2016
TRANSURBAN
ANNUAL REPORT
transurban.com
Contents
Transurban Group financial statements
Security holder information
1
114
Corporate Governance Statement
Transurban’s 2016 Corporate Governance Statement is located at
www.transurban.com/corporate-governance-statement
Transurban Holdings Limited
Transurban Holdings Limited
and Controlled Entities
and Controlled Entities
ABN 86 098 143 429
ABN 86 098 143 429
(Including Transurban International Limited and Transurban Holding Trust)
(Including Transurban International Limited and Transurban Holding Trust)
Annual report
Annual report
for the year ended 30 June 2016
for the year ended 30 June 2016
1
2016 Transurban Annual Report Contents
Directors’ report ....................................................................................................................................................... 3
Section A: Group financial statements................................................................................................................... 44
Section B: Notes to the Group financial statements .............................................................................................. 50
Section C: Transurban Holding Trust (‘THT’) and Transurban International Limited (‘TIL’) financial statements 94
Section D: Notes to the THT and TIL financial statements ………………………………………………………….. .. 99
Section E: Signed reports.................................................................................................................................... 111
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2016 Transurban Annual Report Directors’ report
The Directors of Transurban Holdings Limited (‘the Company’, ‘the Parent’ or ‘THL’) and its controlled entities
(‘Transurban Group’ or ‘the Group’), Transurban International Limited and its controlled entities (‘TIL’), and
Transurban Infrastructure Management Limited (‘TIML’), as responsible entity of Transurban Holding Trust and
its controlled entities (‘THT’), present their report on the Transurban Group for the financial year ended 30 June
2016 (‘FY16’). The controlled entities of THL include the other members of the stapled group being TIL and THT.
Result
Statutory results
Revenue from ordinary activities increased 18.8 per cent to $2,210 million;
Profit from ordinary activities after tax increased from a loss of $373 million to a profit of $22 million;
Profit from ordinary activities after tax excluding significant items increased 228.9 per cent to $148
million;
Earnings before depreciation and amortisation, net finance costs, equity accounted investments and
income taxes (‘EBITDA’) increased 59.6 per cent to $1,248 million;
EBITDA excluding significant items increased 13.9 per cent to $1,379 million;
Statutory net profit attributable to security holders of the stapled group increased from a loss of $182
million to a profit of $99 million; and
Statutory net profit attributable to security holders of the stapled group excluding significant items
increased 114.5 per cent to $178 million.
Proportional results
Toll revenue increased 17.5 per cent to $1,946 million;
EBITDA increased by 37.5 per cent to $1,398 million;
EBITDA excluding significant items increased by 14.8 per cent to $1,480 million; and
Free cash increased 20.6 per cent to $926 million.
Distributions
Final distribution (declared prior to reporting date)
Final dividend (declared prior to reporting date)
Interim distribution for the current year
Interim dividend for the current year
Final distribution (prior year)
Final dividend (prior year)
Amount per
security
Cents
Franked amount
per security
%
19.5
3.5
23.0
19.0
3.5
22.5
17.0
3.5
20.5
–
100
–
100
–
100
Record date for determining entitlements to distribution and dividend
Date of payment of final distribution and dividend
30 June 2016
12 August 2016
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2016 Transurban Annual Report Principal activities
The principal activities of the Group during the financial year were the development, financing, operation and
maintenance of toll road networks as well as management of the associated customer and client relationships.
Operating and financial review
Our business
Transurban manages and develops urban toll road networks in Australia and the United States of America.
The Group owns concession assets across four key market segments: Victoria (‘VIC’), New South Wales
(‘NSW’), Queensland (‘QLD’) and the Greater Washington Area (‘GWA’).
Transurban is listed on the Australian securities exchange (‘ASX’) and has been in business since 1996.
Strategy
Transurban’s target markets are the eastern seaboard of Australia and North America.
At the heart of our business strategy is our desire to be a partner of choice for our government clients and an
organisation that meets the needs of our customers and the community. To achieve this, we provide effective
transportation solutions to support the growth and development of the cities in which we operate.
At Transurban we do this through management of our existing road networks, through our active involvement in
the transport policy debate, and by applying our unique skills to the infrastructure challenges in our markets.
In delivering on this objective our business has fostered core capabilities in the following areas:
Network planning and forecasting
Community engagement
Development and delivery
Technology
Operations and customer management
Value proposition
Transurban has a market leading position with an interest in 15 operating assets across four markets. The
investment proposition for high quality toll road assets lies in providing investors with access to long dated,
predictable, growing cash flows generated over the life of the concession.
Organic growth is derived from traffic growth and inflation protected toll escalation. It is supported by
Transurban’s ability to provide efficient corporate and operational services at scale across its portfolio.
Transurban has a track record of leveraging its core competencies to drive cost efficiencies and margin uplift.
In addition, value is unlocked through the ongoing development of the portfolio through investment in the
underlying assets.
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2016 Transurban Annual Report 5
2016 Transurban Annual Report5Operating and financial review Segments1.Following the acquisition of the non-controlling interest in the GWAassets on 29 June 2015, the proportional ownership of the GWAassets is reported at 100% from 1 July 2015. Prior to this, the proportional ownership interest in the 95 Express Lanes and 495 ExpressLanes were 77.5% and 94.0% respectively. 2.Airportlink M7 was acquired on 1 April 2016.3.Westlink M7 and NorthConnex form the NorthWestern Roads Group. Concession assets timeline Below lists the concession asset end dates.VICNSWQLD Operating and financial review (continued)
Accounting for assets – changes during the year
During the year ended 30 June 2016, the following changes in accounting for our assets have taken place:
Transurban Queensland
(‘TQ’) acquisition of
AirportlinkM7
On 1 April 2016 Transurban Queensland, in which Transurban has a 62.5 per cent interest,
acquired AirportlinkM7 for $1,870 million, plus stamp duty of $108 million and transaction costs of
$23 million.
Group financial performance
Financial performance indicators
The Transurban Board and management assess the performance of the networks in which we operate based on
a measure of proportional earnings before interest, tax, depreciation and amortisation expenses (‘Proportional
EBITDA’) excluding the impact of significant items (‘Underlying proportional EBITDA’). This reflects the
contribution of each network in the Group in the proportion of Transurban's equity ownership.
Significant items are those items where their nature and amount is considered material to the financial
statements and not in the ordinary course of business.
To arrive at the proportional result, minority interests in Transurban’s controlled roads are taken out and
Transurban’s interests in non-controlled assets are included, in proportion to Transurban’s ownership.
Free cash is the primary measure used to assess Transurban’s cash generation. Free cash is used as the guide
to determine distributions to security holders.
Year ended 30 June 2016 highlights
Statutory results
Toll revenue1
EBITDA
Net profit/(loss)
EBITDA excluding significant items
Net profit after tax excluding significant items
FY16
$M
1,870
1,248
22
1,379
148
FY15
$M
1,611
782
(373)
1,211
45
1. Toll revenue now includes toll revenue and service and fee revenue. Refer to note B5 for further details.
Proportional EBITDA
Segment information in note B4 to the financial statements presents the proportional result for Transurban Group,
including reconciliations to the statutory result. Management considers proportional EBITDA to be the best
indicator of asset performance. The table below also provides FY16 results adjusted to exclude certain
acquisitions and new assets so as to compare the performance of the existing business to the prior year result.
Toll revenue1
Other revenue
Total costs
EBITDA excluding significant
items
Significant items
EBITDA
FY16
$M
1,946
60
(526)
1,480
(82)
1,398
FY16
Adjusted2
$M
1,912
60
(501)
1,471
(7)
1,464
FY15
$M
1,656
70
(437)
1,289
(272)
1,017
% Change3
15.5%
(14.3%)
14.6%
14.1%
(97.4%)
44.0%
1. Toll revenue now includes toll revenue and service and fee revenue. Refer to note B5 for further details.
2. Excludes contributions associated with AirportlinkM7 and Legacy Way.
3. Percentage change between adjusted FY16 and FY15.
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2016 Transurban Annual Report Operating and financial review (continued)
Financial position
Market capitalisation – 30 June
Shares on issue – 30 June
Cash and cash equivalents
FY16
M
FY15
M
$24,406
$17,800
2,036
$834
1,914
$1,249
Transurban’s operating assets are primarily long-life intangible assets (concession assets), representing the
provision by Government entities for the right to toll customers for the use of the assets. Concession assets
represent 78 per cent of the total assets of the Group. The total duration of the concessions typically range from
approximately 30 to 80 years, and for accounting purposes the carrying values are amortised on a straight line
basis over the duration of the concession.
Free cash and cash flows from operations
Free cash
Weighted average securities eligible for distribution1
Free cash per security (cents)
FY16
$926M
1,978M
46.8
FY15
% Change
$768M
1,910M
40.2
20.6%
3.6%
16.4%
1. New securities issued during the year are included only to the extent they were eligible for the interim and/or final distribution.
Movements in free cash during the period have been influenced by:
$81 million growth in EBITDA from 100 per cent owned Australian assets
$58 million contribution from Greater Washington Area assets (100% owned from 29 June 2015)
$26 million decrease in net finance costs paid (from 100% owned Australian assets) due to timing of
cash flows on new and refinanced debt
($29 million) increase in maintenance provision on 100% owned Australian assets
($18 million) decrease in non-100% owned assets distributions received due to lower distributions from
M5 ($28 million) associated with the timing of payment of FY16 distributions and Transurban
Queensland ($10 million) due to the timing of interest payments in FY16, partially offset by an increase
in Eastern Distributor distributions ($13 million) and the NorthWestern Roads Group distributions ($7
million), noting that the FY15 NorthWestern Roads Group distribution included a $23 million debt service
reserve release that did not recur in FY16
$40 million favourable year on year movement in working capital
The weighted average securities eligible for distribution have increased due to the half year impact of the equity
issued in December 2015 to support the acquisition of AirportlinkM7. These securities issued in December 2015
were eligible for the FY16 2nd half distributions only.
Note B10 to the statutory accounts provides a detailed calculation of free cash.
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2016 Transurban Annual Report Operating and financial review (continued)
Network performance
Network Highlights
Prop. Toll
revenue
contribution
Traffic
growth
(ADT)
Toll
revenue
growth
EBITDA
growth2
EBITDA
margin2
NSW
Continued traffic growth across the
41.1%
7.4%
13.9%
14.1%
79.7%
network
Truck toll multipliers increasing to 3
times car tolls on Lane Cove Tunnel,
M5 South West Motorway and Westlink
M7. Weighted average truck toll
multiplier across Sydney network 2.35
times car toll at 30 June 2016.
VIC
Average weekend/public holiday traffic
33.9%
1.0%
7.3%
7.9%
85.5%
growth increased by 3.2%
Major construction works on the
CityLink Tulla Widening project
commenced mid-March 2016
QLD1
AirportlinkM7 traffic and revenue results
16.1%
26.5%
18.1%
18.1%
69.6%
GWA3
at upper end of expectations
Excluding Legacy Way and
AirportlinkM7 EBITDA increased 13.0%
Continued growth observed across both
495 Express Lanes and 95 Express
Lanes
Average dynamic toll price increased
25.6% for 495 Express Lanes and
20.8% for 95 Express Lanes compared
to the prior period.
8.9%
13.5% 107.8% 140.3%
49.5%
1. Excluding Legacy Way and AirportlinkM7 from FY16, ADT increased by 2.7%, toll revenue grew by 5.4%, EBITDA grew by 13% and EBITDA
margin is 74.7%.
2. EBITDA Growth and EBITDA margin are calculated before significant items.
3. Toll revenue and EBITDA growth are calculated in USD, EBITDA margin is calculated in AUD.
New South Wales
Operations
GLIDe tolling system
Increase in recoveries following implementation of GLIDe on Lane Cove Tunnel, Westlink M7 and Roam
Tolling in July 2015 and Roam Express in June 2016
Development
NorthConnex
Construction proceeding on time and on budget
Road headers commenced tunnelling in April 2016
Project cost is approximately $3.0 billion, including Government contribution
Westlink M7 truck toll currently 2.33 times car toll and will reach 3 times car toll by 1 January 2017
Expected project completion late 2019
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2016 Transurban Annual Report Operating and financial review (continued)
Victoria
Operations
CityLink Operations
Introduction of a Freeway Management System (‘FMS’) that enables Transurban to move from an
attendance to an immediate clearance incident response model
Development
CityLink Tulla Widening
Western Distributor
Major works commenced in mid-March 2016
The Western Distributor is a proposed tunnel
Construction proceeding on time and on budget
Project cost is approximately $1.3 billion
Expected project completion early 2018
and elevated motorway that connects the West
Gate Freeway with the Port of Melbourne,
CityLink and the central business district,
providing an alternative river crossing and
easing pressure on West Gate Bridge.
The Reference Design and Request for Tender
has been issued to market
Works to commence on Monash Freeway
Upgrade in September 2016
Financial close expected by late 2017
Total project cost expected to be approximately
$5.5 billion
Queensland
Operations
AirportlinkM7
Financial close reached 1 April 2016
Integration of AirportlinkM7 into Transurban Queensland is largely complete
Customer accounts transitioned to Transurban Queensland in June 2016
Development
Inner City Bypass (‘ICB’)
Gateway Upgrade North
Logan Enhancement Project
Brisbane City Council has
entered into discussions with
Transurban Queensland for
the potential delivery of the
ICB upgrade
Transurban Queensland is
managing the project on
behalf of the Queensland and
Federal Governments
Entered exclusive negotiations
and design and construction
procurement underway
Final business case to be
Completion is expected in
submitted shortly
Project cost expected to be
2018
$80 million
Completion expected in 2018
Project cost expected to be $450
million
Construction expected to
commence early 2017 and be
completed early 2019
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2016 Transurban Annual Report
Operating and financial review (continued)
Greater Washington Area
Operations
95 Express Lanes
Full year of operation
Continued ramp up increasing toll pricing and traffic volumes
Development
I-66
I-395
Competitive process
Agreed development
underway to design, build,
finance, operate and
maintain Express Lanes
system on I-66
framework with Virginia
Department of Transportation
(‘VDOT’) to progress 395
Express Lanes project
Transurban shortlisted to
participate in Request for
Proposal (‘RFP’) process
Estimated project cost
approximately US$250 to
$300 million
Proposals due October 2016
Financial close expected in
mid-2017
Southern Extensions to 95
Express Lanes
In-principle agreement with
VDOT to extend 95 Express
Lanes by 3 kilometres
Capital contribution of US$25
million
Construction to commence
September 2016 and is
expected to be completed by
late 2018
Additional 14 kilometre
extension to Fredericksburg
under negotiation with VDOT
as part of the Atlantic
Gateway Project
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2016 Transurban Annual Report Operating and financial review (continued)
Equity issue
During December 2015, the Group successfully completed the fully underwritten institutional and retail
components of its renounceable 1 for 18 pro rata entitlement offer. The institutional component raised $726
million and the retail component raised $280 million at an issue price of $9.60 per security. The total proceeds
from the entitlement offer were approximately $1,006 million and were used to fund the Group’s equity
contribution to the Transurban Queensland acquisition of AirportlinkM7 which occurred in April 2016.
Financing activities
During the reporting period Transurban completed a number of financing activities including:
July 2015
Interlink Roads (operator of the M5) refinanced $742 million of senior secured debt.
September 2015
Transurban Queensland issued USD$641 million of 10, 12 and 15 year US private
placement notes and AUD$70 million of 15 year US private placement notes.
November 2015
USD$550 million of corporate senior secured 10 year notes were issued in the US 144A
bond market.
March 2016
May 2016
May 2016
June 2016
Transurban Queensland raised AUD$950 million of term bank debt to fund the acquisition
of AirportlinkM7.
Capital Beltway Express (operator of 495 Express Lanes) refinanced USD$225 million
Letters of Credit which support the 495 Express Lane’s senior secured Private Activity
Bonds.
Lane Cove Tunnel refinanced AUD$260 million of debt facilities and raised an additional
AUD$200 million of non-recourse debt facilities.
Transurban Queensland issued AUD$280 million of senior secured 7 year notes in the
Swiss market.
There were no changes to the Transurban Group ratings provided by Standard and Poor’s Financial Services
LLC rating service, Moody’s Investors Services Inc. or Fitch Ratings Inc. during the period.
Funding structure
The following diagram shows the non-recourse and corporate debt balances of the Group.
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2016 Transurban Annual Report Operating and financial review (continued)
Debt maturity profiles
The following charts show the Group’s current debt maturity profile based on the total facilities available. The
charts show the debt in the financial year it matures and in the case of the non-recourse debt, the full value of the
debt facilities has been shown as this is the value of debt for refinancing purposes.
The debt values are shown at 30 June 2016, with US, Euro, Canadian and Swiss denominated debt converted at
the hedged rate where cross currency swaps are in place. Unhedged US dollar debt has been converted to
Australian dollars at spot exchange rate ($0.74 at 30 June 2016).
Corporate debt maturity profile
Non-recourse debt maturity profile
Financial risk management
Transurban’s exposure to financial risk management and its policies for managing that risk can be found in the
Financial Risk Management notes in the financial statements – note B15. This section discusses Transurban’s
hedging policies, credit risk, interest rate risk and liquidity and funding policies.
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2016 Transurban Annual Report Operating and financial review (continued)
Corporate activities
People
At Transurban we aim to create an environment where our people are encouraged to reach their full potential,
and are recognised and rewarded for their achievements. We strive to maintain an open culture where diversity is
welcomed and accepted. We want everyone in our workplace to be treated fairly and to feel their contribution is
valued. The safety and wellbeing of our employees are central to everything we do as a business. We recognise
that, ultimately, our future successes are a direct result of the people who work with us and the contribution they
make every day.
We have over 1200 employees located in our four regions, Melbourne, Sydney, Brisbane and Washington, DC.
This year, our internal employee opinion survey showed that 77% of employees are proud to work for
Transurban. The way we work together and engage with our customers is guided by our values of Integrity,
Collaboration, Accountability, Ingenuity and Respect and our survey told us that 90% of our employees believe in
the values of the Group.
Leadership
We support our employees’ career aspirations by offering personal and professional development opportunities.
We offer a range of career planning and support programs to suit the many different needs and learning styles of
our workforce. We support and encourage eligible employees to pursue further education related to their specific
discipline or future career path at Transurban. Through our learning and development framework, eligible
employees have access to both study/exam leave and financial assistance.
We are dedicated to the ongoing development of our existing and future leaders. This year, 35 senior leaders
attended the annual Senior Leadership Program. The key theme of the program continues to be striving for
sustained high performance. There has also been a focus on building greater leadership capability through the
middle management group. Activities to support this include the cascading of activities from the Senior
Leadership Program; the People Leader Fundamentals program and the continuation of the Realise your
Potential program for female managers.
Transurban conducts a bi-annual talent review with the Executive and Senior Leadership teams. This review
helps identify high potential individuals who have the ability to move into Senior Leadership or Executive roles, or
those who may be able to move laterally outside of their area of technical expertise. In addition, we recognise
those individuals with exceptional technical skills that are highly valued by the organisation.
Capability
We continue to identify ways to build capability at all layers within the organisation. A key activity throughout
FY16 has been to develop a Professional/Technical Career Framework to help support employees in these roles
articulate their career pathways and identify development opportunities aligned with this. The inaugural
Transurban Graduate Program commenced in February 2016 with Graduates working across Engineering,
Technology, Business (Finance), Marketing and HR disciplines. The aim of the program is to attract the next
generation of Transurban leaders and professional/technical experts.
We have developed relationships with key universities enabling the establishment of summer internships for
engineering and business graduates.
Performance
At Transurban we focus on developing a high performance culture through differentiating performance. The Short
Term Incentive (‘STI’) program includes formal performance comparisons against peers, which strengthens the
link between individual employee performance and Group performance. We offer a range of employee benefits
including an employee share scheme and group insurance including salary continuance, death and permanent
disablement insurance cover.
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2016 Transurban Annual Report Operating and financial review (continued)
Wellbeing
At Transurban, we believe that healthy employees contribute to a high performing company. We are committed to
keeping our employees safe, and promoting their health and wellbeing so they can enjoy fit and healthy lives,
both at work and at home. Our Wellbeing program has five essential elements: health; work; financial; values and
staying connected. Creating awareness and education on Mental Health issues has been a focus throughout
2016 and we have trained over sixty employees to be Mental Health First Aiders in every office location in
Australia.
The employee volunteer program has continued, which includes the ability for all employees to take one day of
paid volunteer leave each year. The Transurban Annual Awards function held in October 2015, recognises
achievements of employees in the categories of customer service, diversity, ingenuity, safety, sustainability and
overall business excellence.
Sustainability
Transurban's vision ‘to strengthen communities through transport’ is closely supported by our sustainability
strategy. We are committed to making sure that our roads help make our cities great places to live and work —
both now and in the future.
Transurban’s sustainability strategy has three key pillars:
Be good neighbours: We will work with communities to create shared value with our business by
anticipating, listening and responding to community needs;
Use less: We will minimise natural resource use and create resource efficiencies during development,
operations and maintenance to reduce the impacts of our operations on the community and
environment; and
Think long term: We will look for innovative transport solutions that will create efficient, safe transport
networks and thriving cities.
During the period Transurban continued with a range of sustainability initiatives including:
Community partnerships and grants programs;
Two major innovation projects (a more effective road safety barrier design and a noise cancellation and
transformation project);
An energy efficiency roadmap to deliver on our ‘10-in-10’ commitment to reduce our energy
consumption by 10% by 2023;
Two major road corridor regeneration projects (one each in Melbourne and Sydney); and
Continued public reporting of our sustainability performance.
Transurban provides regular progress reports to the Board on our focus areas. The annual Sustainability Report
summarises the year’s activities and outlines commitments for the coming years.
The 2016 Sustainability Report will be published in October 2016 and will be available via the Transurban
website.
Safety
Safety continues to be a key focus of our business and during this financial year, we worked to integrate and
strengthen the links between health, safety and environment (‘HSE’) in order to consider all elements through a
holistic risk management approach.
An integrated HSE Policy replaced the previous safety and environment policies. A new event reporting system,
Enablon was introduced and implemented during the financial year, to capture and report on HSE events that can
be used for trend analysis and to support development of improvement strategies in HSE performance.
There were no employee lost time injuries recorded, and the contractor recordable injury frequency rate finished
below target. The employee recordable injury frequency rate finished at 1.1, above our target of 0 and the Road
Incident Crash Index finished at 4.6, also slightly above the 4.3 target.
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2016 Transurban Annual Report Operating and financial review (continued)
Business risks and opportunities
The following are key opportunities that may impact Transurban’s financial and operating result in future periods:
Ability to leverage capabilities to enhance motorway networks;
Greater than forecast traffic volumes;
Integration of consistent technology and systems to enhance network footprint;
Ability to harness knowledge and experience to drive operations and maintenance;
Identification of new business opportunities in Transurban’s target markets; and
Application of sustainability initiatives to enhance road user and local community experiences.
The following are key risks that may impact Transurban’s financial and operating result in future periods:
Reduced traffic volumes or an inability to grow traffic volumes;
Change in government policies;
Competitor growth or behaviour;
Access to suitable financing arrangements;
Safety incidents through operations or driver behaviour;
Dependency on the services of key contractors and counterparties;
Unfavourable changes to market or operating conditions;
Cyber and information protection; and
Failure of technical infrastructure.
Risk management
Managing risk is an essential part of our business. Key risks are regularly reviewed by the Board, the Audit and
Risk Committee and our Executive Committee.
Transurban has a business-wide risk framework in place to help create a consistent and rigorous approach to
identifying, analysing and evaluating risks. This framework has various policies, standards and guidelines
attached to it, including the Risk Management Policy which can be found in the Corporate Governance section of
our website (transurban.com).
The framework is overseen by the Audit and Risk Committee and is actively managed by the Executive
Committee. It is consistent with AS/NZ31000:2009 and is subject to regular review by internal audit. Our Audit
and Risk Committee Charter is also available in the Corporate Governance section of our website.
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 AusNet Services, and Senior
Corporate Counsel at National Australia Bank. She has over 16 years of legal, company secretariat and other
relevant experience. Prior to her in-house work, Amanda was a solicitor specialising in M&A work with Australian
law firm King & Wood Mallesons.
Julie Galligan
LLB, BA
Julie joined Transurban in November 2008 and was appointed as General Counsel in February 2012. Julie has
over 16 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 and at law firms, SJ Berwin LLP
and MinterEllison.
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2016 Transurban Annual Report Operating and financial review (continued)
Meetings of directors
The number of meetings of the Boards of Directors of THL, TIML and TIL and each Board Committee held during
the year ended 30 June 2016, and the number of meetings attended by each Director are set out in the following
tables.
Meetings of the Boards of Directors of THL, TIML and TIL were held jointly.
