EMERALD TOURIST RAILWAY BOARD annual · PDF fileEMERALD TOURIST RAILWAY BOARD annual report ... industrial relations, OH&S, and logistics. ... appointment of a training manager,

EMERALD TOURIST RAILWAY BOARD

annual report

TOP: Special train celebrating the 50th Anniversary of the re-opening of the line between Belgrave and Menzies Creek on 28th July 2012. PHOTO: DANIEL HANCOCK.ABOVE LEFT: Special train crew, Blair Campbell, Coupar Hind and Chris Tasker. PHOTO: BOB WILSON. ABOVE RIGHT: The Commemorative plaque. PHOTO: DAVID CAMPBELL.

2013


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Puffing Billy is Australia’s foremost operating steam railway, and one ofthe largest steam and heritage railways in the world. Its history spans

a period of 113 years. Remarkably, for more than half that span, it hasoperated as a volunteer-based not-for-profit body. The railway operatesup to seven trains a day, every day except Christmas Day and it carriedover 284,000 patrons in the current financial year.

The narrow gauge line between Belgrave and Gembrook survives as oneof the most intact examples of pioneering railway infrastructure inAustralia. Its steeply graded banks, trestle bridges, line-side telegraph,signalling and rolling stock are of an era elsewhere supplanted by moremodern technology. This railway takes its ‘era of significance’, 1900 to1930, seriously and its guiding philosophy has held it in good stead.

What set the 2’6” gauge line to Gembrook apart is that following itsopening in 1900, primarily to carry produce, livestock and timber toFerntree Gully, it quickly became a great favourite of Melburnians,seeking a leisurely way of visiting ‘the hills’. The railway closed in 1954after a major landslide near Menzies Creek, and a succession of YoungSun specials was organised by the Melbourne daily newspaper to farewellthe railway. The success of these specials brought about the formation ofthe Puffing Billy Preservation Society, which quickly reopened the railwayfor the public to enjoy.

In 1977, the Emerald Tourist Railway Board was created as a StatutoryCorporation under its own Act, as a means of taking over theinfrastructure previously owned by the Victorian Railways. The master-stroke, so critical to maintaining the support base, was to interlock thisBoard with the Puffing Billy Preservation Society. The Board isresponsible for corporate governance, while the Society provides financialand people-power support as well as a significant proportion of theRailway’s knowledge base.

We are pleased to present this, the thirty-sixth Annual Report of theEmerald Tourist Railway Board.

what is?PUFFING BILLY


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MEMBERS OF THE BOARD

Chairman

Ray Leivers has a degree in agricultural science, was a Director of Catchment & LandManagement, and was General Manager at Phillip Island Nature Park and Falls Creek Alpine Resortbefore becoming CEO at Emerald Tourist Railway Board from 2002 to 2006.

Deputy Chairman

Robert Cochrane is a former teacher and education manager, with a wide range of experience inboth Victoria and the Northern Territory. He holds degrees in both Arts and Education. He is avery active volunteer at Puffing Billy, regularly performing a varied range of operational roles.

Other Members

John Brady is a Chartered Professional Engineer owning and managing a business that providesmechanical and engineering consulting services to industry. John is a Fellow of the Institution ofEngineers, Australia. He has been an active volunteer at Puffing Billy for many years, and is on theProject Governance Committee.

Nola Cuddy has worked in the tourism industry for more than 25 years, with marketing andmanagement roles in both metropolitan and regional Victoria. Experiences include the NationalTrust and Zoos Victoria, as well as significant international marketing skills. Board appointmentsinclude Yarra Ranges Regional Marketing Ltd, VTOA (including as chairperson), and TourismAlliance.

John Hoy has worked for over 35 years in manufacturing with extensive experience in production,plant engineering, human resources, industrial relations, OH&S, and logistics. He is on theExecutive Committee of Puffing Billy Preservation Society and has been a Puffing Billy volunteerfor over thirty-six years, and a Board member since 2001.

Rex Kingham was appointed to the Board in March 2013. He is a Fellow of the Australian Societyof Certified Practising Accountants (FCPA) and a Fellow of the Chartered Secretaries Australia(FCSA) Due to service in the then CMF and now Army Reserve he holds the Reserve ForceDecoration (RFD), retiring with the commissioned rank of Major. He is currently Secretary of thePuffing Billy Preservation Society. Before retirement Rex worked for a major listed company as aproject/management accountant, and then was in business for himself.

Jacquie Nichols-Reeves has worked in local government since 1990. Prior to this she worked forthe National Trust and Victoria College. She is currently the Curator of a major local governmentart collection. With an interest in sustainable collection management, Jacquie is also a member ofDeakin University’s Cultural Heritage and Museum Studies Board.

Adrian Ponton has worked in the rail industry for 40 years and brings broad experience in railoperations, logistics, project management and rail safety accreditation. He is currently the Registrar,Tourist and Heritage Railways. He is a Member of the Institute of Railway Signalling Engineers andAustralian Institute of Company Directors. He has also been a volunteer at Puffing Billy.

board & management


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Members of the Board as at 30th June 2013 were:Chairman R.L. Leivers Dip. Ag.Sci., B. Ag. Sci (Hons).Deputy Chairman R.S. Cochrane* BA, B. Ed., TTC.Members J.R. Brady* FIE Aust CPEng.

N. Cuddy,J.F. Hoy*,R.W. Kingham* RFD, FCSA, FCPA, FCIS.J. Nichols-Reeves BA (Hons), MA, Grad Dip (Museum Studies).A.J. Ponton

Secretary to the Board: D.G. Parbery B.Sc. Agr. (Syd.), M. Agr. Sc. (Qld.), Ph.D. (Melb.)* = nominated by the Puffing Billy Preservation Society (PBPS).

Mr J.A. Robinson was appointed acting Chief Executive Officer in November 2012, and ChiefExecutive Officer in January 2013. He ceased to be a Board member when his term expired inMarch. He was replaced by Mr. Kingham.All Board Members, and the Secretary, serve in an honorary capacity.COMMITTEES AND OFFICERS OF THE BOARDThe Audit and Remuneration Committee, as at 30th June 2013 comprised the following:

Chairman R.W. KinghamMembers R.L. Leivers, J. Nichols-Reeves, A.J. Ponton

The Rail Safety Management Systems CommitteeMembership and Officers are the same as the Board as at 30th June 2013

The Project Governance Committee, as at 30th June 2013 comprised the following:Chairman D. RashleighMembers R.D. Bowen, J.R. Brady, N. Byrne, (Tourism Investment),

V. Ciccone (Tourism Investment), J.F. Hoy,K. Lane (Tourism Investment), R.L. Leivers,J. Pearsall (Tourism Investment), J.A. Robinson

The Heritage Advisory Committee, as at 30th June 2013 comprised the following:Chairman A.D. Rayment.Members D. Baker, M. Bracher, R.S. Cochrane, B.R. Holmes, C. Segnit,

G. Tasker, J.E. Thompson, B. van der LindeExecutive Officers as at 30th June 2013

Chief Executive Officer J.A. Robinson* F.C.A.Manager, Finance & Administration R.D. Bowen* CA, CPA (Canada)Manager, Operations & Engineering J.F. Hoy*Manager, Passenger Services J.L. Clowes*Manager, Marketing N.M. Hutchins*

Management Officers as at 30th June 2013Manager, Retail and Refreshment Services A. Williams*Manager, Special Events M.J. Collopy*Manager, Traffic B. McKenzie*Manager, Volunteer Co-ordinato S.L. Ham*Manager, Museum D. BakerManager, Way & Works J.M. Bell*Manager, Signals & Telegraph A.D. WheatlandManager, External Contracts J.D. Shaw*

* = Staff Managers, other Members serve in an honorary capacity.

FCA


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The Board’s focus during 2012/13 has been to implement the first phase of our plan towardslong term sustainability. Following the preparation of a detailed business case in early 2012, a

grant of $4,400,000 million was announced by the Minister for Tourism and Major Events in the2012 State budget over two years to upgrade railway infrastructure and enhance rail safety.

In the current financial year $2,535,000 was provided out of the total grant. These funds have beenused to upgrade various items of infrastructure, including the railway track, and all of the manybuildings along the railway. This work is not finished and will be continued in the next financialyear. Various ageing capital assets have also been replaced in the locomotive workshop andcomputer equipment has also been upgraded. Part of the grant has also been used towards theongoing refurbishment of two steam locomotives.

The Board has also progressed planning for new capital works included in the business case,including improved food and beverage facilities, a Discovery and Interpretation Centre, heavylocomotive maintenance facilities, and improved working conditions for staff and volunteers.

A series of initiatives have been undertaken to consolidate human resource management includingappointment of a training manager, recruiting and managing new volunteers and encouragement ofyounger volunteers to give them a voice in the future of the railway. This is part of a Boardsuccession plan to ensure the long term sustainability of our human resources.

During the year former Chief Executive Officer, Eamonn Seddon accepted another positioninterstate. We thank Eamonn for the contribution he made while he was CEO, and in particularthe improvements made to our catered trains and the success of themed Night Trains.

The Board was pleased to appoint John Robinson to the position of CEO effective from 1st January2013, having been acting CEO since November 2012. The new CEO is driving a number ofinitiatives to ensure the long term sustainability of the railway.

Once again the 2012/13 year has seen the railway carry record numbers of passengers and recordrevenue in a climate where other attractions are finding difficulty. Our marketing team must takesome credit for this. I would also like to thank our dedicated volunteers for providing the ‘friendlyface’ of the railway which is so often referred to in positive feedback to the railway. Thanks also toour staff, who are tireless in their continued contribution to the success of the railway.Finally I would like to thank my fellow members of the Board for their advice and support over thelast twelve months.

Ray Leivers, Chairman

chairman’s report


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The year under review has been challenging yet very rewarding for the Puffing Billy Railway.Despite an uncertain economic environment, we have achieved all-time record patronage of

284,536 passengers carried, being 16,808 or 6% higher than the previous year and 15,552 higherthan our previous record set in 2010/2011. It is also our largest year-on-year growth for thirteenyears.The continued assistance of Tourism Victoria and the Government’s drive to grow InternationalTourism markets has assisted our internal marketing initiatives and has resulted in strong growth ininbound tourism numbers.This result has been achieved due to the tireless dedication and hard work of our staff andvolunteers. Our volunteer numbers now exceed 900 people and their combined efforts result inexcess of four and a half million dollars per annum of donated labour. With our full time and parttime staff we are now a family of approximately 1000 people.Puffing Billy is an excellent example of dedicated community involvement.Funding provided by the State Government as reported in the Chairman’s Report has assisted us inprogressing our principal objective of ensuring long term sustainability for the Puffing Billy Railway.Further anticipated growth in local and inbound markets in the years ahead requires continuedimprovement to our product range and overall visitor experience.As part of our long term plan we are seeking to further ‘weatherproof ’ our product range and visitorexperience in order to improve yield with existing infrastructure during months of poorer weather.The aim is to ensure that Puffing Billy becomes a year round ‘must do’ visitor destination.At some point during the next twelve months, probably during March 2014, we will carry our 10millionth passenger since the reopening of the railway in July, 1962. This will be another significantmilestone in the history of the Puffing Billy Railway.Despite the successes of the past year major challenges remain for the future.Our principal aim for long term sustainability has many components and remains a major focus ofthe Board and the management team. Continued funding support from Government and othersources remains critical to the achievement of these objectives.Improved infrastructure, product development and improved facilities for staff and volunteers willbe pursued as rapidly as funds permit.The Puffing Billy Preservation Society continued to support the activities of the Board and duringthe year made grants totalling $157,360 mainly for capital works.Once again my thanks to the entire Puffing Billy team for a great year’s work.

John Robinson, CEO

ceo’s report


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Pursuant to the provisions of the Financial Management Act 1994 and the Audit Act 1994, theBoard presents its Annual Report in respect of the year ending 30th June 2013. The report is

prepared in accord with all Victorian legislation.

The Year’s Operations

Patronage for 2013 (the fifty-first year of operation since re-opening in 1962) was 284,536 – anincrease of 16,808 (6.3 percent) on 267,728 in 2012. This is the highest number of passengers in asingle year in the railway’s history.

