TORONTO, ONTARIO (August 5, 2009) – Macquarie Power & Infrastructure Income
Fund (TSX: MPT.UN; MPT.DB – “MPT” or the “Fund”), which owns and operates essential
infrastructure assets, today reported unaudited results for the second quarter ended June
30, 2009. The 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
“Power production in the second quarter was lower primarily due to maintenance outages at
our Cardinal and Whitecourt facilities and lower than expected water flows at our Wawatay
hydro power facility, which were partially offset by a strong wind resource at Erie Shores.
Leisureworld’s performance was consistent, reflecting stable occupancy across its homes,
increased government funding and growth in the accommodation rate of premium private
rooms,” said Michael Bernstein, the Fund’s President and Chief Executive Officer. “An
important achievement during the quarter was the establishment of a new credit facility, which
has largely eliminated refinancing risk for the Fund until 2012 while maintaining our flexibility to
pursue small to mid-sized growth opportunities that meet our investment and return criteria.”
For 2009, the Fund currently anticipates maintaining distributions to unitholders of $1.05 per
unit, barring any significant events or growth initiatives. Based on management’s current
operational outlook for the balance of the year, the Fund expects distributions to unitholders in
2009 to slightly exceed 100% of the Fund’s distributable cash.1 The Fund’s general reserve
account ensures the Fund’s ability to support distributions to unitholders in 2009, if required.
Management is currently developing a strategy to address the impact of taxation in 2011 and
expects to provide guidance on the Fund’s future structure and distribution profile before the
end of 2009.
Second Quarter Financial Performance
Revenue for the quarter was $32.6 million compared with $34.9 million in the second quarter
of 2008. The decrease reflected lower power production, primarily attributable to maintenance
activities at the Cardinal gas cogeneration (“Cardinal”) and Whitecourt biomass (“Whitecourt”)
facilities as well as to lower water flows at the Wawatay hydro power facility (“Wawatay”).
These factors were partially offset by a higher average wind speed at Erie Shores Wind Farm
The Fund’s distributable cash was $10.2 million ($0.205 per unit) compared with $11.2 million
($0.224 per unit) in 2008. Declared distributions to unitholders were $13.1 million ($0.262 per
unit), representing a payout ratio of 128%, which reflected lower cash flow as a result of the
factors noted above as well as higher net interest expense, which was partially offset by lower
administrative expenses. Declared distributions to unitholders in the second quarter of 2008
were also $13.1 million ($0.262 per unit), representing a payout ratio of 117%. The payout
ratio for the first six months of 2009 was 104% compared with 95% in the same period last
year. Maintenance costs at each of the Fund’s power generation facilities are fully funded through the Fund’s major maintenance reserve account and do not affect the determination of distributable cash.
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.
Income from operations2 for the Fund was $1.3 million compared with $3.2 million in the
second quarter of 2008. This variance reflected a combination of lower revenue and higher
operating expenses due to increased maintenance costs at Cardinal and Whitecourt. These
factors were partially offset by lower administrative expenses, which primarily reflected lower
business development costs.
As at June 30, 2009, the Fund had positive working capital of $10.5 million and cash on hand
of $16.2 million, of which $5.0 million was not designated for general, major maintenance and
capital expenditure reserve accounts. The Fund is conservatively leveraged relative to the low
risk profile and long life of its assets, with a debt to capital ratio of 45.1%.
Second Quarter Operational Highlights
Total power production was 458,511 MWh compared with 490,684 MWh in the second quarter
of 2008, a decrease of approximately 6.6%.
Cardinal produced 264,729 MWh of electricity (Q2 2008 – 285,727 MWh), reflecting 307 hours
of outage (Q2 2008 – 180) that primarily related to the hot gas path maintenance inspection
that was conducted in April. In addition, the Ontario Electricity Financial Corporation (“OEFC”),
Cardinal’s electricity purchaser, requested that Cardinal curtail production for 318 hours (Q2
2008 – 56) during the quarter. During curtailment, the facility continues to produce electricity
but at less than capacity. For the quarter, Cardinal achieved an availability of 85.7% (Q2 2008
– 91.6%) and a capacity factor of 82.9% (Q2 2008 – 89.1%).
Erie Shores produced 55,487 MWh (Q2 2008 – 53,976 MWh) of electricity, reflecting a higher
average wind speed during the quarter. The facility achieved an overall availability of 97.0%
(Q2 2008 – 96.5%) and a capacity factor of 25.7% (Q2 2008 – 24.9%).
The Fund’s hydro power facilities produced 55,004 MWh (Q2 2008 – 59,411 MWh) of
electricity, primarily as a result of lower than expected water flows at Wawatay due to colder
temperatures and less precipitation than in the same period last year. The lower production
also reflected 229 hours of outage (Q2 2008 – 102), primarily at the Hluey Lakes hydro facility
for repairs and maintenance. The hydro power facilities achieved a weighted average
availability of 99.0% (Q2 2008 – 98.8%) and a capacity factor of 70.6% (Q2 2008 – 76.5%).
Whitecourt produced 34,372 MWh of electricity (Q2 2008 – 38,941 MWh), primarily reflecting
731 hours of outage (Q2 2008 – 548) during the quarter for repairs and maintenance to
address the higher than normal vibration of the turbine, which was identified in the fourth
quarter of 2008. As a result, the facility operated at an availability of 66.5% (Q2 2008 – 74.9%)
and achieved a capacity factor of 66.3% (Q2 2008 – 74.5%).
