b.c. timber sales · sustainable forest management bcts manages 100% of its apportioned timber...

B.C. TIMBER SALES

QUARTER PERFORMANCE

REPORT

April 1, 2019 to June 30, 2019

Quarterly Performance Summary | | for the period April 1 to June 30, 2019 | Fiscal 2019/20 2

Library and Archives Canada Cataloguing in Publication Data

BC Timber Sales.

Quarter ... performance. — Quarter 1

(April 1/June 30, 2019)- Quarterly.

Running title: BC Timber Sales quarter ... performance.

ISSN 1715-6319 = 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.B7B37 354.5’5 C2004-960204-X


BC TIMBER SALES AREA MAP

TABLE OF CONTENTS

Introduction ........................................................................................... 4

Performance Highlights .......................................................................... 5

Overview Principle 1: Forest sector safety Principle 2: Reconciliation with Indigenous peoples Principle 3: Sustainable resources

GOAL: Providing credible representative price and cost benchmark data…… 6

Objective 1: Selling the full BC Timber Sales’ apportionment ....... 8

Objective 2: Generate direct net revenue and indirect revenue. .. 10

Objective 3: Continuous business improvement .......................... 11

Appendix 1—Outputs ............................................................................. 13

Appendix 2—Financial Performance ....................................................... 14


BC Timber Sales (BCTS) presents its first quarter performance report for 2019/20. Quarterly performance reports are a key part of the BCTS 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.

INTRODUCTION


QUARTERLY PERFORMANCE HIGHLIGHTS

Overall Performance: Summary of Highlights

During quarter one, higher than expected billed rates paid for timber continued to increase revenues; however, BCTS is projecting that rates will decline as the year progresses. At this time, BCTS is expecting that it will achieve its revenue targets for the year.

A shortage in available timber supply and delays in preparing timber inventory for sale are adversely impacting operations. A number of performance targets including volume sold were not achieved during the quarter.

Reconciliation with Indigenous Peoples

BCTS has been focusing on improving our peoples understanding of the United Nations Declaration on the Rights of Indigenous Peoples and the Truth and Reconciliation Commissions Calls to Action. All BCTS staff are required to take training that is focused on improving cultural awareness and understanding of Indigenous people’s history, culture and legal framework. BCTS is currently working with the broader Ministry on development of the next phase of Learning for Reconciliation.

In addition to staff training, BCTS has incorporated new employment opportunities with the business areas that will focus on Indigenous engagement and relationship building.

For the 2019 summer work term, BCTS hired 11 Indigenous students enrolled in the BC First Nations Forestry Council (FNFC) Study and Work Forestry Scholarship Program. These students are being mentored by experienced BCTS staff in eight locations across the Province.

Forest Sector Safety

BCTS is currently planning for its annual safety audit to assess BCTS’s compliance with the SAFE Company certification standards. The audit will take place in quarter two. BCTS continued to collaborate with the Ministry in support of its safety certification and with industry, to promote the achievement of safe and healthy workplaces. BCTS is continuing to integrate the BCTS safety program with the Ministry of Forests, Lands and Natural Resource Operations and Rural Development’s Safety Management System to reduce duplication and ensure our safety program is effective and efficient. BCTS hosted a workshop with our contracting community to identify opportunities to improve emergency response planning in our contracted worksites. Areas for improvement include planning for the transportation of injured workers and reporting of safety incidents. BCTS is continuing to work with our contractors to improve safety in the Forest Sector.

Sustainable Forest Management

BCTS manages 100% of its apportioned timber volume under Sustainable Forestry Initiative (SFI) forest certification standard as of the end of June 2019. This marks the end of a transition period whereby BCTS Peace Liard (TPL) Business Area changed a portion of its area from CSA Certification to SFI. This follows an earlier decision by Canfor (TPL major licensee and certification partner) to shift to SFI.


4% 4% 3%

20% 21% 21%

0%

5%

10%

15%

20%

25%

Q1 YR Q1 YR Q1 YR

Perc

ent

% of Projected Harvest Volume April 1 - June 30th, 2019

Target Actual / Projected Previous Year

3% 4%

20% 20%

0%

5%

10%

15%

20%

25%

Q1 YR Q1 YR

Percent of Projected Harvest

Coast Interior

The volume of timber auctioned by BCTS must be at a level sufficient to support the Market-based Pricing System.

