CALGARY, ALBERTA--(Marketwired - July 27, 2016) - Canadian Utilities Limited (TSX:CU)(TSX:CU.X)
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Canadian Utilities today announced second quarter adjusted earnings for 2016 of $131 million compared to $101 million in
2015.
Higher earnings compared to the second quarter of 2015 were mainly the result of continued capital investment and growth in
rate base within the Regulated Utilities and business-wide cost reduction initiatives. Earnings in the second quarter of 2015
were reduced by a one-time earnings impact resulting from a retroactive regulatory decision that ATCO Gas Australia received in
that quarter.
Canadian Utilities invested $331 million in the second quarter and $674 million in the first half of 2016, 88 per cent of
which was in the Company's Regulated Utilities and in long-term contracted capital assets. These investments either earn a return
under a regulatory business model or are commercially secured under long-term contracts.
On July 12, 2016, Canadian Utilities declared a third quarter dividend for 2016 of 32.50 cents per Class A Non-Voting and
Class B Common Share, a 10 per cent increase over the dividends declared in the same period of 2015. Canadian Utilities' annual
dividend per share has increased for 44 consecutive years.
RECENT DEVELOPMENTS
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In May 2016, Canadian Utilities rapidly responded to wildfires in the Fort McMurray region of
northern Alberta by mobilizing teams from across Alberta to provide accommodation for first responders and evacuees, and
rebuild utility infrastructure that was damaged by wildfires. The fires impacted the assets of the Company's Regulated
Electricity and Regulated Pipelines & Liquids businesses located in the region. Insurance coverage applies to the Company's
property with the exception of small diameter natural gas pipelines and meters and electric property outside of
transmission substations including wires, poles, towers, transformers and meters. The estimated net book value of the
damaged assets is less than $10 million. |
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On July 25, 2016, the Government of Alberta commenced legal action to determine the validity and
interpretation of certain terms within the Power Purchase Arrangements (PPAs) and related regulations. The legal
action the Government of Alberta filed seeks to prevent the PPAs from being returned to the Balancing Pool. Canadian
Utilities has never been a buyer of a coal PPA. Canadian Utilities continues to operate Battle River unit 5 and Sheerness
units 1 and 2 under the terms of their respective PPAs. Canadian Utilities will monitor and, in its capacity as a
respondent, participate in the proceeding. However, the proceeding seeks no direct relief against Canadian Utilities. |
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED EARNINGS
A financial summary and reconciliation of adjusted earnings to earnings attributable to equity owners is provided
below:
| |
For the Three Months
Ended June 30 |
For the Six Months
Ended June 30 |
| ($ Millions except share data) |
2016 |
2015 |
2016 |
2015 |
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|
|
|
|
| Adjusted earnings (1) |
131 |
101 |
328 |
231 |
| Gain on sale of joint operation (2) |
- |
- |
13 |
- |
| Restructuring costs (2) |
- |
(4) |
- |
(4) |
| Impairments (2) |
- |
(4) |
- |
(4) |
| Rate-regulated activities (2) |
(40) |
(63) |
(75) |
(31) |
| Dividends on equity preferred shares |
17 |
13 |
34 |
25 |
| Earnings attributable to equity owners |
108 |
43 |
300 |
217 |
| Weighted average shares outstanding (millions of shares) |
267.0 |
264.2 |
266.8 |
264.0 |
| (1) |
Adjusted earnings are earnings attributable to equity owners after adjusting
for the timing of revenues and expenses associated with rate-regulated activities and dividends on equity preferred shares
of Canadian Utilities. Adjusted earnings also exclude one-time gains and losses, significant impairments and items that are
not in the normal course of business or a result of day-to-day operations. Adjusted earnings present earnings on the same
basis as was used prior to adopting International Financial Reporting Standards (IFRS) - that basis being the U.S.
accounting principles for rate-regulated entities - and they are a key measure used to assess segment performance, to
reflect the economics of rate regulation and to facilitate comparability of Canadian Utilities' earnings with other
Canadian rate-regulated companies. |
| (2) |
Refer to Note 3 of the consolidated financial statements for descriptions of
the adjustments. |
Earnings attributable to equity owners of the Company were $108 million in the second quarter of 2016, $65 million
higher compared to the same period in 2015 mainly due to adjusted earnings that were higher in the second quarter by $30 million.
Earnings attributable to equity owners of the Company includes timing adjustments related to rate-regulated activities that are
not included in adjusted earnings.
The net impact of timing adjustments made in rate-regulated accounting improved earnings attributable to equity owners by $23
million in the second quarter of 2016 compared to the same period in 2015. Earnings in the second quarter of 2015 attributable to
equity owners of the Company also included $8 million of impairments and restructuring costs. The Company also had $4 million of
higher finance costs associated with preferred share issuances completed in 2015.
This news release should be used as a preparation for reading the full disclosure documents. Canadian Utilities' consolidated
financial statements and management's discussion and analysis for the second quarter ended June 30, 2016 will be available on the
Canadian Utilities website (www.canadianutilities.com), via SEDAR
(www.sedar.com) or can be requested from the Company.
With nearly 5,500 employees and assets of approximately $18 billion, Canadian Utilities Limited is an ATCO company.
ATCO is a diversified global corporation delivering service excellence and innovative business solutions in Structures &
Logistics (workforce housing, innovative modular facilities, construction, site support services, and logistics and operations
management); Electricity (electricity generation, transmission, and distribution); Pipelines & Liquids (natural gas transmission,
distribution and infrastructure development, energy storage, and industrial water solutions); and Retail Energy (electricity and
natural gas retail sales). More information can be found at www.canadianutilities.com.
Forward-Looking Information:
Certain statements contained in this news release may constitute forward-looking information. Forward-looking
information is often, but not always, identified by the use of words such as "anticipate", "plan", "estimate", "expect", "may",
"will", "intend", "should", and similar expressions.
Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in such forward-looking information. The Company's actual
results could differ materially from those anticipated in this forward-looking information as a result of regulatory decisions,
competitive factors in the industries in which the Company operates, prevailing economic conditions, and other factors, many of
which are beyond the control of the
Company.
The Company believes that the expectations reflected in the forward-looking information are reasonable, but no assurance
can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied
upon.
Any forward-looking information contained in this news release represents the Company's expectations as of the date
hereof, and is subject to change after such date. The Company disclaims any intention or obligation to update or revise any
forward-looking information whether as a result of new information, future events or otherwise, except as required by applicable
securities legislation.