annual report 2012–13

Contents

About the Transport Ticketing Authority...... 2

Our role...... 2

Our main objectives and functions...... 2

Our key business partners...... 3

Chief Executive Officer and Administrator’s report...... 4

Board of Directors...... 6

About myki...... 7

About Metcard...... 8

Report of operations...... 9

Accountable Officer’s and Chief Finance and Accounting Officer’s declaration...... 25

Auditor-General’s report...... 26

Comprehensive operating statement...... 28

Balance sheet...... 29

Statement of changes in equity...... 30

Cash flow statement...... 31

Notes to financial statements...... 32

Annual Report 2012–13 1 About the Transport Ticketing Authority

Our role • high performance levels by the myki and Metcard ticketing systems consistent with contractual The Transport Ticketing Authority (TTA) was requirements and within approved budgets, established in June 2003 to: including the ongoing integrity and value for money of ticketing infrastructure and operations • manage the Metcard public transport ticketing system contract • administration of fare revenue generated by myki and Metcard as agent for Public Transport • oversee the design, build, delivery and operation Victoria (PTV) and transport operators. of the new myki ticketing system. TTA was measured by the following outcomes: The TTA completed its role in the delivery of • delivery of the modified ticketing system within myki and management of the Metcard system on adjusted timeframes and approved budget 31 December 2012, with Public Transport Victoria (PTV) assuming responsibility for all TTA functions • overseeing the expanding operations of the as from 1 January 2013. myki ticketing system within contractual requirements to meet customer expectations On this day, the TTA was put into administration with the former Chief Executive Officer, Bernie Carolan, • transition of customers (including use of acting as Administrator, to wind down TTA’s affairs educational, information and support programs) by 30 June 2013. and public transport operators (including staff training) to the new ticketing system The Metcard ticketing system ceased to operate in Melbourne after the last service of 28 December • overseeing the remaining operations of the 2012. At this point myki became the only ticket that Metcard ticketing system so that it continued to could be used in Melbourne. meet customer expectations, but that sales of Metcards ceased by 31 December 2012 The TTA ceased being a State Owned Enterprise on 30 June 2013. • assisting less regular public transport users to make the switch to myki via programs emphasising the convenience of smart cards Our main objectives and functions and explaining myki ease-of-use TTA’s primary objective was to ensure that myki was • customer assessment of smart card introduced in line with contracted requirements and convenience, reliability and ease of use, as that it and the Metcard system met the needs of reflected in the rate of ‘take-up’ of the new customers and public transport operators. In doing ticketing system across all customer groups so, TTA aimed to achieve: • public transport operator confirmation that the • smooth transition to myki throughout delivered system meets agreed requirements metropolitan Melbourne and in specified areas • ongoing achievement of high levels of system of regional Victoria performance of the myki and Metcard ticketing • high levels of customer satisfaction with the new systems ticketing system • the successful transition of TTA to PTV. • endorsement by public transport operators that myki meets their requirements and provides opportunities to enhance service value

2 Transport Ticketing Authority Our key business partners OneLink Transit Systems The supplier of the Metcard ticketing system was Kamco OneLink Transit Systems Pty Ltd (OLT).

Kamco (Keane Australia Micropayment Consortium The OLT consortium consists of Ingot Capital Pty Ltd) is the consortium delivering the myki Management Pty Ltd, R Noble and the JF & LJ ticketing system. Following a public tender process Carroll Family Trust (who each acquired a portion Kamco was contracted in July 2005 to design, build of the Mayne Group former interest), Fujitsu and implement the new ticketing system and then Australia Ltd and Utilico Ltd which acquired the operate it for 10 years. former interest of ERG Pty Ltd. Following the 2011 Government Review of the Subsequent to the Government review of 2011, a new myki project negotiations for a revised contract contract with OLT was executed on 29 February 2012 commenced. The negotiations were staged and first to ensure availability of Metcards during 2012 and to addressed the remaining build phase of the system, provide for the decommissioning of Metcard systems followed by the ongoing operation of myki. and equipment. A Fifth Amending Deed to the contract was signed The Metcard system ceased operating for customers in November 2011, finalising the build phase of the on 28 December 2012, but continued to be used for system. A Sixth Amending Deed was signed in March some operator/system purposes through the early 2013, by PTV, setting in place terms relating to the months of 2013. ongoing operation of the system.

Annual Report 2012–13 3 Chief Executive Officer and Administrator’s report

The 2012-13 year has been one of transformation myki progress for the Transport Ticketing Authority and for the development of the myki system. The Government announced that Metcards would no longer be valid for travel after 28 December 2012, and that myki was to become the only ticket TTA into PTV that could be used on Melbourne’s trains, trams and buses. In the lead up to this significant milestone, On 31 December 2012, the terms of the TTA’s TTA undertook extensive work to ensure that the Chairman, Directors and CEO all expired, transition for public transport users was as smooth consistent with the handover of all TTA functions as possible. and responsibilities to PTV on 1 January 2013. An Administrator was appointed to TTA from TTA continued with a combined myki uptake and 1 January so that the Authority could be formally Metcard product withdrawal strategy, progressively dissolved by 30 June 2013. introducing more locations for passengers to buy and top up a myki. As myki use grew, more devices From 1 January 2013, responsibility for the further were installed to assist with passenger flow on rollout of myki, the ongoing operations of the the network. The replacement of old Metcard system and management of the Kamco and OneLink barriers with new myki only gates commenced at contracts was assumed by PTV. On that date, all CBD stations during July 2012, then extended to remaining TTA staff required to complete the project suburban stations with barriers. This program saw became PTV fixed-term employees (Ex-TTA staff over 50 additional exit/entrance aisles implemented involved in overseeing the ongoing operation of the at around 15 key locations. At ungated stations, myki system and the remaining term of the OneLink approximately 300 additional Fare Payment Devices contract had already become PTV employees in (FPDs) were installed to supplement the around April 2012). The myki assets, created by the project 1,000 FPDs originally specified; this included 60 activity, remained under TTA ownership at this point. totally new station entrance/exit points. From August Until PTV assumed the responsibilities, the TTA 2012, TTA progressively converted train station ticket Board maintained close oversight of TTA activities, windows to full myki sales and top up services. When with a special focus on achieving the cessation of the Metcard booking office machine was removed Metcard use by the target date of 28 December ticket windows offered only myki services. ’Starter 2012. Under the guidance of the Board, TTA worked Pack’ sales of myki commenced onboard buses from diligently to ensure the formal Allocation Statements the first service of 29 December 2012. associated with the transfer of responsibilities were As a result of these deliberate strategies, myki use timely, accurate and comprehensive. accounted for more than 95 per cent of all ticket Between January and June 2013, TTA prepared for, validations by the time Metcard was switched and achieved, the transfer of the myki assets to off. Having this number of passengers already VicTrack. TTA retained all corporate records in line transitioned to myki made the cessation of Metcard with Government policy and has been responsive relatively smooth, but TTA undertook an extensive to any follow-up issues that have arisen following marketing and information campaign to assist the the transfer of budgets and responsibilities to PTV. remaining travellers. TTA worked with its Internal Auditors and with the Further improvements to the system, the removal Victorian Auditor General’s Office to ensure there of Metcard equipment from trams and buses, is appropriate endorsement for all treatments introduction of myki sales/top ups on board buses, associated with the Authority’s dissolution. extension of the system onto V/Line’s commuter service trains and the continuation of customer education messages became PTV’s responsibility to oversee from 1 January 2013.

4 Transport Ticketing Authority TTA people

With the transfer of most ex-TTA people across to PTV, a small number of staff remained with TTA past December 2012, to support the Administrator achieve the orderly formal dissolution of the organisation by 30 June 2013. I wish to acknowledge the contribution made by all of TTA’s staff and contractors over the years that the organisation existed, and especially during 2012–13. The project has been extremely challenging at times but the dedication of all has been an inspiration and allowed TTA to meet its goal of completing the rollout of myki in Melbourne. I have personally found it rewarding to work with others on such a complex and important project for Melbourne and Victoria. The role of Administrator would not have been possible without the full commitment and professionalism of Craig Barrett and Belinda Mariano as Chief Financial Officer and Corporate Services Manager during my term as Administrator. I thank them sincerely for their support.

Bernie Carolan Administrator of TTA 1/1/13–30/6/13, previously CEO of TTA 1/7/12–31/12/12 Friday 28 June 2013

Annual Report 2012–13 5 Board of Directors

Mr John McMillan Chair (to 31 December 2012)

Appointed on 1 November 2007, Mr McMillan was acting Chair of the TTA Board from September 2011 and was formally appointed Chairman in December 2011. Mr McMillan previously held senior positions in Victorian and Commonwealth public sector agencies and until 2 April 2012 served as Chairman, Metlink Victoria Pty Ltd.

Mr John Peoples Board Director (to 31 December 2012)

Mr Peoples has been a member of the Board since 1 November 2007 and was Chairperson between 3 February 2009 and March 2010. He is a project adviser to public and private sector organisations on a range of commercial projects.

Mr Peter Matthey Board Director (to 31 December 2012)

Mr Matthey was appointed to the Board effective from 20 September 2010. He was appointed Audit Committee Chair having a wealth of experience as a senior partner at KPMG and a Director of KPMG Transaction Services. Mr Matthey is also Chair of Cabrini Health Limited, and holds Office in Cormack Foundation Pty Ltd.

Mr John Wilson Board Director (to 31 December 2012)

Mr Wilson was appointed to the Board effective 1 April 2011. He is currently a board member of V/Line Pty Ltd and Principal of WD and Associates specialising in consultancy in public transport. He is a Certified Practicing Accountant and a member of the Australian Institute of Company Directors and the International Association for Public Transport.

6 Transport Ticketing Authority About myki

myki is a smart card ticketing system. It has replaced Metcard in Melbourne and paper tickets on buses in some regional centres and on V/Line commuter trains to Ballarat, Bendigo, Geelong, Traralgon and Seymour. Passengers travelling with myki touch on with their smart card at the beginning of a journey and touch off at the end. myki automatically calculates and deducts the lowest fare for the travel taken. All passengers must have either a positive myki money balance, or a valid myki pass and a myki money balance of at least $0.00, in order to touch on and have a valid ticket. myki stores two kinds of value: • myki money – a dollar value (e.g. $20) that is stored on a customer’s myki. Fares are calculated and money is deducted according to when and where the passenger touches on and touches off. Various charging caps apply e.g. a 2-hour or daily cap. • myki pass – pre-purchased travel days similar to weekly and monthly tickets. A passenger specifies the zone(s) of travel and the exact duration of their pass, either seven days or between 28 and 365 consecutive days. The myki pass will be active from the time the passenger first touches on and off in a zone for which the pass is valid.

Passengers can top up their myki at close to 800 retail outlets including all 7-Eleven stores, the ticket window at staffed stations, myki machines at all metropolitan railway stations, some accessible tram stops and bus interchanges, online, by telephone, using auto top up and via the driver on buses.

Annual Report 2012–13 7 About Metcard

A Metcard is an electronically encoded ticket valid for travel on trains, trams and buses in the metropolitan area (Zones 1 and 2). The Metcard ticketing system ceased operating on 28 December 2012 and was replaced by myki as the ticket to travel on Melbourne’s public transport network. From November 2012, customers with unused Metcards were able to transfer the value to a myki at the ticket window at staffed stations. Refunds for, and the transfer of any unused Metcards to myki, ceased on 30 June 2013.

8 Transport Ticketing Authority Report of operations

1. Key activities Customers were provided the opportunity to transfer the value of unused Metcards to their myki or to The following pages provide an overview of the key receive a refund. Metcards to the value of $1.7 activities undertaken by TTA during 2012 – 13. million have been transferred to myki in the period to 30 June 2013. 1.1. Complete delivery of the new During 2012 – 13 TTA and PTV continued to work ticketing system with the PTO to improve customer service across both the Metcard and myki ticketing systems. The TTA completed its role in the delivery of myki when Public Transport Victoria (PTV) assumed The number of passengers contacting the PTO about responsibility for all TTA functions on 1 January myki increased from 1,578 in 2011 – 12, to 1,661 in 2013. All remaining project staff needed to complete 2012 – 13. the rollout of the system transitioned to PTV for the Passengers contacting the PTO directly on myki remainder of their fixed-term employment. queries were referred immediately back to TTA or Significant progress had been made in delivery of the PTV for resolution of their issues. system through 2012, which enabled Metcard to be In cases dealt with by the PTO, TTA and PTV worked switched off at the end of 2012. actively to ensure a speedy resolution for customers. By the end of 2012, all ticket offices had been converted to full myki services, approximately 50 per 1.3. Transition from the Metcard system to cent of Metcard barriers had been replaced, with all the new ticketing system for passengers Metcard ticket vending machines and 85 per cent of and operators validators removed from the rail network. Moving forward, the focus for PTV in the first half of The general transition strategy to move passengers 2013 was to remove Metcard equipment from trams, from Metcard to myki involved the progressive convert buses to full myki operation, introduce the withdrawal of Metcard ticket types and Metcard system to V/Line commuter services, and work with sales channels, combined with the introduction of Kamco to deliver system enhancements. additional myki card sales and top up channels. On 1 July 2012, eight Metcard types were withdrawn, 1.2. Operating the Metcard and new ticketing leaving single-use 2-hour, Daily, City Saver and system in a way that meets passenger Seniors Daily as the only Metcards available. At this expectations time myki use accounted for 77 per cent of all ticket validations across the network. Around 9.5 million Metcards were sold in the myki use continued to increase in the latter 2012 – 13 financial year to 31 December 2012. months of 2012 as the ability to buy Metcards at The Metcard system handled over 16 million ticket windows was withdrawn. When Metcard was validations during the year and continued to perform switched off on 28 December 2012, the only place at high levels of availability. During the six months these tickets could be purchased was onboard to 31 December 2012, overall availability of Metcard trams and buses. At this time, however, myki use on equipment was: the system was approximately 95%, meaning most • 99.78 per cent for ticket vending equipment passengers had already made the switch. • 99.83 per cent for ticket validating equipment.

