Tasrail annual report highlights

TasRail has tabled its fourth annual report in State Parliament after a year of moderate but sustained growth. The company delivered a solid earnings performance in 2012/13 with Customer Revenue up 3% over the previous year in a challenging freight market.

TasRail invested $43.0 million Australian Government funds in Below Rail assets, and $17.6 million of Tasmanian Government funds in Above Rail assets during the 2012/13 financial year.

These capital investments represent significant progress toward the completion of an ambitious rail revitalisation program to replace ageing rollingstock and track infrastructure.

CEO Damien White said the TasRail 2012/13 Annual Report was a strong indicator of progress toward rail revitalisation in Tasmania, with construction underway on all major projects, and rollingstock assets being commissioned into the network.

“The historic lack of investment in rail infrastructure, and the impact of the deteriorated asset condition on the safety, reliability and consequently market share are well documented.
“Investment in the rail network to date, combined with improved operational practices has enabled TasRail to achieve a significant improvement in the safety and productivity of the rail network.

“The growth in our bulk commodity haulage, plus the return to logs on rail after nearly a decade, demonstrate a renewed confidence from our customers. We estimate that by freighting logs on rail, there are around 3000 log trucks off the road” said Mr White.

Actual Customer Revenue rose $1.0 million increasing from $33.540 million in 2011/12 to $34.549 million in 2012/13. The significant drivers of the Customer Revenue growth were increases in container and cement train traffic.

Below rail support was provided from State Government through the Tasmanian Government Operating Grant for 2012/13 was $16.288 million, a reduction of $2.487 million compared to the $18.775 million allocated in the previous financial year.

TasRail’s Corporate Plan through to 2016/17 foreshadows further decreases in the Operating Grant as Above Rail profits increase, and will be used to reduce the annual Operating Grant.
The EBITDA result for 2012/13 financial year was a $1.899 million loss. This is a $300k increase over the loss in the 2011/12 financial year and was due to a reduction in the Annual Operating Grant and reduced interest earnings on cash as TasRail’s capital projects moved into delivery phase.

Loss for the year after tax but before comprehensive income was $50.294 million after an impairment expense of $45.233 million. The previous financial period recorded a Loss for the year after tax but before comprehensive income of $36.294 million with an impairment charge of $31.750 million.

EXPLANATORY NOTES TO THE 2012/13 ANNUAL REPORT

Under Australian accounting standards and direction from the Tasmanian Treasurer, Australian Government contributions to fund below rail infrastructure are required to be recognised directly to equity and not as revenue. The treatment of these contributions as equity is the predominant reason for the reported loss.

As these infrastructure assets do not provide a direct commercial return to TasRail now or into the foreseeable future and are not able to be sold, the assets are subsequently impaired to nil value which creates an impairment charge to TasRail’s profit and loss account. It is important to note that these significant impairment charges are not actual cash losses; the irony is that the greater the Australian Government’s investment in TasRail’s below rail asset, the larger the impairment charge.

The Tasmanian Government is providing a total of $137.2 million of capital funding to TasRail over seven years to 2015/16. This will fund the purchase of 191 wagons and 17 locomotives, a modern train control system, tamping and ballast regulator machines to maintain the rail formation, and for refurbishing the bulk minerals ship loader at Burnie Port. Significant progress was made on all these projects during 2012/13 financial year with construction underway on all major Tasmanian Government funded Rail projects.

In total $210.5 million of Nation Building Funding (to 2013/14) has been committed by the Australian Government for approved Below Rail projects. During the 2012/13 financial year TasRail invested $43.0 million of Australian Government funding on track upgrades, across the network. The remaining Nation Building funds will be used for completing bridge works in the North West and the installation of 100,000 (~70 track kilometres) of concrete sleepers during 2013/14.

Links:

Annual Report:

http://cdn-src.tasmaniantimes.com.s3.amazonaws.com/files/TASRAIL%20Annual%20Report%202012-2013.pdf
TasRail CEO, Damien White