BC Transit 2015/16 ANNUAL SERVICE PLAN REPORT

Transcription

1 BC Transit ANNUAL SERVICE PLAN REPORT

2 For more information on BC Transit contact the head office: 520 Gorge Road East, PO Box 9861 Victoria, British Columbia V8W 9T5 Telephone: (250) Fax: (250) or visit the website at

3 Board Chair's Accountability Statement BC Transit The BC Transit Annual Service Plan Report compares the corporation's actual results to the expected results identified in the BC Transit /18 Service Plan. I am accountable for those results as reported. Kevin Mahoney Board Chair Annual Service Plan Report 3

4 BC Transit Table of Contents Board Chair's Accountability Statement... 3 Table of Contents... 4 Chair/CEO Report Letter... 5 Purpose of the Organization... 6 Strategic Direction and Context... 6 Report on Performance... 7 Goals, Strategies, Measures and Targets... 7 Financial Report Discussion of Results Financial Resource Summary Table Auditor's Report Audited Financial Statements Capital Plan and Major Projects Appendix A: Subsidiaries and Operating Segments Active Subsidiaries Inactive Subsidiaries Operating Segments Appendix B: Additional Information Corporate Governance Supplementary Financial Information Organizational Overview Contact Information Performance Measure Definitions Appendix C BC Transit's Mandate and Actions Summary Annual Service Plan Report 4

5 BC Transit Chair/CEO Report Letter In, BC Transit continued to implement the Taxpayer Accountability Principles and to incorporate the Principles into its organizational practices and procedures. This letter describing BC Transit's performance with respect to those expectations established in BC Transit's Mandate Letter for operating under the Taxpayer Accountability Principles represents BC Transit's accountability requirement as described in Taxpayer Accountability Principles Action Item 5. (For a summary of BC Transit's actions in response to the direction on strategic priorities for the fiscal year received in the Mandate Letter please see Appendix C.) BC Transit's strategic engagement with the Ministry during, as established in Taxpayer Accountability Principles Action Item 8, included meetings between the President/Chief Executive Officer and the Deputy Minister as well as regular consultations at the staff level throughout the year, beginning with the development of the BC Transit 2017/18 Service Plan. This engagement enabled BC Transit to work more effectively with the Ministry while increasing the Ministry's ability to hold BC Transit accountable for the outcomes and measures identified. In accordance with Taxpayer Accountability Principle Action Item 9, BC Transit provided orientation and training in for its Board members. New Board member orientation was provided to Board Member Carol Leclerc in September In June 2015, at the invitation of the Deputy Minister to the Premier and Head of the BC Public Service, a number of BC Transit Board members participated in a Board of Directors Professional Development training session provided by the Ministry of Finance. We are accountable for BC Transit's performance with respect to those expectations established in BC Transit's Mandate Letter for operating under the Taxpayer Accountability Principles. Kevin Mahoney Board Chair Manuel Achadinha President and Chief Executive Officer Annual Service Plan Report 5

6 BC Transit Purpose of the Organization BC Transit is the provincial Crown agency charged with coordinating the delivery of public transportation across British Columbia with the exception of those areas serviced by TransLink (Metro Vancouver). More than 1.75 million British Columbians in over 130 communities across the province have access to BC Transit local and regional transit services. BC Transit operates under the British Columbia Transit Act, which provides it with a mandate to plan implement, maintain and operate public transportation systems which support growth, community planning, and economic development. BC Transit's operations reflect the priorities and values of the government and its shareholders the citizens of B.C. as outlined in the Taxpayer Accountability Principles. BC Transit's shared services model helps to ensure the most efficient and effective delivery of transit services across all transit systems. In most Regional Transit Systems, service is provided through a partnership between BC Transit, local government, and a transit management company. Under this partnership model, BC Transit provides a variety of shared services available for all transit systems. BC Transit's collaborative, shared-services partnership model offers value by maximizing efficiency through the use of "common resources," specialization and standardization. BC Transit's activities include planning, financial management, marketing, asset management, supply chain management, the provision of safety and human resources expertise, and contracting for the operation of transit services. BC Transit also operates the conventional service in the Victoria Regional Transit System. The funding of transit service is provided by customer fares and through a partnership of local government and the Province through BC Transit. Information about BC Transit's Corporate Governance is provided in Appendix B. Strategic Direction and Context BC Transit's strategic direction is defined in its Mandate Letter and includes the B.C. Taxpayer Accountability Principles. As detailed in Appendix C, in order to meet the requirements of its mandate, BC Transit: Continued actions and activities, in collaboration with its local government partners, that assisted the Ministry to achieve the goals and objectives of B.C on the Move A 10-Year Transportation Plan, subject to Ministry fiscal funding allocations and local government affordability; Continued to undertake business evaluations to maximize efficiencies and expand ridership opportunities, including supporting the Province's Crown Review of BC Transit's operations, planning and forecasting, and financial performance; Continued to implement enhanced performance measures and targets which aligned with, and aided in achievement of, the goals and strategies documented in its /18 Service Plan; Shared a three-year annual operating budget and a ten-year capital budget with the Ministry and worked with the Ministry throughout the year to ensure that financial targets were achieved, identified reporting requirements were met, quarterly forecasts were accurately reported, and expenditures did not exceed budget; and Continued to incorporate the Taxpayer Accountability Principles into its organizational practices and procedures. Annual Service Plan Report 6

