EDMONTON, ALBERTA -- (Marketwired) -- 08/05/15 -- EPCOR Utilities Inc. (EPCOR) today filed its quarterly results for the three months and year-to-date period ended June 30, 2015.
"EPCOR's financial and operational results for the second quarter show our core operations are performing well. The quarter also included a significant gain related to a sale of Capital Power shares in April and temporary fair value adjustments on financial electricity purchases contracts," said David Stevens, EPCOR President & CEO.
Highlights of EPCOR's financial performance are as follows:
-- Net income was $139 million and $208 million on revenues of $489 million
and $962 million for the three and six months ended June 30, 2015,
respectively, compared with $55 million and $93 million on revenues of
$435 million and $899 million for the corresponding period in the
previous year. Net income was higher in part due to gains associated
with the partial sell-down and reclassification of the Company's
investment in Capital Power. Also, the increase in net income was due to
higher favorable fair value adjustments related to financial electricity
purchase contracts and higher approved customer rates.
-- Net cash flows from operating activities was $283 million for the six
months ended June 30, 2015, compared with $182 million for the
corresponding period in the previous year. The increase was due to
higher funds from operations and higher non-cash operating working
capital.
-- Investment in capital projects was $121 million for the three months
ended June 30, 2015, compared with $91 million for the corresponding
period in the previous year.
-- Investment in capital projects was $191 million for the six months ended
June 30, 2015, compared with $154 million for the corresponding period
in the previous year.
Management's discussion and analysis (MD&A) of the quarterly results are shown below. The MD&A and the unaudited condensed consolidated interim financial statements are available on EPCOR's website (corp.epcor.com) and SEDAR (www.sedar.com).
EPCOR's wholly owned subsidiaries build, own and operate electrical transmission and distribution networks, water and wastewater treatment facilities and infrastructure in Canada and the United States. The Company's subsidiaries also provide electricity and water services and products to residential and commercial customers. EPCOR, headquartered in Edmonton, is an Alberta top 70 employer. EPCOR's website address is www.epcor.com.
EPCOR Utilities Inc. Interim Management's Discussion and Analysis June 30, 2015
This management's discussion and analysis (MD&A) dated August 5, 2015, should be read in conjunction with the condensed consolidated interim financial statements of EPCOR Utilities Inc. for the three months and six months ended June 30, 2015, including significant accounting policies adopted (note 3) and financial instruments (note 7), the consolidated financial statements and MD&A for the year ended December 31, 2014, including standards and interpretations not yet applied (note 3(x)), related party transactions (note 28) and financial instruments (note 29), and the cautionary statement regarding forward-looking information at the end of this MD&A. In this MD&A, any reference to "the Company", "EPCOR", "it", "its", "we", "our" or "us", except where otherwise noted or the context otherwise indicates, means EPCOR Utilities Inc., together with its subsidiaries and joint arrangements. In this MD&A, Capital Power refers to Capital Power Corporation and its directly and indirectly owned subsidiaries including Capital Power L.P., except where otherwise noted or the context otherwise indicates. Financial information in this MD&A is based on the June 30, 2015, condensed consolidated interim financial statements, which were prepared in accordance with International Financial Reporting Standards (IFRS), and is presented in Canadian dollars unless otherwise specified. In accordance with its terms of reference, the Audit Committee of the Company's Board of Directors reviews the contents of the MD&A and recommends its approval by the Board of Directors. This MD&A was approved and authorized for issue by the Board of Directors on August 5, 2015.
Overview
EPCOR is wholly-owned by The City of Edmonton (the City). EPCOR builds, owns and operates electrical transmission and distribution networks in Canada as well as water and wastewater treatment facilities and infrastructure in Canada and the United States (U.S.). EPCOR also provides electricity and water services as well as products to residential and commercial customers. EPCOR's electricity (collectively the Distribution and Transmission and Energy Services segments) and water (including wastewater treatment) businesses consist primarily of rate-regulated and long-term commercial contracted operations.
EPCOR's net income was $139 million and $208 million for the three and six months ended June 30, 2015, respectively, compared with net income of $55 million and $93 million for the comparative periods in 2014, respectively. The increase of $84 million and $115 million was in part due to gain on sale of a portion of investment in Capital Power and gain on reclassification of investment in Capital Power as an available-for-sale asset. Also contributing to the increase in net income was higher favorable fair value adjustments related to financial electricity purchase contracts, higher approved water and electricity customer rates, and lower tax expense due to the re-organization of Energy Services in 2014.
