Valener Announces its Financial Results for the Third Quarter of Fiscal 2012
A Quarter that Saw the Completion of the Central Vermont Public Service
Another Step Forward in the Electricity Distribution Sector
MONTREAL, Aug. 10, 2012 /CNW Telbec/ – Valener Inc. (Valener) (TSX:
VNR), which has held the public ownership interest in Gaz MÃ©tro Limited
Partnership (Gaz MÃ©tro) since September 30, 2010, is today announcing
its financial results for the third quarter ended June 30, 2012.
Valener posted a net loss of $0.5 million ($0.02 per common share) for
the third quarter of fiscal 2012 versus net income of $0.3 million (nil
per common share) for the third quarter of last year. For the first
nine months of fiscal 2012, net income totalled $31.3 million ($0.83
per common share) compared to $33.8 million ($0.91 per common share) in
the same period last year.
These year-over-year decreases of $0.8 million for the third quarter and
of $2.5 million for the first nine months of fiscal 2012 were mainly
due to the one-time costs incurred for the acquisition of Central
Vermont Public Service Corporation (CVPS) by Gaz MÃ©tro as well as to
the rate reduction authorized by the RÃ©gie de l’Ã©nergie for fiscal 2012
that translated into lower net income for Gaz MÃ©tro. Other factors
include temperature-related impacts and changing demand by industrial
customers in Gaz MÃ©tro’s gas distribution activity, which drove up the
average cost of transporting natural gas to Quebec.
“Despite these impacts, Gaz MÃ©tro’s growth strategy deployments in the
electricity sector, including completion of the CVPS acquisition and
development of the wind power projects in Quebec and Vermont, are
precursory of a promising future for Valener,” said Pierre Monahan,
Chairman of the Board of Valener.
Excluding the non-recurring items of Gaz MÃ©tro, Valener would have
posted a net income of $1.8 million ($0.04 per common share) for the
third quarter of fiscal 2012, up $1.4 million from the third quarter of
last year, and net income of $33.6 million ($0.89 per common share) for
the first nine months of fiscal 2012, comparable to the same period
Valener’s consolidated net income (loss), excluding the share in the
non-recurring items of Gaz MÃ©tro, net of income taxes
3 months ended June 30 9 months ended June 30 (in millions of dollars, unless otherwise indicated) 2012 2011 2012 2011 Consolidated net income (loss) (0.5) 0.3 31.3 33.8 Share in the non-recurring items of Gaz MÃ©tro 2.3 0.1 2.3 (0.2) Income taxes on the share in the non-recurring items of Gaz MÃ©tro - - - - Consolidated net income, excluding the share in the non-recurring items of Gaz MÃ©tro, net of income taxes 1.8 0.4 33.6 33.6 Less: Cumulative dividends on preferred shares 0.3 - 0.3 - Consolidated net income attributable to common shareholders, excluding the share in the non-recurring items of Gaz MÃ©tro, net of income taxes (1) 1.5 0.4 33.3 33.6 Weighted average number of common shares outstanding (in millions of common shares) 37.5 37.3 37.4 37.0 Consolidated net income attributable to common shareholders, excluding the share in the non-recurring items of Gaz MÃ©tro, net of income taxes, per common share (in $)(1) 0.04 0.01 0.89 0.91
1) These measures are financial measures that are not defined in
Canadian generally accepted accounting principles (GAAP).
Gaz MÃ©tro’s prudent and targeted diversification in the electricity
“The third quarter of fiscal 2012 saw the completion of the acquisition
of CVPS, Vermont’s largest electric power distributor. This transaction
stands as a major milestone in Gaz MÃ©tro’s prudent and targeted
diversification strategy in the electricity sector. Gaz MÃ©tro
successfully ventured into the sector in 2007 with the acquisition of
Green Mountain Power Corporation, Vermont’s second largest electric
power distributor, and is also involved in developing 341 MW and 63 MW
wind power projects in Quebec and Vermont,” said Sophie Brochu,
President and Chief Executive Officer of Gaz MÃ©tro.
