Board Meeting| 26 July 2016 Agenda item no. 8 Open Session Draft Financial Results for the Twelve Months Ended 30 June 2016 Recommendation That the Board: i. Receives the report. Table of Contents 1. Executive Summary 2. Auckland Transport Financial Results a. Split by category (section 2a) b. Net surplus/(deficit) waterfall (section 2b) c. Split by activity (section 2c) 3. Capital expenditure results a. Summary of capital expenditure (section 3a) b. Funding (section 3b) 4. Statement of Financial Position a. Statement of Financial Position (section 4a) b. Notes to the financial statements (section 4b) 5. Cash flow a. Cash flow (section 5a) b. Cash flow waterfall (section 5b) 6. Accounts receivable (section 6) 7. AT HOP stakeholder report (section 7)
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Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Draft Financial Results for the Twelve Months Ended 30 June 2016 Recommendation That the Board:
i. Receives the report.
Table of Contents 1. Executive Summary
2. Auckland Transport Financial Results
a. Split by category (section 2a)
b. Net surplus/(deficit) waterfall (section 2b)
c. Split by activity (section 2c)
3. Capital expenditure results
a. Summary of capital expenditure (section 3a)
b. Funding (section 3b)
4. Statement of Financial Position
a. Statement of Financial Position (section 4a)
b. Notes to the financial statements (section 4b)
5. Cash flow
a. Cash flow (section 5a)
b. Cash flow waterfall (section 5b)
6. Accounts receivable (section 6)
7. AT HOP stakeholder report (section 7)
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Executive Summary Draft financial results for the twelve months ended 30 June 2016:
Current Full year Full year Full yearmonth variance Actual revised
variance to revised Full year budgetto revised budget Actual
budget
$m $m $m $mTotal operating income 2.6 2.8 671.6 668.8Total operating expenditure (4.0) 9.8 971.2 981.0Surplus/(deficit) from operations (1.4) 12.5 (299.6) (312.2) Income for capital projects (17.5) (17.6) 696.7 714.2Net surplus/(deficit) before tax (19.0) (5.0) 397.0 402.1
Total direct capital (9.2) 52.6 555.2 607.7
resultsFull year
Key to symbols used:
: Within tolerable range : Above budget, favourable variance.
: Below budget, unfavourable variance. : Largely on track
: Below budget, favourable variance. : Monitoring, some action taken
Total operating expenditure 90,195 86,209 (3,986) 971,245 980,996 9,751 Surplus/(deficit) from operations (35,186) (33,765) (1,421) (299,649) (312,157) 12,508
Income for capital projectsNZ Transport Agency capital co-investment 20,709 13,476 7,233 140,188 154,036 (13,848) Auckland Council capital grant 58,905 50,896 8,009 403,026 435,705 (32,679) Other Capital Grants 1,954 8,000 (6,046) 1,954 8,000 (6,046) Vested asset income (1,734) 25,000 (26,734) 151,495 116,473 35,022
79,834 97,372 (17,538) 696,663 714,214 (17,551)
Net surplus/(deficit) before tax and derivatives 44,648 63,607 (18,959) 397,014 402,057 (5,043)
Gains/(losses) on derivatives (399) - (399) 305 (193) 498 Profit/(loss) on disposal of assets (3,276) (758) (2,518) (13,369) (722) (12,647) Income tax benefit/(expense) - - - 198 - 198
Net surplus/(deficit) after tax and derivatives 40,973 62,849 (21,876) 384,148 401,142 (16,994)
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Section 2b – Net surplus/(deficit) waterfall
Net surplus/ (deficit) – Year to date budget to actual (excluding vested asset income)
$284.7m $232.6m
($3.3m) ($5.1m) $5.6m $5.6m$1.5m ($2.0m) $10.3m
$0.5m($12.7m)
($13.9m)
($38.7m) $0.2m
$0m
$20m
$40m
$60m
$80m
$100m
$120m
$140m
$160m
$180m
$200m
$220m
$240m
$260m
$280m
$300m
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Section 2c – Summary of financial results by activity
The carrying value of cash and cash equivalents approximates their fair value.
