BC Ferries releases second quarter results
VICTORIA, Nov. 16, 2012 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) announced its second quarter results today with net earnings of $66.5 million and $69.8 million for the three and six-month periods ended September 30, 2012, up from $55.8 million and $52.3 million for the three and six-month periods ended September 30, 2011.
Total revenue for the three-month period ended September 30, 2012 increased from $256.9 million to $268.6 million. After a soft first four months of the fiscal year, there was a noticeable improvement in traffic during August and September. Revenue results also reflect an increase in ferry transportation fees from the Province of $7.4 million. Operating expenses increased from $183.4 million to $184.5 million, compared to the same period last year. For the six-months ended September 30, 2012, total revenue was $466.2 million compared to $443.9 million for the six-month period ended September 30, 2011, including an increase in transportation fees of $12.9 million. Operating expenses for the same period were $361.4 million, up from $356.7 million in the prior year, mainly due to increases in the price of fuel. BC Ferries' financial statements (without notes) are attached as Appendix 1.
As of April 1, 2012, BC Ferries began reporting its financial position and results of operations in accordance with International Financial Reporting Standards (IFRS). For comparative purposes, the prior year figures have been restated to comply with IFRS.
IFRS differs significantly from previous accounting standards. IFRS does not have a standard for rate-regulated activities and therefore, does not permit BC Ferries to report in the company's financial statements, the assets and liabilities that result from the regulated price cap setting process, such as the deferred fuel cost accounts. Rather than being charged to regulatory asset accounts on the Statement of Financial Position, fuel surcharges collected or rebates granted are now included in revenue, and increases or decreases in fuel prices from those approved in price caps are now included in operating expenses. While this is a significant accounting change for BC Ferries, it does not change the treatment of these types of assets and liabilities for regulatory purposes. A pro forma income statement reflecting the results of rate-regulated activities is included as Appendix 2.
Capital expenditures in the three and six-months ended September 30, 2012 totalled $18.3 million and $39.5 million, respectively. Projects included vessel upgrades and modifications, terminal marine structures, terminal and building upgrades and equipment, and information technology projects.
BC Ferries and the Province finalized amendments to the Coastal Ferry Services Contract for performance term three on June 30, 2012. The amending agreement includes increases of $54.5 million in aggregate ferry transportation fees, which are in addition to a one-time $25 million equity contribution. These funds, totalling $79.5 million, are intended to reduce the pressure for future fare cap and price cap increases. The amending agreement also includes a principle-based process for identifying $30 million in service level adjustments over the term. The company must also find $54.2 million in internal efficiencies.
"BC Ferries is working hard to find efficiencies in all areas of our business to ensure the operation is cost effective and financially viable, without compromising safety," said Mike Corrigan, BC Ferries' President and CEO. "It is our job as the service provider to deliver safe, efficient and flexible ferry service along coastal British Columbia that meets the changing needs of our customers over the long term."
On September 30, 2012, the BC Ferries Commissioner released his final price cap order for the remaining three years of performance term three, April 1, 2013 to March 31, 2016. The order outlined price cap increases of 4.1 per cent, 4.0 per cent and 3.9 per cent for all route groups on April 1 of 2013, 2014 and 2015, respectively.
Other significant events during the second quarter include, as a result of declining fuel prices, the July 20, 2012 reduction in fuel surcharges from 2.5 per cent to 2.0 per cent on the Horseshoe Bay - Langdale route and from 5.0 per cent to 2.0 per cent on all other routes with the exception of the northern routes. No surcharges or rebates were in place on our northern routes.
