Financial Statements for the year ended 30 June 2013 Pursuant to Aurizon Network s Access Undertaking Below Rail Services Provided by Aurizon Network

Transcription

1 Below Rail Services provided by Aurizon Network Financial Statements for the year ended 30 June 2013

2 ABN Financial Statements for the year ended 30 June 2013 Pursuant to Aurizon Network s Access Undertaking Below Rail Services Provided by Aurizon Network Contents Page Purpose and Scope of the Financial Statements 3 Financial Statements Statement of Earnings before Interest and Tax 4 Statement of Assets 5 Statement of Investments 5 Notes to and forming part of the Financial Statements 6 Certificate of Aurizon Network Pty Ltd 9 Independent Audit Report 10 Glossary 12 2

3 Financial Statements pursuant to Aurizon Network s Access Undertaking Purpose and Scope of the Financial Statements Aurizon Holdings Limited ( Aurizon ) [ACN ], the parent company of Aurizon Operations Limited [ABN ] has established its organisational structure to facilitate the separation of the management of Rail Infrastructure from the operation of Train Services. To this end, Aurizon Network Pty Ltd ( Aurizon Network or the Company ) [ABN ] was incorporated as a wholly owned subsidiary of Aurizon Operations Limited [ABN ] on 11 July 2008, responsible for the provision of Below Rail Services including: (i) Access to Aurizon Network rail network and the negotiation and administration of all access agreements; (ii) Managing Aurizon Network network assets including infrastructure maintenance, renewal and enhancement; and (iii) Network operations including train control and scheduling, emergency response and incident management and investigation. Aurizon Network is obligated under sub clause of the QR Network Access Undertaking to prepare financial statements for Below Rail Services provided by Aurizon Network and under sub clause of the QR Network Access Undertaking, publish those financial statements. In order to prepare financial statements of the Below Rail Services, there are certain adjustments to include below rail transactions captured outside of the Aurizon Network legal entity and exclude non-below rail transactions that have been accounted for within the Aurizon Network legal entity. The Below Rail financial statements do not therefore fully reflect the statutory financial position of Aurizon Network. These financial statements are prepared in accordance with the Costing Manual, and take the form of a Statement of Earnings before Interest and Tax, a Statement of Assets and a Statement of Investments and separately identify the Central Queensland Coal Region ( CQCR ) from the rest of the network. Significant changes in state of affairs In June 2013 Aurizon Network completed a major refinancing program, including implementing stand alone debt facilities, creating a transparent and sustainable financial structure with debt placed appropriately against the regulated CQCR and the ability to further diversify funding sources. As part of the implementation of the new capital structure, the Company entered into $3,100.0 million of senior bank facilities ($2,186.4 million net of capitalised borrowing costs drawn at 30 June 2013). The net proceeds of these borrowings were used to pay a capital distribution of $1,632.3 million and a special dividend of $531.0 million to the parent company, Aurizon Operations Limited, with the balance remaining in cash. Prior to June 2013, receivables from and payables to other entities within the Aurizon Holdings Group were offset against an intercompany loan payable to Aurizon Operations Limited. The trade receivables balance at June 30, 2013 includes one month s trading with other entities within the Aurizon Holdings Group (which previously would have been offset against the intercompany loan not recognised on the Statement of Assets). There was also a transfer of inventory and property, plant and equipment from Aurizon Operations Limited into Aurizon Network resulting in an intercompany loan equal to the book written down value of the assets transferred. On 13 May 2013, Aurizon Holdings Limited announced its intention to reorganise the Aurizon Group internal operating divisions in order to establish stand alone operating structures for Aurizon Network and its parent consistent with its regulatory obligations. The new operating structure was implemented on 1 July 2013 and saw the Engineering and Project Delivery division moving under Aurizon Operations Limited. The new operating structure is designed to ensure that Aurizon Network continues to manage and develop the skills and resources specific to the operation, management and maintenance of the CQCR. 3

4 Financial Statements pursuant to Aurizon Network s Access Undertaking BELOW RAIL SERVICES PROVIDED BY AURIZON NETWORK STATEMENT OF EARNINGS BEFORE INTEREST AND TAX FOR YEAR ENDED 30 JUNE 2013 FOR YEAR ENDED 30 JUNE 2012* Central Qld Total Central Qld Total Coal Rest of Below Coal Rest of Below Region Network Rail Region Network Rail $000's $000's $000's $000's $000's $000's REVENUE Access charges - coal 867, , , ,631 Access charges - other 12,995-12,995 12,300-12,300 Electric traction energy charges 40,736-40,736 35,205-35,205 Contributions from developers Other 40,605-40,605 41,881-41,881 Total Revenue 962, , , ,821 OPERATING EXPENSES Infrastructure maintenance 134, , , ,602 Derailment / collision / flood repairs 23,299-23,299 8,278-8,278 Train operations management 27,052-27,052 28,159-28,159 Infrastructure management 17,590-17,590 15,050-15,050 Insurance and accreditation 6,955-6,955 8,748-8,748 Traction electricity 103, ,647 77,416-77,416 Other expenses 43,511-43,511 26,626-26,626 Corporate overhead 59,298-59,298 52,983-52,983 Depreciation and amortisation 182, , , ,326 Total Expenses 598, , , ,188 EARNINGS BEFORE INTEREST AND TAX 363, , , ,633 The above Statement of Earnings before Interest and Tax should be read in conjunction with the accompanying notes. * Refer to Note 5 for explanation of changes to comparatives for Other expenses and Corporate overhead as a result of changes to the Costing Manual. 4

