Annual Report 2006 DELIVERING VALUE

Contents

Delivering value Key highlights

Delivering on promises 1 Chairman & Managing Director’s overview

Delivering new projects 5 Cover image Delivering congestion solutions 9 The Light Horse intersection rises 23 metres above the ground creating Delivering service and savings 13 a striking architectural feature on Westlink M7, the new motorway opened by Transurban Delivering benefits to Group and its partners in Sydney, Australia, the community 17 in December 2005.

Westlink M7 completes the missing link Delivering in new markets 19 in Sydney’s orbital motorway network. It is attracting new growth to an already booming Delivering for success 21 regional economy in western Sydney and is Corporate Governance set to deliver increasing revenues to Transurban. Delivering financials 29

Dollar values are provided in Australian currency unless otherwise specifi ed. e-TAG® is a registered trade mark of CityLink Melbourne Limited ACN 070 810 678 Roam® and Roam Express® are registered trade marks of Transurban Limited ACN 098 143 410 Transurban owns and manages a diversified portfolio of toll road assets. They deliver growing, predictable, inflation protected cash flows. As a pioneer in its business, Transurban has developed the wide range of skills required to maximise the value and successfully manage the risks involved in developing and managing toll roads. This annual report demonstrates how those skills delivered for investors in FY06. The Group is well placed to carefully select new opportunities as the global market for electronic toll roads rapidly expands.

annual report 2006 DELIVERING VALUE FY06 was a successful year for WE OPENED A NEW TOLL ROAD...

ACQUIRED A SECOND...

TOOK CONTROL OF O&M ON A THIRD...

SIGNED A $903M DEAL...

AND INCREASED DISTRIBUTIONS BY 43%.

ii annual report 2006 Transurban with five significant highlights

Transurban and its partners opened Westlink M7 in Sydney eight months early. Transurban delivered the full electronic tolling system ten months early and earned a bonus of $8.3 million.

The Pocahontas Parkway in Richmond, Virginia, became Transurban’s fi rst toll road in the United States in June 2006.

Transurban bought out the operations and maintenance contractor for Hills M2 in Sydney in May 2006, following the acquisition of Hills Motorway Group in FY05.

Transurban and the Victorian Government agreed to add 75 kilometres of new lanes to Melbourne’s major economic spine, the West Gate-CityLink-Monash freeway corridor. The project will greatly enhance the value of our cornerstone asset.

Transurban paid total distributions of 50 cents per security to its investors for FY06.

annual report 2006 iii DELIVERING ON PROMISES

Transurban acquires its first US asset The latest toll road in the Transurban portfolio is the Pocahontas Parkway. It crosses the James River near Richmond in Virginia. The Parkway services an area poised for growth over the next 20 years making the road an attractive investment.

Transurban’s portfolio of toll road Asset mix assets has been built on a unique Pocahontas Parkway CityLink combination of key capabilities: - 100% owned & operated - 100% owned & operated - Acquired Virginia, US, 2006 - Opened Melbourne 2000 – Traffi c modelling – Full electronic (open road) tolling 4% 54% – Customer service – Road performance – Stakeholder engagement 11% – Concession management – Project delivery 31% – Financial management Westlink M7 Hills M2 - 47.5% owned, customer - 100% owned & operated service & tolling provider - Acquired Sydney 2005 - Opened Sydney 2005

1 annual report 2006 Chairman and Managing Director’s overview

Delivering value for investors Financial results As a result of non-cash items such This has been a landmark year for Transurban aims to deliver a growing as depreciation, the Group recorded Transurban. We delivered for investors stream of distributions to investors. an accounting loss after tax of with total distributions of 50 cents per Total distributions for 2006 were up $60.9 million, compared to $90.4 million security. We acquired one new road, 43 per cent on the previous year. the year before. enhanced existing ones and achieved All previous Transurban distributions The new international accounting rules strong cash fl ows from our operating were 100 per cent tax deferred which (AIFRS) reduced the loss by $3.4 million, assets. meant they were not assessable for making the loss fi gures for 2005 and In Sydney, we completed the operational income tax, but deducted from the 2006 not directly comparable. takeover of Hills M2, and opened investor’s cost base for Capital Gains Total toll and fee revenues were Westlink M7 eight months early and Tax purposes. Because of the takeover $404.1 million, up from $297.8 million, delivered its full electronic tolling of Hills Motorway Group and other an increase of 35.7 per cent. system ten months early. Group developments, 80.6 per cent of the distributions paid for FY06 are We acquired our fi rst toll road in the Distribution growth now tax deferred. The remaining United States, the Pocahontas Parkway, 60 19.4 per cent are assessable for income and were named the preferred tenderer 50 54.0 tax. (Full details are published in your 50.0 for another project in the highly Transurban Annual Tax Statement populated Washington DC area. 40 mailed in August.) 35.0 We agreed to a $903 million 30 On 20 July 2006, the High Court ruled in 25.5 forecast redevelopment of Melbourne’s premier 20 20.0

favour of Transurban in a long running per security cents road link, a project that will greatly tax dispute. The case revolved around 10 enhance the value of our cornerstone the tax treatment of Concession Fees 5.3 asset, CityLink. 0 that we are required to pay to the State 2002 2003 2004 2005 2006 2007 As an owner and manager of toll roads of Victoria under the Melbourne CityLink we focus on extracting value for our Concession Deed. The court ruled that Toll and fee revenue growth investors over the life of long concessions. the fees are fully tax deductible when 500 Our business model is not just about issued and awarded costs to Transurban. the development of high quality The ruling has no impact on the amount 400 infrastructure. It is about providing of distributions Transurban pays 404.1 services over many decades to the investors. Distributions will continue stakeholders who use the infrastructure. to be substantially tax deferred in the 300 297.8 medium term. Employees in our operating businesses 254.5 231.1 have a strong customer service culture. Our distributions are underpinned by $ million 200 They work closely with people in our the strong cash fl ows generated by our

business development teams to maximise toll roads and our capital management 100 the community benefi ts we deliver on strategy announced in FY05. Although our existing roads and in new projects. these are growing strongly, the Group 0 will continue to report accounting losses 2003 2004 2005 2006 We would like to pay tribute to the work for several years as we depreciate our of all our employees in FY06—our results assets. Depreciation is a non-cash item Free cash fl ow growth are built on their efforts. and the accounting loss therefore does 250 not affect our ability to pay cash 223.4 distributions to investors. 200

In FY06, we recorded a 22.2 per cent 182.8

increase in free cash fl ow. The fi gure 150 was $223.4 million, up from $182.8 million in FY05. 127.9 $ million 100 97.3

50

0 2003 2004 2005 2006 annual report 2006 2 Traffi c and revenue continued to grow in corridor. The Government predicts it will Hills M2 line with our forecasts and did not appear increase traffi c capacity by 55 per cent. The opening of Westlink M7 has to be impacted by higher petrol prices. The project will encourage more traffi c signifi cantly increased traffi c on Hills M2 A study commissioned by Transurban onto CityLink. The increased revenue which connects to it. Traffi c over the year in its two biggest markets, the Australian will be shared equally with the State, was up 7.8 per cent. In the second half, cities of Melbourne and Sydney, found but only after Transurban has recovered following the opening of Westlink M7, that 74 per cent of people were ‘totally its costs. These include the $166 million traffi c jumped 14.3 per cent. reliant’ on their cars. invested on Southern Link and the cost The increased traffi c delivered to Hills M2 of traffi c disruption during construction. In Melbourne, we studied traffi c in by Westlink M7 vindicates Transurban’s the CityLink corridor at a time of rising This deal demonstrates the value that decision to acquire Hills Motorway Group. petrol prices. CityLink traffi c grew we can deliver to the community and Our forecasts on how much Westlink M7 2.9 per cent in the period studied. Traffi c investors through long term ownership would increase Hills M2 traffi c have on other roads in the same corridor of major freight and commuter routes. proved to be accurate. declined by 4.3 per cent. This suggests Hills M2 traffi c will receive a further boost Westlink M7 people favoured our road, presumably after the opening of the Lane Cove Tunnel, to save time and fuel, over alternate Westlink M7 opened in Sydney in expected to be late 2006–early 2007. congested routes. December 2005, eight months ahead of schedule. Transurban is the tolling and Transurban has made signifi cant CityLink customer service provider for the toll service improvements for Hills M2 The biggest news on CityLink was road. We delivered the tolling system customers. Six manual toll booths were the announcement of a $903 million ten months ahead of schedule and two replaced by four full electronic express agreement between Transurban and months ahead of construction completion. lanes which began operating in January the Government of Victoria to fund The early delivery earned the Group 2006. This delivers quicker, safer a widening and upgrade of Melbourne’s an $8.3 million performance bonus. journeys and increases traffi c capacity major economic spine, the West Gate- and potential revenue growth. Transurban began FY06 with a 40 per cent CityLink-Monash freeway corridor. stake in Westlink M7. During the year Operating cost synergies for the Group The Southern Link section of CityLink we purchased an additional 5 per cent of $5.4 million have been delivered in sits in the middle of the corridor which equity interest for $47.4 million. FY06. An additional $3.6 million has connects Melbourne’s port and central After the end of FY06 we exercised our been identifi ed for progressive delivery business district with industrial areas pre-emptive right to purchase an over the next 24 months. west of the city and manufacturing additional 2.5 per cent, taking our to the east. Pocahontas Parkway holding to 47.5 per cent. Under the agreement, the State will Transurban acquired its fi rst toll road Westlink M7 is performing well, assign Transurban all remaining and in the United States, the Pocahontas with traffi c increasing by more than future Concession Note liabilities. Parkway in Virginia, in June 2006. 16 per cent since the road opened. This means Transurban will effectively While traffi c volumes are slightly below The Parkway is a 14-kilometre road that bring forward the Concession Fees due forecast, the average tolled trip length services an area near the city of Richmond to the State over the life of the CityLink is 35 per cent higher than expected. which is poised for signifi cant growth concession. It will pay the State As a result revenue is achieving our over the next 20 years. Traffi c on $614 million over three years instead forecast levels for opening. the road is forecast to substantially of $2.9 billion between 2014 and 2034, increase over the next eight years as which is a signifi cant fi nancial benefi t Industrial and commercial development the development of the surrounding for our security holders. in the corridor continues to outstrip area takes place. predictions. An independent forecast The Government will use the $614 million by CB Richard Ellis says one quarter Our equity investment in Pocahontas plus $123 million of their own funds to of all new industrial fl oor space in is up to A$249 million/US$191 million, upgrade the freeways that connect to metropolitan Sydney in the next two funded from our Distribution each end of Southern Link. Transurban years will be built in the Westlink M7 Reinvestment Plan. The project is will invest a further $166 million on corridor. This will increase business and expected to generate an equity internal enhancements to Southern Link. freight traffi c. rate of return of 12.6 per cent and is The project will add extra lanes and conservatively geared with a 70:30 implement an advanced freeway debt-to-equity ratio. management system along the entire

3 annual report 2006 US projects system and the development of our fi rst help position us to take advantage of In FY05, Transurban secured exclusive Sustainability Report, due for publication future projects. in late 2006. negotiating rights for a 23 kilometre In Australia, the toll road industry will HOT lane system that makes up part of CSR is an important strategy for aligning continue to grow. The demand for new the Capital Beltway orbital road around our business with the long term interests road infrastructure in the next 20 to 30 Washington. HOT lanes are tolled lanes of our stakeholders. Without their years greatly exceeds the ability of built next to free lanes which are often support, we won’t have a sustainable governments to pay without massive heavily congested. Drivers can choose business. Our aim is to understand our increases in debt or taxes. Private sector to pay a toll to avoid the congestion impacts on society and the environment, fi nancing is the alternative. in the free lanes. to enhance positive impacts and Research commissioned by Transurban minimise negative impacts. In FY06, Transurban was selected as estimates government spending on the preferred developer for the I-95/395 Conclusion economic and social infrastructure project, a 90 kilometre bus rapid transit would have to increase by $14 billion In this overview, we have focussed and HOT lane system just south of each and every year between now and on the most signifi cant events of Washington DC. 2020, if we want to wipe out Australia’s the year. There were other important infrastructure backlog through public Transurban’s international business achievements and these are covered investment only. development priority is to reach throughout this annual report. fi nancial close on the Capital Beltway The sheer size of the road infrastructure Transurban has a low risk, diversifi ed project in FY07. challenge dictates the need for private portfolio of toll road assets generating investment. Without it, critical road Our success in Virginia refl ects strong cash fl ows over the long term. projects will be delayed for many years the reputation we have earned on our The growing, predictable and infl ation with a major loss of economic Australian roads. We work closely with protected nature of those cash fl ows development and growth opportunities. governments to ensure motorists enjoy is attractive to many investors. a seamless road experience across Transurban has the combination of There are signifi cant opportunities for networks with two or more different operational, fi nancial, construction growth in the United States, a market road operators. Our pioneering experience management and technology skills to in which we are now well established. in electronic tolling and customer roll out new projects and to maximise We have taken the time to develop service is well known and in demand returns from our existing assets. in the United States market. the strong relationships with partners, governments and road authorities that Transurban investors can look forward New tolling businesses to a rewarding future. Transurban introduced a new tolling business under the Roam® and Roam Express® brand names to service the Sydney market. Roam was set up to provide customer service on Westlink M7. Roam Express serves Hills M2 customers. The Lane Cove Tunnel, in which Transurban has no equity, selected Roam Express as its preferred tag and pass provider. Transurban now Laurence G Cox AO Kimberley Edwards has a 20 per cent share of Sydney’s tag and pass market and we expect this Chairman Managing Director to grow in future years.

Corporate social responsibility We made good progress in FY06 in implementing corporate social responsibility (CSR) programs throughout the business. Initiatives include the development of a Group wide framework for community relations, an environmental management annual report 2006 4 DELIVERING NEW PROJECTS

Westlink M7 creates economic growth Westlink M7 has been a magnet for economic development in western Sydney—fast tracking industrial, commercial and residential development that will drive more traffic and revenue onto the road. More than 665,000 square metres of industrial land is being developed along the M7 corridor. A 2,450 hectare western Sydney employment hub is planned with the potential to create up to 36,000 jobs when fully developed. Westlink M7 also links the two largest residential developments in New South Wales. Around 160,000 new homes will be built over the next 30 years and will accommodate more than 350,000 people.

5 annual report 2006 This project is an excellent example of what can be achieved through governments and the private sector working together. John Howard, Prime Minister of Australia, on Westlink M7

During FY06, Transurban opened Around the time the road opened Key facts – Westlink M7 Westlink M7 ahead of schedule and Transurban: – 40-kilometre motorway in Sydney, fi nalised the operational takeover – Purchased an additional 5 per cent Australia of Hills M2. The Group also acquired equity inerest in Westlink M7 for $47.4 – Construction completed December its fi rst United States asset, the million. After FY06, Transurban 2005—8 months ahead of schedule exercised its pre-emptive right to Pocahontas Parkway in Richmond, purchase an additional 2.5 per cent, – Tolling system delivered 10 months Virginia. which will increase its holding to 47.5 ahead of schedule and 2 months per cent. ahead of construction Westlink M7 opens eight months ahead – Owned 47.5% Transurban, of schedule – Renegotiated its bank debt facilities and secured a lower interest rate 47.5% Macquarie Infrastructure Transurban and its partners opened because the motorway and tolling Group, 5% Leighton (September 2006) Westlink M7 to traffi c in December 2005, system were successfully delivered. – eight months ahead of schedule. Revenue on track to meet forecasts The early opening saved the Westlink Westlink Motorway successfully – Strong community & business support consortium $90 million on capitalised negotiated early payment of the Abigroup – Key industrial and residential interest. Leighton Joint Venture design and construction bonus, paying $61 million growth corridor Transurban earned a performance this year rather than approximately – Toll increases in line with CPI bonus of $8.3 million for delivering $100 million in 2008. the tolling and customer service system – Concession until 2037 ahead of schedule and in time for the Westlink M7 opening. Westlink M7 is the missing link in Sydney’s orbital motorway network. The 40-kilometre, fully electronic toll road joins three motorways—Hills M2, the M4 and M5. When tolling began in January 2006, weekday traffi c averaged 89,174. By June, this fi gure had increased by more than 16 per cent to 103,912.

MONA VALE Major freight companies now have a TO NEWCASTLE Legend direct link to the signifi cant number of MARSDEN HORNSBY PARK F3 Westlink M7 new industrial parks along the road and Transurban asset can bypass Sydney on the new route. CASTLE HILL Freeways PACIFIC While reported traffi c volumes to date M2 HIGHWAY Toll roads are slightly below forecast, the average MT.DRUITT Secondary routes Tunnel under construction tolled trip length—currently around MANLY Tunnels RYDE 12.5 kilometres—is 35 per cent higher TO PENRITH PARRAMATTA EASTERN than expected. CREEK LANE COVE TUNNEL HARBOUR HARBOUR M7 M4 BRIDGE TUNNEL SYDNEY Westlink M7’s Light Horse interchange CROSS CITY TUNNEL LEICHHARDT BONDI JUNCTION

EASTERN Hoxton Park Sydney Airport Bankstown Airport DISTRIBUTOR LIVERPOOL Airport HOXTON PARK

M5 Port M5 EAST Botany

HUME PRINCES HIGHWAY HIGHWAY 0 124 6 8 kms N mls TO CANBERRA TO WOLLONGONG 0 12345 annual report 2006 6 Key facts – Hills M2 Hills M2 traffi c continues to increase The increase in traffi c is due to a number – 21-kilometre motorway in Sydney, Since acquiring Hills M2 in June 2005, of factors. Australia Transurban has delivered increased – The opening of Westlink M7 at the traffi c, synergies and cost savings for – Acquired by Transurban in June 2005 western end of the motorway, and investors, and signifi cant road and – Express Lanes introduced in service improvements for customers. – The opening of new Express Lanes January 2006 on the Hills M2 (see page 11 for more The M2 acquisition provided synergies details). – Tollaust (M2 operator) acquired in that Transurban estimated would deliver May 2006 cost savings of $5 million to $6 million Construction of the Lane Cove Tunnel per annum. Actual cost savings of has impacted M2 traffi c. However, – $5.4 million in synergies delivered; $5.4 million have been delivered in FY06. the new tunnel is expected to deliver $3.6 million identifi ed for delivery An additional $3.6 million has been additional traffi c growth when it opens over next 24 months identifi ed for progressive delivery over in late 2006–early 2007. – Direct link to Westlink M7 and the next 24 months. Lane Cove Tunnel (expected to In December 2005, Transurban open late 2006–early 2007) announced the purchase of Tollaust, – Strong residential and commercial the M2 operator, for $38.9 million growth corridor (including acquisition costs). Under its contract, Tollaust was entitled to traffi c – Concession until 2042 incentive payments on Hills M2. These payments, which are estimated to exceed $200 million in nominal terms over the life of the concession, will now stay within Transurban. Traffi c and revenue have both grown strongly. Hills M2 toll revenue (net of GST and provisioning for doubtful debts) for FY06 was $95.8 million, an increase of 7.9 per cent. Total traffi c numbers increased by 7.8 per cent year on year.

TO NEWCASTLE Legend MARSDEN HORNSBY PARK F3 Hills M2

CASTLE HILL Transurban asset

PACIFIC Freeways M2 HIGHWAY Toll roads

MT.DRUITT Secondary routes

Tunnel under MANLYconstruction CHATSWOOD RYDE TO PENRITH Tunnels PARRAMATTA EASTERN CREEK LANE COVE TUNNEL HARBOUR HARBOUR M7 BRIDGE TUNNEL M4 SYDNEY CROSS CITY TUNNEL Hills M2 Express Lanes were introduced LEICHHARDT BONDI JUNCTION in January 2006.

EASTERN Hoxton Park Sydney Airport Bankstown Airport DISTRIBUTOR LIVERPOOL Airport HOXTON PARK

M5 Port M5 EAST Botany

HUME PRINCES HIGHWAY HIGHWAY 0 124 6 8 kms N mls TO CANBERRA TO WOLLONGONG 0 12345

7 annual report 2006 WASHINGTON D.C.

Transurban acquires Pocahontas The Parkway gives Transurban Key facts – Pocahontas Parkway Parkway in US the opportunity to apply its operational – 14-kilometre/9-mile toll road in In June 2006, Transurban acquired expertise in the US, leveraging its Richmond, Virginia its fi rst US toll road—the Pocahontas electronic tolling management and – Transurban holds 99-year concession Parkway (Route 895), a four-lane, customer communication capabilities. to manage and operate the roadway hybrid cash/electronic toll road The Group is also working with the in Richmond, Virginia. Commonwealth of Virginia on the – 100 per cent of equity owned by Transurban The Group’s capital investment is development of two High Occupancy Toll expected to generate an equity internal (HOT) lane projects in Northern Virginia – Forecast equity internal rate of return rate of return of 12.6 per cent. on the I-95/395 and the I-495 Capital of 12.6% The project is conservatively geared Beltway (see pages 19 and 20 for more – Total upfront funding of with a 70:30 debt-to-equity ratio. details). A$817 million/US$604 million Strong business and residential growth – Equity commitment up to in the region will drive revenue growth A$249 million/US$191 million on the Parkway. – Represents 4 per cent of Transurban’s Opened in 2002, it was designed to portfolio facilitate development opportunities south-east of Richmond. – Services a strong growth area In 2005, traffi c using the Parkway grew at a rate of 6 per cent and revenue increased by 22 per cent. Daily traffi c Pocahontas Parkway provides the only is forecast to signifi cantly increase from crossing of the James River for around 15,000 in 2005 to approximately 10 kilometres/6 miles in either direction. 33,000 by 2012. The 14-kilometre/9-mile toll road links Interstates 95 and 295 and creates a southern bypass of Richmond, the capital of Virginia. It also provides the only crossing of the James River for 10 kilometres/6 miles in either direction, and facilitates access to Richmond International Airport. The Parkway is a vital transport link 76 195 RRICHMONDICHMOND for a development called Wilton on the 64 James. It is expected to provide 3,200 dwellings for upper-middle income 60 Richmond 60 households over the next 10 years, 60 International Airport 360 as well as new commercial and retail 1 5 space. In addition, 12 commercial and 150 95 residential developments are underway AIRPORT in the region. Strong population growth CONNECTOR 895 TOLL is also predicted for Richmond’s BOOTH POCAHONTAS Chesterfi eld and Henrico counties, TOLL 295 PLAZA PARKWAY where residents use the Parkway to 5 travel east-west. 150 Transurban will also arrange and manage Legend the construction of a direct link between 1 Transurban asset WILTON ON the Parkway and the airport, subject to Freeways THE JAMES 95 5 US federal fi nancial assistance. 288 Toll roads

Secondary routes 0 284 6 Tunnel under kms N mls construction 0 12345 annual report 2006 8

PETERSBURG DELIVERING CONGESTION SOLUTIONS

$903 million improvement project for Melbourne’s economic spine The West Gate-CityLink-Monash improvement project is one of the most significant upgrades to Victorian road infrastructure since the opening of CityLink in 2000. The project will optimise the corridor which links Melbourne’s manufacturing hub with the Port of Melbourne, CBD and Melbourne Airport, and carries essential freight and hundreds of thousands of commuters daily. The project will deliver a range of benefits including increased CityLink traffic and revenue, and quicker travel times and improved safety for commuters.

