Boralex Improves Profitability Again in Second Quarter 2007

    MONTREAL, Aug. 8 /CNW Telbec/ - Boralex inc. ("Boralex" or the
"Corporation") generated revenue of $32.4 million for the second quarter of
2007, an increase of 56% over the same period in 2006.

     (in millions of dollars, except per share data)
                                 For the three-month       For the six-month
                                    periods ended             periods ended
                                 June 30,    June 30,    June 30,    June 30,
                                    2007        2006        2007        2006
    Revenue from energy sales       32.4        20.8        83.2        57.9
    EBITDA                           6.2         4.9        31.4        22.5
    Net earnings                     4.8         1.4        14.6         8.9
      per share                    $0.15       $0.05       $0.47       $0.30
    Cash flows from operations       6.7         1.9        26.8        13.3
      per share                    $0.21       $0.06       $0.86       $0.44

    At $6.2 million, earnings before interest, taxes, depreciation and
amortization ("EBITDA") were up 27% over the same quarter in 2006. The
increase in revenue from energy sales and EBITDA is partly due to a 28%
increase in overall power generation, additional revenue of $4.6 million from
the sale of RECs and an increase of about 3% in the average price per MWh.
    Including certain specific items (income tax adjustments and favourable
change in market value of certain interest rate swaps), the Corporation
recorded net earnings of $4.8 million or $0.15 per share for the second
quarter of 2007, compared to $1.4 million or $0.05 per share for the same
quarter in 2006. The specific items increased net earnings by $0.18 per share
in 2007 and $0.09 per share in 2006. However, these specific items did not
affect cash flows from operations which increased 250%, reaching $6.7 million
or $0.21 per share in the second quarter of 2007, a record for this
three-month period.
    In the second quarter, Boralex also completed a $110 million public
offering and refinanced its master agreements in France. "The additional
capital and the refinancing significantly strengthens Boralex's potential for
growth and allows us to plan expansion projects that could double our
installed capacity over the next five years," said Patrick Lemaire, President
and Chief Executive Officer. Boralex has already announced that it has
acquired rights to 90 MW of wind power capacity in Ontario. The start-up in
July of a 7th wind farm in France is part of our ongoing growth.
    In segment results, the wood-residue segment recorded revenue of
$22.8 million in the second quarter of 2007, more than double the amount for
the same period in 2006. Growth stems from the 47% increase in power
generation by the five operating power stations, the recording of $4.6 million
in REC sales and a 10% increase in the power stations' average price. EBITDA
for the wood-residue segment was $2.2 million, compared to an operating loss
of $2.8 million in the same quarter a year earlier.
    For the three months ended June 30, 2007, the wind power segment recorded
revenue from energy sales of $4.9 million compared to $5.2 million for the
same quarter in 2006, consequence of an 11% decrease in production volume due
to weaker wind conditions compared to the previous year.
    Revenue from the hydroelectric segment amounted to $2.9 million for the
second quarter of 2007, compared to $2.7 million for the same period in 2006.
The 7% increase is partly due to higher electricity prices in the northeastern
U.S. market, along with capacity premiums obtained on the market.
    Lastly, the natural gas cogeneration plant recorded revenue of
$1.7 million, down 11% from the same period in 2006, stemming mainly from
lower steam prices, which are partially and contractually indexed to the price
of natural gas.
    Boralex's management is confident that the Corporation will do well in
2007, as it will continue to benefit from the strong REC market, the positive
impacts of investments to expand the wind power segment, and the ongoing
efficiency improvements at the wood-residue thermal power stations.

    About Boralex

    Boralex is a major private electricity producer whose core business is the
development and operation of power stations that run on renewable energy.
Employing close to 300 people, the Corporation owns and operates 22 power
stations with a combined installed capacity of 347 MW in Quebec, the
northeastern United States and France. Boralex is distinguished by its leading
expertise and long experience in four types of power generation - wind power,
hydroelectric power, thermal and cogeneration power from natural gas or wood
residue. The Boralex shares trade on the Toronto stock exchange under the
ticker symbol BLX.
    In addition, Boralex holds a 23% interest in Boralex Power Income Fund
which owns 10 power stations in Quebec and the United States with an installed
capacity of close to 190 MW. Management of the Fund's assets is provided by

    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 Boralex's products,
increases in raw material costs, fluctuations in currency exchange rates,
fluctuations in sales prices and adverse changes in general market and
industry conditions. The financial statements included in this press release
also contain certain financial measurements that are not recognized as
generally accepted accounting principles.
    To assess the operating performance of its assets and reporting segments,
the Corporation uses Earnings before interest, taxes, depreciation and
amortization ("EBITDA") as a performance measurement. EBITDA is not defined
under Generally Accepted Accounting Principles ("GAAP") and 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 note 12 of the interim financial statements included with this
press release, as well as in the latest annual report of the Corporation.
Boralex also uses cash flows from operations, which corresponds to cash flow
from operating activities before changes in non-cash working capital balances
in the consolidated statement of cash flows, as a useful financial indicator
to measure cash flows provided by operations. Cash flows from operations per
share are calculated using the weighted average number of class A shares

