ANNUAL report
2012
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Guidance of
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Annual Report
1
9
Corporate Governance Statement
Financial Statements
9
Transurban Holdings Limited and Controlled Entities
140
Transurban Holding Trust and Controlled Entities
225
Transurban International Limited and Controlled Entities
321
Security Holder Information
This statement outlines the key aspects of Transurban’s corporate governance framework and main governance practices. Copies or
summaries of certain governance documents referred to in this statement can be found in the “Corporate Governance” section of the
Transurban website. These charters, policies and procedures are regularly reviewed and updated to ensure they continue to reflect best
practice.
Throughout the year ended 30 June 2012 (the reporting period), Transurban’s governance arrangements complied with the ASX
Corporate Governance Council’s Corporate Governance Principles and Recommendations. A checklist cross-referencing the Principles
and Recommendations to the relevant sections of this statement and elsewhere in the Annual Report can be found in the Corporate
Governance section of the Transurban website.
The Board of Transurban Holdings Limited (THL), the Board of Transurban Infrastructure Management Limited (TIML), as responsible
entity of Transurban Holding Trust (THT), and the Board of Transurban International Limited (TIL) are collectively referred to as the
“Board” in this statement, unless otherwise indicated.
On 5 January 2012, the incorporation and registration of TIL was
transferred from Bermuda to Australia. On that date, the two
Bermudan based TIL Directors resigned and were replaced with
those THL and TIML Directors not currently on the Board of TIL.
As a result, the Board of THL, the Board of TIML and the Board of
TIL now have common Directors and meetings are held
concurrently. The Board currently comprises eight Directors, with
seven Non-executive Directors, including the Chair, and one
Executive Director, the CEO. Each Director’s skills, qualifications,
experience, relevant expertise and period in office are set out in
the Directors’ Report.
During the reporting period:
• Geoff Cosgriff and Jeremy Davis retired from the Board;
• Ian Smith and Christine O’Reilly joined the Board, effectively
completing the Board renewal process; and
• Transurban announced the resignation of Chris Lynch as
Managing Director and CEO, and the appointment of his
replacement, Scott Charlton, both with effect in July 2012.
Shortly after the reporting period, Scott Charlton commenced as
Managing Director and CEO. Bob Officer also resigned from the
Board (see below).
Director independence
Each Director is expected to bring unfettered and independent
judgment to the Board’s deliberations.
Under the Board Charter, the Board must comprise a majority of
independent Non-executive Directors and have an independent
Non-executive Chair. The roles of the Chair and the CEO must
be exercised by separate individuals.
The Board defines an independent Director as a Non-executive
Director who is free of any business or other relationship that
could interfere with, or could reasonably be perceived to interfere
with, the exercise of their unfettered and independent judgment
and ability to act in the best interests of security holders.
Relevant governance documents:
! Board Charter
The Board is accountable to security holders for the performance
of Transurban.
that sets out
The Board has a Charter
its authority,
responsibilities and membership, and the arrangements by which
it operates. The Charter also clearly establishes the relationship
between the Board and management. The Board reviewed and
amended the Charter during the reporting period.
The primary role of the Board is to provide overall strategic
guidance for Transurban and effective oversight of management.
To this end, the Board has reserved to itself the specific
responsibilities listed in the Charter. To assist it in discharging
these responsibilities, the Board has established Committees to
give detailed consideration to key issues.
responsibility
The Board has delegated to the CEO, and through the CEO to
other Senior Executives,
the day-to-day
management of Transurban. The scope of, and limitations to,
these delegations are clearly documented and cover areas such
as operating expenditure, capital expenditure and investments.
These delegations balance effective oversight with appropriate
empowerment and accountability of Senior Executives.
for
2 STRUCTURE AND MEMBERSHIP OF THE
BOARD
Relevant governance documents:
! Board Charter
! Policy and Procedure for the Nomination, Selection
and Appointment of New NEDs and the Re-Election
of Incumbent NEDs
! Diversity Policy
Board structure
The Board is structured so that its membership provides the mix
of qualifications, skills, experience and diversity to enable it to
discharge its responsibilities, and so that its size facilitates
effective discussion and efficient decision making.
The Board determines its size and composition, subject to the
constitutions of THL, TIML, and TIL, and the law.
1 TRANSURBAN ANNUAL REPORT 2012
1 20120122 CORPORATE GOVERNANCE STATEMENTCORPORATE GOVERNANCE STATEMENT 1 ROLE OF THE BOARD
In assessing the independent status of a Non-executive Director,
the Board considers the ‘relationships affecting independent
status’ set out in the ASX Corporate Governance Council’s
Corporate Governance Principles and Recommendations and
other
the Board
considers relevant. The test of whether a business or other
relationship is material1 is assessed from the perspective of both
Transurban and the Director.
information and circumstances
facts,
that
The Board assesses the independence of new Directors upon
appointment, and reviews the independence of all Directors
annually and as appropriate. Each Director is required to provide
the Board with all relevant information to enable it to make this
assessment.
The Board has reviewed the positions and associations of the
current Non-executive Directors, including the Chair. The Board
considers each of them to be independent.
Lindsay Maxsted, Neil Chatfield, Rodney Slater and Samantha
Mostyn each hold positions in companies or with firms with which
Transurban has commercial relationships, as described in note 36
in the notes to the Financial Statements in the Annual Report.
The Board has considered each case separately and has
concluded that these relationships are not material and do not
interfere with the relevant Director’s exercise of unfettered and
independent judgment or their ability to act in the best interests of
security holders. None of Mr Maxsted, Mr Chatfield, Mr Slater,
nor Ms Mostyn were, or are, involved in any procurement or other
Board decision making regarding the companies or firms with
which they have an association.
Bob Officer was not considered by the Board to be independent
as he was a nominee of CP2 Limited. CP2 Limited is a co-
investor in DRIVe, the US toll road investment vehicle managed
by Transurban, and was previously also one of Transurban’s
largest security holders. Professor Officer resigned from the
Board in August 2012.
Tenure, retirement and re-election
Each Non-executive Director’s term of appointment is subject to
the provisions of the Corporations Act, the ASX Listing Rules, and
the constitutions of THL, TIML and TIL.
New Directors (appointed by the Board during the year to fill a
casual vacancy or as an addition to the Board) are required to
seek election as a Director at the Annual General Meeting (AGM)
following their appointment, and then re-election on a rotational
basis with the other Directors.
No Director of THL, TIML or TIL (other than the CEO) may hold
office without re-election past the third AGM following their
appointment or 3 years, whichever is longer.
Board support for Directors retiring and seeking re-election is not
automatic. Prior to each AGM, the Board determines whether it
will recommend to security holders that they vote in favour of the
re-election of each Non-executive Director seeking re-election,
having regard to any matters the Board considers relevant,
including the Director’s performance evaluation and his or her
tenure.
1 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,
in
accounting standards are used and interests equal to more than
5% of revenue, equity or profit are potentially material. In certain
circumstances, the Board considers that interests of a lesser value
might also be relevant.
thresholds suggested
2 TRANSURBAN ANNUAL REPORT 2012
The Board does not set fixed tenure limits for Non-executive
Directors. It is the Board’s intention that Non-executive Directors
serve up to three terms, but tenure remains a matter for the
Board’s discretion on a case-by-case basis.
In the case of long-serving Non-executive Directors who are
standing for re-election at an AGM but who intend to retire from
the Board within their next term, this intention to retire will be
clearly disclosed in the AGM notice of meeting.
Nomination and appointment of new Directors and
Board gender diversity
the
The Board has established a policy and procedure for the
nomination, selection and appointment of new Non-executive
Directors. A regular assessment of the range of qualifications,
skills, experience, and diversity of gender, age, experience,
relationships and background on the Board is undertaken to
enable
identification of particular competencies and
perspectives that will best increase the Board’s effectiveness.
The assessment is assisted by the development and use of a
Board ‘skills matrix’ to identify any gaps. Where a need or gap is
identified or arises, the Nomination Committee commences a
search process
for potential appointees across a diverse
candidate pool, with the assistance of external consultants as
necessary. The Nomination Committee then undertakes an
assessment of short listed potential appointees. The Chair and
other Directors also meet in person with potential appointees.
The Nomination Committee will then recommend the most
appropriate candidate(s) for consideration by the Board as a
whole.
During the reporting period, the Board reviewed the mix of skills
and diversity which it seeks to achieve in its membership. It
identified additional gender diversity and engineering, major
projects and infrastructure skills and experience as priorities. A
search process as described above was undertaken and Ian
Smith and Christine O’Reilly were identified as the candidates
who best met the Board’s criteria. Mr Smith and Ms O’Reilly were
appointed
in January 2012 and April 2012
to
respectively.
the Board
The Board recognises that diversity is a competitive advantage
bringing real value and adding to the collective skills and
experience of
is
responsible for making recommendations to the Board on
strategies for addressing Board diversity.
The Nomination Committee
the Board.
Induction of new Directors
New Non-executive Directors are issued with a formal letter of
appointment that sets out the key terms and conditions of
appointment,
rights and
responsibilities, the time commitment envisaged, and the Board’s
expectations regarding involvement with Committee work.
the Director’s duties,
including
An induction program is in place to allow new Non-executive
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 Transurban’s financial,
strategic, operational and risk management position, its culture
and values, the role and responsibilities of Senior Executives, the
role of Board Committees, meeting arrangements and Director
interaction with each other, Senior Executives and other
stakeholders.
2
Knowledge, skills and experience
Directors are expected to maintain the knowledge and skills
required to discharge their obligations to Transurban. The Board
is provided with papers, presentations and briefings on
Transurban’s operations, and is briefed on relevant changes in
the legislative, regulatory or industry framework. Directors are
expected to undertake any necessary continuing professional
education and training to update and enhance their knowledge
and skills.
Board access to information and independent
professional advice
Directors have unrestricted access to management. Management
is expected to provide regular detailed financial and operational
reports in a form and timeframe and of a quality that enable the
Board to discharge its duties effectively. Directors may request
additional
informed
decisions.
information where necessary
to make
The Board Charter sets out the circumstances and procedures
pursuant to which a Director may seek independent professional
advice at Transurban’s expense. These procedures require prior
consultation with, and the consent of, the Chair and, under normal
circumstances, the provision of a copy of the advice to the Board.
Conflicts of interest
Directors are required to take all reasonable steps to avoid actual,
potential or perceived conflicts of interests.
Under the Corporations Act, the constitutions of THL, TIML and
TIL, and the Board Charter, Directors are required to disclose any
conflicts and abstain from participating in any discussion or voting
on matters in which they have a material personal interest. A
Director who discloses that they may have a conflict must follow
the procedures developed by the Board to deal with such
circumstances.
Corporate Governance Framework
Independent
Assurance
– External Auditor
– Internal Auditor
Board
Delegation
Assurance and oversight
through reporting
Delegation
Remuneration
Committee
Nomination
Committee
Audit and risk
Committee
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Executive Committee
3 OPERATION OF THE BOARD
Relevant governance documents:
! Board Charter
! Audit and Risk Committee Charter
! Nomination Committee Charter
! Remuneration Committee Charter
Board Committees
The Board has established
Directors:
Committee and the Remuneration Committee.
the Audit and Risk Committee,
three standing Committees of
the Nomination
Each standing 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.
The role of Committees is to advise and make recommendations
to the Board. The Committees do not have decision making
authority except as expressly stated in the relevant charter or as
authorised by the Board.
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, which
to each
resulted
Committee charter.
in amendments
The current composition of each Committee is set out on the
following page. 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.
3 TRANSURBAN ANNUAL REPORT 2012
3
Current Committee composition
Audit and Risk Committee
Nomination Committee
Remuneration Committee
• Only Non-executive Directors, all of
• Only Non-executive Directors, all
• Only Non-executive Directors, all of whom
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whom are independent;
of whom are independent;
• At least 3 members, each of whom is
financially literate and has relevant
qualifications/experience;
• An independent Chair who is not also
• At least 3 members;
• An independent Chair.
Chair of the Board.
- Neil Chatfield (Chair);
- Lindsay Maxsted;
- Christine O’Reilly; and
- Bob Edgar.
- Lindsay Maxsted (Chair);
- Neil Chatfield;
- Bob Edgar;
- Samantha Mostyn;
- Christine O’Reilly; and
- Rodney Slater.
are independent;
• At least 3 members;
• An independent Chair.
- Bob Edgar (Chair);
- Neil Chatfield; and
- Samantha Mostyn.
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• Integrity of financial reporting;
• Effectiveness of systems of financial risk
management and internal control;
• Internal and external audit functions;
• Effectiveness of the risk management
framework and supporting risk
management systems.
• Size and composition of the Board
and new Board appointments;
• Board gender diversity and
diversity in general;
• Board, Committee and Director
performance;
• Board and Senior Executive
succession planning.
• Remuneration of Directors;
• Performance and remuneration of, and
incentives for, the CEO and other Senior
Executives;
• Remuneration by gender;
• Remuneration strategies, practices and
disclosures generally.
*Until his resignation in August 2012, Bob Officer was a member of the Audit and Risk and Nomination Committees.
Performance of the Board
The Board acknowledges the importance of the regular review of
its own performance and effectiveness, as well as
the
performance and effectiveness of its Committees and individual
Directors. The Board conducts an internal evaluation each year
and has an expert external consultant formally facilitate the
process every third year. This arrangement is supplemented by
assessments undertaken by committees, the results of which are
reported to the Board.
the
reporting period.
facilitated Board effectiveness
review was
An externally
conducted during
Interviews were
conducted with each Board member and with senior management
and additional feedback was gathered by completion of a detailed
(confidential) questionnaire. The results of the review were
formally presented to, and considered by, the Board as a whole.
The review concluded that the Board is functioning well with an
appropriate mix of skills and experience on the Board, and that
there were effective working relationships between Board
members and between the Board and management. Suggestions
for improvement and actions agreed by the Board in response to
those suggestions have been documented and the completion of
these is monitored by the Board.
As noted above, Transurban has a Diversity Policy and the Board
has again set measurable objectives for achieving greater gender
diversity. Achieving these objectives is a measure against which
performance of the Board is assessed going forward. The Board
recognises that increasing Board accountability for diversity
objectives is an important element in delivering improvements in
diversity on the Board and at all levels of the organisation.
Performance of Senior Executives
Each year the Board sets key performance indicators (KPIs) for
the CEO, and approves KPIs set for other Senior Executives,
against which their performance is measured. KPIs relate to both
the performance of Transurban, safety and the performance of
the executive individually. The performance of the CEO is
reviewed by the Board. The CEO reviews the performance of
each Senior Executive and reports to the Board through the
Remuneration Committee on the outcome of these reviews. The
outcomes directly impact each Senior Executive’s short term
incentive.
Performance reviews for the CEO and other Senior Executives for
the year ended 30 June 2011 were conducted during the
reporting period. Detailed information regarding these reviews,
and the reward structure and remuneration outcomes for the CEO
and other Senior Executives during the reporting period, can be
found in the Remuneration Report within the Directors’ Report.
Performance reviews for the year ended 30 June 2012 were
conducted in July 2012.
Remuneration of Directors and Senior Executives
The remuneration of Non-executive Directors consists entirely of
Directors’ fees and Committee fees. Non-executive Directors do
not receive any variable remuneration or other performance
related incentives. In September 2005, the Board resolved to
discontinue previously provided retirement benefits for Non-
executive Directors. Accrued “frozen” retirement benefits plus
interest (at the statutory fringe benefits rate) were paid to Geoff
Cosgriff and Jeremy Davis upon their retirement in December
2011. No other current Directors are entitled to any accrued
retirement benefits.
Further details of the remuneration paid to each Non-executive
the
Director during
Remuneration Report within the Directors’ Report.
reporting period are set out
the
in
4 TRANSURBAN ANNUAL REPORT 2012
4
For the reporting period, the remuneration of the CEO and other
Senior Executives comprised fixed remuneration, short term
incentives (cash and deferred equity) and long term equity based
incentives. Transurban’s remuneration strategy and framework,
and the remuneration package and outcomes for the CEO and
other Senior Executives, are described
the
Remuneration Report within the Directors’ Report. In the year
ended 30 June 2011, a comprehensive review of Transurban’s
remuneration framework was undertaken in light of feedback
received from security holders and other stakeholders, market
expectations and regulatory developments. As a result, the
Board approved and implemented a new remuneration framework
for the reporting period, details of which are summarised in the
Remuneration Report within the Directors’ Report.
in detail
in
4 ETHICAL CONDUCT AND RESPONSIBLE
DECISION-MAKING
Relevant governance documents:
! How We Work @ TU
! Whistleblower Policy
! Fraud Policy
! Dealing in Securities Policy
! Diversity Policy
! Supplier Sustainability Code of Practice
! Sustainability Report
Conduct and ethics
Transurban’s code of conduct, “How We Work @ TU”, sets the
standards for how all of Transurban’s employees, consultants and
contractors should act to ensure that Transurban’s organisational
values (honesty, integrity, humility and accountability) are upheld.
All employees are expected to align their actions with the code
whenever they are representing Transurban or undertaking work
on Transurban’s behalf. The code refers employees to relevant
Transurban policies for further information and guidance. It also
encourages employees who become aware of unethical
behaviours to report these to Senior Management.
A copy of How We Work @ TU 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 protection
In keeping with the spirit of How We Work @ TU, Transurban has
to encourage Directors, Senior
a Whistleblower Policy
Executives, employees, contractors and suppliers who have
witnessed, or know about, any misconduct to report it without fear
of reprisal. The policy sets out how Transurban will respond to,
the
and
protections available to those who make a whistleblower report in
good faith.
reports of misconduct, and outlines
investigate,
Transurban also has a separate Fraud Policy that sets out the
procedures for the investigation of reports of fraudulent or corrupt
conduct that are made other than under the Whistleblower Policy.
Dealing in securities
Transurban has a Dealing in Securities Policy that establishes a
procedure
for dealings by Directors, Senior Executives,
employees, contractors and their related parties in Transurban
securities, and
in securities of other entities with whom
Transurban may have business dealings.
5 TRANSURBAN ANNUAL REPORT 2012
The policy prohibits Directors and all personnel 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. Directors and all personnel may generally deal
in securities during “Open Periods” if prior approval is obtained in
accordance with procedure set out in the policy. For the
purposes of the policy, dealing includes hedging.
The policy also prohibits dealing in securities on a short-term
basis, except in circumstances of financial hardship. Employees
who have entitlements to securities under a Transurban equity
plan may not hedge against those entitlements until they have
vested. In addition, Directors and Senior Executives may not
hedge against entitlements that have vested but remain subject to
a holding lock. Directors and employees are also prohibited from
entering into margin lending arrangements using Transurban
securities as security.
Diversity
Transurban’s workforce is made up of individuals with diverse
skills, values, backgrounds, experiences and needs. Transurban
values this diversity and recognises the organisational strength,
opportunities for innovation and other corporate benefits that it
brings. Transurban is committed to p roviding an environment in
which all employees are treated with fairness and respect, and
have equal access to opportunities at work. Transurban has, and
will continue to develop, practices, programs and initiatives to
support and assist with improving diversity at all levels of the
business.
Transurban believes
that genuine diversity drives strategic
advantage and contributes to the achievement of its corporate
objectives. It enables Transurban to attract people with the best
skills and attributes, and to develop a workforce selected from all
available talent, whose diversity reflects that of the customers and
communities Transurban serves.
Transurban was an early adopter of the diversity measures set out
in the ASX Corporate Governance Council’s Principles and
Recommendations that came in to effect for financial years ending
on or after 1 January 2011. In 2010, Transurban established a
Diversity Policy that included a requirement for the Board to set
measurable objectives for achieving gender diversity and review
both the objectives and the progress in achieving them annually.
Transurban’s gender diversity profile as at 30 June 2012 is set
out below:
25%
(2)
75%
(6)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
33%
(10)
67%
(20)
50%
(310)
50%
(314)
Board Members
CEO/Senior Executive
Total Workforce
Female
Male
5
Transurban’s measurable gender diversity objectives for the reporting period, and the progress in achieving those objectives during that
period, are outlined below:
Objective
FY11 Actual and FY12 Target
Outcome as at 30 June 2012
Increase the proportion of
women on the Board
! FY11 (Actual) – 1 female Non-
executive Director
! FY12 (Target) – 1 additional female
Non-executive Director
Increase the proportion of
women in executive and
senior management positions
! FY11 (Actual) – 29% of
executive/senior management
positions held by women
! FY12 (Target) – 31% of
executive/senior management
positions held by women
Proactive consideration of
female candidates for Board
and management positions
! Minimum of 1 female candidate
included in every Board /
management interview list
Enhance workplace flexibility
options and access to these
! FY11 (Actual) – 30.5% of employees
utilising workplace flexibility programs
! FY12 (Target) – 34.6% of employees
utilising workplace flexibility programs
Maternity leave return rate
! FY11 (Actual) – 93% of employees
due to return from maternity leave
returned to work
! FY12 (Target) – 100% of employees
due to return from maternity leave to
return to work
Christine O’Reilly was appointed to the Board on 12 April 2012.
She joins Sam Mostyn as Transurban’s second female Non-
executive Director.
33.3% of executive and senior management positions are held by
women. This increase from previous years and above target result
is due to the appointment of females into the CFO and General
Counsel, Australia positions.
Female candidates were included in every Board / management
interview list. During the reporting period, 1 female was appointed
to the Board, and management appointments occurred through the
implementation of succession plans.
Transurban continued to enhance and promote workplace flexibility
through the reporting period. 28.6% of employees accessed
workplace flexibility programs. The breakdown of these programs is
as follows:
•
•
•
19.8% of employees are employed on a part-time basis;
7.4% of employees purchased additional lifestyle leave; and
4.3% of employees utilised other formal flexible leave
arrangements eg. working from home, telecommuting, flexi-
hours.
80% of employees due to return from maternity leave returned to
work.
Diversity initiatives
5
INTEGRITY IN FINANCIAL REPORTING
The Women
During the reporting period Transurban retained a focus on
gender diversity.
in Leadership program
continued – 24 females participated in two further workshops.
Bi-annual
in
Leadership participants, providing them with an opportunity to
network with participants from other programs and hear from
an external speaker.
forums have commenced
for all Women
There
is continued awareness and education around
opportunities for all employees to assist in improving diversity
at all levels. Initiatives include enhancing workplace policies
and programs, the inclusion of unconscious bias into all
manager training, and equal opportunity awareness training for
all employees. A gender pay equity review has also been
undertaken.
Sustainability
to ensuring
is committed
The Board
that all Transurban
operations work to sustainable business practices. Further
information on Transurban’s approach to sustainability is set out
in Transurban’s Sustainability Report which will be published in
to
October 2012. Transurban
sustainability into its procurement processes to ensure suppliers
and contractors maintain a high standard of governance and
compliance.
its approach
integrates
Relevant governance documents:
! Audit and Risk Committee Charter
!
External Auditor Independence Policy
Role of the Audit and Risk Committee
The Audit and Risk Committee assists 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 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
to attend
meetings.
invited
The Audit and Risk Committee has unrestricted access to
management and the auditors, and rights to seek explanations
and additional information. The committee meets on a regular
basis with the internal auditor, and separately with the external
auditor, without management present.
6 TRANSURBAN ANNUAL REPORT 2012
6
Independence of the external auditor
Transurban’s external auditor is PricewaterhouseCoopers. The
effectiveness, performance and independence of the external
auditor is reviewed by the Audit and Risk Committee. If it
becomes necessary
for
replace
the Committee will
independence reasons,
performance or
the selection and
for
formalise a procedure and policy
appointment of a new external auditor.
the external auditor
to
The Corporations Act requires the external auditor to make an
annual independence declaration, addressed to the Board,
declaring that the auditor has maintained its independence in
accordance with
rules of
professional accounting bodies. PricewaterhouseCoopers has
provided an independence declaration to the Board for the
reporting period. The declaration forms part of the Directors’
Report.
the Corporations Act and
the
John Yeoman has been the lead audit engagement partner of
PricewaterhouseCoopers in relation to the external audit of
Transurban since 1 July 2007. He is currently being rotated off as
lead partner and is being replaced by Chris Dodd.
Restrictions on the provision of non-audit services by
the external auditor
Transurban has implemented policies and procedures to monitor
the independence of the external auditor. The External Auditor
Independence Policy regulates the provision of non-audit services
by the external auditor. Under the policy, the auditor is prohibited
from providing certain non-audit services, and may only provide a
permissible non-audit service where there is a compelling reason
for the auditor to do so. The provision of permissible non-audit
services must be pre-approved by either the Audit and Risk
Committee, the Chair of that Committee, or the CFO (where the
proposed fee for the service does not exceed $5,000). The CFO
provides a verbal report at each Audit and Risk Committee
meeting describing any non-audit services pre-approved by the
CFO or the Chair since the last meeting.
Details of the fees paid to PricewaterhouseCoopers during the
reporting period, including a breakdown of fees paid for non-audit
services, are set out in the Directors’ Report. The Board has
considered the nature of the non-audit services provided by
PricewaterhouseCoopers during the reporting period and has
determined that the services provided, and the amount paid for
those services, are compatible with the general standard of
independence for auditors imposed by the Corporations Act and
that the auditor’s independence has not been compromised.
also ensures that Transurban and its personnel are aware of the
penalties
for a contravention of Transurban’s continuous
disclosure obligations.
for
The Company Secretary has primary responsibility
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
(after appropriate
consultation) whether disclosure is required and, if so, co-
ordinates the actual form of the disclosure, its approval and
prompt release. 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).
information, determines
that
All information disclosed to the ASX is promptly posted on the
Transurban website. All material used in presentations to equity
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.
7 COMMUNICATIONS WITH SECURITY
HOLDERS
Relevant governance documents:
! Security Holder Communications Policy
Transurban places considerable
importance on effective
communication with its security holders to ensure they are kept up
to date with Transurban’s latest news and information. The
Security Holder Communications Policy outlines the range of
ways Transurban provides information to its security holders and
other stakeholders. These include the Transurban website,
meetings and briefings, written materials and email updates.
Security holders are encouraged to elect to receive information in
to
electronic
sustainability.
line with Transurban’s commitment
format
in
Transurban uses its website to complement the official release of
information to the ASX. All ASX announcements and related
information, such as information provided to analysts or the media
during briefings or presentations, are promptly posted on the
website. The annual and half year results presentations, media
releases and other communications material are also published
on the website.
Attendance of the external auditor at the AGM
Annual general meeting
The lead audit engagement partner of PricewaterhouseCoopers
attends, and is available to answer security holder questions
about the conduct of the audit and the preparation and content of
the auditor’s report at Transurban’s AGM.
6 CONTINUOUS DISCLOSURE
Relevant governance documents:
! Continuous Disclosure Policy and Procedure
Transurban has a Continuous Disclosure Policy and Procedure
that establishes a best practice procedure for compliance with its
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
Transurban regards its AGM as an important opportunity to
communicate with security holders. It is also a major forum for
security holders to ask questions about the performance of
Transurban, and to provide feedback to Transurban about
information they have received.
Transurban welcomes and encourages security holder attendance
and participation at AGMs. The full text of notices of meeting and
explanatory material is published on the Transurban website.
AGMs are also webcast to accommodate security holders who
are unable to attend in person.
7 TRANSURBAN ANNUAL REPORT 2012
7
8 RISK MANAGEMENT
Relevant governance documents:
! Audit and Risk Committee Charter
! Risk Management Policy
Risk oversight and management
Transurban views effective risk management as central to
achieving its objectives. Responsibility for risk management on a
day to day basis rests with line management.
The Board is responsible for reviewing Transurban’s policies on
risk oversight and management and satisfying
that
management has developed and implemented a sound system of
risk management and internal control.
itself
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
ISO 31000:2009)
to embed risk management
processes into Transurban’s business activities and functions.
that seeks
Within the framework, each business unit is required to formally
consider its risk environment and create a register of identified
risks, controls, actions to treat risks and where necessary, a risk
management plan. Risk registers are stored in a risk management
reports are derived. Risk
information system
Management Facilitators are appointed to each business unit to
support managers in implementing a robust and consistent
approach for the identification and management of risks. Progress
in the management of risks is regularly reported to Senior
Executives. Senior Executives have also established a strategic
risk register which they review regularly.
from which
The Audit and Risk Committee assists the Board in overseeing
Transurban’s Risk Management Policy and the effectiveness of its
risk management framework and supporting systems. At each
meeting, the Committee considers the ‘Key Risks’ (those with a
residual risk rating of “A” or “B”). Management reports to the
committee in relation to the effectiveness of the management of
Key Risks. Detailed reports are provided to the Committee if the
rating of a Key Risk changes or if there are any other significant
developments in relation those risks.
Financial reporting - CEO and CFO certifications
The Board has received certifications from the CEO and the CFO
in connection with the financial statements for the Transurban
Group and the individual entities comprising the Transurban
Group for the year ended 30 June 2012. 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.
8 TRANSURBAN ANNUAL REPORT 2012
8
Transurban Holdings Limited and
Controlled Entities
ABN 86 098 143 429
(including Transurban International Limited and Transurban Holding Trust)
Annual report
for the year ended 30 June 2012
9 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited ABN 86 098 143 429
Annual report - 30 June 2012
Contents
Directors' report
Auditor's Independence Declaration
Financial statements
Directors' declaration
Independent auditor's report to the members
Page
11
50
51
137
138
10 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
Directors' report
The Directors of Transurban Holdings Limited (THL), Transurban International Limited (TIL), and Transurban
Infrastructure Management Limited (TIML), as responsible entity of Transurban Holding Trust (THT), present
their report on the Transurban Group for the year ended 30 June 2012.
Group accounts
The Transurban Group financial statements have been prepared as an aggregation of the financial statements of
THL and controlled entities, TIL and controlled entities, and THT and controlled entities, 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 THL, TIML and TIL
during the whole of the financial year and up to the date of this report:
THL
TIML
TIL
Non-executive Directors
Lindsay Maxsted
Neil Chatfield *
Geoffrey Cosgriff (resigned 6 December 2011)
Jeremy Davis (resigned 6 December 2011)
Robert Edgar *
Samantha Mostyn *
Robert Officer *
Christine O'Reilly (appointed 12 April 2012)
Rodney Slater *
Ian Smith (appointed 1 January 2012) *
James Keyes (resigned 5 January 2012)
Jennifer Eve (resigned 5 January 2012)
Executive Directors
Christopher Lynch (resigned 16 July 2012)
Scott Charlton (appointed 16 July 2012)
(*) - Appointed to the Board of TIL on 5 January 2012, being the date on which the registration and incorporation
of TIL was transferred from Bermuda to Australia.
11 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Result
The consolidated net profit
$118,158,000). The profit attributable to ordinary equity holders of
$112,467,000).
for the year ended 30 June 2012 for the Group was $58,558,000 (2011:
the Group was $54,905,000 (2011:
Principal activities
The principal activities of the Group during the financial year were the development, operation and maintenance
of toll roads.
Distributions
Distributions paid to the ordinary equity holders of the Group during the financial year were as follows:
Distribution payable
Final distribution for 2012 financial year payable and recognised as a liability:
15.0 cents (2011: 14.0 cents) per fully paid Stapled Security payable
14 August 2012
Fully franked (2011: 0% franked) based on tax paid @ 30% - 3.5 cents (2011:
0.0 cents) per fully paid Stapled Security
Unfranked final distribution - 11.5 cents (2011: 14.0 cents) per fully paid
Stapled Security
Distributions paid during the year
Final (unfranked) distribution for 2011 financial year of 14.0 cents (2010: 12.0
cents) per fully paid Stapled Security paid 11 August 2011
Interim distribution for 2012 financial year of 14.5 cents (2011: 13.0 cents) per
fully paid Stapled Security paid 14 February 2012
Fully franked (2011: 0% franked) based on tax paid @ 30% - 3.5 cents (2011:
0.0 cents) per fully paid Stapled Security
Unfranked interim distribution - 11.0 cents (2011: 13.0 cents) per fully paid
Stapled Security
Total distributions paid during the year
Distributions paid in cash or satisfied by the issue of Stapled Securities
under the distribution reinvestment plan during the years ended 30 June
2012 and 30 June 2011
Paid in cash
Satisfied by issue of Stapled Securities
Funds available (from)/for future distribution reinvestment plans
30 June
2012
$'000
30 June
2011
$'000
51,041
167,707
218,748
-
202,096
202,096
202,096
202,096
169,760
169,760
50,801
159,654
210,455
-
187,367
187,367
412,551
357,127
336,549
76,001
1
412,551
232,577
124,557
(7)
357,127
12 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Review of operations
Transurban's net profit for the year ended 30 June 2012 was $58.6 million. Toll revenue increased by 5.7 per
cent to $765.4 million. The key driver behind the increase was the price escalation and traffic growth on CityLink,
partially offset by the construction impact of the Hills M2 Upgrade works on the Hills M2 and Lane Cove Tunnel.
Performance of Transurban's portfolio of assets
CityLink (Melbourne)
CityLink toll revenue for the year ended 30 June 2012 increased 8.5 per cent to $471.6 million on the back of a
1.9 per cent increase on average daily transactions.
CityLink traffic growth was impacted by the planned major resurfacing works on Western Link during the year;
overall the Western Link grew 0.7 per cent and the Southern Link 2.9 per cent.
Hills M2 (Sydney)
Toll revenue for the year ended 30 June 2012 for the Hills M2 decreased by 3.1 per cent to $141.2 million. As
expected average daily trips decreased by 5.1 per cent, reflecting the construction impact of the Hills M2
Upgrade.
As at 30 June 2012 the upgrade was over 70 per cent complete with the first stage, the Windsor Road ramps,
opened for traffic on the 25 July 2012. The project completion is scheduled for mid 2013 and remains consistent
with Transurban’s expectations.
On 30 January 2012, Hills M2 and M1 Eastern Distributor successfully implemented full electronic tolling with
minimal impact on traffic. The move to cashless tolling will result in improved travel times for customers across
the corridor and operational efficiencies.
Lane Cove Tunnel/Military Road e-Ramps (Sydney)
Toll revenue for the year ended 30 June 2012 was $60.0 million. Average daily trips decreased by 0.7 per cent
compared to the previous year.
The decrease in traffic is a reflection of the construction impact of the Hills M2 Upgrade on Lane Cove Tunnel, a
connecting road.
M1 Eastern Distributor (Sydney) – Airport Motorway Group
Toll revenue for the year ended 30 June 2012 for the M1 Eastern Distributor increased 0.6 per cent to $92.7
million. Average daily trips increased 0.7 per cent.
As previously mentioned, M1 Eastern Distributor implemented cashless tolling on 30 January 2012.
M5 Motorway (Sydney) - Interlink Roads Pty Limited
Toll revenue for the year ended 30 June 2012 for the M5 increased by 8.1 per cent to $181.1 million. Average
daily trips decreased 0.1 per cent.
The car toll price increased from $3.80 to $4.40 on 25 November 2011, the first car toll price increase since
August 2006.
On the 26 June 2012, Transurban announced that it had reached financial close with the NSW Government for
the M5 West Widening Project, a $400 million project of which the Government will fund approximately $50
million.
Under the agreement, an extra lane in each direction will be added from Camden Valley at the western end to
King Georges Road in the east. The expected traffic increase will be approximately 4.4 per cent, with the truck
toll multiplier progressively moving to three times the car toll at construction completion. Construction is expected
to take 2.5 years and the concession extended by 3.3 years to December 2026.
13 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Review of operations (continued)
Performance of Transurban's portfolio of assets (continued)
Westlink M7 (Sydney) - Westlink Motorway Group
Toll revenue for the year ended 30 June 2012 increased by 5.2 per cent to $200.5 million. Average daily trips
increased by 1.3 per cent.
Both the northern and southern sectors of the Westlink M7 have been impacted by the flow-on effects of
development activities and upgrade works on the connecting roads.
Pocahontas 895 (Virginia USA) - Transurban DRIVe
Toll revenue for the year ended 30 June 2012 increased by 5.7 per cent to US$14.9 million. Average daily trips
increased by 3.2 per cent, due to milder weather conditions and the benefit of the completion of the Airport
Connector in January 2011.
Transurban announced on the 18 June 2012, that after a detailed review of traffic and operating forecasts for
Pocahontas 895, it was necessary to reduce the carrying value of the asset based on revised lower revenue
forecasts. This resulted in an equity accounting charge for the year ended 30 June 2012 of $138.1 million.
Transurban’s investment
in Pocahontas is held via Transurban DRIVe, which is 75 per cent owned by
Transurban. As a result of this equity accounting charge, Transurban’s carrying value of its investment in DRIVe
has been reduced to zero.
Business development activities
Capital Beltway (Virginia USA) - Transurban DRIVe
Construction on the Capital Beltway 495 Express Lane project is now more than 95 per cent complete. The
construction project remains on budget and on track for completion late 2012, with first tolls expected in early
2013.
95 Express Lanes (Virginia USA) – Transurban DRIVe
On 1 August 2012, the Group announced that financial close had been reached with the Commonwealth of
Virginia to build and operate the 95 Express Lanes in northern Virginia, USA.
The 95 Express Lanes will be a 29 mile (46 kilometre), reversible two and three lane facility, with a 73 year
operating concession from opening date (2015).
Other corporate activities
Chief Executive Officer (CEO)
On 30 January 2012, Transurban announced Mr Chris Lynch’s intention to resign as CEO and as a Director
effective from July 2012 after a four year tenure. After a comprehensive Board selection process, Transurban
announced on 3 April 2012 the appointment of Mr Scott Charlton as new CEO effective from July 2012.
14 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Review of operations (continued)
Refinancing activities
Transurban continued to have success in financing activities in the year ended 30 June 2012.
July 2011
Refinanced $520.0 million of non-recourse project debt on the M1 Eastern Distributor.
August 2011
Raised $100.0 million of new corporate working capital facilities
December 2011 Refinanced $375.0 million of syndicated bank debt. This replaced the $375.0 million that was
due to mature in August 2012.
March 2012
June 2012
Issued C$250 million of Canadian dollar denominated secured fixed rate medium term notes
under the Euro Medium Term Note (“EMTN”) Programme Maple bonds established in October
2011.
Raised $735.0 million of non-recourse project debt on Interlink Roads Pty Limited, comprising
of $525.0 million of existing debt ($15 million undrawn facility) and $210.0 million of additional
syndicated bank debt to fund the upgrade project.
Significant changes in the state of affairs
On 5 January 2012, TIL and its wholly owned susbidiary, Transurban International Holdings Limited, changed
registered domicile from Bermuda to Australia. The change in domicile has had no financial
impact on the
Group.
There have been no other significant changes in the state of affairs of the Group during the year.
Matters subsequent to the end of the financial year
As noted above, on 1 August 2012, the Group reached financial close on the 95 Express Lanes project.
Transurban also announced that the 95 Express Lanes investment will be the final new toll road project
undertaken by Transurban's co-investment vehicle, DRIVe. Transurban will continue to manage the assets
owned by DRIVe.
At the date of this report the Directors are not aware of any other circumstances that have arisen since 30 June
2012 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 assets.
15 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Information on Directors
Lindsay Maxsted Dip Bus, FCA
Chair and independent Non-executive Director
Term of office
Director since 1 March 2008. Chair since 12 August 2010.
Lindsay is currently Chairman and a Non-executive Director of Westpac Banking Corporation, and a
Non-executive Director of BHP Billiton Limited and BHP Billiton plc. He is the Managing Director of Align Capital
Pty Ltd and the Honorary Treasurer of Baker IDI Heart and Diabetes Institute.
Lindsay was formerly the CEO of KPMG Australia from 2001 - 2007. His principal area of practice prior to this
was in the corporate recovery field managing a number of Australia’s largest insolvency / workout / turnaround
engagements. Lindsay was previously a Non-executive Director of both St George Bank and of VicRacing Pty
Ltd.
Lindsay holds interests in 30,000 Stapled Securities.
Transurban Board Committee membership
Chair of the Nomination Committee and a member of the Audit and Risk Committee.
Christopher Lynch B Comm, MBA, FCPA, FAICD
Chief Executive Officer
Term of office
Director since 18 February 2008. CEO since April 2008. Resigned 16 July 2012.
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 came to Transurban
from BHP Billiton, where he held senior roles, including as CFO and as Executive Director and Group President -
Carbon Steel Materials. Prior to this the bulk of Chris’s career was with Alcoa Inc where his roles included Vice
President and CIO, CFO-Europe and Managing Director of KAAL Australia Limited.
Chris is currently a Non-executive Director of Rio Tinto plc and Rio Tinto Limited and a Commissioner of the
Australian Football League.
Chris holds interests in 713,563 Stapled Securities and 2,016,918 performance awards.
Scott Charlton BSci, MBA (Texas)
Chief Executive Officer
Term of office
Director since 16 July 2012. CEO since 16 July 2012.
Scott recently joined Transurban from Lend Lease, where he was Group COO (since November 2011) and
Group Director of Operations (from March 2010). Prior to this, Scott held several senior appointments across a
range of infrastructure and financial
institutions, including as CFO of Leighton Holdings (2007-2009) and as
Managing Director of Deutsche Bank in Australia and Hong Kong (1995 - 2003).
Scott does not hold interests in any Stapled Securities.
16 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Information on Directors (continued)
Neil Chatfield M.Bus, FCPA, FAICD
Independent Non-executive Director
Term of office
Director since 18 February 2009.
Neil served as Executive Director and the CFO of Toll Holdings Limited from 1997 until September 2008. Neil
has extensive experience in general and financial management, capital markets, mergers and acquisitions and
risk management.
Neil is currently the Chairman of Virgin Australia Holdings Limited and a Non-executive Director of Seek Limited
and of Grange Resources Limited. Neil is also Honorary Chairman of HomeGround Services. He was previously
a Non-executive Director of Whitehaven Coal Limited.
Neil holds interests in 30,910 Stapled Securities.
Transurban Board Committee membership
Chair of the Audit and Risk Committee and a member of the Nomination and Remuneration Committees.
Robert Edgar BEc (Hons), PhD, FAICD
Independent Non-executive Director
Term of office
Director since 21 July 2009.
Bob has over 30 years experience as a Senior Executive, with 25 years at ANZ Banking Group in various senior
roles, including Deputy CEO, Senior Managing Director, COO, and Chief Economist.
Bob is currently the Chairman of Centro Retail Australia and a Non-executive Director of Asciano Group and of
Linfox Armaguard Pty Ltd. He is also Chairman of the Prince Henry’s Institute of Medical Research. He was
previously a Non-executive Director of Nufarm Limited, AMMB Holdings Berhad, Shanghai Rural Commercial
Bank and of the Bank of Tianjin.
Bob holds interests in 23,733 Stapled Securities.
Transurban Board Committee membership
Chair of the Remuneration Committee and member of the Audit and Risk and Nomination Committees.
17 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Information on Directors (continued)
Samantha Mostyn BA, LLB
Independent Non-executive Director
Term of office
Director since 8 December 2010.
Sam is a Non-executive Director and corporate advisor and has previously held Senior Executive positions at
IAG, Optus and Cable & Wireless Plc. Sam is currently Chair of the Stakeholder Advisory Council of the
CSIRO’s Climate Adaptation Flagship and Deputy Chair of the Diversity Council of Australia. She is a member of
the NSW Climate Change Council, the advisory boards of ClimateWorks Australia and the Crawford School of
Government and Economics, ANU. Sam is a Commissioner of the Australian Football League and the National
Mental Health Commission.
She is currently a Non-executive Director of Virgin Australia Holdings Limited, Sydney Theatre Company,
Citigroup Pty Ltd, Australian Volunteers International and St James Ethics Centre Foundation.
Sam holds interests in 10,300 Stapled Securities.
Transurban Board Committee membership
Member of the Remuneration and Nomination Committees.
Robert Officer BAgSc (Melb), MAgEc (New Eng), MBA, PhD (Chicago), FASSA, FINSIA
Non-independent Non-executive Director
Term of office
Director since 20 August 2010.
Bob is currently Professor Emeritus of the University of Melbourne and a specialist in financial economics. His
career has spanned academia and consulting across private and public organisations. Bob has held a number of
finance professorships at Australian and overseas universities and consulted to a large number of public, private
and government organisations in valuation and investment appraisal, international finance, capital markets and
takeovers.
Bob is currently Chairman of Acorn Capital Ltd and JCP Investment Partners Ltd. He is on the Boards of CP2
Limited, the Transport Accident Commission and Colonial Foundation. He is a past Chairman of Victorian
WorkCover Authority and was previously on the Boards of the Bank of Melbourne, the Over Fifty Group and
Melbourne University Publishing Pty Ltd.
Bob holds interests in 20,115 Stapled Securities.
Transurban Board Committee membership
Member of the Nomination and Audit and Risk Committees.
18 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Information on Directors (continued)
Christine O'Reilly BBus
Independent Non-executive Director
Term of office
Director since 12 April 2012.
Christine is the Head of Asset Management for Unlisted Infrastructure at Colonial First State Global Asset
Management, with a primary focus on direct investment in and management of major infrastructure projects. In
this capacity, Christine is a Director of the Anglian Water Group (UK) and Electricity North West (UK). She will
step down from these positions on 30 September 2012.
Prior to her time with Colonial, Christine was CEO and Director of the Gasnet Australia Group. She has more
than 20 years of infrastructure and financial experience including an early involvement in the reform and
establishment of the regulatory framework for the Australian gas industry.
Christine is currently a Non-executive Director of CSL Limited and of Care Australia.
Christine does not hold interests in any Stapled Securities.
Rodney Slater J.D., BS
Independent Non-executive Director
Term of office
Director since 22 June 2009.
Rodney is a partner in the public policy practice group of Washington DC firm Patton Boggs, where he has been
a leader of 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 the Administrator of the Federal Highway
Administration between 1993 and 1996.
In the US, Rodney’s current directorships include Kansas City Southern (railroads), Verizon Communications
Inc, Atkins Global, and Southern Development Bancorporation. He was previously a Director of Parsons
Brinckerhoff, Delta Airlines, Northwest Airlines, and ICx Technologies Inc. He also served on Transurban’s US
Advisory Board until November 2008. Rodney is a Director of the Congressional Awards Foundation and United
Way Worldwide.
Rodney does not hold interests in any Stapled Securities.
Transurban Board Committee membership
Member of the Nomination Committee.
19 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Information on Directors (continued)
Ian Smith BE Mining (Hons), BFin Admin
Independent Non-executive Director
Term of office
Director since 1 January 2012.
Ian has more than 30 years experience in the global mining industry in a variety of operational and project
management roles. He is currently the Managing Director and CEO of Orica Limited.
Ian is President of The Australian Mines and Metals Association. He was previously the CEO at Newcrest Mining
Limited and a Director of the Australian Chamber of Commerce and Industry.
Ian holds interests in 70,000 Stapled Securities.
Company Secretaries
Amanda Street LLB (Hons), BComm
Amanda joined Transurban in September 2008 and was appointed as Company Secretary in February 2011.
Before joining Transurban, Amanda was Assistant Company Secretary at SP Ausnet, and Senior Corporate
Counsel at National Australia Bank. She has over 10 years of legal, company secretarial and other relevant
experience. Prior to her in-house work, Amanda was a solicitor specialising in M&A work with Australian law firm
Mallesons.
Julie Galligan LLB, BA
Julie joined Transurban in November 2008 and was appointed as General Counsel, Australia in February 2012.
Julie has over 10 years legal experience in private practice and in-house roles in both Australia and the United
Kingdom. Prior to joining Transurban, Julie worked in-house at Associated British Ports.
20 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Meetings of Directors
The number of meetings of the Boards of Directors of THL, TIML and TIL held during the year ended 30 June
2012, and the number of meetings attended by each Director are set out in the following tables.
Meetings of the Boards of Directors of THL and TIML were held jointly. Meetings of the Board of Directors of TIL
were held separately until 5 January 2012, when the incorporation and registration of TIL was transferred from
Bermuda to Australia. Since that date, meetings of all three Boards have been held jointly.
Board of Directors Board of Directors Board of Directors
TIML
Attended Held# Attended Held# Attended Held#
THL
TIL
Lindsay Maxsted
Christopher Lynch
Neil Chatfield
Geoffery Cosgriff (resigned 6 December 2011)
Jeremy Davis (resigned 6 December 2011)
Robert Edgar
Samantha Mostyn
Robert Officer
Christine O'Reilly (appointed 12 April 2012)
Rodney Slater
Ian Smith (appointed 1 January 2012)
Jennifer Eve (resigned 5 January 2012)
James Keyes (resigned 5 January 2012)
11
11
11
5
4
9
10
11
3
9
5
*
*
11
11
11
5
5
11
11
11
3
11
6
*
*
11
11
11
5
4
9
10
11
3
9
5
*
*
11
11
11
5
5
11
11
11
3
11
6
*
*
8
8
6
*
*
5
6
6
3
5
5
2
2
8
8
6
*
*
6
6
6
3
6
6
2
2
# = Number of meetings held during the time the Director held office
* = Not a member of the relevant Board
The number of meetings of each Board Committee held during the year ended 30 June 2012, and the number of
meetings attended by each Director, are set out in the following table.
Audit and Risk
Committee(1)
Remuneration
Committee(2)
Nomination
Committee(3)
Special
purpose Sub-
committees
Attended Held# Attended Held# Attended Held# Attended Held#
Lindsay Maxsted
Christopher Lynch
Neil Chatfield
Geoffery Cosgriff (resigned 6 December 2011)
Jeremy Davis (resigned 6 December 2011)
Robert Edgar
Samantha Mostyn
Robert Officer
Christine O'Reilly (appointed 12 April 2012)
Rodney Slater
Ian Smith (appointed 1 January 2012)
Jennifer Eve (resigned 5 January 2012)
James Keyes (resigned 5 January 2012)
8
8
8
2
3
8
*
5
1
1
*
*
*
8
*
8
*
3
8
*
4
*
*
*
*
*
4
4
4
2
2
5
5
1
*
1
*
*
*
*
*
2
2
2
4
2
*
*
*
*
*
*
2
2
2
*
*
1
1
2
2
2
1
*
*
2
*
2
*
*
2
2
2
*
2
*
*
*
3
3
2
*
*
*
*
*
*
*
*
*
*
3
3
2
*
*
*
*
*
*
*
*
*
*
# = Number of meetings held during the time the Director held office and was a member of the Committee
* = Not a member of the relevant Committee
(1) Chris Lynch, Geoffrey Cosgriff, Christine O'Reilly and Rodney Slater were not members of the Audit and Risk Committee but attended
meetings during the year. Bob Officer attended a meeting prior to becoming a member.
(2) Lindsay Maxsted, Chris Lynch, Bob Officer and Rodney Slater were not members of the Remuneration Committee but attended meetings
during the year. Neil Chatfield, Samantha Mostyn and Bob Edgar attended meetings prior to becoming members. Chris Lynch was excluded from
discussions involving his remuneration during meetings which he attended.
(3) Chris Lynch, Christine O'Reilly and Ian Smith were not members of the Nomination Committee but attended meetings during the year.
21 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
2012 REMUNERATION REPORT (AUDITED)
INTRODUCTION
This report, prepared in accordance with the Corporations Act 2001, contains detailed information
regarding the remuneration arrangements for the Directors and Senior Executives who are the 'key
management personnel' (KMP) of the Transurban Group (Group).
The KMP for the year ended 30 June 2012 are listed in the table below:
Current Non-executive Directors
Name
Lindsay Maxsted, Chair
Neil Chatfield
Bob Edgar
Samantha Mostyn
Bob Officer
Christine O'Reilly (appointed 12 April 2012)
Rodney Slater
Ian Smith (appointed 1 January 2012)
Current Senior Executives
Name and position
Chris Lynch, Executive Director, CEO1
Ken Daley, President, International Development
Andrew Head, Group General Manager, New South Wales
Samantha Hogg, CFO2
Michael Kulper, President, North America
Elizabeth Mildwater, Group General Manager, Victoria
Former Non-executive Directors
Jeremy Davis (retired 6 December 2011)
Geoff Cosgriff (retired 6 December 2011)
Jennifer Eve (Director of TIL only) (resigned 5 January 2012)
James Keyes (Director of TIL only) (resigned 5 January 2012)
Former Senior Executives
Tom Honan, CFO (resigned 2 May 2012)2
1 On 30 January 2012, Transurban announced Chris Lynch’s intention to resign as CEO, and on 3 April 2012,
Transurban announced the appointment of Scott Charlton as CEO-elect, both with effect
in July 2012.
2 On 2 May 2012, Transurban announced the appointment of Samantha Hogg as CFO following the resignation of Tom
Honan, with immediate effect. Until 2 May 2012, Ms Hogg was Transurban’s Group General Manager, Corporate
Services. Ms Hogg has been a member of KMP for the full financial year.
CONTENTS
The remuneration information contained in this report is presented as follows:
Content
1 Remuneration snapshot
2 Remuneration governance
3 Remuneration in context
4 CEO and Senior Executive remuneration for the year ended 30 June 2012
5 Link between Group performance, security holder wealth and remuneration
6 Non-executive Director remuneration
All values in this report are in Australian dollars, unless otherwise stated.
Page
23
25
26
27
43
45
22 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
1
A
REMUNERATION SNAPSHOT
THE NEW REMUNERATION FRAMEWORK
A new Group remuneration framework was implemented for the year ended 30 June 2012.
Details of the new framework were summarised in the 2011 report, and security holders voted in favour of
the adoption of that report at the 2011 Annual General Meeting (AGM).
The implementation of the new framework followed a comprehensive review by the Board of the Group’s
remuneration arrangements in the year ended 30 June 2011. The review took into account feedback
sought and received from security holders and other stakeholders, market expectations and regulatory
developments.
The key elements of the new framework for the CEO and other Senior Executives were as follows:
Remuneration mix
The remuneration of the CEO and other Senior Executives was structured as a mix of fixed remuneration
and variable or 'at risk' remuneration through short term and long term incentive components.
The relative weightings of the three remuneration components were as follows:
% of total remuneration (annualised) (at target) - 2012 *
Fixed TEC
Variable (performance based)
CEO
Other Senior Executives
33.3
45
STI
33.3**
30**
LTI
33.3
25
* Refer to page 28 for the new CEO's remuneration arrangements. The transition to the remuneration mix for Michael Kulper
and Ken Daley will be achieved by FY2014.
** With 30 per cent STI deferral.
Short term incentive (STI)
In the year ended 30 June 2012, the performance measures for the STI plan were linked to growth in
proportional EBITDA, cost management based on proportional net costs, safety, and performance
against individual KPIs.
In the year ended 30 June 2012, mandatory deferral of 30 per cent of the overall STI award was
introduced for the CEO and other Senior Executives.
The deferral period is three years (comprising the 2012 financial year performance period and a two year
trading restriction). For Australian Senior Executives, deferral is into securities. Due to legal restrictions
on the issue of securities to US residents, US Senior Executives receive deferred cash awards. The
deferred component of remuneration may, at the discretion of the Board, be subject to forfeiture or
clawback (e.g. in the event of misconduct or material misstatement of financial results).
Long term incentive (LTI)
In the year ended 30 June 2012, the performance measures for the LTI plan were as follows:
• 50 per cent relative Total Shareholder Return (TSR) measured against a bespoke comparator group
comprising companies in the transport, utilities, real estate, construction and infrastructure Global
Industry Classification Standards (GICS) sectors of the ASX150; and
• 50 per cent Free Cash Flow (FCF) per security, reflecting the Group's focus on the maximisation of free
cash flow to drive security holder return. The definition of FCF per security is set out on page 36. The
FCF calculation is included in note 21 of the audited financial statements.
23 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
B
OTHER EVENTS/ACTIONS IMPACTING REMUNERATION IN THE YEAR ENDED 30 JUNE 2012
CEO transition
On 30 January 2012, Transurban announced Chris Lynch’s intention to resign as CEO. On 3 April 2012,
Transurban announced the appointment of Scott Charlton as CEO-elect. Mr Charlton became CEO on 16
July 2012.
A summary of Mr Lynch’s entitlements on resignation is set out on page 28. Further details of Mr Lynch’s
resignation arrangements and remuneration details for any part of the year ended 30 June 2013 worked by
Mr Lynch will be set out in the 2013 report.
The remuneration arrangements for Mr Charlton were designed in accordance with the Group’s
remuneration strategy: to ensure alignment of reward with the creation of security holder value and with the
achievement of corporate objectives as determined by the Board. They were developed with the benefit of
input
from remuneration consultants and Australian peer company benchmark data. Mr Charlton’s
remuneration package was disclosed at the time of his appointment as CEO-elect and is outlined on page
28.
CFO transition
On 2 May 2012, Transurban announced Tom Honan’s resignation as CFO and the appointment of
Samantha Hogg to the role with immediate effect. Details of Mr Honan’s entitlements on resignation are set
out on page 29. Details of Ms Hogg’s remuneration are set out elsewhere in this report. Her remuneration
arrangements as CFO were designed in accordance with the Group’s remuneration strategy and were
developed with the benefit of Australian peer company benchmark data.
Legislative changes to executive remuneration
In the year ended 30 June 2012, legislative changes introduced by the Federal Government in relation to
the governance of executive remuneration arrangements came into effect. The legislation in large part
concerns the appointment process for, and recommendations of, independent remuneration advisers.
In response, the Remuneration Committee adopted a protocol governing the appointment of ‘remuneration
consultants’ and the manner in which any recommendations made by those consultants concerning the
remuneration of KMP are to be provided to the Group, and in particular the circumstances in which
management may be given access to those recommendations. The purpose of the protocol is to ensure
that any remuneration recommendations provided by consultants are provided without undue influence by
KMP.
24 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
2
A
REMUNERATION GOVERNANCE
BOARD AND REMUNERATION COMMITTEE RESPONSIBILITY
The Remuneration Committee assists the Board in fulfilling its responsibilities relating to the remuneration
the CEO and other Senior Executives, and
of Directors,
remuneration practices, strategies and disclosures generally. The Committee also reviews gender pay
equity.
the remuneration of, and incentives for,
It is critical that the Remuneration Committee is independent of management when making decisions
affecting employee remuneration. Accordingly, the Committee comprises Non-executive Directors, all of
whom are independent. Where appropriate, members of Management attend Committee meetings by
invitation, however they do not participate in formal decision making.
