Annual and Financial Report 2013-14 General Information

This is the consolidated Annual and Financial Report 2013-14 Translation and interpreting assistance: of Rail (ABN 68 598 268 528) and its subsidiaries, is committed to providing accessible services to Queensland Rail Limited (ABN 71 132 181 090) (QRL) and On Track Queenslanders from all culturally and linguistically diverse backgrounds. Insurance Pty Ltd (ABN 18 095 032 670) (OTI) (“the Report”). If you have difficulty in understanding this Annual Report, please Queensland Rail is a statutory authority established under the contact us and we will arrange an interpreter to share the report Queensland Rail Transit Authority Act 2013 (Qld) (QRTA Act) and is with you. a statutory body for the purposes of the Financial Accountability Act 2009 (Qld) and the Statutory Bodies Financial Arrangements Act 1982 (Qld). Queensland Rail’s functions are detailed in Section 9 of the QRTA Act. Queensland Rail discharges its statutory functions through its wholly-owned subsidiary QRL. QRL does not employ any personnel, but owns all non-employee related assets and contracts. It performs the role of railway manager and railway operator under the Transport Infrastructure Act 1994 (Qld). OTI is a wholly-owned subsidiary of QRL. It provides insurance cover for claims on Queensland Rail, QRL and the Aurizon group of companies in respect of events up until 30 June 2010. Unless the context otherwise requires, Queensland Rail together with its subsidiaries QRL and OTI, are collectively referred to as “Queensland Rail” for the purposes of this report. A general description of the nature of Queensland Rail’s operations and principal activities is included in the Report.

This report is available, along with other useful resources, via the Queensland Rail website: queenslandrail.com.au.

For further information on Queensland Rail: Phone: 13 16 17 Mail: GPO Box 1429, , Queensland, 4001 Copyright © Queensland Rail Limited 2014. facebook.com/queenslandrail twitter.com/queenslandrail Disclaimer While all care has been taken in preparing this publication, Registered Office Queensland Rail accepts no responsibility for decisions or actions taken Queensland Rail as a result of any data, information, statement or advice, expressed, Level 14, Rail Centre 1 implied or contained in this publication. Queensland Rail is committed 305 Edward Street to minimising the impact on the environment by printing a limited Brisbane, Queensland, 4000 number of copies of this report. Electronic versions of this document Queensland Rail ABN 68 598 268 528 are available from queenslandrail.com.au.

Page 2 | Queensland Rail Annual and Financial Report 2013-14 South Brisbane station.

Queensland Rail Annual and Financial Report 2013-14 | Page 3

Table of Contents Queensland Rail Annual Report 2013-14

About Us 6

Chairman’s Outlook 8

Chief Executive Officer’s (CEO) Report 10

Year at a Glance 12

Operational Performance 13

Financial Performance 14

Our Safety 16

Our People 20

Our Environment 22

Our Community 24

Heritage Operations 26

Efficiency 28

Service Quality 32

Commercial Performance 36

Growth 38

Acknowledgements 41

Governance Structure 42

Organisational Structure 43

Board 44

Executive Leadership Team 46

Corporate Governance 48

Summary of the 2013-14 Operational Plan 56

Compliance Checklist 58

Glossary and Acronyms 60

Queensland Rail Financial Report 2013-14 61

Queensland Rail Annual and Financial Report 2013-14 | Page 5 About Us Queensland Rail is steeped in almost 150 years of history. Over these years the railways have seen more than 220,000 Queenslanders proudly contribute to the State’s economic, social and regional development.

Its fleet of trains offers public passenger transport in South East Our Operations Queensland, with long distance rail services operating between There are four Core Functions within Queensland Rail - Network, Rail Brisbane and Cairns via Rockhampton, extending from Longreach to Operations, Access and Business Strategy and Customer Service – these Charleville and Townsville to Mount Isa. are supported by the Enabling functions delivering specialist services, With more than 6,500km of track and 216 stations across the State, governance and enterprise frameworks and systems. The organisation the business is made up of three primary products: Citytrain, Travel and is dedicated to contributing to the economic growth of the State by Tourist train, and Network. Across all these areas, safety is paramount supporting the Queensland Government’s commitment to creating and forms the cornerstone of the business. Efficiency, reliability and a “Four Pillar Economy” built on agriculture, tourism, resources and customer service are also considered of the utmost importance. These construction. four drivers are at the forefront of the minds of more than 5,800 Queensland Rail employees, who work every day to deliver the best Our Products performing railway in Australia. The Queensland Plan: Queenslanders’ 30-year vision, is being realised Our Vision at Queensland Rail through the effective management and delivery of three primary products: Citytrain, Travel and Tourist train and Network. To be Australia’s best performing railway delivering safe, on time, customer-focused and efficient rail services. Citytrain Our Purpose Citytrain comprises the South East Queensland (SEQ) network. It is focused on getting people to and from their destinations, safely, on Queensland Rail is dedicated to increasing rail patronage through time, and in comfort. Across the SEQ network, Queensland Rail has 146 improved reliability, frequency of services and making rail travel stations, carrying approximately 150,000 passengers per day. the transport mode of choice in Queensland. The organisation is committed to building a better passenger business by connecting with Citytrain provides services extending from the centre of Brisbane: customers, improving frontline services and facilitating Queensland’s growth and development. • south to Beenleigh and Varsity Lakes on the Gold Coast Throughout this financial year, Queensland Rail’s progress was • north to Ferny Grove, Shorncliffe, Doomben, Caboolture and Gympie measured against four key objectives: Efficiency, Service Quality, • east to Cleveland Commercial Performance and Growth. To realise these objectives, Queensland Rail is committed to implementing change to ensure • west to Richlands, Ipswich, Springfield and Rosewood. performance counts by: During the past financial year, there were more than 50 million • driving organisational performance passenger trips taken on Citytrain services. Passenger services provided through Citytrain are integral to the daily life of customers, whether • ensuring efficiency and productivity they be students, workers, tourists or residents, moving between • facilitating patronage and network tonnage growth, and suburbs and cities.

• ensuring safety and security. Travel and Tourist train Our Operating Environment Travel and Tourist train enables customers to explore the vast and magnificent state of Queensland, while onboard a variety of trains with Queensland Rail has two responsible Ministers: different offerings that range from the classic rail experience on the • The Honourable Tim Nicholls MP, Treasurer and Minister for Trade , to the modern world-first rail experience on the • The Honourable Scott Emerson MP, Minister for Transport and Main . They visit 70 stations across the regional network, Roads carrying more than 700,000 customers in the last financial year alone. Responsible Ministers are advised in a timely manner, of all issues likely Ten different trains travel various parts of the regional network to have a significant financial, operating, employment, community or including the: Spirit of Queensland, , The environmental impact, including those matters that may prevent or Sunlander, Kuranda Scenic Railway, , Savannahlander, The significantly affect achievement of the performance objectives outlined Westlander and Inlander, and the Bundaberg and Rockhampton Tilt in the Queensland Rail Operational Plan 2013-14. Trains. Each train offers customers a different experience from seats to catering, which has been designed to characterise the beauty of the Queensland Rail’s obligation to the Queensland Government is outlined region it explores. in the Queensland Rail Operational Plan 2013-14. The function and powers of Queensland Rail are defined in theQueensland Rail Transit Authority Act 2013.

Page 6 | Queensland Rail Annual and Financial Report 2013-14 Queensland Rail also owns and operates specialist travel centres in This infrastructure provides freight customers including the agricultural, key regional hubs offering complete holiday packages to complement mining, manufacturing, retail and tourism industries with transport customers’ rail journeys. The next generation of long distance travel will logistics to access supplies and service key markets. Central to this enhance the customer experience by providing unique accommodation, product is providing access for third-party operators to the network with in-seat service delivery and entertainment on-demand. for delivery of freight. Queensland Rail is focused on offering efficient and competitive supply chain solutions for its business partners, in Network comparison to road and air freight. Network access agreements Queensland Rail’s network exceeds 6,500 kilometres of track, including contributed $217.5 million in revenue in 2013-14, with 23.4 million the Mount Isa, North Coast, Western, West Moreton, South Western tonnes of freight transported across the network. and Central Western rail lines. The network arm of the business is focused on ‘below rail’ management, which is essentially the management of Queensland Rail’s track and rail assets.

City network service at South Brisbane station.

Queensland Rail Annual and Financial Report 2013-14 | Page 7 Chairman’s Outlook During this financial year, Queensland Rail delivered strong results for its shareholders – the people of Queensland.

These results have been achieved amongst These outcomes have been achieved in large a mix of challenging circumstances as part due to the leadership demonstrated well as clear opportunities. We have both within the organisation. I acknowledge overcome and embraced these conditions by the past contribution of Glen Dawe to focusing on what we do best – improving our Queensland Rail, most recently as the Chief operational performance. Executive Officer (CEO). I acknowledge the contribution to this year’s performance Many organisations across the nation have of previous Board Members and make a felt the economic pressures to perform while special mention of Geoff Harley’s support remaining conscious of cost, in an effort to and assistance during the handover of the assist national and state governments get Chairmanship. budgets back on track. I would also like to acknowledge and Public transport providers specifically are welcome Helen Gluer, our current CEO. Under faced with increasing demands for improved Helen’s leadership we have already seen customer service, while reducing operating the organisation take great strides across costs in order to decrease necessary all areas of Queensland Rail in a very short subsidies. space of time. The Board and I look forward This is a challenge that Queensland Rail to working with Helen and her Executive is facing head on. This year we positively Leadership Team (ELT) over the coming geared our efforts towards improving on year, and continuing the excellent working time running performance, frequency partnership now in place. of services, and finding efficiencies and I would like to thank the Board and welcome innovation in maintenance practices. This our new Members – Aivars Blums, Glenn was done to improve customer service at a Poole, Paul Wallis and the Hon. John Mickel. reduced cost. We have succeeded in making significant improvements. Under the leadership of the Board and the ELT, we have seen Queensland Rail continue Queensland Rail’s EBITDA increased by a program of transformation, becoming a $102.2 million to $810.6 million. This more efficient and effective organisation that increase was due to an increase in revenue is focused on effective project management, by $52.8 million and a reduction in operating the importance of customer service and expenses by $49.4 million. As a result, a ensuring every safe second counts. dividend of $170.9 million was declared for the financial year. The on time running To drive these changes, the Board and ELT indices for 2013-14 confirm that Queensland have delivered the organisation a clear vision Rail exceeded performance parameters. and a set of strategic objectives. Queensland Queensland Rail now has the best on time Rail’s vision will now focus on “Connecting running performance in Australia. Communities and Communities Connecting”. This recognises the role Queensland Rail is Further efficiencies have also been found in expected to perform socially, economically, timetabling operations, rollingstock reliability, operationally and environmentally. As long as well as maintenance practices on the as our employees recognise the importance network. of our vision and the role we perform in the Although patronage has not improved on the community, the people of Queensland will as previous year, the number of Citytrain trips well. We want all Queenslanders and visitors taken per week across South East Queensland to choose Queensland Rail as transport mode has increased by 30,000. This indicates of choice wherever a service is provided. the improvements to service frequency In so many ways across the State, and reliability have encouraged existing Queensland Rail is the life force of customers to use the network more often, communities, providing transport, jobs, which is a positive result.

Page 8 | Queensland Rail Annual and Financial Report 2013-14

CEO’s Report During my first year as the Chief Executive Officer of Queensland Rail, I have seen us draw strength from all corners of the organisation to achieve strong and positive results that our shareholders, the people of Queensland, can be proud of.

Our focus has been on ensuring Queensland’s further improved. For 2013-14, our Citytrain rail service is the best performing rail service on time running was 97.03 per cent, which is in Australia, and in so many ways we have, almost three per cent better than 2012-13 and are continuing to deliver on this goal. and a 17 per cent improvement on 2011-12 results. An efficient railway is a safe railway. Safety is, and always will be, our highest priority. Not only do our trains have better on Safety must be more than just a measure of time running performance than any other compliance. It must be engrained in the very Australian operator, we have more services fabric of our culture. than ever with key stations now offering a “Turn Up and Go” service, meaning a This year we launched the “Good to train passes through the station every 15 Great” campaign in an effort to ensure minutes during peak periods. Since the safety continues to be at the forefront of implementation of the Sector Two Timetable our people’s minds. The “Good to Great” change we have seen the number of trips campaign takes existing initiatives and taken increase by 30,000 each week. includes fresh activities to ensure safety is paramount to the organisation. Most These positive results have significantly aided safety incidents that occur in Queensland our efforts to improve customer service, Rail happen at level crossings, however, complementing the work already being done this year we have seen a decrease in near within our Customer team. The Customer misses following the launch of our “Crosses” Service Institute of Australia (CSIA) recently campaign, which reminds people of the reviewed our customer service standards consequences of playing Russian roulette in line with the International Customer with trains and encourages them to obey Service Standard (ICSS). The outcome of signs and signals. the review saw Queensland Rail achieve recertification and a score of 7.12. This is We are also trialling new radio break-in a significant improvement, up from 6.68 technology in an effort to prevent near in 2013, and positions Queensland Rail as misses and collisions. a leader in customer service delivery not The continued use of CCTV footage to raise only in the transport industry but across awareness in the community of the dangers all organisations assessed. The CSIA was at level crossings has proved effective particularly impressed by the commitment, with extensive national and international passion and ownership demonstrated by coverage gained for our videos, highlighting Queensland Rail employees in delivering key the importance of safety around railway business outcomes, as well as our smarter use lines. The importance of safety permeates of resources and process improvements to through everything we do at Queensland create efficiencies. Rail, which is why this year we launched the We know, however, there is more we can do ‘Every Safe Second Counts’ program with our to improve the experience for customers. We employees. We know the most important have projects underway to improve access at thing to customers is ensuring we run the Dinmore, Newmarket, Alderley and Graceville trains on time – provided it’s not at the stations to ensure people of all capabilities expense of their safety. and with varying needs can access our In January 2014, we implemented the most stations with greater ease. significant timetable upgrade in the history Queensland Rail’s regional customers are of Queensland Rail, adding 200 new daily also appreciating our services on offer. The services. With this change, on time running Rockhampton and Bundaberg results for South East Queensland have

Page 10 | Queensland Rail Annual and Financial Report 2013-14

Year at a Glance

July August

• Marked the 125th anniversary of the laying of the first steel sleeper • Launched the rebranded Spirit of Queensland service as part of a on the Normanton to Croydon railway line, route of the Gulflander $200 million investment in long distance travel • Launched a partnership with Endeavour Foundation to help people with disabilities learn to catch the train safely

October September

• New Spirit of Queensland service made its first journey between • Ne w safety campaign launched targeting customer slips, trips, and Brisbane and Cairns falls • Disability access upgrades were announced for Alderley, Newmarket, • T rials began in North Queensland of two new technologies aimed at Dinmore and Graceville stations as part of a $40 million upgrade improving level crossing safety program • Kuranda Scenic Railway phone app released to help non-English speaking tourists experience the journey

November December

• Completed two new train stations connecting the fast-growing • T rial began of a radio break-in technology, to warn motorists of Springfield area to Brisbane, including 9.5km of new dual track approaching trains, at Malu in South West Queensland

February January

• Trip numbers on the SEQ network rose to an average of 30,000 extra • R evised the SEQ network timetable, delivering an additional 200 trips per week following the introduction of the new timetable services per day • T rain services now run at least every 15 minutes from approximately 6am-8pm weekdays between Central and Northgate, Cannon Hill, Coopers Plains, Darra and Ferny Grove

March April

• New procedures were introduced to allow trains to keep moving at a safe • Queensland Rail Board appointed Helen Gluer to CEO role speed following a boomgate strike • Launched Stage 1 of the Enterprise Asset Management System to • Construction of an additional 50 car spaces at Nambour station was become the one reference point for everyone involved in the asset completed management chain • Customer Service Institute of Australia rated Queensland Rail at the highest tier of the International Customer Service Standard (Integration Level) June May

• 96.23 per cent of trains arrived on time during peak periods – the highest • R ockhampton and Bundaberg Tilt Trains reached five million level in a decade kilometres travelled since being introduced in 1998 • New disabled parking bays completed at Nambour train station • Ext ended staff hours at Corinda, Ferny Grove, Indooroopilly and • Completed the $5 million redevelopment of Central Station Yeerongpilly stations between first and last service Monday to Saturday • 64,468 Low Profile Concrete sleepers inserted over 71km of continuously welded track

Page 12 | Queensland Rail Annual and Financial Report 2013-14 Operational Performance

Summary of non-financial measures

Growth

2013-14 Actual 2013-14 Target Patronage Growth % - Citytrain -0.66% 0.81% Patronage Growth % - Traveltrain -7.3% 0.88% Passenger Trips - Citytrain 50,874,758 51,624,951 Passenger Trips - Traveltrain 363,481 398,420

On time running, service quality and customer satisfaction

2013-14 Actual 2013-14 Target On time running – Citytrain 24/7 (adjusted for Force Majeure) 97.03% 94.17% On time departure – Traveltrain 97.57% 75.00% On time arrival – Traveltrain 89.07% 75.00% Below Rail Delays per 100 train kilometres – SEQ 0.67 2.36 Below Rail Delays per 100 train kilometres – Regional 1.84 7.84 Below rail cancellation rate – SEQ 0.10% 1.00% Below rail cancellation rate – Regional 1.12% 1.21% Utilisation of fleet available for Master Train Plan requirements – 107.83% 100.00% Combined Peaks Net tonnes (Network) 23,443,111 27,090,000 Gross tonne km growth (Network) -8.88% -0.90% Customer satisfaction – Citytrain (TransLink index) 69 70 Customer Satisfaction – Traveltrain 79 81 Scheduled services not actually run (cancellation rate) - Citytrain 0.17% 0.13% Scheduled services not actually run (cancellation rate) – Traveltrain 1.70% 2.00%

Safety Improvement

2013-14 Actual 2013-14 Target Signal Passed At Danger per million train kilometres – Operator 2.92 2.63 Customer injuries per million passenger journeys – Queensland Rail 12.28 15.28 Lost Time Injury Frequency Rate 3.88 5.98

Queensland Rail Annual and Financial Report 2013-14 | Page 13 Financial Performance

Financial Summary

Consolidated income statement for the year ended 30 June 2014

2013-14 ($M) 2012-13 ($M) Revenue 1,969.2 1,916.4 Operating Expenses (1,158.6) (1,208.0) Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) 810.6 708.4 Depreciation and Amortisation Expense (317.6) (298.2) Earnings Before Interest and Tax (EBIT) 493.0 410.2 Net Finance Costs (183.3) (209.4) Income Tax Expense (96.1) (56.0) Net Profit 213.6 144.8

The Queensland Rail consolidated entities’ EBIT increased by $82.8 million. Revenue increased by $52.8 million due to an increase in transport service contract revenue of $40.1 million. Operating expenses in the current year included a $30.0 million onerous contract provision for surplus office lease space and the prior year included $54.0 million relating to project expenditure incurred that did not meet the recognition criteria for capitalisation as assets. Underlying operaring expenses reduced 2.2% on the prior year, whilst delivering additional train kilometres, primarily due to a reduction in employee expenditure across the consolidated entity. Finance costs decreased with an increased capitalisation of interest costs to capital projects. Income tax expense increased by $40.1 million to $96.1 million and is mainly in line with improved profitability. A dividend of $170.9 million was declared in respect of the year ended 30 June 2014. This dividend will be paid during 2014/15.

Financial performance measures compared to the 2013-14 Operational Plan

2013-14 Actual 2013-14 Operational Plan EBIT ($M) 493.0 476.9 Net Profit After Tax ($M) 213.6 201.3 Return on Operating Assets (%) 7.6 7.4 Debt to debt plus equity (%) 51.7 52.1

Page 14 | Queensland Rail Annual and Financial Report 2013-14 Financial Performance (cont)

Consolidated balance sheet as at 30 June 2014

2013-14 ($M) 2012-13 ($M) Current Assets 582.3 527.0 Non-current Assets 6,320.4 6,318.1 Total Assets 6,902.7 6,845.1 Current Liabilities 666.3 685.0 Non-current Liabilities 3,433.8 3,392.1 Total Liabilities 4,100.1 4,077.1 Net Assets 2,802.6 2,768.0 Contributed Equity 2,594.9 2,602.6 Retained Earnings 207.7 165.1 Reserves – 0.3 Total Equity 2,802.6 2,768.0

The consolidated entities’ current assets increased by $55.3 million to $582.3 million as a result of increased cash deposits and inventory, offset by a reduction in receivables. The consolidated entities’ current liabilities decreased by 2.7% to $666.3 million as a result of repayment of short term borrowings and bank overdraft. Total equity for Queensland Rail increased by 1.3% to $2,802.6 million as a result of profit for the year of $213.6 million. This was offset by the declared dividend of $170.9 million.

Consolidated cash flows for the year ended 30 June 2014

2013-14 ($M) 2012-13 ($M) Net cash inflow from operating activities 675.8 422.2 Net cash outflow from investing activities (313.4) (482.2) Net cash outflow from financing activities (215.7) (2.8) Net increase/(decrease) in cash and cash equivalents 146.7 (62.8)

Cash flows from operating acitivites increased significantly in the current year due to a reduction in payments to supplier and employees and reduction of receivables. Increase cash outflows from financing activities is attributable to increased dividends of $55.0 million and borrowings reduced by $99.8 million during the year. The consolidated entities’ net debt position decreased by $154.3 million resulting in a decrease in the gearing ratio from 53.2% to 51.6%.

Queensland Rail Annual and Financial Report 2013-14 | Page 15 Our Safety

Safety is a cornerstone of Queensland Rail’s business. Location – inspection and rerailing of South Pine River Bridge.

Page 16 | Queensland Rail Annual and Financial Report 2013-14 Our Safety At Queensland Rail the safety of its people, customers and community remain the highest priority across all operations. During the financial year a number of safety and security initiatives have been undertaken. These initiatives ensure Queensland Rail remains focused on becoming Australia’s safest railway, where every safe second counts.

Safety initiatives for our people ‘Every Safe This campaign was introduced to align A number of safety initiatives were undertaken this year to remind Second Queensland Rail’s commitment to safety with the employees of the importance of safety in the workplace – making Counts’ continued focus on outstanding performance in sure everyone gets home to their families safe, every day. From broad Campaign service delivery. The campaign highlighted that awareness-raising campaigns to targeted initiatives, all highlight to efficiency and safety go hand in hand. Through Queensland Rail’s people that an efficient railway is a safe railway. printed and visual media communications and staff toolbox talks, the campaign encourages Rail Rover The Rail Rover is an unmanned inspection vehicle front line employees to contribute to a safe and used when it is unsafe for a manned vehicle to high performing railway by empowering them to undertake track inspections. The machine was manage the network’s performance. built to detect large faults and disturbances to the rail corridor, such as landslides and washouts Safety The SMARTs program encourages Queensland that can occur after extreme weather events. The Motivated Rail employees to take an active role in improving Rail Rover uses sensors and cameras to detect Action safety in their workplace, by empowering and photograph the track and surrounding Resource individuals to contribute to the implementation of environment, sending real time pictures to a Teams safety improvements. At the end of 2013-14, remote operator working at a safe location. Program there were 89 active SMART initiatives, 21 of (SMARTs) these were approved and implemented. These Signal Passed SPAD is a lead indicator for some of Queensland initiatives were directly linked to managing risk at At Danger Rail’s highest safety risks including collision and the worksite level. (SPAD) derailment. SPAD performance is a key safety Management metric and a continued decline in SPAD trends ‘Good to ‘Good to Great’ was launched in January 2014, is a paramount goal. During the financial year, Great’ with an aim to refocus employees’ attention on Queensland Rail performed well in comparison Cultural existing programs to ensure safety continues to with other passenger railways, achieving a rate of Safety be at the forefront of operational decisions. The 2.92 SPADs per million train kilometres travelled Campaign campaign integrates safety initiatives that have in comparison to the industry average of five already commenced, such as Safety Interactions per million train kilometres travelled. A number and SMARTs. of initiatives designed to reduce SPADs were implemented including: • Identification of high risk signal locations in the Brisbane Central Business District • The establishment of the Queensland Rail SPAD working group • Forums with Rail Traffic Drivers to understand factors leading to SPADs and to identify areas for improvement • SPAD prevention videos for Rail Traffic Drivers • Improved training for Rail Traffic Drivers • Improved investigation framework

Queensland Rail Annual and Financial Report 2013-14 | Page 17 Safety (cont)

Safety initiatives for customers and the community Level Queensland Rail is working with the Department Queensland Rail takes its responsibility for the safety and wellbeing of Crossing of Transport and Main Roads on a Level Crossing customers and the surrounding community seriously. Safety measures Innovation Innovation Project that involves investigating and improvements are frequently put in place across the network to new technology to make level crossings safer. prevent accidents occurring; however Queensland Rail also dedicates The Queensland Government has provided $2.1 a significant portion of its time to educate customers and community million to fund three separate trials of technology members about the importance of acting safely on and around the rail to improve level crossing safety. network. A solar-powered system incorporating active flashing lights and passive stop sign technology Travelling Queensland Rail has embarked on various was trialled from mid-July 2013 at Lane Road in Customer initiatives to reduce the occurence of injuries Lanefield and Carnarvon Highway in Thallon to Safety sustained by customers. This strategy seeks to warn motorists of approaching trains. This trial is Strategy influence customer behaviour in the vicinity of expected to conclude in late 2014. stations and onboard trains. This initiative is aimed at reducing slip, trip and fall related injuries, Two different radio break-in systems are also which are the most common type of incidents being trialled. The ‘Pixie’ radio system has been resulting in customer injury on Queensland Rail developed by NFA Innovation and alerts motorists property. if there is a train approaching a level crossing. A different type of radio break-in technology, Sanding Following the incident at Cleveland Station in developed by La Trobe University has also been Systems January 2013 when a train failed to stop at trialled in North Queensland. Trials the end-of-line buffer, the investigation found environmental conditions resulted in poor European Queensland Rail continued to work with adhesion between the train’s wheels and the rail Train Control Government stakeholders throughout 2013-14 head resulting in the train being unable to stop. System Level on the development of ETCS, an advanced form of train protection, for the South East Queensland Immediate measures were put in place to ensure 2 (ETCS) System. This signalling, control and track safety and reduce the adhesion risk including: the protection system delivers lineside information identification and removal of rail contaminants electronically to the train driver, reducing the need from rail head, and operational restriction under to act on lineside signals that are passed at speed specific conditions. and can be difficult to see. For the long-term, following a successful six month trial of a prototype sanding system, Queensland Rail is now considering proposals for the design, supply and installation of the system on the 64 trains in the 160/260 class. Fitting is expected to start by late 2014 with the sanding systems installed on the 160/260 class trains by late 2015.

Level People still risk their lives to save a few minutes Crossing at level crossings. The Level Crossing Safety

Safety campaign encourages road users to obey signs and signals, whether on boom gates, flashing lights or signage. In March 2014, Queensland Rail introduced further measures to tackle on time running impacts of delays arising from level crossing incidents. New procedures allow trains to continue to operate following a boom gate strike. If a motorist strikes a boom gate, trains are directed to safely pass through the level crossing at a restricted speed of five kilometres per hour, provided all other signs and signals are operational.

Page 18 | Queensland Rail Annual and Financial Report 2013-14 Security initiatives for our customers and the community Closed Circuit A CCTV Analysis Unit has been introduced to Queensland Rail has implemented various programs to manage a Television undertake collection, analysis and preparation diverse range of security risks, from anti-social behaviour to possible (CCTV) of footage for detection of offenders. This acts of terrorism. Working closely with the Department of Transport Surveillance footage also supports Queensland Police Service and Main Roads, the Queensland Police Service (QPS), Crime Stoppers investigations and is in addition to the existing and a number of local councils is integral to the success of Queensland live streaming of CCTV footage from all Citytrain Rail’s security initiatives. station cameras.

Graffiti Every year, more than $5.5 million is spent on Emergency Queensland Rail has an established engagement Management the prevention and removal of graffiti from Response program with its emergency services partners to enhance joint response to emergency incidents and Queensland Rail assets and private properties adjoining rail corridors. Graffiti damages on the rail network. This includes familiarisation Prevention Queensland Rail’s reputation and detrimentally sessions provided to approximately 300 affects community perceptions of safety and emergency services personnel on the safety security on the rail network. Queensland Rail protocols required when responding to train or rail employs a best practice graffiti management infrastructure incidents. There have been 15 joint program, which combines intelligence collection field exercises with emergency services agencies, and enforcement, along with state-of-the-art undertaken to test Queensland Rail’s ability to technology and infrastructure designed to reduce effectively respond to an emergency incident. graffiti and enhance community engagement. Queensland Rail also implemented and/or A new five year Graffiti Prevention and continued the following security initiatives: Management Plan has been developed, in partnership with the Queensland Police Service • Transit Officer patrols of trains and stations and local councils, introducing new security along with the engagement of approximately technologies across the rail network to support 200 private security guards detection and prosecution of graffiti vandals. Queensland Rail also introduced a new graffiti • Mobile security dog teams, each team removal program involving adult and juvenile comprising a handler and security dog, offenders undertaking court-issued service orders. patrolling train stations, car parks and other property Queensland Rail’s award winning Positive pARTnerships program helps to reduce graffiti by • Guardian train services, services that carry producing high quality public artwork in locations private security guards on approximately 40 attractive to vandals. The program works with per cent of timetabled services after 7pm community groups, schools and stakeholders and from Sunday to Thursday, and all timetabled has delivered more than 90 projects covering services after 7pm on Friday and Saturday approximately 20,000 square metres. • Regular mounted police patrols to target Railway A new Ipswich Railway Squad Police Outpost corridor security issues is under construction and expected to be Squad Police • Joint operations with the Queensland Police completed in late 2014. This outpost will provide Outposts Service and Transit Officers targeting various a permanent police presence in the area and will offences and locations, based on intelligence help police officers patrol the rail network along the Ipswich rail corridor. analysis and operational planning Police Outposts have been established at Petrie, • Identification of core zones on most train Manly, Beenleigh, Redbank and Robina stations, platforms are indicated by blue and white with Railway Squad Headquarters located at stripes and featuring enhanced lighting, CCTV Roma Street station. cameras and an emergency help phone

Crime Queensland Rail continues to work in partnership • Continued growth of the QPS Railway Squad, Stoppers with Crime Stoppers to combat crime across its with numbers expected to increase to 70 by the end of 2014-15 Partnership rail network. In 2013-14, another 50 stations were visited, educating thousands of customers on how to report security incidents on the rail network. • Progressively increasing the size of the A dedicated website (railcrime.com.au) has been CCTV network and introducing new security established by Crime Stoppers for customers to technologies to support the detection report security incidents on its rail network. and identification of offenders. Throughout this financial year, the focus was on enhancing network security. Queensland Rail displayed Crime Stoppers intelligence notices on Passenger Information Display Screens, which led to a number of railway offenders being apprehended and prosecuted.

Queensland Rail Annual and Financial Report 2013-14 | Page 19 Our People

For almost 150 years, Queensland Rail’s people have put their best foot forward to deliver a safe and reliable service for customers. Location – Track Chats at Ferny Grove station.

Page 20 | Queensland Rail Annual and Financial Report 2013-14 Our People Queensland Rail employs a workforce across a range of occupations throughout the State.

As at 30 June 2014, there were 5,879 full time equivalents (FTEs) The Plan provided Queensland Rail with long term workforce capability employed, of which: and capacity requirements and impacts, in alignment with alternate • 90 per cent were employed in Core functions (Rail Operations, business models as part of the fundamental reform of operations and Network, Projects, Customer, Access and Business Strategy) contestability readiness. • 68 per cent were employed in operational areas (train driving, Business roles were identified and managed to ensure workforce network control, station and onboard operations and a variety capacity will be available long term. Queensland Rail’s capability of trades) management planning provided strategies for staff to adapt to the • 23 per cent worked in regional areas evolving business models. • 20 per cent were women (49 per cent in the Enabling functions Key recommendations from the Queensland Rail Strategic Workforce and 17 per cent in Core functions) Plan shaped the capability management strategies for business areas. More broadly, the Enterprise People Strategy enabled optimisation • 2 per cent were classified as apprentices, graduates or trainees, and of workforce sustainability, engagement and productivity to deliver • 94 per cent were employed on a permanent basis. organisational objectives through a high performance culture.

