| HIGHLIGHTS FOR FISCAL 2014 |
|
| Valener |
|
| Gaz Métro |
|
MONTREAL, Nov. 27, 2014 /CNW Telbec/ - Valener Inc. (Valener) (TSX: VNR), the public investment vehicle in Gaz Métro Limited Partnership (Gaz Métro), is today announcing its financial results.
For fiscal 2014, recurring net income attributable to common shareholders totalled $36.7 million ($0.97 per common share) versus $34.0 million ($0.90 per common share) in fiscal 2013. This increase of $2.7 million ($0.07 per common share) came from an increase in Gaz Métro's recurring net income owing to higher natural gas and electricity deliveries in Quebec and Vermont, synergies from the operational integration of Green Mountain Power (GMP) and Central Vermont Public Service (CVPS), as well as a favourable impact of the depreciation of the Canadian dollar versus the U.S. dollar on the results of its business activities in the United States.
"For a third consecutive year, Valener has shown shareholders that it can deliver solid returns through its investment in Gaz Métro. Gaz Métro's performance has clearly shown that its growth strategy is both effective and profitable. We're confident that we'll be able to build on this momentum," said Pierre Monahan, Chairman of Valener's board of directors.
For fiscal 2014, Valener recorded normalized operating cash flows of $38.8 million or $1.02 per common share, enough to cover the dividend payment of $1.00 per common share even though Valener does not benefit, since October 1, 2013, from increased annual distributions otherwise payable by Gaz Métro, representing $0.13 per common share, and the Seigneurie de Beaupré wind farms have not yet started to pay distributions to their partners.
For fiscal 2015, Valener expects to maintain the $1.00 per common share dividend payment.
Seigneurie de Beaupré Wind Farms
| Wind farms 2 and 3 |
||||
| Installed capacity |
Complete start-up |
Total investment |
Valener |
Gaz Métro |
| 272 MW |
Dec. 2013 |
~$750M |
24.5% |
25.5% |
Since being commissioned, these wind farms have generated 645,143 megawatthours, exceeding expectations thanks to favourable wind conditions.
The commercial operation of these wind farms is going as planned, and, given the favourable winds experienced since the start of operations, Seigneurie de Beaupré Wind Farms 2 and 3 General Partnership (Wind Farms 2 and 3) generated operating cash flows in fiscal 2014, a portion of which is expected to be distributed, subject to certain conditions, to Valener and Gaz Métro in fiscal 2015.
| Wind farm 4 |
||||
| Installed capacity |
Expected start-up |
Total investment |
Valener |
Gaz Métro |
| 68 MW |
Nov. 2014 |
~$190M |
24.5% |
25.5% |
The commissioning of wind farm 4 is expected within the next few days, as scheduled and within budget.
In addition to substantial advantages of the Seigneurie de Beaupré site—namely, the wind and environmental conditions and existing infrastructure—this wind farm benefits from the logistical synergies achieved during construction and those to be achieved during operation.
Outlook
In November 2014, Gaz Métro and its partners participated in a new call for tenders issued by Hydro-Québec to purchase a block of wind power with a total installed capacity of 450 megawatts, i.e., 300 megawatts in the Bas-Saint-Laurent and Gaspésie-Îles-de-la-Madeleine regions and 150 megawatts from projects across Quebec. Under the terms and conditions of the call for tenders, these wind farms should be connected to Hydro-Québec's main grid in 2016 and 2017. The tenders are currently being examined by Hydro-Québec.
| Summary of Valener's results |
||||||||
| For the fiscal years ended September 30 |
||||||||
| (in millions of dollars unless otherwise indicated) |
2014 |
2013 |
||||||
| Net income attributable to common shareholders |
36.7 |
37.1 |
||||||
| Recurring net income attributable to common shareholders (1) |
36.7 |
34.0 |
||||||
| Per common share (in $) |
0.97 |
0.90 |
||||||
| Normalized operating cash flows (1) |
38.8 |
40.4 |
||||||
| Per common share (in $) |
1.02 |
1.07 |
||||||
| (1) |
These measures are financial measures not defined in Canadian generally accepted accounting principles (GAAP). |
|||||||
Growth drivers for Gaz Métro
In addition to its joint wind power projects with Valener and Boralex Inc., Gaz Métro is pursuing growth in the following areas:
Liquefied natural gas
Gaz Métro recently announced that, in partnership with the Government of Quebec, $118 million will be invested to triple the production capacity of its natural gas liquefaction plant in Eastern Montreal. The government's contribution, to be made through Investissement Québec, will be a maximum of $50 million.
