Red us · PDF fileRed us Annual Report —1 hairman & hief Executive Report ... church...

Red Bus Annual Report — 1

Chairman & Chief Executive Report

Audited Financial Statements

Statutory Information

Governance Statement

Directory

Contents

“Leading the way in Passenger Transport”

Red Bus Limited operates a large passenger transport business in Canterbury. Last year our urban and school bus services carried 3.74 million passengers and travelled 5.2 million fleet kilometres. Our vision is to “lead the way in passenger transport” and our objective is to achieve this by operating a profitable and mod-ern passenger service while maintaining our reputation as a good employer. Delivering on this vision and the associated objectives is contributing to a quality passenger transport service supporting the Canterbury recovery. Red Bus Limited is 100% owned by Christchurch City Holdings Limited, the investment arm of the Christchurch City Council.

Red Bus


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2015/16 Highlights

Achieved a positive financial result and maintained a strong balance sheet.

Paid a shareholder dividend of $1.35 million

Improved passenger comfort and lower fuel consumption through Telematics

Retained most ECan school bus contracts with improved margins

Completed digital radio telephone upgrade

Purchased extra coaches to support the strong growth for Red Travel


Revenue ($ millions) Total Comprehensive Income for the period ($ millions) Total Assets ($ millions)

Shareholder’s Equity ($ millions) LTIFR (Lost Time Incidents/million hours) Urban Service Passenger Numbers

(millions of passengers)

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Chairman & Chief Executive Report Red Bus Limited is pleased to present the 25th Annual Report together with the financial statements of the company for the year ended 30 June 2016. The company’s principal objective, as specified in its Statement of Intent (SOI), is to “operate a profitable, sustainable and inno-vative business in providing passenger transport and ancillary services”. The company strives to achieve this objective by working closely and constructively with Environment Canter-bury as regional planner and regulator and Christchurch City Council as the infrastructure owner for the Christchurch urban services. A key result during the 2015/16 financial year was an increased operational profit on the prior year. While operational profita-bility has yet to achieve expectations this year is another posi-tive step forward. Core elements in this year’s financial result were the retention of the majority of Environment Canterbury school contracts at improved profit margins from January 2016, the strong revenue growth and profitability of Red Travel coach services, fuel sav-ings from Telematics and leasing of surplus property. Telematics is an onboard system monitoring speed, accelera-tion, braking and cornering forces that gives drivers real time feedback when their driving is within or exceeds pre-set limits. Red Bus continues to invest in new equipment, technology and ongoing training to continue its leadership in service standards and growth capacity.

This year investments included:

Commitment to purchase 8 Mercedes mid-sized urban buses after agreement with ECan to reduce bus size to match customer demand and reduce costs.

Commitment to purchase a fleet wide CCTV camera system replacement to improve reliability and on bus security. Most of the replacement programme will oc-cur during 2017.

Commitment to purchase of 4 coaches adding scale and capacity to Red Travel coach services.

Continued investment in the Safe and Fuel Efficient Driver (SAFED) training programme to ensure drivers have the appropriate skills to deliver our customers safely and efficiently.

An upgrade of all bus radio telephones onto a common digital platform.

The company’s successful delivery of professional services is reflected in the leading position on ECan’s mystery shopper survey rating for Christchurch urban service providers. The average quarterly rating for Red Bus was 85.4% in 2016 (85.0% in 2015). This compares with 83% in 2016 (82% in 2015) for the entire Metro bus network. The introduction of Telematics across most of the fleet in 2015 was enhanced by the introduction of a driver incentive package to reinforce positive driving performance. One direct impact of the Telematics introduction was a noticeable improvement in the smoothness of ride measure in the urban mystery shopper survey and consistent fuel savings.

Red Bus continues to operate with a lean management struc-ture that ensures operational efficiency and a close connection between staff and management. The company engages in regu-lar meetings with ECan commissioners and officers to explore areas of mutual concern and interest.

Financial Results The company’s financial results for the year are summarised as follows: The company made an operating after tax paid profit of $93k and a total comprehensive income of $2,370 after incorpo-rating the property revaluation gain. Revenue increased from $18.1m last year to $19.1m this year as a result of strong growth from Red Travel, increased service capacity on route 28 (Lyttelton to city services), depot leasing and improved revenues on ECan school contracts from January forward. The company continued to maintain positive operating cash flows during the year. Red Bus paid a dividend of $1,350,000 during the financial year from operating cash surpluses.

Patronage Red Bus patronage on ECan urban service contracts was 3.38 million passenger trips in 2016, slightly lower (1.1%) than the 3.42 million passenger trips in 2015. By comparison overall ECan urban passenger Metro network trips fell approximately

2016 2015

($’000) ($’000)

Revenue 19,105 18,120

Net surplus before taxation 132 25

Tax expense 39 7

Other Comprehensive income (Property Revaluation)

2,277 0

Total Comprehensive Income 2,370 18


2.3% compared with 2015. 2016 Metro network passenger trip numbers were 20.5% below the 2010 pre-earthquake passenger trip volumes. Passenger numbers dipped during the second quarter with a partial recovery in the fourth quar-ter. School passenger trips are 4.5% lower this year than in 2015. There were no major network changes this year other than a frequency increase on the Lyttelton (28) and Eastgate-Rapaki (535) services.

Outlook Christchurch urban passenger transport services are expected to remain relatively flat with no significant Metro network changes in the coming year. The completion of the Justice Precinct building with 1,500 employees and other corporate and retail buildings is anticipated to increase passenger activi-ty through the central bus interchange during the latter part of 2017. Red Bus intends to continue diversification and grow the rev-enue base beyond urban services through the expansion of Red Travel, Charter and The Rebuild Tour as tourism contin-ues to grow year on year. Investment from Christchurch Inter-national Airport and Christchurch and Canterbury Tourism profiling Christchurch as the South Island gateway aligns well with the Red Travel growth strategy. Additional investment in coaches and charter capacity is planned to expand both the service capacity and the variety of services on offer. Although the primary growth path is organic, Red Bus will consider acquisition opportunities that have an appropriate fit and add business value. A Government commitment at the December 2015 Paris cli-mate conference to a 30% reduction in 2005 green house gas emission level by 2030 is generating interest in alternative fuels and energy efficient hybrid and electric transport op-tions. Red Bus is working with Christchurch City Council on options for a future electric bus potential trial. The company intends to retain its focus on improving custom-

er service and operational efficiency while continuing to meet or exceed projected budget results. Reversing the recent rising trend in lost time accidents and continued systemic improvement of safety protocols and procedures are important operational objectives this year.

Acknowledgements The company has a highly professional and competent team of drivers, support staff and managers delivering services and leading the company. We acknowledge and appreciate the contribution from all employees, directors and suppliers dur-ing the past year. Tony Mountford retires by rotation at the AGM in October 2016. Tony has contributed with enthusiasm throughout his nine years as Director especially in his role as Chairman of the Health and Safety subcommittee since November 2014. We wish Tony well for the future.

