BC Ferries releases first quarter results
VICTORIA, BC, Aug. 18 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) announced its first quarter results today. Net earnings were $0.9 million for the first three months ended June 30, 2010 compared to net losses of $3.6 million in the first quarter of the previous year.
In the first quarter, revenues increased by 6.7 per cent to $190.2 million, with total expenses increasing 4.1 per cent to $189.3 million, compared to the first quarter last fiscal year. The increase in expenses is largely attributed to fuel, interest and amortization expenses, as well as wage rate increases in accordance with the Collective Agreement,.
Capital expenditures in the three months ended June 30, 2010 totalled $26.0 million as follows:
- $10.3 million in terminal marine structures;
- $7.3 million in information technology;
- $5.3 million in building upgrades and equipment;
- $3.1 million in vessel upgrades and modifications.
"We remain concerned about the soft state of tourism currently in B.C. and as a result we are closely monitoring our expenditures," said David L. Hahn, BC Ferries' President and CEO. "The summer months are typically the time of year when BC Ferries generates its annual profits and strong numbers in July and August are important to our bottom line."
In the first quarter of fiscal 2011, BC Ferries experienced a decline of 1.6 per cent in vehicle traffic and 1.2 per cent in passenger traffic compared to the same quarter last year, while drop-trailer and other commercial traffic increased.
Significant events during the first quarter include the May 11, 2010 opening of BC Ferries new Vacations Centre located across the street from the expanded Convention Centre in downtown Vancouver. In addition, on May 18, 2010, the 28-year old Quinsam returned to service on the Gabriola route following an extensive $19 million upgrade to prepare the ship for another 17 years of service.
Currently BC Ferries offers fuel rebates of two per cent of tariffs on average on the majority of its routes. The mid-week CoastSaver promotional fares were offered on the three major routes from May 25, 2010 through July 29, 2010.
On June 3, 2010, Bill 20 - Miscellaneous Statutes Amendment Act (No.3), 2010 (Bill 20) received Royal Assent. Bill 20 amends several statutes, including the Coastal Ferry Act. It includes changes to the governance and regulatory framework within which BC Ferries operates. The costs to BC Ferries to implement the regulatory, governance and administrative changes resulting from Bill 20 are uncertain at this time.
As part of the federal government's Infrastructure Stimulus Fund program, BC Ferries will qualify for partial reimbursement of eligible costs for eleven terminal upgrades including eight sewage pump-ashore and waste water treatment projects. The net funding expected to be received is $7.5 million.
BC Ferries continued its multi-year project to upgrade security at nine terminals which includes fencing, lighting, access control and closed circuit television, as well as upgrades to foot passenger ticketing areas and baggage screening. BC Ferries received $9.1 million (including $3.2 million this quarter) of federal funding through the Transport Canada Marine Security Contribution Program to help offset the cost of this project.
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 21 million passengers and 8.3 million vehicles during the fiscal year ended March 31, 2010. BC Ferries provides frequent year-round ferry transportation services to the West Coast of Canada on 25 routes, currently supported by 36 vessels and 47 terminals, and also manages other remote routes through contracts with independent operators.
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, turbulent financial markets, demographics, import duties remission, tax changes, and the requirements of the Coastal Ferry Services Contract.
Forward looking statements included in this release include statements with respect to estimates of future customer demand, and our expectations of funding under the Infrastructure Stimulus Fund program. 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.
Consolidated Balance Sheets
(expressed in thousands)
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June 30, March 31,
2010 2010
(unaudited)
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Assets
Current assets:
Cash and cash equivalents $ 6,067 $ 10,608
Restricted cash equivalents and
short-term investments 37,240 37,240
Other short-term investments 7,840 7,678
Accounts receivable 17,691 17,707
Prepaid expenses 12,796 6,813
Inventories 18,185 18,040
Derivative assets 27 -
Regulatory assets 4,775 4,775
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104,621 102,861
Property, plant and equipment 1,637,390 1,644,069
Intangible assets 31,556 26,406
Assets held for sale 200 200
Long-term land lease 33,323 33,437
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$ 1,807,090 $ 1,806,973
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 41,084 $ 38,884
Interest payable on long-term debt 15,243 18,319
Accrued employee costs 47,551 48,644
Deferred revenue 18,119 16,023
Current portion of long-term debt 10,875 9,000
Current portion of accrued employee
future benefits 800 800
Current portion of obligations under
capital lease 339 398
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134,011 132,068
Accrued employee future benefits 11,229 11,130
Regulatory liabilities 3,170 4,325
Long-term debt 1,346,546 1,348,183
Obligations under capital lease 87 139
Other long-term liabilities 172 172
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1,495,215 1,496,017
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Shareholders' equity:
Share capital 75,478 75,478
Retained earnings 236,397 235,478
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311,875 310,956
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$ 1,807,090 $ 1,806,973
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BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of Earnings (Loss), Comprehensive Income and
Retained Earnings (unaudited)
(expressed in thousands)
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For the three months ended
June 30, 2010 June 30, 2009
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Revenue:
Tariffs $ 118,212 $ 108,043
Ferry service fees 38,531 38,234
Federal-Provincial Subsidy Agreement 6,731 6,731
Retail 20,090 19,889
Other income 6,675 5,358
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190,239 178,255
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Expenses:
Operations 103,617 100,460
Maintenance 23,851 23,702
Administration 7,517 7,446
Cost of retail goods sold 7,680 7,533
Amortization 28,688 26,955
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171,353 166,096
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Earnings from operations 18,886 12,159
Gain on foreign exchange 75 3
Interest expense (18,028) (15,765)
(Loss) Gain on disposal of capital assets (14) 1
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Net earnings (loss) 919 (3,602)
Other comprehensive income - -
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Net earnings (loss) and comprehensive income 919 (3,602)
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Retained earnings, beginning of period 235,478 238,094
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Retained earnings, end of period $ 236,397 $ 234,492
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BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of Cash Flows (unaudited)
(expressed in thousands)
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For the three months ended
June 30, 2010 June 30, 2009
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Cash provided by (used in):
Operations:
Net earnings(loss) $ 919 $ (3,602)
Items not involving cash:
Amortization 28,688 26,955
Other non-cash charges 389 (716)
Long-term regulatory costs deferred (2,349) 2,725
Change in non-cash operating working
capital (11,302) (1,794)
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16,345 23,568
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Financing:
Proceeds from short-term loans - 2,034
Repayment of capital lease obligations (111) (155)
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(111) 1,879
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Investing:
Proceeds from disposal of property,
plant and equipment 26 4
Purchase of property, plant and equipment
and intangible assets (20,639) (22,460)
Purchase of short-term investments (162) -
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(20,775) (22,456)
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(Decrease) increase in cash and cash
equivalents (4,541) 2,991
Cash and cash equivalents, beginning of
period 10,608 12,402
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Cash and cash equivalents, end of period $ 6,067 $ 15,393
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%SEDAR: 00020627E
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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