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1 Annual Report 2011

2 BrisConnections Investment Trust ARSN and BrisConnections Holding Trust ARSN Annual Report For the year ended 30 June 2011 BrisConnections operates under a Concession Deed with the State of Queensland to fi nance, design, construct, commission, operate and maintain Airportlink as a toll road until BrisConnections is made up of two Australian unit trusts, BrisConnections Holding Trust and BrisConnections Investment Trust (Trusts). Units in the Trusts are stapled together and traded as one on the ASX. The Trusts are managed by BrisConnections Management Company Limited (BMCL), a whollyowned subsidiary of BrisConnections Holding Trust, whose only function is to act as the responsible entity of the Trusts. BMCL has delegated management of the day-today business affairs of the Trusts to BrisConnections Operations Pty Limited (BCOps), which is a wholly- owned subsidiary of BrisConnections Holdings 2 Pty Limited. BMCL retains responsibility for the corporate governance of the Trusts and the protection of unitholders interests. BMCL, therefore, monitors BCOps compliance with its regulatory and contractual obligations. The Trusts were registered as managed investment schemes by ASIC on 29 May On 30 July 2008, the BrisConnections Group was listed on the ASX and it commenced trading on 31 July This is the third annual fi nancial report for the Group and covers the reporting period 1 July 2010 to 30 June The fi nancial statements have been prepared by consolidating the fi nancial statements of all the entities that comprise the BrisConnections Group.

3 Contents HIGHLIGHTS 5 MESSAGE FROM THE CHAIRMAN 7 MANAGING DIRECTOR S OVERVIEW 9 FINANCIAL REPORTS 14 } Corporate Governance Statement 15 } Directors Report 23 } Auditor s Independence Declaration 30 } Financial Statements 31 Consolidated Statement of fi nancial position 31 Consolidated Statement of comprehensive income 32 Statement in changes of equity 33 Consolidated statement of cash fl ows 35 Notes to the fi nancial statements 36 Directors Declaration 77 } Independent Audit Report 78 RISK REPORT 81 SUSTAINABILITY REPORT 83 ADDITIONAL INVESTOR INFORMATION 84 CORPORATE DIRECTORY 89 Annual Report

4 Chermside 2011 Annual Report North western suburbs GYMPIE RD This 2011 Annual Report complies with reporting requirements and contains statutory fi nancial statements. It contains reports from the Chairman and Managing Director on BrisConnections business and operational highlights, BrisConnections Corporate Governance Statement, the Directors Report and full fi nancial statements. This document is not a concise report prepared under section 314 (2) of the Corporations Act. BrisConnections has not prepared a concise report for the 2011 fi nancial year. STAFFORD RD KEDRON Pursuant to recent changes to the Corporations Act, a printed copy of the Annual Report will no longer be mailed to members provided it is available electronically on the BrisConnections website. To obtain a copy of the Annual Report, simply go to com.au to view and download the document. If you prefer a printed copy, please contact BrisConnections at investors@brisconnections.com.au In the 2011 Annual Report, the expression BrisConnections refers to BrisConnections Unit Trusts and its controlled entities. Reference in this Report to a year is to the period from 1 July 2010 to 30 June 2011 unless otherwise stated. All fi gures are expressed in Australian currency unless otherwise stated. Revenues and expenses are recognised net of the amount of Goods and Services Tax. BOWEN HILLS CBD (BOWEN BRIDGE RD) INNER CITY BYPASS (M3) CLEM7 (M7) CAMPBELL ST Toowoomba Ipswich Western suburbs Brisbane City Gold Coast 2 Annual Report 2010

5 Northern suburbs Sunshine Coast SANDGATE ROAD TOOMBUL Brisbane Airport Australia TradeCoast LUTWYCHE Clayfield Airportlink is a critical piece of new road infrastructure for the northside of Brisbane. It will revolutionise the way in which motorists connect with the northern suburbs, Brisbane Airport, Australia TradeCoast, the city, Ipswich and the southern suburbs. Avoids up to 18 sets of traffi c lights Saves up to 20 minutes in travel time Connects the two largest economic zones in Queensland Annual Report

6 artist impression Bowen Hills At Bowen Hills, Airportlink connects with the Inner City Bypass, CLEM7, Campbell Street and Bowen Bridge Road. It provides direct links to the city, western suburbs, South Brisbane and Ipswich. Airportlink motorists will save up to 15 minutes in travel time between the city and Kedron. Airportlink will bring about a Road Revolution by improving the economic competitiveness of Brisbane as a business centre and many commercial enterprises across all of South East Queensland. Toowoomba CBD (BOWEN BRIDGE RD) Ipswich INNER CITY BYPASS (M3) Western suburbs CLEM7 (M7) CAMPBELL ST Gold Coast Brisbane City 4 Annual Report 2010

7 2011 highlights August 2010 Airportlink 50% complete February 2011 Airport Roundabout Upgrade complete January 2011 Permanent ramps open to traffic at Bowen Hills May 2011 Website launch April 2011 Tolling factory acceptance testing undertaken May 2011 Operations systems and processes underway June 2011 Airportlink 84% complete June 2011 One year to opening Airportlink Annual Report

8 artist impression Kedron At Kedron, Airportlink connects the northern arterials of Gympie Road and Stafford Road, Chermside Shopping Centre and the north western suburbs. Airportlink also provides a link from Lutwyche Road to Brisbane Airport. North western suburbs Chermside Motorists travelling from Kedron to the airport will save more than ten minutes travel time in peak hour. Airportlink will improve travel fl ows and reduce rat-running in the northern suburbs of Brisbane. GYMPIE RD STAFFORD RD Brisbane City, south western suburbs & Gold Coast Sunshine Coast, Brisbane Airport & Australia TradeCoast 6 Annual Report 2011

9 Message from the Chairman Dear Fellow Security Holder The Board of BrisConnections Management Company Limited as responsible entity of BrisConnections Unit Trusts ( BrisConnections ) is pleased to present to security holders the annual fi nancial report of the Trusts and their subsidiaries, covering the year ended 30 June Substantial progress has been achieved, in construction and in pre-operational activities in the past 12 months, towards commencement of operations in 2012 of Airportlink, the largest privately funded road infrastructure project in Australian history. This year construction has progressed signifi cantly, reaching a number of major milestones including the completion of tunnel excavation, the opening of permanent ramps at Bowen Hills and the completion of Airport Roundabout Upgrade eliminating a major traffi c bottleneck, the fi rst of many congestion reducing benefi ts the project will deliver. The project has now entered its last year of construction and commissioning before operations commence. Our activities in tolling, customer service and marketing are preparing us for the much anticipated opening in mid Behind the very visible construction progress, delivery of the tolling system is well advanced, with factory acceptance testing underway. Customer service processes are being put in place and broad community education and marketing has commenced all ready to support the opening of Airportlink. Work is also progressing on the vital mechanical and electrical aspects of Airportlink including lighting and ventilation, safety systems and other features to ensure a quicker, safer and more reliable journey for drivers that more than halves peak commuting times, liberates travellers from up to 18 sets of traffi c lights, saves up to 30% fuel consumption and reduces the frustrations of commuting in Brisbane. We would like to acknowledge the positive working relationship with our two principal project parties: the construction contractor, Thiess John Holland; and the government agency overseeing the project, City North Infrastructure. I am excited about the multi-faceted marketing program that we are implementing to support the opening of Airportlink. We are adopting a fresh and innovative approach, having learned from the experiences of other toll roads and, more importantly, listened to our future customers. Indeed, the theme around the Road Revolution is no hollow statement when Airportlink opens in mid-2012, it will dramatically change the way motorists travel around Brisbane - reducing traffic congestion and significantly improving travel times between the city, the airport and places all around. Airportlink will be a Road Revolution. Airportlink is more than just a road, it is a multi-destinational link, connecting Brisbane s key economic zones, the city, airport and places all around. It will revolutionise the way motorists move around Brisbane. During the year, Ms Andrea Harcourt was appointed as an Independent Non-executive Director of BrisConnections Management Company Limited. Her appointment provides the Board with marketing experience which is critical as we prepare for commencement of operations next year. On behalf of my fellow Directors, I thank all investors for their ongoing support and I look forward to keeping you informed as we countdown to operations in mid I would like to thank my fellow Directors for their contribution. In concluding, I would like to thank our CEO, Dr Ray Wilson, his executive management team and all of our employees for their contribution to another year bringing us closer to commencement of operation of this revolutionary piece of infrastructure which will change the way Brisbane moves. We also acknowledge the sustained efforts of the nearly 4,500 workers employed in the project. Having now drawn over $2.450 billion of our debt funding in construction of this project, we acknowledge the support of our banks. Our funding for the entire construction program remains in place with no refi nancing obligations until mid-2018 (six years after commencement of operations). Trevor C Rowe AO, DUniv CHAIRMAN Annual Report

10 Toombul At Toombul, Airportlink connects with East-West Arterial Road and Sandgate Road and provides links to Brisbane Airport and Australia TradeCoast. artist impression Airportlink will save motorists up to 20 minutes in travel time between the city and Brisbane Airport. Northern suburbs Sunshine Coast Brisbane City, south western suburbs & Gold Coast SANDGATE ROAD Brisbane Airport Australia TradeCoast Clayfield 8 Annual Report 2010

11 Managing Director s Overview I am pleased to report to you on our continued progress in the delivery of this revolutionary road project, providing critical new transport infrastructure for Brisbane and benefi ting all of South East Queensland. Airportlink, Brisbane s new 6.7km tunnel and road project, connecting the CBD to Brisbane Airport, Australia TradeCoast and the rapidly growing northern suburbs is Australia s largest privately funded transport infrastructure project. Construction work remains on program to enable BrisConnections to open the tunnels to motorists in mid Airportlink will transform Brisbane s road network and help to build a more liveable and effi cient city by better connecting its communities and providing many economic and social benefi ts. It will revolutionise, that is, dramatically change, the way the public will travel around Brisbane. It will deliver reduced travel times, more predictable journeys, reduced driver stress, result in lower vehicle emissions per km, improve safety and enhance the effi ciency of the overall Brisbane road network. BrisConnections has a 45 year concession to own and operate Airportlink. We know we are developing a project with substantial long-term economic benefi t, for both our unitholders and the community as a whole. During the fi nancial year ending in June 2011, BrisConnections reached a number of signifi cant project milestones as we progress toward the commencement of operations next year. As of today, BrisConnections has completed over 87% of this world scale project, with completion due in mid We believe that the benefi ts delivered by Airportlink will bring about a Road Revolution. It will improve the economic competitiveness of Brisbane as a business centre and of many commercial enterprises across all of South East Queensland. These gains will be realised in several ways. Firstly, in its physical elements. Airportlink is a critical piece of new road infrastructure for the northside of Brisbane, adding substantial network capacity. It will transform the way in which motorists connect to the northern suburbs, the city, Brisbane Airport, Australia TradeCoast and ultimately to the south western communities linked to Brisbane. It is really three roads in one piece of infrastructure featuring streamlined design, suffi cient lane capacity to avoid queuing, grade separated ramps resulting in smoother intersection performance with easy merging and reduced weaving on lane changes. The improved east west connection will reduce rat-running in local northside suburban roads and enhance community well being. Airportlink will signifi cantly improve travel times between the city, the airport precinct, the northern suburbs and destinations beyond. As the network further develops with the completion of Legacy Way in 2014, it will improve connectivity to the south western suburbs and Ipswich. This is the essence of the Airportlink revolution. Secondly, we are developing a number of innovative customer focussed initiatives. Use of the latest tolling technology means that Airportlink will attain greater accuracy and reliability using video tolling and reducing the need for a tag, whilst allowing for the introduction of innovative tolling products. A number of value adding tolling options are being assessed to provide greater fl exibility for motorists. These may include pre-paid plans and in the future, frequent user rewards programs. The Airportlink website contains an innovative simulator designed to assist motorists become familiar with the road well before they will need to use it. The simulator demonstrates how to access Airportlink, how to get on and off it (easy on easy off), what it will look like, what motorists can expect by way of signage and the benefi ts they will gain from its use. Finally, the changes delivered by Airportlink will provide substantial and tangible user benefi ts. Reduced travel times will revolutionise the way that motorists get around the northside; providing both a quicker and more reliable journey, with improved safety. Substantial time savings can be expected on some journeys more than a 70% improvement. Annual Report

12 Managing Director s Overview cont d Free-fl ow travel using Airportlink will reduce driver frustration (avoiding traffi c lights and congestion points on the alternative surface roads), all resulting in a less stressful journey. Greater road connectivity and grade separated intersections will make for a more predictable and reliable journey. Free-fl ow driving reduces wear and tear and running costs - fuel consumption can be reduced by up to 30% and greenhouse gas emissions will be substantially lessened. Thiess John Holland, our design and construction contractor, continues to achieve signifi cant milestones on the project, despite it being of unprecedented size and complexity and being delivered within a heavily populated urban area. Their fi xed price, fi xed time contract ensures a predictable, on time and on budget outcome for BrisConnections. Delivery of the projects for BrisConnections which are being undertaken by Thiess John Holland (TJH), remain on program. Milestones achieved in the last year, as we progress ever closer to the commencement of operations in mid 2012 include: Finally I would like to acknowledge the support received by BrisConnections from all of our unitholders, the funding banks, Government counterparts (particularly City North Infrastructure), our contractor TJH and once again the community, throughout this very busy year. The progress made by BrisConnections towards the completion of this vital infrastructure, and in our preparation for operations, has only been possible because of the effort and support provided to myself, and our Board, by my extremely competent, hardworking and focused management team. I express my appreciation to every one of them and the entire BrisConnections team. Raymond H Wilson MANAGING DIRECTOR and CEO - Airport Roundabout Upgrade reached practical completion on 1 July 2011, - completion of factory acceptance testing of elements of the tolling system, - opening to traffi c of the ramps at Bowen Hills connecting CLEM7, the Inner City Bypass and Lutwyche Road and completion of the permanent bridges connecting Airportlink to the city and road network and, in addition, putting into service the permanent traffi c arrangements at Kedron and Toombul, - developing and growing our operations and maintenance organisation and resources, - the commencement of fi tout of the Airportlink Operations Centre (ALOC) (our permanent home) with relocation to these purpose built premises expected in the latter part of 2011, - commencement of the marketing program and education campaign for Airportlink to assist in informing the public and creating usage behaviour, - launch of the Airportlink website at com.au and unique drive it before it s real driver simulator, all in readiness for the commencement of operations in mid Annual Report 2011

13 Sustainability Airportlink will deliver more than three hectares of new parkland created for communities to enjoy, linking green belts and connecting opening spaces. This will include one million new plants, including approximately 5000 trees, and new or improved cycle paths and walkways. BrisConnections is a long term neighbour and part of the Brisbane community. We understand that a focus on social sustainability needs to be integrated into the way we do business. When operational we will endeavour to work with stakeholders to contribute to the local area, to local employment and the liveability of our communities. Bowen Hills artist impression Toombul artist impression Annual Report

14 Market education The community engagement and market education program is part of a broader marketing campaign to help motorists become more familiar with the road. 12 Annual Report 2011

15 The Airportlink website contains an innovative simulator designed to assist motorists become familiar with the road well before they will need to use it. The simulator demonstrates how to access Airportlink, how to get on and off it (easy on easy off), what it will look like, what motorists can expect by way of signage and the benefi ts they will gain from its use. Annual Report

16 Financial Reports } Corporate Governance Statement 15 } Directors Report 23 } Auditor s Independence Declaration 30 } Consolidated Statement of fi nancial position 31 } Consolidated Statement of comprehensive income 32 } Statement in changes of equity 33 } Consolidated statement of cash fl ows 35 } Notes to the fi nancial statements 36 } Directors Declaration 77 } Independent Audit Report 78 BrisConnections Management Company Limited (BMCL) ABN / AFSL is the responsible entity for BrisConnections Investment Trust (BCIT) ARSN and its controlled entities and BrisConnections Holding Trust (BCHT) ARSN and its controlled entities (collectively, BrisConnections or the Group). BrisConnections Management Company Limited is a wholly owned subsidiary of BrisConnections RE Holdings Pty Limited, a subsidiary of BrisConnections Holding Trust. BMCL is incorporated in Australia and its registered address is Level 2, Kedron Brook Building, 1 Gympie Road, Kedron, QLD This report is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation or particular needs of any investor. Before making an investment in BrisConnections, the investor or prospective investor should consider whether such an investment is appropriate to their particular investment objectives, financial situation and needs and consult an investment adviser if necessary. BMCL, as responsible entity of BCIT and BCHT, is entitled to fees for so acting. The BrisConnections financial report has been prepared to enable BMCL as responsible entity to comply with its obligations under the Corporations Act 2001 to ensure compliance with ASX Listing Rules and satisfy the requirements of the Australian accounting standards in relation to stapled structures. The responsibility for preparation of the financial report and any financial information contained in this financial report rests solely with the Directors of BMCL. The financial report was authorised for issue by the Directors on 19 August The company has the power to amend and re-issue the financial report. The financial report is presented in Australian currency. 14 Annual Report 2011

17 Corporate Governance Statement The Directors of BrisConnections Management Company Limited (BMCL), the responsible entity of BrisConnections Investment Trust and BrisConnections Holding Trust, recognise their duties and obligations to stakeholders to implement and maintain a robust system of corporate governance. BMCL believes that the adoption of good corporate governance adds value to stakeholders and enhances investor confidence. The following statement provides an overview of BrisConnections governance practices and reports against the ASX Corporate Governance Principles and Recommendations (2nd Edition) (ASX Principles). BrisConnections corporate governance practices comply with the ASX Principles unless otherwise stated. The following corporate governance practices were in place throughout the financial year, unless otherwise stated. In this statement, the Board means the Board of Directors of BMCL as Responsible Entity of the Trusts. BMCL holds AFSL No It has the primary responsibility to operate the Trusts (as registered managed investment schemes) and to perform functions conferred on it by the Corporations Act, the Trust Constitutions and the Compliance Plans. All corporate governance practices and policies have been adopted by BMCL as responsible entity of the Brisconnections Holding Trust and Brisconnections Investment Trust ( BrisConnections ) to implement the various systems and processes to ensure that the interests of security holders and other stakeholders in BrisConnections are protected at all times. This corporate governance statement and other related information is available on BrisConnections website. Principle 1: Lay solid foundations for management and oversight. The role of the Board and delegations BMCL is a wholly-owned subsidiary of BrisConnections RE Holdings Pty Ltd which in turn is wholly owned by BrisConnections Holding Trust. BMCL s role is provided for in the Trusts Constitutions. Its role covers the provision of all corporate services in connection with the Trusts, including investor relations, government and operator liaison, secretarial and administrative services, maintenance of fi nancial and taxation records and statutory compliance plus overall corporate governance of the Trusts, including the protection of unitholders interests. BMCL has entered into a services agreement under which its AFSL management services are provided by BrisConnections Operations Pty Limited, a subsidiary of BCHT until 1 April 2013 (renewable by BMCL for a further 2 years), and BCHT receives a rebate on the management fee. This agreement does not relieve BMCL from its obligations as Responsible Entity under the Corporations Act. Following the acquisition of BMCL by BrisConnections, all of the management fee is retained within BrisConnections. The Board is accountable to security holders for the activities and performance of BrisConnections by overseeing the development of sustainable security holder value within an appropriate framework of risk and regard for all stakeholder interests. The Board has identifi ed the key functions which it has reserved for itself. These duties are outlined below and set out in the Board Charter, a copy of which is available on BrisConnections website. establishment, promotion and management of the strategic direction of BrisConnections; approval of business plans, budgets and fi nancial policies; consideration of management recommendations on strategic business matters; establishment, promotion and maintenance of proper processes and controls to maintain the integrity of accounting and fi nancial records and reporting; fairly and responsibly rewarding executives, having regard to the interests of security holders, the performance of executives, market conditions and BrisConnections performance; Annual Report

