Land Transport New Zealand Annual Report

Financial statements

Statement of financial performance

For the year ended 30 June 2006

This statement details the revenue received and expenses incurred by Land Transport New Zealand.

		Actual 12 months 2005/06	Budget 12 months 2005/06	Actual 7 months 2004/05
	Notes	$000	$000	$000
Revenue
Crown		63,257	62,701	49,586
Safety Administration Programme (SAP)		30,454	30,454	14,894
NLTP funding from NLTF		1,480,355	1,481,067	791,644
Contract services		46,899	49,899	24,268
Third party revenue	1	92,615	78,552	52,652
Total revenue		1,713,580	1,702,673	933,044
Expenditure
Personnel expenses		39,731	39,073	18,356
Operating expenses	2	123,569	124,093	79,499
NLTP excluding operating costs		1,649,015	1,658,740	956,055
Depreciation	3	5,859	5,740	3,186
Capital charge		1,700	1,842	946
Total expenditure	4	1,819,874	1,829,488	1,058,042
Net surplus (deficit) for the period		(106,294)	(126,815)	(124,998)

The accompanying accounting policies and notes form part of these financial statements.

Statement of movements in equity

For the year ended 30 June 2006

This statement sets out the causes and changes to the opening equity during the course of the year.

		Actual 12 months 2005/06	Budget 12 months 2005/06	Actual 7 months 2004/05
	Notes	$000	$000	$000
Public equity as at 1 July 2005		169,738	162,449	287,444
Net surplus/(deficit) for the year		(106,294)	(126,815)	(124,998)
Total recognised revenue and expenses for the year		(106,294)	(126,815)	(124,998)
Net transfer movements	5	(1,191)	0	7,292
Public equity as at 30 June 2006		62,253	35,634	169,738

The accompanying accounting policies and notes form part of these financial statements.

Statement of financial position

As at 30 June 2006

This statement reports the total assets and liabilities of Land Transport New Zealand. The residual interest in the assets after deducting liabilities is equity.

		Actual 2005/06	Budget 2005/06	Actual 2004/05
	Notes	$000	$000	$000
Assets
Current assets
Cash and investments	6	222,118	38,914	355,792
Prepayments		617	220	212
Inventory		173	180	461
Crown receivable		46,953	0	32,653
Debtors and receivables	7	42,980	299,297	31,199
Total current assets		312,841	338,611	420,317
Non-current assets
Fixed assets	8	19,393	24,954	21,562
Total assets		332,234	363,565	441,879
Liabilities
Current liabilities
Creditors and payables	9	264,424	324,291	266,741
Provision for repayment of surplus to the Crown		1,486	0	1,692
Employee entitlements	10	2,282	3,640	2,165
Total current liabilities		268,192	327,931	270,598
Non-current liabilities
Employee entitlements	10	1,789	0	1,543
Total liabilities 269,981		269,981	327,931	272,141
Public equity
General funds		19,075	18,575	19,075
Licensing memorandum account balances	11	5,927	3,714	4,325
National land transport account balances	12	24,547	0	136,172
Accumulated operating surplus/(deficit)		12,704	13,345	10,166
Total public equity		62,253	35,634	169,738
Total liabilities and public equity		332,234	363,565	441,879

The accompanying accounting policies and notes form part of these financial statements.

Statement of cash flows

For the year ended 30 June 2006

This statement summarises the cash movements in and out of Land Transport New Zealand during the year.

		Actual 12 months 2005/06	Budget 12 months 2005/06	Actual 7 months 2004/05
	Notes	$000	$000	$000
Cash flows from operating activities
Cash was provided from:
> Supply of outputs to the Crown		63,257	62,701	49,586
> Supply of outputs to NLTF		1,543,408	1,678,256	1,116,919
> Supply of outputs to third parties		51,970	78,563	43,166
> Net goods & services tax		11,261	0	32,979
> Interest received		17,580	0	6,886
		1,687,476	1,819,520	1,249,536
Cash was applied to:
> Personnel expenses		(39,368)	(39,073)	(21,385)
> Operating cost of outputs		(1,774,994)	(1,914,576)	(971,929)
> Payment of capital charge to the Crown		(1,700)	(1,842)	(1,716)
		(1,816,062)	(1,955,491)	(995,030)
Net cash flows from operating activities	13	(128,586)	(135,971)	254,506
Cash flows from investing activities
Cash was provided from:
> Sale of fixed assets		19	20	442
Cash was applied to:
> Purchase of fixed assets		(3,709)	(4,768)	(2,052)
Net cash flows from investing activities		(3,690)	(4,748)	(1,610)
Cash flows from financing activities
Cash was provided from:
> Capital contributions from the Crown		0	0	0
Cash was applied to:
> Repayment of surplus to the Crown		(1,398)	(1,553)	(190)
Net cash flows from financing activities		(1,398)	(1,553)	(190)
Net increase/(decrease) in cash held		(133,674)	(142,272)	252,706
Opening cash balances		355,792	181,786	103,086
Closing cash balances		222,118	38,914	355,792
Cash		254	100	395
Investments		221,864	38,814	355,397
Closing cash balances		222,118	38,914	355,792