    Notice to shareholders

    These quarterly financial statements for the periods ended June 30, 2007
    and 2006 were not reviewed by our auditors PricewaterhouseCoopers LLP.
    The financial statements are the responsability of the Management of
    Boralex Inc. They were reviewed and approved by its Board of Directors,
    as recommended by its Audit Committee.

    Consolidated balance sheets
    (in thousands of dollars)

                                                       As at           As at
                                                     June 30,    December 31,
                                            Note        2007            2006
                                                                 (restated -
                                                                      note 2)

    Current assets
    Cash and cash equivalents                         84,493          13,899
    Accounts receivable                               26,686          26,964
    Inventories                                        5,119           5,342
    Prepaids                                           2,115           2,776
                                                     118,413          48,981

    Investment                                        71,929          75,553
    Property, plant and equipment              2     266,343         280,136
    Electricity sale contracts                        19,142          20,631
    Future income taxes                                1,481           6,249
    Other assets                               6      41,534          44,480
                                                     518,842         476,030


    Current liabilities

    Accounts payable and accrued
     liabilities                                      18,023          20,005
    Income taxes                                           -           1,786
    Current portion of long-term debt          7      30,080          41,835
                                                      48,103          63,626

    Long-term debt                          2, 7     147,770         192,493
    Future income taxes                        2      20,071          20,780
    Deferred revenue                           9      13,025          16,368
    Fair value of derivatives                            442               -
    Non-controlling interests                            780             730
                                                     230,191         293,997

    Shareholders' equity
    Capital stock                                    223,128         112,451
    Retained earnings                                108,857          97,649
    Accumulated other comprehensive
     income                                 2, 8     (43,334)        (28,067)
                                                     288,651         182,033
                                                     518,842         476,030
    See accompanying notes

    Consolidated statements of earnings
    (in thousands of dollars, except per-share amounts and number of shares)

                                        For the                 For the
                                 three-month periods       six-month periods
                                     ended June 30           ended June 30
                        Note        2007        2006        2007        2006
                                         (restated -             (restated -
                                              note 2)                 note 2)
    Revenue from energy
     sales                        32,354      20,819      83,156      57,920
    Renewable energy tax
     credits               9       2,174       2,268       5,290       5,223
    Operating costs               26,844      19,283      58,057      45,941
                                   7,684       3,804      30,389      17,202

    Share in earnings of
     the Fund                      1,181       2,199       4,659       5,784
    Management revenue
     from the Fund                 1,376       1,355       2,781       2,711
    Other revenue                    106         880       1,626       3,321
                                  10,347       8,238      39,455      29,018
    Other expenses
    Management and
     operation of the
     Fund                          1,152       1,095       2,313       2,118
    Administration costs           2,979       2,234       5,768       4,410
                                   4,131       3,329       8,081       6,528
    Earnings before
     amortization                  6,216       4,909      31,374      22,490
    Amortization           2       4,842       4,850      11,327       9,582
    Termination of
     relationships        10      (5,874)          -      (5,874)          -
    Financial expenses             2,920       2,897       6,326       5,678
                                   1,888       7,747      11,779      15,260
    Earnings (loss)
     before income taxes           4,328      (2,838)     19,595       7,230
    Income tax expense
     (recovery)            2        (507)     (4,315)      4,926      (1,852)
                                   4,835       1,477      14,669       9,082
     interests                         3         (66)        (54)       (137)
    Net earnings                   4,838       1,411      14,615       8,945

    Net earnings per
     class A share
     (basic) (in dollars)           0.15        0.05        0.47        0.30
    Net earnings per
     class A share
    (diluted) (in dollars)          0.15        0.05        0.46        0.30

    Weighted average
     number of class A
     shares outstanding
     (basic)                  32,526,623  30,038,064  31,300,863  30,017,924

    Consolidated statements of retained earnings
    (in thousands of dollars)

                                                                For the
                                                           six-month periods
                                                             ended June 30
                                            Note            2007        2006
                                                                 (restated -
                                                                      note 2)
    Balance - beginning of period, as
     previously reported                                  99,208      84,188
    Modification of accounting policy          2          (1,559)     (1,260)
    Balance - beginning of period,
     restated                                             97,649      82,928
    Share issue costs, net of related
     income taxes                                         (3,407)          -
    Net earnings for the period                           14,615       8,945
    Balance - end of period                              108,857      91,873

