May 9, 2007 - Financial releases
Montreal, May 9, 2007 – Gaz Métro Limited Partnership (TSX: GZM.UN, "Gaz Métro") reports Partners’ income of $104.3 million, or $0.86 per unit, for the second quarter of the 2007 fiscal year, compared to $102.8 million, or $0.88 per unit for the same period last year. For the first six months of the 2007 fiscal year, Partners’ income is $176.1 million, or $1.46 per unit, compared to $173.6 million, or $1.48 per unit at the same date last year.
Income for the second quarter is up, mainly due to higher normalized volumes delivered in Quebec, lower expenses recorded on the Rabaska project and non-recurring items in subsidiaries in the Energy Services and Other Sector. These are also the main reasons income is up for the first six months of the 2007 fiscal year compared to 2006.
"The challenges posed by the reduction in the authorized base rate of return in all our regulated activities and the loss of large customers of Portland Natural Gas Transmission System (PNGTS) during the last fiscal year are still with us. In spite of these challenges, after the two quarters that have the greatest impact on the annual results, Partners’ income is ahead of last year due to the sustained efforts of the entire Gaz Métro group", stated Sophie Brochu, President and Chief Executive Officer.
"Our efforts on the regulatory side were also rewarded just after the quarter ended when the Régie de l'énergie approved the changes Gaz Métro and the various interveners had proposed in connection with the renewal of the performance incentive mechanism. As a result, we will be able to include these changes in the 2008 rate case", announced Sophie Brochu.
Consolidated revenues of $731.2 million for the second quarter of the 2007 fiscal year are $31.7 million, or 4.1%, lower than the same period last year. The main reason for this is the significant decrease in the average selling price of natural gas, which was $6.34/gigajoule in the second quarter of the 2007 fiscal year compared to $8.43/gigajoule in 2006. After six months, consolidated revenues are down $179.0 million to $1,265.2 million and higher deliveries are more than offset by a close to 32% decrease in the average selling price of system gas during the period.
While the selling price of natural gas does not affect results because of an adjustment mechanism for customers in Quebec and Vermont, distribution rate and volume increases by the Quebec distribution activity made it possible to increase consolidated gross margin by 3.5%, or $7.2 million, to $217.0 million during the second quarter of the 2007 fiscal year compared to 2006. After six months, gross margin is up $12.7 million to $402.4 million.
Cash flows related to operating activities, before change in non-cash working capital items, are $165.9 million for the second quarter of the 2007 fiscal year, an increase of $20.7 million over the $145.2 million for the same period last year. They are $292.2 in the first semester of the 2007 fiscal year, an increase of $26.4 million. This can be explained by average temperatures that were colder than last year resulting in greater consumption for the Quebec distribution activity and the increase in the distributions paid by PNGTS during the first quarter.
Gaz Métro inc., in its capacity as General Partner of the Partnership, today declared a distribution of $0.31 per unit, payable July 3, 2007 to Partners of record at the close of business on June 15, 2007.
Income from the Distribution Sector is $94.3 million for the second quarter, down $0.5 million, or 0.5%, from the second quarter of the 2006 fiscal year. After six months, it is $160.4 million, an increase of $0.9 million, or 0.6%, which is attributable to, among other things, the increase in normalized volumes delivered in Quebec.
Normalized deliveries (based on temperatures, in Quebec) during the second quarter of the 2007 fiscal year total 2,189 million cubic metres, which is 13.5% higher than the 1,928 million cubic metres in 2006. For the first half of the 2007 fiscal year, normalized volumes of 4,071 million cubic metres are 15.4% higher than last year. The main reasons for this are the start-up of the Bécancour cogeneration plant and increased consumption in the refining and metallurgical sectors.
Income from the Transportation Sector is down $1.2 million for the second quarter to $5.2 million compared to 2006. For the first six months of the fiscal year, income is $8.7 million, which is $3.6 million lower than last year. As explained in the first quarter, the Sector’s results are affected by lower PNGTS earnings and the reduction in Trans Quebec & Maritimes Pipeline's (TQM) authorized rate of return.
Partners’ income from this Sector is down $0.8 million for the second quarter to $0.9 million. After six months, it is down $0.5 million to $1.9 million. The main reason for this is a non-recurring revenue recorded last year.
Energy Services and Other Activities Sector
Net income from the Sector is $4.1 million in the second quarter of the 2007 fiscal year compared to $1.1 million for the same period last year. For the first semester of the 2007 fiscal year, net income is $5.2 million, an increase of $2.7 million over last year. The main reasons for this are the partial recognition of the gain on the sale in 2006 of a portion of the units of CCUM and the recording of a non-recurring tax benefit in MTO Telecom Inc.
The proposed LNG terminal is presently being reviewed by the Bureau d'audiences publiques sur l'environnement (BAPE). Public hearings are completed and the Partnership is awaiting the BAPE recommendation. No expenditures related to this project affected the results in the quarter, which contributed generating net savings on development expenditures of $1.0 million and $3.0 million respectively compared to the corresponding quarter and semester for the 2006 fiscal year.
As announced on April 12 2007, Gaz Métro, through its wholly-owned subsidiary, Northern New England Energy Corporation ("NNEEC"), completed the acquisition of Green Mountain Power Corporation. Gaz Métro will therefore consolidate the results of this large Vermont electricity distributor after that date.
The Partnership will hold a telephone conference with financial analysts to discuss its results for the second quarter of the 2007 fiscal year on Wednesday, May 9, 2007 at 4:00 p.m. (Eastern time). Interested parties are invited to listen in. Sophie Brochu, President and Chief Executive Officer, and Pierre Despars, Executive Vice President and Chief Financial Officer, will be the main speakers.
The conference can be accessed live by dialling 1 800 731 5319 or 416 644 3419. It will also be webcast on Gaz Métro’s website (www.gazmetro.com/investors) in the “Webcasts” section.
Rebroadcasts can be accessed for 30 days by telephone at 1 877 289 8525 or 416 640 1917 (access code #21227225) and on Gaz Métro’s website.
Gaz Métro Overview
With more than $2.9 billion of assets and more than 1,500 employees in Quebec, Gaz Métro is a leading Quebec energy company and one of Canada’s largest natural gas distributors. Gaz Métro serves about 167,000 customers in Quebec through an underground pipeline network of almost 10,000 km.
Through its wholly-owned subsidiary, NNEEC, Gaz Métro has been active in New England’s energy industry since 1986 and has nearly 300 employees there. NNEEC includes Vermont Gas Systems, the sole gas distributor in Vermont, and Green Mountain Power Corporation, the second largest electricity distributor in that State.
Through subsidiaries, affiliates, companies subject to significant influence and partnerships, Gaz Métro is active in natural gas transportation and storage as well as energy services and water and waste water systems and fibre optic networks. Gaz Métro also participates in various development projects in the energy sector.
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