Veresen announces 2012 fourth quarter and year-end results and affirms 2013 guidance
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./
CALGARY, March 6, 2013 /CNW/ - Veresen Inc. ("Veresen" or the "Company") (TSX: VSN) announced today its 2012 fourth quarter and year-end results.
Financial highlights for the fourth quarter and year ended December 31, 2012, include:
- Distributable cash1 of $57 million or $0.29 per Common Share for the fourth quarter and $211 million or $1.09 per Common Share for the year.
- Net income attributable to Common Shares of $12 million or $0.06 per Common Share for the fourth quarter and $39 million or $0.20 per Common Share for the year.
- Cash from operating activities of $65 million for the fourth quarter and $180 million for the year.
Key strategic activities for the year ended December 31, 2012 included:
- Veresen invested over $1 billion in growth projects which were placed in operation in 2012, including the Hythe/Steeprock gas processing facilities which have a combined functional capacity of 516 mmcf/d, the 400-MW York Energy Centre, and the 20-MW Grand Valley Wind Farm. These assets generated $68 million in new and stable cash flow for the year ended December 31, 2012 which materially contributed to distributable cash in the face of a weak NGL environment.
- Veresen successfully transitioned all operating and accounting functions associated with the Hythe/Steeprock facilities. Veresen now has the internal capability to build a leading independent midstream business.
- Alliance Pipeline made good progress in attracting interest for pipeline capacity beyond 2015. Alliance's proposed new services framework capitalizes on its competitive advantage for transporting liquids-rich natural gas to premium markets.
- Veresen advanced engineering and permitting activities through the regulatory approval process in the United States in respect of its Jordan Cove Energy Project, which proposes to export liquefied natural gas from Coos Bay, Oregon.
"We successfully integrated a transformational acquisition in 2012 and now have the internal capability to grow our independent midstream business," said Mr. Don Althoff, President and CEO. "Given the rapidly changing energy infrastructure environment within North America, I believe Veresen is uniquely positioned to take advantage of the opportunities that will develop around our strategic footprint."
_________________________________
1 This is not a standard measure under GAAP and may not be comparable to similar measures used by other entities. See the reconciliation of distributable cash to cash from operating activities in the tables attached to this news release.
FINANCIAL HIGHLIGHTS
Three months ended | Year ended | |||||
December 31 | December 31 | |||||
($ Millions, except per Common Share amounts) | 2012 | 2011 | 2012 | 2011 | ||
Net income (loss) before tax and non-controlling interest | ||||||
Pipeline | 22.5 | 23.1 | 88.7 | 92.6 | ||
Midstream | 20.3 | 32.7 | 76.7 | 90.2 | ||
Power | 0.7 | (9.2) | (1.0) | (24.0) | ||
Veresen - Corporate | (22.4) | (16.3) | (88.9) | (62.4) | ||
21.1 | 30.3 | 75.5 | 96.4 | |||
Tax expense | (6.9) | (15.8) | (28.8) | (43.2) | ||
Net income attributable to non-controlling interest | - | (0.1) | (0.1) | (0.1) | ||
Net income | 14.2 | 14.4 | 46.6 | 53.1 | ||
Preferred Share dividends | (2.2) | - | (7.7) | - | ||
Net income attributable to Common Shares | 12.0 | 14.4 | 38.9 | 53.1 | ||
Per Common Share ($) | 0.06 | 0.09 | 0.20 | 0.33 | ||
Financial Performance
For the three months ended December 31, 2012, Veresen generated net income attributable to Common Shares of $12.0 million or $0.06 per Common Share compared to $14.4 million or $0.09 per Common Share for the same period last year. Excluding the effect of unrealized fair value gains and losses related to a 20-year interest rate hedge for the York Energy Centre, net income attributable to Common Shares for the three months ended December 31, 2012 was $10.6 million or $0.05 per Common Share compared to $17.9 million or $0.11 per Common Share for the same period in 2011.