18 Corporate Governance Statement adoption, oversight and implementation of appropriate corporate governance practices; oversight of the establishment, promotion and maintenance of effective risk management policies and processes; determination and adoption of BrisConnections distribution policy; review of the Board s composition and performance; appointment, duration, evaluation and remuneration of the Chief Executive Offi cer (CEO), the Chief Financial Offi cer (CFO), the Company Secretary and all direct reports to the CEO; and determination of the extent of any delegated authorities. The Board has established Committees to assist in carrying out its responsibilities and to consider certain issues and functions in detail. The Board Committees are discussed in Principle 2 below. Non-Executive Directors are issued with formal letters of appointment governing their role and responsibilities. Each new Director appointed undergoes an induction and management is available for discussions as required. BCML Management responsibility Responsibility for the day to day management and administration of BrisConnections is delegated by the Board to the Chief Executive Offi cer, who is assisted by the executive management team. The Chief Executive Offi cer manages BrisConnections in accordance with the strategy, plans and delegations approved by the Board. The Board monitors the decisions and actions of the Chief Executive Offi cer and the performance of BrisConnections to gain assurance that progress is being made towards attainment of the approved strategies and plans. The Board also monitors the performance of BrisConnections through its Committees. The Chief Executive Offi cer and the executive management team provides open and detailed reports on BrisConnections performance and related matters to each Board meeting. Executive performance assessment The performance of senior executives is reviewed at least annually against appropriately agreed and documented performance objectives and measures. The Remuneration and Nomination Committee is responsible to the Board for reviewing the performance of the CEO at least annually, including setting the CEO goals for the coming year and reviewing progress in achieving those goals and making recommendations. The CEO is responsible for setting performance objectives and reviewing the performance of his direct reports. Performance evaluations for the CEO and senior executives have taken place in respect of the 2011 reporting period in accordance with the above process. The Chairman is selected by Non-Executive Directors of the Board. The roles of Chairman and CEO are not exercised by the same person. The Chairman is an Independent Nonexecutive Director. Principle 2: Structure of the Board to add value Membership of the Board The Board comprises Directors who possess an appropriate range of skills, experience and expertise to: have a proper understanding of, and competence to deal with, the current and emerging issues of the business; exercise independent judgement; encourage enhanced performance of BrisConnections; and effectively review and challenge the performance of management. BMCL s constitution provides for a minimum of three Directors and a maximum of 10 Directors. Background details and period of offi ce of each Director are set out in the Directors Report. In addition to ensuring that the Board has a broad range of necessary skills, knowledge and experience to govern BMCL and understand the challenges that BMCL faces, the Board considers that its membership should represent an appropriate balance between Directors with experience and knowledge of BrisConnections and Directors with an external perspective. The Chairman of the Board is an Independent Nonexecutive Director. The Board also considers that its size should be conducive to effective discussion and effi cient decision-making. The Board believes that its current composition meets these requirements. The Chairman is responsible for leading the Board, ensuring Directors are properly briefed in all matters relevant to their roles and responsibilities, facilitating Board discussions and 16 Annual Report 2011

19 managing the Board s relationship with BMCL s executive management. His specifi c role is detailed in the Board Charter. The Chief Executive Offi cer is responsible for implementing BrisConnections strategies and policies. The roles of the Chairman and Chief Executive Offi cer are separate roles which are undertaken by separate people. Succession planning In conjunction with the Remuneration and Nomination Committee, the Board considers the succession of its members, the CEO, and those direct reports to the CEO, as required. Review of Board performance The Board Charter sets out the requirement for a formal review of the Board s performance at least every year. A review of the Board s performance was conducted in September The review of the Board s performance is conducted by the Chairman with all Board members. The review involves consideration of the effectiveness of the Board and its committees having regard to the knowledge, skills and experience of the Directors. The review involves considering the weighting of attributes, culture and capabilities of the Board. Director independence The Board has adopted an Independence Policy that states that an Independent Director should be independent of management and free from any business or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgement. The Board considers and assesses the independence of each Director in light of the interests and information which Directors disclose. In accordance with the Corporations Act, Directors are required to advise BrisConnections of any material personal interests they have in a matter. In assessing independence, the Board will have regard to whether the Director has any of the following relationships with BMCL or any BrisConnections company: 1. is a substantial security holder (as defi ned by section 9 of the Corporations Act) of BrisConnections, or is a Director or offi cer of, or otherwise associated directly with, a substantial security holder of BrisConnections; 2. is employed, or has in the last 3 years been employed in an executive capacity by BrisConnections and there has not been a period of at least three years between ceasing such employment and serving on the Board; 3. has within the last 3 years been a principal of a material professional adviser or a material consultant to BrisConnections or an employee materially associated with the service provided; 4. is a material supplier or customer of BrisConnections or an offi cer of or otherwise associated directly or indirectly with a material supplier or customer; 5. has a material contractual relationship with BrisConnections other than as a Director; 6. has served on the Board for a period which could or could reasonably be perceived to materially interfere with the Director s ability to act in the best interests of the Group; and 7. is free from any interest and any business or other relationship, which could, or could reasonably be perceived to, materially interfere with the Director s ability to act in the best interests of the Group. The Board will state its reasons if it considers a Director to be independent notwithstanding the existence of a relationship of the kind referred to in paragraphs 1 7 above. From the commencement of the year the Board has had a majority of Independent Directors including the Chairman. The Board currently has seven members of which fi ve, Trevor Rowe, John Allpass, Richard Wharton, Martin Kriewaldt and Andrea Harcourt are independent. Mark Snape and his alternate Mark Lynch are non-executive but not independent. Determination of materiality in assessing independence Conflicts of interest In accordance with the Board Charter and the Corporations Act 2001 (Cth), any Director with a material personal interest in a matter being considered by the Board must declare such an interest and may only be present when the matter is being considered at the Board s discretion. Directors with a material interest may not vote on any matter in which they have declared a personal interest. Meetings of the Board During the year, the Board generally meets formally every four to six weeks. In addition, the Board may meet whenever necessary to deal with specifi c matters needing Annual Report

20 Corporate Governance Statement attention between scheduled meetings. The CEO and Company Secretary, in consultation with the Chairman, establish the meeting agendas to ensure adequate coverage of strategic, fi nancial and material risk areas throughout the year. Senior executives are invited to attend Board meetings and are available for contact by Non-Executive Directors between meetings. The Non- Executive Directors have held, when required, private sessions without any executive involvement. The Board convenes by telephone conference call to discuss matters of urgency and importance with management, make recommendations to management and discuss strategy. The Company Secretary supports the effectiveness of the Board by monitoring that Board policy and procedures are followed, and coordinating the timely completion and despatch of board agenda and briefi ng material. The Company Secretary is accountable to the Board through the Chair, on all governance matters. The appointment and removal of the Company Secretary is a matter for decision by the Board as a whole. Board access to information and advice All Directors have unrestricted access to BrisConnections records, information and the Company Secretary. BrisConnections Company Secretary provides Directors with guidance on corporate governance issues and developments and on all other matters reasonably requested by the Directors and monitors compliance with the Board Charter. The Board or each individual Director has the right to seek independent professional advice at BrisConnections expense to assist them to discharge their duties. Whilst the Chairman s prior approval is required, it may not be unreasonably withheld or delayed. Board committees To assist it in undertaking its duties, the Board has established the following Committees: the Audit Risk and Compliance Committee; the Remuneration and Nomination Committee; the Scheme Compliance Committee; and the Health Safety and Environment Committee. Each Committee has its own Charter, copies of which are available on BrisConnections website. The Charters specify the composition, responsibilities, duties, reporting obligations, meeting arrangements, authority and resources available to the Committees and the provisions for review of the Charter. Details of Directors membership of each Committee and their attendance at meetings are set out in the Directors Report. Principle 3: Promote ethical and responsible decision-making The Board and BrisConnections commitment to ethical and responsible decision making is refl ected in the internal policies and procedures. Code of Conduct The Board has adopted a Code of Conduct which applies to all Directors, executives, management and employees of BrisConnections and its subsidiaries. The Code articulates the standards of honest, ethical and law-abiding behaviour expected by BrisConnections. Employees are actively encouraged to bring any problems to the attention of management or the Board, including activities or behaviour which may not comply with the Code of Conduct, other policies and procedures in place, or other regulatory requirements or laws. A copy of the Code can be found on BrisConnections website. Directors and staff trading policy Directors and staff are subject to restrictions under the law relating to dealing in securities, including the securities issued by BrisConnections, if they are in possession of insider information. The Board has approved the Group s Security Trading Policy which prescribes the manner in which staff can trade in BrisConnections securities. A copy of the policy is available on BrisConnections website. The policy applies to all Directors and staff and places restrictions and reporting requirements on staff, including the imposition of blackout periods for trading in the securities of BrisConnections and requiring pre-trade approval. Diversity Policy The Board has adopted a Diversity Policy targeted at addressing the under representation of certain groups and to actively facilitate a more diverse and representative workforce and management structure. A copy of the policy is available on the BrisConnections website. As at 30 June 2011, 14% of Directors, 22% of executive management team and 42% of whole organisation 18 Annual Report 2011

21 (including contractors) were female. BrisConnections is committed to promoting a culture where diversity is embraced and to the extent practicable BrisConnections will address the recommendations and guidance in the ASX Principles. However, with only a limited number of employees (25 as at 30 June 2011), there are inherent constraints on the Groups ability to comply with all aspects of the ASX Principles at this time, including setting measurable objectives beyond the current representation of women. Principle 4: Safeguard integrity in financial reporting Integrity of BrisConnections financial reporting The Board has the responsibility to ensure truthful and factual presentation of BrisConnections fi nancial position. The Board has established an Audit Risk and Compliance Committee to assist the Board to focus on issues relevant to the integrity of the Group s fi nancial reporting. In accordance with its Charter, the Audit Risk and Compliance Committee must have at least three members and is comprised of all Non-Executive Directors and a majority of independent members. The Committee is chaired by an Independent Director, who is not Chair of the Board. The background details of the Audit Risk and Compliance Committee members are set out in the Directors Report. The Committee typically meets at least 4 times a year and additional meetings are scheduled as required. The members names and attendance at meetings is set out in the Directors Report. The Committee makes recommendations to the Board in relation to the appointment, review and removal of an external auditor, assessment of the external auditor s independence and the appropriateness of non-audit services that the external auditor may provide. A copy of the Audit Risk and Compliance Committee Charter is available on BrisConnections website. Declaration by Management The CEO and CFO periodically provide formal assurance statements to the Board that BrisConnections fi nancial statements present a true and fair view of BrisConnections fi nancial condition and operational results. The CEO and Company Secretary periodically provide formal assurance statements to the Board that the risk management and internal compliance and control systems are sound, appropriate and operating effi ciently and effectively. Independent external audit BrisConnections Audit, Risk and Compliance Committee ( ARCC ) in accordance with its Charter, is responsible for overseeing the relationship with BrisConnections external auditor, KPMG, including the terms of engagement of the external auditor and the scope of the external audit programme each year. The ARCC is also responsible for monitoring and evaluating the performance and independence of the external auditor. The Board has adopted a Policy for Auditor independence which forms part of the ARCC s Charter published on BrisConnections website. KPMG provides the ARCC with a half yearly and annual certifi cation of its continued independence, in accordance with the requirements of the Corporations Act, and in particular confi rmed that it did not carry out any services or assignments during the relevant period that were not compatible with auditor independence. In addition to the audit partner rotation and appointment requirements set out in the Policy and in the Corporations Act, the ARCC also reviews and approves, or declines, as considered appropriate before the engagement commences, any individual engagement for non-audit services involving fees exceeding $100,000. For the year ended 30 June 2011, there was no such engagement. Below this amount, approval, or otherwise as considered appropriate, is delegated to BrisConnections CFO. BrisConnections is not required to hold an Annual General Meeting but KPMG are invited and notifi ed of any members meetings held. Principle 5: Make timely and balanced disclosure Continuous Disclosure Policy BrisConnections is committed to ensuring all investors have equal and timely access to material information concerning BrisConnections and that announcements are factual and presented in a clear and objective manner. The Board has approved and implemented a Continuous Disclosure Policy. Supporting Brisconnections Continuous Disclosure Policy is BrisConnections Communications Policy which governs BrisConnections policy in relation to interactions with external individuals, investors, analysts and other market participants. Annual Report

22 Corporate Governance Statement The Company Secretary is responsible for the BrisConnections compliance with its continuous disclosure obligations and for overseeing and co-ordinating disclosures to the ASX and other interested parties. BrisConnections Continuous Disclosure and Communications Policies are available from the Investor Information section of BrisConnections website Principle 6: Respect the rights of security holders BrisConnections recognises the importance of enhancing its relationship with investors by: communicating effectively; providing ready access to clear and balanced information about BrisConnections; and encouraging participation at general meetings, when held. As set out in principle 5, it is BrisConnections policy that material information concerning BrisConnections will be announced to the market in a timely and objective manner. Following release to the market, BrisConnections publishes annual and half yearly reports, announcements, media releases and other relevant information on its website at While BrisConnections is not required by the Corporations Act to hold an annual general meeting, it may choose to convene an annual investor forum. Unless there is formal business to consider, the meeting will be an information meeting to brief investors on BrisConnections performance over the previous 12 months. All major and price sensitive announcements by BrisConnections are lodged with the ASX and made publicly available via its website before being discussed or disseminated with members of the investment community. Principle 7: Recognise and manage risk Risk management and compliance The management of risks is fundamental to BrisConnections business and to building security holder value. The Board recognises the broad range of risks which apply to BrisConnections as a participant in the fi nancial services industry, including, but not limited to, market risk, funding and liquidity risk, credit risk, investment, strategic and business risk, reputation, licence (compliance) and operational risk. The Board is responsible for determining the Group s risk management strategy. Management is responsible for implementing the Board s strategy and for developing policies and procedures to identify, manage and mitigate risks across the whole of the Group s operations. As a registered managed investment scheme BrisConnections has a compliance plan which has been lodged with ASIC. The compliance plan sets out measures to ensure compliance with the Trust Constitution, the Corporations Act, the AFSL and other material legislation and contracts. The compliance offi cers provide a written report to the Scheme Compliance Committee quarterly regarding compliance with the plan. The external auditor, KPMG, conducts an annual audit of compliance with the compliance plan. Management maintain risk registers and are responsible for ongoing identifi cation, assessment, monitoring and management of risk and reporting to the Board via the Audit Risk and Compliance Committee. Reports describe and confi rm the effective management of BMCL s and BrisConnections material business risks by preparation of interim and fi nal (coinciding with sign off of the annual fi nancial statements) reports on the effectiveness of BMCL s management of all material business risks. The CEO and CFO provide declarations in accordance with section 295A of the Corporations Act. This framework is underpinned by a regularly reviewed set of policies, procedures and delivery plans. The framework and policies are developed and approved by management, reviewed and approved by the Audit Risk and Compliance Committee and then made available to all Directors, staff of BrisConnections and its subsidiaries. The Committee provides reporting to the Board on compliance with the framework and policies. The Board and Audit Committee review the effectiveness of the risk management and internal control system on an annual basis. A risk report for BrisConnections is contained in this Annual Report. Assurance During the period, the Board has received formal assurance from: The CEO and CFO that BrisConnections fi nancial statements present a true and fair view of BrisConnections fi nancial condition and operational results. The CEO and Company Secretary that the risk management and internal compliance and control systems are sound, appropriate and operating effi ciently and effectively. 20 Annual Report 2011

23 This assurance forms part of the process by which the Board determines the effectiveness of its risk management and internal control systems in relation to fi nancial reporting risks. Principle 8: Remunerate fairly and responsibly The Board Remuneration Committee The Board has established a Remuneration and Nomination Committee comprised of a majority of Independent Directors, having at least 3 members and is chaired by an Independent Director. The background details of the Remuneration Committee members are set out in the Directors Report. The Committee usually meets at least twice during the year, and additional meetings are scheduled as required. The members names and attendance at meetings is set out in the Directors Report. The Remuneration and Nomination Committee is responsible for reviewing and recommending to the Board on: BrisConnections remuneration, recruitment, retention and termination policies and procedures for senior executives; senior executives remuneration and incentives; superannuation arrangements; and the remuneration framework for Directors. Remuneration It is BrisConnections objective to provide maximum stakeholder benefi t from the retention of a high quality Board and executive management team by remunerating Directors and key executives fairly and appropriately in accordance with market conditions and refl ective of their contribution. Independent Directors are required to take a percentage of their remuneration by way of equity. The Chairman is to take 40% of total remuneration by way of security purchase, while the other Independent Non-executive Directors are to take 20% of their total remuneration by way of security purchases. Securities are purchased on market in accordance with the ASX Listing Rules. Further information on the remuneration of Directors and key management personnel is set out in Note 30 of the Financial Report. The expected outcomes of this remuneration philosophy are the retention and motivation of key executives, the attraction of quality management to BMCL and the provision of performance incentives which allow executives to share the rewards of the success of BrisConnections. BMCL has entered into a services agreement so that its AFSL management services are provided by BrisConnections Operations Pty Limited, a subsidiary of BCHT until 1 April 2013 (renewable by BMCL for a further 2 years), in consideration of a rebate on the management fee. This agreement does not, however, relieve BMCL from its obligations as Responsible Entity under the Corporations Act. Following the acquisition of BMCL by the Group, all of the management fee is retained within the Group. Annual Report

24 Airportlink Operations Centre The Airportlink Operations Centre (ALOC) is located 200 metres from the intersection of Stafford and Gympie Roads in Kedron. The location of ALOC is strategically important maximising the effi ciency of operations, maintenance and safety services across the road and tunnel network. It will house Airportlink s control centre as well as a customer service facility. 22 Annual Report 2011

25 Directors Report Your Directors present their report on BrisConnections Unit Trusts ( BrisConnections ) together with the fi nancial statements of BrisConnections and its controlled entities ( the Group ), for the year ended 30 June Trust Information BrisConnections is made up of two Australian unit trusts, BrisConnections Holding Trust ( BCHT ) and BrisConnections Investment Trust ( BCIT ). Units in BrisConnections comprise a unit in BCHT and a unit in BCIT stapled together and traded as one on the ASX. Travel time savings of up to 20 minutes in peak hour can be expected on some journeys more than a 70% improvement. BrisConnections is managed by BrisConnections Management Company Limited ( BMCL ), a wholly-owned subsidiary of BrisConnections RE Holdings Pty Limited, a wholly owned subsidiary of BCHT, whose only function is to act as the responsible entity of BCIT and BCHT. BMCL has delegated management of the day-to-day business affairs of BrisConnections to BrisConnections Operations Pty Limited (BCOps), which is a wholly owned subsidiary of BrisConnections Holdings 2 Pty Limited, a wholly owned subsidiary of BCHT. BMCL retains responsibility for the corporate governance of BCIT and BCHT and the protection of unitholders interests. BMCL, therefore, monitors BCOps compliance with its regulatory and contractual obligations. Information on Directors and Officers of Responsible Entity The Board of Directors ( Board ) has power to appoint additional persons as Directors. The names of BrisConnections Directors in offi ce during or since the end of the fi nancial year are as follows: Annual Report