    Consolidated Statement of Comprehensive Income
    (in thousands of dollars)
                                        For the                 For the
                                 three-month periods       six-month periods
                                     ended June 30           ended June 30
                        Note        2007        2006        2007        2006

    Net earnings for
     the period                    4,838       1,411      14,615       8,945

    Other components
     of comprehensive
         exchange losses
         on translation
         of the financial
         statements of
         operations              (12,882)     (5,801)    (14,410)     (5,106)
        Share of
         of the Fund              (1,658)       (782)     (1,419)       (840)
      Cash flow hedges
        Change in fair
         value of
         derivatives               3,938           -       2,553           -
        Realized hedging
         to net earnings            (413)          -      (1,124)          -
        Termination of
         relationships    10      (5,874)          -      (5,874)          -
        Income tax
         expense                     749           -       1,422           -
                                 (16,140)     (6,583)    (18,852)     (5,946)
    Comprehensive income         (11,302)     (5,172)     (4,237)      2,999
    See accompanying notes

    Consolidated statements of cash flows
    (in thousands of dollars)

                                        For the                 For the
                                 three-month periods       six-month periods
                                     ended June 30           ended June 30
                        Note        2007        2006        2007        2006
                                         (restated -             (restated -
                                              note 2)                 note 2)
    Operating activities
    Net earnings                   4,838       1,411      14,615       8,945
     received from
     the Fund                      3,098       3,098       6,196       6,196
    Adjustment for
     non-cash items
      Share in earnings
       of the Fund                (1,181)     (2,199)     (4,659)     (5,784)
      Amortization                 4,842       4,850      11,327       9,582
      Amortization of
       financing costs               195         127         340         271
      Renewable energy
       tax credits                  (953)     (2,268)     (2,283)     (5,223)
      Future income
       taxes                         939      (3,281)      5,957      (1,138)
      Termination of
       relationships      10      (5,874)          -      (5,874)          -
      Other                          784         207       1,161         419
                                   6,688       1,945      26,780      13,268
    Net change in
     non-cash working
     capital balances              3,406       4,150      (3,789)     (3,568)
                                  10,094       6,095      22,991       9,700
    Investing activities
    Purchase of minority
     interests                         -        (997)          -        (997)
    Purchase of property,
     plant and equipment         (11,693)     (7,856)    (12,192)    (16,006)
    Change in restricted
     funds held for the
     debt service                  6,236      (1,055)      6,215      (5,980)
    Other                         (2,096)       (711)     (3,217)     (1,227)
                                  (7,553)    (10,619)     (9,194)    (24,210)
    Bank loans and
     advances                          -           -           -     (42,012)
    Increase in
     long-term debt              148,908       3,665     151,437      63,561
    Payments of
     long-term debt             (193,219)     (4,726)   (195,559)     (6,793)
    Financing costs               (1,861)       (564)     (1,866)     (1,281)
    Net proceeds on
     share issuance              105,180         190     105,307         274
    Fees related to
     the monetization
     program                        (240)          -        (494)          -
                                  58,768      (1,435)     58,825      13,749
     adjustments on
     cash and cash
     equivalents                  (1,932)        (72)     (2,028)        341
    Net change in cash
     and cash
     equivalents                  59,377      (6,031)     70,594        (420)
    Cash and cash
     equivalents -
     beginning of period          25,116      16,226      13,899      10,615
    Cash and cash
     equivalents -
     end of period                84,493      10,195      84,493      10,195

    Cash and cash
     paid for:
      Interests                    2,694       3,037       6,003       5,410
      Income taxes                     7         310         642         644
    See accompanying notes

    Notes to interim consolidated financial statements (tabular amounts in
    thousands of dollars, unless otherwise specified)

    Note 1 - Accounting policies

    These unaudited interim consolidated financial statements were prepared
    in accordance with the same accounting policies as the ones used in the
    latest audited consolidated financial statements, except for the new
    policies described in note 2. These unaudited interim consolidated
    financial statements and notes should be read in conjunction with the
    Boralex inc. ("Boralex or the "Corporation") audited consolidated
    financial statements as at December 31, 2006.

    Note 2 - Change in accounting policy and new accounting policies adopted
    in 2007


    In the first quarter of 2007, the Corporation modified the amortization
    method it uses for its natural gas cogeneration power station and two
    wind power sites. These sites, which were the Corporation's first
    investments in these areas in France, were amortized based on the
    duration of their power sales contracts. Following a technical analysis
    of these facilities, it was determined that an amortization method based
    on the useful life of the various components would better reflect the
    consumption of future benefits related to these assets. The fixed assets
    of these units were therefore separated into their major components and
    amortized on a straight-line basis according to their expected useful
    lives, which range from 5 to 20 years. This change in accounting policy
    was applied retroactively, with restatement of prior years.

