BC Ferries releases first quarter results
VICTORIA, Aug. 24, 2012 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) announced its first quarter results today. Net earnings were $3.3 million for the first three months ended June 30, 2012 compared to a net loss of $3.5 million in the first quarter of the previous year.
In the first quarter, revenues increased by 5.7 per cent to $197.6 million, with operating expenses increasing 2.1 per cent to $176.9 million, compared to the first quarter of last fiscal year. $4.9 million of the $10.6 million increase in revenues is due to an increase in fuel surcharges levied as a result of higher fuel prices. The $3.6 million increase in operating expenses is largely attributed to an increase in fuel prices and higher depreciation and amortization charges, partially offset by a decrease in fuel consumption, benefit costs, maintenance costs and lower salaries and wages.
As of April 1, 2012, BC Ferries began reporting its financial position and results of operations in accordance with International Financial Reporting Standards (IFRS). For comparative purposes, the prior year figures have been restated to comply with IFRS.
IFRS differs significantly from previous accounting rules in that it does not recognize assets and liabilities arising from rate-regulation, such as BC Ferries' deferred fuel cost accounts. As a result, rather than being charged to regulatory asset accounts on the company's balance sheet, fuel surcharges collected or rebates granted are now included in revenue, and increases or decreases in fuel prices from those approved in price caps are now included in operating expenses, While this is a significant accounting change for BC Ferries it does not change the treatment of these types of assets and liabilities for regulatory purposes.
Capital expenditures in the three months ended June 30, 2012 totalled $21.2 million as follows:
- $11.0 million in vessel upgrades and modifications;
- $4.6 million in information technology;
- $4.1 million in terminal marine structures;
- $1.5 million in terminal and building upgrades and equipment.
BC Ferries is undertaking a multi-year $39 million customer service program which will replace the aging point-of-sale and reservations systems to allow the company to respond in a more timely fashion to changing business needs and to support marketing, travel services and pricing initiatives.
In the first quarter of fiscal 2013, BC Ferries experienced a decline of 1.7 per cent in vehicle traffic and 2.4 per cent in passenger traffic as compared to the same period the year prior.
"We are managing our bottom line as efficiently as possible with our cost containment initiatives in order to reduce expenditures without compromising the safety of our operation," said Mike Corrigan, BC Ferries' President and CEO. "The Province has announced a public engagement process regarding adjustments to service levels and the development of a long-term vision for connecting coastal communities. We look forward to supporting this process with our technical assistance."
Significant events during the first quarter include the Coastal Ferry Service Contract amendments relating to performance term three, which is the period from April 1, 2012 to March 31, 2016. These amendments became effective on April 1, 2012.
On May 3, 2012, BC Ferries executed a contract for the development and analysis of initial design criteria for a cable ferry service on the Buckley Bay - Denman Island route, and in early June, the company issued a Request for Proposals (RFP) for detailed design engineering. On May 17, 2012, the company also issued an RFP for third parties interested in providing passenger and vehicle cable ferry service, under contract to BC Ferries, at a lower cost, while maintaining high levels of safety, quality and reliability.
On May 9, 2012, the Province announced additional payments totalling $79.5 million in order to reduce the pressure for future fare and price cap increases. Of this, $25 million is a contribution to the company's equity and was received in April 2012. The remaining $54.5 million will be received over fiscal years 2013 through 2016.
On July 20, 2012, fuel surcharges were reduced from 2.5 per cent to 2 per cent on the Horseshoe Bay - Langdale route and from 5 per cent to 2 per cent on the majority of BC Ferries' other routes. These reductions reflect declining fuel prices.
Full financial statements, including notes and Management's Discussion & Analysis, are filed on SEDAR and will be available at www.sedar.com.
BC Ferries is one of the largest ferry operators in the world based on passengers transported annually and transportation infrastructure, and carried 20.2 million passengers and 7.8 million vehicles during the fiscal year ended March 31, 2012. BC Ferries provides frequent year-round ferry transportation services to the West Coast of Canada on 25 routes, currently supported by 35 vessels and 47 terminals, and also manages other remote routes through contracts with independent operators.
FORWARD LOOKING STATEMENTS
This release contains certain "forward looking statements". These statements relate to future events or future performance and reflect management's expectations regarding our growth, results of operations, performance, business prospects and opportunities and industry performance and trends. They reflect management's current internal projections, expectations or beliefs and are based on information currently available to management. Some of the market conditions and factors that have been considered in formulating the assumptions upon which forward looking statements are based include traffic, the Canadian Dollar relative to the US Dollar, fuel costs, construction costs, the state of the local economy, fluctuating financial markets, demographics, tax changes, and the requirements of the Coastal Ferry Services Contract.
