2016/17. Directors' Report and Financial Statements for the year ended 30 June 2017

Transcription

1 Directors' Report and Financial Statements for the year ended 30 June /17 Sydney Motorway Corporation Pty Ltd ABN and its controlled entities

2 Sydney Motorway Corporation Directors Report and Financial Statements 2 Contents Directors' Report 3 Auditor's Independence Declaration 10 Income Statement 12 Statement of Comprehensive Income 13 Statement of Financial Position 14 Statement of Changes in Equity 15 Statement of Cash Flows 16 Notes to the Financial Statements 17 Directors Declaration 45 Independent Auditor's Report 46

3 Sydney Motorway Corporation Directors Report and Financial Statements 3 Directors Report The Directors of Sydney Motorway Corporation Pty Limited present their report of the consolidated entity, consisting of Sydney Motorway Corporation Pty Limited ABN and its controlled entities (referred to hereafter as the Group or SMC ), for the financial year ended 30 June and the auditor s independence declaration thereon. Organisation overview Sydney Motorway Corporation Pty Limited ( the Company ) is a private company limited by shares and established by the NSW Government in August 2014 under the Corporations Act Principal activities SMC, through its subsidiaries, develops, finances, delivers and operates major infrastructure solutions to support Sydney s long term economic and population growth. During the -17 financial year, SMC was responsible for developing, financing and delivering key components of WestConnex Australia s largest transport infrastructure project including: New M4 (comprising M4 Widening and M4 East projects) New M5 (including King Georges Road Interchange Upgrade) M4-M5 Link. WestConnex is a central part of the NSW Government's integrated transport solution for Sydney. It was a key recommendation of the State Infrastructure Strategy 2012 (updated in 2014) and the Long Term Transport Master Plan, (updated in 2014). WestConnex will provide improved connectivity between Greater Sydney and Global Sydney's primary economic centres and international gateways. Key functional changes this year SMC is developing the M4-M5 Link on behalf of Roads and Maritime Services (RMS), with the memorandum of understanding (MOU) signed on 23 March. RMS is fully funding the M4-M5 Link's development costs, currently through SMC. Shareholders SMC is governed by a majority independent Board appointed by its shareholders. SMC has three shareholders: The Hon. Dominic Perrottet, MP, Treasurer, and Minister for Industrial Relations The Hon. Victor Dominello, MP, Minister for Finance, Services and Property The Hon. Stuart Ayres, MP, Minister for Western Sydney, Minister for WestConnex, and Minister for Sport.

4 Sydney Motorway Corporation Directors Report and Financial Statements 4 Directors Report continued Board of Directors and Officers Directors Name Position Appointed Resigned Peter Brecht* Chair, Non-Executive Director 28 May 2015 (as Chair from October 2015) Dennis Cliche Executive Director and Chief Executive Officer 22 June 2015 John Cooper* Non-Executive Director 27 May Leilani Frew Non-Executive Director 28 August August Penelope Graham Non-Executive Director 15 September 2014 Rodney Pearse Non-Executive Director 15 September 2014 Mary Ploughman Non-Executive Director 15 September 2014 Cameron Robertson Non-Executive Director 15 September 2014 * Post the 30 June financial year end, Peter Brecht advised he would not renew his term as a Director and Chair of the SMC Board. John Cooper was appointed as Chair of the Board, effective 21 July. Peter Brecht will remain a non-executive director until 1 October. Officers of the company Name Position Appointed Roderick MacKinnon Company Secretary 5 February Audit and Risk Committee Name Rodney Pearse John Cooper Mary Ploughman Cameron Robertson Position Chair, Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Remuneration Committee Name Penelope Graham Rodney Pearse Position Chair, Non-Executive Director Non-Executive Director

5 Sydney Motorway Corporation Directors Report and Financial Statements 5 Directors Report continued The year in review highlights July November December January February April May June Tunnelling commenced on the M4 East project at Cintra Park in Concord Planning approval given for construction of the New M5 Concept design for the Rozelle Interchange announced, with the provision of significant green space in the Inner West Expressions of interest called to build M4-M5 Link twin tunnels Tunnelling started on the New M5 $1.7bn financing established for the New M4 SMC signed three-year community partnership with Wests Tigers, NRL club King Georges Road Interchange Upgrade completed two months ahead of schedule G-Loop access ramp to M4 opened at Homebush Bay Drive The M4 viaduct, a 2.5km elevated section between Parramatta and Granville, opened to traffic SMC entered into a three-year community partnership with Greater Western Sydney Giants, AFL club New M5 draft urban design and landscape plan released Concept design for M4-M5 Link released One-month free tolling period announced NSW Government announced its intention to sell a majority stake in SMC $1.6bn worth of contracts with 1600 businesses signed since work began on WestConnex projects John Holland CPB Contractors JV and Lendlease Samsung Bouygues JV shortlisted to tender for the M4-M5 Link project Significant changes since 30 June July August First stage of WestConnex, the widened M4, opened to traffic Expressions of Interest announced for construction of the Rozelle Interchange First underground breakthrough achieved between two tunnelling sites on the M4 East project John Cooper appointed Chair of SMC Board, effective 1 October, following the resignation of Peter Brecht Tolling commenced on the widened M4 M4-M5 Link Environmental Impact Statement (EIS) released Divestment of 51 per cent of SMC and its subsidiaries announced by NSW Treasury Outlook In the coming year, SMC expects to achieve the following milestones: New M4 Commence civil, mechanical and electrical fitouts for the New M4 tunnel and buildings Complete major traffic switches on the M4, Parramatta Road and Wattle Street Open the new Powells Creek M4 on-ramp. New M5 Switch traffic onto a section of the future New M5 motorway at Kingsgrove, from the existing M5, to allow for construction work to continue Complete remediation work at the old Alexandria Landfill site (the future St Peters Interchange) Install the first bridge structure at the St Peters Interchange Install the bridge sections at Campbell Road and at Gardeners Road. M4-M5 Link Award a Joint Venture contract for construction of the M4-M5 Link Commence site works for the M4-M5 Link.

6 Sydney Motorway Corporation Directors Report and Financial Statements 6 Directors Report continued SMC Projects WestConnex is part of an integrated transport plan to keep Sydney moving easing congestion, creating jobs and connecting communities. The new motorway will provide vital support for Sydney s long term economic and population growth. WestConnex is being delivered in stages and is expected to be completed in It will: Extend the widened M4 motorway in underground tunnels between Homebush and Haberfield to create the New M4 Double road capacity along the M5 corridor with the New M5 underground tunnels running between St Peters and Kingsgrove Join these underground routes together via the M4 M5 Link tunnel, to form a seamless motorway without traffic lights Provide a western bypass of the Sydney central business district (CBD) Provide connections to the future Western Harbour Tunnel, Beaches Link and the proposed F6 Extension Provide future connections to Sydney Airport and Port Botany via Sydney Gateway, currently being designed by Roads and Maritime Services Enable improved public transport along key corridors including Parramatta Road (between Burwood Road and Haberfield) and along Victoria Road, Rozelle Provide more than 18 hectares of new open space and 14km of new and improved cycleways and walkways, improving connectivity for non-motorway users as well. WestConnex New M4 - M4 Widening project Construction on the project commenced in March 2015, creating an additional lane for 7.5km in each direction between Parramatta and Homebush. The widened M4 opened to traffic in July, and tolling operations commenced on 15 August. WestConnex New M4 - M4 East project The M4 East project will extend the M4 Motorway in twin-tunnels between Homebush and Haberfield, via Concord. It includes provision for a future connection to the M4-M5 Link at the Wattle Street Interchange. Construction on the project commenced in March. The project is about 6.5km in length (including 5.5km of motorway in tunnels) and is expected to open to traffic in As at 30 August, tunnelling excavation was approximately 70 per cent complete. WestConnex New M5 The New M5 project involves duplicating the existing M5 East with twin-tunnels from Kingsgrove to a new interchange at St Peters. The St Peters Interchange allows for connections to the future Sydney Gateway project and the M4-M5 Link. The New M5 tunnels will also allow for a connection to the proposed F6 Extension. Construction on the project commenced in July, with completion targeted for King Georges Road Interchange Upgrade This project involved upgrading the King Georges Road Interchange between the M5 West and the M5 East at Beverly Hills, in preparation for the New M5 project. It opened to traffic in December. WestConnex M4-M5 Link The M4-M5 Link will connect to the New M4 at Haberfield and the New M5 at St Peters, as well as a new interchange at Rozelle and the Iron Cove Link at Victoria Road. It includes ramps for a connection to the proposed Western Harbour Tunnel and Beaches Link. The Environmental Impact Statement for the project was lodged with the Department of Planning and Environment on 18 August, and has a 60-day public exhibition period. Subject to planning approval, the project would be built in two stages with the first stage, the mainline tunnels linking the M4 and M5 tunnels, commencing in mid-2018.

