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TransLink Annual Report 2005

The Way Ahead

1 Performance to the Plan

3 Bringing Transportation Plans to Life

7 TransLink deploys Transit Police

9 Message from the Chair

11 Message from the CEO

12 The Year in Review

14 Road and Transit Expansion Program

17 Company Profile

19 2005 Awards and Recognition

20 Management Discussion and Analysis

28 Financial Report

The 2005 Greater Vancouver Transportation Authority Annual Report was prepared under the direction of the Board of Directors, which is

accountable for the contents of the report, including the selection of performance measures and the reported results. Any conflict between the

material published in this report and the Greater Vancouver Transportation Authority Act will be resolved by reference to the Act. All significant

decisions, events and identified risks as of December 31, 2005, have been considered in preparing the report.

On behalf of the Board of Directors | Malcolm Brodie, Chair

Contents

Expanding rapid transitPre-construction work began on the Canada Line, an automated rapid-transit line

that will link Vancouver, Richmond and the Vancouver International Airport, adding

transit capacity equivalent to 10 major road lanes. With the help of community input,

we also made significant progress on the project definition phase of the Evergreen Line,

a light-rail line that will join Lougheed Town Centre in Burnaby with neighbourhoods

in Port Moody and Coquitlam.

Building roads and bridgesTransLink chose the builder for the Golden Ears Bridge that will connect Langley and

Surrey on the south side of the Fraser River, and Maple Ridge and Pitt Meadows on

the north. The new TransLink-funded Dollarton Bridge opened in the District of North

Vancouver in the fall. Widening of the Fraser Highway in Surrey continued, and work

began on another major TransLink-funded road project: the 204th Street Overpass in

the City of Langley. We also continued repair work and safety improvements to the

Pattullo and Knight Street bridges.

Keeping our passengers safe and secureHonouring our commitment to improve the public transit system, TransLink deployed

the Transit Police Service – the first unit of its kind in Canada. The police officers will

provide better safety and security for our transit passengers and employees, and work

with local police to make our neighbourhoods safer.

In 2005, TransLink completed the first-year commitments of

its second three-year transportation plan. TransLink is delivering

transportation projects on time and on budget to improve the

lives of Greater Vancouver residents and to meet the needs of

a growing population and economy.

2005 MILESTONES

Performance to the PlanDelivering promised improvements

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Making our system more accessibleAccessibility was foremost on our minds in 2005 with the 25th Anniversary

of HandyDART, and the launch of the region's first Accessible Transit Strategic

Plan, which involved extensive consultation with people with disabilities and other

key stakeholders on how to make the system more welcoming to all residents in

the region.

Renewing aging infrastructureConstruction of the new Vancouver Transit Centre in Marpole began in 2005.

The $37-million facility will be home to approximately 1,000 transit employees and

400 buses, including TransLink's new electric trolley buses. The first of those trolleys

arrived in 2005. The pilot bus, which was tested extensively in 2005, is one of

228 state-of-the-art trolleys that will provide pollution-free, fully accessible transit

to thousands of transit customers on Vancouver and Burnaby trolley routes.

Testing the power of tomorrowTransLink further delivered on its promise to provide an effective, efficient and

environmentally sound transportation system for Greater Vancouver by launching

the Bus Demonstration Project to test alternative fuel and propulsion technologies.

Results will help guide TransLink in the future purchases of new buses.

Partnering with the federal government on the New Deal for Cities:TransLink is a significant beneficiary of the federal government's New Deal for Cities

and Communities, announced in 2005. Over the next five years, close to $390 million

in federal gas tax revenues will contribute to the building of public transit infrastructure

that will reduce pollution, increase transit service levels, and make the Greater

Vancouver transportation network more accessible to people with disabilities.

NEW DEAL FOR CITIES

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2005 Milestones (continued)

Expanding neighbourhood-friendly Community ShuttlesTransLink expanded the popular Community

Shuttle minibus service by 33 per cent,

adding 14 new routes and 33 minibuses in

North Surrey, Ladner, Maple Ridge, Pitt

Meadows, the Tri-Cities, Burnaby, West

Vancouver and Lions Bay. The smaller buses

provide neighbourhood-friendly service on

less busy, residential routes. Customers

enjoy more frequent departures and more

direct routing. Thanks to the Community

Shuttle program, to date TransLink has

freed up close to 50 conventional "big"

buses for use on busy routes. As a result,

more buses are running during rush hours

when ridership is at its highest levels.

Making it easierto cycle in the regionMore relaxed rules for bicycles on SkyTrain

were piloted to improve transit service for

cyclists. The new rules allow cyclists to

board via any door, increase the number of

bikes that can be carried, and significantly

reduce the hours during which bikes are

prohibited. Working in partnership with

local municipalities, TransLink provided

$4.25 million in 2005 to construct bike

lanes and routes, improve access to transit,

and invest in cycling research, education

and promotion. These projects improve

cycling safety throughout the region and

encourage more people to opt for cycling

as a way of travel.

Using technology to helproad and transit usersWith funding from Transport Canada,

Western Economic Diversification Canada,

the Ministry of Transportation and the

Vancouver Port Authority, TransLink's

Intelligent Transportation Systems sub-

sidiary is developing a Regional Advanced

Traveller Information System that will

benefit drivers, goods carriers, and transit

customers alike. This will involve a web

portal that will feature traveller information

for all modes of transportation, including

roads, bridges, BC Ferries, SeaBus, bus,

commuter rail and rapid transit service, etc.

Expanding VancityU-Pass serviceThe Vancity U-Pass program, which gives

students at the University of British

Columbia and Simon Fraser University a

discounted transit pass for unlimited travel

on the transit system, continues to grow in

popularity. Currently, 63,000 students

benefit from the program. Since the

Vancity U-Pass program was introduced in

the fall of 2003, daily transit ridership to

the two universities has grown by 61%.

TransLink continued to work to improve

service for Vancity U-Pass holders, adding

12,500 annual service hours to routes to

UBC and SFU in 2005, bringing the total

Vancity U-Pass service to 73,500 hours. In

2005, TransLink also extended the Vancity

U-Pass program to the summer term for

UBC students.

8:47 am Cyclist takes SkyTrain 9:15 am Technology keeps 98 B-line on time8:36 am Boarding Community Shuttle

3

Bringing Transportation Plans to LifeExceeding targets for 2005

Building the newGolden Ears BridgeIn December, the TransLink Board of

Directors selected Golden Crossing Group

as the preferred proponent to design,

build, finance and operate the Golden Ears

Bridge. The $800-million bridge will provide

a vital new link between communities on

the south side of the Fraser River – Langley

and Surrey – and the north-side communities

of Maple Ridge and Pitt Meadows.

Expected to open in mid-2009, the Golden

Ears Bridge will reduce travel times across

the river by at least 20 to 30 minutes and

improve transit connections on both sides

of the river. In addition, the bridge will

promote economic development in

adjacent communities.

Improving goods movementIn 2005, TransLink began work on the

Greater Vancouver Goods Movement Study

with funding from Transport Canada, the

BC Ministry of Transportation and the

Greater Vancouver Gateway Council.

This study will profile marine, road, rail

and air modes of goods movement to

understand their economic impact.

In addition, the study will help develop

regional consensus on the issues and

opportunities for goods movement and

identify worldwide best practices that could

be applied in Greater Vancouver. This study

will be conducted in two phases. The first

phase will be an environmental scan and

scoping study, looking at each mode and

its contribution to the regional, provincial

and national economies, while the second

phase will include data collection and

model development that will be used to

develop a freight strategy.

Upgrading and expandingregional roadsTransLink is working on major road

upgrades and expansions to reduce traffic

congestion, improve commuting times and

facilitate inter-regional trucking. Major

TransLink-funded improvements that were

under construction in 2005 include:

• The 204 Street Overpass to

improve north-south travel across

the rail tracks just south of the

Langley Bypass

• Fraser Highway widening to a

consistent four lanes through Surrey

to reduce congestion on an important

truck and commuter route

• Expansion of the Dollarton Highway

Bridge to four lanes (completed in

October of 2005) to improve east-

west travel across the Seymour River

in North Vancouver

In addition to major road projects, TransLink

committed $16 million in 2005 towards 32

projects to improve road safety and efficiency

throughout Greater Vancouver. We funded

another $27 million in road operation and

maintenance in 2005.

Bringing Transportation Plans to LifeExceeding targets for 2005

10:35 am Arriving at UBC on 99 B-Line 10:50 am Customer enjoys new trolley pilot bus 11: 34 am Keeping goods moving

4

Planning transit improvementsto Vancouver-UBCVancouver and UBC residents had an

opportunity to play a direct role in

setting the future course of their public

transit services. TransLink, the City of

Vancouver and the University of British

Columbia went through an in-depth public

consultation process to create a new plan

for the Vancouver-UBC area, where half of

all bus trips in the region are taken. The

plan establishes transit service objectives

through 2010 and calls for improvements

that would see almost all residents have

access to rush-hour transit service that runs

every 10 minutes or better. TransLink's area

transit plans are intended to identify service

priorities for a one-to-five year period and

the planning process continuously rotates

through seven areas in the region.

Keeping Main Street movingMain Street – one of Vancouver's oldest

and busiest transit corridors – began a

$7.7-million makeover as part of the

Urban Transportation Showcase Program.

Transport Canada, the City of Vancouver

and TransLink are co-funding the project.

Residents, shoppers and transit customers

will enjoy improved transit services, wider

sidewalks, better street furniture, more

greenery and new street art. A key design

feature of the new streetscape will be

"bus bulges" – curb extensions that mean

trolleys will be able to load and unload

passengers without leaving the traffic lane.

Not only does this improve transit travel

times, it also opens up more storefront

parking and makes intersection crossings

safer for pedestrians.

Responding to changes inregional travelTransLink introduced a number of significant

improvements to the Greater Vancouver

Region’s bus services to address over-

crowding and to make public transit a

more user-friendly travel option. In 2005,

we added 197,000 annual hours of transit

service. We provided more frequent bus

service on busy corridors during rush hour,

put more buses on the road during the

midday, and offered longer hours of service

on evenings and weekends. Many of these

service improvements are in response to

customer requests, recognizing that people’s

travel habits are changing. Recent travel

studies conducted by TransLink show more

people are travelling during the middle of

the day, and the afternoon and morning

rush hours are being extended. The new

bus services will help serve this growing

demand.

2:12 pm Construction of Canada Line 4:12 pm Vancouver buses run frequently 5:25 pm Shoppers relax on the trip home

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Safely LinkingCommunities

The new police service is designed to provide an added

level of comfort and protection for our transit

customers and staff. Officers bring an average of

18 years' prior policing experience to the new

unit, which makes it a potent addition to our

region's crime prevention capabilities.

Currently, 77 fully sworn Transit Police officers are

dedicated to maintaining order, safety and security

on transit facilities and in surrounding communities,

with an additional 22 being recruited. Initially, the

police will focus primarily on SkyTrain, West Coast

Express and SeaBus. In addition, officers will be stationed at

TransLink's major bus depots around the region and will be

available to address problems on specific bus routes and to

support bus operators.

The B.C. Association of Chiefs of Police

is on record as unanimously supporting the designation

of the new Transit Police Service.

As fully sworn police officers, members now have the added

authority to enforce laws relating to the possession of illegal

drugs and stolen property, as well as to apprehend those wanted

on outstanding warrants. The absence of this authority seriously

limited the enforcement potential of our previous force of special

provincial constables.

Officers are also now able to operate in the community

rather than being restricted to TransLink property.

Transit Police will work in close cooperation with

the municipal police agencies and RCMP to

provide a well-coordinated police response to

incidents taking place in and around our stations.

It is primarily for this reason that the Solicitor General

has authorized Transit Police officers to carry firearms,

putting their authorities and resources on par with

every other police force in the region.

The deployment of the Transit Police Service is part of

a broader range of TransLink initiatives aimed at making riding

public transit a safer, more pleasant experience. Lighting at Expo

Line stations was recently upgraded, for example, and SkyTrain is

working to introduce retailing to some stations.