26 Directors Report Trevor C Rowe Chairman and Independent Non-executive Director Appointed 23 May 2008 Raymond H Wilson Managing Director and CEO* Appointed 23 May 2008 John G Allpass Independent Non-executive Director Appointed 23 May 2008 Andrea C Harcourt Independent Non-executive Director Appointed 1 December 2010 Martin DE Kriewaldt Independent Non-executive Director Appointed 24 October 2008 Richard JE Wharton Independent Non-executive Director Appointed 23 May 2008 Mark A Snape Non-executive Director Appointed 24 October 2008 Mark H Lynch Non-executive Director (alternate to Mark A Snape) Appointed 21 November 2008 *Dr Wilson was originally appointed Non-Executive Director on 23 May, 2008 and then became Managing Director and CEO on 3 November, 2008 Each of the above Directors has been in offi ce since the date of appointment noted above and up to the date of this report. Details of Directors of BrisConnections in offi ce at the date of this report, and each Director s qualifi cations, experience and special responsibilities are below. Trevor C Rowe, AO DUniv. FCIS, FAICD, ACPA Independent Non-Executive Chairman Mr. Rowe is Executive Chairman of Rothschild Australia Limited since November Prior to joining Rothschild Mr. Rowe was at Citigroup Global Markets and held numerous senior positions with Citigroup/Salomon Smith Barney/Salomon Brothers over a period of some 23 years living and working in New York, Asia and Australia. He is also Chairman of UGL Limited, Careers Australia Group Pty Limited and Gotalk Limited and a Member of Samsung Investments Global Advisory Council. Mr. Rowe was Chairman of Queensland Investment Corporation (QIC), Chairman of the Queensland BioCapital Fund Ltd (QBF) from 2001 to September 2009 and a Member of the Takeovers Panel from 2000 to 2003, a Member of the Board of Guardians of the Future Fund of Australia from 2006 to April 2011 and a Non-Director of the Australian Securities Exchange Limited (ASX) from 2002 to June He also served as Chancellor of Bond University from 2003 to May 2009 and is currently Chairman of the Bond University Board of Trustees. In June 2011 Queen s Birthday honours Mr. Rowe was awarded an Offi cer of the Order of Australia (AO) for his service to the fi nance sector, particularly in the area of investment management. In June 2009, Mr. Rowe was awarded an Honorary Doctorate of the University from Bond University. Mr. Rowe has been Chairman since May 2008, prior to the fl oat in July He is also Chairman of the Scheme Compliance Committee and the Remuneration and Nomination Committee. Mr. Rowe holds an interest in 282,808 BrisConnections stapled securities as at the date of this report. Raymond H Wilson B.Eng (Hons), MS, PhD, MIPENZ, MASCE, FIE Aust, MAICD Managing Director and CEO Dr. Wilson was previously Executive General Manager Development and Special Projects at Thiess Pty Ltd and he was responsible for investments in major infrastructure projects and strategic business development for the company. He was a Director of each of the companies comprising the Connector Motorways Group and was also a Director of the ASX listed ConnectEast. He has more than 35 years experience in all aspects of international and local project development and operations, including 16 years involvement in the development of privatised infrastructure projects such as toll roads and power projects in Australia, New Zealand and Asia. In his previous roles he has worked on projects in Australia, South East Asia, New Zealand, the Middle East and West Africa. Prior to joining Thiess in late 1993, his roles included Director of Engineering Development for Leighton Holdings (Technical Resources), Operations Director for Baulderstone Hornibrook and General Manager (Heavy Construction) for McConnell Dowell. Dr. Wilson has been a Director since May 2008, prior to the fl oat in July 2008 and became Managing Director and CEO from 3 November Dr Wilson holds an interest in 15,009 BrisConnections stapled securities as at the date of this report. 24 Annual Report 2011

27 John G Allpass FCA, FCPA, FAICD Independent Non-Executive Director Mr. Allpass was in practice as a Chartered Accountant from 1971 to 1993 in the fi rm now known as KPMG. During that time he specialised in Audit Assurance and Corporate Recovery. He was Managing Partner of the Queensland practice of KPMG from 1984 to 1993 and was a member of the fi rm s National Board during that time. Since 1993, he has held various board appointments as a Non-executive Director of both listed and unlisted companies. John has been a Director of Bupa Australia Pty Ltd (formerly MBF Australia Limited Group) since 1999 and Chairman of Envestra Limited since 2002, having been a Director since He was previously a Director of Queensland Investment Corporation from 1991 to 2008 and Macquarie Bank Limited from 1994 to He is also a Director of Brisbane Airport Corporation Group. He is a Fellow of the Australian Institute of Company Directors and a Fellow of the Institute of Chartered Accountants in Australia. Mr. Allpass has been a Director since May 2008, prior to the fl oat in July He is also Chairman of the Audit Risk and Compliance Committee and a member of the Remuneration and Nomination Committee and the Scheme Compliance Committee. Mr. Allpass holds an interest in 65,988 BrisConnections stapled securities as at the date of this report. Richard JE Wharton B.Eng (Civil), MAICD, Hon. FIE Aust, CP Eng Independent Non-Executive Director Mr. Wharton is a civil engineer engaged in general consulting and project assessment. He has over 40 years experience in highway and bridge design, construction and administration throughout Queensland. He spent most of his career with the Department of Main Roads and held various senior management positions prior to being appointed Commissioner of Main Roads in He later served as Director-General of Main Roads, Queensland from 1996 to He served two terms as chairman of Austroads and was a Director of the Australian Road Research Board for four years. He was a member of the Council of James Cook University for eight years and President of Engineers Australia, Queensland Division in In 2005 he was awarded the Australian Road Forum s John Shaw Medal for outstanding service to the transport industry. He is an Honorary Fellow of Engineers Australia and continues to promote the interests of the engineering profession. Mr. Wharton has been a Director since May 2008, prior to the fl oat in July He is also Chairman of the Health Safety and Environment Committee and a member of the Audit Risk and Compliance Committee and the Scheme Compliance Committee. Mr. Wharton holds an interest in 50,901 BrisConnections stapled securities as at the date of this report. Martin DE Kriewaldt BA, LLB (Hons), FAICD Independent Non-Executive Director Mr. Kriewaldt has over 20 years experience as a Director including experience in infrastructure projects both during construction and ramp-up periods. He is a Director of Macarthur Coal Limited, Oil Search Limited and ImpediMed Limited. He is Chairman of Opera Queensland, immediate past President of the Queensland division of the Institute of Company Directors, and has previously served as a Director of Campbell Brothers Limited, Suncorp Metway Limited, GWA International Limited, Peptech Limited and Orogen Minerals Limited and as Chairman of Suncorp Insurance and Finance, Infratil Australia Limited, Hooker Corporation Limited and Airtrain Citylink Ltd. Mr. Kriewaldt has been a Director since October He is also a member of the Health Safety and Environment Committee, the Audit Risk and Compliance Committee, the Remuneration and Nomination Committee and the Scheme Compliance Committee. Mr. Kriewaldt holds an interest in 57,179 BrisConnections stapled securities as at the date of this report. Mark A Snape B.Ec, MBA, ACA, FAICD Non-Executive Director Mr. Snape is group General Manager Infrastructure Finance & Investment for the John Holland Group. He has considerable experience in the development and operation of large scale infrastructure projects, including the Alice to Darwin Railway, the Lane Cove Tunnel toll road in Sydney, Eastlink toll road in Melbourne and Metro Trains Melbourne. Before joining John Holland Group in 2003, he held various senior management positions including as Managing Director Australia for American Electric Power Co. Inc., Director Deloitte Corporate Finance, Director County Natwest Corporate Finance and Director BZW Corporate Finance. His prior directorships include Asia Pacifi c Transport Pty Ltd, Connector MotorWays Group, ConnectEast Group, Metro Trains Melbourne and Australian Council for Infrastructure Development. Mr. Snape has been a ddirector since October 2008, prior Annual Report

28 Directors Report to which he was BrisConnections interim CEO. He is also member of the Health Safety and Environment Committee, the Audit Risk and Compliance Committee and the Scheme Compliance Committee. Mr. Snape holds an interest in 5,000 BrisConnections stapled securities as at the date of this report. Mark H Lynch B.Sc, LLB (Hons), LLM, MAICD Non-Executive Director (Alternate for Mark Snape) Mr. Lynch is Executive General Manager, Strategy & Development for Thiess Pty Ltd, with responsibility for the Thiess Group s project investments and its strategic development, project fi nance and business strategy activities. He has considerable experience in large scale infrastructure development and project fi nancing as a solicitor and as a Director of companies involved in the development or operation of major infrastructure projects including Aquasure, the successful bidder for the Victorian Desalination Project, Infrashore, concessionaire of the Royal North Shore Hospital Redevelopment, and is an alternate Director of ConnectEast. He is also a Director of Perth based engineering consultancy ProMet Engineers. Before joining Thiess 11 years ago he was in private legal practice in the areas of property and project development. Mr. Lynch has been alternate Director for Mark Snape since November Andrea C Harcourt BA, MAICD Independent Non-Executive Director Ms. Harcourt is an experienced global Marketing Director, having led multi-disciplinary sales and marketing teams for publicly-listed and private companies across Australia, Asia and the United States. She is currently an executive at Mitchell s Quality Foods Limited and was previously Director of Marketing & Admissions at Bond University. She returned from the USA in 2004 to take up the role at Bond University, having previously been the Director of Global Marketing and Communications for NASDAQ-listed Internet Security Systems (now the internet security arm of IBM). Ms. Harcourt has been a Director since December She is also a member of the Scheme Compliance Committee. Ms. Harcourt holds an interest in 9,178 BrisConnections stapled securities as at the date of this report. Company Secretary BrisConnections Secretary of the Group in offi ce at the date of this report is Ms Tamira Herbst. Her qualifi cations and experience are below: Ms. Tamira D Herbst B.Juris/LL.B, MAICD, ACLA, CIS (Aff), ACI Company Secretary and General Counsel Ms. Herbst was appointed Company Secretary of BrisConnections in November 2007 and is responsible for the provision of legal advice on all aspects of BCS business to management and Board, as well as company secretarial matters including corporate governance, continuous disclosure and compliance systems and practices and investor communications. Ms. Herbst was previously Company Secretary and Legal Counsel for Grand Hotel Group, Q Limited and Jumbuck Entertainment Limited and has held similar roles for private and public companies and joint ventures. Principal activities BrisConnections has been awarded a 45 year concession from 2008 to design, construct, operate, maintain and fi nance Airportlink toll road in Brisbane. Airportlink is a 6.7 kilometre multi-lane electronic free-fl ow toll road with dual 5.7 kilometre tunnels. It is Australia s largest privately funded transport infrastructure project which, when complete in 2012, will reduce congestion, transform the road network and help to build a better Brisbane community through its economic and social value to the city. Airportlink is a key connector road, and will boost business effi ciency in the economic heart of one of Australia s highest growth capital cities. Upon completion, Airportlink will connect multi-destinations including Brisbane s northern suburbs, Brisbane s CBD and Brisbane Airport, the CLEM7 (North-South Bypass Tunnel) and the Inner City Bypass. It will also serve as a key distribution road, connecting some of Brisbane s major destinations such as Brisbane Airport, the CBD, Royal Brisbane Hospital, Australia TradeCoast and the Chermside Shopping Centre area. BrisConnections also designed and constructed a portion of the Northern Busway between Windsor and Kedron and an upgrade of the East-West Arterial / Airport Drive / Southern Cross Drive interchange ( ARU ) at Brisbane Airport, both of which are funded by the Queensland Government. BrisConnections will not receive any profi t from these projects and they are both being handed over to the Queensland Government after commissioning. ARU reached practical completion on 1 July Annual Report 2011

29 In the opinion of the Directors there were no signifi cant changes in the state of affairs of the Group that occurred during the fi nancial year not otherwise disclosed in this report or the fi nancial statements. Review of Operations BrisConnections is in the design and construction phase of the Airportlink, Northern Busway and ARU projects. Accordingly, BrisConnections has capitalised all costs relating to debt establishment, deferred costs or intangible assets as appropriate. BrisConnections has, as Principal Contractor, appointed Thiess John Holland (TJH) on a fi xed time fi xed price contract to undertake design and construction activities. Airportlink is expected to open to traffi c in mid As at the end of the fi nancial year, approximately 84% of the three projects were complete with over 20 million manhours worked, about 4,500 people directly employed on the job and construction expenditure of approximately $3.47 billion. In addition, a number of milestones have been achieved to the date of this report including ARU reaching practical completion on 1 July 2011, factory acceptance testing of elements of the tolling system completed, the opening to traffi c of permanent ramps at Bowen Hills connecting CLEM7 and the Inner City Bypass and the growth of our operations resources. We also commenced our marketing for Airportlink and launched the Airportlink website at www. airportlinkm7.com.au and unique drive it before it s real tool. Except for the matters disclosed, there are, at the date of this report, no other matters or circumstances which have arisen since 30 June 2011 that have signifi cantly affected or may signifi cantly affect: (a) the operations in future fi nancial periods subsequent to the fi nancial year ended 30 June 2011, of the Group constituted by BrisConnections and the entities it controls from time to time; (b) the results of those operations in future fi nancial periods; or (c) the state of affairs, in future fi nancial periods, of the Group. Distributions The Board announced on 20 November 2009 no further distributions will be paid prior to completion of the toll road. As such, no distributions were paid during the year to 30 June Securities All BrisConnections stapled securities on issue, comprising 390,264,895 stapled securities, trade on ASX as fully paid securities under the ASX code BCS. During the period to 30 June 2011, no stapled securities were issued by BrisConnections. Opening balance 1 July 2010 Closing Balance 30 June 2011 Number of Stapled Securities Total * 390,264,895 1,170, ,264,895 1,170,489 *excludes the impact of non-controlling interests and the net present value (NPV) of the fi nal instalment and equity raising costs. Events subsequent to reporting date There has not arisen in the interval between the end of the reporting period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of BrisConnections, to affect signifi cantly the operations of BrisConnections, the results of those operations, or the state of affairs of BrisConnections in future fi nancial years. Future or Likely Developments, Operating Results and Prospects During the next fi nancial year, the Group will continue to work toward completion of construction and commencement of operations in mid Environmental Issues BrisConnections pays due attention to the management of environmental matters. Signifi cant environmental risks have been considered and BrisConnections is not aware of any current environmental issues giving rise to any obligations which have not been addressed. Fees paid to the Responsible Entity and Associates Fees paid to the Responsible Entity out of BrisConnections property are disclosed in Notes 26 and 29. The exemption that allows listed companies to disclose remuneration details in relation to their key management Annual Report

30 Directors Report personnel in their Directors report rather than in Notes to the fi nancial statements is not available to other disclosing entities, including managed investment schemes such as BrisConnections. Accordingly, fees paid by BrisConnections to the Directors of the Responsible Entity and key management personnel are disclosed in Note 30. Note should be taken that long term incentive arrangements for key management personnel have been the subject of change (refer Note 30). Meetings of Directors The table below shows the number of Directors meetings held (including meetings of Board committees being the Audit Risk and Compliance Committee (ARCC), Health Safety and Environment Committee (HSEC), Scheme Compliance Committee (SCC) and Remuneration and Nominations Committee (RNC) and sub-committee of the board (SC) and number of meetings attended by each of the Directors of BrisConnections during the year: Directors and executives interests The tables below show the interests of each director (as notifi ed by the Directors to the Australian Securities Exchange in accordance with section 205G(l) of the Corporations Act) and executives in the issued Securities of the Group as at the date of this report. Fully Paid Ordinary Securities Mr TC Rowe 282,808 Mr JG Allpass 65,988 Mr MDE Kriewaldt 57,179 Mr RJE Wharton 50,901 Mr MA Snape 5,000 Mr MH Lynch 0 Ms AC Harcourt 9,178 Director Board Attend ARCC Attend TC Rowe JG Allpass MDE Kriewaldt* MA Snape RJE Wharton AC Harcourt** R Wilson * Leave of absence granted for April 2011 meeting ** Appointed to Board and SCC on 1 December 2010 Retirement, Election and Continuation in Office of Directors BrisConnections Management Company Limited is a wholly owned subsidiary of BrisConnections RE Holdings Pty Limited ( BREH ), a wholly owned subsidiary of BCHT, and accordingly, Directors are nominated by BREH and appointed by the Board of BrisConnections Management Company Limited. There is no requirement for Directors to retire by rotation. HSEC Attend SCC Attend RNC Attend SC Attend Dr RH Wilson 15,009 Mr N Lattimore 10,009 Ms TD Herbst 3,002 Mr CC MacDonald 5,000 Directors Interests in Contracts No material contracts involving Directors interests were entered into during the period, or existed at the end of the year, other than those transactions detailed in Note 30 to the Financial Statements. Directors and officers indemnity BrisConnections has indemnifi ed each Director referred to in this report, BrisConnections Secretary and previous directors and secretaries (Offi cers) against all liabilities or loss (other than to BrisConnections or a related body corporate) that may arise from their position as Offi cers of BrisConnections and its controlled entities, except where the liability arises out of conduct involving a lack of good faith or indemnifi cation is otherwise not permitted under the Corporations Act. The indemnity stipulates that BrisConnections will meet the full amount of any such liabilities, including costs and expenses, and covers a period of seven years after ceasing to be an Offi cer of BrisConnections. 28 Annual Report 2011

31 BrisConnections has also indemnifi ed the current and previous Directors of its controlled entities and certain members of BrisConnections senior management for all liabilities and loss (other than to BrisConnections or a related body corporate) that may arise from their position, except where the liability arises out of conduct involving a lack of good faith or indemnifi cation is otherwise not permitted under the Corporations Act. BrisConnections has executed deeds of indemnity in favour of each Director and offi cer of the BrisConnections Group. Directors and officers insurance BrisConnections has paid insurance premiums for one year cover in respect of Directors and Offi cers liability insurance contracts, for Offi cers of BrisConnections and of its controlled entities. The insurance cover is on standard industry terms and provides cover for loss and liability for wrongful acts in relation to the relevant person s role as an Offi cer, except that cover is not provided for loss in relation to Offi cers gaining any profi t or advantage to which they were not legally entitled, or Offi cers committing any criminal, dishonest, fraudulent or malicious act or omission, or any knowing or wilful violation of any statute or regulation. Cover is also only provided for fi nes and penalties in limited circumstances. The insurance does not provide cover for the independent auditors of BrisConnections or of a related body corporate of BrisConnections. In accordance with usual commercial practice, the insurance contract prohibits disclosure of details of the nature of the liabilities covered by the insurance, the limit of indemnity and the amount of the premium paid under the contract. Non-Audit Services There were non-audit services provided by the auditors KPMG during the year in relation to the internalisation of the Responsible Entity ($17,500). Audit Services The statement by the Group s external auditors to the members of BrisConnections in relation to the auditors compliance with the independence requirements of the Corporations Act and the professional code of conduct for external auditors, forms part of this Directors Report, and is set out on page 30. No person who was an Offi cer of BrisConnections during the fi nancial year was a Director or Partner of the Group s external auditor at a time when the Group s external auditors conducted an audit of the Group. KPMG continues in offi ce as auditor in accordance with section 327 of the Corporations Act Rounding of Amounts BrisConnections is of a kind referred to in Class Order 98/100, issued by the Australian Securities & Investment Commission, relating to the rounding of amounts in the Directors Report. Amounts in this Directors Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar. This report is made in accordance with a resolution of the Directors and is signed for and on behalf of the Directors. Dated at Brisbane this 22nd day of August Management declaration The Chief Executive Offi cer and the Chief Financial Offi cer have given a declaration in accordance with section 295A of the Corporations Act 2001 to the Board of Directors that in their opinion the fi nancial records of BrisConnections have been properly maintained, the fi nancial statements and Notes for the fi nancial year ended 30 June 2011 comply with the accounting standards and give a true and fair view. Trevor C Rowe AO DUniv Chairman Raymond H Wilson Managing Director Annual Report

