TORONTO, ONTARIO (March 2, 2010) – Macquarie Power & Infrastructure Income Fund
(TSX: MPT.UN; MPT.DB.A – “MPT” or the “Fund”), which owns and operates essential
infrastructure assets, today reported unaudited results for the fiscal year and fourth quarter
ended December 31, 2009.
“The Fund’s operating cash flow in 2009 was lower than in 2008, reflecting outages at our
Cardinal and Whitecourt facilities as well as lower production from our wind and hydro power
facilities due to unfavourable weather conditions, all of which occurred primarily in the first
three quarters of the year,” said Michael Bernstein, the Fund’s President and Chief Executive
Officer. “However, we returned to strong operational performance in the fourth quarter of the
year, reflecting fewer outages as well as improved water flows at our hydro power facilities.”
“Additionally, during the year we took a number of steps to strengthen the Fund’s platform and
improve our operations,” Mr. Bernstein continued. “These included the early refinancing and
extension of our credit facilities and convertible debentures, various value enhancement
projects at our assets and the establishment of a new, sustainable distribution policy. Our
focus in 2010 is on delivering reliable distributions to unitholders while pursuing opportunities
to grow and diversify our portfolio.”
Fiscal 2009 Financial Performance
Revenue in 2009 was $148.4 million (2008 - $153.2 million), reflecting lower production at the
Cardinal gas cogeneration (“Cardinal”) and Whitecourt biomass (“Whitecourt”) facilities due to
major maintenance outages as well as decreased water flows and lower wind speed at the
Fund’s hydro power facilities and Erie Shores Wind Farm (“Erie Shores”), respectively. In
addition, revenue in 2008 included the receipt by Cardinal of $1.3 million from the Ontario
Electricity Financial Corporation (“OEFC”) in the form of an upward revenue adjustment
compared with the $57,000 payment Cardinal was required to make to the OEFC in 2009.
The Fund’s distributable cash1 was $49.6 million ($0.994 per unit) compared with $52.2 million
($1.046 per unit) in 2008. Declared distributions to unitholders were $52.4 million ($1.050 per
unit) compared with $52.5 ($1.050 per unit) in 2008, representing a payout ratio of 106% in
2009 compared with 100% in 2008. The 2009 payout ratio reflected lower cash flow and
higher net interest expense as a result of the May 2009 refinancing of the Fund’s credit
facilities while distributions to unitholders remained at $1.05 per unit. Distributions to
unitholders were reduced to $0.66 per unit on an annualized basis effective January 2010.
Income from operations2 was $21.3 million compared with $26.1 million in 2008, reflecting
lower operating cash flows from each of the power facilities, partially offset by lower
administrative expenses due to lower business development expenses and a lower incentive
fee. Operating expenses increased due to major maintenance expenses at Whitecourt for
turbine repairs and at Cardinal for the scheduled hot gas path inspection.
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 (MBL). MBL does not guarantee or otherwise provide assurance in respect of
the obligations of Macquarie Power & Infrastructure Income Fund.
Fourth Quarter Financial Performance
Revenue for the quarter was $42.8 million (Q4 2008 - $42.2 million), reflecting fewer outage
hours at Cardinal and Whitecourt as well as higher water flows at the Sechelt and Wawatay
hydro power facilities. Additionally, Cardinal received a higher power rate under its power
purchase agreement (“PPA”). These drivers were partially offset by lower production at Erie
Shores due to lower wind speeds than in the same period last year.
Distributable cash was $16.1 million ($0.323 per unit) compared with $14.7 million ($0.294) in
the fourth quarter of 2008. Distributions to unitholders were consistent with the fourth quarter
of 2008 at $13.1 million ($0.262 per unit), representing a payout ratio of 81% (Q4 2008 –
Income from operations was $11.5 million (Q4 2008 - $8.2 million), reflecting higher cash flow
at Cardinal, Whitecourt and the hydro power facilities as well as lower administrative
expenses, partially offset by lower cash flows from Erie Shores. Lower operating expenses
compared with the same period last year reflected lower gas transportation costs at Cardinal
as well as lower maintenance costs at Whitecourt.
As at December 31, 2009, the Fund had positive working capital of $17.0 million and cash and
short-term investments of $53.1 million3. The Fund is conservatively leveraged relative to the
low risk profile and long life of its assets, with a debt to capital4 ratio of 49.9%.
Fiscal 2009 Operational Highlights
Total power production decreased 2.3% to 2,035,557 MWh from 2,084,376 MWh in 2008.
