Toronto Hydro Corporation Releases its 2012 Financial Statements and Related MD&A
TORONTO, Feb. 28, 2013 /CNW/ - Toronto Hydro Corporation (the "Corporation") announced today that it has filed with Canadian securities regulators its Annual Consolidated Financial Statements and related Management's Discussion and Analysis for the year ended December 31, 2012, prepared in accordance with United States Generally Accepted Accounting Principles ("US GAAP"), including the application of rate-regulated accounting policies and are presented in Canadian dollars. Copies may be obtained from the Corporation or accessed through SEDAR's website www.sedar.com.
| Selected Financial Highlights (in millions of Canadian dollars, audited) |
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| Year Ended December 31 | ||||||||
| 2012 $ |
2011 $ |
|||||||
| Net income | 86.0 | 95.9 | ||||||
| Net revenues | 577.3 | 586.9 | ||||||
| Capital Expenditures | 290.4 | 437.1 | ||||||
- Net income was $86.0 million compared to a net income of $95.9 million for the same period in 2011.
- Net revenues were $577.3 million compared to $586.9 million for the same period in 2011.
- In connection with a workforce reduction program, the Corporation recorded restructuring costs of $27.8 million in 2012.
- Capital Expenditures were lower at $290.4 million compared to $437.1 million for the same period in 2011.
"We faced some challenging regulatory issues in 2012, but quickly adapted by restructuring our operations to reduce spending. As a result, our net income from normalized regulated operations is the highest that the company has achieved to date. Furthermore, it is important to note that we delivered the largest conservation and demand management program in Ontario while executing a substantial capital construction program using our productive workforce and achieving the best safety record in our history", said Anthony Haines, President and Chief Executive Officer.
Corporate Developments
On May 10, 2012, Toronto Hydro-Electric System Limited ("LDC") filed its application to set electricity distribution rates for 2012, 2013 and 2014 under the Incentive Regulation Mechanism ("IRM") framework which includes the filing of an Incremental Capital Module ("ICM") (collectively, the "IRM/ICM Application"). An update to the IRM/ICM Application was submitted by LDC on October 31, 2012 modifying the requested amounts for 2012 and 2013, respectively, and requesting that consideration for 2014 be deferred until LDC has received a decision from the Ontario Energy Board ("OEB") in respect of the 2012 and 2013 rate years. The proposed IRM framework establishes rates through the use of a formulaic adjustment and the intent of the ICM is to address capital expenditure needs not covered by the formulaic adjustment. Through the updated IRM/ICM Application, Toronto Hydro was requesting capital funding, over a two year period, in the amount of approximately $860.0 million. On November 3, 2012, the OEB accepted LDC's request for a two-phase proceeding.
Selected Financial Highlights
| Selected Financial Highlights Year ended December 31 (in millions of Canadian dollars, audited) |
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| 2012 $ |
2011 $ |
Change $ |
Change % |
|||||
| Net income | 86.0 | 95.9 | (9.9) | (10.3) | ||||
| Net revenues | 577.3 | 586.9 | (9.6) | (1.6) | ||||
| Operating expenses | 245.2 | 262.2 | (17.0) | (6.5) | ||||
| Depreciation and amortization | 141.6 | 151.0 | (9.4) | (6.2) | ||||
| Net financing charges | (74.0) | (75.3) | 1.3 | (1.7) | ||||
| Gain on disposals of property, plant and equipment ("PP&E") |
1.8 | 3.9 | (2.1) | (53.8) | ||||
| Restructuring costs | (27.8) | - | (27.8) | - | ||||
| Income tax expense | 4.6 | 6.3 | (1.7) | (27.0) | ||||
| Capital expenditures | 290.4 | 437.1 | (146.7) | (33.6) | ||||
Net income for the year ended December 31, 2012 was $86.0 million compared to net income of $95.9 million for the comparable periods in 2011. The decrease in net income for the year ended December 31, 2012 was primarily due to restructuring costs incurred in conjunction with cost reduction initiatives at LDC recognized in the first quarter of 2012 ($27.8 million), lower net revenues ($9.6 million) and a decrease in gain on disposals of PP&E ($2.1 million). These unfavourable variances were partially offset by lower operating expenses ($17.0 million), lower depreciation and amortization expense ($9.4 million), lower income tax expense ($1.7 million) and lower net financing charges ($1.3 million).
The decrease in regulated capital expenditures for the year ended December 31, 2012 amounted to $146.7 million. The decrease was primarily due to the uncertainty surrounding LDC's capital work program as a result of the OEB's decision to impose the IRM framework in 2012.
About Toronto Hydro Corporation
The Corporation is a holding company which wholly-owns two subsidiaries:
- LDC — which distributes electricity and engages in Conservation and Demand Management activities; and
- Toronto Hydro Energy Services Inc. — which provides street lighting services.
The principal business of the Corporation and its subsidiaries is the distribution of electricity by LDC. LDC owns and operates an electricity distribution system, which delivers electricity to approximately 719,000 customers located in the City of Toronto.
SOURCE: Toronto Hydro Corporation
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