7 Sydney Motorway Corporation Directors Report and Financial Statements 7 Directors Report continued Financing and investment SMC s commercial objective is to safely develop, deliver and operate all stages of the WestConnex project through the provision of best-value solutions for our shareholders. SMC s financing strategy involves establishing SMC subsidiaries to enable the raising of limited-recourse debt against net toll revenues to fund the construction costs of each WestConnex project. Post financial year end, the Shareholders announced their intention to sell 51% of SMC and its subsidiaries. WestConnex New M4 refinancing On November, SMC was successful in raising a $1.7bn senior debt facility for the New M4 projects. M4-M5 Link SMC is continuing to work with the NSW Government on the financing and procurement strategy for the M4-M5 Link. Planning approvals for WestConnex Each WestConnex project is subject to a thorough environmental impact assessment under the Environmental Planning and Assessment Act This process involves the preparation and public exhibition of an Environmental Impact Statement (EIS). Each EIS includes information on the project design, air quality, heritage, traffic and transport impacts, and the management of other construction and operational impacts. Stakeholders and members of the community are invited to provide feedback during the preparation and exhibition of the EIS. Submissions received during the EIS exhibition are addressed in a Submissions and Preferred Infrastructure Report, and submitted to the Minister for Planning for consideration in the planning approval assessment process. WestConnex projects that have received planning approval are: New M4 (M4 Widening) New M4 (M4 East) King Georges Road Interchange Upgrade New M5. The M4 M5 Link EIS was submitted to the Department of Planning and Environment on 18 August, with a 60-day public exhibition period. Environmental regulation and performance SMC and its contractors are delivering WestConnex in accordance with: The measures identified in the related Environmental Impact Statement and Submissions and Preferred Infrastructure Reports The Conditions of the Approval set out by the Department of Planning and Environment and Minister for Planning The related project Environmental Protection Licenses. The NSW Environment Protection Authority (EPA) and Department of Planning and Environment are the primary governing bodies for all requirements associated with NSW environmental regulation. The WestConnex projects are subject to environmental regulations under Australian Commonwealth and State laws. SMC is committed to ensuring construction and operations of the WestConnex motorways in an environmentally responsible manner. Our key regulators include: The NSW Environment Protection Authority, which monitors compliance with the environmental protection laws and regulates environmental performance Department of Planning and Environment, which monitors compliance with the conditions of project approval and mitigation measures agreed to during planning approval Commonwealth Department of the Environment, which regulates national environmental laws, some of which focus on the conservation of biodiversity. SMC has invested in project-specific environmental expertise and management systems that advise, guide, monitor and report on the fulfilment of environmental obligations by our contractors and delivery teams.

8 Sydney Motorway Corporation Directors Report and Financial Statements 8 Directors Report continued SMC consolidated group financial highlights 30 June $m 30 June $m Summary of financial performance Revenue 2,103 1,560 Expenses (2,113) (1,547) (Loss)/profit for the year (10) 13 Summary of financial position Total assets 4,831 2,710 Total liabilities (1,600) (422) Total equity 3,231 2,288 Financial statistics Current ratio (times) Total equity to total assets (%) 67% 84% Other balance sheet items Intangible assets 3,669 1,746 Cash and cash equivalents 1, Borrowings (1,096) Other non-current liabilities (192) (122) Financial performance The M4 Widening project was substantially completed in and opened for operations in July There was increased construction activity on the M4 East project and the New M5 The progress of these projects resulted in increased construction revenue and construction expenses for The group incurred $2.1bn in costs during the period, of which $1.9bn was recognised as construction revenue in accordance with AASB Interpretation 12 Service Concession Agreements and $0.2bn was funded by RMS and consequently recognised as external revenue The $1.9bn of the above construction revenue added to intangible assets which had a total carrying value of $3.7bn as at 30 June Total liabilities mainly consist of debt of $1.1bn, with trade payables, deferred income on debt and derivative financial liabilities comprising a further $0.5bn. How we funded the business and managed risks A $1.7bn senior debt facility was successfully arranged to finance the New M4 project, of which $0.2bn was drawn (including capitalised interest over the loan term) as at 30 June $1.0bn was drawn under the $4.3bn of senior and subordinated New M5 debt facilities (including capitalised interest over the loan term) as at 30 June $0.9bn of equity was contributed by shareholders to the M4 Group in the year to 30 June $3.1bn of interest rate swaps are in place to reduce volatility from interest rate movements in relation to the M4 and M5 borrowings. The full audited Financial Statements for the Group are available on our website westconnex.com.au

9 Sydney Motorway Corporation Directors Report and Financial Statements 9 Directors Report continued Dividends Subject to the Corporations Act 2001, the Board determines the dividend policy of the Company from time-to-time and in doing so will consider the implications for cash reserves and solvency of the Company. No dividends were paid or proposed to be paid to members during the financial year ended 30 June. Indemnification of officers and auditors As provided under the Constitution, the Company indemnifies current and former directors and officers for any loss arising from any claim by reason of any wrongful act committed by them in their capacity as director or officer (subject to certain exclusions as required by law). During the financial year, the Company has paid premiums in respect of contracts insuring the directors and officers against any liability of this nature. In accordance with normal commercial practices, under the terms of the insurance contracts, the nature of the liabilities insured against and the amount of premiums paid are confidential. The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or any related body corporate against a liability incurred as such by an officer or auditor. Auditor s independence declaration The auditor s independence declaration for the year ended 30 June is attached to this Directors Report. Rounding of amounts Amounts in the financial report and Directors Report have been rounded off to the nearest thousand dollars, unless otherwise stated. This report is made in accordance with a Resolution of the Board of Directors and is signed for and on behalf of Directors pursuant to s.298(2) of the Corporations Act Signed: Signed: Name: Dennis Cliche Name: John Cooper Director Director Sydney, 21 September Sydney, 21 September

10 Sydney Motorway Corporation Directors Report and Financial Statements 10 Auditor s Independence Declaration

11 Financial Statements for the year ended 30 June

12 Sydney Motorway Corporation Directors Report and Financial Statements 12 Income Statement For the year ended 30 June Note Revenue Design and Construction revenue 2 1,877,126 1,518,917 External revenue 3 204,414 15,609 60,182 12,109 Interest income 21,579 25,508 13,827 20,102 Management services revenue 21,816 31,452 Dividend income 693 Other gain 3,597 10,000 Total revenue 2,103,119 1,560, ,115 73,663 Expenses Design and Construction costs 4 1,966,918 1,456,149 Employee related costs 5 55,450 27,476 38,309 20,754 Other operating costs 6 83,620 63,527 65,971 33,152 Ineffectiveness in swaps designated as cash flow hedges 15 6,682 Finance costs 7-49 Depreciation and amortisation 11 & Total expenses 2,113,380 1,547, ,941 54,222 (Loss)/Profit for the year (10,261) 12,517 (4,826) 19,441 The above Income Statement should be read in conjunction with the accompanying notes.

13 Sydney Motorway Corporation Directors Report and Financial Statements 13 Statement of Comprehensive Income For the year ended 30 June Note (Loss)/Profit for the year (10,261) 12,517 (4,826) 19,441 Other comprehensive income/(loss) Items that will not be reclassified subsequently to profit or loss: Defined benefit plan actuarial (loss) 18 (368) (368) Items that may be reclassified subsequently to profit or loss: Gain/(loss) on cash flow hedges taken to equity 15 38,422 (121,016) Total other comprehensive income/(loss) for the year 38,054 (121,016) (368) Total comprehensive income/(loss) for the year 27,793 (108,499) (5,194) 19,441 The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

14 Sydney Motorway Corporation Directors Report and Financial Statements 14 Statement of Financial Position As at 30 June Note Current Assets Cash and cash equivalents 8 1,030, , , ,351 Trade and other receivables 9 77,431 72,455 20,272 17,547 Other assets 10 3,669 7,565 Total current assets 1,111, , , ,898 Non-current assets Intangible assets 11 3,668,563 1,745,585 1, Property, plant and equipment 12 2,908 3,189 2,703 2,976 Investment in subsidiaries 13 2,778,785 1,898,298 Other assets 10 47,458 18,685 Total non-current assets 3,718,929 1,767,459 2,783,004 1,901,292 Total assets 4,830,842 2,709,548 3,346,986 2,439,190 Current liabilities Trade and other payables , ,414 14,913 20,255 Derivative financial liabilities 15 18,836 Provisions 16 6,588 3,773 4,003 2,201 Total current liabilities 312, ,187 18,916 22,456 Non-current liabilities Borrowings 17 1,095,500 Derivative financial liabilities 15 70, ,016 Provisions 16 3,401 1,484 2, Deferred income ,250 Defined benefit obligation Total non-current liabilities 1,287, ,500 2, Total liabilities 1,600, ,687 21,316 23,409 Net assets 3,230,737 2,287,861 3,325,670 2,415,781 Equity Issued capital 19 3,301,240 2,386,157 3,301,240 2,386,157 Reserves 20 (82,962) (121,016) (368) Retained earnings 12,459 22,720 24,798 29,624 Total equity 3,230,737 2,287,861 3,325,670 2,415,781 The above Statement of Financial Position should be read in conjunction with the accompanying notes.

15 Sydney Motorway Corporation Directors Report and Financial Statements 15 Statement of Changes in Equity For the year ended 30 June Contributed equity Cash flow hedge reserve Other reserve Retained earnings Total equity Balance at 01 July ,000 10, ,203 Profit for the year 12,517 12,517 Other comprehensive (loss) (121,016) (121,016) Total comprehensive (loss) (121,016) 12,517 (108,499) Transactions with owners in their capacity as owners: Issue of share capital 1,446,157 1,446,157 Balance at 30 June 2,386,157 (121,016) 22,720 2,287,861 Loss for the year (10,261) (10,261) Other comprehensive income/(loss) 38,422 (368) 38,054 Total comprehensive income/(loss) 38,422 (368) (10,261) 27,793 Transactions with owners in their capacity as owners: Issue of share capital 915, ,083 Balance at 30 June 3,301,240 (82,594) (368) 12,459 3,230,737 Contributed equity Cash flow hedge reserve Other reserve Retained earnings Total equity Balance at 01 July ,000 10, ,183 Profit for the year 19,441 19,441 Other comprehensive income/(loss) Total comprehensive income 19,441 19,441 Transactions with owners in their capacity as owners: Issue of share capital 1,446,157 1,446,157 Balance at 30 June 2,386,157 29,624 2,415,781 Loss for the year (4,826) (4,826) Other comprehensive (loss) (368) (368) Total comprehensive (loss) (368) (4,826) (5,194) Transactions with owners in their capacity as owners: Issue of share capital 915, ,083 Balance at 30 June 3,301,240 (368) 24,798 3,325,670 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

