BC Ferries Releases First Quarter Results

Pricing promotions planned for fall 2016 and spring 2017

VICTORIA, Aug. 19, 2016 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) released its first quarter results today.  Net earnings for the three months ended June 30, 2016 (the first quarter of fiscal 2017) were $27.0 million, compared to net earnings of $18.8 million in the first quarter of the previous year. These earnings reflect the effects of higher traffic levels, higher retail sales, higher ferry transportation fees, and lower financial costs, partially offset by lower social program fees, and higher operating costs.

In the first quarter of fiscal 2017, revenues increased by 4.9 per cent to $219.2 million, while operating expenses increased by 1.5 per cent to $178.6 million, compared to the first quarter of the previous fiscal year.

"It's important for BC Ferries to maintain strong financial performance to help finance our 12-year $3 billion capital plan so we can continue to provide safe, efficient and reliable service for our customers for years to come," said Mike Corrigan, BC Ferries' President and CEO. "Part of that plan includes the three new Salish-Class vessels which are nearing completion and will enter service next year to replace the 51-year old Queen of Burnaby and the 52-year old Queen of Nanaimo. Other ships that will be replaced over the next several years include the North Island Princess, the Nimpkish and the Howe Sound Queen."

Along with releasing BC Ferries' first quarter results, Corrigan also announced that there will be upcoming pricing promotions in the fall of 2016 and the spring of 2017.  Details about the promotions will be announced in the coming months.

Capital expenditures for the three months ended June 30, 2016 totalled $45.9 million, of which $30.8 million was invested in new vessels, and vessel upgrades and modifications. The remainder was spent on terminal marine structures, terminal and building upgrades and equipment, and information technology.

Across the system, passenger traffic increased by 2.5 per cent and vehicle traffic increased by 5.1 per cent, as compared to the first quarter of the previous fiscal year. During the three months ended June 30, 2016, BC Ferries provided over 42,000 sailings, carrying over 5.3 million passengers and over 2.1 million vehicles.

Significant events during the first quarter of fiscal 2017 include the following:

On April 1, 2016, BC Ferries implemented average tariff increases in accordance with the BC Ferries Commissioner's Order 15-03 dated September 16, 2015.  Tariff increases were 1.9 per cent on average. Also on April 1, 2016, due to lower fuel prices, coupled with the fact that the company has locked in pricing for a significant portion of its forecast fuel consumption to the end of fiscal 2017 through its hedging program, a fuel rebate increase of 1.9 per cent was implemented across the system. This fuel rebate increase completely offset the 1.9 per cent average tariff increase, effectively resulting in no net increase to customers at the beginning of Performance Term Four. Fuel rebates increased from 1.0 per cent to 2.9 per cent on the major and minor routes and a fuel rebate of 1.9 per cent was implemented on the northern routes.

On April 25, 2016, the Province confirmed the Government of Canada's expansion of the criteria eligibility for projects to be funded under the New Building Canada Fund. This will provide an opportunity for BC Ferries to apply for funding for ferries and related infrastructure.

On May 17, 2016, BC Ferries finalized the sale of the 52-year old Tenaka to Lady Rose Marine Services of Port Alberni, B.C.

On June 2, 2016, the Salish Eagle and the Salish Raven, the second and third of the new Salish-Class vessels, were launched and christened at Remontowa Shipbuilding S.A. in Gdansk, Poland. The Salish Orca was previously launched and christened on November 24, 2015. The contracts with Remontowa Shipbuilding S.A, with a total value of $165 million, form the majority of the total project budget of $206 million. The original project budget of $252 million has been reduced by $46 million reflecting the elimination of tariffs to import the vessels into Canada. These vessels will be dual-fuel capable, designed to run primarily on natural gas with marine diesel as a backup.

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 20.7 million passengers and 8.1 million vehicles during the fiscal year ended March 31, 2016. 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: the capital plan, pricing promotions, the New Building Canada Fund, and the Salish-Class vessels. 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.

NON-IFRS MEASURES

In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we present certain financial measures that do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental financial 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.

 


BRITISH COLUMBIA FERRY SERVICES INC.

Interim Consolidated Statements of Financial Position (unaudited)

(Expressed in thousands of Canadian dollars)



As at


June 30, 2016


March 31, 2016

Assets




Current assets




Cash and cash equivalents

78,093


79,113

Restricted short-term investments

31,891


31,986

Other short-term investments

57,749


61,464

Trade and other receivables

21,180


16,249

Prepaid expenses

17,076


8,550

Inventories

25,669


23,988


231,658


221,350

Non-current assets



Loan receivable

24,515


24,515

Land lease

30,573


30,688

Property, plant and equipment

1,543,791


1,539,957

Intangible assets

87,931


82,741


1,686,810


1,677,901

Total assets

1,918,468


1,899,251

Liabilities




Current liabilities




Accounts payable and accrued liabilities

46,445


53,575

Interest payable on long-term debt

16,053


18,262

Deferred revenue

23,106


18,883

Derivative liabilities

5,230


17,879

Current portion of long-term debt

24,000


24,000

Current portion of accrued employee future benefits

1,900


1,900

Current portion of obligations under finance lease

1,531


1,514

Provisions

54,725


53,321


172,990


189,334

Non-current liabilities




Accrued employee future benefits

19,268


19,361

Long-term debt

1,214,455


1,218,106

Obligations under finance lease

41,614


42,003

Other liabilities

1,500


1,500


1,276,837


1,280,970

Total liabilities

1,449,827


1,470,304

 