32 Lead Auditor s Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of BrisConnections Management Company Limited, the responsible entity of BrisConnections Investment Trust and BrisConnections Holding Trust I declare that, to the best of my knowledge and belief, in relation to the audit for the year ended 30 June 2011 there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. KPMG Scott Guse Partner Brisbane 22 August 2011 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. 30 Annual Report 2011

33 For Consolidated statement of financial position the year ended 30 June 2011 Consolidated In thousands of AUD Notes 30 Jun Jun 2010 ASSETS Current Assets Cash 8 169, ,936 Other fi nancial assets 8 73,300 67,250 Other Current Assets Receivables 13 10,206 11,762 Total Current Assets 253, ,207 Non-Current Assets Receivables , ,115 Plant & Equipment Intangible Assets 14 3,033,727 1,859,042 Capital Work In Progress , ,032 Other Non-Current Assets Deferred Tax Assets 7 132, ,872 Total Non-Current Assets 3,584,481 2,297,654 Total Assets 3,837,775 2,550,861 LIABILITIES Current Liabilities Trade & Other Payables 16 89, ,430 Other Financial Liabilities 17 70,451 44,725 Employee Benefi ts 28 1, Loans and borrowings 18-1,286 Total Current Liabilities 160, ,581 Non-Current Liabilities Other Financial Liabilities , ,770 Loans and borrowings 19 2,404,213 1,111,992 Total Non-Current Liabilities 2,589,518 1,364,762 Total Liabilities 2,750,220 1,520,343 Net Assets 1,087,555 1,030,518 EQUITY Issued capital/units 1,064,371 1,064,371 Deferred capital/unit contribution 120, ,130 Hedging Reserve 17 (179,030) (208,229) Retained Earnings 197,824 99,775 Total equity attributable to unit holders 1,203,295 1,076,047 Non-controlling interest (115,740) (45,529) Total Equity 1,087,555 1,030,518 The above Consolidated statement of fi nancial position should be read in conjunction with the accompanying Notes. Annual Report

34 As Consolidated statement of comprehensive income at 30 June 2011 Consolidated In thousands of AUD Notes 30 Jun Jun 2010 Revenue 1,308,762 1,283,500 Financial Income 4 10,721 10,191 Total revenue and income 1,319,483 1,293,691 Expenses Administrative Expenses 13,212 9,981 Construction Expenses 1,308,762 1,283,500 Total expenses 1,321,974 1,293,481 Profit (Loss) Before Income Tax (2,491) 210 Income Tax (Expense) /Benefi t 6 29,970 16,954 Net Profit/ (Loss) after Income Tax 27,479 17,164 Other comprehensive income Effective portion of changes in fair value of cash fl ow hedges, net of tax 29,199 (79,857) Other comprehensive income for the period, net of Income Tax 29,199 (79,857) Total comprehensive income for the period 56,678 (62,693) Profit after Income Tax attributable to: Unit Holders 98,049 56,910 Non-controlling interest (70,570) (39,746) Profit for the period 27,479 17,164 Total comprehensive income attributable to: Unit Holders 127,248 (33,606) Non-controlling interest (70,570) (29,087) Total comprehensive income for the period 56,678 (62,693) Earnings per unit 21 Basic earnings per unit (cents) (profi t per unit) Diluted earnings per unit (cents) (profi t per unit) The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes. 32 Annual Report 2011

35 For Statement of changes in equity - Consolidated the year ended 30 June 2011 Attributable to unit holders of the Parent Issued Capital Deferred Capital Accumulated Profit/(Loss) Hedging Reserve Total Equity Non- Controlling Interest Total Equity In thousands of AUD Opening Balance 1 July ,064, ,130 99,775 (208,229) 1,076,047 (45,529) 1,030,518 Total comprehensive income for the period Profi t or (Loss) ,049-98,049 (70,570) 27,479 Other comprehensive income Effective portion of changes in fair value of cashfl ow hedges, net of tax ,199 29,199-29,199 Total other comprehensive income ,199 29,199-29,199 Total comprehensive income 1,064, , ,824 (179,030) 1,203,295 (116,099) 1,087,196 Transactions with unit holders, recorded directly in equity Contributions by and distributions to unit holders Units issued DRP Underwriting Fee Deferred Tax - Equity Total transactions with unit holders Closing Balance at 30 June ,064, ,130* 197,824 (179,030) 1,203,295 (115,740) 1,087,555 *This amount is equal to $122,309,545 less the non-controlling interest of $2,180,056 (refer Note 3(i)(iii)). The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes. Annual Report

36 Statement of changes in equity -Consolidated For the year ended 30 June 2010 Attributable to unit holders of the Parent Issued Capital Deferred Capital Accumulated Profit/(Loss) Hedging Reserve Total Equity Non- Controlling Interest Total Equity In thousands of AUD Opening Balance 1 July ,078, ,130 42,865 (117,712) 1,123,415 (16,663) 1,106,752 Total comprehensive income for the period Profi t or Loss ,910-56,910 (39,746) 17,164 Other comprehensive income Effective portion of changes in fair value of cashfl ow hedges, net of tax (90,517) (90,517) 10,659 (79,858) Total other comprehensive income (90,517) (90,517) 10,659 (79,858) Total comprehensive income ,910 (90,517) (33,607) (29,087) (62,694) Transactions with unit holders, recorded directly in equity Contributions by and distributions to unit holders Units issued DRP Underwriting Fee (13,860) (13,860) (140) (14,000) Deferred Capital Contribution Total transactions with unit holders (13,761) (13,761) 221 (13,540) Closing Balance at 30 June ,064, ,130 99,775 (208,229) 1,076,047 (45,529) 1,030, Annual Report 2011

37 For Consolidated statement of cash flows the year ended 30 June 2011 Consolidated In thousands of AUD Notes 30 Jun Jun 2010 Cash Flows from Operating Activities Cash paid to suppliers and employees (12,067) (11,983) Interest Received 14,287 6,670 Interest Paid (176,791) (65,095) Net Cash Outflow from Operating Activities 9 (174,571) (70,408) Cash Flows from Investing Activities Payments for intangible assets and capital work-in-progress (1,109,073) (1,000,233) Payment for acquisition of: Physical non-current assets (122) (89) Net Cash Outflows from Investing Activities (1,109,195) (1,000,322) Cash Flows from Financing Activities Receipts from State for Airport Roundabout Upgrade & Northern Busway Projects Payments to contractor for Airport Roundabout Upgrade & Northern Busway Projects 241, ,608 (241,955) (253,608) Proceeds from issue of units - 389,033 Payment of transaction costs - Distributions paid - (56) Proceeds from borrowings 1,285,378 1,149,933 Repayment of borrowings - (413,782) Net Cash Inflow from Financing Activities 1,285,378 1,125,128 Net Increase/(Decrease) in Cash Held 1,612 54,398 Cash & other fi nancial assets at the beginning of the year 241, ,788 Cash & other fi nancial assets at the end of the year 242, ,186 The above Consolidated Statement of cash fl ows should be read in conjunction with the accompanying Notes. Annual Report

38 Notes to the Financial Statements 1. Reporting entity The Directors of BrisConnections Management Company Limited ( BMCL ) (ABN /AFSL ), being the responsible entity of the BrisConnections Investment Trust ( BCIT ) & BrisConnections Holding Trust ( BCHT ) stapled group and their controlled entities ( BrisConnections Group or the Group ), submit the fi nancial report of the Group for the year ended 30 June 2011 and the auditor s report thereon. On 29 May 2008 the Group was registered with ASIC as a managed investment scheme. On 30 July 2008 the Group was listed on the ASX Limited ( ASX ) and commenced trading on 31 July The period 1 July 2010 to 30 June 2011 is hereafter referred to as the year ended 30 June The comparative period is from 1 July 2009 to 30 June The units of BCIT and BCHT are stapled together and quoted as one on ASX. BCIT and BCHT were established in Australia. Under each Trust Deed they have been set up as indefi nite life trusts. As these trusts do not have a termination date, contributions by unitholders have been classifi ed as equity in the balance sheet. For the purposes of this report the Parent Entity is defi ned as BCIT. The ASX reserves the right (but without limiting its absolute discretion) to remove BCIT or BCHT or both from the offi cial list if any of the units in BCIT and the units in BCHT cease to be stapled together, or any equity securities are issued by either of the Stapled Trusts which are not stapled to equivalent securities in the other entity. 2. Basis of preparation (a) Statement of compliance The fi nancial report is a general purpose fi nancial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act The consolidated fi nancial report of the Group complies with the International Financial Reporting Standards (IFRSs) and the interpretations adopted by the International Accounting Standards Board (IASB). The fi nancial report was authorised for issue by the Directors of BMCL as RE on 22 August (b) Basis of measurement These fi nancial statements have been prepared under the historical cost convention except for derivative fi nancial instruments that are measured at fair value. The fi nancial report is presented in Australian dollars unless otherwise stated and all values are rounded to the nearest thousand dollars () unless otherwise stated. (c) Functional and presentation currency These consolidated fi nancial statements are presented in Australian dollars, which is the Parent s functional currency. The Group is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all fi nancial information presented in Australian dollars has been rounded to the nearest thousand unless otherwise stated. (d) Use of Estimates and Judgements The preparation of fi nancial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. The key critical estimate made by the Group is that of traffi c usage of the motorway once it opens. This traffi c forecast is key in assessing whether there is any potential impairment to the motorway s carrying value or its related assets (Refer to Note 14). The traffi c forecasts used in the impairment testing are those outlined in the Product Disclosure Statement dated 31 July These forecasts were made by independent traffi c experts Arup Pty Ltd. The Group regularly monitors the inputs into the traffi c forecasts to ensure they are still appropriate. To date there has been no evidence to suggest otherwise. Refer Note 14. (e) Change in accounting policies There have been no changes to accounting policies. 36 Annual Report 2011

39 3. Significant accounting policies The fi nancial statements have been prepared by consolidating the fi nancial statements of all the entities that comprise BrisConnections Group. The Corporations Amendment (Corporate Reporting Reform) Act 2011 was enacted in June 2010 and amended the Corporations Act so that a consolidated reporting group is required to prepare consolidated fi nancial statements rather than parent entity fi nancial statements. BrisConnections has therefore removed the parent entity columns from this fi nancial report and has provided summarised parent entity information in Note 31 to the fi nancial statements. (a) Basis of consolidation (i) Stapling The units of BCHT and BCIT are combined and issued as stapled units. The units of the Trusts cannot be traded separately and can only be traded as stapled units. The Group fi nancial statements refl ect the aggregation of the consolidated fi nancial statements of BCHT and BCIT. In accordance with AASBs, specifi cally the requirements of AASB 3, BCIT has been identifi ed as the acquirer in the BrisConnections Group based on the size of its net assets and its operations and accordingly, it will present the consolidated fi nancial report of the BrisConnections Group. These aggregated fi nancial statements incorporate an elimination of inter-entity balances and other adjustments necessary to present the fi nancial statements on a combined basis. Non-controlling interests represent the equity attributable to unitholders of BCHT. Non-controlling interest is defi ned as that portion of the profi t and loss and net assets of BCHT and its subsidiaries which are not owned, directly or indirectly through subsidiaries, by the Parent. On the basis that there is no ownership interest between the entities involved in the stapling arrangement, the net assets of the BCHT Group shall be identifi ed as non-controlling interests and presented in the consolidated statement of fi nancial position within equity, separately from the parent unitholders equity. The profi t or loss of the entity is separately disclosed as non-controlling interest in the profi t or loss of the Group. (ii) Subsidiaries The consolidated fi nancial statements incorporate the assets and liabilities of all subsidiaries of the Group as at 30 June 2011 and the results of all subsidiaries for the fi nancial year then ended. BCIT and its subsidiaries together are referred to in this fi nancial report as the Group or the consolidated entity. Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the fi nancial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. (b) Income & Revenue Revenue relating to construction services under a service concession arrangement is recognised based on the stage of completion of the work performed. No profi t is recognised on this revenue as the design and construction has been outsourced. Pursuant to AASBs, payments for design and construction works must be treated as revenue. As such the expense is an equal and opposite offset against construction revenues. Financial Income primarily relates to the earning of interest on cash and deferred capital injections. Interest income on cash held is recognised as it accrues in profi t or loss, using the effective interest method. Annual Report

40 Notes to the Financial Statements 3. Significant accounting policies (continued) (c) Income Tax Income tax expense comprises current and deferred tax. Income tax expense is recognised in profi t or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised as equity. Current Tax Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profi t or loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Deferred Tax Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for fi nancial reporting purposes and the amounts used for taxation purposes. The tax base for an asset or liability is the amount attributed to it for tax purposes. Prima facie a deferred tax liability will be recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that suffi cient amounts will be available against which deductible temporary difference or unused tax losses and tax offsets can be utilised. Deferred tax assets and liabilities are not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profi t or loss; and deferred tax liability in relation to taxable temporary differences arising on the initial recognition of goodwill. Deferred tax liabilities are recognised in relation to investments in subsidiaries, branches and associates, and interests in joint ventures except to the extent that there is control over the reversal of the temporary difference and it is probable the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments and interest are only recognised to the extent that it is probable that there will be suffi cient taxable profi ts against which to utilise the benefi ts of the temporary differences and they are expected to reverse in the foreseeable future. Deferred tax assets relating to tax losses are recognised when the group believes their recoverability is probable. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax assets and liabilities refl ects the tax consequences that would follow from settling the assets and liabilities as is held at reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. BrisConnections Investment Trust (BCIT) Pursuant to provisions of Division 6A of the Income Tax Assessment Act 1936 ( the Act ), it is intended that BCIT will not be liable for income tax under the Act, provided that the taxable income of the Trust is fully distributed to unitholders each year. Accordingly, income tax and tax-effect accounting will not be applied in relation to BCIT. BrisConnections Holding Trust (BCHT) Pursuant to the provisions of Division 6C of the Act, it is intended BCHT will be treated as a public trading trust and effectively treated as a company for income tax purposes. The income tax expense or revenue for the period is the tax payable on the current period s taxable income based on the income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements, and to unused tax losses. 38 Annual Report 2011

41 Tax consolidation legislation Under the Syndicated Facilities Agreement executed in June 2008, the debt obligors within the Group are prevented from joining a consolidated group for tax. This undertaking will remain in place until July (d) Property, plant and equipment (i) Recognition and measurement Items of plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the assets. The cost of self-constructed assets includes the cost of material and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site to which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant & equipment have different useful lives, they are accounted for as separate items (major components) of property, plant & equipment. (ii) Depreciation and Amortisation Plant and equipment are depreciated on a straight-line basis at various rates over their expected average useful life for that asset type. The estimated useful lives of each class of asset are: Plant and Equipment 2 15 years Depreciation methods, useful lives and residual values are reassessed at the reporting date. (e) Acquisition of Assets The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of the exchange plus costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity. Identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group s share of the identifi able net assets of the subsidiary acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identifi cation and measurement of the net asset acquired. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent fi nancier under comparable terms and conditions. (f) Impairment At each reporting date an assessment is made as to whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, an estimate of the asset s recoverable amount is made. An asset s recoverable amount is the higher of its fair value less costs to sell and its value in use and determined for an individual asset, unless the asset does not generate cash infl ows that are largely independent of those from other assets or groups of assets and the asset s value in use cannot be estimated to be close to its fair value. In such cases, the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash generating unit exceeds its recoverable amount, the asset or cash generating unit is considered impaired and is written down to its recoverable amount. Annual Report

42 Notes to the Financial Statements 3. Significant accounting policies (continued) (f) Impairment (continued) In assessing value in use, the estimated future cash fl ows are discounted to their present value using a discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset. An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is only reversed if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profi t or loss. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (i) Financial assets A fi nancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A fi nancial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash fl ows of that asset. An impairment loss in respect of a fi nancial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash fl ows discounted at the original effective interest rate. Individually signifi cant fi nancial assets are tested for impairment on an individual basis. The remaining fi nancial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profi t or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For fi nancial assets measured at amortised cost, the reversal is recognised in profi t or loss. (ii) Non-fi nancial assets The carrying amounts of the Group s non-fi nancial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset s recoverable amount is estimated. For goodwill and intangible assets that have indefi nite lives or that are not yet available for use, the recoverable amount is estimated at each reporting date. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profi t or loss. Impairment losses recognised in respect of cash-generating units are allocated fi rst to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (g) Borrowings Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profi t and loss over the period of the borrowing using the effective interest rate method. 40 Annual Report 2011

43 Borrowings are classifi ed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. (h) Borrowing Costs Borrowing costs comprise interest and amortisation costs incurred in establishing borrowing facilities. Where borrowings are specifi cally incurred in relation to qualifying assets, the actual borrowing costs are capitalised into the carrying value of those assets. The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the entity s outstanding borrowings during the period. Borrowing costs are capitalised up to the date when the asset is substantially complete and ready for use and are subsequently amortised over the useful life of the asset. Any additional funds drawn down from lending facilities that were not utilised for construction have been invested and any income generated was offset against the capitalised interest on borrowings. (i) Equity / Unitholders Funds (i) Life of Trusts BCHT and BCIT were established in Australia. Under each Trust Deed they have been set up as indefi nite life trusts. As these trusts do not have a termination date, contributions by unitholders have been classifi ed as equity in the balance sheet. (ii) Partly paid units On 29 July 2008, 390,166,667 stapled units were issued. These units, worth $3.00, were paid to $1.00. The fi rst instalment of $1.00 per stapled unit was due by unitholders on 29 April 2009 and the remaining instalment of $1.00 was due on 29 January The full amount of the fi rst two instalments of $1.00 per stapled unit has been refl ected in equity. The fi nal equity contribution of $1.00 per stapled unit was taken up as the present value of the third instalment into Equity. (iii) Deferred equity contribution Pursuant to the Deferred Equity Commitment Deed, Thiess Infrastructure Trust and John Holland Infrastructure Trust have each subscribed for $100,000,000 of stapled units at $3.933 per stapled unit. The timing of this subscription is on the earlier of 24 months after completion, 71 months after fi nancial close, or demand made by security trustee on an event of default. As it is currently the Group s expectation that this subscription will occur 24 months after construction completion (mid 2012), the amount of this subscription has been discounted to present value ($146,920,747), and refl ected in equity (after issue costs). A corresponding receivable was also taken up. Thiess Infrastructure Trust and John Holland Infrastructure Trust will contribute equity as follows: Thiess Infrastructure Trust: $100,000,000, representing approximately 5.5% of the Notional Equity in the BrisConnections Unit Trusts. John Holland Infrastructure Trust: $100,000,000, representing approximately 5.5% of the Notional Equity in the BrisConnections Unit Trusts. Stapled Units issued under the Deferred Equity Commitment Deed will rank equally with previously issued Stapled Units. Notional Equity is the anticipated number of Stapled Units on issue including the Stapled Units issued to Thiess Infrastructure Trust and John Holland Infrastructure Trust on the assumption that no additional Stapled Units are issued after the Allotment Date (29 July 2008). The amount recorded in equity (after issue costs) at 30 June 2011 is $122,309,545 (calculated as the NPV of $146,920,747 less equity raising costs of $25,578,051, plus tax adjustment of $966,849) and includes the non-controlling interest of $2,180,056. The $173,086,576 receivable (refer Note 13) is shown at present value at 30 June This is calculated as $164,115,435 (30 June 2010 receivable) plus interest income of $8,971,141 for the year ended 30 June The receivable will continually be re-valued to present value. The increase in its present value each period will be refl ected as interest income in the income statement. The present value of the receivable will increase to $200,000,000 at the time the deferred equity contribution is received. Annual Report

