Creating the foundation for the future. TransLink 2009 Annual Report

Transcription

1 South Coast British Columbia Transportation Authority Kingsway Burnaby, BC Canada V5H 4N Creating the foundation for the future

2 Contents 01 About TransLink Accomplishments at a Glance 04 Operating and Financial Highlights 07 Chair s Message 09 A Message from our CEO 11 Corporate Structure and Governance 20 Year in Review 23 Management Discussion and Analysis 24 Consolidated Financial Statements 55 TransLink Board 87 TransLink Executive Awards and Recognition 93

3 About TransLink The South Coast British Columbia Transportation Authority (TransLink) is Metro Vancouver s regional transportation authority, and is dedicated to developing and operating an efficient and sustainable transportation system throughout Metro Vancouver. Through operating companies such as Coast Mountain Bus, BCRTC (SkyTrain), and West Coast Express, TransLink is delivering these services on an integrated system of roads, regional transit, and an ever-expanding network of bike and pedestrian pathways. Guided by Transport 2040, the region s long-term transportation plan, choices about transportation and future land use are made to protect the natural environment, reduce greenhouse gas emissions, foster an inclusive and fair society, and support a vibrant, sustainable economy. Transport 2040 Goals Greenhouse gas emissions from transportation are aggressively reduced in support of federal, provincial and regional targets. Most trips are by transit, walking and cycling. The majority of jobs and housing in the region are located along the Frequent Transit Network. Traveling in the region is safe, secure and accessible for everyone. Economic growth and efficient goods movement are facilitated through effective management of the transportation network. Funding for TransLink is stable, sufficient, appropriate and influences transportation choices.

4 Accomplishments at a Glance Opening Golden Ears Bridge 05 Delivering 240 new buses, including articulated trolleys and diesel-electric Opening Central Valley Greenway, a bicycle and pedestrian network Opening Canada Line Building the Coast Meridian Overpass in Port Coquitlam Expanding the SkyTrain fleet by 48 new railcars Achieving TransLink s largest-ever funding increase of $130 million annually needed to maintain existing service levels Launching a brand new SeaBus Serving an estimated 188 million revenue passengers

5 Eight million more revenue passengers in million revenue passengers = 5 million revenue passengers 06 Operating and Financial Highlights 07 = 5 million revenue passengers = 5 million revenue passengers 2009 REVENUES ($000 s) 2009 expenses ($000 s) Total $1,181,085 Total $1,227, million revenue passengers 2009 REVENUE PASSENGERS Rail service reliability improves in SkyTrain 188 million revenue passengers West Coast Express % 97.93% % 97.69% Other (Includes AirCare) 9% Transit Fares 30% Fuel Tax 22% Property Tax 22% Capital Contributions & Interest 17% Other (Includes AirCare) 3% Transit Operations 62% Administration 3% Interest 9% Amortization of Capital & Other Assets 10% Maintenance & Funding for MRN 13% ON-TIME PERFORMANCE (RAIL EXCLUDING CANADA LINE) Bus service reliability improves in Bus % % DELIVERED % OF SCHEDULED SERVICE (BUS & CONTRACTORS EXCLUDING handydart) Operating revenues, while higher than 2008, were below budget for 2009 due to the continued global economic impacts and more people using discounted fare passes. Operating expenses were under budget as a result of an organization-wide focus on cost containment. ACTUAL VS BUDGETED CUMULATIVE SURPLUS ($000 s) Budget Actual Customer satisfaction ratings improve in Overall Score out of 10 % Rated 8 or higher % % $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150, CUSTOMER SERVICE PERFORMANCE Thoughtful financial planning resulted in a cumulative fund surplus that will be necessary to support our operations going forward.

6 A historical comparison 08 US$/Veh Rev Mile SKYTRAIN LOWEST COST SKYTRAIN COST EFFICIENCY COMPARISON Operating Costs per Vehicle Mile (2006 data) I have been privileged to chair the board for TransLink s family of companies for the past two years. In our oversight role, the board is Chair s Message Dale Parker Your board has also put in place a structure that allows us to oversee all aspects of the business, including thoughtful analysis and ensuring not only responsible for ensuring cost-effective TransLink s leadership team has the strength and SkyTrain comparison to other North American light rail services data from U.S. Department of Transport Federal Transit Administration Expo and Millennium SkyTrain Lines are the most efficient, lowest-cost operations in North America. operations, but also for ensuring the delivery of superior service that responds to customers needs, supports sustainable communities and contributes to the quality of life in Metro Vancouver. expertise to effectively guide the organization through these changes. We are confident that continued progress will be achieved. Guided by our Board Manual, we remain committed to excellence in governance practices. $16 $14 $12 $10 $8 $6 $4 $2 $0 CMBC INTERNATIONAL COMPARISON Total Operating Cost - per actual total vehicle in km GENERAL TREND - COST OUTPACING INFLATION CMBC RANKED 3RD LOWEST COST OVERALL SECOND BEST FOR ADMIN COST AND OPERATIONS Coast Mountain Bus Company part of international bus benchmarking group (IBBG) Participants include: Montreal, New York, Dublin, London, Brussels, Paris, Madrid, Lisbon, Barcelona, Sydney Compared to the biggest bus systems in the world, Coast Mountain Bus Company ranked 3rd lowest cost overall. $0.18 $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 WEST COAST EXPRESS COSTS Net Operating Cost per Passenger per km CMBC RIDERSHIP CONTINUES TO RISE - TRAINS ARE FULL COSTS ARE DOWN NET OPERATING COST PER PASSENGER KM DECREASED 85% - FROM $0.16 TO $0.025/KM IMPROVEMENTS RESULT OF CONSTANT MONITORING AND MEASURING Since 2000, West Coast Express net operating cost per passenger km has decreased 84%. We have benchmarked ourselves against our peers in North America and internationally, and it is evident that TransLink is operating one of the most efficient transportation systems in the world. For example, our Expo and Millennium SkyTrain lines are the most efficient, lowest-cost operations in North America. The West Coast Express commuter rail system has one of the best cost recovery rates from fares in North America. Finally, our bus system benchmarks itself against 10 of the biggest bus systems in the world, and ranks in the upper tier. TransLink s 2009 transit-related administrative costs were 11.9 per cent, which is well within the range for public transportation systems. Responding to greater transit demand, ridership growth and the exceptional expansion of the region s transportation system has taken place over the past five years and operating costs have understandably increased. Building on our strength to manage our resources well and absorb costs through efficiencies, our goal is to reverse this trend and since 2008, we have taken steps to reduce costs. In early 2009, the board began a process review to determine organizational effectiveness. This resulted in changes that better align functions and enable a more cost-effective The manual is available at translink.ca. TransLink is operating one of the most efficient transportation systems in the world. We have undoubtedly made significant achievements to the sustainability and quality of life in Metro Vancouver. On behalf of the board, we are proud of these achievements and extend our appreciation to the entire TransLink family. Going forward, the board, leadership and entire team at TransLink will continue to maintain a strong focus on achieving the six goals set out in Transport 2040, while at the same time strengthening the effectiveness of our organization. DALE PARKER Board Chair and efficient organization.

7 10 A Message from our CEO Ian Jarvis 11 Looking back, 2009 was a pivotal year for TransLink. While the recession challenged our business, we delivered on many significant investments in programs, assets and people, and achieved the largest-ever funding increase of $130 million. These successes move the region towards the goals of Transport 2040 and positioned our transportation system for success during the 2010 Winter Olympic Games. The results of these efforts are the foundation for our future. Canada Line opened under budget and three months ahead of schedule. Our mandate represents first and foremost our responsibility to people and goods movement, yet our impact is far greater. The mandate we have been given is vital to ensuring sustainable communities, a strong economy and a high quality of life in Metro Vancouver. In 2009, our organization faced the most significant financial challenge of our history: declining revenues and funding concerns that put at risk the ability to deliver on our mandate. The choices ahead were to drastically cut services or find new ways of funding a sustainable transportation system. Staying true to our strategic path, we delivered an unprecedented public consultation program to determine the willingness of the people of the region to pay for transportation improvements. This resulted in TransLink achieving the largest-ever funding increase of $130 million annually. Despite falling short of the investment level required to realize our long-range vision, it was a significant step in a difficult economic climate and necessary to maintain our assets in good repair and keep current service levels for customers. Persevering through the challenge, our dedicated team worked collectively to continue delivering quality service for customers with a focus on our core business and on finding efficiencies in the way we operate. With customer satisfaction ratings at the highest level since 2005, our efforts certainly paid off.

8 12 CEO s Message continued CEO s Message continued 13 Aggressively reduce greenhouse gas emissions from transportation sources A key milestone of 2009 was the opening of the new Canada Line SkyTrain system that transformed our region and contributed to our status as a world-class city. Delivered three months ahead of schedule and within budget, the system stretches through one of the busiest corridors in the region and is the first rapid transit line in Canada to connect the downtown core with an international airport. Less than one year in operation, the new line has already surpassed expectations, carrying 100,000 passengers daily and helping to eliminate 14,000 tonnes of greenhouse gas (GHG) emissions annually. Thanks to the perseverance of partners and the people who designed, built and delivered the Canada Line, we have added an important element to our sustainable transportation network. Our partnership with the federal and provincial governments also continued to play a key role in helping to further lessen the carbon footprint. With funding made available through the Gas Tax, we invested in a more fuel-efficient and lower emission fleet. In 2009, we added 34 articulated trolley buses that have 96 per cent lower GHG emissions Guided by Transport 2040 and strengthened by our partnerships with all levels of government, TransLink realized many milestones in 2009 that prepare us for the future. Bicycle/walking Electric trolley bus (20 passengers) SkyTrain electric light rail car (20 passengers) New hybrid diesel-electric bus (20 passengers) New diesel bus (20 passengers) Two-person car pool (gasoline engine) Metro Vancouver Commuting Modes and Greenhouse Gas Emissions (GHGs) Tonnes per year Tonnes per year Tonnes per year Tonnes per year 1.79 Tonnes per year GHGs emitted per person per year from a 15 km round-trip commute GHGs emitted per person per year from a 60 km round-trip commute compared to conventional buses, and an additional 180 diesel-electric hybrid buses with 22 per cent lower fuel consumption and GHG emissions. The year 2009 also marked the maiden voyage of a new SeaBus vessel that connects downtown Vancouver with the North Shore, cutting commute times, easing traffic congestion and resulting in cleaner air. Together with Prime Minister Stephen Harper, our Board Chair Dale Parker and the many people who helped build the vessel, we celebrated the addition of this vessel that uses 18 per cent less fuel and GHG emissions than the existing fleet. Locate most jobs and housing along the Frequent Transit Network With our focus on creating and serving transit-supportive communities, we continued advancing strategies to create a Frequent Transit Network with transit service at a minimum of 15 minutes, seven days a week. Helping us grow transit ridership, we initiated and progressed work to improve transit facilities and exchanges in Burnaby, North Vancouver, Semiahmoo, Steveston, Surrey and Vancouver. In 2009, we provided service to an estimated 188 million revenue passengers. While funding uncertainties did not allow us to fully implement service expansion that was planned for 2009, we did increase bus service by 92,000 hours and 37,400 hours on SkyTrain. Most trips by transit, walking and cycling Key to achieving the vision of Transport 2040 is making the strategic investments that enable most trips to be taken by transit, walking and cycling. In 2009, we made great strides in doing so. As part of the federal Urban Transportation Showcase Program, we completed and opened Metro Vancouver Commuting Modes and Greenhouse Gas Emissions (GHGs) 74% of all Metro Vancouver resident trips were by auto, either driver or passenger 13% Transit users Our goal by 2040: 50% of all trips in the region by transit, cycling or walking 11% Walking the Central Valley Greenway, a new 24-kilometre pathway in Metro Vancouver, aimed at creating cleaner, healthier transportation choices. The greenway connects downtown Vancouver, Burnaby and New Westminster, joins the SkyTrain and bus systems, other bike routes and urban trails, and gives cyclists and walkers a new way of getting around. The number of bike trips across our region is on the rise and the Central Valley Greenway has already attracted more than 600,000 users in its first year of operation. 2% Biking Left: The new SeaBus uses 18% less fuel and GHG emissions than the existing fleet. Below: Central Valley Greenway. More than 600,000 users in the first year. Driver travelling alone in car (gasoline engine) Tonnes per year Driver travelling alone in SUV or van (gasoline engine) Tonnes per year Helping to reduce emissions from transportation.

9 14 CEO s Message continued 15 We also dedicated more than $5 million as part of TransLink s Cycling Program in communities across the region, and we will continue to work with stakeholders on a Regional Cycling Strategy in the year ahead. Make travel safer, more secure and more accessible for everyone In 2009, Access Transit centralized many HandyDART functions to improve our ability to provide customers with special needs a safer, more convenient and comfortable way of getting around the region. A labour disruption in the fall impacted our results for this service; however, the operational efficiencies achieved through the consolidation of service will bring measurable benefits going forward. In partnership with the federal government, we improved and upgraded the security of the system. We upgraded lighting, installed closed-circuit monitoring systems, implemented employee training programs and raised public awareness of potential dangers. Through Transit Secure, we are using the latest in security technology and will continue searching for new, innovative ways to improve our system even further. An integrated transportation system is vital to a strong economy. Support economic growth and efficient goods movement As the agency responsible for both transit and roads, we continued to invest in the entire integrated transportation network in the region. One of the most significant achievements of the Safety of our customers, employees and system continued to be a top priority in Photo Courtesy of: Port Metro Vancouver.

10 16 CEO s Message continued 17 year for TransLink was the opening of the Golden Ears Bridge. The bridge is the first direct, fixed route connecting communities on the north and south side of the Fraser River, and improves travel times, reduces regional congestion and opens access to new economic opportunities. Our team negotiated a private financing strategy to ensure we could construct the Golden Ears Bridge without impacting our borrowing limits or other funding requirements. By establishing a fixed price contract, our board, governments, and stakeholders had more certainty in terms of cost and schedule in an overheated construction market, and we delivered an important addition to our transportation network ahead of schedule. Fred Cummings, our vice-president in charge of the project, earned recognition for his leadership on this project, and the project itself earned international recognition for innovative project financing. Obtain stable, sufficient funding In fall 2009, the Mayors Council on Regional Transportation approved a Funding Stabilization Plan that will generate $130 million in new annual revenue. With an increase in fuel taxes and transit fares, TransLink will be able to maintain road and transit operations at current levels. Our focus will continue to be on Funding Stabilization Plan generates $130 million in new annual revenue. operational efficiency; however, to move the region to a more sustainable transportation future, the conversation on funding will need to continue until we secure stable, new funding sources that influence our travel choices and contribute to a healthier region for everyone. Golden Ears Bridge is also the first of its kind in Western Canada to use fully-electronic tolling. Our team will work hard to generate more traffic and benefit from this new tolled facility by launching new customer awareness initiatives. The Golden Ears Bridge, the first of its kind in Western Canada to use fully-electronic tolling, opened June 16, We also advanced the Asia-Pacific Gateway and Corridor Initiative, allowing rail and road upgrades in the Roberts Bank Rail Corridor to begin. The corridor will connect Canada s largest container facility and major coal terminal with the rest of North America, significantly improving the flow of goods and ultimately strengthening Canada s competitiveness in the global marketplace. With nine partners including the federal and provincial governments, TransLink, Port Metro Vancouver, local municipalities, CN and CP Railways, we are making great strides on this project.