Who is responsible for the Transit Police?The Greater Vancouver Transportation Authority Police Board

governs the Transit Police and is responsible for determining the

priorities, goals and objectives of the policing unit in consultation

with the provincial Solicitor General. The board also sets standards,

guidelines and administration policies consistent with the Police

Act. Members of the Transit Police are approved by the Solicitor

General on the recommendation of the board. Complaints are

dealt with through the B.C. Police Complaint Commissioner.

TransLink made history in 2005 with the deployment of the first

dedicated Transit Police Service in Canada. The Greater Vancouver

Transportation Authority Police Service – commonly known as

Transit Police – was officially launched in December.

7

TransLink deploys Transit PoliceEnhancing safety and security

Our Vision

We see a transportation future where

people and goods move

in a way that promotes a healthy economy,

environment and quality of life

for generations to come.

Improving our region through better roads, better transit

In 2005, TransLink celebrated its sixth anniversary and it's useful

to look back to see how far we've come. TransLink was created

in 1999 to coordinate the planning of Greater Vancouver's roads

and transit, and to meet the region's goals in terms of managing

population growth, preserving green space, and protecting air

quality. While much more needs to be done to attain those

goals, TransLink has achieved many accomplishments in its first

six years.

Investing in roads and transitWe've invested $98 million in 300 road projects to improve

safety and efficiency and funded another $141 million in road

operation and maintenance. In addition, we've launched eight

major road projects totalling $230 million plus the $800-million

Golden Ears Bridge.

On the transit side of the business, transit ridership has grown

tremendously – up 24 per cent since 2002. To keep pace, we

have substantially boosted transit service to 5.1 million annual

hours – a 26 per cent increase since our launch. Rapid transit

ridership will nearly double when the Canada Line connects

Vancouver, Richmond and the Vancouver International Airport,

and the Evergreen Line links Burnaby, Coquitlam and Port

Moody in 2009.

TransLink's expansion program and financial strategy were the

result of two years of intensive public consultation. Representing

a regional consensus on how best to move forward, our trans-

portation plan and its funding strategy were endorsed by busi-

ness, labour and environmental organizations.

Looking ahead to the futureWith demands for expansion come long-term revenue challenges,

and having the right decision-making and funding structure will

be vital for TransLink's continued success. On principle, TransLink

tries to share the cost of transportation improvements equitably

among those who benefit from them. That's why we rely on

diverse funding, mainly through transit fares, fuel taxes and

property taxes. Balancing transportation needs and the public's

ability to pay has not been easy so far, as the recent debate over

the parking site tax indicates.

Looking towards the future, TransLink can only achieve the

region's long-term road and transit objectives with sustained,

predictable revenue. These are important matters to citizens

of this region and will be a major focus of the province's

governance review.

Doing more with what we haveIn the future, we will need not only to complete outstanding

infrastructure projects, we will also need to maximize the capacity

of our existing transportation infrastructure. We can do this

through effective, regional land-use planning, and in particular,

by looking at increased density at rapid transit stations. We also

need to implement more transit-priority measures and consider

other measures to reduce peak-travel demand on roads.

Amid this discussion, we should not lose sight of TransLink's

unique role in providing an integrated transportation network.

Greater Vancouver is the only Canadian region with a trans-

portation authority responsible for roads and bridges as well as

transit services. We have the ability to coordinate transportation

projects and policies that cross municipalities and encompass

multiple modes of travel. In the years ahead, we look forward to

continuing to deliver a transportation network that serves as a

model for the nation.

Malcolm Brodie | Chair

9

Message from the Chair

Our MissionWe plan, finance, implement

and champion an integrated

transportation system

that moves people and goods

safely and efficiently,

supporting Greater Vancouver's

regional growth strategy,

air quality objectives and

economic development.

TransLink puts service and capital expansion plans in motion

TransLink made significant progress in 2005 on an ambitious

$4-billion expansion program, creating the roads, bridges, rapid-

transit and bus service improvements that will promote a robust

economy, sustainable environment, and healthy quality of life

for generations to come.

Keeping our expansion plan on time,on budgetIn 2005, we completed the first year of our 2005-2007 Plan

and among the many highlights was the selection of a preferred

proponent to build the Golden Ears Bridge that will link

communities on the north and south sides of the Fraser River.

The Dollarton Bridge, financed by TransLink, opened in the

District of North Vancouver. Construction began on the 204th

Street Overpass in Langley, and continued on the Fraser Highway

widening in Surrey – both TransLink-funded projects that will

improve traffic flow on heavily used commuter and transit routes.

Pre-construction work began on the Canada Line rapid-transit

project, and working with the community, TransLink moved

ahead in defining the look and feel of the Evergreen Line light-rail

project. In addition, we began building the new Vancouver

Transit Centre, and we took delivery of the first of our new

electric, low-floor trolley buses that will make our transit system

fully accessible by 2008. We made history with the launch of

the Transit Police – the first dedicated police unit of its kind in

Canada. The uniformed officers will help ensure our transit

customers are safe and secure.

In 2005, TransLink added 197,000 annual hours

of transit service, focusing on busy regional corridors,

routes used by student Vancity U-Pass holders, and the

expansion of Community Shuttle minibus service.

Managing costs wiselyTransLink and its subsidiaries continue to strive to find efficiencies.

In 2005, TransLink and its transit subsidiaries absorbed $9 million

in higher than budgeted fuel costs and $5 million in lower than

budgeted fuel tax revenue. Unlike the airlines and ferry companies,

we did this without adding fare surcharges while still substantially

expanding service.

Another success story has been the expansion of Community

Shuttle service by 33 per cent in 2005, with the addition of

14 routes to residential areas throughout the region. Today,

Community Shuttle minibuses, operating at half the cost of

40-foot buses, supply 10 per cent of transit service. Between

2000 and 2005, West Coast Express reduced operating costs by

11 per cent while increasing service by 19 per cent. Meanwhile,

SkyTrain's cost per vehicle-kilometre remains significantly lower

than that of other rapid transit systems.

Building the gateway to the global economyIn 2005, TransLink began work on a Greater Vancouver Goods

Movement Study that will focus on strategies to improve the

transportation of goods. This study will analyze trends in rail,

road, water and air transport with the goal of developing new

policies and priorities.

An integrated, multi-modal transportation system gives

Greater Vancouver a competitive advantage in the global

economy, and we look forward to continuing to partner with

federal and provincial governments and industry as we make

the infrastructure improvements and policy changes that will

enable us to take full advantage of the growing trade with Asia.

11

Message from the CEO

Pat Jacobsen | Chief Executive Officer

The Year in Review

(All numbers in thousands) 2005 2004 2003 2002

REVENUESTransit Fares and Advertising $292,402 $264,448 $248,571 $232,748Fuel Tax $254,628 $252,294 $242,748 $227,657Other Taxes and Levies $245,089 $158,792 $149,858 $142,250AirCare $ 26,653 $ 25,148 $ 26,606 $ 30,533

Total $818,772 $700,682 $667,783 $633,188

MAJOR ROAD NETWORK (MRN)MRN Operating and Maintenance Costs $ 28,630 $ 27,383 $ 24,259 $ 22,282Albion Ferry Operating Costs $ 5,258 $ 5,218 $ 4,511 $ 4,906

Total $ 33,888 $ 32,601 $ 28,770 $ 27,188

Albion Ferry Boarding Passengers (a) 2,522 2,487 2,506 2,426

MINOR ROAD CAPITALAUTHORIZED ALLOCATION (b)

$20,000 $20,000 $20,000 $15,000

MAJOR ROAD CAPITALAUTHORIZED ALLOCATION

$35,000 $35,000 $35,000 $35,000

PUBLIC TRANSITService Hours 5,392 5,187 4,978 4,773Operating Cost $500,211 $467,323 $451,819 $417,437Revenue Passengers (c) 160,958 156,840 144,832 129,731Boarded Passengers (d)

Coast Mountain BusBus 189,887 191,745 179,002 160,372Community Shuttle 3,899 2,135 652 71

Total Coast Mountain Bus 193,786 193,880 179,654 160,443

West Vancouver Transit 7,615 7,079 6,697 6,513Contracted Community Shuttle 910 807 509 108SeaBus 5,016 4,854 4,640 4,713SkyTrain 66,292 65,003 62,048 52,043West Coast Express 2,104 2,034 1,930 1,929HandyDART 1,158 1,160 1,106 1,053Taxi Saver 184 181 190 183

AIRCAREVehicles Tested 742 745 786 779Excess Emitting Vehicles Identified (e) 96 122 128 111

12

(a) Boarding Passenger count for Albion Ferry in 2002 & 2003 was revised in 2004.

(b) The MRN Minor Capital Program is a cost-sharing partnership between TransLink and the municipalities. TransLink fundingcovers up to 50% of the eligible costs of approved capital improvements on the MRN.

(c) "Revenue Passengers" are the number of people who purchased a ticket and travelled to a destination regardless of thenumber of transfers made to complete the trip. This indicates the level of use of the transit system.

(d) "Boarded Passengers" are the total number of passengers using the system, including the initial boardings and transfers

along the way. This indicates the capacity the system needs to carry the passengers using all of the different modes (bus,

SeaBus, SkyTrain and West Coast Express).

(e) In 2001 AirCare implemented a biennial (every two years) testing schedule for 1992 and newer vehicles so fewer vehicles

are required to be tested. At the same time, more rigorous testing procedures have led to the identification of more excess

emitting vehicles.

MAJOR CAPITAL PROJECTS

(All numbers in thousands) Board Approvals as of Dec 31, 2005 Forecast Approvals 2006+

Major Roads

Dollarton Bridge $8,000

Fraser Highway Widening $29,700 $15,300

David Avenue Extension $15,000

Coast Meridian Overpass $60,000

North Fraser Perimeter Road $0 $60,000

204 Street Overpass $18,000

Main Street Widening $0 $5,000

Murray Clarke Connector $250 $24,750

Rapid Transit

Canada Line $370,000

Evergreen Line $3,000 TBD*

Trolley Bus Purchase $273,000

Golden Ears Bridge $166,000

* GVTA current funding commitment is $400 million

13

14

31,000 personyears of

employment

$4.9 billion in wagesand benefits

$3.9 billionin capital

THREE-YEAR PLAN

2004/5 2006 2007 2008RAPID TRANSIT Evergreen Line project Rapid transit options Upgrade 99 B-LineEXPANSION definition and public study for West Broadway New 95 B-Line route

consultation extension (Hastings)

Canada Line VCC-ClarkSkyTrain Station opens

pre-construction started Granville Street SkyTrainStation entrance opens

GOLDEN EARS Builder for Golden Ears Golden Ears BridgeBRIDGE Bridge chosen construction starts

MAJOR ROAD Dollarton Bridge David Avenue Connector 204th Street OverpassPROJECTS expansion to four lanes completed (Coquitlam) completed (Langley)

completed(North Vancouver) (‘05)

Murray-Clarke Connectordesign underway

204th Street Overpass (Port Moody)construction started Coast Meridian Overpass(Langley) design underwayFraser Highway widening (Port Coquitlam)construction continued

Main Street widening(Surrey)planning initiated(North Vancouver)

TRANSIT FLEET 41 Community Shuttles (‘04) 107 Buses 142 BusesEXPANSION, 42 HandyDART vehicles (‘05) 21 Community Shuttles 44 Community ShuttlesREPLACEMENT ( 30 HandyDART vehicles 59 HandyDART vehiclesAND UPGRADES 1 Trolley (‘05)

50 Trolleys 9 Express Coaches 20 Trolleys37 Community Shuttles (‘05)

157 Trolleys 1 new SeaBus

BUS FACILITY New Vancouver Transit New Vancouver TransitIMPROVEMENTS Centre construction started Centre opens

COMMUTER RAIL Spare locomotive forEXPANSION West Coast Express

ROAD IMPROVEMENTPROGRAM(Minor Capital)

ROAD OPERATIONAND MAINTENANCEFUNDING

TRANSIT-RELATEDINFRASTRUCTUREPROJECTS

CYCLINGPROGRAM

Economic Impact of TransLink’s 10-Year Capital Program

Road and Transit Expansion Program*

2.2 millionin 2004

GVRD POPULATION

$200 MILLION (to municipalities) 2004 – 2013

$30 MILLION/YEAR (to municipalities) GROWING TO $40 MILLION/YEAR BY 2013

$31 MILLION 2004 – 2013

$54 MILLION (to municipalities) 2004 – 2013

15

2.4 millionby 2013

GVRD POPULATION

100,000 person yearsof employment

$3.4 billion in wagesand benefits

$710 millionin capital

PROJECTED

*All figures are rounded and projections are approximate.These are estimates that will be refined throughupcoming planning processes and board approval.

