Boralex Growth Strategy Sparks First-Quarter Earnings Surge

MONTREAL, May 11 /CNW Telbec/ - Boralex Inc. ("Boralex" or the "Corporation") capitalizes on its expansion strategy, reporting net earnings for the first quarter of fiscal 2011 of $7 million ($0.19 per share), up 250% from $2 million for the first quarter of fiscal 2010.

    <<
    (in millions of dollars, except per share amounts)
    -------------------------------------------------------------------------
                                                           Quarters ended
                                                     ------------------------
                                                        March 31,   March 31,
                                                            2011        2010
                                                     ------------------------
    Revenues from energy sales                              82.0        51.0
    EBITDA                                                  37.8        17.8
    Net earnings                                             7.0         2.0
    per share (basic) in dollars                           $0.19       $0.05
    Cash flows from operations                              24.1        14.5
    -------------------------------------------------------------------------
    >>

Quarterly results

"Our first-quarter results clearly show the positive impact of Boralex's most recent expansion strategy," said President and CEO Patrick Lemaire. The 132% expansion in Boralex's installed wind power capacity and the acquisition of Boralex Power Income Fund (the "Fund") fuelled significant growth in financial results for the first quarter of fiscal 2011.

Revenues from energy sales for the three-month period ended March 31, 2011 totalled $82 million, up 61% from the same quarter of fiscal 2010. The inclusion of the Fund's ten power stations contributed an additional $30 million in revenues. More importantly, the Fund's contribution, coupled with the effect of the Corporation's new wind power stations, resulted in a 112% increase in EBITDA, to $37.8 million for the first quarter of fiscal 2011. The wind power segment remains Boralex's top EBITDA growth driver. Given wind power projects under development, the segment's leading contribution to Boralex's operating profitability is expected to grow over the next few years.

What's more, the acquisition of the Fund provides greater stability in profit margins and cash flows. As at March 31, 2011, the Corporation recorded a 66% increase in cash flows from operations, thereby generating flexibility and financial strength to drive Boralex's future growth.

2015 Vision

Subsequent to the recent growth in its wind power segment and the acquisition of the Fund, Boralex has expanded its footprint and positioning by balancing the contribution of each of its operating segments, with a combined total of 700 MW in energy producing assets in Canada, the U.S. and France, of which 73% have long-term power sales contracts. With more than 400 MW of projects currently under development with its various partners, all of which have long-term contracts, Boralex's strategic objective of reaching 1,000 MW in operating/contracted capacity has been met. "Boralex has set a new objective of attaining an operating/contracted capacity of 1,500 MW by 2015. This growth will occur primarily in France and Canada in the wind and solar power segments and, on a smaller scale, in the hydroelectric segment," added Mr. Lemaire.

Segment performance

In examining segment results, we note that the wind power segment has enjoyed a performance boost with the addition of 143 MW in new assets since January 2010, consisting of 90 MW in Canada and 53 MW in France. Quarterly revenues were up 61%, with revenues from energy sales and EBITDA of $18.3 million and $15.1 million, respectively. Note that in the first quarter, Boralex sold the Merlin-Buxton wind power project in Ontario, realizing a $1.8 million gain. This decision was prompted by the site's low development potential following structural changes out of Boralex control. In addition, a significant portion of the construction work at the first two Seigneurie de Beaupré wind farms, with an installed capacity of 272 MW, will be completed in 2011. The construction work on several foundations and most of the road work gets underway at the end of April.

Clearly, the performance boost in the hydroelectric power segment for the first quarter of fiscal 2011 compared with the same period of fiscal 2010 was a key benefit of acquiring the Fund. Adding the seven hydroelectric power stations increased segment revenues fourfold to $12.7 million, and EBITDA nearly fivefold, to $9.1 million. In February 2011, Boralex and Hydro-Québec renewed the power sales contract for 2 MW of installed capacity at the East Angus power station in Québec for an additional 20-year period. This was Boralex's first long-term contract to be successfully renegotiated and renewed with Hydro-Québec.

Our wood-residue thermal power segment reported revenues totalling $34.3 million, up 13.6% from $30.2 million for the same period in the previous year, while EBITDA rose 3% to $10.3 million year over year. Despite a higher average selling price, the Corporation's U.S. power stations continued to grapple with tough market conditions. In late February, Boralex entered into a two-year power sales contract for its Fort Fairfield power station in Maine. Moreover, the Ashland, Maine power station has been shut down indefinitely. This decision was prompted by the Corporation's operating strategy aimed at reducing operating costs through responsible management and minimizing the impact of a persistently fragile U.S. economy. Boralex expects performance at its Canadian power stations to hold steady or improve, particularly at the Senneterre power station, due in part to investments to secure its raw material supply. Furthermore, the Dolbeau power station was shut down as expected in April. Management continues to evaluate a number of scenarios for this facility.

Note that this quarter marked the Corporation's first financial statements prepared in accordance with International Financial Reporting Standards ("IFRS").

About Boralex

Boralex is a power producer whose core business involves developing and operating renewable energy power stations with a total installed capacity of 700 MW in Canada, the Northeastern United States and France. Boralex is also committed under power development projects, both independently and with European and Canadian partners, to add approximately 400 MW of power. With nearly 350 employees, Boralex is known for its diversified expertise and in-depth experience in three power generation segments - wind, hydroelectric and thermal - and will add a fourth segment to its energy portfolio with the upcoming commissioning of its first solar power station. Boralex's shares and convertible debentures are listed on the Toronto Stock Exchange under the ticker symbols BLX and BLX.DB, respectively. More information is available at www.boralex.com or www.sedar.com.

Some statements 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, fluctuations in electricity selling prices, the Corporation's financing capacity, and adverse changes in general market and industry conditions, as well as other factors listed in the Corporation's filings with various securities commissions.

The summarized financial statements included in this press release also contain certain financial measures not defined under IFRS. To assess the performance of its assets and reporting segments, the Corporation uses EBITDA and cash flows from operations as performance measures, as defined in the accompanying financial statements. These are measures not defined under IFRS and have no standard definition under IFRS. As a result, these measures may be different from similarly titled measures used by other companies.

    <<
    Consolidated Balance Sheets

                                               AS AT       AS AT       AS AT
                                            MARCH 31,   DECEMBER   JANUARY 1,
    (in thousands of dollars) (unaudited)       2011    31, 2010        2010
    -------------------------------------------------------------------------

    ASSETS
    CURRENT ASSETS
    Cash and cash equivalents                131,268      92,650      37,821
    Restricted cash                            6,512      15,924           -
    Accounts receivable                       51,053      60,420      39,632
    Available-for-sale financial asset         3,832      23,251           -
    Future income taxes                            -         512         422
    Inventories                                7,980       9,179       8,726
    Prepaid expenses                           4,475       2,516       2,537
    Fair value of derivative financial
     instruments                                   -         769           -
    -------------------------------------------------------------------------
                                             205,120     205,221      89,138
    Investment                                     -           -      45,729
    Property, plant and equipment            735,106     738,884     412,707
    Energy sales contracts                   104,066     103,994      49,023
    Water rights                             112,274     113,015       4,146
    Other long-term assets                    43,440      46,842      52,475
    Goodwill                                  38,063      38,063           -
    -------------------------------------------------------------------------
                                           1,238,069   1,246,019     653,218
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    CURRENT LIABILITIES
    Bank loans and advances                        -         195      12,291
    Accounts payable and accrued
     liabilities                              38,331      59,558      31,798
    Income taxes payable                       3,934       3,209         283
    Fair value of derivative financial
     instruments                                  30         183           -
    Current portion of long-term debt         46,676      34,033      24,273
    -------------------------------------------------------------------------
                                              88,971      97,178      68,645
    Long-term debt                           472,040     479,546     206,116
    Convertible debentures                   221,429     220,824           -
    Long-term lease accruals                   2,997       2,981           -
    Future income taxes                       67,603      66,967      33,603
    Fair value of derivative financial
     instruments                               9,448      10,834       7,645
    -------------------------------------------------------------------------
                                             862,488     878,330     316,009
    -------------------------------------------------------------------------