11 18 What the world had to say CEO s Message continued 19 The public transit is scarily efficient Time Magazine This well-planned city seemed more than able to handle the crowds. That s mostly thanks to the transit system that seems futuristic to U.S. residents The Bellingham Herald Trains and buses steal gold for Vancouver Vancouver s driverless trains have been steady winners at the Winter Olympics Reuters Social media group consensus was tweeps got gold for their transit tweets that kept us Your team has really maximized the efficiency of your system to move massive amounts of people who are out celebrating this incredible event Customer accolade A perfect recipe for success in 2010 The Winter Olympic Games in Vancouver in the early part of 2010 was undoubtedly the greatest test of our organization, systems and people, and our ability to work collaboratively with other organizations, governments and individuals. Ultimately, the success of the transportation system underpinned the success of the Olympics. During the Olympics we moved a record 26 million riders a 31% increase over normal. Perhaps the greatest legacy of the Olympics for TransLink is that we proved our ultimate vision for Metro Vancouver s transportation system is achievable. With factors such as strong partnerships, funding support, awareness, parking restrictions and the willingness of the public to change behaviors, the region achieved a 36 per cent reduction in vehicular travel into downtown Vancouver. This demonstrates that with the right incentives, our region is ready for a sustainable transportation future. A foundation for the future Building on the legacy of the Olympics, TransLink will continue to invest in programs to give customers the knowledge and tools that help them choose more sustainable modes of travel will be our year to refine the transportation system, use our assets and resources as efficiently and productively as possible. We will continue creating the foundation for the future as we strive to achieve a sustainable transportation system. IAN JARVIS Chief Executive Officer 2010 Priorities Continue to improve customer service Secure stable funding Build on the momentum of support for public transportation created by the Games Continue to build an effective, accountable and customer-focused team Continue on our path toward a sustainable transportation future

12 20 Corporate Structure Governance 21 Mayors Council on Regional Transportation TransLink Board of Directors Regional Transportation Commissioner The entities involved in TransLink s governance framework include the Mayors Council on candidates and is comprised of one nominee from each of the Chartered Accountants of Regional Transportation, the Board of Directors, British Columbia, the Gateway Council of the Regional Transportation Commissioner and a British Columbia, Mayors Council, the Ministry Transportation Property & Casualty Co., Inc. (Captive Insurance) (TL Subsidiary Company) South Coast British Columbia Transportation Authority (TransLink) (includes Golden Ears Bridge oversight, Transit Police) Pacific Vehicle Testing Technologies Ltd. (AirCare) (TL Subsidiary Company) Envirotest Canada (PVTT Contractor) Screening Panel. The Mayors Council is currently comprised of the mayors from the 21 municipalities within the Metro Vancouver region and the Chief of the Tsawwassen First Nation. Municipalities within the South Coast of British Columbia have the option of joining TransLink s service area and as this occurs, the membership of the Mayors Council will be expanded to of Transportation and Infrastructure and the Vancouver Board of Trade. The panel is also responsible for setting the remuneration of the board. Following the annual appointment of directors to fill the vacancies on the board by the Mayors Council, the panel is dissolved. The Mayors Council also appoints the Commissioner. The Commissioner reviews include the mayors of the additional municipalities. TransLink s 10-year base and supplemental plans BUS - Operations managed by CMBC Coast Mountain Bus Company Ltd. (Bus, SeaBus, Community Shuttle) (TL Subsidiary Company) RAIL - Operations managed by BCRTC British Columbia Rapid Transit Company Ltd. (SkyTrain) (TL Subsidiary Company) The board is made up of nine independent directors and is responsible for overseeing the management of TransLink s affairs. They are appointed by the Mayors Council from the qualified candidates identified through the panel s recruitment process. The panel is constituted annually to recruit director and provides an opinion to the Mayors Council on whether the parameters and assumptions contained in the 10-year plans are reasonable. In addition, the Commissioner reports annually to the Mayors Council on TransLink s performance relative to its service, capital and operational plans. Fraser River Marine Transportation Ltd. (Albion Ferry) (TL Subsidiary Company) West Coast Express Limited (BCRTC Subsidiary Company) TransLink Board of Directors Mayors Council Composed of all mayors in Metro Vancouver Appoints chair of Mayors Council Appoints TransLink board of directors Bowen Island Community Transit Ltd. D-W Services Ltd. Metro Shuttle Services Ltd. (Community Shuttle) (TL Contractors) MVT Canadian Bus Inc. (HandyDART) (TL Contractor) Municipality of West Vancouver (Blue Bus) (TL Contractor) Canada Line Rapid Transit Inc. (TL Subsidiary Company) InTransit BC Limited Partnership (Canada Line) (TL Contractor) Appoints chair of board of directors Appoints CEO Establishes subsidiaries and appoints boards & chairs Supervises the management of the affairs of TransLink Prepares & implements long-term transportation strategies (30-year) & 10-year transportation and financial strategic plans Proposes to the Commissioner a customer satisfaction survey process and conducts surveys annually Proposes to the Commissioner a customer complaint process and implements it Publishes an annual report Holds a public annual general meeting Approves project & program public consultation plans Appoints Commissioner & Deputy Commissioner(s) Receives and approves transportation and financial plans as laid out in the Legislation Commissioner Advises whether parameters and assumptions (including financial estimates) in 10-year transportation and financial plans are reasonable Approves short-term fares Approves customer satisfaction survey process Approves customer complaint process Oversees sale of major assets Publishes an annual report and submits it to the Mayors Council

13 22 Year in Review year ended December 31, 2009 (all numbers in thousands except per unit calculations) Operating Performance Operating Revenue 818, , , , ,860 Operating Expense 677, , , ,293 1,106,539 Net Interest Expense 47,492 36,455 29,083 38,999 90,697 Operating Surplus (Deficit) 93,984 68,565 78,266 (44,234) (209,376) Non-Operating Items 227, , , , ,778 Net Surplus (Deficit) as reported 321, , , ,550 (46,598) Financial Indicators Cumulative Funded Surplus 1 164, , , , ,279 Net Capital Assets 1,203,196 1,999,424 3,091,868 3,977,411 4,609,380 Net Long-term Direct Debt 1,067, ,842 1,289,828 1,421,000 1,481,000 Net Long-term Indirect Debt 2 272, ,268 1,345,000 1,674,000 Net Long-term Debt 1,067,276 1,167,599 2,093,096 2,766,000 3,155,000 Net Long-term Debt per Revenue Passenger $6.68 $7.07 $12.16 $15.47 $16.79 Net Long-term Debt as a % of Operating Revenues % 132.0% 229.4% 283.0% 321.8% Farebox recovery ratio (%) 53.1% 50.6% 49.4% 48.7% 46.3% Gross Interest Cost as % of Total Revenues 5.9% 4.9% 4.6% 5.4% 9.6% Operating Indicators Population of Service Region 2,174 2,199 2,238 2,271 2,315 Scheduled Transit Service Boarded Passengers 275, , , , ,291 Revenue Passengers 159, , , , ,912 Growth in Revenue Passengers 2.6% 3.4% 4.2% 3.9% 5.1% Service Hours 4,893 5,117 5,333 5,588 5,954 Service Kilometres 114, , , , ,827 Operating Cost per Revenue Passenger $4.24 $4.73 $4.68 $5.28 $5.89 Operating Cost per Total Vehicle Kilometre $4.50 $4.83 $5.01 $5.39 $5.33 Boardings per Service Hour Access Transit Service 4 Revenue Passengers 1,246 1,260 1,308 1,365 1,217 Service Hours Operating Cost per Revenue Passenger $20.45 $21.56 $23.11 $26.50 $33.20 Operating Cost per Service Hour $50.88 $52.30 $55.10 $61.09 $78.38 In 2009, we provided almost 6 million hours of service for 188 million revenue passengers. Northeast Fraser River Vehicle Crossings Golden Ears Bridge 5 4,639 Albion Ferry 1,520 1,519 1,511 1, The cumulative funded surplus as calculated under the SCBCTA Act is the amount of resources available to fund future operations. 2 Net Indirect Debt includes Deferred Concessionaire credit for Canada Line & Golden Ears Bridge contractor liability. 3 This measure excludes capital contributions. 4 A work stoppage resulted in only emergency service being provided from Oct 25, 2009 to Jan 11, Bridge opened June 16, 2009.

14 24 Management Discussion & Analysis Management Discussion & Analysis continued 25 OVERVIEW OF BUSINESS governing LEGISLATION Each year, TransLink must prepare a 10-year base transportation and financial plan that describes the transportation services to be provided, major capital projects planned and key transportation demand management initiatives for the 10-year period, using only established funding resources (as defined in the SCBCTA Act). TransLink may also, in any given year, choose to prepare one or more 10-year supplemental transportation and financial plans that set out (i) the additions, enhancements, or other changes that TransLink proposes be made to the transportation services and major capital projects contemplated in the base plan, (ii) any additional initiatives TransLink proposes to undertake in addition to those contemplated in the base plan, and (iii) the increased expenditures, funding sources, anticipated revenues, and increases to borrowing limits needed to implement such plans. TransLink must ensure that, for each base or supplemental plan, the contemplated expenditures do not exceed anticipated revenues, borrowings and accumulated funding resources. Introduction The (formerly the Greater Vancouver Transportation Authority) is a regional authority governed by the BC Act (SCBCTA Act). The is commonly known as TransLink. Under the SCBCTA Act, the purpose of TransLink is to provide a regional transportation system that moves goods and people in support of the region s growth strategy, provincial and regional environmental objectives and the economic development of the service region. The regional transportation system is a system for the transportation of passengers and goods within in the service region (currently the boundaries of Metro Vancouver), including ferries, cycling path networks, custom transit services, bus transportation systems, rail transportation systems, designated projects and the major road network, that is operated by TransLink or its subsidiaries or contractors. In addition to management and operation of the regional transportation system, TransLink is responsible for developing transportation demand management strategies and programs and for the motor vehicle emissions testing program known as AirCare. TransLink was established in 1998 under the BC Greater Vancouver Transportation Authority Act. Primary responsibility for public transit in Metro Vancouver was transferred from British Columbia Transit, a provincial crown corporation, to TransLink in April (Although the majority of the assets and liabilities related to the provision of public transit services in Metro Vancouver were transferred to TransLink, the Province of British Columbia retains ownership of the infrastructure and property interests of the Expo and Millennium SkyTrain lines and the West Coast Express (which have a $1.5 billion estimated net book value) and TransLink is responsible for operations and maintenance. The Greater Vancouver Transportation Authority Act was significantly amended and re-named the South Coast British Columbia Transportation Authority Act in November TransLink s 10-year strategic plan consists of the 10-year base plan, as amended by any 10-year supplemental plan(s) approved by the Mayors Council on Regional Transportation, provided that any supplementary fare increase or firsttime short term fare (as defined by the SCBCTA Act) proposed in an approved 10-year supplemental plan must also be approved the Regional Transportation Commissioner. TransLink must ensure that all service, capital and operational plans and policies of TransLink and its subsidiaries are consistent with the strategic plan. Under the SCBCTA Act, each annual budget of TransLink must set out all the anticipated revenue in the fiscal year together with accumulated surpluses and all of the operating expenses that TransLink anticipates it will incur in the fiscal year. The total amount of anticipated operating expenses must not be greater than the total amount of the anticipated revenue plus accumulated surpluses. In addition, TransLink is subject to certain restrictions in relation to debt obligations. ACCOUNTING POLICIES Significant and new accounting policies are disclosed in notes 2 and 3 of the notes to the Consolidated Financial Statements. Transportation and Financial Planning Requirements Future Accounting Changes Under the SCBCTA Act, TransLink is explicitly permitted to raise revenues by means of taxes (including property taxes, fuel taxes and parking sales taxes), levies, toll charges, user fees (including transit fares) and motor vehicle charges, in accordance with the provisions of the SCBCTA Act. (a ) Changes in accounting framework: TransLink is currently classified as a not-for-profit organization (NPO). The CICA Accounting Standards Board (AcSB) is proposing to carry forward existing accounting standards for not-for-profit organizations into its new Accounting Handbook. The AcSB reconfirmed that existing standards for not-for-profit organizations will remain in effect for the time being until a mandatory effective date for adopting the new standards is established. Under the SCBCTA Act, TransLink must prepare a long-term transportation strategy (covering a period of at least 30 years) every five years. This long-term strategy guides the annual development of 10-year base and supplemental transportation and financial plans. TransLink is required to consult with various stakeholders, governments and the public in the transportation service region as these plans are created. The CICA Public Sector Accounting Board is also establishing not for profit standards concurrently with the AcSB. TransLink intends to continue applying the existing not-for-profit standards and is awaiting the finalization of the new not-for-profit standards. Once the new standards are finalized, TransLink will determine the impact and which framework to adopt. It is not anticipated that International Financial Reporting Standards will be adopted.

15 26 Management Discussion & Analysis continued Management Discussion & Analysis continued 27 (b) Financial instruments presentation and disclosure: CICA Section 3862 Financial Instruments Disclosure and CICA Section 3863 Financial Instruments Presentation were issued in December 2006 to improve the disclosures of risks and improve the standards regarding presentation and classification of financial instruments and are currently not required for NPOs. Accordingly, TransLink has not yet adopted the Sections 3862 or 3863 and has elected to continue to apply the existing financial instruments presentation and disclosures in accordance with Section 3861, Financial Instruments Disclosure and Presentation. Adoption of New Accounting Policies: (a) Capital disclosures, Section 1535: Effective January 1, 2009, TransLink adopted Handbook Section 1535, Capital Disclosures. Under this new standard, TransLink is required to disclose both qualitative and quantitative information that enables users of the financial statements to evaluate the organization s objectives, policies, and processes for managing capital. It also includes disclosure regarding what the company regards as capital, whether it has complied with any external requirements and in the event of non-compliance, the consequences of not complying with these capital requirements. (b) Goodwill and intangible assets, Section 3064: Effective January 1, 2009, TransLink adopted Handbook Section 3064, Goodwill and Intangible Assets, which replaced existing Handbook Section 3062, Goodwill and Other Intangible Assets, and Handbook Section 3450, Research and Development. The new standard provides guidance on the recognition, measurement, presentation and disclosure of goodwill and intangible assets. The implementation of this standard did not have an impact on the financial statements. (c) Other revisions to NPO accounting standards: There are several other changes effective for periods beginning on or after January 1, 2009, which clarify the applicability of Accounting Guidelines and Abstracts of Issues discussed by the Emerging Issues Committee to NPOs, remove the requirement to disclose net assets invested in capital assets, clarify capital asset recognition criteria and amortization, expand interim financial statement requirements to NPOs, and require disclosure of allocated fundraising and general support expenses by NPOs. These changes did not have a significant impact on TransLink s financial statements. TRANSIT OPERATIONS TransLink operates the public transit system in the greater Vancouver region, providing service to 21 municipalities situated on 2,000 square kilometres of British Columbia s southwestern mainland. Conventional Transit Conventional transit services are delivered through three wholly-owned subsidiaries (Coast Mountain Bus Company Ltd., British Columbia Rapid Transit Company Ltd. and West Coast Express Ltd.) and various contractors. As of December 31, 2009 the TransLink fleet included 1,552 buses, three passenger ferries, 270 rapid transit vehicles and 37 commuter rail passenger cars. Coast Mountain Bus Company Ltd. (CMBC) operates 95 per cent of the bus service. The CMBC fleet includes 1,078 conventional buses, 260 electric trolley buses, 133 Community Shuttle minibuses and three SeaBus passenger ferries. British Columbia Rapid Transit Company Ltd. (BCRTC) operates the Expo and Millennium automated light rail SkyTrain lines. The lines connect downtown Vancouver with the cities of Burnaby, New Westminster and Surrey. At the end of 2009, 250 vehicles were in service and a further eight new vehicles were placed in service in early The new Canada SkyTrain Line automated rail system opened in August 2009, connecting downtown Vancouver with Richmond and the Vancouver International Airport and using 20 vehicles. The line is operated under a 35-year concession agreement with InTransit BC. A wholly-owned subsidiary of TransLink, Canada Line Rapid Transit Inc. (CLCO) oversaw the procurement, design, construction and implementation of the Canada Line. The concession agreement was assigned by CLCO to TransLink upon substantial completion of the line in August BCRTC oversees the management of the concession agreement on behalf of TransLink.. West Coast Express Ltd. (WCE) operates five commuter trains each weekday morning from Mission City in the Fraser Valley to downtown Vancouver, with return trips each afternoon. It also contracts out the TrainBus coach bus service, which supplements the commuter train service. WCE is a wholly-owned subsidiary of BCRTC. TransLink contracts with independent operators for delivery of the following transit services and supplies the vehicles used by the contractors: Community Shuttle minibus services in Langley, New Westminster and Bowen Island are operated by independent contractors using a fleet of 30 minibuses. The District of West Vancouver operates minibus service in West Vancouver and Lions Bay with a fleet of five vehicles. The West Vancouver Blue Bus transit service is operated by the District of West Vancouver, using a fleet of 46 buses.

16 28 Management Discussion & Analysis continued Management Discussion & Analysis continued 29 Custom Transit HandyDART is a shared-ride custom transit service for people with physical or cognitive disabilities who cannot use conventional services. Prior to 2009, this service was provided by seven contractors in eight separate contract areas. Effective January 1, 2009, there is one independent contractor operating this service and the eight contract areas have been consolidated into three. There are 362 vehicles in the HandyDART fleet. A supplementary Taxi Saver Program enables eligible users to make trips by taxi with substantial savings. SECURITY The Province established the Police Service (Transit Police) in 2005 as the first dedicated transit police service in Canada. The Transit Police maintain order, safety and security on transit facilities and adjacent areas, and are authorized to enforce laws and carry firearms. The Transit Police coordinates its activities with jurisdictional police as well as other transit security staff. ROADS AND BRIDGES In partnership with the municipalities, TransLink supports the Major Road Network (MRN), a network of major roads throughout Metro Vancouver. Ownership of, and operational responsibility for, the MRN generally remains with the respective municipalities. TransLink provides funding for the operation, maintenance and rehabilitation of the MRN, and shares in the cost of eligible capital improvements. Car ferry service across the Fraser River was included in the MRN. This two vessel service, known as the Albion Ferries and operating between Maple Ridge and Langley, was provided by the TransLink subsidiary Fraser River Marine Transportation Company Ltd. Ferry service stopped on July 31, 2009 with the opening of the Golden Ears Bridge, and the vessels are being actively marketed for sale. TRANSLINK CORPORATE TransLink corporate is the organization s head office, responsible for organizational leadership and oversight, and the development of TransLink s strategic transportation and financial plans. Other functions centralized at the TransLink corporate office include major capital project management, legal services, corporate information systems strategy, corporate finance, transportation systems planning, internal audit, marketing, public affairs, real estate services and the transportation demand management program B.C. Ltd. (ITS Corporation) is the TransLink subsidiary that was originally established to research and develop intelligent transportation systems (ITS) and technologies. The ITS Corporation is no longer active. A multi-agency committee continues to meet on ITS matters. The insurance needs of the organization are administered through TransLink s captive insurance company, Transportation Property and Casualty Company Ltd., which was co-owned with BC Transit (90 per cent TransLink, 10 per cent BC Transit) until April 1, The Transportation Property and Casualty Company Ltd. is now a wholly-owned subsidiary of TransLink. AIRCARE Under the SCBCTA Act, TransLink must develop and administer programs for certifying motor vehicle compliance with regulations under the Motor Vehicle Act with respect to exhaust emission standards. TransLink s wholly-owned subsidiary, Pacific Vehicle Testing Technologies Ltd., manages the AirCare program, which is a mandatory vehicle emissions testing program in the Metro Vancouver region. The inspection contractor for the AirCare program is Envirotest Canada, which operates 10 inspection centres. Testing fees are set such that, over the lifetime of the contract, all program costs related to AirCare are recovered through user fees. The current AirCare contract expires on December 31, A study is underway to evaluate the need for light duty vehicle emissions inspections. The study will be complete by Summer The Golden Ears Bridge, a new six-lane toll bridge across the Fraser River, opened in June The operations, maintenance and rehabilitation of the bridge and its 14-kilometre associated road network are contracted to the Golden Crossing General Partnership. TransLink owns the Knight Street Bridge, Pattullo Bridge, Westham Island Bridge and Albion Ferry docks.

