Annual Public Meeting
August 24, 2012
Agenda
• Forward Looking Statements
• Chair’s Reports
- Jane L. Peverett, Chair, Board of Directors,
B.C. Ferry Authority
– Donald P. Hayes, Chair, Board of Directors,
British Columbia Ferry Services Inc.
• President’s Report
– Mike Corrigan, President & Chief Executive Officer
• Financial Report
– Robert P. Clarke, Chief Financial Officer
• Discussion
– Bruce Williams, Moderator
• Closing Remarks
1
Caution Regarding Forward Looking Statements
•
This presentation 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 presentation include statements with respect to: economic
conditions, and traffic levels; our short-term and long-range business plans, capital expenditure levels,
and asset renewal programs for vessels and terminals; our cable ferry initiative, and our LNG plans;
our performance measures targets; the additional payments to be received from the Province over the
following four fiscal years, the Province’s role regarding service levels and a long-term vision for
connecting coastal communities, and our expectations regarding the amount of efficiencies to be
achieved from service level reduction initiatives; and our expectations regarding 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 presentation 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 presentation,
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.
2
Chair’s Report
Jane L. Peverett
Chair, Board of Directors
B.C. Ferry Authority
3
Tabling of Reports
The Annual Report of B.C. Ferry
Authority, including audited financial
statements for its fiscal year ended
March 31, 2012
4
Compliance with Bill 20
• B.C. Ferry Authority is in full compliance with
the Coastal Ferry Act, as amended by the
Miscellaneous Statutes Amendment Act (No.3)
2010 (“Bill 20”)
5
Board of Directors
B.C. Ferry Authority
•
Jane L. Peverett
(Community-at-large)
•
Bohdan I. Bodnar
(Southern Mainland appointment area)
•
Christopher M. Causton
(Province of British Columbia)
•
Roderick D. Dewar
(Southern Vancouver Island appointment area)
•
Robin W. Kenyon
(Province of British Columbia)
•
Randolph K. Morriss
(Central Vancouver Island & Northern Georgia Strait appointment area)
•
A. Daniel Miller
(Community-at-large)
•
John Radosevic
(Organized labour)
•
Stephen E. Smith
(Northern Coastal & North Island appointment area)
6
High Standards of Accountability
• Public Disclosure
– Audited Financial Statements
– Meeting Outcomes
– By-Law Amendments
– Compensation Plans
– Appointment and Remuneration of Directors
• Compliance with Legislated Obligations Independently
Assessed
• Annual General Meetings
7
Chair’s Report
Donald P. Hayes
Chair, Board of Directors
British Columbia Ferry Services Inc.
8
Tabling of Reports
1. The Annual Report of British Columbia Ferry
Services Inc., including audited financial statements
for its fiscal year ended March 31, 2012
2. The Annual Report of British Columbia Ferry
Services Inc. to the British Columbia Ferry
Commissioner, pursuant to Section 66 of the Coastal
Ferry Act for the fiscal year ended March 31, 2012
3. The Business Plan of British Columbia Ferry
Services Inc. for the current fiscal year
9
Board of Directors
British Columbia Ferry Services Inc.
• Donald P. Hayes, Chair
• Holly A. Haston-Grant
• Brian G. Kenning, Chair of Audit & Finance Committee
• Gordon R. Larkin
• Maureen V. Macarenko
• P. Geoffrey Plant, QC
• Wayne H. Stoilen, Chair of Safety, Health, Environment &
Security Committee
• Graham M. Wilson, Chair of Human Resources &
Compensation Committee
10
High Standards of Accountability
• Public Disclosure
- Quarterly and Annual Audited Financial Statements
- Customer Satisfaction Surveys
- Annual Business Plans
• Compliance with the Coastal Ferry Act and the
Coastal Ferry Services Contract independently
assessed
• Annual Public Meetings
• Regulatory Oversight
11
Commissioner’s Report
• Findings of British Columbia Ferries
Commissioner’s report on review of BC Ferries
issued January 2012:
– BC Ferries is efficient and well run
– Challenges to fare affordability and financial
sustainability
– Solution requires stakeholder involvement and long
term vision
12
Accomplishments
• Highest on-time performance record ever at
91%
• Exceptional service reliability at 99.8%
• Customer satisfaction rating also very strong
at 88%
13
Priorities
• Safety is our number one priority
• We continue to concentrate on operating the service to
a world-class safety standard, while delivering solid
economic value for ferry users across the fleet
• Committed to developing and supporting our employees
• Continuing to build a better BC Ferries
– Renewing our assets
– Investing in our infrastructure
14
President’s Report
Mike Corrigan
President & Chief Executive Officer
British Columbia Ferry Services Inc.
