BC Ferries Releases Third Quarter Results

50 per cent passenger discounts offered for Spring Break

VICTORIA, Feb. 24, 2017 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) released its third quarter results today for the fiscal year ending March 31, 2017. The company reported a net loss of $4.0 million for the three months ended December 31, 2016, as compared to a net loss of $3.7 million in the same quarter last year. Net earnings for the nine-month period ended December 31, 2016 were $118.2 million, up from $99.6 million for the same period in the previous year.

Due to the seasonality of ferry travel, BC Ferries typically generates higher net earnings in the first and second quarters, which are substantially reduced by net losses in the last two quarters of the fiscal year. 

"Our strong financial position year-to-date allows us to reinvest in the fleet and replace aging assets like the 52-year old Queen of Burnaby and the 53-year old Queen of Nanaimo with new natural gas-fuelled vessels to ensure the long-term viability of the coastal ferry system," said Mike Corrigan, BC Ferries' President and CEO. "Our newest ship, Salish Orca, arrived in B.C. last month and will be deployed on the Powell River – Comox route this spring. Her sister ships, Salish Eagle and Salish Raven, are scheduled to enter service in the Southern Gulf Islands later this year."

In the three months ended December 31, 2016, BC Ferries carried 1.8 million vehicles and 4.4 million passengers. Vehicle traffic increased 1.5 per cent (4.1 per cent year-to-date) and passenger traffic increased 0.8 per cent (3.0 per cent year-to-date) compared to the same quarter in the prior year.

From March 11 – 30, 2017, BC Ferries is offering a fleet wide pricing promotion of 50 per cent off regular passenger fares. Passengers travelling on select sailings will receive the discount off the regular passenger fare and children 11 and under will travel free. The discount is being offered to encourage travel over less busy periods during Spring Break. "With more than 2,000 sailings to choose from, BC Ferries expects customers and their families will take advantage of this promotion," said Corrigan          

Total revenue for the three-month period ended December 31, 2016 increased by $5.0 million to $183.7 million and operating expenses increased by $5.4 million to $173.9 million as compared to the same quarter last year. Total revenue for the nine months ended December 31, 2016 increased by $33.5 million to $701.8 million and operating expenses increased by $16.4 million to $542.9 million as compared to the same period the year prior. 

Capital expenditures in the three and nine months ended December 31, 2016 totalled $83.0 million and $153.2 million respectively. Projects included vessel replacements, vessel upgrades and modifications, terminal marine structures, information technology, and terminal building upgrades and equipment. 

Significant events during or subsequent to the three months ended December 31, 2016 include the November 1, 2016 launch of an initiative that brings together BC Ferries existing environmental activities, conservation efforts, community investments and new sustainability endeavours under a single program called SeaForward.

On November 22, 2016 and November 25, 2016, BC Ferries drew down $39 million and
$6 million, respectively, for a total of $45 million, under the export loan agreement with KfW IPEX-Bank GmbH, to coincide with the contract payment schedule for the purchase of Salish Orca. This amortizing loan will be repaid over a 12-year term and bear an annual interest rate of 2.09 per cent.  The net proceeds from the loan were used to partially finance the purchase of Salish Orca.

On January 3, 2017, BC Ferries submitted an application, under Section 55 of the Coastal Ferry Act, to the British Columbia Ferries Commissioner seeking approval of a major capital expenditure to acquire two new minor class vessels. 

On January 11, 2017, BC Ferries' new vessel, Salish Orca, arrived in British Columbia after its 50-day 10,440 nautical mile journey from Gdansk, Poland. On January 18, 2017, BC Ferries signed the Protocol of Delivery and Acceptance with Remontowa Shipbuilding S.A. and ownership of the vessel was transferred to BC Ferries. Salish Orca will replace the 52-year old Queen of Burnaby on the ComoxPowell River route this spring.

