40 Explanatory statement

a) Significant variances between estimated and actual result for the financial year

Details and reasons for significant variations between estimates and actual results are detailed below. Significant variations are considered to be those greater than

10% or $5 million.

	2012 Actual $000	2012 Estimate $000	Variance $000
Income	233,224	199,942	33,282
Cost of Services	1,076,687	1,097,519	20,832
Net Cost of Services	843,463	897,577	54,114

Revenue

Revenue was $33.3 million (16.6%) above the estimate. The variations include increased:

• fare revenue from increased patronage
• revenue from ticket infringements, advertising and parking
• revenue from services funded by external parties
• interest revenue through holding the City of Perth contribution to the Perth City Link project.

Total cost of services

Cost of services for the year was $20.8 million (1.9%) below the estimate.

There were several significant variations that contributed to this overall variation. These variations include:

• Decreased interest costs of $16.5 million
• Decreased depreciation costs of $9.4 million resulting from deferral of the asset investment program and unfunded depreciation related to the freight network infrastructure.

Offset by:

• Increased grants and subsidies of $3.3 million for the grain freight network
• Increased provision for contaminated sites to be remediated of $2.2 million.

b) Significant variations between actual revenues and expenditures for the financial year and revenues and expenditures for the immediately preceding financial year

Details and reasons for significant variations between actual results with the corresponding items of the preceding year are detailed below. Significant variations are considered to be those greater than 10% or $5 million.

	2012 Actual $000	2011 Actual $000	Variance $000
Income
User charges and fees	192,003	170,869	21,134
Other revenue	32,164	52,483	(20,319)
Interest revenue	3,125	2,042	1,083
Expenses
Employee benefits expense	135,193	125,936	9,257
Grants and subsidies expense	379,867	345,647	34,220
Supplies and services	201,439	184,032	17,407
Energy and fuel	25,236	22,545	2,691
Other expenses	20,818	16,168	4,650
Loss on disposal of non-current assets	816	101	715

User charges and fees

Increased user charges and fees mainly due to fare increases and patronage increase.

Other revenue

Decreased other revenue mainly due to a contribution of $25.6 million from the City of Perth for the Perth City Link project in the previous year, offset by increased revenue from services funded by external parties and increased income from leased properties.

Interest revenue

Increased interest revenue mainly through holding the funding from the City of Perth contribution to the Perth City Link project.

Employee benefits expense

Increased employee benefits expense mainly due to increased FTE, yearly salary and wages increment based on the Enterprise Bargaining Agreement and voluntary severance payments.

Grants and subsidies expense

Increased grants and subsidies expense of $34.2 million mainly due to increased:

• bus service kilometres for the Transperth Bus Network
• labour and fuel costs for the Transperth and School bus operators
• grants and subsidies of $3.3 million for the grain freight network.

Supplies and services

Increased supplies and services expense of $17.4 million mainly due to increased:

• maintenance of railcars
• security on rail and buses
• signage
• contaminated sites provision
• retrofit of perimeter seating to buses.

Energy and fuel

Increased energy costs mainly due to an increase in electricity tariffs.

Other expenses

Increased other expenses mainly due to increased workers’ compensation contributions to Riskcover and crediting infringements revenue to the Consolidated Account.

Loss on disposal of non-current assets

Increased loss on disposal of non-current assets mainly due to sale of buses which had a higher written down value.