During 2012 – 13 TTA received only 12 complaints regarding the Metcard system from the Public Transport Ombudsman (PTO). Metcard ticket vending machines were totally removed from railway stations during the second half of 2012.

Annual Report 2012–13 9 1.4. Uptake of the new ticketing system 1.6. TTA under Administration

The number of myki users and transaction volume As from 1 January 2013 TTA no longer had operating grew steadily throughout the year. By the end of 2012: functions. From that date its focus was: • approximately 3.9 million myki cards were in the • Any follow-up issues associated with hands of customers the 1 January transition of previous TTA responsibilities into Public Transport Victoria • more than 300,000 cards were purchased in the last four weeks of the year • Liaison with TTA’s Internal Auditors and with the Victorian Auditor General’s Office to ensure they • the system was regularly processing more than had endorsed the close-down processes 5.5 million touch ons per week • Preparations for the completion of all necessary • for myki users, myki money was the favoured annual attestations way to pay for public transport travel • Preparations for the transfer of the myki assets, • 80 per cent of myki money tops ups per week until now owned by TTA, to the appropriate were for amounts between $5 and $20 ongoing agencies • on buses in regional Victoria, myki cards • Preparations for the termination of TTA’s office were used for approximately 40 per cent of all lease and other similar arrangements necessary trips taken. to facilitate total dissolution of the Authority • Appropriate storage of all TTA records, including 1.5. Working with public transport operators those related to the history and operations of the to ensure the delivered system meets Metcard contract. their requirements

The 2012 – 13 financial year saw continued support from all public transport operators and the bedding down of a number of key operational procedures required to support the efficient running of myki. This cooperation was fundamental to achievement of the 28 December 2012 target for Metcard cessation.

10 Transport Ticketing Authority 2. Organisation Pay and Conditions

Central to TTA’s aims to meet its main objectives The TTA Workplace Agreement (2009 – 2012) is its focus on people and the value it placed served TTA well and was effectively extended to on developing and maintaining a robust human apply throughout 2012 – 13. It acted as a fair and resources framework in the key areas of resourcing transparent framework that summarises salaries and talent management, performance and and conditions for TTA staff. Its alignment of recognition and career development for all staff. progression step payments with successful delivery of yearly business objectives is central to how staff Resourcing and talent management were recognised and rewarded at TTA.

While upholding equal opportunity and merit Occupational Health and Safety (OHS) principles in its resourcing strategy, TTA was able to attract and appoint highly valued staff through TTA promoted safe work practices and is committed a process of external sourcing and development to implementing and maintaining appropriate of internal staff. This resulted in well-rounded occupational health and safety policies, procedures and competent teams achieving NTS milestones and programs to address legislative requirements and project objectives. All staff, contractors and and the needs of TTA staff. Occupational Health and consultants had to comply with the Code of Conduct Safety training was also conducted as part of the for Victorian Public Sector Employees. staff induction process.

Performance and Development Organisational structure

The online performance system introduced in TTA’s senior management group met weekly to previous years continued to ease the review process assess progress, activities and the risk profile. for Managers and staff alike. Its alignment with core Figure 1 shows TTA’s management and governance behavioural capabilities and business deliverables structures until December 2012. to learning and development needs, facilitated a holistic approach to monitoring, reviewing and developing staff.

Workforce planning

An “as required” resourcing strategy coupled with contract alignment to project schedule and work requirements continued to be the cornerstone of achieving project milestones and objectives.

Annual Report 2012–13 11 Figure 1: TTA’s management structure until December 2012

Minister for Treasurer Public Transport

Board

Audit Committee

CEO Public Secretary Transport DOT Victoria

CEO CEO Assistant

Finance Project Commercial myki Media & Metcard Corporate Delivery & Legal Operations Communications Operations Services

Operator Relationships

From 1 January 2013, the TTA Administrator retained a Chief Financial Officer and a Manager of Corporate Services, along with a small number of support staff.

12 Transport Ticketing Authority Figure 2: TTA’s management structure until June 2013

Minister for Treasurer Public Transport

TTA Administrator

Finance Corporate Services

Annual Report 2012–13 13 Workforce information 3. Governance and compliance

TTA’s staffing profile for the end of the financial year The Public Transport Ticketing Body, operating as 2012 – 13 is set out in Table 1. The absence of any the Transport Ticketing Authority, was established in roles as at the end of June 2013 is consistent with June 2003 through an Order in Council under section the transfer of roles to PTV and the subsequent wind 14 of the State Owned Enterprises Act 1992. TTA up and dissolution of TTA on 30 June 2013. was governed by a Board of Directors established through the Governor in Council. Table 1: TTA staff numbers June 2012 and TTA reported to the Minister for Public Transport June 2013 for transport policy matters and the Treasurer for matters regarding the State Owned Enterprises Act. June 2012 June 2013 The TTA Board conducted six ordinary meetings and one special purpose meeting. Workforce profile Ongoing/Permanent 0 0 Audit Committee Fixed Term 66 0 The TTA Audit Committee provided assistance to Casuals 8 0 the Board to help fulfil its corporate governance Total 74 0 and oversight responsibilities in relation to TTA’s financial reporting, internal control structure, risk Gender management systems and internal audit functions. Male 33 0 It aimed to maintain free and open communication between the committee, external auditors, internal Female 41 0 auditors and TTA management. Total 74 0 The Audit Committee consisted of three independent members, all of whom were Board Members, and TTA classification was chaired by Mr Peter Matthey. Composition of (VPS equivalent) the Committee remained unchanged throughout the TTA 1 0 0 2012 – 13 financial year and met four times during TTA 2 10 0 this period. TTA 3 21 0 The Audit Committee also oversaw the internal audit TTA 4 9 0 program that was outsourced to RSM Bird Cameron, who remained contracted to undertake farebox and TTA 5 17 0 system related reviews until 30 June 2013. TTA 6 12 0 The Audit Committee ceased on 31 December 2012. TTA STS 1 0 The TTA received an exemption from Direction 2.2 Executive 4 0 (Direction Requirement 4: Audit Committee) for Total 74 0 the 2012 – 13 financial year because it entered Secondees 44 0 administration and wound up its affairs on or before 30 June 2013. Contractors 12 0 Total 130 0 Board meeting attendance Note: On 31 December 2012 the TTA workforce was reduced to 14 personnel with numbers progressively reducing to 3 personnel The number of Board meetings during the financial remaining during June 2013, and none by the end of that month. year (including meetings of committees of the Board) and the number of meetings attended by each director of the Board are listed in Table 2.

14 Transport Ticketing Authority Table 2: Attendance at scheduled Board/Board committee meetings 1 July 2012 to 31 December 2012

Special Directors Information Meeting Board Purpose Board Audit Committee sessions Eligible Number Eligible Number Eligible Number Eligible to Number to attend attended to attend attended to attend attended attend attended Mr J McMillan 6 6 1 1 4 4 0 0 Mr J Peoples 6 6 1 1 4 4 0 0 Mr P Matthey 6 6 1 1 4 4 0 0 Mr J Wilson 6 6 1 1 4 4 0 0 DTF Observer 6 6 1 1 N/A N/A N/A N/A DPC Observer 6 6 1 0 N/A N/A N/A N/A PTV Observer 6 5 1 1 N/A N/A N/A N/A RSMBird Cameron N/A N/A N/A N/A 4 4 N/A N/A (internal auditors) VAGO N/A N/A N/A N/A 4 4 N/A N/A

The board was dissolved on 31 December 2012.

Freedom of information National competition policy

The Freedom of Information Act 1982 allows members Under the National Competition Policy, the of the public to obtain information held by TTA. The guiding principle is that legislation, including Freedom of Information Officer is the principal officer future legislative proposals, should not restrict for the purpose of administering the requirements of competition, unless it can be shown that the the Act. benefits of the restriction to the community as a whole outweighs the costs and that the objectives During the 12 months ending June 2013, TTA received of the legislation can only be achieved by restricting seven requests. Of these, six were from the media competition. TTA complied with the requirements of and one from the general public. No decisions made the National Competition Policy. during the 12 months to end June 2013 were referred to internal review. None progressed to appeal at the Victorian Civil and Administrative Tribunal. Disclosure of major contracts From 1 January 2013, PTV handled all FOI requests TTA has not entered into any new major contracts on behalf of TTA. (defined in FRD12A as being in excess of $10 million) during the reporting period. Availability of additional information Implementation of the Victorian Industry In compliance with the requirements of the Standing Participation Policy Directions of the Minister for Finance, TTA retains information applying to the entity, which is available In October 2003, the Victorian Parliament passed the on request to relevant ministers, members of Victorian Industry Participation Policy Act 2003, which Parliament and the public (subject to Freedom of requires public bodies and departments to report Information requirements). on the implementation of the Victorian Industry Participation Policy (VIPP). Departments and public bodies are required to apply VIPP in all tenders over $3 million in metropolitan Melbourne and $1 million in regional Victoria.

Annual Report 2012–13 15 Protected Disclosure Act 2012

The Protected Disclosure Act 2012 (Vic) protects people who make disclosures about improper conduct by public bodies or public officers. TTA developed procedures for managing any such disclosure about the organisation or any of its officers. These processes provide for the appropriate receipt, assessment and investigation of disclosures and appropriate actions to be taken after investigation. They also allow for managing the welfare of the discloser and the person against whom a disclosure was made. Disclosures of improper conduct by TTA or its employees could be made to the Protected Disclosure Coordinator nominated in the policy document or directly to the Victorian Ombudsman. Disclosures may be made by TTA’s employees, consultants, contractors or the public. No disclosures under the protected disclosure legislation relating to TTA or its employees were received during the reporting period. In line with section 104 of the Protected Disclosure Act 2012, the TTA reported the following:

Table 3: Protected Disclosure Act disclosure

Topic Report Number and type of disclosures made to TTA during the year Nil Number of disclosures referred to the Ombudsman by TTA to determine whether they are public Nil interest disclosures Number and type of disclosed matters referred by TTA to the Ombudsman to investigate Nil Number and type of disclosed matters referred by the Ombudsman to TTA Nil Number and type of investigations of disclosed matters taken over by the Ombudsman from TTA Nil Number and type of requests made under section 74 to the Ombudsman to investigate disclosed matters Nil Number and types of disclosed matters that TTA declined to investigate Nil Number and types of disclosed matters substantiated on investigation and action taken (still in progress) Nil Recommendations made by the Ombudsman that relate to TTA Nil Number and types of disclosed matters investigated and not substantiated Nil

16 Transport Ticketing Authority Environmental commitment

This information has been prepared based on the requirements set out in FRD 24C: Reporting of Office-based Environmental Impacts by Government Departments. It only relates to TTA office-based activities at Levels 37 and 38, 55 Collins St, Melbourne.

Energy

Energy consumption figures are for Levels 37 and 38 at 55 Collins Street only. The below data was collected through energy retailer billing information.

Category Electricity 2012/2013 Total energy used (MJ) 589,353 Greenhouse gas emissions associated with energy use (tonnes) Not recorded Carbon emissions savings by purchasing Green Power (tonnes) Nil Percentage of electricity purchased as Green Power Nil Units of energy used per FTE (MJ/FTE) 11,787 Units of energy used per unit of office area (MJ/m) 403.1

Explanatory note The floor space area for Levels 37 and 38 combined is 2,065.3 square metres.

Waste The waste generated by TTA was divided into three general classes: landfill, compost and recycling. At the time of reporting, the breakdown was not available.

Indicator 2012/2013 Total units of waste disposed of (kg/yr) per year Unavailable at the time of reporting Units of waste disposed of per FTE (kg/FTE) per year Unavailable at the time of reporting Recycling rate (% of total waste) Unavailable at the time of reporting Greenhouse gas emissions associated with waste disposal (tonnes) Unavailable at the time of reporting

Paper The paper figures represented below were compiled through TTA’s paper retailer billing information.

Category 2011/2012 Total units of copy paper used (reams) 571 Units of copy used per FTE (reams per FTE) N/A1 Percentage 76 –100% recycled content copy paper purchased (%) 91.7% 1 As the majority of TTA employees were transferred to PTV from 1 January 2013, the number of reams of paper per staff member used is unable to be reported on accurately

Annual Report 2012–13 17 Water Jones Lang LaSalle (Building Management) advised water usage statistics cannot be provided solely for Levels 37 and 38. Water usage statistics can only be collated for 35 and 55 Collins Street buildings as this information is collated from one water meter (there are no individual floor water meter readings) and the building owners were unable to provide information at time of reporting.

Transport TTA hired vehicles on 83 occasions throughout the financial year. Of these vehicles, 1.2 per cent are LPG, 8.4 per cent are diesel fuelled cars and 90.4 per cent are unleaded fuelled cars.2

Indicator Unleaded Diesel LPG E101 2012/2013 Total energy consumption by vehicles (MJ) 116,681 25,051 2,934 Nil Total vehicle travel associated with entity operations (km) 55,163 9,675 744 Nil Total greenhouse gas emissions from vehicle fleet (Co2-e) 7.82 1.75 0.18 Nil Greenhouse gas emissions from vehicle fleet per 1,000km 0.15 0.19 0.25 Nil travelled (Co2-e)

Air travel data TTA staff travelled a total of 5,410 km to national business destinations.