EPCOR's core operations performed well in the second quarter without any significant issues or disruptions to customers. Net income from core operations was $87 million and $142 million, respectively, for the three and six months ended June 30, 2015, compared with $53 million and $82 million, for the respective comparative periods in 2014, as described in the net income table on page 3. The increase in income from core operations, as mentioned above, was driven in part by higher favorable fair value adjustments related to financial electricity purchase contracts and improved rates. Income from core operations is a non-IFRS financial measure as described in Net Income on page 2 of this MD&A.
In April 2015, David Stevens, EPCOR President & CEO, announced he would be retiring from EPCOR. Mr. Stevens will remain in his position until September 1, 2015. The Board of Directors has initiated the recruitment process for his replacement.
In April 2015, EPCOR exchanged 9,450,000 limited partnership units for an equal number of common shares of Capital Power which were immediately sold at an offering price of $23.85 per share for aggregate gross proceeds of $225 million. As a result of this transaction, the Company recognized a net gain before income tax of $21 million in net income, including $9 million on items previously recognized in other comprehensive income. In addition, EPCOR exchanged all of its remaining 9,391,000 exchangeable limited partnership units for common shares of Capital Power. Following the completion of the offering, EPCOR directly owns 9% of Capital Power and as a result, the Company lost significant influence over Capital Power. Accordingly, the Company has reclassified its remaining investment in Capital Power as an available-for-sale asset. On initial recognition of investment in Capital Power as an available-for-sale asset, the Company recognized a net gain before income tax of $32 million in net income including $9 million on items previously recognized in other comprehensive income.
In February of 2015, Suncor gave the Company notice that it will exercise its contractual rights to buy back the leased assets and terminate the related financing and operating agreements. The transfer of assets and operations back to Suncor is to take place over an 18-month period unless the parties agree otherwise. This is not expected to have a material impact on the Company or its operations.
Consolidated results of operations
Revenues
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Three Six
months months
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Revenues for the periods ended June 30, 2014 $ 435 $ 899
Higher Water Services segment revenues 41 68
Higher electricity Distribution and
Transmission segment revenues 17 31
Lower Energy Services segment revenues (3) (32)
Other (1) (4)
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Increase in revenues from core operations 54 63
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Revenues for the periods ended June 30, 2015 $ 489 $ 962
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Consolidated revenues were higher by $54 million and $63 million for the three and six months ended June 30, 2015, respectively, compared with the corresponding periods in 2014 primarily due to the net impact of the following:
-- Water Services segment revenues were higher for the three and six months
ended June 30, 2015, compared with the corresponding periods in 2014
primarily due to higher construction revenues, approved customer rates
and volumes, commercial revenues, and foreign exchange translation
gains.
-- Electricity Distribution and Transmission segment revenues were higher
for the three and six months ended June 30, 2015, compared with the
corresponding periods in 2014 primarily due to higher approved
electricity rates.
-- Energy Services segment revenues were lower for the three and six months
ended June 30, 2015, compared with the corresponding periods in 2014
primarily due to lower electricity prices and volumes.
Net Income
We use income from core operations to distinguish operating results from the Company's water and electricity businesses from results with respect to its investment in Capital Power. It is a non-IFRS financial measure, which does not have any standardized meaning prescribed by IFRS and is unlikely to be comparable to similar measures published by other entities. However, it is presented since it provides a useful measure of the Company's core operations and it is referred to by debt holders and other interested parties in evaluating the Company's financial position and in assessing its creditworthiness.
