Toronto Hydro Corporation Releases its Third Quarter Financial Results

  

TORONTO, Nov. 26, 2015 /CNW/ - Toronto Hydro Corporation (the "Corporation") today announced its consolidated financial and operating results as at and for the three and nine months ended September 30, 2015.  Due to the transition to International Financial Reporting Standards ("IFRS") and early adoption of IFRS 14 Regulatory Deferral Accounts ("IFRS 14") (effective the first quarter of 2015), all comparative figures for 2014 that were previously reported in accordance with United States Generally Accepted Accounting Principles ("US GAAP") have been modified to conform with the new standards adopted.  The unaudited condensed interim consolidated financial statements and related Management's Discussion and Analysis, presented in Canadian dollars, are available on the Corporation's website www.torontohydro.com or through SEDAR's website www.sedar.com.

Selected Financial Highlights

(in millions of Canadian dollars, unaudited)



Three Months Ended

September 30

Nine Months Ended
September 30


2015

$

2014

$

2015

$

2014

$






Net income after net movements in regulatory balances

20.0

35.1

52.4

87.9

Revenues

977.6

808.4

2,684.6

2,408.0

Capital expenditures

141.9

183.2

402.6

436.0






  • Net income after net movements in regulatory balances for the nine months ended September 30, 2015 was $52.4 million compared to $87.9 million for the same period in 2014.
  • Revenues were higher at $2,684.6 million for the nine months ended September 30, 2015 compared to $2,408.0 million for the same period in 2014.
  • Capital expenditures were lower at $402.6 million for the nine months ended September 30, 2015 compared to $436.0 million for the same period in 2014.

"Consistent with our corporate strategy, we continue to maximize customer and stakeholder satisfaction by focusing on key drivers including enhancements in service and prudent investments in reliability. The Corporation's lower net income for 2015 is reflective of the interim rates approved by the Ontario Energy Board in April 2015 pending its release of the decision in our distribution rates application," said Anthony Haines, President and CEO, Toronto Hydro.


Corporate Developments

Effective January 1, 2015, the Corporation adopted IFRS, including early adoption of IFRS 14.  All comparative consolidated financial information has been modified from the consolidated financial statements previously presented in accordance with US GAAP. The Corporation's first IFRS annual consolidated financial statements will be for the year ended December 31, 2015.

On April 28, 2015, the Ontario Energy Board ("OEB") declared Toronto Hydro-Electric System Limited's ("LDC") existing rates as interim rates, effective May 1, 2015, pending a final Custom Incentive Rate decision and rate order. LDC will reconcile, at a later date, any variance between the interim rates and the approved rates over the interim period between May 1, 2015 and the effective date of the OEB decision. The current application is subject to an in-depth review by the OEB, and there can be no assurance that the OEB will allow for the amount of electricity distribution rates requested by LDC. The financial effect of the OEB decision will be reflected in the period it becomes known and could be material to the Corporation's financial performance.

On September 2, 2015, the Corporation re-opened its Series 9 offering and issued an additional $45.0 million of 3.96% senior unsecured debentures at a price of $1,004.68 per $1,000 principal amount due April 9, 2063, carrying the same terms and conditions as the original issuance. The Series 9 debentures bear interest payable semi-annually in arrears and contain covenants which, subject to certain exceptions, restrict the ability of the Corporation and LDC to create security interests, incur additional indebtedness or dispose of all or substantially all of their assets.  The net proceeds of the debentures were used to repay certain existing indebtedness of the Corporation and for general corporate purposes.  

 

Selected Financial Highlights
Nine Months ended September 30
(in millions of Canadian dollars, unaudited)







2015

$

2014

$








Net income after net movements in regulatory balances





52.4

87.9

Energy sales





2,216.9

1,943.3

Distribution revenue





424.1

423.2

Energy purchases





2,190.1

1,997.3

Operating expenses





203.0

198.8

Depreciation and amortization





134.6

124.7

Finance costs





52.7

45.1

Gain on disposals of PP&E





6.4

1.5

Income tax expense





16.0

18.1

Net movements in regulatory balances, net of tax





(42.2)

62.4

Capital expenditures





402.6

436.0








Net income after net movements in regulatory balances for the nine months ended September 30, 2015 was $52.4 million compared to $87.9 million for the comparable period in 2014. The Corporation continues to apply interim rates as approved by the OEB in April 2015, pending the OEB decision on LDC's Custom Incentive Rate application resulting in lower net income for 2015. The decrease from the comparable period in 2014 was primarily due to incremental capital module income recognized in 2014 ($14.9 million), higher depreciation and amortization expense ($9.9 million), higher finance costs ($7.6 million), and income recorded in 2014 related to the implementation of the smart meter incremental revenue requirement ($7.2 million).

Capital expenditures amounted to $402.6 million for the nine months ended September 30, 2015 compared to $436.0 million for the comparable period in 2014.  The most significant regulated capital expenditures incurred by LDC for the nine months ended September 30, 2015 relates to spending on underground infrastructure ($87.3 million), overhead infrastructure ($86.5 million), customer connections ($41.4 million), reactive remediation work ($23.7 million), the facilities consolidation program ($23.1 million), and Copeland Station ($18.5 million).

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, delivering electricity to approximately 752,000 customers located in the City.  It is the largest municipal electricity distribution company in Canada and distributes approximately 19% of the electricity consumed in the province of Ontario.

Forward-Looking Information

The Corporation includes forward-looking information in its news release within the meaning of applicable securities laws in Canada ("forward-looking information"). The purpose of the forward-looking information is to provide management's expectations regarding the Corporation's future results of operations, performance, business prospects and opportunities and may not be appropriate for other purposes.  All forward-looking information is given pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. The words "can", "could", "will" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. The forward-looking information reflects management's current beliefs and is based on information currently available to the Corporation's management.

The forward-looking information in this news release includes, but is not limited to, statements regarding the Corporation's conversion to IFRS and the Corporation's plans and expectations regarding the current rate application under the Custom Incentive Rate-setting mechanism. The statements that make up the forward-looking information are based on assumptions that include, but are not limited to, the current guidance from accounting standard bodies with respect to the conversion to IFRS accounting standards and the outcomes regarding the current rate application under the Custom Incentive Rate-setting mechanism.

The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.  The factors which could cause results or events to differ from current expectations include, but are not limited to, market liquidity and the quality of the underlying assets and financial instruments, the timing and extent of changes in prevailing interest rates, inflation levels, and legislative, judicial and regulatory developments that could affect revenues and the results of borrowing efforts.

All forward-looking information in the news release is qualified in its entirety by the above cautionary statements and, except as required by law, the Corporation undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.

SOURCE Toronto Hydro Corporation

For further information: Chris Tyrrell, Executive Vice-President and Chief Customer Care and Conservation Officer: 416-542-3143, ctyrrell@torontohydro.com; JS Couillard, Executive Vice-President and Chief Financial Officer: 416-542-3166, jcouillard@torontohydro.com

RELATED LINKS
http://www.torontohydro.com

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