5 Financial Statements pursuant to Aurizon Network s Access Undertaking BELOW RAIL SERVICES PROVIDED BY AURIZON NETWORK STATEMENT OF ASSETS AS AT 30 JUNE 2013 AS AT 30 JUNE 2012 Central Qld Total Central Qld Total Coal Rest of Below Coal Rest of Below Region Network Rail Region Network Rail $000's $000's $000's $000's $000's $000's CURRENT ASSETS Cash 22,306-22, Receivables 232, ,396 50, ,023 Inventories 49,916-49, Other Total Current Assets 304, ,651 50, ,123 NON - CURRENT ASSETS Receivables ,641-34,641 Inventories 10,937-10, Fixed assets Property (Land and Buildings) 28,279 2,257 30,536 15,097 2,342 17,439 Plant and Equipment 2,190 2,616 4,806 1,930 5,072 7,002 Infrastructure Permanent way 2,794,086 17,069 2,811,155 2,523,137 17,789 2,540,926 Other 1,244,492 5,292 1,249,784 1,064,535 6,532 1,071,067 Assets under construction 611, , , ,081 Total Non-Current Assets 4,691,188 27,234 4,718,422 4,303,421 31,735 4,335,156 Total Assets 4,995,553 27,520 5,023,073 4,354,258 32,021 4,386,279 STATEMENT OF INVESTMENTS FOR YEAR ENDED 30 JUNE 2013 FOR YEAR ENDED 30 JUNE 2012 Central Qld Total Central Qld Total Coal Rest of Below Coal Rest of Below Region Network Rail Region Network Rail $000's $000's $000's $000's $000's $000's Expenditure on fixed assets 599, , , ,134 The above financial statements should be read in conjunction with the accompanying notes. 5

6 Financial Statements pursuant to Aurizon Network s Access Undertaking NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2013 NOTE 1. Basis of Preparation These financial statements are prepared to meet the needs of the Queensland Competition Authority (QCA) and access seekers for access to rail infrastructure for the purpose of operating trains. These financial statements are special purpose financial reports prepared in accordance with sub clause of the QR Network s Access Undertaking and the Costing Manual. The Costing Manual was originally approved by the QCA on 18 February 2010 for adoption when preparing the 30 June 2009 financial statements. The QCA agreed for Aurizon Network to continue to adopt the Costing Manual, without further material amendment, for its 2011 financial statements. The Costing Manual has been subsequently revised and approved by the QCA on 27 July 2012 to apply to the 30 June 2012 financial statements and 24 October 2013 to apply to the 30 June 2013 financial statements. QR Network s Access Undertaking was approved by the QCA on 1 October 2010 and has been adopted when preparing the 30 June 2013 financial statements. The recognition and measurement requirements of Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board applicable to Aurizon Network as reported in Aurizon s Network s Financial Report for the year ended 30 June 2013 are applicable in the preparation of these statements, unless specifically stated otherwise. For a summary of the significant accounting policies used, refer to Note 1 of Aurizon Network s Financial Report for the year ended 30 June Aurizon Network (formerly QR Network) was incorporated as a wholly owned subsidiary of Aurizon Operations Limited (formerly QR Limited) on 11 July Aurizon Operations Limited is a wholly owned subsidiary of Aurizon Holdings Limited (QR National Limited) which was incorporated on 14 September 2010 and listed on the Australian Securities Exchange (ASX) on 22 November Comparative information has been restated for changes in the Costing Manual. Statement of Earnings Before Interest and Tax The sources of information for the Statement of Earnings Before Interest and Tax for the year are: (a) The accounting records of Aurizon Network, for the period from 1 July 2012 to 30 June 2013; and (b) The accounting records of Aurizon and its subsidiaries for the purposes of determining the allocation of a portion of the Corporate Overhead from Aurizon Holdings Limited. Statement of Assets The Statement of Assets as at 30 June 2013 comprises the asset accounts from Aurizon Network s Balance Sheet, varied as follows: (a) Fixed assets held by Aurizon on behalf of Aurizon Network at 30 June 2013 have been added to the Statement of Assets; and (b) Aurizon Network s deferred tax asset has been offset against the deferred income tax liability at 30 June 2013 and the resulting net liability excluded from the Statement of Assets. Statement of Investments The Statement of Investments has been based on internal investment reports, and relates to the amounts spent during the year on those capital projects that comprise assets under construction in Aurizon Network s Balance Sheet. 6

