EMERALD TOURIST RAILWAY BOARD annual report2014...Decoration (RFD), retiring with the commissioned rank of Major. He is currently Secretary of the Puffing Billy Preservation Society

EMERALD TOURIST RAILWAY BOARD

annual report

On 5 February 2014, a Swisse Formula One two-seater racing car crosses paths with Puffing Billy during a promotion ‘teaser’ for this year’s Australian Grand Prix. The event took place in Melbourne from 13 to 18 March. The raised arms in the car are the passenger’s – not the driver’s! PHOTO: AUSTRALIAN GRAND PRIX CORPORATION.

2014

PUFFING BILLY RAILWAYANNUAL PATRONAGE 1962–2014

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

period of 113 years. Remarkably, for more than half that span, it hasoperated as a volunteer-based not-for-profit body. The railway operatesup to seven trains a day, every day except Christmas Day and it carriedover 304,000 patrons in the current financial year, an all-time record.

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

The 2’6” gauge line to Gembrook opened in 1900, initially to carryproduce, livestock and timber to Ferntree Gully, where the freight wastransferred to broad gauge trains. However, it quickly became a greatfavourite of Melburnians, seeking a leisurely way of visiting ‘the hills’.The railway closed in 1954 after a major landslide near Menzies Creek,and a succession of Young Sun specials was organised by the Melbournedaily newspaper to farewell the railway. The success of these specialsbrought about the formation of the Puffing Billy Preservation Society,which quickly reopened the railway for the public to enjoy.

The 60th Anniversary of those Young Sun specials is to be celebrated inDecember this year, with a number of activities being planned toacknowledge the pivotal role those special trains played in raising publicawareness of the necessity to save the railway for future generations.

In 1977, the Emerald Tourist Railway Board was created as a StatutoryCorporation under its own Act, as a means of taking over theinfrastructure previously owned by the Victorian Railways.

The masterstroke, so critical to maintaining the support base, was tointerlock this Board with the Puffing Billy Preservation Society. TheBoard is responsible for corporate governance, while the Society providesfinancial and people-power support as well as a significant proportion ofthe Railway’s knowledge base.

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

what is?PUFFING BILLY


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MEMBERS OF THE BOARD

Chairman

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

Deputy Chairman

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

Other Members

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

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

Jean Clowes was appointed to the Board in March 2014. She is Vice President of Puffing BillyPreservation Society and has been involved with Puffing Billy for more than twenty-five years, as avolunteer, and as an employee for the last sixteen years. Currently she is the Passenger BusinessManager, responsible for managing volunteer station masters, conductors, and booking office staff,as well as customer service and cleaning staff.

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

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

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

board & management


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Members of the Board as at 30 June 2014 were:Chairman R.L. Leivers Dip. Ag.Sci., B. Ag. Sci (Hons).Deputy Chairman R.S. Cochrane* BA, B. Ed., TTC.Members J.R. Brady* FIE Aust CPEng.

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

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

Mr J.Hoy , a Puffing Billy Preservation Society nominee, retired from the Board in February 2014,and was replaced on the Board by Mrs. J. L. ClowesAll Board Members, and the Secretary, serve in an honorary capacity.

COMMITTEES AND OFFICERS OF THE BOARDThe Audit and Remuneration Committee, as at 30 June 2014 comprised the following:

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

The Rail Safety Management Systems CommitteeMembership and Officers are the same as the Board as at 30 June 2014

The Project Governance Committee, as at 30 June 2014 comprised the following:Chairman D. RashleighMembers R.D. Bowen, J.R. Brady, N. Byrne, (Tourism Victoria), J.F. Hoy,

K. Lane (DSDBI), R.L. Leivers, J. Pearsall (Tourism Victoria), J.A. Robinson, E. Salkovic (DSDBI)

The Heritage Advisory Committee, as at 30 June 2014 comprised the following:Chairman A.D. Rayment.Members D. Baker, M. Bracher, R.S. Cochrane, B.R. Holmes,

B. Saunders, G. Tasker, J.E. Thompson, B. van der Linde Senior Managers Group as at 30 June 2014

Chief Executive Officer J.A. Robinson* F.C.A.Manager, Finance & Administration R.D. Bowen* CA, CPA (Canada)Manager, Operations & Engineering J.F. Hoy*Manager, Passenger Services J.L. Clowes*Manager, Marketing N.M. Hutchins*Manager, Retail and Refreshment Services A. Williams*Manager, Way & Works J.M. Bell*Manager, Training D.M. Gadsden*

Management Officers as at 30 June 2014Manager, Special Events M.J. Collopy*Manager, Traffic B. McKenzie*Manager, Volunteer Co-ordinator S.L. Ham*Manager, Menzies Creek Museum D. Baker* Manager, Signals & Telegraph A.D. WheatlandManager, External Contracts J.D. Shaw*

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


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The Board is delighted with the achievements of the $4.385 million State Government grantmade available over the last two financial years. This grant enabled us to achieve the first phase

of our aim to make the Railway sustainable. The funds provided have allowed us to commence theupgrade of our infrastructure and to deliver enhanced rail safety. Project outcomes will be reportedin other parts of this report. The Board now turns its attention to the challenges of attracting sufficient funds to implementseveral major projects identified in our Corporate Plan and Business Case to Government which arecritical to our long term sustainability. These include a Discovery Centre at Lakeside together withupgraded food and beverage facilities at Belgrave and Lakeside. In addition, improved engineeringfacilities and administrative facilities for staff are essential. Improved volunteer amenities are alsocritical to ensure high levels of voluntary commitment vital to our business model. We propose tobroaden our approach for funding support to include sponsors, benefactors and fundraising, as wellas State Government grants.Congratulations are in order to all our volunteers and staff. For the second consecutive year theRailway has recorded a record number of passengers (304,672 compared to last year’s 284,536).Furthermore for the second consecutive year the Railway was awarded a Trip Advisor TourismExcellence Award. This award is the direct result of unsolicited customer feedback to Trip Advisorby visitors.These achievements reflect the enjoyment our visitors experience from visiting the Railway and ourvolunteers and staff should be justly proud of the part they played in that award. The Board greatlyappreciates the invaluable contribution volunteers make to the Railway. The Railway could not torun without them.The Board is pleased with the contribution being made by the Young Volunteers RepresentativeTeam, established as part of our long term succession plan. This group has arranged its ownprogram of events as well as contributing to Board and Puffing Billy Preservation Society activities.Finally, I would like to thank my fellow Board members for their contribution, advice and supportover the last twelve months.

