For Immediate Release August 22, 2014 BC FERRIES RELEASES FIRST QUARTER RESULTS

Transcription

1 For Immediate Release August 22, 2014 BC FERRIES RELEASES FIRST QUARTER RESULTS VICTORIA 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, 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. / Note to newsrooms: For urgent media inquiries off-hours, call our emergency pager at (250)

2 Page 2 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 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 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 Media Contact: BC Ferries, Media Relations Victoria: (250) Customer Contact: Victoria: (250) Toll-free: BCFERRY ( ) 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, 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

3 Page 3 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.

4 Interim Consolidated Statements of Financial Position (unaudited) 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, , ,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, ,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, , ,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, ,142 Total equity before reserves 360, ,620 Reserves (4,044) (1,691) Total equity including reserves 356, ,929 Total liabilities and equity 1,825,736 1,885,192

5 Interim Consolidated Statements of Comprehensive Income (unaudited) Three months ended, June 30, 2014 June 30, 2013 Revenue Vehicle and passenger fares 131, ,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, ,969 Expenses Operations 115, ,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, ,807 Operating profit 30,600 21,162 Net finance and other expenses Net finance expense Finance income 1, 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

6 Interim Consolidated Statements of Cash Flows (unaudited) Cash flows from operating activities Three months ended, June 30, 2014 June 30, 2013 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 Accrued interest costs 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, Interest paid (21,496) (21,370) Net cash generated by operating activities 28,152 24,769

7 Interim Consolidated Statements of Cash Flows (unaudited) Cash flows from financing activities Three months ended, June 30, 2014 June 30, 2013 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 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

8 Interim Consolidated Statements of Changes in Equity (unaudited) Share capital Contributed surplus Retained earnings Total equity before reserves Reserves (note 8 (a)) Total equity including reserves Balance as at March 31, ,478 25, , ,665 3, ,898 Net earnings for the three months ended June 30, ,273 4,273-4,273 Other comprehensive income for the three months ended June 30, Balance as at June 30, ,478 25, , ,938 3, ,171 Balance as at March 31, ,478 25, , ,620 (1,691) 344,929 Net earnings for the three months ended June 30, ,888 13,888-13,888 Other comprehensive income for the three months ended June 30, (2,396) (2,396) Hedge losses reclassified to net earnings Balance as at June 30, ,478 25, , ,508 (4,044) 356,464