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Three Six
(Unaudited, $ millions) months months
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Net income for the period ended June 30,
2014 $ 55 $ 93
2014 equity share of income from Capital
Power (net of income tax) (2) (11)
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2014 income from core operations 53 82
Higher Water Services segment operating
income 12 14
Higher electricity Distribution and
Transmission segment operating income - 12
Higher Energy Services segment operating
income 22 33
Lower (higher) net financing expense 4 (1)
Other (4) 2
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Increase in income from core operations 34 60
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2015 income from core operations 87 142
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2015 equity share of income from Capital
Power (net of income tax recovery) - 14
2015 dividend income from available-for-sale
investment in Capital Power 3 3
2015 gain on sale of a portion of investment
in Capital Power (net of income tax) 19 19
2015 gain on reclassification of investment
in Capital Power as available-for-sale
investment (net of income tax) 30 30
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Net income for the period ended June 30,
2015 $ 139 $ 208
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Net income was higher for the three and six months ended June 30, 2015, compared with the corresponding periods in 2014 primarily due to the following:
-- Changes in each business segment's operating results for the three and
six months ended June 30, 2015, compared with the corresponding periods
in 2014 as described under Segment Results below.
-- Net financing expense was lower for the three months ended June 30,
2015, compared with the corresponding period in 2014 primarily due to a
favorable fair value adjustments related to interest rate swaps.
-- Net financing expense was higher for the six months ended June 30, 2015,
compared with the corresponding period in 2014 primarily due to a higher
unfavorable fair value adjustments related to interest rate swaps.
-- EPCOR's equity share of income of Capital Power was lower for the three
months ended June 30, 2015, compared with the corresponding period in
2014. This was primarily due to the change from equity accounting to
fair value accounting for the investment in Capital Power as a result of
the loss of significant influence. The sell-down of Capital Power in
April 2015, as mentioned above, reduced EPCOR's ability to exert
significant influence over Capital Power and resulted in the
reclassification of the Company's investment in Capital Power as an
available-for-sale asset.
-- EPCOR's equity share of income of Capital Power was higher for the six
months ended June 30, 2015, compared with the corresponding period in
2014. This was primarily due to an income tax recovery in 2015 compared
to income tax expenses in 2014.
-- EPCOR's dividend income from the available-for-sale asset in Capital
Power was higher for the three and six months ended June 30, 2015,
compared with the corresponding periods in 2014. This was due to
accounting for the investment in Capital Power as an available-for-sale
asset as described above.
-- EPCOR recognized a gain on sale of a portion of its investment in
Capital Power with no corresponding transaction in 2014. A gain on sale
resulted from proceeds received less direct expenses that were higher
than the carrying amount of the portion of the Company's investment in
Capital Power sold. Items initially recognized in other comprehensive
income which were reclassified to net income also contributed to the
gain.
-- EPCOR recognized a net gain on the initial recognition of the investment
in Capital Power as an available-for-sale asset with no corresponding
transaction in 2014. Items initially recognized in other comprehensive
income which were reclassified to net income also contributed to the
gain.
Segment results
Water Services
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(Unaudited, $ millions,
including intersegment Three months ended Six months ended
transactions) June 30, June 30,
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2015 2014 2015 2014
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Revenues $ 180 $ 139 $ 327 $ 259
Expenses (127) (98) (243) (189)
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Operating income $ 53 $ 41 $ 84 $ 70
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Water Services' operating income increased by $12 million and $14 million for the three and six months ended June 30, 2015, respectively, compared with the corresponding periods in 2014 primarily due to higher approved customer rates, increased volumes, higher commercial and construction activity and a Suncor termination fee.
Distribution and Transmission
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(Unaudited, $ millions,
including intersegment Three months ended Six months ended
transactions) June 30, June 30,
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2015 2014 2015 2014
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Revenues $ 142 $ 125 $ 285 $ 254
Expenses (127) (110) (240) (221)
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Operating income $ 15 $ 15 $ 45 $ 33
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Distribution and Transmission's operating income did not change for the three months ended June 30, 2015, compared with the corresponding period in 2014 due to higher net system access collections and distribution access rates offset by higher electricity delivery service charges, depreciation and staff costs.
Distribution and Transmission's operating income increased by $12 million for the six months ended June 30, 2015, due to higher net system access collections and distribution access rates. This was partially offset by higher electricity delivery service charges, depreciation and staff costs.
Energy Services
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(Unaudited, $ millions,
including intersegment Three months ended Six months ended
transactions) June 30, June 30,
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2015 2014 2015 2014
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Revenues $ 203 $ 206 $ 431 $ 463
Expenses (160) (185) (368) (433)
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Operating income $ 43 $ 21 $ 63 $ 30
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Energy Services' operating income increased by $22 million and $33 million for the three and six months ended June 30, 2015, respectively, compared with the corresponding periods in 2014 primarily due to higher favorable fair value adjustments related to financial electricity purchase contracts. This was partially offset by lower Energy Price Setting Plan margins.