7 Financial Statements pursuant to Aurizon Network s Access Undertaking NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2013 (Cont.) NOTE 2. Internal Charges Internal charges for services provided by Aurizon Network to other Aurizon companies are treated as revenue. Internal charges treated as revenue are access charges, traction electricity charges, telecommunications charges, and ancillary infrastructure charges. The total internal and intercompany charges reported as below rail revenue for the year ended 30 June 2013 was $708.2 million (2012: $642.4 million). Access charges for Aurizon train services are in accordance with Aurizon Network s access agreements and where applicable consistent with Reference Tariffs approved by the QCA. Other internal charges are either similar to charges levied on external customers or in accordance with internal service agreements. NOTE 3. Below Rail Services Provided by Aurizon Network The QR Network Access Undertaking and Costing Manual require the Statement of Earnings before Interest and Tax, Statement of Assets and Statement of Investments to identify Below Rail Services Provided by Aurizon Network. Below Rail Services are activities associated with the provision and management of Rail Infrastructure, including the construction, maintenance and renewal of Rail Infrastructure assets, and the network management services required for the safe operation of Train Services on the Rail Infrastructure, including Train Control Services and the implementation of safeworking procedures. Aurizon Network is the business established to manage the provision of Below Rail Services with the exception of stations and platforms. NOTE 4. Central Queensland Coal Region The QR Network Access Undertaking and Costing Manual require the Statement of Earnings before Interest and Tax, Statement of Assets and Statement of Investments to separately identify the Central Queensland Coal Region from the rest of Aurizon Network s network. The Central Queensland Coal Region represents the following rail corridors: Gladstone area to Moura Mine, Boundary Hill and Callide Coalfields Gladstone area to Minerva mine and branches Hay Point/ Dalrymple Bay to North Goonyella, Blair Athol Mine and Gregory Junction and branches Abbot Point to Newlands and branches 7

8 Financial Statements pursuant to Aurizon Network s Access Undertaking NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDING 30 JUNE 2013 (Cont.) NOTE 5. Costing Manual Amendments The QCA has approved a number of amendments to the Costing Manual on 24 October 2013 which have application to the financial statements. These changes were made to reflect changes to Aurizon s organisational structure to a functional model. (a) Amendments to Standard Allocators Amendments to the Costing Manual include the following changes to Allocators in Schedule C: Business support costs attributable to businesses other than the Network Below Rail business (ie Asset Maintenance, Engineering & Project Delivery and Specialised Track Services) of 80%. The impact of this change has had no material impact on the financial statements as they were allocated 75% to other Network businesses in the previous financial year. (b) Amendments to Corporate Overhead Allocation Corporate overhead has been redefined to include corporate services costs, which in the Aurizon functional organisation model are incurred centrally and not within the operating functions. Previously, corporate services costs were included within Other expenses in the Statement of Earning Before Interest and Tax. The methodology for the allocation of the corporate overhead costs has been refined to allocate overhead to Below Rail on the basis of allocators including individually and in combination: revenue, employees, direct costs and value of assets. This change has been necessitated by the implementation of the functional organisational model by the Aurizon Group. While this change was effective December 2011, it was not fully implemented until the year ended 30 June Comparatives for the year ended 30 June 2012 have been restated using this methodology. Consequently, earnings before interest and tax has decreased by $3.7 million. 8

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10 Ernst & Young 111 Eagle Street Brisbane QLD 4000 Australia GPO Box 7878 Brisbane QLD 4001 Tel: Fax: ey.com/au Independent auditor s report to Aurizon Network Pty Limited We have audited the accompanying special purpose financial report of Aurizon Network Pty Limited, which comprises the statement of assets as at 30 June 2013, and the statement of earnings before interest and tax and statement of investments for the year ended on that date, and the accompanying notes to the financial report. Managements Responsibility for the Financial Report Management of the entity are responsible for the preparation of the financial report and have determined that the basis of preparation described in Note 1 to the financial report is appropriate to meet the financial reporting requirements of the Costing Manual (as approved 24 October 2013) and is appropriate to meet the needs of the Queensland Competition Authority (QCA). Management are also responsible for such controls as they determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity s preparation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit we have complied with the independence requirements of the Australian professional accounting bodies. Opinion In our opinion the financial report is prepared, in all material respects, in accordance with the Costing Manual (as approved 24 October 2013). A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