Lindsay Maxsted
Scott Charlton
Neil Chatfield
Robert Edgar
Samantha Mostyn
Christine O'Reilly
Rodney Slater
Peter Scott4
Ian Smith5
Board of Directors
Audit & Risk
Committee1
Remuneration &
HR Committee2
Nomination
Committee3
Attended Held
Attended Held
Attended Held Attended Held
9
9
9
9
8
9
9
3
1
9
9
9
9
9
9
9
3
1
6
6
6
6
1
6
*
1
*
6
*
6
6
*
6
*
*
*
5
5
5
5
5
3
*
*
*
*
*
5
5
5
*
*
*
*
3
3
3
3
3
3
3
1
*
3
*
3
3
3
3
3
*
*
* = Not a member of the relevant Committee
1. Scott Charlton, Samantha Mostyn and Peter Scott were not members of the Audit and Risk Committee but attended meetings during the year.
2. Lindsay Maxsted, Scott Charlton and Christine O'Reilly were not members of the Remuneration and Human Resources Committee but attended
meetings during the year. Scott Charlton was excluded from discussions involving his remuneration during meetings which he attended.
3. Scott Charlton and Peter Scott were not members of the Nomination Committee but attended meetings during the year.
4. Peter Scott was appointed to the Board of Directors on 1 March 2016. Only those meetings held since his appointment have been included above.
5. Ian Smith resigned as Non-executive Director effective 10 August 2015. Only those meetings held during his appointment have been included
above.
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2016 Transurban Annual Report Directors
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, unless otherwise stated:
Lindsay Maxsted
Dip Bus, FCA, FAICD
Chair and independent Non-executive Director
Director since 1 March 2008. Chair since 12 August 2010.
Chair of the Nomination Committee and a member of the Audit and Risk Committee.
Lindsay is currently Chair 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 Limited and the Honorary Treasurer of Baker IDI
Heart and Diabetes Institute.
Lindsay was formerly a partner of KPMG Australia and was the CEO of that firm from 2001
to 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.
As at the date of this report, Lindsay holds interests in 70,258 stapled securities.
Scott Charlton
BSci, MBA
Chief Executive Officer and Executive Director
Director since 16 July 2012. CEO since 16 July 2012.
Scott joined Transurban from Lend Lease, where he was Group COO and Group Director
of Operations.
Prior to this, Scott held several senior appointments across a range of infrastructure entities
and financial institutions, including as CFO of Leighton Holdings Limited and as Managing
Director of Deutsche Bank in Australia and Hong Kong.
Scott is currently Deputy Chair of Infrastructure Partnerships Australia and is a member of
the Monash Industry Council of Advisors, the Business Council of Australia, and of Roads
Australia.
As at the date of this report, Scott holds interests in 1,047,562 stapled securities, 1,019,868
performance awards (unlisted) and 117,926 STI deferred awards (unlisted).
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2016 Transurban Annual Report Directors (continued)
Neil Chatfield
M.Bus, FCPA, FAICD
Independent Non-executive Director
Director since 18 February 2009.
Chair of the Audit and Risk Committee and a member of the Remuneration and Human
Resources Committee and the Nomination Committee.
Neil is an established Executive and Non-executive Director with extensive experience
across all facets of company management, and with specific expertise in financial
management, capital markets, mergers and acquisitions, and risk management.
Neil is currently the Chair and a Non-executive Director of Seek Limited and Costa Group
Holdings Limited. Neil is also a Non-executive Director of Iron Mountain Inc. and Chair of
Launch Housing, a not-for-profit organisation. He was previously a Non-executive Director
of Recall Holdings Limited (to May 2016), Chair and a Non-executive Director of Virgin
Australia Holdings Limited (to May 2015) and a Non-executive Director of Grange
Resources Limited (to April 2014).
Neil previously served as Executive Director and the CFO of Toll Holdings (from 1997 to
2008).
As at the date of this report, Neil holds interests in 59,728 stapled securities.
Robert Edgar
BEc (Hons), PhD, FAICD
Independent Non-executive Director
Director since 21 July 2009.
Chair of the Remuneration and Human Resources Committee and a member of the Audit
and Risk Committee and the Nomination Committee.
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 a Non-executive Director of Asciano Group, Linfox Armaguard Pty Ltd and
Djerriwarhh Investments. He is Chair of the Hudson Institute of Medical Research. Bob was
previously Chair and a Non-executive Director of Federation Centres (to June 2015).
As at the date of this report, Bob holds interests in 32,009 stapled securities.
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2016 Transurban Annual Report Directors (continued)
Samantha Mostyn
BA, LLB
Independent Non-executive Director
Director since 8 December 2010.
Member of the Nomination Committee and a member of Remuneration and Human
Resources Committee.
Sam has significant experience in the Australian corporate sector both in Executive and
Non-executive capacities, in particular in the areas of human resources, corporate and
government affairs, sustainability management, and diversity.
Sam is currently Chair and a Non-executive Director of Citigroup Pty Limited and a Non-
executive Director of Virgin Australia Holdings Limited, Cover-More Group Limited, and the
Mirvac Group. She is President of the Australian Council for International Development.
Sam is also a Non-executive Director of Australia Council for the Arts and Chair of
Carriageworks.
Sam is currently Deputy Chair of the Diversity Council of Australia, and is a member of the
NSW Climate Change Council, the advisory boards of ClimateWorks Australia, the
Crawford School of Government and Economics, Australian National University and
Commissioner of the Business and Sustainable Development Commission.
As at the date of this report, Sam holds interests in 18,215 stapled securities.
Christine O'Reilly
BBus
Independent Non-executive Director
Director since 12 April 2012.
Member of the Audit and Risk Committee and the Nomination Committee.
Christine has over 30 years’ experience in the finance and infrastructure sectors in various
roles including as Co-Head of Unlisted Infrastructure at Colonial First State Global Asset
Management and as CEO of the GasNet Australia Group.
Christine is currently a Non-executive Director of CSL Limited, Energy Australia Holdings
Limited, and Medibank Private Limited. She is also a Non-executive Director of Baker IDI
Heart and Diabetes Institute and is the Deputy Chair of CARE Australia.
As at the date of this report, Christine holds interests in 20,406 stapled securities.
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2016 Transurban Annual Report Directors (continued)
Rodney Slater
J.D., BS
Independent Non-executive Director
Director since 22 June 2009.
Member of the Nomination Committee.
Rodney is a partner in the Government Relations and Lobbying, Transportation,
Infrastructure and Local Government, and Construction project groups of Washington, DC
firm Squire Patton Boggs (US) LLP 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. and Southern Development Bancorporation. He was previously a
Director of Parsons Brinckerhoff, Delta Airlines, Northwest Airlines, WS Atkins plc and ICx
Technologies Inc. Rodney is a Director of the Congressional Awards Foundation and
United Way Worldwide.
As at the date of this report, Rodney holds interests in 3,000 stapled securities.
Peter Scott
BE (Hons), M.Eng.Sc, Hon FIEAust, MICE
Independent Non-executive Director
Director since 1 March 2016.
Member of the Nomination Committee from 8 August 2016.
Peter has over 20 years’ of senior business experience in publicly listed companies and
considerable breadth and expertise in the engineering and finance sectors. He was
formerly the CEO of MLC and head of National Australia Bank’s Wealth Management
Division and has held a number of senior positions with Lend Lease.
Peter is currently Chair and a Non-executive Director of Perpetual Limited and of Perpetual
Equity Investment Company Limited, Chair of Igniting Change Limited, a not-for-profit
organisation and a member of the Prime Minister’s Community Business Partnership. He
was previously a Non-executive Director of Stockland Corporation Limited (to August
2016).
As at the date of this report, Peter holds interests in 20,000 stapled securities.
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2016 Transurban Annual Report Directors (continued)
Ian Smith
BE Mining (Hons), BFin Admin
Independent Non-executive Director
Director from 1 January 2012 to 10 August 2015
Ian was previously the Managing Director and CEO of Orica Limited (to March 2015),
Managing Director and CEO of Newcrest Mining, the Global Head of Operational and
Technical Excellence at Rio Tinto, based in London, and Managing Director of Comalco
Aluminium Smelting within the Rio Tinto Group. Prior to this, Ian held senior operational
and project management roles with WMC Resources, Pasminco Limited and CRA Limited.
Ian was previously the President of The Australian Mines and Metals Association,
Chairman of the Minerals Council of Australia, and a Director of the Australian Chamber of
Commerce and Industry.
Ian is a Fellow of both the Institute of Engineers Australia and the Australasian Institute of
Mining and Metallurgy - from which he was awarded its highest honour, the Institute Medal,
in June 2012.
As at the date of his resignation, Ian held interests in 94,785 stapled securities.
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2016 Transurban Annual Report 2016 Remuneration report (audited)
Introduction
The Board is pleased to present the Remuneration Report for the Transurban Group (the Group) for the year
ended 30 June 2016 (‘FY16’), prepared in accordance with the Corporations Act 2001 and its regulations. This
report contains detailed information regarding the remuneration arrangements for the Directors and senior
executives who were key management personnel (‘KMP’) of the Group during FY16.
Key Management Personnel
The following table details the Group’s KMP during FY16.
Non-executive Directors
Lindsay Maxsted, Chair
Neil Chatfield
Robert Edgar
Samantha Mostyn
Christine O'Reilly
Peter Scott (from 1 March 2016)
Rodney Slater
Former Non-executive Directors
Ian Smith1
Current senior executives
Scott Charlton, Executive Director and Chief Executive Officer (‘CEO’)
Tony Adams, Group General Manager, Project Delivery and Operational Excellence
Jennifer Aument, Group General Manager, North America
Wesley Ballantine, Group General Manager, Queensland
Andrew Head, Group General Manager, New South Wales
Michele Huey, Group General Manager, Strategy
Sue Johnson, Group General Manager, Customer Operations and Human Resources
Lisa Tobin, Group General Manager, Technology
Vin Vassallo, Group General Manager, Victoria
Adam Watson, Chief Financial Officer
1. Ian Smith resigned as a Non-executive Director effective 10 August 2015.
Contents
Section
1. Remuneration snapshot
2. Remuneration governance
3. Senior executive remuneration policy and structure
4. Group performance, security holder wealth and remuneration
5. Senior executive remuneration outcomes for FY16
6. Service agreements
7. Non-executive Director remuneration
8. Statutory tables
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25
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31
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2016 Transurban Annual Report Remuneration report (continued)
1. Remuneration snapshot
The Transurban Board is committed to an executive remuneration framework that is focused on driving a
performance culture and linking pay to the achievement of the Group’s strategy and business objectives that in
turn drive long term security holder value.
Transurban’s remuneration framework is reviewed annually taking into consideration security holder and other
stakeholder feedback, market expectations and regulatory developments.
At the 2015 annual general meeting (‘AGM’), the remuneration framework received strong support from security
holders, with a 99.52% vote in favour of the resolution to adopt the 2015 Remuneration Report.
The Board considers that the current remuneration framework offers a range of mechanisms to balance sensible
risk management and motivate executives to deliver outstanding results.
The core strategy of the Group is to partner with governments to provide effective and innovative urban road
infrastructure. Consistent with this strategy, the Group has significantly expanded its portfolio with acquisitions
and development projects in Australia and the USA, leveraging its urban networks and partnering with
Governments to develop transport solutions in our core markets of the east coast of Australia and North America.
These activities have helped deliver against the Group’s stated objective of growing distributions for security
holders.
The remuneration outcomes this year reflect Transurban’s strong financial results and achievements across the
Group’s operational and development activities. These results are outlined in more detail in the Operating and
Financial Review within the Directors’ Report.
In comparison with the previous financial year, the following results were achieved in FY16:
14.8% increase in underlying proportional EBITDA;
16.4% increase in free cash flow per security;
13.8% increase in distributions paid to security holders;
28.9% increase in security price; and
26.7% increase in proportional net costs (excluding significant items) to support growth in traffic and business
activity and the continued focus on technology and customer initiatives.
The Board and the Board’s Remuneration and Human Resources Committee believe that the remuneration
outcomes reflect alignment between rewarding senior executive efforts in meeting key targets and recognising
security holder outcomes.
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2016 Transurban Annual Report Remuneration report (continued)
2. Remuneration governance
A. Board and Remuneration and Human Resources Committee responsibilities
The Remuneration and Human Resources Committee assists the Board in fulfilling its responsibilities relating to
the remuneration of Non-executive Directors, the remuneration of, and incentives for, the CEO and other senior
executives, remuneration budgets for all employees and remuneration practices, strategies and disclosures
generally.
It is critical that the Remuneration and Human Resources 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, the CEO and the Group General Manager, Customer
Operations and Human Resources attend Committee meetings, however they do not participate in formal
decision making.
The members of the Committee are Robert Edgar (Chair), Samantha Mostyn and Neil Chatfield. Further details
regarding the Committee are set out in the Directors’ Report.
B. Use of remuneration consultants
The Remuneration and Human Resources Committee may seek and consider advice from independent
remuneration consultants where appropriate. Any advice from consultants is used to guide the Remuneration and
Human Resources Committee and the Board, but does not serve as a substitute for thorough consideration by
Non-executive Directors.
The Group has a protocol in place 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.
During FY16, consultants did not provide the Remuneration and Human Resources Committee with remuneration
recommendations relating to KMP. Benchmark data only was provided to the Committee.
C. Dealing 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, senior executives 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.
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2016 Transurban Annual Report Remuneration report (continued)
3. Senior executive remuneration policy and structure
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 success.
A. Remuneration framework
The Group’s remuneration framework provides a combination of incentives intended to drive performance against
the Group’s short and longer term objectives. The framework for each senior executive comprises three
components:
• Total Employment Cost (‘TEC’): fixed remuneration component comprising salary, superannuation and
other prescribed benefits;
• Short Term Incentive (‘STI’): an ‘at risk’ component, awarded on performance over a 12 month period
against pre-determined individual and Group performance measures that comprises both a cash component
and a component deferred into equity; and
• Long Term Incentive (‘LTI'): an ‘at risk’ equity component, awarded on the achievement of pre-determined
internal and external performance measures over a three year period.
B. Remuneration mix
A significant proportion of senior executive remuneration is ‘at risk’ to provide alignment with the interests of
security holders and to drive performance. The remuneration mix is designed to achieve a balanced reward for
achievement of immediate objectives and the creation of long term sustainable value. The remuneration mix at
target performance for senior executives is outlined in the diagram below.
CEO target remuneration mix
Senior executive target remuneration mix
30%
40%
15%
15%
25%
15%
15%
45%
Fixed annual remuneration
Variable STI - cash
Variable STI - deferred
Variable LTI
C. Fixed total employment cost (‘TEC’)
Fixed TEC is set with reference to the market median, using the ASX 10-30 as the primary reference.
Remuneration packages (including TEC levels) are reviewed annually by the Remuneration and Human
Resources Committee taking into consideration an individual's role, experience and performance, as well as
relevant comparative market data provided by remuneration consultants. TEC levels are also reviewed on a
change in role.
Changes to CEO remuneration package effective FY2017
Following a review of the CEO’s FY2016 remuneration package with the relevant comparator group, the Board
has approved a revised remuneration package for the CEO, effective 1 July 2016. The revised package includes
an increase in the CEO’s fixed remuneration of 3.69% to $2.2 million as well as a revised remuneration mix
resulting in an increase to his total remuneration package. The revised package better aligns the CEO’s total
remuneration to the market through an appropriate weighting for each remuneration component, strongly aligning
the achievement of the Group’s strategy and security holder value. The revised remuneration mix is weighted
33% for fixed annual remuneration; 33% for variable STI (50% continues to be deferred); and 34% for variable
LTI.
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2016 Transurban Annual Report Remuneration report (continued)
D. Short term incentive (‘STI’)
Description
Eligible permanent Group employees, including the CEO and other senior executives, participate in the
annual STI plan, which puts a proportion of remuneration 'at risk' subject to meeting specific pre-determined
Group and individual performance measures linked to Group objectives.
Performance
Period
Opportunity
Payment and
deferral
The performance period is the financial year preceding the payment date (i.e. 1 July 2015 – 30 June 2016).
For ‘at-target’ performance, the CEO has the opportunity to receive 75% of TEC and all other senior
executives have the opportunity to receive 67% of TEC. The minimum STI an individual can receive is 0%
(if targets are not met) and the maximum is 150% of the STI opportunity, which is only awarded for
exceptional performance.
The awarded STI for the CEO and other senior executives is settled 50% in cash and 50% is deferred. For
Australian employees, the deferral component is into fully paid Transurban securities, which are held on trust
for two years following the performance year and are restricted from trading until vesting. USA employees
are awarded deferred cash awards (due to legal restrictions on the issue of securities to USA residents). The
deferred securities and deferred cash awards participate in dividends and/or distributions paid.
The number of securities or awards is determined by dividing the amount to be deferred by a 20 day Volume
Weighted Average Price (VWAP) of securities up to and including the last business day of the performance
period.
Performance
measures
Performance measures are a mix of Group and individual measures. The diagram below illustrates the
weighting of the two performance measures.
Individual KPIs are unique to the individual’s area of accountability. Individuals have a clear line of sight to
KPIs and are able to directly affect outcomes through their own actions.
The total STI performance outcome is calculated: (Individual STI Outcome % + (Individual STI Outcome %
x Group Outcome %)) ÷ 2.
How is the
annual pool
determined
The Board approves a total pool to be distributed which is the sum of all eligible employees’ possible STI
outcomes at target (TEC x STI opportunity). One half of this sum represents the individual component of the
STI (capped at 100%) and the second half is multiplied by the Group’s performance outcome to represent the
Group’s performance component (capped at 150%). The overall pool is capped at 125%. The Board has
discretion as to the proportion of the pool that will be distributed each year.
Vesting
Performance against Group measures is assessed by the Board and the results of key elements are
independently validated.
The Board confirms final outcomes for individual and Group performance and has discretion to make
adjustments to the performance conditions and outcomes.
Payment of STI
The payment of the cash component and the allocation of deferred securities and cash awards (USA
residents) will occur in August 2016 following finalisation and approval of the audited Group results and the
Board’s approval of individual outcomes.
Cessation of
employment
If employment ceases before performance is assessed, generally there is no entitlement to receive any STI
award. Any unvested deferred securities will lapse, unless the plan rules provide otherwise or the Board
otherwise resolves.
Clawback
Fraudulent or dishonest behaviour will result in the forfeiture or clawback of any unvested awards. Further,
at the discretion of the Board awards are subject to forfeiture or clawback where there is a financial
misstatement circumstance or the allocation of awards was made in error, on the basis of the
misrepresentation or an omission, or on the basis of facts or circumstances that were later proven to be
untrue or inaccurate.
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2016 Transurban Annual Report
Remuneration report (continued)
STI Group performance measures in detail
Group
Measure
Proportional
EBITDA
(EBITDA:
earnings before
interest, taxes,
depreciation
and
amortisation)
Weighting
Description of Measure
20%
Targets: the target for 100% vesting for FY16 was $1,351 million with straight line vesting
between the minimum target of 50% vesting of $1,326 million and 150% vesting of $1,378
million.
Targets were set by the Board at the beginning of FY16 against the Group’s FY16 budget. The
targets excluded Legacy Way and Transurban Queensland integration costs due to Legacy
Way being in ramp-up phase and the integration of Queensland being a one-off cost. The
Group has consistently applied an approach of excluding assets in ramp-up phase when
setting the targets. Legacy Way will be included in the FY17 targets. The recently acquired
AirportLinkM7 was also excluded from both the FY16 proportional EBITDA target and outcome.
Proportional EBITDA is one of the primary measures the Board uses to assess the operating
performance of the Group. 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 Board believes proportional EBITDA
provides a better reflection of the underlying performance of the Group’s assets than statutory
EBITDA.
Definition: 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 figures used to assess performance are included in note B4 of the
audited financial statements.
Proportional
Net Costs
20%
Targets: the target for 100% vesting for FY16 was $320 million with straight line vesting
between the minimum target of 50% vesting of $333 million and 150% vesting of $307 million.
Targets were set by the Board at the beginning of FY16 against the Group’s FY16 budget. The
targets excluded Legacy Way and Transurban Queensland integration costs due to Legacy
Way being in ramp-up phase and the integration of Queensland being a one-off cost. The
recently acquired AirportLinkM7 was also excluded from both the FY16 proportional net costs
target and outcome.
Definition: Proportional Net Costs are calculated as total costs less fee and other revenues.
This measure encourages and allows management to incur additional costs where these are
justified by increased revenue results. It also reflects management’s 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.
Health, Safety
and
Environment
(‘HSE’)
10%
The HSE target was a combination of a lead indicator (an employee leadership component
through KPIs) and three lag indicators. The diagram below illustrates the performance
measures within the lag indicators. Targets were set with straight line vesting between 0% and
150%.
Targets: the targets for the lag indicators for 100% vesting for FY16 were as follows:
• Recordable Injury Frequency Rate – zero for employees and 7.65 for contractors;
• Road Injury Crash Index – 4.29 (6% reduction on FY14 outcome); and
• High Severity and Recordable Incidents close out – all high severity (actual or potential)
and recordable incidents, where Transurban has control, are reported, investigated with
lessons learned and shared across the Group. The FY16 target was zero overdue actions
within agreed timeframes and quarterly reviews completed and analysis presented to the
CEO and other senior executives.
The HSE measures focus on improving the Group’s HSE culture and reducing workplace
injuries for employees and contractors as well as customer safety.
Individual KPIs
50%
Individual KPIs related to critical business measures and are not disclosed due to the
commercially sensitive nature of these targets.
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2016 Transurban Annual Report
Remuneration report (continued)
E. Long term incentive (‘LTI’)
Description
Participation in the LTI plan is offered to the CEO and other senior executives, and a very limited
number of other employees nominated by the CEO and approved by the Board.
Grants are made in the form of performance awards at no cost to the recipient. Each performance
award is an entitlement to receive a fully paid Transurban security, or an equivalent cash payment,
on terms and conditions determined by the Board, subject to the achievement of vesting conditions.
Performance
Period
Opportunity
The three financial years commencing on 1 July in the year the grant is issued.
The CEO’s opportunity is 75% of TEC and the opportunity for all other senior executives is 56% of
TEC.
Performance
measures
Two performance measures are used to determine the number of awards that will vest at the end
of the performance period; relative Total Shareholder Return (‘TSR’) against a bespoke
comparator group, and Free Cash Flow (‘FCF’) (each with a 50% weighting).
Allocation
TSR component: An independently determined fair value allocation valuation is applied to this
component of the LTI.
FCF component: An independently determined face value allocation valuation (discounted for
distributions and/or dividends foregone throughout the performance period) is applied to this
component of the LTI.
The Board regularly considers the most appropriate measures for the Group and believe that fair
value is the correct measure for the TSR component of the LTI awards as it’s a market based
measure and the inclusion of market forces within the discounting calculation is appropriate.
Whereas the non-market based performance measure of FCF is more suited to a face value
valuation when allocating LTI awards.
Vesting
TSR component
The Group uses an independent report that sets out the Group's TSR growth and that of each
company in the bespoke comparator group. A VWAP of securities for the 20 trading days up to and
including the testing date is used to calculate TSR.
The level of TSR growth achieved by the Group is 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 is ranked at the 100th percentile). This ranking determines the extent to
which performance awards subject to this target vest.
FCF component
The Group's FCF per security percentage growth rate is calculated based on the FCF per security
over the three year performance period.
The Board determines in its absolute discretion whether the performance awards are settled in
Transurban securities or a cash payment of equivalent value. Due to legal restrictions on the issue
of securities to USA residents, the USA senior executive receives a cash payment upon vesting.
The maximum vesting following these tests is capped at 100% of awards issued.
Following testing, any awards that do not vest, lapse and any awards that vest are automatically
exercised.
Cessation of
employment
If employment ceases before the performance measures are tested, generally there is no
entitlement to unvested performance awards. Any unvested awards will lapse, unless the plan rules
provide otherwise or the Board otherwise resolves.
Clawback
Fraudulent or dishonest behaviour will result in the forfeiture or clawback of any unvested awards.
Further, at the discretion of the Board awards are subject to forfeiture or clawback where there is a
financial misstatement circumstance or the allocation of awards was made in error, on the basis of
the misrepresentation or an omission, or on the basis of facts or circumstances that were later
proven to be untrue or inaccurate.
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2016 Transurban Annual Report Remuneration report (continued)
LTI performance measures in detail
Group
Measure
Weighting
Description of measure
Relative TSR
50%
TSR 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. 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.
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 ASX 150. The 36 companies in this group for grants made
during FY16 were:
Abacus Property Group, AGL Energy Limited, Asciano Limited, APA Group, Aurizon Holdings
Limited, Aveo Group, BWP Trust, CIMIC Group Limited, Cromwell Property Group, Charter Hall
Group, Charter Hall Retail REIT, DUET Group, Dexus Property Group, Federation Centres,
Goodman Group, GPT Group, Growthpoint Properties Australia Limited, iiNet Limited, Investa
Office Fund, Lend Lease Group, M2 Group Limited, Macquarie Atlas Roads Group, Mirvac Group,
Qantas Airways Limited, Qube Holdings Limited, Scentre Group Limited, Shopping Centres
Australasia Property Group, Stockland, Spark Infrastructure Group, Spark New Zealand Limited,
AusNet Services, Sydney Airport, Transurban Group, Telstra Corporation Limited, TPG Telecom
Limited, Westfield Corporation.
