Alterra Power Announces Results for the Quarter Ended June 30, 2016
(under IFRS and all amounts in US dollars unless otherwise stated)
VANCOUVER, Aug. 9, 2016 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) ("Alterra" or the "Company") is pleased to report its financial and operating results for the three and six months ended June 30, 2016. For further information on these results please see Alterra's Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis.
At June 30, 2016, Alterra consolidated 100% of the results of operations from its Icelandic subsidiary HS Orka, while Alterra's interests in the Toba Montrose, Dokie 1 and Shannon renewable power projects were accounted for as equity investments. In certain statements in this news release, Alterra's results are disclosed as Alterra's "net interest", by which the Company means the effective portion of operating results that the Company would have reported if each of HS Orka (66.6%), Toba Montrose (40%), Dokie 1 (25.5%), and Shannon (50% sponsor equity interest) had been reported in accordance with Alterra's actual share of ownership at June 30, 2016 and for the three and six months then ended. Management believes that net interest reporting provides the clearest view of Alterra's performance.
Highlights for the quarter and subsequent period include:
- Continued strong generation at Toba Montrose: Toba Montrose achieved record second quarter generation at 121% of budget, an increase from the comparative quarter (118% of budget).
- Deep drilling project at HS Orka: The last major contract was signed for a 5,000 meter deep drilling program at the Reykjanes plant in Iceland. The rig has been deployed to site and drilling will commence in August.
- Jimmie Creek project completion: Construction of the 62 MW hydro project was completed on time and within budget with first test power generated on June 10, 2016. Jimmie Creek commenced commercial operations on August 1 and began selling power to the British Columbia Hydro and Power Authority under a 40-year power purchase agreement.
- Flat Top wind development project: On June 15, 2016 the Company acquired the 200 MW Flat Top wind project for consideration of $0.9 million, with further payments to be made on completion of agreed milestones. The project, located in the counties of Comanche and Mills in Texas, is currently under development with construction expected to begin in late 2016 or early 2017. Concurrent with closing, the Company placed a $1.5 million security deposit with the project's transmission service provider.
- Solar development portfolio: In July the Company reached an agreement to acquire an 80% ownership interest in a two-project 20 MWDC portfolio of solar farms under development in the Midwestern USA. Both projects are contracted under long-term, investment-grade power purchase agreements.
- Distributions: The Company received distributions during the quarter from equity investments of $3.6 million from Shannon and Blue Lagoon hf (plus a separate $0.3 million return of capital from Shannon). Subsequent to the quarter, the Company received distributions of C$9.4 million from Toba Montrose GP and Dokie GP and $0.4 million from Shannon.
- Adjusted EBITDA and revenue: Consolidated revenue increased by 2% to $13.8 million and net interest revenue increased by 5% to $18.5 million, respectively. The increase in revenue is primarily due to increased generation at Dokie 1, generation from Shannon and the strengthening of the Icelandic Krona. Consolidated and net interest Adjusted EBITDA decreased by 8% to $10.8 million and 10% to $8.5 million, respectively, primarily due to increased development spend on new early-stage projects and the weakening of the Canadian dollar.
Financial Results
The following table shows Alterra's net interest in select operating and financial results for the quarter, in addition to key financial information extracted from the consolidated results.
| For the three months ended |
HS Orka |
Toba Montrose |
Dokie 1 |
Shannon |
Development and Head Office |
Net Interest Total |
Consolidated Results |
| June 30, 2016(a) |
(66.6%) |
(40%) |
(25.5%) |
(50%) |
|||
| Generation (MWh) |
184,011 |
110,014 |
16,841 |
76,205 |
— |
387,071 |
276,293 |
| Total revenue |
9,189 |
6,900 |
1,368 |
1,088 |
— |
18,545 |
13,797 |
| Gross profit (loss) |
2,392 |
5,028 |
466 |
(1,111) |
— |
6,775 |
3,591 |
| Adjusted EBITDA(b) |
4,465 |
5,550 |
807 |
(67) |
(2,228) |
8,527 |
10,765 |
| For the three months ended |
HS Orka |
Toba Montrose |
Dokie 1 |
Development and Head Office |
Net Interest Total |
Consolidated Results |
|
| June 30, 2015 |
(66.6%) |
(40%) |
(25.5%) |
||||
| Generation (MWh) |
204,814 |
108,051 |
15,700 |
— |
328,565 |
307,529 |
|
| Total revenue |
9,005 |
7,398 |
1,258 |
— |
17,661 |
13,522 |
|
| Gross profit |
2,588 |
5,498 |
298 |
— |
8,384 |
3,887 |
|
| Adjusted EBITDA(b) |
4,378 |
6,011 |
650 |
(1,554) |
9,485 |
11,679 |
|
| (a) |
Here and elsewhere, all tabular amounts (except generation) are expressed in thousands of US dollars. |
| (b) |
Here and elsewhere, adjusted EBITDA ("Adjusted EBITDA") is defined by the Company as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as adjustments for changes in the fair value of holding company bonds (Sweden) and derivatives, write-offs of development costs, other income (expense) except business interruption insurance proceeds, amortization of below market contracts, value assigned to options granted, share of results of equity investments, the Company's proportionate interest in Adjusted EBITDA of its equity investments, research and development costs for deep drilling program and non-recurring items (insurance deductibles, litigation and arbitration costs). Adjusted EBITDA has been calculated on a consistent basis with the comparative quarter. The Company discloses Adjusted EBITDA as it is a measure used by analysts and by management to evaluate the Company's performance. As Adjusted EBITDA is a non-IFRS measure, it may not be comparable to Adjusted EBITDA calculated by others. In addition, Adjusted EBITDA is not a substitute for net earnings. Readers should consider net earnings in evaluating the Company's performance. Readers should also consider the risks and assumptions in estimates of Adjusted EBITDA discussed under the heading "Cautionary Note Regarding Forward-Looking Statements and Information". For a reconciliation of consolidated Adjusted EBITDA to Alterra's condensed consolidated interim financial statements refer to the Company's Management's Discussion and Analysis for the three and six months ended June 30, 2016 available on SEDAR at www.sedar.com. |
Consolidated Results
Revenue was $13.8 million for the quarter, up 2% from the comparative quarter primarily due to the strengthening of the Icelandic Krona.