2 Trade and other receivables
Trade debtors 2,278 2,651
Finance lease receivable 57 59
Infringements receivable 32,092 32,593
Amounts due from related parties 205,510 185,080
Accrued income 42,053 29,606
Goods and services tax - 3,028
281,990 253,017 Less provision for impairment of receivables (13,618) (13,893)
Total trade and other receivables 268,372 239,124
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Section 4b – Notes to the Financial Statements As at 30 June 2016
The carrying value of debtors and other receivables approximates their fair value.
There is no concentration of credit risk with respect to receivables as there are a large number of customers.
The maximum exposure to credit risk at reporting date is the carrying value of each class of receivable mentioned above.
The ageing profile of receivables at 30 June 2016 is detailed below:
Gross Impaired Net$000 $000 $000
Not past due 251,107 - 251,107 Past due 1 - 30 days 1,981 - 1,981 Past due 31 - 60 days 1,315 - 1,315 Past due 61 - 90 days 1,101 - 1,101 Past due > 90 days 26,486 (13,618) 12,868
281,990 (13,618) 268,372
All receivables greater than 30 days in age are considered to be past due.
Movements in the provision for impairment of receivables are as follows: Actual$000
At 1 July 2015 14,118 Additional provisions made 1,427 Provisions reversed (152)
Receivables written-off (1,775)
At 30 June 2016 13,618
The provision for impairment of receivables has been calculated on an individual basis. The provision is based on a review of significant debtor balances. Receivables are assessed as impaired due to significant financial difficulties being experienced by the debtor, and Auckland Transport management concluding that it is remote that the overdue amounts will be recovered.
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Section 4b – Notes to the Financial Statements As at 30 June 2016
Actual Actual30 June 2016 31 May 2016
$000 $000
3 Derivative financial instruments
Current asset portionForward foreign exchange contracts - cash flow hedges - 69 Current derivative financial instruments - 69
The fair values of forward foreign exchange contracts have been determined using a discounted cash flows valuation technique based on quoted market prices. The inputs into the valuation model are from independently sourced market parameters such as currency rates. Most market parameters are implied from forward foreign exchange contract prices.
The notional principal amount of outstanding forward foreign exchange contract cash flow hedges was NZD $5.5 million. The foreign currency principal amount was USD $3.7 million. The cash flow hedge loss of $242,000 on the revaluation has been recorded in the Statement of Financial Performance.
The fair values of interest rate swaps have been determined by calculating the expected cash flows under the terms of the swaps and discounting these values to present value. The inputs into the valuation model are from independently sourced market parameters such as interest rate yield curves. Most market parameters are implied from instrument prices. The notional principal amount of the outstanding interest rate swap contracts was $18 million. At 30 June 2016 the fixed interest rates of cash flow hedge interest rate swaps varied from 5.58% to 5.96%. The gain on their revaluation of $18,000 has been recorded in the Statement of Financial Performance.
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Section 4b – Notes to the Financial Statements As at 30 June 2016
Actual Actual30 June 2016 31 May 2016
$000 $000
4 Trade and other payablesCurrent portionCreditors 30,570 22,805Goods and services tax 2,306 -Accrued expenses 139,195 123,838Retentions 10,502 9,678Amounts due to related parties 7,280 5,180Income in advance 9,187 971
Total current trade and other payables 199,040 162,472
Non-current portionAmounts due to related parties 19,924 20,165
Total non-current trade and other payables 19,924 20,165
5 Employee benefit liabilities
Current portionAccrued salaries and wages 4,463 3,485Accrued leave 9,119 8,797
Current employee benefit liabilities 13,582 12,282
Creditors and other payables are non-interest bearing and are normally settled on 20-day terms. Therefore, the carrying value of creditors and other payables approximates their fair value.
