BC Ferries releases year-end results

VICTORIA, BC, June 15, 2012 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) released its year-end results today for fiscal 2012.  The company reported a net loss of $16.5 million for the year ended March 31, 2012, compared to net earnings of $3.8 million the previous year.  The net earnings from fiscal 2011 included a one-time gain of $9.3 million from the sale of the company's former head office building.

Revenues for the year decreased from $739.3 million to $738.2 million, while operating expenses increased from $672.2 million to $682.7 million.  The $10.5 million increase in fiscal 2012 operating expenses includes increases of $4.0 million in fuel expenses and $8.5 million in amortization costs, partially offset by reductions in advertising costs, public relations expenses, cost of retail goods sold and a number of miscellaneous items.

Capital expenditures in the three and twelve months ended March 31, 2012 totalled $31.6 million and $122.2 million, respectively.  For fiscal 2012, these investments include: $48.5 million in vessel upgrades and modifications; $44.0 million in terminal marine structures; $18.6 million in information technology; and $11.1 million in terminal and building upgrades and equipment.

On January 24, 2012, the British Columbia Ferries Commissioner (the Commissioner) released his report following a comprehensive review of BC Ferries and the commercial regulatory structure in which it operates. The review re-confirmed the company is an efficient and well run operation.  The report makes recommendations covering a wide range of ferry related issues and clearly articulates the challenges ahead if BC Ferries continues to operate the same level of service with the same level of government funding.

In May 2012 in response to the Commissioner's report, the Province of British Columbia enacted Bill 47 which implemented changes to the Coastal Ferry Act designed to balance the interests of ferry users, taxpayers and the sustainability of the ferry operator.  In announcing Bill 47 the Minister of Transportation and Infrastructure (the Minister) also announced a commitment of $79.5 million to reduce pressure on fares and price caps. Of this amount, $25 million was a contribution to equity in the fiscal year ended March 31, 2012. The remaining $54.5 million will be provided over the next four fiscal years.

"The legislative changes and committed funding are important to the long term financial sustainability of BC Ferries in order to provide British Columbians with a reliable and affordable service without compromising safety," said Mike Corrigan, BC Ferries' President and CEO.  "We look forward to working with the Province, local communities and the Commissioner to help find solutions that are in the common interests of our customers, the government and BC Ferries."

In the year ended March 31, 2012, vehicle and passenger traffic declined by 3.5 per cent and 2.8 per cent, respectively.  The traffic in fiscal 2012 is the lowest vehicle traffic that BC Ferries has experienced in 13 years and the lowest passenger traffic in 21 years.

BC Ferries is currently forecasting a small loss for fiscal 2013, largely driven by significantly lower traffic levels than those originally included in setting performance term three price caps.  The company expects to return to profitability in fiscal 2014, assuming no further deterioration in traffic. In the meantime, BC Ferries does not anticipate that economic conditions or its traffic levels will improve in the near future and the company is continuing its program of cost containment and deferrals without compromising the safety of its operations.

Fourth quarter revenues decreased from $140.7 million to $138.2 million compared to the same quarter the year prior, while total expenses increased from $179.7 million to $183.4 million.  Due to the seasonality of ferry travel, BC Ferries typically generates higher earnings in the first two quarters of the fiscal year, which are usually offset by net losses in the third and fourth quarters of the 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.


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: traffic levels and economic conditions; the additional payments to be received from the Province over the next four fiscal years; our short-term and long-range business plans; a net loss in fiscal 2013 and a return to profitability in fiscal 2014; and the impacts of Bill 47. 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)

   
                As at March 31,
  2012   2011
         
Assets        
Current assets:        
  Cash and cash equivalents $ 7,700 $ 33,335
  Restricted short-term investments   35,705   37,040
  Other short-term investments   26,880   64,074
  Accounts receivable   42,341   20,619
  Prepaid expenses   6,725   5,648
  Inventories   22,017   19,957
  Regulatory assets         -   3,703
    141,368   184,376
Property, plant and equipment   1,577,709   1,581,007
Intangible assets   41,913   34,929
Long-term regulatory assets   1,501         -
Long-term loan receivable   24,515   24,247
Long-term land lease   32,521   32,979
   $ 1,819,527 $ 1,857,538
Liabilities and Shareholders' Equity        
         