“The combination of the two electric utilities in Vermont, will generate
significant synergies for both our Vermont customers and our Partners,
Valener and Gaz MÃ©tro inc.,” added Ms. Brochu.
Acquisition of Central Vermont Public Service Corporation (CVPS)
On June 27, 2012, having received the required regulatory approvals, Gaz
MÃ©tro, through its wholly owned subsidiary Northern New England Energy
Corporation (NNEEC), acquired all the issued and outstanding shares of
CVPS. CVPS serves approximately 160,000 customers in 163 Vermont towns
CVPS was acquired for a net cash consideration of $513.5 million
(US$500.7 million), $20.0 million of which was paid in fiscal 2011.
Transaction-related costs expensed in the income statement were
$7.9 million (net of income taxes) for the nine-month period ended June
30, 2012 and $1.8 million in fiscal 2011. The preliminary purchase
price allocation resulted in the recognition of $233.1 million of
Gaz MÃ©tro financed the acquisition with 50/50 debt/equity. On November
11, 2011, Gaz MÃ©tro inc. (GMi) entered into a note purchase agreement
with investors, by way of private placement, for a total capital amount
of US$260.0 million. On May 15, 2012, the notes (secured by Gaz MÃ©tro)
were issued in two series of US$130.0 million each. The notes bear
interest at 3.86% and 5.06% per annum and mature 10 years and 30 years
after the issuance date, respectively. The proceeds of the issuance
were loaned to Gaz MÃ©tro on conditions similar to those of the secured
notes. For the equity portion, on June 28, 2012, Gaz MÃ©tro issued, by
way of a private placement, new units to its Partners, GMi and Valener,
for total proceeds of $260.0 million.
This acquisition paves the way for a business combination, by way of
merger, planned for the coming months, between CVPS and Green Mountain
Power Corporation (GMP), a wholly-owned subsidiary of NNEEC, to create
a stronger public utility for Vermont residents. The new utility will
cover an extensive area of Vermont and serve more than 255,000
customers. The combined resources will continue to provide the
competitively priced power needed for vibrant communities and a growing
economy and will strengthen Gaz MÃ©tro’s commitment to providing
Wind power projects of the Seigneurie de BeauprÃ© Wind Farms 2 and 3
General Partnership (wind power projects 2 and 3)
BeauprÃ© Ã‰ole General Partnership (which is 51% and 49% indirectly owned
by Gaz MÃ©tro and Valener, respectively) and a wholly owned subsidiary
of Boralex Inc. are equal-share partners in two wind power projects
with an installed capacity of 272 megawatts, namely, wind power
projects 2 and 3, which are scheduled to begin operations in December
Completion of these wind power projects will require a total investment
of approximately $750 million (including financing costs). On November
8, 2011, Seigneurie de BeauprÃ© Wind Farms 2 and 3 General Partnership,
the entity that owns these projects, completed a $725 million debt
financing (including a construction loan and short-term facilities)
with a group of lenders.
Construction on wind power projects 2 and 3 began in May 2011 and
stopped for the winter in November 2011. According to schedule, work
resumed on May 7, 2012, and the consortium has since almost completed
the road access and foundation work and began work on the collector
system and electrical substation as well as erection of some of the
Wind power project of Seigneurie de BeauprÃ© wind farm 4 (wind power
BeauprÃ© Ã‰ole 4 General Partnership (which is 51% and 49% indirectly
owned by Gaz MÃ©tro and Valener, respectively) and a wholly owned
subsidiary of Boralex inc. are equal-share partners in a wind power
project with an installed capacity of 69 megawatts, namely, wind power
Last June, public environment-related hearings were held by the relevant
Quebec government agency, BAPE (Bureau d’audiences publiques sur l’environnement), and the final report is expected by the end of September 2012. The
decree from the Quebec ministry of Sustainable Development, the
Environment and Parks (MinistÃ¨re du DÃ©veloppement durable, de l’Environnement et des Parcs) is expected to be received in January 2013, which will constitute the
final authorization required to begin the work. This wind power project
is scheduled to begin operations in December 2014.
