CUC Announces Fourth Quarter and Twelve Month Results for the Period Ended December 31, 2012
Caribbean Utilities Company, Ltd. is listed for trading in United States dollars on the Toronto Stock Exchange.
GRAND CAYMAN, Cayman Islands, Feb. 7, 2013 /CNW/ - Caribbean Utilities Company, Ltd. (TSX: CUP.U) ("CUC" or "the Company") announced today its unaudited results for the Fourth Quarter ended December 31st 2012 (all figures in United States dollars).
Net earnings for the three months ended December 31, 2012 ("Fourth Quarter 2012") were $4.1 million, a 20% or $1.0 million decrease when compared to $5.1 million for the three months ended December 31, 2011 ("Fourth Quarter 2011"). This decrease in earnings is the result of higher depreciation and transmission and distribution costs for the Fourth Quarter 2012 when compared to the Fourth Quarter 2011.
Net earnings for the twelve months ended December 31, 2012 were $17.7 million, representing a 13% or $2.7 million decrease from net earnings of $20.4 million for the twelve months ended December 31, 2011. This decrease in earnings was driven by a 1% decline in kilowatt-hour ("kWh") sales and higher depreciation, transmission and distribution, financing and general and administrative charges.
The temporary cessation of depreciation on two damaged generating units resulted in reduced costs for the twelve months ended December 31, 2011. Depreciation expense recommenced on both units in 2012.Increased general and administration expenses for the twelve months ended December 31, 2012 were the result of higher costs associated with the Company's defined benefit plans.
These items were partially offset by lower maintenance costs for the twelve months ended December 31, 2012 as the Company continued its focus on efficiency and reliability capital upgrade projects. CUC's Average Service Availability Index, a key measure of system reliability, was recorded at 99.96% for 2012.
KWh sales for the Fourth Quarter 2012 were 132.4 million, comparable to 132.6 million for the Fourth Quarter 2011. KiloWatt-hour sales for the twelve months ended December 31, 2012 were 547.8 million kWh, a decrease of 6.2 million or 1% when compared to 554.0 million for the year ended December 31, 2011. Sales were negatively impacted by cooler weather conditions which affected customer air conditioning usage. The average temperature for 2012 was 81.9 degrees Fahrenheit compared to 82.3 degrees for 2011.
Electricity sales revenue increased $0.1 million, or 1%, in the Fourth Quarter 2012 to $16.8 million when compared to electricity sales revenues of $16.7 million for the Fourth Quarter 2011 due to the base rate increase of 0.7% which took effect in June 2012. Electricity sales revenue decreased $0.5 million, in the twelve months ended December 31, 2012 to $69.1 million when compared to electricity sales revenues of $69.6 million for the twelve months ended December 31, 2011. Electricity sales revenues for the year ended December 31, 2012 were primarily lower as a result of cooler, wetter weather conditions and continued weak economic conditions.
Higher fuel prices and higher fuel factor revenues drove operating revenues up by 2%, or $1.4 million, to $59.1 million for the Fourth Quarter 2012 from $57.7 million for the Fourth Quarter 2011. Similarly, operating revenues increased 2%, or $5.5 million, to $223.5 million for the twelve months ended December 31, 2012 from $218.1 million for the twelve months ended December 31, 2011. While fuel prices were stable during the twelve months ended December 31, 2012, they remain relatively high and as a result, customers continue to conserve their energy usage.
Total customers as at December 31, 2012 were 27,035, an increase of 1% compared to 26,636 customers as at December 31, 2011. The Company connected 141 customers for the three month period ended December 31, 2012 comprising 123 residential customers and 18 commercial customers.
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the Fourth Quarter 2012 were $3.5 million, or $0.12 per Class A Ordinary Share, as compared to $4.5 million, or $0.15 per Class A Ordinary Share for the Fourth Quarter 2011. After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the twelve months ended December 31, 2012 were $16.8 million, or $0.58 per Class A Ordinary Share as compared to $19.5 million, or $0.68 per Class A Ordinary Share for the twelve months ended December 31, 2011.
Richard Hew, President and Chief Executive Officer of the Company stated, "The year 2012 was the third consecutive year without appreciable growth in electricity sales for CUC. Although there are some signs of weak economic growth reflected in the small increases in customer connections, any positive impact on sales is being offset by increased energy efficiency in new commercial buildings and by residential consumer conservation. The Company continues to focus on controlling discretionary expenditures, while maintaining a safe, efficient and reliable service to customers. However, improvements in electricity sales and earnings continue to hinge on the return of growth in the local economy. "
Capital expenditures for the Fourth Quarter 2012 were $9.2 million, a $0.7 million, or 7% decrease from $9.9 million in capital expenditures for the Fourth Quarter 2011. Capital expenditures for the twelve months ended December 31, 2012 were $30.8 million, an $8.8 million, or 22% decrease from $39.6 million in capital expenditures for 2011.
Capital expenditures for 2011 included the repair of units damaged during that year for which the cost was covered by insurance proceeds (net of deductible). Excluding these costs, capital expenditure initiatives for 2011 totaled $34.0 million.
During the period under review the Company started the roll out of its Advanced Metering Infrastructure (AMI) project. This project will bring efficiencies in the meter reading and services such as disconnects and reconnects directly from CUC's offices, provide real-time electricity consumption information and a 'pay as you go' payment option to assist consumers with monitoring and controlling their electricity consumption.
The Company has also completed the Eastern Transmission Loop. This 69 KV Loop is intended to minimize the number and duration of outages and will improve reliability levels in the Eastern part of the island.
In August 2011, the Company initiated a competitive bidding process to fill 13 MW of non-firm renewable energy capacity. Extensive negotiations with two leading bidders have been conducted and agreement has been reached with one bidder on the significant terms and milestones leading to the execution of a binding power purchase agreement, subject to regulatory approval. CUC anticipates agreeing terms on a similar basis with the second bidder in the first quarter of 2013. Pursuant to these agreements CUC anticipates purchasing renewable energy at competitive prices from large scale renewable energy facilities by late 2014.
In early 2012 the Electricity Regulatory Authority ("ERA") solicited Request for Proposals (RFP) for additional generation capacity from Qualified Bidders (including CUC). CUC submitted its bid on July 16, 2012. This competitive solicitation process is in response to the certificate of need issued by the Company in November 2011, driven primarily by the upcoming retirements of some of the Company's generating units.
The projected date for 18 MW of additional generation capacity is July 2014, with a second increment of 18 MW of capacity required up to three years later in 2017 with timing dependent on economic growth and development of the Grand Cayman economy and the related growth in demand for electricity. The ERA's selection of the successful bidder is expected during the first quarter of 2013 to meet the projected commissioning date of July 2014.
CUC's Fourth Quarter Report for the period ended December 31, 2012 is attached to this release. This report contains a detailed discussion of CUC's unaudited fourth quarter financial results, the Cayman Islands economy, liquidity and capital resources, capital expenditures and the business risks facing the Company. The release and Fourth Quarter Report 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.
CUC includes forward-looking statements in this material. 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 Management's Discussion and Analysis for the twelve month period ended December 31, 2011, 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.