15
Year in Review
• Carried 20.2 million passengers and
7.8 million vehicles on over 185,000 sailings
last year
• Invested $122.2 million in capital expenditures
16
Morfitt Follow-Up Safety Review
• January 24, 2012, former B.C. Auditor General
George Morfitt released comprehensive followup safety review on the operational safety
audit conducted five years ago
• The 73-page report reviewed the status of 41
recommendations made by Morfitt in the
original 2007 report
17
Morfitt Follow-Up Safety Review
“There has been, since our 2007 report, a
significant improvement in the safety culture
and practices within the company. We found
that awareness about, and actions taken in
regards to, safety have increased substantially
since we carried out our last review.
Considering that many of our
recommendations were of a complex nature
and necessarily would take a considerable
time to implement, the progress to date made
by the company in respect of the
recommendations is highly commendable.”
18
Commissioner’s Review
January 24, 2012
Key Findings: Well Run and Efficient
Fiscal Year
2004
Results
Fiscal Year
2012
Results
Improvement
since
2004
365
200
45.2%
Fleet Reliability
(% of scheduled sailings delivered)
99.14%
99.76%
0.6%
Fleet On-Time Performance
(% of sailings within 10 minutes of schedule)
85.2% *
91.1%
6.9%
3.99
4.19
5.0%
379,238
240,906
36.5%
122,550,507
118,824,798
3.0%
Employee Safety
(Employee time loss injuries)
Overall Customer Satisfaction **
(Rating out of 5 where 5 is very satisfied
and 1 is very unsatisfied)
Employee Absenteeism
(Hours for illness and other paid leave)
Fuel Consumption
(Total litres consumed)
* Fiscal Year 2006 Results
** Calendar Year 2004 and 2011 Results
19
Key Accomplishments: Safety
• Completed phase two of SailSafe, a joint safety
initiative with the BC Ferry & Marine Workers’ Union
• Former B.C. Auditor General George Morfitt released a
comprehensive report after conducting a follow-up
review on the operational safety audit conducted five
years ago
• Continued reduction in time loss injuries
• Performed 28 marine rescues throughout coastal British
Columbia
20
Key Accomplishments: Training
• Corporate University Exchange Award for Standardized
Education and Assessment (SEA) program.
• Opened new state-of-the-art bridge simulator training
facilities at Swartz Bay, Departure Bay and Tsawwassen
in October 2011.
• Over 200 Bridge Team Members have attended the
Bridge Operations, Skills and Systems
(BOSS) 1 course.
• Represents over 50 per cent of the Bridge Teams in the
fleet. The remainder will be scheduled over the course
of the year.
21
Bridge Simulator
22
Key Accomplishment:
Extended Collective Agreement
• Reached an agreement with the BC Ferry &
Marine Workers’ Union for a three year
extension of the Collective Agreement to
October 31, 2015
23
Key Accomplishments: Customer Service
• Reached fleetwide on-time performance record
of 91% per cent, which is the highest level yet
• In partnership with Parks Canada, continued
to offer the Coastal Naturalist Program in the
summer
• Introduced new menu items to offer more
healthy choices and drive sales
• Increased quality of merchandise in gift shops
• Offered the popular $39.95 car and driver
CoastSaver promotion on weekends in
June 2011
24
CoastSaver Promotion
25
Continuing Strong Customer Satisfaction
Overall customer
satisfaction
– 4.19 out of 5
High marks for:
– Safety of ferry
operations
– Staff courtesy and
professionalism
– Loading and unloading
procedures
– Selection in onboard
giftshops
– Cleanliness of lounges
26
Key Accomplishments: Terminals
• Completed a $8.7 million project to replace
the marine structures at Berth 5 at
Tsawwassen
• Constructed a new pedestrian overpass at
Horseshoe Bay to improve safety for
customers accessing the Village
27
Horseshoe Bay Overhead Walkway
28
Key Accomplishments: Terminals
• Opened a new foot passenger waiting room at
Nanaimo Harbour
• Undertook a $19 million project at Swartz Bay
for the upgrade of Berths 4 and 5
• Invested $16.9 million into the marine
structures at Gravelly Bay on Denman Island
and Shingle Spit on Hornby Island
29
A view of Denman Island Worksite
30
New Terminal at Klemtu
• Commenced operations at new terminal in
Klemtu in August 2011
• Federal and Provincial Governments built the
facility to accommodate the Northern
Expedition
• Improves safety of operations
• Allows BC Ferries to utilize Northern
Expedition year round
31
Klemtu Terminal
32
Key Accomplishments: Vessels
• Continued with implementation of a multi-year
$63.1 million sewage and waste water
treatment program to upgrade 27 vessels and
8 terminals
• The Queen of Burnaby underwent $5 million
asset improvement as well as a $3 million refit
• Continued with the $15 million major life
