AAnnnnuuaall RReeppoorrtt 22000055--0066

Annual Report 2005-06

TransAdelaide GPO Box 2351 Adelaide SA 5001

Prepared by: Business Services Copies of Annual Report are available from TransAdelaide’s Website: transadelaide.com.au Enquiries: 08 8218 2478 September 2006

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Year in Review...... 4 Corporate Structure...... 8 Strategic Direction...... 8 Corporate Values ...... 8 Board of Directors...... 9 Corporate Governance...... 11 Organisational Structure...... 16 Executive Structure...... 17 Rail Systems ...... 19 Patronage ...... 21 Customer Satisfaction ...... 22 Special Services & Promotions...... 22 Reliability...... 23 Marketing & Promotion...... 24 Customer Information...... 24 Fare Compliance ...... 24 Rail Education Unit...... 25 Corridor Services ...... 27 Stations...... 29 Signals & Power...... 29 Track & Civil Infrastructure ...... 29 Projects ...... 30 Adopt-A-Station...... 32 Environment ...... 32 Fleet Infrastructure ...... 35 Railcars ...... 37 Tramcars...... 37 Energy Efficiency ...... 38 Business Services...... 39 Financial Management ...... 41 Information Systems...... 41 Property Management ...... 41 Contracts & Procurement...... 41 Security...... 42 Organisation Development ...... 43 Employee Statistics ...... 46 Registered Training Organisation (RTO)...... 48 Learning & Development ...... 49 Industrial Relations ...... 49 Certified Agreements ...... 49 WorkCover Statistics ...... 50 Workers Compensation & Rehabilitation...... 51 Safety & Management ...... 51 Equal Employment Opportunity ...... 52 Quality Certification ...... 52 Financial Report ...... 53 Directors’ Report ...... 55 Financial Statements ...... 61-95 Certification...... 96 Attorney-General’s Department – Independent Audit Report ...... 97

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Year in review

New trams, the tramway upgrade, a new transport interchange at Mawson Lakes and petrol price-driven patronage growth have all made for a busy 2005-06 for TransAdelaide and ensured that TransAdelaide continues to progress toward achieving the public transport target in South Australia’s Strategic Plan.

It remains to be seen whether the move to public transport by many who would not normally use it becomes permanent. The challenge for TransAdelaide will be the continuing provision of high quality customer service to

retain these new customers. Bill Watson General Ma nager

Financial Performance

TransAdelaide achieved a net profit after tax of $14.855m. This profit was attributable to the sale of tram related assets to the Department of Transport, Energy and Infrastructure.

Considerable effort was made in containing operational expenses during the year to ensure that TransAdelaide’s operational budget remained within the limitations of the Public Transport Division rail services contract. Remaining within budget limitations is becoming more difficult each financial year with all costs continuing to rise faster than the increases in revenue paid to us in the rail services contract. This makes the task of meeting customer expectations increasingly difficult.

Trams

2005-06 was an exciting time for Adelaide’s tram business, with recommencement of services on the upgraded tram track; commencement of services with the new light rail vehicles; progressive H Class tram retirement and further work on the City West extension.

In August 2005 tram services resumed following the completion of the $23.57m tram line upgrade. Passenger amenity was substantially improved with new platforms and shelters, enhanced lighting and landscaping. Motorists crossing the tram corridor benefited from level crossing upgrades with the introduction of concrete level crossings.

The tramway upgrade project represented a major undertaking for TransAdelaide, testing project management and technical skills. It is a credit to the project team that the project was completed on time with less than a 2% cost overrun.

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With the introduction of the new light rail vehicles in January, Adelaide’s tram system entered the 21st Century. The gradual introduction of the new light rail vehicles since then opens up tram travel to a group of customers who were not able to use tram services, namely those using wheelchairs and gophers and those with limited mobility.

Overall customer reaction to the new trams has been positive. Clearly there were some initial teething problems but modifications were made to tram air conditioning systems with further modifications planned for later this year. In addition, extra hanging straps were also installed.

By December, tram patronage had recovered to pre shut-down levels which was faster than expected. In the past, following a major closure, passengers have taken much longer to revert to their previous travel patterns. At year’s end, patronage was down only 1% on the previous year which is a magnificent achievement given the shutdown. In response to passenger demand an additional morning peak service was introduced.

A number of tram derailments occurred following the re-opening of the tram line. All occurred as low speed, non-passenger shunting movements with no-one being injured. It is a matter of regret, the passengers who rely on reliable tram services, were inconvenienced on a number of occasions, as were a substantial number of participants in the City to Bay Fun Run. To determine the causes and to ensure that there would be no re-occurrences, a comprehensive investigation was undertaken by two rail experts. TransAdelaide has accepted the investigators’ recommendations and is implementing each of them.

A substantial investment was made in training operational and maintenance staff in all aspects of the new trams.

Looking forward the tram business has a number of challenges in 2006-07:

• Responding to the substantial increase in patronage • Analysing the results of the nine months of new tram operation to develop strategies to improve service delivery and enhance customer service • Completion of the installation of points and switches • Assuming responsibility from Bombardier Transportation Australia Ltd (Bombardier) for all aspects of new tram maintenance.

TransAdelaide’s tram business is well placed to provide services next year on the extension to City West and to respond to the Government’s light rail vision.

Rail

The second half of 2005-06 saw a resurgence in rail’s popularity. Train patronage grew by 4.7% compared to the previous financial year. Patronage growth was due to two factors – rising fuel prices and the Mawson Interchange opening in February.

Mawson Interchange is the first major rail/bus interchange development in 25 years. Bus connectivity, car parking and UniSA’s Mawson Lakes campus have made this interchange an immediate success. The Interchange demonstrates the benefits of transit oriented developments.

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Patronage growth has been relatively uniform across the network. With no prospect of fuel prices permanently returning to less than $1.20 a litre, TransAdelaide faces a challenge to service existing and new customers. Options for additional morning and afternoon peak services are being evaluated and will see the reintroduction of six 2000/2100 Class railcars back into service during 2007.

TransAdelaide is working with its railcar maintenance provider, Bombardier, to reduce the number of railcars out of service during the morning peak thus providing additional morning peak capacity.

Reliability of TransAdelaide’s train control system was significantly enhanced with the introduction of a $10m replacement train control system. The changeover to the new system was not without teething problems causing customer inconvenience. Since the system changeover in June, the new train control system has proved remarkably stable and is now being used as a demonstration site by the system supplier, United Goninan.

The new train control system was one of many challenges that the Rail Systems business unit faced during the year in providing rail services. What appears to be a relatively simple business, is in fact quite complex.

At the Train Control Centre there is a dedicated team of staff working 24 hours a day, every day to ensure that our customers get where they need to go. During the year, they and the Rail Systems team coped admirably with numerous operational challenges such as peak demands like the SkyShow, Royal Show and New Years Eve as well as service interruptions such as those associated with the replacement train control system. Withdrawal of a large number of 2000 Class rail cars for a number of months from service for urgent corrective maintenance in April required a significant amount of work re- allocating railcars.

Safety

The Board has set the organisation an ambitious target of having the best safety performance of any suburban rail operator in Australia.

As a step toward achieving this objective, TransAdelaide commissioned an independent review of its safety performance to mature its safety culture. TransAdelaide’s Board has accepted the review’s recommendations with the organisation working toward implementing each recommendation.

The journey to a sustainable, high performance safety culture requires considerable organisational persistence accompanied by managers and supervisors taking a leadership role in safety and continually demonstrating TransAdelaide’s safety values.

TransAdelaide’s four year, pedestrian crossing upgrade program commenced during the year. The program’s objective is to prevent pedestrians from being killed and injured by trains through introduction of automatic pedestrian gates at selected locations, devices and signs that warn pedestrians of two trains approaching and safer pedestrian crossing surfaces.

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Railcar Maintenance

2005-06 marked the first full twelve months of Bombardier Transportation maintaining TransAdelaide’s railcar fleet. Bombardier assumed responsibility in June 2005, replacing United Goninan.

Under the new contractual arrangements railcar reliability has significantly improved thus providing greater on-time running and service reliability. Our Fleet Infrastructure team is working with Bombardier to further enhance fleet reliability and extend railcar life.

Our People

14 million passengers would not have arrived at their destination without the combined efforts of TransAdelaide’s 531 staff. What sets our staff apart is their dedication to the rail and tram system. During the year when operations have not gone to plan, our staff rise to the challenge to get services back to normal. In these circumstances the amount of work behind the scenes is substantial. This may not be realised by customers who are frustrated by a service delay or cancellation.

In 2005-06 a number of staff with very lengthy periods of service retired. We wish Ian Sinclair, Roger Paues, Jim Sandford, and Darryl Jeffries well. Each of these men had more than 20 years service and each made a significant contribution to TransAdelaide, the STA and in some cases South Australian Railways.

On behalf of the Board

Bill Watson Virginia Hickey General Manager Chair

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Corporate Structure

The TransAdelaide (Corporate Structure) Act 1998 was proclaimed in January 1999 providing the Government with shareholder rights and obligations while providing TransAdelaide with the flexibility and opportunity to operate under a business charter with the guidance of an independent, commercially astute Board. TransAdelaide’s principal function is to operate train and tram passenger services within the Adelaide Metropolitan Area. These services are provided under contract to the Passenger Transport Division of the Department of Transport Energy and Infrastructure.

Strategic Direction

TransAdelaide’s strategic direction sets a strong focus on TransAdelaide operating as a key player in an integrated passenger transport network. This commitment means that TransAdelaide will capitalise on the natural advantages of the North/South rail ‘spine’ and will work closely with the other service providers to deliver services expected by the community. TransAdelaide also aims for high standards in areas of importance to the travelling public such as safety and security, reliability, up-to-date information and frequency of services.

TransAdelaide’s key target is to achieve its part of the South Australian Strategic Plan target T3.9: ‘Double the use of public transport to 10% of weekday travel by 2018’.

TransAdelaide’s Corporate Values

• Safety and security for the public and our people • Building a successful organisation with foundations of trust and respect for the individual • Reliable, comfortable and affordable services accessible to all • Customer service of the highest order • Financial responsibility supported by good governance and ethical conduct • Awareness of our responsibilities to the community • Encouraging innovation and creativity • Sustainability by caring for the environment

These are our guiding principles governing how we work together to achieve our goals.

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Board of Directors

The Governor of South Australia appoints the Board of Directors pursuant to the TransAdelaide (Corporate Structure) Act 1998. Directors have been appointed to reflect TransAdelaide’s need for a diverse set of professional skills and business backgrounds and to provide a commercial influence on strategic decision-making.

Ms Virginia Hickey, the Chair of the Board, brings expertise in corporate governance and commercial law, as well as experience in transport. She is a corporate governance consultant, lawyer, and a director on a number of government and private sector boards including being a Commissioner of the National Transport Commission and on the board of Flinders Ports. Virginia is a member of the TransAdelaide Audit & Risk Committee and on the Board of TransAdelaide’s joint venture, Transitplus.

Mr Kevin Benger is Chief Executive Officer of CommunityCPS Australia Ltd. Kevin brings financial and transport skills to the Board from both his current role and 30 years involvement with transport, including his role as former General Manager of TransAdelaide.

Kevin is Chair of the TransAdelaide Audit & Risk Committee and a member of the Board of Transitplus.

Ms Frances Magill is the Chief Executive Officer of Statewide Superannuation Trust and Managing Director of Statewide Financial Management Services. Frances brings a wealth of commercial experience to the TransAdelaide Board and the Audit & Risk Committee, as well as a strong personal focus on improving community involvement. A recipient of the Telstra Business Woman of the Year, Frances has recently been awarded the Centenary Medal for Services to the Community and Statewide Superannuation Trust.

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Mrs Libby Kosmala is a Public Relations / Fundraiser for the Spina Bifida and Hydrocephalus Association of South Australia and a well-known South Australian paralympian. Libby brings a unique perspective of public relations, sporting achievements and disability access to the Board. Libby is also a member of the Management Committee of Transitplus.

Mr Roger Jowett is the National Transport Policy Advisor for the Rail, Tram and Bus Union. He was formerly National Secretary of the Rail Tram and Bus Union and was a member of the Australian Council of Trade Unions Executive. Roger has represented the Union on a number of Union / employer consultative committees at both State and National level.

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Corporate Governance

Framework

TransAdelaide has adopted a Corporate Governance Framework that provides a series of statements to management and staff on the Board’s requirements in areas important to the governance of TransAdelaide.

Composition of the Board

The Board of Directors is entirely independent from the management of TransAdelaide and brings a mix of skills and experience that ensures the application of commercial expertise, independent and objective judgement to all issues facing TransAdelaide. Members of the Board are appointed by the Governor on the nomination of the Minister of Transport.

At Board meetings held during the year, there was also ex-officio attendance by:

Mr Bill Watson General Manager, TransAdelaide Mr Dennis Huxley Manager Business Services, TransAdelaide (until November 2005) Mr Ian Maxfield Acting Manager Business Services, TransAdelaide (from December 2005 to February 2006) Ms Suzanne Ridding Manager Business Services, TransAdelaide (from March 2006) Ms Rachel Read Observer, Department of Treasury & Finance (to April 2006) Mr Damien Anderson Observer, Department of Treasury & Finance (from May 2006)

Board Committees

To assist the Board in monitoring TransAdelaide’s operations, an Audit & Risk Committee exists to assist the Board with its responsibilities for financial management and reporting, risk management, internal controls and achieving good corporate governance. At the date of this report, members of the Audit & Risk Committee were:

Mr Kevin Benger Chair Ms Virginia Hickey Member Ms Frances Magill Member

Audit & Risk Committee meetings were also ex-officio attended by:

Mr Bill Watson General Manager, TransAdelaide Mr Dennis Huxley Manager Business Services (to December 2005) Mr Ian Maxfield Acting Manager Business Services (December 2005 Meeting) Ms Suzanne Ridding Manager Business Services (from April 2006) Mr Salvatore Bianco Director of Audits, Auditor-General’s Department Mr Ben Brincat Audit Manager, Auditor-General’s Department Mr Laurie Kozlovic KPMG (Internal Auditor for TransAdelaide) Mr Justin Jamieson KPMG (Internal Auditor for TransAdelaide)

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Meetings of Directors

The number of meetings of the Board of Directors and Committees of the Board held during the year are shown below:

TransAdelaide Board Audit & Risk Committee Meetings Meetings No. eligible No. No. eligible No. to attend attended to attend attended Ms Virginia Hickey 11 11 5 5 Mr Kevin Benger 11 9 5 5 Ms Frances Magill 11 11 5 5 Mrs Libby Kosmala 11 11 Mr Roger Jowett 11 10

Audit Program

External Audit The Auditor-General’s Department is TransAdelaide’s external auditor and undertakes independent audits on the integrity and quality of the financial management and reporting by TransAdelaide. In addition, the Auditor-General’s Department examines the efficiency and economy with which TransAdelaide utilises its resources.

The scope of the audit program is determined by the Auditor-General to comply with the obligations as required by Section 31 of the Public Finance and Audit Act 1987 and sub section 32(4) of the Public Corporations Act 1993.

During the year, the Audit & Risk Committee members also met with the external auditors independent of management.