The TSR component of performance awards granted during FY16, will vest on a straight line basis
in accordance with the following table:
The Group’s relative TSR ranking in the
comparator group
% of performance awards that vest
At or below the 50th percentile
Zero
Above the 50th percentile but below the
75th percentile
Straight line vesting between 50 and 100
At or above the 75th percentile
100
Growth in
FCF per
security
50%
Growth in FCF per security reflects the Group’s continued focus on the maximisation of free
cash.
The FCF calculation is included in note B10 of the audited financial statements.
The FCF per security component of performance awards granted during FY16 will vest
based on the Group’s compound annual growth targets translated into annual FCF per
security over the three year performance period, as set out below:
% annual growth in FCF per security
(FCF base of 40.2 cents per security)
Less than 8%
Between 8% and 11%
11% or more
% of performance awards that vest
Zero
Straight line vesting between 50 and 100
100
For performance awards granted during FY17, the performance target range for growth in
FCF per security is between 9% and 12% per annum. This is calculated using the FY16
distribution of 45.5 cents per security as the base.
The target reflects the Group’s focus on the maximisation of free cash to drive security holder
return. Transurban’s distribution policy has been to align distributions with FCF per security;
however, free cash coverage may vary from year to year. Owing to a range of factors, the
distribution is considered the best point of alignment with security holders’ expectation for
growth in free cash.1
1. Using FY16 reported FCF of 46.8 cents per security as the base, the performance target range for growth in FCF per security is between
7.5% and 10.5% per annum. The Group’s compound annual growth targets over the three year performance period remain the same
regardless of which base is used.
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2016 Transurban Annual Report Remuneration report (continued)
4. Group performance, security holder wealth and remuneration
A. Financial highlights for FY16
The Group’s network portfolio delivered strong EBITDA growth which was mainly caused by increased traffic
across our networks and disciplined cost control. The Group recorded proportional EBITDA excluding significant
items of $1,480 million for the financial year ended 30 June 2016, an underlying increase of 14.8% on the prior
corresponding period.
B. Overview of Group performance
The variable (or 'at risk') remuneration of the CEO and other senior executives is linked to the Group’s
performance through the use of measures based on the operating performance of the business. The graphs
below show the Group’s performance over the past five years including metrics used to determine components of
STI and LTI awards.
Financial measures
Underlying proportional EBITDA
($ millions)
Proportional Net Costs excluding
significant items ($ millions)
1,600
1,400
1,200
1,000
800
600
400
200
0
50
45
40
35
30
25
14
12
10
8
6
4
2
0
30
1,480
1,289
784
828
934
342
270
160
163
183
400
350
300
250
200
150
100
50
0
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
Free Cash per security (cents)
46.8
40.2
33.9
29.8
30.1
2012
2013
2014
2015
2016
Security price at year end ($)
11.99
9.30
6.76
7.39
5.69
Distributions paid per security
(cents)
45.5
40.0
35.0
29.5
31.0
2012
2013
2014
2015
2016
Total security holder return
performance (%)
35
32
25
15
17
50
45
40
35
30
25
20
40
30
20
10
0
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
30
2016 Transurban Annual Report Remuneration report (continued)
5. Senior executive remuneration outcomes for FY16
A. STI Outcomes for FY16
Group performance in respect of the proportional EBITDA, proportional Net Costs and HSE STI performance
measures for FY16 was assessed by the Board as 116.5% of the possible STI opportunity.
Measure
Proportional EBITDA1
Proportional net costs1
HSE
Overall Group Performance
Performance
Outcome
$1,471 million
$319 million
–
–
150.0%
104.6%
73.4%
116.5%
1. For FY16 Legacy Way and the Transurban Queensland transaction and integration costs were excluded from the Proportional EBITDA and
Proportional net costs targets and actual outcomes. Also excluded from the performance outcomes is the AirportlinkM7 which was acquired by
Transurban Queensland in April 2016.
The Group achieved the following HSE outcomes which are linked to the Group’s STI awards.
Measure
Score
Outcome %
STI Outcome %
Leadership
Recordable Injury Frequency Rate (‘RIFR’)1 – employees
Recordable Injury Frequency Rate (‘RIFR’)1 – contractors
Road Injury Crash Index (‘RICI’)2
High Severity and Recordable Incidents
3.1
1.1
7.1
4.6
30 incidents
79.0
85.3
111.0
0.0
113.3
Overall HSE Outcome
1. RIFR: recordable injuries (fatalities, lost time and medical treatment injuries) per million work hours.
47.4
6.4
8.3
0.0
11.3
73.4
2. RICI: serious road injury (requiring medical treatment or where emergency medical care is required, other than first aid) crashes per 100 million
vehicle kilometres travelled.
The individual STI performance outcomes and awards for the CEO and senior executives for FY16 are detailed in
the following table:
STI outcome (%)
STI awarded4 ($)
STI forfeited (%)
Current senior executives
Individual KPIs
S Charlton2
T Adams
J Aument1
W Ballantine2
A Head
M Huey
S Johnson
L Tobin
V Vassallo2
A Watson
140.0
110.0
120.0
140.0
93.0
120.0
110.0
93.0
150.0
93.0
Total3
150.0
119.1
129.9
150.0
100.7
129.9
119.1
100.7
150.0
100.7
2,386,950
426,550
572,313
552,750
444,750
429,500
422,900
375,400
603,000
450,700
–
–
–
–
–
–
–
–
–
–
1. Jennifer Aument is remunerated in USA Dollars. Her awarded STI has been translated to Australian Dollars using the exchange rate at 30
June 2016.
2. The maximum possible total value of the FY16 STI award is the combined value of the cash and deferred STI award and is capped at 150% of
the STI opportunity. In accordance with this cap, the STI opportunities for Scott Charlton, Wes Ballantine and Vin Vassallo have been capped
at 150% and the STI awarded as shown in the table above is in accordance with this cap. The minimum possible total value of the grant is
zero.
3. The total STI performance outcome is calculated: (Individual STI Outcome % + (Individual STI Outcome % x Group Outcome %)) ÷ 2. The
Group’s percentage outcome is 116.5%.
4. 50% is paid in cash and 50% is deferred for two years following the performance year.
31
31
2016 Transurban Annual Report Remuneration report (continued)
STI deferred securities and cash awards granted in FY16
Current senior executives
S Charlton
T Adams
J Aument
W Ballantine
A Head
M Huey1
S Johnson
L Tobin
V Vassallo
A Watson1
Balance
at start
of year
Granted
during year as
remuneration
Matured
and paid
during year
Forfeited
during
the year
Balance
at the end
of year
245,695
117,926
108,486
40,979
35,722
44,687
54,018
–
39,349
29,674
36,751
–
20,574
27,073
24,322
30,513
7,398
20,932
23,693
26,643
12,847
18,754
14,282
17,328
15,202
–
21,288
6,612
6,612
–
–
–
–
–
–
–
–
–
–
–
255,135
42,799
48,513
51,681
69,329
7,398
38,993
46,755
56,782
12,847
1. Michele Huey and Adam Watson had a zero opening balance at the beginning of FY16, as they joined the Group during FY15. Their STI
outcome for FY15 was pro-rated in accordance with their commencement dates.
B. LTI Outcomes for FY16
Eligible senior executives (excluding the CEO) received performance awards with a grant date of 17 August
2015. Following the receipt of security holder approval at the 2015 AGM, the CEO received performance awards
with a grant date of 2 November 2015. All performance awards granted in FY16 may vest subject to a
performance period from 1 July 2015 through to 30 June 2018.
The relevant values of the grants are as follows:
Recipient
Grant date
Value of awards
at grant date
Closing security price
at grant date
Eligible senior executives
17 August 2015
CEO
2 November 2015
1. Fair value in accordance with AASB 2 treatment of market conditions.
Performance awards granted in FY16
Relative
TSR1
FCF per
security
$4.52
$5.12
$8.65
$9.33
$9.77
$10.44
Current senior executives
S Charlton
T Adams
J Aument
W Ballantine
A Head
M Huey
S Johnson
L Tobin
V Vassallo
Number of performance
awards granted
Potential value of grant yet to vest1
($)
292,441
55,019
65,155
56,603
67,857
50,784
54,545
57,273
61,749
1,933,027
328,836
389,417
338,304
405,566
303,524
326,005
342,309
369,060
A Watson
1. The maximum value of the grant has been estimated based on the award valuations at grant date (a fair value approach for the TSR
component and a face value approach discounted for distributions/and or dividends for the FCF component). The minimum total value of the
grant, if the applicable performance measures are not met, is zero.
411,011
68,768
32
32
2016 Transurban Annual Report Remuneration report (continued)
Value of performance awards vested and lapsed in FY16
The FY13 LTI plan vested on 13 August 2015 (performance period 1 July 2012 to 30 June 2015).
The outcome of the performance tests were as follows:
Test type
TSR
Cash Flow
Overall vesting
Result of test
% units vest
Transurban ranked 8 out of 31 companies (76.66%)
104.2 cents adjusted to 108.3 cents
(100% vesting target was 106.5 cents)
100%
100%
100%
Senior Executive
Awards Vested
S Charlton
A Head
448,400
112,754
Value ($)1
1,848,114
427,605
1. Based on the fair value at date of grant.
Financial close of the Transurban Queensland (‘TQ’) (formerly, Queensland Motorways) acquisition occurred in
July 2015. The associated capital raising (the issue of 404.5 million new securities) occurred in May 2015. The
timing of these events (two different financial years) impacted the calculation of the FCF for FY14 and the FCF
performance calculation against the FCF targets for the three LTI plans on foot at that time (the FY12, FY13 and
FY14 plans).
Consistent with the treatment of the FY12 LTI plan, as disclosed in the FY14 Remuneration Report, the Board
exercised its discretion to ensure that participants in the FY13 LTI plan were neither advantaged nor
disadvantaged as a result of the TQ acquisition and associated capital raising. The Board exercised its
discretion to, in effect, exclude the new securities issued from the number of securities used to calculate the
FY14 FCF per security for the purposes of calculating the FCF outcome for the FY13 LTI plan. Interest income
on the equity raised prior to financial close was similarly excluded from the calculation. The targets set at the
beginning of the performance period (1 July 2012) were not adjusted.
Value of performance awards vested and lapsed in FY17
Initial vesting calculations indicate that 100% of awards on issue for the FY14 plan will vest for all remaining
participants.
6. Service agreements
The remuneration and other terms of employment for the CEO and other senior executives are formalised in
service agreements that have no specified term. Under these agreements, the CEO and other senior executives
are eligible to participate in STI and LTI plans. Some other key aspects of the agreements in place for FY16 are
outlined below:
CEO
Other senior executives
Period of notice
to terminate (executive)
Period of notice to
terminate (the Group)1
6 months
3 months
12 months
6 months
1. 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.
33
33
2016 Transurban Annual Report Remuneration report (continued)
7. Non-executive Director remuneration
A. Remuneration policy
The diagram below sets out the key objectives of the Group’s Non-executive Director remuneration policy and
how they are achieved 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 and
workload expected, the
Director’s experience and
expertise, and market
benchmark data.
Director remuneration consists of
base (Director) fees and
Committee fees. No element of
Director remuneration is 'at risk'
(i.e. fees are not based on the
performance of the Group or
individual Directors from year to
year).
Directors are encouraged to
hold Transurban securities and
the Board has recently
endorsed guidelines in respect
of Director security holdings.
B. Remuneration arrangements
The Remuneration and Human Resources Committee regularly reviews Non-executive Director remuneration
arrangements, which includes periodic benchmarking against other publicly listed entities of similar size and
complexity to Transurban.
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.
A review of Non-executive Director fees (base Director and Committee fees) was undertaken during FY16 having
regard to both the remuneration policy described above and market benchmark data. Following the review,
certain fees were increased (effective 1 January 2016) in line with market benchmarks. A review of the
aggregate fee pool was subsequently undertaken and as a result, the Board has approved that security holder
approval be sought at the 2016 AGM to increase the aggregate fee pool to $3,000,000. The increase is required
to ensure adequate headroom allowing the Board flexibility to make additional Non-executive Director
appointments, and to facilitate appropriate and coordinated Board succession planning.
Base Director and Committee fees per year are set out below:
Board Fees
Chair
Member
Committee Fees
Audit and Risk Committee
Chair
Member
Remuneration and Human Resources Committee
Chair
Member
Nomination Committee
1 July 2015 1 January 2016
505,000
170,000
48,000
25,000
35,000
20,000
10,000
550,000
185,000
50,000
25,000
40,000
20,000
10,000
The Chair of the Board does not receive any additional fees for Committee responsibilities.
The Chair of each Committee only receives the Chair fee (and not a member fee).
Non-executive Directors are permitted to be paid additional fees for special duties or exertions. No such fees
were paid during FY16. 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.
Non-executive Directors are not entitled to any retirement benefits.
34
34
2016 Transurban Annual Report Remuneration report (continued)
C. Non-executive Director related party information
All Non-executive Director related party relationships are based on normal commercial terms. None of the Non-
executive Directors were, or are, involved in any procurement or other Board decision-making regarding the
companies or firms with which they have an association.
The Group is not required to make the following disclosures but for transparency reasons notes the following
relationships and transactions:
Director
Related Party
Services provided
R Slater
Mr Slater is a partner in the public policy practice
group of Squire Patton Boggs (US) LLP.
Transurban used Squire Patton Boggs (US) LLP
during FY16 for various lobbying activities in the
USA, and incurred US$180,000 for services during
FY16.
L Maxsted
Mr Maxsted is Chairman and a Non-executive
Director of Westpac Banking Corporation.
Westpac provides a number of banking products
and services to Transurban.
N Chatfield
S Mostyn
Mr Chatfield is Chairman and a Non-executive
Director of Seek Limited.
Mr Chatfield is a Non-executive Director of Iron
Mountain Inc.
Seek provides employment advisory services to
Transurban.
Iron Mountain Inc. provides document management
services to Transurban.
Ms Mostyn is a Non-executive Director of
Citigroup Pty Ltd.
Ms Mostyn is a Non-executive Director of Virgin
Australia Holdings Limited.
Citigroup provides banking products and services
to Transurban.
Transurban uses air travel services provided by
Virgin Australia.
C O’Reilly
Ms O’Reilly is a Non-executive Director of
EnergyAustralia.
EnergyAustralia is one of Transurban’s electricity
providers in New South Wales and Queensland.
35
35
2016 Transurban Annual Report Remuneration report (continued)
8. Statutory tables
A. Senior executive remuneration
Short-term employee benefits
Cash
salary
and fees
Cash
STI3
Non-
monetary
benefits4
Deferred
STI5
Post-
employment
benefits
Superannuation
Long-
term
benefits
Long
service
leave
Share based
benefits6
Total
Equity
awards
Cash
awards
Current CEO
S Charlton
2016
2015
2,102,392
2,045,112
1,193,475
1,160,975
13,024
5,814
1,120,400
592,517
19,308
18,783
8,463
–
1,821,975
1,939,196
Current other senior executives
T Adams1
2016
2015
515,292
552,978
213,275
200,500
1,983
136,789
191,142
129,188
19,308
18,783
10,052
8,929
214,874
100,314
–
–
–
–
6,279,037
5,762,397
1,165,926
1,147,481
J Aument2
2016
2015
668,904
656,643
286,157
266,525
1,459
1,608
361,400
134,454
W Ballantine
2016
2015
530,692
491,711
640,042
622,524
474,142
208,293
510,692
458,525
537,192
522,517
529,323
541,217
648,892
368,210
A Head
2016
2015
M Huey
2016
2015
S Johnson
2016
2015
L Tobin
2016
2015
V Vassallo
2016
2015
A Watson
2016
2015
TOTAL
2016
2015
276,375
239,450
222,375
300,400
214,750
72,825
211,450
191,375
187,700
233,250
301,500
262,300
225,350
126,475
2,034
123,974
4,306
2,444
1,784
770
2,869
1,685
2,012
1,724
2,065
1,724
1,829
1,001
228,708
108,383
298,267
132,485
48,550
–
182,983
93,892
213,725
73,225
250,958
91,092
84,317
–
14,521
12,548
19,308
18,783
19,308
18,783
19,308
9,392
19,308
18,783
19,308
18,783
19,308
18,783
19,308
10,957
–
–
–
–
992,155
458,905
2,324,596
1,530,683
10,353
9,033
313,368
195,951
12,486
11,437
413,050
419,998
–
–
291,326
159,956
9,963
8,620
2,168
–
2,344
–
304,768
191,708
348,614
229,019
360,869
232,625
–
–
310,998
154,762
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,380,838
1,187,285
1,609,834
1,508,071
1,049,860
451,236
1,242,033
964,588
1,310,719
1,078,518
1,466,367
1,147,741
1,290,694
661,405
7,157,563
3,332,407
33,365
2,980,450
6,467,730
3,054,075
277,533
1,355,236
188,293
164,378
55,829
4,379,842
992,155
19,119,904
38,019
3,623,529
458,905
15,439,405
1. Amounts shown as ‘cash salary and fees’ in 2015 for Tony Adams includes $58,824 in relocation costs from the USA to Australia.
2. Jennifer Aument is remunerated in USA Dollars. The amounts shown in the table above have been converted to Australian Dollars using the
average exchange rate over the reporting period. Amounts disclosed as ‘cash salary and fees’ for FY15 includes $67,506 of annual leave
cashed out.
3. The amount represents the cash STI payment to the senior executive for FY16, which will be paid in August 2016.
4. Non-monetary benefits include Group insurance and relocation allowances (where relevant).
5. A component of STI award is deferred into securities. In accordance with accounting standards, the deferred component will be recognised
over the three year service period. The amount recognised in this table is the FY16 accounting charge for unvested grants.
6.
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 performance 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 accounting standards. The fair value of the performance awards has
been valued applying a Monte Carlo simulation (using a Black-Scholes framework) to model Transurban’s security price and where applicable,
the TSR performance against the comparator group performance.
36
36
2016 Transurban Annual Report Remuneration report (continued)
B. Number of performance awards on issue as at 30 June 2016
Balance at
start of year
Granted
during year as
remuneration
Matured and
paid during
year
Lapsed
or forfeited
during year
Balance at
the end
of year
Current senior executives
S Charlton1
T Adams
J Aument
W Ballantine
A Head
M Huey2
S Johnson
L Tobin
V Vassallo
A Watson3
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
1,254,579
988,196
64,928
–
137,229
74,494
126,309
62,630
287,601
207,521
48,888
–
123,563
62,630
147,568
79,980
149,902
79,980
69,830
–
292,441
345,135
(527,152)
(78,752)
55,019
64,928
65,155
62,735
56,603
63,679
67,857
80,080
50,784
48,888
54,545
60,933
57,273
67,588
61,749
69,922
68,768
69,830
–
–
–
–
–
–
(112,754)
–
(12,894)
–
–
–
–
–
–
–
(7,594)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,019,868
1,254,579
119,947
64,928
202,384
137,229
182,912
126,309
242,704
287,601
86,778
48,888
178,108
123,563
204,841
147,568
211,651
149,902
131,004
69,830
1. Scott Charlton’s number of performance awards granted during FY13 included 236,256 performance awards granted in September 2012 as a
sign-on award, to vest, subject to his continued employment, in three equal tranches on the first, second and third anniversaries of his
commencement with the Group. The first tranche (78,752) awards vested on 16 July 2013, the second tranche (78,752) awards vested on 16
July 2014 and the third and final tranche (78,752) awards vested on 16 July 2015.
2. Michele Huey received a pro-rated grant of performance awards in FY15 due to her commencement date of 19 January 2015. She also received
a one-off equity grant of 25,788 awards recognising the equity awards forfeited when she ceased employment with her former employer. The
one-off equity grant will vest, subject to continued employment, in two equal tranches on the first and second anniversaries of her commencement
with the Group. The first tranche (12,894) awards vested 19 January 2016.
3. Adam Watson received a pro-rated grant of performance awards in FY15 due to his commencement date of 1 December 2014. He also received
a one-off equity grant of 15,188 awards recognising the equity awards forfeited when he ceased employment with his former employer. The one-
off equity grant will vest, subject to continued employment, in two equal tranches on the first and second anniversaries of his commencement
with the Group. The first tranche (7,594) awards vested 1 December 2015.
37
37
2016 Transurban Annual Report
Remuneration report (continued)
C. Securities held by senior executives as at 30 June 2016
Current senior executives
Balance at
start of year
Changes during
year
Balance at
end of year
S Charlton
T Adams
J Aument
W Ballantine
A Head
M Huey
S Johnson
L Tobin
V Vassallo
A Watson
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
213,374
134,622
5,090
5,0901
–
–
5,794
4,685
75,661
87,760
–
–
30,099
43,763
–
–
11,557
11,048
–
–
696,979
78,752
4,278
–
–
–
(2,110)
1,109
923
(12,099)
12,894
–
17,745
(13,664)
9,576
–
7,114
509
8,307
–
910,353
213,374
9,368
5,090
–
–
3,684
5,794
76,584
75,661
12,894
–
47,844
30,099
9,576
–
18,671
11,557
8,307
–
1. Opening balance held prior to the senior executive becoming a member of KMP.
38
38
2016 Transurban Annual Report Remuneration report (continued)
D. Remuneration paid to Non-executive Directors
Short-term benefits
Current Non-executive Directors
L Maxsted
N Chatfield
R Edgar
S Mostyn
C O'Reilly
P Scott
R Slater2
Former Non-executive Directors
I Smith3
Total
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2016
2015
2016
2015
2016
2015
Fees
508,192
462,071
237,492
226,321
230,992
217,321
190,028
183,570
194,365
185,643
56,317
246,575
217,181
17,191
155,973
1,681,152
1,648,080
Post-employment benefits
Superannuation1
Total
19,308
18,783
19,308
18,783
19,308
18,783
18,053
17,439
18,465
17,636
5,144
–
–
1,270
14,817
100,856
106,241
527,500
480,854
256,800
245,104
250,300
236,104
208,081
201,009
212,830
203,279
61,461
246,575
217,181
18,461
170,790
1,782,008
1,754,321
1. Superannuation contributions made on behalf of Non-executive Directors to satisfy the Group’s obligations under applicable superannuation
guarantee legislation.
2. Rodney Slater is remunerated in USA Dollars. The amounts shown in the table above have been converted to Australian Dollars using the
average exchange rate over the reporting period.
3. Ian Smith resigned as a Non-executive Director effective 10 August 2015.
E. Securities held by Non-executive Directors as at 30 June 2016
Balance at
start of year
Changes
during year
Balance at
end of year
Current Non-executive Directors
L Maxsted
N Chatfield
R Edgar
S Mostyn
C O'Reilly
P Scott1
R Slater
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2016
2015
Former Non-executive Directors
I Smith2
2016
2015
66,559
66,559
55,424
50,424
30,324
30,324
17,256
17,256
19,332
13,972
–
–
–
94,785
92,742
3,699
–
4,304
5,000
1,685
–
959
–
1,074
5,360
20,000
3,000
–
(94,785)
2,043
70,258
66,559
59,728
55,424
32,009
30,324
18,215
17,256
20,406
19,332
20,000
3,000
–
–
94,785
1. Peter Scott acquired his securities prior to his appointment as a Non-executive Director.
2. Ian Smith resigned as a Non-executive Director effective 10 August 2015. Balance removed due to departure from the Group.
39
39
2016 Transurban Annual Report Auditor
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
Non-audit services
The Company 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 judgment or
independence.
The external auditor will only provide a permissible non-audit service where there is a compelling reason for it to
do so.
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 during the period 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 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
Other consulting services
Total remuneration for PricewaterhouseCoopers
Total auditors remuneration
Indemnification and insurance
2016
$
2015
$
2,190,000
444,300
2,634,300
–
2,634,300
2,634,300
2,293,000
173,600
2,466,600
243,915
2,710,515
2,710,515
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 Director’s and officer’s 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 42.
40
40
2016 Transurban Annual Report 41
2016 Transurban Annual Report Auditor’s Independence Declaration
As lead auditor for the audit of the Transurban Group, THT and TIL for the year ended 30 June 2016, I
declare that to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of the Transurban Group and the entities it controlled during the period,
THT and the entities it controlled during the period and TIL and the entities it controlled during the
period.