extension project on the 33-year old Queen of
Chilliwack
33
Terminal Investments
• Invested $2.7 million in berth modifications at
the Brentwood Bay/Mill Bay terminals and a
further $2.7 million in vessel modifications on
the MV Klitsa
• Built a new public float at the Langdale
terminal for use by private boaters to address
long-standing safety and security concerns
34
Key Accomplishments: Financial Integrity
• Credit ratings at June 30, 2012:
- A (DBRS) with a stable trend
- A+ (Standard & Poor’s) with a negative
outlook
35
Key Accomplishment: Stakeholders
• Consulted regularly with our Ferry Advisory
Committees. Established a 13th committee for
users of the Mill Bay – Brentwood Bay route
• Sponsored the BC Bike Race, Sport BC, the Powell
River Kings Junior “A” Hockey Club and the Victoria
Highlanders Football Club
• Employees pledged more than $85,000 to the
2011 United Way Campaign
• Raised $50,000 for Jeneece Place and $50,000 for
First Tee of Greater Vancouver YMCA through
BC Ferries Media Charity Golf Classics
36
Charitable Giving
Jeneece Place is a home away from home on Vancouver Island that
supports families with medical needs
37
Key Accomplishments: Expanding the Business
Started March 2009
• 1 customer and 2 trucks
August 2012
• 20+ drivers
• 30+ tractors trucks
• Several new customers
38
Commercial Services
• Continued to expand our drop-trailer business
– Providing a value added service
– Adding new customers
– Continually look to expand drop trailer segment
• Major Milestones
– Carried 50,000 trailers by May 2012
• Average over 575 trailers per week
• Grew revenues in 2012 by $2.6 million to $6.6 million
39
BC Ferries Vacations
• Opened May 2010
• Offer 70 unique coastal
vacations packages
representing all regions
• Packages include round trip
ferry, accommodations and
activities
• 38,000+ people have
travelled on a BCFV
package since opening
40
BC Ferries Vacations: Fiscal 2012
• Grew gross revenues in second year by over
$1 million to $2,400,000
• Positive net earnings in fiscal 2012 of $80,000
• Over 8,800 visits to Vacation Centre
• Over 500,000 BCV Web Visits
41
Comox Airport Advertisement
42
BC Ferries Vacations
Destination Distribution
• Vancouver Island continues to be the most popular
destination (3100 bookings) with Victoria as the leading
city in the region
• North Coast and Cariboo Chilcotin continued to grow, with
the northern packages gaining in awareness and popularity
• Growth to the Southern Gulf Islands a direct result of
increased inventory
• Coast Mountains growth a result of Whistler being added to
the Circle Tour itinerary
43
Automated Customer Experience “ACE”
• $40 million replacement/upgrade program
• Update and improve end-to-end customer experience
• Replace aging Point-of-Sale and Reservations systems
• Improve our ability to understand customer travel
patterns and requirements that will help us define
improved products and services
• Consolidate all card payment processing into a single
system to improve security and compliance
• Provide automated tools at terminals to support
enhanced ticketing capabilities and our ever evolving
safety and security requirements
(turnstiles leading to fare paid and embarkation zones,
automated vehicle measuring systems, baggage tagging
systems, embarkation handheld audit tools and coin
change dispensers)
44
Cable Ferry
• BC Ferries issued a Request for Proposals (RFP) to
qualified ASP respondents on May 17, 2012. Proposals
will pertain to designing, building and operating the
cable ferry system
• BC Ferries is currently conducting a detailed engineering
assessment, including cable design and hull modeling
• Regardless of the operator, BC Ferries is responsible for
providing the contracted service
• A final decision about the cable ferry is expected to be
made in the fall of 2012
45
Liquefied Natural Gas
• BC Ferries has been studying the feasibility of using
liquefied natural gas (LNG)
• LNG is currently 60 per cent cheaper than marine diesel
and reduces emissions
• Green technology could be introduced for newbuilds as
well as major retrofits of some existing vessels
• Looking to convert the Queen of Capilano to LNG in
2014/15 (six-month refit window required)
• Consider LNG for newbuilds --- approximately four
years out with the replacement of the Queen of Burnaby
and Queen of Nanaimo
• Reviewing the feasibility for LNG conversions on seven
or eight of its existing vessels
46
Key Cost Drivers
Major Cost Drivers Affecting
Fares ($ millions)
Fiscal 2004
Actual
Fiscal 2012
202
257
Fuel
50
121
Materials, Supplies,
Contracted Services and Other
33
34
Insurance, Property Tax,
Utilities and Credit Card Fees
10
23
Maintenance Expenses
84
86
Administration Expenses
32
31
Net Financing and
Amortization
68
193
Labour
47
Coastal Ferry Services Contract – PT3