Subscription of Gaz MÃ©tro units and issuance of Series A preferred
On June 28, 2012, Valener subscribed approximately $75 million,
representing its proportionate share in the outstanding units, in a
private placement equity offering of approximately $260 million by
Gaz MÃ©tro. Gaz MÃ©tro inc. also subscribed for its proportionate share
of these units. The purpose of the equity offering was to finance a
portion of the CVPS acquisition, which was completed on June 27, 2012.
Valener financed this investment using part of the net proceeds of the
June 6 issuance of $100 million in Series A cumulative rate reset
preferred shares (Series A preferred shares) paying cumulative
dividends of $1.0875 per share per annum, for a yield of 4.35% per
annum, payable quarterly, for the initial period ending October 15,
2017. The dividend rate will be reset on October 15, 2017 and every
five years thereafter at a rate equal to the 5-year Government of
Canada bond yield plus 2.81%.
Declaration of the quarterly dividends on the common shares and on the
Series A preferred shares
Valener’s Board of Directors declared a quarterly dividend of $0.25 per
common share payable on October 15, 2012 to shareholders of record at
the close of business on September 28, 2012. Valener expects to
maintain the dividend level at $0.25 per common share for each quarter
of fiscal 2013.
Under Valener’s Dividend Reinvestment Plan, the Board of Directors
approved the reinvestment of dividends into additional common shares,
for the dividend payable on October 15, 2012, by way of an issuance of
new Valener common shares at a discount of 5% to the weighted average
price during the five trading days immediately preceding the dividend
The Board of Directors also declared a first quarterly dividend of
$0.39031 per Series A preferred share for the period of June 6, 2012 to
October 15, 2012, payable on October 15, 2012 to shareholders of record
at the close of business on October 12, 2012.
Gaz MÃ©tro’s results
Excluding non-recurring items, net income attributable to the Partners
of Gaz MÃ©tro totalled $6.1 million for the third quarter of fiscal 2012
and $167.2 million for the first nine months of the current fiscal
year, year-over-year decreases of $5.7 million and $12.4 million,
respectively. These decreases were mainly due to lower net income from
the natural gas distribution activity in Quebec, as explained below.
Gaz MÃ©tro’s segment results – Consolidated net income (loss)
attributable to the Partners of Gaz MÃ©tro
3 months ended June 30 9 months ended June 30 (1) (1) (in millions of dollars) 2012 2011 Change 2012 2011 Change Energy Distribution Gaz MÃ©tro-QDA 2.9 7.6 (4.7) 139.0 148.2 (9.2) VGS, GMP and CVPS (6.8) 2.5 (9.3) 8.9 17.0 (8.1) Financing costs of investments in this segment (2) (2.5) (1.0) (1.5) (4.4) (2.9) (1.5) Costs related to the CVPS acquisition (net of income taxes) 7.9 - 7.9 7.9 - 7.9 1.5 9.1 (7.6) 151.4 162.3 (10.9) Natural Gas Transportation TQM, PNGTS and Champion Pipe Line Corporation Ltd 4.1 3.6 0.5 15.3 15.9 (0.6) Financing costs of investments in this segment (2) (0.6) (0.9) 0.3 (2.3) (2.7) 0.4 3.5 2.7 0.8 13.0 13.2 (0.2) Natural Gas Storage Intragaz 2.0 1.5 0.5 5.9 5.1 0.8 Financing costs of investments in this segment (2) (0.4) (0.4) - (1.2) (1.3) 0.1 1.6 1.1 0.5 4.7 3.8 0.9 Energy Services and Other Energy, water 0.2 0.5 (0.3) 2.4 4.0 (1.6) and fibre optic Financing costs of investments in this segment (2) (0.2) (0.4) 0.2 (0.7) (1.1) 0.4 Loss on the sale of Aqua Data Inc. - 0.2 (0.2) - 0.2 (0.2) - 0.3 (0.3) 1.7 3.1 (1.4) Corporate Affairs and Other Corporate Affairs and Other (0.5) (1.5) 1.0 (3.6) (1.8) (1.8) Gain realized by Gaz MÃ©tro Ã‰ole inc. on the sale of 49% of its interest in the Seigneurie projects - - - - (1.1) 1.1 Corporate reorganization expenses - 0.1 (0.1) - 0.1 (0.1) (0.5) (1.4) 0.9 (3.6) (2.8) (0.8) Consolidated net income attributable to the Partners of Gaz MÃ©tro, excluding non-recurring items(3) 6.1 11.8 (5.7) 167.2 179.6 (12.4) Non-recurring items(3) (7.9) (0.3) (7.6) (7.9) 0.8 (8.7) Consolidated net income (loss) attributable to the Partners of Gaz MÃ©tro (1.8) 11.5 (13.3) 159.3 180.4 (21.1)
