Boralex Power Income Fund: Fiscal 2009 Results

MONTREAL, Feb. 22 /PRNewswire-FirstCall/ – Boralex Power Income Fund (the “Fund”) ended its fiscal year as at December 31, 2009 with consolidated revenue from energy sales of $102.2 million and earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $51.7 million, down $7.1 million and $6.0 million respectively compared to fiscal 2008. This decrease stems mainly from the shortfall caused by the shutdown of power and steam production at the Dolbeau power station.

Revenue in the hydroelectric segment amounted to $51.4 million at December 31, 2009, a gain of 9% over revenue of $47.2 million in fiscal 2008. EBITDA grew 10% to $44.2 million compared to $40.1 million during 2008. This performance is mainly due to superior hydrology resulting in higher power generation.

In 2009, the wood-residue segment reported revenue of $22.8 million, down $9.0 million from $31.8 million in 2008. EBITDA fell to $1.8 million from $9.3 million in 2008. This decrease is the result of wood-residue supply difficulties at the Dolbeau power station during the first quarter and the fact that the plant generated no electricity for seven months. Power generation at the Senneterre power station rose 8.6% and the plant operated at full capacity for the entire year, thanks to the strategy of using wood-residue from older piles, given the difficulties in obtaining fresh bark.

The Kingsey Falls natural gas cogeneration plant reported revenue of $28.0 million and EBITDA of $12.2 million, down $2.3 million and $2.6 million respectively versus fiscal 2008. The main factor that influenced these results was the drop in the price of steam.

In the fourth quarter of 2009, the Fund recorded an impairment on its property, plant and equipment of $29.6 million. The impairment applied solely to the Dolbeau property, plant and equipment and stemmed from a number of situational factors, namely the reduction in available fuel supplies, the insolvency of AbitibiBowater (“ABI”), ABI’s unilateral termination of service agreements as well as steam sales and biomass supply contracts, and its indefinite shutdown of the Dolbeau pulp and paper plant. As a result, the Fund registered a net loss of $10.9 million ($0.18 per trust unit) for fiscal 2009 compared to a net loss of $5.8 million ($0.10 per trust unit) for fiscal 2008.

Lastly, in the fourth quarter of 2009, the Fund recorded EBITDA of $12.2 million, down $0.3 million over the corresponding period in 2008. Increased power generation at the hydroelectric power plants, exceeding the historical average by 20%, and higher steam prices at Kingsey Falls largely offset the negative effects of the strong Canadian dollar and reduced generation at the Dolbeau plant. During the quarter, the Fund reached an agreement in principle with ABI to temporarily restart the Dolbeau power plant, which came back on-line on November 26, 2009 and will operate until April 2010.

In 2009, despite the ongoing difficulties in the economy, the Fund continued to demonstrate its ability to generate significant cash flows, given the nature of its long-term contracts and high-quality assets, which are supported by efficient management of operations and a rigorous facility maintenance program.

About Boralex Power Income Fund

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

Certain statements contained in this press release, including those 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 general impact of economic conditions, raw material price increases and availability, currency fluctuations, prevailing electricity selling prices on long-term power sales contract renewal dates, the Fund’s financing capacity, changes to laws and regulations affecting the Fund’s operations particularly with respect to taxation and the environment, adverse changes in general market and industry conditions, as well as other factors listed in the Fund’s filings with different securities commissions.

The summarized financial statements included in this press release also contain certain financial measurements that are not recognized as Generally Accepted Accounting Principles of Canada (GAAP). To assess the operating performance of its assets and reporting segments, the Fund uses earnings before interest, taxes, depreciation and amortization (EBITDA) and cash flows from operations as performance measurements. These measures are not defined under GAAP and do not have a standardized definition prescribed by GAAP. Therefore, they may not be comparable to similar measures presented by other companies. EBITDA is defined in the summarized financial statements included with this press release. Cash flows from operations corresponds to cash flows from operating activities before changes in non-cash working capital items as disclosed in the consolidated statements of cash flows attached in this press release.