Paul Kiesanowski Chairman

Paul McNoe Chief Executive


Our Business

At Red Bus we are committed to delivering reliable, safe and comfortable customer-focused services. This year we safely delivered 3.38 million passenger trips on urban services that operate 20 hours a day, seven days a week (3.74 million pas-senger trips across all services). Urban passenger services contracted to Environment Canter-bury (ECan) remains the largest revenue stream followed by Red Travel, charter and two fully commercial urban services. This year the combination of winning the majority of ECan’s school tenders and implementing higher frequency on the Lyttelton and Rapaki/Eastgate services with smaller buses has improved financial results which began to flow through from January 2016. The construction and completion of central city buildings is growing the number of workers in the CDB. This has yet to translate into urban passenger growth with overall network passenger trips numbers remaining 20.5% below pre-earthquake numbers. A complete recovery of passenger num-bers is expected to take some years. ECan has a marketing plan to focus on businesses returning to the city centre and encourage staff to consider public transport as a first choice. Road works continue to cause delays and detours on urban services in the city roading network. The Stronger Christ-church Infrastructure Rebuild Team has committed to com-pleting all the major repair work in 2016.

Our People

Red Bus as a large Christchurch employer aims to be the in-dustry employer of choice. We are proud to offer a profes-sional work environment that focuses on customer service, fair pay, and a safe work environment with a modern and well maintained fleet.

Recruitment, Retention and Training

Retaining and selecting good people is important for any busi-ness, regardless of the overall labour market and financial climate. The Red Bus combination of industry competitive

remuneration, robust pre-employment and induction pro-cesses plus a commitment to employee development contin-ues to attract and retain good people. Staff turnover rates are similar to previous years although in the second and third quarters employing drivers was more difficult than it had been in the past. Fortunately this was a relatively short lived issue and from the fourth quarter driver availability returned to a more comfortable situation. Our training investment this year was focussed on the Safe and Fuel Efficient Driver (SAFED) training programme with

111 drivers trained in 2016.

Health and Safety

The company is committed to maintaining a safe work envi-ronment for the protection of our people, customers and visitors. Both the Board and Workplace Health and Safety committees have reviewed company health and safety sys-tems and processes to ensure full compliance with the new Health and Safety at Works Act that came into force on 4 April 2016. Red Bus holds ACC Tertiary level accreditation. The increase in lost time injuries for 2016 at 28.1 LTI’s per million hours worked (LTIFR) (12 lost time incidents) was dis-appointing compared with the 2015 LTFIR of 20.2 and 8 LTI’s. This year for the first time in the company’s history a Red Bus driver was responsible for a fatal accident at an inner city intersection. Telematics data immediately before this acci-dent recorded no speeding events or other actions to indicate any driving concerns and because no braking occurred before the impact it seems likely that the driver did not observe that the traffic light was red. Judge MacAskill in his summing up said “Sometimes we all make mistakes on the road, with our driving. Most times nothing happens and sometimes some-thing terribly tragic happens, like this”. The random drug and alcohol testing regime established in 2007 takes a non-recriminatory approach to ensure driver and customer safety. There were no non-negative results for 2016 (none also in 2015).

Operational Services

Red Bus provides a broad range of travel options.

Luxury coach services in Canterbury and across the South Island.

Charter services for schools, community groups, cor-porate, sports groups for a variety of functions and events.

Timetabled urban and school services within Christ-church plus commercial services between Darfield and Oxford and the city.

Rugby Express services operated for Super 18 rugby and test matches.

Red Travel coach line launched last year has added a new revenue stream to our business and achieved substantial growth. Canterbury tourism is rising as the city recovery ad-vances which supports ongoing growth of Red Travel coach services. The Rebuild Tour in partnership with Canterbury Museum continues to rank amongst the top Christchurch TripAdvisor attractions and was awarded a TripAdvisor certificate of excel-lence for the third year running. The new bus interchange became fully operational in October 2016. Although there was some initial driver anxiety about reversing out of the buses bays prior to completion the sys-tem is working well. The only outstanding item is the installa-tion of a camera above each bus bay to give drivers a clear


and consistent view of their reversing space.

Red Bus achieved a commended Z Energy Transport Award at the 2016 Energy Efficiency awards recognising our successful implementation of fleet Telematics. Key elements in achieving the 4.3% reduction in overall fleet fuel consumption were giving drivers transparency on how the system worked, a weekly update on their scores, a transparent process for driv-ers to flag concerns about event recording and an incentive programme. The graph below shows the significant improvement in Telematics scores since its introduction in March 2015. There are three long term benefits—customers are noticing a smoother and more comfortable ride, lower fuel consumption and reduced vehicle maintenance. ECan’s mystery shopper surveys measure ride smoothness and over 2016 Red Bus quarterly results have been 4.9% higher than the Christchurch

Metro network average. Christchurch City Council completed the outbound passenger lounge on Riccarton Road and has begun redevelopment of Riccarton Road to alleviate traffic congestion and improve the passenger transport travel time. While the project works will take over 12 months and create more short term congestion the long term benefits of this work are worthwhile.

The company invested in an upgrade of the core radio tele-phone network converting all analogue radios over to digital. Operationally this results in a single point for fleet communi-cation with improved reliability. Red Bus continues to lead in customer service within the ur-ban network as demonstrated by the adjacent graph. Im-proved ride smoothness following the introduction of Telematics is one of the underlying factors in this upward trend. The ECan mystery shopper survey is undertaken ran-domly across the Christchurch network each month.

Stakeholder Engagement

We continue to work with Environment Canterbury, Christ-church City Council, NZTA and others to support the ongoing recovery of the passenger services network. Red Bus sup-ports establishment of the Greater Christchurch Public Transport Joint Committee to improve customer service and network efficiency. One example of the strong relationship with ECan was a joint initiative to introduce smaller more customer friendly buses on connector services - Eastgate/Rapaki, Styx Mill/Northlands, Casebrook/Northlands, Burwood/New Brighton and West-morland/Eastgate. Mercedes City 45 buses have full urban accessibility including one wheelchair space. The first of these buses went into service in June 2016 and the remaining seven are going into service in August 2016.

Community Support and Engagement

Red Bus supports the Christchurch community through assis-tance with a variety of special events and community activi-ties. We support the CBD Stampede, now in its third year. Red Bus also provides organised passenger services for a number of Christchurch sporting, social and public events across the city. Examples are the Rugby Express, Run to Remember, Summer Starter and City to Surf.

Civil Defence

Red Bus remains available to assist Civil Defence with major event planning processes with strong logistical support,

skilled drivers and a large fleet able to deliver the rapid move-ment of large numbers of people.

Environment and Energy

The company continues to minimise the environmental im-pact of our business through a business-wide recycling and recovery programme. This involves monitoring and minimis-ing the use of key consumables such as fuel, oil and water and recycling or reusing materials whenever practicable. The successful Telematics implementation has achieved a 4.3% reduction in overall fleet fuel consumption which reduc-es the fleet greenhouse gas and exhaust emissions by the same percentage. Red Bus is currently working with Council exploring the opera-tional and economic impacts of electric and energy efficient buses. This may result in trial projects if the review of options is sufficiently promising and there is funding available.

Technological advances in battery and storage capacity are occurring at a rapid pace. These factors aligned with the NZ Government’s contestable fund to support the introduction of electric vehicles could result in electric buses becoming eco-nomically practical faster than previously expected.