    The impact of these changes on previously reported financial statements
    is as follows:

                                              At December 31, 2006
                                   (as previously
                                         reported)  Amortization   (restated)
    Balance sheet
    Property, plant and equipment         282,489         (2,353)    280,136
    Future income taxes liabilities        21,564           (784)     20,780
    Retained earnings                      99,208         (1,559)     97,649
    Cumulative translation
     adjustments                          (28,057)           (10)    (28,067)

                              For the three-month period ended June 30, 2006
                                   (as previously
                                         reported)  Amortization   (restated)
    Statement of earnings
    Amortization                            4,741            109       4,850
    Income tax recovery                    (4,278)           (37)     (4,315)
    Net earnings                            1,483            (72)      1,411
    Net earnings per class A share
     (basic and diluted) (in dollars)        0.05              -        0.05

                                For the six-month period ended June 30, 2006
                                   (as previously
                                         reported)  Amortization   (restated)
    Statement of earnings
    Amortization                            9,361            221       9,582
    Income tax recovery                    (1,778)           (74)     (1,852)
    Net earnings                            9,092           (147)      8,945
    Net earnings per class A share
     (basic and diluted)(in dollars)         0.30              -        0.30

    The restatements had no impact on cash flows related to operating,
    investing and financing activities.

    Comprehensive income, Equity, Financial instruments and Hedges

    On January 1, 2007, Boralex adopted the new recommendations of Section
    1530 "Comprehensive Income", of Section 3251 "Equity", of Section 3855
    "Financial Instruments - Recognition and Measurement", and Section 3865
    "Hedges", from the handbook of the Canadian Institute of Chartered
    Accountants ("CICA"). The retroactive application of the new standards
    does not require restatement of prior periods.

    Section 1530 "Comprehensive Income" describes standards for disclosing
    and presenting comprehensive income and its components. Comprehensive
    income is the change in a company's net assets which results from
    transactions and events from sources not related to a company's
    shareholders. These transactions and events include changes in the
    currency translation adjustment relating to self-sustaining foreign
    operations and unrealized gains and losses resulting from changes in fair
    value of certain financial instruments.

    Section 3251 "Equity" describes the standards for presenting equity and
    changes in equity. Due to the adoption of Section 3251 and Section 1530
    described above, Boralex's financial statements now include information
    on comprehensive income and its components. On January 1st, 2007, an
    amount of $28,067,000, previously recorded as Cumulative translation
    adjustments, was reclassified in Accumulated oher comprehensive income.

    Section 3855 "Financial Instruments - Recognition and Measurement"
    establishes standards for recognizing and measuring financial assets,
    financial liabilities and derivatives. This standard prescribes when to
    recognize a financial instrument in the balance sheet and at what amount
    as well as the basis of presentation for gains and losses on financial
    instruments in the consolidated financial statements.

    Boralex has made the following classifications:

      - Cash and cash equivalents and CO2 quotas are classified as "Assets
        held for trading". They are measured at fair value and the gains or
        losses resulting from the remeasurement at the end of the period are
        recognized in net income.

      - Accounts receivable are classified as "Loans and receivables". They
        are recorded at cost, which upon their initial measurement is equal
        to their fair value. Subsequent measurements are recorded at
        amortized cost using the effective interest method.

      - Restricted funds and other funds held in trust and investments are
        classified as "Assets available for sale" and are measured at fair
        value. Gains and losses resulting from periodic remeasurement are
        recognized in comprehensive income.

      - Accounts payable and accrued liabilities and long-term debt are
        classified as "Other financial liabilities". They are initially
        recorded at fair value. Subsequent measurements are recorded at
        amortized cost using the effective interest method.

    Section 3855 also provides guidelines for the recognition of fees and
    costs incurred on the issuance of debt instruments. Transaction costs are
    now deducted from financial liabilities and are amortized using the
    effective interest method over the expected life of the liability in
    question. Following the application of Section 3855, non-amortized
    financing expenses of $3,011,000 as at January 1, 2007, previously
    recognized under Other long-term assets, have been reclassified under
    Long-term debt.

    Boralex chose January 1, 2003 as the transition date for embedded

    Section 3865 "Hedges" specifies the manner in which hedge accounting is
    applied. Boralex decided, in accordance with its risk management
    strategy, to continue to apply hedge accounting for its interest rate
    swaps and its electricity swaps as cash flows hedges. These derivatives
    are now recognized at their fair value and the gains and losses resulting
    from their periodic remeasurement are recognized in comprehensive income,
    to the extent that the hedging is deemed effective.