The railway ran every day (except Christmas day and one extreme fire alert day) and completed1,586 revenue earning return trips (2012 - 1,577 trips). Trips included scheduled daily excursiontrains, charter trains, lunch time Steam and Cuisine Trains, Dinner Trains, “Day out with Thomas”trains, Murder Mystery and Jazz trains, footplate experience trains, and various special events trains.

Over 89 percent of train kilometres, including non-passenger train kilometres, were steam hauled(94 percent in 2012). Non-steam-train kilometres are mostly diesel trains operated on total fire bandays over the summer period, when steam locomotives are not operated, and works trains. Alsotrains that ran beyond Lakeside during the driest part of the fire season were diesel hauled to reducefire risk. The past summer season was wetter than the preceding few years. Consequently fewerservices were diesel hauled than in the previous summer. Total train kilometres travelled for 2013were 46,406 down 1.5 percent on the 47,083 kilometres travelled in 2012.

Financial

The operations of the Board after depreciation resulted in a Net Loss for the year of $1,070,510compared with a Net Surplus of $113,893 in the previous year. Surplus before depreciation was$211,200 compared with $1,349,527 in the previous year.

The previous year result included two significant revenue items that have not recurred in thecurrent year. The first was $718,297 of revenue assistance grants from the Department of StateDevelopment, Business and Innovation, and the second was an Australian Taxation Office (ATO)refund of GST paid between 2000 and 2007, which had been paid prior to a private ruling fromthe ATO.

In the current year, the Board received a grant of $2,535,000 from the Department of StateDevelopment, Business and Innovation towards several previously agreed capital projects and safetyimprovement initiatives. The grant is classified as a “contribution to capital” and is shown in theStatement of Changes in Equity, and is not included in the Comprehensive Operating Statementresult. However, $467,979 of grant fund expenditure was used for initiatives agreed with the Stategovernment that could not be capitalised under current accounting standards. Consequently thisexpenditure is shown in the Comprehensive Operating Statement.

The most pressing financial issue facing the Board is the amount of depreciation charged against itsfixed assets, particularly infrastructure assets. Total depreciation for the year was $1,281,718 (2012 -$1,235,634). Board revenue covers all expenditure before depreciation (and grant funded expenditureexplained in the previous paragraph), and results in a small surplus. However it does not cover itsdepreciation expense. The business plan prepared in early 2012 is designed to address this problem.

year in reviewAND FINANCIAL STATEMENTS


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The result was achieved on gross income of $7,687,711 (2012 - $8,688,941) less total expenditureof $8,758,221 (2012 - $8,575,048) and represents a return of minus 2.17 percent (2012 – plus0.24 percent) on equity of $49,270,805 (2012 - $47,806,315).

Internally generated income, which comprises fares, ticket revenue, and shop revenue, increased by9.8 percent, whilst revenue per passenger has increased by 4.2 percent, from $21.10 to $22.00. Themain reasons for this are an average three percent increase in regular excursion train fares, and thisyear fares remained at peak fare prices after the summer season. There were also substantial increasesin higher value product ticket sales revenue. Steam and Cuisine revenue increased by 13.5 percent,evening Dinner and Murder Mystery train revenue increased by 15 percent and Thomas the TankEngine ticket revenue increased by 15.5 percent.

Expenses year-on-year increased by 2.1 percent.

Puffing Billy Preservation Society provided grants totalling $157,360 (2012 - $467,300) for on-going capital works.

Expenditure on capital works in the current year increased by $815,000, from $1,271,000 to$2,086,000. Major items of capital expenditure involved the restoration of a Garratt steamlocomotive, purchased from South Africa over 15 years ago (part of long-term sustainabilityplanning), on-going construction of a new display building at Menzies Creek museum, continuingrestoration of the Climax and 12A steam locomotives, the purchase of two new trucks to replacetwo 12 years old trucks, the on-going replacement of workshop equipment, the replacement ofmost computer servers and desktop computers, and commencement of a major upgrade of therailway track between Menzies Creek and Lakeside stations.

During the year cash, or cash equivalents, and liquid investments decreased by $74,000 (2012 –increased by $77,000). Bank short-term deposits increased by $828,000 (2012 - $43,000).

The Board continually seeks opportunities to widen its revenue base in order to lessen dependenceon fare revenue and shop trading activities. For example, the Board rents space in and on top of anold water tower, which it owns in Emerald, to several telephone companies for them to providelocal area mobile phone coverage.

Operating statistics for the past five years are listed hereunder:

2008/2009 2009/2010 2010/2011 2011/2012 2012/2013Passengers 250,500 259,487 268,985 267,728 284,536Fare Revenue $4,402,000 $5,556,000 $5,524,000 $5,654,000 $6,264,000Days Operated 364 364 364 365 363Revenue Trips 1,682 1,577 1,575 1,577 1,586Fare Revenue per Passenger $17.57 $21.41 $20.54 $21.10 $22.00

Total Assets $26,542,674 $26,422,838 $49,212,856* $49,421,720 $51,156,447Total Liabilities $1,882,500 $1,597,136 $1,547,942 $1,615,405 1,885,642

(Note: The railway did not operate trains to Gembrook on weekdays from May to August exceptfor school and public holidays).

* In 2010/2011 the railway’s fixed assets were re-valued by the Valuer General in accordance withState Government pronouncements and Australian accounting standards.


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Human Resources

Paid staff numbers Full Time Permanent Part Time TotalAs at 1 July 2012 39 18 57Commenced during year 3 3 6

Sub Totals 42 21 63Departures 6 4 10

As at 30 June 2013 36 17 53

In addition, 26 casual employees were employed as at 30 June 2013 (2012 – 20).

Health and Safety

Time lost as a result of industrial accidents and incidents for the 2013 year was 29 staff days(2012 – 23 staff days). No incidents were related to rail safety.

Volunteers and Community

Puffing Billy has over 900 people who volunteer their time to operate the railway. It is one of thelargest volunteer organisations in Victoria. Volunteers have contributed over 12,000 days of theirtime towards running Puffing Billy. If there weren’t any volunteers, Puffing Billy would not exist!Our volunteers are involved in every aspect – from selling tickets, to setting up the informationtechnology behind the scenes, to driving the trains, to designing new components for rolling stock.Collectively they possess an incredible number of different skills, and they are a fundamental part ofthe future of the railway. All registered volunteers undergo induction and orientation, prior to on-the-job training and skills development, supported by further formal training, as required.

The railway has recently employed a full time training manager and is reviewing all of its volunteertraining courses to ensure they will comply with ever increasing training legislative requirements.

It is estimated that volunteers contribute up to four and a half million dollars each year for the timethey give to operating the railway. Volunteers also contribute to decision making throughparticipation in an extensive committee system. Volunteers receive regular updates on railwaymatters in the publications Monthly News and Weekly Notice, and through a computerisedVolunteer Management system, which is available on-line and by e-mail, to ensure documents reacha wide audience quickly. Other information is circulated through committee meetings, on noticeboards, and at volunteer forums held during the year.

This year there has been a strong emphasis on increasing the participation of younger volunteers onthe railway, and a new Young Volunteers Committee has been initiated to encourage them tobecome more involved in decision making. Succession planning to ensure the railway has a largeenough volunteer workforce to operate the Railway is critical, especially as the average age of thevolunteer workforce is over 55.

A lot of time has also been placed on encouraging volunteers under eighteen years of age to becomeinvolved. Four Youth Days were held for volunteers aged 6 to18 years old and they attracted over40 young people on each of the days. Youth nights were also held for young volunteers between theages of 13 and 18 to create a social atmosphere in a safe environment.

Several Parks and Gardens weekends were run during the year to encourage more families tobecome involved with the railway.


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The Corporate Volunteer Group Program has continued its work restoring the environment andanimal habitat along the railway corridor.

Puffing Billy works closely with local communities, and every year donates several hundred familypasses to schools and non-profit organizations to support their fundraising activities. The railwayalso makes annual donations to the local CFA branches, and Cardinia Shire Council.

Menzies Creek Museum

The first stage of the reconstruction of the museum at Menzies Creek has been completed. In July2012 it was used for the first time to celebrate the 50th Anniversary of the re-opening of PuffingBilly from Belgrave to Menzies Creek.

Marketing

The marketing department’s key objective has been to increase the number of passengers whopurchase tickets at the booking office, whilst not losing focus on increasing passenger numbers fortour group bookings, dining products and special events. To accomplish this, the railway’sappointed public relations agency generated a substantial amount of free publicity. Social media wasalso used extensively, and a close working relationship with the local tourism bodies wasmaintained.

Domestic Marketing

Puffing Billy increased its participation in the Royal Melbourne Show this year by displaying‘Thomas the Tank Engine’ (one of the railway’s smaller steam locomotives cladded with a Thomasshell). The railway’s stand won ‘Best Commercial Exhibitor for the Woolworths Fresh FoodPavilion’. This was a great opportunity not only to promote the ‘Day Out With Thomas’ event, butalso to increase awareness of Puffing Billy’s excursion trains and dining products.

The railway has a Portable Sales Centre which visits Melbourne and suburban shopping centrethroughout the year. It offers special pricing on Puffing Billy products to the shopping public.

The volunteer Speakers Panel continues to promote the railway to various groups such as ProbusClubs, Service Clubs and Senior Organisations. This year 52 presentations were made by theSpeaker Panel with an average attendance of 54 people.

International Marketing

Passengers from China, Taiwan, Korea and the United Kingdom continued to dominate theinternational market, but there was also evidence of new emerging markets, particularly fromSouth East Asia.

The marketing department worked closely with key industry bodies and attended:d Tourism Australia events including the Australian Tourism Exchange (ATE), the Greater China

Travel Mission and the India Mega Famil & Workshop.d Various Victorian Government events including the South East Asia Super Trade Mission, the

Asia Mega Famil & Workshop and the New Zealand Tri-State Walkabout.d Australian Tourism Export Council (ATEC) events including Meeting Place and FANTASVIC.

A representative based in Shanghai was appointed to assist the railway in attracting visitors fromChina. The representative conducts sales calls and attends road shows throughout China andmanages the railway’s Weibo social media site.


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Product familiarisations were held at the railway for wholesalers, travel agents and media from theUnited Kingdom, India, Asia, Norway, China, Japan, Korea, Malaysia, New Zealand and Australia.

Website & Social Media

The Puffing Billy website recorded 592,000 visits (36 percent more than 2012) with an average of49,400 visits per month. The ‘Friends of Puffing Billy Railway’ Facebook page has 9,540 fans (fourpercent more than 2012). For the past twelve months, Puffing Billy has had a profile on TripAdvisor and it receives regular reviews from passengers who have travelled on the train. All reviewersrank their experience from 1 to 5 (5 being best) and Puffing Billy currently has a 4.5 ranking.

Interpretation Boards

Interpretation boards have been erected at Belgrave Station to show passengers what is available ateach destination along the railway. The signs were printed in English with a ‘summary translation’in Mandarin, Cantonese, Japanese and Korean.

Events

The 32nd Great Train Race

The 2013 Great Train Race, held on Sunday 5th May, was a great success for the railway andcontinues to be the “must do fun run” amongst the running community. A total of 3,058 runnerscompeted on race day, along with 580 train passengers on the two race trains. This year 295runners beat the first train and 2,577 runners crossed the line before the second race train.

All race entries and tickets for the trains sold out in record time, confirming the popularity of thisevent. The race generated seven percent more revenue than the previous year, whilst expenditurewas 11 percent above the previous year, due to the introduction of new electronic race technology.The net return from this year’s Great Train Race was three percent above the previous year. ThePuffing Billy Preservation Society organises the event and the money raised will go towards therestoration of the NGG16-129 Garratt locomotive.

Day out with Thomas

This event was held over seven weekends (four in Spring and three in Autumn). Each weekend wassold out, with nearly 17,000 passengers visiting Emerald station to see ‘Thomas’ and his friends infull steam. This year ‘Thomas’ returned to the main line to assist ‘Diesel’ in hauling the train andthis had a massive impact on our ticket sales and subsequently the enjoyment of our patrons. Thepopularity of the ‘Thomas’ brand is an excellent way to introduce the younger generation to PuffingBilly Railway.

