Published by Linking Authority Building 1 Level 1 Brandon Business Park 540 Springvale Road Glen Waverley 3150 August 2012 Also published on www.linkingmelbourne.vic.gov.au © State of Victoria 2012 This publication is copyright. No part may be reproduced by any process except in accordance with provisions of the Copyright Act. Authorised by the Victorian Government 121 Exhibition Street Melbourne Victoria 3000

Printed on Australian made, carbon neutral, recycled paper using waterless printing. CONTENTS

Acting Chairman’s report ...... 4

CEO’s report...... 5

Linking Melbourne, linking communities...... 6

Governance ...... 7 Our Board...... 7 Our people ...... 8

Peninsula Link ...... 9 Completing Melbourne’s missing link ...... 9 Project benefits...... 9 Project cost ...... 9 features ...... 9 Project objectives...... 10 Delivering Peninsula Link ...... 10 Property ...... 10 Construction ...... 11 Environment...... 12 Social...... 12 Community...... 13 Availability Public Private Partnership...... 13

East West Link ...... 14 A city shaping transport project...... 14 Project overview...... 14 Project benefits...... 15 Governance ...... 15 Business case development...... 15 Keeping communities informed...... 15

EastLink service centres ...... 16

Supporting our people...... 17

Abbreviations ...... 18

Financial statements...... 19

Statutory information ...... 68

Disclosure Index ...... 70 ACTING CHAIRMAN’S REPORT Tony Darvall

Despite the challenging weather conditions, the Peninsula Link project remains on schedule to open to motorists in the 2012-13 financial year, in what will be a major achievement for the Victorian Government and its private sector partners.

The opening of Peninsula Link in early 2013 will We are now turning our attention to the East significantly improve travel around Frankston West Link, the most significant road project and the , generating contemplated in Victoria since the delivery of outstanding transport, economic and CityLink. This project has the potential to shape community benefits for people and businesses the growth and development of Melbourne for in the region. The project is also delivering future generations. The entire team at LMA is great value to the people of Victoria, with the focused on lending its experience to the involvement of the private sector ensuring the Department of Transport as it works to deliver provision of an innovative and cost-effective a business case during 2012-13. project solution. Just as the focus of LMA is moving towards the Project Company Southern Way and its opening of Peninsula Link and supporting the construction contractor Abigroup are to be delivery of a robust East West Link business congratulated for the progress they have case, so too has the focus and composition of achieved, particularly given the impact of wet our Board changed. I would like to weather on construction. Their achievement is acknowledge the enormous contribution that evident to locals and all those visiting the area, David Buckingham made to LMA during his particularly with features including the period as Chairman between 2009 and 2012, EastLink interchange and 45 new structures most notably overseeing the procurement and nearing completion. The recent delivery of Peninsula Link. I also thank retiring commencement of asphalting, landscaping and Board members Shelley Penn and Anna noise wall construction further highlights Skarbek for their hard work and dedication to progress. the organisation over the same period.

Linking Melbourne Authority (LMA) and its In closing, I would like to congratulate our team of engineers, planners, property Chief Executive Officer Ken Mathers and the managers and communicators should be LMA team for their dedication and acknowledged for their role in facilitating this achievements during the year. Looking forward, major infrastructure project for Victoria, we welcome Claire Filson to the Board and particularly in overseeing construction, thank the Minister for his support and the managing environmental obligations, opportunity to assist with the delivery of overseeing traffic management arrangements Government priorities in the year ahead. and consulting with the community. Tony Darvall AM As the Peninsula Link project moves towards Acting Chairman its completion in the year ahead, the LMA team will turn its expertise and resources towards assisting the Department of Transport with the development of a business case for the East West Link, a major east-west road connection between the Eastern Freeway and Western Ring Road.

LMA has overseen the delivery of some of the largest road projects in Victoria, including the $2.5 billion EastLink project, and the CityLink development through its predecessor organisation the Melbourne City Link Authority.

PAGE 4 Linking Melbourne Authority Annual Report 2011/12 CEO’S REPORT Ken Mathers

Over the past year, Linking Melbourne Authority has continued its role in the development of road transport infrastructure that makes a difference to the economic well-being and liveability of Victoria.

Nowhere is this more evident than on alike, providing a place to rest and refuel with a Melbourne’s Mornington Peninsula, where the range of eating options and a spectacular Peninsula Link project is progressing rapidly and outdoor eating area overlooking Melbourne construction activities are in full swing along the Water wetlands. AA Holdings has done a entire 27 kilometre alignment. Highlights this remarkable job in developing these unique year have included construction of the EastLink service centres, with their attractive EastLink- interchange, as well as the completion of the inspired design and the inclusion of much Stony Point Rail Bridge which was slid into its needed truck rest facilities for the freight final position during a complex 72 hour rail industry. closure last September. I would like to add my voice to the Acting Chairman’s in congratulating The year ahead is set to be a rewarding one for Southern Way and its construction contractor everyone at LMA, given the much anticipated Abigroup for their exceptional progress over the opening of Peninsula Link in early 2013 and our past year, despite the rain. role in supporting the Department of Transport to develop a comprehensive and robust business The LMA team has worked diligently during the case for the East West Link, a once in a year to support the construction activities of generation, city shaping, road transport project. Southern Way, with much of our work focused on Needless to say, all members of our team are the important environmental and social aspects excited about the opportunities that 2012-13 will of the project. In addition to overseeing the present, as we continue to focus on delivering the project design, construction and traffic essential infrastructure that Melbourne needs to management, team members led a program of prosper and meet the challenges of the future. vegetation rehabilitation within the Pines Flora and Fauna Reserve, updated the Southern Brown In conclusion, I would also like to pay tribute to Bandicoot Management Plan and made effective our retiring Chairman David Buckingham and progress on our net gain obligations under the Board members Shelley Penn and Anna Skarbek. Native Vegetation Management Framework. I also thank the Minister, Board Members and Working with the community on the development the entire LMA team for their guidance and of the 25 kilometre shared use path, commencing support throughout what has been a rewarding improvement works on Baxter-Tooradin Road and and successful year. engaging with local people around construction Ken Mathers activities were also important achievements. Chief Executive Officer The opening of a state-of-the-art service centre on the northbound carriageway of EastLink near Ferntree Gully Road during the year is already proving popular with motorists and truck drivers

Linking Melbourne Authority Annual Report 2011/12 PAGE 5 LINKING MELBOURNE, LINKING COMMUNITIES

Our purpose and priorities • Regional Growth Plans will guide development and future infrastructure investment in LMA is a specialist Victorian Government regional Victoria, with a focus on providing authority responsible for overseeing the planning greater access from regional areas to national and delivery of complex road projects. and global supply chains and markets. • The Government is also delivering a Transport The organisation was established in 2003 as the Solutions Framework to identify and address Southern and Eastern Integrated Transport logistical bottlenecks in the transport network Authority (SEITA) to oversee the delivery of the to support the growth, competitiveness and $2.5 billion EastLink project. After the opening of productivity of regional businesses and EastLink in 2008, the authority was renamed industries. Linking Melbourne Authority to reflect its ongoing role in delivering projects that link communities, Together, these plans will ensure that land-use jobs and opportunities across the city. and infrastructure planning across the State is fully integrated and properly coordinated, LMA is overseeing construction of the 27 maximising the value obtained from investment kilometre Peninsula Link project by private in infrastructure and ensuring that Victorian company Southern Way as an Availability Public communities, businesses and industries can Private Partnership (PPP). Peninsula Link will adapt to changing circumstances and take complete the missing link in the Mornington advantage of new opportunities. Peninsula Freeway between Carrum Downs and Mount Martha, and deliver significant travel time Planning and transport policies and strategies in savings and many other benefits for the Victorian Victoria are brought together under the community. Transport Integration Act 2010. This legislation unifies the transport portfolio under one LMA is also assisting the Department of framework, with a core focus on achieving both Transport to deliver a business case and integration and sustainability in economic, planning work for the largest and most environmental and social terms. The Act requires significant road project proposed for Melbourne all transport agencies to work together toward in a generation: the East West Link. The East the common goal of an integrated, sustainable West Link is an 18 kilometre inner-urban freeway transport system. extending across Melbourne from the Eastern Freeway to the Western Ring Road. LMA previously undertook planning for the western section of the East West Link (WestLink).

Government priorities

LMA is dedicated to delivering high quality, innovative and well-planned projects in support of Victorian Government priorities. With Melbourne’s population forecast to reach five million by 2030, the Government is developing a range of planning strategies to protect the liveability and prosperity of Victoria: • The Metropolitan Planning Strategy will guide Melbourne’s growth and development over the next 30 to 40 years. This strategy will protect valued aspects of Melbourne’s heritage and character, while ensuring that the city has the infrastructure in place to meet future transport and other needs.

PAGE 6 Linking Melbourne Authority Annual Report 2011/12 GOVERNANCE Our Board

The LMA Board is appointed by the Governor-in-Council and is responsible to the Minister for Roads. The Board provides strategic advice and governance.

Tony Darvall AM - Acting Chairman Claire Filson Tony Darvall was a practising lawyer and a Claire Filson is a lawyer with 30 years’ partner of the law firm Corrs Chambers experience in the financial services and Westgarth from 1967 to 2003. He was a construction industries. She is a Non Executive Commissioner of the Essential Services Director of the Port of Hastings Development Commission for five years until last year. Tony Authority, a Non Executive Director of the was chairman of VicUrban (now Places Victoria) Victorian Pharmacy Authority, a member of the for seven years and was also on the board of Independent Compliance Committee of Melbourne City Link Authority. Tony was Sandhurst Trustees and a member of the chairman of the Melbourne University Law Independent Audit Committees of the Cities of School Foundation, Werribee Park Advisory Kingston and Hume. Claire is experienced in Board, the Legal practitioners’ Liability infrastructure development and management, Committee and Australia’s Open Garden Scheme. and is a former Non Executive Director of the Tony is the chairman of the Audit Committee of Southern Cross Station Authority. VicRoads and Acting Chairman of LMA. He is also a member of the Ethics Committee of the Royal LMA acknowledges the contribution of retiring Melbourne Research Foundation and chairman of Chairman David Buckingham and Board the Maud Gibson Trust. Tony was made a members Anna Skarbek and Shelley Penn member of the Order of Australia (AM) in 2008. between 2009 and 2012.

Gary Liddle Gary Liddle is a civil engineer and the current Chief Executive of VicRoads, an organisation he has served for more than 41 years’. Gary is Chair of Austroads, the Australasian organisation of road authorities and a Board Member of the Australian Road Research Board. He is also Chair of the Australian Chapter of the Road Engineering Association of Asia and Australasia (REAAA), a member of the REAAA Governing Council and a Board member of Roads Australia.

Linking Melbourne Authority Annual Report 2011/12 PAGE 7 GOVERNANCE Our people

LMA people are dedicated to delivering high quality infrastructure projects, and to working closely with stakeholders and communities to ensure that projects meet their needs and expectations.

Our team capabilities cover a wide range of engineering, technical, commercial, legal, financial and communications skills. Staff work under the guidance and direction of the Board and maintain effective working relationships with the Minister for Roads, Department of Transport, VicRoads and Public Transport Victoria.

MINISTER FOR ROADS

LMA BOARD Department of Transport

CHIEF EXECUTIVE OFFICER Department of Treasury and Finance Ken Mathers

Department of Premier and Cabinet

CHIEF OPERATING OFFICER Geoff Rayner

ENGINEERING AND COMMERCIAL AND COMMUNICATIONS CORPORATE SERVICES PLANNING LEGAL Jo Weeks - Director Christine Whelehan - Les Bull - Project Aneetha de Silva - Communications Director Corporate Director Peninsula Link Executive Director Services Bruno Aleksic - Director Commercial and Legal Planning

PAGE 8 Linking Melbourne Authority Annual Report 2011/12 PENINSULA LINK Completing one of Melbourne’s missing links

Opening to motorists in early 2013, the 27 kilometre Peninsula Link is the Mornington Peninsula’s biggest infrastructure project and will complete a missing link in Melbourne’s freeway network.

Peninsula Link will allow freeway conditions from Melbourne's CBD to Rosebud. It will significantly improve travel around Frankston and the Mornington Peninsula, generating transport, economic and community benefits for people and businesses across the region.

Project benefits • Creating local jobs – Peninsula Link is estimated to support 4,000 jobs during its Peninsula Link is being built in response to construction and early operation with some of strong population growth in Melbourne’s south these being indirect jobs created by the east and an associated increase in the demand significant investment in the area. for travel within the region. Project benefits include: Project cost • Travel time savings – A full trip on the freeway will take around 17 minutes, saving The Peninsula Link Project Summary outlining up to 40 minutes in peak periods. People who the financial arrangements for the project was choose to use Peninsula Link will bypass released in May 2010 and can be viewed at eight sets of traffic lights, six major www.partnerships.vic.gov.au. The cost to design roundabouts and a rail crossing. and construct Peninsula Link is $759 million. The Project Summary identifies the total cost of • Reducing congestion – Peninsula Link will ease payments to Southern Way over the life of the congestion on existing arterial roads such as project as $849 million (net present value). This the and Moorooduc includes maintenance, operation and Highway, with many roads expected to refurbishment costs over 25 years. experience up to a 30 per cent reduction in daily traffic volumes when the link opens.

• Supporting the economic development of Frankston – Improved access and amenity will make Frankston a more attractive place to invest and start a business. • Reducing business costs – Freight and Peninsula Link features commercial vehicles will be able to move more efficiently and quickly around the • 27 kilometres with two traffic lanes in each Mornington Peninsula and to and from direction Melbourne, reducing costs for businesses and • On and off ramps to 11 roads, including opening up new markets and opportunities. three freeway-to-freeway connections • Improving recreational opportunities – The • 28 bridges (45 separate structures) construction of a new 25 kilometre walking • A 25 kilometre walking and cycling path and cycling path and improvements in the • 1.7 million trees, plants and shrubs along Pines Flora and Fauna Reserve will create the corridor more opportunities for people to enjoy • New wetlands to treat water from the outdoor activities. roadway prior to release to waterways • Boosting tourism – Peninsula Link will • Wildlife underpasses, revegetation works encourage more tourists to visit the and creek improvements in the Pines Flora Mornington Peninsula and local businesses and Fauna Reserve will benefit from more visitors to the region.

Linking Melbourne Authority Annual Report 2011/12 PAGE 9 Project objectives 4. Provide value for money for the State and road users through innovative design, optimum risk Peninsula Link aims to meet key objectives allocation between the project parties and a designed to deliver benefits to Frankston, the whole-of-life approach to the design and Mornington Peninsula, Melbourne and Victoria: operation of the road.