For the year ended December 31, 2012, Veresen generated net income attributable to Common Shares of $38.9 million or $0.20 per Common Share compared to $53.1 million or $0.33 per Common Share for 2011. Excluding the effect of unrealized fair value gains and losses related to the York Energy Centre hedge, net income attributable to Common Shares for the year ended December 31, 2012 was $38.7 million or $0.20 per Common Share compared to $69.4 million or $0.43 per Common Share for 2011.
The Hythe/Steeprock facilities and York Energy Centre made a substantial contribution towards offsetting reduced earnings from the Aux Sable margin-based business. Through the majority of 2012, Aux Sable's earnings were negatively impacted by unfavourable NGL market conditions, driven by the continued oversupply of ethane and high levels of propane inventory in Aux Sable's market region.
Earnings also reflect an increase in corporate costs, which totaled $22.4 million and $88.9 million for the three and 12 months ended December 31, 2012, respectively, compared to $16.3 million and $62.4 million for the same periods last year. The increase results from higher interest expense related to debt incurred to finance the Hythe/Steeprock acquisition and non-recurring costs incurred to integrate Hythe/Steeprock operations. The increase in corporate costs also reflects increased project development expenditures related to the Jordan Cove LNG project.
Distributable Cash(1) | |||||
Three months ended | Year ended | ||||
December 31 | December 31 | ||||
($ Millions, except per Common Share amounts) | 2012 | 2011 | 2012 | 2011 | |
Pipeline | 37.2 | 37.4 | 147.5 | 151.0 | |
Midstream | 36.3 | 34.6 | 124.3 | 94.2 | |
Power | 4.0 | 1.4 | 27.1 | 25.8 | |
Veresen - Corporate | (15.6) | (11.9) | (64.4) | (49.4) | |
Taxes | (3.2) | (8.3) | (15.4) | (28.6) | |
Preferred Share dividends | (2.2) | - | (7.7) | - | |
Distributable Cash | 56.5 | 53.2 | 211.4 | 193.0 | |
Per Common Share ($) | 0.29 | 0.32 | 1.09 | 1.18 | |
Cash From Operating Activities | 65.1 | 59.9 | 179.9 | 191.4 | |
(1) See the reconciliation of distributable cash to cash from operating activities in the tables attached to this news release. | |||||
Distributable cash reflects a $16.5 million and $60.3 million contribution from Hythe/Steeprock for the three months ended December 31, 2012 and for the period February 9 to December 31, 2012, respectively, and an aggregate $2.7 million and $7.5 million contribution from the recently commissioned York Energy Centre and Grand Valley power facilities for the three and 12 months ended December 31, 2012, respectively. These increases were partially offset by a $14.8 million and $30.2 million decrease in distributions from Aux Sable, driven by lower fractionation margins; higher costs associated with Veresen's growth initiatives, mainly corporate administrative and interest costs; and dividends on the Company's Preferred Shares issued in February 2012. Taxes were lower than the comparative periods due to lower U.S.-based earnings from Veresen's midstream business. For 2012, distributable cash from Veresen's pipeline business decreased relative to 2011, as first quarter 2011 distributions from Alliance U.S. included an additional amount resulting from a realignment of its capital position.
Overview of Business Segments
Pipelines
Alliance has firm-service transportation contracts with primary terms extending to December 2015 with a group of 27 shippers. In October 2012, Alliance announced a proposed new services framework that will underpin the contracting of the pipeline beyond December 2015, when the 15-year term of the original transportation contracts end. The proposed new services build on Alliance's advantage in providing low cost, predictable transportation for liquids-rich natural gas.
Prospective shippers have been offered increased optionality with the introduction of a segmented service structure in Canada with two receipt zones, the creation of a new Canadian trading pool that will allow shippers to sell their natural gas out of the receipt zones, and a transmission zone to the U.S. border. Alliance further proposes to offer shippers fixed tolls or tolls that vary with the Chicago-AECO market basis, and varying contract lengths. Alliance also intends to continue to offer a full path service from Canadian receipt points to Chicago. Alliance is in active negotiations with existing and prospective shippers regarding the new services framework with the goal of entering into precedent agreements in the fall of 2013, after which one or more open seasons will be held to determine additional shipper interest.