17 30 Management Discussion & Analysis continued Management Discussion & Analysis continued 31 (tabular amounts in thousands of dollars except per unit amounts) OPERATING ACTIVITY TransLink evaluates the performance of its operations using key performance measures that are linked to its goals, objectives and strategies. Selected operating results and key performance indicators are shown in the table below. SCHEDULE TRANSIT SERVICE % Chg. Avg. % Chg. Service Hours 4,893,457 5,117,216 5,333,014 5,588,413 5,953, % 5.0% Total Kilometres 114,810, ,373, ,997, ,667, ,826, % 4.7% Boarded Passengers 275,721, ,767, ,007, ,407, ,290, % 3.2% Revenue passengers 159,713, ,073, ,069, ,796, ,912, % 4.2% Operating cost per passenger kilometre $0.272 $0.291 $0.303 $0.324 $ % 5.2% Operating cost per total vehicle kilometre $4.50 $4.83 $5.01 $5.39 $ % 4.4% Average fare per revenue passenger $1.78 $1.82 $1.84 $1.94 $ % 1.6% Operating Cost Recovery 56.40% 53.80% 52.50% 52.00% 49.80% -4.2% -3.1% Overall performance rating (out of 10) % 0.0% Passenger injuries per 1 million boarded passengers * % 128.5% Complaints (All) 20,570 24,236 25,543 25,904 25, % 6.0% Complaints per 1,000 service hours % 0.8% ACCESS TRANSIT ** % Chg. Avg. % Chg Service Hours 500, , , , , % 1.1% Revenue Passengers 1,246,380 1,260,245 1,308,321 1,365,447 1,216, % -0.4% Boarded Passengers 1,344,144 1,364,891 1,416,686 1,490,407 1,341, % 0.1% Operating cost per revenue passenger % 13.1% Operating cost per service hour % 11.8% Passenger injuries per 1 million boarded passengers % Note: Scheduled transit service includes: Bus, SeaBus, SkyTrain, Canada Line and West Coast Express services. * Passengers injuries for the Bus Division were not recorded prior to 2007 ** Access Transit services were subject to a work stoppage from October 25, 2009 to January 11, 2010 Scheduled Transit Service Service hours, kilometres and passengers are the key measures of transit operating activity. Actual service hours delivered increased 6.5 per cent over last year. For the period , service hours have increased on average 5.0 per cent annually. Total kilometres increased by 8.0 per cent in 2009, which was well above the four-year average of 4.7 per cent. A major factor in the increase for 2009 was the introduction of the Canada Line service, which commenced operations in August. Boarded passengers represents the number of times customers board transit vehicles, including transfers between transit vehicles. Boarded passengers increased 3.6 per cent in 2009, lower than the revenue passenger increase, and indicating that fewer transfers occurred between modes. A combination of shorter trips and improved direct routes contributed to the lower transfer rate. The 2009 increase in boarded passengers was greater than the average annual increase of 3.2 per cent. Revenue passengers captures the number of customer trips taken on transit. Revenue rides are recorded on a transit vehicle first used by a customer starting his/her trip. Revenue passengers increased 5.1 per cent over 2008, above the 4.2 per cent average increase over the period, and slightly lower than the growth in service hours. Ridership growth usually lags the growth in service hours, as it takes some time for riders to become aware of the new service and change their behavior. In addition, some service changes are targeted to address over-crowded routes, and not necessarily to add new ridership. Passenger kilometres are defined as the average trip length of a passenger (origin to destination) times the number of boarded passengers. Operating cost per passenger kilometre increased 2.8 per cent in 2009, lower than the 2005 to 2009 average increase of 5.2 per cent. Strong ridership growth combined with cost containment initiatives resulted in the lower growth rate. Vehicle kilometres are defined as the total kilometres travelled by all vehicles. Operating cost per total vehicle kilometre decreased by 1.1 per cent in This is due mainly to cost containment initiatives and the introduction of Canada Line service, which altered the mix of bus and rail vehicle kilometres (operating cost per kilometre for SkyTrain and Canada Line was $2.35, while the operating cost per kilometre for bus service was $5.75). The average increase over the period was 4.4 per cent. Average fare per revenue passenger is a system-wide average including all conventional transit modes. Total transit fares collected are divided by the total revenue passengers to arrive at this average. The average fare per revenue passenger decreased in 2009 by 2.6 per cent as revenue passengers increased at approximately twice the rate of transit fare revenue. Prepaid fares increased three per cent over 2008, whereas cash fares decreased by 1.5 per cent over the same period. Increased use of discounted prepaid fares has resulted in the reduction of average fare per revenue passenger. This metric has increased on average 1.6 per cent per year since 2005.

18 32 Management Discussion & Analysis continued Management Discussion & Analysis continued 33 Operating cost recovery indicates in per cent terms what contribution transit revenue makes towards covering transit operating costs. Operating cost recovery at 49.8 per cent has declined from the 52.0 per cent recovery achieved in This change reflects the increased use of discounted fare products and the rapid growth in service over the period, with slightly slower growth in revenue as ridership tends to build over time. As well maintenance costs have increased, particularly for new bus technologies and improved accessibility features. The overall performance rating shows a 4.3 per cent increase in 2009, and at 7.3 has rebounded to 2005 levels. The percentage of passengers who rate the service between eight and 10 (out of 10) was 53 per cent in 2009 compared to 48 per cent in 2008, a 10.4 per cent increase. This rating is the same for 2005 and An average rating of seven out of 10 or 50 per cent good-to-excellent is the cut-off point below which remedial action is recommended. Passengers injuries per one million boarded passengers increased by 28.2 per cent. It should be noted that passenger injuries were not tracked by the Bus Division prior to Both total complaints and complaints per 1,000 service hours showed a decrease from These decreases show significant improvement from the average for the period. Total complaints decreased 0.7 per cent compared to the average increase of six per cent and complaints per 1,000 service hours decreased 6.5 per cent compared to an average annual increase of 0.8 per cent for the period. Access Transit Service Access Transit service hours and revenue passengers decreased 13 per cent and 10.9 per cent respectively in Service was to increase eight per cent in 2009; however actual service delivered declined due to a work stoppage from October 25, 2009 to January 11, This resulted in an average annual growth in service hours of only 1.1 per cent over the past four years. Revenue passengers had been growing by an average of three per cent annually in the three years prior to 2009; however, the work stoppage resulted in an average decline of 0.4 per cent over the period. The work stoppage also impacted cost metrics. Operating cost per revenue passenger increased by 25.3 per cent and operating cost per service hour increased by 28.3 per cent, as fixed costs continued while only essential service levels were provided. In addition, the transition in 2009 to a single contractor resulted in some one-time costs that will be offset by long-term savings and increased customer service. Passenger injuries per one million boarded passengers were reduced by 44.4 per cent in 2009 for Access Transit, continuing the downward trend from CONSOLIDATED STATEMENT OF OPERATIONS ANALYSIS This analysis reviews 2009 results compared to 2008 and is organized by fund category. General Fund The General Fund captures the operations of TransLInk and its subsidiaries (excluding AirCare which is a restricted fund). The following table summarizes the general fund net operating results for 2009 and Change Revenues $ 970,363 $ 920,021 $ 50,342 Expenses 851, ,737 77,869 $ 118,757 $ 146,284 $ (27,527) Other (3,011) (48) (2,963) Excess of Revenues over Expenses $ 115,746 $ 146,236 $ (30,490)

19 34 Management Discussion & Analysis continued Management Discussion & Analysis continued 35 Revenues In 2009 revenues increased $50.3 million over Taxation revenues increased by $15.6 million. Transit revenues had a net increase of $6.9 million. The balance of the increase reflects new Golden Ears Bridge tolls ($11.3 million) and Canada Line operating contribution and concessionaire credit ($16.5 million). The following table provides more detail on the components. Transit Revenue Change % change Transit fares $ 356,605 $ 348,672 $ 7, % Advertising & other 10,163 11,239 (1,076) -9.6% $ 366,768 $ 359,911 $ 6, % Taxation Revenue Change % change Motor fuel tax $ 259,821 $ 262,298 $ (2,477) -0.9% Property tax 264, ,741 8, % Replacement tax 17,995 8,758 9, % Others 33,845 33, % $ 575,753 $ 560,110 $ 15, % TRANSIT REVENUE Transit Fare revenue increased by $7.9 million (2.3 per cent). This is primarily due to an increase in the purchase of FareSaver tickets ($4.5 million and 8.8 per cent) and program expansion of U-Pass ($4.3 million and 23.7 per cent) as well as the Employer Pass and Government Bus Pass programs growth. Employer pass sales increased $2.6 million or 14.7 per cent during the year. Yet, the average purchase price per pass decreased by $1.85 or two per cent due to the relative sales growth increase of one zone passes to other zones. These increases in overall contract revenue helped mitigate the shortfall in other fare types carried into FareCard revenues were significantly less than in 2008, (down $3.6 million and 2.7 per cent), similar to the decline in FareBox revenues (down $1.4 million and 1.5 per cent). These revenue shifts are indicative of the trend in payment methods that began to emerge in Together, cash sales and monthly FareCard revenues (including WCE 28 day passes) decreased over the previous year by $5.0 million. However, the use of FareSavers (including WCE weekly tickets) increased by a corresponding $4.5 million. Given the weakened economy, it is likely that customers are opting for FareSaver tickets, which do not have a monthly expiration, as an alternative to the FareCard monthly commitment. The overall growth in revenue passengers was 5.1 per cent. Growth of bus and SkyTrain revenue passengers was essentially flat, while West Coast Express experienced a decrease of 2.2 per cent with only the SeaBus and the addition of the Canada Line causing a net increase in the number of revenue passengers carried during the year. A study is underway to explore and understand the reasons behind the relationship and apparent inconsistency between ridership growth and revenues. Golden Ears Bridge Revenue Change % change Tolling $ 11,293 $ 0 $ 11, % Canada Line Revenue Change % change Operating contributions $ 7,496 $ 0 $ 7, % Amort of deferred concessionaire credit 9, , % $ 16,549 $ 16, % $ 970,363 $ 920,021 $ 50, %

20 36 Management Discussion & Analysis continued Management Discussion & Analysis continued 37 The following table summarizes the rate and volume impact of monthly and employer passes. A notable trend is that despite the significant discount of monthly and annual pass programs over comparable cash fares, these fare programs have declined 12.1 per cent from Other transit fare revenue indicates that the 2.3 per cent growth overall to $356.6 million for transit fares is achieved through ticket and DayPass sales and other contractual revenues such as U-Pass and Government Bus Pass programs. Advertising & Other revenue is contract based. Advertising revenue has a guaranteed minimum (which increases annually) and additional revenues are provided if advertising sales are above the minimum. In 2009, advertising revenue exceeded the minimum by $0.3 million, but was below total 2008 revenues by $1.1 million, highlighting the sensitivity of advertising revenues in a weak economic period. Revenue growth from SkyTrain retail contracts offset decreased revenues from West Coast Express Park & Ride lots. Monthly Passes * Change % change Purchases 1,755 1,770 (15) -0.8% Revenue (000 s) $ 130,559 $ 134,189 $ (3,630) -2.7% Average price per purchase $ $ $ (1.42) -1.9% Employer Pass Change % change Purchases % Revenue (000 s) $ 20,840 $ 18,170 $ 2, % Average price per purchase $ $ $ (1.85) -2.0% Both Change % change Purchases 1,982 1, % Revenue (000 s) $ 151,399 $ 152,359 $ (960) -0.6% Average price per purchase $ $ $ (1.19) -1.5% % of total fare revenue 42.5% 43.7% -12.1% *prior year s numbers have been restated to conform to current year format Other Fare Revenue (000 s) Change % change FareBox Revenue $ 88,480 $ 89,854 $ (1,374) -1.5% Ticket and DayPass Revenue 57,014 52,693 4, % Other Pass Revenue ** 59,713 53,766 5, % Total Fare Revenue $ 356,605 $ 348,672 $ 7, % ** majority of revenue is from U-Pass and Government Bus Pass TAXATION REVENUES Motor Fuel Tax revenue decreased $2.5 million (0.9 per cent) over Revenues have decreased over the past two years; however, the rate of decline has improved from the 2008 to 2007 period, in which we experienced a significant decline (two per cent). The revenue decrease of $2.5 million in 2009 is almost completely attributable to gasoline sales. Diesel sales for the full year remain virtually unchanged from 2008, despite a steady improvement in the last six-month period compared to the same time period in 2008 (July to December). Gasoline sales show a slight positive trend in the latter half of the year. The tax rate of $0.12 per litre on gasoline and diesel fuel sales in the Metro Vancouver area remained the same since April In 2009, the ratio of litres sold was 85 per cent gasoline and 15 per cent diesel. This ratio has remained the same since The following graph shows the sales trend for the past three years, using a 12-month moving average. The 12-month average provides a stable comparative for trend analysis, smoothing out the impact of seasonality and adjustments. 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% January 2007 GASOLINE AND DIESEL FUEL % CHANGE IN SALES FROM PRIOR MONTH BASED ON MOVING 12 MONTH AVERAGE January 2008 January 2009 Diesel Gasoline 1 The rate increased to $0.15 cents per litre January 1, 2010.

21 38 Management Discussion & Analysis continued Management Discussion & Analysis continued 39 The graph shows a slight decline in gasoline sales volume, with a positive trend by the end of Diesel sales, despite the averaging effect, show the dramatic decline in the latter half of 2008 from strong 2007 growth rates and the improved sales in the latter part of Average price at the pump for gasoline and diesel in 2009 decreased from This was a noticeable reversal from prior years, where the annual average price increased yearly. Gasoline prices averaged $1.01 per litre in 2009 (compared to $1.21 in 2008). Diesel prices averaged $0.95 per litre in 2009 ($1.30 in 2008). Fuel prices slightly increased in the latter half of 2009, but remain significantly lower than 2008 peak prices ($1.45 per litre for gasoline and $1.53 per litre for diesel). While lower fuel prices are viewed as promoting increased fuel sales, the effect can be dampened by a slower economy which in turn promotes economic restraint. Actions from such restraint can include positive impact on transit fare revenues from increased ridership, but also a curtailment of discretionary travel and greater emphasis on seeking the best vehicle fuel efficiency, which then results in lower fuel tax revenues. Property tax increased $8.4 million (3.3 per cent) over Under a base plan (as defined by the SCBCTA Act) property tax revenues can be forecast to increase three per cent per year. Net revenue actual percentage growth will vary from the forecast level as tax rates are set early in the year and must use an estimate for the dollar impact of appeals and adjustments. The majority of revenue is provided by Class 1 Residential at $142.0 million and Class 6 Business at $101.7 million. Replacement tax increased $9.2 million (106 per cent) over Under the SCBCTA Act, TransLink has the legislated authority to raise a maximum of $18 million in replacement tax on property classes 1, 2, 4, 5 and 6. In March 2008, the board reduced the amount to be collected in 2008 from the allowable $18.0 million to $9.0 million. Replacement tax rates were set in 2009 to collect the permitted $18.0 million from all allowable property classes. The total collected includes adjustments to reflect impacts of appeals and assessment roll adjustment differences. Other - Hydro Levy and Parking Sales Tax increased $0.5 million (1.6 per cent) over Hydro levy and parking sales tax revenues grew by $0.3 million and $0.2 million respectively, reflecting general population growth. Both revenue sources have had the same tax rates since the inception of TransLink. Golden Ears Bridge revenue is a new revenue source and amounted to $11.3 million in TransLink launched the first open road tolling system in Western Canada with the opening of the Golden Ears Bridge in June Tolls are charged on vehicles at rates varying from $1.40 to $9.40, depending on the type of vehicle and account set up within TransLink s Quickpass tolling system. The tolls are used to pay for the design, construction, financing and ongoing maintenance and rehabilitation of the Golden Ears Bridge and for toll processing and collection, all provided by TransLink s concessionaires. Canada Line Contributions Canada Line operations began in August Funding for the Canada Line includes operating contributions from the Province of British Columbia at $1.5 million each 28-day period for 395 periods. This equated to $7.5 million in The amortization of deferred concessionaire credits represents the amortization of the funding provided by the Canada Line concessionaire towards the design and construction phases of the Canada Line. Given the funding was contributed directly by the concessionaire, the deferred concessionaire credit represents a non-cash contribution to TransLink. EXPENSES Total general fund expenses have increased by $77.9 million compared to The following table presents the components of the increase Change Transportation operations $ 732,664 $ 660,829 $ 71,835 Maintenance on Major Road Network 43,615 37,472 6,143 Interfund AirCare Charge Administration 39,795 38,179 1,616 Transit Police 26,767 22,051 4,716 Other projects 8,765 15,206 (6,441) $ 851,606 $ 773,737 $ 77,869 Transportation Operations includes the operating costs of transit subsidiaries and transit contractors. Costs increased by $71.8 million over 2008, driven primarily by factors including labour, materials, the impact of bus service expansion and the addition of the Canada Line. Overall service hours increased 6.5 per cent in 2009 while service kilometres increased eight per cent Change % Operations $ 375,858 $ 320,699 $ 55, % Maintenance 199, ,558 19, % Fuel 40,532 54,367 (13,835) -25.4% Electricity Propulsion 10,585 9, % Indirect/Admin 72,261 65,203 7, % Amortization of Capital Assets 3,417 2, % Rentals, Property tax, Insurance, & Fare media 30,598 28,621 1, % $ 732,664 $ 660,829 $ 71, % 2 Tolling commenced July 16, 2009.

