Consolidated Water Co. Ltd. Reports Higher Third Quarter Earnings

Consolidated Water Co. Ltd. (Nasdaq: CWCO), which develops and operates seawater conversion plants and water distribution systems in areas where natural supplies of drinking (i.e., potable) water are scarce, today reported its operating results for the third quarter and first nine months of 2005. (Note: All per-share amounts in this press release are adjusted for a 2-for-1 stock split distributed to shareholders August 25, 2005.) For the quarter ended September 30, 2005, total revenue increased 17.5% to approximately $6.2 million, compared with $5.3 million in the third quarter of 2004. Net income improved to $1,009,349, or $0.08 per diluted share, versus $424,032, or $0.04 per diluted share, in the quarter ended September 30, 2004. The weighted average number of fully diluted shares outstanding totaled 12,141,924 in the most recent quarter, compared with 11,773,582 in the prior-year period. Retail water sales increased 19.2% to approximately $3.0 million in the most recent quarter, when compared with approximately $2.5 million in the prior-year period. Bulk water sales increased 12.4%, from approximately $2.6 million in the third quarter of 2004 to approximately $2.9 million in the quarter ended September 30, 2005. Revenue from services increased 61.3% to $328,550 in the third quarter of 2005, compared with $203,741 in the prior-year period. Gross margin on Retail sales improved to 55.8% in the most recent quarter, versus 49.3% a year earlier, while gross margin on Bulk sales approximated 14.7%, compared with 25.0% in the third quarter of 2004. "While our water sales to hotels and condominiums in the third quarter continued to reflect the after-effects of Hurricane Ivan upon the tourism infrastructure in the Cayman Islands, retail sales improved 19.2% from the prior-year quarter as residential demand returned to normal levels," stated Rick McTaggart, President and Chief Executive Officer of Consolidated. "A number of lodging businesses have yet to complete repairs and fully reopen on Grand Cayman, but progress is evident all across the Island and tourist arrivals continue to recover. A 12.4% increase in Bulk sales during the third quarter, when compared with the prior-year period, was primarily due to additional consumption by the Water Authority on Cayman as well as increased demand from our customer in Belize. In The Bahamas, we benefited from higher revenue related to the recovery of energy costs at our Windsor plant, which supplies the Nassau area, but this gain was offset by pricing adjustments associated with reduced deliveries related to the fouling of reverse osmosis membrane elements. We are remediating this problem through various cleaning processes and expect to use excess supply water from six containerized desalination units on site to be used to supply water under our Blue Hills contract to temporarily alleviate the production shortfall at the Windsor plant," concluded Mr. McTaggart. Gross margin narrowed to 35.5% of total revenue in the most recent quarter, compared with 36.8% a year earlier, primarily due to the additional operating costs in the Company's Bulk segment as discussed above. Third quarter net income, which rose 138.0% from the prior-year period, benefited from the absence of $387,472 in losses related to Hurricane Ivan in the quarter ended September 30, 2004 and a lower General and Administrative expense ratio (23.8% of revenues versus 26.9% a year earlier). For the nine months ended September 30, 2005, total revenue rose 4.4% to a record $18.8 million, versus $18.0 million in the corresponding period of 2004. Net income declined 6.0% to $3,864,760, or $0.32 per diluted share, compared with $4,111,990, or $0.35 per diluted share, in the nine months of 2004. The weighted average number of fully diluted shares outstanding increased to 12,082,027 in the nine months ended September 30, 2005, versus 11,723,580 in the prior-year period. Joe Pivinski, the Company's Chief Financial Officer, noted that Consolidated had previously announced plans for an equity offering in The Bahamas to finance the construction of the Blue Hills plant and an expansion in production capacity at the Windsor plant on the Island of New Providence in the Commonwealth of The Bahamas. "The offering, which was available only to Bahamian investors, was successfully completed on November 4, 2005 and raised approximately $6.6 million, net, through the sale of Bahamian Depositary Receipts. The offering increased outstanding shares of the Company's common stock by 401,122. Combined with the Bahamian bond offering previously concluded on July 1, 2005, a net total of approximately $16.4 million was raised in The Bahamas." The Company will host a conference call at 11:30 a.m. EST tomorrow, November 10, 2005. Shareholders and other interested parties may participate in the conference call by dialing 800-322-0079 (international participants dial 973-409-9258) and referencing the ID Code 6679358 a few minutes before 11:30 a.m. EST. A replay will be available two hours after the completion of the conference call from November 10, 2005 until November 17, 2005 by dialing 877-519-4471 for participants in the US/Canada (international participants dial 973-341-3080) and entering the Conference ID 6679358. Consolidated Water Co. Ltd. is engaged in the development and operation of seawater conversion plants and/or water distribution systems in areas of the world where naturally occurring supplies of potable water are scarce or nonexistent. Consolidated currently operates water production and/or distribution facilities in the Cayman Islands, the British Virgin Islands, Barbados, Belize and the Commonwealth of the Bahamas. The common stock of Consolidated Water Co. Ltd. is traded on the Nasdaq National Market under the symbol "CWCO". Additional information on the Company is available on its website at