Category 2012/2013 Greenhouse gas emissions associated with energy use No longer reported on Greenhouse gas emissions associated with vehicle fleet 9.75 Greenhouse gas emissions associated with air travel 1.1 Greenhouse gas emissions associated with waste production Not available at time of reporting Greenhouse gas emissions offsets purchased None purchased by TTA

2 After 1 January 2013, the majority of TTA staff became PTV staff, drastically reducing our paper costs and transport vehicles hired

18 Transport Ticketing Authority Procurement & recycling TTA follows the Victorian Government Purchasing Board guidelines when buying any IT or office equipment, considering environmental factors before purchasing. Any scrap metal and furniture that cannot be sold is recycled. TTA participated in the following: • Mobile phones recycling through Mobile Muster, who have a partnership with Landcare Australia • Printer cartridges recycling through Cart Collect, who sort, dismantle and evaluate the cartridges. Cart Collect redirect the waste back into manufacturing stream or if it cannot be reused back into the recycling chain • Compost and recycling bins are placed in each kitchen, collected and recycled by SITA Environmental Solutions • Recycling of secure, shredded and non-confidential paper material is handled by Visy Recycling.

Compliance with the Building Act 1993

TTA does not own or control any government buildings.

Directions from the Minister

None.

VMIA Insurance attestation

I, Bernie Carolan, certify that the Transport Ticketing Authority has complied with the Ministerial Standing Direction 4.5.5.1 – Insurance, as follows: • TTA determined the appropriate level of Insurance in consultation with VMIA • TTA did not have any self-insured retained losses • TTA had a register of all insurances, but at the time of the Authority’s dissolution it had not made this register available to VMIA • TTA had a policy of generally not granting indemnities, but did not have a verified register; most of TTA’s contracts were transferred to PTV on 31 December 2012; during the term of my Administration none of the remaining TTA contracts involved indemnities.

Bernie Carolan Accountable Officer (TTA Administrator 1/1/13–30/6/13; previously TTA’s CEO 1/7/12–31/12/12) Friday 28 June 2013

Annual Report 2012–13 19 Risk management and attestation

Risk management was considered to be essential in achieving TTA’s key strategic objectives. TTA had a risk management framework in place that enabled it to identify and manage risks that were inherent to its day to day operations and, for the period to 31 December 2012, to the delivery and ongoing operation of the NTS. In accordance with Ministerial Standing Direction 4.5.5 of the Financial Management Compliance Framework under Financial Management Act 1994 and the Victorian Government risk management framework, and following a management review of TTA’s risk management practices, the Administrator of TTA makes the following attestation: I, Bernie Carolan, certify that the Transport Ticketing Authority has had risk management processes in place consistent with the Australian/New Zealand Risk Management Standard and an internal control system was in place that enabled the executive to understand and manage risk exposures. I certify that the financial report can be prepared on a sound system of risk management and internal compliance and control which implemented the policies adopted by the Board until 31 December 2012, and thereafter by me as Administrator; and that TTA’s risk management and internal compliance and control system operated efficiently and effectively in all material respects.

Bernie Carolan Accountable Officer (TTA Administrator 1/1/13–30/6/13; previously TTA’s CEO 1/7/12–31/12/12) Friday 28 June 2013

20 Transport Ticketing Authority 4. Financial Management

Overview

Table 4: Summary of financial results for the five years from 2009 to 2013

($ thousand) 2013 2012 2011 2010 2009 Revenue from government 61,476 147,243 101,279 111,000 87,850 Total income from transactions 75,980 155,891 105,360 114,521 89,877 Total expenses from transactions 105,897 182,039 128,600 117,052 90,681 Net result from transactions (29,917) (26,148) (23,240) (2,531) (804) Net result for the period (31,577) (27,218) (50,916) (2,640) (1,132) Net cash flow from/(used in) operating activities (4,966) (144) 3,506 (4,660) (1,571) Total assets – 378,462 346,052 364,004 280,011 Total liabilities – 71,845 50,217 56,753 21,820

TTA received almost all of its funding through parliamentary appropriations via the Department of Transport, Planning and Local Infrastructure which provides grants to support operating expenditure and capital contributions for the development of the new ticketing system. On 21 June 2011 the Government announced some scope changes to the myki Project; including no short-term tickets and no card vending machines on trams. Management viewed both of these as impairment events. Impairment was first applied in 2010 – 11. The carrying value of these assets has been reviewed in 2012 – 13 and the assets were written off. The loss reflected in the operating result for the year is due to the unfunded depreciation and amortisation charges, asset impairment charge and inventory write-down. TTA is funded on a cash requirements basis in line with normal government practice. Depreciation is not offset by grants. In line with Australian Accounting Standards TTA recognises assets for depreciation purposes when they are capable of operating in the way intended by management. As a result, Work In Progress expenditure was transferred to depreciable tangible assets during the year. The higher depreciation charge for the year reflects the commissioning of additional ticketing devices during the year. Contracts in relation to the Metcard and myki ticketing systems were transferred to PTV on 1 January 2013. TTA was put into administration on 1 January 2013 and the activities undertaken in the six months to 30 June 2013 were focused on winding up and dissolution of TTA.

Annual Report 2012–13 21 Consultancies commissioned

TTA used expert consultants for specific specialist skills and knowledge, which it did not have or need regularly in-house.

A total of $1.2 million was expended on professional fees to 31 December 2012. Table 5 summarises the number of consultancy engagements and the total fees incurred.

Table 5: Consultancy projects undertaken during 2012–13

Fees over $10,000 Fees less than $10,000 Number of projects 9 Number of projects NIL Total expenditure commitment $3.4m Total expenditure commitment NIL

Table 6: Consultancy projects in 2012-13 where approved fees are $10,000 or over

($ thousand) Possible Total approved Expenditure future Consultant Summary of project scope project fee 2012-13(i) expenditure Allens Arthur Robinson Legal advice on NTS agreements 150 74 76 CDL & Associates Financial & operational analysis and 155 0 155 financial modelling in relation to Kamco proposals. CardConsults Advice on EMV (Europay, MasterCard and 16 12 4 Visa) compliance Clayton Utz Legal advice on aspects of the project 1,525 531 994 Firecone Ventures Pty Ltd Commercial strategy 1,150 463 687 KPMG Commercial opinion on NTT Data acquisition 94 23 71 of KEANE Maddocks Legal advice on Automated Ticketing Project 232 8 224 Norton Rose Human resources advice 40 0 40 Stratica International Advice on Payment Card Industry 114 97 17 Pty Ltd Compliance and Qualified Security Assessment

(i) Expenditure is for work performed during period 1 July to 31 December 2012. Work performed between 1 January and 30 June 2013 were charged to and paid by PTV. Of the above expenditure $1.2 million has been capitalised and the balance has been expensed in the operating statement.

Subsequent events

No significant events have occurred since 30 June 2013 that would substantially affect TTA’s financial position.

22 Transport Ticketing Authority Disclosure index

This annual report is prepared in line with all relevant Victorian legislation. The index in Table 7 has been prepared to assist readers in identifying TTA’s compliance with statutory disclosure requirements.

Table 7: Disclosure index

Legislation Requirement Page ref Ministerial Directions Report of operations SD 4.2(j) Accountable Officers’ declaration 19, 20 SD 4.3(g) Report of operations to contain relevant information 9–20 not included in the financial statements Charter and purpose FRD 22C Manner of establishment and the relevant Ministers 14 FRD 22C Objectives, functions, powers and duties 2 FRD 22C Nature and range of services provided 2 Management and structure FRD 22C Organisational structure 12 Financial and other information FRD 10 Disclosure index 23–24 FRD 12A Disclosure of major contracts 15 FRD 15B Executive officer disclosures 14 FRD 22C, SD 4.2(k) Operational and budgetary objectives and performance against objectives 9–22 FRD 22C Employment and conduct principles 11 FRD 22C Occupational health and safety policy 11 FRD 22C Summary of the financial results for the year 21 FRD 22C Significant changes in financial position during the year 21 FRD 22C Major changes or factors affecting performance 21 FRD 22C Subsequent events 22 FRD 22C Application and operation of Freedom of Information Act 1982 15 FRD 22C Compliance with building and maintenance provisions of Building Act 1993 19 FRD 22C Statement on National Competition Policy 15 FRD 22C Application and operation of the Whistleblowers Protection Act 2001 16 FRD 22C Details of consultancies over $10,000 22 FRD 22C Details of consultancies under $10,000 22 FRD 22C Statement of availability of other information 15 FRD 24C Reporting of office‑based environmental impacts 17 FRD 25 Victorian Industry Participation Policy disclosures 15 FRD 29 Workforce Data disclosures 14 SD 4.5.5 Risk management compliance attestation 20 SD 4.2(g) General information requirements 9–24 SD 4.2(j) Sign-off requirements 25

Annual Report 2012–13 23 Legislation Requirement Page ref Financial statements required under Part 7 of the FMA SD4.2(a) Statement of changes in equity 30 SD4.2(b) Operating statement 28 SD4.2(b) Balance sheet 29 SD4.2(b) Cash flow statement 31 Other requirements under Standing Direction 4.2 SD4.2(a) Compliance with Australian accounting standards and other 32 authoritative pronouncements SD4.2(a) Statement of compliance 32 SD4.2(d) Rounding of amounts 72 SD4.2(c) Accountable officer’s declaration 25 Other disclosures as required by FRDs in notes to the financial statements FRD 21B Responsible person and executive officer disclosures 55–58 FRD 102 Inventories 47 FRD 103D Non-current physical assets 48–49 FRD 106 Impairment of assets 68 FRD 109 Intangible assets 50 FRD 110 Cash flow statements 31 FRD 112C Defined benefit superannuation obligations 59 FRD 114A Financial Instruments – General government entities and public 59–65 non-financial corporations FRD 119 Contributions by owners 30 Legislation Freedom of Information Act 1982 15 Building Act 1983 19 Whistleblowers Protection Act 2001 16 Victorian Industry Participation Policy Act 2003 15 Financial Management Act 1994 25

24 Transport Ticketing Authority Accountable Officer’s and Chief Finance and Accounting Officer’s declaration

We certify that the attached financial report for the Transport Ticketing Authority (TTA) has been prepared in accordance with Standing Direction 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions and Australian Accounting Standards which include Interpretations. We further state that, in our opinion, the information set out in the comprehensive operating statement, balance sheet, statement of changes in equity, cash flow statement and notes forming part of the financial statements, presents fairly the financial transactions during the year ended 30 June 2013 and the financial position of TTA as at 30 June 2013. We are not aware of any circumstance which would render any particulars included in the financial statements to be materially misleading or inaccurate. We authorise the financial statements for issue on 12 September 2013.

Greg Forck Dean Yates Chief Finance and Accounting Officer Secretary Department of Transport, Planning Department of Transport, Planning and Local Infrastructure and Local Infrastructure

Melbourne Melbourne 12 September 2013 12 September 2013

Annual Report 2012–13 25 Auditor-General’s report

26 Transport Ticketing Authority Annual Report 2012–13 27 Comprehensive operating statement for the year ended 30 June 2013

($ thousand) Notes 2013 2012

Income from transactions Grants from DTPLI 61,476 147,243 Fair value of services received free of charge from Public Transport Victoria 3(a) 6,200 – Interest 3(b) 607 1,052 Fair value of net liabilities transferred free of charge 3(c) – 954 Other income 3(d) 7,697 6,642 Total income from transactions 75,980 155,891

Expenses from transactions Employee expenses 4(a) 2,596 10,252 Costs of PTV seconded staff 1,169 890 Depreciation and amortisation 4(b) 19,220 25,993 Fair value of resources provided free of charge to Public Transport Victoria 4(c) 11,816 – Fair value of services of asset maintenance provided by Public Transport Victoria 4(d) 6,200 – Operational and related payments – the existing ticketing system 24,622 66,553 Service charges – Kamco, new ticketing system 21,535 35,261 Provision for decommissioning and removal of the existing ticketing system – 17,381 Access payments to operators 2,275 2,979 Marketing and customer education 2,527 877 Communications services and supplies 1,039 1,157 Bank charges 925 2,341 myki card costs 4,901 5,837 Professional and consultancy services 1,009 926 Accommodation 669 909 IT services 499 820 Fees on audit of financial report by Victorian Auditor-General’s Office 20 213 219 Other operating expenses 4,682 9,644 Total expenses from transactions 105,897 182,039 Net result from transactions (net operating balance) (29,917) (26,148)

Other economic flows included in net result Asset impairment 23 (1,661) (197) Inventory write-down 23 49 (1,029) Net gain/(loss) on non-financial assets 5(a) (48) 169 Other losses from other economic flows 5(b) – (13) Total other economic flows included in net result (1,660) (1,070) Net result (31,577) (27,218) Total other economic flows – other non-owner changes in equity – – Comprehensive result (31,577) (27,218)

The comprehensive operating statement should be read in conjunction with the accompanying notes.

28 Transport Ticketing Authority Balance sheet as at 30 June 2013

($ thousand) Notes 2013 2012

Assets Current Assets Cash and deposits 6 – 5,220 Receivables 7 – 31,305 Inventories 8 – 4,521 Total current assets – 41,046

Non-current assets Plant and equipment 9 – 229,716 Intangible assets 10 – 107,700 Total non-current assets – 337,416 Total assets – 378,462

Liabilities Current liabilities Payables 11 – 43,287 Provisions 12 – 23,753 Total current liabilities – 67,040 Non-current liabilities Provisions 12 – 4,805 Total non-current liabilities – 4,805 Total liabilities – 71,845

Net assets – 306,617

Equity Accumulated deficit (99,983) (68,406) Contributed capital 99,983 375,023 Net worth – 306,617

Commitments for expenditure 19

The balance sheet should be read in conjunction with the accompanying notes.

Annual Report 2012–13 29 Statement of changes in equity for the year ended 30 June 2013

($ thousand)

Accumulated Contributions (Deficit)/Surplus by Owner Total Balance at 1 July 2011 (41,188) 337,023 295,835 Net result for the year (27,218) – (27,218) Capital contribution from DTPLI – 38,000 38,000 Balance at 30 June 2012 (68,406) 375,023 306,617 Net result for the year (31,577) – (31,577) Capital contribution from DTPLI – 31,543 31,543 Capital transfers through administrative (306,583) (306,583) restructure (Refer to Note 2 for details) Balance at 30 June 2013 (99,983) 99,983 –

The statement of changes in equity should be read in conjunction with the accompanying notes.