Alliance commenced construction of the Tioga Lateral Pipeline in North Dakota in 2012, with commercial in-service expected in the third quarter of 2013. In October 2012, Alliance executed a firm transportation contract with Hess Corporation as the anchor shipper on this pipeline.
Midstream
Aux Sable has been working with producers within an economic radius of the Alliance Pipeline to provide options and value for natural gas and NGLs to reach large and liquid U.S. markets. Aux Sable currently holds a number of Rich Gas Premium (RGP) agreements with producers that will enhance the value of the producers' NGLs. In early 2013, Aux Sable executed additional RGP agreements which are expected to result in increased volumes of liquids-rich natural gas for processing and fractionation at Aux Sable's Channahon facility in the near term and beyond 2015.
During 2012, Veresen successfully transitioned all operating and accounting functions associated with the Hythe/Steeprock facilities. Veresen now has the internal capability to build a leading independent midstream business. The operational performance of these assets has met the Company's expectations. Commercially, Veresen has a strong business partnership with Encana, its primary customer. Veresen has identified a number of potential opportunities to increase production through the facilities. Veresen's midstream team continues to develop these opportunities and solicit interest from producers in the area, including current customers.
Power
Veresen completed construction and commenced operations at the York Energy Centre in 2012. This construction project was the largest undertaken by the Company to date, and it was completed on schedule and within budget. The York Energy Centre is a 400 MW gas-fired peaking generation facility with a 20-year power purchase agreement with the Ontario Power Authority. Veresen is very pleased with the operating performance of this facility. Veresen also completed construction of the first two phases of its Ontario-based Grand Valley wind project. Grand Valley also sells its output to the Ontario Power Authority under long-term contracts.
Veresen continues to advance a number of contracted construction and development projects within its renewable power business. Veresen is constructing the Dasque-Middle run-of-river hydro facility located in northwest British Columbia. This project experienced delays in 2012 due to challenges in progressing the civil works. Grand Valley III and St. Columban I and II are wind projects under development (representing 73 MW collectively) that were awarded contracts under the Ontario Feed-in Tariff program. Culliton Creek is a run-of-river development project in British Columbia that holds a long-term electricity power agreement with BC Hydro. Each development project achieved milestones in 2012, including the submission of regulatory filings and the completion of system impact assessment studies required for interconnection. Upon receipt of the respective regulatory approvals, anticipated in 2013, Veresen will make final investment decisions regarding each development project.
LNG Development Project
Veresen has advanced engineering and permitting activities for exporting liquefied natural gas from Coos Bay, Oregon through the development of the Jordan Cove Energy Project and the Pacific Connector Gas Pipeline. Jordan Cove and Pacific Connector each initiated the Federal Energy Regulatory Commission's ("FERC") pre-filing process under the National Environmental Policy Act, which will lead to completion and submission of formal FERC applications in 2013. Jordan Cove also submitted an application to the U.S. Department of Energy ("DOE") for authorization to export natural gas to non-Free Trade Agreement countries, having earlier received DOE export approval to U.S. Free Trade Agreement countries. In 2012, Veresen also acquired the remaining land in the Coos Bay area to site the LNG terminal project. From a commercial perspective, discussions continue with potential strategic partners to secure long-term arrangements to produce LNG for international customers.
Veresen believes the Jordan Cove Project has several strategic advantages. It is situated at an ideal location on the west coast of North America where there is the ability to source both Canadian and U.S. natural gas through primarily existing natural gas transmission systems. Jordan Cove is to be built on an existing industrial site and is in receipt of all local land use approvals. Jordan Cove is also well situated to access broad labor markets and critical materials during its construction period. The harbor has the capability to handle very large LNG carriers, and the site requires only a 1.5 hour tug-assisted escort to open seas. Further, Veresen believes the economics underpinning the project are compelling.
Corporate
Veresen is committed to actively managing and growing its existing businesses and making targeted accretive investments in long-life infrastructure assets that contribute toward stable and growing distributions. Veresen's capital structure is intended to optimize the Company's cost of capital.
