Transcript AGM Presentation 2012 PowerPoint
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
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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.
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Chair’s Report
Jane L. Peverett Chair, Board of Directors B.C. Ferry Authority
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Tabling of Reports
The Annual Report of B.C. Ferry
Authority, including audited financial
statements for its fiscal year ended March 31, 2012
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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”)
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• • • • • • • • •
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)
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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
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Chair’s Report
Donald P. Hayes Chair, Board of Directors British Columbia Ferry Services Inc.
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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
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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
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High Standards of Accountability •
Public Disclosure - Quarterly and Annual Audited Financial Statements - Customer Satisfaction Surveys - Annual Business Plans
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Compliance with the Coastal Ferry Act and the Coastal Ferry Services Contract independently assessed
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Annual Public Meetings
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Regulatory Oversight
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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
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Accomplishments •
Highest on-time performance record ever at 91%
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Exceptional service reliability at 99.8%
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Customer satisfaction rating also very strong at 88%
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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
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President’s Report
Mike Corrigan President & Chief Executive Officer British Columbia Ferry Services Inc.
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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
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Morfitt Follow-Up Safety Review •
January 24, 2012, former B.C. Auditor General George Morfitt released comprehensive follow up safety review on the operational safety audit conducted five years ago
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The 73-page report reviewed the status of 41 recommendations made by Morfitt in the original 2007 report
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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.”
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Commissioner’s Review January 24, 2012
Key Findings: Well Run and Efficient
Employee Safety
(Employee time loss injuries) Fiscal Year 2004 Results 365
Fleet Reliability
(% of scheduled sailings delivered)
Fleet On-Time Performance
(% of sailings within 10 minutes of schedule) 99.14% 85.2% * 3.99
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) 379,238 122,550,507
* Fiscal Year 2006 Results ** Calendar Year 2004 and 2011 Results
Fiscal Year 2012 Results 200 99.76% 91.1% 4.19
240,906 118,824,798 Improvement since 2004 45.2% 0.6% 6.9% 5.0% 36.5% 3.0%
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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
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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.
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Bridge Simulator
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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
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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
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Introduced new menu items to offer more healthy choices and drive sales
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Increased quality of merchandise in gift shops
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Offered the popular $39.95 car and driver CoastSaver promotion on weekends in June 2011
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CoastSaver Promotion
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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
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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
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Horseshoe Bay Overhead Walkway
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Key Accomplishments: Terminals •
Opened a new foot passenger waiting room at Nanaimo Harbour
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Undertook a $19 million project at Swartz Bay for the upgrade of Berths 4 and 5
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Invested $16.9 million into the marine structures at Gravelly Bay on Denman Island and Shingle Spit on Hornby Island
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A view of Denman Island Worksite
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New Terminal at Klemtu •
Commenced operations at new terminal in Klemtu in August 2011
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Federal and Provincial Governments built the facility to accommodate the Northern Expedition
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Improves safety of operations
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Allows BC Ferries to utilize Northern Expedition year round
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Klemtu Terminal
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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
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The Queen of Burnaby underwent $5 million asset improvement as well as a $3 million refit
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Continued with the $15 million major life extension project on the 33-year old Queen of Chilliwack
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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
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Key Accomplishments: Financial Integrity •
Credit ratings at June 30, 2012: - A (DBRS) with a stable trend - A+ (Standard & Poor’s) with a negative outlook
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Key Accomplishment: Stakeholders
• Consulted regularly with our Ferry Advisory Committees. Established a 13 th 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
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Charitable Giving
Jeneece Place is a home away from home on Vancouver Island that supports families with medical needs
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Key Accomplishments: Expanding the Business Started March 2009 • 1 customer and 2 trucks August 2012 • 20+ drivers • • 30+ tractors trucks Several new customers
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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
