BC Ferries releases first quarter results

VICTORIA, Aug. 23, 2013 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) announced its first quarter results today.  Net earnings were $4.3 million for the three months ended June 30, 2013 compared to net earnings of $3.3 million in the first quarter of the previous year.

In the first quarter of fiscal 2014, revenues increased by 1.2 per cent to $200 million, while operating expenses increased by 1.1 per cent to $178.8 million, compared to the first quarter of last fiscal year.  Net earnings and comprehensive income in the three months ended June 30, 2013 was $1.0 million higher than the three months ended June 30, 2012.  These earnings reflected the effects of lower financing costs and increased fares, partially offset by reductions in fuel surcharges, lower traffic levels, lower ferry transportation fees and operating cost increases.

Primarily due to the timing of the Easter holiday, BC Ferries experienced a decline of 1.8 per cent in vehicle traffic and 1.4 per cent in passenger traffic in the first quarter of fiscal 2014 as compared to the same period in the prior year.  The traffic was negatively impacted by the timing of the Easter holiday.  The first quarter of fiscal 2014 included only the Monday of the Easter holiday weekend while the first quarter of 2013 included the entire Easter weekend.

"While we remain concerned about current economic conditions and the decline in traffic levels, traffic is starting to stabilize and we have recently seen an increase in commercial volumes," said Mike Corrigan, BC Ferries' President and CEO.  "We continue to actively manage our costs and we are on track with our published business plan."

Capital expenditures in the three months ended June 30, 2013 totalled $21.7 million as follows:

• $12.2 million in vessel upgrades and modifications
• $5.6 million in terminal marine structures
• $3.2 million in information technology
• $0.7 million in terminal and building upgrades and equipment

Significant events during the first quarter include the April 3, 2013 amendment to the Coastal Ferry Services Contract.  The Province and BC Ferries agreed to extend the deadline for identifying service level adjustments required over the remainder of Performance Term Three.  The Province also agreed to pay BC Ferries $7.1 million in ferry transportation fees.  Service level adjustments to core service levels designed to achieve a further $18.9 million in net savings over the remainder of the performance term will be determined by March 31, 2014. In response to this amendment the BC Ferries Commissioner issued Order 12-02A, amending his original Performance Term Three price cap order.

On July 19, 2013, the Commissioner approved BC Ferries' application to construct three new intermediate class vessels to replace the 48-year old Queen of Burnaby and the 49-year old Queen of Nanaimo.  Both of these vessels are nearing the end of their service lives and are scheduled for retirement in 2016.

On July 24, 2013, BC Ferries redeemed its $140 million bond series formerly due December 2013 as permitted by the provisions of the Master Trust Indenture.  This initiative was funded by cash from operations and proceeds from the company's credit facility.  It is BC Ferries' intention to refinance these bonds and the company will be monitoring the capital markets for appropriate opportunities to do so.

Full financial statements, including notes and Management's Discussion & 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 19.9 million passengers and 7.7 million vehicles during the fiscal year ended March 31, 2013.  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: economic conditions and traffic levels; our short-term and long-range business plans; our expectations of the impact of our cost containment program; the amount of savings to be achieved through service level adjustments; our vessel replacement program for the Queen of Burnaby and the Queen of Nanaimo; and our intention to refinance bonds. 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.

In addition to providing measures prepared in accordance with IFRS, we present certain supplemental non-IFRS measures. These include, but are not limited to, vehicle and passenger traffic. 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.

BRITISH COLUMBIA FERRY SERVICES INC. Interim Consolidated Statements of Financial Position (unaudited) (Expressed in thousands of Canadian dollars)
											As at,
											June 30, 2013		March 31, 2013
Assets
Current assets
										Cash and cash equivalents	42,610		36,641
										Restricted short-term investments	35,575		35,575
										Other short-term investments	33,950		43,403
										Trade and other receivables	18,769		18,118
										Prepaid expenses	16,400		10,706
										Inventories	23,812		23,257
										Derivative assets	13		-
											171,129		167,700
Non-current assets
										Long-term loan receivable	24,515		24,515
										Long-term land lease	31,948		32,063
										Property, plant and equipment	1,538,338		1,552,062
										Intangible assets	48,941		47,942
											1,643,742		1,656,582
Total assets											1,814,871		1,824,282
Liabilities
Current liabilities
										Accounts payable and accrued liabilities	35,041		51,803
										Interest payable on long-term debt	14,808		18,063
										Deferred revenue	17,618		13,634
										Derivative liabilities	-		12
										Current portion of long-term debt	399,000		149,000
										Current portion of accrued employee future benefits	2,204		2,204
										Current portion of obligations under finance lease	1,084		1,072
										Provisions	53,488		50,839
											523,243		286,627
Non-current liabilities
										Accrued employee future benefits	16,333		16,604
										Long-term debt	887,459		1,137,212
										Obligations under finance lease	45,665		45,941
											949,457		1,199,757
Total liabilities											1,472,700		1,486,384
Equity
										Share capital	75,478		75,478
										Contributed surplus	25,000		25,000
										Retained earnings	238,460		234,187
										Total equity before reserves	338,938		334,665
										Land revaluation reserve	3,233		3,233
Total equity including reserves											342,171		337,898
Total liabilities and equity											1,814,871		1,824,282