1) Seasonal temperature fluctuations influence the energy consumption levels of customers and in turn influence Gaz MÃ©tro's interim consolidated financial results. Historically, Gaz MÃ©tro'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 MÃ©tro to finance investments in the subsidiaries, joint ventures and companies subject to significant influence of each segment. 3) This measure is a financial measure that is not defined in Canadian GAAP.
Segment analysis of Gaz MÃ©tro’s results
Quebec Natural Gas Distribution (Gaz MÃ©tro-QDA)
For the third quarter of fiscal 2012, Gaz MÃ©tro-QDA’s normalized natural
gas deliveries totalled 1,036 million cubic metres, down 38 million
cubic metres or 3.5% from the same quarter last year.
For the first nine months of fiscal 2012, deliveries totalled
4,560 million cubic metres, down 44 million cubic metres or 1.0% from
the first nine months of last year.
It should be noted that Gaz MÃ©tro-QDA’s normalized natural gas
deliveries exceeded those in the 2012 rate case, which had anticipated
year-over-year decreases of 85 million cubic metres or 7.9% for the
third quarter of fiscal 2012 and of 296 million cubic metres or 6.4%
for the first nine months of fiscal 2012.
In the industrial market, nine-month natural gas deliveries rose 0.5%
from the first nine months of fiscal 2011, partly due to greater
consumption, particularly in the metallurgy, refining and petrochemical
sectors and, to a lesser extent, in the pulp and paper sector.
Normalized deliveries to the residential and commercial markets declined
0.2% and 3.7%, respectively, from the first nine months of fiscal 2011,
essentially due to slow economic growth combined with energy
conservation measures undertaken by Gaz MÃ©tro-QDA’s customers, partly
offset by the maturation of new sales.
Gaz MÃ©tro-QDA’s net income attributable to the Partners of Gaz MÃ©tro
totalled $2.9 million for the third quarter of fiscal 2012 and
$139.0 million for the first nine months, year-over-year decreases of
$4.7 million and $9.2 million, respectively. These decreases were
mainly due to:
-- the rate reduction authorized for fiscal 2012 that resulted in a $6.8 million decline in net income for the third quarter ($5.6 million decline for the nine-month period); and -- the higher average cost of transportation tools, which could not be recovered from customers, resulting from changing demand from industrial customers, despite a higher level of deliveries than anticipated in the 2012 rate case.
These items were partly offset, among other factors, by the favourable
impact on the gross margin of the distribution service due to higher
normalized natural gas deliveries to the industrial market compared to
the 2012 rate case. This made it possible to recover the unfavourable
impacts, recognized in the first six months of fiscal 2012, due to
considerably warmer-than-normal temperatures.
Project to serve the CÃ´te-Nord region
The CÃ´te-Nord region is the last of Quebec’s major industrial regions
that does not yet benefit from the environmental and economic
advantages of natural gas, and large amounts of heavy oil are currently
consumed in that region.
However, the distance separating the CÃ´te-Nord from Gaz MÃ©tro-QDA’s
existing infrastructures is considerable. More than 450 km of pipeline
would have to be laid to connect Saguenay to Sept-Ãžles, passing through
the other major industrial centres of Baie-Comeau and Port-Cartier.