On February 2, 2017, BC Ferries conditionally accepted Salish Eagle from Remontowa Shipbuilding S.A. On February 11, 2017, the vessel departed Gdansk, Poland for its voyage to Canada. Salish Eagle will replace the 53-year old Queen of Nanaimo on the TsawwassenSouthern Gulf Islands route. 

On February 10, 2017, BC Ferries' Board of Directors announced the appointment of Mark F. Collins as President and CEO effective April 1, 2017. A senior marine executive for the past 20 years, Mr. Collins' experience includes roles as the President of Rolls Royce Marine Brazil and Italy, and Vice President of Global Technical Services, CSL Group. Mr. Collins is currently Vice President of Strategic Planning & Community Engagement at BC Ferries, and was the Vice President, Engineering between 2004 and 2012. Current President and CEO, Mike Corrigan, will be stepping down on March 31, 2017.

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: traffic levels, the Salish Class vessels, the pricing promotion, and the loan agreement with KfW IPEX-Bank GmbH.  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 Condensed Consolidated Statements of Financial Position (unaudited)
(Expressed in thousands of Canadian dollars)





As at


December 31, 2016

March 31, 2016

Assets



Current assets




Cash and cash equivalents

117,646

79,113


Restricted short-term investments

32,116

31,986


Other short-term investments

117,859

61,464


Trade and other receivables

12,720

16,249


Prepaid expenses

8,950

8,550


Inventories

26,232

23,988


Derivative assets

5,008

-


320,531

221,350

Non-current assets




Loan receivable

24,515

24,515


Land lease

30,344

30,688


Property, plant and equipment

1,567,573

1,539,957


Intangible assets

97,889

82,741


1,720,321

1,677,901

Total assets

2,040,852

1,899,251




Liabilities



Current liabilities




Accounts payable and accrued liabilities

44,196

53,575


Interest payable on long-term debt

16,328

18,262


Deferred revenue

16,892

18,883


Derivative liabilities

-

17,879


Current portion of long-term debt

27,738

24,000


Current portion of accrued employee future benefits

1,900

1,900


Current portion of obligations under finance lease

1,565

1,514


Provisions

57,668

53,321


166,287

189,334

Non-current liabilities




Accrued employee future benefits

20,962

19,361


Long-term debt

1,242,291

1,218,106


Obligations under finance lease

40,823

42,003


Other liabilities

1,500

1,500


1,305,576

1,280,970

Total liabilities

1,471,863

1,470,304




Equity




Share capital

75,478

75,478


Contributed surplus

25,000

25,000


Retained earnings

470,912

352,692


Total equity before reserves

571,390

453,170


Reserves

(2,401)

(24,223)

Total equity including reserves

568,989

428,947

Total liabilities and equity

2,040,852

1,899,251

 

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



Three months ended

December 31

Nine months ended

December 31


2016

2015

2016

2015






Revenue






Vehicle and passenger fares

127,066

120,692

502,443

467,923


Ferry service fees

38,866

39,110

138,909

134,895


Net retail

12,090

11,323

45.807

42,316


Federal-Provincial Subsidy Agreement

7,289

7,182

21,868

21,547


Fuel rebates

(3,787)

(1,350)

(14,764)

(5,102)


Other income

2,139

1,674

7,512

6,674

Total revenue

183,663

178,631

701,775

668,253






Expenses






Operations

110,191

105,681

353,964

342,353


Maintenance

18,009

18,512

53,252

52,673


Administration

8,577

8,445

25,361

24,665


Depreciation and amortization

37,065

35,840

110,278

106,767

Total operating expenses

173,842

168,478

542,855

526,458

Operating profit

9,821

10,153

158,920

141,795






Net finance and other expenses






Net finance expense







Finance income


1,262

1,048

3,446

3,401



Finance expenses

(15,073)

(15,119)

(44,018)

(45,609)


Net finance expense

(13,811)

(14,071)

(40,572)

(42,208)