Cardinal produced 1,251,909 MWh of electricity (2008 – 1,259,737 MWh), reflecting 374 hours
(2008 – 240 hours) of outage primarily due to the planned hot gas path inspection conducted
in April. During the year, Cardinal had 430 hours (2008 – 504 hours) of curtailment. Cardinal
curtails production from time to time during maintenance activities and periods where the spot
market price of gas is favourable. During curtailment, the facility continues to produce
electricity but at less than capacity. For the year, Cardinal achieved an availability of 95.6%
(2008 – 97.2%) and a capacity factor of 94.7% (2008 – 94.9%).
Erie Shores produced 232,296 MWh of electricity (2008 – 253,927 MWh), reflecting a lower
than average wind speed. The facility achieved an overall availability of 96.3% (2008 – 95.0%)
and a capacity factor of 26.8% (2008 – 29.2%).
The Fund’s hydro power facilities produced 160,674 MWh of electricity (2008 – 162,783 MWh),
reflecting lower water flows at the Sechelt hydro power facility, the Fund’s largest hydro power
facility, located in British Columbia, due to dry conditions. This was partially offset by higher
production at the Wawatay hydro power facility, the Fund’s second largest hydro power facility,
located in Ontario, due to significantly higher precipitation in the fourth quarter. The hydro
power facilities achieved a weighted average availability of 98.1% (2008 – 96.3%) and a
capacity factor of 51.4% (2008 – 51.9%).
Whitecourt produced 170,646 MWh of electricity (2008 – 186,528 MWh), primarily reflecting
the 48-day outage to correct a higher than normal vibration of the turbine and to complete
preventive maintenance and enhancements on the generator and balance of plant. As a
result, the facility operated at an availability of 82.0% (2008 – 88.4%) and achieved a capacity
factor of 81.5% (2008 – 88.0%).
The Chapais biomass facility (“Chapais”), in which the Fund holds a minority preferred equity
and debt interest, produced 220,032 MWh of electricity (2008 – 221,401 MWh). The facility
experienced availability of 93.8% (2008 – 93.4%), reflecting 554 hours of outage (2008 – 588
hours), and achieved a capacity factor of 89.7% (2008 – 90.0%).
The Fund owns an indirect 45% equity interest in Leisureworld Senior Care LP
(“Leisureworld”), which the Fund accounts for as an equity investment. Leisureworld delivered
stable performance in 2009, achieving a 7.7% increase in revenue over 2008, reflecting
increases in private accommodation and government funding rates. Average total occupancy
was 98.5% (2008 – 98.4%). The average occupancy of private rooms increased to 95.9%
(2008 – 92.9%).
The Fund’s new distribution level of $0.055 per unit monthly, or $0.66 per unit on an
annualized basis, effective January 2010, is expected to result in an average payout ratio of
approximately 70 to 75% of distributable cash over a five-year period based on the Fund’s
current portfolio. Management currently expects this distribution profile to be sustainable
through 2014. The Fund’s conversion into a dividend-paying corporation is currently expected
to occur in December 2010.
Fiscal 2010 Outlook
Subsequent to year end, on February 16, 2010 the Fund announced the filing of a preliminary
prospectus by Leisureworld Senior Care Corporation (“LSCC”) with the Canadian securities
regulatory authorities in relation to a proposed initial public offering of common shares of
LSCC. With the net proceeds of the offering, LSCC intends to acquire 100% of the ownership
interests in Leisureworld and its general partner from its current owners, MPT and Macquarie
International Infrastructure Fund Limited.
Revenue at Cardinal in 2010 is expected to be higher than in 2009 due to less scheduled
maintenance work and the continuing escalation in the DCR, which results in a higher power
price under Cardinal’s PPA. Cardinal will conduct a combustion inspection in the second
quarter of 2010, which typically requires about five days of outage. It is anticipated that higher
power rates will partially offset the impact of higher gas transportation rates, which are
currently expected to increase from $1.19 per gigajoule in 2009 to approximately $1.63 per
gigajoule in 2010. As a result, cash flow from this facility is expected to be slightly higher than
Revenue at Erie Shores is anticipated to be slightly higher based on the expectation of more
normal wind patterns as well as improved availability resulting from improvements made at the
facility in 2009. Erie Shores’ annual long-term production target is 249,800 MWh. At the end
of July, Erie Shores will internalize operations and maintenance (“O&M”) following the expiry of
its existing O&M contract with GE Canada, which is expected to result in lower operating costs
over time. As a result of the internalization, Erie Shores will incur approximately $800,000 in
one-time expenses and capital expenditures primarily related to building up an inventory of
spare parts as well as end-of-contract inspections. Erie Shores’ cash flow in 2010 is expected
to be slightly higher than in 2009.
