Macquarie Power & Infrastructure Income Fund Announces Strong Second Quarter Results
- Portfolio performing in line with expectations
- Conservative financial position
- Capacity for continuing growth
TORONTO, ONTARIO (August 12, 2008) – Macquarie Power & Infrastructure Income
Fund (TSX: MPT.UN; MPT. DB – “MPT” or the “Fund”), which invests in essential
infrastructure assets, today reported results for the second quarter ended June 30, 2008. The
Fund’s Management’s Discussion and Analysis and unaudited financial statements are
available on the Fund’s website at www.macquarie.com/mpt and on SEDAR at
“The Fund’s portfolio performed in line with expectations, which reflects the diversity, stability
and quality of our power and social infrastructure assets,” said Mr. Gregory Smith, President
and Chief Executive Officer of the Fund. “The Fund continued to benefit from increased power
production and higher power rates as well as predictable results from Leisureworld. Moreover,
the Fund’s financial position remains strong, which will enable us to capitalize on growth
opportunities that contribute to the long-term value of the portfolio.”
Revenue for the quarter was $33.5 million compared with $21.6 million in the second quarter
of 2007. The increase reflected the contribution from the wind, hydro and biomass power
assets that the Fund acquired as part of the unit exchange takeover of Clean Power Income
Fund (“CPIF”) on June 27, 2007. It also reflected higher power prices attributable to the
continuing impact of electricity rate increases under the Cardinal facility’s (“Cardinal”) Power
Purchase Agreement (“PPA”), which was partially offset by lower production at Cardinal.
Income from operations1 for the Fund was $3.1 million for the quarter compared with $2.4
million for the same period last year, reflecting higher revenue as well as gas mitigation at
Cardinal. The increase in revenue was partially offset by a $6.4-million increase in operating
costs, which was due to the addition of the CPIF assets to the portfolio and higher gas
transportation costs at Cardinal. It was also offset by a small increase in administrative
expenses, which included additional management fees and cost reimbursement associated
with the acquisition of CPIF as well as ongoing business development activities.
The Fund’s distributable cash2 was $11.2 million ($0.224 per unit) compared with $7.3 million
($0.237 per unit) in 2007. Declared distributions to unitholders were $13.1 million ($0.262 per
unit) compared with $9.5 million ($0.257 per unit) in 2007, representing a payout ratio of 117%
(Q2 2007 – 129%) for the quarter. For the six-month period ended June 30, 2008, the Fund
achieved a payout ratio of 95% (2007 – 89%). Distributions to unitholders are paid from cash
flows from operations and unrestricted cash balances. For 2008, the Fund anticipates
achieving a payout ratio of approximately 100%.
As at June 30, 2008, the Fund had positive working capital of $53.3 million and cash on hand
of $56.2 million, including fully funded general, major maintenance and capital expenditure
reserve accounts in the aggregate amount of $16.6 million. The Fund is conservatively
leveraged, with a debt to capitalization ratio of 42.2%.
Total power production for the quarter increased 61% to 490,684 MWh compared with 304,293
MWh in the same period last year.
Cardinal produced 285,727 MWh of electricity (Q2 2007 – 304,293 MWh). During the quarter,
the facility had 180 hours of outages (Q2 2007 – 93 hours) and 56 hours of curtailment (Q2
2007 – nil). Cardinal curtailed production and extended outage hours to capitalize on the
favourable spot market price for gas.==As a result, Cardinal achieved availability of 91.6% (Q1
2007 – 95.7%) and capacity of 89.1% (Q2 2007 – 93.7%).
Erie Shores Wind Farm (“Erie Shores”) performed in line with expectations with production of
53,976 MWh (Q2 2007 – 51,301 MWh), reflecting strong winds during the period. The facility
achieved an overall availability of 96.5% (Q2 2007 – 97.3%) and a capacity factor of 24.9%
(Q2 2007 – 23.7%).
The Fund’s hydro power facilities produced 59,411 MWh (Q2 2007 – 55,095 MWh),
representing an increase of approximately 8% from the same period last year. The two hydro
facilities in Ontario experienced increased water flows, which was offset by unplanned outages
at the Sechelt facility in British Columbia due to an outage on B.C. Hydro’s transmission line.