44 Notes to the Financial Statements 3. Significant accounting policies (continued) (i) Equity / Unitholders Funds (continued) Thiess Infrastructure Trust and John Holland Infrastructure Trust cannot novate, assign, transfer or otherwise dispose of all or any part of their rights, benefi ts or obligations under the Deferred Equity Commitment Deed prior to Construction Completion. In the 24 month period after Construction Completion, Thiess Infrastructure Trust and John Holland Infrastructure Trust may nominate a replacement deferred subscriber to assume all its rights to subscribe for the Stapled Units provided that the mechanism set out in the Deferred Equity Commitment Deed is observed. This mechanism requires Thiess Infrastructure Trust and John Holland Infrastructure Trust (as applicable) to provide at least seven days written notice to the deed s parties of its intention to nominate a replacement deferred subscriber and stipulates that a replacement deferred subscriber cannot be appointed until the State has consented in writing to the replacement, the replacement deferred subscriber has provided substitute equity support which is acceptable to the Security Trustee, the Security Trustee is satisfi ed that the replacement deferred subscriber is solvent and reputable and the replacement deferred subscriber and the remaining parties to the deed have entered into a deed of accession on certain specifi ed terms. In the event of a capital reorganisation by consolidation, sub-division or bonus issue, the deferred issue price may be adjusted. The deferred subscribers may also contribute their equity before the Deferred Equity Contribution Date in the event of a pro rata offer to existing Unitholders or if there is an unconditional takeover offer for at least 50% of the Stapled Units, or a similar procedure structured as a scheme for the Stapled Units. BMCL, as trustee of the BrisConnections Unit Trusts, has agreed that it will exercise its powers as members of BrisConnections Investment Trust 2 and BrisConnections Holding 2 Pty Ltd to ensure that a single representative of Thiess Infrastructure Trust and John Holland Infrastructure Trust is appointed as a Director of each of the BrisConnections Group entities and BMCL. The right to have a director appointed will apply only while Thiess Infrastructure Trust and John Holland Infrastructure Trust collectively hold or are obliged to subscribe for at least 10% of the Notional Equity or Stapled Units to the maximum value of $200 million. A replacement deferred subscriber appointed by either of Thiess Infrastructure Trust or John Holland Infrastructure Trust in accordance with the terms of the Deferred Equity Contribution Deed will not have the right to appoint a Director to the abovementioned companies. (j) Intangible Assets (i) Expenses carried forward Project Deed for Airportlink Project Costs associated with the Project Deed (Concession Deed) for Airportlink Project will be capitalised up to the date when the asset is substantially complete and ready for use. Completion is contractually scheduled for June These costs will then be amortised on a straight line basis over the period during which the benefi ts are expected to arise, which is 41 years, from June In accordance with AASB Interpretation 12 Service Concession Arrangements, at Construction Completion an intangible asset, representing the cost of construction services provided in exchange for the Right to the Project Deed, will be recognised as the State does not have the primary obligation to pay BrisConnections Group for the concession services. No profi t or loss has been recognised on the exchange of the construction services for the intangible asset. The cost of intangibles, relating to future tolling rights includes: Costs incurred by the Group prior to entering into the Concession Deed with the State in relation to the design and construction of Airportlink; All directly related expenditure incurred in construction of the assets comprising Airportlink; and Borrowing costs on loans relating to the project up to the date of commencement of operations are capitalised as part of intangibles. The Right to the Project Deed is amortised over the period of the Project Deed, being 41 years from Construction Completion which is expected in June (iii) Amortisation Amortisation will be recognised in profi t or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the day they are available for use. The estimated useful life for the current year and prior period is as follows: Tolling rights 41 years 42 Annual Report 2011

45 (k) Trade and Other Creditors These amounts represent liabilities for goods and services provided to the Group prior to the end of the fi nancial period and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (l) Financial Instruments Debt and equity instruments Debt and equity instruments are classifi ed as either liabilities or as equity in accordance with the substance of the contractual arrangements. Transaction costs on the issue of equity instruments Transactions costs arising on the issue of the Stapled Units are recognised directly in equity as a reduction of the proceeds of the equity instruments to which the costs relate. Transactions costs are the costs that are incurred directly in connection with the issue of those equity instruments and which would not have been incurred had those instruments not been issued. (i) Derivative Financial Instruments The Group enters into derivative fi nancial instruments to manage its exposure to interest rate risk, including interest rate swaps. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date and changes therein are accounted for as described below. Cash fl ow hedges Changes in the fair value of the derivative hedging instrument designated as a cash fl ow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in profi t and loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. When the hedged item is a non-fi nancial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in equity is transferred to profi t or loss in the same period that the hedged item affects profi t or loss. In accordance with its treasury policy, the Group does not hold or issue fi nancial instruments for trading purposes. (ii) Non-Derivative Financial Instruments Non-derivative fi nancial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables. With the exception of cash and cash equivalents (refer Note 3(n)), these nonderivative fi nancial instruments are measured at amortised cost using the effective interest method, less any impairment losses. (iii) Fair value estimation The fair value of fi nancial assets and fi nancial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of fi nancial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash fl ows, are used to determine fair value for the remaining fi nancial instruments. The fair value of interest-rate swaps is calculated as the present value of the estimated future cash fl ows. The fair value of forward exchange contracts is determined using forward exchange market rates at the balance sheet date. (m) Employee Benefits (i) Wages and Salaries, Annual Leave and Sick Leave Liabilities for wages and salaries, including non-monetary benefi ts and annual leave expected to be settled within 12 months of the reporting date are recognised in current provisions in respect of employees services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for nonaccumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. Annual Report

46 Notes to the Financial Statements 3. Significant accounting policies (continued) (m) Employee Benefits (continued) (ii) Long Service Leave The liability for long service leave is recognised in non-current provisions, and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date including on-costs. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using interest rates on national government guaranteed bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outfl ows. (iii) Defi ned Contribution Superannuation Fund Obligations for contributions to defi ned contribution superannuation funds are recognised as an expense in the Income Statement as incurred. (iv) Other Long-Term Employee Benefi ts The Group s net obligation in respect of long-term employee benefi ts is the amount of future benefi t based on probability of achievement that employees have earned in return for their service in the current and future periods. (n) Cash and other financial assets For purposes of the cash fl ow statement, cash includes deposits at call with fi nancial institutions and other highly liquid investments with original maturities of three months or less which are readily convertible to cash on hand and are subject to an insignifi cant risk of change in value. Other fi nancial assets include cash on deposit with original maturity of 12 months or less. (o) Distributions A provision for trust distributions is recognised on an accruals basis. (p) Capital work-in-progress The Group has undertaken to manage on behalf of the State the outsourced construction of the Northern Busway (Windsor to Kedron), the Airport Roundabout Upgrade Project and parts of Airportlink. The value recorded represents the value of capital expenditure to date on behalf of the State relating to Airportlink which will be reimbursed on completion of construction. Capital expenditure on the Northern Busway (Windsor to Kedron) and Airport Roundabout Upgrade Project is reimbursed monthly by the State and is not included in the value recorded. (q) Rounding of Amounts The Group is of a kind referred to in Class Order 98/100, issued by ASIC, relating to the rounding off of amounts in the Directors Report and fi nancial report. Amounts in the Directors Report and fi nancial report have been rounded off to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated. (r) Goods and Services Tax Revenue, expenses and assets are recognised net of the amount of Goods and Services Tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expenses. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from or payable to, the ATO is included as a current asset or liability in the balance sheet. Cashfl ows are included in the statement of cash fl ows on a gross basis. The GST components of cash fl ows arising from investing and fi nancing activities which are recoverable from or payable to, the ATO are classifi ed as operating cashfl ows. (s) Earnings per unit The Group presents basic and diluted earnings per unit (EPS) data for its ordinary stapled units. Basic EPS is calculated by dividing the profi t or loss attributable to ordinary stapled unit holders by the weighted average number of ordinary stapled units outstanding during the period. Diluted EPS is determined by adjusting the profi t or loss attributable to ordinary stapled 44 Annual Report 2011

47 (t) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outfl ow of economic benefi ts will be required to settle the obligation. Provisions are determined by discounting the expected future cash fl ows at a pre-tax rate that refl ects current market assessments of the time value of money and the risks specifi c to the liability. (u) New Standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2010 and have not been applied in preparing these fi nancial statements. None of these is expected to have a signifi cant impact on the fi nancial statements of the Group except for AASB9 Financial Instruments, which becomes mandatory for the Group s 2014 fi nancial statements and could change the classifi cation and measurement of fi nancial assets. The Group does not plan to adopt this standard early and the extent of the impact has not been determined. 4. Income Consolidated 30 June June 2010 Other Income Amortised Interest on Deferred Capital 8,971 8,971 Interest 1,750 1,220 10,721 10, Employee Expenses Consolidated 30 June June 2010 Wages and Salaries 5,809 4,897 Other associated personnel expenses Interest Increase in Liability for annual leave 6 60 Increase in provision for long term incentive (refer Note 30) 1,100-7,697 5,520 Annual Report

48 Notes to the Financial Statements 6. Current Tax Expense/(Benefit) Consolidated 30 June June 2010 Current tax expense/(benefit) Current period 2, Adjustment for prior periods Deferred tax expense/(benefit) Recognition of net temporary differences (32,952) (17,045) Total Income Tax expense/(benefit) (29,970) (16,954) Income Tax recognised directly in Equity Derivatives 76,727 89,266 Total Income Tax Benefit recognised directly in Equity 76,727 89,266 Numerical reconciliation between tax expenses and pre-tax net profit Profi t for the period 27,479 17,164 Total Income Tax benefi t (29,970) (16,954) Profi t/(loss) excluding Income Tax (2,491) 210 Income Tax at entity rate 30% (747) 63 Income in entities not subject to Iincome Tax (30,054) (17,024) Non-deductible expenses Income Tax expense/(benefit) (29,970) (16,954) This Note presents the consolidated tax position for the Group which comprises both taxable and non-taxable entities (refer Note 3(c)). 46 Annual Report 2011

49 7. Tax Assets and Liabilities (a) Deferred tax asset and liability balance 30 June 2011 Consolidated 30 June 2010 Deferred tax asset Hedges (recognised in equity) 76,727 89,266 Other - (45) Tax Losses 80,510 38,877 Balance at 30 June 157, ,098 Deferred tax liability Loans and borrowings 13,704 5,822 Other Costs 10,735 7,404 Balance at 30 June 24,439 13,226 Net deferred tax asset 132, ,872 Consolidated 30 June June 2010 (b) Movement in deferred tax assets and liabilities Deferred Income Tax expense/(benefi t) comprises: Decrease (increase) in deferred tax assets: 12,539 (34,250) Hedges** (45) 299 Other* (41,633) (26,360) Tax losses* (Decrease) increase in deferred tax liabilities: Other costs* 11,213 8,699 Total Movement in deferred tax balances (17,926) (51,612) * Recognised in Income Statement **Recognised in Equity This Note presents the consolidated tax position for the Group which comprises both taxable and non-taxable entities (refer Note 3(c)). Annual Report

50 Notes to the Financial Statements 8. Cash and other financial assets 30 June 2011 Consolidated 30 June 2010 Cash at Bank and on hand (1) 169, ,936 Other Financial Assets (cash on deposit) (2) 73,300 67,250 (1) The amount shown in Cash at Bank and on hand includes: 242, ,186 - $5,000,000 comprising an amount relating to a bank guarantee held for a subsidiary of the Group to discharge its Net Tangible Assets requirement for its Australian Financial Services Licence. This money is not available for general use at 30 June 2011 (30 June 2010 Nil). - $7,320,000 comprising an amount on deposit for market fl ex arrangements with the Bank syndicate. This money is not available for general use at 30 June 2011 (30 June 2010 $7,320,000). - $143,150,000 comprising an amount held in the Group s disbursement account for payment of design and construction costs. This money is not available for general use at 30 June 2011 (30 June 2010 $151,730,000). (2) The amount shown in other fi nancial assets includes $61,100,000 comprising an amount held in the Group s disbursement account for payment of design and construction costs. This money is not available for general use at 30 June 2011 (30 June 2010 $66,250,000). 9. Reconciliation of cash flows from operating activities Consolidated 30 June June 2010 Cash flows from operating activities Profi t (loss) for the period 27,479 17,164 Adjustments for: Depreciation Amortisation of Intangible assets Net fi nance income (1,749) (1,220) Non-cash income items (interest on deferred equity) (8,971) (8,971) Income tax expense (29,970) (16,954) Operating profit before changes in working capital and provisions (13,176) (9,954) Change in receivables 1,556 (10,697) Change in trade and other payables (380) 7,368 Change in prepayments (115) 117 Change in provisions and employee benefi ts 1, Other (1,058) 1,123 (12,067) (11,983) Interest paid (176,791) (65,095) Interest received 14,287 6,670 Net cash outflow from operating activities (174,571) (70,408) 48 Annual Report 2011

51 10. Plant and equipment Consolidated 30 June June 2010 Cost Opening Balance Additions Balance Depreciation Opening Balance 32 5 Depreciation for the period Balance Written down value Capital Works in Progress Consolidated 30 June June 2010 Cost Opening Balance 159,032 62,775 Costs capitalised 66,413 77,398 Interest capitalised 18,859 18,859 Balance at 30 June , ,032 Refer also to Note 3(p) 12. Remuneration of Auditors Consolidated 30 June June 2010 Audit Services Statutory Audit Services Additional 2009 audit fees - 27,745 Audit of fi nancial reports 139, ,700 Compliance Plan Audit 17,200 16,500 AFSL Audit 9,700 9, , ,245 Other Services Accounting Advice 17,500-17,500 - Annual Report

52 Notes to the Financial Statements 13. Receivables Current 30 June 2011 Consolidated 30 June 2010 Sundry Debtors 2,230 1,821 GST Refundable 7,976 8,655 Equity Instalments of $1 per unit (due 29 Jan 2010) 1-1,286 Total Current Receivables 10,206 11,762 Non Current Deferred Equity Contribution 2 173, ,115 Total Non Current Receivables 173, ,115 1 This loan was repaid in accordance with the Underwriting Agreement on 29 July Thiess Infrastructure Trust & John Holland Infrastructure Trust have each subscribed for $100,000,000 stapled units at $3.933 per stapled unit on the Deferred Equity contribution date (currently expected to occur 24 months after construction completion). $173,086,576 represents the present value of this contribution at a discount rate of 5.35% which represents the Group s cost of borrowings for the Equity Facility. The $173,086,576 receivable is shown at present value at 30 June This is calculated as $164,115,435 plus interest income of $8,971,141 for the period ending 30 June The present value of the receivable will increase to $200,000,000 at the time the deferred equity contribution is received. 14. Non-Current Assets Intangibles Consolidated 30 June June 2010 Future Tolling Rights Design and development costs 2,767,698 1,756,941 Capitalised Interest 266, ,101 3,033,727 1,859,042 Interest was capitalised at an effective interest rate of % (2010: %). Consolidated 30 June June 2010 Cost Opening Balance 1,859, ,392 Contract and interest payments during year 1,174,685 1,002,650 Balance at 30 June ,033,727 1,859, Annual Report 2011

53 Impairment analysis At each reporting date, the Group assesses whether there is any indication that the Airportlink Project may be impaired. The Group then makes a formal estimate of the recoverable amount of the asset, using a value in use calculation. In assessing the value in use, the estimated future operating cash fl ow from the road inclusive of future capital expenditure forecasts over the 41 year operating life of the concession are discounted to their present value using a discount rate that refl ects current market assessments of the time value of money and the risks specifi c to the asset. For these purposes, a pre-tax discount rate of 11.17% as been used (11.37% as at 30 June 2010). The impairment test shows an excess value in use of $903 million over the carrying current value of the asset and accordingly the BrisConnections Group has determined that there is no impairment. The value in use estimate is most sensitive to changes in assumptions regarding traffi c and the pre-tax discount rate. A cash fl ow model covering the full concession period has been used and is considered appropriate for these testing purposes given the single revenue stream and long term stable cash fl ows generated. Airportlink is still in construction and as such, solely for the purpose of the value in use estimates, a series of assumptions have been made as to future traffi c volumes. The steady state traffi c volumes as set out in the 2008 Product Disclosure Statement are considered reasonable and no change has been made to them. Traffi c forecasts are derived by independent traffi c experts from a complex modelling exercise incorporating a variety of economic and traffi c parameter assumptions including ramp up (starting traffi c, length of ramp up period, shape of ramp up curve), network and screenline growth including growth in peak hour traffi c and expansion factors, capacity constraints, and many other factors. Accordingly, in considering if the asset is impaired for accounting reporting, it has been determined an appropriate way to test sensitivity to changes to these multiple assumptions is to look at the impact of a permanent increase or reduction in forecast traffi c volumes over the entire term of the concession period. BrisConnections monitors a number of key assumptions used in developing the original traffi c forecasts, including : Forecast growth in employment at Australia TradeCoast Actual and forecast growth in passenger numbers at assets controlled by Brisbane Airport Corporation Forecast growth in CBD employment Network changes including CLEM7, GoBetween Bridge and Northern Link (Legacy Way) Public Transport utilisation and mode share Urban development forecasts including those for Hamilton, Bowen Hills and Chermside Actual traffi c growth across AirportLink Project screenlines (catchment) Employment growth in the traffi c catchment area Population growth Growth in Average Weekly Earnings and the Wage Price Index Economic growth factors including state product, retail sales, dwelling approvals, motor vehicle sales and fi nance approvals. The majority of these key assumptions continue to perform in line with or above the forecast assumptions, although we note that population and employment growth has slowed and economic growth factors remain generally subdued, but with forecasts for strong activity in the next two years. The traffi c forecast is an estimate and once Airportlink opens, actual traffi c numbers may be different, possibly materially so, from this forecast. Accordingly, the table below shows the impact of various sensitivities on the current excess value in use (+$903 million) over the carrying current value of the asset for a change in the PDS forecast traffi c over the entire concession period. Annual Report

54 Notes to the Financial Statements Percentage Change in base case traffic over life of Concession Change to Excess Value in Use -20.0% -$ % -$ % -$ % -$ % % +$ % +$ % +$ % +$569.7 An excess value in use would still be arrived under any of these percentage changes. The traffi c model also incorporates assumptions in respect of ramp up, including the length of the ramp up period (15 months), the discount of commencing traffi c to the steady state traffi c (which varied in each of the three tollable sections) and the shape of the ramp up curve. Sensitivities in respect of the ramp up period showed that by increasing the ramp up period to 36 months resulted in a reduction of $60.5 million in the current excess value in use. Leaving the ramp up period at 36 months and doubling the discount of commencing traffi c resulted in a further reduction of $80.8 million to a total reduction of $141.3 million. In both sensitivities, the shape of the ramp up curve was more conservative than assumed in the traffi c model. Again, an excess value in use for both ramp up sensitivities would still be the result. The current value in use is also sensitive to changes in the discount rate. For example, a 50 basis point change in the pre-tax discount rate will impact the current value in use by +/- $285 million. An excess current value in use would still be the result. No amortisation has been charged as the asset is still under construction. Impairment testing is carried out for accounting purposes, and does not affect the actual capital structure of the BrisConnections Group. 15. Non-Current Assets other 30 June 2011 Consolidated 30 June 2010 Insurance Prepayment Current liabilities trade and other payables For personal use only14. Non-Current Assets Intangibles (continued) 30 June Consolidated 30 June 2010 Trade creditors and accruals* 89, ,430 *Includes Design & Construction payment claims totalling $86,928,786 (2010: $107,827,119) 89, , Annual Report 2011