Tidal fl ow lanes are just one of the components of the advanced freeway management system that will be implemented as part of the $903 million upgrade.

9 annual report 2006 Our latest Melbourne project is a sensational outcome— it will slash travel times and increase traffic and revenue on CityLink. Vic Delosa, General Manager—Victoria

Transurban works closely with Revenue generated by the improvements Key facts - West Gate-CityLink-Monash governments to manage traffi c will be shared with the Government – Transurban worked closely with once Transurban has recovered all across urban road networks. the Victorian Government to develop Southern Link capital costs and any lost the project The Group develops new projects revenue during the construction period. which will reduce congestion and – The $903 million project will upgrade The project is expected to deliver deliver benefi ts to both the CityLink’s Southern Link and two the most signifi cant, high-tech road state-managed freeways—the Monash community and our investors. in Australia. The project includes tidal and West Gate fl ow lanes on the West Gate Bridge West Gate-CityLink-Monash corridor during peak periods, controlled entry – Traffi c fl ow is expected to increase Transurban and the Victorian to the freeways from ramps, and a by 55 per cent and generate higher Government reached a $903 million series of overpasses to separate traffi c traffi c and revenue for CityLink agreement in May 2006 to improve according to destination and eliminate – It is estimated peak period travel Melbourne’s most critical road link, dangerous weaving. times will reduce by 50 per cent the West Gate–CityLink–Monash The upgrades will allow CityLink’s corridor, without any new road tolls. – The project is estimated to generate Burnley and Domain tunnels to operate $14.5 billion in community benefi ts The project is a win-win-win for close to capacity during peak periods, government, the community and removing the need to artifi cially slow – Completion scheduled December Transurban security holders. traffi c fl ow due to bottlenecks created 2010 Together, Transurban and the Government at either end of the tunnels. will add an additional 75 kilometres of The Government predicts that peak bitumen to the corridor—one new lane travel times will halve, accidents will in each direction for 37.5 kilometres. decrease by 20 per cent, and community The Group will also work with the benefi ts will amount to approximately Government to implement a $14.5 billion. state-of-the-art electronic freeway management system along the entire corridor. The overall result will be an estimated additional capacity of 55 per cent, so extra traffi c will fl ow onto the Southern Link section of CityLink. It sits in the middle of the corridor between the Government- operated West Gate and Monash freeways. Legend Tidal fl ow Under the agreement, Transurban Road widening Freeway Management will provide the Government with System with ramp $614 million over the next three years. metering This will effectively bring forward future payments due for the right to collect tolls on CityLink, replacing a liability worth $2.9 billion in nominal terms. The Government will reinvest these payments to upgrade the Monash and West Gate freeways. Transurban will also invest $166 million to widen CityLink’s Southern Link to accommodate the increased traffi c in the corridor. The Group’s capital investment is forecast to generate an equity internal rate of return of 11.1 per cent.

annual report 2006 10 Key facts - Hills M2 Hills M2 express lanes keep CityLink road and safety improvements – 7.8% increase in traffi c in FY06 motorists moving Transurban has invested more than Transurban acquired Hills M2 in June $1.7 million on road and safety – Four express lanes replaced six 2005 and immediately commenced improvement projects that are expected manual toll booths at the main toll improvements to maximise traffi c fl ow to drive traffi c onto CityLink. plaza in January 2006 and revenue and optimise the customer Improvements were made to exit ramps – One full electronic lane can process experience. at three locations to improve traffi c fl ow at least 2,000 vehicles an hour while Transurban removed six toll booths at during peak periods, reduce congestion a cash-only booth can handle 400 the main toll plaza and introduced four and increase service levels for new express lanes to increase traffi c customers. These include: capacity and provide a quicker, safer – Flemington Road experience for customers. The new express lanes began operating in – Punt Road and Batman Avenue, and January 2006. – Kings Way and Power Street. One full electronic toll lane can process Several safety improvement projects at least 2,000 vehicles an hour, while a have also been delivered. cash-only booth can handle around 400. The new express lanes have increased – A Heavy Vehicle Speed Awareness the effi ciency of the motorway and System was implemented on the West removed the toll transaction delays Gate Freeway’s Bolte Bridge on-ramp. for express lane users. The system has reduced the number of truck rollovers. – Variable Speed Limit signs have been installed between the Burnley Tunnel exit and Glenferrie Road to manage vehicle speeds in the event of an incident. MONA VALE

MARSDEN PARK

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CAMPBELLTOWN CRONULLA Tullamarine-Calder freeway M31 Melbourne Legend Airport MEL interchange improvements M79 TULLAMARINE Freeways 43 FREEWAY Works continue on the $150 million project 40 Toll roads to improve one of Victoria’s worst traffi c M80 Secondary routes Under construction

trouble spots—the Tullamarine Freeway Tunnels CALDER and Calder Freeway interchange. Upgrades FREEWAY Essendon Airport Construction began in September 2005 31 and is progressing smoothly. Much of PRESTON the works are located beyond the road TULLAMARINE carriageway and are having a negligible CALDER 43 CCityLinkityLink [[WesternWestern Link]Link] impact on road availability and CityLink INTERCHANGE revenue. 8 M80 SUNSHINE 83 8 83 The project will alleviate the bottlenecks 79 that occur at the interchange. Traffi c fl ow MELBOURNEMELBOURNE Port of CCityLinkityLink 34 onto CityLink will be greatly improved. Melbourne [[SouthernSouthern Link]Link] Completion is scheduled for mid-2007.

M1 BURWOOD WEST GATE ALT FREEWAY 1 26

M1 ST KILDA ALT LAVERTON 1 M1

Works continue on the $150 million upgrade to the Tullamarine-Calder interchange.

GEELONG

annual report 2006 12 DELIVERING SERVICE AND SAVINGS

Cashless parking adds value for customers Transurban has developed a cashless parking system which allows customers to enter, park and exit a car park without visiting the pay station. The secure and convenient system uses a customer’s e-TAG® device and a new piece of technology called a Smartdisc® device. Both the e-TAG and Smartdisc devices are read at the car park’s boom gates, allowing registered customers to pay for their parking by debiting a nominated credit card. Cashless parking began operating at Melbourne’s Federation Square in August 2006.

e-TAG® is a registered trademark of CityLink Melbourne Limited. Smartdisc® is a registered trademark of Transurban Limited. 13 annual report 2006 We’ve demonstrated once again that active management of our roads and operations creates additional value for investors. Brendan Bourke, Group General Manager - Operations

Transurban actively manages its Now a fi ne is only issued after non- continued to attract new customers. toll road businesses to continually payment of an invoice and fi nal notice. They now comprise nearly 35 per cent of CityLink accounts opened each month. improve services to customers and CityLink increased taxi tolls by Access Accounts generated more than 30 per cent in January 2006, the fi rst returns to investors. $6.6 million in toll and fee revenue in FY06. rise in almost six years. The approved Transurban has grown rapidly from increase narrowed the gap between car CityLink closed its Bulla Road customer a company with one toll road to a Group price tolls and the fi xed toll charge for service centre in November 2005 and managing four major assets, three in taxi passengers using CityLink. consolidated over-the-counter services Australia and one in the United States. at the Lorimer Street centre which is Rear image cameras were introduced The Group has restructured its close to both Western Link and Southern to photograph the rear number plates operations to contain costs and ensure Link. The closure delivers an annual cost of vehicles using CityLink where drivers the lessons learned on CityLink are saving of $600,000. All permanent have not made arrangements to pay. applied in the new assets. Teams employees at Bulla Road were offered Previously cameras could only take an supporting customer service and tolling the opportunity for redeployment. image of front number plates. The operations provide ‘shared services’ introduction of rear image cameras has CityLink reports its performance on across all our businesses. increased the capture rate of number customer service targets in the CityLink CityLink plates leading to increased trips billed Scorecard. It is published six monthly for to motorists. the periods ending June and December Initiatives during the year have each year. CityLink met or exceeded all demonstrated the benefi ts of active Access Accounts for occasional CityLink its service targets in FY06. management. Traffi c grew by users who do not have an e-TAG account 3.05 per cent. There was a 4.5 per cent increase in toll prices. In addition, we CityLink scorecard achieved an uplift of 3.4 per cent from CityLink customer service target FY06 avg. result a number of revenue initiatives. The additional uplift would not have been Incident response vehicle to arrive at scene within 10 minutes (4 min 7 sec) realised if CityLink had a ‘set and forget’ 80% of customer calls answered within 20 seconds (81%) manager. Revenue initiatives included 80% of customer issues resolved within 7 business days (91%) Late Toll invoicing, higher taxi tolls and 99% of customer letters and emails responded to or acknowledged within (100%) the rear camera project. Overall, revenue 2 business days grew by 10.9 per cent. 95% of new e-TAG devices despatched within 4 business days (95.5%) 100% compliance with Environment Protection Authority Victoria environmental Late Toll invoicing was introduced in requirements (100%) August 2005. It is the most signifi cant customer service improvement since CityLink opened. Motorists who use CityLink without making an arrangement to pay are now issued with an invoice payable within 14 days. Previously, legislation governing CityLink prescribed that motorists would be automatically fi ned by Victoria Police if they did not have a valid arrangement to use the road.

annual report 2006 14 Westlink M7 have thought about Sydney motorists when structuring their tolling products and have shown good faith as suggested by NRMA Motoring and Services by offering a month long toll-free period… Alan Evans, President, National Road and Motorists Association (NRMA)

Roam® tolling and customer service Roam scorecard launched for Westlink M7 Roam customer service target In October 2005, Transurban launched its New South Wales tolling brand Roam 75% of customer calls answered within 20 seconds in advance of the opening of Westlink M7. 90% of customer issues resolved on fi rst contact Roam offers customers an extensive 80% of issues raised with Customer Resolutions Group fi nalised within 7 business days range of easy-to-use products and 24-hour service accessible through 99% of letters and emails responded to or acknowledged within 2 business days multiple payment channels including 95% of new tags despatched within 4 business days phone, internet and kiosks. Roam has followed CityLink’s lead, Roam Express® rolled out for Hills M2 With more than 200,000 Roam and introducing a Customer Charter with Transurban purchased Tollaust in May Roam Express tags, Transurban now performance targets that it reports on 2006 for $38.9 million, including has a 20 per cent share of Sydney’s every six months. The Customer Charter acquisition costs—the fi nal step in the electronic tag and pass market. applies to customers with a Roam takeover of Hills M2. Tollaust performs The number of Roam Express e-TAG or e-PASS account, or a visitor the cash tolling, road operations and customers is expected to further e-PASS. maintenance functions for Hills M2 and increase when Lane Cove Tunnel opens operates the Express Tag business. (expected to be late 2006–early 2007). Under its contract with Hills Motorway Transurban has been appointed by Lane Group, Tollaust stood to earn Cove Tunnel as its preferred tag and performance payments with a nominal pass provider. total value of $200 million up to the end The Group will deliver tolling services of the Hills M2 concession in 2042. to Lane Cove Tunnel customers through These payments will now stay within the Roam Express brand. the Transurban Group. The acquisition meant Transurban acquired 75,000 Express Tag accounts. Transurban quickly moved to re-brand Express Tag to Roam Express.

15 annual report 2006 Customer Ombudsman extends to Sydney market Initially established for CityLink Transurban Customer Ombudsman customers, Transurban’s independent dispute resolution service has been extended to cover New South Wales (NSW). The Group’s Customer Ombudsman can now consider complaints from customers of Hills M2, and Transurban’s NSW tolling businesses Roam and Roam Express. Transurban Customer Ombudsman Michael has extensive experience in The Customer Ombudsman provides an handling complaints in the national opportunity for customers who cannot Michael Arnold is familiar with tolling fi nance services and insurance sectors, resolve their disputes directly with customer issues, having been the and has a reputation for successful Transurban’s tolling businesses to seek Ombudsman on matters raised by resolution of consumer concerns. a review and determination by an Transurban’s CityLink customers since independent and impartial umpire. September 2004. Now his role extends to Michael Arnold is a lawyer and former the Sydney market. Member of the Victorian Parliament. The Ombudsman is a free service that is fully funded by Transurban and is located outside of the Group’s corporate and operational structure and premises. Most customer complaints are resolved during a customer’s fi rst contact with Transurban. Unresolved issues are transferred to the internal customer resolutions team. If a customer is still dissatisfi ed, they can seek independent determination by the Ombudsman. Transurban is bound by this decision. During FY06, CityLink’s Independent Customer Resolutions group received 6131 enquiries. Of these, only 75 or just over 1 per cent resulted in an enquiry to the Ombudsman’s offi ce.

annual report 2006 16 DELIVERING BENEFITS TO THE COMMUNITY

Run for the kids More than 20,000 runners and walkers participated in the inaugural Herald Sun CityLink Run for the Kids fun run on Sunday 9 April 2006—raising more than $400,000 for Melbourne’s Royal Children’s Hospital Good Friday Appeal. Transurban teamed up with Melbourne’s most popular newspaper—the Herald Sun—to make the run possible, agreeing to close parts of the road for the event. This gave participants the unique experience of traversing the landmark Bolte Bridge and the 1.6 kilometre Domain Tunnel on CityLink. Transurban’s support for Run for the Kids is part of the Group’s ongoing commitment to giving back to the communities in which it operates. Run for the Kids is one of the many community initiatives Transurban supported in 2005-06.

17 annual report 2006 Corporate social responsibility programs help Transurban align its business with the long term interests of our stakeholders. Without their support, we won’t have a sustainable business. Kim Edwards, Managing Director

Transurban will soon publish its providing detailed information and data Sustainability Report fi rst annual Sustainability Report for sustainability reporting. The system The Transurban Sustainability Report will also help the Group prioritise as the Group implements new will provide detailed information on the environmental initiatives. corporate social responsibility Group’s performance in four key areas: (CSR) programs across the The EMS will be linked to data collection – environment systems for ongoing management and business. reporting on Transurban’s social – community The Group’s focus on CSR refl ects its impacts and community engagement – customers, and programs. importance to Transurban’s ongoing – employees. competitive position. Governments During the year, Transurban’s CSR award new toll road concessions and Committee was reconstituted as a The report is based on the Global are likely to consider a bidder’s record formal Board committee. It is chaired Reporting Initiative (GRI) draft G3 in environmental management and by a Board member, Susan Oliver. reporting framework. Developed by community engagement. A second director, Christopher Renwick, a global non-government organisation, also sits on the committee. Three GRI is an internationally recognised As FY06 ended, Transurban was putting framework adopted by some 2,000 the fi nal touches to a new Group-wide independent specialist advisers and a number of senior managers are also businesses and organisations around Community Relations Framework. the world. This provides a blueprint for enhancement members. of existing stakeholder relations programs in our toll road assets and tolling and customer service businesses. More information The Group adopted an Environment Copies of the Sustainability Report Strategy in December 2005. A priority will be available in late 2006 by emailing initiative identifi ed in the strategy, [email protected] to order a the development of an Environmental printed report or visiting Management System (EMS), initially for www.transurban.com.au to download the Australian businesses, is now under a copy. way. The EMS will allow Transurban to closely track the environmental performance of all its toll roads,

Brunswick North West Primary School in Victoria, Australia, is one of the many schools Transurban works closely with as part of its CSR program.

annual report 2006 18 DELIVERING IN NEW MARKETS

Hot lane solutions for US cities Like many American cities, Washington suffers from heavy road congestion. Transurban is looking at congestion solutions for the I-95/395 and I-495 (Capital Beltway) roadways in the Northern Virginia/Washington DC region. Transurban is looking to alleviate the congestion problems by introducing HOT lanes—an innovative demand management solution that delivers free-flow travel through the use of dynamic tolling. Under this type of tolling, toll levels change to maintain the volume of traffic at ‘free-flow’ conditions. HOT lanes are built next to existing lanes—much like Transit Lanes in Australia. Drivers can choose to pay a toll to use the HOT lane and avoid the congestion on ‘free’ lanes, while cars with three or more passengers travel free. HOT lane projects are an attractive investment for Transurban as demand for the route is already proven. They also provide an opportunity for the Group to apply its unique skills in electronic tolling, operations and traffic management.

19 annual report 2006 Transurban’s partnership approach and our growing reputation for active management of our assets, means we are well placed to take advantage of international opportunities. Michael Kulper, Vice President, Transurban North America

Transurban made signifi cant In April 2005 Transurban and Fluor progress in FY06 in pursuing new signed another agreement with VDoT to negotiate development of HOT lanes projects in its priority international along the I-495, part of the Capital market, the United States (US). Beltway ring road around Washington.

International progress In the past year governments and road authorities in the US have announced or The acquisition of the Pocahontas foreshadowed a large number of toll Parkway delivered the Group its fi rst road projects, both new roads and the operating business in the US. During sale of existing ones. Transurban has the year, a modest expansion of the been very selective in pursuing new New York offi ce ensured Transurban opportunities, declining to be involved in has the development and operational many projects because they would not resources to assess further add value to our investors. opportunities in the US. The Group’s initial decision to prioritise A development team has been based in one market, the State of Virginia, rather Washington to work with the Virginia than projects across many States, has Department of Transportation (VDoT) paid off. We are now investigating to bring the I-95/395 and I-495 (Capital projects in a few other States, Beltway) projects to fi nancial close. particularly ones that allow us to apply Transurban has exclusive negotiating our key capabilities in traffi c modelling, positions on both projects. tolling and customer service. These The I-95/395 is a Bus Rapid Transit/High capabilities give Transurban the ability Occupancy Toll (HOT) lane system to the to deliver network-wide solutions based south of Washington in Northern Virginia on multiple concessions within (see opposite for an explanation of HOT contiguous metropolitan areas. lanes). In January 2006, Transurban and its construction partner Fluor were selected as VDoT’s preferred partner to advance this project. BALTIMORE

MARYLAND

TO BALTIMORE 270 370 95 LEESBURG

DULLES GREENWAY 295 267 DULLES 495 495 TOLL ROAD 495 D.C. 95 267 WWASHINGTONASHINGTON DD.C..C. Washington-Dulles International Airport

495 66 495 395 295 95

95 495 CAPITAL BELTWAY 95 (I-495) HOT LANES MARYLAND

I-95/395 HOT LANES

95

Legend

HOT lanes project

FREDERICKSBURG Freeways Toll roads VIRGINIA annual report 2006 20

RICHMOND

NORFOLK DELIVERING FOR SUCCESS

Laurence Cox AO Kimberley Edwards Jeremy Davis Peter Byers Transurban’s Board of Directors

Chairman Managing Director

Susan Oliver Geoff Cosgriff David Ryan Christopher Renwick

21 annual report 2006 Corporate Governance

Transurban Group’s corporate Board of Directors – approval of operating and capital governance framework The Board has adopted a charter budgets. substantially complies with the which sets the broad principles by which – approval of distribution payments it operates. Principles and Best Practice – approval of capital management Recommendations of the Corporate Board Responsibilities activities, including the issue and Governance Council of the (Principal 1, Recommendation 1.1) redemption of equity and the increase Australian Stock Exchange. The Board has delegated some of or reduction of borrowings See page 28 for a list of the its responsibilities to executive – approval of signifi cant changes to management, particularly day-to-day the Group’s organisational structure 10 core principles. operations of the Group. – reviewing and ratifying systems of risk The framework is updated from time The following responsibilities have been management and legal compliance to time to ensure best practice retained by the Board: standards are maintained. – ensuring that the entity complies with – reviewing and ratifying the entity’s all disclosure requirements This corporate governance statement business strategies and monitoring applies to all entities comprising the their implementation – approving changes to the authorities Transurban Group as described in the delegated to management – appointment and removal of the Directors’ Report. The term ‘Board‘ Managing Director, the regular – assessing the performance of refers to the Board of each relevant evaluation of his/her performance each individual director and of entity unless otherwise stated. and the determination of his/her the Board collectively The relationship between the Board remuneration – selection of nominees for election and management is critical to the – appointment and removal of the as directors achievement of the Group’s objectives. Company Secretary and the regular The directors are responsible to the – provision of strong leadership of the evaluation of his/her performance security holders for the performance entity on a continuing basis, and of the Group and their key tasks are – ratifi cation of the appointment of – fostering a culture of compliance to enhance the interests of the security executives reporting to the Managing with the highest legal, ethical and holders and other key stakeholders Director, the review of the Managing environmental standards and and to ensure the Group is properly Director’s assessment of the business practices. managed. performance of such executives, and the determination of their Day-to-day management of the Group’s Board composition remuneration based on the Managing affairs and the implementation of The entity’s constitution allows a Director’s recommendations strategic and policy decisions made maximum of 12 directors. Currently, by the Board have been formally – developing and approving succession the Board has set a minimum number delegated to the Managing Director and plans for the Managing Director and of three directors and a maximum senior executives. These delegations are reviewing and approving succession of eight. reviewed regularly. plans for those executives reporting The Board seeks to ensure that to him/her its membership provides the mix of – reviewing the entity’s fi nancial reports qualifi cations, skills and experience and certifying that they comply with to enable it to effectively fulfi ll its Australian Accounting Standards and responsibilities, and that its size present a true and fair view of the facilitates effective discussion and affairs of the entity effi cient decision making. – ensuring the fi nancial integrity of Board members the entity through: Board member details—their experience, – overseeing the entity’s systems expertise, qualifi cations, term of offi ce of internal control and fi nancial and independence—are set out in the reporting Directors’ Report under the Information on Directors section (see page 31). – the establishment and review of fi nancial performance objectives, and annual report 2006 22 Directors’ Independence In FY04 and FY06, Transurban Group Conflicts of Interest (Principal 2, Recommendation 2.1) paid no fees to MBL. In FY05, advisory (Principle 2, Recommendation 2.1) It is the Board’s policy that a majority fees totalling $12.7 million relating to Entities within the Group follow of directors should be independent the takeover of Hills Motorway Group protocols designed to ensure every directors and the Chairman should were paid to MBL. In addition, director knows of any individual be an independent director. The Board Transurban is entitled to receive director’s confl icts of interest or regularly determines which directors management fees of $6.5 million from potential confl icts of interest in a are considered to be independent MBL in relation to the extension of the particular matter to be considered by directors in the light of their interests term of the Infrastructure Borrowing the Board. These protocols are as disclosed to the Board. In making Facilities provided by MBL. This fee was consistent with obligations imposed by this determination, the Board considers recognised during the year ended the Corporations Act and the Australian whether a director’s security holding 30 June 2004 and is received in quarterly Stock Exchange (ASX) listing rules. in the entity, his/her relationship with instalments from 30 June 2004 until 30 They require each director to disclose security holders, suppliers and June 2007. During this year $2.8 million any contracts, offi ces held, interests in competitors and tenure as a director, was received with the outstanding transactions and other directorships would materially affect their ability balance of $2.3 million to be received held, to signal any potential confl ict. quarterly over the next year. The Group to exercise unfettered and independent If any director considers a potential judgement in the interests of the entity’s also contributes to the cost of Mr Cox’s personal assistant. confl ict of interest could exist or may security holders. arise involving any member of the In considering potential confl icts of Boards of Transurban Group entities, interest, the Board looks at a director’s a sub-committee is established to business or other relationships. assess the matter. The Board believes it is inappropriate The sub-committee excludes the to decide if a confl ict exists solely on potentially confl icted director(s). the basis of arbitrary dollar, profi t or It considers the matter and makes turnover percentage tests. Instead, a determination on whether or not the Board seeks to determine whether the director(s) has/have a confl ict the director is generally free of any of interest. interest and any business or other relationship which could materially The determination is then conveyed interfere with the director’s ability to the affected director(s). to act in the best interests of the Group. If it decides there is no confl ict, the The Board considers that all sub-committee is required to report its non-executive directors are currently actions and recommendations to the independent directors. Board after each sub-committee meeting. If a confl ict is deemed to exist Mr Cox is an executive director of the sub-committee will report its Macquarie Bank Limited (MBL). actions and recommendations to the It is considered Mr Cox’s relationship Board excluding the confl icted director. with MBL does not affect his ability to Further information is set out in the exercise unfettered and independent Board Charter. judgement in the interests of the Group’s security holders.

