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1996/97 STATE TRANSIT ANNUAL REPORT
Financial Summary



Financial Summary

 

 

1995/96

1996/97 (Target)

1996/97 (Actual)

Comments

Total Revenue

$336.6m

$363.2m

$364.2m

0.3% above target.

Expenditure

$326.1m

$360.0m

$363.1m

0.9% over target.

Net Profit (before abnormal items)

$10.5m

$3.2m

$1.1m

A small budgeted profit means major movement in bottom line for minor variations in revenue and expenditure.

Dividend

$5.2m

$0.6m

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No dividend proposed due to an abnormal loss caused by an imputed tax adjustment to State Transit's Superannuation Fund.

Return On Assets

3.45%

1.03%

0.93%

Return marginally down on target.

Return on Equity

6.15%

0.84%

0.66%

Return adversely affected by increased expenditure.



A net operating profit, before abnormals, of $1.07 million was achieved in 1996/97. However, an imputed tax adjustment made by the Superannuation Administration Authority to State Transit's reserve deposit in its superannuation funds resulted in an additional expense of $5.06 million. The net result for State Transit after this abnormal item and a subsequent income tax benefit of $2.536 million, was a loss of $1.5 million. Accordingly the Directors have not recommended the payment of a dividend, but since tax equivalents are now paid, returns to the NSW Government should be seen as taxes plus dividends.


Operating Surplus ($millions)

State Transit's net operating profit was below target and below last year's profit of $10.5 million due a number of uncontrollable, externally imposed cost increases. Expenditure increased by $37 million, with much of this increase being accounted for by:-
  • an increase in the cost of registration and Compulsory Third Party insurance of over 100% or $7.2 million,
  • the introduction of sales tax payments, increasing costs by $4.3 million, and
  • an increase in depreciation and amortisation charges of $9.3 million (40%) mainly due to a revaluation of the assets. That State Transit absorbed additional costs of $20.8 million and remained in surplus is a significant achievement.


Total Expenditure ($millions,96/97 dollars)

Capital works expenditure was $37 million which was funded solely by internal funds.

Revenue was 8.2% higher than last year reflecting growth in patronage and a weighted average 3.5% fare rise.



Total Revenue ($millions, 96/97 dollars)

Government Funding

Public transport is usually assumed to be dependent on Government subsidies. However, in NSW the Government does not subsidise any bus operators - other than to provide reimbursements for certain fare concessions and other Government policy decisions, such as non-commercial fares and non-commercial services.

Under these arrangements, State Transit is reimbursed for concessions granted to school children, pensioners and other groups of people in need of assistance, as is every private bus and ferry operator in New South Wales.

These concession payments are not subsidies but targeted social programs aimed at assisting those in need. It is the difference between the traveller's contribution and the industry standard commercial fare. If this co-payment were not made, both State Transit and private sector fares would have to be increased substantially or services curtailed.

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State Transit is also reimbursed for fulfilling obligations specified by Government which are over and above those required of private operators - pensioner excursion tickets, pricing and service Community Service Obligations (CSOs).

The pricing CSO is paid because State Transit's fares are set at levels lower than the commercial fares charged by private sector operators. The private sector is generally regarded as the pacesetter in efficiency yet requires a fare scale, in Sydney, broadly 15% higher than State Transit's for reasonable cost recovery. The pricing CSO is equivalent to about 7% of revenue.

The service CSO is received from Government for providing non commercial ferry services in Sydney and non commercial bus and ferry services in Newcastle. These include Manly JetCat and Parramatta River ferry services, certain off-peak bus services in Newcastle and the Stockton ferry. These services are defined in contracts issued by the NSW Department of Transport and amount to 4% of revenue.

Bus services in Sydney, which are 80% of State Transit's business, do not receive a service CSO, and if private sector equivalent fares were charged would not require a pricing CSO.





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