22 40 Management Discussion & Analysis continued Management Discussion & Analysis continued 41 Operations The increase in 2009 includes $31.7 million for the Canada Line service, which began operating in August. Excluding the Canada Line, rail operations increased by less than $1 million. Labour is the most significant cost to the subsidiaries, comprising 60 per cent of operating expenses. Increases ranged from 2.5 per cent to 3.5 per cent in 2009 and increased costs by approximately $12.6 million. Overtime costs at CMBC decreased by $6.2 million as new operators were hired, trained and prepared when expansion occurred, avoiding the need for existing operators to work overtime. Maintenance Excluding service expansion, maintenance factors include depot and facility capacity constraints that resulted in increased costs to get the buses from the depots to the service locations, and the increased cost of implementing and maintaining new bus equipment such as new trolley and hybrid technologies. Other items include TMAC radio communications, GPS, on-bus cameras, power mirrors, bicycle racks, enunciators, power ramps and other accessibility features. Fuel and Electricity Propulsion Fuel costs in 2009 decreased by $13.8 million over 2008 due to the fall in market prices in late 2008 that carried through Propulsion power costs increased $0.6 million, reflecting changes in hydro rates and the additional SkyTrain vehicles and trolley buses. Indirect/Administration Access Transit indirect and administrative costs increased $3.6 million, including one-time payment to the contractor for items such as labour and relocation cost for a new centralized call center and an interactive voice recognition system to improve customer service and service scheduling. The balance of the increase is due to staff economic increases and certain one-time charges. Amortization of Capital Assets Subsidiary capital spending increased over the past few years as a result of policy changes to increase the limit for subsidiary capital. As a result, amortization charges have also increased. Rentals, Property Tax, Insurance, and Fare Media the reassessment of the Vancouver Transit Centre property taxes resulted in a savings of $2.4 million over Offsetting this savings was increased rental costs mainly for WCE passenger car lease and increased insurance costs. Maintenance on Roads and Bridges includes the funding provided to the municipalities for the operation, maintenance and rehabilitation of their respective portion of the MRN, the costs to maintain the four TransLink-owned bridges, and the cost to secure the Albion Ferry vessels until they are sold. The majority of the MRN increase relates to the costs of operating the new Golden Ears Bridge. In addition, the MRN funding rate per lane kilometre increased by two per cent, from $12,990/lane kilometre to $13,250/lane kilometre. Transit Police increased by $4.7 million over The majority of the increase ($3.2 million) related to additional staffing requirements for the expansion of Transit Police s infrastructure capacity and increased personnel to support the new Canada Line. The remaining variance relates to renovation costs of the existing facilities and costs associated with the opening of the Bridgeport office to provide policing services to the Canada Line. Other Projects include various studies, one-time projects and expenditures for activities that cannot be capitalized or deferred. Other project costs were reduced by $6.4 million in The 2008 cost included a $7.9 million one-time write-off of the Evergreen Line study costs. Costs of $2.7 million were incurred in 2009 to develop and consult on the Year Strategic Plan, and $298,000 was incurred to raise awareness of the new Golden Ears Bridge. Transit Secure projects were mainly completed in 2008, resulting in limited expenditures in AIRCARE FUND The AirCare fund is used to record the revenues and expenses of the AirCare vehicle emissions testing program. Under legislation, AirCare fees are designed to recover program costs over the life of the current testing contract to December 31, Change Revenues $ 17,497 $ 19,037 $ (1,540) Expenses 18,211 17, Deficit of revenue over expenditures $ (714) $ 1,299 $ (2,013) Revenues have decreased by $1.5 million, due to fewer biennial inspections. Overall, there were 9.6 per cent fewer inspections in 2009 compared to With a significant portion of the test fleet on a biennial test schedule, the year over year revenues will vary. Expenses have increased by $473,000 reflecting a planned two per cent increase in contract expenses from The operating cost per vehicle inspected increased by 14 per cent as there were fewer inspections in the year. The current AirCare contract expires on December 31, A study is underway to evaluate the need for light duty vehicle emissions inspections. The study will be complete by Summer Administration is the TransLink corporate office, including staff and support costs for the transportation planning, technology services, real estate, finance, human resources, capital management and corporate affairs functions. Costs related to the governance structure are captured in this category as well. The $1.6 million increase reflects labour rate increases as well as costs, new to 2009, related to land being held for redevelopment ($517,000). The increases were offset by cost containment initiatives.

23 42 Management Discussion & Analysis continued Management Discussion & Analysis continued 43 CAPITAL FUND The capital fund is primarily used to record balances related to capital assets and any long-term debt outstanding. This fund also includes capital contributions received and the capital funding paid to the municipalities for the MRN. Revenue added to this fund includes interest earned on debt sinking funds and debt reserve deposits as well as interest earned on surplus cash and federal and provincial funds held in segregated investment accounts. Charges to the fund include interest related to borrowings and amortization of capital assets. The following summarizes revenue and expenses of this fund: Revenues Change Capital contributions $ 171,022 $ 217,070 $ (46,048) Interest income 22,203 24,415 (2,212) Revenue $ 193,225 $ 241,485 $ (48,260) Expenses Major Road Network capital $ 116,749 $ 64,710 $ 52,039 Interest on debt 112,900 63,414 49,486 Amortization of capital assets 119,973 88,108 31,865 Expenses $ 349,622 $ 216,232 $ 133,390 $ (156,397) $ 25,253 $ (181,650) Other Gain/(loss) in foreign exchange $ - $ 94 $ (94) Fair value adjustment on financial instruments - (4,100) 4,100 Loss on disposal of capital assets (1,120) (1,232) 112 Write-down of capital assets (4,113) - (4,113) Other $ (5,233) $ (5,238) $ 5 Excess (deficiency) of revenue over expenses $ (161,630) $ 20,015 $ (181,645) Capital contributions are funds received primarily from senior government. Note 12 in the consolidated financial statements details the different sources and how much was received from each source. The federal government s Strategic Priorities Fund (Gas Tax Agreement funds) provided $124.3 million (compared to $62.1 million in 2008) and represents the year five program allocation. Funds were directed towards the capital cost of Phase 2 of the SkyTrain operations and maintenance centre expansion, Expo Line propulsion power upgrade and fleet expansions and replacements related to hybrid buses, HandyDART custom vehicles and Mark II SkyTrain cars. TransLink recognizes these fundings as revenue on receipt and this specific capital funding is typically received before the capital items are purchased. In 2009, $7.7 million (compared to $4.5 million in 2008) was received from the federal government s Transit Secure Funding Program and helped fund enhanced CCTV, enhanced SkyTrain and WCE station lighting projects, and upgrades of the SkyTrain emergency station communication system. The Urban Transportation Showcase program funded by Transport Canada funded $1.7 million (compared to $5.2 million in 2008) towards transit villages, Central Valley Greenway and Main Street transit and pedestrian priority projects. In 2008, the Province advanced $51.8 million as part of its Provincial Transit Plan. This funding has been allocated to partly fund certain Mark II SkyTrain cars, articulated electric trolleys, hybrid buses and the third SeaBus. Government contributions towards the Canada Line project decreased by $56.0 million during the year as the project was completed in Total funding received for this project totalled $753 million. Interest income in 2009 was $2.2 million lower compared to 2008 mainly as a result of the low interest rate environment compared to Partly offsetting these low interest rates was Canada Line s Asset Back Commercial Paper Replacement Notes, which earned $2.8 million in 2009 (compared to nil in 2008). TransLink received repayment of the Asset Back Commercial Paper Replacement Notes during Major Road Network capital is expensed and comprised of major and minor road project contributions, the Bicycle Infrastructure Capital Cost Sharing programs (BICCS) and the Transit-Related Road Infrastructure Projects (TRRIP) programs. The increase in MRN capital reflects the net impact of $101 million that was expensed for Golden Ears Bridge related Handover Facilities (see note II(d)) and lower spending on the Coast Meridian and 204th Street overpass projects ($39.2 million), various minor road projects ($12 million) and BICCS and TRRIP projects ($2 million). Interest on debt increased by $49.5 million compared to The most significant component of the increase is $34.8 million in interest on the Golden Ears Bridge liability, which began accruing upon project substantial completion. The $73.5 million increase in total long-term debt obligation increased interest expense by $8.7 million. Reduced interestduring-construction, primarily due to the completion of Canada Line and Golden Ears Bridge, amounted to $5.8 million. Amortization of capital assets increased by $31.9 million over 2008 reflecting the significant capital assets put into service during 2009, particularly the Canada Line, Golden Ears Bridge, SkyTrain vehicles and conventional buses. Loss on disposal of capital assets results from buses, custom vehicles and community shuttles being retired and sold for scrap in 2009 and 2008 with net book values in excess of the net proceeds on the disposal. Write down of capital assets reflects the write down to fair market value of the cost of the Maple Ridge Maintenance & Transportation Training Centre project. The site was under development, but funding pressures led to the decision to prepare the site for sale.

24 44 Management Discussion & Analysis continued Management Discussion & Analysis continued 45 LIQUIDITY AND CAPITAL RESOURCES The sources of funds for operations, capital expenditures and debt service payments are primarily taxation, transit revenues, capital contributions from senior levels of government, and the issuance of long-term and short-term debt. The following summarizes the change in cash balance during the year: Change Operations $ 175,783 $ 257,062 $ (81,279) Investing (345,595) (392,046) 46,451 Financing 209,773 68, ,357 Increase (decrease) in cash $ 39,961 $ (66,568) $ 106,529 Cash, beginning of year $ 46,703 $ 113,271 $ (66,568) Cash, end of year $ 86,664 $ 46,703 $ 39,961 The movement in the cash balance outlines the significant investments in the capital assets, which is financed by the both the operating and financing activities. Operating activities: Cash provided by operations for 2009 of $175.8 million was $81.3 million lower than the prior year summarized as follows: Change General Fund $ 115,746 $ 146,236 $ (30,490) Capital Fund (161,630) 20,015 (181,645) AirCare - Net (714) 1,299 (2,013) Excess (deficiency) of revenue over expenses $ (46,598) $ 167,550 $ (214,148) Items not involving cash Amortization of capital assets 120,344 88,447 31,897 Others 25,482 6,254 19,228 Changes in non-cash working capital $ 76,555 $ (5,189) $ 81,744 Cash provided by operations $ 175,783 $ 257,062 $ (81,279) As explained in the previous sections, the increases in transportation operations, major road network capital, interest expense and a reduction in capital contributions have been the main causes of the $81.3 million decline in cash provided by operations. Investing activities: Cash invested during 2009 was $345.6 million compared to $392.0 million for Change Purchase of capital assets, net of disposal proceeds $ (447,240) $ (433,744) $ (13,496) Financial instrument assets 101,645 41,698 59,947 Cash used for investments $ (345,595) $ (392,046) $ 46,451 The main reason for the change in the cash used for investments was the sale of the Asset Back Commercial Paper Replacement Notes. This freed up $42.5 million in cash, which was offset by the $13.5 million increase in purchases of capital assets. See the Investment in Capital Assets section for more details on the purchase of capital assets. Financing activities: Financing activities resulted in net proceeds of $209.8 million compared to $68.4 million in 2008 as follows: Change Short-term loan $ 151,000 $ - $ 151,000 Bonds issued 165, ,000 15,600 Bonds issue costs (2,045) (1,125) (920) Bonds matured (91,763) (1,917) (89,846) Increase in debt sinking funds (net) (13,019) (78,542) 65,523 Cash provided by financing activities $ 209,773 $ 68,416 $ 141,357 Currently, long-term bonds are issued ($165.6 million in 2009 and $150 million in 2008) through the Municipal Finance Authority of British Columbia (MFA). TransLink also borrowed $150 million under a line of credit with the MFA. These debts were used primarily to finance purchase of capital assets. The debt sinking funds are used to repay the related debt at maturity. In 2009, the sinking fund increased by $13 million compared to the $78.5 million in In 2009, contributions to the sinking funds totalled $70.4 million (compared to $63.4 million in 2008); interest earned on these funds totalled $16.9 million ($15.1 million in 2008); and $74.3 million (nil in 2008) was utilized to fund the bond repayments at maturity. In 2009, TransLink began exploring alternative short-term and long-term financing strategies as well as sources of debt financing. In early 2010 TransLink has secured alternative short-term financing via a $500 million unsecured credit facility, which will be used to backstop a $500 million commercial paper program. By obtaining access to the commercial paper market, TransLink will gain greater visibility amongst investors; this will greatly assist the organization to eventually borrow directly in the long-term debt market.

25 46 Management Discussion & Analysis continued Management Discussion & Analysis continued 47 INVESTMENT IN CAPITAL ASSETS During 2009, TransLink continued to invest in fleet and infrastructure to increase the capacity of the transportation network to meet the needs of the growing region. For the year ended December 31, 2009, capital assets increased by a net amount of $632.0 million. This represents $757.7 million net additions to capital assets less $120.3 million amortization, a $4.1 million write-down of land, and $1.3 million of asset disposals. The addition of $757.7 million to capital assets during the year were primarily made up of following items: Canada Line and Golden Ears Bridge The Canada Line 2009 addition of $223 million related to costs to complete the rapid transit line from Richmond to the Vancouver International Airport to downtown Vancouver. The Canada Line was completed ahead of schedule and opened to the public on August 17, The capital cost recorded by TransLink for Canada Line as at December 31, 2009 was $1.9 billion (excluding the airport segment and bike bridge). The Golden Ears Bridge 2009 addition of $76 million related to costs to complete the bridge linking Pitt Meadows and Maple Ridge to Langley and Surrey. The bridge was completed ahead of schedule and opened to the public on June 16, 2009, replacing the Albion Ferry services between Maple Ridge and Langley. The capital cost recorded by TransLink for the bridge as at December 31, 2009 was $1.0 billion. The Golden Ears Bridge capital costs do not include $101 million of costs expensed related to the bridge project, to plan, design, arrange financing and construct the bridge s network of highways and related support facilities, which were transferred to the municipalities and the Province upon substantial completion of the bridge. Infrastructure $19.4 million was spent to substantially complete the SkyTrain Operations and Maintenance Centre (OMC) expansion in Evergreen Line The Evergreen Line project is being delivered by the Ministry of Transportation and Infrastructure (MoTI). Under the terms of a memorandum of understanding between MoTI and TransLink, TransLink is providing $16 million towards the project development phase (1/3 contribution). The provincial and federal governments have committed approximately $400 million each towards the capital cost of the project. During 2009, TransLink paid $10.6 million (out of the $16 million commitment) to the Evergreen Line project. TransLink s commitment to the Evergreen Line is $400 million and is subject to securing adequate funding. Land $46.2 million surplus properties from the Canada Line and Golden Ears Bridge projects, which are in the process of being prepared for sale. $19.2 in property acquisitions for a future transit site in Richmond and a parking lot in Port Moody for WCE. At December 31, 2009, TransLink had capital assets with a total net book value of $4.6 billion. In addition, TransLink also operates, maintains and upgrades of capital assets owned by the Province and BC Transit, including the SkyTrain Expo and Millennium lines and West Coast Express infrastructure with a total net book value of approximately $1.5 billion. Fleet Bus - $180.8 million: Diesel 30 standard forty-foot diesel buses Hybrid diesel/electric 122 forty-foot hybrid-diesel buses and 39 articulated sixty-foot hybrid-diesel buses Trolleys 34 articulated sixty-foot electric trolley buses, and Other passenger community shuttles and 55 HandyDART vehicles. Rail - $71.7 million: SkyTrain vehicles: delivery of 48 SkyTrain MKII automated light rail train vehicles, and West Coast Express vehicles: construction commenced on seven additional WCE 150-passenger, bi-level rail cars with delivery of the rail cars scheduled for summer SeaBus - $12.6 million: Third SeaBus: delivery of the Burrard Pacific Breeze, which entered revenue service on December 23, 2009.