Ray Leivers, Chairman

chairman’s report


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FOR the second consecutive year the Railway has established a new patronage record with304,672 passengers enjoying the charm of the Puffing Billy Railway. This represents over 6

percent compound growth annually over the past two years and is in no small measure the result ofa large increase in international visitation. In turn this has resulted from the untiring efforts ofsenior management who have placed strong emphasis on growing our international markets. Theyhave been strongly supported by the efforts of Tourism Victoria who are likewise achieving successin growing international tourism for Victoria. During March we reached a further milestone whenwe carried our ten millionth passenger since the reopening of the Railway in 1962.The $4.385 State Government Grant over the past two years has been completed and fullyexpended on a range of projects which are the first step in our strategy to achieving long termsustainability. Works have included the first stage of a track upgrade program, further butincomplete work on restoration of a Garratt locomotive urgently required for peak season running,infrastructure maintenance and a major upgrade of the Railway’s information technology systems.However, much work remains to be done if we are to become self-sustainable, and we are not ableto advance several key projects, including the establishment of a Discovery Centre at Lakesidewhich is critical to “weather proofing” the Railway for year round attraction, enhancing the visitorexperience and providing new revenue streams. We are currently reviewing our business plan, witha view to seeking further funding from several sources.Continued capital funding for our long term sustainable strategy remains one of our biggestchallenges. The growth in our business over recent years is putting additional strains on our limitedresources on a number of fronts and requires urgent attention to ensure that the business canrespond to the positive growth in Victorian tourism. Business growth over the past two years hasheightened the necessity to implement projects which will remove infrastructure bottlenecks,enhance visitor experience, create new revenue streams and result in long term sustainability.The Railway’s business model would fail if it were not for the enormous contribution of over 900volunteers who work tirelessly on a daily basis to supplement the excellent work of our paid staff.Voluntary contribution provides over $4 million per annum of voluntary labour and is one of themain planks in our ongoing sustainability. Volunteers are active in all facets of our daily operationsand our range of training programs are assuming increased importance in maintaining our highstandards of presentation and operational performance. When funds are available we need to domore to improve facilities for our volunteers and staff who often work in difficult conditions. Puffing Billy remains an excellent example of dedicated community involvement and contributessubstantially to the local economy of the Dandenong Ranges region.My thanks go to the entire Puffing Billy family for another very successful year.

John Robinson, CEO

ceo’s report


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

prepared in accordance with all Victorian legislation.The Year’s OperationsPatronage for 2014 (the fifty-second year of operation since re-opening in 1962) was 304,672 – anincrease of 20,136 (seven percent) on 284,536 in 2013. This is the highest number of passengers ina single year in the Railway’s history. The Railway also carried its ten millionth passenger in March2014.The Railway ran every day (except Christmas day and one extreme fire alert day in February) andcompleted 1,702 revenue earning return trips (2013 - 1,586 trips). Trips included scheduled dailyexcursion trains, charter trains, lunch time Steam and Cuisine trains, Dinner Trains, “Day out withThomas” trains, Murder Mystery and Jazz trains, Footplate Experience trains, and various specialevents trains.Over 93 percent of train kilometres, including non-passenger train kilometres, were steam hauled(89 percent in 2013). Non-steam-train kilometres were mostly diesel-hauled works trains, anddiesel-hauled passenger trains operating on total fire ban days during the fire season. Also sometrains that ran beyond Lakeside during the driest part of the fire season were diesel-hauled to reducefire risk. The past summer season was wetter than the preceding few years. Consequently fewerservices were diesel hauled than in the previous summer. Total train kilometres travelled for 2014were 47,436 up 2.2 percent on the 46,406 kilometres travelled in 2013. FinancialThe operations of the Board after depreciation resulted in a Net Loss for the year of $581,763compared with a Net Loss of $1,070,510 in the previous year. Surplus before depreciation was$790,441 compared with $211,208 in the previous year. Grants from Victorian Government bodies:In the current year, the Board received a grant of $1,850,000, (2013 - $2,535,000) from theDepartment of State Development, Business and Innovation. The grant is classified as a“contribution to capital” and is shown in the Statement of Changes in Equity, and is not includedin the Comprehensive Operating Statement result. Most of the grant has been used to fund thecapital expenditure projects mentioned below. However, $575,714, (2013 - $467,979) of grantfund expenditure was used for initiatives agreed with the State Government that could not becapitalised under current accounting standards. Consequently this expenditure is shown in theComprehensive Operating Statement.The Department of State Development, Business and Innovation also provided grants totalling$121,844 (2013 – nil) for work undertaken by independent consultants to the Railway, andtowards the costs of attending international tourism events. The result was achieved on gross income of $8,842,306 (2013 - $7,689,541) less total expenditureof $9,427,818 (2013 - $8,758,221) and represents a return of minus 1.15 percent (2013 - minus2.17 percent) on equity of $50,539,042 (2013 - $49,270,805).

year in reviewAND FINANCIAL STATEMENTS


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Income earned by the Railway, (which consists of excursion fares, revenue from dining trains, “Dayout with Thomas” weekends, special events, and shop revenue), increased by twelve percent, due toa combination of greater passenger numbers and fare increases. Revenue per passenger has increasedby seven percent, from $22.00 to $23.54. The main reasons for this are an average five percentincrease in regular excursion train fares in December 2013, and an increase in retail margins onshop sales from July 2013. There were also substantial increases in higher value product ticket salesrevenue. Steam and Cuisine revenue increased by nine percent, and Day out with Thomas theTank Engine ticket revenue increased by four percent, although toddler fares remained unchanged. Total expenses year-on-year increased by six percent. The increase included a twenty-three percentincrease in expenditure paid from the State Government grant. Puffing Billy Preservation Society provided grants totalling $262,250 (2013 - $157,360) for on-going restoration of a Garratt locomotive, and continuing construction of a new storage building atMenzies Creek museum. Capital ExpenditureCapital works expenditure in the current year increased by $383,000, from $2,086,000 to$2,469,000. Government funded capital works included:d On-going restoration of a Garratt steam locomotive, purchased from South Africa over sixteen

years ago (required for the long-term sustainability of the Railway). d Production of ten new cylinders to replace all of the original one-hundred year old cylinders on

the well-known Puffing Billy locomotives.d New computer equipment for booking office and retail sales software program upgrades.d On-going work involving a major upgrade of the railway track between Belgrave and Lakeside

stations. This project is now approximately half completed.Other capital works expenditure in the current year, funded internally or by the Puffing BillyPreservation Society included:d On-going construction of a new storage building at Menzies Creek museum. d Completion of the restoration of steam locomotives 12A and the Climax. d A second crane in the locomotive workshop to improve productivity.d Upgrading the toilet facilities in the locomotive workshop.During the year cash, or cash equivalents, and liquid investments increased by $510,000 (2013 –decreased by $74,000). Bank short-term deposits increased by $52,000 (2013 $828,000). Operating statistics for the past five years are listed hereunder:

2009/2010 2010/2011 2011/2012 2012/2013 2013/2014Passengers 259,487 268,985 267,728 284,536 304,672Fare Revenue $5,556,000 $5,524,000 $5,654,000 $6,264,000 $7,172,000Days Operated 364 364 364 363 363Revenue Trips 1,577 1,575 1,577 1,586 1702Fare Revenue per Passenger $21.41 $20.54 $21.10 $22.00 $23.54

Total Assets $26,422,838 $49,212,856* $49,421,720 $51,138,190 $52,668,443Total Liabilities $1,597,136 $1,547,942 $1,615,405 1,867,385 $2,129,401

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

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


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Human Resources

Paid staff numbers Full Time Permanent Part Time TotalAs at 1 July 2013 36 17 53Commenced during year 6 1 7

Sub Totals 42 18 60Departures 3 1 4

As at 30 June 2014 39 17 56

In addition, 24 casual employees were employed as at 30 June 2014 (2013 – 26).

Health and Safety

During the year about 117 staff days were lost as a result of minor industrial accidents and ailments.None of the accidents or ailments was related to rail safety.

The Railway has a Health and Safety Committee, made up of staff and volunteers from all areas ofthe Railway, which meets several times a year to discuss current health and safety matters.