16 Sydney Motorway Corporation Directors Report and Financial Statements 16 Statement of Cash Flows For the year ended 30 June Note Cash flows from operating activities Interest received 20,678 24,958 13,238 19,597 Other receipts 460, ,502 87,210 43,525 Payments to employees and suppliers (287,548) (167,024) (110,383) (50,625) Net cash from/(used in) operating activities ,093 (3,564) (9,935) 12,497 Cash flows from investing activities Payments for concession assets (2,085,742) (1,380,262) (22,873) Payments for intangibles (1,516) (1,516) Payments for property, plant and equipment (520) (3,376) (479) (3,163) Payments for investments (879,794) (1,829,220) Proceeds on transfer of intangibles 88,341 Net cash (used in) investing activities (2,087,778) (1,383,638) (881,789) (1,766,915) Cash flows from financing activities Proceeds from issue of share capital 915,083 1,446, ,083 1,446,157 Proceeds from borrowings 1,193,018 Payments for financing costs (45,672) (26,250) Net cash from financing activities 2,062,429 1,419, ,083 1,446,157 Net increase/(decrease) in cash and cash equivalents 168,744 32,705 23,359 (308,261) Opening cash and cash equivalents 862, , , ,612 Closing cash and cash equivalents 8 1,030, , , ,351 The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

17 Sydney Motorway Corporation Directors Report and Financial Statements 17 Notes to the Financial Statements For the year ended 30 June 1. Summary of significant accounting policies Sydney Motorway Corporation Pty Limited (the Company or SMC ) is a private company limited by shares established by the New South Wales (NSW) State, which is the ultimate parent, on 28 August 2014 under the Corporations Act The role of the Company is to invest (directly and/or indirectly) in, and provide or arrange finance for, Designated Road Projects which the Board has determined are reasonably expected to generate a return. The consolidated financial statements of the Company and its wholly-owned subsidiaries (collectively referred to as 'the Group') as listed below, were authorised for issue in accordance with a resolution of the Directors on 21 September. WCX M4 Group entities consist of the following: WCX M4 AT Pty Ltd WCX M4 PT Pty Ltd WCX M4 AHT Pty Ltd WCX M4 PHT Pty Ltd WCX M4 AT Pty Ltd as Trustee of WCX M4 Asset Trust (WCX M4 Asset Trust) WCX M4 PT Pty Ltd as Trustee of WCX M4 Project Trust (WCX M4 Project Trust) WCX M4 AHT Pty Ltd as Trustee of WCX M4 Asset Hold Trust (WCX M4 Asset Hold Trust) WCX M4 PHT Pty Ltd as Trustee of WCX M4 Project Hold Trust (WCX M4 Project Hold Trust) WCX M4 Pty Ltd (WCX M4 Co) WCX M4 Finco Pty Ltd (WCX M4 Finco). WCX M5 Group entities consist of the following: WCX M5 AT Pty Ltd WCX M5 PT Pty Ltd WCX M5 AHT Pty Ltd WCX M5 PHT Pty Ltd WCX M5 AT Pty Ltd as Trustee of WCX M5 Asset Trust (WCX M5 Asset Trust) WCX M5 PT Pty Ltd as Trustee of WCX M5 Project Trust (WCX M5 Project Trust) WCX M5 AHT Pty Ltd as Trustee of WCX M5 Asset Hold Trust (WCX M5 Asset Hold Trust) WCX M5 PHT Pty Ltd as Trustee of WCX M5 Project Hold Trust (WCX M5 Project Hold Trust) WCX M5 Finco Pty Ltd (WCX M5 Finco).

18 Sydney Motorway Corporation Directors Report and Financial Statements 18 Notes to the Financial Statements continued For the year ended 30 June 1. Summary of Significant Accounting Policies continued a) Basis of preparation The consolidated financial statements are general purpose financial statements and have been prepared in accordance with the requirements of the Corporations Act 2001, applicable Australian Accounting Standards (including the Australian Accounting Interpretations), the requirements of the Public Finance and Audit Act 1983, the Public Finance and Audit Regulations 2015, and the NSW Treasurer s Directions. SMC and its wholly-owned subsidiaries are classified as for-profit entities for the purposes of the application of Australian Accounting Standards and under NSW Treasury Policy TPP 05-4 Distinguishing For-Profit from Not-For-Profit Entities. The historical cost basis of accounting has been adopted except where otherwise stated. The current year includes the restructured WCX M4 Group entities for the period from 11 October (incorporation date) to 30 June. In addition, the prior year comparative includes WCX M5 Group entities for the period from 20 November 2015 to 30 June. Unless otherwise stated, amounts are rounded to the nearest one thousand dollars () and expressed in Australian dollars. Judgements, key assumptions and estimates used by management are disclosed in the relevant notes to the consolidated financial statements. Certain comparative amounts for the prior year have been reclassified to conform to current year presentations. Such reclassifications had no effect on net profit and loss or shareholders equity. M4 restructure During the year, WCX M4 Co was restructured from a single entity to a trust group. All entities under the new structure were registered on 11 October. Under the new structure, WCX M4 Asset Trust is responsible for the financing, design and construction activities while WCX M4 Project Trust is responsible for the tolling, operation, maintenance and repair activities. WCX M4 Finco is responsible for raising external debt finance associated with the New M4 (which includes the M4 Widening and M4 East projects) and providing that finance through loans to WCX M4 Asset Trust. The financial close in relation to this restructure was achieved on 23 November. WCX M4 Co is now a subsidiary of WCX M4 Project Trust. b) Principles of consolidation These financial statements have been consolidated in accordance with Australian Accounting Standards AASB 10 Financial Statements. The consolidated financial statements of the Group comprise of the financial statements of the Company and its whollyowned subsidiaries, as at 30 June. Consolidation of a controlled entity ceases when the Group loses control of the controlled entity. Assets and liabilities, income and expenses of a controlled entity acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the entity. Controlled entities Controlled entities are entities over which the Group has power to control, which is when the Group is exposed, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Controlled entities are fully consolidated when the Group has more than a majority of the voting or similar rights of an entity. All inter-entity balances and transactions between entities in the Group have been eliminated in full on consolidation. c) Statement of compliance The consolidated financial statements and accompanying notes comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). d) Going concern The consolidated financial statements have been prepared on the basis that the Group is expected to be able to pay its debts as and when they fall due and continue in operation without any intention or necessity to liquidate or otherwise wind up their operations.

19 Notes to the Financial Statements continued For the year ended 30 June 1. Summary of Significant Accounting Policies continued e) New or revised Australian Accounting Standards and Interpretations not yet adopted The Group did not early adopt any new accounting standards that are not yet effective. The following new accounting standards and interpretations have been published that are not mandatory for 30 June reporting year: AASB 9 Financial Instruments (effective for financial years commencing on or after 1 January 2018) AASB 9, published in July 2014, replaces the existing guidance in AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment of financial assets, and the new general hedge accounting requirements. It also carries forward guidance on recognition and de-recognition of financial instruments from AASB 139. Another change to the classification and measurement is where the fair value option is used for financial liabilities. The change attributable to changes in credit risk is presented in other comprehensive income, and the remaining change is presented in the Income Statement. The impact of adoption of AASB 9 is not expected to be material. AASB 15 Revenue from Contracts with Customers (effective for financial years commencing on or after 1 January 2018). AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue and AASB 111 Construction Contracts. The impact of adoption of AASB 15 is not expected to be material. AASB 16 Leases (effective for financial years commencing on or after 1 January 2019) AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. This standard will predominately affect lessees, bringing all major leases on the balance sheet. Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to other financial liabilities. Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement includes noncancellable lease payments (including inflation-linked payments), and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. The impact of adoption of AASB 16 is not expected to be material. Sydney Motorway Corporation Directors Report and Financial Statements 19 f) Change in accounting policy No new amendments to standards have a significant impact on the Group s financial position and performance for the current reporting period. g) Critical accounting estimates and judgements The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported in the financial statements. The estimates and associated assumptions are based on factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Main areas where a high degree of judgement or complexity arises or where assumptions and estimates are significant to the financial statements are found in the following notes: Fair value of derivatives. Refer note 21 (c). Impairment testing of motorway concession assets under construction. Refer note 11. Valuation techniques, which involves estimates, are discussed in detail in the relevant notes(s).

20 Sydney Motorway Corporation Directors Report and Financial Statements 20 Notes to the Financial Statements continued For the year ended 30 June 1. Summary of Significant Accounting Policies continued h) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is recognised for the major business activities as follows: Construction revenue During the construction phase of service concession infrastructure assets, the Group records an intangible asset which represents the future right to charge users of the infrastructure and recognises construction revenue from the construction of the infrastructure. Revenue and expenses associated with construction contracts are recognised in accordance with the percentage of completion method. Interest income Interest income is recognised on an accruals basis using the effective interest rate method. i) Construction costs The WCX M4 Group entities, comprising of wholly-owned subsidiaries of the Company, hold the concession for the New M4 which includes the M4 Widening and the M4 East motorway projects (also referred to as WestConnex Stage 1). This grants the Group the right to design, build, operate and maintain the WestConnex Stage 1 motorway for the concession period ending in Construction costs incurred in the development and management of the WestConnex Stage 1 motorway project are recognised in the Income Statement and subsequently capitalised to Intangible Assets (assets under construction Stage 1) in the Statement of Financial Position. The WCX M5 Group entities, comprising of wholly owned subsidiaries of the Company, have been granted the tolling rights to the New M5 motorway (also referred to as WestConnex Stage 2). This grants the Group the right to design, build, operate and maintain the WestConnex Stage 2 motorway for the concession period ending in Construction costs incurred in the development and management of the WestConnex Stage 2 motorway project are recognised in the Income Statement and subsequently capitalised to Intangible Assets (assets under construction Stage 2) of the Statement of Financial Position. Refer note 1 (n) for further details on intangible assets. j) Insurance The Project Deed with Roads and Maritime Services (RMS) requires WCX M4 Asset Trust to effect or cause to effect certain policies of insurance. Subsequent to this obligation, the project related insurances have been passed down through the Design and Construction (D&C) deed to the D&C Contractor under a contractor arranged insurance approach for the WestConnex Stage 1 M4 Widening and M4 East road projects. The Project Deed with RMS requires WCX M5 Asset Trust to effect or cause to effect certain policies of insurance. Subsequent to this obligation, the project insurances have been passed down through the Design and Construction (D&C) deed to the D&C Contractor under a contractor arranged insurance approach for the WestConnex Stage 2 New M5 road project. k) Cash and cash equivalents Cash includes cash at bank and deposits. Cash equivalents are short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes. l) Trade and other receivables Trade and other receivables are initially recognised at fair value, usually based on the transaction cost or face value. Subsequent measurement is at amortised cost using the effective interest method, less any allowance for uncollectible amounts. Changes are recognised in the Income Statement when trade and other receivables are impaired or de-recognised. Short term receivables with no stated interest rate are measured at the original invoice amount where the effect of discounting is immaterial.