Forward looking statements included in this release include statements with respect to: our short-term and long-range business plans; the additional payments to be received from the Province over the following four fiscal years, and the Province's role regarding service levels and a long-term vision for connecting coastal communities. In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from the results discussed in the forward looking statements. In evaluating these statements, prospective investors should specifically consider various factors including, but not limited to, the risks and uncertainties associated with traffic volume and tariff revenue risk, safety and security, asset risk, accident risk, tax risk, environmental risk, regulatory risk, labour disruption risk, limitations of vessel repair facilities, risk of default under material contracts and aboriginal land claims.
Actual results may differ materially from any forward looking statement. Although management believes that the forward looking statements contained in this release are based upon reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this release, and British Columbia Ferry Services Inc. assumes no obligation to update or revise them to reflect new events or circumstances except as may be required by applicable law.
BRITISH COLUMBIA FERRY SERVICES INC.
Interim Consolidated Statement of Financial Position (unaudited)
(Expressed in thousands of Canadian dollars)
As at, | ||||||||
June 30, 2012 | March 31, 2012 | April 1, 2011 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 7,412 | 7,700 | 33,335 | |||||
Restricted short-term investments | 35,705 | 35,705 | 37,040 | |||||
Other short-term investments | 26,930 | 26,880 | 64,074 | |||||
Trade and other receivables | 22,734 | 42,341 | 20,619 | |||||
Prepaid expenses | 16,359 | 6,725 | 5,648 | |||||
Inventories | 22,179 | 22,016 | 19,957 | |||||
Derivative assets | 8 | - | - | |||||
131,327 | 141,367 | 180,673 | ||||||
Non-current assets | ||||||||
Long-term loan receivable | 24,515 | 24,515 | 24,247 | |||||
Long-term land lease | 32,406 | 32,521 | 32,979 | |||||
Property, plant and equipment | 1,581,121 | 1,596,507 | 1,593,194 | |||||
Intangible assets | 44,267 | 41,758 | 34,929 | |||||
1,682,309 | 1,695,301 | 1,685,349 | ||||||
Total assets | 1,813,636 | 1,836,668 | 1,866,022 | |||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 35,483 | 50,708 | 49,872 | |||||
Short-term debt | 7,995 | 17,737 | 3,949 | |||||
Interest payable on long-term debt | 14,977 | 18,249 | 18,261 | |||||
Deferred revenue | 16,184 | 13,784 | 15,596 | |||||
Derivative liabilities | - | 12 | 23 | |||||
Current portion of long-term debt | 9,000 | 9,000 | 22,125 | |||||
Current portion of accrued employee future benefits | 1,600 | 1,600 | 1,200 | |||||
Current portion of obligations under finance lease | 974 | 974 | 1,040 | |||||
Provisions | 50,183 | 50,481 | 49,571 | |||||
136,396 | 162,545 | 161,637 | ||||||
Non-current liabilities | ||||||||
Accrued employee future benefits | 14,363 | 14,506 | 14,459 | |||||
Long-term debt | 1,285,475 | 1,285,232 | 1,327,014 | |||||
Obligations under finance lease | 46,765 | 47,013 | 47,723 | |||||
1,346,603 | 1,346,751 | 1,389,196 | ||||||
Total liabilities | 1,482,999 | 1,509,296 | 1,550,833 | |||||
Equity | ||||||||
Share capital | 75,478 | 75,478 | 75,478 | |||||
Contributed surplus | 25,000 | 25,000 | - | |||||
Retained earnings | 227,982 | 224,717 | 239,711 | |||||
Total equity before reserves | 328,460 | 325,195 | 315,189 | |||||
Revaluation reserve | 2,177 | 2,177 | - | |||||
Total equity including reserves | 330,637 | 327,372 | 315,189 | |||||
Total liabilities and equity | 1,813,636 | 1,836,668 | 1,866,022 | |||||
BRITISH COLUMBIA FERRY SERVICES INC.
Interim Consolidated Statement of Comprehensive Income (Loss) (unaudited)
(Expressed in thousands of Canadian dollars)
Three months ended, | ||||||
June 30, 2012 | June 30, 2011 | |||||
Revenue | ||||||
Vehicle and passenger fares | 114,422 | 114,401 | ||||
Ferry service fees | 46,228 | 40,249 | ||||
Retail | 19,162 | 19,399 | ||||
Federal-Provincial Subsidy Agreement | 7,019 | 6,872 | ||||
Fuel surcharges | 6,030 | 1,155 | ||||
Regulated other income | 3,109 | 3,399 | ||||
Other income | 1,630 | 1,482 | ||||
Total revenue | 197,600 | 186,957 | ||||
Expenses | ||||||
Operations | 111,006 | 108,808 | ||||
Maintenance | 17,217 | 17,645 | ||||
Administration | 7,169 | 7,418 | ||||
Cost of retail goods sold | 7,508 | 7,463 | ||||
Depreciation and amortization | 34,001 | 31,939 | ||||
Total operating expenses | 176,901 | 173,273 | ||||
Operating profit | 20,699 | 13,684 | ||||
Net finance and other expenses | ||||||
Net finance expenses | ||||||
Finance income | 537 | 671 | ||||
Finance expenses | (17,988) | (17,935) | ||||
Total net finance expenses | (17,451) | (17,264) | ||||
Loss on disposal of capital assets | 17 | 29 | ||||
Total net finance and other expenses | (17,434) | (17,235) | ||||
Net earnings (loss) | 3,265 | (3,551) | ||||
Other comprehensive income (loss) | - | - | ||||
Total comprehensive income (loss) | 3,265 | (3,551) | ||||
BRITISH COLUMBIA FERRY SERVICES INC.
