Ministry of Finance and Corporate Relations
Honourable Paul Ramsey, Minister
This electronic version is for informational purposes only.
The printed version remains the official version.
Ministry of Finance and Corporate Relations Honourable Paul Ramsey, Minister |
This electronic version is for informational purposes only. The printed version remains the official version. |
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Report B: FISCAL REVIEW AND OUTLOOK
TABLE B10
MAIN CROWN CORPORATION ASSUMPTIONS AND FORECAST RISKS
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| Crown Corporation | Key Assumptions | Risks and Sensitivities |
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| British Columbia Buildings Corporation Net income: $62 million |
Gains on disposal of properties at $26.2 million. $59 million in capital spending. This includes capital spending of approved client projects, and capital spending for recoverable commercial projects. Dividend to CRF of $62 million. |
Value and timing of property sales depend on market. Capital spending dependent on timing of projects and approval limits for ministry clients. 1% change in interest rates affects interest expense by $1 to $2 million. |
| British Columbia Ferry Corporation Net loss: $10 million |
Toll projections based on current traffic volume trends and the
corporation's business initiatives. $72.3 million received from provincial dedicated motor fuel tax. Major capital expenditure limit at $117 million. Known expenditure pressures included. Lower amortization costs as a result of $240-million writedown of fast-ferries at the end of 1999/00. Assumes effect of $1.08 billion provincial debt forgiveness at the end of 1999/00. |
1% change in volumes affects revenues by about $6 million. 1% change in fuel prices affects fuel costs by $0.5 million. 1999/00 fast ferry write-down assumes book value of $40 million per vessel. Further adjustments may be required depending on sale proceeds if fast ferries sold. Changes in interest rates do not have material effect on expenses due to low level of debt. |
| BC Transportation Financing Authority Net loss: $1 million |
$203 million of dedicated provincial taxes received from provincial
government. Major capital spending limit at $486 million. Known expenditure pressures included. Average borrowing rate assumed at 6.5%. Includes an estimate of the net cost of roads to be transferred to newly incorporated municipalities. |
1% change in provincial fuel consumption volumes affects revenue by
$2 million. Weather patterns can delay projects. Construction costs sensitive to inflation. 1% change in interest rates equals a $20-million change in interest costs. A higher than anticipated number of incorporations will impact the number of highways transferred and will increase costs. |
| Forest Renewal BC Net loss: $52 million |
See forest revenue assumptions in Table B7. Expenditures occur as per published business plan. Known expenditure pressures included. |
±5% in harvest volumes = ±$17 million. ±US $50/tonne in pulp prices = ±$24 million. ±US $25/1,000 bd ft in SPF 2X4 prices = ±$27 million. ±US $50/1,000 bd ft in hemlock prices = ±$3 million. |
| British Columbia Hydro and Power Authority Net income: $429 million |
Forecast based on February 1, 2000 snowpack levels and projected
weather patterns. Export revenue and short-term energy purchase costs based on estimated forward market prices. Assumes continuation of rate freeze. Assumes average short-term interest rates of Cdn. 6.4% and US 6.8%, and an average 69.9 cents US exchange rate. Capital spending at $450 million. Small withdrawal from rate stabilization account required at year-end to achieve target rate of return. |
1% change in water inflows to reservoirs can impact net income by up
to $20 million. 10% change in temperatures, as measured in degree days, equals $5 to $6 million change in residential revenues. Market prices for energy are volatile. 1% change in market price equals $11 million change in electricity trade revenue. 1% change in borrowing rates equals $30 million change in finance costs. 1-cent change in Cdn. $/US $ exchange rate affects financing costs by $5 million. |
| British Columbia Liquor Distribution Branch Net income: $620 million |
Net sales increase of 1.9% based on current and expected consumption
trends. Assumes known cost pressures. Capital spending of $26 million. |
Price competition and economic conditions affect sales. Manufacturer
price changes can be unpredictable. Weather patterns and timing of statutory holidays affects consumption. 1% change in sales volume affects net income by up to $6 million. Higher-than-assumed credit card use could increase collection costs. |
| British Columbia Lottery Corporation Net income: $534 million |
Sales projections based on current trends. Prize payout rates based on historical trends. Assumes opening of one destination casino in July 2000, and additional revenue from new operations started in mid-1999. Forecast assumes no changes to gaming policy (e.g. expanded gaming) beyond what has already been approved. |
1% change in sales could affect net income by $7 million. Changes in disposable income, tourism, competitive markets in other jurisdictions, and volumes of jackpot rollovers also affect sales. These factors and resultant effects are difficult to forecast. |
| British Columbia Railway Company Net income: $40 million |
Freight traffic volumes based on current and projected trends.
Includes effect of announced plans for Tumbler Ridge clients, and
full-year effect of operations commenced in 1999 (e.g. Finlay
Navigation Partnership). No significant traffic/labour disruptions. Incorporates effect of $617-million writedown of rail assets in 1999. Fuel costs to stabilize at 1999 levels. Known pressures included. Capital spending at $125 million. Dividend to CRF at $10 million. No changes to forest activity from the Canada/U.S. Softwood Lumber Agreement, and there is no negative impact from further rationalization in the forest industry. |
If fuel costs remain at current levels, costs could increase $5 to
$10 million. Traffic revenue from lumber, pulp and other commodities could be affected by changes in commodity prices (e.g. lower lumber/pulp prices leading to reduced production in lumber/pulp mills). Depending on assumptions, this could affect net income by up to $10 million. Total traffic disruption could reduce net income by $4 million per week. 1% change in interest rates affects interest costs by $4 to $6 million. |
| Insurance Corporation of British Columbia Net income: $3 million |
Premium revenue growth of 1.2%, largely reflecting increased vehicle
volumes. No change in overall premium rates assumed in 2000. Claims incurred costs will decline 3% and include the effect of road safety and loss mitigation programs. 1999 results included a $238-million positive adjustment due to lower estimates of the costs of settling previous year claims. A smaller adjustment is expected in 2000. |
Claims cost trends are closely tied to economic conditions.
Fluctuations in claims costs may be as much as 10% from estimate,
resulting in up to a $200-million change from forecast. 1% change in CPI affects claims costs by about $20 million. 1% change in GDP could affect claims costs by about 2% or $40 million. Adverse judgments on outstanding litigations, such as those relating to cost control, may affect the 2000 forecast. |
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