Land Transport New Zealand Annual report

Financial statements

Statement of financial performance

For the year ended 30 June 2007

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

	Notes	Actual 2006/07 $000	Budget 2006/07 $000	Actual 2005/06 $000
Revenue
Crown – annual		314,985	347,425	93,711
Crown – National Land Transport Fund		1,799,865	1,780,772	1,480,355
Contract services		49,454	49,956	46,899
Third party revenue	1	88,511	90,129	92,615
Total revenue		2,252,815	2,268,282	1,713,580
Expenditure
Personnel expenses		43,772	45,919	39,731
Operating expenses	2	128,210	132,697	123,569
National Land Transport Programme excluding operating costs		1,848,691	2,060,130	1,649,015
Depreciation	3	6,090	6,743	5,859
Capital charge		1,615	1,822	1,700
Total expenditure	4	2,028,378	2,247,311	1,819,874
Net surplus (deficit) for the period		224,437	20,971	(106,294)

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

Statement of movements in equity

For the year ended 30 June 2007

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

	Notes	Actual 2006/07 $000	Budget 2006/07 $000	Actual 2005/06 $000
Public equity as at 1 July 2006		62,253	83,944	169,738
Net surplus/(deficit) for the year		224,437	20,971	(106,294)
Total recognised revenue and expenses for the year		224,437	20,971	(106,294)
Net transfer movements	5	(650)	0	(1,191)
Public equity as at 30 June 2007		286,040	104,915	62,253

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

Statement of financial position

As at 30 June 2007

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

	Notes	Actual 2006/07 $000	Budget 2006/07 $000	Actual 2005/06 $000
Assets
Current assets
Cash and investments	6	328,963	361,283	222,118
Prepayments		206	220	617
Inventory		445	180	173
Crown receivable		231,327	40,000	46,953
Debtors and receivables	7	6,322	10,000	42,980
Total current assets		567,263	411,683	312,841
Non-current assets
Fixed assets	8	19,118	24,934	19,393
Total assets		586,381	436,617	332,234
Liabilities
Current liabilities
Creditors and payables	9	294,426	327,762	264,424
Provision for repayment of surplus to the Crown		1,190	0	1,486
Employee entitlements	10	2,580	3,940	2,282
Total current liabilities		298,196	331,702	268,192
Non-current liabilities
Employee entitlements	10	2,145	0	1,789
Total liabilities		300,341	331,702	269,981
Public equity
General funds		19,075	19,075	19,075
Licensing memorandum account balances	11	167	1,870	5,927
National Land Transport Account balances	12	247,782	68,537	24,547
Accumulated operating surplus/(deficit)		19,016	15,433	12,704
Total public equity		286,040	104,915	62,253
Total liabilities and public equity		586,381	436,617	332,234

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.

	Notes	Actual 2006/07 $000	Budget 2006/07 $000	Actual 2005/06 $000
Cash flows from operating activities
Cash was provided from:
> supply of outputs to the Crown		314,985	397,381	63,257
> supply of outputs to National Land Transport Programme		1,666,127	1,780,069	1,543,408
> supply of outputs to third parties		95,105	77,175	51,970
> net goods and services tax		17,514	0	11,261
> interest received		13,841	12,954	17,580
		2,107,572	2,267,579	1,687,476
Cash was applied to:
> personnel expenses		(42,937)	(45,920)	(39,368)
> operating cost of outputs		(1,949,425)	(2,180,746)	(1,774,994)
> payment of capital charge to the Crown		(1,615)	(1,822)	(1,700)
		(1,993,977)	(2,228,488)	(1,816,062)
Net cash flows from operating activities	13	113,595	39,091	(128,586)
Cash flows from investing activities
Cash was provided from:
> sale of fixed assets		11	20	19
Cash was applied to:
> purchase of fixed assets		(5,816)	(6,743)	(3,709)
Net cash flows from investing activities		(5,805)	(6,723)	(3,690)
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		(945)	0	(1,398)
Net cash flows from financing activities		(945)	0	(1,398)
Net increase/(decrease) in cash held		106,845	32,368	(133,674)
Opening cash balances		222,118	328,915	355,792
Closing cash balances		328,963	361,283	222,118
Cash		185	100	254
Investments		328,778	361,183	221,864
Closing cash balances		328,963	361,283	222,118

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

Statement of commitments

As at 30 June 2007

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 2006/07 $000	Actual 2005/06 $000
National Land Transport Programme funding commitments
Not later than one year	1,587,900	1,466,191
Later than one year and not later than two years	477,357	188,599
Later than two years and not later than five years	396,502	169,813
Later than five years	0	0
	2,461,759	1,824,603
Non-cancellable operating lease commitments
Not later than one year	17,483	13,777
Later than one year and not later than two years	16,596	15,561
Later than two years and not later than five years	47,164	43,365
Later than five years	45,475	49,611
	126,718	122,314
Total commitments	2,588,477	1,946,917

Statement of contingent liabilities

As at 30 June 2007

This statement discloses situations that existed as at 30 June 2007, 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.

