Maxim Power Corp.
TSX : MXG

Maxim Power Corp.

March 31, 2006 08:30 ET

Maxim Reports Financial and Operating Results for 2005

CALGARY, ALBERTA--(CCNMatthews - March 31, 2006) - Maxim Power Corp. (TSX:MXG) ("MAXIM" or the "Corporation") is pleased to announce the release of financial and operating results for its fourth quarter and year ended December 31, 2005. The audited financial statements, accompanying notes and MD&A will be available later today on SEDAR and on MAXIM's website. All figures reported herein are Canadian dollars unless otherwise stated.

Financial Highlights

For accounting purposes, the Milner Power Limited Partnership ("Milner") is considered to have acquired MAXIM under a reverse takeover ("RTO") at March 31, 2005. As a result, the 2005 operating results and funds from operations reflect those of Milner for the twelve months ended December 31, 2005 plus the other operations of MAXIM for the nine months ended December 31, 2005. Comparative amounts for 2004 represent only Milner's operations from January 29, 2004, the date of acquisition of Milner, to December 31, 2004.



Three Months Ended Twelve Months Ended
December 31 December 31
2005 2004 2005 2004(1)
------------------------------------------------------------------------
($ in thousands except per
share amounts)
Revenue $41,585 $11,584 $82,875 $45,445
EBITDA(2) 20,260 2,602 26,700 12,177
Operating Income 16,863 2,277 20,076 10,572
Net Income 9,867 2,306 11,567 10,678
Per share-basic and diluted $ 0.03 $ 0.01 $ 0.03 $ 0.05
Funds from Operations(2) 19,667 2,526 25,203 12,304
Per share-basic and diluted $ 0.06 $ 0.01 $ 0.07 $ 0.05

Electricity Deliveries (MWh) 336,222 193,033 1,008,981 808,855
Net Generation Capacity
(MW)(3) 374.5 144.0 374.5 144.0
Average Alberta Prices
($ per MWh) $ 117 $ 55 $ 70 $ 56

(1) Year to date 2004 results reflect eleven months of operations at
Milner from the date of acquisition on January 29, 2004 to December
31, 2004.
(2) Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") and Funds from Operations per share are not measures
under Canadian Generally Accepted Accounting Principles ("GAAP")
and may not be comparable to similar measures presented by other
companies.
(3) Net of 10.2 MW of assets held for sale.


Operating Results

For the fiscal year ended December 31, 2005, MAXIM earned revenue from electricity sales of $82.9 million versus $45.4 million for 2004. EBITDA totalled $26.7 million compared to $12.2 million in 2004. Funds from operations for 2005 were $25.2 million or $0.07 per share compared to $12.3 million or $0.05 per share. Net income for 2005 was $11.6 million or $0.03 per share compared to net income of $10.7 million or $0.05 per share for 2004. Net income in 2005 includes a provision of $6.1 million for deferred income taxes on these significant operating results. The 2004 results represent those of Milner which was not subject to tax.

For the fourth quarter of 2005, MAXIM recorded revenue of $41.6 million compared to $11.6 million for 2004. EBITDA was $20.3 million versus $2.6 million in 2004. Net income for 2005 was $9.9 million or $0.03 per share compared to net income of $2.3 million or $0.01 per share for the same period of 2004. Funds from operations were $19.7 million or $0.06 per share versus $2.5 million or $0.01 per share for 2004.

MAXIM's performance for 2005 is mainly due to higher electricity prices received in Alberta during the fourth quarter of $117 per MWh versus $55 per MWh in 2004 and record generation of 1,008,981 MWh versus 808,855 MWh in 2004. In addition, the Corporation's acquisition and development projects in France and their operating results in the fall cogeneration season contributed to the Corporation's improved results.

Milner produced 248,740 MWh during the fourth quarter of 2005 compared to 193,034 MWh for the same period of 2004. This increase is largely a result of operational benefits from the maintenance work completed during the annual turnaround of the facility in the third quarter of 2005. For the year, Milner produced 836,852 MWh compared to 808,855 MWh during 2004, an increase of 27,997 MWh or 3.3%. The average Alberta spot price for 2005 was $70 per MWh compared to $56 for 2004.

Overall production in 2005 reflects the inclusion of the operating results from MAXIM's other projects as follows:



Twelve Months Ended December 31
2005 2004
MWh Revenue MWh Revenue
------------------------------------------------------------------------
($ in thousands)
Milner 836,852 $ 58,610 808,855 $ 45,445
------------------------------------------------------------------------
MAXIM's other projects (1)
Alberta 27,643 4,110 - -
British Columbia 37,299 2,265 - -
USA - 220 - -
Europe 69,747 8,711 - -
Cambodia 37,440 8,959 - -
------------------------------------------------------------------------
Sub-total 172,129 $24,265 - -
------------------------------------------------------------------------
Total 1,008,981 $82,875 808,855 $45,445
------------------------------------------------------------------------
------------------------------------------------------------------------
(1) No comparatives for 2004 under RTO accounting principles.


MAXIM's other projects are not reflected in the first quarter of 2005 nor in 2004 due to RTO accounting. Those other projects generated electricity deliveries of 189,803 MWh and revenue of $20.5 million in the last nine months of 2004.

Growth Initiatives

During the year, the Corporation completed two acquisitions and two greenfield development projects, one of which commenced operations on November 1, 2005. These projects will contribute to operating results in 2006 and beyond.