Gain (loss) on disposal and revaluation of







property, plant and equipment, intangible







assets and inventory

25

233

(128)

32

Net finance and other expenses

(13,786)

(13,838)

(40,700)

(42,176)

Net earnings

(3,965)

(3,685)

118,220

99,619






Other comprehensive income (loss)






Items not to be reclassified to net earnings

-

-

(1,240)

-


Items to be reclassified to net earnings

6,325

(11,739)

16,861

(11,824)

Total other comprehensive income (loss)

6,325

(11,739)

15,621

(11,824)

Total comprehensive income (loss)

2,360

(15,424)

133,841

87,795

 

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





Nine months ended December 31


2016

2015

Cash flows from operating activities



Net earnings

118,220

99,619

Items not affecting cash




Net finance expense

40,572

42,208


Depreciation and amortization

110,278

106,767


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





equipment, intangible assets and inventory

128

(32)


Other non-cash adjustments to property, plant and equipment

(1,604)

(4)


Changes in





Accrued employee future benefits

361

(318)



Derivative (assets) liabilities recognized in net earnings

(10)

21



Provisions

4,347

4,537



Long-term land lease

344

344



Accrued financing costs

271

(97)

Total non-cash items

154,687

153,426

 

Movements in operating working capital




Trade and other receivables

3,529

6,876


Prepaid expenses

(400)

(2,511)


Inventories

(2,244)

361


Accounts payable and accrued liabilities

(9,379)

(17,625)


Deferred revenue

(1,991)

(1,010)


Change in non-cash working capital

(10,485)

(13,909)


Change attributable to capital asset acquisitions

3,040

9,417


Change in non-cash operating working capital

(7,445)

(4,492)

Cash generated from operating activities

265,462

248,553


Interest received

3,149

3,428


Interest paid

(50,469)

(51,065)

Net cash generated by operating activities

218,142

200,916

 

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




Nine months ended December 31


2016

2015

Cash flows from financing activities



Proceeds from long-term debt

44,858

-

Repayment of long-term debt

(15,750)

(15,750)

Repayment of finance lease obligations

(1,129)

(941)

Deferred financing costs incurred

(1,495)

-

Net cash generated by (used in) financing activities

26,484

(16,691)

Cash flows from investing activities



Proceeds from disposal of property, plant and equipment

137

214

Purchase of property, plant and equipment and intangible assets

(149,705)

(116,543)

Changes in debt service reserve

(130)

350

Net purchase of short-term investments

(56,395)

(38,412)

Net cash used in investing activities

(206,093)

(154,391)

Net increase in cash and cash equivalents

38,533

29,834

Cash and cash equivalents, beginning of period

79,113

65,574

Cash and cash equivalents, end of period

117,646

95,408

 

BRITISH COLUMBIA FERRY SERVICES INC.
Interim Condensed 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 March 31, 2015

75,478

25,000

289,177

389,655

(11,450)

378,205

Net earnings

-

-

99,619

99,619

-

99,619

Other comprehensive loss

-

-

-

-

(18,296)

(18,296)

Realized hedge losses recognized








in fuel swaps

-

-

-

-

6,472

6,472

Hedge losses on interest rate








forward contract reclassified to








net earnings

-

-

-

-

187

187

Balance as at December 31, 2015

75,478

25,000

388,796

489,274

(23,087)

466,187

Balance as at March 31, 2016

75,478

25,000

352,692

453,170

(24,223)

428,947

Net earnings

-

-

118,220

118,220

-

118,220

Other comprehensive income

-

-

-

-

15,621

15,621

Realized hedge losses recognized








in fuel swaps

-

-

-

-

6,015

6,015

Hedge losses on interest rate








forward contract reclassified to








net earnings

-

-

-

-

186

186

Balance as at December 31, 2016

75,478

25,000

470,912

571,390

(2,401)

568,989

 

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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http://www.bcferries.ca

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