23 annual report 2006 Roles of the Chairman and Independent External Advice Induction and Training Managing Director (Principle 2, Recommendation 2.5) (Principle 1, Recommendation 1.1) (Principle 2, Recommendation 2.2 and 2.3) Independent external professional New directors are provided with an The Chairman is responsible for leading advice relating to their roles and induction program to familiarise them the Board, ensuring all directors are responsibilities is available to directors with all aspects of the business and properly briefed in all matters relevant at the relevant entity’s expense. each Group entity’s operations. They are to their role and responsibilities, Before seeking such advice, directors kept informed of other programs facilitating effective discussion of are required to consult with, and obtain available to them. The Board has given matters considered by the Board, and the approval of, the Chairman. the Nomination and Remuneration managing the Board’s relationship with The director must consult a suitably Committee responsibility for the entity’s executive management. qualifi ed adviser in the relevant fi eld recommending training and further and inform the Chairman of the fee education it considers necessary to The Managing Director is the Chief payable for the advice. enable the Board to meet its Executive Offi cer of the entity and is responsibilities. responsible to the Board for A copy of the advice obtained must implementation of strategies and be provided to the relevant Board. Certification of Financial Reports policies determined by the Board. and Risk Management Systems Performance Assessment (Principle 4, Recommendation 4.1) The roles of Chairman and Managing (Principle 8, Recommendation 8.1) (Principle 7, Recommendation 7.2) Director are undertaken by separate Each year, the following reviews of people. The Managing Director and the Chief performance are undertaken: Finance Offi cer have provided Commitment – a review of the performance of the certifi cations to the Board in connection (Principle 2, Recommendation 2.5) Board against the requirements with the fi nancial statements for the Board meetings of the three entities of the Board Charter and any other Group and the individual entities comprising the Group are held objectives arising from previous comprising the Group for the year ended concurrently. The number of meetings reviews of performance 30 June 2006. A summary of the certifi cation follows: held by the Boards of each individual – a review of the performance of each entity and by Board committees is Committee against the requirements – the fi nancial statements present disclosed in the Directors’ Report (see of its Charter and of the continuing a true and fair view, in all material pages 39 and 40). need for the Committee respects, of the fi nancial position and generating results of the entities The number of meetings of the Boards – a review by the Chairman with each and of Board committees attended by and the Group, and are in accordance director of the individual performance with relevant accounting standards each director is also disclosed in the of the director, and Directors’ Report (see pages 39 and 40). and the Corporations Act 2001 – a review of the performance of the – the above statement is founded on The Nomination and Remuneration Chairman by a non-executive director sound systems of risk management Committee reviews the commitments nominated by the Board. and internal compliance and control of non-executive directors before their which implement the policies of the appointment to the Board and annually During 2005, an external evaluation of Board, and thereafter. The aim is to ensure that the performance and effectiveness of non-executive directors are able to meet the Chairman, directors and the Board – the systems of risk management and the Board’s expectations concerning as a whole was undertaken. internal compliance and control are time commitment. Directors are operating effi ciently and effectively required to consult with the Chairman in all material respects. before accepting appointment as a director of any entity outside the Group.

annual report 2006 24 Board Committees Audit Committee and removal of the external auditor (Principle 4, Recommendation 4.4) (Principle 4, Recommendation 4.2, and agrees the terms of the auditor’s The Board has established the following 4.3 and 4.5) engagement committees of directors to assist it The Audit Committee consists of – pre-approves all non-audit services in carrying out its responsibilities and the following non-executive directors: provided by the external auditor to allow detailed consideration of complex issues: – David J Ryan (Chairman) – reviews the objectives, competence – Peter C Byers and resourcing of the internal audit – Audit Committee function, including determining – Risk Committee – Laurence G Cox whether the internal audit function – Jeremy G A Davis should be an internal or external – Corporate Social Responsibility function, and (CSR) Committee, and The qualifi cations of these directors and their attendance records at meetings – reviews the internal audit program – Nomination and Remuneration conducted each fi nancial year. Committee. of the Committee are set out in the Directors’ Report (see pages 39 and 40). Risk Committee Each of these committees has a Charter which can be seen on the All members of the Audit Committee The Risk Committee consists of the Group’s website. have appropriate fi nancial expertise and following directors: an appropriate understanding of the – Special purpose committees are industry in which the Group operates. Susan M Oliver (Chairman) established where deemed necessary – Geoff O Cosgriff to deal with specifi c projects or potential The Managing Director, Chairman of confl icts of interest. the Risk Committee, other members – Christopher J S Renwick of the management team and – David J Ryan Each Committee operates under a representatives of the external and Committee Charter, approved by the internal auditor attend meetings of the The qualifi cations of these directors Board, which sets out the authority, Committee by invitation. The external and their attendance records at membership and responsibilities of auditor meets with the Committee meetings of the Committee are set out the committee, together with any without management present on a in the Directors’ Report (see pages 39 relevant administrative arrangements regular basis. and 40). The primary responsibility of and any other matters considered the Committee is to assist the Board in The duties and responsibilities of the appropriate by the Board. assuring the Group manages risk in Audit Committee are set out in its accordance with its Risk Management At least once each year the Board Charter. The Committee’s primary Policy and Standards, by providing: reviews the appropriateness of the responsibility is to oversee the entity’s existing committee structure. fi nancial reporting process on behalf – governance If necessary, it also reviews the of the Board, and to recommend to – oversight, and membership and the charter of the Board appropriate actions to ensure individual committees. high quality fi nancial reporting, sound – strategic direction. practices to control risks and ethical Minutes of committee meetings are After notifying the Board or the behaviour. recorded by the Company Secretary Chairman of the Board and the and circulated with the papers for the In discharging this responsibility, Managing Director, the Committee can: next Board meeting. At the Board the committee: meeting, the Chairman of the – direct any special investigations – assesses the accounting, fi nancial committee highlights key issues under – seek advice from the entity’s auditors and internal control systems used consideration by the committee. and solicitors by the entity and if necessary recommends changes to them – engage and consult independent experts where necessary to carry – reviews the statutory fi nancial reports out its duties, and of the entity and management’s representations in relation to them – consult external reports and other and advises the Board whether to documents. adopt the reports – makes recommendations to the Board for the appointment, remuneration

25 annual report 2006 CSR Committee Nomination and Remuneration employees. To assist in making these The CSR Committee consists of the Committee recommendations, the Committee following directors: (Principle 2, Recommendation 2.4) consults external remuneration (Principle 9, Recommendation 9.1, 9.2, 9.3, consultants as necessary. – Susan M Oliver (Chairman) 9.4 and 9.5) The remuneration of non-executive – Christopher J S Renwick The Nomination and Remuneration directors consists entirely of directors’ The qualifi cations of these directors and Committee consists of the following fees and committee fees. Retirement their attendance records at meetings non-executive directors: benefi ts for non-executive directors of the Committee are set out in the – Laurence G Cox (Chairman) were discontinued on 30 September Directors’ Report (see pages 39 and 40). 2005. – Geoff O Cosgriff Independent stakeholder members are A summary of the Group’s remuneration – Jeremy G A Davis appointed to the CSR Committee to policy is available on the Group’s website. provide specialist external advice and The qualifi cations of these directors and Further information on directors’ and input into the Group’s CSR program. their attendance records at meetings executives’ remuneration is provided in of the Committee are set out in the the Remuneration Report, part of the Senior employees in roles of Directors’ Report (see pages 39 and 40). Directors’ Report (see page 41). responsibility in relation to the Group’s The primary responsibilities of the CSR program have also been appointed External Auditors Committee are to provide advice to the to the Committee. (Principle 4, Recommendation 4.5) Board on the appointment of new The CSR Committee’s responsibility is directors, the measurement of Board The policy of the Group is to appoint to assist the Board to develop initiatives performance and the remuneration of external auditors who are suitably and a forward program for continuous directors and senior executives. qualifi ed and whose independence is improvement in the Group’s CSR unequivocal. In discharging this responsibility, commitments. the Committee: The performance of the external auditors is reviewed annually by the – makes recommendations on the size Audit Committee. It is responsible for and composition of the Board and on making recommendations to the Board procedures for identifying and in relation to the appointment, screening candidates for appointment remuneration and removal of the to the Board external auditors. – implements these identifi cation and PricewaterhouseCoopers were initially screening procedures when required appointed as the Group’s external – reviews at least annually the time auditor in 1996 and subsequently commitments of non-executive re-appointed in December 2001. directors to provide a basis for The appointment of the external assessing whether candidates for auditors has been approved by security appointment as directors can meet holders as required by the Corporations them, having regard to their other Act. PricewaterhouseCoopers are commitments required to rotate audit engagement partners on listed entities at least every – develops and oversees an orientation fi ve years. The last rotation was for and education program for new the fi nancial year beginning 1 July 2002. directors A new audit engagement partner will – makes recommendations regarding be introduced for the fi nancial year succession plans for the Board beginning 1 July 2007. – recommends processes for the review Details of the fees paid to the external of the performance of individual auditors, including a breakdown of fees directors and the Board as a whole, paid for non-audit services, are set out and in the Directors’ Report (see pages 57 and 58). – makes recommendations in relation to the Group’s remuneration polices All non-audit services provided by the and practices for directors and external auditors are reported to the annual report 2006 26 Audit Committee. It is the policy of the Risk Assessment and Management Code of Conduct external auditors to provide an annual (Principle 7, Recommendation 7.1 and 7.3) (Principle 3, Recommendation 3.1, 3.2 and 3.3) declaration of their independence to the The Board, assisted by the Risk (Principle 10, Recommendation 10.1) Audit Committee. The Board has Committee, is responsible for assuring The purpose of the Code is to nurture considered the non-audit services the Group has an effective risk the values underpinning the Group’s provided by the external auditors and is management framework in accordance corporate culture. This has played an satisfi ed they are compatible with the with the Risk Management Policy. important role in Transurban’s success general standard of independence of to date, and in the establishment of its A copy of the Risk Management Policy is auditors. reputation. available on the Group’s website. The external auditors attend the Annual The Code is discussed with each new The Risk Committee is supported by the General Meeting (AGM) and are available employee as part of his/her induction Risk Management Group, which consists to answer questions raised by security training. Each new employee receives of senior executives and is chaired by holders in relation to the conduct of the a copy of the Code with their contract the Group General Manager, Legal and audit and the preparation and content of of employment. the audit report. Risk Management. Key responsibilities of the Risk Management Group are: In summary, the Code requires that all employees act with integrity, fairness – ensuring a consistent and robust and respect for others and in compliance approach to risk management with the letter and spirit of all relevant activities laws and Group policies. The Code is – providing support to, and implementing available on the Group’s website. directions of, the Risk Committee The Code specifi es the procedures for – promoting a culture of risk awareness dealing by directors and employees in across the Group, and securities issued by the Group, and securities of entities with whom the – seeking confi rmation, where necessary, Group has an existing or potential from risk owners that they have a business relationship. Dealing in current plan to manage their Transurban stapled securities and CARS identifi ed risks. is only permitted during the 20 business All major proposals submitted to the day periods following the release of the Board for decision include a annual and half year results to the ASX comprehensive risk assessment and and following the AGM. a description of the strategies proposed Employees and directors are required to be implemented to mitigate the to notify the Company Secretary in identifi ed risks. advance of any proposed transactions Information on the Group’s compliance in Transurban stapled securities, CARS with the environmental regulation to and in the securities of other entities which it is subject is set out in the specifi ed from time to time under the Directors’ Report (see page 35). policy. A summary of the Dealing in Securities Policy is available on the Group’s website. The Code encourages employees who become aware of unethical behaviour or breaches of the securities trading policy to report these to senior management. The directors are satisfi ed that during the year ended 30 June 2006, the Group has complied with the requirements of the Code, including the securities dealing policy.

27 annual report 2006 Continuous Disclosure and Australian equivalents to International ASX Corporate Governance Council Principles Shareholder Communication Financial Reporting Standards (AIFRS) of Good Corporate Governance (Principle 5, Recommendation 5.1 and 5.2) The fi nancial statements for the year Principle 1 Lay solid foundations for management and oversight (Principle 6, Recommendation 6.1) ending 30 June 2006 are the fi rst Group The Board’s policy on information fi nancial statements to be prepared in Principle 2 Structure the board to add value disclosure covers: accordance with AIFRS. AASB 1 First- time Adoption of Australian Equivalents Principle 3 – continuous disclosure of any Promote ethical and responsible decision making information concerning the Group that to International Financial Reporting Standards has been applied in preparing Principle 4 a reasonable person would expect to Safeguard integrity in fi nancial reporting these fi nancial statements. have a material effect on the price of Principle 5 Transurban stapled securities or Financial statements of the Group until Make timely and balanced disclosure CARS, and 30 June 2005 were prepared in Principle 6 – arrangements to promote accordance with previous Australian Respect the rights of shareholders communication with security holders. Generally Accepted Accounting Principle 7 Principles (AGAAP). AGAAP differs in Recognise and manage risk The Continuous Disclosure Policy certain respects from AIFRS. When Principle 8 and Security Holder Communication preparing the Group 2006 fi nancial Encourage enhanced performance Strategy are available on the Group’s statements, management has amended Principle 9 website. certain accounting, valuation and Remunerate fairly and responsibly The Company Secretary is the person consolidation methods applied in the Principle 10 Recognise the legitimate interests of stakeholders with primary responsibility for operation AGAAP fi nancial statements to comply of the Continuous Disclosure Policy and with AIFRS. for all communication with the ASX Reconciliations and descriptions of the related to the continuous disclosure effect of transition from previous AGAAP obligations of Group entities. to AIFRS on the Group’s equity and its net The Group publishes information on its income are given in Note 1 to the Group website as soon as it is disclosed to the fi nancial statements (see page 66). ASX. All material used in briefi ng analysts on the Group’s operations is released to the ASX and placed on the Group’s website. The Group strives to keep its security holders and other stakeholders More information informed of important news and events. More information can be found in the It uses a wide range of communication Corporate Governance section of the tools, including the website, meetings, Group’s website (www.transurban.com. briefi ngs and written materials. au). The following material is available: The Group’s notices of security holder – Board Charter meetings provide all relevant – Nomination and Remuneration information consistent with best Committee Charter practice. Security holders are – Audit Committee Charter encouraged to participate at these meetings. – Remuneration Policy – Code of Conduct – Dealing in Securities Policy – Continuous Disclosure Policy – Security Holder Communication Strategy – Risk Management Policy – Risk Committee Charter, and – Corporate Social Responsibility (CSR) Committee Charter. annual report 2006 28 DELIVERING FINANCIALS

29 annual report 2006 The Transurban Group

The Concise Financial Report of Transurban Holdings Limited and Controlled Entities (ABN 86 098 143 429) including Transurban Holding Trust (ABN 30 169 362 255) and Transurban Limited (ABN 96 098 143 410) For the year ended 30 June 2006

Contents

Directors’ report 31

Concise financial report: Consolidated income statement 61

Consolidated balance sheet 62

Consolidated statement of changes in equity 63

Consolidated cash flow statement 64

Notes to the consolidated financial statements 65

Directors’ declaration 72

Independent audit report to the members 73

Security holder information 75 FINANCIALS

Directors’ report

Relationship of the concise The directors of Transurban Holdings Directors fi nancial report to the full Limited (THL), Transurban Limited (TL) and Transurban Infrastructure With the exception of the changes fi nancial report Management Limited (TIML) as noted, the persons listed below were Responsible Entity for Transurban directors of Transurban Limited, The concise fi nancial report is an Holding Trust present their report on Transurban Holdings Limited and extract from the full fi nancial report the Transurban Group for the year Transurban Infrastructure Management for the year ended 30 June 2006. ended 30 June 2006. Limited during the whole of the fi nancial The fi nancial statements and specifi c year and up to the date of this report. disclosures included in the concise fi nancial report have been derived from Group accounts the full fi nancial report. These Group Accounts have been The concise fi nancial report cannot be prepared as an aggregation of the expected to provide as full an fi nancial statements of Transurban understanding of the fi nancial Holdings Limited and controlled entities performance, fi nancial position and (THL), Transurban Holding Trust and fi nancing and investing activities of controlled entities (THT), and Transurban Holdings Limited and its Transurban Limited and controlled subsidiaries as the full fi nancial report. entities (TL) as if all entities operate Further fi nancial information can be together. They are therefore treated as a obtained from the full fi nancial report. combined entity (‘the combined entity’ The full fi nancial report and auditor’s or ‘Group’), notwithstanding that none of report will be sent to members on the entities controls any of the others. request, free of charge. You can access The fi nancial statements have been both the full fi nancial report and the aggregated in recognition of the fact concise report under the Investors that the securities issued by THL, THT section of Transurban’s website: and TL are stapled into parcels (‘Stapled www.transurban.com.au. Alternatively, Securities’), comprising one share in call 1300 360 146 (free call) for a copy. THL, one share in TL and one unit in THT. None of the components of the Stapled Security can be traded separately.

Transurban Transurban Holdings Transurban Infrastructure Limited Limited Management Limited Non-executive directors Laurence G Cox ✓ ✓ ✓ Peter C Byers ✓ ✓ ✓ Geoffrey O Cosgriff ✓ ✓ ✓ Jeremy G A Davis ✓ ✓ ✓ Susan M Oliver ✓ ✓ ✓ David J Ryan ✓ ✓ ✓ Christopher J S Renwick(1) ✓ ✓ ✓

Executive directors Kimberley Edwards(2) ✓ ✓ ✓ Geoffrey R Phillips (3) ✓ ✓ ✓ (1) C J S Renwick was appointed a non-executive director of TL, THL and TIML on 26 July 2005 and continues in offi ce at the date of this report. (2) K Edwards was appointed an executive director of TIML on 26 July 2005 and continues in offi ce at the date of this report. (3) G R Phillips was an executive director of TL, THL and TIML from the beginning of the fi nancial year until his resignation on 26 July 2005.