Chris Dodd
Partner
PricewaterhouseCoopers
Melbourne
9 August 2016
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
42
42
2016 Transurban Annual Report Transurban Holdings Limited ABN 86 098 143 429
Contents
Section A: Group financial statements
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Section B: Notes to the Group financial statements
Basis of
preparation and
significant
changes
B1
Corporate
information
Operating
performance
B4
Segment
information
B2
Summary of
significant
changes in the
current period
B5
Revenue
Security holder
outcomes
B9
Earnings per
stapled security
B10
Dividends/
distributions and
free cash
B3
Basis of
preparation
B6
Significant items
B7
Income tax
B8
Working capital
Capital and
borrowings
B11
Contributed equity
B12
Reserves
B13
Net finance costs
B14
Borrowings
B15
Derivatives and
financial risk
management
Network summary B16
Intangible assets
B17
Maintenance
provision
B18
Other liabilities –
concession and
promissory notes
Group structure
B19
Principles of
consolidation
B20
Material
subsidiaries
B21
Business
combinations
B22
Equity accounted
investments
B23
Non-controlling
interests – other
B24
Deed of cross and
intragroup
guarantees
Items not
recognised
B25
Contingencies
B26
Commitments
B27
Subsequent
events
Other
B28
Related party
transactions
B29
Key management
personnel
compensation
B30
Remuneration of
auditors
B31
Parent entity
disclosures
Section C: Transurban Holdings Trust (‘THT’) and Transurban International Limited (‘TIL’) financial statements
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Section D: Notes to the THT and TIL financial statements
Section E: Signed reports
Directors’ declaration
Independent auditor’s report to the stapled security holders
43
43
2016 Transurban Annual Report Section A: Group financial statements
Transurban Holdings Limited
for the year ended 30 June 2016
44
44
2016 Transurban Annual Report Transurban Holdings Limited
Consolidated statement of comprehensive income
for the year ended 30 June 2016
Revenue
Expenses
Employee benefits expense
Road operating costs
Construction costs
Transaction and integration costs
Corporate and other expenses
Total expenses
Earnings before depreciation, amortisation, net finance costs,
equity accounted investments and income taxes
Amortisation
Depreciation
Total depreciation and amortisation
Net finance costs
Share of net profits of equity accounted investments
Loss before income tax
Income tax benefit/(expense)
Profit/(loss) for the year
Profit/(loss) attributable to:
Ordinary security holders of the stapled group
- Attributable to THL
- Attributable to THT/TIL
Non-controlling interests - other
Other comprehensive income
Items that may be reclassified to profit or loss in the future
Changes in the fair value of cash flow hedges, net of tax
Share of other comprehensive income of equity accounted investments, 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:
Ordinary security holders of the stapled group
- Attributable to THL
- Attributable to THT/TIL
Non-controlling interests – other
Note
B5
B16
B13
B22
B7
B23
2016
$M
2,210
(149)
(309)
(282)
(131)
(91)
(962)
1,248
(527)
(57)
(584)
(728)
17
(47)
69
22
44
55
99
(77)
22
(79)
(11)
(12)
(102)
(80)
48
(26)
(102)
(80)
2015
$M
1,860
(130)
(243)
(185)
(429)
(91)
(1,078)
782
(513)
(38)
(551)
(611)
17
(363)
(10)
(373)
(57)
(125)
(182)
(191)
(373)
(50)
–
(10)
(60)
(433)
(81)
(176)
(176)
(433)
Earnings per security attributable to ordinary security holders of the stapled group:
Basic and diluted earnings/(loss) per stapled security
B9
Cents
Cents
5.0
(9.5)
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
45
45
2016 Transurban Annual Report 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
Maintenance provision
Distribution provision
Other provisions
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Maintenance provision
Other provisions
Derivative financial instruments
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Non-controlling interests held by security holders of the stapled group (THT/TIL)
Equity attributable to security holders of the stapled group
Non-controlling interests – other
Total equity
Transurban Holdings Limited
Consolidated balance sheet
for the year ended 30 June 2016
Note
B8
B8
B15
B22
B15
B7
B16
B8
B14
B15
B17
B10
B14
B7
B17
B15
B11
B12
B23
2016
$M
2015
$M
834
122
–
956
971
369
121
268
1,097
19,248
22,074
23,030
410
405
17
94
516
31
132
1,605
12,468
981
826
47
393
252
14,967
16,572
6,458
1,422
(66)
(3,129)
6,808
5,035
1,423
6,458
1,249
117
4
1,370
1,092
165
82
249
961
17,320
19,869
21,239
340
628
4
82
438
27
116
1,635
11,471
969
733
61
325
49
13,608
15,243
5,996
1,237
(70)
(3,034)
6,636
4,769
1,227
5,996
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
46
46
2016 Transurban Annual Report
Transurban Holdings Limited
Consolidated statement of changes in equity
for the year ended 30 June 2016
Attributable to security holders of the stapled group
No. of
securities
M
Contributed
equity
$M
Reserves
$M
Accumulated
losses
$M
Non-controlling
interests–
THT & TIL
$M
Non-
controlling
interests–other
$M
Total
$M
Total
equity
$M
Balance at 1 July 2015
1,914
1,237
(70)
(3,034)
6,636
4,769
1,227
5,996
Comprehensive income
Profit/(loss) for the year
Other comprehensive
income/(loss)
Total comprehensive
income/(loss)
Transactions with
owners in their
capacity as owners:
Contributions of equity,
net of transaction
costs1
Employee performance
awards issued2
Distributions provided
for or paid3
Distribution reinvestment
plan4
Distributions to non-
controlling interests5
–
–
–
–
–
–
107
163
1
–
14
–
122
–
–
22
–
185
–
4
4
–
–
–
–
–
–
55
99
(77)
22
(81)
(77)
(25)
(102)
(26)
22
(102)
(80)
843
1,006
356
1,362
44
–
44
–
–
2
2
(139)
(762)
(901)
–
–
(139)
115
137
–
198
–
244
–
–
–
(58)
298
2
(901)
137
(58)
542
Balance at 30 June 2016
2,036
1,422
(66)
(3,129)
6,808
5,035
1,423
6,458
1. During December 2015, the Group successfully completed the fully underwritten institutional and retail components of its renounceable 1 for 18
pro rata entitlement offer. The institutional component raised $726 million and the retail component raised $280 million at an issue price of $9.60
per security. The total proceeds from the entitlement offer (net of equity issue costs) were approximately $1,006 million and were used to fund
the Group’s equity contribution for the AirportlinkM7 acquisition which reached financial close in April 2016, with the remainder used for general
corporate purposes.
In March 2016, the non-controlling partners in Transurban Queensland (Australian Super and Tawreed) contributed $356 million as their equity
contribution for the acquisition of AirportlinkM7. The Group’s equity contribution into Transurban Queensland is eliminated upon consolidation.
2. From 2012 it is the Group’s policy that a portion of all Short Term Incentives issued to the CEO and other senior executives are deferred for a
period of 2 years. In addition to the Short Term Incentives, Stapled Securities (including units in the Trust) were issued to executives under the
Group’s Long Term Incentive share-based payment plans. These securities are held by the executive but will only vest in accordance with the
terms of the plans.
3. Refer to note B10 for further details of dividends and distributions provided for or paid.
4. Under the distribution reinvestment plan, 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.
5. Distributions were paid during the period to the non-controlling interest partners in Airport Motorway Trust (Eastern Distributor) and Transurban
Queensland Invest Trust (Transurban Queensland).
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
47
47
2016 Transurban Annual Report
Transurban Holdings Limited
Consolidated statement of changes in equity
for the year ended 30 June 2016
Transurban Holdings Limited
Consolidated statement of changes in equity
for the year ended 30 June 2016
Attributable to security holders of the stapled group
Attributable to security holders of the stapled group
No. of
No. of
securities
securities
M
M
Contributed
Contributed
equity
equity
$M
$M
Reserves
Reserves
$M
$M
Accumulated
Accumulated
losses
losses
$M
$M
Non-controlling
Non-controlling
interests–
interests–
THT & TIL
THT & TIL
$M
$M
Non-
Non-
controlling
controlling
interests–other
interests–other
$M
$M
Total
Total
$M
$M
Total
Total
equity
equity
$M
$M
Balance at 1 July 2014
Balance at 1 July 2014
1,896
1,896
1,208
1,208
(44)
(44)
(2,843)
(2,843)
7,383
7,383
5,704
5,704
258
258
5,962
5,962
Comprehensive income
Comprehensive income
Profit/(loss) for the year
Profit/(loss) for the year
–
–
–
–
–
–
(57)
(57)
(125)
(125)
(182)
(182)
(191)
(191)
(373)
(373)
–
–
(24)
(24)
–
–
(51)
(51)
(75)
(75)
15
15
(60)
(60)
–
–
(24)
(24)
(57)
(57)
(176)
(176)
(257)
(257)
(176)
(176)
(433)
(433)
Other comprehensive
income/(loss)
Other comprehensive
income/(loss)
Total comprehensive
income/(loss)
Total comprehensive
income/(loss)
Transactions with
Transactions with
owners in their
owners in their
capacity as owners:
capacity as owners:
Contributions of equity,
Contributions of equity,
net of transaction
net of transaction
costs1
costs1
Employee performance
Employee performance
awards issued2
awards issued2
Distributions provided
for or paid3
Distributions provided
for or paid3
–
–
–
–
–
–
1
1
–
–
Distribution reinvestment
Distribution reinvestment
plan4
plan4
Distributions to non-
Distributions to non-
controlling interests5
controlling interests5
Transactions with non-
Transactions with non-
controlling interests
controlling interests
17
17
29
29
–
–
–
–
18
18
–
–
–
–
29
29
–
–
–
–
–
–
–
–
(2)
(2)
–
–
–
–
–
–
–
–
(2)
(2)
–
–
–
–
–
–
–
–
1,342
1,342
1,342
1,342
1
1
(1)
(1)
–
–
(1)
(1)
(134)
(134)
(630)
(630)
(764)
(764)
–
–
(764)
(764)
–
–
–
–
–
–
114
114
143
143
–
–
143
143
–
–
–
–
(64)
(64)
(64)
(64)
(56)
(56)
(56)
(56)
(133)
(133)
(189)
(189)
(134)
(134)
(571)
(571)
(678)
(678)
1,145
1,145
467
467
Balance at 30 June 2015
Balance at 30 June 2015
1,914
1,914
1,237
1,237
(70)
(70)
(3,034)
(3,034)
6,636
6,636
4,769
4,769
1,227
1,227
5,996
5,996
1. In July 2014, the non-controlling partners in Transurban Queensland (Australian Super and Tawreed) contributed $1,331 million as their equity
1. In July 2014, the non-controlling partners in Transurban Queensland (Australian Super and Tawreed) contributed $1,331 million as their equity
contribution for the acquisition of Transurban Queensland. The Group’s equity contribution into Transurban Queensland is eliminated upon
contribution for the acquisition of Transurban Queensland. The Group’s equity contribution into Transurban Queensland is eliminated upon
consolidation. The remaining $11 million is due to an equity contribution into DRIVe from the non-controlling partner during the period.
consolidation. The remaining $11 million is due to an equity contribution into DRIVe from the non-controlling partner during the period.
2. From 2012 it is the Group’s policy that a portion of all Short Term Incentives issued to the CEO and other senior executives are deferred for a
2. From 2012 it is the Group’s policy that a portion of all Short Term Incentives issued to the CEO and other senior executives are deferred for a
period of 2 years as detailed in the Remuneration Report. In addition to the Short Term Incentives, Stapled Securities (including units in the
period of 2 years as detailed in the Remuneration Report. In addition to the Short Term Incentives, Stapled Securities (including units in the
Trust) were issued to executives under the Group’s Long Term Incentive share-based payment plans as detailed in the Remuneration Report.
Trust) were issued to executives under the Group’s Long Term Incentive share-based payment plans as detailed in the Remuneration Report.
These securities are held by the executive but will only vest in accordance with the terms of the plans.
These securities are held by the executive but will only vest in accordance with the terms of the plans.
3. Refer to note B10 for further details of distributions provided for or paid.
3. Refer to note B10 for further details of distributions provided for or paid.
4. Under the distribution reinvestment plan, holders of stapled securities may elect to have all or part of their distribution entitlements satisfied by
4. Under the distribution reinvestment plan, 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.
the issue of new stapled securities rather than by cash.
5. Distributions were paid during the period to the non-controlling interest partners in Airport Motorway Trust (Eastern Distributor) and Transurban
5. Distributions were paid during the period to the non-controlling interest partners in Airport Motorway Trust (Eastern Distributor) and Transurban
Queensland Invest Trust (Transurban Queensland).
Queensland Invest Trust (Transurban Queensland).
The above consolidated statement of changes in equity 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.
48
48
48
2016 Transurban Annual Report
Transurban Holdings Limited
Consolidated statement of cash flows
for the year ended 30 June 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments for maintenance of intangible assets
Transaction and integration costs related to acquisitions
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
Payments for equity accounted investments
Payments for intangible assets
Payments for property, plant and equipment
Distributions received from equity accounted investments
Payments for acquisition of subsidiaries, net of cash acquired
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from equity issued to non-controlling interests
Proceeds from issues of stapled securities
Proceeds from borrowings (net of costs)
Payment for acquisition of non-controlling interest
Repayment of borrowings
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
Note
(a)
B21
B10
B10
B8
2016
$M
2,055
(624)
(52)
(23)
66
31
(543)
–
910
(187)
–
(437)
(78)
127
(1,869)
(2,444)
356
1,006
3,896
–
(3,401)
(689)
(55)
1,113
(421)
1,249
6
834
(a) Reconciliation of profit/(loss) after income tax to net cash flow from operating activities
Profit/(loss) for the year
Depreciation and amortisation
Non-cash share-based payments expense
Net construction revenue
Non-cash net finance costs
Share of profits of equity accounted investments
Change in operating assets and liabilities:
Decrease in trade and other receivables
Increase in concession and promissory note liability
Increase in operating creditors and accruals
Decrease in other operating provisions
Decrease in provision for income taxes payable
Movement in deferred taxes
Increase in maintenance provision
Net cash inflow from operating activities
B22
2016
$M
22
584
3
–
87
(17)
5
21
158
25
(2)
(67)
91
910
2015
$M
1,782
(574)
(91)
(429)
46
79
(506)
(3)
304
(108)
(2)
(203)
(77)
95
(6,397)
(6,692)
1,342
–
6,562
(189)
(2,361)
(570)
(57)
4,727
(1,661)
2,879
31
1,249
2015
$M
(373)
551
7
(5)
52
(17)
1
(10)
52
(1)
3
16
28
304
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
49
49
2016 Transurban Annual Report
Section B: Notes to the Group financial statements
Transurban Holdings Limited
for the year ended 30 June 2016
for the year ended 30 J
50
50
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Basis of preparation and significant changes
B1 Corporate information
Transurban Holdings Limited (‘the company’, ‘the parent’ or ‘THL’) is a company incorporated in Australia and
limited by shares that are publicly traded on the Australian Securities Exchange. These financial statements have
been prepared as a consolidation of the financial statements of Transurban Holdings Limited and its controlled
entities (‘Transurban Group’ or ‘the Group’). The controlled entities of THL include the other members of the
stapled group being Transurban International Limited and its controlled entities (‘TIL’) and Transurban Holding
Trust and its controlled entities (‘THT’). The equity securities THL, THT and TIL are stapled and cannot be traded
separately. Entities within the Group are domiciled and incorporated in Australia and the United States of
America.
The consolidated financial statements of Transurban Group for the year ended 30 June 2016 were authorised for
issue in accordance with a resolution of the Directors on 9 August 2016. Directors have the power to amend and
reissue the financial report.
B2 Summary of significant changes in the current reporting period
The financial position and performance of the Group was particularly affected by the following events and
transactions during the reporting period:
Equity issuance
During December 2015, the Group successfully completed the fully underwritten institutional and retail
components of its renounceable 1 for 18 pro rata entitlement offer. The institutional component raised $726
million and the retail component raised $280 million at an issue price of $9.60 per security. The total proceeds
from the entitlement offer were $1,006 million and were used to fund the Group’s equity contribution to the
Transurban Queensland acquisition of AirportlinkM7 which reached financial close in April 2016, with the
remainder used for general corporate purposes.
Transurban Queensland acquisition of AirportlinkM7
On 1 April 2016, Transurban Queensland, in which Transurban has a 62.5 per cent interest, acquired
AirportlinkM7 for $1,870 million, plus stamp duty of $108 million and transaction costs of $10 million. The details
of the assets and liabilities acquired on 1 April 2016 have been detailed in note B21 and are reflected in the
operating results and financial position of the Group from 1 April 2016.
B3 Basis of preparation
The Group financial statements are general purpose financial statements which:
Have been prepared in accordance with the Corporations Act 2001, Australian accounting standards,
and other authoritative pronouncements of the Australian Accounting Standards Board;
Have adopted all accounting policies in accordance with Australian accounting standards, and where a
standard permits a choice in accounting policy, the policy adopted by the Group has been disclosed in
these financial statements;
Have applied the option under ASIC Corporations (Stapled Group Reports) Instrument 2015/838 to
present the consolidated financial statements in one section (Section A), and all other reporting group
members in a separate section (Section C).
Do not early adopt any accounting standards or interpretations that have been issued or amended but
are not yet effective;
Comply with International financial reporting standards (‘IFRS’) as issued by the International Accounting
Standards Board (‘IASB’);
Have been prepared under the historical cost convention, as modified by the revaluation of other
financial assets and liabilities (including derivative financial instruments);
Are presented in Australian dollars, which is THL’s functional and presentation currency.
Have been rounded to the nearest million dollars, unless otherwise stated, in accordance with ASIC
Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191; and
The presentation of comparative amounts have been restated, where applicable, to conform to the
current period presentation.
51
51
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B3 Basis of preparation (continued)
Going concern
The financial report has been prepared on a going concern basis, which assumes the continuity of normal
operations. This is based on the following:
The Group has generated positive cash inflows from operating activities of $910 million (2015: $304
million), after payment of $23 million (2015: $429 million) in transaction and integration costs relating to
acquisitions;
The Group has available a total of $527 million of undrawn borrowing facilities with maturities beyond 12
months across a number of finance providers. The Group has a further $349 million of undrawn
borrowing facilities, the majority of which are expected to be refinanced within the next 12 months.
Foreign currency translation
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 profit or loss, 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
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.
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 are translated at the closing rate at the reporting date;
income and expenses 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 other
comprehensive income.
New and amended standards
The Group has not changed or amended any accounting policies as a result of new or revised accounting
standards during the annual reporting period commencing 1 July 2015. There were no new or amended
accounting standards issued during the annual reporting period that are effective for the report period
commencing 1 July 2015.
52
52
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B3 Basis of preparation (continued)
Accounting standards and interpretations issued but not yet effective
Certain new accounting standards and interpretations have been published but are not mandatory for 30 June
2016 reporting periods. The Group's assessment of the impact of these new standards and interpretations is set
out below.
Reference
Description
Impact on the Group
AASB 9
Financial
instruments
AASB 9 addresses the
classification, measurement and
derecognition of financial assets
and financial liabilities.
It also includes an expected loss
impairment model and a reformed
approach to hedge accounting.
AASB 15
Revenue from
contracts with
customers
AASB 16
Leases
AASB 15 establishes principles for
reporting useful information to
users of financial statements
about the nature, amount, timing
and uncertainty of revenue and
cash flows arising from an entity’s
contracts with customers. AASB
15 supersedes a number of
current revenue standards.
AASB 16 modifies accounting for
leases by removing the current
distinction between operating and
financing leases. The standard
requires recognition of an asset
and a financial liability for all
leases, with exemptions for short
term and low value leases.
AASB 2015-1
These amendments clarify various
Australian accounting standards.
AASB 2015-2
These amendments are designed
to further encourage companies to
apply professional judgment in
determining what information to
disclose in the financial
statements.
Management has
undertaken an
assessment of the
impact of this standard
on the Group’s financial
statements and does
not believe that the
impact will be significant
to the accounting for the
Group’s financial assets
and liabilities.
Management has
undertaken an
assessment of the
impact of this standard
and does not believe
that the impact will be
material.
Management has
undertaken an
assessment of the
impact of this standard
on the Group’s financial
statements and does
not believe that the
impact will be significant
to the accounting of
leases in the Group
financial statements.
The impact of the
application of this
standard will not be
material to the Group.
The impact of the
application of this
standard will not be
material to the Group.
Application
of the
standard
1 January
2018
Application
by the Group
1 July 2018
1 January
2018
1 July 2018
1 January
2019
1 July 2019
1 January
2016
1 July 2016
1 January
2016
1 July 2016
53
53
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B3 Basis of preparation (continued)
Accounting standards and interpretations issued but not yet effective (continued)
Reference
Description
Impact on the Group
AASB 2016-1
AASB 2016-2
Amendment to AASB 112 clarifies
the accounting for deferred tax
where an asset is measured at fair
value and that fair value is below
the asset’s tax base. They do not
change the underlying principles
for the recognition of deferred tax
assets.
Amendment to AASB 107
introduces additional disclosures
that will enable users of financial
statements to evaluate changes in
liabilities arising from financing
activities.
The Group for tax
purposes records all
assets at cost and does
not revalue assets to
fair value. Therefore the
impact of the application
of the new standard is
not expected to be
material.
Although a formal
assessment has not
been completed the
impact of the application
of the new standard will
be additional disclosure
in the Group financial
statements about the
financial liabilities held
by the Group.
Application
of the
standard
1 January
2017
Application
by the Group
1 July 2017
1 January
2017
1 July 2017
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated by management 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 estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities are found in the following notes:
Income taxes
Fair value of derivatives and other financial instruments
Note B7
Note B15
Estimated impairment of intangible assets and cash generating units Note B16
Provision for maintenance expenditure
Valuation of promissory notes and concession notes
Note B17
Note B18
54
54
2016 Transurban Annual Report 55
2016 Transurban Annual ReportTransurban Holdings LimitedNotes to the consolidated financial statementsfor the year ended 30 June 201655Operating performanceB4Segment information In the segment information provided to the Executive Committee (chief operating decision maker), segments are defined by the geographical networks in which the Group operates being Victoria (‘VIC’), New South Wales (‘NSW’), Queensland (‘QLD’) and the Greater Washington Area(‘GWA’). 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. The Executive Committee assess the performance of the networks based on a measure of proportional earnings before interest, tax, depreciation and amortisation expenses (‘Proportional EBITDA’) excluding the impact of significant items (‘Underlying proportional EBITDA’). This reflects the contribution of each network in the Group in the proportion of Transurban's equity ownership. Interest income and expenses are allocated to the networks where the amounts are related specifically to the assets. Otherwise they are allocated to the Corporate function. Significant items are those items where their nature and amount is considered material to the financial statements and not in the ordinary course of business. Refer to note B6 for further details. The diagram below shows the assets included in each geographical network, together with the ownership interests held by the Group for the current financial year:1.Following theacquisition of the non-controlling interest in the GWAassets on 29 June 2015, the proportional ownership of the GWAassets is reported at 100% from July 2015. Prior to this, the proportional ownership interest in the 95 Express Lanes and 495 Express Lanes were 77.5% and 94.0% respectively.2.AirportlinkM7 was acquired on 1 April 2016 (refer note B21).3.Westlink M7 and NorthConnexform the NorthWestern Roads Group. Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B4 Segment information (continued)
Segment information – proportional income statement
2016
$M
Toll revenue
Other revenue
Total proportional revenue
Underlying proportional EBITDA
Significant items
Proportional EBITDA
2015
$M
Toll revenue1
Other revenue
Total proportional revenue
Underlying proportional EBITDA2
Significant items
Proportional EBITDA
NSW
QLD
GWA
Corporate
and other
VIC
660
21
681
564
–
564
799
28
827
637
–
637
VIC
NSW
615
20
635
523
–
523
701
32
733
558
–
558
313
7
320
218
(82)
136
QLD
265
3
268
185
(262)
(77)
174
–
174
86
–
86
–
4
4
(25)
–
(25)
GWA
Corporate
and other
75
6
81
33
–
33
–
9
9
(10)
(10)
(20)
Total
1,946
60
2,006
1,480
(82)
1,398
Total
1,656
70
1,726
1,289
(272)
1,017
1. The presentation of comparative amounts has been restated to reflect the change of toll revenue to now include toll revenue and service and
fee revenue.
2. The presentation of comparative amounts has been restated to conform with the current period presentation of technology license fees, which
were previously presented in Corporate.
Reconciliation of segment information to statutory financial information
The proportional results presented above are different from the statutory financial results of the Group due to the
proportional presentation of each asset’s contribution to each geographical network.
Segment revenue
Revenue from external customers is through toll and fee revenues earned on toll roads. There are no material
inter-segment revenues. Segment revenue reconciles to total statutory revenue as follows:
Note
B5
Total segment revenue (proportional)
Add:
Revenue attributable to non-100% owned consolidated assets
Construction revenue from road development activities
Less:
Revenue of non-100% owned equity accounted assets
Total statutory revenue
Proportional EBITDA
Proportional EBITDA reconciles to profit/(loss) before income tax as follows:
Proportional EBITDA
Add: EBITDA attributable to non-100% owned consolidated assets
Less: Proportional EBITDA of non-100% owned equity accounted assets
Statutory profit before depreciation, amortisation, net finance costs, equity
accounted investments and income taxes
Statutory net finance costs
Statutory depreciation and amortisation
Share of net profit from equity accounted investments
(Loss)/profit before income tax
56
56
2016
$M
2,006
224
282
(302)
2,210
2016
$M
1,398
106
(256)
1,248
(728)
(584)
17
(47)
2015
$M
1,726
200
185
(251)
1,860
2015
$M
1,017
(21)
(214)
782
(611)
(551)
17
(363)
2016 Transurban Annual Report B5 Revenue
Toll revenue1
Construction revenue
Other revenue
Total revenue
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
2016
$M
1,870
282
58
2,210
2015
$M
1,611
190
59
1,860
1. The presentation of comparative amounts has been restated to reflect the change of toll revenue to now include toll revenue and service and
fee revenue.