In addition, colder than usual weather at Sechelt resulted in decreased water flows. Overall,
the hydro power facilities had a weighted average availability of 98.8% (Q2 2007 – 99.4%) for
the quarter and a capacity factor of 76.5% (Q2 2007 – 70.7%).
The Whitecourt biomass facility (“Whitecourt”) operated at 74.9% availability (Q2 2007 –
94.5%) and achieved a capacity factor of 74.5% (Q2 2007 – 94.0%). During the quarter,
Whitecourt completed its major maintenance shutdown and overhaul in 23 days instead of the
expected 24 days. As a result, total production at Whitecourt was 38,941 MWh (Q2 2007 –
The Chapais facility (“Chapais”), in which the Fund holds a minority preferred equity and debt
interest, experienced availability of 90.9% (Q2 2007 – 92.9%). Production at Chapais was
52,629 MWh (Q2 2007 – 53,606 MWh), primarily reflecting an outage required for the facility’s
annual spring maintenance.
The Fund owns an indirect 45% equity interest in Leisureworld Senior Care LP
(“Leisureworld”), which the Fund accounts for as an equity investment. During the quarter,
Leisureworld achieved a 37% increase in revenue and a 30% increase in income from
operations, reflecting the contribution of the seven homes acquired earlier this year, improved
occupancy and greater use of private accommodation across its portfolio, and increased
government funding. Average total occupancy for the quarter was 98.1% (Q2 2007 – 98.1%).
The average occupancy of private rooms was 92.2% (Q2 2007 – 84.9%).
“Demand for the services provided by essential infrastructure assets is inelastic, which means
they deliver predictable performance throughout the economic cycle. This stability is what
makes infrastructure so compelling to investors seeking to diversify their portfolios,” said Mr.
Smith. “The Fund’s outlook for the balance of fiscal 2008 is positive. In addition, we have
substantial financial capacity for growth and are actively reviewing a range of opportunities.
Our goal is to build a significant, diversified portfolio of infrastructure assets that returns
exceptional long-term value to unitholders.”
In 2008, Cardinal will continue to benefit from higher electricity rates under its PPA. This will
be offset by higher gas transportation costs, reflecting the impact of a final regulated rate
increase to $1.40/GJ awarded to TransCanada Pipelines Limited, which transports gas to the
Cardinal facility, effective June 1, 2008. This followed an earlier interim rate increase on April
1, 2008 to $1.31/GJ from $1.09/GJ previously.
Erie Shores is performing in line with the Fund’s forecast and is expected to deliver annual
production of approximately 245,600 MWh, subject to wind speed and density, which are
typically greatest during the fall and winter months. Plant availability of 97% is guaranteed by
GE, the turbine supplier, and Erie Shores is entitled to direct revenue reimbursement if that
threshold is not met. Erie Shores’ annual maintenance, which typically requires approximately
four to five days of outage, is expected to be completed during the seasonally low third
At the hydro facilities, water flows are typically strongest during the spring and fall months. The
impact of fluctuating water flows on revenue is mitigated by the geographic diversification of
the hydro assets across the Arctic, Atlantic and Pacific watersheds. Additionally, the PPAs at
Wawatay and Dryden provide for higher electricity rates during the months of October to
The hydro facilities are expected to generate long-term average production of 166,360 MWh
per year, which represents average actual historical production at each of the plants. This
long-term average includes the impact of outages required for mechanical and electrical
inspections at the plants, which are typically scheduled for seasonally low periods.
Whitecourt continues to operate reliably, reflecting the stability of its fuel supply and strong
maintenance program. Routine major maintenance costs at each of the Fund’s power plants
are fully funded through the Fund’s major maintenance reserve account and have no impact
on distributable cash.
Leisureworld expects to receive approval from the Ontario Ministry of Health and Long-Term
Care for the acquisition of the Good Samaritan Seniors Complex by the end of 2008.
Leisureworld focuses on providing a high quality of care, accommodation and services, which
contributes to the continuing high occupancy across its 26 homes. In addition, a growing
number of residents are choosing private accommodation, for which Leisureworld receives a
regulated premium. As the third largest provider of long-term care in Ontario, Leisureworld is
well positioned to capitalize on complementary acquisition opportunities that will further
enhance the stability and quality of the portfolio.