    EQUITY ATTRIBUTABLE TO SHAREHOLDERS
    Capital stock                            222,870     222,853     222,694
    Equity component of convertible
     debentures                               14,488      14,488           -
    Contributed surplus                        5,189       5,028       4,290
    Retained earnings                        149,311     142,300     105,538
    Accumulated other comprehensive loss     (25,231)    (25,874)     (2,344)
    -------------------------------------------------------------------------
                                             366,627     358,795     330,178
    Non-controlling interests                  8,954       8,894       7,031
    -------------------------------------------------------------------------
    Total equity                             375,581     367,689     337,209
    -------------------------------------------------------------------------
                                           1,238,069   1,246,019     653,218
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Earnings
                                                            FOR THE QUARTERS
                                                              ENDED MARCH 31
    (in thousands of dollars, except per share        -----------------------
     amounts and number of shares)(unaudited)               2011        2010
    -------------------------------------------------------------------------

    REVENUES
    Revenues from energy sales                            82,028      51,004
    Management revenues from the Fund                          -       1,755
    Other income                                             152         300
    -------------------------------------------------------------------------
                                                          82,180      53,059
    -------------------------------------------------------------------------

    COSTS AND OTHER EXPENSES
    Operating costs                                       39,215      27,019
    Administrative                                         4,293       3,706
    Development                                              884       1,613
    Management and operation of the Fund                       -       1,505
    Amortization                                          15,780       7,667
    Gain on sale of assets                                (2,377)       (774)
    -------------------------------------------------------------------------
                                                          57,795      40,736
    -------------------------------------------------------------------------

    OPERATING INCOME                                      24,385      12,323

    Financing costs                                       11,983       5,763
    Foreign exchange loss                                  1,519         454
    Net loss (gain) on financial instruments                 316        (560)
    -------------------------------------------------------------------------

    EARNINGS BEFORE INCOME TAXES, SHARE IN EARNINGS
    OF THE FUND AND NON-CONTROLLING INTERESTS             10,567       6,666

    Income taxes                                           3,500       2,985
    -------------------------------------------------------------------------

    EARNINGS BEFORE SHARE IN EARNINGS OF THE FUND
     AND NON-CONTROLLING INTERESTS                         7,067       3,681

    Share in earnings of the Fund                              -      (1,425)
    Non-controlling interests                                (56)       (280)
    -------------------------------------------------------------------------

    NET EARNINGS ATTRIBUTABLE TO SHAREHOLDERS              7,011       1,976
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per share (basic)                        $ 0.19      $ 0.05
    Net earnings per share (diluted)                      $ 0.18      $ 0.05
    Weighted average number of shares outstanding
     (basic)                                          37,766,491  37,740,921
    Weighted average number of shares outstanding
     (diluted)                                        57,487,945  37,910,184
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Comprehensive Income (Loss)

                                                            FOR THE QUARTERS
                                                              ENDED MARCH 31
                                                      -----------------------
    (in thousands of dollars)(unaudited)                    2011        2010
    -------------------------------------------------------------------------

    Net earnings for the period including
     non-controlling interests                             7,067       2,256
    -------------------------------------------------------------------------

    Other comprehensive income (loss)
      TRANSLATION ADJUSTMENTS
      Unrealized foreign exchange gain (loss) on
       translation of financial statements of
       self-sustaining foreign operations                  1,074      (9,303)
      Share of cumulative translation adjustments of
       the Fund                                                -        (478)
      Taxes                                                    -           6
      CASH FLOW HEDGES
      Change in fair value of financial instruments         (776)     (5,595)
      Hedging items realized and recognized in net
       earnings                                              629      (1,219)
      Hedging items realized and recognized in balance
       sheet                                                 120       1,146
      Taxes                                                 (427)        777
      LOSS ON AVAILABLE-FOR-SALE FINANCIAL ASSET
      Unrealized loss on available-for-sale financial
       asset                                                  27           -
    -------------------------------------------------------------------------
                                                             647     (14,666)
    -------------------------------------------------------------------------
    Comprehensive income (loss) for the period
     including non-controlling interests                   7,714     (12,410)
    -------------------------------------------------------------------------
    Less: Comprehensive loss for the period
     attributable to non-controlling interests               (60)       (268)
    -------------------------------------------------------------------------
    Comprehensive income (loss) for the quarter
     attributable to shareholders                          7,654     (12,678)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Changes in Equity

                                         Attributable to shareholders
                               ----------------------------------------------
                                              Equity
                                        component of
    (in thousands of dollars)    Capital convertible Contributed    Retained
     (unaudited)                   stock  debentures     surplus    earnings
    -------------------------------------------------------------------------
    Balance - beginning of
     period                      222,853      14,488       5,028     142,300
    -------------------------------------------------------------------------

    COMPREHENSIVE INCOME:
      Net earnings for the
       period                          -           -           -       7,011
      Other comprehensive
       income                          -           -           -           -

    Conversion of convertible
     debentures                       17           -           -           -
    Expense related to stock
     options                           -           -         161           -
    -------------------------------------------------------------------------
    Balance - end of period      222,870      14,488       5,189     149,311
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                       FOR THE QUARTER ENDED
                                                              MARCH 31, 2011
                                                      -----------------------
                                  Attributable to
                                   shareholders
                               ---------------------

                                  Compre-
                                 hensive                     Non-
    (in thousands of dollars)     income             controlling       Total
     (unaudited)                   (loss)      Total   interests      equity
    -------------------------------------------------------------------------
    Balance - beginning of
     period                      (25,874)    358,795       8,894     367,689
    -------------------------------------------------------------------------

    COMPREHENSIVE INCOME:
      Net earnings for the
       period                          -       7,011          56       7,067
      Other comprehensive
       income                        643         643           4         647

    Conversion of convertible
     debentures                        -          17           -          17
    Expense related to stock
     options                           -         161           -         161
    -------------------------------------------------------------------------
    Balance - end of period      (25,231)    366,627       8,954     375,581
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                              Attributable to shareholders
                                          -----------------------------------

    (in thousands of dollars)                Capital Contributed    Retained
     (unaudited)                               stock     surplus    earnings
    -------------------------------------------------------------------------
    Balance - beginning of
     period                                  222,694       4,290     105,538
    -------------------------------------------------------------------------

    COMPREHENSIVE INCOME
     (LOSS):
      Net earnings for the
       period                                      -           -       1,976
      Other comprehensive loss                     -           -           -
    Expense  related to stock
     options                                       -         198           -
    -------------------------------------------------------------------------
    Balance - end of period                  222,694       4,488     107,514
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                       FOR THE QUARTER ENDED
                                                              MARCH 31, 2010
                                                      -----------------------

                                  Attributable to
                                   shareholders
                               ---------------------
                                  Compre-
                                 hensive                     Non-
    (in thousands of dollars)     income             controlling       Total
     (unaudited)                   (loss)      Total   interests      equity
    -------------------------------------------------------------------------
    Balance - beginning of
     period                       (2,344)    330,178       7,031     337,209
    -------------------------------------------------------------------------

