BC Ferries releases first quarter results
50% discounts on regular passenger fares coming this fall fleetwide at off-peak times
VICTORIA, Aug. 21, 2015 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) released its first quarter results today. Net earnings for the first three months ended June 30, 2015 (the first quarter of fiscal 2016) were $18.8 million, compared to net earnings of $13.9 million in the first quarter of the previous year. These positive earnings reflect the results of favourable traffic and increased retail sales, among other contributing factors.
Along with releasing BC Ferries' first quarter results at the Annual General Meeting of B.C. Ferry Authority and the Annual Public Meeting of British Columbia Ferry Services Inc., President and CEO Mike Corrigan also announced plans for a series of pricing promotions, starting next month with a 50 per cent discount on passenger fares during certain off-peak periods.
Across the system, passenger traffic increased 5.0 per cent and vehicle traffic increased 4.7 per cent, as compared to the first quarter last year. During the three months ended June 30, 2015, BC Ferries provided over 41,000 sailings, carrying over five million passengers and two million vehicles.
From September 8 to October 15, regular passenger fares will be discounted by 50 per cent on off-peak days of the week and certain off-peak times of the day on the major and minor routes. From October 1 – 31, regular passenger fares will be discounted by 50 per cent on all sailings on the northern routes.
"While we are uncertain how long this current growth in traffic will last, this promotion allows us an opportunity this fall to test variable pricing concepts in order to understand their impact on traffic trends, customer responses, and operations," said Mike Corrigan, BC Ferries' President and CEO. "This will help us gather information as we prepare pricing strategies for our Fare Flexibility and Digital Experience Initiative in 2017, which will make variable pricing a permanent part of our service delivery model."
"The fact that the positive trend in B.C. tourism and in our passenger traffic is going against the general trend in the Canadian economy makes it difficult to say exactly how long it will last, however we intend to leverage the resulting strong financial results to keep fare increases at approximately the rate of inflation, fund our $3 billion capital program to replace aging vessels, terminal and information technology infrastructure, as well as test variable pricing promotions for the remainder of this fiscal year," said Corrigan.
In the first quarter of fiscal 2016, revenues increased by 2.2 per cent to $217.7 million, while operating expenses increased by 1.2 per cent to $184.6 million compared to the first quarter of the previous fiscal year.
BC Ferries' full financial statements, including notes and Management's Discussion and Analysis, are filed on SEDAR and will be available at www.sedar.com.
Under contract to the Province of British Columbia, BC Ferries is the service provider responsible for the delivery of safe, efficient and dependable ferry service along coastal British Columbia.
BC Ferries is one of the largest ferry operators in the world based on passengers transported annually and transportation infrastructure, and carried 19.8 million passengers and 7.7 million vehicles during the fiscal year ended March 31, 2015. BC Ferries provides frequent year-round ferry transportation services to the west coast of Canada on 24 routes, currently supported by 34 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: capital expenditure levels, fares, economic conditions, traffic levels, pricing promotions, and the Fare Flexibility and Digital Experience Initiative. 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: vendor non-performance; capital market access; interest rate, foreign currency, fuel price, and traffic volume fluctuations; the implementation of major capital projects; security, safety, and environmental incidents; confidential or sensitive information breaches; changes in laws; vessel repair facility limitations; economic regulatory environment changes; tax changes; and First Nation 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.
In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we present certain supplemental non-IFRS measures. These include, but are not limited to, vehicle and passenger traffic and number of sailings. These measures do not have any standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental non-IFRS measures are provided to assist readers in determining our ability to generate cash from operations and improve the comparability of our results from one period to another. We believe these measures are useful in assessing operating performance of our ongoing business on an overall basis.
BC FERRIES OFFERS 50 PER CENT SAVINGS ON ALL PASSENGER FARES ON SELECT SAILINGS ON ALL ROUTES THIS FALL
- BC Ferries announced today a major fleetwide pricing promotion of 50 per cent savings on all regular passenger fares coming soon.
- From September 8 through October 15 on the major and minor routes, the 50 per cent passenger fare discount will be in effect Monday through Thursday on select middle of the day sailings and on Saturday afternoon and evening sailings.
- From October 1 – 31 on the northern routes, the half-price discount for all passengers will apply on all sailings.
- For example, adult passengers on the Tsawwassen – Swartz Bay route will save $8.45 during the promotion. This rate is similar to the fare from 1997.
- For example, adult passengers travelling on the Port Hardy – Prince Rupert Inside Passage route will save $72.75 during the promotion. This rate is similar to the fare 12 years ago.
- During the promotion, Monday through Thursday, BC Seniors travelling on the major and minor routes will receive a 50 per cent discount off the regular seniors' fare during this promotion, so they'll pay just 25 per cent of the regular adult passenger fare.