Volunteers and Community

Puffing Billy is a Railway that operates with hundreds of passionate volunteers, who give their timewillingly and freely to ensure all visitors have an enjoyable and memorable day. Volunteers areinvolved in every aspect – administrative support, special events (examples being Day Out withThomas weekends, and The Great Train Race), driving the trains, restoring the heritage carriages,and maintaining buildings and infrastructure along the Railway.

Puffing Billy is one of the largest volunteer organisations in Victoria, and has over 900 people whovolunteer their time to operate the Railway. Volunteers have contributed over 19,000 days of theirtime towards running Puffing Billy. They are a fundamental part of the future of the Railway andcollectively they possess an incredible diversity of skills. All registered volunteers undergo trainingand skills development, and with the recent appointment of a full time training manager, alltraining courses have been reviewed and refreshed to ensure they will comply with ever increasingtraining and legislative requirements.

It is estimated that volunteers contribute up to four and a half million dollars every year for thetime they give to operating the Railway. Volunteers also contribute to decision making throughparticipation in an extensive committee system.

This year there has been a strong emphasis on increasing the participation of younger volunteers onthe Railway and to include youth in the decision making processes of the Railway; youth days,youth social nights and youth committees have been established. A new Young VolunteersRepresentative Team has been initiated to encourage succession planning, to ensure the Railway hasa sufficient volunteer workforce to operate moving forward, especially as the average age of thevolunteer workforce is increasing.

The Corporate Volunteer Group Program has continued its work restoring the environment andanimal habitat along the railway corridor, with the monthly roster of forty plus corporate volunteersbeing consistently utilised.

Puffing Billy works closely with local communities, and every year donates several hundred familypasses to schools and non-profit organizations to support their fundraising activities. The Railwayalso makes annual donations to local CFA branches to assist with their valuable work in protectingthe community.


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Social weekends have been conducted during the year to encourage more families to becomeinvolved with the Railway; several ‘Parks and Gardens’ and ‘Weeding and Planting’ weekends werewell supported by all those interested parties.

Menzies Creek Museum

Further construction work on the new building at Menzies Creek Museum took place during theyear with completion of the concrete floor and building apron, and laying rail track in the building.Later in the year a number of heritage locomotives and rolling stock items were moved into thebuilding to be stored. This work was funded by the Puffing Billy Preservation Society and wasassisted by considerable voluntary participation. Other smaller tasks were also undertaken duringthe year including work on landscaping and planting of new trees and shrubs.

Marketing

The Railway’s main marketing initiatives were concentrated around increasing the number ofpassengers purchasing tickets at the Booking Office, whilst simultaneously maintaining andimproving Tour Group Bookings. A further priority was to increase passenger numbers for cateredtrains products and special events. Emphasis has been given to generating free publicity via theRailway’s Public Relations Agency, utilising social media, and working closely with local tourismbodies.

Domestic Marketing

Involvement at the Royal Melbourne Show last year, proved to be very successful in generatingextra revenue, and the Railway participated again in 2013 displaying ‘Thomas the Tank Engine’.This was a great opportunity to promote the ‘Day Out With Thomas’ event, and to increaseawareness of other products, especially excursion trains and dining products.

The Portable Sales Centre (PSC) continues to operate in Melbourne and suburban shoppingcentres. The PSC visits a shopping centre for one week and ‘special deals’ of Puffing Billy productsare offered to the public.

The volunteer Speakers Panel continues to promote the Railway to various community groups suchas Probus Clubs, Service Clubs and Senior Organisations. This year forty-nine presentations weremade by the Speakers Panel with an average attendance of forty-four people.

International Marketing

Passengers originating from China, Taiwan, Korea, and the United Kingdom continued todominate the international market, and Malaysian visitors increased substantially this year.

The Railway worked closely with the key industry bodies and attended:d Tourism Australia events including the Australian Tourism Exchange (ATE), Corroboree

Greater China and the India Travel Mission.d Victorian Government events including the China Super Trade Mission, India Super Trade

Mission and the New Zealand Tri-State Workshop.d Australian Tourism Export Council (ATEC) events including Meeting Place and FANTASVIC.d South East Touring Route Workshop.

The Railway continued to fund a representative in Shanghai to assist the Railway in attractingvisitors from China. The representative conducted sales calls and attended Roadshows throughoutChina and managed the Railway’s Weibo social media site.

Product familiarisations were also held at the Railway for wholesalers, travel agents and media fromChina, New Zealand, Japan, Hong Kong, Indonesia, Malaysia, Taiwan, Thailand, Korea, India,Vietnam, Poland, the United Kingdom and USA.


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Key Media Opportunities

The Railway collaborated with the Australian Grand Prix Corporation and arranged for a SwisseFormula One two-seater racing car to cross paths with a Puffing Billy train as a promotional teaserfor the 2014 Australian Grand Prix. The ten millionth passenger travelled on the Railway in March, resulting in considerable televisioncoverage on Melbourne news channels and in the newspapers.

Website & Social Media

The Puffing Billy website recorded 681,293 visits (fifteen percent more than 2013) with an averageof 56,774 visits per month. The ‘Friends of Puffing Billy Railway’ Facebook page has 12,804 fans(thirty-four percent more than 2013).

Puffing Billy continues to receive regular reviews on Trip Advisor from passengers who havetravelled on the train. All reviewers rank their experience from one to five (five being best) andPuffing Billy currently has a 4.5 ranking. The Railway was delighted to receive a Certificate ofExcellence from TripAdvisor for 2014. This prestigious award recognises businesses thatconsistently earn top ratings from TripAdvisor travellers.

With financial support received from Yarra Ranges Tourism, free WiFi has been installed on theBelgrave platform, providing passengers access to the internet.

Events

The 33rd Great Train Race

The 2014 Great Train Race, held on Sunday 4th May, was a great success and continues to be a“must-do event” amongst the running community. A total of 3,130 runners competed on race day,along with 568 train passengers on the two race trains. This year 464 runners beat the first trainand 2,424 runners crossed the line before the second race train.

All race entries and train tickets sold out in a record ten days, confirming the popularity of theevent. The Puffing Billy Preservation Society organises the event with over 300 volunteers offering1800 hours to ensure the event continues to grow. All proceeds go towards the restoration of theNGG16-129 Garratt locomotive.

Day out with Thomas

“Day out with Thomas” was held over seven weekends (four in Spring and three in Autumn)during the year. Every weekend was sold out, with 17,459 passengers visiting Emerald station tosee ‘Thomas’ and his friends in full steam. The popularity of the ‘Thomas’ brand is an excellentway to introduce the younger generation to Puffing Billy Railway.

Commercial

Retail Operations

A new Point-of-Sale and Stock Control system has been installed throughout the Railway whichwill enable significant back office data to be used to improve retail product management, stockcontrol and retail sales margin reporting.

Retail has performed reasonably well in difficult times for retailers, and sales were slightly ahead ofthe previous year. A number of initiatives to increase sales are currently being planned and sales areexpected to improve further in the next year.

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


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Lunch TrainsOver the past twelve months the Steam & Cuisine Luncheon Train has steadily continued toimprove. Wine and produce from the Yarra Valley have been carefully selected for the menu andwine list to promote and support the local region. This product has performed extremely well overthe year and passenger numbers increased by seven percent.