The membership of the Remuneration Committee changed in the year ended 30 June 2012. Geoff Cosgriff
stood down as Chair and Jeremy Davis stood down as a member of the Committee on their respective
retirement from the Board in December 2011. Bob Edgar was appointed Chair and Samantha Mostyn and
Neil Chatfield joined the Committee as new members. Further details regarding the Committee’s
composition are set out in the Directors’ report.
B
ENGAGEMENT OF REMUNERATION CONSULTANTS
To ensure it has all relevant
the
Remuneration Committee may seek and consider advice from independent remuneration consultants
where appropriate. Any advice from consultants is used to guide the Committee and the Board, but does
not serve as a substitute for thorough consideration of the issues by Directors.
its disposal when making remuneration decisions,
information at
Those consultants who provided the Remuneration Committee with a remuneration recommendation
relating to KMP during the year ended 30 June 2012, and who have been deemed by the Group to be
‘remuneration consultants’ for the purposes of the new executive remuneration legislation, are listed below:
Consultant
Ernst & Young
Remuneration
recommendations and
fees
Other advice and fees to the Group during
FY2012
$26,000
$98,921 (General HR advice)
$455,825 (IT, finance, sustainability assurance work,
tax advice and other general consulting services)
Ernst & Young was selected by the Remuneration Committee and commissioned and instructed by the
Chair of the Committee in accordance with the applicable protocol. Ernst & Young’s appointment terms
specified that all remuneration recommendations and advice be sent directly to the Committee through the
Chair, and prohibited the provision of such material or other information directly to Management. The
terms also required that Ernst & Young provide, with their recommendations, both a
appointment
their independence from the KMP to whom their recommendations related, and also
declaration of
confirmation that
the Committee’s conditions for contact and dialogue with Management had been
observed. Ernst & Young provided such a declaration and confirmation in relation to their remuneration
recommendations. In this way, the Committee and the Board have been assured and are satisfied that
Ernst & Young’s remuneration recommendations and advice were made free from undue influence from
Management generally and from KMP specifically.
25 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
3
REMUNERATION IN CONTEXT
Toll road concessions are an asset class characterised by defensive, predictable cash flows, which grow
over the life of long dated concession agreements. There is high upfront capital expenditure during the
construction phase of a project, which for quality assets shifts to a low cost, high margin cash generative
business for the remainder of the concession life. The investment proposition for high quality toll road
assets lies in providing investors with access to long dated, predictable, growing cash flows generated by
the assets over the life of the concessions.
The Group is an international toll road developer and manager with interests in Australia and the US. The
Group is focused on the long term management of toll road assets at various stages of maturity to achieve
the best outcomes for investors, Government partners and the community. In Australia, the Group's
interests include 100 per cent ownership of CityLink in Melbourne, and Hills M2 and Lane Cove Tunnel in
Sydney. The Group has partial interests in a further three roads on the Sydney orbital network, being the
M1 Eastern Distributor (75.1 per cent), the M5 (50 per cent), and the Westlink M7 (50 per cent). In North
America, the Group has interests in two assets, Pocahontas 895 (75 per cent) and the Capital Beltway
Express (67.5 per cent), which is under construction in Northern Virginia.
The Board and Management are focused on ensuring security holder value is enhanced through the strong
performance of the current asset portfolio. Development activities also provide opportunities to further
expand the portfolio in value accretive ways. The maximisation of free cash available to security holders
over the near, medium and longer term is the Group’s aim and the Group’s remuneration framework has
been determined with a focus on this outcome.
26 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
4
CEO AND SENIOR EXECUTIVE REMUNERATION FOR THE YEAR ENDED 30 JUNE
2012
A
REMUNERATION STRATEGY AND POLICY
The Group's executive remuneration strategy is designed to attract, retain and motivate a highly qualified
and experienced Management team with the necessary skills and attributes to lead the Group in achieving
its business objectives. The strategy also aims to encourage Management
to strive for superior
performance by rewarding the achievement of targets that are challenging, clearly understood and within
the control of individuals to achieve through their own actions. The Group's remuneration strategy and
policy as set by the Board is summarised below:
Creating Security Holder Value
Remuneration Strategy
Attract, retain, motivate and reward executives who are critical to the Group's growth and
success by:
• Offering competitive remuneration that is benchmarked against the external market.
• Providing a balance of fixed and variable or 'at risk' remuneration.
Align executive reward with individual and Group performance by:
• Making short and long term components of remuneration 'at risk' based on performance.
• Assessing rewards against appropriate financial and non-financial performance measures.
• Encouraging executive security holdings.
Fixed remuneration
Total Employment Cost (TEC):
Remuneration Structure
• Comprises cash salary, superannuation and other prescribed benefits.
• Provides a base level of reward for effective completion of Group and specific accountabilities.
• Appropriately benchmarked and set with reference to role, responsibilities, skills and experience.
Variable (or 'at risk') remuneration
Short term incentive (STI):
Annual rewards tied to pre-determined individual and Group performance measures, and includes a
deferred element.
Individual targets reflect individual specific accountabilities and key drivers for growth and success.
•
•
• Group performance targets linked to earnings, cost management and safety.
Long term incentive (LTI):
• Equity rewards to align executive and security holder interests.
•
•
Vest after three years, subject to achievement of pre-determined internal and external performance
measures.
Encourages sustainable performance in the medium to longer term, and provides a retention
element.
27 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
B
CHANGE OF CEO AND CFO - TRANSITION ARRANGEMENTS
On ceasing employment on 30 July 2012, the following arrangements applied to Chris Lynch:
• he will receive an STI award for the year ended 30 June 2012, to be awarded at 116 per cent of his
current TEC based on performance against applicable performance targets (see page 34). The cash
component of the award (70 per cent or $1,764,963) will be paid in August 2012. The deferred (into equity)
component of the award (30 per cent or $756,413) will vest, subject to clawback provisions, on 30 June
2014;
• he is contractually entitled to receive an STI award for the 30 days worked in the year ended 30 June
level payment for the 30 days ($178,652) after satisfying
2013, and will receive a pro rated 'target'
performance targets for the period which related to his role in a successful CEO transition process; The
award will be paid in cash in August 2012;
• equity instruments previously granted to him under the Group’s LTI plans will continue on foot in
accordance with their original terms, with the applicable performance measures for each grant to be tested
at the end of the applicable original performance period;
• as he is contractually entitled to receive an LTI award for every day he is employed by the Group, the
Board determined to pay him $1,060,000 in lieu of an LTI grant earned but not received for a 6 month
period during his tenure. The cash sum will be paid in August 2012;
• as he worked out his notice period, he will not receive any amount in lieu of notice; and
• he will not receive any ex gratia payments on separation.
Details of payments made to Mr Lynch in and for the year ended 30 June 2013 will be set out in the 2013
report.
Incoming CEO - Scott Charlton
Scott Charlton’s appointment as CEO took effect on 16 July 2012. Mr Charlton was not a member of KMP
during the year ended 30 June 2012 and he was paid no remuneration during that year.
As disclosed to the ASX at the time of his appointment, the following arrangements apply to Mr Charlton
under his service agreement in relation to the year ended 30 June 2013.
He is provided with the following elements of remuneration (on an annualised basis):
• Total fixed remuneration (TEC) of $1,875,000; and
• Variable annual remuneration comprised of a STI
target opportunity of 30 per cent of his total
remuneration package ($1,406,250); and an LTI target opportunity of 30 per cent of his total remuneration
package ($1,406,250).
In recognition of Mr Charlton giving up certain STI deferred awards for the years ended 30 June 2011 and
2012 and LTI awards for the years ended 30 June 2010 to 30 June 2012 with his former employer to join
Transurban, he will receive a one-off grant of equity as a sign-on award. The grant will consist of 236,256
performance awards, which will vest in three tranches (of 78,752 each) on the first, second and third
anniversaries of his commencement with Transurban. Each performance award is an entitlement to receive
a fully paid Transurban security on vesting.
Further details of Mr Charlton’s remuneration in his first year as CEO will be set out in the 2013 report.
28 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Outgoing CFO - Tom Honan
On ceasing employment as CFO on 2 May 2012, the following arrangements applied to Tom Honan:
• he received a sum equivalent to 3 months TEC as a payment in lieu of notice ($246,160);
• he was paid a cash sum equivalent to the pro rata vesting of his STI award for the year ended 30 June
2012, calculated based on performance against the applicable performance hurdles during the 10 month
period from the start of the year up until the date his employment ceased ($475,000);
• equity instruments previously granted to him under the Group’s LTI plans lapsed in accordance with their
original terms ($962,416 forfeited); and
• he did not receive any ex gratia payments on separation.
Further details of Mr Honan’s resignation payments can be found on page 40.
C
REMUNERATION MIX
For the year ended 30 June 2012, the remuneration of the CEO and other Senior Executives was
structured as a mix of fixed remuneration and variable (or 'at risk') remuneration through short term and
long term incentive components.
The relative weightings of the three remuneration components were determined by the Board (on the
recommendation of the Remuneration Committee) and are set out in the table below:
Relative weightings of remuneration components 1
% of total remuneration (annualised) (at target) - FY20122
Fixed TEC
Variable (performance based)
CEO
Other Senior Executives
33.3
45
STI (with 30% deferral)
33.3
30
LTI
33.3
25
1These figures do not necessarily reflect the relative value derived from each of the components, which depends on
actual performance against targets for the variable components (refer to page 30). The above STI percentages are
based on achieving the relevant performance targets. The above LTI percentages are based on the maximum LTI
available at the time of grant to each Senior Executive if the awards granted vest at the end of the performance period.
The table above reflects the percentage value of remuneration which consists of rights for each KMP.
2Refer to page 28 for the new CEO's remuneration arrangements. The transition to the remuneration mix for Michael
Kulper and Ken Daley will be achieved over a maximum of three years (or by FY2014).
29 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
D
FIXED REMUNERATION - TOTAL EMPLOYMENT COST (TEC)
What is TEC?
Fixed remuneration is represented by total employment cost
superannuation contributions.
(TEC) comprising base salary and
Fixed remuneration is not 'at risk' but is set by reference to appropriate benchmark information for an
individual’s responsibilities, performance, qualifications and experience.
There are no guaranteed base salary increases in any Senior Executive's employment agreement.
How is TEC determined?
TEC levels are reviewed annually by the Remuneration Committee with reference to an individual’s role,
experience and performance, as well as relevant comparative market data. Independent remuneration
consultants and surveys, internal relativities and market conditions also provide guidance. TEC is also
reviewed on a change in role.
Executives' TEC is determined with reference to the market median. The primary reference for determining
the market median is the ASX 20 - 50. Consideration is given to sizing factors including market
capitalisation and revenue. A range around the median provides flexibility to recognise individual
performance.
E
SHORT TERM INCENTIVE (STI)
How does the STI plan operate?
All permanent Group employees, including the CEO and other Senior Executives, participate in the annual
STI plan.
The STI plan puts a significant proportion of remuneration 'at risk' subject
to meeting specific pre
determined Group, team and individual performance measures linked to business objectives. This aligns
executive interests with the Group's financial performance, as well as management principles and the
Group’s cultural values.
For the year ended 30 June 2012, the CEO had a target STI opportunity of 33 per cent of his total
remuneration package. Other Senior Executives had a target STI opportunity of 30 per cent of their total
remuneration package.
Mandatory STI deferral of 30 per cent of the overall STI award was introduced for the CEO and other
Senior Executives in the year ended 30 June 2012. The deferral period is three years (comprising the 2012
financial year performance period and a two year trading restriction). For Australian Senior Executives,
deferral is into securities. Due to legal restrictions on the issue of securities to US residents, US Senior
Executives receive deferred cash awards. The deferred component of remuneration may, at the discretion
of
in the event of misconduct or the material
misstatement of financial results).
to forfeiture or clawback (e.g.
the Board, be subject
30 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
What were the STI performance measures for the year ended 30 June 2012?
There were two categories of STI performance measures for the CEO and other Senior Executives for the
year ended 30 June 2012. They were chosen to provide a balance between corporate,
individual,
operational, strategic, financial and non-financial aspects of performance and are described below.
STI performance measures and targets for FY2012
Measure
% weighting Description of targets/indicators for FY2012
Group
performance
targets
20%
(1) Growth in proportional EBITDA
The proportional EBITDA targets for FY2012 were set against
the
previous year's results and the Group's FY2012 budget, and are set out
below:
Proportional EBITDA result
Less than 7% above forecast underlying result for
FY2011
7% above forecast underlying result for FY2011
Budget EBITDA for FY2012 (9% increase on
result for FY2011)
17% above forecast underlying result for FY2011 150%
50%
100%
% of STI that vests^
0%
^ Straight line vesting applies between 50-100% and 100-150%.
20%
(2) Cost management based on proportional net costs
The proportional net costs targets for FY2012 were set against
the
previous year's results and the Group's FY2012 budget, and are set out
below:
Proportional net costs result
Over budget for FY2012
On budget for FY2012
5% below budget for FY2012
10% below budget for FY2012
% of STI that vests^
0%
50%
100%
150%
^ Straight line vesting applies between 50-100% and 100-150%.
(3) Safety targets, including multiple indicators that focus on improving the
Group's safety culture and reducing workplace injuries for employees
and contractors.
Individual KPIs are unique to the individual's area of accountability, and
in FY2012 related to critical business sustainability measures, including:
operational performance; cost reduction; customer satisfaction; project
outcomes; succession planning; risk management; people management;
strategy development; and business plan implementation.
Individual KPIs reflect the behaviours valued by the Group, and are
capable of measurement. Individuals have a clear line of sight to KPIs
and are able to directly affect outcomes through action.
10%
50%
Individual
key
performance
indicators
(KPIs)
Who sets the STI performance measures?
STI performance measures are set at the beginning of the financial year. The CEO's individual KPIs are
set by the Board. All other Senior Executives’ individual KPIs are set by the CEO and approved by the
Board. The Board sets the Group performance targets.
31 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
What is proportional EBITDA and why does Transurban use it as an STI performance measure?
EBITDA is a common operational performance measure used by many companies.
Proportional EBITDA is one of
the Board uses to assess the operating
performance of the Group, with an aim to maintain a focus on the Group’s operating results and associated
cash generation. It reflects the contribution from individual assets to the Group's operating performance
and focuses on elements of the result that Management can influence to drive improvements in short term
earnings.
the primary measures that
Proportional EBITDA is the aggregation of EBITDA from each asset multiplied by the Group's percentage
ownership, as well as any contribution from Group functions. Proportional EBITDA provides a better
reflection of the underlying performance of the Group’s assets than statutory EBITDA. The EBITDA
calculation from the statutory accounts would not include the EBITDA contribution of the M5, M7 or DRIVe
(equity accounted in the statutory results), which are meaningful contributors to the Group’s performance.
Proportional EBITDA figures used to assess performance are included in note 2 of the audited financial
statements.
The Board can decide to exclude specific items (including contributions from acquisitions or divestments
made during any one year) from proportional EBITDA to provide an underlying result when determining
performance incentives. There were no such exclusions for the year ended 30 June 2012.
Proportional EBITDA has been used by the Group as an STI performance measure since 2009.
What are proportional net costs and why does Transurban use it as a performance measure?
Proportional net costs are the operating, corporate and business development costs of the Group less non
these non toll revenues encourages and allows
toll revenues (fees and other). The deduction of
Management to incur additional costs where these are justified by increased revenue results (e.g. toll
collection activities such as video tolling and/or enforcement).
The use of a cost related STI performance measure reflects the fact that Management has the ability to
influence the expenditure of the business. Strong cost management throughout the business drives an
increase in proportional EBITDA and free cash flow and ultimately security holder value.
Proportional net costs was first used by the Group as an STI performance measure in 2010.
How are the varying levels of performance achievement rewarded?
STI targets are designed to differentiate and reward high performance. 50 per cent of the available STI
vests for on-target performance, 100 per cent vests for high performance and up to an additional 50 per
cent can be earned for exceptional performance. These targets are consistent for all of the Group’s eligible
employees.
Given that STI awards are contingent on performance across a range of measures, maximum STI awards
can only be achieved for performance that is strong on all measures.
32 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
How is performance assessed?
Performance against
independently reviewed.
the Group performance targets is assessed by the Board. The results are
The CEO's performance against his individual KPIs is assessed by the Remuneration Committee which
then makes recommendations to the Board. The performance of other Senior Executives against their
individual KPIs is assessed by the CEO, who confers with the Committee and then the Board regarding his
assessment.
Once KPIs have been assessed, the Board approves STI awards. STI cash awards for the year ended 30
June 2012 will be paid in August 2012. The STI deferred component for the year ended 30 June 2012 will
vest, subject to continuity of employment (unless otherwise determined by the Board) and clawback
provisions, on 30 June 2014.
The Board believes the method of assessment is rigorous and provides a balanced evaluation of the CEO
and each other Senior Executive's performance.
What if a Senior Executive ceases employment?
Under the service agreements for Senior Executives (other than the CEO - refer to page 28) in place for
the year ended 30 June 2012,
if a Senior Executive ceased employment with the Group before
performance against STI targets was assessd, they would generally not be entitled to receive any STI
award, unless otherwise determined by the Board.
In recognition of Tom Honan’s exceptional contribution to the business during the year ended 30 June
2012, and to facilitate an orderly succession in the CFO role, the Board determined to pay Mr Honan a
sum equivalent to the pro-rata vesting of his STI for that year, calculated based on performance against
the applicable performance measures during the 10 month period from the start of the year up until 2 May
2012, being the date his employment as CFO ceased.
What were the STI performance outcomes for the year ended 30 June 2012?
Group performance in respect of the proportional EBITDA, proportional net costs and safety performance
measures for the year ended 30 June 2012 was assessed by the Board as 97 per cent in Australia and
127 per cent in the US.
33 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
STI awards for the CEO and other Senior Executives for the year ended 30 June 2012 are set out in the
table below:
STI outcome (%)
Actual STI awarded1($)
STI forfeited
(%)
Group
performance
Individual
KPIs
Total
Cash2
Deferred into
equity2
Name
Chris Lynch
Ken Daley
Andrew Head
Samantha Hogg
Tom Honan3
Michael Kulper
Elizabeth Mildwater
112%
127%
97%
97%
97%
127%
97%
120%
110%
120%
90%
100%
120%
95%
116%
119%
109%
94%
83%
124%
96%
1,764,963
354,612
756,413
151,976
297,686
127,580
251,598
475,000
107,828
-
492,765
211,185
263,390
112,882
-
-
-
6%
17%
-
4%
1 On-target performance must be achieved before any STI is awarded. Therefore, the minimum potential value of the
STI in respect of FY2012 was nil. The maximum potential value of the STI was the “Actual STI awarded”.
2 The cash STI payments in respect of FY2012 will be paid in August 2012. The STI deferred component for FY2012
(30 per cent of the actual STI awarded) will vest, subject to continuity of employment (unless otherwise determined by
the Board) and clawback provisions, on 30 June 2014.
3 Tom Honan received an STI pro-rated and awarded based on individual performance and Group performance on his
resignation in May 2012. The Board determined to waive the deferred element of this award and pay it in cash.
F
LONG TERM INCENTIVE (LTI)
How does the LTI plan operate?
The LTI plan aligns reward with security holder value by tying this component of executive remuneration to
the achievement of performance measures that underpin sustainable long term growth.
Participation in the LTI plan is only offered to the CEO and other Senior Executives, and certain other
employees nominated by the CEO and approved by the Board. For the year ended 30 June 2012, the CEO
was offered an LTI grant equivalent to 33 per cent of his total remuneration package. Other Senior
Executives were offered grants equivalent to 25 per cent of their total remuneration package.
LTI grants are delivered in the form of performance awards under the Group’s Performance Awards Plan
(PAP). Each performance award is an entitlement to receive a fully paid Transurban security on terms and
conditions determined by the Board, subject to the achievement of certain vesting conditions linked to
performance over a three year period. If the performance measures are satisfied, the performance awards
vest and Transurban securities are delivered to the participant. Whilst the Board has discretion to grant
cash payments of equivalent value at
the performance period, and certain US based
participants may be required to receive cash settled awards, the Board generally intends to settle any
vested performance awards in Transurban securities.
the end of
Performance awards that do not vest after testing of the performance measures lapse, without retesting.
Performance awards are not transferable and do not carry voting or distribution rights. However securities
allocated upon vesting of performance awards carry the same rights as other Transurban securities.
34 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
What were the LTI performance measures for the year ended 30 June 2012?
Performance awards granted during the year ended 30 June 2012 are subject to a three year performance
period and the following dual performance measures over that period:
LTI performance measures for FY2012
Measure % weighting Description of measure
Relative
TSR
50%
Relative TSR is measured against a bespoke comparator group comprising
companies in the transport, utilities,
real estate, construction and
infrastructure Global Industry Classification Standards (GICS) sectors of the
ASX150. The other 33 companies in this group are:
Singapore Telecommunications Ltd, Telstra Corporation Ltd, Westfield
Group, QR National Ltd, Westfield Retail Trust, Stockland, Leighton
Holdings Ltd, AGL Energy Ltd, MAP Group, GPT Group, Goodman Group,
CFS Retail Property Trust, Lend Lease Group, Asciano Ltd, Qantas Airways
Ltd, Dexus Property Group, Mirvac Group, Telecom Corporation of New
Zealand Ltd, Toll Holdings Ltd, SP Ausnet, APA Group, Commonwealth
Property Office Fund, UGL Ltd, ConnectEast Group, Boart Longyear Ltd,
Investa Office Fund, Spark Infrastructure Group, Charter Hall Office Reit,
Australand Property Group, Monadelphous Group Ltd, Duet Group, TPG
Telecom Ltd and Australian Infrastructure Fund.
TSR measures total return on investment of a security, taking into account
both capital appreciation and distributed income which was reinvested on a
pre-tax basis.
For performance awards granted during the year ended 30 June 2012, the
relative TSR component will vest on a straight line basis if the Group’s
relative TSR performance is above the median of the bespoke comparator
group at the end of a three year performance period, in accordance with the
following table:
TSR vesting schedule:
The Group’s relative TSR ranking in the
comparator group
At or below the 50% percentile
Above the 50th percentile but below the 75th
percentile
At or above the 75th percentile
% of performance
awards that vest
Nil
Straight line vesting
between 50% and 100%
100%
35 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Measure % weighting Description of measure
50%
Growth in
Free Cash
Flow (FCF)
per
security
Within Transurban, FCF per security is defined as:
• the Group's cash flow from operating activities;
• less: cash flows from operating activities of non-100% owned controlled
assets;
• add back: maintenance capital expenditure for 100% owned assets;
• less: accounting charge for maintenance provision for the year;
• less: actual tag expenditure in 100% owned assets;
• add: dividends received from non 100% owned assets;
• divided by: weighted average number of securities issued.
The FCF calculation is included in note 21 of the audited financial statements.
For performance awards granted during the year ended 30 June 2012, the
FCF per security component will vest based on the Group's compound
annual growth in FCF per security over the three year performance period,
as set out below:
Growth in FCF per security vesting schedule:
% compound annual growth in FCF per
security
7%
Between 7% and 10%
10% or more
% of performance
awards that vest
50%
Straight line vesting
between 50% and 100%
100%
For performance awards granted during the year ending 30 June 2013, the
performance target range for compound growth in FCF per security is between
6 per cent and 9 per cent.
Why were these LTI performance measures selected?
The TSR target is a relative, external, market-based performance measure against those companies with
which the Group competes for capital. It provides a direct link between executive reward and security
holder return.
For the year ended 30 June 2012, the Group changed the relative TSR comparator group from the
S&P/ASX 100 to the bespoke comparator group described above. The Group considered this comparator
group to be more reflective of its competitive market.
For the year ended 30 June 2012, the Group also changed the second LTI measure to FCF per security
instead of proportional EBITDA to reflect the Group’s focus on the maximisation of free cash. The FCF
calculation is included in note 21 to the audited financial statements.
36 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
How will the LTI performance targets be measured?
Relative TSR
The Group will receive an independent report that sets out the Group's TSR growth and that of each
company in the bespoke comparator group. A volume weighted average price of securities for the four
weeks up to and including the test date is used in the calculation of TSRs for Transurban and the
comparator group.
The level of TSR growth achieved by the Group will be given a percentile ranking having regard to the
Group’s performance compared to the performance of other companies in the comparator group (the
highest ranking company being ranked at the 100th percentile). This ranking will determine the extent to
which performance awards subject to this target will vest.
FCF per security
The Group's FCF per security percentage growth rate (as set out in note 21 to the audited financial
statements) will be calculated based on the cumulative weighted average over the three year performance
period.
The Board considers these methods of measurement to be rigorous and transparent.
What if a Senior Executive ceases employment?
Under the terms of the service agreements for Senior Executives (other than the CEO - refer to page 28) in
place for the year ended 30 June 2012, if a Senior Executive ceased employment with the Group before
the performance measures were tested, then their unvested performance awards would lapse, unless
otherwise determined by the Board.
On cessation of Tom Honan’s employment on 2 May 2012, Mr Honan forfeited his unvested performance
awards.
What will happen in the event of a change in control?
In the event of a takeover or change of control of the Group, the treatment of any unvested performance
awards granted in the year ended 30 June 2012 will be subject to the incumbent Board's discretion.
What was the grant, and movement in the number and value, of performance awards during the
year ended 30 June 2012?
Performance awards granted in FY2012
Performance criteria
Grant date
Vesting date
Fair value of
awards
at grant date1($)
VWAP at grant
date ($)
Relative TSR
FCF per security
26 Sep 2011
CEO: 11 Nov 2011
26 Sep 2011
CEO: 11 Nov 2011
30 June 2014
30 June 2014
$3.37
$3.27
$4.63
$4.81
$5.35
$5.41
$5.35
$5.41
1 An explanation of the pricing model used to calculate these values is set out in note 35 to the audited financial
statements.
37 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Performance Awards granted in FY2012
Name
Chris Lynch1
Ken Daley
Andrew Head
Samantha Hogg
Tom Honan4
Michael Kulper
Elizabeth Mildwater
Number of performance
awards granted2
Value at grant date ($)
Maximum total value
of grant yet to vest3($)
715,024
128,294
107,766
101,320
171,058
159,286
107,766
2,888,697
2,888,697
513,176
431,064
405,280
684,232
637,144
431,064
513,176
431,064
405,280
684,232
637,144
431,064
1 The grant made to the CEO constituted his full LTI entitlement for FY2012 and was made following security holder
approval at the 2011 AGM on the terms summarised above. Performance awards vest subject to performance over the
period from 1 July 2011 through to 30 June 2014.
2 The grants made to Senior Executives assumed full vesting of their full LTI entitlement for FY2012 and were made on
the terms summarised above. Performance awards actually vest subject to performance over the period from 1 July
2011 through to 30 June 2014.
3 The maximum value of the grant has been estimated based on the fair value per instrument at date of grant. The
minimum total value of the grant, if the applicable performance measures are not met, is nil.
4 Performance awards lapse where the performance measures are not satisfied on testing. As the performance awards
only vest on satisfaction of performance and service conditions which are to be tested in future financial periods, Tom
Honan forfeited 171,058 awards. The value of the forfeited awards was $684,232. No other Senior Executives forfeited
performance awards during the year.
38 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
G
LEGACY LTI PLANS
The Group has a number of
participants. Details of these plans are set out below.
legacy LTI plans that are no longer offered but which have existing
Plan
FY2011 PAP
FY2010 PAP
FY2009 PAP
Grant date
1 Nov 2010
11 Dec 2009
Performance period
1 Nov 2010 -
1 Nov 2013
1 July 2009 -
30 June 2012
1 Nov 2008
1 Nov 2008 -
1 Nov 2011
FY2009 Executive
Equity Plan
1 Nov 2008
1 Nov 2008 -
1 Nov 2011
External
performance
measure (50% of
grant)
Comparator group
Relative TSR
Relative TSR
Relative TSR
N/A
Retention grant with
service condition only
The S&P/ASX 100
Relative TSR
% of performance awards that vest
Vesting schedule
Above 50th percentile to 75th
percentile
Straight line vesting between 50% -
100%
At or above the 75th percentile 100% vests
Internal
performance
measure (50% of
grant)
Group’s annual
growth in
proportional EBITDA
Group’s annual growth
in proportional EBITDA
Group’s annual growth
in proportional EBITDA
From 7% - 11%
From 6% - 9%
From 5% - 9%
Compound growth
% of performance awards that vest
At target %
50% vests
Vesting schedule
From target % to stretch %
Straight line vesting between 50% -
100%
At or above stretch %
100% vests
N/A
N/A
N/A
N/A
Current status
To be tested after
1 Nov 2013
TESTED
100% to vest
on 11 Dec 2012
TESTED
94.72% vested
5.28% lapsed
TESTED
100% vested
Value of performance awards vested and lapsed in the year ended 30 June 2012
The FY2009 Executive Equity Plan and the FY2009 PAP vested on 1 November 2011. Regarding the
FY2009 PAP, 90 per cent of awards subject to the TSR performance measure vested based on the
Group’s ranking against the constituents of the S&P/ASX 100. 99.43 per cent of awards subject to the
proportional EBITDA measure vested based on performance against target. In total 5.28 per cent of
awards lapsed.
39 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
FY2009 Executive Equity Plan
FY2009 PAP
Lapsed
Vested
Lapsed
Vested
Name
Number
Value ($)
Number
Value ($)
Number
Value ($)
Number
Value ($)
C Lynch
T Honan
A Head
E Mildwater
S Hogg
K Daley
M Kulper
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79,647
340,093
25,565
85,701
458,156
1,745,183
85,474
364,974
12,291
41,202
220,267
839,030
19,146
81,753
19,146
81,753
15,316
65,399
19,146
81,753
23,944
102,241
2,458
1,536
1,229
3,549
7,686
8,241
5,150
4,120
44,054
167,807
27,534
104,880
22,027
83,904
11,897
63,602
242,269
25,764
137,736
524,658
H
REMUNERATION PAID TO THE CEO AND OTHER SENIOR EXECUTIVES
Short-term employee benefits
Non-
monetary
benefits2
Cash STI1
Deferred
STI3
Post-
employment
benefits
Termination
benefits
Super
-annuation
Share based
benefits4
Total
Long term
benefits
Long
service
leave
-
456,860
-
227,968
704,498
702,287
2,153,375
2,033,360
Cash salary
and fees
Executive director
C Lynch
2012
2011
Other KMP
B Bourke
2012
2011
K Daley5
2012
2011
M Fletcher
2012
2011
A Head
2012
2011
S Hogg
2012
2011
T Honan6
2012
2011
M Kulper
2012
2011
E Mildwater
2012
2011
Total
2012
2011
6,660,430
6,930,103
1,149,822
976,398
955,653
1,017,385
571,722
541,554
569,468
540,797
555,892
433,494
1,764,963
2,461,680
46,299
18,557
252,138
-
15,775
47,500
-
-
40,812
21,309
3,086,801
2,167,745
7,360,163
6,750,151
-
254,163
354,612
431,438
-
110,656
297,686
323,640
251,598
241,285
475,000
587,250
492,765
573,750
263,390
319,633
-
9,097
-
-
118,030
123,596
50,659
-
-
3,114
2,260
6,232
1,903
5,882
3,951
8,178
-
8,199
2,028
6,311
-
-
42,527
-
35,943
-
-
-
70,395
-
37,627
-
-
58,333
45,813
48,995
-
22,917
22,760
24,243
15,775
25,000
26,775
25,000
9,458
9,800
15,775
25,000
-
958,759
-
-
-
(57,846)
-
1,679,366
-
-
21,983
11,627
594,613
180,209
1,890,208
1,498,152
-
402,234
-
-
-
64,842
-
831,731
-
-
-
-
-
-
-
-
-
-
15,258
25,662
11,492
3,342
347,920
209,779
1,300,133
1,131,110
280,575
173,608
1,153,178
882,611
-
-
(824,365)
761,984
831,183
2,358,810
16,165
19,690
10,015
5,419
1,033,606
400,734
2,578,042
2,029,558
350,916
234,376
1,249,219
1,131,536
3,900,014
5,303,495
174,471
189,166
489,289
-
152,131
286,788
-
1,360,993
115,725
87,049
4,870,066 16,362,126
4,135,431 18,293,025
40 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
1 The amount represents the cash STI payment to the Senior Executive for FY2012, which will be paid in August 2012. The
cash component is 70% of the STI award.
2 Non-monetary benefits include Group insurance, vehicle allowances and expatriate allowances (where relevant).
3 30 per cent of STI award is deferred into equity. In accordance with Accounting Standards, the deferred component will be
recognised over the three year service period from 1 July 2011 to 30 June 2014. The amount recognised in this table is the
FY2012 accounting charge.
4 In accordance with the requirements of the Accounting Standards, remuneration includes a proportion of the fair value of
equity compensation granted or outstanding during the year (i.e. performance awards under the LTI plan). The fair value of
equity instruments is determined as at the grant date and is progressively allocated over the vesting period. The amount
included as remuneration may be different to the benefit (if any) that Senior Executives may ultimately realise should the equity
instruments vest. The fair value of performance awards at the date of their grant has been independently determined in
accordance with AASB 2. The fair value of the performance awards has been valued applying a Monte Carlo simulation to
model Transurban’s security price and where applicable, the TSR performance against the comparator group performance.
The assumptions underpinning these valuations are set out in note 35 to the audited financial statements.
5 Ken Daley’s 2008 PAP allocation was based on his TEC as at November 2008 of $577,500 per year. On 5 December 2008,
his TEC was increased to $750,000 per year effective 1 July 2008. The 2008 PAPs were granted on 15 October 2008. The
Board determined to compensate Ken for the shortfall in his performance awards allocation given that his new TEC was
effective prior to the grant.
6 On ceasing employment as CFO on 2 May 2012, Tom Honan was paid all accrued entitlements owing to him (e.g. earned
but unpaid salary and annual leave), a sum equivalent to the pro-rata vesting of this FY2012 STI ($475,000), and a sum
equivalent to 3 months TEC as payment in lieu of notice ($246,160). He did not receive any ex gratia payments on separation.
I
ADDITIONAL REMUNERATION INFORMATION
EMPLOYEE SECURITY PLANS
The Group has three broad employee based security plans.
ShareLink Incentive Plan
Under the ShareLink Incentive Plan, subject to Board approval, an allocation of Transurban securities or
cash payments may be made to eligible employees (excluding the CEO and other Senior Executives) in
recognition of the Group’s prior year performance.
Eligible employees received a grant of 100 securities at no cost to them on 20 February 2012. Due to legal
restrictions on the issue of securities to US residents, eligible employees in the US received a cash
payment of equivalent value in lieu of securities.
Given that the plan is designed to reward employees for the Group's prior year performance and is not
intended to serve as a future incentive, there are no performance measures attached to grants of securities
or cash payments under the plan.
ShareLink Investment Tax Exempt Plan and ShareLink Investment Tax Deferred Plan
The ShareLink Investment Tax Exempt Plan provides eligible employees (excluding the CEO and other
Senior Executives) the opportunity to invest up to $1,000 per year in Transurban securities on a tax
exempt basis. Participants contribute up to $500 by way of salary sacrifice which is matched by the Group
dollar for dollar. Security acquisitions are made quarterly in September, December, March and June each
year.
The ShareLink Investment Tax Deferred Plan provides eligible employees (excluding the CEO and other
Senior Executives) with the opportunity to contribute up to $5,000 per year by way of salary sacrifice to be
invested in Transurban securities. The Group matches participants’ contributions dollar for dollar up to
$3,000. The plan has a maximum disposal restriction period of three years from the date of acquisition,
including a 12 month forfeiture period.
Grants under both of these plans are designed to encourage employee security holdings and to align the
interests of employees with those of the Group and are therefore not subject to performance measures.
41 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
DEALINGS IN SECURITIES
In accordance with the Group’s Dealing in Securities Policy, employees who have awards under a Group
equity plan may not hedge against those awards. In addition, KMP may not hedge against entitlements
that have vested but remain subject to a holding lock.
Employees and Directors are not permitted to obtain margin loans using Transurban securities (either
solely or as part of a portfolio) as security for loans.
SERVICE AGREEMENTS
The remuneration and other terms of employment for the CEO and other Senior Executives are formalised
in service agreements which have no specified term.
Chris Lynch's service agreement included an entitlement to participate in the Group’s STI and LTI plans (or
equivalent cash plan). Scott Charlton and other Senior Executives are eligible to participate in the STI and
LTI plans (or equivalent cash plans for US executives).
Some key aspects of the agreements in place in the year ended 30 June 2012 are outlined below:
CEO
Other Senior Executives
Period of notice to
terminate
(executives)
Period of notice to
terminate
(the Group*)
6 months
3 months
12 months
6 months
* Payment in lieu of the notice period may be provided (based on the executive's fixed remuneration). The Group may
also terminate at any time without notice for serious misconduct.
42 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
5
LINK BETWEEN GROUP PERFORMANCE, SECURITY HOLDER WEALTH AND
REMUNERATION
The variable or 'at risk' remuneration of the CEO and other Senior Executives is linked to the Group’s
performance through the use of measures based on the operating performance of the business.
A
GROUP PERFORMANCE AND STI
For the year ended 30 June 2012, 20 per cent of the Senior Executive STIs were determined with
reference to proportional EBITDA, 20 per cent with reference to proportional net costs, and 10 per cent
with reference to safety as discussed on page 31.
Proportional EBITDA
The underlying proportional EBITDA result for the year ended 30 June 2012 was $784.0 million, a 9.1 per
cent increase from the prior year result. This resulted in the payment of 93.4 per cent of STI's attributable
to proportional EBITDA. The proportional EBITDA result was driven by the Group's continued focus on cost
control and the performance of the asset portfolio. This result was delivered despite significant disruption
caused by construction on Sydney’s Hills M2 Motorway.
Proportional net costs
The underlying proportional net costs result for the year ended 30 June 2012 was $159.9 million, a 7.2 per
cent improvement from the prior year result. This resulted in the payment of 149.6 per cent of STI's
attributable to proportional net costs. Importantly, the Group’s continued focus on proportional net costs
resulted in a cost decrease across operational, corporate and business development areas (when taking
into account the impact of volume based cost increases).
Safety
For the year ended 30 June 2012, the safety performance measure resulted in a zero STI payment for
Senior Executives based in Australia, and 150 per cent for Senior Executives based in the US. The safety
KPI target included several components as discussed on page 31 of which a reduction in recordable injury
frequency rate was one. Strong results were attained for some aspects of the Australian safety measure,
however other areas did not meet all targets.
B
GROUP PERFORMANCE AND LTI
For the year ended 30 June 2012, LTIs were linked to relative TSR and, for the first time, FCF per security
(see pages 35 and 36).
Relative TSR
The relative TSR for the year ended 30 June 2012 is calculated on a bespoke comparator group from the
ASX150 (see page 35).
FCF per security
The performance target range for compound growth in FCF per security of between 7 per cent and 10 per
that reflects the Group’s focus on the
cent over three years is considered an appropriate target
maximisation of free cash to drive security holder return. For performance awards granted during the year
ending 30 June 2013, the performance target range for compound growth in FCF per security is between 6
per cent and 9 per cent.
The table below summarises the Group’s five year results for the relevant performance measures. These
results show that since the year ended 30 June 2009, Transurban’s distribution policy has been to pay out
100 per cent (rounded) of FCF per security. Since that time, Transurban has delivered consistent growth
on this measure based on consistent revenue and EBITDA growth. Based on investor feedback, this
remains Transurban’s financial focus.
43 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Group Performance1
Measure
Security price at year end
Distribution paid per
security
Underlying proportional
EBITDA - $m
TSR performance2
FCF per security
performance - weighted
average
2012
$5.69
29.5c
784.0
15%
2011
$5.23
27.0c
718.7
2010
$4.24
24.0c
2009
$4.18
2008
$4.23
22.0c
57.0c*
635.4
583.3
523.0
32%
10%
2%
(41%)
29.8c
27.5c
27.4c
22.2c
26.0c
* Distributions made under a previous distribution policy no longer applied by the Group.
1 For FY2012, LTIs were linked to relative TSR and FCF per security. In prior years, LTIs were linked to relative TSR
and proportional EBITDA.
2 The TSR performance is the total security holder return for that financial year.
44 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
6
A
NON-EXECUTIVE DIRECTOR REMUNERATION
REMUNERATION POLICY
The diagram below sets out the key objectives of the Group’s Non-executive Director remuneration policy
and how they are implemented through the Group’s remuneration framework:
Securing and retaining talented,
qualified Directors
Preserving independence and
impartiality
Aligning Director and security
holder interests
Director fee levels are set with
regards to: the responsibilities
and risks attached to the role, the
time commitment expected and
the workload, Director experience
and expertise, and market
benchmark data provided by
independent remuneration
consultants.
Director remuneration consists
of base (Director) fees and
Committee fees.
No element of Director
remuneration is 'at risk' - that is,
fees are not based on the
performance of the Group or
individual Directors from year to
year.
Directors are encouraged to
hold Transurban securities.
B
REMUNERATION ARRANGEMENTS
Maximum aggregate remuneration
The amount of aggregate remuneration that may be paid to Non-executive Directors in any year is capped
at a level approved by security holders. The current aggregate fee pool of $2,400,000 per year (inclusive of
superannuation contributions) was approved by security holders at the 2010 AGM. No change to this
amount is proposed for the year ending 30 June 2013.
The aggregate fee pool and the manner in which it is apportioned amongst Non-executive Directors is
reviewed annually. The Remuneration Committee undertakes this review and makes recommendations to
the Board. In conducting the review, the Committee considers market benchmark data from independent
remuneration consultants.
2012 Non-executive Director fees
A review of Non-executive Director fees was undertaken during the year ended 30 June 2012, and it was
determined that there be no increase in fees. Non-executive Director fees were last increased in January
2010.
Current base (Director) fees and Committee fees per year are set out below:
Board
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Chair fee $
455,000
40,000
10,000
25,000
Member fee $
170,000
20,000
10,000
20,000
The Chair of the Board does not receive any additional fees for his Committee responsibilities.
45 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Non-executive Directors are permitted to be paid additional fees for special duties or exertions. No such
fees were paid during the year ended 30 June 2012. Non-executive Directors are also entitled to be
reimbursed for all business related expenses, including travel, as may be incurred in the discharge of their
duties.
Retirement benefits
No current Non-executive Directors are entitled to any retirement benefits.
In September 2005,
the Board resolved to discontinue previously provided retirement benefits for
Non-executive Directors with effect from 30 September 2005. The value of benefits accrued up to that date
attracted interest at the statutory fringe benefits rate. Accrued ‘frozen’ retirement benefits plus interest were
paid to Geoff Cosgriff and Jeremy Davis on their retirement from the Board on 6 December 2011.
The following table details the retirement benefits paid and expensed in the years ended 30 June 2012 and
30 June 2011.
Geoff Cosgriff
Jeremy Davis
FY2012 $
251,028 (paid)
418,186 (paid)
FY2011 $
16,301 (accrued)
27,155 (accrued)
ShareLink Investment Tax Deferred Plan
Under the ShareLink Investment Tax Deferred Plan, Non-executive Directors are able to sacrifice up to 50
per cent of their pre tax fees to acquire up to $5,000 of Transurban securities per year. No securities were
issued to Non-executive Directors under the plan for the year ended 30 June 2012.
46 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
C
REMUNERATION PAID TO NON-EXECUTIVE DIRECTORS
Details of Non-executive Directors’ remuneration for the years ended 30 June 2012 and 30 June 2011 are
set out below:
Short-term benefits
Post-employment benefits
Total
Fees
Superannuation1
Retirement
benefits2,3
34,225
-
176,047
141,066
207,114
196,552
176,047
93,996
439,411
394,593
207,631
199,828
Current Non-executive Directors
Lindsay Maxsted
2012
2011
Neil Chatfield
2012
2011
Bob Edgar
2012
2011
Samantha Mostyn
2012
2011
Bob Officer
2012
2011
Christine O'Reilly (appointed 12 April 2012)
2012
2011
Rodney Slater
173,720
2012
155,268
2011
Ian Smith (appointed 1 January 2012)
77,983
2012
2011
-
Former Non-executive Directors
Geoff Cosgriff (resigned 6 December 2011)
2012
2011
Jeremy Davis (resigned 6 December 2011)
2012
2011
David Ryan (resigned 12 August 2010)
2012
2011
Jennifer Eve (resigned 5 January 2012)
2012
2011
James Keyes (resigned 5 January 2012)
2012
2011
Total
2012
2011
1,717,908
1,747,043
81,778
188,153
69,903
201,920
-
49,199
25,793
34,984
48,256
91,484
15,775
35,513
15,775
17,985
15,775
17,690
15,398
8,460
15,398
12,696
3,080
-
-
-
7,018
-
7,044
16,934
25,648
27,750
-
4,428
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
251,028
16,301
418,186
27,155
-
-
-
-
-
-
455,186
430,106
223,406
217,813
222,889
214,242
191,445
102,456
191,445
153,762
37,305
-
173,720
155,268
85,001
-
339,850
221,388
513,737
256,825
-
53,627
48,256
91,484
25,793
34,984
120,911
141,456
669,214
43,456
2,508,0333
1,931,955
1 Superannuation contributions made on behalf of Non-executive Directors to satisfy the Group’s obligations under
applicable superannuation guarantee legislation.
2 Amounts represent contractual retirement benefits paid (in the year ended 30 June 2012) and provided for (in the year
end 30 June 2011) for two former Non-executive Directors. No current Non-executive Directors are entitled to any
retirement benefits.
3 Retirement benefits are excluded from the amount of aggregate remuneration that may be paid to Non-executive
Directors in any year.
47 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(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 CFO (services less than $5,000) or the Chair of the Audit and Risk
Committee (in all other cases).
The Board 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
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.
impact
the
During the year the following fees were paid or payable for audit and non-audit services provided by the auditor
of THL, 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
Total remuneration for PricewaterhouseCoopers
Total auditors' remuneration
30 June
2012
$
30 June
2011
$
1,100,000
189,300
1,289,300
1,091,000
69,887
1,160,887
1,289,300
1,160,887
Indemnification and insurance
Each officer (including each Director) of the Group is indemnified, to the maximum extent permitted by law,
against any liabilities incurred as an officer of the Group pursuant to agreements with the Group. Each officer is
also indemnified against
incurred in relation to relevant
reasonable costs (whether
proceedings in which the officer is involved because the officer is or was an officer.
legal or otherwise)
The Group 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.
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 50.
48 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Directors' report
30 June 2012
(continued)
Rounding of amounts
The Group 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.
Lindsay Maxsted
Director
Scott Charlton
Director
Melbourne
7 August 2012
49 TRANSURBAN ANNUAL REPORT 2012
50 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited ABN 86 098 143 429
Annual report - 30 June 2012
Contents
Financial statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members
Page
52
53
54
55
56
57
137
138
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 and the United States of America. Transurban Holdings Limited's
registered office and principal place of business is:
Level 3
505 Little Collins Street
Melbourne VIC 3000
The financial report was authorised for issue by the Directors on 7 August 2012. The Directors have 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
51 TRANSURBAN ANNUAL REPORT 2012
Revenue
Toll, fee and other road revenue
Construction revenue
Business development and other revenue
Road operating costs
Corporate costs
Business development costs
Construction costs
Profit before depreciation and amortisation, net finance costs, equity
accounted investments and income taxes
Depreciation and amortisation expense
Finance income
Finance costs
Net finance costs
Share of net losses of equity accounted investments
Profit / (loss) before income tax
Income tax benefit
Profit for the year
Profit is attributable to:
Ordinary equity holders of the stapled group
Non-controlling interests
Transurban Holdings Limited
Consolidated income statement
For the year ended 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
3
4
5
9
6
846,196
286,258
22,030
1,154,484
799,217
220,015
17,284
1,036,516
(186,134)
(31,602)
(19,591)
(280,222)
(517,549)
(160,396)
(39,117)
(13,070)
(220,015)
(432,598)
636,935
603,918
(301,641)
(289,435)
157,030
(367,024)
(209,994)
270,757
(456,270)
(185,513)
(137,946)
(20,198)
(12,646)
108,772
71,204
58,558
54,905
3,653
58,558
9,386
118,158
112,467
5,691
118,158
Cents
Cents
Earnings per security attributable to ordinary equity holders of the
stapled group:
Basic earnings per stapled security
Diluted earnings per stapled security
33
33
3.8
3.8
7.8
7.8
The above consolidated income statement should be read in conjunction with the accompanying notes.
52 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Consolidated statement of comprehensive income
For the year ended 30 June 2012
Profit for the year
Other comprehensive income
Changes in the fair value of cash flow hedges, net of tax
Exchange differences on translation of foreign operations, net of tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Owners of Transurban Holdings Limited
Non-controlling interests
30 June
2012
$'000
30 June
2011
$'000
58,558
118,158
(210,773)
12,980
(197,793)
(17,216)
(7,613)
(24,829)
(139,235)
93,329
119,618
(258,853)
(139,235)
110,722
(17,393)
93,329
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
53 TRANSURBAN ANNUAL REPORT 2012
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total current assets
Non-current assets
Equity accounted investments
Held to maturity investments
Derivative financial instruments
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
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Derivative financial instruments
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
(Accumulated losses)
Non-controlling interest - Transurban International Limited
Non-controlling interests
Total equity
Transurban Holdings Limited
Consolidated balance sheet
As at 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
7
8
11
9
10
11
12
13
14
15
16
11
17
18
16
13
17
11
18
19
20
20
318,148
78,420
-
396,568
411,880
217,560
1,065
630,505
335,190
791,392
137
191,964
12,551
8,174,115
9,505,349
524,834
724,225
55,238
177,548
12,899
8,278,281
9,773,025
9,901,917
10,403,530
110,103
-
1,315
8,510
293,485
73,251
486,664
221,363
202,870
136,431
13,706
296,586
89,622
960,578
4,489,397
687,287
193,755
504,016
53,673
5,928,128
4,035,817
843,846
262,573
255,711
52,654
5,450,601
6,414,792
6,411,179
3,487,125
3,992,351
7,847,912
(138,340)
(4,232,045)
(148,505)
158,103
3,487,125
7,772,117
26,461
(4,085,426)
104,041
175,158
3,992,351
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
54 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Consolidated statement of changes in equity
For the year ended 30 June 2012
Attributable to members of Transurban Holdings
Limited
Contributed
equity
$'000
Reserves
$'000
Accumulated
losses
$'000
Notes
Total
$'000
Non-
controlling
interests
$'000
Total equity
$'000
Balance at 1 July 2010
7,656,383
52,594
(3,836,959)
3,872,018
304,491
4,176,509
Comprehensive income
Profit (loss) for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in
their capacity as owners:
Treasury securities
Distribution reinvestment plan
Distributions provided for or paid
Distributions to non-controlling
interest
Changes in value of share-based
payment reserve
19
19
20
20
-
-
-
-
(30,193)
(30,193)
140,915
-
140,915
140,915
(30,193)
110,722
(22,757)
5,364
(17,393)
118,158
(24,829)
93,329
91
115,831
-
-
-
-
-
-
-
-
(389,463)
91
115,831
(389,463)
12
8,719
-
103
124,550
(389,463)
-
-
(17,226)
(17,226)
(188)
115,734
4,060
4,060
81
(389,382)
3,953
(269,588)
596
(7,899)
4,549
(277,487)
Balance at 30 June 2011
7,772,117
26,461
(4,085,426)
3,713,152
279,199
3,992,351
Balance at 1 July 2011
7,772,117
26,461
(4,085,426)
3,713,152
279,199
3,992,351
Comprehensive income
Profit (loss) for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in
their capacity as owners:
Treasury securities
Distribution reinvestment plan
Distributions provided for or paid
Distributions to non-controlling
interest
Changes in value of share-based
payment reserve
19
19
20
20
-
-
-
-
(162,813)
(162,813)
282,431
-
282,431
282,431
(162,813)
119,618
(223,873)
(34,980)
(258,853)
58,558
(197,793)
(139,235)
1,433
72,961
-
-
-
-
-
-
-
-
(429,203)
1,433
72,961
(429,203)
207
3,040
-
1,640
76,001
(429,203)
-
-
(13,610)
(13,610)
1,401
75,795
(1,988)
(1,988)
153
(429,050)
(434)
(355,243)
(385)
(10,748)
(819)
(365,991)
Balance at 30 June 2012
7,847,912
(138,340)
(4,232,045)
3,477,527
9,598
3,487,125
Non-controlling interests include Transurban International Limited and other non-controlling interests outside of
the Group.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
55 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Consolidated statement of cash flows
For the year ended 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
945,544
(340,656)
(27,731)
34,078
229,786
(421,841)
(45,937)
373,243
(6,975)
(18,271)
(262,306)
(41,832)
53,500
(275,884)
912,781
(338,579)
(18,429)
24,869
217,598
(380,900)
(42,649)
374,691
-
(29,356)
(797,733)
(36,617)
41,000
(822,706)
1,606,050
(1,445,870)
-
(336,549)
(14,891)
(191,260)
1,067,641
(639,130)
103
(232,577)
(15,542)
180,495
(93,901)
(267,520)
411,880
169
318,148
681,259
(1,859)
411,880
31
21
7
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Payments for maintenance of intangible assets
Other revenue
Interest received
Interest paid
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for held-to-maturity investments, net of fees
Payments for equity accounted investments
Payments for intangible assets
Payments for property, plant and equipment
Distributions received from equity accounted investments
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings, net of costs
Repayment of borrowings
Proceeds from sale of treasury securities, net of costs
Dividends and distributions paid to the Group's security holders
Distributions paid to non-controlling interests
Net cash (outflow) inflow from financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of the year
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
56 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
Contents of the notes to the consolidated financial statements
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
Summary of significant accounting policies
Segment information
Revenue
Expenses
Net finance costs
Income tax benefit
Current assets - Cash and cash equivalents
Current assets - Trade and other receivables
Equity accounted investments
Non-current assets - Held to maturity investments
Derivative financial instruments
Non-current assets - Property, plant and equipment
Deferred tax assets and liabilities
Non-current assets - Intangible assets
Current liabilities - Trade and other payables
Borrowings
Provisions
Other liabilities
Contributed equity
Reserves and accumulated losses
Distributions
Remuneration of auditors
Contingencies
Intra-group Guarantees
Commitments
Related party transactions
Subsidiaries
Parent entity financial information
Deed of cross guarantee
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
Earnings per stapled security
Net tangible asset backing
Share-based payments
Key management personnel disclosures
Critical accounting estimates and judgements
Financial risk management
Page
58
73
80
80
81
82
83
84
85
88
89
91
92
93
95
96
100
101
103
105
107
109
110
110
111
112
114
116
117
119
119
119
120
121
121
125
130
131
57 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
These general purpose financial statements have 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.
The Transurban Group financial statements have been prepared as an aggregation of the financial statements of
Transurban Holdings Limited (THL) and controlled entities, Transurban International Limited (TIL) and controlled
entities and Transurban Holding Trust (THT) and controlled entities, 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 principles 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.
The Group’s current liabilities exceed its current assets by $90.1 million as at 30 June 2012. The financial report
has been prepared on a going concern basis, which contemplates the continuity of normal operations, as the
Group is trading profitably and has continually been able to refinance maturing debt. In addition, at 30 June 2012
the Group has available a total of $398.2 million of undrawn borrowing facilities.
Where necessary, comparatives have been reclassified for consistency with current year disclosures.
Compliance with IFRS
The consolidated financial statements of Transurban Holdings Limited also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
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).
Rounding of amounts
The Group 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 statements. Amounts in the financial
statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in
certain cases, to the nearest dollar.
(b) Principles of consolidation
Subsidiaries
Subsidiaries are all 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
de-consolidated from the date that control ceases.
is transferred to the Group. They are
58 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(b) Principles of consolidation (continued)
Subsidiaries (continued)
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 Group except as otherwise indicated.
The acquisition method of accounting is used to account for business combinations by the Group (refer to note
1(h)).
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
income statement, statement of comprehensive income, balance sheet and statement of changes in equity
respectively.
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 9).
Investments in associates are accounted for using the equity method of accounting, after initially being
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. When the
Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint
venture, the Group does not recognise further losses. Dividends received from associates and joint ventures
reduce the carrying amount of the investment.
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 was 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 of TIL to be treated and disclosed as non-controlling
interest.
Changes in ownership interest
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions
with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or
received is recognised in a separate reserve within equity.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Executive Officer (the chief operating decision maker) and the Executive Committee, who report to the Chief
Executive Officer (CEO).
(d) Foreign currency translation
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is Transurban Holdings
Limited's functional and presentation currency.
59 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(d) Foreign currency translation (continued)
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 consolidated income statement, 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.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at
fair value are reported as part of
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 and translation differences on non-monetary assets such as
equities classified as available-for-sale financial assets are recognised in the fair value reserve in equity.
the fair value gain or loss. For example,
Foreign operations
The results and financial position of all of the Group entities 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 in other comprehensive income.
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.
(e) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Revenue is recognised for the major business activities as follows:
60 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(e) Revenue recognition (continued)
•
•
•
•
Toll and fee revenue - Toll charges and related fees are recognised when the charge is incurred by the
user.
Business development revenue - Business development revenue is recognised when earned, and to the
extent of costs incurred and that these costs will be recovered.
Interest income - Interest income is recognised using the effective interest rate method.
Construction revenue - During the construction phase of service concession infrastructure assets, the
Group records an intangible asset representing the right to charge users of the infrastructure and
recognises revenue from the construction of the infrastructure. Revenue and expenses associated with
construction contracts are recognised in accordance with the percentage of completion method.