30 Transport Ticketing Authority Cash flow statement for the year ended 30 June 2013

($ thousand) Notes 2013 2012

Cash flows from operating activities Receipts Receipts from government 53,311 130,904 Receipts from other entities 7,391 6,564 Interest received 610 1,052 Goods and services tax recovered from the ATO 11,646 15,444 Total receipts 72,958 153,964

Payments Payments to suppliers and employees (77,924) (154,108) Total payments (77,924) (154,108) Net cash flows from / (used in) operating activities 14 (4,966) (144)

Cash flows from investing activities Payments for non-financial assets (31,391) (40,413) Cash transferred through administrative restructure (406) – Proceeds from sale of non-financial assets – 172 Net cash flows from / (used in) investing activities (31,797) (40,241)

Cash flows from financing activities Owner contributions by State Government 31,543 38,000 Repayment of finance leases – (2) Net cash flows from / (used in) financing activities 31,543 37,998

Net increase / (decrease) in cash and cash equivalents (5,220) (2,387) Cash and cash equivalents at the beginning of the financial year 5,220 7,607 Cash and cash equivalents at the end of the financial year 6 – 5,220 Non-cash transactions 22

The above cash flow statement should be read in conjunction with the accompanying notes.

Annual Report 2012–13 31 Notes to the financial statements for the year ended 30 June 2013

1. Summary of significant 1.2. Basis of accounting preparation and accounting policies measurement

These annual financial statements represent the The accrual basis of accounting has been applied audited general purpose financial statements of in the preparation of these financial statements the Public Transport Ticketing Body, operating as whereby assets, liabilities, equity, income and Transport Ticketing Authority (TTA) for the period expenses are recognised in the reporting period ending 30 June 2013. The purpose of the report to which they relate, regardless of when cash is is to provide users with information about TTA’s received or paid. stewardship of resources entrusted to it. The financial statements have been prepared on a TTA was wound up and dissolved on 30 June 2013 going concern basis. pursuant to the Transport Legislation Amendment The financial statements as at June 2013 have been (Public Transport Development Authority) Act 2011 prepared as final accounts for TTA. (Refer to Note 2). Despite the negative working capital, operating Notes to financial statements in relation to balance cash flow and operating result. The going concern sheet, financial instruments and commitments are assumption has been made as TTA was fully funded retained for comparatives as at 30 June 2012. by government grant and capital contribution in accordance with the approved budget, which 1.1. Statement of compliance remained in place after the transition of myki operations and the residual project build into PTV The general purpose financial statements have during 2012 – 13. been prepared in accordance with the Financial Management Act 1994 (FMA) and applicable Judgements, estimates and assumptions are Australian Accounting Standards (AAS) which required to be made about the carrying values of include Interpretations, issued by the Australian assets and liabilities that are not readily apparent Accounting Standards Board (AASB). In particular, from other sources. The estimates and associated they are presented in a manner consistent with the assumptions are based on professional judgements requirements of the AASB 1049 Whole of Government derived from historical experience and various other and General Government Sector Financial Reporting. factors that are believed to be reasonable under the circumstances. Actual results may differ from Where appropriate, those AAS paragraphs applicable these estimates. to not-for-profit entities have been applied. Revisions to accounting estimates are recognised Accounting policies are selected and applied in a in the period in which the estimate is revised and manner which ensures that the resulting financial also in future periods that are affected by the information satisfies the concepts of relevance and revision. Judgements and assumptions made by reliability, thereby ensuring that the substance of the management in the application of AASs that have underlying transactions or other events is reported. significant effects on the financial statements and To gain a better understanding of the terminology estimates relate to: used in this report, refer to Note 24 on glossary of • provision for decommissioning and removal terms and style conventions. of the Metcard ticketing system which is an The annual financial statements were authorised estimate on the costs of decommissioning, for issue by the Secretary and Chief Finance Officer removal and making good of the Metcard of Department of Transport, Planning and Local ticketing equipment from the Metropolitan train, Infrastructure (DTPLI) on 12 September 2013. tram and bus network (refer to Note 1.7.5) • the fair value of plant and equipment, (refer to Note 1.9.5); and • superannuation expense (refer to Note 1.7.2).

32 Transport Ticketing Authority These financial statements are presented in 1.5. Scope and presentation of financial Australian dollars, and prepared in accordance with statements the historical cost convention, except for certain assets and liabilities that are calculated with regard to estimated costs of decommissioning the ticketing 1.5.1. Comprehensive operating statement systems. Plant and equipment is valued on a fair Income and expenses in the comprehensive value basis. Historical cost is based on the fair operating statement are classified according to values of the consideration given in exchange for whether or not they arise from ‘transactions’ assets. or ‘other economic flows’. This classification is consistent with the whole of government reporting 1.3. Reporting entity format and is allowed under AASB 101 Presentation of financial statements. The financial statements cover TTA as an individual reporting entity. ‘Transactions’ and ‘other economic flows’ are defined by the Australian system of government TTA was created under the State Owned Enterprises finance statistics: concepts, sources and methods 2005 Act 1992 on 17 June 2003 and commenced operating Cat. No. 5514.0 published by the Australian Bureau on 1 July 2003. It was wholly owned by the Victorian of Statistics (see Note 5). Government. Its principal address was: ‘Transactions’ are those economic flows that are Transport Ticketing Authority considered to arise as a result of policy decisions, Level 38, 55 Collins Street VIC 3000 usually interactions between two entities by mutual The financial statements include all the controlled agreement. Transactions also include flows within activities of TTA. an entity, such as depreciation where the owner is simultaneously acting as the owner of the TTA was wound up and dissolved on 30 June 2013 depreciating asset and as the consumer of the pursuant to the Transport Legislation Amendment service provided by the asset. Taxation is regarded (Public Transport Development Authority) Act 2011 as mutually agreed interactions between the (Refer to Note 2). government and taxpayers. Transactions can be in-kind (e.g. assets provided/given free of charge 1.4. Objective and funding or for nominal consideration) or where the final consideration is cash. For the period 1 July 2012 until 31 December 2012, TTA’s prime objective was to ensure that both ‘Other economic flows’ are changes arising from the Metcard and myki public transport ticketing market re-measurements. They include: systems meet the needs of customers and public • gains and losses from disposals, revaluations transport operators. and impairments of non-financial physical and For the period 1 January 2013 until 30 June 2013 intangible assets; TTA’s prime objective was to achieve the orderly • actuarial gains and losses arising from defined dissolution of the entity. benefit superannuation plans; and TTA was mainly funded by grant from DTPLI for • fair value changes of financial instruments from the provision of outputs of managing the Metcard their use or removal. public transport ticketing system contract, the decommissioning of the Metcard system, and The net result is equivalent to profit or loss derived overseeing the design, build, delivery and operation in accordance with AASs. of the myki public transport ticketing system.

Annual Report 2012–13 33 1.5.2. Balance sheet Interest Assets and liabilities are presented on a current and Interest income is recognised on a time non-current basis in liquidity order. Non-current proportionate basis that takes into account the being those assets and liabilities expected to be effective yield on the financial asset. Interest is recovered or settled more than 12 months after brought to account when the interest is credited balance date. or received and an accrual is made to recognise interest accrued to balance date. 1.5.3. Cash flow statement Fair value of net liabilities transferred free of charge Cash flows are classified according to whether or not they arise from operating activities, investing Contributions of resources provided free of activities or financing activities. This classification charge are recognised at their fair value when the is consistent with requirements under AASB 107 transferee obtains control over them, irrespective Statement of cash flows. of whether restrictions or conditions are imposed over the use of the contributions, unless received For the cash flow statement presentation purposes, from another government department or agency as cash and cash equivalents consist of cash on hand a consequence of a restructuring of administrative and cash at bank. arrangements. In the latter case, such a transfer will be recognised at its carrying value. On 2 April 1.5.4. Statement of changes in equity 2012, equipment and employee rights and liabilities of some staff in myki operations, finance and The statement of changes in equity presents commercial teams were transferred to PTV. reconciliations of non-owner and owner changes The majority of the staff transferred were seconded in equity from opening balance at the beginning of from PTV back to TTA until 31 December 2012. the reporting period to the closing balance at the end of the reporting period. It also shows separately changes due to amounts recognised in the Other income ‘Comprehensive result’ and amounts recognised in Other income relates to recovery of expenditure ‘Other economic flows – other movements in equity’ from DOT. This is recognised as income when the related to ‘Transactions with owner in its capacity expenditure becomes recoverable. as owner”. 1.7. Expenses from transactions 1.5.5. Rounding Expenses are recognised as they are incurred and Amounts in the financial statements have been reported in the financial year to which they relate. rounded to the nearest $1 000, unless otherwise stated. Please refer to the end of Note 24 for a style convention explaining that minor discrepancies in 1.7.1. Employee expenses totals of tables are due to rounding. These expenses include all costs related to employment including wages and salaries, leave 1.6. Income from transactions entitlements, incentive payments, redundancy payments, fringe benefits tax, payroll tax and Grants from DTPLI WorkCover premiums. These expenses do not include the costs of PTV seconded staff. Grants received from DTPLI are recognised as income at the time TTA gains control of the underlying asset, which is deemed to be when the fund/cash is received or receivable.

34 Transport Ticketing Authority 1.7.2. Superannuation – State superannuation defined benefit plans The amount recognised in the comprehensive operating statement in relation to employer contributions for members of defined benefit superannuation plans is the employer contributions that are paid or payable to these plans during the reporting period. The level of these contributions will vary depending upon the relevant rules of each plan, and is based upon actuarial advice. The Department of Treasury and Finance (DTF) in its Annual Financial Statements, discloses on behalf of the state as the sponsoring employer, the net defined benefit cost related to the members of these plans. Refer to DTF’s Annual Financial Statements for more detailed disclosures in relation to these plans. The amount recognised in the comprehensive operating statement in respect of defined benefit superannuation plans represents the accrual of benefits during the reporting period. Note 17 provides further details.

1.7.3. Depreciation and amortisation All plant and equipment and other non-financial physical assets (excluding items under operating leases) that have a limited useful life are depreciated. Depreciation is generally calculated on a straight-line basis, at rates that allocate the asset’s value, less any estimated residual value, over its expected useful life to its estimated residual value. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. For the financial year ending 30 June 2013 and 30 June 2012, the estimated useful lives for the following assets were:

Asset class Useful life Depreciation rate % Computer equipment 3–4 years 25.0–33.3 Furniture and equipment 5–10 years 10.0–20.0 Leasehold improvements Written off in 2012–13 Written off in 2012–13 Motor vehicles under lease 3 years 33.3 Devices (excluding hand-held) 8.9–12 years 8.33–11.2 (approx.) Hand-held devices 1.8–5 years 20.0–55.5 (approx.) Network assets 2.3–5 years 20.0–43.5 (approx.) New ticketing system make good 11–12 years 8.33–9.09 (approx.) Intangibles 12 years 8.33 (approx.)

Intangible assets with finite useful lives are amortised as an expense from transactions on a systematic basis over the asset’s useful life. Amortisation begins when the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. During the project implementation phase, the units of production method of calculating amortisation is being used for the new ticketing system (NTS) assets recognising that only a portion of the total planned network is in use. This will be changed to a straight-line basis when the complete solution is in operation.

Annual Report 2012–13 35 Other operating expenses Impairment of non-financial assets Intangible assets which are work in progress and 1.7.4. Supplies and services not yet available for use are not amortised but tested annually for impairment (i.e. as to whether their Supplies and services generally represent the carrying value exceeds their recoverable amount, day-to-day running costs incurred in the normal and so require write-downs) and whenever there operations of TTA. These items are recognised as is an indication that the asset may be impaired. All an expense in the reporting period in which they are other assets are assessed annually for indications of incurred. impairment, except for financial assets. If there is an indication of impairment, the assets 1.7.5. Existing ticketing system decommissioning concerned are tested as to whether their carrying and removal costs value exceeds their possible recoverable amount. In February 2007, the legacy ticketing system Where an asset’s carrying value exceeds its equipment assets were transferred to TTA from recoverable amount, the difference is written off as DTPLI (formerly the Department of Infrastructure). an other economic flow, except to the extent that the In accordance with AAS, TTA recognised the write down can be debited to an asset revaluation estimated decommissioning and removal costs surplus amount applicable to that class of asset. associated with those assets. The recoverable amount for most assets is measured On 1 January 2013 the provision for decommissioning at the higher of depreciated replacement cost and of the Metcard ticketing system was transferred to fair value less costs to sell. Recoverable amount for PTV (Refer to Note 2). assets held primarily to generate net cash inflows is measured at the higher of the present value of future On 30 June 2013 the provision for the myki ticketing cash flows expected to be obtained from the asset system was transferred to VicTrack (Refer to Note 2). and fair value less costs to sell. 1.8. Other economic flows included in the 1.8.2. Other gains/(losses) from other net result economic flows Other economic flows measure the change in Other gains/(losses) from other economic flows volume or value of assets or liabilities that do not include the gains or losses from: result from transactions. These include: • transfer of amounts from the reserves and/ or accumulated surplus to net result due to 1.8.1. Net gain/(loss) on non-financial assets disposal or derecognition or reclassification Net gain/(loss) on non-financial assets and liabilities • the revaluation of the present value of the long includes realised and unrealised gains and losses as service leave liability due to changes in the bond follows: interest rates.

Disposal of non-financial assets Any gain or loss on the sale of non financial assets is recognised at the date that control of the asset is passed to the buyer and is determined after deducting from the proceeds the carrying value of the asset at that time.

36 Transport Ticketing Authority 1.9. Assets 1.9.3. Inventories Inventories include goods and other property held 1.9.1. Cash and deposits either for sale or for consumption in the ordinary course of business operations. Depreciable assets Cash and deposits, including cash equivalents, are excluded. Inventories are measured at the lower consist of cash on hand and cash at bank. of cost and net realisable value.