7 BC Transit Over the past year, BC Transit focused on maximizing the efficiency of its core services and assuring that every operating dollar be maximized in order to position itself and provincial transit systems for future potential growth opportunities. For much of the year, staff provided significant support for a provincial Crown Review. BC Transit also continued its emphasis on transit service optimization, with existing resources reallocated as appropriate to meet changing customer expectations. This year saw continued pressure on the Canadian dollar creating cost pressures on the procurement of replacement buses and bus parts, many of which are manufactured in the United States. To mitigate these issues, BC Transit implemented a strategic procurement strategy which enabled continued operating cost savings including lower fuel costs. BC Transit also worked extensively with the Ministry to implement regulatory changes that, for the through 2017/18 fiscal years, will enable any operating savings realized in a transit system to be able to be carried forward to offset inflationary increases in costs of that transit system. With 50 per cent of the fleet scheduled to be replaced over the next five years, BC Transit formalized a right-sizing strategy to ensure replacement buses are chosen to meet service needs in the most costeffective manner and evaluated a completed Compressed Natural Gas pilot program. In addition, efforts began to implement improvements in financial and asset management information systems. Efforts continued to connect affordably with customers to meet increasing expectations for access to timely information and services by leveraging the new BC Transit website, the online trip planner, and social media channels. The year also saw ongoing implementation of BC Transit's Human Resources Action Plan with specific improvement in the performance management program and associated employee engagement scores. Report on Performance BC Transit's performance in was conducted in accordance with the specific accountabilities prescribed in BC Transit's Mandate Letter, which includes the Taxpayer Accountability Principles. Specifically, in accordance with Taxpayer Accountability Principles Action Item 7, BC Transit worked with the Ministry during the service planning process to develop a plan for evaluating BC Transit's health and performance against the Taxpayer Accountability Principles. The specific efficiency and performance measures to be used as determinants of BC Transit's health and performance against the Taxpayer Accountability Principles are captured in the BC Transit 2017/18 Service Plan and are reported on in detail below. Goals, Strategies, Measures and Targets This performance report highlights BC Transit's results achieved for the fiscal year ending March 31, The five goals presented in this section are unchanged from the previous Annual Service Plan Report and the BC Transit -2017/18 Service Plan. These goals were first published in Shaping our Future, BC Transit's strategic plan. See Appendix B for a complete listing of the performance measures as well as definitions and calculation methodologies for these measures. Annual Service Plan Report 7

8 BC Transit Goal 1: Develop Financial Sustainability Sustainable long-term revenue sources are fundamental to the ability of BC Transit to deliver on its mandate now and into the future. Since more than two-thirds of total revenues come from provincial and local government sources, the viability of transit services is directly linked to financial support from these levels of government. Demonstrating cost-effective use of public funding (as demonstrated through operating and administrative efficiency), will assist in maintaining government funding support. Strategies The strategic intent is to ensure an affordable public transportation system by: Providing effective transit services that are used by the public; Renewing and revising fare-based revenue sources and collection systems to reflect changing ridership patterns and reduce fare evasion; Developing and taking advantage of non-fare-based revenue opportunities; and Improving cost control, communication and monitoring processes to mitigate cost volatility, maximize efficiency, and reduce costs. Performance Measure 1.1: Transit System - Service Effectiveness Performance Measure* 2012/ / /15 Target 2016/17 Target 2017/18 Target Conventional passenger trips per service hour N/A N/A Custom passenger trips per service hour N/A N/A Data Source: Internal tracking data. * These are measures introduced in the BC Transit 2014/ /17 Service Plan to demonstrate the effectiveness of BC Transit's services as reflected by passengers per service hour. Accordingly, results for 2012/13 and 2013/14 have not been reported. The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. Conventional passenger trips per service hour exceeded target as service optimization strategies were implemented in. Custom passenger trips per service hour also stabilized, with service hours remaining unchanged from 2014/15. Annual Service Plan Report 8

