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For Immediate Release
20-059
November 20, 2020

BC Ferries releases second quarter results

VICTORIA –BC Ferries released its second quarter results today for the three and six months ended September 30, 2020. The COVID-19 global pandemic continues to have a significant impact on the company’s operations and financial results.

BC Ferries’ net earnings for the second quarter of fiscal 2021 were $37.8 million, $57.2 million lower than the same quarter of the previous year. Year-to-date, since April 1, 2020, net losses were $24.2 million, compared to net earnings of $107.2 million in the same period in the prior year, a decline of $131.4 million.

“COVID-19 continues to have a significant impact on the ferry system as we navigate through what is now the new normal with our employees, our customers and all British Columbians,” said Mark Collins, BC Ferries’ President and CEO. “Throughout the pandemic, our employees continue to provide lifeline service to coastal communities and I want to recognize their dedication and perseverance, which has been nothing short of inspiring.”

Revenue for the quarter ended September 30, 2020, at $247.6 million, was down $81.7 million year-over-year. Revenue for the six months ended September 30, 2020 was $385.0 million, down $190.7 million over the same period in the prior year.

During the quarter, BC Ferries carried 5.5 million passengers and 2.5 million vehicles, a decrease of 29.0 per cent and 14.0 per cent respectively, compared to the same quarter in the prior year. Year-to-date, the company has carried 7.7 million passengers and 3.8 million vehicles, a decrease of 43.0 per cent and 28.7 per cent, respectively, compared to the same period in the previous year.

During the three months ended September 30, 2020, expenses from operations decreased $25.4 million or 11.5 per cent compared to the same period in the prior year. Year-to-date since April 1, 2020, expenses from operations decreased $62.1 million or 14.1 per cent and includes reduced labour costs, fuel consumption, maintenance, contracted services, depreciation expense, travel, non-safety related training and advertising. These cost reductions, while helpful, did not offset the decline in revenues as a significant portion of BC Ferries costs are fixed and do not meaningfully fluctuate with reduced traffic demand.

“Prior to COVID-19, our 12-year capital plan totalled $3.9 billion and included new vessels, upgrades and modifications for existing vessels, significant improvements at our fleet maintenance unit, major investments at terminals and renewal of information technology systems,” said Collins. “Given the impact of the pandemic to our operations and financial position, we are reviewing all capital plans to identify opportunities to defer any expenditures that are not regulatory, security or safety related or operationally necessary. It’s imperative that we scrutinize everything we do to preserve the long-term sustainability of the ferry system in the public interest.”

On September 18, 2020, the Federal and Provincial Governments announced that BC Ferries will receive $308 million under the Safe Restart Funding Program. Since the beginning of the pandemic, BC Ferries has been working closely with the Province to collaborate on strategic options to sustain the ferry system for the long term. BC Ferries submitted a detailed plan to meet the public interest and the interests of customers in the provision of safe, reliable and affordable ferry service. Earlier this month BC Ferries reached a formal agreement with the Province regarding the $308 million from the Safe Restart Funding Program.

Capital expenditures in the three and six months ended September 30, 2020 totalled $25.7 million and $49.3 million respectively. Significant investments include the five new vessels currently under construction contracted in 2019, major vessel overhauls and inspections, IT upgrades and various other projects.

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.
 
– 30 –
 
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)

Note to newsrooms: For urgent media inquiries off-hours, call our emergency line at (250) 516-7211.

 

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, the requirements of the Coastal Ferry Services Contract, and the impact of the COVID-19 pandemic.

Forward looking statements included in this release include statements with respect to: the company’s response to the COVID-19 pandemic, reductions in discretionary spending, our fixed costs, capital investments, and funding under the Safe Restart Funding 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: 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 Aboriginal rights and title 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.
 

Significant events Second Quarter Fiscal 2021

Significant events during or subsequent to the Second Quarter of 2021 include the following:
 
  • The Coastal Ferry Services Contract was initially amended in April 2020 for a 60-day period, expiring in early June and subsequently, extended through to September 7, 2020, to reflect temporary reduced service levels in response to the COVID-19 pandemic while maintaining the related ferry transportation fees.
     
  • On September 9, 2020, BC Ferries issued a statement to inform customers that as of September 30, 2020, Transport Canada rescinded the temporary flexibility it granted to ferry operators allowing passengers to remain in their vehicles on enclosed decks. Transport Canada granted this flexibility in the spring in response to the COVID-19 pandemic. BC Ferries has implemented measures to mitigate risk to the travelling public and prevent the spread of the virus including additional cleaning, sanitization, physical distancing and mandatory wearing of face coverings while at the terminal and onboard the vessel.
     