BC Ferries' full financial statements, including notes and Management's Discussion and Analysis are filed on SEDAR and are 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: the additional payments to be received from the Province, the amount of savings to be achieved through service level adjustments, and the efficiency target to be achieved for performance term three. 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. Interim Consolidated Statement of Financial Position (unaudited) (Expressed in thousands of Canadian dollars) |
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As at, | |||||||||||
September 30, 2012 | March 31, 2012 | April 1, 2011 | |||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | 43,025 | 7,700 | 33,335 | ||||||||
Restricted short-term investments | 35,640 | 35,705 | 37,040 | ||||||||
Other short-term investments | 61,430 | 26,880 | 64,074 | ||||||||
Trade and other receivables | 28,179 | 42,341 | 20,619 | ||||||||
Prepaid expenses | 11,120 | 6,725 | 5,648 | ||||||||
Inventories | 22,764 | 22,016 | 19,957 | ||||||||
202,158 | 141,367 | 180,673 | |||||||||
Non-current assets | |||||||||||
Long-term loan receivable | 24,515 | 24,515 | 24,247 | ||||||||
Long-term land lease | 32,292 | 32,521 | 32,979 | ||||||||
Property, plant and equipment | 1,563,700 | 1,596,507 | 1,593,194 | ||||||||
Intangible assets | 45,474 | 41,758 | 34,929 | ||||||||
1,665,981 | 1,695,301 | 1,685,349 | |||||||||
Total assets | 1,868,139 | 1,836,668 | 1,866,022 | ||||||||
Liabilities | |||||||||||
Current liabilities | |||||||||||
Accounts payable and accrued liabilities | 36,268 | 50,708 | 49,872 | ||||||||
Short-term debt | - | 17,737 | 3,949 | ||||||||
Interest payable on long-term debt | 18,220 | 18,249 | 18,261 | ||||||||
Deferred revenue | 12,076 | 13,784 | 15,596 | ||||||||
Derivative liabilities | 4 | 12 | 23 | ||||||||
Current portion of long-term debt | 9,000 | 9,000 | 22,125 | ||||||||
Current portion of accrued employee future benefits | 2,204 | 2,204 | 1,351 | ||||||||
Current portion of obligations under finance lease | 986 | 974 | 1,040 | ||||||||
Provisions | 47,632 | 47,022 | 46,788 | ||||||||
126,390 | 159,690 | 159,005 | |||||||||
Non-current liabilities | |||||||||||
Accrued employee future benefits | 16,846 | 17,361 | 17,091 | ||||||||
Long-term debt | 1,281,221 | 1,285,232 | 1,327,014 | ||||||||
Obligations under finance lease | 46,514 | 47,013 | 47,723 | ||||||||
1,344,581 | 1,349,606 | 1,391,828 | |||||||||
Total liabilities | 1,470,971 | 1,509,296 | 1,550,833 | ||||||||
Equity | |||||||||||
Share capital | 75,478 | 75,478 | 75,478 | ||||||||
Contributed surplus | 25,000 | 25,000 | - | ||||||||
Retained earnings | 294,513 | 224,717 | 239,711 | ||||||||
Total equity before reserves | 394,991 | 325,195 | 315,189 | ||||||||
Land revaluation reserve | 2,177 | 2,177 | - | ||||||||
Total equity including reserves | 397,168 | 327,372 | 315,189 | ||||||||
Total liabilities and equity | 1,868,139 | 1,836,668 | 1,866,022 | ||||||||
BRITISH COLUMBIA FERRY SERVICES INC. Interim Consolidated Statement of Comprehensive Income (Loss) (unaudited) (Expressed in thousands of Canadian dollars) |
|||||||||||
Three months ended | Six months ended | ||||||||||
September 30, | September 30, | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Revenue | |||||||||||
Vehicle and passenger fares | 165,824 | 161,985 | 280,246 | 276,386 | |||||||
Ferry service fees | 57,402 | 49,370 | 103,629 | 89,620 | |||||||
Retail | 27,029 | 27,035 | 46,191 | 46,434 | |||||||
Federal-Provincial Subsidy Agreement | 7,019 | 6,872 | 14,039 | 13,743 | |||||||
Fuel surcharges | 4,100 | 4,359 | 10,130 | 5,515 | |||||||
Regulated other income | 5,177 | 5,372 | 8,286 | 8,771 | |||||||
Other income | 2,059 | 1,949 | 3,690 | 3,431 | |||||||
Total revenue | 268,610 | 256,942 | 466,211 | 443,900 | |||||||
Expenses | |||||||||||
Operations | 121,314 | 119,718 | 232,321 | 228,522 | |||||||
