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Boralex Power Income Fund: Strong Performance in Second Quarter 2008

Posted on: Monday, 4 August 2008, 09:00 CDT

MONTREAL, August 4 /PRNewswire-FirstCall/ -- In the second quarter of 2008, Boralex Power Income Fund (the "Fund") recorded a significant increase in revenue from energy sales, in earnings before interest, taxes, depreciation and amortization (EBITDA) and, as a result, in cash flows related to operating activities.

For the second quarter ended June 30, 2008, consolidated revenue rose 7.1% to $25.6 million, compared to $23.9 million for the same quarter in 2007. EBITDA grew a significant 19.6% over the same period a year earlier, to $13.4 million. This good performance stems primarily from increases in power generation by the hydroelectric and natural gas facilities, higher electricity and steam prices and a judgement in favour of the Fund which led to the reimbursement of municipal tax amounts. The Fund recorded net earnings of $5.3 million ($0.09 per trust unit) for the second quarter ended June 30, 2008, compared to a net loss of $44.3 million for the same period in 2007. Note that in the second quarter of 2007, the Fund recognized a deferred income tax expense of $47.1 million related to changes in the Canada Income Tax Act regarding publicly traded income trusts. Excluding the impact of the deferred income taxes on the second quarters of 2007 and 2008, the Fund's net earnings grew 92.8%, from $2.8 million to $5.4 million.

More specifically, for the quarter ended June 30, 2008, the hydroelectric segment recorded revenue of $11.4 million and EBITDA of $9.8 million, versus $11.6 million and $9.7 million respectively for the same quarter in 2007. Hydrology was slightly better in 2008 than 2007, resulting in a 2.2% increase in overall production volumes for the second quarter of 2008.

Revenue from the wood residue power stations amounted to $7.5 million for the second quarter of 2008, up 2.7% over 2007, despite eight days of downtime at Dolbeau and disturbances in fuel supply. Even so, EBITDA in this segment rose to $2.2 million, compared to $1.8 million for the same period in 2007. This positive difference is mainly due to the reimbursement of municipal taxes paid to the Town of Dolbeau following a favourable court's decision.

The natural gas power stations had a good performance in the second quarter of 2008, reporting revenue of $6.7 million, up 34.0% over the same period in 2007. Electricity production rose by 10.1% and steam production by 4.9%. The increases in production volume, along with higher prices and a favourable difference in maintenance costs had a positive impact on EBITDA, which rose to $3.2 million, compared to $1.8 million in the second quarter of 2007.

In other matters, the dispute between the Fund and AbitibiBowater is running its course and the two parties are still in talks to work out a solution. The Fund is also concerned about the ongoing difficulties in the Quebec forest industry and is paying close attention to the negative impact this situation is having on the wood residue supply for its Quebec power stations, especially at Dolbeau, which is currently not generating electricity since July 4th, 2008. Considering the current hardships of the forest industry, the Fund is assessing different ways to compensate the impacts of this situation.

Lastly, cash flows related to operating activities grew in the second quarter of 2008 by more than 30% to $17.1 million versus $13.1 million in 2007.

About Boralex Power Income Fund

Boralex Power Income Fund is an unincorporated open-ended trust that indirectly owns ten power generating stations located in the province of Quebec and the United States producing energy from different sources including wood-residue or natural gas-fired thermal and cogenerating facilities as well as hydroelectric power stations. In total, these power stations have an installed capacity of 190 MW. The Fund's units are listed for trading on The Toronto Stock Exchange under the symbol BPT.UN.

Certain statements in this release, including statements regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreased demand for the Fund's products, increases in raw material costs, hydrology, fluctuations in currency exchange rates, fluctuations in sales prices and adverse changes in general market and industry conditions. The summarized financial statements included in this press release also contain certain financial measurements that are not recognized as generally accepted accounting principles (GAAP).

The Fund uses EBITDA, among other measures, as a performance measure with respect to its operations. This term is not a defined financial measure according to GAAP and it does not have a standardized meaning prescribed by GAAP. Therefore, this measure may not be comparable to similar measures presented by other enterprises. EBITDA is defined in the summarized financial statements accompanying this press release.

Notice to unitholders

These quarterly financial statements for the periods ended June 30, 2008 and 2007 were not reviewed by our auditors Ernst & Young LLP. The financial statements are the responsibility of the Manager of Boralex Power Income Fund, and were reviewed and approved by Boralex Power Trust's trustees and the members of their audit committee.

The following financial informations were extracted from the interim consolidated financial statements of Boralex Power Income Fund (the "Fund"). The complete interim financial statements were prepared conformingly with the Canadian generally accepted accounting principles ("GAAP"). They are available on the Fund's website (http://www.boralex.com/trust) and filed with SEDAR.