1.9.2. Receivables 1.9.4. Work in progress Receivables consist predominantly of amounts owing The Work In Progress (WIP) relates to the myki from the Victorian Government and GST input tax system and has been separated into two major credits recoverable. Receivables that are contractual categories, being tangible and intangible assets. are classified as financial instruments. Amounts owing from the Victorian Government, taxes and The tangible assets are categorised as plant and other statutory receivables are not classified as equipment (P&E) and include all costs directly financial instruments. incurred in developing, designing and installing the physical components of the NTS project such Receivables are recognised initially at fair value and as fare payment devices and ticketing machines. subsequently measured at amortised costs, using These costs include professional fees and costs the effective interest method, less an allowance for of employee expenses attributed directly to the impairment. A provision for doubtful receivables development of the P&E asset. is made when there is objective evidence that the debts may not be collected. Bad debts are written All costs associated in designing, developing and off when identified. installing the NTS operating system (software) have been capitalised as an intangible asset. This includes expenditure on employee expenses, Impairment of financial assets consultants’ fees and other services and supplies At the end of each reporting period, TTA assesses where these are attributable to development of the whether there is objective evidence that a financial NTS operating system (see Note 10). asset or group of financial assets is impaired. All At the date of commissioning, or ‘go live’, the financial instrument assets, except those measured constituent components of WIP are transferred at fair value through profit or loss, are subject to to the relevant asset category and depreciation of annual review for impairment. tangible assets and amortisation of intangible assets Receivables are assessed for bad and doubtful debts commences. WIP is not depreciated or amortised on a regular basis. Those bad debts considered but is tested for impairment. as written off by mutual consent are classified as a transaction expense. Bad debts not written off 1.9.5. Plant and equipment by mutual consent and the allowance for doubtful receivables are classified as ‘other economic flows’ Plant and equipment are measured at cost less in the net result. accumulated depreciation and impairment. The amount of the allowance is the difference Corporate capital expenditure greater than $1,000 between financial asset’s carrying amount and (2012: $1,000) is capitalised, whereas new ticketing the present value of estimated future cash flows, system capital expenditure greater than $2,000 discounted at the effective interest rate. (2012: $2,000) is capitalised. Cost is measured as the fair value of consideration given for the assets In assessing impairment of statutory (non- plus incidental costs directly attributable to the contractual) financial assets which are not financial acquisition. instruments, TTA applies professional judgement in assessing materiality and using estimates, averages Cost of leasehold improvement is capitalised as and computational shortcuts in accordance with an asset and depreciated over the remaining term AASB 136 Impairment of assets. of the lease or the estimated useful life of the improvements, whichever is the shorter.

Annual Report 2012–13 37 Revaluations of non-current physical assets 1.9.6. Intangible assets Non current physical assets are measured at Intangible assets represent identifiable non- fair value in accordance with Financial Reporting monetary assets without physical substance and Directions (FRD) issued by the Minister for Finance. are initially recognised at cost. Costs incurred A full revaluation normally occurs every five subsequent to initial acquisition are capitalised years, based on the asset’s government purpose when it is expected that additional future economic classification, but may occur more frequently if fair benefits will flow to TTA. value assessments indicate material changes in Amortisation begins when the asset is available for values. Independent valuers are used to conduct use, that is, when it is in the location and condition these scheduled revaluations and any interim necessary for it to be capable of operating in the revaluations are determined in accordance with the manner intended by management. Amortisation requirements of the FRDs. therefore started on intangible assets developed to Revaluation increases or decreases arise from date as at regional bus ‘go live’ of 8 December 2008, differences between an asset’s carrying value and metropolitan train ‘go live’ date of 29 December 2009 fair value. and metropolitan tram and bus ‘go live’ date of 25 July 2010. Net revaluation increases (where the carrying amount of a class of assets is increased as a result In recognition that only a portion of the total planned of a revaluation) are recognised in ‘Other economic network is in use, the units of production method flows – other movement in equity’, and accumulated of calculating amortisation is being used during the in equity under the asset revaluation surplus. project implementation phase. This will be changed However, the net revaluation increase is recognised to a straight-line basis when the complete solution in the net result to the extent that it reverses a net is in operation. revaluation decrease in respect of the same class The amortisation period and the amortisation of plant and equipment previously recognised as an method for an intangible asset with a finite useful expense (other economic flows) in the net result. life are reviewed at least at the end of each annual Net revaluation decreases are recognised in reporting period. In addition, an assessment is made ‘Other economic flows – other movements in equity’ at each reporting date to determine whether there to the extent that a credit balance exists in the are indicators that the intangible asset concerned asset revaluation surplus in respect of the same is impaired. If so, the assets concerned are tested class of plant and equipment. Otherwise, the net as to whether their carrying value exceeds their revaluation decreases are recognised immediately recoverable amount. as other economic flows in the net result. The net Intangible assets are stated at cost less accumulated revaluation decrease recognised in ‘Other economic amortisation and impairment, and are amortised on flows – other movements in equity’ reduces a units of production method over their useful lives the amount accumulated in equity under asset to TTA as follows: revaluation surplus. Revaluation increases and decreases relating 2013 2012 to individual assets within a class of plant and Capitalised software 3–5 years 3–5 years equipment are offset against one another within licences that class but are not offset in respect of assets Capitalised NTS 12 years 12 years in different classes. Any revaluation surplus is not development costs normally transferred to accumulated funds on de recognition of the relevant asset.

38 Transport Ticketing Authority 1.10. Liabilities (i) Wages and salaries, annual leave and sick leave Liabilities for wages and salaries, including non- 1.10.1. Payables monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of Payables consist predominantly of accounts payable the reporting date are recognised in the provision for and other sundry liabilities. employee benefits in respect of employee services Payables are initially measured at fair value, then up to the reporting date, classified as current subsequently measured at amortised cost and liabilities and measured at their nominal values. represent liabilities for goods and services provided Those liabilities that are not expected to be settled to TTA prior to the end of the financial year that are within 12 months are recognised in the provision for unpaid, and arise when TTA becomes obliged to employee benefits as current liabilities, measured make future payments in respect of the purchase of at the present value of the amounts expected to these goods and services. Fair value is determined be paid when the liabilities are settled, using the in the manner described in Note 18(f). remuneration rate expected to apply at the time of settlement. 1.10.2. Provisions Provisions are recognised when TTA has a present (ii) Long service leave obligation, the future sacrifice of economic benefits Liability for long service leave (LSL) is recognised in is probable, and the amount of the provision can be the provision for employee benefits. measured reliably. Unconditional LSL is disclosed in the notes to the The amount recognised as a provision is the best financial statements as a current liability even where estimate of the consideration required to settle the TTA does not expect to settle the liability within 12 present obligation at the end of the reporting period, months because it will not have the unconditional taking into account the risks and uncertainties right to defer the settlement of the entitlement surrounding the obligation. Where a provision is should an employee take leave within 12 months: measured using the cash flows estimated to settle the present obligation, its carrying amount is the The components of this current LSL liability are present value of those cash flows. measured at: • present value – component that TTA does not 1.10.3. Provision for decommissioning and removal expect to settle within 12 months of existing ticketing system • nominal value – component that TTA expects to In accordance with AAS, TTA has provided for the settle within 12 months. estimated costs associated with the decommissioning and removal of the Metcard ticketing system assets. Conditional LSL is disclosed as a non-current The carrying amount is the present value of the liability. There is an unconditional right to defer the estimated cash outflows. settlement of the entitlement until the employee has completed the requisite years of service. 1.10.4. Employee benefits This non current LSL liability is measured at present value. Any gain or loss following revaluation of Provision is made for benefits accruing to employees the present value of non current LSL liability is in respect of wages and salaries, annual leave recognised as a transaction, except to the extent that and long service leave for services rendered to the a gain or loss arises due to changes in bond interest reporting date. rates for which it is then recognised as an other economic flow (refer to Note 1.8.2).

Annual Report 2012–13 39 (iii) Termination benefits Minimum lease payments are apportioned between reduction of the outstanding lease liability, and the Termination benefits are payable when employment periodic finance expense which is calculated using is terminated before the normal retirement date, or the interest rate implicit in the lease, and charged when an employee accepts voluntary redundancy directly to the comprehensive operating statement. in exchange for these benefits. TTA recognises Contingent rentals associated with finance leases termination benefits when it is demonstrably are recognised as an expense in the period in which committed to either terminating the employment of they are incurred. current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to Operating leases encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the TTA as lessee reporting period are discounted to present value. Operating lease payments, including any contingent rentals, are recognised as an expense in the (iv) Employee benefit on-costs comprehensive operating statement on a straight- line basis over the lease term, except where another Employee benefits on-costs such as payroll tax, systematic basis is more representative of the time workers compensation, superannuation, annual pattern of the benefits derived from the use of the leave and LSL accrued while on LSL taken in leased asset. The leased asset is not recognised in service are recognised separately from provision the balance sheet. for employee benefits. 1.12. Commitments 1.11. Leases Commitments for future expenditure include A lease is a right to use an asset for an agreed operating and capital commitments arising from period of time in exchange for payment. contracts. These commitments are disclosed by way Leases are classified at their inception as either of a note (refer to Note 19) and inclusive of the goods operating or finance leases based on the economic and services tax (GST) payable. In addition, where substance of the agreement so as to reflect the it is considered appropriate and provides additional risks and rewards incidental to ownership. Leases relevant information to users, the net present of plant and equipment are classified as finance values of significant individual projects are stated. infrastructure leases whenever the terms of the These future expenditures cease to be disclosed lease transfer substantially all the risks and rewards as commitments once the related liabilities are of ownership from the lessor to the lessee. All other recognised in the balance sheet. leases are classified as operating leases. 1.13. Contributed capital Finance leases Additions to net assets which have been designated as contributions by owners are recognised as TTA as lessee contributed capital. Other transfers that are in the At the beginning of the lease term, finance leases nature of contributions or distributions have also are initially recognised as assets and liabilities at been designated as contributed capital. amounts equal to the fair value of the lease property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The lease asset is depreciated over the shorter of the estimated useful life of the asset or the term of the lease.

40 Transport Ticketing Authority 1.14. Taxation Section 2(4) of the Transport Legislation Amendment (Public Transport Development Authority) Act 2011 provides for the dissolution of TTA on 30 June 2013. 1.14.1. Accounting for Goods and Services Tax (GST) In accordance with this, during 2012-13 the Metcard Income, expenses and assets are recognised ticketing system was ceased, and the responsibilities net of the amount of associated GST, unless the for and management of the myki operations and the GST incurred is not recoverable from the taxation residual project build was transitioned to PTV. authority. In this case, it is recognised as part of the cost of acquisition of the asset or as part of 1.16. Rounding of amounts the expense. Amounts in the financial statements have been Receivables and payables are stated inclusive of rounded to the nearest thousand dollars, unless the amount of GST receivable or payable. The net otherwise stated. Figures in the financial statements amount of GST recoverable from, or payable to, the may not equate due to rounding. taxation authority is included with other receivables or payables in the balance sheet. 1.17. AASs issued that are not yet effective Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or Certain new AASs have been published that are not financing activities, which are recoverable from or mandatory for the 30 June 2013 reporting period. payable to the taxation authority, are presented as DTF assesses the impact of these new standards operating cash flow. and advises departments and other entities of their applicability and early adoption where applicable. Commitments and contingent liabilities are also stated inclusive of GST. With the dissolution of TTA as at 30 June 2013, any AASs that have been issued but are not yet effective will have no impact on TTA. 1.14.2. Income tax status The activities of TTA are exempt from income tax.

1.15. Events after the reporting period

Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between TTA and other parties, the transactions are only recognised when the agreement is irrevocable at, or before the end of the reporting period. Adjustments are made to amounts recognised in the financial statements for events which occur after the reporting period and before the date the financial statements are authorised for issue, where those events provide information about conditions which existed in the reporting period. Note disclosure is made about events between the end of the reporting period and the date the statements are authorised for issue, where the events relate to conditions which arose after the end of the reporting period and which may have a material impact on the results of subsequent reporting periods.