26 48 Management Discussion & Analysis continued Management Discussion & Analysis continued 49 RISK MANAGEMENT TransLink s risk management strategies, policies and limits are designed to ensure TransLink s risks and related exposures are in line with the company s business objectives and risk tolerances. Using an Enterprise Risk Management (ERM) process, annual assessments are conducted that focus on strategic, political, reputational, financial, human resources, business effectiveness, health and safety, environmental, reporting and regulatory risks. All residual risks that are considered high or moderate are incorporated into a corporate risk action plan whereby risks are assigned to an executive who is accountable for reporting back on efforts to mitigate this risk. The chief executive officer provides an update to the board of directors at each board meeting. The 2009 process resulted in several new risks being identified and the dismissal of several risks that had been identified in the 2008 process. The top eight residual risks identified through the 2009 ERM process: Residual Risks 2009 Assessment Governance Alignment High Business Process & Technology High Safety & Security Moderate Inadequate Funding Stabilization Plan Moderate Inadequate Funding Growth Plan Moderate Resourcing & Human Resources Moderate Organizational Alignment & Change Management Moderate TRANSLINK S SUSTAINABILITY TransLink formalized its sustainability commitments in On June 9, TransLink became a signatory to the International Association of Public Transport (UITP) Charter on Sustainable Development. UITP is an international association dedicated to sustainable transportation. Charter members commit to fostering leadership, influencing policy, facilitating training and reporting on sustainability practices. At its July 16 meeting, TransLink s board approved a sustainability policy, committing the organization to making sustainability a key factor in its strategies, plans, business practices, decisions and operations. TransLink is also a member of the American Public Transportation Association (APTA) and is part of a pilot project on how to measure sustainability progress in this sector. Transport 2040 articulates goals and strategies to guide transportation decisions over the coming 30 years. The longrange vision recognizes the social, environmental and economic pillars of sustainability and the importance of links to regional land use and air quality management plans. The sustainability policy, UITP membership, APTA pilot program, Transport 2040 and board leadership build on considerable policy work and programs already completed. These include: Environmental Management System Environmental Policy Emissions Policy Bus Technology Demonstration Policy Access Transit Strategy Public consultation and community engagement principles Operating Risk The occurrence of transportation related accidents or mishaps involving bus, WCE, SkyTrain or SeaBus systems could have a material adverse effect on business operations or financial position. TransLink may be subject to liability claims arising out of accidents involving its equipment on which customers are travelling, including claims for serious personal injury and death. Stakeholder consultation policy Programs based on sustainability principles include building regional cycling networks such as the recently-opened Central Valley Greenway, promoting alternatives to single occupant vehicle travel through commuting options and operating AirCare, a vehicle emissions testing program. TransLink provides a comprehensive risk financing program to insure both physical assets and legal liability for injuries and damage. The risk financing program uses the TransLink captive insurance company (Transportation Property and Casualty Company Inc.), traditional insurers and re-insurers to mitigate the financial impact of loss. The captive insurance company is regulated by the Superintendent of Financial Institutions and has an A.M. Best rating of A-Excellent on its financial strength and excellent capitalization.

27 50 Management Discussion & Analysis continued Management Discussion & Analysis continued 51 GOVERNANCE FRAMEWORK The SCBCTA Act establishes a governance structure for TransLink that includes the following entities: the Board of Directors, the Mayors Council on Regional Transportation and the Regional Transportation Commissioner. In addition, a Screening Panel, established annually, is responsible for nominating candidates for appointment to the Board and setting director compensation. Mayors Council The Mayors Council on Regional Transportation is comprised of representatives of the 21 municipalities and the Tsawwassen First Nation in the transportation service region. The Mayors Council appoints the board and the commissioner and may appoint up to two deputy commissioners, subject to processes stipulated in the SCBCTA Act. The Mayors Council approves or rejects any 10-year supplemental plans submitted by TransLink. Regional Transportation Commissioner The Regional Transportation Commissioner is appointed by the Mayors Council. The commissioner advises TransLink and the Mayors Council of the reasonableness and appropriateness of the projections and parameters included in the 10-year base plans submitted by TransLink each year. The commissioner also approves new short-term fares and increases to shortterm fares above two per cent per year and approves TransLink s plans for annual customer surveys, customer complaint process and any proposed disposition of major assets. Screening Panel The Screening Panel is established annually and comprised of one eligible individual appointed by each of the following entities: the Minister of Transportation and Infrastructure, Mayors Council, Institute of Chartered Accountants of British Columbia, Vancouver Board of Trade and Greater Vancouver Gateway Society. The panel nominates candidates for appointment to the board and sets the level of director compensation. Board of Directors The board is the legal governing body of TransLink and has responsibility for stewardship of the affairs of TransLink by overseeing the conduct of business, supervising management (which is responsible for the day-to-day conduct of the business), and endeavoring to ensure that all major issues affecting the business and affairs of TransLink are given proper consideration. The board appoints the chief executive officer (CEO) and delegates responsibility to the CEO for the day-today leadership and management of the organization. In performing its functions, the board is responsible for fostering the long-term success of TransLink and considers the legitimate interests held by stakeholders, including passengers, TransLink employees, the Mayors Council, the provincial government, suppliers, customers and the public. The board has responsibility and the mandate to make decisions in the interest of TransLink within the limits established by the SCBCTA Act. As of January 1, 2010, the board is comprised of the following directors: Chair: Members: Dale Parker Nomination of Directors James Bruce, Cindy Chan Piper, W. John Dawson, R.W. (Bob) Garnett, Sarah Goodman, Howard Nemtin, Nancy Olewiler, David Unruh The board is composed of nine part-time directors appointed by the Mayors Council from a list of nominees recommended by the Screening Panel. The terms of the first directors (appointed effective January 1, 2008) are: three directors appointed for three years, three directors appointed for two years and three directors appointed for one year. Thereafter, each director is appointed for a three-year term. Directors may be re-appointed and may serve for a maximum of six years. The recruitment of directors is undertaken with the objective of ensuring the board is composed of members who have the skills and experience to effectively monitor the performance of TransLink, add value, and provide support to management in establishing strategy, reviewing risks and opportunities, and reporting to the public. Pursuant to the SCBCTA Act, the board must establish a Board Skills and Experience Profile, which is recorded in the articles, and reflects the personal characteristics and specific competencies viewed as required for the board. Compensation The Screening Panel sets the compensation for the directors. Pursuant to the SCBCTA Act, the panel conducts an annual review of director compensation to ensure directors are appropriately compensated for their contributions. In making its recommendations to the board, the panel takes into account the types of compensation and the amounts paid by other comparable companies. The board is required to incorporate the panel s determination of compensation into the articles and set guidelines for the payment of director compensation and reimbursement of expenses. Board Meetings The board typically holds six regular business meetings per year. In addition, the board holds a strategic planning session at least annually and may hold additional special meetings as required. The board and management recognize that there is a regular need for the board to meet without management in attendance. Every regular board and board committee meeting is followed by an in camera meeting of directors, without management present. TransLink values public input and participation and the board believes that there are significant benefits for both the public and the board through opportunities to receive direct public input. The board publishes a summary of the items that it anticipates it will be deciding upon at a regularly scheduled board meeting on the TransLink website five calendar days before each of its meetings, and allocates time at the start of every meeting to receive presentations on items that will be decided during the meeting. The board will post a summary of any decisions made by the board to the TransLink website, within two business days of the conclusion of a board meeting. Decisions on matters that are deemed confidential by the board will not be published.

28 52 Management Discussion & Analysis continued Management Discussion & Analysis continued 53 Code of Conduct The Board Governance Manual sets out the Directors and Officers Code of Conduct and Conflict of Interest Guidelines, and provides general guidance on the standards of conduct expected of directors and officers. The purpose of the Code of Conduct is to promote honest and ethical conduct, focus the directors and officers of TransLink on areas of ethical risk, provide guidance to directors and officers to help them recognize and deal with conflicts of interest and ethical issues, provide mechanisms to report unethical conduct and help preserve the culture of honesty and accountability at TransLink and its subsidiaries. Directors are required annually to attest to their compliance with the Code of Conduct in writing. TransLink has engaged a conduct review advisor who reports to the board chair s office. The conduct review advisor is a neutral and independent resource to provide a clear interpretation of the standards of business conduct and guidelines for conflict of interest. Board Committees Pursuant to the SCBCTA Act, TransLink may establish such committees as are appropriate to assist the board in carrying out its work. Each board committee analyzes, in depth, policies and strategies developed by management within the committees responsibilities as established in the Committee Charter. Audit Committee (at January 1, 2010) Chair: R. W. (Bob) Garnett Members: James Bruce, W. John Dawson The Audit Committee assists the board in fulfilling its obligations and oversight responsibilities relating to financial planning, the audit process, financial reporting, the system of corporate controls and risk management and, when required, to make recommendations to the full board for approval. In addition, this committee reviews any conflicts or complaints made by directors and officers under the Code of Conduct. Governance Committee (at January 1, 2010) Chair: Nancy Olewiler Members: W. John Dawson, Sarah Goodman The Governance Committee assists the board in fulfilling its obligations relating to the effective governance of TransLink including corporate governance principles, size, composition and charters of the committees; annual board effectiveness evaluations and peer reviews and providing information to the Screening Panel to identify director candidates. Human Resources and Compensation Committee (at January 1, 2010) Chair: Howard Nemtin Members: Sarah Goodman, David Unruh The Human Resources and Compensation Committee has the mandate to assist the board with respect to all matters relating to human resources, including CEO evaluation and compensation, management development, succession planning, executive compensation and significant human resource polices. Major Capital Projects Committee (at January 1, 2010) Chair: James Bruce Members: Cindy Chan Piper, David Unruh The Major Capital Projects Committee assists the board in carrying out its oversight responsibilities with respect to the planning, development and construction of TransLink s major capital projects. Projects with a capital value in excess of $50 million or that involve an alternative to the traditional design/build procurement model are delegated to the committee for oversight. LOOKING AHEAD TransLink is continuing its journey towards an aligned, efficient and effective organization that optimizes the integration of the Metro Vancouver transportation network and is positioned to support future growth. The past five years of service expansion and the corporate focus on maintaining assets in good repair provided the critical underpinning to the 2010 Winter Olympic and Paralymic Games success. The Games demonstrated that a resilient and flexible transportation system can Move the World. TransLink reported record ridership across the system, particularly on SkyTrain, with 26 million riders on all transit modes during the Games. Averaging 1.58 million boardings per weekday, ridership was 31 per cent higher than normal. This proved that TransLink s Transport 2040 vision for Metro Vancouver s transportation system is achievable. The approval of TransLink s first Year Transportation and Financial Plan supplement has made available an additional $130 million in additional revenue. The revenue increases commence in 2010 and provide funding stability, significantly reducing the systemic deficit that has threatened the organization in the past. With its financial situation stabilized the organization is moving from its past expansion mode to one focused on improving efficiency and effectiveness. Various initiatives are underway to improve system productivity and ensure that the public and funding partners are getting best value for every dollar of revenue received and asset utilized. The initiatives include service rationalization, which will refine existing transit service to generate more ridership and revenue, and a repositioning of the roads program to bring increased strategic focus on improving goods movement. Throughout 2010 TransLink will continue emphasis on cost management and the delivery of core services. There is an organization-wide freeze on non-service related hiring, travel, training and other administrative expenditures will be limited and capital spending not essential to the delivery of core services will be deferred. Investment decisions will be framed by the priorities that guided the year plan process, with maintaining services and a state of good repair taking precedence over expansion. TransLink s newly appointed CEO is leading the implementation of the organizational restructuring and realignment process that commenced early in The change process will align the organization under one single mission and vision. The process will result in a common strategic platform across the TransLink family, with clearly articulated goals and common objectives.

29 Management Discussion & Analysis continued Consolidated Financial Statements To provide greater financing flexibility, TransLink has initiated a stand-alone commercial paper program. Effective March 2010, TransLink has a syndicated $500 million unsecured credit facility, which will be used to backstop a $500 million commercial paper program. Accessing the commercial paper markets will assist in preparing for TransLink to eventually borrow directly in the long-term debt market. In July 2010, it is anticipated that TransLink will assume responsibility from the Province for the collection and administration of the parking sales tax. This change was announced in the 2010/11 provincial budget and legislation is under development. While solidifying TransLink s role as a taxing authority, this new responsibility will require additional systems and staff resources. TransLink is committed to delivering existing service within the 2010 budget approved funding levels. However, there are a variety of budget risks that will require continued scrutiny and careful management. Fuel tax revenue is impacted by fuel prices as well as vehicle efficiency. The TransLink fuel tax increased by three cents per litre and the impact of that increase on fuel purchases is uncertain. Transit fares (excluding cash fares) increased by approximately 10 per cent on April 1, 2010, and the increase may reduce ridership to a greater degree than forecast. In addition, transit fare revenue has been tracking below budget and some fare products are showing year-over-year declines. A review is underway to obtain a better understanding of customer choice. The tripling of the parking sales tax rate as well as the addition of the goods and services tax/harmonized sales tax (HST) to that rate may reduce parking demand. Management s Responsibility for Consolidated Financial Statements 56 Auditors Report 57 Consolidated Statement of Financial Position 58 Consolidated Statement of Operations and Changes in Fund Balances 59 Consolidated Statement of Cash Flows Expenditure risks include labour costs, with two contracts expiring this year, fuel prices, and HST. The HST impact is assumed to be generally cost neutral, except for contracts to which provincial sales tax did not apply. The impact may be greater than assumed will be a year of change and challenge for TransLink. The end result will be a stronger organization that will be well positioned for being able to deliver a sustainable transportation system that the public and stakeholders can be proud of.

30 Management s Responsibility for 56 Consolidated Financial Statements Auditors Report 57 Scope of Responsibility Management prepares the accompanying financial statements and related information and is responsible for their integrity and objectivity. The statements are prepared in accordance with Canadian generally accepted accounting principles. These financial statements include amounts that are based on management s estimates and judgements. We believe that these statements present fairly the s financial position and results of operations and that the other information contained in the annual report is consistent with the financial statements. Internal Controls We maintain and rely on a system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded and transactions are properly authorized and recorded. The system includes written policies and procedures, an organizational structure that segregates duties and a comprehensive program of periodic audits by the internal auditors who independently review and evaluate these controls. We continually monitor these internal accounting controls, modifying and improving them as business conditions and operations change. We recognize the inherent limitations in all control systems and believe our systems provide an appropriate balance between costs and benefits desired while providing reasonable assurance that those errors or irregularities that would be material to the financial statements are prevented or detected in the normal course of business. Board of Directors and Audit Committee The Audit Committee, composed of members of the board of directors, oversees management s discharge of its financial reporting responsibilities. The committee recommends for approval to the board of directors, the appointment of the external auditors and fee arrangements. The committee meets regularly with management, our internal auditors and representatives of our external auditors to discuss auditing, financial reporting and internal control matters. The Audit Committee receives regular reports on the internal audit results and evaluation of internal control systems, and it reviews and approves major accounting policies, including alternatives and potential key management estimates or judgements. Both internal and external auditors have access to the Audit Committee without management s presence. The Audit Committee has reviewed these financial statements prior to recommending approval to the board of directors. The board of directors has reviewed and approved the financial statements. To the Members of the Board of the We have audited the consolidated statement of financial position of the South Coast British Columbia Transportation Authority (the Authority ) as at December 31, 2009 and the consolidated statements of operations and changes in fund balances and cash flows for the year then ended. These financial statements are the responsibility of the Authority s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Authority as at December 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants Vancouver, Canada March 5, 2010, except as to note 20 which is as of March 23, On behalf of the : Ian Jarvis Chief Executive Officer Cathy McLay Chief Financial Officer