Internal Audit TransAdelaide engages KPMG as its internal auditor to assist the Board in ensuring compliance with established internal controls to ensure TransAdelaide is effectively identifying and managing risk. The internal auditors have direct access to the Audit & Risk Committee. This committee approves the annual internal audit plan. During the year, the Audit & Risk Committee members met with the internal auditors independent of management.

Risk Management

TransAdelaide uses the AS/NZS 4360:2004 Risk Management framework to identify, analyse, evaluate and treat risks. The organisation’s risk management processes are being further enhanced through a comprehensive review of:

• The structure of the risk management plan • The criteria used to analyse risks • The software required to support risk management processes • Risk reporting within the organisation

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In addition, training packages are being developed to assist the organisation in promoting a strong risk management culture. TransAdelaide has continued to implement risk mitigation strategies to address significant areas of risk.

Whistleblower Legislation

TransAdelaide’s Manager Business Services is responsible for the application of the Whistleblowers Protection Act within TransAdelaide to provide TransAdelaide’s employees, suppliers and members of the public with confidentiality regarding allegations of mal-administration, waste or illegal activities or corruption in the workplace.

Privacy Legislation

TransAdelaide is required to comply with the State Government’s ‘Information Privacy Principles Instruction’. These principles are applied throughout the organisation to provide appropriate levels of privacy protection to personal information.

Ethical Standards and Performance

A Code of Conduct has been in place throughout the course of the year to ensure all business affairs are conducted legally, ethically and with the strict observance of the highest standards of integrity and propriety. This Code of Conduct applies to all executives, employees and contractors of TransAdelaide.

Fraud

There were no instances of fraud detected within TransAdelaide or its joint venture, Transitplus, during the financial year.

Overseas Travel

Overseas travel was undertaken by officers from TransAdelaide during 2005-06 as follows:

No. of persons Destination Purpose Cost travelling 7 Germany Introduction / Training for No cost to new Flexity Trams TransAdelaide

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Consultants

The following private consultancies were engaged during the financial year at a total cost to TransAdelaide of $126,826.

$000 Consultancies up to $10,000 5 24 Consultancies $10,000 to

$50,000 Fellows Medlock & Associates Pty Safety Culture Program 27 Ltd Workplace Relationships and Greg Stevens Consulting 12 Industrial Climate Max Shuard & Associates Pty Ltd Tram Derailment Investigation 15 Environmental Impact on Ballast Soil & Groundwater Consulting 49 Management Consultancies over $50,000 None -

Freedom of Information Act – Information Statement

In accordance with section 9 of the Freedom of Information Act 1991, the following represents TransAdelaide’s information statement as at 30 June 2006.

Structure and Function of TransAdelaide Detailed information on TransAdelaide’s structure and principal activity or function can be found within the Directors’ Report. As will be noted, the primary activity of TransAdelaide is the provision of regular passenger transport services incorporating rail operations and rail infrastructure services. These activities affect members of the public, primarily by providing access to regular passenger transport services throughout the Adelaide Metropolitan Area.

Arrangements for Public Participation TransAdelaide facilitates public participation in the development of services through a Customer Panel that meets monthly to provide feedback and input to service design and delivery. TransAdelaide also has an ‘Adopt-a-Station’ program that provides avenues for community groups to participate in the maintenance and beautification of stations (infrastructure) and their environs.

Contact Arrangements Requests for access to TransAdelaide documents or requests to seek amendment of TransAdelaide’s records concerning the personal affairs of an individual should be directed in writing to:

The Freedom of Information Officer TransAdelaide GPO Box 2351 ADELAIDE SA 5001

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TransAdelaide’s Policies: Documents held by TransAdelaide:

• Assessment Appeals TransAdelaide has the following • Capital Expenditure documents available: • Car Parking • Closed Circuit Television (CCTV) • Annual Reports • Consultants available on-line on • Corporate Governance Framework www.transadelaide.com.au

• Counselling / Disciplinary Action • ‘Year in Review’ • Credit Control available on-line on • Delegations & Authorisations www.transadelaide.com.au • Elimination of Harassment / Bullying • Emergency Procedure Manual • ‘Express’ newsletters • Employee Code of Conduct • Environmental • Public Timetables

• Executive Remuneration • Flexi-Time • Freedom of Information

• Information Technology Security

• Intellectual Property • Leadership Principles • Licences & Accreditation • Near-Miss • Performance Development • Personal and Other Leave • Psychometric Assessment

• Purchasing & Procurement

• Quality • Records Management • Redeployment • Risk Management • Second Job • Security • Study Assistance

• TransAdelaide Safety

• Use of Company Motor Vehicles

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Organisational Structure

The Management structure of TransAdelaide is consistent with its primary functions:

1 The provision of passenger rail services to the Adelaide metropolitan area. 2 The management and maintenance of the associated infrastructure and rolling stock.

TransAdelaide’s corporate office is situated at the Adelaide Railway Station on North Terrace. Rail operations are managed from the Operations Control Centre and Fleet Infrastructure Services from the Railcar Depot, both at North Terrace West. Corridor Services operates from the Mile End facility and Tram Operations is located at the Glengowrie Tram Depot.

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Executive Structure

TransAdelaide’s Executive Structure is made up of business and support units, all reporting to the General Manager who, in turn, reports to the Board of Directors. The executives of each area collectively form the Executive Group whose role, together with the General Manager, is to manage the business. The role of the Board is to focus on corporate governance, strategy and performance.

TransAdelaide’s Executive comprises a dedicated team of individuals with a mix of expertise in both the Public and Private Sectors including Industrial Relations, Engineering, Marketing & Business Development, Finance, Human Resources & Performance Development. TransAdelaide, under the leadership of Bill Watson, is strongly focused on customer service, safety and security for its valued passengers and staff.

The Executive Group manages a range of business units that together achieve the successful operation of TransAdelaide in its endeavour to fulfil and excel in its obligations, under the conditions of contract to the Public Transport Division (PTD) and the Minister for Transport.

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TransAdelaide has a service contract with the Public

Transport Division (PTD) for the provision of rail passenger transport services for the period April 2005 to April 2010. During the year, 201,669 trips were operated for train and tram, carrying nearly 14 million passengers.

Valdis Evele Manager Rail Systems

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TransAdelaide operates 94 railcars and 13 tramcars on a network comprising of 120 route kilometres of track. Seven of the trams are the new Flexities and the other six are the remaining H-Class trams. There are 86 operating stations and 20 tram stops. 35 stations have connecting bus routes. Car park capacity remains at 4257 spaces (including 1086 Local Council-approved spaces) available over 51 station locations.

KPIs met per Quarter 2005-06

TransAdelaide’s performance Key Performance Indicators is measured on 12 Key - Train & Tram - TRAIN Performance Indicators (KPIs) TRAM in accordance with its 12 contract with the Public 11 Transport Division. KPIs 10 9 For the last 3 quarters, Trams 8 passed all 12 KPI benchmarks 7 and Trains scored 11 out of 6 12. Q1 Q2 Q3 Q4 2005-06

Patronage

The total rail network patronage showed an overall growth of just under 4% in 2005-06.

Trains

2005-06 showed an increase of 4.7% rising from 11.2 million to 11.7 million.

One major service initiative introduced during the year was the Royal Show Shuttle service offering a direct Adelaide to Showground Central Station service every 15 minutes. The service, along with the on-platform validation system used to assist crowd control and reduce passenger loading times, proved a major patronage driver in 2005 with an estimated extra 50,000 boardings being recorded over the previous year.

Trams

Total boardings for the 2005-06 year recorded a slight decrease of 1%. However, in June 2005, work commenced on the major upgrade of the tramline as part of the Adelaide Light Rail Project. This required the temporary closure of the track for nine weeks and the provision of alternative bus services. Consequently the figures for tram patronage in 2005-06 include some six weeks of the shutdown period between July and August 2005.

Pleasingly, Tram patronage recovered to pre close-down levels within five months.

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The highlight of the year was the start of regular services of the first two Flexity trams in January 2006. Further arrivals of new trams continued with five new trams now operating throughout the daily timetable with the majority of our services operated with Disability Discrimination Act (DDA) compliant new trams.

Total Patronage

Train Tram 14 12 10 s n 8 illio

M 6 4 2 0 9 0 1 2 3 4 5 6 -9 -0 -0 0 -0 -0 -0 -0 8 9 0 1- 3 4 5 9 02 0 0 0 99 00 00 0 19 1 2 2 2 20 20 20

Total Boardings (expressed as 000’s)

Mode 2004-05 2005-06 Variance % Change Tram 2 095 2 069 -26 -1.2% Train 11 173 11 701 +528 +4.7% Total Rail 13 268 13 770 +502 +3.8%

Customer Satisfaction

Customer satisfaction with services is critical to ongoing patronage growth. The PTD did not conduct an independent satisfaction survey during the 2005-06 financial year period. This is planned for August 2006.

Informal monitoring of customer satisfaction with service attributes is indicating that increased loadings and continuing track work are having an adverse effect with the perceptions of train punctuality and seating availability.

Special Services and Promotions

Events in and around the city of Adelaide continue to provide an opportunity for TransAdelaide to demonstrate the mass transport advantages of rail as the spine of the public transport system.

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During 2005-06, thousands of people were transported to special events such as:

• Adelaide Cup (Morphettville) • Adelaide Festival • Adelaide Fringe Festival • Anzac Day Dawn Services • Big Day Out • Clipsal 500 • Credit Union Christmas Pageant • National and International Cricket at Adelaide Oval • New Year’s Eve (free travel) • Skyshow (free travel) • The Royal Adelaide Show • Tour Down Under • WOMADelaide

Extra train capacity was provided to cater for passenger cruise ships calling at Outer Harbor. Additionally, specialist staff was assigned to assist visiting tourists. Cruise-specific marketing materials were developed for companies representing cruise lines for distribution on board ships prior to the cruise ships’ arrivals.

Special ‘Early Bird’ and additional afternoon services were made available to spectators to attend the Anzac Day Parade in the city.

For the past seven years, TransAdelaide has provided a special train service to passengers wishing to attend the Barossa Under the Stars event held at Tanunda in the Barossa Valley. While it was intended to repeat the service in 2006, TransAdelaide was unsuccessful in gaining permission from the Australian Rail Group (ARG) who owns and operates the section of track beyond Gawler Central. ARG advised it would not warrant the track for passenger travel due to track condition. Under these circumstances TransAdelaide was regretfully unable to provide this popular service.

Reliability

TransAdelaide’s customers rate service reliability as an important factor in the quality of service delivered.

The improvement in railcar maintenance has enabled reliability in services to remain at a high level. The principal ongoing cause of service disruptions is speed restrictions due to track conditions and the construction of the new Mawson Interchange. The implementation of the new Centralised Train Control (CTC) system also had an impact during the initial few weeks.

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Percentage of timetabled trips operated

Years Percentage 2001 - 02 99.57% 2002 - 03 99.71% 2003 - 04 99.75% 2004 – 05 99.76% 2005 - 06 99.62% Average for trains

Marketing and Promotion

The Public Transport Division (PTD) provides the printing and supply of timetables and generic sponsorship for the use of public transport. TransAdelaide directly promotes its services for a range of Adelaide's premier events, using this as a mechanism to increase the public’s experience of TransAdelaide’s services.

Several surveys were conducted to measure passenger loadings during the peak hour services. The data collected was used to assist service planning for some services that appear to have reached carrying capacity.

Significant work was undertaken to identify how rail transport can contribute to the achievement of South Australia’s Strategic Plan Public Transport target.

Customer Information

TransAdelaide publishes a monthly newsletter to customers, Express, which features key information about TransAdelaide's services and other associated information to assist customers when travelling on our services. The Express is distributed to all TransAdelaide customers on board trains and trams, via the Passenger Information Stand, as well as the TransAdelaide website, www.transadelaide.com.au.

During the year a wide range of customer information material was produced for the benefit of passengers, e.g., temporary timetables for special events, safe boarding with prams brochure, rail network maps, etc.

The timetable rack in Adelaide Railway Station was expanded to cater for the increasing number of timetables for other public transport services and light boxes were redesigned to display enlarged rail network and tram route maps.

TransAdelaide’s website is regularly updated to advise customers of service changes and other initiatives and events. The website now averages over 9200 visits per month.

With the commissioning of the new Flexity trams, customer information has been greatly enhanced through the ‘Ibis’ system of automated voice announcements for tram stops.

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Fare Compliance

The reduction of fraud throughout the rail system continued to be an important goal for TransAdelaide in 2005-06. Roving teams targeting specific services and stations, plain-clothes operations and joint TransAdelaide/SAPOL operations are proving successful in detecting and ultimately reducing fraud and anti-social behaviour on board trains and stations within the rail network.

The strategies adopted will continue to be employed next year.

Rail Education Unit

The Rail Education Unit is a joint initiative between TransAdelaide and the South Australian Police. It promotes safe and appropriate behaviour on trains and near rail lines, with emphasis on the welfare of Primary School children. A number of schools along the rail corridors participated in the SafeTrack program and visited the Adelaide Station where they were briefed on the safest and most efficient way to use train and tram services.

Again, the Rail Education Unit was fully booked, with 2500 students participating in the SafeTrack program. Evaluations received by teachers and students taking part in the program continue to be enthusiastic and positive. The Rail Education Unit made a number of appearances at high schools, community events and Neighbourhood Watch groups.

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Cor ridor Services was established as a separate Division within TransAdelaide in 200 4 to give particular focus to the requirements of the key assets in the rail corridor.

Sound investment and maintenance of corridor assets (which include signals, track, stations and bridges) is essential for the optimum and safe operation of TransAdelaide’s railcar fleet.

Randall Barry Manager Corridor Services

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Stations

Station upgrading continued to focus on providing safe, secure and aesthetically pleasing facilities that meet customers’ needs.

With a particular focus on security this year, significant station and car park lighting upgrades were initiated at twelve stations, along with close circuit television (CCTV) upgrades at the Adelaide Railway Station, Salisbury and Noarlunga Interchanges and all train stabling yards. The replacement of all emergency help phones was commenced and CCTV and emergency help phones were installed at Womma, Evanston and Port Adelaide Stations.

Other works included the installation of a further twelve illuminated station name signs, an upgrade of pedestrian access ramps at Midlunga Station, car parking upgrades at Parafield, Glenalta, Gawler Central and Gawler Stations, and major platform extensions and lighting upgrades at Gawler Oval and Munno Para Stations. The Pinera Station platform also was widened to assist passengers in wheelchairs to access trains.

Considerable support was also provided to ensure the successful opening of the new Mawson Interchange in 2006.

Signals & Power

The maintenance of all signalling and power systems throughout the network was completed ensuring ongoing system safety and reliability.

The Centralised Train Control (CTC) and Passenger Information (PI) System was replaced by a more reliable system with improved functionality.

Employee of the Year

Wayne Robertson, Signals and Power Services Supervisor within Corridor Services, was awarded Employee of the Year. This was in recognition for Wayne’s outstanding performance during 2005 in demonstrating significant and sustained commitment and application throughout and above and beyond the call of duty, which resulted in achievement of TransAdelaide's business objectives.