Board of Directors Management Team

L to R: Nick Dwan (Charter Mgr), Peter Hayward (Transport Mgr), Paul McNoe (Chief Executive), Nic Aitken (Workshop Mgr), Nicky Halligan (Marketing Co-ord), Terry Foote (CFO)

L to R: Bob Lineham, Paul Kiesanowski, Melanie Lynn (intern director), Tony Mountford, Tim Keenan


Financial Statements The directors have approved for issue the financial state-ments of Red Bus Limited for the year ended 30 June 2016. For and on behalf of the Board of Directors

Paul Kiesanowski CHAIRMAN—Board of Directors 2 August 2016 Tim Keenan CHAIRMAN— Audit and Risk Management Committee 2 August 2016

T

Statement of Comprehensive Income 10

Statement of Changes in Equity 11

Balance Sheet 12

Statement of Cash Flows 13

Notes to the Financial Statements

1. Summary of Accounting Policies 14

2. Profit from operations 18

3. Incomes Taxes 19

4. Key management personnel compensation 20

5. Trade and Other Receivables 21

6. Other Financial Assets 21

7. Property, Plant and Equipment 22

8. Intangible Assets 24

9. Trade and Other Payables 25

10. Finance Leases 25

11. Share Capital 26

12. Reserves 26

13. Retained Earnings 27

14. Commitments for Expenditure 27

15. Contingent Liabilities and Contingent Assets 27

16. Operating Leases 28

17. Notes to the Cash Flow Statement 28

18. Related party disclosures 30

19. Subsequent events 31

20. Financial instruments 31

21. Segmental reporting 34

22. Statement of Performance 35

Table of Contents for the Financial Statements Page


Statement of Comprehensive Income

For the year ended 30 June 2016

2016 2015

Note $'000 $'000

Revenue 2(a) 19,105 18,120

Other income 2(b) - 171

Depreciation and amortisation expense 2(c) (2,269) (2,269)

Finance expenses - -

Employee benefits expense (10,816) (10,182)

Other expenses 2(d) (5,888) (5,815)

Profit (loss) before income tax expense 132 25

Income tax credit/(expense) 3(a) (39) (7)

Net surplus (deficit) after taxation 93 18

Other comprehensive income

Gain on property revaluation 7 2,385 -

Tax on revalued assets (108) -

Total Comprehensive Income 2,370 18

The accompanying notes form part of and are to be read in conjunction with these financial statements.


Statement of Changes in Equity



Share capital Retained earnings Other reserves Total

Note $'000 $'000 $'000 $'000

Balance as at 1 July 2014 10 26,368 12,179 38,557

Total comprehensive income - 18 - 18

Dividends - (1,850) - (1,850)

Balance at 30 June 2015 13 10 24,536 12,179 36,725

Total comprehensive income - 93 2,277 2,370

Dividends - (1,350) - (1,350)

Balance at 30 June 2016 13 10 23,279 14,456 37,745


Balance Sheet As at 30 June 2016

2016 2015

Note $'000 $'000

Current Assets

Cash and Cash Equivalents 17(a) 2,003 1,189

Trade and Other Receivables 5 869 675 Other Financial Assets 6 2,493 3,442

Inventories 307 298

Total Current Assets 5,672 5,604

Non-current Assets

Property, Plant and Equipment 7 37,455 36,392

Intangible Assets 8 18 32

Total Non-current Assets 37,473 36,424

Total Assets 43,145 42,028

Current Liabilities

Trade and Other Payables 9 1,037 1,047

Current Subvention Payable 138 95

Employee Entitlements 913 858

Finance Leases 10 10 7

Total Current Liabilities 2,098 2,007

Non-current Liabilities

Finance leases 10 17 30

Employee entitlements 14 19

Deferred Tax Liabilities 3(b) 3,271 3,247

Total Non-current Liabilities 3,302 3,296

Total Liabilities 5,400 5,303

Net Assets 37,745 36,725

Equity

Share Capital 11 10 10

Reserves 12 14,456 12,179

Retained Earnings 13 23,279 24,536

Total Equity 37,745 36,725



Statement of Cash Flows


2016 2015

Note $'000 $'000

Cash flows from operating activities

Receipts from customers 18,610 17,603

Interest received 140 224

Payments to suppliers and employees (16,509) (16,001)

Interest and other finance costs paid - -

Subvention tax receipt (payment) (81) 462

Net cash from operating activities 17(b) 2,160 2,288

Cash flows from investing activities

Acquisition of property, plant and equipment (962) (1,442)

Proceeds from Investments 968 1,026

Proceeds from Insurance claims - -

Purchase of Investments (20) (893)

Proceeds from sale of property, plant and equipment 28 596

Net cash from investing activities 14 (713)

Cash flows from financing activities

Payment of Dividends (1,350) (1,850)

Repayment of borrowings (10) -

Net cash used in financing activities (1,360) (1,850)

Net increase in cash and cash equivalents 814 (275)

Cash and cash equivalents at beginning of year 1,189 1,464

Cash and cash equivalents at end of year 17(a) 2,003 1,189



Notes to the Financial Statements

1. Summary of Accounting Policies

Red Bus Limited is a profit-orientated limited liability company, incorporated in New Zealand. Its principal activity is the provision of urban public transport in the Canterbury region. The company is a reporting entity for the purposes of the Financial Reporting Act 2013 and its financial statements comply with that Act.

The company is a Council-Controlled Trading Organisation as defined in section 6(1) of the Local Government Act 2002. The company is wholly owned by Christchurch City Holdings Lim-ited, which is wholly owned by Christchurch City Council. The company’s registered office is located at 120 Ferry Road, Christchurch.

Basis of preparation The financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand (NZ GAAP). For the purposes of complying with NZ GAAP the entity is a for-profit entity.

The company is a Tier 2 for-profit entity and has elected to report in accordance with Tier 2 For-profit Accounting Stand-ards. The Company is eligible to report in accordance with Tier 2 For-profit Accounting Standards on the basis that it does not have public accountability and is not a large for-profit public sector entity.

These financial statements comply with New Zealand equiva-lents to the International Financial Reporting Standards (NZIFRS).

The financial statements are prepared under the historical cost convention, as modified by the revaluation of certain assets as identified in the significant accounting policies. The functional and presentation currency is New Zealand dollars.

Changes in accounting policies and disclosures The accounting polices detailed have been applied in the preparation of these financial statements for the year ended 30 June 2016 and have been consistently applied throughout the year. There have been no changes in accounting policies in comparison with the prior year. New Standards and Interpretations Not Yet Adopted NZ IFRS Standards and Interpretations that have recently been issued or amended but are not yet effective will be adopted in the period that application of the standard is re-quired, however they are not expected to have a significant impact on the company's financial statements. Critical Accounting Estimates and Assumptions The preparation of financial statements in conformity with NZ IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and report-ed amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on his-torical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these esti-mates.

Property, Plant and Equipment Property, Plant and Equipment At balance date the company reviews the useful life and re-sidual values of its property, plant and equipment. Assessing the appropriateness of useful life and residual value estimates of property, plant and equipment requires the company to consider a number of factors such as the physical condition of the asset, expected period of use of the asset by the compa-ny, and expected disposal proceeds from the future sale of the asset. An incorrect estimate of the useful life or residual value will impact on the depreciable amount of an asset, therefore im-pacting on the depreciation expenses recognised in the State-ment of Comprehensive Income, and carrying amount of the asset in the Balance Sheet. The company minimises the risk of this estimation uncertainty by:

· physical inspection of assets;

· asset replacement programs;

· review of second-hand market prices for similar as-sets; and

· analysis of prior assets sales. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are rec-ognised in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.


