(under IFRS and all amounts in US dollars unless otherwise stated)
TSX : AXY
VANCOUVER, Aug. 12, 2014 /CNW/ - Alterra Power Corp. (TSX: AXY)
("Alterra" or the "Company") is pleased to report its financial and
operating results for the three and six months ended June 30, 2014. For
further information on these results please see Alterra's Unaudited
Condensed Consolidated Interim Financial Statements and Management's
Discussion and Analysis.
Alterra consolidates 100% of the results of operations at HS Orka and
Soda Lake, while Alterra's interests in the Toba Montrose run of river
hydro facility and the Dokie 1 wind facility are accounted for as
equity investments. In certain statements in this news release,
Alterra's results are disclosed as Alterra's "net interest", which
means the effective portion of results that Alterra would have reported
if each of HS Orka (66.6%), Toba Montrose (40%), Dokie 1 (25.5%), and
Soda Lake (100%) had been reported in accordance with Alterra's actual
share of ownership at June 30, 2014 and for the three and six months
then ended. While management monitors the consolidated results
closely, it believes that net interest reporting provides the clearest
view of Alterra's performance.
Highlights for the current quarter and subsequent period include:
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Increase in revenue and gross profit: Consolidated revenue increased against the comparative quarter by 9% to
$16.5 million and gross profit increased by $0.7 million to $2.7
million, primarily due to increased generation at HS Orka. Net interest
in revenue and gross profit fell against the comparative quarter due to
lower generation at Toba Montrose and Dokie 1.
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Reliable power generation: Alterra's fleet of power projects generated 334,960 MWh of clean power
(net interest), achieving 101% of budgeted generation.
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Equity distributions: The Company recognized equity distributions declared during the quarter
from Dokie 1 and Blue Lagoon in the amounts of $0.6 million and $2.8
million, respectively.
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Jimmie Creek hydro project highlights:
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Current activities: The Company has executed all major contracts and full construction is
underway, with nearly 100 workers currently active at the site. Road
and bridge construction is now complete and work is well underway at
the intake and powerhouse locations. Clearing for penstock excavation
is nearly complete and subsurface conditions are in line with
expectations. In 2014, the Company has invested C$34.2 million in the
project, which is expected to be in excess of the Company's required
equity contribution. All amounts invested in excess of the Company's
equity contribution will be returned to the Company at financial close.
-
Partnership update: The Company entered into a partnership agreement with an affiliate of
Fiera Axium Infrastructure Inc. ("Fiera Axium"). Under the agreement,
at financial close, subject to certain conditions precedent, Fiera
Axium will cover 49% of all partnership costs from January 1, 2014
forward in exchange for a 49% interest in the project. The Company,
together with Fiera Axium is documenting a credit agreement with a
group of four long-term fixed-rate lenders, and expects to close
construction financing later in 2014.
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Shannon wind farm highlights:
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Current activities: Work continued on design and geotechnical investigation. The Company is
in the process of documenting and executing project contracts
(operation and maintenance, turbine supply agreement, etc.),
documenting a power hedge for project output, and negotiating terms
with tax equity investors. The Company is expecting to close
construction financing for the project with two lenders later in 2014.
Alterra is expected to own up to 50% of the project under a partnership
agreement currently being negotiated with a large energy infrastructure
fund under the terms of a previously executed letter of intent.
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Interconnection security: The Company placed an additional $5.5 million (total $10.1 million) cash
security with Oncor Electric Delivery Company LLC, the project's
transmission service provider, which has begun the design and equipment
procurement for the project's interconnection substation.
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Toba Montrose: The Company satisfactorily settled all insurance claims related to the
2012 naturally occurring rockslide. The project has obtained new
insurance coverage, effective immediately, at substantially the same
coverage terms as existed prior to the rockslide. Subsequent to the
quarter, the distribution waiver under the project loan agreement was
extinguished. The Company expect to receive an equity distribution of
$7.1 million from Toba Montrose in August 2014 (from a total
distribution of $17.8 million).
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Mariposa (Chile) development project: Summer construction activities were completed at the Mariposa project in
preparation for planned drilling in late 2015. These activities
included upgrades to existing site access roads, construction of new
roads, and upgrades of site camp facilities.
Financial Results
The following table shows Alterra's net interest in selected operating
and financial results for the quarter, in addition to key financial
information extracted from the consolidated results.
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For the 3 months ended
June 30, 2014 (a)
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HS Orka
(66.6%)
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Toba
Montrose
(40%)
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Dokie 1
(25.5%)
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Soda
Lake
(100%)
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Exploration
and Head
Office
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Net
Interest
Total
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Consolidated
Results
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Generation (MWh)
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208,384
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96,653
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13,743
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16,180
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—
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334,960
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329,069
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Total revenue
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10,258
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7,285
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1,208
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1,051
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—
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19,802
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16,453
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Gross profit
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1,861
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5,268
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139
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(90)
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—
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7,178
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2,704
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EBITDA (c)
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3,805
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5,450
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494
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114
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(1,834)
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8,029
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9,955
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For the 3 months ended
June 30, 2013 (a)
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HS Orka
(66.6%)
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Toba
Montrose
(40%)
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Pro forma
Dokie 1
(25.5%) (b)
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Soda
Lake
(100%)
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Exploration
and Head
Office
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Net
Interest
Total
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Consolidated
Results
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Generation (MWh)
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202,604
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63,975
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16,443
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15,992
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—
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299,014
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320,202
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Total revenue
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9,373
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6,233
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1,775
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1,022
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—
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18,403
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15,096
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Business interruption proceeds
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—
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1,936
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—
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—
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—
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1,936
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—
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Gross profit (loss)
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1,688
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4,117
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589
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(539)
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—
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5,855
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1,996
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EBITDA (c)
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3,341
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7,059
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1,009
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59
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(1,712)
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9,756
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12,440
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(a)
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All tabular amounts in the table above are expressed in thousands of US
dollars with the exception of generation that is expressed
in MWh's.
