Canadian Utilities Reports Second Quarter 2011 Earnings

 

CALGARY, ALBERTA--(Marketwire - July 29, 2011) - Canadian Utilities (TSX:CU)(TSX:CU.X) today reported earnings attributable to equity owners of $98 million ($0.71 per share) and Adjusted Earnings of $91 million ($0.71 per share) for the quarter ended June 30, 2011. This compares to earnings of $77 million ($0.56 per share) and Adjusted Earnings of $70 million ($0.55 per share) for the same period in 2010, an increase of $21 million in Adjusted Earnings.

Adjusted Earnings in the second quarter of 2011 increased due to higher infrastructure investment in the regulated rate base in the Utilities Segment and the recognition of earnings from ATCO Resources, which was transferred from Canadian Utilities' parent company, ATCO Ltd., to ATCO Power at the beginning of 2011. These increases were partially offset in the Energy Segment by expiry of the Barking generating plant's revenue contract in the third quarter of 2010.

Earnings attributable to equity owners were $274 million ($2.04 per share) and Adjusted Earnings were $257 million ($2.01 per share) for the six months ended June 30, 2011. This compares to earnings of $227 million ($1.70 per share) and Adjusted Earnings of $224 million ($1.77 per share) for the same period in 2010, an increase of $33 million in Adjusted Earnings.

Adjusted Earnings in the first half of 2011 increased in the Energy Segment due to higher power pool prices and related spark spreads for ATCO Power's Alberta generating plants and the recognition of earnings from ATCO Resources as of the beginning of 2011. Adjusted Earnings in the Utilities Segment also increased due to higher infrastructure investment in the regulated rate base.

Adjusted Earnings is a key measure used to assess segment performance, to reflect the economics of rate regulation and to facilitate comparability of Canadian Utilities' earnings with other Canadian rate regulated companies. The importance of Adjusted Earnings is further explained after the Financial Summary and Reconciliation of Adjusted Earnings section.

Earnings reflect Canadian Utilities' implementation of International Financial Reporting Standards (IFRS). Comparative figures for 2010 have been presented on the same basis.

RECENT DEVELOPMENTS


--  Canadian Utilities signed a conditional agreement to acquire 100 per
    cent ownership of Western Australia Gas Networks (WAGN), a natural gas
    distribution utility company that serves the City of Perth and
    surrounding areas. The aggregate purchase price is approximately AUD$1
    billion. The purchase involves the assumption of approximately AUD$644
    million of debt, with the balance funded from current cash reserves. All
    conditions have now been satisfied or waived and the acquisition closed
    today. 

--  Canadian Utilities Limited declared a second quarter dividend for 2011
    of 40.25 cents per Class A non-voting and Class B common share.
    Dividends per share in 2011 have increased for the thirty-ninth
    consecutive year. 

FINANCIAL SUMMARY AND RECONCILIATION OF ADJUSTED EARNINGS

A financial summary and reconciliation of Adjusted Earnings to earnings attributable to equity owners of Canadian Utilities is provided below:


                                            For the Three      For the Six 
                                                   Months           Months 
                                            Ended June 30    Ended June 30 
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($ Millions except per share data)          2011     2010    2011     2010 
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                                                    (Unaudited)            
Adjusted Earnings (1)                         91       70     257      224 
Adjustments for Rate Regulated                                             
 Activities                                    2      (1)       6       (7)
Adjustment for Acquisition Transaction                                     
 Costs                                        (3)       -      (3)       - 
Dividends on Equity Preferred Shares           8        8      12       10 
---------------------------------------------------------------------------
Earnings Attributable to Equity Owners        98       77     274      227 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Adjusted Earnings Per Share (1)             0.71     0.55    2.01     1.77 
---------------------------------------------------------------------------
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Earnings Per Share                          0.71     0.56    2.04     1.70 
---------------------------------------------------------------------------
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Revenues                                     663      656   1,472    1,415 
---------------------------------------------------------------------------
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Funds Generated By Operations (1) (2)        252      196     654      506 
---------------------------------------------------------------------------
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(1) These measures are not defined by Generally Accepted Accounting         
Principles and may not be comparable to similar measures used by other      
companies.                                                                  
(2) This measure is cash flow from operations before changes in non-cash    
working capital.                                                            

The increase in Revenues in the three and six months ended June 30, 2011, is primarily due to higher flow through natural gas sales in ATCO Midstream, and increased infrastructure investment and colder weather in the Utilities Segment, partially offset by expiry of the Barking generating plant's revenue contract in the third quarter of 2010. The first half of 2011 also benefited from higher Alberta power pool prices in ATCO Power. The second quarter and first half of 2010 included one-time revenues of $65 million and $130 million, respectively, related to the lease of the first and second units of the Karratha plant in Australia.

The increase in Funds Generated by Operations in both the three and six months ended June 30, 2011, is primarily due to higher cash earnings and increased availability incentive receipts in ATCO Power.

IMPORTANCE OF ADJUSTED EARNINGS

Adjusted Earnings are defined as earnings attributable to equity owners of Canadian Utilities after adjusting for the timing of revenues and expenses associated with rate regulated activities and equity preferred share dividends. Adjusted Earnings will present earnings on the same basis as was used prior to adopting IFRS - that basis being the U.S. accounting principles for rate regulated entities commonly used by regulated companies in Canada. Adjusted Earnings also exclude one-time gains and losses and items that are not in the normal course of business or day-to- day operations.

Adjusted Earnings is a key measure for several reasons:


--  It is used by the ATCO Group in assessing segment performance and
    allocating resources. 
--  It is the ATCO Group's view that this measure is a better reflection of
    the economics of rate regulation that are directly affected by orders
    and decisions of utility regulators. 
--  It will facilitate comparison with those Canadian regulated companies
    that choose to wait another year before adopting IFRS and with those
    companies that may choose to adopt U.S. accounting principles instead of
    IFRS. 

For rate regulated activities, the differences between Adjusted Earnings and earnings as reported under IFRS are strictly timing in nature: Adjusted Earnings for the Utilities Segment are recognized on the basis of accounting principles that recognize the economics of rate regulation and take into account the orders and decisions of the regulator, whereas earnings under IFRS are recognized when billed to customers. Over time, there is no difference.

Refer to note 4 to the consolidated financial statements for descriptions of the adjustments for rate regulated activities and the timing of their recovery from or refund to customers.

Canadian Utilities' consolidated financial statements and management's discussion and analysis for the three and six months ended June 30, 2011, will be available on Canadian Utilities' website (www.canadian-utilities.com) or via SEDAR (www.sedar.com) or can be requested from the Company.

Alberta-based Canadian Utilities Limited, an ATCO company, with more than 6,000 employees and assets of approximately $11 billion, delivers service excellence and innovative business solutions worldwide with leading companies engaged in Utilities (pipelines, natural gas and electricity transmission and distribution), Energy (power generation, natural gas gathering, processing, storage and liquids extraction) and Technologies (business systems solutions). More information can be found at www.canadian-utilities.com.

Forward-Looking Information:

Certain statements contained in this news release may constitute forward-looking information. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "plan", "estimate", "expect", "may", "will", "intend", "should", and similar expressions. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The Corporation believes that the expectations reflected in the forward- looking information are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon.

Any forward-looking information contained in this news release represents the Corporation's expectations as of the date hereof, and is subject to change after such date. The Corporation disclaims any intention or obligation to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required by applicable securities legislation.



Canadian Utilities Limited
B.R. (Brian) Bale
Senior Vice President & Chief Financial Officer
(403) 292-7502
www.canadian-utilities.com