1. Deliver an integrated, safe and efficient 5 Engage with stakeholders to ensure transport network by: transparent and efficient dealings with all parties associated with the project. • Reducing travel times and improving travel time reliability 6. Timeliness by delivering a fully operational • Improving freight and commercial vehicle Peninsula Link by early 2013. access within the corridor • Reducing traffic congestion • Delivering the project and related traffic Delivering Peninsula Link information systems After 40 years in the making, Peninsula Link • Retaining flexibility for future enhancement entered its final year of construction. Despite of Peninsula Link challenging weather conditions, strong progress • Integrating the project with the existing has been achieved and the project remains on surrounding transport network track to open in early 2013. • Providing flexibility to improve public transport services both within the project and on the surrounding transport network. Property 2. Protect and enhance environmental sustainability whilst adhering to applicable LMA staff worked in a professional and sensitive government laws, guidelines and standards manner to finalise land compensation concerning environmental protection (including arrangements with landowners. Of the original noise, water and air quality). 39 land acquisition and compensation cases, a further 14 were settled this year, with the 3. Increase social amenity along the corridor remaining six being negotiated. The preparation through high quality urban design, noise of freeway declaration, lease and maintenance attenuation solutions and socially sensitive plans was completed substantially in accordance construction and operations management. with project timeframes.

PAGE 10 Linking Melbourne Authority Annual Report 2011/12 Construction

Design on the project is now virtually complete and strong progress has been made on the ground despite the continuation of unfavourable weather conditions for construction throughout much of the year. More than 5,000 people have been inducted onto the project, with over 2.2 million man hours worked since construction commenced in February 2010. Earthworks are nearing completion, with the focus now turning to asphalting and adding Peninsula Link’s ‘finishing touches’, such as noise walls and landscaping.

Major construction achievements for 2011-12 include: Bridge building program to allow Abigroup to complete the ultimate Abigroup made considerable progress on its connection between Peninsula Link and the bridge building task during 2011-12, with work Mornington Peninsula Freeway. An animation underway or completed on all 45 structures to developed to explain the traffic changes to the be built for the project. The first bridge community and road users can be viewed at completed by Abigroup during the year was the www.youtube.com/linkingmelb Robinsons Road Bridge in Frankston South, which opened to traffic in January 2012, closely Asphalting followed by Bungower Road in Moorooduc. Abigroup has entered the pavement Other bridges completed during 2011-12 include construction phase as it heads towards project Eramosa Road West, Cranbourne Road and completion. An asphalt plant has been Loders Road. temporarily established off McClelland Drive opposite Centenary Park Drive to produce the EastLink interchange 380,000 tonnes of asphalt needed to surface Abigroup lifted 24 bridge beams into place over Peninsula Link. Abigroup has entered into an EastLink in November 2011 as part of work to alliance with Boral Asphalt (Victoria) to supply complete the biggest interchange on the project. road surfacing for the freeway. Construction of the EastLink-Peninsula Link interchange is a challenging task, with three Noise wall construction major freeways coming together: EastLink, Abigroup has commenced construction of noise Peninsula Link and the Mornington Peninsula walls along Peninsula Link to ensure the project Freeway. When complete, the Peninsula Link meets the required standards for traffic noise Bridge will be 320 metres long and extend reduction. The walls’ effectiveness will be across EastLink, the Mornington Peninsula confirmed through testing after Peninsula Link Freeway, the north-bound exit from Peninsula opens. In a first for Victoria, Peninsula Link will Link to EastLink and across Boggy Creek. With feature a new type of noise wall made from the bridge beams lifted, Abigroup has been polyethylene, a heavy duty plastic that offers concentrating on building the bridge abutments environmental and local benefits. The ‘poly and installing the architectural cladding. walls’ have greater flexibility in design, which means they can display patterns on both sides Stony Point Rail of the walls. Manufactured locally in Carrum A major project milestone was achieved when Downs, the walls have a lower carbon footprint the Stony Point rail bridge in Frankston slid into during the manufacturing process and are more its final position during a 72 hour rail closure in resistant to graffiti and easier to maintain. September 2011. Bridge foundations were installed ahead of time to minimise disruption to Landscaping train services between Frankston and Stony In May 2012, Abigroup commenced planting the Point. Working to a strict timeframe, Abigroup 1.7 million trees and shrubs earmarked for removed the existing track, excavated 5,000 Peninsula Link’s landscaping program. Grown cubic metres of earth and used a 600 tonne locally at nurseries in Frankston and Dandenong crane to place the bridge abutments, before the South, the native plants will provide an 500 tonne bridge was jacked into place and the attractive backdrop for drivers on Peninsula track reinstated. To view a time lapse video of Link and the surrounding communities. The this bridge construction, visit plants also offer environmental benefits, www.youtube.com/linkingmelb particularly when planted within and adjacent to new wetlands which are being established to Traffic management naturally treat water run-off from the freeway. Parties worked together to co-ordinate traffic management across the project, including the establishment and operation of side tracks, opening of bridges, and night time and weekend closures to facilitate bridge construction. A key activity was the introduction of a major traffic change at the Southern Interchange (intersection of Mornington Peninsula Freeway, and Old Moorooduc Road)

Linking Melbourne Authority Annual Report 2011/12 PAGE 11 Environment Social

Peninsula Link has a strong focus on protecting Peninsula Link is more than a road. As well as and enhancing the local environment, with reducing travel times and improving environmental standards and safeguards built connectivity, it will deliver a range of social into the project during planning and design. benefits. These include a 25 kilometre shared Along with extensive landscaping, special use path known as the Peninsula Link Trail efforts continue to be made in several areas: between Patterson Lakes and Moorooduc, and • Pines Flora and Fauna Reserve – Located a public art program in partnership with the just north of Frankston, the 240 hectare McClelland Gallery and Sculpture Park. Pines Flora and Fauna Reserve is an • Peninsula Link Trail – Progress was important asset for the local community. achieved on the construction of the shared LMA worked closely with Parks Victoria and use path during 2011-12, with sections of the Department of Sustainability and path completed at various locations, Environment to improve the reserve, and is including the Seaford Wetlands. Construction funding the revegetation of 16 hectares of of a number of pedestrian and cycling former orchard in the Pines, as well as bridges is also underway, including bridges undertaking weed and pest animal control to across Thompson Road and the Frankston improve conditions for native wildlife. During Freeway. The new Willow Road pedestrian 2011-12, a contract was awarded to bridge behind Naomi Court in Frankston Goldsmith Civil and Environmental to prepare opened in late March. for the revegetation program including • Public art program – During the year, upgrading fire trails and maintenance tracks, Southern Way announced three major improving drainage, installing rabbit-proof sculptures that will feature along the fencing and clearing existing shrubs and Peninsula Link route. These sculptures are weeds. LMA also released an Expression of being funded by the project developers, and Interest for the planting and maintenance of will be delivered by Southern Way in the 16 hectare site over a five year period. partnership with the McClelland Gallery and • Southern Brown Bandicoot – The Southern Sculpture Park. Panorama Station by Louise Brown Bandicoot is a medium-sized, ground Palmer will be located permanently at the dwelling marsupial native to southern, Peninsula Link/EastLink interchange; Dean eastern and south-western Australia. Once Coll’s Rex Australis: The King is dead, long common, it has declined considerably in the live the King will feature at Skye Road; and last decade. As a population of Southern Phil Price’s Tree of life will be positioned at Brown Bandicoots has previously existed in Cranbourne Road. Every two years, new the Pines, further work was undertaken artwork will be displayed at Skye Road and during the year to monitor for the Cranbourne Road. endangered species. The Southern Brown • Baxter-Tooradin Road improvement works – Bandicoot Management Plan developed for In addition to the Peninsula Link works being the project was updated during the year, with undertaken by Abigroup, LMA commenced a a new focus on habitat renewal for the future. package of enhancement works in the LMA also launched ‘Little Lost Bandicoots’, township of Baxter. New pedestrian signals an educational resource for schools and are operating outside the Baxter shops on libraries on the Peninsula. The resource aims Baxter-Tooradin Road and a contract has to educate children about local plants and been advertised for upgrading the road and animals that are at risk. to provide new footpaths, kerb and channel, • Native Vegetation Management Framework and drainage. – Vegetation removed for the project is being offset under Victoria’s Native Vegetation Management Framework. After an extensive search of 4,000 sites, LMA negotiated with landowners to secure sites at Bessie Creek and Tootgarook to ensure that similar significant vegetation is protected and appropriately managed.

PAGE 12 Linking Melbourne Authority Annual Report 2011/12 Community • Frankston Info Hub – the Peninsula Link Info Hub in Frankston welcomed hundreds of Keeping communities informed about Peninsula visitors during the year to view maps, scale Link continued to be a high priority for LMA’s models, images and videos, samples of project team throughout 2011-12. construction material and the interactive environment corner. Several thousand people Community Advisory Group (CAG) – • Eleven received presentations on the project delivered CAG meetings were held during the year to to community groups in Frankston and on the facilitate communication between the Mornington Peninsula. community and project team. The group helped to identify a range of community concerns, • More ways to connect – People looking to keep particularly in relation to construction impacts. up-to-date with Peninsula Link news The CAG is independently chaired and includes connected with LMA through social media local government representatives, local channels launched during the year. As well as interest groups and five community viewing the latest information on the LMA representatives from Frankston North, website, people across the Mornington Frankston, Mount Eliza, Baxter and Moorooduc. Peninsula are encouraged to follow the progress of Peninsula Link on: • Construction information – Abigroup continued to operate a 24-hour community line and issue @LinkingMelb advance notices of construction to residents and businesses surrounding the works. Four editions of the Peninsula Link newsletter were /LinkingMelbourne distributed via direct mail to households along the corridor, with each providing an insight into the latest project news and construction /LinkingMelb progress. Monthly e-updates were issued by LMA to more than 2,000 people who had registered to receive them. The latest project information can be viewed at: www.linkingmelbourne.vic.gov.au Community consultation – • LMA attended the www.peninsulalink.com.au Frankston Waterfront Festival in January where many hundreds of people took the opportunity to learn more about the project and have a fun photo taken with our photo board. More than 270 people attended ten community sausage sizzles held in September 2011 to hear project information and provide feedback on the project in a relaxed setting. A further 700 people attended six shopping centre displays held in Mornington, Rosebud and Frankston during March and April 2012 to explain major traffic changes at the Southern Interchange.

Availability Public Private Partnership

Peninsula Link is the first road project in Australia to be delivered as an Availability Public Private Partnership (PPP). Private company Southern Way is financing, designing, building, operating and maintaining Peninsula Link for 25 years. Once the project opens, Southern Way will receive quarterly payments from the Victorian Government subject to meeting key performance indicators, about traffic access, incident response, road maintenance and environmental management.

This PPP model allows Peninsula Link to be toll-free for users, while making use of private sector expertise and resources to deliver the project. Southern Way has appointed Abigroup, one of Australia’s leading contractors, to design and construct Peninsula Link and Lend Lease to maintain and operate the freeway upon its completion.

Linking Melbourne Authority Annual Report 2011/12 PAGE 13 EAST WEST LINK A city shaping transport project

The East West Link is potentially one of the biggest and most significant transport projects in Victoria – a once in a generation, city shaping project that would change the way people move around Melbourne and address the city’s poor east-west connectivity.

The East West Link is a proposed 18 kilometre purposes of the Transport Integration Act 2010. road connection that extends across Melbourne LMA was also designated by the Minister for from the Eastern Freeway to the Western Ring Roads as the public authority responsible for the Road. The project would provide a cross-city project under the Road Management Act 2004, alternative to the Monash and West Gate including the planning, construction and freeways (M1), remove traffic from Melbourne’s operation of a transport corridor, and related inner arterial roads, provide better links between infrastructure, broadly linking the end of the industry and the Port of Melbourne, and improve Eastern Freeway at Hoddle Street with the Port the overall connectivity of the city’s road network. of Melbourne.

The Victorian Government announced in May 2012 that it would commence business case development and planning work for the East Project overview West Link project. This includes the commencement of preliminary investigations, The project comprises two sections: such as geotechnical drilling, engineering and • Eastern section (approximately 8 kilometres) flora and fauna surveys to provide background Eastern Freeway to information to develop the project. (CityLink), and then to the Port of Melbourne. • Western section (approximately 10 The Department of Transport (DOT) is leading the kilometres) development of the East West Link business Port of Melbourne to the Western Ring Road case, with support and assistance from the LMA (known as WestLink). Planning for WestLink project team. was undertaken previously, although it is On 16 May 2012, the Minister for Transport subject to further statutory approvals. designated the East West Link (eastern section) as a Road Transport-Related Project for the

PAGE 14 Linking Melbourne Authority Annual Report 2011/12 Project benefits Governance

The East West Link is a once in a generation road As a city shaping project that could provide a infrastructure project that would cater for catalyst for sustainable urban renewal, the East population growth and the corresponding West Link will be planned in close coordination increase in transport movement across with other Victorian Government transport Melbourne, whilst driving economic development, initiatives, including Melbourne Metro and productivity and stimulating the creation of jobs. studies currently underway for Doncaster, Key project benefits include: Rowville, Avalon and rail. DOT • Improving cross-city connections – The East will lead the development of the East West Link West Link would cater for the strong and business case, with support from LMA and other growing demand for cross-city travel in Government agencies. A Steering Committee, Melbourne. With existing road links not having chaired by DOT, will oversee the development of sufficient capacity during peak periods – and the East West Link and ensure coordinated most connections also under increasing transport planning. pressure in non-peak periods – the project would accommodate the increase in demand for cross-city trips without a corresponding Business case development increase in congestion. • Reducing Melbourne’s over-reliance on the A business case is being developed by DOT to M1 – Melbourne currently relies heavily on the ascertain how much the East West Link project M1 as the only high-capacity east-west road would cost and how to achieve the best outcome connection giving access to the Port of for the community. LMA commenced preliminary Melbourne, industrial areas and interstate investigations in May 2012 to support the highways. The East West Link would provide a business case preparation, including much needed alternative route to the M1. geotechnical drilling, engineering investigations and flora and fauna surveys. • Improving freight efficiency – The East West Link would move trucks away from local The first rig commenced drilling on Alexandra streets and improve the flow of freight across Parade in Clifton Hill on 17 May 2012. Around fifty the city, reducing costs for businesses. It would 100mm diameter boreholes need to be drilled also be a vital part of the national land freight along the project corridor over several months. network, moving freight more efficiently from Drilling is being done to depths of 60 metres so regional areas to markets and export gateways that engineers can get an idea of the type and in Melbourne. strength of rock beneath the surface, as well as • Enhancing amenity and liveability – The East the depth of the water table, all of which are West Link has the potential to remove a important elements when planning and designing significant amount of traffic from inner- the construction of major tunnels. Geotechnical northern and inner-western suburban roads, drilling will supplement the desktop information making it easier for people to move around already available, and help to develop an their local areas. It would also provide understanding of how and where the project opportunities for more walking and cycling might be constructed. paths, and open up space for other road uses. • Contributing to urban and economic development – In combination with other transport network initiatives being delivered by Keeping communities the Victorian Government, the East West Link informed would support the long term growth and development of Melbourne by enhancing urban Communities will be kept well-informed about redevelopment and renewal. planning for the East West Link. Residents and • Enhancing public transport – An East West businesses in areas covered by the link will be Link would provide the opportunity to improve given opportunities to comment on and the frequency and reliability of road-based contribute to the development of the project as public transport services including trams and it progresses. These opportunities may include buses along both north-south and east-west public information displays, surveys, regular corridors. project newsletters and information.