2009 2010 2011 2012 2013Canada Line opens King George rapidEvergreen Line opens transit (Surrey)

34 SkyTrain cars

Golden Ears Bridge opens

North Fraser PerimeterRoad (pending municipalapprovals)

Planned new New heavy fleet

New Albion West Coast New North Burnaby West

maintenance facility

Express station Coast Express station

485 Buses (2008-2013)

224 Community Shuttles (2008-2013)

274 HandyDART vehicles (2008-2013)

Economic Impact of the 2010 Winter Olympic Games

North Shore facilityBurnaby Transit Centreexpansion

PROVINCE OFBRITISH COLUMBIA

3 provincial members (vacant)

CHIEF EXECUTIVE OFFICERPat Jacobsen

CHIEF OPERATING OFFICERIan Jarvis

VICE-PRESIDENT, PLANNINGGlen Leicester

VICE-PRESIDENT, HUMAN RESOURCESJohn Madden

VICE-PRESIDENT,CORPORATE & PUBLIC AFFAIRS

Robert Paddon

VICE-PRESIDENT,CAPITAL MANAGEMENT & ENGINEERING

Sheri Plewes

DIRECTOR,ENGINEERING & PROJECT SERVICES

Michelle Blake

DIRECTOR,GOLDEN EARS BRIDGE PROJECT

Fred Cummings

DIRECTOR, COMMUNICATIONKen Hardie

DIRECTOR, SYSTEM PLANNING& OLYMPIC READINESS

Brian Mills

DIRECTOR,STRATEGIC PLANNING & POLICY

Clive Rock

DIRECTOR, F INANCERobin Stringer

CORPORATE SECRETARYCarol Lee

GENERAL COUNSELGigi Chen-Kuo

GREATER VANCOUVERREGIONAL DISTRICT

12 local members 1-year termdirectly appointed by the GVRD

* Finance and Audit Committee

EXECUTIVE TEAM

GREATER VANCOUVERTRANSPORTATIONAUTHORITY ACT

CONTRACTORSWHOLLY OWNEDSUBSIDIARIES

AIRCAREMartin Lay President

ALBION FERRYCapt. David Miller President

COAST MOUNTAINBUS & SEABUS

Denis Clements President & CEO

SKYTRAINDoug Kelsey President & CEO

WEST COAST EXPRESSDoug Kelsey President & CEO

CANADA LINE RAPID TRANSITINC. (formerly RAVCO)

Jane Bird Chief Executive Officer

INTELLIGENTTRANSPORTATION SYSTEMS

Sheri Plewes President

WEST VANCOUVERTRANSIT

COMMUNITYSHUTTLES

HANDYDARTPROVIDERS

TRANSPORTATIONDEMAND MANAGEMENT

PROGRAMS

Kurt Alberts Langley Township

Suzanne Anton* Vancouver

Derek Corrigan* Burnaby

Marvin Hunt* Surrey

Peter Ladner Vancouver

Sam Sullivan Vancouver

Joe Trasolini* Port Moody

Richard Walton* North Vancouver District

Dianne Watts Surrey

Maxine Wilson Coquitlam

Scott Young* Port Coquitlam

BOARD OF DIRECTORS (January, 2006)

CHAIR Malcolm Brodie, Mayor, City of Richmond

On July 30, 1998, the British Columbia legislature passed

Bill 36, the Greater Vancouver Transportation Authority Act.

On April 1, 1999, the Greater Vancouver Transportation

Authority, known as TransLink, became responsible for planning,

funding, building and marketing an integrated transportation

system for the Greater Vancouver Regional District (GVRD).

TransLink's transportation plans must support GVRD goals.

TransLink’s mandate includes the public transit system,

custom transit for the disabled, a 2,200 lane-kilometre

network of major arterial roads, a vehicle emissions

testing program and initiatives to encourage sustainable

alternatives to travel by single-occupant vehicles. It has

the authority to create subsidiary companies or to enter

into contracts for the delivery of transit, road services and

travel alternative programs to manage the demand on the

transportation system.

By law, TransLink is required to produce medium and

long-range strategic transportation plans that support

the region’s goals. TransLink is required to consult with

the public and stakeholders as these plans are created.

A series of three-year transportation and financial plans

build the system toward the goals in the longer-range plans.

TransLink’s annual program plan specifies the road, transit

and transportation-demand management objectives that

are to be achieved and establishes the required operating

and capital budgets.

Police and Subsidiary Boards(as of December 31, 2005)

Company ProfileTransLink is responsible for the regional transportation system

17

TransLink’s Board of Directors

TransLink’s Executive Team

From left to right Malcolm Brodie, Richard Walton, Dianne Watts,Marvin Hunt, Sam Sullivan, Peter Ladner, Derek Corrigan, Suzanne Anton,Kurt Alberts, Scott Young, Joe Trasolini (missing Maxine Wilson)

From left to right Clive Rock, Glen Leicester, Robin Stringer,Gigi Chen-Kuo, Michelle Blake, Ken Hardie, John Madden, Sheri Plewes,Ian Jarvis, Robert Paddon (missing Pat Jacobsen and Carol Lee)

GVTA Police BoardLorne Zapotichny, ChairDick Bent 1

Ian JarvisAlistair MacintyreBob Rich

British Columbia RapidTransit Company Ltd.(SkyTrain)D. Richard Evans, Chair 2

J. Douglas KelseyUmendra Mital 2

Coast Mountain BusCompany Ltd.Sidney O. Fattedad, Chair 2

Paula D. Boddie 2

Denis Clements

Fraser River MarineTransportation Ltd.(Albion Ferry)Ian Jarvis, Chair 2

Grant Close 2

David Miller

Pacific Vehicle TestingTechnologies Ltd.(AirCare)Sheri Plewes, Chair 2

Martin Lay

West Coast ExpressLtd.D. Richard Evans, Chair 2

J. Douglas KelseyUmendra Mital 2

Canada LineRapid Transit Inc.Larry Bell, ChairLarry BergPat JacobsenEva MatsuzakiNorris Paget 3

Mike O'ConnorSheri PlewesDavid Unruh

592040 B.C. Ltd.(IntelligentTransportationSystems)Sheri Plewes, ChairPat JacobsenJames Crandles 4

James KohnkeDirk NylandMichael ProudfootJohn PumpTarek SayedColin Wright

1 Appointed November 24, 20052 Appointed May 20, 20053 Appointed September 21, 20054 Resigned November 17, 2005

Our ValuesWe believe that the only way

we can achieve our transportation vision

is by applying these core

values to everything we do.

SAFETY

FISCAL RESPONSIBILITY

ACCOUNTABILITY

COMMUNICATION

AND CONSULTATION

CUSTOMER SERVICE

INTEGRITY

TEAMWORK

AND PARTNERSHIPS

• TransLink's marketing initiatives were judged against the best

among transportation organizations throughout North America,

resulting in The Transportation Marketing and

Communications Association (TMCA) recognizing TransLink's

marketing department with two awards of merit. TMCA

Compass Awards were bestowed for TransLink's RideShare

advertising campaign and for the Urban Transportation

Showcase website.

• Project Finance International recognized the Canada Line

as the Americas Infrastructure Deal of the Year and North

American Transport Deal of the Year for 2005. The awards

recognized the congestion relief to be provided by the project,

the backing of SNC-Lavalin combined with public-sector support,

and the performance-based payments during the agreement's

operating term.

• Tourism Richmond honoured Coast Mountain Bus Co.

operator Dave Pickett with the 2005 Going The Extra Mile

Award for helping find hotel reservations for a pair of German

tourists with limited English.

• Clark Lim, a TransLink program manager, was awarded the

BC Transportation Professional of the Year Award by the

Institute of Transportation Engineers for his work on the

Evergreen Line Rapid Transit Project, Regional GPS Travel Time

Survey, and for media coverage regarding these projects.

• The TransLink-funded David Avenue Connector Project was

honoured by the Consulting Engineers of BC (CEBC). CEBC

awarded the City of Coquitlam and Golder Associates the 2005

Award of Merit for Engineering Excellence for exemplary

habitat compensation design.

• The CEBC gave an Award of Excellence to Collings Johnston

Inc. and Associated Engineering Ltd. for the planning and

preliminary engineering work on the Golden Ears Bridge.

The award recognized their efforts in successfully defining the

project's requirements and obtaining the necessary approvals to

get the project to market.

• The Federation of Canadian Municipalities honoured

TransLink's Vancity U-Pass program with the FCM-CH2M Hill

Sustainable Transportation Award for innovation and excel-

lence in increasing transit ridership and reducing automobile travel

to the University of British Columbia and Simon Fraser University.

• B.C. Rapid Transit Co. (SkyTrain) was the recipient of an Award

of Recognition from Canadian Blood Services for providing free

advertising promoting blood donation.

• B.C. Rehabilitation honoured the B.C. Rapid Transit Co.

(SkyTrain) with a 2005 Standing Ovation Award "for going

the distance for persons with physical disabilities."

2005 Awards and RecognitionTransLink goes above and beyond

19

Urban Transportation Showcase website TransLink’s Vancity U-Pass program The future Golden Ears Bridge

20

Management Discussion and AnalysisYear Ended December 31, 2005

This report discusses the results of operation and financial

condition of the Greater Vancouver Transportation Authority for

the 2005 fiscal year and should be read in conjunction with the

2005 Consolidated Financial Statements. All financial informa-

tion is determined on the basis of Canadian generally accepted

accounting principles for not-for-profit organizations.

Corporate OverviewThe Greater Vancouver Transportation Authority (GVTA or

the Authority) was created by the British Columbia Greater

Vancouver Transportation Authority Act in 1998. As of its

official launch date on April 1, 1999, the GVTA became more

commonly known as TransLink.

The GVTA is governed by a 15-member board. Twelve of the

members are appointed by the Greater Vancouver Regional

District (GVRD) Board and are either municipal mayors from

specified sub-regions or are members of the GVRD Board.

Three of the members are appointed by the Province of

British Columbia and are MLAs from a constituency located

with the GVRD or a minister with responsibility for matters

directly related to the GVTA’s purpose.1

TransLink is responsible for:

• Transportation planning and funding.

• Operation of the regional transportation system,

including the bus, SeaBus, commuter rail and rapid

transit systems and Albion ferry service.

• Funding the Major Road Network (MRN) and

cycling facilities.

• Transportation demand management.

• AirCare vehicle emissions program.

The GVTA Board has the unilateral authority to approve fare

increases (after public consultation) and annual budgets. The

GVTA Act requires the Authority to fund and operate services

consistent with their Strategic Transportation Plan (STP). The STP

must be approved by the GVTA Board and ratified by the GVRD

Board. Any increases to property tax rates and implementation

of and increases to new revenue sources (i.e. parking site tax,

vehicle charges, tolls) must be ratified by the GVRD Board as

well. Provincial approval is required to increase fuel tax and

hydro levy rates.

Transit services cover 1,800 square kilometres within the

Greater Vancouver Region and are provided by a fleet of

approximately 1,800 vehicles2. The service is primarily operated

by TransLink subsidiary companies – Coast Mountain Bus

Company Ltd. (CMBC), British Columbia Rapid Transit Company

Ltd. (BCRTC/SkyTrain) and West Coast Express Ltd. (WCE).