Track & Civil Infrastructure

Track and civil infrastructure upgrading programs are undertaken to maximise safety, reliability and passenger comfort on the rail network.

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Belair Line Concrete Resleepering

A total of 1040 concrete sleepers were installed on two curves on the Belair line between Eden Hills and Coromandel replacing life-expired timber sleepers. The concrete sleepers improve track quality and reduce the likelihood of buckling of the track during high temperatures. To ensure the concrete sleepers were adequately supported, all existing ballast below the sleepers was removed and replaced.

Concreting of Level Crossings

Concrete encasement of the track in level crossings, as an alternative to bitumen, provides a smoother, safer surface for road users and extends the life of the crossing. Crossings at Jetty Road, Brighton, Charles Sturt Avenue and Fletcher Road on the Grange Line were successfully completed during 2005-06.

Bridge Upgrading

Replacement of the bridge at Grand Central Avenue on the Noarlunga Line commenced in May 2006 and is planned for completion by October 2006. The existing bridge was in poor condition and the slender supporting piers did not comply with contemporary safety standards. The new bridge will be a steel single span structure with concrete deck.

Projects

Tramway Upgrade Project

In conjunction with the acquisition of the new Flexity trams, a $23.57m upgrade of the existing line between Glenelg and Victoria Square was successfully completed in 2005.

The upgrade:

• Improved the track to a standard sufficient to take advantage of the new trams excellent ride characteristics, providing improved comfort for passengers and reduced noise of operating trams • Improved accessibility for passengers with mobility difficulties • Modified the maintenance depot to accommodate the new trams • Reduced track maintenance requirements in the long term

The contract for the upgrade was awarded to Coleman Rail in April 2005. After an intensive work up, the track was closed on Sunday 5 June 2005 for a period of nine weeks.

30 Annual Report 2005-06

During this closure the following works were undertaken:

• Complete re-sleepering of the track between stops 3 and 19 • Re-railing and rail refurbishment • Rebuilding of thirty-eight platfoms • Reconfiguration of pedestrian access to facilitate access for people with a disability • Enhanced platform lighting on major platforms • Landscaping • Modification of the maintenance depot • Upgrading of the electrical supply system

Full services were resumed as planned on 8 August 2005. While the major closure allowed the most critical upgrade work to be completed, further work at Glengowrie Depot for replacement of points and crossings has continued through the year.

Pedestrian Crossing Upgrades

In May 2006 the installation of the first automatic pedestrian gates on the TransAdelaide system at Park Terrace Salisbury was successfully completed.

TransAdelaide has now commenced a major four-year program to further upgrade and improve safety at pedestrian crossings with a range of interventions. Automatic pedestrian gates are to be installed at

• Hove Station/Brighton Road • Woodville Station/Woodville Road • Parafield Station/Kings Road • Smithfield Station/Anderson Walk • Oaklands Station/Morphett Road

Work has commenced at the Hove Station site, with completion expected in October, at which time work is expected to commence at Woodville.

Design and development of an Advanced Multiple Train Warning system has been on-going in conjunction with Sinclair Knights Mertz (SKM). Final design is underway and prototype signs have been developed. It is intended that a program to install up to sixty of these units will commence towards the end of this calendar year.

Oaklands Station

Considerable planning has occurred in preparation for the $7 million transport interchange project at Oaklands Park which was announced as part of the State Infrastructure Plan. The project will result in the delivery of a modern, efficient interchange with facilities that are fully accessible for people with disabilities. Work is expected to commence early in 2007.

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Adopt-A-Station

Since commencement of this program, sixty-nine stations and ten tram stops have been ‘adopted’ by communities.

This year, new groups joined for the stations of Smithfield, Broadmeadows, Largs North, Parafield, Osborne, Gawler Central and Outer Harbor.

A redesign of the Work for the Dole groups was undertaken for Noarlunga Centre and Parafield.

During the past year, projects undertaken by the program have included:

• Landscaping of Tambelin Station which has been taken over by a Work for the Dole group, who will continue to develop the area • A new group, 1st Gawler Scouts has adopted Gawler Central • Paul Alexander of Go Graphic has created murals for the tram line converter stations • Paul Alexander also created a mural for the RSL clubroom’s wall at Largs North Station • New Work for the Dole groups are maintaining various railway stations north and south • Parafield Gardens Primary School will continue with the garden area at Parafield Gardens Station • Outer Harbor has received extensive landscaping from the great efforts of a local volunteer • Ongoing landscaping at Alberton Station • Ongoing joint venture with a volunteer group at Gawler Council for general graffiti removal • The Lions Club of Grange has adopted the Grange Station and will maintain the garden area • A new volunteer at North Haven is keeping a close eye on graffiti at the station • A dedicated volunteer at Osborne Station is keeping the station free of graffiti • At Gawler, the Lions Club have completed the restoration of the residence building which is now occupied by the local arts group and restoration of the steam loco is progressing

Environment

TransAdelaide is committed to the protection of the environment by minimising the impact of its operations including continuous improvement of its environmental performance, and the implementation of pollution prevention measures. This is endorsed in TransAdelaide’s Environmental Policy.

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TransAdelaide’s Track and Structures Department was certified to ISO 14001 standard. TransAdelaide is working towards extending this certification to the whole of its operations, in conjunction with an Integrated Management System (IMS) to incorporate organisational standards for environment, safety and quality.

Asbestos Risk Reduction

Site Not performance 1 2 3 4 5

assessed

e Score

Sit Minor No risk Scale

category Site Risk level Severe Major Moderate (threshold (target category) category) % Of Sites in Category at Year’s 35 65 Commencement Adjusted % After Annual Reduction 20 30 Activity

Greening of Government Operations (GoGO)

TransAdelaide is a member of the Australian Government’s Greenhouse Challenge and as such is committed to greening of its operations.

TransAdelaide’s Mile End Depot incorporating Corridor Services has selected an alternate paper to use in all printers, photocopiers and fax machines. They have made a change from a 10% recycled paper content to a 100% post consumer recycled paper content.

Other Initiatives

In the past year, TransAdelaide has commenced and/or completed the following initiatives:

• Contaminated groundwater at the Rail Car Depot is being managed and remediated • Work is in progress, with the assistance of the Environment Protection Agency (EPA), on the development of an alternative treatment process to significantly reduce the cost of disposal of contaminated ballast • A trial is underway with Davison Nominees for disposal of used timber sleepers • An Environmental Awareness training package was established and provided to all staff

In the near future TransAdelaide is looking to address the following initiatives:

• Further development of accessible information for all staff on various substances found along the rail corridors; • Testing for Phytophthora to assess whether it is present along the rail corridors.

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Fleet Infrastructure ensures that the rolling stock is maintained at an optimum level thus providing a safe, reliable and comfortable service to our customers that is cost-effective in the management of the Railcar Maintenance Contract and to ensure the reliability and availability of the railcar and tram fleet.

Dean Phillips Acting Manager Fleet Infrastructure

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36 Annual Report 2005-06

Railcars

In June 2006 Bombardier completed the first year of its 10-year contract to undertake the maintenance of TransAdelaide’s railcar fleet. Under this contract Bombardier is required to improve the overall condition of the railcars over the period of the contract. The payment of a kilometre rate for each class of railcar requires TransAdelaide to monitor the use of the railcar fleet to ensure that the utilisation of each class of railcar is within a tolerance of plus or minus 5% of the base rate, otherwise a variation to the kilometre rate applies. During 2005-06 the utilisation of the 2000 Class railcars was 93.4% of the base kilometres due predominantly to a number of bogie failures, limiting the availability of these railcars for operational service. The 3000 Class railcar utilisation increased to 107.6 % of the base kilometres off-setting the under-utilisation of the 2000 Class. Redpath Technology completed the design, manufacture and installation of a driver vigilance system for the railcar fleet during 2005-06. Commissioning and driver training is required to be completed before the system goes ‘live’, which is planned for October 2006.

Tramcars

The first of the new ‘Flexity Classic’ trams built in Germany arrived at the Glengowrie Depot on 22 November 2005. The purchase of the trams was managed by the Department of Transport Energy & Infrastructure (DTEI) for TransAdelaide to operate. TransAdelaide has been involved in the commissioning and testing of the new trams and was responsible for developing and undertaking driver training to enable introduction of the new trams into operational service. The first two of the new trams were introduced into operational service on 9 January 2006 and it was soon apparent that the air conditioning system was inadequate for Adelaide’s summer conditions. A number of improvements were made to the air-conditioning system within the limits of the power supply on the trams. TransAdelaide has been working with local air conditioning experts in passenger vehicle systems to improve the units for Adelaide’s requirements. All of the H Class trams were modified by 8 August 2005 to enable operation on the upgraded tram network rebuilt to suit the new ‘Flexity Classic’ trams. As the new trams are introduced into operational service the H Class trams are progressively being removed from operational service. The surplus H Class trams were tendered for disposal during the year and several were moved to their new homes at Bendigo and the St Kilda Tram Museum before 30 June 2006. Those trams sold, but currently still operating, will be removed from service and moved to their new owners by October 2006.

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Energy Efficiency

The railcar fleet has continued to operate on B5 biodiesel for the year. The engine manufacturers have advised that they will not warrant their engines for operation on higher levels of biodiesel. Testing was carried out to determine the power characteristics of B10, B20, B50 and B100 on the railcar engines. However these tests were of short duration and the longer term effects of wear and engine reliability were not able to be assessed. Further testing of the effects of biodiesel on the engines will be conducted during 2006-07. Three further 2000 Class railcars were fitted with the more fuel efficient Mercedes MTU engine making all 9 operational 2000 class railcars now complete with this new diesel alternator set.

Performance against annual energy use target

Energy Use Expenditure GHG Emissions (GJ) ($) (Tonnes CO2 equivalent) Base year 2000-01 Electricity 30 969 1 031 005 10 202 Diesel 287 237 5 917 274 22 433 Petrol 718 17 424 58 Total 318 924 6 965 703 32 693 Current year 2005-06 Electricity 33 304 1 223 272 9 316 Diesel 330 544 9 697 522 23 120 Petrol 5 801 193 334 425 Total 369 648 11 114 128 32 861 Target for 2010 297 532 29 576

The rise in fuel use is due to the increase in service levels by 10% and additional 12.7% passenger kilometres during 2005-06 against Base Year.

Electricity use has increased due to lighting upgrades throughout the rail system.

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Business Services supports the operational aims of the business through the provision of corporate services and the management of financial,

accounting, corporate governance, information systems, security, property, contracts & procurement, records and litigation.

Suzanne Ridding Manager Business Services, Chief Financial Officer & Company Secretary

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40 Annual Report 2005-06

Financial Management

The financial management team prides itself on providing professional financial management services to the business units through managing the day-to-day finances of the business with a focus on adding value. In-house finance business advisors and analysts assist with budget preparation and variance analysis, business case development for capital spending and general advice on matters of financial relevance to the business. This year the finance team has implemented the new Australian equivalents of the International Financial Reporting Standards (see Financial Report for further details).

Information Systems This year saw the development of specialised applications including systems for train fleet planning and the servicing of tram rolling stock. We continued to replace and upgrade business systems and computing infrastructure, minimising business risk and providing a secure computing environment. The transition to new Government computing service contracts began this year with the first being for network management. The Executive Management Information System continues to be developed and expanded. This system targets the reporting of rail operational, financial and human resource details.

Property Management

A wine/food bar cafe was established on the Adelaide Railway Station concourse. The facility is tenanted and trading commenced on 28 March 2006. The facility provides a warm and friendly environment for railway station users and the general public offering a full range of meals, beverages and other delicacies. A kiosk facility was established at the Mawson Interchange to provide commuters with hot/cold drinks and light snacks etc. The kiosk also provides Metro tickets and acts as an information booth to passengers. The official opening occurred on 3 July 2006.

During the year, surplus land to the value of $899,350 was sold. TransAdelaide obtained Treasury approval to repay debt as a reduction to TransAdelaide’s loan, to the value of $784,350.

Contracts & Procurement Management

Competitive tendering throughout the year was conducted to ensure open and fair competition and that TransAdelaide achieves value for money in the expenditure of funds. A number of tenders and contracts were issued throughout the year for railway track and station upgrades including security improvements with additional lighting and CCTV cameras.

41 Annual Report 2005-06

A tender and contract was also issued for the cleaning of various sites including the Adelaide Railway Station and following a public sale tender call, sale contracts were issued for 15 of the old H-class tramcars.

Records Management

The Development and implementation of the Hummingbird electronic documents and records management system continued with the progressive training and rollout of the system to business units.

Third Party Claims

Rail and tram-related third party and public liability claims continue to be managed in- house by TransAdelaide. The number of significant claims remains at similar levels to previous years. During the year risk assessments were conducted and risk mitigating strategies implemented to reduce the likelihood of incidents.

Security

TransAdelaide is committed to the security of its customers and staff. TransAdelaide has continued to roll out security enhancements across its metropolitan stations. Stations have emergency phones linked directly to the Police Security Services Branch ensuring prompt police response to any incident. Improved lighting and closed circuit television cameras (CCTVs), linked to state of the art digital video recorders ensuring all imagery is of a high standard, continued to be implemented throughout the year, facilitated by the receipt of Government capital grant funding of $3.95 million.

TransAdelaide is actively involved and represented across a broad spectrum of committees: Public Transport Preventative Security Committee, Riverbank Precinct Committee, Trusted Information Sharing Network and SA Government Transport Security Committee.

South Australian Police (SAPOL) Transit Security

TransAdelaide’s partnership with the Transit Police continued to provide additional benefits during the year with improved operating procedures between both parties ensuring prompt responses to issues. In addition, TransAdelaide and the Transit Police have conducted special joint security exercises and developed strategies to test and review incident response plans.

Contracted guards on all services leaving the City after 7.00 pm weekdays, Saturdays, Sundays and Public Holidays provide additional security for passengers. Passenger and staff safety has continued to be a key area of focus with continuous improvements taking place. Some of the steps taken to improve security were increased lighting, additional security cameras at stations and on board trains, as well as station and platform upgrading.

42 Annual Report 2005-06

The Organisation Development team provides expert advisory and support services for:

• Learning and development activities, through our Registered Training Organisation

• Risk management associated with safety, health, quality and environmental matters

• Human resourcing, injury management, workers compensation, redeployment and payroll processing

Our focus is developing integrated strategies and practice to support continuous improvement and responsive organisational change needed to foster the healthiest safety

culture, deliver customer service perfection and achieve TransAdelaide's Strategic Plan.

Fiona Kidd Manager Organisation Development

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44 Annual Report 2005-06

During 2005-06, the achievements and contributions of TransAdelaide’s employees, both on an individual basis and as effective multi-functional teams, were demonstrated most significantly by the successful introduction of the new Flexity trams.

To be able to meet the challenges and opportunities presented through the introduction of this new technology, good partnership working with those affected, mostly in the Tram Operations and Maintenance Teams, and their union representatives, resulted in appropriate restructuring and the introduction of competency-based classification structures and development programs. With TransAdelaide achieving Registered Training Organisation (RTO) status in February 2006, this meant that for the first time our Tram Operators who have been trained and assessed as competent in operating the new Flexitys will be awarded nationally recognised Level III qualifications.