During 2012, financing activities were primarily related to funding Veresen's acquisition of the Hythe/Steeprock complex, which included a $200 million Preferred Share offering, a $300 million medium term note offering with a 5-year maturity, and a $50 million medium term note offering with a 10-year maturity.
In December 2012, Veresen amended the terms of its Revolving Credit Facility by extending the term by one year - it now expires in December 2016. Veresen expects its liquidity, together with cash from operations and anticipated future access to capital markets, will be sufficient to finance its current capital projects and provide flexibility for new investment opportunities.
Veresen Director to Retire
John Feick has advised that he will not be standing for re-election to Veresen's Board of Directors at the Company's Annual General Meeting on May 8, 2013. Mr. Feick has been a long-standing member of the Veresen Board, joining in 1997 and serving on a number of committees including Compensation and Environment, Health & Safety. Veresen extends its deepest thanks to Mr. Feick for his many years of dedicated service and valuable contributions to the Company. The Board of Veresen has initiated a process to identify and evaluate candidates to replace Mr. Feick.
2013 Guidance
Veresen affirms its 2013 distributable cash to be in the range of $0.92 per Common Share to $1.19 per Common Share, with a midpoint of $1.06 per Common Share. Further details concerning 2013 guidance can be found in the "Invest" section of Veresen's web site at www.vereseninc.com.
Conference Call and Webcast
Veresen will host a conference call and webcast today at 2:30 p.m. MT (4:300 p.m. ET) to discuss its results.
Dial-in: 1 (888) 231-8191 or 1 (647) 427-7450
Conference ID 11976091
The link to the conference call webcast is available on Veresen's website on the homepage or by selecting "Invest" and then "Events & Presentations".
A replay of the call will be available at approximately 4:30 pm MT (6:30 pm ET) on March 6, 2013 by dialing 1-855-859-2056 and 1-416-849-0833. The access code is 11976091, followed by the pound sign. The replay will expire at midnight (ET) on March 13, 2013.
MD&A, Financial Statements and Notes
The Management's Discussion and Analysis ("MD&A") and consolidated financial statements provide a detailed explanation of Veresen's financial results for the fourth quarter and year ended December 31, 2012 compared to the fourth quarter and year ended December 31, 2011 and should be read in conjunction with this news release. These documents are available at www.vereseninc.com and at www.sedar.com.
About Veresen Inc.
Veresen is a publicly-traded dividend paying corporation based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America. Veresen is engaged in three principal businesses: a pipeline transportation business comprised of interests in two pipeline systems, the Alliance Pipeline and the Alberta Ethane Gathering System; a midstream business which includes ownership interests in a world-class natural gas liquids extraction facility near Chicago, the Hythe/Steeprock gas gathering and processing complex, and other natural gas and NGL processing energy infrastructure; and a power business with renewable and gas-fired facilities and development projects in Canada and the United States, and district energy systems in Ontario and Prince Edward Island. Veresen and each of its pipeline, midstream and power businesses are also actively developing a number of greenfield projects. In the normal course of its business, Veresen and each of its businesses regularly evaluate and pursue acquisition and development opportunities.
Veresen's Common Shares, Series A Preferred Shares, and 5.75% convertible unsecured subordinated debentures, Series C due July 31, 2017 are listed on the Toronto Stock Exchange under the symbols "VSN", "VSN.PR.A" and VSN.DB.C", respectively. For further information, please visit www.vereseninc.com.
