BC Ferries releases third quarter results
VICTORIA, Feb. 24, 2012 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) released its third quarter results today for fiscal 2011/12. The company reported a net loss of $23.1 million for the three months ended December 31, 2011, compared to a net loss of $12.5 million in the same quarter last year. Net earnings for the nine-month period ended December 31, 2011 were $28.7 million, down from $42.8 million for the same period in the previous year. The loss in the third quarter of fiscal 2010/11 included a one-time gain of $9.3 million from the sale of the company's former head office building.
BC Ferries' quarterly results are affected by the seasonality of leisure travel patterns. The second quarter, covering the summer period, experiences the highest traffic levels and the highest earnings of the year. The third and fourth quarters reflect a seasonal downturn in traffic and the company utilizes these off-peak periods to perform upgrades and major maintenance and refit programs, as well as to undertake mandatory inspections on the majority of its vessels.
For the three months ended December 31, 2011, total revenue decreased by $1 million to $161.3 million compared to the same period last year. Total revenue for the nine months ended December 31, 2011 increased $1.4 million to $600.0 million.
For the three months ended December 31, 2011, total operating expenses increased $0.8 million to $166.4 million, compared to the same period last year, with expenses in the nine-month period ended December 31, 2011 increasing by $6.9 million to $517.4 million compared to the nine months ended December 31, 2010.
In the third quarter of fiscal 2011/12, vehicle traffic declined by 3.6 per cent and passenger traffic declined by 3.0 per cent compared to the same period the year prior. The traffic decline has been relatively consistent throughout all three quarters of fiscal 2012 and is the largest year-over-year traffic decline that BC Ferries has experienced in recent years.
On December 6, 2012, BC Ferries' Board announced the appointment of Michael J. Corrigan as President and CEO effective January 1, 2012 to replace outgoing CEO David L. Hahn. The Board stated that Corrigan's past business experience, as well as his nine years in the roles of Chief Operating Officer and of Executive Vice President of Business Development at BC Ferries have prepared him well to take on the leadership of the company.
"I am looking forward to working with the provincial government, the Ferries Commissioner and ferry dependent communities to ensure we provide a ferry system that is safe, reliable and affordable," said Mike Corrigan, BC Ferries' President and CEO. "I am also cognizant of the economic challenges we face and I am committed to ensuring our financial sustainability, without in any way compromising our focus on safety."
Notable events since June 30, 2011 include, the issuance of the British Columbia Ferries Commissioner's report to the B.C. Minister of Transportation and Infrastructure as to how the Coastal Ferry Act could be amended to balance the interests of ferry users with the financial sustainability of BC Ferries. The report reconfirms that BC Ferries is an efficient and well run operation but clearly articulates the challenges ahead if the company continues to operate the same level of service with the same level of funding. The company is awaiting the Province's response to the Commissioner's report and recommendations.
The company reached a tentative agreement with the BC Ferry & Marine Workers' Union for a three year extension, to October 31, 2015, of the Collective Agreement. The agreement has been ratified by the Union membership.
Former B.C. Auditor General George Morfitt released a comprehensive report arising from his follow-up of the operational safety audit he conducted five years ago. The report notes a significant improvement in the safety culture and practices within BC Ferries and concluded the company continues to operate a safe system.
A Request for Expressions of Interest was issued to determine whether a third party, under contract to BC Ferries, can provide cable ferry service at a lower cost, while maintaining high levels of safety, quality and reliability. The company intends to issue a Request for Proposals as the next phase of the procurement process.
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.
BC Ferries is one of the largest ferry operators in the world based on passengers transported annually and transportation infrastructure, and carried 20.7 million passengers and 8.1 million vehicles during the fiscal year ended March 31, 2011. 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: traffic levels; the extension of the Collective Agreement; our short-term and long-range business plans and cable ferry initiative; and the impact of the Commissioner's recommendations. 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.