Statement of commitments

As at 30 June 2006

This statement records those expenditures to which Land Transport New Zealand is contractually committed and which will become liabilities if and when the contractual terms are met.

	Actual 2005/06 $000	Actual 2004/05 $000
National Land Transport Programme funding commitments
Not later than one year	1,466,191	1,309,993
Later than one year and not later than two years	188,599	292,270
Later than two years and not later than five years	169,813	352,459
	1,824,603	1,954,722
Non-cancellable operating lease commitments
Not later than one year	13,777	16,437
Later than one year and not later than two years	15,561	2,390
Later than two years and not later than five years	43,365	5,134
Later than five years	49,611	5,438
	122,314	29,399
Total commitments	1.946,917	1,984,121

The accompanying accounting policies and notes form part of these financial statements.

Statement of contingent liabilities

As at 30 June 2006

This statement discloses situations that existed as at 30 June 2006, the outcome of which is uncertain and will be confirmed only on the occurrence of one of more future events after the date of the financial statements.

	Actual 2005/06 $000	Actual 2004/05 $000
Legal proceedings1	0	65
Total contingent liabilities	0	65

Notes
¹ Frontal impact cases now completed.

The accompanying accounting policies and notes form part of these financial statements.

Notes to the financial statements

For the year ended 30 June 2006

Note 1 - Third party revenue	12 months 2005/06 $000	7 months 2004/05 $000
Overdimension permits	226	131
Rail licensing fees	264	200
Border inspection fees	2,722	2,069
Transport licensing fees	4,377	2,450
Vehicle registration fees	5,247	2,982
Certification review fees	7,429	4,334
Administration fee from Accident Compensation Corporation	11,251	6,600
Driver testing fee	16,284	9,417
Driver licensing fee	25,475	14,958
Other revenue	2,157	1,727
Interest	17,183	7,784
	92,615	52,652

Note 2 - Disclosure of expenditure items	12 months 2005/06 $000	7 months 2004/05 $000
Expenditure includes:
Fees paid to auditors for external audit	135	128
Board members fees	233	134
Finance charges on finance leases	0	2
Rental expense on operating leases	3,472	2,409
Bad debts written off	4	3
Change in provision for doubtful debts	170	94

Note 3 - Depreciation	12 months 2005/06 $000	7 months 2004/05 $000
Computer equipment	1,725	992
Furniture and fittings	253	141
Leasehold improvements	292	169
Office equipment	96	59
Software	3,493	1,825
	5,859	3,186

Note 4 - Disclosure of expenditure by output classes	Actual 12 months 2005/06 $000	Budget 12 months 2005/06 $000	Actual 12 months 2004/05 $000
Rail and sea freight	371	2,065
Transport demand management and walking and cycling	8,216	17,607	12,645
Passenger transport services	211,789	181,581	65,069
Regional land transport	6,104	65,563	17,529
Auckland land transport	4,947	64,000
Wellington land transport	93	1,250
New and improved infrastructure for state highways (1)	702,047	664,559	293,819
Maintenance of state highways (2)	209,035	174,470	243,155
New and improved infrastructure for local roads	281,012	312,410	54,503
Maintenance of local roads	225,401	167,715	239,335
NLTP excluding operating costs	1,649,015	1,651,220	956,055
Research and performance monitoring	5,563	4,953	2,707
Promotion, information and education activities	32,976	31,601	21,846
Regulatory implementation and enforcement	20,439	19,636	13,757
Licensing activities	43,268	47,939	26,156
Management of funding allocation system	12,078	13,287	5,198
Motor vehicle registry and revenue management	56,535	60,852	32,323
Costs and expenses	170,859	178,268	101,987
Total NLTP and costs and expenses	1,819,874	1,829,488	1,058,042
Expenditure net of Transit New Zealand revenue
(1) New and improved infrastructure for state highways	714,470	679,559	294,679
Less cost of NLTP funded by Transit New Zealand property sales	(12,423)	(15,000)	(860)
Total cost of NLTP funded by Land Transport NZ	702,047	664,559	293,819
(2) Maintenance of state highways	227,166	186,570	252,273
Less cost of NLTP funded by Transit New Zealand property sales	(18,131)	(12,100)	(9,118)
Total cost of NLTP funded by Land Transport NZ	209,035	174,470	243,155

Where necessary, comparative figures with the previous year have been adjusted to correspond to changes in output classes, and presentation and classifications adopted in the financial statements during this current year.