  • On September 18, 2020, the Federal and Provincial Governments announced that BC Ferries will receive $308 million under the Safe Restart Funding Program. Previously, on August 11, 2020, the Province had announced that BC Ferries is one of the entities included in the Federal Government’s announced transit funding of $540 million in response to the impact of the COVID-19 pandemic. This transit funding is to be matched equally by the Province for a total funding envelope of $1.08 billion. BC Ferries reached a formal agreement with the Province regarding the $308 million from the Safe Restart Funding Program earlier this month.
     
  • On September 22, 2020, BC Ferries launched its new mobile-friendly website, which lets customers easily book and manage their bookings online and delivers dynamically updated schedules and current conditions information. Features of the new website include dynamically generated, real-time daily and seasonal schedules available for all routes, as well as travel conditions at major terminals to provide greater travel certainty. Enhanced account management capabilities let customers manage all their bookings in one place, and add, change or cancel bookings with ease on their own. The new trip planner tool helps customers find sailings and calculate fares on any route before travelling.
 
- 30 -
 
Media Contact:
BC Ferries, Communications
Victoria: (250) 978-1267

Customer Contact:
Victoria: (250) 386-3431
Toll-free: 1-888-BCFERRY (1-888-223-3779)

 

BRITISH COLUMBIA FERRY SERVICES INC.

Condensed Interim Consolidated Statements of Financial Position (unaudited)
(Expressed in thousands of Canadian dollars)
As at
September 30, 2020 March 31, 2020
Assets
Current assets
Cash and cash equivalents 162,594 169,141
Restricted short-term investments 34,039 33,393
Other short-term investments 54,770 91,588
Trade and other receivables 23,199 19,488
Prepaid expenses 15,398 11,057
Inventories 36,677 31,897
Derivative assets 9 28
326,686 356,592
Non-current assets
Loan receivable 24,515 24,515
Property, plant and equipment 1,838,626 1,879,517
Intangible assets 99,525 99,893
1,962,666 2,003,925
Total assets 2,289,352 2,360,517

Liabilities
Current liabilities
Accounts payable and accrued liabilities 101,928 132,296
Provisions 1,768 1,794
Interest payable on long-term debt 21,526 21,512
Contract liabilities 20,359 21,702
Current portion of long-term debt 15,302 21,644
Current portion of accrued employee future benefits 2,300 3,000
Current portion of lease liabilities 2,741 2,536
Derivative liabilities 13,883 15,507
179,807 219,991
Non-current liabilities
Accrued employee future benefits 20,796 20,151
Long-term debt 1,422,182 1,427,426
Lease liabilities 37,256 38,675
Other liabilities 10,340 10,962
Derivative liabilities 15,011 17,212
1,505,585 1,514,426
Total liabilities 1,685,392 1,734,417
Equity
Share capital 75,478 75,478
Contributed surplus 25,000 25,000
Retained earnings 523,576 547,745
Total equity before reserves 624,054 648,223
Reserves (20,094) (22,123)
Total equity including reserves 603,960 626,100
Total liabilities and equity 2,289,352 2,360,517
 

 

BRITISH COLUMBIA FERRY SERVICES INC.

Condensed Interim Consolidated Statements of Profit or Loss and Other Comprehensive (Loss)
Income (unaudited)
(Expressed in thousands of Canadian dollars)
 
Three months ended
September 30
Six months ended
September 30
2020 2019 2020 2019
Revenue
Vehicle and passenger fares 169,969 216,516 248,750 378,992
Net retail 8,381 23,869 9,164 40,666
Fuel (rebates) surcharges (2,665) 2,981 (3,907) 3,820
Other income 2,566 3,532 3,609 6,569
Revenue from customers 178,251 246,898 257,616 430,047
Ferry service fees 61,388 74,579 111,416 129,988
Federal-Provincial Subsidy Agreement 8,007 7,835 16,014 15,670
Total revenue 247,646 329,312 385,046 575,705