    The adoption of these new standards translated, as at January 1, 2007,
    into a $3,585,000 decrease in accumulated other comprehensive income, a
    $5,272,000 increase in financial instruments reported in Other assets and
    by a $1,687,000 increase in future income tax liabilities. The adoption
    of these new standards had no impact on the Corporation's cash flows.

    Note 3 - Measurement uncertainty

    Boralex records renewable energy tax credits when it possesses a
    reasonable assurance that they can be used. In order to establish the
    recoverability of these credits, Boralex forecasted its taxable income on
    the carry-forward period of the credits. This forecast is based on
    assumptions that could vary considerably in the future.

    The key assumptions are mainly: the future selling price of electricity
    and its other associated revenues, the price of other energy sources,
    particularly those of oil and natural gas, future costs of wood-residue
    procurement, and finally the remaining useful life of the energy
    producing assets, considering the investments and maintenance planned
    over the period.

    On a three-year horizon, there exists some liquidity in the electricity
    open market, making it possible to project the future price curve. Beyond
    three years, prices can be negociated with specific parties, but often at
    a significant discount considering a lack of liquidity for such a period.
    Therefore, the assumption made is that for years four and after, the
    price will vary according to inflation rates. Assumptions related to the
    other sources of energy are made using a similar method because there
    exists a correlation between their price and that of electricity.

    In regards to wood-residue costs, this raw material is not part to an
    organized open market. Purchases are made based on specific agreements
    negotiated with each supplier. Most of the agreements are renewable on an
    annual basis, therefore the prices are subject to some volatility. In
    that context, the assumption for wood-residue costs is based on next
    year's contracts, adjusted for inflation in the remaining years of the
    forecast period.

    Finally, the remaining useful life of the assets will vary with the
    amount of maintenance work realized each year. When the power stations
    are sufficiently well maintained, their useful life can be very long and
    limited mostly by changes in technology which could make their production
    less competitive. Consequently, the forecasts consider sufficient
    maintenance expenses to ensure that the power stations' life will last,
    at a minimum, as long as the forecast period.

    Note 4 - Share information

    As at June 30, 2007 the capital stock issued and outstanding consisted of
    37,454,625 Class A shares (30,049,586 as at December 31, 2006). During
    the six-month period ending June 30, 2007, 71,705 options were exercised,
    7,333,334 shares were issued under a public offering and 151,745 options
    were issued. Cost related to the public offering amounted to $4,968,000
    were recorded against retained earnings, net of future taxes of

    As at August 7, 2007 the number of share purchase options outstanding was
    1,256,146 of which 671,260 could be exercised.

    Note 5 - Share purchase option plan

    The Corporation applies the fair value method of accounting for stock-
    based compensation awards granted to employees and officers. Accordingly,
    an amount of $402,000 has been recorded as administration cost to account
    for the cost of stock options, for the six-month period ended June 30,
    2007 ($240,000 in 2006).

    The following assumptions were used to estimate the fair value, at the
    date of grant, for the options issued in 2007:

    Risk-free interest rate                                             4.16%
    Expected dividend yield                                                0%
    Expected life of options                                         7 years
    Expected volatility                                                   37%

    Note 6 - Other assets

                                                     June 30,    December 31,
                                            Note        2007            2006

    Renewable energy tax credits       6 b)           18,689          20,231
    Deferred financing costs           2                   -           3,011
    Monetization program expenses      9               4,696           5,673
    Restricted funds and other funds
     held in trust                     6 c)            1,510           8,280
    Net investment in lease
     financings                                        7,222           5,420
    Fair value of derivative
     instruments                              2        7,143               -
    Deferred costs                                       496             355
    CO2 quota                                             75              71
    Other investment                                      74              79
    Project development costs                          1,629           1,360
                                                      41,534          44,480
    a)  Amortization of deferred costs was $21,000 for the six-month period
        ended June 30, 2007 ($65,000 for the year ended December 31, 2006).
        Amortization  of the costs related to the monetization program was
        $1,016,000 for the six-month period ended June 30, 2007 ($153,000 for
        the year ended December 31, 2006).

    b)  The renewable energy credits represent tax credits earned by the
        Corporation before it set up the monetization program as well as tax
        credits attributable to power stations acquired subsequently. Tax
        credits earned will be used against future income taxes. Financial
        projection indicate that the amount recorded may be realized in the
        next 5 to 10 years.

    c)  Under the financial agreements for the Massif Central and Plouguin
        projects, in 2006 the Corporation established cash reserves for debt
        servicing. Under the refinancing dated on June 25, 2007, some of
        those reserves were released.