    COMPREHENSIVE INCOME
     (LOSS):
      Net earnings for the
       period                          -       1,976         280       2,256
      Other comprehensive loss   (14,654)    (14,654)        (12)    (14,666)
    Expense  related to stock
     options                           -         198           -         198
    -------------------------------------------------------------------------
    Balance - end of period      (16,998)    317,698       7,299     324,997
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Cash Flows
                                                            FOR THE QUARTERS
                                                              ENDED MARCH 31
                                                      -----------------------
    (in thousands of dollars)(unaudited)                    2011        2010
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
    Net earnings attributable to shareholders              7,011       1,976
    Distributions received from the Fund                       -       1,721
    Financing costs                                       11,983       5,763
    Interest paid                                        (12,404)     (6,139)
    Income taxes                                           3,500       2,985
    Income taxes paid                                     (1,441)       (181)
    Adjustments:
      Unrealized foreign exchange loss on inter
       company advance                                    (1,090)          -
      Net loss (gain) on financial instruments               316        (560)
      Share in earnings of the Fund                            -       1,425
      Amortization                                        15,780       7,667
      Gain on sale of assets                              (2,377)       (774)
      Other                                                  601         637
    -------------------------------------------------------------------------
                                                          24,059      14,520
    Change in non-cash working capital items              16,199       8,198
    -------------------------------------------------------------------------
                                                          40,258      22,718
    -------------------------------------------------------------------------
    INVESTING ACTIVITIES
    Additions to property, plant and equipment           (10,638)    (20,708)
    Change in restricted cash                              9,412     (94,287)
    Proceeds from sale of a subsidiary                         -         878
    Change in reserve funds                                   (4)        857
    Development projects                                    (593)        (45)
    Other                                                     43         958
    -------------------------------------------------------------------------
                                                          (1,780)   (112,347)
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Decrease in bank loans and advances                     (201)     (4,427)
    Net increase in long-term debt                        11,737     188,549
    Payments on long-term debt                           (12,062)    (59,417)
    -------------------------------------------------------------------------
                                                            (526)    124,705
    -------------------------------------------------------------------------
    TRANSLATION ADJUSTMENT ON CASH AND CASH
     EQUIVALENTS                                             666      (6,509)
    -------------------------------------------------------------------------
    NET CHANGE IN CASH AND CASH EQUIVALENTS               38,618      28,567
    CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD       92,650      37,821
    -------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS - END OF PERIOD            131,268      66,388
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

SEGMENTED INFORMATION

The Corporation's power stations are grouped into four distinct segments: wind power, 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 of the four types of power stations. The main accounting policies that apply to the individual segments are as described in note 1.

In order to assess the performance of its assets and reporting segments, Boralex uses EBITDA and cash flows from operations as performance measures. Although they are non-IFRS performance measures, management believes that these measures are widely accepted financial indicators used by investors to assess the performance of a company and its ability to generate cash through operations. Nevertheless, since these measures are not defined under IFRS, they may not be comparable to similarly named measures used by other companies.

Investors should not view EBITDA as an alternative measure to, for example, net earnings, or as a measure of operating results or cash flows, or as a parameter for measuring liquidity.

The following table reconciles EBITDA with net earnings:

    <<
                                                            FOR THE QUARTERS
                                                             ENDED  MARCH 31
                                                      -----------------------
                                                            2011        2010
    -------------------------------------------------------------------------
    Net earnings attributable to shareholders              7,011       1,976
    Non-controlling interests                                 56         280
    Income taxes                                           3,500       2,985
    Net loss (gain) on financial instruments                 316        (560)
    Foreign exchange loss                                  1,519         454
    Financing costs                                       11,983       5,763
    Gain on sale of assets                                (2,377)       (774)
    Amortization                                          15,780       7,667
    -------------------------------------------------------------------------
    EBITDA                                                37,788      17,791
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

Investors should not consider cash flows from operations as an alternative measure to cash flows related to operating activities, which is an IFRS measure.

The following table reconciles cash flows from operations to cash flows related to operating activities:

    <<
                                                      FOR THE QUARTERS ENDED
                                                                    MARCH 31
                                                     ------------------------
                                                            2011        2010
    -------------------------------------------------------------------------
    Cash flows related to operating activities            40,258      22,718
    Cash flows provided by change in non-cash
     working capital items                               (16,199)     (8,198)
    -------------------------------------------------------------------------

    CASH FLOWS FROM OPERATIONS                            24,059      14,520
    -------------------------------------------------------------------------
    >>

Revenues are allocated to different countries by the client's country of domicile. For the quarter ended March 31, 2011, three clients (two clients as at December, 2010) accounted for more than 10% of the Corporation's revenues.

The percentage of consolidated revenues for each of these clients and the segment(s) with which they do business with are presented in the following table:

    <<
                                                       FOR THE QUARTER ENDED
                                                              MARCH 31, 2011
    -------------------------------------------------------------------------
     % of sales attributable to one client                         Segment(s)
    -------------------------------------------------------------------------
                                        14                      Wood residue
                                        15        Wind power and natural gas
                                        24    Hydroelectric and wood residue
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    INFORMATION BY OPERATING SEGMENT

                                    FOR THE QUARTERS        FOR THE QUARTERS
                                      ENDED MARCH 31          ENDED MARCH 31
                                    2011        2010        2011        2010
    -------------------------------------------------------------------------
                                                                    Revenues
                               Power production (MWh)      from energy sales
    -------------------------------------------------------------------------
                                     Not         Not
                                reviewed    reviewed
                               ----------------------------------------------
    Wind power stations          152,570      90,291      18,273      11,413
    Hydroelectric power
     stations                    145,004      40,309      12,732       3,054
    Wood-residue thermal
     power stations              372,419     320,107      34,309      30,216
    Natural gas thermal
     power stations               82,291      22,430      16,714       6,321
    -------------------------------------------------------------------------
                                 752,284     473,137      82,028      51,004
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                       Additions to property,
                                              EBITDA     plant and equipment
                               ----------------------------------------------
    Wind power stations           15,066       9,419       8,119      19,342
    Hydroelectric power
     stations                      9,076       1,873         174         215
    Wood-residue thermal
     power stations               10,283      10,028       1,295         984
    Natural gas thermal
     power stations                7,640       2,038           4           3
    Corporate and eliminations    (4,277)     (5,567)      1,046         164
    -------------------------------------------------------------------------
                                  37,788      17,791      10,638      20,708
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                   AS AT       AS AT       AS AT       AS AT
                                MARCH 31,   DECEMBER    MARCH 31,   DECEMBER
                                    2011    31, 2010        2011    31, 2010
    -------------------------------------------------------------------------
                                        Total assets        Long-term assets
                               ----------------------------------------------
    Wind power stations          526,834     536,135     474,869     469,707
    Hydroelectric power
     stations                    359,910     364,548     342,936     350,773
    Wood-residue thermal
     power stations              147,843     162,070     132,968     137,376
    Natural gas thermal
     power stations               37,758      37,974      20,117      22,619
    Corporate                    165,724     145,292      62,059      60,323
    -------------------------------------------------------------------------
                               1,238,069   1,246,019   1,032,949   1,040,798
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    INFORMATION BY GEOGRAPHIC SEGMENT