Notice to Unitholders

The interim consolidated financial statements as at December 31, 2009 and 2008 have not been reviewed by our auditors Ernst & Young LLP. The financial statements are the responsibility of the Manager of Boralex Power Income Fund, and have been reviewed and approved by Boralex Power Trust’s trustees and the members of its Audit Committee.

The following financial information was extracted from the annual consolidated financial statements of Boralex Power Income Fund (the “Fund”). The complete annual consolidated financial statements were prepared in accordance with Canadian generally accepted accounting principles. They are available on the Fund’s website (www.boralex.com/trust) and filed with SEDAR.

    Consolidated Balance Sheets
                                                         As at         As at
                                                   December 31,  December 31,
                                                  -------------
    (in thousands of dollars) (unaudited)                 2009          2008
    -------------------------------------------------------------------------
    Assets
    Current assets
    Cash and cash equivalents                           15,867        18,846
    Accounts receivable                                 14,498        15,259
    Inventories                                          2,837         2,953
    Prepaid expenses                                       350           945
                                                  ---------------------------
                                                        33,552        38,003
                                                  ---------------------------
    Property, plant and equipment                      311,735       376,316
    Intangible assets                                   54,142        66,990
    Other long-term assets                               6,354         5,552
                                                  ---------------------------
                                                       405,783       486,861
                                                  ---------------------------
    Liabilities and unitholders' equity
    Current liabilities
    Short-term revolving credit facility                 3,100             -
    Accounts payable and accrued liabilities            10,125        11,634
    Income taxes payable                                   800           400
    Distributions payable to unitholders                 3,446         3,446
    Current portion of obligation under capital
     lease                                                   -            20
                                                  ---------------------------
                                                        17,471        15,500
                                                  ---------------------------
    Future income tax liabilities                       33,966        43,280
    Fair value of derivative financial instruments           -           233
    Long-term debt                                     107,234       119,191
    Long-term lease accruals                             2,760         2,773
                                                  ---------------------------
                                                       161,431       180,977
                                                  ---------------------------
    Unitholders' equity
    Capital contribution                               422,174       422,174
    Capital contribution - exchangeable Class B
     units                                             112,867       112,867
    Deficit                                           (272,349)     (220,137)
    Accumulated other comprehensive loss               (18,340)       (9,020)
                                                  ---------------------------
                                                       244,352       305,884
                                                  ---------------------------
                                                       405,783       486,861
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Statements of Earnings

    (in thousands of
     dollars, except
     per unit amounts   For the quarters ended       For the twelve-month
     and number of           December 31,          periods ended December 31,
     trust units)     -------------               -------------
     (unaudited)              2009          2008          2009          2008
    -------------------------------------------------------------------------
    Revenues                25,064        25,975       102,196       109,343
                      -------------------------------------------------------
    Expenses
    Operating               12,170        12,234        47,529        47,452
    Administrative             719         1,274         3,012         4,167
                      -------------------------------------------------------
                            12,889        13,508        50,541        51,619
                      -------------------------------------------------------
    Operating income
     before
     amortization           12,175        12,467        51,655        57,724
    Amortization of
     property, plant
     and equipment           4,840         4,934        19,853        18,895
    Amortization of
     intangible
     assets                  1,753         1,993         6,963         7,543
                      -------------------------------------------------------
    Operating income         5,582         5,540        24,839        31,286
    Financing costs,
     net                     1,966         2,324         7,749         7,740
    Foreign exchange
     loss (gain)             1,375           587         3,184        (1,540)
    Change in fair
     value of
     derivative
     financial
     instruments                 -            (5)            -            (5)
    Impairment of
     goodwill                    -        16,243             -        16,243
    Impairment of
     property, plant
     and equipment
     and intangible
     assets                 29,591        17,724        29,591        17,724
                      -------------------------------------------------------
    Loss before
     income taxes          (27,350)      (31,333)      (15,685)       (8,876)
    Income taxes
     recovery               (6,289)       (2,199)       (4,821)       (3,037)
                      -------------------------------------------------------
    Net loss for the
     period                (21,061)      (29,134)      (10,864)       (5,839)
                      -------------------------------------------------------
    Basic and diluted
     net loss per trust
     unit (in dollars)       (0.36)        (0.49)        (0.18)        (0.10)
                      -------------------------------------------------------
    Weighted average
     number of trust
     units outstanding  59,067,992    59,067,992    59,067,992    59,067,992
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Statements of Deficit          For the twelve-month periods
                                                       ended December 31,
                                                  -------------
    (in thousands of dollars) (unaudited)                 2009          2008
    -------------------------------------------------------------------------
    Deficit - beginning of period                     (220,137)     (170,982)
    Net loss for the period                            (10,864)       (5,839)
    Distributions to unitholders                       (41,348)      (43,316)
                                                  ---------------------------
    Deficit - end of period                           (272,349)     (220,137)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Statements of Comprehensive Income (Loss)