9 BC Transit Performance Measure 1.2: Corporate - Increase Revenue Performance Measure 2012/ / /15 Target 2016/17 Target* 2017/18 Target* Conventional operating cost recovery 37.4% 36.2% 35.1% 32.8% 36.1% 33.1% 32.3% Custom operating cost recovery 10.7% 10.0% 9.6% 8.9% 9.1% 8.7% 8.6% Data Source: BC Transit financial system and audited financial statements. * The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. Conventional operating cost recovery was better than target due to lower fuel prices and operating efficiencies as well as higher passenger revenues. Custom operating cost recovery was better than the target; however, the result decreased from 2014/15 as operating costs to deliver custom transit services continued to increase. Performance Measure 1.3: Corporate - Increase Cost Efficiency Performance Measure 2012/ / /15 Target 2016/17 Target* 2017/18 Target* Conventional operating cost per passenger trip $3.65 $3.73 $3.84 $4.07 $3.76 $4.09 $4.20 Custom operating cost recovery per passenger trip $14.32 $15.21 $15.77 $16.85 $16.36 $17.28 $17.45 Data Source: BC Transit financial system and audited financial statements. * The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. Conventional operating cost per passenger trip exceeded the target due to lower fuel prices and operating efficiencies, combined with a slight increase in ridership. Custom operating cost per passenger trip was better than the target due to lower than targeted operating costs. Goal 2: Support and Shape Livable Communities BC Transit supports more livable communities by encouraging transit-supportive community planning and investments to make it easier to get around by walking, cycling and transit. Greater integration between land use development and transit planning enables greener, more sustainable communities and improves the efficiency of transit services and related infrastructure. Strategies Plan for the effective growth of public transportation through the following actions: Annual Service Plan Report 9

10 BC Transit Increase integration with other types of sustainable travel and work with partners to influence land use development patterns that encourage walking, cycling, and increase the effectiveness of transit; Identify and establish priority transit corridors; and Review services on an ongoing basis and make recommendations for improvement. Performance Measure 2.1: Corporate - Planning and Integration Performance Measure 2012/ / /15 Target 2016/17 Target* 2017/18 Target* Major urban centres with Transit Future Plans completed 29% 50% 79% 100% 100% N/A N/A Data Source: Internal tracking data. * This performance measure was removed from the BC Transit 2016/ /19 Service Plan because the task was completed in. Discussion: Target met. With the completion of the final Transit Future Plan in the Sea to Sky Region in, BC Transit has now met its goal of developing these long range plans in all major urban centres (over 25,000 population). Building on this base, BC Transit is now in the process of updating Transit Future Plans on a five year basis. Performance Measure 2.2: Corporate - Planning and Integration Performance Measure* 2012/ / /15 Target 2016/17 Target 2017/18 Target Communities with a service optimization review completed in past five years N/A N/A 75% 85% 95% 85% 85% Data Source: Internal tracking data. * This is a new measure introduced in the BC Transit 2014/ /17 Service Plan to demonstrate the effectiveness of BC Transit's ability to provide timely planning expertise and evidence-based recommendations to communities with regards to their transit systems. Accordingly, results for 2012/13 and 2013/14 have not been reported. The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. The proportion of communities with service optimization reviews completed in the past five years included the completion of reports for the Victoria Region, Central Fraser Valley, Kamloops, Kelowna Region, Nanaimo Region, Prince George, Whistler, Campbell River, Chilliwack, Comox Valley, Cowichan Valley, Penticton, Sunshine Coast, Vernon Regional, Williams Lake, Hazeltons Regional, Smithers, the Fraser Valley Express, and Okanagan Falls. Goal 3: Change the Perception of Transit To keep existing customers and attract new ones, BC Transit must market its services in competition with private automobiles and reach out to customers in new ways, such as through social media. To help build livable communities, BC Transit must connect with various community and stakeholder Annual Service Plan Report 10

11 BC Transit groups to build awareness of, and support for, public transportation as an important part of creating sustainable, green communities. Strategies Build increased support for public transportation through the following actions: Promote sustainable transportation and its role in building sustainable, livable communities; and Build awareness of BC Transit's services and roles as a transportation leader. Performance Measure 3.1: Transit System - Service Delivery Performance Measure 2012/ / /15 Target 2016/17 Target* 2017/18 Target* Customer satisfaction (1-5 scale) Data Source: Annual customer tracking survey, conducted by a third party research firm. * The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. Customer satisfaction, a measure of the effectiveness of BC Transit in meeting customer expectations, exceeded the target in as well as the result from the last three years. The maintenance of customer satisfaction is the result of continued efforts to enhance the customer experience, including piloting new technologies such as automatic voice annunciators and ensuring services are reliable, routes are designed to meet travel demand, buses are clean, and operators are friendly. Performance Measure 3.2: Corporate - Information Effectiveness Performance Measure* 2012/ / /15 Target 2016/17 Target 2017/18 Target Online communication strategy impact (1-5 scale) N/A N/A Data Source: Annual customer tracking survey, conducted by a third party research firm. * This is a new measure introduced in the BC Transit 2014/ /17 Service Plan to demonstrate the effectiveness of information provided online. Accordingly, results for 2012/13 and 2013/14 have not been reported. The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. Customer perception of the quality, value and effectiveness of BC Transit's online information met the target, reflecting BC Transit's improved internet site and continued growth of its social media channels and expanded use of Trip Planner. Annual Service Plan Report 11