Night TrainsDuring the past twelve months a new calendar of events for the Night Train has added morethemed trains to diversify and attract new customers to the Railway. Food and BeverageManagement is currently reviewing the range of themed trains provided, with the objective offurther increasing the market for this popular product. Passenger BusinessPassenger Business activities cover all station master, conductor and booking office roles, and all arestaffed by volunteer staff. Multi-skilling is encouraged with some volunteers working as conductorsas well as booking clerks or station masters. There are currently two competent volunteer trainersfor conductors and booking clerks. The branch is an area where younger volunteers can becomeinvolved, and they are encouraged and supported by experienced volunteers.During the year a new booking system was successfully introduced into the Belgrave booking office.The system is easy to use and has been well received by all of the booking office staff. The final stages of preparation for the introduction of selling excursion tickets online are currentlyunderway. This will be a major change for the Railway and careful consideration has gone into thepreparation of the presentation on the website. Passenger business staff are being trained to closelymonitor the seats available on each service to ensure that there will always be some capacityavailable for customers arriving on the day. Tour group passenger numbers have increased by ten percent since the previous year and manygroups are now driving to different stations along the Railway to provides their groups withdifferent timing options for their tours. A considerable amount of work goes into monitoring grouppre bookings to ensure that train capacities are adequate, but there are increasing numbers ofoccasions when passenger numbers on a particular day exceed the available capacity.Locomotive and Carriage Workshops The principal activities of the Locomotive Workshop in Belgrave and Carriage Workshop inEmerald are the maintenance and restoration of the locomotives and rolling stock, (carriages andfreight wagons), to meet the daily operational requirements of the Railway. During the busysummer season operational requirements were met by having four steam locomotives and allpassenger carriages available at all times.The Railway’s ageing trolley fleet, used for fire patrols behind all trains in the fire season, were allfully maintained and operational over the entire critical fire danger period.An additional twelve ton overhead crane has been installed in the Belgrave workshop to improve liftcapacity and generate significant productivity gains, eliminating previous time consuming methods,and reducing the need to hire mobile cranes at considerable expense.During the year the restoration work on two locomotives that had been in the locomotiveworkshop for several years, undergoing major reconstruction, were completed: d Locomotive 12A, one of the Railway’s five NA locomotives was successfully released to traffic

following funding assistance through the State Government grant.d Work on the Climax locomotive, a unique, wood burning locomotive that has been undergoing

restoration for twelve years was completed and released to traffic. The locomotive will be usedfor special events and footplate [drive a steam train] experiences. Restoration of this locomotive,one of only a handful left worldwide, was fully funded by the Puffing Billy Preservation Society.


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All of the cylinders on the five operating NA locomotives are the original cylinders, dating back totheir year of manufacture over one hundred years ago. Given they had a design life of thirty years,all have passed their intended use-by date, and, over time, many have had extensive and costlyrepairs to enable them to keep operating. Clearly there will come a time when repairing them willno longer be an option.

The recent State Government funding has enabled the Railway to have ten new cylindersmanufactured and delivered to the Railway for future installation on the locomotives.

The new cylinders incorporate may modern features which will enable an indefinite life span.

A job scheduling, purchasing and stock control software package, installed last financial year, is nowfully functional and a maintenance planner has been appointed to manage it, and further improveworkshop productivity.

Way and Works

A significant proportion of the funding received from the State Government has been allocated toupgrading the mainline track between Belgrave and Lakeside. This section of the track carries themost traffic on the Railway, and requires the most maintenance. Whilst maintenance is carried outregularly, there are insufficient resources to undertake all of the work that could be undertaken eachyear. However, the State Government funding over the last two years has enabled the Railway toemploy a second track gang to upgrade the track. Most of the work in the current year has takenplace between Belgrave and Clematis, where drainage problems have been rectified, severalthousand sleepers have been replaced, and thousands of tons of ballast have been replaced.

The funding over the last two years has been invaluable, but the track upgrade program is only halfcompleted. Whilst regular maintenance is always being undertaken, there has always been a fundingand resource limitation. The current funding has shown how much more progress can be achievedin improving the track condition compared to previous years.

Two major level crossings, at Beaconsfield Rd and Main Rd Clematis, have both been upgradedwith Government funding. Old rail was replaced and drainage systems were upgraded in bothlocations.

Following the annual inspection of the Railway’s bridges, more significant works were carried outthis year. A pile and crosshead were replaced on the timber bridge at Selby, the most photographedbridge on the Railway. In addition new braces and whalers were also replaced on the piers of otherbridges as part of on-going maintenance.

An independent arborist was commissioned to report on the condition of all trees along the RailwayCorridor and to document trees that were deemed to pose a potential danger to passengers,volunteers and employees, and to the Railway’s, assets and infrastructure. Two hundred and sixteentrees were identified as dangerous, and categorised into significant, moderate and low risk. Thisreport formed the basis of work to remove dangerous trees which has commenced along the Railway.

The Railway works closely with a number of environmental management and Landcare groups.A new environmental management initiative the ‘Green Tracks Program’ has been conducting aweed eradication plan. Revegetation works are being carried out in specific areas to assist in theprevention of erosion and the fight against tree damage through water and other elements.

Working relationships with emergency services and local government departments are an integralcomponent of the Way and Works operations. The Way and Works branch’s success relies heavilyupon volunteers who perform a myriad of tasks; track patrols, fire patrols, works trains and buildingmaintenance to name a few. Gardens and grounds in station precincts are also maintained andimproved by a group of dedicated volunteers.


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Signals and Telegraph

Following several years of preparation, a new digital train radio system has been implementedduring the year. The new system is a vast improvement on the old analogue system and ensuresconstant contact with trains, trolleys and work gangs along the entire length of the Railway.Comprehensive training in the new system was provided to all relevant staff and volunteers prior toimplementation.

Environmental Performance

The Railway actively promotes a culture of energy conservation and encourages staff and volunteersto minimise water, waste, electricity and gas consumption wherever possible.

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

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

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

The Railway’s mechanical engineering personnel are in the process of investigating newtechnologies in an effort to reduce the level of existing locomotive emissions.

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

For several years the Railway has had processes in place to reduce other environmental impacts, andthese processes remain in place.

Energy Saving Initiatives

d Electricity: By creating a culture of awareness to turn off appliances and lights after hours, andwhen not in use, this has an immediate impact.

d Water: Puffing Billy is continually providing training to drivers and firemen to ensure engineefficiency, which helps to conserve the amount of water consumed by our trains.

d Paper: Administration staff are encouraged to carry out double-sided printing, scanning,emailing, and to print only what is needed, and mostly in black and white.

d Waste: The message of recycling is promoted on all areas of the Railway with the provision ofrecycling bins at each station, as well as in all administration areas.

d Fuel: Log books are provided in all vehicles and are actively used to verify each vehicle’s use. d Coal: Given that the coal burned to fire Puffing Billy’s steam engines is by far the largest

contributor to carbon emissions, the ongoing training of drivers and firemen, to operate enginesas efficiently as possible, will help to reduce coal usage.

Other Environmental Matters

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

Over the past twelve months the ‘Green Tracks’ program, (a partnership between the Railway andthe Southern Ranges Environmental Alliance launched in 2012), has been active in initiating anddelivering on a range of environmental projects. This partnership is working together to implementthe ‘Puffing Billy Railway Trackside Management Plan’


14

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

Statutory Information

The Board has established procedures to implement the requirements of the Protected DisclosureAct 2012. In the current year, as in all prior years, there were no disclosures made or referred to theBoard or to the Ombudsman.