Significant Accounting Policies The accounting policies set out below have been adopted in the preparation of the financial report and applied consistent-ly to all years presented in the financial statements. (a) Revenue (i) Services rendered Sales of services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. (ii) Interest income Interest income is recognised in the profit or loss as it ac-crues, using the effective interest method. (b) Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as oper-ating leases. Payments made under operating leases are rec-ognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in the profit or loss as an integral part of the total lease expense. (c) Current and deferred income tax Income tax expense comprises both current tax and deferred tax, and is calculated using tax rates that have been enacted or substantively enacted by balance date. Current tax is the amount of income tax payable on the taxable profit for the current year, plus any adjustments to income tax payable in respect of prior years. Deferred tax is the amount of income tax payable or recover-able in future periods in respect of temporary differences and unused tax losses. Temporary differences are differences between the carrying amount of assets and liabilities in the financial statements and corresponding tax bases used in the computation of taxable profit. The measurement of deferred tax reflects the consequences that would follow from the manner in which the company expects to recover or settle the carrying amount of assets and liabilities.

Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be availa-ble against which the deductible temporary differences or tax losses can be utilised. Deferred tax is not recognised if the tem-porary difference arises from the initial recognition of goodwill or from the initial recognition of an asset and liability in a trans-action that is not a business combination, and at the time of the transaction, affects neither the accounting profit nor taxable profit. Current tax and deferred tax is charged or credited to the profit or loss, except where it relates to items charged or credit-ed directly to equity, in which case the tax is dealt with in equi-ty. (d) Goods and services tax (GST) The Statement of Comprehensive Income has been prepared so that all components are stated exclusive of GST. All items in the Balance Sheet are stated exclusive of GST, with the excep-tion of receivables and payables, which include GST. (e) Financial assets The company classifies its financial assets as either at fair value through profit or loss, loans and receivables, held to maturity investments or available for sale financial assets. The classifica-tion depends on the purpose for which the assets were ac-quired. Management determines the classification of its invest-ments at the initial recognition and re-evaluates this designa-tion at every reporting date. (i) Financial assets at fair value through profit and loss This category has two sub categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if ac-quired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also catego-rised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within twelve months of the balance sheet date. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active

market. They arise when the company provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than twelve months after the balance sheet date which are classified as non-current assets. The company classifies trade and other receivables and short term deposits in this category. (iii) Held to maturity investments Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturi-ties that the company’s management has the positive inten-tion and ability to hold to maturity. (iv) Available for sale financial assets Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any oth-er categories. They are included in non-current assets unless management intends to dispose of the investment within twelve months of the balance sheet date. Purchases and sales of investments are recognised on trade date, the date on which the company commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the company has transferred substantially all the risks and rewards of owner-ship. Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held to maturity invest-ments are carried at amortised cost using the effective inter-est method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the profit or loss in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of secu-rities classified as available for sale are recognised in equity, except for foreign exchange movements on monetary assets, which are recognised in the profit or loss. When securities classified as available for sale are sold or impaired, the accu-mulated fair value adjustments are included in the profit or


loss as gains and losses from investment securities. (v) Impairment of financial assets The company assesses at each balance sheet date whether there is objective evidence that a financial asset of a group of financial assets is impaired. If any such evidence exists for available for sale financial assets, the cumulative loss, meas-ured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, is removed from equity and recognised in the profit or loss. Impairment losses recognised in the profit or loss on equity instruments are not reversed through the profit or loss. (f) Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits, and other short-term highly liquid investments with maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the compa-ny’s cash management are included as a component of cash and cash equivalents for the purpose of the Statement of Cash Flows, and in current liabilities on the Balance Sheet. (g) Trade and other receivables Trade and Other Receivables are recognised initially at fair value and subsequently at amortised cost, less an allowance for any uncollectible amounts. A provision for doubtful debts is established when certain indicators suggest that collection of the full amount is no longer probable. Bad debts are written off when identified. (h) Inventories Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of com-pletion and selling expenses. The cost of other inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition (i) Property, plant and equipment Land and buildings are shown at fair value, based on periodic, but at least triennial, valuations undertaken by external inde-

pendent valuers, less subsequent depreciation. The land and buildings are valued at fair value using market-based evi-dence. Market rents and capitalisation rates were applied to determine the fair values. Any accumulated depreciation at the date of revaluation is eliminated against the gross carry-ing amount of the asset and the net amount is restated to the revalued amount of the asset. Valuations are performed with sufficient regularity to ensure revalued assets are carried at a value that is not materially different from fair value. Increases in the carrying amounts arising on revaluation of an asset are recognised as other comprehensive income. To the extent that the increase reverses a decrease previously recog-nised in profit or loss, the increase is first recognised in profit and loss. Decreases that reverse previous increases of the same asset are first charged against revaluation reserves di-rectly to comprehensive income to the extent of the remain-ing reserve attributable to the asset; all other decreases are charged to the profit or loss. All other property, plant and equipment, except capital work in progress, is stated at historical cost less accumulated de-preciation and impairment. Capital work in progress is record-ed at historical cost until the purchase of the item is complet-ed and it begins service in the business. Historical cost in-cludes expenditure that is directly attributable to the acquisi-tion of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the profit or loss during the financial year in which they are incurred. Land and capital work in progress is not depreciated. Depreci-ation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives, as fol-lows: Buildings and capital improvements 7 - 25 years Buses 17 - 26 years

Plant, equipment and motor vehicles 3 - 10 years The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s car-rying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its esti-mated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit or loss. When revalued assets are sold, it is the compa-ny’s policy to transfer the amounts included in other reserves in respect of those assets to retained earnings. (j) Intangible assets (i) Computer software Acquired computer software licenses are capitalised on the basis of costs incurred to acquire the software. These costs are amortised over their estimated useful lives of between one and three years. Costs associated with maintaining com-puter software programs are recognised as an expense as incurred. (ii) Trademarks Trademarks are finite life intangibles and are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over the estimated useful life of ten years. The estimated useful life and amortisation is reviewed at the end of each annual reporting period. (k) Impairment of non-financial assets Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash-generating units). An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s


carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amorti-sation, if no impairment loss had been recognised. (l) Trade and other payables These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade payables are recognised initially at fair value and subse-quently measured at amortised cost using the effective inter-est method. (m) Employee entitlements Liabilities for wages and salaries, including non-monetary benefits, annual leave, and accumulating sick leave expected to be settled within twelve months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. The liabil-ity for employee entitlements is carried at the present value of the estimated future cash flows. (n) Provisions A provision is recognised in the Balance Sheet when the com-pany has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits the amount of which can be reliably estimated will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market as-sessments of the time value of money and, where appropri-ate, the risks specific to the liability. (o) Finance Leases A finance lease is a lease that transfers to the lessee substan-tially all the risks and rewards incidental to ownership of an asset, whether or not title is eventually transferred. At the commencement of the lease term, the company recognises finance leases as assets and liabilities in the balance sheet at the lower of the fair value of the leased item and the value of the minimum lease payments.

