Mr. Richard Hew reports

CARIBBEAN UTILITIES COMPANY LTD (CUC) ANNOUNCES UNAUDITED SECOND QUARTER RESULTS

Caribbean Utilities Co. Ltd. has released its unaudited results for the three and six months ended June 30, 2023 (all figures are stated in U.S. dollars).

Highlights

• Net earnings for the three months ended June 30, 2023 ("Second Quarter 2023" or "Q2 2023") were $10.0 million, a $1.7 million increase compared to three months ended June 30, 2022 ("Second Quarter 2022" or "Q2 2022").
• 3 per cent increase in the regular quarterly dividend from $0.175 to $0.18 per class ordinary share.
• 2 per cent increase in customers when compared to Second Quarter 2022.
• 8 per cent kilowatt-hours ("kWh") increase in electricity sales compared to Second Quarter 2022.
• Credit rating agency, Moody's released the Cayman Islands AAA country ceiling rating and has referenced that the Cayman Islands' political environment, strong policy continuity and sound financial management allows for a stable economic outlook.
• Continual progress on the installation of Battery Energy Storage Systems with potential completion in Q2 2024.
• Continual progress with the conversion of the 5 MAN generating units to natural gas.
• 6 megawatts ("MW") of capacity approved by the Utility Regulation and Competition Office ("OfReg") for Customer Owned Renewable Energy Programmes.

"Q2 2023 sales were strong, supported by a growing economy and hotter than normal temperatures. We are pleased to release another 6 megawatts of renewable capacity for customers to participate in the carbon reduction efforts. We look forward to the long-awaited utility scale renewable energy bid to be conducted by OfReg, and to advancing our natural gas procurement project. Both initiatives will significantly reduce carbon emissions as well as reduce and stabilize energy costs for our customers," said Mr. Richard Hew, President and Chief Executive Officer of CUC.

Net Earnings and Sales Revenues

Net earnings for Second Quarter 2023, were $10.0 million, a $1.7 million increase from net earnings of $8.3 million for Second Quarter 2022. This increase is primarily attributable to higher operating income partially offset by higher finance charges. For the six months ended June 30, 2023, net earnings were $15.2 million which is a $1.4 million increase from net earnings of $13.8 million for the six months ended June 30, 2022.

Sales in kWh for Q2 2023 were 185.2 million kWh which is an increase of 13.9 million kWh or 8 per cent compared to Q2 2022. Sales in kWh for the six months ended June 30, 2023, totaled 344.1 million, an increase of 23.4 million or 7 per cent when compared to 320.7 million for the six months ended June 30, 2022. The increase in sales for kWh is driven by a 2 per cent growth in the overall customer numbers and the increase in the average consumption of residential and general commercial customers. Total customers as at June 30, 2023, were 33,356 which is an increase of 803 customers or 2 per cent when compared to June 30, 2022.

Electricity sales revenues increased by $3.2 million for Q2 2023 to $28.7 million when compared to electricity sales revenues of $25.5 million for Q2 2022. Electricity sales revenues for the six months ended June 30, 2023 were $53.4 million compared to $47.6 million for the six months ended June 30, 2022. The increase in electricity sales is primarily driven by 8 per cent kWh sales growth and the base rate increase of 5.4 per cent and 3.7 per cent effective June 1, 2022 and June 1, 2023, respectively.

Fuel factor and renewable revenues are pass-through costs to customers. The fuel cost constitutes about 58 per cent of the customer bill for Q2 2023 and there has been a downward trend in fuel cost for 2023. The Company's average price per imperial gallon of fuel for the three months ended June 30, 2023, decreased by 22 per cent to $3.71 in comparison to $4.77 for the three months ended June 30, 2022.

Key Updates

Average monthly temperatures continue to have an impact on consumption in Grand Cayman. As at June 30, 2023, the average monthly temperature for Q2 2023 was 84.5 degrees Fahrenheit (F) compared to 83.1F in Q2 2022.

The Cayman Islands Consumer Price Index released by the Cayman Islands Economics and Statistics Office for the First Quarter of 2023 was 130.6, which is 6.6 per cent higher in comparison with the corresponding quarter in 2022. In June 2023, the credit rating agency, Moody's affirmed the Cayman Islands AAA country ceiling rating and has referenced that the Cayman Islands political environment, strong policy continuity and sound financial management allows for a stable economic outlook.

In May 2023, the Board of Directors approved a 3 per cent increase in the regular quarterly dividend from $0.175 to $0.18 per class ordinary share. The Class A ordinary share (CUP.U) traded on the Toronto Stock Exchange at a high of US$14.27 per share during Q2 2023.

The Company released another 6 MW of capacity for the Customer Owned Renewable Energy and Distributed Energy Resources programmes after approval from the Regulator. With this additional capacity, there will be 29MW dedicated to renewable energy on the grid.

Capital Expenditures

Capital expenditures for the six months ended June 30, 2023, were $48.5 million, an increase of $10.9 million, or 29 per cent in comparison to the $37.6 million for the six months ended June 30, 2022. These expenditures were primarily related to several projects which are highlighted below:

• Generation replacements,
• Diesel generation conversion to natural gas,
• Alternate energy technologies,
• Installation of utility scale battery storage
• Facility and auxiliary asset replacement costs and other

Resiliency projects

CUC's Second Quarter 2023 results and related Management's Discussion and Analysis ("MD&A"), are attached to this release and incorporated by reference.

The MD&A section of this report contains a discussion of CUC's unaudited Second Quarter results, the Cayman Islands economy, liquidity and capital resources, capital expenditures and the business risks facing the Company. The release and Second Quarter 2023 MD&A can be accessed on the company's website (Investor Relations/Press Releases) and on SEDAR+.

The principal activity of the Company is to generate, transmit and distribute electricity in its licence area of Grand Cayman, Cayman Islands pursuant to a 20-year Transmission & Distribution ("T&D") Licence and a 25-year non-exclusive Generation Licence (the "Generation Licence" and together with the T&D licence, the "Licences") granted by the Cayman Islands Government (the "Government", "CIG"). The T&D Licence, which expires in April 2028, contains provisions for an automatic 20-year renewal and the Company has reasonable expectation of renewal until April 2048. The Generation Licence expires in November 2039.

We seek Safe Harbor.