During the year, significant organisation development reviews were undertaken of our safety performance across the business and of workplace relationships and recruitment and retention issues within specific Business Units. The action plans established from the recommendations of these reviews are being used as the essential frameworks for targeted activities and initiatives needed to improve our people performance and further develop the capability of our total workforce.

Activities and initiatives in progress, which will continue as priorities into 2006-07

• Developing a healthier safety culture, including tailored Safety Science education programs for managers and OHS&W representatives and the introduction of an accredited integrated management system • Improving our delivery of customer service, as informed by the outcomes of our recent Customer Survey • Promoting better communication flows and consultation practices through the business • Extending employee involvement in business planning activities • Introducing an improved induction program for all employees • Implementing enhanced arrangements for managing change and risk • Engaging additional apprentices

In June 2006, an Employee Survey was conducted. The outcomes of the survey will be used during the next financial year to enhance the initiatives under way, ready for actioning improvements required in our leadership and management of change, employee involvement and engagement, communication and consultation and learning and development activities.

45 Annual Report 2005-06

Employee Statistics

Employee Number, Gender and Status

Total Number of Employees Gender % Persons 531 Gender % Persons FTE’s 523.4 FTE’s Male 88.5 89.3

Female 11.5 10.7

NUMBER OF PERSONS DURING 2005-06 FINANCIAL YEAR Number of persons separated from the agency during the 2005-06 financial year 36 Number of persons recruited to the agency during the 2005-06 financial year 15 Number of persons on leave without pay at 30 June 2006 1

NUMBER OF EMPLOYEES BY SALARY BRACKET Salary Bracket Male Female Total $0 - $40 399 157 22 181 $40 400 - $54 999 130 25 156 $55 000 - $67 999 153 11 165 $68 000 - $88 999 26 1 28 $89 000+ 4 2 6 TOTAL 470 61 531

STATUS OF EMPLOYEES IN CURRENT POSITION (Full Time Equivalent) Ongoing Short- Long- Other Total Term Contract Term Contract (Casual) Female 50.62 - 5.40 - 56.02 Male 454.40 - 13.0 - 467.40 TOTAL 505.02 - 18.40 - 523.42 Persons Ongoing Short- Long- Other Total Term Contract Term Contract (Casual) Female 55 - 6 - 61 Male 457 - 13 - 470 TOTAL 512 - 19 - 531

NUMBER OF EXECUTIVES BY GENDER, CLASSIFICATION AND STATUS IN CURRENT POSITION Ongoing Contract Tenured Contract Untenured Total Class Male Female Male Female Male Female Male Female GRPM 1 1 1 2 1 CT01 1 1 1 1 TOTAL 1 2 2 3 2

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AVERAGE DAYS LEAVE TAKEN PER FULL-TIME EQUIVALENT EMPLOYEE Leave Type 2002-03 2003-04 2004-05 2005-06 Sick Leave 8.9 8.43 9.42 9.0 Family Carer’s Leave 0.04 0.58 0.3 0.35 Special Leave with Pay 0.32 0.35 0.35 0.38

NUMBER OF EMPLOYEES BY AGE BRACKET BY GENDER South Age Bracket Female Male Total % of Total Australian Workforce* 15-19 0 1 1 .2 7.9 20-24 3 3 6 1.1 10.7 25-29 5 8 13 2.4 9.8 30-34 5 20 25 4.7 10.5 35-39 5 60 65 12.2 11.4 40-44 14 94 108 20.3 12.4 45-49 9 105 114 21.5 12.4 50-54 6 94 100 18.8 10.9 55-59 10 60 70 13.2 8.3 60-64 4 24 28 5.3 4.4 65+ 0 1 1 .2 1.3 TOTAL 61 470 531 100 100.0 * Benchmark as at January 2006 from ABS Supertable LM8

NUMBER OF ABORIGINAL AND/OR TORRES STRAIT ISLANDER EMPLOYEES % Strategic Male Female Total of Agency Benchmark Aboriginal / Torres Strait 0 0 0 0 2.0% Islander * Target from South Australia’s Strategic Plan

CULTURAL AND LINGUISTIC DIVERSITY % of SA Male Female Total Agency Community Number of employees born overseas 86 12 98 18.1% 20.3%

Number of employees who

speak language(s) other than 25 2 27 5.0% 15.5% English at home

* Benchmarks from ABS Publication Basic Community Profile (SA) Cat. No. 2001.0

NUMBER OF EMPLOYEES WITH ONGOING DISABILITIES REQUIRING WORKPLACE ADAPTATION Male Female Total % of Agency - - - -

47 Annual Report 2005-06

NUMBER OF EMPLOYEES USING VOLUNTARY FLEXIBLE WORKING ARRANGEMENTS BY GENDER Male Female Total Purchased Leave - - - Flexitime 7 12 19 Compressed Weeks - - - Part-Time / Job Share 1 8 9 Working from Home - - -

DOCUMENTED REVIEW OF INDIVIDUAL PERFORMANCE DEVELOPMENT PLAN Employees with… % Total Workforce A plan reviewed within the past 12 months 38.3% A plan older than 12 months 60.4% No plan 1.3%

TRAINING EXPENDITURE AS A PERCENTAGE OF TOTAL REMUNERATION EXPENDITURE BY SALARY BANDS Salary Bracket Target 04-05 Actual 04-05 Target 05-06 Actual 05-06 $0 - $38 599 2.5 2.1 4.0 1.7 $38 600 - $49 999 2.5 0.9 1.7 4.0 $50 000 - $65 999 1.3 2.7 1.0 4.5 $66 000 - $85 999 0.7 0.0 0.5 0.0 $86 000+ 1.5 1.1 0.5 1.8 TOTAL 9.5 6.8 7.7 12.0

Registered Training Organisation (RTO)

In February 2006, TransAdelaide was successful in regaining its registration as a Recognised Training Organisation. As an accredited RTO we have the approval to issue qualifications consistent with the Australian Qualifications Framework for Certificate I – IV in Transport and Distribution (TDT) in Rail Operations, Administration and Infrastructure.

A review of the efficiency and effectiveness of our administrative and record-keeping processes as an RTO is underway. Continuing consideration will be made during 2006-07 to identify an appropriate solution for streamlining and rationalising the variety of systems used within the organisation currently.

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Learning & Development

The following activities undertaken this year have supported TransAdelaide in striving to meet our business plan objectives:

• Flexity Tram introduction, involving training/assessment to Levels I-III Rail Operations • Rail Safeworking Rules • Suburban Train Drivers – all grades • Rail Safety Awareness (contractors) • WorkZone Traffic Management • Senior First Aid • Fire Safety & Building Emergency • Certificate IV in Training & Assessment • OHS Workplace Representative Level I – III Additionally, employees have participated in a range of specific technical and expert external formal and informal development activities to ensure continual updating of skills and knowledge necessary to drive business improvement.

During 2005-06, greater focus was given to the integration and coordination of learning and development activities across the business, with greater use being made of qualified trainers in each of the work groups for delivering in-house programs. This model of delivery will be enhanced further during the next financial year.

Priorities for 2006-07 will be targeted on activities to support the establishment of a healthier safety culture and a continual improvement ethos, particularly in customer service delivery. Included in these will be an overhaul of our Rail Safeworking Rules refresher training based more on effective adult learning principles, tailored leadership and management development programs, briefing sessions promoting fair and appropriate treatment of people and improving the management of injured employees.

Industrial Relations

Our commitment to developing improved industrial relations has resulted in there being no loss of working hours due to industrial disputation during 2005-06.

Certified Agreements

During the first months of the 2005-06 financial year, TransAdelaide finalised the negotiation of replacement enterprise agreements covering the following functional areas: Train Operations; Tram Operations; Salaried, Professional and Technical Employees; Maintenance; Infrastructure; and Surplus Bus Operators.

49 Annual Report 2005-06

TransAdelaide is presently negotiating new Maintenance and Infrastructure agreements which are consistent with government policy. To help improve workplace relations and promote a sustainable strategic partnership with our union representatives, a principled bargaining approach is being taken to these negotiations, rather than traditional concessional bargaining. As a result, the parties have been able to work together through negotiations in a manner which ensures an environment of continuing improvement, meeting the needs of both employees and the business.

Occupational health, safety and injury management

2002-03 2003-04 2004-05 2005-06 1 OHS legislative requirements Number of notifiable occurrences pursuant to OHS&W 16 9 5 11 Regulations Division 6.6 Number of notifiable injuries pursuant to OHS&W 0 0 0 0 Regulations Division 6.6 Number of notices served pursuant to OHS&W Act s35, 2 4 7 8 s39 and s40 2 Injury Management legislative requirements Total number of employees who participated in the 50 48 46 49 rehabilitation program Total number of employees rehabilitated and reassigned 2 5 2 4 to alternative duties Total number of employees rehabilitated back to their 29 39 35 27 original work 3 WorkCover Action Limits Number of open claims as at 30 June 174 124 107 76 Percentage of workers compensation expenditure over 8.69 7.1 5.6 4.4 gross annual remuneration 4 Number of injuries Number of new workers compensation claims in the 186 151 154 137 financial year, represented by: Number of fatalities, (F) 0 0 0 0 medical treatment only, (MTO) 121 88 62 74 lost time injuries (LTI) 65 63 92 63 Total number of whole working days lost 3 222 3 040 1 288 2 487 5 Cost of workers compensation Cost of new claims for financial year 203 287 284 597 281 706 190 691 Cost of all claims excluding lump sum payments 1 203 489 935 552 696 402 1 384 867 Amount paid for lump sum 555 750 1 078 540 261 593 154 648 payments Total amount recovered from external sources (s54) 142 000 51 906 87 250 0 Budget allocation for workers compensation 719 375 719 375 761 350 775 830 6 Trends Injury frequency rate for new lost-time injury / disease 82 75 72 71 for each million hours worked Most frequent cause (mechanism) of injury Muscle Muscle Muscle Slips, trips Loading Loading – Loading – and falls position of position of posture posture Most expensive cause (mechanism) of injury Body Stress Stress- Stress- Body Stress related related 7 Meeting the organisation's strategic targets Note

Note: Information briefing sessions have taken place and awareness sessions will be presented prior to a rollout of the improved Injury Management Procedures later this year. An internal Audit will be completed by 31 August 2006. The Workers Compensation Section Pre-Gap Analysis will be conducted in August 2006 and will be completed by WorkCover.

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Workers Compensation and Rehabilitation

Targeted improvements in the management of workplace injury have resulted in a significant decrease in the number of workers compensation claims from 154 during 2004-05 to 137 during 2005-06. Additionally, there has been a decrease in lost time injuries for new claims from 92 to 63 over the same period.

TransAdelaide continues to refer employees for counselling assistance immediately following any critical incident within the workplace and assists employees return to work in the earliest and safest way possible under Rehabilitation. Procedures for supporting workers who become injured or ill in the workplace have been revised and will be implemented with a corresponding education program during the first part of 2006-07.

A similar service is offered to all employees through the Employee Assistance Program (EAP), which is designed to support employees in addressing issues that have an effect on their productivity or capacity to cope at work. The EAP continues to assist in reducing workers compensation claims.

Safety Summary

TransAdelaide is committed to operating a safe and efficient rail network that is safe for our customers, employees, contractors and visitors.

In early 2006, TransAdelaide commissioned an independent review of organisational safety focusing on ‘safety culture’. The review acknowledged management needs to be given the knowledge and skills required to support effective safety management and their role in improving safety culture at TransAdelaide.

TransAdelaide will provide a Safety Science training program for all managers and employee safety representatives commencing late 2006. The Safety Science Program will provide managers with the appropriate knowledge, allowing for safety management with an emphasis on line management responsibility. Clearly defined safety responsibilities will improve the effectiveness of day-to-day safety management and demonstrate TransAdelaide’s commitment to continued safety management.

It is TransAdelaide’s objective to meet industry safety management best practice in five years. To support the achievement of this objective, TransAdelaide is working towards an integrated management system, combining the elements of rail safety, occupational safety and environment management in a quality framework with the objective being a certifiable system by July 2007.

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Rail Safety

TransAdelaide continues to maintain its status as an accredited rail operator under the Rail Safety Act 1996. The Act requires that TransAdelaide continually reviews and improves systems and procedures to ensure the ongoing safety of employees, contractors and the community.

In 2007 significant changes to rail safety legislation will impact on the way TransAdelaide manages safety. TransAdelaide is working towards ensuring our safety management systems satisfy the revised railway safety management standard AS 4292. This will position TransAdelaide well for the introduction of new rail safety legislation.

Occupational Health & Safety

TransAdelaide is self-insured for the purposes of managing workers compensation claims and for the provision of rehabilitation to injured workers. To maintain the self insured status, TransAdelaide must demonstrate compliance with WorkCover Performance Standards. TransAdelaide shall be subject to an audit against these performance standards by WorkCover in 2007.

Quality Certification

TransAdelaide’s (3) certified management systems continue to show compliance with the requirements of the AS/NZS ISO 9001:2000 Quality System Standard. Surveillance audits conducted by third party auditors state that the systems are mature.

The organisation has continued development work on an Integrated Management System (IMS), which will see the entire business certified against the Quality, OHS&W and Environmental Standards. The system will also address the requirements of the Rail Safety Standard (AS 4292) and the Risk Management Standard (AS/NZS 4360).

Equal Employment Opportunity

TransAdelaide continues to monitor its human resource management policies and practices to ensure equity and diversity within the workplace and compliance with the Public Sector Human Resource Management standards.

Additionally, targeted workforce and succession management strategies are being developed to address succession planning and ageing workforce issues.

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54 Financial Report 2005-06

Finance Report for the year ended 30 June 2006

Directors’ Report

The TransAdelaide Board has pleasure in presenting its report on the consolidated accounts of the Economic Entity for the financial year ended 30 June 2006.

Principal Activities

TransAdelaide is a body corporate subject to the provisions of the Public Corporations Act 1993. The TransAdelaide (Corporate Structure) Act 1998 provides that TransAdelaide’s principal activity is to operate passenger transport services, an activity that continued to be the primary focus throughout the year.

TransAdelaide has two significant business operations, the provision of passenger tram and train services and the management of the tram and train infrastructure in the metropolitan area. The focus in 2005-06 has been on satisfying customer demand by providing improved quality services and continual upgrading of train infrastructure to enhance passenger safety and comfort in order to attract new customers to public transport.

TransAdelaide’s five-year agreement for the provision of metropolitan rail services with the Public Transport Division (PTD) was renewed by the Government, in accordance with the Contract dated 21 December 2000 for the provision of rail services, until April 2010.

TransAdelaide is a joint shareholder in Transitplus Pty Ltd, a private company that provides passenger transport services in the Adelaide Hills region under contract with the PTD.

Review of Operating Result

For the financial year ended 30 June 2006, TransAdelaide has recorded a profit of $14.855m. This operating result shows an increase on forecast due to the bringing to account of capital grant income as a result of the tram infrastructure asset sale to the Department of Transport, Energy & Infrastructure (DTEI). Without this, there would have been an operating loss of $9.5m. This includes the write off of $10.531m in tax benefits and deferred income tax due to TransAdelaide’s adoption of the Accounting Profits Model – a direct result of the Treasurer’s amendments to T122 Tax equivalents applicable to Government businesses.

