ANNUAL REPORT 2004â05 - V/Line

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NOTE 22 CONTINGENT LIABILITIES AND CONTINGENT ASSETSAs a consequence of the Franchise Agreement, the Company has entered into a Deed of Amendment of Charge. All primary franchise assets will besubject to the fixed charge and all other assets to a floating charge in favour of the Director of Public Transport. The maximum prospective liabilitysecured by the Deed of Charge is one billion dollars.V/Line Passenger Pty Ltd has entered into an agreement for the supply and manufacture of new rolling stock. The agreement provides that the supplierprocure the issue of a Lessee's Refund Amount Letter of Credit (“LRLC”). The LRLC is currently with Dresdner Bank AG with a face value of $6.08million.V/Line has been notified of potential claims from Bombardier Transportation Pty Ltd (Bombardier) arising from delays to the testing and commissioning ofnew rolling stock. Bombardier has advised that it may seek to hold V/Line liable for costs of any delay. No legal proceedings are currently underway. Thelegal costs associated with resolution of this matter are estimated to be no more than $100,000.On January 25, 2003 bushfires occurred at or near Gisborne and Woodend in the Macedon Ranges. V/Line, along with a large range of other parties isan interested party in a coronial inquest due for hearing in November 2005. The legal costs associated with this inquiry are estimated to be no more than$150,000.V/Line has Rolling Stock Manufacture and Supply Agreements (the Agreements) with Bombardier for the provision of a number of new rolling stock units.Several units were delivered by Bombardier after the due dates as specified in the Agreements. Under the Franchise Agreement between the Director ofPublic Transport (the Director) and V/Line there is provision for the Director to, on a discretionary basis, apply liquidated damages in the event that unitsof rolling stock are not delivered by the due dates. Accordingly V/Line has recorded a contingent liability which has been estimated at $1.2 million.Under the Agreements there is provision that, in the event that liquidated damages are levied on V/Line by the Director pursuant to the FranchiseAgreement and, to the extent the cause of the late delivery of units is as a result of the breach of Agreements by Bombardier, then Bombardier is liable topay to V/Line an amount equal to the amount of liquidated damages payable by V/Line to the Director. Accordingly V/Line has recorded a contingentasset at balance date which has been estimated at $1.2 million.Prior to 30 June 2005 there had been a number of incidents involving rolling stock and motor vehicles at level crossings throughout Victoria. In all suchincidents the motor vehicle had been impacted by V/Line rolling stock and the motor vehicle was legally at fault for failing to observe either signals orsignage giving trains a right of way. As a result of these incidents damage has been sustained to V/Line rolling stock necessitating repairs as well as otheroperational costs incurred from the incidents in question. V/Line is pursuing the owners of the vehicles in question from these incidents (either in personor through their insurers) for the costs to V/Line of the repairs and other expenses incurred. On the basis of these anticipated potential recoveries anamount of $400,000 is reported as a contingent asset.On the 13 July 2005, V/Line's Chief Executive Officer wrote to the Director of Public Transport in relation to the significantly increased occupational healthand safety obligations on V/Line, and on its subsidiary company Victorian Rail Heritage Operations Pty Ltd, arising from the provisions of theOccupational Health and Safety Act 2004. Any liability that may arise in relation to these increased occupational health and safety obligations cannot bereliably quantified at this time.CONSOLIDATEDPARENT2005 $’000 2004 $’000 2005 $’000 2004 $’00012 MONTHS 11.5 MONTHS 12 MONTHS 11.5 MONTHSNOTE 23COMMITMENTS FOR EXPENDITUREContractual commitmentsCommitments for minimum contractual payments in relation to non-cancellableoperating commitments are payable as follows:Within one year 26,833 49,514 - -Later than one year but not later than 5 years 3,483 303,428 - -Later than 5 years 1,784 383,797 - -32,100 736,739 - -On June 28 2005 the Minister of Transport signed an allocation statement which transferred operating lease responsibility of the VLocity rolling stock toRolling Stock (Victoria - VL) Pty Ltd. These lease payments have therefore been excluded from the Contractual Commitments note as at 30 June 2005.64| V/LINE ANNUAL REPORT 2004-05
