Their Canadian holding company is crediting Green Mountain Power and Vermont Gas Systems for a rise in 2013 profits. Valener Inc (Valener) (TSX: VNR), the public investment vehicle in Gaz’ Métro Limited Partnership (Gaz’ Métro), has announced that for fiscal 2013, recurring net income attributable to common shareholders totalled’ $34.0’ million’ ($0.90’ per common share) versus’ $30.2’ million’ ($0.81’ per common share) in fiscal 2012.
In a statement, Valener said, "This 12.6 percent or’ $3.8’ million increase ($0.09’ per common share) came mainly from an increase in the share in the net income of Gaz’ Métro, which benefited from the growth in’ Vermont’ energy distribution activities."
"Valener provides its shareholders with a sound investment and stake in Gaz’ Métro's well-targeted growth and diversification strategy, which is rigorously deployed, as evidenced by the net income growth in fiscal 2013. The strength of the dividend paid to our shareholders is further bolstered by advancements in the wind power projects, namely, the imminent commissioning of wind power projects 2 and’ 3 and the implementation of financing for wind power project’ 4"’ said’ Pierre Monahan, Chairman of Valener's board of directors.
HIGHLIGHTS
Valener
$34.0’ million in recurring net income, up $3.8’ million;
At $1.07, normalized operating cash flows per common share rose $0.44’ per share;
Seigneurie de Beaupré wind power projects:
Final year of construction for wind power projects’ 2 and 3 with full commissioning expected in December’ 2013; and
Financing completed for wind power project 4.
‘
Gaz’ Métro
$165.7’ million in recurring net income, up $14.1’ million;
$25.5’ million1’ increase in recurring net income generated in Vermont; and
Green Mountain Power achieved greater-than-anticipated synergies from the merger with Central Vermont Public Service.
For fiscal 2013, Valener cash flows relating to operating activities totalled’ $45.2’ million, a’ $21.4’ million’ year-over-year increase, while normalized operating cash flows totalled’ $40.4’ million’ ($1.07’ per common share2), up$16.6’ million’ ($0.44’ per common share). This result shows that Valener was able to generate sufficient cash flows from operations to pay dividends to its common shareholders. The increases in both of these items came from higher distributions received from Gaz’ Métro given the fiscal 2012 Gaz’ Métro unit subscriptions and from a favourable change in non-cash working capital items.
During fiscal 2013, Valener pursued its core strategy by investing’ $14.5’ million’ into Gaz’ Métro and$6.5’ million’ into the development of the wind power projects, most going towards development of wind power project’ 4.
As for dividends, in fiscal 2013 Valener paid’ $1.00’ per common share, in cash and shares, the same amount as in fiscal 2012.
____________________
1’ Net of financing costs of investments in this segment
2’ Cash flows related to operating activities less dividends paid to preferred shareholders divided by the weighted average number of common shares outstanding
‘
Seigneurie de Beaupré wind power projects
‘
Wind power projects 2 and 3
‘
‘
‘
‘
‘
Installed capacity
272 MW
Fully operational
Dec. 2013
Total investment
~$750M
Valener
24.5%
Gaz’ Métro
25.5%
To date, the 126 wind turbines have been installed. The projects' management committee is proud to confirm that, following successful testing, Wind Farm 2 will be put into service by the end of’ November 2013’ while the start-up of Wind Farm 3 is scheduled for’ December 2013. Construction of these large-scale wind farms was completed as scheduled despite the’ June’ 2013’ construction strike. The success owes largely to the tireless work of the construction crew and thorough oversight by the projects' management committee.
‘
Wind power project 4
‘
‘
‘
‘
‘
Installed capacity
68 MW
Fully operational
Dec. 2014
Total investment
~$190M
Valener
24.5%
Gaz’ Métro
25.5%
The work needed for project start-up is proceeding in accordance with the key stages of the schedule. The required agreements with suppliers are in place. To date, the land has been cleared and foundation and road construction has been completed such that concrete mixers may pass. The collector systems are approximately 60% complete. The site is scheduled to close for the winter in the next few days.
On’ October’ 29, 2013, financing, a key step in the project, was completed. The total financing amount, provided by a group of lenders, is’ $166.1’ million’ and consists of:
a’ $142.4’ million’ construction loan that will convert into a 19.5-year amortizing loan, at a fixed rate of 5.66%, after the start of commercial operations scheduled for’ December’ 2014; and
a short-term bridge loan and a letter of credit facility, totalling’ $23.7’ million, to finance certain construction costs reimbursable by Hydro-Québec and provide various letters of credit.
With this financing and given the investments and commitments totalling’ $43.8’ million’ by partners Valener, Gaz Métro and Boralex inc., wind power project 4 is fully funded.