The finance charge is charged to the profit or loss over the lease period so as to produce a constant periodic rate of in-terest on the remaining balance of the liability. The amount recognised as an asset is depreciated over its useful life. Where there is no uncertainty as to whether the company will obtain ownership at the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life. (p) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. (q) Dividends Provision is made for the amount of any dividend approved by the directors on or before the end of the financial year but not distributed at balance date.


2. Profit from Operations

(a) Revenue

2016 2015

$'000 $'000

Revenue from the rendering of services 18,749 17,784 Rental revenue 221 155

Interest income 135 181

19,105 18,120

(b) Other income

Net gain on sale of Property, Plant and Equipment - 171

- 171

(c) Depreciation and amortisation expense

Depreciation of non-current assets (2,255) (2,237)

Amortisation of non-current assets (14) (32)

(2,269) (2,269)

(d) Other expenses

Audit of the financial statements (40) (39)

Director fees (130) (135)

Raw materials & consumables (2,847) (3,210)

Minimum lease payments under operating leases (12) (18)

Bad debts (175) -

Other expenses (2,684) (2,413)

(5,888) (5,815)


3. Income Taxes

(a) Income Tax Expense

2016 2015

$'000 $'000

Tax Expense comprises:

Current tax expense 138 95

Under/(over) provision of income tax in previous year - -

Deferred tax expense relating to the origination and reversal of temporary differences

(99) (88)

Total Tax Expense 39 7

Reconciliation of prima facie income tax:

Profit from operations 132 25

Income tax expense calculated at 28% 37 7

Non-deductible expenses 2 (1)

Under/(over) provision of income tax in previous year - 1

39 7

(b) Deferred Tax balances

Taxable and deductible temporary differences arise from the following:

Opening Balance

Charged to income

Charged to Equity

Prior Period adjustment

Closing Balance

Year ended 30 June 2016

$'000 $'000 $'000 $'000 $'000

Deferred Tax Liabilities:

Property, Plant and Equipment (3,443) 93 (108) - (3,458)

Other - - - - -

-

(3,443) 93 (108) - (3,458)

Deferred Tax Assets:

Provisions 196 6 - (14) 187

Doubtful debts and Impairment losses - - - - -

196 6 - (14) 187

Net Deferred Tax Liability (3,247) 99 (108) (14) (3,271)


3. Income taxes (continued)

4. Key management personnel compensation

Opening Balance

Charged to income

Charged to Equity

Prior Period adjustment

Closing Balance

Year ended 30 June 2015

$'000 $'000 $'000 $'000 $'000

Deferred Tax Liabilities:

Property, Plant and Equipment (3,518) 75 - - (3,443)

(3,518) 75 - - (3,443)

Deferred Tax Assets:

Provisions 176 12 - 8 196

Doubtful debts and Impairment losses - - - - -

176 12 - 8 196

Net Deferred Tax Liability (3,342) 87 - 8 (3,247)

The primary component of the deferred tax balance is related to Property, Plant and Equipment. There is not expected to be any significant reversal of deferred taxation in the next twelve months.

2016 2015

$'000 $'000

The compensation of the directors and executives, being the

Key management personnel of the entity, is set out below:

Salaries and short term employee benefits 987 969


5. Trade and other receivables

6. Other financial assets

2016 2015

$'000 $'000

Trade and Other Receivables 574 470 Allowance for impairment of receivables (5) -

569 470

Prepayments 300 205

869 675

Trade and other receivables are stated at cost less any impairment losses. The carrying amounts of the company's receivables are reviewed at each balance date to determine whether there is any indication of impairment. If any indication exists, the receivables' recoverable amount is estimated. At balance date 21% (2015 23%) of the company's trade receivables were between 30 and 90 days overdue and 5% (2015: 2%) of the company's trade receivables were more than 90 days overdue. An allowance of $4,803 (2015 - nil) has been made for estimated irrecoverable amounts from the provision of services, determined by reference to past default experience. The net movement in the allowance was recognised in the profit or loss for the current financial year.

2016 2015 $'000 $'000

Bank Term Deposit 2,493 3,442

2,493 3,442

The company has funds invested on short term deposit (12 months or less) with its bankers.


7. Property, plant and equipment

Freehold land at fair

value

Buildings at fair value

Buses at cost Plant &

Equipment Total

$'000 $'000 $'000 $'000 $'000

Balance at 1 July 2014 13,600 1,406 32,319 2,816 50,141

Balance at 30 June 2015 13,600 1,474 33,047 3,318 51,439

Work in Progress - - 371 44 415

Additions - 42 329 172 543

Disposals - - (207) (5) (212)

Net revaluation increments 2,000 385 - - 2,385

Balance at 30 June 2016 15,600 1,901 33,540 3,529 54,570

Accumulated Depreciation and Impairment:

Balance at 1 July 2014 - (165) (10,684) (2,054) (12,903)

Balance at 30 June 2015 - (334) (12,474) (2,239) (15,047) Disposals - - 181 6 187

Depreciation expense - (167) (1,859) (229) (2,255)

Balance at 30 June 2016 - (501) (14,152) (2,462) (17,115)

Net book value at 30 June 2015 13,600 1,140 20,573 1,079 36,392

Net book value at 30 June 2016 15,600 1,400 19,388 1,067 37,455

2016 2015

$'000 $'000

Capital work in progress is contained in the following categories

Buses 371 -

Plant & Equipment 44 -

415 -


7. Property, plant and equipment (continued)

2016 2015

$'000 $'000

Aggregate depreciation allocated, whether recognised as an

expense or capitalised as part of the carrying amount of other

assets during the year:

Buildings 167 169 Buses 1,859 1,871

Plant & Equipment 229 197

2,255 2,237

Freehold land and buildings carried at fair value Land & Buildings is valued at fair value using market-based evidence on its highest and best use with reference to comparable sales and market rents. Mr W Blake (ANZIV/SNZPI) of Knight Frank Limited was contracted by the Board as an independent valuer to assess the fair value the Land & Buidlings. Mr W Blake valued the land and buildings effective as at 30 June 2016.

Caveats are registered against certain property titles under section 40 of the Public Works Act 1981.


8. Intangible Assets

.

develop- Goodwill Trade marks Software Total

$'000 $'000 $'000 $'000

Gross carrying amount:

Balance at 1 July 2014 - 14 298 312

Balance at 30 June 2015 - - 14 328 342

Additions - - - -

Disposals - - - -

Balance at 30 June 2016 - - 14 328 342

Accumulated Amortisation and Impairment:

Balance at 1 July 2014 - (9) (269) (278)

Balance at 30 June 2015 - - (12) (298) (310)

Amortisation expense - (1) (13) (14)

Disposals - - - -

Balance at 30 June 2016 - (13) (311) (324)

Net book value as at 30 June 2015 - 2 30 32

Net book value as at 30 June 2016 - 1 17 18


9. Trade and Other Payables

10. Finance Leases

2016 2015

$'000 $'000

Trade Payables 467 461

Good and Services Tax payable 97 135

Accrued expenses 473 451

1,037 1,047

2016 2015

$'000 $'000

Finance Lease

No later than 1 year 10 7

Later than one year but no later than five years 17 30

Later than 5 years - -

27 37

The company has a finance lease for equipment . The yearly payments are estimated at $10,000 per year. On the conclusion of the repayments the equipment will transfer to the company.