Employee Productivity and Diversity Transformation and Optimisation

A key focus for the organisation this financial year was to engage Throughout 2013-14 Queensland Rail continued to undergo significant with employees throughout organisational change. Queensland Rail organisational change and transformation. The focus has been on implemented the ‘Have Your Say’ initiative, which provides multiple ensuring efficiency and optimising business functions to improve opportunities and channels for dialogue between employees and operational performance. There was a reduction of 609 FTEs and a management on a range of topics. As part of this initiative, an parallel improvement in operational performance, with on time running employee pulse poll survey was conducted in December 2013, with performance at a record high. Business functions focused on refining a follow up survey occuring in July 2014. and improving business processes, leveraging technology to achieve greater efficiency and utilising industry partners to supply services more Included within the ’Have Your Say‘ initiative is a new reward efficiently at a lower cost. and recognition framework, with activities focused on improving Queensland Rail’s performance culture and opportunities for staff A number of Queensland Rail’s Enabling function areas continued to engagement under its diversity strategy. Employees were invited to transform and optimise their operating models to deliver better core participate in a series of diversity focus groups to share experiences business support. Human Resources firmly embedded a HR Central and provide suggestions for improving the support and representation operating model, with usage increasing by 74 per cent since the service of those who identify with a divergent grouping. Queensland Rail launched in January 2013. HR Central provides a centric service where launched a number of diversity initiatives, including mentoring employees and managers are able to access a wide range of workplace opportunities for women, culture and diversity awareness activities, information and receive assistance with managing people issues. along with an Aboriginal and Torres Strait Islander Scholarship Support Further organisational change will occur as the organisation continues Program within local communities. to position itself as a competitive operator of transport services to Leadership Performance Culture and Talent the Queensland community. Queensland Rail will continue to focus on supporting these changes with well-designed business models and Leaders played a key role in the transformation of the organisation governance frameworks at the same time as engaging and supporting during 2013-14. To support continuous performance improvement, employees. leaders focused on identifying and implementing initiatives to improve performance culture across the business. Queensland Rail’s leaders Enterprise Agreements participated in performance moderation activities to enable an The Traincrew Agreement was renegotiated and certified on accurate and balanced view of leadership. 21 October 2013 and is due to expire on 30 July 2016. Several A Leading Transformation Development Program was initiated in productivity improvements were identified to fund wage increases, with specific parts of the business, incorporating a range of activities and implementation and monitoring plans put into place to monitor the mediums to ensure development is practical and directly contributes to progress of productivity initiatives. leaders’ change initiatives. The identification and development of ’key Preparation for the commencement of bargaining to replace six talent‘ is an integral part of Queensland Rail’s performance culture and agreements that expired 30 April 2014 began with negotiating strategy. Career and development opportunities for key talent will be the framework mandates approved by the Queensland Government. focus of performance conversations at the commencement of 2014-15. The Queensland Industrial Relations Commission also released a Strategic Workforce Planning and Capability modernised Queensland Rail State Award in April 2014. This enabled formal negotiations with Unions to commence in May 2014. The aim A five year Strategic Workforce Plan was developed, based on three of these negotiations will be to simplify the agreements framework and possible business scenarios and included: to improve the flexibility and productivity of the workforce. • environmental scanning • engagement with the Board and Executives • workforce supply and demand analysis.

Queensland Rail Annual and Financial Report 2013-14 | Page 21 Our Environment

Queensland Rail is considerate of the environment across its vast and varied operations throughout the State. Location – collecting plant samples at Darr River.

Page 22 | Queensland Rail Annual and Financial Report 2013-14 Our Environment Queensland Rail respects the varying environments it operates within across the State, and continues to apply innovative environmental management practices to achieve compatible outcomes and operational efficiencies.

Noise and Coal Dust petrol driven vehicles and ensures that only a small number of diesel vehicles will be purchased as the road fleet is replaced. In 2013-14, the environmental focus was on addressing noise and coal dust issues across the rail network. By working closely with stakeholders, Energy and Greenhouse Gas Emissions Queensland Rail implemented strategies that minimise noise and coal dust where reasonably practicable. Queensland Rail participates in the Energy Efficiency Opportunities (EEO) Program, pursuant to the Energy Efficiency Opportunities Act Through the publication of extensive noise management information 2006 (Cth). Since having the EEO Assessment Plan approved in mid- and mitigation measures on the website, community awareness of this 2013 and published in December, Queensland Rail has progressed issue has improved. Queensland Rail also works with the Department of energy assessments and identified new opportunities across the Transport and Main Roads to review noise management strategies. business.

Richlands to Springfield Environmental Innovation In May 2014, the Federal Government advised that the EEO Program would close on 29 June 2014. Whilst the program may no longer be The Richlands to Springfield line extension delivered innovative mandated, Queensland Rail continues to identify and assess initiatives station facilities that integrate ecologically sustainable design that deliver energy, environment and business efficiencies. Under principles, including solar energy, LED lighting and water harvesting the National Greenhouse and Energy Reporting Act 2007 (Cth), infrastructures. The construction project also mitigated the impacts Queensland Rail is obligated to report annual energy consumption, on the natural environment and aimed to minimise habitat generation and greenhouse gas emissions. fragmentation. This was achieved through: In May 2014, auditors appointed by the Federal Clean Energy • the design and construction of fauna friendly rail corridor fencing Regulator conducted a Reasonable Assurance Audit of the Queensland • purpose built fauna passages at priority waterway crossings Rail 2012-13 Energy and Emissions Annual Report. The auditors are yet to issue their report. Queensland Rail will consider any opportunities • the installation of 17 nesting boxes in nearby bushland, and identified in the report to improve its performance. • voluntary bushland rehabilitation in areas adjacent to worksites using more than 800 native plants, including koala habitat trees. Environmental Compliance No Environmental Regulator enforcement actions occurred in 2013-14. Green Fleet We continue to work proactively and co-operatively with all relevant During the financial year, Queensland Rail implemented an initiative environmental regulatory agencies. to progressively replace all company road vehicles with standardised commercial models. This decision has eliminated any purchase of

Location – Longreach Winton line section.

Queensland Rail Annual and Financial Report 2013-14 | Page 23 Our Community

Queensland Rail works to connect, educate and support the communities that have helped build the rail network for nearly 150 years across the State. Location – Rail Safety Orientation Day at Roma Street station.

Page 24 | Queensland Rail Annual and Financial Report 2013-14 Our Community For almost 150 years Queensland Rail’s services have connected people across the State, getting children to school, employees to work, patients to hospitals, shoppers to supermarkets, and people to social, cultural and sporting events. Importantly, Queensland Rail also connects people in the regions, offering rural communities social and economic links to the rest of the State.

With an awareness of this critical role, Queensland Rail is committed to Access for All improving its engagement with the community, especially in regards to Queensland Rail aims to provide facilities that promote accessibility for safety education, partnerships, accessibility for all, operational impacts all members of the community, including those with special needs. For and infrastructure improvement. A variety of initiatives have been this reason, Queensland Rail actively engages with organisations in the carried out during the year as a reflection of this commitment. disability sector to ensure access to rail services is equitable, dignified Education and comfortable. The organisation takes pride in recording the improvement of accessibility in support of the objectives outlined in the Educating people on the importance of acting safely around rail Disability Discrimination Act 1992 (Cth) and the Anti-Discrimination infrastructure is a priority for Queensland Rail. Act 1991 (Qld). Through the Railsmart community education program, Queensland Since 2003, Queensland Rail has facilitated an Accessibility Reference Rail aims to positively influence the attitudes and behaviours of Group, comprised of representatives from disability groups and school students and community members around the rail network, organisations, such as Vision Australia, Blind Citizens Australia, Guide encouraging them to take responsibility for their own safety and Dogs Queensland, Better Hearing Australia, Deaf Services Queensland, the safety of others. Queensland Rail undertakes regular school and Endeavour, Arthritis Queensland, Queenslanders with Disabilities community liaison across the State, along with Rail Safety Orientation Network and The Multiple Sclerosis (MS) Society. The reference group Days for people with culturally and linguistically different backgrounds ensures that requirements of customers with disabilities are considered and people with disabilities. across a variety of projects and initiatives. The group has recently This year Queensland Rail also partnered with Jonathan Beninca, a provided input on accessibility requirements for the Moreton Bay Rail rail accident survivor, to help educate Queensland students of the Link Project, the Geebung Overpass Project and the Milton Transit potentially deadly consequences of trespassing in the rail corridor. Oriented Development Project. The group also provided advice on Jonathan visited more than 20 schools over a number of months, Station Accessibility Upgrades. explaining the consequences of his decisions and how they will Queensland Rail is in the process of delivering an Accessibility Action impact him for the rest of his life. Queensland Rail expects to see Plan to provide information about achievements and future plans improvements to the corridor trespass statistics over the following year for improving access to stations and trains. The focus is on removing as a result of this education program. access barriers and making progress in respect of the improvements to achieve accessibility compliance. Following public consultation, Partnerships the finalised Accessibility Action Plan will be published on the Recognising the impact of its operations on communities around queenslandrail.com.au website and submitted to the Australian the State, Queensland Rail is committed to giving back through Human Rights Commission in late 2014. partnerships and support programs. Queensland Rail is proud to partner with its top five non-profit partners – Cancer Council Queensland, Station Upgrades Program Guide Dogs Queensland, The Prince Charles Hospital Foundation, Queensland Rail is in the process of upgrading stations on the network Starlight Children’s Foundation and beyondblue. These organisations to improve accessibility. These upgrades will benefit all customers maintain a strong presence across the State, and were proudly including people with disabilities or injuries, those who are elderly, or chosen by Queensland Rail employees. Queensland Rail assists these even people travelling with prams, small children or luggage. Funding organisations in fundraising and awareness campaigns through station was allocated in the 2013-14 budget to initiate the $40 million Station promotions and collections, promotion of events and free-of-charge Accessibility Upgrade Program, which is scheduled for completion in in-train and station marketing and advertising. Queensland Rail also 2016. A Station Prioritisation Matrix and Strategy ensures upgrades supports numerous other local Queensland community charities are delivered as a priority to those stations requiring the most through similar awareness and promotional activities. urgent accessibility outcomes for customers. Following a community consultation process, Graceville, Dinmore, Newmarket and Alderley Operations and Infrastructure Improvement stations will all receive upgrades as part of this program to make the Queensland Rail is partnering with a number of councils across the stations independently accessible. Construction will begin in late 2014. State to improve flood mitigation for local communities. This year in partnership with the Toowoomba Regional Council, the timber bridge at West Creek was replaced with a concrete bridge. Collaborative work was conducted with the Lockyer Valley Regional Council to identify flood mitigation solutions for the Forest Hill community. Furthermore, Queensland Rail partnered with the Central Highlands Regional Council, to complete flooding immunity works in December 2013 on the eastern side of Emerald, installing 55 square metres of corrugated metal piping. This piping allows for more effective clearing of flood waters into the Nogoa River.

Queensland Rail Annual and Financial Report 2013-14 | Page 25 Celebrating our history – Queensland Government Railways’ steam locomotive BB181/4

Page 26 | Queensland Rail Annual and Financial Report 2013-14 Heritage Operations With 149 years of proud history, to which generations of communities have contributed from all corners of the state, Queensland Rail recognises its responsibility to maintain and preserve the treasures acquired across this vast period of time.

As part of this commitment, Queensland Rail has met its obligations The heritage fleet is used to operate charter services for various outlined in The Queensland Heritage Act 1992 (Qld). This provides organisations and significant revenue heritage services such as the the basis to better manage the conservation of Queensland Rail upcoming 150 year anniversary celebrations. heritage significant locations. To date, 60 sites in the Queensland In consultation with The Workshops Rail Museum, items of historical Heritage Register comprising 235 operational and non-operational significance have been identified for preservation as part of the State assets have been identified. These encompass small structures, such as collection. Those assets not required for the State collection or by signals, buildings and bridges. One of most significance is Roma Street Queensland Rail are offered, in contractual arrangements, to tourist station, Brisbane’s first city station. This year saw the continuation of and heritage rail organisations. conservation works on this memorable building. External works are expected to be completed in 2015. Queensland Rail self-manages a Public Activities for Heritage further 465 assets that have heritage significance, which are not State- listed. The 150th anniversary of the first rail journey in Queensland has prompted significant interest in the story of the railway, its Queensland Rail is continuing to engage local communities and development and relationship with the community and the founders of authorities to divest non-operational assets and to identify re-use Queensland Rail. opportunities. These uses may include tourist information offices, local museums, retail outlets, cafes and community meeting centres. Activities to highlight the significance of cultural heritage, operational heritage and their influence on the community have been scheduled The preservation of Queensland’s fleet of heritage rollingstock is a for different areas and events throughout the year. These have included significant part of heritage operations. This fleet consists of a variety invitations for public presentations, displays, requests for social media of operational and display rollingstock, including steam locomotives material, stakeholder presentations and requests for assistance with from different eras, diesel locomotives, rail motors, wooden and steel accessing published material from historical collections facilitated by carriages, water wagons and coal wagons. Queensland Rail.

Queensland Rail Annual and Financial Report 2013-14 | Page 27 Efficiency

Queensland Rail has seen an increase of 30,000 trips per week from January 2014, when it implemented the organisation’s largest ever timetable upgrade. Location – Fortitude Valley station.

Page 28 | Queensland Rail Annual and Financial Report 2013-14 Efficiency Queensland Rail is committed to continually refining and streamlining operations to deliver efficiencies, while maintaining high customer service levels and satisfaction, and delivering upon Government objectives.

Productivity Timber Bridge Replacement Program This year Queensland Rail dedicated significant effort to improving Queensland Rail partnered with the industry to drive innovation in efficiency and effectiveness of passenger services, train operations and the design and construction of new concrete bridges in remote areas rail network management in order to deliver the best possible, safest of Central Queensland. The successful contractor, in conjunction with service at the lowest cost. Initiatives built around smart, effective and internal bridge engineers, designed and endorsed a unique bridge safe use of resources that provide efficiencies have achieved notable structure involving the use of driven steel piles and pre-cast headstocks, results in this financial year. girders and guardrails. Queensland Rail achieved sustainable labour and consumable cost The design enabled Queensland Rail to replace a significant number reductions across the organisation since July 2012. These reductions of bridges in a very short period of time with minimal disruption to continue to be incorporated into future budgeting. Labour (excluding rail services. At the peak of these activities, seven bridges were being redundancies) and consumable costs decreased over the past two commissioned each week. This innovation in design and construction years from $1.19 billion in 2011/12 to $1.01 billion in 2013-14. achieved significant cost savings for Queensland Rail. The result is a reflection of the organisation’s commitment to provide safe, reliable Market Readiness and affordable rail solutions.

Queensland Rail continues to position itself as a leader in all aspects Operation of Longer Trains of rail service delivery, including financially responsible business operations. The organisation has undertaken in-depth analysis of Queensland Rail has been actively working with rail operators to critical operations, comparing the organisation’s performance with investigate the opportunity to operate longer and more efficient trains similar businesses and industries in both domestic and international on the North Coast Line, West Moreton systems and throughout markets. This hasl uncovered opportunities for efficiency and enhanced South East Queensland. Rail operators have conducted a number of outcomes relating to on time running performance, operating costs successful trial services on the North Coast Line. Queensland Rail is and asset utilisation. now investigating the feasibility of longer trains being incorporated into ongoing operating plans, as well as identifying the enhancements This work also contributes to supporting Government priorities required to facilitate the operation of longer trains. in an effort to deliver the best possible returns for the State. Competitive and efficient services are being delivered through the South East Queensland Maintenance Works application of contestability principles to the service delivery model. Queensland Rail has accelerated delivery of a significant upgrade This agenda aligns with the Queensland Government’s response program to replace timber mainline sleepers in South East Queensland to recommendations relating to Queensland Rail set out in the with low maintenance and resilient concrete rail sleepers. This program Queensland Commission of Audit Final Report 2013. will eliminate the need to replace life expired timber sleepers at a rate of 50 per cent every five years, and will ensure a low maintenance high Efficiency Projects quality track structure to meet ongoing passenger and freight demand. Enterprise Asset Management System (EAMS) The project is currently six months ahead of schedule for a $100 million program of works. Stage One of the EAMS Project was implemented in April 2014. Once complete, the project will see more than 260 asset management Signalling Reliability Improvements systems amalgamated into one, using SAP software. This integrated Significant signalling reliability improvement works have been carried asset management system will act as one reference point for everyone out on the North Coast Line to improve network performance. involved in the asset management chain, providing enhanced Upgrades have been made to electronic signalling interlocking information throughout an asset’s whole of life cycle. The new EAMS systems, train detection and power systems. The Signalling and uses modern mobile platforms, such as tablets, to improve the Operational Systems teams were successful in designing, planning and timeliness of data being entered into the system. Implementation of implementing a series of award-winning signalling and control centre Stage Two will occur in 2014-15. upgrades to provide the necessary operational flexibility to support the Sector Two Timetable implementation.

Queensland Rail Annual and Financial Report 2013-14 | Page 29 Efficiency(cont)

Scheduled Corridor Access System (SCAS) technology is expected to deliver significant savings each subsequent year in maintenance costs. The aim of the SCAS program is to make sure that all customers have a safe and reliable rail service. The structure divides the SEQ rail network Reliability into seven corridors. Each of these corridors are shut down up to four times per year, scheduled evenly throughout the year. The shutdown Improving the reliability of services remained a key focus throughout times vary, however, most are 48 hours in duration. The continued aim 2013-14. To understand its operational performance in context with of these closures is to improve access to the corridors, improve safety of other similar rail operators, Queensland Rail benchmarks its on time works, improve the utilisation of shutdowns, and reduce conflicts with running results against Australian rail operators. Queensland Rail is also special events. a member of the International Suburban Rail Benchmarking Group (ISBeRG), run by the Railway and Transport Strategy Centre at the SCAS closures are an essential part of maintaining rail infrastructure Imperial College in London. and delivering projects. The closures enable teams to undertake work resurfacing kilometres of track at a time, along with concrete sleeper Benchmarking analysis demonstrated that in 2012, Queensland Rail’s replacement and removing overgrown vegetation from the rail corridor. on time running result was 90.62 per cent, placing it 12th amongst ISBeRG participants. In 2013 there was significant improvement with Extended Rail Possession on time running averaging 94.31 per cent, placing Queensland Rail Extended possessions occurred during night works on the North Coast second in comparison to its domestic counterparts, and fifth amongst Line on the Petrie to Caboolture rail corridor, proving effective in ISBeRG participants. In 2014 Queensland Rail has seen the most boosting re-sleepering production. The extra time on track has resulted promising on time running results, maintaining figures above 96 per in productivity increasing from a planned replacement of 179 sleepers cent, delivering the best on time running results in Australia. per night to an average of 358. These extended rail possessions have Results were largely driven by a cross-organisation on time running resulted in substantial cost savings. Taskforce, responsible for implementing a range of initiatives through detailed analysis of performance, consistent monitoring, management Concrete Check Rail System – Toowoomba Range and reporting of identified causes of delays. Queensland Rail currently uses a timber check rail system on the Toowoomba and Little Liverpool Ranges where tight radius curves are Rollingstock Reliability and Availability present. New technology incorporating a concrete check rail system has Significant improvements were made to the availability and reliability been trialled and approved for use. This alternative is more durable and of Queensland Rail’s rollingstock fleet for timetable and network robust than the existing timber system. Upgrades of remaining timber requirements. Rollingstock reliability improved from 3.77 primary delays check rail systems on the Toowoomba Range have been allowed for in per 100,000km in 2012-13 to 2.21 primary delays per 100,000km this the Queensland Rail Access Undertaking and, once completed, the new financial year.

Maintaining the rail network to keep customers safe. Location – detailed bridge inspection at Indooroopilly.

Page 30 | Queensland Rail Annual and Financial Report 2013-14 Rollingstock availability is at an all-time high despite the ageing of the The Sector Two Timetable was implemented on 20 January 2014 and fleet. Availability has improved from 90 per cent in 2012-13 to 94 per has delivered: cent this financial year. This level of availability ensures the optimum • 200 additional daily services during AM and PM peak periods utilisation of rollingstock assets for customers. • in excess of 1,100 additional services every week Timetable Improvements • increased revenue kilometres to 265,000 kilometres weekly A key strategy throughout this financial year was to manage passenger capacity through a timetable upgrading process. As South • more frequent services where the services are most demanded, and East Queensland’s population continues to grow, Queensland Rail is • zero disruption to existing freight services despite the increase in improving its timetables to optimise use of infrastructure and resources passenger service frequency. in order to maximise benefits for customers. Timetable changes also set the stage for the future fleet, allowing for new services to be seamlessly These additional services have been implemented without any added to the network as new trains become available. increases in Traincrew staff or rollingstock fleet and have provided the framework to facilitate the seamless integration of New Generation Timetable upgrades also delivered improved comfort with more Rollingstock into the existing service plan. available seating, more frequent services where they are needed most, and consistent departure and journey times. In addition to providing more capacity, and more frequent services, the timetable upgrade has also ensured a sustained improvement in on This year a major timetable redesign was carried out for the Citytrain time running results, ultimately providing a better service for customers. Sector Two lines – Gold Coast, Beenleigh, Cleveland, Ferny Grove, Shorncliffe, Doomben and the Airport. This completed a strategic and operational overhaul of the network that included Sector One Timetable implementation in June 2011 on the Ipswich, Rosewood, Caboolture and Sunshine Coast lines.

Mayne Control Centre.

Queensland Rail Annual and Financial Report 2013-14 | Page 31 Service Quality

The Spirit of Queensland offers quality customer service including world-first innovative RailBeds, delivering a travel experience in comfort and style.

Page 32 | Queensland Rail Annual and Financial Report 2013-14 Service Quality Optimising operational performance to provide safe, reliable and customer-centric rail services.

Service Quality More than 24,000 people follow Queensland Rail on its social media channels across Facebook, Twitter and YouTube. Queensland Rail is Customer centricity is key to the decision-making process for all one of the few rail operators in Australia to have a proactive presence operational improvements at Queensland Rail. Everything relates back in social media, providing a channel for real-time service information, to how the customer’s experience can be enhanced, while ensuring the improved incident management, promotion of safety measures and a delivery of safe, reliable and efficient services. space for customers to provide suggestions and feedback. Queensland Rail makes seven service commitments to its customers – personal safety, regular and reliable services, accurate and timely Station Upgrades information, comfort, clean and well maintained surroundings, personal As the State continues to grow, Queensland Rail is committed to service and the ability for customers to be heard through feedback upgrading its stations to accommodate the increase in travel demand channels. and improve safety and accessibility for customers. A number of major Efforts dedicated to service quality this year, aim to deliver on these station upgrades were finalised this financial year. commitments to customers. Central Station Concourse Redevelopment International Customer Service Standard (ICSS) Queensland Rail has been working with TransLink to redevelop the Since 2009, the ICSS has been used as an independent business Central station concourse to improve customer flow and cater for improvement tool to benchmark Queensland Rail’s customer service growing patronage. Central station is an integral part of the South East progress and identify opportunities for improvement. Queensland rail network, catering daily for more than 80,000 regular train commuters and visitors to Brisbane City. This year’s audit result of 7.12 out of 10 places the organisation at the highest tier of the Standard (Integration Level). In achieving this The $5 million redevelopment delivered: result, Queensland Rail has positioned itself as a leader in customer • a new ticket office in the adjacent heritage building service delivery within the rail industry and across all organisations assessed. The report recognised: efficiencies gained through smarter • double the number of fare gates from 18 to 36, including seven use of resources, innovation and process improvements; business wide-access gates for improved accessibility improvements driven by customer feedback; improved reporting • a new customer service window within the station concourse allowing for complex analysis, and an operational focus laying the foundations for improved customer outcomes. • new signage and information displays • improved security with upgraded lighting and Closed Circuit The Onboard Experience Television (CCTV) security cameras. Queensland Rail is committed to delivering customer service excellence by continuing to innovate to influence the onboard customer Narangba Station experience. Customers are now able to access all social media The $30 million upgrade delivered: platforms, browse websites, check email or obtain the latest transport • a new high-level platform, which raised the existing platforms to information, thanks to free Wi-Fi on offer onboard a number of trains. train floor level Queensland Rail is the first rail operator in Australia to offer this service. • a new footbridge with lift and stair access to all three platforms Another national first has been delivered with the addition of ‘quiet carriages’ on every Citytrain service. Customers travelling in these • a new station building with universally accessible toilets and ticket carriages are requested to refrain from loud conversations, talking on office mobile phones and listening to noisy musical devices. Almost three in • new signage and passenger information systems, with improved four customers use the quiet carriages for some of their journeys. lighting and CCTV Connecting with Customers • improved passenger waiting shelter on all platforms Queensland Rail stays connected with its customers in order to • 20 additional car park spaces. understand what they value in rail services. This is achieved through the use of social media, reference groups, ‘Track Chats’, and traditional customer feedback channels. ‘Track Chats’ are completed bi-monthly at key stations across the network. This program is aimed at engaging customers on platforms across the network and gaining face-to-face feedback on targeted topics linked to the Customer Charter. This information is compiled and used where possible to drive business improvements across key drivers of satisfaction such as safety and security, provision of information, customer service, stations and facilities.

Queensland Rail Annual and Financial Report 2013-14 | Page 33 Service Quality (cont)

Sandgate Station Traveltrain Renewal Program This $20 million upgrade delivered: Queensland Rail continued with its project to deliver a new, upgraded Traveltrain fleet, with the retirement of existing rollingstock, some of • a new footbridge with lift and stair access to both platforms which is more than 40 years of age. The Traveltrain Renewal Program • raised existing platform height to train floor level is aimed at fulfilling future requirements by providing comfortable, modern and reliable services for customers. Funding was allocated in • an upgraded station building with universally accessible toilets and the 2013-14 budget to a renewal program for delivery of the new Spirit ticket office of Queensland in October 2013, which allowed for the refurbishment of • new signage and passenger information systems an existing Tilt Train. The full Spirit of Queensland fleet will be entered • improved lighting and CCTV security cameras into service in late 2014. • improved customer waiting shelter. The Spirit of Queensland service is a world-first innovation, featuring Premium Economy Seats with innovative fully-reclining RailBeds and South Brisbane Station personal in-seat electronic entertainment systems to redefine the modern rail travel experience. The $12 million project delivered: • a new high-level platform, which raised the height of existing Kuranda Scenic Railway Application platforms to train floor level In October 2013, Queensland Rail Travel launched a trial of the • upgraded lift and stair access multi-lingual application that features an audio playbar, images and commentary transcripts on Kuranda Scenic Railway services. The app • refurbished station building and ticket office offers customers an interactive tour of the railway’s historical site in • new signage and passenger information systems either Japanese, Mandarin, German or English. Customers can also browse information on the Cairns to Kuranda World Heritage protected • improved lighting and CCTV security cameras rainforest. • refurbished heritage passenger waiting shelters on all platforms.

Central Station Concourse Redevelopment.

Page 34 | Queensland Rail Annual and Financial Report 2013-14 Service Offering

Free Wi-Fi Customer charter

Quiet Carriage Professional and Friendly Staff

Clean Surrounds Timely announcements

Frequency of services Safe and secure environment

Accessibility Reliability of services

Train etiquette Informative signage

Queensland Rail Annual and Financial Report 2013-14 | Page 35 Commercial Performance

Queensland Rail is committed to delivering value-for-money to freight customers in the resources, agriculture and construction industries. Location – Mount Isa Line.

Page 36 | Queensland Rail Annual and Financial Report 2013-14 Commercial Performance Queensland Rail delivers sustainable financial performance to help make rail travel more affordable.

With continuous improvement, cost management, increased revenue, Revenue and Funding improved asset management and optimisation of operations, A portion of Queensland Rail’s revenue is derived through the delivery Queensland Rail continues to operate a sustainable railway. The of rail services outcomes to the State. The Government funding for the commercial strategy aims to efficiently deliver core business and provision of infrastructure and passenger services includes: expand areas in support of Government objectives for State economic growth. • Citytrain – funds the efficient delivery of above rail passenger services across the Brisbane suburban network Value • Travel and Tourist train – funds the delivery of regional above Queensland Rail is committed to delivering value for money to freight rail services along the east coast (Brisbane to Cairns), Charleville, customers in the resources, agriculture and construction industries, Longreach and Mount Isa corridors while maintaining high customer service levels and satisfaction. Value for money and affordable rail solutions for Queensland Rail business • Rail Infrastructure – funds the below rail network, excluding the customers are a key performance driver. Focus remains on improving Mount Isa Line. organisational performance to more efficiently manage Government Access Revenue funding. Approximately 11 per cent of revenue is derived from third-party access Supply Chain Forums charges to the below rail network. Queensland Rail actively facilitates regular supply chain forums to In December 2013, the Peabody Mine on the West Moreton System engage with stakeholders and other supply chain partners. This closed. However, due to strong railings on the line in the lead-up to enables an improved understanding of Queensland Rail’s business closure and effective take or pay provisions, the net outcome was amongst supply chain partners, by providing information on capacity positive. The Mount Isa Line experienced plant maintenance shut- analysis, train control, planning and maintenance activities. These open down at Phosphate Hill for a month towards the end of the 2013 communications have resulted in mutually beneficial efficiencies on calendar year. Once again, strong take or pay provisions assisted with critical supply chains. revenue recovery. Outcomes of the North Coast Line Supply Chain Forum include: The Regulatory Framework • improved coordination with Aurizon on the operation of services Open access to Queensland Rail’s network is mandated, which means across Queensland Rail and Aurizon managed sections of the North that third-party operators may seek to operate train services on Coast Line the network. Third-party access to the network is legislated under • facilitated trials of the operation of longer intermodal freight the Queensland Competition Authority Act 1997 administered by services on the North Coast Line with the objective of assisting the Queensland Competition Authority (QCA). Queensland Rail operators to benefit from running longer, more efficient trains, and operates under a QCA-approved Access Undertaking that provides a framework under which parties may seek access to the Queensland Rail • flood-prone locations identified on the North Coast Line (to network. This includes outlining: negotiation process and timeframes; Townsville at this stage) that would benefit from upgrade works to pricing principles; utilisation of the network’s capacity, and network improve flood resistance and network reliability. performance reporting requirements. The current Access Undertaking The net outcome has been increased supply chain optimisation and was assigned to Queensland Rail via a transfer notice on 1 July 2010 delivery of ongoing economic benefits for the State. as part of the separation of QR Limited into QR National (now Aurizon) and Queensland Rail, expiring 31 December 2014. Mount Isa Line Projects and Studies The Mount Isa Line is unique in its history, operating characteristics and possesses future potential. Significant new mineral deposits coupled Queensland Rail contributes to a number of Government-led projects with the discovery of coal in the Northern Galilee Basin indicate that and infrastructure programs, which include the following projects: the Mount Isa Line is on the cusp of growth opportunities. Queensland • Bus and Train (BaT) Project Rail is committed to facilitating the transportation of the forecast tonnage anticipated to be railed on the Mount Isa Line. • Moreton Bay Rail Link (MBRL) Project Despite these future growth opportunities, tonnage along the Mount • Coomera to Helensvale Duplication Isa Line decreased during 2013-14, primarily due to the cessation • Melbourne to Brisbane Inland Rail Project of magnetite operations at Ernest Henry Mine and failure of the ammonia plant at Phosphate Hill. • Transit Oriented Developments (TODs) Glencore Xstrata determined that the business case for magnetite • the New Generation Rollingstock (NGR) Project production was not compelling in current market conditions and • Regional Freight Growth Strategy redirected its focus to the sustainability of copper and gold operations. Incitec Pivot’s ammonia plant shut down for July 2013, causing most of • South East Queensland Capacity Improvement Study their freight traffic to be offline for the month. To rectify a series of operational issues with the ammonia plant, a shutdown was scheduled • North Coast Line Capacity Study, and between May and June this financial year, which significantly reduced • Queensland Intermodal Freight Terminal Study. long and short haul acid and fertiliser tonnages on the Mount Isa Line.

Queensland Rail Annual and Financial Report 2013-14 | Page 37 Growth

The Richlands to Springfield Line extension opened on 1 December 2013. Location – Springfield Central station.

Page 38 | Queensland Rail Annual and Financial Report 2013-14 Growth With a proud history of supporting rural communities, Queensland Rail remains committed to driving economic growth by supporting the resources, agriculture, tourism and construction industries.