The Company recorded net income of $3.4 million, down from the comparative quarter ($6.8 million), resulting primarily from changes in non-cash items such as the change in fair value of holding company bonds (Sweden).
Consolidated cash and cash equivalents at June 30, 2016 was $11.7 million of which $9.1 million is held in the Company's Icelandic subsidiary ($10.3 million and $6.4 million respectively at December 31, 2015).
The Company's consolidated working capital deficit at June 30, 2016 was $153.2 million compared to a working capital deficit of $123.3 million at December 31, 2015. The working capital deficit is primarily due to the fair value of the holding company bonds (Sweden) being classified as short-term (the bonds mature within twelve months).
Net Interest Results
Alterra's net interest revenue increased by $0.9 million to $18.5 million primarily due to increased generation at Dokie 1, generation from Shannon and the strengthening of the Icelandic Krona. Net interest EBITDA decreased 10% to $8.5 million due to development spend on early-stage projects along with the weakening of the Canadian dollar.
The net interest cash position at June 30, 2016 was $14.8 million.
Operating Results
The Company achieved 94.3% of its budgeted generation for the quarter, led by Toba Montrose.
| Q2 2016 Generation (MWh) |
||||||||||
| Total |
Net Interest |
|||||||||
| Facility |
Budget (a) |
Actual |
Budget (a) |
Actual |
% of Budget |
|||||
| Reykjanes |
148,840 |
144,378 |
99,127 |
96,156 |
97.0% |
|||||
| Svartsengi |
134,645 |
131,915 |
89,674 |
87,855 |
98.0% |
|||||
| Toba Montrose |
226,971 |
275,034 |
90,788 |
110,014 |
121.2% |
|||||
| Dokie 1 |
68,131 |
66,043 |
17,373 |
16,841 |
96.9% |
|||||
| Shannon |
226,698 |
152,410 |
113,349 |
76,205 |
67.2% |
|||||
| TOTAL |
805,285 |
769,780 |
410,311 |
387,071 |
94.3% |
|||||
(a) Includes planned maintenance outages.
"We are pleased with the continued solid performance of our operating assets in the quarter as well as the recent achievement of commercial operations at Jimmie Creek," said Lynda Freeman, CFO of Alterra. "We are now fully geared towards our next phase of growth with the advancement of Flat Top as well as a solar development portfolio and other development projects."
| Alterra will host a conference call to discuss financial and operating results on Wednesday, August 10, 2016 at 11:30 am ET (8:30 am PT). |
| North American participants dial 1-888-390-0546 and International participants dial 1-416-764-8688; the conference ID is 17047515
The call will also be broadcast live on the Internet at http://event.on24.com/r.htm?e=1235231&s=1&k=5FFBEFA29195B7323A9D2B993ADE39F9
|
| The call will be available for replay for one week after the call by dialing 1-416-764-8677 and entering replay PIN 047515# |
Cautionary Note Regarding Forward-Looking Statements and Information
Certain of the statements and information included in this news release constitute forward-looking statements and information within the meaning of applicable securities laws. All statements, other than statements of historical fact, are forward-looking statements or information. This information may involve known and unknown risks, assumptions and uncertainties, and other factors which may cause the Company's actual results, performance or achievements to be materially different from the future results, performance or achievements implied by such statements or information. Specifically, forward-looking statements within this news release relate to, among other things: success of the deep drilling program at Reykjanes, successful development and construction of our pre-operational projects and properties, including Flat Top and our solar development portfolio, and the timing of the same, marketing of power and ability to secure power purchase or offtake agreements in respect of the same; success, timing and receipt of future payments and financial milestones, our ability to successfully refinance certain bonds, results of operations, and financial position.
These statements and information reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions that, while considered reasonable by the Company, are inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These assumptions include, among others, the expected power generation from our operations, the success and timely completion of planned development, expansion and construction programs, and modeling and budgeting based on historical trends, our ability or inability to obtain financing or refinancing to pursue our growth strategy and business plans, current conditions and expected future developments. Forward-looking statements and information also involve known and unknown risks that may cause actual results to differ materially from those expressed by such statements or information, and the Company has made assumptions and estimates based on or related to many of these factors. These risks include volatility of renewable energy resources, inherent risks in operating and constructing power plants and development programs related to the same, contractual risks related to credit facilities, partnership and power purchase agreements, prospective power, currency and commodity price fluctuations, health, safety, social and environmental risks and risks related to reliance on third parties. Additional risks, assumptions and influential factors are set out in the Company's management discussion analysis and Alterra's most recent annual information form, copies of which are available on SEDAR at www.sedar.com.
Although the Company has attempted to identify important factors that could cause actual results to differ materially, given the inherent uncertainties in such forward-looking statements and information, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Investors are cautioned against undue reliance on any such forward-looking statements or information, 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.
SOURCE Alterra Power Corp.
Share this article