Stock Name: VNR
Amount: CAD 0.25
Announcement Date: 13/02/2012
Record Date: 28/03/2012
Dividend Detail:
THE COMPETITIVE POSITION OF NATURAL GAS REMAINS STRONG BUT MILDER TEMPERATURES AFFECT GAZ MTRO'S RESULTS
MONTREAL, Feb. 13, 2012 /CNW Telbec/ - Valener Inc. (Valener) (TSX:
VNR), which has held the public ownership interest in Gaz Mtro Limited
Partnership (Gaz Mtro) since September 30, 2010, today announces its
financial results for the first quarter of fiscal 2012 ended December
31, 2011.
Valener's results
For the first quarter of fiscal 2012, Valener posted net income of $10.1
million, or $0.27 per share, down $1.0 million or $0.04 per share from
$11.1 million or $0.31 per share in the first quarter of last year. The
decrease mostly stems from a $1.7 million decrease in Valener's share
in the net income of Gaz Mtro, i.e., an approximate 29% share in its
net income, partly offset by a $1.2million decrease in income taxes.
"Valener's first quarter results were affected by a warm start to the
winter. In no way does this circumstance affect the fundamentals of Gaz
Mtro, our main investment, the outlook of which remains favourable
thanks to the exceptional competitive advantage of natural gas. What's
more, Gaz Mtro continues to make remarkable progress in its prudent
and well-targeted growth initiatives, which will directly benefit
Valener," said Pierre Monahan, Chairman of the Board of Valener.
Mild temperatures make an impact despite the normalization mechanism
"Gaz Mtro's natural gas distribution activities in Quebec benefit from
a revenue normalization mechanism, which is based on normal
temperatures, for its distribution and load-balancing revenues. Despite
this mechanism, very mild temperatures in the first quarter still
affected our results. Transportation revenues, which were affected by
lower consumption among our customers, were insufficient to cover the
costs incurred by Gaz Mtro to ensure its transportation capacity. We
are confident, however, that we will overcome much of this shortfall in
the coming quarters," explained Sophie Brochu, President and Chief
Executive Officer of Gaz Mtro.
A strong competitive position
"Gaz Mtro's system gas price is currently at its lowest level in more
than 11 years, and the outlook for its competitive position remains
strong given the size of new gas reserves available in North America.
Since 2008, the system gas price has fallen by nearly 60% to $3.93/GJ
in December 2011. This is excellent news for our customers and a clear
advantage for the commercial development of Gaz Mtro's business," said
Ms. Brochu.
Declaration of quarterly dividend
Valener's Board of Directors declared a quarterly dividend of $0.25 per
common share payable on April 16, 2012 to shareholders of record at the
close of business on March 30, 2012. Valener expects to maintain the
dividend level at $0.25 per share for each quarter of fiscal 2012.
5% discount maintained under the Dividend Reinvestment Plan
The Board of Directors approved the reinvestment of dividends into
additional common shares, for the dividend payable on April 16, 2012,
by way of an issuance of new common shares by Valener, at a 5% discount
compared to the weighted average price for the five trading days
immediately preceding the dividend payment date.
Gaz Mtro's results
The net income attributable to the Partners of Gaz Mtro stood at $54.8
million for the first quarter of fiscal 2012, down $5.9 million from
last fiscal year's first quarter.
This decrease was due, among other factors, to lower net income from
natural gas distribution activities in Quebec, which is expected to
partly reverse in the coming quarters as anticipated by management. It
is also due to lower net income from the Energy Services and Other
segment, as the interests in MTO Telecom Inc. and Aqua Data Inc. were
sold in fiscal 2011, and to unfavourable non-recurring items in the
Corporate Affairs and Other segment. These decreases were partly offset
by higher net income from energy distribution activities in Vermont.