12 BC Transit Performance Measure 3.3: Corporate - Build Awareness Performance Measure 2012/ / /15 Target 2016/17 Target* 2017/18 Target* Brand recognition 29% 28% 30% 28% 29% 28% 29% Data Source: Annual customer tracking survey, conducted by a third party research firm. * The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. The level of brand recognition exceeded the target by 3.5 per cent; however, as expected the result was slightly less than the 2014/15 measure as limited public marketing opportunities, particularly community events, made it a challenge to communicate new and/or expanded services or major infrastructure projects. Goal 4: Deliver Operational Excellence The BC Transit business model is based on developing and delivering safe, reliable and easy to use services that continuously improve through active engagement with employees, customers and partners. Transit services must continuously adapt and improve to meet the needs and preferences of society, especially in the midst of continuing social, technological and community development change. Strategies Deliver a safe, reliable and affordable transit experience through the following actions: Provide accessible service; Ensure the safety of employees and customers; Monitor and address transit system reliability and on-time performance; and Improve customer service and ensure an effective transit system. Performance Measure 4.1: Transit System - Accessibility Performance Measure* 2012/ / /15 Target 2016/17 Target 2017/18 Target Conventional service hours per capita N/A N/A Custom service hours per capita N/A N/A Data Source: Service hours tracked internally by BC Transit; capita data population is based on the defined service area and uses Census Canada information updated by the latest BC Statistics data. * These are new measures introduced in the BC Transit 2014/ /17 Service Plan to demonstrate how much service is provided to the population that lives within a reasonable distance of service routes. Accordingly, results for 2012/13 and 2013/14 have not been reported. The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Annual Service Plan Report 12

13 BC Transit Discussion: Target partially met. Conventional service hours per capital were below target as population growth exceeded service hour growth. As expected, custom service hours per capita remained stable. Performance Measure 4.2: Corporate - Safety (Passengers) Performance Measure 2012/ / /15 Target 2016/17 Target* 2017/18 Target* Passenger injury claims per million passenger trips Data Source: As reported by ICBC and internal tracking data. * The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. The number of passenger injury claims for was significantly less than the target but increased from last year's measure. While BC Transit has continued its program of awareness around passenger safety, including defensive driving workshops and improved reporting procedures, an aging population, increased traffic and a trending increase in bodily injury claims have all contributed to the increase in this measure. Performance Measure 4.3: Corporate - Safety (Employees) Performance Measure* 2012/ / /15 Target 2016/17 Target 2017/18 Target Workplace injuries per hundred employees N/A N/A Data Source: Internal Tracking data. * This is a new measure introduced in the BC Transit 2014/ /17 Service Plan to demonstrate workplace safety for BC Transit employees. Accordingly, results for 2012/13 and 2013/14 have not been reported. The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. Workplace injuries per 100 employees for were significantly lower than the target and represent only a one per cent variance from last year's measure. Stabilization of this measure is as expected and represents BC Transit's focus on safety protocols and improved communication of safety initiatives. Performance Measure 4.4: Quality of Service Performance Measure* 2012/ / /15 Target 2016/17 Target 2017/18 Target Planned service delivered in conventional transit systems N/A N/A 99.9% 99.7% 99.8% 99.7% 99.7% Data Source: Internal tracking data and reports from operating partners. * This is a new measure introduced in the BC Transit 2014/ /17 Service Plan to demonstrate service reliability. Accordingly, results for 2012/13 and 2013/14 have not been reported. Annual Service Plan Report 13

14 BC Transit The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. As expected, the reliability of trips for was stable as a significant decline in mechanical issues contributing to missed service was offset by construction and congestion delays in some communities which often forced subsequent interlined trips to be missed. In BC Transit's largest transit system, trip reliability was maintained while a substantial operator retraining program, required by the new collective agreement in Victoria, was successfully implemented. Goal 5: Strengthen Our People and Partnerships BC Transit's success depends on creating an adaptable, socially responsible organization that lives its values, develops its existing employees and partnerships, attracts new employees and explores opportunities. This means actively working to improve how employees are attracted and developed, encouraging a culture of innovation and accountability, monitoring environmental, social and economic impacts, and strengthening relationships with local government and other partners. Strategies Be a responsive and accountable organization by: Increasing environmental accountability; Being an adaptable workplace of choice; and Enhancing existing partnerships and developing new ones. Performance Measure 5.1: Transit System - Reduce Carbon Intensity Performance Measure 2012/ / /15 Target 2016/17 Target* 2017/18 Target* Greenhouse Gas Emissions (GHG) per service hour Data Source: Provincial Government's SMARTTool data and internal tracking data. * The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. Carbon intensity per service hour measures BC Transit's direct Greenhouse Gas (GHG) emissions in support of Provincial initiatives. The decrease in 2016 reflects the regulated decline in carbon intensity of diesel fuel supplied in B.C. as a result of the Renewable and Low Carbon Fuel Requirements Regulation and the displacing of more diesel fuel through the further expansion of the Compressed Natural Gas bus fleet, where consumption of natural gas by BC Transit s fleet doubled over the previous year. Annual Service Plan Report 14