Forward-Looking Information
Certain information contained herein relating to, but not limited to, Veresen and its businesses constitutes forward-looking information under applicable securities laws. All statements, other than statements of historical fact, which address activities, events or developments that Veresen expects or anticipates may or will occur in the future, are forward-looking information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", "plan", "intend", "target", "project", "forecast" or similar words suggesting future outcomes or outlook. Forward-looking statements in this news release include, but are not limited to, statements with respect to: the ability of Alliance to implement new service offerings; the timing of completion of construction and start-up of the Dasque-Middle hydro project and the Tioga Lateral Pipeline; Veresen's ability to realize its growth objectives; the availability of financing for current capital projects and new investment opportunities; and the ability of each of its businesses to generate distributable cash in 2013. The risks and uncertainties that may affect the operations, performance, development and results of Veresen's businesses include, but are not limited to, the following factors: the ability of Veresen to successfully implement its strategic initiatives and achieve expected benefits; levels of oil and gas exploration and development activity; the status, credit risk and continued existence of contracted customers; the availability and price of capital; the availability and price of energy commodities; the availability of construction services and materials; fluctuations in foreign exchange and interest rates; Veresen's ability to successfully obtain regulatory approvals; changes in tax, regulatory, environmental, and other laws and regulations; competitive factors in the pipeline, midstream and power industries; operational breakdowns, failures, or other disruptions; and the prevailing economic conditions in North America. Additional information on these and other risks, uncertainties and factors that could affect Veresen's operations or financial results are included in its filings with the securities commissions or similar authorities in each of the provinces of Canada, as may be updated from time to time. Readers are also cautioned that the foregoing list of factors and risks is not exhaustive. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are independent and management's future course of action would depend on its assessment of all information at that time. Although Veresen believes that the expectations conveyed by the forward-looking information are reasonable based on information available on the date of preparation, no assurances can be given as to future results, levels of activity and achievements. Undue reliance should not be placed on the information contained herein, as actual result achieved will vary from the information provided herein and the variations may be material. Veresen makes no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof, and Veresen does not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise. Any forward-looking information contained herein is expressly qualified by this cautionary statement.
Certain financial information contained in this news release may not be standard measures under Generally Accepted Accounting Principles ("GAAP") in the United States and may not be comparable to similar measures presented by other entities. These measures are considered to be important measures used by the investment community and should be used to supplement other performance measures prepared in accordance with GAAP in the United States. For further information on non-GAAP financial measures used by Veresen see Management's Discussion and Analysis, in particular, the section entitled "Non-GAAP Financial Measures" contained in the annual Management Discussion and Analysis, filed by Veresen with Canadian securities regulators.