Food & Beverage Operations

Steam & Cuisine Luncheon train

There has been steady growth for this product over the year. Ticket sales for the Steam & CuisineLuncheon train have increased by seven percent and net revenue increased by 21 percent. Weekendsare particularly popular and are now averaging a minimum two carriages each day. Wines andproduce from the Yarra Valley have been carefully selected for the menu and wine list to promoteand support the local region, which is proving to be very popular with patrons.

Night trains

During the past twelve months the Dinner Special has had a name change and is now the Dinnerand Dance train, to better describe the product and encourage younger patrons. This has proven tobe successful and has been well received by the public.


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The introduction of more themed night trains has attracted a variety of new markets for thisproduct. The format of the Dinner and Dance train has also been improved, resulting in NightTrain patronage increasing by eight percent and net revenue increasing by 16 percent.

Retail Operations

During the past twelve months both Belgrave and Gembrook kiosks have been refurbished withnew retail stands. These have improved customer flow, enhanced stock display and increased yield.Sales overall have increased by four percent, and net profit has increased by five percent.

The retail division has also introduced a new retail specific volunteer program. This has beendeveloped to attract new volunteers and it covers all aspects of the retail, food and beveragebusiness.

Retail Sponsorship

The Board appreciates the continuing support from our major sponsors Schweppes and Street’s Ice-cream. Their assistance contributes to the capital improvements on the railway.

Passenger Business

The passenger business branch continues to cover all operational roles with volunteer staff. Thenumber of trained volunteers for the various roles is increasing, particularly for the peak periods atweekends and holidays. This is a very positive trend.

During the year the new customer service booking system, introduced last financial year, has beenextended to include group pre-bookings on all excursion services. Trials have now commenced toextend the booking system to include tickets purchased on the day.

A key initiative this year has been to increase the amount of training for passenger businessvolunteers. The railway has developed an evaluation process to assist in the selection of suitablevolunteers to be trained as conductors. Competencies for the role of station master have now beenupdated, and the railway will now begin updating training programs and assessing the competenciesrequired for booking officers.

Passenger numbers on excursion trains continue to increase and some tour groups are now beingencouraged to book on sections of the journey where there is spare capacity. By encouraging tourgroups to use other stations as journey entry points, it is possible to maximise capacity fromBelgrave for passengers purchasing tickets on the day of travel.

In the new financial year, the railway will be introducing on-line booking for some excursion trains.There will be considerable challenges to work through as the system is introduced, particularly seatallocation, the method of ticketing, and staff training. The overwhelming advantage for customerswill be the convenience of being able to pre-book tickets. The advantages for the railway will bereduced queues on busy days and the reduced impact of inclement weather on patronage.

Rolling Stock

The rolling stock branch main activities have been the maintenance of the locomotives and rollingstock to meet the operational requirements of the railway. During the busy summer season therewere four steam locomotives available at all times, and the ageing trollies, used for fire patrolsbehind all trains in the fire season, were all fully maintained for this critical role.


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Restoration work on two locomotives that have been in the locomotive workshop for several years,undergoing major reconstruction, has almost been completed:d Locomotive 12A, one of the railway’s five NA locomotives is currently undergoing final

inspection and testing and will be reintroduced into service early in the new financial year.The final stage of the refurbishment has been funded from the grant provided by the StateGovernment.

d Work on the Climax locomotive, a unique, wood burning locomotive that has been undergoingrestoration for twelve years, is almost completed and is being tested prior to a re-launch inSeptember 2013. Restoration of this locomotive has been fully funded by the Puffing BillyPreservation Society.

Two items of machinery, critical for improving safety and efficiency in the locomotive workshop,were replaced during the year, also with assistance from the grant provided by the StateGovernment.

All of the cylinders on the five operating NA locomotives are the original cylinders manufacturedbefore 1913. Originally intended to be used for thirty years, they have been in service for over onehundred years, and they are now approaching the end of their useful lives. Consequently,engineering volunteers in the workshop have designed and ordered prototypes for two newcylinders.

New castings have been manufactured and the first casting has been produced. Funding for thisproject has been provided by the State Government.

A job scheduling, purchasing and stock control software package, installed during the year, is nowalmost ready to be implemented, and a new position of “maintenance planner” will be filled early inthe new financial year.

Way and Works

A significant proportion of the funding received from the State Government has been allocated toupgrading the mainline track between Belgrave and Lakeside. This section of the track carries themost traffic on the railway, and requires the most maintenance. Whilst regular maintenance iscarried out, lack of funds and resources has limited the amount of work that could be undertakeneach year.

The new funding has enabled the railway to employ a second track gang to upgrade the track. Mostof the work in the current year has taken place between Belgrave and Clematis, where drainageproblems have been rectified, and several thousand sleepers have been replaced. New ballast will belaid in this section when the weather improves. This work will continue in the next financial year.

All bridges on the railway are inspected regularly and work is carried out when required. This yearsignificant work was carried out replacing some of the piles and crossheads on the timber bridge atSelby. This is the most photographed bridge on the railway.

The railway’s partnerships with the local CFA stations are stronger than ever after they ran severalcourses on emergency protocols for our volunteers and staff.

Every year many of the tasks carried out by the way and works branch are performed by volunteers,including track patrols, fire patrols, works trains and other work done on and around the railway.Gardens in station precincts are also maintained and improved by a group of dedicated volunteers.


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Signals and Telegraph

Work on a new train radio system has been on-going during the year and the installation of all thenecessary components is almost complete. Training for all staff and volunteers who will use the newsystem will commence early in the next financial year, and the system will be fully implementedprior to the summer season.

The railway, with the assistance of Vic Track and an external contractor, installed boom gate barriersat three of the railway’s busiest level crossings. The crossings were funded by the State Governmentas part of the state wide level crossing safety improvement initiative.

External Contracts

Three external projects were undertaken during the year, the biggest of which was completion ofconstruction of a timber trestle bridge over Beech Creek near Rubicon. Work on the bridgecommenced in the previous year, but was suspended over winter due to wet weather accessproblems.

Two smaller projects involved bridge repairs on the Walhalla narrow gauge railway and repairs onthe Koetong bridges in north-eastern Victoria.

Environmental Performance

The Puffing Billy Railway actively promotes a culture of energy conservation and encourages staffand volunteers to minimise water, waste, electricity and gas consumption wherever possible.

Puffing Billy’s largest negative environmental impact emanates from the coal burning locomotivesthat form an integral part of the heritage steam railway’s historical and tourism appeal.

The railway consumes approximately 1,000 tonnes of coal annually using historical steamlocomotives designed over 100 years ago.

The Board’s management team continues to actively promote the most efficient use of coal possiblein order to keep emissions to a minimum.

Some of the railway’s voluntary mechanical engineers are about to investigate new technologies inan effort to reduce the level of existing locomotive emissions.

Additionally, management is seeking new methods of ash disposal to reduce the impacts on landfill.

Management have for some time had processes in place to reduce other environmental impacts andthese processes remain in place:

Energy Saving Initiativesd Electricity: By creating a culture of awareness to turn off appliances and lights after hours, and

when not in use, this has an immediate impact.d Water: Puffing Billy is continually providing training to drivers and firemen to ensure engine

efficiency, which helps to conserve the amount of water consumed by our trains.d Paper: Administration staff are encouraged to carry out double-sided printing, scanning,

emailing, and to print only what is needed, and mostly in black and white.d Waste: The message of recycling is promoted on all areas of the Railway with the provision of

recycling bins at each station, as well as in all administration areas.d Fuel: Log books are provided in all vehicles and are actively used to verify each vehicle’s use.


1414

d Coal: Given that the coal burned to fire Puffing Billy’s steam engines is by far the largestcontributor to carbon emissions, the ongoing training of drivers and firemen, to operate enginesas efficiently as possible, will help to reduce coal usage.

Other Environmental Matters

A number of other environmentally focused projects are in place to protect and preserve theenvironment including a number of partnerships with local Landcare groups.

During the past twelve months a new initiative titled ‘Green Tracks’ has been launched by theBoard in partnership with the Southern Ranges Environmental Alliance. This partnership isworking together to implement the ‘Puffing Billy Railway Trackside Management Plan 2012’

The plan was prepared in collaboration with local environmental groups and government agenciesand recognizes that the trackside needs to be managed not only to provide a scenic background tothe running of the historic steam train but to also enhance the environmental values of the area thatis held in affection by local residents and the wider community.

Statutory Information

The Board has established procedures to implement the requirements of the former WhistleblowersProtection Act 2001 and the new Protected Disclosure Act 2012. In the current year, as in all prioryears, there were no disclosures made or referred to the Board or to the Ombudsman.

No information was requested by any person or organization pursuant to the Freedom ofInformation Act 1982.

The Board operates the Puffing Billy Railway in association with the Puffing Billy PreservationSociety as an historical example of an early Victorian narrow gauge railway operation for the benefitof present and future generations of Victorian residents, and interstate and international tourists.Both organisations have been endorsed as a Deductible Gift Recipient by the Australian TaxationOffice.

The principal office of the Board is located at Narrow Gauge Railway Station, Old Monbulk Road,Belgrave. Contact numbers are –

Phone: (03) 9757 0700 Fax: (03) 9757 0705 Email: [email protected]

The organisational structure of the Board, its staff and committees is set out in Appendix 1 of thisreport on page 16.

The Board produces an Operations and Financial Report pursuant to the requirements of theEmerald Tourist Railway Act 1977 and the Financial Management Act 1994.

In addition the Board markets a range of publications dealing with the history and operation of thePuffing Billy Railway. These publications can be purchased from the Board’s retail outlets at variousstations along the Puffing Billy Railway.

No member, officer or employee of the Board was required to complete a declaration of PecuniaryInterest during the financial year with respect to their position or employment with the Board.

The Marketing Manager undertook two overseas trips (2012 – four), and the Chief ExecutiveOfficer undertook one overseas trip (2012 – nil) to continue the successful marketing of theRailway to international tourists. All of these trips were unaccompanied. No other overseas visitswere undertaken during the financial year, either on behalf of, or paid for, by the Board.

No time has been lost during 2013 due to industrial disputation (2012 – nil).


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Details of consultancies in excess of $100,000

In 2013 no consultants were engaged, (2012 – one at a cost of $131,900, excluding GST).

Details of consultancies under $100,000

In 2013 no consultants were engaged, (2012 – three at a cost of $85,750 excluding GST).

Attestation on compliance with the Australian Risk Management Standard:

I, J.A. Robinson, certify that Emerald Tourist Railway Board has risk management processes inplace consistent with Australian Standards AS4292 (rail safety) and AS 4360, and an internalcontrol system is in place that enables members of the Board and senior management tounderstand, manage and satisfactorily control material risk exposures. The audit committee verifiesthis assurance that the risk profile of Emerald Tourist Railway Board has been critically reviewedwithin the last 12 months.

Attestation for compliance with Ministerial Standing Direction 4.5.5.1 – Insurance:

I, J.A. Robinson, certify that Emerald Tourist Railway Board has complied with MinisterialDirection 4.5.5.1 – Insurance.