TransLink also contracts with independent operators to deliver

various transit services such as HandyDART, some Community

Shuttle services and West Vancouver's Blue Bus system.

The MRN consists of a network of key roadways that link

various regions within the GVRD. In addition to over 2,200 lane-

kilometres of roadway, the MRN includes the Albion Ferry and

the Knight Street, Pattullo and Westham Island bridges. TransLink

shares responsibility for the MRN with the municipalities, providing

funding for road maintenance and capital improvements.

TransLink administers the AirCare vehicle emissions testing

program through its subsidiary, Pacific Vehicle Testing

Technologies Ltd.

2005-2007 Funding StrategyTransLink has adopted a planning and funding strategy based on

a series of three-year transportation and financial plans that fit

within the long-range regional transportation plan. TransLink's first

three-year plan covered the 2002-2004 period. Consultation on

service improvements and new funding sources for the next plan

period concluded with the December 2004 approval of the

Three-Year 2005-2007 Implementation and Financial Strategy.

The three-year plan was developed within the context of a

Ten-Year Outlook. The Outlook provides an overall vision for the

development of the regional transportation system to 2013, and

identifies the transportation priorities and new funding sources

that are to be implemented in the 2005-2007 period. The Outlook

was approved in February 2004 by the GVTA and GVRD boards.

1 The provincial seats have remained vacant since 2000.

2 1,252 buses, 210 SkyTrain vehicles, 2 SeaBuses, 37 West Coast Expresscommuter trains, 288 custom transit vehicles.

21

The Outlook established the financial envelope TransLink must

work within over the 2005-2007 period. Four financial principles

formed the basis for the Outlook financial strategy and resulting

funding envelope.

• Revenue increases will be implemented in 2005,

generating surpluses in each year of the three-yearplan.

• The operating reserve will be maintained at a level

adequate to manage risks and potential delays in

approval of additional revenues (10% of expenditures).

• Surpluses in excess of the 10% policy target will be used

to pay down debt.

• No assumption of federal funding in the three-year plan

period, in order to allow time for program details

to be developed.

Revenue increases were approved as part of the plan approval,

with transit fares and property tax increases taking effect in

2005. The specific impact of these increases will be noted in the

analysis that follows. A new tax on non-residential parking sites,

originally scheduled for 2005, will take effect in 2006. No further

rate increases are planned for the balance of the plan period.

Changes to Accounting Policies andFinancial Statement PresentationGVTA has expanded the disclosure of its General Fund, AirCare

and Capital Fund results in the December 31, 2005, financial

statements. The basis of accounting for contributions was

changed from the deferral method to the restricted fund

method. Under the restricted fund method, contributions from

third parties for defined purposes are recognized as revenue in

the year they are received. Commencing in 2005, GVTA is

recognizing this as revenue in the appropriate fund. Comparative

results for 2004 have been restated accordingly.

GVTA has also changed the MRN accounting policy from defer-

ring the MRN capital contributions to expensing them when

incurred. Management believes that this accounting basis more

appropriately reflects the nature of the funding relationship

between the GVTA and the municipalities. The expenses are

now reflected in the Capital Fund and the prior year comparative

figures have been restated accordingly.

Consolidated Statementof Operations – AnalysisThis analysis will review 2005 results compared with 2004 and is

organized by the fund categories presented on the Consolidated

Statement of Operations.

General FundThe general fund is unrestricted and includes GVTA taxation

and transit revenues and the operating expenses related to the

provision of transportation services in the region. The following

table summarizes net operating results for 2005 and 2004.

An excess of revenue over expenses of $219.4 million was

achieved in 2005. The $80.6 million increase over 2004 is

primarily due to the revenue rate increases implemented in 2005

and strong growth in transit ridership. The rate increases fund

transportation service improvements implemented in 2005, and

those that will be implemented in 2006 and 2007.

RevenuesProvincial legislation provides TransLink with the specific sources

of revenues that are used to fund the provision and support

of transportation services. In 2005, revenues increased $116.6

million over 2004. Taxation revenues grew by $88.6 million and

transit revenue by $28 million.

$'000

2005 2004 Change

Revenues 792,119 675,534 116,585

Expenses 572,525 536,898 35,627

219,594 138,636 80,958

Other (239) 97 (336)

Excess of RevenuesOver Expenses 219,355 138,733 80,622

22

Management Discussion and Analysis (continued)Year Ended December 31, 2005

The following table provides more detail on the components of

the revenue increase. An analysis of the major reasons for

change from 2004 follows:

Transit Fare revenue grew by $27.6 million. As part of the

2005-2007 Plan, a transit fare rate increase commenced Jan. 1.

Cash fares, monthly pass and annual pass prices were increased

while other prepaid media were maintained at 2002 prices.

The fare increase raised the average fare to $1.74 from $1.62

and accounts for $14 - $15 million of the $28 million increase.

The balance is from ridership growth, reflecting transit-system

service improvements and the shift from private vehicle use to

transit use that has resulted from high fuel costs.

Advertising and Other revenue increased by $400,000 due

to general growth and increased rental revenues.

Transit revenue in total exceeded the 2005 budget target by

$5.5 million.

Motor Fuel Tax revenue increased by $2.3 million over 2004.

On April 1, 2005, the rate per litre received by TransLink

increased by 0.5 cents to 12.0 cents/litre. The rate increase was

a transfer of provincial fuel tax and did not increase the price to

the consumer. Based on historical sales volumes, the additional

revenue from this transfer should have been approximately

$8 million. However, sales volume was reduced due to the

impact of high fuel prices on consumer purchases.3 This decrease

in volume resulted in fuel tax being $5.3 million below budget

for the year.

Property Tax revenue increased by $86.4 million over 2004,

with the primary driver being the impact of the increase to

property tax rates approved as part of the three-year plan’s

financial strategy. The rate increase generated $61.7 million.

An average 18% increase to assessed values (20% increase

to residential values, 9% increase to business values) provided

an additional $24.7 million. The increase in assessed values

was higher than originally assumed, and the additional

revenue allowed for the acceleration of service and safety

improvements. Property tax revenues were on budget with

less than a 0.5% variance.

The administration of the property tax specified in the GVTA Act

is very restrictive and is structured such that once property tax

rates are set, revenue will increase or decrease with assessed

values. Residential class receipts account for 55% of TransLink

property tax revenue and business class 38%. Unlike municipali-

ties, TransLink cannot vary the rate relationships and redistribute

taxes between classes.

Other revenues include the Hydro Levy ($16.6 million), Parking

Sales Tax ($11.5 million) and a subsidy from the City of Mission

for West Coast Express service ($144,000). These did not have

any rate changes or significant volume impact year over year and

met budget targets.

$'000

2005 2004 Change

Transit Revenues

Transit Fares 285,520 257,930 27,590

Advertising and Other 6,882 6,518 364

292,402 264,448 27,954

Taxation Revenues

Motor Fuel Tax 254,628 252,294 2,334

Property Tax 216,824 130,358 86,466

Other 28,265 28,434 (169)

499,717 411,086 88,631

792,119 675,534 116,585

3 Fuel prices in the Greater Vancouver region increased steadily through 2005peaking in the range of $1.15 per litre by early fall.

23

ExpensesTotal general fund expenses have increased by $35.6 million

compared with 2004. The following table indicates the

components of the increase. An analysis follows:

Transportation Operations includes the operating costs of

transit subsidiaries, transit contractors and the Albion Ferry.

Costs have increased by $29.3 million over 2004. The primary

cost drivers in this category are labour, fuel and the impact of

service expansion. A variety of other factors also influence costs.

Labour – TransLink subsidiaries employ a workforce of

approximately 4,900 employees with over 90% of those

being covered by five different labour contracts. Labour is the

subsidiaries' largest expense, comprising 70% of operating costs.

Both bargaining unit and excluded employees received a 2.75%

increase in 2005.4 The cost impact, including increases to

benefit plans, is approximately $7 million.

Fuel – Transportation costs have been significantly impacted by

continuing high diesel fuel prices, which have averaged 20-30%

higher than 2004. This equates to a $9 million increase over 2004

diesel costs, with CMBC having the largest ($8 million) impact.

CMBC has been paying the spot market rate since their previous

fixed-price contract expired in early 2004, as at that time the

futures price exceeded the spot price. A survey of Canadian

transit properties indicated that most have been handling fuel

purchases in the same manner after contract expiry.

Service Expansion – Bus service hours have increased by close

to 140,000 hours at a cost of $8 million. This reflects both the

full year impact of 2004 service expansion and the part-year

impact of 2005 expansion. More than half of the expansion was

in the Community Shuttle mode, which delivers service at a cost

significantly lower than the conventional "big bus" mode.

In addition, during 2005, 17 previously out-of-service compressed

natural gas (CNG) vehicles were converted to diesel and another

13 CNG vehicles were recommissioned for service. This initiative

had a cost of $1 million and was required to ensure there

were sufficient vehicles to meet ridership demands and service

expansion requirements.

The level of service expansion is higher than assumed in the

2005-2007 Plan. Strong 2004 results and higher than originally

anticipated property tax revenue in 2005 allowed the GVTA Board

to approve accelerating certain service and safety improvements.

The full impact of service acceleration will be seen in 2006.

Other - Additional factors that contributed to the net increase are:

• Bus fleet maintenance requirements due to the fleet age

profile ($2 million).

• The transfer of the Transit Security department

from TransLink to CMBC effective August 1, 2005

($600,000).

• Materials and tools for SkyTrain guideway and vehicle

maintenance programs ($500,000).

• Increased operational and system support and

apprentice requirements to support current and future

growth ($1.5 million).

• HandyDART contracts negotiated rate increases

and contract extensions - $1 million.

• A 20-25 % reduction to CMBC and BCRTC WorkSafeBC

rates ($1.4 million savings).

$'000

2005 2004 Change

Expenses

TransportationOperations 506,293 476,996 29,297

Maintenanceon MRN 28,630 27,383 1,247

InterfundAirCare Charge (4,046) (4,046) 0

Administration 22,140 21,503 637

Transit Policeand Security 12,629 10,015 2,614

Other Projects 6,879 5,047 1,832

572,525 536,898 35,627

4 Contracts are in place for most subsidiaries through 2006.The 2006 economic increase under those contracts is 2.5%.The BCRTC contract expires August 31, 2006.

24

Management Discussion and Analysis (continued)Year Ended December 31, 2005

All TransLink subsidiaries performed well against their 2005

budget estimates. A concerted focus on efficiencies and the

impact of a strong Canadian dollar on material prices mitigated

the impact of higher than budgeted fuel prices, resulting in a

$5 million favourable variance.

Maintenance on MRN represents the funding provided to

the municipalities for the operation, maintenance and

rehabilitation of their respective portions of the MRN. It also

includes costs incurred by TransLink for condition assessments,

bridge maintenance contracts and the Pattullo weigh scale.

The $1.2 million increase is primarily due to an agreed upon

increase to the funding rate (from $12,000/lane-kilometre to

$12,240/lane-kilometre) and growth in lane-kilometres.

Interfund AirCare Charge is the annual rental charge for

AirCare testing equipment that is transferred from the General

Fund to the restricted AirCare fund.

Administration is the TransLink corporate head office, including

the staffing and support costs for the transportation planning,

capital management, finance, human resources and corporate

affairs functions. The $600,000 increase reflects the impact of a

2.75% economic increase for exempt and unionized staff and

merit and length of service increases for eligible staff.

Transit Police and Security is the new Transit Police Services

unit and part year of the Transit Security department, which was

transferred to CMBC August 1, 2005. The net year-over-year

increase is $2.6 million, primarily due to the significant resource

requirements necessary to set up and operate an armed police

force. Approximately $2.7 million has been incurred to train staff

to meet police officer standards, purchase firearms, implement

necessary communications infrastructure and purchase new

uniforms and equipment. Salary costs also reflect the $500,000

impact of the 2.75% staff economic increase. The $3.2 million

gross cost increase is reduced by $600,000 representing the

impact of the Transit Security transfer.