31 annual report 2006 The Transurban Group

Directors’ report

Principal activities (d) Tendering for participation in Results and/or acquisition of other toll roads During the year the principal continuing The result of operations for the activities of the Group consisted of: (e) Development of electronic tolling fi nancial year ended 30 June 2006 and other intelligent transport was an operating loss of $60.9 million (a) Operation of CityLink and Hills M2 systems for implementation in (2005: $90.4 million). both domestic and international (b) Participation in the direction of markets, and the activities responsible for the Distributions development of the Westlink M7 (f) Identifi cation and development of motorway project infrastructure projects in accordance Distributions paid by a Group entity to with the investment strategies of members during the fi nancial year are (c) Provision of the tolling and Transurban Group entities. outlined below. customer management system for the Westlink M7 motorway project

2006 2005 $’000 $’000 Distributions proposed Final distribution payable and recognised as a liability: 25.5 cents (2005 - 18.0 cents) per fully paid Stapled Security payable 25 August 2006 207,422 142,455

Distributions paid during the year Final distribution for 2005 fi nancial year of 18.0 cents (2004: 13.5 cents) per fully paid Stapled Security paid 2 September 2005 142,443 71,983 Interim distribution for 2006 fi nancial year of 24.5 cents (2005: 17.0 cents) per fully paid Stapled Security paid 28 February 2006 194,188 91,745 Total Distributions Paid 336,631 163,728

Distributions paid in cash or satisfi ed by the issue of Stapled Securities under the distribution reinvestment plan during the years ended 30 June 2006 and 30 June 2005 Paid in cash 243,240 131,686 Executive loans—repayments 352 - Satisfi ed by issue of Stapled Securities 93,007 32,042 Funds available for future distribution reinvestment plans 32 - Total Distributions Paid 336,631 163,728

The proposed fi nal distribution includes $0.4 million to be settled against the benefi ts received by executives via the Executive Loan Plan.

annual report 2006 32 FINANCIALS

Directors’ report

Review of operations Calder Freeway interchange has motorway in Western Sydney which links provided quick restoration of traffi c Hills M2 at Baulkham Hills, the M4 at fl ow following road incidents. Eastern Creek and the M5 at Preston, and (a) CityLink Melbourne bypasses 48 sets of traffi c lights. - Customer account numbers continue Transaction volume for the year to grow. At 30 June 2006, there were Transurban developed and implemented ended 30 June 2006 was 234.5 million 763,391 accounts (including 81,533 the electronic toll collection system transactions, representing a 3.1 per Access Accounts), and 1,083,880 along with the tolling and customer cent increase on the prior year. Traffi c e-TAG® devices linked to e-TAG management (TCM) system for the growth was stronger in the fi rst half of accounts. This represents increases Westlink project. Transurban received the year at 3.4 per cent moderating of 6.1 per cent and 6.9 per cent, an early completion bonus of to 2.7 per cent in the second half. respectively. $8.3 million for delivery of the tolling Continuing the trend of previous years, system 10 months ahead of schedule. - In addition, CityLink achieved all of the light commercial vehicle class its customer service performance In line with the opening, Transurban experienced the strongest transaction requirements with respect to the increased its equity interest from growth achieving 5.0 per cent over the CityLink customer charter. 40 per cent to 45 per cent. Transurban prior year. and Macquarie Infrastructure Group The growth in transaction volumes (b) Hills Motorway Group have pre-emptive rights over the combined with the toll escalation as remaining 10 per cent held by Abigroup provided for in the Concession Deed During the year Transurban upgraded Limited and Leighton Holdings Limited. resulted in toll and fee revenue (net of Hills M2 with new Electronic Toll GST) of $304.5 million, an increase of Collection (ETC) gantries at both the (d) Roam tolling 10.9 per cent over the previous year. Main Toll Plaza and Pennant Hills ramps. A marketing and community The tolling and customer management As in previous years, Citylink has relations campaign was conducted system for Westlink M7 was successfully maintained the focus on effective cost to customers about the benefi ts of delivered with road opening on 16 control delivering a 7.3 per cent having a tag. The upgrade was December 2005 (refer above). Tolling effi ciency gain. During the year the completed in January and has delivered operations commenced on 16 January 2006 following initiatives were delivered: increased traffi c fl ows by eliminating following a one month toll free period. the need to stop or slow while travelling - The Late Toll Invoice (LTI) initiative As a direct result of Transurban’s marketing through the toll point. implemented in August 2005 delivered campaign to educate the market about the a signifi cant change in the Transaction volume for Hills M2 for Group’s Roam® brand, 106,000 customer enforcement process for CityLink. the year ended 30 June 2006 was accounts were opened during the period Prior to the introduction of the LTI 29 million transactions representing (including 19,600 e-PASS or video accounts), initiative, motorists without valid a growth of 7.8 per cent over the prior with 125,000 e-TAG devices issued and travel arrangements for CityLink were year. Both the ETC project and the 208,000 vehicles registered. issued with an infringement notice opening of the Westlink M7 in which from Victoria Police. Under the new Transurban has a 45 per cent share, (e) Business development regime motorists are issued with an have contributed positively to an invoice comprising the applicable tolls increase in electronic tolling During the year Transurban Limited plus an administration fee. Costs to transactions on weekdays to 80 per has continued to pursue new business administer the LTI system are fully cent, an increase of 20 per cent over development opportunities in both the recovered by CityLink through the the previous year. domestic and international markets. administration fee revenue. Achievements during the period include: During the year the Hills Motorway - Rear Camera gantries were activities were successfully integrated (i) Transurban acquisition of constructed on all toll points into Transurban’s operations with all of Pocahontas Parkway generating increased toll revenue the acquisition benefi ts and synergies through improved image quality. being achieved. On 29 June 2006, Transurban and the Commonwealth of Virginia reached - Extended incident response covering fi nancial close on a Comprehensive the West Gate Freeway between the (c) Westlink M7 Agreement granting Transurban a tunnels and the Bolte Bridge as well The Westlink M7 motorway opened on 99 year concession for the Pocahontas as the Tullamarine Freeway and 16 December 2005 eight months ahead of Parkway in Virginia, US. schedule. Westlink M7 is a 40-kilometre

33 annual report 2006 The Transurban Group

Directors’ report

The Pocahontas Parkway (route 895) 22.4 kilometre segment of the Capital - $600 million wrapped bond issue to is a 14 kilometre, four lane toll road Beltway (I-495) in Northern Virginia, US. refi nance existing wrapped bonds, located south-east of the city of maturing in 2007 and 2009, that were The Transurban-Fluor team has signed Richmond in Virginia. The Parkway redeemed early to extend the overall a development agreement with the provides a crossing of the James River term of the debt and to take Virginia Department of Transportation and facilitates access to the Richmond advantage of favourable market (VDoT) and is currently undertaking International Airport. conditions. The issue consists of two detailed evaluation of project feasibility. tranches of $300 million each with The cost of acquiring the 99 year In the event that fi nancial close is maturities in 2015 and 2017. concession was A$813 million/ achieved in early 2007, Transurban will US$604 million. - In addition, Westlink Motorway act as both an investor and tolling renegotiated its bank debt facilities of operator of the HOT lanes. (ii) Transurban acquisition of $1.25 billion in December 2005. The Tollaust Pty Ltd renegotiated, interest-only facilities, (v) I-95/395 Virginia US Proposal have extended the average debt On 1 May 2006, Transurban acquired —Virginia, US maturity profi le to 6.8 years. Fixed Tollaust Pty Ltd for $38.9 million from In January 2006, Transurban and its interest rate hedging has been put in Abigroup Limited and Egis Projects SA. development partner, Fluor Enterprises, place in relation to 85 per cent of the Tollaust are the operators of the Hills were confi rmed by the Commonwealth face value of the debt. Motorway in Sydney and perform cash of Virginia’s Public Private collections and operations and Transportation Act (PPTA) Advisory maintenance activities on the M2. (b) Transurban acquisition of Panel as the preferred proponent to Pocahontas Parkway The acquisition will enable the develop Bus Rapid Transit/HOT lane Transurban Group to retain traffi c systems for the I-95/395 motorway. The debt funding of Pocahontas was incentive payments payable over the life through non recourse senior bank debt Work is progressing on the feasibility of the concession estimated to be in of A$549 million/US$408 million. The of the project with fi nancial close excess of $200 million in nominal terms. majority of the debt (76 per cent), is anticipated to occur in the second half hedged against adverse movements in The acquisition also included an existing of 2007. interest rates through a series of customer base of approximately 75,000 interest rate swaps. For further tags branded as ‘Express Tag’ in the information on the acquisition of Sydney market. Express Tags are being Signifi cant changes in the Pocahontas Parkway see Item (e)(i) of transitioned to the Transurban brand state of affairs Review of Operations. Roam Express®. This process will deliver account management cost effi ciencies through utilisation of (a) Refi nancing (c) Transurban acquisition Transurban’s existing tolling business. During the year Transurban refi nanced of Tollaust Pty Ltd medium and short term debt facilities See item (e)(ii) of Review of Operations. (iii) Lane Cove Tunnel Letter of Intent through the following debt issues: The Lane Cove Tunnel Company (LCTC) - US private placement of A$511 (d) Lane Cove Tunnel Letter and Transurban have signed a Letter of million/US$380 million on 11 August of Intent Intent for Transurban to utilise its Roam 2005. Proceeds of the placement have See item (e)(iii) of Review of Operations. Express brand as the preferred tag and been applied to maturing wrapped electronic pass provider for the Lane and unwrapped bonds. The placement Cove Tunnel. Transurban will earn a consisted of three tranches with (e) Participation in I-495/Capital fee per transaction for its service. tenors of 10, 12 and 15 years, Beltway project—Virginia, US respectively. (iv) Participation in I-495/Capital See item (e)(iv) of Review of Operations. Beltway project—Virginia, US (f) I-95/395 Proposal Transurban, through its wholly owned subsidiary Transurban USA Inc, is —Virginia, US partnering with Fluor Enterprises to See item (e)(v) of Review of Operations. investigate the feasibility of developing High Occupancy Toll (HOT) lanes along a

annual report 2006 34 FINANCIALS

Directors’ report

(g) West Gate–CityLink Concession Deed. These liabilities have Likely developments –Monash freeway corridor a face value of $2.9 billion and will be and expected results of replaced by payments over the next four improvement project years totalling $614 million. operations See item (a) of Matters Subsequent to Transurban and the State will share in the End of the Financial Year. Information on likely developments in the revenue uplift generated by the the operations of the Group and the project after Transurban has fully (h) Distribution reinvestment expected results of operations have not recovered the capital cost and any lost been included in this report because plan revenue from the construction phase of the directors believe it would be likely the Southern Link upgrades. During the year Transurban re- to result in unreasonable prejudice to introduced its Distribution Reinvestment the Group. Plan (DRP) entitling security holders to (b) Westlink M7 increase in receive additional Stapled Securities in equity interest substitution for some or all cash Environmental regulation Transurban has exercised its pre- distributions in respect of their Stapled emptive right to purchase an additional Securities. Stapled Securities issued CityLink Melbourne Limited is subject 2.5 per cent equity interest in the pursuant to the DRP were subject to a to regulation by the Environment Westlink M7 for $34.3 million. This will discount to market price of 2.5 per cent Protection Authority (EPA) Victoria in increase Transurban’s holding from and were free of all brokerage, respect of: 45 per cent to 47.5 per cent. Transurban commission or other transaction costs, and Macquarie Infrastructure Group - discharges from the tunnel ventilation stamp duty or other duties. DRP have pre-emptive rights over the system acceptance was 47.9 per cent for the remaining 5 per cent held by Leighton interim distribution and 50.2 per cent - discharges from the tunnel drainage Holdings Limited. for the fi nal distribution. systems, and (c) High Court of Australia - groundwater quality in the aquifers surrounding the tunnels. Matters subsequent to the decision—deductibility of end of the fi nancial year concession fees The main regulation relates to the Waste Discharge Licence (EA41502) that On 20 July 2006, the High Court ruled in regulates the operation of the tunnel (a) West Gate-CityLink favour of Transurban in relation to the ventilation system and imposes –Monash freeway corridor tax deductibility of the Concession Fees requirements to monitor the emissions paid to the State of Victoria under the of carbon monoxide, oxides of nitrogen improvement project Melbourne CityLink Concession Deed. and particulate matter. Transurban has reached agreement The case was heard by the High Court of This monitoring is undertaken by with the State of Victoria and VicRoads Australia after the Australian Taxation several specialist organisations under to jointly fund upgrades and Offi ce (ATO) appealed the unanimous the supervision of the CityLink operator, improvements to 75 kilometres of the judgement of the Full Court of the Translink Operations Pty Ltd. West Gate-CityLink (Southern Link)– Federal Court in October 2004. The monitoring organisations are Monash freeway corridor. The High Court awarded the costs of the certifi ed by the National Association The CityLink component of the upgrade, legal action to Transurban which are yet of Testing Authorities. which is estimated to cost $166 million to be quantifi ed. Monitoring verifi es that emission levels over the three year construction period, With the exception of these events, at the are well below the maximum levels will be funded via the DRP. The State date of this report, the directors are not specifi ed in the Waste Discharge will fund the non-CityLink works, aware of any circumstances that have Licence and that there has been an estimated to cost $737 million. Full arisen since 30 June 2006 that have improvement in ambient air quality project completion is expected by signifi cantly affected or may signifi cantly since the tunnels opened. December 2010. affect the operations, and results of Following discussions with the Under the agreement, the State of those operations or the state of affairs, Environmental Management Victoria will also assign to Transurban of the Group in fi nancial years Committee, which includes all remaining and future Concession subsequent to 30 June 2006. representatives from CityLink, Note liabilities incurred under the Translink Operations, EPA Victoria, provisions of the Melbourne CityLink

35 annual report 2006 The Transurban Group

Directors’ report

local councils and community Information on Directors representatives, Translink Operations sought an amendment to the Waste Discharge Licence. Laurence G Cox AO, B. Com, FCPA, FSIA Kimberley Edwards BE, MAdmin (Bus), Accordingly, on 7 June 2005, EPA Chairman—non-executive FIE (Aust), MAICD Victoria issued an amended Waste Managing Director Discharge Licence (Licence EA41502) Experience and expertise which materially altered the licence Over 40 years experience in Australian Experience and expertise conditions. Under the amended licence, and international fi nancial markets, Held senior management positions on CityLink is no longer required to monitor including Chairman of the Australian major commercial and infrastructure ambient air quality in vicinity of the Stock Exchange Limited from 1989–1994 projects in Australia, the United tunnel ventilation stacks. and Executive Chairman of the Potter Kingdom and the Middle East. Joined Monitoring of emissions within the Warburg Group from 1989–1995. Transurban when it was originally tunnels and from the ventilation stacks bidding for the CityLink project and will continue unchanged. Other current directorships recently led the development of the Transurban Group into other toll road Monitoring of groundwater quality Non-executive Chairman of SMS Management and Technology Limited, opportunities and the deployment of its verifi es that the requirements of the electronic tolling technology in Australia EPA are being met. executive director of Macquarie Bank Limited and non-executive director of and overseas. Monitoring of tunnel drainage water Smorgon Steel Group. quality verifi es that the requirements of Other current directorships the EPA are being met. Former directorships in last None CityLink Melbourne Limited is obliged to three years take remedial action if traffi c noise at Non-executive director of Hills Former directorships in last abutting developments exceeds 63dB(A) Motorway Limited (April 2005– three years L10. August 2005). Executive director of Hills Motorway Hills Motorway Limited is subject to Limited (April 2005–August 2005). environmental regulation in respect to: Date of initial appointment Date of initial appointment - discharge of stormwater runoff from 13 February 1996 the M2 Motorway into the Lane Cove 29 October 1996 River, and Special responsibilities Special responsibilities - carbon-monoxide levels within the Chairman of Board, Chairman of M2 tunnels. Nomination and Remuneration Managing Director Committee and member of Monitoring of these parameters Audit Committee. indicates that environmental requirements have been satisfi ed. Westlink M7 operations are not subject to any special environmental regulation apart from that which would apply to any other road or development of a similar nature, except where protection for sensitive areas and specifi ed trees that are endangered sites used by bats for roosting.

annual report 2006 36 FINANCIALS

Directors’ report

Peter C Byers B Com (Hons) Geoffrey O Cosgriff BAppSc, Jeremy G A Davis BEc, MBA, MA, FAICD Independent non-executive Company Director Diploma. FIE(Aust), FAICD Independent non-executive director Independent non-executive director director Experience and expertise Experience and expertise A former business manager and deputy Experience and expertise Professor Davis is a Professor Emeritus principal of the University of Tasmania. Formerly held executive management of the University of New South Wales roles with Melbourne and Metropolitan after retiring from the Australian Other current directorships Board of Works and has had extensive Graduate School of Management in January 2006. He spent ten years as a None experience in the information technology industry, including the management consultant with the Boston Consulting Group and is a Former directorships in last founding Managing Director of MITS former director of the Australian Stock three years Limited. MITS grew to 600 staff and nearly $100 million in sales of Exchange Limited. He is currently a Non-executive director of Hills information technology solutions from director of Singapore Power Limited. Motorway Limited (1995–2005). its formation until December 2000 when it was acquired by Logica Pty Ltd. He is Other current directorships Date of initial appointment currently a director of LogicaCMG Pty Non-executive director of SP AusNet 2 January 1996 Ltd and UXC Limited which have signifi cant international and local Former directorships in last Special responsibilities activities in information technology three years solutions and services, and is a Council Member of Audit Committee Member for Leadership Victoria. Non-executive director of Gradipore Limited (2002–2003). Other current directorships Date of initial appointment Non-executive director of UXC Limited. 16 December 1997 Former directorships in last three years Special responsibilities None Member of Audit Committee, and member of Nomination and Date of initial appointment Remuneration Committee. 19 December 2000

Special responsibilities Member of Risk Committee, and member of Nomination and Remuneration Committee.

37 annual report 2006 The Transurban Group

Directors’ report

Susan M Oliver Christopher J S Renwick David J Ryan AO, BBus, FCPA, FAICD B. Prop. & Const, FAICD AM, BA, LLB, FAIM, FAIE, FTSE Independent non-executive Independent non-executive Independent non-executive director director director Experience and expertise Experience and expertise Experience and expertise Experience covers commercial Former Senior Manager of Andersen Over 35 years experience covering banking, investment banking and Consulting and former Managing mining, operational business operational business management Director of the Australian Commission management and law. in a range of sectors. for the Future Limited. Experience covers private and public sector senior Other current directorships Other current directorships management roles, strategic and Non-executive Chairman of Coal and Non-executive director of Lend Lease technology consulting and business Allied Industries Limited and the Rio Corporation Limited, ABC Learning development. She is currently a non- Tinto Aboriginal Foundation, Governor of Centres Limited and Non-executive executive director and chairperson of the ATSE Ian Clunes Ross Foundation Chairman of Tooth & Co Limited. the Remuneration Committee of MBF and non-executive director of Downer - Australia Limited, and executive director EDI Limited. Former directorships in last and owner of wwITe Pty Limited. three years Former directorships in last Other current directorships Non-executive director of Virgin Blue three years Holdings Limited. (2003–2005) Non-executive director of Programmed Multiple executive directorships with Maintenance Services Limited. Rio Tinto Group (1986–2004). Date of initial appointment Former directorships in last 29 April 2003. Date of initial appointment three years 26 July 2005 Special responsibilities None Chairman of Audit Committee Special responsibilities Date of initial appointment and member of Risk Committee. Member of the Risk Committee and 25 June 1996 member of Corporate Social Responsibility Committee. Special responsibilities Chairperson of Risk Committee, and Chairperson of Corporate Social Responsibility Committee.

annual report 2006 38 FINANCIALS

Directors’ report

Company Secretary Meetings of directors

The number of meetings of the Board Mark Licciardo B.Bus (Acc), Paul O’Shea B.Ec, LLB, FCIS of Directors of Transurban Limited, GradDip CSP, ASA, FCIS Mr O’Shea is a Company Secretary and Transurban Holdings Limited and Transurban Infrastructure Management Mr Licciardo was appointed to the Group General Manager, Legal and Risk Limited held during the year ended position of Company Secretary in Management (previously General 30 June 2006, and the numbers of January 2005. Before joining Transurban Counsel, Transurban Legal). He was meetings attended by each director are he held the position of Company originally appointed General Counsel in outlined below. Secretary with a group of listed March 1996 and appointed Company investment companies, the major one Secretary in March 1998. Before joining being Australian Foundation Investment Transurban he held a senior legal role Company Limited. Prior to that he held at Transfi eld for 18 months and prior to various fi nance roles with investment that worked as a solicitor with two companies and major banks. major legal fi rms.

Name Board of Directors Board of Directors Board of Directors Transurban Limited Transurban Transurban Infrastructure Holdings Limited Management Limited A B A B A B L G Cox 14 14 14 14 14 14 P C Byers(1) 10 14 10 14 10 14 G O Cosgriff 14 14 14 14 14 14 J G A Davis 14 14 14 14 14 14 S M Oliver 14 14 14 14 14 14 C J S Renwick 11 13 11 13 11 13 D J Ryan 14 14 14 14 14 14 K Edwards 14 14 14 14 14 14 G R Phillips(4) 2 2 2 2 2 2

A = Number of meetings attended B = Number of meetings held during the time the director held offi ce

39 annual report 2006 The Transurban Group

Directors’ report

The number of meetings of each board committee of Transurban Limited, Transurban Holdings Limited and Transurban Infrastructure Management Limited held during the year ended 30 June 2006, and the numbers of meetings attended by each director are set out in the following table. All meetings were held jointly.