TransAdelaide’s forecast operating result was also adversely affected by a variety of unfunded cost pressures, to the value of $4.482m, and a greater than expected increase in diesel fuel costs.

55 Financial Report 2005-06

A summary of the operating result of TransAdelaide is set out below.

Parent Entity’s performance against budget for the 2005-06 financial year Actual Budget Variation Results $’000 $’000 $’000 Income 131,927 104,862 27,065 Expenditure 118,044 100,622 (17,422) Operating profit (loss) before income tax 14,855 4,240 10,615

Capital Expenditure

TransAdelaide’s capital expenditure was $22.768m, which incorporates $10.065m related to the tram infrastructure upgrade project.

Dividends

No ordinary dividend was paid to the Department of Treasury & Finance (DTF) in respect of the financial year’s operating result however, special dividends totalling $34.757m were paid. These consist of $2.296m in respect of TransAdelaide’s depreciation funding and $32.461m in respect of the sale proceeds of the tram infrastructure assets to DTEI.

Significant Changes in the Economic Entity

TransAdelaide’s performance was impacted by the revaluation of TransAdelaide’s assets and the contributed capital provided for the Tram Infrastructure Upgrade project.

Ministerial Control and Direction

TransAdelaide did not receive any specific Ministerial Direction during the 2005-06.

Payment of Accounts

Particulars Number of Percentage of Value in $A Percentage Accounts Accounts Paid of Accounts of Accounts Paid (by number) Paid Paid $’000 (by value)

Paid by the due date 13 684 7.20 140 550 98.38

Paid within 30 days or less from due date 245 1.76 614 0.68

Paid more than 30 days from due date 140 1.04 1346 0.94

Events Subsequent to Balance Date

There were no events subsequent to balance date which require disclosure or recognition in the financial statements.

56 Financial Report 2005-06

Likely Future Developments and Expected Results

In our opinion, all appropriate information concerning the likely developments in, and expected results of, the operations of TransAdelaide are contained in this report. Further specific information regarding the likely developments in the operations of TransAdelaide and the expected results of those operations in financial years subsequent to the financial year has not been included in this report, as it is believed this would prejudice the interests of the Corporation.

Director’s Benefits

Neither during nor since the financial year has any Director received or been entitled to receive a benefit, other than their disclosed remuneration as shown in note 11.

Director’s Interests in Contracts

As at the date of this report, no Director of the Economic Entity had interests in contracts or proposed contracts with any part of the Economic Entity.

Indemnities and Insurance

TransAdelaide pays an insurance premium in respect of insuring the directors, the general manager, all of its executive officers and employees of any related body corporate against a liability incurred as a director, secretary or executive officer to the extent permitted by the Passenger Transport Act 1994.

Contractual Arrangements

New Contracts During 2005-06 TransAdelaide did not enter into any new contracts exceeding $4.0m for the provision of services traditionally undertaken by the Public Sector.

Continuation of Existing Contracts. During 2005-06 TransAdelaide continued with the following contractual arrangements exceeding $4.0m that were entered in previous years

Provision of railcar maintenance and related services.

The scope of the contract is: ƒ To carry out planned preventative and corrective maintenance of railcars ƒ To carry out unplanned corrective maintenance of railcars ƒ The cleaning of railcars and ƒ Railcar condition monitoring.

The Contract’s objectives are to: ƒ Provide a Public Transport Service which achieves the highest standard of reliability, safety and comfort for our customers in a manner which is economical and cost- effective

57 Financial Report 2005-06

ƒ Provide the services in a manner which is designed to enhance the overall quality and performance of TransAdelaide’s rail operations ƒ Provide the services fully in compliance with the Rail Safety Act and required standards.

The Contract was awarded to Bombardier Transportation Australia Pty Ltd on a ten-year term, commencing 11 June 2005.

At 30 June 2006 there has been no transfer of assets to Bombardier Transportation Australia Pty Ltd and there are no contingent and other liabilities that have not been reflected in the accounts.

Adelaide Light Rail Project : Glenelg – Adelaide Infrastructure Upgrade.

The scope of infrastructure works for the Glenelg tramway upgrade consists of: • Full concrete re-sleepering of the 9.2km in-corridor ballasted section i.e. from Stop 3 (South Terrace) to Stop 19 (Brighton Road) up and down tracks • Partial (approximately 50%) steel re-railing of the sections of rail identified as being incompatible with operation of the new LRV’s • Re-grinding of the rails to attain the required wheel-rail interface • Refurbishment of tram cross-over switches • Augmentation of the overhead electrical power supply and distribution system by the installation of side feeder booster cables • Modifications (raising, lateral extension and incorporation of ramps) to existing tram- stop platform structures to ensure compatibility with Disability Discrimination Act requirements covering access to both trams and the adjacent local street and footpath network • Incorporation of suitable (low growing) landscape treatments into tram-stops • Modifications to the existing Glengowrie tram maintenance depot by installing overhead work platforms with electrical protection interlocking and a variety of lifting gear • Minor modifications to the undercarriage of the existing H-class trams to enable them to operate on modified infrastructure during a transition period, over which time the new trams are progressively introduced into service.

Key objectives for the infrastructure upgrade include: • Improved ride performance for passenger comfort and minimise wear and tear on the new trams • A reliable power supply and distribution system of adequate capacity • To ensure safe and accessible access to, and from, platforms to the new trams • Safe and practical working environments at Glengowrie workshop depot for the servicing and maintenance of the new trams as well as the five H-class trams that are being retained.

58 Financial Report 2005-06

TransAdelaide, in conjunction with the Department of Transport Energy & Infrastructure, and on behalf of the Minister for Transport, evaluated the submissions. The contract was subsequently awarded to Coleman Rail Pty Ltd on 12 April 2005 Practical Completion Date was 28 April 2006.

At 30 June 2006 there has been no transfer of assets to Coleman Rail Pty Ltd and there are no contingent and other liabilities.

Upgrading of TransAdelaide’s existing Centralised Train Control (CTC) and Passenger Information (PI) systems

The scope of the Contract is to upgrade the existing CTC and PI systems, which have been in service since 1988.

The Contract’s objectives are to: ƒ Provide train passengers with a Public Transport Service that achieves the highest standards of reliability and safety ƒ Eliminate the risk of the current network concerning technical obsolescence and diminishing the level of available equipment support ƒ Improve the efficiency, productivity and adaptability of the CTC and PI systems to better meet the current and future operational and business needs of TransAdelaide.

The Contract was awarded to Alstom Australia Ltd and commenced on 14 March 2003, with a practical completion date of 17 August 2006.

At 30 June 2006, there has been no transfer of assets to Alstom Australia Ltd and there are no contingent and other liabilities.

59 Financial Report 2005-06

Intentionally left blank

60 Financial Report 2005-06 Income Statement Year Ended 30 June 2006 Note 2006 2005 $'000 $'000 Income Revenues from the provision of services 6 97,544 91,971 Revenues from SA Government 8 28,228 3,456 Financial income 7 984 826 Other revenues 10 6,062 6,363 Net (loss) gain from the disposal of assets 9 (891) 1,286 Total Income 131,927 103,902

Expenses Employee benefits costs 11 39,079 38,447 Supplies and services 12 40,569 38,301 Depreciation and amortisation expense 13 21,123 21,446 Financial expenses 14 5,956 6,145 Other expenses 15 786 (15) Change in taxation policy 17 10,531 - Revaluation decrements 5 - 18,404 Total Expenses 118,044 122,728

Share of profit of associates 972 797

Profit before income tax equivalents 14,855 (18,029)

Income tax equivalent expense 17 - -

Net profit (loss) after income tax equivalents attributable to the SA Government as owner 14,855 (18,029)

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

61 Financial Report 2005-06 Balance Sheet As at 30 June 2006 Note 2006 2005 $'000 $'000 Assets Current Assets Cash and cash equivalents 33 22,106 14,498 Receivables 18 2,550 11,093 Inventories 19 4,309 4,684 Total Current Assets 28,965 30,275

Non-Current Assets Property, plant and equipment 20 640,461 665,324 Investment property 21 10,578 10,578 Intangible assets 22 114 389 Investment accounted for using the equity method 24 200 200 Future income tax benefit 17 - 21,986 Total Non-Current Assets 651,353 698,477

Total Assets 680,318 728,752

Liabilities Current Liabilities Payables 25 12,403 18,301 Short-term employee benefits 27 7,646 7,338 Short-term provisions 28 2,837 4,336 Other short-term liabilities 29 419 41 Total Current Liabilities 23,305 30,016

Non-Current Liabilities Long-term borrowings 26 75,205 81,371 Long-term employee benefits 27 10,531 9,767 Long-term provisions 28 10,551 10,650 Provision for deferred income tax 17 - 11,455 Other long-term liabilities 29 6,656 11,460 Total Non-Current Liabilities 102,943 124,703

Total Liabilities 126,248 154,719

Net Assets 554,070 574,033

Equity Reserves 30 474,509 482,636 Retained earnings 79,561 91,397 Total Equity 554,070 574,033

The Total Equity is attributable to the SA Government as owner

Commitments for expenditure 31 Contingent assets and liabilities 32

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

62 Financial Report 2005-06 Statement of Changes in Equity Year Ended 30 June 2006 Asset Revaluation Retained Note Reserve Earnings Total $'000 $'000 $'000

Balance at 30 June 2004 369,727 111,305 481,032 Changes in accounting policy 5 (498) (489) (987)

Restated balance at 30 June 2004 369,229 110,816 480,045 -

Gain (loss) on revaluations during 2004-05 30 96,407 - 96,407 Transferred to retained profits amounts realised on disposal of assets 30 (906) 906 - Profit (loss) after income tax equivalent for 2004-05 (18,029) (18,029) Total recognised income and expense for 2004-05 95,501 (17,123) 78,378

Dividends to SA Government - (2,296) (2,296)

Balance at 30 June 2005 464,730 91,397 556,127

Changes in accounting policy 5 17,906 - 17,906

Restated balance at 30 June 2005 482,636 91,397 574,033

Gain (loss) on revaluations during 2005-06 30 (61) - (61) Transferred to retained profits amounts realised on disposal of assets 30 (8,066) 8,066 - Profit (loss) after income tax equivalent for 2005-06 14,855 14,855

Total recognised income and expense for 2005-06 (8,127) 22,921 14,794

Dividends to SA Government 8b - (34,757) (34,757)

Balance at 30 June 2006 474,509 79,561 554,070

All changes in equity are attributable to the SA Government as owner

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

63 Financial Report 2005-06 Cash Flow Statement Year Ended 30 June 2006 Note 2006 2005 $'000 $'000 Cash flows from Operating Activities Cash Inflows Receipts from the sale of goods and services 98,617 94,697 Interest received 970 818 Receipts from SA Government 27,487 8,114 Dividends received 971 751 GST input tax credits claimed 15,772 10,515 Other receipts 8,742 1,413 Cash generated from operations 152,559 116,308

Cash Outflows Employee benefit payments (40,534) (36,434) Supplies and services (42,957) (38,178) Interest paid (5,992) (6,213) GST payments on purchases (6,756) (6,324) GST remitted to ATO (5,283) (4,048) Cash used in operations (101,522) (91,197)

Net cash provided by operating activities 33 51,037 25,111

Cash flows from Investing Activities Cash Inflows Proceeds from sale of property, plant and equipment 34,388 171 Proceeds from the sales of intangibles - 1,264 Cash generated from investing activities 34,388 1,435

Cash Outflows Purchase of property, plant and equipment (36,894) (15,776) Cash used in investing activities (36,894) (15,776)

Net cash provided by (used in) investing activities (2,506) (14,341)

Cash flows from Financing Activities Cash Outflows Dividends paid (34,757) (2,296) Repayment of borrowings (6,166) (5,381) Net cash used in financing activities (40,923) (7,677)

Net increase in cash and cash equivalents 7,608 3,093 Cash and cash equivalents at the beginning of the financial year 14,498 11,405 Cash and cash equivalents at the end of the financial year 33 22,106 14,498

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

64 Financial Report 2005-06 Note Index Year Ended 30 June 2006 Note Objectives of TransAdelaide 1 Summary of Significant Accounting Policies 2 Financial Risk Management 3 Segment / Service Information 4 Changes in Accounting Policies 5 Income Notes Revenues from the provision of services 6 Financial income 7 Revenues from SA Government 8 Net loss/gain from the disposal of assets 9 Other revenues / income 10 Expense Notes Employee benefits cost 11 Remuneration of employees and TVSP disclosure 11 Remuneration of directors 11 Supplies and services 12 Depreciation and amortisation expense 13 Financial expenses 14 Other expenses 15 Auditor’s remuneration 16 Payments to SA Government 8 Income tax equivalent expense 17 Asset Notes Cash and cash equivalents 33 Receivables 18 Inventories 19 Property, plant and equipment 20 Investment property 21 Intangible assets 22 Reconciliation of asset carrying amounts 23 Investments accounted for using the equity method 24 Liabilities Notes Payables 25 Borrowings 26 Employee benefits 27 Provisions 28 Other liabilities 29 Equity Notes Reserves 30 Other Notes Related party disclosures 11 Commitments 31 Contingent assets and contingent liabilities 32 Reconciliation of cash and cash equivalents 33 After balance date events 34

65 Financial Report 2005-06

Notes to the Financial Statements Year Ended 30 June 2006

Note 1 Objectives of TransAdelaide

TransAdelaide was established as a Public Authority under the TransAdelaide (Corporate Structure) Act 1998 in January 1999. TransAdelaide also has a 50% interest in Transitplus Pty Ltd, a joint venture entity established for the provision of bus services through the Adelaide Hills. TransAdelaide is a body corporate subject to the provisions of the Public Corporations Act 1993. The TransAdelaide (Corporate Structure) Act 1998 provides that TransAdelaide’s principal activity is to operate passenger transport services, an activity that continued to be the primary focus throughout the year.

Note 2 Summary of Significant Accounting Policies

a) Basis of Accounting The financial report is a general purpose financial report. The accounts have been prepared in accordance with applicable Australian Accounting Standards and Treasurer’s Instructions and Accounting Policy Statements promulgated under the provision of the Public Finance and Audit Act 1987 (PFAA). For the purpose of Australian Equivalents to International Financial Reporting Standards, TransAdelaide is a for-profit entity.

These financial statements are the first statements to be prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRS). AASB 1 First time adoption of AIFRS has been applied in preparing these statements. Previous financial statements were prepared in accordance with Australian Generally Accepted Accounting Principles. Reconciliations explaining the transition to AIFRS as at 1 July 2004 and 30 June 2005 are at Note 5.

TransAdelaide’s Income Statement, Balance Sheet and Statement of Changes in Equity have been prepared on an accrual basis and are in accordance with historical cost convention, except for certain assets that were valued in accordance with the valuation policy applicable.

The Cash Flow Statement has been prepared on a cash basis.

The financial report has been prepared based on a twelve month operating cycle and presented in Australian currency.