To achieve this, the business actively engages with rail operators, Queensland Rail Travel also achieved the following significant results end customers such as mining companies, supply chain partners during 2013-14: and industry stakeholders. This ensures Queensland Rail can address • launch of the Spirit of Queensland service in October 2013 capacity issues, facilitate continued economic growth, and improve cycle times and on time running performance. • confirmed delivery of the remaining Spirit of Queensland trains for This year the challenge in delivering on these priorities has been October and December 2014 meeting the demand for more passenger services while at the same • implementation of the new online rail reservation system in time delivering adequate services for freight customers. Queensland October 2013 Rail recognises the importance of continuing to work collaboratively with stakeholders and customers to facilitate growth in network • the first online rail sales campaign to support the new online tonnage and patronage. booking system Queensland Rail will also continue to work with the Department of • delivered a new website dedicated to Queensland Rail Travel, and Transport and Main Roads to review timetabling requirements in South • launched a new long distance timetable in October 2013 to East Queensland regional areas in order to optimise service frequency coincide with delivery of the first Spirit of Queensland service. and make it attractive to use services. Below Rail (Access) Customers Patronage Customers of the below rail business can be categorised into the Queensland Rail is working with TransLink to grow the rail patronage following three main groups: through the delivery of additional services by improving on time running and enhancing station facilities. The quality of service provided • Above rail operators – such as Aurizon, Pacific National, Rail Corp is continually improving based on customer feedback to make the and Cairns Kuranda Steam passenger journey more enjoyable. • End users – such as Xstrata, Yancoal, Palmer Nickel Corporation, Citytrain New Hope and BHP Billiton, and On the Citytrain network, Queensland Rail’s objective is to be South • Other customers – Queensland Rail works with a number of East Queensland’s first choice in public transport by providing a safe, other customers in a variety of ways, including on the design, reliable and timely transport solution. development, installation and/or connection of their adjoining infrastructure to the Queensland Rail network. In 2013-14, there were more than 63,000 passenger movements at Central station between 6am and 6pm each weekday, with more than Queensland Rail continues to build closer relationships with all 50 million total customer journeys for Citytrain for the year. stakeholders in various supply chains, including ports, industry bodies, regional councils and government agencies. This is an important aspect Although patronage numbers have not improved on the previous year, in facilitating growth, reducing system variability, improving planning the Sector Two Timetable Change in January has seen the number of trips taken by passengers, increase by 30,000 trips per week. and communication and increasing supply chain system reliability. This indicates the increase in service frequency and reliability has North and North West Regions encouraged existing customers to use the network more often. The North Coast and Mount Isa lines are the major regional freight The most frequently utilised lines are the Gold Coast, Ipswich and and passenger lines within the Queensland Rail network. These systems Caboolture, with the Gold Coast Line having the highest patronage of carry various freight products, including containerised and industrial any morning peak service. freight, minerals, livestock and bulk commodities including sugar Travel and Tourist Trains and grain. Queensland Rail Travel is committed to operating a safe and efficient The north and north-west regions of Queensland contribute more than travel and commuter services across regional Queensland. $7 billion to the State’s economy. With the Queensland Government being a key stakeholder, to ensure long term growth and viability Traveltrain customers mainly originate from Australia, with the most of these lines Queensland Rail relies on the revenue that operating frequent international customers visiting from the United Kingdom, customers provide for access to the rail network. other parts of Europe and New Zealand. People travel for a variety of reasons including: visiting friends and relatives, holidays, business, Supply chain stakeholders benefit from re-sleepering, re-railing, shopping, and education. Customers mostly enjoy travel by train the network protection works program and the upgrade of the over other modes because of the reasonable price, convenience and telecommunications network on the Mount Isa Line. This work enjoyment of the rail journey. improves safety and reliability and reduces disruptions by providing In 2013-14 Travel and Tourist trains carried more than 700,000 a more robust and stable track structure with improved remote customers across the State, with more than 340,000 people travelling intelligence. on the Kuranda Scenic Railway alone – drawn to the beauty of the Barron Falls.

Queensland Rail Annual and Financial Report 2013-14 | Page 39 Growth (cont)

Network Capacity Improvements The Richlands to Springfield project delivers the following benefits to Queensland Rail customers: Toowoomba Range Capacity • a travel time of 41 minutes from Springfield Central to the The project scope proposes the construction of two one-kilometre rail Brisbane CBD passing loops at Harlaxton and Ballard to provide additional capacity • AM peak services every 6 to 12 minutes on the Toowoomba Range and the lowering of the tunnel floors on the Toowoomba Range and Little Liverpool Range to allow haulage • PM peak services every 12 minutes of higher containers to meet agricultural industry requirements. This • consistent departure times every 30 minutes on Saturday project is expected to be completed post-2015. • departure times every hour each Sunday from 7am, with services Richlands to Springfield Line Extension every 30 minutes between 10am and 10pm. The Richlands to Springfield line extension was officially opened on Lawnton to Petrie Third Track 1 December 2013, delivering a 9.5 kilometre dual track rail line from The Lawnton to Petrie Third Track will increase capacity of the North Richlands to Springfield. Coast Line through installation of a third track between Lawnton and This new rail line will help reduce congestion on the Centenary Petrie stations. This project facilitates the connection of the Moreton Highway, with up to 2,500 cars taken off roads during morning peak Bay Rail Link (MBRL) spur line to the North Coast Line and is being periods. delivered in conjunction with the MBRL project. Construction works commenced in February 2014, with modifications to the existing track The state of the art track and station facilities have delivered work. This project is scheduled for completion in early 2016. much needed public transport infrastructure for the booming local community. More than 3,200 jobs were created throughout the life of Rail Management Centre (RMC) this project. The RMC project will improve Queensland Rail’s operational facilities in In addition to the dual track, the project has provided: order to manage growing South East Queensland network. The RMC will also have the capacity to accommodate regional control centres. • two new stations – one at Springfield near Woodcrest College and the other at Springfield Central, near the Orion Shopping Centre, to The project incorporates the construction of a three-storey building serve a rapidly growing community at the current site, using the available footprint and connecting the existing structure. A separate two level car park will also be constructed. • two new road underpasses under the Centenary Highway from Springfield station to the Orion Shopping Centre The new RMC will cater for projected growth expectations over the next 30 years, while delivering improved incident management and recovery • facilities for cyclists capability, in addition to optimising train operations. The overarching • upgrades to the Centenary Highway between Springfield Parkway purpose will be to improve safety, efficiency and service reliability across and Johnson Road (budgeted separately by the Department of the entire South East Queensland network. Transport and Main Roads) The RMC project has been procured through an Early Contractor • 200 Park’n Ride spaces at Springfield station and 500 Park’n Ride Involvement model to capture efficiencies. spaces at Springfield Central station. A two phased approach has been adopted, with the construction phase commenced in June 2014 to be completed by December 2015, with the RMC Function and fit-out phase scheduled for completion in 2016.

Construction underway on Lawnton to Petrie Third Track.

Page 40 | Queensland Rail Annual and Financial Report 2013-14 Acknowledgements

CSIA Awards Normanton Community Event of the Year The 12th Annual CSIA Service Excellence Awards were held in October In January 2014, Queensland Rail’s Gulflander service was awarded 2013, where awards were recieved for: the Normanton Community Event of the Year Award for 2014 for participation in celebrations held to commemorate the 125th • Customer Service Professional of the Year anniversary of the first railway sleeper laid on the Normanton-Croydon • Customer Service Team of the Year Line. • State and Federal Government Excellence Award. Chartered Institute of Logistics and Transport These awards showcase Queensland Rail’s achievements in customer Australia (CILTA) Awards service and are an acknowledgement of performance benchmarked Queensland Rail received a number of significant industry awards at against peer group organisations. The organisation was also the CILTA Awards held in October 2013. The Excellence in Innovation nominated as a national finalist in the Ease of Service Award, which is Award was conferred on Queensland Rail’s Training Simulator Specialist, a new customer-voted award. The award was based on direct feedback Jessica Paton, in recognition for the development of the innovative from more than 3,000 customers and 2013-14 was the first year this Driver Desktop Simulator Project. award was presented. National Trust of Queensland Heritage Awards Chartered Institute of Purchasing and Supply Australasia Procurement Professional (CIPSAPP) At the Annual National Trust of Queensland Heritage Awards in August Awards 2013, Queensland Rail received Silver and High Commendation Awards in the Queensland Heritage Council Heritage Awards category Queensland Rail was awarded Most Improved Procurement in recognition of the conservation of heritage assets. The Silver Organisation at the ninth Annual CIPSAPP Awards held in October Award was for conservation of the former Station Superintendent’s 2013. residence at Maryborough station. The High Commendation related to Queensland Tourism Awards restoration of Old Ascot station and Coorway station. At the Queensland Tourism Awards, held in November 2013, Member of the Order of Australia Queensland Rail received a bronze award in the Tourist Attraction In the 2014 Queen’s Birthday Honours, Chairman Michael Klug was Category for the Kuranda Scenic Railway service. Queensland Rail also appointed a Member of the Order of Australia for significant service, received a bronze award in the Heritage and Cultural Tourism Category one of the areas of recognition being for his service to the community. for the Spirit of the Outback service.

The award-winning Kuranda Scenic Railway passing by the Barron Falls.

Queensland Rail Annual and Financial Report 2013-14 | Page 41 Governance Structure as at 30 June 2014

State of Queensland – Responsible Ministers

Treasurer and Minister for Trade The Hon. Tim Nicholls MP

Minister for Transport and Main Roads The Hon. Scott Emerson MP

Queensland Rail

Board Members Michael Klug – Chairman Aivars Blums David George Wendy McMillan John Mickel Glenn Poole Paul Wallis*

Chief Executive Officer Helen Gluer

Major Projects People and Safety and Procurement Audit and Risk Committee Committee Committee David George – Chair Wendy McMillan - Chair Glenn Poole – Chair Michael Klug Aivars Blums Michael Klug John Mickel Michael Klug Wendy McMillan Wendy McMillan Glenn Poole

Queensland Rail Limited

On Track Insurance Pty Ltd

*Paul Wallis was appointed as a Board Member on 30 July 2014.

Page 42 | Queensland Rail Annual and Financial Report 2013-14 Organisational Structure as at 30 June 2014

Executive General Manager Access & Business Strategy

Andrew Matthews (Acting) Tim Ripper (Substantive)

Executive General Manager Rail Operations

Kevin Wright

Executive General Manager Network

Tim Ripper (Acting)

Executive General Manager Customer Service Chief Executive Officer Martin Ryan Helen Gluer Executive General Manager Projects

Jim Benstead (Acting)

Chief Financial Officer

Mark Hope

Executive General Manager Safety, Assurance and Environment

Greg Ford Company Secretary

Peter McNamara Executive General Manager People and Performance

Nicholle Duce

General Manager

Office of the Chief Executive of the Chief Office Media and Corporate General Counsel Relations Diana Farrelly Rebecca Masci

Queensland Rail Annual and Financial Report 2013-14 | Page 43 Board

Michael Klug AM – Chairman (LLB, David George (MA (Hons), FAICD, FAICD) FCILT) Michael is a well-respected solicitor David has more than 35 years’ with more than 40 years’ experience. experience in the rail industry in three He recently concluded his third term as countries. This includes being Chief Partner in Charge of the Brisbane office Executive of ONTRACK (New Zealand of Clayton Utz. rail network) between 2004 and 2007 and responsible for Queensland Rail’s He is a leader in the area of Alternative coal and freight businesses between Dispute Resolution and he is one of the 1998 and 2004. Prior to this he was original founders of LEADR (Lawyers Director of European Business for Engaged in Alternative Dispute British Rail (freight) in the run-up to the opening of the Channel Tunnel. Resolution). He was also an original Director of the Australasian Disputes Centre and has served on ADR committees nationwide. David is currently Chief Executive Officer of the Cooperative Research Centre (CRC) for Rail Innovation, a position held since 2007. The CRC Michael is a nationally recognised practitioner, public speaker and for Rail Innovation is winding up in late 2014. lecturer in negotiation, having taught in Australia and overseas to university students, the business and public sector communities. David has previously served as Vice Chair of the International Railway Research Board, as Chair of the organising committee of the World Michael has extensive board experience across a diverse range of Congress on Railway Research (WCRR) held in Sydney in 2013, and fields including education, health care and transport. He is currently also as a member of the Commonwealth Government High Speed Rail Chairman of Autism Queensland. reference group. Michael is a Fellow of the Australian Institute of Company Directors David is a Director of TasRail and also a Fellow of both the Australian and the Vice-President of the Brisbane Club. In 2014, Michael was Institute of Company Directors and the Chartered Institute of Logistics appointed a Member of the Order of Australia (AM) for significant and Transport Australia. service to the law in the field of alternative dispute resolution and to the community. Glenn Poole (BEc, GradDip Bus Admin, FCPA, FCA, FAICD) Aivars Blums (BEc) Glenn is a professional Senior Aivars is an economist with experience Executive and Board member with in the public and private sectors. He has over thirty years’ experience in an extensive government and industry strategic leadership, governance and policy background and worked with the management across the public and Commonwealth Department of Trade, not-for-profit sectors. the Australian Trade Commission and served in a number of overseas trade He has significant practical experience and diplomatic postings. in corporate governance and financial management through appointments as In 1988, Aivars was recruited to the a director of boards and audit committees in the government and not- Queensland Government as the Chief for-profit sectors. He is currently a member of the Local Government Executive of the Private Sector Economic Advisory Committee to the Association of Queensland Audit and Compliance Committee, the then Premier. Subsequently he moved to the private sector as Chief Public Trustee of Queensland Audit and Risk Management Committee, Executive of GWA Trading Corporation and then to the Visy Group as the Board of Governors of the Queensland Community Foundation Special Advisor on Asia. and the Governance, Nomination and Remuneration Committee of the Aivars has previously served as the Deputy Chair of the Commonwealth Queensland Synod of the Uniting Church in Australia. Glenn is also the Government’s Sugar industry Oversight Committee and as a Member Chair of the Advisory Board for the Australian Centre for Philanthropy of the Deputy Prime Minister’s Regional Economic Development and Nonprofit Studies, QUT. Advisory Panel. He was the inaugural Chief Executive of the Gladstone Glenn has successfully undertaken Senior Executive positions in the Economic and Industry Development Broad. Aivars holds a degree in Queensland Treasury Department providing influential policy advice Applied Economics (BEc) from the Australian National University. on economic, financial management and corporate governance issues impacting on the public sector and the community and most recently was the Auditor-General of Queensland from 2004 to 2011. Glenn holds a Bachelor of Economics and a Graduate Diploma of Business Administration and is a Fellow of CPA Australia, the Institute of Chartered Accountants Australia and the Australian Institute of Company Directors.

Page 44 | Queensland Rail Annual and Financial Report 2013-14 Wendy McMillan (BBus, BA, MAICD, Currently, John serves on the Queensland Catholic Education FAIM, AFAMI) Commission Political Advisory Committee, is a Board Member of the Sisters of St Paul de Chartres Aged Care Facility, and undertakes Wendy has more than 18 years of lecturing and public speaking engagements at Griffith University, the commercial experience in transport, QUT and for community organisations. John has established the infrastructure, resources, trade, Vietnamese Orphans and Disability Trust with his wife, is an honorary property, marketing and investment member of Rotary and has been awarded Honorary Citizenship of attraction. Boystown. Wendy is currently a consultant with Everything Infrastructure Group, which Paul Wallis (FIEAust, CPEng, RPEQ, provides strategic advisory, capital GAICD) investment and transaction advice as well as whole of life advisory Appointed: 30 July 2014 services for major infrastructure and service projects, encompassing all aspects of capital investment and infrastructure operation. Her Paul is a Chartered Professional previous positions include Director of Infrastructure for QC Resources Engineer with 40 years’ experience in Investments Pty Ltd, Manager Strategic Projects and Ports O&M, the planning, design and delivery of key Transport Services, and Strategic Development with the John infrastructure projects. He is a Principal Holland Group, General Manager, Australia TradeCoast and senior of the global consulting firm Arup Pty management roles with the Port of Brisbane Corporation, Carter and Limited, and is the regional leader of Spencer International and Gambaro’s Seafood and Exports. the Energy Business. Paul has served as the Brisbane Office leader for ten years Wendy holds a Bachelor of Business and a Bachelor of Arts. She is the to March 2014. Prior to joining Arup in 1986, he worked as a specialist Chairman of the judging panel for the Premier of Queensland’s Export geotechnical engineering consultant in Australia and as an Engineering Awards, a Director of St. Aidan’s School Council and a Member of the Project Manager on major public housing projects with the Hong Kong Australian Institute of Company Directors, Fellow of the Australian Housing Authority. Institute of Management and an Associate Fellow and CPM of the Australian Marketing Institute. Paul is experienced in leading engineering teams to achieve results through innovation and challenging conventional design solutions to Hon. John Mickel (M. Lit St, BA, B Ed. solve problems. He has contributed to many significant projects across St, Dip T) Queensland and internationally, especially in large scale transport infrastructure and energy development projects. These include the The Honourable John Mickel entered Airport Link and Northern Busway project in Brisbane, LNG facilities Queensland Parliament in June on Curtis Island at Gladstone, and the Kogan Power Station on 1998 as the Member for Logan and Queensland’s Darling Downs. was appointed Minister for State Development, Employment and Paul is a Fellow of the Institution of Engineers, Australia; a Registered Industrial Relations from September Professional Engineer of Queensland; and a Member of the Australian 2006 to September 2007 and Institute of Company Directors. Paul previously served on an advisory then Minister for Transport, Trade, council to the Faculty of Engineering, Architecture and IT at the Employment and Industrial Relations University of Queensland and was also a Director on the Board of from September 2007 to March 2009. John was also the 36th Speaker Kidsafe Queensland Inc. He remains a Kidsafe Ambassador and is of the Legislative Assembly of the Queensland Parliament. currently a Director of Green Cross Australia. John was first elevated to the Cabinet as Minister for Environment in February 2004 and appointed Minister for Energy in August 2004. He gained the additional portfolio of Aboriginal and Torres Strait Islander Policy in March 2005. He has represented Australia on the Executive of the Commonwealth Parliamentary Association and represented Queensland businesses on trade missions to Asia, India and the Middle East. He oversaw major reforms to the Queensland energy sector as Minister for Energy, continued the Smart State initiative as Minister for State Development, implemented new technology reforms to the public transport sector as Minister for Transport and is recognised for his skills in diplomatic protocols and public speaking in domestic and international forums. Before entering the Queensland Parliament, John held a number of senior Government roles including Chief of Staff to the Queensland Premier. He is also a university lecturer in politics and public policy.

Queensland Rail Annual and Financial Report 2013-14 | Page 45 Executive Leadership Team

The structure below was effective throughout the 2013-14 financial year. A new Leadership Team was established, effective from July 2014 and comprised of Helen Gluer as Chief Executive Officer; Mark Hope as Chief Finance Officer; Tim Ripper as Executive General Manager Network; Kevin Wright as Executive General Manager Rail Operations; Nicholle Duce as Executive General Manager People and Performance; and Diana Farrelly as General Counsel. Liam Gordon was appointed to the role of Executive General Manager Projects in late July 2014.

Helen Gluer – Chief Executive Officer Andrew is also responsible for negotiating with the Queensland Competition Authority for the endorsement of Queensland Rail Access Helen has an extensive and diverse career, with Undertaking. He is also responsible developing and negotiating more than 28 years’ experience gained in the capital funding arrangements as necessary. Andrew and his team banking, financial, transport and infrastructure have previously been responsible for the below rail TSC and are now industries. responsible for the negotiation and ongoing management of the entire Helen served as Under Treasurer for the TSC portfolio. Queensland Government and as Director- Andrew and his team are also responsible for working with both the General of Health Corporate Services (HSCA). Prior roles include Chief Queensland Rail Board and ELT to develop the organisation strategy Executive Officer of Stanwell Corporation and Tarong Energy – where including the development of the 2014/15 operational plan and five she maintained a strong focus on safety - and as Chief Financial Officer year strategic plan for approval by responsible Ministers. for Brisbane City Council. During her career, Helen has held numerous Board positions and Martin Ryan – Executive General Manager directorships including Director of Brisbane Airport Corporation Customer Service Pty Limited, TransLink Transit Authority and as Chair of the Central Martin is responsible for developing and Queensland Ports Authority. implementing Queensland Rail’s customer Helen is an Adjunct Professor at the Queensland University of strategy, ensuring all aspects of customers’ pre- Technology with a previous appointment as Deputy Chancellor and trip, during trip and post-trip expectations are Council member for the Queensland University of Technology. She satisfied. has also been involved in community issues as a Trustee of the Lord Martin has more than 25 years’ experience working in communications Mayor’s Community Disaster Relief Appeal Fund and a member of the and marketing roles, with a focus on major venues and events, travel Local Government Remuneration Tribunal. and tourism industries. He has an extensive understanding of the organisation, and the importance of high quality customer service and Mark Hope – Chief Financial Officer positive relationships. Mark has acquired more than 20 years of extensive financial and commercial experience Tim Ripper – A/Executive General Manager within the private and public sectors, including Network both chartered and commercial financial roles. Tim has been in the rail industry for close to 30 Mark is a professional who uses his strong years, both in Australia and Hong Kong. During leadership and contemporary management this time he has performed a variety of roles skills to deliver significant organisational change in design, construction, maintenance, asset which is achieved through innovation, skilled commercial acumen and management and more recently as a business a demonstrated partner-focused approach. leader and network manager. As Chief Financial Officer, Mark has responsibility for monitoring the In his current role as Executive General Manager Network, Tim is overall financial performance of the business and leads teams that responsible for operational and strategic management of the network. manage the Transport Services Contract with the State, third party rail His team ensures Queensland Rail provides a safe and reliable network access revenue agreements and the business service groups of Strategy for the people of Queensland, and delivers progressive commercial and Planning, ICT, Property, Road Fleet and Procurement. outcomes for the Government and Queensland Rail.

Andrew Matthews – A/Executive General Kevin Wright – Chief Operating Officer Manager Access and Business Strategy Kevin is responsible for safe and efficient rail Andrew has been working in access and operations, ensuring the quality, movement commercial areas of Queensland Rail since and delivery of train services. This includes the first Access Undertaking was endorsed overseeing the areas of rollingstock engineering by the QCA some 14 years ago. His team and maintenance, South East Queensland is responsible for the negotiation and and Far North Queensland operations, Travel administration of the commercial access network operations, train service delivery and agreements and other commercial agreements associated with access operations facilities and program coordination. to the Queensland Rail network. He has more than 49 years of experience in rail operations, safety and customer service, including more than 16 years in Queensland

Page 46 | Queensland Rail Annual and Financial Report 2013-14 Rail. Kevin was recognised for his career achievements when he was Before Queensland Rail, Greg held the position of the Rail Safety awarded a NSW Public Service Medal in 2003 and an Australian Public Regulator for Queensland Transport for 10 years. Service Medal in 2008 for services to the rail industry. Diana Farrelly – General Counsel and Nicholle Duce – Executive General Manager Executive General Manager Governance Human Resources As General Counsel, Diana brings 15 years of Nicholle is an experienced senior human legal experience to Queensland Rail. In her resources executive with over 15 years’ role, Diana is responsible for the provision of experience gained through leadership and legal advice to the organisation and the Board human resources roles, including strategic and of Directors as well as the establishment and operational positions in major organisations maintenance of an appropriate corporate such as Suncorp and Rio Tinto. governance framework covering risk, audit and compliance. Nicholle is responsible for establishing the vision for human resource Diana’s qualifications include a Bachelor of Laws with First Class management, including the development of a strategic framework, Honours and a Bachelor of Commerce. She was awarded the supporting governance and programs that facilitate cultural change University Medal for Law in 1998. Diana was admitted as a solicitor and fosters a high performing culture. to the Supreme Court of Queensland and the High Court of Australia She leads a team who specialise in a range of human resources in 2001. functions to ensure Queensland Rail has the right mix of people and Diana’s professional experience has been both in private practice and capability to achieve its business goals. in-house legal roles. She has advised on a wide range of legal issues Jim Benstead – A/Executive General including litigation and dispute resolution, contract law, industrial Manager Projects relations, corporate governance, projects, operations, procurement, environment and safety. In addition to her qualifications, Diana Jim was A/Executive General Manager Projects brings to Queensland Rail an in-depth knowledge of the mining and until the appointment of Liam Gordon in July. resources industry, having recently held the position of Senior Counsel Jim is responsible for optimising commercial - Operations at Peabody Energy Australia. Her previous roles included outcomes for Queensland Rail as well as the Deputy Corporate Counsel at Tarong Energy Corporation Ltd and provision of enterprise services including Senior Associate at Clayton Utz. property, procurement, ICT, Road Fleet and Project Delivery Services. Liam Gordon – Executive General Manager Projects Jim joined QR Limited in July 2008 to focus on transformational leadership and change management leading to the separation of the Liam was appointed Executive General Manager company and formation of Queensland Rail. He was the Chief Financial Projects in July 2014. Officer from the commencement of the new Queensland Rail in 2010 Prior to his appointment with Queensland and was the Acting CEO from December 2011 to August 2013. Rail, Liam was Deputy Under Treasurer Before joining QR Limited, Jim held senior management positions in at Queensland Treasury where he was TNT, Carpentaria Transport and Toll Australia where he held lead roles in responsible for the economics functions of the Department, including finance, shared services, credit management, customer service, business macroeconomic forecasting, microeconomic policy and Government integration, commercial management and procurement. Jim has more Owned Corporations oversight. than 30 years’ experience in the transport industry specialising in driving Prior to that, Liam had spent more than ten years working in the business improvement, delivering transformational change and leading infrastructure sector, including as part of the establishment of Projects outcome focused commercial teams. Queensland in 2012 as a standalone unit within Queensland Treasury Greg Ford – Executive General Manager and Trade. Safety, Assurance and Environment As Executive General Manager Projects, Liam is accountable for the Greg leads the overall safety, workplace health operational, commercial and strategic management and performance and safety, environment, investigation and of Queensland Rail’s project delivery, ensuring high service standards assurance, and emergency management are upheld and supported by efficient and effective resource utilisation, functions for Queensland Rail. He brings with appropriate engineering standards and safety performance. him more than 35 years’ experience in safety and quality roles across both the defence and transport industries.

Queensland Rail Annual and Financial Report 2013-14 | Page 47 Corporate Governance Queensland Rail is committed to ensuring that its systems, procedures and practices reflect the highest standards of Corporate Governance. Processes have been established to ensure that Queensland Rail’s Corporate Governance practices are reviewed regularly and are continually refined in accordance with its enterprise governance framework.

Guidelines their roles and responsibilities within Queensland Rail and includes an overview of key corporate expectations, existing governance The responsible Ministers have requested that while Queensland arrangements and the culture and values of the organisation. The Rail is no longer a Government Owned Corporation, Queensland induction process is also relevant to new Senior Executives to allow Rail will continue to apply the Corporate Governance Guidelines them to participate fully and actively in management decision making for Government Owned Corporations, issued by the Queensland at the earliest opportunity. Government. Members are issued with a comprehensive Board handbook The Guidelines reference the Australian Securities Exchange (ASX) that details Queensland Rail and Board operational information, Corporate Governance Principles and Recommendations and provide governance requirements and policies. The Board handbook assists the framework for Government Owned Corporations to develop, with the induction process and also supports existing Members with implement, review and report on their Corporate Governance their ongoing governance responsibilities. The handbook is reviewed arrangements. An overview of existing Corporate Governance practices and updated annually. in line with the above Guidelines is set out below. Performance evaluations for the CEO and Senior Executives are Principle 1 – Foundations for Management and Oversight carried out each financial year in accordance with Queensland Rail’s remuneration framework and the Board approved Performance The roles and responsibilities of the Board and individual Members Payment Policy: Chief and Senior Executives. The performance are defined in a Board Charter. These roles and responsibilities are evaluation for the CEO is conducted by the Board and is based on the reviewed by the Board annually and a copy of the Charter is available achievement of agreed Key Performance Indicators (KPIs), which are at queenslandrail.com.au. set annually by the Board and link to the strategic and operational The Board’s specific functions include: objectives of Queensland Rail. The performance evaluation for Senior Executives is carried out in accordance with the same process based on • developing the strategies and the operational, administrative and the achievement of agreed KPIs. The evaluation is conducted by the financial policies of Queensland Rail CEO and the Board. • ensuring Queensland Rail performs its functions and exercises its The outcome of annual performance evaluations for the CEO and powers in a proper, effective and efficient way Senior Executives are provided to responsible Ministers in accordance • ensuring that, so far as is practicable, Queensland Rail acts under, with the Policy for Government Owned Corporation Chief and Senior and achieves the objects in, its Operational and Strategic Plans Executive Employment Arrangements.

• accounting to the responsible Ministers, as required under the Principle 2 – Structure the Board to Add Value QRTA Act, for Queensland Rail’s performance All Members of the Board, including the Chairman, are non-executive • reviewing the performance of the CEO on an annual basis. Members. Queensland Rail Members are appointed by the responsible In exercising its functions and powers, the Board’s key responsibilities Ministers in accordance with the QRTA Act. As such, the size and include: composition of the Board is determined by the responsible Ministers. • business strategy and planning The Board considers that all Board Members who held office during the year are independent as defined under the ASX Corporate Governance • delegation of authority to senior management Principles and Recommendations. In assessing the ongoing independence of each Member, the Board considers the assessment • relations with responsible Ministers criteria outlined in the ASX recommendations. Materiality in relation to • major capital projects and expenditure independence is considered on a case-by-case basis with reference to each Member’s individual circumstances. • financial eportingr and risk management Board Members are required to keep the Board advised, on an ongoing • governance and policy basis, of any business interests and other directorship and employment • senior management appointments. roles that could potentially conflict with those of Queensland Rail. In circumstances where a conflict is believed to exist, the Member The Board has delegated responsible for the day-to-day operation of concerned does not take part in any decision or consideration of the Queensland Rail to the CEO including the implementation and delivery issue. In addition, the Member will not receive copies of the relevant of the Board’s strategic direction. The CEO is supported by the Senior Board papers. Members must notify the Board via the Company Executive team with management responsibilities clearly defined and Secretary of changes to business interests and appointments. documented through formal position descriptions, performance plans and Board approved Authorities, Approvals and Accountabilities Policy. Details of the current Board Members’ experience and expertise are disclosed in the Annual Report as is information on attendance Newly appointed Members are taken through a formal induction at Board and Committee meetings. Information in relation to process to provide them with an overview of business operations, composition of the Board and terms of appointment for all Members strategies and information in relation to the Board and Committee who held office during the financial year is set out in the Financial functions. The induction process assists the Members to understand Report 2013-14.