At the end of the quarter, BCTS had advertised 4% of the projected annual provincial harvest volume. BCTS is projecting to auction 21% of the projected provincial harvest volume by year end. This volume is sufficient support the Market Pricing System.

BCTS advertised 3% of the projected annual harvest volume on the Coast, and 4% in the Interior.

BCTS is projecting to auction 17% of the projected harvest volume 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.

BCTS auction volume as a percent of projected provincial harvest volume – Coast and Interior

GOAL: PROVIDING CREDIBLE DATA FOR MPS

BCTS auction volume as a percent of projected provincial harvest volume


80% 80%

97% 85%

0%

20%

40%

60%

80%

100%

120%

Coast Interior

Percent of BCTS Auction Volume Harvested July 1, 2018 - June 30, 2019

Target Actual

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

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, 2019, 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.

During the last fiscal year, BCTS implemented a data quality management system that is consistent with the International Standards Organization (ISO) 9001:2015 standard. New indicators were also established under the new system and quarterly assurance and performance reviews are done on a quarterly basis.

For each set of monitored data, the current quality level will be assessed and compared to an expected standard of 95% conformance.

The overall average performance rating for the quarter was 81% and BCTS is working to address those areas of the business where the quality performance indicator is below the required rating. A new group has been established to promote awareness within BCTS of the importance of data quality and how the information is used to support decision–making. BCTS is also in the process of establishing subject matter expert teams that will be looking at ways to improve the workflow in some areas of the business.

GOAL: PROVIDING CREDIBLE DATA FOR MPS


Quarter 1 Timber Volume Sold by Business Area

Volume Sold Coast Target Mm3 Achieved Mm

3 Variance Mm

3 Variance %

CHINOOK 0.07 0.23 0.16 229%

SEAWARD 0.11 0.05 -0.07 -64%

STRAIT OF GEORGIA 0.15 0.03 -0.12 -80%

Coast Total 0.33 0.31 -0.02 -6%

Volume Sold North Target Mm3 Achieved Mm

3 Variance Mm

3 Variance %

BABINE 0.24 0.24 0.00 0%

PEACE LIARD 0.30 0.29 -0.01 -3%

PRINCE GEORGE 0.30 0.23 -0.07 -23%

SKEENA 0.10 0.07 -0.03 -30%

STUART NECHAKO 0.20 0.51 0.31 155%

TOTAL NORTH 1.14 1.34 0.20 18%

Volume Sold South Target Mm3 Achieved Mm

3 Variance Mm

3 Variance %

CARIBOO CHILCOTIN 0.10 0.05 -0.05 -50%

KAMLOOPS 0.29 0.08 -0.21 -72%

KOOTENAY 0.28 0.24 -0.03 -11%

OKANAGAN 0.14 0.16 0.02 14%

South Total 0.81 0.53 -0.28 -35%

2.3 2.2 1.8

11.8 11.9 11.4

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Q1 YR Q1 YR Q1 YR

Total Volume Sold (Mm3) April 1 - June 30, 2019

BP Target Actual / Projected Prior Year

OBJECTIVE 1: SELLING THE APPORTIONMENT

Timber Volume Sold (Mm3) Timber volume sold is a key measure that BCTS is selling its apportionment over the business cycle.

In the first quarter BCTS sold 96% of target. Changing market conditions and delays in preparing inventory for sale has impacted overall performance.

Despite these challenges BCTS is projecting that it will achieve its volume sold target by year-end.


0.6 1.0 0.9

13.6 13.1 10.6

0.0

5.0

10.0

15.0

Q1 YR Q1 YR Q1 YR

Mill

ions m

3

Target Actual/Projection Previous Year

Timber Volume Annual Developed April 1 to June 30, 2019

90%

80%

110%

0%

20%

40%

60%

80%

100%

120%

Target-Min Q1 Target - Max

Perc

ent

% of Volume Advertised in Planned Quarter April 1 to June 30, 2019

1.2

0.16

1.1

0.00.20.40.60.81.01.21.4

BCTS

Mill

ions m

3

Volume Offered 10% of Rationalized Apportionment as Cat 2 - April 1 to June 30, 2019

Target Actual Projection

BCTS develops timber in order to have sufficient inventory for future auctions.