Boralex Power Income Fund Consolidated Balance Sheets (in thousands of dollars) (unaudited) As at As at June 30, December 31, 2008 2007 ------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents 20,787 10,740 Accounts receivable 10,818 13,333 Income taxes receivable - 1,949 Inventories 2,496 2,405 Prepaid expenses 794 1,248 ------------------------------------------------------------------------- 34,895 29,675 Property, plant and equipment 362,511 367,474 Intangible assets 80,873 83,690 Goodwill 16,243 16,243 Other long-term assets 6,628 8,594 ------------------------------------------------------------------------- 501,150 505,676 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and unitholders' equity Current liabilities Short-term revolving credit facility 1,600 2,300 Accounts payable and accrued liabilities 7,252 8,909 Income taxes payable 671 - Distributions payable to unitholders 3,446 4,430 Current portion of obligation under capital lease 137 233 ------------------------------------------------------------------------- 13,106 15,872 Future income tax liabilities 45,981 48,817 Fair value of derivative financial instruments 5 5 Long-term debt 104,781 102,529 Long-term lease accruals 2,112 1,858 ------------------------------------------------------------------------- 165,985 169,081 ------------------------------------------------------------------------- Unitholders' equity Capital contribution 422,174 422,174 Capital contribution - exchangeable Class B units 112,867 112,867 Deficit (173,137) (170,982) Accumulated other comprehensive loss (26,739) (27,464) ------------------------------------------------------------------------- 335,165 336,595 ------------------------------------------------------------------------- 501,150 505,676 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Boralex Power Income Fund Consolidated Statements of Earnings (in thousands of dollars, except amounts per unit) (unaudited) For the six-month For the quarters periods ended ended June 30, June 30, 2008 2007 2008 2007 ------------------------------------------------------------------------- Revenues 25,554 23,898 59,827 57,818 ------------------------------------------------------------------------- Expenses Operating 11,080 11,675 22,552 22,955 Administrative 1,037 978 2,160 1,787 ------------------------------------------------------------------------- 12,117 12,653 24,712 24,742 ------------------------------------------------------------------------- Operating income before amortization 13,437 11,245 35,115 33,076 Amortization of property, plant and equipment 4,669 3,858 9,256 7,813 Amortization of intangible assets 1,902 1,941 3,971 4,098 ------------------------------------------------------------------------- Operating income 6,866 5,446 21,888 21,165 Financial expenses, net 1,742 1,692 3,576 3,438 Foreign exchange loss (gain) (1,059) 864 (1,615) 407 Change in fair value of derivative financial instruments - - - (31) ------------------------------------------------------------------------- Earnings before income taxes 6,183 2,890 19,927 17,351 Income taxes (recovery) 927 47,214 (560) 49,010 ------------------------------------------------------------------------- Net earnings (loss) for the period 5,256 (44,324) 20,487 (31,659) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net earnings (loss) per trust unit (in dollars) 0.09 (0.75) 0.35 (0.54) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of trust units outstanding 59,067,992 59,067,992 59,067,992 59,067,992 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Deficit (in thousands of dollars) (unaudited) For the six-month periods ended June 30, 2008 2007 ------------------------------------------------------------------------- Deficit - beginning of period (170,982) (82,128) Net earnings (loss) for the period 20,487 (31,659) Distributions to unitholders (22,642) (26,581) ------------------------------------------------------------------------- Deficit - end of period (173,137) (140,368) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Comprehensive Income (in thousands of dollars) (unaudited) For the six-month For the quarters periods ended ended June 30, June 30, 2008 2007 2008 2007 ------------------------------------------------------------------------- Net earnings (loss) for the period 5,256 (44,324) 20,487 (31,659) Other comprehensive income (loss) : Translation adjustments Unrealized foreign exchange gains (losses) on translation of the financial statements of self-sustaining foreign operations (802) (9,196) 2,525 (10,523) Reclassification of accumulated foreign exchange losses on translation of the financial statements of self-sustaining foreign operations following a reduction in net investment (1) 1,696 14 1,747 Future income taxes (54) (515) 175 (586) Hedging of net investment in self-sustaining foreign operations Change in fair value of derivative instruments designated as hedges of net investment in self-sustaining foreign operations 48 1,171 (153) 1,322 Hedging instruments realized and recognized in net earnings (1,004) (605) (1,836) (1,036) ------------------------------------------------------------------------- (1,813) (7,449) 725 (9,076) ------------------------------------------------------------------------- Comprehensive income (loss) for the period 3,443 (51,773) 21,212 (40,735) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Boralex Power Income Fund Consolidated Statements of Cash Flows (in thousands of dollars) (unaudited) For the six-month For the quarters periods ended ended June 30, June 30, 2008 2007 2008 2007 ------------------------------------------------------------------------- Operating activities Net earnings (loss) for the period 5,256 (44,324) 20,487 (31,659) Items not affecting cash: Amortization of property, plant and equipment 4,669 3,858 9,256 7,813 Amortization of intangible assets 1,902 1,941 3,971 4,098 Amortization of deferred financing costs 82 106 169 216 Long-term lease accruals 99 109 196 226 Future income taxes 327 46,672 (2,811) 46,825 Realized currency transla- tion adjustments (1) 1,696 14 1,747 Other 115 - 115 174 ------------------------------------------------------------------------- 12,449 10,058 31,397 29,440 Net change in non-cash working capital balances 4,609 3,009 3,674 (196) ------------------------------------------------------------------------- Cash flows related to operating activities 17,058 13,067 35,071 29,244 ------------------------------------------------------------------------- Investing activities Additions to property, plant and equipment (1,054) (1,654) (1,222) (1,914) Acquisition of other assets (9) (37) (71) (187) Other (25) (5) (25) (11) ------------------------------------------------------------------------- Cash flows related to investing activities (1,088) (1,696) (1,318) (2,112) ------------------------------------------------------------------------- Financing activities Distributions paid to unitholders (10,337) (13,291) (23,627) (26,581) Net change in short-term revolving credit facility (600) (2,100) (700) 400 Repayment of capital lease obligation (58) (57) (116) (121) Proceeds from sale of options on foreign exchange forward contracts 191 193 337 341 ------------------------------------------------------------------------- Cash flows related to financing activities (10,804) (15,255) (24,106) (25,961) ------------------------------------------------------------------------- Translation adjustments on cash and cash equivalents (62) (2,317) 400 (2,698) ------------------------------------------------------------------------- Net change in cash and cash equivalents during the period 5,104 (6,201) 10,047 (1,527) Cash and cash equivalents - beginning of period 15,683 30,551 10,740 25,877 ------------------------------------------------------------------------- Cash and cash equivalents - end of the period 20,787 24,350 20,787 24,350 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental information Interest paid 1,151 1,491 3,516 3,939 Income taxes paid 953 2,266 1,072 3,849 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Boralex Power Income Fund Segmented Information (tabular amounts are in thousands of dollars, unless otherwise specified) (unaudited) Segmented information