Gaz Mtro's segment results - Consolidated net income attributable to
the Partners of Gaz Mtro
For the quarters ended December 31 (1) | | | | | | |
(in millions of dollars) | 2011 | | 2010 | | Change | |
Energy Distribution | | | | | | |
| Gaz Mtro-QDA | 43.7 | | 47.2 | | (3.5) |
| VGS and GMP | 7.5 | | 6.0 | | 1.5 |
| Financing costs of investments in this segment (2) | (1.1) | | (1.0) | | (0.1) |
| 50.1 | | 52.2 | | (2.1) | |
Natural Gas Transportation | | | | | | |
| TQM, PNGTS and Champion Pipe Line Corporation Ltd | 5.1 | | 5.7 | | (0.6) |
| Financing costs of investments in this segment (2) | (1.0) | | (1.0) | | - |
| 4.1 | | 4.7 | | (0.6) | |
Natural Gas Storage | | | | | | |
| Intragaz | 2.2 | | 1.8 | | 0.4 |
| Financing costs of investments in this segment (2) | (0.5) | | (0.4) | | (0.1) |
| 1.7 | | 1.4 | | 0.3 | |
Energy Services and Other | | | | | | |
| Energy, water and fibre optic | 0.9 | | 2.4 | | (1.5) |
| Financing costs of investments in this segment (2) | (0.3) | | (0.4) | | 0.1 |
| 0.6 | | 2.0 | | (1.4) | |
Corporate Affairs and Other | | | | | | |
| Corporate Affairs and Other | (1.7) | | 0.4 | | (2.1) |
| Gain realized by Gaz Mtro ole inc. on the sale of 49.0% of its interest in the Seigneurie de Beaupr wind power projects to Valener | - | | (1.1) | | 1.1 |
| CVPS acquisition costs | 0.5 | | - | | 0.5 |
| (1.2) | | (0.7) | | (0.5) | |
Consolidated net income attributable to the Partners of Gaz Mtro, excluding non-recurring items | 55.3 | | 59.6 | | (4.3) | |
Non-recurring items | (0.5) | | 1.1 | | (1.6) | |
Consolidated net income attributable to the Partners of Gaz Mtro | 54.8 | | 60.7 | | (5.9) | |
(1) | Seasonal temperature fluctuations affect the amount of energy consumed by customers and in turn have an influence on Gaz Mtro's interim consolidated financial results. Historically, Gaz Mtro's revenues and profitability are higher in the first two quarters of a fiscal year than in the last two quarters. |
(2) | These costs consist of the interest on the long-term debt incurred by Gaz Mtro to finance investments in the subsidiaries, joint ventures and companies subject to significant influence of each segment. |
Segment analysis of Gaz Mtro's results
Quebec Natural Gas Distribution (Gaz Mtro-QDA)
For the first quarter of fiscal 2012, Gaz Mtro-QDA's normalized natural
gas deliveries totalled 1,538 million cubic metres, 1.3% less than in
the first quarter of last fiscal year.
In the industrial market, natural gas deliveries were up 1.1% from the
first quarter of fiscal 2011, in part due to greater consumption,
particularly in the metallurgy sector.
Normalized deliveries to the residential and commercial markets declined
by 2.8% and 3.7%, respectively, from the first quarter of fiscal 2011,
essentially due to energy conservation measures undertaken by Gaz
Mtro-QDA customers, partly offset by new sales.
Gaz Mtro-QDA's net income attributable to the Partners of Gaz Mtro
totalled $43.7 million in the first quarter of fiscal 2012, a $3.5
million decrease from the same quarter last fiscal year that was due
to:
lower distribution rates, as had been anticipated in the 2012 rate case;
lower deliveries to the residential and commercial markets combined with
the fact that application of the temperature normalization mechanism
did not fully eliminate the impact on revenues of considerably
warmer-than-normal temperatures in the first quarter of fiscal 2012;
and
the impact of lower transported volumes on transportation revenues that
did not translate into an equivalent reduction in costs.
These factors were partly offset by lower load-balancing costs and by a
decrease in the amortization expense mainly due to the amortization of
the deferred credit related to the repayment of customers' share in
overearnings.