21 Notes to the Financial Statements continued For the year ended 30 June 1. Summary of Significant Accounting Policies continued m) Property, plant and equipment Acquisition of assets Assets acquired are initially recognised at cost. Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire the asset at the time of its acquisition or construction or, where applicable, the amount attributed to that asset when initially recognised in accordance with the requirements of the Australian Accounting Standards. Capitalisation thresholds Expenditure on the acquisition, replacement or enhancement of property, plant and equipment is capitalised, provided it exceeds the capitalisation threshold. Impairment of assets At each reporting date, the carrying amounts of assets are reviewed to ensure that they represent fair value. If the carrying amount requires a valuation adjustment in order to represent fair value, this is carried out at the reporting date. In addition, the carrying amounts are reviewed to determine whether there is an indication of impairment. If any indication of impairment exists, a formal estimate of their recoverable amount is made. An impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less cost of disposal and value in use. Impairment losses are recognised as an expense in the Income Statement, unless an asset has previously been revalued through the asset revaluation reserve, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the Income Statement. If the asset s carrying amount is greater than it s estimated recoverable amount, the carrying amount is reduced to recoverable amount and the reduction is recognised as an impairment loss. Depreciation of property, plant and equipment Depreciation is provided for on a straight-line basis over the useful life of the assets. The depreciation charge for each period is recognised as an expense unless it is included in the carrying amount of another asset. In determining an asset s useful life, consideration is given to its expected usage - its expected wear and tear, technical or commercial obsolescence and legal or similar limits on its use. The expected useful lives of items of property, plant and equipment are as follows: Sydney Motorway Corporation Directors Report and Financial Statements 21 Computer and IT hardware Leasehold improvements 3 5 years over the life of the relevant lease n) Intangible assets The Group recognises intangible assets only if it is probable that future economic benefits will flow to the Group and the cost of the asset can be measured reliably. Software Intangible assets are measured initially at cost and the cost is its fair value as at the date of acquisition. Development costs are only capitalised when certain criteria are met. Intangible assets are subsequently measured at fair value only if there is an active market. As there is no active market for the Group s intangible assets, the assets are carried at cost less accumulated amortisation and impairment losses. In determining the asset s useful life, consideration is given to its expected usage, technical, technological, commercial or other types of obsolesce, legal or similar limits on its use, and whether its life is dependent on the useful life of other assets. The expected useful life of an item of software ranges between 2 and 5 years. Software is amortised on a straight-line basis over its estimated life commencing when the item is available for use. All research costs are expensed.

22 Sydney Motorway Corporation Directors Report and Financial Statements 22 Notes to the Financial Statements continued For the year ended 30 June 1. Summary of Significant Accounting Policies continued n) Intangible assets continued Concession assets under construction WCX M4 Group entities and WCX M5 Group entities respectively hold the concession for the WestConnex Stage 1 and Stage 2 motorway projects which grant the entities the right to design, build, operate and maintain these components of the WestConnex motorway for the concession period ending in At the end of the concession period, all assets are to be returned to the NSW Government (RMS). Management judgement is required in the assessment of types of costs that are directly attributable to the increase in value of the intangible asset. Satisfying directly attributable criteria requires an assessment of those unavoidable costs that, if not incurred, would result in the intangible asset not being constructed. Costs include cost of materials, services, direct labour and an appropriate portion of overheads. Concession assets such as the right to future toll revenue in the form of an intangible asset will be amortised over the period of expected future benefits (currently the concession period) once the motorway is fully constructed and operational. Useful lives of these assets are finite. Intangible assets not yet available for use are subject to an annual review of impairment. An intangible asset is de-recognised either on disposal or when its service potential ceases and it is not expected to have any disposal value. On de-recognition any gain or loss is recognised in the Income Statement. Impairment Testing At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes an estimate of the recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units or CGUs). Where the carrying amount of an intangible asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount through the Income Statement. The decrement in the carrying amount is recognised as an expense in the income Statement in the reporting period in which the impairment occurs. The recoverable amount of the Group s CGUs has been determined based on value-in-use calculations. o) Investments in subsidiaries Investments in subsidiaries are accounted for at cost less impairment losses, if any, in the financial statements of the parent entity. On disposal of such an investment, the difference between the net disposal proceeds and its carrying amount is included in the Income Statement. p) Impairment of financial assets All financial assets, except those measured at fair value through profit and loss, are subject to an annual review for impairment. An allowance for impairment is established when there is objective evidence that the Group will not be able to collect amounts due. For financial assets carried at amortised cost, the amount of the allowance is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the impairment loss is recognised in the Income Statement. q) Other assets Other assets including prepayments are recognised on a historical cost basis. r) Trade and other payables These amounts comprise trade creditors and accrued expenses owing by the Group at reporting date and represent liabilities for goods and services received by the Group prior to the end of the financial year 30 June that remain unpaid. Payables are unsecured and are usually paid within 30 days of recognition. Payables are recognised initially at fair value, usually based on the transaction cost or face value and subsequently measured at amortised cost using the effective interest method. Short term payables with no stated interest rate are measured at the original invoice amount where the effect of discounting is immaterial.

23 Notes to the Financial Statements continued For the year ended 30 June 1. Summary of Significant Accounting Policies continued s) Employee benefits and other provisions Salaries and wages, annual leave, sick leave and on-costs Liabilities for wages and salaries (including non-monetary benefits) and annual leave are recognised in payables within accrued employee entitlements and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for wages and salaries (including non-monetary benefits) and annual leave that is expected to be settled within 12 months from reporting date are included as current liabilities in the Statement of Financial Position. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for sick leave are recognised when the leave is taken and measured at the rates paid or payable. Employee benefit on-costs are included in accrued employee entitlements in the Statement of Financial Position and employee expenses in the Income Statement when the employee entitlements to which they relate are recognised. Long service leave and superannuation Long Service Leave is measured at present value in accordance with AASB 119 Employee Benefits. Liabilities for Long Service Leave are recognised when employees reach a qualifying period of continuous service and are measured at the amount expected to be settled within 12 months from reporting date. Any amount which is expected to be payable after 12 months from reporting date is measured as the present value of expected future payments. Consideration is given to future wage and salary levels, experience of employee departures and periods of service and discounted using the 10-year Australian Government bond rate at reporting date, with terms to maturity that match, as closely as possible, the estimated future cash flows. The Group has recognised employee leave entitlement balances transferred from NSW Treasury, RMS and Transport for NSW. Superannuation is contributed to plans as nominated by the employee. The cost of current employee contributions to employee contribution plans are charged to the Income Statement. Defined benefit schemes Defined benefit plan A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods, that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the market yield on corporate bonds as at 30 June that have maturity dates approximating to the terms of the Group s obligations. The calculation is performed by a qualified actuary using the projected unit credit method. All re-measurements arising from defined benefit plans are recognised in Other Comprehensive Income in the year in which they occur. Where the calculation results in a benefit to the corporation, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan. Past service cost is the increase in the present value of the defined benefit obligation for employee services in prior periods, resulting in the current period from the introduction of, or changes to, post-employment benefits or other long term employee benefits. Past service costs may either be positive (where benefits are introduced or improved) or negative (where existing benefits are reduced). Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. Past service costs and net interest expense or income are recognised in profit or loss. SMC has classified the defined benefits scheme wholly as a non-current liability to reflect the appropriate timing of the obligation. Consequential on-costs Consequential on-costs to employment are recognised separately as liabilities and expenses where the employee benefits to which they relate have been recognised. This includes outstanding amounts of payroll tax, workers compensation insurance premiums and fringe benefits tax. Other provisions Sydney Motorway Corporation Directors Report and Financial Statements 23 Other provisions exist when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

24 Sydney Motorway Corporation Directors Report and Financial Statements 24 Notes to the Financial Statements continued For the year ended 30 June 1. Summary of Significant Accounting Policies continued t) Income tax Income tax The Company and its subsidiaries are exempt from income tax as a State/Territory Body under Division 1AB in Part III of Income Tax Assessment Act 1936 (ITAA 1936). Tax equivalent regimes The Company and its subsidiaries are exempt from the National Tax Equivalent Regimes (NTER) and the State Tax Equivalent Regimes (STER), pursuant to an exemption granted by the NSW Treasurer. u) Goods and Services Tax (GST) Income, expenses and assets are recognised net of the amount of GST, except that the: Amount of GST incurred by the Group as a purchaser that is not recoverable from the Australian Tax Office (ATO) is recognised as part of an asset s cost of acquisition or as part of an item of expense; Receivables and trade payables are stated with the amount of GST included; and Cash flows are included in the Statement of Cash Flows on a gross basis. However, the GST components of cash flows arising from investing and financing activities that are recoverable from, or payable to, the ATO are classified as part of the operating cash flows. v) Financial instruments Financial instruments are contracts that give rise to both a financial asset of one entity and a financial liability (or equity instrument) of another entity. They include cash and cash equivalents, receivables, payables and borrowings. Recognition Financial assets or financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual rights to the associated cash flows expire, are effectively transferred, or are otherwise lost. Financial liabilities are de-recognised when the contractual obligation is discharged, is cancelled or expires. Any applicable amortisation, impairment loss (or reversal), or fair value adjustment is recognised in the Income Statement. On de-recognition, any difference between the carrying amount of financial assets and liabilities and the consideration received or paid is recognised in the Income Statement. Measurement All financial assets are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset. The Group s financial assets include loans and receivables, held to maturity investments or derivatives designated as hedging instruments in an effective hedge. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings and payables, are held net of directly attributable transaction costs. The Group s financial liabilities include trade and other payables, borrowings and derivative financial instruments. After initial recognition, receivables, payables, and loans and borrowings are carried in the Statement of Financial Position at amortised cost and derivative financial instruments are carried at fair value. w) Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement The Group uses derivative financial instruments such as interest rate swaps to hedge its interest rate risk. Such derivative financial instruments are initially recognised at fair value on the date the derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