Page 48 | Queensland Rail Annual and Financial Report 2013-14 A process is in place whereby Members, either collectively or employees in relation to the potential misuse of information including individually, may seek independent professional advice where it is the insider trading prohibition under the Corporations Act 2001 (Cth). considered necessary to fulfil their duties and responsibilities. This is Ongoing training in relation to ethical business practices is provided done at Queensland Rail’s expense. A Member wishing to seek such by the organisation and the Queensland Rail Code of Conduct also advice must first obtain the approval of the Chairman. forms part of the induction process for new employees, consultants Members are encouraged to further their knowledge through and contractors. A copy of the Code of Conduct is available on the participation in industry, governance and government forums and Queensland Rail website. attend seminars hosted by the Australian Institute of Company Queensland Rail also has in place related processes and policy Directors, Chartered Secretaries Australia and other peak professional documents setting out the requirements of the Public Interest bodies. In addition to peer review, interaction and networking with Disclosure Act 2010 (Cth), which facilitates disclosure of public interest other Directors and industry leaders, Queensland Rail Members information and provides protection for those who make public participate in Queensland Rail leadership forums and actively engage disclosures. with Queensland Rail employees and visit Queensland Rail operations to gain an understanding of operational employee requirements, Principle 4 – Safeguard Integrity in Financial Reporting challenges and issues. The Board has established an Audit and Risk Committee that reviews The ongoing provision of timely and relevant information to the Board the integrity of Queensland Rail’s financial reporting systems. The is of critical importance in enabling the Board to effectively discharge Committee is governed by its own Charter, which is approved by the their obligations in accordance with the requirements of the QRTA Board and reviewed annually. A copy of the Audit and Risk Committee Act. The structure, format and content of Board agendas presented Charter is available on the website. The Committee assists the Board by to Members for consideration and decision, along with Board Paper reviewing and monitoring assurance activities over business operations, format, quality and timeliness, is reviewed on an ongoing basis with a the effectiveness of internal controls, regulatory reporting, financial formal review annually. risks, compliance issues and enterprise risk management frameworks. The Board reviews its own performance and that of the Committees The Committee monitors both internal and external audit functions. of the Board on a regular basis to ensure they are working effectively. The role of the Chair of the Committee is not held by the Chairman of The Board participates in regular in-camera sessions that provide the Board and all Committee members are independent non-executive an opportunity for the Members to review and analyse their current Members. Membership of the Committee and details of attendance at performance as a Board and discuss any issues that may exist. meetings is disclosed below in the Board Committees section. A formal Board performance evaluation is conducted on an annual The CEO and Chief Financial Officer (CFO) certify in writing that the basis to achieve and maintain Corporate Governance best practice Queensland Rail Financial Report represents a true and fair view of and continual improvement. An independent consultant is engaged Queensland Rail’s financial position and that it has been prepared in to assist with the evaluation every second year, with the latest accordance with all relevant accounting standards and legislation. independent review completed during 2011/12. Queensland Rail’s Internal Audit function provides independent The performance evaluation process generally includes the evaluation assurance to key stakeholders including the Audit & Risk Committee, of the Board as a whole, the Chair and the effectiveness of the Board Chief Executive Officer and senior management regarding the Committees. The process is undertaken through a formal questionnaire adequacy and effectiveness of the organisation’s system of internal completed by each Member and members of the Senior Executive controls, risk management procedures and governance processes team. The review considers a range of issues including Board role, throughout the organisation. strategy, monitoring performance, risk and compliance oversight, stakeholder communication, Board structure and processes. The To maintain independence the Internal Audit function is governed by independent Board evaluation review for 2013-14 is expected to be the Queensland Rail Internal Audit charter which is approved by the completed by the second quarter of financial year 2014-15. Audit & Risk Committee. Written advice of the outcome of the evaluation will be provided to Queensland Rail has a detailed internal audit plan that is managed responsible Ministers on completion of the review. by the Internal Audit Manager and Executive General Manager Governance. The risk based Internal Audit plan is developed through Principle 3 – Promote Ethical and Responsible Decision Making extensive internal and external consultation and review of the organisation’s risk registers and is approved and monitored by the Audit Queensland Rail has well established policies, procedures and practices & Risk Committee through regular reporting provided by the Internal that seek to promote ethical standards of behaviour and a culture of Audit Manager Assurance. In addition to the annual Internal Audit Plan compliance that is risk aware and embraces good governance practices the Internal Audit function completes management request audits in accordance with corporate, legal and community obligations. throughout the year. These expected standards of integrity, honesty and accountability In accordance with the Auditor-General Act 2009 (Qld), the external are reflected in the formal Code of Conduct, which applies to all audit function of Queensland Rail is performed by the Queensland Members and employees and is aligned with the organisation’s Audit Office. The Audit and Risk Committee monitors the performance strategic objectives. The Code of Conduct is supported by other policy of the external auditors on an annual basis. related documents in relation to ethics, privacy, dealing with conflicts of interest, trading in securities and official misconduct. While as a Statutory Authority, no Member or employee holds or trades securities in Queensland Rail, the organisation has established standards and procedures that set out the legal duties that apply to Members and

Queensland Rail Annual and Financial Report 2013-14 | Page 49 Corporate Governance (cont)

Information Systems and Recordkeeping Principle 6 – Respect the Rights of Shareholders Managing Queensland Rail’s information and performing appropriate Queensland Rail respects the rights of responsible Ministers as the recordkeeping functions are key to managing risk. We have an ultimate owners of the business. The Board and Senior Executives obligation to meet particular records management legislation and of Queensland Rail engage with responsible Ministers and their to fulfil statutory obligations by improving the reliability of our representatives on a regular basis. As at 30 June 2014, Queensland recordkeeping systems and management of public records. Initiatives Rail’s responsible Ministers were the Honourable Scott Emerson MP, throughout 2013-14 included: Minister for Transport and Main Roads and the Honourable Tim Nicholls MP, Treasurer and Minister for Trade. • Queensland Rail’s Record Management team is seeking approval for the Digitisation Disposal Specification which will govern the We are committed to ensuring that responsible Ministers and their digitisation of certain classes of paper records. representatives are provided with information to make informed assessments of the operations, financial and performance and financial • Queensland Rail is pursuing online self-paced learning tools to assist position of Queensland Rail and its subsidiaries. with organisational training of our eDRMS system. Queensland Rail prepares an Operational Plan and Strategic Plan for • Queensland Rail continues to appraise and sentence all physical responsible Ministers’ approval. The Operational Plan and Strategic records in line with recordkeeping Governance tools and cataloguing Plan are formal performance contracts between Queensland Rail and in the eDRMS. the responsible Ministers detailing proposed undertakings and target • Over the next financial year, the Record Management team will performance for the year ahead. prepare to upgrade its recording keeping system and tools with a In line with the requirements of the QRTA Act, responsible Ministers focus on born digital records. are advised in a timely manner of all issues likely to have a significant • Record Framework that clearly defines roles, responsibilities and financial, operating, employee, community or environmental impact Queensland Rail’s obligations for recordkeeping including those matters that may prevent or significantly affect achievement of the performance objectives outlined in the • A plan to continue the review of the Recordkeeping Governance Operational Plan. tools in 2015-16 Approval of responsible Ministers is sought for major investments and Greater emphasis during the next financial year and beyond will be expenditure outlays, as well as Queensland Rail’s entry into significant on the capture and management of born digital records in compliant supply or customer contracts. business systems including the eDRMS. To ensure we achieve a single source of truth for all records and provide efficient records access to Principle 7 – Recognise and Manage Risk Queensland Rail employees, our processes are tailored to be simple and time-effective for all parties involved in recordkeeping. Queensland Rail recognises that effective risk management and compliance frameworks are a key element of an organisation’s Principle 5 – Make Timely and Balanced Disclosure Corporate Governance process. The Board has approved a Risk Management Policy and associated framework for identifying, Queensland Rail has established communication protocols and assessing and managing Queensland Rail’s strategic, operational, standards in relation to the disclosure of public information and financial and reputation risks. regularly assesses the information needs of all stakeholders to ensure that they continue to be informed about activities in a timely and The objectives of the policy are to: accurate manner. • provide an enterprise-wide approach to risk management to ensure In addition, the organisation has established a dedicated Government it is managed in an integrated, systematic and practical manner and Stakeholder Relationships team to assist with management of • facilitate the achievement of Queensland Rail’s corporate objectives government and regulatory relationships and the co-ordination of and strategies information and reporting requests. • define the mechanisms yb which the company determines its risk Regular communications are initiated with key stakeholders including appetite and the process for identification and management of risk responsible Ministers and Government representatives. The Chairman and CEO meet with responsible Ministers and/or their representatives • articulate roles, responsibilities and accountabilities for the on a regular basis. Queensland Rail management also meets with management, oversight and governance of risk. representatives of the responsible Ministers after each Board meeting The approach defined within this policy is consistent with the Australian to update them on relevant issues. Information needs of these and New Zealand standard on change to risk management (ISO stakeholders are also discussed at these meetings. As required by 31000:2009). Supporting the policy is a framework prepared to guide the QRTA Act, detailed quarterly reports are provided to responsible the various business functions in addressing their particular risks Ministers and their representatives, as well as individual Ministerial through a structured risk management approach. The framework is briefings on specific issues. These reports include information regarding designed to ensure risks are regularly identified, assessed, monitored financial performance, updates on major capital programs, key and reported to the Board on a periodic basis, along with appropriate operational matters, risk management and governance issues as well risk mitigation and management plans. as information required to be given in accordance with Queensland Rail’s Operational and Strategic Plans. The Board evaluates reported risks reaching a defined enterprise risk tolerance level and actively monitors these risks and associated controls, including any additional risk mitigation treatments that are proposed. Assurance activities are undertaken to ensure that the

Page 50 | Queensland Rail Annual and Financial Report 2013-14 controls are operating effectively. Government Policies The Board has charged management with the responsibility for While Queensland Rail is no longer a Government Owned Corporation, managing risk within the organisation and the implementation of Queensland Rail and subsidiaries continue to apply, to the greatest mitigation measures, under the direction of the CEO supported by extent possible, the governance policies and guidelines, set out in: Senior Executives. The group risk management function, led by the • Code of Practice for Government Owned Corporations’ Financial Manager Enterprise Risk and Executive General Manager Governance Arrangements (2009). has been established to facilitate the process by providing a centralised role in advising the various business functions on executing risk • Corporate Entertainment and Hospitality Guidelines (2008). management and mitigation strategies, as well as consolidating risk • Investment Guidelines for Government Owned Corporations (2013). reporting to Senior Executives and the Board. • Corporate Governance Guidelines for GOCs (2009). The CEO and CFO have declared in writing to the Board that Queensland Rail’s risk management and control system is operating • Cost of Capital Principles – GOCs (2006). effectively in all material respects based on representations by • Government Owned Corporations Bargaining Guidelines (2010). management. • Government Owned Corporations Governance Arrangements for Queensland Rail has established an appropriate fraud control Chief and Senior Executives (2009). framework for the ongoing monitoring and co-ordination of fraud control activities. The framework is supported by the Code of Conduct • Government Owned Corporations Release of Information and associated governance principles, standards and procedures that Arrangements (2009). outline employee obligations in relation to ethical behaviour and the • Local Industry Policy: A Fair Go for Local Industry (2013). process for reporting, recording and investigating allegations of fraud. • Minimum Disclosure Requirements for Directors and Chief and A dedicated Ethics Hotline has been established to enable employees Senior Executives of GOCs (2009). to report any concerns regarding unethical conduct, breaches of the law and suspected fraud or official misconduct. A dedicated Crime • Code of Practice for the Building and Construction Industry (2013). and Misconduct Commission (CMC) Liaison Officer manages the • State Procurement Policy (2008). obligations under the Crime and Corruption Act 2001 (Qld) in relation to notification of suspected corrupt conduct to the CMC. As of 1 July Queensland Rail as a Statutory authority is to comply with the 2014 such matters will now be referred to the Crime and Corruption Statutory Bodies Financial Arrangements Act 1982, Statutory Bodies Commission (CCC). Financial Arrangements Regulation 1997 and the Operational Guidelines to the Statutory Bodies Financial Arrangements Act 1982. Principle 8 – Remunerate Fairly and Responsibly Board Meetings The Board has established a People and Safety Committee that, among other things, reviews Queensland Rail’s remuneration The Board held 15 meetings during 2013-14. Typically, at Board framework. The Committee is governed by its own Charter, which meetings, the Agenda will include the following: is approved by the Board and reviewed annually. A copy of the • disclosure of Member interests People and Safety Committee Charter is available on the website. The Committee assists the Board by reviewing and providing • minutes of the previous meeting and any outstanding issues raised recommendations on the recruitment, retention, remuneration and by Members at previous meetings performance measurements of the CEO and Senior Executives. • CEO and CFO Reports Membership of the Committee and details of attendance at meetings is disclosed below in the Board Committees section. Queensland • ongoing reform and strategy Rail recognises that the achievement of its corporate objectives • reports on major projects and current business issues is dependent on the efforts of its people and has established remuneration policies, procedures and framework designed to attract • transactions requiring Board approval in accordance with the and retain high calibre employees and to align individual and team Delegations Framework efforts to agreed KPIs linked to the Operational and Strategic Plans of • updates from Committee Chairs on matters considered at the organisation. Committee meetings The Senior Executive remuneration arrangements are subject to • the minutes of previous Committee meetings. approval or endorsement by the Board in accordance with the Policy for Government Owned Corporation Chief and Senior Executive A private session involving only non-executive Members is held at the Employment Arrangements. Remuneration for Board Members is beginning of each Board meeting and chaired by the Chairman. The established by the responsible Ministers in accordance with the CEO, CFO, General Counsel and Company Secretary are also present QRTA Act. at all Board meetings. Members of senior management attend Board Details of the nature and amount of payments to each Member of meetings when an issue under their area of responsibility is being Queensland Rail and specified Queensland Rail Senior Executives are considered or as otherwise requested by the Board. set out in the Financial Report 2013-14.

Queensland Rail Annual and Financial Report 2013-14 | Page 51 Corporate Governance (cont)

• the effectiveness of Queensland Rail’s systems of accounting and internal controls • the scope of Queensland Rail’s internal audit and external audit Member attendance at meetings of the Board in 2013-14 are detailed programs and any material issues arising from these audits below: • the effectiveness of the processes and assurance activities used by Board Member Attended Meetings Eligible management to monitor and ensure Queensland Rail’s compliance to Attend with laws, regulations, ethical guidelines and obligations for external reporting of financial information Michael Klug1 (Chairman) 10 10 • review of risk policies and associated risk Documentation adopted Geoff Harley2 (Deputy Chair) 7 8 by Queensland Rail Aivars Blums3 5 5 • the effectiveness of risk management processes and frameworks used to support Queensland Rail’s risk management policies, David George 14 15 procedures and documentation Merren McArthur4 3 3 • review and monitor key risk exposures, control mitigations and residual risks of Queensland Rail Wendy McMillan 15 15 • the effectiveness of the risk management and control structures in 5 John Mickel 9 10 place to identify and monitor Queensland Rail’s compliance with Dawson Petie6 3 3 applicable laws, regulations and governance obligations. Glenn Poole is the current Chair of the Committee. The Committee Glenn Poole 9 9 members and attendance at meetings in this year are detailed below: Julie-Anne Schafer7 4 5 Committee Member Attended Meetings Eligible 1 Appointed to the Board 01/10/13 2 Resigned from the Board 31/12/13 to Attend

3 Appointed to the Board 30/01/14 1 4 Resigned from the Board 04/08/13 Glenn Poole (Chair) 4 4

5 Resigned from the Board 02/08/13 2 6 Appointed to the Board 30/10/13 Geoff Harley 3 4 7 Resigned from the Board 30/09/13 Michael Klug3 5 5

Board Committees Wendy McMillan 7 7 The Board has established Committees to assist with meeting its Dawson Petie4 1 1 responsibilities. The Audit and Risk Committee, People and Safety Committee and the Major Projects and Procurement Committee are Julie-Anne Schafer5 2 2 governed by their own Charters. 1 Appointed as Committee Chair 30/10/13 The membership of each Board Committee is made up of a minimum 2 Ceased to be a member 31/12/13 of three Members from the Board. 3 Appointed as member 23/10/13 4 Ceased to be a member 02/08/13 The CEO and Senior Executives attend meetings at the discretion of the 5 Ceased to be a member 30/09/13 Committee. People and Safety Committee An annual evaluation of Committee performance forms part of the Board’s overall performance review. The People and Safety Committee is a committee of the Board created to assist the Board in the effective discharge of its governance and Audit and Risk Committee oversight responsibilities relating to the human resource and safety practices of Queensland Rail. The Audit and Risk Committee is a committee of the Board created to assist the Board in the effective discharge of its governance and The Committee oversees and monitors the remuneration and oversight responsibilities relating to the financial reporting and risk performance framework for Queensland Rail’s Senior Executives and management of Queensland Rail. employees. The Committee also provides direction and oversight for safety policies, frameworks and practices. The Committee oversees and monitors the preparation of financial statements, internal control structures, compliance and risk The Committee’s key responsibilities include: management frameworks and the internal and external audit functions • the appointment and termination of the CEO and Senior Executives of Queensland Rail. (direct reports to CEO) The Committee’s key responsibilities include: • the annual remuneration and performance review for the CEO • the integrity of Queensland Rail’s financial reporting and disclosure and Senior Executives including the establishment of appropriate processes performance measures and incentive targets • review of significant accounting policies and alternative treatments • the development and review of human resource policies and available practices including remuneration, learning and development, people

Page 52 | Queensland Rail Annual and Financial Report 2013-14 performance framework, code of conduct, ethics and expected • oversee and monitor existing project management frameworks to values and behaviours ensure appropriate governance structures, capabilities and resources are in place for the efficient and cost effective delivery of projects • the adequacy and effectiveness of Queensland Rail’s employment, remuneration and industrial relations strategies and plans • review and evaluate major project plans as they relate to capital • external stakeholder engagement (including responsible works, operations, asset replacement and maintenance to achieve Ministers, government and community) and external corporate prudency and efficiency of project delivery within budget and communications strategies and plans agreed timeframes • development and review of policies, frameworks and practices relating • assess the adequacy and effectiveness of internal controls and to the security and safety of Queensland Rail’s network and trains risks as they relate to major projects, procurement and investment considerations • review and monitor frameworks and practices dealing with the health, safety and welfare of Queensland Rail’s customers, • oversight and review of tender methods and appropriate probity employees and the public processes to ensure the ethical procurement of goods and services to ensure compliance with the State Government Procurement Policy • the adequacy and effectiveness of Queensland Rail’s compliance with relevant safety legislation, regulations, engineering • ensuring strategic procurement objectives are developed and implemented through a procurement strategy to ensure that major • standards and accreditation requirements investment decisions are procured strategically to enable prudent • provide direction and oversight of safety related risks, controls and and efficient outcomes through market engagement assurance processes. • review and monitor development of strategic business initiatives David George is the current Chair of the Committee. The Committee to ensure procurement policies, procedures and frameworks are members and attendance at meetings in this financial year are consistent with the strategic planning and performance objectives detailed below: of Queensland Rail • review and monitor procurement performance to ensure alignment Committee Member Attended Meetings Eligible with Queensland Rail’s strategic objectives relating to service quality, to Attend efficiency, profitability and growth. 1 David George (Chairman) 6 6 Wendy McMillan is the current Chair of the Committee. The Committee Geoff Harley5 2 3 members and attendance at meetings from 1 January 2014 are detailed below. Michael Klug2 3 4 Committee Member Attended Meetings Eligible Merren McArthur3 1 1 to Attend Wendy McMillan 5 5 Wendy McMillan1 (Chair) 2 2 John Mickel2 3 3 Aivars Blums2 2 2 Julie-Anne Schafer4 1 2 Michael Klug3 2 2 1 Appointed Committee Chair 05/12/13 4 2 Appointed as a member 23/10/13 Glenn Poole 2 2 3 Ceased to be a member 04/08/13 1 Appointed Committee Chair 01/01/14 4 Ceased to be a member 30/09/13 2 Appointed member 27/02/14 5 Ceased to be a member 30/12/13 3 Appointed member 01/01/14 4 Appointed member 28/01/14 Major Projects and Procurement Committee Established 1 January 2014, the Major Projects and Procurement Notifications by Responsible Ministers Committee is a committee of the Board created to assist the Board in By letter dated 1 August 2013, pursuant to section 12 of the QRTA the effective discharge of its governance and oversight responsibilities Act, the responsible Ministers directed the Board of Queensland Rail to relating to the delivery of major projects and procurement decisions appoint as from 2 August 2013, Glen Dawe to the position of CEO of within Queensland Rail. The Major Projects and Procurement Committee Queensland Rail for a term of three years. replaced the Organisational Performance and Strategy Committee, which was disbanded with effect from 31 December 2013. The oversight By letter dated 18 September 2013, pursuant to section 54 of the and responsibilities of the Organisational Performance and Strategy QRTA Act, the responsible Ministers directed the Queensland Rail Board Committee are now performed by the full Queensland Rail Board. to do all things necessary to transfer MBRL assets and the property located at Wulkuraka, identified as Lot 27 on SP 136632, The Committee’s key responsibilities include: from Queensland Rail’s equity to the Department of Transport and • review and assess Queensland Rail’s major project proposals and Main Roads. capital investment program to ensure alignment with Queensland By letter dated 19 December 2013, pursuant to section 12 of the Rail’s approved Operational and Strategic Plans QRTA Act, the responsible Ministers notified Queensland Rail of • ensure the implementation of major projects is in a manner the preparation of a scoping study for the responsible Ministers for consistent with Queensland Rail’s strategy and the expectations of consideration by Cabinet regarding the potential lease of the Mount responsible Ministers Isa Line to the private sector (on its own or as part of a parcel involving the Port of Townsville) and directed the Board of Queensland Rail to:

Queensland Rail Annual and Financial Report 2013-14 | Page 53 Corporate Governance (cont)

(a) give effect to a written request of the Under Treasurer or Project (a) give effect to the written request of the responsible Ministers of Directors(s) for the purposes of this Direction, if and when given 25 March 2014 (b) pr ovide full cooperation and assistance to the State and its (b) provide full cooperation to provide timely access to relevant advisors for the purposes of the Project information and facilitate the work of the ARTC Project Team and TMR Project Team and their advisors for the purposes of this (c) use their best endeavour to require the employees, servants, Project agents and contractors of Queensland Rail to provide full cooperation and assistance to the State and its advisors for (c) use their best endeavours to require the employees, servants, purposes of the Project agents and contractors of Queensland Rail to provide full cooperation and assistance to the ARTC Project Team and the (d) as part of, but without limiting, clauses 2(a), 2(b) and 2(c) above: TMR Project Team and their advisors for the purposes of this i. disclose and cause Queensland Rail to disclose to the State or Project its advisors such documents and information of Queensland (d) all associated costs incurred by Queensland Rail, in facilitating Rail or such classes of documents and information of this decision by Government, will be kept to a minimum and be Queensland Rail as requested by the Under Treasurer or the absorbed within Queensland Rail’s existing budget Project Director(s) from time to time for the purposes of the Project, and to retain copies of any documents disclosed (e) in relation to the Government’s consideration of the aggregation pursuant to such a request for such period as required of the Mount Isa Line and the Port of Townsville, we require that pursuant to the Public Records Act 2002 (Qld) or any longer any discussion undertaken with the ARTC Project Team are done period specifically required by the Under Treasurer on the basis that the Mount Isa Line is out of scope so as to avoid potentially fettering the State’s ability to exercise its future ii. assist and cause Queensland Rail to assist the State and discretion in relation to this matter its advisors with the identification of assets, liabilities and instruments used or incurred by Queensland Rail for the (f) As part of, but without limiting: purposes of the Project i. disclose or cause Queensland Rail to disclose to the ARTC or iii. permit access by the State and its advisors to all premises, its advisors such documents and information of Queensland assets, documents and records of Queensland Rail that the Rail or such classes of documents and information of Under Treasurer or Project Director(s) deem necessary for the Queensland Rail as requested by the Project Director, from purposes of the Project time to time for the purposes of the Project, and to retain copies of any documents disclosed pursuant to such a request (e) execute such instruments as required by the Under Treasurer or for such period as required pursuant to the Public Records Act Project Director(s) for the purposes of the Project 2002 (Qld) (f) carry out any other tasks or take such other actions for the ii. assist and cause Queensland Rail to assist ARTC and its purposes of the Project as required by the Under Treasurer or the advisors with the identification of assets, liabilities and Project Director(s) instruments used or incurred by Queensland Rail for the (g) wher e documents or information may contain the Personal purposes of the Project Information and/or Sensitive Information of employees or iii. permit access by the ARTC and its advisors to all premises, customers of Queensland Rail, they are authorised and required to assets, documents and record of Queensland Rail that the do all things necessary to disclose the Personal Information and/ Project Director deems necessary for the purposes of the or Sensitive Information of those employees or customers to the Project; State and its advisors, as requested by the Under Treasurer or the Project Director(s) from time to time (g) carry out any other tasks or take such other actions for the purpose of the Project as required by the Project Director (h) wher e there is ambiguity or doubt about the meaning or intent of this Direction that Queensland Rail and the Queensland Rail (h) where documents or information may contain the Personal Board follow the interpretation of the Under Treasurer about the Information and/or Sensitive Information of employees or matter as advised to them in a written clarifying statement. customers of Queensland Rail, they are authorised and required to do all things necessary to disclose the Personal Information and/ By letter dated 24 April 2014, pursuant to section 12 of the QRTA Act, or Sensitive Information of those employees or customers to the the responsible Ministers notified Queensland Rail of the ARTC due ARTC and its advisors, as requested by the Project Director. diligence investigation to explore opportunities to extend the National Freight network into Queensland and directed the Board of Queensland Rail to:

Page 54 | Queensland Rail Annual and Financial Report 2013-14 Roma Street at sunset.

Queensland Rail Annual and Financial Report 2013-14 | Page 55 Summary of the 2013-14 Operational Plan The Operational Plan is the formal statement of Queensland Rail’s strategic direction, including objectives, strategies and performance outcomes for 2013-14 and represents the performance agreement between the Board of Queensland Rail and responsible Ministers. The Operational Plan is consistent with Queensland Rail’s four-year Strategic Plan and reflects the strategic activity in year one of this planning horizon.

The Annual Report provides a summary of Queensland Rail’s Government Revenues and Funding performance outcomes against the 2013-14 Operational Plan relating The Operational Plan outlines the funding of the following services: to the delivery of strategic and operational objectives. • Citytrain Queensland Rail measures performance against objectives to focus efforts achieving strategy. Key performance indicator measures and • Traveltrain, with the exception of Kuranda Scenic Railway related targets were identified within the Operational Plan to track the • Network Infrastructure (for agreed rail infrastructure network success of strategies during this financial year. Other key components standards and capacity, excluding the Mount Isa Line). of the 2013-14 Operational Plan are summarised as follows.

Performance Monitoring Employment and Industrial Relations Plan The Operational Plan includes an Employment and Industrial Relations The Operational Plan contains a framework for performance Plan, which guides Queensland Rail in developing and maintaining monitoring that ensures the Queensland Rail Board is accountable conditions of employment for employees, including labour market to its responsible Ministers for Queensland Rail’s performance. based remuneration. This framework enables Queensland Rail to report on a number of mandatory financial and non-financial performance indicators Queensland Rail has committed to ongoing reform and modernisation to present a balanced perspective on Queensland Rail’s overall of our policies, streamlined certified agreements that support the performance. Queensland Rail reports to its responsible Ministers on a operational goals of the business and aligns with Government Wages quarterly basis in relation to its performance against the performance Policy. The implementation of these frameworks was also supported indicators. through reviewing local operating procedures to enable change and a number of key initiatives which drive a mature performance Examples of financial indicators included in the 2013-14 Operational culture, the retention of key talent, reward and recognition and leader Plan are: accountability. The organisation works proactively and collaboratively • earnings before interest and tax with union Union stakeholders to effectively manage industrial issues. • net profit after tax Organisational and industrial changes are managed through leader driven engagement and consultation processes encouraging feedback • return on operating assets from employees through the communication and implementation • Debt to Debt plus equity phases. Examples of non-financial indicators included in the 2013-14 Operational Plan are: Modifications to the Operational Plan The Queensland Rail Transit Authority Act 2013 (Qld) requires that • Citytrain on time running Queensland Rail’s Annual Report include particulars of any directions • Below Rail Delays given to Queensland Rail to modify its Operational Plan during the • Customer Satisfaction relevant year. Queensland Rail did not modify its Operational Plan during this financial year. • Signals Passed at Danger per million train kilometres • Lost Time Injury Frequency Rate.

Page 56 | Queensland Rail Annual and Financial Report 2013-14 Corporate Entertainment and Hospitality

During this financial year, Queensland Rail did not undertake any corporate entertainment and hospitality events that exceeded $5,000.

Overseas Travel

During this financial year, Queensland Rail Overseas travel expenses were $25,786. These costs were incurred in presenting to key capacity markets to obtain improved insurance pricing and to observe and evaluate the capability of Chinese suppliers of rail and rollingstock products. Further information can be sourced by visiting qld.gov.au/data.

Open Data Warehouse

Queensland Rail is in the process of coordinating the collection and analysis of data for the Open Data website and this can be sourced by visiting qld.gov.au/data.

Flexible Working Practices

Flexible working practices benefit Queensland Rail by allowing all employees to balance their family and work responsibilities. Queensland Rail is committed to assisting employees to balance work and life by providing a range of flexible work / life options.

Queensland Rail Annual and Financial Report 2013-14 | Page 57 Compliance Checklist

Summary of Requirement Basis for requirement Annual report reference

• A letter of compliance from the ARRs – section 8 Page 4 Letter of Compliance accountable officer or statutory body to the relevant Minister.

Accessibility • Table of contents ARRs – section 10.1 Pages 5, 60 • Glossary (and Acronyms)

• Public availability ARRs – section 10.2 Page 2

• Interpreter service statement Queensland Government Language Page 2 Services Policy ARRs – section 10.3

• Copyright notice Copyright Act 1968 Page 2 ARRs – section 10.4

• Information Licensing Queensland Government Enterprise N/A Architecture – Information Licensing ARRs – section 10.5

General information • Introductory Information ARRs – section 11.1 Pages 6-11

• Agency role and main functions ARRs – section 11.2 Pages 2, 6

• Operating environment ARRs – section 11.3 Pages 6, 13, 22, 41

• Machinery of government changes ARRs – section 11.4 Page 2

Non-financial performance • Government’s objectives for the ARRs – section 12.1 Pages 6, 24-25, 27, 30-40 community

• Other whole-of-government plans / ARRs – section 12.2 Pages 7, 21, 29, 31, 37, specific initiatives 39, 51

• Agency objectives and performance ARRs – section 12.3 Pages 13-41, 56 indicators

• Agency services areas and service ARRs – section 12.4 Pages 13-15 standards

Financial performance • Summary of financial performance ARRs – section 13.1 Pages 14-15, 61-154

Governance – management • Organisational structure ARRs – section 14.1 Page 43 and structure • Executive management ARRs – section 14.2 Pages 44-47

• Related entities ARRs – section 14.3 Pages 2, 42, 61-154

• Government Bodies ARRs – section 14.4 N/A

• Public Sector Ethics (PSE) Act 1994 PSE Act 1994 (section 23 and schedule) N/A ARRs – section 14.5

Page 58 | Queensland Rail Annual and Financial Report 2013-14 Compliance Checklist (cont)

Summary of Requirement Basis for requirement Annual report reference

Governance – risk • Risk management ARRs – section 15.1 Pages 48-54 management and accountability • External scrutiny ARRs – section 15.2 Pages 18, 23, 37

• Audit committee ARRs – section 15.3 Pages 42, 49-50, 52

• Internal audit ARRs – section 15.4 Pages 49-50, 52

• Public Sector Renewal ARRs – section 15.5 Page 29

• Information systems and ARRs – section 15.6 Page 50 recordkeeping

Governance – human • Workforce planning, attraction and ARRs – section 16.1 Pages 21, 51, 56-57 resources retention and performance • Early retirement, redundancy and Directive No. 11/12 Early Retirement, N/A retrenchment Redundancy and Retrenchment ARRs – section 16.2

Open Data • Open Data ARRs – section 17 Page 57

Financial statements • Certification of financial statements FAA – section 62 See Financial Report attached – Pages 61-152 FPMS – sections 42, 43 and 50 ARRs – section 18.1

• Independent Auditors Report FAA – section 62 See Financial Report attached – Pages 153- FPMS – section 50 154 ARRs – section 18.2

Financial Reporting Requirements for See Financial Report • Remuneration disclosures Queensland Government Agencies attached – Pages 133- 141 ARRs – section 18.3

FAA Financial Accountability Act 2009 FPMS Financial and Performance Management Standard 2009 ARRs Annual Report requirements for Queensland Government Agencies

Queensland Rail Annual and Financial Report 2013-14 | Page 59 Glossary and Acronyms

Glossary CCTV Closed Circuit Television Citytrain network A collective term for the tracks, stations, trains and infrastructure CEO providing train services in South East Queensland bounded by the Gold Chief Executive Officer Coast in the south, Rosewood in the west and the Sunshine Coast in the north. CFO Chief Finance Officer Customer A term used for any passenger utilising our Citytrain or Traveltrain CMC services, or a rail operator in the context of the freight network. Crime and Misconduct Commission Freight Corporations Act General freight that is not transported in a bulk train and does not Corporations Act 2001 include intermodal and industrial products CSIA Lost Time Injury Frequency Rate (LTIFR) Customer Service Institute of Australia A measure of the number of lost time injuries per million hours worked, used by Queensland Rail to monitor and report employee health and DDA safety Disability Discrimination Act 1992 Net Profit After Tax (NPAT) DSITIA Defined as net profit after allowance for tax expense Department of Science, Information Technology, Innovation and the Arts Network DTMR Queensland’s rail system, including all main railway lines, marshalling Department of Transport and Main Roads yards, bulk freight loading and unloading points and customer stations EAMS Positive pARTnerships Enterprise Asset Management System A Queensland Rail program involving work with community groups, local schools and stakeholders to collaborate and produce high quality EBIT public artwork projects on Queensland Rail property Earnings Before Interest and Tax Quiet Carriage EBITDA The second and fifth carriage of every six-car and the middle of every Earnings Before Interest, Tax, Depreciation and Amortisation three-car Citytrain – a designated quiet area where customers are asked to refrain from having loud conversations, talking on their mobile EEO phone or listening to loud musical devices. Energy Efficiency Opportunities Return on Assets (ROA) EGP Defined as EBIT less income from investments, divided by average Enterprise Governance Program operating assets ELT Return on Equity (ROE) Executive Leadership Team Defined as operating profit after tax divided by average equity FTE Rollingstock Full-time equivalent (employee) Rail locomotives and wagons ICSS Transport Oriented Development (TOD) International Customer Service Standard A planning concept promoting the creation of well-designed and sustainable urban communities focused around public transport modes KPIs Key Performance Indicators TransLink A division of the Department of Transport and Main Roads, that KSR facilitates passenger transport services for Queenslanders and aim to Kuranda Scenic Railway provide a single integrated transport network accessible to everyone. MOU Acronyms Memorandum of Understanding AASB MP Australian Accounting Standards Board Member of Parliament AICD OGOC Australian Institute of Company Directors Office of Government-owned Corporations ASX QCA Australian Securities Exchange Queensland Competition Authority ATO QTC Australian Taxation Office Queensland Treasury Corporation ATSB SEQIPP Australian Transport Safety Bureau South East Queensland Infrastructure Plan and Program

Page 60 | Queensland Rail Annual and Financial Report 2013-14 Financial Statements 2013-14

Queensland Rail Annual and Financial Report 2013-14 | Page 61 Queensland Rail ABN 68 598 268 528 Financial report for the year ended 30 June 2014 Queensland Rail ABN 68 598 268 528 Financial report - 30 June 2014

Contents Page Financial statements Statement of comprehensive income 1 Balance sheet 2 Statement of changes in equity 3 Statement of cash flows 5 Notes to the financial statements 6 Management certificate 89 INDEPENDENT AUDITOR'S REPORT 90

These financial statements cover Queensland Rail and its controlled entities. Queensland Rail is an unincorporated statutory body established under the Queensland Rail Transit Authority Act 2013. The statutory body is controlled by the State of Queensland which is the ultimate parent. The head office and principal place of business of the statutory body is: Level 14, Rail Centre 1, 305 Edward Street Brisbane Qld 4000 A description of the nature of the statutory body's operations and its principal activities is included in the notes to the financial statements. Queensland Rail Statement of comprehensive income For the year ended 30 June 2014

Consolidated Parent 2014 2013* 2014 2013* Notes $'000 $'000 $'000 $'000

Revenue from continuing operations 5 1,967,638 326,931 971,699 259,096 Other income 6 1,545 487 - - Revenue 1,969,183 327,418 971,699 259,096

Supplies and services 7 (433,151) (75,602) - - Employee benefits expense 8 (681,620) (113,403) (756,450) (120,486) Depreciation and amortisation expense 9 (317,584) (51,419) - - Other expenses 9 (43,793) (2,126) (2,317) - Expenses (1,476,148) (242,550) (758,767) (120,486)

Operating profit 493,035 84,868 212,932 138,610

Finance income 9 14,460 1,722 - - Finance expenses 9 (197,770) (38,371) - - Net finance costs (183,310) (36,649) - -

Profit before income tax 309,725 48,219 212,932 138,610

Income tax expense 10 (96,120) (10,504) - -

Profit for the year 213,605 37,715 212,932 138,610

Other comprehensive income Items that may be reclassified to profit or loss Changes in the fair value of cash flow hedges 30 (449) 497 - - Income tax relating to components of other comprehensive income , 3010 135 (149) - - Other comprehensive income for the year, net of tax (314) 348 - -

Total comprehensive income for the year 213,291 38,063 212,932 138,610

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013. The above statement of comprehensive income should be read in conjunction with the accompanying notes.

