August 24, 2018 - 2:47 PM EDT
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BC Ferries Releases First Quarter Results

Canada NewsWire

Company records highest vehicle traffic levels in its 58-year history 

VICTORIA, Aug. 24, 2018 /CNW/ - Ferries released its first quarter results today for the three months ended June 30, 2018. The passenger traffic levels experienced during this period were the highest the company has experienced in over 20 years and the vehicle traffic levels were the highest ever recorded.

"Traffic across the system has grown and we are working hard to deliver the travel experience our customers expect," said Mark Collins, BC Ferries' President and CEO.  "However at these unprecedented traffic levels we know that some travellers and communities are seeing some delays. To address this, we've added even more extra sailings this summer for the increased demand while maintaining key operational targets like safety and on-time performance."

Net earnings for the first quarter of fiscal 2019 were $6.0 million, compared to net earnings of $17.3 million for the same quarter of the previous year. Net earnings decreased in this quarter due to BC Ferries' contributions to the April 1 fare reductions as well as more sailings at popular sailing times.

At the start of fiscal 2019 (April 1, 2018), the fares on all routes were reduced by 15 per cent with the exception of the three Metro Vancouver – Vancouver Island routes where they were held constant. The B.C. seniors' passenger discount was increased from 50 per cent to 100 per cent for travel Monday to Thursday. These initiatives are being partly funded by BC Ferries over two years.

Revenues increased by 1.5 per cent to $229.7 million in the quarter primarily as a result of the increased traffic levels, partially offset by a decrease in the average tariff per passenger and per vehicle due to the fare reductions.

"With traffic levels the highest our company has ever experienced we continue to add service where possible, resulting in higher operating expenses," said Collins. Operating expenses increased in the quarter by 7.8 per cent to $209.9 million as the company provided 352 additional round trips to meet the increase in demand, implemented schedule adjustments for the routes operating out of Horseshoe Bay terminal, and one-time reintroduction costs for the upgraded Spirit of British Columbia. These actions, important for the travelling public, resulted in an increase in labour, fuel consumption and training related costs.

The Spirit of British Columbia was returned to service on June 6, 2018 on the TsawwassenSwartz Bay route following a mid-life upgrade. The mid-life upgrade, which significantly reduces the vessel's emissions and operating costs, included the conversion of the engines to dual-fuel capable so it can operate on liquefied natural gas, as well as major upgrades to passenger amenities.

BC Ferries currently operates four vessels on liquefied natural gas, part of its Clean Tech Adoption Plan, which helps reduce carbon emissions and achieve greenhouse gas reductions.

"BC Ferries looks to the future, ensuring it has the vessels and infrastructure to deliver sustainable service," said Collins. "It's important to continue to reinvest in the assets and systems to ensure we have the resilience to meet increasing demand." Capital investments in the three months ended June 30, 2018 totalled $72.8 million, and include the Spirit Class mid-life upgrades, vessel major overhauls and inspections, and the new Island Class vessels currently under construction.

On July 10, 2018, BC Ferries confirmed the introduction of the direct service between Port Hardy and Bella Coola using the Northern Adventure beginning on September 16 through October 11, 2018. The Northern Sea Wolf, the vessel acquired for this service, has been delayed as a result of the extensive upgrades necessary to bring it up to BC Ferries and Transport Canada's standards of safety and reliability.

The company issued two Requests for Expressions of Interest (RFEOI) on July 26, 2018, to procure four 47-vehicle Island Class vessels and one 138-vehicle Salish Class vessel to replace aging fleet assets. The competitive bidding process is open to local, national and international shipyards, including consortiums, and local companies are encouraged to bid on these projects. This proposed capital expenditure requires approval from the BC Ferries Commissioner under Section 55 of the Coastal Ferry Act. Subject to a favourable decision by the Commissioner and BC Ferries' Board of Directors, BC Ferries envisages awarding contracts for these ferries by the end of 2018.

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 22.0 million passengers and 8.7 million vehicles during the fiscal year ended March 31, 2018.  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: traffic levels, the Spirit of British Columbia mid-life upgrade, and the multi-vessel procurement.  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.
Condensed Interim Consolidated Statements of Financial Position (Unaudited)
(Expressed in thousands of Canadian dollars)





June 30, 2018

March 31, 2018

Assets



Current assets




Cash and cash equivalents

51,281

69,913


Restricted short-term investments

32,156

32,276


Other short-term investments

88,413

114,259


Trade and other receivables

40,248

26,258


Prepaid expenses

19,520

8,434


Inventories

31,463

31,584


Derivative assets

17,033

12,530


280,114

295,254

Non-current assets




Loan receivable

24,515

24,515


Land lease

-

29,771


Property, plant and equipment

1,776,327

1,713,080


Intangible assets

99,984

99,802


1,900,826

1,867,168

Total assets

2,180,940

2,162,422

Liabilities



Current liabilities




Accounts payable and accrued liabilities

84,881

77,233


Interest payable on long-term debt

16,203

18,537


Deferred revenue

35,743

32,034


Derivative liabilities

8

-


Current portion of long-term debt

34,616

34,594


Current portion of accrued employee future benefits

3,000

3,000


Current portion of lease liability

2,176

1,652


Provisions

62,757

60,372


239,384

227,422

Non-current liabilities




Accrued employee future benefits

20,763

21,299


Long-term debt

1,273,429

1,279,775


Lease liability

40,648

38,769


Other liabilities

7,750

7,750


1,342,590

1,347,593

Total liabilities

1,581,974

1,575,015

Equity




Share capital

75,478

75,478


Contributed surplus

25,000

25,000


Retained earnings

484,895

477,955

Total equity before reserves

585,373

578,433


Reserves

13,593

8,974

Total equity including reserves

598,966

587,407

Total liabilities and equity

2,180,940

2,162,422




 