Other Projects includes the Cycling, Transportation Demand

Management and Intelligent Transportation Systems operating

programs and other special projects. The $1.8 million increase

represents the net of:

• $4 million increase in Parking Site Tax implementation costs,

involving contracting with BC Assessment Authority to conduct

parking site measurements, create the parking site roll and set

up appropriate systems and processes. The Parking Site Tax

will be implemented in 2006 and is expected to generate

$20 million in gross revenues annually.

• $800,000 for capital project feasibility studies and project

definition costs, which are now being expensed rather than

capitalized.

• $3 million reduction to the amortization of Millennium Line

start-up costs.

AirCare FundThis is a restricted fund used to capture the revenues and

expenses of the AirCare vehicle emissions testing program.

Under legislation, the program must recover all of its costs

over a seven-year period, including annualized equipment costs.

Revenues have increased by $1.5 million, as the increase in

revenue from the $47 bi-annual test fee exceeded the reduction

in revenue from the $23 annual test fee. Expenses have

increased by $400,000, reflecting a 2% increase to the fee paid

to the vehicle testing contractor and staff economic increases.

The deficiency of revenues over expenses has been reduced by

$1 million.

$'000

2005 2004 Change

Revenues 26,653 25,148 1,505

Expenses 27,385 26,950 435

Deficiency of Revenueover Expenses (732) (1,802) 1,070

25

Capital FundThis fund is used to record the acquisition costs of capital assets

and any related long-term debt outstanding. This fund also

includes capital contributions received and the funding paid to

the municipalities for the MRN. Charges to the fund include

interest related to borrowings and amortization of capital. The

following summarizes Revenue and Expenses:

Capital contributions are funds received from senior government

towards the construction of the Canada Line. The amount

received in 2005 includes: Government of Canada, $108.9

million (2004 - $3.7 million), the Province, 117.1 million (2004 -

$1.0 million) and the City of Vancouver, $1.1 million (2004 - nil).

Interest on debt decreased slightly. Long-term debt increased to

$1,108.5 million at the end of 2005, (2004 - $1,005.7 million)

with a related increase of $6.6 million in interest costs. The

increase in interest costs were offset by an increase of $3.1

million in interest capitalized during construction, reflecting

a higher level of capital work-in-progress; an additional

$1.3 million in short-term interest income, reflecting higher

short-term liquidity; a reduction of $1.6 million in interest

on capital leases as a result of lease buyouts exercised, and an

additional $3.1 million in interest received on sinking funds.

The increase in amortization of capital and other assets reflects

the increased asset capital base.

Liquidity and Capital ResourcesThe sources of funds for operations, capital expenditures and

debt service payments are from taxation, transit revenues, capital

contributions from senior levels of government and issuance of

long-term debt. As stated previously, the financial framework for

the sources and uses of funds was established in the Three-Year

2005-2007 Implementation and Financial Strategy.

Operating activities: Cash provided by operations was $436.2

million compared with $91.3 million for 2004. The increase of

$344.9 million is summarized as follows:

(1) Refer to Consolidated Statement of Operations - Analysis foranalysis and discussion of fund contributions.

(2) Includes accounts receivables, inventory, prepaid expenses, accountspayable, employee future benefits and due from the GVRD. As atDecember 31, 2005, TransLink has recorded an amount payable toGVRD of $1 million (2004 - receivable from GVRD - $44.2 million fora net change of $45.2 million). The GVRD balance is a component ofliquidity; related interest paid or earned is calculated at a weightedaverage rate of a pooled investment account.

$'000

2005 2004 Change

Revenue

Capital Contributions 227,155 4,718 222,437

ExpensesMajor Road Network

capital funding 11,019 6,649 4,370

Interest on debt 47,492 49,980 (2,488)

Amortization of capital& other assets 66,367 64,114 2,253

Expenses 124,878 120,743 4,135

102,277 (116,025) 218,302

Gain on disposalof capital assets 177 149 28

Excess (deficiency)of revenue 102,454 (115,876) 218,330over expenses

$'000

2005 2004 Change

General Fund 219,355 138,733 80,622

Capital Fund 102,454 (115,876) 218,330

AirCare-net (732) (1,802) 1,070

Fund Contributions(1) 321,077 21,055 300,022

Items not involving cash:

Amortization of capitaland other assets 66,367 67,159 (792)

Other 1,335 909 426

Changes in non-cashworking capital(2) 47,460 2,180 45,280

Cash providedby Operations 436,239 91,303 344,936

26

Management Discussion and Analysis (continued)Year Ended December 31, 2005

Investing activities: Cash invested was $450.4 million compared

with $152.8 million for 2004, a net increase of $297.6 million.

Canada Line investment was $209.4 million in 2005 (2004 -

$10.6 million). Other significant purchases of capital assets

included Golden Ears Bridge $21.1 million (2004 - $17.3 million),

Vancouver Transit Centre $31.4 million (2004 - $22.8 million)

and trolley buses $13.3 million (2004 - $25.0 million).

Increases in financial instruments include marketable securities,

$67.0 million (2004 - $36.4 million), long-term investments,

$5.4 million (2004 - 0.2 million), and debt reserve deposits,

$2.4 million (2004 - $3.4 million).

Financing activities: Financing activities resulted in net proceeds

of $38.5 million compared with $55.2 million in 2004.

Bonds are issued through the Municipal Finance Authority of

British Columbia (MFA). MFA is the central borrowing agency

responsible for financing capital requirements of municipalities

and regional districts in the Province. MFA has been bond rated

by Standard & Poor's, AA+Stable/A-1+ and Moody's, Aaa Stable.

In addition, TransLink has also been rated by Moody's, Aa3

Stable and by Dominion Bond Rating Service, AA.

• Contributions to the debt sinking funds, including interest

earned, are used to repay the related debt at maturity.

• Long-term debt at 2005 was $1,108.5 million

(2004 - $1,005.7 million).

• Obligations under capital leases at 2005 were $17.8 million

(2004 - $39.2 million).

The following summarizes the change in Cash balance during

the year:

Looking ForwardThe Three-Year 2005-2007 Implementation and Financial

Strategy established the framework and policy for TransLink's

transportation, investment and financial strategies over this

three-year period. The challenge is to provide stable and predictable

funding over a three-year period that can accommodate cost

and revenue variables with revenue principles and policies that

cap fares and tax rates for the term of the plan.

Fuel costs and fuel tax revenue have represented the most

significant variables in the current plan. High fuel prices have

reduced consumption and therefore fuel tax revenues, while at

the same time increasing operating costs. The cumulative impact

in 2005 was $20 million in lower revenues and higher costs over

those forecast in the three-year plan.

$'000

2005 2004 Change

Net Additions toCapital Assets 375,579 112,787 262,792

Increase in Financialinstrument assets 74,789 39,989 34,800

Cash used for investments 450,368 152,776 297,592

$'000

2005 2004 Change

Bonds issued 118,000 115,000 3,000

Bond issue costs (935) (793) (142)

Bonds matured (15,305) (15,305)

Increase in debt sinking funds (41,812) (42,185) 373

Principal paymentson capital leases (21,495) (16,791) (4,704)

Cash providedby financing activities 38,453 55,231 (16,778)

$'000

2005 2004 Change

Operations 436,239 91,303 344,936

Investing (450,368) (152,776) (297,592)

Financing 38,453 55,231 (16,778)

Increase (decrease) in cash 24,324 (6,242) 30,566

Cash, beginning of year (4,167) 2,075 (6,242)

Cash, end of year 20,157 (4,167) 24,324

27

Another variable affecting the plan is a change in the timing,

amount and type of funding from the transfer of federal fuel tax

revenue, which instead of an annual revenue stream that could

support debt service and operating costs, is currently limited to

five years and is available only for transit capital purchases.

Other variables include transit ridership growth, interest rates,

exchange rate on the Canadian dollar, forthcoming collective

bargaining, and general inflation.

Consistent with the current three-year plan, an operating reserve

of 10% of operating expenditures is currently forecast. TransLink

also expects to achieve a $157.5 million capital reserve as antici-

pated in the plan.

Commencing in 2006, TransLink will be developing a new

three-year 2008-2010 plan and a longer term outlook. New

funding source options will be developed as part of this process.

29 Management’s Responsibilityfor Consolidated Financial Statements

30 Auditors’ Report

31 Consolidated Statementof Financial Position

32 Consolidated Statementsof Operations and Changes

in Fund Balances

33 Consolidated Statementof Cash Flow

34 Notes to ConsolidatedFinancial Statements

Financial Report

Management’s Responsibilityfor Consolidated Financial Statements

Scope of ResponsibilityManagement prepares the accompanying financial statements

and related information and is responsible for their integrity

and objectivity. The statements are prepared in accordance

with Canadian generally accepted accounting principles.

These financial statements include amounts that are based

on management’s estimates and judgements. We believe

that these statements present fairly the Greater Vancouver

Transportation Authority’s financial position and results of

operations and that the other information contained in the

annual report is consistent with the financial statements.

Internal ControlsWe maintain and rely on a system of internal accounting con-

trols designed to provide reasonable assurance that assets are

safeguarded and transactions are properly authorized and

recorded. The system includes written policies and procedures,

an organizational structure that segregates duties and a

comprehensive program of periodic audits by the internal

auditors, who independently review and evaluate these controls.

We continually monitor these internal accounting controls,

modifying and improving them as business conditions and

operations change. We recognize the inherent limitations in all

control systems and believe our systems provide an appropriate

balance between costs and benefits desired while providing

reasonable assurance that those errors or irregularities that

would be material to the financial statements are prevented

or detected in the normal course of business.

Board of Directorsand Finance and Audit CommitteeThe Finance and Audit Committee, composed of members of

the Board of Directors, oversees management’s discharge of its

financial reporting responsibilities. The committee recommends

for approval to the Board of Directors, the appointment of the

external auditors and fee arrangements. The committee meets

regularly with management, our internal auditors and represen-

tatives of our external auditors to discuss auditing, financial

reporting and internal control matters. The Finance and Audit

Committee receives regular reports on the internal audit results

and evaluation of internal control systems, and it reviews

and approves major accounting policies, including alternatives

and potential key management estimates or judgements.

Both internal and external auditors have access to the Finance

and Audit Committee without management’s presence.

The Finance and Audit Committee has reviewed these

financial statements prior to recommending approval to the

Board of Directors. The Board of Directors has reviewed and

approved the financial statements.

29

IAN JARVISChief Operating Officer andChief Financial Officer

PAT JACOBSENChief Executive Officer

On behalf of the Greater Vancouver Transportation Authority:

Auditors’ ReportTo the Members of the Board of the Greater Vancouver Transportation Authority

We have audited the consolidated statement of financial position of the Greater Vancouver Transportation Authority (the

“Authority”) as at December 31, 2005 and the consolidated statements of operations and changes in fund balances and cash flows

for the year then ended. These financial statements are the responsibility of the Authority’s management. Our responsibility is to

express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the Canadian generally accepted auditing standards. Those standards require that we

plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An

audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit

also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Authority

as at December 31, 2005 and the results of its operations and its cash flows for the year then ended in accordance with Canadian

generally accepted accounting principles.