Accounting policy
The Group generates the following types of revenue:
Revenue type
Recognition
Toll revenue
Recognised when the charge is incurred by the user and the amount is determined to be
recoverable by the Group.
Construction revenue Revenue for the construction of service concession infrastructure assets is recognised in
accordance with the percentage of completion method, which is measured by reference to
costs incurred to date as a percentage of total forecast costs for each project.
Other revenue
Includes management fee revenue, business development revenue and other road
revenue, and is recognised to the extent that incurred costs will be recovered.
B6 Significant items
Significant items are those items where their nature and amount is considered material to the financial statements
and not in the ordinary course of business. Such items which have been included in transaction and integration
costs within the Group's result for the year and are detailed below:
2016
2015
Statutory
$M
Proportional
$M
Statutory
$M
Proportional
$M
(a)
(a)
(b)
(a)
Stamp duty on acquisitions
Other transaction fees on acquisitions
Integration costs relating to acquisitions
Significant items included within EBITDA
Significant items included within net finance costs
Total significant items
Income tax benefit associated with transaction and
integration costs of acquisitions
Net significant items
(a) Stamp duty and other transaction fees
108
10
13
131
5
136
(10)
126
67
6
9
82
3
85
(6)
79
384
23
22
429
–
429
(11)
418
240
18
14
272
–
272
(7)
265
The Transurban Queensland consortium acquisition of AirportlinkM7 was completed on 1 April 2016. The
consortium incurred stamp duty and other transaction costs during the year ended 30 June 2016 as a result of the
acquisition. The stamp duty is payable in the year ended 30 June 2017. Significant items included within finance
costs relate to premiums paid on interest rate swap option contracts entered into as part of the Airportlink M7
acquisition that were not exercised.
The acquisition of Queensland Motorways Group (Transurban Queensland) by a Transurban-led consortium was
completed on 2 July 2014. The consortium incurred stamp duty and other transaction costs during the year ended
30 June 2015 as a result of the acquisition.
(b) Integration costs relating to Transurban Queensland and AirportlinkM7
Since acquisition, the Group has incurred costs to integrate Transurban Queensland and AirportlinkM7 into
Transurban. These costs include employee costs, consulting and legal fees.
57
57
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B7
Income tax
Income tax expense/(benefit)
Current tax
Deferred tax
Under provision in prior years
Deferred income tax expense/(benefit) included in income tax expense/(benefit) comprises:
(Increase) in deferred tax assets
Decrease in deferred tax liabilities
Reconciliation of income tax expense/(benefit) to prima facie tax payable
(Loss)/profit before income tax expense/(benefit)
Tax at the Australian tax rate of 30.0% (2015: 30.0%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Trust income not subject to tax
Trust losses not claimable
Equity accounted results
Tax rate differential
Non-deductible interest
Non-deductible stamp duty
Prior year tax losses recognised
Deferred tax balance derecognised on disposal
Sundry items
Under/(over) provision in prior years
Income tax expense/(benefit)
Tax expense/(income) relating to items of other comprehensive income
Cash flow hedges
Deferred tax assets and liabilities
2016
$M
(70)
(24)
25
(69)
(68)
44
(24)
2016
$M
(47)
(14)
(52)
–
13
(9)
21
–
(56)
–
3
25
(69)
(56)
(56)
2015
$M
(24)
23
11
10
(62)
85
23
2015
$M
(363)
(109)
–
35
13
13
13
25
–
8
1
11
10
(6)
(6)
The balance comprises temporary differences attributable to:
Provisions
Current and prior year losses
Fixed assets/intangibles
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 to the statement of comprehensive income
Credited/(charged) to equity
Acquired
Foreign exchange movements
Transfer from deferred tax assets/liabilities
Other
Closing balance at 30 June
Deferred tax assets/(liabilities) to be recovered after more than 12 months
58
58
Assets
2016
$M
310
845
693
–
152
4
2,004
(907)
1,097
1,881
68
67
4
8
(65)
41
2,004
2,004
2015
$M
258
729
773
–
108
13
1,881
(920)
961
900
62
(36)
873
15
72
(5)
1,881
1,881
Liabilities
2016
$M
2015
$M
–
–
(1,423)
(369)
(96)
–
(1,888)
907
(981)
(1,889)
(44)
(15)
–
(6)
65
1
(1,888)
(1,888)
–
–
(1,434)
(368)
(87)
–
(1,889)
920
(969)
(1,500)
(85)
48
(264)
(12)
(72)
(4)
(1,889)
(1,889)
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B7
Income tax (continued)
Accounting policy
The income tax expense/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 expense 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 Company 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.
The Transurban stapled group comprises two corporate entities (THL and TIL) and a trust (THT). THT operates
as a flow-through trust, and is not liable to pay tax itself. Instead, security holders pay tax on the distributions they
receive from the trust at their individual marginal tax rates. The Group is structured in this way because the initial
heavy capital investment and associated debt funding required for infrastructure investments results in accounting
losses being generated in the initial years which would otherwise prevent a company from paying dividends. The
trust enables distributions to be made to security holders throughout the life of the asset.
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,
deferred income tax is not accounted for if it arises from the 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 assets and liabilities 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 profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity.
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.
Tax consolidation legislation
The Transurban Group has adopted the Australian tax consolidation legislation for THL and its wholly-owned
Australian entities from 1 July 2005.
All entities within the Australian tax consolidated groups 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.
59
59
2016 Transurban Annual Report 60
2016 Transurban Annual ReportTransurban Holdings LimitedNotes to the consolidated financial statementsfor the year ended 30 June 201660B7Income tax (continued)Tax consolidation legislation (continued) The tax consolidated groups within the Group are summarised as follows:1.Entity is classified as a partnership for tax purposes.2.There are no tax groups under THT.THL tax consolidated groupThe entities in the THL tax consolidated group entered into a tax sharing agreement (‘TSA’) effective from 29 April 2009.The entities in the THL 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 is calculated at the end of the financial year for each wholly-owned entity. THL determinesand communicates the amount payable/receivable to each wholly-owned entity along with the method of calculation and any other information deemed necessary.Transurban Queensland tax consolidated groupThe entities in the Transurban Queensland Holdings 1 Pty Ltd (‘TQH1’) tax consolidated group entered into a TSA effective from 2 July 2014. The entities in the TQH1 tax consolidated group have also entered into a TFA effective from 2 July 2014. APL HoldCo Pty Ltd (‘AirportlinkM7’)and its controlledentities entered the Transurban Queensland tax consolidated group effective from 23 November 2015.Under the TFA the wholly-owned entities fully compensate TQH1 for any current tax payable assumed and are compensated by TQH1 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 is calculated at theend of the financial year for each wholly-owned entity. TQH1 determines and communicates the amount payable / receivable to each wholly-owned entity along with the method of calculation and any other information deemed necessary. Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B7
Income tax (continued)
Transurban DRIVe tax consolidated group
Transurban DRIVe Holdings LLC (‘TDH’) is the head company of the DRIVe tax consolidated group. The DRIVe
tax consolidated group is consolidated for US tax purposes in the sense that the 100% subsidiaries of TDH have
elected to be treated as disregarded entities for US tax purposes. This treatment means that those entities are
ignored for US tax purposes and that TDH, as head entity, carries any tax liability or benefits arising in the group.
The DRIVe tax consolidated group currently owns partnership interests in both 495 Express Lanes and 95
Express Lanes and includes its share of each asset’s profits or losses in its US tax return.
The acquisition of the non-controlling interest on 29 June 2015 had no impact on the composition of the
Transurban DRIVe tax consolidated group.
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.
Key estimate
The Group is subject to income taxes in Australia and the 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 recognised deferred tax assets in
relation to tax losses.
61
61
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B8 Working capital
The Group’s working capital balances are summarised as follows:
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Prepayments
Current liabilities
Trade payables and accruals
Legacy Way consideration payable
Stamp duty payable on AirportlinkM7 acquisition
Net working capital
Cash and cash equivalents
2016
$M
834
76
35
11
122
956
(302)
–
(108)
(410)
546
2015
$M
1,249
61
45
11
117
1,366
(222)
(118)
–
(340)
1,026
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. All cash balances are interest bearing.
The amount shown in cash and cash equivalents includes $376 million not available for general use at 30 June
2016 (2015: $202 million) of which $209 million (2015: $140 million) belongs to TIL. This comprises amounts
required to be held under maintenance and funding reserves and prepaid tolls, which are not available for general
use.
Trade and other 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. 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 unrecoverable
are written off by reducing the carrying amount of trade debtors directly. An allowance for impairment is used
when there is 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 allowance for impairment is the difference between the carrying amount and
the amount expected to be recoverable. The additional amount of the allowance for doubtful debtors is recognised
in profit or loss.
As at 30 June 2016, the Group held an allowance for doubtful debtors of $2 million (2015: $7 million), recognised
for current trade receivables that were considered potentially unrecoverable. As at 30 June 2016, trade
receivables of $20 million (2015: $19 million) were overdue but the Group still believe that these overdue amounts
will be received in full. The other classes within trade and other receivables do not contain amounts that are
considered to be potentially unrecoverable.
The carrying amount of trade and other receivables approximates their fair value.
62
62
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Security holder outcomes
B9 Earnings per stapled security
Reconciliation of earnings used in calculating earnings per security
Profit/(loss) attributable to ordinary security holders of the stapled group ($M)
Weighted average number of securities (M)
Basic and diluted earnings per security attributable to the ordinary security holders
of the stapled group (Cents)
2016
99
1,982
5.0
2015
(182)
1,908
(9.5)
B10 Dividends/distributions and free cash
Dividends/distributions paid by the Group
2015
Declared 23 May 2014
Franked THL
Franked THT
Unfranked THT
Declared 3 December 20141
Franked THL
Unfranked THT
Total paid FY15
2016
Declared 15 May 20151
Franked THL
Unfranked THT
Declared 24 November 20152
Franked THL
Unfranked THT
Total paid FY16
Dividends/distributions payable by the Group
Declared 24 May 20162
Franked THL
Unfranked THT
1. Total declared FY15 is $764 million.
2. Total declared FY16 is $901 million.
Total
$M
Paid in
cash
$M
Settled in
securities
$M
Cents
Date paid/
payable
19
47
274
340
68
305
373
713
66
326
392
68
366
434
826
71
396
467
3
39
227
269
42
259
301
570
55
269
324
57
308
365
689
–
–
–
16
8
47
71
26
46
72
143
11
57
68
11
58
69
137
–
–
–
1.0
2.5
14.5
18.0
3.5
16.0
19.5
37.5
3.5
17.0
20.5
3.5
19.0
22.5
43.0
3.5
19.5
23.0
14 August 2014
13 February 2015
14 August 2015
12 February 2016
12 August 2016
63
63
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B10 Dividends/distributions and free cash (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
Add back transaction and integration costs related to acquisitions (non 100% owned entities)
Add back payments for maintenance of intangible assets
Less cash flow from operating activities from consolidated non 100% owned entities
Less allowance for maintenance of intangible assets for 100% owned assets
Adjust for distributions and interest received from non 100% owned entities
M1 Eastern Distributor distribution
M5 distribution and term loan note interest
Transurban Queensland distribution and shareholder loan note interest
NWRG distribution and M7 term loan note interest
Free cash
Weighted average securities on issue (millions)1
Free cash per security (cents) – weighted average securities
1. The weighting applied to securities is based on their eligibility for distributions during the year.
Franking credits
Franking credits available for subsequent periods based on a tax rate of 30.0% (2015: 30.0%)
2016
$M
910
23
52
(284)
(60)
44
39
108
94
926
1,978
46.8
2016
$M
193
2015
$M
304
419
91
(338)
(11)
31
67
118
87
768
1,910
40.2
2015
$M
246
Distribution provision
A provision for distribution is recognised for any distribution declared and authorised on or before the end of the
reporting period, but not distributed by the end of the reporting period. These distributions are provided for once
they are approved by the board, are announced to equity holders and are no longer at the discretion of the entity.
Movements in distribution provision
Movements in the distribution provision during the financial year are set out below:
Balance at 1 July 2014
Additional provision recognised
Amounts paid
Amounts reinvested
Balance at 30 June 2015
Additional provision recognised
Amounts paid
Amounts reinvested
Balance at 30 June 2016
Distribution to
security holders
$M
Distributions to
non-controlling
interest – other
$M
340
764
(570)
(143)
391
901
(689)
(137)
466
40
64
(57)
–
47
58
(55)
–
50
Total
$M
380
828
(627)
(143)
438
959
(744)
(137)
516
64
64
2016 Transurban Annual Report Capital and borrowings
B11 Contributed equity
Fully paid stapled securities
Stapled securities
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
2016
$M
1,422
1,422
2015
$M
1,237
1,237
Stapled securities are classified as equity and entitle the holder to participate in distributions and on winding up of
the Group in proportion to the number of securities held. Every holder of a stapled security present at a meeting,
in person or by proxy, is entitled to one vote. The issued units of the Group are made up of a parcel of stapled
securities, each parcel comprising one share in THL, one unit in THT and one share in TIL. The individual
securities comprising a parcel of stapled securities cannot be traded separately.
Other contributed equity attributable to security holders of the Group relating to THT and TIL of $10,822 million is
included within non-controlling interests – THT / TIL.
B12 Reserves
Balance 1 July 2014
Revaluation – gross
Deferred tax
Currency translation differences
Transfers to profit or loss
Balance 30 June 2015
Revaluation – gross
Deferred tax
Share of other comprehensive
income of equity accounted
investments, net of tax
Balance 30 June 2016
Cash flow
hedges
$M
(55)
(43)
6
–
(2)
(94)
18
(2)
Share-based
payments
$M
2
(2)
–
–
–
–
–
–
Foreign
currency
translation
$M
8
–
–
15
–
23
(1)
–
Transactions
with non-
controlling
interests
$M
1
–
–
–
–
1
–
–
(11)
(89)
–
–
–
22
–
1
Total
$M
(44)
(45)
6
15
(2)
(70)
17
(2)
(11)
(66)
Nature of reserves
Purpose of reserves
Cash flow hedges
Used to record gains or losses on cash flow hedging instruments, which are used by the
Group to mitigate the risk of movements in exchange rates and interest rates. Amounts
are reclassified to profit or loss when the transaction to which the hedge is linked (such
as the payment of interest) affects profit or loss.
Share-based payments
Used to recognise the fair value of long-term incentives issued but not exercised.
Foreign currency
translation
Exchange differences arising on translation of the US operations of the Group are
recognised in this reserve.
Transactions with
non-controlling interests
The Group uses the economic entity approach when accounting for transactions with
non-controlling interests.
65
65
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B13 Net finance costs
Finance income
Interest income on held-to-maturity investments
Interest income on bank deposits
Unwind of discount on liabilities – promissory and concession notes
Total finance income
Finance costs
Interest and finance charges paid/payable
Unwind of discount on liabilities – promissory and concession notes
Unwind of discount on liabilities – other liabilities
Unwind of discount on liabilities – maintenance provision
Net foreign exchange losses
Total finance costs
Net finance costs
2016
$M
23
23
–
46
(698)
(19)
(11)
(41)
(5)
(774)
(728)
2015
$M
41
14
13
68
(625)
–
–
(43)
(11)
(679)
(611)
An additional $2 million (2015: $10 million) of financing costs have been capitalised and included in the carrying
value of assets under construction.
B14 Borrowings
Current
Capital markets debt
U.S. private placement
Term debt
Total current borrowings
Non-current
Working capital facilities
Capital markets debt
U.S. private placement
Term debt
Syndicated facilities
TIFIA
Shareholder loan notes
Total non-current borrowings
Total borrowings
Accounting policy
2016
$M
–
129
276
405
60
5,308
2,078
3,535
–
1,167
320
12,468
2015
$M
500
128
–
628
530
4,226
1,239
3,883
245
1,067
281
11,471
12,873
12,099
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 profit or loss 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 profit or loss 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.
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 capitalised and amortised over the effective
period of the funding.
66
66
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B14 Borrowings (continued)
Financing arrangements and credit facilities
Credit facilities are provided as part of the overall debt funding structure of the Group. The drawn component of
each facility is shown below:
Corporate debt
Working capital facilities drawn
AUD 125m facility
AUD 125m facility
AUD 100m facility
AUD 100m facility
AUD 125m facility
AUD 100m facility
Net capitalised borrowing costs
Capital markets debt
Domestic wrapped bond AUD 300m
Domestic unwrapped bond AUD 200m
Domestic wrapped bond AUD 300m
EMTN CAD 250m
EMTN EUR 500m
EMTN EUR 600m
EMTN EUR 500m
US 144A USD 550m
Net capitalised borrowing costs
Syndicated facilities
Syndicated debt USD 93m1
Syndicated debt AUD 125m1
U.S. private placement
Aug 2005 – Tranche A USD 98m
Nov 2006 – Tranche A USD 43m (plus accreted interest)
Dec 2004 – Tranche B USD 39m
Aug 2005 – Tranche B USD 126m
Nov 2006 – Tranche B USD 136m (plus accreted interest)
Dec 2004 – Tranche C USD 109m
Dec 2004 – Tranche D AUD 72m
Aug 2005 – Tranche C USD 157m
Nov 2006 – Tranche C USD 121m (plus accreted interest)
Nov 2006 – Tranche D USD 50m (plus accreted interest)
Net capitalised borrowing costs
Maturity
Carrying value
2016
$M
2015
$M
Aug 2016
Aug 2016
Dec 2016
Apr 2017
Jun 2017
Jun 2018
Nov 2015
Jun 2016
Nov 2017
Mar 2019
Oct 2020
Sep 2024
Aug 2025
Feb 2026
May 2017
Aug 2017
Aug 2015
Nov 2016
Dec 2016
Aug 2017
Nov 2018
Dec 2019
Dec 2019
Aug 2020
Nov 2021
Nov 2026
–
–
–
–
–
62
(2)
–
–
300
260
746
896
746
741
(27)
–
–
–
77
52
169
244
146
72
211
218
91
(1)
124
88
94
91
118
–
(2)
300
200
300
262
728
874
728
–
(23)
120
125
128
74
51
164
236
141
72
204
211
88
(2)
Total corporate debt, net of capitalised borrowing costs
5,001
5,494
1. These facilities were repaid during FY16.
67
67
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B14 Borrowings (continued)
Financing arrangements and credit facilities (continued)
Non-recourse debt
Working capital facilities drawn
Transurban Queensland Finance – facility AUD 25m
Capital markets debt
Airport Motorway Trust – Domestic bond AUD 300m
Transurban Queensland Finance – Domestic bond AUD 250m
Transurban Queensland Finance – EMTN CHF 200m
Transurban Queensland Finance – Domestic bond AUD 200m
95 Express Lanes – Private activity bonds USD 72m
95 Express Lanes – Private activity bonds USD 170m
495 Express Lanes – Private activity bonds USD 225m
Net capitalised borrowing costs
U.S. private placement
Transurban Queensland Finance – Sep 2015 – Tranche A USD 155m
Transurban Queensland Finance – Sep 2015 – Tranche B USD 230m
Transurban Queensland Finance – Sep 2015 – Tranche C USD 256m
Transurban Queensland Finance – Sep 2015 – Tranche D AUD 70m
Net capitalised borrowing costs
Term debt
Transurban Queensland Finance – Bridge facility AUD 350m3
Clem7 – Term debt AUD 270m3
Lane Cove Tunnel Trust – Term debt AUD 260m2
Cross City Tunnel Trust – Term debt AUD 277m
Transurban Queensland Finance – Capex facility AUD 158m
Transurban Queensland Finance – Term debt AUD 420m4
Hills Motorway Trust – Term debt AUD 405m
Airport Motorway Trust – Term debt AUD 225m
TQ APL Finance – Term debt AUD 475m
Transurban Queensland Finance – Term debt AUD 750m
Hills Motorway Trust – Term debt AUD 350m
Lane Cove Tunnel Trust – Term debt AUD 160m
TQ APL Finance – Term debt AUD 475m
Lane Cove Tunnel Trust – Term debt AUD 60m
Lane Cove Tunnel Trust – Term debt AUD 40m
Transurban Queensland Finance – Term debt AUD 200m
Lane Cove Tunnel Trust – Term debt AUD 40m
Net capitalised borrowing costs
TIFIA loans
495 Express Lanes – Facility limit USD 589m (plus accreted interest)
95 Express Lanes – Facility limit USD 300m (plus accreted interest)
Shareholder loan notes
Loan from Transurban Queensland consortium partners – AUD 281m
Loan from Transurban Queensland consortium partners – AUD 38m
Maturity
Carrying value
2016
$M
2015
$M
Jul 2017
Dec 2020
Dec 2021
Jun 2023
Dec 2024
Jul 20345
Jan 20405
Dec 2047
Sep 2025
Sep 2027
Sep 2030
Sep 2030
Sep 2015
Sep 2015
Aug 2016
Jun 2017
Jul 2017
Jul 2017
Mar 2018
Jul 2018
Apr 2019
Jul 2019
Mar 2020
May 2021
Apr 2021
May 2025
May 2028
Apr 2030
May 2031
Oct 20475
Jan 20485
Jun 2048
Jul 2053
–
300
250
275
200
97
229
303
(8)
209
310
345
70
(5)
–
–
–
277
–
420
405
225
475
750
350
120
475
60
40
200
40
(26)
843
324
281
38
17
300
250
–
200
93
222
293
(1)
–
–
–
–
–
350
270
260
277
74
750
405
225
–
750
350
–
–
–
–
200
–
(28)
768
299
281
–
Total non-recourse debt, net of capitalised borrowing costs
Total debt
7,872
12,873
6,605
12,099
2. This facility was refinanced during FY16.
3. These facilities were repaid during FY16.
4. This facility was reduced from $750m during FY16.
5. This represents the final maturity.
68
68
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B14 Borrowings (continued)
Working capital facilities
The corporate facilities are secured by first ranking charges over the cash flows of the Group;
The Transurban Queensland Finance facilities are secured against the respective rights of Transurban
Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited, Transurban
Queensland Invest Trust and their assets; and
The AirportlinkM7 facility is fully secured against the respective rights of APL Hold Co Pty Limited, APL
Co Pty Limited, TQ APL Hold Trust, TQ APL Asset Trust and their assets. At 30 June 2016 the facility
was undrawn.
Capital markets debt
The corporate domestic bonds are secured by first ranking charges over the cash flows of the Group;
A corporate secured EMTN program was established in October 2011 with a program limit of USD $2
billion, which increased to USD $5 billion in May 2015. Under the program the Group may from time to
time issue notes denominated in any currency. These facilities are secured by first ranking charges over
the cash flows of the Group;
The Airport Motorway Trust domestic bond is secured against the respective rights of Airport Motorway
Limited and Airport Motorway Trust and their assets;
The Transurban Queensland Finance domestic bonds are secured against the respective rights of
Transurban Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited,
Transurban Queensland Invest Trust and their assets;
A Transurban Queensland EMTN program was established in March 2016 with a program limit of
USD$2 billion. Under the program, Transurban Queensland may from time to time issue notes
denominated in any currency. These facilities are secured against the respective rights of Transurban
Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited, Transurban
Queensland Invest Trust and their assets;
The 95 Express Lanes Private Activity Bonds (‘PABs’) are secured against the rights of 95 Express
Lanes LLC and its assets;
The 495 Express Lanes PABs are secured against the rights of Capital Beltway Express LLC and its
assets; and
The US 144A notes are secured by first ranking charges over the cashflows of the Group.
Syndicated facilities
The corporate syndicated bank debt was secured by first ranking charges over the cash flows of the
Group.
U.S. private placement
Corporate U.S. private placement facilities are secured by a first ranking charge over the cash flows of
the Group; and
The Transurban Queensland U.S private placement facilities are secured against the respective rights of
Transurban Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited,
Transurban Queensland Invest Trust and their assets.
69
69
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B14 Borrowings (continued)
Term debt
The Airport Motorway facility is fully secured against the respective rights of Airport Motorway Limited
and the Airport Motorway Trust and their assets;
The Hills Motorway Trust facilities are fully secured against the respective rights of Hills Motorway
Limited and Hills Motorway Trust and their assets;
The Lane Cove Tunnel facility is fully secured against the respective rights of LCT-MRE Pty Limited and
LCT-MRE Trust and their assets;
The Cross City Tunnel facility is fully secured against the respective rights of Transurban CCT Pty
Limited and Transurban CCT Trust and their assets;
The Clem7 facility was fully secured against the respective rights of the Project T Partnership and their
assets;
The AirportlinkM7 facility is fully secured against the respective rights of APL Hold Co Pty Limited, APL
Co Pty Limited, TQ APL Hold Trust, TQ APL Asset Trust and their assets; and
The Transurban Queensland Finance facilities are secured against the respective rights of Transurban
Queensland Holdings 1 Pty Limited, Transurban Queensland Holdings 2 Pty Limited, Transurban
Queensland Invest Trust and their assets.
Transportation Infrastructure Finance and Innovation Act (‘TIFIA’)
The 495 Express Lanes TIFIA facility is secured against the rights of Capital Beltway Express LLC and
its assets; and
The 95 Express Lanes TIFIA facility is secured against the rights of 95 Express Lanes LLC and its
assets.