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

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

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

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

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

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

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

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

The Marketing Manager undertook three overseas trips (2013 – two), to continue the successfulmarketing of the Railway to international tourists. All of these trips were unaccompanied. No otheroverseas visits were undertaken during the financial year, either on behalf of, or paid for, by theBoard.

No time has been lost during 2014 due to industrial disputation (2013 – nil).

Details of consultancies in excess of $100,000

In 2014 no consultants were engaged, (2013 – none).

Details of consultancies under $100,000

In 2014 two consultants were engaged at a total cost of $113,000 (2013 – none).


15

Attestation on compliance with the Australian Risk Management Standard:

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

Attestation for compliance with Ministerial Standing Direction 4.5.5.1 – Insurance:

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

This report is made by a resolution of the Board dated 27th August 2014, in accordance with theFinancial Management Act 1994, and signed on behalf of the Board by:

R.L. Leivers J.A. Robinson

Chairman Chief Executive Officer


Appendix 1

PU

FF

IN

G B

IL

LY

RA

IL

WA

YManagem

ent Structure – 30

June

2014

PBPS Executive

Audit & Rem

uneration Com

mittee

Rail Safety Managem

ent Systems

Com

mittee

Heritage Advisory Com

mittee

Project Governance Com

mittee

EMER

ALD

TOURIST RAILWAY BOARD

Executive Assistant

CHIEF EX

ECUTIVE OFFICER

Finance & Adm

in.

Manager

Operations &

Engineering Manager

Way & W

orks

Manager

Passenger Business

Manager

Marketing

Manager

Com

mercial

Manager

Training Manager

Finance Staff

Belgrave Workshop

Foreman

Buildings Forem

anStation Operations

Staff

Marketing

Executive

Retail Supervisor

Volunteer

Co-Ordinator

IT Team

Emerald Carshops

Leading Hand

Road Foreman

Passenger Operations

Staff

Marketing

Assistant

Night Train

Supervisor

Maintenance

Planner

External Contracts

Project M

anager

Customer Service

Centre

Special Events

Manager

Lunch Train

Supervisor

YVRT

(Young Volunteer

Representative

Team)

Traffic M

anager

Parks & Gardens

Cleaning Supervisor

Loco Ops

Supervisor

Environm

ental

Groups

Lineside Attractions

Manager

S&T M

anager

Rail Safety Accreditation Officer

and Internal Audit group

16

17

Auditing in the Public Interest

18

Auditing in the Public Interest

FOR THE YEAR ENDED 30 JUNE 2014

financial report

CERTIFICATION BY THE BOARD

IN accordance with a resolution of the Emerald Tourist Railway Board, we theundersigned;1. certify that in our opinion the accompanying Financial Statements comprisingComprehensive Operating Statement, Balance Sheet, Statement of Changes in Equity, CashFlow Statement and Notes to the Financial Statements, which have been prepared inaccordance with Australian Accounting Standards, applicable financial reporting directionsand other mandatory professional reporting requirements presents fairly the financialtransactions during the year ended 30 June, 2014 and the financial position of the Board asat that date;2. are not aware of any circumstances which would render any particulars included in thereport to be misleading or inaccurate; and3. state that in our opinion the Financial Statements have been prepared in accordance withStanding Direction 4.2 of the Financial Management Act, 1994.Signed at Melbourne this 27th day of August, 2014 on behalf of the Board –

............................................................................................................................................... R.L. LeiversChairman

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

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

19



comprehensive operating statement

20

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

NOTES 2014 2013$ $


21

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

AS AT 30 JUNE 2014

balance sheetNOTES 2014 2013

$ $


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

statement of changes in equity


22


Physical AssetRevaluation Accumulated Contributed

Surplus Loss Capital Total$ $ $ $

Balance at 1 July 2012 36,078,853 (1,248,653) 12,976,115 47,806,315Net Result for the Year – (1,070,510) – (1,070,510)Contributions by Owner – – 2,535,000 2,535,000

Balance at 30 June 2013 36,078,853 (2,319,163) 15,511,115 49,270,805Net Result for the Year – (581,763) – (581,763)Contributions by Owner – – 1,850,000 1,850,000

Balance at 30 June 2014 36,078,853 (2,900,926) 17,361,115 50,539,042

23

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


cash flow statementNOTES 2014 2013

$ $


continued …

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

(A) Statement of compliance

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

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

The annual financial statements were authorised for issue by the Board of the Emerald TouristRailway Board on 27 August, 2014.

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

(B) Basis of accounting preparation and measurement

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

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

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

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

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

Exceptions to the historical cost convention include:

d non-financial physical assets which, subsequent to acquisition, are measured at a revaluedamount being their fair value at the date of the revaluation less any subsequent accumulateddepreciation and subsequent impairment losses. Revaluations are made with sufficient regularityto ensure that the carrying amounts do not materially differ from their fair value;

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

24

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


25

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

d provision for employee benefits – (refer to Note 1(I))

The accounting policies set out below have been applied in preparing the financial statements forthe year ended 30 June 2014 and the comparative information presented for the year ended 30June 2013.

(C) Reporting entity

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

Emerald Tourist Railway Board.Old Monbulk RoadBelgrave 3160

(D) Scope and presentation of financial statements

Comprehensive operating statement

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

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

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

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

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


continued …

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


26

continued …

Balance sheet

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

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

Cash flow statement

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

Statement of changes in equity

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

(E) Income from transactions

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

Interest income

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

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

Sales of goods and services

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

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

d it is probable that the economic benefits associated with the transaction will flow to the Board.Under the stage of completion method, income is recognised by reference to labour hourssupplied or to labour hours supplied as a percentage of total services to be performed in eachannual reporting period.




27

continued …

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

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

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

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

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

Grants

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

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

Rental Income

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

(F) Expenses from transactions

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

Employee expenses

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

Depreciation and amortisation

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

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

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




28

continued …

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

Buildings, Structures and Improvements 20 – 60 yearsLocomotives and Rolling Stock 10 – 40 yearsMotor Vehicles 5 – 10 yearsOffice Furniture and Equipment 5 – 10 yearsPlant and Equipment 10 – 40 yearsPermanent Way 50 – 100 years

Land and core cultural assets, which are considered to have an indefinite life, are not depreciated.Depreciation is not recognised in respect of these assets as their service potential has not, in anymaterial sense, been consumed during the reporting period. Earthworks under the railway track areconsidered to have an almost indefinite life and are depreciated over 100 years.

Interest expense

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

Other operating expenses

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

Supplies and services

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

Bad and doubtful debts

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

Borrowing costs of qualifying assets

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




29

Other economic flows included in the net result

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

Net gain/(loss) on non-financial assets

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

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

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

Disposal of non-financial assets

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

Impairment of assets

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

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

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

(G) Financial assets

Cash and deposits

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

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


continued …



30

continued …

Receivables

Receivables consist of:

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

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

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

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

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

Investments and other financial assets

Investments are classified in the following categories:

d financial assets at fair value through profit or loss,

d loans and receivables, and

d available-for-sale financial assets.