During the first quarter BCTS declared 1.0Mm3 of ready to sell timber.

At this time, BCTS is projecting that it will fall short of its annual target by year end because of land management delays in preparing inventory for sale.

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, some business areas did not achieve target. The overall rating was 80% which was outside the performance indicator for auction volume reliability.

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 0.16Mm3 to Category 2 registrants. BCTS is currently projecting to advertise 1.1Mm3 by year end.

OBJECTIVE 1: SELLING THE APPORTIONMENT

The volume of timber supplied to the market is reliable

Develop sufficient timber to maximise timber volume offered and sold

Offer 10% of Rationalized Apportionment as Category 2 Timber Sales


$77 $78 $70

$366 $366 $434

$0

$100

$200

$300

$400

Q1 YR Q1 YR Q1 YR

Mill

ions

Target Actual/ Projection Previous Year

Gross Revenue April 1 to June 30, 2019

$38 $38 $36

$214 $214 $213

$0

$50

$100

$150

$200

$250

Q1 YR Q1 YR Q1 YR

Mill

ions


Captialized Expenditures April 1 to June 30, 2019

$39 $40 $34

$152 $152

$221

$0

$50

$100

$150

$200

$250

Q1 YR Q1 YR Q1 YR

Mill

ions


Net Revenue April 1 to June 30, 2019

Less: Capitalized Expenditures

Capitalized expenditures for the first three months were on target for the quarter.

BCTS is projecting that its annual expenditures for the year will be on target.

Wildfire activity is less than the previous two years. At this time, there are no significant losses due to fires.

OBJECTIVE 2: REVENUE

BCTS achieved its Gross Revenue target for the quarter.

Gross Revenue was $8M (11%) more than the prior year because of continued increases in billed rates paid for harvested timber.

BCTS is expecting that rates will begin to decline as the year progresses; however, BCTS is expecting that it will achieve its annual gross revenue target.

Gross Revenue

Net Revenue for the three month period ending June 30th, 2019 was $40M. It was $6M more than the prior period mainly because of the higher billed rates for harvested timber. BCTS is projecting that it will achieve its Net Revenue target for the year.

Equals: Net Revenue


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 operations, practices and processes

BCTS is continually looking for new ways to meet its business plan targets, reduce waste, increase efficiency, and improve safety outcomes. BCTS applies the Lean philosophy in its pursuit of finding ways to improve its business processes. During the quarter, three new projects were identified and initiated. The projects involved hiring practices, accounting procedures, and emergency response planning. BCTS’s Lean projects require staff participation and collaboration in order to be successful and selection of members for the teams are based on skill set, knowledge, geographical representation, and other attributes. BCTS offers training throughout the province to all staff members on the Lean philosophy, and advanced training to the lead team coordinators. As part of the commitment to continuous improvement of the BCTS Contract Quality Management System, the Audit Program and Plan were finalized during the quarter. Five BCTS business areas will have their Contract Accountability Performance Management Framework (CAPMF) audited during 2019/20. Each of BCTS’s twelve business areas and Headquarters are required to have governance over their contract practices and processes through a business area CAPMF. Each business area’s fully functioning CAPMF ensures that BCTS conforms to the ISO9001 Standard for Quality Management Systems.

Pursue excellence in people

Every two years the BC Public Service Work Environment Survey (WES) is completed. Last year, the BCTS People Practices Working Group (PPWG) completed an analysis of the results for the most recently completed WES. The PPWG has several ongoing projects as a result of this analysis. Ongoing projects include improving onboarding for new employees, more effective delivery of our mandatory training, improving the summer student program and improving the efficiency of our hiring practices.


OBJECTIVE 3: CONTINUOUS IMPROVEMENT

Pursue Effective Relationships

Effective relationships are vital to the success of BCTS. These relationships can be with the Ministry and across government as well as with Indigenous peoples, communities, customers and suppliers. Building and maintaining effective relationships supports the Ministry objective that “natural resource decisions and dispositions support community needs and provincial priorities” and the Ministry’s key strategy to “engage with communities, industry and First Nations to manage the impacts to upcoming fibre supply as a result of the mountain pine beetle epidemic.”