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Section 4b – Notes to the Financial Statements As at 30 June 2016
Actual Actual30 June 2016 31 May 2016
$000 $000
6 Borrowings
Current portionLoans from Auckland Council 5,234 5,217
Current borrowings 5,234 5,217
Non-current portionLoans from Auckland Council 490,708 491,119
Non-current borrowings 490,708 491,119
Weighted average cost of funds on total borrowings 6.01% 6.01%
7 Deferred tax liability
Other Provisions Tax Losses
Actual 30 June 2016 Total
Deferred tax liability $000 $000 $000 $000
Balance at 1 July 2015 (11,665) - - (11,665) Charged to profit and loss 198 - - 198 Charged to equity - - - -
Balance at 30 June 2016 (11,467) - - (11,467)
Property, Plant and
Equipment
Auckland Transport's loan debt of $496 million is issued at fixed rates of interest ranging from 5.55% to 6.22%.
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Section 5a – Cash Flow
Full year
ActualRevisedBudget
RevisedBudget
$000 $000 $000Cash flows from operating activities
Total cash provided 1,197,008 1,257,855 1,257,855 Cash applied to: Actual
Payments to suppliers, employees and directors 608,814 633,848 633,848 $000Interest paid 26,687 29,553 29,553 Total cash applied 635,501 663,401 663,401 Surplus/(deficit) after tax 384,148
Net cash from operating activities 561,507 594,454 594,454 Add/(less) non cash items
Cash flows from investing activities Depreciation and amortisation 318,954 Cash provided from: Vested assets (151,495)
Sale of property, plant and equipment 1,012 - - Loss on disposal of property, plant and equipment 11,180 Total cash provided 1,012 - - Loss on asset write off -
Cash applied to: Revaluation decrement 2,188 Capital expenditure projects 571,965 607,740 607,740 Foreign exchange loss 242 Total cash applied 571,965 607,740 607,740 Gain on interest rate swaps (18)
Net cash from investing activities (570,953) (607,740) (607,740) Income tax (198) 180,853
Cash flows from financing activities Cash provided from: Add/(less) movements in working capital
Loan from Auckland Council - EMU 17,000 10,000 10,000 Decrease/(Increase) in debtors and other receivables (30,798) Other Capital Grants - 8,000 8,000 Decrease/(Increase) in inventories (1,959) Total cash provided 17,000 18,000 18,000 (Decrease)/Increase in creditors and other payables 28,870
Cash applied to: (Decrease)/Increase in employee benefits payable 1,620 Repayments of EMU loan from Auckland Council 4,764 4,691 4,691 (Decrease)/Increase in other assets 373 Repayments of finance lease principal 23 23 23 (Decrease)/Increase in non current asset held for sale (1,600) Total cash provided 4,787 4,714 4,714 (3,494)
Net cash from financing activities 12,213 13,286 13,286 Net cash flow from operating activities 561,507
Net (decrease)/increase in cash and cash equivalents 2,767 - - Opening cash balance 7,496 - -
Closing cash balance 10,263 - -
Year to date
Reconciliation of net surplus/(deficit) after tax to net cash flow from operating activities
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Section 5b – Cash Flow Waterfall Cash flow – Year to date budget to actual
1 - Sundry Debtors administered in the SAP system.
2 - Parking Permit Debtors administered in the Pathway system. These invoices are for on street permits issued. Amounts not collected within 60 days are lodged with Baycorp for collection. Accounts not paying on time are blocked for further permits.
3 - Inter-Council Group debts.
4 - Relates to invoices which have been queried or disputed by customers. The AR Team and various AT Departments are engaged in an effort to resolve these queries.
5 - Relates to accounts lodged with Baycorp for collection. All these amounts have been impaired in full and some may be written off in the future. All amounts written off are approved by the CFO in accordance with policy.
6 - Relates to customers where an arrangement to pay has been agreed to. These are monitored until full payment has been received.
7 - Relates to matters where AT is recovering damages from road accidents investigated by the Police. Many of the matters are being paid off at a nominal amount per week as instructed by the Courts.