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

Impairment of financial assets

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

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

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




31

(H) Non-Financial Assets

Inventories

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

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

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

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

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

Property, plant and equipment

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

All property, plant and equipment categories have been categorised into a hierarchy of three levels,which are as follows:

d Level 1 – are assets which can be purchased in an active market in which there are identical orsimilar assets readily available.

d Level 2 – are assets in a market in which there are other like or observable assets, other thanthose included in Level 1, which can be quoted either directly or indirectly.

d Level 3 – are assets which are not observable against any other assets to determine a comparablecost.

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

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


continued …



32

continued …

Restrictive nature of cultural and heritage assets

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

The fair value of Museum Exhibits has been measured at cost and these Exhibits are notdepreciated as it is considered by the Board that these Exhibits may well be appreciating in value.

Non-financial physical assets arising from finance leases

Refer to Note 1(J) Leases.

Non-financial physical assets constructed by the Board

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

Revaluations of non-financial physical assets

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

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

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

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

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




33

Other non-financial assets

Prepayments

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

(I) Liabilities

Payables

Payables consist of:

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

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

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

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

Borrowings

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

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

Provisions

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

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


continued …



34

continued …

Employee benefits

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

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

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

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

(ii) Long service leave

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

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

The components of this current LSL liability are measured at:

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

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

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

Employee benefits on-costs

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




35

(J) Leases

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

Finance leases

Board as lessee

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

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

Operating leases

Board as lessor

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

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

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

(K) Equity

Contributions by owners

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

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


continued …



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continued …

(L) Commitments

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

(M) Contingent assets and contingent liabilities

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

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

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

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

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

(O) Events after the reporting period

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




37

continued …


(P) AASs issued that are not yet effective

Certain new AASs have been published that are not mandatory for the 30 June 2014 reportingperiod. DTF assesses the impact of these new standards and advises the Board of their applicabilityand early adoption where applicable.

As at 30 June 2014, the following standards and interpretations that are applicable to the Boardhad been issued but are not mandatory for the financial year ending 30 June 2014. Standards andinterpretations that are not applicable to the Board have been omitted. The Board has not earlyadopted these standards. No significant impact on the financial statements is expected from thefollowing standards:

AASB 9 Financial Instruments

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

2013-16 Amendments to AASB 136 arising from Reduced Disclosure Requirements

2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments

(Q) Changes in accounting policies

Subsequent to the 2012-13 reporting period, the following new and revised Standards have beenadopted in the current accounting period, with their financial impact detailed below:

AASB 13 - Fair Value Measurement

AASB 13 establishes a single source of guidance for all fair value measurements. AASB 13 does notchange when the Board is required to use fair value, but rather provides guidance on how tomeasure fair value under Australian Accounting Standards when fair value is required or permitted.The Board has considered the specific requirements relating to highest and best use, valuationpremise, and principal market. The methods, assumptions, processes and procedures fordetermining fair value were revisited and adjusted where applicable. In light of AASB 13, the Boardhas reviewed fair value, and the assessment has not materially changed the fair values recognised.

AASB 119 - Employee Benefits

In 2013-14, the Board has applied AASB 119 – Employee Benefits (September 2011, as amended)for the first time.

The revised standard changes the definition of short-term employee benefits. These were previouslybenefits that were expected to be settled within twelve months after the end of the reporting periodin which the employees render the related service, however, short-term employee benefits are nowdefined as benefits expected to be settled wholly within twelve months after the end of the reportingperiod in which the employees render the related service. As a result, accrued annual leave balanceswhich were previously classified by the Board as short-term employee benefits no longer meet thisdefinition and are now classified as long-term employee benefits. This has resulted in a change ofmeasurement for the annual leave provision from an undiscounted to discounted basis.

The impact of any changes made under AASB 119 are not material.



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continued …

NOTE 2: INCOME

NOTE 3: EXPENSES

NOTES 2014 2013$ $


NOTE 4: DEPRECIATION

NOTES 2014 2013$ $

39


continued …

NOTE 5: CASH ASSETS AND CASH EQUIVALENTS

NOTE 7: OTHER FINANCIAL ASSETS

NOTE 6: RECEIVABLES

NOTE 8: INVENTORIES


Current

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

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

40


continued …

NOTE 9: PROPERTY, PLANT AND EQUIPMENT

NOTES 2014 2013$ $

In accordance with Financial Reporting Directive 103E, all property plant and equipment wasrevalued at 30 June 2011.

An independent valuation of the Board’s land and buildings was performed by the Valuer-GeneralVictoria to determine the fair value of land and buildings. The valuation, which conforms to


41


continued …

NOTE 9: PROPERTY, PLANT AND EQUIPMENT (continued)

Australian Valuation Standards, was determined by reference to the amounts for which assets couldbe exchanged between knowledgeable willing parties in an arm’s length transaction. Fair value isdetermined by direct reference to recent market transactions on arm’s length terms for land andbuildings of comparable size and location to the railway. The valuation was based on independentassessments.

An independent valuation of all other Board fixed assets was performed by the Valuer-GeneralVictoria. The valuation, which conforms to Australian Valuation Standards, was determined basedon the depreciated replacement cost of the assets.

ReconciliationsReconciliation of the carrying amount of each class of property, plant and equipment at thebeginning and end of the current financial year are set out below:


42


NOTE 9: PROPERTY, PLANT AND EQUIPMENT (continued)


Description of observable inputs to Level 3 valuations

Sensitivity of fair valuemeasurement to changes in

significant unobservable inputs

A significant increase or decreasein the community service

obligation discount would resultin a significantly higher or lower

fair value

Range

40%Communityservice obligation

Market baseddirect comparison,discounted for

public use zoning(community

service obligation)

Land

A significant increase or decreasein the estimated useful life of the

asset would result in asignificantly higher or lower

fair value

Impact of heritagerestrictions isconsidered butnot quantified.

25 – 60 years

Impact of heritagerestrictions isconsidered butnot quantified.

20 – 40 years

HeritageRestrictions

HeritageRestrictions

Useful life ofbuildings and

bridges

Depreciatedreplacement cost

Buildings,Structures &Improvements



fair valueRemaining Usefullife of locomotivesand rolling stock



Locomotives and

Rolling Stock



fair value

30 – 100 yearsUseful life of therailway track and

earthworks

Permanent Way

Valuationtechnique

Significantunobservable

inputs

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continued …

NOTE 10: CAPITAL WORKS IN PROGRESS

ReconciliationsReconciliation of the carrying amount of each class of capital works in progress at the beginningand end of the current financial year are set out below:

NOTES 2014 2013$ $


NOTE 12: INTEREST BEARING LIABILITIES

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

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continued …


NOTE 11 PAYABLES

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

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

NOTES 2014 2013$ $


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continued …


NOTE 13: PROVISIONS

NOTES 2014 2013$ $


NOTE 13A: EMPLOYEE ENTITLEMENTS AND RELATED ON-COSTS

NOTE 14: OTHER CURRENT LIABILITIES

NOTE 15: GRANTS FROM GOVERNMENT BODIES

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continued …


NOTE 16: FINANCIAL COMMITMENTS

NOTES 2014 2013$ $

(b) Other financial commitmentsThe Board has short term financial commitments to purchase $947,100 (2013 - $320,000) ofcapital equipment, and no committed (2013 - $65,000) operational expenditure. None of thecommitments are payable later than one year.

