directors’ report on the Financial Report of Transurban City Link Limited and Controlled Entity. Directors‘ Report on the Financial Report of Transurban City Link Limited and Controlled Entity. Your directors present their report on the consolidated entity consisting of Transurban City Link Limited and the entity  it controlled at the end of, and during, the year ended  30 June 2001. From the first day, the tunnel was accepted well by users and traffic volumes rose quickly to approximately the same level as the Domain Tunnel. Traffic volumes using the Western Link also increased due to the reduction in delays on the Westgate Freeway and the delivery of continuous freeway standard operations for eastbound traffic. COMPANY ACCOUNTS The Burnley Tunnel wall failure, which occurred on 19 February 2001 is estimated to have reduced transaction volumes for the year by 0.9 per cent. This reduction is due to the closure of the tunnel between 19 and 25 February to allow a full investigation of the cause of the failure to be completed and the effects of closure of one lane of the tunnel until 16 June to allow repairs to be completed. Overall traffic ramp-up is generally in accord with expectations but has been impacted by both the wall failure and the opening of the Wurundjeri Way in the Docklands Precinct. At 30 June 2001, the 5 day moving average of weekday transactions was 584,512. This is 94.3 per cent of the transaction volumes for 2001 predicted by the Base Case Traffic Model after allowing for the ramp-up factors included in the prospectus and of the diversion of traffic on to Wurundjeri Way in the Docklands precinct. The shortfall relative to projected volumes is almost entirely on the Elevated Roadway and Bolte Bridge CityLink’s customer base grew strongly over the year with the number of account holders increasing by 29 per cent to 478,870, while the number of e-TAG’s associated with these accounts increased by 28 per cent to 680,825. This substantial growth in the customer base and in usage posed a challenge for the delivery of customer service and some problems were experienced over the Christmas/New Year holiday period due to the coincidence of the opening of the Burnley Tunnel with a high demand for CityLink Passes due to the large number of visitors to Melbourne for the holidays. Progress over the year in reducing customer service costs was less than planned, due to the disruptions over the Christmas/New Year period and delays in the implementation of new technology. "Touch" kiosks in Shell service stations and an automated telephone channel using There were nil dividends in the year (2000: nil). The result of operations for the financial year ended 30 June 2001 was an operating loss of $221 million (1999: $163 million). The principal continuing activities of the consolidated entity during the year were the design, construction and operation of CityLink. RESULTS DIVIDENDS REVIEW OF OPERATIONS (a) Traffic PRINCIPAL ACTIVITIES (b) Customer Service DIRECTORS The following persons were directors of Transurban City Link Limited during the whole of the financial year and up to the date of this report: Laurence G Cox Kimberley Edwards W H John Barr Peter C Byers Susan M Oliver Geoffrey R Phillips Jeremy G A Davis Geoff O Cosgriff was appointed a director on 19 December 2000 and continues in office at the date of this report. The Company and The Transurban City Link Unit Trust (the Trust) have entered into a Concession Deed with the State of Victoria in relation to the Melbourne City Link project (CityLink) and have issued securities, which are stapled into parcels (Stapled Securities). A Stapled Security comprises one share in the Company with a nominal price of $0.01 and one unit in the Trust with a nominal price of $0.99. None of the components can be traded separately.  The Burnley Tunnel was opened to traffic on 22 December 2000 and tolling commenced on 28 December 2000. 26