In March 2014, EPCOR completed its re-organization of Energy Services. The services formerly offered directly by EPCOR Energy Alberta Inc. are now provided by EPCOR Energy Alberta Limited Partnership, through its general partner EPCOR Energy Alberta GP Inc.
Capital Spending and Investment
---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Unaudited, $ millions) Six months ended June 30, 2015 2014 ---------------------------------------------------------------------------- Water Services $ 84 $ 66 Distribution and Transmission 103 84 Energy Services - 2 Corporate 4 2 ---------------------------------------------------------------------------- Total capital spending and investment $ 191 $ 154 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
Total capital spending and investment was higher for the six months ended June 30, 2015, compared with the corresponding period in 2014 primarily due to increased spending in the Distribution and Transmission segment on lifecycle replacement, growth and performance improvement projects. This was accompanied by increased construction activity in the Water Services segment at the Gold Bar wastewater treatment plant, new reservoirs at the Walker and Big Lake booster stations in Edmonton, and on the White Rock Total Water Quality Management project. This was partially offset by decreased construction activity in the Distribution and Transmission segment due to the Heartland Transmission Project being completed in 2014.
Consolidated statements of financial position - assets
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(Unaudited, $ June December Increase Explanation of material
millions) 30, 31, (decrease) changes
2015 2014
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Cash and cash $ 157 $ 37 $ 120 Refer to Consolidated
equivalents Statements of Cash Flows
section.
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Trade and other 506 333 173 Increase primarily due to an
receivables increase in current portion
of finance lease receivables
due from Suncor and other
financial assets (see below)
and higher customer water
rates and volumes, partially
offset by lower electricity
accruals and billings
resulting from lower
electricity volumes.
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Inventories 13 14 (1)
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Finance lease 91 118 (27) Decrease primarily due to re-
receivables classifying non-current lease
receivables to current
(recorded in trade and other
receivables above) resulting
from the Suncor buy-back
decision.
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Other financial 281 408 (127) Decrease primarily due to
assets portions of Capital Power and
Regina long-term receivables
becoming current and
reclassified to trade and
other receivables above,
partially offset by higher
construction revenue
recognized.
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Deferred tax 70 69 1
assets
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Investment in - 393 (393) Decrease primarily due to
Capital Power ceasing equity accounting and
re-classifying the investment
in Capital Power to an
available-for-sale asset
(recorded in available-for-
sale investment below).
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Available-for-sale 202 - 202 Increase primarily due to
investment in ceasing equity accounting and
Capital Power re-classifying the investment
in Capital Power to
available-for-sale investment
(see above).
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Property, plant 4,301 4,112 189 Increase primarily due to
and equipment capital expenditures and
foreign currency valuation
adjustments, partially offset
by depreciation expense.
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Intangible assets 270 254 16 Increase primarily due to
and goodwill capital expenditures and
foreign currency valuation
adjustments, partially offset
by amortization expense on
assets with finite lives.
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Consolidated statements of financial position - liabilities and equity
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(Unaudited, $ June December Increase Explanation of material
millions) 30, 31, 2014 (decrease) changes
2015
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Trade and other 316 248 68 Increase primarily due to
payables higher electricity purchase
accruals as a result of
higher wholesale electricity
prices and due to Regina
construction.
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Loans and 1,993 2,080 (87) Decrease due to repayment of
borrowings short-term debt, partially
(including offset by foreign currency
current portion) valuation adjustments on U.S.
debt.
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Deferred revenue 912 870 42 Increase primarily due to
(including contributed assets received
current portion) and favorable foreign
currency valuation
adjustments, partially offset
by revenue recognized.
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Provisions 124 135 (11) Decrease primarily due to
(including contributions from
current portion) developers, partially offset
by lower employee benefit
obligations.
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Derivative 10 9 1
liabilities
(including
current portion)
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Other liabilities 36 37 (1)
(including
current portion)
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Deferred tax 24 19 5 Increase due to taxable
liabilities temporary differences.
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Equity 2,476 2,340 136 Increase due to increase in
attributable to net income, partially offset
the Owner of the by dividends paid.
