Second Quarter Year-to-Date Results Highlight Fiscal Responsibility
October 03, 2012
Cost-cutting marks the quarter
VANCOUVER – Second quarter results show aggressive cost-cutting is helping TransLink beat previous budget forecasts and rely less on the reserve fund to pay for programs and services.
“Our focus is on being fiscally responsible,” says Chief Executive Officer Ian Jarvis. “In the quarter, we were challenged to find efficiencies and took the prudent step to pause and revisit our expansion plans. Since then, the entire TransLink enterprise is rallying around an efficiency mandate to effectively contain costs in all areas of the business and find innovative ways to deliver exceptional customer service within the means we have available.”
In the 2012 Second Quarter Financial Performance Report, for the period ending June 30, 2012, TransLink reported revenues at $713.3 million, 10.2 per cent higher than the same period in 2011. This included a sale of surplus property and higher revenue from fares, taxation and tolls. Ridership was up 6.3 per cent from the same period last year, due to moving existing resources to areas that need it most and more people getting on transit. Importantly, customer satisfaction in the quarter remained at record levels at 7.7 out of 10.
Expenditures totalled $672.4 million, 2.6 per cent higher than the same period last year, but six per cent less than budget for the quarter. Operating cost per revenue passenger dropped $0.02 from the same period in 2011 to $3.61. Forecast expenditures for the year are now $25.6 million less than original budget. As a result, TransLink will need to draw down $11 million of reserves to fund programs and services compared to $38 million previously budgeted.
“The reserve fund is meant to cover unexpected events like the significant drop in fuel tax revenue,” adds Chief Financial Officer Cathy McLay. “Given the volatility we’ve seen in the fuel market and other financial challenges we expect over the next three years, the less we need to draw down on the reserve each year to pay for our day-to-day operations, the better financial shape we’re in.
“As a result of our financial position, good governance and the way we manage our business complexities, Moody’s Investor Services has maintained an Aa2 credit rating for TransLink. This, along with positive second quarter results, validates that we are on the right track.”
The second quarter results come on the heels of the draft 2013 Base Plan, the transportation and financing plan for the next three years, released last month. That plan forecasts $472 million less revenue compared to the 2012 Moving Forward Plan due to lower than expected fuel tax revenues, lower than expected fare and toll revenues, and the deferral of the sale of surplus real estate. The most recent plan outlines $98 million in efficiencies and drawing down on the reserve to pay for planned transportation improvements.
Other highlights from the second quarter include:
• Revenue from fuel tax was $3.8 million (2.5 per cent) higher than the previous year, but is slightly less than budget. This increase was the result of the two cent increase in fuel tax that came into effect on April 1, 2012. The 2012 budget is $30 million less than what was forecasted for our 2012 Moving Forward Plan, reflecting a decrease in fuel consumption in the regional area.
• All capital projects were reviewed and evaluated; more than 30 have been cancelled or deferred and 75 projects worth a total of over $810 million were either substantially completed or closed.
• Conventional bus system efficiency rose 3.9 per cent over the first half of 2011 as more service was directed to high-demand areas, making better use of existing bus capacity.
• Average daily crossings on the Golden Ears Bridge rose 6.6 per cent in the first six months of 2012, which contributed to a 17.6 per cent increase in revenue over the same period in 2011.
The full second quarter results are online at: TransLink Corporate Reports.