Linking Melbourne Authority Annual Report 2011/12 PAGE 15 EASTLINK SERVICE CENTRES The final piece fits into place

Two uniquely-designed service centres catering for motorists, cyclists and pedestrians represent the final piece of the massive EastLink project.

EastLink opened in June 2008, ahead of developed by Melbourne Water along the schedule, and now caters for more than adjacent section of Dandenong Creek. The 60 million trips each year along the freeway. service centres have been designed to match Two service centres, located on EastLink the high standard of the EastLink motorway and between Wellington Road and Ferntree Gully feature a striking green and orange design with Road, will provide facilities for these motorists, extensive landscaping to complement the as well as for people using the EastLink surrounding environment. walking and cycling trail. Construction of the service centres commenced The service centres include a number of in late 2010 and continued throughout 2011-12. restaurants, truck and vehicle parking bays, Work initially concentrated on the north-bound cycling racks and, eventually, a terraced centre, which opened to customers on restaurant overlooking the new wetlands 21 December 2011. The south-bound service centre is scheduled to open to the public in mid to late 2012. EastLink features LMA, in cooperation with Melbourne Water, • 39 kilometres, with three lanes in each Parks Victoria and Knox City Council, arranged direction for most of this distance for the construction of shared use paths to • Connects the Eastern, Monash and connect the north-bound service centre with Frankston Freeways, bypassing more than the EastLink Trail and a new cycle path being 45 sets of traffic lights constructed by Knox City Council. • 17 interchanges and 88 bridges The connection to the EastLink Trail passes • Project cost: $2.5 billion through the new wetlands and across • Road owned and operated by ConnectEast Dandenong Creek. The connection to the Knox • Melbourne’s second fully-electronic tollway City Council path provides access to the existing • Includes the and path on Wellington Road. These works include (both untolled) almost two kilometres of path and two bridges and are expected to be completed in late 2012. • A 35 kilometre EastLink Trail • Opened 29 June 2008

PAGE 16 Linking Melbourne Authority Annual Report 2011/12 SUPPORTING OUR PEOPLE

LMA’s people are our greatest asset, and the key to our ability to deliver high quality infrastructure projects. During 2011-12, LMA continued to focus on developing our people, strengthening our organisational effectiveness and delivering strong financial management and effective corporate governance.

Developing our people Sustainability and innovation

Our training and development program focused LMA is moving towards adopting more on addressing common skills and knowledge sustainable practices across its operations, both gaps identified in individual Performance Plans. within the working environment and in relation to Eight staff took part in an in-house leadership the projects we oversee. Key initiatives development program, tailored to develop key undertaken during 2011-12 include: competencies identified as important to LMA’s • Introducing Onboard, an iPad-enabled continued success. The program was targeted at paperless meeting solution for Board and aspiring and current managers and aimed to Committee meetings. This gives Board provide participants with the skills, knowledge members and directors fast and secure access and practical tools to build personal, team and to meeting documents, as well as saving costs organisational effectiveness, enhance their in printing and delivering documents. leadership and management skills and become • Establishing a Sustainability Reference Group more self aware and effective as leaders. to provide leadership, coordination and guidance to LMA in integrating sustainability principles and practices within our corporate Managing information and operational activities. • Promoting staff attendance at a number of Managing large volumes of often highly technical sustainability seminars and summits to information is an important element in LMA’s increase their knowledge and understanding of operations. LMA upgraded its Electronic sustainability matters and how they relate to Document Management System to ensure the LMA projects. efficient management of information. • Becoming an organisational member of the Australian Green Infrastructure Council (AGIC), an industry body focused on enhancing Financial management sustainability in the design and construction of infrastructure projects in Australia. LMA has implemented internal controls and procedures that are consistent with best practice financial management. During the year, we undertook several activities, including: • Holding information sessions for staff on all finance-related policies and procedures to increase staff understanding and facilitate compliance. • Developing a comprehensive fraud control policy that covers prevention, detection, investigation and reporting strategies. • Maintaining full compliance with the Financial Management Compliance Framework.

Linking Melbourne Authority Annual Report 2011/12 PAGE 17 ABBREVIATIONS

AAS Australian Accounting Standards ATO Australian Taxation Office CAG Community Advisory Group CRG Community Reference Group DOT Department of Transport DPCD Department of Planning and Community Development DPC Department of Premier and Cabinet DTF Department of Treasury and Finance FRD Financial Reporting Direction GPC Government Purpose Classifications LMA Linking Melbourne Authority LSL Long Service Leave PPP Public Private Partnership SCA Service Concession Payments SEITA Southern and Eastern Integrated Transport Authority QSP Quarterly Service Payments

PAGE 18 Linking Melbourne Authority Annual Report 2011/12 LINKING MELBOURNE AUTHORITY FINANCIAL STATEMENTS 30 June 2012

CONTENTS Comprehensive operating statement ...... 20 Balance sheet...... 21 Statement of changes in equity ...... 22 Cash flow statement ...... 23 Notes to the financial statements ...... 24 Auditor-General’s report ...... 66

The Financial Statements cover Linking Melbourne Authority (LMA) as an individual entity.

LMA is a Victorian State Government Authority and is located at:

Building 1, Level 1 Brandon Business Park 540 Springvale Road Glen Waverley VIC 3150

A description of the nature of LMA’s operations and its principal activities is included in the Annual Report.

For queries in relation to LMA’s Financial Statements please call (03) 8562 6800.

Linking Melbourne Authority Annual Report 2011/12 PAGE 19 COMPREHENSIVE OPERATING STATEMENT for the financial year ended 30 June 2012

($ thousand)

Note 2012 2011

Continuing operations Income from transactions Grants from State Government 2 16,075 10,634 Independent Reviewer 2 3,809 3,401 Interest 2 140 207 Fair value of assets received free of charge 2 - 200 Other income 2 572 241

Total income from transactions 20,596 14,683

Expenses from transactions Employee expenses 2 (5,100) (5,626) Independent Reviewer 2 (3,809) (3,401) Professional and consultancy services 2 (5,674) (1,597) Occupancy expense 2 (828) (1,031) Depreciation 2 (303) (402) Interest expense 2 (28) (29) Other operating expenses 2 (6,631) (2,826)

Total expenses from transactions (22,373) (14,912)

Net result from transactions (net operating balance) (1,777) (229)

Other economic flows included in net result Net gain/(loss) on non-financial assets 2 19 34 Net gain/(loss) on property revaluation 2 (1,480) (6,485)

Total other economic flows included in net result (1,461) (6,451)

Net Result (3,238) (6,680)

Comprehensive result – total change in net worth (3,238) (6,680)

The above Comprehensive Operating Statement should be read in conjunction with the accompanying notes.

PAGE 20 Linking Melbourne Authority Annual Report 2011/12 BALANCE SHEET as at 30 June 2012

($ thousand)

Note 2012 2011

Assets Financial assets Cash and deposits 3 2,399 1,794 Receivables 4 18,552 34,660

Total financial assets 20,951 36,454

Non-financial assets Property, plant and equipment 5 8,021 8,048 Property acquired for roads 6 69,468 72,296 Works-in-progress 7 21,929 21,929 Property acquired for environmental net gain offset purposes 8 1,182 1,182 Other non-financial assets 1 52

Total non-financial assets 100,601 103,507

Total assets 121,552 139,961

Liabilities Payables 9 2,645 1,266 Interest bearing liabilities 10 443 375 Provision for compulsory land acquisitions 11 1,524 16,398 Other provisions 12 1,994 2,390

Total liabilities 6,606 20,429

Net assets 114,946 119,532

Equity Accumulated surplus/(deficit) 19 (9,918) (6,680) Contributed capital 19 124,864 126,212

Net worth 114,946 119,532

Leases 14 Commitments 15 Contingent assets and liabilities 16

The above Balance Sheet should be read in conjunction with the accompanying notes.

Linking Melbourne Authority Annual Report 2011/12 PAGE 21 STATEMENT OF CHANGES IN EQUITY for the financial year ended 30 June 2012

($ thousand)

Accumulated Contributed Total surplus capital

Balance at 1 July 2010 - - - Transferred from the Southern and Eastern Integrated Transport Authority (SEITA) 101,696 101,696 Net result for the year (6,680) - (6,680) Contributed capital - 24,516 24,516

Balance as at 30 June 2011 (6,680) 126,212 119,532

Net result for the year (3,238) - (3,238) Contributed capital - (1,348) (1,348)

Balance as at 30 June 2012 (9,918) 124,864 114,946

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

PAGE 22 Linking Melbourne Authority Annual Report 2011/12 CASH FLOW STATEMENT for the financial year ended 30 June 2012

($ thousand)

Note 2012 2011 Cash flows from operating activities Receipts Receipts from State Government 14,900 7,200 Receipts from other entities 4,578 3,540 Interest received 140 207

Total receipts 19,618 10,947

Payments Payments to suppliers and employees (21,154) (22,701) Goods and Services Tax paid to the ATO (i) (587) (1,206) Interest and other costs of finance paid (28) (29)

Total payments (21,769) (23,936)

Net cash flows from/(used in) operating activities 18 (2,151) (12,989)

Cash flows from investing activities Payments for land and infrastructure (13,536) (9,031) Payments for property, plant and equipment (276) (119)

Net cash flows from/(used in) investing activities (13,812) (9,150)

Cash flows from financing activities Proceeds from capital contributions by State Government 16,500 15,512 Transfer from SEITA - 8,503 Repayment of finance leases 68 (82)

Net cash flows from/(used in) financing activities 16,568 23,933

Net increase/(decrease) in cash and cash equivalents 605 1,794

Cash and cash equivalents at the beginning of the financial year 1,794 -

Cash and cash equivalents at the end of the financial year 3 2,399 1,794

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

(i) Goods and Services Tax paid to the ATO is presented on a net basis.

Linking Melbourne Authority Annual Report 2011/12 PAGE 23 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

TABLE OF CONTENTS

Note 1: Summary of accounting policies...... 25

Note 2: Income and expenses by nature and major activity ...... 38

Note 3: Cash and deposits ...... 41

Note 4: Receivables ...... 41

Note 5: Property, plant and equipment ...... 42

Note 6: Property acquired for roads ...... 43

Note 7: Works-in-progress...... 44

Note 8: Property acquired for environmental net gain offset purposes...... 44

Note 9: Payables...... 45

Note 10: Interest bearing liabilities ...... 45

Note 11: Provision for compulsory land acquisition...... 46

Note 12: Other provisions...... 47

Note 13: Superannuation ...... 49

Note 14: Leases...... 50

Note 15: Commitments ...... 52

Note 16: Contingent assets and contingent liabilities...... 54

Note 17: Financial instruments...... 55

Note 18: Reconciliation of comprehensive result to net cash flows from operating activities...... 60

Note 19: Movements in equity...... 60

Note 20: Responsible persons ...... 61

Note 21: Remuneration of executives...... 62

Note 22: Remuneration of auditors ...... 62

Note 23: Subsequent events ...... 63

Note 24: State initiated modifications and other works...... 63

Note 25: Restructuring of administrative arrangements...... 63

PAGE 24 Linking Melbourne Authority Annual Report 2011/12 NOTE 1: SUMMARY OF ACCOUNTING POLICIES These annual Financial Statements represent the audited general purpose Financial Statements for Linking Melbourne Authority (LMA).

(a) Statement of compliance These general purpose Financial Statements have been prepared in accordance with the Financial Management Act 1994 (FMA) and applicable Australian Accounting Standards (AAS) which include Interpretations, issued by the Australian Accounting Standards Board (AASB). In particular, they are presented in a manner consistent with the requirements of the AASB 1049 Whole of Government and General Government Sector Financial Reporting. Where appropriate, those AAS paragraphs applicable to not-for-profit entities have been applied. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. The annual Financial Statements were authorised for issue by the Acting Chairman of the Board on 14 August 2012.

(b) Basis of preparation and measurement The accrual basis of accounting has been applied in the preparation of these Financial Statements whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid. Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on professional judgements derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in future periods that are affected by the revision. Judgements and assumptions made by management in the application of AASs that have significant effects on the Financial Statements and estimates, with a significant risk of material adjustments in the next year, are disclosed throughout the notes to the Financial Statements. In particular, the provision for compulsory land acquisition (Note 11) is a source of estimation uncertainty based on management’s judgement. This can also impact on the carrying value of property acquired for roads (Note 6). These Financial Statements are presented in Australian dollars, and prepared in accordance with the historical cost convention except for non-financial physical assets which, subsequent to acquisition, are measured at a revalued amount being their fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent impairment losses. Revaluations are made with sufficient regularity to ensure that the carrying amounts do not materially differ from their fair value.

(c) Reporting entity The Financial Statements cover LMA as an individual reporting entity. LMA was created by the Transport Integration Act 2010. LMA is the successor in law to the Southern and Eastern Integrated Transport Authority which ceased to exist on 30 June 2010. LMA’s principal address is: Building 1, Brandon Business Park 540 Springvale Road Glen Waverley VIC 3150 The Financial Statements include all the controlled activities of LMA.

Linking Melbourne Authority Annual Report 2011/12 PAGE 25 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

(d) Objectives and funding LMA’s primary objective is to oversee the construction and delivery of the Peninsula Link project as a Public Private Partnership (PPP). Peninsula Link is a 27 kilometre freeway connection between EastLink and the Mornington Peninsula Freeway in Carrum Downs and the Mornington Peninsula Freeway in Mt Martha. The management of the Peninsula Link project is predominantly funded by grants from the Victorian Government and is delivered as an Availability PPP. LMA is assisting the Department of Transport to develop the business case and undertake preliminary planning work for the East West Link, an 18 kilometre cross city road connection between the Eastern Freeway and the Western Ring Road, which is funded by the Victorian Government.

(e) Scope and presentation of Financial Statements Comprehensive Operating Statement Income and expenses in the Comprehensive Operating Statement are classified according to whether or not they arise from ‘transactions’ or ‘other economic flows’. This classification is consistent with the whole of government reporting format and is allowed under AASB 101 Presentation of Financial Statements. ‘Transactions’ and ‘other economic flows’ are defined by the Australian System of Government Finance Statistics: Concepts, Sources and Methods 2005 and Amendments to Australian of Government Statistics, 2005 (ABS Catalogue No. 5514.0). ‘Transactions’ are those economic flows that are considered to arise as a result of policy decisions, usually interactions between two entities by mutual agreement. Transactions 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. ‘Other economic flows’ are changes arising from market re-measurements. They include: • gains and losses from disposals; and • revaluations and impairments of non-current physical and intangible assets. The net result is equivalent to profit or loss derived in accordance with AASs.

