BCTS. BC Timber Sales. Quarterly Performance Report April 1 to June 30, Economic Prosperity. Sustainable Resources. Business Excellence.

Transcription

1 BCTS BC Timber Sales Quarterly Performance Report April 1 to June 30, 2017 Economic Prosperity Sustainable Resources Business Excellence Safety

2 Library and Archives Canada Cataloguing in Publication Data BC Timber Sales. Quarter... performance. Quarter 1 (April 1/June 30, 2017)- Quarterly. Running title: BC Timber Sales quarter... performance. ISSN = Quarter... performance (BC Timber Sales) 1. BC Timber Sales - Periodicals. 2. British Columbia - Marketing - Periodicals. 3. Logging - Government policy - British Columbia - Periodicals. I. Title. II. Title: BC Timber Sales quarter performance. HD9764.B7B C X Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 2

3 TABLE OF CONTENTS Introduction... 4 Performance Highlights... 5 Overview Sustainability Safety Relationships GOAL: Providing Credible Data for the Market Pricing System..6 Objective 1: Selling the Apportionment... 8 Objective 2: Revenue Objective 3: Continuous Improvement Appendix 1 Outputs Appendix 2 Financial Performance BC TIMBER SALES AREA MAP Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 3

4 INTRODUCTION BC Timber Sales (BCTS) presents its first quarter performance report for 2017/18. Quarterly performance reports are a key part of the BC Timber Sales Performance Management and Accountability Framework. Our Mission Committed to pursuing excellence in all aspects of our business, maintaining effective relations and focusing on results, BC Timber Sales generates economic prosperity for all British Columbians through the safe, sustainable, and reliable development and auction of Crown timber and by playing a pivotal role in the ministry s reforestation strategies. Business Plan Business Outcomes BC Timber Sales has one goal and three objectives: Goal: Provide credible representative price and cost benchmark data for the Market Pricing System through auctions of timber harvested from public land in British Columbia. Objectives: 1. Sell the full BC Timber Sales apportionment over the business cycle, consistent with safe practices & sustainable forest management. 2. Generate direct net revenue and indirect revenue for the Province over the business cycle. 3. Continuous Business Improvement Principle 1 - Sustainable Forest Management Principle 2 - Forest Sector Safety BC Timber Sales goal, objectives and principles support the outcomes of Economic Prosperity, Business Excellence, Sustainable Forest Management and Forest Sector Safety. Economic Prosperity Market priced timber. Rural economies, jobs & families. Maximum value for asset & net revenue to support government priorities. Business Excellence Continuous improvement & long term success of BCTS. Sustainable Forest Management BCTS is recognized as demonstrating sound forest management. Forest Sector Safety Increased safety awareness & a culture of safety in all its practices & operations. Key Indicators The success of BCTS in achieving its business goal is measured through three key indicators: 1. BC Timber Sales timber volume advertised as a percent of projected provincial harvest volume 2. Volume of timber sold 3. Net revenue earned Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 4

5 QUARTERLY PERFORMANCE HIGHLIGHTS Overall Performance: Summary of Highlights Weather and operational issues adversely impacted overall first quarter performance. BC Timber Sales (BCTS) under-achieved a number of its first quarter targets including Timber Volume Sold. Demand for timber remains strong and BCTS is working to overcome its issues. At this time, BCTS is projecting to achieve all or most of its Business Plan targets for the year. Sustainable Forest Management BCTS is maintaining 100% of its apportioned timber volume certified to one of the three major forest certification standards. BCTS remains an active member of the CSA Technical Committee on SFM, the Western Canada SFI Implementation Committee and the PEFC Board of Directors. Forest Sector Safety An external recertification audit is underway to assess BCTS compliance with safety standards and to maintain SAFE Company certification. The audit results are expected in the second quarter, and will be used to continue to improve our safety program and forest sector safety. In in first quarter BCTS also continued to collaborate with the Ministry in support of its safety certification and with industry, to promote the achievement of safe and healthy workplaces. Relationships BCTS continued with the implementation of its relationship strategies and with the Ministry on engagement with First Nations and furthering the Ministry s priority of Supporting First Nations Reconciliation. BCTS continues to be a key participant in the First Nations Forestry Training Program - a joint program with the Ministry s First Nations Relations Branch and the BC First Nations Forestry Council. Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 5