BRITISH COLUMBIA FERRY SERVICES INC. Interim Consolidated Statements of Comprehensive Income (unaudited) (Expressed in thousands of Canadian dollars)
				Three months ended
				June 30, 2013	June 30, 2012
Revenue
	Vehicle and passenger fares			124,383	114,422
	Ferry service fees			44,059	46,228
	Retail			19,654	19,162
	Federal-Provincial Subsidy Agreement			7,093	7,019
	Fuel surcharges			-	6,030
	Regulated other income			2,944	3,109
	Other income			1,836	1,630
Total revenue				199,969	197,600
Expenses
	Operations			114,178	111,006
	Maintenance			15,560	17,217
	Administration			7,031	7,169
	Cost of retail goods sold			7,725	7,508
	Depreciation and amortization			34,313	34,001
Total operating expenses				178,807	176,901
Operating profit				21,162	20,699
Net finance and other expenses
	Net finance expenses
		Finance income		799	537
		Finance expenses		(17,692)	(17,988)
	Total net finance expenses			(16,893)	(17,451)
	Gain on disposal of capital assets			4	17
Total net finance and other expenses				(16,889)	(17,434)
Net earnings				4,273	3,265
Other comprehensive income				-	-
Total comprehensive income				4,273	3,265

BRITISH COLUMBIA FERRY SERVICES INC. Interim Consolidated Statements of Cash Flows (unaudited) (Expressed in thousands of Canadian dollars)
		Three months ended
		June 30,2013		June 30,2012
Cash flows from operating activities
Net earnings		4,273		3,265
Items not affecting cash
	Net finance costs recognized in net earnings	16,893		17,451
	Depreciation and amortization of non-current assets	34,313		34,001
	Gain on disposal of property, plant and equipment	(4)		(17)
	Decrease in long-term accrued employee future benefits	(271)		(143)
	Increase in derivative assets	(13)		(8)
	Decrease in derivative liabilities	(12)		(12)
	Increase (decrease) in provisions	2,649		(298)
	Other non-cash adjustments to property, plant & equipment	-		(275)
	Decrease in long-term land lease	115		115
	Increase in accrued net financing	394		589
Total non-cash items		54,064		51,403
Movements in operating working capital
	(Increase) decrease in trade and other receivables	(651)		19,607
	Increase in prepaid expenses	(5,694)		(9,634)
	Increase in inventories	(555)		(162)
	Increase in accounts payable and accrued liabilities	(16,762)		(15,225)
	Decrease in deferred revenue	3,984		2,400
	Change in non-cash working capital	(19,678)		(3,014)
	Change attributable to capital asset acquisitions	7,088		11,313
	Change attributable to contributed surplus	-		(25,000)
	Change in non-cash operating working capital	(12,590)		(16,701)
Cash generated from operating activities		47,747		37,967
	Interest received	392		149
	Interest paid	(21,370)		(21,656)
Net cash generated by operating activities		24,769		16,460

BRITISH COLUMBIA FERRY SERVICES INC. Interim Consolidated Statements of Cash Flows (unaudited) (Expressed in thousands of Canadian dollars)
	Three months ended
	June 30, 2013	June 30, 2012
Cash flows from financing activities
Repayment of short term debt	-	(9,743)
Repayment of finance lease obligations	(264)	(248)
Contributed surplus payment from Province	-	25,000
Net cash (used in) provided by financing activities	(264)	15,009
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment	15	29
Purchase of property, plant and equipment and intangible assets	(28,004)	(31,736)
Proceeds from (purchase of) short-term investments	9,453	(50)
Net cash used in investing activities	(18,536)	(31,757)
Net increase (decrease) in cash and cash equivalents	5,969	(288)
Cash and cash equivalents, beginning of period	36,641	7,700
Cash and cash equivalents, end of period	42,610	7,412

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	Land revaluation reserve	Total equity including reserves
Balance at March 31, 2012	75,478	25,000	224,717	325,195	2,177	327,372
Net earnings for the three months ended June 30, 2012	-	-	3,265	3,265	-	3,265
Other comprehensive income for three months ended June 30, 2012	-	-	-	-	-	-
Balance as at June 30, 2012	75,478	25,000	227,982	328,460	2,177	330,637
Balance as at March 31, 2013	75,478	25,000	234,187	334,665	3,233	337,898
Net earnings for the three months ended June 30, 2013	-	-	4,273	4,273	-	4,273
Other comprehensive income for the three months ended June 30, 2013	-	-	-	-	-	-
Balance as at June 30, 2013	75,478	25,000	238,460	338,938	3,233	342,171

 

 

 

SOURCE: British Columbia Ferry Services Inc.

Media Contact:
BC Ferries, Media Relations
Victoria:  [phone]