This report is made by a resolution of the Board dated 15th August 2013, in accordance with theFinancial Management Act 1994, and signed on behalf of the Board by:

R.S. Cochrane J.A. Robinson

Acting Chairman Chief Executive Officer


16


17


18


1918

FOR THE YEAR ENDED 30TH JUNE 2013

financial report

CERTIFICATION BY THE BOARD

IN accordance with a resolution of the Emerald Tourist Railway Board, we theundersigned;

1. certify that in our opinion the accompanying Financial Statements comprising BalanceSheet, Comprehensive Operating Statement, Statement of Changes in Equity, Cash FlowStatement and Notes to the Financial Statements, which have been prepared in accordancewith Australian Accounting Standards, applicable financial reporting directions and othermandatory professional reporting requirements presents fairly the financial transactionsduring the year ended 30th June, 2013 and the financial position of the Board as at thatdate;2. are not aware of any circumstances which would render any particulars included in thereport to be misleading or inaccurate; and3. state that in our opinion the Financial Statements have been prepared in accordance withStanding Direction 4.2 of the Financial Management Act, 1994.Signed at Melbourne this 30th day of August, 2013 on behalf of the Board –

.............................................................................................................................................. R.S. CochraneActing Chairman

............................................................................................................................................. J.A. RobinsonChief Executive and Accountable Officer

................................................................................................................................................. R.D. BowenDivisional Manager, Corporate


20

FOR THE YEAR ENDED30TH JUNE 2013

comprehensiveoperating statement

NOTES 2013 2012 $ $Income Revenue from Fares, Shops and External Contracts 2 7,276,242 6,681,692 Grants from Victorian Government Bodies 15 - 718,297 Other Income 2 413,299 1,281,084 2 7,689,541 8,681,073 Expenses Employee Benefits Expense (3,529,063) (3,543,258)Depreciation Expense 4 (1,281,718) (1,235,634)Supplies and Services 3(a) (2,127,765) (1,972,265)Finance Costs (19,232) (16,407)Advertising and Promotion (243,074) (208,005)Insurance Costs (211,395) (220,390)Administration Expenses (560,763) (707,876)Other Expenses 3(b) (785,211) (671,213) (8,758,221) (8,575,048)Net Results from Transactions (1,068,680) 106,025 Other Economic Flows included in Net Result Net (loss) gain on Non-Financial Assets (1,830) 7,868 Net Result for the Year (1,070,510) 113,893 Other Economic Flows - Other Comprehensive Income Correction to Physical Assets Revaluation - 27,508Total Other Economic Flows - Non-owner Changes in Equity - 27,508 Comprehensive Result for the Year (1,070,510) 141,401

The Comprehensive Operating Statement should be read in conjuction with the accompanying notes.


21

20

The Balance Sheet should be read in conjunction with the accompanying notes.

AS AT 30TH JUNE 2013balance sheet NOTES 2013 2012 $ $FINANCIAL ASSETS Cash and Cash Equivalents 5 904,350 977,944Receivables 6 307,201 246,176Other Financial Assets 7 1,672,597 844,236

Total Financial Assets 2,884,148 2,068,356 NON-FINANCIAL ASSETS Prepayments 159,596 49,858Inventories 8 351,130 347,866Property, Plant and Equipment 9 45,667,052 44,956,996Capital Works in Progress 10 2,076,264 1,998,644

Total Non-Financial Assets 48,254,042 47,353,364

Total Assets 51,138,190 49,421,720 LIABILITIES Payables 11 600,961 516,628Interest Bearing Liabilities 12 292,033 160,335Provisions 13 672,674 619,469Other 14 301,717 318,973

Total Liabilities 1,867,385 1,615,405

Net Assets 49,270,805 47,806,315 EQUITY Contributed Capital 15,511,115 12,976,115Physical Asset Revaluation Surplus 36,078,853 36,078,853Accumulated Loss (2,319,163) (1,248,653

Total Equity 49,270,805 47,806,315

The Balance Sheet should be read in conjuction with the accompanying notes.


2221

The Statement of Changes in Equity should be read in conjunction with the accompanying notes.

statement ofchanges in equity


Balance at 1st July 2011 36,051,345 (1,362,546) 12,976,115 47,664,914 Net Result for the Year - 113,893 - 113,893

Other Comprehensive Income for the year 27,508 - - 27,508 Balance at 30th June 2012 36,078,853 (1,248,653) 12,976,115 47,806,315 Net Result for the Year - (1,070,510) 2,535,000 1,464,490 Balance at 30th June 2013 36,078,853 (2,319,163) 15,511,115 49,270,805

AccumulatedLoss

$

Contributionsby Owner

$Total

$

Physical AssetRevaluation

Surplus$


23

22

The Cash Flow Statement should be read in conjunction with the accompanying notes.


cash flow statement

NOTES 2013 2012 $ $ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers 8,133,552 7,930,555Payments to Suppliers and Employees (8,201,068) (7,717,018)Interest Received 69,449 85,108Capital Grants from Puffing Billy Preservation Society 157,360 467,300Grants from Victorian Government Bodies - 718,297 Net Cash Flows from Operating Activities 18(b) 159,293 1,484,242 CASH FLOWS FROM INVESTING ACTIVITIES Payment for Property, Plant and Equipment (231,098) (302,626)Payment for Capital Works in Progress (1,646,011) (968,234)Payment for Investments (828,361) (42,766)Proceeds from sale of Property, Plant and Equipment 15,273 14,591 Net Cash Used in Investing Activities (2,690,197) (1,299,035) CASH FLOWS FROM FINANCING ACTIVITIES Owner Contributions by State Government 2,535,000 -Proceeds from/(Repayment of ) Borrowings (77,690) (108,164) Net Cash Flows from/Used in Financing Activities 2,457,310 (108,164) Net Increase/(Decrease) in Cash and Cash Equivalents (73,594) 77,043 Cash and Cash Equivalents at Beginning of the Year 977,944 900,901 Cash and Cash Equivalents at End of the Year 18(a) 904,350 977,944


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continued …

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The annual financial statements represent the audited general purpose financial statements for theEmerald Tourist Railway Board (the Board).

(A) Statement of compliance

These general purpose financial statements have been prepared in accordance with the FinancialManagement Act 1994 and applicable Australian Accounting Standards (AAS), which includesinterpretations issued by the Australian Accounting Standards Board (AASB).

Where appropriate, those AAS paragraphs applicable to not-for-profit entities have been applied.

The annual financial statements were authorised for issue by the Manager, Finance andAdministration of the Emerald Tourist Railway Board on 10th of August, 2013.

Accounting policies are selected and applied in a manner which ensures that the resulting financialinformation satisfies the concepts of relevance and reliability, thereby ensuring that the substance ofthe underlying transactions or other events is reported.

(B) Basis of accounting preparation and measurement

The accrual basis of accounting has been applied in the preparation of these financial statementswhereby assets, liabilities, equity, income and expenses are recognised in the reporting period towhich they relate, regardless of when cash is received or paid.

These financial statements are presented in Australian dollars, the functional and presentationcurrency of the Board.

In the application of AAS, judgements, estimates and assumptions are required to be made aboutcarrying values of assets and liabilities that are not readily apparent from other sources. Theestimates and associated assumptions are based on professional judgements derived from historicalexperience and various other factors that are believed to be reasonable under the circumstance.Actual results may differ from these estimates.

The estimates and associated assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimate is revised and also in futureperiods that are affected by the revision. Judgements made by management in the application ofAASs that have significant effects on the financial statements and estimates, with a risk of materialadjustments in the next year, are disclosed throughout the notes to the financial statements.

The report has been prepared in accordance with the historical cost convention. Historical cost isbased on the fair values of the consideration given in exchange for assets.

Exceptions to the historical cost convention include:

d non-financial physical assets which, subsequent to acquisition, are measured at a revaluedamount being their fair value at the date of the revaluation less any subsequent accumulated

NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED 30TH JUNE 2013

continued...


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depreciation and subsequent impairment losses. Revaluations are made with sufficient regularityto ensure that the carrying amounts do not materially differ from their fair value;

d the fair value of an asset other than land is generally based on its depreciated replacement value.

d provision for long service leave – (refer to Note 1(I))

The accounting policies set out below have been applied in preparing the financial statements forthe year ended 30 June 2013 and the comparative information presented for the year ended 30 June2012.

(C) Reporting entity

The financial statements cover the Emerald Tourist Railway Board (the Board) as an individualreporting entity. The Board is a statutory authority established under the Emerald Tourist RailwayAct 1977. Its principal address is:

Emerald Tourist Railway Board.Old Monbulk RoadBelgrave 3160

(D) Scope and presentation of financial statements

Comprehensive operating statement

Income and expenses in the comprehensive operating statement are classified according to whetheror not they arise from ‘transactions’ or ‘other economic flows’. This classification is consistent withthe whole of government reporting format and is allowed under AASB 101 Presentation of financialstatements.

‘Transactions’ and ‘other economic flows’ are defined by the Australian system of governmentfinance statistics: concepts, sources and methods 2005 Cat. No. 5514.0 published by the AustralianBureau of Statistics.

‘Transactions’ are those economic flows that are considered to arise as a result of policy decisions,usually interactions between two entities by mutual agreement. Transactions also include flowswithin an entity, such as depreciation where the owner is simultaneously acting as the owner of thedepreciating asset and as the consumer of the service provided by the asset. Taxation is regarded asmutually agreed interactions between the Government and taxpayers. Transactions can be in kind(e.g. assets provided/given free of charge or for nominal consideration) or where the finalconsideration is cash.

‘Other economic flows’ are changes arising from market re-measurements. They include gains andlosses from disposals, revaluations and impairments of non-financial physical and intangible assets;actuarial gains and losses arising from defined benefit superannuation plans; fair value changes offinancial instruments and agricultural assets; and depletion of natural assets (non-produced) fromtheir use or removal.


continued …continued...


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continued …

The net result is equivalent to profit or loss derived in accordance with AASs.

Balance sheet

Assets and liabilities are presented in liquidity order with assets aggregated into financial assets andnon-financial assets.

Current and non-current assets and liabilities (those expected to be recovered or settled beyond 12months) are disclosed in the notes, where relevant.

Cash flow statement

Cash flows are classified according to whether or not they arise from operating activities, investingactivities, or financing activities. This classification is consistent with requirements under AASB 107Statement of cash flows.

Statement of changes in equity

The statement of changes in equity presents reconciliations of each non-owner and owner equityopening balance at the beginning of the reporting period to the closing balance at the end of thereporting period. It also shows separately changes due to amounts recognised in the comprehensiveresult and amounts recognised in other comprehensive income related to other non-owner changesin equity.

(E) Income from transactions

Income is recognised to the extent that it is probable that the economic benefits will flow to theentity and the income can be reliably measured.

Interest income

Interest includes interest received on deposits and other investments and the unwinding over timeof the discount on financial assets. Interest income is recognised using the effective interest methodwhich allocates the interest over the relevant period.

Net realised and unrealised gains and losses on the revaluation of investments do not form part ofincome from transactions, but are reported either as part of income from other economic flows inthe net result or as unrealised gains and losses taken directly to equity, forming part of the totalchange in net worth in the comprehensive result.

Sales of goods and services

Income from the provision of services is recognised by reference to the stage of completion of theservices being performed. The income is recognised when:

d the amount of the income, stage of completion and transaction costs incurred can be reliablymeasured; and

d it is probable that the economic benefits associated with the transaction will flow to the Board.Under the stage of completion method, income is recognised by reference to labour hours


continued...


27

continued...

27

continued …

supplied or to labour hours supplied as a percentage of total services to be performed in eachannual reporting period.

Income from the sale of goods is recognised by the Board when:

d the significant risks and rewards of ownership of the goods have transferred to the buyer;

d the Board retains neither continuing managerial involvement to the degree usually associatedwith ownership nor effective control over the goods sold;

d the amount of income, and the costs incurred or to be incurred in respect of the transaction canbe reliably measured; and

d it is probable that the economic benefits associated with the transaction will flow to the Board.

Grants

Grants from third parties (other than contribution by owners) are recognised as income in thereporting period in which the Board gains control over the underlying assets.

The Board received a number of resources and volunteer services free of charge as part of itsoperations. As the value of these resources and services cannot be reliably measured, they have notbeen recognised as revenue.

Rental Income

Rental income from the leasing of property, plant and equipment is recognised on a straight-linebasis over the lease term.

(F) Expenses from transactions

Expenses are recognised as they are incurred and reported in the financial year to which they relate.

Employee expenses

These expenses include all costs related to employment, including wages and salaries,superannuation, fringe benefits tax, leave entitlements and WorkCover premiums.

Depreciation and amortisation

All infrastructure assets, buildings, plant and equipment and other non-financial physical assets(excluding items under operating leases, assets held-for-sale and investment properties) that havefinite useful lives are depreciated. Depreciation is generally calculated on a straight-line basis, atrates that allocate the asset’s value, less any estimated residual value, over its estimated useful life.