Current liabilities:        
  Accounts payable and accrued liabilities $ 51,985 $ 51,249
  Short-term debt   17,737          3,949
  Interest payable on long-term debt   18,249   18,261
  Accrued employee costs   49,204   48,194
  Deferred revenue   13,784   15,596
  Derivative liabilities         12          23
  Regulatory liabilities   2,379         -
  Current portion of long-term debt   9,000   22,125
  Current portion of accrued employee future benefits   1,600   1,200
  Current portion of obligations under capital lease   974   1,040
    164,924   161,637
         
Accrued employee future benefits   11,171   10,907
Long-term regulatory liabilities          -          1,558
Long-term debt   1,285,232   1,327,014
Obligations under capital lease   47,013   47,723
    1,508,340   1,548,839
         
Shareholders' equity:        
  Share capital   75,478   75,478
  Contributed surplus   25,000         -
  Retained earnings   210,709   233,221
    311,187   308,699
        $ 1,819,527 $ 1,857,538
         

BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of (Loss) Earnings, Comprehensive Income and Retained Earnings
(expressed in thousands)

 
  Years ended March 31,
    2012   2011
         
Revenue:        
  Tariffs $ 457,003 $ 458,049
  Ferry service fees   154,959   151,023
  Federal-Provincial Subsidy Agreement   27,487   26,924
  Retail   76,522   78,920
  Other income   22,206   24,354
    738,177   739,270
         
Expenses:        
  Operations   413,259   411,116
  Maintenance   86,313   85,717
  Administration   30,974   31,169
  Cost of retail goods sold   29,132   29,659
  Amortization   122,973   114,486
    682,651   672,147
         
Earnings from operations   55,526   67,123
         
Gain on foreign exchange   233   173
Interest expense   (71,902)   (72,173)
(Loss) gain on disposal and impairment of capital assets   (331)   8,658
Net (loss) earnings   (16,474)   3,781
         
Other comprehensive income         -        -
         
Net (loss) earnings and comprehensive income   (16,474)   3,781
         
Retained earnings, beginning of year   233,221   235,478
         
Preferred share dividend   (6,038)   (6,038)
         
         
Retained earnings, end of year $ 210,709 $ 233,221

BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of Cash Flows
(expressed in thousands)

   
  Years ended March 31,
    2012   2011
         
Cash provided by (used in):        
         
Operations:        
  Net (loss) earnings $ (16,474) $ 3,781
  Items not involving cash:        
            Amortization   122,973   114,486
            Other non-cash items   (2,665)   (6,659)
  Long-term regulatory costs deferred   (3,059)   (7,543)
  Change in non-cash operating working capital   (318)   1,459
    100,457   105,524
         
Financing:        
  Dividends paid on preferred shares   (6,038)   (6,038)
  Repayment of long-term debt   (55,875)   (9,000)
  Proceeds from (repayment of) short-term loans   13,788   3,949
  Repayment of capital lease obligations   (1,042)   (1,021)
    (49,167)   (12,110)
         
Investing:        
  Proceeds from disposal of property, plant and equipment   118   11,181
  Purchase of property, plant and equipment and intangible assets   (115,304)   (120,874)
  Recovery of import duties and related taxes       -   119,449
  Reduction of restricted short-term investments   1,335   200
  Advancement of long-term loan   (268)   (24,247)
  Proceeds from (purchase of) short-term investments   37,194   (56,396)
    (76,925)   (70,687)
         
(Decrease) increase in cash and cash equivalents   (25,635)   22,727
         
Cash and cash equivalents, beginning of year   33,335   10,608
         
Cash and cash equivalents, end of year $ 7,700 $ 33,335
         

 

SOURCE British Columbia Ferry Services Inc.

For further information:

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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