(f)
Income tax
The income tax expense or benefit for the period is the tax payable or benefit 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.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of
the reporting period in the countries where the Group operates and generates taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
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 foreign operations where the Group 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 is recognised in the income statement, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
Investment allowances
Companies within the Group may be entitled to claim special tax deductions for investments in qualifying assets
(investment allowances). The Group accounts for such allowances as tax credits, which means that
the
allowance reduces income tax payable and current
is recognised for
unclaimed tax credits that are carried forward as tax losses.
tax expense. A deferred tax asset
61 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(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 taxpayer within
the tax consolidated group.
(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 25). Payments made under operating leases (net of any
incentives received from the lessor) are charged to the consolidated income statement 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 acquisition method of accounting is used to account for all business combinations, including business
combinations involving entities or businesses under common control, regardless of whether equity instruments
or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair
values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The
consideration transferred also includes the fair value of any contingent consideration arrangement and the fair
value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition
basis,
the
non-controlling interest's proportionate share of the acquiree's net identifiable assets.
the Group recognises any non-controlling interest
in the acquiree either at
fair value or at
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group's share
of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the
net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in income statement as a bargain purchase.
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.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in the income statement.
62 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(i)
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 an estimate of the 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 through the income statement. The decrement in the carrying amount is
recognised as an expense in the income statement 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. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
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 the purpose of presentation in the consolidated statement of cash flows, 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.
(k)
Investments and other financial assets
Classification
The Group classifies its investments and other financial assets 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 and other financial assets were
acquired. The classification of the Group's investments and other financial assets are determined at initial
recognition and, in the case of assets classified as held-to-maturity, is re-evaluated at the end of each reporting
period.
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 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 consolidated balance sheet.
63 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(k)
Investments and other financial assets (continued)
Loans and receivables (continued)
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.
Collectability 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 impairment 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. The amount of the impairment allowance is recognised in the income statement.
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 the investment matures or management intends to dispose of the investment within 12
months of the end of the reporting period.
Recognition and derecognition
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
other comprehensive income are reclassified to profit or loss 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 or 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 or loss is
recognised in the income statements as part of revenue from continuing operations when the Group's right to
receive payments is established.
64 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(k)
Investments and other financial assets (continued)
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset or a 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 the income statement - is reclassified from equity and recognised in
the income statement as a reclassification adjustment. Impairment losses recognised in the income statement on
equity instruments classified as available-for-sale are not reversed through the income statement.
(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 the end of each reporting period. 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);
hedges of a particular risk associated with 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 11.
Movements in the hedging reserve in shareholders' equity are shown in note 20. 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. The treatment of derivatives is as follows:
Fair value hedges
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 statement.
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.
Cash flow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss
relating to the ineffective portion is recognised immediately in the income statement.
65 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(l) Derivatives and hedging activities (continued)
Cash flow hedges (continued)
Amounts accumulated in equity are reclassified to 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.
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 statement.
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 other
comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion
is recognised immediately in the income statement.
Gains and losses accumulated in equity are included in the income statement when the foreign operation is
partially disposed of or sold.
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 statement.
(m) Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. 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.
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).
66 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(n) Intangible assets
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. For details of concession
agreement dates refer to note 14.
Where work is in progress, it is classified as assets under construction.
Goodwill
Goodwill is measured as described in note 1(h). Goodwill on acquisitions of businesses 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.
(o) Financial liabilities
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.
Concession and promissory notes
The Group has non-interest bearing long term debt, represented by Concession and Promissory Notes, payable
to the government, measured at the net present value of expected future payments.
(p) 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 consolidated income statement 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 the income statement as finance 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 period.
67 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(q) 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.
(r) 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 discounted to the present value of management's best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. 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 discount unwinding over the passage of time is recognised as a finance cost.
Provision for maintenance
As part of its obligations under the service concession arrangements, 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 to present value if the impact is material. The increase in the provision due to the discount
unwinding over the passage of time is recognised as a finance cost.
Provision for distribution
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 reporting period but not distributed at the end of the
reporting period.
(s) Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and short-term incentives, and
long service leave expected to be settled within 12 months after the end of the period, are recognised in respect
of employees' services up to the reporting date. They are measured at the amounts expected to be paid when
the liabilities are settled. The liability for annual leave and short-term incentives, and long service leave expected
to be settled within 12 months of the reporting date is recognised in the provision for employee benefits. All other
short-term employee benefit obligations are presented as payables. An expense for non-accumulating sick leave
is recognised when the leave is taken and measured at the rates paid or payable.
Long-term employee benefit obligations
The liability for long service leave which is not expected to be settled within 12 months after the end of the period
is recognised in the provision for employee benefits. It is 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.
68 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(s) Employee benefits (continued)
Equity-based compensation benefits
Equity-based compensation benefits have been provided to some employees.
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 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 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 to providing termination benefits as a result of an
offer made to encourage voluntary redundancy.
(t) Contributed equity
Stapled securities are classified as equity.
Incremental costs directly attributable to the issue of new stapled securities are shown in equity as a deduction,
net of tax, from the proceeds.
If the Group reacquires its own securities, those securities are deducted from equity. 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.
(u) Parent entity financial information
The financial
prepared on the same basis as the consolidated financial statements, except as set out below.
information for the parent entity, Transurban Holdings Limited, disclosed in note 28 has been
69 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(u) Parent entity financial information (continued)
Investments in subsidiaries and associates
Investments in subsidiaries and associates are accounted for at cost in the financial statements of Transurban
Holdings Limited. Dividends received from associates are recognised in the parent entity's profit or loss, rather
than being deducted from the carrying amount of these investments.
Tax consolidation legislation
Transurban Holdings Limited and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation effective 1 July 2005.
The head entity, Transurban Holdings Limited, and the controlled entities in the tax consolidated group account
for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax
consolidated group is a separate taxpayer 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.
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.
(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) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2012 reporting periods. The Group's assessment of the impact of these new standards and interpretations is set
out below.
(i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from
AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9
(December 2010) (effective from 1 January 2013*)
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets
and financial liabilities. The standard is not applicable until 1 January 2013* but is available for early adoption.
Management are in the process of assessing the impact on financial assets but do not believe this will be
significant.
There will be no impact on the Group's accounting for financial liabilities, as the new requirements only affect the
accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not
have any such liabilities. The Group has not yet decided when to adopt AASB 9.
70 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(w) New accounting standards and interpretations (continued)
(i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from
AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9
(December 2010) (effective from 1 January 2013) (continued)
* In December 2011, the IASB delayed the application date of IFRS 9 to 1 January 2015. The AASB is expected
to make an equivalent amendment to AASB 9 shortly.
(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests
in Other Entities, revised AASB 127 Separate Financial Statements and AASB 128 Investments in
Associates and Joint Ventures and AASB 2011-7 Amendments to Australian Accounting Standards arising
from the Consolidation and Joint Arrangements Standards (effective 1 January 2013)
In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for
joint arrangements, consolidated financial statements and associated disclosures.
AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate
Financial Statements, and Interpretation 112 Consolidation - Special Purpose Entities. The core principle that a
consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains
unchanged, as do the mechanics of consolidation. However the standard introduces a single definition of control
that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns
before control is present. Power is the current ability to direct the activities that significantly influence returns.
Returns must vary and can be positive, negative or both. Management are currently assessing the impact but do
not believe it will be significant.
AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on
the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the
joint arrangement. AASB 11 also provides guidance for parties that participate in joint arrangements but do not
share joint control. This will not impact the Group as it does not have any such arrangements.
AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and
AASB 11, and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of
this standard by the Group will not affect any of the amounts recognised in the financial statements, but will
impact the type of information disclosed in relation to the Group's investments.
Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not
remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and
vice versa. The amendments also introduce a 'partial disposal' concept. The Group is still assessing the impact
of these amendments.
The Group does not expect to adopt the new standards before their operative date.
(iii) AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to
Australian Accounting Standards arising from Reduced Disclosure Requirements (effective from 1 July 2013)
On 30 June 2010 the AASB officially introduced a revised differential reporting framework in Australia. Under this
framework, a two-tier differential reporting regime applies to all entities that prepare general purpose financial
statements. Transurban Holdings Limited is listed on the ASX and is therefore not eligible to adopt the new
Australian Accounting Standards - Reduced Disclosure Requirements. The two standards will have no impact on
the financial statements of the Group.
71 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(w) New accounting standards and interpretations (continued)
(iv) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards
arising from AASB 13 (effective 1 January 2013)
AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value
disclosures. The Group has yet to determine which, if any, of its current measurement techniques will have to
change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on
any of the amounts recognised in the financial statements. However, application of the new standard will impact
the type of information disclosed in the notes to the consolidated financial statements. The Group does not
intend to adopt the new standard before its operative date.
(v) AASB 2011-9 Amendments to Australian Accounting Standards - Presentation of Items of Other
Comprehensive Income (effective 1 July 2012)
In September 2011, the AASB made an amendment to AASB 101 Presentation of Financial Statements which
requires entities to separate items presented in other comprehensive income into two groups, based on whether
they may be recycled to profit or loss in the future. This will not affect the measurement of any of the items
recognised in the balance sheet or the profit or loss in the current period. The Group intends to adopt the new
standard from 1 July 2012.
(vi) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management
Personnel Disclosure Requirements (effective 1 July 2013)
In July 2011 the AASB decided to remove the individual key management personnel (KMP) disclosure
requirements from AASB 124 Related Party Disclosures, to achieve consistency with the international equivalent
standard and remove a duplication of the requirements with the Corporations Act 2001. While this will reduce the
disclosures that are currently required in the notes to the financial statements, it will not affect any of the
amounts recognised in the financial statements. The amendments apply from 1 July 2013 and cannot be
adopted early. The Corporations Act requirements in relation to remuneration reports will remain unchanged for
now, but these requirements are currently subject to review and may also be revised in the near future.
72 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
2 Segment information
Description of segments
It has been determined that the operating segments based on information provided to the CEO and Executive
Committee is by geographical region, being Victoria and New South Wales in Australia and the USA.
The Group operates in one business sector only, being the development, operation and maintenance of toll
roads. The CEO and Executive Committee therefore consider the business from the perspective of locations.
The following assets are included in the operating segments:
Segment
Victoria, Australia
Assets
CityLink
New South Wales, Australia
Hills M2 Motorway
Lane Cove Tunnel
75.1 per cent interest in the M1 Eastern Distributor
Equity investments in the M5 Motorway (50.0 per cent) and Westlink M7 (50.0
per cent)
75.0 per cent interest in Transurban DRIVe. Transurban DRIVe holds 100.0
per cent of Pocahontas 895 and 90.0 per cent of Capital Beltway Express
USA
The tolling businesses of Roam and Tollaust have also been included in the NSW operating segment as they are
managed together with each of the assets and contribute tolling services to all NSW assets.
The USA segment does not meet the quantitative thresholds to be reported as an operating segment in
accordance with AASB 8. However management have concluded that this segment should be reported as it is
closely monitored as an emerging market with development opportunities.
The Group's corporate function is not an operating segment under the requirements of AASB 8 as its revenue
generating activities are only incidental to the business. Management have aggregated and disclosed the
corporate business units as the contribution to the business is closely monitored.
The operating segments have been further broken down by asset to assist with external analysis of the financial
statements.
Segment information - Proportional Income Statement
The CEO and Executive Committee assesses the performance of the operating segments based on a measure
of underlying proportional EBITDA. EBITDA excludes the impact of interest income and expense which have
been presented by segment where applicable. Interest income and expense are allocated across segments
where the charges are related specifically to the assets. Otherwise they have been allocated to the Corporate
function.
The segment information provided to the Executive Committee is presented on a proportional basis. The
information for the reportable segments for the year ended 30 June 2012 and 30 June 2011 is detailed in the
following tables.
73 TRANSURBAN ANNUAL REPORT 2012
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Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
2 Segment information (continued)
Other segment information - Proportional income statement
Proportional basis of presenting results
The CEO and the Executive Committee receive information for assessing the business on an underlying
proportional basis reflecting the contribution of
individual assets in the proportion of Transurban's equity
ownership.
The Group's proportional EBITDA result reflects business performance and permits a more appropriate and
meaningful analysis of the Group's underlying performance on a comparative basis. This method of presentation
differs from the statutory accounting format and has been reconciled below.
EBITDA is earnings before interest, taxation, depreciation and amortisation.
Segment revenue
Revenue from external customers is through toll and fee revenues earned on toll roads. There are no
inter-segment revenues.
Segment revenue reconciles to total statutory revenue as follows:
Total segment revenue (proportional)
Add: Revenue attributable to non-controlling interest
Less: Revenue of non-controlled assets
Construction revenue recognised in accordance with AASB-I 12 Service
Concession Arrangements
Business development revenue (offset against business development costs for
proportional result)
Other
Total revenue (note 3)
30 June
2012
$'000
30 June
2011
$'000
1,047,180
972,969
25,022
(208,737)
25,682
(196,515)
265,535
212,659
19,550
5,934
1,154,484
16,255
5,466
1,036,516
Interest revenue
Interest revenue is earned through infrastructure bonds, bank interest revenue and term loan note interest
received.
Interest revenue reconciles to total statutory finance income as follows:
Total segment interest revenue (proportional)
Add: Interest revenue attributable to non-controlling interest
Less: Interest revenue of non-controlled assets
Total statutory finance income (note 5)
30 June
2012
$'000
30 June
2011
$'000
148,471
232,572
13,207
(4,648)
157,030
42,672
(4,487)
270,757
76 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
2 Segment information (continued)
Other segment information - Proportional income statement (continued)
Reconciliation of proportional EBITDA to statutory profit for the year
Proportional EBITDA reconciles to statutory net profit as follows:
Proportional EBITDA
Add: Proportional EBITDA attributable to non-controlling interest
Less: Proportional EBITDA of M5
Less: Proportional EBITDA of M7
Less: Proportional EBITDA of Pocahontas
Less: Proportional EBITDA of Other Transurban DRIVe
Statutory profit before depreciation and amortisation, net finance costs,
equity accounted investments and tax
Statutory net finance costs
Statutory depreciation and amortisation
Share of net losses of equity accounted investments
Income tax benefit
Profit for the year
30 June
2012
$'000
30 June
2011
$'000
783,984
737,309
16,909
(82,276)
(78,656)
(6,981)
3,955
18,645
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(74,658)
(6,321)
4,114
636,935
603,918
(209,994)
(301,641)
(137,946)
71,204
58,558
(185,513)
(289,435)
(20,198)
9,386
118,158
One off items
The exclusion of certain items in the Group's results permits a more appropriate and meaningful analysis of the
Group's underlying performance on a comparative basis.
One off items are:
M4 handback provision and reversal of contingent liability recognised on
acquisition
30 June
2012
$'000
30 June
2011
$'000
-
-
18,625
18,625
77 TRANSURBAN ANNUAL REPORT 2012
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79 TRANSURBAN ANNUAL REPORT 2012
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3 Revenue
Toll revenue
Fee revenue
Other road revenue
Total toll, fee and other road revenue
Construction revenue
Business development revenue
Other revenue
Total business development and other revenue
Total revenue
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
Notes
3(a)
3(a)
3(b)
3(c)
3(d)
30 June
2012
$'000
30 June
2011
$'000
765,431
61,782
18,983
846,196
724,130
56,693
18,394
799,217
286,258
220,015
19,550
2,480
22,030
16,255
1,029
17,284
1,154,484
1,036,516
Toll and fee revenue
(a)
Toll revenue and associated fees are recognised when the charge is incurred by the user.
Other road revenue
(b)
Other road revenue includes advertising, rental and other associated revenue.
Construction revenue
(c)
Construction revenue is recognised during the construction phase of an intangible asset, and the development of
assets for sale to third parties.
Business development revenue
(d)
Business development revenue relates to the provision of development services to third parties.
4 Expenses
Profit before income tax includes the following specific
expenses:
Provision for impairment of trade receivables recognised during the year
Rental expenses relating to operating leases
Employee benefit expense
Defined contribution superannuation expense
Share based payment expense
30 June
2012
$'000
30 June
2011
$'000
829
4,157
86,035
4,229
3,131
1,089
4,828
88,262
4,889
4,581
80 TRANSURBAN ANNUAL REPORT 2012
4 Expenses (continued)
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
30 June
2012
$'000
30 June
2011
$'000
Provision for maintenance recognised during the year
18,945
14,748
M4 handback provision and reversal of contingent liability recognised on
acquisition
-
(18,625)
Concession fees (road operating cost) are attributable to:
Hills M2 Motorway
M1 Eastern Distributor
Depreciation and amortisation expense
Road operating cost
Corporate cost
5 Net finance costs
Finance income
Interest income on infrastructure bonds *
Interest income on held to maturity investments
Interest income on bank deposits
Total finance income
Finance costs
Interest and finance charges paid/payable
Interest charges paid/payable on infrastructure bonds *
Unwind of discount on liabilities
Net foreign exchange losses
Total finance costs
Net finance costs
(*) - The M1 Eastern Distributor infrastructure bonds matured in August 2011.
30 June
2012
$'000
30 June
2011
$'000
1,476
1,722
3,198
287,073
14,568
301,641
1,280
1,689
2,969
285,008
4,427
289,435
30 June
2012
$'000
30 June
2011
$'000
50,129
91,341
15,560
157,030
(338,286)
(16,757)
(11,911)
(70)
(367,024)
168,403
84,565
17,789
270,757
(324,899)
(113,546)
(17,156)
(669)
(456,270)
(209,994)
(185,513)
81 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
6 Income tax benefit
Income tax benefit
Current tax
Deferred tax
Under (over) provision in prior years
Deferred income tax (benefit) expense included in income tax benefit comprises:
(Increase) decrease in deferred tax assets (note 13)
(Decrease) increase in deferred tax liabilities (note 13)
Numerical reconciliation of income tax benefit to prima facie tax payable
Profit (loss) before income tax benefit
Tax at the Australian tax rate of 30% (2011 - 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
Sundry items
Under (over) provision in prior years
Income tax benefit
Tax expense (income) relating to items of other comprehensive income
Cash flow hedges (note 20)
Foreign currency translation (note 20)
30 June
2012
$'000
30 June
2011
$'000
54,793
(111,748)
(14,249)
(71,204)
(49,544)
(62,204)
(111,748)
31,084
(47,973)
7,503
(9,386)
(81,669)
33,696
(47,973)
30 June
2012
$'000
30 June
2011
$'000
(12,646)
108,772
(3,794)
32,632
(102,688)
6,349
5,027
41,383
(3,232)
(56,955)
(14,249)
(71,204)
(93,123)
5,094
34,064
6,059
(1,615)
(16,889)
7,503
(9,386)
83,850
(99,386)
(43,823)
192
(43,631)
(12,560)
(432)
(12,992)
82 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
6 Income tax benefit (continued)
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.
7 Current assets - Cash and cash equivalents
Cash at bank and in hand
All cash balances are interest bearing.
Funds not for general use
30 June
2012
$'000
30 June
2011
$'000
318,148
318,148
411,880
411,880
The amount shown in Cash at Bank includes $68.0 million not available for general use at 30 June 2012 (2011:
$77.8 million). This comprises amounts required to be held under maintenance and funding reserves, and
prepaid tolls, which are restricted from general use.
83 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
8 Current assets - Trade and other receivables
Trade receivables
Provision for impairment of receivables
Infrastructure bond interest receivable
Other receivables
Prepayments
30 June
2012
$'000
30 June
2011
$'000
36,440
(973)
35,467
-
37,103
5,850
78,420
31,817
(1,185)
30,632
149,370
32,204
5,354
217,560
Provision for impaired trade and other receivables
As at 30 June 2012 current trade receivables of the Group with a nominal value of $973,000 (2011: $1,185,000)
were considered impaired and accordingly the Group held a provision for impairment of $973,000 (2011:
$1,185,000). As at 30 June 2012, trade receivables of $9,783,000 (2011: $2,097,000) were past due but not
impaired.
The ageing of these receivables is as follows:
For the year ended 30 June 2012
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
For the year ended 30 June 2011
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
Impaired
$'000
25,684
9,194
491
88
10
35,467
Not Impaired
$'000
Impaired
$'000
Allowance for
Doubtful
Debts
$'000
265
66
50
54
538
973
265
66
50
54
538
973
Allowance for
Doubtful
Debts
$'000
28,535
1,617
327
52
101
30,632
732
22
114
42
275
1,185
732
22
114
42
275
1,185
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.
84 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
8 Current assets - Trade and other receivables (continued)
Provision for impaired trade and other receivables (continued)
Movements in the provision for impairment of receivables are as follows:
At 1 July
Provision for impairment recognised during the year
Receivables written off during the year as uncollectable
At 30 June
30 June
2012
$'000
30 June
2011
$'000
1,185
829
(1,041)
973
579
1,089
(483)
1,185
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 it is sent to a government enforcement authority and the customers are
issued an external fine. These authorities use the full extent of the law to recover the amounts and then pass on
an amount collected back to the Group. This is recognised in ‘other revenue’.
9 Equity accounted investments
Name of company
Westlink M7:
WSO Co Pty Limited
Westlink Motorway Limited
WSO Finance Pty Limited
Westlink Motorway Partnership
Interlink Roads Pty Ltd (M5 Motorway)
Transurban DRIVe Holdings LLC (Transurban DRIVe)
Ownership
interest
30 June
2012
%
30 June
2011
%
Carrying amounts
30 June
2012
$'000
30 June
2011
$'000
50
50
50
50
50
75
50
50
50
50
50
75
-
-
-
-
-
-
-
-
335,190
383,890
-
335,190
140,944
524,834
Summarised financial information of equity accounted investments
Ownership
Interest %
Assets
$'000
Liabilities
$'000
Revenues
$'000
Profit (loss)
$'000
Group's share of:
2012
Westlink M7
M5 Motorway
Transurban DRIVe
50
50
75
994,356
654,094
1,344,261
2,992,711
(1,520,435)
(318,904)
(1,374,961)
(3,214,300)
101,548
96,334
10,855
208,737
(71,086)
4,800
(249,269)
(315,555)
85 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
9 Equity accounted investments (continued)
Summarised financial information of equity accounted investments (continued)
2011
Westlink M7
M5 Motorway
Transurban DRIVe
Movement in carrying
amounts
Carrying amount 1 July
Investments in associates
Share of profits / (losses )
after tax
Distributions received
Movement in exchange
rate
Movement in reserves
Carrying amount at 30
June
Share of profits or losses
Profit/(loss) before tax
Income tax
(expense)/benefit
Shares of losses not
recognised
Balance at 1 July
Unrecognised losses for
the year
Balance at 30 June
Share of expenditure
commitments
Capital commitments
Operating commitments
Contingent liabilities
Share of contingent
liabilities incurred jointly
with other investors
50
50
75
997,769
682,555
1,376,446
3,056,770
(1,404,116)
(298,665)
(1,235,502)
(2,938,283)
96,544
89,135
10,837
196,516
(70,236)
(3,857)
(16,341)
(90,434)
Westlink M7
M5 Motorway
Transurban DRIVe
Total
30 June
2012
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2011
$'000
-
-
-
-
-
-
-
-
-
-
- 383,890
-
50
428,747 140,944
17,586
-
170,712 524,834
17,636
28,103
599,459
28,103
-
-
-
-
4,750
(53,500)
(3,857) (142,696)
-
(41,000)
(16,341) (137,946)
(53,500)
-
(20,198)
(41,000)
-
-
-
-
24,162
(39,996)
(52,957)
11,427
24,162
(39,996)
(52,957)
11,427
- 335,190
383,890
-
140,944 335,190
524,834
-
-
-
19,404
11,417 (191,707)
(22,664) (172,303)
(11,247)
(14,654)
4,750
(15,274)
49,011
(3,857) (142,696)
6,323
34,357
(16,341) (137,946)
(8,951)
(20,198)
341,496
271,260
71,086
412,582
70,236
341,496
-
-
-
-
-
- 341,496
271,260
- 106,573
- 106,573
- 177,659
- 519,155
70,236
341,496
-
204,657
204,657
- 133,112
191,045
-
191,045 133,112
604
64,387
- 186,554
604 250,941
323,835 197,499
143,657 391,211
467,492 588,710
324,439
334,702
659,141
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
86 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
9 Equity accounted investments (continued)
Westlink M7
Transurban owns a 50 per cent interest in the Westlink Group which holds the concession to design, construct,
finance and operate the Westlink M7 Motorway in Sydney for a period of 34 years until February 2037. All were
incorporated in Australia.
WSO Co Pty Limited is the operator of the Motorway.
Westlink Motorway Limited is the nominee manager of the Westlink Motorway Partnership.
WSO Finance Pty Limited is the financier of the Motorway.
Westlink Motorway Partnership was responsible for the construction of the Motorway. The Motorway opened for
operation on 16 December 2005.
The Motorway 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 M7.
M5 Motorway
Transurban holds a 50 per cent ownership interest 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 December
2026 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 (Electronic Toll Collection) 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.
87 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
9 Equity accounted investments (continued)
Transurban DRIVe
Transurban owns 75 per cent of Transurban DRIVe Holdings LLC (DRIVe). Whilst Transurban ownership
represents greater than half of the voting rights of DRIVe, it does not have power to govern its financial, investing
and operating policies and accordingly accounts for DRIVe as an associate.
A Meeting of Members of DRIVe is required to make decisions in relation to such areas as the legal and financial
structure of DRIVe, including distribution policies. 80 per cent or more of the membership interests of those
voting is required to pass a decision of the Meeting of Members. Key decisions relating to the operations and
financing of DRIVe, such as approval to bid for or dispose of an investment and approval of budgets, are made
by the Investment and Management Review Committee (IMRC). IMRC decisions also require an affirmative vote
by all current members.
DRIVe owns 100 per cent of Pocahontas 895 and 90 per cent of Capital Beltway Express, both in Virginia, USA.
Pocahontas 895 is a 99 year concession ending in June 2105. Tolls are 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.
In June 2012, after a detailed review of traffic operating forecasts for Pocahontas 895, it was necessary to
reduce the carrying value of the asset based on revised lower revenue forecasts. This resulted in a proportional
impairment charge of $302.5 million (see note 2) and an equity accounting charge for the year ended 30 June
2012 of $138.1 million within the Transurban Group. As noted above there are further additional unrecognised
losses of $106.6 million within the Transurban Group.
10 Non-current assets - Held to maturity investments
Term loan notes
M5 debt notes
(a) Term loan notes
Notes
10(a)
10(b)
30 June
2012
$'000
30 June
2011
$'000
782,667
8,725
791,392
724,225
-
724,225
Term Loan Notes (TLN's) represent Transurban's debt funding contribution to Westlink M7. 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 Maritime Services (RMS) (formally known as 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 2012 the Group capitalised interest of $58.4 million (2011: $46.2 million).
(b) M5 debt notes
The M5 debt notes are Transurban’s debt funding contribution to the M5 West Widening Project. The fixed
maturity date of the notes is 10 years after financial close of the Project. The interest rate charged on these
notes is fixed at 5.0 per cent for the first three years following financial close.
88 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
10 Non-current assets - Held to maturity investments (continued)
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.
11 Derivative financial instruments
Current assets
Interest rate swap contracts - cash flow hedges
Non-current assets
Interest rate swap contracts - cash flow hedges
Cross-currency interest rate swap contracts - cash flow hedges
Forwards exchange contracts - cash flow hedges
Total derivative financial instrument assets
Current liabilities
Interest rate swap contracts - cash flow hedges
Forward exchange contracts - cash flow hedges
Non-current liabilities
Interest rate swap contracts - cash flow hedges
Cross-currency interest rate swap contracts - cash flow hedges
30 June
2012
$'000
30 June
2011
$'000
-
-
70
-
67
137
137
1,201
114
1,315
279,422
224,594
504,016
1,065
1,065
15,361
39,877
-
55,238
56,303
754
135,677
136,431
69,404
186,307
255,711
Total derivative financial instrument liabilities
505,331
392,142
Instruments used by the Group
instruments in the normal course of business in order to hedge
The Group is party to derivative financial
exposure to fluctuations in interest and foreign exchange rates in accordance with the Group financial risk
management policies (refer to note 38).
The instruments used by the Group are as follows:
89 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
11 Derivative financial instruments (continued)
Instruments used by the Group (continued)
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 interest rate of 5.0 per cent (2011: 6.2 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 99 per cent (2011: 99 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 7.1 per cent (2011: 7.0 per cent).
Forward exchange contracts - cash flow hedges
In order to protect against exchange rate movements, the Group currently uses forward exchange contracts to
hedge a portion of the US Private Placement interest (Nov 06 - Tranche C).
The contracts that were in existence in the prior year were settled in November 2011. The Group raised fixed
U.S. dollar debt through a US private placement in November 2006. This placement was structured to be capital
accretive for five years, with hedging to commence in November 2011. These contract were used to hedge the
initial settlement of the cross -currency interest rate swap contracts which commenced in November 2011.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is
recognised in other comprehensive income.
Cross-currency interest rate 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.
90 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
12 Non-current assets - Property, plant and equipment
Equipment,
fittings and
operating
systems
$'000
284,285
(138,232)
146,053
146,053
44,308
(1,121)
(11,560)
(132)
177,548
319,675
(142,127)
177,548
177,548
36,616
(1,085)
(21,163)
48
191,964
352,392
(160,428)
191,964
At 1 July 2010
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2011
Opening net book amount
Additions
Disposals
Depreciation charge
Movement in foreign exchange rates
Closing net book amount
At 30 June 2011
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2012
Opening net book amount
Additions
Disposals
Depreciation charge
Movement in foreign exchange rates
Closing net book amount
At 30 June 2012
Cost
Accumulated depreciation
Net book amount
91 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
13 Deferred tax assets and liabilities
Assets
Liabilities
Net
30 June
2012
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2011
$'000
1,384
78,777
531,913
8,027
9,460
-
11,478
-
2,218
74,619
459,883
19,494
6,813
-
27,488
-
-
-
-
-
(992,585)
(1,413)
(12,621)
(6,165)
-
-
-
-
(1,013,821)
(46,119)
(13,862)
(9,986)
513
125,658
1,599
768,809
(756,258)
12,551
-
112,979
2,261
(336,817)
(93,944)
-
705,755 (1,443,545)
(692,856)
756,258
12,899
(687,287)
(327,826)
(125,088)
-
(1,536,702)
692,856
(843,846)
1,384
78,777
531,913
8,027
(983,125)
(1,413)
(1,143)
(6,165)
(336,304)
31,714
1,599
(674,736)
-
(674,736)
2,218
74,619
459,883
19,494
(1,007,008)
(46,119)
13,626
(9,986)
(327,826)
(12,109)
2,261
(830,947)
-
(830,947)
705,755
553,631 (1,536,702)
(1,443,042)
(830,947)
(889,411)
49,544
12,678
832
768,809
81,669
73,701
(3,246)
62,204
30,953
-
705,755 (1,443,545)
(33,696)
(60,709)
745
(1,536,702)
111,748
43,631
832
(674,736)
47,973
12,992
(2,501)
(830,947)
768,809
768,809
705,755 (1,443,545)
705,755 (1,443,545)
(1,536,702)
(1,536,702)
(674,736)
(674,736)
(830,947)
(830,947)
The balance comprises
temporary differences
attributable to:
Accrued expenses
Provisions
Current and prior year losses
Unearned income
Fixed Assets/Intangibles
Interest receivable
Unrealised gain
Prepayments
Concession fees and promissory
notes
Cash flow hedges
Other
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
Movements:
Opening balance at 1 July
Credited/(charged) to the income
statement
Credited/(charged) to equity
Foreign exchange movements
Closing balance at 30 June
Deferred tax assets/(liabilities) to
be recovered after more than 12
months
The set off of deferred tax assets and liabilities relates to deferred tax balances for Australian domiciled entities
that are levied tax by the Australian Taxation Office, and separately, the deferred tax balances for United States
domiciled entities that are levied tax by the Internal Revenue Service.
92 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
14 Non-current assets - Intangible assets
Goodwill
$'000
CityLink
$'000
Hills M2
Motorway
$'000
M1 Eastern
Distributor
$'000
M4
Motorway
$'000
Lane Cove
Tunnel
$'000
Assets
under
construction
$'000
Total
$'000
At 1 July 2010
Cost
Accumulated
amortisation
Net book amount
Year ended 30 June 2011
Opening net book
amount
Additions
Transfers
Amortisation charge
Closing net book amount
At 30 June 2011
Cost
Accumulated
amortisation
Net book amount
260,288
4,489,001 2,517,866 2,153,780
178,788
-
260,288
(1,302,003)
(171,602)
(452,836)
3,186,998 2,065,030 1,982,178
(176,314)
2,474
-
-
-
181,651
9,781,374
-
181,651
(2,102,755)
7,678,619
260,288
-
-
-
260,288
3,186,998 2,065,030 1,982,178
51,611
-
-
139,368
-
-
(52,050)
(64,340)
(139,140)
3,238,837 2,000,690 1,930,128
2,474
-
-
(501)
1,973
-
648,068
-
(21,844)
626,224
181,651
177,858
(139,368)
-
220,141
7,678,619
877,537
-
(277,875)
8,278,281
260,288
4,679,980 2,517,866 2,153,780
178,788
648,068
220,141 10,658,911
-
260,288
(1,441,143)
(223,652)
(517,176)
3,238,837 2,000,690 1,930,128
(176,815)
1,973
(21,844)
626,224
-
220,141
(2,380,630)
8,278,281
Year ended 30 June 2012
Opening net book
amount
Additions
Other adjustments (note
17)
Transfers
Amortisation charge
Closing net book amount
260,288
-
-
-
-
260,288
3,238,837 2,000,690 1,930,128
-
-
-
-
-
(89,227)
-
-
64,180
(139,158)
(52,049)
(64,427)
3,074,632 1,936,263 1,878,079
1,973
-
-
-
(307)
1,666
626,224
-
-
-
(24,533)
601,691
220,141
265,535
8,278,281
265,535
-
(64,180)
-
421,496
(89,227)
-
(280,474)
8,174,115
At 30 June 2012
Cost
Accumulated
amortisation
Net book amount
Goodwill
260,288
4,654,933 2,517,866 2,153,780
178,788
648,068
421,496 10,835,219
-
260,288
(1,580,301)
(275,701)
(581,603)
3,074,632 1,936,263 1,878,079
(177,122)
1,666
(46,377)
601,691
-
421,496
(2,661,104)
8,174,115
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, M4 Motorway and Lane Cove Tunnel Service Concession
Arrangements have been accounted for in accordance with AASB-I 12 and therefore the concession assets have
been classified as Intangible Assets.
93 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
14 Non-current assets - Intangible assets (continued)
Concession assets (continued)
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 per cent (equivalent to an annual escalation rate of 4.5 per
cent) for the first 15 years then quarterly by CPI, but no greater than annual CPI plus 2.5 per cent. At the end of
the concession period, all concession assets are to be returned to the Victorian State Government.
During the year $64.2 million of assets under construction were transferred to the CityLink concession asset,
representing the completed components of the CityLink Upgrade. The provision for contingent consideration
associated with M1 Citylink upgrade (see note 17) was reviewed at 30 June 2012. This resulted in a decrease in
the provision and a corresponding adjustment to the intangible asset.
Hills M2 concession asset
Transurban has the right
Transurban to maintain the Motorway.
to toll
the Hills M2 Motorway until 2046. The Concession Deed also requires
Toll increases for the 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 per cent, 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
Transurban has the right to toll the M1 Eastern Distributor (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 per cent 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
Transurban held an investment of 50.61 per cent in the M4 Motorway in Sydney via the concessionaire,
Statewide Roads Limited. The M4 Motorway opened in 1992 and was handed back to the NSW State
Government on 15 February 2010.
The Group continues to operate and maintain the service centres located on the M4 Motorway.
Lane Cove Tunnel
Transurban has the right to toll the Lane Cove Tunnel until January 2037.
Toll increases for the Lane Cove Tunnel are based on a theoretical toll increase as defined in the Concession
Deed, being a quarterly escalation of CPI, subject to the nearest whole cent rounding. At the end of the
concession period, all concession assets will be returned to the NSW State Government.
Assets under construction
The Group is currently undertaking upgrade works on CityLink and the Hills M2 Motorway. Construction on the
M2 Upgrade commenced in January 2011. These will be transferred to the respective intangible assets upon
completion. During the year completed works of $64.2 million were transferred to the CityLink concession asset.
94 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
14 Non-current assets - Intangible assets (continued)
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 note 1(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 calculating the recoverable amount
The Group makes assumptions in calculating the recoverable amount 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 ranging from 8.8 to 11.0 per cent (2011: 8.8 to 11.0 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.
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 (2011: 2.5 per cent) and AWE of 4.0 per cent (2011: 4.0 per cent) have been used.
In determining future cash flows,
15 Current liabilities - Trade and other payables
Trade payables and accruals
Infrastructure bond interest payable
30 June
2012
$'000
30 June
2011
$'000
110,103
-
110,103
109,821
111,542
221,363
95 TRANSURBAN ANNUAL REPORT 2012
16 Borrowings
Current
Infrastructure facilities
Less: Infrastructure facility cash reserve
Capital Markets debt
Non-current
Working capital facilities
Capital Markets debt
Term debt
U.S. Private Placement
Syndicated facility
Total borrowings
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
Notes
16(a)
16(a)
16(b)
16(c)
16(b)
16(d)
16(e)
16(f)
30 June
2012
$'000
30 June
2011
$'000
-
-
-
-
1,292,301
(1,292,301)
202,870
202,870
58,355
1,276,478
1,412,849
1,142,963
598,752
4,489,397
37,383
1,037,377
1,286,769
1,074,951
599,337
4,035,817
4,489,397
4,238,687
Description of borrowings - 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
The infrastructure facility was repaid in August 2011. The facility was certified by the Development Allowance
Authority to qualify for concessional tax treatment under the Income Tax Legislation. The bonds were secured by
an infrastructure facility cash reserve equal to the amount of the loan which was set off against the loan facility.
(b) Capital markets debt
These facilities comprise the following:
•
•
•
$600.0 million credit wrapped floating rate bonds raised in November 2005 with terms of 10 years
($300.0 million) and 12 years ($300.0 million) with interest currently payable at 4.0 per cent at 30 June
2012. These facilities are fully hedged with all-in rates of 7.4 and 5.0 per cent respectively.
$250.0 million non-credit wrapped fixed rate bonds raised in March 2010 with a term of four years.
Interest is payable at 7.3 per cent.
$200.0 million non-credit wrapped fixed rate bonds raised in June 2011 with a term of five years.
Interest is payable at 6.8 per cent.
The above facilities have deferred borrowing costs of $10.7 million. These facilities are secured by a first ranking
charge over the cash flows of the Group.
The Group also established a US $2 billion secured EMTN program in October 2011. Under the program the
Group may from time to time issue notes denominated in any currency.
The Group issued the following notes under the program during the year:
96 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
16 Borrowings (continued)
(b) Capital markets debt (continued)
•
$239.1 million of Canadian dollar denominated ($250.0m CAD) secured fixed rate medium term notes
raised in March 2012 with a term of seven years. Interest is payable at 3.4 per cent. This facility is fully
hedged with an all-in rate after hedging of 6.7 per cent.
The EMTN facility has deferred borrowing costs of $1.9 million. This facility is secured by a first ranking charge
over the cash flows of the Group.
(c) Working capital facilities
The Group has the following facilities in place:
•
•
•
•
•
$110.0 million facility which is for a term of three years, maturing December 2013. At 30 June 2012,
$59.7million of the facility was drawn.
$110.0 million facility which is for a term of three years, maturing December 2013. At 30 June 2012,
the facility was undrawn.
$100.0 million facility which is for a term of three years, maturing April 2013. At 30 June 2012, the
facility was undrawn.
$100.0 million facility which is for a term of three years, maturing August 2014. At 30 June 2012, the
facility was undrawn.
$30.0 million facility which is for a term of three years, maturing June 2013. At 30 June 2012, the
facility was undrawn.
These facilities are secured by a first ranking charge over the cash flows of the Group. The facilities have
deferred borrowing costs of $1.3 million.
(d) Term debt
The term debt facilities are comprised of:
•
•
•
$520.0 million facility entered into by AMT Management Limited (as trustee for Airport Motorway
Trust). The facility has deferred borrowing costs of $4.4 million.
$740.0 million facility entered into by Hills Motorway Management Limited (as trustee for Hills
Motorway Trust). The facility has deferred borrowing costs of $6.5 million.
$260.0 million facility entered into by LCT-MRE Nominees Pty Limited (as trustee for LCT-MRE Trust).
The facility has deferred borrowing costs of $0.9 million.
The Airport Motorway facility was refinanced in July 2011 and is fully secured against the respective rights of
Airport Motorway Limited and Airport Motorway Trust and their assets. The facility is a $520.0 million
non-recourse syndicated facility with terms of three years ($295.0 million) and seven years ($225.0 million). The
current floating interest rate applicable to the facility is 3.5 per cent (2011: 4.9 per cent). These facilities are
currently 99 per cent hedged to an all-in rate after hedging of 7.0 per cent.
The Hills M2 facility was refinanced in November 2010 and is fully secured against the respective rights of Hills
Motorway Limited and Hills Motorway Trust and their assets. The facility is a non-recourse syndicated facility
totalling $740.0 million. The financing comprised: the refinancing of $465.0 million of existing debt with terms of
four years ($400.0 million), and six years ($65.0 million); and a new construction capex facility of $275.0 million
with a term of six years. As at 30 June 2012, $179.7 million was drawn under the construction capex facility. The
total facility is currently 98.3 per cent hedged with an all-in rate after hedging of 7.1 per cent.
97 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
16 Borrowings (continued)
(d) Term debt (continued)
The Lane Cove Tunnel facility was established in August 2010 to partially finance the acquisition of the Lane
Cove Tunnel and is fully secured against the respective rights of LCT-MRE Pty Limited and LCT-MRE Trust and
their assets. This facility is a non-recourse syndicated facility with a term of three years. The current floating rate
applicable to the facility is 3.6 per cent (2011: 4.9 per cent). The facility is currently fully hedged to an all-in rate
after hedging of 7.0 per cent.
(e) 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%
4.1%
USD
$'000
100,000
38,900
108,600
98,000
125,500
156,500
56,980
181,534
162,220
67,392
1,095,626
AUD
$'000
Maturity
98,126 Dec 2014
38,171 Dec 2016
106,564 Dec 2019
96,163 Aug 2015
123,148 Aug 2017
153,567 Aug 2020
55,912 Nov 2016
178,132 Nov 2018
159,179 Nov 2021
66,129 Nov 2026
1,075,091
72,000 Dec 2019
72,000
1,147,091
(4,128)
1,142,963
Note that the Dec 04 - Tranche D facility is fully hedged with an all in rate after hedging of 6.7 per cent.
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 Holdings LLC acts as a natural hedge against exposure to
foreign currency movements in a portion of
the US Private Placement (Nov 06 - Tranche C). Exchange
differences arising on the revaluation of the USD debt are recognised in profit or loss in the separate financial
In the consolidated financial report, such exchange
report of Transurban Finance Company Pty Limited.
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 2012, the Group has deferred $45.4 million in gains (2011: $53.2 million).
(f) Syndicated facility
These facilities, established in August 2007 and December 2011, comprise syndicated bank debt issued by
Transurban Finance Company Pty Limited. At 30 June 2012, the following amounts were drawn:
98 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
16 Borrowings (continued)
(f) Syndicated facility (continued)
•
•
•
•
$215.0 million which is for a term of circa three years, maturing February 2015.
$160.0 million which is for a term of circa five years, maturing February 2017.
$100.0 million which is for a term of seven years, maturing August 2014.
$125.0 million which is for a term of ten years, maturing August 2017.
Applicable interest rates ranging between 5.0 and 6.4 per cent. These facilities are fully hedged with an all-in
rate after hedging of 8.0 per cent.
These facilities have deferred borrowing costs of $1.2 million and are secured by a first ranking charge over the
cash flows of the Group.
Letters of credit and corporate credit facilities
The Group has a $50 million letter of credit facility which is for a term of 3 years, maturing December 2013. As at
30 June 2012, letters of credit to the value of $42.1 million have been issued which are currently undrawn and
therefore no liability has been recorded.
A $6.6 million general credit facility is in place covering corporate requirements including letters of credit, credit
card facilities, online banking and an overdraft facility. As at 30 June 2012, $5.3 million of bank guarantees have
been issued which are currently undrawn and therefore no liabilities have been recorded. The 365 day facility
matures June 2013.
Set-off of assets and liabilities
In the prior year, a legal right of set-off was in place in respect of the specific cash deposit of $1,292.3 million
representing collateralisation of the M1 Airport Motorway Infrastructure Facility.
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 based clause where gearing must not exceed 60 per cent.
Based on the balance sheet as at 30 June 2012, the Group's security price would need to close below $2.15 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 1.2 times
Hills M2 Motorway - ICR greater than 1.2 times
Lane Cove Tunnel - ICR greater than 1.15 times
99 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
Notes
17(a)
17(b)
17(c)
17(c)
17(d)
17(a)
17(d)
17(e)
30 June
2012
$'000
30 June
2011
$'000
18,119
1,560
218,798
28,065
26,943
293,485
5,602
175,782
12,371
193,755
20,118
2,101
202,146
29,347
42,874
296,586
2,226
158,749
101,598
262,573
487,240
559,159
17 Provisions
Current
Employee benefits
Onerous lease provision
Distribution to security holders
Distribution to non-controlling interests in subsidiaries
Maintenance provision
Non-current
Employee benefits
Maintenance provision
Provision for contingent consideration
Total provisions
Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Current
Non-current
Onerous lease
provision
$'000
Distribution
to security
holders
$'000
Distributions to
non-controlling
interest in
subsidiaries
$'000
Current
maintenance
provision
$'000
Non-current
maintenance
provision
$'000
Provision for
contingent
consideration
$'000
2,101
202,146
29,347
42,874
158,749
101,598
-
-
(634)
93
-
-
1,560
429,203
-
(412,551)
-
-
-
218,798
13,036
-
(14,318)
-
-
-
28,065
18,945
-
(29,940)
-
-
(4,936)
26,943
-
-
-
-
12,097
4,936
175,782
-
(89,227)
-
-
-
-
12,371
Consolidated - 2012
Balance at 1 July
Additional provision
recognised
Unutilised amounts
Amounts paid/utilised
Movements in foreign
exchange rates
Unwinding of discount
Transfer
Balance at 30 June
(a) Employee benefits
Employee benefits relate to the provision for annual leave, bonuses and long service leave.
(b) Onerous lease provision
An onerous lease is recognised when the Group has lease commitments on property no longer used.
100 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
17 Provisions (continued)
(c) Distribution to security holders and non-controlling interests
These distributions are provided for once approved by the board and are announced to equity holders.
(d) 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.
(e) Provision for contingent consideration
As part of the M1 CityLink Upgrade project agreement with the Victorian State Government, Transurban agreed
to share any increased toll revenue resulting from the upgrade once the agreed investment and future operating
costs for the new Southern Link Upgrade section are recovered.
The payment will represent 50 per cent of the present value of this increased revenue. Actual toll revenue for the
third full financial year post construction completion is extrapolated to the end of the CityLink concession to
determine the payment amount.
A provision and corresponding intangible asset have been recognised for the potential obligation to pay the
State.
18 Other liabilities
Current
Prepaid tolls
Unearned income
Other
Non-current
Concession and promissory notes
Lease incentive
Other
Total other liabilities
(a) Prepaid tolls
Notes
18(a)
18(b)
18(c)
30 June
2012
$'000
30 June
2011
$'000
59,976
12,694
581
73,251
51,072
1,984
617
53,673
59,046
29,995
581
89,622
49,510
2,565
579
52,654
126,924
142,276
Prepaid tolls represent amounts received from customers and held on deposit until the charge is incurred by the
user.
(b) Unearned income
Unearned income represents amounts received in advance and will be recognised when the income is earned.
101 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
18 Other liabilities (continued)
(c) Concession and promissory notes
M1 Eastern Distributor
The Eastern Distributor Project Deed between Airport Motorway Limited, Airport Motorway Trust and the Roads
and Maritime Services (RMS) provides for annual concession fees of $15.0 million during the construction phase
and for the first 24 years after construction completion of the M1 Eastern Distributor. Until a certain threshold
return is achieved, payments of concession fees due under the Project Deed will be satisfied by means of the
issue of non-interest bearing Concession Notes.
Concession Notes are recognised 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 motorway, the present value
of the expected future repayments is determined using a discount rate of 12 per cent which recognises their
subordinate nature.
The face value of Concession Notes on issue at 30 June 2012 is $225 million (2011: $210.0 million). The net
present value at 30 June 2012 of the redemption payments relating to these Concession Notes is $30.7 million
(2011: $29.8 million).
M2 Motorway
The Hills Motorway Trust has entered into leases with the Roads and Maritime Services of New South Wales
(RMS). 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 RMS.
Promissory Notes are recognised 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 recognises
their subordinated nature.
The face value of Promissory Notes on issue at 30 June 2012 is $136.9 million (2011: $126.5 million). The net
present value at 30 June 2012 of the redemption payments relating to these Promissory Notes is $20.3 million
(2011: $19.7 million).
102 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
30 June
2012
$'000
30 June
2011
$'000
7,847,912
7,847,912
7,772,117
7,772,117
30 June
2012
Number
'000
30 June
2011
Number
'000
1,458,321
1,458,321
1,443,193
1,443,193
19 Contributed equity
Share capital
Fully paid stapled securities
Fully paid stapled securities
Stapled securities
The number of stapled securities on issue is 1,458,321,154 (2011: 1,443,543,731). The difference in the prior
year of 351,075 relates to treasury securities.
Stapled securities entitle the holder to participate in distributions and on 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.
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 16.
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that
it 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 amount of distributions paid to
security holders, return capital to security holders, issue new securities or sell assets to reduce debt.
103 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
19 Contributed equity (continued)
Movements in ordinary share capital:
Opening balance at 1 July 2010
Distribution reinvestment plan
Purchase, disposal and vesting of treasury securities
Transfer vesting portion of LTI from share-based
payment reserve
Purchase of Performance Rights Plan units
Less: Amounts attributable to Transurban
International Limited
Closing balance at 30 June 2011
Opening balance at 1 July 2011
Distribution reinvestment plan
Disposal and vesting of treasury securities
Transfer vesting portion of LTI from share-based
payment reserve
Purchase of Performance Awards Plan units
Less: Amounts attributable to Transurban
International Limited
Closing balance at 30 June 2012
Notes
19(a)
19(b)
19(b)
19(b)
19(c)
19(a)
19(b)
19(b)
19(b)
19(c)
Number of
units
$'000
Consolidated
$'000
1,414,295
28,876
22
7,656,383
124,550
103
-
-
440
(675)
-
1,443,193
(8,684)
7,772,117
1,443,193
14,162
351
7,772,117
76,001
1,640
615
-
4,051
(2,496)
-
1,458,321
(3,401)
7,847,912
(a) 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.
(b) Treasury securities
Stapled securities were issued to executives under share based payment plans. The securities were held by the
executive but vested in the executive in accordance with the terms of the plans. The acquired securities could
not be transferred or sold prior to vesting date. On forfeit, the securities were sold on market.
104 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
19 Contributed equity (continued)
(c) Non-controlling 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 non-controlling interest.
20 Reserves and accumulated losses
Reserves
Cash flow hedges
Share-based payments
Foreign currency translation
Transactions with non-controlling interests
Movements:
Cash flow hedges
Balance 1 July
Revaluation - gross
Deferred tax (note 13)
Transfer to net profit
Amount attributable to non-controlling interest
Movement in associate's reserve
Movement in associate's reserve attributable to non-controlling interest
Balance 30 June
Share-based payments
Balance 1 July
Employee share plan expense
Transfer vesting portion of LTI to contributed equity
Transfer non-vesting portion of LTI to retained earnings
Balance 30 June
Foreign currency translation
Balance 1 July
Deferred tax (note 13)
Currency translation differences arising during the year
Currency translation differences arising during the year attributable to
non-controlling interest
Balance 30 June
30 June
2012
$'000
30 June
2011
$'000
(129,119)
8,200
(12,294)
(5,127)
(138,340)
34,560
10,188
(13,160)
(5,127)
26,461
30 June
2012
$'000
30 June
2011
$'000
34,560
(219,648)
43,823
5,048
7,098
(39,996)
39,996
(129,119)
10,188
3,131
(4,966)
(153)
8,200
(13,160)
(192)
13,172
(12,114)
(12,294)
63,602
(45,578)
12,560
4,375
(399)
11,427
(11,427)
34,560
6,128
4,581
(440)
(81)
10,188
(12,009)
432
(8,045)
6,462
(13,160)
105 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
20 Reserves and accumulated losses (continued)
Reserves (continued)
Transactions with non-controlling interests
Balance 1 July
Balance 30 June
Accumulated losses
Movements in (accumulated losses) were as follows:
30 June
2012
$'000
30 June
2011
$'000
(5,127)
(5,127)
(5,127)
(5,127)
30 June
2012
$'000
30 June
2011
$'000
Balance 1 July
Profit (loss) attributable to ordinary equity holders of the stapled group
Distributions to ordinary security holders
Transfer of loss attributable to non-controlling interest - Transurban International
Limited
Transfer non-vesting portion of LTI from share-based payment reserve
Balance 30 June
(4,085,426)
54,905
(429,203)
227,526
153
(4,232,045)
(3,836,959)
112,467
(389,463)
28,448
81
(4,085,426)
Nature and purpose of reserves
Cash flow hedges
The cash flow hedges reserve is used to record gains or losses on a hedging instrument in a cash flow hedge
that are recognised in other comprehensive income, as described in note 1(l). Amounts are reclassified to profit
or loss when the associated hedged transaction affects profit or loss.
Share-based payments
The share-based payments reserve is used to recognise the fair value of long-term incentives issued but not
exercised.
Foreign currency translation
Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive
income as described in note 1(d) and accumulated in this reserve within equity.
Transactions with non-controlling interests
The transactions with non-controlling interests reserve was created as a result of the acquisition of an additional
3.75 per cent of the Airport Motorway Group during a prior year as the Group uses the economic entity approach
to transactions with non-controlling interests.
106 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
21 Distributions
Distribution payable
Final distribution for 2012 financial year payable and recognised as a liability:
15.0 cents (2011: 14.0 cents) per fully paid Stapled Security payable
14 August 2012
Fully franked (2011: 0% franked) based on tax paid @ 30% - 3.5 cents (2011:
0.0 cents) per fully paid Stapled Security
Unfranked final distribution - 11.5 cents (2011: 14.0 cents) per fully paid
Stapled Security
Distributions paid during the year
Final (unfranked) distribution for 2011 financial year of 14.0 cents (2010: 12.0
cents) per fully paid Stapled Security paid 11 August 2011
Interim distribution for 2012 financial year of 14.5 cents (2011: 13.0 cents) per
fully paid Stapled Security paid 14 February 2012
Fully franked (2011: 0% franked) based on tax paid @ 30% - 3.5 cents (2011:
0.0 cents) per fully paid Stapled Security
Unfranked interim distribution - 11.0 cents (2011: 13.0 cents) per fully paid
Stapled Security
Total distributions paid during the year
Distributions paid in cash or satisfied by the issue of Stapled Securities
under the distribution reinvestment plan during the year ended 30 June
2012 and 2011
Paid in cash
Satisfied by issue of Stapled Securities
Funds available (from)/for future distribution reinvestment plans
30 June
2012
$'000
30 June
2011
$'000
51,041
167,707
218,748
-
202,096
202,096
202,096
202,096
169,760
169,760
50,801
159,654
210,455
-
187,367
187,367
412,551
357,127
336,549
76,001
1
412,551
232,577
124,557
(7)
357,127
107 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
21 Distributions (continued)
Distribution policy and free cash calculation
The Group's distribution policy is to align distributions with free cash from operations. The Group calculates free
cash as follows:
Cash flows from operating activities
Less Westlink M7 Term Loan Note interest received
Add back payments for maintenance of intangibles
Less cash flows from operating activities - M1 Eastern Distributor and M4
Controlled cash
Add dividends and distributions received
M1 Eastern Distributor
M4 Statewide Roads
M5 Interlink
Westlink M7 Term Loan Note interest
Less allowance for maintenance of capital expenditure for CityLink, Hills
M2 and Lane Cove Tunnel, and e-Tag expenditure
Free cash
One-off items
Contribution from M4
Underlying free cash
Weighted average securities on issue (millions)
Underlying free cash per security (cents) - weighted average securities
Free cash per security (cents) - weighted average securities
Securities on issue (millions)
Underlying free cash per security (cents) - securities on issue
Free cash per security (cents) - securities on issue
30 June
2012
$'000
30 June
2011
$'000
373,243
(30,866)
27,731
370,108
(45,406)
324,702
43,183
354
53,500
30,866
(19,208)
433,397
374,691
(36,991)
18,429
356,129
(53,069)
303,060
32,368
4,877
41,000
36,991
(23,035)
395,261
-
433,397
(4,877)
390,384
1,453
1,438
29.8
29.8
27.1
27.5
1,458
1,444
29.7
29.7
27.0
27.4
108 TRANSURBAN ANNUAL REPORT 2012
21 Distributions (continued)
Franking credits
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
30 June
2012
$'000
30 June
2011
$'000
Franking credits available for subsequent financial years based on a tax rate of
30% (2011 - 30%)
319,886
282,254
22 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity
and its related practices:
Amounts received or due and receivable by PricewaterhouseCoopers
Audit and other assurance services
Audit and review of financial reports
Other assurance services
Total remuneration for PricewaterhouseCoopers
Total auditors' remuneration
30 June
2012
$
30 June
2011
$
1,100,000
189,300
1,289,300
1,091,000
69,887
1,160,887
1,289,300
1,160,887
109 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
23 Contingencies
Contingent liabilities
The Group and parent entity had contingent liabilities at 30 June 2012 in respect of:
Equity guarantee
the Transurban Group, holds a concession
Transurban DRIVe Holdings LLC (DRIVe), a related party of
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 be complete in late 2012 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.
in the
The Transurban Group owns 75 per cent of
consolidated financial statements using the equity method of accounting. DRIVe holds 90 per cent 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$182,857,326 has been paid at
balance sheet date.
the equity of DRIVe and recognises this investment
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 per cent discount to its fair value. As
such in the instance of the Guarantee being called, the Transurban Group may exercise its right to acquire the
interest in DRIVe at a discounted value.
