BC Ferries releases year-end results

VICTORIA, BC, June 15, 2012 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) released its year-end results today for fiscal 2012.  The company reported a net loss of $16.5 million for the year ended March 31, 2012, compared to net earnings of $3.8 million the previous year.  The net earnings from fiscal 2011 included a one-time gain of $9.3 million from the sale of the company's former head office building.

Revenues for the year decreased from $739.3 million to $738.2 million, while operating expenses increased from $672.2 million to $682.7 million.  The $10.5 million increase in fiscal 2012 operating expenses includes increases of $4.0 million in fuel expenses and $8.5 million in amortization costs, partially offset by reductions in advertising costs, public relations expenses, cost of retail goods sold and a number of miscellaneous items.

Capital expenditures in the three and twelve months ended March 31, 2012 totalled $31.6 million and $122.2 million, respectively.  For fiscal 2012, these investments include: $48.5 million in vessel upgrades and modifications; $44.0 million in terminal marine structures; $18.6 million in information technology; and $11.1 million in terminal and building upgrades and equipment.

On January 24, 2012, the British Columbia Ferries Commissioner (the Commissioner) released his report following a comprehensive review of BC Ferries and the commercial regulatory structure in which it operates. The review re-confirmed the company is an efficient and well run operation.  The report makes recommendations covering a wide range of ferry related issues and clearly articulates the challenges ahead if BC Ferries continues to operate the same level of service with the same level of government funding.

In May 2012 in response to the Commissioner's report, the Province of British Columbia enacted Bill 47 which implemented changes to the Coastal Ferry Act designed to balance the interests of ferry users, taxpayers and the sustainability of the ferry operator.  In announcing Bill 47 the Minister of Transportation and Infrastructure (the Minister) also announced a commitment of $79.5 million to reduce pressure on fares and price caps. Of this amount, $25 million was a contribution to equity in the fiscal year ended March 31, 2012. The remaining $54.5 million will be provided over the next four fiscal years.

"The legislative changes and committed funding are important to the long term financial sustainability of BC Ferries in order to provide British Columbians with a reliable and affordable service without compromising safety," said Mike Corrigan, BC Ferries' President and CEO.  "We look forward to working with the Province, local communities and the Commissioner to help find solutions that are in the common interests of our customers, the government and BC Ferries."

In the year ended March 31, 2012, vehicle and passenger traffic declined by 3.5 per cent and 2.8 per cent, respectively.  The traffic in fiscal 2012 is the lowest vehicle traffic that BC Ferries has experienced in 13 years and the lowest passenger traffic in 21 years.

BC Ferries is currently forecasting a small loss for fiscal 2013, largely driven by significantly lower traffic levels than those originally included in setting performance term three price caps.  The company expects to return to profitability in fiscal 2014, assuming no further deterioration in traffic. In the meantime, BC Ferries does not anticipate that economic conditions or its traffic levels will improve in the near future and the company is continuing its program of cost containment and deferrals without compromising the safety of its operations.

Fourth quarter revenues decreased from $140.7 million to $138.2 million compared to the same quarter the year prior, while total expenses increased from $179.7 million to $183.4 million.  Due to the seasonality of ferry travel, BC Ferries typically generates higher earnings in the first two quarters of the fiscal year, which are usually offset by net losses in the third and fourth quarters of the fiscal year.

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.

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: traffic levels and economic conditions; the additional payments to be received from the Province over the next four fiscal years; our short-term and long-range business plans; a net loss in fiscal 2013 and a return to profitability in fiscal 2014; and the impacts of Bill 47. 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)

