Queensland Rail 2011/12 Annual and Financial Report Welcome to the Queensland Rail Limited (Queensland Rail) Annual and Financial Report for the financial year 2011/12. This report is broken up into four sections beginning with general company information, followed by a review based on Queensland Rail’s strategic pillars of Safety, Customer, People, Commercial and Community. The company’s Governance and Statement of Corporate Intent is detailed in the third section moving through to the Financial Report 2011/12. This report is also available, along with other useful resources, via the Queensland Rail website: queenslandrail.com.au. For further information on Queensland Rail: Phone: 13 16 17 Mail: GPO Box 1429, Brisbane QLD 4001 Web: queenslandrail.com.au Registered Office Queensland Rail Limited Level 15, 295 Ann Street Brisbane QLD 4000 ABN 71 132 181 090 2 Queensland Rail Limited 2011/12 Annual and Financial Report Contents About us 4 Fast facts 5 Financial summary 6 Summary of non-financial measures 8 1team values and behaviours 9 Chairman’s outlook 10 Acting CEO’s report 12 Safety 14 Customer 18 People 22 Commercial 26 Community 30 Environment 33 Enterprise Governance Program 34 Governance structure 35 Board 36 Leadership team 38 Corporate Governance 40 Summary of the 2011/12 Statement of Corporate Intent 46 Financial report for the year ended 30 June 2012 48 Glossary 119 Queensland Rail Limited 2011/12 Annual and Financial Report 3 About us Queensland Rail is one of Queensland’s largest Government Owned Corporations and its most iconic; one that has contributed to Queensland’s success and development for 147 years. As an integrated rail operator, Queensland What Queensland Rail does and how we Regional Access and Infrastructure Rail operates the rail network along do it is underpinned by five key areas– Network access and infrastructure with a fleet of trains that provide vital Safety, Customer, People, Commercial and services include the design, delivery and public passenger transport in South East Community. In its day to day business management of network paths and rail Queensland. Trains travel between Brisbane activity and long-term strategic planning, assets across Queensland. The focus of this and key regional areas such as Cairns, Queensland Rail is focused on growing and part of our business is to improve supply Townsville, Rockhampton, Longreach, improving its three main services–South East chain solutions and develop partnerships Charleville and Mount Isa. Queensland network, Regional Access and and new business opportunities. This Infrastructure, and Long Distance Commuter Queensland Rail’s network consists of will help meet the needs of our resource and Tourist. 7,148 kilometres of track. This critical company customers as well as freight, travel infrastructure gives the agricultural, mining, South East Queensland network and tourist rail operators. manufacturing, retail and tourism industries The South East Queensland network is an Long Distance Commuter of Queensland access to supplies and to integrated passenger and rail access service and Tourist national and international markets. The that extends from the centre of Brisbane, regional freight network supports industries The long distance commuter and tourist south to Beenleigh and Varsity Lakes on the on the Mount Isa, North Coast, Western, service integrates travel and regional Gold Coast, north to Ferny Grove, Shorncliffe, West Moreton, South Western and Central accessibility for commuters with a Doomben, Caboolture and Gympie, east to Western lines. comfortable rail experience for international, Cleveland and west to Richlands, Ipswich interstate and intrastate tourists and holiday and Rosewood. A strong Corporate Social Responsibility makers. This includes the Queensland (CSR) ethos is held by Queensland Passenger services are provided through the Rail Travel network, Heritage and Tourist Rail towards local communities and City network and are integral to the daily life Operations and Travel Centres. Customers organisations, through investment, of our customers, whether students, workers, of the Queensland Rail Travel network are employment, local spending and assistance tourists or residents, moving between provided with a unique rail travel experience during emergencies. This enables suburbs and cities. Our key challenge in in comfort with world-class customer service. Queensland Rail to foster relationships managing the City network is ensuring Improvements to the Queensland Rail Travel through significant contributions to the capacity in the face of growing demand. network support growth in Queensland communities in which we operate. Aside from the rapid expansion in South tourism and the commercial success of Queensland