    Note 7 - Long-term debt

                                                     June 30,    December 31,
                                    Note    Rate(1)     2007            2006

    Revolving credit bearing
     interest at a variable
     rate                        a)            -           -          49,493
    Bridge loan with a balance
     of (euro)6,800,000 as
     at June 30, 2007
     ((euro)15,873,000 in 2006),
     bearing interest at a
     variable rate and maturing
     January 4, 2008             b)         4.24%      9,776          24,408
    Secured senior credits with a
     balance of (euro) 95,546,000
     as at June 30, 2007
     ((euro)83,938,000 in 2006),
     repayable in semi-annual
     instalments and maturing
     between 2017 and 2020       c)         4.95%    137,357         129,071
    Secured junior credit with a
     balance of (euro)7,050,000
     as at June 30, 2007
     ((euro)3,734,000 in 2006),
     repayable in semi-annual    c)         6.20%     10,135           5,742
     instalments and maturing
     in 2015
    Project leases with a balance
     of (euro)11,158,000 as at
     June 30, 2007
     ((euro)12,096,000 in 2006),
     repayable in quarterly
     instalments and maturing
     between 2012 and 2015       d)         5.66%     16,041          18,600
    Term loan bearing interest
     at a variable rate with a
     balance of US$3,896,000
     as at June 30, 2007
     (US$4,296,000 in 2006),
     repayable in quarterly
     instalments and maturing
     July 31, 2007                          8.25%      4,143           5,006
    Others                                             5,366           2,008
                                                     182,818         234,328
    Current portion of long-term
     debt                                             30,080          41,835
    Deferred financing costs           2               4,968               -
                                                     147,770         192,493
    (1) Average weighted annual rates, adjusted to reflect the impact of
        interest rate swaps.

    a)  This financing, for a total authorized of $85,000,000, is guaranteed
        by Boralex's investment in the Fund, based on the following formula:
        amounts advanced may not exceed 60% of the market value of the
        investment. If the market value of the investment were to drop below
        this limit, creditors would be entitled to demand repayment of a
        portion of the amounts advanced in order to reestablish the coverage
        ratio. As at June 30, 2007, no amount was used but letters of credit
        for a total of $10,716,000 (including the letter of credit discussed
        in b) were issued against this operating credit. Lastly, the market
        value of a unit was $10,08 and the repayment threshold was $1,30
        (including all letters of credit in circulation issued on the
        operating credit).

    b)  A letter of credit in the amount of $9,776,000 as at June 30, 2007
        ($25,269,000 as at December 31, 2006) drawn on the revolving credit
        was issued to garantee the secured credits. As discussed below, the
        Corporation closed a major refinancing of some secured credits. This
        transaction allowed to reimburse part of the bridge loan and
        consequently its corresponding letter of credit.

    c)  During the second quarter of 2007, the Corporation concluded the
        refinancing of secured senior and junior credits related to the wind
        power sites of Ally, Cham Longe, Plouguin and Saint Agrève. This
        refinancing was achieved through the implementation of a new master
        credit agreement comprised of a senior credit facility of a maximum
        of 250 million euros and a junior credit facility of a maximum of
        15 million euros. The previous secured credits, some of which were
        included under the previous master credit agreement, were reimbursed
        by amounts drawned on the new agreement. The set up of this new
        master agreement also allowed to extend the term until December 31,

        Because of the increased diversification of the portfolio of assets,
        the Corporation was able to increase its loan capacity, as well as
        reduce the amount of cash reserves required to support debt service.
        As a result, the Corporation negotiated two new credit facilities
        that will serve to cover temporarily eventual cash requirements to
        service the debts. Those credit facilities are authorized at
        $7,234,000 ((euro)5,032,000) and $808,000 ((euro)562,000)

        Senior and junior credits are secured with the assets of the
        associated projects, with the junior credit being subordinate to the
        senior credit.

    d)  Project leases consist of capital leases on assets located in France.
        The net book value of property, plant and equipment covered by these
        leases is $21,294,000 ($26,245,000 as at December 31, 2006).

    Interest rate swaps

    Except for the Nibas wind farm financing, all senior and junior secured
    credit together with a portion of certain leases bear interest at a
    variable rate. To offset the interest rate risk, the Corporation has
    entered into interest rate swaps to obtain fixed interest charges on
    portions varying from 56% to 100% of the corresponding credit. These
    agreements involve the periodic exchange of interest payments without any
    exchange of the principal on which they are calculated. Under these
    agreements, the Corporation receives a variable amount based on the
    EURIBOR rate and pays fixed amounts based on rates of between 3.30% and
    5,16%. Since some credits are drawn progressively and the loans are
    periodically repaid when sites are commissioned, the swaps have been
    structured to mirror the terms of the underlying credit arrangements and
    to always cover a significant portion of these arrangements. By using
    these swap instruments, the Corporation has reduced the proportion of its
    variable-rate debt from 86% to 16%.