- During the promotion, Experience Card, Northern Resident and Group Discounts will be increased to match the promotional discounts of 50 per cent off the regular fare.
- This off-peak pricing promotion will not apply on Thanksgiving Monday (October 12) on the major and minor routes, as traditionally that day is always a busy day for ferry travel.
- For the purpose of this promotion, the major routes are the Metro Vancouver – Vancouver Island and Horseshoe Bay – Langdale routes. The minor routes are the Southern and Northern Gulf Island routes and the Port McNeill – Alert Bay Sointula route.
- For the purpose of this promotion, the northern routes are the Port Hardy – Prince Rupert, Prince Rupert – Haida Gwaii, Alliford Bay – Skidegate routes and the Discovery Coast connector.
- BC Ferries is planning some other pricing promotions for late fall and next spring that customers will enjoy. Stay tuned for details.
BRITISH COLUMBIA FERRY SERVICES INC. |
|||
As at |
|||
June 30, 2015 |
March 31, 2015 |
||
Assets |
|||
Current assets |
|||
Cash and cash equivalents |
70,048 |
65,574 |
|
Restricted short-term investments |
32,401 |
32,496 |
|
Other short-term investments |
58,079 |
62,098 |
|
Trade and other receivables |
19,903 |
19,490 |
|
Prepaid expenses |
15,995 |
6,177 |
|
Inventories |
26,095 |
25,393 |
|
222,521 |
211,228 |
||
Non-current assets |
|||
Loan receivable |
24,515 |
24,515 |
|
Land lease |
31,032 |
31,146 |
|
Property, plant and equipment |
1,521,837 |
1,524,692 |
|
Intangible assets |
69,385 |
65,031 |
|
1,646,769 |
1,645,384 |
||
Total assets |
1,869,290 |
1,856,612 |
|
Liabilities |
|||
Current liabilities |
|||
Accounts payable and accrued liabilities |
50,607 |
57,401 |
|
Interest payable on long-term debt |
16,196 |
18,329 |
|
Deferred revenue |
21,825 |
16,957 |
|
Derivative liabilities |
997 |
4,433 |
|
Current portion of long-term debt |
24,000 |
24,000 |
|
Current portion of accrued employee future benefits |
2,400 |
2,400 |
|
Current portion of obligations under finance lease |
1,394 |
1,309 |
|
Provisions |
50,057 |
48,065 |
|
167,476 |
172,894 |
||
Non-current liabilities |
|||
Accrued employee future benefits |
18,598 |
18,800 |
|
Long-term debt |
1,238,052 |
1,241,699 |
|
Obligations under finance lease |
43,142 |
43,514 |
|
Other liabilities |
1,500 |
1,500 |
|
1,301,292 |
1,305,513 |
||
Total liabilities |
1,468,768 |
1,478,407 |
|
Equity |
|||
Share capital |
75,478 |
75,478 |
|
Contributed surplus |
25,000 |
25,000 |
|
Retained earnings |
307,974 |
289,177 |
|
Total equity before reserves |
408,452 |
389,655 |
|
Reserves |
(7,930) |
(11,450) |
|
Total equity including reserves |
400,522 |
378,205 |
|
Total liabilities and equity |
1,869,290 |
1,856,612 |
BRITISH COLUMBIA FERRY SERVICES INC. |
||||
Three months ended June 30, |
||||
2015 |
2014 |
|||
Revenue |
||||
Vehicle and passenger fares |
143,344 |
131,372 |
||
Ferry service fees |
41,259 |
45,047 |
||
Retail |
21,326 |
19,944 |
||
Federal-Provincial Subsidy Agreement |
7,182 |
7,089 |
||
Fuel (rebates) surcharges |
(1,626) |
4,362 |
||
Regulated other income |
4,071 |
3,399 |
||
Other income |
2,143 |
1,896 |
||
Total revenue |
217,699 |
213,109 |
||
Operating expenses |
||||
Operations |
112,230 |
115,024 |
||
Maintenance |
20,592 |
16,649 |
||
Administration |
7,984 |
7,613 |
||
Cost of retail goods sold |
8,651 |
7,989 |
||
Depreciation and amortization |
35,111 |
35,234 |
||
Total operating expenses |
184,568 |
182,509 |
||
Operating profit |
33,131 |
30,600 |
||
Net finance and other expenses |
||||
Net finance expenses |
||||
Finance income |
897 |
1,067 |
||
Finance expenses |
(15,242) |
(17,712) |
||
Net finance expenses |
(14,345) |
(16,645) |
||
Gain (loss) on disposal and revaluation of property, plant and |
||||
equipment and intangible assets |
11 |
(67) |
||
Net finance and other expenses |
(14,334) |
(16,712) |
||
Net earnings |
18,797 |
13,888 |
||
Other comprehensive income (loss) |
||||
Items to be reclassified to net earnings |