31 58 Consolidated Statement of Financial Position Consolidated Statement of Operations and Changes in Fund Balances 59, with comparative figures for 2008 (in thousands of dollars), with comparative figures for 2008 (in thousands of dollars) Restricted Funds General Capital Total Total Fund AirCare Fund Assets Current assets: Cash $ 26,680 $ - $ 59,984 $ 86,664 $ 46,703 Short-term investments ,441 70, ,665 Accounts receivable 66, ,617 52,864 Supplies inventory 33, ,196 32,577 Prepaid expenses 8, ,431 5, , , , ,248 Interfund 709,476 (1,757) (707,719) - - Long-term investments (note 4) 22, ,789 67,155 Debt reserve deposits (note 5) ,631 40,631 40,686 Debt sinking funds (note 6) , , ,787 Capital assets (note 7) ,608,644 4,609,380 3,977,411 Liabilities and Fund Balances (Deficit) $ 866,978 $ (810) $ 4,445,787 $ 5,311,955 $ 4,711,287 Current liabilities: Accounts payable and accrued liabilities $ 249,462 $ 325 $ - $ 249,787 $ 159,160 Short term loan (note 8) 151, , , , ,160 Employee future benefits (note 9) 45, ,109 41,817 Deferred Concessionaire credits (note 10(a)) 707, , ,693 Golden Ears Bridge contractor liability (note 11(a)) , , ,195 Long-term debt (note 8) - - 1,896,152 1,896,152 1,822,677 Non-controlling interest in Transportation Property and Casualty Company Inc. 1, ,621 1,721 1,154, ,862,293 4,017,529 3,370,263 Fund balances (deficit): Invested in capital assets (note 14(a)) ,453,069 1,453,805 1,211,319 Externally restricted (note 14(b)) , , ,318 Unrestricted (deficit) (287,933) (1,871) - (289,804) (1,613) (287,933) (1,135) 1,583,494 1,294,426 1,341,024 $ 866,978 $ (810) $ 4,445,787 $ 5,311,955 $ 4,711,287 Restricted Funds General Capital Fund AirCare Fund Total Total Total Revenue: Taxation $ 575,753 $ - $ - $ - $ 575,753 $ 560,110 Transit 366, , ,911 Golden Ears Bridge tollings 11, ,293 - AirCare - 17,497-17,497 17,497 19,037 Capital contributions (note 12) , , , ,070 Operating contributions 7, ,496 - Amortization of deferred Concessionaire credit 9, ,053 - Interest income ,203 22,203 22,203 24, ,363 17, , ,722 1,181,085 1,180,543 Expenses: Transportation operations 732, , ,829 Maintenance on roads and bridges 43, ,615 37,472 Major road network capital , , ,749 64,710 AirCare - contracted services - 16,328-16,328 16,328 16,029 Administration 39,795 1,512-1,512 41,307 39,455 Transit Police 26, ,767 22,051 Other projects 8, ,765 15,206 Interest , , ,900 63,414 Amortization of capital assets , , ,344 88, ,606 18, , ,833 1,219,439 1,007,613 Excess (deficiency) of revenue over expenses before other items 118,757 (714) (156,397) (157,111) (38,354) 172,930 Other items: Fair value adjustment on financial instruments (4,100) Loss on disposal of capital assets - - (1,120) (1,120) (1,120) (1,232) Write-down of capital assets - - (4,113) (4,113) (4,113) - Non-controlling interest in loss (gain) of Transportation Property and Casualty Company Inc (48) Reorganization expense (3,111) (3,111) - (3,011) - (5,233) (5,233) (8,244) (5,380) Commitments and contingencies (note 15) Subsequent event (note 20) See accompanying notes to consolidated financial statements. Approved on behalf of the board: Excess (deficiency) of revenue over expenses 115,746 (714) (161,630) (162,344) (46,598) 167,550 Fund balance (deficit), beginning of year (109) (421) 1,341,554 1,341,133 1,341,024 1,173,474 Net transfer between funds (403,570) - 403, , Fund balance (deficit), end of year $ (287,933) $ (1,135) $ 1,583,494 $ 1,582,359 $1,294,426 $ 1,341,024 Dale PArker Chair BOB GArnett Director See accompanying notes to consolidated financial statements.

32 60 Consolidated Statement of Cash Flows 61, with comparative figures for 2008 (in thousands of dollars) Cash provided by (used for): Operations: Excess (deficiency) of revenue over expenses $ (46,598) $ 167,550 Items not involving cash (note 16) 145,826 94,701 1 Operations: The, formerly the Greater Vancouver Transportation Authority, (the Authority or TransLink ) was established in June 1998 as a regional public transportation authority under the Greater Vancouver Transportation Authority Act (the Act ) to provide for the planning, funding, management and operation of an integrated regional transportation system for the greater Vancouver region, effective April 1, Changes in non-cash working capital (note 16) 76,555 (5,189) Investing: 175, ,062 Decrease in short-term investments 57,224 44,689 Decrease in long-term investments 44, Decrease/(Increase) in debt reserve deposits 55 (3,091) Net proceeds from disposal of capital assets Purchase of capital assets (447,383) (434,187) Financing: (345,595) (392,046) Short-term loan proceeds 151,000 - Long-term debt - sinking fund bonds issued 165, ,000 Issue costs on bonds issued (2,045) (1,125) To achieve this, all transportation operations, assets and liabilities in the greater Vancouver region, formerly owned and operated by British Columbia Transit, except those specified in Section 38 (8)(a) of the Act (most notably the SkyTrain Expo Line guideway and West Coast Express infrastructures), together with the shares of British Columbia Rapid Transit Company Ltd. ( BCRTC ) and West Coast Express Limited ( WCE ), were transferred from the Province of British Columbia (the Province ) to the Authority. Also assumed by the Authority during 1999 was a 90% interest in Transportation Property and Casualty Company Inc. ( TPCC ), operations of the Albion Ferry, and administration of the AirCare program. The Authority also acquired a 100% interest in Canada Line Rapid Transit Inc. ( CLCO ) in The Act was renamed in November 2007 by the British Columbia provincial legislature to the South Coast British Columbia Transportation Authority Act and the name of the Authority was also changed at that time. The mandate of the Authority was reconfirmed with possible enlargement in the service region and additional funding sources. 2 Significant accounting policies: Repayments on long-term debt (91,763) (1,917) Contributions to debt sinking funds (13,019) (78,542) 209,773 68,416 Increase (decrease) in cash 39,961 (66,568) Cash, beginning of period 46, ,271 Cash, end of period $ 86,664 $ 46,703 (a) Basis of presentation: The consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles for not-for-profit organizations. The consolidated financial statements follow the restricted fund method for accounting for contributions and reflect a combination of the Authority s General and Restricted Funds. General Fund: Supplementary information: Interest paid $ 104,335 $ 91,629 Canada Line concessionaire non-cash capital contribution 177, ,080 Golden Ears Bridge contractor non-cash capital contribution 133, ,540 See accompanying notes to consolidated financial statements. This fund includes the operations of the Authority and its subsidiaries, excluding AirCare, which is a restricted fund. Restricted Funds: Restricted funds include the AirCare and Capital funds. (i) AirCare Fund: This fund is used to record the operations of the AirCare Program, which is a self-funded program (note 14(a)).

33 Significant accounting policies (continued): 2 Significant accounting policies (continued): (a) Basis of presentation (continued): (b) Financial instruments (continued): (ii) Capital Fund: All financial assets and liabilities are classified into one of the following five categories: held for trading, heldto-maturity, loans and receivables, available-for-sale financial assets or other financial liabilities. All financial instruments, including derivatives, are included on the balance sheet and initially measured at fair market value. This fund is used to record the acquisition costs of capital assets and any related long-term debt outstanding. This fund also includes the capital contributions received and payments to the municipalities for the Major Road Network ( MRN ). Subsequent measurement and recognition of changes in fair value of financial instruments depend on their initial classification. Held for trading financial investments are measured at fair value and all gains and losses are included in net income in the period in which they arise. Available-for-sale financial instruments are measured at fair value with revaluation gains and losses included in fund balance. Loans and receivables, held-to-maturity financial investment and other financial liabilities are measured at amortized cost using the effective interest rate method. The consolidated financial statements include the accounts of the Authority and its active subsidiaries as follows: (i) Coast Mountain Bus Company Ltd. ( CMBC ) - bus, seabus and community shuttle services; (ii) BCRTC - SkyTrain service; (iii) WCE - commuter rail system services; (iv) Fraser River Marine Transportation Ltd. ( FRMT ) - ferry services between Maple Ridge and Langley (Albion Ferry), which ceased operations as of July 31, 2009 after the opening of the Golden Ears Bridge on June 16, 2009; Derivative instruments are required to be recorded as either assets or liabilities measured at their fair value unless exempted from derivative treatment as normal purchase and sale. Certain derivatives embedded in other contracts must also be measured at fair value. All changes in the fair value of derivatives are recognized as earnings unless specific hedge criteria are met, which require that an entity must formally document, designate and assess the effectiveness of a transaction that received hedge accounting. (v) Pacific Vehicle Testing Technologies Ltd. ( PVTT ) - administration of AirCare program; (vi) CLCO - oversaw the study, design, construction and implementation of a rapid transit line (the Canada Line ) from Richmond to the Vancouver International Airport and downtown Vancouver up to the point of substantial completion of construction, after which Translink assumed the responsibility for all assets, liabilities, and operations; and The categories of the Authority s financial assets and liabilities are as follows: Financial Assets (i) Held for trading: (vii) TPCC a captive insurance company which provides insurance liability coverage. Cash: All subsidiaries are wholly owned except for TPCC, in which the Authority has a 90% interest and the remaining 10% interest is owned by British Columbia ( BC ) Transit. Effective April 1, 2010, the operation of TPCC will change from a sophisticated captive insurance company to a pure captive insurance company as a result of BC Transit withdrawing its 10% shareholder participation. Cash is classified as held for trading. All intercompany balances and transactions have been eliminated upon consolidation. Short-term investments: Short-term investments are fixed income investments with a term to maturity of three months or less from the date of purchase and are designated held for trading. All the gains and losses are included in net income in the period in which they arise. (b) Financial instruments: Asset-Backed Commercial Paper: The Authority accounts for its financial assets and liabilities in accordance with the Canadian Institute of Chartered Accountants (CICA) Handbook Section 3855, Financial Instruments Recognition and Measurement, CICA Handbook Section 3861, Financial Instruments Disclosure and Presentation, and CICA Handbook Section 3865, Hedges. These Handbook Sections provide comprehensive requirements for the recognition and measurement of financial instruments, as well as standards on when and how hedge accounting may be applied. At December 31, 2008 long-term investments included non-bank sponsored Asset-Backed Commercial Paper ( ABCP ) or replacement notes (note 4) that were designated as held for trading and recorded at their estimated fair values. All of these were disposed of in the current year, as disclosed in note 4. (ii) Held-to-maturity: Debt reserve deposits and debt sinking fund: The Authority classifies debt reserve deposits (note 5) and debt sinking funds (note 6) as held-to-maturity recorded at their amortized costs as these assets are due when the related debt matures.

34 Significant accounting policies (continued): 2 Significant accounting policies (continued): (b) Financial instruments (continued): (c) Supplies inventory: Financial Assets (continued) Supplies inventory is valued at the lower of average cost and net realizable value. Cost includes purchase price, (ii) Held-to-maturity: (continued) Long-term investments: Long-term investments include bonds classified as held-to-maturity financial assets and recorded at amortized cost, with any premium or discount on purchase being amortized over the term to maturity of import duties, other net taxes, and transport, handling and other costs directly attributable to acquisition. Net realizable value is the estimated current replacement cost. (d) Capital assets: Capital assets have been recorded as follows: each investment using an effective yield method. Declines in value of investments are recognized only (i) Capital assets are recorded at cost, including capitalized interest as described in note 2(e). The cost includes when the decline is considered to be other than temporary. the purchase price and other acquisition costs such as installation costs, design and engineering fees, legal (iii) Loans and receivables: fees, survey costs, site preparation costs, freight charges, transportation, insurance costs and duties. Accounts receivable: Accounts receivable and accrued interest receivable are recorded at amortized cost less any impairment losses provided for. Financial Liabilities (iv) Held for trading: (ii) Capital assets, contributed by the Province and BC Transit to the Authority upon inception, were recorded at fair value at the date of contribution. (iii) Major spare parts and standby equipment qualify as capital assets when they are expected to be used for a period exceeding one year. (iv) Amortization is provided on the cost less estimated salvage value on a straight-line basis over a period not exceeding the estimated useful lives as follows: The Authority does not currently hold any financial liabilities classified as held for trading. (v) Other financial liabilities: Asset Years Long-term debt: The Authority records long-term debt at its amortized cost. Debt transaction costs, financing costs and bond premium discounts are attributed to the debt incurred and amortized using the effective interest rate method over the term of the underlying debt. Accounts payable and accrued liabilities: Accounts payable and accrued liabilities are recorded at amortized cost. (vi) Derivative financial instruments: During the year ended December 31, 2008, the Authority was a party to forward foreign exchange contracts (used to manage foreign currency exposures on imported purchases). Gains and losses including fair value adjustments on forward foreign exchange contracts were recognized in income. The Authority does not utilize derivative financial instruments for trading or speculative purposes. There were no outstanding foreign exchange contracts at December 31, Land improvements 30 Buildings Bridges, guideways, tunnels and other supporting structures Vehicles and SeaBus 5 40 Equipment 3 40 Capital spares 20 (e) Capitalization of interest: Interest incurred in connection with construction projects and major capital acquisitions is capitalized from the commencement of the capital outlays until the assets are placed into service. (f) Major Road Network ( MRN ) and Handover Facilities: Part 2 of the Act provides that the Authority must establish a major road network comprising an integrated system of highways throughout the transportation service region and the Authority must contribute funds to the municipality for the purpose of constructing and maintaining any part of the MRN within that municipality.

35 Significant accounting policies (continued): 2 Significant accounting policies (continued): (f) Major Road Network ( MRN ) and Handover Facilities (continued): (i) Revenue recognition: The related assets created become the property of the appropriate municipalities who assume all the rights and obligations. As such, the funding provided by the Authority to the municipalities is expensed in the statement of operations as incurred. In conjunction with the Golden Ears Bridge ( GEB ) project, the Authority planned, designed, arranged financing and constructed the GEB s network of highways and related support facilities ( Handover Facilities ) under separate agreements with various municipalities and the Province. Upon substantial completion of the bridge, construction costs related to the Handover Facilities were transferred to the Municipalities and the Province. The associated costs of the Handover Facilities were expensed and included as part of the Major Road Network Capital. (g) Pension plans and employee future benefits: The Authority, its subsidiaries and employees make contributions to either the Public Service Pension Plan or other defined contribution pension plans. These contributions are expensed as incurred. Post-retirement and post-employment benefits are also available to the majority of the Authority s employees. The cost of post-retirement benefits is actuarially determined, prorated on service and management s best estimate of retirement ages and expected health care costs. The cost of post-employment benefits to disabled employees is actuarially determined based on future projected benefits of currently disabled employees. The obligations under these post-retirement and post-employment benefit plans are accrued as the employees render services necessary to earn the future benefits. The measurement date of the accrued benefit obligation coincides with the Authority s fiscal year. The most recent actuarial valuation of the plans for funding purposes was December 31, The plans are unfunded and require no contributions from employees. Employer contributions are made based upon expected annual benefit payments. Actuarial gains (losses) on the accrued benefit obligation arise from differences between actual and expected experience and from changes in the actuarial assumptions used to determine the accrued benefit obligation. The net accumulated actuarial gains (losses) over 10% of the accrued benefit obligation is calculated using the comparative figures and is amortized over the average remaining service period of active employees in the statement of operations. The average remaining service period of the active employees covered by the postretirement plan is 9 years ( years) and post-employment plan is 5 years ( years). (h) Deferred Concessionaire credits: Deferred Concessionaire credits represent the funding provided by the Canada Line Concessionaire towards the design and construction phases of the Canada Line. This amount is amortized to income over the operating term of the concessionaire agreement which commenced in August 2009 and will expire in July The Authority follows the restricted fund method of accounting for contributions. Contributions from third parties for defined purposes are recognized as revenue in the year they are received or receivable in the applicable restricted fund. Specifically, contributions restricted for the purchase of capital assets are recognized as revenue in the year they are received or receivable in the Capital fund. User fees received for AirCare are restricted for the recovery of program costs and therefore they are recognized in revenue in the restricted AirCare fund. Unrestricted contributions are recognized as revenue in the general fund when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. (j) Income taxes: The Authority is classified as a not for profit organization and is exempt from Canadian Federal and British Columbia Provincial income taxes. The Authority s subsidiaries are filing on the basis that they are exempt from Canadian Federal and British Columbia Provincial income taxes. (k) Foreign currency translation: Transactions of the Authority and its subsidiaries originating in foreign currencies are translated at the rates in effect at the time of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to Canadian dollars at exchange rates in effect at the balance sheet dates. Foreign exchange gains and losses are included in income. (l) Use of estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of estimates include determination of useful lives of capital assets, percentage of completion of construction in progress, allowance for doubtful accounts receivable, obsolete inventory, determination of employee future benefits, estimated self insurance liabilities, provisions for legal contingencies, and fair values of financial instruments. Actual results could differ from those estimates. (m) Future accounting changes: (i) Changes in accounting framework: The Authority is currently classified as a not-for-profit organization ( NPOs ) under the Act. The CICA Accounting Standards Board ( AcSB ) is proposing to carryforward existing accounting standards for NPOs into its new Accounting Handbook. The AcSB reconfirmed that existing standards for NPOs will remain in effect for the time being until a mandatory effective date for adopting the new standards is established.