15 BC Transit Performance Measure 5.2: Corporate - Strengthen Our People Performance Measure* 2012/ / /15 Target 2016/17 Target 2017/18 Target Employee engagement N/A 60% N/A 62% 63% N/A 63% Data Source: BC Stats (BC Transit employee survey). * The survey which provides the data for this measure is only conducted every other year. The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. Employee engagement measures how satisfied or happy employees are with their organization and their jobs, and how committed or loyal they are to them. Engagement is assessed through a bi-annual Work Environment Survey that assesses the many factors that employees experience in the workplace that influence employee engagement. The target for was 62 per cent and BC Transit exceeded this target by achieving 63 per cent. The next Work Environment Survey is expected to be distributed in the fall of Performance Measure 5.3: Corporate - Strengthen Our Partnerships Performance Measure 2012/ / /15 Target 2016/17 Target* 2017/18 Target* Partner satisfaction (1-5 scale) Data Source: CivicInfo BC Transit Survey. * The targets shown are from the BC Transit 2016/ /19 Service Plan and in some cases have been revised from those targets originally published in the BC Transit 2017/18 Service Plan. Discussion: Target met. Local government partners rated their overall satisfaction with the level of customer service provided by BC Transit nearly 10 per cent higher than the target in. However, as expected this was less than the 2014/15 result as local governments could not respond to increasing customer demand for services. Maintaining partner relations continued to be a major priority for BC Transit this year and we continued to engage our partners in a collaborative manner to optimize services and identify solutions that met individual community and operating needs. Annual Service Plan Report 15

16 BC Transit Financial Report Discussion of Results Total revenues for the year ending March 31, 2016 were $289.7 million, an increase of $8.5 million from fiscal 2014/15 and $13.8 million lower than budget. The increase in total revenue from fiscal 2014/15 can be attributed to higher passenger revenues due to more passenger trips, fare changes and a new advertising contract in. Local government transfers revenue was below budget by $17.0 million as a result of lower than budgeted operating expenses and increased passenger revenues. Total operating expenses (excluding debt service) for the year ending March 31, 2016 were $225.4 million, an increase of $1.7 million over 2014/15 and $15.2 million lower than budget. Cost efficiency, as measured on a cost per hour basis, was favourable to budget by 5.7 per cent and decreased year-over-year by 0.7 per cent. The improvement in cost efficiencies from fiscal 2014/15 and budget reflects management's continued focus to contain costs.' The total operating expenses increased over fiscal 2014/15, which can be attributed to the annualization of 2014/15 service expansions (33,500 service hours), general inflationary pressures on materials, parts, wages and benefits, and contracted services. Total operating expenses decreased from budget which can be attributed to savings in fuel due to a significant drop in diesel prices, lower vehicle maintenance costs, and lower labour costs. Debt service (interest and amortization) for the year ending March 31, 2016, was $64.3 million, an increase of $7.5 million from fiscal 2014/15. The increase over fiscal 2014/15 can be attributed to an increase in amortization expense resulting from the completion of numerous capital projects during the year including $62.6 million of new vehicles, $20.4 million towards rapid transit exchanges and $6.8 million invested in major vehicle components. The increase over budget is due to timing of capitalization. On May 14, 2015, Bill BC Transportation Financing Authority Transit Assets and Liabilities Act (the "Act") was granted Royal Assent. The Bill called for all of BC Transit's tangible capital assets under lease in the Greater Vancouver Regional District to be transferred to BC Transportation Financing Authority ("BCTFA"). Effective May 21, 2015, BC Transit transferred all related assets and liabilities to BCTFA. Upon the transfer, BC Transit recognized a reduction in annual surplus of $65.9 million. The transfer was an extraordinary item within the financial statements and zero proceeds were received. The transaction is non-recurring and had no impact to the ongoing operations or financial assets of BC Transit. Annual Service Plan Report 16