25 Notes to the Financial Statements continued For the year ended 30 June 1. Summary of Significant Accounting Policies continued w) Derivative financial instruments and hedge accounting continued For the purpose of hedge accounting, hedges are classified as: Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment. At inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for the undertaking of the hedge. The documentation includes the identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the hedging instruments fair value in offsetting the exposure to changes in the hedged item s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial periods for which they have been designated. Hedges that meet the criteria for hedge accounting are accounted for, as described below: Cash flow hedges The effective portion of the gain or loss on the derivative is recognised in Other Comprehensive Income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the Income Statement. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for the hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Income Statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is transferred to the Income Statement. Derivatives that do not qualify for hedge accounting Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the Income Statement. Fair value estimation Sydney Motorway Corporation Directors Report and Financial Statements 25 The fair value of financial instruments traded in active markets is based on quoted market prices at reporting date. The fair value of instruments that are not traded in an active market is determined by the Group using valuation techniques based on assumptions, and market conditions existing at reporting date. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. x) Loans and borrowings Loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, these financial liabilities are stated at amortised cost, with any difference between cost and redemption value being recognised in the profit or loss over the period of the loans and borrowings on an effective interest basis. Interest and other borrowing costs are recognised as expenses in the period in which they are incurred, unless they relate to qualifying assets, in which case they are capitalised as part of the cost of those assets. Capitalisation of borrowing costs is undertaken where a direct relationship can be established between the borrowings and the relevant projects giving rise to qualifying assets. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalised is net of any interest earned on those borrowings. y) Leases Leases where the lessor retains substantially all of the risks and benefits of ownership of the asset are classified as operating leases. Net rental payments for operating leases are recognised as an expense in the Income Statement on a straight-line basis over the period of the lease.

26 Sydney Motorway Corporation Directors Report and Financial Statements 26 Notes to the Financial Statements continued For the year ended 30 June 2. Design and Construction revenue Design and Construction revenue 1,877,126 1,518,917 Total Design and Construction revenue 1,877,126 1,518,917 Construction revenue is recognised during the construction phase of an intangible asset under AASB Interpretation 12 Service Concession Arrangements. 3. External revenue External revenue primarily relates to work funded or reimbursed by RMS for the following WestConnex Stage 1 variation and local area works $70.4m (: $3.5m), WestConnex Stage 2 local area works $73.7m (: nil) and Stage 3 (WestConnex M4-M5 Link) development work (SMC parent) of $57.3m (: $12.1m). 4. Design and Construction costs Design and Construction costs 1,966,918 1,377,769 Pre-development costs 78,380 Total Design and Construction costs 1,966,918 1,456,149 Construction costs cover all contracted Design and Construction (D&C) payments, all pre-construction development costs and any other project costs attributable to the assets under construction. The costs are recognised in accordance with the percentage of completion method. Other costs include all directly attributable costs of the projects, including an appropriate allocation of overheads. 5. Employee related costs Salaries and wages (including annual leave) 22,432 13,917 13,732 9,240 Contractors 25,247 8,342 19,586 7,102 Superannuation 1, , Long service leave Other employee related costs 5,687 3,474 3,774 3,412 Total employee related costs 55,450 27,476 38,309 20,754

27 Sydney Motorway Corporation Directors Report and Financial Statements 27 Notes to the Financial Statements continued For the year ended 30 June 6. Other operating costs Professional services 69,085 44,947 55,142 16,309 IT costs 3,540 2,013 3,540 2,013 Office accommodation and support 2,965 1,880 2,965 1,880 Audit of financial statements Other costs 7,696 4,623 3,990 2,886 Environmental impact survey costs 9,871 9,871 Total other operating costs 83,620 63,527 65,971 33, Finance costs Interest on swaps 31 Other fees 18 Total finance costs Cash and cash equivalents Cash at bank 597, , , ,351 Term deposits 433, , , ,000 Total cash and cash equivalents 1,030, , , ,351 Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents represents fair value. Term deposits are made for varying periods, depending on the immediate cash requirements of the Group, and earn interest at the respective short term deposit rates. The amount shown in cash and cash equivalents includes $173.8m (: $38.5m) not available for general use as at 30 June. This comprises amounts required to be held under maintenance and funding reserves, the use of which is subject to certain conditions.

28 Sydney Motorway Corporation Directors Report and Financial Statements 28 Notes to the Financial Statements continued For the year ended 30 June 9. Trade and other receivables Goods and Services Tax (GST) receivable 36,967 60, ,286 Prepayments 1, Roads and Maritime Services 37,069 10,033 15,129 10,033 Intercompany-WCX M4 Co 1,386 Intercompany-WCX M4 Project Trust 1,422 Intercompany-WCX M5 Project Trust 628 2,460 Accrued interest 1,922 1,023 1, Other Total current trade and other receivables 77,431 72,455 20,272 17, Other assets Deferred debt establishment cost WestConnex Stage 1 2,834 Deferred debt establishment cost WestConnex Stage ,565 Total current other assets 3,669 7,565 Deferred debt establishment cost WestConnex Stage 1 29,095 Deferred debt establishment cost WestConnex Stage 2 18,363 18,685 Total non-current other assets 47,458 18,685 Deferred finance costs relate to establishment costs incurred in connection with obtaining the senior debt facilities. As at 30 June the drawn debt relating to WestConnex Stage 1 was $189.7m and WestConnex Stage 2 was $1,028.7m. The establishment cost and interest expense are being amortised using the effective interest method.

29 Sydney Motorway Corporation Directors Report and Financial Statements 29 Notes to the Financial Statements continued For the year ended 30 June 11. Intangible assets Software Software (WIP) Asset under construction Stage 1 Asset under construction Stage 2 Total Cost 29 1,024, ,402 1,745,596 Accumulated amortisation (11) (11) Net carrying amount at 30 June 18 1,024, ,402 1,745,585 Cost 1,516 2,022,662 1,644,385 3,668,563 Accumulated amortisation Net carrying amount at 30 June 1,516 2,022,662 1,644,385 3,668,563 Movement in intangible assets Balance at 1 July ,688 55, ,014 Additions 1 862, ,103 1,528,581 Amortisation (10) (10) Net carrying amount at 30 June 18 1,024, ,402 1,745,585 Additions 1, , ,983 1,922,996 Disposals (15) (15) Amortisation (3) (3) Net carrying amount at 30 June 1,516 2,022,662 1,644,385 3,668,563 Note: During the year, borrowing costs of $48.9m (: $7.3m) were capitalised to intangible assets. Software Software (WIP) Asset under construction Stage 1 Asset under construction Stage 2 Total Cost Accumulated amortisation (11) (11) Net carrying amount at 30 June Cost 1,516 1,516 Accumulated amortisation Net carrying amount at 30 June 1,516 1,516 Movement in intangible assets Balance at 1 July Additions 1 1 Amortisation (10) (10) Net carrying amount at 30 June Additions 1,516 1,516 Disposals (15) (15) Amortisation (3) (3) Net carrying amount at 30 June 1,516 1,516

30 Sydney Motorway Corporation Directors Report and Financial Statements 30 Notes to the Financial Statements continued For the year ended 30 June 11. Intangible assets continued Concession assets Service Concession Arrangements have been accounted for in accordance with AASB Interpretation 12 and as such concession assets have been classified as Intangible Assets. As at 30 June the Group is responsible for the WestConnex Stage 1 project (the scope of which includes widening of the existing M4 motorway and the construction of M4 East) and WestConnex Stage 2 project (the scope of which includes construction and maintenance services of the New M5 motorway in accordance with the Project Deed). The concession for WestConnex Stage 1 of the project is held by WCX M4 Group entities which grants the entities the right to design, build, operate and maintain the motorway for the concession period ending in The concession for WestConnex Stage 2 of the project is held by WCX M5 Group entities which grants the entities the right to design, build, operate and maintain the motorway for the concession period ending in Concession assets under construction Concession assets under construction represent the Group s right to operate roads under Service Concession Arrangements. All concession assets are classified as intangible assets and once completed and ready for use, will be amortised on a straight-line basis over the term of the right to operate the asset. At the end of the concession period, all concession assets are to be returned to NSW Government (RMS). Impairment testing of motorway concession assets under construction During the construction phase, the Group tests its intangible assets annually by comparing its carrying value with its recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets of groups of assets (CGUs). Where the carrying amount of an intangible asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount, through the Income Statement. The reduction in the carrying amount is recognised as an expense in the Income Statement in the reporting period during which the impairment occurs. The recoverable amount of the Group s CGUs have been determined based on value-in-use calculations. The following paragraph and table sets out the key assumptions on which management has based its cash flow projections for the purposes of impairment testing. The calculations use cash flow projections based on the approved investment cases. A long term annual revenue growth rate of 4% until 2039 and 2.5% from 2040 onwards (: 2.5%), a long term average weekly earnings (LTAWE) annual growth rate of 3.5% (: 3.5%) have been used in the calculations. Operating and maintenance costs are escalated in line with a combination of the CPI and LTAWE annual growth rates. The Group has applied post-tax discount rates to discount the forecast future post tax cash flows.