11. Share Capital

12. Reserves

2016 2015

$'000 $'000

Fully paid ordinary shares 10 10

As at 30 June 2016, share capital comprised 10,100 ordinary shares (2015: 10,100).

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company, and rank equally with regard to the company’s residual assets.

Reserve for sale Asset General Total

Funds revaln revaluation

$'000 $'000 $'000 $'000 $'000

Balance at 1 July 2014 4,879 7,300 12,179

Balance at 30 June 2015 4,879 7,300 12,179

Gain/(loss) on revalued assets 2,385 - 2,385

Deferred Tax on revaluation (108) (108)

Balance at 30 June 2016 7,156 7,300 14,456

Asset Revaluation Reserve The Asset Revaluation Reserve comprises $6,080,000 (2015: $4,080,000) of land revaluation and $1,076,000 (2015: $799,000) of buildings revaluation net of deferred tax.

General Reserve The General Reserve of $7,300,000 comprises a Share Premium Reserve of $7,290,000 and a Capital Redemption Reserve of $10,000.


13. Retained Earnings

14. Commitments for Expenditure

15. Contingent Liabilities and Contingent Assets

2016 2015

$'000 $'000

Balance at beginning of year 24,536 26,368

Net surplus (deficit) after taxation 93 18

Dividends paid (1,350) (1,850)

Balance at end of year 23,279 24,536

As at 30 June 2016 the company had entered into contracts to purchase Property, Plant and Equipment of $3,185,907 (2015: nil).

2016 2015

$'000 $'000

Contingent Liabilities:

Performance bonds 920 920

The company has a contingent liability in respect of contract performance bonds with Environment Canterbury. The company does not anticipate having to make any payment under these performance bonds.

Contingent Assets:

As at 30 June 2016 the company had no contingent assets (2015: nil).


16. Operating Leases

17. Notes to the Cash Flow Statement

(a) cash and cash equivalents

2016 2015

$'000 $'000

No later than one year 7 9

Later than one year and not later than five years 18 -

25 9

Cash 31 26

Bank balances 234 94

Call deposits 1,738 1,069

2,003 1,189


17. Notes to the Cash Flow Statement (continued) (b) Reconciliation of profit for the year with net cash from operating activities

2016 2015

$'000 $'000

Profit for the year 93 18

(Gain) on sale or disposal of non-current assets - (171)

Depreciation and amortisation of non-current assets 2,269 2,269

Increase/(decrease) in current tax balances 43 565

Increase/(decrease) in deferred tax balances 24 (95)

Deferred tax on revaluation to reserves (108) -

Changes in net assets and liabilities:

(Increase)/decrease in assets

Current receivables - other (194) (154)

Accrued Interest - Investments 14 24

Current inventories (9) (40)

Increase/(decrease) in liabilities

Current payables (10) (112)

Employee entitlements - current 53 (72)

Finance leases -current 3 7

Employee Entitlements - non current (5) 19

Finance Leases - non current (13) 30

Net cash from operating activities 2,160 2,288


18. Related party disclosures

(b) Payments to related parties

(c) Year-end balances arising from transactions

During the year the company conducted normal business transactions with its shareholder, Christchurch City Holdings Limited (CCHL), its ultimate shareholder Christchurch City Council and associated CCHL subsidiaries of Connetics Ltd, City Care Ltd, Christchurch International Airport Limited and Vbase Ltd of which the major transactions were

2016 2015

(a) Receipts from related parties $'000 $'000

Transactions:

Sales of goods/services to ChCh City Council 9 9

Sales of goods/services to Christchurch City Holdings Ltd 1 -

Sales of goods/services to Connetics Ltd 1 -

Sales of goods/services to City Care Ltd 1 -

Sales of goods/services to ChCh International Airport Ltd - 16

Sales of goods/services to Vbase Ltd 17 4

29 29

Transactions: Rates paid to ChCh City Council 72 67 Purchase of goods/services from ChCh City Council 1 - Payment of Dividends to ChCh City Holdings Ltd 1,350 1,850 Purchase of goods/services from City Care Limited 60 100

Purchase of goods/services from ChCh International Airport Limited

4 24

1,487 2,041

Payable to Christchurch City Council 1 -

Payable to City Care Limited 1 14

Payable to Christchurch International Airport Limited 1 -

Receivable from Christchurch City Council 1 -


18. Related party disclosures (continued) (d) Separate disclosure of individual transactions

19. Subsequent Events

20. Financial instruments

(a) Financial instrument categories

The company paid dividends of $1,350,000 net of imputation credits (2015: $1,850,000) to its immediate parent, Christchurch City Holdings Limited. The company made a subvention payment totalling $80,578 (2015 subvention receipt $461,668) and purchased loss offsets of $207,200 (2015 sold loss offsets $1,648,814)from members of the Christchurch City Council Group. For the current year the company will make a payment of $137,922 as a subvention payment and purchase tax losses of $492,579 from members of the Christchurch City Council Group. During the year no transactions were entered into with any of the company's directors other than payment of directors' fees. Key management personnel of the company purchased sundry goods and services from the company during the period which totalled $502 (2015: $850). There were no outstanding bal-ances with Key management personnel at the end of the year (2015: nil). All transactions were conducted on standard commercial terms.

There were no events post balance date, that require disclosure or adjustment to the information included in the financial statements.

The accounting for financial instruments have been applied to the line items below:

2016 2015 $'000 $'000 Financial Assets

Loans & Receivables Cash & Cash Equivalents 2,003 1,189

Short Term Deposits 2,493 3,442

Trade & Other Receivables 574 470

Total Loans & Receivables 5,070 5,101

Financial Liabilities

Financial Liabilities at amortised cost Trade & Other Payables 1,037 1,047

Borrowings 27 37

Total Financial Liabilities at amortised cost 1,064 1,084


20. Financial instruments (continued)

(b) Financial Instrument Risks

The company has a policy that manages the risk associated with financial instruments, and is risk adverse and seeks to minimise exposure from its treasury activities. The policy does not allow any transactions that are speculative in nature to be entered into. Market Risk Cash flow interest rate risk Cash flow interest rate risk is the risk that the cash flows from a financial instrument will fluctuate because of changes in the market interest rates. Borrowings issued at variable interest rates expose the company to cash flow rate risk. Had interest rates been either 1% higher or lower, and all other variables been held constant , the Company's profit would have increased (or decreased) by approximately $20,000 (2015:$12,000) Credit risk Financial instruments that potentially subject the company to concentrations of credit risk consist principally of cash, short-term investments and trade receivables. Cash and short-term investments are placed with banks with high credit ratings assigned by international credit-rating agencies, or other high credit quality financial institutions. The company manages its exposure to credit risk from trade receivables by performing credit evaluations on all customers requiring credit whenever possible, and continuously monitoring the outstanding credit exposure to individual customers. The company does not generally require or hold collateral against credit risk.

