BC Ferries releases first quarter results
VICTORIA, Aug. 22, 2014 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) released its first quarter results today. Net earnings for the first three months ended June 30, 2014 (the first quarter of fiscal 2015) were $13.9 million, compared to net earnings of $4.3 million in the first quarter of the previous year. These earnings reflect the effects of increased fares, higher ferry transportation fees, fuel surcharges and lower financing costs, partially offset by lower traffic levels, lower social program fees and operating cost increases.
In the first quarter of fiscal 2015, revenues increased by 6.6 per cent to $213.1 million, while operating expenses increased by 2.1 per cent to $182.5 million, compared to the first quarter of the previous fiscal year.
Capital expenditures for the three months ended June 30, 2014 totalled $26.1 million as follows:
- $8.5 million in vessel upgrades and modifications
- $10.8 million in terminal marine structures
- $5.2 million in information technology
- $1.6 million in terminal and building upgrades and equipment
"We continue to focus on fare affordability for our customers, keeping costs down below previously planned levels wherever possible without compromising safety," said Mike Corrigan,
BC Ferries' President and CEO. "In addition to achieving targeted savings, our catering and retail services, the drop trailer business and BC Ferries Vacations are all showing strong results, which help to improve our bottom line."
During the three months ended June 30, 2014, BC Ferries provided over 43,000 sailings, as compared to almost 46,000 sailings during the same quarter last year, carrying five million passengers and two million vehicles. Across the system, vehicle traffic decreased 0.4 per cent while passenger traffic increased 0.3 per cent, as compared to the same quarter last year.
On April 28, 2014, after six weeks of community consultation, feedback and further analysis of schedule refinement options, BC Ferries implemented new schedules for the Northern and regulated Other Routes to achieve a net savings of $14 million over the remainder of performance term three (PT3), which ends March 31, 2016. These new schedules relate to the service reductions determined by the Province in order to better align service levels with demand, and to ensure the coastal ferry system is affordable, efficient and sustainable.
Also on April 28, 2014, BC Ferries completed a private placement of $200 million of 30-year senior secured bonds with accredited investors. These bonds bear interest at a rate of 4.289 per cent per annum, payable semi-annually. The effective rate of this issue, net of hedging, is 4.45 per cent, the lowest effective bond interest rate in the 11-year history of the company. The net proceeds of this new issue, together with additional cash on hand, were used to repay the $250 million bond Series 04-01, which matured on May 27, 2014, and to fund the debt service reserve related to these bonds.
On July 3, 2014, BC Ferries awarded Remontowa Shipbuilding S.A. of Gdansk, Poland contracts totalling $165 million to build three new intermediate class vessels. The total project budget of $252 million includes financing and project management costs and includes $51 million for Canadian taxes and federal import duties. The contracts are design-build, fixed-price contracts that provide BC Ferries with substantial guarantees related to delivery dates, performance criteria, cost certainty and quality of construction. The vessels will be delivered in 2016 and 2017 and will replace the 49-year old Queen of Burnaby and the 50-year old Queen of Nanaimo. The new vessels will be dual-fuel capable, so they can operate on marine diesel fuel or liquefied natural gas, which will provide BC Ferries with the capability to significantly reduce fuels costs and emissions.
