directors’ report (b) Refinance of Infrastructure Bonds LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS (a) Liquidated Damages (c) CTCS Development MATTERS SUBSEQUENT TO THE END  OF THE FINANCIAL YEAR (b) Burnley Tunnel (c) Customer Service (d) New Business Opportunities EXPECTED RESULTS OF OPERATIONS on the Financial Report of Transurban City Link Limited and Controlled Entity. right to receive liquidated damages ceased. Action to recover the outstanding liquidated damages owed by the TOJV will continue. The construction activities of the Company are now limited to management of the defects correction period. The interest rate on Transurban’s $1,249 million infrastructure borrowing facilities has been reduced from 8.4 per cent per annum to 7.5 per cent per annum with effect from 1 July 2001. The basis for altering the interest rate going forward has also changed from being subject to adjustment in the corporate taxation rate to now being subject to changes in the top marginal personal taxation rate. The result of the change is a saving in interest costs of $11.2 million per annum, resulting in aggregate savings of $41.2 million over the balance of the term of the infrastructure facilities.  As part of the Interim Settlement Agreement with TOJV of 2 November 2000, agreement was reached on the functionality of the CTCS to be provided by the TOJV on final handover of the system. This agreed functionality excludes some works that TOJV undertook to complete as part of the D&C Contract. This functionality is not critical to Transurban’s ability to meet its obligations under the Concession Deed or to deliver satisfactory customer service, and a financial settlement on the value of these excluded works has been reached.  On final handover, Transurban will take responsibility for the future development of the CTCS and has established an in- house development team for this purpose. This will ensure that the CTCS is developed to further improve customer service delivery and reduce customer service costs. At the date of this report, the directors are not aware of  any circumstances that have arisen since 30 June 2001  that have significantly affected or may significantly affect  the operations, and results of those operations or the state  of affairs, of the consolidated entity in financial years subsequent to 30 June 2001.  Information on the expected results of operations has not been included in this report because the directors believe such information would be likely to result in unreasonable prejudice to the combined entity. Transurban wishes to use the skills and knowledge gained in the development and operation of CityLink to increase shareholder value by participating in new projects. In order to achieve this aim, Transurban is discussing with the State of Victoria the removal of the provisions in the Concession Deed which limit Transurban’s activities to the operation of CityLink, (the Single Purpose Constraint). Customer service delivery improvement is to continue over the year. The improvements will concentrate on the development and enhancement of self service channels (internet, kiosk and telephone) with the aim of improving customer access and reducing service delivery costs. The reduction in customer service costs over the year is targeted at $7.5 million ($11.2 million annualised) with  a target for customer service costs of $33 million for  2001 – 2002. A programme of enhancements to the arch toe of the Burnley Tunnel has been recommended by the TOJV. The enhancements are the result of the review of the Burnley Tunnel following the structured failure in February 2001. The design package for the enhancements is being reviewed and work is expected to commence early September 2001 for completion by the end of the year. Transurban and TOJV will continue litigation in the Supreme Court relating to the enforceability of liquidated damages and arbitration of TOJV’s disputation of the Independent Reviewer’s determination that TOJV is not entitled to extensions of time. However, Transurban and the TOJV are continuing discussions in an attempt to bring about a negotiated settlement on all matters in dispute between them. The major likely developments in operations in the next six months are as follows: 28