Leasehold improvements are depreciated over the period of the lease or estimated useful life,whichever is the shorter, using the straight-line method.

The estimated useful lives, residual values and depreciation method are reviewed at the end of eachannual reporting period, and adjustments made where appropriate.



28

continued...

28

continued …

The following are typical estimated useful lives for the different asset classes for both current andprior years. Asset class useful live are as follows:

Buildings, Structures and Improvements 20 – 60 yearsLocomotives and Rolling Stock 10 – 40 yearsMotor Vehicles 5 – 10 yearsOffice Furniture and Equipment 5 – 10 yearsPlant and Equipment 10 – 40 yearsPermanent Way 50 years

Land, earthworks, land under declared roads, and core cultural assets, which are considered to havean indefinite life, are not depreciated. Depreciation is not recognised in respect of these assets astheir service potential has not, in any material sense, been consumed during the reporting period.

Interest expense

Interest expenses are recognised as expenses in the period in which they are incurred.

Other operating expenses

Other operating expenses generally represent the day to day running costs incurred in normaloperations.

Supplies and services

Supplies and services expenses are recognised as an expense in the reporting period in which theyare incurred. The carrying amounts of any inventories held for distribution are expensed whendistributed.

Bad and doubtful debts

Bad and doubtful debts are assessed on a regular basis. Those bad debts considered as written off bymutual consent are classified as a transaction expense. Bad debts not written off by mutual consentand the allowance for doubtful receivables, are classified as ‘other economic flows’ in the net result.

Borrowing costs of qualifying assets

In accordance with the paragraphs of AASB 123 Borrowing costs applicable to not-for-profit publicsector entities, the Board continues to recognise borrowing costs immediately as an expense, to theextent that they are directly attributable to the acquisition, construction or production of aqualifying asset.

Other economic flows included in the net result

Other economic flows measure the change in volume or value of assets or liabilities that do notresult from transactions. These include:



29

continued...

29

Net gain/(loss) on non-financial assets

Net gain/(loss) on non-financial assets and liabilities includes realised and unrealised gains andlosses as follows:

Revaluation gains/(losses) of non-financial physical assets

Refer to accounting policy on Property, plant and equipment, provided in Note 1(H)

Disposal of non-financial assets

Any gain or loss on the sale of non-financial assets is recognised at the date that control of the assetis passed to the buyer and is determined after deducting from the proceeds the carrying value of theasset at that time.

Impairment of assets

All other assets are assessed annually for indications of impairment, except for inventories.

If there is an indication of impairment, the assets concerned are tested as to whether their carryingvalue exceeds their possible recoverable amount. Where an asset’s carrying value exceeds itsrecoverable amount, the difference is written off as another economic flow, except to the extent thatthe write-down can be debited to an asset revaluation surplus amount applicable to that class ofasset.

It is deemed that, in the event of the loss of an asset, the future economic benefits arising from theuse of the asset will be replaced unless a specific decision to the contrary has been made. Therecoverable amount for most assets is measured at the higher of depreciated replacement cost andfair value less costs to sell. Recoverable amount for assets held primarily to generate net cash inflowsis measured at the higher of the present value of future cash flows expected to be obtained from theasset and fair value less costs to sell.

(G) Financial assets

Cash and deposits

Cash and deposits, including cash equivalents, comprise cash on hand and cash at bank, deposits atcall and those highly liquid investments with an original maturity of three months or less, which areheld for the purpose of meeting short term cash commitments rather than for investment purposes,and which are readily convertible to known amounts of cash and are subject to an insignificant riskof changes in value.

For cash flow statement presentation purposes, cash and cash equivalents includes bank overdrafts,which are included as borrowings on the balance sheet.


continued …


30

continued...

30

continued …

Receivables

Receivables consist of:

d statutory receivables which include predominantly amounts owing from the government andGST input tax credits recoverable; and

d contractual receivables which include mainly debtors in relation to goods and services, loans tothird parties, accrued investment income, and finance lease receivables (refer to Note 1(J)).

Receivables that are contractual are classified as financial instruments. Statutory receivables are notclassified as financial instruments.

Receivables are recognised initially at fair value and subsequently measured at amortised cost, usingthe effective interest method, less an allowance for impairment.

A provision for doubtful receivables is made when there is objective evidence that the debts may notbe collected and bad debts are written off when identified (refer to Note 1(F))

Investments and other financial assets

Investments are classified in the following categories:

d financial assets at fair value through profit or loss,

d loans and receivables, and

d available-for-sale financial assets.

The classification depends on the purpose for which the investments were acquired. Managementdetermines the classification of its investments at initial recognition. Any dividend or interest earnedon the financial asset is recognised in the comprehensive operating statement as a transaction.

Impairment of financial assets

The Board assesses at the end of each reporting period whether there is objective evidence that afinancial asset or group of financial assets is impaired. All financial instrument assets, except thosemeasured at fair value through profit or loss, are subject to annual review for impairment.

Bad and doubtful debts for financial assets are assessed on a regular basis. Those bad debtsconsidered as written off by mutual consent are classified as a transaction expense. The bad debtsnot written off by mutual consent and allowance for doubtful receivables are classified as ‘othereconomic flows’ in the net result.

In assessing impairment of statutory (non-contractual) financial assets which are not financialinstruments, the Board applies professional judgement in assessing materiality using estimates,averages and other computational methods in accordance with AASB 136 Impairment of assets.

36


NOTE 2 and NOTE 3 on this page (based on 2012 A/R)

continued …


31

continued...

31

(H) Non-Financial Assets

Inventories

Inventories include goods held either for sale, or for distribution at zero or nominal cost, or forconsumption in the ordinary course of business operations.

Inventories held for distribution are measured at cost, adjusted for any loss of service potential. Allother inventories, are measured at the lower of cost and net realisable value.

Bases used in assessing loss of service potential for inventories held for distribution include currentreplacement cost and technical or functional obsolescence. Technical obsolescence occurs when anitem still functions for some or all of the tasks it was originally acquired to do, but no longermatches existing technologies. Functional obsolescence occurs when an item no longer functions theway it did when it was first acquired.

Cost for all inventory is measured on the basis of weighted average cost.

Inventories acquired for no cost or nominal consideration are measured at current replacement costat the date of acquisition.

Property, plant and equipment

All non-financial physical assets are measured initially at cost and subsequently revalued at fair valueless accumulated depreciation and impairment.

Non-financial physical assets such as land and heritage assets are measured at fair value with regardto the property’s highest and best use after due consideration is made for any legal or constructiverestrictions imposed on the asset, public announcements or commitments made in relation to theintended use of the asset. Theoretical opportunities that may be available in relation to the asset arenot taken into account until it is virtually certain that the restrictions will no longer apply.

The fair value of infrastructure systems and plant, equipment and vehicles, is normally determinedby reference to the asset’s depreciated replacement cost. For plant, equipment and vehicles, existingdepreciated historical cost is generally a reasonable proxy for depreciated replacement cost becauseof the short lives of the assets concerned.

Restrictive nature of cultural and heritage assets

The Board holds some heritage assets and infrastructure, which are deemed worthy of preservationbecause of the social rather than financial benefits they provide to the community. Consequently,there are certain limitations and restrictions imposed on their use and/or disposal.

The fair value of Museum Exhibits has been measured at cost and these Exhibits are not depreciatedas it is considered by the Board that these Exhibits may well be appreciating in value.

Non-financial physical assets arising from finance leases

Refer to Note 1(J) Leases.


continued …


32

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32

continued …

Non-financial physical assets constructed by the Board

The cost of non-financial physical assets constructed by the Board includes the cost of all materialsused in construction, direct labour on the project, and an appropriate proportion of variable andfixed overheads.

Revaluations of non-financial physical assets

Non-financial physical assets are measured at fair value in accordance with FRD 103D issued by theMinister for Finance. A full revaluation normally occurs every five years, based on the asset’sgovernment purpose classification, but may occur more frequently if fair value assessments indicatematerial changes in values. Independent valuers are used to conduct these scheduled revaluationsand any interim revaluations are determined in accordance with the requirements of the FRDs.

Revaluation increases or decreases arise from differences between an asset’s carrying value and fairvalue.

Net revaluation increases (where the carrying amount of a class of assets is increased as a result of arevaluation) are recognised in “Other economic flows – other movements in equity” andaccumulated in equity under the asset revaluation surplus, except that the net revaluation increaseshall be recognised in the net result to the extent that it reverses a net revaluation decrease in respectof the same class of property, plant and equipment previously recognised as an expense (othereconomic flows) in the net result.

Net revaluation decreases are recognised immediately as expenses (other economic flows) in the netresult, except that the net revaluation decrease shall be recognised in “other economic flows – othermovements in equity” to the extent that a credit balance exists in the asset revaluation surplus inrespect of the same class of property, plant and equipment. The net revaluation decrease recognisedin ‘other economic flows – other movement in equity’ reduces the amount accumulated in equityunder the asset revaluation surplus.

Revaluation increases and decreases relating to individual assets within a class of property, plant andequipment, are offset against one another within that class but are not offset in respect of assets indifferent classes. Any asset revaluation surplus is not normally transferred to accumulated funds onderecognition of the relevant asset.

Other non-financial assets

Prepayments

Other non-financial assets include prepayments which represent payments in advance of receipt ofgoods or services or that part of expenditure made in one accounting period covering a termextending beyond that period.



3332

(I) Liabilities

Payables

Payables consist of:

d contractual payables, such as accounts payable, and unearned income which is the incomereceived but related to the service to be rendered in the future period (‘income in advance’).Accounts payable represent liabilities for goods and services provided to the Board prior to theend of the financial year that are unpaid, and arise when the Board becomes obliged to makefuture payments in respect of the purchase of those goods and services; and

d statutory payables, such as goods and services tax and fringe benefits tax payables.

Contractual payables are classified as financial instruments and categorised as financial liabilities atamortised cost. Statutory payables are recognised and measured similarly to contractual payables,but are not classified as financial instruments and not included in the category of financial liabilitiesat amortised cost because they do not arise from a contract.

Payables are initially recognised at fair value, being the cost of the goods and services, andsubsequently measured at amortised cost.

Borrowings

Borrowings are initially measured at fair value, being the cost of the borrowings, net of transactioncosts (refer to Note 1(J) Leases).

Subsequent to initial recognition, borrowings are measured at amortised cost with any differencebetween the initial recognised amount and the redemption value being recognised in net result overthe period of the borrowing using the effective interest method.

Provisions

Provisions are recognised when the Board has a present obligation, the future sacrifice of economicbenefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a liability is the best estimate of the consideration required to settle thepresent obligation at reporting period, taking into account the risks and uncertainties surroundingthe obligation. Where a provision is measured using the cashflows estimated to settle the presentobligation, its carrying amount is the present value of those cashflows, using the discount rate thatreflects the time value of money and risk specific to the provision.

Employee benefits

Provision is made for benefits accruing to employees in respect of wages and salaries, annual leaveand long service leave for services rendered to the reporting date.




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continued …

(i) Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, and annual leave which areexpected to be settled within 12 months of the reporting period, are recognised in the provision foremployee benefits. These liabilities are classified as current liabilities and measured at their nominalvalues.

Those liabilities that are not expected to be settled within 12 months are also recognised in theprovision for employee benefits as current liabilities, but are measured at present value of theamounts expected to be paid when the liabilities are settled using the remuneration rate expected toapply at the time of settlement.

(ii) Long service leave

Liability for long service leave (LSL) is recognised in the provision for employee benefits.

Current liability – unconditional LSL is disclosed in the notes to the financial statements as acurrent liability even where the Board does not expect to settle the liability within 12 monthsbecause it will not have the unconditional right to defer the settlement of the entitlement should anemployee take leave within 12 months.

The components of this current LSL liability are measured at:

d nominal value – component that the Board expects to settle within 12 months; andd present value – component that the Board does not expect to settle within 12 months.

Non-current liability – conditional LSL is disclosed as a non-current liability. There is anunconditional right to defer the settlement of the entitlement until the employee has completed therequisite years of service.