Interim Consolidated Statement of Cash Flows (unaudited)
(Expressed in thousands of Canadian dollars)
Three months ended, | |||
June 30, 2012 | June 30, 2011 | ||
Cash flows from operating activities | |||
Net earnings (loss) | 3,265 | (3,551) | |
Items not affecting cash | |||
Net finance costs recognized in net income | 17,451 | 17,264 | |
Depreciation and amortization of non-current assets | 34,001 | 31,938 | |
Gain on disposal of property, plant and equipment | (17) | (29) | |
(Decrease) increase in employee future benefits | (143) | 581 | |
Increase in derivative assets | (8) | - | |
Decrease in derivative liabilities | (12) | (12) | |
(Decrease) increase in provisions | (298) | 995 | |
Other non-cash adjustments to property, plant & equipment | (275) | 206 | |
Decrease in long-term land lease | 115 | 114 | |
Increase in accrued net financing | 589 | 375 | |
Total non-cash items | 51,403 | 51,432 | |
Movements in operating working capital | |||
Decrease (increase) in accounts receivable | 19,607 | (2,634) | |
Increase in prepaid expenses | (9,634) | (10,245) | |
Increase in inventories | (162) | (896) | |
Decrease in accounts payable and accrued liabilities | (15,225) | (7,781) | |
Increase in deferred revenue | 2,400 | 4,599 | |
Change in non-cash working capital | (3,014) | (16,957) | |
Change attributable to capital asset acquisitions | 11,313 | (3,527) | |
Change attributable to contributed surplus | (25,000) | - | |
Change in non-cash operating working capital | (16,701) | (20,484) | |
Cash generated from operating activities | 37,967 | 27,397 | |
Interest rate support received | - | 638 | |
Interest received | 149 | 186 | |
Interest paid | (21,656) | (21,860) | |
Net cash generated by operating activities | 16,460 | 6,361 |
BRITISH COLUMBIA FERRY SERVICES INC.
Interim Consolidated Statement of Cash Flows (unaudited)
(Expressed in thousands of Canadian dollars)
Three months ended, | ||
June 30, 2012 | June 30, 2011 | |
Cash flows from financing activities | ||
Repayment of long-term debt | - | (1,875) |
Repayment of short-term loans | (9,743) | (3,949) |
Repayment of finance lease obligations | (248) | (276) |
Contributed surplus payment from Province | 25,000 | - |
Net cash generated by (used in) financing activities | 15,009 | (6,100) |
Cash flows from investing activities | ||
Proceeds from disposal of property, plant and equipment | 29 | 29 |
Purchase of property, plant and equipment and intangibles | (31,736) | (28,460) |
Advancement of long-term loan | - | (268) |
(Purchase of) proceeds from short-term investments | (50) | 5,000 |
Net cash used in investing activities | (31,757) | (23,699) |
Net decrease in cash and cash equivalents | (288) | (23,438) |
Cash and cash equivalents, beginning of period | 7,700 | 33,335 |
Cash and cash equivalents, end of period | 7,412 | 9,897 |
BRITISH COLUMBIA FERRY SERVICES INC.
Interim Consolidated Statement of Changes in Equity (unaudited)
(Expressed in thousands of Canadian dollars)
Share Capital |
Contributed Surplus |
Retained Earnings |
Total Equity Before Reserves |
Revaluation Reserve |
Total Equity Including Reserves |
|
Balance as at April 1, 2011 | 75,478 | - | 239,711 | 315,189 | - | 315,189 |
Net loss for the three months ended June 30, 2011 | - | - | (3,551) | (3,551) | - | (3,551) |
Other comprehensive income for the three months ended June 30, 2011 | - | - | - | - | - | - |
Balance as at June 30, 2011 | 75,478 | - | 236,160 | 311,638 | - | 311,638 |
Balance as at April 1, 2012 | 75,478 | 25,000 | 224,717 | 325,195 | 2,177 | 327,372 |
Net earnings for the three months ended June 30, 2012 | - | - | 3,265 | 3,265 | - | 3,265 |
Other comprehensive income for the three months ended June 30, 2012 | - | - | - | - | - | - |
Balance as at June 30, 2012 | 75,478 | 25,000 | 227,982 | 328,460 | 2,177 | 330,637 |
SOURCE: British Columbia Ferry Services Inc.
Media Contact:
BC Ferries, Media Relations
Victoria: (250) 978-1267
Customer Contact:
Victoria: (250) 386-3431
Toll-free: 1-888-BCFERRY (1-888-223-3779)
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