	Notes	Actual 2006/07 $000	Actual 2005/06 $000
Guarantees and indemnities		72	0
Total contingent liabilities		72	0

Building lease reassigned, however the original clauses of the lease will apply if the assignee defaults. Therefore the contingent liability reflects the exposure in case of default.

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

Notes to the financial statements

For the year ended 30 June 2007

NOTE 1 – THIRD PARTY REVENUE

	2006/07 $000	2005/06 $000
Overdimension permits	211	226
Rail licensing fees	266	264
Border inspection fees	2,328	2,722
Transport licensing fees	4,520	4,377
Vehicle registration fees	5,248	5,247
Certification review fees	7,443	7,429
Administration fee from Accident Compensation Corporation	11,888	11,251
Driver testing fee	15,350	16,284
Driver licensing fee	24,647	25,475
Other revenue	2,543	2,157
Interest	14,067	17,183
	88,511	92,615

NOTE 2 – DISCLOSURE OF EXPENDITURE ITEMS

	2006/07 $000	2005/06 $000
Expenditure includes:
Fees paid to auditors for external audit	141	135
Fees for audit of NZ IFRS opening balance sheet	13	0
Fees paid to auditors for other services	17	0
Board members fees	214	233
Rental expense on operating leases	4,213	3,472
Bad debts written off	29	4
Change in provision for doubtful debts	18	170

NOTE 3 – DEPRECIATION

	2006/07 $000	2005/06 $000
Computer equipment	1,615	1,725
Furniture and fittings	271	253
Leasehold improvements	302	292
Office equipment	89	96
Software	3,813	3,493
	6,090	5,859

NOTE 4 – DISCLOSURE OF EXPENDITURE BY OUTPUT CLASSES

	ACTUAL 2006/07 $000	BUDGET 2006/07 $000	ACTUAL 2005/06 $000
Research and performance monitoring	5,904	6,058	5,563
Promotion, information and education activities	30,933	33,936	32,976
Regulatory implementation and enforcement	23,906	25,405	20,439
Licensing activities	45,981	49,176	43,268
Management of funding allocation system	12,777	11,668	12,078
Motor vehicle registry and revenue management	60,186	60,938	56,535
Costs and expenses	179,687	187,181	170,859
Rail and sea freight	94	1,500	371
Transport demand management and walking and cycling	8,884	18,550	8,216
Passenger transport services	222,089	270,920	211,789
Regional land transport	19,784	60,960	6,104
Auckland land transport	7,990	20,550	4,947
Wellington land transport	62	12,010	93
Bay of Plenty land transport	29,267	55,000	0
New and improved infrastructure for state highways (1)	750,124	762,470	702,047
Maintenance of state highways (2)	217,686	173,130	209,035
New and improved infrastructure for local roads	298,128	436,360	281,012
Maintenance of local roads	224,142	175,990	225,401
Management of funding allocation system	70,341	72,690	0
National land transport programme excluding operating costs	1,848,691	2,060,130	1,649,015
Total NLTP and costs and expenses	2,028,378	2,247,311	1,819,874
Expenditure net of Transit NZ revenue
(1) New and improved infrastructure for state highways	763,876	777,470	714,470
Less cost of NLTP funded by Transit NZ property sales	(13,752)	(15,000)	(12,423)
Total cost of NLTP funded by Land Transport NZ	750,124	762,470	702,047
(2) Maintenance of state highways	236,233	190,130	227,166
Less cost of NLTP funded by Transit NZ property sales	(18,547)	(17,000)	(18,131)
Total cost of NLTP funded by Land Transport NZ	217,686	173,130	209,035

NOTE 5 – NET TRANSFER MOVEMENTS

	2006/07 $000	2005/06 $000
Net transfers to/from provision to repay MVR&RM surplus to the Crown	(1,190)	(1,486)
Net transfers to/from MVR&RM surplus approved for retention	540	295
	(650)	(1,191)

NOTE 6 – CASH AND INVESTMENTS

	2006/07 $000	2005/06 $000
Cash and bank	185	254
Short term investments:
- ANZ Bank	59,140	77,885
- ASB Bank	71,900	6,200
- Bank of New Zealand	76,613	14,430
- Citibank	60,640	68,995
- Kiwibank	7,300	3,450
- Westpac	53,185	50,904
	328,778	221,864
	328,963	222,118
Short term investments were deposited at the following terms:
Less than 30 days	134,058	111,819
30 to 59 days	154,890	59,915
60 to 89 days	0	0
90 to 119 days	6,940	0
120 to 149 days	32,890	14,650
150 to 179 days	0	19,650
180+ days	0	15,830
	328,778	221,864
Weighted average effective interest rates for short term investments	8.2%	7.1%

