EARNINGS / Gas Management Income Fund
GAS MANAGEMENT INCOME FUND REPORTS FIRST QUARTER 1998 FINANCIAL RESULTS
TSE symbol: GIF.UN
TORONTO, May 26 /CNW/ - Gas Management Income Fund today reported its
financial results - and the performance of its underlying business, Alliance
Gas Management Inc. - for the three months ended March 31, 1998.
For the first quarter, Gas Management distributed 35.0 cents per unit, up
from 32.6 cents per unit distributed in each of the previous four quarters.
The distribution was entirely funded from available cash flow of
approximately $3.1 million, or 47 cents per unit, generated during the
quarter. Cash flow declined from $3.5 million, or 54 cents per unit, reported
in the fourth quarter of 1997 due to higher fees paid by Alliance to its
management company, Alliance Gas Services Inc., reflecting the growth of
Alliance's business.
''Growth is being fueled by the expansion of Alliance's customer base and
the conversion of an increasing number of customers to our popular Stable
Price natural gas service,'' said Paul Woods, President and CEO of Alliance.
''These positive factors allowed Gas Management to increase its distributions
as anticipated.''
Alliance's Stable Price programs allow residential customers to lock in
natural gas prices for up to six years, thereby offering protection from price
volatility while ensuring natural gas supply.
Gas Management's first quarter revenue rose to $33.4 million from $30.4
million in the previous quarter due to the commencement of gas service to new
customers signed and acquired in late fiscal 1997. Revenue more than doubled
from $14.6 million in the same quarter last year, reflecting continuing growth
in Alliance's customer base to over 500,000 residential customer equivalents
(an industry measure of residential and commercial customers) from 274,000 at
the same time last year.
Gross profit was $5.5 million, up from $5.2 million in the previous
quarter and $2.1 million a year ago. Gross margin of 16.5%, while comparing
favorably to 14.1% at the same time last year, slipped slightly from 17.1% in
the fourth quarter of 1997 as a result of higher gas supply costs, which are
expected to persist in the second quarter.
Alliance has now converted 160,000 customers, or 32% of its total
customer base, to Stable Price programs, compared to 140,000 customers
representing 28% of the total at 1997 year end. Gas was already being flowed
to approximately 140,000 Stable Price customers at March 31, 1998, versus
100,000 at year end and none a year ago.
Alliance will continue working towards its target of converting 40% to
50% of all customers to these fixed-price programs within the year.
''We expect Alliance will attract more natural gas customers and tap into
related revenue streams in the future.'' said Woods. ''Based on our first
quarter performance, we are well on track to realize our previously stated
1998 target of doubling annual sales to $130 million.''
Gas Management Income Fund is a closed end investment trust which
provides unitholders with regular income and the potential for growth through
its ownership of the common shares, preferred shares and notes of Alliance
Gas. Established in 1991, Alliance Gas provides approximately 500,000 Canadian
residential customer equivalents with access to savings and stable price
natural gas contracts. Gas Management Income Fund units are traded on The
Toronto Stock Exchange under the symbol GIF.UN. The Fund is eligible for
RRSPs, RKIFs and DPSPs.
Consolidated Financial Statements of
GAS MANAGEMENT INCOME FUND
Period ended March 31, 1998
(Unaudited)
<<
GAS MANAGEMENT INCOME FUND
Consolidated Statement of Changes in Financial Position
For the three month periods ended March 31, 1998 and March 31, 1997
Unaudited
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1998 1997
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(Thousands of Dollars)
Operations:
Loss for the period $ (225) $ (1,990)
Amortization of customer contracts 3,476 2,905
Minority Interest - (397)
Change in non-cash operating working capital (1,005) 1,265
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2,246 1,783
Investing:
Proceeds on sale of capital assets - -
Acquisition of customer contracts - -
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- -
Financing:
Distributions to Unitholders (2,074) (1,931)
Increase (decrease) in long-term debt (122) -
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(2,196) (1,931)
Increase (Decrease) in cash 50 (148)
Cash, beginning of period 3,711 3,001
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Cash, end of period $ 3,761 $ 2,853
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GAS MANAGEMENT INCOME FUND
Consolidated Balance Sheet
March 31, 1998, with comparative figures for December 31, 1997
Unaudited
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1998 1997
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(Thousands of Dollars)
Assets
Current assets:
Cash $ 3,761 $ 3,711
Accounts receivable 12,550 12,085
Advances to related parties 2,398 1,874
Prepaid expenses and other assets 167 234
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18,876 17,904
Capital assets 35 37
Customer contracts, net 53,532 57,006
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$ 72,443 $ 74,947
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Liabilities and Unitholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 3,889 $ 6,558
Advances from related parties 11,781 9,325
Due to Canem Holdings Ltd. 130 -
Note Payable 8,906 8,906
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24,706 24,789
Long-term debt 8,235 8,357
Unitholders' equity:
Capital 59,245 59,245
Deficit (19,743) (17,444)
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39,502 41,801
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$ 72,443 $ 74,947
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GAS MANAGEMENT INCOME FUND
Consolidated Statement of Loss and Deficit
For the period ended March 31, 1998 with comparative results for the
period ended March 31, 1997
Unaudited
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1998 1997
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(Thousands of Dollars except per Trust Unit amount)
Sales $ 33,364 $ 14,557
Cost of sales 27,843 12,506
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5,521 2,051
Expenses:
Amortization of customer contracts 3,476 2,905
Marketing fees 309 756
Other 336 309
Management fee 1,083 250
Interest 212 162
Utility fees 256 --
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5,672 4,382
Other Income & Expenses
Interest Income 21 --
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Loss before minority interest and income taxes (130) (2,331)
Minority interest 70 (367)
Income taxes 25 25
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Net loss for the period (225) (1,990)
Deficit, beginning of period (17,444) (5,269)
Distributions to Unitholders (2,074) (1,931)
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Deficit, end of period $(19,743) $ (9,190)
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Loss per Trust Unit $ (0.04) $ (0.34)
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-30-
For further information: Chaitu Parikh, Senior Vice President of
Finance, (416) 498-8044
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