February 7, 2007 - Financial releases
Montreal, February 7, 2007 – Gaz Métro Limited Partnership (TSX: GZM.UN, "Gaz Métro") reports Partners’ income of $71.8 million, or $0.60 per unit, for the first quarter ended December 31, 2006. It represents an increase of $1.0 million, or 1.4%, compared to
$70.8 million, or $0.60 per unit, for the same period last year. The average number of outstanding units was 2.9 million (2.5%) higher than the corresponding quarter for the 2006 fiscal year as the result of last October’s unit issue. The number of outstanding units is
“The increase in income demonstrates the soundness and efficiency of the operations of the Partnership, which, this year again, has to deal with a reduction in the authorized base rate of return for its natural gas distribution activity in Quebec”, stated Robert Tessier, who is retiring as President and Chief Executive Officer of the Partnership. “We are pleased to announce that a unanimous agreement reached with the various intervenors on proposed changes to the performance incentive mechanism was submitted to the Régie de l’énergie on January 12. If the agreement is approved by the Régie, it will provide Gaz Métro with an opportunity to increase its return”, added Mr. Tessier.
As the Partnership benefits from a temperature normalization mechanism for deliveries in Quebec, the results for the Quebec distribution activity were not affected by the mild temperatures in Quebec over the past few months. Moreover, the continual acquisition of new residential customers and the start-up of TransCanada Energy Ltd.’s cogeneration plant in Bécancour, combined with lower natural gas prices, enabled the Partnership to increase total deliveries by 17.6% over the same period last year.
Consolidated revenues for the first quarter of the 2007 fiscal year are down from last year, by $147.3 million, or 21.6%, to $534.0 million, mainly on account of a significant decrease in the average selling price of natural gas, which fell from $9.78 a Gigajoule in the first quarter of the 2006 fiscal year to $6.07 a Gigajoule in the first quarter of the 2007 fiscal year. In Quebec, and in Vermont since October 1st. 2006, natural gas purchased by the Partnership is billed to customers at its cost and, therefore, has no impact on gross margin or Partners’ income.
Consolidated gross margin of $185.4 million for the first quarter of the 2007 fiscal year is up by 3.1%, or $5.5 million, compared to the corresponding quarter in the 2006 fiscal year. The increase is largely attributable to the increase in distribution revenues as a result of the higher normalized volumes for the Quebec distribution activity.
Consolidated cash flows of $126.3 million before change in non-cash working capital items in the first three months of the 2007 fiscal year are up by $5.7 million, or 4.7%, from
$120.6 million for the same period last year. The $9.7 million share of the distributions made by PNGTS during the first quarter, compared to $1.8 million in the first quarter of the preceding year, contributed to the increase.
Gaz Métro inc., in its capacity as General Partner of the Partnership, today declared a distribution of $0.31 per unit, payable April 2, 2007 to Partners of record at the close of business on March 15, 2007.
Partners’ income from the Distribution Sector is $66.1 million, up by $1.4 million, or 2.2%, compared to the first quarter of the 2006 fiscal year. This is largely attributable to the increase in normalized volumes for the Quebec distribution activity.
Normalized deliveries (for temperatures, in Quebec) during the first three months of the 2007 fiscal year total 1,882 million cubic metres are up a substantial 17.6% from
1,600 million cubic metres in the 2006 fiscal year. The main reasons for this are the production start-up at the Bécancour cogeneration plant and higher spot sales in the industrial market.
Quebec’s warmer than normal temperatures also affected the rate stabilization accounts. A $14.6 million variation was recognized during the quarter compared to $5.8 million during the corresponding quarter last year. Under the regulatory mechanism, these amounts will be recovered over a five-year period through rate adjustments.
Partners’ income from the Transportation Sector is down $2.5 million for the first quarter to $3.5 million compared to the 2006 fiscal year on account of lower earnings by PNGTS and a decrease in TQM’s authorized rate of return.
Partners’ income from this Sector is $1.1 million, an increase of $0.3 million over the same quarter for the preceding year, mainly on account of a reduction in development expenditures.
Energy Services and Other Sector
Partners’ income from the Sector is $1.1 million in the first quarter of the 2007 fiscal year compared to $1.4 million for the same period last year. The decrease is attributable to the reduction in the investment interest in Climatisation et Chauffage Urbains de Montréal and the increase in the financial costs allocated to the Sector, offset in part by stronger performance of other activities, in particular Aqua-Rehab.
The proposed LNG terminal is presently being reviewed by the Bureau d'audiences publiques sur l'environnement. No expenditures were made on this project during the first quarter, which reduced net expenses by $2.0 million compared to the corresponding quarter in the 2006 fiscal year.
On October 31 2006, a solid majority of the shareholders of Green Mountain Power Corporation approved the offer made by Northern New England Energy Corporation (NNEEC), a wholly owned subsidiary of Gaz Métro. Following the public hearings held in January 2007, the Vermont Public Service Board should render a decision within the next few months.
As announced on September 28, 2006, the Partners’ Annual Meeting on February 7, 2007 will undergo major management changes at Gaz Métro. Sophie Brochu will succeed Robert Tessier as President and Chief Executive Officer and Mr. Tessier will take over from Robert Parizeau as Chairman of the Board.
Gaz Métro Limited Partnership will hold its Partners’ Annual Meeting on Wednesday, February 7, 2007 at 2:00 p.m. (Eastern time) at the Palais des Congrès de Montréal, 1001, Place Jean-Paul Riopelle, Salle 511B, Montreal, Quebec. It will report on its activities and discuss its results for the 2006 fiscal year and the first quarter of the 2007 fiscal year. The Partners’ Annual Meeting will be broadcast live on Gaz Métro’s website (www.gazmetro.com/investors) in the “Webcasts” section. Rebroadcasts will be available for 90 days.
The Partnership will also hold a telephone conference with financial analysts to discuss its results for the first quarter of the 2007 fiscal year on Wednesday, February 7, 2007 at
4:30 p.m. (Eastern time). Interested parties are invited to listen in. Robert Tessier, Chairman of the Board, Sophie Brochu, President and Chief Executive Officer, and Pierre Despars, Executive Vice President and Chief Financial Officer, will be the speakers.
The conference can be accessed live by dialling 1 800 732 9303 or 416 644 3415. It will also be webcast on Gaz Métro’s website (www.gazmetro.com/investors) in the “Webcasts” section.
Rebroadcast can be accessed for 30 days by telephone at 1 877 289 8525 or 416 640 1917 (access code21216588#) and on Gaz Métro’s Internet site.
Gaz Métro Overview
With more than $2.7 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. A subsidiary, Vermont Gas Systems, serves about 38,000 customers.
Gaz Métro also owns significant investment interests in two natural gas transportation enterprises (Trans Quebec & Maritimes Pipeline and Portland Natural Gas Transmission System) and in an enterprise specializing in underground natural gas storage facilities (Intragaz Group). A subsidiary of Gaz Métro, Gaz Métro Plus, provides maintenance and repair services for natural gas, cooling and district heating equipment (CDH Solutions & Operations) and leases water heaters, including electric water heaters (HydroSolution). Through its various subsidiaries and joint ventures, Gaz Métro also provides diagnosis and rehabilitation services for water and waste water infrastructures (Aqua Data and Aqua-Rehab) and fibre optics (MTO Telecom).
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