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(b)
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For comparison purposes, the 2013 operating results shown here for Dokie
1 have been adjusted to show a pro forma 25.5%
interest for the comparative quarter (actual ownership during the
comparative quarter was 51.0%).
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(c)
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Here and elsewhere, Adjusted EBITDA ("EBITDA") is defined by Alterra as
earnings before interest, taxes, foreign exchange,
depreciation and amortization, as well as before deductions for change
in fair value of bonds payable and derivatives, foreign
exchange gain (loss), write off of development costs and goodwill, and
other income (expense) except business interruption
proceeds, amortization of below market contracts, and value assigned to
options granted, less share of income (loss) of equity
accounted investees, plus the Company's interest in EBITDA of its equity
accounted investees. Alterra discloses EBITDA as it is
a measure used by analysts and by management to evaluate Alterra's
performance. As EBITDA is a non-IFRS measure, it may
not be comparable to EBITDA calculated by others. In addition, as EBITDA
is not a substitute for net earnings, readers should
consider net earnings in evaluating Alterra's performance. For a
reconciliation of consolidated EBITDA to Alterra's consolidated
financial statements refer to the Company's Management's Discussion and
Analysis for the three and six months ended June 30,
2014.
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Consolidated Results
Revenue was up 9% at $16.5 million for the quarter ended June 30, 2014,
due to increased generation at both HS Orka and Soda Lake which
resulted in an increase in gross profit by $0.7 million.
Net income was $6.0 million, an improvement against the comparative
quarter ($2.3 million loss) resulting from the increase in revenue and
a reduction in general and administrative expenses, as well as certain
non-cash items including:
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A $4.0 million non-cash gain ($6.8 million loss in the comparative
quarter) resulting from an increase in long-term forecast aluminum
prices from March 31, 2014, which caused a reduction in the value of
the embedded derivative liabilities.
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A $4.3 million non-cash gain ($2.4 million loss in the comparative
quarter) on foreign exchange due to favorable movements in exchange
rates.
The increases were offset by a reduction in the share of results of
equity investees to $2.9 million, from $7.2 million in the comparative
quarter. The reduction is due to the recognition of property insurance
proceeds at Toba Montrose of $4.1 million in the comparative quarter,
against $0.8 million recognized in the three months to June 30, 2014,
as well as lower winds at Dokie 1 in the current quarter and lower
water flows at Toba Montrose.
Consolidated cash and cash equivalents at June 30, 2014 were $38.6
million of which $36.1 million is held in the Company's Icelandic
subsidiary ($41.7 million and $33.9 million respectively at December
31, 2013).
Net Interest Results
Alterra's net interest revenue decreased 3% to $19.8 million compared to
$20.3 million in the comparative quarter, which included business
interruption proceeds related to the 2012 rockslide. EBITDA decreased
by 18% to $8.0 million as a result of the lower generation at Toba
Montrose and Dokie 1.
The net interest cash position at June 30, 2014 was $33.1 million.
Operating Results
For the three months ended June 30, 2014, the Company's fleet wide
generation was 101% of budget on a net interest basis.
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Q2 2014 Generation (MWh)
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Net Interest
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Facility
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Budget
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Actual
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Budget
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Actual
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% of Budget
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Reykjanes
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205,150
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189,771
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136,630
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126,387
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93%
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Svartsengi
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106,099
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123,118
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70,662
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81,997
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116%
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Soda Lake
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16,925
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16,180
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16,925
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16,180
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96%
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Toba Montrose
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228,551
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241,633
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91,420
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96,653
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106%
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Dokie 1
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68,132
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53,893
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17,374
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13,743
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79%
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TOTAL
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624,857
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624,595
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333,011
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334,960
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101%
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Outlook
John Carson, Alterra's CEO, said, "Our team produced strong results on
all fronts this quarter. Our operators safely produced clean power
above our targeted amount, and our development and financing teams made solid
gains on our growth projects. Looking ahead our team remains fully
focused on achieving positive growth and results for our shareholders."
Alterra Power will host a conference call to discuss financial and
operating results on Wednesday, August 13, 2014 at 11:30 am ET (8:30 am
PT).
North American participants dial 1-888-390-0546 and International
participants dial 1-416-764-8688; the conference ID is 68495512
The call will also be broadcast live on the Internet at
http://www.newswire.ca/en/webcast/detail/1389013/1541135
The call will be available for replay for one week after the call by
dialing 1-416-764-8677 and entering replay PIN 495512
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Cautionary Note Regarding Forward-Looking Statements and Information
Certain statements included in this news release may contain information
that is forward-looking within the meaning of certain securities laws,
including information and statements regarding prospective results of
operations, financial position, cash flows or growth potential. These
statements are based on factors or assumptions that were applied in
drawing a conclusion or making a forecast or projection, including
assumptions based on historical trends, current conditions and expected
future developments. Since forward-looking statements relate to future
events and conditions, by their very nature they require making
assumptions and involve inherent risks and uncertainties. Alterra
cautions that although it is believed that the assumptions are
reasonable in the circumstances, these risks and uncertainties give
rise to the possibility that actual results may differ materially from
the expectations set out in the forward-looking statements. Material
risk factors include those set out in the management's discussion and
analysis section of Alterra's most recent annual report and quarterly
report, and in Alterra's Annual Information Form. Given these risks,
undue reliance should not be placed on these forward-looking
statements, which apply only as of their dates. Other than as
specifically required by law, Alterra undertakes no obligation to
update any forward-looking statements or information to reflect new
information, subsequent or otherwise.
SOURCE Alterra Power Corp.