1 Queensland Rail Balance sheet As at 30 June 2014

Consolidated Parent 2014 2013 2014 2013 Notes $'000 $'000 $'000 $'000

ASSETS Current assets Cash and cash equivalents 11 409,241 276,468 - - Trade and other receivables 12 84,674 182,025 382,806 675,625 Inventories 13 81,862 61,237 - - Derivative financial instruments 14 - 475 - - Other current assets 15 6,501 6,862 - - Total current assets 582,278 527,067 382,806 675,625

Non-current assets Receivables 16 3,647 3,843 31,335 31,375 Inventories 17 27,306 22,533 - - Property, plant and equipment 18 6,230,247 6,239,870 - - Intangible assets 19 54,336 46,988 - - Deferred tax assets 20 - - 68,302 73,419 Other financial assets 21 - - 2,845,324 2,845,324 Other non-current assets 22 4,856 4,834 30,100 - Total non-current assets 6,320,392 6,318,068 2,975,061 2,950,118

Total assets 6,902,670 6,845,135 3,357,867 3,625,743

LIABILITIES Current liabilities Bank overdraft 11 - 13,908 - - Trade and other payables 23 401,981 309,829 199,710 501,552 Provisions 24 205,756 236,728 198,278 217,071 Borrowings 26 - 99,817 - - Current tax liabilities 26,138 - 26,138 1,154 Other current liabilities 25 32,390 24,758 23 67 Total current liabilities 666,265 685,040 424,149 719,844

Non-current liabilities Provisions 24 68,570 52,024 31,335 37,808 Borrowings 26 3,000,000 3,000,000 - - Deferred tax liabilities 27 343,126 310,235 - - Other non-current liabilities 28 22,067 29,845 - - Total non-current liabilities 3,433,763 3,392,104 31,335 37,808

Total liabilities 4,100,028 4,077,144 455,484 757,652

Net assets 2,802,642 2,767,991 2,902,383 2,868,091

EQUITY Contributed equity 29 2,594,872 2,602,628 2,837,568 2,845,324 Reserves 30 - 314 - - Retained earnings 30 207,770 165,049 64,815 22,767

Total equity 2,802,642 2,767,991 2,902,383 2,868,091

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

2 Queensland Rail Statement of changes in equity For the year ended 30 June 2014

Contributed Retained Total equity Reserves earnings equity Consolidated Notes $'000 $'000 $'000 $'000

Balance at 3 May 2013 - - - -

Profit for the period - - 37,715 37,715 Other comprehensive income - 348 - 348 Total comprehensive income for the period* - 348 37,715 38,063

Transactions with owners in their capacity as owners: Acquisition of subsidiaries , 3029 2,602,628 (34) 243,177 2,845,771 Distributions of equity 29 - - - - Dividends provided 31 - - (115,843) (115,843) 2,602,628 (34) 127,334 2,729,928

Balance at 30 June 2013 2,602,628 314 165,049 2,767,991

Balance at 1 July 2013 2,602,628 314 165,049 2,767,991

Profit for the year - - 213,605 213,605 Other comprehensive income - (314) - (314) Total comprehensive income for the year - (314) 213,605 213,291

Transactions with owners in their capacity as owners: Acquisition of subsidiaries , 3029 - - - - Distributions of equity 29 (7,756) - - (7,756) Dividends provided 31 - - (170,884) (170,884) (7,756) - (170,884) (178,640)

Balance at 30 June 2014 2,594,872 - 207,770 2,802,642

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013. The above statement of changes in equity should be read in conjunction with the accompanying notes.

3 Queensland Rail Statement of changes in equity For the year ended 30 June 2014 (continued)

Contributed Retained Total equity Reserves earnings equity Parent Notes $'000 $'000 $'000 $'000

Balance at 3 May 2013 - - - -

Profit for the period - - 138,610 138,610 Other comprehensive income - - - - Total comprehensive income for the period* - - 138,610 138,610

Transactions with owners in their capacity as owners: Acquisition of subsidiaries , 3029 2,845,324 - - 2,845,324 Distributions of equity 29 - - - - Dividends provided 31 - - (115,843) (115,843) 2,845,324 - (115,843) 2,729,481

Balance at 30 June 2013 2,845,324 - 22,767 2,868,091

Balance at 1 July 2013 2,845,324 - 22,767 2,868,091

Profit for the year - - 212,932 212,932 Other comprehensive income - - - - Total comprehensive income for the year - - 212,932 212,932

Transactions with owners in their capacity as owners: Acquisition of subsidiaries , 3029 - - - - Distributions of equity 29 (7,756) - - (7,756) Dividends provided 31 - - (170,884) (170,884) (7,756) - (170,884) (178,640)

Balance at 30 June 2014 2,837,568 - 64,815 2,902,383

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013. The above statement of changes in equity should be read in conjunction with the accompanying notes.

4 Queensland Rail Statement of cash flows For the year ended 30 June 2014

Consolidated Parent 2014 2013* 2014 2013* Notes $'000 $'000 $'000 $'000

Cash flows from operating activities Receipts from customers** 439,279 86,106 758,774 132,536 Receipts from Government** 1,868,467 254,272 - - Dividends received from subsidiaries - - 138,610 - Interest received 14,360 1,705 - - Payments to suppliers and employees** (1,264,911) (239,548) (780,055) (113,079) Interest and other costs of finance paid (220,139) (31,421) - - GST input tax credits 82,054 21,230 413 - GST remitted (206,787) (40,792) (5,605) (6,453) Other 3 (31) 16 1 Income taxes paid**** (36,534) - (36,534) - Net cash inflow from operating activities 38 675,792 51,521 75,619 13,005

Cash flows from investing activities Proceeds from the disposal of assets 10,705 1,075 - - Payments for fixed assets (324,165) (93,990) - - Repayments of loans by related parties - - 40,224 - Loans to related parties - - - (13,005) Net cash (outflow) from investing activities (313,460) (92,915) 40,224 (13,005)

Cash flows from financing activities (Repayments of) / proceeds from borrowings (99,817) 28,240 - - Dividends paid 31 (115,843) - (115,843) - Net cash (outflow) inflow/ from financing activities (215,660) 28,240 (115,843) -

Net /increase (decrease) in cash and cash equivalents 146,672 (13,154) - - Cash and cash equivalents at the beginning of the financial year 262,562 - - - Cash and cash equivalents acquired from subsidiaries - 275,716 - - Cash and cash equivalents at end of year*** 11 409,234 262,562 - -

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

** Inclusive of goods and services tax (GST). *** Net of bank overdraft and monies held in trust. **** Queensland Rail and its subsidiaries, Queensland Rail Limited and On Track Insurance Pty Ltd, formed a consolidated income tax group. Queensland Rail, as head entity, is responsible for the payment and refund of income tax on behalf of the consolidated income tax group as of the current reporting period.

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

5 Queensland Rail Notes to the financial statements 30 June 2014

Contents of the notes to the financial statements

Page 1 Summary of significant accounting policies 7 2 Financial risk management 23 3 Critical accounting estimates and judgements 31 4 Correction of error and revision of estimates 33 5 Revenue from continuing operations 33 6 Other income 33 7 Supplies and services 34 8 Employee benefits expense 34 9 Expenses 35 10 Income tax expense 37 11 Current assets - Cash and cash equivalents 39 12 Current assets - Trade and other receivables 39 13 Current assets - Inventories 41 14 Derivative financial instruments 42 15 Current assets - Other current assets 42 16 Non-current assets - Receivables 43 17 Non-current assets - Inventories 43 18 Non-current assets - Property, plant and equipment 44 19 Non-current assets - Intangible assets 49 20 Non-current assets - Deferred tax assets 51 21 Non-current assets - Other financial assets 52 22 Non-current assets - Other non-current assets 52 23 Current liabilities - Trade and other payables 52 24 Liabilities - Provisions 53 25 Current liabilities - Other current liabilities 57 26 Liabilities - Borrowings 57 27 Non-current liabilities - Deferred tax liabilities 59 28 Non-current liabilities - Other non-current liabilities 60 29 Contributed equity 60 30 Reserves and retained earnings 62 31 Dividends 63 32 Key management personnel disclosures 64 33 Contingencies 78 34 Commitments 79 35 Related party transactions 81 36 Subsidiaries 84 37 Remuneration of auditors 84 38 Reconciliation of profit after income tax to net cash inflow from operating activities 85 39 Queensland Rail Limited consolidated financial information 86 40 Events occurring after the reporting period 88

6 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Queensland Rail and its subsidiaries, Queensland Rail Limited and On Track Insurance Pty Ltd. In the prior reporting period, the shares in Queensland Rail Limited were transferred to the Queensland Rail Transit Authority. The Queensland Rail Transit Authority was established under the Queensland Rail Transit Authority Act 2013 (QRTA Act). In accordance with the QRTA Act, the name of the Queensland Rail Transit Authority was changed to Queensland Rail in the prior reporting period. Queensland Rail is an unincorporated statutory body domiciled in Australia and owned by the Queensland State Government. Queensland Rail is a for-profit entity. These financial statements are denominated in Australian dollars. Queensland Rail is referred to in this financial report as the "company" or the "parent". Queensland Rail together with its subsidiaries, Queensland Rail Limited and On Track Insurance Pty Ltd, are collectively referred to as the "consolidated entity". The consolidated entity’s objectives for the financial year comprises: (a) efficiency through smart, effective and safe use of its resources that delivers better value for money; (b) service quality through optimising operational performance to provide safe, reliable and customer centric rail services for its customers; (c) commercial performance through delivering sustainable financial performance to help make rail travel more affordable; and (d) growth through attracting and retaining passenger and freight customers. The principal activities of the consolidated entity consists of: (a) South East Queensland (SEQ) above and below rail services; (b) Traveltrain services throughout Queensland; and (c) Network access services throughout regional Queensland. In accordance with the QRTA Act, all employees and their associated leave entitlements belonging to Queensland Rail Limited were transferred to Queensland Rail in the prior reporting period. All expenses incurred by Queensland Rail relating to these employees have been recharged to Queensland Rail Limited in accordance with a Managed Services Agreement. These financial statements were approved for issue by the members on 28 August 2014.

7 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

(a) Basis of preparation (i) Statement of compliance These financial statements are general purpose financial statements which have been prepared in accordance with: • applicable Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB); • the Financial and Performance Management Standard 2009; • Queensland Treasury and Trade’s Financial Reporting Requirements for Queensland Government Agencies to the extent relevant; and • other authoritative pronouncements. (ii) New and amended standards adopted by the consolidated entity The following new standards and amendments to standards are mandatory for the first time for the financial year beginning on 1 July 2013: • AASB 10 Consolidated Financial Statements (August 2011) • AASB 11 Joint Arrangements (August 2011) • AASB 12 Disclosures of Interests in Other Entities (August 2011) • AASB 13 Fair Value Measurement (September 2011) and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 • AASB 119 Employee Benefits (September 2011) and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119 (September 2011) • AASB 124 (FP) Related Party Disclosures [for for-profit entities] (December 2012) and 2011-4 Amendments to Australian Accounting Standards - Reduced Disclosure Requirements and Other Amendments • AASB 127 Separate Financial Statements (August 2011) • AASB 128 Investments in Associates and Joint Ventures (August 2011) • AASB 1053 Application of Tiers of Australian Accounting Standards (June 2010) and AASB 2010-2 Amendments to Australian Accounting Standards arising from AASB 1053 • Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine (November 2011) and AASB 2011-12 Amendments to Australian Accounting Standards arising from Interpretation 20 • AASB 2011-2 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project - Reduced Disclosure Requirements [AASB 101 and 1054] • AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards • AASB 2012-1 Amendments to Australian Accounting Standards - Fair Value Measurement - Reduced Disclosure Requirement [AASB 3, 7, 13, 140 and 141] • AASB 2012-2 Amendments to Australian Accounting Standards - Disclosures -Offsetting Financial Assets and Financial Liabilities (June 2012) - AASB 7 • AASB 2012-4 Amendments to Australian Accounting Standards - Government Loans [AASB 1] • AASB 2012-5 Amendments to Australian Accounting Standards arising from the Annual Improvements 2009 - 2011 Cycle • AASB 2012-7 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements [AASB 7, 12, 101 and 127] • AASB 2012-9 Amendment to AASB 1048 arising from the Withdrawal of Australian Interpretation 1039 • AASB 2012-10 Amendments to Australian Accounting Standards - Transition Guidance and other amendments • AASB 2012-11 Amendments to Australian Accounting Standards due to Reduced Disclosure Requirements and Other Amendments [AASB 1, 2, 8, 10, 107, 128, 133, 134 and 2011-4] • AASB CF 2013-1 Amendments to the Australian Conceptual Framework and AASB 2013-9 Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments - Part A Conceptual Framework

8 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2013 were early adopted. The adoption of AASB 119 resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements. The revised AASB 119 modifies the way that companies account for and disclose defined benefit superannuation plans. Although some Queensland Rail employees have defined benefit plans with QSuper, these are accounted for by the Queensland State government. The revised standard also modifies the definition of short-term employee benefits. The revised definition captures only those benefits expected to be settled within 12 months of reporting date. The previous definition included all benefits that were due within 12 months. The impact of the change is that, while all benefits due within 12 months must still be disclosed as current, that portion of employee benefits that is expected to be settled outside of 12 months must now be measured as though it were non-current. The current leave provisions that now have portions measured as though they are non-current have been recalculated taking into account expected future pay rates and then discounted to present value. The impact of the recalculation of employee entitlements is considered a change in accounting policy under AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The amount of the impact, however, was considered immaterial for both the parent entity and the consolidated entity. The change in the employee entitlements would be required to be allocated to both the entity from establishment and also the subsidiary, Queensland Rail Limited, prior to the transfer of the employee entitlements. This is considered impractical by management. As the change in measurement is both immaterial and impractical, the impact is not recognised in the prior period but applied prospectively from the 2013/14 reporting period in accordance with AASB 108. (iii) Early adoption of standards The following standards and amendments to standards are available for early adoption for the financial year beginning 1 July 2013: • AASB 9 Financial Instruments (September 2012) and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 • AASB 1055 Budgetary Reporting • AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Liabilities • AASB 2013-1 Amendments to AASB 1049 - Relocation of Budgetary Reporting Requirements • AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets • AASB 2013-4 Amendments to Australian Accounting standards - Novation of Derivatives and Continuation of Hedge Accounting • AASB 2013-5 Amendments to Australian Accounting standards - Investment Entities • AASB 2013-6 Amendments to AASB 136 arising from Reduced Disclosure Requirements • AASB 2013-9 Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments (December 2013) - Part C (Financial Instruments) The application of these standards and amendments in future periods is not expected to have a material impact on the accounts of the consolidated entity. The consolidated entity has elected not to early adopt any pronouncements for the current annual reporting period. There are no other standards that are not yet effective and that are expected to have a material impact on the consolidated entity in the current or future reporting periods and on foreseeable future transactions. (iv) Historical cost convention These financial statements have been prepared under the historical cost convention, except for certain assets which, as stated, are at fair value.

9 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

(v) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. (vi) Going Concern The financial report for the consolidated entity is prepared on a going concern basis despite current liabilities exceeding current assets at reporting date. The shortfall is partly due to vested employee benefits being classified as current. Funding through Transport Service Contracts, adequate interest coverage and a low gearing ratio provides adequate assurance of the consolidated entity's status as a going concern. The parent is a going concern as all costs incurred in providing employees to its subsidiary, Queensland Rail Limited, is recharged by the parent under a Managed Services Agreement with Queensland Rail . AllLimited funding for operating activities of the parent are sourced from the Queensland Rail Limited banking facilities.

(b) Principles of consolidation (i) Subsidiaries The consolidated financial statements incorporate the assets and liabilities of the subsidiaries of Queensland Rail as at reporting date and the results of the subsidiaries for the year then ended. A subsidiary is an entity (including a structured entity) over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Inter-company transactions, balances and unrealised gains on transactions between consolidated entity companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Non-current inter-company loans may not be demanded by the other entity and do not become payable other than through settlement of obligations associated with the loans or one of the entities exits the wholly-owned consolidated entity. A Variation to the Managed Services Agreement between Queensland Rail and its subsidiary, Queensland Rail Limited, was approved in the current reporting period. The Variation permits all inter-company balances between both entities to be legally offset and settled on a net basis at the end of each reporting period. Accounting policies have been adopted consistently across the consolidated entity. Investment in the subsidiary is accounted for at cost in the financial records of the parent entity.

(c) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the consolidated entity's entities are measured using the currency of the primary economic environment in which the entity operates (i.e. the functional currency). The consolidated financial statements are presented in Australian dollars, which is the consolidated entity's functional and presentation currency.

10 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

(ii) Transactions and balances Foreign currency transactions are initially translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

(d) Rounding of amounts / Comparative restatements The financial statements are presented in Australian dollars, which is the consolidated entity’s functional currency. Amounts included in the financial statements have been rounded to the nearest thousand dollars unless disclosure of the full amount is specifically required. Comparative information has been restated where necessary to be consistent with disclosures in the current reporting period.

(e) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Trade receivables and trade payables in the balance sheet are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the balance sheet. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing or financing activities, which are disclosed as operating cash flow. Queensland Rail and its subsidiaries consisting of Queensland Rail Limited and On Track Insurance Pty Ltd formed a GST group effective 1 July 2013. This means that any inter-company transactions within the Queensland Rail consolidated entity do not attract GST. Queensland Rail is the representative member of the GST group and is responsible for reporting all GST liabilities and credits on behalf of the consolidated entity.

(f) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable after taking into account any discounts allowed. Amounts disclosed as revenue are net of indirect taxes. The consolidated entity recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the consolidated entity's activities as described below. Exchanges of goods and services of the same nature and value without any cash consideration are not recognised as revenues. Revenue is recognised for the major business activities as follows: (i) Services revenue Services revenue comprises revenue earned from Transport Service Contracts, the provision of passenger transport and track access. In addition to Transport Service Contracts, the State Government reimburses the entity for concessions provided to senior citizens, pensioners and students.

11 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

Transport Service Contracts A new Rail Transport Service Contract (TSC) 2013/14 was executed between Queensland Rail, Queensland Rail Limited and the State of Queensland in July 2013. This contract covers funding to Queensland Rail Limited from the Department of Transport and Main Roads (DTMR), on behalf of the State of Queensland, for services undertaken by Queensland Rail Limited associated with: • Rail Infrastructure DTMR compensates the company for the capital and operational requirements on the TSC supported network. The capital funding is in the form of a payment being the sum of Return on Assets (RoA), depreciation and capital works expense. RoA is calculated as a set percentage on capital expenditure from the time the asset is commissioned. The RoA and depreciation are paid for TSC supported commissioned assets. • Citytrain The company receives payment for the delivery of train services on the suburban network in accordance with the timetable. Revenue is determined as the sum of the operating shortfall plus RoA, depreciation and capital works expense. The RoA and depreciation are paid for TSC supported commissioned assets. Base kilometres include travel for special events held during the year. Revenue is recognised and paid on growth kilometres travelled over the base, capped at 602,000 kilometres, during the reporting period. • Traveltrain The company receives payments associated with travel services provided to the public on the Travel Network. Revenue is determined as the sum of the operating shortfall plus RoA, depreciation and capital works expense. The RoA and depreciation are paid for TSC supported commissioned assets. All Transport Service Contract revenue is invoiced monthly to the DTMR in accordance with the contract. Adjustments relating to capital expenditure are recognised monthly against revenue and accrued to reflect the revised expected service revenue. This adjustment is invoiced or paid to DTMR after the end of the financial year. Adjustments relating to growth kilometres are adjusted in the monthly invoice relating to the period where growth kilometres were operated. This adjustment is made during the reporting period once the entity has assessed the additional kilometres. The 2013-14 TSC no longer provides the company with an RoA on work in progress as in previous TSCs. Passenger Transport Other train passenger service revenue comprises ticket and travel related sales and is recognised as revenue once the service has been rendered. Government concession revenue is recognised in the period in which the service is provided based on a predetermined formula as agreed with the local authority. Track Access Revenue generated from rail network access is recognised as the services are provided and is calculated based on a number of operating parameters (such as tonnage hauled) applied to either regulator approved tariffs or negotiated access agreements. In some circumstances where paths are not utilised by customers, a take or pay fee is charged. This fee is subject to individual access contracts. Managed Services Agreement Revenue generated from the provision of personnel services to Queensland Rail Limited is recognised when the service is provided and includes direct and indirect costs as per the Managed Services Agreement.

12 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

Rental Revenue and Fees Revenue generated from lease agreements classified as operating leases are measured at the fair value of the consideration received or receivable after taking into account any discounts allowed. The company has rental agreements that are classified as operating leases where the risks and rewards incidental to ownership have not been substantially transferred to the lessee. (ii) Other revenue Other revenue comprises revenue earned from the sale of goods and services. Revenue for sale of goods is recognised when the significant risks and rewards are passed to the buyer and the costs incurred, or to be incurred in respect of the transaction can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery. (iii) Interest income Interest income is recognised using the effective interest method.

(g) Other Income (i) Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the consolidated entity will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the statement of comprehensive income over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are accounted for as income in advance and amortised to the statement of comprehensive income on a straight-line basis over the expected lives of the assets. (ii) Disposal of assets The gain or loss on disposal of an asset is recognised at the date when the significant risks and rewards of ownership of the asset pass to the buyer, usually when the purchaser takes delivery of the asset. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal and is recognised as other income or expenses in the statement of comprehensive income.

(h) Defined benefit superannuation obligations The consolidated entity makes contributions to the State Public Sector Superannuation Scheme (QSuper) on behalf of its employees concerning superannuation. QSuper is an employer-sponsored fund, with the major employer being the State of Queensland. There are a number of membership categories in QSuper, which are either accumulation or defined benefits in nature. The Treasurer has ultimate responsibility for funding payments to defined benefit members. The State has in place funding arrangements designed to meet the defined benefit obligations for its members. The Treasurer has the ability to require employers to pay any amounts needed to meet these benefits. Generally, this is handled through the regular standard fortnightly contribution paid by every employer, which has been determined on the advice of the State Actuary. No directions varying this contribution have been received by the consolidated entity to reporting date. The State Actuary makes a recommendation to the Treasurer on the standard employer contribution rate required to fund the normal range of benefits at the conclusion of each triennial actuarial investigation. The most recent actuarial investigation was completed in 2013 and the actuary’s recommendation to leave the employer contribution rate unchanged was approved by the Treasurer. This investigation is undertaken on QSuper as a whole and is not segregated into different employers or occupations.

13 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

(i) Special payments Special payments include ex-gratia expenditure and other expenditure that the consolidated entity is not contractually or legally obligated to make to other parties. The total of all special payments (including those of $5,000 or less) is disclosed separately within other expenses (note 9). However, descriptions of the nature of special payments are only provided for special payments greater than $5,000.

(j) Income tax The income tax expense or benefit for the period is the tax payable / receivable on the current period's taxable income based on the national income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements and by unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. Deferred tax assets are recognised for deductible temporary differences, unused tax losses and tax credits, only if it is probable that future taxable amounts will be available to utilise those temporary differences, losses and credits. Deferred tax liabilities and assets are not recognised for the temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends to either settle on a net basis, or to realise the assets and settle the liability simultaneously. Current and deferred tax is recognised as an expense or income in the statement of comprehensive income, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity. (i) Tax consolidation legislation Queensland Rail (the head company) and its wholly owned Australian subsidiaries consisting of Queensland Rail Limited and On Track Insurance Pty Ltd (the specified subsidiary members) formed a Queensland Rail National Tax Equivalents Regime (NTER) income tax consolidated group effective 3 May 2013. The Board resolved to form an income tax consolidation group in May 2014 with retrospective application back to 3 May 2013. The resolution was made after the financial statements of the entity for the 2012/13 year were issued. The impact on the consolidated entity, however, was not material. In accordance with UIG Interpretation 1052 the specified subsidiary members each recognise the tax effect of their own transactions in their financial statements and the head company recognises the aggregate current income tax liability of the consolidated entity and the benefit of any tax losses arising in the consolidated entity in its financial statements. Assets or liabilities arising under the tax funding agreement with the income tax consolidated group members are recognised as amounts receivable from or payable to other members in the consolidated entity. In addition to its own current and deferred tax amounts, Queensland Rail also recognises the current tax liabilities (or assets) and the deferred tax assets arising from any unused tax losses and unused tax credits assumed from the specified subsidiary members in the income tax consolidated group.

14 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

(ii) Income tax equivalents The consolidated entity is required to make income tax equivalent payments to the Queensland Government, based upon the value of benefits derived and rulings set out in the National Tax Equivalent Regime (NTER) which is administered by Australian Taxation Office (ATO). These payments are made pursuant to the Queensland Rail Transit Authority Act 2013 and instruction from the Treasurer. The NTER gives rise to obligations which reflect in all material respects those obligations for taxation which would be imposed by the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997 and associated legislation, as well as Rulings and other pronouncements by the ATO to determine the tax payable by the consolidated entity.

(k) Cash and cash equivalents For the statements of cash flows and balance sheet presentation purposes, cash and cash equivalents include cash on hand, deposits held at call with financial institutions and other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(l) Trade receivables Trade receivables Trade receivables are initially recorded at fair value less any allowance for uncollectible amounts. Trade receivables generally have credit terms ranging from 7 to 31 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance for impairment of trade receivables is established when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the debt. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment loss is recognised in the statement of comprehensive income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of comprehensive income. Other receivables Other receivables include accruals, contractual receivables and GST receivable. Collectability is reviewed on an ongoing basis.

(m) Inventories The value of inventories reported includes items held in centralised stores, workshops and infrastructure and rollingstock depots. Cost comprises cost of purchase, cost of conversion and other costs incurred in bringing the inventory to its present location and condition. Inventories are valued at the lower of cost and net realisable value. Cost is determined predominantly on an average cost basis. Items expected to be consumed after more than one year are classified as non-current. The allowance for inventory obsolescence is based on assessments by management of particular inventory classes and relates specifically to infrastructure and rollingstock maintenance items. The amount of the allowance is based on a proportion of the value of damaged stock, slow moving stock and stock that has become obsolete during the reporting period.

15 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

The consolidated entity has an agreement in place with Aurizon Operations Limited (formerly QR National Limited) regarding inventory held in the Aurizon Operations Limited workshops on behalf of the consolidated entity. The agreement includes both "call option" and "put option" clauses and expires on 30 June 2015. The consolidated entity may exercise a call option upon expiry or termination of the agreement to acquire all or part of the dedicated inventory held by Aurizon Operations Limited at the expiry or termination date. Aurizon Operations Limited, may in turn, exercise a put option to require the consolidated entity to acquire all or any part of the dedicated inventory held on behalf of the company at the expiry or termination date.

(n) Investments and other financial assets The consolidated entity classifies its non-derivative financial assets based on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition. At reporting date, the consolidated entity has only one type of non-derivative financial asset: loans and receivables. (i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in current trade and other receivables (note 12) and non-current receivables (note 16) in the balance sheet. (ii) Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date which is the date on which the consolidated entity commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. (iii) Subsequent measurement Loans and receivables are carried at amortised cost using the effective interest method. Details on the determination of the fair value of financial instruments are disclosed in note 2. (iv) Impairment The consolidated entity assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets are impaired. If there is evidence of impairment for any of the consolidated entity’s financial assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in the statement of comprehensive income.

(o) Derivatives and hedging activities The consolidated entity enters into derivative contracts to hedge exposures to foreign exchange rates and commodity prices as described in note 2. Derivative balances are disclosed in note 14. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. The consolidated entity designates certain derivatives as hedges of the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges).

16 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

At inception, the consolidated entity documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The consolidated entity also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be, highly effective in offsetting future cash flows of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. (i) Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the statement of comprehensive income. Amounts accumulated in equity are recycled in the statement of comprehensive income in the periods when the hedged item will affect profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time is recognised when the forecast transaction is ultimately recognised in the statement of comprehensive income. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statement of comprehensive income. (ii) Derivatives that do not qualify for hedge accounting Certain derivative instruments do not qualify for hedge accounting. Changes in fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the statement of comprehensive income. (iii) Embedded derivatives Through the consolidated entity's purchase and sale contracts, it is possible that embedded derivatives have been entered into. An embedded derivative will cause some or all of the cash flows of the purchase or sale contract (i.e. the host contract) to be modified by reference to a variable such as a foreign exchange rate or a commodity price if that variable is not closely related to the host contract. Embedded derivatives are separated from the host contract and accounted for as a stand alone derivative if the economic characteristics and risks of the embedded derivatives are not closely related to those of the host contract. At reporting date, there were no embedded derivatives not closely related to the host contract.

(p) Property, plant and equipment Methodology for valuation Property, plant and equipment is measured at cost less accumulated depreciation. Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction. Cost may also include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. The cost of fixed assets constructed by the consolidated entity includes the cost of all materials used in construction, direct labour, site preparation, interest and foreign currency gains and losses incurred where applicable and an appropriate proportion of variable and fixed overheads based on direct labour hours.