Such a project would require an investment of about $750 million, adding
approximately 40% to Gaz MÃ©tro-QDA’s rate base. To make a fully
informed decision on a project of such magnitude, the Quebec government
and Gaz MÃ©tro are diligently carrying out the following three
comprehensive feasibility studies:
-- market studies to determine the expected potential energy consumption in the CÃ´te-Nord if natural gas were available; -- environmental and social studies to select the lowest-impact route for the gas pipeline; and -- technical and financial feasibility studies, including engineering, to optimize the design and confirm the costs.
These studies are under way and the conclusions are expected by the end
of 2012. If the conclusions are positive, Gaz MÃ©tro-QDA will continue
the regulatory and environmental approval processes in 2013 while
continuing to consult the main stakeholders to evaluate their needs and
expectations. If all the necessary approvals are obtained, the
preparatory work and construction of Gaz MÃ©tro-QDA’s CÃ´te-Nord service
could start in 2014 with a view to operational start-up at the end of
2015 or in 2016.
First project to inject biomethane in Gaz MÃ©tro-QDA’s network
On July 26, 2012, Gaz MÃ©tro announced the first project to inject
biomethane into its network. This major project is an important
milestone in the development of a new renewable energy in Quebec. It
involves the construction of an anaerobic digestion plant in
Saint-Hyacinthe as well as the infrastructures needed to feed
biomethane into Gaz MÃ©tro-QDA’s distribution network.
The Quebec government has created a program to treat organic wastes
through biomethanation, or composting, and thereby divert organic
materials from landfills to produce a new green energy, biomethane,
that will aim at replacing fossil and other fuels.
Use of the biomethane produced in Saint-Hyacinthe will eventually reduce
greenhouse gas (GHG) by 25,000 tonnes annually. Under the agreement
with the City of Saint-Hyacinthe, Gaz MÃ©tro-QDA will purchase the
energy produced by the city and install the infrastructures needed to
inject biomethane into its distribution network and make it available
to customers. As a public utility, Gaz MÃ©tro will therefore be serving
the needs of municipalities and the Quebec government’s goal of
promoting biomethane, a locally produced, renewable energy. The project
is subject to the approval of the RÃ©gie de l’Ã©nergie.
Energy Distribution in Vermont
The results attributable to the Partners of Gaz MÃ©tro from energy
distribution activities in Vermont, which now include the results of
CVPS, showed a $9.3 million net loss(1) for the third quarter of fiscal 2012, down $10.8 million from net
income of $1.5 million in the same period of 2011. The main factors
underlying this decrease were:
-- $7.9 million in costs (net of income taxes) related to the CVPS acquisition and severance benefits payable to certain of its officers; and -- a $2.8 million increase in financial expenses resulting, in particular, from the additional financing associated with the CVPS acquisition and GMP's Kingdom Community Wind (KCW) project.
These items were offset by a 3.2% increase in GMP’s distribution rates
attributable to its 2012 rate case and by the decrease in its direct
electricity supply costs.
For the first nine months, net income attributable to the Partners of
Gaz MÃ©tro from energy distribution activities in Vermont totalled
$4.5 million(1), a $9.6 million year-over-year decrease that came mainly from the
above-described factors, from reductions in VGS’s natural gas
deliveries and GMP’s electricity deliveries due, among others, to
temperatures considerably warmer year over year, and from increases in
VGS’s and GMP’s operating and maintenance costs.
Excluding the one-time expenses related to the CPVS acquisition, the net
loss attributable to the Partners of Gaz MÃ©tro from energy distribution
activities in Vermont was $1.4 million(1) for the third quarter, and net income was $12.4 million for the first
nine months of fiscal 2012, corresponding to declines of $2.9 million
and $1.7 million, respectively, from the same periods of fiscal 2011.
Kingdom Community Wind (KCW) project
At the end of fiscal 2011, GMP began construction of the 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 operational start-up scheduled for the end of 2012. At
this time, construction of the access road and all of the turbine pads
has been completed as well as the power transmission line for the wind
farm. Erection of the towers began in July 2012.