Rail. The four core functions in Queensland East Queensland’s population, commuter and long distance passenger trains compete Rail–Network, Rail Operations, Customer Queensland Rail Travel also operates two with freight operators for access to paths on and Project Delivery are supported by the tourist train services, the Kuranda Scenic the network. Queensland Rail is tackling the enabling functions focused on specialist Railway (KSR) and Gulflander, along with resulting capacity challenges through a long services, governance and enterprise a fleet of steam locomotives and wooden term rail network strategy for growth. frameworks and systems. carriages. These offer a unique travel experience and charter opportunities for customers. 4 Queensland Rail Limited 2011/12 Annual and Financial Report Fast facts Queensland Rail 2011/12 at a glance: • Revenue–$1.95 billion • Assets–$6.85 billion • Full-time Equivalent Employees (FTE)–7,312 • Rail network–7,148 km • Customer journeys–51.6 million • City network stations–145 • Travel network stations–75 • Three-car trains–211 • Tourist trains–2 • Long distance trains–9 • Gross tonne kilometres of freight carried–20.07 billion the Vision of Queensland Together, we proudly deliver a safe, customer focused and efficient railway Purpose Safety Customer People Commercial Community A relentless Consistent As a learning Growing our business Engaging commitment to world-class organisation we grow through smarter Queenslanders for ZERO Harm customer service our people and use of our resources positive community engage our team outcomes Goals and strategies 5 year planning horizon 5 year We will continue to We will focus on continually We will embed a culture We will maximise revenue, We will make build our safety culture, improving our customer that provides opportunities refine our operating costs and positive community capability and systems service and deploying prioritised for our people to develop, undertake productivity and contributions and integrate customer service solutions lead and perform efficiency improvements environmental sustainability throughout our business We will align delivery and performance to our strategies through Function, group, team and individual planning • We have a workplace where • All Queensland Rail • Our people are engaged, • We control our costs • We are a good corporate nobody gets hurt employees know who their motivated and capable • Our investments meet or citizen with a favourable • We safely operate our customers are • Our people use constructive exceed our target returns reputation. network and trains. • Our trains run on time behaviours. • We take advantage of Execution • We optimise our network revenue opportunities. availability Key result areas this year areas result Key • Our customers tell us they are satisfied. One Queensland Rail – 1 team Queensland Rail Limited 2011/12 Annual and Financial Report 5 Financial summary Consolidated income statement for the year ended 30 June 2012 2011/2012 2010/2011 $m $m Revenue 1,931.9 1,836.1 Operating expenses (1,240.6) (1,202.1) Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) 691.3 634.0 Depreciation and amortisation expense (296.5) (251.5) Earnings Before Interest and Tax (EBIT) 394.8 382.5 Net finance costs (208.8) (221.1) Income tax expense (57.7) (12.1) Net profit 128.3 149.3 The Queensland Rail group’s EBITDA increased by $57.3 million to Income tax expense increased by $45.6 million to $57.7 million. $691.3 million. This increase was due to increased transport service This increase is the result of a tax credit received by the company in contract revenue, record travel sales and higher rail access charges. 2010/11, upon receiving approval from the National Tax Equivalents Regime to utilise $37 million in unused revenue and capital tax Queensland Rail’s focus on cost control through efficiency measures losses previously belonging to QR Limited. These losses were not and improved procurement processes limited the group’s operating carried forward by QR Limited when it privatised in the prior expenses increase to just 3.2%. reporting period. In 2011/12, depreciation and amortisation expense increased by A dividend of $102.6 million was declared in respect of the year 17.9% to $296.5 million. This increase is the result of Queensland ended 30 June 2012. This dividend will be paid during 2012/13. Rail’s significant investment in new infrastructure over the last 18 months, which included the Darra to Springfield track extension and the Keperra to Ferny Grove track duplication. Financial performance measures compared to Statement of Corporate Intent (SCI) 2011/2012 2011/2012 Actual SCI Target Earnings before interest and tax ($m) 394.8 404.3 Net profit after tax ($m) 128.3 103.7 Return