6 GOAL: PROVIDING CREDIBLE DATA FOR MPS BCTS auction volume as a percent of projected provincial harvest Percent 25% 20% 15% 10% 5% 0% % of Projected Harvest Volume 22% 23% 20% 5% 4% 5% Q1 YR Q1 YR Q1 YR Target Actual/Projected Previous Year The volume of timber auctioned by BCTS must be at a level sufficient to support the Market Pricing System. In the first quarter, BCTS had advertised 4% of the projected annual provincial harvest volume. BCTS is projecting to auction 22% of the projected provincial harvest volume by year end. This is sufficient volume to support the Market Pricing System. BCTS auction volume as a percent of projected provincial harvest volume Coast and Interior Percent 25% 20% 15% 10% 5% 0% Percent of Projected Harvest - Coast, Interior 23% 22% 3% 4% Q1 YR Q1 YR Coast Interior First quarter auction performance was less than expected. BCTS advertised 3% of the projected annual harvest volume on the Coast, and 4% in the Interior. The slow start was due to weather and operational issues which delayed sales. BCTS is projecting to auction 23% of the projected harvest on the Coast and 22% in the Interior by year end. This level of auction volume will be sufficient to support the Market Pricing System. Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 6

7 GOAL: PROVIDING CREDIBLE DATA FOR MPS The percent of BCTS timber volume sold is within 5 percentage points of the percent of harvest volume by major licensees for each major species and grade 80% of the time 120% 100% 80% 60% 40% 20% 0% Percent of BCTS Auction Volume Harvested July 1, 2016 to June 30, % 80% 80% Coast Target Actual Interior 81% BCTS must develop and auction a representative volume of timber sales to provide statistically credible data to the Market Pricing System. This data is used to establish market-based stumpage rates. For the twelve month period ending June 30, 2017, the BCTS auction volume harvested was within five (5) percentage points of the Major Licensee harvest volume by species and grade more than 80% of the time. This indicates good representation of harvest volume provided by BCTS. For BCTS to ensure it provides credible data to establish market-based stumpage rate it also has to ensure its data is complete, accurate, and reliable. BCTS is implementing a Data Quality Management System (DQMS) to ensure that its data is complete, accurate, and reliable. The DQMS is applied through quarterly monitoring and annual reporting of the published Performance Metric data sets and quality assurance reviews of all Cost Survey and Silviculture Liability data. For each set of monitored data, the current quality level will be assessed and compared to the expected performance standard of 95% conformance. Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 7

8 OBJECTIVE 1: SELLING THE APPORTIONMENT Timber Volume Sold Millions m Q1 YR Q1 YR Q1 YR Targets Volume Sold April 1 to June 30, 2017 Actual/Projected Previous Year Timber volume sold is a key measure that BCTS is selling its apportionment over the business cycle. In the first quarter BCTS sold 35% less timber than target and 15% less than the prior year s performance. Operational delays outside BCTS control contributed to it not achieving. Despite the slow start BCTS is projecting to catch up and achieve its volume sold target by year end. Quarter 1 Timber Volume Sold by Business Area Volume Sold Coast Target Mm3 Achieved Mm3 Variance Mm3 Variance % CHINOOK % SEAWARD % STRAIT OF GEORGIA % Coast Total % Volume Sold North Target Mm3 Achieved Mm3 Variance Mm3 Variance % BABINE % PEACE LIARD % PRINCE GEORGE % SKEENA % STUART NECHAKO % TOTAL NORTH % Volume Sold South Target Mm3 Achieved Mm3 Variance Mm3 Variance % CARIBOO CHILCOTIN % KAMLOOPS % KOOTENAY % OKANAGAN % South Total % Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 8