Since this investment is regulated and part of GMP’s rate base, it will
be financed through both debt and equity, in accordance with GMP’s
capital structure. To that effect, on November 16, 2011, GMP issued, by
way of private placement, US$50.0 million in Series A First Mortgage
Bonds. On April 2, 2012, GMP issued the second tranche of Series B
First Mortgage Bonds in the amount of US$25.0 million. The remainder of
the investment will be financed by an equity injection from Gaz MÃ©tro,
Natural Gas Transportation
Net income attributable to the Partners of Gaz MÃ©tro from the Natural
Gas Transportation segment totalled $3.5 million(1) for the third quarter of fiscal 2012, up $0.8 million from the third
quarter of fiscal 2011. This increase came mainly from the higher share
in the income of Portland Natural Gas Transmission System (PNGTS),
which, given a decline in the natural gas available on other networks,
increased its transported volumes of natural gas and consequently its
short-term revenues and interruptible service revenues, as well as from
lower costs for its pending rate cases before the FERC.
For the first nine months, the segment’s net income totalled
$13.0 million(1), down $0.2 million from the same period in fiscal 2011. This decline
was mainly due to the fact that Trans QuÃ©bec & Maritimes Pipeline Inc.
(TQM) had benefited from a favourable adjustment to its amortization
expense in the first quarter of fiscal 2011, after the amortization
rates for property, plant and equipment were revised downward upon
National Energy Board approval.
Natural Gas Storage
Net income attributable to the Partners of Gaz MÃ©tro from the Natural
Gas Storage segment totalled $1.6 million(1) for the third quarter of fiscal 2012 and $4.7 million(1) for the first nine months, up $0.5 million and $0.9 million,
respectively, from the same periods last year. These slight increases
were mainly due to lower operating expenses as certain maintenance
projects were delayed.
Energy Services and Other
The net income attributable to the Partners of Gaz MÃ©tro from the Energy
Services and Other segment was nil(1) in the third quarter of fiscal 2012, down $0.1 million from the same
period in fiscal 2011. For the first nine months, the segment’s net
income totalled $1.7 million, down $1.2 million from the same period in
fiscal 2011. This decrease relates mainly to the fiscal 2011 sale of
the interests in Aqua Data Inc. and MTO Telecom Inc. and to higher
expenses for Gaz MÃ©tro Transport Solutions, L.P. (Transport Solutions),
which began its operations in fiscal 2011. Being in the start-up phase,
Transport Solutions has started to execute its first liquefied natural
gas (LNG) supply contract for vehicles, in addition to building the
refuelling stations. These factors were partly offset by HydroSolution
L.P.’s higher profitability from higher rental rates for water heaters
and from greater unit sales in the electric water heater business as
well as from additional revenues generated on the sale of heating and
air conditioning equipment that began in March 2011.
Natural gas as transportation fuel
Transport Solutions, an indirect subsidiary of Gaz MÃ©tro created to
develop natural gas for use as fuel by the transport industry, is
deploying the Blue Road. Since July 2011, it has been installing the
facilities needed to supply LNG to 180 freight trucks from three
refuelling stations, under an agreement entered into with Transport
Robert 1973 LtÃ©e (Robert Transport). The Boucherville and Mississauga
stations have been in operation since September 19, 2011 and January
16, 2012, respectively. Construction of the third station, which will
be located in the Quebec City region, is planned for fiscal 2013. For
Transport Solutions, the project represents an investment of
approximately $5 million. Delivery of trucks ordered by Robert
Transport began in autumn 2011 and is continuing in fiscal 2012.