Balance Sheet Assets and liabilities are presented in liquidity order with assets aggregated into financial assets and non-financial assets. Current and non-current assets and liabilities (non-current being those assets or liabilities expected to be recovered or settled beyond 12 months) are disclosed in the notes, where relevant.

Cash Flow Statement Cash flows are classified according to whether or not they arise from operating activities, investing activities, or financing activities. This classification is consistent with requirements under AASB 107 Statement of Cash Flows.

Statements of Changes in Equity The Statement of Changes in Equity presents reconciliations of non-owner and owner changes in equity from the opening balance at the beginning of the reporting period to the closing balance at the end of the reporting period. It also shows separate changes due to amounts recognised in the ‘comprehensive result’ and amounts recognised in ‘other economic flows – other movements in equity’ related to ‘transactions with owner in its capacity as owner’.

Rounding Amounts in the Financial Statements have been rounded to the nearest thousand dollars, unless otherwise stated. Minor discrepancies in totals of tables are due to rounding.

PAGE 26 Linking Melbourne Authority Annual Report 2011/12 NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

(f) Income from transactions Income is recognised to the extent that it is probable that the economic benefits will flow to LMA and the income can be reliably measured at fair value.

Grants from State Government The State provides funding to LMA and revenue relevant to expenditure is recognised when expenditure is incurred. Funds are drawn down by LMA over the periods necessary to meet related expenditure.

Independent Reviewer income Southern Way provides the funding for the Independent Reviewer’s expenses relating to the Peninsula Link project. LMA recognises revenue, relevant to expenditure, when expenditure is incurred.

Fair value of assets received free of charge Contributions of resources received free of charge or for nominal consideration are recognised at fair value when LMA obtains control of them, irrespective of whether these contributions are subject to restrictions or conditions over their use.

Interest income Interest income is recognised using the effective interest method which allocates the interest over the relevant period.

Other income Other income includes rental income and income recognised for rendering of services as they are delivered.

(g) Expenses from transactions Expenses from transactions are recognised as they are incurred and reported in the financial year to which they relate.

Employee expenses These expenses include all costs related to employment (other than superannuation which is accounted for separately) including wages and salaries, fringe benefits tax, leave entitlements, redundancy payments and WorkCover premiums.

Superannuation The amount recognised in the Comprehensive Operating Statement is the employer contributions for members of both defined benefit and defined contribution superannuation plans that are paid or payable during the reporting period. 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 as an administered liability. Refer to DTF’s Annual Financial Statements for more detailed disclosures in relation to these plans.

Independent Reviewer Expenses from the Independent Reviewer are recognised as they are incurred. The Independent Reviewer’s expenses are recovered from Southern Way.

Depreciation All infrastructure assets, property, plant and equipment and leasehold improvements that have finite useful lives 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 estimated useful life. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight-line method.

Linking Melbourne Authority Annual Report 2011/12 PAGE 27 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, and adjustments made where appropriate. The following are typical estimated useful lives for the different asset classes for current and prior years.

Asset class Useful life Infrastructure assets 90 years Plant and equipment 3–5 years Motor vehicles 3 years Leasehold improvements over the useful life of the lease Intangible assets 5 years

Land, earthworks and land under declared roads, which are considered to have an indefinite life are not depreciated. Depreciation is not recognised in respect of these assets as their service potential has not, in any material sense, been consumed during the reporting period. Intangible produced assets with finite useful lives are depreciated as an expense from transactions on a systematic (typically straight-line) basis over the useful life of the asset. Depreciation 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. The consumption of intangible non produced assets with finite useful lives is not classified as a transaction, but as amortisation and is included in the net result as an ‘other economic flow’. Intangible assets with indefinite useful lives are not depreciated or amortised, but are tested annually for impairment.

Interest expense Interest expenses are recognised as expenses in the period in which they are incurred.

Other operating expenses Other operating expenses generally represent the day-to-day running costs, including maintenance costs, incurred in the normal operations of LMA. These items are recognised as an expense in the reporting period in which they are incurred.

(h) Other economic flows included in net result Other economic flows measure the change in volume or value of assets or liabilities that do not result from transactions.

Net gain/(loss) on non-financial assets Net gain/(loss) on non-financial assets includes realised and unrealised gains and losses from revaluations, impairments and disposals of all physical assets and intangible assets.

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

Impairment of non-financial assets Intangible assets are assessed annually for impairment and whenever there is an indication that the asset may be impaired. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written off as another economic flow, except to the extent that the write-down can be debited to an asset revaluation surplus amount applicable to that class of assets.

PAGE 28 Linking Melbourne Authority Annual Report 2011/12 NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

It is deemed that, in the event of the loss or destruction of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made. The recoverable amount for most assets is measured at the higher of depreciated replacement cost or fair value less costs to sell. The recoverable amount for assets held primarily to generate net cash inflows is measured at the higher of the present value of future cash flows expected to be obtained from the asset or fair value less costs to sell.

(i) Financial assets Cash and deposits Cash and deposits, including cash equivalents, comprise cash on hand and cash at banks which are held for the purpose of meeting short-term cash commitments rather than for investment purposes and are subject to an insignificant risk of changes in value.

Receivables Receivables consist of: • contractual receivables, which include mainly debtors in relation to goods and services; and • statutory receivables, which include predominantly amounts owing from the Victorian Government in relation to the Peninsula Link and East West Link projects and GST input tax credit recoverable. Receivables that are contractual are classified as financial instruments. Statutory receivables are not classified as financial instruments. Receivables are subject to impairment testing as described below. A provision for doubtful debts is recognised where there is objective evidence that the debts may not be collected, and bad debts are written off when identified. Contractual receivables are classified as financial instruments and categorised as loans and receivables. Statutory receivables are recognised and measured similarly to contractual receivables (except for impairment), but are not classified as financial instruments because they do not arise from a contract.

Impairment of financial assets At the end of each reporting period, LMA assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. All financial instrument assets, except those measured at fair value through profit or loss, are subject to annual review for impairment. Bad and doubtful debts for financial assets are assessed on a regular basis. Those bad debts considered as written-off by mutual consent are classified as a transaction expense. Bad debts not written-off by mutual consent and the allowance for doubtful receivables are classified as ‘other economic flows’ in the net result.

(j) Non-financial assets Property, plant and equipment Property, plant and equipment are measured initially at cost and subsequently revalued at fair value less accumulated depreciation and impairment.

Leasehold improvements The cost of leasehold improvements is capitalised as an asset and depreciated over the remaining term of the lease or the estimated useful life of the improvements, whichever is the shorter.

Acquisitions of assets The cost method of accounting is used for all acquisitions of assets. Cost is measured as the fair value of the assets given up or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. In the case of land, control is assumed by LMA when a Notice of Acquisition is issued for land that is compulsorily acquired. Assets acquired at no cost, or for nominal consideration, are initially recognised at their fair value at the date of acquisition.

Linking Melbourne Authority Annual Report 2011/12 PAGE 29 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

Revaluations of non-current physical assets Non-current physical assets measured at fair value are revalued in accordance with FRD 103D issued by the Minister for Finance. A full revaluation normally occurs every five years, based upon the asset’s Government Purpose Classification, but may occur more frequently if fair value assessments indicate material changes in values. Revaluation increases or decreases arise from differences between an asset’s carrying value and fair value. Net revaluation increases are recognised in ‘other economic flows – other movements in equity’, and accumulated in equity under the revaluation surplus. However, the net revaluation increase is recognised in the net result to the extent that it reverses a net revaluation decrease in respect of the same class of property, plant and equipment. Otherwise the net revaluation decreases are recognised immediately as ‘other economic flows’ in the net result. The net revaluation decrease recognised in ‘other economic flows – other movements in equity’ reduces the amount accumulated in equity under the asset revaluation surplus. Revaluation increases and decreases relating to individual assets within a class of property, plant and equipment, are offset against one another within that class but are not offset in respect of assets in different classes. Any asset revaluation surplus is not normally transferred to accumulated funds on de-recognition of the relevant asset.

Non-current physical assets constructed by LMA The cost of non-current physical assets constructed by LMA includes the cost of all materials used in construction, direct labour, consultant costs on the project and an appropriate proportion of variable and fixed overheads.

Property acquired for roads Property acquired for roads includes property acquired directly or indirectly as a result of an intention to construct a road within the vicinity of the property, and which has not been transferred for an alternate use. Land acquired is measured initially at cost of acquisition and subsequently at fair value less any impairment. The valuation basis is consistent with the entire class of property, plant and equipment, except land under roads. All costs directly associated with the acquisition of the land are capitalised into the acquisition cost. The property is classified in this sub category of land until such time as a road is constructed and declared under section 14 of the Road Management Act 2004 and then the asset is re-classified as land under declared roads. When such land is re-classified, it is transferred at its carrying amount at that time.

Property acquired for environmental net gain offset purposes Pursuant to section 6(2)(j) of the Planning and Environment Act 1987 and section 5.3(c) of the Peninsula Link Project Incorporated Document, LMA is required to comply with Victoria's Native Vegetation Management, A Framework for Action (Department of Natural Resources and Environment, 2002) and provide for net gain offsets for the project. Land acquired to secure net gain offset credits is recognised at acquisition cost in the year it is acquired following the signing of an unconditional contract.

Leased assets Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and rewards incidental to ownership. Leases of infrastructure, property, plant and equipment are classified as finance infrastructure leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership from the lessor to the lessee. All other leases are classified as operating leases. LMA as lessee At the commencement of the lease term, finance leases are initially recognised as assets and liabilities at 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.

PAGE 30 Linking Melbourne Authority Annual Report 2011/12 NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

Minimum lease payments are apportioned between reduction of the outstanding lease liability and periodic finance expense which is calculated using the interest rate implicit in the lease and charged directly to the Comprehensive Operating Statement. Contingent rentals associated with finance leases are recognised as an expense in the period in which they are incurred. Operating lease payments, including any contingent rentals, are recognised as an expense in the Comprehensive Operating Statement on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern of the benefits derived from the leased assets. Peninsula Link project During the 2009-10 financial year, Southern Way was awarded the contract to build and deliver the Peninsula Link project. This work has continued in 2011-12. The component of the contract relating to the design and construction of the road infrastructure is accounted for by LMA as a finance lease agreement (Note 14).

Works-in-progress Works-in-progress is stated at cost and not depreciated. Depreciation on works-in-progress commences when the asset is ready for its intended use.

Other non-financial assets Other non-financial assets include prepayments which represent payments in advance of receipt of goods or services or that part of expenditure made in one accounting period covering a term extending beyond that period.

Intangible assets Intangible assets are initially measured at cost. Subsequently, intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Costs incurred subsequent to initial acquisition are capitalised when it is expected that additional future economic benefits will flow to LMA.

(k) Liabilities Payables Payables consist of: • contractual payables such as accounts payable. Accounts payable represent liabilities for goods and services provided to LMA prior to the end of the financial year that are unpaid, and arise when LMA becomes obliged to make future payments in respect of the purchase of those goods and services; and • statutory payables, such as goods and services tax and fringe benefits tax payables. Contractual payables are classified as financial instruments and categorised as financial liabilities at amortised cost. Statutory payables are recognised and measured similarly to contractual payables, but are not classified as financial instruments and not included in the category of financial liabilities at amortised cost, because they do not arise from a contract.

Interest bearing liabilities Interest bearing liabilities are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, interest bearing liabilities are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the interest bearing liability using the effective interest rate method.

Provisions Provisions are recognised when LMA has a present obligation, the future sacrifice of economic benefits is probable and the amount of the provision can be measured reliably. For the land acquisition provision the present obligation is created when a Notice of Acquisition is issued. The land acquisition provision contains significant estimates based on management’s best judgement. As such, a material adjustment to the carrying amount of the land acquisition provision within the next financial year is possible.

Linking Melbourne Authority Annual Report 2011/12 PAGE 31 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.

Employee benefits Provision is made for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave for services rendered to the reporting date. Wages, salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in the provision for employee benefits in respect of employee services up to the reporting date, classified as current liabilities and measured at their nominal values. Those liabilities that are not expected to be settled within 12 months are also recognised in the provision for employee benefits as current liabilities, but are measured at present value of the amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.

Long service leave Liability for long service leave (LSL) is recognised in the provision for employee benefits. Unconditional LSL (representing seven or more years of continuous service for Victorian Public Service (VPS) staff and executives) is disclosed as a current liability even where LMA does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months. The components of this current LSL liability are measured at: • present value - component that LMA does not expect to settle within 12 months; and • nominal value - component that LMA expects to settle within 12 months. Conditional LSL (representing less than seven years of continuous service for VPS staff and executives) is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current LSL liability is measured at present value.

Employee benefits on-costs Employee benefits on-costs such as payroll tax, workers compensation and superannuation are recognised separately from the provision for employee benefits.

(l) Equity Contributions by owners Additions to net assets which have been designated as contributions by owners are recognised as contributed capital. Other transfers that are in the nature of contributions or distributions have also been designated as contributions by owners. Transfers of net assets arising from administrative restructurings are treated as distributions to or contributions by owners.

(m) Commitments Commitments for future expenditure include operating and capital commitments arising from contracts. These commitments are disclosed by way of a note at their nominal value and inclusive of the goods and services tax (GST) payable. In addition, where it is considered appropriate and provides additional relevant information to users, the net present values of significant individual projects are stated. These future expenditures cease to be disclosed as commitments once the related liabilities are recognised in the balance sheet.

PAGE 32 Linking Melbourne Authority Annual Report 2011/12 NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

(n) Contingent assets and contingent liabilities Contingent assets and contingent liabilities are not recognised in the Balance Sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively.

(o) Service concession arrangements The State sometimes enters into certain arrangements with private sector participants to design and construct or upgrade an asset used to provide public services. These arrangements are typically complex and usually include the provision of operational and maintenance services for a specified period of time. These arrangements are often referred to as either PPPs or Service Concession Arrangements (SCAs). The SCA involves the State paying the operator over the period of the arrangement, subject to specified performance criteria being met. At the date of commitment to the principal provisions of the arrangement, these estimated periodic payments are allocated between a component related to: 1. the design and construction, which is accounted for as a lease payment; 2. upgrading of the asset (lifecycle expenditure including road resurfacing), which is accounted for as a capital commitment; and 3. the ongoing operation and maintenance of the asset, which is accounted for as a commitment for operating costs. These are expensed in the Comprehensive Operating Statement as they are incurred. The Peninsula Link project which was awarded to Southern Way during the 2009/10 financial year is consistent with the SCA model described above. Refer to Note 14 for a detailed description of the Project. There is currently no authoritative accounting guidance applicable to grantors (the State) on the recognition and measurement of the right of the State to receive assets from such concession arrangements. Due to the lack of such guidance, there has been no change to existing policy and those assets are not currently recognised (Note 14).