Maintenance | 11,591 | 12,662 | 28,809 | 30,308 | |||||||
Administration | 7,155 | 8,475 | 14,324 | 15,896 | |||||||
Cost of retail goods sold | 10,068 | 9,966 | 17,576 | 17,430 | |||||||
Depreciation and amortization | 34,412 | 32,583 | 68,413 | 64,521 | |||||||
Total operating expenses | 184,540 | 183,404 | 361,443 | 356,677 | |||||||
Operating profit | 84,070 | 73,538 | 104,768 | 87,223 | |||||||
Net finance and other expenses | |||||||||||
Net finance expenses | |||||||||||
Finance income | 653 | 531 | 1,189 | 1,202 | |||||||
Finance expenses | (18,112) | (18,232) | (36,100) | (36,167) | |||||||
Total net finance expenses | (17,459) | (17,701) | (34,911) | (34,965) | |||||||
(Loss) gain on disposal of capital assets | (79) | 9 | (61) | 37 | |||||||
Total net finance and other expenses | (17,538) | (17,692) | (34,972) | (34,928) | |||||||
Net earnings | 66,532 | 55,846 | 69,796 | 52,295 | |||||||
Other comprehensive income | - | - | - | - | |||||||
Total comprehensive income | 66,532 | 55,846 | 69,796 | 52,295 | |||||||
BRITISH COLUMBIA FERRY SERVICES INC. Interim Consolidated Statement of Cash Flows (unaudited) (Expressed in thousands of Canadian dollars) |
||||||||||
Six months ended | ||||||||||
September 30, | ||||||||||
2012 | 2011 | |||||||||
Cash flows from operating activities | ||||||||||
Net earnings | 69,796 | 52,295 | ||||||||
Items not affecting cash | ||||||||||
Net finance costs recognized in net earnings | 34,911 | 34,965 | ||||||||
Depreciation and amortization of non-current assets | 68,413 | 64,521 | ||||||||
Loss (gain) on disposal of property, plant and equipment | 61 | (37) | ||||||||
(Decrease) increase in long-term accrued employee future benefits | (515) | 645 | ||||||||
(Increase) in derivative assets | - | (14) | ||||||||
Decrease in derivative liabilities | (8) | (23) | ||||||||
Increase in provisions | 610 | 878 | ||||||||
Other non-cash adjustments to property, plant & equipment | 200 | (57) | ||||||||
Decrease in long-term land lease | 229 | 229 | ||||||||
Increase in accrued net financing | 539 | 1,059 | ||||||||
Total non-cash items | 104,440 | 102,166 | ||||||||
Movements in operating working capital | ||||||||||
Decrease (increase) in accounts receivable | 14,162 | (214) | ||||||||
Increase in prepaid expenses | (4,395) | (2,556) | ||||||||
Increase in inventories | (748) | (989) | ||||||||
Decrease in accounts payable and accrued liabilities | (14,440) | (12,831) | ||||||||
Decrease in deferred revenue | (1,708) | (435) | ||||||||
Increase in current portion of accrued employee future benefits | - | 302 | ||||||||
Change in non-cash working capital | (7,129) | (16,723) | ||||||||
Change attributable to capital asset acquisitions | 11,387 | (1,798) | ||||||||
Change attributable to contributed surplus | (25,000) | - | ||||||||
Change in non-cash operating working capital | (20,742) | (18,521) | ||||||||
Cash generated from operating activities | 153,494 | 135,940 | ||||||||
Interest rate support received | 412 | 638 | ||||||||
Interest received | 600 | 387 | ||||||||
Interest paid | (36,870) | (37,532) | ||||||||
Net cash generated by operating activities | 117,636 | 99,433 | ||||||||
BRITISH COLUMBIA FERRY SERVICES INC. Interim Consolidated Statement of Cash Flows (unaudited) (Expressed in thousands of Canadian dollars) |
||||||||||
Six months ended | ||||||||||
September 30, | ||||||||||
2012 | 2011 | |||||||||
Cash flows from financing activities | ||||||||||
Repayment of long-term debt | (4,500) | (51,375) | ||||||||
Repayment of short-term loans | (17,737) | (3,949) | ||||||||
Repayment of finance lease obligations | (487) | (539) | ||||||||
Contributed surplus payment from Province | 25,000 | - | ||||||||
Net cash generated by (used in) financing activities | 2,276 | (55,863) | ||||||||
Cash flows from investing activities | ||||||||||
Proceeds from disposal of property, plant and equipment | 80 | 84 | ||||||||
Purchase of property, plant and equipment and intangibles | (50,182) | (61,606) | ||||||||
