Boralex Power Income Fund: Strong Performance in Second Quarter 2008



    MONTREAL, August 4 /CNW Telbec/ - In the second quarter of 2008, Boralex
Power Income Fund (the "Fund") recorded a significant increase in revenue from
energy sales, in earnings before interest, taxes, depreciation and
amortization (EBITDA) and, as a result, in cash flows related to operating
activities.
    For the second quarter ended June 30, 2008, consolidated revenue rose
7.1% to $25.6 million, compared to $23.9 million for the same quarter in 2007.
EBITDA grew a significant 19.6% over the same period a year earlier, to
$13.4 million. This good performance stems primarily from increases in power
generation by the hydroelectric and natural gas facilities, higher electricity
and steam prices and a judgement in favour of the Fund which led to the
reimbursement of municipal tax amounts. The Fund recorded net earnings of
$5.3 million ($0.09 per trust unit) for the second quarter ended June 30,
2008, compared to a net loss of $44.3 million for the same period in 2007.
Note that in the second quarter of 2007, the Fund recognized a deferred income
tax expense of $47.1 million related to changes in the Canada Income Tax Act
regarding publicly traded income trusts. Excluding the impact of the deferred
income taxes on the second quarters of 2007 and 2008, the Fund's net earnings
grew 92.8%, from $2.8 million to $5.4 million.
    More specifically, for the quarter ended June 30, 2008, the hydroelectric
segment recorded revenue of $11.4 million and EBITDA of $9.8 million, versus
$11.6 million and $9.7 million respectively for the same quarter in 2007.
Hydrology was slightly better in 2008 than 2007, resulting in a 2.2% increase
in overall production volumes for the second quarter of 2008.
    Revenue from the wood residue power stations amounted to $7.5 million for
the second quarter of 2008, up 2.7% over 2007, despite eight days of downtime
at Dolbeau and disturbances in fuel supply. Even so, EBITDA in this segment
rose to $2.2 million, compared to $1.8 million for the same period in 2007.
This positive difference is mainly due to the reimbursement of municipal taxes
paid to the Town of Dolbeau following a favourable court's decision.
    The natural gas power stations had a good performance in the second
quarter of 2008, reporting revenue of $6.7 million, up 34.0% over the same
period in 2007. Electricity production rose by 10.1% and steam production by
4.9%. The increases in production volume, along with higher prices and a
favourable difference in maintenance costs had a positive impact on EBITDA,
which rose to $3.2 million, compared to $1.8 million in the second quarter of
2007.
    In other matters, the dispute between the Fund and AbitibiBowater is
running its course and the two parties are still in talks to work out a
solution. The Fund is also concerned about the ongoing difficulties in the
Québec forest industry and is paying close attention to the negative impact
this situation is having on the wood residue supply for its Quebec power
stations, especially at Dolbeau, which is currently not generating electricity
since July 4th, 2008. Considering the current hardships of the forest
industry, the Fund is assessing different ways to compensate the impacts of
this situation.
    Lastly, cash flows related to operating activities grew in the second
quarter of 2008 by more than 30% to $17.1 million versus $13.1 million in
2007.

    About Boralex Power Income Fund

    Boralex Power Income Fund is an unincorporated open-ended trust that
indirectly owns ten power generating stations located in the province of
Québec and the United States producing energy from different sources including
wood-residue or natural gas-fired thermal and cogenerating facilities as well
as hydroelectric power stations. In total, these power stations have an
installed capacity of 190 MW. The Fund's units are listed for trading on The
Toronto Stock Exchange under the symbol BPT.UN.

    Certain statements in this release, including statements 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 effect of
general economic conditions, decreased demand for the Fund's products,
increases in raw material costs, hydrology, fluctuations in currency exchange
rates, fluctuations in sales prices and adverse changes in general market and
industry conditions. The summarized financial statements included in this
press release also contain certain financial measurements that are not
recognized as generally accepted accounting principles (GAAP).

