Toronto Hydro Corporation Releases its First Quarter Financial Results

TORONTO, May 14, 2015 /CNW/ - Toronto Hydro Corporation (the "Corporation") today announced its consolidated financial and operating results as at and for the three months ended March 31, 2015.  Due to the transition to International Financial Reporting Standards ("IFRS") effective the first quarter of 2015, and early adoption of IFRS 14 Regulatory Deferral Accounts ("IFRS 14"), all comparative figures for 2014 that were previously reported in accordance with United States Generally Accepted Accounting Principles ("US GAAP") have been modified to conform with the new standards adopted.  The unaudited condensed interim consolidated financial statements and related Management's Discussion and Analysis, presented in Canadian dollars, are available on the Corporation's website www.torontohydro.com or through SEDAR's website www.sedar.com.

Selected Financial Highlights (in millions of Canadian dollars, unaudited)
				Three Months Ended March 31
				2015 $	2014 $
Net income after net movements in regulatory balances				16.5	21.6
Revenues				864.1	897.1
Capital expenditures				109.0	94.7

• Net income after net movements in regulatory balances for the three months ended March 31, 2015 was $16.5 million compared to $21.6 million for the same period in 2014.
• Revenues were lower at $864.1 million for the three months ended March 31, 2015 compared to $897.1 million for the same period in 2014.
• Capital expenditures were higher at $109.0 million for the three months ended March 31, 2015 compared to $94.7 million for the same period in 2014.

"In the first quarter of 2015, we continued to focus our efforts on the modernization of our electricity grid, consistent with the strategy outlined in our 2015-2019 electricity distribution rates application currently in front of the Ontario Energy Board", said Anthony Haines, President and Chief Executive Officer.

Corporate Developments

Effective January 1, 2015, the Corporation adopted IFRS, including early adoption of IFRS 14.  All comparative consolidated financial information has been modified from the consolidated financial statements previously presented in accordance with US GAAP.  The Corporation's first IFRS annual consolidated financial statements will be for the year ended December 31, 2015.

On January 9, 2015, the Corporation filed a base shelf prospectus with the securities commissions or similar regulatory authorities in each of the provinces of Canada.  These filings allow the Corporation to make offerings of unsecured debt securities of up to $1.0 billion during the 25-month period following the date of the prospectus.

On March 16, 2015, the Corporation issued $200.0 million of 3.55% senior unsecured debentures at a price of $998.37 per $1,000 principal amount due July 28, 2045 ("Series 11").  The Series 11 debentures bear interest payable semi-annually in arrears and contain covenants which, subject to certain exceptions, restrict the ability of the Corporation and Toronto Hydro-Electric System Limited ("LDC") to create security interests, incur additional indebtedness or dispose of all or substantially all of their assets. The net proceeds of the debentures were used to repay certain existing indebtedness of the Corporation and for general corporate purposes.

On April 28, 2015, the Ontario Energy Board ("OEB") declared LDC's existing rates interim, effective May 1, 2015.  The decision on the rate application LDC filed with the OEB on July 31, 2014 under the Custom Incentive Rate-setting mechanism, will be issued sometime after LDC's proposed rate implementation date. This will allow LDC to reconcile, at a later date, any variance between its existing and approved rates over the interim period between May 1, 2015 and the effective date of the OEB decision. 

Selected Financial Highlights
(in millions of Canadian dollars, unaudited)
			Three Months Ended March 31
			2015 $	2014 $
Net income after net movements in regulatory balances			16.5	21.6
Energy sales			703.6	742.1
Distribution revenue			147.0	141.1
Energy purchases			687.2	708.6
Operating expenses			70.3	74.3
Depreciation and amortization			42.7	39.1
Finance costs			17.0	15.0
Income tax expense			5.3	5.5
Net movements in regulatory balances, net of tax			(31.5)	(33.0)
Capital expenditures			109.0	94.7

Net income after net movements in regulatory balances for the three months ended March 31, 2015 was $16.5 million compared to $21.6 million for the comparable period in 2014. The analysis of this variance needs to reflect the offsetting impacts of items included in net movements in regulatory balances, net of tax. Accordingly, the variance of $5.1 million was mainly related to lower distribution revenue ($3.7 million), higher depreciation expense ($3.6 million), and higher financing costs ($2.0 million); partially offset by lower operating expenses ($4.0 million).

Capital expenditures amounted to $109.0 million for the three months ended March 31, 2015 compared to $94.7 million for the comparable period in 2014.  The most significant regulated capital expenditures incurred by LDC for the three months ended March 31, 2015 related to spending on overhead infrastructure ($21.2 million), underground infrastructure ($16.8 million), customer connections ($12.4 million), the facilities consolidation program ($7.6 million), Copeland Station ($6.6 million), and reactive remediation work ($6.6 million).

About Toronto Hydro Corporation

The Corporation is a holding company which wholly-owns two subsidiaries:

• LDC - which distributes electricity and engages in Conservation and Demand Management activities; and
• Toronto Hydro Energy Services Inc. - which provides street lighting services.

The principal business of the Corporation and its subsidiaries is the distribution of electricity by LDC.  LDC owns and operates an electricity distribution system, delivering electricity to approximately 744,000 customers located in the City.  It is the largest municipal electricity distribution company in Canada and distributes approximately 18% of the electricity consumed in the province of Ontario.

Forward-Looking Information

The Corporation includes forward-looking information in its news release within the meaning of applicable securities laws in Canada ("forward-looking information").  The purpose of the forward-looking information is to provide management's expectations regarding the Corporation's future results of operations, performance, business prospects and opportunities and may not be appropriate for other purposes.  All forward-looking information is given pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. The word "will" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words.  The forward-looking information reflects management's current beliefs and is based on information currently available to the Corporation's management.

The forward-looking information in this news release includes, but is not limited to, statements regarding the Corporation's conversion to IFRS and the Corporation's plans and expectations regarding the current rate application under the Custom Incentive Rate-setting mechanism.  The statements that make up the forward-looking information are based on assumptions that include, but are not limited to, the current guidance from accounting standard bodies with respect to the conversion to IFRS accounting standards and the outcomes regarding the current rate application under the Custom Incentive Rate-setting mechanism.

The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.  The factors which could cause results or events to differ from current expectations include, but are not limited to, market liquidity and the quality of the underlying assets and financial instruments, the timing and extent of changes in prevailing interest rates, inflation levels, and legislative, judicial and regulatory developments that could affect revenues and the results of borrowing efforts.

All forward-looking information in the news release is qualified in its entirety by the above cautionary statements and, except as required by law, the Corporation undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.

SOURCE Toronto Hydro Corporation

please contact: Chris Tyrrell, Executive Vice-President and Chief Customer Care and Conservation Officer: 416-542-3143, [email protected]; JS Couillard, Executive Vice-President and Chief Financial Officer: 416-542-3166; [email protected]