Water company still negotiating for new franchise
(CNS): Consolidated Water Co Ltd has reported a decline in earnings by 13 percent in its 2010 results. The firm revealed that total revenues for the year end December 31 declined to around $50.7 million, compared with approximately $58 million in 2009. The private firm, which supplies water on Grand Cayman and operates in other parts of the Caribbean, said the decline was down to rate reduction of 7 percent and a lower volume of sales due to Cayman’s soft economy. Rick McTaggart, Chief Executive Officer of Consolidated Water Co. Ltd also revealed in his comments on the results that the firm has not yet negotiated its new retail water franchise in Cayman and it was taking longer than expected.
“We continue to negotiate with the Cayman Islands government for a new retail water franchise in Grand Cayman. This process has taken longer and been more difficult than anyone anticipated,” McTaggart said but did not indicate what the problems were regarding the talks. “However, we continue to meet with the government negotiating team on a regular basis, and we are optimistic that a satisfactory conclusion to the negotiations will eventually be forthcoming," he added.
McTaggart said the firm was optimistic about the 20111 year despite a fall in profits in 2010. “We are encouraged, however, by recent signs of recovery, including a 17% increase in retail water sales in our franchise area, along with gains of approximately 6% in both air and cruise ship passenger arrivals to Grand Cayman during the month of January 2011, when compared with the prior-year period,” McTaggart said.
The financial report revealed that net income attributable to stockholders improved to $6,292,025, or $0.43 per diluted share, in the year ended 31 December 2010, compared with net income of $6,098,571, or $0.42 per diluted share, in the year ended 31 December 2009.
The services segment recorded a gross profit of approximately $0.7 million in the year ended 31 December 2010, compared with a gross profit of approximately $3.8 million in 2009. The lower gross profit for 2010 in the services segment stems primarily from the decrease in construction revenues and, to a lesser extent, from liquidated damages of $260,000 and construction cost overruns relating to the refurbishment and commissioning of the Red Gate plant.
Interest income increased 50% to $1,375,827 in the year ended 31 December 2010, versus $917,330 in the previous year, due to interest earned on the loans receivable from the Water Authority – Cayman arising from the completion and sale of the North Side Water Works and the refurbishment of the Red Gate plant.
"While looking forward is always a challenging task, we believe Consolidated Water is well-positioned to expand its role in the global water industry in coming years by moving into new geographic markets and pursuing larger project opportunities. Despite the economic and geopolitical uncertainties facing the world today, a growing number of countries are finally realizing that their existing natural fresh water resources will be inadequate for their long-term requirements. As more of these countries turn to the vast potential of our oceans as a source of potable water, the future for seawater desalination, in general, and our company, in particular, looks increasingly bright," concluded McTaggart.
Consolidated Water Co. Ltd. develops and operates seawater desalination plants and water distributionsystems in areas of the world where naturally occurring supplies of potable water are scarce or nonexistent. The company operates water production and/or distribution facilities in the Cayman Islands, Belize, the British Virgin Islands, The Commonwealth of The Bahamas and Bermuda.
Consolidated Water Co. Ltd. is headquartered in George Town, Grand Cayman. The company’s ordinary (common) stock is traded on the NASDAQ Global Select Market under the symbol "CWCO". Additional information on the company is available on its website at www.cwco.com.
Category: Business
I may have found the sticking point in the negotiations:
Our service area is comprised of an area on Grand Cayman that includes the Seven Mile Beach and West Bay areas, two of the three most populated areas in the Cayman Islands. For the year ended December 31, 2010, we generated approximately 43% of our consolidated revenues and 70% of our consolidated gross profits from the retail water operations conducted pursuant to our exclusive license.
looks like the profits from Mac’s constituents are being used to finance the company’s operations elsewhere. Mac’s hardcore supporters may be happy with a little handout each month to "hep" with their water bill, but quite frankly, the rest of us who live in the franchise area are not pleased at paying much higher rates than what Water Authority customers pay.
I’m sure the hotels along the beach would also welcome a reduction in their rates.
The press release is far more upbeat than the stark truth filed with the SEC.
Well of course there is a decline in water consumption – duhhhhh!!! With the mass exodus of people who have already left the island and many more on their way soon, what did you expect? Businesses here aught to know there is no possibility of profit in this environment. Tink ’bout it mon.