                                    FOR THE QUARTERS        FOR THE QUARTERS
                                      ENDED MARCH 31          ENDED MARCH 31
                                    2011        2010        2011        2010
    -------------------------------------------------------------------------
                                                                    Revenues
                               Power production (MWh)      from energy sales
    -------------------------------------------------------------------------
                                     Not         Not
                                reviewed    reviewed
                               ----------------------------------------------
    Canada                       266,747      36,828      33,594       4,435
    United States                379,699     350,992      32,548      32,137
    Europe                       105,838      85,317      15,886      14,432
    -------------------------------------------------------------------------
                                 752,284     473,137      82,028      51,004
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                       Additions to property,
                                              EBITDA     plant and equipment
                               ----------------------------------------------
    Canada                        17,324        (328)      6,962       3,985
    United States                 12,024      11,051         310       1,171
    Europe                         8,440       7,068       3,366      15,552
    -------------------------------------------------------------------------
                                  37,788      17,791      10,638      20,708
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                   AS AT       AS AT       AS AT       AS AT
                                MARCH 31,   DECEMBER    MARCH 31,   DECEMBER
                                    2011    31, 2010        2011    31, 2010
    -------------------------------------------------------------------------
                                        Total assets        Long-term assets
                               ----------------------------------------------
    Canada                       640,772     634,043     527,665     529,787
    United States                293,591     301,921     267,917     263,094
    Europe                       303,706     310,055     237,367     247,917
    -------------------------------------------------------------------------
                               1,238,069   1,246,019   1,032,949   1,040,798
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Corporation's consolidated financial statements for the quarter ended March 31, 2011 are the first consolidated financial statements prepared in accordance with IFRS.

In preparing these consolidated financial statements in accordance with IFRS 1, the Corporation has applied the mandatory exceptions and some of the elective exemptions from full retrospective application of IFRS. The Corporation's transition date is January 1, 2010.

FIRST-TIME ADOPTION OF IFRS

The Corporation has applied the following elective exemptions and mandatory exceptions:

Elective exemptions:

Business combinations

IFRS 1 provides for the retrospective or prospective application of IFRS 3R, Business Combinations, as of the date of transition. Retrospective application requires the restatement of business combinations occurring prior to the date of transition. The Corporation has elected not to apply IFRS 3R retrospectively to business combinations occurring prior to the date of transition. Accordingly, these business combinations have not been restated. Under this exemption, no adjustments have been made to the carrying amount of net assets acquired as part of business combinations prior to the date of transition and determined according to Canadian GAAP.

Cumulative translation differences included under Accumulated other comprehensive loss

Retrospective application of IFRS in this respect would require us to determine the amount of cumulative translation differences in accordance with IAS 21, The Effects of Changes in Foreign Exchange Rates, from the date at which a foreign subsidiary or an associate was formed or acquired. IFRS 1 allows cumulative translation differences to be reset at zero at the date of transition. Boralex has elected to apply this elective exemption.

Fair value as deemed cost

IFRS 1 allows an entity to measure each of its property, plant and equipment items using the fair value method ("fair value model") and designate fair value as deemed cost as at the date of transition. An entity may also elect to recalculate the original cost ("cost model") and accumulated amortization retrospectively in accordance with IAS 16, Property, Plant and Equipment. Boralex has elected to apply this cost model for property, plant and equipment.

Asset retirement obligations

Under IFRIC 1, Changes in Existing Decommissioning, Restoration and Similar Liabilities, an entity is required to determine its liabilities to decommission, remove or restore items of property, plant and equipment in accordance with IFRS as of the acquisition date of such items. IFRS 1 allows an entity to prospectively apply the requirements set out in IFRIC 1. The Corporation has elected to measure the liability and impact of amortization prospectively as of the date of transition.

Borrowing costs

IFRS 1 provides for the retrospective or prospective application of IAS 23, Borrowing Costs, as of the date of transition. IAS 23 requires an entity to capitalize borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of the asset. A "qualifying asset" is an asset that takes a substantial period of time to prepare for its intended use or sale. The Corporation has elected not to apply IAS 23 retrospectively.

Employee benefits

IFRS 1 allows entities to retroactively apply the corridor method according to IAS 19, Employee Benefits, and not to recognize actuarial gains and losses of pension plans. IFRS 1 also allows the actuarial gains and losses to be recognized in Retained earnings as at the date of transition. Boralex has elected to recognize all actuarial gains and losses accumulated at the date of transition in Retained earnings.

Mandatory exceptions:

Hedge accounting

Hedge accounting may be applied prospectively as of the date of transition only to transactions that meet the hedge accounting criteria set out in IAS 39, Financial Instruments: Recognition and Measurement. Hedging relationships may not be designated retrospectively and the supporting documentation may not be created retrospectively. As a result, only hedging relationships that meet the hedge accounting criteria as at the transition date are recorded as hedges in the Corporation's Accumulated other comprehensive loss under IFRS. All derivatives, whether they meet IAS 39 criteria for hedge accounting or not, were fair valued and recorded in the statement of financial position.

Estimates

Hindsight is not used to create or revise estimates. Therefore, the estimates previously made by the Corporation under Canadian GAAP were not revised for the application of IFRS.

IMPACT OF TRANSITION TO IFRS

The differences between Canadian GAAP ("previous GAAP") and IFRS identified as having a significant effect on the Corporation's previously reported consolidated financial performance and financial position are summarized in the following pages.

ACQUISITION OF THE FUND

The reconciliation tables shown below present the impact of the finalization of the PPA relating to the Fund (note 4). The impact of these adjustments is shown under the PPA columns in the reconciliation of the consolidated balance sheet as at December 31, 2010 and in the reconciliations of the consolidated statement of earnings and the consolidated statement of comprehensive income for the year ended December 31, 2010.

GENERAL PRESENTATION OF THE CONSOLIDATED STATEMENT OF INCOME

As part of its IFRS conversion process, the Corporation has carried out a comprehensive review of the overall presentation of items in its consolidated statement of earnings. However, to facilitate understanding of other reconciliation items specific to IFRS conversion, the reconciliations of the consolidated statements of earnings for the periods ended March 31, 2010 and December 31, 2010 provided below have been prepared according to the old presentation.

STATEMENT OF CASH FLOWS

Under Canadian GAAP, interest paid and income taxes paid included in the determination of net earnings were disclosed separately as supplementary cash flow information. Under IFRS, interest paid and income taxes paid are included in the body of the statement of cash flows as separate line items.

    <<
    Consolidated Balance Sheets - Reconciliation
                                                                       AS AT
                                                                   JANUARY 1,
                                                                        2010
                                                                  -----------
                                                            IFRS
    (in thousands of dollars)               Canadian      adjust-
    (unaudited)                     Note        GAAP       ments        IFRS
    -------------------------------------------------------------------------
    ASSETS
    CURRENT ASSETS
    Cash and cash equivalents                 37,821           -      37,821
    Accounts receivable                       39,632           -      39,632
    Future income taxes                          422           -         422
    Inventories                                8,726           -       8,726
    Prepaid expenses                           2,537           -       2,537
    -------------------------------------------------------------------------
                                              89,138           -      89,138
    Investment                        (e)     55,446      (9,717)     45,729
    Property, plant and equipment     (d)    413,539        (832)    412,707
    Energy sales contracts                    49,023           -      49,023
    Water rights                               4,146           -       4,146
    Other long-term assets                    52,475           -      52,475
    -------------------------------------------------------------------------
                                             663,767     (10,549)    653,218
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    CURRENT LIABILITIES
    Bank loans and advances                   12,291           -      12,291
    Accounts payable and
     accrued liabilities          (a),(b)     28,913       2,885      31,798
    Income taxes payable                         283           -         283
    Current portion of
     long-term debt                           24,273           -      24,273
    -------------------------------------------------------------------------
                                              65,760       2,885      68,645
    Long-term debt                           206,116           -     206,116
    Future income taxes       (a),(b),(d),
                                  (e),(f)     37,185      (3,582)     33,603
    Fair value of
     derivative financial
     instruments                               7,645           -       7,645
    -------------------------------------------------------------------------
                                             316,706        (697)    316,009
    -------------------------------------------------------------------------