(p) Goods and services tax (GST) Income, expenses and assets are recognised net of the amount of associated GST, except where GST incurred is not recoverable from the taxation authority. In this case, the GST payable is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Balance Sheet. Cash flows are presented on a gross basis. The GST component of cash flows arising from investing or financing activities which are recoverable from, or payable to, the taxation authority are presented as an operating cash flow. Commitments are also stated inclusive of GST.

(q) 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 LMA 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 date and before the date the statements are authorised for issue, where those events provide information about conditions which existed at the reporting date. Note that disclosure is made about events between the balance date and the date the statements are authorised for issue where the events relate to conditions which arose after the reporting date and which may have a material impact on the results of subsequent years.

Linking Melbourne Authority Annual Report 2011/12 PAGE 33 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

(r) New accounting standards and interpretations Certain new AASs have been published that are not mandatory for the 30 June 2012 reporting period. DTF assesses the impact of all these new standards and advises LMA of their applicability and early adoption where applicable. As at 30 June 2012, the following AASs have been issued by the AASB but are not yet effective. They become effective for the first Financial Statements for the reporting period commencing after the stated operative dates as follows:

Standard / Interpretation Summary Applicable Impact financial statements for annual reporting periods beginning or ending on

AASB 9 Financial instruments This Standard simplifies 1 Jan 2013 Detail of impact is still being requirements for the classification assessed. and measurement of financial assets resulting from Phase 1 of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement).

AASB 13 Fair Value This Standard outlines the 1 Jan 2013 Disclosure for fair value Measurement requirements for measuring the measurements using fair value of assets and liabilities unobservable inputs are and replaces the existing fair value relatively onerous compared to definition and guidance in other disclosure for fair value AASs. AASB 13 includes a ‘fair measurements using observable value hierarchy’ which ranks the inputs. Consequently, the valuation technique inputs into Standard may increase the three levels using unadjusted disclosures for public sector quoted prices in active markets for entities that have assets identical assets or liabilities, other measured using depreciated observable inputs and replacement cost. unobservable inputs.

AASB 119 Employee Benefits In this revised Standard for 1 Jan 2013 Not-for-profit entities are not defined benefit superannuation permitted to apply this Standard plans, there is a change to the prior to the mandatory methodology in the calculation of application date. superannuation expenses. In While the total superannuation particular, there is now a change in expense is unchanged, the the split between superannuation revised methodology is expected interest expense (classified as to have a negative impact on the transactions) and actuarial gains net result from transactions of and losses (classified as ‘Other the general government sector economic flows – other movements and for those few Victorian in equity’) reported on the public sector entities that report Comprehensive Operating superannuation defined benefit Statement. plans.

AASB 1053 Application of This Standard establishes a 1 July 2013 The Victorian Government is Tiers of Australian Accounting differential financial reporting currently considering the Standards framework consisting of two tiers impacts of Reduced Disclosure of reporting requirements for Requirements (RDRs) for certain preparing general purpose public sector entities and has financial statements. not decided if RDRs will be implemented in the Victorian public sector.

PAGE 34 Linking Melbourne Authority Annual Report 2011/12 NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

Standard / Interpretation Summary Applicable Impact financial statements for annual reporting periods beginning or ending on

AASB 2009-11 Amendments to This Standard gives effect to 1 Jan 2013 No significant impact is expected Australian Accounting consequential changes arising from these consequential Standards arising from AASB 9 from the issuance of AASB 9. amendments on entity reporting. [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 and 1038 and Interpretations 10 and 12]

AASB 2010-2 Amendments to This Standard makes amendments 1 July 2013 The Victorian Government is Australian Accounting to many Australian Accounting currently considering the Standards arising from Standards, including impacts of Reduced Disclosure Reduced Disclosure Interpretations, to introduce Requirements (RDRs) for certain Requirements reduced disclosure requirements public sector entities and has to the pronouncements for not decided if RDRs will be application by certain types of implemented in the Victorian entities. public sector.

AASB 2010-7 Amendments to These consequential amendments 1 Jan 2013 No significant impact is expected Australian Accounting are in relation to the introduction from these consequential Standards arising from of AASB 9. amendments on entity reporting. AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108,112, 118, 120, 121, 127, 128, 131,132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127]

AASB 2011-2 Amendments to The objective of this amendment is 1 July 2013 The Victorian Government is Australian Accounting to include some additional currently considering the Standards arising from the disclosure from the Trans-Tasman impacts of Reduced Disclosure Trans-Tasman Convergence Convergence Project and to reduce Requirements (RDRs) and has Project – Reduced Disclosure disclosure requirements for not decided if RDRs will be Requirements [AASB 101 & entities preparing general purpose implemented in the Victorian AASB 1054] financial statements under public sector. Australian Accounting Standards – Reduced Disclosure Requirements.

AASB 2011-3 Amendments to This amends AASB 1049 to clarify 1 July 2012 This amendment provides Australian Accounting the definition of the ABS GFS clarification to users preparing Standards – Orderly Adoption Manual, and to facilitate the the whole of government and of Changes to the ABS GFS adoption of changes to the general govovernment sector Manual and Related ABS GFS Manual and related financial reports on the version Amendments [AASB 1049] disclosures. of the GFS Manual to be used and what to disclose if the latest GFS Manual is not used. No impact on departmental or entity reporting.

AASB 2011-4 Amendments to This Standard amends AASB 124 1 July 2013 No significant impact is expected Australian Accounting Standards Related Party Disclosures by from these consequential to Remove Individual Key removing the disclosure amendments on entity Management Personnel requirements in AASB 124 in reporting. isclosure Requirements relation to individual key [AASB 124] management personnel (KMP).

Linking Melbourne Authority Annual Report 2011/12 PAGE 35 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

Standard / Interpretation Summary Applicable Impact financial statements for annual reporting periods beginning or ending on

AASB 2011-9 Amendments The main change resulting from 1 July 2012 This amending Standard could to Australian Accounting this Standard is a requirement for change the current presentation Standards – Presentation of entities to group items presented of ‘Other economic flows- other Items of Other Comprehensive in other comprehensive income movements in equity’ that will Income [AASB 1, 5, 7, 101, (OCI) on the basis of whether they be grouped on the basis of 112, 120, 121, 132, 133, 134, are potentially reclassifiable to whether they are potentially 1039 & 1049] profit or loss subsequently reclassifiable to profit or loss (reclassification adjustments). subsequently. No other These amendments do not remove significant impact will be the option to present profit or loss expected. and other comprehensive income in two statements, nor change the option to present items of OCI either before tax or net of tax.

AASB 2011-10 Amendments This Standard makes 1 Jan 2013 No significant impact is expected to Australian Accounting consequential changes to a range from these consequential Standards arising from of other Australian Accounting amendments on entity reporting. AASB 119 (September 2011) Standards and Interpretaion [AASB 1, AASB 8, AASB 101, arising from the issuance of AASB 124, AASB 134, AASB AASB 119 Employee Benefits. 1049 & AASB 2011-8 and Interpretation 14]

AASB 2011-11 Amendments to This Standard makes amendments 1 July 2013 The Victorian Government is AASB 119 (September 2011) to AASB 119 Employee Benefits currently considering the arising from Reduced (September 2011), to incorporate impacts of Reduced Disclosure Disclosure Requirements reduced disclosure requirements Requirements (RDRs) and has into the Standard for entities not decided if RDRs will be applying Tier 2 requirements in implemented in the Victorian preparing general purpose public sector. financial statements.

2011-13 Amendments to This Standard aims to improve the 1 July 2012 No significant impact is expected Australian Accounting Standard AASB 1049 Whole of Government from these consequential – Improvements to AASB 1049 and General Government Sector amendments on entity reporting. Financial Reporting at the operational level. The main amendments clarify a number of requirements in AASB 1049, including the amendment to allow disclosure of other measures of key fiscal aggregates as long as they are clearly distinguished from the key fiscal aggregates and do not detract from the the information required by AASB 1049. Furthermore, this Standard provides additional guidance and examples on the classification between ‘transactions’ and ‘other economic flows’ for GAAP items without GFS equivalents.

PAGE 36 Linking Melbourne Authority Annual Report 2011/12 NOTE 1: SUMMARY OF ACCOUNTING POLICIES continued...

Standard / Interpretation Summary Applicable Impact financial statements for annual reporting periods beginning or ending on

2012-1 Amendments to This amending Standard 1 July 2013 As the Victorian whole of Australian Accounting prescribes the reduced disclosure government and the general Standards - Fair Value requirements in a number of government (GG) sector are Measurement - Reduced Australian Accounting Standards subject to Tier 1 reporting Disclosure Requirements as a consequence of the issuance requirements (refer to AASB [AASB 3, AASB 7, AASB 13, of AASB 13 Fair Value 1053 Application of Tiers of AASB 140 & AASB 141] Measurement. Australian Accounting Standards), the reduced disclosure requirements included in AASB 2012-1 will not affect the financial reporting for Victorian whole of government and GG sector.

The following standards do not apply to LMA in the 2011-12 financial year: • AASB 10 Consolidated Financial Statements. • AASB 11 Joint Arrangements. • AASB 12 Disclosure of Interests in Other Entities. • AASB 127 Separate Financial Statements. • AASB 128 Investments in Associates and Joint Ventures. • AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112]. • AASB 2010-10 Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters [AASB 2009-11 & AASB 2010-7]. • AASB 2011-6 Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation – Reduced Disclosure Requirements [AASB 127, AASB 128 & AASB 131]. • AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards [AASB 1, 2, 3, 5, 7, 9, 2009-11, 101, 107, 112, 118, 121, 124, 132, 133, 136, 138, 139, 1023 & 1038 and Interpretations 5, 9, 16 & 17]. • AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 [AASB 1, 2, 3, 4, 5, 7, 9, 2009-11, 2010-7, 101, 102, 108, 110, 116, 117, 118, 119, 120, 121, 128, 131, 132, 133, 134, 136, 138, 139, 140, 141, 1004, 1023 & 1038 and Interpretations 2, 4, 12, 13, 14, 17, 19, 131 & 132]. • AASB 2011-12 Amendments to Australian Accounting Standards arising from Interpretation 20 [AASB 1]. • AASB Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine.

Linking Melbourne Authority Annual Report 2011/12 PAGE 37 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012 -2 - 200 572 239 140 207 (401) (407) 3,809 3,401 16,075 10,634 (3,809) (3,401) (5,100) (5,626) (4,699) (5,219) (558) - (558) - ----572241 ------

($ thousand) and Other Works (Peninsula Link)(Peninsula Modifications (SIMS) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Project Management Project State Initiated Environmental Link West East Total Superannuation (401) (407) Salaries and wages (4,141) (5,219) Independent Reviewer (3,809) (3,401) Total employee benefits employee Total (4,542) (5,626) NOTE 2: INCOME AND EXPENSES BY NATURE AND MAJOR ACTIVITY 2: INCOME AND EXPENSES BY NATURE NOTE incomeRental other incomeTotal transactions from income Total transactions Expenses from benefits Employee 12,780 14,093 56 516 - 190 51 2 525 516 400 190 6,775 - 20,596 14,683 Other income Sundry income 56 49 516 190 Interest 140207------Interest of charge free received of assets value Fair - 200 Independent Reviewer 3,809 3,401 Continuing operations transactions from Income Revenue Government State from Grants 8,775 10,234 - - 525 400 6,775 -

PAGE 38 Linking Melbourne Authority Annual Report 2011/12 - (1) (28) (29) (303) (402) (184) (246) (828) (1,031) (303) (401) (2,356)(4,091) (1,815) (765) (6,631) (2,826) (5,674) (1,597) (654) ------

($ thousand) and Other Works (Peninsula Link)(Peninsula Modifications (SIMS) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Project Management Project State Initiated Environmental Link West East Total Contract and professional and professional Contract (169) (107) (2,980) (658) (369) - (573) - Administration (1,702)Administration (1,815) Amortisation intangible assets assets Amortisation intangible - expensesTravel (1) (184) (246) Property, plant, and equipment (Note 5 (c)) plant, and equipment (Note Property, (303) (401) NOTE 2: INCOME AND EXPENSES BY NATURE AND MAJOR ACTIVITY continued... AND MAJOR ACTIVITY 2: INCOME AND EXPENSES BY NATURE NOTE Total depreciation and amortisation depreciation Total lease finance charges Interest Expenses Other Operating (303) (402) (28) (29) Total supplies and servicesTotal transactions from expenses Total transactions from Net result balance)(net operating (12,037) (13,832) (2,055) (3,036) (2,168) (2,980) (681) (525) (658) 743 (399) (369) (6,775) 261 (2,520) - - (491) (1,227) (22,373) (14,912) - - 1 - - (1,777) (229) Professional and consultancy services and consultancy Professional (472) (1,175) (56) (23) (156) (399) (4,990) - Occupancy expenseOccupancy and amortisation Depreciation (828) (1,031)

Linking Melbourne Authority Annual Report 2011/12 PAGE 39 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012 )

Planning and 19 34 (1,480) (6,485 (1,461) (6,451) rs. agement for Peninsula Link Peninsula agement for e project under the e project now been recognised by LMA at its now been recognised ------

($ thousand) and Other Works (Peninsula Link)(Peninsula Modifications (SIMS) 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Project Management Project State Initiated Environmental Link West East Total

Environment Protection and Biodiversity Conservation Act 1999. and the Total other economic flows included in flows other economic Total of this land. as LMA is in control value fair State Initiated Modifications (SIMS) and other works contracto by various been constructed Link that have Peninsula to LMA managed works adjacent During the 2011-12 financial year, Environmental th for of approval conditions to related Link. These are Peninsula to obligations in relation LMA has a number of environmental includes assets received free of charge. This is for land that was not previously recognised by any other State Entity and has by any other State recognised land that was not previously This is for of charge. free received includes assets NOTE 2: INCOME AND EXPENSES BY NATURE AND MAJOR ACTIVITY continued... AND MAJOR ACTIVITY 2: INCOME AND EXPENSES BY NATURE NOTE 6, 11)(Note net result (Note 19) result Comprehensive Description of major activities (applied to Note 2): (718) management Project (6,190) man Project on behalf of the State. Link project of the Peninsula development and administer facilitate to LMA has a major task (1,480) (2,520) (6,485) (491) (1,461) (6,451) - Link West East Link. West East planning work for early and undertake case the business develop to 1 the Department of Transport LMA is assisting - - (3,238) (6,680) Net gain/(loss) on property revaluation revaluation on property Net gain/(loss) Other economic flows included in net result flows Other economic on non-financial assetsNet gain/(loss) 19 34 Environment Act 1981

PAGE 40 Linking Melbourne Authority Annual Report 2011/12 NOTE 3: CASH AND DEPOSITS

($ thousand)

2012 2011

Total cash and deposits disclosed in the Balance Sheet 2,399 1,794

Cash and deposits at the end of the financial year as per Cash Flow Statement 2,399 1,794

NOTE 4: RECEIVABLES

($ thousand)

2012 2011

Current receivables

Contractual Trade debtors 361 370 361 370 Statutory Goods and services tax receivable 3,038 2,451 Accrued income – Peninsula Link 12,970 31,518 Accrued income – East West Link 1,875 - Accrued income – Independent Reviewer Peninsula Link 307 317 Accrued income – SIMS and other works 1 4

18,191 34,290

Total current receivables 18,552 34,660

LMA allows for 30 day terms on its receivables. LMA has no doubtful debts and no bad debts were written off.