Energy Distribution in Vermont
Net income attributable to the Partners of Gaz Mtro from energy
distribution activities in Vermont totalled $6.4 million1 for the first quarter of fiscal 2012, up $1.4 million from the first
quarter of last fiscal year. The increase came mainly from a 3.2%
increase in the distribution rates of Green Mountain Power Corporation
(GMP) attributable to its 2012 rate case, the higher number of
customers of Vermont Gas Systems, Inc. (VGS) and higher income as a
result of GMP's increased investment in Vermont Transco LLC, which is
involved in electricity transmission in Vermont. The increase was
partly mitigated by the fact that VGS and GMP had lower natural gas and
electricity deliveries in part due to warmer temperatures combined with
higher operating and network maintenance costs.
Central Vermont Public Service Corporation (CVPS) acquisition project
To strengthen its presence in Vermont, on July 12, 2011, Gaz Mtro
announced that it had signed an agreement to purchase CVPS, the largest
electricity distribution company in Vermont. Subject to the required
U.S. regulatory approvals, CVPS will be acquired for an all-cash
consideration of US$35.25 per share for an approximate total of US$485
million, net of transaction fees and other costs estimated at
approximately US$40 million.
The transaction was approved on September 29, 2011 by a strong majority
of CVPS's common shareholders. CVPS and Gaz Mtro also received
confirmation from the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice that no measures or action would be requested concerning the
acquisition, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The acquisition is also subject to the approval of other U.S. federal
and state regulators, and Gaz Mtro is confident that it will obtain
the additional authorizations required to finalize the acquisition by
summer 2012.
Gaz Mtro intends to finance this new investment with 50% debt and 50%
equity. To that effect, on November 11, 2011, Gaz Mtro inc. entered
into a note purchase agreement with investors, by way of a private
placement, in anticipation of a later issuance of notes secured by Gaz
Mtro, for a total capital amount of US$260.0million. The proceeds of
the issuance will be loaned to Gaz Mtro on conditions similar to those
of the secured notes, for purposes of partially financing the CVPS
acquisition.
Once the transaction is finalized, CVPS and GMP will combine their
operations under Northern New England Energy Corporation, a wholly
owned subsidiary of Gaz Mtro based in Vermont.
Natural Gas Transportation
For the first quarter of fiscal 2012, net income attributable to the
Partners of Gaz Mtro from the Natural Gas Transportation segment
totalled $4.1 million2, a year-over-year decrease of $0.6million that was mainly due to
various non-recurring items related to Trans Qubec & Maritimes Inc.
(TQM) and the decrease in the share of income of Portland Natural Gas
Transmission System (PNGTS) arising from a decline in interruptible
service revenues.
Natural Gas Storage
The net income attributable to the Partners of Gaz Mtro from the
Storage segment totalled $1.7million2 for the first quarter of fiscal 2012, a year-over-year increase of $0.3
million that came mainly from lower administrative expenses.
Energy Services and Other
The net income attributable to the Partners of Gaz Mtro from the Energy
Services and Other segment totalled $0.6 million2 in the first quarter of fiscal 2012, down $1.4 million from the same
period in fiscal 2011. This decrease was mainly due to the sale, in
fiscal 2011, of interests in AquaData Inc. and MTO Telecom Inc., and a
decline in profitability at Servitech Energy Limited Partnership
stemming mainly from weaker demand for its turnkey services in heating,
air conditioning and plumbing.
Joint development projects between Valener and Gaz Mtro
Wind power projects in Quebec:
Wind power projects of the Seigneurie de Beaupr Wind Farms 2 and 3 (wind power projects
2 and 3)
Beaupr ole General Partnership (which is 51% indirectly owned by Gaz
Mtro and 49% indirectly owned by Valener) and a wholly owned
subsidiary of Boralex Inc. are equal partners of two wind power
projects with an installed capacity of 272 megawatts, namely wind power
projects 2 and 3, expected to be commissioned in December 2013.