Contingent assets
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, an asset has not been recognised.
24 Intra-group Guarantees
As at 30 June 2012, 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.
110 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
25 Commitments
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property, plant and equipment payable:
Within one year
Later than one year but not 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
Later than one year but not later than five years
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
Sub-lease payments
30 June
2012
$'000
30 June
2011
$'000
3,457
-
3,457
38,590
75,912
312,573
427,075
155,361
14,213
169,574
14,214
2,414
16,628
60,631
95,326
347,776
503,733
283,597
109,442
393,039
30 June
2012
$'000
30 June
2011
$'000
4,059
12,812
496
17,367
3,973
15,247
1,874
21,094
Future minimum lease payments expected to be received in relation to
non-cancellable sub-leases of operating leases
428
428
812
812
111 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
25 Commitments (continued)
Lease commitments (continued)
Promissory Notes
The Responsible Entity, on behalf of the Hills Motorway Trust, has entered into an agreement with the Roads
and Maritime Services of New South Wales (RMS). Annual
liabilities under this agreement 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 this agreement can be made at the discretion
of the Responsible Entity, by means of the issue of non-interest bearing promissory notes to the RMS. For
further information refer to note 18.
Concession Notes
The Eastern Distributor Project Deed between Airport Motorway Limited, Airport Motorway Trust and the RMS
provides for annual concession fees of $15.0 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
renegotiated.
26 Related party transactions
Transactions with associates
The following transactions occurred with related parties:
Revenue from services
Operating electronic tolling system for Westlink M7
Business development fees
Interest earned
Term Loan Notes
M5 debt notes
30 June
2012
$
30 June
2011
$
8,451,418
19,550,291
28,001,709
11,768,736
16,254,993
28,023,729
91,328,563
11,952
91,340,515
84,565,108
-
84,565,108
112 TRANSURBAN ANNUAL REPORT 2012
26 Related party transactions (continued)
Loans to/from associates
Term loan notes
Beginning of the year
Net interest capitalised
End of the year
M5 debt notes
Beginning of the year
Amount paid
End of the year
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
30 June
2012
$
30 June
2011
$
724,225,296
58,441,751
782,667,047
678,044,167
46,181,129
724,225,296
-
8,724,600
8,724,600
-
-
-
No provision for doubtful debts has been raised in relation to any outstanding balances, and no expense has
been recognised in respect of bad or doubtful debts from related parties.
Transactions with Director related parties
Refer to note 36 for Director related party transactions.
Term loan notes
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 RMS 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.
M5 debt notes
The M5 debt notes are Transurban’s debt funding contribution to the M5 West Widening Project. The fixed
maturity date of the notes is 10 years after financial close of the Project. The interest rate charged on these
notes is fixed at 5.0 per cent for the first three years following financial close.
113 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
27 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
CityLink Trust
CityLink Melbourne Limited
City Link Extension Pty Limited
Transurban Infrastructure Management Limited
Transurban Limited
Transurban Collateral Security Pty Limited
Transurban Finance Trust
Transurban Finance Company Pty Limited
Transurban Nominees Pty Limited
Transurban Nominees 2 Pty Limited
Transurban WSO Pty Limited
Transurban AL Trust
Transurban CARS Trust
Transurban WSO Trust
Roam Tolling Pty Limited
Transurban Retail Pty Limited
Transurban (USA) Holdings No.1 Pty Limited
Transurban (USA) Holdings No.2 Pty Limited
Transurban (USA) Holdings No.3 Pty Limited
Transurban Asset Management Pty Limited
Transurban Operations Pty Limited
Transurban Investments Pty Limited
The Hills Motorway Limited
Hills Motorway Management Limited
Hills Motorway Construction Company Pty Limited
Hills Motorway Underwriting No.1 Pty Limited
Hills Motorway Trust
LMI WSO Holding No.2 Pty Limited
Abigroup WSO Holding No.2 Pty Limited
Abigroup Westlink Partner Holding No.4 Pty Limited
Abigroup Westlink Partner No.4 Pty Limited
Abigroup WSO Holding No.4 Pty Limited
Abigroup Westlink Partner Holding No.2 Pty Limited
Abigroup Westlink Partner No.2 Pty Limited
LMI Westlink Partner Holding No.4 Pty Limited
LMI Westlink Partner No.4 Pty Limited
LMI WSO Holding No.4 Pty Limited
LMI Westlink Partner Holding No.2 Pty Limited
LMI Westlink Partner No.2 Pty Limited
Tollaust Pty Limited
Transurban (USA) Inc.
Transurban (USA) Holdings Inc.
Transurban (USA) Operations Inc.
Transurban (895) General Partnership
T (895) Finance Trust
Transurban International Holdings Limited
Transurban DRIVe Management LLC
Country of
incorporation Class of shares
Equity
holding
2012
%
2011
%
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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
USA
USA
USA
Australia
Australia *
USA
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
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
114 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
27 Subsidiaries (continued)
Name of entity
Country of
incorporation Class of shares
Sydney Roads Limited
Sydney Roads Trust
Sydney Roads Management Limited
Airport Motorway Trust
Airport Motorway Holdings Pty Limited
Airport Motorway Limited
Airport Motorway Construction Company Pty Limited
AMT Management Limited
M5 Holdings Funding Trust
M5 Holdings Pty Limited
M4 Holdings No.1 Pty Limited
Devome Pty Limited
Statewide Roads Limited
SWR Services Pty Limited
SWR Engineers Pty Limited
Statewide Roads (M4) Pty Limited
SWR Operations Pty Limited
SWR Properties Pty Limited
Statewide Roads (M2) Pty Limited
SWR Constructors Pty Limited
LCT-MRE Pty Limited
LCT-MRE Nominees Pty Limited
LCT-MRE Trust
LCT-MRE Holdings Trust
LCT-MRE Holdings Pty Limited
LCT-MRE No.1 Pty Limited
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
Equity
holding
2012
%
2011
%
100
100
100
75.1
75.1
75.1
75.1
100
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
75.1
75.1
75.1
75.1
100
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
*
Transurban International Holdings Limited changed registered domicile from Bermuda to Australia on
5 January 2012.
115 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
28 Parent entity financial information
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Contributed equity
Reserves
Retained earnings
Profit / (loss) for the year
Total comprehensive profit / (loss)
Guarantees entered into by the parent entity
30 June
2012
$'000
30 June
2011
$'000
350,222
187,020
2,359,945
2,374,953
2,710,167
2,561,973
154,357
149,308
1,906,487
1,754,621
2,060,844
1,903,929
649,323
(1,947,969)
658,044
(1,974,132)
607,190
2,152
39,981
649,323
583,896
5,026
69,122
658,044
72,591
(65,774)
72,591
(65,774)
There are cross guarantees given by Transurban Holdings Limited, Transurban Limited, Tollaust Pty Limited,
Roam Tolling Pty Limited, Sydney Roads Limited, Sydney Roads Management Limited, and M5 Holdings Pty
Limited as described in note 29.
Contingent liabilities of the parent entity
For details of contingent liabilities of the parent entity, refer to note 23.
116 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
29 Deed of cross guarantee
Transurban Holdings Limited, Transurban Limited, Tollaust Pty Limited, Roam Tolling Pty Limited, Sydney
Roads Limited, Sydney Roads Management Limited and M5 Holdings Pty Limited are party 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.
Consolidated income statement, consolidated statement of comprehensive income and summary of
movements in consolidated retained earnings
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
earnings for the years ended 30 June 2012 and 30 June 2011 for the parties to the deed of the cross guarantee.
Income statement
Revenue
Operating costs
Depreciation and amortisation expense
Net finance costs
Loss before income tax
Income tax benefit
Loss for the year
Statement of comprehensive income
Profit (loss) for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
30 June
2012
$'000
30 June
2011
$'000
115,999
(101,266)
(15,223)
(114,248)
(114,738)
34,660
(80,078)
98,352
(110,842)
(5,808)
(79,182)
(97,480)
37,955
(59,525)
(80,078)
-
(80,078)
(59,525)
-
(59,525)
Summary of movements in consolidated retained earnings
Retained earnings at the beginning of the financial year
Profit (loss) for the year
Transfer of non-vesting portion of LTI from share-based payment reserve
Dividends provided for or paid
Retained earnings at the end of the financial year
(138,264)
(80,078)
109
(101,842)
(320,075)
(78,743)
(59,525)
4
-
(138,264)
117 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
29 Deed of cross guarantee (continued)
Consolidated balance sheet
Set out below is a consolidated balance sheet as at 30 June 2012 and 30 June 2011 for the parties to the deed
of cross guarantee.
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 earnings
Total equity
30 June
2012
$'000
30 June
2011
$'000
33,421
387,894
421,315
94,770
339,137
433,907
1,520,031
177,176
536,066
2,233,273
1,541,621
173,778
468,981
2,184,380
2,654,588
2,618,287
1,540,926
63,815
1,604,741
1,519,914
16,111
1,536,025
719,961
33,032
7,586
760,579
593,115
36,263
2,226
631,604
2,365,320
2,167,629
289,268
450,658
607,190
2,153
(320,075)
289,268
583,896
5,026
(138,264)
450,658
Under the stapling arrangement, each entity directly and/or indirectly supports each entity and its controlled
entities within the Transurban Group on a continual basis.
Where necessary, prior year comparatives have been reclassified for comparative purposes.
118 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
30 Events occurring after the reporting period
On 1 August 2012, the Group announced that financial close had been reached with the Commonwealth of
Virginia to build and operate the 95 Express Lanes in northern Virginia, USA.
The Group also announced that the 95 Express Lanes investment will be the final new toll road project
undertaken by Transurban's co-investment vehicle, DRIVe. Transurban will continue to manage the assets
owned by DRIVe.
There are no other 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 Group, the results of those operations
or the state of affairs of the Group in subsequent financial years.
31 Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Depreciation and amortisation
Non-cash share-based payments expense
Non-cash finance costs
Share of net losses of equity accounted investments
Change in operating assets and liabilities:
Increase in concession and promissory note liability
(Decrease) increase in operating creditors and accruals
Decrease (increase) decrease in debtors
Capitalised held to maturity investment interest
Increase (decrease) in other operating provisions
Increase (Decrease) in maintenance provision
Movement in deferred taxes
(Decrease) in provision for income taxes payable
Net cash inflow (outflow) from operating activities
32 Non-cash investing and financing activities
Distributions satisfied by the issue of stapled securities under the distribution
reinvestment plan
30 June
2012
$'000
30 June
2011
$'000
58,558
301,641
3,131
40,658
137,946
1,562
(138,147)
143,732
(60,192)
836
1,102
(112,388)
(5,196)
373,243
118,158
289,435
4,581
44,966
20,198
7,664
15,308
(13,815)
(46,181)
(5,261)
(10,385)
(45,904)
(4,073)
374,691
30 June
2012
$'000
30 June
2011
$'000
76,001
76,001
124,557
124,557
119 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
33 Earnings per stapled security
Basic earnings per share
Earnings per security attributable to the ordinary equity holders of the stapled
group
Diluted earnings per share
Earnings per security attributable to the ordinary equity holders of the stapled
group
Reconciliation of earnings used in calculating earnings per security
Basic and diluted earnings per security
Profit for the year
Profit attributable to non-controlling interests
Profit attributable to ordinary equity holders of the stapled group used in
calculating earnings per security
Weighted average number of securities used as denominator
30 June
2012
Cents
30 June
2011
Cents
3.8
3.8
7.8
7.8
30 June
2012
Cents
30 June
2011
Cents
3.8
3.8
7.8
7.8
30 June
2012
$'000
30 June
2011
$'000
58,558
(3,653)
118,158
(5,691)
54,905
112,467
30 June
2012
Number
30 June
2011
Number
Weighted average number of securities used as the denominator in calculating
basic and diluted earnings per security
1,452,932,838
1,437,820,619
120 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
33 Earnings per stapled security (continued)
Weighted average number of securities used as denominator (continued)
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 non-controlling 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 stapled security adjusts the figures used in the determination of basic earnings per stapled
security to take into account the after income tax effect of interest and other financing costs associated with
dilutive potential stapled securities and the weighted average number of additional stapled securities that would
have been outstanding assuming the conversion of all dilutive potential stapled securities.
34 Net tangible asset backing
30 June
2012
$
30 June
2011
$
Net tangible asset backing per stapled security*
2.21
2.59
(*) - Net tangible assets used as the basis for this calculation include the concessions and permits relating to the
operational assets of the Group. Assets of this type are characterised as intangibles under Australian Accounting
Standards.
35 Share-based payments
Performance Awards Plan
Under the Performance Awards Plan (PAP), eligible executives 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 at vesting. No dividends or distributions on securities are payable to participants
prior to vesting.
Dual performance measures (Free Cash Flow (FCF) (from 1 July 2011) or earnings before interest, tax,
depreciation and amortisation (EBITDA) measure (pre 1 July 2011) and relative total security holder return (TSR)
apply to Performance Awards, each representing 50 per cent of the award. 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 with a three year vesting period. For the plan granted 11 December 2009
and future grants, the awards are tested at the end of the three year vesting period. However, for the 1
November 2008 grant, the awards were tested at the end of each year. If the performance measures were
satisfied for the year, one third of the awards were preserved until the end of the three year period. At the end of
the three years a cumulative test of the performance measures was applied to any unvested awards.
121 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
35 Share-based payments (continued)
Performance Awards Plan (continued)
Grant date
Vesting /
Expiry date
Fair value at grant date ($)
FCF
EBITDA
TSR
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
2012
1 Nov 2008
11 Dec 2009
1 Nov 2010
23 Dec 2010
26 Sep 2011
11 Nov 2011
Total
1 Nov 2011
11 Dec 2012
1 Nov 2013
1 Nov 2013
30 Jun 2014
30 Jun 2014
3.30
3.33
3.23
3.33
3.37
3.27
4.27
4.97
4.62
4.97
N/A
N/A
N/A
N/A
N/A
N/A
4.63
4.81
1,260,113
1,776,583
1,401,575
684,683
-
-
5,122,954
-
-
-
-
837,990
715,024
(1,193,516)
-
-
-
-
-
1,553,014 (1,193,516)
(66,597)
(150,589)
(200,498)
-
(176,058)
-
(593,742)
-
1,625,994
1,201,077
684,683
661,932
715,024
4,888,710
Weighted average exercise price
$4.00
$4.02
$3.79
$3.99
$4.06
Grant date
Vesting /
Expiry date
Fair value at grant date ($)
FCF
EBITDA
TSR
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
2011
1 Nov 2008
11 Dec 2009
1 Nov 2010
23 Dec 2010
Total
1 Nov 2011
11 Dec 2012
1 Nov 2013
1 Nov 2013
3.30
3.33
3.23
3.33
4.27
4.97
4.62
4.97
N/A
N/A
N/A
N/A
1,277,630
1,990,913
-
-
3,268,543
-
-
1,658,614
684,683
2,343,297
-
-
-
-
-
(17,517)
(214,330)
(257,039)
-
(488,886)
1,260,113
1,776,583
1,401,575
684,683
5,122,954
Weighted average exercise price
$4.01
$3.99
$-
$4.02
$4.00
Executive Equity Plan
Equity awards were granted under the Executive Equity Plan (EEP) based on executives’ performance and were
designed to encourage retention of executives while focusing on business excellence.
Individuals who are high performers and in business critical roles were nominated for awards for their past
contribution and expected future performance. Board approval was required to grant EEP awards to nominated
executives.
Under the EEP, eligible executives received 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 last made under the EEP on 1 November 2008. The table below provides details of the awards
granted.
Grant date
2012
1 Nov 2008
Total
Vesting /
Expiry date
Exercise
price
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
1 Nov 2011
$4.27
433,722
433,722
-
-
(433,722)
(433,722)
-
-
-
-
Weighted average exercise price
$4.27
$-
$4.27
$-
$-
122 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
35 Share-based payments (continued)
Executive Equity Plan (continued)
Grant date
2011
1 Nov 2008
Total
Weighted average exercise price
Performance Rights Plan
Vesting /
Expiry date
Exercise
price
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
1 Nov 2011
$4.27
548,650
548,650
$4.27
-
-
$-
(72,334)
(72,334)
(42,594)
(42,594)
433,722
433,722
$4.27
$4.27
$4.27
The Performance Rights Plan (PRP) enabled eligible executives to receive a grant of Performance Rights that
entitled participants to receive stapled securities in the Transurban Group (Securities) at no cost at the end of a
three year performance period, subject
to the achievement of performance conditions. No dividends or
distributions on Securities were payable to participants prior to vesting. The Plan has two performance
measures, EBITDA and relative TSR against the S&P/ASX 100 Industrials, each applied to 50 per cent of the
PRP award. For US participants of the plan, they will be awarded a cash amount instead of stapled securities at
the end of the three year performance period, subject to performance conditions. There is only one testing date
at the end of the performance hurdles at the vesting date.
Awards were last made under the PRP in November 2007. This award matured on 1 November 2010. 84.44% of
awards subject
the
constituents of the S&P/ASX 100. None of the awards subject to the statutory EBITDA growth or DRIVe
management fee growth conditions vested as the prescribed performance conditions were not met.
to the TSR performance condition vested based on Transurban's ranking against
Australian based plan
Grant date
2011
1 Nov 2007
Total
Weighted average exercise price
Overseas based plan
Vesting /
Expiry date
Fair value at grant
date ($)
TSR
EBITDA
Balance at
start of the
year
Number
Granted
during the
year
Number
Vested
during the
year
Number
Lapsed
during the
year
Number
Balance at
end of the
year
Number
1 Nov 2010
3.50
5.96
331,594
331,594
$4.73
-
-
$-
(143,060)
(143,060)
(188,534)
(188,534)
$4.73
$4.73
-
-
$-
Grant date
2011
1 Nov 2007
Total
Vesting /
Expiry date
Fair value at grant
date ($)
TSR
DRIVe
mgt fee
Balance at
start of the
year
Granted
during the
year
Vested
during the
year
Lapsed
during the
year
Balance at
end of the
year
Number
Number
Number
Number
Number
1 Nov 2010
3.50
5.96
247,561
247,561
$4.26
-
-
$-
(107,007)
(107,007)
(140,554)
(140,554)
$4.26
$4.26
-
-
$-
Weighted average exercise price
123 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
35 Share-based payments (continued)
Assessed fair value
The assessed fair value at grant date of the plans above has been independently determined in accordance with
AASB 2.
The TSR component of the Performance Awards has been valued applying a Monte-Carlo simulation (of a
geometric Brownian motion process, as used in the Black-Scholes framework) to model Transurban's future
security price and TSR performance against the comparator group performance at vesting date. The valuation
model takes into account the term of the award, 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 award.
The Free Cash component of performance awards has been valued using the Black-Scholes framework. The
model valuation takes into account the term of the award, the security price at grant date, the expected dividend
yield and the risk free interest rate for the term of the award.
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 2011 to 30 June 2012, the cost
of company matches was $114,459 (2011: $89,885) for the Investment Tax Exempt Plan and $391,708 (2011:
$304,375) for the Investment Tax Deferred Plan.
The third element under the Plan is the Incentive Plan. Subject to Board approval and the performance of the
Group, eligible employees may receive a certain number of Transurban securities at no cost to them. In
February 2012, each participant was allocated 100 stapled securities at a value of $5.67 per security. Stapled
securities provided under the Plan were acquired on the open market. Eligible US based participants received an
equivalent cash award.
30 June
2012
Number
30 June
2011
Number
Shares purchased on the market under the plan and provided to participating
employees
42,200
42,200
Expenses arising from share-based payments
Total expenses arising from share-based payment
employee benefit expense was $3.1 million (2011: $4.6 million).
transactions recognised during the period as part of
124 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
36 Key management personnel disclosures
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
Christopher Lynch (resigned 16 July 2012) (THL, TIML and TIL)
Scott Charlton (appointed 16 July 2012) (THL, TIML and TIL)
Non-executive Directors
Lindsay Maxsted (Chairman of THL, TIML and TIL)
Neil Chatfield (THL and TIML, and TIL from 5 January 2012)
Geoffrey Cosgriff (resigned 6 December 2011) (THL and TIML)
Jeremy Davis (resigned 6 December 2011) (THL and TIML)
Robert Edgar (THL and TIML, and TIL from 5 January 2012)
Samantha Mostyn (THL and TIML, and TIL from 5 January 2012)
Robert Officer (THL and TIML, and TIL from 5 January 2012)
Christine O'Reilly (appointed 12 April 2012) (THL, TIML and TIL)
Rodney Slater (THL and TIML, and TIL from 5 January 2012)
Ian Smith (appointed 1 January 2012) (THL and TIML, and TIL from 5 January 2012)
Jennifer Eve (resigned 5 January 2012) (TIL)
James Keyes (resigned 5 January 2012) (TIL)
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:
K Daley
A Head
S Hogg *
T Honan *
M Kulper
E Mildwater
President, International Development
Group General Manager, New South Wales
Chief Financial Officer
Chief Financial Officer
President, Transurban North America
Group General Manager, Victoria
(*) - On 2 May 2012, Tom Honan resigned as Chief Financial Officer, and Samantha Hogg was appointed as
Chief Financial Officer (previously she was Group General Manager, Corporate Services).
Key management personnel compensation
The remuneration amounts below represent the entire amounts paid by the Transurban Group.
30 June
2012
$
30 June
2011
$
12,452,823
489,289
942,256
115,725
-
4,870,066
18,870,159
14,169,807
-
471,700
87,049
1,360,993
4,135,431
20,224,980
Short-term employee benefits
Deferred STIs
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
125 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
36 Key management personnel disclosures (continued)
Key management personnel compensation (continued)
Detailed remuneration disclosures are made in the Directors' report. The relevant information can be found in the
remuneration report in the Directors' report.
Equity instrument disclosures relating to key management personnel
Share-based payments
Details of
conditions of the long term incentives, can be found in the remuneration report in the Directors' report.
long-term incentives provided as remuneration and securities issued,
together with terms and
Performance Awards Plan
2012
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
1,785,615
Directors of the Group
C Lynch
Other key management personnel of the Group
K Daley
A Head
S Hogg
T Honan
M Kulper
E Mildwater
223,297
181,525
136,569
545,513
401,033
186,359
715,024
128,294
107,766
101,320
171,058
159,286
107,766
(458,156)
(25,565) 2,016,918
(63,602)
(44,054)
(22,027)
(220,267)
(137,736)
(27,534)
(3,549)
(2,458)
(1,229)
(496,304)
(7,686)
(1,536)
284,440
242,779
214,633
-
414,897
265,055
-
-
-
-
-
-
-
2011
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
1,100,932
Directors of the Group
C Lynch
Other key management personnel of the Group
B Bourke
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
194,515
178,427
82,362
105,859
70,734
380,926
307,378
95,836
684,683
13,233
123,441
5,761
90,523
65,835
164,587
170,433
90,523
-
-
1,785,615
(39,204)
(33,173)
(4,704)
(6,273)
-
-
(32,416)
-
(168,544)
(45,398)
(83,419)
(8,584)
-
-
(44,362)
-
-
223,297
-
181,525
136,569
545,513
401,033
186,359
-
-
-
-
-
-
-
-
-
126 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
36 Key management personnel disclosures (continued)
Equity instrument disclosures relating to key management personnel (continued)
Stapled security holdings
The numbers of Stapled Securities held during the financial year by each Director of THL and other key
management personnel of the Group, including their personally-related parties, are set out below.
2012
Directors of the Group
L Maxsted
N Chatfield
G Cosgriff *
J Davis *
R Edgar
S Mostyn
R Officer
C O'Reilly
R Slater
I Smith
J Eve
J Keyes
C Lynch
S Charlton
Other key management personnel of the Group
K Daley
A Head
S Hogg
T Honan *
M Kulper
E Mildwater
Balance at
start of the
year
Other changes
during the year
Balance at end
of the year
30,000
20,910
152,236
158,188
18,627
-
19,089
-
-
-
-
-
255,401
-
384,678
21,112
15,616
94,820
103,944
27,098
-
10,000
(152,236)
(158,188)
5,106
10,300
1,026
-
-
70,000
-
-
458,162
-
-
(18,071)
(14,063)
(94,820)
(23,944)
28,968
30,000
30,910
-
-
23,733
10,300
20,115
-
-
70,000
-
-
713,563
-
384,678
3,041
1,553
-
80,000
56,066
* These individuals are not Key Management Personnel at 30 June 2012, therefore their closing balance has
been reduced to zero through "other changes during the year" in the table above.
127 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
36 Key management personnel disclosures (continued)
Equity instrument disclosures relating to key management personnel (continued)
Stapled security holdings (continued)
2011
Directors of the Group
L Maxsted
D Ryan
N Chatfield
G Cosgriff
J Davis
R Edgar
S Mostyn
R Officer
R Slater
J Eve
J Keyes
C Lynch
Other key management personnel of the Group
B Bourke
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
Balance at
start of the
year
Other changes
during the year
Balance at end
of the year
12,000
66,486
20,910
144,423
158,188
11,836
-
19,089
-
-
-
254,966
460,251
384,678
34,491
23,842
15,516
93,574
103,944
25,196
18,000
(66,486)
-
7,813
6,791
-
-
-
-
-
435
(460,251)
-
(34,491)
(2,730)
100
1,246
-
1,902
30,000
-
20,910
152,236
158,188
18,627
-
19,089
-
-
-
255,401
-
384,678
-
21,112
15,616
94,820
103,944
27,098
Executive Equity Plan (EEP)
2012
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
79,647
Directors of the Group
C Lynch
Other key management personnel of the Group
K Daley
A Head
S Hogg
T Honan
M Kulper
E Mildwater
19,146
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
-
(79,647)
(19,146)
(19,146)
(15,316)
(85,474)
(23,944)
(19,146)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
128 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
36 Key management personnel disclosures (continued)
Equity instrument disclosures relating to key management personnel (continued)
Executive Equity Plan (EEP) (continued)
2011
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
79,647
Directors of the Group
C Lynch
Other key management personnel of the Group
B Bourke
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
19,146
19,146
19,146
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
-
-
-
-
(19,146)
-
(19,146)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79,647
-
19,146
-
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
-
-
-
Performance Rights Plan
2011
Other key management
personnel of the Group
B Bourke
K Daley
M Fletcher
A Head
M Kulper
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
92,857
78,571
11,142
14,857
76,778
-
-
-
-
-
(39,204)
(33,173)
(4,704)
(6,273)
(32,416)
(53,653)
(45,398)
(6,438)
(8,584)
(44,362)
-
-
-
-
-
-
-
-
-
-
Other transactions with Directors and key management personnel
Mr 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 in the US. This relationship is based on normal commercial
terms.
Mr Lindsay Maxsted is a Non-executive Director of Westpac Banking Corporation. Westpac provides
transactional banking and loan facilities to Transurban. This relationship is based on normal commercial terms.
Mr Neil Chatfield is a Non-executive Director of Seek Limited who provides employment advising services to
Transurban. This relationship is based on normal commercial terms.
Mr Chatfield is also Chairman of, and Ms Sam Mostyn is a Non-executive Director of, Virgin Australia Holdings
Limited. Transurban uses air travel services provided by Virgin Australia. This relationship is based on normal
commercial terms.
129 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
37 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 Group 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 are
discussed below.
Income taxes
The Group is subject to income taxes in Australia and USA. Significant judgement 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 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
assets and liabilities 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. In the USA tax losses generally expire after a 20 year period.
Management has reviewed the potential future taxable profits and has therefore recognised deferred tax assets
in relation to tax losses.
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
lives are less than previously
increase the depreciation charge where useful
estimated lives, or will write-off or writedown 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.
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 note 1(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.
130 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
37 Critical accounting estimates and judgements (continued)
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.
Fair value of derivatives and other financial instruments
instruments that are not traded in an active market is determined using valuation
The fair value of financial
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.
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.
38 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 cash flows,
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.
Market risk
Foreign exchange risk
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.
131 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Financial risk management (continued)
Market risk (continued)
Foreign exchange risk (continued)
The Group's exposure to foreign currency risk at the reporting date, denominated in the currency in which the
rise arises, was as follows:
Cash and cash equivalents
Net investment in foreign operation
Borrowings
Cross-currency interest rate swaps
Trade creditors
Net exposure
30 June 2012
30 June 2011
USD
$'000
CAD
$'000
USD
$'000
CAD
$'000
9,371
245,226
(1,156,439)
933,406
(6,123)
25,441
6
-
(250,000)
250,000
-
6
7,068
209,083
(1,124,261)
933,406
(5,115)
20,181
-
-
-
-
-
-
Exposure to other foreign exchange movements is not material.
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 Group’s post-tax profit for the year
would have been $199,000 lower (2011: $108,000 lower) or $243,000 higher (2011: $131,000 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 more sensitive to movements in the Australian dollar/US dollar exchange rate in
the current year due to an increase in US dollar cash holdings.
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 $26,801,000 lower (2011: $24,286,000 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 $35,819,000 higher (2011: $29,009,000 higher). The Group revalues 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.
Based on the financial instruments held at 30 June 2012, had the Australian dollar strengthened/weakened by
10 cents against the Canadian dollar with all other variables held constant, the Group’s post-tax profit for the
year would have been unchanged, as a result of foreign exchange gains/losses on translation of Canadian dollar
denominated financial instruments as detailed in the above table.
Had the Australian dollar strengthened by 10 cents against the Canadian dollar with all other variables held
constant, the Group's equity would have been $3,734,000 lower. Had the Australian dollar weakened by 10
cents against the Canadian dollar with all other variables held constant, the Group's equity would have been
$5,158,000 higher.
The Group revalues its foreign currency denominated 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/foreign currency exchange rates.
Price risk
The Group is not exposed to price risk.
132 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Financial risk management (continued)
Market risk (continued)
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 per
cent. Covenant requirements vary by debt facility, and require a minimum of between 50 per cent and 80 per
cent of interest rate exposure to be hedged. At 30 June 2012, 97 per cent (2011: 98 per cent) 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 2012
30 June 2011
Weighted
average
interest rate
%
Balance
$'000
Weighted
average
interest rate
%
Cash and cash equivalents
Floating rate borrowings
Interest rate swaps (notional principal amount)
Net exposure to cash flow interest rate risk
4.2%
5.0%
3.9%
(318,148)
2,756,394
(2,680,500)
(242,254)
5.3%
6.2%
5.0%
An analysis by maturities is provided in Liquidity risk below.
Balance
$'000
(411,880)
2,680,609
(2,619,400)
(350,671)
Sensitivity
At 30 June 2012, 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 $2,423,000 higher/lower (2011: $3,507,000
higher/lower). Profit is less sensitive to movements in interest rates in 2012 than 2011, due mainly to a decrease
in cash holdings.
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
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 is through Term Loan Notes (see note 10 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.
133 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Financial risk management (continued)
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 (one to five 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 five year horizon.
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Floating rate
- Expiring within one year
- Expiring beyond one year
30 June
2012
$'000
30 June
2011
$'000
130,000
268,212
398,212
-
418,002
418,002
The facilities are committed for the term of the facility and cannot be withdrawn by the lenders without notice.
Maturities of financial liabilities
The tables below analyse the Group's financial liabilities, net and gross settled derivative financial instruments
into relevant maturity groupings based on their contractual maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant. For interest rate swaps the cash
flows have been estimated using forward interest rates applicable at the end of the reporting period.
134 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Financial risk management (continued)
Liquidity risk (continued)
Contractual
maturities of
financial liabilities
At 30 June 2012
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total
non-derivatives
Derivatives
Net settled (interest
rate swaps)
Net settled
(cross-currency
interest rate swaps/fx
forwards)
Total derivatives
At 30 June 2011
Non-derivatives
Non-interest bearing
Variable rate
Fixed rate
Total
non-derivatives
Derivatives
Net settled (interest
rate swaps)
Net settled
(cross-currency
interest rate swaps/fx
forwards)
Total derivatives
1 year or
less
$'000
Over 1 to
2 years
$'000
Over 2 to
3 years
$'000
Over 3 to 4
years
$'000
Over 4 to
5 years
$'000
Over 5
years
$'000
Total
contractual
cash flows
$'000
Carrying
amount
(assets)/
liabilities
$'000
309,898
123,679
100,689
-
-
431,043 1,088,528
219,581
352,609
-
359,111
409,350
-
449,192
195,455
364,402
750,145
1,491,626
674,300
3,201,698
2,769,310
361,587
2,756,393
1,733,004
534,266
783,652 1,308,109
768,461
644,647
2,606,173
6,645,308
4,850,984
82,976
80,993
60,146
39,382
28,586
20,800
312,883
280,552
19,742
102,718
16,817
97,810
47,602
107,748
39,932
79,314
41,806
70,392
94,703
115,503
260,602
573,485
224,642
505,194
1 year or
less
$'000
Over 1 to 2
years
$'000
Over 2 to 3
years
$'000
Over 3 to 4
years
$'000
Over 4 to 5
years
$'000
Over 5 years
$'000
Total
contractual
cash flows
$'000
Carrying
amount
(assets)/
liabilities
$'000
414,832
232,994
216,453
-
736,382
93,118
-
431,833
340,347
-
877,284
212,108
-
367,368
397,707
338,957
733,374
1,372,316
753,789
3,379,235
2,632,049
464,921
2,680,609
1,558,077
864,279
829,500
772,180
1,089,392
765,075
2,444,647
6,765,073
4,703,607
31,272
24,702
12,313
4,652
(2,500)
(8,675)
61,764
53,732
19,935
51,207
27,172
51,874
28,275
40,588
57,068
61,720
44,475
41,975
198,418
189,743
375,343
437,107
282,107
335,839
Fair value measurements
The carrying value of
approximates fair value.
financial assets and financial
liabilities brought
to account at balance sheet date
135 TRANSURBAN ANNUAL REPORT 2012
Transurban Holdings Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Financial risk management (continued)
Fair value measurements (continued)
The fair value of
measurement or for disclosure purposes.
these financial assets and financial
liabilities must be estimated for
recognition and
The Group has adopted the amendment to AASB 7 Financial Instruments: Disclosures which requires disclosure
of fair value measurements by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
(b)
inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (level 2), and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level
3).
(c)
The following table presents the Group's assets and liabilities measured and recognised at fair value at 30 June
2012 and 30 June 2011:
30 June 2012
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
30 June 2011
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Level 1
$'000
-
-
-
-
-
-
-
-
137
137
505,331
505,331
Level 2
$'000
Level 3
$'000
56,303
56,303
392,142
392,142
-
-
-
-
-
-
-
-
137
137
505,331
505,331
Total
$'000
56,303
56,303
392,142
392,142
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 the end of each reporting period. The fair value of
both cross-currency interest rate swaps and interest rate 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 end of the reporting period. All these instruments are included in level 2.
136 TRANSURBAN ANNUAL REPORT 2012
In the Directors' opinion:
Transurban Holdings Limited
Directors' declaration
30 June 2012
(a)
(b)
(c)
the financial statements and notes set out on pages 51 to 136 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 Group's financial position as at 30 June 2012 and of its
performance for the 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 29 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 29.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
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.
Lindsay Maxsted
Director
Scott Charlton
Director
Melbourne
7 August 2012
137 TRANSURBAN ANNUAL REPORT 2012
138 TRANSURBAN ANNUAL REPORT 2012
139 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust and
Controlled Entities
ARSN 098 807 419
Annual report
for the year ended 30 June 2012
140 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust ARSN 098 807 419
Annual report - 30 June 2012
Directors' report
Auditor's Independence Declaration
Financial statements
Directors' declaration
Independent auditor's report to the members
Page
142
146
147
222
223
141 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Directors' report
30 June 2012
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 controls (collectively "the Group"), for the year ended 30 June 2012.
The Trust forms part of the triple staple that is Transurban. A Stapled Security comprises one share in
Transurban Holdings Limited, one share in Transurban International Limited and one unit in the Trust. None of
the components of the Stapled Security can be traded separately.
Responsible entity
The Trust is registered as a managed investment scheme under Chapter 5C of the Corporations Act 2001 and,
as a result, requires a responsible entity. The Company is the responsible entity of the 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 the Company during the
whole of the financial year and up to the date of this report:
Non-executive Directors
Lindsay Maxsted
Neil Chatfield
Geoffrey Cosgriff (resigned 6 December 2011)
Jeremy Davis (resigned 6 December 2011)
Robert Edgar
Samantha Mostyn
Robert Officer
Christine O'Reilly (appointed 12 April 2012)
Rodney Slater
Ian Smith (appointed 1 January 2012)
Executive Directors
Christopher Lynch (resigned 16 July 2012)
Scott Charlton (appointed 16 July 2012)
Results
The consolidated net profit for the Group was $350,600,000 (2011: profit of $318,384,000). The profit attributable
to ordinary unit holders of Transurban Holding Trust was $337,662,000 (2011: profit of $306,024,000).
Principal activities
The principal activities of the Group during the year were the leasing of assets and the provision of funding to the
Transurban Group.
142 TRANSURBAN ANNUAL REPORT 2012
Distributions - Transurban Holding Trust
Distributions paid to members during the financial year were as follows:
Distributions proposed
Final distribution payable and recognised as a liability: 11.5 cents (2011: 14.0
cents) per fully paid Stapled Security payable 14 August 2012
Transurban Holding Trust
Directors' report
30 June 2012
(continued)
30 June
2012
$'000
30 June
2011
$'000
167,707
167,707
202,096
202,096
Distributions paid during the year
Final distribution for 2011 financial year of 14.0 cents (2010: 12.0 cents) per fully
paid Stapled Security paid 11 August 2011
Interim distribution for 2012 financial year of 11.0 cents (2011: 13.0 cents) per
fully paid Stapled Security paid 14 February 2012
Total distributions paid during the year
202,096
169,760
159,654
361,750
187,367
357,127
Distributions paid in cash or satisfied by the issue of Stapled Securities
under the distribution reinvestment plan during the years ended 30 June
2012 and 30 June 2011
Paid in cash
Satisfied by issue of Stapled Securities
Funds available for future distribution reinvestment plans
294,958
66,791
1
361,750
232,577
124,557
(7)
357,127
The distributions are unfranked and have a minimal tax deferred component.
Review of operations
Total revenue for the Group increased 23.1 per cent to $507.7 million. The profit for the year was $350.6 million.
Hills M2 (Sydney) upgrade
Toll revenue for the year ended 30 June 2012 for the Hills M2 decreased by 3.1 per cent to $141.2 million. As
expected average daily trips decreased by 5.1 per cent, reflecting the construction impact of the Hills M2
Upgrade.
As at 30 June 2012 the upgrade was over 70 per cent complete with the first stage, the Windsor Road ramps,
opened for traffic on the 25 July 2012. The project completion is scheduled for mid 2013 and remains consistent
with Transurban’s expectations.
On 30 January 2012, Hills M2 and M1 Eastern Distributor successfully implemented full electronic tolling with
minimal impact on traffic. The move to cashless tolling will result in improved travel times for customers across
the corridor and operational efficiencies.
Other corporate activities
Chief Executive Officer (CEO)
On 30 January, Transurban announced Mr Chris Lynch’s intention to resign as CEO and as a Director effective
from July 2012 after a four year tenure. After a comprehensive Board selection process, Transurban announced
on 3 April 2012 the appointment of Mr Scott Charlton as new CEO effective from July 2012.
Financing activities
Transurban continued to have success in financing activities in the year ended 30 June 2012. In July 2011,
$520.0 million of non-recourse project on the M1 Eastern Distributor was refinanced.
143 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Directors' report
30 June 2012
(continued)
Review of operations (continued)
Significant changes in the state of affairs
There have been no significant changes in the state of affairs of the Group during the year.
Matters subsequent to the end of the financial year
At the date of this report the Directors are not aware of any other circumstances that have arisen since 30 June
2012 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 Group 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 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 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 assets.
Indemnification and insurance
Each officer (including each director) of the Group is indemnified, to the maximum extent permitted by law,
against any liabilities incurred as an officer of the Group pursuant to agreements with the Group. Each officer is
also indemnified against reasonable costs (whether legal or otherwise) incurred in relation to relevant
proceedings in which the officer is involved because the officer is or was an officer.
The Group 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.
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 28.
No fees were paid to the Directors of the responsible entity during the year out of Trust property.
Interests in the Group issued during the financial year
Balance at 1 July
Units issued during the year
Balance at 30 June
Value of assets
Value of Group assets at 30 June
30 June
2012
Number
'000
30 June
2011
Number
'000
1,443,193
15,128
1,458,321
1,414,295
28,898
1,443,193
2012
$'000
2011
$'000
10,660,841
10,425,042
The value of the Group's assets is derived using the basis of accounting set out in Note 1 to the financial
statements.
Units under option
There are 4,888,710 units of the Trust under share based payment schemes. 1,553,014 units were granted in the
current year. 1,627,238 units were issued on the exercise of the relevant schemes.
144 TRANSURBAN ANNUAL REPORT 2012
Directors' interests
The Directors of the responsible entity have disclosed relevant interests in Stapled Securities as follows:
Transurban Holding Trust
Directors' report
30 June 2012
(continued)
Number of stapled
securities
Non-executive Directors
Lindsay Maxsted
Neil Chatfield
Geoffrey Cosgriff (resigned 6 December 2011)
Jeremy Davis AM (resigned 6 December 2011)
Robert Edgar
Samantha Mostyn
Robert Officer
Christine O'Reilly (appointed 12 April 2012)
Rodney Slater
Ian Smith (appointed 1 January 2012)
Executive Directors
Christopher Lynch (resigned 16 July 2012)
Scott Charlton (appointed 16 July 2012)
30,000
30,910
-
-
23,733
10,300
20,115
-
-
70,000
713,563
-
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 146.
Rounding of amounts
The Group 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.
Lindsay Maxsted
Director
Scott Charlton
Director
Melbourne
7 August 2012
145 TRANSURBAN ANNUAL REPORT 2012
146 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust ARSN 098 807 419
Annual report - 30 June 2012
Contents
Financial statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members
Page
148
149
150
151
152
153
222
223
This financial report covers 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 7 August 2012. The Directors have 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
147 TRANSURBAN ANNUAL REPORT 2012
Revenue
Other income
Administration costs
Promissory notes
Construction costs
Profit before depreciation and amortisation, net finance costs, equity
accounted investments and income taxes
Depreciation and amortisation expense
Finance income
Finance costs
Net finance income
Share of net profits (losses) of equity accounted investments
Profit before income tax
Income tax expense
Profit for the year
Profit is attributable to:
Owners of Transurban Holding Trust
Non-controlling interests
Transurban Holding Trust
Consolidated income statement
For the year ended 30 June 2012
Notes
4
5
6
7
12
8
30 June
2012
$'000
30 June
2011
$'000
484,530
412,341
25,333
24,115
(4,155)
(1,476)
(224,296)
(229,927)
(3,949)
(1,280)
(160,751)
(165,980)
279,936
270,476
(108,604)
(106,745)
520,620
(338,778)
181,842
494,421
(337,062)
157,359
-
-
353,174
321,090
(2,574)
350,600
(2,706)
318,384
337,662
12,938
350,600
306,024
12,360
318,384
Cents
Cents
Earnings per unit for profit attributable to the ordinary unit holders:
Basic earnings per unit
Diluted earnings per unit
34
34
23.2
23.2
21.3
21.3
The above consolidated income statement should be read in conjunction with the accompanying notes.
148 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Consolidated statement of comprehensive income
For the year ended 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
350,600
318,384
(71,286)
(71,286)
(4,263)
(4,263)
279,314
314,121
273,473
5,841
279,314
301,362
12,759
314,121
Profit for the year
Other comprehensive income
Changes in the fair value of cash flow hedges, net of tax
Other comprehensive income for the year net of tax
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Owners of Transurban Holding Trust
Non-controlling interest
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
149 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Consolidated balance sheet
As at 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
9
10
14
11
13
14
15
16
17
14
19
20
18
14
20
21
22
22
3,545
248,970
-
252,515
11,036
212,642
913
224,591
6,398,365
782,667
70
2,700
3,224,524
10,408,326
6,364,880
724,225
750
1,764
3,108,832
10,200,451
10,660,841
10,425,042
224,838
76
1,784
195,821
20,549
443,068
192,540
754
235
231,493
33,287
458,309
4,710,361
85,039
20,326
4,815,726
4,522,642
14,666
19,720
4,557,028
5,258,794
5,015,337
5,402,047
5,409,705
7,240,721
(70,142)
(1,804,650)
36,118
5,402,047
7,188,221
(6,839)
(1,814,990)
43,313
5,409,705
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments
Total current assets
Non-current assets
Receivables
Term loan notes
Derivative financial instruments
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Derivative financial instruments
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
UNIT HOLDERS' FUNDS
Issued units
Reserves
Accumulated losses
Non-controlling interests
Total unit holders' funds
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
150 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Consolidated statement of changes in equity
For the year ended 30 June 2012
Attributable to members of
Transurban Holding Trust
Notes
Issued units
$'000
Reserves
$'000
Accumulated
losses
$'000
Non-
controlling
interests
$'000
Total unit
holders'
funds
$'000
Balance at 1 July 2010
7,103,500
(3,985)
(1,731,625)
42,971
5,410,861
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity
as owners:
Treasury units
Distribution reinvestment plan
Changes in value of share-based payments
reserve
Distributions provided for or paid
Distributions paid to non-controlling interests
21
21
22
22
-
-
-
-
(4,662)
(4,662)
306,024
-
306,024
12,360
399
12,759
318,384
(4,263)
314,121
68
84,691
(38)
-
-
84,721
-
-
1,808
-
-
1,808
-
-
-
-
68
84,691
74
(389,463)
-
(389,389)
-
-
(12,417)
(12,417)
1,844
(389,463)
(12,417)
(315,277)
Balance at 30 June 2011
7,188,221
(6,839)
(1,814,990)
43,313
5,409,705
Balance at 1 July 2011
7,188,221
(6,839)
(1,814,990)
43,313
5,409,705
Comprehensive income
Profit (loss) for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity
as owners:
Treasury units
Distribution reinvestment plan
Changes in value of share-based payments
reserve
Distributions provided for or paid
Distributions paid to non-controlling interests
21
21
22
22
-
-
-
-
(64,189)
(64,189)
337,662
-
337,662
12,938
(7,097)
5,841
350,600
(71,286)
279,314
413
51,682
405
-
-
52,500
-
-
886
-
-
886
-
-
-
-
413
51,682
44
(327,366)
-
(327,322)
-
-
(13,036)
(13,036)
1,335
(327,366)
(13,036)
(286,972)
Balance at 30 June 2012
7,240,721
(70,142)
(1,804,650)
36,118
5,402,047
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
151 TRANSURBAN ANNUAL REPORT 2012
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers (inclusive of GST)
Interest received
Interest paid
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from sale of treasury units, net of costs
Proceeds from borrowings, net of costs
Repayment of borrowings
Loans to/from related parties
Repayment of loans to/from related parties
Distributions paid to Transurban Group's security holders
Distributions paid to non-controlling interests in subsidiaries
Net cash inflow from financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at end of the year
Transurban Holding Trust
Consolidated statement of cash flows
For the year ended 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
269,623
(29,242)
129,982
(292,292)
(3,094)
74,977
239,395
(6,857)
122,005
(275,088)
(4,654)
74,801
(217,546)
(217,546)
(480,741)
(480,741)
-
630,715
(515,000)
(335,969)
664,608
(294,958)
(14,318)
135,078
67
775,803
(465,000)
(240,547)
585,786
(232,577)
(10,733)
412,799
(7,491)
6,859
11,036
3,545
4,177
11,036
32
23
9
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
152 TRANSURBAN ANNUAL REPORT 2012
Contents of the notes to the consolidated financial statements
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
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
Summary of significant accounting policies
Trust formation and termination
Segment information
Revenue
Other income
Expenses
Net finance income
Income tax expense
Current assets - Cash and cash equivalents
Current assets - Trade and other receivables
Non-current assets - Receivables
Equity accounted investments
Non-current assets - Term loan notes
Derivative financial instruments
Deferred tax assets and liabilities
Non-current assets - Intangible assets
Current liabilities - Trade and other payables
Borrowings
Current liabilities - Provisions
Other liabilities
Issued units
Reserves and accumulated losses
Distributions
Remuneration of auditors
Contingencies
Intra-group guarantees
Commitments
Related party transactions
Subsidiaries
Parent entity financial information
Events occurring after balance sheet date
Reconciliation of profit after income tax to net cash inflow from operating activities
Non-cash investing and financing activities
Earnings per unit
Share-based payments
Critical accounting estimates and judgements
Financial risk management
Key management personnel disclosures
Page
154
163
163
164
164
164
165
166
166
167
167
168
169
170
171
172
173
173
175
175
176
177
179
179
179
180
180
181
182
183
183
184
184
184
185
188
189
195
153 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the consolidated financial report are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
The financial report includes the consolidated entity consisting of Transurban Holding Trust and its subsidiaries
(the Group).
(a) Basis of preparation
These general purpose financial statements have 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.
The Group’s current liabilities exceed its current assets by $190.6 million as at 30 June 2012. The financial report
has been prepared on a going concern basis, which contemplates the continuity of normal operations, as the
Group is trading profitably and has continually been able to refinance maturing debt. In addition, at 30 June 2012
the Transurban Group has available a total of $398.2 million of unused working capital facilities.
Where necessary, comparatives have been reclassified for consistency with current year disclosures.
Compliance with International Financial Reporting Standards (IFRS)
The consolidated financial statements of Transurban Holding Trust also comply with IFRS as issued by the
International Accounting Standards Board.
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 (including derivative financial instruments).
Rounding of amounts
The Group 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.
(b) Principles of consolidation
Subsidiaries
Subsidiaries are all those 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 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 Group except as otherwise indicated.
The acquisition method of accounting is used to account for business combinations by the Group (refer to note
1(g)).
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
income statement, statement of comprehensive income, balance sheet and statement of changes in equity
respectively.
154 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(b) Principles of consolidation (continued)
Subsidiaries (continued)
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 12).
Investments in associates are accounted for using the equity method of accounting, after initially being
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. W hen the
Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint
venture, the Trust does not recognise further losses. Dividends received from associates and joint ventures
reduce the carrying amount of the investment.
Accounting policies of associates and joint ventures have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions
with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or
received is recognised in a separate reserve within equity.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Executive Officer (the chief operating decision maker) and the Executive Committee, who report to the Chief
Executive Officer (CEO).
(d) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Revenue is recognised for the major business activities as follows:
• Rental revenue - Rental revenue is recognised as earned in accordance with the lease contract.
•
Interest income - Interest income is recognised on a time proportionate basis using the effective interest
method.
• Distribution revenue - Distribution revenue is recognised when the Trust’s right to receive payment is
established.
• Construction revenue - During the construction phase of service concession infrastructure assets, the
Group records an intangible asset representing the right to charge users of the infrastructure and
recognises revenue from the construction of the infrastructure. Revenue and expenses associated with
construction contracts are recognised in accordance with the percentage of completion method.
155 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(e)
Income tax
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.
Income tax is brought to account in the financial statements to the extent it relates to companies in the Group.
The income tax expense or benefit for the period is the tax payable or benefit 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.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Trust's subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
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 end of the reporting period 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 foreign operations where the company 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.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
(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.
Lease incentives are recognised as a reduction of the rental expense over the lease term on a straight line basis.
(g) Business combinations
The acquisition method of accounting is used to account for all business combinations, including business
combinations involving entities or businesses under common control, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair
values of the assets transferred, the liabilities incurred and the equity interests issued by the Trust. The
consideration transferred also includes the fair value of any contingent consideration arrangement and the fair
value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition
basis, the Trust recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling
interest's proportionate share of the acquiree’s net identifiable assets.
156 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(g) Business combinations (continued)
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Trust's share of
the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the
net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in profit or loss as a bargain purchase.
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.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
(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 an estimate of the 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.
Recoverable amount is the greater of fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
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 statement of 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 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.
(j)
Investments and other financial assets
Classification
The Group classifies its investments and other financial assets 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. The classification of the Group's investments are
determined at initial recognition and re-evaluated 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 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 (current) (note 10) and in receivables (non-current) (note 11) in the balance sheet.
157 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(j)
Investments and other financial assets (continued)
Loans and receivables (continued)
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.
Collectability 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 impairment 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 impairment allowance is the
difference between the asset’s carrying amount and the present value of estimated future cash flows. The
amount of the impairment allowance is recognised in the income statement.
Held-to-maturity investments (term loan notes)
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.
Recognition and derecognition
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
other comprehensive income are reclassified to profit or loss 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 or 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 profit or loss within other income or other expenses in the period in which
they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss
as part of revenue from continuing operations when the Trust's right to receive payments is established.
Impairment
The Group assesses at each reporting period 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 the income statement - is reclassified from equity and recognised in the income
statement as a reclassification adjustment. Impairment losses recognised in the income statement on equity
instruments classified as available-for-sale are not reversed through the income statement.
158 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(k) 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 the end of each reporting period. 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 a particular risk associated with the cash flows 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.
The fair values of various derivative financial instruments used for hedging purposes are disclosed in note 14.
Movements in the hedging reserve in shareholder's equity are shown in note 22. 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.
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 the hedging reserve. The gain or loss relating to the ineffective portion is recognised
immediately in the income statement.
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.
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 profit or loss. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified 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 hedge accounting are recognised immediately in the income statement.
(l)
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. For details of concession
agreement dates refer to note 16.
Where work is in progress, it is classified as assets under construction.
159 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(m) Financial liabilities
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.
Concession and promissory notes
The Group has non-interest bearing long term debt, represented by Concession and Promissory Notes, payable
to the government, measured at the net present value of expected future payments.
(n) 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 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 profit or loss as 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 period.
(o) Borrowing costs
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 consolidated income statement 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.
Costs incurred in connection with the arrangement of borrowings are deferred and amortised over the effective
period of the funding.
(p) 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 discounted to 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 discount unwinding over the passage of time is recognised as a finance cost.
Provision for distribution
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 reporting period but not distributed at the end of the reporting
period.
(q) Contributed equity
Units in the Trust are classified as equity.
160 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(q) Contributed equity (continued)
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
If the Group reacquires its own units, those units are deducted from equity. 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.
(r) Parent entity financial information
The financial information for the parent entity, Transurban Holding Trust, disclosed in note 30 has been prepared
on the same basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial
statements of Transurban Holding Trust. Dividends received from associates are recognised in the parent entity's
profit or loss, rather than being deducted from the carrying amount of these investments.
(s) 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
consolidated 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.
(t) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2012 reporting periods. The Group's assessment of the impact of these new standards and interpretations is set
out below.
(i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from
AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9
(December 2010) (effective from 1 January 2013*)
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets
and financial liabilities. The standard is not applicable until 1 January 2013* but is available for early adoption.
Management are in the process of assessing the impact on financial assets but do not believe this will be
significant.
There will be no impact on the Group's accounting for financial liabilities, as the new requirements only affect the
accounting for financial liabilities that are designated at fair value through profit or loss and the Trust does not
have any such liabilities. The Group has not yet decided when to adopt AASB 9.
* In December 2011, the IASB delayed the application date of IFRS 9 to 1 January 2015. The AASB is expected
to make an equivalent amendment to AASB 9 shortly.
(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests
in Other Entities, revised AASB 127 Separate Financial Statements and AASB 128 Investments in
Associates and Joint Ventures and AASB 2011-7 Amendments to Australian Accounting Standards arising
from the Consolidation and Joint Arrangements Standards (effective 1 January 2013)
In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for
joint arrangements, consolidated financial statements and associated disclosures.
161 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(t) New accounting standards and interpretations (continued)
(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests
in Other Entities, revised AASB 127 Separate Financial Statements and AASB 128 Investments in
Associates and Joint Ventures and AASB 2011-7 Amendments to Australian Accounting Standards arising
from the Consolidation and Joint Arrangements Standards (effective 1 January 2013)
AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate
Financial Statements, and Interpretation 112 Consolidation - Special Purpose Entities. The core principle that a
consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains
unchanged, as do the mechanics of consolidation. However the standard introduces a single definition of control
that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns
before control is present. Power is the current ability to direct the activities that significantly influence returns.
Returns must vary and can be positive, negative or both. Management are currently assessing the impact but do
not believe it will be significant.
AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on
the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the
joint arrangement. AASB 11 also provides guidance for parties that participate in joint arrangements but do not
share joint control. This will not impact the Group as it does not have any such arrangements.
AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and
AASB 11, and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of
this standard by the Group will not affect any of the amounts recognised in the financial statements, but will
impact the type of information disclosed in relation to the Group's investments.
Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not
remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and
vice versa. The amendments also introduce a 'partial disposal' concept. The Group is still assessing the impact of
these amendments.
The Group does not expect to adopt the new standards before their operative date.
(iii) AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to
Australian Accounting Standards arising from Reduced Disclosure Requirements (effective from 1 July 2013)
On 30 June 2010 the AASB officially introduced a revised differential reporting framework in Australia. Under this
framework, a two-tier differential reporting regime applies to all entities that prepare general purpose financial
statements. Transurban Holding Trust is listed on the ASX and is therefore not eligible to adopt the new
Australian Accounting Standards - Reduced Disclosure Requirements. The two standards will have no impact on
the financial statements of the Group.
(iv) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards
arising from AASB 13 (effective 1 January 2013)
AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value
disclosures. The Group has yet to determine which, if any, of its current measurement techniques will have to
change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on
any of the amounts recognised in the financial statements. However, application of the new standard will impact
the type of information disclosed in the notes to the consolidated financial statements. The Group does not intend
to adopt the new standard before its operative date.