Maximum exposure to Credit Risk

2016 2015

$'000 $'000

Cash & Cash Equivalents 2,003 1,189

Short Term Deposits 2,493 3,442

Trade and Other Receivables 574 470

5,070 5,101

Credit quality of financial assets The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to the Standard & Poor's credit ratings:

2016 2015

$'000 $'000

Counterplay with Credit Ratings

Cash & Cash Equivalents AA- 2,003 1,189

Short Term Deposits AA- 2,493 3,442

4,496 4,631


20. Financial instruments (continued)

Liquidity risk Liquidity risk represents the company's ability to meet its contractual obligations. The company evaluates its liquidity requirements on an ongoing basis. In general, the company generates sufficient cash flows from its operating activities to meet its contractual obligations arising from its financial liabilities and has credit lines in place to cover potential shortfalls.

Contractual Maturity Analysis

Carrying amount

Contractual cash flow

Less than 1 year

1-2 years 2-5 years

$'000 $'000 $'000 $'000 $'000

As at 30 June 2016

Financial Assets Cash & Cash Equivalents 2,003 2,003 2,003 - -

Short Term Deposits 2,493 2,493 2,493 - -

Trade and Other Receivables 574 574 574 - -

5,070 5,070 5,070 - -

Financial Liabilities Trade and Other Payables 564 564 564 - -

Accruals 473 473 473 - -

Finance leases 27 27 7 7 13

1,064 1,064 1,044 7 13

As at 30 June 2015

Financial Assets

Cash & Cash Equivalents 1,189 1,189 1,189 - -

Short Term Deposits 3,442 3,442 3,442

Trade and Other Receivables 470 470 470 - -

5,101 5,101 5,101 - -


Trade and Other Payables 596 596 596 - -

Accruals 451 451 451 - -

Finance Leases 37 37 7 7 23

1,084 1,084 1,054 7 23


20. Financial Instruments (continued)

21. Segmental reporting

Sensitivity Analysis The company is exposed to movements in interest rates.

2016 2015

Interest Rate Risk -100bps +100bps -100bps +100bps

$'000 $'000 $'000 $'000

Financial Assets

Cash & Cash Equivalents (20) 20 (12) 12


Borrowings 0

(0) 0 (0)

Total Sensitivity (20) 20 (12) 12 Explanation of the interest rate risk sensitivity The interest rate sensitivity is based on a reasonable possible movement in interest rates, with all other variables held constant, measured as a basis point (bps) movement. (c) Capital management The company's capital includes share capital, reserves and retained earnings. The company's policy is to maintain a strong capital base so as to maintain investor, creditor and market confi-dence and to sustain the future development of the business. The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowing and the advantages and security offered by a sound capital posi-tion. (d) Fair Value The estimated fair values of the company's financial instruments are represented by the carrying values.

Red Bus Limited operates predominantly in one segment, being the provision of urban public transport in the Canterbury Region.


22. Statement of performance The Statement of Intent agreed between the directors of Red Bus Limited and Christchurch City Holdings Limited provided the following performance targets.

Actual Target

(a) Financial performance

Revenue $19.1 $18.5m Target achieved

NPAT $0.1m $0.4m Target not achieved

EBITDA $2.3m $2.7m Target not achieved

Net debt as a % of equity 14.3% <20% Target achieved

Net interest as a % of equity -0.4% <10% Target achieved

Liquidity % 270.4% >120% Target achieved

(b) Operational performance

Number of urban passengers 3.74m At least 3.5 million Target achieved

Minimum fleet utilisation in peak 93% At least 85% Target achieved

Percentage of service trips not run Less than .04% Less than 1% Target achieved

Percentage of service trips starting on time 98% At least 97% Target achieved


22. Statement of performance (continued)

(c) Social and environmental Actual Target

Percentage of bus fleet with Euro 2 or higher emission compliant engines

94% 85%

Target achieved

Secondary ACC accreditation Maintained Maintained

Target achieved—from September 2015 Tertiary ACC accreditation

Lost Time Injury experience 28 Fewer than 15 LTI’s

Target not achieved Per million worked hours

Customer Service (urban) 86% Achieve at least 82% in

Target achieved Annual mystery shopper survey Substantiated Customer Complaints (urban) 4 Fewer than 3

Target not achieved Substantiated complaints Per 100,000 customers


Independent Auditor’s Report

To the readers of Red Bus Limited’s

financial statements and performance information for the year ended 30 June 2016

The Auditor-General is the auditor of Red Bus Limited (the company). The Auditor-General has ap-

pointed me, John Mackey, using the staff and resources of Audit New Zealand, to carry out the au-

dit of the financial statements and performance information of the company on her behalf.

Opinion on the financial statements and the performance information

We have audited:

the financial statements of the company on pages 10 to 34, that comprise the Balance

Sheet as at 30 June 2016, the statement of comprehensive income, statement of changes

in equity and statement of cash flows for the year ended on that date and the notes to the

financial statements that include accounting policies and other explanatory information;

and

the performance information of the company on pages 35 to 36

In our opinion:

the financial statements of the company:

present fairly, in all material respects:

· its financial position as at 30 June 2016; and

· its financial performance and cash flows for the year then ended; and

comply with generally accepted accounting practice in New Zealand in accordance

with New Zealand Equivalents to International Financial Reporting Standards Re-

duced Disclosure Regime

the performance information of the company presents fairly, in all material respects, the

company’s actual performance compared against the performance targets and other

measures by which performance was judged in relation to the company’s objectives for the

year ended 30 June 2016.

Our audit was completed on 2 August 2016. This is the date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board

of Directors and our responsibilities, and explain our independence.

Basis of opinion

We carried out our audit in accordance with the Auditor-General’s Auditing Standards, which incor-

porate the International Standards on Auditing (New Zealand). Those standards require that we

comply with ethical requirements and plan and carry out our audit to obtain reasonable assurance

about whether the financial statements and the performance information are free from material

misstatement.

Material misstatements are differences or omissions of amounts and disclosures that, in our judge-

ment, are likely to influence readers’ overall understanding of the financial statements and the

performance information. If we had found material misstatements that were not corrected, we

would have referred to them in our opinion.

An audit involves carrying out procedures to obtain audit evidence about the amounts and disclo-

sures in the financial statements and in the performance information. The procedures selected

depend on our judgement, including our assessment of risks of material misstatement of the finan-

cial statements and the performance information, whether due to fraud or error. In making those

risk assessments, we consider internal control relevant to the preparation of the company’s finan-

cial statements and performance information in order to design audit procedures that are


appropriate in the circumstances but not for the purpose of expressing an opinion on the effective-

ness of the company’s internal control.

An audit also involves evaluating:

the appropriateness of accounting policies used and whether they have been consistently

applied;

the reasonableness of the significant accounting estimates and judgements made by the

Board of Directors;

the appropriateness of the reported performance information within the company’s frame-

work for reporting performance;

the adequacy of the disclosures in the financial statements and in the performance infor-

mation; and

the overall presentation of the financial statements and the performance information.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial

statements and the performance information. Also, we did not evaluate the security and controls

over the electronic publication of the financial statements and the performance information.

We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our

audit opinion.

Responsibilities of the Board of Directors

The Board of Directors is responsible for the preparation and fair presentation of financial state-

ments for the company that comply with generally accepted accounting practice in New Zealand.

The Board of Directors is also responsible for preparation of the performance information for the

company.

The Board of Directors’ responsibilities arise from the Local Government Act 2002.

The Board of Directors is responsible for such internal control as it determines is necessary to ena-

ble the preparation of financial statements and performance information that are free from materi-

al misstatement, whether due to fraud or error. The Board of Directors is also responsible for the

publication of the financial statements and the performance information, whether in printed or

electronic form.

