Alterra Power Announces Results for the Quarter Ended June 30, 2012
(under IFRS and all amounts in US dollars unless otherwise stated)
TSX : AXY
VANCOUVER, Aug. 13, 2012 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) ("Alterra") today provided an update on its operations and reported its financial and operating results for the three months ended June 30, 2012 ("the current quarter"). For further information on these results please see Alterra's Unaudited Condensed Consolidated Interim Financial Statements ("consolidated results") and Management's Discussion and Analysis.
Under IFRS, Alterra continues to consolidate 100% of the HS Orka and Soda Lake operations, while Alterra's interests in the Toba Montrose run of river hydro facility and the Dokie 1 wind facility are accounted for as equity investments. In certain statements in this news release, Alterra's results are disclosed as Alterra's "net interest", which means the effective portion of results that Alterra would have reported if each of HS Orka (66.6%), Toba Montrose (40%), Dokie 1 (51%) and Soda Lake (100%) had been reported in accordance with Alterra's actual share of ownership at June 30, 2012 and for the three months then ended.
Highlights for the current quarter include:
- Power production from Alterra's six power plants of 582,117 MWh continued on plan (98% of budget) for the quarter. Alterra's net interest in generation totalled 325,807 MWh.
- Alterra's net interest in revenue was $21.1 million and net interest in EBITDA was $9.5 million.
- Dokie General Partnership (51% owned by Alterra), which owns the Dokie 1 wind farm, fully funded its C$8.9 million loan reserve and declared its first equity distribution of C$1.0 million to the partners. If the loan reserve did not require the initial funding, there would have been C$9.9 million available for distribution.
- Alterra entered into an agreement to acquire a portfolio of early-stage wind development assets in coastal British Columbia with potential generation capacity of over 1,000 MW.
- An unsolicited offer was received from an Icelandic consortium to purchase Alterra's 66.6% interest in HS Orka. Alterra signed a non-binding term sheet to pursue the transaction conditional on reaching a definitive agreement.
- An interconnection agreement was signed with BC Hydro for the Upper Toba run of river hydro project.
- Alterra awarded a contractor a limited notice to proceed with engineering for the Upper Toba project.
- A Resource Development Agreement ("RDA") was signed with the Klahoose First Nation for the Upper Toba project, establishing the framework under which Alterra and the Klahoose First Nation will work together to advance the project.
- An RDA was signed with the Sliammon First Nation to facilitate the development of the transmission infrastructure for the proposed Bute Inlet run of river hydro project.
John Carson, Alterra's CEO, said, "I'm pleased with how our next development projects are advancing. Upper Toba should lead that group, as we move the project toward construction in early 2013. Meanwhile our power plants continue fully on plan, which is a credit to our team and the reliability of our operations."
The comparative quarter ended June 30, 2011 ("the comparative quarter") is not fully comparable to the current quarter as the comparative quarter only includes the results for Toba Montrose and Dokie 1 since May 13, 2011, the date of their acquisition.
The following table shows Alterra's net interest in selected operating and financial results for the current quarter, in addition to key financial information extracted from the consolidated results.
(expressed in thousands of US dollars, except for production)
|EBITDA (a), (b)||3,617||6,947||1,356||1,211||(3,595)||9,537||11,350|
|Cash and Cash Equivalents||46,438|
EBITDA is defined by Alterra as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as before deductions for other gains and losses, amortization of below market contracts, and value assigned to options granted less share of income (loss) of equity accounted investees plus the Company's interest in EBITDA of its equity accounted investees. Alterra discloses EBITDA as it is a measure used by analysts and by management to evaluate Alterra's performance. As EBITDA is a non-IFRS measure, it may not be comparable to EBITDA calculated by others. In addition, as EBITDA is not a substitute for net earnings, readers should consider net earnings in evaluating Alterra's performance.
|Loss for the period to EBITDA reconciliation|
|Three months ended|
|June 30, 2012|
|Loss for the period||$||(9,656)|
|Income tax recovery||(1,630)|
|Share of income of equity investees||(2,115)|
|Share of EBITDA of equity investees||9,011|
|Other gains and losses||10,997|
|Amortization of below market contracts||(439)|
|Amortization, depreciation, depletion and accretion||3,471|
|Stock based compensation||238|
Consolidated revenue for the current quarter was $14.2 million compared to $17.6 million in the comparative quarter, with the decline primarily due to lower revenues associated with two aluminum-linked power purchase agreements ("PPAs") which were subject to a 21.7% drop in aluminum prices against the comparative quarter, as well as lower production in Iceland due to planned maintenance work. Alterra's net interest in revenue was $21.1 million, primarily supported by expected generation at Toba Montrose and Dokie 1, which partially offset the negative effect of the decline in aluminum prices.
Consolidated gross profit was $3.1 million for the current quarter, compared to $4.8 million for the comparative quarter, a decrease of $1.7 million primarily due to lower revenues and partially offset by a lower cost of production in Iceland.
Alterra's net interest in EBITDA for the current quarter totaled $9.5 million.
Alterra recorded a net loss of $9.7 million for the current quarter compared to a net loss of $23.6 million for the comparative quarter. The improvement of $13.9 million is largely attributable to a $5.6 million saving in general and administration and financing costs, as well as a number of non-cash items including:
- A net positive non-cash change in the fair value of bonds and embedded derivatives of $1.7 million, related primarily to changes in the future price of aluminum.
- A non-cash improvement in foreign exchange gain (loss) of $6.6 million, with the current quarter's $1.8 million foreign exchange gain being contrasted to the comparative quarter's loss of $4.8 million.
