Caribbean Utilities Company, Ltd. is listed for trading in United States dollars on the Toronto Stock Exchange.
GRAND CAYMAN, Cayman Islands, July 29, 2016 /CNW/ - Caribbean Utilities Company, Ltd. (TSX: CUP.U) ("CUC" or "the Company") announced today its unaudited results for the Second Quarter ended June 30, 2016 (all figures in United States dollars).
Sales for the three months ended June 30, 2016 ("Second Quarter 2016") totalled 156.2 million kilowatt-hour ("kWh"), an increase of 10.2 million kWh in comparison to 146.0 million kWh for the three months ended June 30, 2015 ("Second Quarter 2015"). This 7% sales growth was driven by warmer weather conditions and an increase in customer numbers.
Operating income for Second Quarter 2016 totalled $7.2 million, an increase of $0.8 million when compared to operating income of $6.4 million for Second Quarter 2015. The increase is primarily attributable to the 7% kWh sales growth, partially offset by higher depreciation and general and administration 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 $1.7 million in Second Quarter 2016 when compared to $1.0 million in Second Quarter 2015. The increase in AFUDC, and resulting reduction in Finance Charges, is due primarily to the Company's 39.7 megawatts ("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.
The Company anticipates a reduction in AFUDC and an increase in depreciation costs commencing with the completion of the Generation Project.
Net earnings for the Second Quarter 2016 totalled $7.5 million, an increase of $2.0 million when compared to net earnings of $5.5 million for the three months ended June 30, 2015 ("Second Quarter 2015").
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the Second Quarter 2016 were $7.4 million, or $0.23 per Class A Ordinary Share, compared to earnings on Class A Ordinary Shares of $5.4 million or $0.17 per Class A Ordinary Share for the Second Quarter 2015.
Sales for the six months ended June 30, 2016 totalled 291.7 million kWh, an increase of 16.7 million kWh in comparison to 275.0 million kWh for the six months ended June 30, 2015. The average monthly temperature for the first six months of 2016 was 82.1 degrees Fahrenheit as compared to an average monthly temperature of 81.3 degrees for the first six months of 2015. Warmer temperatures increase air conditioning load and can positively impact the Company's sales.
Net earnings for the six months ended June 30, 2016 totalled $12.5 million, an increase of $3.7 million when compared to net earnings of $8.8 million for the six months ended June 30, 2015. The increase is attributable to the 6% increase in kWh sales, higher other income, and lower interest costs. These items were partially offset by higher depreciation and transmission and distribution costs.
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the six months ended June 30, 2016 were $ 12.3 million, or $ 0.38 per Class A Ordinary Share, compared to earnings on Class A Ordinary Shares of $8.6 million or $0.28 per Class A Ordinary Share for the six months ended June 30, 2015.
The continued reduction in world market fuel prices as well as the 30 cents Government reduction in fuel duty have resulted in customers benefitting from significantly reduced electricity costs during the Second Quarter 2016. Residential customers who used an average of 1,000 kWh per month would have seen their monthly bills decline by approximately CI$49 during the Second Quarter 2016 when compared to the same period in 2015.
However, historically, the world fuel market has been volatile and the Company continues to seek ways to connect other stable and competitively priced energy options to the grid to ensure that its commitment to provide a safe and reliable electricity service at least cost remains attainable.
The ground-breaking event for the 5 MW Solar Project at Bodden Town took place in May 2016. The project which is being developed by Entropy Cayman Solar Limited is progressing as planned and is expected to be operational by the end of 2016. The Company anticipates further renewable energy sources connected to the grid with a Request for Proposal for renewable energy being conducted by the Electricity Regulatory Authority (ERA) in the near future.
The Consumer-Owned Renewable Energy Generation ("CORE") programme which allows consumers to generate energy from renewable sources and be compensated through stable, long-term rates continues to attract participants. At June 30, 2016, 146 customers were connected with 2,080 kilowatts ("kW") of renewable capacity. The CORE programme allows customers to connect small scale solar systems or wind turbines to CUC's distribution system and to reduce their monthly energy bills by generating their own electricity while remaining connected to the CUC grid.
The Company's new Power House building was completed and the new engine room handed over during the Second Quarter 2016. On June 21, 2016 the official commissioning ceremony was held. CUC now has an additional 39.7 MW of diesel power which includes a 2.7 MW waste heat recovery steam turbine.
CUC is committed to providing reliable electric service to its customers. During the Second Quarter 2016, some customers were affected by a communication systems problem around the commissioning of the new engines which caused the generating unit to disconnect for short periods of time, triggering outages. CUC and its partner MAN have put all of the necessary resources in place to address these issues and the Company is confident they have now been resolved.
The CUC system Average Service Availability Index was 99.89% for the six months ended June 30, 2016 compared to 99.96 % for the six months ended June 30, 2015.
President and CEO Mr. Richard Hew says, "The quarter was mainly positive as we had strong demand for electricity which we were able to meet with the successful completion of the 39.7 MW power plant. Unfortunately some of our customers were impacted by frequent, short duration outages in June and our usual high reliability standard was not met. However, we are confident that the longer term reliability outlook is very positive with the addition of the new units."
The Advanced Metering Infrastructure ("AMI") project will soon be completed. At the end of June 2016, over 23,000 new meters were installed to residential properties and businesses across Grand Cayman. The project, which is expected to be completed at the end of July 2016 provides real time electricity consumption information and brings efficiencies in meter reading. Customers who have the new AMI meters are now able to monitor their consumption through our website and better manage their usage.
Mr. Hew added, "I am also pleased to report that during the quarter another Caymanian, Mr. Sacha Tibbetts was promoted to the executive level as Vice President, Customer Service and Technology. Sacha's appointment to this new role solidifies our Executive team structure and will better position our company to deliver on our key strategic initiatives which include Reliability, New Business and Technology, Human Capital and Brand. These are very exciting times for the energy business and our team is ready to deliver positive results to all of our stakeholders."
CUC's Second Quarter results and related Management's Discussion and Analysis ("MD&A") for the period ended June 30, 2016 are attached to this release and incorporated by reference. They can be accessed by clicking the link at the end of this release.
The MD&A section of this report contains a discussion of CUC's unaudited 2016 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 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]