Caribbean Utilities Company, Ltd. is listed for trading in United States dollars on the Toronto Stock Exchange under the trading symbol "CUP.U".
GRAND CAYMAN, Cayman Islands, July 31, 2018 /CNW/ - Caribbean Utilities Company, Ltd. (TSX: CUP.U) ("CUC" or "the Company") announced today its unaudited results for the three and six months ended June 30, 2018 (all dollar amounts are stated in United States dollars).
Results for the Company for the three months ending June 30, 2018 ("Second Quarter 2018") were highlighted by a 2% increase in total customers, a $0.9 million increase in net earnings, when compared to the three months ending June 30, 2017 ("Second Quarter 2017") and $14.5 million in capital expenditures to meet customer growth and improve system reliability.
Net earnings increased from $6.1 million in Second Quarter 2017 to $7.0 million in Second Quarter 2018. This increase was primarily due to higher electricity sales revenues booked in the quarter and other income. These items were partially offset by higher depreciation, transmission and distribution and maintenance costs.
During the First Quarter 2018, electricity sales revenues for large commercial customers under the newly introduced demand rate were less than what would have been billed under the previous energy only rate. The Company applied to the Utility Regulation and Competition Office ("OfReg") for a review of this shortfall to ensure revenue neutrality, which would provide for the same revenues as if billed under the previous energy only rates, and for an adjustment in the demand rate going forward.
In June 2018, OfReg approved an increase of the large commercial demand rate going forward. The Company was also granted approval to record the revenue shortfall of $1.0 million for the first five months of 2018 which positively impacted large commercial electricity sales revenues. The revenue shortfall will be recovered over years two and three of the implementation period in order to smoothen the effects of the adjustment to the large commercial customers.
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the Second Quarter 2018 were $6.9 million, or $0.21 per Class A Ordinary Share, compared to earnings on Class A Ordinary Shares of $6.0 million or $0.19 per Class A Ordinary Share for the Second Quarter 2017.
Second Quarter 2018 also saw an increase in our customer base. Total customers as at June 30, 2018 were 29,377, an increase of 574 customers, or 2%, compared to 28,803 customers as at June 30, 2017.
Capital expenditures during the Second Quarter 2018 totaled $14.5 million, including $7.9 million for distribution system extension and upgrades, and $4.5 million in generation asset replacements and upgrades.
Work is currently being carried out to replace the existing High Pressure Sodium ("HPS") street lights with more energy efficient LED lights. This will provide benefits to the community such as: an overall reduction in cost to customers, lower air emissions due to burning less fuel and a higher quality lighting system. The programme which started in 2017 will run for 5 years at a total project cost of approximately $3.6 million.
Work also continues on the new Seven Mile Beach and Prospect sub-stations. This work is necessary to meet load growth and to improve reliability in both of these areas.
President and CEO, Mr. Richard Hew, stated, "I am pleased with the results for the Second Quarter 2018 including the progress made with the Company's five–year $200 million Capital Investment Plan to increase the reliability of the electricity system and to meet the demands of the growing economy and increasing customer numbers. In addition, the Company continues to pursue a diversified generation mix with Customer Owned Renewable Energy ("CORE") capacity connected to the grid growing by 370% from 1 megawatts to 4.7 megawatts since March 2016."
CUC's Second Quarter 2018 results and related Management's Discussion and Analysis ("MD&A") for the period ended June 30, 2018 are attached to this release and incorporated by reference and can be accessed by clicking the link provided.
The MD&A section of this report contains a discussion of CUC's unaudited 2018 Second Quarter results, the Cayman Islands economy, liquidity and capital resources, capital expenditures and the business risks facing the Company. The release and Second Quarter 2018 MD&A can be accessed at www.cuc-cayman.com (Investor Relations/Press Releases) and at www.sedar.com.
CUC provides electricity to Grand Cayman, Cayman Islands, under an Electricity Generation Licence expiring in 2039 and an exclusive Electricity Transmission and Distribution Licence expiring in 2028. Further information is available at www.cuc-cayman.com.
Certain statements in the MD&A, other than statements of historical fact, are forward-looking statements concerning anticipated future events, results, circumstances, performance or expectations with respect to the Company and its operations, including its strategy and financial performance and condition.
Forward looking statements include statements that are predictive in nature, depend upon future events or conditions, or include words such as "expects", "anticipates", "plan", "believes", "estimates", "intends", "targets", "projects", "forecasts", "schedule", or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". Forward looking statements are based on underlying assumptions and management's beliefs, estimates and opinions, and are subject to inherent risks and uncertainties surrounding future expectations generally that may cause actual results to vary from plans, targets and estimates. Some of the important risks and uncertainties that could affect forward looking statements are described in the MD&A in the section labeled "Business Risks" and include but are not limited to operational, general economic, market and business conditions, regulatory developments and weather. CUC cautions readers that actual results may vary significantly from those expected should certain risks or uncertainties materialize, or should underlying assumptions prove incorrect. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.
SOURCE Caribbean Utilities Company, Ltd.
For further information: Letitia Lawrence, Vice President Finance and Chief Financial Officer, Phone: (345) 914-1124, E-Mail: [email protected]