Completion of wind power projects 2 and 3 represents a total investment
of approximately $750million (including financing costs). On November
8, 2011, Seigneurie de Beaupr Wind Farms2 and 3 General Partnership
(Wind Farms 2 and 3), the entity that owns these projects, completed a
debt financing with a group of lenders. The total amount of the
financing is $725 million and consists of:
a two-year construction loan of $590 million that will convert into an
18-year amortizing loan after the start of commercial operations, which
represents approximately 80% of the anticipated total investment; and
short-term facilities, including a bridge loan and a letter of credit
facility, totalling $135 million to finance certain costs reimbursable
by Hydro-Qubec to be incurred during construction, and to provide
various letters of credit.
A $260 million portion of the financing is covered by a guarantee
offered to the lenders by the Federal Republic of Germany through its
export credit agency Euler-Hermes. With this financing and given the
investments and the commitments of $153 million by the partners of Wind
Farms 2 and 3, wind power projects 2 and 3 are fully funded.
Construction on wind power projects 2 and 3 started in May 2011. On
November 25, 2011, the construction site closed for the winter. Work is
expected to resume in May 2012.
Gaz Mtro's main development initiatives
Kingdom Community Wind project in Vermont:
At the end of fiscal 2011, GMP began construction of the Kingdom
Community Wind (KCW) project, a 63-megawatt wind power project located
in Lowell, Vermont. This US$150-million, 21-turbine project will supply
power to more than 24,000 households consisting of GMP customers and
members of the Vermont Electric Cooperative, Inc. Construction is
proceeding as planned with commissioning scheduled towards the end of
2012. As of now, construction of the access road and several of the
turbine pads, as well as the power transmission line for the wind farm,
have been completed. Discussions are currently underway with the
Independent System Operator of New England (ISO-NE) to address how
costs will be shared for the voltage control system needed to connect
the project to the transmission system. The outcome of these
discussions could lead to an increase in the project costs to be
included in GMP's rate base.
The investments required for this project are expected to be financed by
GMP through both debt and equity financing in accordance with its
capital structure, as this investment is regulated and is part of its
rate base. To that effect, on November 16, 2011, GMP issued, by way of
a private placement, US$50.0million in Series A First Mortgage Bonds
and also entered into a bond purchase agreement for US$25.0 million in
Series B First Mortgage Bonds with a planned issuance in April 2012.
These issuances will serve to finance a portion of its investment in
the project.
Natural gas as transportation fuel:
Gaz Mtro Transport Solutions, L.P. (Transport Solutions), an indirect
subsidiary of Gaz Mtro created to develop natural gas for use as fuel
by the transportation industry, is deploying the "Blue Road." Since
July 2011, it has been installing the facilities needed to supply
liquefied natural gas (LNG) to 180 freight trucks from three refuelling
stations, under an agreement entered into with Transport Robert 1973
Lte (Robert Transport). The Boucherville and Mississauga stations have
been in operation since September 19, 2011 and January 16, 2012,
respectively. Delivery of trucks ordered by Robert Transport began in
autumn 2011 and will continue during fiscal 2012.
In October 2011, Gaz Mtro announced that Transport Solutions will
supply LNG to three ferries operated by the Socit des traversiers du
Qubec. The two ferries for the Tadoussac-Baie-Sainte-Catherine
crossing and the ferry for the Matane-Baie-Comeau-Godbout crossing will
be supplied with LNG, in replacement of marine diesel, as of 2013 and
2014. Replacing marine diesel with natural gas for these three ferries
will reduce GHG emissions by as much as 25% or 8,750 GHG tonnes each
year, which is equivalent to removing 1,750 cars from the roads.
Conference call
Valener will hold a conference call with financial analysts today,
Monday, February 13, 2012 at 11a.m. (Eastern Time) to discuss its
results and those of Gaz Mtro for the first quarter ended December 31,
2011.
Pursuant to an administration and management support agreement entered
into between Valener and Gaz Mtro on September 30, 2010, Gaz Mtro
acts as the manager of Valener. As such, Sophie Brochu, President and
Chief Executive Officer, and Pierre Despars, Executive Vice-President,
Corporate Affairs and Chief Financial Officer of Gaz Mtro inc., the
General Partner of Gaz Mtro, will be the speakers, and a question
period will follow.