Chartered Accountants

Vancouver, Canada

February 24, 2006, except

as to note 16(b) which is as of March 10, 2006

30

Consolidated Statement of Financial Position

31

DECEMBER 31,2005(in thousands of dollars)

Restricted FundsGeneral Capital Total Total

Fund AirCare Fund 2005 2004(restated -note 3)

ASSETSCurrent assets

Cash and cash equivalents $ - $ - $ 23,249 $ 23,249 $ 1,453Marketable securities 105,025 - 18,150 123,175 56,222Due from Greater Vancouver Regional District (note 4) - - - - 44,238Accounts receivable 40,553 493 6,141 47,187 38,947Supplies inventory 26,596 - - 26,596 26,796Interfund (4,438) 4,438 - - -Prepaid expenses 4,308 13 72 4,393 3,975

172,044 4,944 47,612 224,600 171,631

Long-term investments (market value - $19,804; 2004 - $14,593) 19,669 - - 19,669 14,220Debt reserve deposits (note 5) - - 26,848 26,848 24,461Debt sinking funds (note 6) - - 239,402 239,402 197,590Capital assets (note 7) - 42 1,203,154 1,203,196 894,025

$ 191,713 $ 4,986 $ 1,517,016 $ 1,713,715 $ 1,301,927

LIABILITIES AND FUND BALANCESCurrent liabilities

Cheques issued in excess of funds on deposit $ 3,082 $ 10 $ - $ 3,092 $ 5,620Accounts payable and accrued liabilities 79,191 374 15,328 94,893 88,211Due to Greater Vancouver Regional District (note 4) 972 - - 972 -Current portion of long-term debt (note 8) - - 41,207 41,207 38,082Current portion of obligation under capital lease (note 9) - - 6,580 6,580 21,495

83,245 384 63,115 146,744 153,408

Employee future benefits (note 10) 28,897 6 - 28,903 24,877Long-term debt (note 8) - - 1,067,276 1,067,276 967,586Obligation under capital lease (note 9) - - 11,171 11,171 17,751Non-controlling interest in Transportation

Property and Casualty Company Inc. 1,603 - - 1,603 1,364

113,745 390 1,141,562 1,255,697 1,164,986

Fund balances 77,968 4,596 375,454 458,018 136,941

$ 191,713 $ 4,986 $1,517,016 $ 1,713,715 $ 1,301,927

Commitments and contingencies (note 12)

Subsequent events (note 16)

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board:

MALCOLM BRODIE MARVIN HUNTDirector Director

YEAR ENDED DECEMBER 31,2005(in thousands of dollars)

Restricted FundsGeneral Capital

Fund AirCare Fund Total Total Total2005 2005 2005 2005 2005 2004

(schedule 1) (schedule 2) (restated -note 3)

Revenue:Taxation $ 499,717 $ - $ - $ - $ 499,717 $411,086Transit 292,402 - - - 292,402 264,448AirCare - 26,653 - 26,653 26,653 25,148Capital contributions (note 12(g)) - - 227,155 227,155 227,155 4,718

792,119 26,653 227,155 253,808 1,045,927 705,400Expenses:

Transportation Operations 506,293 - - - 506,293 476,996Maintenance on Major Road Network 28,630 - - - 28,630 27,383Major Road Network capital funding - - 11,019 11,019 11,019 6,649AirCare - contracted and other services - 21,296 - 21,296 21,296 20,931Interfund AirCare charge (4,046) 4,046 - 4,046 - -Administration 22,140 2,043 - 2,043 24,183 23,476Transit Police and Security 12,629 - - - 12,629 10,015Other projects 6,879 - - - 6,879 2,002Interest on debt - - 47,492 47,492 47,492 49,980Amortization of capital and other assets - - 66,367 66,367 66,367 67,159

572,525 27,385 124,878 152,263 724,788 684,591

Excess (deficiency) of revenue overexpenses before other items 219,594 (732) 102,277 101,545 321,139 20,809

Other items:Gain on disposal of capital assets - - 177 177 177 149Non-controlling interest in loss

(income) of Transportation Propertyand Casualty Company Inc. (239) - - - (239) 97

(239) - 177 177 (62) 246

Excess (deficiency) of revenue over expenses 219,355 (732) 102,454 101,722 321,077 21,055

Fund balance, beginning of year:As previously reported 51,166 5,328 39,987 45,315 96,481 72,803Adjustment to reflect change in accounting

for deferred contributions (note 3(a)) - - 77,665 77,665 77,665 75,901Adjustment to reflect change in accounting

for Major Road Network (note 3(b)) - - (37,205) (37,205) (37,205) (32,818)As restated 51,166 5,328 80,447 85,775 136,941 115,886

Net transfer between funds (note 11(a)) (192,553) - 192,553 192,553 - -

Fund balance, end of year $ 77,968 $ 4,596 $ 375,454 $ 380,050 $ 458,018 $ 136,941

See accompanying notes to consolidated financial statements.

Consolidated Statements of Operationsand Changes in Fund Balances

32

YEAR ENDED DECEMBER 31,2005(in thousands of dollars)

2005 2004

Cash provided by (used for):

Operations:Excess of revenue over expenses $ 321,077 $ 21,055Items not involving cash (note 13) 67,702 68,068Changes in non-cash working capital (note 13) 47,460 2,180

436,239 91,303Investing:

Increase in marketable securities (66,953) (36,361)Increase in long-term investments (5,449) (235)Increase in debt reserve deposits (2,387) (3,393)Proceeds from disposal of capital assets 194 520Additions to other assets - (525)Purchase of capital assets (375,773) (112,782)

(450,368) (152,776)Financing:

Principal payments on capital leases (21,495) (16,791)Bonds issued 118,000 115,000Issue costs on bonds issued (935) (793)Bonds matured (15,305) -Increase in debt sinking funds (41,812) (42,185)

38,453 55,231Increase (decrease) in cash 24,324 (6,242)

Cash, beginning of year (4,167) 2,075

Cash, end of year $ 20,157 $ (4,167)

Cash is defined as cash and cash equivalents less cheques issued in excess of funds on deposit.

Supplementary information:Interest paid $ 65,545 $ 60,181

See accompanying notes to consolidated financial statements.

Consolidated Statement of Cash Flows

33

Notes to Consolidated Financial StatementsYear Ended December 31, 2005(tabular amounts in thousands of dollars)

34

1. Operations:

The Greater Vancouver Transportation Authority (the "Authority") was established in June 1998 as a not-for-profit organization under theGreater Vancouver Transportation Authority Act (the "Act"), to provide for the planning, funding, management and operation of an integratedregional transportation system for the Greater Vancouver region, effective April 1, 1999.

To achieve this, all transportation operations, assets and liabilities in the Greater Vancouver region, formerly owned and operated by BC Transit,except those specified in Section 38 (8)(a) of the Act, (most notably the SkyTrain Expo Line guideway and West Coast Express infrastructures)together with the shares of British Columbia Rapid Transit Company Ltd. ("BCRTC") and West Coast Express Limited ("WCE"), were transferredfrom the Province of British Columbia (the "Province") to the Authority. Also assumed by the Authority during 1999 was a 90% interest inTransportation Property and Casualty Company Inc. ("TPCC") (formerly BC Transit Captive Insurance Company Inc.), operations of the AlbionFerry, and administration of the AirCare program. The Authority also acquired a 100% interest in Canada Line Rapid Transit Inc. ("CLCO"formerly known as RAV Project Management Ltd.) in 2003 and Fraser Bridge Project Ltd. ("GEB") in 2004.

2. Significant accounting policies:

(a) Basis of presentation:The consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles for not-for-profitorganizations.

The consolidated financial statements follow the restricted fund method for accounting for contributions (note 3(a)) and reflect a combinationof the Authority's General and Restricted Funds.

General Fund:This fund includes the operations of the Authority and its subsidiaries, excluding AirCare, which is a restricted fund.

Restricted Funds:Restricted funds include the AirCare and Capital funds.

(i) AirCare Fund:This fund is used to record the operations of the AirCare Program, which is a self-funded program (note 11(c)).

(ii) Capital Fund:This fund is used to record the acquisition costs of capital assets and any related long-term debt outstanding. This fund also includes thecapital contributions received and the funding paid to the municipalities for the Major Road Network ("MRN").

The consolidated financial statements include the accounts of the Authority and its subsidiaries:

(i) Coast Mountain Bus Company Ltd. ("CMBC"), bus, SeaBus and Community Shuttle services;

(ii) BCRTC, SkyTrain service;

(iii) WCE, commuter rail services;

(iv) Fraser River Marine Transportation Ltd. ("FRMT"), ferry services between Maple Ridge and Langley (Albion Ferry);

(v) Pacific Vehicle Testing Technologies Ltd. ("PVTT"), administration of AirCare program;

(vi) CLCO, oversees the study, design, construction, implementation and operation of a rapid transit line from Richmond to the VancouverInternational Airport and downtown Vancouver;

(vii) GEB, oversees the construction and implementation of the Golden Ears Bridge;

(viii)592040 B.C. Ltd., development of intelligent transportation systems; and

(ix) TPCC, insurance liability coverage.

2. Significant accounting policies (continued):

(a) Basis of presentation (continued):

All subsidiaries are wholly owned except for TPCC, in which the Authority has a 90% interest.

All intercompany balances and transactions have been eliminated upon consolidation.

(b) Marketable securities:Marketable securities are investments with a term to maturity of three months or less from the date of purchase and are stated at the lowerof cost and market value.

(c) Supplies inventory:Supplies inventory is valued at the lower of average cost and net replacement value.

(d) Long-term investments:Long-term investments, consisting of Canadian bonds, are recorded at cost, with any premium or discount on purchase being amortizedover the term to maturity of each investment. Declines in value of investments are recognized only when the decline is considered to beother than temporary.

(e) Capital assets:Capital assets have been recorded as follows:

(i) Capital assets are recorded at cost, including capitalized interest as described in note 2(f).

(ii) Capital assets, contributed by the Province and BC Transit to the Authority upon inception, were recorded at fair valueat the date of contribution.

(iii) Amortization is provided on a straight-line basis over a period not exceeding the estimated useful lives as follows:

Asset Years

Land improvements 30Buildings 20 - 30Revenue vehicles 5 - 20Revenue vehicles under capital leases 20Equipment 3 - 20SkyTrain and WCE vehicles 30SkyTrain equipment under capital leases 20SkyTrain system upgrade 30AirCare equipment 6

(f) Capitalization of interest:Interest incurred in connection with capital acquisitions from the date of advance of funds until the assets are placed in service fortransportation purposes is capitalized. Interest capitalized during the year ended December 31, 2005 amounted to $5,057,000(2004 - $1,986,000).

(g) Major Road Network ("MRN"):Part 2 of the Act provides that the Authority must establish a major road network comprising an integrated system of highways throughoutthe transportation service region and the Authority must contribute funds to the municipality for the purpose of constructing any part of theMRN within that municipality.

The related assets created become the property of the appropriate municipalities who assume all the rights and obligations. As such, thefunding is expensed in the statement of operations as incurred (note 3(b)).

Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

35

Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

2. Significant accounting policies (continued):

(h) Due to (from) Greater Vancouver Regional District ("GVRD"):The GVRD manages the marketable securities and borrowings on behalf of the Authority and other GVRD related entities. In order toimprove cash management, the general practice is to accumulate marketable securities in a pooled account held by GVRD. The invest-ments consist of highly liquid money market instruments.

(i) Amortization of bond discounts:Bond discounts are amortized on a straight-line basis over the term to maturity of the related debt.

(j) Pension plans and employee future benefits:The Authority, its subsidiaries and employees make contributions to either the Public Service Pension Plan or defined contribution pensionplans. These contributions are expensed as incurred.

Post-retirement and post-employment benefits are also available to the majority of the Authority's employees. The cost of post-retirementbenefits is actuarially determined, prorated on service and management's best estimate of retirement ages and expected health care costs.The cost of post-employment benefits to disabled employees is actuarially determined based on future projected benefits of currentlydisabled employees. The obligation under these post-retirement and post-employment benefit plans are accrued as the employees renderservices necessary to earn the future benefits. The measurement date of the accrued benefit obligation coincides with the Authority'sfiscal year. The most recent actuarial valuation of the plans for funding purposes was December 31, 2005. The plans are unfunded andrequire no contributions from employees. Employer contributions are made based upon expected annual benefit payments.

Actuarial gains (losses) on the accrued benefit obligation arise from differences between actual and expected experience and fromchanges in the actuarial assumptions used to determine the accrued benefit obligation. The net accumulated actuarial gains (losses) over10% of the greater of the accrued benefit obligation is amortized over the average remaining service period of active employees. Theaverage remaining service period of the active employees covered by the post-employment plan is 5 years (2004 - 5 years).

(k) Revenue recognition:All sources of revenue are recognized on the accrual basis.