Company
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Consolidated statements of cash flows
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(Unaudited, $ millions)
Cash inflows (outflows)
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Three months ended 2015 2014 Increase Explanation
June 30, (decrease)
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Operating $ 170 $ 82 $ 88 Increase primarily reflects
higher funds from operations
and higher non-cash operating
working capital primarily
resulting from a larger
increase in accounts
payables, partially offset by
larger increase in trade and
other receivables.
Investing 95 (63) 158 Increase primarily due to
proceeds on sale of portion
of the investment in Capital
Power, partially offset by
higher capital expenditure
and higher advances on
financial lease receivables
and other assets.
Financing (148) (44) (104) Decrease primarily due to
repayment of short-term loans
and borrowings, partially
offset by lower repayment of
long-term loans and
borrowings.
Opening cash and 40 126 (86)
cash equivalents
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Closing cash and $ 157 $ 101 $ 56
cash equivalents
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(Unaudited, $ millions)
Cash inflows (outflows)
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Six months ended 2015 2014 Increase) Explanation
June 30, (decrease
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Operating $ 283 $ 182 $ 101 Increase primarily reflects
higher funds from operations
and higher non-cash operating
working capital primarily
resulting from larger
increase in accounts
payables, partially offset by
larger increase in trade and
other receivables.
Investing 15 (131) 146 Increase primarily due to
proceeds on sale of portion
of the investment in Capital
Power, higher non-cash
investing working capital and
lower payments for Gold Bar
transfer fees, partially
offset by higher advances on
financial lease receivables
and other assets and higher
capital expenditure.
Financing (178) (80) (98) Decrease primarily due to
repayment of short-term loans
and borrowings, partially
offset by lower repayment of
long-term loans and
borrowings.
Opening cash and 37 130 (93)
cash equivalents
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Closing cash and $ 157 $ 101 $ 56
cash equivalents
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Liquidity and capital resources
The Company maintains its financial position through rate-regulated utility and contracted operations which generate stable cash flows.
Capital Requirements and Contractual Obligations
During the second quarter of 2015, there were no material changes to the Company's capital requirements or purchase obligations, including payments for the next five years and thereafter.
Financing
The Company has bank credit facilities, which are used principally for the purpose of backing the Company's commercial paper program and providing letters of credit, as outlined below:
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Letters of
credit and
(Unaudited, $ Banking other
millions) Total commercial facility Net amounts
June 30, 2015 Expiry facilities paper issued draws available
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Committed
Syndicated bank
credit December
facility(1) 2017 $ 200 $ - $ 99 $ 101
Syndicated bank December
credit facility 2019 350 - - 350
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Total committed 550 - 99 451
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Uncommitted
Bank line of
credit No expiry 25 - - 25
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Total uncommitted 25 - - 25
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Total credit
facilities $ 575 $ - $ 99 $ 476
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(1) Restricted to letters of credit.
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Letters of
credit and
(Unaudited, $ Banking other
millions) Total commercial facility Net amounts
December 31, 2014 Expiry facilities paper issued draws available
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Committed
Syndicated bank
credit December
facility(1) 2017 $ 200 $ - $ 82 $ 118
Syndicated bank December
credit facility 2019 350 103 - 247
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Total committed 550 103 82 365
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Uncommitted
Bank line of
credit No expiry 25 - - 25
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Total uncommitted 25 - - 25
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Total credit
facilities $ 575 $ 103 $ 82 $ 390
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(1) Restricted to letters of credit.
Letters of credit are issued to meet the credit requirements of energy market participants and conditions of certain service agreements.
The Company has a Canadian base shelf prospectus under which it may raise up to $1 billion of debt with maturities of not less than one year. At June 30, 2015, the available amount remaining under this base shelf prospectus was $1 billion (December 31, 2014 - $1 billion). The base shelf prospectus expires in December 2015.
The Company expects to have sufficient liquidity to finance its plans and fund its obligations for the remainder of 2015 with a combination of cash on hand, cash flow from operating activities, sell down of our interest in Capital Power, the issuance of commercial paper and drawings upon existing credit facilities. The Company has an adequate contractual liquidity position with credit available under various bank lines as described above. Cash flows from operating activities would be impaired by events that cause severe damage to our facilities and would require unplanned cash outlays for system restoration repairs. Under those circumstances, more reliance would be placed on our credit facilities for working capital requirements until a regulatory approved recovery mechanism was in place or insurance proceeds were received.