17 BC Transit Financial Resource Summary Table Management Discussion and Analysis Financial Report Figures in thousands 2010/ / / /14* 2014/15 As at March 31, 2016 Budget Variance Year over Year Variance to Budget (Un)Favourable Revenue ($) ($) ($) ($) ($) ($) ($) ($) ($) Operations 65,127 67,847 67,944 69,192 69,182 70,494 68,912 1,312 1,582 Government transfers Provincial 83,971 88,065 89,013 95,415 96, , ,862 7,651 - Local government** 66,793 75,483 76,312 84,984 88,315 81,433 98,408 (6,882) (16,975) Deferred capital contributions 30,151 27,183 28,805 38,746 23,449 30,587 27,591 7,138 2,996 Investment and other income 3,404 2,947 4,152 5,219 4,030 3,294 4,654 (736) (1,360) Total Revenues 249, , , , , , ,427 8,483 (13,757) Expenses Operations Operations (excl. fuel) 113, , , , , , ,693 (4,943) 2,645 Fuel 23,795 28,416 28,392 30,021 27,969 22,353 31,200 5,616 8,847 Total operations 137, , , , , , , ,492 Maintenance Fleet 31,230 32,122 33,053 35,824 37,332 38,566 41,122 (1,234) 2,556 Facilities 6,895 7,253 8,206 8,521 9,776 9,476 10, Total maintenance 38,125 39,375 41,259 44,345 47,108 48,042 51,234 (934) 3,192 Administration 21,457 22,009 21,735 23,455 24,579 25,981 26,457 (1,402) 476 Total operating expenses 196, , , , , , ,584 (1,663) 15,160 Debt Service Interest 9,153 10,902 11,045 10,794 10,478 9,478 11,380 1,000 1,902 Amortization 46,644 47,218 47,739 60,597 46,372 54,835 51,463 (8,463) (3,372) 55,797 58,120 58,784 71,391 56,850 64,313 62,843 (7,463) (1,470) Total Expenses 252, , , , , , ,427 (9,126) 13,690 Net Income (Loss) from Operations (3,035) (631) (213) (67) - (643) (67) Non-Operating Items: Vancouver assets Amortization expense (32,654) (32,654) (14,769) (15,010) (15,187) (2,494) (14,924) 12,693 12,430 Deferred capital contributions 31,242 31,242 14,340 14,581 14,757 2,494 14,924 (12,263) (12,430) Disposal and impairment of capital assets Impairment of capital assets (4,600) - - 4,600 - Loss on disposal of capital assets - - (370) - (716) (177) (177) Deferred capital contributions , (2,881) - Provincial government transfers , (1,985) - Other capital recoveries (45) 405 Other income Gain (loss) on investments and foreign exchange (118) 167 Total Non-Operating Items (795) (781) (221) 286 (106) Annual surplus (deficit) (3,830) (1,412) (434) (81) 390 Non-routine loss on transfer of Vancouver assets (65,875) - (65,875) (65,875) Annual surplus (deficit) after non-routine loss (3,830) (1,412) (434) (65,485) - (65,956) (65,485) *Fiscal 2013/14 has been restated due to a correction of an error. For more information please see note 3 to the consolidated financial statements ** Includes Provincial Health Authority and fuel tax funding Annual Service Plan Report 17

18 BC Transit Auditor's Report Annual Service Plan Report 18

19 June 2, 2016 VIA Manuel Achadinha President and Chief Executive Officer British Columbia Transit 520 Gorge Road East Victoria, B.C. V8W 2P3 Dear Mr. Achadinha: Re: Audit of Financial Statements For British Columbia Transit For the Year Ended March 31, 2016 Please find enclosed a copy of the audited financial statements of British Columbia Transit for the year ended March 31, 2016, together with our auditor s report. As required by the Auditor General Act, a copy of the audit opinion will also be forwarded to the Minister responsible. Please note that no changes are to be made to the attached final version of the financial statements without the consent of the Auditor General. Yours truly, Russ Jones, FCPA, FCA Deputy Auditor General CL/sd Enclosures Copy: Kelly Cairns, Chair, Audit, Finance and Risk Management Committee Alan Thomas, Executive Director of Finance and Chief Financial Officer

20 BC Transit Audited Financial Statements Annual Service Plan Report 20

21 Consolidated Financial Statements of BRITISH COLUMBIA TRANSIT Year ended March 31, 2016

22

23 INDEPENDENT AUDITOR'S REPORT To the Board of Governors of British Columbia Transit, and To the Minister of Transportation and Infrastructure, Province of British Columbia I have audited the accompanying consolidated financial statements of British Columbia Transit ( the entity ), which comprise the consolidated statement of financial position as at March 31, 2016, and the consolidated statements of operations, changes in net debt, cash flows, and remeasurement gains and losses for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation of these consolidated financial statements in accordance with Canadian Public Sector Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility My responsibility is to express an opinion on these consolidated financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. In my view, the audit evidence I have obtained is sufficient and appropriate to provide a basis for my qualified audit opinion. Basis for Qualified Opinion As described in Note 2(a) to the consolidated financial statements, the entity s accounting treatment for contributions received from governments and for externally restricted contributions received from non-government sources is to initially record them as deferred revenue (a liability)

