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Boralex Power Income Fund: Operating Results Up in 2008

Posted on: Friday, 20 February 2009, 06:00 CST

MONTREAL, Feb. 20 /PRNewswire-FirstCall/ - Boralex Power Income Fund (the "Fund") reports better operating results in 2008 than in 2007.

For the fiscal year ended December 31, 2008, revenue from the sale of energy rose to $109.3 million and earnings before interest, taxes, depreciation and amortization (EBITDA) to $57.7 million, for an increase of $7.1 million and $2.5 million respectively compared to fiscal 2007. Growth stems mainly from higher electricity and steam selling prices and increased power generation by the hydroelectric segment.

As at December 31, 2008, revenue from the hydroelectric segment amounted to $47.2 million, up a substantial 16.5% compared to the same period a year earlier. Favourable hydrology, particularly in the first quarter and second semester of 2008, had a positive impact on power generation at the Fund's U.S. and Canadian facilities, which exceeded their historical averages.

In the wood residue segment, fiscal 2008 closed with revenues of $31.8 million, down 10.9% from 2007. The wood-residue thermal power stations generated EBITDA of $9.3 million as at December 31, 2008, compared to $16.5 million at the same date a year earlier. The lower figures are primarily due to the higher raw material costs and temporary downtime at the Dolbeau and Senneterre plants. These two plants have, however, been back in operation since mid-November, in time to benefit from capacity premiums.

The natural gas cogeneration plant earned revenue of $30.3 million in 2008, up 17.0% year over year, due primarily to increased power generation and index-linked electricity and steam selling prices. EBITDA rose to $14.8 million, up 18.4% from last year due to higher selling prices and capacity premiums.

Despite the world economic crisis, the nature of the Fund's fixed-price contracts and the quality of its assets allow for a positive outlook for 2009. The wood-residue supply situation is an ongoing concern and the Fund will continue to regularly assess the situation to ensure it finds the best operational strategy for its facilities.

Note that in the fourth quarter 2008, the Fund recorded a non-cash $33.9 million impairment of goodwill and intangible assets of the Dolbeau facility. As a result, the Fund recorded a net loss of $5.8 million ($0.10 per trust unit) for fiscal 2008, compared to a net loss of $35.7 million ($0.60 per trust unit) for fiscal 2007. Excluding these items and an amount of $7.6 million of future income tax related to Canadian public trusts, the Fund would have generated net earnings of $20.5 million ($0.35 per unit).

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, availability of raw materials and increases in their cost, hydrology, fluctuations in currency exchange rates, fluctuations in sales prices and adverse changes in general market and industry conditions. The 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 Canadian generally accepted accounting principles (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 excerpts from the financial statements appended to this press release.