(v) AASB 2011-9 Amendments to Australian Accounting Standards - Presentation of Items of Other
Comprehensive Income (effective 1 July 2012)
In September 2011, the AASB made an amendment to AASB 101 Presentation of Financial Statements which
requires entities to separate items presented in other comprehensive income into two groups, based on whether
they may be recycled to profit or loss in the future. This will not affect the measurement of any of the items
recognised in the balance sheet or the profit or loss in the current period. The Group intends to adopt the new
standard from 1 July 2012.
162 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(t) New accounting standards and interpretations (continued)
(vi) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management
Personnel Disclosure Requirements (effective 1 July 2013)
In July 2011 the AASB decided to remove the individual key management personnel (KMP) disclosure
requirements from AASB 124 Related Party Disclosures, to achieve consistency with the international equivalent
standard and remove a duplication of the requirements with the Corporations Act 2001. While this will reduce the
disclosures that are currently required in the notes to the financial statements, it will not affect any of the amounts
recognised in the financial statements. The amendments apply from 1 July 2013 and cannot be adopted early.
The Corporations Act requirements in relation to remuneration reports will remain unchanged for now, but these
requirements are currently subject to review and may also be revised in the near future.
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 segment
Management has determined that Transurban Holding Trust has one operating segment, based on the review
and management of the consolidated Group.
Transurban Holding Trust operations involve 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 these
activities. The management structure and internal reporting of the Trust are based on this operating segment.
163 TRANSURBAN ANNUAL REPORT 2012
4 Revenue
Rental income
Construction revenue
Other revenue
Total revenue
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
Notes
4(a)
4(b)
30 June
2012
$'000
30 June
2011
$'000
260,060
224,296
174
484,530
251,385
160,751
205
412,341
Rental income
(a)
Rental income is derived from property held by the Group and is recognised in the income statement in
accordance with the lease contract.
(b)
Construction revenue is recognised during the construction phase of an intangible asset.
Construction revenue
5 Other income
Concession notes
(a) Concession notes
Notes
5(a)
30 June
2012
$'000
30 June
2011
$'000
25,333
25,333
24,115
24,115
Income from concession notes relates to the CityLink concession notes, following agreements reached with the
State of Victoria and Vic Roads. Under the agreements, the Group paid a total of $765 million to reassign all
current and future concession notes incurred under the provisions of the Melbourne CityLink Concession Deed to
Transurban Holding Trust. The Group recognises income as additional notes are issued by CityLink Melbourne
Limited semi-annually.
6 Expenses
30 June
2012
$'000
30 June
2011
$'000
Profit before income tax includes the following specific
expenses:
Depreciation and amortisation expense - operating cost
108,604
106,745
164 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
30 June
2012
$'000
30 June
2011
$'000
Notes
462,093
494
4,272
1,052
52,709
520,620
443,674
488
-
-
50,259
494,421
7(a)
(338,778)
-
-
(338,778)
(327,069)
(8,385)
(1,608)
(337,062)
181,842
157,359
7 Net finance income
Finance income
Interest income from related parties
Other interest income
Net foreign exchange gains
Net movement in promissory note payable
Re-measurement of concession notes receivable
Total finance income
Finance costs
Interest and finance charges paid/payable
Net foreign exchange losses
Net movement in promissory note payable
Total finance costs
Net finance income
(a) Re-measurement of concession notes
Re-measurement of concession notes represent the discount unwinding over the passage of time on these notes
and the change in the payment profile of the concession notes.
165 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
8 Income tax expense
Income tax expense
Current tax
Deferred tax
(Over)/Under provided in prior years
Deferred income tax (revenue) included in income tax expense comprises:
(Increase) decrease in deferred tax assets (note 15)
(Decrease) increase in deferred tax liabilities (note 15)
Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax expense
Tax at the Australian tax rate of 30% (2011 - 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Trust income not subject to tax
(Over)/Under provided in prior years
Income tax expense
9 Current assets - Cash and cash equivalents
Cash at bank and in hand
All cash balances are interest bearing.
30 June
2012
$'000
30 June
2011
$'000
3,534
(936)
(24)
2,574
(1,042)
106
(936)
3,480
(776)
2
2,706
(860)
84
(776)
30 June
2012
$'000
30 June
2011
$'000
353,174
105,952
321,090
96,327
(103,354)
2,598
(93,623)
2,704
(24)
2,574
2
2,706
(355,748)
(323,796)
30 June
2012
$'000
30 June
2011
$'000
3,545
3,545
11,036
11,036
166 TRANSURBAN ANNUAL REPORT 2012
10 Current assets - Trade and other receivables
Loans to related parties
Prepayments
Other receivables
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
Notes
10(a)
10(b)
30 June
2012
$'000
30 June
2011
$'000
245,699
1,534
1,737
248,970
210,633
1,352
657
212,642
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) Loans to related parties
Loans to related parties predominantly represent interest and finance charges on funds loaned from Transurban
Finance Company, distributions receivable from its subsidiaries and accrued interest from a related party. There
is no allowance for doubtful debts as the counterparties are related parties.
(b) Prepayments
Prepayments relate to expenses that have been paid but not yet incurred as at 30 June 2012.
11 Non-current assets - Receivables
Concession notes
Loans to related parties
Notes
11(a)
11(b)
30 June
2012
$'000
30 June
2011
$'000
632,383
5,765,982
6,398,365
554,341
5,810,539
6,364,880
None of the non-current receivables are impaired or past due but not impaired.
(a) Concession notes
The Group reached agreements with the State of Victoria and Vic Roads, under which the Group paid $765
million to the State to reassign all current and future concession notes incurred under the provisions of the
Melbourne CityLink Concession Deed to Transurban Holding Trust.
(b) Loans to related parties
Loans to related parties represents amounts advanced to other members of the Transurban Group. There is no
allowance for doubtful debts as the counterparties are related parties.
167 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
12 Equity accounted investments
Ownership interest
Carrying amount
30 June
2012
%
30 June
2011
%
30 June
2012
$'000
30 June
2011
$'000
Westlink M7:
Westlink Motorway Limited
WSO Finance Pty Limited
Westlink Motorway Partnership
50
50
50
50
50
50
-
-
-
-
-
-
-
-
Each of the above is a member of the Westlink Motorway Group, established to invest in, construct and operate
the Westlink M7 Motorway in Sydney for a period of 34 years until February 2037. All were incorporated in
Australia.
Westlink Motorway Limited is the nominee manager of the Westlink Motorway Partnership.
WSO Finance Pty Limited is the financier of the Motorway.
Westlink Motorway Partnership was responsible for the construction of the Motorway. The Motorway opened for
operation on 16 December 2005.
Summarised financial information of equity accounted investments
2012
Westlink M7
2011
Westlink M7
Ownership
Interest %
Assets
$'000
Group's share of:
Liabilities
$'000
Revenues
$'000
Loss
$'000
50
50
726,107
726,107
(970,838)
(970,838)
60,350
60,350
(22,044)
(22,044)
702,292
702,292
(876,307)
(876,307)
57,316
57,316
(26,128)
(26,128)
168 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
12 Equity accounted investments (continued)
Movements in carrying amounts
Balance 1 July
Share of losses after income tax
Additional investment acquired
Balance at 30 June
Share of profits or losses
Loss before income tax
Losses not recognised
Balance at 1 July
Unrecognised losses for the year
Share of equity accounted investments' expenditure commitments
As at the reporting date, there are no expenditure commitments.
Contingent liabilities of equity accounted investments
As at the reporting date, there are no contingent liabilities.
13 Non-current assets - Term loan notes
Term loan notes
30 June
2012
$'000
30 June
2011
$'000
-
-
-
-
-
-
-
-
-
-
-
-
126,568
22,044
148,612
100,440
26,128
126,568
30 June
2012
$'000
30 June
2011
$'000
782,667
782,667
724,225
724,225
Term Loan Notes (TLN's) represent Transurban’s debt funding contribution to the Westlink M7 Motorway. 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 Maritime Services (formerly known as 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 2012 the Group capitalised interest of $58.4 million (2011: $46.2 million).
The TLN's are accounted for as held-to-maturity investments.
Impairment and risk exposure
None of the TLN's are either past due or impaired. All TLN's 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.
169 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
30 June
2012
$'000
30 June
2011
$'000
-
-
70
70
70
76
76
913
913
750
750
1,663
754
754
85,039
85,039
14,666
14,666
85,115
15,420
14 Derivative financial instruments
Current assets
Interest rate swap contracts - cash flow hedges
Total current derivative financial instrument assets
Non-current assets
Interest rate swap contracts - cash flow hedges
Total non-current derivative financial instruments
Total derivative financial instrument assets
Current liabilities
Interest rate swap contracts - cash flow hedges
Total current derivative financial instrument liabilities
Non-current liabilities
Interest rate swap contracts - cash flow hedges
Total non-current derivative financial instrument liabilities
Total derivative financial instrument liabilities
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 financial risk
management policies (refer to note 37).
Interest rate swap contracts - cash flow hedges
The Group uses interest rate swap contracts for hedging purposes to convert variable rate borrowings to fixed
interest. Variable rate borrowings of the Group currently bear an average interest rate of 5.3 per cent (2011: 7.2
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.
Swaps taken out by the Group currently cover 99 per cent (2011: 98 per cent) of long term variable debt. The
average all-in rate after hedging on the hedged portion of the Group's variable rate borrowings is 7.1 per cent
(2011: 7.5 per cent).
170 TRANSURBAN ANNUAL REPORT 2012
15 Deferred tax assets and liabilities
The balance comprises
temporary difference
attribulate to:
Current year and prior year losses
Receivables
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
Movements:
Opening balance at 1 July
Credited/(charged) to the income statement
Balance at 30 June
Deferred tax assets/liabilities to be recovered
after more than 12 months
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
Assets
Liabilities
Net
30 June
2012
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2011
$'000
4,113
-
4,113
(1,413)
2,700
3,072
-
3,072
(1,308)
1,764
-
(1,413)
(1,413)
1,413
-
-
(1,308)
(1,308)
1,308
-
4,113
(1,413)
2,700
-
2,700
3,072
(1,308)
1,764
-
1,764
3,072
1,042
4,114
2,212
860
3,072
(1,308)
(106)
(1,414)
(1,224)
(84)
(1,308)
1,764
936
2,700
988
776
1,764
4,114
4,114
3,072
3,072
(1,413)
(1,413)
(1,308)
(1,308)
2,700
2,700
1,764
1,764
The set off of deferred tax assets and liabilities relates to deferred tax balances for Australian domiciled entities
that are levied tax by the Australian Taxation Office.
171 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
16 Non-current assets - Intangible assets
CityLink
$'000
Hills M2
Motorway
$'000
Lane Cove
Tunnel
$'000
Asset
under
construction
$'000
Total
$'000
1,207,442
(254,163)
953,279
2,116,141
(362,884)
1,753,257
-
-
-
-
-
-
3,323,583
(617,047)
2,706,536
953,279
-
(40,475)
912,804
1,753,257
-
(54,530)
1,698,727
-
348,290
(11,740)
336,550
-
160,751
-
160,751
2,706,536
509,041
(106,745)
3,108,832
1,207,442
(294,638)
912,804
2,116,141
(417,414)
1,698,727
348,290
(11,740)
336,550
160,751
-
160,751
3,832,624
(723,792)
3,108,832
912,804
-
(40,475)
872,329
1,698,727
-
(54,945)
1,643,782
336,550
-
(13,184)
323,366
160,751
224,296
-
385,047
3,108,832
224,296
(108,604)
3,224,524
1,207,442
(335,113)
872,329
2,116,141
(472,359)
1,643,782
348,290
(24,924)
323,366
385,047
-
385,047
4,056,920
(832,396)
3,224,524
At 1 July 2010
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2011
Opening net book amount
Additions
Amortisation charge
Closing net book amount
At 30 June 2011
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2012
Opening net book amount
Additions
Amortisation charge
Closing net book amount
At 30 June 2012
Cost
Accumulated amortisation
Net book amount
Concession Assets
The CityLink, Hills M2 and Lane Cove Tunnel 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 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 per cent (equivalent to an annual escalation rate of 4.5 per
cent) for the first 15 years then quarterly by CPI, but no greater than annual CPI plus 2.5 per cent. At the end of
the Concession period, all concession assets are to be returned to the Victorian State Government.
Hills M2 concession asset
Transurban has the right to toll the Hills M2 Motorway until 2046. The Concession Deed also requires Transurban
to maintain the Motorway.
172 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
16 Non-current assets - Intangible assets (continued)
Concession Assets (continued)
Hills M2 concession asset (continued)
Toll increases for the 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 per cent, subject to integer rounding. At the end of the
concession period, all concession assets will be returned to the NSW State Government.
Lane Cove Tunnel
Transurban has the right to toll the Lane Cove Tunnel until January 2037.
Toll increases for the Lane Cove Tunnel are based on a theoretical toll increase as defined in the Concession
Deed, being a quarterly escalation of CPI, subject to the nearest whole cent rounding. At the end of the
concession period, all concession assets will be returned to the NSW State Government.
Assets under construction
The Group is currently undertaking an upgrade of the Hills M2 Motorway. Construction on the M2 upgrade
commenced in January 2011. This will be transferred to the intangible asset upon completion.
Impairment testing
The Group tests whether intangible assets have suffered any impairments, in accordance with the accounting
policy stated in note 1(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 in calculating the recoverable amount
The Group makes assumptions in calculating the recoverable amount 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 ranging from 8.8 to 11.0 per cent (2011: ranging from 8.8 to 11.0 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 CPI and Average Weekly Earnings (AWE) forecasts. A long term CPI rate of 2.5 per cent (2011: 2.5 per cent)
and AWE of 4.0 per cent (2011: 4.0 per cent) have been used.
17 Current liabilities - Trade and other payables
30 June
2012
$'000
30 June
2011
$'000
24,042
200,796
224,838
18,613
173,927
192,540
Notes
18(a)
18(b)
30 June
2012
$'000
30 June
2011
$'000
1,412,849
3,297,512
4,710,361
1,286,769
3,235,873
4,522,642
Trade payables and accruals
Related party payables
18 Borrowings
Term debt
Loans from related parties
173 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
18 Borrowings (continued)
(a) Term debt
The term debt facilities are comprised of:
•
•
•
$520.0 million facility entered into by AMT Management Limited (as trustee for Airport Motorway Trust).
The facility has deferred borrowing costs of $4.4 million.
$740.0 million facility entered into by Hills Motorway Management Limited (as trustee for Hills Motorway
Trust). The facility has deferred borrowing costs of $6.5 million.
$260.0 million facility entered into by LCT-MRE Nominees Pty Limited (as trustee for LCT-MRE Trust).
The facility has deferred borrowing costs of $0.9 million.
The Airport Motorway facility was refinanced in July 2011 and is fully secured against the respective rights of
Airport Motorway Limited and Airport Motorway Trust and their assets. The facility is a $520.0 million
non-recourse syndicated facility with terms of three years ($295.0 million) and seven years ($225.0 million). The
current floating interest rate applicable to the facility is 3.5 per cent (2011: 4.9 per cent). These facilities are
currently 99 per cent hedged to an all-in rate after hedging of 7.0 per cent.
The Hills M2 facility was refinanced in November 2010 and is fully secured against the respective rights of Hills
Motorway Limited and Hills Motorway Trust and their assets. The facility is a non-recourse syndicated facility
totaling $740.0 million. The financing comprised: the refinancing of $465.0 million of existing debt with terms of
four years ($400.0 million), and six years ($65.0 million); and a new construction capex facility of $275.0 million
with a term of six years. As at 30 June 2012, $179.7 million was drawn under the construction capex facility. The
total facility is currently 98 per cent hedged with an all-in rate after hedging of 7.1 per cent.
The Lane Cove Tunnel facility was established in August 2010 to partially finance the acquisition of the Lane
Cove Tunnel and is fully secured against the respective rights of LCT-MRE Pty Limited and LCT-MRE Trust and
their assets. This facility is a non-recourse syndicated facility with a term of three years. The current floating rate
applicable to the facility is 3.6 per cent (2011: 4.9 per cent). The facility is currently fully hedged to an all-in rate
after hedging of 7.0 per cent.
(b) Loans from related parties
The Group receives funding from a related party, Transurban Finance Company Pty Limited, which is used to
finance its activities.
Covenants
The Transurban 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 Transurban Group has a market capitalisation clause where gearing must not exceed 60 per cent.
Based on the balance sheet at 30 June 2012, the Transurban Group's Security price would need to close below
$2.15 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 1.2 times
• Hills M2 Motorway - ICR greater than 1.2 times
•
Lane Cove Tunnel - ICR greater than 1.15 times
174 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
19 Current liabilities - Provisions
Distribution to security holders
Distribution to non-controlling interests in subsidiaries
Notes
19(a)
19(a)
30 June
2012
$'000
30 June
2011
$'000
167,756
28,065
195,821
202,146
29,347
231,493
(a) Distributions to security holders and non-controlling interests
These distributions are provided for once approved by the Board and are announced to equity holders.
Movements in provisions
Movements in each class of provision during the financial year are set out below:
2012
Carrying amount at 1 July
Provision recognised
Amounts paid/utilised during the year
Carrying amount at 30 June
20 Other liabilities
Current
Unearned income (related parties)
Non-current
Promissory notes
Total other liabilities
(a) Unearned income
Distribution to
non-
controlling
interests in
subsidiaries
$'000
Distribution
to security
holders
$'000
202,146
327,366
(361,756)
167,756
29,347
13,036
(14,318)
28,065
Notes
20(a)
20(b)
30 June
2012
$'000
30 June
2011
$'000
20,549
20,549
20,326
20,326
33,287
33,287
19,720
19,720
40,875
53,007
Unearned income related to rental income received in advance from a related party.
175 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
20 Other liabilities (continued)
(b) Promissory notes
The Hills Motorway Trust has entered into leases with Roads and Maritime Service (RMS). Annual lease liabilities
under these leases total $7.0 million, indexed annually to CPI 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 RMS.
Promissory notes are recognised 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 (2011: 12 per cent) which
recognises their subordinated nature.
The face value of Promissory notes on issue at 30 June 2012 is $136.9 million (2011: $126.5 million). The net
present value at 30 June 2012 of the redemption payments relating to these Promissory notes is $20.3 million
(2011: $19.7 million).
21 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.
Issued units
30 June
2012
Number
'000
30 June
2011
Number
'000
30 June
2012
$'000
30 June
2011
$'000
Ordinary units fully paid
1,458,321
1,458,321
1,443,193
1,443,193
7,240,721
7,240,721
7,188,221
7,188,221
Units in trust
The number of units on issue is 1,458,321,154 (2011: 1,443,543,731). The difference of nil (2011: 351,075)
relates to treasury securities.
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.
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.
Capital risk management
The Transurban 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 18.
The Group's objectives when managing capital are to safeguard its 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.
176 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
21 Issued units (continued)
Capital risk management (continued)
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.
Movements in issued units
Opening balance at 1 July 2010
Distribution reinvestment plan
Purchase, disposal and vesting of treasury securities
Transfer vesting portion of LTI from share-based
payment reserve
Purchase of Performance Rights Plan units
Closing balance at 30 June 2011
Opening balance at 1 July 2011
Distribution reinvestment plan
Disposal and vesting of treasury securities
Transfer vesting portion of LTI from share-based
payment reserve
Purchase of Performance Awards Plan units
Closing balance at 30 June 2012
Notes
21(a)
21(b)
21(a)
21(b)
Number of
units
'000
Consolidated
$'000
1,414,295
28,876
22
-
-
1,443,193
1,443,193
14,162
351
615
-
1,458,321
7,103,500
84,691
68
420
(458)
7,188,221
7,188,221
51,682
413
1,022
(617)
7,240,721
(a) 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.
(b) 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 prior to vesting date. On forfeit the securities are sold
on market.
22 Reserves and accumulated losses
Reserves
Cash flow hedges
Share-based payments
30 June
2012
$'000
30 June
2011
$'000
(76,190)
6,048
(70,142)
(12,001)
5,162
(6,839)
177 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
22 Reserves and accumulated losses (continued)
Reserves (continued)
Movements:
Cash flow hedges
Balance 1 July
Revaluation - gross (note 14)
Transfer to net profit attributable to non-controlling interests
Balance 30 June
Share-based payments
Balance 1 July
Employee share plan expense
Transfer vesting portion of LTI to issued units
Transfer non-vesting portion of LTI from retained earnings
Balance 30 June
Accumulated losses
Movements in accumulated losses were as follows:
Balance 1 July
Profit for the year attributable to owners of Transurban Holding Trust
Distributions
Transfer non-vesting portion of LTI to share based payments reserve
Balance 30 June
Nature and purpose of other reserves
30 June
2012
$'000
30 June
2011
$'000
(12,001)
(71,286)
7,097
(76,190)
5,162
2,365
(1,435)
(44)
6,048
(7,339)
(4,263)
(399)
(12,001)
3,354
2,302
(420)
(74)
5,162
2012
$'000
2011
$'000
(1,814,990)
337,662
(327,366)
44
(1,804,650)
(1,731,625)
306,024
(389,463)
74
(1,814,990)
Cash flow hedges
The cash flow hedges reserve is used to record gains or losses on a hedging instrument in a cash flow hedge
that are recognised in other comprehensive income, as described in note 1(k). Amounts are reclassified to profit
or loss when the associated hedged transaction affects profit or loss.
Share-based payments
The share-based payments reserve is used to recognise the fair value of long-term incentives issued but not
exercised.
178 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
23 Distributions
Distributions payable
Final distribution payable and recognised as a liability: 11.5 cents (2011: 14.0
cents) per fully paid Stapled Security payable 14 August 2012
30 June
2012
$'000
30 June
2011
$'000
167,707
167,707
202,096
202,096
Distributions paid during the year
Final distribution for 2011 financial year of 14.0 cents (2010: 12.0 cents) per fully
paid Stapled Security paid 11 August 2011
Interim distribution for 2012 financial year of 11.0 cents (2011: 13.0 cents) per
fully paid Stapled Security paid 14 February 2012
Total distributions paid during the year
202,096
169,760
159,654
361,750
187,367
357,127
Distributions paid in cash or satisfied by the issue of Stapled Securities
under the distribution reinvestment plan during the years ended 30 June
2012 and 30 June 2011
Paid in cash
Satisfied by issue of Stapled Securities (a)
Funds available for future distribution reinvestment plans
294,958
66,791
1
361,750
232,577
124,557
(7)
357,127
(a) The value of stapled securities represents the total value of securities issued, however, this value
is apportioned between Transurban Holdings Limited ($18.7 million), Transurban Holding Trust
($45.4 million) and Transurban International Limited ($2.7 million).
24 Remuneration of auditors
The audit fee for the current and prior year has been borne and paid by a related party, Transurban Limited.
25 Contingencies
The Group and parent entity had contingent liabilities at 30 June 2012 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 be complete in late 2012 and the tolling concession will
operate for 75 years.
179 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
25 Contingencies (continued)
Equity guarantee (continued)
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 per cent of the equity of DRIVe and recognises this investment in the
consolidated financial statements using the equity method of accounting. DRIVe holds 90 per cent 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$182,857,326 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 per cent 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.
26 Intra-group guarantees
As at 30 June 2012, 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.
27 Commitments
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Intangible assets
Payable:
Within one year
Later than one year but not later than five years
Promissory notes
30 June
2012
$'000
30 June
2011
$'000
139,195
12,792
151,987
242,997
98,498
341,495
The Responsible Entity, on behalf of the Hills Motorway Trust, has entered into an agreement with the RMS.
Annual liabilities under this agreement total $7.0 million indexed annually to the CPI over the estimated period
that the Hills M2 Motorway will be used. Until such time as a threshold return is achieved, payments under this
agreement can be made at the discretion of the Responsible Entity, by means of the issue of non-interest bearing
promissory notes to the RMS. For further information refer to note 20.
180 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
28 Related party transactions
Other related parties
All of the directors of Transurban Infrastructure Management Limited are also directors of Transurban Holdings
Limited (THL) and Transurban International Limited (TIL). The following services are provided by the Group to
THL and TIL and/or their subsidiaries:
•
•
Financial support through interest bearing and non-interest bearing loans; and/or
The rental of land.
Financial support is received from Transurban Finance Company Pty Ltd in the form of an interest bearing loan.
The Group 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.
The following transactions occurred with related parties:
Amounts recognised as revenue
Rental income
Interest income
Term loan note interest revenue
Amounts recognised as expenses
Interest and other related charges paid
Responsible Entity fees
Aggregate amounts of related party receivables at balance date
Current receivables
Term loan notes (loan to associate)
Non-current receivables
Aggregate amounts of related party payables at balance date
Current payables
Non-current payables
30 June
2012
$
30 June
2011
$
260,060,073
370,765,907
91,328,563
722,154,543
251,384,307
359,109,721
84,565,108
695,059,136
252,330,549
2,791,895
255,122,444
227,015,493
2,714,245
229,729,738
245,698,961
782,667,047
5,765,981,717
6,794,347,725
210,633,245
724,225,027
5,810,538,998
6,745,397,270
200,795,653
3,297,511,859
3,498,307,512
173,927,225
3,235,872,868
3,409,800,093
Loans to/from related parties
No provision for doubtful debts has been raised in relation to any outstanding balances, and no expense has
been recognised in respect of bad or doubtful debts from related parties.
181 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
28 Related party transactions (continued)
Loans 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 Maritime Services of New South W ales
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.
Terms and conditions of transactions with related parties other than key management personnel or
entities
All transactions were made on normal terms and conditions and at market rates.
29 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
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
Airport Motorway Trust
LCT - MRE Trust
LCT - MRE Holding Trust
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
The proportion of ownership interest is equal to the proportion of voting power held.
2012
%
2011
%
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
100
100
100
75.10
100
100
182 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
30 Parent entity financial information
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Unit holders' funds
Issued units
Reserves
Accumulated losses
Profit for the year
Total comprehensive income
Contingent liabilities of the parent entity
For details of contingent liabilities of the parent entity, refer to note 25.
31 Events occurring after balance sheet date
30 June
2012
$'000
30 June
2011
$'000
683,578
512,008
7,697,413
7,460,573
8,380,991
7,972,581
304,959
308,721
2,244,702
1,984,012
2,549,661
2,292,733
(17,493,990)
(17,039,544)
7,240,721
6,048
(1,415,439)
5,831,330
7,188,221
5,162
(1,513,535)
5,679,848
425,419
465,577
425,419
465,577
Apart from the refinancing of the debt as disclosed in note 18(a), there are no other 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 Group, the results of those operations or the state of affairs of the Group
in subsequent financial years.
183 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
32 Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year
Depreciation and amortisation
Capitalised term loan note interest
Non-cash concession notes income
Non-cash finance costs
Change in operating assets and liabilities:
(Increase) in receivables and prepayments
(Increase) in operating related party balances
Movement in current tax liabilities and deferred taxes
Increase in payables
Increase (decrease) in unearned income
Increase in Promissory Note liability
Net cash inflow from operating activities
33 Non-cash investing and financing activities
30 June
2012
$'000
30 June
2011
$'000
350,600
108,604
(58,442)
(78,042)
14,997
(1,262)
(255,388)
613
5,429
(12,738)
606
74,977
318,384
106,745
(46,181)
(74,374)
44,996
(845)
(310,760)
(505)
979
33,287
3,075
74,801
30 June
2012
$'000
30 June
2011
$'000
Distributions satisfied by the issue of units under the distribution reinvestment
plan
51,682
84,691
34 Earnings per unit
Basic earnings per unit
30 June
2012
Cents
30 June
2011
Cents
Earnings attributable to the ordinary unit holder
Total basic earnings per unit attributable to the ordinary equity holders of the
Trust
23.2
23.2
21.3
21.3
Diluted earnings per unit
30 June
2012
Cents
30 June
2011
Cents
Earnings attributable to the ordinary unit holder
Total diluted earnings per unit attributable to the ordinary equity holders of the
Trust
23.2
23.2
21.3
21.3
184 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
34 Earnings per unit (continued)
Reconciliation of earnings used in calculating earnings per unit
Basic and diluted earnings per unit
Profit for the year
Profit attributable to non-controlling interests
Profit attributable to ordinary unit holders of the trust and used in calculating
basic and diluted earnings per unit
Weighted average number of units used as the denominator
30 June
2012
$'000
30 June
2011
$'000
350,600
(12,938)
318,384
(12,360)
337,662
306,024
30 June
2012
Number
30 June
2011
Number
Weighted average number of units used as the denominator in calculating
basic and diluted earnings per unit
1,452,932,838
1,437,820,619
Basic earnings per unit
Basic earnings per unit is determined by dividing the profit attributable to unit holders excluding any
non-controlling interest and costs of servicing equity other than distributions, by the weighted average number of
units outstanding during the financial year.
Diluted earnings per unit
Diluted earnings per unit adjusts the figures used in the determination of basic earnings per unit to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential units
and the weighted average number of units that would have been outstanding assuming the conversion of all
dilutive potential units.
35 Share-based payments
Performance Awards plan
Under the Performance Awards Plan (PAP), eligible executives 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 at vesting. No dividends or distributions on securities are payable to participants
prior to vesting.
Dual performance measures (Free Cash Flow (FCF) (from 1 July 2011) or earnings before interest, tax,
depreciation and amortisation (EBITDA) measure (pre 1 July 2011) and relative total security holder return (TSR)
apply to Performance Awards, each representing 50 per cent of the award. 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 with a three year vesting period. For the plan granted 11 December 2009 and
future grants, the awards are tested at the end of the three year vesting period. However, for the 1 November
2008 grant, the awards were tested at the end of each year. If the performance measures were satisfied for the
year, one third of the awards were preserved until the end of the three year period. At the end of the three years
a cumulative test of the performance measures was applied to any unvested awards.
185 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
35 Share-based payments (continued)
Performance Awards plan (continued)
Grant date
Vesting /
Expiry date
Fair value at grant date ($)
FCF
EBITDA
TSR
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
2012
1 Nov 2008
11 Dec 2009
1 Nov 2010
23 Dec 2010
25 Sep 2011
11 Nov 2011
Total
1 Nov 2011
11 Dec 2012
1 Nov 2013
1 Nov 2013
30 Jun 2014
30 Jun 2014
3.30
3.33
3.23
3.33
3.37
3.27
4.27
4.97
4.62
4.97
N/A
N/A
N/A
N/A
N/A
N/A
4.63
4.81
1,260,113
1,776,583
1,401,575
684,683
-
-
(1,193,516)
-
-
-
-
-
-
-
-
837,990
-
715,024
5,122,954 1,553,014 (1,193,516)
(66,597)
(150,589)
(200,498)
-
(176,058)
-
(593,742)
-
1,625,994
1,201,077
684,683
661,932
715,024
4,888,710
Weighted average exercise price
$4.00
$4.02
$3.79
$3.99
$4.06
Grant date
Vesting /
Expiry date
Fair value at grant date ($)
FCF
EBITDA
TSR
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
2011
1 Nov 2008
11 Dec 2009
1 Nov 2010
23 Dec 010
Total
1 Nov 2011
11 Dec 2012
1 Nov 2013
1 Nov 2013
3.30
3.33
3.23
3.33
4.27
4.97
4.62
4.97
N/A
N/A
N/A
N/A
1,277,630
1,990,913
-
-
3,268,543
-
-
1,658,614
684,683
2,343,297
-
-
-
-
-
(17,517)
(214,330)
(257,039)
-
(488,886)
1,260,113
1,776,583
1,401,575
684,683
5,122,954
Weighted average exercise price
$4.01
$3.99
$-
$4.02
$4.00
Executive Equity Plan
Equity awards were granted under the Executive Equity Plan (EEP) based on executives' performance and were
designed to encourage retention of executives while focusing on business excellence.
Individuals who are high performers and in business critical roles were nominated for awards for their past
contribution and expected future performance. Board approval was required to grant EEP awards to nominated
executives.
Under the EEP, eligible executives received 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 last made under the EEP on 1 November 2008. The table below provides details of the awards
granted.
Grant date
2012
1 Nov 2008
Total
Expiry date
Exercise
price
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
1 Nov 2011
$4.27
433,722
433,722
-
-
(433,722)
(433,722)
-
-
-
-
Weighted average exercise price
$4.27
$-
$4.27
$-
$-
186 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
35 Share-based payments (continued)
Executive Equity Plan (continued)
Grant date
2011
1 Nov 2008
Total
Vesting /
Expiry date
Exercise
price
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
1 Nov 2011
$4.27
548,650
548,650
-
-
(72,334)
(72,334)
(42,594)
(42,594)
433,722
433,722
Weighted average exercise price
$4.27
$-
$4.27
$4.27
$4.27
Performance rights plan
The Performance Rights Plan (PRP) enabled eligible executives to receive a grant of Performance Rights that
entitled participants to receive stapled securities in the Transurban Group (Securities) at no cost at the end of a
three year performance period, subject to the achievement of performance conditions. No dividends or
distributions on Securities were payable to participants prior to vesting. The Plan has two performance measures,
EBITDA and relative TSR against the S&P/ASX 100 Industrials, each applied to 50 per cent of the PRP award.
For US participants of the plan, they will be awarded a cash amount instead of stapled securities at the end of the
three year performance period, subject to performance conditions. There is only one testing date at the end of the
performance hurdles at the vesting date.
Awards were last made under the PRP in November 2007. This award matured on 1 November 2010. 84.44 per
cent of awards subject to the TSR performance condition vested based on Transurban's ranking against the
constituents of the S&P/ASX 100. None of the awards subject to the statutory EBITDA growth or DRIVe
management fee growth conditions vested as the prescribed performance conditions were not met.
Australian based plan
Grant date
2011
1 Nov 2007
Total
Vesting /
Expiry date
Fair value at grant
date ($)
TSR
EBITDA
Balance at
start of the
year
Number
Granted
during the
year
Number
Vested
during the
year
Number
Lapsed
during the
year
Number
Balance at
end of the
year
Number
1 Nov 2010
3.50
5.96
331,594
331,594
-
-
(143,060)
(143,060)
(188,534)
(188,534)
-
-
Weighted average exercise price
$4.73
$-
$4.73
$4.73
$-
Overseas based plan
Grant date
2011
1 Nov 2007
Total
Vesting /
Expiry date
Fair value at grant
date ($)
TSR
DRIVe
mgt fee
Balance at
start of the
year
Granted
during the
year
Vested
during the
year
Lapsed
during the
year
Balance at
end of the
year
Number
Number
Number
Number
Number
1 Nov 2010
3.50
5.96
247,561
247,561
-
-
(107,007)
(107,007)
(140,554)
(140,554)
-
-
Weighted average exercise price
$4.26
$-
$4.26
$4.26
$-
187 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
35 Share-based payments (continued)
Assessed fair value
The assessed fair value at grant date of the plans above has been independently determined in accordance with
AASB 2.
The TSR component of the Performance Awards has been valued applying a Monte-Carlo simulation (of a
geometric Brownian motion process, as used in the Black-Scholes framework) to model Transurban’s future
security price and TSR performance against the comparator group performance at vesting date. The valuation
model takes into account the term of the award, 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 award.
The Free Cash component of performance awards has been valued using the Black Scholes framework. The
model valuation takes into account the term of the award, the security price at grant date, the expected dividend
yield and the risk free interest rate for the term of the award.
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 2011 to 30 June 2012, the cost of company
matches was $114,459 (2011: $89,885) for the Investment Tax Exempt Plan and $391,708 (2011: $304,375) for
the Investment Tax Deferred Plan.
The third element under the Plan is the Incentive Plan. Subject to Board approval and the performance of the
Group, eligible employees may receive a certain number of Transurban securities at no cost to them. In February
2012, each participant was allocated 100 stapled securities at a value of $5.67 per security. Stapled Securities
provided under the Plan were acquired on the open market. Eligible US based participants received an
equivalent cash award.
30 June
2012
Number
30 June
2011
Number
Shares purchased on the market under the plan and provided to participating
employees
42,200
42,200
36 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 Group 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 are
discussed below.
Valuation of Promissory notes and Concession Notes
The Group 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.
188 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
36 Critical accounting estimates and judgements (continued)
Valuation of Promissory notes and Concession Notes (continued)
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.
Fair value of derivatives and other financial instruments
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.
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.
37 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 cash flows,
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.
Market risk
Foreign exchange risk
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, denominated in the currency in which the risk
arises, was as follows:
Consolidated
Receivables
Borrowings
Net exposure
Exposure to other foreign exchange movements is not material.
30 June 2012 30 June 2011
USD
$'000
USD
$'000
379,432
(342,278)
37,154
357,265
(313,600)
43,665
189 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
37 Financial risk management (continued)
Market risk (continued)
Foreign exchange risk (continued)
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 Group’s post-tax profit for the year
would have been $3,258,000 lower (2011: $3,464,000 lower) or $3,967,000 higher (2011: $4,175,000 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.
Price risk
The Group is not exposed to price risk.
Cash flow and fair value interest rate risk
The Group’s main exposure to interest rate risk arises from cash equivalents, loans and other receivables with
variable interest rates, and 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 per cent. Covenant requirements
vary by debt facility, and require a minimum of between 50 per cent and 80 per cent of interest rate exposure to
be hedged. At 30 June 2012, 99 per cent (2011: 98 per cent) of the Group’s interest rate exposure on variable
rate borrowings was hedged.
As at the end of the reporting period, the Group had the following variable rate borrowings and interest rate swap
contracts outstanding:
30 June 2012
30 June 2011
Weighted
average
interest rate
%
Balance
$'000
Weighted
average
interest rate
%
Balance
$'000
Cash and cash equivalents
Floating rate borrowings
Interest rate swaps (notional principal amount)
Net exposure to cash flow interest rate risk
4.8%
5.3%
3.6%
(3,545)
1,424,720
(1,408,500)
12,675
5.5%
7.2%
4.9%
(11,036)
1,304,050
(1,282,000)
11,014
An analysis by maturities is provided in liquidity risk below.
Sensitivity
At 30 June 2012, 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 $127,000 lower/higher (2011: $110,000
lower/higher).
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.
190 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
37 Financial risk management (continued)
Credit risk (continued)
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 is through term loan notes (see note 13 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.
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 five year horizon.
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Floating rate
- Expiring within one year
- Expiring beyond one year
30 June
2012
$'000
30 June
2011
$'000
130,000
268,212
398,212
-
418,002
418,002
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 financial liabilities, net and gross settled derivative financial instruments
into relevant maturity groupings based on their contractual maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant. For interest rate swaps the cash
flows have been estimated using forward interest rates applicable at the end of the reporting period.
191 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
37 Financial risk management (continued)
Liquidity risk (continued)
Contractual
maturities of
financial
liabilities
At 30 June
2012
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
Carrying
amount
(assets)/
liabilities
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest
bearing
Variable rate
Fixed rate
Total
non-derivati
ves
Derivatives
Net settled
(interest rate
swaps)
Total
derivatives
413,886
-
73,658 379,972
223,813 473,813
-
726,625
640,775
-
24,710
782,922
-
261,833
385,257
136,910
238,265
1,889,415
550,796
1,705,063
4,395,995
434,212
1,472,523
3,237,838
711,357 853,785
1,367,400
807,632
647,090
2,264,590
6,651,854
5,144,573
30,495
27,182
15,974
10,685
5,153
1,789
91,278
85,045
30,495
27,182
15,974
10,685
5,153
1,789
91,278
85,045
192 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
37 Financial risk management (continued)
Liquidity risk (continued)
Contractual
maturities of
financial
liabilities
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
Carrying
amount
(assets)/
liabilities
At 30 June 2011
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest
bearing
Variable rate
Fixed rate
Total
non-derivatives
Derivatives
Net settled
(interest rate
swaps)
Total
derivatives
415,936
-
96,769 293,247 384,578
399,469 559,199 411,279
-
-
725,116
381,684
-
14,716
126,465
204,460
760,541 1,617,211
542,401
435,656
1,718,886 1,325,928
4,129,383 3,196,714
912,174 852,446 795,857 1,106,800
775,257 1,948,136
6,390,670 4,958,298
5,257
4,956
2,563
2,601
1,141
5,257
4,956
2,563
2,601
1,141
258
258
16,776
13,757
16,776
13,757
Fair value measurements
The carrying value of financial assets and financial liabilities brought to account at balance sheet date
approximates fair value.
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes.
Transurban Holding Trust has adopted the amendment to AASB 7 Financial Instruments: Disclosures which
requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
(b)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (level 2), and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level
3).
(c)
193 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
37 Financial risk management (continued)
Fair value measurements (continued)
The following table presents the Group's assets and liabilities measured and recognised at fair value at 30 June
2012 and 30 June 2011:
As at 30 June 2012
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
As at 30 June 2011
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
-
-
-
-
-
-
-
-
Level 1
$'000
70
70
85,115
85,115
Level 2
$'000
Level 3
$'000
1,663
1,663
15,420
15,420
-
-
-
-
-
-
-
-
70
70
85,115
85,115
Total
$'000
1,663
1,663
15,420
15,420
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 the end of each reporting period. The fair value of
interest rate swaps are calculated as the present value of the estimated future cash flows. These instruments are
included in level 2.
194 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures
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:
Executive Directors
Christopher Lynch (resigned 16 July 2012)
Scott Charlton (appointed 16 July 2012)
Non-executive Directors
Lindsay Maxsted
Neil Chatfield
Geoffrey Cosgriff (resigned 6 December 2011)
Jeremy Davis AM (resigned 6 December 2011)
Robert Edgar
Samantha Mostyn
Robert Officer
Christine O'Reilly (appointed 12 April 2012)
Rodney Slater
Ian Smith (appointed 1 January 2012)
Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of
the Trust, directly or indirectly, during the financial year:
K Daley
A Head
S Hogg *
T Honan *
M Kulper
E Mildwater
President International Development
Group General Manager, New South Wales
Chief Financial Officer
Chief Financial Officer
President, North America
Group General Manager, Victoria
(*) - On 2 May 2012, Tom Honan resigned as Chief Financial Officer, and Samantha Hogg was appointed as
Chief Financial Officer (previously she was Group General Manager, Corporate Services).
195 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
2012 REMUNERATION REPORT (AUDITED)
INTRODUCTION
This report, prepared in accordance with the Corporations Act 2001, contains detailed information regarding
the remuneration arrangements for the Directors and Senior Executives who are the 'key management
personnel' (KMP) of the Transurban Group (Group).
The KMP for the year ended 30 June 2012 are listed in the table below:
Current Non-executive Directors
Name
Lindsay Maxsted, Chair
Neil Chatfield
Bob Edgar
Samantha Mostyn
Bob Officer
Christine O'Reilly (appointed 12 April 2012)
Rodney Slater
Ian Smith (appointed 1 January 2012)
Current Senior Executives
Name and position
Chris Lynch, Executive Director, CEO1
Ken Daley, President, International Development
Andrew Head, Group General Manager, New South Wales
Samantha Hogg, CFO2
Michael Kulper, President, North America
Elizabeth Mildwater, Group General Manager, Victoria
Former Non-executive Directors
Jeremy Davis (retired 6 December 2011)
Geoff Cosgriff (retired 6 December 2011)
Jennifer Eve (Director of TIL only) (resigned 5 January 2012)
James Keyes (Director of TIL only) (resigned 5 January 2012)
Former Senior Executives
Tom Honan, CFO (resigned 2 May 2012)2
1 On 30 January 2012, Transurban announced Chris Lynch’s intention to resign as CEO, and on 3 April 2012,
Transurban announced the appointment of Scott Charlton as CEO-elect, both with effect in July 2012.
2 On 2 May 2012, Transurban announced the appointment of Samantha Hogg as CFO following the resignation of Tom
Honan, with immediate effect. Until 2 May 2012, Ms Hogg was Transurban’s Group General Manager, Corporate
Services. Ms Hogg has been a member of KMP for the full financial year.
CONTENTS
The remuneration information contained in this report is presented as follows:
Content
1 Remuneration snapshot
2 Remuneration governance
3 Remuneration in context
4 CEO and Senior Executive remuneration for the year ended 30 June 2012
5 Link between Group performance, security holder wealth and remuneration
6 Non-executive Director remuneration
All values in this report are in Australian dollars, unless otherwise stated.
Page
197
199
200
201
217
219
196 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
1
A
REMUNERATION SNAPSHOT
THE NEW REMUNERATION FRAMEWORK
A new Group remuneration framework was implemented for the year ended 30 June 2012.
Details of the new framework were summarised in the 2011 report, and security holders voted in favour of
the adoption of that report at the 2011 Annual General Meeting (AGM).
The implementation of the new framework followed a comprehensive review by the Board of the Group’s
remuneration arrangements in the year ended 30 June 2011. The review took into account feedback sought
and received from security holders and other stakeholders, market expectations and regulatory
developments.
The key elements of the new framework for the CEO and other Senior Executives were as follows:
Remuneration mix
The remuneration of the CEO and other Senior Executives was structured as a mix of fixed remuneration
and variable or 'at risk' remuneration through short term and long term incentive components.
The relative weightings of the three remuneration components were as follows:
% of total remuneration (annualised) (at target) - 2012 *
Fixed TEC
Variable (performance based)
CEO
Other Senior Executives
33.3
45
STI
33.3**
30**
LTI
33.3
25
* Refer to page 202 for the new CEO's remuneration arrangements. The transition to the remuneration mix for Michael Kulper
and Ken Daley will be achieved by FY2014.
** With 30 per cent STI deferral.
Short term incentive (STI)
In the year ended 30 June 2012, the performance measures for the STI plan were linked to growth in
proportional EBITDA, cost management based on proportional net costs, safety, and performance against
individual KPIs.
In the year ended 30 June 2012, mandatory deferral of 30 per cent of the overall STI award was
introduced for the CEO and other Senior Executives.
The deferral period is three years (comprising the 2012 financial year performance period and a two year
trading restriction). For Australian Senior Executives, deferral is into securities. Due to legal restrictions on
the issue of securities to US residents, US Senior Executives receive deferred cash awards. The deferred
component of remuneration may, at the discretion of the Board, be subject to forfeiture or clawback (e.g.
in the event of misconduct or material misstatement of financial results).
Long term incentive (LTI)
In the year ended 30 June 2012, the performance measures for the LTI plan were as follows:
• 50 per cent relative Total Shareholder Return (TSR) measured against a bespoke comparator group
comprising companies in the transport, utilities, real estate, construction and infrastructure Global
Industry Classification Standards (GICS) sectors of the ASX150; and
197 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
• 50 per cent Free Cash Flow (FCF) per security, reflecting the Group's focus on the maximisation of free
cash flow to drive security holder return. The definition of FCF per security is set out on page 210. The
FCF calculation is included in note 21 of the Transurban Holdings Limited audited financial statements.
B
OTHER EVENTS/ACTIONS IMPACTING REMUNERATION IN THE YEAR ENDED 30 JUNE 2012
CEO transition
On 30 January 2012, Transurban announced Chris Lynch’s intention to resign as CEO. On 3 April 2012,
Transurban announced the appointment of Scott Charlton as CEO-elect. Mr Charlton became CEO on 16
July 2012.
A summary of Mr Lynch’s entitlements on resignation is set out on page 202. Further details of Mr Lynch’s
resignation arrangements and remuneration details for any part of the year ended 30 June 2013 worked by
Mr Lynch will be set out in the 2013 report.
The remuneration arrangements for Mr Charlton were designed in accordance with the Group’s
remuneration strategy: to ensure alignment of reward with the creation of security holder value and with the
achievement of corporate objectives as determined by the Board. They were developed with the benefit of
input from remuneration consultants and Australian peer company benchmark data. Mr Charlton’s
remuneration package was disclosed at the time of his appointment as CEO-elect and is outlined on page
202.
CFO transition
On 2 May 2012, Transurban announced Tom Honan’s resignation as CFO and the appointment of
Samantha Hogg to the role with immediate effect. Details of Mr Honan’s entitlements on resignation are set
out on page 203. Details of Ms Hogg’s remuneration are set out elsewhere in this report. Her remuneration
arrangements as CFO were designed in accordance with the Group’s remuneration strategy and were
developed with the benefit of Australian peer company benchmark data.
Legislative changes to executive remuneration
In the year ended 30 June 2012, legislative changes introduced by the Federal Government in relation to
the governance of executive remuneration arrangements came into effect. The legislation in large part
concerns the appointment process for, and recommendations of, independent remuneration advisers.
In response, the Remuneration Committee adopted a protocol governing the appointment of ‘remuneration
consultants’ and the manner in which any recommendations made by those consultants concerning the
remuneration of KMP are to be provided to the Group, and in particular the circumstances in which
management may be given access to those recommendations. The purpose of the protocol is to ensure
that any remuneration recommendations provided by consultants are provided without undue influence by
KMP.
198 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
2
A
REMUNERATION GOVERNANCE
BOARD AND REMUNERATION COMMITTEE RESPONSIBILITY
The Remuneration Committee assists the Board in fulfilling its responsibilities relating to the remuneration
of Directors, the remuneration of, and incentives for, the CEO and other Senior Executives, and
remuneration practices, strategies and disclosures generally. The Committee also reviews gender pay
equity.
It is critical that the Remuneration Committee is independent of management when making decisions
affecting employee remuneration. Accordingly, the Committee comprises Non-executive Directors, all of
whom are independent. Where appropriate, members of Management attend Committee meetings by
invitation, however they do not participate in formal decision making.
The membership of the Remuneration Committee changed in the year ended 30 June 2012. Geoff Cosgriff
stood down as Chair and Jeremy Davis stood down as a member of the Committee on their respective
retirement from the Board in December 2011. Bob Edgar was appointed Chair and Samantha Mostyn and
Neil Chatfield joined the Committee as new members. Further details regarding the Committee’s
composition are set out in the Directors’ report.
B
ENGAGEMENT OF REMUNERATION CONSULTANTS
To ensure it has all relevant information at its disposal when making remuneration decisions, the
Remuneration Committee may seek and consider advice from independent remuneration consultants
where appropriate. Any advice from consultants is used to guide the Committee and the Board, but does
not serve as a substitute for thorough consideration of the issues by Directors.
Those consultants who provided the Remuneration Committee with a remuneration recommendation
relating to KMP during the year ended 30 June 2012, and who have been deemed by the Group to be
‘remuneration consultants’ for the purposes of the new executive remuneration legislation, are listed below:
Consultant
Ernst & Young
Remuneration
recommendations and
fees
Other advice and fees to the Group during
FY2012
$26,000
$98,921 (General HR advice)
$455,825 (IT, finance, sustainability assurance work,
tax advice and other general consulting services)
Ernst & Young was selected by the Remuneration Committee and commissioned and instructed by the
Chair of the Committee in accordance with the applicable protocol. Ernst & Young’s appointment terms
specified that all remuneration recommendations and advice be sent directly to the Committee through the
Chair, and prohibited the provision of such material or other information directly to Management. The
appointment terms also required that Ernst & Young provide, with their recommendations, both a
declaration of their independence from the KMP to whom their recommendations related, and also
confirmation that the Committee’s conditions for contact and dialogue with Management had been
observed. Ernst & Young provided such a declaration and confirmation in relation to their remuneration
recommendations. In this way, the Committee and the Board have been assured and are satisfied that
Ernst & Young’s remuneration recommendations and advice were made free from undue influence from
Management generally and from KMP specifically.
199 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
3
REMUNERATION IN CONTEXT
Toll road concessions are an asset class characterised by defensive, predictable cash flows, which grow
over the life of long dated concession agreements. There is high upfront capital expenditure during the
construction phase of a project, which for quality assets shifts to a low cost, high margin cash generative
business for the remainder of the concession life. The investment proposition for high quality toll road
assets lies in providing investors with access to long dated, predictable, growing cash flows generated by
the assets over the life of the concessions.
The Group is an international toll road developer and manager with interests in Australia and the US. The
Group is focused on the long term management of toll road assets at various stages of maturity to achieve
the best outcomes for investors, Government partners and the community. In Australia, the Group's
interests include 100 per cent ownership of CityLink in Melbourne, and Hills M2 and Lane Cove Tunnel in
Sydney. The Group has partial interests in a further three roads on the Sydney orbital network, being the
M1 Eastern Distributor (75.1 per cent), the M5 (50 per cent), and the Westlink M7 (50 per cent). In North
America, the Group has interests in two assets, Pocahontas 895 (75 per cent) and the Capital Beltway
Express (67.5 per cent), which is under construction in Northern Virginia.
The Board and Management are focused on ensuring security holder value is enhanced through the strong
performance of the current asset portfolio. Development activities also provide opportunities to further
expand the portfolio in value accretive ways. The maximisation of free cash available to security holders
over the near, medium and longer term is the Group’s aim and the Group’s remuneration framework has
been determined with a focus on this outcome.
200 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
4
CEO AND SENIOR EXECUTIVE REMUNERATION FOR THE YEAR ENDED 30 JUNE
2012
A
REMUNERATION STRATEGY AND POLICY
The Group's executive remuneration strategy is designed to attract, retain and motivate a highly qualified
and experienced Management team with the necessary skills and attributes to lead the Group in achieving
its business objectives. The strategy also aims to encourage Management
to strive for superior
performance by rewarding the achievement of targets that are challenging, clearly understood and within
the control of individuals to achieve through their own actions. The Group's remuneration strategy and
policy as set by the Board is summarised below:
Creating Security Holder Value
Remuneration Strategy
Attract, retain, motivate and reward executives who are critical to the Group's growth and
success by:
• Offering competitive remuneration that is benchmarked against the external market.
• Providing a balance of fixed and variable or 'at risk' remuneration.
Align executive reward with individual and Group performance by:
• Making short and long term components of remuneration 'at risk' based on performance.
• Assessing rewards against appropriate financial and non-financial performance measures.
• Encouraging executive security holdings.
Fixed remuneration
Total Employment Cost (TEC):
Remuneration Structure
• Comprises cash salary, superannuation and other prescribed benefits.
• Provides a base level of reward for effective completion of Group and specific accountabilities.
• Appropriately benchmarked and set with reference to role, responsibilities, skills and experience.
Variable (or 'at risk') remuneration
Short term incentive (STI):
Annual rewards tied to pre-determined individual and Group performance measures, and includes a
deferred element.
Individual targets reflect individual specific accountabilities and key drivers for growth and success.
•
•
• Group performance targets linked to earnings, cost management and safety.
Long term incentive (LTI):
• Equity rewards to align executive and security holder interests.
•
•
Vest after three years, subject to achievement of pre-determined internal and external performance
measures.
Encourages sustainable performance in the medium to longer term, and provides a retention
element.
201 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
B
CHANGE OF CEO AND CFO - TRANSITION ARRANGEMENTS
On ceasing employment on 30 July 2012, the following arrangements applied to Chris Lynch:
• he will receive an STI award for the year ended 30 June 2012, to be awarded at 116 per cent of his
current TEC based on performance against applicable performance targets (see page 208). The cash
component of the award (70 per cent or $1,764,963) will be paid in August 2012. The deferred (into equity)
component of the award (30 per cent or $756,413) will vest, subject to clawback provisions, on 30 June
2014;
• he is contractually entitled to receive an STI award for the 30 days worked in the year ended 30 June
2013, and will receive a pro rated ‘target’ level payment for the 30 days ($178,652) after satisfying
performance targets for the period which related to his role in a successful CEO transition process. The
award will be paid in cash in August 2012;
• equity instruments previously granted to him under the Group’s LTI plans will continue on foot in
accordance with their original terms, with the applicable performance measures for each grant to be tested
at the end of the applicable original performance period;
• as he is contractually entitled to receive an LTI award for every day he is employed by the Group, the
Board determined to pay him $1,060,000 in lieu of an LTI grant earned but not received for a 6 month
period during his tenure. The cash sum will be paid in August 2012;
• as he worked out his notice period, he will not receive any amount in lieu of notice; and
• he will not receive any ex gratia payments on separation.
Details of payments made to Mr Lynch in and for the year ended 30 June 2013 will be set out in the 2013
report.
Incoming CEO - Scott Charlton
Scott Charlton’s appointment as CEO took effect on 16 July 2012. Mr Charlton was not a member of KMP
during the year ended 30 June 2012 and he was paid no remuneration during that year.
As disclosed to the ASX at the time of his appointment, the following arrangements apply to Mr Charlton
under his service agreement in relation to the year ended 30 June 2013.
He is provided with the following elements of remuneration (on an annualised basis):
• Total fixed remuneration (TEC) of $1,875,000; and
• Variable annual remuneration comprised of a STI target opportunity of 30 per cent of his total
remuneration package ($1,406,250); and an LTI target opportunity of 30 per cent of his total remuneration
package ($1,406,250).
202 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
In recognition of Mr Charlton giving up certain STI deferred awards for the years ended 30 June 2011 and
2012 and LTI awards for the years ended 30 June 2010 to 30 June 2012 with his former employer to join
Transurban, he will receive a one-off grant of equity as a sign-on award. The grant will consist of 236,256
performance awards, which will vest in three tranches (of 78,752 each) on the first, second and third
anniversaries of his commencement with Transurban. Each performance award is an entitlement to receive
a fully paid Transurban security on vesting.
Further details of Mr Charlton’s remuneration in his first year as CEO will be set out in the 2013 report.
Outgoing CFO - Tom Honan
On ceasing employment as CFO on 2 May 2012, the following arrangements applied to Tom Honan:
• he received a sum equivalent to 3 months TEC as a payment in lieu of notice ($246,160);
• he was paid a cash sum equivalent to the pro rata vesting of his STI award for the year ended 30 June
2012, calculated based on performance against the applicable performance hurdles during the 10 month
period from the start of the year up until the date his employment ceased ($475,000);
• equity instruments previously granted to him under the Group’s LTI plans lapsed in accordance with their
original terms ($962,416 forfeited); and
• he did not receive any ex gratia payments on separation.
Further details of Mr Honan’s resignation payments can be found on page 214.
C
REMUNERATION MIX
For the year ended 30 June 2012, the remuneration of the CEO and other Senior Executives was
structured as a mix of fixed remuneration and variable (or 'at risk') remuneration through short term and
long term incentive components.
