(under IFRS and all amounts in US dollars unless otherwise stated)
TSX : AXY
VANCOUVER, March 27, 2013 /CNW/ - Alterra Power Corp. (TSX: AXY) ("Alterra") today is pleased to provide an update on its operations and to report its financial and operating results for the year ended December 31, 2012. For further information on these results please see Alterra's Consolidated Financial Statements ("consolidated results") and Management's Discussion and Analysis.
Alterra consolidates 100% of the results of operations at HS Orka and Soda Lake, while Alterra's interests in the Toba Montrose run of river hydro facility and the Dokie 1 wind facility are accounted for as equity investments. In certain statements in this news release, Alterra's results are disclosed as Alterra's "net interest", which means the effective portion of results that Alterra would have reported if each of HS Orka (75% for 2 months of the year and 66.6% for the remaining 10 months), Toba Montrose (40%), Dokie 1 (51%) and Soda Lake (100%) had been reported in accordance with Alterra's actual share of ownership at December 31, 2012 and for the twelve months then ended. Management believes that net interest reporting provides the clearest view of Alterra's performance.
Highlights for the year include:
- Alterra's net interest in revenue for the year was $87.2 million and net interest in EBITDA was $37.0 million.
- Our gross earnings remained steady at 24% of revenues for the year, marginally down from 25% in the previous six-month reporting period.
- Power production from Alterra's six power plants of 2,250,804 MWh was at 98% of budgeted generation (94% of long-term forecast annual generation, which does not take into account planned outages), with consistently strong performances at the Svartsengi and Reykjanes geothermal plants offset by lower than forecast production from the Soda Lake geothermal plant, Toba Montrose and Dokie 1 wind farm. Alterra's net interest in generation totaled 1,316,004 MWh.
- HS Orka received cash of ISK 4.7 billion ($37.5 million) from the issuance of shares to Alterra's partner in HS Orka, a group of Icelandic pension funds ("Jarðvarmi"). Jarðvarmi now holds a 33.4% interest in HS Orka, with Alterra holding 66.6%.
- During the year C$11.0 million in dividends were declared by the Toba Montrose and the Dokie 1 facilities, of which Alterra received C$4.8 million.
- Alterra continued to advance the Upper Toba Hydro project (consisting of the Upper Toba and Jimmie Creek projects), through continued assessment of project economics and performance of drilling and seismic testing on both the Upper Toba and the Jimmie Creek projects. Following the results of this work Alterra plans to advance only the 62 MW Jimmie Creek project in order to optimize project economics. Construction of Jimmie Creek is planned to commence in the summer of 2013. Further analysis will be performed on the Upper Toba project during 2013.
- Alterra entered into an agreement with Energy Development Corporation ("EDC"), a Philippines-based global leader in the geothermal power industry, which may be advanced into partnerships for the development of the Mariposa geothermal project in Chile and five geothermal concessions in Peru. The terms allow EDC to earn 70% interests in the partnerships in return for funding the next $58.3 million of expenditures at Mariposa and the next $8.0 million in Peru. Alterra expects final arrangements to be completed within the first half of 2013.
- Effective April 1, 2013, Paul Rapp has been appointed Vice President, Wind and Geothermal Power and Murray Kroeker has been promoted to the position of Vice President, Solar Power and Engineering. Together with Jay Sutton, Vice President, Hydro Power, Mr. Rapp and Mr. Kroeker will assume overall responsibility for Alterra's existing operations and development projects, replacing Bruce Ripley, Chief Operating Officer, who has resigned and will be taking a leadership position with Discover Energy, effective April 1.
- A major rockslide occurred at Toba Montrose in December 2012 affecting the Montrose penstock. Repairs are expected to be completed by the summer of 2013. Repairs and business interruption costs are fully insured (subject to policy deductibles).
John Carson, Alterra's CEO, said, "I'm pleased to report another solid year of operational performance, demonstrating again the quality of our assets and our team. We have recently reduced our overhead costs and development expenses to improve our net cash flow from operations, which will enable us to focus our capital only on the most attractive opportunities. We are well equipped to advance our growth projects in 2013. I'd also like to thank Bruce Ripley for his many contributions as Alterra's COO, and on behalf of the Company we wish him the best success at his new position."
The following table shows Alterra's net interest in selected operating and financial results for the year, in addition to key financial information extracted from the consolidated results.