Name Audit Committee Nomination & Risk Corporate Social Remuneration Committee Responsibility Committee Committee A B A B A B A B L G Cox 4 4 7 7 x x x x P C Byers (1) 3 4 x x x x x x G O Cosgriff x x 7 7 4 4 x x J G A Davis 4 4 7 7 x x x x S M Oliver (2) x x x x 4 4 4 4 C J S Renwick x x x x 3 4 4 4 D J Ryan 4 4 x x 4 4 x x K Edwards (3) x x x x x x x x G R Phillips (4) x x x x 0 0 x x

A = Number of meetings attended B = Number of meetings held during the time the director held offi ce or was a member of the committee during the year X = Not a member of the relevant committee (1) P C Byers did not participate in four board meetings and one audit committee meeting due to illness. The Board granted leave for an indefi nite period on 20 April 2006. (2) S M Oliver is not a member of the Audit Committee but attended three of these meetings in her capacity as Chair of the Risk Committee. (3) K Edwards is not a member of the Audit Committee and Nomination and Remuneration Committee but attends these meetings. Mr K Edwards was excluded from discussions on his own remuneration. (4) G R Phillips was an executive director from the beginning of the fi nancial year until his resignation on 26 July 2005.

annual report 2006 40 FINANCIALS

Directors’ report

Directors’ interests

The directors of the Group have disclosed relevant interests in Stapled Securities, options over Stapled Securities and Convertible Adjusting Rate Securities (CARS) as follows: Name Number of Options over Number Stapled Securities Stapled Securities of CARS L G Cox 1,142,500 - - P C Byers 70,580 - - G O Cosgriff 31,110 - 121 J G A Davis 51,817 - - S M Oliver 68,009 - - C J S Renwick - - - D J Ryan 22,394 - - K Edwards 1,873,500 - -

Remuneration report (a) Principles used to determine In 1997, the Board implemented a policy the nature and amount of to provide retirement allowances to non-executive directors. The policy The remuneration report is set out remuneration (audited) under the following main headings. provided for an entitlement to a lump sum payment (not exceeding the Non-executive directors (a) Principles used to determine the maximum allowable under the nature and amount of The remuneration of non-executive Corporations Act 2001) if the remuneration directors consists of director’s fees and non-executive director completed a committee fees. Non-executive minimum of three years service. (b) Details of remuneration directors are not currently provided with The lump sum was equivalent to the any form of equity-based compensation. total emoluments received during the (c) Service agreements relevant period. The relevant period was The constitutions of the entities one-third of the director’s total period of comprising the Transurban Group (d) Share-based compensation service or three years (both calculated (‘the Group’) provide that the total to the day of retirement), whichever was remuneration paid in a year to non- (e) Additional information the lesser. This policy was reviewed in executive directors may not exceed September 2005 when it was resolved to $950,000 per entity. Subject to this limit, The information provided under the discontinue retirement benefi ts for all remuneration structure and amounts headings (a)-(d) includes remuneration participating non-executive directors for non-executive directors are disclosures that are required under with effect from 30 September 2005 recommended by the Nomination and Accounting Standards AASB 124 Related such that future directors are not Remuneration Committee of the Board Party Disclosures. These disclosures entitled to this benefi t. The value of with assistance from external have been transferred from the fi nancial benefi ts accrued up to this date will remuneration consultants. Liability for report and have been audited. attract interest from 1 October 2005 at the Superannuation Guarantee The disclosures under heading (e) are the statutory FBT rate (currently Contribution is met from gross additional disclosures required by 7.05 per cent). The accrued `frozen’ remuneration. The current fee the Corporations Act 2001 and the retirement benefi ts plus interest will be arrangements were last reviewed with Corporations Regulations 2001 which paid to directors upon their retirement. have not been audited. effect from 1 October 2005.

41 annual report 2006 The Transurban Group

Directors’ report

Executive directors and executives - total shareholder return relative to - the extent to which a profi t-related other companies in the ASX fi nancial performance target is The key objectives of the Group’s policy Industrials index, and achieved, and for executive remuneration are: - individual performance as - the extent to which the executive has - to secure employees with the skills measured by the achievement of achieved his/her individual KPIs. and experience necessary to meet key performance indicators (KPIs) business objectives Such adjustments can result in the and the upholding of Group values. actual STI payment received by the - to motivate employees to the highest The remuneration of the Managing executive being above or below the levels of performance, and Director is established by the Board, targeted STI amounts. STI payments are - to align employee incentives with based on the recommendation of the made annually in September following increased shareholder value. Nomination and Remuneration annual performance reviews. Committee. The remuneration of senior The policy seeks to support the Group’s The intent of the adjustment is to ensure executives reporting to the Managing objective to be perceived as an employer that STI payments are only made when Director is established by the of choice by: value has been created for security Nomination and Remuneration holders and profi t and business growth is - offering remuneration levels which Committee, based on the consistent with the business plan. are attractive relative to those offered recommendation of the Managing by comparable employers, and Director. Each year, KRAs, including a fi nancial performance target, are established by - providing strong, transparent linkages The components of executive the Board based on recommendations between individual and group remuneration are described below: made by the Managing Director. The performance and rewards. KPIs for the Managing Director are Base pay In consultation with external established by the Board based on remuneration consultants, the Group Base pay represents the fi xed recommendations made by the has structured its executive component of executive remuneration Nomination and Remuneration remuneration to reward both longer and is structured as a Total Employment Committee. KPIs for executives term growth and the achievement of Cost (TEC). TEC consists of a mix of reporting to the Managing Director are short term performance targets. cash, superannuation and prescribed established by the Managing Director. benefi ts. An executive’s TEC is reviewed Executives are remunerated through a The Nomination and Remuneration annually against market rates for combination of base salary and benefi ts, Committee is also responsible for comparable roles. There are no short-term incentives (STI) in the form assessing the extent to which KRAs and guaranteed base pay increases fi xed in of cash bonuses and long-term KPIs set for senior executives have been any executive’s contract of employment. incentives (LTI). achieved. To assist in making these assessments, the Committee receives The proportion of each component of an Benefi ts reports from the Chief Finance Offi cer executive’s total remuneration is Executives receive benefi ts including and the Managing Director. established by reference to death and disability insurance, salary remuneration survey data for continuance insurance and car parking. comparable companies. As executives progress in seniority, the proportion of Short-term incentives (STI) remuneration which is dependent on the performance of the entity increases. On an annual basis, the Group makes available STI payments to executives for The incentive component of executive the achievement of Group and individual remuneration is determined by: performance via KPIs. A target STI - fi nancial performance relative to amount, expressed as a percentage of short-term profi tability targets the executive’s TEC, is specifi ed for each executive and is subject to further - business achievements through adjustment for: the achievement of Group key result areas (KRAs) - the extent to which the Group has met its (KRAs) - project successes

annual report 2006 42 FINANCIALS

Directors’ report

Long-term incentives (LTI) The BGIP is intended to reward The fi ve highest paid executives of the executives for successful business Group are: Three forms of LTIs are currently in generation activities, based on the operation. The Executive Option Plan - M Kulper—Vice President North increase in security holder value derived (EOP) provides equity rewards, the America from new business. BGIP payments are Executive Long Term Incentive Plan determined and awarded by the Board, - K Daley—Vice President International (ELTIP) provides cash rewards linked to on the recommendation of the Development equity performance, and the Executive Nomination and Remuneration Loan Plan (ELP) performance based - C Brant—Chief Finance Offi cer Committee and Managing Director. plan which is linked to improvements is - B Bourke—Group General Manager the price of Stapled Securities over a Key characteristics of Transurban’s Operations three year period. All plans utilise Total Business Generation Incentive Plan Shareholder Return as the basis for (BGIP) are: - P O’Shea—Group General Manager determining payment. The EOP was Legal and Risk Management - based on success, not effort introduced with a fi ve year term in 2001. The key management personnel of the Following a review in 2003, it was - based on the added value of new Group are the directors of the decided to make no further issues of business Transurban Group (see page 31) and options under the EOP and to introduce - determined by a risk adjusted market those executives that report directly to the ELTIP to provide long-term value analysis, and the Managing Director. The executives incentives beyond the period when all are: options issued under the EOP has - distributed based on contribution. vested. No options were granted under - C Brant—Chief Finance Offi cer the EOP during this fi nancial year. (b) Details of remuneration - B Bourke—Group General Manager A further review of LTIs was undertaken (audited) Operations in 2005 and as a result a revised Transurban Holdings Limited does not - P O’Shea—Group General Manager Executive Loan Plan was introduced. employ any executive key management Legal and Risk Management The objective of this plan is to personnel or executive directors. All - G Mann—Group General Manager implement a more cost effective plan to related remuneration disclosures refer Development (from 3 October 2005 to the Group for a given amount of to other Group entities and have not 30 June 2006) incentive. In addition, the revised plan been apportioned between the Group takes into consideration those plans entities as a relevant basis of The above persons were also key which had been introduced by a number apportionment is not available. management persons during the year of other companies whose equity ended 30 June 2005, except for G Mann securities are stapled. Non-executive remuneration reported who commenced employment with the as ‘Transurban Holdings Limited’ Group on 3 October 2005. C Brant was a Employee security ownership plan represents the parent’s share of key management person for only part of remuneration with the remainder the year ended 30 June 2005 as he Executives may elect to participate in divided between Transurban Holding commenced employment on the Employee Security Ownership Plan Trust and Transurban Limited. on the same basis as that offered to all 22 November 2004. permanent employees. Executive Share-based disclosures relate to the directors do not currently participate in Transurban Stapled Group. The full the Plan. amounts have been disclosed within the parent disclosures as a reasonable Business Generation Incentive Plan basis of apportionment is not available. (BGIP) Details of the remuneration of the The Group also operates a BGIP in directors, key management personnel which executives may participate, and each of the fi ve highest paid depending upon their level of executives of Transurban Holdings involvement in generating new business. Limited and the Transurban Holdings The BGIP provides for cash bonuses to Group are set out in the following tables. be paid from a bonus pool determined by the risk adjusted net present value of a project or business venture.

43 annual report 2006 The Transurban Group

Directors’ report

Key management personnel of Transurban Holdings Limited

2006 Short-term benefi ts Post-employment Share-based payments benefi ts Name Cash Cash Non- Super- Retirement Options(1) Executive Long Term Total salary bonus monetary annuation benefi ts(4) Loan Incentive and fees benefi ts Plan(2) Plan(3) $ $ $ $ $ $ $ $ $ Non-executive directors L G Cox Chairman 112,410 - - 3,763 20,623 - - - 136,796 P C Byers 44,768 - - 4,029 7,924 - - - 56,721 G O Cosgriff 37,699 - - 5,564 6,003 - - - 49,266 J G A Davis 26,348 - - 18,445 8,079 - - - 52,872 S M Oliver 42,394 - - 3,815 7,972 - - - 54,181 CJS Renwick(1) 12,893 - - 31,182 - - - - 44,075 D J Ryan 44,985 - - 4,049 - - - 49,034

Executive directors K Edwards Managing Director - - - - - 57,972 93,151 512,111 663,234 G R Phillips(2) Deputy Managing Director - - - - - 19,324 - - 19,324

Other key management personnel C Brant ------35,174 36,030 71,204 B Bourke ------30,405 98,389 128,794 P O’Shea ------22,356 77,822 100,178 G Mann ------33,534 - 33,534

Five executives receiving the highest remuneration —not already mentioned above M Kulper ------27,821 27,821 K Daley ------116,816 116,816 Total 321,497 - - 70,847 50,601 77,296 214,620 868,989 1,603,850

annual report 2006 44 FINANCIALS

Directors’ report

Key management personnel of the Group

2006 Short-term benefi ts Post-employment Share-based payments benefi ts Name Cash Cash Non- Super- Retirement Options(1) Executive Long Term Total salary bonus monetary annuation benefi ts(4) Loan Incentive and fees benefi ts Plan(2) Plan(3) $ $ $ $ $ $ $ $ $ Non-executive directors L G Cox Chairman 362,614 - - 12,139 66,526 - - - 441,279 P C Byers 144,412 - - 12,997 25,562 - - - 182,971 G O Cosgriff 121,611 - - 17,948 19,364 - - - 158,923 J G A Davis 84,994 - - 59,500 26,061 - - - 170,555 S M Oliver 136,755 - - 12,308 25,717 - - - 174,780 CJ S Renwick(1) 41,591 - - 100,587 - - - - 142,178 D J Ryan 145,114 - - 13,060 - - - - 158,174

Executive directors K Edwards Managing Director 1,400,006 1,100,000 7,900 100,587 - 57,972 93,151 512,111 3,271,727 G R Phillips(2) Deputy Managing Director 174,592 - 658 861,261 - 19,324 - - 1,055,835

Other key management personnel C Brant 515,872 465,000 7,900 45,460 - - 35,174 36,030 1,105,436 B Bourke 445,682 442,500 7,900 41,303 - - 30,405 98,389 1,066,179 P O’Shea 351,333 464,000 7,900 31,399 - - 22,356 77,822 954,810 G Mann 386,148 120,000 13,400 12,139 - - 33,534 - 565,221

Five executives receiving the highest remuneration —not already mentioned above M Kulper 222,095 1,599,134 - 31,964 - - - 27,821 1,881,014 K Daley 340,992 904,100 - 28,748 - - - 116,816 1,390,656 Total 4,873,811 5,094,734 45,658 1,381,400 163,230 77,296 214,620 868,989 12,719,738

(1) C J S Renwick was appointed a non-executive director on 26 July 2005. (2) G R Phillips was an executive director from the beginning of the fi nancial year until his resignation on 26 July 2005. His remuneration includes a termination benefi t of $990,000 in recognition of his long term service to the Group.

45 annual report 2006 The Transurban Group

Directors’ report

Key management personnel of the Group

2005 Short-term benefi ts Post-employment Share-based payments benefi ts Name Cash Cash Non- Super- Retirement Options(1) Executive Long Term Total salary bonus monetary annuation benefi ts(4) Loan Incentive and fees benefi ts Plan(2) Plan(3) $ $ $ $ $ $ $ $ $ Non-executive directors L G Cox Chairman 265,718 - - 20,331 168,992 - - - 455,041 P C Byers 100,935 - - 9,085 78,822 - - - 188,842 G O Cosgriff 97,918 - - 8,812 47,078 - - - 153,808 J G A Davis 77,013 - - 80,000 79,311 - - - 236,324 S M Oliver 101,852 - - 9,167 82,340 - - - 193,359 D J Ryan 117,566 - - 10,581 - - - - 128,147

Executive directors K Edwards Managing Director 1,154,259 1,000,000 7,300 95,940 - 183,999 - 2,545,620 4,987,118 G R Phillips Deputy Managing Director 538,509 262,500 7,300 11,585 - 61,333 - - 881,227

Other key management personnel C Brant 265,936 220,000 4,867 23,934 - - - 114,060 628,797 B Bourke 385,342 230,000 7,300 46,660 - 35,791 - 485,490 1,190,583 P O’Shea 304,319 225,000 7,300 27,312 - 26,181 - 387,751 977,863

Five executives receiving the highest remuneration —not already mentioned above K Daley 321,352 230,000 6,083 27,337 - 30,544 - 482,286 1,097,602 V Howard 254,315 432,500 7,300 15,000 - 21,817 - 350,699 1,081,631 L Hunt 305,473 137,000 13,400 26,511 - 11,742 - 375,935 870,061 Total 4,290,507 2,737,000 60,850 412,255 456,543 371,407 - 4,741,841 13,070,403

(1) No options were granted during the year over Transurban Group Stapled Securities. Option remuneration relates to options granted to Executive Directors and Executives in prior fi nancial years. The amounts disclosed as remuneration is that part of the value of the options which is attributable to the current year portion of the vesting period. (2) The amounts disclosed as remuneration is that part of the value of the Executive Loan Plan benefi t which is attributable to the current year portion of the vesting period. (3) The amount shown as Long Term Incentive is that part of the units issued under the cash based Executive Long Term Investment Plan which is attributable to the current year portion of the vesting period for each current allocation. (4) Retirement benefi ts were frozen for all participating non-executive directors at their current levels up to 30 September 2005. Interest accrues on directors entitlement balances at 7.05 per cent per annum. annual report 2006 46 FINANCIALS

Directors’ report

(c) Service agreements (audited) parking. Although not specifi ed in agreements, executives are eligible to Remuneration for the Managing participate in the Executive Loan Plan Director and the key management (or equivalent Cash Plan) and the personnel are formalised in service Business Generation Incentive Plan. agreements. Each of these agreements Other major provisions of the provides for access to performance- agreements, relating to remuneration, related cash bonuses and other benefi ts are set out below. including death and disability insurance, salary continuance insurance and car

Current target remuneration mix % of total remuneration TEC STI LTI Executive Director Managing Director 56% 22% 22% Key Management Personnel Average 59% 18% 24%

Executive directors Key management personnel and (d) Share-based compensation other executives K Edwards, Managing Director (audited) The major provisions contained in the - Term of Agreement—permanent, subject service agreements of key management Options to six months notice of termination. personnel and other executives are the Options were issued at no cost to the - The payment of one year’s fi xed same for all persons (except for the Option holder and vested in three equal remuneration upon termination as base salary component) and include the tranches on the second, third and fourth disclosed in the 2005 Annual Report. following provisions. anniversaries of their issue. The Exercise - Fixed remuneration including base - Term of agreement—permanent, of the options was subject to an Exercise salary and superannuation, for the subject to termination on six Condition. The Exercise Condition year ended 30 June 2006 of $1,500,000 months notice. involved a comparison between Total to be reviewed annually by the Shareholder Return (TSR) of Transurban Nomination and Remuneration - Total Employment Cost reviewed Group’s Stapled Securities over the two Committee and the Board. annually by the Nomination and years prior to a vesting date of options, Remuneration Committee and and the TSR of each of the other - Long Term Incentive allocation for approved by the Board. FY07 based on 35 per cent of current companies in the S&P/ASX 200 TEC allocation. Industrials as at the end of the relevant Exercise Condition Test Period which had - Ineligible to participate in the been in the S&P/ASX 200 Industrials for Employee Share Ownership Plan. the full term of the Exercise Condition

47 annual report 2006 The Transurban Group

Directors’ report

Test Period (‘Test Companies’) measured The exercise price of options was the expected price volatility of Transurban over the same period. volume weighted average price at which Group Stapled Securities, expected the Group’s Stapled Securities were future distributions and the risk free rate TSR measures the total return on traded on the ASX during the fi ve of interest over the term of the options. investment of a security. It takes into business days immediately prior to account both capital appreciation and The terms and conditions of each granting the options. When exercised, distribution income. Transurban Group grant of options affecting remuneration each option was converted into one and each of the Test Companies were in this or future reporting periods are Stapled Security, comprising one ranked according to their respective outlined below. ordinary share in Transurban Limited, TSRs over the Exercise Condition Test one ordinary share in Transurban Period. The ranking determines the Holdings Limited and one unit in extent to which vested options could be Transurban Holding Trust. Options were exercised. If the Group’s TSR exceeded exercisable at any time after vesting. the 65th percentile of the ranking, 100 per cent of the vested options were Fair values at grant date were exercisable. If Transurban Group’s TSR independently determined, using a was below the 25th percentile of the Black-Scholes derived option valuation ranking, none of the vested options were model taking into consideration the exercisable. If the TSR fell between exercise price, the term of the option, these percentiles, the percentage of the market price of Transurban Group vested options that were exercisable Stapled Securities on the grant date, the were calculated according to a formula.

Grant date Expiry date Exercise price Value per option at Date exercisable grant date 26 April 2001 30 April 2006 $3.817 $0.425 One-third after 28/04/03, 26/04/04, 26/04/05 23 October 2001 31 October 2006 $4.404 $0.491 One-third after 28/04/03, 26/04/04, 26/04/05 1 February 2002 30 April 2007 $4.280 $0.477 One-third after 01/02/04, 01/02/05, 01/02/06 9 April 2002 30 April 2007 $4.030 $0.449 One-third after 20/05/04, 20/05/05, 20/05/06 20 May 2002 30 April 2007 $4.220 $0.470 One-third after 20/05/04, 20/05/05, 20/05/06

Details of options over Stapled Securities provided as remuneration to each director of Transurban Group and each of the key management personnel of the Group are set out on page 49.

annual report 2006 48 FINANCIALS

Directors’ report

Number of options Number of options granted during the year vested during the year 2006 2005 2006 2005 Directors of the Group K Edwards - - - 500,000 G R Phillips - - - 166,667

Other key management personnel of the Group C Brant - - - - B Bourke - - - 116,667 P O’Shea - - - 100,000 G Mann - - - -

Details of Stapled Securities provided as a result of the exercise of remuneration options to each director of Transurban Group and other key management personnel of the Group are set out below.

Number of Stapled Securities issued on exercise of options during the year 2006 2005 Directors of the Group K Edwards 1,500,000 - G R Phillips - 500,000

Other key management personnel of the Group C Brant - - B Bourke - 350,000 P O’Shea - 204,300 G Mann - -

The amounts paid per Stapled Security by each director and other key management personnel on the exercise of options at the date of exercise were as follows:

Exercise date Amount paid per Stapled Security 21 September 2005 $4.404 13 December 2005 $4.404 20 June 2005 $4.404

No amounts are unpaid on any securities issued on the exercise of options.