11 Basis of Accounting Without modifying our opinion, we draw attention to Note 1 to the financial report which describes the basis of accounting. The report is prepared to assist Aurizon Network Pty Limited to meet the requirements of the 2010 QR Network Access Undertaking. As a result the financial report may not be suitable for another purpose. Our report is intended solely for Aurizon Network Pty Limited and the QCA and should not be distributed to parties other than Aurizon Network Pty Limited or QCA. Ernst & Young Brisbane 19 December 2013 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

12 Glossary Above Rail Services means those activities, other than Below Rail Services, required to provide and operate Train Services, including rollingstock provision, rollingstock maintenance, non Train Control related communications, train crewing, terminal provision and services, freight handling and marketing and administration of those services. Access means the non-exclusive utilisation of a specified section of Rail Infrastructure for the purposes of operating Train Services. Access Charge means the price paid by a Railway Operator for Access under an Access agreement. Aurizon means Aurizon Holdings Limited, the listed parent holding company. Aurizon wholly owns Aurizon Operations Limited that wholly owns Aurizon Network Pty Ltd. Aurizon Network means Aurizon Network Pty Ltd (ABN ), formerly known as QR Network Pty Ltd, a wholly owned subsidiary of Aurizon Operations Limited incorporated on 11 July Below Rail Services means the activities associated with the provision and management of Rail Infrastructure, including the construction, maintenance and renewal of Rail Infrastructure assets, and the network management services required for the safe operation of Train Services on the Rail Infrastructure within Queensland, including Train Control Services and the implementation of safeworking procedures. Central Queensland Coal Region means the region defined in Note 4 of these statements or Schedule A of the Costing Manual. Costing Manual means a manual prepared by Aurizon Network and approved by the QCA from time to time that identifies the following matters: (A) for Financial Statements prepared under Subparagraph 3.2.1(a)(i), the process for identifying, from Aurizon s audited general purpose financial statements, the cost base for Below Rail Services, separate from other services provided by Aurizon or Related Parties of Aurizon to which those Financial Statements relate; and (ii) (iii) within the cost base for Below Rail Services, the process for identifying costs attributable to the specified line sections (line section costs), costs not attributable to specified line sections but attributable to specified geographic regions (regional costs), and costs not attributable to specified line sections or any specified geographic region (network costs); and the format of Financial Statements. Financial Statements means the Statement of Assets, Statement of Earnings before Interest and Tax and Statement of Investments, which separately identify the Central Queensland Coal Region from the rest of the network, and which are required in accordance with the QR Network Access Undertaking. Permanent Way means track and bridge assets including formation, retaining walls, drainage systems, access roads, cuttings, embankments, tunnels, subways, fences along the rail corridor, ballast, sleepers, rails, rail fastenings, points and crossings, culverts and pipes (major), rail bridges and road overbridges (excluding footbridges). The term excludes fences surrounding other assets such as stations, freight terminals, workshops, depots and buildings. 12

13 Glossary (Cont.) QCA means the Queensland Competition Authority as established by the Queensland Competition Authority Act 1997 (Qld). QR Network Access Undertaking refers to the QR Network Access Undertaking approved on 1 October 2010 in accordance with the Queensland Competition Authority Act 1997 (Qld). Rail Infrastructure means Rail Transport Infrastructure, except that the term does not include the track and associated infrastructure on those parts of the network not identified as the responsibility of Aurizon Network in the QR Network Access Undertaking. Rail Transport Infrastructure means rail transport infrastructure as defined in the Transport Infrastructure Act 1994 (Qld) for which Aurizon Operations Limited or Aurizon Network Pty Ltd may be the Railway Manager. Railway Manager has the meaning given to that term in the Transport Infrastructure Act 1994 (Qld). Railway Operator has the meaning given to that term in the Transport Infrastructure Act 1994 (Qld). Reference Tariff is an Access Charge applicable for a specified Reference Train Service, set out in Schedule F of the QR Network Access Undertaking, or established by Aurizon Network and authorised by the QCA, the purpose of which is to provide information to Access Seekers as to the likely level of Access Charge for Train Services of a similar type as the specified Reference Train Service (as amended, varied or escalated in accordance with the QR Network Access Undertaking from time to time). Reference Train Service means a notional Train Service identified in respect to a Reference Tariff and conforming to certain criteria, including carrying a specified commodity type, operating between specified geographical areas and conforming to specified technical characteristics, operational characteristics and contract terms and conditions. Train Operations Management means all activities associated with the management and monitoring of train movements on the rail infrastructure. This includes train control and scheduling at train control centres, signalling and safeworking functions at yards and remote locations, management of incidents occurring on the rail infrastructure, and any management function required to ensure the safe operation of train services on the rail infrastructure. 13