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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
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BC Ferries Vacations: Fiscal 2012 •
Grew gross revenues in second year by over $1 million to $2,400,000
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Positive net earnings in fiscal 2012 of $80,000
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Over 8,800 visits to Vacation Centre
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Over 500,000 BCV Web Visits
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Comox Airport Advertisement
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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
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Automated Customer Experience “ACE”
• • • • • • $40 million replacement/upgrade program Update and improve end-to-end customer experience Replace aging Point-of-Sale and Reservations systems Improve our ability to understand customer travel patterns and requirements that will help us define improved products and services Consolidate all card payment processing into a single system to improve security and compliance Provide automated tools at terminals to support enhanced ticketing capabilities and our ever evolving safety and security requirements (turnstiles leading to fare paid and embarkation zones, automated vehicle measuring systems, baggage tagging systems, embarkation handheld audit tools and coin change dispensers)
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Cable Ferry
• BC Ferries issued a Request for Proposals (RFP) to qualified ASP respondents on May 17, 2012. Proposals will pertain to designing, building and operating the cable ferry system • BC Ferries is currently conducting a detailed engineering assessment, including cable design and hull modeling • Regardless of the operator, BC Ferries is responsible for providing the contracted service • A final decision about the cable ferry is expected to be made in the fall of 2012
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Liquefied Natural Gas
• • • • • • BC Ferries has been studying the feasibility of using liquefied natural gas (LNG) LNG is currently 60 per cent cheaper than marine diesel and reduces emissions Green technology could be introduced for newbuilds as well as major retrofits of some existing vessels Looking to convert the Queen of Capilano to LNG in 2014/15 (six-month refit window required) Consider LNG for newbuilds --- approximately four years out with the replacement of the Queen of Burnaby and Queen of Nanaimo Reviewing the feasibility for LNG conversions on seven or eight of its existing vessels
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Key Cost Drivers
Major Cost Drivers Affecting Fares ($ millions) Labour Fiscal 2004 Actual 202 Fuel 50 33 Materials, Supplies, Contracted Services and Other Insurance, Property Tax, Utilities and Credit Card Fees Maintenance Expenses Administration Expenses Net Financing and Amortization 10 84 32 68 Fiscal 2012 257 121 34 23 86 31 193
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Coastal Ferry Services Contract – PT3 •
On June 13, 2012, the Province and BC Ferries finalized amendments to the CFSC for PT3
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Targeted savings from service levels: -$4 million on majors (confirmed) -$26 million on all routes (to be determined)
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Inclusion of Route 3 in Major Route Group
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$15 million efficiency target for BC Ferries
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Additional Payments from Province •
$79.5 million to reduce pressure for future fare and price cap increases over PT3
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First payment of $25 million was received April 20, 2012 as contribution to equity
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Further $54.5 million is expected to be received in annual payments in fiscal 2013 through fiscal 2016
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Province’s Public Engagement Process •
Adjustments to service levels, discussions with communities about trade-offs among service adjustments, fare increases and potential community contributions
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Public input to develop strategies to support a vision for connecting coastal communities
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BC Ferries to provide technical assistance for this process
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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
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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
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Capacity Utilization
Capacity Utilization - Fiscal 2012
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1 2 30 3 10 11 40 4 Major Routes Route 3 5 6 7 8 Northern Routes 9 12 17 18 19 20 21 22 23 24 25 26 Minor Routes Corporate Average
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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
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Financial Report
Robert P. Clarke Executive Vice President & Chief Financial Officer
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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%
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Results for the Year Overview
Years ended March 31, ($ millions)
2012 2011
Total Revenue Total Operating Expenses
Earnings from Operations
Financing & Gain/Loss on Disposal
Net (loss) earnings
738.2
682.7
55.5
72.0
(16.5)
739.3
672.2
67.1
63.3
3.8
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Revenues ($ millions)
Tariffs Fee for Service Contract – transportation service fees – social program fees Federal-Provincial Agreement Retail Other income
Total Revenue
2012
457.0
128.4
26.6
27.5
76.5
22.2
738.2
2011
458.1
127.0
24.0
26.9
78.9
24.4
739.3
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Expenses ($ millions)
Operations, maintenance, administration Cost of retail goods sold Amortization Total operating expenses
2012
530.6
29.1
123.0
682.7
2011
528.0
29.7
114.5
672.2
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Earnings ($ millions)
Earnings from operations
Gain on foreign exchange Interest expense (Loss) gain on disposal and impairment of capital assets
Net (loss) earnings
2012
55.5
0.2
(71.9) (0.3)
(16.5)
2011
67.1
0.2
(72.2) 8.7
3.8
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Capital Expenditures
Capital expenditures were $122.2 million in fiscal 2012
($ millions)
Investment in terminals (including marine structures) 55.1
Investment in Ships Systems upgrades) (includes $6.3 million on multi-year $39M customer service program and $3.4 million on hardware 48.5
18.6
122.2
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Discussion
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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
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Closing Remarks
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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 laid out 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.
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