24 BRITISH COLUMBIA TRANSIT Independent Auditor s Report and then recognize revenue in the statement of operations either on the same basis as the related expenditures occur or, in the case of funds for the purchase or construction of capital assets, to recognize revenue on the same basis as the related assets are amortized. The entity was required to adopt this accounting policy as prescribed by Province of British Columbia Treasury Board Regulation 198/2011. Under Canadian Public Sector Accounting Standards, the entity s method of accounting for contributions is only appropriate in circumstances where the funding meets the definition of a liability. Otherwise, the appropriate accounting treatment is to record contributions as revenue when they are received or receivable. In our opinion certain contributions of the entity do not meet the definition of a liability, and as such the entity s method of accounting for those contributions represents a departure from Canadian Public Sector Accounting Standards. This departure has existed since the inception of the standard, which applies to periods beginning on or after April 1, When the cumulative effects of this departure to date are adjusted through opening accumulated surplus, the entity s records indicate that the effects of this departure on the current year consolidated financial statements is an overstatement of the liability for deferred revenue and contributions of $18 million and for deferred capital contributions of $203 million, an understatement of opening accumulated surplus of $816 million, and a current year overstatement of revenue of $595 million. Accordingly, the current year deficit after nonroutine loss is understated by $595 million and net debt is overstated by $221 million. Qualified Opinion In my opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the consolidated financial statements present fairly, in all material respects, the financial position of British Columbia Transit as at March 31, 2016, and the results of its operations, changes in its net debt, remeasurement gains and losses and its cash flows for the year then ended in accordance with Canadian Public Sector Accounting Standards. Other Matters Without modifying my opinion, I advise that I issued an unmodified audit opinion dated May 28, 2015 on the consolidated financial statements of British Columbia Transit as at March 31, 2015, in which I reported on compliance with Section 23.1 of the Budget Transparency and Accountability Act. As such, the comparative financial information was not audited for fair presentation in accordance with Canadian Public Sector Accounting Standards. Victoria, British Columbia May 26, 2016 Russ Jones, FCPA, FCA Deputy Auditor General

25

26 BRITISH COLUMBIA TRANSIT Consolidated Statement of Operations (In thousands of dollars) Year ended March 31, 2016, with comparative figures for March 31, 2015 Budget March 31, March 31, (Note 2(j)) (Restated note 3) Revenue: Operations $ 68,912 $ 70,494 $ 69,182 Government transfers: Provincial (note 14) 103, ,862 96,211 Local government (note 14) 98,408 81,433 88,315 Deferred capital contributions (note 6) 27,591 30,587 23,449 Investment and other income 4,654 3,294 4, , , ,187 Expenses: (note 15) Operations 222, , ,866 Maintenance 53,714 50,878 49,332 Administration 27,378 26,841 25, , , ,611 Net surplus (deficit) from operations - (67) 576 Other: Vancouver Assets: Deferred capital contributions (note 6) 14,924 2,494 14,757 Amortization expense (note 10) (14,924) (2,494) (15,187) Disposal and impairment of capital assets Impairment of capital assets (note 9) - - (4,600) Loss on disposal of capital assets (note 9) - (177) (716) Deferred capital contributions - - 2,881 Provincial government transfers (note 14) - - 1,985 Other capital recoveries Other income Gain on investments Foreign exchange gain (106) Annual surplus Non-routine loss on transfer of Vancouver assets (note 10) - (65,875) - Annual surplus (deficit) after non-routine loss - (65,485) 470 Accumulated operating surplus, beginning of year 73,337 73,337 72,867 Accumulated operating surplus, end of year $ 73,337 $ 7,852 $ 73,337 The accompanying notes are an integral part of these consolidated financial statements 2

27 BRITISH COLUMBIA TRANSIT Consolidated Statement of Change in Net Debt (In thousands of dollars) Year ended March 31, 2016, with comparative figures for March 31, 2015 Budget March, 31 March 31, (Note 2(j)) (Restated note 3) Surplus (deficit) for the year $ - $ (65,485) $ 470 Acquisition of tangible capital assets (73,430) (50,708) (83,212) Amortization of tangible capital assets 66,387 57,329 61,559 Loss on sale of tangible capital assets ,076 Transfer of deferred capital contributions - 609,245 - Loss on transfer of Vancouver assets - 65,875 - Proceeds on sale of tangible capital assets and assets under lease (7,043) 616,603 (14,867) Acquisition of inventories of parts - (22,795) (27,537) Consumption of inventories of parts - 23,409 27,170 Acquisition of prepaid expenses - (8,914) (6,189) Consumption of prepaid expenses - 7,121 6,020 Acquisition of prepaid leases - (1,934) (118) Consumption of prepaid leases (2,761) (353) Realized (gain) reclassified to operations - (127) (275) Unrealized gain (loss) on portfolio investment - (1,771) 7,236 - (1,898) 6,961 (Increase) decrease in net debt (7,043) 611,944 (8,259) Net debt, beginning of year (925,089) (925,089) (916,830) Net debt, end of year $ (932,132) $ (313,145) $ (925,089) The accompanying notes are an integral part of these consolidated financial statements 3