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 19.7 million passengers and 7.6 million vehicles during the fiscal year ended March 31, 2014. BC Ferries provides frequent year-round ferry transportation services to the west coast of Canada on 24 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 service level adjustment plan, and BC Ferries' vessel replacement program for the Queen of Burnaby and the Queen of Nanaimo. 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, 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, 2014 |
March 31, 2014 |
||||||||||||
Assets |
|||||||||||||
Current assets |
|||||||||||||
Cash and cash equivalents |
42,505 |
71,365 |
|||||||||||
Restricted short-term investments |
32,906 |
35,792 |
|||||||||||
Other short-term investments |
50,535 |
81,006 |
|||||||||||
Trade and other receivables |
16,379 |
16,577 |
|||||||||||
Prepaid expenses |
18,178 |
6,934 |
|||||||||||
Inventories |
26,090 |
25,073 |
|||||||||||
186,593 |
236,747 |
||||||||||||
Non-current assets |
|||||||||||||
Long-term loan receivable |
24,515 |
24,515 |
|||||||||||
Long-term land lease |
31,490 |
31,604 |
|||||||||||
Property, plant and equipment |
1,527,100 |
1,539,162 |
|||||||||||
Intangible assets |
56,038 |
53,164 |
|||||||||||
1,639,143 |
1,648,445 |
||||||||||||
Total assets |
1,825,736 |
1,885,192 |
|||||||||||
Liabilities |
|||||||||||||
Current liabilities |
|||||||||||||
Accounts payable and accrued liabilities |
35,993 |
48,134 |
|||||||||||
Interest payable on long-term debt |
16,329 |
19,634 |
|||||||||||
Deferred revenue |
19,424 |
14,563 |
|||||||||||
Derivative liabilities |
33 |
5,274 |
|||||||||||
Current portion of long-term debt |
24,000 |
270,250 |
|||||||||||
Current portion of accrued employee future benefits |
2,204 |
2,204 |
|||||||||||
Current portion of obligations under finance lease |
1,120 |
1,120 |
|||||||||||
Provisions |
47,956 |
51,801 |
|||||||||||
147,059 |
412,980 |
||||||||||||
Non-current liabilities |
|||||||||||||
Accrued employee future benefits |
16,028 |
15,931 |
|||||||||||
Long-term debt |
1,261,642 |
1,066,531 |
|||||||||||
Obligations under finance lease |
44,543 |
44,821 |
|||||||||||
1,322,213 |
1,127,283 |
||||||||||||
Total liabilities |
1,469,272 |
1,540,263 |
|||||||||||
Equity |
|||||||||||||
Share capital |
75,478 |
75,478 |
|||||||||||
Contributed surplus |
25,000 |
25,000 |
|||||||||||
Retained earnings |
260,030 |
246,142 |
|||||||||||
Total equity before reserves |
360,508 |
346,620 |
|||||||||||
Reserves |
(4,044) |
(1,691) |
|||||||||||
Total equity including reserves |
356,464 |
344,929 |
|||||||||||
Total liabilities and equity |
1,825,736 |
1,885,192 |
|||||||||||
British Columbia Ferry Services Inc. Interim Consolidated Statements of Comprehensive Income (unaudited) (Expressed in thousands of Canadian dollars) |
||||||
Three months ended, |
||||||
June 30, 2014 |
June 30, 2013 |
|||||
Revenue |
||||||
Vehicle and passenger fares |
131,372 |
124,383 |
||||
Ferry service fees |
45,047 |
44,059 |
||||
Retail |
19,944 |
19,654 |
||||
Federal-Provincial Subsidy Agreement |
7,089 |
7,093 |
||||
Fuel surcharges |
4,362 |
- |
||||
Regulated other income |
3,399 |
2,944 |
||||
Other income |
1,896 |
1,836 |
||||
Total revenue |
213,109 |
199,969 |
||||
Expenses |
||||||
Operations |
115,024 |
114,178 |
||||
Maintenance |
16,649 |
15,560 |
||||
Administration |
7,613 |
7,031 |
||||
Cost of retail goods sold |
7,989 |
7,725 |
||||
Depreciation and amortization |
35,234 |
34,313 |
||||
Total operating expenses |
182,509 |
178,807 |
||||
Operating profit |
30,600 |
21,162 |
||||
Net finance and other expenses |
||||||
Net finance expense |
||||||
Finance income |
1,067 |
799 |
||||
Finance expenses |
