CUC Announces First Quarter Results for the Period Ended March 31st, 2013
Caribbean Utilities Company, Ltd. is listed for trading in United States dollars on the Toronto Stock Exchange
GRAND CAYMAN, Cayman Islands, May 7, 2013 /CNW/ - Caribbean Utilities Company, Ltd. (TSX: CUP.U) ("CUC" or "the Company") announced today its unaudited results for the First Quarter ended March 31st 2013 (all figures in United States dollars).
Despite continuing declines in kilowatt-hour ("kWh") sales, CUC's earnings for the three months ended March 31, 2013 ("First Quarter 2013") improved over the same period last year as the Company continued its focus on controlling costs and improving efficiencies throughout the organization.
Net earnings for the First Quarter 2013 totalled $2.9 million, an increase of $1.0 million, or 53%, when compared to $1.9 million for the three months ended March 31, 2012 ("First Quarter 2012"). This increase was due primarily to lower general and administration and financing costs as well as an increase in other income. General and administrative expenses for the First Quarter 2012 included a one-time charge of $0.3 million related to restructuring costs incurred to further streamline CUC's organizational structure. Maintenance costs also declined as a result of the ongoing capital-related projects that upgrade and improve the performance of the Company's fleet of generating units.
These items were partially offset by a 1% decline in kilowatt-hour (kWh) sales and higher depreciation costs for the First Quarter 2013 when compared to the First Quarter 2012.
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the First Quarter 2013 were $2.8 million, or $0.10 per Class A Ordinary Share, an increase of $1.0 million when compared to $1.8 million, or $0.06 per Class A Ordinary Share for the First Quarter 2012.
Kilowatt- hour sales for the First Quarter 2013 totalled 125.5.million kWh, which is a decrease of 0.9 million kWh, or 1% when compared to 126.4 million kWh for the First Quarter of 2012.
President and CEO, Mr. Richard Hew, says, "With a weak economy and high fuel costs, customers continue to conserve energy. The Company remained focused on controlling its operating costs while investing in required infrastructure to meet current and future demand as needed. CUC has been making every effort to ensure that its customers are provided with a safe and reliable electricity service at least cost."
Capital expenditures for the First Quarter 2013 were $6.4 million and system reliability was recorded at 99.97%.
A Certificate of Need for generation capacity was issued to the Electricity Regulatory Authority ("ERA") by the Company in November 2011. This was driven primarily by the upcoming retirements of some of the Company's generating units beginning in 2014.
In March 2012, the ERA solicited Request for Proposals (RFP) for an additional 36 megawatts ("MW") of generation capacity from qualified bidders, including CUC. In February 2013, the Company was advised that another local company, DECCO Ltd., had won the bid.
In April 2013, the ERA announced that it would be engaging an independent party to conduct an investigation into the 36 MW bid process following public statements being made by its former managing director concerning alleged irregularities with the process.
Mr. Hew stated, "The Company is becoming increasingly concerned that the ongoing delays in the process to secure firm generating capacity may lead to inadequate installed generation capacity, given that 18 MW of the 36 MW of capacity was intended to have been installed for July 2014 to serve the needs of Grand Cayman. However, we will explore all options, including temporary generation solutions to mitigate the threat of extended power outages for the summer of 2014."
During the quarter under review the Company also continued discussions with prospective providers of alternative energy in the areas of solar and wind. Once the negotiations are completed and agreements have been reached with all parties, an announcement will be made.
Mr. Hew added "The addition of renewable sources will not allay concerns regarding reliability as these sources are not considered firm capacity. However, we believe there are economic and environmental benefits to engage renewable energy sources to displace some of the diesel fuel that our generators presently consume."
CUC's First Quarter results and related Management's Discussion and Analysis ("MD&A") for the period ended March 31st 2013 are attached to this release and incorporated by reference and can be accessed by clicking the link at the end of this release.
The MD&A section of this report contains a discussion of CUC's unaudited 2013 First Quarter results, the Cayman Islands economy, liquidity and capital resources, capital expenditures and the business risks facing the Company. The release and First Quarter MD&A can be accessed at www.cuc-cayman.com (Investor Relations/Press Releases) and at www.sedar.com.
CUC provides electricity to Grand Cayman, Cayman Islands, under an Electricity Generation Licence expiring in 2029 and an exclusive Electricity Transmission and Distribution Licence expiring in 2028. Further information is available at www.cuc-cayman.com.
Certain statements in the MD&A, other than statements of historical fact, are forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations with respect to the Company and its operations, including its strategy and financial performance and condition.
Forward looking statements include statements that are predictive in nature, depend upon future events or conditions, or include words such as "expects", "anticipates", "plan", "believes", "estimates", "intends", "targets", "projects", "forecasts", "schedule", or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". Forward looking statements are based on underlying assumptions and management's beliefs, estimates and opinions, and are subject to inherent risks and uncertainties surrounding future expectations generally that may cause actual results to vary from plans, targets and estimates. Some of the important risks and uncertainties that could affect forward looking statements are described in the MD&A in the section labeled "Business Risks" and include but are not limited to operational, general economic, market and business conditions, regulatory developments and weather. CUC cautions readers that actual results may vary significantly from those expected should certain risks or uncertainties materialize, or should underlying assumptions prove incorrect. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.
SOURCE Caribbean Utilities Company, Ltd.