36 Significant accounting policies (continued): 3 Adoption of new accounting policies (continued): (m) Future accounting changes (continued): (c) Other revisions to NPO accounting standards: (i) Changes in accounting framework (continued): The CICA Public Sector Accounting Board ( PSAB ) is also establishing NPOs concurrently with the AcSB. The Authority intends to continue applying the existing NPOs standards and is awaiting the finalization of the new NPOs standards. Once the new standards are finalized, the Authority will determine the impact and which framework to adopt. It is not anticipated that International Financial Reporting Standards will be adopted by the Authority. There are several other changes effective for periods beginning on or after January 1, 2009, which clarify the applicability of Accounting Guidelines ( AcGs ) and Abstracts of Issues Discussed by the Emerging Issues Committee ( EICs ) to NPOs, remove the requirement to disclose net assets invested in capital assets, clarify capital asset recognition criteria and amortization, expand interim financial statement requirements to NPOs, and require disclosure of allocated fundraising and general support expenses by NPOs. These changes did not have a significant impact on the Authority s financial statements. (ii) Financial instruments presentation and disclosure: CICA Section 3862 Financial Instruments Disclosure and CICA Section 3863 Financial Instruments Presentation were issued in December 2006 to improve the disclosures of risks and improve the standards regarding presentation and classification of financial instruments and are currently not required for NPOs. Accordingly, the Authority has not yet adopted the Sections 3862 or 3863 and has elected to continue to apply the existing financial instruments presentation and disclosures in accordance with Section 3861, Financial Instruments Disclosure and Presentation. 3 Adoption of new accounting policies: The Authority has adopted the following new accounting standards in these financial statements: (a) Capital disclosures: Effective January 1, 2009, the Authority adopted Handbook Section 1535, Capital Disclosures. Under this new standard, the Authority is required to disclose both qualitative and quantitative information that enables users of the financial statements to evaluate the Authority s objectives, policies, and processes for managing capital. It also includes disclosure regarding what the Authority regards as capital, whether the Authority has complied with any external requirements and in the event of non-compliance, the consequences of not complying with these capital requirements (note 18). (b) Goodwill and intangible assets, Section 3064: Effective January 1, 2009, the Authority adopted Handbook Section 3064, Goodwill and Intangible Assets, which replaced existing Handbook Section 3062, Goodwill and Other Intangible Assets, and Handbook Section 3450, Research and Development. The new standard provides guidance on the recognition, measurement, presentation and disclosure of goodwill and intangible assets. The implementation of this standard did not have an impact on the financial statements. 4 Long-term investments: Bonds and term notes $ 22,789 $ 21,955 Asset Backed Commercial Paper & Replacement Notes - 45,200 $ 22,789 $ 67,155 (a) Long term bonds: The long term bonds are designated as held to maturity and recorded at amortized cost. The fair value of the bonds and notes totals $23,316,924 ( $22,609,592). (b) Asset-Backed Commercial Paper & Replacement Notes: The Asset-Backed Commercial Paper was designated as held for trading and recorded at their fair value. During the year, the Authority received repayment of $45,200,000 of the replacement notes received in exchange for its Asset-Backed Commercial Paper, previously held. 5 Debt reserve deposits: The Authority is required to pay the Municipal Finance Authority of British Columbia ( MFA ) debt reserve deposits into a debt reserve fund of 1% (2% prior to 2007) of the face value of each debenture borrowing from the MFA. These are interest bearing restricted funds administered by the MFA and are only refundable once the respective debt issue has been fully repaid. If at any time the MFA does not receive sufficient funds to meet interest and principal payments or sinking fund contributions due on the Authority s debt obligations, the interest and principal payments or sinking fund contributions will be deducted from this debt reserve fund. As the debt reserve deposits are not expected to be refunded until the debt fully matures, the balance of $40,631,000 ( $40,686,000) has been presented as a long-term asset.

37 Debt reserve deposits (continued): 8 Short term loan and long-term debt: In addition to the debt reserve deposit, the Authority is required by the MFA to issue a non-interest bearing demand (a) Short term loan: note for an amount equal to one-half the average annual installment of principal and interest relative to any debt borrowed less the debt reserve deposit. The demand notes payable to the MFA are callable only if, in the event of a default by the Authority or Metro Vancouver (the interposed significant lender over the Authority s long term debt), there are insufficient funds in the Authority s debt reserve deposits held at the MFA to meet a required interest and principal payment or sinking fund contributions. As the Authority is in full compliance with its debt payments and no such call has been made by the MFA against these demand notes, their face value have not been recorded on the balance sheet. At year end, these demand notes totaled $56,010,020 (2008- $53,205,895). (i) At December 31, 2009 the Authority had drawn $150,000,000 under a $250,000,000 line of credit with the MFA, secured by a demand promissory note and a registered security interest over property tax receipts. This line of credit is subject to floating interest rates of approximately prime less 1.25% per annum. (ii) BC Transit, a shareholder, advanced $1,000,000 to TPCC in exchange for a promissory note. The advance was made by BC Transit to increase their relative insurance pool in accordance with the shareholder agreement requirements. The note bears interest equal to the net investment income earned on investment of such funds. The note matures on December 31, 2012, but prepayment may be accelerated without bonus or penalty. 6 Debt sinking funds: (b) Long-term debt: The debt sinking funds are administered by the MFA and are restricted for the ultimate settlement of the Authority s sinking fund debenture liability. Annual contributions are made to the sinking fund based on amortization schedules for each debenture. In addition to the annual contributions, interest earned on the debt sinking fund is estimated based on the MFA s future interest rate projections Unsecured sinking fund bonds, weighted average coupon rate of 4.83% (effective rate 4.95%), maturing at various dates from 2010 to 2036, 10 to 30 year term $ 1,669,975 $ 1,680,236 7 Capital assets: Secured sinking fund bond, coupon rate of 4.90% (effective rate 5.00%), maturing in 2019, 20 year term 148,926 - Accumulated Cost amortization Net Net Land $ 205,413 $ - $ 205,413 $ 133,210 Land improvements 41,741 10,628 31,113 24,616 Buildings 160,966 59, , ,038 Bridges, guideways, tunnels and other supporting structures 2,922,398 19,704 2,902,694 2,603,256 Vehicles and SeaBus 1,340, , , ,085 Equipment 422, , , ,926 Unsecured serial debenture, coupon rate of 5.10% (effective rate 5.19%), maturing in 2025, principal repayment annually, 20 year term 38,993 40,935 Unsecured sinking fund bonds, under interest rate and currency conversion agreements, effective weighted average coupon rate of 5.74% (effective rate 5.76%), maturing in 2010, 20 year term 38, ,506 $ 1,896,152 $ 1,822,677 Sinking fund and serial debt payments, due in each of the next five years and thereafter, are approximately as follows: Capital spares 7,520 1,442 6,078 5,699 Capital projects in progress 184, , ,581 $ 5,285,763 $ 676,383 $ 4,609,380 $ 3,977,411 Sinking Fund Serial Debt 2010 $ 75,202 $ 2, ,202 2, ,202 2,120 Interest capitalized during the year ended December 31, 2009 amounted to $22,391,000 (2008- $28,585,000) ,816 2, ,128 2,230 Thereafter 1,488,609 28,386 Three transit properties have been mortgaged as security for the repayment on the above noted secured sinking fund bond.

38 pension plans and employee future benefits 9 pension plans and employee future benefits (continued): (a) Pension plans: (b) Post retirement benefit plans and post employment plans (continued): The Authority, CMBC, PVTT and FRMT and their employees contribute to the Public Service Pension Plan (the Plan ), which is a multi-employer defined benefit plan, together with other British Columbia public service employers, in accordance with the Public Sector Pension Plans Act. The British Columbia Pension Corporation administers the Plan, including the payment of pension benefits and other post-retirement benefits, on behalf of the employers and the employees to whom the Act applies. Details of the Plan are provided in the Public Accounts of British Columbia. The long-term funding of the Plan is based on the level contribution method. Using this method, employer contribution rates are set out so that, in combination with member contributions, they will fully pay for benefits earned by the typical new entrants to the Plan and will maintain the Plan s unfunded accrual liability (UAL) for funding purposes, if any, as a constant percentage of employer payroll. The actuary does not attribute portions of the UAL to individual employers. Contributions to the Plan are expensed in the year when payments are made. The total expense recorded in the financial statements in respect of pension contributions amounts to $31,018,000 ( $27,283,000). (iii) Summary of the Authority s post-retirement and post-employment plans is as follows: Post-retirement Post-employment benefits benefits Accrued benefit obligation $ 28,796 $ 10,394 $ 39,190 $ 33,281 Unamortized amounts 1,312 4,607 5,919 8,536 Accrued benefit liability $ 30,108 $ 15,001 $ 45,109 $ 41,817 The accrued benefit liability is not presently funded. (iv) The significant assumptions used are as follows: Every three years, an actuarial valuation is performed to assess the financial position of the Plan and the adequacy of plan funding. The latest full actuarial valuation, which was carried out as at March 31, 2008, resulted in a surplus of $487,000,000. Accrued benefit obligation as of December 31: Discount rate 5.5% - 7.0% 5.4% - 5.5% Benefit costs for years ended December 31: Discount rate 6.8% - 7.3% 6.8% - 7.3% The employees of WCE and BCRTC are members of defined contribution plans administered by Great West Life, Sun Life and Canada Life. The total expense recorded in the financial statements, in respect of pension contributions under these plans, amounts to $3,964,000 ( $3,524,000). Assumed health care cost trend rates at December 31: Increase in health care cost trend rate 3.0% % 3.0% % (b) Post-retirement benefit plans and post-employment plans: Employee future benefit costs recognized in the year: Post-retirement and post-employment benefits $ 5,446 $ 6,070 (i) Apart from the post-retirement benefits provided by the Plan, the Authority and CMBC continue to provide life insurance benefits to all retired employees. BCRTC also sponsors a post-retirement plan which provides continuing healthcare benefits to retired employees. The total expense recorded in the financial statements, in respect of obligations under these plans, amounts to $2,952,000 ( $3,675,000). Other information regarding the Authority s post-retirement and post-employment plan is as follows: (ii) The Authority and its subsidiaries also provide Provincial health care, extended health, dental care and life insurance benefits to employees on long-term disability from the date they become disabled (postemployment benefits). The total expense recorded in the financial statements for the year, in respect of obligations under these plans, amounts to $2,494,000 ( $2,395,000). Employer contributions $ 2,154 $ 2,014

39 Canada Line: 11 Golden Ears Bridge: (a) Deferred Concessionaire credit: (a) Golden Ears Bridge ( GEB ) Contractor Liability: Opening balance $ 539,693 $ 264,613 Add: deferred Concessionaire capital contributions 177, ,080 Less: amortization (9,054) - $ 707,719 $ 539, Opening balance $ 805,195 $ 538,655 Add: GEB contractor capital contributions 133, ,540 Interest accretion on contractor liability 27,676 - Ending balance $ 966,141 $ 805,195 (b) Operating commitments: The Canada Line project is a rail based rapid transit line that links central Richmond, the Vancouver International Airport and downtown Vancouver. TransLink assumed the responsibility from CLCO to oversee the contract with the concessionaire (InTransit BC) over the operating period from August 2009 to July Base operational and maintenance payments to the Canada Line Concessionaire which are subject to adjustments for operational metrics and inflation adjustments are as follows: Each 28 Day Period August 2009 to July 2034 $ 6,409 August ,236 September 2034 to July ,064 The total estimated base operating and maintenance payments to the Concessionaire for each of the next 5 years adjusted for certain operational metrics and inflation excluding taxes are as follows: 2010 $ 82, , , , ,000 The Province of BC has committed to provide funding of $1,478,000 at each 28 day period for 395 periods related to the Canada Line operating expenses, which is approximately $19.3 million per annum. In 2006, the Authority entered in a fixed-price contract with the Golden Crossing General Partnership (the GCGP ) to design, construct, finance, operate, maintain and rehabilitate the GEB. The contract was executed in March 2006 and terminates in June The GCGP was responsible for financing the estimated construction cost of the GEB of $888,000,000. In addition, the GCGP has advanced $50,000,000 to the Authority, which is included in the GEB contractor liability on the statement of financial position. Capital and interest payments to the GCGP commenced on substantial completion of the project. The nominal monthly blended capital and interest payments, which will escalate based on a CPI index, are as follows: Monthly January 2010 to June 2010 $ 1,500 July 2010 to June ,000 July 2011 to June ,000 July 2014 to June ,792 The obligation to the GCGP bears interest at an effective rate of 6.70% per annum. The effective interest rate is the sum of the implicit interest rate, which establishes the net present value of the payment stream of the cost of the bridge, plus the forecast CPI index with expected annual inflation rate of 2%. Capital and interest 2010 $ 29, , , , ,918

40 Golden Ears Bridge (continued): 11 Golden Ears Bridge (continued): (b) Operating agreement with GCGP: (d) Municipal and Provincial Handover Facilities (continued): The Authority will also pay the GCGP a monthly Operating, Maintenance, Rehabilitation ( OMR ) fee of and highways, access facilities, utility infrastructure and related support facilities, ramps and traffic signals to $316,198, which will also escalate based on a CPI index. improve access along and across the Fraser River. The Handover Facilities were transferred to the Municipalities Based on the 2% inflation rate per annum, OMR payments to GCGP in next five years are expected to be as follows: 2010 $ 4, , ,278 OMR and the Province upon substantial completion of the GEB project. The Municipalities and the Province assumed ownership and the risks associated with the Handover Facilities and will operate, maintain and rehabilitate the Handover Facilities thereafter. As at December 31, 2009, $100,998,000 was expensed as a result of Handover Facilities that were transferred to the Municipalities and the Province. Construction of a remaining $3,000,000 in Handover Facilities will be expensed in 2010 upon completion and transfer of title , , Capital contributions: (c) Agreement with V-Flow Tolling Inc. ( V-Flow ): Capital contributions received during the year: In 2007, the Authority entered in a contract with V-Flow to design, furnish, install, test, operate and maintain a toll system for the GEB on behalf of the Authority. Tolling operations commenced July The contract Transfer from the Government: expires in 2014, with the Authority having the option to extend the term of the contract for up to an Government of Canada additional three years. Gas Tax Agreement Funds $ 124,296 $ 62,148 Payments to V-Flow are effected on substantial system acceptance and consist of fixed and variable components and are adjusted monthly based on a CPI index. The fixed component of the payments is as Transit-Secure Funds 7,658 4,510 Urban Transportation Showcase Program 1,657 5,213 follows: 133,611 71,871 Monthly July 2009 to June 2010 $ 2,261 July 2010 to June ,328 July 2011 to June ,660 July 2012 to June ,598 July 2013 to June ,664 Provincial Government of British Columbia Provincial Transit Plan - 51,800 Canada Line project: Government of Canada 23,336 24,734 Provincial Government of British Columbia 13,050 59,600 City of Vancouver 1,000 7,065 City of Richmond - 2,000 (d) Municipal and Provincial Handover Facilities: 37,386 93,399 Under separate agreements between the Authority and the Township of Langley, the District of Maple Ridge, the District of Pitt Meadows, the City of Surrey, the Greater Vancouver Regional District, the Greater Vancouver Sewerage and Drainage District, the Greater Vancouver Water District (the Municipalities ) and the Province, Others 25 - $ 171,022 $ 217,070 the Authority planned, designed, financed and constructed the GEB, together with a new network of highways which brought the improvement, upgrading, relocation and widening of existing provincial and municipal roads

41 Capital contributions (continued): 14 Fund balances - restricted funds: Contributions from the Vancouver International Airport Authority ( VIAA ) totaling $15,945,000 ( $48,002,000) were netted against the related project costs of the Canada Line as VIAA ultimately retains ownership to the related capital outlay. (a) Invested in capital assets: Capital fund: Gas Tax Agreement: Gas Tax Agreement funding is provided by the Government of Canada. The use of the funding is established by a funding agreement between the Authority and the Union of British Columbia Municipalities. Funding may be used towards designated public transit projects in accordance with the agreement. Receipts and disbursements for the year are as follows: Gas Tax Agreement Funds Opening balance, unspent funds $ 59,468 $ 34,022 Add: Amount received during the year 124,296 62,148 Interest earned 581 1,103 Less: Amount spent on projects (55,923) (37,693) Amount spent on administration (305) (112) Closing balance, unspent funds $ 128,117 $ 59,468 Balance, beginning of year $ 1,210,236 $ 932,331 Net additions to capital assets (includes non-cash items) 757, ,507 Amortization of capital assets (119,973) (88,108) Amortization of capital asset charged to capital projects in progress (44) (142) Amortization of deferred Concessionaire credit 9,053 - Write-down of capital assets (4,113) - Loss on disposal of capital assets (1,120) (1,232) Net proceeds from disposal of capital assets (143) (443) Amount funded by long-term debt (73,475) (147,690) Amount funded by deferred Concessionaire credits (177,080) (275,080) Amount funded by Golden Ears Bridge contractor liability (160,946) (266,540) Decrease in debt reserve deposits (55) 3,091 Increase in debt sinking funds 13,019 78, , ,905 Balance, end of year $ 1,453,069 $ 1,210,236