    The Fund uses EBITDA, among other measures, as a performance measure with
respect to its operations. This term is not a defined financial measure
according to GAAP and it does not have a standardized meaning prescribed by
GAAP. Therefore, this measure may not be comparable to similar measures
presented by other enterprises. EBITDA is defined in the summarized financial
statements accompanying this press release.

    Notice to unitholders

    These quarterly financial statements for the periods ended June 30, 2008
and 2007 were not reviewed by our auditors Ernst & Young LLP. The financial
statements are the responsibility of the Manager of Boralex Power Income Fund,
and were reviewed and approved by Boralex Power Trust's trustees and the
members of their audit committee.
    The following financial informations were extracted from the interim
consolidated financial statements of Boralex Power Income Fund (the "Fund"). 
The complete interim financial statements were prepared conformingly with the
Canadian generally accepted accounting principles ("GAAP").  They are
available on the Fund's website (www.boralex.com/trust) and filed with SEDAR.

    
    Boralex Power Income Fund
    Consolidated Balance Sheets
    (in thousands of dollars)
    (unaudited)
                                                         As at         As at
                                                       June 30,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------
    Assets

    Current assets
    Cash and cash equivalents                           20,787        10,740
    Accounts receivable                                 10,818        13,333
    Income taxes receivable                                  -         1,949
    Inventories                                          2,496         2,405
    Prepaid expenses                                       794         1,248
    -------------------------------------------------------------------------
                                                        34,895        29,675
    Property, plant and equipment                      362,511       367,474
    Intangible assets                                   80,873        83,690
    Goodwill                                            16,243        16,243
    Other long-term assets                               6,628         8,594
    -------------------------------------------------------------------------
                                                       501,150       505,676
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and unitholders' equity

    Current liabilities
    Short-term revolving credit facility                 1,600         2,300
    Accounts payable and accrued liabilities             7,252         8,909
    Income taxes payable                                   671             -
    Distributions payable to unitholders                 3,446         4,430
    Current portion of obligation under capital lease      137           233
    -------------------------------------------------------------------------
                                                        13,106        15,872
    Future income tax liabilities                       45,981        48,817
    Fair value of derivative financial instruments           5             5
    Long-term debt                                     104,781       102,529
    Long-term lease accruals                             2,112         1,858
    -------------------------------------------------------------------------
                                                       165,985       169,081
    -------------------------------------------------------------------------

    Unitholders' equity
    Capital contribution                               422,174       422,174
    Capital contribution - exchangeable Class B units  112,867       112,867
    Deficit                                           (173,137)     (170,982)
    Accumulated other comprehensive loss               (26,739)      (27,464)
    -------------------------------------------------------------------------
                                                       335,165       336,595
    -------------------------------------------------------------------------
                                                       501,150       505,676
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Boralex Power Income Fund
    Consolidated Statements of Earnings
    (in thousands of dollars, except amounts per unit)
    (unaudited)
                                                           For the six-month
                                    For the quarters         periods ended
                                     ended June 30,              June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Revenues                      25,554      23,898      59,827      57,818
    -------------------------------------------------------------------------
    Expenses
    Operating                     11,080      11,675      22,552      22,955
    Administrative                 1,037         978       2,160       1,787
    -------------------------------------------------------------------------
                                  12,117      12,653      24,712      24,742
    -------------------------------------------------------------------------
    Operating income before
     amortization                 13,437      11,245      35,115      33,076
    Amortization of property,
     plant and equipment           4,669       3,858       9,256       7,813
    Amortization of intangible
     assets                        1,902       1,941       3,971       4,098
    -------------------------------------------------------------------------
    Operating income               6,866       5,446      21,888      21,165
    Financial expenses, net        1,742       1,692       3,576       3,438
    Foreign exchange loss (gain)  (1,059)        864      (1,615)        407
    Change in fair value of
     derivative financial
     instruments                       -           -           -         (31)
    -------------------------------------------------------------------------
    Earnings before income taxes   6,183       2,890      19,927      17,351
    Income taxes (recovery)          927      47,214        (560)     49,010
    -------------------------------------------------------------------------
    Net earnings (loss) for
     the period                    5,256     (44,324)     20,487     (31,659)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted net
     earnings (loss) per trust
     unit (in dollars)              0.09       (0.75)       0.35       (0.54)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number
     of trust units
     outstanding              59,067,992  59,067,992  59,067,992  59,067,992
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Deficit
    (in thousands of dollars)
    (unaudited)