49 annual report 2006 The Transurban Group

Directors’ report

Executive Long-Term Incentive Plan Returns (TSRs) of the companies within the S&P/ASX 200 Industrials over the The executive long term incentive plan two years prior to maturity. If (ELTIP) was introduced in 2003 to Transurban’s TSR ranking is below the provide long term incentives to executive 40th percentile, no payment will be directors and executives in the period made. For TSR rankings between the after issued options had fully vested. 40th and 70th percentiles, the Under the ELTIP, participants were proportion increases linearly from 25 allocated ELTI units. Each ELTI unit per cent to 100 per cent. If Transurban’s entitled the holder to a cash payment on TSR ranking is above the 70th the maturity date, approximately two percentile, the proportion is 100 per years after the date of allocation. cent. The cash payment per unit is equal to The terms and conditions of each the increase in the Stapled Security grant of Long Term Incentive Plan price over the period between the date units affecting remuneration in this or of allocation and the maturity date. future reporting periods are outlined The proportion of ELTI units which vest below. with the executive at maturity is dependent on Transurban Group’s ranking in the Total Shareholder

Grant date Expiry date Grant price Value per unit at Value per unit at Date payable grant date reporting date 30 September 2003 30 September 2005 $4.23 $0.46 fully paid 30 November 2005

30 September 2004 30 September 2006 $5.45 $0.54 $1.79 30 November 2006

Details of ELTIs provided and paid to each director of Transurban Group and other key management personnel of the Group are set out as follows:

Name Number of ELTIs Number of ELTIs $ Value of ELTIs granted during the year paid during the year paid during the year 2006 2005 2006 2005 2006 2005 Directors of Transurban Holdings Limited K Edwards - 800,000 850,000 - 2,558,500 - G Phillips ------

Other key management personnel of the Group C Brant - 170,000 - - - - B Bourke - 160,000 160,000 - 481,600 - P O’Shea - 120,000 130,000 - 391,300 - G Mann ------

annual report 2006 50 FINANCIALS

Directors’ report

Executive Loan Plan (ELP) If the Stapled Securities vest in repayment of the repayable portion of the executive: the loan. The ELP was introduced in 2005 as it offered payoff characteristics similar to (a) then the executive can either pay All dividends and distributions payable those of an option-based plan, and thus the amount of the loan which in respect of the Stapled Securities rewarded TSR out performance. The needs to be repaid and which is subject of the Plan, net of deductions for ELP, similar to those which had been attributable to those vested Stapled tax, are to be applied in reduction of the introduced by a number of other Securities, in which case they will outstanding loan balance. If a takeover companies whose equity securities were be free to deal with those Stapled offer or scheme of arrangement occurs, stapled, was also more cost effective Securities as they see fi t, or all outstanding Stapled Securities will than an option-based plan in terms of vest, and upon payment of the cost to the Group for a given amount of (b) the Group will otherwise sell the outstanding loan amount, the executive incentive. (The cost referred to above vested securities and apply for will be free to deal with those Stapled was in the form of fringe benefi ts tax the proceeds of sale in discharge Securities as he or she sees fi t. that was payable by the Group on the of the amount of the loan which is The performance hurdle attached to allocation of options.) repayable attributable to those Stapled Securities has been set to Stapled Securities, with any The ELP is structured as a performance ensure that both executives and Stapled surplus to be provided to the loan plan which is linked to Security holders generally benefi t from executive. improvements in the price of Stapled the allocation of Stapled Securities to Securities over a three year period. executives under the Plan. Any unvested Stapled Securities will The Plan has been structured so that also be sold by the Group and the The performance hurdle involves a rewards are only obtained if there are proceeds will be applied in reduction comparison of Total Shareholder materially improved security of the repayable amount of the loan Returns (TSR). The TSR of Transurban’s holder returns. attributable to those unvested listed Stapled Securities is compared Executives participating in the ELP are securities, with the executive having with the TSR of each other company provided with an interest free loan to no entitlement to the surplus. (Test Company) in the S&P/ASX 100 assist them to acquire Stapled Industrials (or similar or replacement The Plan has been designed so that the Securities at market price. The term of index) for the whole period of executive does not need to provide any the loan is three years and there is only comparison. The period of comparison money to purchase securities in one testing date. The Stapled Securities (Performance Hurdle Test Period) is the Transurban Group and is not himself are held by the executive but will only three years post the date of or herself directly responsible for vest in the executive in accordance with commencement of the Plan. repayment of any loan provided. the terms of the Plan. Expiry occurs The proceeds of sale of Stapled TSR measures total return on three years plus 60 days from the date Securities are, unless the rules of the investment of a security. It takes into of commencement of the Plan, unless Plan provide otherwise, applied to account both capital appreciation and the rules of the Plan provide otherwise. discharge the repayable portion of any distributed income. It assumes a Holding locks are applied to the Stapled loan. notional reinvestment of distributions Securities to ensure that the Stapled paid on the security (on a pre-tax basis) Securities can only be dealt with in If the executive does not meet the in additional securities, at the market accordance with the terms of the Plan. hurdle identifi ed, and remains employed price on the day before the securities The acquired shares cannot be by Transurban Group for a period of begin trading ex the relevant transferred or sold while the loan three years from the date of distribution. is outstanding. commencement of the Plan, unless the rules of the Plan provide otherwise, no Transurban and each of the Test Stapled Securities will vest in the Stapled Securities will vest in the Companies will be ranked according to executive if: executive and all Stapled Securities will their respective TSRs over the (a) the executive is employed by be sold with the proceeds being applied Performance Hurdle Test Period. Transurban Group for at least in repayment of the repayable portion of This ranking determines the extent to three years from the date of the loan, with no surplus being provided which Stapled Securities will vest. commencement of the Plan, to the executive. unless the rules of the Plan - If Transurban’s TSR is ranked at or If an executive leaves the employ of provide otherwise, and above the 75th percentile, 100 per Transurban Group those unvested cent of the Stapled Securities will securities will lapse and will be sold (b) the performance hurdle relevant to vest. with the proceeds being applied in the offer is met.

51 annual report 2006 The Transurban Group

Directors’ report

- If Transurban’s TSR is ranked above The number of Stapled Securities price of Stapled Securities the 50th percentile but below the 75th an executive is entitled to is derived weighted by reference to volume percentile, the percentage of Stapled by using an option valuation over the week leading up to and Securities (P) that will vest will be that methodology such as the Black including the date of calculated according to the following Scholes with Monte Carlo commencement of the Plan, and formula: simulations or other similar method of calculation. These (iv) the amount of the loan provided - P = 50 + 2 x (RTransurban – 50) valuation methods take into to a participant is equal to the - Where: RTransurban = The account the fact that the loan will purchase price per Stapled Security percentile rank of Transurban’s TSR. need to be repaid along with multiplied by the participant’s performance and other conditions. Stapled Securities entitlement. - If Transurban’s TSR is ranked at or By dividing the remuneration value below the 50th percentile, none of or number by this adjusted Details of securities provided to each the Stapled Securities will vest. valuation, the number of Stapled director of Transurban Limited and The allocation of ELP units is Securities is derived other key management personnel of determined by the following: the Group are set out below. (ii) the Stapled Securities are acquired (i) A remuneration value is and transferred to each participant determined for each participant relative to their total employment (iii) the purchase price per Stapled cost. These values are referenced Security is the average market to external market benchmarks.

Number of Number of Number of securities granted securities vested securities exercised 2006 2005 2006 2005 2006 2005 Directors of Transurban Holdings Limited K Edwards 312,500 - - - - -

Other key management personnel of the Group C Brant 118,000 - - - - - B Bourke 102,000 - - - - - P O’Shea 75,000 - - - - - G Mann 112,500 - - - - -

Executive Loan Plan for executives located overseas An Executive Long Term Incentive Cash Plan mirroring that of the Executive Loan Plan is used for participants outside Australia. The terms and conditions of each grant of units under this cash plan affecting remuneration in this or future reporting periods are as follows:

Grant date Expiry date Grant price Value per unit at Value per unit at Date payable grant date reporting date 1 November 2005 1 November 2008 $6.47 $1.35 $1.40 1 November 2008

annual report 2006 52 FINANCIALS

Directors’ report

Announced taxation changes impacting - the extent to which the Group has met Cash bonuses and options Stapled Securities its KRAs

In the May 2006 Budget, the Federal - total shareholder return relative to Cash bonuses Government announced its intention to other companies in the ASX extend the employee share scheme and Industrials index, and Remuneration of the Group’s executives related capital gains tax provisions to includes a short term incentive (STI) - individual performance as measured Stapled Securities that include an component and each executive has the by the achievement of KPIs and the ordinary share and are listed on the potential to receive 100 per cent of his upholding of Group values. ASX, with effect from 1 July 2006. Draft or her target STI payment. The actual legislation is expected to be introduced Short term profi tability targets for the STI payment received by each executive around September–October 2006. Group were achieved for the year is determined by the extent to which the evidenced by the decreased loss executive’s KPIs are met. The Government’s announcement is reported for the period of $60.9 million welcome and will offer some relief to Cash bonuses aggregating $6.34 million compared to $90.4 million for the prior companies with other than ordinary were incurred under the Business corresponding period. In addition, key shares offered to their employees. Generation Incentive Plan in relation to result areas were achieved with the Given this announcement, a review of the purchase of the Pocahontas business delivering synergies of Transurban’s Equity Plans will be Parkway (Virginia, US) and the $9 million following the acquisition of carried out once legislation is passed to agreement with the Victorian the Hills Motorway Group which was ensure that the long term incentive Government to upgrade the West Gate– further enhanced by the acquisition of programs and Employee Share Plans CityLink–Monash corridor. Tollaust Pty Ltd, tolling and operations remain relevant and aligned to the manager of Hills M2. For each cash bonus paid to the interests of Stapled Security holders. directors and the fi ve executives However, Transurban’s ability to offer a Transurban’s ability to grow receiving the highest remuneration, the full range of alternative incentive plans distributions represents a combination percentage of the available bonus that is impacted by the constitution of of strong cash generation and its was paid in the fi nancial year and the Transurban Holding Trust. increased debt capacity. Since percentage that was forfeited because commencement of operations, the person did not meet his or her Transurban’s annual cash contribution (e) Additional information performance criteria is set out opposite. from operations has increased from a No part of the cash bonuses are payable surplus in 2001 of $0.02 million to Principles used to determine the in future years. nature and amount of remuneration: $172.2 million for the current period. relationship between remuneration Transurban is currently ranked in and company performance. the top 50 public companies listed The overall level of executive reward on the ASX. takes into account the performance of the Group. In particular, the following items are considered in determining executive remuneration: - fi nancial performance relative to short-term profi tability targets

53 annual report 2006 The Transurban Group

Directors’ report

Cash bonus Name Paid Forfeited % % K Edwards 100 - M Kulper 100 - K Daley 100 - C Brant 100 - B Bourke 100 - P O’Shea 100 -

Mr G R Phillips resigned on 26 July 2005 and was ineligible for a bonus in the current fi nancial year.

Options No options on issue to the directors and the fi ve executives receiving the highest remuneration listed in the above table vested in the current year and there are no remaining options on issue.

Long term incentive units Long term incentive units which were issued in September 2003 vested in September 2005 and were paid in November 2005. No amounts were forfeited.

annual report 2006 54 FINANCIALS

Directors’ report

Further details relating to options and long term incentives are set out below. Name A B C D E Remuneration Value at Value at Value at Total of % grant date exercise date lapse date columns B-D $ $ $ $ K Edwards —options - - 3,963,002 - 3,963,002 —ELTI - - 2,558,500 - 2,558,500 —share plan 30 437,500 - - 437,500

G R Phillips —options - - - - - —ELTI - - - - - —share plan - - - - -

M Kulper —options - - - - - —ELTI 30 126,000 - - 126,000 —share plan - - - - -

K Daley —options - - 723,247 - 723,247 —ELTI 30 103,950 511,700 - 615,650 —share plan - - - - -

C Brant —options - - - - - —ELTI - - - - - —share plan 30 165,000 - - 165,000

B Bourke —options - - - - - —ELTI - - 481,600 - 481,600 —share plan 30 142,500 - - 142,500

P O’Shea —options - - - - - —ELTI - - 391,300 - 391,300 —share plan 30 105,000 - - 105,000

A = The percentage of the value of remuneration, based on the value at grant date set out in column B B = The value at grant date calculated in accordance with AASB 2 Share-Based Payment. C = The value at exercise date that were granted as part of remuneration and were exercised/matured during the year. D = The value at lapse date that were granted as part of remuneration and that lapsed during the year.

55 annual report 2006 The Transurban Group

Directors’ report

Shares under option

Unissued Stapled Securities of Transurban Group under option at the date of this report are as follows. No options were issued during the year.

Grant date Expiry date Issue price of Stapled Number under option Securities 20 May 2002 30 April 2007 $4.220 76,283

Shares issued on the exercise of options The following Transurban Stapled Securities were issued during the year ended 30 June 2006 on the exercise of options granted under Transurban Group’s Employee Option Plan. No further securities have been issued since that date. No amounts are unpaid on any of the securities. Date options granted Issue price Number of of securities securities issued 26 April 2001 $3.817 390,000 23 October 2001 $4.404 1,500,000 1 February 2002 $4.280 - 9 April 2002 $4.030 223,200 20 May 2002 $4.220 586,102

Indemnifi cation and Pursuant to this indemnifi cation, the Rounding off insurance individual entities of the Group have paid premiums for an insurance policy for the The Group is of a kind referred to in benefi t of directors, secretaries and The offi cers of the Group are indemnifi ed Class Order 98/0100, issued by the executive offi cers and related bodies against liability incurred by the person in Australian Securities and Investment corporate of the Group, in the case of the their capacity as an offi cer unless the Commission, relating to the rounding off Trusts within the Group the offi cers are liability arises out of conduct on the part of amounts in the Directors’ Report. indemnifi ed out of the assets of the of the offi cer which involves a lack of Amounts in the Directors’ Report have Trusts. In accordance with common good faith. The Group also indemnifi es been rounded off in accordance with practice, the insurance policies prohibit each person who is or has been an that Class Order to the nearest disclosure of the nature of the liability offi cer against liability for costs or thousand dollars, or in certain cases, covered and the amount of the premium. expenses incurred by the person in his or to the nearest dollar. her capacity as an offi cer in defending civil or criminal proceedings in which judgement is given in favour of the person, or the person is acquitted, or in connection with an application in which the Court grants relief to the person under the Corporations Act 2001.

annual report 2006 56 FINANCIALS

Directors’ report

Non-audit services of the Corporations Act 2001 for the provided by the auditor of the parent following reasons. entity, its related practices and non- related audit fi rms. The Group may decide to employ the - All non-audit services have been auditor on assignments additional to reviewed by the Audit Committee their statutory audit duties where the to ensure they do not impact the auditor’s expertise and experience with impartiality and objectivity of the Group are important. the auditor. The Board of Directors has considered - None of the services undermine the position and, in accordance with the the general principles relating to advice received from the Audit auditor independence as set out in Committee, is satisfi ed that the professional statement F1, including provision of the non-audit services is reviewing or auditing the auditor’s compatible with the general standard own work, acting in a management of independence for auditors imposed or a decision making capacity for the by the Corporations Act 2001. combined entity, acting as advocate The directors are satisfi ed that the for the combined entity, or jointly provision of non-audit services by sharing economic risk and rewards. the auditor, did not compromise the During the year the fees outlined below auditor independence requirements were paid or payable for services

Consolidated 2006 2005 $ $ 1. Assurance services Audit services PricewaterhouseCoopers Australian fi rm: Audit and review of fi nancial reports and other audit work under the Corporations Act 2001 689,850 335,750 Fees paid to non-PricewaterhouseCoopers audit fi rms for the audit or review of fi nancial reports - 40,000 Total Remuneration for Audit Services 689,850 375,750

Other assurance services PricewaterhouseCoopers Australian fi rm: Due diligence 158,621 432,500 Compliance plan audit 24,700 24,700 Other assurance services including IFRS 329,335 115,000 Controls assistance 163,000 - Fees paid to non-PricewaterhouseCoopers audit fi rms - 12,360 Total Remuneration for Other Assurance Services 675,656 584,560

57 annual report 2006 The Transurban Group

Directors’ report

Consolidated 2006 2005 $ $ 2. Taxation services PricewaterhouseCoopers Australian fi rm: Tax compliance services, including review of income tax returns 104,735 191,865 International tax consulting 1,128,028 - Indirect taxation services 434,714 619,530 Fees paid to non-PricewaterhouseCoopers audit fi rms - 26,436 Total Remuneration for Taxation Services 1,667,477 837,831

Auditors’ independence Auditor declaration PricewaterhouseCoopers continues in A copy of the auditors’ independence offi ce in accordance with section 327 of declaration as required under section the Corporations Act 2001. 307C of the Corporation Act 2001 is set out on page 60.

annual report 2006 58 FINANCIALS

Directors’ report

This report is made in accordance with a resolution of the directors.

Laurence G Cox Chairman

Kimberley Edwards Managing Director

Melbourne 22 August 2006

59 annual report 2006 The Transurban Group

Directors’ report

Auditors’ Independence Declaration

As lead auditor for the audit of the Transurban Group for the year ended 30 June 2006, I declare that to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit, other than a contravention covered by ASIC Class Order 05/910; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of the Transurban Group and the entities it controlled during the year.

Tim Goldsmith Partner

Melbourne 22 August 2006 Liability limited by a scheme approved under Professional Standards Legislation.

annual report 2006 60 FINANCIALS

Consolidated income statement for the year ended 30 June 2006

Consolidated 2006 2005 $’000 $’000 Revenue from continuing operations 690,408 510,938 Other income 4,410 714

Expenses from ordinary activities: Operational costs (105,291) (74,222) Corporate costs (28,979) (26,730) Corporate and community relations (6,278) (3,523) Business development (9,033) (18,158) Concession fees (22,053) (16,268) Promissory notes (2,025) (541) Depreciation and amortisation expense (258,065) (178,896) Finance costs (372,092) (280,207) Share of net profi ts of associates and joint venture partnership accounted for using the equity method (8,634) - Loss before income tax (117,632) (86,893) Income tax benefi t/(expense) 56,732 (3,544) Loss for the Year Attributable to Members of Transurban Group (60,900) (90,437)

Earnings per security for loss attributable to the ordinary equity holders: Cents Cents Basic earnings per Stapled Security (7.6) (15.3) Diluted earnings per Stapled Security (7.6) (15.3)

The above consolidated income statement should be read in conjunction with the accompanying notes.

61 annual report 2006 The Transurban Group

Consolidated balance sheet as at 30 June 2006

Consolidated 2006 2005 $’000 $’000 Current assets Cash and cash equivalents 323,110 395,561 Trade and other receivables 46,901 25,394 Derivative fi nancial instruments 1,709 - Other - 9,178 Total Current Assets 371,720 430,133 Non-current assets Receivables 186 - Investments accounted for using the equity method 15,732 6,236 Held-to-maturity investments 469,767 392,000 Derivative fi nancial instruments 20,217 - Property, plant and equipment 5,760,346 5,946,814 Deferred tax assets 260,570 255,394 Intangible assets 805,511 115,030 Other - 26,898 Total Non-Current Assets 7,332,329 6,742,372 Total Assets 7,704,049 7,172,505 Current liabilities Trade and other payables 78,625 104,301 Borrowings 265,142 598,000 Non-interest bearing liabilities 39,205 129,578 Provisions 229,115 157,601 Current tax liabilities - 5,429 Derivative fi nancial instruments 13,423 - Total Current Liabilities 625,510 994,909 Non-current liabilities Borrowings 3,550,294 2,275,976 Deferred tax liabilities 784,601 843,937 Non-Interest bearing liabilities 213,477 243,296 Provisions 364 3,999 Derivative fi nancial instruments 67,652 - Total Non-Current Liabilities 4,616,388 3,367,208 Total Liabilities 5,241,898 4,362,117 Net Assets 2,462,151 2,810,388 Equity Contributed equity 4,277,736 4,127,228 Reserves (53,087) - Accumulated losses (1,762,498) (1,316,840) Total Equity 2,462,151 2,810,388

The above consolidated balance sheet should be read in conjunction with the accompanying notes. annual report 2006 62 FINANCIALS

Consolidated statement of changes in equity for the year ended 30 June 2006 Consolidated 2006 2005 $’000 $’000 Total Equity at the Beginning of the Financial Year 2,810,388 1,321,810 Adjustment on adoption of AASB 132 and AASB 139, net of tax: Retained profi ts 16,840 - Reserves (40,074) - Restated total equity at the beginning of the fi nancial year 2,787,154 1,321,810 Changes in fair value of share-based payments 1,188 - Transfer to net profi t - gross 1,127 - Deferred tax - derivatives 18,626 - Changes in fair value of cash fl ow hedges, net of tax (33,954) - Net income recognised directly in equity (13,013) - Loss for the year (60,900) (90,437) Total Recognised Income and Expense for the Year (73,913) (90,437)

Transactions with equity holders in their capacity as equity holders: Exercise of employee security options 11,464 11,559 Treasury securities (10,227) - CARS conversion 56,265 - Issue on acquisition of Hills Motorway, inclusive of transaction costs - 1,841,597 Distribution reinvestment plan 93,006 32,042 Distributions provided for or paid (401,598) (306,183) (251,090) 1,579,015 Total Equity at the End of the Financial Year 2,462,151 2,810,388

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

63 annual report 2006 The Transurban Group

Consolidated cash flow statement for the year ended 30 June 2006

Consolidated 2006 2005 $’000 $’000 Cash fl ows from operating activities Receipts from customers (inclusive of GST) 485,874 379,532 Payments to suppliers (inclusive of GST) (207,766) (171,174) Interest received 186,189 223,554 Other revenue 6,256 15,258 Income taxes paid (9,688) (2,720) Interest paid (288,643) (297,478) Net Cash Infl ow from Operating Activities 172,222 146,972

Cash fl ows from investing activities Payment for purchase of subsidiaries, net of cash acquired (98,412) 332,580 Payments for property, plant and equipment (67,953) (29,361) Payments for intangibles (673,217) (4,400) Payments for Tullamarine-Calder freeway upgrade (161,985) - Payment to secure release from single purpose restrictions - (3,150) Distributions received - 4,650 Loans to related parties - (2,576) Repayment of loans by related parties 691 3,778 Net Cash (Outfl ow) \ Infl ow from Investing Activities (1,000,876) 301,521

Cash fl ows from fi nancing activities Proceeds from issue of Stapled Securities 11,468 11,559 Share issue transaction costs - (146) Interest capitalised against cash collateral 38,507 35,007 Proceeds from borrowings 2,810,451 810,321 Payments for establishing borrowing facilities (22,708) (10,394) Payments for treasury securities (10,228) - Repayment of borrowings (1,788,000) (590,000) Distributions paid (243,240) (131,686) Net Cash Infl ow from Financing Activities 796,250 124,661

Net (decrease) \ increase in cash at bank and cash collateral (32,404) 573,154 Cash at bank and cash collateral at the beginning of the fi nancial year 2,029,636 1,456,452 Effects of exchange rate changes on cash and cash equivalents (1,540) 30 Cash at bank and cash collateral at the end of the fi nancial year 1,995,692 2,029,636 Less cash collateral (1,672,582) (1,634,075) Cash at Bank at the End of the Financial Year 323,110 395,561

The above consolidated cash fl ow statement should be read in conjunction with the accompanying notes.