(c) Committed Lease revenueThe Board has long-term lease agreements with several telecommunications companies to providespace in a former water tower on its property. No long term value is attributed to the leases since allof them contain six month notice of termination clauses.

NOTE 17: SUPERANNUATION

The Board made a minimum nine and a quarter percent (2013: nine percent) contribution intothirty-four defined contribution superannuation schemes on behalf of employees, and selected bythe employees themselves. Total Board contributions in 2014 were $360,302 (2013: $327,106). Additionally all employees have an option of making additional contributions into their nominatedschemes, and some employees took up this option. There are no unfunded liabilities or outstanding contributions due to any superannuation schemes.


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continued …


NOTE 18: CASH FLOW INFORMATION

NOTES 2014 2013$ $

(c)Non-cash financing and investing activities:

Property, Plant and equipment:

During the financial year, the Board acquired plant and equipment with an aggregate fair value of$39,662 (2013 – $209,388) by means of hire purchase agreements. These acquisitions are not reflected in the Cash Flow Statement.


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

NOTE 20: RESPONSIBLE PERSONSResponsible persons during the year ended 30th June 2014 were:Responsible Minister: The Hon. Louise Asher, Minister for Tourism Accountable Officer: J.A. Robinson (Chief Executive Officer) Remuneration paid to the Minister is reported in the Annual Report of the Department of thePremier and Cabinet.

Members of the Board during the year ended 30th June 2014 were as under:R.L. Leivers (Chairman) 1 July 2013 to 30 June 2014J.R.S. Cochrane (Deputy Chairman) 1 July 2013 to 30 June 2014J. Brady 1 July 2013 to 30 June 2014J.L.Clowes 1 March 2014 to 30 June 2014N. Cuddy 1 July 2013 to 30 June 2014J.F. Hoy 1 July 2013 to 1 March 2014 J. Nichols-Reeves 1 July 2013 to 30 June 2014A.J. Ponton 1 July 2013 to 30 June 2014 R.W. Kingham 1 July 2013 to 30 June 2014Secretary to the Board: D.G. Parbery 1 July 2013 to 30 June 2014

No remuneration was paid or is payable to any Board Members acting in their capacity as a Board Member.Remuneration paid to Accountable Officers is as follows:

Total Remuneration Base RemunerationIncome Band 2014 2013 2014 2013$60,000 - $69,999 – – – 1 $70,000 - $79,999 – 1 – –$100,000 - $109,999 – – – 1$110,000 - $119,999 – 1 – –$170,000 - $179,999 – – 1 –$190,000 - $199,999 1 – – –Total Numbers 1 2 1 2Total Amount $191,847 $193,499 $175,847 $168,906


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continued …

NOTE 21: EXECUTIVE OFFICERS(a) Executive Officers at 30 June 2014 were as follows –R.D. Bowen Manager, Finance & AdministrationJ.F. Hoy Manager, Operations & EngineeringN.M. Hutchins Manager, MarketingJ.L. Clowes Manager, Passenger Operations

Remuneration paid to Executive Officers is as follows:

Total Remuneration Base RemunerationIncome Band 2014 2013 2014 2013$60,000 – $69,999 – – – 1$80,000 – $89,999 – 1 – –$90,000 – $99,999 – – 1 –$100,000 – $109,999 1 – – 1$110,000 – $119,999 – 1 1 1$120,000 – $129,999 1 – – 1$130,000 – $139,999 – 1 1 –$149,000 – $149,999 – 1 1 –$150,000 – $159,999 2 – – –Total Number of Executives 4 4 4 4Total annualised employee equivalents 4 4 4 4Total Amount $534,370 $493,508 $498,370 $417,650

(b) Payments to contractors charged with significant management responsibility:There were no payments made to contractors charged with significant management responsibility(2013: Nil).

NOTE 22: RELATED PARTY TRANSACTIONSMembers of the Board who are also members of the Puffing Billy Preservation Society ExecutiveCommittee were J.F. Hoy, R. Cochrane, J. Brady, R. Kingham and J.L. Clowes. There were norelated party transactions with any of these members. Other than the transactions of the Society disclosed elsewhere in this report, there were no otherrelated party transactions.Members of The Puffing Billy Preservation Society provide volunteer services to the Board.Additionally Puffing Billy Preservation Society has provided grants totalling $262,250 (2013:$157,360) towards capital works in progress, as disclosed in Note 2. The Board has purchasedbooks to the value of $249 (2013: $1,857) from the Society for sale in its station kiosks.



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continued …

NOTE 23: FINANCIAL INSTRUMENTS

(a) Financial Risk Management Objectives and PoliciesThe Board’s principal financial instruments comprise:

• Cash Assets• Term Deposits• Receivables (excluding statutory receivables)• Payables (excluding statutory payables)• Hire Purchase Liabilities

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



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continued …

NOTE 23 FINANCIAL INSTRUMENTS (continued)



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continued …



The net holding gains or losses disclosed above are determined as follows:• for cash and cash equivalents and loans or receivables, the net gain or loss is calculated by takingthe movement in the fair value of the asset, the interest income, and minus any impairmentrecognised in the net result;• for financial liabilities measured at amortised cost, the net gain or loss is calculated by taking theinterest expense measured at amortised cost.



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(b) Credit RiskCredit arises from the contractual financial assets of the Board, which comprise cash and deposits,and non-statutory receivables. The Board’s exposure to credit risk arises from the potential defaultof a counter party on the contractual obligations resulting in financial loss to the Board. Credit riskis measured at fair value and is monitored on a regular basis.Credit risk associated with the Board’s contractual financial assets is minimal because it is theBoard’s policy to only deal with entities with proven credit ratings.In addition, the Board does not engage in hedging for its contractual financial assets and mainlyobtains contractual financial assets that are on fixed interest, except for cash assets, which are mainlycash at bank. As with the policy for debtors, the Board’s policy is to only deal with banks and highcredit ratings.Provision of impairment for contractual financial assets is recognised when there is objectiveevidence that the Board will not be able to collect a receivable. Objective evidence includes financialdifficulties of the debtor or debts which are more than 90 days overdue.Except as otherwise detailed in the following table, the carrying amount of contractual financialassets recorded in the financial statements, net of any allowance for losses, represents the Board’smaximum exposure to credit risk without taking account of the value of any collateral obtained.