17 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

Gifted and Donated Assets Assets acquired from government at no cost are measured at fair value as government grants. Fair value means the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets acquired from customers at no cost are recorded at fair value. Land Land is carried at cost. The Transport Infrastructure Act 1994 stipulates that the consolidated entity only retains ownership of its non-corridor land. As such, only non-corridor land is recorded in these accounts. Ownership of corridor land remains with the Department of Natural Resources and Mines on behalf of the State. This land is leased to the Department of Transport and Main Roads and subsequently sub-leased to the consolidated entity for no cost. The sub-lease term is for an initial term of 100 years with a renewal option for an additional 100 years. Owned building, plant and equipment and major plant and equipment Owned building, plant and equipment and major plant and equipment are carried at cost less accumulated depreciation. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. Rollingstock is considered to be major plant and equipment. Owned infrastructure Owned infrastructure assets are carried at cost and represent capitalised expenditures that are directly related to capital projects and may include materials, labour and equipment, in addition to an allocation of a portion of indirect costs that clearly relate to a particular project that will provide future economic benefits and remain within the control of the consolidated entity. Subsequent and maintenance costs Costs related to repairs and maintenance activities are expensed when such repairs are performed. Subsequent costs are only capitalised when it is probable that future economic benefits associated with the item which flow to the consolidated entity and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. Leased property, plant and equipment The capitalised fit out costs of leased properties is disclosed under buildings. The consolidated entity does not have any finance leases. Work in progress The cost of fixed assets constructed by the consolidated entity includes the cost of all materials used in construction, direct labour, site preparation, interest and foreign currency gains and losses incurred where applicable and an appropriate proportion of variable and fixed overheads based on direct labour hours. Depreciation and Amortisation Buildings, plant and equipment, major plant and equipment and infrastructure are depreciated on a straight-line basis over the useful life net of the residual value. Motor vehicles are depreciated using the diminishing value basis (percentages range from 13.64% to 35.00%), with land and work in progress not depreciated. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

18 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

Assets are depreciated or amortised from the date of acquisition, or, in respect of internally constructed or manufactured assets, from the time an asset is completed and held ready for use. Major spares purchased specifically for particular assets are capitalised and depreciated in line with standard default asset class lives. Where assets have separately identifiable components that are subject to regular replacement, these components are assigned useful lives distinct from the asset to which they relate. Any expenditure that increases the originally assessed capacity or service potential of an asset is capitalised and the new depreciable amount is depreciated over the remaining life of the asset. The depreciation and amortisation rates used during the year were based on the following range of useful lives: - Buildings 10 - 50 years - Major plant and equipment 8 - 40 years - Plant and equipment 4 - 25 years - Infrastructure* 6 - 100 years The depreciation and amortisation rates are reviewed annually and adjusted if appropriate. * Longer life infrastructure includes bridges, tunnels and other long lived civil works. Shorter life infrastructure includes telecommunications and security and surveillance equipment.

(q) Intangible assets (i) IT development and software Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits are capitalised to software and systems. Costs capitalised include external direct costs of materials and service and direct payroll and payroll related costs of employees' time spent on the project. Amortisation is calculated using the straight-line method over their useful life which varies from 3 to 7 years. IT development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility and where the company has an intention and ability to use the asset.

(r) Classification of expenditure Items of expenditure in excess of $2,000 which are expected to provide future economic benefits are capitalised, with the exception of the purchase of office equipment and other items of a similar nature that provide limited quantifiable benefits. The threshold applies to all asset classes except capital spares and intangibles. Capital spares have a threshold of $20,000. If capital spares are under $20,000, the item is recorded in inventory. Expenditure not capitalised is treated as an operating expense in the period in which the expenditure is incurred. Intangibles have a threshold of $50,000. If intangibles are under $50,000, expenditure is not capitalised and is treated as an operating expense in the period in which the expenditure is incurred.

(s) Impairment of assets Assets (including work in progress) are reviewed for impairment annually to determine if there are indications that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units). Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset or cash generating unit.

19 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

Non-financial assets that have suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

(t) Trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within the terms set by the supplier.

(u) Borrowings and borrowing costs Debt is drawn from facilities with the Queensland Treasury Corporation (QTC) incorporating fixed and floating debt and is initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost, using the effective interest rate method. Interest is accrued and paid monthly. Interest costs are calculated and advised by QTC in accordance with an agreed book rate methodology, which equates with amortised cost using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument. Borrowing costs, which includes interest calculated using the effective interest method and administration fees, are expensed in the period in which they arise. Borrowing costs which are directly attributable to the construction of material qualifying assets are capitalised. Qualifying assets are assets not funded from other sources with a cost of more than $1.0 million and which take a substantial period of time to prepare for intended use or sale. The consolidated entity entered into a new Transport Service Contract with the Department of Transport and Main Roads from 1 July 2013. All Return on Assets (RoA) funding commences when a constructed asset is commissioned, not whilst still under construction. This has resulted in a significant increase in the capitalisation of borrowing costs for the current and subsequent reporting periods. The rate used to determine the amount of borrowing cost to be capitalised is the QTC interest rate applicable to the entity’s outstanding borrowings during the year, in this case 7.31% (2013: 7.48%). During the year, interest costs of $25.8 million were capitalised (2013: $(0.6) million). Borrowings are classified as current liabilities unless the consolidated entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(v) Provisions Provisions are recognised when the consolidated entity has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. 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. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. The discount rate used to determine the present value is a pre tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

(w) Employee benefits Employee obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur. The remaining unvested employee obligations are included as non-current liabilities. Employee benefits expense recognised in the statement of comprehensive income and disclosed in note 8 excludes all employee related expenditure that is capitalised. In accordance with accounting standards and Queensland Rail capitalisation policy, all employee expenses directly attributable to the acquisition or construction of an asset is recognised directly in property, plant and equipment.

20 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

(i) Wages and salaries, annual leave, leave loading and long service leave Liabilities for wages and salaries, including non-monetary benefits, annual leave, leave loading and long service leave expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised as short-term benefits. These liabilities are in respect of employees' services up to the reporting date and are measured at the nominal amount plus related on-costs (where applicable). (ii) Other long-term employee benefit obligations Liabilities for annual leave, leave loading and long service leave not expected to be settled wholly within 12 months after the end of the period in which the employee renders the service, based on experience of leave history are recognised as long-term benefits. The liabilities are measured using the expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future non-current payments are discounted using market yields at the reporting date on Fixed Rate Commonwealth Government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows. (iii) Retirement allowance Retirement allowance is payable to employees that retire or are paid according to Voluntary Employee Redundancy Scheme (VERS) or Medical Separation who: • are not members of a QSuper contributory or defined benefit superannuation fund; • were employed prior to 1 February 1995; • have 10 or more years of continuous service; and • have reached the retirement attainment age of 55. Liabilities for retirement allowance where employees fulfil all of the above requirements are recognised as current liabilities at nominal values. The remaining unvested liabilities are included as non-current liabilities. The liability for retirement allowance is measured using the expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to the history of employee departures, expected future wage and salary levels as well as expected age of retirement. Expected future non-current payments are discounted using market yields at the reporting date on Fixed Rate Commonwealth Government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows. These conditions continue to apply to employees who have transferred from Aurizon Operations Limited (formerly QR National Limited) and Aurizon Network Pty Ltd (formerly QR Network Pty Ltd) to Queensland Rail. (iv) Sick leave Sick leave is not provided for on the grounds that it is non-vesting and on average, no more than the annual entitlement is taken each year. (v) Superannuation Contributions are expensed as they are made. The consolidated entity pays an employer subsidy to the Government Superannuation Office in respect of employees who are contributors to either the Public Sector Superannuation (QSuper) scheme or State Service Superannuation. Employer contributions to the Super Defined Benefit Fund are determined by the State Actuary. No liability is recognised for accruing superannuation benefits as this liability is held on a Whole-of-Government basis and reported in the Whole-of-Government financial statements. The consolidated entity also makes superannuation guarantee payments into the QSuper Accumulation Fund (RailSuper) and QSuper Accumulation Fund (Contributory) administered by the Government Superannuation Office.

21 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

1 Summary of significant accounting policies (continued)

No liability / asset is recognised for the consolidated entity's share of any potential deficit of the Super Defined Benefit Fund of QSuper. Refer to 1(h)note for further information on defined benefit liabilities.

(x) Contributed equity Ordinary shares are classified as equity. Equity injections are treated as an increase in the value of issued shares.

(y) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the consolidated entity, on or before the end of the financial year but not distributed at reporting date.

(z) Leases (i) Leases on property, plant and equipment Leases in which a significant portion of the risks and rewards of ownership are not transferred to the consolidated entity as lessee are classified as operating leases (note 34). Operating lease rental (net any incentive received from the lessor) is expensed on a straight-line basis over the lease term and is charged to the statement of comprehensive income. Leases of property, plant and equipment where the consolidated entity, as lessee, assumes substantially all the risks and benefits of ownership are classified as finance leases. The consolidated entity did not have any finance leases at reporting date. Expected rental revenue from operating leases where the consolidated entity is a lessor is recognised as income on a straight-line basis over the lease term (note 34).

(aa) Insurance The consolidated entity insures against risks which are largely uncontrollable, have significant or catastrophic consequences for assets and / or revenue and the aggregate costs of which would exceed the limit of exposure the organisation is prepared to accept. Insurance cover has accordingly been effected for a variety of such risks. Other areas of risk exposure are self-insured, including workers' compensation. Until 30 June 2010, self-insurance and other underwriting activities were performed by Queensland Rail's wholly-owned subsidiary, On Track Insurance Pty Ltd. On Track Insurance Pty Ltd was transferred from Aurizon Operations Limited (formerly QR National Limited) on 6 October 2010 and will continue to provide cover for claims relating to events up until 30 June 2010 for both Queensland Rail and the Aurizon Operations Limited group.

(ab) Environmental regulation The consolidated entity is subject to a variety of laws and regulations in the jurisdiction in which it operates or maintains land. Where remediation measures are probable and can be reliably measured, such costs incurred in complying with relevant laws and regulations are accounted for in accordance with the policy in note 1(v).

(ac) Authorisation for issue The financial statements are authorised for issue by the chairman at the date of signing the management certificate.

22 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

2 Financial risk management

The consolidated entity's activities expose it to a variety of financial risks including market risk, credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses derivative financial instruments such as foreign exchange contracts and commodity swap contracts to hedge significant risk exposures. Trading for profit is strictly prohibited. Financial risk management is being carried out by the central treasury section of the Capital Management unit within the consolidated entity under policies approved by the Members of the (theBoard Board). The treasury section identifies, evaluates and hedges financial risks in close co-operation with the consolidated entity's operating units. The Board approves the Finance Policy for overall risk management, as well as principles covering specific areas, such as mitigating foreign exchange, commodity price, interest rate and credit risks, use of derivative financial instruments and investing excess liquidity. Any breaches of policy are reported to the Board. Sensitivity analysis has been used to help assess the financial risk of the consolidated entity. In determining this sensitivity, the average of the 50 day historical volatility of the closing daily spot rate for three years, was used to adjust the forward curve. A three year period was chosen in line with the consolidated entity's current hedging framework. For foreign currency the adjustment was applied to the US Dollar, the Euro and the Japanese Yen. For commodity price risk, the adjustment was applied to the Singapore Gasoil curves.

(a) Market risk (i) Foreign exchange risk Foreign exchange risk arises from capital expenditures that are denominated in a currency that is not the entity's functional currency. The consolidated entity is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar (USD), the Euro (EUR) and the Japanese Yen (JPY). The risk is measured using cash flow at risk. The consolidated entity has a Treasury Principle in place to manage foreign exchange risk. All foreign exchange risk is centrally managed by the treasury section using approved derivative instruments. The consolidated entity's foreign exchange risk management policy dictates the level of hedging to be undertaken within the Board approved limits. At reporting date, the Board approved trading range for the foreign exchange risk hedging is: 0 - 1 year: 80% - 100% 1 - 2 years: 60% - 100% 2 - 3 years: 40% - 100% The consolidated entity designates forward foreign currency derivatives for hedging foreign exchange forecast transactions which are highly probable. At reporting date, no foreign exchange hedges were designated for hedge accounting purposes (2013: 100%). At reporting date, no contracts were recognised directly in equity (2013: net gains of $0.4 million). During the year ended 30 June 2014, gains of $0.57 million (2013: $0.01 million) were removed from equity and included in the acquisition cost of capital and gains of $0.04 million 2013: nil)( were removed from equity and included in the acquisition cost of components.

23 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

2 Financial risk management (continued)

The consolidated entity's exposure to foreign currency risk at reporting date was as follows:

30 June 2014 30 June 2013 USD EUR JPY USD EUR JPY Consolidated $'000 €'000 ¥'000 $'000 €'000 ¥'000

Cash and cash equivalents 100 96 30 28 125 1 Forward exchange contracts - capital expenditure foreign currency (qualifying for hedge accounting) - - - 577 2,525 - Net exposure 100 96 30 605 2,650 1

30 June 2014 30 June 2013 USD EUR JPY USD EUR JPY Parent $'000 €'000 ¥'000 $'000 €'000 ¥'000

Cash and cash equivalents ------Forward exchange contracts - capital expenditure foreign currency (qualifying for hedge accounting) ------Net exposure ------

Sensitivity At reporting date, had the Australian dollar weakened / strengthened against the USD / EUR with all other variables held constant, the consolidated entity’s post tax profit would not have been effected as there were no foreign exchange hedges in place (2013: nil10%, higher / $0.006 million lower). (ii) Commodity price risk Commodity price risk arises when future commercial supply agreements are subject to fluctuations in price movements. Commodity swap contracts, transacted by the treasury section, are used to manage commodity price risk. The consolidated entity has a Treasury Principle in place to manage commodity price risk. All commodity price risk is centrally managed by the treasury section using approved derivative instruments. The consolidated entity uses the commodity Singapore Gasoil 0.001% due to environmental efficiencies. The consolidated entity has chosen Singapore Gasoil 0.05% to hedge exposures as these are the most liquid markets available. The consolidated entity's commodity price risk management policy dictates the level of hedging to be undertaken within Board approved limits. At reporting date, the Board approved trading range for the commodity price hedging is: 0 - 1 year: 0% - 100% 1 - 2 years: 0% - 100% 2 - 3 years: 0% - 100% The consolidated entity designates forward commodity derivatives for hedging commodity forecast transactions which are highly probable. At the current and prior year reporting date, no commodity hedges were designated for hedge accounting purposes. During the prior reporting period, losses of $0.1 million were removed from equity and included in the cost of diesel fuel.

24 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

2 Financial risk management (continued)

(iii) Cash flow and fair value interest rate risk The consolidated entity's main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the consolidated entity to cash flow interest rate risk. Borrowings issued at fixed rates expose the consolidated entity to fair value interest rate risk. The QTC has been authorised to manage the interest rate risk of the consolidated entity within limits in accordance with the risk profile approved by the Board. This is achieved by varying the proportion of the floating and fixed rate funding. The performance of this risk management is assessed against the benchmark duration of the debt portfolio. At reporting date the consolidated entity had the following exposure to variable rate borrowings:

30 June 2014 30 June 2013 Weighted Weighted average average interest rate Balance interest rate Balance Consolidated % $'000 % $'000

Bank overdrafts and bank loans 7.3 3,000,000 7.3 3,099,817 Net exposure to cash flow interest rate risk 3,000,000 3,099,817

30 June 2014 30 June 2013 Weighted Weighted average average interest rate Balance interest rate Balance Parent % $'000 % $'000

Bank overdrafts and bank loans - - - - Net exposure to cash flow interest rate risk - -

25 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

2 Financial risk management (continued)

The following table summarises the sensitivity of the consolidated entity’s debt with QTC to interest rate risk:

Interest rate risk -1% +1% Carrying Consolidated amount Profit Equity Profit Equity 30 June 2014 $'000 $'000 $'000 $'000 $'000

Client Specific Debt Pool 3,000,000 2,583 2,583 (2,485) (2,485) Total increase / (decrease) 2,583 2,583 (2,485) (2,485)

Interest rate risk -1% +1% Carrying Consolidated amount Profit Equity Profit Equity 30 June 2013 $'000 $'000 $'000 $'000 $'000

Client Specific Debt Pool 3,000,000 1,711 1,711 (1,577) (1,577) Total increase / (decrease) 1,711 1,711 (1,577) (1,577)

Interest rate risk -1% +1% Carrying Parent amount Profit Equity Profit Equity 30 June 2014 $'000 $'000 $'000 $'000 $'000

Client Specific Debt Pool - - - - - Total increase / (decrease) - - - -

Interest rate risk -1% +1% Carrying Parent amount Profit Equity Profit Equity 30 June 2013 $'000 $'000 $'000 $'000 $'000

Client Specific Debt Pool - - - - - Total increase / (decrease) - - - -

(b) Credit risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at reporting date to recognised financial assets, is the carrying amount, net of any allowances for impairment of those assets, as disclosed in the balance sheet and notes to the consolidated financial statements. The consolidated entity does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the consolidated entity, other than amounts owing by the State of Queensland. For some trade receivables the consolidated entity may also obtain security in the form of guarantees, deeds of undertaking or letters of credit which can be called upon if the counterparty is in default under the terms of the agreement.

26 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

2 Financial risk management (continued)

Policies are in place to ensure that sales of products and services are only made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited to high credit quality financial institutions and are approved by the Board. The consolidated entity has policies that limit the amount of credit exposure to any one financial institution. At reporting date the consolidated entity had the following credit exposure risk:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Cash at bank and short-term bank deposits AA+ 392,340 276,339 - - AA 16,761 - - - 409,101 276,339 - -

Derivative financial assets AA - 475 - - - 475 - -

(c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Liquidity risk management within the consolidated entity ensures sufficient cash to meet short-term and long-term financial commitments. The consolidated entity has policies in place to manage liquidity risk, including the establishment of an annual approved borrowing program and the availability of appropriate working capital facilities. The consolidated entity manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash flow is maintained. Financing arrangements The short-term borrowing arrangements with QTC are interest bearing, refer to note 2(a)(iii). The borrowing arrangements are subject to annual review. The amount of undrawn short-term borrowing facilities with QTC available at reporting date is shown below:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

QTC short-term facilities Used at reporting date - 99,817 - - Unused at reporting date 150,000 350,183 - - Total facilities 150,000 450,000 - -

Long-term borrowings are sourced from the Queensland Rail Client Specific Pool subject to annual approval of the Queensland State Treasurer. The consolidated entity may draw up to the amount of the approved borrowing program. Borrowings are not secured.

27 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

2 Financial risk management (continued)

Maturity Analysis The tables below analyse the consolidated entity's financial liabilities and net and gross settled derivative financial instruments into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Queensland Treasury Corporation borrowings are interest only with no fixed repayment date for the principal component. For the purposes of completing the maturity analysis, the principal component of this loan has been included in the over five years time band with no interest payment assumed in this time band.

Total Less than Between Over contractual Consolidated 1 year 1 and 5 years 5 years cash flows 30 June 2014 $'000 $'000 $'000 $'000

Non-derivatives Non-interest bearing 205,801 - - 205,801 Variable rate 25,296 - - 25,296 Duration based 213,336 853,931 3,021,152 4,088,419 Total non-derivatives 444,433 853,931 3,021,152 4,319,516

Derivatives Gross settled (foreign exchange hedges) Assets - (inflow) - - - - - outflow - - - - Total derivatives - - - -

Total Less than Between Over contractual Consolidated 1 year 1 and 5 years 5 years cash flows 30 June 2013 $'000 $'000 $'000 $'000

Non-derivatives Non-interest bearing 168,475 - - 168,475 Variable rate 125,328 - - 125,328 Duration based 219,113 877,056 2,962,320 4,058,489 Total non-derivatives 512,916 877,056 2,962,320 4,352,292

Derivatives Gross settled (foreign exchange hedges) Assets - (inflow) (4,294) - - (4,294) - outflow 3,811 - - 3,811 Total derivatives (483) - - (483)

28 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

2 Financial risk management (continued)

Total Less than Between Over contractual Parent 1 year 1 and 5 years 5 years cash flows 30 June 2014 $'000 $'000 $'000 $'000

Non-derivatives Non-interest bearing 28,826 - - 28,826 Variable rate - - - - Duration based - - - - Total non-derivatives 28,826 - - 28,826

Derivatives Gross settled (foreign exchange hedges) Assets - (inflow) - - - - - outflow - - - - Total derivatives - - - -

Total Less than Between Over contractual Parent 1 year 1 and 5 years 5 years cash flows 30 June 2013 $'000 $'000 $'000 $'000

Non-derivatives Non-interest bearing 385,709 - - 385,709 Variable rate - - - - Duration based - - - - Total non-derivatives 385,709 - - 385,709

Derivatives Gross settled (foreign exchange hedges) Assets - (inflow) - - - - - outflow - - - - Total derivatives - - - -

29 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

2 Financial risk management (continued)

(d) Fair value measurements The fair value of financial assets and financial liabilities must be estimated for recognition and for disclosure purposes. AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: (Level 1) quoted prices (unadjusted) in active markets for identical assets or liabilities; (Level 2) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and (Level 3) inputs for the asset or liability that are not based on observable market data (unobservable inputs). The following table presents the consolidated entity's assets and liabilities measured and recognised at fair value at reporting date:

Consolidated Level 1 Level 2 Level 3 Total 30 June 2014 $'000 $'000 $'000 $'000

Assets Derivatives used for hedging Forward exchange contracts - - - - Total assets - - - -

Consolidated Level 1 Level 2 Level 3 Total 30 June 2013 $'000 $'000 $'000 $'000

Assets Derivatives used for hedging Forward exchange contracts - 475 - 475 Total assets - 475 - 475

Parent Level 1 Level 2 Level 3 Total 30 June 2014 $'000 $'000 $'000 $'000

Assets Derivatives used for hedging Forward exchange contracts - - - - Total assets - - - -

Parent Level 1 Level 2 Level 3 Total 30 June 2013 $'000 $'000 $'000 $'000

Assets Derivatives used for hedging Forward exchange contracts - - - - Total assets - - - -

30 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

2 Financial risk management (continued)

The fair value of financial instruments traded in active markets (such as foreign exchange and commodity derivatives) is based on observable market prices at reporting date. The observable market price used for financial assets and liabilities held by the consolidated entity for effective hedges is the average (i.e. mid) forward rate at close of business on reporting date. The fair value of financial instruments that are not traded in an active market (for example, over the counter derivatives) is determined using generally accepted valuation techniques. The consolidated entity uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Observable market prices or dealer estimates for similar instruments are used to estimate fair value for long-term debt for disclosure purposes. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of forward exchange contracts and commodity swap contracts is determined using forward market rates at the end of the reporting period. These instruments are included in level 2 and comprise derivative financial instruments. In the circumstances where a valuation technique for these instruments is based on significant unobservable inputs, such instruments are included in level 3. The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the consolidated entity for similar financial instruments. The carrying amount of current borrowings approximates the fair value, as the impact of discounting is not significant.

3 Critical accounting estimates and judgements

Estimates and judgements are evaluated annually and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

(a) Critical accounting estimates and assumptions The consolidated entity makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Estimated impairment of property, plant and equipment The consolidated entity tests annually whether property, plant and equipment has suffered any impairment, in accordance with the accounting policy stated in note 1(s). The recoverable amounts of cash generating units have been determined based on value in use calculations or fair value less costs to sell. Value in use calculations require the use of assumptions. These assumptions include the allocation of the Forward Estimates for the next three years for the consolidated entity to each cash generating unit and the discounting of nominal amounts using the weighted average cost of capital applicable to that cash generating unit. (ii) Long service leave provision The determination of the provisions required is dependent on a number of assumptions including expected wage increases, length of employee service and bond rates. Refer to note 24 for more information. (iii) Provisions for insurance claims The subsidiary company, On Track Insurance Pty Ltd, managed the self-insurance activities of the Aurizon Operations Limited (formerly QR National Limited) group to which both Queensland Rail Limited and On Track Insurance Pty Ltd belonged until 30 June 2010 and 6 October 2010 respectively. Actuarial assessments are undertaken annually to assess the value of the provision for any outstanding claims. Refer to note for1(aa) further information.

31 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

3 Critical accounting estimates and judgements (continued)

Accrued insurance liabilities (includes workers' compensation) is based on a combination of management estimates and independent actuarial assessments performed as at year end. Refer to note 24 for more information. (iv) Workers' compensation self-insurance provision Independent actuarial valuations are used to estimate the provisions required for self-insured workers' compensation. The determination of the provisions required is dependent on a number of assumptions including the total future cost to finalise existing open claims, wage increases that will impact existing claims, inflation and the amount of claims that have been incurred but not yet reported. Refer to note 24 for more information. (v) Provision for land rehabilitation There is uncertainty as to the amount that will ultimately be required to be expensed to remediate contaminated land. Refer to note 24 for more information. (vi) Provision for onerous contracts A provision is recognised for onerous contracts concerning commercial property leases in Brisbane. The determination of this provision requires estimates of the timing of future rental income that can offset future rental commitments, bond rates and the likelihood of whether floors will be used by Queensland Rail, or will remain onerous. Refer to note 24 for more information. (vii) Access revenue - West Moreton system coal tariff The access revenue for the contracted paths on the West Moreton system is determined with reference to coal tariffs under the access undertaking approved by the Queensland Competition Authority (QCA). A transitional reference tariff is in place from 1 July 2013 to 30 June 2014 and is based on the old tariff which expired 30 June 2013, escalated by CPI. The final tariff, yet to be approved by QCA, will be backdated to 1 July 2013. For the 2014 financial report, management estimated the value of access revenue relating to the West Moreton system based on available information as at reporting date. (viii) Taxation The consolidated entity's accounting policy for taxation requires management's judgement as to the types of arrangements considered to be subject to a tax. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the balance sheet. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only when it is considered probable that they will be recovered. Recoverability is dependent on the generation of sufficient future taxable profits. Refer to notes 27and20 for carrying amounts of deferred tax assets and deferred tax liabilities. (ix) Depreciation Management estimates the useful lives and residual values of property, plant and equipment based on the expected period of time over which economic benefits from use of the asset will be derived. Management reviews useful life assumptions on an annual basis having given consideration to variables including historical and forecast usage rates, technological advancements and changes in legal and economic conditions. Refer to note 1(p) for details of current depreciation rates used. (x) Hedge accounting Management's judgement is necessary when determining whether a derivative financial instrument qualifies for hedge accounting, such as whether forecast transactions are highly probable as required by AASB 139 Financial Instruments: Recognition and Measurement. The assessment of whether forecast transactions are highly probable is judgmental and is subject to changes to the timing and magnitude of underlying purchases.

32 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

4 Correction of error and revision of estimates

There have been no corrections of error in the current reporting period. There were no material revisions of estimates during the current reporting period.

5 Revenue from continuing operations

Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Transport service contract revenue 1,566,714 246,264 - - Services revenue - - 758,767 120,486 Passenger transport revenue 74,211 11,577 - - Network access revenue 217,514 43,174 - - Rental revenue and fees 9,437 1,863 - - Other revenue** 99,762 24,053 - - Inter-company dividend revenue - - 212,932 138,610 1,967,638 326,931 971,699 259,096

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013. ** Other revenue includes External construction works revenue $34.9 million (2013: $5.9 million), Workshop revenue $24.8 million (2013: $3.9 million), Telecommunication revenue $12.0 million (2013: $1.7 million), Airtrain revenue $11.3 million (2013: $2.0 million), Natural Disaster funding $4.9 million 2013: -( million), Advertising revenue $4.4 million (2013: $0.7 million) and Insurance claims revenue $2.4 million (2013: $8.9 million).

6 Other income

Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Net foreign exchange gains - 19 - - Rebates 1,545 468 - - 1,545 487 - -

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

33 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

7 Supplies and services

Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Materials and consumable items 105,136 24,060 - - Services 112,333 20,459 - - Capital and external works 55,596 11,774 - - Lease and hire charges 52,224 1,062 - - Traction electricity and train fuel 41,688 5,781 - - Utilities 28,307 4,994 - - Vehicle running expenses 19,078 3,388 - - Other supplies and services 18,789 4,084 - - 433,151 75,602 - -

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

8 Employee benefits expense

Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Wages and salaries 456,415 78,675 528,393 87,511 Annual leave 49,431 8,276 49,432 6,874 Long service leave 6,780 2,629 6,780 2,378 Superannuation Defined benefit superannuation expense 17,055 3,487 17,055 2,783 Defined contribution superannuation expense 43,887 6,802 43,887 6,673 Other employee benefits 72,448 12,580 72,456 12,243 Workers' compensation premium 3,750 (5,056) 3,750 (5,056) Payroll tax 31,854 6,010 32,136 5,138 Other employee related expenses - - 2,561 1,942 681,620 113,403 756,450 120,486

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013. The number of full-time equivalent (FTE) employees as at reporting date includes, full-time, part-time and casual employees based on a thirty-eight hour week.

2014 2013

Number of FTE employees 5,879.0 6,488.1

34 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

9 Expenses

Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Profit before income tax includes the following specific expenses: Depreciation and amortisation Depreciation Buildings 20,434 3,252 - - Plant and equipment 23,323 3,844 - - Infrastructure 138,199 22,631 - - Major plant and equipment 113,807 18,328 - - Total depreciation 295,763 48,055 - - Amortisation Lease fit out 2,709 489 - - Software (note 19) 19,112 2,875 - - Total amortisation 21,821 3,364 - -

Total depreciation and amortisation 317,584 51,419 - -

Net finance costs Interest earned / receivable (14,460) (1,722) - - Interest and finance charges paid / payable 197,770 38,371 - - Total net finance costs 183,310 36,649 - -

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

35 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

9 Expenses (continued)

Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Profit before income tax includes the following specific expenses: Other expenses Rental expenses relating to leases - 9 - - Allowance for inventory obsolescence 930 215 - - Research and development costs - 75 - - Settlement of litigation expenses 660 83 - - Impairment losses Trade receivables 84 (20) - - Special payments** Ex-gratia payments 2,329 - 2,317 - Net losses on non-hedge currency derivatives and hedge ineffectiveness 110 - - - Net foreign exchange losses 11 - - - Net losses on commodity hedge ineffectiveness - 3 - - Net loss on disposal of property, plant and equipment 9,174 1,190 - - Onerous contracts 29,956 - - - Other expenses 539 571 - - Total other expenses 43,793 2,126 2,317 -

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013. ** Special payments: - Ex-gratia payments were made to employees in the form of medical separations which are not required under their respective employment agreements. Following a review of medical separations, in ordinary circumstances, all non-contractual medical separations have ceased. - An out-of-court settlement was paid to a private individual impacted by a level crossing incident. The consolidated entity has disclosed its special payments, for the first time as at 30 June 2014. This is a regulatory requirement for all statutory bodies. Due to the late establishment of Queensland Rail in May 2013, these payments were not disclosed. Availability of similar payments as at 30 June 2013 (comparatives) is not practical.

36 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

10 Income tax expense

(a) Income tax expense Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Current tax 64,265 5,574 (5,117) 1,154 Deferred tax 28,684 4,930 5,117 (1,154) Adjustments for current tax of prior periods 3,171 - - - 96,120 10,504 - -

Deferred income tax /expense (benefit) included in income tax expense comprises: (Increase) / decrease in deferred tax assets (note 20) 169 (948) 5,117 (1,154) Increase in deferred tax liabilities (note 27) 28,516 5,878 - - 28,685 4,930 5,117 (1,154)

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

(b) Numerical reconciliation of income tax expense to prima facie tax payable Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Profit from continuing operations before income tax expense 309,725 48,219 212,932 138,610 Tax at the Australian tax rate of 30% (2013: 30%) 92,918 14,466 63,880 41,583 Tax effect of amounts which are not deductible / (taxable) in calculating taxable income: Research and development - (381) - - Inter-company eliminations - (3,587) - - Dividends received from subsidiaries - - (63,880) (41,583) Other 40 8 - - Non-assessable income (9) (2) - - Adjustments for current tax of prior periods 3,171 - - - 3,202 (3,962) (63,880) (41,583)

Total income tax expense 96,120 10,504 - -

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

37 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

10 Income tax expense (continued)

(c) Amounts recognised directly in equity Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss but directly debited or credited to equity: Net deferred tax - debited / (credited) directly to equity (notes and20 27) (135) 149 - - (135) 149 - -

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

(d) Income tax consolidation Queensland Rail (the head company) and its wholly owned Australian subsidiaries consisting of Queensland Rail Limited and On Track Insurance Pty Ltd (the specified subsidiary members) are entities which are members of the Queensland Rail National Tax Equivalents Regime (NTER) income tax consolidated group for the purposes of the Income Tax Act 1997 from 3 May 2013. In accordance with UIG Interpretation 1052 the specified subsidiary members each recognise the tax effect of their own transactions in their financial statements and the head company recognises the aggregate current income tax liability of the consolidated entity and the benefit of any tax losses arising in the consolidated entity in its financial statements. Under the terms of the tax funding agreement, the income tax consolidated group compensates Queensland Rail for any current tax payable assumed and is compensated by Queensland Rail for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Queensland Rail under income tax consolidation legislation. The funding amounts are recognised as non-current inter-company receivables or payables.

38 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

11 Current assets - Cash and cash equivalents

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Cash on hand 133 129 - - Bank balances 16,761 - - - Short-term investments 392,340 276,339 - - Trust monies 7 - - - Total cash and cash equivalents 409,241 276,468 - -

Less: bank overdraft - (13,908) - - Less: trust monies (7) 2 - - (7) (13,906) - -

Balance as per statement of cash flows 409,234 262,562 - -

(a) Interest rate risk exposure The consolidated entity’s exposure to interest rate risk is discussed in note 2.