Next year, approximately 100 workers will be busy, among others, erecting the 28 wind turbines. In addition, road work will be completed such that turbine components can be delivered, and the remaining collector systems will be buried and connected to the electrical substation. Project start-up is scheduled for’ December’ 2014.
‘
Consolidated net income attributable to common shareholders,’
excluding the share in the non-recurring items of Gaz’ Métro, net of income taxes
For the fiscal years ended September’ 30
‘
2013
‘
2012
(in’ millions of dollars, unless otherwise indicated)
‘
‘
‘
‘
Consolidated net income
‘
41.5
‘
29.6
Share in the non-recurring items of Gaz’ Métro
‘
(4.3)
‘
2.3
Income taxes on the share in the non-recurring items of Gaz’ Métro
‘
1.1
‘
(0.1)
Consolidated net income, excluding the share in the non-recurring items of Gaz’ Métro, net of income taxes’
‘
38.3
‘
31.8
Less: Cumulative dividends on Series A preferred shares
‘
4.3
‘
1.6
Consolidated net income attributable to common shareholders,’
excluding the share in the non-recurring items of Gaz’ Métro, net of income taxes’ (1)
‘
34.0
‘
30.2
Weighted average number of common shares outstanding
(in’ millions of common shares)
‘
37.7
‘
37.5
Consolidated net income attributable to common shareholders,’
excluding the share in the non-recurring items of Gaz’ Métro, net of income taxes, per common share’ (in $)’ (1)
‘
0.90
‘
0.81
(1)’
These measures are financial measures that are not defined in the Canadian generally accepted accounting principles (GAAP). For additional information, refer to the Non-GAAP Financial Measures heading in Valener's MD&A for the fiscal year ended September’ 30,’ 2013.
‘
Gaz’ Métro's results
Excluding non-recurring items, net income attributable to the Partners of Gaz’ Métro totalled’ $165.7’ millionin fiscal 2013 versus’ $151.6’ million’ in fiscal 2012, a’ $14.1’ million’ or 9.3% increase that came from higher net income generated by’ Vermont’ energy distribution activities following the acquisition of Central Vermont Public Service Corporation (CVPS).
"These results demonstrate our willingness to lead. Through innovation and determination, we can makeQuebec’ a greener and more prosperous leader. Petroleum products won't be obsolete anytime soon, so we must combine the advantages that electric power can bring to private and public transportation with those that natural gas can bring to the trucking, railroad and shipping industries. Through this winning combination of energy sources, we'll reduce our environmental footprint as well as our overall energy bill. In fact, that is what we stated before’ Quebec's’ committee on energy issues (Commission sur les enjeux énergétiques). And it's thanks to projects like the one announced at the end of September’ by our subsidiary Gaz’ Métro’ LNG, in collaboration with Société des traversiers du Québec, that we'll reach our goal,"’ said’ Sophie Brochu, President and Chief Executive Officer of Gaz’ Métro.
Energy Distribution
‘
Quebec natural gas distribution (Gaz’ Métro-QDA)
‘
‘
‘
‘
Rate base
$1.8B
Authorized return
8.90%
Distribution system
10,000 km
Customers
~192,000
For fiscal 2013, Gaz’ Métro-QDA's net income attributable to the Partners of Gaz’ Métro totalled$105.9’ million, a’ $4.8’ million’ year-over-year decrease that was essentially due to the parameters of the 2013 rate case. It's important to note, however, that this decrease is’ $1.8’ million’ less than that anticipated in the rate case, explained by the following items:
realization of a new transportation service incentive return that reached’ $2.3’ million;
a’ $0.7’ million’ incentive return on financial optimization transactions from load-balancing and transportation; and
achievement of the annual energy savings target, which provided Gaz’ Métro-QDA with a$1.0’ million’ Global Energy Efficiency Plan (GEEP) performance incentive that had not been anticipated in the rate case;
partly offset by:
a’ $2.2’ million’ shortfall in the distribution service, mainly because operating expenses exceeded the authorized budget, which the Régie de l'énergie (Régie) reduced by’ $5.0’ million’ in its’ July’ 2013decision on the 2013 rate case.
For the 2014 rate case, the Régie approved a renewal of the 8.90% authorized rate of return on deemed common equity. This rate case, submitted in’ October’ 2013, was also developed on a cost-of-service basis, as was the 2013 rate case, pending a new incentive mechanism. A final decision is expected by summer 2014.
‘
Energy Distribution in Vermont
Green Mountain Power (GMP)
Vermont Gas Systems (VGS)
‘
‘
‘
‘
‘
‘
Rate base
US$1.1B
Authorized return
8.84%
Customers
~260,000
Rate base
US$107M’ 1
Authorized return
9.75%
Customers
~46,000
With respect to the’ Vermont’ energy distribution activities, recurring net income attributable to the Partners of Gaz’ Métro totalled’ $45.7’ million’ 2’ for fiscal 2013, a’ $25.5’ million’ year-over-year increase.