The relative weightings of the three remuneration components were determined by the Board (on the
recommendation of the Remuneration Committee) and are set out in the table below:
Relative weightings of remuneration components 1
% of total remuneration (annualised) (at target) - FY20122
Fixed TEC
Variable (performance based)
CEO
Other Senior Executives
33.3
45
STI (with 30% deferral)
33.3
30
LTI
33.3
25
1These figures do not necessarily reflect the relative value derived from each of the components, which depends on
actual performance against targets for the variable components (refer to page 204). The above STI percentages are
based on achieving the relevant performance targets. The above LTI percentages are based on the maximum LTI
available at the time of grant to each Senior Executive if the awards granted vest at the end of the performance period.
The table above reflects the percentage value of remuneration which consists of rights for each KMP.
2 Refer to page 202 for the new CEO's remuneration arrangements. The transition to the remuneration mix for Michael
Kulper and Ken Daley will be achieved over a maximum of three years (or by FY2014).
203 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
D
FIXED REMUNERATION - TOTAL EMPLOYMENT COST (TEC)
What is TEC?
Fixed remuneration is represented by total employment cost (TEC) comprising base salary and
superannuation contributions.
Fixed remuneration is not 'at risk' but is set by reference to appropriate benchmark information for an
individual’s responsibilities, performance, qualifications and experience.
There are no guaranteed base salary increases in any Senior Executive's employment agreement.
How is TEC determined?
TEC levels are reviewed annually by the Remuneration Committee with reference to an individual’s role,
experience and performance, as well as relevant comparative market data. Independent remuneration
consultants and surveys, internal relativities and market conditions also provide guidance. TEC is also
reviewed on a change in role.
Executives' TEC is determined with reference to the market median. The primary reference for determining
the market median is the ASX 20 - 50. Consideration is given to sizing factors including market
capitalisation and revenue. A range around the median provides flexibility to recognise individual
performance.
E
SHORT TERM INCENTIVE (STI)
How does the STI plan operate?
All permanent Group employees, including the CEO and other Senior Executives, participate in the annual
STI plan.
The STI plan puts a significant proportion of remuneration 'at risk' subject to meeting specific pre
determined Group, team and individual performance measures linked to business objectives. This aligns
executive interests with the Group's financial performance, as well as management principles and the
Group’s cultural values.
For the year ended 30 June 2012, the CEO had a target STI opportunity of 33 per cent of his total
remuneration package. Other Senior Executives had a target STI opportunity of 30 per cent of their total
remuneration package.
Mandatory STI deferral of 30 per cent of the overall STI award was introduced for the CEO and other
Senior Executives in the year ended 30 June 2012. The deferral period is three years (comprising the 2012
financial year performance period and a two year trading restriction). For Australian Senior Executives,
deferral is into securities. Due to legal restrictions on the issue of securities to US residents, US Senior
Executives receive deferred cash awards. The deferred component of remuneration may, at the discretion
of the Board, be subject to forfeiture or clawback (e.g. in the event of misconduct or the material
misstatement of financial results).
204 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
What were the STI performance measures for the year ended 30 June 2012?
There were two categories of STI performance measures for the CEO and other Senior Executives for the
year ended 30 June 2012. They were chosen to provide a balance between corporate, individual,
operational, strategic, financial and non-financial aspects of performance and are described below.
STI performance measures and targets for FY2012
Measure
% weighting Description of targets/indicators for FY2012
Group
performance
targets
20%
(1) Growth in proportional EBITDA
The proportional EBITDA targets for FY2012 were set against
the
previous year's results and the Group's FY2012 budget, and are set out
below:
Proportional EBITDA result
Less than 7% above forecast underlying result for
FY2011
7% above forecast underlying result for FY2011
Budget EBITDA for FY2012 (9% increase on
result for FY2011)
17% above forecast underlying result for FY2011 150%
50%
100%
% of STI that vests^
0%
^ Straight line vesting applies between 50-100% and 100-150%.
20%
(2) Cost management based on proportional net costs
The proportional net costs targets for FY2012 were set against
the
previous year's results and the Group's FY2012 budget, and are set out
below:
Proportional net costs result
Over budget for FY2012
On budget for FY2012
5% below budget for FY2012
10% below budget for FY2012
% of STI that vests^
0%
50%
100%
150%
^ Straight line vesting applies between 50-100% and 100-150%.
(3) Safety targets, including multiple indicators that focus on improving the
Group's safety culture and reducing workplace injuries for employees
and contractors.
Individual KPIs are unique to the individual's area of accountability, and
in FY2012 related to critical business sustainability measures, including:
operational performance; cost reduction; customer satisfaction; project
outcomes; succession planning; risk management; people management;
strategy development; and business plan implementation.
Individual KPIs reflect the behaviours valued by the Group, and are
capable of measurement. Individuals have a clear line of sight to KPIs
and are able to directly affect outcomes through action.
10%
50%
Individual
key
performance
indicators
(KPIs)
205 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
Who sets the STI performance measures?
STI performance measures are set at the beginning of the financial year. The CEO's individual KPIs are set
by the Board. All other Senior Executives’ individual KPIs are set by the CEO and approved by the Board.
The Board sets the Group performance targets.
What is proportional EBITDA and why does Transurban use it as an STI performance measure?
EBITDA is a common operational performance measure used by many companies.
Proportional EBITDA is one of the primary measures that the Board uses to assess the operating
performance of the Group, with an aim to maintain a focus on the Group’s operating results and associated
cash generation. It reflects the contribution from individual assets to the Group's operating performance and
focuses on elements of the result that Management can influence to drive improvements in short term
earnings.
Proportional EBITDA is the aggregation of EBITDA from each asset multiplied by the Group's percentage
ownership, as well as any contribution from Group functions. Proportional EBITDA provides a better
reflection of the underlying performance of the Group’s assets than statutory EBITDA. The EBITDA
calculation from the statutory accounts would not include the EBITDA contribution of the M5, M7 or DRIVe
(equity accounted in the statutory results), which are meaningful contributors to the Group’s performance.
Proportional EBITDA figures used to assess performance are included in note 2 of the Transurban Holdings
Limited audited financial statements.
The Board can decide to exclude specific items (including contributions from acquisitions or divestments
made during any one year) from proportional EBITDA to provide an underlying result when determining
performance incentives. There were no such exclusions for the year ended 30 June 2012.
Proportional EBITDA has been used by the Group as an STI performance measure since 2009.
What are proportional net costs and why does Transurban use it as a performance measure?
Proportional net costs are the operating, corporate and business development costs of the Group less non
toll revenues (fees and other). The deduction of
these non toll revenues encourages and allows
Management to incur additional costs where these are justified by increased revenue results (e.g. toll
collection activities such as video tolling and/or enforcement).
The use of a cost related STI performance measure reflects the fact that Management has the ability to
influence the expenditure of the business. Strong cost management throughout the business drives an
increase in proportional EBITDA and free cash flow and ultimately security holder value.
Proportional net costs was first used by the Group as an STI performance measure in 2010.
How are the varying levels of performance achievement rewarded?
STI targets are designed to differentiate and reward high performance. 50 per cent of the available STI
vests for on-target performance, 100 per cent vests for high performance and up to an additional 50 per
cent can be earned for exceptional performance. These targets are consistent for all of the Group’s eligible
employees.
Given that STI awards are contingent on performance across a range of measures, maximum STI awards
can only be achieved for performance that is strong on all measures.
206 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
How is performance assessed?
Performance against the Group performance targets is assessed by the Board. The results are
independently reviewed.
The CEO's performance against his individual KPIs is assessed by the Remuneration Committee which
then makes recommendations to the Board. The performance of other Senior Executives against their
individual KPIs is assessed by the CEO, who confers with the Committee and then the Board regarding his
assessment.
Once KPIs have been assessed, the Board approves STI awards. STI cash awards for the year ended 30
June 2012 will be paid in August 2012. The STI deferred component for the year ended 30 June 2012 will
vest, subject to continuity of employment (unless otherwise determined by the Board) and clawback
provisions, on 30 June 2014.
The Board believes the method of assessment is rigorous and provides a balanced evaluation of the CEO
and each other Senior Executive's performance.
What if a Senior Executive ceases employment?
Under the service agreements for Senior Executives (other than the CEO - refer to page 202) in place for
the year ended 30 June 2012, if a Senior Executive ceased employment with the Group before
performance against STI targets was assessd, they would generally not be entitled to receive any STI
award, unless otherwise determined by the Board.
In recognition of Tom Honan’s exceptional contribution to the business during the year ended 30 June
2012, and to facilitate an orderly succession in the CFO role, the Board determined to pay Mr Honan a sum
equivalent to the pro-rata vesting of his STI for that year, calculated based on performance against the
applicable performance measures during the 10 month period from the start of the year up until 2 May
2012, being the date his employment as CFO ceased.
What were the STI performance outcomes for the year ended 30 June 2012?
Group performance in respect of the proportional EBITDA, proportional net costs and safety performance
measures for the year ended 30 June 2012 was assessed by the Board as 97 per cent in Australia and 127
per cent in the US.
207 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
STI awards for the CEO and other Senior Executives for the year ended 30 June 2012 are set out in the
table below:
STI outcome (%)
Actual STI awarded1($)
STI forfeited
(%)
Group
performance
Individual
KPIs
Total
Cash2
Deferred into
equity2
Name
Chris Lynch
Ken Daley
Andrew Head
Samantha Hogg
Tom Honan3
Michael Kulper
Elizabeth Mildwater
112%
127%
97%
97%
97%
127%
97%
120%
110%
120%
90%
100%
120%
95%
116%
119%
109%
94%
83%
124%
96%
1,764,963
354,612
756,413
151,976
297,686
127,580
251,598
475,000
107,828
-
492,765
211,185
263,390
112,882
-
-
-
6%
17%
-
4%
1 On-target performance must be achieved before any STI is awarded. Therefore, the minimum potential value of the STI
in respect of FY2012 was nil. The maximum potential value of the STI was the “Actual STI awarded”.
2 The cash STI payments in respect of FY2012 will be paid in August 2012. The STI deferred component for FY2012 (30
per cent of the actual STI awarded) will vest, subject to continuity of employment (unless otherwise determined by the
Board) and clawback provisions, on 30 June 2014.
3 Tom Honan received an STI pro-rated and awarded based on individual performance and Group performance on his
resignation in May 2012. The Board determined to waive the deferred element of this award and pay it in cash.
F
LONG TERM INCENTIVE (LTI)
How does the LTI plan operate?
The LTI plan aligns reward with security holder value by tying this component of executive remuneration to
the achievement of performance measures that underpin sustainable long term growth.
Participation in the LTI plan is only offered to the CEO and other Senior Executives, and certain other
employees nominated by the CEO and approved by the Board. For the year ended 30 June 2012, the CEO
was offered an LTI grant equivalent to 33 per cent of his total remuneration package. Other Senior
Executives were offered grants equivalent to 25 per cent of their total remuneration package.
LTI grants are delivered in the form of performance awards under the Group’s Performance Awards Plan
(PAP). Each performance award is an entitlement to receive a fully paid Transurban security on terms and
conditions determined by the Board, subject to the achievement of certain vesting conditions linked to
performance over a three year period. If the performance measures are satisfied, the performance awards
vest and Transurban securities are delivered to the participant. Whilst the Board has discretion to grant
cash payments of equivalent value at the end of the performance period, and certain US based participants
may be required to receive cash settled awards, the Board generally intends to settle any vested
performance awards in Transurban securities.
Performance awards that do not vest after testing of the performance measures lapse, without retesting.
Performance awards are not transferable and do not carry voting or distribution rights. However securities
allocated upon vesting of performance awards carry the same rights as other Transurban securities.
208 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
What were the LTI performance measures for the year ended 30 June 2012?
Performance awards granted during the year ended 30 June 2012 are subject to a three year performance
period and the following dual performance measures over that period:
LTI performance measures for FY2012
Measure % weighting Description of measure
Relative
TSR
50%
Relative TSR is measured against a bespoke comparator group comprising
companies in the transport, utilities,
real estate, construction and
infrastructure Global Industry Classification Standards (GICS) sectors of the
ASX150. The other 33 companies in this group are:
Singapore Telecommunications Ltd, Telstra Corporation Ltd, Westfield
Group, QR National Ltd, Westfield Retail Trust, Stockland, Leighton
Holdings Ltd, AGL Energy Ltd, MAP Group, GPT Group, Goodman Group,
CFS Retail Property Trust, Lend Lease Group, Asciano Ltd, Qantas Airways
Ltd, Dexus Property Group, Mirvac Group, Telecom Corporation Of New
Zealand Ltd, Toll Holdings Ltd, SP Ausnet, APA Group, Commonwealth
Property Office Fund, UGL Ltd, ConnectEast Group, Boart Longyear Ltd,
Investa Office Fund, Spark Infrastructure Group, Charter Hall Office Reit,
Australand Property Group, Monadelphous Group Ltd, Duet Group, TPG
Telecom Ltd and Australian Infrastructure Fund.
TSR measures total return on investment of a security, taking into account
both capital appreciation and distributed income which was reinvested on a
pre-tax basis.
For performance awards granted during the year ended 30 June 2012, the
relative TSR component will vest on a straight line basis if the Group’s
relative TSR performance is above the median of the bespoke comparator
group at the end of a three year performance period, in accordance with the
following table:
TSR vesting schedule:
The Group’s relative TSR ranking in the
comparator group
At or below the 50% percentile
Above the 50th percentile but below the 75th
percentile
At or above the 75th percentile
% of performance
awards that vest
Nil
Straight line vesting
between 50% and 100%
100%
209 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
Measure % weighting Description of measure
50%
Growth in
Free Cash
Flow (FCF)
per
security
Within Transurban, FCF per security is defined as:
• the Group's cash flow from operating activities;
• less: cash flows from operating activities of non-100% owned controlled
assets;
• add back: maintenance capital expenditure for 100% owned assets;
• less: accounting charge for maintenance provision for the year;
• less: actual tag expenditure in 100% owned assets;
• add: dividends received from non 100% owned assets;
• divided by: weighted average number of securities issued.
The FCF calculation is included in note 21 of the Transurban Holdings Limited
audited financial statements.
For performance awards granted during the year ended 30 June 2012, the
FCF per security component will vest based on the Group's compound
annual growth in FCF per security over the three year performance period,
as set out below:
Growth in FCF per security vesting schedule:
% compound annual growth in FCF per
security
7%
Between 7% and 10%
10% or more
% of performance
awards that vest
50%
Straight line vesting
between 50% and 100%
100%
For performance awards granted during the year ending 30 June 2013, the
performance target range for compound growth in FCF per security is between
6 per cent and 9 per cent.
Why were these LTI performance measures selected?
The TSR target is a relative, external, market-based performance measure against those companies with
which the Group competes for capital. It provides a direct link between executive reward and security holder
return.
For the year ended 30 June 2012, the Group changed the relative TSR comparator group from the
S&P/ASX 100 to the bespoke comparator group described above. The Group considered this comparator
group to be more reflective of its competitive market.
For the year ended 30 June 2012, the Group also changed the second LTI measure to FCF per security
instead of proportional EBITDA to reflect the Group’s focus on the maximisation of free cash. The FCF
calculation is included in note 21 to the Transurban Holdings Limited audited financial statements.
210 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
How will the LTI performance targets be measured?
Relative TSR
The Group will receive an independent report that sets out the Group's TSR growth and that of each
company in the bespoke comparator group. A volume weighted average price of securities for the four
weeks up to and including the test date is used in the calculation of TSRs for Transurban and the
comparator group.
The level of TSR growth achieved by the Group will be given a percentile ranking having regard to the
Group’s performance compared to the performance of other companies in the comparator group (the
highest ranking company being ranked at the 100th percentile). This ranking will determine the extent to
which performance awards subject to this target will vest.
FCF per security
The Group's FCF per security percentage growth rate (as set out in note 21 to the Transurban Holdings
Limited audited financial statements) will be calculated based on the cumulative weighted average over the
three year performance period.
The Board considers these methods of measurement to be rigorous and transparent.
What if a Senior Executive ceases employment?
Under the terms of the service agreements for Senior Executives (other than the CEO - refer to page 202)
in place for the year ended 30 June 2012, if a Senior Executive ceased employment with the Group before
the performance measures were tested, then their unvested performance awards would lapse, unless
otherwise determined by the Board.
On cessation of Tom Honan’s employment on 2 May 2012, Mr Honan forfeited his unvested performance
awards.
What will happen in the event of a change in control?
In the event of a takeover or change of control of the Group, the treatment of any unvested performance
awards granted in the year ended 30 June 2012 will be subject to the incumbent Board's discretion.
What was the grant, and movement in the number and value, of performance awards during the
year ended 30 June 2012?
Performance awards granted in FY2012
Performance criteria
Grant date
Vesting date
Fair value of
awards
at grant date1($)
VWAP at grant
date ($)
Relative TSR
FCF per security
26 Sep 2011
CEO: 11 Nov 2011
26 Sep 2011
CEO: 11 Nov 2011
30 June 2014
30 June 2014
$3.37
$3.27
$4.63
$4.81
$5.35
$5.41
$5.35
$5.41
1 An explanation of the pricing model used to calculate these values is set out in note 35 to the Transurban Holdings
Limited audited financial statements.
211 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
Performance Awards granted in FY2012
Name
Chris Lynch1
Ken Daley
Andrew Head
Samantha Hogg
Tom Honan4
Michael Kulper
Elizabeth Mildwater
Number of performance
awards granted2
Value at grant date ($)
Maximum total value
of grant yet to vest3($)
715,024
128,294
107,766
101,320
171,058
159,286
107,766
2,888,697
2,888,697
513,176
431,064
405,280
684,232
637,144
431,064
513,176
431,064
405,280
684,232
637,144
431,064
1 The grant made to the CEO constituted his full LTI entitlement for FY2012 and was made following security holder
approval at the 2011 AGM on the terms summarised above. Performance awards vest subject to performance over the
period from 1 July 2011 through to 30 June 2014.
2 The grants made to Senior Executives constituted their full LTI entitlement for FY2012 and were made on the terms
summarised above. Performance awards vest subject to performance over the period from 1 July 2011 through to 30
June 2014.
3 The maximum value of the grant has been estimated based on the fair value per instrument at date of grant. The
minimum total value of the grant, if the applicable performance measures are not met, is nil.
4 Performance awards lapse where the performance measures are not satisfied on testing. As the performance awards
only vest on satisfaction of performance and service conditions which are to be tested in future financial periods, Tom
Honan forfeited 171,058 awards. The value of the forfeited awards was $684,232. No other Senior Executives forfeited
performance awards during the year.
212 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
G
LEGACY LTI PLANS
The Group has a number of legacy LTI plans that are no longer offered but which have existing participants.
Details of these plans are set out below.
Plan
FY2011 PAP
FY2010 PAP
FY2009 PAP
Grant date
1 Nov 2010
11 Dec 2009
Performance period
1 Nov 2010 -
1 Nov 2013
1 July 2009 -
30 June 2012
1 Nov 2008
1 Nov 2008 -
1 Nov 2011
FY2009 Executive
Equity Plan
1 Nov 2008
1 Nov 2008 -
1 Nov 2011
External
performance
measure (50% of
grant)
Comparator group
Relative TSR
Relative TSR
Relative TSR
N/A
Retention grant with
service condition only
The S&P/ASX 100
Relative TSR
% of performance awards that vest
Vesting schedule
Above 50th percentile to 75th
percentile
Straight line vesting between 50% -
100%
At or above the 75th percentile 100% vests
Internal
performance
measure (50% of
grant)
Group’s annual
growth in
proportional EBITDA
Group’s annual growth
in proportional EBITDA
Group’s annual growth
in proportional EBITDA
From 7% - 11%
From 6% - 9%
From 5% - 9%
Compound growth
% of performance awards that vest
At target %
50% vests
Vesting schedule
From target % to stretch %
Straight line vesting between 50% -
100%
At or above stretch %
100% vests
N/A
N/A
N/A
N/A
Current status
To be tested after
1 Nov 2013
TESTED
100% to vest
on 11 Dec 2012
TESTED
94.72% vested
5.28% lapsed
TESTED
100% vested
Value of performance awards vested and lapsed in the year ended 30 June 2012
The FY2009 Executive Equity Plan and the FY2009 PAP vested on 1 November 2011. Regarding the
FY2009 PAP, 90 per cent of awards subject to the TSR performance measure vested based on the Group’s
ranking against the constituents of the S&P/ASX 100. 99.43 per cent of awards subject to the proportional
EBITDA measure vested based on performance against target. In total 5.28 per cent of awards lapsed.
213 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
FY2009 Executive Equity Plan
FY2009 PAP
Lapsed
Vested
Lapsed
Vested
Name
Number
Value ($)
Number
Value ($)
Number
Value ($)
Number
Value ($)
C Lynch
T Honan
A Head
E Mildwater
S Hogg
K Daley
M Kulper
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79,647
340,093
25,565
85,701
458,156
1,745,183
85,474
364,974
12,291
41,202
220,267
839,030
19,146
81,753
19,146
81,753
15,316
65,399
19,146
81,753
23,944
102,241
2,458
1,536
1,229
3,549
7,686
8,241
5,150
4,120
44,054
167,807
27,534
104,880
22,027
83,904
11,897
63,602
242,269
25,764
137,736
524,658
H
REMUNERATION PAID TO THE CEO AND OTHER SENIOR EXECUTIVES
Short-term employee benefits
Non-
monetary
benefits2
Cash STI1
Deferred
STI3
Post-
employment
benefits
Termination
benefits
Super
-annuation
Share based
benefits4
Total
Long term
benefits
Long
service
leave
-
227,968
-
456,860
704,498
702,287
2,153,375
2,033,360
Cash salary
and fees
Executive director
C Lynch
2012
2011
Other KMP
B Bourke
2012
2011
K Daley5
2012
2011
M Fletcher
2012
2011
A Head
2012
2011
S Hogg
2012
2011
T Honan6
2012
2011
M Kulper
2012
2011
E Mildwater
2012
2011
Total
2012
2011
6,660,430
6,930,103
955,653
1,017,385
1,149,822
976,398
571,722
541,554
555,892
433,494
569,468
540,797
1,764,963
2,461,680
46,299
18,557
252,138
-
15,775
47,500
-
-
40,812
21,309
3,086,801
2,167,745
7,360,163
6,750,151
-
254,163
354,612
431,438
-
110,656
297,686
323,640
251,598
241,285
475,000
587,250
492,765
573,750
263,390
319,633
-
9,097
-
-
118,030
123,596
50,659
-
-
3,114
2,260
6,232
1,903
5,882
3,951
8,178
-
8,199
2,028
6,311
-
-
42,527
-
35,943
-
-
-
70,395
-
37,627
-
-
58,333
45,813
48,995
-
22,917
22,760
24,243
15,775
25,000
26,775
25,000
9,458
9,800
15,775
25,000
-
958,759
-
-
-
(57,846)
-
1,679,366
-
-
21,983
11,627
594,613
180,209
1,890,208
1,498,152
-
402,234
-
-
-
64,842
-
831,731
-
-
-
-
-
-
-
-
-
-
15,258
25,662
11,492
3,342
347,920
209,779
1,300,133
1,131,110
280,575
173,608
1,153,178
882,611
-
-
(824,365)
761,984
831,183
2,358,810
16,165
19,690
10,015
5,419
1,033,606
400,734
2,578,042
2,029,558
350,916
234,376
1,249,219
1,131,536
3,900,014
5,303,495
174,471
189,166
489,289
-
152,131
286,788
-
1,360,993
115,725
87,049
4,870,066 16,362,126
4,135,431 18,293,025
214 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
1 The amount represents the cash STI payment to the Senior Executive for FY2012, which will be paid in August 2012. The
cash component is 70% of the STI award.
2 Non-monetary benefits include Group insurance, vehicle allowances and expatriate allowances (where relevant).
3 30 per cent of STI award is deferred into equity. In accordance with Accounting Standards, the deferred component will be
recognised over the three year service period from 1 July 2011 to 30 June 2014. The amount recognised in this table is the
FY2012 accounting charge.
4 In accordance with the requirements of the Accounting Standards, remuneration includes a proportion of the fair value of
equity compensation granted or outstanding during the year (i.e. performance awards under the LTI plan). The fair value of
equity instruments is determined as at the grant date and is progressively allocated over the vesting period. The amount
included as remuneration may be different to the benefit (if any) that Senior Executives may ultimately realise should the equity
instruments vest. The fair value of performance awards at the date of their grant has been independently determined in
accordance with AASB 2. The fair value of the performance awards has been valued applying a Monte Carlo simulation to
model Transurban’s security price and where applicable, the TSR performance against the comparator group performance. The
assumptions underpinning these valuations are set out in note 35 to the Transurban Holdings Limited audited financial
statements.
5 Ken Daley’s 2008 PAP allocation was based on his TEC as at November 2008 of $577,500 per year. On 5 December 2008,
his TEC was increased to $750,000 per year effective 1 July 2008. The 2008 PAPs were granted on 15 October 2008. The
Board determined to compensate Ken for the shortfall in his performance awards allocation given that his new TEC was
effective prior to the grant.
6 On ceasing employment as CFO on 2 May 2012, Tom Honan was paid all accrued entitlements owing to him (e.g. earned but
unpaid salary and annual leave), a sum equivalent to the pro-rata vesting of this FY2012 STI ($475,000), and a sum equivalent
to 3 months TEC as payment in lieu of notice ($246,160). He did not receive any ex gratia payments on separation.
I
ADDITIONAL REMUNERATION INFORMATION
EMPLOYEE SECURITY PLANS
The Group has three broad employee based security plans.
ShareLink Incentive Plan
Under the ShareLink Incentive Plan, subject to Board approval, an allocation of Transurban securities or
cash payments may be made to eligible employees (excluding the CEO and other Senior Executives) in
recognition of the Group’s prior year performance.
Eligible employees received a grant of 100 securities at no cost to them on 20 February 2012. Due to legal
restrictions on the issue of securities to US residents, eligible employees in the US received a cash
payment of equivalent value in lieu of securities.
Given that the plan is designed to reward employees for the Group's prior year performance and is not
intended to serve as a future incentive, there are no performance measures attached to grants of securities
or cash payments under the plan.
215 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
ShareLink Investment Tax Exempt Plan and ShareLink Investment Tax Deferred Plan
The ShareLink Investment Tax Exempt Plan provides eligible employees (excluding the CEO and other
Senior Executives) the opportunity to invest up to $1,000 per year in Transurban securities on a tax exempt
basis. Participants contribute up to $500 by way of salary sacrifice which is matched by the Group dollar for
dollar. Security acquisitions are made quarterly in September, December, March and June each year.
The ShareLink Investment Tax Deferred Plan provides eligible employees (excluding the CEO and other
Senior Executives) with the opportunity to contribute up to $5,000 per year by way of salary sacrifice to be
invested in Transurban securities. The Group matches participants’ contributions dollar for dollar up to
$3,000. The plan has a maximum disposal restriction period of three years from the date of acquisition,
including a 12 month forfeiture period.
Grants under both of these plans are designed to encourage employee security holdings and to align the
interests of employees with those of the Group and are therefore not subject to performance measures.
DEALINGS IN SECURITIES
In accordance with the Group’s Dealing in Securities Policy, employees who have awards under a Group
equity plan may not hedge against those awards. In addition, KMP may not hedge against entitlements that
have vested but remain subject to a holding lock.
Employees and Directors are not permitted to obtain margin loans using Transurban securities (either solely
or as part of a portfolio) as security for loans.
SERVICE AGREEMENTS
The remuneration and other terms of employment for the CEO and other Senior Executives are formalised
in service agreements which have no specified term.
Chris Lynch's service agreement included an entitlement to participate in the Group’s STI and LTI plans (or
equivalent cash plan). Scott Charlton and other Senior Executives are eligible to participate in the STI and
LTI plans (or equivalent cash plans for US executives).
Some key aspects of the agreements in place in the year ended 30 June 2012 are outlined below:
CEO
Other Senior Executives
Period of notice to
terminate
(executives)
Period of notice to
terminate
(the Group*)
6 months
3 months
12 months
6 months
* Payment in lieu of the notice period may be provided (based on the executive's fixed remuneration). The Group may
also terminate at any time without notice for serious misconduct.
216 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
5
LINK BETWEEN GROUP PERFORMANCE, SECURITY HOLDER WEALTH AND
REMUNERATION
The variable or 'at risk' remuneration of the CEO and other Senior Executives is linked to the Group’s
performance through the use of measures based on the operating performance of the business.
A
GROUP PERFORMANCE AND STI
For the year ended 30 June 2012, 20 per cent of the Senior Executive STIs were determined with reference
to proportional EBITDA, 20 per cent with reference to proportional net costs, and 10 per cent with reference
to safety as discussed on page 205.
Proportional EBITDA
The underlying proportional EBITDA result for the year ended 30 June 2012 was $784.0 million, a 9.1 per
cent increase from the prior year result. This resulted in the payment of 93.4 per cent of STI's attributable to
proportional EBITDA. The proportional EBITDA result was driven by the Group's continued focus on cost
control and the performance of the asset portfolio. This result was delivered despite significant disruption
caused by construction on Sydney’s Hills M2 Motorway.
Proportional net costs
The underlying proportional net costs result for the year ended 30 June 2012 was $159.9 million, a 7.2 per
cent improvement from the prior year result. This resulted in the payment of 149.6 per cent of STI's
attributable to proportional net costs. Importantly, the Group’s continued focus on proportional net costs
resulted in a cost decrease across operational, corporate and business development areas (when taking
into account the impact of volume based cost increases).
Safety
For the year ended 30 June 2012, the safety performance measure resulted in a zero STI payment for
Senior Executives based in Australia, and 150 per cent for Senior Executives based in the US. The safety
KPI target included several components as discussed on page 205 of which a reduction in recordable injury
frequency rate was one. Strong results were attained for some aspects of the Australian safety measure,
however other areas did not meet all targets.
B
GROUP PERFORMANCE AND LTI
For the year ended 30 June 2012, LTIs were linked to relative TSR and, for the first time, FCF per security
(see pages 209 and 210).
Relative TSR
The relative TSR for the year ended 30 June 2012 is calculated on a bespoke comparator group from the
ASX150 (see page 210).
FCF per security
The performance target for compound growth in FCF per security of between 7 per cent and 10 per cent
over three years is considered an appropriate target that reflects the Group’s focus on the maximisation of
free cash to drive security holder return. For performance awards granted during the year ending 30 June
2013, the compound growth in FCF per security is between 6 per cent and 9 per cent.
The table below summarises the Group’s five year results for the relevant performance measures. These
results show that since the year ended 30 June 2009, Transurban’s distribution policy has been to pay out
100 per cent (rounded) of FCF per security. Since that time, Transurban has delivered consistent growth on
this measure based on consistent revenue and EBITDA growth. Based on investor feedback, this remains
Transurban’s financial focus.
217 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
Group Performance1
Measure
Security price at year end
Distribution paid per
security
Underlying proportional
EBITDA - $m
2012
$5.69
29.5c
2011
$5.23
27.0c
2010
$4.24
24.0c
2009
$4.18
2008
$4.23
22.0c
57.0c*
784.0
718.7
635.4
583.3
523.0
TSR performance2
15%
32%
10%
2%
(41%)
FCF per security
performance - weighted
average
29.8c
27.5c
27.4c
22.2c
26.0c
* Distributions made under a previous distribution policy no longer applied by the Group.
1 For FY2012, LTIs were linked to relative TSR and FCF per security. In prior years, LTIs were linked to relative TSR and
proportional EBITDA.
2 The TSR performance is the total security holder return for that financial year.
218 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
6
A
NON-EXECUTIVE DIRECTOR REMUNERATION
REMUNERATION POLICY
The diagram below sets out the key objectives of the Group’s Non-executive Director remuneration policy
and how they are implemented through the Group’s remuneration framework:
Securing and retaining talented,
qualified Directors
Preserving independence and
impartiality
Aligning Director and security
holder interests
Director fee levels are set with
regards to: the responsibilities
and risks attached to the role, the
time commitment expected and
the workload, Director experience
and expertise, and market
benchmark data provided by
independent remuneration
consultants.
Director remuneration consists
of base (Director) fees and
Committee fees.
No element of Director
remuneration is 'at risk' - that is,
fees are not based on the
performance of the Group or
individual Directors from year to
year.
B
REMUNERATION ARRANGEMENTS
Directors are encouraged to
hold Transurban securities.
Maximum aggregate remuneration
The amount of aggregate remuneration that may be paid to Non-executive Directors in any year is capped
at a level approved by security holders. The current aggregate fee pool of $2,400,000 per year (inclusive of
superannuation contributions) was approved by security holders at the 2010 AGM. No change to this
amount is proposed for the year ending 30 June 2013.
The aggregate fee pool and the manner in which it is apportioned amongst Non-executive Directors is
reviewed annually. The Remuneration Committee undertakes this review and makes recommendations to
the Board. In conducting the review, the Committee considers market benchmark data from independent
remuneration consultants.
2012 Non-executive Director fees
A review of Non-executive Director fees was undertaken during the year ended 30 June 2012, and it was
determined that there be no increase in fees. Non-executive Director fees were last increased in January
2010.
Current base (Director) fees and Committee fees per year are set out below:
Board
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Chair fee $
455,000
40,000
10,000
25,000
Member fee $
170,000
20,000
10,000
20,000
The Chair of the Board does not receive any additional fees for his Committee responsibilities.
219 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
Non-executive Directors are permitted to be paid additional fees for special duties or exertions. No such
fees were paid during the year ended 30 June 2012. Non-executive Directors are also entitled to be
reimbursed for all business related expenses, including travel, as may be incurred in the discharge of their
duties.
Retirement benefits
No current Non-executive Directors are entitled to any retirement benefits.
In September 2005, the Board resolved to discontinue previously provided retirement benefits for
Non-executive Directors with effect from 30 September 2005. The value of benefits accrued up to that date
attracted interest at the statutory fringe benefits rate. Accrued ‘frozen’ retirement benefits plus interest were
paid to Geoff Cosgriff and Jeremy Davis on their retirement from the Board on 6 December 2011.
The following table details the retirement benefits paid and expensed in the years ended 30 June 2012 and
30 June 2011.
Geoff Cosgriff
Jeremy Davis
FY2012 $
251,028 (paid)
418,186 (paid)
FY2011 $
16,301 (accrued)
27,155 (accrued)
ShareLink Investment Tax Deferred Plan
Under the ShareLink Investment Tax Deferred Plan, Non-executive Directors are able to sacrifice up to 50
per cent of their pre tax fees to acquire up to $5,000 of Transurban securities per year. No securities were
issued to Non-executive Directors under the plan for the year ended 30 June 2012.
220 TRANSURBAN ANNUAL REPORT 2012
Transurban Holding Trust
Notes to the consolidated financial statements
30 June 2012
(continued)
38 Key management personnel disclosures (continued)
Remuneration report (continued)
C
REMUNERATION PAID TO NON-EXECUTIVE DIRECTORS
Details of Non-executive Directors’ remuneration for the years ended 30 June 2012 and 30 June 2011 are
set out below:
Short-term benefits
Post-employment benefits
Total
Fees
Superannuation1
Retirement
benefits2,3
34,225
-
176,047
141,066
207,114
196,552
207,631
199,828
176,047
93,996
439,411
394,593
Current Non-executive Directors
Lindsay Maxsted
2012
2011
Neil Chatfield
2012
2011
Bob Edgar
2012
2011
Samantha Mostyn
2012
2011
Bob Officer
2012
2011
Christine O'Reilly (appointed 12 April 2012)
2012
2011
Rodney Slater
173,720
2012
2011
155,268
Ian Smith (appointed 1 January 2012)
77,983
2012
-
2011
Former Non-executive Directors
Geoff Cosgriff (resigned 6 December 2011)
2012
2011
Jeremy Davis (resigned 6 December 2011)
2012
2011
David Ryan (resigned 12 August 2010)
2012
2011
Jennifer Eve (resigned 5 January 2012)
2012
2011
James Keyes (resigned 5 January 2012)
2012
2011
Total
2012
2011
1,717,908
1,747,043
81,778
188,153
69,903
201,920
-
49,199
25,793
34,984
48,256
91,484
15,775
35,513
15,775
17,985
15,775
17,690
15,398
8,460
15,398
12,696
3,080
-
-
-
7,018
-
7,044
16,934
25,648
27,750
-
4,428
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
251,028
16,301
418,186
27,155
-
-
-
-
-
-
455,186
430,106
223,406
217,813
222,889
214,242
191,445
102,456
191,445
153,762
37,305
-
173,720
155,268
85,001
-
339,850
221,388
513,737
256,825
-
53,627
48,256
91,484
25,793
34,984
120,911
141,456
669,214
43,456
2,508,0333
1,931,955
1 Superannuation contributions made on behalf of Non-executive Directors to satisfy the Group’s obligations under
applicable superannuation guarantee legislation.
2 Amounts represent contractual retirement benefits paid (in the year ended 30 June 2012) and provided for (in the year
end 30 June 2011) for two former Non-executive Directors. No current Non-executive Directors are entitled to any
retirement benefits.
3 Retirement benefits are excluded from the amount of aggregate remuneration that may be paid to Non-executive
Directors in any year.
221 TRANSURBAN ANNUAL REPORT 2012
In the Directors' opinion:
Transurban Holding Trust
Directors' declaration
30 June 2012
(a)
the financial statements and notes set out on pages 147 to 221 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 Group's financial position as at 30 June 2012 and of its
performance for the year ended on that date, and
(ii)
(b)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
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.
Lindsay Maxsted
Director
Scott Charlton
Director
Melbourne
7 August 2012
222 TRANSURBAN ANNUAL REPORT 2012
223 TRANSURBAN ANNUAL REPORT 2012
224 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited and
Controlled Entities
ABN 90 121 746 825
Annual report
for the year ended 30 June 2012
225 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited ABN 90 121 746 825
Annual report - 30 June 2012
Contents
Directors' report
Auditor's Independence Declaration
Financial statements
Directors' declaration
Independent auditor's report to the members
Page
227
264
265
318
319
226 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
Directors' report
The Directors of Transurban International Limited (TIL or "the Company") present their report on the consolidated
entity (and referred to hereafter as "the Group") consisting of TIL and the entities it controlled at the end of, or
during, the year ended 30 June 2012.
TIL forms part of the triple staple that is Transurban. A Stapled Security comprises one share in Transurban
Holdings Limited, one share in TIL and one unit in Transurban Holding Trust. 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 the Company during the
whole of the financial year and up to the date of this report.
Non-executive Directors
Lindsay Maxsted
Neil Chatfield
Robert Edgar
Samantha Mostyn
Robert Officer
Christine O'Reilly
Rodney Slater
Ian Smith
Jennifer Eve
James Keyes
(Appointed 5 January 2012)
(Appointed 5 January 2012)
(Appointed 5 January 2012)
(Appointed 5 January 2012)
(Appointed 12 April 2012)
(Appointed 5 January 2012)
(Appointed 5 January 2012)
(Resigned 5 January 2012)
(Resigned 5 January 2012)
Executive Directors
Christopher Lynch
Scott Charlton
(Resigned 16 July 2012)
(Appointed 16 July 2012)
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. The Group currently holds a 75 per cent interest in DRIVe.
Dividends
No dividends were declared or paid during the financial year.
Review of operations
The consolidated net loss for the year ended for the Group was $227,526,000 (2011: $28,448,000).
Key highlights for the Group during the period were as follows:
Pocahontas 895 (Virginia USA) - Transurban DRIVe
Toll revenue for the year ended 30 June 2012 increased by 5.7 per cent to US$14.9 million. Average daily trips
increased by 3.2 per cent, due to milder weather conditions and the benefit of the completion of the Airport
Connector in January 2011.
Transurban announced on the 18 June 2012, that after a detailed review of traffic and operating forecast for
Pocahontas 895, it was necessary to reduce the carrying value of the asset based on revised lower revenue
forecasts. This resulted in an equity accounting charge for the year ended 30 June 2012 of $213.3 million.
TIL’s investment in Pocahontas is held via Transurban DRIVe, which is 75 per cent owned by Transurban. As a
result of this equity accounting charge, TIL’s carrying value of its investment in DRIVe will be reduced to zero.
227 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Review of operations (continued)
Business development activities
Capital Beltway (Virginia USA) - Transurban DRIVe
Construction on the Capital Beltway 495 Express lane project is now more than 95 per cent complete. The
construction project remains on budget and on track for completion late 2012, with first tolls expected in early
2013.
95 Express Lanes (Virginia USA) - Transurban DRIVe
On 1 August 2012, Transurban announced that financial close had been reached with the Commonwealth of
Virginia to build and operate the 95 Express Lanes in northern Virginia, USA.
The 95 Express Lanes will be a 29 mile (46 kilometre), reversible two and three lane facility, with a 73 year
operating concession from opening date (2015).
Other corporate activities
Chief Executive Officer (CEO)
On 30 January 2012, Transurban announced Mr Chris Lynch’s intention to resign as CEO and as a Director
effective from July 2012 after a four year tenure. After a comprehensive Board selection process, Transurban
announced on 3 April 2012 the appointment of Mr Scott Charlton as new CEO effective from July 2012.
Significant changes in the state of affairs
On 5 January 2012, TIL and its wholly owned subsidiary, Transurban International Holdings Limited, changed
registered domicile from Bermuda to Australia. The change in domicile has had no financial impact on the Group.
There were no other significant changes to the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
As noted above, on 1 August 2012, the Group reached financial close on the 95 Express Lanes project.
Transurban also announced that the 95 Express Lanes investment will be the final new toll road project
undertaken by Transurban's co-investment vehicle, DRIVe. Transurban will continue to manage the assets
owned by DRIVe.
At the date of this report the Directors are not aware of any other circumstances that have arisen since 30 June
2012 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 assets.
228 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Information on Directors
Lindsay Maxsted Dip Bus, FCA.
Chair and independent Non-executive Director
Term of office
Director and Chair since 12 August 2010.
Lindsay is currently Chairman and a Non-executive Director of Westpac Banking Corporation, and a
Non-executive Director of BHP Billiton Limited and BHP Billiton plc. He is the Managing Director of Align Capital
Pty Ltd and the Honorary Treasurer of Baker IDI Heart and Diabetes Institute.
Lindsay was formerly the CEO of KPMG Australia from 2001 - 2007. His principal area of practice prior to this
was in the corporate recovery field managing a number of Australia’s largest insolvency / workout / turnaround
engagements. Lindsay was previously a Non-executive Director of St George Bank and of VicRacing Pty Ltd.
Lindsay holds interests in 30,000 Stapled Securities.
Transurban Board Committee membership
Chair of the Nomination Committee and a member of the Audit and Risk Committee.
Christopher Lynch B Comm, MBA, FCPA, FAICD.
Chief Executive Officer
Term of office
Director since 18 February 2008. CEO since April 2008. Resigned 16 July 2012.
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 came to Transurban
from BHP Billiton, where he held senior roles, including as CFO and as Executive Director and Group President -
Carbon Steel Materials. Prior to this the bulk of Chris’s career was with Alcoa Inc where his roles included Vice
President and CIO, CFO-Europe and Managing Director of KAAL Australia Limited.
Chris is currently a Non-executive Director of Rio Tinto plc and Rio Tinto Limited and a Commissioner of the
Australian Football League.
Chris holds interests in 713,563 Stapled Securities and 2,016,918 performance awards.
Scott Charlton BSci, MBA (Texas)
Chief Executive Officer
Term of office
Director since 16 July 2012. CEO since 16 July 2012.
Scott recently joined Transurban from Lend Lease, where he was Group COO (since November 2011) and
Group Director of Operations (from March 2010). Prior to this, Scott held several senior appointments across a
range of infrastructure and financial institutions, including as CFO of Leighton Holdings (2007-2009) and as
Managing Director of Deutsche Bank in Australia and Hong Kong (1995 - 2003).
Scott does not hold interests in any Stapled Securities.
229 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Information on Directors (continued)
Neil Chatfield M.Bus, FCPA, FAICD
Independent Non-executive Director
Term of office
Director since 5 January 2012.
Neil served as Executive Director and the CFO of Toll Holdings Limited from 1997 until September 2008. Neil has
extensive experience in general and financial management, capital markets, mergers and acquisitions and risk
management.
Neil is currently the Chairman of Virgin Australia Holdings Limited and a Non-executive Director of Seek Limited
and of Grange Resources Limited. Neil is also Honorary Chairman of HomeGround Services. He was previously
a Non-executive Director of Whitehaven Coal Limited.
Neil holds interests in 30,910 Stapled Securities.
Transurban Board Committee membership
Chair of the Audit and Risk Committee and a member of the Nomination and Remuneration Committees.
Robert Edgar BEc (Hons), PhD, FAICD
Independent Non-executive Director
Term of office
Director since 5 January 2012.
Bob has over 30 years experience as a Senior Executive, with 25 years at ANZ Banking Group in various senior
roles, including Deputy CEO, Senior Managing Director, COO, and Chief Economist.
Bob is currently the Chairman of Centro Retail Australia and a Non-executive Director of Asciano Group and of
Linfox Armaguard Pty Ltd. He is also Chairman of the Prince Henry’s Institute of Medical Research. He was
previously a Non-executive Director of Nufarm Limited, AMMB Holdings Berhad, Shanghai Rural Commercial
Bank and of the Bank of Tianjin.
Bob holds interests in 23,733 Stapled Securities.
Transurban Board Committee membership
Chair of the Remuneration Committee and member of the Audit and Risk and Nomination Committees.
230 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Information on Directors (continued)
Samantha Mostyn BA, LLB
Independent Non-executive Director
Term of office
Director since 5 January 2012.
Sam is a Non-executive Director and corporate advisor and has previously held Senior Executive positions at
IAG, Optus and Cable & Wireless Plc. Sam is currently Chair of the Stakeholder Advisory Council of the CSIRO’s
Climate Adaptation Flagship and Deputy Chair of the Diversity Council of Australia. She is a member of the NSW
Climate Change Council, the advisory boards of ClimateWorks Australia and the Crawford School of Government
and Economics, ANU. Sam is a Commissioner of the Australian Football League and the National Mental Health
Commission.
She is currently a Non-executive Director of Virgin Australia Holdings Limited, Sydney Theatre Company,
Citgroup Pty Ltd, Australian Volunteers International and St James Ethics Centre Foundation.
Sam holds 10,300 Stapled Securities.
Transurban Board Committee membership
Member of the Remuneration and Nomination Committees.
Robert Officer BAgSc (Melb), MAgEc (New Eng), MBA, PhD (Chicago), FASSA, FINSIA
Non-independent Non-executive Director
Term of office
Director since 5 January 2012.
Bob is currently Professor Emeritus of the University of Melbourne and a specialist in financial economics. His
career has spanned academia and consulting across private and public organisations. Bob has held a number of
finance professorships at Australian and overseas universities and consulted to a large number of public, private
and government organisations in valuation and investment appraisal, international finance, capital markets and
takeovers.
Bob is currently Chairman of Acorn Capital Ltd and JCP Investment Partners Ltd. He is on the Boards of CP2
Limited, the Transport Accident Commission, Colonial Foundation and Tactical Global Management Ltd. He is a
past Chairman of Victorian WorkCover Authority and was previously on the Boards of the Bank of Melbourne, the
Over Fifty Group and Melbourne University Publishing Pty Ltd.
Bob holds interests in 20,115 Stapled Securities.
Transurban Board Committee membership
Member of the Nomination and Audit and Risk Committees.
231 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Information on Directors (continued)
Christine O'Reilly BBus
Independent Non-executive Director
Term of office
Director since 12 April 2012
Christine is the Head of Asset Management for Unlisted Infrastructure at Colonial First State Global Asset
Management, with a primary focus on direct investment in and management of major infrastructure projects. In
this capacity, Christine is a Director of the Anglian Water Group (UK) and Electricity North West (UK). She will
step down from these positions on 30 September 2012.
Prior to her time with Colonial, Christine was CEO and Director of the Gasnet Australia Group. She has more
than 20 years of infrastructure and financial experience including an early involvement in the reform and
establishment of the regulatory framework for the Australian gas industry.
Christine is currently a Non-executive Director of CSL Limited and of Care Australia.
Christine does not hold interests in any Stapled Securities.
Rodney Slater J.D., BS
Independent Non-executive Director
Term of office
Director since 5 January 2012.
Rodney is a partner in the public policy practice group of Washington DC firm Patton Boggs, where he has been
a leader of 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 the Administrator of the Federal Highway
Administration between 1993 and 1996.
In the US, Rodney’s current directorships include Kansas City Southern (railroads), Verizon Communications Inc,
Atkins Global, and Southern Development Bancorporation. He was previously a Director of Parsons Brinckerhoff,
Delta Airlines, Northwest Airlines, and ICx Technologies Inc. He also served on Transurban’s US Advisory Board
until November 2008. Rodney is a Director of the Congressional Awards Foundation and United Way Worldwide.
Rodney does not hold interests in any Stapled Securities.
Transurban Board Committee membership
Member of the Nomination Committee.
232 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Information on Directors (continued)
Ian Smith BE Mining (Hons), BFin Admin
Independent Non-executive Director
Term of office
Director since 5 January 2012.
Ian has more than 30 years experience in the global mining industry in a variety of operational and project
management roles. He is currently the Managing Director and CEO of Orica Limited.
Ian is President of The Australian Mines and Metals Association. He was previously the CEO at Newcrest Mining
Limited and a Director of the Australian Chamber of Commerce and Industry.
Ian holds interests in 70,000 Stapled Securities.
Jennifer Eve BA, LLB (Hons), LLM in Corporate Law
Independent Non-executive Director
Term of office
Director of TIL from 18 September 2006 to 5 January 2012.
Jennifer is an associate and member of the Funds and Investment Services Team within the Corporate and
Commercial Practice Group at offshore law firm Appleby. She practices in the area of company and commercial
law, specialising in the formation and administration of investment vehicles. Jennifer also has experience
involving debt restructuring and intergroup restructuring. She is 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 is a member of the Bar of England
and Wales (non-practicing) and Bermuda.
Jennifer does not hold interests in any Stapled Securities.
James Keyes MA. (Hons)
Independent Non-executive Director
Term of office
Director of TIL from 18 September 2006 to 5 January 2012.
James 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.
James does not hold interests in any Stapled Securities.
233 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Company Secretaries
Amanda Street LLB (Hons), BComm.
Amanda joined Transurban in September 2008 and was appointed as Company Secretary in February 2011.
Before joining Transurban, Amanda was Assistant Company Secretary at SP Ausnet and Senior Corporate
Counsel at National Australia Bank. She has over 10 years of legal, company secretarial and other relevant
experience. Prior to her in-house work, Amanda was a solicitor specialising in M&A work with Australian law
firm Mallesons.
Julie Galligan LLB, BA
Julie joined Transurban in November 2008 and was appointed as General Counsel, Australia in February 2012.
Julie has over 10 years of legal experience in private practice and in-house roles in both Australia and the United
Kingdom. Prior to joining Transurban, Julie worked in-house at Associated British Ports.
234 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Meetings of Directors
The numbers of meetings of the Company's board of Directors and of each board committee held during the year
ended 30 June 2012, and the numbers of meetings attended by each Director were:
Lindsay Maxsted
Christopher Lynch
Neil Chatfield (Appointed 5 January 2012)
Robert Edgar (Appointed 5 January 2012)
Samantha Mostyn (Appointed 5 January 2012
Robert Officer (Appointed 5 January 2012)
Christine O'Reilly (Appointed 12 April 2012)
Rodney Slater (Appointed 5 January 2012)
Ian Smith (Appointed 5 January 2012)
Jennifer Eve (Resigned 5 January 2012)
James Keyes (Resigned 5 January 2012)
Attended Held#
8
8
6
5
6
6
3
5
5
2
2
8
8
6
6
6
6
3
6
6
2
2
# = Number of meetings held during the time the director held office
The number of meetings of each Board Committee held during the year ended 30 June 2012, and the number of
meetings attended by each Director, are set out in the following table.
Audit and Risk
Committee(1)
Remuneration
Committee(2)
Attended Held# Attended Held# Attended Held#
Nomination
Committee(3)
Lindsay Maxsted
Christopher Lynch
Neil Chatfield (Appointed 5 January 2012)
Robert Edgar (Appointed 5 January 2012)
Samantha Mostyn (Appointed 5 January 2012)
Robert Officer (Appointed 5 January 2012)
Christine O'Reilly (Appointed 12 April 2012)
Rodney Slater (Appointed 5 January 2012)
Ian Smith (Appointed 5 January 2012)
Jennifer Eve (Resigned 5 January 2012)
James Keyes (Resigned 5 January 2012)
8
8
8
8
*
5
1
1
*
*
*
8
*
8
8
*
4
*
*
*
*
*
4
4
4
5
5
1
*
1
*
*
*
*
*
2
4
2
*
*
*
*
*
*
2
2
2
1
1
2
2
2
1
*
*
2
*
2
2
2
2
*
2
*
*
*
# = Number of meetings held during the time the director held office or was a member of the Committee
* = Not a member of the relevant Committee
(1) Chris Lynch, Christine O'Reilly and Rodney Slater were not members of the Audit and Risk Committee
but attended meetings during the year. Bob Officer attended a meeting prior to becoming a member.
(2) Lindsay Maxsted, Chris Lynch, Bob Officer and Rodney Slater were not members of the Remuneration
Committee but attended meetings during the year. Neil Chatfield, Samantha Mostyn and Bob Edgar
attended meetings prior to becoming members. Chris Lynch was excluded from discussions involving his
remuneration during meetings of the Remuneration Committee which he attended.
(3) Chris Lynch, Christine O'Reilly and Ian Smith were not members of the Nomination Committee but
attended meetings during the year.
235 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
2012 REMUNERATION REPORT (AUDITED)
INTRODUCTION
This report, prepared in accordance with the Corporations Act 2001, contains detailed information regarding
the remuneration arrangements for the Directors and Senior Executives who are the 'key management
personnel' (KMP) of the Transurban Group (Group).
The KMP for the year ended 30 June 2012 are listed in the table below:
Current Non-executive Directors
Name
Lindsay Maxsted, Chair
Neil Chatfield
Bob Edgar
Samantha Mostyn
Bob Officer
Christine O'Reilly (appointed 12 April 2012)
Rodney Slater
Ian Smith (appointed 1 January 2012)
Current Senior Executives
Name and position
Chris Lynch, Executive Director, CEO1
Ken Daley, President, International Development
Andrew Head, Group General Manager, New South Wales
Samantha Hogg, CFO2
Michael Kulper, President, North America
Elizabeth Mildwater, Group General Manager, Victoria
Former Non-executive Directors
Jeremy Davis (retired 6 December 2011)
Geoff Cosgriff (retired 6 December 2011)
Jennifer Eve (Director of TIL only) (resigned 5 January 2012)
James Keyes (Director of TIL only) (resigned 5 January 2012)
Former Senior Executives
Tom Honan, CFO (resigned 2 May 2012)2
1 On 30 January 2012, Transurban announced Chris Lynch’s intention to resign as CEO, and on 3 April 2012,
Transurban announced the appointment of Scott Charlton as CEO-elect, both with effect in July 2012.
2 On 2 May 2012, Transurban announced the appointment of Samantha Hogg as CFO following the resignation of Tom
Honan, with immediate effect. Until 2 May 2012, Ms Hogg was Transurban’s Group General Manager, Corporate
Services. Ms Hogg has been a member of KMP for the full financial year.
CONTENTS
The remuneration information contained in this report is presented as follows:
Content
1 Remuneration snapshot
2 Remuneration governance
3 Remuneration in context
4 CEO and Senior Executive remuneration for the year ended 30 June 2012
5 Link between Group performance, security holder wealth and remuneration
6 Non-executive Director remuneration
All values in this report are in Australian dollars, unless otherwise stated.
Page
237
239
240
241
257
259
236 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
1
A
REMUNERATION SNAPSHOT
THE NEW REMUNERATION FRAMEWORK
A new Group remuneration framework was implemented for the year ended 30 June 2012.
Details of the new framework were summarised in the 2011 report, and security holders voted in favour of
the adoption of that report at the 2011 Annual General Meeting (AGM).
The implementation of the new framework followed a comprehensive review by the Board of the Group’s
remuneration arrangements in the year ended 30 June 2011. The review took into account feedback sought
and received from security holders and other stakeholders, market expectations and regulatory
developments.
The key elements of the new framework for the CEO and other Senior Executives were as follows:
Remuneration mix
The remuneration of the CEO and other Senior Executives was structured as a mix of fixed remuneration
and variable or 'at risk' remuneration through short term and long term incentive components.
The relative weightings of the three remuneration components were as follows:
% of total remuneration (annualised) (at target) - 2012 *
Fixed TEC
Variable (performance based)
CEO
Other Senior Executives
33.3
45
STI
33.3**
30**
LTI
33.3
25
* Refer to page 242 for the new CEO's remuneration arrangements. The transition to the remuneration mix for Michael Kulper
and Ken Daley will be achieved by FY2014.
** With 30 per cent STI deferral.
Short term incentive (STI)
In the year ended 30 June 2012, the performance measures for the STI plan were linked to growth in
proportional EBITDA, cost management based on proportional net costs, safety, and performance against
individual KPIs.
In the year ended 30 June 2012, mandatory deferral of 30 per cent of the overall STI award was
introduced for the CEO and other Senior Executives.
The deferral period is three years (comprising the 2012 financial year performance period and a two year
trading restriction). For Australian Senior Executives, deferral is into securities. Due to legal restrictions on
the issue of securities to US residents, US Senior Executives receive deferred cash awards. The deferred
component of remuneration may, at the discretion of the Board, be subject to forfeiture or clawback (e.g.
in the event of misconduct or material misstatement of financial results).
Long term incentive (LTI)
In the year ended 30 June 2012, the performance measures for the LTI plan were as follows:
• 50 per cent relative Total Shareholder Return (TSR) measured against a bespoke comparator group
comprising companies in the transport, utilities, real estate, construction and infrastructure Global
Industry Classification Standards (GICS) sectors of the ASX150; and
• 50 per cent Free Cash Flow (FCF) per security, reflecting the Group's focus on the maximisation of free
cash flow to drive security holder return. The definition of FCF per security is set out on page 250. The
FCF calculation is included in note 21 of the Transurban Holdings Limited audited financial statements.