The Authority follows the restricted fund method of accounting for contributions. Contributions from third parties for defined purposesare recognized as revenue in the year they are received in restricted funds. Contributions restricted for the purchase of capital assets arerecognized as received in the Capital Fund. Unrestricted contributions are recognized as revenue when received or receivable if theamount to be received can be reasonably estimated and collection is reasonably assured.

(l) Income and capital taxes:The Authority is exempt from Canadian Federal and British Columbia Provincial income and capital taxes. The Authority's subsidiaries arefiling on the basis that they are exempt from Canadian Federal and British Columbia Provincial income and capital taxes.

(m)Use of estimates:The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenue and expenses during the reporting period. Significant areas requiring the use of estimates include determination of useful lives ofcapital assets, allowance for doubtful accounts receivable, obsolete inventory and determination of employee future benefits. Actualresults could differ from those estimates.

3. Change in accounting policy:

(a) Restricted fund method:The Authority has changed from the deferral method to the restricted fund method. As a result, capital contributions are no longer deferredand are instead recognized as revenue in the Capital Fund in the year received. This change has been applied retroactively and has decreasedamounts previously recorded as deferred capital contributions by $77,665,000 (2004 - $75,901,000) and increased opening fund balancesby $77,665,000 (2004 - $75,901,000). Additionally, the statement of operations has been restated to reflect the removal of amortization of$3,124,000 (2004 - $2,954,000) and recognize contributions of $227,155,000 (2004 - $4,718,000).

36

Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

3. Change in accounting policy (continued):

(b) MRN:The Authority has also changed its method of recording MRN expenditures. Such expenditures, formerly capitalized and amortized, are nowbeing expensed as incurred. This change has been applied retroactively and has decreased amounts previously recorded for MRN assets andfund balances by $37,205,000 (2004 - $32,818,000) and has increased MRN capital funding expense by $11,019,000 (2004 - $6,649,000).

4. Related party transactions:

As at December 31, 2005, the Authority has recorded an amount payable to GVRD of $972,000 (2004 - receivable from GVRD - $44,238,000).The amount due to GVRD is due on demand and incurs interest at the weighted average rate of the pooled investment account held by theGVRD as described in note 2(h).

These transactions are in the normal course of operations and is measured at the exchange amount, which is the amount of considerationestablished and agreed to by the related parties.

5. Debt reserve deposits:

The Authority is required to pay into a debt reserve fund, administered by the Municipal Finance Authority of British Columbia ("MFA"), anamount equal to one-half the average annual installment of principal and interest relative to any debt borrowed. This amount may be paid eitherin full or in an amount equal to 2% of the principal amount borrowed together with a non-interest bearing demand note for the balance. If, atany time, the Authority does not have sufficient funds to meet payments or sinking fund contributions due on its debt obligations, the paymentsor sinking fund contributions shall be made from the debt reserve fund. The demand notes payable to the MFA are callable only if there areadditional requirements to be met to maintain the level of the debt reserve fund, and therefore have not been recorded on the balance sheet.

6. Debt sinking funds:

Contributions to the sinking fund, administered by the MFA, are made for all long-term debt obligations. Investments held in the sinking funds,including interest earned, are used to repay the related debt at maturity.

7. Capital assets:

Accumulated 2005 2004Cost amortization Net Net

Land $ 63,273 $ - $ 63,273 $ 63,273Land improvements 26,636 5,273 21,363 21,091Buildings 99,234 32,096 67,138 72,042Revenue vehicles 344,593 147,333 197,260 212,209Revenue vehicles under capital leases 13,848 11,098 2,750 4,394Equipment 185,092 84,479 100,613 91,566SkyTrain vehicles 230,565 61,000 169,565 179,733SkyTrain equipment under capital leases 29,472 28,409 1,063 5,272SkyTrain system upgrade 98,433 14,036 84,397 87,329WCE vehicles 23,329 4,046 19,283 20,061Capital projects in progress:

Canada Line 227,988 - 227,988 18,616Other capital projects in progress 248,503 - 248,503 118,439

$1,590,966 $ 387,770 $1,203,196 $ 894,025

37

Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

8. Long-term debt:

2005 2004

Sinking fund bonds, weighted average interest rate of 5.76%,maturing at various dates from 2006 to 2026, amortized from 10 to 20 years $ 891,760 $ 835,865

Serial debenture, interest rate of 5.10%, 20-year term, maturing in 2025 46,800 -

Sinking fund bonds, under interest rate and currency conversion agreements,effective weighted average interest rate of 6.45%, maturing at various datesfrom 2007 to 2010, amortized over 20 years 176,524 176,524

1,115,084 1,012,389Less unamortized bond discount 6,601 6,721

1,108,483 1,005,668Less current portion 41,207 38,082

$1,067,276 $ 967,586

Sinking fund payments due in each of the next five years are approximately as follows:

2006 $ 41,2072007 41,2992008 39,8352009 39,8842010 36,725

9. Obligation under capital lease:

The obligation under capital lease, which matures in 2007, represents the total present value of future minimum lease payments discounted atthe interest rates implicit in the lease at the commencement of the lease term. The current fixed rate to maturity is 9.68%.

The obligation under capital lease is guaranteed by the Province.

Future minimum lease payments, together with the balance of the obligation under capital lease at December 31, 2005, are approximately as follows:

2006 $ 8,1432007 12,081

20,224Less payments representing implicit interest 2,473

Present value of minimum capital lease payments 17,751Current portion 6,580

$11,171

10. Pension plans and employee future benefits:

The Authority, CMBC, PVTT and FRMT and their employees contribute to the Public Service Pension Plan (the "Plan"), which is a multi-employerdefined benefit plan, together with other public service employers, in accordance with the Pension (Public Service) Act. The British ColumbiaPension Corporation administers the Plan, including the payment of pension benefits, on behalf of the employers and the employees to whomthe Act applies. Details of the Plan are provided in the Public Accounts of British Columbia. The long-term funding of the Plan is based on thelevel contribution method. Using this method, employer contribution rates are set out so that, in combination with member contributions, theywill fully pay for benefits earned by the typical new entrants to the Plan and will maintain the Plan's unfunded accrual liability (UAL) for fundingpurposes, if any, as a constant percentage of employer payroll. The actuary does not attribute portions of the UAL to individual employers.

38

10. Pension plans and employee future benefits (continued):

Contributions to the Plan are expensed in the year when payments are made. The total expense recorded in the financial statements in respectof pension contributions amounts to $15,681,000 (2004 - $15,048,000).

Every three years, an actuarial valuation is performed to assess the financial position of the Plan and the adequacy of plan funding.The latest full actuarial valuation, which was carried out as at March 31, 2005 resulted in an unfunded liability of $767,000,000.

The employees of WCE and BCRTC are members of defined contribution plans administered by Great West Life, Sun Life and Canada Life.The total expense recorded in the financial statements in respect of pension contributions under these plans amounts to $2,752,000 (2004 -$2,604,000).

Apart from the post-retirement benefits provided by the Plan, the Authority and CMBC continue to provide life insurance benefits to all retiredemployees. BCRTC also sponsors a post-retirement benefit (non-pension) plan providing continuing healthcare benefits to retired employees.The total expense recorded in the financial statements, in respect of obligations under these plans, amounts to $3,113,000 (2004 -$2,913,000).

The Authority and its subsidiaries also provide Provincial health care, extended health, dental care and life insurance benefits to employees onlong-term disability from the date they become disabled (post-employment benefits). The total expense recorded in the financial statements forthe year, in respect of obligations under these plans, amounts to $3,548,000 (2004 - $3,543,000).

Information regarding the Authority's post-retirement and post-employment plans is as follows:

Post-retirement Post-employmentbenefits benefits 2005 2004

Accrued benefit obligation $ 23,201 $ 13,382 $ 36,583 $ 30,849Fair value of plan assets - - - -

Funded status (23,201) (13,382) (36,583) (30,849)Balance of unamortized amounts 5,585 2,095 7,680 5,972

Accrued benefit liability $ (17,616) $ (11,287) $ (28,903) $ (24,877)

The significant assumptions used are as follows:

2005 2004

Accrued benefit obligation as of December 31:Discount rate 4.5% - 5.0% 5.5% - 6.0%

Benefit costs for years ended December 31:Discount rate 5.0% - 6.0% 5.5% - 6.5%

Assumed health care cost trend rates at December 31:Increase in health care cost trend rate 3.0% - 10.0% 3.5% - 10.0%

Employee future benefit costs recognized in the year:Post-employment and retirement benefits $ 6,661 $ 6,456

Other information regarding the Company's post-retirement and post-employment plan is as follows:

2005 2004

Employer contributions $ 2,635 $ 2,434

The accrued benefit obligation is not presently funded.

Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

39

Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

11. Fund balances - restricted funds:

(a) Net transfer from general fund to restricted funds:

2005 2004

Purchase of capital assets $ 375,731 $ 112,782Change in working capital 22,999 (5,631)Amortization of capital asset charged to capital projects in progress (218) (156)Amounts funded by long-term debt (102,815) (115,206)Principal payments on capital lease 21,495 16,791Proceeds from disposal of capital assets (194) (520)Increase in debt reserve deposits 2,387 3,393Increase in debt sinking funds 41,812 42,185Capital contributions (227,155) (4,718)MRN capital funding 11,019 6,649Interest on debt 47,492 49,980Transfer to Capital Fund reserve - 6,450

$ 192,553 $ 111,999

(b) Capital fund:A special reserve of $18,150,000 (2004 - $18,150,000) has been created to provide for future debt service costs on the capital that has beencommitted towards the MRN.

(c) Externally restricted from AirCare operation:AirCare is a self-funded program under Section 50 of the Motor Vehicle Act whereby earnings from current operations have been restrictedto be used to offset any deficits.

12. Commitments and contingencies:

(a) Operating lease payments – WCE:Effective December 28, 1995, BC Transit entered into a 20-year operating lease agreement with Pitney Bowes of Canada Ltd. for the WCEvehicles totaling $62,000,000. This lease was transferred from BC Transit to the Authority effective March 31, 1999.

In connection with operating the Commuter Rail System, WCE has entered into operating commitments for train operations, rolling stockmaintenance, land leases, ticket vending and parking management and miscellaneous services.

The total future minimum annual operating lease payments, including railcars, for the next five years and thereafter are as follows:

2006 $ 18,4092007 18,3492008 19,1102009 19,5032010 and thereafter 106,967

(b) Vehicle emission testing contract – PVTT:PVTT has entered into a contract with Envirotest Ltd. to provide vehicle emission testing services until August 2006. The minimum paymentsin 2006 are $14,385,000.

40

Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

41

12. Commitments and contingencies (continued):

(c) Other operating leases:The Authority is committed to annual lease payments in respect of office premises in the following amounts:

2006 $ 6,3182007 6,3982008 3,8872009 2,116

(d) Trolley bus purchase:In December 2004, the Authority entered into a contract to purchase 188 standard 40-foot trolleys and 40 articulated 60-foot trolleys for atotal contract value of $119,000,000 and €69,600,000. The approximate future payments are as follows:

2006 $ 62,3372007 95,8082008 25,330

(e) Diesel fuel purchase:CMBC has entered into a floating price purchase contract for diesel fuel for the three-year period beginning February 1, 2004. The approxi-mate payments relating to the minimum purchase volume, for the remaining term of the contract, are as follows:

2006 $ 27,8252007 2,319

(f) Natural gas contract:CMBC entered into a floating price purchase contract for natural gas for a five-year period beginning November 1, 2005. The payments,relating to the minimum purchase volume for the remaining term of the contract, are as follows:

2006 $ 8192007 9012008 9012009 9012010 751

(g) Canada Line:The Canada Line project is a rail based rapid transit line that will link central Richmond, the Vancouver International Airport and downtownVancouver. CLCO is a special-purpose subsidiary of the Authority created specifically to oversee the procurement, design, construction andimplementation of the project.