(a) Ageing analysis of receivables Please refer to Note 17 for the ageing analysis of receivables.

(b) Nature and extent of risk arising from receivables Please refer to Note 17 for the nature and extent of credit risk arising from receivables.

Linking Melbourne Authority Annual Report 2011/12 PAGE 41 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 5: PROPERTY, PLANT AND EQUIPMENT Classification by ‘Transportation and Communications’ Purpose Group

(a) Carrying amounts

($ thousand)

2012 2011

Sub-classification by nature

Buildings: Leasehold improvements At fair value 1,725 1,725 Less: accumulated amortisation (1,725) (1,705) Infrastructure Asset: At fair value 7,522 7,522 Less: accumulated amortisation (104) (21) Plant, equipment and vehicles: At fair value 1,090 928 Less: accumulated depreciation (487) (401)

Net carrying amount of property, plant and equipment 8,021 8,048

(b) Movements in carrying amounts

($ thousand) Leasehold Infrastructure Plant, Total improvements at cost equipment at cost and vehicles at cost 2012 2011 2012 2011 2012 2011 2012 2011

Opening balance 20 - 7,501 - 527 - 8,048 - Capital contribution - 224 - - - 619 - 843 Additions - - - 7,522 394 285 394 7,807 Disposals - - - - (119) (201) (119) (201) Depreciation expense (Note 2) (20) (204) (84) (21) (199) (176) (303) (401)

Closing balance - 20 7,418 7,501 603 527 8,021 8,048

Property, plant and equipment are classified primarily by the ‘purpose’ for which the assets are used, according to one of six ‘Purpose Groups’ based upon Government Purpose Classifications (GPC). All assets within a ‘Purpose Group’ are further sub-categorised according to the asset’s ‘nature’ (i.e. buildings, plant and equipment etc), with each sub-category being classified as a separate class of asset for financial reporting purposes.

PAGE 42 Linking Melbourne Authority Annual Report 2011/12 NOTE 5: PROPERTY, PLANT AND EQUIPMENT continued...

(c) Aggregate depreciation recognised as an expense during the year

($ thousand)

2012 2011

Buildings 20 204 Infrastructure asset * 84 21 Plant, equipment and vehicles 199 176

303 401

* This is for a bridge at Lathams Road which was a Peninsula Link early works project.

NOTE 6: PROPERTY ACQUIRED FOR ROADS

($ thousand)

2012 2011

Balance at beginning of financial year 72,296 - Capital contribution - 64,881 Additions - 13,565 Assets received free of charge - 200 Land allocated as contributed capital from other government authorities - 134 Net gain/(loss) from fair value adjustments (2,828) (6,484)

Balance at end of financial year 69,468 72,296

Property acquired for roads relates to land acquired for the purpose of constructing the Peninsula Link project. Once Peninsula Link is constructed and declared under Section 14 of the Road Management Act 2004, it will be reclassified as ‘land under declared roads’. When such land is reclassified, it is transferred at its carrying amount at that time. The land acquisition provision (Note 11) is a source of estimation uncertainty based on management’s judgement. As such there is a significant risk of a material adjustment to the carrying amount of property acquired for roads within the next financial year.

Linking Melbourne Authority Annual Report 2011/12 PAGE 43 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 7: WORKS-IN-PROGRESS Classification by ‘Transportation and Communications’ Purpose Group

(a) Carrying amounts

($ thousand)

2012 2011

Works-in-progress: Works-in-progress - at cost 21,929 21,929

Net carrying amount of works in progress 21,929 21,929

(b) Movements in carrying amounts

($ thousand)

Works-in-progress Works-in-progress Total (Peninsula Link) (WestLink)

2012 2011 2012 2011 2012 2011

Opening balance 11,578 - 10,351 - 21,929 - Capital contribution - 15,489 - 3,977 - 19,466 Additions - 3,611 - 6,374 - 9,985 Transferred to infrastructure asset - (7,522) - - - (7,522)

Closing balance 11,578 11,578 10,351 10,351 21,929 21,929

NOTE 8: PROPERTY ACQUIRED FOR ENVIRONMENTAL NET GAIN OFFSET PURPOSES

($ thousand)

2012 2011

Balance at beginning of financial year 1,182 - Additions - 1,182

Balance at end of financial year 1,182 1,182

PAGE 44 Linking Melbourne Authority Annual Report 2011/12 NOTE 9: PAYABLES

($ thousand)

2012 2011

Contractual - current Trade creditors – Peninsula Link 30 30 Trade creditors – East West Link 242 - Trade creditors – SIMS and other works 1 - Accrued expenses – Peninsula Link 841 784 Accrued expenses – East West Link 1,371 200 Accrued expenses – SIMS and other works 91 213 Accrued expenses – Environmental 40 - Accrued expenses – Land Acquisition 29 39

Total payables 2,645 1,266

LMA allows for 14 day terms on its payables.

(a) Maturity analysis of payables Please refer to Note 17 for the ageing analysis of payables.

(b) Nature and extent of risk arising from payables Please refer to Note 17 for the nature and extent of risk arising from payables.

NOTE 10: INTEREST BEARING LIABILITIES

($ thousand)

2012 2011

Current Secured: Finance lease liabilities (i) (Note 14) 224 173

Total current interest bearing liabilities 224 173

Non-current Secured: Finance lease liabilities (i) (Note 14) 219 202

Total non-current interest bearing liabilities 219 202

Total interest bearing liabilities 443 375

(i) Secured by the assets leased.

Linking Melbourne Authority Annual Report 2011/12 PAGE 45 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 10: INTEREST BEARING LIABILITIES continued...

(a) Maturity analysis of interest bearing liabilities Please refer to Note 17 for the ageing analysis of interest bearing liabilities.

(b) Nature and extent of risk arising from interest bearing liabilities Please refer to Note 17 for the nature and extent of risk arising from interest bearing liabilities.

(c) Defaults and breaches During the current and prior year, there were no defaults and breaches of any of the loans.

NOTE 11: PROVISION FOR COMPULSORY LAND ACQUISITION

($ thousand)

2012 2011

Balance at beginning of financial year 16,398 - Capital contribution 7,146 Land acquisitions invoiced during the period (13,526) (3,939) Revision of estimate provision for compulsory land acquisitions (1,348) 13,191

Provision for compulsory land acquisition 1,524 16,398

The provision for compulsory land acquisition represents the remaining ‘estimate’ of land costs to complete the acquisition of land required for the Peninsula Link project. By nature the estimate of this provision will continually be revised throughout the life of the project as new information becomes available and settlements occur. It is expected that this would generally be due to changes in the land requirements of the project and ongoing revisions in the final settlement value of properties. The land acquisition provision is a source of estimation uncertainty based on management’s judgement. As such there is a significant risk of a material adjustment to the carrying amount of the land acquisition provision within the next financial year. This also impacts on the fair value of property acquired for roads (Note 6).

PAGE 46 Linking Melbourne Authority Annual Report 2011/12 NOTE 12: OTHER PROVISIONS

($ thousand)

2012 2011

Current provisions Employee benefits (i) – annual leave Unconditional and expected to be settled within 12 months (ii) 138 176 Unconditional and expected to be settled after 12 months (iii) 104 128

Employee benefits (i) – long service leave Unconditional and expected to be settled within 12 months (ii) 174 231 Unconditional and expected to be settled after 12 months (iii) 780 1,065 1,196 1,600 Provisions related to employee benefit on-costs Unconditional and expected to be settled within 12 months (ii) 53 67 Unconditional and expected to be settled after 12 months (iii) 152 201 205 268 Other provisions Performance incentive provision 238 233 Make good provision 21 -

259 233

Total current provisions 1,660 2,101

Non-current provisions Employee Benefits 114 87 Employee benefits on-costs 17 13 Make good provisions 203 190

Total non-current provisions 334 289

Total provisions 1,994 2,390

Note: (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.

Linking Melbourne Authority Annual Report 2011/12 PAGE 47 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 12: OTHER PROVISIONS continued...

(a) Employee benefits and related on-costs

($ thousand)

2012 2011

Current employee benefits Annual leave entitlements 242 304 Long service leave entitlements 954 1,296

Non-current employee benefits Long service leave entitlements 114 87

Total employee benefits 1,310 1,687

Current on-costs 204 268 Non-current on-costs 17 12

Total on-costs 221 280

Total employee benefits and related on-costs 1,531 1,967

(b) Movement in provisions

($ thousand) Employee Performance Employee Make Total benefits incentive benefits good provision on-costs provision

Opening balance 1,687 233 280 190 2,390 Additional provisions recognised/ reduction from payments (9) 5 13 34 43 Adjustment (368) - (71) - (439)

Closing balance 1,310 238 222 224 1,994

Current 1,196 238 205 21 1,660 Non-current 114 - 17 203 334

1,310 238 222 224 1,994

The adjustment resulted from a correction of the calculation of the long service leave provision which resulted in a positive revision of $439,000. Current employee benefits comprise all annual leave entitlements as well as long service leave entitlements representing seven plus years of continuous service.

PAGE 48 Linking Melbourne Authority Annual Report 2011/12 NOTE 12: OTHER PROVISIONS continued...

As explained in Note 1(k) the amount for long service leave is measured at its present value. The following assumptions were adopted in measuring present value:

2012 2011

Weighted average rates of increase in annual employee entitlements to settlement of the liabilities 2.87% 5.05% Weighted average terms to settlement of the liabilities 15 years 15 years

Employee numbers

2012 2011

The number of employees as at 30 June 39 43

NOTE 13: SUPERANNUATION

($ thousand)

Contribution Contribution for the Year for the Year

2012 2011

Defined benefits plans: State Government Superannuation Scheme – revised and new 32 32 Defined contribution plans: Victorian Superannuation Fund – Vic Super Scheme 296 324 Private Funds 67 64

Total 395 420

The basis for contributions is determined by the various schemes. The above amounts were measured as at 30 June of each year, or in the case of employer contributions they relate to the period ended 30 June 2012. There are no contributions outstanding to the above funds at 30 June 2012.

Linking Melbourne Authority Annual Report 2011/12 PAGE 49 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 14: LEASES

(a) Finance leases Finance leases relate to motor vehicles with lease terms of three years. LMA does not have an option to purchase the motor vehicles at the conclusion of the lease agreement.

($ thousand) Minimum future Percent value of lease payments minimum future lease payments 2012 2011 2012 2011

Finance lease liabilities payable Not longer than 1 year 245 193 224 173 Longer than 1 year and not longer than 5 years 229 210 219 202

Minimum lease payments 474 403 443 375 Less: future finance charges (31) (28) - -

Present value of minimum lease payments 443 375 443 375

Included in the Financial Statements as: Current interest bearing liabilities (Note 10) 224 173 Non-current interest bearing liabilities (Note 10) 219 202

443 375

(b) Finance leases – Peninsula Link project During the 2009-10 financial year, Southern Way was awarded the contract to build and deliver the toll- free Peninsula Link project. The component of the contract relating to the design and construction of the road infrastructure is to be accounted for by LMA as a Finance Lease agreement in accordance with the current Government accounting policy for availability based Private Provision for Public Infrastructure (PPPI) projects in 2012-13. The component of the contract relating to the operation and maintenance of the road infrastructure is considered a service contract. The remaining component of the contract is a lifecycle capital commitment (this includes road resurfacing). Under the arrangement of the contract with Southern Way, the component of service payments to be paid by LMA relating to design and construction of the road infrastructure represents the minimum lease payments over the project term. These design and construction service payments as specified in the project agreement were agreed at the inception of the lease agreement and are not subject to variations during the project term (i.e. Southern Way bears any construction risks). There is no contingent rent payable under the agreement. During the project term, Southern Way is required to operate the road infrastructure with the objective of making the road available for public use on behalf of the State. The Government retains the residual interest in the road infrastructure at the end of the project term and will take ownership of the road infrastructure at that time. Accordingly, the design and construction component of the contract with Southern Way is considered a Finance Lease agreement, whereby LMA is the lessee. There is no purchase option under the agreement. The contract was awarded to Southern Way on 20 January 2010 and financial close was achieved on 8 February 2010. The commencement date of the lease is scheduled for 8 December 2012 or at the time of project completion.

PAGE 50 Linking Melbourne Authority Annual Report 2011/12 NOTE 14: LEASES continued...

The total contracted minimum future lease payments are presented below together with the present value of the minimum future lease payments to be recognised at the commencement date of 8 December 2012 or at the time of project completion. There is no contractual lease liability or leased asset to be recognised as at 30 June 2012. The initial recognition of the lease liability and leased asset will occur as of the lease commencement date expected to be 8 December 2012 or at the time of project completion, in the Financial Statements for the year ending 30 June 2013. These amounts are commitments until recognised as a finance lease in 2012.

($ thousand) Minimum future lease payments 2012 2011

Finance lease payable from commencement date (i) Not longer than 1 year 38,487 - Longer than 1 year but not longer than 5 years 460,163 392,493 Later than 5 years 1,796,639 1,902,796

Minimum future lease payments (nominal) 2,295,289 2,295,289 Less: future finance charges (1,450,477) (1,450,477)

Present value of minimum lease payments 844,812 844,812

Note: (i) These minimum future lease payments (totalling $2,295 million) were contracted and committed to but they are only payable from the commencement date of the lease agreement expected to be 8 December 2012. Key assumptions in calculating the net present value of the minimum lease payments include: The Finance Lease payable has been disclosed from commencement date, December 2012. The Finance Lease will run over a 25 year period with quarterly payments to Southern Way. The minimum lease payments relate to the design and construction component. The phasing of the minimum lease payments (in time brackets) are calculated from the reporting date (30 June 2012). The discount rate implicit in the Finance Lease is 10.95%.

($ thousand) Minimum future lease payments 2012 2011 Present value of minimum lease payments to be recognised at initial recognition date of December 2012 (ii) Not longer than 1 year 90,847 90,847 Longer than 1 year but no longer than 5 years 316,357 316,357 Later than 5 years 437,608 437,608

Present value of minimum lease payments 844,812 844,812

Note: (ii) The present value of minimum lease payments has been determined as at the lease commencement date with minimum payments derived from the present value of the project cost as outlined in the Peninsula Link Project Summary.