Notice to unitholders These quarterly financial statements for the periods ended December 31, 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. Boralex Power Income Fund Consolidated Balance Sheets (in thousands of dollars) (unaudited) As at As at December 31, December 31, 2008 2007 ------------------------------------------------------------------------- Assets Current assets Cash and cash equivalents 18,846 10,740 Accounts receivable 17,610 13,333 Income taxes receivable - 1,949 Inventories 2,953 2,405 Prepaid expenses 945 1,248 ------------------------------------------------------------------------- 40,354 29,675 Property, plant and equipment 376,316 367,474 Intangible assets 66,990 83,690 Goodwill - 16,243 Other long-term assets 5,552 8,594 ------------------------------------------------------------------------- 489,212 505,676 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and unitholders' equity Current liabilities Short-term revolving credit facility - 2,300 Accounts payable and accrued liabilities 13,985 8,909 Income taxes payable 400 - Distributions payable to unitholders 3,446 4,430 Current portion of obligation under capital lease 20 233 ------------------------------------------------------------------------- 17,851 15,872 Future income tax liabilities 43,280 48,817 Fair value of derivative financial instruments 233 5 Long-term debt 119,191 102,529 Long-term lease accruals 2,773 1,858 ------------------------------------------------------------------------- 183,328 169,081 ------------------------------------------------------------------------- Unitholders' equity Capital contribution 422,174 422,174 Capital contribution - exchangeable Class B units 112,867 112,867 Deficit (220,137) (170,982) Accumulated other comprehensive loss (9,020) (27,464) ------------------------------------------------------------------------- 305,884 336,595 ------------------------------------------------------------------------- 489,212 505,676 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Boralex Power Income Fund Consolidated Statements of Earnings (in thousands of dollars, except amounts per unit) (unaudited) For the For the quarters twelve-month periods ended December 31, ended December 31, 2008 2007 2008 2007 ------------------------------------------------------------------------- Revenues 25,975 24,544 109,343 102,168 ------------------------------------------------------------------------- Expenses Operating 12,234 11,642 47,452 43,580 Administrative 1,274 510 4,167 3,347 ------------------------------------------------------------------------- 13,508 12,152 51,619 46,927 ------------------------------------------------------------------------- Operating income before amortization 12,467 12,392 57,724 55,241 Amortization of property, plant and equipment 4,934 3,548 18,895 14,998 Amortization of intangible assets 1,993 1,592 7,543 7,068 ------------------------------------------------------------------------- Operating income 5,540 7,252 31,286 33,175 Financial expenses, net 2,324 1,720 7,740 6,778 Foreign exchange loss (gain) 587 1,217 (1,540) 4,072 Change in fair value of derivative financial instruments (5) (2) (5) (33) Impairment of goodwill 16,243 13,997 16,243 13,997 Impairment of intangible assets 17,724 - 17,724 - ------------------------------------------------------------------------- Earnings (loss) before income taxes (31,333) (9,680) (8,876) 8,361 Income taxes (recovery) (2,199) (4,138) (3,037) 44,054 ------------------------------------------------------------------------- Net loss for the period (29,134) (5,542) (5,839) (35,693) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted net loss per trust unit (in dollars) (0.49) (0.09) (0.10) (0.60) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 twelve-month periods ended December 31, 2008 2007 ------------------------------------------------------------------------- Deficit - beginning of period (170,982) (82,128) Net loss for the period (5,839) (35,693) Distributions to unitholders (43,316) (53,161) ------------------------------------------------------------------------- Deficit - end of period (220,137) (170,982) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Comprehensive Income (in thousands of dollars) (unaudited) For the For the quarters twelve-month periods ended December 31, ended December 31, 2008 2007 2008 2007 ------------------------------------------------------------------------- Net loss for the period (29,134) (5,542) (5,839) (35,693) Other comprehensive income (loss) : Translation adjustments Unrealized foreign exchange gains (losses) on translation of the financial statements of self-sustaining foreign operations 13,714 (575) 19,658 (17,445) Reclassification of accumulated foreign exchange losses on translation of financial statements of self-sustaining foreign operations following a reduction in net investment 994 1,938 1,075 6,858 Future income taxes 947 (49) 1,356 (1,019) 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 (628) (42) (904) 2,165 Hedging items realized and recognized in net earnings (309) (585) (2,741) (2,141) ------------------------------------------------------------------------- 14,718 687 18,444 (11,582) ------------------------------------------------------------------------- Comprehensive income (loss) for the period (14,416) (4,855) 12,605 (47,275) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Boralex Power Income Fund Consolidated Statements of Cash Flows (in thousands of dollars) (unaudited) For the For the quarters twelve-month periods ended December 31, ended December 31, 2008 2007 2008 2007 ------------------------------------------------------------------------- Operating activities Net loss for the period (29,134) (5,542) (5,839) (35,693) Items not affecting cash: Amortization of property, plant and equipment 4,934 3,548 18,895 14,998 Amortization of intangible assets 1,993 1,592 7,543 7,068 Amortization of deferred financing costs 93 3 341 320 Long-term lease accruals 115 