Macquarie Power Income Fund Announces New Name and Fourth Quarter and Yearly Results
TORONTO, February 21, 2006 – Macquarie Power Income Fund (TSX: MPT.UN - the
“Fund”) today announced results for the fourth quarter and year ended December 31, 2005
and declared a cash distribution for the month of February 2006 of $0.08333 per trust unit.
The Fund also announced that, effective today, it has changed its name to “Macquarie Power
& Infrastructure Income Fund”. The change of name follows a decision by the Fund’s Board of
Trustees to better align the name of the Fund with its mandate to invest in infrastructure
assets, with an emphasis on power infrastructure. The Fund expects that its trust units will
begin trading on the Toronto Stock Exchange (the “TSX”) under the new name by
February 27, 2006. The Fund’s TSX ticker symbol will remain MPT.UN.
Fund Results for the Fourth Quarter and Year ended December 31, 2005
The Fund has completed the fourth quarter and its first full year results in an excellent financial
position, underpinned by a strong operating and financial performance from Cardinal Power
and the successful transition of the recently acquired 45% interest in Leisureworld.
The Fund generated revenue for the quarter of $24.6 million, slightly ahead of revenue in the
previous corresponding quarter of $24.3 million. The Fund’s revenue for the year was $90.2
million (2004 – $88.8 million).
The Fund’s earnings before interest, taxes, depreciation and amortization and unrealized gains
and losses (“EBITDA”) was $6.4 million for the quarter, compared to $8.5 million for the
previous corresponding quarter. EBITDA for the year was $26.1 million (2004 – $29.7 million).
During the quarter the Fund generated distributable cash of $7.8 million ($0.264 per fully
diluted unit), compared to the previous corresponding quarter of $7.6 million ($0.360 per fully
diluted unit). The Fund’s distributable cash for the year was $26.0 million ($1.12 per unit).
Declared distributions for the year were $22.2 million ($0.95 per unit), resulting in a payout
ratio of 85.5% (2004 – 95%).
The improvement in the Fund’s cash flows for the quarter and the year was driven by a
sustainable increase in electricity rates under Cardinal’s Power Purchase Agreement with
Ontario Electricity Financial Corporation. As the Fund announced last quarter, the total market
cost of electricity (“TMC”) to industrial customers increased significantly during 2005 and
ended the year 19% up on 2004. The Direct Customer Rate (“DCR”) is calculated based on a
three year average of the TMC, and therefore the high prices experienced in 2005 will have a
continuing impact on the DCR through 2007.
Other factors contributing to the increased cash flows included lower than expected fuel costs
at Cardinal due to decreased transportation costs for 2005 and distributions of $1.9 million
from Leisureworld for the 75 days of ownership in 2005.
The increase in cash flows for the quarter and the year was partially offset by increased Fund
administration expenses of $3.0 million (2004 – $0.7 million) for the quarter and $4.4 million
(eight months 2004 - $1.2 million) for the year. This is primarily related to the accrual of an
annual incentive fee payable to the Manager of $1.3 million and increased costs associated
with the Fund’s very active pursuit of potential investments.
The Fund’s financial position improved during the year with positive working capital of $17.8
million (2004 - $12.9 million), including $3.2 million of uncommitted cash reserves.
Mr. Gregory Smith, Chief Executive Officer of the Fund, said, “Since launching the Fund less
than two years ago, we have delivered a steady improvement in the Fund’s financial
performance by maximizing the operating results from the Cardinal facility.
“The Fund’s distributable cash was further enhanced in 2005 by increasing electricity rates for
the Cardinal business, a factor that will continue to benefit the asset and the Fund during 2006
and 2007. The recent investment in the Leisureworld long term care business has
underpinned the stability of the Fund’s long term cash flows as well as diversifying the Fund’s
“The Fund is in a strong financial position at the end of 2005 and the outlook continues to be
positive in 2006, reflecting the continued strength and expected growth in cash flows from the
underlying Cardinal and Leisureworld businesses. It is also significant that capital expenditure
programs at both Cardinal and Leisureworld in 2006 have already been fully funded.”