Linking Melbourne Authority Annual Report 2011/12 PAGE 51 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 14: LEASES continued...

(c) Operating leases Operating leases relate to office facilities with lease terms of between two to three years with an option to extend. The operating leases contain review clauses in the event that LMA exercises its option to renew. LMA does not have an option to purchase the leased assets at the expiry of the lease period.

($ thousand)

2012 2011 Non-cancellable operating leases payable: office facilities Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within 1 year 549 524 Later than 1 year but not later than 5 years 94 331 643 855

(i) Maturity analysis of finance lease liabilities Please refer to Note 17 for the ageing analysis of finance lease liabilities. (ii) Nature and extent of risk arising from finance lease liabilities Please refer to Note 17 for the nature and extent of risks arising from finance lease liabilities.

NOTE 15: COMMITMENTS The main obligation of LMA under the Project Deed is the Quarterly Service Payments (QSPs) that it has to pay Southern Way in consideration for the delivery of the various components of the project. The total estimated QSPs over the life of the project comprise a Finance Lease component of $2,295.3 million, a Lifecycle Capital component of $79.3 million and an Operation & Maintenance component of $367.9 million (all figures are nominal and exclusive of GST). The following commitments have not been recognised as liabilities in the Financial Statements:

(a) Service Concession (Public Private Partnership) related commitments

($ thousand) 2012 2011 Present Nominal Present Nominal value value value value The design and construction of Peninsula Link - presented as a Finance Lease (refer to Note 14). 844,812 (i) 2,295,289 844,812 (i) 2,295,289

Lifecycle capital expenditures of Peninsula Link – including road resurfacing. 18,963 (ii) 79,265 17,447 (iii) 79,265

The operation and maintenance of Peninsula Link - service contract. 118,085 (ii) 367,961 108,644 (iii) 367,961

(i) Present value as at 8 December 2012 (ii) Present value as at 30 June 2012 (iii) Present value as at 30 June 2011

PAGE 52 Linking Melbourne Authority Annual Report 2011/12 NOTE 15: COMMITMENTS continued...

The present value (PV) for the Finance Lease is calculated as at 8 December 2012, which is the scheduled commencement date of the Finance Lease. As a result this PV has not changed since the 2009-10 Southern Eastern Integrated Transport Authority Annual Report. The PV for both the lifecycle capital expenditure and the operation and maintenance commitments is disclosed as at 30 June 2012. As PV calculations evolve and unwind over time, the PV of commitments will usually change every financial year. The PV is calculated using a pre-tax discount rate of 8.69 per cent. The nominal value of the QSPs has not changed from 2009/10.

(b) Commitments payable

($ thousand)

2012 2011 Capital expenditure commitments Not longer than 1 year - - Longer than 1 year but not longer than 5 years - - Longer than 5 years 79,265 79,265

Total capital expenditure commitments exclusive of GST 79,265 79,265

GST amount 7,926 7,925

Total capital expenditure commitments inclusive of GST 87,191 87,190

($ thousand)

2012 2011 Other expenditure commitments Public private partnership operation and maintenance commitment – Peninsula Link Not longer than 1 year 4,249 - Longer than 1 year but not longer than 5 years 34,744 29,412 Longer than 5 years 328,968 338,549

Total other commitments exclusive of GST 367,961 367,961

GST amount 36,796 36,796

Total other commitments inclusive of GST 404,757 404,757

Also refer to lease commitments disclosed in Note 14.

Linking Melbourne Authority Annual Report 2011/12 PAGE 53 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 16: CONTINGENT ASSETS AND CONTINGENT LIABILITIES Project Deed As disclosed in the Annual Report, the State has entered into a Project Deed with Southern Way for private sector delivery of the design, construction, finance, operation and maintenance of Peninsula Link under the Partnerships Victoria framework. The Project Deed is a public document and can be obtained on the internet at www.linkingmelbourne.vic.gov.au. The Project Deed creates certain rights and obligations for the State. The most significant right is the right to receive the completed project in the future.

Contingent assets Project bonds The project documents provide for a bond to protect the State’s interest in its arrangements with Southern Way. The bond is a handover bond which Southern Way may provide as security for the performance of any maintenance and repair work to achieve handover of Peninsula Link to the State (as an alternative to depositing funds in an escrow account). This option does not arise until three years before the expected expiry of the operations and maintenance term. Lathams Road Project The Lathams Road works were pre-construction works relating to the Peninsula Link project and were undertaken by BMD Constructions. Practical completion was achieved in February 2011. Under the contractual agreement, the contractor is required to provide security for 2.5 per cent of the contract sum. This security consists of a bond in the sum of $173,059 which is scheduled to be returned two years after practical completion.

Contingent liabilities The State has retained some specified risks associated with the project. Certain events such as compensable relief events and force majeure events, as well as some changes in law, enable Southern Way to submit a change notice to the State. If Southern Way’s obligations are suspended because of a compensable relief event, or if a change in law has an effect on the cost of performing the operating and maintenance activities, then subject to a number of conditions, Southern Way may be entitled to be paid an amount calculated in accordance with the change compensation principles. No such claims have been established to date. Southern Way is required to minimise the duration and consequences of relief events and to insure against certain such events.

PAGE 54 Linking Melbourne Authority Annual Report 2011/12 NOTE 17: FINANCIAL INSTRUMENTS

(a) Financial risk management objectives and policies LMA’s principal financial instruments comprise: • cash assets; • receivables (excluding statutory receivables); • payables (excluding statutory payables); and • finance lease 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 asset, financial liability and equity instrument are disclosed in Note 1 to the Financial Statements. The main purpose in holding financial instruments is to prudentially manage LMA’s financial risks within the Government’s policy parameters.

(b) Categorisation of financial instruments

($ thousand)

Contractual financial assets Note Category Carrying amount

2012 2011

Cash and deposits 3 Contractual financial assets - 2,399 1,794 receivables Receivables (i) 4 Contractual financial assets - 361 370 receivables

Total contractual financial assets 2,760 2,164

Contractual financial liabilities

Payables (ii) 9 Contractual financial liabilities measured at amortised cost 2,645 1,266 Interest bearing liabilities 10 Contractual financial liabilities measured at amortised cost 443 375

Total contractual financial liabilities 3,088 1,641

Notes: (i) The amount of receivables disclosed here excludes statutory receivables which are the amounts receivable from the Department of Transport and the ATO. (ii) The amount of payables disclosed here excludes statutory payments which are the amounts payable to the ATO and that arise as a result of the statutory requirements of the Land Acquisition and Compensation Act 1986.

Linking Melbourne Authority Annual Report 2011/12 PAGE 55 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 17: FINANCIAL INSTRUMENTS continued...

(c) Credit risk Credit risk arises from the financial assets of LMA, which comprise cash and cash equivalents, trade and other receivables. Credit risk arises when there is the possibility of LMA’s debtors defaulting on their contractual obligations, resulting in financial loss to LMA. LMA measures credit risk on a fair value basis and monitors risk on a regular basis. Credit risk associated with LMA’s financial assets is minimal because the main debtor is the Department of Transport. In addition, the majority of LMA’s receivables relate to statutory obligations rather than contractual obligations.

($ thousand)

Financial institutions AA credit rating Others Total 2012 Cash and deposits 2,399 - 2,399 Receivables (i) - 361 361

Total contractual financial assets 2,399 361 2,760

2011 Cash and deposits 1,794 - 1,794 Receivables - 370 370

Total contractual financial assets 1,794 370 2,164

Notes: (i) The amount of receivables disclosed here excludes statutory receivables which are the amounts receivable from the Department of Transport and the ATO.

Financial assets that are either past due or impaired Currently LMA does not hold any collateral as security nor credit enhancements relating to any of its financial assets. Refer to Note 4, Receivables, for further information. As at the reporting date, there is no event to indicate that any of the financial assets are impaired. There are no financial assets that have had their terms renegotiated so as to prevent them from being past due or impaired, and they are stated at the carrying amounts as indicated. The following table discloses the ageing only of financial assets that are past due but not impaired:

PAGE 56 Linking Melbourne Authority Annual Report 2011/12 NOTE 17: FINANCIAL INSTRUMENTS continued...

Interest rate exposure and ageing analysis of financial assets table

($ thousand) Weighted Interest Not past Past due but not impaired Impaired average Carrying rate due Financial effective amount exposure and not Less than 1 – 3 3 months 1 -5 assets interest rate% impaired 1 month months – 1 year years

2012 Financial assets Cash and deposits 4.31% 2,399 2,399 2,399 ----- Receivables (i)- 361361361-----

2,760 2,760 2,760 -----

2011 Financial assets Cash and deposits 4.56% 1,794 1,794 1,794 ----- Receivables (i)- 370370370-----

2,164 2,164 2,164 -----

Note: (i) Ageing analysis of receivables excludes statutory receivables (i.e. amounts owing from Department of Transport and GST input tax credit recoverable).

Linking Melbourne Authority Annual Report 2011/12 PAGE 57 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 17: FINANCIAL INSTRUMENTS continued...

(d) Liquidity risk Liquidity risk arises when LMA is unable to meet its financial obligations as they fall due. LMA settles financial obligations within 14 days. LMA’s maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed on the Balance Sheet. It continuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holding of high quality liquid assets. LMA’s exposure to liquidity risk is deemed insignificant based on data from prior periods and current assessment of risk. The following table discloses the contractual maturity analysis for LMA’s financial liabilities: Interest rate exposure and maturity analysis of financial liabilities table

($ thousand) Weighted Interest rate Maturity dates average Carrying exposure Nominal effective amount Fixed Non- amount Less than 1 – 3 3 months 1 – 5 interest rate% interest interest 1 month months – 1 year years rate bearing 2012 Financial liabilities Payables (i): Other payables - 2,645 - 2,645 2,645 2,645 - - - Interest bearing liabilities: Finance lease liabilities 6.37% 443 443 - 474 20 41 184 229

3,088 443 2,645 3,119 2,665 41 184 229 2011 Financial liabilities Payables (i): Other payables - 1,266 - 1,266 1,266 1,266 - - - Interest bearing liabilities: Finance lease liabilities 6.68% 375 375 - 403 12 24 157 210

1,641 375 1,266 1,669 1,278 24 157 210

Note: The amounts disclosed are the contractual undiscounted cash flows for each class of financial liabilities. (i) Maturity analysis of payables excludes statutory payables (i.e. amounts payable as a result of the statutory requirements of the Land Acquisition and Compensation Act 1986 and GST input tax payment).

(e) Market risk LMA’s exposure to market risk is primarily through interest rate risk. Objectives, policies and processes used to manage each of these risks are disclosed in the paragraphs below. Interest rate risk Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. LMA does not hold any interest-bearing financial instruments that are measured at fair value and therefore has no exposure to fair value interest rate risk.

PAGE 58 Linking Melbourne Authority Annual Report 2011/12 NOTE 17: FINANCIAL INSTRUMENTS continued...

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. LMA has minimal exposure to cash flow interest rate risks through its cash and deposits, that are at floating rate. LMA has fixed interest rates for its finance leases; thus, the impact of a movement in interest rates will have a minimal impact on LMA. Sensitivity disclosure analysis Taking into account past performance, future expectations, economic forecasts, and management’s knowledge and experience of the financial markets, LMA believes that interest rate and CPI movements, either way, will have a minimal impact on its financial instruments. The movement considered is a parallel shift of +1% and -1% on both interest rates issued by the Reserve Bank and CPI movements as reported by the Bureau of Statistics. The impact on net operating result and equity for each category of financial instruments held by LMA at year-end as presented to key management personnel, if the above movements were to occur, is immaterial for the 2011 and 2012 financial years.

(f) Fair value LMA considers that the carrying amount of financial instrument assets and liabilities recorded in the Financial Statements to be a fair approximation of their fair values, because of the short-term nature of the financial instruments and the expectation that they will be paid in full. The following table shows the fair value and net fair value of cash and deposits and non-interest bearing monetary financial assets and financial liabilities of LMA approximates their carrying amounts.

($ thousand) Carrying amount Net fair value 2012 2011 2012 2011

On-Balance Sheet financial instruments

Financial assets Cash 2,399 1,794 2,399 1,794 Receivables (i) 361 370 361 370

2,760 2,164 2,760 2,164

Financial liabilities Payables (ii) 2,645 1,266 2,645 1,266 Interest bearing liabilities 443 375 443 375

3,088 1,641 3,088 1,641

Notes: (i) The amount of receivables disclosed here excludes statutory receivables which are the amounts receivable from the Department of Transport and the ATO. (ii) The amount of payables disclosed here excludes statutory payments which are the amounts payable to the ATO and that arise as a result of the statutory requirements of the Land Acquisition and Compensation Act 1986.

Linking Melbourne Authority Annual Report 2011/12 PAGE 59 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 18: RECONCILIATION OF COMPREHENSIVE RESULT TO NET CASH FLOWS FROM OPERATING ACTIVITIES

($ thousand) 2012 2011

Comprehensive result (3,238) (6,680)

Non-cash movements Depreciation and amortisation of non-current assets 303 402 Asset received free of charge - (200) Gain/loss on property revaluation (Note 6, 11) 1,480 6,485

Movements in assets and liabilities (Increase)/decrease in debtors and receivables (1,740) (4,926) Increase/(decrease) in employee provisions (396) 758 (Decrease)/increase in creditors and accruals 1,389 (2,454) (Increase)/decrease in other operating assets 51 (6,374) Net cash from operating activities (2,151) (12,989)

NOTE 19: MOVEMENTS IN EQUITY

(a) Contributed capital

($ thousand) 2012 2011

Balance at beginning of financial year 126,212 - Transferred from SEITA - 101,694 Rounding error -2 Capital contributions during the year by Victorian State Government WestLink - 6,022 Peninsula Link land freehold land acquisition (1,348) 14,748 Peninsula Link Lathams Rd - 3,612 Land transferred from DSE - 134 Total capital contributions (1,348) 24,516

Balance at end of the financial year 124,864 126,212

(b) Accumulated surplus/(deficit)

($ thousand) 2012 2011

Balance at beginning of financial year (6,680) - Net result (3,238) (6,680) Balance at end of financial year (9,918) (6,680)

PAGE 60 Linking Melbourne Authority Annual Report 2011/12 NOTE 20: RESPONSIBLE PERSONS Remuneration received for Responsible Persons in the 2012 year. 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 Responsible Persons in LMA are as follows:

Responsible Minister Minister for Roads The Hon Terry Mulder, MP 1 July 2011 to 30 June 2012

Accountable Officer Chief Executive Officer Ken Mathers 1 July 2011 to 30 June 2012

Board Members Chairman, LMA Board David Buckingham 1 July 2011 to 30 June 2012 Member, LMA Board Anthony Darvall 1 July 2011 to 30 June 2012 Member, LMA Board Gary Liddle 1 July 2011 to 30 June 2012 Member, LMA Board Shelley Penn 1 July 2011 to 30 June 2012 Member, LMA Board Anna Skarbek 1 July 2011 to 30 June 2012 The term of appointment for Board Members ceased on 30 June 2012. Gary Liddle and Anthony Darvall have been reappointed.