This non-current LSL liability is measured at present value. Any gain or loss following revaluationof the present value of non-current LSL liability is recognised as a transaction, except to the extentthat a gain or loss arises due to changes in bond interest rates for which it is then recognised as another economic flow (refer to Note 1(F) Other economic flows include in net result).

Employee benefits on-costs

Employee benefits on-costs such as payroll tax, workers compensation and superannuation arerecognised in the provision for employee benefits.

(J) Leases

A lease is a right to use an asset for an agreed period of time in exchange for payment. Leases areclassified at their inception as either operating or finance leases based on the economic substance ofthe agreement so as to reflect the risks and rewards incidental to ownership. Leases of property,plant and equipment are classified as finance infrastructure leases whenever the terms of the leasetransfer substantially all the risks and rewards of ownership from the lessor to the lessee. All otherleases are classified as operating leases.


continued...


35

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35

Finance leases

Board as lessee

At the commencement of the lease term, finance leases are initially recognised as assets andliabilities at amounts equal to the fair value of the lease property or, if lower, the present value of theminimum lease payment, each determined at the inception of the lease. The lease asset isdepreciated over the shorter of the estimated useful life of the asset or the term of the lease.

Minimum finance lease payments are apportioned between reduction of the outstanding leaseliability, and periodic finance expense which is calculated using the interest rate implicit in the leaseand charged directly to the comprehensive operating statement.

Operating leases

Board as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of therelevant lease.

All incentives for the agreement of a new or renewed operating lease are recognised as an integralpart of the net consideration agreed for the use of the leased asset, irrespective of the incentive’snature or form or the timing of payments.

In the event that lease incentives are given to the lessee, the aggregate cost of incentives arerecognised as a reduction of rental income over the lease term, on a straight line basis unless anothersystematic basis is more representative of the time pattern over which the economic benefit of theleased asset is diminished.

(K) Equity

Contributions by owners

Additions to net assets which have been designated as contributions by owners are recognised ascontributed capital. Other transfers that are in the nature of contributions or distributions have alsobeen designated as contributions by owners.

Transfers of net assets arising from administrative restructurings are treated as distributions to orcontributions by owners.

(L) Commitments

Commitments are disclosed at their nominal value and inclusive of the goods and services tax(GST) payable. In addition, where it is considered appropriate and provides additional relevantinformation to users, the net present values of significant individual projects are stated.


continued …


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(M) Contingent assets and contingent liabilities

Contingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosedby way of a note and, if quantifiable, are measured at nominal value. Contingent assets andliabilities are presented inclusive of GST receivable or payable respectively.

(N) Accounting for the Goods and Services Tax (GST)

Income, expenses and assets are recognised net of the amount of associated GST, unless the GSTincurred is not recoverable from the taxation authority. In this case, it is recognised as part of thecost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The netamount of GST recoverable from, or payable to, the taxation authority is included with otherreceivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investingor financing activities which are recoverable from, or payable to the taxation authority, are presentedas operating cash flow.

(O) Events after the reporting period

Assets, liabilities, income or expenses arise from past transactions or other past events. Where thetransactions result from an agreement between the Board and other parties, the transactions are onlyrecognised when the agreement is irrevocable at or before the end of the reporting period.Adjustments are made to amounts recognised in the financial statements for events which occurafter the reporting period and before the date the financial statements are authorised for issue,where those events provide information about conditions which existed in the reporting period.Note disclosure is made about events between the end of the reporting period and the date thefinancial statements are authorised for issue where the events relate to conditions which arose afterthe end of the reporting period and which may have a material impact on the results of subsequentreporting periods.

(P) AASs issued that are not yet effective

Certain new AASs have been published that are not mandatory for the 30 June 2013 reportingperiod. DTF assesses the impact of these new standards and advises the Board of their applicabilityand early adoption where applicable.

As at 30 June 2013, the following standards and interpretations that are applicable to the Board hadbeen issued but are not mandatory for the financial year ending 30 June 2013. Standards andinterpretations that are not applicable to the Board have been omitted. The Board has not earlyadopted these standards. No significant impact on the financial statements is expected from thefollowing standards:



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AASB 9 Financial Instruments

AASB 13 Fair Value Measurement

AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9

AASB 2010-7 Amendments to Australian Accounting Standards arising fromAASB 9 (December 2010)

AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13

AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – OffsettingFinancial Assets and Financial Liabilities

AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assetsand Financial Liabilities

AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures forNon-Financial Assets


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36


NOTE 2 and NOTE 3 on this page (based on 2012 A/R)

continued …

NOTES 2013 2012 $ $NOTE 2 - INCOMEREVENUE FROM FARES, SHOPS AND EXTERNAL CONTRACTSFares 6,264,298 5,654,399 Sales - Shop 915,427 883,244 Sales - External Contracts 96,517 144,049

7,276,242 6,681,692 OTHER INCOMEGrants from Puffing Billy Preservation Society 157,360 467,300 Interest Received 69,449 95,109 Rents Received 112,266 90,212 Other Income 74,224 628,463

413,299 1,281,084 GOVERNMENT GRANTS RECEIVED- Victorian Government Bodies 15 718,297

TOTAL INCOME 7,689,541 8,681,073 Other income for 2012 includes a recovery of GST from the Australian Taxation Office. The settlement with ATO is subject to a confidentiality agreement.

NOTE 3: EXPENSES(a) Supplies and ServicesCost of Sales - Shop 428,846 418,438 Cost of Sales - External Contracts 94,284 126,779 Coal and Light Up Wood 247,154 305,258 Catering on Trains 332,265 326,316 Repairs, Maintenance and Consumables 1,025,216 795,474

2,127,765 1,972,265(b) Other ExpensesAuditor’s Remuneration:- Auditor General 7,500 7,070 Provision for Doubtful Debts - 27,000 Other Expenses 646,820 543,882 Sundry Train Operating Expenses 130,891 93,261

785,211 671,213

continued...


39

37


NOTES 4–8 on this page (based on 2012 A/R)

continued …

2013 2012 $ $NOTE 4: DEPRECIATION Building, Structures and Improvements 285,483 285,004Locomotives and Rolling Stock 457,618 461,608Motor Vehicles 80,923 42,272Office Furniture and Equipment 32,054 24,195Plant and Equipment 168,046 164,961Permanent Way 257,594 257,594 1,281,718 1,235,634NOTE 5: CASH ASSETS AND CASH EQUIVALENTS Cash on Hand 22,074 22,338Cash at Bank 148,172 78,665A.N.Z. Cash Management 734,104 876,941 904,350 977,944NOTE 6: RECEIVABLES Current Contractural Trade Debtors 144,501 154,214Provision for Doubtful Debtors (3,160) (30,160)Other Receivables 27,804 4,532 169,145 128,586Statutory GST Receivables 138,056 1172,590 307,201 246,176

continued...

NOTE 7: OTHER FINANCIAL ASSETSAustralian dollar term deposits 1,672,597 844,236(a) Ageing analysis of other financial assets.

Please refer to Note 23 for the ageing analysis of other financial assets.(b) Nature and extent of risk arising from other financial assets.

Please refer to Note 23 for the nature and extent of risk arising from other financial assets.

NOTE 8: INVENTORIES Finished Goods held for resale, at cost 244,197 238,692 Coal, at cost 16,240 12,600 Catered Train Beverages, at cost 37,180 43,061 Workshop Inventories, at cost 53,513 53,513 351,130 347,866

(a) Ageing analysis of contractual receivablesPlease refer to Note 23 for the ageing analysis of contractual receivables.

(b) Nature and extent of risk arising from contractual receivablesPlease refer to Note 23 for the nature and extent of risk arising from contractual receivables.


40

37




2013 2012 $ $

NOTE 9: PROPERTY, PLANT AND EQUIPMENTLand - at fair value 8,099,000 8,099,000 8,099,000 8,099,000 Buildings, Structures and Improvements - at fair value 6,676,023 6,569,273 Accumulated Depreciation (570,487) (285,004) 6,105,536 6,284,269 Total Land and Buildings 14,204,536 14,383,269 Locomotives and Rolling Stock - at fair value 16,720,233 15,240,395 Accumulated Depreciation (919,226) (461,608)Total Locomotives and Rolling Stock 15,801,007 14,778,787 Motor Vehicles - at fair value 448,549 243,009 Accumulated Depreciation (116,337) (42,272) 332,212 200,737

Office Furniture and Equipment - at fair value 157,461 87,742 Accumulated Depreciation (56,249) (24,195) 101,212 63,547 Plant and Equipment - at fair value 1,586,280 1,463,211 Accumulated Depreciation (333,007) (164,961)Total Plant and Equipment 1,253,273 1,298,250 Total Motor Vehicles, Plant and Equipment 1,686,697 1,562,534 Permanent Way - at fair value 14,490,000 14,490,000 Accumulated Depreciation (515,188) (257,594) Total Permanent Way 13,974,812 14,232,406

Property, Plant and Equipment 45,667,052 44,956,996

In accordance with Financial Reporting Directive 103D, all property plant and equipment was revalued at 30 June 2011.An independent valuation of the Board’s land and buildings was performed by the Valuer-General Victoria to determine the fair value of land and buildings. The valuation, which conforms to Australian Valuation Standards, was determined by reference to the amounts for which assets could be exchanged between knowledgeable willing parties in an arm’s length transaction. Fair value is determined by direct reference to recent market transactions on arm’s length terms for land and buildings of comparable size and location to the railway. The valuation was based on independent assessments. An independent valuation of all other Board fixed assets was performed by the Valuer-General Victoria. The valuation, which conforms to Australian Valuation Standards, was determined based on the depreciated replacement cost of the assets.


41

continued...

NOTE 9: PROPERTY, PLANT AND EQUIPMENT (CONTINUED)ReconciliationsReconciliation of the carrying amount of each class of property, plant and equipment at the beginning and end of the current financial year are set out below:

Carrying Amount at 1st July 2011 8,099,000 6,560,765 15,169,300 1,479,059 14,490,000 45,798,124Additions - - - 302,626 - 302,626Disposals - - - (6,723) - (6,723)Transfers from Work in Progress - - 71,095 - - 71,095Revaluation - 8,508 - 19,000 - 27,508Depreciation Expense - (285,004) (461,608) (231,428) (257,594) (1,235,634)Carrying Amount at 30th June 2012 8,099,000 6,284,269 14,778,787 1,562,534 14,232,406 44,956,996Additions - 56,430 - 384,056 - 440,486Disposals - - - (17,103) - (17,103)Transfers from Work in Progress - 50,320 1,479,838 38,233 - 1,568,391Depreciation Expense - (285,483) (457,618) (281,023) (257,594) (1,281,718) Carrying Amount at 30th June 2013 8,099,000 6,105,536 15,801,007 1,686,697 13,974,812 45,667,052

Land$

Buildings Structures & Equipment

$

Locomotives and

Rolling Stock$

Motor VehiclesPlant and

Equipment$

PermanentWay

$Total

$

37



continued …

2013 2012NOTE 10: CAPITAL WORKS IN PROGRESS $ $

Restoration of Locomotives - at cost 1,085,467 1,627,599 Restoration of Rolling Stock - at cost 24,831 31,803 Permanent Way - at cost 580,993 -Other Plant and Equipment - at cost 384,973 339,242 Total Capital Works in Progress 2,076,264 1,998,644 ReconciliationsReconciliation of the carrying amount of each class of capital works in progress at the beginning and end of the current financial year are set out below:


42

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continued …

NOTE 10: CAPITAL WORKS IN PROGRESS (CONTINUED)

NOTE 11: PAYABLES 2013 2012 $ $

Current Contractural Trade Creditors 123,214 139,714Sundry Creditors and Accrued Expenses 293,669 229,157 416,883 368,871 Statutory GST Payable 116,586 102,081 Employee Tax Withheld 67,492 45,676 184,078 147,757 600,961 516,628

Buildings, Locomotives Structures & and Plant and Permanent Improvements Rolling Stock Equipment Way Total $ $ $ $ $Carrying Amount at 1st July 2011 55,823 1,045,682 - - 1,101,505 Additions 280,243 684,815 3,176 - 968,234 Transfers to Property Plant and Equipment - (71,095) - - (71,095)Carrying Amount at 30th June 2012 336,066 1,659,402 3,176 - 1,998,644

Additions 85,129 930,734 49,155 580,993 1,646,011 Transfers to Property Plant and Equipment (50,320) (1,479,838) (38,233) - (1,568,391)Carrying Amount at 30th June 2013 370,875 1,110,298 14,098 580,993 2,076,264

(a) Maturity analysis of contractual payables.Please refer to Note 23 for the maturity analysis of contractual payables.