    EQUITY ATTRIBUTABLE
     TO SHAREHOLDERS
    Capital stock                            222,694           -     222,694
    Contributed surplus               (f)      4,295          (5)      4,290
    Retained earnings         (a),(b),(c),
                              (d),(e),(f)    159,900     (54,362)    105,538
    Accumulated other
     comprehensive income
     (loss)                           (c)    (46,859)     44,515      (2,344)
    -------------------------------------------------------------------------
                                             340,030      (9,852)    330,178
    Non-controlling interests                  7,031           -       7,031
    -------------------------------------------------------------------------
    Total equity                             347,061      (9,852)    337,209
    -------------------------------------------------------------------------
                                             663,767     (10,549)    653,218
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Balance Sheets - Reconciliation
                                                                       AS AT
                                                                    DECEMBER
                                                                    31, 2010
                                                                  -----------
                                                   Adjustments
    (in thousands of            Canadian     -----------------------
     dollars)(unaudited)  Note      GAAP         PPA        IFRS        IFRS
    -------------------------------------------------------------------------
    ASSETS

    CURRENT ASSETS
    Cash and cash
     equivalents                  92,650           -           -      92,650
    Restricted cash               15,924           -           -      15,924
    Accounts receivable           60,420           -           -      60,420
    Available-for-sale
     financial asset              21,508       1,743           -      23,251
    Future income taxes              512           -           -         512
    Inventories                    9,179           -           -       9,179
    Prepaid expenses               2,516           -           -       2,516
    Fair value of
     derivative
     financial
     instruments                     769           -           -         769
    -------------------------------------------------------------------------
                                 203,478       1,743           -     205,221
    Property, plant
     and equipment          (d)  810,700     (71,275)       (541)    738,884
    Energy sales
     contracts          (a),(d)  100,673       5,436      (2,115)    103,994
    Water rights                   2,925     110,090           -     113,015
    Other long-term
     assets                       44,774       2,068           -      46,842
    Goodwill                (i)   70,721      (9,500)    (23,158)     38,063
    -------------------------------------------------------------------------
                               1,233,271      38,562     (25,814)  1,246,019
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES

    CURRENT LIABILITIES
    Bank loans and advances          195           -           -         195
    Accounts payable
     and accrued
     liabilities        (a),(b)   58,815           -         743      59,558
    Income taxes
     payable                       3,209           -           -       3,209
    Fair value of
     derivative
     financial
     instruments                     183           -           -         183
    Current portion
     of long-term
     debt                         34,033           -           -      34,033
    -------------------------------------------------------------------------
                                  96,435           -         743      97,178
    Long-term debt               479,546           -           -     479,546
    Convertible
     debentures                  220,824           -           -     220,824
    Future income
     taxes              (a),(b),
                        (d),(e),
                        (f),(h),
                            (i)   47,949      38,174     (19,156)     66,967
    Fair value of
     derivative
     financial
     instruments                  10,834           -           -      10,834
    Long-term lease
     accruals                      2,981           -           -       2,981
    -------------------------------------------------------------------------
                                 858,569      38,174     (18,413)    878,330
    -------------------------------------------------------------------------

    EQUITY ATTRIBUTABLE
     TO SHAREHOLDERS
    Capital stock                222,853           -           -     222,853
    Equity component
     of convertible
     debentures             (h)   19,537           -      (5,049)     14,488
    Contributed
     surplus                (f)    5,527           -        (499)      5,028
    Retained earnings   (a),(b),
                        (c),(d),
                        (e),(f),
                        (g),(i)  184,690         388     (42,778)    142,300
    Accumulated
     other comprehensive
     income (loss)      (c),(g)  (66,799)          -      40,925     (25,874)
    -------------------------------------------------------------------------
                                 365,808         388      (7,401)    358,795
    Non-controlling
     interests                     8,894           -           -       8,894
    -------------------------------------------------------------------------
    Total equity                 374,702         388      (7,401)    367,689
    -------------------------------------------------------------------------
                               1,233,271      38,562     (25,814)  1,246,019
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Earnings - Reconciliation

                                                                     FOR THE
                                                                     QUARTER
                                                                       ENDED
                                                                    MARCH 31,
                                                                        2010
                                                                  -----------
    (in thousands of dollars,
     except per share amounts                               IFRS
     and number of shares)                  Canadian      adjust-
     (unaudited)                    Note        GAAP       ments        IFRS
    -------------------------------------------------------------------------
    Revenues from energy sales                51,004           -      51,004
    Operating costs                           27,019           -      27,019
    -------------------------------------------------------------------------
                                              23,985           -      23,985

    Share in earnings of the
     Fund                            (e)      (1,461)         36      (1,425)
    Management revenues from
     the Fund                                  1,755           -       1,755
    Other income                                 300           -         300
    -------------------------------------------------------------------------
                                              24,579          36      24,615
    -------------------------------------------------------------------------
    OTHER EXPENSES
    Management and operation
     of the Fund                               1,505           -       1,505
    Development                                1,613           -       1,613
    Administrative                   (f)       3,829        (123)      3,706
    -------------------------------------------------------------------------
                                               6,947        (123)      6,824
    -------------------------------------------------------------------------
    OPERATING INCOME                          17,632         159      17,791

    Amortization                     (d)       7,698         (31)      7,667
    Foreign exchange loss            (g)         876        (422)        454
    Net gain on financial
     instruments                                (560)          -        (560)
    Financing costs                            5,763           -       5,763
    Gain on sale of subsidiary                  (774)          -        (774)
    -------------------------------------------------------------------------
                                              13,003        (453)     12,550
    -------------------------------------------------------------------------
    EARNINGS BEFORE INCOME
     TAXES AND NON-CONTROLLING
     INTERESTS                                 4,629         612       5,241
    Income taxes               (d)(e)(f)       3,001         (16)      2,985
    -------------------------------------------------------------------------
    Net earnings including
     non-controlling interests                 1,628         628       2,256
    Non-controlling interests                   (280)          -        (280)
    -------------------------------------------------------------------------

    NET EARNINGS ATTRIBUTABLE
     TO SHAREHOLDERS                           1,348         628       1,976
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per Class A
     share (basic and diluted)                $ 0.04                  $ 0.05
    Weighted average number of
     Class A shares outstanding
     (basic)                              37,740,921              37,740,921
    Weighted average number of
     Class A shares outstanding
     (diluted)                            37,910,184              37,910,184
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Earnings - Reconciliation
                                                                     FOR THE
                                                                  YEAR ENDED
                                                                    DECEMBER
                                                                    31, 2010
                                                                 ------------

    (in thousands of
     dollars, except per                        Adjustments
     share amounts and                   ------------------------
     number of shares)          Canadian
     (unaudited)          Note      GAAP         PPA        IFRS        IFRS
    -------------------------------------------------------------------------
    Revenues from
     energy sales                202,864           -           -     202,864
    Operating costs              115,568           -           -     115,568
    -------------------------------------------------------------------------
                                  87,296           -           -      87,296
    Share in earnings
     of the Fund            (e)   (3,251)          -         103      (3,148)
    Management revenues
     from the Fund                 4,437           -           -       4,437
    Other income                     718           -           -         718
    -------------------------------------------------------------------------
                                  89,200           -         103      89,303
    -------------------------------------------------------------------------
    OTHER EXPENSES
    Management and
     operation of the
     Fund                          3,995           -           -       3,995
    Development                    4,214           -           -       4,214
    Administrative          (f)   17,025           -        (494)     16,531
    -------------------------------------------------------------------------
                                  25,234           -        (494)     24,740
    -------------------------------------------------------------------------
    OPERATING INCOME              63,966           -         597      64,563