12 Current assets - Trade and other receivables

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Trade receivables 65,495 65,704 - - Allowance for impairment of receivables (a) (285) (253) - - Net trade receivables 65,210 65,451 - -

Inter-company receivables (c) - - 169,874 537,015 Inter-company dividend receivables - - 212,932 138,610 - - 382,806 675,625

Transport service contracts 7,286 90,437 - - Receivables - SEQIPP works 6,932 7,345 - - Other receivables 5,246 18,792 - - 19,464 116,574 - -

Total trade and other receivables 84,674 182,025 382,806 675,625

Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.

39 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

12 Current assets - Trade and other receivables (continued)

(a) Impaired trade receivables At reporting date, it was assessed that a portion of the impaired receivables is expected to be recovered. The nominal values and ageing of the impaired trade receivables is as follows:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

1 to 3 months 18 6 - - 3 to 6 months 54 82 - - Over 6 months 213 252 - - 285 340 - -

Movements in the allowance for impairment of receivables are as follows:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Opening balance 253 - - - Acquisition of subsidiaries - 273 - - Allowance for impairment recognised during the period 85 - - - Receivables written off during the year as uncollectable (53) - - - Unused amounts reversed - (20) - - 285 253 - -

The creation and release of the allowance for impaired receivables has been included in the statement of comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

(b) Past due but not impaired At reporting date, some of the consolidated entity’s trade receivables were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

3 to 6 months 4,784 315 - - Over 6 months 2,986 1,991 - - 7,770 2,306 - -

(c) Inter-company receivables The inter-company receivables in the current reporting period has been settled on a net basis due to a legal Variation to the Managed Services Agreement between Queensland Rail and its subsidiary, Queensland Rail Limited, permitting all inter-company balances to be settled on a net basis.

40 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

13 Current assets - Inventories

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Raw materials and stores (b) 83,480 62,314 - - Work in progress 27 125 - - Less: allowance for inventory obsolescence (1,645) (1,202) - - Inventory at lower of cost or net realisable value 81,862 61,237 - -

(a) Inventory expense Inventory recognised as expense during the year ended 30 June 2014 amounted to $84.284 million (2013: $19.639 million). Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2014 amounted to $0.192 million (2013: $0.004 million).

(b) Raw materials and stores The amount of raw materials and stores includes surplus materials held to support the existing rollingstock assets of the consolidated entity. An independent external valuer performed a stock take and assessed the value of the surplus materials in connection with the carriages that were de-scoped from the Sunlander 14 capital program to be $5.0 million. This amount was transferred to inventory from capital work in progress in the prior reporting period. Queensland Rail engaged an independent external valuer to assess and value materials procured in relation to the portions of the Sunlander 14 capital program that were de-scoped. Key estimates and assumptions were made by the valuer in determining the value of the materials that could be used by Queensland Rail to support existing rollingstock. These include: • All materials were considered to be new at reporting date and no aging allowances were included in the values determined. • All materials transferred to inventory only included those items that are replaceable units which support the rendering of services to Queensland Rail. • The value of procured materials represented the cost paid by Queensland Rail to the supplier where it was identifiable. Otherwise, the value represented the likely price that Queensland Rail could expect to pay for each item. • The materials valued were components created and purchased in order to assemble a narrow gauge tilt train. Accordingly, it was held that there was no opportunity to dispose of surplus materials in accordance with its best and highest use to another rail operator. Physical inspections were included up to and including those on 19 November 2013 and were undertaken by inspecting a representative sample with a focus on high value sub system components first. The inspections and valuations have been based upon the information provided to the valuer.

41 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

14 Derivative financial instruments

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Current assets Forward exchange contracts - cash flow hedges - 475 - - Total current derivative financial instrument assets - 475 - -

Total derivative financial instrument assets - 475 - -

(a) Instruments used by the consolidated entity The consolidated entity holds derivative financial instruments to hedge (including economically hedge) its foreign currency and commodity price risk exposures in accordance with the consolidated entity’s financial risk management policy (note 2).

15 Current assets - Other current assets

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Prepayments 6,501 6,439 - - Prepaid income tax* - 423 - - 6,501 6,862 - -

* The consolidated entity made Pay As You Go quarterly income tax instalments for the 2012/13 period which exceeded the income tax liability for the same period.

42 - - - - - Queensland Rail - Notes to the financial statements 30 June 2014 111,786

(continued) Total $'000 (continued) (1,465,840) 30 June 2014 ------Queensland Rail 16 Non-current assets - Receivables

Consolidated Parent $'000 2014 2013 2014 2013

$'000 $'000 $'000 $'000 Infrastructure ------Notes to the financial statements Notes to the financial Loan receivable* 3,647 3,843 - - (65) (318) (2,263) 17,288 43,660 (10,827)

Inter-company receivables - - 31,335 31,375 (18,328) (22,631) (48,544) and $'000 1,338,346 3,652,751 6,189,718 1,337,241 3,673,462 6,239,870 1,907,339 4,320,286 7,705,710 3,647 3,843 31,335 31,375 1,337,241 3,673,462 6,239,870 equipment Major plant - - - - - * Loan receivable represents the outstanding balance of the loan between the subsidiary company, On Track - 42

Insurance Pty Ltd and its former parent company, Aurizon Operations Limited (formerly QR National Limited). 512 This loan is non-interest bearing and is not repayable on demand. The loan balance is reduced as On Track Insurance Pty Ltd settles outstanding insurance claims by Aurizon Operations Limited and its subsidiaries. $'000 Plant and (a) Impaired receivables and receivables past due equipment ------None of the non-current receivables are impaired or past due but not impaired. - (60) (1,816) 4,001

(b) Fair values (3,741) (3,844) (130,853) (116,276) (570,098) (646,824) The carrying value of non-current receivables represents the best approximation of fair value. $'000 Buildings ------

17 Non-current assets - Inventories (4) 65

Consolidated Parent (1,789) Land 44 2014 2013 2014 2013 $'000 $'000 $'000 $'000 $'000 ------Raw materials and stores 27,306 22,533 - - 27,306 22,533 - - (76,353) 539,096 127,152 409,544 122,829 111,744 574,487 127,213 409,744 117,723 574,487 129,002 540,597 233,999 574,487 127,213 409,744 117,723 $'000 Work in progress , plant and equipment 30 June 2013 2013 Non-current assets - Property - assets Non-current 30 June 2013 Consolidated At 3 May Cost Accumulated depreciation / amortisation and impairment losses impairment and amortisation / depreciation Accumulated Net book amount Period ended Opening net book amount Acquisition of subsidiaries Additions Transfers between asset classes Transfers between asset Transfers to supplies and services (d) Transfers to State Government (e) Disposals Depreciation / amortisation expense Closing net book amount At Cost Accumulated depreciation / amortisation and impairment losses impairment and amortisation / depreciation Accumulated Net book amount

43 18 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

18 Non-current assets - Property, plant and equipment

Major plant Work in Plant and and progress Land Buildings equipment equipment Infrastructure Total Consolidated $'000 $'000 $'000 $'000 $'000 $'000 $'000

At 3 May 2013 Cost ------Accumulated depreciation / amortisation and impairment losses ------Net book amount ------

Period ended 30 June 2013 Opening net book amount ------Acquisition of subsidiaries 539,096 127,152 409,544 122,829 1,338,346 3,652,751 6,189,718 Additions 111,744 - - 42 - - 111,786 Transfers between asset classes (76,353) 65 4,001 512 17,288 43,660 (10,827) Transfers to supplies and services (d) ------Transfers to State Government (e) ------Disposals - (4) (60) (1,816) (65) (318) (2,263) Depreciation / amortisation expense - - (3,741) (3,844) (18,328) (22,631) (48,544) Closing net book amount 574,487 127,213 409,744 117,723 1,337,241 3,673,462 6,239,870

At 30 June 2013 Cost 574,487 129,002 540,597 233,999 1,907,339 4,320,286 7,705,710 Accumulated depreciation / amortisation and impairment losses - (1,789) (130,853) (116,276) (570,098) (646,824) (1,465,840) Net book amount 574,487 127,213 409,744 117,723 1,337,241 3,673,462 6,239,870

44 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

18 Non-current assets - Property, plant and equipment (continued)

Major plant Work in Plant and and progress Land Buildings equipment equipment Infrastructure Total Consolidated $'000 $'000 $'000 $'000 $'000 $'000 $'000

Year ended 30 June 2014 Opening net book amount 574,487 127,213 409,744 117,723 1,337,241 3,673,462 6,239,870 Acquisition of subsidiaries ------Additions 379,823 - - 92 - - 379,915 Transfers between asset classes (666,473) 84 81,209 35,324 79,874 442,870 (27,112) Transfers to supplies and services (d) (36,971) - - - - - (36,971) Transfers to State Government (e) (6,027) (1,729) - - - - (7,756) Disposals - (2,378) (577) (5,750) (3,255) (7,267) (19,227) Depreciation / amortisation expense - - (23,143) (23,323) (113,807) (138,199) (298,472) Closing net book amount 244,839 123,190 467,233 124,066 1,300,053 3,970,866 6,230,247

At 30 June 2014 Cost 244,839 124,979 619,818 245,956 1,973,657 4,752,155 7,961,404 Accumulated depreciation / amortisation and impairment losses - (1,789) (152,585) (121,890) (673,604) (781,289) (1,731,157) Net book amount 244,839 123,190 467,233 124,066 1,300,053 3,970,866 6,230,247

45 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

18 Non-current assets - Property, plant and equipment (continued)

Major plant Work in Plant and and progress Land Buildings equipment equipment Infrastructure Total Parent $'000 $'000 $'000 $'000 $'000 $'000 $'000

At 3 May 2013 Cost ------Accumulated depreciation / amortisation and impairment losses ------Net book amount ------

Period ended 30 June 2013 Opening net book amount ------Acquisition of subsidiaries ------Additions ------Transfers between asset classes ------Transfers to supplies and services (d) ------Transfers to State Government (e) ------Disposals ------Depreciation / amortisation expense ------Closing net book amount ------

At 30 June 2013 Cost ------Accumulated depreciation / amortisation and impairment losses ------Net book amount ------

46 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

18 Non-current assets - Property, plant and equipment (continued)

Major plant Work in Plant and and progress Land Buildings equipment equipment Infrastructure Total Parent $'000 $'000 $'000 $'000 $'000 $'000 $'000

Year ended 30 June 2014 Opening net book amount ------Acquisition of subsidiaries ------Additions ------Transfers between asset classes ------Transfers to supplies and services (d) ------Transfers to State Government (e) ------Disposals ------Depreciation / amortisation expense ------Closing net book amount ------

At 30 June 2014 Cost ------Accumulated depreciation / amortisation and impairment losses ------Net book amount ------

47 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

18 Non-current assets - Property, plant and equipment (continued)

(a) Non-current assets pledged as security No assets have been pledged as security by the company.

(b) Impairment An impairment assessment was undertaken prior to reporting date. No impairment was recognised in the current or prior reporting periods.

(c) Acquisition of subsidiaries for work in progress The acquisitions of subsidiaries section of work in progress in the prior reporting period reflect the transfer of costs to supplies and services expense and the transfer to inventory relating to the de-scope of the Sunlander 14 capital program. The acquisitions of subsidiaries for work in progress have been reduced by $48.2 million representing the transfer of costs to supplies and services expense and $5.0 million representing the transfer to inventory. The transfer of estimated costs to supplies and services expense in the prior reporting period represent materials, project management and engineering design costs relating to the de-scoped portions of the capital program. These costs were incurred to build carriages which were unique to a narrow gauge tilt train. Accordingly, it was held that these costs did not represent a future economic benefit and there was no opportunity to dispose of the surplus materials in accordance with its best and highest use to another rail operator.

(d) Transfers to supplies and services The transfers to supplies and services represent expenditure incurred in prior years that are expensed in the current year on the basis that they are operational in nature or comprise expenditure on capital works on behalf of third parties. A significant portion of the transfers in the current period relate to pre-feasibility expenditure on the New Generation Rollingstock program that was recharged to the State Government in the current period.

(e) Transfers to State Government The transfers to State Government comprise work in progress or commissioned assets that have been transferred to other State Government owned entities external to the Queensland Rail consolidated entity. These transfers are settled via a distribution of Queensland Rail’s contributed equity to its shareholders, the responsible Ministers. Refer to note 29(a).

48 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

19 Non-current assets - Intangible assets

Computer software* Total Consolidated $'000 $'000

At 3 May 2013 Cost - - Accumulated amortisation and impairment - - Net book amount - -

Period ended 30 June 2013 Opening net book amount - - Acquisition of subsidiaries 39,036 39,036 Transfers 10,827 10,827 Disposals - - Amortisation expense (2,875) (2,875) Closing net book amount 46,988 46,988

At 30 June 2013 Cost 74,456 74,456 Accumulated amortisation and impairment (27,468) (27,468) Net book amount 46,988 46,988

Year ended 30 June 2014 Opening net book amount 46,988 46,988 Acquisition of subsidiaries - - Transfers 27,112 27,112 Disposals (652) (652) Amortisation expense (19,112) (19,112) Closing net book amount 54,336 54,336

At 30 June 2014 Cost 104,142 104,142 Accumulated amortisation and impairment (49,806) (49,806) Net book amount 54,336 54,336

* Software includes capitalised development costs being an internally generated intangible asset.

49 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

19 Non-current assets - Intangible assets (continued)

Computer software* Total Parent $'000 $'000

At 3 May 2013 Cost - - Accumulated amortisation and impairment - - Net book amount - -

Period ended 30 June 2013 Opening net book amount - - Acquisition of subsidiaries - - Transfers - - Disposals - - Amortisation expense - - Closing net book amount - -

At 30 June 2013 Cost - - Accumulated amortisation and impairment - - Net book amount - -

Year ended 30 June 2014 Opening net book amount - - Acquisition of subsidiaries - - Transfers - - Disposals - - Amortisation expense - - Closing net book amount - -

At 30 June 2014 Cost - - Accumulated amortisation and impairment - - Net book amount - -

* Software includes capitalised development costs being an internally generated intangible asset.

An impairment assessment was undertaken prior to reporting date. No impairment was recognised in the current or prior reporting periods.

50 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

20 Non-current assets - Deferred tax assets

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

The balance comprises temporary differences attributable to: Tax losses - 2,011 - - Accrued expenses 12,152 10,230 4,781 4,524 Capital losses 881 3,211 - - Provisions 79,890 81,683 62,461 68,903 Superannuation contributions 1,060 706 1,060 (8) Unearned revenue 3,166 3,818 - - Total deferred tax assets 97,149 101,659 68,302 73,419

Set-off of deferred tax liabilities pursuant to set-off provisions (note 27) (97,149) (101,659) - - Net deferred tax assets - - 68,302 73,419

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Movements: Opening balance - - 73,419 - Acquisition of subsidiaries - 98,734 - - Transfer from subsidiaries - - - 72,265 Credited / (charged) to the consolidated statement of comprehensive income (note 10) (169) 948 (5,117) 1,154 Cash flow hedges - (14) - - Increase in / (utilisation of) carried forward tax losses (2,011) 1,991 - - Utilisation of capital losses (2,330) - - - Set-off of deferred tax liabilities pursuant to set-off provisions (note 27) 4,510 (101,659) - - Closing balance at 30 June - - 68,302 73,419

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Deferred tax assets expected to be recovered within 12 months - - 63,806 67,637 Deferred tax assets expected to be recovered after more than 12 months - - 4,496 5,782

51 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

21 Non-current assets - Other financial assets

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Shares in subsidiaries - - 2,845,324 2,845,324 - - 2,845,324 2,845,324

22 Non-current assets - Other non-current assets

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Prepayments 4,856 4,834 - - Inter-company loans - - 30,100 - 4,856 4,834 30,100 -

23 Current liabilities - Trade and other payables

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Trade payables 207,721 166,087 22,116 17,168 Dividend payable 170,884 115,843 170,884 115,843 Other payables 12,534 14,490 6,839 7,270 391,139 296,420 199,839 140,281

Inter-company payables (a) - - - 355,736 - - - 355,736

GST input tax credits receivable (7,763) (14,025) (129) (62) GST payable 18,605 27,434 - 5,597 10,842 13,409 (129) 5,535

Total trade and other payables 401,981 309,829 199,710 501,552

(a) Inter-company payables The inter-company payables in the current reporting period has been settled on a net basis due to a legal Variation to the Managed Services Agreement between Queensland Rail and its subsidiary, Queensland Rail Limited, permitting all inter-company balances to be settled on a net basis.

52 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

24 Liabilities - Provisions

2014 2013 Current Non-current Total Current Non-current Total Consolidated $'000 $'000 $'000 $'000 $'000 $'000

Employee benefits (a) 191,703 14,987 206,690 210,401 19,273 229,674 Provision for insurance claims (b) 2,220 - 2,220 13,296 - 13,296 Litigation and workers' compensation provision (c) 7,067 16,704 23,771 7,149 19,024 26,173 Land rehabilitation provision (d) - 8,562 8,562 - 10,967 10,967 Make good provision (e) - 3,127 3,127 - 2,760 2,760 Onerous contracts provision (f) 4,766 25,190 29,956 - - - Other provisions (g) - - - 5,882 - 5,882 205,756 68,570 274,326 236,728 52,024 288,752

2014 2013 Current Non-current Total Current Non-current Total Parent $'000 $'000 $'000 $'000 $'000 $'000

Employee benefits (a) 191,703 14,987 206,690 210,401 19,273 229,674 Provision for insurance claims (b) ------Litigation and workers' compensation provision (c) 6,575 16,348 22,923 6,670 18,535 25,205 Land rehabilitation provision (d) ------Make good provision (e) ------Onerous contracts provision (f) ------Other provisions (g) ------198,278 31,335 229,613 217,071 37,808 254,879

53 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

24 Liabilities - Provisions (continued)

(a) Employee benefits Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Annual leave and leave loading 57,065 60,490 57,065 60,490 Long service leave 133,572 150,661 133,572 150,661 Other 16,053 18,523 16,053 18,523 206,690 229,674 206,690 229,674

The current provision for long service leave covers all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. This portion of the provision is presented as current, since the consolidated entity does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The non-current provision for long service leave covers all conditional entitlements where employees have not completed the required period of service and are not entitled to pro-rata payments. This portion of the provision is presented as non-current, since the consolidated entity does not have an obligation to settle the provision within the next 12 months. Other employee benefits includes payroll tax and retirement allowances. Employees and their entitlements were transferred from Queensland Rail Limited to Queensland Rail on 3 May 2013 in accordance with the Queensland Rail Transit Authority Act 2013. This resulted in the transfer of the entire balance of the employee benefits on the same day.

(b) Provision for Insurance Claims The provision for insurance claims is raised for insurance claims external to the consolidated entity as recorded by On Track Insurance Pty , theLtd consolidated entity's internal captive insurance provider for claims up until 30 June 2010. The provision represents the estimated requirement to settle all third party claims against the consolidated entity as determined by an actuarial assessment.

(c) Litigation and workers' compensation provision Provision is made for the estimated liability for workers' compensation and litigation claims. Independent actuarial valuations are used to estimate the provisions required for self-insured workers' compensation. Litigation claims are assessed separately for common law, statutory and asbestos claims. The outstanding liability is determined after factoring future claims inflation and discounting future claim payments. Estimates are made based on the average number of claims and average claim payments over a specified period of time. Claims Incurred But Not Reported (IBNR) are also included in the estimate. Claims are expected to be paid over a period exceeding more than one year. Subsequent to the enactment of the Queensland Rail Transit Authority Act 2013, the Queensland State Government issued a Transfer Notice resulting in the transfer of the workers' compensation liability from Queensland Rail Limited to Queensland Rail.

54 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

24 Liabilities - Provisions (continued)

(d) Land rehabilitation provision This provision recognises the estimated costs to remediate contaminated land in accordance with the consolidated entity's constructive obligations per the environmental sustainability policy. These estimated costs have arisen as a result of past events. The provision for land rehabilitation is the present value of management's best estimate of the expenditure required to settle the land rehabilitation present obligation at the reporting date. The provision was originally recognised in 2010 based on advice from external consultants and management's best estimate of likely remediation costs. In 2014 external consultants were engaged to provide updated valuations.

(e) Make good provision This provision represents the anticipated costs of the future restoration of leased office premises. Make good requirements vary for different properties. The provision includes future cost estimates associated with the restoration of office fixtures and fittings to original condition; removal of all property and equipment to return the premises to a vacant shell and making good any damage caused by their removal; removing any alterations to return to its original layout; and repairing and making good any damage which may be caused to land adjoining the premises as a result of carrying out structural work or other improvements. The provision has been calculated based on management's best estimate of make good costs.

(f) Onerous contracts provision This provision represents the net unavoidable costs expected to be incurred on commitments for property leases concerning commercial office space in Brisbane. The net unavoidable costs comprise the commitments under the lease contracts for offices that are currently vacated by the company less expected revenue to be received from the sub-lease of office space under the same contracts. The onerous provision is equivalent to the present value of the future net unavoidable costs.

(g) Other provisions Other provisions comprise an outstanding commitment in the prior year to compensate a supplier for materials and project administration and engineering costs associated with the carriages that were de-scoped from the Sunlander 14 capital program for the amount of $5.9 million. In accordance with the accounting standards, this commitment is recognised as a provision in the current reporting period as the consolidated entity has a present contractual obligation, relating to an event that has occurred, which is expected to be settled in the next reporting period.

55 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

24 Liabilities - Provisions (continued)

(h) Movements in provisions Movements in each class of provision during the financial year, other than employee benefits, are set out below:

Provision Litigation and for workers' Land Make Onerous insurance compensation rehabilitation good contracts Other Consolidated claims provision provision provision provision provisions Total 2014 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Current and non-current Carrying amount at start of year 13,296 26,173 10,967 2,760 - 5,882 59,078 Charged / (credited) to profit or loss - additional provisions recognised - 9,394 - 152 29,956 - 39,502 - unused amounts released (10,270) (5,425) (2,863) - -- (18,558) - unwind discount - - 458 215 -- 673 Amounts used during the year (806) (6,371) - - - (5,882) (13,059) Carrying amount at end of year 2,220 23,771 8,562 3,127 29,956 - 67,636

Provision Litigation and for workers' Land Make Onerous insurance compensation rehabilitation good contracts Other Parent claims provision provision provision provision provisions Total 2014 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Current and non-current Carrying amount at start of year - 25,205 - - -- 25,205 Charged / (credited) to profit or loss - additional provisions recognised - 8,873 - - -- 8,873 - unused amounts released - (5,425) - - -- (5,425) - unwind discount ------Amounts used during the year - (5,730) - - - - (5,730) Carrying amount at end of year - 22,923 - - - - 22,923

56 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

25 Current liabilities - Other current liabilities

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Income in advance (a) 29,708 21,592 - - Other current liabilities 2,682 3,166 23 67 32,390 24,758 23 67

(a) Income in advance Income in advance predominantly represents amounts received as prepayment for the development of rail infrastructure and lease payments and / or incentives received in advance. Infrastructure prepayments are deferred and earned over the term of their respective agreements while lease incentives are amortised to the statement of comprehensive income over the life of the related lease.

26 Liabilities - Borrowings

2014 2013 Current Non-Current Total Current Non-current Total Consolidated $'000 $'000 $'000 $'000 $'000 $'000

Queensland Treasury Corporation borrowings* - 3,000,000 3,000,000 99,817 3,000,000 3,099,817 Total borrowings - 3,000,000 3,000,000 99,817 3,000,000 3,099,817

2014 2013 Current Non-Current Total Current Non-current Total Parent $'000 $'000 $'000 $'000 $'000 $'000

Queensland Treasury Corporation borrowings* ------Total borrowings ------

* Unsecured

(a) Financing arrangements For details of the consolidated entity's financing arrangements please refer to note 2(c).

57 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

26 Liabilities - Borrowings (continued)

(b) Fair value The carrying amounts and fair values of current and non-current borrowings and off-balance sheet guarantees at reporting date are:

2014 2013 Carrying Carrying amount Fair value amount Fair value Consolidated $'000 $'000 $'000 $'000

On-balance sheet (i) Non-traded financial liabilities Current borrowings - - 99,817 99,817 Non-current borrowings 3,000,000 3,337,340 3,000,000 3,225,974 3,000,000 3,337,340 3,099,817 3,325,791

Off-balance sheet (ii) Unrecognised financial assets Third party guarantees - 295,680 - 293,018 Bank guarantees - 96,189 - 93,387 Insurance company guarantees - 20,100 - 24,857 Unrecognised financial liabilities Third party guarantees - (16,176) - (2,000) Bank guarantees - (36,015) - (36,015) - 359,778 - 373,247

2014 2013 Carrying Carrying amount Fair value amount Fair value Parent $'000 $'000 $'000 $'000

On-balance sheet (i) Non-traded financial liabilities Current borrowings - - - - Non-current borrowings ------

Off-balance sheet (ii) Unrecognised financial assets Third party guarantees - - - - Bank guarantees - - - - Insurance company guarantees - - - - Unrecognised financial liabilities Third party guarantees - - - - Bank guarantees ------

(i) On-balance sheet The fair value of borrowings is determined by reference to pricing models and valuation techniques as advised by QTC.

58 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

26 Liabilities - Borrowings (continued)

(ii) Off-balance sheet The off-balance sheet items comprise guarantees either held or issued by the consolidated entity and contingent assets and liabilities not qualifying for recognition at reporting date. A majority of the guarantees held relate to performance guarantees on construction contracts provided by third parties.

(c) Risk exposures Information about the entity's exposure to interest rate and foreign currency fluctuations is provided in note 2.

27 Non-current liabilities - Deferred tax liabilities

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

The balance comprises temporary differences attributable to: Accrued income 34 1,789 - - Consumables and spare parts 6,042 6,923 - - Property, plant and equipment 434,080 401,488 - - Prepayments 119 115 - - Cash flow hedges - 135 - - Foreign exchange gains - 1,444 - - Total deferred tax liabilities 440,275 411,894 - -

Set-off of deferred tax liabilities pursuant to set-off provisions (note 20) (97,149) (101,659) - - Net deferred tax liabilities 343,126 310,235 - -

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Movements: Opening balance 310,235 - - - Acquisition of subsidiaries - 405,881 - - Charged to the consolidated statement of comprehensive income (note 10) 28,516 5,878 - - Cash flow hedges (135) 135 - - Set-off of deferred tax liabilities pursuant to set-off provisions (note 20) 4,510 (101,659) - - Closing balance at 30 June 343,126 310,235 - -

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Deferred tax liabilities expected to be settled within 12 months (68,261) (69,932) - - Deferred tax liabilities expected to be settled after more than 12 months 411,387 380,167 - -

59 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

28 Non-current liabilities - Other non-current liabilities

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Income in advance (a) 22,067 29,845 - - 22,067 29,845 - -

(a) Income in advance Income in advance predominantly represents amounts received as prepayment for the development of rail infrastructure and lease incentives received in advance. Infrastructure prepayments are deferred and earned over the term of their respective agreements while lease incentives are amortised to the statement of comprehensive income over the life of the related lease.

29 Contributed equity

(a) Share capital Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Ordinary shares Fully paid at the beginning of the year 2,602,628 - 2,845,324 - Shares acquired - 2,602,628 - 2,845,324 Distributions of equity* (7,756) - (7,756) - Total contributed equity 2,594,872 2,602,628 2,837,568 2,845,324

* Refer to note 18(e).

(b) Movements in ordinary share capital Consolidated

Date Details Number of shares $'000

3 May 2013 Opening balance - - Shares acquired 100 2,602,628 Capital distributions - - 30 June 2013 Closing balance 100 2,602,628

1 July 2013 Opening balance 100 2,602,628 Shares acquired - - Capital distributions - (7,756) 30 June 2014 Closing balance 100 2,594,873

60 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

29 Contributed equity (continued)

(c) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

(d) Capital risk management The consolidated entity's objectives when managing capital are to safeguard its ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The responsible Ministers advise the appropriate methodology in determining the dividend payable annually. The consolidated entity monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including 'borrowings' and external ‘trade and other payables' as shown in the balance sheet) less cash and cash equivalents (including bank overdraft). Total capital is calculated as ‘equity’ as shown in the balance sheet plus net debt. The consolidated entity's gearing ratios are as follows:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Total borrowings 3,401,981 3,409,646 199,710 145,816 Less: cash and cash equivalents (including bank overdraft) (409,241) (262,560) - - Net debt 2,992,740 3,147,086 199,710 145,816 Total equity 2,802,642 2,767,991 2,902,383 2,868,091 Total capital 5,795,382 5,915,077 3,102,093 3,013,907

Consolidated Parent Gearing ratio 52% 53% N/A N/A

The consolidated entity is also required by QTC to maintain an Earnings Before Interest and Tax (EBIT) Interest Coverage of greater than 1.25:1, except where the total debt to capital is greater than 70%, in which case the EBIT Interest Coverage must be at least 2:1. The consolidated entity has complied with this requirement for both the current and prior reporting periods.

61 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

30 Reserves and retained earnings

(a) Reserves Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Hedging reserve - cash flow hedges - 314 - - - 314 - -

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Movements: Hedging reserve - cash flow hedges Opening balance 314 - - - Acquisition of subsidiaries - (34) - - Fair value gains taken to equity 161 407 - - Deferred tax (48) (122) - - Fair value (gains) / losses matured and included in components cost (42) 101 - - Deferred tax 13 (30) - - Fair value (gains) matured and capitalised (568) (11) - - Deferred tax 170 3 - - Balance 30 June - 314 - -

62 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

30 Reserves and retained earnings (continued)

(b) Retained earnings Movements in retained earnings were as follows:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Opening balance 165,049 - 22,767 - Acquisition of subsidiaries - 243,177 - - Profit for the year 213,605 37,715 212,932 138,610 Dividends provided (170,884) (115,843) (170,884) (115,843) Balance 30 June 207,770 165,049 64,815 22,767

31 Dividends

Ordinary shares Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Dividend of 1,708,840 dollars per share (2013: 1,158,433) was declared by the Board for the consolidated entity for the year ended 30 June 2014: Dividend declared* 170,884 115,843 170,884 115,843 Dividend paid* 115,843 - 115,843 -

* All dividends declared / paid were unfranked.

63 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures

(a) Members, directors and specified executives Compensation and other terms of employment for the specified executives are formalised in service agreements. Details of members' and directors' terms of appointment and compensation details together with the major provisions of the service agreements for specified executives, as at reporting date, relating to compensation are as follows: (i) Members and directors

Queensland Rail Members Position Appointment term Expiry date M Klug Chairman 3 years 30 September 2016 A Blums Member 2 years 8 months 30 September 2016 D George Member 2 years 5 months 30 September 2015 W McMillan Member 2 years 5 months 30 September 2015 J Mickel Member 3 years 30 September 2016 G Poole Member 2 years 11 months 30 September 2016 P Wallis was appointed to the Board as a Member on 30 July 2014.

Queensland Rail Limited Directors Position Appointment term Expiry date M Klug Chairman 3 years 30 September 2016 A Blums Director 2 years 8 months 30 September 2016 D George Director 2 years 9 months 30 September 2015 W McMillan Director 2 years 9 months 30 September 2015 J Mickel Director 3 years 30 September 2016 G Poole Director 2 years 11 months 30 September 2016 P Wallis was appointed to the Board as a Director on 30 July 2014.

On Track Insurance Pty Ltd Directors Position Appointment term Expiry date J Benstead Managing Director No set appointment term No expiry date G Pringle Director No set appointment term No expiry date

64 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

(ii) Specified executives

Position Responsibilities Appointment authority Chief Executive Officer The Chief Executive Officer is responsible for providing Section 29 effective leadership and direction of Queensland Rail. Queensland Rail The role is responsible for ensuring an integrated Transit Authority approach is taken to provide safe, on-time rail travel to Act 2013 Queenslanders at minimum cost. Acting Executive General Manager The Executive General Manager Projects is responsible Section 35 Projects for the operational, commercial and strategic Queensland Rail management and performance of project delivery. Transit Authority Act 2013 Executive General Manager People The Executive General Manager People and Section 35 and Performance Performance is responsible for the leadership and Queensland Rail strategic management of the human resources function. Transit Authority Act 2013 General Counsel The General Counsel is responsible for the effective Section 35 leadership and direction of legal activities. Queensland Rail Transit Authority Act 2013 Executive General Manager Safety The Executive General Manager Safety and Section 35 and Environment Environment is responsible for the strategic direction Queensland Rail and management of the workplace health and safety, Transit Authority rail safety and environmental management functions. Act 2013 Chief Financial Officer The Chief Financial Officer is responsible for the Section 35 leadership and strategic management of finance and Queensland Rail corporate services. Transit Authority Act 2013 Acting Executive General Manager The Executive General Manager Access and Business Section 35 Access and Business Strategy Strategy is responsible for strategic management and Queensland Rail performance of the commercial aspect of rail access. Transit Authority Act 2013 Acting Executive General Manager The Executive General Manager Network is responsible Section 35 Network for the operational and strategic management of the Queensland Rail network function. Transit Authority Act 2013 Executive General Manager The Executive General Manager Customer Service is Section 35 Customer Service responsible for the operational, commercial and Queensland Rail strategic provision of customer services. Transit Authority Act 2013 Executive General Manager Rail The Executive General Manager Rail Operations is Section 35 Operations responsible for the operational, commercial and Queensland Rail strategic management and performance of rail services. Transit Authority Act 2013

65 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

Queensland Rail Specified executives Position Appointment term Expiry date H Gluer Chief Executive Officer 1 year 3 April 2015 J Benstead1 Acting Executive General Manager Projects 3 years + 2 years 30 June 2015 extension N Duce Executive General Manager People and 3 years + 2 years 30 June 2016 Performance extension D Farrelly General Counsel 3 years 9 March 2017 G Ford Executive General Manager Safety and 3 years + 2 years 30 June 2015 Environment extension M Hope Chief Financial Officer Tenured No expiry date A Matthews1 Acting Executive General Manager Access Tenured No expiry date and Business Strategy T Ripper1 Acting Executive General Manager Network 3 years 9 December 2015 M Ryan Executive General Manager Customer 3 years 11 November 2015 Service K Wright Executive General Manager Rail Operations 3 years 26 February 2015

1Appointment terms provided are for this officer’s substantive position.