94 411 425 Future income taxes (2,864) (5,010) (5,373) 42,127 Realized currency translation adjustments 1,002 1,938 1,083 6,858 Impairment of goodwill 16,243 13,997 16,243 13,997 Impairment of intangible assets 17,724 - 17,724 - Other 55 (2) 169 184 ------------------------------------------------------------------------- 10,161 10,618 51,197 50,284 Net change in non-cash working capital balances (233) (1,197) 2,703 (4,018) ------------------------------------------------------------------------- Cash flows related to operating activities 9,928 9,421 53,900 46,266 ------------------------------------------------------------------------- Investing activities Additions to property, plant and equipment (1,510) (1,246) (3,715) (3,710) Acquisition of other assets (4) (6) (90) (205) Other (4) (14) (6) (86) ------------------------------------------------------------------------- Cash flows related to investing activities (1,518) (1,266) (3,811) (4,001) ------------------------------------------------------------------------- Financing activities Distributions paid to unitholders (10,337) (13,290) (44,301) (53,161) Net change in short-term revolving credit facility (2,800) 1,000 (2,300) (800) Repayment of capital lease obligation (59) (57) (233) (235) Proceeds from sale of options on foreign exchange forward contracts 59 101 508 555 ------------------------------------------------------------------------- Cash flows related to financing activities (13,137) (12,246) (46,326) (53,641) ------------------------------------------------------------------------- Translation adjustments on cash and cash equivalents 3,235 50 4,343 (3,761) ------------------------------------------------------------------------- Net change in cash and cash equivalents during the period (1,492) (4,041) 8,106 (15,137) Cash and cash equivalents - beginning of period 20,338 14,781 10,740 25,877 ------------------------------------------------------------------------- Cash and cash equivalents - end of the period 18,846 10,740 18,846 10,740 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplemental information Interest paid 1,348 1,149 7,211 7,508 Income taxes paid 216 125 1,432 4,518 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 performance 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 loss: For the For the quarters twelve-month periods ended December 31, ended December 31, 2008 2007 2008 2007 ------------------------------------------------------------------------- Net loss for the period (29,134) (5,542) (5,839) (35,693) Income taxes (recovery) (2,199) (4,138) (3,037) 44,054 Impairment of intangible assets 17,724 - 17,724 - Impairment of goodwill 16,243 13,997 16,243 13,997 Change in fair value of derivative financial instruments (5) (2) (5) (33) Foreign exchange loss (gain) 587 1,217 (1,540) 4,072 Financial expenses, net 2,324 1,720 7,740 6,778 Amortization of intangible assets 1,993 1,592 7,543 7,068 Amortization of property, plant and equipment 4,934 3,548 18,895 14,998 ------------------------------------------------------------------------- EBITDA 12,467 12,392 57,724 55,241 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Information by operating segment For the For the quarters twelve-month periods ended December 31, ended December 31, 2008 2007 2008 2007 ------------------------------------------------------------------------- PRODUCTION (in MWh) Hydroelectric power stations 134,753 107,801 536,407 457,939 Wood-residue thermal power stations 47,145 82,444 256,979 366,072 Natural gas power station 54,819 53,092 206,152 200,015 ------------------------------------------------------------------------- 236,717 243,337 999,538 1,024,026 ------------------------------------------------------------------------- ------------------------------------------------------------------------- REVENUES Hydroelectric power stations 12,929 8,984 47,243 40,521 Wood-residue thermal power stations 6,325 8,459 31,779 35,747 Natural gas power station 6,721 7,101 30,321 25,900 ------------------------------------------------------------------------- 25,975 24,544 109,343 102,168 ------------------------------------------------------------------------- ------------------------------------------------------------------------- EBITDA Hydroelectric power stations 10,890 7,580 40,060 33,925 Wood-residue thermal power stations 871 2,865 9,296 16,512 Natural gas power station 2,268 3,459 14,800 12,524 Corporate and eliminations (1,562) (1,512) (6,432) (7,720) ------------------------------------------------------------------------- 12,467 12,392 57,724 55,241 ------------------------------------------------------------------------- ------------------------------------------------------------------------- For the For the quarters twelve-month periods ended December 31, ended December 31, 2008 2007 2008 2007 ------------------------------------------------------------------------- ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT Hydroelectric power stations 371 268 692 621 Wood-residue thermal power stations 443 840 1,287 1,169 Natural gas power station 696 138 1,736 1,920 ------------------------------------------------------------------------- 1,510 1,246 3,715 3,710 ------------------------------------------------------------------------- ------------------------------------------------------------------------- As at As at December 31, December 31, 2008 2007 ------------------------------------------------------------------------- ASSETS Hydroelectric power stations 295,182 262,881 Wood-residue thermal power stations 149,868 190,541 Natural gas power station 42,043 47,003 Corporate and eliminations 2,119 5,251 ------------------------------------------------------------------------- 489,212 505,676 ------------------------------------------------------------------------- -------------------------------------------------------------------------

SOURCE BORALEX POWER INCOME FUND

Source: PR Newswire

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