EPCOR plans to eventually sell all or a substantial portion of its remaining interest in Capital Power subject to market conditions, based on its requirements for capital and other circumstances that may arise in the future.
No commercial paper was issued and outstanding at June 30, 2015 (December 31, 2014 - $103 million).
Financial Covenants
EPCOR is currently in compliance with all of its financial covenants in relation to its bank credit facilities, Canadian public medium-term notes and U.S. private-debt notes. Based on current financial covenant calculations, the Company has sufficient capacity to borrow to fund current and long-term requirements. Although the risk is low, breaching these covenants could potentially result in a revocation of EPCOR's credit facility causing a significant loss of access to liquidity.
If the economy were to deteriorate in the longer term, particularly in Canada and the U.S., the Company's ability to extend the maturity or revise the terms of its bank credit facilities, arrange long-term financing for its capital expenditure programs and acquisitions, or refinance outstanding indebtedness when it matures could be adversely impacted. If market conditions worsen, the Company may suffer a credit rating downgrade. We believe that these circumstances have a low probability of occurring, however, we continue to monitor our capital programs and operating costs to minimize the risk that the Company becomes short of cash or unable to honor its obligations. If required, the Company would look to reduce capital expenditures and operating costs and / or sell a portion of its investment in Capital Power as market conditions permit.
For further information on the Company's contractual obligations, refer to the 2014 annual MD&A.
Critical accounting estimates
In preparing the condensed consolidated interim financial statements, management necessarily made estimates in determining transaction amounts and financial statement balances. The following are the items for which significant estimates were made in the condensed consolidated interim financial statements: electricity revenues and costs, unbilled consumption of electricity and water, fair values and income taxes. Although the current condition of the economy has not impacted our methods of estimating accounting values, it has impacted the inputs in those determinations and the resulting values. Interim results will fluctuate due to the seasonal demands for electricity and water, changes in electricity prices, and the timing and recognition of regulatory decisions. Consequently, interim results are not necessarily indicative of annual results.
For further information on the Company's other critical accounting estimates, refer to the 2014 annual consolidated financial statements and 2014 annual MD&A.
Risk management
This section should be read in conjunction with the Risk Management section of the 2014 annual MD&A. EPCOR faces a number of risks including operational risks, regulatory risk, political and legislative risk, electricity price and volume risk, strategy execution risk, risk related to investment in Capital Power, health and safety risk, information technology related security risks, environment risk, project risk, weather risk, financial liquidity risk, availability of people, counterparty credit risk, foreign exchange risk, conflicts of interest, and general economic conditions, business environment and other risks. The Company employs active programs to manage these risks.
As part of ongoing risk management practices, the Company reviews current and proposed transactions to consider their impact on the risk profile of the Company. The risk related to its investment in Capital Power is lower in the condensed consolidated interim financial statements for the six months ended June 30, 2015 compared to the risk profile or risk management strategies of EPCOR as described in the 2014 annual MD&A.
Outlook
In 2015, we intend to continue to focus on growth in rate-regulated water and electricity infrastructure. We expect this growth to come from new infrastructure to accommodate growth and operational improvements in both rate-regulated water and electricity businesses primarily related to the Edmonton based operations. We also intend to expand our water and electricity commercial services offerings.
Demand for water is expected to continue to increase and we anticipate increased requirements for better water management practices including watershed management and conservation. We will pursue expansion of our portfolio of commercial water contracts, particularly in Canada.
The Alberta Utilities Commission's (AUC) 2013 Generic Cost of Capital decision set the return on equity for 2013 through 2015 to 8.3% (previously 8.75%) for all Alberta natural gas and electricity distribution and transmission utilities. The applications to true up for the reduced approved return on equity will be submitted to the AUC in the second half of 2015. The AUC also reduced the equity portion of the capital structure by 1%, based on improved credit market conditions.