"Thanks to this strategic initiative, we will be able to provide, as of 2016, liquefied natural gas service to areas that are far removed from our gas network, in particular the Nord-du-Québec and Côte-Nord regions. We'll be able to do the same for the road and maritime transportation sectors, which are keen on using a cleaner, more cost-effective fuel than diesel," said Sophie Brochu, Gaz Métro's President and Chief Executive Officer.
"This initiative will also expand the commercial and geographic reach of natural gas in Quebec. It will help our new customers improve both their financial and environmental track record and help Quebec society to prosper in an even more sustainable fashion," continued Ms. Brochu.
Extension of the natural gas system in Vermont
Vermont Gas Systems, Inc. (VGS), a wholly-owned subsidiary of Gaz Métro, has continued to expand its gas system to serve the communities of Vergennes and Middlebury in Addison County as of December 2015.
As for the distribution service extension to International Paper Company in New York State, the Vermont Public Service Board (VPSB) will begin technical hearings in January 2015.
The investments for this project will more than double VGS's current size.
Greater efficiency by Vermont's electricity distribution operations
In 2014, GMP, a wholly-owned subsidiary of Gaz Métro, continued integrating its operations with those of CVPS. With the synergies achieved, GMP was able to attribute US$5 million to its customers, as had been planned, and retain the surplus as per the agreement reached with the VPSB upon the CVPS acquisition in 2012.
During fiscal 2015, GMP will continue merging its operations so that its customers and GMP itself can continue to benefit from the resulting efficiencies and synergies.
Investments in existing energy distribution and transportation systems
Gaz Métro applies a robust investment program to its natural gas and electricity distribution and transportation systems to ensure they remain safe, durable and reliable. Under this program, more than $325 million was invested in Quebec and Vermont in fiscal 2014.
Gaz Métro's results
For fiscal 2014, recurring net income attributable to the Partners of Gaz Métro totalled $174.7 million, up $9.0 million or 5.4% from $165.7 million last year. This increase came mainly from strong performance by the Energy Distribution segment.
| Gaz Métro's segment results – Net income attributable to Partners, excluding non-recurring items |
||||
| For the fiscal years ended September 30 |
||||
| (in millions of dollars) |
2014 |
2013 |
Change |
|
| Energy Distribution |
||||
| Gaz Métro‑QDA |
111.0 |
105.9 |
5.1 |
|
| GMP and VGS (1) |
58.2 |
45.7 |
12.5 |
|
| 169.2 |
151.6 |
17.6 |
||
| Natural Gas Transportation (1) |
16.1 |
16.1 |
- |
|
| Energy Production (1) |
- |
(1.1) |
1.1 |
|
| Energy Services, Storage and Other (1) |
(2.9) |
7.0 |
(9.9) |
|
| Corporate Affairs (1) |
(7.7) |
(7.9) |
0.2 |
|
| Net income attributable to Partners, excluding non-recurring items (2) |
174.7 |
165.7 |
9.0 |
|
| Net gain on the disposal of the interest in HydroSolution LP |
- |
14.7 |
(14.7) |
|
| Net income attributable to Partners |
174.7 |
180.4 |
(5.7) |
|
| (1) |
Net of financing costs of investments in this segment. These costs consist of the interest on the long-term debt incurred by Gaz Métro to finance investments in the subsidiaries, joint ventures and entities subject to significant influence of each segment. |
|||
| (2) |
This measure is a financial measure not defined in Canadian GAAP. |
|||
Performance in the Energy Distribution segment
| Quebec Natural Gas Distribution (Gaz Métro-QDA) |
|||
| Rate base |
Authorized return |
Distribution network |
Customers |
| $1.9B |
8.90% |
~10,000 km |
~195,000 |
For fiscal 2014, Gaz Métro‑QDA's net income attributable to the Partners of Gaz Métro totalled $111.0 million, up $5.1 million or 4.8% from last year. The increase came mainly from:
- the recognition of a $2.5 million share in distribution service overearnings caused primarily by higher natural gas deliveries, particularly due to much colder-than-normal temperatures in winter 2014;
- attainment of the annual energy savings goal, which allowed Gaz Métro-QDA to obtain the Global Energy Efficiency Plan performance incentive; and
- the 2014 rate case parameters, which included an increase in the rate base.