The Fund's power stations are grouped into three distinct segments: hydroelectric power, wood-residue thermal power and natural gas thermal power, and are engaged mainly in power generation. The classification of these segments is based on the different cost structures relating to each type of power station. The Fund allocates its revenues by geographical region based on the point of delivery of the power.

The Fund analyzes the performance of its operating segments based on their EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization. EBITDA is not a measure of performance defined under Canadian generally accepted accounting principles; however, management uses this measure to assess the operating performance of its reportable segments. Results for each segment are presented on the same basis as those of the Fund. In the consolidated statement of earnings, EBITDA is represented by Operating income before amortization.

The following table reconciles EBITDA with net earnings or loss: For the six-month For the quarters periods ended ended June 30, June 30, 2008 2007 2008 2007 ------------------------------------------------------------------------- Net earnings (loss) 5,256 (44,324) 20,487 (31,659) Income taxes (recovery) 927 47,214 (560) 49,010 Change in fair value of derivative financial instruments - - - (31) Foreign exchange loss (gain) (1,059) 864 (1,615) 407 Financial expenses, net 1,742 1,692 3,576 3,438 Amortization of intangible assets 1,902 1,941 3,971 4,098 Amortization of property, plant and equipment 4,669 3,858 9,256 7,813 ------------------------------------------------------------------------- EBITDA 13,437 11,245 35,115 33,076 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Information by operating segment For the six-month For the quarters periods ended ended June 30, June 30, 2008 2007 2008 2007 ------------------------------------------------------------------------- PRODUCTION (in MWh) Hydroelectric power stations 140,538 137,553 283,583 272,584 Wood-residue thermal power stations 81,434 86,988 163,198 185,164 Natural gas power station 45,471 41,318 105,844 100,599 ------------------------------------------------------------------------- 267,443 265,859 552,625 558,347 ------------------------------------------------------------------------- ------------------------------------------------------------------------- REVENUES Hydroelectric power stations 11,378 11,570 24,616 25,497 Wood-residue thermal power stations 7,492 7,345 19,052 19,226 Natural gas power station 6,684 4,983 16,159 13,095 ------------------------------------------------------------------------- 25,554 23,898 59,827 57,818 ------------------------------------------------------------------------- ------------------------------------------------------------------------- EBITDA Hydroelectric power stations 9,773 9,748 21,208 21,519 Wood-residue thermal power stations 2,186 1,800 8,433 9,648 Natural gas power station 3,179 1,793 8,782 6,026 Corporate and eliminations (1,701) (2,096) (3,308) (4,117) ------------------------------------------------------------------------- 13,437 11,245 35,115 33,076 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT Hydroelectric power stations 256 73 269 123 Wood-residue thermal power stations 776 57 831 69 Natural gas power station 22 1,524 122 1,722 ------------------------------------------------------------------------- 1,054 1,654 1,222 1,914 ------------------------------------------------------------------------- ------------------------------------------------------------------------- As at As at June 30, December 31, 2008 2007 ------------------------------------------------------------------------- ASSETS Hydroelectric power stations 268,909 262,881 Wood-residue thermal power stations 186,195 190,541 Natural gas power station 42,832 47,003 Corporate and eliminations 3,214 5,251 ------------------------------------------------------------------------- 501,150 505,676 ------------------------------------------------------------------------- -------------------------------------------------------------------------

BORALEX POWER INCOME FUND

CONTACT: Ms. Patricia Lemaire, Director, Public Affairs andCommunications, Boralex Power Inc., (514) 985-1353,patricia.lemaire@boralex.com

Source: PRNewswire-FirstCall

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