CLASS A ORDINARY SHARES LISTED FOR TRADING IN UNITED STATES FUNDS ON THE
TORONTO STOCK EXCHANGE/TRADING SYMBOL: CUP.U
GRAND CAYMAN, Cayman Islands, July 17 /CNW/ - Caribbean Utilities Company, Ltd. ("CUC" or "the Company") announced today its audited financial results for the year ended April 30, 2007 (all figures reported in United States dollars unless otherwise noted).
Final Return
CUC submitted to the Cayman Islands Government ("Government") today its Final Return containing its year-end 2007 audited results confirming that the Company is entitled to a 4.5% rate increase effective August 1, 2007 under its current Licence. This shortfall on Return on Capital Employed is primarily a result of the disposal of the 2.4 megaWatt (MW) steam system as part of a power plant restructuring, increased operating expenses and infrastructure investment. CUC will not seek to implement this rate increase, as it agreed with Government that it would freeze its base rates during the period of the Hurricane Ivan Cost Recovery Surcharge.
CUC has not increased its base rates since 2002 and, in the five-year period since, will have foregone $16.9 million in total revenue, including $3.5 million representing the August 2007 entitlement.
Financial Results
Net earnings for the year ended April 30, 2007 were $18.5 million, a 19%, or $4.4 million, decline from net earnings of $22.9 million last year. This decrease is primarily due to the $3.7 million impact from the power plant restructuring in the third quarter and a series of unexpected generator failures partially offset by 12% sales growth. Fiscal 2007 earnings on Class A Ordinary Shares after preference dividends were $17.7 million, or $0.70 per share, compared to $21.9 million, or $0.87 per share, for fiscal 2006.
Operating revenues for the year totaled $158.9 million, a 17% increase over 2006 revenues of $135.7 million. Electricity sales increased 12% from $85.7 million in 2006 to $96.2 million in 2007. Net generation grew to 546.07 million kiloWatt-hours (kWh) from 485.52 million kWh in 2006, representing a 12% increase. Peak load for the year was 86.83 MW compared with 79.04 MW in 2006, representing a 10% increase. Total customers increased 8% to more than 22,700 in 2007.
General Comments
"The plant restructuring was a strategic decision in 2007 that will optimize our generation operations in the future," said Richard Hew, CUC President and Chief Executive Officer. "Although the one-time plant restructuring charge of $3.7 million and unexpected expenses relating to generation maintenance and generation leasing drove 2007 earnings lower, we anticipate that more normal operating expenses, coupled with strong demand growth, will improve earnings performance in 2008. CUC is projecting 8% sales growth in fiscal 2008, which is indicative of the Cayman Islands economic growth that has occurred and will continue in the future. Accordingly, we are undertaking several major capital projects to meet this demand, such as our newly commissioned MAN B&W 16 MW engine as well as planned transmission and distribution (T&D) system upgrades. Capital expenditures totaled $35.6 million in fiscal 2007 and are projected at $39.7 million in 2008."
Licence negotiations with Government for new Licences are continuing. Management met regularly with the Government's appointed negotiating team throughout fiscal 2007. CUC also met with Cabinet in May 2007 and submitted a new proposal to Government at its request in mid-June. CUC's current Licence remains in full force and effect until January 2011 or replaced by new Licences by mutual agreement.
Year-end customer reliability improved to 99.93% as measured by the Average System Availability Index despite the aforementioned three generator failures representing 29.4 MW of generating capacity during the year. CUC has various reliability initiatives planned to improve service in this area such as the completion of the eastern transmission loop. The Company also sustained its excellent performance in training, safety and the environment in fiscal 2007 by meeting its planned targets in these areas.
"CUC continued to engage in community projects in 2007 in maintaining its position as a leading corporate citizen," Mr. Hew continued. "Our employees contributed more than 3,100 volunteer hours this year in supporting our many community partners throughout Grand Cayman. This total more than doubled our 2006 volunteer hours, and I am very proud of our employees' service to our community."
CUC closed in June on the first $30 million tranche of a $40 million private placement debt offering of Senior Unsecured Notes with one institutional lender in the United States. The second and final closing of $10 million will occur in December 2007. Proceeds from the debt offering will be used to repay short-term indebtedness and finance the Company's generation and T&D capital program.
"CUC remains committed to providing world-class, reliable service at least cost to our customers," stated Mr. Hew. "The Company completed its spring 2007 customer satisfaction survey and received an 84% overall rating. We are also planning a number of user-friendly initiatives in fiscal 2008 to further improve the level of service to our customers and to make it easier to conduct business with us."
CUC's Management's Discussion and Analysis (MD&A), audited financial statements for the year ended April 30, 2007 and accompanying notes are incorporated by reference to this release and can be accessed by clicking the link below:
http://files.newswire.ca/520/cuc07mdaandfinancials.pdf
The MD&A contains a detailed discussion of CUC's audited year-end financial results, liquidity, capital resources and capital expenditures, the Cayman Islands economy and the business risks facing the Company. The release, MD&A, year-end audited financial statements and notes can be downloaded from www.cuc-cayman.com (Investor Relations/Press Releases) and www.sedar.com. The 2007 Annual General Meeting of shareholders will be held August 30 in Grand Cayman, Cayman Islands.
CUC is the sole provider of electricity to Grand Cayman, Cayman Islands and operates under a 25-year exclusive Licence with the Government of the Cayman Islands, which expires in January 2011. Further information is available at www.cuc-cayman.com.
Caribbean Utilities Company, Ltd. ("CUC" or "the Company"), on occasion, includes forward-looking statements in its media releases, Canadian securities regulatory authorities filings, shareholder reports and other communications. Forward-looking statements are based on underlying assumptions by their very nature and are subject to certain risks and uncertainties that may cause actual results to vary from plans, targets and estimates. Such risks and uncertainties include but are not limited to general economic, market and business conditions, regulatory developments and weather conditions. CUC cautions readers that actual results may vary significantly from those expected should certain risks or uncertainties materialize or should underlying assumptions prove incorrect. 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.
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