54

(b) Credit Risk (continued)



Contractual financial assets that are either past due or impaired

There are no material financial assets which are individually determined to be impaired. Currentlythe Board does not hold any collateral as security nor credit enhancements relating to any of itsfinancial assets.There are no financial assets that have their terms renegotiated so as to prevent them from beingpast due or impaired, and they are stated at the carrying amounts as indicated. The ageing analysistable above discloses the ageing only of contractual financial assets that are past due but notimpaired.

continued …


55



(c) Liquidity risk

Liquidity risk is the risk that the Board would be unable to meet its financial obligations as andwhen they fall due. The Board’s policy is to settle financial obligations within 30 days from the endof the month in which the obligation arose.The Board’s maximum exposure to liquidity risk is the carrying amount of financial liabilities asdisclosed in the face of the balance sheet. The Board manages its liquidity risk by:• close management by senior management of its short-term and long-term borrowings, includingmonthly reviews on current and future borrowing levels and requirements;• maintaining an adequate level of uncommitted funds that can be drawn at short notice to meet itsshort-term obligations; • holding investments and other contractual financial assets that are readily tradable in the financial markets; and• careful maturity planning of its financial obligations based on forecasts of future cash flows.The Board’s exposure to liquidity risk is deemed insignificant based on prior periods’ data andcurrent assessment of risk.The carrying amount detailed in the following table of contractual financial liabilities recorded inthe financial statements, represents the Board’s maximum exposure to liquidity risk.The following table discloses the contractual maturity analysis for the Board’s contractual financialliabilities.

continued …


56

(d) Market RiskThe Board’s exposures to market risk are primarily through foreign currency risk and interest risk.Objectives, polices and processes used to manage each of those risks are disclosed below.Foreign Currency Risk

The Board is exposed to insignificant foreign currency risk through its payables relating to purchaseof supplies and consumables from overseas, This is because of a limited amount of purchasedenominated in foreign currencies and a short timeframe between commitment and settlement.Interest Rate Risk

Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuatebecause of changes in market interest rates. The Board does not hold any interest-bearing financialinstruments that are measured at fair value, therefore has no exposure to fair value interest rate risk.Cash flow interest rate risk is the risk that the future cash flows of a financial instrument willfluctuate because of changes in market interest rates.Exposure to cash flow interest rate risk might arise primarily through the Board interest bearingliabilities. Minimisation of risk is achieved by mainly undertaking fixed or no-interest bearingfinancial instruments, For financial liabilities, Emerald Tourist Railway Board mainly undertakesfinancial liabilities with relatively even maturity profiles.



continued …


57



Sensitivity Disclosure AnalysisTaking into account past performance, future expectations, economic forecasts, and management’sknowledge and experience of the financial markets, the Board believes the following movements are‘reasonably possible’ over the next 12 months:

• A parallel shift of 2% and -2% in market interest rates (AUD)The following table discloses the impact on net operating result and equity for each category offinancial instrument held by the Board at year end as presented to key management personnel, ifchanges in the relevant risk occur.

(d) Market Risk (continued)

continued …


58


NOTE 23 FINANCIAL INSTRUMENTS (continued)(d) Market Risk (continued)

Sensitivity Disclosure Analysis (continued)

This sensitivity analysis has been performed on the assumption that all other variable remainunchanged.(e) Fair ValueThe fair values and net fair values of financial instrument assets and liabilities are determined asfollows:• Level 1 – the fair value of financial instrument with standard terms and conditions and tradedin active liquid markets are determined with reference to quoted market prices;

• Level 2 – the fair value is determined using inputs other than quoted prices that are observablefor the financial asset or liability, either directly or indirectly; and

• Level 3 – the fair value is determined in accordance with generally accepted pricing modelsbased on discounted cash flow analysis using unobservable market inputs.

The Board considers that the carrying amounts of financial instrument assets and liabilities recordedin the financial statements to be fair approximation of their fair values, because of the short-termnature of the financial instruments and the expectation that they will be paid in full. The Board hasno financial assets measured at fair value.The following table shows that the fair value of all of the contractual financial assets and liabilitiesare the same as the carrying amounts.

continued …


59



(e) Fair Value (continued)

NOTE 24: CONTINGENT LIABILITIESAt the date of the signing of the Certification of the Board, the Board Members were unaware ofany liabilities, contingent or otherwise, that were not already disclosed elsewhere in this report(2013: Nil).


60

DISCLOSURE INDEX FOR THE YEAR ENDED 30 JUNE 2014


The Annual Report of Emerald Tourist Railway Board is prepared in accordance with all Victorian legislation. This index has been prepared to facilitate identification of the Board’s compliance with statutory disclosure requirements.

Legislation Disclosure Requirement Page

Charter and Purpose

FRD 22E Manner of establishment and relevant Minister 1, 48FRD 22E Objectives, functions, powers and duties 6, 14FRD 22E Services provided 6-13

Management and Structure

FRD 22E Organisational structure 16

Financial and other information

FRD 10 Disclosure index 61FRD 12A Disclosure of major contracts 14FRD 15B Executive officer disclosures 49FRD 22E Operational and budgetary objectives and performance against objectives 6, 7FRD 22E Occupational health and safety 8FRD 22E Summary of financial results for the year 7FRD 22E Significant changes in financial position during the year 23FRD 22E Major changes or factors affecting performance 6, 7FRD 22E Subsequent events 59FRD 22E Statement on National Competition Policy N/AFRD 22E Details of consultancies over $100,000 14FRD 22E Details of consultancies under $100,000 16FRD 22E Statement of availability of other information 14, IBCFRD 24C Reporting of office-based environmental impacts 13-14FRD 29 Statement of workforce data 8SD 4.5.5 Risk management compliance attestation 15SD 4.2(g) General information requirements 6-15SD 4.2(j) Sign-off requirements 19

Financial Statements

Financial statements required under Part 7 of the FMASD 4.2(a) Statement of Changes in Equity 22SD 4.2(b) Cash Flow Statement 23SD 4.2(b) Comprehensive Operating Statement 20SD 4.2(b) Balance Sheet

Other requirements required under Standing Directions 4.2SD 4.2(c) Compliance with Australian accounting standards and

other authoritative pronouncements 24SD 4.2(c) Compliance with Ministerial Directions 24SD 4.2(d) Rounding of amounts N/ASD 4.2(c) Accountable officers’ declaration 19

Other disclosures as required by FRDs in notes to the financial statementsFRD 11A Disclosure of ex-gratia payments N/AFRD 21B Responsible person and executive office disclosures 48-49 FRD 102 Inventories 31FRD 103D Non-current physical assets 31-33FRD 106 Impairment of Assets 30FRD 114A Financial Instruments 50-59FRD 119A Transfers through Contributed Capital 22, 35

Legislation

Freedom of Information Act 1982 14Protected Disclosure Act 2012 14Building Act 1983 N/AFinancial Management Act 1994 6

BOARD OFFICES

Train Operations, Marketing and WorkshopsOld Monbulk Road, BELGRAVE 3160Finance and Administration10 Kings Road, EMERALD 3782

POSTAL ADDRESS

P. O. Box 451, BELGRAVE 3160

BANKERS

A.N.Z. Banking Group Ltd.,Belgrave–Gembrook Road,EMERALD 3782

AUDITORS

Victorian Auditor General’s Office,Level 24, 35 Collins Street,MELBOURNE 3000

RECORDED INFORMATION

(03) 9757 0700 (24 hr. service, 38c per min. inc. GST)

ENQUIRIES & BOOKINGS

Phone: (03) 9757 0700Fax: (03) 9757 0705

ADMINISTRATION

Phone: (03) 5968 6257Fax: (03) 5968 6264

EMAIL

[email protected]

WEBS ITE

www.puffingbilly.com.au

MISSION STATEMENTTo restore and operate the Puffing Billy Railway as Australia’s premier heritage

steam railway, in a safe, efficient and economically sustainable manner, for the ongoing benefit and satisfaction of the community, customers

and the Railway stakeholders, including staff and volunteers.


Annual Report produced for the Emerald Tourist Railway Board by Seagull Press, 1672 Burwood Highway, Belgrave, Victoria 3160. Tel: (03) 9754 3196.

Documents

EMERALD TOURIST RAILWAY BOARD annual report2014...Decoration (RFD), retiring with the commissioned rank of Major. He is currently Secretary of the Puffing Billy Preservation Society