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Notes to the Financial Statements (continued) Year Ended 30 June 2006

b) Comparative Information The presentation and classification of items in the financial report are consistent with prior periods except where a specific Accounting Policy Statement or Australian Accounting Standard has required a change. Comparative figures have been restated on an AIFRS basis except for financial instrument information as permitted by AASB 1. The comparatives have been restated to assist users’ understanding of the current reporting period and do not replace the original financial report for the preceding period. Note 5 provides a detailed analysis of comparative amounts that have been reclassified as a result of the adoption of AIFRS.

c) Rounding All amounts in the financial statements have been rounded to the nearest thousand dollars ($’000).

d) Taxation In accordance with Treasurer’s Instruction 22 Tax Equivalent Payments, TransAdelaide is required to pay to the State Government an income tax equivalent. The income tax liability is based on the Treasurer’s accounting profit method, which requires that the corporate income tax rate be applied to the net accounting profit.

TransAdelaide is liable for payroll tax, fringe benefits tax, goods and services tax, emergency services levy, land tax equivalents and local government rate equivalents.

Income, expenses and assets are recognised net of the amount of GST except where the amount of GST incurred by TransAdelaide as a purchaser is not recoverable from the Australian Taxation Office. Receivables and payables are stated with the amount of GST included.

e) Income and Expenses

Income and expenses are recognised in TransAdelaide’s Income Statement when and only when it is probable that the flow of economic benefits to or from the entity will occur and can be reliably measured. Income and expenses have been classified according to their nature in accordance with Accounting Policy Framework II General Purpose Financial Reporting Framework paragraph APS 3.5 and have not been offset unless required or permitted by a specific accounting standard. In accordance with Accounting Policy Framework II General Purpose Financial Reporting Framework APS 4.1 and 4.2 the financial report’s notes disclose income, expenses, financial assets and financial liabilities where the counterparty/transaction is with an entity within the SA Government as at the reporting date, classified according to their nature.

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Notes to the Financial Statements (continued) Year Ended 30 June 2006

Revenues Revenues are measured at fair value of consideration received or receivable. Revenue is recognised for major activities as follows:

Revenues are derived from the provision of rail services to the public under contract with the Public Transport Division of the Department of Transport, Energy and Infrastructure. This revenue is recognised upon delivery of the service.

Rental income arising on investment properties is accounted for on a straight line basis over the lease term.

Grants, subsidies and funding received from the SA Government are recognised as revenues when TransAdelaide obtains control over the assets. Control over these revenues is normally obtained upon receipt and they are accounted for in accordance with Treasurer’s Instruction 3 Appropriation.

Where money has been appropriated in the form of a loan, TransAdelaide has recorded the amount in the balance sheet.

Income from the disposal of non-current assets is recognised when control of the asset has passed to the buyer and is determined by comparing proceeds with carrying amount. When revalued assets are sold, the revaluation increments are transferred to retained earnings in accordance with Accounting Policy Framework III Asset Accounting Framework APS 3.11. Resources received/provided free of charge are recorded as revenue and expenditure in the Income Statement at their fair value in accordance with Accounting Policy Framework III Asset Accounting Framework APS 2.12. Resources provided free of charge are recorded at their fair value in the expense line items to which they relate.

Contributions Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and TransAdelaide will comply with all attached conditions.

Government grants relating to costs are deferred and recognised in the Income Statement over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are recognised as deferred income and are credited to the Income Statement on a straight line basis over the expected lives of the related assets.

All contributions from non-government entities are recognised as income when TransAdelaide obtains control of the contribution or the right to receive the contribution and the income recognition criteria are met.

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Notes to the Financial Statements (continued) Year Ended 30 June 2006

Expenses TransAdelaide undertakes major cyclical maintenance on its infrastructure assets. All costs involved with the major cyclical maintenance are recorded as an expense unless they add to the service potential of the existing infrastructure asset.

Borrowing costs are recognised as an expense.

f) Current and Non-Current Classification Assets and liabilities are characterised as either current or non-current in nature. TransAdelaide has a clearly identifiable operating cycle of twelve months. Assets and liabilities that are sold, consumed or realised as part of the normal operating cycle even when they are not expected to be realised within twelve months after the reporting date have been classified as current assets or current liabilities. All other assets and liabilities are classified as non-current.

Where asset and liability line items combine amounts expected to be realised within twelve months and more than twelve months, TransAdelaide has separately disclosed the amounts expected to be recovered or settled after more than twelve months.

g) Cash and Cash Equivalents Cash and cash equivalents recorded in the cash flow statement includes cash on hand and deposits held at call. Cash is measured at nominal value.

h) Receivables Receivables include amounts receivable from trade, prepayments and other accruals. Trade receivables arise in the normal course of selling goods and services to the public and agencies. Trade receivables are generally receivable within 30 days after the issue of an invoice or the goods/services have been provided under a contractual arrangement. Other debtors arise outside the normal course of selling goods and services to other entities and to the public. TransAdelaide determines the provision for doubtful debts based on a review of balances within trade receivables that are unlikely to be collected. These are generally receivables that are 90 days or more overdue.

i) Inventories Inventories are measured at the lower of cost or their net realisable value. Cost is allocated in accordance with the weighted average method. Net realisable value is determined using the estimated sales proceeds less costs incurred in marketing, selling and distribution to customers. The amount of any inventory write-down to net realisable value/replacement cost or

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Notes to the Financial Statements (continued) Year Ended 30 June 2006

inventory losses is recognised as an expense in the period the write-down or loss occurred. Any write-down reversals are recognised as an expense reduction.

j) Non-Current Asset Acquisition and Recognition Assets are initially recorded at cost or at the value of any liabilities assumed, plus any incidental cost involved with the acquisition. Where assets are acquired at no value, or minimal value, they are recorded at their fair value in the Balance Sheet. If however, the assets are acquired at no or nominal value as part of a restructuring of administrative arrangements then the assets are recorded at the value recorded by the transferor prior to transfer. In accordance with Accounting Policy Framework 3 Asset Accounting Framework APS 2.15 and APS 7.2, all non-current tangible assets with a value of $4,000 are capitalised. Assets held for sale are separately disclosed and measured at the lower of carrying amount and fair value less cost to sell. k) Revaluation of Non-Current Assets TransAdelaide’s non-current assets are included at fair value. Valuations are provided by either an independent valuer, by the Valuer General or a Director’s valuation. In accordance with the Department of Treasury and Finance, Accounting Policy Framework, asset classes containing individual assets over a threshold of $1 million, based on fair value at the time of acquisition, are regularly revalued. Where an asset class does not contain assets above the threshold, all assets in that class are deemed to be revalued to their fair values immediately following recognition at acquisition cost, as required by Accounting Policy Framework 3 “Asset Accounting Framework".

The cost of property, plant and equipment constructed by TransAdelaide includes the cost of materials and direct labour and an appropriate proportion of fixed and variable overheads. All major non-current assets are usually revalued every three years on an existing use, fair value basis in the financial statements at the revalued amounts.

The most recent valuation was conducted under instruction from TransAdelaide by Certified Practising Valuer Mr John L Morgan B. App. Sc. (Val.) Fellow, Australia Property Institute during the 2004-05 year and included the major asset classes: Trams, Trains, Land, Buildings and Permanent Way.

In accordance with Accounting Policy Framework 3, Asset Accounting Framework assets will continue to be valued at fair value and the value in the asset revaluation reserve will be retained to ensure that, to the extent possible, any valuation decrements are recorded against previous valuation increments rather than in the income statement.

TransAdelaide has taken revaluation adjustments to the asset revaluation reserve on an individual basis.

l) Impairment All non-current tangible and intangible assets are tested for indication of impairment at each reporting date. Where there is an indication of impairment, the recoverable amount

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Notes to the Financial Statements (continued) Year Ended 30 June 2006

is estimated. An amount by which the asset’s carrying amount exceeds the recoverable amount is recorded as an impairment loss. Impairment is generally limited to where an asset’s depreciation is materially understated or where the replacement cost is falling.

m) Depreciation and Amortisation of Non-Current Assets All non-current assets, having a limited useful life, are systematically depreciated/amortised over their useful lives in a manner that reflects the consumption of their service potential. Amortisation is used in relation to intangible assets such as software, while depreciation is applied to physical assets such as property, plant and equipment.

The useful lives of all major assets held by TransAdelaide are reassessed on an annual basis.

The value of leasehold improvements is amortised over the estimated useful life of each improvement, or the unexpired period of the relevant lease, whichever is shorter.

Land and assets held for sale are not depreciated. Depreciation/amortisation for non-current assets is determined as follows:

Class of Assets Depreciation Method Useful Life (Years)

Rollingstock Railcars Straight Line 20 – 42 Tramcars Straight Line 10 - 87 Buildings Straight Line 10 – 100 Permanent Way Straight Line 20 - 242 Machinery, Plant & Equipment Straight Line 3 - 100 Intangibles Straight Line 3

n) Intangible Assets An intangible asset is an identifiable non-monetary asset without physical substance. Intangible assets are measured at cost. The acquisition of/or internal development of software is capitalised when the expenditure meets the definition and recognition criteria of an intangible asset outlined in AASB 138 Intangible Assets and when the amount of expenditure is greater than or equal to $4,000, in accordance with Accounting Policy Framework III Asset Accounting Framework paragraph APS 2.15. All research and development costs that do not meet the capitalisation criteria outlined in AASB 138 are expensed.

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Notes to the Financial Statements (continued) Year Ended 30 June 2006

Subsequent expenditure on intangible assets has not been capitalised. This is because TransAdelaide has been unable to attribute this expenditure to the intangible asset rather than to TransAdelaide as a whole.

o) Investment Property Investment property principally comprises freehold land and is not occupied by TransAdelaide. Investment property is carried at fair value, as mandated by Accounting Policy Framework III Asset Accounting Framework. Changes in fair value are recorded in the Income Statement as part of Other Income or Other Expense.

p) Payables Payables include creditors, accrued expenses and employment on-costs.

Creditors represent the amounts owing for goods and services received prior to the end of the reporting period that are unpaid at the end of the reporting period. Creditors include all unpaid invoices received relating to the normal operations of TransAdelaide.

Accrued expenses represent goods and services provided by other parties during the period that are unpaid at the end of the reporting period and where an invoice has not been received.

All payables are measured at their nominal amount and are normally settled within 30 days from the date of the invoice or date the invoice is first received in accordance with Treasurer’s Instruction 11 Payment of Creditor’s Accounts.

Employment on-costs include superannuation contributions and payroll tax with respect to outstanding liabilities for salaries and wages, long service leave, annual and other leave.

TransAdelaide makes contributions to several State Government and externally managed superannuation schemes. These contributions are treated as an expense when they occur. There is no liability for payments to beneficiaries as they have been assumed by the respective superannuation schemes. The only liability outstanding at balance date relates to any contributions due but not yet paid to the South Australian Superannuation Board (SASB).

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Notes to the Financial Statements (continued) Year Ended 30 June 2006

q) Employee Benefits These benefits accrue for employees as a result of services provided up to the reporting date that remain unpaid. Long-term employee benefits are measured at present value and short-term employee benefits are measured at nominal amounts.

No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees is estimated to be less than the annual entitlement of sick leave.

Liability for salaries and wages are measured as the amount unpaid at the reporting date at remuneration rates current at reporting date. The annual leave liability is expected to be payable within twelve months and is measured at the undiscounted amount expected to be paid.

In the unusual event where salary and wages and annual leave are payable later than twelve months, the liability will be measured at nominal amount.

The liability for long service leave is recognised after an employee has completed seven years of service in accordance with Accounting Policy Framework IV Financial Asset and Liability Framework. An actuarial assessment of Long Service Leave undertaken by the Department of Treasury and Finance based on a significant sample of employees throughout the South Australian public sector determined that the liability measured using the short-hand method was not materially different from the liability measured using the present value of expected future payments. This calculation is consistent with TransAdelaide’s experience of employee retention and leave taken. r) Leases TransAdelaide has entered into operating leases. Operating Leases In respect of operating leases, the lessor effectively retains substantially the entire risks and benefits incidental to ownership of the leased assets. Operating lease payments are recognised as an expense on the basis that is representative of the pattern of benefits derived from the leased assets.

s) Insurance TransAdelaide has arranged, through the SA Government Captive Insurance Corporation (SAICORP), to insure all major risks of TransAdelaide. The excess payable under this arrangement varies depending on each class of insurance held.

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Notes to the Financial Statements (continued) Year Ended 30 June 2006

t) Joint Venture In TransAdelaide’s financial statements the investment in joint venture entity is carried at the lower of cost or recoverable amount. TransAdelaide’s share of the joint venture entity’s net profit or loss is recognised in the Income Statement from the date joint control commenced. The economic entity’s investment in joint venture entity is based upon the equity method of accounting for investment in associates as per Australian Accounting Standard AASB 128, “Investments in Associates”.

Note 3 Financial Risk Management

TransAdelaide is exposed to a variety of financial risks, market risk, credit risk and liquidity risk. Financial risk management is carried out by Business Services and risk management policies and practices are in accordance with Australian Risk Management Standards. Internal accounting policies and procedures are in place which cover the main areas of financial risk including cash management, accounts payable and receivable, reconciliations and accruals, delegations of authority, fixed assets and capital expenditure. TransAdelaide has non-interest bearing assets (cash on hand and on call and receivables) and liabilities (payables) and interest bearing assets (held to maturity investments) and liabilities (borrowings from the SA Government). Further details on interest rate risk are included in Notes 26 and 33. TransAdelaide’s exposure to foreign exchange risk and cash flow interest risk is minimal. TransAdelaide is exposed to price risk for changes in interest rates that relate to long- term debt obligations and investments classified either as available-for-sale or fair value.

TransAdelaide has no significant concentration of credit risk. Any existing risk has been acknowledged through provision for doubtful debts.

In relation to liquidity/funding risk, the continued existence of TransAdelaide in its present form, and with its present segments/services, is dependent on Government policy and on continuing capital appropriations by Parliament to maintain TransAdelaide’s asset base.

Note 4 Segment Information

TransAdelaide operations fully relate to the provision of public transportation services in the Adelaide metropolitan area.