Cardinal Power Operational Performance
During the quarter the plant also performed well with availability of 98.7% (2004 – 98.0%),
capacity of 93.7% (2004 – 96.8%) and electricity sales of 325,000 MWh (2004 – 336,000
MWh). Plant availability was excellent and slightly ahead of the corresponding quarter in
2004. The sale of electricity and capacity were both lower reflecting higher curtailments in
2005 to benefit from temporary escalation in the spot price of gas through reduced net fuel
Cardinal performed strongly throughout 2005, with availability of 98.5% (2004 – 98.0%), a
capacity load factor of 95.4% (2004 – 96.0%) and electricity sales of 1,282,000 MWh (2004 –
1,281,000 MWh) for the year.
Leisureworld Operational Performance
The Fund completed the acquisition of its 45% interest in Leisureworld on October 18, 2005.
Leisureworld’s operating performance for the 75 day period ended December 31, 2005 was in
line with expectations. As at December 31, 2005, Leisureworld had 3,147 long term care
beds, with occupancy at all but two of the Leisureworld homes having surpassed the threshold
rate of 97% so they are now considered mature facilities. The threshold rate is significant
because, if a long-term care home’s average annual occupancy meets or exceeds 97%, it is
the Province’s policy to provide funding based on 100% occupancy. Only two homes,
constructed since September 2003, remain in “ramp up” phase and are expected to achieve
the 97% occupancy level by the fourth quarter of 2006.
The strong performance of the Fund and its assets in 2005 has enabled MPT to deliver
growing and sustainable distributions to its unitholders. On December 13, 2005 the Fund
announced a more than 5% increase in monthly cash distributions from $0.07917 to $0.08333
per unit, the equivalent of $1.00 per unit on an annualized basis. The distribution increase first
applied to unitholders of record on January 31, 2006.
The cash distribution for the month of February 2006 is $0.08333 per trust unit. The
distribution will be paid on March 31, 2006 to unitholders of record at the close of trading on
February 28, 2006. A distribution of $0.08333 per unit will also be paid on March 31, 2006 to
holders of Class B Exchangeable Units of MPT LTC Holding L.P., an indirect subsidiary entity
of the Fund, of record on February 28, 2006.
The Board of Trustees anticipates maintaining a payout ratio of less than 95% for the Fund for
the 2006 financial year.
Conference Call and Webcast
The Fund will hold a conference call to discuss the results on Wednesday, February 22, 2006
at 8:30 AM EST, at which time the Fund’s Manager will present the results for the fourth
quarter and year ended December 31, 2005. The conference call will be available via webcast
through the Fund’s website at www.macquarie.com/mpt and by telephone at 416-644-3431.
A replay of the conference call will be available until March 4, 2006 and can be accessed by
dialling 416-640-1917, pass code 21173553#.
About the Fund
Macquarie Power & Infrastructure Income Fund invests in infrastructure assets with an
emphasis on power infrastructure. MPT’s strategy is to acquire and actively manage a high
quality portfolio of long life infrastructure assets to improve their financial performance and
provide growing and sustainable distributions to unitholders for the long term. MPT’s
infrastructure portfolio includes Cardinal Power, a 156MW gas-fired cogeneration power
station in Ontario, and a 45% interest in Leisureworld, a leading long-term care provider in
Ontario with over 30 years operating experience. MPT is managed by a wholly-owned
subsidiary of Macquarie Bank Limited and a member of the Macquarie group.
For further information, please contact:
Chief Financial Officer
Macquarie Power Management Ltd.
Tel: (416) 607 5198
Public Affairs and Communications
Macquarie North America Ltd.
Tel: (416) 607 5042
Macquarie Power & Infrastructure Income Fund is not an authorised deposit taking institution for the purposes of the Banking Act (Cth) 1959 and Macquarie Power & Infrastructure Income Fund’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Power & Infrastructure Income Fund.