(Amounts in thousands of U.S. dollars, except share and per share data,
or as indicated)
TORONTO, March 30 /CNW/ - TSX:WPO: World Point Terminals Inc. (the
"Company") completed a highly successful 2006. On January 30, 2006, the
Company announced that it had initiated a process to explore the possibility
of a sale of its Europoint facility and hired Scotia Waterous as its financial
advisor to market the facility. The facility was widely marketed and the
Company received numerous bids. After extensive negotiations, a share purchase
agreement was executed whereby a wholly owned subsidiary of the Company, sold
the shares of its two subsidiaries which owned the Company's European
operations, to the Vitol Group. Under the terms of the agreement, which had
economic effect as of September 30, 2006, the Vitol Group paid $170,000 cash
to acquire the shares of the two subsidiaries.
In November, the directors of the Company voted to distribute the net
proceeds from the sale of the Europoint terminal to the shareholders of the
Company and on December 15, 2006, the Company paid an extraordinary dividend
of US$7.03 per common share to its shareholders of record as at November 30,
Center Point continued to expand in 2006, adding 440,000 barrels of new
tankage at its Baton Rouge terminal and acquiring the remaining 60 percent
interest in the Galveston terminal. These moves added 900,000 barrels of
capacity to the Company's operations. These additions along with the Baltimore
and Newark terminals acquired at the end of 2005 resulted in 89 percent growth
in Center Point's revenues and 479 percent growth in segment operating profit.
South Riding Point continued to rebuild from the hurricanes of 2004 and
2005 and to make other major repairs. As additional payments were received
from the Company's insurers, South Riding Point reported $1,995 of additional
gain on insurance recoveries.
Results of Operations
Revenues from continuing operations for 2006 were $53,248 compared to
$35,204 in 2005 - a 51 percent increase. This increase primarily reflects the
growth within Center Point in storage capacity and increases in rates during
the year. Revenues at South Riding Point were also higher, excluding the
non-recurring items included in 2005 revenues.
Center Point's revenues grew by $18,282 or 89 percent compared to the
prior year. Revenues for 2006 reflect a full year of operations at the
Baltimore (22 days in 2005) and Newark (2 days in 2005) terminals and four
months of operations at the Galveston terminal. These three terminals added
$9,068 to revenues during the year. Demand for storage capacity allowed us to
increase storage rates at several locations. As many of these contracts are
renewed every 12 months, it is uncertain what rates market conditions will
dictate when these agreements reach their renewal dates. Revenues for the
fourth quarter were $5,699 (103 percent) higher than the same period in 2005.
South Riding Point's revenues decreased by $481 or 4 percent compared to
the prior year. Excluding the 2005 non-recurring gains (sales of product
inventory and sublease option payments) revenues increased by 9 percent over
2005. While market conditions continued to favor leaving oil in the tanks for
longer periods of time during much of 2006, vessel activity increased over the
prior year. South Riding Point was able to increase port charges mid-year and
near the end of the year, extend the term and increase the rates on all of its
tankage. Revenues for the fourth quarter were $59 (2 percent) higher than the
same period in 2005.
The revenues of Freepoint Tug & Towage increased by $243 or 13.9 percent
compared to 2005 as a result of modest container ship volume and rate
increases during 2006. Revenues for the fourth quarter were $79 (17 percent)
higher than the same period in 2005.
2006 operating expenses were $27,585 compared to $23,693 in 2005, a
$3,892 (16 percent) increase. The most significant components of the increase
occurred at Center Point, where operating expenses for the Baltimore, Newark
and Galveston terminals not owned for most of 2005 totaled $6,153. Reductions
in major repair projects that were ongoing in 2005 offset the increase from
the addition of the new terminals.
For the fourth quarter of 2006 as compared to the fourth quarter of 2005,
operating expenses decreased by $4.
Net income, including the operations and gain on sale of Europoint, for
2006 was $153,484 versus $10,442 for 2005 and basic earnings per share were
US$6.568 versus US$0.492. Fiscal 2006 diluted earnings per share increased to
US$6.521 from US$0.490 in 2005. Excluding the effect of Europoint, results
were still quite impressive as income from continuing operations for 2006 was
$13,000 versus $7,739 and basic earnings per share from continuing operations
were US$0.556 versus US$0.365 in 2005.
Segmented operating profit (net income excluding income taxes, general
corporate expenses, and equity earnings from non-consolidated subsidiaries)
increased from $8,301 in 2005 to $18,476 in 2006.
On April 19, 2006, the Company announced that the Dutch authorities were
investigating possible embezzlement and tax issues at its European facility.
The Dutch authorities are continuing their investigation into these
allegations which include the filing of incorrect tax returns for payroll
taxes, customs and excise duties, the failure to maintain proper records
related to the movement of petroleum products in and out of the facility's
bonded warehouse and permitting property subject to customs and excise duties
to leave the bonded warehouse without payment of the appropriate taxes.
The authorities and the Company also continue to investigate the alleged
embezzlement by certain former employees and certain service providers of
Europoint. The Company has terminated three employees and rescinded contracts
with three vendors. The Company has ascertained that the alleged embezzlement
occurred during the period from 1999 through early 2006. Based on the initial
investigations, the Company has determined that the alleged fraud does not
have a material impact on the current year or any individual prior year
financial statements. The Company has also accrued for all amounts that have
been assessed by the authorities.
The outlook for the 2007 fiscal year is also positive as virtually all of
the Company's tankage continues to be under contract through, at least, the
remainder of the year. Market conditions have allowed the Company to increase
rates at many facilities; however, management cannot give any assurance that
the existing favorable market conditions will prevail. Projects are in the
planning stage for expansion at several facilities.
World Point Terminals Inc. ("World Point") and its subsidiaries (the
"Company") own and operate 14 million barrels of liquid bulk storage and
terminal facilities located in North America ("Center Point") and the Bahamas
("South Riding Point"). These facilities store, blend, and transship petroleum
and other liquid products as an integral part of the wholesale distribution
system. Through a joint venture, the Company also operates a fleet of tugboats
around Grand Bahama Island in the Bahamas ("Freepoint").
On behalf of the Board:
Bernard A. Roy
President and CEO
March 30, 2007
Cautionary Statement Regarding Forward-Looking Statements
Some of the statements contained in this release may be forward-looking
statements, such as estimates and statements that describe the Company's
future plans, objectives or goals, including words to the effect that the
Company or management expects a stated condition to exist or occur. Since
forward-looking statements, by their very nature, involve inherent risks and
uncertainties, actual results in the future could differ materially from those
currently anticipated in such statements by reason of factors including, but
not limited to, changes in economic and market conditions and changes in world
political stability. World Point Terminals will not update or revise any
forward-looking statements for new information, future events or otherwise.
This discussion and analysis of operating results and the financial
position of the Company should be read in conjunction with the unaudited
financial statements contained in this release and the audited financial
statements in the Company's 2006 Annual Report.
For further information:
For further information: Bernard A. Roy, President and CEO, (514)