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Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006

Note 5 - Changes in Accounting Policies

(i) Explanation of transition to AIFRS and other changes in accounting policy

In accordance with the First-time Adoption of AIFRS, the Corporation first applied AIFRS from 1 July 2004 to convert the previous GAAP reported results to AIFRS. AIFRS was also applied to the 30 June 2005 reported result to convert the previously reported GAAP figures to AIFRS. These AIFRS figures for 2005 form the figures reported in the Income Statement, Balance Sheet and Notes for the 2005 year and are directly comparable to the AIFRS figures for 2006. There has also been a change in accounting policy for long service leave calculation - see note 27. Reconciliations and notes explaining the transition to AIRFS and other changes in accounting policies are shown below:

At 30/6/05 At 1/7/04 Previous Adjust- Previous Adjust- AIFRS AIFRS GAAP ments GAAP ments Note $'000 $'000 $'000 $'000 $'000 $'000 Current assets a 30,058 217 30,275 19,723 19,723 Non-current assets b 696,119 2,358 698,477 601,053 423 601,476 Current liabilities c, d 32,485 (2,469) 30,016 25,832 (3,677) 22,155 Non-current liabilities a,c,d,g 111,398 13,305 124,703 113,912 5,087 118,999 Net Assets 582,294 (8,261) 574,033 481,032 (987) 480,045 Equity 582,294 (8,261) 574,033 481,032 (987) 480,045 Retained earnings e, f, g 117,564 (26,167) 91,397 111,305 (489) 110,816

Assets revaluation reserve e, f 464,730 17,906 482,636 369,727 (498) 369,229 Total equity 582,294 (8,261) 574,033 481,032 (987) 480,045 Profit (loss) after income tax equivalents 7,650 (25,679) (18,029) 1,793 (987) 806 Total Cash Flows 3,093 - 3,093 (381) - (381)

75 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006

Note 5 - Changes in Accounting Policies (continued) The adoption of AIFRS has resulted in a number of material adjustments to the Balance Sheet and Income Statement. a) Recognition of capital grant income in accordance with AASB 120 "Accounting for Government Grants and Disclosure of Government Assistance". TransAdelaide reclassified $1.4 million of capital grants previously recorded as revenue in 2003-04 and a further $10.05 million recorded as revenue in 2004-05 to other liabilities. The liability will be amortised over the future life of the funded assets. In 2004-05 this also resulted in recognition of additional capital work in progress of $0.2 million which, under the previous application of GAAP, would not have been recognised until the completion of the asset. b) Changes made to prior balances have given rise to changes in the FITB and PDIT recognised in 2003-04 and 2004-05. Changes to the net results of TransAdelaide have resulted in an increase to FITB of $0.4 million in 2003-04 and a further $1.935 million in 2004-05 and a reduction to the PDIT for 2005 of $1.3 million. On 23 August 2005, the Treasurer approved amendments to TI22 "Tax and Tax Equivalents Applicable to Government Businesses"; these amendments included the requirement for TransAdelaide to use the Accounting Profits Model to calculate the income tax equivalent expense from 1 July 2005. As a result of the adoption of this model, tax-effect accounting of all income statement items resulted in an adjustment to the tax related balance sheet items' carrying values, increasing the write-off of these values. c) Borrowings re-classification. In accordance with AASB 101 liabilities that are not expected to be settled in the entity's normal operating cycle, or where there is a right to defer settlement for at least 12 months after the reporting date, should be classified as non-current. TransAdelaide has therefore re-classified 100% of borrowings to non-current liabilities. d) Employee benefit provision re-classification to current assets . AASB 101 requires that a liability shall be classified as current where the entity does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. As TransAdelaide does not have an unconditional right to defer settlement of employee benefits such as annual leave and the retirement and death gratuity and associated on-costs, $2.9 million has been reclassified from non-current to current liabilities. e) Investment property. Under AASB 140 Investment Property, revaluations performed related to investment property are required to be brought to account as part of reported profit instead of being adjusted to the asset revaluation reserve as was performed under GAAP. This has resulted in a decrease to the Asset Revaluation Reserve of $13.3 million in 2004 to reverse prior increments and an increase to the Asset Revaluation Reserve of $2.7 million in 2005 to reverse a revaluation decrement from that year.

76 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006

Note 5 - Changes in Accounting Policies (continued) f) Asset revaluation reserve. In accordance with AASB 116, where an asset's carrying amount has been increased as a result of revaluation, the increase has been credited to the Asset Revaluation Reserve. Where such increase reverses a previous revaluation decrease of the same asset, the increase has been recognised as income. Where an asset's carrying amount has been decreased as a result of revaluation, the decrease has been recognised as a reduction of income. To the extent of any credit balance existing in the Asset Revaluation Reserve for such asset, the revaluation decrease has been applied against that balance. g) Long service leave voluntary accounting policy change . TransAdelaide has this year adopted the short-hand method of calculating long service leave liability as permitted in AASB 119 Employee Benefits. Based on TransAdelaide's experience of employee retention and leave taking, this method is considered reliable and does not result in a material difference when compared with the long-hand method of calculation.

Impact on the Income Statement The AIFRS and voluntary accounting policy changes have had the following impacts on the income statement: i) Re-statement of long service leave using the short-hand method increased employee benefit expenditure in 2005 by $679,000 ii) Income tax expense decreased by $3.2 million in 2004-05 iii) Grant revenue recognised in 2004-05 decreased by $9.8 million as a result of the requirement to recognise capital grant funding as deferred income under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance iv) An increase to revaluation decrement expense of $18.4 million was recognised in the 2005 income statement as a result of AASB 116 Property, Plant and Equipment which requires revaluation decrements to be recognised in the income statement for individual assets where there are not sufficient prior increments posted against the reserve to absorb the decrement.

(ii) Impact on Financial Year Ended 30 June 2007

A number of Australian Accounting Standards have been issued or amended and are applicable to this Corporation but are not yet effective. The Corporation has assessed the impact of the new and amended standards and there will be no impact on the accounting policies of the Corporation.

77 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 6 - Revenues from the provision of services

Services received by entities within SA Government 93,378 87,850 Services received by entities external to the SA Government 4,166 4,121 Total revenues from the provision of services 97,544 91,971

Note 7 - Financial income

Interest received/receivable from entities within SA Government 984 826 Total financial income 984 826

Note 8 - Revenues from/payments to SA Government a) Revenues from SA Government

Appropriations from Consolidated Account pursuant to the Appropriation Act 2,356 3,343 Funding grants from the Department of Transport, Energy and Infrastructure (DTEI) * Capital grants 24,558 100 Recurrent grants 723 2

Amortisation of capitalised funding grants 305 11 Other 286 - Total revenues from SA Government 28,228 3,456

* These amounts predominantly relate to the upgrade of the Glenelg tram line and its subsequent disposal as discussed below. Under AIFRS, the value shown as capital grants above would have been carried forward to amortise against future depreciation had the funded assets not have been disposed of during the financial year. b) Payments to SA Government Income Tax equivalent payment - - Dividends paid 34,757 2,296 Total payments to SA Government 34,757 2,296

Dividends paid and payable have been specifically determined and approved in consultation with the Treasurer and TransAdelaide’s Minister. A special dividend paid during 2005-06 of $2.296m relates to an ongoing arrangement. This special dividend was paid to the South Australian Government’s Consolidated Account on 29 June 2006.

On 26 June 2006 the Acting Treasurer approved: - A special dividend of $32.461m in 2005-06 representing the net proceeds received from the sale of tram related infrastructure assets to the Department of Transport, Energy and Infrastructure (DTEI). This special dividend was paid to the South Australian Government’s Consolidated Account on 29 June 2006. - That no ordinary dividend be paid by TransAdelaide for 2005-06.

78 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 9 - Net loss/gain from the disposal of assets

Rollingstock Proceeds from disposal 78 - Less net book value of assets disposed (96) (52) Net (loss)/gain from disposal of rollingstock (18) (52)

Permanent way Proceeds from disposal 31,485 - Less net book value of assets disposed (32,200) (48) Net (loss)/gain from disposal of permanent way (715) (48)

Land and buildings Proceeds from disposal 2,619 170 Less net book value of assets disposed (2,619) 22 Net (loss)/gain from disposal of land and buildings - 192

Other property, plant and equipment Proceeds from disposal 143 1 Less net book value of assets disposed (152) (68) Net (loss)/gain from disposal of property, plant and equipment (9) (67)

Intangibles Proceeds from disposal * - 1,264 Less net book value of assets disposed (149) (3) Net (loss)/gain from disposal of intangibles (149) 1,261

Total Assets Total proceeds from disposal * 34,325 1,435 Less total value of assets disposed (35,216) (149) Total net (loss)/gain from disposal of assets (891) 1,286

* In 2005 this amount includes the gain from sale of the intellectual property of Austrics

On 26 June 2006 the Acting Treasurer approved the sale of tram related infrastructure assets by TransAdelaide to DTEI for consideration of $32.461m. These asset sales include Permanent Way, Land & Buildings and Other Plant & Equipment asset classes.

79 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 10 - Other revenues / income

Other revenues from entities external to the SA Government Property Rental 3,197 4,030 Other Revenue 2,069 1,490 5,266 5,520 Other revenues from entities within SA Government Property Rental 796 843

Total other revenues 6,062 6,363

Future minimum payments receivable from non-cancellable operating leases of non-investment properties are: (i) within one year $2,733,000, (ii) between 2 and 5 years $9,538,000, and (iii) later than 5 years $49,514,000. Leases include advertising and display sites, mobile telephone transmitters and real estate with tenancies ranging from monthly to 95 years, whilst providing for regular reviews.

Note 11 - Employee benefits cost

Salaries and wages 28,021 28,805 TVSPs (refer below) 183 - Long Service Leave 1,688 1,339 Annual Leave 2,991 2,645 Block Book Off 581 577 Retiring and Death Gratuity 14 5 Employment on-costs - superannuation 3,411 3,046 Employment on-costs - other 2,051 1,890 Board fees 139 140 Total employee benefits costs 39,079 38,447

Target Voluntary Separation Packages (TVSPs) Amounts paid to these employees: TVSPs 183 - Annual Leave and Long Service Leave paid during the reporting period 89 - 272 - Recovery from the Department of Treasury and Finance (183) -

Number of employees who were paid TVSPs during the reporting period 1-

80 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 11 - Employee benefits cost (continued)

Remuneration of Employees Total Remuneration for employees > $100,000 3,188 1,628

The number of employees whose remuneration falls within the following remuneration bands were: No. of No. of Remuneration Band $ Employees Employees 100,000 - 109,999 7 2 110,000 - 119,999 7 2 120,000 - 129,999 3 4 130,000 - 139,999 3 - 150,000 - 159,999 - 1 160,000 - 169,999 - 1 170,000 - 179,999 1 1 180,000 - 189,999 - 1 190,000 - 199,999 1 - 240,000 - 249,999 1 - 280,000 - 289,999 1 - 24 12

The table includes: - all employees who received remuneration of $100,000 or more during the year. Remuneration of employees reflects all costs of employment including salaries and wages, superannuation contributions, fringe benefits tax and any other salary sacrifice benefits. - payments of long service leave entitlements to some positions in 2005 - a TVSP payment in 2006.

Related party disclosures

(a) Directors' Transactions Details of Directors' remuneration payments are set out below.

(b) Transactions with other related parties TransAdelaide has a 50% interest in a joint venture entity Transitplus Pty Ltd. TransAdelaide receives an annual management fee of $125,600 and an ordinary dividend from the joint venture entity. Two board members of TransAdelaide are also board members of the joint venture (Virginia Hickey and Kevin Benger); board fees relating to these positions are paid to the board members by TransAdelaide.

81 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006

Note 11 - Employee benefits cost (continued)

Remuneration of directors

The number of directors whose remuneration falls within the following No. of No. of Remuneration Band $ Directors Directors

$20,000 - $29,999 3 3 $30,000 - $39,999 1 1 $40,000 - $49,999 1 1

55

The names of the directors who have held office during the financial year are: Kevin Benger, Virginia Hickey, Roger Jowett, Elizabeth Kosmala and Frances Magill. c) Key management personnel 2006 2005 $'000 $'000 Short-term employee benefits 1,250 1,021

Note 12 - Supplies and services

Supplies and services - Non SA Government entities 35,256 32,855 Supplies and services - SA Government entities 5,313 5,446 Total supplies and services 40,569 38,301

Consultants The number and dollar amount of Consultancies paid / payable (included in supplies and services expense) that fell within the following bands: 2006 2005 No. $'000 No. $'000

Below $10,000 5 24 2 5 Between $10,000 and $50,000 4 103 3 41 Total paid / payable to the consultants engaged 127 46

2006 2005 $'000 $'000 Note 13 - Depreciation and amortisation expense

Depreciation Rollingstock Railcars 7,723 7,727 Tramcars 2,078 2,564 Permanent way 7,216 7,363 Buildings 2,672 2,649 Other property, plant and equipment 1,251 1,007 20,940 21,310

82 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006

Note 13 - Depreciation and amortisation expense (continued)

Amortisation Intangible assets 183 136 183 136

Total depreciation and amortisation 21,123 21,446

Change in depreciation due to a revaluation TransAdelaide has maintained the fair value of its assets resulting from the independent valuation conducted in 2004/05.

Revision in Accounting Estimates Depreciation of tramcars differed between 2005 and 2006 due to a reassessment of the remaining useful life of the five remaining "H" type tramcars from 4 years to 11 years from 1/7/2005. This has resulted in a decrease in depreciation expense for this asset class of $0.5m per annum.

2006 2005 $'000 $'000 Note 14 - Financial expenses

Interest on borrowings 5,381 5,528 Treasury guarantee fee 575 617 Financial expenses - SA Government 5,956 6,145

Total financial expenses 5,956 6,145

Note 15 - Other expenses

Other expenses paid / payable to entities external to the SA Government Net Bad and Doubtful Debts (15) (15) Total other expenses - Non SA Government entities (15) (15)

Other expenses paid / payable to entities within the SA Government Net Bad and Doubtful Debts 801 - Total other expenses - SA Government entities 801 -

Total other expenses 786 (15)

Note 16 - Auditor’s remuneration

Audit fees paid / payable to the Auditor-General's Department 155 150 155 150 Other Services No other services were provided by the Auditor-General’s Department.

83 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 17 - Income tax equivalent expense

Profit (loss) before income tax expense 14,855 (18,029) Prima facie tax (if profit) thereon at 30% (4,457) -

Tax exempt revenue items * 4,457 Income tax equivalent expense - -

Change in taxation policy ** Adjustment to deferred tax balance sheet items as a result of Policy change (10,531) -

Total change in taxation policy (10,531) -

Total change in taxation policy expense comprises: Movements in: Future income tax benefit (21,986) - Provision for deferred income tax 11,455 - (10,531) -

Income tax related balance sheet items Future income tax benefit - 21,986 Provision for deferred income tax - (11,455) Net income tax related balance sheet items - 10,531

* Tax exempt revenue items The disposal of tram infrastructure assets during the year resulted in related capital grant funding received in 2004-05 and 2005-06 being brought to account during the year.

On 26 June 2006 the Acting Treasurer approved that any net accounting profit made by TransAdelaide as a result of the sale of tram related infrastructure assets will be excluded from the calculation of TransAdelaide's income tax equivalents payments in 2005-06 and 2006-07, by approving a variation to the application of Treasurer's Instruction 22 Tax Equivalent Payments."

** Policy change On 23 August 2005, the Treasurer approved amendments to TI22 "Tax and Tax Equivalents Applicable to Government Businesses". These amendments included the requirement for TransAdelaide to use the Accounting Profits Model to calculate the income tax equivalent expense from 1 July 2005.

As a result, the tax related assets identified in the Balance Sheet as at 30 June 2005 were not able to be realised and were written off in the 2005-06 financial year as part of the income tax equivalent expense calculation.