			As at March 31,
				2012		2011
Assets
Current assets:
	Cash and cash equivalents		$	7,700	$	33,335
	Restricted short-term investments			35,705		37,040
	Other short-term investments			26,880		64,074
	Accounts receivable			42,341		20,619
	Prepaid expenses			6,725		5,648
	Inventories			22,017		19,957
	Regulatory assets			-		3,703
				141,368		184,376
Property, plant and equipment				1,577,709		1,581,007
Intangible assets				41,913		34,929
Long-term regulatory assets				1,501		-
Long-term loan receivable				24,515		24,247
Long-term land lease				32,521		32,979
			$	1,819,527	$	1,857,538
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable and accrued liabilities		$	51,985	$	51,249
	Short-term debt			17,737		3,949
	Interest payable on long-term debt			18,249		18,261
	Accrued employee costs			49,204		48,194
	Deferred revenue			13,784		15,596
	Derivative liabilities			12		23
	Regulatory liabilities			2,379		-
	Current portion of long-term debt			9,000		22,125
	Current portion of accrued employee future benefits			1,600		1,200
	Current portion of obligations under capital lease			974		1,040
				164,924		161,637
Accrued employee future benefits				11,171		10,907
Long-term regulatory liabilities				-		1,558
Long-term debt				1,285,232		1,327,014
Obligations under capital lease				47,013		47,723
				1,508,340		1,548,839
Shareholders' equity:
	Share capital			75,478		75,478
	Contributed surplus			25,000		-
	Retained earnings			210,709		233,221
				311,187		308,699
			$	1,819,527	$	1,857,538

BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of (Loss) Earnings, Comprehensive Income and Retained Earnings
(expressed in thousands)

			Years ended March 31,
				2012		2011
Revenue:
	Tariffs		$	457,003	$	458,049
	Ferry service fees			154,959		151,023
	Federal-Provincial Subsidy Agreement			27,487		26,924
	Retail			76,522		78,920
	Other income			22,206		24,354
				738,177		739,270
Expenses:
	Operations			413,259		411,116
	Maintenance			86,313		85,717
	Administration			30,974		31,169
	Cost of retail goods sold			29,132		29,659
	Amortization			122,973		114,486
				682,651		672,147
Earnings from operations				55,526		67,123
Gain on foreign exchange				233		173
Interest expense				(71,902)		(72,173)
(Loss) gain on disposal and impairment of capital assets				(331)		8,658
Net (loss) earnings				(16,474)		3,781
Other comprehensive income				-		-
Net (loss) earnings and comprehensive income				(16,474)		3,781
Retained earnings, beginning of year				233,221		235,478
Preferred share dividend				(6,038)		(6,038)
Retained earnings, end of year			$	210,709	$	233,221

BRITISH COLUMBIA FERRY SERVICES INC.
Consolidated Statements of Cash Flows
(expressed in thousands)

			Years ended March 31,
				2012		2011
Cash provided by (used in):
Operations:
	Net (loss) earnings		$	(16,474)	$	3,781
	Items not involving cash:
		Amortization		122,973		114,486
		Other non-cash items		(2,665)		(6,659)
	Long-term regulatory costs deferred			(3,059)		(7,543)
	Change in non-cash operating working capital			(318)		1,459
				100,457		105,524
Financing:
	Dividends paid on preferred shares			(6,038)		(6,038)
	Repayment of long-term debt			(55,875)		(9,000)
	Proceeds from (repayment of) short-term loans			13,788		3,949
	Repayment of capital lease obligations			(1,042)		(1,021)
				(49,167)		(12,110)
Investing:
	Proceeds from disposal of property, plant and equipment			118		11,181
	Purchase of property, plant and equipment and intangible assets			(115,304)		(120,874)
	Recovery of import duties and related taxes			-		119,449
	Reduction of restricted short-term investments			1,335		200
	Advancement of long-term loan			(268)		(24,247)
	Proceeds from (purchase of) short-term investments			37,194		(56,396)
				(76,925)		(70,687)
(Decrease) increase in cash and cash equivalents				(25,635)		22,727
Cash and cash equivalents, beginning of year				33,335		10,608
Cash and cash equivalents, end of year			$	7,700	$	33,335

 

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

Customer Contact:
Victoria: [phone]
Toll-free:  1-888-BCFERRY (1-888-223-3779)