Annual Report 2012–13 41 2. Dissolution of TTA – Minister Directions and Allocations

TTA was wound up and dissolved on 30 June 2013 pursuant to Transport Legislation Amendment (Public Transport Development Authority) Act 2011. This was achieved in stages as follows:-

2.1. Transfer of assets to PTV

On 1 January 2013 TTA transferred to PTV all property, rights, assets and liabilities except for: a) Those necessary for the orderly wind up of the affairs of the TTA, and b) NTS Assets

The transfer was designated as a capital contribution by owners and included the following net assets:

($)

Assets GST recoverable 1,864,211 Grant receivable from DTPLI 30,462,000 Accounts receivable 528,594 Other receivables 2,708,690 Card inventory 19,827,324 Card inventory write-down (15,653,488) myki Ticketing System funds in transit 4,333,122 (including card vending machine floats & underwriting settlements) myki Ticketing System development – work in progress 111,175,408 Fixed assets 46,051 Leasehold improvements 291,747

Liabilities Accounts payable (45,694,690) Receipt in advance (1,049,167) Provisioning for decommissioning of Metcard Ticketing System (21,507,305) Provision for staff entitlements – current (667,174) Provision for staff entitlements – non-current (122,830) Net assets transferred to PTV $86,542,493

42 Transport Ticketing Authority 2.2. Transfer of myki completed civil works assets to VicTrack

On 30 June 2013 TTA transferred to VicTrack completed civil works that form part of the fixed assets of the myki ticketing system (comprising cabling, conduit, trenches, pits, lids and bores). This transfer was designated as a contribution by owners and included the following net assets:

($)

Assets Civil works 62,306,043 Assets transferred to VicTrack 62,306,043

2.3. Transfer of myki assets to VicTrack

On 30 June 2013 TTA transferred to VicTrack the fixed assets of the myki ticketing system (comprising devices, network assets, NTS make good, and intangible assets for software development). This transfer was designated as a capital contribution and included the following net assets:

($)

Assets Devices 72,430,298 Network assets 254,653 NTS – make good 3,255,434 Intangible assets 85,952,006

Liabilities Provision for decommissioning (4,580,873) Net assets transferred to VicTrack 157,311,518

Annual Report 2012–13 43 2.4. Transfer of residual assets to PTV

On 30 June 2013 TTA transferred to PTV all residual property, rights, assets and liabilities in existence prior to dissolution of TTA. This transfer was designated as a capital contribution by owners and included the following net assets:

($)

Assets Bank account 405,790 GST recoverable 45,057 Account with PTV 303,974

Liabilities Payables (297,695) Provision for annual leave (16,415) Provision for retention incentive payments (10,281) Provision for long service leave (7,950) Net assets transferred to PTV 422,480

44 Transport Ticketing Authority 3. Income from transactions

($ thousand) 2013 2012

(a) Fair value of services received free of charge Fair value of services of asset maintenance of the new ticketing system received free of charge from Public Transport Victoria(i) 6,200 –

(b) Interest Interest on bank deposits 607 1,052 Total interest 607 1,052

(c) Fair value of net liabilities transferred free of charge Leave entitlements and equipment transferred to PTV – 954

(d) Other Revenue Card issuance revenue 7,466 4,676 Cost recovery from DTPLI on ticketing services and revenue audit function – 1,002 Cost recovery from PTV on project management – 381 Cost recovery from DTPLI on staff secondment – 126 Cost recovery from V/Line Pty Ltd on accounting services 22 126 Other cost recovery 209 331 Total other income 7,697 6,642

Notes: (i) From 1 January 2013 to 30 June 2013, TTA received services of maintenance of assets of the new ticketing system free of charge from Public Transport Victoria. Fair value of the asset maintenance services is determined at $6.2 million. Fair value of services of asset maintenance of the new ticketing system received free of charge is recognised as services received free of charge and expense (Refer to Note 4(d)).

Annual Report 2012–13 45 4. Expenses from transactions

($ thousand) 2013 2012

(a) Employee expenses Post-employment benefits: Defined contribution superannuation expense 221 613 Salaries, wages and long service leave expense 2,375 9,639 Total employee expenses 2,596 10,252

(b) Depreciation and amortisation Depreciation of plant and equipment (Table 9.3) 15,816 19,184 Amortisation of intangible assets with finite useful lives (Note 10) 3,404 6,809 Total depreciation and amortisation 19,220 25,993

(c) Fair value of resources provided free of charge Fair value of use of assets of the new ticketing system provided free of charge to Public Transport Victoria(i) Plant and equipment (Table 9.2) 8,412 – Software (Note 10) 3,404 – Total fair value of resources provided free of charge 11,816

(d) Fair value of services of asset maintenance Fair value of services of asset maintenance received free 6,200 – of charge from Public Transport Victoria(ii)

Notes: (i) From 1 January 2013 to 30 June 2013, TTA provided the use of assets of the new ticketing system free of charge to Public Transport Victoria. Fair value of the use of assets from 1 January 2013 to 30 June 2013 is determined as the amount of depreciation charge of the assets of $11,816 thousand. Use of assets provided free of charge to PTV is recognised as resources provided free of charge. (ii) From 1 January 2013 to 30 June 2013, TTA received services of maintenance of assets of the new ticketing system free of charge from Public Transport Victoria (Refer to Note 3(a)).

5. Other economic flows included in net result

($ thousand) 2013 2012

(a) Net gain/(loss) on non-financial assets Net gain/(loss) on disposal of plant and equipment (48) 169

(b) Other gains/(losses) from other economic flows Gain/(loss) on revaluation of long service leave provision Change in provision due to changes in bond rates – (13) Total other gains/(losses) from other economic flows – (13) Total other economic flows included in net result (48) 156

46 Transport Ticketing Authority 6. Cash and deposits

($ thousand) 2013 2012 Cash at bank and on hand – 5,220 Total – 5,220

Cash at the end of the year as shown in the Cash Flow Statement is reconciled to the cash assets above. Cash at bank and on hand does not include farebox funds held as agent for distribution to transport operators.

7. Receivables

($ thousand) 2013 2012

Current receivables Contractual Receivables(i) – 6,371

Statutory Amounts owing from DTPLI for grant and recoverable expenses – 22,297 GST input tax credit recoverable – 2,637 – 24,934 Total receivables – 31,305

Note (i) The average credit period for other receivables is 30 days. No interest is charged on other receivables.

Ageing analysis of contractual receivables Please refer to Note 18 for the ageing analysis of contractual receivables.

8. Inventories

($ thousand) 2013 2012

Current inventories Card inventories At cost – 20,223 Write-down (Note 23) – (15,702) Total inventories – 4,521

Annual Report 2012–13 47 9. Plant and equipment

Table 9.1 Classification by ‘Purpose Group’ – Carrying amounts

($ thousand) 2013 2012 Nature-based classification Transportation and Communications Computer equipment At cost – 344 Less: accumulated depreciation – 278 – 66 Furniture and equipment At cost – 235 Less: accumulated depreciation – 172 – 63 Leasehold improvement At cost – 1,406 Less: accumulated depreciation – 943 – 463 Work In Progress – NTS plant and equipment At cost – 73,813 – 73,813 Devices At cost – 115,118 Less: accumulated depreciation – 23,722 Less: impairment – 10,134 – 81,262 Network assets At cost – 2,789 Less: accumulated depreciation – 2,137 – 652 Civil works At cost – 88,251 Less: accumulated depreciation – 17,861 Less: impairment – 664 – 69,726 myki ticketing system – make good At fair value – 4,581 Less: accumulated depreciation – 910 – 3,671 Net carrying amount of plant and equipment – 229,716

48 Transport Ticketing Authority – – – – (36) (198) 2012 36,394 229,716 212,740 (19,184) – – – Total (50)

($ thousand) (998) 2013 26,258 (8,412) 229,716 (15,816) (230,698) – – – – – – – (416) 3,671 4,087 2012 – – – – – – NTS (208) (208) 3,671 good make 2013 (3,255) – – – – – – 8,380 2012 69,726 68,981 (7,635) – – – – – – 664 Civil works 2013 69,726 (8,084) (62,306) – – – – – – 373 652 (817) 1,096 2012 – – – – – – assets 652 (37) Network Network (255) (360) 2013 – – – (198) 3,069 2012 24,215 81,262 74,326 (9,936) (10,214) – – 750 Devices (664) (998) 7,869 2013 81,262 (6,960) (8,167) (73,092) – – – – – – – 21 (2) (19) 2012 – – – – – – – – – – Leased vehicles 2013 – – – – – 9,936 2012 33,241 73,813 63,604 (32,968) – – – – – – 2013 (7,869) 25,508 73,813 & equipment WIP NTS plant (91,452) – – – – – – – 511 463 (48) 2012 – – – – – – – 463 (292) (171) Leasehold 2013 improvement – – – – – – 89 63 (4) (22) 2012 – – – – – – – 63 (48) (15) equipment 2013 Furniture & Furniture – – – – – 25 84 66 (13) (30) 2012 – – – – – – 66 (2) (18) (46) Computer Computer equipment 2013 Opening balance Additions Transfer Disposals Depreciation/ amortisation expenses of value Fair resources free provided of charge 4(c)) (Note of Transfer impairment provision Impairment 23) (Note Transfers through administrative restructure balance Closing not material were and the decision was made that movements within this purpose group of assets all classes for been performed have assessments value Fair a full revaluation). for 10 per cent than or equal to (less Table 9.2 Classification by ‘Transportation and Communications’ Purpose Group – Movements in carrying amounts in – Movements Group Purpose Communications’ and by ‘Transportation Classification 9.2 Table

Annual Report 2012–13 49 Table 9.3 Aggregate depreciation/amortisation recognised as an expense during the year

($ thousand) 2013 2012 Computer equipment 18 30 Furniture and equipment 15 22 Leasehold improvements 171 48 Motor vehicles under lease - 2 Devices 6,960 10,214 Network assets 360 817 Civil works 8,084 7,635 NTS make good 208 416 Total 15,816 19,184

10. Intangible assets

($ thousand) Capitalised software development – Capitalised software Work in progress development Software/Licences Total 2013 2012 2013 2012 2013 2012 2013 2012

Gross carrying amount Opening balance 14,940 7,840 109,194 109,194 227 287 124,361 117,321 Additions 4,784 7,100 – – – – 4,784 7,100 Disposal – – – – (227) (60) (227) (60) Transfer through administrative restructure (19,724) – (109,194) – – – (128,918) – Closing balance – 14,940 – 109,194 – 227 – 124,361 Accumulated amortisation and impairment Opening balance – – 16,434 9,625 227 287 16,661 9,912 Amortisation expense – – 3,405 6,809 – – 3,405 6,809 Fair value of resources provided free of charge – – 3,404 – – – 3,404 – (Note 4(c)) Disposal – – – – (227) (60) (227) (60) Transfer through administrative restructure – – (23,243) – – – (23,243) – Closing balance – – – 16,434 – 227 – 16,661 Net book value at the end of the financial year – 14,940 – 92,760 – – – 107,700

TTA has capitalised costs for the development of the myki ticketing system. Amortisation of the carrying amount of the capitalised development costs starts at regional bus ‘go live’ date of 8 December 2008, metropolitan train ‘go live’ date of 29 December 2009 and metropolitan tram and bus ‘go live’ date of 25 July 2010.

50 Transport Ticketing Authority 11. Payables

($ thousand) 2013 2012

Current payables Contractual Amounts payable to DTPLI – 1,383 Other payables – 41,904 Total – 43,287

Note: The average credit period is less than 30 days. No interest is charged on creditors or amounts payable to other government entities/agencies.

(a) Maturity analysis of payables Please refer to Note 18 for the ageing analysis of payables.

Annual Report 2012–13 51 12. Provisions

($ thousand) 2013 2012

Current Employee benefits(i) – annual leave: Unconditional and expected to be settled within 12 months (ii) – 253 Unconditional and expected to be settled after 12 months (iii) – 206 Employee benefits(i) – long service leave: Unconditional and expected to be settled within 12 months (ii) – 35 Unconditional and expected to be settled after 12 months (iii) – 156 Staff retention scheme – 1,000 Performance incentive payments – – – 1,650 Provisions related to employee benefit on-costs: Unconditional and expected to be settled within 12 months (ii) – 45 Unconditional and expected to be settled after 12 months (iii) – 56 – 101 Provision for removal of the existing ticketing system – 22,002 Total current provisions – 23,753

Non-current provisions Employee benefits Conditional long service entitlements (iv) – 196 Employee benefits on-costs Provisions related to employee benefit on-costs – 28 Other provisions Provision for decommissioning of the new ticketing system – 4,581 Total non-current provisions – 4,805 Total provisions – 28,558

Notes: (i) Provisions for employee benefits consist of amounts for annual leave and long service leave accrued by employees, not including on-costs. (ii) The amounts disclosed are nominal amounts. (iii) The amounts disclosed are discounted to present values. (iv) The amounts disclosed represent less than seven years of continuous service measured at present value.

52 Transport Ticketing Authority 12.1. Employee benefits and related on-costs

($ thousand) Comprising of: 2013 2012

Current employee benefits Annual leave entitlements – 459 Staff retention scheme – 1,000 Performance incentive payments – – Long service leave entitlements – 191

Non-current employees benefits Long service leave entitlements – 196 Total employee benefits – 1,846 Current on-costs – 101 Non-current on-costs – 28 Total on-costs – 129 Total employee benefits and related costs – 1,975

12.2. Movement in provisions

($ thousand) Provision for decommissioning Provision for of new ticketing removal of existing On-costs system ticketing system Total Opening balance as at 1 July 2012 129 4,581 22,002 26,712 (Write-back) Additional provisions recognised (126) – (495) (621) Transfer through administrative restructure (3) (4,581) (21,507) (26,091) Closing balance as at 30 June 2013 – – – –

Annual Report 2012–13 53 13. Lease

Operating leasing arrangement

Operating lease relates to office premises which expired on 31 July 2013 with rent paid in June 2013 to cover the period to the end of lease. TTA does not have an option to purchase the lease assets at the expiry of the lease period.

($ thousand) 2013 2012

Non-cancellable operating lease payable Not longer than one year – 196 Total – 196

14. Reconciliation of net result for the year to net cash flows from operating activities

($ thousand) 2013 2012

Net result for the year (31,577) (27,218) Non-cash movements: Depreciation, amortisation and impairment 32,700 26,191 Inventory write-down (49) 1,029 (Gain)/loss from disposal of non-current assets 48 (169) Net liabilities transferred free of charge – (954) Movements in assets and liabilities: (Increase)/decrease in assets: Receivables (8,047) (17,346) Other non-current assets (497) (1,401) Increase/(decrease) in liabilities: Payables 4,102 1,202 Other liabilities (1,646) 18,522 Net cash from/(used in) operating activities (4,966) (144)

54 Transport Ticketing Authority 15. Responsible persons’ and executive officers’ disclosures

In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the reporting period.

Names

The persons who held the positions of Ministers, Board Members and Accountable Officer in TTA are:

Responsible Minister Minister for Public Transport The Hon. Terry Mulder MP 1 July 2012 to 30 June 2013

Board members Mr John McMillan Chairperson 1 July 2012 to 31 December 2012 Mr Peter Matthey 1 July 2012 to 31 December 2012 Mr John Peoples 1 July 2012 to 31 December 2012 Mr John Wilson 1 July 2012 to 31 December 2012 Accountable Officer Mr Bernie Carolan(i) 1 July 2012 to 30 June 2013 Mr Dean Yates(ii) post 30 June 2013 until certification of the financial statements for year ended 30 June 2013 Notes: (i) Mr Bernie Carolan was the Accountable Officer for TTA for the full financial year, whilst occupying positions being: • Chief Executive Officer for period 1 July 2012 to 31 December 2012. • TTA Administrator for period 1 January 2013 to 30 June 2013.