Shareholder loan notes
The loans to Transurban Queensland from the non-Transurban Group acquisition consortium partners
are unsecured.
Letters of credit and corporate credit facilities
Letter of credit facility
Letter of credit facility
General credit facility1
Total
Maturity
Nov 2016
Dec 2019
Aug 2017
2016
$M
2015
$M
Facility
amount
60
240
4
304
Amount
issued
39
240
3
282
Facility
amount
60
240
4
304
Amount
issued
37
240
3
280
1. The general credit facility covers corporate requirements including credit card facilities, online banking and an overdraft facility.
Letters of credit and bank guarantees to the value of $56 million (2015: $17 million) have also been issued under
multi-option facilities and working capital facilities. A separate cash-backed letter of credit to the value of $108
million has been issued in relation to stamp duty payable on the AirportlinkM7 acquisition. All letters of credit are
currently undrawn and therefore no liability is recorded.
70
70
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B14 Borrowings (continued)
Covenants
A number of the Group's consolidated borrowings include covenants, some of which are listed below. There have
been no breaches of any of these covenants during the year.
Corporate Debt
Covenant
Senior interest coverage ratio
Group Market Capitalisation
CityLink Interest Coverage Ratio
Non-Recourse Debt
Covenant
Threshold
Greater than 1.25 times
Gearing must not exceed 60%1
Greater than 1.1 times
Threshold
Airport Motorway Trust Interest Coverage Ratio
Hills Motorway Trust Interest Coverage Ratio
Lane Cove Tunnel Trust Interest Coverage Ratio
Cross City Tunnel Trust Senior Debt Service Coverage Ratio
Transurban Queensland Finance Interest Coverage Ratio
AirportlinkM7 Finance Interest Coverage Ratio2
495 Express Lanes Senior Debt Service Coverage Ratio
95 Express Lanes Senior Debt Service Coverage Ratio3
1. Based on the balance sheet as at 30 June 2016, the Group’s security price would need to close below $4.26 (2015: $5.23) per security for 20
Greater than 1.15 times
Greater than 1.15 times
Greater than 1.15 times
Greater than 1.15 times
Greater than 1.20 times
Greater than 1.20 times
Greater than 1.15 times
Greater than 1.30 times
consecutive days to trigger this clause.
2. The first relevant calculation date for this ratio was 30 June 2016.
3. The first relevant calculation date is in December 2017, three years from project substantial completion.
B15 Derivatives and financial risk management
Derivatives
2016
$M
2015
$M
Current
Non-current
Current Non-current
Assets
Interest rate swap contracts – cash flow hedges
Forward exchange contracts – cash flow hedges
Cross-currency interest rate swap contracts – cash flow hedges
Total derivative financial instrument assets
Liabilities
Interest rate swap contracts – cash flow hedges
Forward exchange contracts – cash flow hedges
Cross-currency interest rate swap contracts – cash flow hedges
Cross-currency interest rate swap contracts – net investment hedge
Total derivative financial instrument liabilities
–
–
–
–
12
2
3
–
17
–
–
121
121
279
–
46
68
393
–
4
–
4
3
–
1
–
4
71
16
–
66
82
227
–
41
57
325
71
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B15 Derivatives and financial risk management (continued)
Accounting policy
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 this note.
Movements in the cash flow hedging reserve in shareholders' equity are shown in note B12. 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.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit
or loss, 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 profit or loss 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 profit or loss.
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 profit or loss.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit
or loss.
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 transferred to profit or
loss.
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 profit or loss.
Gains and losses accumulated in equity are included in profit or loss 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 profit or loss.
72
72
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B15 Derivatives and financial risk management (continued)
Hedging strategy and instruments used by the Group
The Group uses derivative financial instruments in the normal course of business in order to hedge exposures to
fluctuations in interest rates and foreign exchange rates in accordance with the Group’s financial risk
management policies. The Group’s policies allow derivative transactions to be undertaken for the purpose of
reducing risk and do not permit speculative trading. The instruments used by the Group are as follows:
Interest rate swap contracts – cash flow hedges
The Group uses interest rate swap contracts to manage the Group’s exposure to variable interest rates related to
borrowings. Interest rate swap contracts currently in place cover 100% (2015: 83%) of the variable debt held by
the Group (excluding working capital facilities).
Forward exchange contracts – cash flow hedges
The Group currently uses forward exchange contracts to protect against exchange rate movements between the
AUD and foreign currencies. The Group has hedged a portion of its USD interest commitments and its capital
expenditure commitments.
Cross-currency interest rate contracts – cash flow hedges
The Group has entered into cross-currency interest rate swap contracts to remove the risk of unfavourable
exchange rate movements on borrowings held in foreign currencies. Under these contracts, the Group receives
foreign currency at fixed rates and pays AUD at either fixed or floating rates. The Group then uses the interest
rate swap contracts to hedge the floating interest rate commitments back to fixed interest rates.
Offsetting financial assets and financial liabilities
Currently there is no right or basis to present any financial assets or financial liabilities on a net basis, and as such
no financial assets or financial liabilities have been presented on a net basis in the Group's balance sheet at the
end of the financial year.
Hedge of net investment in foreign entity
Transurban's investment in its US based assets (495 Express Lanes and 95 Express Lanes) acts as a natural
hedge against the exposure to foreign currency movements for a portion of the Group’s USD denominated
borrowings. Exchange differences arising on the revaluation of these USD denominated borrowings are
recognised in profit or loss in the separate financial statements of Transurban Finance Company Pty Limited. In
the Group financial statements these exchange differences are recognised in the foreign currency translation
reserve in equity and will be transferred to profit or loss when the Group disposes its interest in the US based
assets. As at 30 June 2016, the Group has deferred $94 million in losses (2015: $87 million losses).
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 under the policies
approved by the Board. The Group reviews operations actively to identify and monitor all financial risks and to
mitigate these risks through the use of hedging instruments where appropriate. The Board are informed on a
regular basis of any material exposures to financial risks.
The Group continuously monitors risk exposures over time through review of cash flows, price movements,
market analysis and ongoing communication within the Group. When measuring financial risk, The Group
considers positive and negative exposures, existing hedges and the ability to offset exposures where possible.
73
73
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B15 Derivatives and financial risk management (continued)
Market risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk when future 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
investments in foreign assets are generally managed using foreign currency debt. All known material operating
exposures out to 12 months are hedged, either using hedging instruments, or are offset by drawing on foreign
currency funds.
Exposure to foreign currency risk at the reporting date, denominated in the currency in which the risk arises, was
as follows:
2016
$M
2015
$M
USD
EUR
CAD
CHF
USD
EUR
CAD
CHF
1,192
(2,094)
–
(1,600)
1,122
220
1,600
–
–
(250)
250
–
–
(200)
200
–
1,093
(1,484)
–
(1,600)
529
138
1,600
–
–
(250)
250
–
–
–
–
–
Net investment in foreign
operation
Borrowings
Cross-currency interest rate
swaps
Net exposure
Sensitivity
Sensitivity to exchange rate movements based on the translation of financial instruments held at the end of the
period is as follows:
AUD/USD
+ 10 cents
- 10 cents
AUD/EUR
+ 5 cents
- 5 cents
AUD/CAD
+ 10 cents
- 10 cents
AUD/CHF
+ 10 cents
- 10 cents
2016
$M
2015
$M
Movement in
post-tax profit
Increase /
(decrease) in
equity
Movement in
post-tax profit
Increase /
(decrease) in
equity
–
–
–
–
–
–
–
–
(68)
93
(45)
58
(2)
3
(10)
17
–
–
–
–
–
–
–
–
(36)
50
(42)
56
(2)
3
–
–
The Group revalues its foreign currency denominated borrowings each period using market spot rates and, where
these borrowings have been appropriately hedged, defers these movements in the cash flow hedge reserve in
equity. The volatility in the cash flow hedge reserve 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.
74
74
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B15 Derivatives and financial risk management (continued)
Interest rate risk
The Group’s main exposure to interest rate risk arises from cash and cash equivalents, and long-term borrowings.
The Group manages interest rate risk by entering into fixed rate debt facilities or by using interest rate swaps to
convert floating rate debt to fixed interest rates. Generally, the Group raises long term borrowings at floating
interest rates and swaps them into fixed interest rates that are lower than those available if the Group borrowed at
fixed rates directly. The Group’s policy is to hedge interest rate exposure at a minimum in compliance with the
covenant requirements of funding facilities and up to 100%. Covenant requirements vary by debt facility, and
require a minimum of between 50% and 80% of the interest rate exposure to be hedged. At 30 June 2016, 99%
(2015: 75%) of the Group’s interest rate exposure on variable rate borrowings was hedged.
As at the reporting date, the Group had the following cash balances, variable rate borrowings and interest rate
swap contracts outstanding:
Cash and cash equivalents
Floating rate borrowings
Interest rate swaps (notional principal amount)
Net exposure to interest rate risk
Sensitivity
Sensitivity to interest rate movements based on variable rate obligations is as follows:
2016
$M
834
(4,693)
4,631
772
2015
$M
1,249
(5,852)
4,409
(194)
Interest rates +100bps
Interest rates –100bps
Credit risk
Movement in post-tax profit
2016
$M
8
(8)
2015
$M
(2)
2
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
entering into financial transactions through the ordinary course of business. These include funds held on deposit,
cash investments and the market value of derivative transactions.
The Group assesses the credit strength of potential financial counterparties using objective ratings provided by
multiple independent rating agencies. The Board approved policies ensure that 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 and undrawn facilities to maintain short term flexibility and enable the Group
to meet financial commitments in a timely manner. The Group 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.
75
75
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B15 Derivatives and financial risk management (continued)
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
2016
$M
349
527
876
2015
$M
–
356
356
As at 30 June 2016, the Group has letter of credit facilities and general credit facilities in place with undrawn
capacity of $22 million (2015: $24 million). The facilities are committed for the term of the facility and cannot be
withdrawn by the lenders without notice.
Contractual maturities of financial liabilities
The amounts disclosed in the table are the contractual undiscounted cash flows of the Group’s financial liabilities.
For interest rate swaps, the cash flows have been estimated using forward interest rates applicable at the end of
the reporting period.
2016
$M
Trade payables
Borrowings
Interest rate swaps
Cross-currency swaps
Concession and
promissory notes
Other liabilities
Total
2015
$M
Trade payables
Borrowings
Interest rate swaps
Cross-currency swaps
Concession and
promissory notes
Total
1 year
or less
410
652
81
93
–
–
1,236
1 year
or less
340
903
88
47
–
1,378
Over
1 to 2
years
–
1,738
69
80
–
45
1,932
Over
1 to 2
years
–
2,266
70
72
–
2,408
Over
2 to 3
years
–
1,615
55
54
–
155
1,879
Over
2 to 3
years
–
2,113
39
64
–
2,216
Over
3 to 4
years
–
1,677
33
74
–
–
1,784
Over
3 to 4
years
–
1,042
23
35
–
1,100
Over
4 to 5
years
–
2,293
18
51
–
–
2,362
Over
4 to 5
years
–
1,577
8
60
–
1,645
Over 5
years
–
11,249
78
(419)
466
–
11,374
Over 5
years
–
10,166
7
(345)
440
10,268
Total
contractual
cash flows
Carrying
amount
410
19,224
334
(67)
466
200
20,567
410
12,873
291
(2)
67
177
13,816
Total
contractual
cash flows
Carrying
amount
340
18,067
235
(67)
440
19,015
340
12,099
214
29
46
12,728
Capital risk management
The Group is subject to a gearing ratio covenant imposed by senior secured lenders and monitors capital on the
basis of the gearing ratio to ensure compliance with the covenant. There have been no breaches of the covenant
during the current financial year. For further information refer to the Borrowings note B14.
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern and to
maintain an optimal capital structure to reduce the cost of capital, so that it can continue to provide returns to
security holders and benefits for other stakeholders.
76
76
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B15 Derivatives and financial risk management (continued)
Fair value measurements
The carrying value of the Group’s financial assets and liabilities approximate fair value. This is also generally the
case with borrowings since either the interest payable on those borrowings is close to current market rates or the
borrowings are of a short-term nature. The fair values of non-current borrowings are determined based on
discounted cash flows using a current borrowing rate. They are classified as level 2 fair values in the fair value
hierarchy due to the use of observable inputs.
Fair value is categorised within the fair value hierarchy based on the lowest level of input that is significant to the
fair value measurement as a whole:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – 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 3 – inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
All of the Group’s financial instruments measured, recognised and disclosed at fair value were valued using
market observable inputs (Level 2). There were no transfers between levels during the period and there has been
no change in the valuation techniques applied.
Key estimate
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 its judgement to select a variety of
methods and makes assumptions that are mainly based on market conditions existing at each reporting date.
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.
77
77
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Network summary
The table below summarises the key balance sheet items of the Group’s concession assets by network:
2016
$M
VIC
NSW
QLD
GWA
Total
2015
$M
VIC
NSW
QLD
GWA
Total
Equity accounted
investment
carrying amount
Concession
assets
Assets under
construction
Goodwill
Maintenance
provision
–
971
–
–
971
2,498
5,176
8,101
2,613
18,388
340
34
13
7
394
1
260
205
–
466
(128)
(158)
(589)
(45)
(920)
Equity accounted
investment
carrying amount
Concession
assets
Assets under
construction
Goodwill
Maintenance
provision
–
1,092
–
–
1,092
2,632
5,111
6,411
2,562
16,716
45
83
10
–
138
1
260
205
–
466
(118)
(142)
(531)
(24)
(815)
Non-
recourse
borrowings
–
(1,810)
(4,269)
(1,793)
(7,872)
Non-
recourse
borrowings
–
(1,810)
(3,120)
(1,675)
(6,605)
B16 Intangible assets
2016
$M
Cost
Accumulated amortisation
Net book amount
2015
$M
Cost
Accumulated amortisation
Net book amount
Concession
assets
Assets under
construction
22,673
(4,285)
18,388
394
–
394
Concession
assets
Assets under
construction
20,474
(3,758)
16,716
138
–
138
Goodwill
466
–
466
Goodwill
466
–
466
Total
23,533
(4,285)
19,248
Total
21,078
(3,758)
17,320
78
78
2016 Transurban Annual Report
B16 Intangible assets (continued)
Movement in intangible assets
Opening balance 1 July 2014
Additions
Acquisition of subsidiary
Currency and other adjustments
Transfers
Amortisation charge
Net book amount 30 June 2015
Additions
Acquisition of subsidiary
Currency and other adjustments
Transfers
Amortisation charge
Net book amount 30 June 2016
Concession assets
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Concession
assets
$M
9,315
140
6,431
297
1,046
(513)
16,716
165
1,880
78
76
(527)
18,388
Assets under
construction
$M
810
212
–
162
(1,046)
–
138
332
–
–
(76)
–
394
Goodwill
$M
261
–
205
–
–
–
466
–
–
–
–
–
466
Total
$M
10,386
352
6,636
459
–
(513)
17,320
497
1,880
78
–
(527)
19,248
Concession assets represent the Group's rights to operate roads under Service Concession Arrangements. All
concession assets are classified as intangible assets and are amortised on a straight line basis over the term of
the right to operate the asset.
Transurban has the right to toll the concession assets for the concession period. Extensions to the concession
period have been granted during the period for a number of individual concessions as a result of road
development projects and improvements. At the end of the concession period, all concession assets are returned
to the respective Government. The remaining terms of the right to operate are reflected below:
VIC – Victorian State Government
NSW – New South Wales State Government
QLD – Queensland State Government and Brisbane City Council
GWA – Virginia State Government
Assets under construction
2016
Years
19
20 – 32
35 – 49
71
2015
Years
20
21 – 33
36 – 50
72
Assets under construction include upgrade works as part of the CityLink-Tulla Widening project and Hills M2 –
NorthConnex Integration works in New South Wales, Australia. Construction costs relating to completed works
are transferred to the concession asset upon final completion of the projects.
Goodwill
Goodwill primarily relates to the Group's NSW Network and Queensland Network and has arisen from the
acquisition of Hills Motorway Group, Tollaust Pty Limited and the Sydney Roads Group in NSW and the
Queensland Motorways Group in Queensland.
79
79
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B16 Intangible assets (continued)
Impairment testing of goodwill and other intangible 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. Goodwill is tested for
impairment on an annual basis, regardless of whether an indicator of impairment exists.
Recoverable amount is the greater of fair value less costs to sell and value in use. For the purpose 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).
Where the carrying amount of an intangible asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount through profit or loss. The decrement in the carrying
amount is recognized as an expense in profit or loss in the reporting period in which the impairment occurs.
The recoverable amount of the Group’s cash generating units have been determined based on value-in-use
calculations.
The following table sets out the key assumptions on which management has based its cash flow projections. The
calculations use 3 year cash flow projections based on financial budgets reviewed by the Board. Cash flows
beyond this period are modelled using the same set of assumptions up to the end of the applicable concession
period:
Long term CPI (% annual growth)
Long term average weekly earnings (% annual
growth)
Pre-tax discount rate (%)
VIC
NSW
QLD
GWA
2016
2.5%
4.0%
8.2%
2015
2.5%
4.0%
8.2%
2016
2.5%
4.0%
8.2%
2015
2.5%
4.0%
8.2%
2016
2.7%
2015
2.7%
2016
2.5%
2015
2.5%
N/A
N/A
3.0%
3.0%
8.2%
8.2%
8.2%
8.2%
Management has determined the values assigned to each of the above key assumptions as follows:
Assumption
Traffic volume
Approach used to determine values
Based on historical trends and the Group’s long term traffic forecasting
models
Long term CPI (% annual growth)
Based on independent external forecasts
Long term average weekly earnings (%
annual growth)
Pre-tax discount rate
Based on independent external forecasts
Discount rates consider specific risks relating to the CGU. In
performing the value-in-use calculations for each CGU, the Group has
applied post-tax discount rates to discount the forecast future
attributable post tax cash flows. The equivalent pre-tax discount rates
are disclosed in the table above.
Key estimate
The Group makes certain assumptions in calculating the recoverable amount of its goodwill and other
intangible assets. These include assumptions around expected traffic flows and forecast operational costs.
In performing the value-in-use calculation, the Group has applied the assumptions noted in the above table.
Management does not consider that any reasonable possible change in the assumptions will result in the
carrying value of a CGU exceeding its recoverable amount.
80
80
2016 Transurban Annual Report B17 Maintenance provision
Movement in maintenance provision
Carrying value at 1 July 2014
Additional provision recognised
Acquisition of subsidiary
Amounts paid/utilised
Unwinding of discount
Transfer
Movement in foreign exchange
Carrying value at 30 June 2015
Additional provision recognised
Acquisition of subsidiary
Amounts paid/utilised
Unwinding of discount
Transfer
Movement in foreign exchange
Carrying value at 30 June 2016
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Current
$M
Non-current
$M
77
80
28
(91)
–
(10)
(2)
82
97
4
(50)
–
(42)
3
94
211
–
468
–
43
10
1
733
–
10
–
41
42
–
826
Key estimate
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. 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.
B18 Other liabilities – concession and promissory notes
M1 Eastern Distributor concession note
M2 Motorway promissory note
Total
Key estimate
2016
$M
33
34
67
2015
$M
26
20
46
The Group has non-interest bearing long term debt, represented by promissory notes and concession notes
payable to the Government, measured 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. A discount rate of 12% (2015: 12%) has been used, which recognises the subordinated nature
of these notes.
81
81
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B18 Other liabilities – concession and promissory notes (continued)
M1 Eastern Distributor
The Eastern Distributor project deed between Airport Motorway Limited, Airport Motorway Trust and the New
South Wales Roads and Maritime Services (‘RMS’) provides for annual concession fees of $15 million during the
construction phase and for the first 24 years after completion of construction 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.
The face value of concession notes on issue at 30 June 2016 is $285 million (2015: $270 million).
M2 Motorway
The Hills Motorway Trust has entered into leases with the RMS. Annual lease liabilities under these leases total
$7 million (2015: $7 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 trustee of the Hills Motorway, by means of the issue of non-interest
bearing promissory notes to the RMS.
The face value of promissory notes on issue at 30 June 2016 is $181 million (2015: $170 million).
82
82
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Group structure
B19 Principles of consolidation
Subsidiaries
Subsidiaries are fully consolidated from the date the Group gains control of the subsidiary and are de-
consolidated from the date that control ceases.
In preparing the consolidated financial statements of the Group, all inter-entity transactions and balances have
been eliminated. The accounting policies adopted by the individual entities comprising the Group are consistent
with the parent company.
Non-controlling interests consist of two components:
Non-controlling interest – other: external non-controlling interests relating to Transurban Queensland and
Eastern Distributor in the results and equity of subsidiaries are shown separately in the Group financial
statements. The external non-controlling interests related to the 495 Express Lanes and 95 Express
Lanes were acquired on 29 June 2015 and accordingly the external non-controlling interest balances
have been de-recognised from this date.
Non-controlling interests that relate to THT and TIL are presented separately, but relate to equity holders
of the stapled group.
Associates and joint ventures
Associates are all entities over which the Group has significant influence but not control and relate to the Group’s
investments in Interlink M5 and the NorthWestern Roads Group (which holds the Westlink M7 and NorthConnex
assets).
The Group's share of the post-acquisition profits or losses in associates is recognised in profit or loss and its
share of post-acquisition movements in reserves is recognised in other comprehensive income. These post-
acquisition movements are adjusted against the carrying amount of the investment. When the Group’s cumulative
share of losses in an associate exceeds its investment in the asset, the Group does not recognise any further
losses from this point. Dividends received from the assets listed above reduce the carrying amount of the
investment.
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.
83
83
2016 Transurban Annual Report 84
2016 Transurban Annual ReportTransurban Holdings LimitedNotes to the consolidated financial statementsfor the year ended 30 June 201684B20Material subsidiariesThe Group’s material subsidiaries are outlined in the Group structure diagram below.1.Acquisition of non-controlling interest occurred on 29 June 2015.2.Acquisition of AirportlinkM7 occurred on 1 April 2016.B21Business combinationsAccounting policyBusiness combinations are accounted for using the acquisition method. 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 businesscombination 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 profit or loss as a bargain purchase. Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B21 Business combinations (continued)
Accounting policy (continued)
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.
AirportlinkM7
On 24 November 2015 the Group announced that Transurban Queensland (in which the Group holds a 62.5%
equity interest) had reached agreement to acquire the AirportlinkM7 concession. The acquisition was completed
on 1 April 2016.
AirportlinkM7 is an urban tunnel in Brisbane, Australia and is adjacent to three assets owned and operated by
Transurban Queensland. The tunnel is complementary to the Transurban Queensland network and contributes
additional scale, a long dated concession ending June 2053, investment potential and strategic value to the
Group’s current portfolio.
Purchase consideration
Cash paid
Total purchase consideration
$M
1,870
1,870
The consideration of $1,870 million was paid on 1 April 2016. This has been reflected in the Group’s current year
financial statements.
Reconciliation of purchase consideration to cash acquired
Cash paid
Less: cash acquired
Payment for business combination, net of cash
Acquisition-related costs
$M
1,870
(1)
1,869
Total acquisition and integration costs incurred to date are $120 million, inclusive of $108 million of stamp duty,
$10 million of transaction costs and $2 million of integration costs. The total costs have been incurred in the
current financial year. These acquisition costs are not included in the purchase consideration disclosed above.
85
85
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B21 Business combinations (continued)
AirportlinkM7 (continued)
Identifiable assets acquired and liabilities assumed
The final fair values of the assets and liabilities of AirportlinkM7 as at acquisition date are as follows:
Cash and cash equivalents
Trade and other receivables
Deferred tax assets
Intangible assets
Trade and other payables
Provisions
Total identified assets acquired
Revenue and profit contribution
Fair value
$M
1
2
4
1,880
(3)
(14)
1,870
From the date of acquisition to 30 June 2016, revenue of $27 million and a statutory loss after taxation of $125
million was included in the profit or loss with regard to AirportlinkM7. Excluding significant items related to the
acquisition, AirportlinkM7 contributed a net loss after taxation of $5 million.
If the acquisition had occurred on 1 July 2015, annualised revenue of $109 million and a statutory loss after
taxation of $140 million would have been recognised for the year ended 30 June 2016. Excluding significant items
related to the acquisition, the net loss after taxation would have been $20 million. These amounts have been
calculated using the subsidiaries’ results and adjusting for one-off costs not related to the ongoing operations of
the business.