9 OBJECTIVE 1: SELLING THE APPORTIONMENT Develop sufficient timber to maximise timber volume offered and sold Millions m Timber Volume Developed April 1 to June 30, Q1 YR Q1 YR Q1 YR Target Actual/Projection Previous Year BCTS develops timber in order to have sufficient inventory for future auctions to achieve its targets. During the first quarter BCTS developed 0.7Mm3 of timber, under achieving its target by 22%. This under achievement was primarily due to operational delays, outside its control. At this time, BCTS is still projecting to achieve its yearend target. The volume of timber supplied to the market is reliable Percent 120% 100% 80% 60% 40% 20% 0% % of Volume Advertised in the Quarter Planned April 1 to June 30, % 82% 110% Target-Min Q1 Target - Max Timber volume advertised in the quarter planned is an indicator of the reliability of timber supply and the reliability of BCTS Sales Schedules. In the first quarter, four of 12 business areas achieved their sales volumes as planned. Overall, BCTS did not achieve target. Offer 10% of Rationalized Apportionment as Category 2 Timber Sales Millions m Volume Offered as Category 2 Timber Sales April 1 to June 30, BCTS Target Actuals Projected 1.2 A key BCTS strategy is to provide open access to Crown timber for non-tenured or insufficiently tenured timber processing facilities. This promotes local employment, and supports the value-added sector. In the first quarter BCTS offered 150,000m3 to Category 2 registrants. BCTS is currently predicting to achieve its yearend target. Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 9

10 OBJECTIVE 2: REVENUE Gross Revenue Millions $400 $350 $300 $250 $200 $150 $100 $50 $0 $312 $312 $44 $58 $70 $336 Q1 YR Q1 YR Q1 YR Target Gross Revenue April 1 to June 30, 2017 Actual/ Projection Previous Year BCTS over achieved its Gross Revenue target for the quarter by $14M (32%)due to higher than expected billed rates. Gross Revenue was $12M (18%) lower than the prior year due to lower harvest volume. BCTS is projecting to continue to realize higher than expected billed rates and achieve its Gross Revenue target for the year. Less: Capitalized Expenditures $200 Captialized Expenditures April 1 to June 30, 2017 $183 $183 $178 Capitalized expenditures for the first three months were on target. Millions $150 $100 $50 $35 $35 $38 Expenses for the current quarter were $3 million less than the previous year due to the decrease in harvest volume. $0 Q1 YR Q1 YR Q1 YR Target Actual/Projection Previous Year BCTS is projecting that total expenditures for the year will be on target. Equals: Net Revenue Millions $200 $150 $100 $50 $0 Net Revenue April 1 to June 30, 2017 $129 $129 $10 $23 $33 $158 Q1 YR Q1 YR Q1 YR Target Actual/Projection Previous Year Net Revenue for the quarter was $13M (130%) more than target primarily because of higher than expected billed rates. Net Revenue was $10M less than the prior year mainly due to the decreased harvest volume. BCTS is projecting that it will achieve its Net Revenue target of $129M for the year. Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 10

11 OBJECTIVE 3: CONTINUOUS IMPROVEMENT To effectively realize its mission, goal and objectives, deliver superior performance, and make a distinct and lasting impact, BC Timber Sales needs to be continuously improving. Only those with Excellent Processes and Excellent People will truly excel. To achieve this continuous improvement BC Timber Sales and its people are committed to continuously learn, innovate, and lead through change in the pursuit of excellence. BCTS has embraced Lean as the next step in continuous improvement. Pursue excellence in people BCTS is in the second year of its Forest Technologist Entry Level Program. A second cohort of six participants started in June. This program will help address recruitment and retention issues being experienced in Northern BC. The first graduates of the program will be in June, The BCTS People Practices Working Group has been working on actions that will lead to improvements related to the following areas: hiring practices, recognition, supervisory level management, workplace tools and space, and benefits. The BCTS Developmental Opportunities Program Pilot is in the final stage of its first two experiential learning projects. The Steering Committee will be evaluating the pilot in the coming months, disseminating outcomes of the projects, and providing recommendations for the continuation of the program. Pursue excellence in operations, practices and processes BCTS conducted two Lean workshops in the first quarter. The workshops focused on nursery inspections, and invoice processing within the Seedling Services group. The new processes will save approximately 25 person days of time each year. Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 11