Conference Call and Webcast
Management of the Fund will hold a conference call (with accompanying slides) to discuss
second quarter results on Wednesday, August 13, 2008 at 8:30 a.m. ET. The conference call
will be accessible via webcast through the Fund’s website at www.macquarie.com/mpt and by
telephone at 416-641-6139 (Canada) or 1-866-542-4262 (North America). A replay of the call
will be available until August 27, 2008 by dialling 416-695-5800 or 1-800-408-3053 and
entering the passcode 3265537.
Distribution Reinvestment Plan (DRIP)
Eligible unitholders may elect to participate in the Fund’s Distribution Reinvestment Plan. For
more information about the DRIP, please visit the Fund’s website at www.macquarie.com/mpt.
About the Fund
Macquarie Power & Infrastructure Income Fund invests in essential infrastructure assets in
North America with an emphasis on power infrastructure. MPT’s strategy is to acquire and
actively manage a diverse, high quality portfolio of infrastructure assets to improve their
financial performance and provide growing and sustainable distributions to unitholders. MPT’s
portfolio includes investments in gas cogeneration, wind, hydro and biomass power generating
facilities, representing approximately 350 MW of installed capacity, and a 45% interest in
Leisureworld Senior Care LP, a leading provider of long-term care, or social infrastructure, in
Ontario. MPT is managed by a wholly-owned subsidiary of Macquarie Group Limited. Please
visit www.macquarie.com/mpt for additional information.
1 Income from operations refers to income before net interest, foreign exchange, share of income (losses) from long-term investments,
unrealized gains (losses) on swap contracts and on embedded derivatives in gas purchase contracts, and taxes.
2 Distributable cash is defined as cash flows from operating activities after removing changes in working capital and reflecting the
impacts of releases from maintenance reserves, allocations to major maintenance and capital expenditure reserves, non-discretionary
payments and receipts, and distributions from Leisureworld.
Certain statements in this news release may constitute forward-looking statements, which involve known and unknown
risks, uncertainties and other factors that may cause the actual results to be materially different from any future results
expressed or implied by such forward-looking statements. Forward-looking statements use such words as “may”,
“will”, “anticipate”, “believe”, “expect”, “plan” and other similar terminology. These statements reflect current
expectations regarding future events and operating performance and speak only as of the date of this news release.
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved.
A number of factors could cause actual results to differ materially from the results discussed in the forward-looking
statements, including, but not limited to: including risks associated with: the operational performance of the Fund’s
assets; power purchase agreements; fuel costs, supply and transportation; default under credit agreements; regulatory
regime and permits; land tenure and related rights; government regulation and funding; acquisition-related risks for
Leisureworld; LTC home ownership and operation; minority ownership interest in Leisureworld; reliance on key
personnel; default under Leisureworld’s long-term debt and credit facility; labour relations and cost; the variability of
distributions; unitholder liability; dependence on Macquarie Power Management Ltd. (“MPML” or the “Manager”), the
Manager of the Fund, and potential conflicts of interest; insurance; and risks related to the environmental, health and
safety regimes within which the Fund’s assets operate. The risks and uncertainties described above are not
exhaustive and other events and risk factors including risk factors disclosed in MPT’s filings with Canadian securities
regulatory authorities could cause actual results to differ materially from the results discussed in the forward-looking
The forward-looking statements contained in this news release are based upon information currently available and
what the Fund currently believes are reasonable assumptions. These assumptions include that the business and
economic conditions affecting the Fund’s operations will continue substantially in their current state, including, with
respect to industry conditions, general levels of economic activity, regulations, weather, taxes and interest rates and
that there will be no unplanned material changes to the Fund’s facilities, equipment and contractual arrangements.
However, the Fund cannot assure investors that actual results will be consistent with these forward-looking
statements. These forward-looking statements are made as of the date of this news release, and the Fund and MPML
assumes no obligation to update or revise them to reflect new events or circumstances. The Fund cautions readers
not to place undue reliance on any forward-looking statements, which speak only as of the date made.
Non-GAAP Financial Measures
"Income from operations" and "distributable cash" do not have any standardized meaning under Canadian Generally
Accepted Accounting Principles. Management believes they are useful measures of performance as they provide
investors with indications of income from operations and the amount of cash available for distribution to unitholders.
The Fund's method of calculating "income from operations" and "distributable cash" may not be comparable to other
similarly named calculations.
For further information, please contact:
Vice President & Chief Financial Officer
Tel: (416) 607 5198
Vice President, Communications and Investor Relations
Tel: (416) 649 1325