| Energy Distribution in Vermont |
|||||
| GMP |
VGS |
||||
| Rate base |
Authorized return |
Customers |
Rate base |
Authorized return |
Customers |
| US$1.2B |
9.58% |
~260,000 |
US$144M |
10.26% |
~45,000 |
The net income attributable to the Partners of Gaz Métro generated by Vermont energy distribution activities (through subsidiaries GMP and VGS) totalled $58.2 million for fiscal 2014, up $12.5 million or 27.4% year over year.
The increase came mainly from synergy-related savings resulting from the operational integration of GMP and CVPS, favourable impacts from GMP's and VGS's 2014 rate cases, a favourable impact of colder temperatures in winter 2014 on GMP's deliveries, and the appreciation of the U.S. dollar versus the Canadian dollar, despite higher supply, production and transmission costs for GMP.
Performance in other segments
For fiscal 2014, net income from the Natural Gas Transportation segment totalled $16.1 million, unchanged from fiscal 2013.
The higher share in the earnings, net of income taxes, of Portland Natural Gas Transmission System reflected an increase in transported volumes resulting from the signing of new short-term contracts and from higher demand due to colder temperatures. This increase was, however, cancelled out by the decrease in the net income of Trans Québec & Maritimes Pipeline resulting from higher pipeline maintenance costs.
The Energy Production segment consists of the non-regulated energy production activities of wind farms 2 and 3 and wind farm 4 developed by Valener in conjunction with Gaz Métro and Boralex Inc. on the private lands of Seigneurie de Beaupré.
The results generated since the December 2013 commissioning of wind farms 2 and 3 explain the $1.1 million decrease in the net loss recorded in fiscal 2014 compared to last year.
Recurring net income from the Energy Services, Storage and Other segment was down $9.9 million for fiscal 2014 compared to last year.
This decrease was mainly due to lower net income from Intragaz following the Régie de l'énergie's May 2013 decision, and to a decline in profitability of Climatisation et Chauffage Urbains de Montréal, s.e.c. resulting from higher fuel supply costs given the cold temperatures in winter 2014.
Conference call
Valener will hold a conference call with financial analysts today at 3 p.m. (Eastern Time) to discuss its results and those of Gaz Métro for the fiscal year ended September 30, 2014.
The call will be broadcast live and is accessible by dialling 647-427-7450 or toll-free 1-888-231-8191. For 30 days afterward, a rebroadcast will be accessible by dialling 416-849-0833 or toll-free 1-855- 859-2056 (access code: 10429989). It will also be available via webcast on Valener's website (www.valener.com) in the Events and Presentations page of the Investors section and can be heard during the 90 days following the initial call.