NOTE 7 – DEBTORS AND RECEIVABLES

	2006/07 $000	2005/06 $000
Trade debtors	3,515	3,372
Less provision for doubtful debts	(257)	(788)
	3,258	2,584
Other amounts receivable	1,139	22,811
GST receivable	1,925	17,585
	6,322	42,980

NOTE 8 – FIXED ASSETS

	COST 30/06/07 $000	ACCUMULATED DEPRECIATION $000	NET BOOK VALUE $000
2007
Computer equipment	6,134	3,918	2,216
Furniture and fittings	2,265	666	1,599
Leasehold improvements	4,062	779	3,283
Office equipment	470	267	203
Software	21,254	9,437	11,817
	34,185	15,067	19,118
	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
	28,373	8,980	19,393

NOTE 9 – CREDITORS AND PAYABLES

	2006/07 $000	2005/06 $000
Trade creditors	174,471	160,679
Accrued expenses	119,955	103,745
	294,426	264,424

NOTE 10 – EMPLOYEE ENTITLEMENTS

	2006/07 $000	2005/06 $000
Annual leave	2,580	2,282
Long service leave	359	251
Retirement leave	1,786	1,538
	4,725	4,071
Current	2,580	2,282
Non-current	2,145	1,789
	4,725	4,071

NOTE 11 – LICENSING MEMORANDUM ACCOUNT BALANCES

	2006/07 $000	2005/06 $000
Opening balance	5,927	4,325
Revenue	40,221	44,870
Expenditure	45,981	43,268
Net surplus (deficit)	(5,760)	1,602
	167	5,927

NOTE 12 – NATIONAL LAND TRANSPORT ACCOUNT BALANCES

	2006/07 $000	2005/06 $000
Opening balance	24,547	136,172
Revenue	2,071,926	1,537,390
Expenditure	1,848,691	1,649,015
Net surplus (deficit)	223,235	(111,625)
	247,782	24,547

NOTE 13 – RECONCILIATION OF THE NET SURPLUS (DEFICIT) FROM OPERATIONS WITH THE NET CASH FLOWS FROM OPERATING ACTIVITIES

	2006/07 $000	2005/06 $000
Net surplus from operations	224,437	(106,294)
Add (less) non-cash items:
Depreciation	6,090	5,859
Increase (decrease) in non-current employee entitlements	356	117
	6,446	5,976
Add (less) movements in working capital items:
(Increase) decrease in receivables/inventory	36,797	(11,898)
(Increase) decrease in receivable from Crown – NLTF	(184,374)	(14,300)
Increase (decrease) in payables	30,002	(2,316)
Increase (decrease) in employee entitlements	298	246
	(117,277)	(28,268)
Add (less) items classified as investing activities:
Net loss (gain) on sale of assets	(11)	0
Net cash flow from operating activities	113,595	(128,586)

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.

During the 2006/07 financial year Board members and staff of Land Transport NZ were involved in minor transactions with the motor vehicle registry and driver licensing systems when re-registering their vehicle or driver licenses.

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.

TOTAL REMUNERATION PACKAGE:	NUMBER OF EMPLOYEES
	2006/07	2005/06
$100,000–$110,000	14	11
$110,001–$120,000	10	11
$120,001–$130,000	8	4
$130,001–$140,000	4	5
$140,001–$150,000	4	3
$150,001–$160,000	1	2
$160,001–$170,000	0	2
$170,001–$180,000	0	2
$190,001–$200,000	4	0
$200,001–$210,000	1	0
$370,001–$380,000	0	1
$380,001–$390,000	1	0
	47	41

The Chief Executive’s remuneration and benefits is in the $380,001–$390,000 band (2005/06: $370,001–$380,000 band).

Severence payments - During the financial year, three employees received severance payments totalling $105,506 (2005/06 $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 2006/07 $000	FEES 2005/06 $000
Mr Paul Fitzharris (Acting Chair)		40	30
Mr Murray King		7	0
Mr Gary McIver		22	0
Mr Gary Moore		7	0
Mr Greg Presland		30	30
Mr John Rutledge		7	0
Dr Janet Stephenson		30	30
Dr Jan Wright	Stepped down in February 2007	40	60
Mr Gerry Te Kapa Coates	Stepped down in March 2007	23	30
Mr Bryan Jackson	Stepped down in September 2006	8	30
Mr David Stubbs	Stepped down in April 2006	0	23
		214	233

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

Annual funding from Crown was reduced by $32.442 million from budget in anticipation of lower call on funds targeted to Auckland, Wellington and Bay of Plenty this year. Lower than budgeted NLTP expenditure reflected lower investment in local roads than forecast. This is expected to be caught up in the next financial year.

Statement of financial position

Cash and investments are reserves earmarked mainly for NLTP claims. Most variations reflect the timing of claims received from approved organisations.

NOTE 18 - CHANGES TO COMPARATIVE FIGURES

Where necessary, comparative figures have been adjusted to conform with 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 2007.

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 has completed the opening balance sheet in readiness for NZ IFRS reporting as at 30 June 2008.

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Page created: 14 November 2007