(17,712) |
(17,692) |
||||
Net finance expense |
(16,645) |
(16,893) |
||||
(Loss) gain on disposal of property, plant and equipment |
(67) |
4 |
||||
Net finance and other expenses |
(16,712) |
(16,889) |
||||
Net earnings |
13,888 |
4,273 |
||||
Other comprehensive (loss) income |
||||||
Items to be reclassified to net earnings |
(2,396) |
- |
||||
Total other comprehensive loss |
(2,396) |
- |
||||
Total comprehensive income |
11,492 |
4,273 |
||||
British Columbia Ferry Services Inc. Interim Consolidated Statements of Cash Flows (unaudited) (Expressed in thousands of Canadian dollars) |
||||
Three months ended, |
||||
June 30, 2014 |
June 30, 2013 |
|||
Cash flows from operating activities |
||||
Net earnings |
13,888 |
4,273 |
||
Items not affecting cash |
||||
Net finance expense |
16,645 |
16,893 |
||
Depreciation and amortization |
35,234 |
34,313 |
||
Loss (gain) on disposal of property, plant and equipment |
67 |
(4) |
||
Other non-cash adjustments to property, plant & equipment |
(405) |
- |
||
Changes in |
||||
Long-term accrued employee future benefits |
97 |
(271) |
||
Derivative assets |
- |
(13) |
||
Derivative liabilities recognized in net earnings |
15 |
(12) |
||
Provisions |
(3,845) |
2,649 |
||
Long-term land lease |
114 |
115 |
||
Accrued interest costs |
20 |
394 |
||
Total non-cash items |
47,942 |
54,064 |
||
Movements in operating working capital |
||||
Trade and other receivables |
198 |
(651) |
||
Prepaid expenses |
(11,244) |
(5,694) |
||
Inventories |
(1,017) |
(555) |
||
Accounts payable and accrued liabilities |
(12,141) |
(16,762) |
||
Deferred revenue |
4,861 |
3,984 |
||
Change in non-cash working capital |
(19,343) |
(19,678) |
||
Change attributable to capital asset acquisitions |
6,116 |
7,088 |
||
Change in non-cash operating working capital |
(13,227) |
(12,590) |
||
Cash generated from operating activities |
48,603 |
45,747 |
||
Interest received |
1,045 |
392 |
||
Interest paid |
(21,496) |
(21,370) |
||
Net cash generated by operating activities |
28,152 |
24,769 |
||
British Columbia Ferry Services Inc. Interim Consolidated Statements of Cash Flows (unaudited) (Expressed in thousands of Canadian dollars) |
||
Three months ended, |
||
June 30, 2014 |
June 30, 2013 |
|
Cash flows from financing activities |
||
Proceeds from issuance of bonds |
200,000 |
- |
Repayment of long-term debt |
(250,000) |
- |
Repayment of finance lease obligations |
(278) |
(264) |
Deferred financing costs incurred |
(1,315) |
- |
Hedge losses on interest rate forward contracts |
(7,652) |
- |
Net cash used in financing activities |
(59,245) |
(264) |
Cash flows from investing activities |
||
Proceeds from disposal of property, plant and equipment |
43 |
15 |
Purchase of property, plant and equipment and intangible assets |
(31,167) |
(28,004) |
Decrease of debt service reserves |
2,886 |
- |
Proceeds from short-term investments |
30,471 |
9,453 |
Net cash provided by (used in) investing activities |
2,233 |
(18,536) |
Net (decrease) increase in cash and cash equivalents |
(28,860) |
5,969 |
Cash and cash equivalents, beginning of period |
71,365 |
36,641 |
Cash and cash equivalents, end of period |
42,505 |
42,610 |
British Columbia Ferry Services Inc. Interim Consolidated Statements of Changes in Equity (unaudited) (Expressed in thousands of Canadian dollars) |
||||||
Share |
Contributed |
Retained |
Total equity |
Reserves |
Total equity |
|
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 |
Balance as at March 31, 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 income 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 |
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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