(ii) Mr Dean Yates became the Accountable Office for TTA post 30 June 2013 for the purpose of finalising the financial statements for the year ending 30 June 2013, and received no remuneration from TTA.

Annual Report 2012–13 55 Remuneration received or receivable by Board Members and the Accountable Officer in connection with the management of TTA during the reporting period was in the ranges: ‘Other economic flows’ are changes arising from market re-measurements. They include:

Board and Accountable Officer

Remuneration received or receivable by Board Members and the Accountable Officer in connection with the management of TTA during the reporting period was in the ranges:

Total remuneration Base remuneration 2013 2012 2013 2012 Income Band No. No. No. No. $10,000 – $19,999 3 – 3 – $20,000 – $29,999 – 1 – 1 $30,000 – $39,999 1 3 1 3 $50,000 – $59,999 – 1 – 1 $190,000 – $199,999 – – 1 – $360,000 – $369,999 1 – – – $370,000 – $379,999 – 1 – 1 Total numbers 5 6 5 6 Total amount $ 450,440 $ 558,305 $ 280,356 $ 558,305

(a) The TTA Board and Chief Executive Officer (as Accountable Officer) ceased on 31 December 2012. Administrator (as Accountable Officer) was contracted from 1 January 2013 to 30 June 2013 to dissolve TTA. (b) The total includes TTA Board and CEO as Accountable Officer until 31 December 2012, and Administrator as Accountable Officer on part time basis until 30 June 2013. Amounts relating to Ministers are reported in the financial report of the Department of Premier and Cabinet.

Related party transactions

Mr John McMillian, Chair of TTA, was Chair of Metlink Victoria Pty Ltd (Metlink) until its transition into PTV on 2 April 2012, at which time Mr McMillian’s Chair of Metlink ceased. Mr John Wilson, Director of TTA, is a Board Member of V/Line.

($ thousand) 2013 2012

Metlink Victoria Pty Ltd Costs of staff secondment – 485 myki project costs – – Costs of travel passes – – Total – 485

V/Line passenger myki project costs 9 – Total related party transactions 9 485

56 Transport Ticketing Authority 16. Executives Remuneration and payments to other personnel (i.e. Contractors with significant management responsibilities).

16.1. Remuneration of executives

The number of executive officers, other than Ministers, Board Members and the Accountable Officer, and their total remuneration during the reporting period are shown in the first two columns in the table below in their relevant income bands. The base remuneration of executive officers is shown in the third and fourth columns. Base remuneration is exclusive of bonus payments, long service leave payments, redundancy payments and retirement benefits. The total annualised employee equivalent provides a measure of full time equivalent executive officers over the reporting period.

Total remuneration Base remuneration 2013 2012 2013 2012 Income band No. No. No. No. $90,000 – $99,999 – – 2 – $100,000 – $109,999 2 – 1 – $110,000 – $119,999 1 1 – 1 $120,000 – $129,999 – – – 1 $130,000 – $139,999 – 2 – 1 $170,000 – $179,999 – – – 1 $180,000 – $189,999 – 1 – – $200,000 – $209,999 – – 1 1 $210,000 – $219,999 1 1 – – Total numbers (b) (c) 4 5 4 5 Total annualised employee equivalent 2.54 4.08 2.54 4.08 (AEE) (a) (b) (c) Total amount (b) $ 538,332 $ 787,520 $ 497,380 $ 743,219

(a) Annualised employee equivalent is based on working 38 ordinary hours per week over the reporting period (b) The above table includes six month salary and AEE of an executive officer who was transferred to PTV in April 2012 and seconded back to TTA until 31 December 2012. (c) The above totals included 2 employed and 1 seconded executives who all ceased at TTA 31 December 2012

Annual Report 2012–13 57 16.2. Payments to other personnel (i.e. Contractors with significant management responsibilities)

The following disclosures are made in relation to other personnel of the Transport Ticketing Authority, i.e. contractors charged with significant management responsibilities. Payments have been made to a number of contractors with significant management responsibilities, which are disclosed in $10,000 expense bands. These contractors have been responsible for myki project build and commercial contractual obligations, directly or indirectly, for TTA. Contractors were engaged by TTA for the full year for 2011–12, but only six months for 2012–13 owing to their engagements being transferred to PTV on 1 January 2013.

Total expense (exclusive of GST) 2013 2012 Expense band No. No. $210,000 – $219,999 1 – $280,000 – $289,999 1 – $480,000 – $489,999 – 1 $540,000 – $549,999 – 1 Total numbers 2 2 Total expenses (exclusive of GST) $ 504,538 $ 1,022,481

58 Transport Ticketing Authority 17. Superannuation scheme contributions and liabilities

Employees of TTA are entitled to receive superannuation benefits and TTA contributes to both defined benefit and defined contribution plans. The defined benefit plan(s) provides benefits based on years of service and final average salary. TTA does not recognise any defined benefit liability in respect of the plan(s) because the entity has no legal or constructive obligation to pay future benefits relating to its staff; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance recognises and discloses the state’s defined benefit liabilities in its financial statements. However, superannuation contributions paid or payable for the reporting period are included as part of employee benefits in the comprehensive operating statement of TTA. The names of the major employee superannuation funds and employer contributions made by TTA are as follows:

($ thousand) Paid contribution for the year 2013 2012

Defined benefits plan ESS Super 2 29

Defined contribution plans VicSuper Scheme 34 135 Australian Retirement Fund 171 414 Other Superannuation schemes 122 279 Total 329 857

No employer contributions were outstanding at year end. Apart from ESS Super, all superannuation payments were made to defined contribution plans.

18. Financial instruments

(a) Financial risk management objectives and policies

TTA’s principal financial instruments comprise: • cash assets; • receivables (excluding statutory receivables) and • payables (excluding statutory payables)

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised, with respect to each class of financial assets, financial liability and equity instrument are disclosed in Note 1 to the financial statements. TTA’s main financial risks include credit risk, liquidity risk and interest rate risk. TTA manages these financial risks in accordance with its financial risk management policy. Primary responsibility for the identification and management of financial risks rested with the Board of Directors of TTA, supported by the Audit Committee until 31 December 2012, and thereafter with the TTA Administrator.

Annual Report 2012–13 59 (b) Categorisation of financial instruments

($ thousand) Contractual financial Contractual assets – loans financial liabilities Note and receivables at amortised cost Total

2013 Contractual financial assets Cash and deposits 6 – – – Receivables (a) 7 – – – Total contractual financial assets – – –

Contractual financial liabilities Payables 11 – – – Total contractual financial liabilities – – –

($ thousand) Contractual financial Contractual assets – loans financial liabilities Note and receivables at amortised cost Total

2012 Contractual financial assets Cash and deposits 6 5,220 – 5,220 Receivables (a) 7 6,371 – 6,371 Total contractual financial assets 11,591 – 11,591

Contractual financial liabilities Payables 11 – 43,287 43,287 Total contractual financial liabilities – 43,287 43,287

Note: (a) The amount of receivables disclosed here excludes statutory receivables (i.e. amounts owing from the Victorian Government and GST input tax credit recoverable).

60 Transport Ticketing Authority (c) Credit risk exposures

Credit risk arises from the contractual financial assets of TTA, which comprise cash and deposits and non- statutory receivables. TTA’s exposure to credit risk arises from the potential default of counter-party on their contractual obligations resulting in financial loss to TTA. Credit risk is measured at fair value and is monitored on a regular basis. Credit risk associated with TTA’s financial assets is minimal because the main debtor is the Victorian Government. In addition, TTA does not engage in hedging for its contractual financial assets and mainly obtains contractual financial assets that are on fixed interest, except for cash assets, which are mainly cash at bank.

Credit quality of contractual financial assets that are neither past due nor impaired

($ thousand)

Financial Government institutions (AA agencies (AAA Others (without credit rating) credit rating) credit rating) Total

2013 Cash and deposits (Note 6) – – – – Receivables(a) (Note 7) – – – – Total contractual financial assets – – – –

2012 Cash and deposits (Note 6) 5,220 – – 5,220 Receivables(a) (Note 7) – – 6,371 6,371 Total contractual financial assets 5,220 – 6,371 11,591

Note: (a) The amount of receivables disclosed here excludes statutory receivables (i.e. amounts owing from the Victorian Government and GST input tax credit recoverable). Currently TTA does not hold any collateral as security nor credit enhancements relating to any of its financial assets.

Annual Report 2012–13 61 Ageing analysis of contractual financial assets

($ thousand) Past due but not impaired Not past Carrying due and not Less than 3 months Note amount impaired 1 month 1–3 months – 1 year 1–5 years

2013 Financial assets Cash and deposits 6 – – – – – – Receivables 7 – – – – – – Total – – – – – –

2012 Financial assets Cash and deposits 6 5,220 5,220 – – – – Receivables 7 6,371 6,371 – – – – Total 11,591 11,591 – – – –

(d) Liquidity risk

Liquidity risk arises when TTA is unable to meet its financial obligations as and when they fall due. TTA operates under the Government fair payments policy of settling financial obligations within 30 days and in the event of a dispute, makes payments within 30 days from the date of resolution. It also continuously manages risk through monitoring future cash flows. TTA’s exposure to liquidity risk is deemed insignificant based on prior periods’ data and current assessment of risk. The following table discloses the contractual maturity analysis for TTA’s contractual financial liabilities.

62 Transport Ticketing Authority Maturity analysis of contractual financial liabilities

($ thousand) Maturity dates Carrying Nominal Less than 3 months- Note amount amount 1 month 1-3 months 1 year 1-5 years

2013 Financial liabilities Payables Other payables 11 – – – – – – Amounts payable to other government entities/agencies 11 – – – – – – Total – – – – – –

2012 Financial liabilities Payables Other payables 11 41,904 41,904 41,874 29 – 1 Amounts payable to other government entities/agencies 11 1,383 1,383 1,383 – – – Total 43,287 43,287 43,257 29 – 1

(e) Interest rates exposure

Exposure to interest rate risk is insignificant and might arise primarily through TTA’s interest bearing liabilities. Minimisation of risk is achieved by mainly undertaking fixed rate or non-interest bearing financial instruments. For financial liabilities, TTA mainly undertakes financial liabilities with relatively even maturity profiles. TTA’s interest bearing liabilities are managed by DTPLI. The following table shows TTA’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and liabilities. Exposures arise primarily from assets and liabilities bearing variable interest rates.

Annual Report 2012–13 63 Interest rate exposure of financial instruments

($ thousand) Interest rate exposure Weighted Carrying/ average nominal Fixed Variable Non-interest Note interest rate amount interest rate interest rate bearing

2013 Financial assets Cash and deposits 6 – – – – Receivables 7 – – – – – – – –

Financial liabilities Payables Other payables 11 – – – – Amounts payable to other government entities/agencies 11 – – – –

– – – – Net financial assets (liabilities) – – – –

($ thousand) Interest rate exposure Weighted Carrying/ average nominal Fixed Variable Non-interest Note interest rate amount interest rate interest rate bearing

2012 Financial assets Cash and deposits 6 4.25% 5,220 – 5,220 – Receivables 7 6,371 – – 6,371 11,591 – 5,220 6,371

Financial liabilities Payables Other payables 11 41,904 – – 41,904 Amounts payable to other government entities/agencies 11 1,383 – – 1,383

43,287 – – 43,287 Net financial assets (liabilities) (31,696) – 5,220 (36,916)

64 Transport Ticketing Authority Sensitivity disclosure analysis Taking into account past performance, future expectations, economic forecasts and management’s knowledge and experience of the financial markets, TTA believes that interest rate movements, either way, will have a minimal impact on its financial instruments. The movement considered is a parallel shift of +1% and -1% on interest rate. TTA’s management cannot be expected to predict movements in market rates and prices; sensitivity analysis shown is for illustrative purposes only. The following table discloses the impact on TTA’s net result and equity for each category of financial instrument held by TTA at year end as presented to key management personnel, if the above movement were to occur.

Interest rate risk sensitivity

($ thousand) Interest rate -100 basis points +100 basis points Carrying amount Net result Equity Net result Equity

2013 Contractual financial assets Cash and deposits (i) – – – – – Total impact – – – – –

2012 Contractual financial assets Cash and deposits (i) 5,220 (52) (52) 52 52 Total impact – (52) (52) 52 52 (i) Cash and deposits includes a deposit of $0 thousand (2012: $5,200 thousand) that is exposed to floating rates movements. Sensitivities to these movements are calculated as follows: • 2012: $5,200 thousand x -0.01 = -$52 thousand; and $5,220 thousand x 0.01 = $52 thousand.

(f) Comparison between carrying amount and fair value

The fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

($ thousand) Carrying amount Fair value Carrying amount Fair value 2013 2013 2012 2012

Contractual financial assets Cash and deposits – – 5,220 5,220 Receivables – – 6,371 6,371 Total contractual financial assets – – 11,591 11,591

Contractual financial liabilities Payables – – 43,287 43,287 Total contractual financial liabilities – – 43,287 43,287

Annual Report 2011–12 65 19. Commitments for expenditure

The following commitments have not been recognised as liabilities in the financial statements.