The call will be broadcast live and accessible by dialling 416-644-3426 or toll-free 1-800-731-5319. It will also be available via webcast on Valener's website (www.valener.com) in the Events & Presentations page of the Investors section. The media
and other interested parties are invited to listen in on this
conference call. After the conference call, the speakers will be
available for media interviews and questions.
For 30 days afterward, a rebroadcast will be accessible by dialling
416-640-1917 or toll-free 1-877-289-8525 (access code: 4507842#). For
90 days afterward, the call can be played back on the above-mentioned
website.
Annual and extraordinary shareholders' meeting
Valener will hold its annual and special shareholders' meeting on March
14, 2012 at 10a.m. (Eastern Time) at the Palais des congrs de
Montral in Montreal, Quebec.
Overview of Valener
Valener owns an economic interest of approximately 29% in Gaz Mtro.
Valener therefore has a stake in the energy industry and benefits from
Gaz Mtro's diversified profile, both in terms of geography and
business segment. Valener also owns an indirect interest of 24.5% in
the wind power projects developed with Gaz Mtro and Boralex Inc. on
the private lands of Sminaire de Qubec. Valener may also pursue its
own development projects and acquisition strategies subject to a
non-competition agreement in favour of Gaz Mtro and to applicable
limitations under its credit facility. Valener's common shares are
listed on the Toronto Stock Exchange under the "VNR" trading symbol. www.valener.com
Overview of Gaz Mtro
With over $3.8 billion in assets as at December 31, 2011, Gaz Mtro is
Quebec's leading natural gas distributor. Its more than
10,000-kilometre network serves 300 municipalities. Gaz Mtro has
operated in this regulated industry since 1957 and is the trusted
energy provider to its customers in Quebec and Vermont, who choose
natural gas for its competitive price, efficiency, comfort and
environmental benefits. Gaz Mtro is also present in the electricity
distribution market, natural gas transportation and storage, and in the
development of innovative energy projects such as wind power, natural
gas as fuel for transportation vehicles and biomethanation. Gaz Mtro
is committed to the satisfaction of its customers, its Partners (Gaz
Mtro inc. and Valener), its employees and the communities it serves. 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 Mtro inc. (GMi), in its capacity as General Partner
of GazMtro, 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 Mtro to differ
significantly from current expectations, as described in the
forward-looking statements, including but not limited to the general
nature of the aforementioned, and as described in the Risk Factors
Relating to Valener and the Risk Factors Relating to Gaz Mtro sections
of the Valener and GazMtro MD&A for the year ended September 30, 2011
and in Valener and Gaz Mtro disclosure filings. Although the
forward-looking statements contained herein are based upon what the
management of the manager believes to be reasonable assumptions,
including assumptions to the effect that no unforeseen changes in the
legislative and regulatory framework of energy markets in Quebec and
the New England states will occur; that no significant event occurring
outside the ordinary course of business, such as a natural disaster or
other calamity, will occur; that Gaz Mtro will be able to continue
distributing substantially all of its net income (excluding
non-recurring items); that the wind power projects in which Valener and
Gaz Mtro are indirect participants will be completed on schedule and
as per specification; that Gaz Mtro will obtain the required approvals
from federal and state authorities for the acquisition of CVPS; that
Gaz Mtro will obtain sufficient capital and that GMP will be able to
quickly and efficiently integrate CVPS's operations; in addition to the
other assumptions described in the Valener and Gaz Mtro MD&A for the
quarter ended December 31, 2011, 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. Readers are cautioned to not place undue reliance on these
forward-looking statements.