British Columbia Ferry Services Inc.
Condensed Interim Consolidated Statements of Comprehensive Income (Unaudited)
(Expressed in thousands of Canadian dollars)






Three months ended June 30



2018

2017





Revenue






Vehicle and passenger fares


158,427

163,119



Net retail


15,559

14,923



Fuel rebates


(4,517)

(4,868)



Other income


2,808

2,716


Revenue from customers


172,277

175,890


Ferry service fees


49,797

42,899


Federal-Provincial Subsidy Agreement


7,626

7,446

Total revenue


229,700

226,235





Expenses





Operations


135,872

125,268


Maintenance


22,221

20,869


Administration


9,739

9,958


Depreciation and amortization


42,025

38,641

Total operating expenses


209,857

194,736

Operating profit


19,843

31,499





Net finance and other expenses






Finance expenses                                                                             


14,972

15,169



Finance income


(1,257)

(1,063)


Net finance expense


13,715

14,106


Loss on disposal and revaluation of property, plant

and equipment and intangible assets


88

42

Net finance and other expenses


13,803

14,148





NET EARNINGS


6,040

17,351









Other comprehensive income (loss)





Items to be reclassified to net earnings


7,879

(5,716)

Total other comprehensive income (loss)


7,879

(5,716)

Total comprehensive income


13,919

11,635





 

British Columbia Ferry Services Inc.
Condensed Interim Consolidated Statements of Cash Flows (Unaudited)
(Expressed in thousands of Canadian dollars)




Three months ended June 30


2018

2017

Cash flows from operating activities



Net earnings

6,040

17,351

Items not affecting cash




Net finance expense

13,715

14,106


Depreciation and amortization

42,025

38,641


Other non-cash changes to property, plant and equipment

412

635


Changes in:





Accrued employee future benefits

(536)

(740)



Derivative assets and liabilities recognized in net earnings

62

(510)



Provisions

2,385

1,839



Long-term land lease

-

115



Accrued financing costs

503

322


Total non-cash items

58,566

54,408





Movements in operating working capital




Trade and other receivables

(13,990)

(3,015)


Prepaid expenses

(11,086)

(12,338)


Inventories

121

1,039


Accounts payable and accrued liabilities

7,648

(5,822)


Deferred revenue

4,609

19,801


Change in non-cash working capital

(12,698)

(335)


Change attributable to capital asset acquisitions

1,178

7,261


Change in non-cash operating working capital

(11,520)

6,926




Cash generated from operating activities

53,086

78,685


Interest received

767

572


Interest paid

(18,919)

(18,569)





Net cash generated by operating activities

34,934

60,688

 

British Columbia Ferry Services Inc.
Condensed Interim Consolidated Statements of Cash Flows (Unaudited)
(Expressed in thousands of Canadian dollars)




Three months ended June 30


2018

2017

Cash flows from financing activities



Proceeds from long-term debt

-

45,264

Repayment of long-term debt

(6,571)

(6,571)

Repayment of lease liabilities

(529)

(389)

Deferred financing costs incurred

-

(1,470)

Net cash (used in) generated by financing activities

(7,100)

36,834




Cash flows from investing activities



Proceeds from disposal of property, plant and equipment

14

23

Purchase of property, plant and equipment and intangible assets

(72,446)

(97,115)

Changes in debt service reserve

120

(350)

Net proceeds from short-term investments

25,846

-

Net cash used in investing activities

(46,466)

(97,442)

Net (decrease) increase in cash and cash equivalents

(18,632)

80




Cash and cash equivalents, beginning of period

69,913

72,032

Cash and cash equivalents, end of period

51,281

72,112

 

British Columbia Ferry Services Inc.
Condensed Interim Consolidated Statements of Cash Flows (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, 2017

75,478

25,000

424,020

524,498

(3,066)

521,432








Net earnings

-

-

17,351

17,351

-

17,351








Other comprehensive loss

-

-

-

-

(5,716)

(5,716)








Realized hedge losses

recognized in fuel swaps

-

-

-

-

796

796








Hedge losses on interest rate

forward contract reclassified to

net earnings

-

-

-

-

62

62








Balance as at June 30, 2017

75,478

25,000

441,371

541,849

(7,924)

533,925








Balance as at March 31, 2018

75,478

25,000

477,955

578,433

8,974

587,407








Impact of adoption of new

accounting standard – IFRS 15

-

-

900

900

-

900








Balance as at April 1, 2018

75,478

25,000

478,855

579,333

8,974

588,307








Net earnings

-

-

6,040

6,040

-

6,040








Other comprehensive income

-

-

-

-

7,879

7,879








Realized hedge losses

recognized in fuel swaps

-

-

-

-

(3,322)

(3,322)








Hedge losses on interest rate

forward contract reclassified to

net earnings

-

-

-

-

62

62








Balance as at June 30, 2018

75,478

25,000

484,895

585,373

13,593

598,966

 

SOURCE British Columbia Ferry Services Inc.

View original content: http://www.newswire.ca/en/releases/archive/August2018/24/c5502.html

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)Copyright CNW Group 2018


Source: Canada Newswire (August 24, 2018 - 2:47 PM EDT)

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