3,458 |
(2,396) |
||
Total other comprehensive income (loss) |
3,458 |
(2,396) |
||
Total comprehensive income |
22,255 |
11,492 |
BRITISH COLUMBIA FERRY SERVICES INC. |
||||
Three months ended June 30, |
||||
2015 |
2014 |
|||
Cash flows from operating activities |
||||
Net earnings |
18,797 |
13,888 |
||
Items not affecting cash |
||||
Net finance expense |
14,345 |
16,645 |
||
Depreciation and amortization |
35,111 |
35,234 |
||
(Gain) loss on disposal and revaluation of property, plant and |
||||
equipment and intangible assets |
(11) |
67 |
||
Other non-cash adjustments to property, plant and equipment |
79 |
(405) |
||
Changes in |
||||
Accrued employee future benefits |
(202) |
97 |
||
Derivative liabilities recognized in net earnings |
23 |
15 |
||
Provisions |
1,992 |
(3,845) |
||
Long-term land lease |
114 |
114 |
||
Accrued interest costs |
514 |
20 |
||
Total non-cash items |
51,965 |
47,942 |
||
Movements in operating working capital |
||||
Trade and other receivables |
(413) |
198 |
||
Prepaid expenses |
(9,818) |
(11,244) |
||
Inventories |
(702) |
(1,017) |
||
Accounts payable and accrued liabilities |
(6,794) |
(12,141) |
||
Deferred revenue |
4,868 |
4,861 |
||
Change in non-cash working capital |
(12,859) |
(19,343) |
||
Change attributable to capital asset acquisitions |
(3,142) |
6,116 |
||
Change in non-cash operating working capital |
(16,001) |
(13,227) |
||
Cash generated from operating activities |
54,761 |
48,603 |
||
Interest received |
391 |
1,045 |
||
Interest paid |
(18,494) |
(21,496) |
||
Net cash generated by operating activities |
36,658 |
28,152 |
BRITISH COLUMBIA FERRY SERVICES INC. |
||
Three months ended June 30, |
||
2015 |
2014 |
|
Cash flows from financing activities |
||
Proceeds from issuance of bonds |
- |
200,000 |
Repayment of long-term debt |
(3,750) |
(250,000) |
Repayment of finance lease obligations |
(287) |
(278) |
Deferred financing costs incurred |
- |
(1,315) |
Hedge losses on interest rate forward contracts |
- |
(7,652) |
Net cash used in financing activities |
(4,037) |
(59,245) |
Cash flows from investing activities |
||
Proceeds from disposal of property, plant and equipment |
12 |
43 |
Purchase of property, plant and equipment and intangible assets |
(32,273) |
(31,167) |
Decrease of debt service reserves |
95 |
2,886 |
Net proceeds from short-term investments |
4,019 |
30,471 |
Net cash (used in) provided by investing activities |
(28,147) |
2,233 |
Net increase (decrease) in cash and cash equivalents |
4,474 |
(28,860) |
Cash and cash equivalents, beginning of year |
65,574 |
71,365 |
Cash and cash equivalents, end of year |
70,048 |
42,505 |
BRITISH COLUMBIA FERRY SERVICES INC. |
|||||||
Share capital |
Contributed surplus |
Retained earnings |
Total equity before reserves |
Reserves |
Total equity including reserves |
||
Balance as at April 1, 2014 |
75,478 |
25,000 |
246,142 |
346,620 |
(1,691) |
344,929 |
|
Net earnings for the three |
|||||||
months ended June 30, 2014 |
- |
- |
13,888 |
13,888 |
- |
13,888 |
|
Other comprehensive loss for the |
|||||||
three months ended June 30, 2014 |
- |
- |
- |
- |
(2,396) |
(2,396) |
|
Hedge losses reclassified to net |
|||||||
earnings |
- |
- |
- |
- |
43 |
43 |
|
Balance as at June 30, 2014 |
75,478 |
25,000 |
260,030 |
360,508 |
(4,044) |
356,464 |
|
Balance as at March 31, 2015 |
75,478 |
25,000 |
289,177 |
389,655 |
(11,450) |
378,205 |
|
Net earnings for the three months |
|||||||
ended June 30, 2015 |
- |
- |
18,797 |
18,797 |
- |
18,797 |
|
Other comprehensive income for the |
|||||||
three months ended June 30, 2015 |
- |
- |
- |
- |
3,458 |
3,458 |
|
Hedge losses reclassified to net |
|||||||
earnings |
- |
- |
- |
- |
62 |
62 |
|
Balance as at June 30, 2015 |
75,478 |
25,000 |
307,974 |
408,452 |
(7,930) |
400,522 |
SOURCE British Columbia Ferry Services Inc.
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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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