Nancy SouthernPresident &Chief Executive Officer
I begin this letter wishing to convey my deepest appreciation and congratulations to the 6,700 women and men of Canadian Utilities (CU), who worked so diligently, with courage and ingenuity, to deliver a hallmark year to our customers, partners, suppliers and share owners.
I am also very proud that we achieved great strides towards accomplishing our stated strategy to recreate CU’s Canadian business model in Australia.
In March 2011, under the leadership of Steven Landry, Managing Director & Chief Operating Officer, ATCO Australia, we opened the ATCO Australia Corporate Office Headquarters in Perth, Western Australia.
On July 29, 2011, we completed a complex $1.1 Billion acquisition of a natural gas distribution company in Perth. The newly named ATCO Gas Australia has more than 650,000 customers and approximately 13,100 kilometres of low pressure pipelines in one of the fastest growing resource driven economies in the world.
Brian Bale, your company’s Chief Financial Officer, provided tremendous stewardship of your company’s cash and liquidity, by negotiating approximately $2 Billion of credit line facilities, $700 Million of low cost, long term debt and $325 Million of Equity Preferred Shares amidst tumultuous financial markets.
Once again, I wish to express my appreciation to the people of Canadian Utilities and our Board of Directors, for their dedication and commitment to the sustainable, profitable growth of your company.
Brian BaleSenior Vice President &Chief Financial Officer
Canadian Utilities continues to deliver share owner value by focusing on businesses that generate reliable earnings while still creating the opportunity for premium returns through exposure to select commodity markets. In 2011, Canadian Utilities not only generated strong earnings, but also enhanced its ability to deliver long-term share owner value. This was accomplished by acquiring a gas distribution utility in Australia, ongoing significant investment in Alberta infrastructure, and further enhancing its already strong financial position.
Reliable Earnings with an Opportunity for Premium ReturnsRegulated utility and other long-term contracted operations contributed approximately 74 per cent of total Adjusted Earnings in 2011, providing a solid foundation of reliable earnings. Canadian Utilities maintains a moderate level of exposure to select commodity markets, which provides the opportunity for premium returns.
Canadian Utilities has consistently increased its dividend every year since 1972.
Growth from Diversified BusinessesIn early 2011, the launch of ATCO Australia was announced to reflect the company’s continuing focus on diversification and intention to expand its Australian presence. The acquisition of ATCO Gas Australia in July 2011 provides enhanced geographic diversification benefits and a strong regulated utility base from which to make further investments in Australia.
The significant ongoing investment in the Utilities segment provides a solid foundation for continued growth in Alberta. The need for this investment is fuelled by both system expansion and replacement of aging infrastructure. Utility capital expenditures are expected to be $6 Billion over the 2012-2014 timeframe.
Financial StrengthCanadian Utilities is committed to maintaining strong investment grade credit ratings.
In 2011, Canadian Utilities completed approximately $3 Billion of financing activity to support the company’s value creating growth initiatives. This included approximately $2 Billion in Canadian and Australian bank financing, and more than $1 Billion in Canadian capital markets issuance. Canadian Utilities’ liquidity position is not only supported by its available credit facilities, but also by $613 Million of cash balances as at December 31, 2011.