31 11. Intangible assets continued Sydney Motorway Corporation Directors Report and Financial Statements 31 Notes to the Financial Statements continued For the year ended 30 June The Board has determined the values assigned to each of the above key assumptions as follows: Assumption Traffic volume Long term CPI (% annual growth) Long term average weekly earnings (% of annual growth) Post-tax discount rate Pre-tax nominal discount rate Approach used to determine values Based on the project entities' long term traffic forecasting models Based on independent external forecasts Based on independent external forecasts Discount rates consider specific risks relating to the CGU. In performing the value-in-use calculations for each CGU, the Group has applied post-tax discount rates to discount forecast future attributable post tax cash flows. The equivalent pre-tax rates are disclosed below. WCX M4 Group entities 9.6% % (: 9.8% %) WCX M5 Group entities 9.0% % (: 9.3% %) Key estimates The Group makes certain assumptions in calculating the recoverable amount of its intangible assets. These include assumptions around expected traffic flows and forecast operational costs. In performing the value-in-use calculation, the Group has applied the assumptions noted above. The Board does not consider that any reasonable possible change in the assumptions will result in the carrying value of a CGU exceeding its recoverable amount as at 30 June. 12. Property, plant and equipment Computer hardware Leasehold improvements Total Cost 132 3,374 3,506 Accumulated depreciation (54) (263) (317) Net carrying amount at 30 June 78 3,111 3,189 Cost 3,847 3,847 Accumulated depreciation (939) (939) Net carrying amount at 30 June 2,908 2,908 Movement in property, plant and equipment Balance at 1 July Additions 2 3,374 3,376 Depreciation expense (43) (263) (306) Net carrying amount at 30 June 78 3,111 3,189 Additions Disposals (63) (63) Depreciation expense (15) (692) (707) Net carrying amount at 30 June 2,908 2,908

32 Sydney Motorway Corporation Directors Report and Financial Statements 32 Notes to the Financial Statements continued For the year ended 30 June 12. Property, plant and equipment continued Computer hardware Leasehold improvements Total Cost 132 3,161 3,293 Accumulated depreciation (54) (263) (317) Net carrying amount at 30 June 78 2,898 2,976 Cost 3,609 3,609 Accumulated depreciation (906) (906) Net carrying amount at 30 June 2,703 2,703 Movement in property, plant and equipment Balance at 1 July Additions 2 3,161 3,163 Depreciation expense (43) (263) (306) Net carrying amount at 30 June 78 2,898 2,976 Additions Disposals (63) (63) Depreciation expense (15) (643) (658) Net carrying amount at 30 June 2,703 2, Investment in subsidiaries The principal subsidiaries of the (with 100% ownership) during the year were: Name of Entity Country of establishment Principal activities WCX M4 Asset Hold Trust Australia Delivery of the WestConnex Stage 1 motorway 1,928,731 WCX M5 Asset Hold Trust Australia Delivery of the WestConnex Stage 2 motorway 840, ,300 WCX M4 Project Hold Trust Australia Delivery of the WestConnex Stage 1 motorway 9,753 WCX M5 Project Hold Trust Australia Delivery of the WestConnex Stage 2 motorway 1 1 WCX M4 Pty Limited 1 Australia Delivery of the WestConnex Stage 1 motorway 1,057,997 WCX M4 AHT Pty Ltd 2 Australia Trustee WCX M4 PHT Pty Ltd 2 Australia Trustee WCX M5 AHT Pty Ltd 2 Australia Trustee WCX M5 PHT Pty Ltd 2 Australia Trustee Total investments in subsidiaries 2,778,785 1,898,298 1 As part of the restructure of WCX M4 Co, WCX M4 Co is now owned by WCX M4 Project Trust. 2 The Trustee Companies have been established with a share capital of $10 each.

33 Sydney Motorway Corporation Directors Report and Financial Statements 33 Notes to the Financial Statements continued For the year ended 30 June 14. Trade and other payables Design, construction and development costs 203, ,166 Unearned revenue 59,580 6,500 Other project accruals 7,304 11,133 7,304 11,133 Trade creditors 2,764 2,147 Inter-entity payables 541 Accrued salaries, wages and on-costs Accrued finance costs 4, Other costs 11,270 6,357 7,055 5,911 Total current trade and other payables 286, ,414 14,913 20,255 Due to the short term nature of current trade and other payables, their carrying value is deemed to approximate their fair value. 15. Derivative financial liabilities Cash flow hedge 18,836 Total current derivative financial liabilities 18,836 Cash flow hedge 70, ,016 Total non-current derivative financial liabilities 70, ,016 The net derivative financial position of the Group of $89.3m comprises of $18.8m of current and $70.4m of non-current derivative financial liabilities. Part of the Group s derivative financial instruments are considered ineffective hedges for accounting purposes as per AASB 139 Financial Instruments and therefore an amount of $6.7m has been recorded in the Income Statement as an expense. The effective portion of $82.6m (: $121m) has been recorded as cash flow hedge reserve in the Statement of Financial Position, resulting in $38.4m movement in cash flow hedge reserve in the current reporting period.

34 Sydney Motorway Corporation Directors Report and Financial Statements 34 Notes to the Financial Statements continued For the year ended 30 June 16. Provisions Employee benefits and related on-costs Employee benefits annual leave 1, Employee benefits long service leave Employee benefits other 4,268 2,424 2,677 1,513 Total current provisions 6,588 3,773 4,003 2,201 Employee benefits and related on-costs Employee benefits long service leave Employee benefits other 2, , Total non-current provisions 3,401 1,484 2, Total employee benefits and related on-costs Provisions current 6,588 3,773 4,003 2,201 Provisions non-current 3,401 1,484 2, Accrued salaries, wages and on-costs (note 14) Total employee benefits and related on-costs 10,716 5,780 6,589 3,677 1 Included in this amount is $587k (: $93k) which is not expected to be settled within 12 months of reporting date.

35 Sydney Motorway Corporation Directors Report and Financial Statements 35 Notes to the Financial Statements continued For the year ended 30 June 17. Borrowings Non-current borrowings Secured M4 Senior debt facility 189,732 M5 Senior debt facility 402,837 M5 Commonwealth subordinated debt 625,869 Other Fair value of debt 1 (112,622) Prepaid finance costs (10,316) Total non-current borrowings 1,095,500 1 As per the requirements of AASB 139 Financial Instruments, the fair value of the M5 Commonwealth Subordinated debt at initial recognition has been calculated based on prevailing market interest rate. An amount of $118.2m has been recognised as a reduction in the debt value with a deferred income recognised for the same amount. An interest charge of $5.6m has also been capitalised to intangible assets to reflect the amoritisation of fair value of debt in respect of the current financial year. Borrowings - facility details Facility Drawn Available Secured M4 Senior debt facility 1,724, ,732 1,534,649 M5 Senior debt facility 1,500, ,837 1,097,163 M5 Commonwealth subordinated debt 2,784, ,869 2,158,346 Total facilities 6,008,596 1,218,438 4,790,158 Borrowings - facility details Facility Drawn Available Secured M5 Senior debt facility 1,500,000 1,500,000 M5 Commonwealth subordinated debt 2,784,215 2,784,215 Total facilities 4,284,215 4,284,215 The above borrowings are secured by fixed and floating charges over certain of the Group s subsidiary assets and future cash flows. 18. Defined benefit obligation Defined benefit obligation Defined benefit obligation 1,236 1,236 Less: fair value of plan assets (868) (868) Net defined benefit plan obligation Refer to note 1 (s) for additional information.

36 Sydney Motorway Corporation Directors Report and Financial Statements 36 Notes to the Financial Statements continued For the year ended 30 June 19. Issued capital and (shares) No. of shares 000 s No. of shares 000 s Value Value Fully paid shares Opening balance 1,565, ,000 1,565, ,000 Issued 625, ,000 Partially paid shares Opening balance 1,822, ,157 Partly paid 1,822, , ,157 Balance at reporting date 3,387,000 3,387,000 3,301,240 2,386,157 Sydney Motorway Corporation Pty Limited was established as a Company on 28 August Shares are held by the following NSW Ministers as voting shareholders: 1. The Hon. Dominic Perrottet, MP, Treasurer, and Minister for Industrial Relations 2. The Hon. Victor Dominello, MP, Minister for Finance, Services and Property 3. The Hon. Stuart Ayres, MP, Minister for Western Sydney, Minister for WestConnex, and Minister for Sport. 20. Reserves Interest rate swap cash flow hedge (82,594) (121,016) Defined benefit reserve (368) (368) Total reserves (82,962) (121,016) (368) The hedge reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedging instruments related to hedged transactions. 21. Financial instruments a) Capital Management The Group s overall risk management program focuses on ensuring compliance with the Group s constitution, Trust Deeds and SMC's Treasury Policy in relation to interest rate risk, counterparty risk, investments and liquidity. Under these guidelines, capital and financial risk management is carried out by the Group through the SMC Treasury function. The Group s capital management strategy is reviewed and revised where necessary by SMC s Treasury function and presented to the Board for approval. The Group s objective when managing its capital requirements is to maintain an appropriate capital structure, while ensuring compliance with the capital requirements of the Group's Constitution, Trust Deeds, regulatory authorities, policies and debt facilities. There were no breaches of the financial covenants of any debt facilities during the period.