237 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
B
OTHER EVENTS/ACTIONS IMPACTING REMUNERATION IN THE YEAR ENDED 30 JUNE 2012
CEO transition
On 30 January 2012, Transurban announced Chris Lynch’s intention to resign as CEO. On 3 April 2012,
Transurban announced the appointment of Scott Charlton as CEO-elect. Mr Charlton became CEO on 16
July 2012.
A summary of Mr Lynch’s entitlements on resignation is set out on page 242. Further details of Mr Lynch’s
resignation arrangements and remuneration details for any part of the year ended 30 June 2013 worked by
Mr Lynch will be set out in the 2013 report.
The remuneration arrangements for Mr Charlton were designed in accordance with the Group’s
remuneration strategy: to ensure alignment of reward with the creation of security holder value and with the
achievement of corporate objectives as determined by the Board. They were developed with the benefit of
input from remuneration consultants and Australian peer company benchmark data. Mr Charlton’s
remuneration package was disclosed at the time of his appointment as CEO-elect and is outlined on page
226.
CFO transition
On 2 May 2012, Transurban announced Tom Honan’s resignation as CFO and the appointment of
Samantha Hogg to the role with immediate effect. Details of Mr Honan’s entitlements on resignation are set
out on page 243. Details of Ms Hogg’s remuneration are set out elsewhere in this report. Her remuneration
arrangements as CFO were designed in accordance with the Group’s remuneration strategy and were
developed with the benefit of Australian peer company benchmark data.
Legislative changes to executive remuneration
In the year ended 30 June 2012, legislative changes introduced by the Federal Government in relation to
the governance of executive remuneration arrangements came into effect. The legislation in large part
concerns the appointment process for, and recommendations of, independent remuneration advisers.
In response, the Remuneration Committee adopted a protocol governing the appointment of ‘remuneration
consultants’ and the manner in which any recommendations made by those consultants concerning the
remuneration of KMP are to be provided to the Group, and in particular the circumstances in which
management may be given access to those recommendations. The purpose of the protocol is to ensure
that any remuneration recommendations provided by consultants are provided without undue influence by
KMP.
238 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
2
A
REMUNERATION GOVERNANCE
BOARD AND REMUNERATION COMMITTEE RESPONSIBILITY
The Remuneration Committee assists the Board in fulfilling its responsibilities relating to the remuneration
of Directors, the remuneration of, and incentives for, the CEO and other Senior Executives, and
remuneration practices, strategies and disclosures generally. The Committee also reviews gender pay
equity.
It is critical that the Remuneration Committee is independent of management when making decisions
affecting employee remuneration. Accordingly, the Committee comprises Non-executive Directors, all of
whom are independent. Where appropriate, members of Management attend Committee meetings by
invitation, however they do not participate in formal decision making.
The membership of the Remuneration Committee changed in the year ended 30 June 2012. Geoff Cosgriff
stood down as Chair and Jeremy Davis stood down as a member of the Committee on their respective
retirement from the Board in December 2011. Bob Edgar was appointed Chair and Samantha Mostyn and
Neil Chatfield joined the Committee as new members. Further details regarding the Committee’s
composition are set out in the Directors’ report.
B
ENGAGEMENT OF REMUNERATION CONSULTANTS
To ensure it has all relevant information at its disposal when making remuneration decisions, the
Remuneration Committee may seek and consider advice from independent remuneration consultants
where appropriate. Any advice from consultants is used to guide the Committee and the Board, but does
not serve as a substitute for thorough consideration of the issues by Directors.
Those consultants who provided the Remuneration Committee with a remuneration recommendation
relating to KMP during the year ended 30 June 2012, and who have been deemed by the Group to be
‘remuneration consultants’ for the purposes of the new executive remuneration legislation, are listed below:
Consultant
Ernst & Young
Remuneration
recommendations and
fees
Other advice and fees to the Group during
FY2012
$26,000
$98,921 (General HR advice)
$455,825 (IT, finance, sustainability assurance work,
tax advice and other general consulting services)
Ernst & Young was selected by the Remuneration Committee and commissioned and instructed by the
Chair of the Committee in accordance with the applicable protocol. Ernst & Young’s appointment terms
specified that all remuneration recommendations and advice be sent directly to the Committee through the
Chair, and prohibited the provision of such material or other information directly to Management. The
appointment terms also required that Ernst & Young provide, with their recommendations, both a
declaration of their independence from the KMP to whom their recommendations related, and also
confirmation that the Committee’s conditions for contact and dialogue with Management had been
observed. Ernst & Young provided such a declaration and confirmation in relation to their remuneration
recommendations. In this way, the Committee and the Board have been assured and are satisfied that
Ernst & Young’s remuneration recommendations and advice were made free from undue influence from
Management generally and from KMP specifically.
239 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
3
REMUNERATION IN CONTEXT
Toll road concessions are an asset class characterised by defensive, predictable cash flows, which grow
over the life of long dated concession agreements. There is high upfront capital expenditure during the
construction phase of a project, which for quality assets shifts to a low cost, high margin cash generative
business for the remainder of the concession life. The investment proposition for high quality toll road
assets lies in providing investors with access to long dated, predictable, growing cash flows generated by
the assets over the life of the concessions.
The Group is an international toll road developer and manager with interests in Australia and the US. The
Group is focused on the long term management of toll road assets at various stages of maturity to achieve
the best outcomes for investors, Government partners and the community. In Australia, the Group's
interests include 100 per cent ownership of CityLink in Melbourne, and Hills M2 and Lane Cove Tunnel in
Sydney. The Group has partial interests in a further three roads on the Sydney orbital network, being the
M1 Eastern Distributor (75.1 per cent), the M5 (50 per cent), and the Westlink M7 (50 per cent). In North
America, the Group has interests in two assets, Pocahontas 895 (75 per cent) and the Capital Beltway
Express (67.5 per cent), which is under construction in Northern Virginia.
The Board and Management are focused on ensuring security holder value is enhanced through the strong
performance of the current asset portfolio. Development activities also provide opportunities to further
expand the portfolio in value accretive ways. The maximisation of free cash available to security holders
over the near, medium and longer term is the Group’s aim and the Group’s remuneration framework has
been determined with a focus on this outcome.
240 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
4
CEO AND SENIOR EXECUTIVE REMUNERATION FOR THE YEAR ENDED 30 JUNE
2012
A
REMUNERATION STRATEGY AND POLICY
The Group's executive remuneration strategy is designed to attract, retain and motivate a highly qualified
and experienced Management team with the necessary skills and attributes to lead the Group in achieving
its business objectives. The strategy also aims to encourage Management
to strive for superior
performance by rewarding the achievement of targets that are challenging, clearly understood and within
the control of individuals to achieve through their own actions. The Group's remuneration strategy and
policy as set by the Board is summarised below:
Creating Security Holder Value
Remuneration Strategy
Attract, retain, motivate and reward executives who are critical to the Group's growth and
success by:
• Offering competitive remuneration that is benchmarked against the external market.
• Providing a balance of fixed and variable or 'at risk' remuneration.
Align executive reward with individual and Group performance by:
• Making short and long term components of remuneration 'at risk' based on performance.
• Assessing rewards against appropriate financial and non-financial performance measures.
• Encouraging executive security holdings.
Fixed remuneration
Total Employment Cost (TEC):
Remuneration Structure
• Comprises cash salary, superannuation and other prescribed benefits.
• Provides a base level of reward for effective completion of Group and specific accountabilities.
• Appropriately benchmarked and set with reference to role, responsibilities, skills and experience.
Variable (or 'at risk') remuneration
Short term incentive (STI):
Annual rewards tied to pre-determined individual and Group performance measures, and includes a
deferred element.
Individual targets reflect individual specific accountabilities and key drivers for growth and success.
•
•
• Group performance targets linked to earnings, cost management and safety.
Long term incentive (LTI):
• Equity rewards to align executive and security holder interests.
•
•
Vest after three years, subject to achievement of pre-determined internal and external performance
measures.
Encourages sustainable performance in the medium to longer term, and provides a retention
element.
241 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
B
CHANGE OF CEO AND CFO - TRANSITION ARRANGEMENTS
On ceasing employment on 30 July 2012, the following arrangements applied to Chris Lynch:
• he will receive an STI award for the year ended 30 June 2012, to be awarded at 116 per cent of his
current TEC based on performance against applicable performance targets (see page 248). The cash
component of the award (70 per cent or $1,764,963) will be paid in August 2012. The deferred (into equity)
component of the award (30 per cent or $756,413) will vest, subject to clawback provisions, on 30 June
2014;
• he is contractually entitled to receive an STI award for the 30 days worked in the year ended 30 June
2013, and will receive a pro rated ‘target’ level payment for the 30 days ($178,652) after satisfying
performance targets for the period which related to his role in a successful CEO transition process; The
award will be paid in cash in August 2012;
• equity instruments previously granted to him under the Group’s LTI plans will continue on foot in
accordance with their original terms, with the applicable performance measures for each grant to be tested
at the end of the applicable original performance period;
• as he is contractually entitled to receive an LTI award for every day he is employed by the Group, the
Board determined to pay him $1,060,000 in lieu of an LTI grant earned but not received for a 6 month
period during his tenure. The cash sum will be paid in August 2012;
• as he worked out his notice period, he will not receive any amount in lieu of notice; and
• he will not receive any ex gratia payments on separation.
Details of payments made to Mr Lynch in and for the year ended 30 June 2013 will be set out in the 2013
report.
Incoming CEO - Scott Charlton
Scott Charlton’s appointment as CEO took effect on 16 July 2012. Mr Charlton was not a member of KMP
during the year ended 30 June 2012 and he was paid no remuneration during that year.
As disclosed to the ASX at the time of his appointment, the following arrangements apply to Mr Charlton
under his service agreement in relation to the year ended 30 June 2013.
He is provided with the following elements of remuneration (on an annualised basis):
• Total fixed remuneration (TEC) of $1,875,000; and
• Variable annual remuneration comprised of a STI target opportunity of 30 per cent of his total
remuneration package ($1,406,250); and an LTI target opportunity of 30 per cent of his total remuneration
package ($1,406,250).
In recognition of Mr Charlton giving up certain STI deferred awards for the years ended 30 June 2011 and
2012 and LTI awards for the years ended 30 June 2010 to 30 June 2012 with his former employer to join
Transurban, he will receive a one-off grant of equity as a sign-on award. The grant will consist of 236,256
performance awards, which will vest in three tranches (of 78,752 each) on the first, second and third
anniversaries of his commencement with Transurban. Each performance award is an entitlement to receive
a fully paid Transurban security on vesting.
Further details of Mr Charlton’s remuneration in his first year as CEO will be set out in the 2013 report.
242 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Outgoing CFO - Tom Honan
On ceasing employment as CFO on 2 May 2012, the following arrangements applied to Tom Honan:
• he received a sum equivalent to 3 months TEC as a payment in lieu of notice ($246,160);
• he was paid a cash sum equivalent to the pro rata vesting of his STI award for the year ended 30 June
2012, calculated based on performance against the applicable performance hurdles during the 10 month
period from the start of the year up until the date his employment ceased ($475,000);
• equity instruments previously granted to him under the Group’s LTI plans lapsed in accordance with their
original terms ($962,416 forfeited); and
• he did not receive any ex gratia payments on separation.
Further details of Mr Honan’s resignation payments can be found on page 254.
C
REMUNERATION MIX
For the year ended 30 June 2012, the remuneration of the CEO and other Senior Executives was
structured as a mix of fixed remuneration and variable (or 'at risk') remuneration through short term and
long term incentive components.
The relative weightings of the three remuneration components were determined by the Board (on the
recommendation of the Remuneration Committee) and are set out in the table below:
Relative weightings of remuneration components 1
% of total remuneration (annualised) (at target) - FY20122
Fixed TEC
Variable (performance based)
CEO
Other Senior Executives
33.3
45
STI (with 30% deferral)
33.3
30
LTI
33.3
25
1These figures do not necessarily reflect the relative value derived from each of the components, which depends on
actual performance against targets for the variable components (refer to page 244). The above STI percentages are
based on achieving the relevant performance targets. The above LTI percentages are based on the maximum LTI
available at the time of grant to each Senior Executive if the awards granted vest at the end of the performance period.
The table above reflects the percentage value of remuneration which consists of rights for each KMP.
2Refer to page 242 for the new CEO's remuneration arrangements.The transition to the remuneration mix for Michael
Kulper and Ken Daley will be achieved over a maximum of three years (or by FY2014).
243 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
D
FIXED REMUNERATION - TOTAL EMPLOYMENT COST (TEC)
What is TEC?
Fixed remuneration is represented by total employment cost (TEC) comprising base salary and
superannuation contributions.
Fixed remuneration is not 'at risk' but is set by reference to appropriate benchmark information for an
individual’s responsibilities, performance, qualifications and experience.
There are no guaranteed base salary increases in any Senior Executive's employment agreement.
How is TEC determined?
TEC levels are reviewed annually by the Remuneration Committee with reference to an individual’s role,
experience and performance, as well as relevant comparative market data. Independent remuneration
consultants and surveys, internal relativities and market conditions also provide guidance. TEC is also
reviewed on a change in role.
Executives' TEC is determined with reference to the market median. The primary reference for determining
the market median is the ASX 20 - 50. Consideration is given to sizing factors including market
capitalisation and revenue. A range around the median provides flexibility to recognise individual
performance.
E
SHORT TERM INCENTIVE (STI)
How does the STI plan operate?
All permanent Group employees, including the CEO and other Senior Executives, participate in the annual
STI plan.
The STI plan puts a significant proportion of remuneration 'at risk' subject to meeting specific pre
determined Group, team and individual performance measures linked to business objectives. This aligns
executive interests with the Group's financial performance, as well as management principles and the
Group’s cultural values.
For the year ended 30 June 2012, the CEO had a target STI opportunity of 33 per cent of his total
remuneration package. Other Senior Executives had a target STI opportunity of 30 per cent of their total
remuneration package.
Mandatory STI deferral of 30 per cent of the overall STI award was introduced for the CEO and other
Senior Executives in the year ended 30 June 2012. The deferral period is three years (comprising the 2012
financial year performance period and a two year trading restriction). For Australian Senior Executives,
deferral is into securities. Due to legal restrictions on the issue of securities to US residents, US Senior
Executives receive deferred cash awards. The deferred component of remuneration may, at the discretion
of the Board, be subject to forfeiture or clawback (e.g. in the event of misconduct or the material
misstatement of financial results).
244 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
What were the STI performance measures for the year ended 30 June 2012?
There were two categories of STI performance measures for the CEO and other Senior Executives for the
year ended 30 June 2012. They were chosen to provide a balance between corporate, individual,
operational, strategic, financial and non-financial aspects of performance and are described below.
STI performance measures and targets for FY2012
Measure
% weighting Description of targets/indicators for FY2012
Group
performance
targets
20%
(1) Growth in proportional EBITDA
The proportional EBITDA targets for FY2012 were set against
the
previous year's results and the Group's FY2012 budget, and are set out
below:
Proportional EBITDA result
Less than 7% above forecast underlying result for
FY2011
7% above forecast underlying result for FY2011
Budget EBITDA for FY2012 (9% increase on
result for FY2011)
17% above forecast underlying result for FY2011 150%
50%
100%
% of STI that vests^
0%
^ Straight line vesting applies between 50-100% and 100-150%.
20%
(2) Cost management based on proportional net costs
The proportional net costs targets for FY2012 were set against
the
previous year's results and the Group's FY2012 budget, and are set out
below:
Proportional net costs result
Over budget for FY2012
On budget for FY2012
5% below budget for FY2012
10% below budget for FY2012
% of STI that vests^
0%
50%
100%
150%
^ Straight line vesting applies between 50-100% and 100-150%.
(3) Safety targets, including multiple indicators that focus on improving the
Group's safety culture and reducing workplace injuries for employees
and contractors.
Individual KPIs are unique to the individual's area of accountability, and
in FY2012 related to critical business sustainability measures, including:
operational performance; cost reduction; customer satisfaction; project
outcomes; succession planning; risk management; people management;
strategy development; and business plan implementation.
Individual KPIs reflect the behaviours valued by the Group, and are
capable of measurement. Individuals have a clear line of sight to KPIs
and are able to directly affect outcomes through action.
10%
50%
Individual
key
performance
indicators
(KPIs)
Who sets the STI performance measures?
STI performance measures are set at the beginning of the financial year. The CEO's individual KPIs are set
by the Board. All other Senior Executives’ individual KPIs are set by the CEO and approved by the Board.
The Board sets the Group performance targets.
245 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
What is proportional EBITDA and why does Transurban use it as an STI performance measure?
EBITDA is a common operational performance measure used by many companies.
Proportional EBITDA is one of the primary measures that the Board uses to assess the operating
performance of the Group, with an aim to maintain a focus on the Group’s operating results and associated
cash generation. It reflects the contribution from individual assets to the Group's operating performance and
focuses on elements of the result that Management can influence to drive improvements in short term
earnings.
Proportional EBITDA is the aggregation of EBITDA from each asset multiplied by the Group's percentage
ownership, as well as any contribution from Group functions. Proportional EBITDA provides a better
reflection of the underlying performance of the Group’s assets than statutory EBITDA. The EBITDA
calculation from the statutory accounts would not include the EBITDA contribution of the M5, M7 or DRIVe
(equity accounted in the statutory results), which are meaningful contributors to the Group’s performance.
Proportional EBITDA figures used to assess performance are included in note 2 of the Transurban Holdings
Limited audited financial statements.
The Board can decide to exclude specific items (including contributions from acquisitions or divestments
made during any one year) from proportional EBITDA to provide an underlying result when determining
performance incentives. There were no such exclusions for the year ended 30 June 2012.
Proportional EBITDA has been used by the Group as an STI performance measure since 2009.
What are proportional net costs and why does Transurban use it as a performance measure?
Proportional net costs are the operating, corporate and business development costs of the Group less non
these non toll revenues encourages and allows
toll revenues (fees and other). The deduction of
Management to incur additional costs where these are justified by increased revenue results (e.g. toll
collection activities such as video tolling and/or enforcement).
The use of a cost related STI performance measure reflects the fact that Management has the ability to
influence the expenditure of the business. Strong cost management throughout the business drives an
increase in proportional EBITDA and free cash flow and ultimately security holder value.
Proportional net costs was first used by the Group as an STI performance measure in 2010.
How are the varying levels of performance achievement rewarded?
STI targets are designed to differentiate and reward high performance. 50 per cent of the available STI
vests for on-target performance, 100 per cent vests for high performance and up to an additional 50 per
cent can be earned for exceptional performance. These targets are consistent for all of the Group’s eligible
employees.
Given that STI awards are contingent on performance across a range of measures, maximum STI awards
can only be achieved for performance that is strong on all measures.
246 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
How is performance assessed?
Performance against the Group performance targets is assessed by the Board. The results are
independently reviewed.
The CEO's performance against his individual KPIs is assessed by the Remuneration Committee which
then makes recommendations to the Board. The performance of other Senior Executives against their
individual KPIs is assessed by the CEO, who confers with the Committee and then the Board regarding his
assessment.
Once KPIs have been assessed, the Board approves STI awards. STI cash awards for the year ended 30
June 2012 will be paid in August 2012. The STI deferred component for the year ended 30 June 2012 will
vest, subject to continuity of employment (unless otherwise determined by the Board) and clawback
provisions, on 30 June 2014.
The Board believes the method of assessment is rigorous and provides a balanced evaluation of the CEO
and each other Senior Executive's performance.
What if a Senior Executive ceases employment?
Under the service agreements for Senior Executives (other than the CEO - refer to page 242) in place for
the year ended 30 June 2012, if a Senior Executive ceased employment with the Group before
performance against STI targets was assessd, they would generally not be entitled to receive any STI
award, unless otherwise determined by the Board.
In recognition of Tom Honan’s exceptional contribution to the business during the year ended 30 June
2012, and to facilitate an orderly succession in the CFO role, the Board determined to pay Mr Honan a sum
equivalent to the pro-rata vesting of his STI for that year, calculated based on performance against the
applicable performance measures during the 10 month period from the start of the year up until 2 May
2012, being the date his employment as CFO ceased.
What were the STI performance outcomes for the year ended 30 June 2012?
Group performance in respect of the proportional EBITDA, proportional net costs and safety performance
measures for the year ended 30 June 2012 was assessed by the Board as 97 per cent in Australia and 127
per cent in the US.
247 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
STI awards for the CEO and other Senior Executives for the year ended 30 June 2012 are set out in the
table below:
STI outcome (%)
Actual STI awarded1($)
STI forfeited
(%)
Group
performance
Individual
KPIs
Total
Cash2
Deferred into
equity2
Name
Chris Lynch
Ken Daley
Andrew Head
Samantha Hogg
Tom Honan3
Michael Kulper
Elizabeth Mildwater
112%
127%
97%
97%
97%
127%
97%
120%
110%
120%
90%
100%
120%
95%
116%
119%
109%
94%
83%
124%
96%
1,764,963
354,612
756,413
151,976
297,686
127,580
251,598
475,000
107,828
-
492,765
211,185
263,390
112,882
-
-
-
6%
17%
-
4%
1 On-target performance must be achieved before any STI is awarded. Therefore, the minimum potential value of the STI
in respect of FY2012 was nil. The maximum potential value of the STI was the “Actual STI awarded”.
2 The cash STI payments in respect of FY2012 will be paid in August 2012. The STI deferred component for FY2012 (30
per cent of the actual STI awarded) will vest, subject to continuity of employment (unless otherwise determined by the
Board) and clawback provisions, on 30 June 2014.
3 Tom Honan received an STI pro-rated and awarded based on individual performance and Group performance on his
resignation in May 2012. The Board determined to waive the deferred element of this award and pay it in cash.
F
LONG TERM INCENTIVE (LTI)
How does the LTI plan operate?
The LTI plan aligns reward with security holder value by tying this component of executive remuneration to
the achievement of performance measures that underpin sustainable long term growth.
Participation in the LTI plan is only offered to the CEO and other Senior Executives, and certain other
employees nominated by the CEO and approved by the Board. For the year ended 30 June 2012, the CEO
was offered an LTI grant equivalent to 33 per cent of his total remuneration package. Other Senior
Executives were offered grants equivalent to 25 per cent of their total remuneration package.
LTI grants are delivered in the form of performance awards under the Group’s Performance Awards Plan
(PAP). Each performance award is an entitlement to receive a fully paid Transurban security on terms and
conditions determined by the Board, subject to the achievement of certain vesting conditions linked to
performance over a three year period. If the performance measures are satisfied, the performance awards
vest and Transurban securities are delivered to the participant. Whilst the Board has discretion to grant
cash payments of equivalent value at the end of the performance period, and certain US based participants
may be required to receive cash settled awards, the Board generally intends to settle any vested
performance awards in Transurban securities.
Performance awards that do not vest after testing of the performance measures lapse, without retesting.
Performance awards are not transferable and do not carry voting or distribution rights. However securities
allocated upon vesting of performance awards carry the same rights as other Transurban securities.
248 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
What were the LTI performance measures for the year ended 30 June 2012?
Performance awards granted during the year ended 30 June 2012 are subject to a three year performance
period and the following dual performance measures over that period:
LTI performance measures for FY2012
Measure % weighting Description of measure
Relative
TSR
50%
Relative TSR is measured against a bespoke comparator group comprising
companies in the transport, utilities,
real estate, construction and
infrastructure Global Industry Classification Standards (GICS) sectors of the
ASX150. The other 33 companies in this group are:
Singapore Telecommunications Ltd, Telstra Corporation Ltd, Westfield
Group, QR National Ltd, Westfield Retail Trust, Stockland, Leighton
Holdings Ltd, AGL Energy Ltd, MAP Group, GPT Group, Goodman Group,
CFS Retail Property Trust, Lend Lease Group, Asciano Ltd, Qantas Airways
Ltd, Dexus Property Group, Mirvac Group, Telecom Corporation Of New
Zealand Ltd, Toll Holdings Ltd, SP Ausnet, APA Group, Commonwealth
Property Office Fund, UGL Ltd, ConnectEast Group, Boart Longyear Ltd,
Investa Office Fund, Spark Infrastructure Group, Charter Hall Office Reit,
Australand Property Group, Monadelphous Group Ltd, Duet Group, TPG
Telecom Ltd and Australian Infrastructure Fund.
TSR measures total return on investment of a security, taking into account
both capital appreciation and distributed income which was reinvested on a
pre-tax basis.
For performance awards granted during the year ended 30 June 2012, the
relative TSR component will vest on a straight line basis if the Group’s
relative TSR performance is above the median of the bespoke comparator
group at the end of a three year performance period, in accordance with the
following table:
TSR vesting schedule:
The Group’s relative TSR ranking in the
comparator group
At or below the 50% percentile
Above the 50th percentile but below the 75th
percentile
At or above the 75th percentile
% of performance
awards that vest
Nil
Straight line vesting
between 50% and 100%
100%
249 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Measure % weighting Description of measure
50%
Growth in
Free Cash
Flow (FCF)
per
security
Within Transurban, FCF per security is defined as:
• the Group's cash flow from operating activities;
• less: cash flows from operating activities of non-100% owned controlled
assets;
• add back: maintenance capital expenditure for 100% owned assets;
• less: accounting charge for maintenance provision for the year;
• less: actual tag expenditure in 100% owned assets;
• add: dividends received from non 100% owned assets;
• divided by: weighted average number of securities issued.
The FCF calculation is included in note 21 of the Transurban Holdings Limited
audited financial statements.
For performance awards granted during the year ended 30 June 2012, the
FCF per security component will vest based on the Group's compound
annual growth in FCF per security over the three year performance period,
as set out below:
Growth in FCF per security vesting schedule:
% compound annual growth in FCF per
security
7%
Between 7% and 10%
10% or more
% of performance
awards that vest
50%
Straight line vesting
between 50% and 100%
100%
For performance awards granted during the year ending 30 June 2013, the
performance target range for compound growth in FCF per security is between
6 per cent and 9 per cent.
Why were these LTI performance measures selected?
The TSR target is a relative, external, market-based performance measure against those companies with
which the Group competes for capital. It provides a direct link between executive reward and security holder
return.
For the year ended 30 June 2012, the Group changed the relative TSR comparator group from the
S&P/ASX 100 to the bespoke comparator group described above. The Group considered this comparator
group to be more reflective of its competitive market.
For the year ended 30 June 2012, the Group also changed the second LTI measure to FCF per security
instead of proportional EBITDA to reflect the Group’s focus on the maximisation of free cash. The FCF
calculation is included in note 21 to the Transurban Holdings Limited audited financial statements.
250 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
How will the LTI performance targets be measured?
Relative TSR
The Group will receive an independent report that sets out the Group's TSR growth and that of each
company in the bespoke comparator group. A volume weighted average price of securities for the four
weeks up to and including the test date is used in the calculation of TSRs for Transurban and the
comparator group.
The level of TSR growth achieved by the Group will be given a percentile ranking having regard to the
Group’s performance compared to the performance of other companies in the comparator group (the
highest ranking company being ranked at the 100th percentile). This ranking will determine the extent to
which performance awards subject to this target will vest.
FCF per security
The Group's FCF per security percentage growth rate (as set out in note 21 to the Transurban Holdings
Limited audited financial statements) will be calculated based on the cumulative weighted average over the
three year performance period.
The Board considers these methods of measurement to be rigorous and transparent.
What if a Senior Executive ceases employment?
Under the terms of the service agreements for Senior Executives (other than the CEO - refer to page 242)
in place for the year ended 30 June 2012, if a Senior Executive ceased employment with the Group before
the performance measures were tested, then their unvested performance awards would lapse, unless
otherwise determined by the Board.
On cessation of Tom Honan’s employment on 2 May 2012, Mr Honan forfeited his unvested performance
awards.
What will happen in the event of a change in control?
In the event of a takeover or change of control of the Group, the treatment of any unvested performance
awards granted in the year ended 30 June 2012 will be subject to the incumbent Board's discretion.
What was the grant, and movement in the number and value, of performance awards during the
year ended 30 June 2012?
Performance awards granted in FY2012
Performance criteria
Grant date
Vesting date
Fair value of
awards
at grant date1($)
VWAP at grant
date ($)
Relative TSR
FCF per security
26 Sep 2011
CEO: 11 Nov 2011
26 Sep 2011
CEO: 11 Nov 2011
30 June 2014
30 June 2014
$3.37
$3.27
$4.63
$4.81
$5.35
$5.41
$5.35
$5.41
1 An explanation of the pricing model used to calculate these values is set out in note 35 to the Transurban Holdings
Limited audited financial statements.
251 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Performance Awards granted in FY2012
Name
Chris Lynch1
Ken Daley
Andrew Head
Samantha Hogg
Tom Honan4
Michael Kulper
Elizabeth Mildwater
Number of performance
awards granted2
Value at grant date ($)
Maximum total value
of grant yet to vest3($)
715,024
128,294
107,766
101,320
171,058
159,286
107,766
2,888,697
2,888,697
513,176
431,064
405,280
684,232
637,144
431,064
513,176
431,064
405,280
684,232
637,144
431,064
1 The grant made to the CEO constituted his full LTI entitlement for FY2012 and was made following security holder
approval at the 2011 AGM on the terms summarised above. Performance awards vest subject to performance over the
period from 1 July 2011 through to 30 June 2014.
2 The grants made to Senior Executives assume full vesting of their full LTI entitlement for FY2012 and were made on
the terms summarised above. Performance awards actually vest subject to performance over the period from 1 July 2011
through to 30 June 2014.
3 The maximum value of the grant has been estimated based on the fair value per instrument at date of grant. The
minimum total value of the grant, if the applicable performance measures are not met, is nil.
4 Performance awards lapse where the performance measures are not satisfied on testing. As the performance awards
only vest on satisfaction of performance and service conditions which are to be tested in future financial periods, Tom
Honan forfeited 171,058 awards. The value of the forfeited awards was $684,232. No other Senior Executives forfeited
performance awards during the year.
252 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
G
LEGACY LTI PLANS
The Group has a number of legacy LTI plans that are no longer offered but which have existing participants.
Details of these plans are set out below.
Plan
FY2011 PAP
FY2010 PAP
FY2009 PAP
Grant date
1 Nov 2010
11 Dec 2009
Performance period
1 Nov 2010 -
1 Nov 2013
1 July 2009 -
30 June 2012
1 Nov 2008
1 Nov 2008 -
1 Nov 2011
FY2009 Executive
Equity Plan
1 Nov 2008
1 Nov 2008 -
1 Nov 2011
External
performance
measure (50% of
grant)
Comparator group
Relative TSR
Relative TSR
Relative TSR
N/A
Retention grant with
service condition only
The S&P/ASX 100
Relative TSR
% of performance awards that vest
Vesting schedule
Above 50th percentile to 75th
percentile
Straight line vesting between 50% -
100%
At or above the 75th percentile 100% vests
Internal
performance
measure (50% of
grant)
Group’s annual
growth in
proportional EBITDA
Group’s annual growth
in proportional EBITDA
Group’s annual growth
in proportional EBITDA
From 7% - 11%
From 6% - 9%
From 5% - 9%
Compound growth
% of performance awards that vest
At target %
50% vests
Vesting schedule
From target % to stretch %
Straight line vesting between 50% -
100%
At or above stretch %
100% vests
N/A
N/A
N/A
N/A
Current status
To be tested after
1 Nov 2013
TESTED
100% to vest
on 11 Dec 2012
TESTED
94.72% vested
5.28% lapsed
TESTED
100% vested
Value of performance awards vested and lapsed in the year ended 30 June 2012
The FY2009 Executive Equity Plan and the FY2009 PAP vested on 1 November 2011. Regarding the
FY2009 PAP, 90 per cent of awards subject to the TSR performance measure vested based on the Group’s
ranking against the constituents of the S&P/ASX 100. 99.43 per cent of awards subject to the proportional
EBITDA measure vested based on performance against target. In total 5.28 per cent of awards lapsed.
253 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
FY2009 Executive Equity Plan
FY2009 PAP
Lapsed
Vested
Lapsed
Vested
Name
Number
Value ($)
Number
Value ($)
Number
Value ($)
Number
Value ($)
C Lynch
T Honan
A Head
E Mildwater
S Hogg
K Daley
M Kulper
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79,647
340,093
25,565
85,701
458,156
1,745,183
85,474
364,974
12,291
41,202
220,267
839,030
19,146
81,753
19,146
81,753
15,316
65,399
19,146
81,753
23,944
102,241
2,458
1,536
1,229
3,549
7,686
8,241
5,150
4,120
44,054
167,807
27,534
104,880
22,027
83,904
11,897
63,602
242,269
25,764
137,736
524,658
H
REMUNERATION PAID TO THE CEO AND OTHER SENIOR EXECUTIVES
Short-term employee benefits
Non-
monetary
benefits2
Cash STI1
Deferred
STI3
Post-
employment
benefits
Termination
benefits
Super
-annuation
Share based
benefits4
Total
Long term
benefits
Long
service
leave
704,498
702,287
-
227,968
-
456,860
2,153,375
2,033,360
Cash salary
and fees
Executive director
C Lynch
2012
2011
Other KMP
B Bourke
2012
2011
K Daley5
2012
2011
M Fletcher
2012
2011
A Head
2012
2011
S Hogg
2012
2011
T Honan6
2012
2011
M Kulper
2012
2011
E Mildwater
2012
2011
Total
2012
2011
955,653
1,017,385
6,660,430
6,930,103
1,149,822
976,398
555,892
433,494
571,722
541,554
569,468
540,797
1,764,963
2,461,680
46,299
18,557
252,138
-
15,775
47,500
-
-
40,812
21,309
3,086,801
2,167,745
7,360,163
6,750,151
-
254,163
354,612
431,438
-
110,656
297,686
323,640
251,598
241,285
475,000
587,250
492,765
573,750
263,390
319,633
-
9,097
-
-
118,030
123,596
50,659
-
-
3,114
2,260
6,232
1,903
5,882
3,951
8,178
-
8,199
2,028
6,311
-
-
42,527
-
35,943
-
-
-
70,395
-
37,627
-
-
58,333
45,813
48,995
-
22,917
22,760
24,243
15,775
25,000
26,775
25,000
9,458
9,800
15,775
25,000
-
958,759
-
-
-
(57,846)
-
1,679,366
-
-
21,983
11,627
594,613
180,209
1,890,208
1,498,152
-
402,234
-
-
-
64,842
-
831,731
-
-
-
-
-
-
-
-
-
-
15,258
25,662
11,492
3,342
347,920
209,779
1,300,133
1,131,110
280,575
173,608
1,153,178
882,611
-
-
(824,365)
761,984
831,183
2,358,810
16,165
19,690
10,015
5,419
1,033,606
400,734
2,578,042
2,029,558
350,916
234,376
1,249,219
1,131,536
3,900,014
5,303,495
174,471
189,166
489,289
-
152,131
286,788
-
1,360,993
115,725
87,049
4,870,066 16,362,126
4,135,431 18,293,025
254 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
1 The amount represents the cash STI payment to the Senior Executive for FY2012, which will be paid in August 2012. The
cash component is 70% of the STI award.
2 Non-monetary benefits include Group insurance, vehicle allowances and expatriate allowances (where relevant).
3 30 per cent of STI award is deferred into equity. In accordance with Accounting Standards, the deferred component will be
recognised over the three year service period from 1 July 2011 to 30 June 2014. The amount recognised in this table is the
FY2012 accounting charge.
4 In accordance with the requirements of the Accounting Standards, remuneration includes a proportion of the fair value of
equity compensation granted or outstanding during the year (i.e. performance awards under the LTI plan). The fair value of
equity instruments is determined as at the grant date and is progressively allocated over the vesting period. The amount
included as remuneration may be different to the benefit (if any) that Senior Executives may ultimately realise should the equity
instruments vest. The fair value of performance awards at the date of their grant has been independently determined in
accordance with AASB 2. The fair value of the performance awards has been valued applying a Monte Carlo simulation to
model Transurban’s security price and where applicable, the TSR performance against the comparator group performance. The
assumptions underpinning these valuations are set out in note 35 to the Transurban Holdings Limited audited financial
statements.
5 Ken Daley’s 2008 PAP allocation was based on his TEC as at November 2008 of $577,500 per year. On 5 December 2008,
his TEC was increased to $750,000 per year effective 1 July 2008. The 2008 PAPs were granted on 15 October 2008. The
Board determined to compensate Ken for the shortfall in his performance awards allocation given that his new TEC was
effective prior to the grant.
6 On ceasing employment as CFO on 2 May 2012, Tom Honan was paid all accrued entitlements owing to him (e.g. earned but
unpaid salary and annual leave), a sum equivalent to the pro-rata vesting of this FY2012 STI ($475,000), and a sum equivalent
to 3 months TEC as payment in lieu of notice ($246,160). He did not receive any ex gratia payments on separation.
I
ADDITIONAL REMUNERATION INFORMATION
EMPLOYEE SECURITY PLANS
The Group has three broad employee based security plans.
ShareLink Incentive Plan
Under the ShareLink Incentive Plan, subject to Board approval, an allocation of Transurban securities or
cash payments may be made to eligible employees (excluding the CEO and other Senior Executives) in
recognition of the Group’s prior year performance.
Eligible employees received a grant of 100 securities at no cost to them on 20 February 2012. Due to legal
restrictions on the issue of securities to US residents, eligible employees in the US received a cash
payment of equivalent value in lieu of securities.
Given that the plan is designed to reward employees for the Group's prior year performance and is not
intended to serve as a future incentive, there are no performance measures attached to grants of securities
or cash payments under the plan.
ShareLink Investment Tax Exempt Plan and ShareLink Investment Tax Deferred Plan
The ShareLink Investment Tax Exempt Plan provides eligible employees (excluding the CEO and other
Senior Executives) the opportunity to invest up to $1,000 per year in Transurban securities on a tax exempt
basis. Participants contribute up to $500 by way of salary sacrifice which is matched by the Group dollar for
dollar. Security acquisitions are made quarterly in September, December, March and June each year.
The ShareLink Investment Tax Deferred Plan provides eligible employees (excluding the CEO and other
Senior Executives) with the opportunity to contribute up to $5,000 per year by way of salary sacrifice to be
invested in Transurban securities. The Group matches participants’ contributions dollar for dollar up to
$3,000. The plan has a maximum disposal restriction period of three years from the date of acquisition,
including a 12 month forfeiture period.
Grants under both of these plans are designed to encourage employee security holdings and to align the
interests of employees with those of the Group and are therefore not subject to performance measures.
255 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
DEALINGS IN SECURITIES
In accordance with the Group’s Dealing in Securities Policy, employees who have awards under a Group
equity plan may not hedge against those awards. In addition, KMP may not hedge against entitlements that
have vested but remain subject to a holding lock.
Employees and Directors are not permitted to obtain margin loans using Transurban securities (either solely
or as part of a portfolio) as security for loans.
SERVICE AGREEMENTS
The remuneration and other terms of employment for the CEO and other Senior Executives are formalised
in service agreements which have no specified term.
Chris Lynch's service agreement included an entitlement to participate in the Group’s STI and LTI plans (or
equivalent cash plan). Scott Charlton and other Senior Executives are eligible to participate in the STI and
LTI plans (or equivalent cash plans for US executives).
Some key aspects of the agreements in place in the year ended 30 June 2012 are outlined below:
CEO
Other Senior Executives
Period of notice to
terminate
(executives)
Period of notice to
terminate
(the Group*)
6 months
3 months
12 months
6 months
* Payment in lieu of the notice period may be provided (based on the executive's fixed remuneration). The Group may
also terminate at any time without notice for serious misconduct.
256 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
5
LINK BETWEEN GROUP PERFORMANCE, SECURITY HOLDER WEALTH AND
REMUNERATION
The variable or 'at risk' remuneration of the CEO and other Senior Executives is linked to the Group’s
performance through the use of measures based on the operating performance of the business.
A
GROUP PERFORMANCE AND STI
For the year ended 30 June 2012, 20 per cent of the Senior Executive STIs were determined with reference
to proportional EBITDA, 20 per cent with reference to proportional net costs, and 10 per cent with reference
to safety as discussed on page 245.
Proportional EBITDA
The underlying proportional EBITDA result for the year ended 30 June 2012 was $784.0 million, a 9.1 per
cent increase from the prior year result. This resulted in the payment of 93.4 per cent of STI's attributable to
proportional EBITDA. The proportional EBITDA result was driven by the Group's continued focus on cost
control and the performance of the asset portfolio. This result was delivered despite significant disruption
caused by construction on Sydney’s Hills M2 Motorway.
Proportional net costs
The underlying proportional net costs result for the year ended 30 June 2012 was $159.9 million, a 7.2 per
cent improvement from the prior year result. This resulted in the payment of 149.6 per cent of STI's
attributable to proportional net costs. Importantly, the Group’s continued focus on proportional net costs
resulted in a cost decrease across operational, corporate and business development areas (when taking
into account the impact of volume based cost increases).
Safety
For the year ended 30 June 2012, the safety performance measure resulted in a zero STI payment for
Senior Executives based in Australia, and 150 per cent for Senior Executives based in the US. The safety
KPI target included several components as discussed on page 245 of which a reduction in recordable injury
frequency rate was one. Strong results were attained for some aspects of the Australian safety measure,
however other areas did not meet all targets.
B
GROUP PERFORMANCE AND LTI
For the year ended 30 June 2012, LTIs were linked to relative TSR and, for the first time, FCF per security
(see page 249 and 250).
Relative TSR
The relative TSR for the year ended 30 June 2012 is calculated on a bespoke comparator group from the
ASX150 (see page 250).
FCF per security
The performance target range for compound growth in FCF per security of between 7 per cent and 10 per
cent over three years is considered an appropriate target that reflects the Group’s focus on the
maximisation of free cash to drive security holder return. For performance awards granted during the year
ending 30 June 2013, the performance target range for compound growth in FCF per security is between 6
per cent and 9 per cent.
The table below summarises the Group’s five year results for the relevant performance measures. These
results show that since the year ended 30 June 2009, Transurban’s distribution policy has been to pay out
100 per cent (rounded) of FCF per security. Since that time, Transurban has delivered consistent growth on
this measure based on consistent revenue and EBITDA growth. Based on investor feedback, this remains
Transurban’s financial focus.
257 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Group Performance1
Measure
Security price at year end
Distribution paid per
security
Underlying proportional
EBITDA - $m
2012
$5.69
29.5c
2011
$5.23
27.0c
2010
$4.24
24.0c
2009
$4.18
2008
$4.23
22.0c
57.0c*
784.0
718.7
635.4
583.3
523.0
TSR performance2
15%
32%
10%
2%
(41%)
FCF per security
performance - weighted
average
29.8c
27.5c
27.4c
22.2c
26.0c
* Distributions made under a previous distribution policy no longer applied by the Group.
1 For FY2012, LTIs were linked to relative TSR and FCF per security. In prior years, LTIs were linked to relative TSR and
proportional EBITDA.
2 The TSR performance is the total security holder return for that financial year.
258 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
6
A
NON-EXECUTIVE DIRECTOR REMUNERATION
REMUNERATION POLICY
The diagram below sets out the key objectives of the Group’s Non-executive Director remuneration policy
and how they are implemented through the Group’s remuneration framework:
Securing and retaining talented,
qualified Directors
Preserving independence and
impartiality
Aligning Director and security
holder interests
Director fee levels are set with
regards to: the responsibilities
and risks attached to the role, the
time commitment expected and
the workload, Director experience
and expertise, and market
benchmark data provided by
independent remuneration
consultants.
Director remuneration consists
of base (Director) fees and
Committee fees.
No element of Director
remuneration is 'at risk' - that is,
fees are not based on the
performance of the Group or
individual Directors from year to
year.
B
REMUNERATION ARRANGEMENTS
Directors are encouraged to
hold Transurban securities.
Maximum aggregate remuneration
The amount of aggregate remuneration that may be paid to Non-executive Directors in any year is capped
at a level approved by security holders. The current aggregate fee pool of $2,400,000 per year (inclusive of
superannuation contributions) was approved by security holders at the 2010 AGM. No change to this
amount is proposed for the year ending 30 June 2013.
The aggregate fee pool and the manner in which it is apportioned amongst Non-executive Directors is
reviewed annually. The Remuneration Committee undertakes this review and makes recommendations to
the Board. In conducting the review, the Committee considers market benchmark data from independent
remuneration consultants.
2012 Non-executive Director fees
A review of Non-executive Director fees was undertaken during the year ended 30 June 2012 and it was
determined that there be no increase in fees.
Current base (Director) fees and Committee fees per year are set out below:
Board
Audit and Risk Committee
Nomination Committee
Remuneration Committee
Chair fee $
455,000
40,000
10,000
25,000
Member fee $
170,000
20,000
10,000
20,000
The Chair of the Board does not receive any additional fees for his Committee responsibilities.
259 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
Non-executive Directors are permitted to be paid additional fees for special duties or exertions. No such
fees were paid during the year ended 30 June 2012. Non-executive Directors are also entitled to be
reimbursed for all business related expenses, including travel, as may be incurred in the discharge of their
duties.
Retirement benefits
No current Non-executive Directors are entitled to any retirement benefits.
In September 2005, the Board resolved to discontinue previously provided retirement benefits for
Non-executive Directors with effect from 30 September 2005. The value of benefits accrued up to that date
attracted interest at the statutory fringe benefits rate. Accrued ‘frozen’ retirement benefits plus interest were
paid to Geoff Cosgriff and Jeremy Davis on their retirement from the Board on 6 December 2011.
The following table details the retirement benefits paid and expensed in the years ended 30 June 2012 and
30 June 2011.
Geoff Cosgriff
Jeremy Davis
FY2012 $
251,028 (paid)
418,186 (paid)
FY2011 $
16,301 (accrued)
27,155 (accrued)
ShareLink Investment Tax Deferred Plan
Under the ShareLink Investment Tax Deferred Plan, Non-executive Directors are able to sacrifice up to 50
per cent of their pre tax fees to acquire up to $5,000 of Transurban securities per year. No securities were
issued to Non-executive Directors under the plan for the year ended 30 June 2012.
260 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Remuneration report (continued)
C
REMUNERATION PAID TO NON-EXECUTIVE DIRECTORS
Details of Non-executive Directors’ remuneration for the years ended 30 June 2012 and 30 June 2011 are
set out below:
Short-term benefits
Post-employment benefits
Total
Fees
Superannuation1
Retirement
benefits2,3
34,225
-
176,047
141,066
439,411
394,593
207,114
196,552
176,047
93,996
207,631
199,828
Current Non-executive Directors
Lindsay Maxsted
2012
2011
Neil Chatfield
2012
2011
Bob Edgar
2012
2011
Samantha Mostyn
2012
2011
Bob Officer
2012
2011
Christine O'Reilly (appointed 12 April 2012)
2012
2011
Rodney Slater
173,720
2012
155,268
2011
Ian Smith (appointed 1 January 2012)
77,983
2012
2011
-
Former Non-executive Directors
Geoff Cosgriff (resigned 6 December 2011)
2012
2011
Jeremy Davis (resigned 6 December 2011)
2012
2011
David Ryan (resigned 12 August 2010)
2012
2011
Jennifer Eve (resigned 5 January 2012)
2012
2011
James Keyes (resigned 5 January 2012)
2012
2011
Total
2012
2011
1,717,908
1,747,043
81,778
188,153
69,903
201,920
48,256
91,484
-
49,199
25,793
34,984
15,775
35,513
15,775
17,985
15,775
17,690
15,398
8,460
15,398
12,696
3,080
-
-
-
7,018
-
7,044
16,934
25,648
27,750
-
4,428
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
251,028
16,301
418,186
27,155
-
-
-
-
-
-
455,186
430,106
223,406
217,813
222,889
214,242
191,445
102,456
191,445
153,762
37,305
-
173,720
155,268
85,001
-
339,850
221,388
513,737
256,825
-
53,627
48,256
91,484
25,793
34,984
120,911
141,456
669,214
43,456
2,508,0333
1,931,955
1 Superannuation contributions made on behalf of Non-executive Directors to satisfy the Group’s obligations under
applicable superannuation guarantee legislation.
2 Amounts represent contractual retirement benefits paid (in the year ended 30 June 2012) and provided for (in the year
end 30 June 2011) for two former Non-executive Directors. No current Non-executive Directors are entitled to any
retirement benefits.
3 Retirement benefits are excluded from the amount of aggregate remuneration that may be paid to Non-executive
Directors in any year.
261 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(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 $5,000) or the Chair of the Audit
and Risk Committee (in all other cases).
The Board 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 TIL, its related practices and non-related audit firms:
30 June
2012
$
30 June
2011
$
Amounts received or due and receivable by PricewaterhouseCoopers
Audit and review of financial reports
Total remuneration for PricewathouseCoopers
52,000
52,000
50,000
50,000
Indemnification and insurance
Each officer (including each Director) of the Group is indemnified, to the maximum extent permitted by law,
against any liabilities incurred as an officer of the Group pursuant to agreements with the Group. Each officer is
also indemnified against reasonable costs (whether legal or otherwise) incurred in relation to relevant
proceedings in which the officer is involved because the officer is or was an officer.
The Group 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.
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 264.
262 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' report
30 June 2012
(continued)
Rounding of amounts
The Group 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 dollars, or in certain cases, to the
nearest dollar.
Auditor
PricewaterhouseCoopers was re-elected as auditor, at the Annual General Meeting on 26 October 2011, and
continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of Directors.
Lindsay Maxsted
Director
Scott Charlton
Director
Melbourne
7 August 2012
263 TRANSURBAN ANNUAL REPORT 2012
264 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited ABN 90 121 746 825
Annual report - 30 June 2012
Contents
Financial statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members
Page
266
267
268
269
270
271
318
319
This financial report covers the consolidated financial statements of the consolidated entity consisting of
Transurban International Limited and its subsidiaries. The financial report is presented in the Australian currency.
Transurban International Limited is incorporated and domiciled in Australia.
Its registered office is:
Level 3
505 Little Collins Street
Melbourne VIC 3000
The financial statements were authorised for issue by the Directors on 7 August 2012 . The Directors have the
power to amend and reissue the financial statements.
Through the use of the internet, we have ensured that our corporate reporting is timely and 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
265 TRANSURBAN ANNUAL REPORT 2012
Consolidated statement of comprehensive income
Transurban International Limited
For the year ended 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
(227,526)
(28,448)
(39,996)
12,113
(27,883)
11,427
(6,461)
4,966
(255,409)
(23,482)
(255,409)
(255,409)
(23,482)
(23,482)
Loss for the year
Other comprehensive income
Changes in the fair value of cash flow hedges, net of tax
Exchange differences on translation of US operations, net of tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Owners of Transurban International Limited
Revenue
Construction revenue
Business development and other revenue
Administration costs
Business development costs
Construction costs
Profit (loss) before depreciation and amortisation, net finance costs,
equity accounted investments and income tax
Depreciation and amortisation expense
Finance costs
Finance costs
Share of net losses of equity accounted investments
Loss before income tax
Income tax (expense) benefit
Loss for the year
Loss is attributable to:
Owners of Transurban International Limited
Transurban International Limited
Consolidated income statement
For the year ended 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
3
3
4
5
9
6
20,723
19,883
40,606
(9,477)
(15,778)
(14,687)
(39,942)
7,356
16,915
24,271
(7,062)
(12,177)
(7,356)
(26,595)
664
(2,324)
(592)
(14,211)
(14,211)
(140)
(13,268)
(13,268)
(213,338)
(17,785)
(227,477)
(33,517)
(49)
(227,526)
5,069
(28,448)
(227,526)
(227,526)
(28,448)
(28,448)
Cents
Cents
Loss per share for loss attributable to the ordinary equity holders of
the Company:
Basic earnings per share
Diluted earnings per share
27
27
(15.7)
(15.7)
(2.0)
(2.0)
The above consolidated income statement should be read in conjunction with the accompanying notes.
accompanying notes.
The above consolidated statement of comprehensive income should be read in conjunction with the
266 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Consolidated statement of comprehensive income
For the year ended 30 June 2012
Loss for the year
Other comprehensive income
Changes in the fair value of cash flow hedges, net of tax
Exchange differences on translation of US operations, net of tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Owners of Transurban International Limited
30 June
2012
$'000
30 June
2011
$'000
(227,526)
(28,448)
(39,996)
12,113
(27,883)
11,427
(6,461)
4,966
(255,409)
(23,482)
(255,409)
(255,409)
(23,482)
(23,482)
Profit (loss) before depreciation and amortisation, net finance costs,
equity accounted investments and income tax
Revenue
Construction revenue
Business development and other revenue
Administration costs
Business development costs
Construction costs
Depreciation and amortisation expense
Finance costs
Finance costs
Loss before income tax
Income tax (expense) benefit
Loss for the year
Loss is attributable to:
Owners of Transurban International Limited
Share of net losses of equity accounted investments
(213,338)
(17,785)
Transurban International Limited
Consolidated income statement
For the year ended 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
3
3
4
5
9
6
20,723
19,883
40,606
(9,477)
(15,778)
(14,687)
(39,942)
7,356
16,915
24,271
(7,062)
(12,177)
(7,356)
(26,595)
664
(2,324)
(592)
(14,211)
(14,211)
(140)
(13,268)
(13,268)
(227,477)
(33,517)
(49)
(227,526)
5,069
(28,448)
(227,526)
(227,526)
(28,448)
(28,448)
Cents
Cents
Loss per share for loss attributable to the ordinary equity holders of
the Company:
Basic earnings per share
Diluted earnings per share
27
27
(15.7)
(15.7)
(2.0)
(2.0)
The above consolidated income statement should be read in conjunction with the accompanying notes.
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
267 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Consolidated balance sheet
As at 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
7
8
9
10
11
12
13
14
15
16
16
9,186
9,889
462
19,537
-
2,009
12,551
14,560
6,574
6,345
-
12,919
212,197
969
12,899
226,065
34,097
238,984
251,349
-
4,767
12,678
268,794
201,721
954
4,903
13,581
221,159
268,794
221,159
(234,697)
17,825
205,065
(72,711)
(367,051)
201,661
(44,289)
(139,547)
(234,697)
17,825
Transurban International Limited
Consolidated statement of changes in equity
For the year ended 30 June 2012
Attributable to members of
Transurban International Limited
Contributed
Accumulated
Notes
equity
$'000
Reserves
$'000
losses
$'000
Total equity
$'000
Balance at 1 July 2010
192,977
(49,896)
(111,099)
31,982
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners:
Distribution reinvestment plan
Treasury securities
Changes in fair value of share-based payment reserve
15
15
16
Balance at 30 June 2011
Balance at 1 July 2011
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
-
-
-
8,719
(35)
-
8,684
4,966
4,966
-
-
-
641
641
(28,448)
(28,448)
(28,448)
4,966
(23,482)
8,719
(35)
641
9,325
201,661
(44,289)
(139,547)
17,825
201,661
(44,289)
(139,547)
17,825
-
-
-
(27,883)
(27,883)
(227,526)
(227,526)
(227,526)
(27,883)
(255,409)
-
-
-
-
-
-
-
-
-
-
-
Transactions with owners in their capacity as owners:
Distribution reinvestment plan
Treasury securities
Changes in fair value of share-based payment reserve
15
15
16
3,040
207
157
3,404
(539)
(539)
22
22
3,040
207
(360)
2,887
Balance at 30 June 2012
205,065
(72,711)
(367,051)
(234,697)
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax receivables
Total current assets
Non-current assets
Equity accounted investments
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Other liabilities
Total current liabilities
Total liabilities
Net (liabilities)/assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
notes.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
268 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Consolidated balance sheet
As at 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
7
8
9
10
11
12
13
14
15
16
16
9,186
9,889
462
19,537
-
2,009
12,551
14,560
6,574
6,345
-
12,919
212,197
969
12,899
226,065
34,097
238,984
251,349
-
4,767
12,678
268,794
201,721
954
4,903
13,581
221,159
268,794
221,159
(234,697)
17,825
205,065
(72,711)
(367,051)
201,661
(44,289)
(139,547)
(234,697)
17,825
Transurban International Limited
Consolidated statement of changes in equity
For the year ended 30 June 2012
Attributable to members of
Transurban International Limited
Contributed
equity
$'000
Reserves
$'000
Accumulated
losses
$'000
Notes
Total equity
$'000
Balance at 1 July 2010
192,977
(49,896)
(111,099)
31,982
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners:
Distribution reinvestment plan
Treasury securities
Changes in fair value of share-based payment reserve
15
15
16
Balance at 30 June 2011
Balance at 1 July 2011
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners:
Distribution reinvestment plan
Treasury securities
Changes in fair value of share-based payment reserve
15
15
16
-
-
-
-
4,966
4,966
(28,448)
-
(28,448)
(28,448)
4,966
(23,482)
8,719
(35)
-
8,684
-
-
641
641
-
-
-
-
8,719
(35)
641
9,325
201,661
(44,289)
(139,547)
17,825
201,661
(44,289)
(139,547)
17,825
-
-
-
-
(27,883)
(27,883)
(227,526)
-
(227,526)
(227,526)
(27,883)
(255,409)
3,040
207
157
3,404
-
-
(539)
(539)
-
-
22
22
3,040
207
(360)
2,887
Balance at 30 June 2012
205,065
(72,711)
(367,051)
(234,697)
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Current tax receivables
Total current assets
Non-current assets
Equity accounted investments
Property, plant and equipment
Deferred tax assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Other liabilities
Total current liabilities
Total liabilities
Net (liabilities)/assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
269 TRANSURBAN ANNUAL REPORT 2012
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
Summary of significant accounting policies
Segment information
Revenue
Expenses
Finance costs
Income tax benefit
Current assets - Cash and cash equivalents
Current assets - Trade and other receivables
Equity accounted investments
Non-current assets - Property, plant and equipment
Deferred tax assets and liabilities
Current liabilities - Trade and other payables
Provisions
Current liabilities - Other current liabilities
Contributed equity
Reserves and accumulated losses
Dividends
Remuneration of auditors
Contingencies
Intra-group guarantees
Commitments
Related party transactions
Subsidiaries
Parent entity financial information
Events occurring after the reporting period
Loss per share
Share-based payments
Key management personnel disclosures
Critical accounting estimates and judgements
Financial risk management
Reconciliation of profit after income tax to net cash inflow from operating activities
Page
272
282
286
286
287
287
288
288
289
292
293
293
294
294
295
296
297
298
298
299
299
300
301
302
302
303
303
305
309
314
315
Transurban International Limited
Consolidated statement of cash flows
For the year ended 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
Contents of the notes to the consolidated financial statements
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest paid
Tax (income taxes paid)/refunds
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payment for investments in equity accounted investments
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from sale of treasury securities, net of costs
Loans from related parties
Repayment of loans to related parties
Net cash inflow from financing activities
Net increase (decrease) in cash and cash equivalents
26
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
33,621
(29,031)
(901)
(460)
3,229
(1,568)
(18,221)
(19,789)
-
32,630
(13,900)
18,730
2,170
6,574
442
9,186
33,322
(29,007)
(427)
88
3,976
(577)
(29,356)
(29,933)
(35)
31,879
(10,814)
21,030
(4,927)
13,743
(2,242)
6,574
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
270 TRANSURBAN ANNUAL REPORT 2012
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest paid
Tax (income taxes paid)/refunds
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payment for investments in equity accounted investments
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from sale of treasury securities, net of costs
Loans from related parties
Repayment of loans to related parties
Net cash inflow from financing activities
Net increase (decrease) in cash and cash equivalents
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
Transurban International Limited
Consolidated statement of cash flows
For the year ended 30 June 2012
30 June
2012
$'000
30 June
2011
$'000
Notes
26
33,621
(29,031)
(901)
(460)
3,229
(1,568)
(18,221)
(19,789)
-
32,630
(13,900)
18,730
2,170
6,574
442
9,186
33,322
(29,007)
(427)
88
3,976
(577)
(29,356)
(29,933)
(35)
31,879
(10,814)
21,030
(4,927)
13,743
(2,242)
6,574
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
Contents of the notes to the consolidated financial statements
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
Summary of significant accounting policies
Segment information
Revenue
Expenses
Finance costs
Income tax benefit
Current assets - Cash and cash equivalents
Current assets - Trade and other receivables
Equity accounted investments
Non-current assets - Property, plant and equipment
Deferred tax assets and liabilities
Current liabilities - Trade and other payables
Provisions
Current liabilities - Other current liabilities
Contributed equity
Reserves and accumulated losses
Dividends
Remuneration of auditors
Contingencies
Intra-group guarantees
Commitments
Related party transactions
Subsidiaries
Parent entity financial information
Events occurring after the reporting period
Reconciliation of profit after income tax to net cash inflow from operating activities
Loss per share
Share-based payments
Key management personnel disclosures
Critical accounting estimates and judgements
Financial risk management
Page
272
282
286
286
287
287
288
288
289
292
293
293
294
294
295
296
297
298
298
299
299
300
301
302
302
303
303
305
309
314
315
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
271 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial statements are set
out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
This general purpose financial statements 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.