12 OBJECTIVE 3: CONTINUOUS IMPROVEMENT Pursue Effective Relationships BCTS continues to work collaboratively with the First Nations Relations Branch and others on engagement with First Nations and furthering the Ministry s priority of Supporting First Nations Reconciliation. BCTS continues to implement its First Nations Relationship and Business Relations strategies. In addition, BCTS has begun work on a new Rural Communities Communications Strategy. The strategy is expected to be finalized and implementation is expected to start in the second quarter. BCTS continues to be a key participant in the First Nations Forestry Training Program, a joint program with the Ministry s First Nations Relations Branch and the BC First Nations Forestry Council. Five BCTS Business Areas are participating. They have hired and are now mentoring 10 forestry students from the program (for the summer of 2017). This assists BCTS in achieving its objectives and helps build capacity for First Nations in the Forest Sector. It also helps fill a need for qualified forest professionals for years to come. Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 12

13 APPENDIX 1 OUTPUTS Key Year to Date Results by Coast and Interior Areas April 1 to June 30, 2017 Target Total Coast Northern Interior Southern Interior Volume Advertised /Offered (Mm3) Less: No Bid Sales/No Sale (0.04) (0.19) (0.00) (0.09) (0.10) Less: Timing Variance (note 1) (0.0) (0.34) (0.14) (0.10) (0.10) Plus: YE Timing Variance Volume Sold (Mm3) Volume Scaled (Harvested (Mm3)) Lump Sum Timber Sale Licences Number (TSL) Volume (Mm3) Advertised Less: No Bid/No Sale (10) (0.18) Total Sold Note 1: The timing variance is the volume of timber advertised but not yet sold at cut off. Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 13

14 APPENDIX 2 REPORT ON FINANCIAL PERFORMANCE April 1 June 30, /17 First Quarter (Millions) 2017/18 First Quarter (Millions) Revenue from External Sources $ 70.1 $ 57.7 GROSS REVENUE $70.1 $57.7 Capitalized Expenses: Cost of Timber Inventory Harvested Administration / Salaries ($4.8) ($3.7) Planning & Sales ($7.1) ($6.2) Access Amortization ($7.1) ($7.1) Sub-Total Cost of Timber Inventory Harvested ($19.0) ($17.0) Other Costs Silviculture Liability Expenses ($10.2) ($10.0) Road & Bridge Maintenance ($1.5) ($1.0) Harvest Conformance ($0.1) ($0.1) Operational & Administrative Overhead ($6.9) ($7.3) Land Bases Investment/ Forest For Tomorrow (FFT) Land Base Investment / FFT Recoveries ($1.8) $2.0 ($1.9) $2.1 Sub-Total Other Costs ($18.5) ($18.2) NET REVENUE/ (LOSS) $32.6 $22.5 Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 14

15 APPENDIX 2 REPORT ON FINANCIAL PERFORMANCE Selected Balance Sheet Items 2016/17 First Quarter (Millions) 2017/18 First Quarter (Millions) Silviculture Liability ($ 114.5) ($ 116.0) Inventory Value of Developed Timber Timber Inventory Opening Balance $142.0 $165.4 Timber Developed $ 10.9 $ 10.4 Timber Available for Sale $152.9 $175.8 Cost of Timber Inventory Harvested ($ 11.9) ($ 9.9) Timber Inventory Closing Balance $141.0 $165.9 Roads Book Value $768.7 $798.2 Accumulated Amortization ($515.3) ($540.1) Net Book Value $253.4 $258.1 Deactivation Liability ($ 9.2) ($ 11.1) Seed Inventory $ 20.9 $ 18.7 (Unaudited) Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 15

16 Quarterly Performance Summary for the period April 1 to June 30, 2017 Fiscal 2017/18 16