55 17. Cashflow Hedges Consolidated 30 June June 2010 Present Value of Derivative Liability - Current 70,451 44,725 Present Value of Derivative Liability - Non Current 185, , , ,495 Deferred Tax Assets - Non Current 76,726 89,266 Cash Flow Hedge Reserve 179, , , , Current liabilities loans and borrowings Consolidated 30 June June 2010 Loan MCAL Underwriters Loan Deutsche Bank AG Underwriters , Non-current liabilities loans and borrowings Consolidated 30 June June 2010 Equity Bridge Facility 170, ,267 State Bridge Facility 267, ,164 Construction Facility 2,015, ,130 Sub total 2,452,941 1,167,561 Less deferred debt establishment costs (48,728) (55,569) 2,404,213 1,111,992 Annual Report

56 Notes to the Financial Statements 20. Equity Date Movement in ordinary stapled units issued 2011 number of units Consolidated 2010 number of units 1 July 2009 Units on issue 390,166,749 3 August 2009 Units issued under DRP (2nd distribution) 98, June 2010 Balance 390,264,895 1 July 2010 Units on Issue 390,264, June 2011 Balance 390,264,895 Ordinary Stapled Units The units of BCHT and BCIT are stapled and the number of units issued by each entity is the same, however, their values differ. Currently their respective values are apportioned 1% (BCHT) and 99% (BCIT). Deferred equity contribution Thiess Infrastructure Trust and John Holland Infrastructure Trust have each subscribed for $100,000,000 of stapled units at $3.933 per stapled unit (50,851,767 units). The timing of this subscription is on the earlier of 24 months after completion, 71 months after fi nancial close, or demand made by security trustee on an event of default. As it is currently the Group s expectation that this subscription will occur 24 months after construction completion, the amount of this subscription has been discounted to present value, and refl ected in equity. A corresponding receivable was also taken up. The receivables in relation to the Deferred Equity Contribution from the contractor is guaranteed by way of bank guarantees. Hedging Reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value cashfl ow hedging instruments related to hedged transactions that have not yet matured, net of the related tax effect. 21. Earning per unit Basic Earnings per unit The calculation of earnings per unit at 30 June 2011 was based on a profi t of $98,049,000 and a weighted average number of ordinary units outstanding of 390,264,895. Diluted Earnings per unit The calculation of diluted earnings per unit at 30 June 2011 was based on profi t of $89,078,000 and a weighted average number of ordinary units outstanding of 441,116,662 after adjustment for the effects of all dilutive potential ordinary units of 50,851,767 calculated as follows: Profit attributable to ordinary unitholders (diluted) Consolidated 30 June June 2010 Net profi t attributable to ordinary unitholders 98,049 56,910 Amortised interest on deferred capital (8,971) (8,971) Adjusted Net profit attributable to ordinary unitholders 89,078 47, Annual Report 2011

57 Weighted average number of ordinary units (diluted) Consolidated 30 June June 2010 Weighted average number of ordinary units 390, ,265 Effect of deferred capital contribution 50,852 50,852 Weighted average number of ordinary units 441, , Distributions consolidated group There have been no distributions declared or paid for the year ended 30 June Financial Instruments The Group has exposure to the following risks from their use of fi nancial instruments: credit risk; liquidity risk; market risk. This Note presents information about the Group s exposure to each of the above risks, the objectives, policies and processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are included throughout this fi nancial report. The Board of Directors has delegated to management the responsibility for the establishment, oversight and operation of the risk management framework. The Board has established the Audit, Risk and Compliance Committee, which is responsible for overseeing and monitoring risk management policies. The committee reports regularly to the Board of Directors on its activities. Risk management policies are in place to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to refl ect changes in market conditions and the Group s activities. The Group, through their training and management standards and procedures, aim to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Group Audit, Risk and Compliance Committee oversees how management monitors compliance with the Group s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. Credit risk Credit risk is the risk of fi nancial loss to the Group if a customer or counterparty to a fi nancial instrument fails to meet its contractual obligations, and arises principally from the Group s receivables from deferred equity contribution (Thiess Infrastructure Trust & John Holland Infrastructure Trust subscription for $200 million in value of stapled units at $3.933 per stapled unit) and other parties. Thiess Infrastructure Trust and John Holland Infrastructure Trust have provided bank guarantees in support of the deferred equity contribution. At reporting date, apart from the deferred equity contribution, there were no signifi cant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each fi nancial asset, including derivatives in the balance sheet. Management does not expect any counterparty to fail to meet its obligations. Annual Report

58 Notes to the Financial Statements 23. Financial Instruments (continued) (i) Trade and other receivables The Group is currently in a construction phase and does not have a customer base. Therefore there is no risk of default, however further review of this risk area is planned once the toll road is in operation. The Group will establish appropriate customer credit policies including standard payment terms and conditions. Purchase limits will be established for each customer, representing the maximum open amount without requiring approval which will be reviewed quarterly. Customers that fail to meet the benchmark creditworthiness may transact only on a prepayment basis. As the Group enters operations, monitoring will commence for customer risk, with customers assessed according to their credit characteristics. The Group will establish an allowance for impairment that represents an estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance will be a specifi c loss component that relates to individually signifi cant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identifi ed. The collective loss allowance will be determined based on historical data of payment statistics for similar fi nancial assets. (ii) Investments and cash equivalents The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have a credit rating of at least A1 from Standard & Poor s and A from Moody s. Given these high credit ratings, the Group does not expect any counterparty to fail to meet its obligations. (iii) Financing arrangements The Group s future funding is secured with high credit quality fi nancial institutions. The Product Disclosure Statement issued by the Group in June 2008 highlighted a number of risk exposures. However, one particular risk, Debt Funding Risk has increased in light of the global credit crisis. The term of the primary debt funding facility (used to construct and then operate the toll road) is locked in place for a period of 10 years (maturing 2018). This funding, as outlined in the Product Disclosure Statement, is being provided by a syndicate of Australian and overseas banks. The ability of the Group to make drawdowns against this facility is subject to the Group meeting its obligations under the funding arrangements. The global fi nancial crisis has signifi cantly impacted the banking industry and events in Europe and ongoing stress testing have particularly impacted European Banks. As a consequence a number of the banks, including several of those providing funding to the Group, have recently experienced rating downgrades or are under review pending a possible downgrade. At the date of this report all banks in the syndicate, apart from two, had a Standard and Poors rating of A or greater. One bank however has a Standard and Poors rating of BBB and the other has a Standard and Poors rating of BB and the same banks have Moody s ratings of Baa3 and Ba2 respectively. As at the date of this fi nancial report all banks have met their drawdown obligations. However, in the event that a bank in the syndicate fails to continue providing funding for the construction activities, it is the Group s responsibility to replace that bank in the syndicate as the obligation to provide debt by each of the fi nanciers is a several obligation and not a joint obligation. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its fi nancial obligations as they fall due. The Group s approach to managing liquidity is to ensure, as far as possible, that it will always have suffi cient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group s reputation. Prudent liquidity risk management implies maintaining suffi cient cash and term deposits, the availability of funding through an adequate amount of committed credit facilities and the ability to close-out market positions. At reporting date the Group has suffi cient funds and facilities available to meet payments as they arise. It is expected that at the completion of construction, the Group will have in excess of $300.0 million in liquidity of which $198.3 million will be drawn from the Construction Facility at completion of construction (refer Note 24). 56 Annual Report 2011

59 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group s income or the value of its holdings of fi nancial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. The Group manages its market risk by entering into long dated interest swaps on its debt. Market risk on cash held by the Group is not material in the context of the size of the balance sheet and the short term nature of those cash deposits. (i) Cash fl ow sensitivity analysis for variable rate instruments A change of 50 basis points in interest rates at the reporting date would have increased (decreased) equity and profi t or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. 30 June bp increase Profit or loss 50bp decrease Consolidated 50bp increase Equity 50bp decrease Variable rate instruments 1,214 (1,214) Interest rate swap 74,854 (77,269) Cash fl ow sensitivity (net) 1,214 (1,214) 74,854 (77,269) 30 June 2010 Variable rate instruments 1,206 (1,206) Interest rate swap 81,432 (83,926) Cash fl ow sensitivity (net) 1,206 (1,206) 81,432 (83,926) (ii) Cash fl ow and fair value Interest rate risk The Group enters into derivatives, and also incurs fi nancial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines approved by the Board. Generally the Group seeks to apply hedge accounting in order to manage volatility in profi t or loss. The Group s funding arrangements are in place until 2018 and the interest rate exposure is fully hedged up to construction completion in 2012 with at least 80% hedged to July The Group manages its cash fl ow interest-rate risk by using fl oating to fi xed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings from fl oating rates to fi xed rates. The Group raises long term borrowings at fl oating rates and swaps them into fi xed rates. Under the interest-rate swaps, the Group agrees with other parties to exchange, at specifi ed intervals the difference between the fi xed contract rate and the fl oating-rate interest amounts calculated by reference to the agreed notional principal amounts. (iii) Capital management The Board s policy is to maintain a strong capital base so as to maintain investor, creditor and market confi dence and to sustain future development of the business. The Group currently assesses its capital management on its total debt and equity outstanding, the relevant maturity dates and unitholder total return requirements. Once operations commence the Board of Directors will monitor the return on the stapled units, which the Group defi nes as net operating income divided by total equity. The Board of Directors also monitors the level of distributions to ordinary stapled security holders. The Board announced on 20 November 2009 no further distributions will be paid prior to completion of the toll road. As such, no distributions were paid during the period to 30 June Annual Report

60 Notes to the Financial Statements 23. Financial Instruments (continued) BrisConnections has a Distribution Reinvestment Plan which is underwritten by Macquarie Capital Advisors Limited until 31 October The underwriting is limited by certain caps. There were no changes in the Group s approach to capital management during the year other than the AFSL requirements following the acquisition of BMCL (refer Note 26). (iv) Exposure to Credit Risk The carrying amount of the Group s fi nancial assets represent the maximum credit exposure. The Group s maximum exposure to credit risk at the reporting date was: 30 June 2011 Consolidated 30 June 2010 Cash and cash equivalents 242, ,186 GST & other Trade Receivables 10,206 10,476 Instalment Receivable - 1,286 Deferred Equity Contribution Receivable 173, ,115 None of the Group s fi nancial assets were past due. (v) Liquidity risk 426, ,063 The following are the contractual maturities of fi nancial liabilities, including estimated interest payments and excluding the impact of netting agreements and interest rate swaps. During the contracted construction period up to June 2012, the Group will continue to make monthly draw downs on the available facilities to cover capital expenditure and interest (refer Note 24). Consolidated 30 June 2011 Carrying Amount Contractual Cash flows 6 mths or less 6 12 mths 1 2 years 2 5 years More than 5 years Average Effective interest rate Non-Derivative Financial liabilities Secured Loans 2,452,941 2,592,775 19,038 19, ,257 41,402 2,016, % Trade creditors and accruals 89,005 89,005 89, % 2,541,946 2,681, ,043 19, ,257 41,402 2,016,668 Derivative Financial liabilities Interest Rate Swaps used for hedging 255, ,533 33,889 38,512 57, ,686 54, , ,533 33,889 38,512 57, ,686 54, Annual Report 2011

61 Consolidated 30 June 2010 Carrying Amount Contractual Cash flows 6 mths or less 6 12 mths 1 2 years 2 5 years More than 5 years Average Effective interest rate Non-Derivative Financial liabilities Secured Bank Loans 1,111,992 1,310,135 18,412 18, , , , % Underwriter Loans 1,286 1,286 1, % Trade creditors and accruals 109, , , % 1,222,708 1,420, ,128 18, , , ,076 Derivative Financial liabilities Interest Rate Swaps used for hedging 297, ,329 18,896 27,211 72, , , , ,329 18,896 27,211 72, , ,743 1,520,203 1,780, ,024 45, , , ,819 (v) Fair Values The Group has assessed the carrying values of its fi nancial assets and liabilities and, given the types of fi nancial assets and liabilities, the current market conditions and the risk mitigation being imposed on the business, has determined that the carrying values equate to the fair values. (vi) Fair Value Hierarchy The following table provides an analysis of fi nancial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Consolidated 30 June June 2010 Level 2: Financial assets at FVTPL Derivative Liabilities 255, ,495 Total 255, ,495 Annual Report

62 Notes to the Financial Statements 24. Borrowings Financing Arrangements Total facilities available to the BrisConnections Group at 30 June 2011 were as follows: Drawn Down Amount Facility Limit Maturity Date State Bridge* $267,164,299 $267,164,299 6 July 2012 Equity Bridge** $170,267,194 $200,000, June 2014 Construction/Term *** $2,015,510,155 $2,928,000, July 2018 Liquidity Facility **** - $110,156, July 2018 Total facilities available to the BrisConnections Group at 30 June 2010 were as follows: Drawn Down Amount Facility Limit Maturity Date State Bridge* $267,164,299 $267,164,299 6 July 2012 Equity Bridge** $170,267,194 $200,000, June 2014 Construction/Term *** $730,129,857 $2,928,000, July 2018 Loan MCAL Underwriters $642, July 2010 Loan Deutsche Bank AG Underwriters $642, July 2010 Liquidity Facility **** - $110,156, July 2018 * The State Bridge facility is fully drawn down and it is repaid 7 days after the date of completion of construction, which is assumed to be 29 June, 2012 ** No further drawings under the Equity Bridge Facility are available until after 29 June *** Draw down from the Construction Facility commenced in December It converts to the Term facility on completion of construction. This debt fi nancing is being provided through a syndicated senior bank debt facility comprising 10 banks (see also Note 23(iii) Credit Risk). **** The Liquidity facility is not available to be drawn down until completion of construction which is assumed to be 29 June Assets pledged as security BrisConnections Nominees Company Pty Limited in its own capacity and as trustee of the BrisConnections Asset Trust, BrisConnections Operations Pty Limited, Northern Busway Contracting Pty Limited BrisConnections Finance Pty Limited, BrisConnections Contracting Pty Limited, BrisConnections Holding 2 Pty Limited, BrisConnections Management Company Limited and Trust Company Limited as trustee and custodian respectively of the BrisConnections Investment Trust 2 and BrisConnections Management Company Limited (in its capacity of responsible entity and manager of each of BrisConnections Holding Trust and BrisConnections Investment Trust) have granted charges over their assets and undertakings to secure the funding provided by the fi nanciers and hedge providers. 60 Annual Report 2011

63 Equity Bridge Facility, State Bridge Facility and Construction Facility Funds drawn under the Equity Bridge Facility, State Bridge Facility and Construction Facility will be applied towards meeting costs incurred by the Group, specifi cally: construction costs certain amounts payable to the construction contractor under the design and construction contract; development costs costs incurred at fi nancial close and during the construction period; operating costs incurred prior to construction completion costs payable to the operator, fees payable to the lenders engineer or the security trustee, operating expenses, amounts payable to comply with project documents, capital maintenance contributions and taxes (including GST); fi nancing costs incurred prior to construction completion funding interest (net of payments under the swap arrangements), fees and other expenses incurred during the construction period in relation to the debt and other fees due; reserve accounts funding the required debt services reserve account, ramp up reserve account, equity contingency reserve account, DRP reserve; and other meeting any other costs approved by the lenders. Drawings under the facilities may be requested monthly. The drawings are deposited into an account controlled by the lenders. Withdrawals from the account are permitted subject to certain conditions precedent: no specifi ed event of default, potential event of default, or review event subsists or will occur; all necessary authorisations have been obtained for the withdrawal and for the relevant stage of the design and construction contract; a withdrawal notice has been received by the lenders agent; and receipt by the lenders agent of a progress certifi cate which demonstrates satisfaction of the costs to complete test (demonstrating that there are enough funds to fi nance construction until construction completion). The Equity Bridge Facility will be repaid with the proceeds from the deferred equity contribution. The State Bridge Facility will be repaid by the State of Queensland on construction completion. Term Facility The construction facility will be converted into a loan owing under the Term Facility at construction completion (June 2012 or earlier). The Term Facility will comprise a medium-term, interest only tranche repayable as follows: Tranche A: 100% of principal outstanding, repayable 30 July Annual Report

64 Notes to the Financial Statements 25. Commitments Commitments for the cost of various goods and services to be supplied but not recognised as liabilities: Capital expenditure The Group has entered into a construction contract with an unincorporated joint venture comprising John Holland Pty Ltd and Thiess Pty Ltd ( TJHJV ) to complete the required construction activities over the expected period of 47 months from July Construction commitments contracted for, but not recognised in the balance sheet, are payable as follows: Consolidated 30 June June 2010 Within one year 645,065 1,349,069 One year or later and no later than fi ve years - 273, ,065 1,622,768 Commitments related to the intangible asset included above are: Within One Year $528,410,690 (2010:$1,060,027,000) and one year or later and no later than fi ve years $nil (2010:$245,970,000). Maintenance Contract BrisConnections Group has entered into an operations and maintenance agreement with Thiess John Holland Motorway Services Pty Ltd, with a term that ends on the expiration of fi ve years after the completion of construction unless terminated or extended in accordance with the contract (O&M contract). Construction period Consolidated 30 June June 2010 Within one year 5,842 1,443 One year or later and no later than 5 years - 5,333 5,842 6,776 Commencement of Operations Amounts payable for the initial fi ve year period following commencement of operations (adjusted for CPI increases) are as follows: Consolidated 30 June June 2010 Within one year 23,127 22,691 One year or later and no later than fi ve years 106, , , ,609 After fi ve years the Group may either elect to extend the O&M contract, re-tender the contract to other available service providers or bring road-side operations and maintenance in-house. 62 Annual Report 2011

65 26. Acquisition of Subsidiary In the prior period the Group disclosed a contingent liability being the responsible entity call option. On 21 October 2010 the Group pursuant to the option agreement dated, 1 October 2008 acquired all the shares in BrisConnections Management Company Limited (BMCL) for $294,050 in cash. BMCL is the responsible entity of BCIT and BCHT. Following acquisition, BMCL is a wholly owned subsidiary of BrisConnections RE Holdings Pty Ltd (BCREH). BCREH was established by the Group on 30 September 2010 and is wholly owned by BCHT. If the acquisition had occurred on 1 July 2010, management estimates that there would be no effect on consolidated revenue or consolidated profi t for the year ended 30 June The acquisition of BMCL has the following effect of the Group s assets and liabilities. Recognised Values on acquisition Cash and cash equivalents 303 Receivables 52 Net Tax Assets 14 Payables (75) Total net tangible assets 294 Consideration Paid, satisfi ed in cash (294) Cash acquired 303 Net cash infl ow 9 BMCL and BrisConnections Operations Pty Limited have entered into six year (from 2008) management deeds (renewable by either party for a further one year) that document the administrative and asset management functions to be performed by BrisConnections Operations Pty Limited. BMCL has entered into a services agreement so that its AFSL management services are provided by BrisConnections Operations Pty Limited, a subsidiary of BCHT until 1 April 2013 (renewable by BMCL for a further 2 years), in consideration of a rebate on the management fee. This agreement does not, however, relieve BMCL from its obligations as Responsible Entity under the Corporations Act. Following the acquisition of BMCL by the Group, all of the management fee is retained within the Group. 27. Contingent Liabilities The contract between the Group and a joint venture comprising TJHJV, whose ultimate parent is Leighton Holdings Ltd ( Leighton ), is a fi xed price fi xed term contract (with limited capacity to increase either). Leighton has announced to the market that it has suffered contracting losses on the contract and that it is considering its options to seek recompense from a variety of parties. It is possible that Leighton or TJH may commence some proceedings and it is further possible that the Group could become engaged in such proceedings. BrisConnections has reviewed its contractual terms with TJHJV and considers that it is not appropriate to make any provision for this contingency. Annual Report