http://www.cwco.com. This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "intend," "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products and services in the marketplace, changes in its relationship with the Governments of the jurisdictions in which it operates, the ability to successfully secure contracts for water projects in other countries, the ability to develop and operate such projects profitably, the Company's ability to manage growth and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. For further information, please contact: Frederick W. McTaggart, President and CEO at (345) 945-4277 or via e-mail atinfo@cwco.com http://www.cwco.com or RJ Falkner & Company, Inc., Investor Relations Counsel at (800) 377-9893 or via e-mail at info@rjfalkner.com CONSOLIDATED WATER CO. LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (Expressed in United States Dollars) September 30, December 31, 2005 2004(unaudited) ASSETS Current asset ash and cash equivalents$12,394,564 $9,216,908Accounts receivable 3,972,888 4,879,410Insurance claim receivable -- 1,932,905Inventory 1,840,510 1,629,348Prepaid expenses and other current assets 1,137,208 625,563Current portion of loans receivable 718,386 924,020 Total current assets 20,063,556 19,208,154 Loans receivable, including $800,000 due from affiliate2,591,881 2,270,326 Property, plant and equipment, net26,821,536 27,218,589 Construction in progress, including interest of $187,500 and $nil in 2005 and 2004, respectively 11,086,092 1,642,813 Other assets562,438 424,564 Investments in affiliates 11,355,190 11,070,848 Intangible assets 4,723,971 5,421,381 Goodwill 3,568,374 3,568,374 Total assets $80,773,038 $70,825,049 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilitie ividends payable $828,190$783,854Accounts payable and other current liabilities3,004,259 3,860,511Current portion of long term debt 3,721,144 3,733,144 Total current liabilities7,553,593 8,377,509 Long term debt, including Series A bond issue of $10,000,000 20,185,633 12,856,226 Security deposits and other liabilities 357,957 357,957 Minority interest in Waterfields Company Limited 861,990 861,463 Total liabilities 28,959,173 22,453,155 Stockholders' equit edeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 29,046 shares as at September 30, 2005 and 27,842 shares as at December 31, 2004 17,428 16,705 Class A common stock, $0.60 par value. Authorized 19,680,000 shares; issued and outstanding 11,768,038 shares as at September 30, 2005 and 11,506,970 shares as at December 31, 2004 7,060,823 6,904,183Class B common stock, $0.60 par value. Authorized 120,000 shares -- --Stock and options earned but not issued150,715 20,746Additional paid-in capital28,658,723 27,281,728Retained earnings 15,926,176 14,148,532 Total stockholders' equity 51,813,865 48,371,894 Total liabilities and stockholders' equity $80,773,038 $70,825,049 CONSOLIDATED WATER CO. LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Expressed in United States Dollars) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Retail water sales $3,005,984 $2,522,708 $9,549,318 $9,634,096 Bulk water sales2,869,852 2,552,605 8,435,746 7,716,477 Service revenue 328,550203,741 829,676 675,543 Total revenue 6,204,386 5,279,054 18,814,740 18,026,116 Retail cost of sales(1,329,128) (1,280,030) (3,881,939) (4,071,181) Bulk cost of sales (2,448,101) (1,913,867) (7,023,888) (5,808,369) Service cost of sales (224,743) (142,734) (526,409) (447,851) Total cost of sales (4,001,972) (3,336,631) (11,432,236) (10,327,401) Gross profit 2,202,414 1,942,423 7,382,504 7,698,715 General and administrative expense (1,477,898) (1,419,611) (4,421,675) (3,892,809) Net loss due to Hurricane Ivan -- (387,472)--(387,472) Income from operations 724,516135,340 2,960,829 3,418,434 Other income (expense):Interest income 42,605 21,600 78,840 54,237Interest expense (214,736) (183,622) (661,216) (503,040)Other income 121,232127,981 422,081 378,696Equity in earnings of affiliate 337,248340,367 1,055,186 846,480 Other income, net 286,349306,326 894,891 776,373 Income before income taxes and minority interest 1,010,865441,666 3,855,720 4,194,807 Income tax benefit (expense) (6,822)(6,836) 9,567 (21,011)Minority interest recovery (expense) 5,306(10,798) (527)(61,806) Net income$1,009,349 $424,032 $3,864,760 $4,111,990 Basic earnings per common share $0.09 $0.04 $0.33 $0.36 Diluted earnings per common share $0.08 $0.04 $0.32 $0.35 Dividends declared per common share $0.06 $0.058 $0.178 $0.173 Weighted average number of common shares used in the determination of: Basic earnings pe hare 11,754,530 11,497,710 11,678,398 11,463,796 Diluted earnings pe hare 12,141,924 11,773,582 12,082,027 11,723,580 CONSOLIDATED WATER CO. LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Expressed in United States Dollars) Nine Months Nine Months EndedEnded September 30, September 30, 2005 2004 Net cash flows provided by operating activities $6,362,132 $5,297,563 Cash flows provided by (used in) investing activities Purchase of property, plant and equipment (10,591,733) (1,728,524)Proceeds from sale of property, plant and equipment -- 20,000Distribution of income from affiliate 1,136,250 681,750Loan to affiliate(800,000) --Collections from loans receivable684,079 821,804 Net cash used in investing activities(9,571,404)(204,970) Cash flows provided by (used in) financing activities Dividends paid (2,042,781) (1,888,200)Proceeds from issuance of common stock 1,311,598 432,421Proceeds from issuance of preferred stock 12,213 --Net proceeds from issuance of Series A bonds9,788,491 --Principal payments of long term debt (2,682,593) (2,754,354) Net cash provided by (used in) financing activities 6,386,928 (4,210,133) Net increase in cash and cash equivalents 3,177,656 882,460 Cash and cash equivalents at beginning of period 9,216,9088,236,924 Cash and cash equivalents at end of period$12,394,564 $9,119,384 Interest paid in cash $775,079 $430,861 Interest received in cash $79,854 $54,237

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