Caribbean Utilities Company, Ltd. is listed for trading in United States dollars on the Toronto
GRAND CAYMAN, July 31, 2017 /CNW/ - Caribbean Utilities Company, Ltd. (TSX: CUP.U) ("CUC" or "the Company") announced today its unaudited results for the Second Quarter ended June 30, 2017 (all figures in United States dollars).
Sales for the three months ended June 30, 2017 ("Second Quarter 2017") totalled 161.0 million kilowatt-hours ("kWh"), an increase of 4.8 million kWh, or 3%, in comparison to 156.2 million kWh for the three months ended June 30, 2016 ("Second Quarter 2016").
Sales for the six months ended June 30, 2017 totalled 297.6 million kWh, an increase of 5.9 million kWh, or 2%, in comparison to 291.7million kWh for the six months ended June 30, 2016. These increases were driven primarily by growth in customer numbers and higher average residential customer consumption.
Operating income for Second Quarter 2017 totalled $7.5 million, an increase of $0.3 million when compared to operating income of $7.2 million for Second Quarter 2016. The increase is attributable to higher electricity sales revenues driven by the 3% kWh sales growth, and lower maintenance expenses as a larger portion of the scheduled maintenance in the Second Quarter 2017 was of a capital nature, than in the Second Quarter of 2016. Certain types of major maintenance result in improvements to the life of the equipment and therefore the cost of such maintenance is capitalised. These positive factors were partially offset by higher depreciation costs.
Despite the factors positively impacting operating income, net earnings decreased $1.4 million from $7.5 million in Second Quarter 2016 to $6.1 million in Second Quarter 2017. This was due primarily to a $1.0 million increase in finance charges in Second Quarter 2017. This increase in finance charges resulted from a reduction in Allowance for Funds Used During Construction ("AFUDC") upon completion of the 40 MW power plant in June 2016. AFUDC is the capitalisation of finance charges 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 six months ended June 30, 2017 totalled $10.6 million, a decrease of $1.9 million when compared to net earnings of $12.5 million for the six months ended June 30, 2016. The decrease is attributable to the increase in finance charges and depreciation costs. These items were partially offset by higher electricity sales revenues and lower maintenance costs.
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the Second Quarter 2017 were $6.0 million, or $0.19 per Class A Ordinary Share, compared to earnings on Class A Ordinary Shares of $7.4 million or $0.23 per Class A Ordinary Share for the Second Quarter 2016.
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, 2017 were $ 10.4 million, or $0.32 per Class A Ordinary Share, compared to earnings on Class A Ordinary Shares of $12.3 million or $0.38 per Class A Ordinary Share for the six months ended June 30, 2016.
During the Second Quarter 2017, CUC connected Entropy Cayman Solar, Limited ("Entropy") to the electricity grid on Grand Cayman. Entropy's 5 megawatts ("MW") solar plant in Bodden Town, the first of its kind for the Cayman Islands, was officially launched in June. At its peak, this Solar Farm can provide energy to power the equivalent of 800 homes.
The final presentation on CUC's Integrated Resource Plan ("IRP") study was held in May. This study will give shape to the energy generation plans for Grand Cayman over the next 30 years. The IRP study demonstrates the Company's commitment to generation diversification on Grand Cayman in an optimized manner. CUC's goal is to ensure that all energy options are explored before decisions are made on what the grid can accommodate in a safe, reliable and efficient manner. The study is expected to be completed during the Third Quarter of 2017.
The Utility Regulation and Competition Office ("OfReg") approved another 2 MW of capacity to be allocated to the Consumer Owned Renewable Energy ("CORE") programme. The CORE programme's previous limit of 6 MW was reached in March. The extension of the programme will be limited to smaller systems of capacity with one rate for system sizes up to 5 kilowatts ("kW") and another rate for system sizes over 5 kW and up to 10 kW.
President and CEO Mr. Richard Hew says, "We are pleased to report a reasonably strong Second Quarter. While, as anticipated our earnings are down, electricity sales have increased. This period under review highlighted the outcome of years of work on renewable energy which resulted in the launch of the 5 MW Solar Farm in Bodden Town. The Company remains focused on its commitment to provide our consumers with a reliable electricity service and our employees continue to focus on improving cost efficiencies across the Company and improved productivity."
CUC's Second Quarter results and related Management's Discussion and Analysis ("MD&A") for the period ended June 30, 2017 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 2017 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]