annual report 2006 64 FINANCIALS

Notes to the consolidated financial statements for the year ended 30 June 2006 Principles of consolidation Security comprises one share in Transurban Holdings Limited, one share Upon the adoption of AIFRS, Transurban in Transurban Limited and one unit in Group must apply the requirements of Transurban Holding Trust. None of the UIG Interpretation 1013 ‘Consolidated components of the Stapled Security are Financial Reports in relation to Pre- able to be traded separately. Date-of-Transition Stapling The Group is of a kind referred to in Arrangements’. UIG 1013 requires that Class Order 98/0100, issued by the where a stapling arrangement is Australian Securities and Investments effected prior to the date of transition, Commission, relating to the rounding off one of the combining entities shall be of amounts in fi nancial reports. identifi ed as the parent for the purposes Amounts in the concise fi nancial report of preparing consolidated fi nancial have been rounded off in accordance reports. Further, it requires that the with that Class Order to the nearest consolidated fi nancial report of thousand dollars, or in certain cases, to the ‘parent’ under the stapling the nearest dollar. arrangement shall be the combined fi nancial report of the entities whose securities are stapled, prepared on the same basis as the combined fi nancial report for those entities immediately before adopting AIFRS. Transurban Holdings Limited has been identifi ed as the parent in the Stapled Group based on the size of its net assets and its operations. Accordingly, it presents the consolidated fi nancial report of the Stapled Group. As such, this Concise Financial Report consists of the aggregated fi nancial statements of the combined entity comprising Transurban Holdings Limited and controlled entities, Transurban Holding Trust and controlled entities and Transurban Limited and controlled entities, notwithstanding that none of the entities controls the others. The aggregated accounts incorporate an elimination of inter-entity transactions and balances and other adjustments necessary to present the fi nancial statements on a combined basis. The accounting policies adopted in preparing the fi nancial statements have been consistently applied by the individual entities comprising the accounts except as otherwise indicated in Note 1 below. The fi nancial statements have been aggregated in recognition of the fact that the securities issued by the parent entities are stapled into parcels during the year ended 30 June 2006. A Stapled

65 annual report 2006 The Transurban Group

Notes to the consolidated financial statements for the year ended 30 June 2006 1. Adoption of Australian Accounting Principles (AGAAP). AGAAP to AIFRS on the Group’s equity and its Equivalents to differs in certain respects from AIFRS. net income are given in note 46 of the When preparing Transurban Holdings full fi nancial report. A summary of this International Financial Limited 2006 fi nancial statements, information is provided below. Reporting Standards management has amended certain accounting, valuation and consolidation The full fi nancial report on which this methods applied in the AGAAP fi nancial concise fi nancial report is based is the statements to comply with AIFRS. With fi rst annual Transurban Holdings the exception of fi nancial instruments, Limited fi nancial report to be prepared the comparative fi gures in respect of in accordance with Australian 2005 were restated to refl ect these Equivalents to International Financial adjustments. Reporting Standards (AIFRS). AASB 1 The Group has taken the exception First-Time Adoption of Australian available under AASB 1 to only apply Equivalents to International Financial AASB 132 Financial Instruments: Reporting Standards has been applied Disclosure and Presentation and AASB in preparing the full fi nancial report. 139 Financial Instruments: Recognition Financial statements of Transurban and Measurement from 1 July 2005. Holdings Limited until 30 June 2006 Reconciliations and descriptions of the had been prepared in accordance with effect of transition from previous AGAAP previous Australian Generally Accepted

(a) Impact on total equity reported under previous AGAAP 30 June 1 July 2005 2004 $’000 $’000 Total Equity Under Previous AGAAP 3,328,367 1,837,189 Adjustment to retained earnings (net of related tax impact) Derecognition of goodwill (8,252) (8,752) Creation of goodwill on acquisition 84,742 - Recognition of deferred tax assets 244,444 250,621 Recognition of deferred tax liabilities (838,913) (757,248) Total Equity Under AIFRS 2,810,388 1,321,810

(b) Impact on profi t for the year ended 30 June 2005 $’000 Loss for the year ended 30 June 2005 as reported under AGAAP (87,837) Adjustment to depreciation expense 500 Adjustment to income tax expense (3,100) Loss for the Year Ended 30 June 2005—Restated Under AIFRS (90,437)

(c) Impact on cash fl ow statement for the year ended 30 June 2005 The adoption of AIFRS has not resulted in any material adjustments to the cash fl ow statement.

annual report 2006 66 FINANCIALS

Notes to the consolidated financial statements for the year ended 30 June 2006 2. Presentation currency

The presentation currency used in this concise fi nancial report is Australian dollars.

3. Change in accounting policy

The Group has taken the exemption available under AASB 1 First-Time Adoption of Australian Equivalents to International Financial Reporting Standards to apply AASB 132 Financial Instruments: Disclosure and Presentation and AASB 139 Financial Instruments: Recognition and Measurement from 1 July 2005. At the date of transition to these standards at 1 July 2005, the following adjustments were recognised. 30 June 1 July 2005 Adjustment 2005 $’000 $’000 $’000

Other fi nancial assets at fair value through profi t or loss - 16,840 16,840 Deferred tax assets 244,444 17,948 262,392 Non-current derivative fi nancial assets - 5,910 5,910 Other non-current assets 22,811 (22,811) - Current derivative liabilities - 20,817 20,817 Non-current interest bearing liabilities 2,865,976 (16,320) 2,849,656 Non-current non-interest bearing liabilities 206,796 (11,741) 195,055 Deferred tax liabilities 843,937 1,773 845,710 Non-current derivative fi nancial liabilities - 46,592 46,592 Adjustment to Net Assets (23,234)

Cash fl ow reserve - (40,074) (40,074) Accumulated losses (1,316,840) 16,840 (1,300,000) Adjustment to Total Equity (23,234)

Financial assets at fair value Derivative fi nancial instruments instruments within the scope of AASB through profi t or loss 132 and AASB 139. From 1 July 2004 to 30 June 2005. Options held to acquire an additional The following sets out how derivatives 5.0 per cent interest in Westlink M7 The Group has taken the exemption were accounted for under previous Project at a cost of $49 million were available under AASB 1 to apply AASB AGAAP. recognised and recorded at fair value. 132 and AASB 139 from 1 July 2005. The A fi nancial asset and an increase in Group has applied previous AGAAP in accumulated losses of $16,840,000 the comparative information on fi nancial were recognised.

67 annual report 2006 The Transurban Group

Notes to the consolidated financial statements for the year ended 30 June 2006 Interest rate swaps Adjustments on transition date: (i) fair value hedge 1 July 2005 The net amount receivable or payable Changes in the fair value of derivatives under interest rate swap agreements The nature of the main adjustments to that are designated and qualify as fair was progressively brought to account make this information comply with value hedges are reported in the income over the period to settlement. AASB 132 and AASB 139 are that statement, together with any changes derivatives are measured on a fair value in the fair value of the hedged asset or The amount recognised was accounted basis. Changes in fair value are either liability that are attributable to the for as an adjustment to interest and taken to the income statement or an hedged risk. The gain or loss relating fi nance charges during the period and equity reserve. At the date of transition to the effective portion of interest rate included in other debtors or other (1 July 2005) changes in the carrying swaps hedging fi xed rate borrowings is creditors at each reporting date. amounts of derivatives were taken to recognised in the income statement Where an interest rate swap was retained earnings or reserves, within other income or other expense. terminated early and the underlying depending on whether the criteria for Together with the gain or loss relating hedged transaction was: hedge accounting are satisfi ed at the to the ineffective portion and changes transition date. in the fair value of the hedge fi xed rate (a) still expected to occur as borrowings attributable to interest designated—the gains and losses From 1 July 2005 rate risk. arising on the swap upon its early termination continued to be Derivatives are initially recognised at If the hedge no longer meets the criteria deferred and were progressively fair value on the date a derivative for hedge accounting, the adjustment to brought to account over the period contract is entered into and are the carrying amount of a hedge item for during which the hedged subsequently remeasured to their fair which the effective interest method is transactions were recognised, and value at each reporting date. The used is amortised to profi t or loss over accounting for subsequent changes in the period to maturity. (b) no longer expected to occur as fair value depends on whether the designated—the gains or losses derivatives are designated as hedging (ii) cash fl ow hedge arising on the swap upon its early instruments, and if so, the nature of the The effective portion of changes in the termination were recognised in the item being hedged. The Group fair value of derivatives that are income statement at termination. designates certain derivatives as either: designated and qualify as cash fl ow (1) hedges of the fair value of hedges is recognised in equity in the Forward foreign exchange contracts recognised assets or liabilities or a hedging reserve. The gain or loss relating fi rm commitment (fair value to ineffective portion is recognised Gains or costs arising from entering hedge), or immediately in the income statement into a contract intended to hedge the within ‘other income’ or ‘other expense’. purchase or sale of goods or services, (2) hedges of the cash fl ow of together with the subsequent exchange Amounts accumulated in equity are recognised assets and liabilities and gains or losses resulting from recycled in the income statement in the highly probable forecast measurement of those contracts by periods when the hedged item will transactions (cash fl ow hedges). reference to movements in spot affect profi t or loss. The gain or loss exchange rates, were deferred in the relating to the effective portion of At the inception of the hedging balance sheet from the inception of the interest rate swaps hedging variable transaction the Group documents hedging transaction up to the date of rate borrowings is recognised in the the relationship between hedging the purchase or sale and included in the income statement within ‘fi nance costs’. instruments and hedged items, as well measurement of the purchase or sale. as its risk management objective and When a hedging instrument expires or Early termination of forward foreign strategy for undertaking various hedge is sold or terminated, or when a hedge exchange contracts was accounted for transactions. The Group also documents no longer meets the criteria for hedge on a basis consistent with interest rate its assessment, both at hedge inception accounting, any cumulative gain or loss swaps (see above). For both interest rate and on an ongoing basis, of whether the existing in equity remains in equity and swaps and foreign exchange contracts, if derivatives that are used in hedging is recognised when the forecast the hedged transaction was not expected transactions have been, and will transaction is ultimately recognised in to occur as originally designated, or if the continue to be, highly effective in the income statement. When a forecast transaction is no longer expected to hedge was no longer expected to be offsetting changes in fair values or occur, the cumulative gain or loss that effective, any previously deferred gains or cash fl ows of hedged items. was reported in equity is immediately losses were recognised as revenue or transferred to the income statement. expense immediately. annual report 2006 68 FINANCIALS

Notes to the consolidated financial statements for the year ended 30 June 2006 (iii) Derivatives that do not qualify for Re-classifi cation of capitalised 4. Segment information hedge accounting borrowing costs The Group’s primary business segment Certain derivative instruments do not The carrying value of deferred for the year ending 30 June 2006 was qualify for hedge accounting. Changes borrowing costs of $16,320,000 has the operation of the toll roads being in the fair value of any derivative been re-classifi ed as a reduction in CityLink in Melbourne, Hills M2 in instrument that does not qualify for the interest bearing liabilities, rather than Sydney, a 45 per cent interest in the hedge accounting are recognised a non-current asset. immediately in the income statement Westlink M7 in Sydney and the and are included in ‘other income’ or investigation of possible investment Financial swap contract break ‘other expenses’. opportunities in the segment. costs Geographical segment information is Impact on adoption In May 2005, the Group incurred fi nance provided in the table below and refl ects The recognition of a non-current asset costs of $6,491,000 associated with the Transurban Group’s activities in relation of $5,910,000 and an increase in cash early termination of swap contracts. to geographically unique locations. fl ow reserves of the same amount. These costs have been recognised in a cash fl ow reserve within equity, rather The recognition of a current liability of than a non-current asset. $20,817,000 and a reduction in cash fl ow reserves of the same amount. Non-interest bearing liabilities The recognition of a non-current Cross-currency interest rate swap liability of $46,592,000 and a reduction contracts under which the Group is in reserves of the same amount. obliged to receive foreign currency The recognition of tax deferred assets of interest at fi xed rates and to pay $17,948,000 and deferred tax liabilities Australian dollar interest at fl oating of $1,773,000 with the net effect rates is revalued at each reporting date recognised in cash fl ow reserves. to refl ect any changes in foreign exchange rates. The contracts are settled on a net basis. These net payables or receivables of $11,741,000 have been recognised in a cash fl ow reserve within equity

Segment revenues Segment assets Segment liabilities 2006 2005 2006 2005 2006 2005 $’000 $’000 $’000 $’000 $’000 $’000 Victoria, Australia 466,146 436,035 3,874,293 4,200,495 3,874,458 3,358,093 New South Wales, Australia 224,262 74,903 3,109,967 2,970,082 920,742 1,004,024 United States - - 717,226 1,928 536,698 - Other - - 2,563 - - - Total 690,408 510,938 7,704,049 7,172,505 5,241,898 4,362,117

69 annual report 2006 The Transurban Group

Notes to the consolidated financial statements for the year ended 30 June 2006 5. Revenue

Consolidated 2006 2005 $’000 $’000 Services revenue from continuing operations 435,795 314,553

6. Distributions

The distributions set out below represent distributions to Stapled Securities holders. Consolidated 2006 2005 $’000 $’000 Distributions proposed Final distribution payable and recognised as a liability: 25.5 cents (2005: 18.0 cents) per fully paid Stapled Security payable 25 August 2006 207,422 142,455

Distributions paid during the year Final distribution for 2005 fi nancial year of 18.0 cents (2004: 13.5 cents) per fully paid Stapled Security paid 2 September 2005 142,443 71,983 Interim distribution for 2006 fi nancial year of 24.5 cents (2005: 17.0 cents) per fully paid Stapled Security paid 28 February 2006 194,188 91,745 Total Distributions Paid 336,631 163,728

Consolidated 2006 2005 $’000 $’000 Distributions paid in cash or satisfi ed by the issue of Stapled Securities under the distribution reinvestment plan during the years ended 30 June 2006 and 30 June 2005 Paid in cash 243,240 131,686 Executive loans—repayments 352 - Satisfi ed by issue of Stapled Securities 93,007 32,042 Funds available for future distribution reinvestment plans 32 - Total Distributions Paid 336,631 163,728

annual report 2006 70 FINANCIALS

Notes to the consolidated financial statements for the year ended 30 June 2006 7. Events occurring after (b) Westlink M7 increase in the balance date equity interest Transurban has exercised its pre- emptive right to purchase an additional (a) West Gate-CityLink-Monash 2.5 per cent equity interest in the freeway corridor improvement Westlink M7 for $34.3 million. This will project increase Transurban’s holding from Transurban has reached agreement 45 per cent to 47.5 per cent. Transurban with the State of Victoria and VicRoads and Macquarie Infrastructure Group to jointly fund upgrades and have pre-emptive rights over the improvements to 75 kilometres of the remaining 5 per cent held by Leighton West Gate-CityLink (Southern Link)- Holdings Limited. Monash freeway corridor. (c) High Court of Australia decision The CityLink upgrade, which is estimated —deductibility of concession fees to cost $166 million over the three year construction period, will be funded via On 20 July 2006, the High Court ruled in the Distribution Reinvestment Plan. favour of Transurban in relation to the The State will fund the non-CityLink tax deductibility of the Concession Fees works, estimated to cost $737 million. paid to the State of Victoria under the Full project completion is expected by Melbourne CityLink Concession Deed. December 2010. The case was heard by the High Court of Australia after the Australian Taxation Under the agreement, the State of Offi ce (ATO) appealed the unanimous Victoria will also assign to Transurban judgement of the Full Court of the all remaining and future Concession Federal Court in October 2004. Note liabilities incurred under the provisions of the Melbourne CityLink The High Court awarded the costs of the Concession Deed. These liabilities have legal action to Transurban which are yet a face value of $2.9 billion and will be to be quantifi ed. replaced by payments over the next four years totalling $614 million. Transurban and the State will share in the revenue uplift generated by the project after Transurban has fully recovered the capital cost and any lost revenue from the construction phase of the Southern Link upgrades.

71 annual report 2006 The Transurban Group

Directors’ declaration

The directors declare that in their opinion, the concise fi nancial report of the consolidated entity for the year ended 30 June 2006, as set out on pages 61 to 71, complies with Accounting Standard AASB 1039: Concise Financial Reports. The concise fi nancial report is an extract from the full fi nancial report for the year ended 30 June 2006. The fi nancial statements and specifi c disclosures included in the concise fi nancial report have been derived from the full fi nancial report. The concise fi nancial report cannot be expected to provide as full an understanding of the fi nancial performance, fi nancial position and fi nancing and investing activities of the consolidated entity as the full fi nancial report, which is available on request. This declaration is made in accordance with separate resolutions of the directors of Transurban Limited, Transurban Infrastructure Management Limited and Transurban Holdings Limited.

Laurence G Cox Chairman

Kimberley Edwards Managing Director

Melbourne 22 August 2006

annual report 2006 72 FINANCIALS

Independent audit report to the members

73 annual report 2006 The Transurban Group

Independent audit report to the members

annual report 2006 74 FINANCIALS

Security holder information as at 31 August 2006

Shareholder Information

The security holder information set out below was applicable as at 31 August 2006.

A. Distribution Of Stapled Securities 1. The number of holders of Stapled Securities, which comprise one share in Transurban Holdings Limited, one share in Transurban Limited and one unit in Transurban Holding Trust, was 61,060.

2. The voting rights are one vote per Stapled Security.

3. At 31 August 2006 the percentage of the total holdings held by or on behalf of the twenty largest holders of these securities was 60.86 per cent.

4. The distribution of holders was as follows:

Security Grouping Number of Holders Stapled Securities held % 1 - 1,000 12,954 8,101,713 0.97 1,001 - 5,000 36,758 92,172,780 11.06 5,001 - 10,000 7,532 54,472,850 6.53 10,001 - 100,000 3,579 77,503,197 9.29 100,001 - and over 237 601,670,645 72.15 Total 61,060 833,921,185 100

There were 72 holders of less than a marketable parcel of ordinary shares.

5. Substantial Shareholder’s as at 31 August 2006 are as follows:

Name Number of % of Total Stapled Securities Commonwealth Bank of Australia 107,188,884 13.54 Ontario Teacher’s Pension Plan Board 48,153,103 6.08

75 annual report 2006 The Transurban Group

Security holder information as at 31 August 2006

B. Twenty Largest Holders Of Stapled Securities Number of % of Issued Stapled Securities Held Stapled Securities Westpac Custodian Nominees Limited 108,957,945 13.07 National Nominees Limited 98,002,340 11.75 J P Morgan Nominees Australia Limited 56,025,274 6.72 ANZ Nominees Limited 35,330,662 4.24 Citicorp Nominees Pty Limited 25,907,530 3.11 ANZ Nominees Limited 25,879,938 3.10 Queensland Investment Corporation 24,271,145 2.91 RBC Dexia Investor Services Australia Nominees 21,664,987 2.60 Citicorp Nominees Pty Limited 21,613,879 2.59 Cogent Nominees Pty Limited 14,653,050 1.76 Westpac Financial Services Limited 14,328,011 1.72 Citicorp Nominees Pty Limited 11,473,729 1.38 UBS Wealth Management Australia Nominees Pty Ltd 10,030,788 1.20 Australian Foundation Investment Company Limited 8,792,402 1.05 Citicorp Nominees Pty Limited 7,646,406 0.92 Citicorp Nominees Pty Limited 5,456,248 0.65 AMP Life Limited 5,342,861 0.64 Citicorp Nominees Pty Limited 4,586,097 0.55 Cogent Nominees Pty Limited 4,236,822 0.51 Djerriwarrh Investments 3,250,000 0.39 Total 507,450,114 60.86

annual report 2006 76 FINANCIALS Transurban CARS Trust and Controlled Entities

The Concise Financial Report of Transurban CARS Trust and Controlled Entities (ABN 81 656 633 158) For the year ended 30 June 2006

Contents

Directors’ report 79

Concise fi nancial report: Consolidated income statement 86

Consolidated balance sheet 87

Consolidated statement of changes in equity 88

Consolidated cash fl ow statement 89

Notes to the consolidated fi nancial statements 90

Directors’ declaration 92

Independent audit report to the members 93

Security holder information 95 FINANCIALS

Directors’ report

Relationship of the concise Directors Transurban and Macquarie fi nancial report to the full Infrastructure Group have pre-emptive With the exception of the changes noted rights over the remaining 10 per cent fi nancial report below, the following persons were held by Abigroup Limited and Leighton directors of TIML during the whole of Holdings Limited. The concise fi nancial report is an the fi nancial year and up to the date of Transurban’s role in the Westlink extract from the full fi nancial report this report. for the year ended 30 June 2006. project involves: The fi nancial statements and specifi c Non-executive directors - a 45 per cent equity stake in the road’s disclosures included in the concise owner, Westlink Motorway fi nancial report have been derived Laurence G Cox - supply of the tolling system, and from the full fi nancial report. Geoffrey O Cosgriff The concise fi nancial report cannot Jeremy G A Davis - provision of tolling and customer be expected to provide as full an Peter C Byers management services. Susan M Oliver understanding of the fi nancial Westlink M7 is a 40-kilometre motorway David J Ryan performance, fi nancial position and in Western Sydney which links Hills M2 Christopher J S Renwick(1) fi nancing and investing activities at Baulkham Hills, the M4 at Eastern of Transurban CARS Trust and its Creek and the M5 at Prestons, and subsidiaries as the full fi nancial report. Executive directors bypasses 48 sets of traffi c lights. Further fi nancial information can be Kimberley Edwards(2) obtained from the full fi nancial report. Geoffrey R Phillips(3) b) Construction Phase Loan The full fi nancial report and auditor’s (1) C J S Renwick was appointed a Notes (CPLN) report will be sent to members on non-executive director on 26 July During the period, Transurban CARS request, free of charge. You can access 2005 and continues in offi ce at the Trust (TCT) received distributions both the full fi nancial report and the date of this report. from its wholly owned entity, concise report via the internet at our Transurban WSO Trust (TWT). Investor Information on our website: (2) K Edwards was appointed an The distributions are funded from www.transurban.com.au. Alternatively, executive director on 26 July 2005 interest received by TWT from the CPLN you can call 1300 360 146 (free call) and and continues in offi ce at the date which it acquired to fund Transurban’s a copy will be forwarded to you. of this report. contribution to the Westlink Motorway The directors of Transurban Partnership. The CPLN are (3) Infrastructure Management Limited, G R Phillips was an executive subordinated loan notes which pay the Responsible Entity of Transurban director from the beginning of the interest at the rate of 6.27 per cent CARS Trust, present their report on the fi nancial year until his resignation per annum. consolidated entity consisting of the on 26 July 2005. The income received by way of Transurban CARS Trust (the Trust), distribution from TWT is the principal and the entities it controlled at the source of cash to fund distributions end of, and during, the year ended Principal activities and payable by TCT on the Convertible 30 June 2006. review of operations Adjusting Rate Securities (CARS) issued by TCT. Responsible entity The investment policy of the Trust continues to be that detailed in the CPLN held by the Trust converted to Term prospectus and in accordance with the Loan Notes (TLN) on the Equity Transurban CARS Trust is registered as provisions of the governing documents Contribution Date defi ned as the earlier of: a managed investment scheme under of the Trust. Chapter 5C of the Corporations Act 2001 - the date of completion of construction and as a result, requires a Responsible of the Westlink M7 motorway a) Westlink M7 Entity. Transurban Infrastructure - the date which is 42 months after Management Limited (TIML) is the The Trust increased its equity interest fi nancial close, and Responsible Entity of the Transurban from 40 per cent to 45 per cent in the - the date on which a demand is CARS Trust and is responsible for Westlink M7 project on 16 December made after the occurrence of an performing all functions that are 2005, in line with the opening of the event of default under the required under the Corporations Westlink M7 Motorway, eight months subscription agreement. Act 2001. ahead of schedule.