Equity




Share capital

75,478


75,478

Contributed surplus

25,000


25,000

Retained earnings

379,677


352,692

Total equity before reserves

480,155


453,170

Reserves

(11,514)


(24,223)

Total equity including reserves

468,641


428,947

 

Total liabilities and equity

 

1,918,468


1,899,251

 


BRITISH COLUMBIA FERRY SERVICES INC.
Interim Consolidated Statements of Comprehensive Income (unaudited)
(Expressed in thousands of Canadian dollars)



Three months ended June 30


2016

2015

 

Revenue




Vehicle and passenger fares

158,364

147,415


Ferry service fees

42,156

41,259


Net retail

13,711

12,675


Federal-Provincial Subsidy Agreement

7,289

7,182


Fuel rebates

(4,699)

(1,626)


Other income

2,378

2,143

Total revenue

219,199

209,048

 

Expenses




Operations

112,712

112,230


Maintenance

21,073

20,592


Administration

8,027

7,984


Depreciation and amortization

36,840

35,111

Total operating expenses

178,652

175,917




Operating profit

40,547

33,131

 

Net finance and other expenses




Net finance expense





Finance income

1,035

897



Finance expenses

(14,412)

(15,242)


Net finance expense

(13,377)

(14,345)


(Loss) gain on disposal and revaluation of property, plant and





equipment, intangible assets and inventory

(185)

11

Net finance and other expenses

(13,562)

(14,334)




Net earnings

26,985

18,797

 

Other comprehensive income




Items to be reclassified to net earnings

10,328

3,458

Total other comprehensive income

10,328

3,458




Total comprehensive income

37,313

22,255

 


BRITISH COLUMBIA FERRY SERVICES INC.
Interim Consolidated Statements of Cash Flows (unaudited)
(Expressed in thousands of Canadian dollars)




Three months ended June 30


2016

2015

Cash flows from operating activities



Net earnings

26,985

18,797




Items not affecting cash




Net finance expense

13,377

14,345


Depreciation and amortization

36,840

35,111


Loss (gain) on disposal and revaluation of property, plant and





equipment, intangible assets and inventory

185

(11)


Other non-cash adjustments to property, plant and equipment

(345)

79


Changes in





Accrued employee future benefits

(93)

(202)



Derivative liabilities recognized in net earnings

(1)

23



Provisions

1,404

1,992



Long-term land lease

115

114



Accrued financing costs

316

514

Total non-cash items

51,798

51,965




Movements in operating working capital




Trade and other receivables

(4,931)

(413)


Prepaid expenses

(8,526)

(9,818)


Inventories

(1,681)

(702)


Accounts payable and accrued liabilities

(7,130)

(6,794)


Deferred revenue

4,223

4,868


Change in non-cash working capital

(18,045)

(12,859)


Change attributable to capital asset acquisitions

(1,990)

(3,142)


Change in non-cash operating working capital

(20,035)

(16,001)

Cash generated from operating activities

58,748

54,761


Interest received

704

391


Interest paid

(18,316)

(18,494)




Net cash generated by operating activities

41,136

36,658

 


BRITISH COLUMBIA FERRY SERVICES INC.
Interim Consolidated Statements of Cash Flows (unaudited)
(Expressed in thousands of Canadian dollars)




Three months ended June 30


2016

2015




Cash flows from financing activities



Repayment of long-term debt

(3,750)

(3,750)

Repayment of finance lease obligations

(372)

(287)

Net cash used in financing activities

(4,122)

(4,037)




Cash flows from investing activities



Proceeds from disposal of property, plant and equipment

63

12

Purchase of property, plant and equipment and intangible assets

(41,907)

(32,273)

Changes in debt service reserve

95

95

Net proceeds from short-term investments

3,715

4,019

Net cash used in investing activities

(38,034)

(28,147)




Net (decrease) increase in cash and cash equivalents

(1,020)

4,474




Cash and cash equivalents, beginning of period

79,113

65,574




Cash and cash equivalents, end of period

78,093

70,048

 

BRITISH COLUMBIA FERRY SERVICES INC.

Interim Consolidated Statements of Cash Flows (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 March 31, 2015

75,478

25,000

289,177

389,655

(11,450)

378,205

Net earnings

-

-

18,797

18,797

-

18,797

Other comprehensive income

-

-

-

-

2,827

2,827

Realized hedge losses








recognized in fuel swaps

-

-

-

-

631

631

Hedge losses on interest rate








forward contract reclassified








to net earnings

-

-

-

-

62

62








Balance as at June 30, 2015

75,478

25,000

307,974

408,452

(7,930)

400,522

 

Balance as at March 31, 2016

 

75,478

 

25,000

 

352,692

 

453,170

 

(24,223)

 

428,947

Net earnings

-

-

26,985

26,985

-

26,985

Other comprehensive income

-

-

-

-

10,328

10,328

Realized hedge losses








recognized in fuel swaps

-

-

-

-

2,319

2,319

Hedge losses on interest rate








forward contract reclassified








to net earnings

-

-

-

-

62

62








Balance as at June 30, 2016

75,478

25,000

379,677

480,155

(11,514)

468,641

 

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

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