66 Notes to the Financial Statements 28. Employee Benefits 30 June June 2010 Current Liability for long term incentives 1,100 - Liability for annual leave Total employee benefits 1, Related Party Transactions Aggregate amount of transactions with related parties incurred in relation to the BrisConnections Group being awarded the concession to fi nance, design, build, maintain and operate Airportlink. Macquarie Bank Limited 1 30 June June 2010 IPO Equity Bridge Facility interest and commitment fees - 18,673,474 BrisConnections Management Company Limited as Responsible Entity 2 Management fees 155, ,196 There were no outstanding balances with the above related parties at period end other than disclosed below and in Note 18 in respect of Macquarie Bank Limited. 1 Macquarie Bank Limited - Macquarie Bank Limited or its associates ( Macquarie ) became a major unit holder on 29 October 2009, when the loan made by Macquarie pursuant to the Underwriting Agreement dated 28 May 2008 in respect of the second instalments converted to units. Macquarie have also acquired additional units in relation to the conversion of the underwriters loans, for the third instalment due 29 January 2010, to equity on 29 July Responsible Entity - The BrisConnections Group is a stapled entity and comprises the aggregation of BCHT and its wholly-owned controlled entities and BCIT and its wholly-owned controlled entities. The Responsible Entity of BCHT and BCIT is BMCL. BMCL is now wholly owned by the Group and as such all management fee are retained by the Group from acquisition date. Refer Note 26 for further details. TJHJV has been engaged to complete the design and construction activities. The amount payable during the period was $1,308,761,356 (2010: $1,283,500,686) which includes an amount outstanding at 30 June 2011 of $100,991,567 (2010: $135,478,683). The corresponding receivable from the State Government in relation to Northern Busway & Airport Roundabout Upgrade projects has been offset from the accrual in the balance sheet. 64 Annual Report 2011

67 30. Key Management Personnel The following were key management personnel of the Group at any time during the reporting period (appointment dates are listed): Directors of BMCL (responsible entity) Appointment Date Trevor C Rowe 23 May 2008 Raymond H Wilson 23 May 2008 John G Allpass 23 May 2008 Richard JE Wharton 23 May 2008 Martin DE Kriewaldt 24 October 2008 Mark A Snape 24 October 2008 Mark H Lynch (alternate to Mark A Snape) 21 November 2008 Andrea C Harcourt 1 December 2010 Key management personnel Raymond H Wilson 3 November 2008 Nicholas Lattimore 13 October 2008 Charles C MacDonald 1 October 2008 Tamira D Herbst 6 October 2008 Colin J Richmond 4 April 2011 Andrew F Thornton 7 March 2011 Principles of remuneration The management of the Group is outsourced to BrisConnections Operations Pty Limited pursuant to a management services agreement (refer Note 26). BrisConnections Operations Pty Limited in turn employs the key management personnel. Key management personnel of BrisConnections have authority and responsibility for planning, directing and controlling activities. Key management personnel comprise the Directors of BMCL and executives. Compensation levels for the key management personnel of the Group are competitively set to attract and retain appropriately qualifi ed and experienced Directors and executives. The Board obtains independent advice on the appropriateness of the Group s compensation strategy, where appropriate. Compensation packages may include a mix of fi xed and variable compensation. Remuneration Remuneration arrangements for executives and employees of BrisConnections Unit Trusts, including Specifi ed Directors and Specifi ed Executives in accordance with sections of the AASB 124 Related Party Disclosures are set out below. Board s responsibility for remuneration The Board s responsibilities, as set out in the Board Charter, include: appointing, remunerating, reviewing the performance of, and (where applicable) removing the CEO; approving the appointment, remuneration, and (where applicable) removal, and participating in review of the performance of, the Chief Financial Offi cer ( CFO ), the Company Secretary ( CS ) and senior managers reporting to the CEO; establishing a structure for remuneration in BrisConnections (including for the CEO) which is linked to achievement of the Group objectives and is benchmarked against market for organisations of similar size, operations and complexity; establishing the performance requirements of the CEO and senior management so they are linked to achievement of the Group objectives, and that systems for evaluating the performance of the CEO and senior management are based on open and relevant criteria; and monitoring senior management s performance and implementation of strategy. Annual Report

68 Notes to the Financial Statements 30. Key Management Personnel (continued) In accordance with the ASX Corporate Governance Recommendations, the structure of Non-executive Directors and Senior executives remuneration is separate and distinct. Remuneration and Nominations Committee The Board has established a Remuneration and Nominations Committee with the following areas of focus: human resources policies and strategies, including executive remuneration and succession planning; and remuneration of non-executive directors. In relation to executive remuneration, the Committee s role includes developing and recommending to the Board for approval strategies and policies for executive remuneration, including the at-risk components of executive remuneration. The Committee from time to time engages consultants to advise on the appropriateness of BrisConnections remuneration arrangements. The Committee also draws on data from external sources for the purposes of benchmarking remuneration levels. The members of the Remuneration and Nominations Committee during the year were: Mr Trevor Rowe (Chairman); Mr John Allpass; and Mr Martin Kriewaldt. The Chief Executive Offi cer attends the Remuneration and Nominations Committee meetings by invitation and has assisted the Committee in its deliberations, except on matters associated with his own remuneration. Executive Remuneration Policy General Executive remuneration is made up of a fi xed component and, for eligible executives, an at-risk component. BrisConnections aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within BrisConnections and so as to: Reward executives for achievement of pre-determined key performance indicators; Link reward with the strategic goals and performance of BrisConnections; and Pay total remuneration which is competitive by market standards. The remuneration for Senior Executives and staff is reviewed annually using a formal performance appraisal process. During the year ended 30 June 2011, individual remuneration was aligned with contribution towards achievement of strategic goals. Strategic goals are set annually by the Board and are designed to be measurable and to support achievement of the Group objectives. Approval of Remuneration Executive remuneration levels are reviewed annually by reference to market benchmarks, the executive s performance and any changes in the executive s role or responsibilities. Executive remuneration is approved as follows: the remuneration of the CEO is approved by the Board upon recommendation of the Remuneration and Nominations Committee; the remuneration of direct reports to the CEO is approved by the Board upon the recommendation of the CEO and the Remuneration and Nominations Committee; and all other employee remuneration is approved by the CEO. Fixed remuneration The fi xed component of executive remuneration is structured as a total employment cost package, including cash, voluntary superannuation and benefi ts. Fringe benefi ts tax costs are taken into account in the total employment cost calculation. The fi xed 66 Annual Report 2011

69 component is set by reference to the scope and nature of the executive s role, and the executive s performance and experience. At-Risk Remuneration The at-risk component of executive remuneration during the construction phase is made up of a blend of short-term and long term incentive benefi ts linked to the achievement of business goals and strategies. Recognising the potential value to the Group of completing construction on or before the contract date of June 2012, certain employees are also eligible for a long term incentive benefi t (LTIB). The at-risk remuneration component is payable in cash. The LTIB may be payable in securities. Short term incentives (STI) allow for payment of a percentage (ranging from 20% to 50%) of the executive s fi xed remuneration each fi nancial year, subject to performance against individual goals and Group goals, with higher amounts payable at the discretion of the Board. Individual goals for each executive are tailored to the accountabilities of the executive s role and the capacity of the executive to affect the Group s performance. STI payments are made as soon as practicable after their determination, typically in July. Long term incentive benefi ts allow for payment of a percentage of the executive s fi xed full year remuneration upon achievement of key project milestones (such as completion of construction operations, traffi c ramp-up and debt re-fi nancing), with higher amounts payable at the discretion of the Board. An executive s entitlement to receive a long term incentive benefi t is generally accrued having regard to the executive s performance each year leading up to achievement of the key milestone. For example, an executive who earns 100% of his or her short term incentive for each relevant year will earn 100% of the available long term incentive payment on achievement of the project milestone. Long term incentive benefi t payments will be made within three months after achievement of the relevant project milestone. An eligible employee s potential LTIB payment represents a percentage of between 100% and 150% of an eligible employee s full year total fi xed remuneration payable on the achievement of the milestone. A percentage of the LTIB may be paid in BCS securities. During the year ended 30 June 2011, BrisConnections did not provide any equity-based incentives, nor incentives related directly to total unitholder returns. Performance of BrisConnections The Group s strategic goals for the year ended 30 June 2011 measured performance in supporting completion of Airportlink as a quality project, preparing for operations, embedding health, safety and environment in the Group s culture, preparing to deliver customer satisfaction and maintaining the confi dence of key stakeholders (including the State, the community and investors). In reviewing performance against these strategic goals, the Board considered reports from external sources and management at each regular meeting of the Board. The Board is satisfi ed that its processes were adequate to enable it to assess performance against the goals. The Board determined that the goals set in each of these areas were substantially achieved during the fi nancial year. Senior executives Key Management Personnel The Key Management Personnel are those executives, who have the greatest authority for the strategic direction and management of BrisConnections. The Group and each Key Management Personnel have entered into a service contract that sets out the remuneration and other terms of employment of the Key Management Personnel. Each service contract outlines the components of remuneration (including eligibility for at-risk remuneration), but does not prescribe the level of remuneration from year to year. Service contracts for senior management, including the CEO, have no fi xed term. Each contract can be terminated by the giving of a fi xed period of notice. BrisConnections also has the right to terminate the contract immediately, by making a payment in lieu of notice. The contractual period of notice is six months for the CEO and three months for the CFO and CS. It is one month for other senior managers. Annual Report

70 Notes to the Financial Statements 30. Key Management Personnel (continued) At-risk remuneration The table below summarises the at-risk component of the remuneration for the year ended 30 June 2011 under the service contracts between the Group and the Key Management Personnel who are in offi ce as at the date of this report. At-risk remuneration Raymond H Wilson Managing Director and CEO Nicholas Lattimore Chief Financial Offi cer Charles C MacDonald General Manager Construction Tamira D Herbst Company Secretary and General Counsel Andrew F Thornton General Manager Marketing Colin J Richmond General Manager Operations and Maintenance A short term incentive of up to 50% of full year total fi xed remuneration A long term incentive benefi t of up to 150% of full year total fi xed remuneration on agreed traffi c ramp up fi gure in the fi rst 9 months and up to 150% of full year total fi xed remuneration if completion occurs on or before 30 June 2012, 75% of full year total fi xed remuneration if completion occurs on or before 31 July 2012, 37.5% of full year total fi xed remuneration if completion occurs on or before 31 August 2012 or 0% of full year total fi xed remuneration of completion occurs after 30 September A short term incentive of up to 35% of full year total fi xed remuneration A long term incentive benefi t of up to 100% of full year total fi xed remuneration on refi nancing contemplated in 2012 (earlier than required pursuant to fi nancing facilities) and up to 100% of total full year fi xed remuneration if completion occurs on or before 30 June 2012, 50% of full year total fi xed remuneration if completion occurs on or before 31 July 2012, 25% of full year total fi xed remuneration if completion occurs on or before 31 August 2012 or 0% of full year total fi xed remuneration of completion occurs after 30 September A short term incentive of up to 30% of full year total fi xed remuneration A long term incentive benefi t of up to 100% of full year total fi xed remuneration if completion occurs on or before 30 June 2012, 50% of full year total fi xed remuneration if completion occurs on or before 31 July 2012, 25% of full year total fi xed remuneration if completion occurs on or before 31 August 2012 or 0% of full year total fi xed remuneration of completion occurs after 30 September A short term incentive of up to 25% of full year total fi xed remuneration A long term incentive benefi t of up to 50% of full year total fi xed remuneration if completion occurs on or before 30 June 2012, 25% of full year total fi xed remuneration if completion occurs on or before 31 July 2012, 12.5% of full year total fi xed remuneration if completion occurs on or before 31 August 2012 or 0% of full year total fi xed remuneration of completion occurs after 30 September A short term incentive of up to 30% of full year total fi xed remuneration A long term incentive benefi t of up to 50% of full year total fi xed remuneration if 150,000 active customer accounts (either tag or video accounts) secured by 30 June 2014 and up to 50% of total full year base remuneration if growth in security holder return (TSR) from date on commencement of employment to 30 June 2014, is equal to the 50th percentile of the TSR of the ASX Top 200 companies over the equivalent period (changes in composition of entities in the ASX Top 200 companies will not be taken into consideration). A guaranteed short term incentive entitlement of $50,000 for year ended 30 June 2011 and up to 30% of full year total fi xed remuneration for 2012 year onward. A long term incentive of up to 50% of full year total fi xed remuneration on completion of the defects period 18 months after toll road completion. 68 Annual Report 2011

71 Remuneration of key management personnel The remuneration of key management personnel during the year ended 30 June 2011 is set out below: Salary and Fees Short term incentive (STI)(2) STI % (5) LTI accrual (4) LTI % (6) Superannuation (1) % (3) Total Executive Directors $ $ % $ % $ % $ Dr R Wilson 613, , , , ,474,000 Total 613, , , , ,474,000 Executives Mr N Lattimore 433, , , , ,500 Mr C MacDonald 377, , , , ,250 Ms TD Herbst 291,170 74, , , ,000 Mr AF Thornton* 109,372 28, , ,438 Mr C Richmond** 64,388 50, , ,500 Total 1,275, , , , ,333,688 (1) Includes statutory and voluntary contributions. (2) Short term incentives were paid in cash on 5 August 2011 after review of performance for the year ended 30 June 2011 and are based on full year total fi xed remuneration (comprising base salary and superannuation). (3) % of all remuneration that related to performance. (4) This represents 50% of the maximum potential entitlement, accrued but not payable in relation to construction and tolling system completion. (5) STI as a percentage of current full year total fi xed remuneration (comprising base salary and superannuation). (6) Accrued LTI as a percentage of current full year total fi xed remuneration (comprising base salary and superannuation). * commenced 7 March 2011 ** commenced 4 April No units were issued as part of the remuneration of key management personnel. Annual Report

72 Notes to the Financial Statements 30. Key Management Personnel (continued) The remuneration of key management personnel during the year ended 30 June 2010 is set out below: Executive Directors Salary snd Fees Short term incentive (2) STI as a % of full current year total fixed remuneration Non- Cash Benefits Superannuation (1) Units % (3) Total $ $ % $ $ $ % $ Dr R Wilson 600, , , ,000 Total 600, , , ,000 Executives Mr N Lattimore 420, , ,606 14, ,606 Mr C MacDonald 313, , , ,000 Ms TD Herbst 239,168 70, ,371 14, ,000 Mr P Southam* 203, ,288 10, ,410 Total 1,176, , ,265 75, ,633,016 (1) Includes statutory and voluntary contributions. (2) Short term incentives were paid in cash on 31 July 2010 after review of performance for the year ended 30 June 2010 and are based on full year total fi xed remuneration. (3) % of all remuneration that related to performance. *resigned 12 March 2011 In lieu of notice payment of $54,435 is included in Salary & Fees. BrisConnections has not provided any loans to executives or Directors. No performance options or performance rights have been granted to Executive Eirectors or specifi ed executives. No retirement benefi ts are paid or payable to Executive Directors or specifi ed executives. The remuneration of the key management personnel and Non-executive Directors is paid by BrisConnections Operations Pty Limited, wholly owned subsidiary of the Group. In respect of the parent entity, no reasonable apportionment can be determined and therefore remuneration paid to key management personnel of the parent are the same as disclosed above. Remuneration of Non-Executive directors Remuneration policy The remuneration of Independent Non-executive Directors is related to the extent of their involvement at Board and Committee level. The remuneration for Non-executive Directors is set at a level that takes account of the time commitment required of a Director and will attract the calibre of Director required to contribute to a high-performing Board. For that purpose, the Board obtains advice from external consultants on benchmarks for remuneration of Non-executive Directors in comparable organisations. Each independent Director is paid a fi xed annual fee that takes account of the extent of the Director s involvement at Board and Committee level. The fees paid to the Independent Directors are periodically reviewed by the Remuneration and Nominations Committee, which makes recommendations to the Board having regard to the matters described above. All Directors have fl exibility in relation to their remuneration, including the opportunity to set aside additional employer superannuation contributions. The appointment letters for the Non-executive Directors set out the terms and conditions of their appointments. These terms 70 Annual Report 2011

73 and conditions are in conjunction with, and subject to, BrisConnections constitution and the charters and policies approved by the Board from time to time. Independent Directors (other than the Chairman) have agreed to apply 20% of their remuneration to the purchase of BrisConnections units. The Chairman has agreed to apply 40% of his remuneration to the purchase of BrisConnections units. The Group purchases these units on-market during the securities trading windows (in accordance with BrisConnections Securities Trading Policy). If a trading window is not opened at these times (for example, because the Group is in possession of unpublished pricesensitive information), the relevant portion of the Independent Directors remuneration will be paid in cash. BrisConnections does not pay any remuneration to the Directors nominated by Thiess Pty Ltd or John Holland Pty Ltd. These Directors are remunerated as executives of Thiess and John Holland respectively. Other than for statutory superannuation, there is no provision for retirement allowances for Non-executive Directors, nor for payment of compensation on early termination of their appointment. The annual base rate for remuneration paid to Independent Non-executive Directors for the year ended 30 June 2011, and payable for the year ending 30 June 2011 is as follows: Year ending 30 June 2011 Year ending 30 June 2010 Trevor C Rowe AO 235, ,000 John G Allpass 140, ,000 Richard JE Wharton 122, ,000 Martin DE Kriewaldt 120, ,000 Andrea C Harcourt* 63,333 - *Appointed 1 December 2010 The remuneration paid to the Non-executive Directors is shown in the tables below. Equity values used in the tables are below are pre-tax dollars. Cash salary and fees $ Equity $ Superannuation $ Total $ Year ending 30 June 2010 Trevor C Rowe AO 124,769 88,000 7, ,000 John G Allpass 93,266 26,000 10, ,000 Richard JE Wharton 38,000 22,000 50, ,000 Martin DE Kriewaldt 71,743 20,000 8, ,000 Total 327, ,000 76, ,000 Annual Report

74 Notes to the Financial Statements 30. Key Management Personnel (continued) Cash salary and fees $ Equity $ Superannuation $ Total $ Year ending 30 June 2010 Name Trevor C Rowe AO 141,000 94, ,000 John G Allpass 100,440 28,000 11, ,000 Richard JE Wharton 48,000 24,500 50, ,500 Martin DE Kriewaldt 86,091 24,000 9, ,000 Andrea C Harcourt 45,437 12,667 5,229 63,333 Total 420, ,167 76, ,833 Total Remuneration of Key Management Personnel and Non-Executive Directors The total remuneration of the Group s Key Management Personnel is shown in the table below: Year ending 30 June 2011 $ Year ending 30 June 2010 $ Short term employee benefi ts 3,045,818 2,705,373 Long term employee benefi ts 1,037,000 - Termination Payment Benefi ts - 54,435 Share based payments 183, ,000 Post employment benefi ts 222, ,208 Total 4,488,521 3,118,016 Share based payment expense recognised in the Income Statement: $183,167 (2010: $156,000). In addition to remuneration benefi ts above, BrisConnections paid a premium for a contract insuring all Directors of BrisConnections and specifi ed executives of the Group as offi cers. It is not possible to allocate the benefi t of this premium between individual directors or specifi ed executives. In accordance with usual commercial practice, the insurance contract prohibits disclosure of details of the premium paid under the contract. Stapled Unit Holdings The numbers of Stapled Units in the BrisConnections held during the fi nancial year by each Director of BrisConnections Management Company Limited and each of the Key Management Personnel of the Group, including their personally-related entities, are set out as follows: 72 Annual Report 2011