(b) Nature and extent of risk arising from contractual payables.Please refer to Note 23 for the nature and extent of risk arising from contractual payables.


43

(a) Maturity analysis of interest bearing liabilities. Please refer to Note 23 for the maturity analysis of interest bearing liabilities.(b) Nature and extent of risk arising from interest bearing liabilities. Please refer to Note 23 for the nature and extent of risk arising from interest bearing liabilities.(c) Defaults and breaches. During the current and prior years, there are no defaults and breaches of any of the interest bearing liabilities.

NOTE 12: INTEREST BEARING LIABLITIES 2013 2012 $ $

Secured: Current Hire Purchase Liability 82,611 73,621 Deferred Hire Purchase Charges (21,896) (10,546) 60,715 63,075 Non-current Hire Purchase Liability 270,753 105,897 Deferred Hire Purchase Charges (39,435) (8,637) 231,318 97,260 Total Interest Bearing Liabilities 292,033 160,335

NOTE 13: PROVISIONS Current - Employee Benefits (Note 13A) 618,950 574,867 Non-Current - Employee Benefits (Note 13A) 53,724 44,602 Total Provision for Employee Entitlements 672,674 619,469

NOTE 13A: EMPLOYEE ENTITLEMENTS AND RELATED ON-COSTS

Current (Note 13) All Annual Leave and LSL Entitlements (representing 7+ years of continuous service) - Short-term employee benefits, that fall due within 12 months after the end of the period measured at nominal value: Annual Leave 290,226 271,058 Long Service Leave 164,038 172,263

37



continued …


44

continued...

- Other long-term employee benefits that do not fall due within 12 months after the end of the period measured at present value 164,686 131,546 618,950 574,867

Non-Current (Note 13) LSL representing less than 7 years of continuous service measured at present value 53,724 44,602 Movement in Long Service Leave Balance at the start of the year 348,411 266,958 Provision made during the year 64,356 98,989 Settlements made during the year (30,319) (17,536)Balance at end of the year 382,448 348,411

NOTE 13A: EMPLOYEE ENTITLEMENTS AND 2013 2012 $ $RELATED ON-COSTS (CONTINUED)

NOTE 14: OTHER CURRENT LIABILITIES Passenger Bookings in Advance 215,849 245,858 Rent Received in Advance 85,868 73,115 301,717 318,973 NOTE 15: GRANTS FROM GOVERNMENT BODIES Grants from : - Department of Business and Innovation - 218,297 - Tourism Victoria - 500,000 - 718,297

37



continued …


45

37



continued …

NOTE 16: FINANCIAL COMMITMENTS NOTES 2013 2012 $ $

(b) Other financial commitments

The Board has short term financial commitments to purchase $320,000 (2012 - $109,000) of capital equipment, and $65,000 (2012 - $167,000) of operational expenditure. None of the commitments are payable later than one year.

(c) Committed Lease revenue

The Board has long-term lease agreements with several telecommunications companies to provide space in a former water tower on its property. No long term value is attributed to the leases since all of them contain six month notice of termination clauses.

NOTE 17: SUPERANNUATION

The Board made a minimum nine percent (2012 - nine percent) contribution into thirty-four defined contribution superannuation schemes on behalf of employees, and selected by the employees themselves. Total Board contributions in 2013 were $327,106 (2012 - $295,645). Additionally all employees have an option of making additional contributions into their nominated schemes, and some employees took up this option. There are no unfunded liabilities or outstanding contributions due to any superannuation schemes.

Commitment for Hire Purchase Payments Payable not later that 1 year 82,611 73,621 Payable later than 1 year but not later than 5 years 270,753 105,897 353,364 179,518 Deferred Hire Purchase Charges (61,331) (19,183) 292,033 160,335 Current Hire Purchase Liability (net) 12 60,715 63,075 Non-current Hire Purchase Liability (net) 12 231,318 97,260 292,033 160,335


46

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continued …

(c)Non-cash financing and investing activities: property, plant and equipment:During the financial year, the Board acquired plant and equipment with an aggregate fair value of $209,388(2012 – nil) by means of hire purchase agreements. These acquisitions are not reflected in the Cash Flow Statement.

NOTE 18: CASH FLOW INFORMATION NOTES 2013 2012 $ $(a) Reconciliation of Cash and Cash Equivalents Cash on Hand 5 22,074 22,338 Cash at Bank 5 148,172 78,665 Cash invested at call 5 734,104 876,941 Balance as per cash flow statement 904,350 977,944

(b) Reconciliation of Cash Flows from Operations Net Result for the Year (1,070,510) 113,893

Non-cash movements - Depreciation 4 1,281,718 1,235,634 - Loss (Profit) on Disposal of Property, Plant and Equipment 1,830 (7,868) 213,038 1,341,659 Movements in assets and liabilities - Decrease/(Increase) in Receivables (61,025) (13,285)- Increase in Inventories (3,264) (10,776)- Increase in Prepayments (109,738) (8,983)- Increase in Payables 84,333 38,199 - Increase in Provisions 53,205 127,277 - Increase (Decrease) in Other Liabililities (17,256) 10,151 Net Cash Flows from Operations 159,293 1,484,242

NOTE 19: POST BALANCE DATE EVENTSThere is no event occurring after balance date that would have a material effect on the accounts.

NOTE 20: RESPONSIBLE PERSONSResponsible persons during the year ended 30 June, 2013 were:Responsible Minister: The Hon. Louise Asher, Minister for Tourism and Major Events Accountable Officers: E. D. J. Seddon (Chief Executive Officer) to 2 November 2012 J. A. Robinson (Chief Executive Officer) from 3 November 2012 Remuneration paid to the Minister is reported in the Annual Report of the Department of the Premier and Cabinet.


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continued …


NOTE 21: DIRECTORS AND EXECUTIVE OFFICERSMembers of the Board during the year ended 30th June, 2013 were as under:R.L. Leivers (Chairman) 1 July 2012 to 30 June 2013J.A. Robinson (Deputy Chairman) 1 July 2012 to 13 March 2013J.R. Brady 1 July 2012 to 30 June 2013R.S. Cochrane (Deputy Chairman) 1 July 2012 to 30 June 2013N. Cuddy 1 July 2012 to 30 June 2013J.F. Hoy 1 July 2012 to 30 June 2013J. Nichols-Reeves 1 July 2012 to 30 June 2013A. J. Ponton 1 July 2012 to 30 June 2013R.W. Kingham 13 March 2013 to 30 June 2013Secretary to the Board: D.G. Parbery 1 July 2012 to 30 June 2013

No remuneration was paid or is payable to any Board Members acting in their capacity as a Board Member.

Remuneration paid to Accountable Officers is as follows:

Income Band$60,000 - $69,999$70,000 - $79,999$100,000 - $109,999$110,000 - $119,999$130,000 - $139,999$160,000 - $169,999

Total NumbersTotal Amount

2013–1–1––2

$193,499

2012–––––11

$160,164

20131–1–––2

$168,906

2012––––1–1

$138,533

Total Remuneration Base Remuneration

Income Band

$80,000 - $89,999$60,000 - $69,999

$100,000 - $109,999$110,000 - $119,999$120,000 - $129,999$130,000 - $139,999$140,000 - $149,999Total Number of Executives

Total Amount

2013

1

1–

11

–

4$493,508

2012

–– –

––

–

––

11

2$262,498

20131

11

1––4

48

$417,650

2012

–

––

11

–2

$194,834

Total Remuneration Base Remuneration

Executive Officers at 30th June, 2013 were as follows:R.D. Bowen Manager, Finance & AdministrationJ.F. Hoy Manager, Operations & EngineeringN.M. Hutchins Manager, MarketingJ.L. Clowes Manager, Passenger Operations

Remuneration paid to Executive Officers is as follows:


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continued …

NOTE 22: RELATED PARTY TRANSACTIONSMr. J.A. Robinson was a former Board member prior to being appointed Chief Executive Officer. Following his appointment as Chief Executive Officer, he was not re-elected to the Board when his term expired in March. Members of the Board who are also members of the Puffing Billy Preservation Society Executive Committee were J.F. Hoy, R.S. Cochrane, J.R. Brady and R. Kingham. There were no related party transactions with any of these members,Other than the transactions of the Society disclosed elsewhere in this report, there were no other related party transactions.Members of The Puffing Billy Preservation Society provide volunteer services to The Board. Additionally Puffing Billy Preservation Society has provided grants totalling $157,360 (2012 - $467,300) towards capital works in progress, as disclosed in Note 2. The Board has purchased books to the value of $1,857 (2012 - $5,133) from the Society for sale in its station kiosks.

NOTE 23: FINANCIAL INSTRUMENTS

(a) Financial Risk Management Objectives and Policies

The Board’s principal financial instruments comprise of:- Cash Assets- Term Deposits- Receivables (excluding statutory receivables)- Payables (excluding statutory payables)- Hire Purchase Liabilities

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, with respect of each class of financial asset and financial liability are disclosed in Note 1 to the financial statements.The main purpose in holding financial instruments is to prudentially manage the Boards financial risks within the government policy parameters.The Board’s main financial risks include credit risk and interest rate risk. The Board manages these financial risks in accordance with its financial risk management policy.The Board uses different methods to measure and manage the different risks to which it is exposed. Primary responsibility for the identification and management of financial risks rests with the Audit Remuneration Committee of the Board.

continued...


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Categorisation of Financial Assets Contractual Contractual Financial Assets Financial Loans and Liabilities at Receivables amortised cost Total2013 $ $ $Contractual Financial Assets • Cash and cash equivalent 904,350 - 904,350 • Term Deposits 1,672,597 - 1,672,597 • Receivables 190,562 - 190,562Total Contractual Financial Assets 2,767,509 - 2,767,509Contractual Financial Liabilities • Payables - 435,140 435,140 • Hire Purchase Liabilities - 353,364 353,364Total Contractual Financial Liabilities - 788,504 788,5042012 Contractual Financial Assets • Cash and cash equivalent 977,944 - 977,944 • Term Deposits 844,236 - 844,236 • Receivables 158,746 - 158,746Total Contractual Financial Assets 1,980,926 - 1,980,926Contractual Financial Liabilities • Payables - 368,871 368,871 • Hire Purchase Liabilities - 179,518 179,518Total Contractual Financial Liabilities - 548,389 548,389

Net Holding Gain/(Loss) on Financial Instruments by Category Categorisation of Financial Assets Net Holding Total Interest Impairment gain/(loss) income/(expense) Loss Total2013 $ $ $ $Contractual Financial Assets • Financial Assets - loans and receivables - 69,449 - 69,449 Total Contractual Financial Assets - 69,449 - 69,449 Financial Liabilities • Financial Liabilities at amortised cost - (19,232) - (19,232)Total Financial Liabilities - (19,232) - ($19,232)2012 Contractual Financial Assets • Financial Assets - loans and receivables - 95,109 (27,000) 68,109 Total Contractual Financial Assets - 95,109 (27,000) 68,109 Financial Liabilities • Financial Liabilities at amortised cost - (16,407) - (16,407)Total Financial Liabilities - (16,407) - (16,407)

NOTE 23: FINANCIAL INSTRUMENTS (CONTINUED)


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The net holding gains or losses disclosed above are determined as follows:• for cash and cash equivalents and loans or receivables, the net gain or loss is calculated by taking the movement in the fair value of the asset, the interest income, and minus any impairment recognised in the net result;• for financial liabilities measured at amortised cost, the net gain or loss is calculated by taking the interest expense measured at amortised cost.(b) Credit RiskCredit arises from the contractual financial assets of the Board, which comprise cash and deposits, and non-statutory receivables. The Board’s exposure to credit risk arises from the potential default of a counter party on the contractual obligations resulting in financial loss to the Board. Credit risk is measured at fair value and is monitored on a regular basis.Credit risk associated with the Board’s contractual financial assets is minimal because it is the Board’s policy to only deal with entities with proven credit ratings.In addition, the Board does not engage in hedging for its contractual financial assets and mainly obtains contractual financial assets that are on fixed interest, except for cash assets, which are mainly cash at bank. As with the policy for debtors, the Board’s policy is to only deal with banks and high credit ratings.Provision of impairment for contractual financial assets is recognised when there is objective evidence that the Board will not be able to collect a receivable. Objective evidence includes financial difficulties of the debtor or debts which are more than 90 days overdue.Except as otherwise detailed in the following table, the carrying amount of contractual financial assets recorded in the financial statements, net of any allowance for losses, represents the Board’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

Financial Institutions Triple-A credit rating Other Total

2013 $ $ $

• Cash and deposits 2,576,947 - 2,576,947 • Receivables - 190,562 190,562Total contractual financial assets 2,576,947 190,562 2,767,509 2012 • Cash and deposits 1,822,180 - 1,822,180 • Receivables - 158,746 158,746 Total contractual financial assets 1,822,180 158,746 1,980,926

Credit Quality of contractual financial assets that are neither past due nor impaired.