Acquisitions

In June 2005, the Corporation completed the acquisition of 7 power plants in France. The addition of these plants, the completion in early 2005 of Bataneres, another French facility, when combined with our two existing plants, Pouchon and Mirail, have resulted in a total net generating capacity of 63 MW electric and 27 MW thermal at December 31, 2005. France remains an area of focus for MAXIM, and during 2006, the Corporation will continue to pursue both acquisition and development opportunities in this region.

On November 9, 2005, MAXIM announced the acquisition of a 67 MW natural gas-fired combined cycle cogeneration plant located in Pawtucket, Rhode Island, USA. MAXIM believes that the Northeast USA regional market has positive fundamentals and that this facility will prove to be a low-cost high impact acquisition in MAXIM's portfolio of generating facilities. Recognizing the risk of inadequate generation resources in the market, ISO New England ("ISO-NE") has proposed the implementation of a forward capacity market, which will provide financial capacity payments to existing and new generation as of December 2006. This proposal is currently awaiting Federal Energy Regulatory Commission ("FERC") approval. This development would increase the value of capacity in the market and the Pawtucket plant. MAXIM has identified several other acquisition targets similar to Pawtucket and will evaluate these acquisition opportunities throughout 2006.

Development

The Bataneres Project referred to above added 5.6 MW of electrical and 4.9 MW of thermal generating capacity. Commercial operations commenced in November 2005, the beginning of the French cogeneration season.

The Basin Creek Project in Montana was substantially completed in 2005 and will represent a net 50.2 MW of natural gas-fired generating capacity to MAXIM. This facility is planned to be in commercial operation for the spring of 2006, at which time it will sell power under a fixed price contract.

MAXIM has invested approximately $0.5 million to December 31, 2005 on the development of Milner's coal lease, which could support a significant expansion of the generating capacity at Milner. This lease has an estimated 13 million tonnes of recoverable coal reserves. A marketing review and a transportation study have been completed and a detailed mine design is underway. Environmental fieldwork is 75% complete. All drilling permit approvals for the field program have been received and development drilling is expected to commence during the second quarter of 2006.

MAXIM has initiated the expansion of the Vancouver Landfill Project from its current 5.6 MW (electric) and 6.7 MW (thermal) capacity to a plant capacity of 7.4 MW (electric) and 8.9 MW (thermal). The existing powerhouse was designed to accept the fourth cogeneration unit, and MAXIM expects to complete the expansion by June 2006.

On March 29, 2006, the Corporation entered into agreements to sell its wholly-owned subsidiaries and development opportunities in Austria and Germany for total proceeds of 1,850 Euro. Sale proceeds are intended for further acquisitions and expansion in France.

MAXIM will continue to execute on its strategy as an Independent Power Producer and is targeting significant growth through acquisitions, development and rationalization of power projects which utilize hydrocarbon-based fuels and renewables in the markets of North America and France.

Share Consolidation

Maxim previously received shareholder approval for a share consolidation on the basis of one (1) new common share for each ten (10) issued and outstanding common shares. The effective date of the consolidation will be April 10, 2006, and it is anticipated that MAXIM's shares will commence trading on the Toronto Stock Exchange on a consolidated basis on or about April 13, 2006. At the present time, 438,777,092 Common Shares are issued and outstanding so that following the consolidation, MAXIM will have a total of approximately 43,877,800 shares outstanding. All registered shareholders will be contacted on or about April 10, 2006 by Computershare Investor Services Inc. with respect to the exchange of existing share certificates for new certificates representing their new common shares.

Conference Call and Webcast for 2005 results

MAXIM will host a conference call for analysts and investors on Tuesday, April 11, 2006 at 2:30 p.m. MDT (4:30 p.m. EDT). The call will be hosted by John Bobenic, MAXIM's President and Chief Executive Officer, and by Vick Dusik, Vice-President, Finance and Chief Financial Officer.

To participate in this conference call, please dial (866) 249-1964 or (416) 644-3414 in the Toronto area. It is recommended that participants call at least ten minutes prior to start time.

A recording of the conference call will be available from 5:30 p.m. MDT (7:30 p.m. EDT) on Tuesday, April 11, 2006 until Sunday, April 23, 2006 at 9:59 p.m. MDT (11:59 p.m. EDT). To access this replay, please dial (877) 289-8525 or (416) 640-1917 followed by the passcode 21181627#. In addition, the webcast will be available commencing April 11, 2006 in the Investor Relations section of MAXIM's web site at www.maximpowercorp.com.

About MAXIM Power Corp.

Based in Calgary, Alberta, MAXIM is an Independent Power Producer, which acquires or develops, owns and operates innovative and environmentally responsible power projects. MAXIM currently owns and operates 22 power plants in Western Canada, United States, France and Cambodia, having 375 MW of electric and 45 MW of thermal net generating capacity. MAXIM trades on the TSX under the symbol "MXG". For more information about MAXIM, visit our website at www.maximpowercorp.com.

Statements in this release which describe MAXIM's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of MAXIM to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. MAXIM may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions and will update such forward looking statements as required pursuant to applicable securities laws.


The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Maxim Power Corp.
    John R. Bobenic
    President and CEO
    (403) 750-9300
    or
    Maxim Power Corp.
    Victor S. Dusik
    Vice President, Finance and CFO
    (403) 750-9319