Queensland Rail Limited Specified executives Position Appointment term Expiry date H Gluer Chief Executive Officer 1 year 3 April 2015 J Benstead1 Acting Executive General Manager Projects 3 years + 2 years 30 June 2015 extension N Duce Executive General Manager People and 3 years + 2 years 30 June 2016 Performance extension D Farrelly General Counsel 3 years 9 March 2017 G Ford Executive General Manager Safety and 3 years + 2 years 30 June 2015 Environment extension M Hope Chief Financial Officer Tenured No expiry date A Matthews1 Acting Executive General Manager Access Tenured No expiry date and Business Strategy T Ripper1 Acting Executive General Manager Network 3 years 9 December 2015 M Ryan Executive General Manager Customer 3 years 11 November 2015 Service K Wright Executive General Manager Rail Operations 3 years 26 February 2015

1Appointment terms provided are for this officer’s substantive position.

66 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

The above are the key executives representing the consolidated entity. These executives provide advice in relation to strategy and future direction of the consolidated entity under the business model adopted. On Track Insurance Pty Ltd does not have any senior executives who are involved in setting strategy or future direction for the entity and no On Track Insurance Pty Ltd executives are disclosed above for this reason. Termination of an executive can be made by the consolidated entity to the specified executive either with notice, without notice or due to the incapacity of the specified executive. Formal policy concerning the application to terminations for Queensland Rail chief and senior executives are governed by the Policy for Government Owned Corporation Chief and Senior Executive Employment Arrangements v 1.0. This policy was issued by the Government in the 2013/14 period and is applicable to arrangements in the 2013/14 period. In the prior period, Queensland Rail complied with the Government Owned Corporations - Governance Arrangements for Chief and Senior Executives v3.0 publication. Termination by notice can be made by the specified executive or the consolidated entity at any time by either party giving to the other 1 month written notice for senior executives or 3 months written notice of termination for the chief executive. Previously, all executives were required to provide 3 months written notice. The chief executive is entitled to 3 months salary where termination occurs on the agreed termination date. Senior executives are entitled to 1 months salary where termination occurs on the agreed termination date. The entitlement was 12 weeks in the prior year for all executives. Under the new Policy, all new appointments to chief and senior executives are on an ongoing (tenured) basis with no specific end date. When a termination occurs, specified executives that are tenured are entitled to the following: • any accrued leave; • salary for the balance of the notice period, if the employment is terminated by the consolidated entity immediately or during the notice period; and • a termination payment of 6 months salary for the chief executive and 3 months salary for senior executives. In the prior year, tenured executives would be entitled to a service payment equal to the greater of 13 weeks salary or 2 weeks salary per year of continuous service with the consolidated entity up to a maximum 52 weeks salary. Under the Policy, existing contracts with outer limits for specified executives can continue until the expiry of the current contract term. Reappointments are to be on a tenure basis. For specified executives with outer limit contracts, when a termination occurs prior to the termination date (assuming no gross misconduct), the consolidated entity will pay the specified executive the following: • any accrued leave; • salary for the balance of the notice period; • a service payment equal to the greater of 4 weeks salary or 2 weeks salary per year of continuous service with the consolidated entity up to a maximum 52 weeks salary; and • a separation payment equal to 20% of the salary that the specified executive would have earned had the employment continued from the day after the notice period ceased until the termination date.

67 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

(b) Key management personnel compensation Member and directors' remuneration and terms of appointment were set by the Governor in Council at the time of a director's appointment. Following the establishment of the Queensland Rail Transit Authority Act 2013, members' and directors' remuneration and terms of appointment are set by responsible Ministers. Members' and directors' remuneration is subsequently reviewed annually by responsible Ministers. Members and directors are not entitled to termination payments on termination of their period of service. Queensland Rail Chief and Senior Executive Officers are compensated in accordance with the above mentioned Policy for Government Owned Corporation Chief and Senior Executive Employment Arrangements v 1.0 publication. The Queensland Rail Board has also implemented the Performance Payment Policy - Chief and Senior Executive which reflects the expectations of the Queensland State Government as outlined in the stated policy. The Performance Payment Policy - Chief and Senior Executive provides for a performance pay process that is administered on a 12 month (financial year) cycle and aligns the executives with Queensland Rail wide and Individual Key Performance Indicators (KPIs). Performance Payment pays up to a maximum payment of 15% per annum of a Chief or Senior Executive’s total fixed remuneration on the achievement of stretch targets. The Queensland Rail KPIs are set by the Board at the beginning of the financial year in alignment with the Statement of Strategic Expectations issued by the State Government, the Queensland Rail Statement of Corporate Intent and the delivery of our organisational performance outcomes including safety, reliability, customer outcomes and financial performance. The performance agreement components are weighted as follows: • Queensland Rail 70% The Queensland Rail KPIs are aligned to the organisational performance outcomes as follows: Reliability • On Time Running City network combined peak periods • Below rail delays City network Financial • Consumable cost reduction • Earnings before interest and tax Customer • Customer satisfaction City network Safety • Lost Time Injury Frequency Rate • Signals Passed at Danger • Individual 30% The Individual KPIs are set by the Chief Executive Officer on the recommendation of the relevant executive member. Individual KPIs are reflective of Queensland Rail and Functional KPIs for which the executive has direct accountability and / or reflective of strategic business plans, budgets and capital / infrastructure projects. Eligible executives must also meet minimum expectations for the consistent demonstration of the Queensland Rail Values and Behaviours. The Chief and Senior Executives participate in the Queensland Rail performance management process with quarterly and annual performance reviews. Annual performance results of the Executives are assessed and calibrated by the Chief Executive Officer and Executive General Manager People and Performance. The Board is responsible for the assessment of the Chief Executive Officer’s performance. The Queensland Rail Board approve the calculation and payment of the Chief and Senior Executive Performance Payments and provide written advice to the responsible Ministers in accordance with the Government Arrangements.

68 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

Details of the compensation of each specified member, director and executive are as follows:

2014 2013* $'000 $'000

Short-term benefits 4,211 512 Post-employment benefits 456 54 Long-term benefits 300 - Termination benefits 135 - 5,102 566

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013. Short-term benefits includes cash salary, at risk performance incentives (for specified executives only), fees and non-monetary benefits. Non-monetary benefits represent the value of Exempt and Reportable Fringe Benefits for the respective Fringe Benefits Tax year.

69 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

(i) Members and directors of Queensland Rail and subsidiaries

2014 Short-term benefits Post-employment benefits Member Non- fees and monetary Super- Retirement Members allowances benefits annuation benefits Total $'000 $'000 $'000 $'000 $'000

M Klug Chairman 93 - 9 - 102 (appointed 1 October 2013) Blank G Harley Deputy 23 - 2 - 25 (ceased 31 December 2013) Chairman Blank A Blums Member 14 - 1 - 15 (appointed 30 January 2014) Blank D George Member 40 - 4 - 44 Blank M McArthur Member 6 - 1 - 7 (ceased 4 August 2013) Blank W McMillan Member 45 - 4 - 49 Blank J Mickel Member 27 - 3 - 30 (appointed 1 October 2013) Blank D Petie Member 6 - 1 - 7 (ceased 2 August 2013) Blank G Poole Member 27 - 3 - 30 (appointed 30 October 2013) Normal J Schafer Member 12 - 1 - 13 (ceased 30 September 2013) Blank Blank Total 293 - 29 - 322

All the members listed above are members of the Queensland Rail Board and directors of the Queensland Rail Limited Board. As an executive of former parent company, Aurizon Operations Limited (formerly QR National Limited), G Pringle did not receive additional remuneration in his capacity as director of On Track Insurance Pty Ltd. As an executive of Queensland Rail, J Benstead did not receive additional remuneration in his capacity as director of On Track Insurance Pty Ltd. These amounts are not in addition to the amounts disclosed in the Key Management Personnel note of the Queensland Rail Limited financial statements as they were recharged by the company in accordance with the Managed Services Agreement.

70 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

2013 * Short-term benefits Post-employment benefits Member Non- fees and monetary Super- Retirement Members allowances benefits annuation benefits Total $'000 $'000 $'000 $'000 $'000

G Harley Deputy 6 - 1 - 7 (appointed as Deputy Chairman Chairman on 21 June 2013) Blank G Dawe Chairman 18 - 2 - 20 (ceased 18 June 2013) Blank D George Member 6 - 1 - 7 Blank M McArthur Member 6 - 1 - 7 Blank W McMillan Member 7 - 1 - 8 Blank D Petie Member 7 - 1 - 8 Blank J Schafer Member 6 - 1 - 7 Blank Blank Blank Row Total 56 - 8 - 64

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013. All the members listed above are members of the Queensland Rail Board and directors of the Queensland Rail Limited Board, except for D Petie who is also Chairman of the On Track Insurance Pty Ltd Board. As an executive of former parent company, Aurizon Operations Limited (formerly QR National Limited), G Pringle did not receive additional remuneration in his capacity as director of On Track Insurance Pty Ltd. As an executive of Queensland Rail, J Benstead did not receive additional remuneration in his capacity as director of On Track Insurance Pty Ltd. These amounts are not in addition to the amounts disclosed in the Key Management Personnel note of the Queensland Rail Limited financial statements as they were recharged by the company in accordance with the Managed Services Agreement from 3 May 2013.

71 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

(ii) Specified executives of the consolidated entity

Short-term benefits Post- Long- 2014 employment term benefits benefits Cash Non- Long Term- salary Cash monetary Super- service ination Specified executives and fees bonuses benefits annuation leave benefits Total $'000 $'000 $'000 $'000 $'000 $'000 $'000

H Gluer 270 - 3 30 -- 303 Chief Executive Officer (from 3 April 2014) Acting Chief Executive Officer (from 10 January 2014 until 2 April 2014) Blank G Dawe 216 - 3 23 - 110 352 Chief Executive Officer (from 2 August 2013 until ceased 9 January 2014) Blank J Benstead 389 - 6 48 -- 443 Acting Executive General Manager Projects (from 21 May 2014) Acting Executive General Manager Commercial and Corporate Services (from 2 August 2013 until 20 May 2014) Acting Chief Executive Officer (from 1 July 2013 until 1 August 2013) Blank J Crawford 59 -- 5 - - 64 Acting Executive General Manager Safety, Assurance and Environment (from 25 December 2013 until 30 March 2014) Blank N Duce 282 - 5 27 -- 314 Executive General Manager People and Performance Blank D Farrelly 89 - 2 11 -- 102 General Counsel (from 10 March 2014) Blank Blank Blank

72 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

Short-term benefits Post- Long- 2014 employment term benefits benefits Cash Non- Long Term- salary Cash monetary Super- service ination Specified executives and fees bonuses benefits annuation leave benefits Total $'000 $'000 $'000 $'000 $'000 $'000 $'000

G Ford 281 - 12 40 30 - 363 Executive General Manager Safety, Assurance and Environment Blank R Franklin* ------Acting General Counsel (from 17 February 2014 until 9 March 2014) Blank R Green 397 - 6 45 262 1 711 Acting Executive General Manager Projects (from 16 December 2013 until ceased 21 May 2014) Executive General Manager Network (until 15 December 2013) Blank M Hope 307 - 7 26 -- 340 Chief Financial Officer (from 27 March 2014) Acting Chief Financial Officer (from 29 August 2013 until 26 March 2014) Blank N Le Mare 171 - 3 22 - 24 220 General Counsel (until ceased 2 January 2014) Blank A Matthews 109 - 2 12 -- 123 Acting Executive General Manager Access and Business Strategy (from 13 January 2014) Blank B Moller 53 -- 5 - - 58 Acting Chief Financial Officer (until 28 August 2013) Blank T Ripper 343 - 8 45 8 - 404 Acting Executive General Manager Network (from 16 December 2013) Executive General Manager Access and Business Strategy (until 15 December 2013)

73 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

Short-term benefits Post- Long- 2014 employment term benefits benefits Cash Non- Long Term- salary Cash monetary Super- service ination Specified executives and fees bonuses benefits annuation leave benefits Total $'000 $'000 $'000 $'000 $'000 $'000 $'000

M Ryan 355 - 9 45 -- 409 Executive General Manager Customer Service Blank K Wright 520 - 11 43 -- 574 Executive General Manager Rail Operations Blank Total 3,841 - 77 427 300 135 4,780

* This officer did not receive monetary benefits directly. Payments made to the company in which this officer is a Principal is disclosed in note 32(c). These amounts are not in addition to the amounts disclosed in the Key Management Personnel note of the Queensland Rail Limited financial statements as they were recharged by the company in accordance with the Managed Services Agreement.

74 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

Short-term benefits Post- Long- 2013 * employment term benefits benefits Cash Non- Long Term- salary Cash monetary Super- service ination Specified executives and fees bonuses benefits annuation leave benefits Total $'000 $'000 $'000 $'000 $'000 $'000 $'000

J Benstead 73 - 1 7 - - 81 Acting Chief Executive Officer Blank N Duce 43 - 1 4 - - 48 General Manager Human Resources Blank G Ford 48 - 2 6 - - 56 Executive General Manager Safety and Environment Test R Green 60 - 2 6 - - 68 Executive General Manager Network Blank B Moller 42 - 2 4 - - 48 Acting Chief Financial Officer Blank T Ripper 54 - 1 6 - - 61 Executive General Manager Access and Business Strategy Blank M Ryan 53 - 3 7 - - 63 Executive General Manager Customer Service Blank K Wright 69 - 2 6 - - 77 Executive General Manager Rail Operations Blank Total 442 - 14 46 - - 502

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013. These amounts are not in addition to the amounts disclosed in the Key Management Personnel note of the Queensland Rail Limited financial statements as they were recharged by the company in accordance with the Managed Services Agreement from 3 May 2013.

75 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

2014 2013* $'000 $'000

Aggregate performance bonus compensation Aggregate performance bonus compensation accrued for current period 10,437 (956) Aggregate compensation (including performance bonus compensation) to employees eligible for performance bonus compensation 129,100 18,351

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

2014 2013

Number of employees eligible for performance bonus compensation 1,071 979

The 2013 bonus accrued in the prior period was reversed in full in the current period as the consolidated entity did not meet all of its performance targets. The 2013 bonus was overaccrued when employee benefits liability was transferred from Queensland Rail Limited. This was reversed on 30 June 2013. The performance bonus compensation disclosed above is for the period 3 May 2013 to 30 June 2013. For full 12 months performance payment, refer to note 30 of Queensland Rail Limited 2012/13 financial statements. The following categories of employees are eligible for performance based at risk incentive bonus compensation: • specified executives; • other executives; • salaried employees; and • award employees. Performance bonus compensation paid to specified executives is granted upon approval by the Queensland Rail Board. Performance bonus compensation paid to other employees is granted upon approval by the Chief Executive Officer or in accordance with a subsidiary agreement. The amount of the compensation is determined by performance against key performance indicators set at the start of the year for employees or conditions of a subsidiary agreement for work units.

76 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

32 Key management personnel disclosures (continued)

(c) Transactions with members, directors and key management personnel During the prior reporting period, G Harley, deputy chairman of Queensland Rail and Queensland Rail Limited, was the chairman of Queensland Urban Utilities that provided utilities to Queensland Rail Limited. During the current and prior reporting period, D George, member of Queensland Rail and director of Queensland Rail Limited, was the Chief Executive Officer of Rail CRC Limited that provided key innovation services to Queensland Rail Limited. Queensland Rail Limited provided rental accommodation to Rail CRC Limited. During the current reporting period, from 17 February until 9 March 2014, R Franklin, specified executive of Queensland Rail and Queensland Rail Limited, was a principal of the corporation Franklin Athanasellis Cullen Pty Ltd that had provided key management personnel and consultancy services to Queensland Rail and Queensland Rail Limited. During the reporting period, G Ford, specified executive of Queensland Rail and Queensland Rail Limited, was a director of the corporation Rail Industry Safety and Standards Board that had provided corporate memberships to Queensland Rail Limited. During the reporting period, a family member of M Ryan, specified executive of Queensland Rail and Queensland Rail Limited, received reimbursement for the Vince O’Rourke scholarship from Queensland Rail. The specified executives have the individual capacity to control or significantly influence the financial and operating policies of another corporation but not Queensland Rail. All figures displayed below are exclusive of GST.

Consolidated 2014 2013* $'000 $'000

Utilities - Queensland Urban Utilities - 15 Professional services - Rail CRC Limited 509 42 Rental revenue - Rail CRC Limited (180) (27) Consultancy fees - Franklin Athanasellis Cullen Pty Ltd 74 - Corporate membership - Rail Industry Safety and Standards Board 244 - Vince O'Rourke scholarship 4 - 651 30

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

77 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

33 Contingencies

The consolidated entity had contingencies at reporting date in respect of:

(a) Contingent liabilities Issues relating to common law claims and product warranties are dealt with as they arise. There were no material contingent liabilities requiring disclosures in the financial statements other than as set out below. Litigation A number of common law claims are pending against the consolidated entity. Provisions are taken up for some of these exposures based on the Board's determination and are included as such in note 24. As at reporting date, the following cases were filed in the courts naming Queensland Rail as defendant:

Consolidated Parent 2014 2013 2014 2013

Number of cases before the High Court 1 - 1 - Number of cases before the Supreme Court 3 - 1 - Number of cases before the District Court 8 - - - Number of cases before the Magistrates Court 1 - - -

It is not possible to make a reliable estimate of the final amount payable, if any, in respect of the litigation before the courts at this time. The consolidated entity has disclosed the number of cases filed in the courts for the first time as at 30 June 2014. This is a regulatory requirement for all statutory bodies. Due to the late establishment of Queensland Rail in May 2013, these numbers were not disclosed. Availability of similar numbers as at 30 June 2013 (comparatives) is not practical. Guarantees and letters of credit For information about guarantees and letters of credit given by the consolidated entity, refer to note 26(b). Deed of Cross Guarantee Neither the company nor its subsidiary were a party to a deed of cross guarantee at reporting date.

(b) Contingent assets For information about guarantees given to the consolidated entity, refer to note 26(b).

78 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

34 Commitments

The future commitments of the consolidated entity (including GST) at reporting date were as follows:

(a) Capital commitments Capital expenditure contracted for at reporting date but not recognised as liabilities is payable as follows:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Within one year 96,048 187,156 - - Later than one year but not later than five years 817 28,923 - - Later than five years - - - - 96,865 216,079 - -

(b) Lease commitments Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Within one year 11,192 11,145 - - Later than one year but not later than five years 29,321 43,549 - - Later than five years 10,901 28,059 - - 51,414 82,753 - -

The above commitments flow primarily from operating leases of property. These leases, with terms mostly ranging from one to ten years, generally provide the consolidated entity with a right of renewal at which times the lease terms are renegotiated. The lease payments comprise a base amount, while some property leases also contain a contingent rental, which is based on either the movements in the Consumer Price Index or another fixed percentage as agreed between the parties.

(c) Lease commitments receivable: where the company is the lessor Minimum lease payments receivable but not recognised in the financial statements are receivable as follows:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Within one year 5,430 3,545 - - Later than one year but not later than five years 10,470 9,761 - - Later than five years 39,574 40,315 - - 55,474 53,621 - -

The prior year lease commitments receivable have been restated due to an indexation factor of 5% applied annually to one long-term lease rather than every five years.

79 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

34 Commitments (continued)

(d) Operating commitments Operating expenditure, excluding leases, contracted for at reporting date but not recognised as liabilities is payable as follows:

Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Within one year 104,707 - - - Later than one year but not later than five years 2,617 - - - Later than five years - - - - 107,324 - - -

Operating commitments include inventory commitments of $33.6 million. The consolidated entity has disclosed its operating commitments, excluding leases, for the first time as at 30 June 2014. This is a regulatory requirement for all statutory bodies. Due to the late establishment of Queensland Rail in May 2013, these commitments were not disclosed. Availability of similar commitments as at 30 June 2013 (comparatives) is not practical.

80 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

35 Related party transactions

(a) Subsidiaries Interests in subsidiaries are set out in note 36.

(b) Key management personnel Disclosures relating to key management personnel are set out in note 32.

(c) Transactions with related parties The following transactions occurred with related parties:

Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Sale of goods and services to subsidiaries - - 758,767 120,486 Dividend revenue from subsidiaries - - 212,932 138,610 Blank Dividend receivable from subsidiaries - - 212,932 138,610 Receivables from subsidiaries - current - - 169,874 537,015 Receivables from subsidiaries - non-current - - 31,335 31,375 Payables to subsidiaries - current - - - 355,736 Blank Shares in subsidiaries - - 2,845,324 2,845,324 Blank * The results for the prior year cover the period of 3 May 2013 to 30 June 2013. The current and non-current receivables transferred from subsidiaries on 3 May 2013 include the initial transfer of employee related liabilities from the subsidiary in accordance with the Queensland Rail Transit Authority Act 2013 amounting to $271.9 million. Deferred tax assets amounting to $72.3 million associated with these employee entitlements were also transferred on the same date.

(d) Loans to / from related parties Consolidated Parent 2014 2013 2014 2013 $ $ $ $

Loans to subsidiaries Beginning of the year - - - - Loans advanced - - 113,461 - Loans repayments received - - (83,361) - End of year - - 30,100 -

81 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

35 Related party transactions (continued)

(e) Transactions and outstanding balances with State of Queensland controlled entities The company is limited by shares with all shares held by the responsible Ministers on behalf of the State of Queensland. The company transacted with other State of Queensland controlled entities during the year as set out below:

Consolidated Notes 2014 2013* Nature of transaction $'000 $'000

Cash and cash equivalents 11 392,340 276,339 QTC short-term investments

Trade and other receivables , 1612 12,316 114,144 Transport service contracts and other accounts receivable

Current tax liabilities 26,138 - Current tax payable

Other current assets 15 - 423 Prepaid income tax

Borrowings 26 3,000,000 3,099,817 Unsecured loan facility (QTC)

Trade and other payables 23 196,225 141,483 Interest payable, accounts payable and dividend payable

Other current liabilities 25 2,760 3,067 Clearing accounts

Contributed equity 29 (7,756) - Capital distributions

Revenue 5 1,629,172 252,756 Sales, community service obligation, government concessions and interest revenue

Interest expense 9 219,251 37,724 QTC loan interest (includes financing cost)

Other expenses 9 154,956 17,972 Payroll tax, income tax, audit fees, licences and permits and supplies and services

Dividends declared 31 170,884 115,843 Dividend declared

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

82 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

35 Related party transactions (continued)

Parent Notes 2014 2013* Nature of transaction $'000 $'000

Cash and cash equivalents 11 - - QTC short-term investments

Trade and other receivables , 1612 - - Transport service contracts and other accounts receivable

Current tax liabilities 26,138 1,154 Current tax payable

Other current assets 15 - - Prepaid income tax

Borrowings 26 - - Unsecured loan facility (QTC)

Trade and other payables 23 170,884 115,843 Interest payable, accounts payable and dividend payable

Other current liabilities 25 - - Clearing accounts

Contributed equity 29 (7,756) - Capital distributions

Revenue 5 - - Sales, community service obligation, government concessions and interest revenue

Interest expense 9 - - QTC loan interest (includes financing cost)

Other expenses 9 32,136 5,138 Payroll tax, income tax, audit fees, licences and permits and supplies and services

Dividends declared 31 170,884 115,843 Dividend declared

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

83 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

36 Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in accordance with the accounting policy described in note 1(b).

Country of Name of entity incorporation Class of shares Equity holding 2014 2013 % %

Queensland Rail Limited Australia Ordinary 100 100 On Track Insurance Pty Ltd Australia Ordinary 100 100

The principal activities of Queensland Rail Limited are to carry out the key objectives of its parent, Queensland Rail, in accordance with the QRTA Act. Queensland Rail Limited retains title of all non-employee related assets, liabilities and contracts. The management of its assets are effected through the provision of employee services from Queensland Rail under a Managed Services Agreement. The principal activities of On Track Insurance Pty Ltd are the provision of insurance coverage for all claims relating to events for both former parent, Aurizon Operations Limited (formerly QR National Limited) and Queensland Rail Limited up until 30 June 2010. The Auditor-General of Queensland is the authorised auditor of Queensland Rail Limited and On Track Insurance Pty Ltd.

37 Remuneration of auditors

During the year the following fees were paid or payable for services provided by the auditor of the consolidated entity:

(a) Audit services Consolidated Parent 2014 2013 2014 2013 $'000 $'000 $'000 $'000

Auditor-General of Queensland Audit and review of financial reports 457 544 47 28 Total auditors' remuneration 457 544 47 28

84 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

38 Reconciliation of profit after income tax to net cash inflow from operating activities

Consolidated Parent 2014 2013* 2014 2013* $'000 $'000 $'000 $'000

Profit for the year 213,605 37,715 212,932 138,610 Depreciation and amortisation 317,584 51,419 - - Amortisation of prepaid access facilitation charges (1,577) (263) - - Losses on sale of non-current assets 9,174 1,190 - - Unrealised (gain) / loss on derivatives - 3 - - Impairment of trade receivables 84 (20) - - Inventory obsolescence 930 215 - - Change in operating assets and liabilities: (Increase) / decrease in trade debtors 97,454 (34,636) (74,322) (138,610) (Increase) / decrease in inventories (26,328) (1,233) - - (Increase) / decrease in other operating assets 813 (885) (61,519) (1,154) Increase / (decrease) in trade creditors 18,021 (2,804) (1,147) 19,965 Increase / (decrease) in other liabilities 60,460 18,267 24,941 1,221 Increase / (decrease) in other provisions (14,428) (17,447) (25,266) (7,027) Net cash inflow from operating activities 675,792 51,521 75,619 13,005

* The results for the prior year cover the period of 3 May 2013 to 30 June 2013.

85 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

39 Queensland Rail Limited consolidated financial information

The Queensland Rail Limited consolidated entity, comprising Queensland Rail Limited and its subsidiary, On Track Insurance Pty Ltd, is wholly owned by Queensland Rail. Queensland Rail is required to table an annual report with the Queensland State Government which includes the Queensland Rail financial statements. This is in accordance with section 62 of the Financial Accountability Act 2009. The financial statements of Queensland Rail Limited are not required to be included in the Queensland Rail annual report. The financial results of the Queensland Rail Limited consolidated entity are significant and represent a substantial portion of the Queensland Rail consolidated entity’s results. This note is disclosed to provide users of these financial statements more clarity concerning the financial results of the Queensland Rail consolidated entity. A summarised version of the Queensland Rail Limited consolidated financial statements are disclosed below:

2014 2013 $'000 $'000

Consolidated statement of comprehensive income

Revenue 1,969,183 1,916,418 Expenses (1,476,148) (1,506,185) Operating profit 493,035 410,233

Net finance costs (183,310) (209,397) Profit before income tax 309,725 200,836

Income tax expense (96,120) (56,032)

Profit for the year 213,605 144,804

Other comprehensive income for the year, net of tax (314) 1,347

Total comprehensive income for the year 213,291 146,151

86 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

39 Queensland Rail Limited consolidated financial information (continued)

2014 2013 $'000 $'000

Consolidated balance sheet

Current assets 582,278 883,956 Non-current assets 6,320,392 6,318,068 Total assets 6,902,670 7,202,024

Current liabilities 624,922 997,710 Non-current liabilities 3,532,165 3,459,090 Total liabilities 4,157,087 4,456,800

Net assets 2,745,583 2,745,224

Total equity 2,745,583 2,745,224

(13,805,340) (14,404,048) 2014 2013 $'000 $'000

Consolidated statement of changes in equity

Balance at the beginning of the financial year 2,745,224 2,737,683

Total comprehensive income for the year 213,291 146,151 Transactions with owners in their capacity as owners (212,932) (138,610)

Balance at end of year 2,745,583 2,745,224

2014 2013 $'000 $'000

Consolidated statement of cash flows

Cash flows from operating activities 738,783 409,160 Cash flows from investing activities (353,684) (469,155) Cash flows from financing activities (238,427) (2,812) Net increase / (decrease) in cash and cash equivalents 146,672 (62,807)

Cash and cash equivalents at the beginning of the financial year 262,562 325,369

Cash and cash equivalents at end of year 409,234 262,562

87 Queensland Rail Notes to the financial statements 30 June 2014 (continued)

40 Events occurring after the reporting period

No matters or circumstances have arisen since the end of the financial year which significantly affected, or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

88 Queensland Rail Management certificate 30 June 2014

These general purpose financial statements have been prepared pursuant to section 62(1) of the Financial Accountability Act 2009 (the Act), relevant sections of the Financial and Performance Management Standard 2009 and other prescribed requirements. In accordance with section 62(1)(b) of the Act we certify that in our opinion: (a) the prescribed requirements for establishing and keeping the accounts have been complied with in all material aspects; and (b) the statements have been drawn up to present a true and fair view, in accordance with prescribed accounting standards, of the transactions of Queensland Rail and its controlled entities for the financial year ended 30 June 2014 and of the financial position at the end of that year.

M Klug Chairman

Brisbane, Qld 28 August 2014

89 Queensland Rail 30 June 2014

INDEPENDENT AUDITOR'S REPORT

To the Board of Queensland Rail

Report on the Financial Report I have audited the accompanying financial report of Queensland Rail, which comprises the balance sheets as at 30 June 2014, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and certificates given by the Chairman of the entity and the consolidated entity comprising the entity and the entities it controlled at the year’s end or from time to time during the financial year. The Board’s Responsibility for the Financial Report The Board is responsible for the preparation of the financial report that gives a true and fair view in accordance with prescribed accounting requirements identified in the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009, including compliance with Australian Accounting Standards. The Board’s responsibility also includes such internal control as the Board determines is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility My responsibility is to express an opinion on the financial report based on the audit. The audit was conducted in accordance with the Auditor-General of Queensland Auditing Standards, which incorporate the Australian Auditing Standards. Those standards require compliance with relevant ethical requirements relating to audit engagements and that the audit is planned and performed to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control, other than in expressing an opinion on compliance with prescribed requirements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board, as well as evaluating the overall presentation of the financial report including any mandatory financial reporting requirements approved by the Treasurer for application in Queensland. I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion. Independence The Auditor-General Act 2009 promotes the independence of the Auditor-General and all authorised auditors. The Auditor-General is the auditor of all Queensland public sector entities and can be removed only by Parliament. The Auditor-General may conduct an audit in any way considered appropriate and is not subject to direction by any person about the way in which audit powers are to be exercised. The Auditor-General has for the purposes of conducting an audit, access to all documents and property and can report to Parliament matters which in the Auditor-General’s opinion are significant.

90 Queensland Rail 30 June 2014

INDEPENDENT AUDITOR'S REPORT (continued) Opinion In accordance with s.40 of the Auditor-General Act 2009 - (a) I have received all the information and explanations which I have required; and (b) in my opinion - (i) the prescribed requirements in relation to the establishment and keeping of accounts have been complied with in all material respects; and (ii) the financial report presents a true and fair view, in accordance with the prescribed accounting standards, of the transactions of Queensland Rail for the financial year 1 July 2013 to 30 June 2014 and of the financial position as at the end of that year. Other Matters - Electronic Presentation of the Audited Financial Report Those viewing an electronic presentation of these financial statements should note that audit does not provide assurance on the integrity of the information presented electronically and does not provide an opinion on any information which may be hyperlinked to or from the financial statements. If users of the financial statements are concerned with the inherent risks arising from electronic presentation of information, they are advised to refer to the printed copy of the audited financial statements to confirm the accuracy of this electronically presented information.

A M GREAVES FCA FCPA Queensland Audit Office Auditor-General of Queensland Brisbane

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