Veresen Inc. | ||||
Consolidated Statement of Financial Position | ||||
(Canadian $ Millions; shares in Millions; unaudited) | December 31, 2012 | December 31, 2011 | ||
Assets | ||||
Current assets | ||||
Cash and short-term investments | 16.1 | 21.9 | ||
Restricted cash | 5.8 | 354.6 | ||
Distributions receivable | 39.9 | 43.4 | ||
Receivables | 53.7 | 25.0 | ||
Accrued receivables | 18.9 | 7.3 | ||
Due from jointly-controlled businesses | 1.5 | 25.5 | ||
Other | 10.0 | 75.5 | ||
145.9 | 553.2 | |||
Investments in jointly-controlled businesses | 957.4 | 934.1 | ||
Rate-regulated asset | 76.4 | 85.8 | ||
Pipeline, plant and other capital assets | 1,443.8 | 768.7 | ||
Intangible assets | 455.0 | 197.3 | ||
Due from jointly-controlled businesses | 48.1 | 3.6 | ||
Other assets | 17.4 | 15.4 | ||
3,144.0 | 2,558.1 | |||
Liabilities | ||||
Current liabilities | ||||
Payables | 19.6 | 14.0 | ||
Interest payable | 12.5 | 8.2 | ||
Accrued payables | 28.5 | 37.3 | ||
Deferred revenue | 2.8 | - | ||
Subscription receipts payable | - | 348.6 | ||
Dividends payable | 12.9 | 2.7 | ||
Current portion of long-term senior debt | 11.7 | 11.2 | ||
88.0 | 422.0 | |||
Long-term senior debt | 1,247.6 | 754.4 | ||
Subordinated convertible debentures | 86.2 | 86.2 | ||
Deferred taxes | 316.2 | 321.7 | ||
Other long-term liabilities | 46.2 | 35.0 | ||
1,784.2 | 1,619.3 | |||
Shareholders' Equity | ||||
Share capital | ||||
Preferred shares | 195.2 | - | ||
Common shares (197.8 and 166.6 outstanding at December 31, 2012 and 2011, respectively) |
1,804.3 | 1,391.0 | ||
Additional paid-in capital | 4.3 | - | ||
Cumulative other comprehensive loss | (164.8) | (159.2) | ||
Accumulated deficit | (479.3) | (324.7) | ||
1,359.7 | 907.1 | |||
Non-controlling interest | 0.1 | 31.7 | ||
1,359.8 | 938.8 | |||
3,144.0 | 2,558.1 |
Veresen Inc. | ||||
Consolidated Statement of Income | ||||
Three months ended December 31 | Year ended December 31 | |||
(Canadian $ Millions, except per Common Share amounts; unaudited) | 2012 | 2011 | 2012 | 2011 |
Equity income | 38.4 | 49.4 | 135.8 | 155.1 |
Operating revenues | 67.7 | 42.4 | 264.2 | 174.2 |
Operations and maintenance | (31.0) | (23.0) | (112.4) | (85.1) |
General, administrative and project development | (17.5) | (15.3) | (69.5) | (51.9) |
Depreciation and amortization | (21.5) | (12.1) | (83.1) | (48.4) |
Interest and other finance | (15.2) | (10.9) | (58.6) | (45.9) |
Foreign exchange and other | 0.2 | (0.2) | (0.9) | (1.6) |
Net income before taxes and non-controlling interest | 21.1 | 30.3 | 75.5 | 96.4 |
Current taxes | (6.0) | (8.3) | (18.2) | (28.1) |
Deferred taxes | (0.9) | (7.5) | (10.6) | (15.1) |
Net income before non-controlling interest | 14.2 | 14.5 | 46.7 | 53.2 |
Non-controlling interest | - | (0.1) | (0.1) | (0.1) |
Net income | 14.2 | 14.4 | 46.6 | 53.1 |
Preferred Share dividends | (2.2) | - | (7.7) | - |
Net income attributable to Common Shares | 12.0 | 14.4 | 38.9 | 53.1 |
Net income per Common Share | ||||
Basic and diluted | 0.06 | 0.09 | 0.20 | 0.33 |
Consolidated Statement of Comprehensive Income | ||||||
Three months ended December 31 | Year ended December 31 | |||||
(Canadian $ Millions; unaudited) | 2012 | 2011 | 2012 | 2011 | ||
Net income before non-controlling interest | 14.2 | 14.5 | 46.7 | 53.2 | ||
Other comprehensive income (loss) | ||||||
Cumulative translation adjustment | ||||||
Unrealized foreign exchange gain (loss) on translation | 5.3 | (9.8) | (5.6) | 13.5 | ||
Cumulative translation adjustment reclassified to net income | - | - | - | 0.8 | ||
Other | - | - | - | 1.8 | ||
Other comprehensive income (loss) | 5.3 | (9.8) | (5.6) | 16.1 | ||
Comprehensive income before non-controlling interest | 19.5 | 4.7 | 41.1 | 69.3 | ||
Comprehensive income attributable to non-controlling interest | - | (0.1) | (0.1) | (0.1) | ||
Comprehensive income | 19.5 | 4.6 | 41.0 | 69.2 | ||
Preferred Share dividends | (2.2) | - | (7.7) | - | ||
Comprehensive income attributable to Common Shares | 17.3 | 4.6 | 33.3 | 69.2 |