Consolidated Balance Sheets
(expressed in thousands)
December 31, 2011 (unaudited) |
March 31, 2011 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 27,642 | $ | 33,335 | |||
Restricted short-term investments | 35,774 | 37,040 | |||||
Other short-term investments | 26,880 | 64,074 | |||||
Accounts receivable | 17,514 | 20,619 | |||||
Prepaid expenses | 7,603 | 5,648 | |||||
Inventories | 20,478 | 19,957 | |||||
Regulatory assets | 1,194 | 3,703 | |||||
137,085 | 184,376 | ||||||
Property, plant and equipment | 1,582,622 | 1,581,007 | |||||
Intangible assets | 38,380 | 34,929 | |||||
Regulatory assets | 997 | - | |||||
Long-term loan receivable | 24,515 | 24,247 | |||||
Long-term land lease | 32,635 | 32,979 | |||||
$ | 1,816,234 | $ | 1,857,538 | ||||
Liabilities and Shareholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 39,625 | $ | 51,249 | |||
Short-term debt | - | 3,949 | |||||
Interest payable on long-term debt | 15,324 | 18,261 | |||||
Accrued employee costs | 50,812 | 48,194 | |||||
Deferred revenue | 13,348 | 15,596 | |||||
Derivative liabilities | - | 23 | |||||
Current portion of long-term debt | 9,000 | 22,125 | |||||
Current portion of accrued employee future benefits | 1,200 | 1,200 | |||||
Current portion of obligations under capital lease | 974 | 1,040 | |||||
130,283 | 161,637 | ||||||
Accrued employee future benefits | 11,823 | 10,907 | |||||
Regulatory liabilities | - | 1,558 | |||||
Long-term debt | 1,289,491 | 1,327,014 | |||||
Obligations under capital lease | 47,258 | 47,723 | |||||
1,478,855 | 1,548,839 | ||||||
Shareholders' equity: | |||||||
Share capital | 75,478 | 75,478 | |||||
Retained earnings | 261,901 | 233,221 | |||||
337,379 | 308,699 | ||||||
$ | 1,816,234 | $ | 1,857,538 |
BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings
(unaudited)
(expressed in thousands)
Three months ended | Nine months ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue: | ||||||||||||||||
Tariffs | $ | 98,601 | $ | 99,086 | $ | 376,060 | $ | 373,007 | ||||||||
Ferry service fees | 34,420 | 33,954 | 122,287 | 118,892 | ||||||||||||
Federal-Provincial Subsidy Agreement | 6,872 | 6,731 | 20,615 | 20,193 | ||||||||||||
Retail | 16,590 | 17,208 | 63,024 | 65,351 | ||||||||||||
Other income | 4,804 | 5,344 | 18,032 | 21,134 | ||||||||||||
161,287 | 162,323 | 600,018 | 598,577 | |||||||||||||
Expenses: | ||||||||||||||||
Operations | 97,902 | 96,676 | 317,493 | 315,201 | ||||||||||||
Maintenance | 23,932 | 26,815 | 63,142 | 63,289 | ||||||||||||
Administration | 6,818 | 7,531 | 22,624 | 22,365 | ||||||||||||
Cost of retail goods sold | 6,473 | 6,525 | 23,903 | 24,482 | ||||||||||||
Amortization | 31,305 | 28,059 | 90,229 | 85,188 | ||||||||||||
166,430 | 165,606 | 517,391 | 510,525 | |||||||||||||
(Loss) earnings from operations | (5,143) | (3,283) | 82,627 | 88,052 | ||||||||||||
Gain on foreign exchange | 37 | 67 | 214 | 173 | ||||||||||||
Interest expense | (17,953) | (18,367) | (54,173) | (54,354) | ||||||||||||
(Loss) gain on disposal of capital assets | (25) | 9,146 | 12 | 8,893 | ||||||||||||
Net (loss) earnings | (23,084) | (12,437) | 28,680 | 42,764 | ||||||||||||
Other comprehensive income | - | - | - | - | ||||||||||||
Net (loss) earnings and comprehensive income | (23,084) | (12,437) | 28,680 | 42,764 | ||||||||||||
Retained earnings, beginning of period | 284,985 | 290,679 | 233,221 | 235,478 | ||||||||||||
Retained earnings, end of period | $ | 261,901 | $ | 278,242 | $ | 261,901 | $ | 278,242 |
BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of Cash Flows (unaudited)
(expressed in thousands)
Three months ended | Nine months ended | ||||||||||||||||
December 31 | December 31 | ||||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||||
Cash provided by (used in): | |||||||||||||||||
Operations: | |||||||||||||||||
Net (loss) earnings | $ | (23,084) | $ | (12,437) | $ | 28,680 | $ | 42,764 | |||||||||
Items not involving cash: | |||||||||||||||||
Amortization | 31,305 | 28,059 | 90,229 | 85,188 | |||||||||||||
Other non-cash charges | 2,379 | (8,874) | 4,227 | (7,084) | |||||||||||||
Long-term regulatory costs deferred | (1,855) | (1,628) | (2,555) | (6,904) | |||||||||||||
Change in non-cash operating working capital | 1,431 | 7,931 | (16,867) | (414) | |||||||||||||
10,176 | 13,051 | 103,714 | 113,550 | ||||||||||||||
Financing: | |||||||||||||||||
Repayment of long-term debt | - | - | (51,375) | (4,500) | |||||||||||||
Repayment of short-term loans | - | - | (3,949) | - | |||||||||||||
Repayment of capital lease obligations | (259) | (318) | (798) | (715) | |||||||||||||
(259) | (318) | (56,122) | (5,215) | ||||||||||||||
Investing: | |||||||||||||||||
Proceeds from disposal of property, plant and equipment | 23 | 11,040 | 107 | 11,118 | |||||||||||||
Purchase of property, plant and equipment and intangible assets | (35,873) | (34,420) | (91,584) | (78,196) | |||||||||||||
Recovery of import duties and related taxes | - | 119,449 | - | 119,449 | |||||||||||||
Reduction of debt service reserves | (29) | - | 1,266 | 200 | |||||||||||||
Advancement of long-term loan | - | (24,247) | (268) | (24,247) | |||||||||||||
Proceeds from (purchase of) short-term investments | 32,230 | (51,382) | 37,194 | (51,601) | |||||||||||||
(3,649) | 20,440 | (53,285) | (23,277) | ||||||||||||||
Increase (decrease) in cash and cash equivalents | 6,268 | 33,173 | (5,693) | 85,058 | |||||||||||||
Cash and cash equivalents, beginning of period | 21,374 | 62,493 | 33,335 | 10,608 | |||||||||||||
Cash and cash equivalents, end of period | $ | 27,642 | $ | 95,666 | $ | 27,642 | $ | 95,666 |
Media Contact:
BC Ferries, Media Relations
Victoria: (250) 978-1267
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