The financial report includes the consolidated entity consisting of Transurban International Limited and its
subsidiaries ("the Group").
Where necessary, comparatives have been reclassified for consistency with current year disclosures.
Compliance with IFRS
The consolidated financial statements of Transurban International Limited also comply with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
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.
Rounding of amounts
The Group 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.
(b) Principles of consolidation
Subsidiaries
Subsidiaries are all those 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 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 acquisition method of accounting is used to account for business combinations by the Group (refer to note
1(h)).
Associates
Associates are all entities over which the Group has significant influence but not control. Investments in
associates are accounted for using the equity method of accounting, after initially being recognised at cost.
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. When the Group's share of losses in an
associate equals or exceeds its interest in the associate, the Group does not recognise further losses. Dividends
received from associates reduce the carrying amount of the investment.
272 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Executive Officer (the chief operating decision maker) and the Executive Committee who report to the Chief
Executive Officer (CEO).
(d) Foreign currency translation
Functional and presentation currency
The Group's functional currency is United States Dollars and its presentation currency is Australian Dollars, being
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 consolidated income statement, 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.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair
value are reported as part of the fair value gain or loss. For example, 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 and 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.
Foreign operations
The results and financial position of all Group entities 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 in other comprehensive income.
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.
(e) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable.
Revenue is recognised for the major business activities as follows:
•
•
Business development revenue - Business development fees are recognised when receivable, and to
the extent of costs incurred and that these costs will be recovered.
Interest income - Interest income is recognised using the effective interest rate method.
• Construction revenue - Construction revenue is recognised during the development phase of assets for
sale to third parties.
273 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(f)
Income tax
The income tax expense or benefit for the period is the tax payable or benefit 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.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Group operates and generates taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
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 end of the reporting period 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 foreign operations where the company 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 is recognised in the income statement, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income, or directly in equity, respectively.
Investment allowances
Companies within the Group may be entitled to claim special tax deductions for investments in qualifying assets
(investment allowances). The Group accounts for such allowances as tax credits, which means that the
allowance reduces income tax payable and current tax expense. A deferred tax asset is recognised for unclaimed
tax credits that are carried forward as tax losses.
(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 21). Payments made under operating leases (net of any
incentives received from the lessor) are charged to profit or loss 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.
274 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(h) Business combinations
The acquisition method of accounting is used to account for all business combinations, including business
combinations involving entities or businesses under common control, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair
values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The
consideration transferred also includes the fair value of any contingent consideration arrangement and the fair
value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition
basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the
non-controlling interest's proportionate share of the acquiree's net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group's share
of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the
net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the
difference is recognised directly in the income statement as a bargain purchase.
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.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in the income statement.
(i)
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 an estimate of the 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 through the income statement. The decrement in the carrying amount is
recognised as an expense in the income statement 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. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
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 the purpose of presentation in the consolidated statement of cash flows, 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.
275 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(k)
Investments and other financial assets
Classification
The Group classifies its investments and other financial assets 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. The classification of
the Group's investments at initial recognition and, in the case of assets classified as held-to-maturity, is
re-evaluated at each reporting period.
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 are included in current assets, except for those with maturities greater than 12
months after the reporting period which are classified as non-current assets. Loans and receivables are included
in trade and other receivables (note 8) in the balance sheet.
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.
Collectability 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 impairment 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. The
amount of the impairment allowance is recognised in the income statement.
Recognition and derecognition
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.
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.
276 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(k)
Investments and other financial assets (continued)
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 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 reclassified from equity and recognised in the income statement as a
reclassification adjustment. Impairment losses recognised in the income statement on equity instruments
classified as available-for-sale are not reversed through the income statement.
(l) Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. 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 Company 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 profit or loss 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.
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(i).
(m) Financial liabilities
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.
(n) 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, 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 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 finance income or finance costs.
277 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(n) Borrowings (continued)
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 period.
(o) 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.
(p) 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 discounted 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 is due to the discount unwinding over the passage of time and is recognised as a finance cost.
(q) Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and short-term incentives, and
long service leave expected to be settled within 12 months after the end of the period are recognised in respect
of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the
liabilities are settled. The liability for annual leave and short-term incentives, and long service leave expected to
be settled within 12 months of the reporting date is recognised in the provision for employee benefits. All other
short-term employee benefit obligations are presented in payables. An expense for non-accumulating sick leave
is recognised when the leave is taken and measured at the rates paid or payable.
Long-term employee benefit obligations
The liability for long service leave which is not expected to be settled within 12 months after the end of the period
is recognised in the provision for employee benefits. It is 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.
Equity-based compensation benefits
Equity-based compensation benefits have been provided to some employees.
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.
278 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(q) Employee benefits (continued)
Equity-based compensation benefits (continued)
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.
(r) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a reduction, net of tax,
from the proceeds.
If the Group reacquires its own equity shares, those shares are deducted from equity. 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.
(s) Parent entity financial information
The financial information for the parent entity, Transurban International Limited, disclosed in note 24 has been
prepared on the same basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries and associates
Investments in subsidiaries and associates are accounted for at cost in the financial statements of Transurban
International Limited. Dividends received from associates are recognised in the parent entity's profit or loss,
rather than being deducted from the carrying amount of these investments.
(t) 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
consolidated balance sheet.
279 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(t) Goods and Services Tax (GST) (continued)
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.
(u) Net asset deficiency
As at 30 June 2012 the Group has a net asset deficiency represented by net liabilities of $234.7 million. This
deficiency reflects a number of specific factors primarily related to an intercompany loan payable with another
entity within the Transurban Group.
(v) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June
2012 reporting periods. The Groups assessment of the impact of these new standards and interpretations is set
out below.
(i) AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from
AASB 9 and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9
(December 2010) (effective from 1 January 2013*)
AASB 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets
and financial liabilities. The standard is not applicable until 1 January 2013* but is available for early adoption.
Management are in the process of assessing the impact on financial assets but do not believe this will be
significant.
There will be no impact on the Group's accounting for financial liabilities, as the new requirements only affect the
accounting for financial liabilities that are designated at fair value through profit or loss and the Company does
not have any such liabilities. The Group has not yet decided when to adopt AASB 9.
* In December 2011, the IASB delayed the application date of IFRS 9 to 1 January 2015. The AASB is expected
to make an equivalent amendment to AASB 9 shortly.
(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests
in Other Entities, revised AASB 127 Separate Financial Statements and AASB 128 Investments in
Associates and Joint Ventures and AASB 2011-7 Amendments to Australian Accounting Standards arising
from the Consolidation and Joint Arrangements Standards (effective 1 January 2013)
In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for
joint arrangements, consolidated financial statements and associated disclosures.
AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate
Financial Statements, and Interpretation 112 Consolidation - Special Purpose Entities. The core principle that a
consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains
unchanged, as do the mechanics of consolidation. However the standard introduces a single definition of control
that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns
before control is present. Power is the current ability to direct the activities that significantly influence returns.
Returns must vary and can be positive, negative or both. Management are currently assessing the impact but do
not believe it will be significant.
AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on
the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the
joint arrangement. AASB 11 also provides guidance for parties that participate in joint arrangements but do not
share joint control. This will not impact the Group as it does not have any such arrangements.
AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and
AASB 11, and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of
this standard by the Group will not affect any of the amounts recognised in the financial statements, but will
impact the type of information disclosed in relation to the Group's investments.
280 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
1 Summary of significant accounting policies (continued)
(v) New accounting standards and interpretations (continued)
(ii) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests
in Other Entities, revised AASB 127 Separate Financial Statements and AASB 128 Investments in
Associates and Joint Ventures and AASB 2011-7 Amendments to Australian Accounting Standards arising
from the Consolidation and Joint Arrangements Standards (effective 1 January 2013)
Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not
remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and
vice versa. The amendments also introduce a 'partial disposal' concept. The Group is still assessing the impact of
these amendments.
The Group does not expect to adopt the new standards before their operative date.
(iii) AASB 1053 Application of Tiers of Australian Accounting Standards and AASB 2010-2 Amendments to
Australian Accounting Standards arising from Reduced Disclosure Requirements (effective from 1 July 2013)
On 30 June 2010 the AASB officially introduced a revised differential reporting framework in Australia. Under this
framework, a two-tier differential reporting regime applies to all entities that prepare general purpose financial
statements. Transurban International Limited is listed on the ASX and is therefore not eligible to adopt the new
Australian Accounting Standards - Reduced Disclosure Requirements. The two standards will have no impact on
the financial statements of the Group.
(iv) AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards
arising from AASB 13 (effective 1 January 2013)
AASB 13 was released in September 2011. It explains how to measure fair value and aims to enhance fair value
disclosures. The Group has yet to determine which, if any, of its current measurement techniques will have to
change as a result of the new guidance. It is therefore not possible to state the impact, if any, of the new rules on
any of the amounts recognised in the financial statements. However, application of the new standard will impact
the type of information disclosed in the notes to the consolidated financial statements. The Group does not intend
to adopt the new standard before its operative date.
(v) AASB 2011-9 Amendments to Australian Accounting Standards - Presentation of Items of Other
Comprehensive Income (effective 1 July 2012)
In September 2011, the AASB made an amendment to AASB 101 Presentation of Financial Statements which
requires entities to separate items presented in other comprehensive income into two groups, based on whether
they may be recycled to profit or loss in the future. This will not affect the measurement of any of the items
recognised in the balance sheet or the profit or loss in the current period. The Group intends to adopt the new
standard from 1 July 2012.
(vi) AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management
Personnel Disclosure Requirements (effective 1 July 2013)
In July 2011 the AASB decided to remove the individual key management personnel (KMP) disclosure
requirements from AASB 124 Related Party Disclosures, to achieve consistency with the international equivalent
standard and remove a duplication of the requirements with the Corporations Act 2001. While this will reduce the
disclosures that are currently required in the notes to the financial statements, it will not affect any of the amounts
recognised in the financial statements. The amendments apply from 1 July 2013 and cannot be adopted early.
The Corporations Act requirements in relation to remuneration reports will remain unchanged for now, but these
requirements are currently subject to review and may also be revised in the near future.
281 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
2 Segment information
Description of segments
The Group operates in one business sector only, being the development, operation and maintenance of toll
roads. The CEO and Executive Committee therefore consider the business from the perspective of locations.
The Group's corporate function is not an operating segment under the requirements of AASB 8 as its revenue
generating activities are only incidental to the business. Management have aggregated and disclosed the
corporate business units as the contribution to the business is closely monitored.
The operating segments have been further broken down by asset to assist with external analysis of the financial
statements.
Segment information - Proportional Income Statement
The CEO and Executive Committee assess the performance of the operating segments based on a measure of
proportional EBITDA. EBITDA excludes the impact of interest income and expense which have been presented
by segment where applicable. Interest income and expense are allocated across segments where the charges
are related specifically to the assets. Otherwise they have been allocated to the Corporate function.
The segment information provided to the Executive Committee is presented on a proportional basis. The
information for the reportable segments for the year ended 30 June 2012 and 30 June 2011 is as follows:
30 June 2012
$'000
Toll revenue from external
customers
Fee and other revenue
Total revenue
Underlying proportional EBITDA
Proportional EBITDA
Interest revenue
Interest expense
Depreciation and amortisation
Impairment of assets
Proportional profit (loss) before
tax
Income tax benefit (expense)
Proportional net profit (loss)
Pocahontas
895
75.0%
Transurban DRIVe
Other
Transurban
DRIVe
75.0%
Capital
Beltway
67.5%
Total
Transurban
DRIVe
Corporate
Total
100.0%
10,750
105
10,855
6,981
6,981
-
-
-
-
-
-
-
-
(3,955)
(3,955)
10,750
105
10,855
3,026
3,026
-
20,882
20,882
10,750
20,987
31,737
664
664
3,690
3,690
3
(19,499)
(15,755)
(302,490)
1,501
-
-
-
-
-
-
-
1,504
(19,499)
(15,755)
(302,490)
-
(14,210)
(592)
-
1,504
(33,709)
(16,347)
(302,490)
(330,760)
1,501
(3,955)
(333,214)
(14,138)
(347,352)
73,959
(256,801)
245,946
-
1,501
(1,501)
2,972
(983)
983
76,931
(256,283)
245,428
(49)
(14,187)
(6,695)
76,882
(270,470)
238,733
282 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
2 Segment information (continued)
Segment information - Proportional Income Statement (continued)
30 June 2011
$'000
Pocahontas
895
75.0%
Capital
Beltway
67.5%
Transurban DRIVe
Other
Transurban
DRIVe
Corporate
Total
Total
Transurban
DRIVe
75.0%
100.0%
Toll revenue from external customers
Fee and other revenue
Total revenue
Underlying proportional EBITDA
Proportional EBITDA
Interest revenue
Interest expense
Depreciation and amortisation
Foreign exchange gain (loss)
Proportional profit (loss) before tax
Income tax benefit (expense)
Proportional net profit (loss)
10,818
19
10,837
6,321
6,321
59
(18,775)
(9,194)
-
(21,589)
10,097
(11,492)
-
-
-
-
-
1,595
-
-
-
1,595
-
1,595
-
-
-
(4,114)
(4,114)
-
-
-
-
(4,114)
(3,774)
(7,888)
10,818
19
10,837
2,207
2,207
1,654
(18,775)
(9,194)
-
(24,108)
-
7,555
7,555
10,818
7,574
18,392
(2,324)
(2,324)
(117)
(117)
-
(12,524)
(140)
(744)
(15,732)
1,654
(31,299)
(9,334)
(744)
(39,840)
6,323
(17,785)
5,069
(10,663)
11,392
(28,448)
Other segment information - Proportional income statement
Proportional basis of presenting results
The Executive Committee and the CEO receive information for assessing the business on an underlying
proportional basis reflecting the contribution of individual assets in the proportion of Transurban's equity
ownership.
The Group's proportional EBITDA result reflects business performance and permits a more appropriate and
meaningful analysis of the Group's underlying performance on a comparative basis. This method of presentation
differs from the statutory accounting format and has been reconciled below.
EBITDA is earnings before interest, taxation, depreciation and amortisation.
Segment revenue
Revenue from external customers is through toll and fee revenues earned on toll roads. There are no
inter-segment revenues.
Segment revenue reconciles to total statutory revenue as follows:
30 June
2012
$'000
30 June
2011
$'000
Total segment revenue (proportional)
Less: Revenue of non-controlled assets
Interest revenue
Business Development revenue (offset against Business Development costs for
proportional results)
Other
Total revenue (note 3)
31,737
(12,359)
1,504
19,550
174
40,606
18,392
(12,491)
1,654
16,255
461
24,271
283 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
2 Segment information (continued)
Other segment information - Proportional income statement (continued)
Interest revenue
Interest revenue is earned through bank interest revenue.
Interest revenue reconciles to total statutory finance income as follows:
Total segment interest revenue (proportional)
Less: Interest revenue of non-controlled assets
Total finance income
Proportional EBITDA
Proportional EBITDA reconciles to statutory net loss for the year as follows:
Proportional EBITDA
Less: Proportional EBITDA of Pocahontas
Less: Proportional EBITDA of DRIVe
Statutory profit (loss) before depreciation and amortisation, net finance
costs, equity accounted investments and tax
Net finance costs
Statutory depreciation and amortisation
Share of associates profit/(loss)
Income tax (expense)/benefit
Loss for the year
30 June
2012
$'000
30 June
2011
$'000
1,504
(1,504)
-
1,654
(1,654)
-
30 June
2012
$'000
30 June
2011
$'000
3,690
(6,981)
3,955
664
(14,211)
(592)
(213,338)
(49)
(227,526)
(117)
(6,321)
4,114
(2,324)
(13,268)
(140)
(17,785)
5,069
(28,448)
284 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
2 Segment information (continued)
Segment information - Segment assets
The segment information provided to the CEO and Executive Committee in respect of assets is presented on a
statutory consolidated basis. The information for the reportable segments for the periods ended 30 June 2012
and 30 June 2011 is as follows:
30 June 2012
Total segment assets
Total segment assets include:
Investment in associates and joint venture partnerships
Additions to non-current assets (other than financial assets
and deferred tax)
30 June 2011
Transurban
DRIVe
$'000
Corporate
$'000
Total
$'000
-
-
-
34,097
34,097
-
677
-
677
Transurban
DRIVe
$'000
Corporate
$'000
Total
$'000
Total segment assets
212,197
26,787
238,984
Total segment assets include:
Investments in associates and joint venture partnerships
Additions to non-current assets (other than financial assets
and deferred tax)
212,197
-
212,197
-
560
560
285 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
Notes
3(a)
3(b)
30 June
2012
$'000
30 June
2011
$'000
20,723
19,883
40,606
7,356
16,915
24,271
3 Revenue
Construction revenue
Management and Business development revenue
Total Revenue
(a) Construction revenue
Construction revenue is recognised during the development of assets for sale to third parties.
(b) Management and Business development revenue
Business development revenue relates to the provision of management and development services to third
parties.
4 Expenses
30 June
2012
$'000
30 June
2011
$'000
Loss before income tax includes the following specific
expenses:
Employee benefits expense
Rental expense
10,269
635
11,451
756
286 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
5 Finance costs
Finance costs
Interest and finance charges paid/payable
Foreign exchange losses
Total finance costs
Finance costs
6 Income tax benefit
Income tax benefit
Current tax
Deferred tax
Under/(over) provided in prior years
Deferred income tax (benefit) expense included in income tax benefit comprises:
Decrease (Increase) in deferred tax assets (note 11)
(Decrease) Increase in deferred tax liabilities (note 11)
Numerical reconciliation of income tax benefit to prima facie tax payable
Loss before income tax benefit
Tax at the Australian tax rate of 30.0% (2011 - 30.0%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Non-deductible interest
Tax differential
Share of equity accounted results
Income not subject to tax
Sundry items
Under/(over) provision in prior years
Income tax expense (benefit)
287 TRANSURBAN ANNUAL REPORT 2012
30 June
2012
$'000
30 June
2011
$'000
(14,211)
-
(14,211)
(12,524)
(744)
(13,268)
(14,211)
(13,268)
30 June
2012
$'000
30 June
2011
$'000
(703)
1,178
(426)
49
6,891
(5,713)
1,178
1,435
(6,784)
280
(5,069)
(9,847)
3,063
(6,784)
30 June
2012
$'000
30 June
2011
$'000
(227,477)
(68,243)
(33,517)
(10,055)
3,810
58
64,001
-
849
(426)
49
-
(1,372)
5,335
146
597
280
(5,069)
227,428
38,586
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
7 Current assets - Cash and cash equivalents
Cash at bank and in hand
All cash balances are interest bearing.
8 Current assets - Trade and other receivables
Loans to related parties
Other receivables
Prepayments
30 June
2012
$'000
30 June
2011
$'000
9,186
9,186
6,574
6,574
30 June
2012
$'000
30 June
2011
$'000
4,377
5,486
26
9,889
3,864
2,456
25
6,345
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 Group does not hold any collateral in relation to
these receivables.
288 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
9 Equity accounted investments
Ownership interest
Carrying amount
30 June
2012
%
30 June
2011
%
30 June
2012
$'000
30 June
2011
$'000
Transurban DRIVe Holdings LLC
75
75
-
-
212,197
212,197
Summarised financial information of equity accounted investments
Ownership
Interest
%
Assets
$'000
Liabilities
$'000
Revenues
$'000
Loss
$'000
Group's share of:
2012
Transurban DRIVe Holdings LLC
2011
Transurban DRIVe Holdings LLC
75
75
1,344,261
1,344,261
(1,374,961)
(1,374,961)
10,855
10,855
(249,269)
(249,269)
1,371,454
1,371,454
(1,159,257)
(1,159,257)
10,837
10,837
(17,785)
(17,785)
289 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
9 Equity accounted investments (continued)
Movements in carrying amounts
Carrying amount 1 July
Investments in associates
Share of (losses) after income tax
Movements in exchange rates
Movements in reserves
Carrying amount at 30 June
Share of profits or losses
Loss before income tax
Income tax benefit
Share of losses not recognised
Balance at 1 July
Unrecognised losses for the year
Balance at 30 June
Share of expenditure commitments
Capital commitments
Operating commitments
Contingent liabilities of associates
As at the reporting date there are no contingent liabilities.
DRIVe
30 June
2012
$'000
30 June
2011
$'000
212,197
17,586
(213,338)
23,551
(39,996)
-
242,321
28,103
(17,785)
(51,869)
11,427
212,197
(279,007)
65,669
(213,338)
(24,108)
6,323
(17,785)
-
35,931
35,931
64,387
186,554
250,941
-
-
-
325,835
143,657
469,492
290 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
9 Equity accounted investments (continued)
Transurban DRIVe Holdings LLC
The Group owns 75 per cent of Transurban DRIVe Holdings LLC (DRIVe). Whilst its ownership represents
greater than half of the voting rights of DRIVe, it does not have power to govern its financial, investing and
operating policies and accordingly accounts for DRIVe as an associate.
A Meeting of Members of DRIVe is required to make decisions in relation to such areas as the legal and financial
structure of DRIVe, including distribution policies. 80 per cent or more of the membership interests of those voting
is required to pass a decision of the Meeting of Members. Key decisions relating to the operations and financing
of DRIVe, such as approval to bid for or dispose of an investment and approval of budgets, are made by the
Investment and Management Review Committee (IMRC). IMRC decisions also require an affirmative vote by all
current members.
DRIVe owns 100 per cent of Pocahontas 895 and 90 per cent of Capital Beltway Express, both in Virginia, USA.
Pocahontas is a 99 year concession ending in June 2105. Tolls are 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.
In June 2012, after a detailed review of traffic operating forecasts for Pocahontas 895, it was necessary to reduce
the carrying value of the asset based on revised lower revenue forecasts. This resulted in a proportional
impairment charge of $302.5 (see note 2) and an equity accounting charge for the year ended 30 June 2012 of
$213.3 million within the Group. As noted there are further additional unrecognised losses of $35.9 million.
291 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
10 Non-current assets - Property, plant and equipment
At 1 July 2010
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2011
Opening net book amount
Additions
Depreciation charge
Movement in foreign exchange rates
Closing net book amount
At 30 June 2011
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2012
Opening net book amount
Additions
Disposals
Depreciation charge
Movement in foreign exchange rates
Closing net book amount
At 30 June 2012
Cost
Accumulated depreciation
Net book amount
Included in property, plant and equipment is operating systems, equipment and fittings.
Equipment,
fittings,
operating
systems
$'000
4,712
(4,031)
681
681
560
(140)
(132)
969
4,276
(3,307)
969
969
1,600
(3)
(592)
35
2,009
5,608
(3,599)
2,009
292 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
11 Deferred tax assets and liabilities
Assets
Liabilities
Net
30 June
2012
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2011
$'000
30 June
2012
$'000
30 June
2011
$'000
621
1,251
2,638
8,014
-
67
12,591
(40)
12,551
219
1,038
-
14,577
-
2,818
18,652
(5,753)
12,899
-
-
-
-
(40)
-
(40)
40
-
-
-
-
-
(5,753)
-
(5,753)
5,753
-
621
1,251
2,638
8,014
(40)
67
12,551
-
12,551
219
1,038
-
14,577
(5,753)
2,818
12,899
-
12,899
The balance comprises
temporary difference
attribulate to:
Accrued expenses
Provisions
Current and prior year losses
Unearned income
Fixed Assets/Intangibles
Unrealised foreign exchange
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
Movements:
Opening balance at 1 July
Credited/(charged) to the income statement
Foreign exchange movements
Closing balance 30 June
Deferred tax assets/(liabilities) to be recovered
after more than 12 months
18,652
(6,891)
830
12,591
12,051
9,847
(3,246)
18,652
(5,753)
5,713
-
(40)
(3,436)
(3,063)
746
(5,753)
12,899
(1,178)
830
12,551
8,615
6,784
(2,500)
12,899
12,591
12,591
(18,652)
(18,652)
(40)
(40)
5,753
5,753
12,551
12,551
(12,899)
(12,899)
12 Current liabilities - Trade and other payables
Trade payables and accruals
Loans from related parties (note 22)
30 June
2012
$'000
30 June
2011
$'000
6,008
245,341
251,349
4,960
196,761
201,721
293 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
Notes
13(a)
13(b)
30 June
2012
$'000
30 June
2011
$'000
3,207
1,560
4,767
3,165
1,738
4,903
13 Provisions
Employee benefits
Onerous lease provision
Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
Onerous
lease
provision
$'000
1,738
(271)
93
1,560
Consolidated - 2012
Carrying amount at start of year
Amounts paid/utilised during the year
Movements in foreign exchange rates
Carrying amount at the end of year
(a) Employee benefits
Employee benefits relate to the provision for annual leave, bonuses and long service leave.
(b) Onerous lease provision
An onerous lease is recognised when the Group has lease commitments on property no longer used.
14 Current liabilities - Other current liabilities
Unearned income
(a) Unearned income
Notes
14(a)
30 June
2012
$'000
30 June
2011
$'000
12,678
12,678
13,581
13,581
Unearned income represents amounts received in advance and will be recognised when the income is earned.
294 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
15 Contributed equity
Share capital
2012
Number
'000
2011
Number
'000
30 June
2012
$'000
30 June
2011
$'000
Ordinary shares - fully paid
1,458,321
1,458,321
1,443,193
1,443,193
205,065
205,065
201,661
201,661
Movements in ordinary share capital
Details
Opening balance at 1 July 2010
Distribution Reinvestment Plan
Purchase, disposal and vesting of treasury securities
Closing balance at 30 June 2011
Opening balance at 1 July 2011
Distribution Reinvestment Plan
Disposal and vesting of treasury securities
Transfer vesting portion of LTI from share-based
payment reserve
Purchase of Performance Awards Plan shares
Closing balance at 30 June 2012
Notes
15(a)
15(b)
15(a)
15(b)
Number of
securities
'000
$'000
1,414,295
28,876
22
1,443,193
1,443,193
14,162
351
615
-
1,458,321
192,977
8,719
(35)
201,661
201,661
3,040
207
517
(360)
205,065
(a) 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.
(b) 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 prior to vesting date. On forfeit, the securities are sold on
market.
295 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
15 Contributed equity (continued)
Ordinary shares
The number of shares on issue is 1,458,321,112 (2011: 1,443,543,731). The difference in the prior year of
351,075 relates to treasury securities of the Group.
All shares issued are a component of stapled securities issued by the Transurban Group. Prior to June 2008, a
nil value was assigned to TIL with the value being apportioned between Transurban Holdings Limited and
Transurban Holding Trust.
Shares 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 shares held. On a show of hands, every holder of shares present at a
meeting in person or by proxy is entitled to one vote.
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 objective when managing capital is to safeguard its 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.
16 Reserves and accumulated losses
Reserves
Cash flow hedges
Share-based payments
Foreign currency translation
Transactions with non-controlling interests
Movements:
Cash flow hedges
Balance 1 July
Movement in associate's reserve (note 9)
Balance 30 June
30 June
2012
$'000
30 June
2011
$'000
(104,334)
765
40,083
(9,225)
(72,711)
(64,338)
1,304
27,970
(9,225)
(44,289)
(64,338)
(39,996)
(104,334)
(75,765)
11,427
(64,338)
296 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
16 Reserves and accumulated losses (continued)
Reserves (continued)
Share-based payments
Balance 1 July
Employee share plan expense
Transfer vesting portion of LTI to contributed equity
Transfer non-vesting portion of LTI to retained earnings
Balance 30 June
Foreign currency translation
Balance 1 July
Currency translation differences arising during the year
Balance 30 June
Common control reserve
Balance 1 July
Balance 30 June
Accumulated losses
Balance 1 July
Net (loss) for the year
Transfer of non-vesting portion of LTI from shared-based payment reserve
Balance 30 June
1,304
(725)
208
(22)
765
27,970
12,113
40,083
663
641
-
-
1,304
34,431
(6,461)
27,970
(9,225)
(9,225)
(9,225)
(9,225)
2012
$'000
2011
$'000
(139,547)
(227,526)
22
(367,051)
(111,099)
(28,448)
-
(139,547)
Nature and purpose of other reserves
Cash flow hedges
The cash flow hedge reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that
are recognised in other comprehensive income and accumulated in this reserve in equity. Amounts are
reclassified to profit or loss when the associated hedged transaction affects profit and loss.
Share-based payments
The share-based payments reserve is used to recognise the fair value of long-term incentives issued but not
exercised.
Foreign currency translation
Exchange differences arising on translation of the foreign controlled entities are recognised in other
comprehensive income as described in note 1(d) and accumulated in this reserve in equity.
Transactions with non-controlling interests
The transactions with non-controlling interests 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).
17 Dividends
No dividends were paid or declared during the year.
297 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
18 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:
Amounts received or due and receivable by PricewaterhouseCoopers
Audit services
Audit and review of financial reports
Total remuneration for PricewaterhouseCoopers
19 Contingencies
Contingent liabilities
30 June
2012
$
30 June
2011
$
52,000
52,000
50,000
50,000
The parent entity and the Group had contingent liabilities at 30 June 2012 in respect of:
Equity guarantee
Transurban DRIVe Holdings LLC (DRIVe), a related party of the 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 be complete in late 2012 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 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 per cent 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$182,857,326 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 per cent 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.
298 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
19 Contingencies (continued)
Contingent assets
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, an asset has not been recognised.
20 Intra-group guarantees
As at 30 June 2012 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.
21 Commitments
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
Payable:
Within one year
Later than one year but not later than five years
Later than five years
Lease commitments
Commitments in relation to leases contracted for at the reporting date but no
recognised as liabilities, payable:
Within one year
Later than one year but not later than five years
Later than five years
30 June
2012
$'000
30 June
2011
$'000
3,457
-
-
3,457
10,635
2,414
-
13,049
30 June
2012
$'000
30 June
2011
$'000
932
3,371
496
4,799
952
3,416
1,138
5,506
299 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
21 Commitments (continued)
Lease commitments (continued)
Sub-lease payments
Future minimum lease payments expected to be received in relation to
non-cancellable sub-leases of operating leases
22 Related party transactions
Transactions with related parties
The following transactions occurred with related parties:
Revenue from services provided to associate
Management and Business development fees
Loans to/from related parties
Loans to related parties
Beginning of the year
Loans advanced
Repayment of loans
Foreign exchange movements
Loans from related parties
Beginning of the year
Loans advanced
Loans repayments
Foreign exchange movements
Other related parties
30 June
2012
$'000
30 June
2011
$'000
428
428
812
812
30 June
2012
$
30 June
2011
$
19,883,145
19,883,145
16,917,972
16,917,972
3,864,127
23,493,685
(23,164,126)
182,844
4,376,530
6,247,973
25,088,416
(26,298,488)
(1,173,774)
3,864,127
196,761,369
64,326,442
(26,961,002)
11,214,513
245,341,322
223,562,646
70,515,117
(52,361,651)
(44,954,743)
196,761,369
All the Directors of TIL are also 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 the Appleby law firm. During the year Transurban International Limited utilised Appleby
for various legal services. These services are based on normal commercial terms.
300 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
23 Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following principal
subsidiaries in accordance with the accounting policy described in note 1(b):
Name of entity
incorporation Class of shares
Equity holding
Country of
Transurban International Holdings Limited
Transurban (USA) Holdings Inc
Transurban (USA) Inc
Transurban DRIVe Management LLC
Transurban (USA) Operations Inc.
Australia*
USA
USA
USA
USA
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2012
%
2011
%
100
100
100
100
100
100
100
100
100
100
* Transurban International Holdings Limited changed domicile from Bermuda to Australia on 5 January 2012.
The proportion of ownership interest is equal to the proportion of voting power held.
301 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
24 Parent entity financial information
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders' equity
Contributed equity
Reserves
Accumulated losses
Profit for the year
Total comprehensive income
30 June
2012
$'000
30 June
2011
$'000
184,876
172,442
1
1
184,877
172,443
-
-
-
61
-
61
(554,631)
(517,146)
205,061
(19,471)
(712)
184,877
201,658
(28,369)
(905)
172,384
172
172
94
94
Contingent liabilities and guarantees of the parent entity
For details of contingent liabilities and guarantees of the parent entity, refer to note 19.
25 Events occurring after the reporting period
On 1 August 2012, the Group announced that financial close had been reached with the Commonwealth of
Virginia to build and operate the 95 Express Lanes in northern Virginia, USA.
The Group also announced that the 95 Express Lanes investment will be the final new toll road project
undertaken by Transurban's co-investment vehicle, DRIVe. Transurban will continue to manage the assets
owned by DRIVe.
There are no other 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 Group, the results of those operations
or the state of affairs of the Group in subsequent financial years.
302 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
26 Reconciliation of profit after income tax to net cash inflow from operating activities
Loss for the year
Depreciation and amortisation
Share of net losses of equity accounted investments
Change in operating assets and liabilities:
(Increase) decrease in prepayments
(Increase) decrease in trade and other receivables
Increase in related party loans
Increase in trade payables and accruals
(Decrease) in provisions
(Decrease) increase in unearned income
Movement in current taxes and deferred taxes
Net cash inflow from operating activities
27 Loss per share
Basic earnings per share
Loss attributable to the ordinary equity holders of the company
Diluted earnings per share
Loss from continuing operations attributable to the ordinary equity holders of the
company
Reconciliation of losses used in calculating loss per share
Basic and diluted earnings per share
Loss for the year
30 June
2012
$'000
30 June
2011
$'000
(227,526)
592
213,338
(1)
(3,030)
20,915
1,048
(136)
(903)
(1,068)
3,229
(28,448)
140
17,785
4
227
12,929
1,056
(1,951)
4,619
(2,385)
3,976
30 June
2012
Cents
30 June
2011
Cents
(15.7)
(15.7)
(2.0)
(2.0)
30 June
2012
Cents
30 June
2011
Cents
(15.7)
(15.7)
(2.0)
(2.0)
30 June
2012
$'000
30 June
2011
$'000
(227,526)
(227,526)
(28,448)
(28,448)
303 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
27 Loss per share (continued)
Weighted average number of shares used as denominator
30 June
2012
Number
30 June
2011
Number
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share
1,452,932,838
1,437,820,619
Loss per share
Basic loss per share
Basic loss per share is calculated by dividing the loss attributable to members of the share excluding any
non-controlling interest and costs of servicing equity other than distributions, by the weighted average number of
shares outstanding during the financial year.
Diluted loss per share
Diluted loss per share adjusts the figures used in the determination of basic loss 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.
304 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
28 Share-based payments
The disclosure below represents the Share-based payment plans offered by the Transurban Group.
Performance Awards Plan
Under the Performance Awards Plan (PAP), eligible executives 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 at vesting. No dividends or distributions on securities are payable to participants
prior to vesting.
Dual performance measures (Free Cash Flow (FCF) (from 1 July 2011) or earnings before interest, tax,
depreciation and amortisation (EBITDA) measure (pre 1 July 2011) and relative total security holder return (TSR)
apply to Performance Awards, each representing 50 per cent of the award. 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 with a three year vesting period. For the plan granted 11 December 2009 and
future grants, the awards are tested at the end of the three year vesting period. However, for the 1 November
2008 grant, the awards were tested at the end of each year. If the performance measures were satisfied for the
year, one third of the awards were preserved until the end of the three year period. At the end of the three years
a cumulative test of the performance measures was applied to any unvested awards.
Grant date
Vesting /
Expiry date
Fair value at grant date ($)
FCF
EBITDA
TSR
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
2012
1 Nov 2008
11 Dec 2009
1 Nov 2010
23 Dec 2010
26 Sep 2011
11 Nov 2011
Total
1 Nov 2011
11 Dec 2012
1 Nov 2013
1 Nov 2013
30 Jun 2014
30 Jun 2014
3.30
3.33
3.23
3.33
3.37
3.27
4.27
4.97
4.62
4.97
N/A
N/A
N/A
N/A
N/A
N/A
4.63
4.81
1,260,113
1,776,583
1,401,575
684,683
-
-
5,122,954
-
-
-
-
837,990
715,024
(1,193,516)
-
-
-
-
-
1,553,014 (1,193,516)
(66,597)
(150,589)
(200,498)
-
(176,058)
-
(593,742)
-
1,625,994
1,201,077
684,683
661,932
715,024
4,888,710
Weighted average exercise price
$4.00
$4.02
$3.79
$3.99
$4.06
Grant date
Vesting /
Expiry date
Fair value at grant date ($)
FCF
EBITDA
TSR
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
2011
1 Nov 2008
11 Dec 2009
1 Nov 2010
23 Dec 2010
Total
1 Nov 2011
11 Dec 2012
1 Nov 2013
1 Nov 2013
3.30
3.33
3.23
3.33
4.27
4.97
4.62
4.97
N/A
N/A
N/A
N/A
1,277,630
1,990,913
-
-
3,268,543
-
-
1,658,614
684,683
2,343,297
-
-
-
-
-
(17,517)
(214,330)
(257,039)
-
(488,886)
1,260,113
1,776,583
1,401,575
684,683
5,122,954
Weighted average exercise price
$4.01
$3.99
$-
$4.02
$4.00
305 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
28 Share-based payments (continued)
Executive Equity Plan
Equity awards were granted under the Executive Equity Plan (EEP) based on executives’ performance and were
designed to encourage retention of executives while focusing on business excellence.
Individuals who are high performers and in business critical roles were nominated for awards for their past
contribution and expected future performance. Board approval was required to grant EEP awards to nominated
executives.
Under the EEP, eligible executives received a grant of stapled securities in the Transurban Group (”securities”) at
no cost that are subject to disposal restrictions for three years from the grant date. Participants are entitled to
distributions paid on their Securities during the restriction period. If the executive ceases employment with
Transurban during the restriction period, their Securities will be forfeited unless the Board decides otherwise.
Awards were last made under the EEP on 1 November 2008. The table below provides details of the awards
granted.
Grant date
2012
1 Nov 2008
Total
Expiry date
Exercise
price ($)
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
1 Nov 2011
4.27
433,722
433,722
-
-
(433,722)
(433,722)
-
-
-
-
Weighted average exercise price
$4.27
$-
$4.27
$-
$-
Grant date
2011
1 Nov 2008
Total
Expiry date
Exercise
price ($)
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
1 Nov 2011
4.27
548,650
548,650
-
-
(72,334)
(72,334)
(42,594)
(42,594)
433,722
433,722
Weighted average exercise price
$4.27
$-
$4.27
$4.27
$4.27
306 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
28 Share-based payments (continued)
Performance rights plan
The Performance Rights Plan (PRP) enabled eligible executives to receive a grant of Performance Rights that
entitled participants to receive stapled securities in the Transurban Group (Securities) at no cost at the end of a
three year performance period, subject to the achievement of performance conditions. No dividends or
distributions on Securities were payable to participants prior to vesting. The Plan has two performance measures,
EBITDA and relative TSR against the S&P/ASX 100 Industrials, each applied to 50 per cent of the PRP award.
For US participants of the plan, they will be awarded a cash amount instead of stapled securities at the end of the
three year performance period, subject to performance conditions. There is only one testing date at the end of the
performance hurdles at the vesting date.
Awards were last made under the PRP in November 2007. This award matured on 1 November 2010. 84.44% of
awards subject to the TSR performance condition vested based on Transurban's ranking against the constituents
of the S&P/ASX 100. None of the awards subject to the statutory EBITDA growth or DRIVe management fee
growth conditions vested as the prescribed performance conditions were not met.
Australian based plan
Grant date
2011
1 Nov 2007
Total
Vesting /
Expiry date
Fair value at grant
date ($)
TSR
EBITDA
Balance at
start of the
year
Number
Granted
during the
year
Number
Vested
during the
year
Number
Lapsed
during the
year
Number
Balance at
end of the
year
Number
1 Nov 2010
3.50
5.96
331,594
331,594
-
-
(143,060)
(143,060)
(188,534)
(188,534)
-
-
Weighted average exercise price
$4.73
$-
$4.73
$4.73
$-
Overseas based plan
Grant date
2011
1 Nov 2007
Total
Vesting /
Expiry date
Fair value at grant
date ($)
TSR
DRIVe
mgt fee
Balance at
start of the
year
Granted
during the
year
Vested
during the
year
Lapsed
during the
year
Balance at
end of the
year
Number
Number
Number
Number
Number
1 Nov 2010
3.50
5.96
247,561
247,561
-
-
(107,007)
(107,007)
(140,554)
(140,554)
-
-
Weighted average exercise price
$4.26
$-
$4.26
$4.26
$-
307 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
28 Share-based payments (continued)
Performance rights plan (continued)
Assessed fair value
The assessed fair value at grant date of the plans above has been independently determined in accordance with
AASB 2.
The TSR component of the Performance Awards has been valued applying a Monte-Carlo simulation (of a
geometric Brownian motion process, as used in the Black-Scholes framework) to model Transurban’s future
security price and TSR performance against the comparator group performance at vesting date. The valuation
model takes into account the term of the award, 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 award.
The Free Cash component of performance awards has been valued using the Black Scholes framework. The
model valuation takes into account the term of the award, the security price at grant date, the expected dividend
yield and the risk free interest rate for the term of the award.
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 2011 to 30 June 2012, the cost of company
matches was $114,459 (2011: $89,885) for the Investment Tax Exempt Plan and $391,708 (2011: $304,375) for
the Investment Tax Deferred Plan.
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 2012, each participant was allocated 100 stapled securities at a value of $5.67 per security. Stapled
securities provided under the Plan were acquired on the open market. Eligible US based participants received an
equivalent cash award.
2012
Number
2011
Number
Shares purchased on the market under the plan and provided to participating
employees
42,200
42,200
308 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
29 Key management personnel disclosures
Directors
The following persons were Directors of Transurban International Limited during the financial year:
Executive Directors
Christopher Lynch
Scott Charlton
(Resigned 16 July 2012)
(Appointed 16 July 2012)
Non-executive Directors
Lindsay Maxsted
Neil Chatfield
Robert Edgar
Samantha Mostyn
Robert Officer
Christine O'Reilly
Rodney Slater
Ian Smith
Jennifer Eve
James Keyes
(Chairman)
(Appointed 5 January 2012)
(Appointed 5 January 2012)
(Appointed 5 January 2012)
(Appointed 5 January 2012)
(Appointed 12 April 2012)
(Appointed 5 January 2012)
(Appointed 5 January 2012)
(Resigned 5 January 2012)
(Resigned 5 January 2012)
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:
K Daley
A Head
S Hogg*
T Honan*
M Kulper
E Mildwater
President, International Development
Group General Manager, New South Wales
Chief Financial Officer
Chief Financial Officer
President, Transurban North America
Group General Manager, Victoria
(*) - On 2 May 2012, Tom Honan resigned as Chief Financial Officer, and Samantha Hogg was appointed as
Chief Financial Officer (previously she was Group General Manager, Corporate Services).
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 Group's portion.
Short-term employee benefits
Deferred STIs
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
30 June
2012
$
30 June
2011
$
12,301,143
489,289
240,351
115,725
-
4,870,066
18,016,574
12,993,024
-
326,729
87,049
1,360,993
4,135,431
18,903,226
Detailed remuneration disclosures are made in the Directors’ report. The relevant information can be found in the
remuneration report in the Directors' report.
309 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
29 Key management personnel disclosures (continued)
Equity instrument disclosures relating to key management personnel
Share based payments
Details of long-term incentives provided as remuneration and shares issued, together with terms and conditions
of long-term incentives, can be found in the remuneration report in the Directors' report.
Performance Awards Plan (PAP)
2012
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 the group
C Lynch
1,785,615
715,024
(458,162)
(25,559) 2,016,918
Other key management personnel of the Group
K Daley
A Head
S Hogg
T Honan
M Kulper
E Mildwater
223,297
181,525
136,569
545,513
401,033
186,359
128,294
107,766
101,320
171,058
159,286
107,766
(63,602)
(44,054)
(22,027)
(220,267)
(137,736)
(27,534)
(3,549)
(2,458)
(1,229)
(496,304)
(7,686)
(1,536)
284,440
242,779
214,633
-
414,897
265,055
-
-
-
-
-
-
-
2011
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 the group
C Lynch
1,100,932
684,683
-
-
1,785,615
Other key management personnel of the Group
B Bourke
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
194,515
178,427
82,362
105,859
70,734
380,926
307,378
95,836
13,233
123,441
5,761
90,523
65,835
164,587
170,433
90,523
(39,204)
(33,173)
(4,704)
(6,273)
-
-
(32,416)
-
(168,544)
(45,398)
(83,419)
(8,584)
-
-
(44,362)
-
-
223,297
-
181,525
136,569
545,513
401,033
186,359
-
-
-
-
-
-
-
-
-
310 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
29 Key management personnel disclosures (continued)
Equity instrument disclosures relating to key management personnel (continued)
Stapled security holdings
The number of Stapled Securities held during the financial year by each director of TIL and other key
management personnel of the Group, including their personally-related parties, are set out below.
2012
Directors of the group
L Maxsted
N Chatfield
R Edgar
S Mostyn
R Officer
C O'Reilly
R Slater
I Smith
J Eve
J Keyes
C Lynch
Other key management personnel of the Group
K Daley
A Head
S Hogg
T Honan
M Kulper
E Mildwater
2011
Directors of the group
L Maxsted
J Eve
J Keyes
C Lynch
Other key management personnel of the Group
B Bourke
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
Balance at
start of the
year
Other changes
during the year
Balance at end
of the year
30,000
-
-
-
-
-
-
-
-
-
255,401
384,678
21,112
15,616
94,820
103,944
27,098
-
30,910
23,733
10,300
20,115
-
-
70,000
-
-
458,162
-
(18,071)
(14,063)
(94,820)
(23,944)
28,968
30,000
30,910
23,733
10,300
20,115
-
-
70,000
-
-
713,563
384,678
3,041
1,553
-
80,000
56,066
Balance at
start of the
year
Other changes
during the year
Balance at end
of the year
12,000
-
-
254,966
460,251
384,678
34,491
23,842
15,516
93,574
103,944
25,196
18,000
-
-
435
(460,251)
-
(34,491)
(2,730)
100
1,246
-
1,902
30,000
-
-
255,401
-
384,678
-
21,112
15,616
94,820
103,944
27,098
311 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
29 Key management personnel disclosures (continued)
Executive Equity Plan (EEP)
2012
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 the group
C Lynch
79,647
-
(79,647)
Other key management personnel of the Group
K Daley
A Head
S Hogg
T Honan
M Kulper
E Mildwater
19,146
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
(19,146)
(19,146)
(15,316)
(85,474)
(23,944)
(19,146)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2011
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 the group
C Lynch
79,647
-
-
Other key management personnel of the Group
B Bourke
K Daley
M Fletcher
A Head
S Hogg
T Honan
M Kulper
E Mildwater
19,146
19,146
19,146
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
-
-
(19,146)
-
(19,146)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
79,647
-
19,146
-
19,146
15,316
85,474
23,944
19,146
-
-
-
-
-
-
-
-
-
312 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
29 Key management personnel disclosures (continued)
Performance Rights Plan (PRP)
2011
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
B Bourke
K Daley
M Fletcher
A Head
M Kulper
92,857
78,571
11,142
14,857
76,778
-
-
-
-
-
(39,204)
(33,173)
(4,704)
(6,273)
(32,416)
(53,653)
(45,398)
(6,438)
(8,584)
(44,362)
-
-
-
-
-
-
-
-
-
-
Other transactions with key management personnel
Ms Jennifer is an associate with Appleby. During the year Transurban utilised Appleby for various legal services.
these services are based on normal commercial terms.
313 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
30 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 Group 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 are
disclosed below.
Income taxes
The Group is subject to income taxes in the USA. 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 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 current and deferred tax assets and
liabilities in the period in which such determination is made.
Estimated impairment of the investment of equity in DRIVe
The Group tests whether the investment of equity in DRIVe has suffered any impairment, in accordance with the
accounting policy stated in note 1(i).
314 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
31 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.
Market risk
Foreign exchange risk
The Group operates internationally and is exposed primarily to foreign exchange risk arising from currency
exposures to the Australian 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 end of the reporting date, expressed in Australian dollar,
was as follows:
Receivables
Payables
Net exposure
30 June 2012 30 June 2011
AUD
$'000
AUD
$'000
363
(4,736)
(4,373)
319
(2,625)
(2,306)
The above table is presented in the currency in which the exposure exists. The Australian dollar exposure exists
in the US dollar functional currency entities.
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 loss for the year
would have been $251,000 lower (2011: $146,000 lower) or $308,000 higher (2011: $182,000 higher), as a result
of foreign exchange gains/losses on translation of Australian dollar denominated financial instruments as detailed
in the above table.
Cash flow interest rate risk
The Group's main exposure to interest rate risk arises from long-term intercompany borrowings and funds on
deposit.
As at the reporting period, the Group had the following variable rate borrowings outstanding. An analysis of
maturities is provided in liquidity risk below:
30 June 2012
30 June 2011
Weighted
average
interest rate
%
Balance
$'000
Weighted
average
interest rate
%
Balance
$'000
Cash and cash equivalents
Net exposure to cash flow interest rate risk
-%
9,186
9,186
-%
6,574
6,574
315 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
31 Financial risk management (continued)
Market risk (continued)
Cash flow interest rate risk (continued)
Sensitivity
At 30 June 2012, if interest rates had changed by +100 basis points from the year-end rates with all other
variables held constant, post-tax loss for the year would have been $56,000 lower (2011: $40,000 lower).
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.
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.
Liquidity risk
The Group maintains sufficient cash 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. The reserve is maintained on a rolling 12 month basis. Medium term liquidity
forecasting is maintained on a 5 year horizon.
316 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Notes to the consolidated financial statements
30 June 2012
(continued)
31 Financial risk management (continued)
Liquidity risk (continued)
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their
contractual maturities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant.
Contractual maturities of
financial liabilities
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 5
years
Total
contractual
cash flows
Carrying
amount
(assets)/
liabilities
At 30 June 2012
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest bearing
Fixed rate
Total non-derivatives
10,481
255,079
265,560
-
-
-
-
-
-
-
-
-
-
-
-
10,481
255,079
265,560
10,481
240,868
251,349
At 30 June 2011
1 year or
less
Over 1 to
2 years
Over 2 to
3 years
Over 3 to
4 years
Over 5
years
Total
contractual
cash flows
Carrying
amount
(assets)/
liabilities
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Non-derivatives
Non-interest bearing
Fixed rate
Total non-derivatives
6,882
206,335
213,217
-
-
-
-
-
-
-
-
-
-
-
-
6,882
206,335
213,217
6,882
194,839
201,721
There is no liquidity risk exposure to the Group in the current or prior periods other than as shown above.
317 TRANSURBAN ANNUAL REPORT 2012
Transurban International Limited
Directors' declaration
30 June 2012
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 265 to 317 are in accordance with the Corporations
Act 2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
giving a true and fair view of the Group's financial position as at 30 June 2012 and of its
performance for the year ended on that date, and
(b)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
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.
Lindsay Maxsted
Director
Scott Charlton
Director
Melbourne
7 August 2012
318 TRANSURBAN ANNUAL REPORT 2012
319 TRANSURBAN ANNUAL REPORT 2012
320 TRANSURBAN ANNUAL REPORT 2012
Security holder information
The security holder information set out below was applicable as at 3 August 2012.
Distribution of stapled securities
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
60,535.
The voting rights are one vote per stapled security.
The percentage of total holdings held by or on behalf of the 20 largest holders of these securities was
80.03 per cent.
The distribution of holders was as follows:
Security grouping
Total holders
Stapled securities
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 999,999,999
Total
21,564
28,082
6,778
3,895
216
60,535
8,614,941
71,069,657
48,782,501
83,407,678
1,246,446,335
1,458,321,112
% of issued stapled
securities
0.59
4.87
3.35
5.72
85.47
100.00
There were 4,384 holders of less than a marketable parcel of stapled securities.
There were 1,458,321,112 stapled securities on issue.
20 largest holders of stapled securities
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
COGENT NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
AMP LIFE LIMITED
JP MORGAN NOMINEES AUSTRALIA LIMITED
UBS WEALTH MANAGEMENT AUSTRALIA NOMINEES PTY LTD
QUEENSLAND INVESTMENT CORPORATION
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
COGENT NOMINEES PTY LIMITED
COGENT NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
COGENT NOMINEES PTY LIMITED
DJERRIWARRH INVESTMENTS LIMITED
UBS NOMINEES PTY LTD
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
RBC DEXIA INVESTOR SERVICES AUSTRALIA NOMINEES PTY LTD
Number of stapled
securities held
422,934,041
% of issued
stapled securities
29.00
285,045,346
266,427,289
43,685,631
30,195,345
20,224,655
16,025,348
13,243,281
12,118,092
9,963,514
7,602,587
6,710,523
5,771,213
4,836,208
4,260,492
4,456,126
4,270,000
4,242,542
3,857,858
3,311,375
19.55
18.27
3.00
2.07
1.39
1.10
0.91
0.83
0.68
0.52
0.46
0.40
0.33
0.29
0.31
0.29
0.29
0.27
0.23
Total
1,167,021,501
80.03
Substantial holders
Substantial security holders as at 3 August 2012 were as follows:
Name
Treasury Group
Rare Infrastructure
Future Fund
Number of stapled
securities held
123,924,947
102,126,158
98,867,357
% of issued stapled securities
8.50
7.00
6.78
321 TRANSURBAN ANNUAL REPORT 2012
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324 TRANSURBAN ANNUAL REPORT 2012
eNqUirieS
ANd iNforMAtioN
eNqUirieS ABoUt yoUr
trANSUrBAN StApLed SecUritieS
The stapled securities register is
maintained by Computershare Investor
Services Pty Ltd.
If you have a question about your
Transurban securities or distributions
please contact:
Computershare
Yarra Falls
452 Johnston Street
Abbotsford Victoria 3067
Australia
MAiL
The Registrar
Computershare Investor Services
Pty Limited
GPO Box 2975
Melbourne VIC 3001
Australia
(Australia) 1300 555 159
(Overseas) +61 3 9415 4062
trANSUrBAN GroUp
australia
melbourne (head office)
Level 3, 505 Little Collins Street
Melbourne Victoria
Phone +61 (0) 3 8656 8900
sydney
Level 5, 50 Pitt Street
Sydney NSW 2000
Australia
united states
new York
589 Eighth Avenue, 21st Floor
New York, NY 10018
Phone: +1 646 278 0870
Washington dC area
6440 General Green Way
Alexandria VA 22312
United States
Phone: +1 571 419 6100
325 TRANSURBAN ANNUAL REPORT 2012
ANNUAL report
2012
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2
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1
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Guidance of
31¢
29.5¢
27¢
24¢
22¢
DISTRIBUTION
2009
2010
2011
2012
2013
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