Consolidated Results

Net earnings

In the fourth quarter of 2014, our net earnings were $73 million ($0.18 per share diluted), an increase of $9 million compared to $64 million ($0.16 per share diluted) in 2013, mainly due to:

• higher uranium gross profits resulting from higher average realized prices and lower average unit cost of sales
• a favourable settlement of $37 million with respect to a dispute regarding a long-term supply contract with a utility customer
• lower exploration expenditures
• higher income tax recovery

partially offset by:

• the impact of a $126 million write-down of our investments in the Eagle Point mine assets at Rabbit Lake
• the write-off of $41 million of assets under construction as a result of changes made to the scope of a number of projects
• no earnings from BPLP due to divestiture of our interest in the first quarter of 2014
• higher losses on foreign exchange derivatives resulting from the weakening of the Canadian dollar

On an adjusted basis, our earnings this quarter were $205 million ($0.52 per share diluted) compared to $150 million ($0.38 per share diluted) (non-IFRS measures) in the fourth quarter of 2013, mainly due to:

• higher uranium gross profits due to a higher average realized price and lower average unit cost of sales
• a favourable settlement of $37 million with respect to a dispute regarding a long-term supply contract with a utility customer
• lower exploration expenditures

partially offset by:

• no earnings from BPLP due to divestiture of our interest in the first quarter of 2014

We use adjusted net earnings, a non-IFRS measure, as a more meaningful way to compare our financial performance from period to period. See 2014 Consolidated Financial Results for more information. The following table reconciles adjusted net earnings with our net earnings.

Administration

Direct administration costs were $51 million in the quarter, $6 million higher than the same period last year due to the timing of expenditures. Stock-based compensation expenses were $3 million lower than the fourth quarter of 2013 due to a change in the compensation program. See note 26 to the financial statements.

Quarterly Trends

Key things to note:

• Our financial results are strongly influenced by the performance of our uranium segment, which accounted for 68% of consolidated revenues in the fourth quarter of 2014 and 65% of consolidated revenues in the fourth quarter of 2013.
• The timing of customer requirements, which tends to vary from quarter to quarter, drives revenue in the uranium and fuel services segments.
• Net earnings do not trend directly with revenue due to unusual items and transactions that occur from time to time. We use adjusted net earnings, a non-IFRS measure, as a more meaningful way to compare our results from period to period.
• Cash from operations tends to fluctuate as a result of the timing of deliveries and product purchases in our uranium and fuel services segments.
• Quarterly results are not necessarily a good indication of annual results due to the variability in customer requirements noted above.

Discontinued Operation

On March 27, 2014, we completed the sale of our 31.6% limited partnership interest in BPLP.