37 21. Financial instruments continued b) Overview Notes to the Financial Statements continued For the year ended 30 June Financial assets and liabilities comprise cash, trade debtors, trade creditors, loans and borrowings, derivatives and short term deposits. SMC's Treasury policy prohibits entering into or trading financial instruments for speculative purposes. c) Fair values The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. A number of the Group s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When measuring fair value, the valuation technique used maximises the use of relevant observable inputs and minimises the use of unobservable inputs. Fair value is categorised based on the lowest level of input that is significant to the fair value measurement as a whole: Level 1 quoted prices in active markets for identical assets/liabilities that the entity can access at the measurement date. Level 2 inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly. Level 3 inputs that are not based on observable market data (unobservable inputs). Fair value is the expected price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: In the principal market for the asset or liability; or Sydney Motorway Corporation Directors Report and Financial Statements 37 In the absence of a principal market, a market that closely resembles the underlying asset or liability. The principal or referenced market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that the market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest. Due to the short term nature of the current receivables, their carrying value is assumed to approximate their fair value and based on credit history it is expected that the receivables that are neither past due nor impaired will be received when due. The fair value of interest rate swaps is calculated using the present value of estimated future cash flows, based on the term to maturity of each contract, using market interest rate for a similar instrument at the reporting date. The input used to fair value these instruments are therefore market observable inputs (Level 2). The carrying values of the financial assets and liabilities approximate fair value. The carrying amounts shown in the Statement of Financial Position, are presented as follows: Note Financial assets Cash and cash equivalents 8 1,030, , , ,351 Trade and other receivables 9 39,310 11,165 19,013 14,886 Financial liabilities Trade and other payables , ,914 14,913 20,255 Derivative financial liabilities current 15 18,836 Derivative financial liabilities non-current 15 70, ,016 Borrowings 17 1,105,816 Note: Financial assets and liabilities exclude Goods and Services Tax, unearned revenue and prepayments which are not within the scope of AASB 7.

38 Sydney Motorway Corporation Directors Report and Financial Statements 38 Notes to the Financial Statements continued For the year ended 30 June 21. Financial instruments continued d) Financial risk The operational activities of the Group expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including interest rate risk). SMC s Treasury Policy focuses on prudent risk management and seeks to minimise potential adverse effects from financial market price movements. Methods used to measure risk include sensitivity analysis, in the case of interest rate risk and cash flow forecasting for liquidity risk. SMC's Treasury Policy is within the broad framework of the Public Authorities (Financial Arrangements) Act 1987 (PAFA) Act and the Corporations Act e) Market risk Market risk relates to fluctuations in the fair value of future cash flows of financial instruments as a result of changes in market prices. This applies to the Group s interest rate risk. The Group is not exposed to foreign exchange risk. Interest rate risk Interest rate risk refers to the market value of financial instruments and cash flows due to changes in interest rates. The Group s main interest rate risk relates to cash at bank, investments and borrowings. The Group manages its interest rate exposures according to SMC s Treasury Policy by entering into derivative instruments, such as interest rate swaps. Interest rate swaps On 23 November, the Group entered into new interest rate swap agreements with a notional amount of $1.7bn. The Group s policy is to manage its interest rate risk by entering into interest rate swap contracts in respect of its floating rate debt. The notional amount of interest rate swap derivative contracts that were in place at 30 June was $3.2bn (: $1.5bn). All outstanding derivative interest rate swap contracts have been stated at their fair value at the reporting date. The following table demonstrates the sensitivity to a reasonably possible change in interest rate on the Group s financial assets and financial liabilities. The Commonwealth subordinated debt is at a fixed interest rate and as such excluded from the interest rate sensitivity analysis. With all other variables held constant, the Group s profit is affected as follows: Change as a result of 1% increase in interest rate Change as a result of 1% reduction in interest rate Carrying amount Profit Equity Profit Equity Financial assets Cash at bank 597,813 5,978 5,978 (5,978) (5,978) Short term investments 433,000 4,330 4,330 (4,330) (4,330) Financial liabilities Senior debt facilities 592,569 (5,926) (5,926) 5,926 5,926 Interest rate swaps 1 636,074 6,361 6,361 (6,361) (6,361) Net exposure to interest risk 10,743 10,743 (10,743) (10,743) Financial assets Cash at bank 452,069 4,521 4,521 (4,521) (4,521) Short term investments 410,000 4,100 4,100 (4,100) (4,100) Financial liabilities Senior debt facilities Interest rate swaps Net exposure to interest risk 8,621 8,621 (8,621) (8,621) 1 The carrying amount of interest rate swaps represents notional drawdown.

39 21. Financial instruments continued e) Market risk continued Sydney Motorway Corporation Directors Report and Financial Statements 39 Notes to the Financial Statements continued For the year ended 30 June Change as a result of 1% increase in interest rate Change as a result of 1% reduction in interest rate Carrying amount Profit Equity Profit Equity Financial assets Cash at bank 110,710 1,107 1,107 (1,107) (1,107) Short term investments 433,000 4,330 4,330 (4,330) (4,330) Net exposure to interest risk 5,437 5,437 (5,437) (5,437) Financial assets Cash at bank 110,351 1,104 1,104 (1,104) (1,104) Short term investments 410,000 4,100 4,100 (4,100) (4,100) Net exposure to interest risk 5,204 5,204 (5,204) (5,204) f) Credit risk Credit risk represents the expected loss that would be recognised if counterparties failed to perform as contracted. Market prices generally incorporate credit assessments into valuations and risk of loss is implicitly provided for in the carrying value of financial assets and liabilities when valued at fair value. The maximum exposure to credit risk at reporting date is therefore the carrying amount of financial assets recognised in the Statement of Financial Position. In managing credit risk of cash, cash equivalents, insurance, guarantees and investments in marketable securities, the Group only deals with creditworthy counterparties defined in SMC's Treasury Policy as a means of minimising credit risk. The Group s maximum exposure to credit risk is the carrying amount of all cash assets, term deposits, trade and other receivables and derivative asset balances. There are no financial assets past due or impaired. g) Liquidity risk Liquidity risk refers to the Group being unable to meet its payment obligations when they fall due. The Group manages risk by maintaining adequate reserves as defined by SMC s Treasury Policy, banking facilities and continuously monitoring forecast cash flows. During the period, there have been no defaults or breaches on any amounts payable. The Group s exposure to liquidity risk is deemed insignificant based on current period data and assessment of risk. Liabilities are recognised for amounts due to be paid in the future for goods and services received, whether or not invoiced. If trade terms are not specified, payment is generally made no later than the end of the month following the month in which an invoice or a statement is received. In November 2015, WCX M5 Finco entered into a $1.5bn senior debt facility and a $2bn Commonwealth subordinated facility. The Company entered into on-loan agreements with the parent, WCX M5 Asset Trust, on substantially the same terms with those issued under the senior debt facility and Commonwealth subordinated facility. As at 30 June, WCX M5 Finco has drawn down $402.8m on the senior debt facility and $625.9m on the Commonwealth subordinated facility. In November, WCX M4 Finco entered into a $1.7bn senior debt facility. The Company entered into on-loan agreements with the parent, WCX M4 Asset Trust, on substantially the same terms with those issued under the senior debt facility. As at 30 June, WCX M4 Finco has drawn down $189.7m on this loan.

40 Sydney Motorway Corporation Directors Report and Financial Statements 40 Notes to the Financial Statements continued For the year ended 30 June 21. Financial instruments continued g) Liquidity risk continued The following table(s) provide maturity profiles of the Group's financial liabilities. Within 1 year 1-5 years > 5 years Total Non-derivatives Borrowings 1 158,116 1,601,982 1,760,098 Trade and other payables 2 227, ,143 Derivatives Interest rate swaps 19,909 79,556 (5,808) 93,657 1 The above amount does not equal the carrying value as this amount is based on undiscounted cash flows and includes interest. 2 Financial assets and liabilities exclude Goods and Services Tax, unearned revenue and prepayments which are not within the scope of AASB 7. Within 1 year $' years $'000 > 5 years $'000 Total $'000 Non-derivatives Trade and other payables 1 288, ,914 Derivatives Interest rate swaps 2 4,290 76,103 71, ,791 1 Financial assets and liabilities exclude Goods and Services Tax, unearned revenue and prepayments which are not within the scope of AASB 7. 2 The above amount does not equal the carrying value as this amount is based on undiscounted cash flows whereas the carrying value is based on discounted cash flows. Within 1 year 1-5 years > 5 years Total Non-derivatives Trade and other payables 1 14,913 14,913 1 Financial assets and liabilities exclude Goods and Services Tax, unearned revenue and prepayments which are not within the scope of AASB 7. Within 1 year 1-5 years > 5 years Total Non-derivatives Trade and other payables 1 20,255 20,255 1 Financial assets and liabilities exclude Goods and Services Tax, unearned revenue and prepayments which are not within the scope of AASB 7.

41 Sydney Motorway Corporation Directors Report and Financial Statements 41 Notes to the Financial Statements continued For the year ended 30 June 22. Related party disclosures The Group has related party relationships with key management personnel (refer (a) below) and their related parties (refer (b) below). a) Key management Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly. This comprises all directors, whether executive or non-executive, and senior executives who lead, direct and control functions of the parent entity or the Group. Key management personnel compensation is as follows: Short term employee benefits 5,930 5,476 3,844 3,800 Post-employment benefits Other long term benefits Total compensation 6,158 5,643 3,984 3,923 Senior executives 5,621 5,151 3,447 3,431 Directors non-executive Total compensation 6,158 5,643 3,984 3,923 The above table includes all amounts paid and payable for employee benefits during the reporting period. The compensation paid to senior executives who also serve as executive directors has been included in the senior executive category as they are not compensated separately for their director services. b) Other transactions with key management personnel and related entities Roads and Maritime Services (RMS) RMS is a NSW statutory authority established in 2011 under the Transport Legislation Amendment Act RMS is responsible for implementing strategy and delivering essential frontline services to people who use roads, harbours and waterways. RMS is the custodian of Sydney s roads and motorway network and its activities are overseen by the NSW Minister for Roads, Maritime and Freight. RMS has granted the Group the right to undertake design and construction work and operation and maintenance activities of the WestConnex Stage 1 and Stage 2 projects. During the year a number of transactions have taken place between RMS and the Group. Significant transactions relate to additional variation works requested by RMS to be performed by contractors through SMC. Under a separate Memorandum of Understanding, RMS has engaged SMC as its development partner and agent for the Stage 3 (WestConnex M4-M5 Link). During the financial year, a total of $203.9m was recognised as revenue by the Group in relation to transactions with RMS. During the financial year, the Group also incurred a cost of $1.2m in relation to transactions with RMS. Directors Some of the Directors of the Company were also Directors of other Companies. A declaration of Directors conflicts of interest is provided at the start of each Board or Committee meeting. During the year, the Company has not been a party to any material transaction, or proposed transactions, in which any member of the key management personnel (including directors) had or was to have a direct or indirect material interest. Inter-entity related transactions Management Services Agreement (MSA) between SMC and WCX M5 Project Trust A Management Service Agreement (MSA) exists between SMC and WCX M5 Project Trust for the purpose of reimbursing SMC for corporate services and management costs incurred by SMC on behalf of the New M5 project and payable by WCX M5 Project Trust. These include corporate support services, general management services, Environmental Impact Statement (EIS) costs and other specific reimbursable costs. During the financial year, a total of $6.9m (: $19.3m) was charged by the company to WCX M5 Project Trust.