    Amortization            (d)   40,658        (571)       (272)     39,815
    Foreign exchange loss   (g)    4,298           -      (3,604)        694
    Net loss on financial
     instruments                     247           -           -         247
    Financing costs               24,104           -           -      24,104
    Impairment of goodwill  (i)        -           -      23,158      23,158
    Net gain on deemed
     disposal of
     investment
     in the Fund            (i)  (15,130)          -      (9,614)    (24,744)
    Gain on sale of
     subsidiary                     (774)          -           -        (774)
    -------------------------------------------------------------------------
                                  53,403        (571)      9,668      62,500
    -------------------------------------------------------------------------

    EARNINGS BEFORE
     INCOME TAXES AND
     NON-CONTROLLING
     INTERESTS                    10,563         571      (9,071)      2,063
    Recovery of income
     taxes              (d),(e),
                        (f),(i)  (12,738)        183     (20,655)    (33,210)
    -------------------------------------------------------------------------
    Net earnings
     including
     non-controlling
     interests                    23,301         388      11,584      35,273
    Non-controlling
     interests                      (201)          -           -        (201)
    -------------------------------------------------------------------------

    NET EARNINGS
     ATTRIBUTABLE TO
     SHAREHOLDERS                 23,100         388      11,584      35,072
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per
     Class A share
     (basic and diluted)          $ 0.61                              $ 0.93
    Weighted average
     number of Class A
     shares outstanding
     (basic)                  37,741,916                          37,741,916
    Weighted average
     number of Class A
     shares outstanding
     (diluted)                37,860,092                          37,860,092
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Comprehensive Loss - Reconciliation

                                                                     FOR THE
                                                                     QUARTER
                                                                       ENDED
                                                                       MARCH
                                                                    31, 2010
                                                                 ------------
    (in thousands of                                        IFRS
     dollars)                               Canadian      adjust-
     (unaudited)                    Note        GAAP       ments        IFRS
    -------------------------------------------------------------------------
    Net earnings for the period
     including non-controlling
     interests                                 1,628         628       2,256
    -------------------------------------------------------------------------
    Other comprehensive loss
      TRANSLATION ADJUSTMENTS
        Unrealized foreign
         exchange loss on
         translation of
         financial statements
         of self-sustaining
         foreign operations                   (9,300)          9      (9,291)
        Reclassification to net
         earnings of a realized
         foreign exchange loss
         related to the
         reduction of net
         investment in
         self-sustaining foreign
         operations                   (g)        422        (422)          -
        Share of cumulative
         translation adjustments
         of the Fund                            (478)          -        (478)
        Taxes                                      6           -           6
      CASH FLOW HEDGES
        Change in fair value of
         financial instruments                (5,595)          -      (5,595)
        Hedging items realized
         and recognized in net
         earnings                             (1,219)          -      (1,219)
        Hedging items realized
         and recognized in
         balance sheet                         1,146           -       1,146
        Taxes                                    777           -         777
    -------------------------------------------------------------------------
                                             (14,241)       (413)    (14,654)
    -------------------------------------------------------------------------
    Comprehensive loss for the
     period including
     non-controlling interests               (12,613)        215     (12,398)
    -------------------------------------------------------------------------
    Less: Loss for the period
     attributable to
     non-controlling interests                  (280)          -        (280)
    -------------------------------------------------------------------------
    Comprehensive loss for the
     period attributable to
     shareholders                            (12,893)        215     (12,678)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Comprehensive Income - Reconciliation

                                                                FOR THE YEAR
                                                                       ENDED
                                                                 DECEMBER 31,
                                                                        2010
                                                                 ------------

                                                Adjustments
    (in thousands of                     ------------------------
     dollars)                   Canadian
     (unaudited)          Note      GAAP         PPA        IFRS        IFRS
    -------------------------------------------------------------------------
    Net earnings for
     the year including
     non-controlling
     interests                    23,301         388      11,584      35,273
    -------------------------------------------------------------------------

    Other comprehensive
     income (loss)
      TRANSLATION
       ADJUSTMENTS
        Unrealized
        foreign exchange
        loss on
        translation of
        financial
        statements of
        self-sustaining
        foreign
        operations               (15,537)          -          14     (15,523)
       Reclassification
        to net earnings
        of a realized
        foreign exchange
        loss related to
        the reduction of
        net investment in
        self-sustaining
        foreign operations  (g)    3,604           -      (3,604)          -
       Taxes                        (179)          -           -        (179)
     CASH FLOW HEDGES
       Change in fair
        value of financial
        instruments              (11,028)          -           -     (11,028)
       Hedging items
        realized and
        recognized in net
        earnings                  (5,554)          -           -      (5,554)
       Hedging items
        realized and
        recognized in
        balance sheet              5,652           -           -       5,652
       Taxes                       3,829           -           -       3,829
      LOSS ON AVAILABLE-
       FOR-SALE FINANCIAL
       ASSET
        Unrealized loss on
         available-for-sale
         financial asset            (727)          -           -        (727)
    -------------------------------------------------------------------------
                                 (19,940)          -      (3,590)    (23,530)
    -------------------------------------------------------------------------
    Comprehensive income
     for the year including
     non-controlling
     interests                     3,361         388       7,994      11,743
    -------------------------------------------------------------------------
    Less: Loss for the year
     attributable to
     non-controlling
     interests                      (201)          -           -        (201)
    -------------------------------------------------------------------------
    Comprehensive income for
     the year attributable
     to shareholders               3,160         388       7,994      11,542
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Equity - Reconciliation

                                                      Adjustments
                                         ------------------------------------
    (in thousands of dollars)            Contributed    Retained
     (unaudited)                    Note     surplus    earnings     Results
    -------------------------------------------------------------------------
    Total equity according
     to Canadian GAAP
    -------------------------------------------------------------------------
    IFRS ADJUSTMENTS:
    Stock-based compensation
     over the vesting period          (f)         (5)          7           -
    Amortization  of property,
     plant and equipment and
     intangible assets                (d)          -        (579)          -
    Investment in the Fund            (e)          -      (7,151)          -
    Foreign exchange impact:                                               -
      Reversal of cumulative
       translation differences
       for all foreign
       operations as at the
       date of transition             (c)          -     (44,515)          -
    Business combinations
     - additional consideration       (a)          -      (2,092)          -
    Employee benefits -
     actuarial loss                   (b)          -         (32)          -
    -------------------------------------------------------------------------
                                                  (5)    (54,362)          -
    -------------------------------------------------------------------------
    Total equity according to IFRS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                                       AS AT
                                                                     JANUARY
                                                                     1, 2010
                                                                 ------------
                                                     Adjustments
                                                     ------------
                                                       Comprehen-
    (in thousands of dollars)                               sive       Total
     (unaudited)                    Note                  income      equity
    -------------------------------------------------------------------------
    Total equity according
     to Canadian GAAP                                                347,061
    -------------------------------------------------------------------------
    IFRS ADJUSTMENTS:
    Stock-based compensation
     over the vesting period          (f)                      -           2
    Amortization  of property,
     plant and equipment and
     intangible assets                (d)                      -        (579)
    Investment in the Fund            (e)                      -      (7,151)
    Foreign exchange impact:                                   -           -
      Reversal of cumulative
       translation differences
       for all foreign
       operations as at the
       date of transition             (c)                 44,515           -
    Business combinations
     - additional consideration       (a)                      -      (2,092)
    Employee benefits -
     actuarial loss                   (b)                      -         (32)
    -------------------------------------------------------------------------
                                                          44,515      (9,852)
    -------------------------------------------------------------------------
    Total equity according to IFRS                                   337,209
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Equity - Reconciliation