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Contractual financial assets that are either past due or impairedThere are no material financial assets which are individually determined to be impaired. Currently the Board does not hold any collateral as security nor credit enhancements relating to any of its financial assets.There are no financial assets that have their terms renegotiated so as to prevent them from being past due or impaired, and they are stated at the carrying amounts as indicated. The ageing analysis table above discloses the ageing only of contractual financial assets that are past due but not impaired.(c) Liquidity riskLiquidity risk is the risk that the Board would be unable to meet its financial obligations as and when they fall due. The Board’s policy is to settle financial obligations within 30 days from the end of the month in which the obligation arose.The Board’s maximum exposure to liquidity risk is the carrying amount of financial liabilities as disclosed in the face of the balance sheet. The Board manages its liquidity risk by:• close management by senior management of its short-term and long-term borrowings, including

monthly reviews on current and future borrowing levels and requirements;• maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet its

short-term obligations; • holding investments and other contractual financial assets that are readily tradable in the financial

markets; and • careful maturity planning of its financial obligations based on forecasts of future cash flows.

2013 Investment and other Contractual Financial Assets Cash and cash equivalent 904,350 904,350 - - - -Term Deposits 1,672,597 1,672,597 - - - -Receivables: - - - - • Sale of goods and services 141,341 144,501 - - - (3,160) • Other receivables 46,061 46,061 - - - -Total Financial Assets 2,764,349 2,767,509 - - - (3,160)2012 Investment and other Contractual Financial Assets Cash and cash equivalent 977,944 977,944 - - -Term Deposits 844,236 844,236 - - - -Receivables: • Sale of goods and services 124,054 154,214 - - - (30,160) • Other receivables 4,532 4,532 - - - -Total Financial Assets 1,950,766 1,980,926 - - - (30,160)

Ageing Analysis of Financial Assets Past due but not Impaired

Carrying Amount

$

Nominal Amount

$

Less than1 month

$

3 Months 1 Year

$

1 - 5 Years

$Impairment

$


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continued …

The Board’s exposure to liquidity risk is deemed insignificant based on prior periods’ data and current assessment of risk.The carrying amount detailed in the following table of contractual financial liabilities recorded in the financial statements, represents the Board’s maximum exposure to liquidity risk.The following table discloses the contractual maturity analysis for the Board’s contractual financial liabilities.

continued...

(d) Market RiskThe Board’s exposures to market risk are primarily through foreign currency risk and interest risk. Objectives, polices and processes used to manage each of those risks are disclosed below.Foreign Currency RiskThe Board is exposed to insignificant foreign currency risk through its payables relating to purchase of supplies and consumables from overseas, This is because of a limited amount of purchase denominated in foreign currencies and a short timeframe between commitment and settlement.Interest Rate RiskFair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. The Board does not hold any interest-bearing financial instruments that are measured at fair value, therefore has no exposure to fair value interest rate risk.Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.Exposure to cash flow interest rate risk might arise primarily through the Board interest bearing liabilities. Minimisation of risk is achieved by mainly undertaking fixed or no-interest bearing financial instruments, For financial liabilities, Emerald Tourist Railway Board mainly undertakes financial liabilities with relatively even maturity profiles.

Maturity analysis of contractual financial liabilities

2013Payables Supplies and services 123,214 123,214 123,214 - - -Other payables 311,926 311,926 311,926 - - -Borrowings Hire purchase liabilities 353,364 353,364 6,884 13,769 61,958 270,753 Total 788,504 788,504 442,024 13,769 61,958 270,753 2012 Payables Supplies and services 139,714 139,714 139,714 - - -Other payables 229,157 229,157 229,157 - - -Borrowings Hire purchase liabilities 179,518 179,518 6,135 12,270 55,216 105,897 Total 548,389 548,389 375,006 12,270 55,216 105,897

Maturity DatesCarrying Amount

$

Nominal Amount

$

Less than1 month

$

1 -3 Months

$

3 Months 1 Year

$

1 - 5 Years

$


53

2013 Financial Assets Cash and cash equivilent 3.92 904,350 - 734,104 170,246 Term Deposits 4.80 1,672,597 1,672,597 -Receivables • Sale of goods and services 144,501 - - 144,501 • Other receivables 46,061 - - 46,061 Total Financial Assets 2,767,509 1,672,597 734,104 360,808 Financial Liability Payables • Supplies and services 123,214 - - 123,214 • Other payables 311,926 - - 311,926 Borrowings • Hire purchase liabilities 8.80 353,364 353,364 - -Total Financial Liabilities 788,504 353,364 - 435,140 2012 Financial Assets Cash and cash equivilent 4.59 977,944 - 876,941 101,003 Term Deposits 6.00 844,236 844,236 - -Receivables • Sale of goods and services 154,214 154,214 • Other receivables 4,532 4,532 Total Financial Assets 1,980,926 844,236 876,941 259,749 Financial Liability Payables • Supplies and services 139,714 - - 139,714 • Other payables 229,157 - - 229,157 Borrowings • Hire purchase liabilities 9.69 179,518 179,518 - -Total Financial Liabilities 548,389 179,518 - 368,871


37



continued …

Interest Rate Exposure

Weighted Average Effective

Interest %

Carrying Amount

$

Fixed Interest

Rate $

Variable Interest

Rate $

Non Interest Bearing

$

Interest Rate Exposure of Financial Instruments


54

continued...


37



continued …

Interest Rate Risk

-2 percent +2 percentCarrying Amount

$Profit

$Profit

$Equity

$Equity

$

Sensitivity Disclosure AnalysisTaking into account past performance, future expectations, economic forecasts, and management’s knowledge and experience of the financial markets, the Board believes the following movements are ‘reasonably possible’ over the next 12 months: • A parallel shift of 2% and -2% in market interest rates (AUD)The following table discloses the impact on net operating result and equity for each category of financial instrument held by the Board at year end as presented to key management personnel, if changes in the relevant risk occur.

2013 Financial Assets Cash and cash equivalent 904,350 (18,087) - 18,087 -Term Deposits 1,672,597 (33,452) - 33,452 -Receivables 190,562 - - - - Contractual Financial Liabilities Trade and other payables 435,140 - - - -Borrowings 292,033 - - - - (51,539) (51,539) - 51,539 2012 Financial Assets Cash and cash equivilent 977,944 (19,559) - 19,559 -Term Deposits 844,236 (16,885) - 16,885 -Receivables 158,746 - - - - Contractual Financial Liabilities Trade and other payables 368,871 - - - -Borrowings 160,335 - - - - - (36,444) - 36,444

This sensitivity analysis has been performed on the assumption that all other variable remain unchanged.

-

-


55


37



continued …

(e) Fair Value• The fair values and net fair values of financial instrument assets and liabilities are

determined as follows:• Level 1 – the fair value of financial instrument with standard terms and conditions and

traded in active liquid markets are determined with reference to quoted market prices;• Level 2 – the fair value is determined using inputs other than quoted prices that are

observable for the financial asset or liability, either directly or indirectly; and• Level 3 – the fair value is determined in accordance with generally accepted pricing models

based on discounted cash flow analysis using unobservable market inputs.The Board considers that the carrying amounts of financial instrument assets and liabilities recorded in the financial statements to be fair approximation of their fair values, because of the short-term nature of the financial instruments and the expectation that they will be paid in full. The Board has no financial assets measured at fair value.The following table shows that the fair value of all of the contractual financial assets and liabilities are the same as the carrying amounts.

NOTE 24: CONTINGENT LIABILITIES

At the date of the signing of the Certification of the Board, the Board Members were unaware of any liabilities, contingent or otherwise, that were not already disclosed elsewhere in this report (2012: Nil).

Contractual Financial AssetsCash and cash equivlent 3 904,350 904,350 977,944 977,944Term Deposits 3 1,672,597 1,672,597 844,236 844,236Receivables 3 187,402 187,402 128,586 128,586Total Contractual Financial Assets 2,764,349 2,764,349 1,950,766 1,950,766Contractual Financial Liabilities Trade and other payables 3 435,140 435,140 368,871 368,871 Borrowings 3 353,364 353,364 179,518 179,518 Total Contractual Financial Liabilities 788,504 788,504 548,389 548,389

Level

Carrying Amount

$

Carrying Amount

$

Fair Value

$

Fair Value

$

2013 2012


56

DISCLOSURE INDEXThe Annual Report of Emerald Tourist Railway Board is prepared in accordance with all Victorian legislation. This index has been prepared to facilitate identification of compliance with statutory disclosure requirements.Legislation Disclosure Requirement Page

Charter and Purpose FRD 22B Manner of establishment and relevant Minister 1, 46FRD 22B Objectives, functions, powers and duties 6, 14FRD 22B Services provided 6-13Management and StructureFRD 22B Organisational structure 16Financial and other information FRD 10 Disclosure index 56FRD 12B Disclosure of major contracts 15FRD 15B Executive officer disclosures 47FRD 22B Operational and budgetary objectives and performance against objectives 6,7FRD 22B Occupational health and safety 8FRD 22B Summary of financial results for the year 7FRD 22B Significant changes in financial position during the year 23FRD 22B Major changes or factors affecting performance 6, 7FRD 22B Subsequent events 46FRD 22B Statement on National Competition Policy N/AFRD 22B Details of consultancies over $100,000 16FRD 22B Details of consultancies under $100,000 16FRD 22B Statement of availability of other information 14, IBCFRD 24C Reporting of office-based environmental impacts 13-14FRD 29 Statement of workforce data 8SD 4.5.5 Risk management compliance attestation 15SD 4.2(g) General information requirements 6 - 15SD 4.2(j) Sign-off requirements 19Financial StatementsFinancial statements required under Part 7 of the FMASD 4.2(a) Statement of Changes in Equity 22SD 4.2(b) Cash Flow Statement 23SD 4.2(b) Comprehensive Operating Statement 20SD 4.2(b) Balance Sheet 21Other requirements required under Standing Directions 4.2SD 4.2(c) Compliance with Australian accounting standards and other authoritative pronouncements 24SD 4.2(c) Compliance with Ministerial Directions 24SD 4.2(d) Rounding of amounts N/ASD 4.2(c) Accountable officers’ declaration 19Other disclosures as required by FRDs in notes to the financial statementsFRD 11 Disclosure of ex-gratia payments N/AFRD 21A Responsible person and executive office disclosures 46-47 FRD 102 Inventories 31FRD 103D Non-current physical assets 31-32FRD 106 Impairment of Assets 30FRD 114A Financial Instruments 48-55LegislationFreedom of Information Act 1982 14Whistleblowers Protection Act 2001 14Building Act 1983 N/AFinancial Management Act 1994 6

Documents

EMERALD TOURIST RAILWAY BOARD annual · PDF fileEMERALD TOURIST RAILWAY BOARD annual report ... industrial relations, OH&S, and logistics. ... appointment of a training manager,