    In addition to capital assets associated with capital leases and the
    investment in the Fund securing the revolving bank credit, the property,
    plant and equipment of one U.S. power station, one Quebec power station
    and French power stations, with a net book value totalling $170,813,000
    as at June 30, 2007 ($172,396,000 as at December 31, 2006), together with
    the related working capital, have been pledged as collateral on the debts
    associated to those projects.

    The estimated aggregate amount of repayments on long-term debt in each of
    the next five years is as follows:

               2008     2009     2010     2011     2012
             30,080   14,265   15,017   13,651   11,852

    Note 8 - Accumulated other comprehensive income

                                                                     June 30,

    Cumulative translation adjustments
     reclassified in accordance with                                 (28,067)
     the new accounting policies (note 2)

    Cumulative impact of accounting
     changes relating to financial
     instruments as at January 1, 2007 (note 2)                        3,585

    Other comprehensive income for the period                        (18,852)
    Balance end of period                                            (43,334)

    Note 9 - Renewable energy tax credit monetization program

    The Corporation closed a transaction that allows it to immediately
    receive a cash portion of the value of the renewable energy tax credits
    to be earned by some of its wood-residue thermal power stations in the
    United States. The investor must be the legal owner of the power stations
    in order to take advantage of these credits. The transaction thus also
    included the transfer of power station ownership. However, the
    Corporation continues to consolidate these facilities under AcG-15, which
    defines the rules for consolidating variable interest entities. Although
    the Corporation no longer holds the majority voting rights for these
    operations, it is still the primary beneficiary since it will receive all
    of the cash flow generated by these facilities and is responsible for any
    operating losses. In addition, the Corporation continues to operate the
    facilities under a service agreement that allows it to define strategic
    and operating parameters.

    On December 1, 2006, the Corporation received $16,719,000
    (US $14,500,000), or about 50% of the value of the tax credits that will
    be generated between the transaction date and December 31, 2009, the date
    when the program ends. The balance of the credit amount will be paid by
    the investor as the credits are earned. If the Corporaion cannot produce
    enough to absorb the value of the amount initially paid by the investor,
    the contract requires the Corporation to repay that portion. The
    Corporation believes that future production will be sufficient to cover
    all its commitments.

    The agreements state that by the end of the program, the Corporation's
    share of the profits generated by the power stations will automatically
    be adjusted to a minimum of 80% and that it will have call rights to buy
    the assets at their market value at that date. Based on current
    estimates, the buy back option would cost about US$5,000,000.

    Due to the implementation of this program, the nature of the amounts
    recorded after December 1, 2006 has been modified. Although the payments
    are equivalent to a proportion of the value of the renewable energy tax
    credit, the amounts recorded cannot be posted against tax expenses as
    they become a taxable item. The Corporation decided that it would not
    modify the presentation of the items and that it would continue to
    indicate them separately given their relative materiality.

    Note 10 - Financal instruments

    The Corporation is carrying long-term debts bearing interest at variable
    rates. As at June 30, 2007, approximately 86% of the long-term debt
    issued bears interest at variable rates as do the Corporation's bank
    loans. A sharp increase in interest rates in the future, could affect the
    liquid assets available for the Corporation's development projects. As
    discussed in note 7, the Corporation has used interest rate swaps to
    reduce its risk by reducing its exposure to interest rate fluctuations to
    16% of total debt. As at June 30, 2007, the notional amount of those
    swaps was $130,420,000 ((euro)90,720,000) and their favourable fair value
    stood at $5,942,000 ((euro)4,134,000).

    Because of the refinancing closed on June 25, 2007, the Corporation
    failed to maintain the hedging relationships that had been established
    between its interest rate swaps and the previous debts. As such, it had
    to terminate the hedging relationship it had established using the
    critical term match criteria, which provide an exemption from the
    performance of periodic efficiency testing. Based on a mathematical
    demonstration of that efficiency, these swaps will be redesignated as
    hedges of interest cash flows of the refinanced debts. The fair value of
    those instruments was $5,874,000 ((euro)4,085,000).

    As at June 30, 2007, the Corporation had entered into seven electricity
    swaps for the deliveries of 275,640 MWh over periods of 3 to 21 months.
    All these financial electricity swaps as at June 30, 2007 were designed
    as hedges of future variable cash flows related to the delivery of
    electricity and their favorable fair value amounted to $759,000
    ($US714,000). These contracts qualify for hedge accounting.