BCTS is actively implementing a Rural Communities Communications and Engagement Strategy and an enhanced communications program across all 12 of its business areas. Since the fall of 2017, our participation in forestry sector industry, educational and community events and face-to-face meetings with stakeholders and Indigenous peoples has steadily increased.

During the quarter, BCTS engaged and collaborated with a number of key stakeholder groups throughout the province. These groups include government, industry customers and suppliers, First Nations and rural communities. BCTS continues to seek new opportunities for meaningful engagement and to build and maintain mutually beneficial relationships.

Earlier this year, BCTS integrated its twelve business areas with the 8 provincial forest regions in order to optimize its land management resources and capabilities. During quarter one, BCTS began implementing changes to support the new structure.


Target Total Coast Northern

Interior

Southern

Interior

Volume Advertised /Offered (Mm3) 2.26 2.18 0.36 1.35 0.47

Volume Advertised- CAT2 (Mm3) 0.04 0.16 0.03 0.11 0.02

Less: No Bid Sales/No Sale 0.02 0.04 0.03 0.01 0.00

Less: Timing Variance (note 1) 0.00 0.15 0.02 0.13 0.00

Plus: YE Timing Variance 0.00 0.07 0.00 0.03 0.04

Volume Sold (Mm3) 2.28 2.22 0.34 1.35 0.53

Volume Scaled (Harvested (Mm3)) 1.30 1.20 0.60 0.40 0.20

Lump Sum Timber Sale Licences Number

(TSL)

Volume

(Mm3)

Advertised 25 0.850

Less: No Bid/No Sale (2) (0.012)

Total Sold 23 0.838

APPENDIX 1 – OUTPUTS

Note 1: The timing variance is the volume of timber advertised but not yet sold at cut off.

Key Year to Date Results by Coast and Interior Areas April 1 to June 30, 2019


April 1 – June 30, 2019

2018/19 First Quarter

(Millions)

2019/20 First Quarter (Millions)

Revenue from External Sources $ 69.7 $ 78.0

GROSS REVENUE $69.7 $78.0

Capitalized Expenses:

Cost of Timber Inventory Harvested

Administration / Salaries ($3.8) ($3.2)

Planning & Sales

($6.6) ($6.0)

Access – Amortization ($7.8) ($7.8)

Sub-Total Cost of Timber Harvested & Amortization ($18.2) ($17.0)

Other Costs

Silviculture Liability Expenses ($10.0) ($11.0)

Road & Bridge Maintenance Non- BCTS Roads

($1.3)

($0.0)

($1.8)

($0.1)

Harvest Conformance

($0.0) ($0.1)

Operational & Administrative Overhead

($6.6)

($8.7)

Land Base Investment / FFT Recoveries $0.3

$0.8

Sub-Total Other Costs NET REVENUE/ (LOSS)

($17.6)

$ 33.9

($20.9)

$ 40.1

Note: Results are Unaudited

APPENDIX 2 – FINANCIAL PERFORMANCE


Selected Balance Sheet Items

2018/19 First

Quarter (Millions)

2019/20 First

Quarter (Millions)

Silviculture Liability $ 130.8 $ 145.7

Inventory Value of Developed Timber

Timber Inventory – Opening Balance $178.7 $202.9

Timber Developed

$ 12.0 $ 10.7

Timber Available for Sale $190.7

$213.6

Cost of Timber Inventory Harvested ($ 10.4) ($ 9.2)

Timber Inventory – Closing Balance $180.3 $204.4

Roads

Book Value

$822.1 $851.2

Accumulated Amortization

($560.2) ($583.2)

Net Book Value

$261.9 $268.0

Deactivation Liability ($ 9.8)

($ 11.2)

Seed Inventory $ 18.6

$ 19.8

Note: Results are Unaudited

APPENDIX 2 – FINANCIAL PERFORMANCE

b.c. timber sales · sustainable forest management bcts manages 100% of its apportioned timber...

Documents