75 Directors of BrisConnections Management Company Limited Balance as at 1 July 2010 Units acquired during the year Purchased Remuneration DRP Balance as at 30 June 2011 Value of units as at 30 June 2011^ Trevor C Rowe AO 220,967 61, , ,387 John G Allpass 45,518 20,470 65,988 56,090 Richard JE Wharton 31,552 19,349 50,901 43,266 Martin DE Kriewaldt 39,684 17,495 57,179 48,602 Andrea C Harcourt - 9,178 9,178 7,801 Mark A Snape 5,000 5,000 4,250 Mark H Lynch - - Key Management Personnel of BrisConnections Management Company Limited Raymond H Wilson 15,009 15,009 12,758 Nicholas Lattimore 10,009 10,009 8,508 Charles MacDonald 5,000 5,000 4,250 Tamira D Herbst 3,002 3,002 2,552 Andrew F Thornton Colin J Richmond ^ The basis of valuation of the securities at the year end is the security price as at 30 June 2011 ($0.85 per stapled security) Annual Report

76 Notes to the Financial Statements 30. Key Management Personnel (continued) Balance 1 July 2009 Units acquired during the year Purchased Remuneration DRP Balance as at 30 June 2010 Value of units as at 30 June 2010^ Directors of BrisConnections Management Company Limited Trevor C Rowe AO 175,128-45, , ,064 John G Allpass 19,903 11,000 14,615-45,518 50,070 Richard JE Wharton 17,948-13,604-31,552 34,707 Martin DE Kriewaldt 18,467 10,000 11,217-39,684 43,652 Mark A Snape 5, ,000 5,500 Mark H Lynch Key Management Personnel of BrisConnections Management Company Limited Raymond H Wilson 10,000 5, ,009 16,510 Nicholas Lattimore 10, ,009 11,010 Charles MacDonald 5, ,000 5,500 Tamira D Herbst 3, ,002 3,302 Patrick Southam ^ The basis of valuation of the securities at the year end is the security price as at 30 June 2010 ($1.10 per stapled security) Other related party disclosures The Group has a related party relationship with each of the entities in the Group (see Note 32) and its key management personnel (see above). Transactions between entities within the Group are loans and advances and reimbursement of operational costs. Intercompany loans are at call and are non interest bearing, all other transactions are conducted on a normal commercial basis. 74 Annual Report 2011

77 31. Parent Entity Disclosures As at, and throughout, the fi nancial year ending 30 June 2011 the parent entity of the Group was BrisConnections Investment Trust. Company In thousands of AUD Notes Result of the parent entity Profi t for the period 9,573 9,625 Other comprehensive income/(loss) - - Total comprehensive Income for the period 9,573 9,625 Financial Position of parent entity at year end Current assets 21,246 14,106 Total assets 1,369,895 1,353,875 Current liabilities 1 94 Total liabilities 140, ,972 Total equity of the parent entity comprising of: Share capital 1,064,371 1,064,371 Deferred capital contribution 120, ,130 Hedging Reserve - - Retained Earnings 44,974 35,402 Total Equity 1,229,475 1,219,903 No obligation rests with the parent entity in relation to capital commitments. Annual Report

78 32. Investments in Controlled Entities The BrisConnections Group comprises the aggregation of the BCHT and BCIT. The BrisConnections Investment Trust Group comprises: Country of Incorporation Class of shares/ units BrisConnections Investment Trust Australia Ordinary Equity holding 2011 and 2010 BrisConnections Asset Trust Australia Ordinary 100% BrisConnections Investment Trust 2 Australia Ordinary 100% BrisConnections Finance Pty Limited Australia Ordinary 100% The BrisConnections Holding Trust Group comprises: Country of Incorporation Class of shares/ units BrisConnections Holding Trust Australia Ordinary Equity holding 2011 and 2010 BrisConnections Nominee Company Pty Limited Australia Ordinary 100% BrisConnections Holding 2 Pty Limited Australia Ordinary 100% BrisConnections Operations Pty Limited Australia Ordinary 100% BrisConnections Management Company Limited Australia Ordinary 100%* BrisConnections RE Holdings Pty Ltd Australia Ordinary 100%* BrisConnections Contracting Pty Limited Australia Ordinary 100% Northern Busway Contracting Pty Limited Australia Ordinary 100% *2011 only 33. Events Occurring After Reporting Date No matter or circumstance arose since 30 June 2011 that has signifi cantly affected, or may signifi cantly affect the operations of the BrisConnections Group, the results of those operations or the state of affairs of the BrisConnections Group in subsequent periods. 34. Segment Information The consolidated entity operates as one segment being the Airportlink, Northern Busway (Windsor to Kedron) and Airport Roundabout Upgrade Project, in one geographic location being Queensland. 76 Annual Report 2011

79 Directors Declaration The Directors of BrisConnections Management Company Limited declare that: 1. the fi nancial statement and Notes, as set out on pages 31 to 76 a) are in accordance with the Corporations Act 2001; b) comply with the accounting standards and the Corporations Regulations 2001; c) comply with International Financial Reporting Standards as disclosed in Note 2(a); and d) give a true and fair view of the fi nancial position as at 30 June 2011 and of the performance for the period ended on that date of BrisConnections; 2. the Chief Executive Offi cer and Chief Financial Offi cer have each made declarations in accordance with section 295A of the Corporations Act 2001; 3. in the Directors opinion there are reasonable grounds to believe that BrisConnections will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. Dated at Brisbane this 22nd day of August Trevor C Rowe AO DUniv Chairman Raymond H Wilson Managing Director Annual Report

80 Independent Audit Report KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Independent auditor s report to the unit holders of BrisConnections Investment Trust and BrisConnections Holding Trust We have audited the accompanying financial report of BrisConnections Investment Trust and BrisConnections Holding Trust, which comprises the consolidated statement of financial position as at 30 June 2011, and consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 34 comprising a summary of significant accounting policies and other explanatory information and the directors declaration of the Group comprising BrisConnections Investment Trust and BrisConnections Holding Trust and the entities they controlled at the year s end or from time to time during the financial year. Directors responsibility for the financial report The directors of BrisConnections Management Company Limited, the responsible entity of BrisConnections Investment Trust and BrisConnections Holding Trust, are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. In note 2(a), the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements of the Group comply with International Financial Reporting Standards. Auditor s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the Group s financial position and of its performance. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 78 Annual Report 2011

81 Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act Auditor s opinion In our opinion: (a) the financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group s financial position as at 30 June 2011 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations (b) the financial report also complies with International Financial Reporting Standards as disclosed in note 2(a). Emphasis of matter Traffic estimates Pursuant to Auditing Standard ASA 706, and without qualification of our opinion, we draw your attention to Note 14 of the financial report. This note outlines that the intangible asset s value in use, used to support its carrying value, is highly sensitive to changes in estimated traffic forecasts and other assumptions. Given the long term nature of the intangible asset, the estimated traffic forecasts may not necessarily represent actual traffic volumes which may result in material differences to the intangible asset s value in use. As actual traffic numbers may differ materially from forecast, Note 14 provides sensitivity analysis to identify how a change in traffic estimates would impact the intangible asset s value in use in the financial report. KPMG Scott Guse Partner Brisbane 22 August 2011 Annual Report

82 Reduced travel times will revolutionise the way that motorists get around the northside; providing both a quicker and more reliable journey, with improved safety. 80 Annual Report 2011

83 Risk Report Risk and risk management BrisConnections recognises that the existence of risk is an inherent component of its business. The Group fosters a risk aware corporate culture in its management activities and decision making. Through application of risk analysis and management, we manage risk in order to enhance opportunities and contain exposure to threats. Risk management overview Effective risk management requires risk analysis to assist in making decisions taken throughout the organisation. The responsibility for identifying and managing risks lies with BrisConnections executives and all managers. The Group s risk management policy, together with our risk management framework, sets out a process to follow in analysing and managing risk. By providing an overall methodology and structure for the handling of risk within the organisation, the Group seeks to provide the Board and senior management with a continuing, Group wide perspective of the key risks. The risk register is reviewed by the Board and the Audit Risk and Compliance Committee twice yearly. Reports as to changes in risks are submitted to the Board regularly. While we adopt strategies to mitigate or manage risks, there is no assurance that risks can be contained to a level of immaterial exposure. Risk factors The Group is subject to risks that can adversely impact our business, results of operations, fi nancial condition and future performance. If any of the following risks occur in a material sense, our business, results of operations or fi nancial condition could be materially affected. The risks and uncertainties described below are not the only ones we may face. Additional risks and uncertainties that we are unaware of, or that we currently deem to be immaterial, may also become important factors that affect us. Construction failure to complete in accordance with fi xed price fi xed time contract Traffi c - failure to achieve forecast traffi c Operations - failure of systems, operations or program delivery to properly support BrisConnections activities Any risk arising out of the construction activities are primarily carried by Thiess John Holland pursuant to the fi xed price fi xed time contract signed with them and guaranteed by their parent entity, Leighton Holdings Limited and by performance bonds held by Brisconnections. Further, as at 30 June 2011, construction was 84% complete (in money spent) with 25.5% of the contracted fi xed construction time still to run. Brisconnections recognises that it takes time to build the usage habit by motorists within the target market for use of our infrastructure. Marketing, education programs and demonstrating how to use Airportlink pre-opening that is how to access the road and ability to use interactive testing of journey options via the new Airportlink website ( are now well underway. In addition, a range of pricing options to encourage use of Airportlink are also being considered. Further, fi nancial facilities in excess of $300 million are in place to enable fi nancial obligations to be met during initial stages of Airportlink operations. We also regularly monitor the factors which inform the traffi c model. As a services organisation we are exposed to a variety of risks including those resulting from process error, fraud, information technology instability and failure, system failure, security and physical protection, customer services, staff competence, external events (including fi re, fl ood, earthquake or pandemic) that cause material damage, impact on our operations or adversely affect demand for our services. Operational risks can directly impact our reputation and result in fi nancial losses which would adversely affect our fi nancial performance or fi nancial condition. These risks are managed via compliance with policies and standards in place as well as an information technology system and infrastructure. Annual Report

84 Risk Report General economic and political environment changes to interest rates, economic growth, infl ation, introduction of new taxes Financing failure to obtain refi nancing, failure by debt provider Economic volatility in Australia and overseas can impact on a number of variables that affect consumer behaviour including growth in employment, population, savings, gross state product and investment as can political uncertainty or government changes. These are external risks which are outside the control of BrisConnections, however, we have marketing and education programs in place to enable consumers to become more aware of the various benefi ts associated with using Airportlink. Adverse credit and capital market conditions may signifi cantly affect our ability to meet funding and liquidity needs and may increase our cost of funding. No refi nancing is required under BrisConnections current funding profi le until Global credit and capital markets have experienced extreme volatility, disruption and decreased liquidity in recent years. While some stability has returned to the markets, the environment remains volatile. Insurance BrisConnections retains a comprehensive insurance program that forms part of its risk management strategy. Cover is arranged for various exposures that could impact BrisConnections assets and operations where available on reasonable terms. Insurance does not, however, cover every potential risk associated with BrisConnections operations as adequate coverage at reasonable rates is not always obtainable or may not fully cover a liability or consequences of business interruptions such as some force majeure events. 82 Annual Report 2011

85 Sustainability Report Sustainability commitment BrisConnections believes that sustainability in its broadest sense underpins our business. Our responsibility to internal and external stakeholders, whether they are employees, government regulators, customers, business partners or the broader community, expect us to act as a good corporate citizen by fi nding the right balance between economic, environmental and social considerations. Our sustainability approach Our approach to sustainability is evolving as we approach commencement of operations in We seek to understand and respond to the interests of our people, marketplace and the wider community. During this time we will also look to improve our stakeholder engagement practices and implement initiatives in response to environmental impacts. Embedding sustainability This year we began down the path to strengthen our environmental performance and community development capability with a view to putting in place sustainability action plans and policies. People BrisConnections management team and skilled employees are integral to our success. They have worked hard to ensure we have the right capabilities to continue to develop our business. Our commitment to gender diversity is refl ected in our diversity policy. Contributing to local communities BrisConnections is a long term neighbour and part of the Brisbane community. We understand that a focus on social sustainability needs to be integrated into the way we do business. When operational we will endeavour to work with stakeholders to contribute to the local area, to local employment and the liveability of our communities. Climate change and energy efficiency BrisConnections advocates energy effi ciency via our free fl owing Airportlink motorway, thereby reducing carbon emissions produced from vehicles stop starting on normal surface roads. In addition, specifi c tolling benefi ts will be made available to green/hybrid vehicles using Airportlink. We will also look to work in partnership with government and utilities providers to deliver lower energy usage and thereby lower carbon emissions. Annual Report

86 Additional Investor Information Stock Exchange Listing BrisConnections is listed on ASX under the code BCS for ordinary fully paid stapled Securities. Distributions No distributions have been paid for BrisConnections for the fi nancial year ending 30 June Taxation Statements Investors will receive a comprehensive taxation statement after the end of each fi nancial year in which distributions are paid. This statement contains full details of any distribution payments made in the preceding fi nancial year and the necessary information to complete their tax returns. We advise all security holders to seek professional taxation advice when completing their income tax returns. Registry Link Market Services Limited is BrisConnections security register manager and holds all Security holder records electronically. Link is also responsible for the maintenance of Security holder records, BrisConnections call centre, and the preparation of distribution payments. Contact details for Link are set out on page 89. Investor Support If you have any queries regarding your investment, please contact Link toll free on or visit their website at Please note there is a section of the website designed to provide security holders with the forms necessary to initiate changes of the details held at the registry. This service is available from 8.30am to 5.30pm (Sydney time) on all business days. Enquiries may also be ed via BrisConnections website ( or Link s website ( Requests for changes to your holding details, distribution payment details, or general enquires, can all be directed to the Security holder Service Centre. Annual Report All security holders are entitled to receive a copy of the Annual Report. If you do not require the Annual Report, or if you receive more copies than you require, please notify Link at the address shown on page 89. The Annual Report and Financial Statements can also be downloaded from the Reports and Publications area of our website at Annual General Meeting There is no legal requirement for BrisConnections to hold an annual general meeting. 84 Annual Report 2011

87 Statement of Security holders BrisConnections 20 largest ordinary security holders and their holdings as at 6 September 2011: Holder A/C Designation Securities % 1 ACN Pty Ltd <Principal A/C> 178,147, DNU Nominees Pty Limited 129,883, Queensland Investment Corporation 32,323, HSBS Custody Nominees (Australia) Limited 28,017, National Nominees Limited 15,485, Bell Potter Nominees Ltd <BB Nominees A/C> 958, Eclectic Investments Pty Limited <Clive Carroll Super A/C> 325, Waratah Capital Partners Pty Limited 300, Quote Holdings Pty Ltd <Salrowe Super Fund A/C> 282, J & G Enterprise Co Pty Ltd <Marchio Family A/C> 200, Mr Nicholas Neil Jukes 200, Tree House Super Pty Ltd <Tree House Super Pty Ltd> 150, Mr Raymond Sentman Willard <Willard Super Fund A/C> 125, Mr Jan Sinclair & Mrs Anne Sinclair <Sinclair Super Fund A/C> 100, Yungaburra Pty Ltd <Sampson Family S/F A/C> 100, Sandhurst Investments Pty Ltd <Parish Family No 1 A/C> 100, Grant & Lindner Pty Limited <No 2 Account> 100, Mr Lance Michael Comes & Mrs Carol Maree Osborne 100, Philcrest Pty Ltd 100, Perpetual Custodians Limited 100, SKJ Superannuation Pty Limited <The Seymour Super Fund A/C> 90, Ten If s Pty Ltd <The Wilbar Family A/C> 90, Mr Stuart Keith Anderson 90, Bond Street Custodians Limited <MDR-AP0345 A/C> 80, Est Margaret Isabel Green 80, Mr Vu Xuan Nguyen <Vu & Tram Super Fund A/C> 77, Mr Austin Harold Rummery & Mrs Jacqueline Rummery <The Rummery Super Fund A/C> 75, TOTAL 387,682, Balance of Register 2,582, GRAND TOTAL 390,264, Annual Report

88 Statement of Security holders Distribution of Security holders Range Securities % No of Holders % 100,001 and Over 386,400, ,001 to 100,000 3,476, ,001 to 10, , ,001 to 5, , to 1,000 9, Total 390,264, Unmarketable Parcels 3, Substantial Security holders Security holder No. of securities held Percentage held ACN PTY LTD <PRINCIPAL A/C> 178,147, % DNU NOMINEES PTY LIMITED 129,883, % QUEENSLAND INVESTMENT CORPORATION 33,156, % HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 28,051, % Voting Rights Under BrisConnections Constitutions, each member present at a general meeting is entitled: 1. on a show of hands, to one vote; and 2. on a poll, to one vote for each Security held or represented. 86 Annual Report 2011

89 Notes Annual Report

90 Notes 88 Annual Report 2011

91 Corporate Directory Listed Entities Comprising BrisConnections: BrisConnections Holding Trust ARSN BrisConnections Investment Trust ARSN ASX Listing Code: BCS Website: Responsible Entity: BrisConnections Management Company Limited ABN AFSL Registered Office: Level 2, Kedron Brook Building 1 Gympie Road Kedron QLD 4031 Telephone: Facsimile: Security Registry: Link Market Services Limited Level Queen Street Brisbane QLD 4000 Telephone: Board of BrisConnections: Chairman Trevor C Rowe AO DUniv Directors John G Allpass Richard JE Wharton Martin ED Kriewaldt Mark A Snape Mark H Lynch (alternate for Mark Snape) Andrea C Harcourt Managing Director and CEO Raymond H Wilson Company Secretary of BrisConnections: Tamira D Herbst Executive Management: Raymond Wilson CEO Nick Lattimore CFO Charles MacDonald General Manager Construction Tamira Herbst Company Secretary and General Counsel Colin J Richmond General Manager Operations and Maintenance Andrew Thornton General Manager Marketing Auditors of BrisConnections: KPMG Riparian Plaza 71 Eagle Street Brisbane QLD 4000 Telephone: PERFORMANCE DISCLAIMER Investments in BrisConnections are subject to investment risk, including possible delays in repayment and loss of income and capital invested. BrisConnections Management Company Limited (responsible entity) does not guarantee the performance of BrisConnections, the repayment of capital or the payment of a particular rate of return on BrisConnections stapled units. GENERAL SECURITIES WARNING This annual report is not an offer or invitation for subscription or purchase of or a recommendation with respect to holding, purchasing or selling securities in BrisConnections. It does not take into account the objectives, fi nancial situation or needs of any person. Before making any decision about an investment in BrisConnections, a person should consider whether such an investment is appropriate to their particular objectives, fi nancial situation and needs and consult an investment adviser if necessary. COMPLAINTS HANDLING BrisConnections has in place a formal complaints handling procedure, which is available on our website at PRIVACY BrisConnections honours without reservation our obligation to respect and protect the privacy of the personal information of individuals with whom we deal. Our privacy policy is available on our website at

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