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 TsawwassenSwartz 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 HardyPrince 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.
Interim Consolidated Statements of Financial Position (unaudited)
(Expressed in thousands of Canadian dollars)


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.
Interim Consolidated Statements of Comprehensive Income (unaudited)
(Expressed in thousands of Canadian dollars)


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.
Interim Consolidated Statements of Cash Flows (unaudited)
(Expressed in thousands of Canadian dollars)


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.
Interim Consolidated Statements of Cash Flows (unaudited)
(Expressed in thousands of Canadian dollars)


       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.
Interim Consolidated Statements of Changes in Equity (unaudited)
(Expressed in thousands of Canadian dollars)


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.

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)

RELATED LINKS
http://www.bcferries.ca

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890