The Chapais biomass facility (“Chapais”), in which the Fund holds a minority preferred equity
and debt interest, produced 48,919 MWh (Q2 2008 – 52,629 MWh) of electricity. The facility
experienced availability of 87.8% (Q2 2008 – 90.9%), reflecting 266 hours of outage (Q2 2008
– 202), and achieved a capacity factor of 80.0% (Q2 2008 – 86.1%).
The Fund owns an indirect 45% equity interest in Leisureworld Senior Care LP (“Leisureworld”), which the Fund accounts for as an equity investment. In the second quarter, Leisureworld achieved a 6.7% increase in revenue, reflecting increases in private accommodation and government funding rates. Average total occupancy in the second quarter was 98.0% (Q2 2008 – 98.1%). The average occupancy of private rooms was 94.7% (Q2 2008 – 92.2%).
“A key initiative for management in 2009 is to develop a strategy that addresses the impact of
taxation in 2011 while maximizing value for unitholders. We expect to provide guidance on our
future structure and distribution profile before the end of 2009,” said Mr. Bernstein. “At the
same time, we are continuing to evaluate a number of growth opportunities to increase the
size and scale of our portfolio, particularly in the renewable power sector and in new
categories of infrastructure such as roads, hospitals and schools, including through publicprivate
partnerships. We are committed to building MPT into Canada’s leading public
infrastructure investment vehicle and to delivering a compelling yield and attractive total return
to our unitholders.”
In 2009, Cardinal is expected to generate lower revenue than in 2008, which primarily reflects
the hot gas path inspection that required 13 days of outage in April. While Cardinal will
continue to experience higher gas transportation costs, the confirmed 2009 rate of $1.19/GJ is
below the average 2008 level. As a result of these factors, cash flow from Cardinal will be
slightly lower on a year-over-year basis.
Erie Shores is expected to generate slightly less electricity than the estimated average annual
production of 249,800 MWh, reflecting generally lower wind speed and density in 2009 to date.
Erie Shores’ production is subject to wind speed and density, which are typically strongest
during the fall and winter months.
The hydro power facilities are expected to generate less electricity than the average long-term
annual production of 166,360 MWh, which reflects the unusually poor hydrological conditions
in 2009 to date. Production at the hydro power facilities is subject to water flows, which are
typically strongest during the spring and fall months. Initiatives planned at the hydro power
facilities during the third quarter of 2009, a seasonally low period, include the replacement of
the turbine at the Wainwright power station, one of three stations that form the 3MW Dryden
hydro power facility, which will require a 90-day outage at Wainwright commencing in
September. A key efficiency improvement is the automation of the storage and release of
water in the lake that serves the Sechelt facility, which will enable the facility to remotely
control water flows, and, accordingly, maximize production.
Whitecourt completed its planned spring outage on July 18, 2009, requiring a total of 48 days,
or 1,147 hours, to repair the turbine vibration instead of the 24 days originally anticipated. The
extended outage allowed for additional preventive maintenance and enhancements to be
undertaken on the generator and balance of plant, thereby extending the useful life of various
components and incrementally improving the facility’s efficiency. The extended outage also
eliminated the need for the previously scheduled four-day maintenance outage in the fall of
2009. Management currently expects that the turbine will operate reliably until the next
scheduled major maintenance inspection, which occurs every seven years. Whitecourt is
expected to achieve an availability of approximately 80% to 83% in 2009 (2008 - 88.4%) and
to return to its five-year average availability of approximately 95% in 2010.
In addition, Whitecourt continues to work closely with the Millar Western Group of Companies
(“Millar Western”), which supplies a majority of the facility’s wood waste fuel, to ensure a
continuing stable and adequate supply of wood waste. Under the terms of Whitecourt’s supply
contract with Millar Western, in the event that Millar Western does not supply the minimum
required quantity of wood waste it must pay Whitecourt’s cost to source replacement fuel,
subject to certain exceptions. Whitecourt currently expects to have an adequate and stable
supply of wood waste through 2009.
Leisureworld is continuing to focus on enhancing the quality of care and accommodation for
residents, which contributes to the continuing high occupancy of its homes. In addition,
Leisureworld is continuing to attract a growing number of residents to private accommodation,
for which Leisureworld receives a regulated premium. The Fund currently anticipates that
Leisureworld’s distribution policy will be maintained for fiscal 2009.
In July, the Ministry of Health and Long-Term Care (“MOHLTC”) advised Ontario’s long-term
care (“LTC”) operators that an additional $43 million in one-time funding will be provided in the
2009-2010 fiscal year (retroactive to April 1, 2009) under the Other Accommodation portion of
the accommodation funding envelope. This funding is expected to represent approximately
$1.55 per resident per day in additional funding to Ontario’s LTC homes, including
Leisureworld. Further details on the funding are expected by the end of the summer.
Conference Call and Webcast
Management of the Fund will hold a conference call (with accompanying slides) to discuss
second quarter results on Thursday, August 6, 2009 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 416-641-6139 (Canada) or 1-866-542-4262
(North America). A replay of the call will be available until August 20, 2009 by dialling 416-
695-5800 or 1-800-408-3053 and entering the passcode 8136626.
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
www.macquarie.com/mpt for additional information.
1 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.
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,
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" and "distributable cash" 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 named calculations.