Alterra Power Announces Results for the Quarter Ended June 30, 2013
(under IFRS and all amounts in US dollars unless otherwise stated)
VANCOUVER, Aug. 12, 2013 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) is pleased to report its financial and operating results for the three and six months ended June 30, 2013. For further information on these results please see Alterra's Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis.
Alterra consolidates 100% of the HS Orka and Soda Lake operations and accounts for its interests in the Toba Montrose and Dokie 1 facilities as equity investments. Alterra's results are sometimes disclosed as Alterra's "net interest", which means the 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. Management believes that net interest reporting provides the clearest view of the Company's performance.
Highlights for the current quarter and subsequent period include:
- Increased revenue and EBITDA (net interest): Revenue (including business interruption proceeds) was $22.1 million and EBITDA was $10.8 million in the quarter, up 5% and 12% respectively from the comparative quarter, primarily due to increased earnings at HS Orka and Dokie 1.
- Reliable power generation: Alterra's net interest on power generated during the quarter was 315,456 MWh of clean power during the quarter, achieving 92% of its budgeted generation despite the Montrose hydro facility being offline the entire quarter for repairs. Generation would have been 103% of budget had the Montrose plant not been offline. Total generation from plants operated by Alterra was 544,620 MWh.
- Mid-year distributions from projects: Mid-year dividends were declared at both Toba Montrose and Dokie 1 totalling $4.4 million in the quarter, with Alterra's share being $2.0 million. Blue Lagoon also declared a dividend during the quarter with HS Orka's share being $1.8 million.
- Reduction in overheads: General and administrative expenses declined by 32% against the comparative quarter primarily due to lower recurring corporate overhead costs and fluctuations in the pension liability.
- Montrose rockslide repair update: Repair work has progressed and return to service is now expected in the second half of 2013. Property and business insurance proceeds have substantially funded the repairs.
- Completion of South America partnership: Alterra finalized its partnership with Energy Development Corporation ("EDC") to further geothermal projects in Chile and Peru, as EDC completed its due diligence, and completed definitive documentation.
- Jimmie Creek project development: Subsequent to the quarter ended June 30, 2013 a Limited Notice to Proceed was signed with SNC Lavalin on the Upper Toba Valley (Jimmie Creek) Hydro project in British Columbia.
- New development opportunities: Alterra continues to pursue new project options and subsequent to the quarter has entered into an exclusivity agreement for a wind project in the United States.
John Carson, Alterra's CEO, said, "We're pleased to report solid progress on the Montrose repair, accompanied by another quarter of strong asset performance and reductions in administrative costs. I'm confident we are well-positioned for new opportunities as well as meeting the current challenges before us in the remainder of 2013 and into 2014."
The following table shows key financial information extracted from the consolidated results.
(expressed in thousands of US dollars, except for generation)
|For the three months ending June 30, 2013|
Exploration and Head
|Business Interruption Insurance Proceeds||-||1,936||-||-||-||1,936||-|
|Gross Profit (Loss)||1,688||4,117||1,321||(539)||-||6,587||1,996|
|For the three months ending June 30, 2012|
|Gross Profit (Loss)||2,491||5,679||561||(614)||-||8,117||3,127|
Note (a) - Here and elsewhere, EBITDA is defined by Alterra as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as before deductions for change in fair value of bonds payable and derivatives, foreign exchange gain (loss), write off of development costs and other income (expense) except business interruption proceeds, 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. For a reconciliation of consolidated EBITDA to Alterra's consolidated financial statements refer to the Company's Management's Discussion and Analysis for the three and six months ended June 30, 2013.
Revenue was up 6% for the quarter ended June 30, 2013 from the comparative quarter ($15.1 million compared to $14.2 million) due to increased generation at HS Orka. Gross profit fell by 36% as a result of increased maintenance spend on two producing wells at HS Orka.
Alterra recorded a net loss of $2.3 million for the current quarter compared to a net loss of $9.7 million for the comparative quarter, an improvement of $7.4 million. Non-cash items contributing to this result include:
- A positive change in the fair value of bonds and derivatives of $5.4 million, related primarily to fluctuation in forecasted aluminum prices.
- A negative movement of $4.2 million related to foreign exchange ($2.4 million loss in the quarter versus a $1.8 million gain in the comparative quarter.)
Alterra had consolidated cash and cash equivalents of $43.5 million at the end of the period, up from $39.2 million at December 31, 2012, with the increase primarily related to draws on the Company's revolving line of credit.
Net Interest Results
Alterra's net interest in generation, revenue and EBITDA increased quarter on quarter (including proforma results from Montrose Creek) due to new sales contracts at HS Orka and the timing of wind generation at Dokie 1 as the pricing of the power purchase agreement fluctuates month over month.
