Canadian Utilities Limited (TSX: CU, CU.X)
Canadian Utilities today reported comparable Adjusted Earnings
in the third quarter as higher earnings from investment in utility
infrastructure to support Alberta growth and the addition of ATCO
Gas Australia in late July 2011 were offset by the effect of
utility rate decisions received at the end of 2011.
Earnings attributable to equity owners were $119 million ($0.87
per share) for the third quarter of 2012 compared to $66 million
($0.47 per share) for the same period in 2011. Adjusted Earnings
were $106 million for the third quarter of 2012 and $106 million
for the same period in 2011.
Earnings attributable to equity owners were $417 million ($3.06
per share) for the nine months ended September 30, 2012 compared to
$340 million ($2.51 per share) for the same period in 2011.
Adjusted Earnings were $376 million for the nine months ended
September 30, 2012, and $362 million for the same period in
2011.
In the third quarter, ATCO Electric, ATCO Gas and ATCO Pipelines
invested an additional $557 million in infrastructure to support
Alberta's continuing growth, bringing the total investment in the
first nine months of 2012 to $1.5 billion. A significant amount of
this capital investment is related to regulated transmission
infrastructure projects required to reinforce the electricity
system and supply growing electricity demand in northeast Alberta.
Canadian Utilities earns a regulated return on its infrastructure
investments.
Construction continues on the Hanna Region Transmission
Development Project in southeast Alberta with an expected
in-service by the end of the second quarter of 2013.
Pre-construction activities continue on the Eastern Alberta
Transmission Line with final approval of the facility application
expected by late 2012.
Higher earnings from utility rate base growth were offset by
utility rate decisions received at the end of 2011, which lowered
the return on equity for ATCO Electric, ATCO Gas and ATCO Pipelines
from 9.00% to 8.75%, reduced ATCO Pipelines equity from 45% to 38%,
and reduced interim rates billed to customers by ATCO Gas in
2012.
RECENT DEVELOPMENTS
-- Canadian Utilities declared a fourth quarter dividend for 2012 of 44.25
cents per Class A non-voting and Class B common share. Canadian
Utilities' annual dividend per share has increased for 40 consecutive
years.
-- On August 1, 2012, Canadian Utilities announced the combination of the
operations of ATCO Midstream and ATCO Energy Solutions under the name
ATCO Energy Solutions, reflecting its focus on offering comprehensive
gas storage, industrial water infrastructure, natural gas gathering,
processing, transportation and gas liquids services to the oil and gas
sector.
-- Canadian Utilities implemented a Dividend Reinvestment Plan (DRIP)
effective with the quarterly dividend payment in September 2012 to
eligible Class A non-voting and Class B common share owners of record as
of August 10, 2012, who are enrolled in the program. Shares purchased
under the DRIP will be new Class A shares issued from treasury. The
shares will be issued at a two per cent discount to the volume weighted
average price of the Class A shares traded on the Toronto Stock Exchange
during the last five qualifying trading days preceding the dividend
payment date. During the third quarter and first nine months of 2012,
414,798 Class A non-voting shares were issued under the DRIP, using
reinvested dividends of $28 million.
-- CU Inc., a wholly owned subsidiary of Canadian Utilities, issued $500
million of 3.805% Debentures maturing on September 10, 2042 and $200
million of 3.825% Debentures maturing on September 11, 2062.
FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED EARNINGS
A financial summary and reconciliation of Adjusted Earnings to
earnings attributable to equity owners is provided
below:
For the Three Months For the Nine Months
Ended September 30 Ended September 30
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($ Millions except per share
data) 2012 2011 2012 2011
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Adjusted Earnings (1) 106 106 376 362
Adjustments for Rate Regulated
Activities (2) 4 1 14 8
Acquisition Transaction Costs - (47) - (50)
Dividends on Equity Preferred
Shares 9 6 27 20
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Earnings Attributable to Equity
Owners 119 66 417 340
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Earnings Per Share 0.87 0.47 3.06 2.51
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Revenues 741 697 2,284 2,172
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Funds Generated By Operations
(3) 352 261 1,067 905
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(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 and items that are not in the normal course of business or day-
to-day operations. Adjusted Earnings present earnings on the same basis
as was used prior to adopting 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 to the consolidated financial statements for
descriptions of the adjustments for rate regulated activities and the
timing of their recovery from or refund to customers.
(3) This measure is cash flow from operations before changes in non-cash
working capital. It does not have standardized meaning under
International Financial Reporting Standards (IFRS) and may not be
comparable to similar measures used by other companies.
Revenues in the third quarter and the first nine months of 2012
increased primarily due to increased rate base in the Utilities and
the acquisition of ATCO Gas Australia in late July 2011. These
increases in revenues were partially offset by lower flow through
natural gas sales in ATCO Energy Solution's natural gas liquids
extraction operations.
Funds Generated by Operations increased in the third quarter and
the first nine months of 2012 primarily for the same reasons
earnings increased, as well as higher contributions by utility
customers required to connect customers to utility
infrastructure.
Canadian Utilities' consolidated financial statements and
management's discussion and analysis for the three and nine months
ended September 30, 2012, will be available on the Canadian
Utilities website (www.canadianutilities.com), via SEDAR
(www.sedar.com) or can be requested from the Corporation.
Alberta-based Canadian Utilities Limited, an ATCO company, with
more than 6,700 employees and assets of approximately $13 billion,
delivers service excellence and innovative business solutions
worldwide with leading companies engaged in utilities (pipelines,
natural gas and electricity transmission and distribution), energy
(power generation, natural gas gathering, processing, storage and
liquids extraction) and technologies (business systems solutions).
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 Corporation 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 Corporation's expectations as of the date hereof,
and is subject to change after such date. The Corporation 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.
Contacts: Canadian Utilities Limited B.R. (Brian) Bale Senior
Vice President & Chief Financial Officer (403) 292-7502
www.canadianutilities.com
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