                                                      Adjustments
                                         ------------------------------------
    (in thousands of dollars)            Contributed    Retained
     (unaudited)                    Note     surplus    earnings     Results
    -------------------------------------------------------------------------
    Total equity according to
     Canadian GAAP
    -------------------------------------------------------------------------
    IFRS ADJUSTMENTS:
    Stock-based
     compensation over the vesting
     period                           (f)       (128)          7         156
    Amortization  of property,
     plant and equipment and
     intangible assets                (d)          -        (579)         24
    Investment in the Fund            (e)          -      (7,151)         26
    Foreign exchange impact:                 -
      Reversal of cumulative
       translation differences
       for all foreign operations
       as at the date of transition   (c)          -     (44,515)          -
      Reversal of reclassifications
       of translation adjustments to
       net earnings                   (g)          -           -         422
    Business combinations -
     additional consideration         (a)          -      (2,092)          -
    Employee benefits - actuarial
     loss                             (b)          -         (32)          -
    Other                                         (1)          -           -
    -------------------------------------------------------------------------
                                                (129)    (54,362)        628
    -------------------------------------------------------------------------
    Total equity according to IFRS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                                       AS AT
                                                                       MARCH
                                                                    31, 2010
                                                                 ------------
                                                     Adjustments
                                                     ------------
                                                       Comprehen-
                                                            sive
    (in thousands of dollars)                             income       Total
     (unaudited)                                           (loss)     equity
    -------------------------------------------------------------------------
    Total equity according to Canadian GAAP                          334,758
    -------------------------------------------------------------------------
    IFRS ADJUSTMENTS:
    Stock-based
     compensation over the vesting
     period                           (f)                      -          35
    Amortization  of property,
     plant and equipment and
     intangible assets                (d)                      -        (555)
    Investment in the Fund            (e)                      -      (7,125)
    Foreign exchange impact:                                               -
      Reversal of cumulative
       translation differences
       for all foreign operations
       as at the date of transition   (c)                 44,515           -
      Reversal of reclassifications
       of translation adjustments to
       net earnings                   (g)                   (422)          -
    Business combinations -
     additional consideration         (a)                      -      (2,092)
    Employee benefits - actuarial
     loss                             (b)                      -         (32)
    Other                                                      9           8
    -------------------------------------------------------------------------
                                                          44,102      (9,761)
    -------------------------------------------------------------------------
    Total equity according to IFRS                                   324,997
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Equity - Reconciliation

                                                   Adjustments
                                          -----------------------------------
                                               Equity
                                            component
                                                   of
    (in thousands of dollars)             convertible Contributed    Retained
    (unaudited)                      Note  debentures     surplus    earnings
    -------------------------------------------------------------------------
    Total equity according to
     Canadian GAAP
    PPA adjustments
    -------------------------------------------------------------------------

    IFRS ADJUSTMENTS:
    Stock-based compensation over
     the vesting period               (f)          -        (499)          7
    Amortization of property, plant
     and equipment and intangible
     assets                           (d)          -           -        (579)
    Investment in the Fund            (e)          -           -      (7,151)
    Foreign exchange impact:
    Reversal of cumulative
     translation differences for
     all foreign operations as
     at the date of transition        (c)          -           -     (44,515)
    Reversal of reclassifications
     of translation adjustments
     to net earnings                  (g)          -           -           -
    Business combinations -
     additional consideration         (a)          -           -      (2,092)
    Employee benefits - actuarial
     loss                             (b)          -           -         (32)
    Future income taxes on the
     liability component of
     convertible debentures           (h)     (5,049)          -           -
    Other                                          -           -           -
    -------------------------------------------------------------------------
                                              (5,049)       (499)    (54,362)
    -------------------------------------------------------------------------
    Total equity according to IFRS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                                        AS AT
                                                                     DECEMBER
                                                                     31, 2010
                                                                 ------------
                                                Adjustments
                                          -----------------------
                                                       Comprehen
                                                           -sive
    (in thousands of dollars)                             income       Total
    (unaudited)                     Note     Results       (loss)     equity
    -------------------------------------------------------------------------
    Total equity according to
     Canadian GAAP                                                   374,702
    PPA adjustments                                                      388
    -------------------------------------------------------------------------
                                                                     375,090
    IFRS ADJUSTMENTS:
    Stock-based compensation over
     the vesting period               (f)        624           -         132
    Amortization of property, plant
     and equipment and intangible
     assets                           (d)        233           -        (346)
    Investment in the Fund            (e)      7,151           -           -
    Foreign exchange impact:
    Reversal of cumulative
     translation differences for
     all foreign operations as
     at the date of transition        (c)          -      44,515           -
    Reversal of reclassifications
     of translation adjustments
     to net earnings                  (g)      3,604      (3,604)          -
    Business combinations -
     additional consideration         (a)          -           -      (2,092)
    Employee benefits - actuarial
     loss                             (b)          -           -         (32)
    Future income taxes on the
     liability component of
     convertible debentures           (h)          -           -      (5,049)
    Other                                        (28)         14         (14)
    -------------------------------------------------------------------------
                                              11,584      40,925      (7,401)
    -------------------------------------------------------------------------
    Total equity according to IFRS                                   367,689
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

NOTES TO THE RECONCILIATIONS

(a) Business Combinations

Under Canadian GAAP, additional consideration related to business combinations is recognized as an adjustment to the acquisition entry when such consideration is paid. Under IFRS, additional consideration is recognized at fair value at the time of the acquisition. Subsequent changes are recognized through income for the period.

On January 1, 2010, the Corporation recognized an additional consideration payable in the amount of $2,842,000, including related taxes of $750,000, in connection with the acquisition of the Thames River wind power sites in Ontario. An offsetting amount of $2,092,000 was charged to Retained earnings.

In the third quarter of 2010, the Corporation paid a portion of this additional consideration. As a result, a reversal of $2,142,000 was recorded in power sales contracts regarding the additional payable. A balance amount of $700,000 is payable.

(b) Employee Benefits

In accordance with the elective exemption provided for in IFRS 1, the Corporation has elected to recognize all actuarial gains and losses not recognized in its defined benefit pension plans. On January 1, 2010, the Corporation recognized actuarial losses in the amount of $43,000, including related taxes of $11,000. An offsetting amount of $32,000 was charged to Retained earnings.

(c) Cumulative Translation Adjustments Included Under Accumulated Other Comprehensive Income

In accordance with the elective exemption provided for in IFRS 1, the Corporation elected to reset at zero all cumulative translation gains and losses related to its foreign operations. As a result, an amount of $44,515,000 was transferred to Retained earnings as at the date of transition.

(d) Property, Plant and Equipment and Intangible Assets

Impairment Test

Under Canadian GAAP, an impairment loss is recognized only when the net carrying amount of an asset exceeds total undiscounted future cash flows. Under IFRS, an impairment loss is recognized only when the net carrying amount of an asset exceeds total discounted future cash flows. On January 1, 2010, Boralex tested its property, plant and equipment and energy sales contracts for impairment but no impairment charge was recognized.

