Caribbean Utilities Company, Ltd. is listed for trading in United States dollars on the Toronto Stock Exchange.
GRAND CAYMAN, Cayman Islands, Feb. 19, 2015 /CNW/ - Caribbean Utilities Company, Ltd. (TSX: CUP.U) ("CUC" or "the Company") announced today its unaudited results for the Fourth Quarter and Twelve Months ended December 31, 2014 (all figures in United States dollars).
Net earnings for the three months ended December 31, 2014 ("Fourth Quarter 2014") were $5.4 million, a $0.4 million decrease when compared to $5.8 million for the three months ended December 31, 2013 ("Fourth Quarter 2013"). This decrease is attributable to a weather-driven 3% decline in kiloWatt-hour ("kWh") sales, additional temporary generation costs and higher consumer services expenses in the Fourth Quarter 2014. These items were partially offset by lower maintenance costs for the Fourth Quarter 2014 when compared to the Fourth Quarter 2013.
Net earnings for the twelve months ended December 31, 2014 were $20.8 million, a $0.4 million increase from net earnings of $20.4 million for the twelve months ended December 31, 2013. This increase is attributable to a 2% kWh sales growth, lower depreciation and maintenance expenses and higher other income. These items were partially offset by higher consumer services expenses, driven by a one-time adjustment to increase the Company's allowance for doubtful accounts during the twelve months ended December 31, 2014.
For the Fourth Quarter 2014, kWh sales were 135.8 million, a decrease of 4.5 million kWh, or 3%, when compared to 140.3 million for the Fourth Quarter 2013. Sales were negatively impacted by cooler weather conditions that affected customer air conditioning usage. The average monthly temperature for the Fourth Quarter 2014 was 3.3 degrees Fahrenheit lower than the average monthly temperature experienced during the Fourth Quarter 2013.
For the twelve months ended December 31, 2014, kWh sales were 564.2 million, an increase of 8.5 million kWh, or 2%, when compared to 555.7 million kWh for the year ended December 31, 2013. Annual sales were positively impacted by a 2% growth in customer numbers. Total customers as at December 31, 2014 were 27,784, compared to 27,364 customers as at December 31, 2013.
After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the Fourth Quarter 2014 were $4.8 million, or $0.16 per Class A Ordinary Share, as compared to $5.2 million, or $0.18 per Class A Ordinary Share for the Fourth Quarter 2013. After the adjustment for dividends on the preference shares of the Company, earnings on Class A Ordinary Shares for the twelve months ended December 31, 2014 were $19.9 million, or $0.68 per Class A Ordinary Share as compared to $19.5 million, or $0.68 per Class A Ordinary Share for the twelve months ended December 31, 2013. The weighted average Class A Ordinary Shares outstanding were 29,130,536 and 28,891,552 for the twelve months ended December 31, 2014 and December 31, 2013, respectively.
President and CEO, Mr. Richard Hew, says, "In spite of the decrease in earnings and kilowatt hour sales, the Fourth Quarter 2014 recorded overall positive results for the Company. The announcement of CUC's winning of the bid for firm generation as well as progress being made by one of the renewable energy providers to develop a 5 megawatts solar power plant, are highlights of the period under review. The Company remains focussed on delivering a cost-effective, safe and reliable service to its customers while at the same time improving efficiency and managing costs."
During the Fourth Quarter 2014, the Electricity Regulatory Authority ("ERA") announced that CUC was the successful bidder for new generation capacity. The Company will develop and operate a new 39.7 megawatts ("MW") diesel power plant including two 18.5 MW diesel generating units and a 2.7 MW waste heat recovery steam turbine. The project cost is estimated at $85 million and the plant will be commissioned no later than June 2016.
Mr. Hew added, "Over the next year, the Company will see significant activity associated with the development of the new diesel power plant and the waste heat recovery steam turbine. Upon completion, the plant will boast the most fuel efficient generation ever installed by CUC which will bring increased reliability and lower cost to our consumers."
As a result of the Company's successful bid to supply additional generation, in November 2014 the ERA issued a new Generation license to the Company which replaces the Generation Licence granted in April 2008. The 2014 Generation license will expire in November 2039. The terms and conditions of the new Generation Licence are not materially different from the terms and conditions of the 2008 Generation Licence.
During the Fourth Quarter 2014, the ERA approved CUC's 2015-2019 Capital Investment Plan ("CIP") in the amount of $234 million, including generation expansion costs. The ERA also approved the Company's new Customer Service Code ("CSC"). The CSC sets out the terms and conditions of the supply of electricity to the Company's customers, as well as the standards for the level of service which CUC is required to provide to its customers. The new CSC provides for an increase in various customer service fees and the application of a Finance Charge which will be levied on overdue customer accounts beyond 60 days. This charge took effect on January 1, 2015.
The Company's average price per imperial gallon ("IG") of fuel for the Fourth Quarter 2014 decreased to $4.17 from $4.70 for the Fourth Quarter 2013. The Company's average price per IG of fuel for the twelve months ended December 31, 2014 decreased to $4.56 from $4.74 for the twelve months ended December 31, 2013.
With the price of fuel continuing to trend downwards, customers are expected to see a reduction in their utility bills in early 2015. The average Fuel Cost Charge rate per kWh charged to consumers for the Fourth Quarter 2014 was $0.28, a 3% decrease when compared to $0.29 per kWh for the Fourth Quarter 2013. Additional reductions to the fuel cost charge rate per kWh are expected to occur due to a 33% decrease in the customs duties levied on diesel fuel imports by the Cayman Islands Government which went into effect on January 1, 2015. CUC passes through 100% of fuel costs to consumers on a two-month lag basis without mark-up.
CUC believes that there are economic and environmental benefits to be derived from renewable energy sources. One of the potential renewable energy providers, International Electric Power ("IEP"), applied for and received from the Cayman Islands Planning Department permission to start the development of a 5MW solar power plant. A draft Power Purchase Agreement between CUC and IEP is now before the ERA for review.
CUC's Fourth Quarter Report for the period ended December 31, 2014 is attached to this release and incorporated by reference and can be accessed by clicking the link at the end of this release.
This report contains a detailed discussion of CUC's unaudited 2014 Fourth Quarter 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 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 report, 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 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) 914-1124E-Mail: [email protected]