                         For the quarters ended       For the twelve-month
    (in thousands of         December 31,          periods ended December 31,
     dollars)         -------------               -------------
    (unaudited)               2009          2008          2009          2008
    -------------------------------------------------------------------------
    Net loss for
     the period            (21,061)      (29,134)      (10,864)       (5,839)
    Other comprehensive
     income (loss):
    Translation
     adjustments
    Unrealized foreign
     exchange gains
     (losses) on trans-
     lation of financial
     statements of self-
     sustaining foreign
     operations             (1,780)       13,714       (13,208)       19,658
    Reclassification
     of accumulated
     foreign exchange
     losses on trans-
     lation of financial
     statements of self-
     sustaining foreign
     operations following
     a reduction in net
     investment              1,656           994         3,850         1,075
    Future income taxes       (153)          947          (998)        1,356
    Hedging of net
     investment in
     self-sustaining
     foreign operations
    Change in fair value
     of derivatives
     designated as hedges
     of net investment
     in self-sustaining
     foreign operations        135          (670)        1,699          (904)
    Hedging instruments
     realized and
     recognized in net
     loss                     (280)         (267)         (668)       (2,741)
                      -------------------------------------------------------
                              (422)       14,718        (9,325)       18,444
                      -------------------------------------------------------
    Comprehensive
     income (loss) for
     the period            (21,483)      (14,416)      (20,189)       12,605
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Consolidated Statements of Cash Flows

                          For the quarters           For the twelve-month
    (in thousands of     ended December 31,        periods ended December 31,
     dollars)          ------------               -------------
     (unaudited)              2009          2008          2009          2008
    -------------------------------------------------------------------------
    Operating activities
    Net loss for the
     period                (21,061)      (29,134)      (10,864)       (5,839)
    Items not affecting
     cash:
      Amortization of
       property, plant
       and equipment         4,840         4,934        19,853        18,895
      Amortization of
       intangible assets     1,753         1,993         6,963         7,543
      Amortization of
       deferred financing
       costs                    87            93           384           341
      Long-term lease
       accruals                 96           115           425           411
      Future income
       taxes                (7,527)       (2,864)       (9,008)       (5,373)
      Realized currency
       translation
       adjustments           1,656         1,002         3,850         1,083
      Impairment of
       goodwill                  -        16,243             -        16,243
      Impairment of
       property, plant
       and equipment and
       intangible assets    29,591        17,724        29,591        17,724
      Other                      -            55            48           169
                      -------------------------------------------------------
                             9,435        10,161        41,242        51,197
    Net change in
     non-cash working
     capital balances       (1,068)         (233)          236         2,703
                      -------------------------------------------------------
    Cash flows related
     to operating
     activities              8,367         9,928        41,478        53,900
                      -------------------------------------------------------

    Investing
     activities
    Additions to
     property, plant
     and equipment          (1,112)       (1,510)       (2,591)       (3,715)
    Acquisition of
     other assets               (4)           (8)         (278)          (96)
                      -------------------------------------------------------
    Cash flows related
     to investing
     activities             (1,116)       (1,518)       (2,869)       (3,811)
                      -------------------------------------------------------