NOTES TO THE FINANCIAL STATEMENTSCONSOLIDATEDPARENT2005 $’000 2004 $’000 2005 $’000 2004 $’00012 MONTHS 11.5 MONTHS 12 MONTHS 11.5 MONTHSNOTE 24(a) Employee benefitsEMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTSThe aggregate employee benefit liability is comprised of:Accrued wages, salaries and on costs 1,403 1,059 - -Provisions (current) 7,310 6,968 - -Provisions (non-current) 26,327 22,661 - -(b) Superannuation commitments35,040 30,688 - -Prior to the original Franchise Agreement, the majority of the consolidated entity's staff were members of Government Superannuation funds that wereopen to members prior to the award of the original franchise in 1999 to the V/Line Passenger Pty Ltd.The State organised funds include the Revised Scheme, New Scheme and the Transport Superannuation Fund, which are all defined benefits schemes.These schemes are 'master funds' comprising a large number of participating companies and are, therefore, not controlled by the consolidated entity.With effect from 29 August 1999, employees were given the opportunity to remain in the State organised superannuation funds or to change to a privatesuperannuation fund. The private funds joined by employees of the consolidated entity since 29 August 1999 are VicSuper or Superannuation Trust ofAustralia. These funds are both accumulation funds.The consolidated entity has not recognised any unfunded superannuation liabilities as the State has guaranteed to undertake this liability from thecommencement of the original franchise in 1999. Any unfunded liabilities that may arise subsequent to the new franchise are calculated annually by theGovernment Superannuation Office and paid by V/Line at the end of the financial year.(c) Superannuation schemes contributions and liabilitiesA. VicSuper SchemeI. contributions for the year - 2005 $921,452 (2004: $433,000)II. contributions outstanding at year-end - 2005 Nil (2004: $47,000)III. contributions are made in accordance with the Commonwealth Superannuation Guarantee Legislation.B. Superannuation Trust AustraliaI. contributions for the year - 2005 $526,236 (2004: $460,000)II. contributions outstanding at year-end - 2005 Nil (2004: Nil)III. contributions are made in accordance with the actuarial calculations, as advised by the Government Superannuation OfficeC. Individual Employee SchemesI. Contributions for the year - 2005 $88,125 (2004: - $44,000).II. Contributions outstanding at year-end - Nil (2004: Nil)III. Contributions are made in accordance with the Commonwealth Superannuation Guarantee Legislation.NOTE 25EVENTS OCCURRING AFTER REPORTING DATEIn July 2004, V/Line was directed to take over operations for a range of heritage rail groups. Following the introduction of more stringent occupationalhealth and safety (OH&S) legislation in July 2005, V/Line has obtained the Director of Public Transport's consent to temporarily suspend operations (from11 August 2005 to 4 September 2005) while an assessment of its ability to comply with the new requirements is conducted. It is anticipated thatmodified OH&S procedures will be developed and implemented by 4 September 2005.NOTE 26SEGMENT INFORMATIONThe consolidated entity operates in the passenger transportation industry in Victoria only and therefore only operates in one segment. As a consequence,additional segment disclosure is not relevant.V/LINE ANNUAL REPORT 2004-05|65
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ANNUAL REPORT 2004-05
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REPORT 04-05 CONTENTSLETTER TO THE
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LETTER TO THE MINISTEROctober 2005T
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CHAIRMAN’S REPORTWhile we know th
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CEO’S REPORTDespite this focus on
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AN OVERVIEWTHE V/LINE RAIL AND COAC
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AN OVERVIEW (CONTINUED)THE YEAR IN
Page 15 and 16: MAJOR PROJECTSVLOCITY TRAINSThe int
Page 17 and 18: OUR CUSTOMERS“GRENVILLE DAWSONOUR
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Page 23 and 24: OUR OPERATIONS“GRAEME CLEAKTHE NE
Page 25 and 26: OUR OPERATIONS (CONTINUED)THE PERCE
Page 27 and 28: OUR OPERATIONS (CONTINUED)THE MAJOR
Page 29 and 30: OUR OPERATIONS (CONTINUED)Since 200
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Page 33 and 34: OUR EMPLOYEES“JOHN MITCHELLOUR MA
Page 35 and 36: OUR EMPLOYEES (CONTINUED)Early resu
Page 37 and 38: OUR EMPLOYEES (CONTINUED)New traini
Page 39 and 40: CORPORATE GOVERNANCEFROM LEFT: MERE
Page 41 and 42: CORPORATE GOVERNANCE (CONTINUED)COL
Page 43 and 44: FINANCIAL AND STATUTORY STATEMENTSS
Page 45 and 46: STATEMENT OF FINANCIAL PERFORMANCEF
Page 47 and 48: STATEMENT OF CASH FLOWSFOR THE YEAR
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Page 71 and 72: NOTES TO THE FINANCIAL STATEMENTS1.
Page 73 and 74: AUDITOR GENERAL’S STATEMENTV/LINE
Page 75: CONTACT DETAILSV/LINE PASSENGER PTY
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ANNUAL REPORT 2004â05 - V/Line

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ANNUAL REPORT 2004â05 - V/Line