($ thousand) 2013 2012

OLT Transition Amendment Deed – operations (Note a) Payable: Not longer than one year – 47,946 Longer than one year and not longer than five years – – Longer than five years – – – 47,946

NTS Contract – plant and equipment (Note b) Payable: Not longer than one year – 48,936 Longer than one year and not longer than five years – 12,631 Longer than five years – – – 61,567

NTS Contract – intangible assets (Note b) Payable: Not longer than one year – 31,133 Longer than one year and not longer than five years – 16,190 Longer than five years – – – 47,323

NTS Contract – operations (Note b) Payable: Not longer than one year – 35,125 Longer than one year and not longer than five years – 102,354 Longer than five years – 45,288 – 182,767 Total commitments for expenditure (inclusive of GST) – 339,603 Less GST recoverable from the Australian Taxation Office – 30,873 Total commitments for expenditure (exclusive of GST) – 308,730

Note (a): The OneLink Transit Systems (OLT) Transition Amendment Deed provides for full assistance and cooperation from the incumbent ticketing services provider throughout the new ticketing system transition and implementation phases. This agreement was transferred to PTV on 1 January 2013 and expired on 31 July 2013. Note (b): The NTS contract was awarded in July 2005 for the design, build and 10-year operation of the myki public transport ticketing system using smartcard technology. The operation phase of the NTS contract began on 8 May 2009 for initially 10 years with an option for a further two years. However the contract was renegotiated in March 2013 with a shorter contract operation term ceasing 30 June 2016. The contract was transferred to PTV on 1 January 2013.

66 Transport Ticketing Authority 20. Remuneration of auditors The following table shows the amounts of farebox distribution to DTPLI/PTV and V/Line. ($ thousand) For six months For the year ended 2013 2012 from 1 July 2012 to 30 June 2012 31 December 2012 Victorian Auditor-General’s Office Metcard $ 35,462,749 $ 425,688,336 Audit of the TTA’s financial statements 213 219 myki $ 280,255,945 $ 265,857,213 The Victorian Auditor-General’s Office has not provided TTA with any other services. Until 31 December 2012 TTA also received and managed myki customer money balances. These balances came from various channels including 21. myki system integrity audit ticketing machines, railway stations, retail outlets, the internet and the PTV Hub (formerly MetShop). Kamco operated the myki ticketing system, including TTA performed the accounts receivable function management of the myki financial system general for both ticketing systems and administered the ledger under contract to TTA until 31 December agreements with OLT and Kamco to ensure cash 2012, being the date responsibility was transferred collection services and payments via the banking to PTV. The PTV Revenue Audit Team acting on system were managed effectively. behalf of TTA conducted its own assurance function on these activities. In addition, TTA annually As at 30 June 2012, the following amounts were held commissioned an independent system audit on the in TTA managed bank accounts: myki ticketing system. The independent audit report • For distribution to DTPLI/PTV and V/Line: was commissioned for 2012/13 with no significant issues being noted as at 31 December 2012. Metcard $2,068,827 myki $4,724,856 22. Fare and cardholder funds myki cardholders funds $17,049,645 administration Metcard bank accounts were closed after completion of distribution of fare receipts captured by the Until 31 December 2012 TTA was responsible for Metcard ticketing system. Management of myki bank administering the collection and distribution of accounts was transferred to PTV on 1 January 2013. fare receipts captured by both the existing Metcard and new myki ticketing systems as specified in the From 2 April 2012 PTV manages the revenue audit Revenue Sharing and Ticketing Services Agreements function which focuses on reviewing and reporting with the DTPLI. TTA’s obligations were limited to on controls around farebox revenue collection fare receipts from ticket sales, and as such had and distribution processes within public transport no obligations with regards to fare evasion and operators. Formal planned revenue audits are therefore was not responsible for the completeness undertaken by TTA at metropolitan and V/Line of public transport revenues. train stations, as well as metropolitan and regional bus depots. TTA received fare receipts in its capacity as agent for PTV and transport operators to be distributed to them in accordance with their respective entitlements under the Agreements referred to above. The cash flows, bank balances and payables associated with these activities were therefore excluded from TTA’s accounts as they did not meet economic benefit or control criteria of Australian accounting standards. Similarly myki cardholders funds (‘myki money’) held in trust were not reported in TTA’s financial statements.

Annual Report 2012–13 67 23. Asset impairment TTA has made the following impairment assessments: On 21 June 2011, the Premier announced that the • Short-term cards Government would continue with the implementation and operation of myki, but with some changes to the In line with the Government policy project scope as follows: announcement, all short-term cards in stock as at 30 June 2012 were written off with the • Removing V/Line intercity trains and long exception of stocks required to support sales distance V/Line coaches from the initial scope on regional buses for a reasonable period. Total until at least steady state operations are amount of write-down as at 30 June 2012 was achieved in metropolitan Melbourne and major $15,702,136. regional centres Myki deployment on Regional buses has now • Eliminating to the extent possible the been completed with all remaining short-term introduction of short term cards, which are card stock written off and physically destroyed currently only in use on certain regional bus in 2012 – 13. services; and • No myki CVMs on trams • Operating trams without smartcard ticket vending machines (after Metcard equipment As at 30 June 2012 all hardware and software is removed). costs attributable to tram CVMs were written off except for any reasonably expected recovery of Costs already incurred in regard to the second and hardware costs as spare parts for compatible third changes are accordingly subject to impairment. network devices. The amount of impairment charge for 2011 – 12 was $197,095, resulting in The deferral of V/Line intercity trains and long total impairment charge of $13,078,028 as at 30 distance V/Line coaches is not seen as an June 2012. impairment event. As at 30 June 2013 the remaining costs of tram CVMs of $1,661,268 were written off and tram CVMs were physically destroyed after usable parts were extracted. Refer to Note 9 (Table 9.2) and Note 10.

68 Transport Ticketing Authority 24. Glossary of financial terms and Customer defined availability style convention A private company under contract to the state government operates and maintains the Metcard AAS ticketing system for Melbourne’s public transport. The current contract was awarded in May 1994 to the Australian Accounting Standard consortium OneLink Transit Systems Pty Ltd. Customer defined availability targets represent AASB minimum levels of acceptable availability and Australian Accounting Standards Board performance, and allow for specified levels of non-availability due to maintenance, servicing Actuarial gains or losses on superannuation and breakdowns. defined benefit plans The targets are included in the OneLink contract and determine whether OneLink incurs a penalty or Actuarial gains or losses reflect movements in the receives an incentive payment for its performance. superannuation liability resulting from differences between the assumptions used to calculate the Employee benefits expenses superannuation expense from transactions and actual experience. Employee benefits expenses include all costs related to employment including wages and salaries, ATO leave entitlements, redundancy payments and superannuation contributions. Australian Taxation Office Financial asset Commitments A financial asset is any asset that is: Commitments include those operating, capital and (a) cash other outsourcing commitments arising from non cancellable contractual or statutory sources. (b) an equity instrument of another entity (c) a contractual right: Comprehensive result • to receive cash or another financial asset from Total comprehensive result is the change in equity another entity for the period other than changes arising from transactions with owners. It is the aggregate of net • to exchange financial assets or financial result and other non-owner changes in equity. liabilities with another entity under conditions that are potentially favourable to the entity CPI (d) a contract that will or may be settled in the entity’s own equity instruments and is: Consumer price index • a non derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments • a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments.

Annual Report 2012–13 69 Financial statements GST

Depending on the context of the sentence where Goods and services tax the term ‘financial statements’ is used, it may include only the main financial statements (i.e. IASB comprehensive operating statement, balance sheet, cash flow statements, and statement of changes International Accounting Standards Board in equity); or it may also be used to replace the old term ‘financial report’ under the revised AASB 101 Intangible assets (Sept 2011), which means it may include the main financial statements and the notes. Intangible assets represent identifiable non monetary assets without physical substance. FRD Interest expense Financial Reporting Direction issued by the Department of Treasury and Finance. Costs incurred in connection with the borrowing of funds. Interest expenses include interest on bank GFS overdrafts and short term and long term borrowings, amortisation of discounts or premiums relating to Government Finance Statistics borrowings, interest component of finance leases repayments, and the increase in financial liabilities GG and non employee provisions due to the unwinding of discounts to reflect the passage of time. General government Interest revenue Grants and other transfers Interest revenue includes interest received on bank Transactions in which one unit provides goods, term deposits, interest from investments, and other services, assets (or extinguishes a liability) or labour interest received. to another unit without receiving approximately equal value in return. Grants can either be operating LSL or capital in nature. While grants to governments may result in the provision of some goods or Long service leave services to the transferor, they do not give the transferor a claim to receive directly benefits of Net acquisition of non financial assets approximately equal value. Receipt and sacrifice (from transactions) of approximately equal value may occur, but only by coincidence. For example, governments are not Purchases (and other acquisitions) of non financial obliged to provide commensurate benefits, in the assets less sales (or disposals) of non financial form of goods or services, to particular taxpayers assets less depreciation plus changes in inventories in return for their taxes. For this reason, grants are and other movements in non financial assets. referred to by the AASB as involuntary transfers and Includes only those increases or decreases in non are termed non reciprocal transfers. financial assets resulting from transactions and Grants can be paid as general purpose grants which therefore excludes write offs, impairment write refer to grants that are not subject to conditions downs and revaluations. regarding their use. Alternatively, they may be paid as specific purpose grants which are paid for a particular purpose and/or have conditions attached regarding their use.

70 Transport Ticketing Authority Net result Payables

Net result is a measure of financial performance Includes short and long term trade debt and of the operations for the period. It is the net result accounts payable, grants and interest payable. of items of revenue, gains and expenses (including losses) recognised for the period, excluding those PNFC that are classified as ‘other non owner changes in equity’. Public non-financial corporation

Net result from transactions/net operating Receivables balance Includes short and long term trade credit and Net result from transactions or net operating accounts receivable, grants, taxes and interest balance is a key fiscal aggregate and is revenue from receivable. transactions minus expenses from transactions. It is a summary measure of the ongoing sustainability Sales of goods and services of operations. It excludes gains and losses resulting from changes in price levels and other changes in Refers to revenue from the direct provision of goods the volume of assets. It is the component of the and services and includes fees and charges for change in net worth that is due to transactions and services rendered, sales of goods and services, fees can be attributed directly to government policies. from regulatory services, work done as an agent for private enterprises. It also includes rental income Non financial assets under operating leases and on produced assets such as buildings and entertainment, but excludes rent Non financial assets are all assets that are not income from the use of non produced assets such ‘financial assets’. as land. User charges includes sale of goods and services revenue. Other economic flows SD Other economic flows are changes in the volume or value of an asset or liability that do not result from Standing Direction issued by the Department of transactions. These include gains and losses from Treasury and Finance. disposals, revaluations and impairments of non current physical and intangible assets; actuarial Supplies and services gains and losses arising from defined benefit superannuation plans; fair value changes of financial Supplies and services generally represent cost instruments and agricultural assets; and depletion of goods sold and the day to day running costs, of natural assets (non produced) from their use or including maintenance costs, incurred in the normal removal. In simple terms, other economic flows are operations of TTA. changes arising from market re measurements.

Annual Report 2012–13 71 Transactions

Transactions are those economic flows that are considered to arise as a result of policy decisions, usually an interaction between two entities by mutual agreement. They also include flows within an entity such as depreciation where the owner is simultaneously acting as the owner of the depreciating asset and as the consumer of the service provided by the asset. Taxation is regarded as mutually agreed interactions between the Government and taxpayers. Transactions can be in kind (e.g. assets provided/given free of charge or for nominal consideration) or where the final consideration is cash. In simple terms, transactions arise from the policy decisions of the Government.

WIP

Work in progress relates to part of the myki system that is still being developed.

Style conventions

Figures in the tables and in the text have been rounded. Discrepancies in tables between totals and sums of components reflect rounding. Percentage variations in all tables are based on the underlying unrounded amounts. The notation used in the tables is as follows: .. zero, or rounded to zero (xxx.x) negative numbers 200x year period 200x-0x financial year period The financial statements and notes are presented based on the illustration for a government department in the 2012-13 Model Report for Victorian Government Departments.

72 Transport Ticketing Authority Acronyms and terms

Accountable Officer The Financial Management Act 1994 part 7 section 42 (2) defines the accountable officer for a public body as the chief executive officer of that body.

DTPLI Department of Transport Planning and Local Infrastructure (Formerly Department of Transport)

DPC Department of Premier and Cabinet

ESS Employee Shares Schemes

FRD Financial Reporting Directions

FTE Full-time employees

Kamco Keane Australia Micropayment Consortium Pty Ltd, the contractor for the new myki ticketing system.

LPG Liquefied petroleum gas

Metcard Melbourne’s former ticketing system, operating on train, tram and bus services (being replaced by myki).

Metro Trains Metro Trains Melbourne (MTM) operates Melbourne’s metropolitan train network including all Melbourne customer service activities as well as engineering and maintenance of rail infrastructure and rolling stock. MTM is a fully integrated Joint Venture between Hong Kong’s MTR Corporation, John Holland Melbourne Rail Franchise Pty Ltd and UGL Rail, division of United Group Limited.

MJ Megajoule

myki Victoria's new ticketing system. It is replacing the Metcard and V/Line ticketing systems, as well as paper tickets used on regional buses in Geelong, Seymour, Ballarat, Bendigo, Warragul and the Latrobe Valley. It is also extending to V/Line interurban trains and possibly longer distance V/Line services at a later stage.

NTS New Ticketing System (myki)

OLT OneLink Transit Systems Pty Ltd. Supplier of current Metcard system. OneLink consortium consists of: Ingot Capital Management Pty Ltd and the R Noble, JF & LJ Carroll Family Trust.

PTV Public Transport Victoria

SD Standing Direction

TTA Transport Ticketing Authority – the operating name of the Public Transport Ticketing Body.

V/Line V/Line Pty Ltd operates a network of passenger trains in Victoria and maintains and operates the regional below rail network, including being a network access provider for freight operators. V/Line is fully owned by the State of Victoria, through its parent entity, V/Line Corporation, a statutory corporation. Coach services throughout regional Victoria are run under the V/Line brand but operated by the private sector under contract to DTPLI.

VicTrack Victorian Rail Track

Annual Report 2012–13 73 74 Transport Ticketing Authority Annual Report 2012–13 75 76 Transport Ticketing Authority Authorised and produced by the Transport Ticketing Authority

© Transport Ticketing Authority 2013

This document is available in an accessible format at ptv.vic.gov.au

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