42 Fund balances - restricted funds (continued): 15 Commitments and contingencies: (a) Invested in capital assets (continued): (a) Operating lease payments WCE: AirCare: The Authority has an operating lease agreement with Pitney Bowes of Canada Ltd. for WCE vehicles which Balance, beginning of year $ 1,083 $ 1,122 expires March In connection with operating the Commuter Rail System, WCE also has entered into operating commitments for train operations, rolling stock maintenance, land leases, ticket vending and parking management and miscellaneous services. Purchase of capital assets The following summarizes the WCE operating commitments: Amortization of capital assets (371) (339) (347) (39) WCE Other vehicles leases Total Balance, end of year $ 736 $ 1, $ 9,193 $ 12,261 $ 21, ,136 8,861 18,997 (b) Externally restricted: Capital fund: ,175 5,838 17, ,320 5,680 18, and thereafter 31,677 10,579 42, Balance, beginning of year $ 131,318 $ 106,555 (b) Vehicle emission testing contract - PVTT: PVTT has entered into a contract with Envirotest Canada Ltd. to provide vehicle emission testing services until Contributions received 171, ,070 December The minimum annual fee for each of the contract year is as follows: Expenditures of restricted funds (171,915) (192,307) (893) 24, $ 16, ,015 Balance, end of year $ 130,425 $ 131,318 (c) Diesel fuel purchase: The majority of the restricted funds are associated with the Gas Tax agreement as disclosed in note 13. AirCare: During 2009, the Authority entered into multiple fixed price futures agreements with the objective of achieving budget stability of 75% of expected diesel purchase volumes for January to November 2010 and 50% for December 2010 as at year end. The approximate payments relating to the fixed price futures agreements for the AirCare is a self-funded program under Section 50 of the Motor Vehicle Act. Any deficits incurred will be contracted purchase volumes are as follows: covered through future operations, such that any deficits are eliminated by the end of the program $ 28,437

43 Commitments and contingencies (continued): (g) Lawsuits and claims (continued): (d) Natural gas supply contract: A class action lawsuit has been filed by Cambie area merchants, but no specific amount has been claimed at The Authority entered into a floating price contract for a five year period beginning November 1, Subsequently, the Authority entered into three fixed price agreements for various terms and minimum purchase volumes, which are equal to approximately 70% of the Authority s expected volumes. The approximate payment relating to the minimum purchase volume for the remaining term of these contracts is as follows: 2010 $ 1,364 this time. The Authority does not believe that a reasonable estimate of any potential loss can be estimated at this time and therefore no provisions have been made in the financial statements. A lawsuit has been filed by a number of Cambie area merchants, but no specific amount has been claimed at this time. The Authority does not believe that a reasonable estimate of any potential loss can be estimated at this time and therefore no provisions have been made in the financial statements. Management will continue to monitor and assess these potential claims. Once a reasonable estimate of the (e) Major Road Network ( MRN ) Capital Funding: potential liability, if any, is determined, a provision will be recognized. The Authority has signed several funding agreements with municipalities on major MRN projects. At December 31, 2009, the net amount of MRN capital funding committed is $79,000,000 ( $135,505,000). This amount will be paid to the municipalities upon completion of their projects. (h) Other capital commitments: At December 31, 2009, $107,113,000 has been contractually committed for other capital projects in progress ( $379,460,000). (f) Other operating leases: The Authority is committed to annual lease payments in respect of office premises and computer equipment in the following amounts: 16 Statement of cash flows: 2010 $ 12, , , , ,597 Items not involving cash: Amortization of capital assets $ 120,344 $ 88,447 Amortization of capital assets charged to capital projects in progress Amortization of bond discount 1, (g) Lawsuits and claims: Amortization of Deferred Concessionaire credits (9,053) - As at December 31, 2009, a number of lawsuits and claims, arising in the ordinary course of business, have been initiated against the Authority. Management is of the opinion that, except as noted below, the outcome of any lawsuits and claims against the Authority are not likely to be material, and therefore sufficient provisions have been made in the financial statements for any liability related to such lawsuits and claims. Three lawsuits were commenced against TransLink and/or its subsidiary CLCO in relation to the Canada Line project. Interest accretion on contractor liability 27,676 - Writedown of capital asset 4,113 - Loss on disposal of capital assets 1,120 1,232 Non-controlling interest in income/(loss) of TPCC (100) 48 Fair value adjustment on financial instruments - 4,100 Changes in non-cash working capital: $ 145,826 $ 94,701 A lawsuit was resolved in favour of the plaintiff, a Cambie Street merchant, and is currently under appeal. (Increase) / decrease in accounts receivable $ (13,753) $ 3,927 The settlement award was recognized in the current year. Increase in supplies inventory (619) (3,962) Increase in prepaid expenses (2,992) (113) Increase / (decrease) in accounts payable and accrued liabilities 90,627 (9,097) Employee future benefit payable 3,292 4,056 $ 76,555 $ (5,189)

44 Financial instruments: 18 Capital management (continued): (a) Credit, interest and foreign exchange risk: The Authority utilizes various financial instruments. Unless otherwise noted, it is management s opinion that the Authority is not exposed to any significant credit or interest rate risk as a result of these financial instruments. The Authority s capital is calculated as follows: Interest rates have been fixed for all long-term debt. The Authority s operations are all based in Canada and Short-term loan $ 151,000 $ - exposure to foreign exchange fluctuations is not significant. Long-term debt (includes current portion, net of financing costs) 1,896,152 1,822,677 (b) Fair values: The fair value of debt reserve deposits, debt sinking funds and long-term debt at December 31, 2009 is $40,430,000, $371,956,000, and $1,986,351,000 ( $40,755,000, $361,400,000 and $1,869,099,000), respectively. Fund balances * 1,294,426 1,341,024 Less: Cash * (86,664) (46,703) Short-term investments * (70,441) (127,665) Debt reserve deposits (40,631) (40,686) For all other classes of financial instruments shown in these financial statements, management considers that Debt sinking funds (373,806) (360,787) the carrying amounts approximate fair values due to the immediate or short-term maturity of these financial instruments. $ 2,770,036 $ 2,587,860 * These balances include a restricted portion. 18 Capital management: The Authority s principal business of providing public transit and joint responsibility of the MRN requires ongoing access to capital in order to fund operations, satisfy outstanding long-term debt obligations and fulfill future capital asset acquisition obligations. In order to ensure capital market access is maintained, the Authority targets to maintain strong investment grade credit ratings. The Authority defines capital as short-term borrowings, long-term debt (including current portion) and fund balances, net of cash, short-term investments, debt reserve funds and debt sinking funds. The GEB contractor liability is not considered to be capital as management has little, if any, influence over this debt and monthly repayments are supported by toll revenues which also provides a natural hedge as both repayments and toll rates are indexed to CPI. The Authority s objectives when managing capital are to enable its businesses to operate at the highest efficiency and to provide liquidity to meet operational and capital commitments. The need for sufficient liquid resources is considered in the preparation of an annual budget, 10-year base plan and supplemental plans and in the monitoring of cash flows and actual results. Capital is generally available through a variety of short term and long term sources. Under the SCBCTA Act, the Authority is restricted from incurring debt obligations that exceed the Authority s debt obligation cap of $2,800,000,000. The debt obligations are calculated as the sum of current borrowings of the Authority secured by debentures, bonds, other forms of indentures, capital leases, short-term notes, lines of credits and bank overdrafts, excluding any financing costs. Any future increases in this cap need to be approved by the Mayors Council on Regional Transportation (after consultation with the Greater Vancouver Regional District) through a supplementary financial plan. As at December 31, 2009 the Authority s outstanding debt obligation was $2,057,287,162 (short term and long term debt excluding financing fees).

45 86 TransLink Board Comparative figures: Certain of the comparative figures have been reclassified to conform with current year s financial statement presentation. Dale Parker Board Chair Appointed: January 1, 2008 Term Expires: December 31, Subsequent event: Effective March 23, 2010 the Authority entered into a $500 million unsecured credit agreement with a syndicate of Canadian banks led by the Toronto-Dominion Bank. This credit agreement has a term of three years with an annual extension option. The credit agreement provides for a number of borrowing options including a revolving line of credit, a swing line of up to $50 million, bankers acceptances, London Interbank Offered Rate loans and letters of credit. Interest rates are generally floating but can be fixed for terms up to 365 days. Mr. Parker, a former bank executive, is a graduate of the Advanced Management Program of the Graduate School of Business Administration, Harvard University. He has been self-employed as a corporate director since James Bruce Appointed: January 1, 2008 (reappointed January 1, 2010) Term Expires: December 31, 2012 Mr. Bruce is a partner of Capital West Partners, an independent investment banking firm. He holds both a Bachelor of Science degree (Mechanical Engineering) and a Masters of Business Administration degree from the University of Manitoba. He is also a certified management accountant. chartered business valuator and professional engineer (retired). Cindy Chan Piper Appointed: January 1, 2008 (reappointed January 1, 2009) Term Expires: December 31, 2011 Ms. Chan Piper is the principal of Piper Designs Inc., a consulting firm that provides planning and design services to public and private sector clients. She holds both a Bachelor of Arts and Bachelor of Architecture degrees from the University of British Columbia.

46 88 TransLink Board continued TransLink Board continued 89 W. John Dawson Appointed: January 1, 2010 Term Expires: December 31, 2012 Mr. W John Dawson is a professional accountant and was a partner with an international accounting firm for 29 years until his retirement from public practice. He served as President of the BC Institute of Chartered Accountants from 1998 to Mr. Dawson has a Bachelor of Commerce (Accounting) degree from the University of British Columbia Howard Nemtin Appointed: January 1, 2009 Term Expires: December 31, 2011 Mr. Nemtin is the President and owner of Nemtin Consultants Ltd. a real estate development and consulting company. He is also a commercial mediator. Mr. Nemtin holds a Bachelor of Science degree from York University and a Masters of Business Administration from the University of Western Ontario. Nancy Olewiler R. W. (Bob) Garnett Appointed: January 1, 2008 (reappointed January 1, 2009) Term Expires: December 31, 2011 Mr. Garnett is a Chartered Accountant and an owner of Paradigm Management Partners, Novex Couriers and WDX Couriers. He holds a Bachelor of Arts (Commerce) degree from Simon Fraser University. Appointed: January 1, 2008 Term Expires: December 31, 2010 Ms. Olewiler is a professor in the Department of Economics and director of the Graduate Public Policy Program in the Faculty of Arts at Simon Fraser University. Her degrees, all in economics, are a Bachelor of Arts degree with honours from Barnard College, Columbia University, and a Masters of Arts degree from Simon Fraser University, and a Doctorate degree from the University of British Columbia. David Unruh Sarah Goodman Appointed: January 1, 2008 (reappointed January 1, 2010) Term Expires: December 31, 2012 Ms. Goodman is the Vice President of Business Development and Services for Tides Canada. She earned a Masters of Business Administration from the University of Warwick, Coventry, UK, and a Bachelor of Journalism degree from Carleton University, Ottawa. Appointed: January 1, 2008 Term Expires: December 31, 2010 Mr. Unruh currently serves on the boards of several corporations including Union Gas Ltd., Ontario Power Generation Inc. and Pacific Northern Gas Ltd. Mr Unruh holds a Bachelor of Arts degree and a Bachelor of Law degree from the University of Manitoba.

47 TransLink Executive TransLink Executive continued Ian Jarvis Chief Executive Officer Ian has been part of the TransLink enterprise since its inception in He received his Bachelor of Commerce from the University of British Columbia and is a member of the Institute of Chartered Accountants of British Columbia. Prior to public service he served seven years in public practice. The CEO has overall responsibility to the Board for the general management of, and control over, the businesses, activities and other affairs of TransLink. The CEO does this by leading and managing TransLink through the development and implementation of strategies and policies, the management of its human resources, and efficient and effective operations. Denis Clements President and Chief Executive Office, CMBC Denis joined the TransLink enterprise in 2001 and has held senior positions at both TransLink s operating subsidiaries, BC Rapid Transit (SkyTrain) and Coast Mountain Bus Company (CMBC). Prior to 2001, he was in senior management at Canadian Airlines for 26 years. CMBC is TransLink s largest operating subsidiary, providing bus service through conventional buses, smaller community shuttles, SeaBus and a fleet of state-of-the-art trolley buses in Greater Vancouver. CMBC is also responsible for contracted services provided by the West Vancouver Blue Bus and MVT Canadian Bus (HandyDART service). Sandra Hentzen Vice President, Human Resources Before coming to TransLink in December 2009, Sandra was responsible for the strategic corporate direction of all human resources activities at Coast Mountain Bus Company. Sandra earned a Diploma in Human Resources from the British Columbia Institute of Technology. The Human Resources Division provides a variety of services to the TransLink enterprise including employee relations and communication, employee development, compensation, succession planning and performance management. The Human Resources Division is responsible for ensuring that there is alignment across the TransLink family on enterprise-wide employee programs. Doug Kelsey Executive Vice President, TransLink and President, BCRTC Doug joined the TransLink enterprise in 1999 when he was appointed President and CEO of West Coast Express. He currently heads both West Coast Express and BCRTC, the TransLink subsidiary responsible for the operation of the SkyTrain system. Doug is a graduate of the CEO program at the Kellogg School of Management in Chicago. BCRTC encompasses all rail transit operations in the Metro Vancouver region, including SkyTrain, West Coast Express and the Canada Line. Cathy McLay Chief Financial Officer and Vice President, Finance and Corporate Services Prior to her appointment as the Interim Chief Financial Officer and Vice President, Finance and Corporate Services in December 2009, Cathy was TransLink s Director of Finance. She has an extensive background as a financial executive. She is a Certified Management Accountant and holds a Business Administration Diploma in Finance and Accounting. The Chief Financial Officer is responsible for the financial leadership and guidance of the TransLink enterprise. The Finance and Corporate Services Division is responsible for financial planning, accounting, taxation, treasury, revenue operations, procurement, enterprise risk management and legal counsel. Robert Paddon Vice President, Corporate and Public Affairs Bob came to TransLink in 2001 from Metro Vancouver, bringing expertise in local government, communications, media relations and business administration. He has a Masters of Business Administration and a Master of Arts degree in Communications and Technology. The Corporate and Public Affairs division helps ensure there is public and political goodwill and funding support for TransLink s programs, plans and projects. The division is responsible for public consultation, government relations, marketing, market research, issues management, media relations, communications and administration of the transportation demand management program.

48 92 TransLink Executive continued 2009 Awards and Recognition 93 Michael Shiffer Vice President, Planning, Strategy and Technology Excellence in customer service Prior to joining the TransLink enterprise in May 2009, Mike had held the position of Vice-President for Planning and Development at the Chicago Transit Authority. Mike received a Doctorate degree. in Regional Planning and Master s of Urban Planning (MUP) from the University of Illinois. The American Public Transportation Association recognized TransLink s new user-friendly website (translink.ca), and the public awareness and education campaign about safety and security on the transit system, as being the best among transit associations throughout North America. These initiatives are part of TransLink s overall efforts to improve customer service. The Planning Strategy and Technology Division are responsible for future planning of the region s transportation system. The division leads the development of TransLink s transportation plans including monitoring activity, behavior and trends in the transport system; forecasting future demand and needs; and developing long term transportation strategy and policy. B.C. Contact Centre Association named Coast Mountain Bus Company s Customer Information Line as the Contact Centre of the Year. The line has an average 16 agents answering phone calls at any one time, ensuring customers calls are answered and wait time is minimized.

49 Awards and Recognition continued 2009 Awards and Recognition continued 95 Excellence in innovation and partnerships The Canadian Council of Public Private Partnerships awarded the Golden Ears Bridge the 2009 Silver Award for Infrastructure. Excellence in the workplace For the fourth consecutive year, Coast Mountain Bus Company was recognized as one of British Columbia s Top 50 Employers. The Golden Ears Bridge also received the 2009 Bill Curtis Technical Achievement Award for Outstanding Technical Achievement from the Canadian Institute of Transportation Engineers, Greater Vancouver Chapter. The Association for Commuter Transportation recognized TransLink s efforts in building collaboration and capacity for transportation demand management (TDM) in Canada, creating awareness, strategies and policies to reduce single-occupancy vehicle travel and contribute to a sustainable region. Excellence in safety SkyTrain was named the Best Organization by Lieutenant Governor s Awards for Public Safety, recognizing leadership, achievement and innovation in promoting public safety in British Columbia. Excellence of our team Fred Cummings was recognized for his innovation and initiative in overseeing the Golden Ears Bridge from design to completion, achieving the 2009 Award of Achievement from the Transportation Association of Canada. Trish Webb was recognized by the Canadian Public Relations Society with a Gold Award of Excellence for creating the Transport 2040 document that effectively communicates the organization s long-range vision. Sany R. Zein was twice recognized for his commitment to excellence, receiving the 2009 Outstanding Professional Award by the Canadian Institute of Transportation Engineers and the Committee Chair s Award from the Transportation Association of Canada. Chris Morris was inducted as a Fellow of Engineers Canada for his exceptional contributions to the engineering profession. Radenko Knezevic, Coast Mountain Bus Company, received an Employee Excellence Award from the Canadian Urban Transit Association for his quick actions while on the job that helped save the lives of four people.