The Tribune

By NEIL HARTNELL Tribune Business Editor REVENUES generated by BISX-listed Consolidated Water's Bahamian operations increased by 22.5 per cent year-over-year during 2011 to total just shy of $20 million, accounting for a five percentage point increase in their share of the company's total top-line. The year-end accounts filed by Consolidated Water, and which have been obtained by Tribune Business, disclose that the Bahamas is its most important market in terms of top-line revenue, this nation's share having grown from 26 per cent in 2009 to 31 per cent in 2010, then to 36 per cent in 2011. The accounts, and 10-K form filed by the BISX-listed company with the Securities & Exchange Commission (SEC), also disclose that Consolidated Water's lease for its second Nassau reverse osmosis plant, Windsor, expires in 2013, and that no agreement has been reached with the Government-owned Water & Sewerage Corporation as to what happens after that date. On the revenue front, Consolidated Water's 2011 performance, boosted by $770,000 generated in the fourth quarter from the 67 per cent Blue Hills reverse osmosis plant expansion, was 27.6 per cent above 2009 levels. "Included in the revenues from other countries is $19.825 million in 2011 (2010: $16.188 million and 2009: $15.535 million) from the operations in the Bahamas," the BISX-listed company's SEC filing disclosed. "For the year ended December 31, 2011, revenues in the amount of $19.825 million (2010: $16.188 million and 2009: $15.535 million) were earned from the Water and Sewerage Corporation of the Bahamas...... During 2011, revenues from the Water and Sewerage Corporation represented 36 per cent (2010: 31 per cent and 2009: 26 per cent) of total revenues." When it came to the Windsor Plant, Consolidated Water said the options open the Water and Sewerage Corporation included extending the BISX-listed company's lease for a further five years at a rate, and price per gallon of water, to be determined. Other options for the Water and Sewerage Corporation were for it to buy the Windsor reverse osmosis plant from Consolidated Water, or "exercise a right of first refusal to purchase any materials, equipment and facilities" that the latter wanted to remove from the site. The final choice is for Consolidated Water to completely exit, removing all trace of its operations. "We are required to provide the Water and Sewerage Corporation with at least 16.8 million US gallons per week of potable water from our Windsor plant, and the Water and Sewerage Corporation has contracted to purchase at least that amount from us on a take-or-pay basis. This water supply agreement expires on March 1, 2013," Consolidated Water said. "Prior to 2011 we incurred penalties relating to the Windsor plant for not meeting diesel fuel and electricity efficiencies specified in our water sale agreement with the Water and Sewerage Corporation. "These penalties totaled $15,713, and $63,433 in 2010 and 2009, respectively. We believe that programs to replace problematic equipment and improve the feed water source of this plant will to allow us to operate without incurring any material penalties in the future." Addressing a conference call with Wall Street analysts to discuss Consolidated Water's 2011 results, Rick McTaggart, the company's chief executive, said the 67 per cent Blue Hills capacity expansion to 12 million gallons of water per day had been completed "in record time". The expansion is expected to finish by the 2012 first quarter end. Consolidated Water's 2011 financial statements also provided the rationale for it to redeem the outstanding $8.5 million worth of bonds still held by Bahamian investors by March 2012's end. With $37.6 million worth of cash on the balance sheet, some $29.6 million of which was generated over the past three years, the company has opted not to continue paying interest on the bonds - effectively saving itself three years' worth of such payments. The bonds, which carry a 7.5 per cent interest coupon, were used to finance construction on the initial Blue Hills plant. Some $1.5 million were redeemed in September 2010. "We redeemed $1.5 million of these bonds in September 2010," Consolidated Water confirmed. "As of December 31, 2011, $8.5 million of the Series A bonds were outstanding. We have elected to redeem the remaining $8.5 million of these bonds outstanding on March 31, 2012."