CLCO has entered into various agreements with the Authority, the Government of Canada, the Province, the Vancouver International AirportAuthority (the "Airport Authority") and the City of Vancouver. These agreements provide for the funding of costs related to the procurementand construction phases of the Canada Line, as follows:

Funding Agency commitments (nominal dollars except as otherwise noted):

Agency Total amount of funding

Government of Canada $ 450,000The Province 435,025The Authority 334,625Airport Authority (note (i)) 300,000City of Vancouver 28,970

(i) The Airport Authority contributions are based on the value of the Canadian dollar at April 1, 2003 subject to annual compounding forcumulative inflation.

Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

12. Commitments and contingencies (continued):

(g) Canada Line (continued):On July 29, 2005, CLCO entered into an Amended and Restated Concession Agreement (the "Concession Agreement") with the Authorityand InTransitBC Limited Partnership (the "Concessionaire"), the private sector partner selected through a competitive bid process.

Under the Concession Agreement, the Concessionaire agreed to design, construct, partially finance, and operate the Canada Line over atotal term of 35 years. During the construction phase, CLCO will make payments to the Concessionaire upon the achievement of certainmilestones. The Concessionaire assumes price and schedule risk, subject to certain Compensation Events, the occurrence of which willrequire CLCO to make compensatory payments to the Concessionaire. During the operating phase, CLCO will make monthly payments tothe Concessionaire based on the Concessionaire's performance. Construction of the Canada Line started in August 2005 and operations willcommence in November 2009.

Capital contributions received during the year:

2005 2004

Government of Canada $108,936 $ 3,693The Province 117,100 1,025City of Vancouver 1,119 -

$227,155 $ 4,718

Contributions from the Airport Authority totaling $19,982,000 (2004 - $1,025,000) are netted against the related project costs whenincurred.

(h) Golden Ears Bridge:The Golden Ears Bridge is a six-lane bridge that will improve the movement of goods and people between Pitt Meadows and Maple Ridgeon the north side of the Fraser River, and Surrey and Langley on the south side.

A request of proposals was issued in January 2005 to three short listed consortia, seeking their proposals for the design, construction, opera-tion, maintenance and rehabilitation of the bridge. In June 2005, the Authority and the four municipalities adjacent to the project finalizedthe Golden Ears Bridge "Master Municipal Agreement", detailing the roles and responsibilities of the Authority and each municipality. OnDecember 7, 2005, the Authority selected Golden Crossing Group ("GCG") as the preferred proponent to design, build, finance, operate,maintain and rehabilitate the Golden Ears Bridge and associated road network. Negotiation of the concession agreement with the selectedproponent has been finalized subsequent to year end (note 16(b)). The bridge is scheduled to open to traffic in mid 2009.

The cost of the bridge will be recovered through toll revenue. The toll rates for the bridge are designed to generate sufficient revenue to payfor the construction, operation, maintenance and rehabilitation of the bridge over the next 30 years.

(i) Loan guarantee for Jack Bell Foundation:The Authority has guaranteed a $1,000,000 loan from Vancouver City Savings & Credit Union for the Jack Bell Foundation to purchase vehi-cles for the car and vanpool fleet. At December 31, 2005, the outstanding balance guaranteed by the Authority is $279,000 (2005 -$414,000).

(j) Other capital commitments:At December 31, 2005, $68,288,000 has been contractually committed for capital projects in progress (2004 - $16,751,000).

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12. Commitments and contingencies (continued):

(k) Lawsuits:As at December 31, 2005, there are a number of lawsuits pending against the Authority arising in the ordinary course of business.Management is of the opinion that any claims against the Authority which are not recoverable from the Authority's insurance, are not likelyto be material and therefore, no provision has been made in the financial statements for any such liability.

(l) Family passes:Canada Revenue Agency is reviewing whether the issuance of family transit passes to employees by the Authority is a deemed taxablebenefit. The impact of this matter on the Authority is currently undeterminable. Any financial impact to the Authority related to this matterwill be recorded in the period in which it is incurred.

13. Statement of cash flows:

2005 2004

Items not involving cash:Amortization of capital and other assets $ 66,367 $ 67,159Amortization of capital assets charged to capital projects in progress 218 156Amortization of bond discount 1,055 999Gain on disposal of capital assets (177) (149)Non-controlling interest in income (loss) of TPCC 239 (97)

$ 67,702 $ 68,068

Changes in non-cash working capital:Increase (decrease) in due to GVRD $ 45,210 $ (5,660)Increase in accounts receivable (8,240) (6,964)Decrease (increase) in supplies inventory 200 (3,563)Decrease (increase) in prepaid expenses (418) 260Increase in accounts payable and accrued liabilities 6,682 14,086Increase in employee future benefits 4,026 4,021

$ 47,460 $ 2,180

14. Financial instruments:

The Authority's financial instruments include cash, marketable securities, investments, accounts receivable, other assets and accounts payable,debt reserve and sinking fund deposits, long-term debt and obligations under capital leases. It is management's opinion that the Authority is notexposed to any significant credit or interest rate risk as a result of these financial instruments. Interest rates have been fixed for all long-term debtand capital leases. The Authority's operations are all based in Canada and exposure to foreign exchange fluctuations is not significant.

The fair value of debt reserve deposits, debt sinking funds and long-term debt at December 31, 2005 is $26,982,000, $240,599,000, and$1,140,731,000, respectively.

For all other classes of financial instruments shown in these financial statements, management considers that the carrying amounts approximatefair values due to the immediate or short-term maturity of these financial instruments.

15. Comparative figures:

Certain of the comparative figures have been reclassified to conform with current year's financial statement presentation.

Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

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Notes to Consolidated Financial Statements (continued)

Year Ended December 31, 2005(tabular amounts in thousands of dollars)

16. Subsequent events:

(a) Bus radio communication contract:The Authority has awarded a $35,000,000 contract to INIT of Karlesruhe, Germany to supply the new radio communication system for itsfleet of 1,300 transit buses. The new system will provide state-of-the-art radio communications, as well as a platform for other features thatwill improve security, customer service and schedule performance. Installation on the entire fleet of buses is expected to be complete by theend of 2007.

(b) Golden Ears Bridge:(i) Commercial and financial close:

On March 10, 2006, an Agreement between the Authority and GCG, the preferred proponent of GEB, was executed.

(ii) Property acquisition:The GEB requires the acquisition of a number of properties to fulfill the right of way requirements of the project. To date, a number ofstrategically acquired properties have already been purchased for $31,000,000. By the end of 2006, it is expected that approximately$100,000,000 will be acquired.

(iii) Honorarium:Within 60 days of execution of the Agreement, the Authority is obligated to pay $1,200,000 to the unsuccessful proponents who sub-mitted bona fide responsive proposals.

(iv) Katzie Benefitting Agreement:Within 10 days of execution of the Agreement, a sum of $1,700,000 will be provided to the Katzie First Nation for the benefit of theKatzie community. This is in accordance with the Katzie Benefit Agreement that was signed in September 2004 in which the respectiveresponsibilities and obligations of both parties were established.

(v) Environmental enhancements:As specified in the Environmental Assessment Certificate, $500,000 will be put towards off-site fish habitat compensation at UnnamedCreek. There is no timing set on the contribution.

(vi) TD Securities payment:Upon execution of the Agreement, a minimum of $600,000 will be paid out to TD Securities, the Financial Advisor, as compensation forits role in the procurement of the GEB transaction.

(vii)Project implementation:It is anticipated that for 2006, the Authority will pay out an estimated $3,900,000 to fulfill its implementation and contractual obliga-tions as outlined in the Agreement.

(viii) Independent Certifier:The Authority and GCG will select and jointly enter into an agreement with an Independent Certifier who will certify SubstantialCompletion and Total Completion of the project. The cost of this agreement will be split equally between the Authority and GCG. It isexpected that the Authority's share will be in the amount of $1,000,000 payable over three years.

(c) New deals for Cities and Communities:On September 19, 2005, the Government of Canada, the Province and the Union of British Columbia Municipalities ("UBCM") signed theAgreement on the Transfer of Federal Gas Tax Revenue under the New Deal for Cities and Communities. The Agreement will transfer a por-tion of federal gas tax revenues to cities and communities to support environmentally sustainable infrastructure.

In January 2006, the Strategic Priorities Fund Agreement was signed between UBCM, GVRD and the Authority and $36,839,000 wasreceived by the Authority.

(d) AirCare program:Subsequent to December 31, 2005, the GVRD, Fraser Valley Regional District and the Province have approved the continuance of the AirCareprogram until December 31, 2011.

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YEAR ENDED DECEMBER 31,2005(in thousands of dollars)

2005 2004

Revenue:Taxation $ 499,717 $ 411,086Transit 292,402 264,448

792,119 675,534Expenses:

Bus and SeaBus 370,628 345,032SkyTrain 73,381 72,550Commuter rail 21,084 20,450Albion Ferry 5,258 5,218Contracted services 35,942 33,746Maintenance on Major Road Network 28,630 27,383Interfund AirCare charge (4,046) (4,046)Administration 22,140 21,503Transit Police and Security 12,629 10,015Special projects 5,443 756Other transportation demand initiatives 1,436 1,246Amortization of other assets - 3,045

572,525 536,898

Excess (deficiency) of revenue over expenses before other items 219,594 138,636

Other items:Non-controlling interest in loss (income) of Transportation Property and Casualty Company Inc. (239) 97

Excess (deficiency) of revenue over expenses 219,355 138,733

Fund balance, beginning of year 51,166 24,432

Net transfer between funds (192,553) (111,999)

Fund balance, end of year $ 77,968 $ 51,166

General Fund – Statements of Operations and Fund BalancesSchedule 1

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Restricted Funds - Statements of Operations and Fund BalancesSchedule 2

YEAR ENDED DECEMBER 31,2005(in thousands of dollars)

CapitalAirCare Fund Total Total

2005 2005 2005 2004Revenue:

AirCare $ 26,653 $ - $ 26,653 $ 25,148Capital contributions - 227,155 227,155 4,718

26,653 227,155 253,808 29,866Expenses:

Major Road Network capital funding - 11,019 11,019 6,649AirCare - contracted and other services 21,296 - 21,296 20,931Interfund AirCare charge 4,046 - 4,046 4,046Administration 2,043 - 2,043 1,973Interest on debt - 47,492 47,492 49,980Amortization of capital and other assets - 66,367 66,367 64,114

27,385 124,878 152,263 147,693

Excess (deficiency) of revenue over expenses before other items (732) 102,277 101,545 (117,827)

Other items:Gain on disposal of capital assets - 177 177 149

Excess (deficiency) of revenue over expenses (732) 102,454 101,722 (117,678)

Fund balance, beginning of year 5,328 80,447 85,775 91,454

Net transfer between funds - 192,553 192,553 111,999

Fund balance, end of year $ 4,596 $ 375,454 $ 380,050 $ 85,775

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OUR VISIONWe see a transportation future wherepeople and goods movein a way that promotes a healthy economy,environment and quality of lifefor generations to come.

OUR MISSIONWe plan, finance, implement, and champion anintegrated transportation system that moves peopleand goods safely and efficiently, supporting GreaterVancouver's regional growth strategy, air qualityobjectives and economic development.

OUR VALUESWe believe that the only way we can achieve ourtransportation vision is by applying these corevalues to everything we do.

SafetyWe will plan and deliver a transportation systemthat promotes the health, safety and security ofemployees and the public.

Fiscal ResponsibilityWe will invest the public's transportation dollarswisely to ensure that the system is sustainable in thelong term and we will make every effort to attractfinancial partners.

AccountabilityWe will account for our achievements, shortcomingsand challenges to our employees, partners,stakeholders and the public.

Communication and ConsultationWe will listen to and actively seek the ideas ofemployees, partners, stakeholders and the public.We will provide clear and concise information in atimely manner.

Customer ServiceWe will understand our customers and increasetheir satisfaction with the services they receive.

IntegrityWe will conduct ourselves ethically, respectfullyand honestly as stewards of the region'stransportation system.

Teamwork and PartnershipsWe will work together as partners to achieve asustainable transportation network that meets thecurrent and future needs of the region.

1600 - 4720 Kingsway

Burnaby, BC V5H 4N2

Canada

Tel: 604-453-4500

Fax: 604-453-4642

www.translink.bc.ca

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