41 Explanatory statement
a) Significant variations between estimates and actual results 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 $1 million.
| 2010 Actual $000 |
2010 Estimate $000 |
Variance $000 |
|
|---|---|---|---|
|
Income |
197,774 |
168,826 |
28,948 |
|
Cost of Services |
882,693 |
866,141 |
(16,552) |
|
Net Cost of Services |
684,919 |
697,315 |
12,396 |
Revenue
Revenue was $28.9 million (17.1%) above the estimate. The positive variations include:
- Proceeds received from settlement of actions or claims by PTA - $6.8 million;
- Increased revenue from external works recoveries of $5.2 million;
- Increased revenue from fares of $3.9 million;
- Increased rental revenue of $2.9 million;
- Increased service contribution revenue of $2.1 million received from various funding agreements with City Councils, Universities, etc;
- Increased infringement revenue of $1.9 million;
- Increased service contribution revenue of $1.2 million due to joint ticketing of various sporting and entertainment events;
- Contribution from a major supplier towards a fire suppression installation on gas buses $1.0 million; and
- Reversal of provision for contaminated sites $1.0 million.
Total cost of services
Cost of services for the year was $16.5million (1.9%) above the estimate.
There were several significant positive and negative variations that contributed to this overall variation. These variations include:
- Increased costs related to external works $5.2 million;
- Grant to Main Roads WA and Department of Transport for the Grain Freight Stage 1 program $5.2 million;
- Settlement of legal costs payable pursuant to court decision on rise and fall calculation on a major contract - $3.7 million;
- Increased Transperth bus costs of $2.4 million mainly due to increased fuel costs;
- Voluntary severance of $2.1 million for employees leaving the public sector;
- Increased grant to local government of $2.0 million due to transfer of roads and associated infrastructure controlled by local government; and
- Notional charge for services provided by Landgate $1.2 million;
Offset by:
- Lower depreciation of $6.4 million due to the timing of the capital works program.
b) Significant variances between actual and prior year actual
| 2010 Actual $000 |
2009 Actual $000 |
Variance $000 |
|
|---|---|---|---|
|
Income |
|||
|
Other revenue |
38,889 |
29,603 |
9,286 |
|
User charges and fees |
152,026 |
149,200 |
2,826 |
|
Expenses |
|||
|
Employee benefits expense |
120,158 |
110,226 |
9,932 |
|
Supplies and services |
192,278 |
176,289 |
15,989 |
|
Depreciation and amortisation expense |
159,026 |
156,128 |
2,898 |
|
Grants and subsidies expense |
326,098 |
313,610 |
12,488 |
|
Energy and fuel |
15,269 |
13,835 |
1,434 |
|
Land rationalisation expense |
781 |
2,751 |
(1,970) |
|
Other expenses |
12,344 |
10,555 |
1,789 |
Other revenue
Increased other revenue mainly due to proceeds from settlement of insurance claims and contributions from local government (mainly for the Mirrabooka bus station), infringements and rental income.
User charges and fees
Increase is mainly due to fare increase based on CPI of 3.9%.
Employee benefit expense
Increased employee benefit expense due to filling of vacant positions mainly transit officers which were previously occupied by contractors, voluntary severance for employees leaving the public sector and new Enterprise Bargaining Agreements.
Supplies and services
- Settlement of legal costs payable pursuant to court decision on rise and fall calculation on a major contract - $3.7 million;
- Increased rail maintenance on the Midland line $2.8 million;
- Increased security costs of $2.2 million for Transperth Bus services;
- Increased maintenance costs of ‘B’ series railcars $2.0 million;
- Increased maintenance costs of ‘A’ series railcars of $1.6 million;
- Increased planned bus refurbishment costs $1.4 million; and
- Increased external works cost $0.9 million.
Depreciation and amortisation expense
Increased depreciation of $2.9 million is mainly due to addition of assets during the year.
Grants and subsidies expense
Increased Grants and subsidies expense of $12.5 million are mainly due to:
- $13.7 million increase for the Transperth bus operators mainly due to increase in fuel and labour costs;
- $6.0 million increase in School bus services mainly due to increase in fuel and labour costs including additional costs of providing seatbelts;
- $5.2 million grant to Main Roads WA and Department of Transport for the Grain Freight Stage 1 program;
Offset by:
- Decrease of $13.9 million in grants for road infrastructure transferred to local government.
Energy and fuel
Increased energy costs mainly due to an increase in electricity tariffs.
Land rationalisation expense
Decrease in land rationalisation costs due to lower land rationalisation activity.
Other expenses
Increase due to increased payroll tax, increased workers’ compensation claims (mainly due to mesothelioma) and increased services received free of charge.