Iceland Operations (66.6% Interest)
The 100 MW Reykjanes plant generated 120,729 MWh of electricity (96% of budget), and the 72 MW Svartsengi plant generated 81,875 MWh of electricity (112% of budget), and continued to supply thermal energy for district heating. The work-over of an existing well was completed at HS Orka's Reykjanes facility during the second quarter and initial indications are positive with respect to increased capacity.
Toba Montrose Operations (40% Interest)
The 146 MW East Toba River facility generated 63,975 MWh of electricity, or 110% of forecasted generation. Although the Montrose facility was offline for repairs, the measured water flow for purposes of business interruption insurance payments (attributed generation) is also 110% of budget.
On December 13, 2012 a naturally occurring rockslide damaged a 300 meter section of the five kilometer penstock (which supplies water from the intake to the power generating plant) at the Montrose facility. The penstock repairs at the Montrose hydro facility continued in Q2 2013 with excavation for the replacement of the 300 meter penstock segment and delivery of the replacement penstock to the site. Installation of the replacement penstock commenced in July 2013 and the Montrose hydro facility is expected to be back in service in the second half of 2013. Property and business interruption proceeds were received by the insurer during the quarter.
Dokie 1 Operations (51% Interest)
The 144 MW Dokie 1 wind farm generated 32,885 MWh of electricity for the quarter, or 95% of budget. Revenue for the current quarter increased over the comparative quarter due to the timing of wind generation as pricing fluctuates month to month in the power purchase agreement
Soda Lake Operations (100% Interest)
The 15 MW Soda Lake geothermal plant generated 15,992 MWh of electricity for the current quarter, or 96% of budget.
Expansion and Development Projects
Alterra has agreed to purchase for approximately $7.2 million a 10% of interest in a 50 MW solar generation project built in Ontario by First Solar, Inc., ABW Solar. Alterra will serve as the managing partner for ABW Solar. In April 2013 the project entered commercial operations and Alterra together with our partner General Electric Energy Financial Services and First Solar Inc. are currently in late-stage negotiations with lenders for the required debt financing and expect the project to close in the third quarter of 2013.
Alterra is currently finalizing plant design for the Jimmie Creek project and in July 2013 signed a limited notice to proceed with SNC Lavalin who will provide further pre-construction services. Alterra also renegotiated certain terms of the Power Purchase Agreement with BC Hydro, and expects to execute an amendment to the agreement in the third quarter of 2013. The revised agreement will cover the Jimmie Creek project only, at a nameplate capacity of 62 MW with projected annual firm energy of 114 GWh with a May 1, 2016 completion date. Alterra will examine the possibility of constructing the Upper Toba project at a later date under a future call for power.
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 matters remaining prior to construction are concluding a power purchase agreement, obtaining project financing and confirmation of resource. Alterra has commenced a reinjection program at the Reykjanes field, and will refine the timeline for the Reykjanes expansion pending results from the program.
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. During the quarter Alterra continued to collect data, conduct engineering work and perform other studies to complete the assessment of the project.
In July 2013 Alterra completed an agreement with EDC for the further development of the Mariposa project in Chile and the Crucero, Loriscota, and Tutupaca Norte concessions in Peru (Peruvian assets) on a joint basis. Under the terms of the joint venture agreement EDC will be entitled to earn a 70% interest by funding $58.3 million in project expenditures at Mariposa and $8.0 million on the Peruvian concessions. Subsequent project equity contributions and all economic sharing would be on a pro rata basis between the partners. On completion of the transaction control over the Mariposa project and the Peruvian assets were transferred to EDC, and in subsequent periods the projects will be recorded as equity investments by Alterra.
Alterra continues to advance other early stage geothermal projects in
Italy and Peru, including exploration field work, data assessment and
continued community consultations. Alterra also continues to advance
its British Columbia hydro projects in 2013 through collection of
hydrology data for the Bute Inlet project and other early stage run of
river and pumped storage hydro projects. In Iceland, Alterra began an
environmental assessment on the Bulandsvirkjun hydroelectric project.
Alterra entered into a solar partnership with Greenbriar Capital Corp. ("Greenbriar"), AG Solar One in Puerto Rico. Subsequent to the quarter, Alterra and Greenbriar Capital Corp. mutually agreed to end efforts to finalize next-stage partnership arrangements. Alterra will have no ownership stake in the development project going forward, and all amounts contributed to the partnership by Alterra will be returned.
|Alterra Power will host a conference call to discuss financial and operating results on Tuesday, August 13, 2013 at 11:30 am ET (8:30 am PT). North American participants dial 1-888-390-0605 and International participants dial 1-416-764-8609, the conference ID is 51380004. The call will also be broadcast live on the Internet at http://www.newswire.ca/en/webcast/detail/1204727/1321213. The call will be available for replay for one week after the call by dialing 1-416-764-8677 and entering replay PIN 380004.|
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.