B22 Equity accounted investments
Below is the reconciliation of the equity accounted carrying value of investments:
NorthWestern Roads Group
M5 Motorway
Total
Opening carrying value 1 July
Transfer of Westlink M7 Term loan note
balance into equity accounted
investment
Costs capitalised on creation of NWRG
Group’s share of net profits
Group’s recognised share of other
comprehensive income
Dividends received
Closing carrying value
Cumulative losses not recognised
2016
$M
872
–
–
–
–
(94)
778
534
2015
$M
–
892
10
–
–
(30)
872
624
2016
$M
220
–
–
17
(11)
(33)
193
–
2015
$M
268
–
–
17
–
(65)
220
–
2016
$M
1,092
–
–
17
(11)
(127)
971
534
2015
$M
268
892
10
17
–
(95)
1,092
624
Joint ventures
NorthWestern Roads Group (50% ownership interest)
The Group has a 50% ownership interest in the NorthWestern Roads Group, which holds 100% of the Westlink
M7 Group and the NorthConnex Group. Westlink M7 holds the concession to design, construct, finance and
operate the Westlink M7 Motorway in Sydney for a period of 43 years from the date of operation (16 December
2005) until June 2048, and NorthConnex holds the concession to design, construct, finance and operate the
NorthConnex Tunnel in Sydney until 2048.
86
86
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B22 Equity accounted investments (continued)
Joint ventures (continued)
The following entities are a part of the Westlink Group:
WSO Co Pty Limited (the operator of the Motorway).
Westlink Motorway Limited (the nominee manager of the Westlink Motorway Partnership).
WSO Finance Pty Limited (the financier of the Motorway).
Westlink Motorway Partnership (was responsible for the construction of the Motorway).
The following entities are part of the NorthConnex Group:
NorthConnex Company Pty Limited (the operator of the Motorway).
NorthConnex Finance Company Pty Limited (the financier of the Motorway).
NorthConnex State Works Contractor Pty Limited (was responsible for the construction of the Motorway).
M5 Motorway (50% ownership interest)
Tolls are collected on the M5 in both directions, with four toll collection points. The concession for the M5
Motorway was extended to December 2026 following completion of the M5 widening. At the end of the
concession, all concession assets will be returned to the NSW State Government.
Summarised financial information of equity accounted investments
Set out below is the summarised financial information for those investments accounted for using the equity
method. The summarised financial information presented below is on a 100 per cent basis for each equity
accounted investment.
NorthWestern Roads
Group
M5 Motorway
Total
Summarised balance sheet – 100%
Cash and cash equivalents
Other current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Summarised statement of
comprehensive income – 100%
Revenue
Depreciation and amortisation
Other expenses
Interest expense
Income tax benefit / (expense)
Profit/(loss)
Other comprehensive income
Total comprehensive income
2016
$M
84
23
3,196
(109)
(2,966)
228
343
(84)
(54)
(118)
3
90
11
101
2015
$M
53
11
3,118
(4)
(2,782)
396
272
(76)
(40)
(104)
3
55
(2)
53
2016
$M
111
19
419
(84)
(946)
(481)
261
(43)
(39)
(48)
(43)
88
(23)
65
2015
$M
5
11
459
(48)
(904)
(477)
230
(28)
(32)
(36)
(46)
88
1
89
2016
$M
195
42
3,615
(193)
(3,912)
(253)
604
(127)
(93)
(166)
(40)
178
(12)
166
2015
$M
58
22
3,577
(52)
(3,686)
(81)
502
(104)
(72)
(140)
(43)
143
(1)
142
The following table reconciles the above summarised financial information presented on a 100 per cent basis to the proportional
amounts recognised by the Group
Ownership interest
Proportional total comprehensive
income
Amortisation of fair value uplift
Group's share of comprehensive
income
Profits not recognised
Group's recognised share of total
comprehensive income
Group's share of dividends / distributions
received
50%
50%
50
–
50
(50)
–
94
27
–
27
(27)
–
30
87
50%
33
(27)
6
–
6
33
50%
44
(27)
17
–
17
65
50%
83
(27)
56
(50)
6
127
50%
71
(27)
44
(27)
17
95
87
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B23 Non-controlling interests – other
Set out below is summarised financial information for each material subsidiary (see note B20) that has non-
controlling interests that are material and external to the stapled Group and the total external non-controlling
interest. The amounts disclosed are before inter-company eliminations.
Transurban Queensland
37.5%
Airport Motorway
24.9%
Total non-controlling
interests
Summarised balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Carrying amount of NCI
Summarised statement of
comprehensive income
Revenue
Expenses
(Loss) / profit for the year
Other comprehensive income
Total comprehensive income
(Loss)/profit allocated to NCI
OCI allocated to NCI
2016
$M
244
9,069
(283)
(5,549)
3,481
1,305
512
(731)
(219)
(70)
(289)
(82)
(26)
2015
$M
92
7,267
(243)
(4,187)
2,929
1,099
429
(929)
(500)
(24)
(524)
(187)
(9)
Summarised cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increases in cash and cash
equivalents
118
(2,006)
2,027
(290)
(6,429)
6,745
139
26
B24 Deed of cross and intra-group guarantees
Deed of cross guarantee
2016
$M
10
1,740
(211)
(1,099)
440
110
127
(107)
20
4
24
5
1
60
–
(59)
1
2015
$M
10
1,794
(205)
(1,109)
490
122
116
(99)
17
–
17
4
–
39
–
(41)
(2)
2016
$M
254
10,809
(494)
(6,648)
3,921
1,423
639
(838)
(199)
(66)
(265)
(77)
(25)
178
(2,006)
1,968
2015
$M
102
9,061
(448)
(5,296)
3,419
1,227
630
(1,171)
(541)
(42)
(583)
(191)
15
(248)
(6,595)
7,062
140
219
Transurban Holdings Limited, Transurban Limited, Tollaust Pty Limited, Roam Tolling Pty Limited, Sydney Roads
Limited, Sydney Roads Management Limited, Statewide Roads Limited, M4 Holdings No. 1 Pty Limited, M5
Holdings Pty Limited and Devome 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. The 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 THL, they also represent the 'extended closed group’. Set out on the next page is the summary
financial information of the closed group:
88
88
2016 Transurban Annual Report B24 Deed of cross and intra-group guarantees (continued)
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Summarised statement of comprehensive income
Revenue
Operating costs
Depreciation and amortisation expense
Net finance costs
Profit/(loss) before income tax
Income tax benefit/(expense)
Profit/(loss) for the year
Total comprehensive income/(loss) for the year
Summarised movements in retained earnings
Accumulated losses at the beginning of the year
Profit/(loss) for the year
Dividends provided for or paid
Retained earnings at the end of the year
Summarised balance sheet
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
Other reserves
Retained earnings
Total equity
Intra–group guarantees
2016
$M
578
(208)
(47)
(22)
301
59
360
360
(624)
360
(139)
(403)
63
2,225
2,288
2,384
248
496
3,128
5,416
4,249
95
4,344
17
22
13
52
4,396
1,020
1,422
1
(403)
1,020
2015
$M
321
(186)
(25)
22
132
(23)
109
109
(600)
109
(134)
(625)
542
1,903
2,445
2,090
227
540
2,857
5,302
4,165
87
4,252
351
78
7
436
4,688
614
1,237
1
(624)
614
As at 30 June 2016, 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 is able to provide direct and/or indirect support to each other entity and its
controlled entities within the Group on a continual basis.
89
89
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Items not recognised
B25 Contingencies
Contingent liabilities
As a result of the acquisition of the concession assets noted below, the Group may be required to make further
payments to the respective vendors in the event that the traffic and toll revenue performance of the relevant asset
exceeds certain criteria. The contingent consideration is recorded at the end of each reporting period at its fair
value based upon the same traffic and revenue assumptions as outlined in note B16. The following table details
the current carrying value of the contingent consideration recognised within ‘Other provisions’ in the consolidated
balance sheet, the maximum nominal value that could be paid under each contract and the date at which the
contingent consideration is assessed and becomes payable:
Concession asset
Cross City Tunnel
Legacy Way Tunnel
Legacy Way Tunnel
Go-Between Bridge
Carrying
value
$M
Maximum
consideration
payable
$M
Assessment
/ payment
date
–
–
26
15
28
200
Unlimited1
Unlimited1
Dec 2017
Jun 2017
Jun 2020
Jun 2018
The parent entity does not have any contingent liabilities at reporting date (2015: nil).
The equity accounted investments of the Group do not have any contingent liabilities at reporting date (2015: nil).
1. The maximum consideration payable will reflect a portion of the cumulative outperformance of the concession asset as compared against an
internal rate of return agreed between Transurban Queensland and the Brisbane City Council.
B26 Commitments
Within one year
Later than one year but not later
than five years
Later than five years
Operating
commitments
2016
$M
121
312
207
640
2015
$M
100
247
248
595
Capital
commitments
Operating lease
commitments
2016
$M
499
200
–
699
2015
$M
139
763
–
902
2016
$M
5
22
20
47
Share of commitments for equity accounted investments
Capital commitments
Operating commitments
NorthWestern Roads Group
50%
M5 Motorway
50%
2016
$M
1,078
419
1,497
2015
$M
1,247
186
1,433
2016
$M
–
2
2
2015
$M
–
2
2
Total
2016
$M
1,078
421
1,499
2015
$M
–
13
17
30
2015
$M
1,247
188
1,435
90
90
2016 Transurban Annual Report B27 Subsequent events
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
The following events have occurred subsequent to year end:
The following events have occurred subsequent to year end:
B27 Subsequent events
On 7 July 2016, Westlink M7 priced $500 million of secured notes (‘Notes’) under its Australian Medium Term
Note Programme. The Notes will be issued in two tranches, consisting of $400 million secured fixed rate 7-
year notes and $100 million of secured floating rate 10-year medium term notes. The floating rate notes will
On 7 July 2016, Westlink M7 priced $500 million of secured notes (‘Notes’) under its Australian Medium Term
be fully hedged.
Note Programme. The Notes will be issued in two tranches, consisting of $400 million secured fixed rate 7-
year notes and $100 million of secured floating rate 10-year medium term notes. The floating rate notes will
be fully hedged.
Approximately $150 million of the proceeds raised will be used to repay existing Westlink M7 debt that begins
to reach maturity from August 2017. Approximately $350 million of proceeds will be utilised for general
corporate purposes by the NorthWestern Roads Group (‘NWRG’). Settlement of the Notes occurred on 14
Approximately $150 million of the proceeds raised will be used to repay existing Westlink M7 debt that begins
July 2016. Transurban holds a 50% interest in NWRG with the investment recorded within the equity
to reach maturity from August 2017. Approximately $350 million of proceeds will be utilised for general
accounted investments balance.
corporate purposes by the NorthWestern Roads Group (‘NWRG’). Settlement of the Notes occurred on 14
On 12 July 2016, Transurban Finance Company priced a private placement of NOK$750 million (AUD$117
July 2016. Transurban holds a 50% interest in NWRG with the investment recorded within the equity
accounted investments balance.
million) of senior secured 11 year notes under its Euro Medium Term Note Programme. The proceeds will be
used to repay existing debt. Settlement occurred on 26 July 2016 and is subject to certain closing conditions.
On 12 July 2016, Transurban Finance Company priced a private placement of NOK$750 million (AUD$117
On 20 July 2016, Lane Cove Tunnel drew down $200 million of funds that were raised as part of the Lane
million) of senior secured 11 year notes under its Euro Medium Term Note Programme. The proceeds will be
used to repay existing debt. Settlement occurred on 26 July 2016 and is subject to certain closing conditions.
Cove Tunnel debt refinancing that was announced in May 2016. The funds will be used to repay existing debt
at the Transurban Group level.
On 20 July 2016, Lane Cove Tunnel drew down $200 million of funds that were raised as part of the Lane
Cove Tunnel debt refinancing that was announced in May 2016. The funds will be used to repay existing debt
Other than what is noted above, there has not arisen in the interval between the end of the financial year and the
at the Transurban Group level.
date of this report any matter or circumstance that has significantly affected, or may significantly affect, the
operations of the Group, and results of those operations, or the state of affairs of the Group, in future financial
Other than what is noted above, there has not arisen in the interval between the end of the financial year and the
years.
date of this report any matter or circumstance that has significantly affected, or may significantly affect, the
operations of the Group, and results of those operations, or the state of affairs of the Group, in future financial
years.
91
91
91
2016 Transurban Annual Report
Other
B28 Related party transactions
Transactions with related parties
Revenue from services
Interest income
Repayment of M5 debt notes
Outstanding balances with related parties
M5 debt notes
NorthConnex shareholder loan notes
Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
Joint ventures
2016
$’000
14,657
23,283
–
70,000
298,964
2015
$’000
13,346
41,113
11,683
70,000
95,253
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.
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% for the first three years following financial close.
NorthConnex shareholder loan notes
The Shareholder loan notes (‘SLNs’) earn interest at a fixed rate of 9.0% until the final day of the NorthConnex
concession period. Any unpaid interest is capitalised and deemed to subscribe for further loan notes with an
aggregate principal amount equal to that unpaid interest.
The SLNs 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. All SLNs are
denominated in Australian currency.
B29 Key management personnel compensation
The remuneration amounts below represent the entire amounts paid by the Group.
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Deferred short term incentives
Termination benefits
2016
$
2015
$
12,204,487
289,149
55,829
5,371,997
2,980,450
–
20,901,912
11,573,323
280,011
(83,978)1
3,631,691
1,279,396
347,272
17,027,715
1. Includes a reversal of accrued long service leave due to the departure of key management personnel during the year.
Detailed remuneration disclosures including the key management personnel are made in the remuneration report
in the Directors' report.
92
92
2016 Transurban Annual Report Transurban Holdings Limited
Notes to the consolidated financial statements
for the year ended 30 June 2016
B30 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Group 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
Other consulting services
Total remuneration for PricewaterhouseCoopers
Total auditors remuneration
B31 Parent entity disclosures
2016
$
2015
$
2,190,000
444,300
2,634,300
–
2,634,300
2,634,300
2,293,000
173,600
2,466,600
243,915
2,710,515
2,710,515
The financial information for the parent entity, Transurban Holdings Limited, has been prepared on the same
basis as the consolidated financial statements, except as set out below.
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are accounted for at cost in the parent entity 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
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.
Summary financial information
The individual financial statements for the parent entity report the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Shareholders' equity
Contributed equity
Reserves
Retained earnings
Total equity
Profit for the year
Total comprehensive income
2016
$M
2,259
5,868
(124)
(4,149)
1,719
1,422
1
296
1,719
376
376
2015
$M
1,933
5,826
(117)
(4,531)
1,295
1,237
1
57
1,295
104
104
Guarantees entered into by the parent entity
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, Statewide Roads Limited,
M4 Holdings No 1 Pty Limited, Devome Pty Limited and M5 Holdings Pty Limited as described in note B24.
93
93
2016 Transurban Annual Report Transurban Holdings Limited
for the year ended 30 June 2016
for the year ended 30 June 2
Section C: Transurban Holding Trust (‘THT’)
and Transurban International Limited (‘TIL’)
financial statements
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Section D: Notes to the THT and TIL financial statements
Basis of
preparation and
significant
changes
Operating
performance
D1
Introduction
D3
Segment
information
D2
Trust formation and
termination
D4
Revenue
D5
Income tax
Security holder
outcomes
D6
Distributions
D7
Earnings per
stapled security
Capital and
borrowings
D8
Reserves
D9
Net finance costs
D10
Borrowings
Network
summary
D12
Intangible assets
D13
Other liabilities –
concession and
promissory notes
Group structure
D14
Equity accounted
investments
D15
Non-controlling
interests
Other
D16
Related party
transactions
D17
Parent entity
financial information
D11
Derivatives and
financial risk
management
94
94
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Consolidated statement of comprehensive income
for the year ended 30 June 2016
Transurban Holding
Trust
Transurban International
Limited
Revenue
Employee benefits expense
Road operating costs
Construction costs
Transaction and integration costs
Corporate and other expenses
Total expenses
Earnings before depreciation and amortisation,
net finance costs, equity accounted
investments and income tax
Note
D4
2016
$M
641
–
(4)
(35)
(98)
(1)
(138)
2015
$M
593
–
(4)
(18)
(311)
(2)
(335)
503
258
Depreciation and amortisation expense
Net finance costs
D9
(276)
(53)
D15
(Loss)/profit before income tax
Income tax benefit/(expense)
(Loss)/profit for the year
(Loss)/profit is attributable to:
Ordinary security holders of TIL
Ordinary unit holders of THT
Non–controlling interests
Other comprehensive income
Items that may be reclassified to profit or loss
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:
Ordinary security holders of TIL
Ordinary unit holders of THT
Non-controlling interests
174
(1)
173
–
209
(36)
173
(75)
–
(75)
98
–
159
(61)
98
(276)
(71)
(89)
(8)
(97)
–
9
(106)
(97)
(17)
–
(17)
(114)
–
1
(115)
(114)
2016
$M
174
(16)
(60)
–
–
(12)
(88)
86
(37)
(234)
(185)
31
(154)
(154)
–
–
(154)
(20)
(11)
(31)
2015
$M
235
(10)
(39)
(142)
–
(9)
(200)
35
(29)
(165)
(159)
17
(142)
(134)
–
(8)
(142)
4
(22)
(18)
(185)
(160)
(185)
–
–
(185)
(177)
–
17
(160)
Earnings per security attributable to ordinary
security holders of the group:
Basic and diluted earnings/(loss) per security
D7
10.5
0.5
(7.8)
(7.0)
Cents
Cents
Cents
Cents
The above consolidated statements of comprehensive income should be read in conjunction with the
accompanying notes.
95
95
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Consolidated balance sheet
for the year ended 30 June 2016
Transurban Holding
Trust
Transurban International
Limited
Note
D14
D5
D12
D10
D6
D11
D5
D10
D11
D8
D15
2016
$M
229
2,377
2
2,608
768
–
5,966
961
–
41
9,920
17,656
20,264
–
142
276
–
446
11
44
919
–
–
5,101
5,483
148
89
10,821
2015
$M
156
2,468
1
2,625
862
16
5,701
866
–
–
8,414
15,859
18,484
629
30
–
–
372
2
38
1,071
–
–
4,944
4,394
76
20
9,434
11,740
10,505
8,524
7,979
–
10,520
(92)
(3,132)
1,228
8,524
–
9,584
(43)
(2,579)
1,017
7,979
2016
$M
245
8
16
269
–
–
–
–
4
352
2,620
2,976
3,245
1,560
29
–
3
–
–
5
1,597
42
282
–
1,793
87
–
2,204
3,801
(556)
302
–
(176)
(682)
–
(556)
2015
$M
179
17
12
208
–
–
–
–
3
163
2,562
2,728
2,936
1,398
39
–
2
–
–
6
1,445
22
134
–
1,675
54
–
1,885
3,330
(394)
279
–
(145)
(528)
–
(394)
ASSETS
Current assets
Cash and cash equivalents
Loans to related parties
Trade and other receivables
Total current assets
Non-current assets
Equity accounted investments
Derivative financial instruments
Related party receivables
Concession notes
Property, plant and equipment
Deferred tax assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Related party payables
Trade and other payables
Borrowings
Maintenance provision
Distribution payable
Derivative financial instruments
Other liabilities
Total current liabilities
Non–current liabilities
Maintenance provision
Deferred tax liabilities
Related party payables
Borrowings
Derivative financial instruments
Other liabilities
Total non–current liabilities
Total liabilities
Net assets/(liabilities)
EQUITY
Contributed equity
Issued units
Reserves
Accumulated losses
Non-controlling interests
Total equity
The above consolidated balance sheets should be read in conjunction with the accompanying notes.
96
96
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Consolidated statement of changes in equity
for the year ended 30 June 2016
THT
Attributable to security holders of
Transurban Holding Trust
No. of units
M
Issued units
$M
Reserves
$M
1,896
9,472
–
–
–
–
1
–
17
–
18
1,914
–
–
–
107
1
–
14
–
122
2,036
–
–
–
–
1
–
111
–
112
9,584
–
–
–
823
1
–
112
–
936
10,520
(35)
–
(8)
(8)
–
–
–
–
–
–
(43)
–
(50)
(50)
–
1
–
–
–
–
(92)
Accumulated
losses
$M
Non-
controlling
interests
$M
Total
equity
$M
(1,958)
49
7,528
9
–
9
–
–
(630)
–
–
(630)
(2,579)
209
–
209
–
–
(762)
–
–
(762)
(3,132)
(106)
(9)
(115)
1,147
–
–
–
(64)
1,083
1,017
(36)
(25)
(61)
330
–
–
–
(58)
272
1,228
(97)
(17)
(114)
1,147
1
(630)
111
(64)
565
7,979
173
(75)
98
1,153
2
(762)
112
(58)
446
8,524
Balance at 1 July 2014
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Contributions of equity, net of
transaction costs
Employee share awards issued
Distributions
Distribution reinvestment plan
Distributions to NCI
Balance at 30 June 2015
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Contributions of equity, net of
transaction costs
Employee share awards issued
Distributions
Distribution reinvestment plan
Distributions to NCI
Balance at 30 June 2016
TIL
Attributable to security holders of
Transurban International Limited
No. of
securities
M
Contributed
equity
$M
Reserves
$M
Accumulated
losses
$M
Non-
controlling
interests
$M
Total
equity
$M
Balance at 30 June 2014
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Contributions of equity, net of
transaction costs
Employee share awards issued
Distribution reinvestment plan
Transactions with NCI
Balance at 30 June 2015
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income
Contributions of equity, net of
transaction costs
Employee share awards issued
Distribution reinvestment plan
Balance at 30 June 2016
1,896
276
–
–
–
–
1
17
–
18
1,914
–
–
–
107
1
14
122
2,036
–
–
–
–
–
3
–
3
279
–
–
–
20
–
3
23
302
(46)
–
(43)
(43)
–
–
–
(56)
(56)
(145)
–
(31)
(31)
–
–
–
–
(176)
(394)
(134)
–
(134)
–
–
–
–
–
(528)
(154)
–
(154)
–
–
–
–
(682)
107
(8)
25
17
9
–
–
(133)
(124)
–
–
–
–
–
–
–
–
–
(57)
(142)
(18)
(160)
9
–
3
(189)
(177)
(394)
(154)
(31)
(185)
20
–
3
23
(556)
The above consolidated statements of changes in equity should be read in conjunction with the accompanying
notes.
97
97
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Consolidated statement of cash flows
30 June 2016
Transurban
Holding Trust
Transurban International
Limited
Note
(a)
Cash flows from operating activities
Receipts from customers
Payments to suppliers
Payments for maintenance of intangibles
Transaction costs related to acquisitions
Interest received
Interest paid
Income taxes (paid)/refunds received
Net cash outflow from operating activities
Cash flows from investing activities
Payments for acquisition of subsidiary
Payments for property, plant and equipment
Payments for intangible assets
Distributions received from equity accounted investments
Net cash outflow from investing activities
Cash flows from financing activities
Loans (to)/from related parties
Repayment of loans from/(to) related parties
Proceeds from issue of shares
Proceeds from borrowings(net of cost)
Repayment of borrowings
Payment for acquisition of non-controlling interest
Distributions paid to Transurban Group's security
holders
Distributions paid to non-controlling interests in
Subsidiaries
Proceeds from equity issued to non-controlling interests
Net cash inflow from financing activities
Net increase/(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 year
2016
$M
574
(2)
–
–
220
(495)
–
297
(1,710)
–
(23)
94
(1,639)
(278)
(160)
821
2,541
(1,205)
–
(579)
(55)
330
1,415
73
156
–
229
2015
$M
551
(42)
–
(311)
127
(413)
(3)
(91)
(5,240)
–
(21)
–
(5,261)
(1,590)
3,892
–
3,612
(1,056)
–
(515)
(57)
1,147
5,433
81
75
–
156
2016
$M
167
(70)
(1)
–
–
(28)
–
68
–
(1)
(19)
–
(20)
18
(26)
20
–
–
–
–
–
–
12
60
179
6
245
(a) Reconciliation of (loss)/profit after income tax to net cash inflow from operation activities
THT
TIL
Profit/(loss) for the year
Depreciation and amortisation
Non-cash net finance costs
Capitalised interest income
Net construction revenue
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
(Decrease)/increase in related party operating loans
Increase/(decrease) in unearned income
Increase/(decrease) in trade creditors and accruals
Increase/(decrease) in other operating provisions
Increase/(decrease) in provision for income taxes
payable
Increase/(decrease) in maintenance provision
Increase/(decrease) in other liabilities
Net cash outflow from operating activities
2016
$M
173
276
36
(95)
–
(1)
(208)
–
112
–
1
–
3
297
2015
$M
(97)
276
(3)
(76)
–
43
(260)
1
20
–
5
–
–
(91)
2016
$M
(154)
37
82
–
–
(4)
115
–
2
–
(31)
21
–
68
2015
$M
105
(83)
(1)
–
–
(24)
–
(3)
–
–
(166)
–
(166)
236
(4)
9
117
–
(189)
–
–
–
169
–
147
32
179
2015
$M
(142)
29
65
–
(5)
(10)
80
(10)
(1)
10
(19)
–
–
(3)
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
98
98
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
Basis of preparation and significant changes
D1
Introduction
The Transurban Holding Trust Group consists of Transurban Holding Trust (‘THT’) and the entities it controls
(‘THT Group’) and the Transurban International Limited Group consists of Transurban International Limited (‘TIL’)
and the entities it controls (‘TIL Group’). THT and TIL form part of the stapled Transurban Group.