Expenses
Operations 126,803 152,231 232,124 292,919
Maintenance 15,162 13,440 38,243 39,752
Administration 8,837 9,271 20,080 17,967
Depreciation and amortization 44,498 45,740 88,546 90,462
Total operating expenses 195,300 220,682 378,993 441,100
Operating profit 52,346 108,630 6,053 134,605
Net finance and other expenses
Finance expenses 15,436 15,330 30,542 30,321
Finance income (1,062) (1,508) (2,284) (2,681)
Net finance expense 14,374 13,822 28,258 27,640
Loss (gain) on disposal and revaluation of property, plant and equipment and intangible assets
105

(194)

1,964

(206)
Net finance and other expenses 14,479 13,628 30,222 27,434

NET EARNINGS (LOSS)

37,867

95,002

(24,169)

107,171
 
Other comprehensive income (loss)
Items that are or may be reclassified subsequently

to net earnings (loss)
(5,147) (3,832) (5,543) (3,890)
Items not to be reclassified to net earnings (loss) (1,933) (126) (1,933) (126)
Total other comprehensive loss (7,080) (3,958) (7,476) (4,016)
Total comprehensive income (loss) 30,787 91,044 (31,645) 103,155


 

BRITISH COLUMBIA FERRY SERVICES INC.

Condensed Interim Consolidated Statements of Cash Flows (unaudited)
(Expressed in thousands of Canadian dollars)
 
Six months ended September 30
2020 2019
Operating activities
Net (loss) earnings (24,169) 107,171
Items not affecting cash:
Net finance expense 28,258 27,640
Depreciation and amortization 88,546 90,462
Loss (gain) on disposal and revaluation of property, plant and equipment and intangible assets
1,964

(206)
Other non-cash changes to property, plant and equipment 119 (946)
Changes in:
Accrued employee future benefits (1,988) (28)
Derivative assets and liabilities recognized in net loss 32 8
Provisions (26) 3,367
Accrued financing costs 274 (434)
Total non-cash items 117,179 119,863
Movements in operating working capital:
Trade and other receivables (3,711) (6,169)
Prepaid expenses (4,341) (5,721)
Inventories (4,780) (388)
Accounts payable and accrued liabilities (30,368) (34,759)
Contract liabilities (1,343) (6,837)
Change in non-cash working capital (44,543) (53,874)
Change in non-cash working capital attributable
to investing activities 26,825 23,550
Change in non-cash operating working capital (17,718) (30,324)

Cash generated from operating activities

75,292

196,710
Interest received 1,905 3,276
Interest paid (34,422) (32,211)

Cash generated from operating activities

42,775

167,775


 

BRITISH COLUMBIA FERRY SERVICES INC.

Condensed Interim Consolidated Statements of Cash Flows (unaudited)
(Expressed in thousands of Canadian dollars)
 
Six months ended September 30
2020 2019

Financing activities
Repayment of long-term debt


(12,016)


(17,641)
Repayment of lease liabilities (1,209) (1,093)
Cash used in financing activities (13,225) (18,734)

Investing activities
Proceeds from disposal of property, plant and equipment


94


295
Purchase of property, plant and equipment and intangible assets (72,363) (72,668)
Changes in restricted short-term investments (646) 310
Net proceeds from (purchase of) other short-term investments 36,818 (1,969)
Cash used in investing activities (36,097) (74,032)
Net (decrease) increase in cash and cash equivalents (6,547) 75,009
Cash and cash equivalents, beginning of period 169,141 59,888
Cash and cash equivalents, end of period 162,594 134,897


 

BRITISH COLUMBIA FERRY SERVICES INC.

Condensed Interim Consolidated Statements of Changes in Equity (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 April 1, 2019

75,478

25,000

525,006

625,484

12,834

638,318
Net earnings - - 107,171 107,171 - 107,171
Other comprehensive loss - - - - (4,016) (4,016)
Realized hedge gains recognized in
fuel swaps
- - - - (4,335) (4,335)
Hedge losses on interest rate forward
contract reclassified to net earnings     
- - - - 124 124
Balance as at September 30, 2019 75,478 25,000 632,177 732,655 732,655 737,262

Balance as at April 1, 2020

75,478

25,000

547,745

648,223

(22,123)

626,100
Net loss - - (24,169) (24,169) - (24,169)
Other comprehensive loss - - - - (7,476) (7,476)
Realized hedge losses recognized in fuel swaps - - - - 9,381 9,381
Hedge losses on interest rate forward contract reclassified to net earnings - - - - 124 124
Balance as at September 30, 2020 75,478 25,000 523,576 624,054 (20,094) 603,960