Responsibilities of the Auditor

We are responsible for expressing an independent opinion on the financial statements and the

performance information and reporting that opinion to you based on our audit. Our responsibility

arises from the Public Audit Act 2001.

Independence

When carrying out the audit, we followed the independence requirements of the Auditor-General,

which incorporate the independence requirements of the External Reporting Board.

Other than the audit, we have no relationship with or interests in the company.

John Mackey

Audit New Zealand

On behalf of the Auditor‑General

Christchurch, New Zealand


Statutory Information

Ownership

Red Bus Limited is a limited liability company incorporated

under the Companies Act 1993. The company is wholly owned

by Christchurch City Holdings Limited, a company 100% owned

by the Christchurch City Council.

Principal activities

The company’s principal activity during the year was the

operation of urban bus services in the Canterbury region.

Dividend

A Dividend of $1,350,000 was paid on June 29, 2016 with no

imputation credits attached to Christchurch City Holdings

Limited. Red Bus Ltd satisfied all Companies Act 1993 require-

ments at the time of the dividend payment.

Directors

The following directors held office during the year ended 30

June 2016:

Paul Kiesanowski

Tim Keenan

Tony Mountford

Bob Lineham

Directors’ Interests

The company maintains an interests register in which particulars of certain transactions and matters involving the directors are

recorded. These records are a requirement under the Companies Act 1993. The following entries were recorded by the compa-

ny’s directors in the interests register during the year ended 30 June 2016.

Director Entity Position

Tim Keenan Bayley Insurance Trust Limited Director

Theatre Royal Charitable Foundation Director

Keenan Trustee Services Limited Director

Nurse Maude Director

McAuley Property Limited Director

Hilton Leasing Limited Director

Coolpak Coolstores Limited Director

Tony Mountford Enso International Limited Director

Courier Solutions Ltd Director

Bob Lineham San Dona Olives Limited Director

Local Government Finance Corporation Limited Director

Quality Finance Audit and Risk Committee –Canterbury DHB

Appointed Member

Christchurch City Holdings Ltd Chief Executive Officer (Retired 30 June 2016)

Riccarton Bush Trust Trustee

Paul Kiesanowski Paul Kiesanowski Advisory Ltd Director

New Zealand Red Cross Director

Red Cross Foundation Trustee

Earthquake Commission Commissioner

City Care Limited Chief Financial Officer


Directors’ Remuneration

Remuneration and other benefits paid or due and payable to directors for services during the year as a

director of the company were as follows:

Directors’ remuneration includes fees only. No other form of remuneration was paid during the year.

Use of Company Information

During the year, no notices were received from directors requesting to use company information in their

capacity as directors, which was not otherwise available to them.

Directors’ Insurance

During the year the company paid premiums insuring all directors in respect of liability and costs to the

extent permitted under Section 162 of the Companies Act 1993.

Employee Remuneration

Remuneration and other benefits paid or due and payable to employees who

received remuneration and other benefits of $100,000 or more per annum

was as follows:

Donations

There were no cash donations made during the year.

Auditor

In accordance with Section 70 of the Local Government Act 2002, the Office of

the Auditor General has appointed Audit New Zealand to undertake the audit.

Director Remuneration

Tim Keenan 37,333

Tony Mountford 33,867

Paul Kiesanowski 59,067

Bob Lineham -

Total $130,267

Total remuneration and other benefits

Number of employees

2016 2015

$100,001 to $110,000 - 1

$110,000 to $120,000 1 -

$140,001 to $150,000 - 1

$160,000 to $170,000 1 -

$300,001 to $310,000 1 1


Governance Statement

Board Structure and Functions

The Directors of Red Bus Limited are appointed by the share-

holder, Christchurch City Holdings Limited for terms of up to

three years. Board membership currently consists of four non

-executive directors.

The Red Bus Ltd Board’s principal responsibilities are:

To provide strategic direction and create shareholder

value through the development and approval of company

strategies and policies, with particular regard to corporate

objectives, return expectations and the concepts of corpo-

rate sustainability.

To foster and encourage a company culture which re-

quires management and every staff member to adhere to

high levels of ethical behaviour.

To review and monitor company performance against

budget and other performance targets.

To appoint, review performance and set remuneration for

the Chief Executive.

Monitor the appointment of senior managers and provide

ongoing professional development opportunities for the

senior management team.

To communicate with the shareholder on a regular basis

through the preparation and submission of an annual

Statement of Intent, Annual and Interim Reports and oth-

er reporting as requested by the shareholder

To approve and monitor risk management programmes

and ensure legislative and regulatory compliance.

To ensure that appropriate external advice is available to

the board and management.

The Board has formally constituted three board committees:

Audit and Risk Management Committee

Membership of the committee consists of all members of

the board, and the committee is regulated by approved

terms of reference that address membership, functions

and responsibilities, authorities and reporting proce-

dures. The committee is chaired by a director who is not

the board Chairman. The committee monitors risk man-

agement processes, oversees the findings of the compa-

ny’s external auditors and monitors legislative compli-

ance.

Health & Safety Sub-Committee

Membership of the sub-committee consists of all mem-

bers of the board, and the sub-committee is regulated by

approved terms of reference that address membership,

functions and responsibilities, authorities and reporting

procedures.

The sub-committee is chaired by a director who is not the

board Chairman. The sub-committee is to provide inde-

pendent assurance and assistance to the Board that the

company is able to meet its primary duty of care to en-

sure that the health and safety of workers is protected

and that no others are put at risk by Red Bus’s work.

CE Review and Remuneration Committee

Membership of the committee consists of the board

Chairman, who also chairs the committee, and one other

director. The committee convenes at least annually to

review the performance of the Chief Executive and make

recommendations to the board on the Chief Executive’s

remuneration package. In considering remuneration poli-

cy, the committee has regard to performance and compa-

rable market rates.

Board Operations and Policies

The board meets regularly and policies are in place to ensure

these meetings are subject to formal agendas and reporting

procedures. The board has a policy relating to evaluating its

own performance.

The Board seeks, in conjunction with its shareholder, to main-

tain a balance of directors with complementary skills and

business experience and who will contribute to the Board in a

positive and constructive manner, while acting with the high-

est levels of integrity and professionalism. Newly appointed

directors undergo an induction process, which includes a site

visit and the provision of relevant documentation. Directors

are encouraged to belong to appropriate professional organi-

sations and to participate in ongoing training and develop-

ment relevant to their governance responsibilities.


Directory

Directors Paul Kiesanowski, Chairman

Tim Keenan

Bob Lineham

Tony Mountford

Officers Paul McNoe, Chief Executive

Nic Aitken, Workshop Manager

Nick Dwan, Charter Manager

Terry Foote, Chief Financial Officer

Nicky Halligan, Marketing Co-ordinator

Peter Hayward, Transport Manager

Registered Office 120 Ferry Road

P O Box 10-171

Christchurch 8145

New Zealand

Phone +64 3 379 4260

Email: [email protected]

Web: www.redbus.co.nz

Solicitors Buddle Findlay

Bankers ASB Bank Limited

Auditor Audit New Zealand

on behalf of the

Auditor General

http://www.redbus.co.nz

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