Revenue and cash flow from the Fund’s hydro power facilities is anticipated to be higher based
on the expectation of improved hydrological conditions as well as price escalators in the
facilities’ PPAs. The average long-term annual production of the hydro power facilities is
166,360 MWh. Capital expenditures across the facilities are expected to be significantly lower
than in 2009.
Revenue and cash flow from Whitecourt are expected to be significantly higher in 2010 than in
2009. Whitecourt is anticipated to achieve an availability factor of approximately 95% in 2010,
which is in line with its historical performance. Whitecourt’s turbine is expected to operate
reliably until the facility’s next scheduled major maintenance inspection in 2016. Approximately
$1 million in capital expenditures is planned for 2010, including the replacement of the facility’s
boiler feedwater pumps and air compressor, which will support Whitecourt’s continuing
reliability. Whitecourt is currently expected to have a continuing stable and adequate supply of
wood waste fuel in 2010.
The Fund expects higher administrative and interest costs in 2010 than in 2009.
Administrative costs are expected to be higher due to the Fund’s corporate conversion process, the implementation of International Financial Reporting Standards, and increased business development activity as the Fund pursues its growth strategy. Increased interest
costs in 2010 will reflect higher rates on the Fund’s credit facility as well as the higher principal
amount outstanding on the convertible debentures. Despite these costs, the Fund expects
increased cash flow in 2010.
Conference Call and Webcast
Management of the Fund will hold a conference call (with accompanying slides) to discuss
fourth quarter and year-end results on Wednesday, March 3, 2010 at 8:30 a.m. ET. The
conference call will be accessible via webcast through the Fund’s website with accompanying
slides at www.macquarie.com/mpt and by telephone at 416-695-7848 (Canada) or 1-800-355-
4959 (North America). A replay of the call will be available until March 17, 2010 by dialling
416-695-5800 or 1-800-408-3053 and entering the passcode 6124785.
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 Macquarie Power & Infrastructure Income 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 an affiliate of Macquarie Group Limited. Please visit
www.macquarie.com/mpt for additional information.
1 Distributable cash is defined as cash flows from operating activities after removing changes in working capital. Distributable cash also
reflects the impacts of: cash taxes; releases from maintenance reserves; allocations to major maintenance and capital expenditure
reserves; non-discretionary payments and receipts; and distributions from Leisureworld.
2 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, gain on sale of capital assets,
impairment of goodwill and taxes.
3 On January 11, 2010, the Fund fully redeemed its 6.75% convertible unsecured subordinated debentures that were coming due on
December 31, 2010 with proceeds from the issuance of its $57.5 million offering of 6.50% convertible unsecured subordinated
debentures due December 31, 2016. The total amount paid was equal to the principal outstanding of $38.9 million plus accrued
4 The Fund’s total debt includes long-term debt, capital lease obligations, convertible debentures and levelization amounts as at
December 31, 2009. The fair value of unitholders’ equity reflects the Fund’s market capitalization as at December 31, 2009 based on a
unit price of $6.11 and units outstanding of 49,914,927, including 3,249,390 Class B exchangeable units
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. When used in the this news release, such
statements use such words as “may”, “will”, “expect”, “believe”, “plan” and other similar terminology. 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. The forwardlooking
statements contained in this news release are based on information currently available and what the Fund
currently believes are reasonable assumptions, including the material assumptions for each of the Fund’s assets set
out in the Fund’s 2008 Annual Report under the headings “Outlook” on pages 23 to 24, as updated in subsequently
filed quarterly Financial Reports of the Fund. 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, except as required by law, the Fund does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, whether as a result of new information, future events or
otherwise. The Fund cautions readers not to place undue reliance on any forward-looking statements contained in this
news release. The forward-looking statements contained in this news release are expressly qualified by this
The forward-looking information contained in this news release is presented for the purposes of assisting investors
and analysts in understanding the Fund’s financial position and our stated priorities and objectives may not be
appropriate for other purposes. The Fund cautions readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made. 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, 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; the ability to complete future acquisitions; 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., 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 Fund’s filings
with Canadian securities regulatory authorities, could cause actual results to differ materially from the results
discussed in the forward-looking statements.
Non-GAAP Financial Measures
"Income from operations", "distributable cash" and “contribution margin” do not have any standardized meaning under
Canadian GAAP. 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