Advancement of long-term loan | - | (268) | ||||||||
Reduction of debt service reserve | 65 | - | ||||||||
(Purchase of) proceeds from short-term investments | (34,550) | 6,259 | ||||||||
Net cash used in investing activities | (84,587) | (55,531) | ||||||||
Net increase (decrease) in cash and cash equivalents | 35,325 | (11,961) | ||||||||
Cash and cash equivalents, beginning of period | 7,700 | 33,335 | ||||||||
Cash and cash equivalents, end of period | 43,025 | 21,374 | ||||||||
BRITISH COLUMBIA FERRY SERVICES INC. Interim Consolidated Statement of Changes in Equity (unaudited) (Expressed in thousands of Canadian dollars) |
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Share Capital |
Contributed Surplus |
Retained Earnings |
Total Equity Before Reserves |
Land Revaluation Reserve |
Total Equity Including Reserves |
|||||||||||||||
Balance as at April 1, 2011 | 75,478 | - | 239,711 | 315,189 | - | 315,189 | ||||||||||||||
Net earnings for the six months ended September 30, 2011 | - | - | 52,295 | 52,295 | - | 52,295 | ||||||||||||||
Other comprehensive income for the six months ended September 30, 2011 |
- | - | - | - | - | - | ||||||||||||||
Balance as at September 30, 2011 | 75,478 | - | 292,006 | 367,484 | - | 367,484 | ||||||||||||||
Balance as at April 1, 2012 | 75,478 | 25,000 | 224,717 | 325,195 | 2,177 | 327,372 | ||||||||||||||
Net earnings for the six months ended September 30, 2012 | - | - | 69,796 | 69,796 | - | 69,796 | ||||||||||||||
Other comprehensive income for the six months ended September 30, 2012 |
- | - | - | - | - | - | ||||||||||||||
Balance as at September 30, 2012 | 75,478 | 25,000 | 294,513 | 394,991 | 2,177 | 397,168 | ||||||||||||||
BRITISH COLUMBIA FERRY SERVICES INC. Pro forma Interim Consolidated Statement of Comprehensive Income (unaudited) Reflecting the Effect of Regulatory Assets and Regulatory Liabilities (Expressed in thousands of Canadian dollars) |
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Three months ended | Six months ended | ||||||||||
September 30, | September 30, | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Revenue | |||||||||||
Vehicle and passenger fares | 165,824 | 161,985 | 282,707 | 277,458 | |||||||
Ferry service fees | 56,823 | 48,458 | 102,492 | 87,870 | |||||||
Retail | 27,029 | 27,035 | 46,191 | 46,434 | |||||||
Federal-Provincial Subsidy Agreement | 7,019 | 6,872 | 14,039 | 13,743 | |||||||
Fuel surcharges | - | - | - | - | |||||||
Regulated other income | 5,177 | 5,372 | 8,286 | 8,771 | |||||||
Other income | 2,059 | 1,949 | 3,690 | 3,431 | |||||||
Total revenue | 263,931 | 251,671 | 457,405 | 437,707 | |||||||
Expenses | |||||||||||
Operations | 118,342 | 114,643 | 225,407 | 219,842 | |||||||
Maintenance | 11,591 | 12,662 | 28,809 | 30,308 | |||||||
Administration | 7,155 | 8,444 | 14,324 | 15,802 | |||||||
Cost of retail goods sold | 10,068 | 9,966 | 17,576 | 17,430 | |||||||
Depreciation and amortization | 34,432 | 33,777 | 68,454 | 66,909 | |||||||
Total operating expenses | 181,588 | 179,492 | 354,570 | 350,291 | |||||||
Operating profit | 82,343 | 72,179 | 102,835 | 87,416 | |||||||
Net finance and other expenses | |||||||||||
Net finance expenses | |||||||||||
Finance income | 653 | 531 | 1,189 | 1,202 | |||||||
Finance expenses | (18,111) | (18,255) | (36,096) | (36,223) | |||||||
Total net finance expenses | (17,458) | (17,724) | (34,907) | (35,021) | |||||||
(Loss) gain on disposal of capital assets | (79) | 9 | (61) | 37 | |||||||
Total net finance and other expenses | (17,537) | (17,715) | (34,968) | (34,984) | |||||||
Net earnings | 64,806 | 54,464 | 67,867 | 52,432 | |||||||
Other comprehensive income | - | - | - | - | |||||||
Total comprehensive income | 64,806 | 54,464 | 67,867 | 52,432 | |||||||
SOURCE: British Columbia Ferry Services Inc.
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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