(expressed in thousands of US dollars, except for production)
| HS Orka*
| Dokie 1
| Soda Lake
| Net Interest
|Total Revenue||$ 38,560||$ 27,238||$ 17,034||$ 4,406||$ -||$ 87,238||$ 61,112|
|EBITDA (a), (b)||16,440||20,463||10,550||(614)||(9,884)||36,955||44,692|
|Long Term Debt||93,406||185,894||90,297||-||129,194||498,791||269,443|
|Cash Interest Paid||2,458||11,830||6,219||-||218||20,725||3,908|
|Cash and Cash Equivalents||39,211|
|(a) EBITDA is defined by Alterra as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as before deductions for other gains and losses, amortization of below market contracts, and value assigned to options granted less share of income (loss) of equity accounted investees plus the Company's interest in EBITDA of its equity accounted investees. Alterra discloses EBITDA as it is a measure used by analysts and by management to evaluate Alterra's performance. As EBITDA is a non-IFRS measure, it may not be comparable to EBITDA calculated by others. In addition, as EBITDA is not a substitute for net earnings, readers should consider net earnings in evaluating Alterra's performance.|
|(b) For a reconciliation of consolidated EBITDA to Alterra's consolidated financial statements refer to the Company's Management's Discussion and Analysis for the year ended December 31, 2012.|
|* 2 months of results at 75% and 10 months at 66.6%|
Due to a change in year-end, the timing of the acquisitions of Toba Montrose and Dokie 1 and the change of ownership of HS Orka, the following proforma results represent what Alterra's net interest in the operating facilities would have been had Alterra reported the results representing Alterra's ownership percentage in effect as at December 31, 2012 of HS Orka (66.6%), TMGP (40%), DGP (51%), and Soda Lake facility (100%) for the twelve months ended December 31, 2012 and 2011.
Pro Forma Information
| For the 12 months ended
December 31, 2012
| HS Orka
| Toba Montrose
| Dokie 1
| Soda Lake
|Revenue||$ 38,367||$ 27,238||$ 17,034||$ 4,406||87,045|
|EBITDA (b, c)||15,214||20,463||10,550||(614)||45,613|
| For the 12 months ended
December 31, 2011
| HS Orka
| Toba Montrose
| Dokie 1
| Soda Lake
|Revenue||$ 44,516||$ 25,830||$ 16,650||$ 5,163||92,159|
|EBITDA (b, c)||15,369||19,011||10,748||949||46,077|
|(a) - Actual results for the year ended December 31, 2012|
|(b) - EBITDA is a non-GAAP measure as defined above.|
|(c) - This financial information has been prepared from the financial results of each operating facility. This information has not been audited or reviewed by Alterra's auditors and is purely provided for additional comparative information only.|
Generation remained consistent in 2011 and 2012, with only a marginal decrease of 2% on a pro forma basis in 2012 primarily related to the expiration of a 35 MW contract in October 2011 at HS Orka, lower than expected winds at Dokie as well as planned maintenance activities and delays in bringing a well back online at the Soda Lake facility. This was offset in part by an increase in generation at the Toba Montrose facility due to a 4% increase in water flow in 2012.
Revenue from both the Toba Montrose and Dokie 1 wind facility was higher than 2011 on a pro forma basis in 2012 due to an uplift in the firm energy price for both facilities in 2012, off-set by reduced revenue related to the contract expiry mentioned above coupled with a weakening of the Icelandic krona against the US dollar, resulting in a net 5% decrease in revenue (on a net interest consolidated basis).
Year on year EBITDA was essentially unchanged from 2011.
Iceland Operations (66.6% Interest)
The 100 MW Reykjanes plant generated 760,770 MWh of electricity (95% of forecast), and the 72 MW Svartsengi plant generated 466,817 MWh of electricity (101% of forecast), and continued to supply thermal energy for district heating. A drilling program for two new production wells and one work over well at the Reykjanes reservoir commenced in late 2012. The new capacity expected to result from the drilling will be used for the planned 80 MW expansion and as reserve capacity for the existing 100 MW plant.
Toba Montrose Operations (40% Interest)
The 146 MW East Toba River and 89 MW Montrose Creek run of river hydro plants generated 661,409 MWh of electricity, or 91% of forecast. The shortfall was due to low flows during the first quarter of 2012.
Generation was up 4% at Toba Montrose in 2012 due to increased water flow, and in July the facility achieved a new daily production record of 5,504 MWh. The Toba Montrose General Partnership declared equity distributions of C7.0 million to its partners, Fiera Axium Infrastructure and Alterra (Alterra received 40% or C$2.8 million).
On December 12, 2012 a naturally occurring rockslide damaged a 300 meter section of the five kilometer penstock (which supplies water from the intake to the power generating plant) at the Montrose facility. Replacement pipe for the damaged section has been ordered, and preparations for the repair are nearing completion. Alterra expects the facility to return to full operations in the summer of 2013. The repairs are to be carried out during the first half of 2013 when water flows and power generation are lower. The project's insurers have confirmed that the incident is covered by property and business interruption insurance, and total insurance deductibles related to the rockslide are expected to be less than $1.0 million for the Toba Montrose project (of which the Company's interest is 40%).