28 BRITISH COLUMBIA TRANSIT Consolidated Statement of Remeasurement Gains and Losses (In thousands of dollars) Years ended March 31, 2016, with comparative figures for March 31, 2015 March 31, March 31, Accumulated remeasurement gains, beginning of year $ 12,322 $ 5,361 Unrealized gain (loss) on investments (1,771) 7,236 Realized (gain) on investments, reclassified to Consolidated Statement of Operations (gain on investments) (127) (275) Accumulated remeasurement gains, end of year $ 10,424 $ 12,322 The accompanying notes are an integral part of these consolidated financial statements 4

29 BRITISH COLUMBIA TRANSIT Consolidated Statement of Cash Flows (In thousands of dollars) Years ended March 31, 2016, with comparative figures for March 31, 2015 Cash provided by (used for): March 31, March 31, Operating transactions Annual surplus (deficit) $ (65,485) $ 470 Non-cash charges to operations (note 16) 90,611 23,693 Changes in non-cash operating working capital (note 16) 9,289 18,519 Cash provided by (applied to) operating transactions 34,415 42,682 Capital transactions Proceeds on sale of tangible capital assets Cash used to acquire tangible capital assets (48,170) (69,360) Cash provided by (applied to) capital transactions (48,000) (69,120) Investing transactions Increase in debt sinking funds and investments net of unrealized gain (loss) 8,401 (201) Cash provided by (applied to) investing transactions 8,401 (201) Financing transactions Prepaid lease payments (1,934) (118) Debt repaid (25,595) (19,275) Deferred capital contributions received 42,138 43,382 Cash provided by (applied to) financing transactions 14,609 23,989 Increase / (decrease) in cash and cash equivalents 9,425 (2,650) Cash and cash equivalents, beginning of year 38,056 40,706 Cash and cash equivalents, end of year $ 47,481 $ 38,056 Supplemental cash flow information: Cash paid for interest $ 9,776 $ 10,562 Cash received from interest $ 205 $ 470 The accompanying notes are an integral part of these consolidated financial statements 5

30 BRITISH COLUMBIA TRANSIT Notes to Consolidated Financial Statements (In thousands of dollars) Year ended March 31, 2016, with comparative figures for Nature of Operations: British Columbia Transit ( BC Transit ) is a Crown corporation, established under the British Columbia Transit Act, as amended in 1998, to operate the urban transit systems in the Province of British Columbia (the Province ) outside of the Metro Vancouver Regional service area. BC Transit is included in the government reporting entity of the Province of British Columbia and reports to the Legislative Assembly through the Ministry of Transportation and Infrastructure. BC Transit is exempt from income taxes under the Income Tax Act. BC Transit, on behalf of the Victoria Regional Transit Commission, is responsible for the administration of all funds raised by certain tax levies. These funds held in trust are excluded from the consolidated financial statements and are summarized in note Summary of Significant Accounting Policies: (a) Basis of accounting: These consolidated financial statements have been prepared in accordance with Canadian public sector accounting standards as required by Section 23.1 of the Budget Transparency and Accountability Act of the Province of British Columbia and supplemented by Regulation 198/2011 issued by the Province of British Columbia Treasury Board. Regulation 198/2011 requires that restricted contributions be recognized as revenue in the period the restriction the contribution is subject to is met, and that restricted contributions for the purpose of acquiring or developing a depreciable tangible capital asset, be recognized in revenue at the same rate the amortization of the related tangible capital asset is recorded. The reduction of the deferred capital contributions and the recognition of the revenue are accounted for in the fiscal period during which the tangible capital asset is used to provide services. Canadian public sector accounting standards require government transfers, which do not contain a stipulation that creates a liability, to be recognized as revenue by the recipient when approved by the transferor and the eligibility criteria have been met. The Regulation allows for the deferral of revenue recognition to future years, recognized for non-capital government transfers in the period the restriction the transfer is subject to is met and for capital transfers in income systematically over the useful life of the asset, rather than in the year the transfer was made. This results in differences in deferred contributions, deferred capital contributions and accumulated operating surplus on the consolidated statement of financial position, and the government transfers revenue and annual surplus on the statement of operations. (b) Basis of consolidation: (i) Consolidated entities: The consolidated financial statements reflect the assets, liabilities, revenues, and expenses of organizations which are controlled by BC Transit. Controlled organizations are consolidated with inter-organizational transactions, balances, and activities eliminated on consolidation. 6