                                                          For the six-month
                                                            periods ended
                                                               June 30,
                                                          2008          2007
    -------------------------------------------------------------------------

    Deficit - beginning of period                     (170,982)      (82,128)
    Net earnings (loss) for the period                  20,487       (31,659)
    Distributions to unitholders                       (22,642)      (26,581)
    -------------------------------------------------------------------------
    Deficit - end of period                           (173,137)     (140,368)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statements of Comprehensive Income
    (in thousands of dollars)
    (unaudited)
                                                           For the six-month
                                    For the quarters         periods ended
                                     ended June 30,              June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Net earnings (loss) for the
     period                        5,256     (44,324)     20,487     (31,659)

    Other comprehensive income
     (loss) :
    Translation adjustments
    Unrealized foreign exchange
     gains (losses) on translation
     of the financial statements
     of self-sustaining foreign
     operations                     (802)     (9,196)      2,525     (10,523)

    Reclassification of accumulated
     foreign exchange losses on
     translation of the financial
     statements of self-sustaining
     foreign operations following a
     reduction in net investment      (1)      1,696          14       1,747

    Future income taxes              (54)       (515)        175        (586)

    Hedging of net investment in
     self-sustaining foreign
     operations
    Change in fair value of
     derivative instruments
     designated as hedges of net
     investment in self-sustaining
     foreign operations               48       1,171        (153)      1,322

    Hedging instruments realized
     and recognized in net
     earnings                     (1,004)       (605)     (1,836)     (1,036)
    -------------------------------------------------------------------------
                                  (1,813)     (7,449)        725      (9,076)
    -------------------------------------------------------------------------
    Comprehensive income (loss)
     for the period                3,443     (51,773)     21,212     (40,735)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Boralex Power Income Fund
    Consolidated Statements of Cash Flows
    (in thousands of dollars)
    (unaudited)
                                                           For the six-month
                                    For the quarters         periods ended
                                     ended June 30,              June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Operating activities
    Net earnings (loss) for the
     period                        5,256     (44,324)     20,487     (31,659)
    Items not affecting cash:
      Amortization of property,
       plant and equipment         4,669       3,858       9,256       7,813
      Amortization of intangible
       assets                      1,902       1,941       3,971       4,098
      Amortization of deferred
       financing costs                82         106         169         216
      Long-term lease accruals        99         109         196         226
      Future income taxes            327      46,672      (2,811)     46,825
      Realized currency transla-
       tion adjustments               (1)      1,696          14       1,747
      Other                          115           -         115         174
    -------------------------------------------------------------------------
                                  12,449      10,058      31,397      29,440
    Net change in non-cash
     working capital balances      4,609       3,009       3,674        (196)
    -------------------------------------------------------------------------
    Cash flows related to
     operating activities         17,058      13,067      35,071      29,244
    -------------------------------------------------------------------------

    Investing activities

    Additions to property,
     plant and equipment          (1,054)     (1,654)     (1,222)     (1,914)
    Acquisition of other
     assets                           (9)        (37)        (71)       (187)
    Other                            (25)         (5)        (25)        (11)
    -------------------------------------------------------------------------
    Cash flows related to
     investing activities         (1,088)     (1,696)     (1,318)     (2,112)
    -------------------------------------------------------------------------

    Financing activities
    Distributions paid to
     unitholders                 (10,337)    (13,291)    (23,627)    (26,581)
    Net change in short-term
     revolving credit facility      (600)     (2,100)       (700)        400
    Repayment of capital lease
     obligation                      (58)        (57)       (116)       (121)
    Proceeds from sale of
     options on foreign
     exchange forward contracts      191         193         337         341
    -------------------------------------------------------------------------
    Cash flows related to
     financing activities        (10,804)    (15,255)    (24,106)    (25,961)
    -------------------------------------------------------------------------
    Translation adjustments on
     cash and cash equivalents       (62)     (2,317)        400      (2,698)
    -------------------------------------------------------------------------
    Net change in cash and cash
     equivalents during the
     period                        5,104      (6,201)     10,047      (1,527)
    Cash and cash equivalents -
      beginning of period         15,683      30,551      10,740      25,877
    -------------------------------------------------------------------------
    Cash and cash equivalents -
     end of the period            20,787      24,350      20,787      24,350
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental information