Dokie 1 Operations (51% Interest)
The 144 MW Dokie 1 wind farm generated 297,387 MWh of electricity for the year, or 90% of forecast. The shortfall was primarily due to lower than expected winds in the fourth quarter of 2012. During the year, Dokie 1 declared equity distributions to the partners of $4.0 million (of which Alterra received $2.0 million) and completed funding of a C$8.9 million required loan reserve.
Soda Lake Operations (100% Interest)
The 15 MW Soda Lake geothermal plant generated 64,421 MWh of electricity for 2012. In March 2012, the US Department of the Treasury awarded and paid a grant of $2.1 million to Soda Lake under the American Recovery and Reinvestment Act of 2009.
Expansion and Development Projects
Alterra has agreed to purchase for approximately $6.0 million, subject to a number of closing conditions, 10% of a 50 MW portfolio of five photovoltaic solar facilities being built in Ontario ("ABW Solar") by First Solar, Inc. Alterra will serve as the managing partner for ABW Solar. Construction has begun on the project and completion of two facilities occurred at the end of 2012. The remaining three facilities are expected to be completed in the first half of 2013. Long term project financing arrangements are expected to be completed in the first half of 2013.
During 2012, Alterra continued to advance the Upper Toba project entering into an interconnection agreement with BC Hydro and Power Authority to allow the project to interconnect to the Saltery Bay substation; signing a Resource Development Agreement with the Klahoose First Nation, the final First Nation impacted by the project; and entering into a development phase agreement with a contractor to perform project optimization and design work for the project. Alterra is currently finalizing plant design for the Jimmie Creek run of river hydro project (the first half of the Upper Toba project) and plans to commence construction in 2013. The project has a 40 year PPA in place with BC Hydro.
Preparations continue for the two expansions at the Reykjanes plant that would increase capacity to 180 MW and annual average generation by approximately 700,000 MWh. The key matters remaining prior to construction are concluding the ongoing PPA discussions and obtaining project financing.
Alterra holds a 51% interest in a planned expansion of the Dokie 1 wind farm ("Dokie 2") with projected additions to capacity of up to 156 MW. During the year Alterra continued to advance the resource assessment and planning for the project.
Other Development Projects
Alterra signed an agreement with EDC that outlines the terms of partnerships for the development of the Mariposa geothermal project in Chile and further exploration at five of Alterra's geothermal concessions in Peru. If EDC advances into a formal arrangement then they will be entitled to earn 70% interests in the partnerships by funding the next $58.3 million in project expenditures at Mariposa and the next $8.0 million in project expenditures on the Peruvian concessions. Alterra expects any final arrangements to be completed in the first half of 2013.
Alterra continued to advance other early stage geothermal projects in Italy, British Columbia and Peru, including exploration field work, data assessment and continued community consultations.
Alterra also continued to advance its Bute Inlet run of river hydro project in 2012, including signing a Resource Development Agreements with the Sliammon First Nation. Alterra continues to collect hydrology data for the Bute Inlet project and other early stage run of river and pumped storage hydro projects in British Columbia, and began an environmental assessment on a hydroelectric project in Iceland.
Ross Beaty, Alterra's Chairman, said, "Alterra's operating assets performed well in 2012 and I look forward to another year in 2013, with new growth from project development at Jimmie Creek, Iceland and Chile."
| Alterra Power will host a conference call to discuss financial and operating results on:
Thursday, March 28, 2013 at 11:30 am ET (8:30 am PT).
North American participants dial 1-888-390-0546 and International participants dial 1-647-764-8688, the conference ID is 74385375. The call will also be broadcast live on the Internet at http://www.newswire.ca/en/webcast/detail/1127041/1229311. The call will be available for replay until April 11th by dialing 1-416-764-8677 and entering replay PIN number 385375.
Cautionary Note Regarding Forward-Looking Statements and Information
Certain statements included in this news release may contain information that is forward-looking within the meaning of certain securities laws, including information and statements regarding prospective results of operations, financial position, cash flows or growth potential. These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. Alterra cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. Material risk factors include those set out in the management's discussion and analysis section of Alterra's most recent annual report and quarterly report, and in Alterra's Annual Information Form. Given these risks, undue reliance should not be placed on these forward-looking statements, 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, subsequent or otherwise.
SOURCE: Alterra Power Corp.
For further information:
Peter Lekich, Corporate Communications
Alterra Power Corp.