HIGHLIGHTS | | | | | | | |
| | | | | | | |
VALENER INC. | 3 months ended December 31 | | |||||
(in millions of dollars, except for share data, which is in dollars) | 2011 | | 2010 | | |||
| (unaudited) | | (unaudited) | | |||
CONSOLIDATED INCOME AND CASH FLOWS | | | | | | | |
Share in the net income of Gaz Mtro | $ | 15.9 | | $ | 17.6 | | |
Net income | $ | 10.1 | | $ | 11.1 | | |
Cash flows related to operating activities | $ | (4.3) | | $ | (1.5) | | |
Basic and diluted net income per share | $ | 0.27 | | $ | 0.31 | | |
Dividends declared per share to shareholders of record on December 30 | $ | 0.25 | | $ | 0.25 | | |
Weighted average number of shares outstanding (in millions) | | 37.4 | | | 36.4 | | |
OTHER INFORMATION | | | | | | | |
Market prices on Toronto Stock Exchange (TSX): | | | | | | | |
| High | $ | 16.29 | | $ | 18.37 | |
| Low | $ | 13.55 | | $ | 16.85 | |
| Close | $ | 15.98 | | $ | 17.10 | |
CONSOLIDATED BALANCE SHEETS | | | | | | | |
| December 31, | | September 30, | | |||
| 2011 | | 2011 | | |||
| (unaudited) | | (audited) | | |||
| | | | | | | |
Total assets | $ | 693.1 | | $ | 672.7 | | |
Total debt | $ | 44.2 | | $ | - | | |
Shareholders' equity | $ | 598.3 | | $ | 602.6 | | |
Shareholders' equity per share | $ | 16.00 | | $ | 16.13 | | |
| | | | | | | |
GAZ MTRO LIMITED PARTNERSHIP | 3 months ended December 31 | | |||||
(in millions of dollars, except for unit data, which is in dollars) | 2011 | | 2010 | | |||
| (unaudited) | | (unaudited) | | |||
CONSOLIDATED INCOME AND CASH FLOWS | | | | | | | |
Revenues | $ | 536.6 | | $ | 577.8 | | |
Gross margin | $ | 202.8 | | $ | 210.0 | | |
Net income attributable to the Partners of Gaz Mtro | $ | 54.8 | | $ | 60.7 | | |
Cash flows related to operating activities (before non-cash working capital items) | $ | 132.3 | | $ | 135.4 | | |
Purchases of property, plant and equipment | $ | 118.0 | | $ | 46.7 | | |
Changes in deferred charges and credits | $ | 42.4 | | $ | 17.2 | | |
Basic and diluted net income per unit attributable to the Partners of Gaz Mtro | $ | 0.43 | | $ | 0.48 | | |
Distributions paid per unit to Partners of record on September 15 (3) | $ | 0.28 | | $ | - | | |
Weighted average number of units outstanding (in millions) | | 126.3 | | | 126.0 | | |
OTHER INFORMATION | | | | | | | |
Authorized rate of return on deemed common equity (Gaz Mtro's natural gas distribution activity in Quebec) (1) | | 9.69 | % | | 9.09 | % | |
Credit ratings | | | | | | | |
| First mortgage bonds (Standard & Poor's (S&P)/DBRS Limited (DBRS)) (2) | | A/A | | | A/A | |
| Commercial paper (S&P/DBRS) (2) | A-1(low)/R-1(low) | | A-1(low)/R-1(low) | | ||
CONSOLIDATED BALANCE SHEETS | | | | | | | |
| December 31, | | September 30, | | |||
| 2011 | | 2011 | | |||
| (unaudited) | | (audited) | | |||
| | | | | | | |
Total assets | $ | 3,889.9 | | $ | 3,727.2 | | |
Total debt | $ | 1,877.6 | | $ | 1,762.9 | | |
Partners' equity attributable to the Partners of Gaz Mtro | $ | 1,039.7 | | $ | 1,023.3 | | |
Partners' equity per unit attributable to the Partners of Gaz Mtro | $ | 8.23 | | $ | 8.10 | | |
(1) | Including the sharing of productivity gains, if applicable, and excluding the Global Energy Efficiency Plan incentive. |
(2) | Through its General Partner, Gaz Mtro inc. |
(3) | No distributions were made in the first quarter of fiscal 2011, given that, as part of Gaz Mtro's reorganization, a distribution of $0.31 per unit was paid on September 30, 2010 instead of on October 1, 2010. |
_______________________________
1 Net of financing costs
2 Net of financing costs
For further information:
Investors and Analysts
Caroline Warren
Investor Relations
514-598-3324
www.valener.com
Media
Audrey Gigure
Media and Public Relations
514-598-3449
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