Caribbean Utilities Company, Ltd. is listed for trading in United States dollars on the Toronto Stock Exchange.
GRAND CAYMAN, Cayman Islands, May 3, 2016 /CNW/ - Caribbean Utilities Company, Ltd. (TSX: CUP.U) ("CUC" or "the Company") announced today its unaudited results for the First Quarter ended March 31 2016 (all figures in United States dollars).
Sales for the three months ended March 31, 2016 ("First Quarter 2016") totalled 135.6 million kilowatt-hour ("kWh"), an increase of 6.6 million kWh in comparison to 129.0 million kWh for the three months ended March 31, 2015 ("First Quarter 2015"). This 5% sales growth was driven by warmer weather conditions and an increase in customer numbers.
Operating income for First Quarter 2016 totalled $5.1 million, an increase of $0.6 million when compared to operating income of $4.5 million for First Quarter 2015. The increase is attributable to the 5% kWh sales growth and lower general and administration costs. These items were partially offset by higher depreciation, maintenance and amortization costs.
In addition to the factors positively impacting operating income, net earnings increased as a result of higher capitalization of interest expenses through the Allowance for Funds Used During Construction ("AFUDC") of $1.9 million in First Quarter 2016 when compared to $0.9 million in First Quarter 2015. The increase in AFUDC, and resulting reduction in Finance Charges, is due primarily to the Company's ongoing 39.7 MW Generation Project. AFUDC is the capitalisation of Financing Cost which is calculated by multiplying the Company's Cost of Capital rate by the average construction work in progress for each month.
Net Earnings for the First Quarter 2016 totalled $5.0 million, an increase of $1.7 million when compared to net earnings of $3.3 million for the First Quarter 2015.
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the First Quarter 2016 were $4.9 million, or $0.15 per Class A Ordinary Share, compared to earnings on Class A Ordinary Shares of $3.2 million or $0.11 per Class A Ordinary Share for the First Quarter 2015.
The average monthly temperature for the First Quarter 2016 was 80.2 degrees Fahrenheit as compared to an average monthly temperature of 79.5 degrees for First Quarter 2015. Warmer temperatures increase air conditioning load which can positively impact the Company's sales.
During the First Quarter 2016, there was an increase in the number of customers connected to the CUC grid. The total number of customers as at March 31, 2016 was 28,332, an increase of 459 customers, or 2%, compared to 27,873 customers as at March 31, 2015.
Capital expenditures for the three months ended March 31, 2016 were $10.6 million, a $3.5 million, or 49% increase from $7.1 million in capital expenditures for the three months ended March 31, 2015. This increase in capital expenditures is driven by costs associated with the Company's 39.7 MW generation project.
The Company is currently in the commissioning phase of the two new engines for the Generation Project and it is expected that the units will be fully commissioned in June 2016. The new engine room houses two 18.5 megawatts ("MW") diesel generating units, one 2.7 MW waste heat recovery steam turbine and associated auxiliary equipment. The project cost is estimated at $85 million and will be the most efficient fuel plant of its kind in the region when completed.
President and CEO, Mr. Richard Hew, says, "The First Quarter of 2016 has been a good one for the Company. We remained focused on becoming a more efficient company and on meeting the future energy needs of Grand Cayman. During this Quarter our customers continued to benefit from lower electricity bills, our new generating plant has progressed to the commissioning stage and significant progress has been made to increase our renewable energy options."
Reliability of service to our customers is a key objective for our Company and it is critical to the continuing growth of Grand Cayman. The Company remains committed to meeting the challenges which come with providing a highly reliable service on a small island system such as what we have in Grand Cayman. The CUC system Average Availability Index was 99.90% during First Quarter 2016.
With the reduction in world fuel market prices and the 30 cents Government reduction in fuel duty, customers benefited from significantly reduced electricity costs during the First Quarter 2016. The residential consumer who used 1,000 kWh per month would have seen their monthly bills decline by approximately CI$68 during the First Quarter 2016 when compared to the same period in 2015.
While current fuel prices are low historically, the world fuel market has been volatile therefore the Company's efforts to connect other stable and competitively priced energy options to the grid have not been deterred.
The 5 MW Solar Project at Bodden Town is progressing as planned with ground-breaking by the developer, Entropy Cayman Solar Limited, scheduled for early May and planned commercial operation by the end of 2016. The Company anticipates further renewable energy sources will be connected to the grid, with a Request for Proposal ("RFP") for renewable energy being conducted by the Electricity Regulatory Authority ("ERA") in the near future.
The Company remains committed to using the latest technologies to increase efficiencies within the business. At the end of First Quarter 2016, the Company had installed over 15,000 meters as part of the Advanced Metering Infrastructure ("AMI") project.
The AMI project is expected to be completed in July 2016 and provides real-time consumption information, and brings efficiencies to meter reading as well as other services. It will also offer a pay- as- you-go payment option which will help customers to monitor and control their electricity consumption.
CUC's First Quarter results and related Management's Discussion and Analysis ("MD&A") for the period ended March 31 2016 are attached to this release and incorporated by reference and can be accessed by clicking the link at the end of this release.
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]