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, Feb. 9, 2012 /CNW/ - Caribbean Utilities Company, Ltd. ("CUC" or the "Company") announced today its unaudited results for the fourth quarter and twelve months ended December 31, 2011 (all figures in United States dollars).
Net earnings for the three months ended December 31, 2011 ("Fourth Quarter 2011") were $5.1 million. This represents an increase of 9%, or $0.4 million, from net earnings of $4.7 million for the three months ended December 31, 2010 ("Fourth Quarter 2010"). This increase in earnings is the result of an increase in electricity sales and a decrease in maintenance and transmission and distribution expenses as the Company continued to focus on reliability driven capital upgrade projects during the period. Electricity sales were positively impacted by warmer weather conditions during the Fourth Quarter 2011 versus the same period last year. Overall, kilowatt- hour (kWh) sales for 2011 were flat at 554.0 million.
Net earnings for the twelve months ended December 31, 2011 were $20.4 million, representing a 3% or $0.5 million increase from net earnings of $19.9 million for the twelve months ended December 31, 2010. With flat kWh sales, this increase in earnings was driven by an increase in other income and lower financing and maintenance charges.
Higher fuel prices and 4% kWh sales growth drove operating revenues up by 22%, or $10.3 million, to $57.7 million for the Fourth Quarter 2011 as compared to $47.4 million for the Fourth Quarter 2010. Operating revenues increased 21%, or $38.0 million, to $218.1 million for the twelve months ended December 31, 2011 from $180.1 million for the twelve months ended December 31, 2010. The increase in operating revenues was a result of higher fuel factor revenues in 2011 due to an increase in fuel prices. The average Fuel Cost Charge rate per kWh charged to consumers for the twelve months ended December 31, 2011 was $0.27, a 35% increase from $0.20 per kWh for the twelve months ended December 31, 2010. Actual fuel and lubricating costs are passed on to consumers without mark-up.
After the adjustment for dividends on Class B Preference Shares, earnings per Class A Ordinary Share for the Fourth Quarter 2011 of $0.15 was comparable to earnings per Class A Ordinary Share for the Fourth Quarter 2010. After the adjustment for dividends on Class B Preference Shares, earnings per Class A Ordinary Share for 2011 was $0.68, an increase of 1% over earnings per Class A Ordinary Share in 2010 of $0.67.
Richard Hew, President and Chief Executive Officer of the Company stated, "The year under review has been a challenging one for CUC and the Cayman Islands. However, the Company was able to finish the year on a positive note with some earnings growth. This is a direct result of steps taken to control the Company's discretionary operational expenditures while maintaining our focus on safety, efficiency and service reliability. We anticipate that this focus will remain as the economy slowly emerges from this recession."
Capital expenditures for the Fourth Quarter 2011 were $10.8 million, a $5.3 million, or 96% increase from $5.5 million in capital expenditures for the Fourth Quarter 2010. Capital expenditures for the twelve months ended December 31, 2011 were $40.6 million, a $19.2 million, or 90% increase from $21.4 million in capital expenditures for 2010. Excluding capital expenditures related to repair of units damaged earlier in the year, for which the cost was covered by insurance proceeds (net of deductible), capital expenditure initiatives for 2011 totaled $34.0 million and included the initiation of the Advanced Metering Infrastructure (AMI) project roll-out and completion of the Eastern Transmission Loop. By the second quarter of 2012 the AMI project will bring efficiencies in meter reading and services such as disconnects and reconnects directly from CUC's offices, provide near real-time electricity consumption information and a 'pay as you go' payment option to aid consumers in monitoring and controlling their electricity consumption.
The Eastern Transmission Loop project will also bring customer benefits through an increase in the reliability and operational flexibility of the Transmission and Distribution System serving all areas of the island from South Sound, east to the districts of East End and North Side.
In November 2011 CUC issued a certificate of need to the Electricity Regulatory Authority (ERA) for 18 megawatts (MW) of new generating capacity to be installed in 2014 and for an additional 18 MW of generating capacity to be installed in either 2015 or 2016 contingent on growth over the next two years. The primary driver for the new generating capacity in 2014 is the upcoming retirements of several of CUC's generating units which are reaching the end of their useful lives. As a result of CUC expressing its need for replacement capacity, the ERA will be conducting a competitive solicitation in 2012 in accordance with CUC's licences which will allow all interested and qualified parties, including CUC, to submit bids to fill the Company's firm capacity requirement.
The Company also recently conducted and completed a competitive bidding process to fill 13 MW of non-firm renewable energy capacity. There are currently no viable renewable energy sources in Grand Cayman that meet CUC's reliability requirements for firm capacity, however, CUC expects that there are third parties that can build and maintain renewable energy plants on the island and sell energy to CUC at a competitive price to diesel.
Mr. Hew added that, "CUC welcomes the competitive bidding process which is being conducted by the ERA for replacement of the retiring firm capacity and also looks forward to completing the bid evaluations which will move the island closer to having medium-to-large scale renewable energy sources. With the Government projecting modest Gross Domestic Product (GDP) growth for 2011, which impacts the rate outlook for the Company, we remain cautiously optimistic about future growth in the economy and a resumption of growth in electricity demand and believe the Company is well positioned to continue to serve the island in an efficient and reliable manner at least cost, while providing a fair return to our shareholders."
This report contains a detailed discussion of CUC's unaudited fourth quarter financial results, the Cayman Islands economy, liquidity and capital resources, capital expenditures and the business risks facing the Company. The release and Fourth Quarter Report 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 2029 and an exclusive Electricity Transmission and Distribution Licence expiring in 2028. Further information is available at www.cuc-cayman.com.
CUC includes forward-looking statements in this material. 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 Management's Discussion and Analysis for the twelve month period ended December 31, 2010, 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.
PDF with caption: "CUC's Fourth Quarter Report for the period ended December 31, 2011 can be accessed by clicking the link below.". PDF available at: http://stream1.newswire.ca/media/2012/02/09/20120209_C3082_DOC_EN_9981.pdf
Letitia Lawrence
Vice President Finance and Chief Financial Officer
Phone: (345) 914-1124
E-Mail: [email protected]
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