This increase was due to higher net income from GMP following the’ June’ 2012’ acquisition of CVPS, tempered by the related increase in financing costs and the lower electricity rates resulting from the parameters of its 2013 rate case following its merger with CVPS. Other factors underlying this increase include a favourable impact on GMP's deliveries of colder temperatures in fiscal 2013 as well as a favourable impact of VGS's new temperature normalization mechanism, its growing customer base and higher rates as per its rate case.
As for the operational integration of GMP and CVPS, GMP is working to accelerate implementation of its three-year plan such that it and its customers can benefit from the efficiencies and synergies resulting from the merger of the two entities as soon as possible. At present, GMP is ahead of its schedule and the synergies experienced in fiscal 2013 have been greater than anticipated.
As part of GMP's 2014 rate case, in’ September’ 2013’ the Vermont Public Service Board (VPSB) approved a 9.58% rate of return on common equity and a 49.5% common equity ratio.
As for VGS, an application seeking regulatory approval for Phase I’ of its system extension to’ Addison County’ was filed in’ December’ 2012. A decision is expected by the end of the 2013 calendar year such that construction may begin in 2014. The project includes a second phase to extend natural gas service to one of International Paper Company's mills in’ New York State’ starting at the end of the 2015 calendar year. In’ November 2013, VGS filed an application for the regulatory approval of this second phase. If approved, these system developments (Phases’ I and II), estimated at’ US$150’ million, could more than double VGS's average rate base over time. In the fourth quarter of fiscal 2013, the initially anticipated investment amount was revised upward given changes to the materials and methods that will be used to build the system extension.
As part of VGS's 2014 rate case, in’ October’ 2013’ the VPSB approved a 10.26% rate of return on common equity and a 55.0% common equity ratio.
____________________
1’ Including’ US$5’ million’ invested in the system extension project to’ Addison County’
2’ Net of financing costs of investments in this segment
‘
Natural Gas Transportation
In the Natural Gas Transportation segment, net income attributable to the Partners of Gaz’ Métro totalled$16.1’ million’ 1’ for fiscal 2013, a slight’ $0.2’ million’ decline from last year.
This change came mainly from lower revenues from Trans Québec & Maritimes Pipeline (TQM) (as a result of lower final rates approved by the National Energy Board in’ May’ 2013’ and effective retroactively toJanuary’ 1, 2013) and from the allocation of the income tax expense related to TQM, as explained below, offset by an increase in the share in the income before taxes of Portland Natural Gas Transmission System (PNGTS), which benefited from, among other factors, the decrease in natural gas available on other systems, thus increasing its short-term sales.
Note that, since the reorganization that led to the creation of 9265-0860 Québec inc. at the end of fiscal 2012, the income tax expenses related to TQM and Intragaz are recognized by Gaz’ Métro rather than by Valener and Gaz’ Métro’ inc.
Energy Production
This new segment consists of non-regulated energy production activities related to wind power projects 2 and 3 and wind power project 4 located on the private lands of Seigneurie de Beaupré. During fiscal 2013, these wind power projects were still under construction.
Energy Services, Storage and Other
In the Energy Services, Storage and Other segment, recurring net income attributable to the Partners of Gaz’ Métro totalled’ $7.0’ million’ 1’ for fiscal 2013, down’ $3.0’ million’ from fiscal 2012.
The lower net income was mainly due to the net income that had been realized by HydroSolution, L.P. in fiscal 2012, whereas the interest in this company was sold in the first quarter of fiscal 2013, and to the allocation of the income tax expense related to Intragaz, as previously explained.
Gaz’ Métro Transport Solutions, L.P. (Transport Solutions), a subsidiary of Gaz’ Métro created to promote the use of natural gas in the transportation industry, in particular for heavy transportation vehicles inQuebec,’ Ontario’ and’ Eastern Canada, continues to deploy liquefied natural gas (LNG) refuelling stations on the Blue Road, which runs along the Highway’ 20 and Highway’ 401 corridor between Rivière-du-Loup and’ Toronto. To date, four stations are supplying 124’ Transport Robert 1973 Ltée trucks as well as other carriers. Furthermore, in’ July’ 2013, as part of the Blue Road initiative, Transport Solutions and La Coop fédérée announced a partnership agreement for the deployment of an innovative, multi-energy service station concept. These public stations will be the first in’ Eastern Canada’ to offer LNG as fuel and, in some cases, compressed natural gas (CNG).