Veresen Inc. | |||||
Consolidated Statement of Cash Flows | |||||
Three months ended December 31 | Year ended December 31 | ||||
(Canadian $ Millions; unaudited) | 2012 | 2011 | 2012 | 2011 | |
Operating | |||||
Net income before non-controlling interest | 14.2 | 14.5 | 46.7 | 53.2 | |
Equity income | (38.4) | (49.4) | (135.8) | (155.1) | |
Distributions from jointly-controlled businesses | 53.5 | 66.5 | 204.4 | 230.2 | |
Depreciation and amortization | 21.5 | 12.1 | 83.1 | 48.4 | |
Foreign exchange and other non-cash items | (0.9) | 3.6 | (0.3) | (3.2) | |
Deferred taxes | 0.9 | 7.5 | 10.6 | 15.1 | |
Changes in non-cash working capital | 14.3 | 5.1 | (28.8) | 2.8 | |
65.1 | 59.9 | 179.9 | 191.4 | ||
Investing | |||||
Acquisitions, net of cash acquired | - | (50.0) | (890.5) | (144.6) | |
Investments in jointly-controlled businesses | (43.0) | (15.1) | (106.0) | (125.2) | |
Return of capital from jointly-controlled businesses | - | - | 8.5 | - | |
Pipeline, plant and other capital assets | (39.5) | (8.1) | (91.5) | (18.5) | |
Restricted cash | - | (1.6) | 0.4 | (3.6) | |
Other | (0.9) | 3.7 | (1.6) | 8.4 | |
(83.4) | (71.1) | (1,080.7) | (283.5) | ||
Financing | |||||
Subscription receipts issued | - | 348.6 | - | 348.6 | |
Restricted cash | (0.2) | (347.1) | 348.4 | (347.1) | |
Short-term debt issued, net of issue costs | - | - | 249.1 | - | |
Short-term debt repaid | - | - | (250.0) | - | |
Long-term debt issued, net of issue costs | - | 148.5 | 347.8 | 202.3 | |
Long-term debt repaid | (3.6) | (3.3) | (11.2) | (57.2) | |
Net change in credit facilities | 41.2 | (101.1) | 154.2 | 32.4 | |
Preferred Shares issued, net of issue costs | - | - | 193.7 | - | |
Common Share dividends paid | (38.7) | (22.9) | (104.2) | (53.3) | |
Preferred Share dividends paid | (2.2) | - | (7.7) | - | |
Repayments from (advances to) jointly-controlled businesses | 0.3 | (12.2) | (20.5) | (25.5) | |
Other | (1.9) | (11.7) | (4.9) | (15.3) | |
(5.1) | (1.2) | 894.7 | 84.9 | ||
Decrease in cash and short-term investments | (23.4) | (12.4) | (6.1) | (7.2) | |
Effect of foreign exchange rate changes on cash and short-term investments | 0.2 | (0.5) | 0.3 | 6.5 | |
Cash and short-term investments at the beginning of the period | 39.3 | 34.8 | 21.9 | 22.6 | |
Cash and short-term investments at the end of the period | 16.1 | 21.9 | 16.1 | 21.9 |
Veresen Inc. | |||||
Distributable Cash (1) | |||||
Three months ended December 31 | Year ended December 31 | ||||
(Canadian $ Millions, except where noted; unaudited) | 2012 | 2011 | 2012 | 2011 | |
Alliance distributions, prior to withholdings for capital expenditures and net of debt service | 32.5 | 33.5 | 130.7 | 135.2 | |
AEGS distributable cash, after non-recoverable capital expenditures and debt service | 4.7 | 3.9 | 16.8 | 15.8 | |
Hythe/Steeprock distributable cash, after non-recoverable maintenance capital expenditures | 16.5 | - | 60.3 | - | |
Aux Sable distributions, net of support payments, non-recoverable maintenance capital expenditures and debt service |
19.8 | 34.6 | 64.0 | 94.2 | |
Power distributable cash, after maintenance capital expenditures and debt service | 4.0 | 1.4 | 27.1 | 25.8 | |
77.5 | 73.4 | 298.9 | 271.0 | ||
Corporate | |||||
General and administrative | (5.9) | (6.4) | (27.3) | (23.5) | |
Interest and other finance | (9.7) | (5.5) | (37.1) | (24.4) | |
Principal repayments on senior debt | - | - | - | (1.5) | |
(15.6) | (11.9) | (64.4) | (49.4) | ||
Taxes | (3.2) | (8.3) | (15.4) | (28.6) | |
Preferred Share dividends | (2.2) | - | (7.7) | - | |
(21.0) | (20.2) | (87.5) | (78.0) | ||
Distributable cash (1) | 56.5 | 53.2 | 211.4 | 193.0 | |
Distributable cash per Common Share ($) (2) | 0.29 | 0.32 | 1.09 | 1.18 | |
Dividends paid/payable (3) | 49.4 | 41.5 | 193.5 | 163.0 | |
Dividends paid/payable per Common Share ($) | 0.25 | 0.25 | 1.00 | 1.00 |