    Note 11 - Seasonality

    The Corporation's power generation follows a seasonal cycle. Generally,
    consumption increases in the winter and summer, which correspond to
    Boralex's first and third quarters. This means that, for those two
    periods, facilities that sell on the open market usually have higher
    average electricity sales prices. Given this, and because the wood-
    residue power stations can control their level of production, they
    operate at a higher level during such periods. Their regular maintenance
    is then done in the spring or fall, which affects their operating

    Hydroelectric generation depends on water flows, which in Québec and the
    northeastern US are at their maximum in the spring and are generally good
    in the fall, which correspond to Boralex's second and fourth quarters.
    Flows tend to decrease in the winter and summer. Note that Boralex's
    hydroelectric facilities do not have reservoirs with which they could
    regulate the water flows.

    In other respects, certain power stations have long-term fixed-price
    power sales contracts. This is the case for the two hydroelectric
    stations in Québec, one hydroelectric in the US and all of the
    Corporation's facilities in France.

    The natural gas power station is also subject to a seasonal cycle because
    its electricity sales contract favours the production during winter,
    where the demand in France is higher. Thus, during the 3 last years, the
    Corporation produced electricity only during the months of November to

    The investment of Boralex in the Boralex Power Income Fund (the "Fund")
    is also subject to a seasonal cycle. In fact, about 50% of the Fund's
    production is hydroelectric, and therefore subject to comparable
    fluctuations as those affecting the power stations owned directly by
    Boralex in that segment.

    In conclusion, Boralex is affected by seasonal cycles, however, its
    diversification in production sources reduces the seasonal variations in
    its results.

    Note 12 - Segmented information

    The Corporation's power stations are grouped under four distinct
    segments: wind power, hydroelectric power, wood-residue thermal power and
    natural gas thermal power, and are engaged mainly in the production of
    energy. The classification of these segments is based on the different
    cost structures relating to each type of power station. The accounting
    policies that apply to the individual segments are the same policies used
    for the consolidated financial statements as described in note 1.

    The Corporation 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
    under Canadian generally accepted accounting principles; however,
    management uses this performance measure for assessing the operating
    performance of its reportable segments. Earnings for each segment are
    presented on the same basis as those of the Corporation.

    The following table
     reconciles EBITDA to
     net earnings:                      For the                 For the
                                 three-month periods       six-month periods
                                     ended June 30           ended June 30
                                     2007       2006        2007        2006
                                         (restated -             (restated -
                                              note 2)                 note 2)

    Net earnings                    4,838      1,411      14,615       8,945
    Non-controlling interests          (3)        66          54         137
    Income tax expense (recovery)    (507)    (4,315)      4,926      (1,852)
    Financial expenses              2,920      2,897       6,326       5,678
    Termination of hedging
     relationships                 (5,874)         -      (5,874)          -
    Amortization                    4,842      4,850      11,327       9,582
    Consolidated EBITDA             6,216      4,909       31,374     22,490

    Information by segment

                                        For the                 For the
                                 three-month periods       six-month periods
                                     ended June 30           ended June 30
                                    2007        2006        2007        2006
    Wind power stations           38,729      43,430     100,705      89,960
    Hydroelectric power stations  32,589      37,027      66,170      77,790
    Wood-residue thermal power
     stations                    255,503     174,378     596,883     458,795
    Natural gas thermal power
     station                          28          30      22,202      22,679
                                 326,849     254,865     785,960     649,224
    Wind power stations            4,934       5,221      13,202      10,795
    Hydroelectric power stations   2,857       2,693       5,936       6,287
    Wood-residue thermal power
     stations                     22,839      11,001      56,199      33,249
    Natural gas thermal power
     station                       1,724       1,904       7,819       7,589
                                  32,354      20,819      83,156      57,920
    Wind power stations            3,867       4,457      10,937       8,968
    Hydroelectric power stations   2,203       2,129       4,269       4,692
    Wood-residue thermal power
     stations                      2,239      (2,767)     13,766       1,480
    Natural gas thermal power
     station                        (329)        344       1,776       3,847
    Corporate and eliminations    (1,764)        746         626       3,503
                                   6,216       4,909      31,374      22,490
    Wind power stations           10,331       1,613      10,528       7,595
    Hydroelectric power
     stations                         11         129         129         147
    Wood-residue thermal power
     stations                      1,281       5,983       1,326       8,059
    Natural gas thermal power
     station                           -          94           2          94
    Corporate and eliminations        70          37         207         111
                                  11,693       7,856      12,192      16,006

                                                     June 30,    December 31,
                                                        2007            2006
    ASSETS                                                       (restated -
                                                                      note 2)

    Wind power stations                              197,086         194,634
    Hydroelectric power stations                      34,966          34,284
    Wood-residue thermal power stations              132,818         147,099
    Natural gas thermal power station                 17,800          21,944
    Corporate and eliminations                       136,172          78,069
                                                     518,842         476,030

For further information:

For further information: Ms. Patricia Lemaire, Director, communications,
Boralex Inc., (514) 985-1353,

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