On’ September’ 27, 2013, Gaz’ Métro LNG, L.P., a subsidiary of Gaz’ Métro created in fiscal 2013 to respond to rapidly growing demand in the LNG market, concluded an agreement in principle with Société des traversiers du Québec to purchase fuel to supply three ferries with LNG. These ferries will be among the first in’ North America’ to be fuelled with LNG and will be put into service in 2015.
____________________
1’ Net of financing costs of investments in this segment
‘
Gaz’ Métro's segment results - Consolidated net income attributable to Partners,’
excluding non-recurring items
(in’ millions of dollars)
‘
2013
‘
2012
‘
Change
Energy Distribution
‘
‘
‘
‘
‘
‘
‘
Gaz’ Métro-QDA
‘
105.9
‘
110.7
‘
(4.8)
‘
VGS and GMP
‘
65.6
‘
23.1
‘
42.5
‘
Financing costs of investments in this segment’ (1)
‘
(19.9)
‘
(9.7)
‘
(10.2)
‘
Costs related to the CVPS acquisition (net of income taxes)
‘
-
‘
6.8
‘
(6.8)
‘
‘
151.6
‘
130.9
‘
20.7
Natural Gas Transportation
‘
‘
‘
‘
‘
‘
‘
TQM, PNGTS and Champion Pipe Line Corporation Ltd.
‘
17.6
‘
19.1
‘
(1.5)
‘
Financing costs of investments in this segment’ (1)
‘
(1.5)
‘
(2.8)
‘
1.3
‘
‘
16.1
‘
16.3
‘
(0.2)
Energy Production’ (2)
‘
‘
‘
‘
‘
‘
‘
Gaz’ Métro à ole inc. and Gaz’ Métro à ole 4 Inc.
‘
(1.1)
‘
(1.1)
‘
-
‘
Financing costs of investments in this segment’ (1)
‘
-
‘
-
‘
-
‘
‘
(1.1)
‘
(1.1)
‘
-
Energy Services, Storage and Other’ (2)
‘
‘
‘
‘
‘
‘
‘
Energy and storage
‘
22.8
‘
12.5
‘
10.3
‘
Financing costs of investments in this segment’ (1)
‘
(1.1)
‘
(2.5)
‘
1.4
‘
Net gain on the disposal of the interest in HydroSolution, L.P.
‘
(14.7)
‘
-
‘
(14.7)
‘
‘
7.0
‘
10.0
‘
(3.0)
Corporate Affairs’ (2)
‘
‘
‘
‘
‘
‘
‘
Corporate affairs
‘
(7.9)
‘
(5.5)
‘
(2.4)
‘
Costs related to the CVPS acquisition
‘
-
‘
1.0
‘
(1.0)
‘
‘
(7.9)
‘
(4.5)
‘
(3.4)
Consolidated net income attributable to Partners,’
excluding non-recurring items’ (3)
‘
165.7
‘
151.6
‘
14.1
Non-recurring items
‘
14.7
‘
(7.8)
‘
22.5
Consolidated net income attributable to Partners
‘
180.4
‘
143.8
‘
36.6
‘
(1)’
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)’
As of the first quarter of fiscal 2013, Gaz’ Métro modified its financial reporting structure for segment disclosures given the development of important wind power projects and the sale of certain companies. Last fiscal year's figures have been reclassified to present financial information that reflects the new business segments.
(3)’
This measure is a financial measure not defined in the Canadian generally accepted accounting principles (GAAP). For additional information, refer to the Non-GAAP Financial Measures heading in Valener's MD&A for the fiscal year ended September’ 30, 2013.
Conference call
Valener will hold a conference call with financial analysts today,’ Thursday, November’ 28, 2013’ at’ 11 am (Eastern Time)’ to discuss its results and those of Gaz’ Métro for the fiscal year ended’ September’ 30, 2013.
The media and other interested parties are invited to listen to this conference call by dialling’ 647-427-7450or toll-free’ 1-888-231-8191.’ It will also be available via webcast on Valener's website (www.valener.com) in the Events & Presentations page of the Investors section.
For 30 days afterward, a rebroadcast will be accessible by dialling 416-849-0833 or toll-free 1-855-859-2056 (access code: 86476246) and for 90 days on Valener's Web site.
Overview of Valener
Valener owns an economic interest of approximately 29% in Gaz’ Métro. Valener therefore has a stake in the energy industry and benefits from Gaz’ Métro's diversified profile, both in terms of geography and business segment. Valener also owns a 24.5% indirect interest in the wind power projects developed with Gaz’ Métro and Boralex inc. on the private lands of Séminaire de Québec. 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’ $5 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 190,000 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 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 who 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 (GMi and Valener) and employees.’ www.gazmetro.com
MONTREAL,’ Nov. 28, 2013’ /CNW Telbec/ -’ Valener Inc
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