84 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 18 - Receivables

Current Gross accrued income 3,470 10,982 Less: Provision for doubtful debts (988) (202) Prepayments 68 84 GST receivable - 229 Total receivables 2,550 11,093

Receivables from SA Government entities Accrued income 1,517 8,419 Less: Provision for doubtful debts (806) (5) Prepayments 11 9 Total receivables from SA Government entities 722 8,423

Receivables from Non SA Government entities Accrued income 1,953 2,563 Less: Provision for doubtful debts (182) (197) Other 57 304 Total receivables from Non SA Government entities 1,828 2,670

Total receivables 2,550 11,093

Note 19 - Inventories

Stores inventories 4,309 4,778 Less: Provision for obsolescence - (94) Net Stores Inventories 4,309 4,684

Note 20 - Property, plant and equipment

Rollingstock Railcars Spare parts and associated equipment at Fair Value 5,229 5,300 Less: Accumulated depreciation 2,033 1,878 Railcar equipment at Fair Value 3,196 3,422

At independent valuation 1 July 2004 402,500 402,500 Less: Accumulated depreciation 207,029 199,487 Railcars at Valuation 195,471 203,013

Total Railcars 198,667 206,435

85 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 20 - Property, plant and equipment (continued) Tramcars Spare parts at Fair Value 79 79 Less: Accumulated depreciation 29 26 Tramcar spares at fair value 50 53

At independent valuation 1 July 2004 48,768 72,425 Less: Accumulated depreciation 45,314 67,089 Tramcars at valuation 3,454 5,336

Total Tramcars 3,504 5,389 Total Rollingstock 202,171 211,824

Land and Buildings Freehold Land: At Fair Value 1,370 1,378 At independent valuation 1 July 2004 131,450 132,349 Total land 132,820 133,727

Buildings: At Fair Value 2,670 1,101 At Independent Valuation 1 July 2004 183,642 186,909 Less: Accumulated depreciation 99,080 98,245 Total buildings 87,232 89,765

Total land and buildings 220,052 223,492

Permanent Way At Fair Value 18,858 2,118 At Independent Valuation 1 July 2004 383,939 407,936 Less: Accumulated depreciation 202,633 213,532 Total permanent way 200,164 196,522

Other Property, Plant and Equipment At Fair Value 19,831 19,184 Less: Accumulated depreciation (12,937) (13,057) Total other property, plant & equipment 6,894 6,127

Assets Under Construction Rollingstock: - Railcars 327 964 - Tramcars - 239 Permanent way and equipment 8,764 24,740 Land and buildings 2,089 1,416 Total assets under construction 11,180 27,359

Total property, plant & equipment 640,461 665,324

86 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 20 - Property, plant and equipment (continued)

Carrying amounts of property, plant and equipment that would have been recognised if these assets were stated at Cost Rollingstock 94,827 100,139 Land and buildings 67,817 70,789 Permanent way 94,054 80,724 Other property, plant & equipment 7,204 6,516 Assets under construction - - Total property, plant & equipment at Cost 263,902 258,168

This information is based on historical cost and depreciation sourced from a historical asset register containing original estimated useful lives and costs since asset creation, some dating back as far as 1856. 2006 2005 $'000 $'000 Note 21 - Investment property

Opening balance at fair value 10,578 10,578 Acquisitions -- Closing Balance at fair value 10,578 10,578

Valuation basis Investment properties are measured at fair value, being the amounts for which the properties could be exchanged between willing parties in an arms length transaction, based on current prices in an active market for similar property. The most recent valuation was conducted under instruction from TransAdelaide by Certified Practising Valuer Mr John L Morgan B. App. Sc. (Val.) Fellow, Australia Property Institute during the 2004-05 year. 2006 2005 $'000 $'000 Note 22 - Intangible assets

Computer Software Other computer software 1,135 1,686 Less: Accumulated amortisation (1,021) (1,297) Total Intangible assets 114 389

Computer software has been separately identified in the notes to the accounts in accordance with AASB 138. In previous years this class of assets was included in Property, Plant and Equipment.

87 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006

Note 23 - Reconciliation of asset carrying amounts Total Property, Investment Total Non- Rolling- Land & Permanent Other Assets Under Plant & Intangible Property current stock Buildings Way PP&E Construction Equipment Assets Assets Assets $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Carrying amount at beginning of year 211,824 234,070 196,522 6,516 27,359 676,291 --676,291 Transfers - (10,578) - (389) - (10,967) 389 10,578 - Change in accounting policy ------Restated carrying amount at beginning of year 211,824 223,492 196,522 6,127 27,359 665,324 389 10,578 676,291 Additions - 13 800 204 30,246 31,263 --31,263 Disposals (96) (2,621) (7,064) (152) (25,136) (35,069) (149) - (35,218) Transfers 244 1,840 17,183 1,966 (21,290) (57) 57 - -

Acquisitions through equity acquired ------

Revaluation increment (decrement) - - (61) - - (61) --(61)

Recoverable amount write-downs ------Reversals of recoverable amount write-downs ------Impairment losses ------Depreciation (9,801) (2,672) (7,216) (1,251) - (20,940) (183) - (21,123) Carrying amount at end of year 202,171 220,052 200,164 6,894 11,179 640,460 114 10,578 651,152

New assets resulting from completed Assets Under Construction have been treated as transfers.

88 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 24 - Investments accounted for using the equity method

Ownership Interest Joint Venture Transitplus Pty Ltd 50% 50%

Investment in Related Entities Transitplus Pty Ltd 200 200 200 200

Principal Activities Transitplus Pty Ltd - Provision of bus services

Investment in Transitplus Pty Ltd Carrying amount at 1 July 200 200 Share of net profit 972 797 Less distributions received or receivable (972) (797) Carrying amount at 30 June 200 200

For reasons of commercial sensitivity TransAdelaide is unable to provide any further financial information on Transitplus Pty Ltd

Note 25 - Payables

Current: Creditors 1,949 13,721 Accrued expenses 4,886 2,642 Accrued employment on-costs 635 573 GST payable 3,502 - 10,972 16,936 Expected to be paid more than 12 months after reporting date Employment on-costs 1,431 1,365 Total payables 12,403 18,301

Payables to SA Government entities Creditors 529 823 Accrued expenses 906 1,519 Employment on-costs 2,066 1,938 Total payables to SA Government entities 3,501 4,280

Payables to Non SA Government entities Creditors 1,420 12,898 Accrued expenses 3,980 1,123 GST payable 3,502 - Total payables to Non SA Government entities 8,902 14,021 Total payables 12,403 18,301

89 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 26 - Borrowings

Non-current: Borrowings from SA Government 75,205 81,371 Total non-current borrowings 75,205 81,371 Total borrowings 75,205 81,371

Borrowings are recognised at cost in accordance with APF IV Financial Asset and Liability Framework paragraph APS 2.1 and have no maturity date. The interest rate is determined by the Treasurer. Excluding the SA Government guarantee fee, the average annual rate was 7.00% in 2006 (6.70% in 2005).

Note 27 - Employee benefits

Current: Annual leave 3,093 2,885 Long service leave 976 763 Block book off 728 700 Retiring and death gratuity 198 115 Total current employee benefits provisions 4,995 4,463 Accrued wages and salaries 1,132 1,329 6,127 5,792 Expected to be paid more than 12 months after reporting date Annual leave 1,519 1,476 Retiring and death gratuity - 70 Total short-term employee benefits 7,646 7,338 Non-current: Long service leave 10,531 9,767 Total long-term employee benefits 10,531 9,767

Total employee benefits 18,177 17,105

Employee benefits as above 18,177 17,105 Plus: related on-costs included in current payables 2,066 1,938 Aggregate employee benefits plus related on-costs 20,243 19,043

In the 2006 financial year, TransAdelaide adopted the use of the short-cut method of calculating long service leave by applying the benchmark contained in the Accounting Policy Framework IV Financial Asset and Liability Framework. The 2005 balance has been adjusted by $679,000 to provide relevant comparative information. This method is based on actuarial calculations provided by the Department of Treasury & Finance. Based on TransAdelaide's experience of employee retention and leave taking, this method is considered reliable and does not result in a material difference when compared with the long-hand method of calculation.

90 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 28 - Provisions

Current: Workers compensation claims 1,470 1,510 Third party accident damage 996 1,263 Railcar maintenance debt 371 1,563 Total short-term provisions 2,837 4,336

Non-current: Workers compensation claims 7,866 9,287 Third party accident damage 2,685 1,363 Total long-term provisions 10,551 10,650

Total: Workers compensation claims 9,336 10,797 Third party accident damage 3,681 2,626 Railcar maintenance debt 371 1,563 Total provisions 13,388 14,986

Note 28(a) - Reconciliation of Provisions movements Workers Third Party Comp. Accident Railcar Claims Damage Maint. Debt Total $'000 $'000 $'000 $'000

Carrying amount at 1 July 2005 10,797 2,626 1,563 14,986

Recognised expense in 2005-06 416 1,176 - 1,592 less Provisions used during the year (1,877) (344) (1,192) (3,413) plus Recoupments - 223 - 223 Movement (1,461) 1,055 (1,192) (1,598) Carrying amount at 30 June 2006 9,336 3,681 371 13,388

Workers Compensation This liability reflects unsettled workers compensation claims. The workers compensation provision is based on an actuarial assessment of outstanding claims by Brett & Watson Pty Ltd at at 30 June 2006. Due to the uncertainty surrounding the extent of any particular claim, future outflows cannot be estimated.

Third Party Accident Damage This liability reflects TransAdelaide's partial self insurance for this operational risk. The third party accident damage provision is based on an actuarial assessment of oustanding claims performed by Brett & Watson Pty Ltd as at 30 June 2006. The extent of any outflows cannot be estimated due to the level of uncertainty as to the ultimate cost of individual claims. TransAdelaide has reinsurance for claims exceeding $2.1 million for claims prior to 1 July 1997 and exceeding $1 million for claims since 1 July 1997.

91 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006

Note 28(a) - Reconciliation of Provisions movements (continued)

Railcar Maintenance Debt This liability relates to work being performed by Bombardier Transportation Ltd on the 2000 and 3000 class bogies for which, under the Railcar maintenance and service contract, TransAdelaide has agreed to pay a portion. This work is due to be finalised this year.

2006 2005 $'000 $'000 Note 29 - Other liabilities

Current: Revenue received for future services from entities within SA Government 357 3 from entities external to the SA Government 62 38 Total other short-term liabilities 419 41

Non-Current: Capital grants from entities within SA Government Grants received 6,973 11,472 Less: Accumulated amortisation (317) (12) Total other long-term liabilities 6,656 11,460

Total other liabilities 7,075 11,501

Note 29(a) - Reconciliation of capital grants movements

Carrying amount at beginning of year 11,460 - Change in accounting policy - 1,411 Restated carrying amount at beginning of year 11,460 1,411 Additional capital grants received 20,060 10,061 Amortisation (24,864) (12) Carrying amount at end of year 6,656 11,460

Government Grants received for Capital Expenditure are amortised over the life of the resulting asset in accordance with AASB 120. TransAdelaide has received such grants for security and safety upgrades. Grants totalling $24.5m were received to upgrade the tramway infrastructure. (Refer Note 8).

92 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 30 - Reserves

Asset revaluation reserve 474,509 464,730 Changes in accounting policy - 17,906 Restated balance 474,509 482,636

Movements during the year

Asset Revaluation Reserve: Opening balance 464,730 369,727 Changes in accounting policy 17,906 (498) Restated opening balance 482,636 369,229

Revaluation increment on non-current assets: Land and buildings - 76,157 Infrastructure (61) 10,330 Rollingstock - 27,826

Transferred to retained profits amounts realised on disposal of: Land and buildings (320) (88) Infrastructure (6,714) (818) Rollingstock (1,032) -

Reserves as at end of year 474,509 482,636

Nature and purpose of reserves

Asset Revaluation

The asset revaluation reserve includes the net revaluation increments (decrements) arising from the revaluation of non-current assets in accordance with AASB 116. Asset decrements are expensed where no previous revaluation reserve increment exists for that asset.

Upon disposal of revalued assets, any related revaluation increment standing to the credit of the asset revaluation reserve is transferred to retained profits.

93 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 31 - Commitments

Capital Commitments Capital expenditure contracted for at the reporting date but not recognised as liabilities in the financial report, are payable as follows: Within one year 1,953 10,820 Later than one year but not longer than five years - - Later than five years - -

Total capital commitments 1,953 10,820

Net capital expenditure incurred 31,263 22,768 TransAdelaide's capital commitments are for the upgrading of railway stations, pedestrian crossings, railway lines and for the implementation of security improvements throughout the suburban railway network.

Operating lease commitments Commitments in relation to operating leases contracted for at the reporting date but not recognised as liabilities are payable as follows:

Not later than one year 606 1,185 Later than one year but not later than five years 477 1,069 Later than five years - - Total operating lease commitments 1,083 2,254

Operating lease expenses paid 2,257 2,198

TransAdelaide leases property under operating leases expiring from one month to four years. The leases generally provide TransAdelaide with a right of renewal at which time all terms are negotiated. Contingent rental payments are based upon either movements in the Consumer Price Index or operating criteria.

Note 32 - Contingent assets and contingent liabilities TransAdelaide has two outstanding claims for which there is a high degree of certainty that it will recover approximately $500,000.

TransAdelaide currently has a legal claim against its former AUSTRICS division by AMT Genoa for breach of contract which is covered by an insurance policy with SAICORP. The excess payable on this policy is $25,000 given that the claim related to policy conditions when Austrics was a separate legal entity and such conditions prevail.

TransAdelaide has a contingent liability in relation to the warranty of AUSTRICS products sold and provision of annual support of the same. The life of various elements of the indemnities vary between two and seven years from settlement date. As at balance date, this could not be reliably measured.

TransAdelaide has fifty 3000/3100 class railcars subject to a cross border lease which expires in April 2023. Encumbrances exist within this agreement which give rise to financial consequences in the event of loss or destruction of these leased railcar assets. The South Australian Financing Authority monitor the majority of foregoing obligations. To balance date, no event has occurred which would give rise to the encumbrances/consequences.

94 Financial Report 2005-06 Notes to the Financial Statements (continued) Year Ended 30 June 2006 2006 2005 $'000 $'000 Note 33 - Reconciliation of cash and cash equivalents

(a) Reconciliation of Cash

Cash as at 30 June 22,106 14,498

(b) Reconciliation of Net Cash provided by Operating Activities to Net Profit (Loss) from Ordinary Activities after related income tax expense

Net profit (loss) 14,855 (18,029)

Add (less) non-cash items Depreciation 20,939 21,446 Amortisation 184 - (Gain) loss on disposal of assets 891 (1,286) Amortisation of grant funding (305) (11) Write-back of 30 June 2005 unamortised capital grants on disposal of underlying assets (9,844) - Write-off of 30 June 2005 income tax related balances 10,531 - Revaluation decrements - 18,404

Net Cash provided by operating activities before change in assets and liabilities 37,251 20,524

Movements in: Receivables 8,843 (6,484) Stores inventories 369 (1,388) Payables (254) 608 Interest payable (37) (68) Employee benefits 1,358 121 Provisions (1,599) 1,954 Other liabilities 5,106 9,844 Net Cash Provided by Operating Activities after related income tax equivalent expense 51,037 25,111

As at balance date, the interest rate on cash held at call was 6.95%.

Note 34 - After balance date events

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of TransAdelaide, to affect significantly the operations of TransAdelaide, the results of those operations, or the state of affairs of TransAdelaide in future financial years.

95 Financial Report 2005-06

96 Financial Report 2005-06

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