- A reduction in non-cash write offs of $3.1 million less than the comparative quarter.
At June 30, 2012, Alterra had consolidated cash and cash equivalents of $46.4 million (December 31, 2011: $22.2 million) and our net interest in cash and cash equivalents was $36.9 million. Alterra ended the quarter with consolidated working capital of $33.0 million (net interest $29.9 million), compared to $4.6 million at December 31, 2011. The increase in both cash and working capital occurred in the first quarter of 2012 and was primarily due to the investment of $37.5 million in HS Orka by Alterra's pension fund partners (Jarðvarmi slhf) and the receipt of the US government grant of $2.1 million by Soda Lake.
Iceland Operations (66.6% Interest)
The 100 MW Reykjanes plant generated 171,179 MWh of electricity (100% of budget), and the 72 MW Svartsengi plant generated 115,878 MWh of electricity (112% of budget), and continued to supply thermal energy for district heating.
The newly invested funds from Jarðvarmi are currently being held at HS Orka in preparation for the Reykjanes 3 and 4 expansion projects.
Toba Montrose Operations (40% Interest)
The 146 MW East Toba River and 89 MW Montrose Creek run of river hydro plants generated 213,177 MWh of electricity, or 93% of budget despite being offline until early April for warranty and planned maintenance work.
Dokie 1 Operations (51% Interest)
The 48 turbine 144 MW Dokie 1 wind farm generated 66,381 MWh of electricity for the current quarter or 97% of budget. The operating subsidiary for the wind farm fully funded its C$8.9 million loan reserve and declared its first equity distribution of $1.0 million to the partners.
On May 1, 2012, Dokie 1 commenced billing in accordance with the 10% increase in firm energy allotment under its PPA, and as a result annual revenue is expected to increase by 1.2%.
Soda Lake Operations (100% Interest)
The 15 MW Soda Lake geothermal plant generated a net 15,502 MWh of electricity for the current quarter, or 77% of budget. The lower than expected performance was primarily attributable to higher than average ambient temperatures in Nevada, which reduced the plant's net production.
Expansion and Development Projects
Alterra has agreed to purchase for approximately $6.0 million, subject to a number of closing conditions, 10% of a 50 MW portfolio of five photovoltaic solar facilities being built in Ontario ("ABW Solar") by First Solar, Inc. Alterra will serve as the managing partner for the project. All of the required construction permits and approvals for the project have been received and construction began in May 2012, with completion expected by the end of 2012.
Alterra is currently in final negotiations on a partnership agreement for the Upper Toba Valley run of river hydro project. Alterra is finalizing plant design and planning to commence construction in early 2013. The proposed facility would share much of the infrastructure already in place for Toba Montrose, and is currently configured for up to 124 MW of capacity and annual generation of up to 345,000 MWh, though final size and projected output are currently being optimized. The project has a 40 year PPA in place with BC Hydro. In April 2012, an interconnection agreement was signed with the Toba Montrose General Partnership and BC Hydro for joint use of the transmission line with the Toba Montrose facility and interconnection to BC Hydro's Saltery Bay substation.
Preparations continue for the two expansions at the Reykjanes plant that would increase capacity to 180 MW and annual average generation by approximately 700,000 MWh. The key issues remaining are to conclude the ongoing PPA amendment negotiations and to obtain project financing. Permitting is now in place for all construction-related activities.
Alterra holds a 51% interest in a planned expansion of the Dokie 1 wind farm ("Dokie 2") with projected additions to capacity of up to 156 MW and annual production of up to 357,000 MWh. The project has already received a BC Provincial Environmental Assessment Certificate. Data collection for a resource assessment of the project remains on schedule to be completed within months.
Alterra continues to advance its geothermal exploration projects in Chile, Peru and Italy, and remains in active discussions with prospective industry partners to fund the next phase of exploration and development costs for Chile and Peru.
Alterra also continued data collection and signed an RDA with the Sliammon First Nation for its Bute Inlet project, and continues to advance other early stage run of river and pumped storage hydro projects in British Columbia.
Ross Beaty, Alterra's Chairman, said, "Alterra's focus today is on advancing our Upper Toba, Dokie 2 and Reykjanes 3 and 4 projects towards construction, maintaining full production at our operating assets and reviewing some interesting corporate opportunities. These efforts should reward our shareholders with continuing growth across the board."
|Alterra Power will host a conference call to discuss financial and operating results on Tuesday, August 14, 2012 at 11:30 am ET (8:30 am PT). North American participants dial 1-888-231-8191 and International participants dial 1-647-427-7450, the conference ID is 1657 2147. The call will also be broadcast live on the Internet at http://www.newswire.ca/en/webcast/detail/1014127/1095799. The call will be available for replay for one week after the call by dialing 1-416-849-0833 and entering replay pin number 1657 2147.|
Cautionary Note regarding Forward-Looking Statements and Information
Certain statements included in this news release may contain information that is forward-looking within the meaning of certain securities laws, including information and statements regarding prospective results of operations, financial position, cash flows or growth potential. These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. Alterra cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. Material risk factors include those set out in the management's discussion and analysis section of Alterra's most recent annual report and quarterly report, and in Alterra's Annual Information Form. Given these risks, undue reliance should not be placed on these forward-looking statements, which apply only as of their dates. Other than as specifically required by law, Alterra undertakes no obligation to update any forward-looking statements or information to reflect new information, subsequent or otherwise.
SOURCE Alterra Power Corp.