Note 5 - Net transfer movements	12 months 2005/06 $000	7 months 2004/05 $000
Net transfers to/from memorandum account	0	(519)
Net transfers to/from provision to repay surplus to the Crown	(1,486)	1,692
Net transfers to/from surplus approved for retention	295	170
Net transfers to/from adjustments for expenditure funded by retained earnings	0	5,949
	(1,191)	7,292

Note 6 - Cash and investments	12 months 2005/06 $000	7 months 2004/05 $000
Cash and bank	254	395
Short term investments:
ANZ Bank	77,885	76,600
ASB Bank	6,200	76,600
Bank of New Zealand	14,430	71,285
Citibank	68,995	49,600
Kiwibank	3,450	8,500
Westpac	50,904	73,412
	222,118	355,792
Short term investments were deposited at the following terms:
Less than 30 days	112,073	191,692
30 to 59 days	59,915	101,600
60 to 89 days	0	18,200
90 to 119 days	0	24,100
120 to 149 days	14,650	20,200
150 to 179 days	19,650	0
180+ days	15,830	0
	222,118	355,792

Note 7 - Debtors and receivables	12 months 2005/06 $000	7 months 2004/05 $000
Trade debtors	3,372	3,464
Less provision for doubtful debts	(788)	(782)
	2,584	2,682
Other amounts receivable	22,811	3,037
GST receivable	17,585	25,480
	42,980	31,199

Note 8 - Fixed assets	Cost 30/06/06 $000	Accumulated depreciation $000	Net book value $000
2006
Computer equipment	5,020	2,634	2,386
Furniture and fittings	2,089	395	1,694
Leasehold improvements	2,969	461	2,508
Office equipment	391	155	236
Software	17,904	5,335	12,569
Work in progress: Software	0	0	0
	28,373	8,980	19,393
	Cost 30/06/05 $000	Accumulated depreciation $000	Net book value $000
2005
Computer equipment	4,072	992	3,080
Furniture and fittings	1,773	141	1,632
Leasehold improvements	2,515	169	2,346
Office equipment	376	59	317
Software	15,655	1,825	13,830
Work in progress: Software	357	0	357
	24,748	3,186	21,562

Note 9 - Creditors and payables	12 months 2005/06 $000	7 months 2004/05 $000
Trade creditors	160,679	256,300
Accrued expenses	103,745	10,441
	264,424	266,741

Note 10 - Employee entitlements	12 months 2005/06 $000	7 months 2004/05 $000
Annual leave	2,282	2,076
Long service leave	251	211
Retirement leave	1,538	1,421
	4,071	3,708
Current	2,282	2,165
Non-current	1,789	1,543
	4,071	3,708

Note 11 - Licensing memorandum account balances	12 months 2005/06 $000	7 months 2004/05 $000
Opening balance	4,325	3,806
Revenue	44,870	26,675
Expenditure	43,268	26,156
Net surplus (deficit)	1,602	519
	5,927	4,325

Note 12 - National land transport account balances	12 months 2005/06 $000	7 months 2004/05 $000
Opening balance	136,172	252,740
Revenue	1,537,390	847,392
Expenditure	1,649,015	963,960
Net surplus (deficit)	(111,625)	(116,568)
	24,547	136,172

Note 13 - Reconciliation of the net surplus (deficit) from operations with the net cash flows from operating activities	12 months 2005/06 $000	7 months 2004/05 $000
Net surplus from operations	(106,294)	(124,998)
Add (less) non-cash items:
Depreciation	5,859	3,185
	5,859	3,185
Add (less) movements in working capital items:
(Increase) decrease in receivables/inventory	(11,898)	(34,177)
(Increase) decrease in receivable from Crown - NLTF	(14,300)	321,876
Increase (decrease) in payables	(2,316)	88,814
Increase (decrease) in employee entitlements	363	(194)
	(28,151)	376,319
Net cash flow from operating activities	128,586	254,506

Note 14 - Related party information

Land Transport New Zealand undertakes transactions with other government departments, Crown agencies and state-owned enterprises. These transactions are carried out on an arms-length basis and it is considered that they do not fall within the intended scope of related party disclosure.