On July 31, 2012, Gaz MÃ©tro announced a first public liquefied
biomethane fuelling station in RiviÃ¨re-du-Loup. Attentive to the needs
of municipalities and the government’s goal to promote green energy,
Transport Solutions has signed an agreement with the SociÃ©tÃ© d’Ã©conomie mixte d’Ã©nergie renouvelable de la rÃ©gion de
RiviÃ¨re-du-Loup (SÃ‰MER). Under this agreement, Transport Solutions will buy all the
liquefied biomethane produced by the RiviÃ¨re-du-Loup plant for a
minimum of 20 years and will operate a new biomethane fuelling station
for the heavy transport market.
Valener will hold a conference call with financial analysts today,
Friday, August 10, 2012 at 11 a.m. (Eastern Time) to discuss its
results and those of Gaz MÃ©tro for the third quarter ended
June 30, 2012.
Pursuant to an administration and management support agreement entered
into between Valener and Gaz MÃ©tro on September 30, 2010, Gaz MÃ©tro
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 MÃ©tro inc., the
General Partner of Gaz MÃ©tro, will be the speakers, and a question
period will follow.
The call will be broadcast live and accessible by dialling 647-427-7450 or 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.
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
416-849-0833 or toll-free 1-855-859-2056 (access code: 11792953). For
90 days afterward, the call can be played back on the above-mentioned
Overview of Valener
Valener owns an economic interest of approximately 29% in Gaz MÃ©tro.
Valener therefore has a stake in the energy industry and benefits from
Gaz MÃ©tro’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 MÃ©tro and Boralex inc. on
the private lands of SÃ©minaire de QuÃ©bec. Valener’s common shares and
preferred shares are listed on the Toronto Stock Exchange under the
“VNR” trading symbol for common shares and under the “VNR.PR.A” symbol
for Series A preferred shares. www.valener.com
Overview of Gaz MÃ©tro
With almost $5 billion in assets as at June 30, 2012, Gaz MÃ©tro is a
major energy distributor. It is the principal natural gas distributor
in Quebec, where its more than 10,000-km underground distribution
network serves some 300 municipalities. Gaz MÃ©tro is also present in
Vermont, where it is active in the electricity distribution and natural
gas markets. Gaz MÃ©tro is actively involved in the development of
innovative energy projects such as the production of wind power, the
use of natural gas as a fuel for transportation, and the promotion of
biomethane. Gaz MÃ©tro is committed to the satisfaction of its over
180,000 customers in Quebec and 295,000 customers in Vermont, its
Partners (Gaz MÃ©tro 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 GMi, in its capacity as General Partner of Gaz MÃ©tro, 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 MÃ©tro to differ significantly from current
expectations, as described in the forward-looking statements, including
but not limited to the general nature of the aforementioned, terms of
decisions rendered by regulatory agencies, the competitiveness of
natural gas in relation to other energy sources, the reliability of
natural gas supply, the integrity of the natural gas distribution
system, the progress of wind power projects and other development
projects, the ability to complete attractive acquisitions and the
related financing and integration aspects, the ability to secure future
financing, general economic conditions, exchange rate fluctuations, and
other factors described in the Risk Factors Relating to Valener and the
Risk Factors Relating to Gaz MÃ©tro sections of Valener’s and Gaz
Metro’s MD&As for the year ended September 30, 2011 and in Valener’s
disclosure filings. Although the forward-looking statements contained
herein are based on what the management of the manager believes to be
reasonable assumptions, among others, 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
no significant event occurring outside the ordinary course of business,
such as a natural disaster or other calamity, will occur; that Gaz
MÃ©tro can continue to distribute substantially all of its net income
(excluding non-recurring items); that the wind power projects in which
Valener and Gaz MÃ©tro are indirectly involved will be completed on time
and within the defined parameters; that GMP and CVPS will obtain the
required approvals from federal and state authorities for their merger;
that GMP will be able to quickly and effectively integrate CVPS’s
operations; and that the conclusions of studies on the project to serve
the CÃ´te-Nord region will be positive and that the required regulatory
approvals will be obtained in addition to the other assumptions
described in the MD&A of Valener and Gaz MÃ©tro for the quarter ended
June 30, 2012, 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.