Remuneration Remuneration received or receivable by the Accountable Officer in connection with the management of LMA during the year was in the range $450,000 - $459,999 ($430,000 - $439,999 in 2010-11). Remuneration received or receivable by other Responsible Persons in connection with LMA during the year was in the range: Income Band 2012 2011

$80,000 - $89,999 1 $70,000 - $79,999 1 $60,000 - $69,999 1 $50,000 - $59,999 1 $40,000 - $49,999 1 3 $0 - $9,999 11

Total numbers 55 Total amount $252,359 $199,965

For the period ending 30 June 2012, the LMA Board met on 11 occasions. As outlined in the terms of conditions of their appointment to LMA in 2009, Directors are entitled to receive $2,300 per committee per annum for service on major Board committees. This has been paid in the 2012 financial year. Amounts relating to Ministers are reported in the Financial Statements of the Department of Premier and Cabinet.

Other transactions Other related transactions and loans requiring disclosure under the Directions of the Minister for Finance for Responsible Persons have been considered and there are no matters to report.

Linking Melbourne Authority Annual Report 2011/12 PAGE 61 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

NOTE 21: REMUNERATION OF EXECUTIVES The number of executive officers, other than the Minister and the Accountable Officer, and their total remuneration during the reporting period is shown in the first column in the table below in their relevant income bands. The base remuneration of executive officers is shown in the second column. Base remuneration includes superannuation but is exclusive of bonus payments, long service leave payments, redundancy payments and retirement benefits. Total remuneration represents the actual remuneration paid or payable.

Income Band Total Remuneration Base Remuneration 2012 2011 2012 2011 No. No. No. No.

$320,000 – $329,999 1 $310,000 – $319,999 1 $280,000 – $289,999 1 $270,000 – $279,999 1 $260,000 – $269,999 1 $240,000 – $249,999 1 1 $210,000 – $219,999 1 2 $200,000 – $209,999 1 $190,000 – $199,999 1 $180,000 – $189,999 1 1 $160,000 – $169,999 1 1 2 $150,000 – $159,999 1 1 $140,000 – $149,999 1 1 $130,000 – $139,999 1111 $120,000 – $129,999 1 $110,000 – $119,999 1 $0 – $99,999 1 1

Total numbers 8787

Total annualised employee equivalent 6.9 6.8 6.9 6.8

Total amount $1,419,943 $1,478,194 $1,249,164 $1,285,574

NOTE 22: REMUNERATION OF AUDITORS Amounts received, or due and receivable, by the Victorian Auditor General’s Office for the audit of LMA’s Financial Statements:

($ thousand) 2012 2011

Victorian Auditor-General’s Office Audit of the Financial Statements 62 60

PAGE 62 Linking Melbourne Authority Annual Report 2011/12 NOTE 23: SUBSEQUENT EVENTS Victorian Public Service Workplace Determination 2012 The Victorian Public Service Workplace Determination 2012 was made by Fair Work Australia on 23 July 2012, which replaces the 2009 Extended and Varied Version of the Victorian Public Service Agreement 2006. The Workplace Determination takes effect from 29 July 2012 and will remain in force until 31 December 2015. The Workplace Determination provides for wage increases of 3.25 per cent and 1.25 per cent on 1 July 2012 and 1 January 2013 respectively over 2012-13, with six monthly wage increases thereafter. A lump sum payment of $1,500 (or equivalent pro-rata amount for part time employees) will also be payable to eligible Victorian Public Service employees who received a salary on 1 July 2012 and were employed on 29 July 2012. As the Workplace Determination takes effect from 29 July 2012, no adjustments have been made to these financial statements other than for the impact on the estimated accrued employee benefits as at 30 June 2012.

NOTE 24: STATE INITIATED MODIFICATIONS AND OTHER WORKS LMA has managed works on land adjacent to Peninsula Link that are being constructed by private contractors. LMA receives an amount from the Department of Transport and engages these contractors to undertake these works. The amount received from the Department of Transport is shown as income and the amount paid to the Concessionaire and other contractors is shown as expenditure. LMA used retained earnings to partially fund some of the other works. At completion of these works, the relevant State Authority will be advised to take up the fair value of these works in its accounts.

NOTE 25: RESTRUCTURING OF ADMINISTRATIVE ARRANGEMENTS There were no restructuring of administrative arrangements in 2011-12. In 2010-11 LMA acquired land from the Department of Sustainability and Environment (DSE) for the Peninsula Link project. On 30 June 2011 the assets were transferred to LMA. The net asset transfer was treated as a contribution of capital by the Crown.

($ thousand) 2012 2011

Assets Property acquired for roads - 134

Net assets transferred from DSE - 134

Linking Melbourne Authority Annual Report 2011/12 PAGE 63 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

PAGE 64 Linking Melbourne Authority Annual Report 2011/12 Linking Melbourne Authority Annual Report 2011/12 PAGE 65 NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2012

PAGE 66 Linking Melbourne Authority Annual Report 2011/12 Linking Melbourne Authority Annual Report 2011/12 PAGE 67 STATUTORY INFORMATION

Freedom of Information (d)to make recommendations in relation to contractual arrangements between the State LMA is subject to the provisions and and any other person for the development, requirements of the Freedom of Information Act delivery or operation of any Road Transport- 1982. Further information can be obtained from Related Project; the Act, the various regulations made under that Act and by visiting www.foi.vic.gov.au. (e) to administer and manage agreements and arrangements between the State and any LMA received two new requests under the Act other person for, or relating to, the from 1 July 2011 to 30 June 2012. Of these, one development, delivery or operation of any was from a Member of Parliament, the other Road Transport-Related Project; from the media. No decisions made during the 12 months ending June 2012 were referred to (f) to facilitate and co-ordinate consultations with internal review. None progressed to appeal at the public entities and other bodies or persons Victorian Civil and Administrative Tribunal (VCAT). involved in, or affected by, the development, delivery or operation of any Road Transport- Access to documents (as defined in section 5 of Related Project; the Act) may be obtained only through written request as detailed in section 17 of the Freedom (g)to negotiate and enter into arrangements with of Information Act 1982. Requests should be public entities and other bodies or persons addressed to: involved in, or affected by, the development, delivery or operation of any Road Transport- Freedom of Information Officer Related Project; Linking Melbourne Authority Building 1, Level 1 (h)to make recommendations to the Minister in 540 Springvale Road relation to facilitating any Road Transport- Glen Waverley VIC 3150 Related Project and co ordinating with public Telephone: (03) 8562 6800 entities and other bodies or persons involved Email: [email protected] in, or affected by, the development, delivery or operation of the Road Transport-Related Project; Whistleblowers Protection Act 2001 (i) to ensure that agreements and arrangements LMA is subject to the provisions and between the State and any other person for, or requirements of the Whistleblowers Protection relating to, the development, delivery or Act 2001. During the reporting year, no staff of operation of any Road Transport-Related the Authority sought to disclose information in Project are performed in accordance with their accordance with the Act. terms; (j) to enter into contractual arrangements with Publications any other person for the provision of any infrastructure or services in connection with Publications and statements produced by LMA are or relating to the development, delivery or principally located within electronic domains and operation of any Road Transport-Related can be found at www.linkingmelbourne.vic.gov.au. Project; and (k)to perform any other functions or duties Functions conferred on the Linking Melbourne Authority by any other Act or any regulations under any Section 138 of the Transport Integration Act 2010 other Act. prescribes the functions of Linking Melbourne Authority as follows: Pecuniary interest (a) to facilitate, on behalf of the State, the scoping, development, construction, delivery Declarations of Pecuniary Interest were executed and operation of any Road Transport-Related by all Board members, senior officers and other Project; relevant employees of the Authority. (b)to seek and evaluate submissions from persons interested in undertaking any Road Victorian Industry Participation Policy Transport-Related Project; There were no contracts completed in this period (c) to negotiate with persons interested in to which the Victorian Industry Participation undertaking any Road Transport-Related Policy Act 2003 applied. Project;

PAGE 68 Linking Melbourne Authority Annual Report 2011/12 Availability of other information • a statement that declarations of pecuniary interest have been completed by all relevant The Directions of the Minister for Finance, officers; pursuant to the Financial Management Act 1994, require a range of information to be • LMA is again compliant with the whole-of- prepared in relation to the financial year. This Government’s Ministerial Standing material is itemised below and, where not Directions regarding financial management; published in this report, is retained by the and Accountable Officer and can be made available • LMA complies with all Victorian Government to Ministers, Members of Parliament and the occupational health and safety public on request, subject to the limitations of requirements. the Freedom of Information Act 1982:

LMA Consultancy Disclosures 2011/12 Financial Year $000's (excl GST)

Consultant Purpose of Consultancy Start End Total Expend- Future Date Date approved iture expend- project fee 2011/12 iture AGA Joint Professional services associated 17-Nov-09 30-Jun-13 5,820 208 136 Venture with planning the East West Link western section (formerly WestLink) Arnold Dix Tunnel safety advice 13-Oct-10 30-Sep-11 99 39 - Consultant Clayton Utz Legal advice on aspects of 01-Jan-11 01-Jan-15 1,451 1,451 - LMA projects D'Artagnan Advice on aspects of the 04-Jun-12 29-Jun-12 50 50 - East West Link business case development Ecocentric Net gain ecological advice 01-Jul-11 30-Jun-12 38 38 - Environmental Consulting Ecology & Ecological advice for 01-Mar-12 31-May-12 15 15 - Heritage Partners Peninsula Link GHD Early planning work for the 13-Dec-11 01-Mar-13 80 79 - East West Link JHDL-JV Engineering investigations 07-Feb-12 2012/13 962 899 63 for the East West Link Parsons Planning and engineering 08-Feb-12 31-Jul-12 53 46 7 Brinkerhoff advice on aspects of the Australia Pty Ltd East West Link Pricewaterhouse- Commercial and financial 01-Oct-10 30-Sep-14 2,249 2,249 - Coopers advice on aspects of LMA projects Standfast Provision of strategic and 01-Jul-11 30-Jun-12 206 206 - Commercial Pty Ltd commercial advisory services on aspects of LMA projects Wood Marsh Pty Ltd Conceptual design advice 03-Nov-11 03-Nov-12 100 36 - Architecture for LMA projects Workshop Urban and landscape design 01-Oct-09 01-Jun-13 45 45 - Architecture Pty Ltd advice for LMA projects Veitch Lister Traffic modelling advice for 17-Feb-12 30-Jun-12 200 200 - Consulting Pty Ltd the East West Link business case development

Consultancies under $10,000 In 2011-12, LMA engaged four consultancies where the total fees payable to the consultants were less than $10,000, with a total expenditure of $23,000 (Excl GST).

Linking Melbourne Authority Annual Report 2011/12 PAGE 69 DISCLOSURE INDEX

The Annual Report of the Linking Melbourne Authority is prepared in accordance with all relevant Victorian legislation. This index has been prepared to facilitate identification of the Authority’s compliance with statutory disclosure requirements.

Ministerial Directions Report of operations – Financial Reporting Direction (FRD) Guidance* Legislation Requirement Page Legislation Requirement Page

Charter and Purpose FRD 22C Subsequent events 63 FRD 22C Manner of establishment and FRD 22C Application and operation the relevant Ministers 6, 8 of Freedom of Information FRD 22C Objectives, functions, Act 1982 68 powers and duties 6, 8, 68 FRD 22C Compliance with building FRD 22C Nature and range of and maintenance provisions services provided 6, 8, 64 of Building Act 1993 - FRD 22C Statement on National Management and structure Competition Policy - FRD 22B Organisational structure 8 FRD 22C Application and operation of Whistleblowers Protection Act 2001 68 Financial and other information FRD 22C Details of consultancies FRD 8B Budget portfolio outcomes 6 over $10,000 69 FRD 10 Disclosure index 70 FRD 22C Details of consultancies FRD 12A Disclosure of major contracts 9, 69 under $10,000 69 FRD 15B Executive officer disclosures 62 FRD 22C Statement of availability of FRD 22C, Operational and budgetary other information 69 SD 4.2(k)** objectives and performance FRD 24C Reporting of office-based against objectives 6 environmental impacts - FRD 22C Employment and conduct FRD 25A Victorian Industry Participation principles 17 Policy disclosures 69 FRD 22C Occupational health and FRD 29 Workforce data disclosures 49 safety policy 69 SD 4.5.5 Risk management FRD 22C Summary of the financial compliance attestation 65 results for the year 20 SD 4.2(g) Specific information FRD 22C Major changes or factors requirements 4-17 affecting performance - SD 4.2(j) Sign off requirements 64

PAGE 70 Linking Melbourne Authority Annual Report 2011/12 Financial Statements Legislation Requirement Page Legislation Requirement Page FRD 13 Disclosure of parliamentary appropriations - Financial statement required under Part 7 of the FMA FRD 21B Disclosure of responsible persons, executive officers SD 4.2(a) Statement of changes in equity 22 and other personnel SD 4.2(b) Operating Statement 20 (contractors with significant management responsibilities) SD 4.2(b) Balance Sheet 21 in the Financial Report 61-62 SD 4.2(b) Cash flow statement 23 FRD 102 Inventories - FRD 103D Non-current physical assets 42-44 FRD 104 Foreign currency - Other requirements under Standing Directions 4.2 FRD 106 Impairment of assets - SD 4.2(c) Compliance with Australian accounting standards and other FRD 109 Intangible assets 21 authoritative pronouncements 25-33 FRD 107 Investment properties - SD 4.2(c) Compliance with Ministerial FRD 110 Cash flow statements 23 Directions 25 FRD 112C Defined benefit SD 4.2(d) Rounding of amounts 26 superannuation obligations 32 SD 4.2(c) Accountable officer’s declaration 64 FRD 113 Investments in subsidiaries, jointly controlled entities and associates - Other disclosures as required by FRDs in notes FRD 114A Financial Instruments – to the financial statements General government FRD 9A Departmental disclosure of entities and public administered assets and non-financial corporations 55-59 liabilities - FRD 119 Contributions by owners 22 FRD 11 Disclosure of ex-gratia payments -

Legislation

Freedom of Information Act 1982 * FRD is a Financial Reporting Direction issued by the Minister for Finance pursuant to section 8 Building Act 1983 of the Financial Management Act 1994 and Whistleblowers Protection Act 2001 Regulation 16 of the Financial Management Act 2004. Compliance with FRDs is mandatory. Victorian Industry Participation Policy Act 2003 ** SD is a Standing Direction under the Financial Financial Management Act 1994 Management Act 2004. Compliance with SDs is mandatory.

Linking Melbourne Authority Annual Report 2011/12 PAGE 71