      Interest paid                1,151       1,491       3,516       3,939
      Income taxes paid              953       2,266       1,072       3,849
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Boralex Power Income Fund
    Segmented Information
    (tabular amounts are in thousands of dollars, unless otherwise specified)
    (unaudited)

    Segmented information

    The Fund's power stations are grouped into three distinct segments:
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 type of
power station. The Fund allocates its revenues by geographical region based on
the point of delivery of the power.
    The Fund analyzes the performance of its operating segments based on
their EBITDA, which is defined as earnings before interest, taxes,
depreciation and amortization. EBITDA is not a measure of performance defined
under Canadian generally accepted accounting principles; however, management
uses this measure to assess the operating performance of its reportable
segments. Results for each segment are presented on the same basis as those of
the Fund. In the consolidated statement of earnings, EBITDA is represented by
Operating income before amortization.

    The following table reconciles EBITDA with net earnings or loss:

    
                                                           For the six-month
                                    For the quarters         periods ended
                                     ended June 30,              June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    Net earnings (loss)            5,256     (44,324)     20,487     (31,659)
    Income taxes (recovery)          927      47,214        (560)     49,010
    Change in fair value of
     derivative financial
     instruments                       -           -           -         (31)
    Foreign exchange loss (gain)  (1,059)        864      (1,615)        407
    Financial expenses, net        1,742       1,692       3,576       3,438
    Amortization of intangible
     assets                        1,902       1,941       3,971       4,098
    Amortization of property,
     plant and equipment           4,669       3,858       9,256       7,813
    -------------------------------------------------------------------------
    EBITDA                        13,437      11,245      35,115      33,076
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Information by operating segment

                                                           For the six-month
                                    For the quarters         periods ended
                                     ended June 30,              June 30,
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------

    PRODUCTION (in MWh)
    Hydroelectric power
     stations                    140,538     137,553     283,583     272,584
    Wood-residue thermal power
     stations                     81,434      86,988     163,198     185,164
    Natural gas power station     45,471      41,318     105,844     100,599
    -------------------------------------------------------------------------
                                 267,443     265,859     552,625     558,347
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    REVENUES
    Hydroelectric power
     stations                     11,378      11,570      24,616      25,497
    Wood-residue thermal power
     stations                      7,492       7,345      19,052      19,226
    Natural gas power station      6,684       4,983      16,159      13,095
    -------------------------------------------------------------------------
                                  25,554      23,898      59,827      57,818
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EBITDA
    Hydroelectric power
     stations                      9,773       9,748      21,208      21,519
    Wood-residue thermal power
     stations                      2,186       1,800       8,433       9,648
    Natural gas power station      3,179       1,793       8,782       6,026
    Corporate and eliminations    (1,701)     (2,096)     (3,308)     (4,117)
    -------------------------------------------------------------------------
                                  13,437      11,245      35,115      33,076
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    ADDITIONS TO PROPERTY, PLANT
     AND EQUIPMENT
    Hydroelectric power stations     256          73         269         123
    Wood-residue thermal power
     stations                        776          57         831          69
    Natural gas power station         22       1,524         122       1,722
    -------------------------------------------------------------------------
                                   1,054       1,654       1,222       1,914
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                         As at         As at
                                                       June 30,  December 31,
                                                          2008          2007
    -------------------------------------------------------------------------

    ASSETS
    Hydroelectric power stations                       268,909       262,881
    Wood-residue thermal power stations                186,195       190,541
    Natural gas power station                           42,832        47,003
    Corporate and eliminations                           3,214         5,251
    -------------------------------------------------------------------------
                                                       501,150       505,676
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

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

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BORALEX POWER INCOME FUND

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