The motor vehicle registry and revenue management output class is managed by Land Transport NZ under contract to the Ministry of Transport. The Transport Registry Centre, based in Palmerston North, operates the motor vehicle registry and revenue management business. The other component of this output is the Economic Compliance Unit. This Unit is situated in the Land Transport NZ National Office with field staff operating throughout the country from Land Transport NZ regional offices.

Land Transport NZ receives funding from the Road Safety Trust for providing administrative support.

Dr Jan Wright, the Chair of the Land Transport NZ Board, is a member of the Board of Transit New Zealand.

Schedule 4 of the Land Transport Management Act 2003 states that section 66 of the Crown Entities Act 2004 does not apply to a person who is interested in a matter only because he or she is a member of the Board of both Land Transport NZ and Transit New Zealand.

Note 15 - Employees with total remuneration packages in excess of $100,000

The term 'total remuneration package' is defined as including the following elements: salary, non-monetary benefits, and only those performance payments actually accrued or received.

	Number of employees
Total remuneration package	2005/06	2004/05
$100,000 - $110,000	11	10
$110,001 - $120,000	11	2
$120,001 - $130,000	4	5
$130,001 - $140,000	5	4
$140,001 - $150,000	3	0
$150,001 - $160,000	2	1
$160,001 - $170,000	2	3
$170,001 - $180,000	2	1
$330,001 - $340,000	0	1
$370,001 - $380,000	1	0
	41	27

Wayne Donnelly was appointed the Chief Executive Officer of Land Transport NZ on 21 December 2004. His total remuneration package is in the $370,001 – $380,000 band.

Severance payments – During the financial year, four employees received severance payments totalling $303,572.

Note 16 - Board fees

No severance payments have been made to Board members. Remuneration through fees is all-inclusive and no consultancy or ex gratia payments or benefits have been provided to Board members other than fees. Board members earned the following fees during the year:

Member	Fees 12 months 2005/06 $000	Fees 7 months 2004/05 $000
Dr Jan Wright (Chair)	60	35
Mr Paul Fitzharris (Deputy Chair)	30	5
Mr Gerry Te Kapa Coates	30	18
Mr Bryan Jackson	30	18
Mr Greg Presland	30	18
Dr Janet Stephenson	30	18
Mr David Stubbs	23	18
Mr Simon Mitchell	0	6
	233	134

Mr Simon Mitchell stepped down from the Board in January 2005, and Mr David Stubbs stepped down in April 2006.

The Board has taken insurance cover for Board members and employees for personal loss caused by wrongful acts in the course of their duties where indemnity is not available from the organisation. The Board has also taken insurance cover covering personal accident and travel risk for Board members and employees where injury or loss occurs whilst on Land Transport NZ business.

Note 17 - Major budget variations

Statement of financial performance
Funding for contract services of the MVR & RM business was reduced by $3 million from budget in anticipation of lower motor vehicle registry and revenue management expenditure.

Higher third party revenue of $14.063 million reflects the level of interest earned on funds held during the period. A high level of funds held in the bank account reflects the timing of roading funds drawn down by approved organisations.

NLTP expenditure was below budget mainly due to claims from Transit New Zealand being lower than forecast.

Statement of financial position
Cash and investments are reserves earmarked mainly for NLTP claims. The balance is higher than budgeted due to the timing of claims received from approved organisations.

An anticipated high level of debtors and creditors at year-end did not eventuate due to NLTP funding being received before the year-end.

Note 18 - Changes to comparative figures

Where necessary, comparative figures have been adjusted to conform to changes in presentation and classification adopted in the current period.

Note 19 - Adoption of international financial reporting standards

In December 2002, the New Zealand Accounting Standards Review Board announced that New Zealand International Financial Reporting Standards (NZ IFRS) will apply to all New Zealand reporting entities for the periods beginning on or after 1 January 2005.

Land Transport NZ intends to implement NZ IFRS in its annual financial statements for the year ending 30 June 2008.

Entities complying with the New Zealand equivalents to IFRS for the first time will be required to restate their comparative financial statements to amounts reflecting the application of IFRS to that comparative period. Most adjustments required on transition to IFRS will be made, retrospectively, against opening retained earnings.

Land Transport NZ is assessing the significance of these changes and preparing for their implementation.

As Land Transport NZ has not yet completed an analysis of the differences between existing NZ GAAP and NZ IFRS, we are unable to reliably estimate the key differences in accounting policies or quantify the impacts to the financial statements that are expected to arise on transition to NZ IFRS. Land Transport NZ intends to provide further information, including quantification of the impacts of transitioning to NZ IFRS, in the financial statements for the year ending 30 June 2007.

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Page created: 13 February 2007