(1) Net of financing costs
VALENER INC. 3 months ended June 30 9 months ended June 30 (in millions of dollars, except for share data, which is in dollars) 2012 2011 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) CONSOLIDATED INCOME AND CASH FLOWS Share in the $ $ $ $ net income (loss) of Gaz MÃ©tro (0.5) 3.3 46.2 52.3 Net income $ $ $ $ (loss) (0.5) 0.3 31.3 33.8 Cash flows $ $ $ $ related to operating activities 9.0 11.9 14.1 21.4 Basic and $ $ $ $ diluted net income (loss) per common share (0.02) - 0.83 0.91 Dividends declared per share to shareholders of record on December 30, 2011, March 30, 2012 and June 29, 2012 $ 0.25 $ 0.25 $ 0.75 $ 0.75 Weighted average number of common shares outstanding (in millions) 37.5 37.3 37.4 37.0 OTHER INFORMATION Market prices of common shares on the Toronto Stock Exchange (TSX): High $ 15.48 $ 16.88 $ 16.50 $ 18.37 Low $ 14.60 $ 16.05 $ 13.55 $ 16.05 Close $ 15.29 $ 16.22 $ 15.29 $ 16.22 Market prices of Series A preferred shares on the TSX: High $ 25.92 $ - $ 25.92 $ - Low $ 25.10 $ - $ 25.10 $ - Close $ 25.50 $ - $ 25.50 $ - CONSOLIDATED BALANCE SHEETS September June 30 30 2012 2011 (unaudited) (audited) Total assets $ 773.8 $ 672.7 Total debt $ 26.9 $ - Shareholders' $ $ equity 696.6 602.6 GAZ MÃ‰TRO 3 months ended June 30 LIMITED PARTNERSHIP 9 months ended June 30 (in millions of dollars, except for unit data, which is in dollars) 2012 2011 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) CONSOLIDATED INCOME AND CASH FLOWS Revenues $ 334.3 $ 364.1 $ 1,549.9 $ 1,676.4 Gross margin $ 156.7 $ 158.1 $ 613.6 $ 624.9 Net income $ $ $ $ (loss) attributable to the Partners of Gaz MÃ©tro (1.8) 11.5 159.3 180.4 Cash flows $ $ $ $ related to operating activities 79.3 99.7 405.0 412.5 Purchases of $ $ $ $ property, plant and equipment 105.4 43.0 281.6 120.3 Changes in $ $ $ $ deferred charges and credits 41.6 30.0 109.5 73.7 Basic and diluted net income (loss) per unit attributable to the Partners of Gaz MÃ©tro $ (0.01) $ 0.09 $ 1.26 $ 1.43 Distributions $ $ $ $ paid per unit to Partners (1) 0.28 0.28 0.84 0.56 Weighted average number of units outstanding (in millions) 126.9 126.3 126.5 126.2 OTHER INFORMATION Authorized rate of return on deemed common equity (Gaz MÃ©tro's natural gas distribution activity in Quebec)(2) 9.69% 9.09% Credit ratings First mortgage bonds (Standard & Poor's (S&P)/DBRS Limited (DBRS)) (3) A/A A/A Commercial paper A-1 A-1 (S&P/DBRS) (low)/R-1 (low)/R-1 (3) (low) (low) CONSOLIDATED BALANCE SHEETS September June 30 30 2012 2011 (unaudited) (audited) Total assets $ 4,999.5 $ 3,727.2 Total debt $ 2,370.3 $ 1,762.9 Partners' $ $ equity attributable to the Partners of Gaz MÃ©tro 1,329.1 1,023.3 Partners' $ $ equity per unit attributable to the Partners of Gaz MÃ©tro 9.25 8.10
(1) No distributions were made in the first quarter of fiscal 2011, given that, as part of the reorganization of Gaz MÃ©tro, a distribution of $0.31 per unit was paid on September 30, 2010 instead of on October 1, 2010. (2) Including the sharing of productivity gains, if applicable, and excluding the Global Energy Efficiency Plan incentive. (3) Through its General Partner, Gaz MÃ©tro inc.
SOURCE VALENER INC.