42 Sydney Motorway Corporation Directors Report and Financial Statements 42 Notes to the Financial Statements continued For the year ended 30 June 22. Related party disclosures continued b) Other transactions with key management personnel and related entities continued Intra Group Management Services Agreement (IG-MSA) between WCX M5 Project Trust, WCX M5 Asset Trust and WCX M5 Finco An IG-MSA exists between WCX M5 Project Trust, WCX M5 Asset Trust and WCX M5 Finco for the purpose of reimbursing WCX M5 Project Trust for corporate support services and management costs incurred on behalf of WCX M5 Asset Trust and WCX M5 Finco. These include corporate support services, general management services, EIS costs and other specific reimbursable costs. During the financial year, a total of $4.1m (: $14.7m) and $0.9m (: $1.5m) was charged by WCX M5 Project Trust to WCX M5 Asset Trust and WCX M5 Finco respectively. Design, Construction and Asset Renewal Management Services Agreement (DCAR-MSA) between WCX M5 Project Trust and WCX M5 Asset Trust A DCAR-MSA exists between WCX M5 Project Trust and WCX M5 Asset Trust for all services necessary to allow WCX M5 Asset Trustee to manage the discharge of its design, construction and asset renewal obligation under the project documents and any related contractual arrangements and any other services directed by WCX M5 Asset Trust. During the financial year, a total of $5.9m (: $3.6m) was charged by WCX M5 Project Trust to WCX M5 Asset Trust in relation to DCAR-MSA costs. Corporate recharges between SMC and WCX M4 Co Corporate services and management costs were charged by the parent entity to WCX M4 Co in line with an agreed budget for the period to November, prior to the restructure of WCX M4 Co. During the financial year, a total of $4.5m (: $11.4m) was charged by SMC to WCX M4 Co. Management Services Agreement (MSA) between SMC and WCX M4 Project Trust Following the re-structure of WCX M4 Co, new management agreements were entered into by the newly established Trust entities. A Management Service Agreement (MSA) exists between SMC and WCX M4 Project Trust for the purpose of reimbursing SMC for corporate services and management costs incurred by SMC on behalf of the M4 projects - M4 Widening and M4 East, and payable by WCX M4 Project Trust. These include corporate support services, general management services, Environmental Impact Statement (EIS) costs and other specific reimbursable costs. During the period from November to the end of the financial year, a total of $9.6m (: nil) was charged by the company to WCX M4 Project Trust. Intra Group Management Services Agreement (IG-MSA) between WCX M4 Project Trust, WCX M4 Asset Trust and WCX M4 Finco Following the re-structure of WCX M4 Co, new management agreements were entered into by the newly established Trust entities. An IG-MSA was entered between WCX M4 Project Trust, WCX M4 Asset Trust and WCX M4 Finco for the purpose of reimbursing WCX M4 Project Trust for corporate support services and management costs incurred on behalf of WCX M4 Asset Trust and WCX M4 Finco. These include corporate support services, general management services, EIS costs and other specific reimbursable costs. During the period from November to the end of the financial year, a total of $5.8m and $0.6m was charged by WCX M4 Project Trust to WCX M4 Asset Trust and WCX M4 Finco respectively (: nil). Design, Construction and Asset Renewal Management Services Agreement (DCAR-MSA) between WCX M4 Project Trust and WCX M4 Asset Trust A DCAR-MSA agreement exists between WCX M4 Project Trust and WCX M4 Asset Trust for all services necessary to allow WCX M4 Asset Trustee to manage the discharge of its design, construction and asset renewal obligation under the project documents and any related contractual arrangements and any other services directed by WCX M4 Asset Trust. During the financial period, a total of $16.1m (: nil) was charged by WCX M4 Project Trust to WCX M4 Asset Trust in relation to DCAR-MSA costs.

43 23. Operating lease commitments Non-cancellable operating lease rentals are payable as follows: Sydney Motorway Corporation Directors Report and Financial Statements 43 Notes to the Financial Statements continued For the year ended 30 June Within 1 year 2,020 2,261 1,804 2,043 Later than 1 year but no later than 5 years 4,519 8,208 4,351 7,807 Later than 5 years Total operating lease commitments 6,539 10,469 6,155 9,850 SMC and its controlled subsidiaries lease properties under non-cancellable operating leases expiring between 4 and 5 years. 24. Capital commitments The Group has signed contracts for project works relating to WestConnex Stage 1 and WestConnex Stage 2. Future minimum payments under non-cancellable contracts but not recognised as liabilities are as follows: Within 1 year 2,416,910 2,110,394 Later than 1 year but no later than 5 years 1,242,961 3,539,925 Later than 5 years 66,676 Total capital commitments 3,659,871 5,716, Contingencies As at 30 June, D&C contractor claims have been received with respect to WCX M5 and WCX M4 Group entities. This includes a claim for unforeseen planning conditions and planning approval delays in relation to the Stage 2 motorway project. The validity of these claims is currently being assessed and the outcome of these cannot be foreseen at present and cannot be reliably measured. RMS has been notified of claims where potential upstream claims exist in accordance with requirements of the Project Deeds. Finalisation of these matters is subject to further discussion and negotiation.

44 Sydney Motorway Corporation Directors Report and Financial Statements 44 Notes to the Financial Statements continued For the year ended 30 June 26. Reconciliation of (loss)/profit for the year to cash flows from operating activities (Loss)/Profit for the year (10,261) 12,517 (4,826) 19,441 Adjustments for non-cash items Depreciation and amortisation Other gain (3,597) (10,000) Dividend received (693) Loss on sale of property, plant and equipment Defined benefit (368) (368) Swap ineffectiveness 6,682 (Increase)/decrease in assets Decrease/(increase) in receivables 50,247 (55,290) (2,726) (8,564) (Decrease)/increase in liabilities Increase/(decrease) in payables 148,922 33,759 5,338 8,273 (Decrease)/increase in provisions (1,902) 5,134 (3,787) 3,031 Net cash flows from/(used in) operating activities 194,093 (3,564) (9,935) 12, Subsequent events On 4 July, the WCX M4 Group entities completed the widened M4 motorway project, with the motorway opening to traffic in July and tolling commencing on 15 August. In August, the Shareholders announced that the sale of the Group will include a divestment of 51% of SMC and its subsidiaries. There have been no other matters or circumstances occurring subsequent to the end of the financial year, that have significantly affected, or may significantly effect, the operations, or the state of affairs of the Group in future years except those mentioned in the review and results of operations of this report. 28. Auditor s remuneration Statutory audit of financial statements Total amounts paid and payable to auditor SMC, as the parent of the WCX M4 and WCX M5 Group entities pays the audit fees on behalf of those entities. The increase in fees during the year reflects primarily the first year audit of the re-structured WCX M4 Group entities.

45 Sydney Motorway Corporation Directors Report and Financial Statements 45 Directors Declaration 1. In the opinion of the Directors the financial statements and notes set out on pages 12 to 44: i. Give a true and fair view of the financial position of the Company and its controlled entities as at 30 June and of its performance for the financial year ended on that date; and ii. Comply with Australian Accounting Standards, the Corporations Act 2001, the provisions of the Public Finance and Audit Act 1983, the Public Finance and Audit Regulation 2015, International Financial Reporting Standards as disclosed in Note 1, other mandatory professional reporting requirements and the NSW Treasurer's Directions. 2. There are reasonable grounds to believe that the Company and its controlled entities will be able to pay its debts as and when they become due and payable. This declaration has been made pursuant to S295(5) of the Corporations Act 2001 in accordance with a resolution of the Board of Directors dated 21 September. Signed on behalf of the Board: Name: Dennis Cliche Name: John Cooper Director Director Sydney, 21 September Sydney, 21 September

46 Sydney Motorway Corporation Directors Report and Financial Statements 46 Independent Auditor s Report INDEPENDENT AUDITOR S REPORT Sydney Motorway Corporation Pty Limited To Members of the New South Wales Parliament and Members of Sydney Motorway Corporation Pty Limited Opinion I have audited the accompanying financial statements of Sydney Motorway Corporation Pty Limited (the Company), which comprise the statement of financial position as at 30 June, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors declaration of the Company and the consolidated entity. The consolidated entity comprises the Company and the entities it controlled at the year s end or from time to time during the financial year. In my opinion the financial statements: are in accordance with the Corporations Act 2001, including: - giving a true and fair view of the Company s and consolidated entity s financial position as at 30 June and of their performance for the year ended on that date - complying with Australian Accounting Standards and the Corporations Regulations 2001 are in accordance with section 45E of the Public Finance and Audit Act 1983 (PF&A Act) and the Public Finance and Audit Regulation 2015 comply with International Financial Reporting Standards as disclosed in Note 1(c). My opinion should be read in conjunction with the rest of this report. Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the standards are described in the Auditor s Responsibilities for the Audit of the Financial Statements' section of my report. I am independent of the Company and the consolidated entity in accordance with the requirements of the: Australian Auditing Standards Corporations Act 2001 Accounting Professional and Ethical Standards Board s APES 110 Code of Ethics for Professional Accountants (APES 110). I have also fulfilled my other ethical responsibilities in accordance with APES 110. Parliament further promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by: providing that only Parliament, and not the executive government, can remove an Auditor- General mandating the Auditor-General as auditor of public sector agencies precluding the Auditor-General from providing non-audit services.