Adjusted Debtors 27.7% Not yet due 92.0%Permit Debtors 0.2% 30 Day 4.4%Queried Invoices 5.6% 60 Days 1.4%Baycorp matters 1.5% 90 Days 0.4%Arrangements 0.1% 120 Days 0.0%MOJ Damages 3.6% 120+ Days 1.8%Related Parties 61.3% 100.0%
100.0%
Overview of Debtors Book at 30 JuneAdjustedDebtorsPermit Debtors
Queried Invoices
Baycorp matters
PaymentArrangementMOJ Damages
Related Parties
Overview and Ageing of Adjusted Debtors
Not yet due
30 Day
60 Days
90 Days
120 Days
120+ Days
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Infringement Overview:
June’s Infringement receipts by volume are down 5.4% on May (21 working days in June compared with 22 in May). Of the customers not paying in response to a Baycorp demand, 72.7% are making use of our electronic payment methods (71.9% in May). The AT website recorded 49.2% of all receipts. The highest average receipt by value was once again received through AC FoH and via cheque payments in the post.
The following graph illustrates the seasonal issuance of infringements. While the graph is still trending downwards, there has been a recovery over the past 4 months. Average issued Nov 2015 to Feb 2016 is $2.3 million. Average issued Mar to Jun 2016 is $2.7 million.
Working days May -> 22Ave receipts / day May -> 1,221Working days Jun -> 21Ave receipts / day Jun -> 1,209Other influencing factors -> Queen's Birthday Weekend
Analysis by Payment Channel (Volume)
AT Website
AT Website A2A
AC FoH
AT Finance
Baycorp
BNZ RP
Chq's in Post
Internet Banking
KiwiBank
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Analysis of receipts by value show that infringements issued over the past 24 months have decreased. While collections follow the issue trend two to three months later, the collection lines over time continue to move closer as a result of improved collection rates. Average Infringements issued Jan to Jun for the past four years (2012 $17.3 million / 2013 $17.3 million / 2014 $16.8 million / 2015 $16.5 million) is $16.98 million compared with $15.7 million so far in 2016. Analysis of MoJ’s collection statistics show that recovery in 2016 is down 8.4% on the 2015 average. AT’s receipts (Jan to Jun 2016 average) are down 3.5% compared with the same period in 2015. This is in line with the 4.5% decrease in infringements issued for the same periods.
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
Analysis of Infringements Issued 2012 to 2016
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep-1
2
Nov-1
2
Jan-1
3
Mar-1
3
May-1
3
Jul-1
3
Sep-1
3
Nov-1
3
Jan-1
4
Mar-1
4
May-1
4
Jul-1
4
Sep-1
4
Nov-1
4
Jan-1
5
Mar-1
5
May-1
5
Jul-1
5
Sep-1
5
Nov-1
5
Jan-1
6
Mar-1
6
May-1
6
Infringements Issued versus Infringement Receipts Jan 12 to Jun 16
Infr. Issued
AT Receipts
Poly. (Infr. Issued)
Poly. (AT Receipts)
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Direct receipts prior to lodging with MoJ continue to show an upward trend as a result of the Baycorp arrangement.
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
Section 7 – AT HOP Stakeholder Monthly Report (Does not form part of AT results)
The AT HOP Stakeholder bank account finished off the 2016 financial year at $11.8 million.
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OpeningBalance
Credit CardTop-Up
EFTPOS Top-Up
VRD CashDeposits
Settlementfrom
Retailers
AutoloadsTop-Up
Cash Tickets(Bus and Rail)
Settlement toPT Operators
Settlement toAT
ClosingBalance
HOP Stakeholder Account Movement June 2016$m
Board Meeting| 26 July 2016 Agenda item no. 8
Open Session
The following graph provides an overview of monthly balances for Stored Value, Period Passes, and the AT HOP Stakeholder Account together with trend lines.
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AT HOP Stakeholder Account Analyis of Stored Value, Period Pass and Bank Balance
Stored Value Period Passes Bank Balance Linear (Stored Value) Linear (Period Passes) Linear (Bank Balance)