Quarterly results
---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Unaudited, $ millions) Quarters ended Revenues Net income ---------------------------------------------------------------------------- June 30, 2015 $ 489 $ 139 March 31, 2015 473 69 December 31, 2014 499 75 September 30, 2014 506 23 June 30, 2014 435 55 March 31, 2014 464 38 December 31, 2013 492 23 September 30, 2013 515 50 ----------------------------------------------------------------------------
Events for the past eight quarters compared to the same quarter of the prior year that have significantly impacted net income include:
-- June 30, 2015 second quarter results included gain on sale of a portion
of investment in Capital Power and gain on reclassification of
investment in Capital Power to an available-for-sale asset. It also
includes higher approved water and electricity customer rates, higher
fair value adjustments on financial electricity purchase contracts,
lower income tax expense due to the re-organization of Energy Services,
and favorable fair value adjustments related to the interest rate swap.
-- March 31, 2015 first quarter results included higher approved water and
electricity customer rates, higher fair value adjustments on financial
electricity purchase contracts, higher equity share of income of Capital
Power, and lower income tax expense due to the re-organization of Energy
Services. This was partially offset by a loss on fair value adjustments
related to the interest rate swap.
-- December 31, 2014 fourth quarter results included higher approved water
and electricity customer rates, recovery of deferred income taxes due to
the recognition of loss carry forwards as a result from an increase in
forecasted taxable income in Energy Services, gain on dilution of
interest in Capital Power and higher income from our equity share of
Capital Power, partially offset by higher depreciation on capital assets
in service, lower fair value adjustments on interest rate swap and
financial electricity purchase contracts, and lower capitalized interest
due to lower capital spend during the period.
-- September 30, 2014 third quarter results included higher favorable fair
value adjustments on financial electricity purchase contracts and higher
approved water and electricity customer rates, partially offset by lower
income from our equity share of Capital Power.
-- June 30, 2014 second quarter results included higher favorable fair
value adjustments on financial electricity purchase contracts and higher
approved water and electricity customer rates, partially offset by lower
income from our equity share of Capital Power.
-- March 31, 2014 first quarter results included lower income from our
equity share of Capital Power and higher unfavorable fair value
adjustments on financial electricity purchase contracts, partially
offset by higher approved water and electricity rates.
-- December 31, 2013 fourth quarter results included increased income
primarily due to a lower impairment charge related to the investment in
Capital Power, higher income from our equity share of Capital Power and
increased income from higher approved water and electricity customer
rates, partially offset by a loss on sale of the partial investment in
Capital Power.
-- September 30, 2013 third quarter results included lower income primarily
due to higher transmission flow-through charges not yet approved to be
billed to customers and lower income from our equity share of Capital
Power, partially offset by increased income from higher approved water
customer rates.
Forward - looking information
Certain information in this MD&A is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as "will", "anticipate", "believe", "plan", "intend", "target", and "expect" or similar words suggest future outcomes.
The purpose of forward-looking information is to provide investors with management's assessment of future plans and possible outcomes and may not be appropriate for other purposes.
Material forward-looking information within this MD&A, including related material factors or assumptions and risk factors, are noted in the table below:
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Forward-looking Material Factors or Risk Factors
Information Assumptions
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The Company expects to EPCOR is able to EPCOR's operations do not
have sufficient liquidity generate the expected generate the expected
to finance its plans and cash flow from level of cash flow and /
fund its obligations for operations and various or circumstances arise
the remainder of 2015. means of funding remain limiting or restricting
available to the the Company's ability to
Company. access funds through the
various means otherwise
available.
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EPCOR plans to eventually EPCOR is able to find EPCOR is unsuccessful in
sell all or a substantial suitable lower-risk finding suitable
portion of its remaining businesses and / or businesses and / or
interest in Capital assets to invest the assets to invest in,
Power. sell-down proceeds in. therefore negating
further sell downs to
Market conditions permit raise funds.
the sale of Capital
Power shares at a price The market price of
suitable to EPCOR. Capital Power shares
declines to an amount
that EPCOR no longer
deems it feasible to sell
all or substantially all
of its interest in
Capital Power.
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Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ from expectations and are identified in the Risk Management section above.
Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Except as required by law, EPCOR disclaims any intention and assumes no obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.
Additional information
Additional information relating to EPCOR including the Company's 2014 Annual Information Form is available on SEDAR at www.sedar.com.
Contacts:
Media Relations:
Tim le Riche
(780) 969-8238
tleriche@epcor.com
Corporate Relations:
Claudio Pucci
(780) 969-8245 or toll free (877) 969-8280
cpucci@epcor.com