THT is registered as a managed investment scheme under Chapter 5C of the Corporations Act 2001, and as a
result requires a responsible entity. The responsible entity of the THT is Transurban Infrastructure Management
Limited (‘TIML’). TIML 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.
THT is a Trust registered and domiciled in Australia.
TIL is a public company limited by shares and incorporated in Australia.
Going concern
TIL’s current liabilities exceed its current assets by $1,328 million as at 30 June 2016. This is primarily attributable
to a $1,560 million loan payable to another entity within the Transurban Group. Excluding this loan, the TIL Group
has net current assets of $232 million.
Under the stapling arrangement, each entity is able to provide direct and / or indirect support to each other entity
and its controlled entities within the Transurban Group.
The financial reports have been prepared on a going concern basis, which assumes the continuity of normal
operations.
D2 Trust formation and termination
The Transurban Holding Trust was established on 15 November 2001 and has no termination date. The Trust
was registered as a managed investment scheme by the Australian Securities and Investments Commission on
28 November 2001.
99
99
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
Operating performance
D3 Segment information
Refer to note B4 for further information around the structure of the segments for the Transurban Group.
THT operating segments
Management has determined that THT has one operating segment.
THT 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 one operating segment.
TIL operating segments
Management has determined that TIL has one operating segment.
TIL operations involve the development, operation and maintenance of toll roads in the Greater Washington Area.
All revenues and expenses are directly attributable to these activities. The management structure and internal
reporting of TIL are based on this one operating segment.
Reconciliation of segment information to statutory financial information
Segment information for TIL as disclosed in the Transurban Group segment note at B4 is reconciled to the TIL
statutory financial information below.
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-100% owned consolidated assets
Construction revenue from road development activities
Total revenue
Reconciliation of proportional EBITDA to statutory profit for the year
Proportional EBITDA reconciles to statutory net profit as follows:
Proportional EBITDA
Add:
EBITDA attributable to non-100% owned and consolidated assets
Statutory earnings before depreciation and amortisation, net finance costs,
equity accounted investments and tax
Statutory net finance costs
Statutory depreciation and amortisation
Loss before tax for the year from continuing operations
TIL1
2016
$M
174
–
–
174
TIL1
2016
$M
86
–
86
(234)
(37)
(185)
2015
$M
81
10
144
235
2015
$M
33
2
35
(165)
(29)
(159)
1. Following the acquisition of the non-controlling interest in the GWA assets on 29 June 2015, the proportional ownership of the GWA assets is
reported at 100% from 1 July 2015. Prior to this, the proportional ownership interest in the 95 Express Lanes and 495 Express Lanes were
77.5% and 94.0% respectively.
100
100
2016 Transurban Annual Report D4 Revenue
Toll revenue1
Rental income
Construction revenue
Other revenue
Concession fees
Total revenue
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
THT
TIL
2016
$M
–
575
35
1
30
641
2015
$M
–
546
18
1
28
593
2016
$M
174
–
–
–
–
174
2015
$M
86
–
147
2
–
235
1. The presentation of comparative amounts has been restated to reflect the change of toll revenue to now include toll revenue and service and
fee revenue.
Revenue type
Recognition
Rental income
Rental income is derived from property held by THT and is recognised in profit and loss in
accordance with the lease contract.
Concession fees
Other income from concession fees relates to the CityLink concession notes. Pursuant to
the Agreement for the Melbourne CityLink Concession Deed (the Concession Deed),
CityLink Melbourne Limited (‘CityLink’) (a member of the Transurban Group), is required to
pay annual concession fees for the duration of CityLink's concession period. Until a certain
threshold rate of return on the project is achieved, the payment of concession fees due
under the Concession Deed can be satisfied by means of non-interest bearing concession
notes.
Following agreements reached with the State of Victoria (the State), the Group paid a total
of $765 million to the State to have all current concession notes issued by the State
assigned to Transurban Holding Trust, and the State directed CityLink to pay future
concession notes to Transurban Holding Trust. Accordingly, CityLink continues to issue
notes semi-annually to Transurban Holding Trust, and Transurban Holding Trust
recognises concession note income from the issue of these notes, at the present value of
expected future repayments.
D5
Income tax
TIL deferred tax assets and liabilities
The balance comprises temporary difference
attributable to:
Accrued expenses
Provisions
Current and prior year losses
Fixed assets/intangibles
Cash flow hedges
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
Movements:
Opening balance at 1 July
Credited/(charged) to the statement of comprehensive
income
Credited /(charged) to equity
Foreign exchange movements
Transfer from deferred tax assets/liabilities
Other
Closing balance 30 June
Deferred tax assets/(liabilities) to be recovered after more
than 12 months
Asset
2016
$M
2015
$M
7
21
260
42
34
364
(12)
352
239
78
13
8
(44)
70
364
364
8
–
167
43
21
239
(76)
163
109
104
7
15
–
4
239
239
Liability
2016
$M
–
–
–
(294)
–
(294)
12
(282)
(210)
(117)
–
(6)
44
(5)
(294)
(294)
2015
$M
–
–
–
(210)
–
(210)
76
(134)
(108)
(82)
–
(12)
–
(8)
(210)
(210)
101
101
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
Security holder outcomes
D6 Distributions
Refer to note B10 of the THL financial statements for the dividends/distributions paid and payable by the Group.
Movements in distribution provision – THT
Balance at 1 July 2014
Additional provision recognised
Amounts paid
Amounts reinvested
Balance at 30 June 2015
Additional provision recognised
Amounts paid
Amounts reinvested
Balance at 30 June 2016
D7 Earnings per stapled security
Profit/(loss) attributable to ordinary security holders ($M)
Weighted average number of securities (M)
Basic and diluted earnings per security attributable to the
ordinary security holders (Cents)
Distribution to
security
holders
$M
Distributions to
non-controlling
interest
in subsidiaries
$M
322
630
(515)
(111)
326
762
(579)
(112)
397
39
64
(57)
–
46
58
(55)
–
49
Total
$M
361
694
(572)
(111)
372
820
(634)
(112)
446
THT
TIL
2016
209
1,982
10.5
2015
9
1,908
2016
(154)
1,982
2015
(134)
1,908
0.5
(7.8)
(7.0)
102
102
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
Capital and borrowings
D8 Reserves
Refer to note B12 for a description of the nature and purpose of each reserve.
THT
Balance 1 July 2014
Revaluation
Balance 30 June 2015
Revaluation
Balance 30 June 2016
TIL
Balance 1 July 2014
Revaluation, net of tax
Currency translation differences
Transactions with NCI
Balance 30 June 2015
Revaluation, net of tax
Currency translation differences
Balance 30 June 2016
Cash flow
hedges
$M
–
4
–
–
4
(20)
–
(16)
D9 Net finance income and costs
Finance income
Interest income from related parties
Other interest income
Net foreign exchange gains
Re-measurement of promissory note payable
Re-measurement of concession notes receivable
Total finance income
Finance costs
Interest and finance charges paid/payable
Unwind of discount on liabilities – other liabilities
Unwind of discount on liabilities – promissory note
Net foreign exchange losses
Total finance costs
Net finance costs
Re-measurement of concession notes
Cash flow
hedges
$M
Share-based
payments
$M
(40)
(8)
(48)
(50)
(98)
5
–
5
1
6
Share-
based
payments
Foreign
currency
translation
Transactions
with non-
controlling
interests
$M
–
–
–
–
–
–
–
–
$M
(44)
–
(47)
–
(91)
–
(11)
(102)
THT
2016
$M
477
8
2
–
63
550
(587)
(3)
(13)
–
(603)
(53)
2015
$M
371
1
9
6
44
431
(502)
–
–
–
(502)
(71)
$M
(2)
–
–
(56)
(58)
–
–
(58)
TIL
2016
$M
–
–
–
–
–
–
(230)
–
–
(4)
(234)
(234)
Total
$M
(35)
(8)
(43)
(49)
(92)
Total
$M
(46)
4
(47)
(56)
(145)
(20)
(11)
(176)
2015
$M
–
–
–
–
–
–
(154)
–
–
(11)
(165)
(165)
Re-measurement of concession notes represents the discount unwinding over the passage of time on these notes
and the change in the payment profile of the concession notes.
103
103
2016 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
D10 Borrowings
Refer to note B14 for a description of each facility type.
Current
Term debt
Non-current
Working capital facilities
Capital markets debt
U.S. private placement
Term debt
TIFIA
Total borrowings
D11 Derivative and financial risk management
The instruments used by the Group are described in note B15.
2016
$M
THT
2016
$M
276
276
–
1,018
929
3,536
–
5,483
5,759
2015
$M
–
–
16
745
–
3,633
–
4,394
4,394
2015
$M
–
–
–
608
–
–
1,067
1,675
1,675
TIL
2016
$M
–
–
–
626
–
–
1,167
1,793
1,793
2015
$M
Current
THT
TIL
Non-current
THT
TIL
Current
THT
TIL
Non-current
THT
TIL
–
11
–
11
–
–
–
–
–
–
–
–
16
–
118
30
148
87 2
– 76 54
–
87
–
2
–
–
–
76
–
54
Assets
Interest rate swap contracts –
cash flow hedges
Liabilities
Interest rate swap contracts –
cash flow hedges
Cross currency interest rate swap contracts –
cash flow hedges
Market risk
Foreign exchange risk
Exposure to foreign currency risk at the reporting date, denominated in the currency in which the risk arises, was
as follows:
Receivables
Payables
Borrowings
Cross-currency interest rate swaps
Net exposure
THT
TIL
2016
USD
$M
1,121
(1,084)
(641)
641
37
2015
USD
$M
1,110
(1,072)
–
–
38
2016
CHF
$M
–
–
(200)
200
–
2015
CHF
$M
–
–
–
–
–
2016
AUD
$M
1
(9)
–
–
(8)
2015
AUD
$M
1
(8)
–
–
(7)
Sensitivity
THT
AUD/USD
+ 10 cents
- 10 cents
AUD/CHF
+ 10 cents
- 10 cents
Movement in
post-tax profit
Increase / (decrease) in
equity
2016
$M
2015
$M
(6)
8
–
–
(6)
7
–
–
2016
$M
(30)
42
(10)
17
2015
$M
–
–
–
–
TIL’s profit and equity are not materially impacted by movements in foreign exchange.
104
104
2016 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
D11 Derivative and financial risk management (continued)
Interest rate risk
THT and TIL are not materially impacted by movements in interest rates. As at the reporting date, the Group had
the following variable rate borrowings and interest rate swap contracts outstanding:
2016
$M
THT
229
(3,957)
3,957
229
TIL
245
(303)
303
245
2015
$M
THT
156
(3,857)
3,417
(284)
TIL
179
(293)
293
179
Cash and cash equivalents
Floating rate borrowings
Interest rate swaps (notional principal amount)
Net exposure to interest rate risk
Liquidity risk
Contractual maturities of financial liabilities
The amounts disclosed in the table are the contractual undiscounted cash flows of the Group’s financial liabilities.
For interest rate swaps, the cash flows have been estimated using forward interest rates applicable at the end of
the reporting period. For further information refer to note B15.
THT
2016
$M
Trade payables
Borrowings
Related party loans
Interest rate swaps
Cross-currency swaps
Concession and
promissory notes
Other liabilities
Total
2015
$M
Trade payables
Borrowings
Related party loans
Interest rate swaps
Concession and
promissory notes
Total
1 year
or less
142
443
634
44
22
–
–
1,285
1 year
or less
30
137
1,055
44
–
Over
1 to 2
years
–
1,003
763
37
21
–
14
1,838
Over
1 to 2
years
–
1,031
991
31
–
Over
2 to 3
years
–
858
655
26
21
–
46
1,606
Over
2 to 3
years
–
1,348
796
13
–
1,266
2,053
2,157
Over
3 to 4
years
Over
4 to 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
–
1,222
409
10
21
–
–
1,662
–
996
1,172
7
20
–
–
2,195
–
2,615
3,123
18
(106)
181
–
5,831
142
7,137
6,756
142
(1)
181
60
14,417
142
5,759
5,101
129
30
34
53
11,248
Over
3 to 4
years
Over
4 to 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
–
313
617
3
–
933
–
1,156
375
(2)
–
1,529
–
1,114
3,348
(31)
170
4,601
30
5,099
7,182
58
170
30
4,394
5,573
62
20
12,539
10,079
105
105
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
D11 Derivative and financial risk management (continued)
TIL
2016
$M
Trade payables
Borrowings
Related party loans
Interest rate swaps
Total
2015
$M
Trade payables
Borrowings
Related party loans
Interest rate swaps
Total
1 year
or less
29
10
1,651
11
1,701
Over
1 to 2
years
Over
2 to 3
years
Over
3 to 4
years
Over
4 to 5
years
–
19
–
11
30
–
69
–
10
79
–
83
–
10
93
–
83
–
9
92
Over 5
years
–
4,274
–
60
4,334
Total
contractual
cash flows
Carrying
amount
29
4,538
1,651
111
6,329
29
1,793
1,559
87
3,468
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
39
20
1,480
9
1,548
–
22
–
8
30
–
22
–
7
29
–
71
–
6
77
–
84
–
5
89
–
4,579
–
34
4,613
39
4,798
1,480
69
6,386
39
1,675
1,398
54
3,166
106
106
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
Network summary
Refer to the Network summary section of the Group financial statements for the intangible assets, maintenance
provision, goodwill, and concession and promissory note accounting policies.
D12 Intangible assets
2016
$M
Concession assets
Assets under construction
Total
THT
TIL
THT
TIL
THT
Cost
Accumulated amortisation
Net book amount
11,505
(1,616)
9,889
2,681
(68)
2,613
31
–
31
7
–
7
11,536
(1,616)
9,920
2015
$M
Concession assets
Assets under construction
Total
THT
TIL
THT
TIL
THT
Cost
Accumulated amortisation
Net book amount
9,671
(1,340)
8,331
2,593
(31)
2,562
83
–
83
–
–
–
9,754
(1,340)
8,414
Movement in intangible assets
Opening balance 1 July 2014
Additions
Acquisition of subsidiary
Currency and other adjustments
Transfer
Amortisation charge
Net book amount 30 June 2015
Additions
Acquisition of subsidiary
Currency and other adjustments
Transfer
Amortisation charge
Net book amount 30 June 2016
Concession assets
$M
Assets under construction
$M
Total
$M
THT
3,586
–
5,240
–
(219)
(276)
8,331
50
1,710
–
74
(276)
9,889
TIL
1,289
–
–
323
979
(29)
2,562
–
–
88
–
(37)
2,613
THT
55
19
–
–
9
–
83
22
–
–
(74)
–
31
TIL
676
142
–
161
(979)
–
–
7
–
–
–
–
7
THT
3,641
19
5,240
–
(210)
(276)
8,414
72
1,710
–
–
(276)
9,920
TIL
2,688
(68)
2,620
TIL
2,593
(31)
2,562
TIL
1,965
142
–
484
–
(29)
2,562
7
–
88
–
(37)
2,620
D13 Other liabilities – concession and promissory notes
M2 Motorway
The face value of promissory notes on issue at 30 June 2016 is $181 million (2015: $170 million). The net present
value at 30 June 2016 of the redemption payments relating to these promissory notes is $34 million (2015: $20
million).
107
107
2016 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
Group structure
D14 Equity accounted investments
Set out below is the summarised financial information for the THT Group’s investments accounted for using the
equity method. The summarised financial information presented below is on a 100 per cent basis. Refer to note
B22 for the details of the NorthWestern Roads Group.
THT
NorthWestern
Roads Group
Summarised balance sheet – 100%
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Summarised statement of comprehensive income – 100%
Revenue
Depreciation and amortisation
Other expenses
Interest income
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income
2016
$M
–
2,503
(63)
(1,346)
1,094
130
(34)
(2)
50
(3)
141
–
141
The following table reconciles the above summarised financial information presented on a 100 per cent basis to the
proportional amounts recognised by the Group
Ownership interest
Proportional total comprehensive income
Profits not recognised
Group's share of comprehensive income
50%
70
70
–
2015
$M
35
2,534
(64)
(1,340)
1,165
128
(47)
(5)
58
1
135
–
135
50%
68
68
–
Reconciliation of summarised financial information
Reconciliation of the summarised financial information presented to the carrying amount of the Group’s interest in
associates
THT
Opening carrying value 1 July
Transfer of Westlink M7 term loan note balance into equity accounted investment
Group’s recognised share of total comprehensive income
Distributions received
Closing carrying value
Cumulative losses not recognised
NorthWestern
Roads Group
50%
2016
$M
862
–
–
(94)
768
178
2015
$M
–
892
–
(30)
862
248
108
108
2016 Transurban Annual Report Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
D15 Non-controlling interests
Set out below is summarised financial information for each material subsidiary that has non-controlling interests
that are material to THT. The amounts disclosed for each subsidiary are before inter-company eliminations.
THT
Summarised balance sheet
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Carrying amount of NCI
Summarised statement of comprehensive income
Revenue
Profit/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Profit/(loss) allocated to NCI
OCI allocated to NCI
Summarised cash flows
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increases in cash and cash equivalents
Transurban
Queensland
37.5%
Airport Motorway
Trust
24.9%
Total
2016
$M
2015
$M
265
7,106
(145)
(4,064)
3,162
1,186
117
5,114
(21)
(2,606)
2,604
976
259
(144)
(70)
(214)
(54)
(26)
240
(327)
(24)
(351)
(123)
(9)
104
(1,710)
1,630
24
(152)
(5,240)
5,417
25
2016
$M
21
881
(198)
(536)
168
42
106
72
4
76
18
1
59
–
(59)
–
2015
$M
21
867
(186)
(539)
163
41
103
69
–
69
17
–
41
–
(41)
–
2016
$M
2015
$M
286
7,987
(343)
(4,600)
3,330
1,228
138
5,981
(207)
(3,145)
2,767
1,017
365
(72)
(66)
(138)
(36)
(25)
343
(258)
(24)
(282)
(106)
(9)
163
(1,710)
1,571
24
(111)
(5,240)
5,376
25
109
109
2016 Transurban Annual Report
Transurban Holding Trust and Transurban International Limited
Notes to the THT and TIL financial statements
30 June 2016
Other
D16 Related party transactions
THT
Transactions with related parties
Rental income
Interest income
Interest expense
Other expenses
Outstanding balances with related parties
Current receivables
Non-current receivables
Concession notes
Current liabilities
Non-current liabilities
TIL
Transactions with related parties
Interest expense
Other expenses
Outstanding balances with related parties
Loan to related parties
Loan from related parties
1. Transactions and outstanding balances between THT/TIL and THL.
D17 Parent entity financial information
Summary financial information
THL1
Joint ventures
2016
$’000
574,993
477,387
311,519
4,263
2015
$’000
545,914
335,706
241,630
4,408
2,376,501
5,966,590
959,850
–
5,101,395
2,468,660
5,701,214
866,153
628,947
4,943,438
2016
$’000
–
–
–
–
–
–
–
–
–
2015
$’000
–
35,569
–
–
–
–
–
–
–
THL1
2016
$’000
127,373
7,470
2015
$’000
75,000
10,374
7,786
1,559,664
17,469
1,398,138
The individual financial statements for the parent entities (THT and TIL) show the following aggregate amounts:
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Contributed equity
Reserves
Retained earnings
Shareholders’ equity
Profit/loss for the year
Exchange differences on translation of US operations,
net of tax
Total comprehensive income/(loss)
THT
2016
$M
2,828
14,238
687
4,897
9,341
10,520
6
(1,185)
9,341
393
–
393
2015
$M
2,943
13,943
496
5,361
8,582
9,584
4
(1,006)
8,582
787
–
787
TIL
2016
$M
351
372
–
–
372
302
69
1
372
3
11
14
2015
$M
338
338
3
3
335
279
58
(2)
335
(3)
58
55
110
110
2016 Transurban Annual Report 111
2016 Transurban Annual Report Independent auditor’s report to the stapled security holders of
the Transurban Group
Report on the financial report
We have audited the accompanying financial report which comprises;
•
•
•
Transurban Holdings Limited (the Company), which comprises the consolidated balance sheet as
at 30 June 2016, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year ended on that date, a
summary of significant accounting policies, other explanatory notes and the directors’ declaration
for Transurban Holdings Limited and its controlled entities (the Transurban Group). The
Transurban Group comprises the Company and the entities it controlled at year’s end or from
time to time during the financial year including the other members of the stapled group being
Transurban International Limited and Transurban Holding Trust and their controlled entities.
Transurban Holding Trust (the Trust), which comprises the consolidated balance sheet as at 30
June 2016, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year ended on that date, a
summary of significant accounting policies, other explanatory notes and the directors’ declaration
for Transurban Holding Trust and its controlled entities (THT). THT comprises the Trust and the
entities it controlled at year’s end or from time to time during the financial year.
Transurban International Limited (the International Company), which comprises the
consolidated balance sheet as at 30 June 2016, the consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for
the year ended on that date, a summary of significant accounting policies, other explanatory notes
and the directors’ declaration for Transurban International Limited and its controlled entities
(TIL). TIL comprises the International Company and the entities it controlled at year’s end or
from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the Transurban Holdings Limited, Transurban International Limited and Transurban
Infrastructure Management the responsible entity of Transurban Holding Trust (collectively referred to as
“the directors”) are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards, the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that is free
from material misstatement, whether due to fraud or error. In Note B3, the directors also state, in
accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance whether the financial report is free from material misstatement.
PricewaterhouseCoopers, ABN 52 780 433 757
Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
112
112
2016 Transurban Annual Report An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Transurban Group’s preparation and fair
presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Transurban
Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.
Auditor’s opinion
In our opinion:
(a)
the financial reports of the Transurban Group, THT and TIL are in accordance with the Corporations
Act 2001, including:
(i)
(ii)
giving a true and fair view of the Transurban Group, THT and TIL financial position as at 30
June 2016 and of their performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations), the Corporations Regulations 2001 and
(b)
the financial report and notes also comply with International Financial Reporting Standards as
disclosed in Note B3.
Report on the Remuneration Report
We have audited the remuneration report included in pages 22 to 39 of the directors’ report for the year
ended 30 June 2016. The directors of the Company are responsible for the preparation and presentation of
the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is
to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
Auditor’s opinion
In our opinion, the remuneration report of the Transurban Group for the year ended 30 June 2016 complies
with section 300A of the Corporations Act 2001.
PricewaterhouseCoopers
Chris Dodd
Partner
113
Melbourne
9 August 2016
113
2016 Transurban Annual Report Security holder information
The security holder information set out below was applicable as at 16 August 2016.
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 92,322.
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 78.20 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
32,260
42,637
10,501
6,623
301
92,322
14,270,889
104,337,993
73,154,896
139,872,067
1,710,313,088
2,041,948,933
There were 2,936 holders of less than a marketable parcel of stapled securities.
% of issued
stapled securities
0.70
5.11
3.58
6.85
83.76
100.00
There were 2,041,948,933 stapled securities on issue.
20 largest holders of stapled securities
Name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
BNP PARIBAS NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ARGO INVESTMENTS LIMITED
AMP LIFE LIMITED
AUSTRALIAN UNITED INVESTMENT COMPANY LIMITED
UBS NOMINEES PTY LIMITED
MILTON CORPORATION LIMITED
NATIONAL NOMINEES LIMITED
BOND STREET CUSTODIANS LIMITED
CS FOURTH NOMINEES PTY LIMITED
DIVERSIFIED UNITED INVESTMENT LIMITED
WARBONT NOMINEES PTY LIMITED
Total
Substantial holders
Substantial security holders as at 16 August 2016 were as follows:
Number of stapled
securities held
% of issued stapled
securities
551,573,307
312,740,911
263,746,986
186,208,419
138,429,344
37,512,642
35,056,921
18,335,264
8,575,552
6,855,155
5,785,989
5,210,443
4,000,000
3,950,967
3,512,975
3,300,782
3,123,900
3,015,831
3,000,000
2,900,000
27.01
15.32
12.92
9.12
6.78
1.84
1.72
0.90
0.42
0.34
0.28
0.26
0.20
0.19
0.17
0.16
0.15
0.15
0.15
0.14
1,596,835,388
78.20
Name
UNISUPER
COMMONWEALTH BANK OF AUSTRALIA
114
Number of stapled
securities held
% of issued stapled
securities
255,358,756
121,869,397
12.55
6.42
2016 Transurban Annual Report
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2016 Transurban Annual Report Enquiries
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 Ltd
GPO Box 2975
Melbourne, Victoria 3001
Australia
Phone
(Australia ) 1300 555 159
(Overseas) +61 3 9415 4062
AUSTRALIA
MELBOURNE (HEAD OFFICE)
Level 23
Tower One, Collins Square
727 Collins Street
Docklands
Victoria 3008
SYDNEY
Level 9
1 Chifley Square
Sydney
New South Wales 2000
BRISBANE
7 Brandl Street
Eight Mile Plains
Queensland 4113
MAILING ADDRESS
Locked Bag 28
South Melbourne Victoria 3205
Phone +61 3 8656 8900
Fax +61 3 8656 8585
UNITED STATES
WASHINGTON DC AREA
6440 General Green Way
Alexandria VA 22312
United States
Phone 571 419 6100
Email corporate@transurban.com