• On June 13, 2012, the Province and BC Ferries
finalized amendments to the CFSC for PT3
• Targeted savings from service levels:
-$4 million on majors (confirmed)
-$26 million on all routes (to be determined)
• Inclusion of Route 3 in Major Route Group
• $15 million efficiency target for BC Ferries
48
Additional Payments from Province
• $79.5 million to reduce pressure for future
fare and price cap increases over PT3
• First payment of $25 million was received April
20, 2012 as contribution to equity
• Further $54.5 million is expected to be
received in annual payments in fiscal 2013
through fiscal 2016
49
Province’s Public Engagement Process
• Adjustments to service levels, discussions with
communities about trade-offs among service
adjustments, fare increases and potential
community contributions
• Public input to develop strategies to support a
vision for connecting coastal communities
• BC Ferries to provide technical assistance for
this process
50
Traffic: Fiscal 2012/2013
• In the first quarter of fiscal 2013, BC Ferries
experienced a decline of 1.7 per cent in
vehicle traffic and 2.8 per cent in passenger
traffic compared to the same period the year
prior
• August 1 – 20, traffic has improved 3.0 per
cent in vehicle traffic and 3.9 per cent in
passenger traffic compared to the same period
the year prior
51
Capacity Utilization
Capacity Utilization - Fiscal 2012
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1
2
30
3
10
Major Routes
11
40
4
Route 3
5
6
7
8
Northern Routes
9
12
17
18
Minor Routes
19
20
21
22
23
24
25
26
C orporate Average
52
Current Focus
• Ongoing commitment to safety & security
• Minor route vessel and infrastructure replacement
strategy
• Impact of federal shipbuilding initiative
• Expanded travel & tourism packages
• Continue to improve the customer experience
• Manage to the current marketplace
• Cost Containment Strategy
53
Financial Report
Robert P. Clarke
Executive Vice President
& Chief Financial Officer
54
Traffic
Vehicles
Passengers
2012
2011
Decrease
7,837,919
8,119,546
(281,627)
-3.5%
20,169,977
20,746,222
(576,245)
-2.8%
55
Results for the Year Overview
Years ended March 31,
($ millions)
2012
2011
Total Revenue
738.2
739.3
Total Operating Expenses
682.7
672.2
Earnings from Operations
55.5
67.1
Financing & Gain/Loss on
Disposal
72.0
63.3
(16.5)
3.8
Net (loss) earnings
56
Revenues
($ millions)
2012
2011
457.0
458.1
128.4
127.0
26.6
24.0
Federal-Provincial
Agreement
27.5
26.9
Retail
76.5
78.9
Other income
22.2
24.4
738.2
739.3
Tariffs
Fee for Service Contract
– transportation service
fees
– social program fees
Total Revenue
57
Expenses
($ millions)
Operations, maintenance,
administration
Cost of retail goods sold
2012
2011
530.6
528.0
29.1
29.7
Amortization
123.0
Total operating expenses
682.7
114.5
672.2
58
Earnings
($ millions)
Earnings from operations
Gain on foreign exchange
Interest expense
(Loss) gain on disposal and
impairment of capital assets
Net (loss) earnings
2012
2011
55.5
67.1
0.2
0.2
(71.9)
(72.2)
(0.3)
8.7
(16.5)
3.8
59
Capital Expenditures
Capital expenditures were $122.2 million in fiscal 2012
($ millions)
Investment in terminals
(including marine structures)
55.1
Investment in Ships
48.5
Systems
18.6
(includes $6.3 million on multi-year $39M
customer service program and $3.4 million on hardware
upgrades)
122.2
60
Discussion
61
Guidelines for Discussion
• Moderator will facilitate the discussion
– Recognize speakers
– Manage time
• One person speaks at a time
• Please identify yourself
• Ask a question or make a statement
• Length of questions limited to two minutes
• One question per person unless sufficient time
62
Closing Remarks
63
64
65
Customer Feedback
BC Ferries Vacations
I had no idea that BC Ferries offered a travel service! It was one of
those instances where you’re surfing the net, looking at websites, and
click on links that take you here and there. Soon enough I had landed
on the BC Ferries Vacations website and one of the pre-packaged
tours got my attention.
We wanted to go up to the Bella Coola Valley, and BCFV offered a trip
similar to what I was trying to put together myself. Melissa, our travel
consultant, was great from the get-go. I could “tweak” the package
and make the trip our own.
Of course I priced out my own version of the package and it was
definitely a few hundred dollars cheaper booking through BCFV. The
best part is that I didn’t have to do anything. Melissa did it all. In the
end I received all the documentation and vouchers in a very well laidout email.
It was great to avoid the stress of juggling hotel bookings, deposits,
ferry reservations and the like. I was VERY happy with the prompt,
competent and super-friendly service we received from Melissa and
her colleagues.
C.A., Coquitlam, B.C.
66