Amortization Method

The Québec power stations with long-term sales contracts are amortized by component using the straight-line method according to IFRS. Under GAAP, they were amortized using the compound interest method at a rate of 3%. In addition, new components were identified according to IFRS and amortized separately.

These adjustments have the following impacts:

    <<
    As at January 1, 2010:
      Property, plant and equipment                                ($832,000)
      Future income tax liabilities                                ($253,000)
      Retained earnings                                            ($579,000)

    Quarter ended March 31, 2010:
      Property, plant and equipment                                  $31,000
      Future income tax liabilities                                   $7,000
      Retained earnings                                              $24,000

      Amortization expense                                          ($31,000)
      Income tax expense                                              $7,000

    Year ended December 31, 2010:
      Property, plant and equipment                                 $245,000
      Energy sales contracts                                         $27,000
      Future income tax liabilities                                  $39,000
      Retained earnings                                             $233,000

      Amortization expense                                         ($272,000)
      Income tax expense                                             $39,000
    >>

(e) Investment

Impairment Test

Under Canadian GAAP, an impairment loss is recognized only when the net carrying amount of an asset exceeds total undiscounted future cash flows. Under IFRS, an impairment loss is recognized only when the net carrying amount of an asset exceeds total discounted future cash flows. On January 1, 2010, the Fund tested its property, plant and equipment and intangible assets for impairment, based on these CGU. Subsequently, the Fund recognized an impairment loss of $55,072,000 for the property, plant and equipment at the Senneterre power station. As the Corporation's share in the Fund was 23.3%, the share of the impairment loss is equivalent to a $12,832,000 decrease in the investment, including related taxes amounting to $3,388,000.

This impairment charge was made as discounted future cash flows of this power station over the long term did not match the current value of the property plant and equipment. To perform the impairment test, the recoverable amount of the Senneterre power station was determined using the calculated value in use. The value in use was calculated using cash flow projections based on financial forecasts up to the expiry date of the power sales contract, which is 2026. Pre-tax cash flows were discounted using a real pre-tax discount rate of 12.14%.

Amortization Method

The Fund changed its accounting treatment for property, plant and equipment and intangible assets. The Québec power stations with long-term sales contracts are amortized by component using the straight-line method according to IFRS while, under Canadian GAAP, they were amortized using the compound interest method at a rate of 3%. In addition, new components were identified according to IFRS and amortized separately. The impact of these changes, net of the deferred gain, was a $3,115,000 increase in the investment in the Fund, based on the Corporation's 23.3% share in the Fund. The related taxes amounted to $822,000.

These adjustments following the impairment test and the change in the amortization method have the following impacts:

    <<
    As at January 1, 2010:

      Investment                                                 ($9,717,000)
      Future income tax liabilities                              ($2,566,000)
      Retained earnings                                          ($7,151,000)

    Quarter ended March 31, 2010:
      Investment                                                     $36,000
      Future income tax liabilities                                  $10,000
      Retained earnings                                              $26,000

      Share in earnings of the Fund                                 ($36,000)
      Income tax expense                                             $10,000

    Year ended December 31, 2010:
      Investment                                                    $103,000
      Future income tax liabilities                                  $17,000
      Retained earnings                                              $86,000

      Share in earnings of the Fund                                ($103,000)
      Income tax expense                                             $17,000
    >>

(f) Stock-Based Compensation

Under GAAP, the Corporation recognized its stock-based compensation expense on a straight-line basis while IFRS requires the expense to be recognized over the vesting period of each tranche.

These adjustments have the following impacts:

    <<
    As at January 1, 2010:
      Future income tax liabilities                                  ($2,000)
      Contributed surplus                                            ($5,000)
      Retained earnings                                               $7,000

    Quarter ended March 31, 2010:
      Future income tax liabilities                                 ($33,000)
      Contributed surplus                                          ($123,000)
      Retained earnings                                             $156,000

      Compensation expense                                         ($123,000)
      Income tax expense                                            ($33,000)

    Year ended December 31, 2010:
      Future income tax liabilities                                ($130,000)
      Contributed surplus                                          ($494,000)
      Retained earnings                                             $624,000

      Compensation expense                                         ($494,000)
      Income tax expense                                           ($130,000)

    (g) Foreign Exchange Impact
    >>

Under Canadian GAAP, when an entity makes a partial repayment of long-term intercompany advances considered as part of its net investment in a foreign subsidiary, a proportional amount of cumulative translation adjustments is recognized through earnings for the period. Under IFRS, an entity recognizes cumulative translation adjustments through earnings for the period only if there is a disposal of substantially all of its net investment in the foreign subsidiary.

These adjustments have the following impacts:

    <<
    Quarter ended March 31, 2010:
      Retained earnings                                             $422,000
      Accumulated other comprehensive income                       ($422,000)

      Foreign exchange gain                                        ($422,000)

    Year ended December 31, 2010:
      Retained earnings                                           $3,604,000
      Accumulated other comprehensive income                     ($3,604,000)

      Foreign exchange gain                                      ($3,604,000)
    >>

(h) Tax on on Convertible Debentures and imputed interest

Under Canadian GAAP, temporary differences between the liability component of convertible debentures and the underlying tax basis are not recognized as future income taxes. Under IFRS, future income taxes are recognized for such temporary differences. Accordingly, future income taxes were recognized in respect of the equity component of convertible debentures.

These adjustments have the following impacts:

    <<
    Year ended December 31, 2010:
      Future income tax liabilities                               $5,049,000
      Equity component of convertible debentures                 ($5,049,000)
    >>

(i) Investment in the Fund

The Fund's earnings have been consolidated as of September 15, 2010 with a share of non-controlling interests up to October 30, 2010. The acquisition of the Fund was carried out in two steps: (1) deemed disposal of the Corporation's interest in the Fund and calculation of the gain on the disposal, and (2) acquisition of all the units of the Fund at fair value and finalizing the allocation of the purchase price. The transactions under step 1 were recalculated under IFRS. The results of step 2 only impacted the PPA. To calculate the income taxes relating to the PPA, the Corporation used a tax rate specific to the tax structure of the Fund at the time of the acquisition without considering the future distributions anticipated by management, in accordance with IFRS. On November 2, 2010, the Corporation carried out a reorganization of the tax structure of the Fund, including its initial operations, and remeasured its future income tax balances using the new income tax rate. Due to this reorganization, the Corporation performed an impairment test on the goodwill and subsequently recognized an impairment loss of $23,158,000 in relation to goodwill. These adjustments have the following impacts:

    <<
    Year ended December 31, 2010:
      Deemed disposal of Boralex's investment in the Fund and calculation of
      ----------------------------------------------------------------------
      the gain on disposal:
      ---------------------
      Investment (reversal of IFRS adjustments)                  ($9,614,000)
      Future income tax liabilities                               $2,577,000
      Retained earnings                                           $7,037,000

      Net gain on deemed disposal of investment in the Fund      ($9,614,000)
      Income tax expense                                          $2,577,000

      Impairment of goodwill and recovery of taxes:
      ---------------------------------------------
      Goodwill                                                  ($23,158,000)
      Future income tax liabilities                             ($23,158,000)

      Income tax expense                                        ($23,158,000)
      Impairment of goodwill                                     $23,158,000
    >>

SOURCE BORALEX INC.

For further information: Ms. Patricia Lemaire, Director, Publics Affairs and Communications, Boralex Inc., 514-985-1353, patricia.lemaire@boralex.com

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BORALEX INC.

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