Overview of Valener
Valener Inc. is a public company that is 100% owned by the public investor and serves as the investment vehicle in Gaz Métro. Through its investment in Gaz Métro, Valener offers its shareholders a solid investment in a diversified and largely regulated energy portfolio in Quebec and Vermont. As a strategic partner, Valener, on one hand, contributes to Gaz Métro's growth, and on the other hand invests in wind power production in Quebec together with Gaz Métro. Valener favours energy sources and uses that are innovative, clean, competitive and profitable. Valener's common shares and preferred shares are listed on the Toronto Stock Exchange under the "VNR" symbol for common shares and under the "VNR.PR.A" symbol for Series A preferred shares. www.valener.com
Overview of Gaz Métro
With more than $6 billion in assets, Gaz Métro is a leading energy provider. It is the largest natural gas distribution company in Quebec, where its network of over 10,000 km of underground pipelines serves 300 municipalities and more than 195,000 customers. Gaz Métro is also present in Vermont, producing electricity and distributing electricity and natural gas to meet the needs of more than 305,000 customers. Gaz Métro is actively involved in the development and operation of innovative, promising energy projects such as the production of wind power, the use of natural gas as a transportation fuel and the development of biomethane. Gaz Métro is a major energy sector player that takes the lead in responding to the needs of its customers, regions and municipalities, local organizations and communities while also satisfying the expectations of its Partners (Gaz Métro inc. and Valener) and employees. www.gazmetro.com
Cautionary note regarding forward-looking statements
This press release may contain forward-looking information within the meaning of applicable securities laws. Such forward-looking information reflects the intentions, plans, expectations and opinions of the management of Gaz Métro inc. (GMi), in its capacity as General Partner of Gaz Métro, and acting as manager of Valener (the management of the manager) and is based on information currently available to the management of the manager and assumptions about future events. Forward-looking statements can often be identified by words such as "plans," "expects," "estimates," forecasts," "intends," "anticipates" or "believes" or similar expressions, including the negative and conjugated forms of these words. Forward-looking statements involve known and unknown risks and uncertainties and other factors beyond the control of the management of the manager. A number of factors could cause the actual results of Valener or of Gaz Métro to differ significantly from historical results or current expectations, as they are described in the forward-looking statements, including but not limited to the general nature of the aforementioned, terms of decisions rendered by regulatory agencies, uncertainty that approvals will be obtained from regulatory agencies and interested parties to carry out activities in Gaz Métro's various business segments and the socio-economic risks associated with such activity, the competitiveness of natural gas in relation to other energy sources, the reliability or costs of natural gas and electricity supply, the integrity of the natural gas and electricity distribution systems, the progress and profitability of wind power projects and other development projects, the ability to complete attractive acquisitions and the related financing and integration aspects, the ability to complete new development projects, the ability to secure future financing, general economic conditions, exchange rate and interest rate fluctuations, weather conditions and other factors described in the "Risk Factors Relating to Valener" and in the "Risk Factors Relating to Gaz Métro" sections of Valener's MD&A for the fiscal year ended September 30, 2014 and in Valener's and Gaz Métro's disclosure filings. Although the forward-looking statements contained herein are based on what the management of the manager believes to be reasonable assumptions, in particular assumptions to the effect that no unforeseen changes in the legislative and regulatory framework of energy markets in Quebec and in the New England states will occur; that the applications filed with the Régie will be approved as submitted; that natural gas prices will remain competitive; that the supply of natural gas and electricity will be maintained or will be available at competitive costs; that no significant event occurring outside the ordinary course of business, such as a natural disaster or other calamity, will occur; that Gaz Métro will be able to continue distributing substantially all of its net income (excluding non-recurring items); that the wind power project in which Valener and Gaz Métro own indirect interests will be completed on schedule and as per specification; that Wind Farms 2 and 3 and Seigneurie de Beaupré Wind Farm 4 General Partnership will be able to make distribution payments to their partners; that GMP will be able to continue to quickly and effectively integrate CVPS's operations; that liquidity needs for Gaz Métro's development projects will be obtained through a combination of operating cash flows, borrowings on credit facilities, capital injections from Partners, and issuances of debt securities; and that the subsidiaries will obtain the required authorizations and funds needed to finance their development projects; in addition to the other assumptions described in Valener's MD&A for the year ended September 30, 2014, the management of the manager cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of this date, and the management of the manager assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. These statements do not reflect the potential impact of any unusual item or any business combination or other transaction that may be announced or that may occur after the date hereof. Readers are cautioned to not place undue reliance on these forward-looking statements.
SOURCE: Valener Inc.
Investors and Analysts: Caroline Warren, Investor Relations, 514-598?3324; Media: Marie-Christine Demers, Public Affairs and Communications, 514-598-3449, www.twitter.com/gazmetro, www.gazmetro.com/salledepresse; Photos, videos (b-roll) and logos are available in Gaz Métro's Multimedia library.
Share this article