79 annual report 2006 Transurban CARS Trust and Controlled Entities

Directors’ report

Construction of Westlink M7 was c) Convertible Adjusting Rate Under the terms of the CARS completed on 16 December 2005, Securities (CARS) prospectus, unit holders are eligible to accordingly CPLN converted to Term convert their CARS units into Loan Notes accruing interest at 11.93 During the period, TCT paid distributions to Transurban triple stapled securities per cent. CARS holders at the fi xed rate of 7 per cent (Transurban securities) at any time after per annum. The distributions which are the second anniversary of the issue date Any unpaid interest capitalises into paid twice annually with payment dates of (14 April 2005). During the year additional Term Loan Notes. 31 July and 31 December, respectively, exchange notices were received electing were 100 per cent tax deferred for the year to convert units into Transurban Group ended 30 June 2006. Stapled Securities.

The table below sets out the conversions for the year ended 30 June 2006. Units on Conversion Stapled issue factor Securities issued ‘000 1 July 2005 4,300,000 31 December 2005—Stapled Securities were issued on 3 January 2006 (288,711) 17.0679 4,928 30 June 2006—Stapled Securities were issued on 3 July 2006 (273,953) 17.4966 4,793 30 June 2006 3,737,336 9,721

Distributions

Distributions paid to holders of CARS during the fi nancial year were as follows: 2006 $’000 CARS Distribution payment for the period 1 January 2005 to 30 June 2005 of 7.0 per cent per annum paid on 29 July 2005 14,926 Distribution payment for the period 1 July 2005 to 31 December 2005 of 7.0 per cent per annum paid on 31 January 2006 15,174 30,100

A further distribution for the period 1 January 2006 to 30 June 2006 of $13.9 million was paid on 31 July 2006.

annual report 2006 80 FINANCIALS

Directors’ report

Results

A summary of the consolidated revenue and overall result is set out below: Consolidated 2006 2005 $’000 $’000 Revenue from continuing operations 41,237 26,030 Net Profi t/(Loss) 3,450 (8,939)

Signifi cant changes in the Likely developments Fees paid to and interest state of affairs and expected results held in the trust by the of operations responsible entity or its With the exception of the events associates mentioned in the Review of Operations Information on likely developments in (See page 79), in the opinion of the the operations of the consolidated entity directors there were no signifi cant Fees paid to the responsible entity and and the expected results of operations its associates out of Trust property changes in the state of affairs of the have not been included in this report consolidated entity that occurred during during the year are disclosed in Note 25 because the directors believe it would of the full fi nancial statements. the fi nancial year. be likely to result in unreasonable prejudice to the consolidated entity. No fees were paid out of Trust property to the directors of the responsible entity Matters subsequent to the during the year. end of the fi nancial period Environmental regulation The number of securities held by the responsible entity or its associates as at Transurban has exercised its Westlink M7 operations are not subject to the end of the fi nancial year are pre-emptive right to purchase an any special environmental regulation apart disclosed in Note 28 of the full fi nancial additional 2.5 per cent equity interest from that which would apply to any other statements. in Westlink M7 for $34.3 million. This road or development of a similar nature will increase Transurban’s holding from except where protection for sensitive areas 45 per cent to 47.5 per cent. Transurban and specifi ed trees that are endangered and Macquarie Infrastructure Group sites used by bats for roosting. have pre-emptive rights over the remaining 5 per cent held by Leighton Holdings Limited. Insurance and With the exception of this event at the indemnifi cation of offi cers date of this report, the directors are not No insurance premiums are paid for aware of any circumstances that have out of the assets of the Trust in regards arisen since 30 June 2006 that have to insurance cover provided to the signifi cantly affected, or may responsible entity or any of its agents. signifi cantly affect: So long as the offi cers of the (a) the Trust’s operations in future responsible entity act in accordance fi nancial years with the Trust Constitution and the Act, they remain fully indemnifi ed out of the (b) the results of those operations in assets of the Trust against any losses future fi nancial years, or incurred while acting on behalf of the Trust. The auditor of the Trust is in no (c) the Trust’s state of affairs in future way indemnifi ed out of the assets of fi nancial years. the Trust.

81 annual report 2006 Transurban CARS Trust and Controlled Entities

Directors’ report

Interests in the Trust issued during the fi nancial year

Consolidated 2006 2005 CARS on issue at 1 July 4,300,000 4,300,000 CARS issued during the year - - CARS converted to Transurban Stapled Securities (562,664) - CARS on issue at 30 June 3,737,336 4,300,000

Consolidated 2006 2005 Units Units Ordinary units on issue at 1 July 12 12 Ordinary units issued during the year - - Ordinary units on issue at 30 June 12 12

Value of assets

Consolidated 2006 2005 $’000 $’000 Value of Trust assets at 30 June 491,916 437,236

annual report 2006 82 FINANCIALS

Directors’ report

Directors’ interests

Security holdings As at the date of this Directors’ Report, the directors of the responsible entity have disclosed relevant interests in Stapled Securities, options over Stapled Securities and Convertible Adjusting Rate Securities (CARS) issued by the Transurban Group as follows: Name Number of CARS Number of Options issued over Transurban Stapled Transurban Stapled Securities Securities L G Cox - 1,142,500 - P C Byers - 70,580 - G O Cosgriff 121 31,110 - J G A Davis - 51,817 - S M Oliver - 68,009 - C J S Renwick - - - D J Ryan - 22,394 - K Edwards - 1,873,500 -

Rounding of amounts Auditors’ independence declaration The Trust is of a kind referred to in Class Order 98/0100, issued by the Australian A copy of the auditors’ independence Securities and Investments Commission, declaration as required under section relating to the ‘rounding off’ of amounts 307C of the Corporations Act 2001 is set in the Directors’ Report. Amounts in the out on page 85. Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in Auditor certain cases, to the nearest dollar. PricewaterhouseCoopers continues in offi ce in accordance with the Corporations Act 2001.

83 annual report 2006 Transurban CARS Trust and Controlled Entities

Directors’ report

This report is made in accordance with a resolution of the directors of Transurban Infrastructure Management Limited.

Laurence G Cox Chairman

Kimberley Edwards Managing Director

Melbourne 22 August 2006

annual report 2006 84 FINANCIALS

Directors’ report

Auditors’ Independence Declaration

As lead auditor for the audit of the Transurban Group for the year ended 30 June 2006, I declare that to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit, other than a contravention covered by ASIC Class Order 05/910; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This statement is in respect of the Transurban Group and the entities it controlled during the year.

Tim Goldsmith Partner

Melbourne 22 August 2006

Liability limited by a scheme approved under Professional Standards Legislation.

85 annual report 2006 Transurban CARS Trust and Controlled Entities

Consolidated income statement for the year ended 30 June 2006

Consolidated Notes 2006 2005 $’000 $’000 Revenue from continuing operations 5 41,237 26,030 Other income 2,940 - Administration expenses (2,599) (3,843) Finance costs (29,494) (31,126) Share of net losses of associates and joint venture partnership accounted for using the equity method (8,634) - Net Profi t/(Loss ) for the Year Attributable to the Unit-holders of the Trust 3,450 (8,939) Earnings per unit for profi t/(loss) from continuing operations attributable to the ordinary unit holders: $ $ Basic earnings per ordinary unit 287,500 (744,917) Diluted earnings per ordinary unit 287,500 (744,917)

The above consolidated income statement should be read in conjunction with the accompanying notes.

annual report 2006 86 FINANCIALS

Consolidated balance sheet as at 30 June 2006

Consolidated 2006 2005 $’000 $’000 Current assets Cash and cash equivalents 12,452 32,531 Trade and other receivables 201 354 Total Current Assets 12,653 32,885

Non-current assets Investments accounted for using the equity method 9,496 - Held-to-maturity investments 469,767 392,000 Other fi nancial asset - 12,351 Total Non-Current Assets 479,263 404,351 Total Assets 491,916 437,236

Current liabilities Trade and other payables 18,757 17,119 Total Current Liabilities 18,757 17,119

Non-current liabilities Borrowings 482,537 449,785 Total Non-Current Liabilities 482,537 449,785 Total Liabilities 501,294 466,904 Net liabilities (9,378) (29,668)

Unitholders’ funds Accumulated losses (9,378) (29,668) Total Unitholders’ Funds (9,378) (29,668)

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

87 annual report 2006 Transurban CARS Trust and Controlled Entities

Consolidated statement of changes in equity for the year ended 30 June 2006 Consolidated Notes 2006 2005 $’000 $’000 Total equity at the beginning of the fi nancial year (29,668) (20,729) Adjustment on adoption of AASB 132 and AASB 139: Retained profi ts 3 16,840 - Profi t/(loss) for the year 3,450 (8,939) Total Equity at the End of the Financial Year Attributable to Unit Holders of the Trust (9,378) (29,668)

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

annual report 2006 88 FINANCIALS

Consolidated cash flow statement for the year ended 30 June 2006

Consolidated Notes 2006 2005 $’000 $’000 Cash fl ows from operating activities Receipts from customers (inclusive of GST) 270 355 Payments to suppliers (inclusive of GST) (2,860) (4,503) Interest received 12,528 26,051 Interest paid 6 (30,100) (30,135) Net Cash (Outfl ows) from Operating Activities (20,162) (8,232)

Cash fl ows from investing activities Payment for purchase of subsidiary, net of cash acquired (47,350) - Loans to related parties - (92) Net Cash (Outfl ows) from Investing Activities (47,350) (92)

Cash fl ows from fi nancing activities Loans from related parties 47,433 171 Repayment of loans to related parties - (23) Net cash infl ows from fi nancing activities 47,433 148 Net (decrease) in cash held (20,079) (8,176) Cash at the beginning of the fi nancial year 32,531 40,707 Cash at the End of the Financial Year 12,452 32,531

The above consolidated cash fl ow statement should be read in conjunction with the accompanying notes.

89 annual report 2006 Transurban CARS Trust and Controlled Entities

Notes to the consolidated financial statements for the year ended 30 June 2006 This concise fi nancial report relates to to International Financial Reporting 2. Presentation currency the consolidated Trust consisting of Standards (AIFRS). AASB 1 First-Time Transurban CARS Trust and the entities Adoption of Australian Equivalents to The presentation currency used in it controlled at the end of, or during, International Financial Reporting this concise fi nancial report is the year ended 30 June 2006. Standards has been applied in Australian dollars. The accounting policies adopted have preparing the full fi nancial report. been consistently applied to all years Financial statements of Transurban presented, unless otherwise stated in 3. Change in accounting CARS Trust until 30 June 2006 had been Note 1 below. prepared in accordance with previous policy The Trust is of a kind referred to in Australian Generally Accepted Class Order 98/0100, issued by the Accounting Principles (AGAAP). AGAAP The Trust has taken the exemption Australian Securities and Investments differs in certain respects from AIFRS. available under AASB 1 First-Time Commission, relating to the ‘rounding When preparing Transurban CARS Trust Adoption of Australian Equivalents off’ of amounts in fi nancial reports. 2006 fi nancial statements, management to International Financial Reporting Amounts in the concise fi nancial report has amended certain accounting, Standards to apply AASB 132 have been rounded off in accordance valuation and consolidation methods Financial Instruments: Disclosure with that Class Order to the nearest applied in the AGAAP fi nancial and Presentation and AASB 139 thousand dollars, or in certain cases, statements to comply with AIFRS. With Financial Instruments: Recognition to the nearest dollar. the exception of fi nancial instruments, and Measurement from 1 July 2005. the comparative fi gures in respect of At the date of transition to these 2005 were restated to refl ect these standards at 1 July 2005, the below 1. Adoption of Australian adjustments. The Trust has taken the adjustments were recognised: Equivalents to exception available under AASB 1 to only International Financial apply AASB 132 Financial Instruments: Disclosure and Presentation and AASB Reporting Standards 139 Financial Instruments: Recognition and Measurement from 1 July 2005. The full fi nancial report on which this concise fi nancial report is based is the fi rst annual Transurban CARS Trust fi nancial report to be prepared in accordance with Australian equivalents

30 June 1 July 2005 Adjustment 2005 $’000 $’000 $’000 Financial assets at fair value through profi t or loss - 16,840 16,840 Other non-current assets 12,351 (12,351) - Non-current interest bearing liabilities 449,785 (12,351) 437,434 Adjustment to Net Assets 16,840 Accumulated losses (29,668) 16,840 (12,828) Adjustment to Total Equity 16,840

annual report 2006 90 FINANCIALS

Notes to the consolidated financial statements for the year ended 30 June 2006 Financial assets at fair value Re-classifi cation of capitalised 4. Segment information through profi t or loss borrowing costs The Trust’s sole business segment for Options held to acquire an additional The carrying value of deferred the year ending 30 June 2006 was 5 per cent interest in the Westlink M7 borrowing costs of $12,351,000 has investing in the Westlink Motorway Project at a cost of $49 million were been re-classifi ed as a reduction in Partnership. All revenues and expenses recognised and recorded at fair value. interest bearing liabilities, rather than are directly attributable to this sole A fi nancial asset and an increase in a non-current assets. purpose. Internal fi nancial reporting is accumulated losses of $16,840,000 based on this sole business segment. were recognised.

5. Revenue Consolidated 2006 2005 $’000 $’000 Interest from continuing operations 41,237 26,030

6. Distributions 2006 $’000 CARS Distribution payment for the period 1 January 2005 to 30 June 2005 of 7.0 per cent per annum paid on 29 July 2005 14,926 Distribution payment for the period 1 July 2005 to 31 December 2005 of 7.0 per cent per annum paid on 31 January 2006 15,174 30,100

The coupon payment for the half year ended 30 June 2006 of $13.9 million was paid on 31 July 2006.

7. Economic dependency 8. Events occurring after the balance date Transurban CARS Trust is reliant on the receipt of distributions from Transurban Transurban has exercised its pre- WSO Trust for its ongoing viability. emptive right to purchase an additional Transurban CARS Trust has 2.5 per cent equity interest in Westlink $12.4 million (2005: $20.1 million) in M7 for $34.3 million. This will increase reserve to fund future CARS coupon Transurban’s holding from 45 per cent payments which is not available for to 47.5 per cent. Transurban and general use. The CARS coupon Macquarie Infrastructure Group payments are guaranteed by have pre-emptive rights over the Transurban Holding Trust (parent entity) remaining 5 per cent held by Leighton until the fi rst reset date 14 April 2007. Holdings Limited.

91 annual report 2006 Transurban CARS Trust and Controlled Entities

Directors’ declaration

The directors declare that in their opinion, the concise fi nancial report of the Trust for the year ended 30 June 2006, as set out on pages 86 to 91, complies with Accounting Standard AASB 1039: Concise Financial Reports. The concise fi nancial report is an extract from the full fi nancial report for the year ended 30 June 2006. The fi nancial statements and specifi c disclosures included in the concise fi nancial report have been derived from the full fi nancial report. The concise fi nancial report cannot be expected to provide as full an understanding of the fi nancial performance, fi nancial position and fi nancing and investing activities of the Trust as the full fi nancial report, which is available on request. This declaration is made in accordance with a resolution of the directors of Transurban Infrastructure Management Limited.

Laurence G Cox Chairman

Kimberley Edwards Managing Director

Melbourne 22 August 2006

annual report 2006 92 FINANCIALS

Independent audit report to the members

93 annual report 2006 Transurban CARS Trust and Controlled Entities

Independent audit report to the members

annual report 2006 94 FINANCIALS

Security holder information as at 31 August 2006

Shareholder information

The security holder information set out below was applicable as at 31 August 2006.

A. Distribution of Convertible Adjusting Rate Securities (CARS) 1. The number of holders of CARS, which are preference units in Transurban CARS Trust was 5,277.

2. The voting rights are one vote per security.

3. At 31 August 2006 the percentage of the total holdings held by or on behalf of the twenty largest holders of these securities was 71.12 per cent.

4. The distribution of holders was as follows:

Security grouping Number of holders Number of CARS held % 1 - 1,000 5,166 876,640 23.45 1,001 - 5,000 85 151,618 4.06 5,001 - 10,000 4 26,811 0.72 10,001 - 100,000 16 531,823 14.23 100,001 - and over 6 2,150,444 57.54 Total 5,277 3,737,336 100

There were 43 holders of less than a marketable parcel of preference units. 5. Substantial Holders as at 31 August 2006 are as follows:

Name Number of CARS % of total DKR Oasis Management Company and associate 274,000 6.37 JP Morgan Chase and Co and its affi liates 374,365 10.02

95 annual report 2006 Transurban CARS Trust and Controlled Entities

Security holder information as at 31 August 2006

B. Twenty largest holders of CARS Number of CARS held % of issued CARS Citicorp Nominees Pty Limited 779,753 19.56 ANZ Nominees Limited 399,972 12.01 Westpac Custodian Nominees Limited 329,857 9.57 Brispot Nominees Pty Limited 255,562 7.79 J P Morgan Nominees Australia Limited 170,029 4.46 RBC Dexia Investor Services Australia Nominees 155,227 4.15 HSBC Custody Nominees Australia Limited 97,500 2.61 Goldman Sachs Jbwere Capital Markets Ltd 59,252 1.59 National Nominees Limited 58,571 1.57 Irrewarra Investments Pty Ltd 42,500 1.24 UBS Wealth Management Australia Nominees 36,583 0.97 Brencorp No 8 Pty Limited 33,278 0.87 RBC Dexia Investor Services Australia Nominees 64,997 0.82 Brencorp No 11 Pty Limited 25,927 0.69 Cambooya Pty Limited 25,335 0.68 Fortis Clearing Nominees 21,791 0.59 Cogent Nominees Pty Limited 21,153 0.57 Elise Nominees Pty Limited 24,282 0.54 Australian Executor Trustees Limited 17,047 0.44 RBC Dexia Investor Services Australia Nominees 14,222 0.40 Total 2,632,838 71.12

annual report 2006 96 FINANCIALS

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97 annual report 2006 Enquiries and information

Enquiries about your stapled Tax File Number (TFN) information securities While it is not compulsory for security holders to provide a TFN, the Company is obliged to deduct Printed by Finsbury Green Printing, Australia’s leading The Stapled Securities Register is maintained tax from distributions or dividends to holders environmental printer. by Computershare Investor Services Pty Limited. resident in Australia who have not supplied such If you have a question about your Transurban information. If you have not already supplied your Finsbury uses vegetable based inks (key components are soya and linseed oil), which are made from Securities, transfer of securities or distributions, TFN, you may do so by writing to the Stapled please contact: renewable sources. This paper is certified by the Forest Securities Register. Stewardship Council and carries the FSC trademark, Computershare Investor Services Pty Limited the international benchmark for sustainable paper. This Change of address or name paper is produced using 80% post consumer recycled Yarra Falls, 452 Johnston Street content and 20% FSC certified fibre from softwood Abbotsford Victoria 3067 A security holder should notify the Register grown specifically for paper production, and is GPO Box 2975 immediately, in writing, if there is any change elemental chlorine free. Finsbury has used no isopropyl Melbourne Victoria 3001 in his/her registered address or name. alcohol and no solvent based cleaning products in the printing of this brochure, consequently contributing to a Telephone 1300 360 146 (within Australia) reduction in greenhouse gas emissions. Finsbury is Telephone +613 9415 4000 (outside Australia) Transurban Group Australia’s only carbon neutral printer and operates Facsimile +613 9473 2500 under world best practice systems (ISO14001:2004 Transurban Holdings Limited [email protected] Environmental Management System and ISO9001:2000 ABN 86 098 143 429 www.computershare.com Quality Management System). Transurban Holding Trust Enquiries about Transurban ABN 30 169 362 255 Contact Transurban’s Investor Relations: Transurban Limited Manager, Investor Relations ABN 96 098 143 410 Telephone +613 9612 6999 Facsimile +613 9649 7380 Transurban Infrastructure Email via our website: Management Limited www.transurban.com.au ABN 27 098 147 678 (as responsible entity of the Transurban CARS Trust ARSN 103 090 928) Or write to: Registered Offi ce Manager, Investor Relations Level 43, Rialto South Tower Transurban Group 525 Collins Street Level 43, Rialto South Tower Melbourne Victoria 3000 525 Collins Street Telephone +613 9612 6999 Melbourne Victoria 3000 Facsimile +613 9649 7380 www.transurban.com.au Stock Exchange listing Directors Stapled Securities are listed on the Australian Stock Exchange under the name Transurban Laurence G Cox, Chairman Group and under the code ‘TCL’. Kim Edwards, Managing Director Peter C Byers Transurban CARS Trust: securities are listed on Geoffrey O Cosgriff the Australian Stock Exchange under the name Jeremy G A Davis Transurban CARS Trust and under the code Susan M Oliver ‘TCS’. Christopher J S Renwick The securities participate in the Clearing House David J Ryan Electronic Subregister System (CHESS). Company Secretaries Removal from Annual Report Mark Licciardo mailing list Paul O’Shea Security holders can nominate not to receive an Auditors Annual Report by written notice to the Stapled Securities Register. Security holders will continue PricewaterhouseCoopers to receive all other shareholder information, Freshwater Place including Notice of Annual General Meeting and 2 Southbank Boulevard proxy form. Melbourne Victoria 3006 Telephone +613 8603 1000 Facsimile +613 8603 1999 www.transurban.com.au