    Financing
     activities
    Net change in
     short-term
     revolving
     credit facility         2,600        (2,800)        3,100        (2,300)
    Repayment of
     capital lease
     obligation                  -           (59)          (20)         (233)
    Distributions
     paid to
     unitholders           (10,337)      (10,337)      (41,348)      (44,301)
    Proceeds from
     sale of options
     on foreign
     exchange forward
     contracts                   -            59             -           508
                      -------------------------------------------------------
    Cash flows
     related to
     financing
     activities             (7,737)      (13,137)      (38,268)      (46,326)
                      -------------------------------------------------------
    Translation
     adjustments on
     cash and cash
     equivalents              (420)        3,235        (3,320)        4,343
                      -------------------------------------------------------
    Net change in
     cash and cash
     equivalents during
     the period               (906)       (1,492)       (2,979)        8,106
    Cash and cash
     equivalents -
     beginning of
     period                 16,773        20,338        18,846        10,740
                      -------------------------------------------------------
    Cash and cash
     equivalents - end
     of period              15,867        18,846        15,867        18,846
                      -------------------------------------------------------

    Supplemental
     information:
    Interest paid            1,211         1,348         7,535         7,211
    Income taxes paid           82           216         3,873         1,432
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

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 earnings before interest, taxes, depreciation and amortization (“EBITDA”). EBITDA is not a measure of performance defined under Canadian GAAP; 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 loss:

                         For the quarters             For the twelve-month
                         ended December 31,        periods ended December 31,
                       ------------                ------------
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    Net loss for the
     period                (21,061)      (29,134)      (10,864)       (5,839)
    Income taxes
     recovery               (6,289)       (2,199)       (4,821)       (3,037)
    Impairment of
     property, plant
     and equipment and
     intangible assets      29,591        17,724        29,591        17,724
    Impairment of
     goodwill                    -        16,243             -        16,243
    Change in fair value
     of derivative finan-
     cial instruments            -            (5)            -            (5)
    Foreign exchange
     loss (gain)             1,375           587         3,184        (1,540)
    Financing costs, net     1,966         2,324         7,749         7,740
    Amortization of
     intangible assets       1,753         1,993         6,963         7,543
    Amortization of
     property, plant
     and equipment           4,840         4,934        19,853        18,895
                      -------------------------------------------------------
    EBITDA                  12,175        12,467        51,655        57,724
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Information by operating segment

                         For the quarters             For the twelve-month
                         ended December 31,        periods ended December 31,
                      -------------               -------------
                              2009          2008          2009          2008
    -------------------------------------------------------------------------
    PRODUCTION (in MWh)
    Hydroelectric power
     stations              147,230       134,753       553,627       536,407
    Wood-residue thermal
     power stations         50,281        47,145       226,209       256,979
    Natural gas thermal
     power station          56,571        54,819       211,132       206,152
                      -------------------------------------------------------
                           254,082       236,717       990,968       999,538
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    REVENUES
    Hydroelectric
     power stations         13,198        12,929        51,431        47,243
    Wood-residue thermal
     power stations          4,217         6,325        22,762        31,779
    Natural gas thermal
     power station           7,649         6,721        28,003        30,321
                      -------------------------------------------------------
                            25,064        25,975       102,196       109,343
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA
    Hydroelectric
     power stations         11,304        10,890        44,219        40,060
    Wood-residue thermal
     power stations           (712)          871         1,828         9,296
    Natural gas thermal
     power station           3,261         2,268        12,194        14,800
    Corporate and
     eliminations           (1,678)       (1,562)       (6,586)       (6,432)
                      -------------------------------------------------------
                            12,175        12,467        51,655        57,724
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    ADDITIONS TO
     PROPERTY, PLANT
     AND EQUIPMENT
    Hydroelectric
     power stations            251           371         1,559           692
    Wood-residue thermal
     power stations            830           443           936         1,287
    Natural gas thermal
     power station              31           696            96         1,736
                      -------------------------------------------------------
                             1,112         1,510         2,591         3,715
    -------------------------------------------------------------------------

                                                         As at         As at
                                                   December 31,  December 31,
                                                  -------------
                                                          2009	         2008
    -------------------------------------------------------------------------
    ASSETS
    Hydroelectric power stations                       246,387       295,182
    Wood-residue thermal power stations                106,845       147,517
    Natural gas thermal power station                   37,308        42,043
    Corporate and eliminations                          15,243         2,119
                                                  ---------------------------
                                                       405,783       486,861
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

SOURCE BORALEX POWER INCOME FUND