(1) | Distributable cash is not a standard measure under generally accepted accounting principles in the United States and may not be comparable to similar measures presented by other entities. Distributable cash represents the cash available to Veresen for distribution to shareholders after providing for debt service obligations and any capital expenditures that are not growth-oriented or recoverable but does not include distribution reserves, if any, held by Veresen's businesses, project development costs, or transaction costs incurred in conjunction with acquisitions. Project development costs are discretionary, non-recoverable costs incurred to assess the commercial viability of new greenfield business initiatives unrelated to the Company's operating businesses. The Company considers transaction costs to be part of the consideration paid for an acquired business and, as such, are unrelated to the Company's operating businesses. Distributable cash is an important measure used by the investment community to assess the source and sustainability of Veresen's cash distributions and should be used to supplement other performance measures prepared in accordance with generally accepted accounting principles in the United States. See the following table for the reconciliation of distributable cash to cash from operating activities. |
(2) | The number of Common Shares used to calculate distributable cash per Common Share is based on the average number of Common Shares outstanding at each record date. For the three months ended December 31, 2012 the average number of Common Shares outstanding for this calculation was 197,493,139 (2011 - 166,305,542) and 203,399,647 (2011 - 172,212,734) on a basic and diluted basis, respectively. For the year ended December 31, 2012, the average number of Common Shares outstanding for this calculation was 193,559,607 (2011 - 163,119,400) and 199,466,172 (2011 - 169,026,820) on a basic and diluted basis, respectively. The number of Common Shares outstanding would increase by 5,906,508 (2011 - 5,907,192) Common Shares if the outstanding Convertible Debentures on December 31, 2012 were converted into Common Shares. |
(3) | Includes $10.6 million and $79.2 million of dividends for the three and 12 months ended December 31, 2012 (2011 - $19.3 million and $111.4 million, respectively) satisfied through the issuance of Common Shares under the Company's Premium DividendTM and Dividend Reinvestment Plan (trademark of Canaccord Genuity Corp.). |
Veresen Inc. | |||||
Reconciliation of Distributable Cash to Cash from Operating Activities | |||||
Three months ended December 31 | Year ended December 31 | ||||
(Canadian $ Millions; unaudited) | 2012 | 2011 | 2012 | 2011 | |
Cash from operating activities | 65.1 | 59.9 | 179.9 | 191.4 | |
Add (deduct): | |||||
Project development costs (4) | 7.0 | 2.5 | 23.9 | 11.1 | |
Change in non-cash working capital | (19.8) | (12.4) | 30.0 | (12.3) | |
Deferred revenue | 2.8 | - | 2.8 | - | |
Principal repayments on senior notes | (2.9) | (2.9) | (11.3) | (10.8) | |
Maintenance capital expenditures | (2.7) | (1.1) | (7.5) | (2.9) | |
Distributions earned greater (less) than distributions received (5) | 6.3 | 7.2 | (1.6) | 16.5 | |
Preferred Share dividends | (2.2) | - | (7.7) | - | |
Current tax on Preferred Share dividends | 2.9 | - | 2.9 | - | |
Distributable cash | 56.5 | 53.2 | 211.4 | 193.0 |
(4) | Represents costs incurred by the Company in relation to projects where the recoverability of such costs has not yet been established. Amounts incurred for the three and 12 months ended December 31, 2012 relate primarily to the Jordan Cove LNG terminal project, the Pacific Connector Gas Pipeline project, and various power development projects. |
(5) | Represents the difference between distributions declared by jointly-controlled businesses and distributions received. |
SOURCE: Veresen Inc.
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Dorreen Miller, Director, Investor Relations
Phone: (403) 213-3633
Email: [email protected]
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