Boralex Power Income Fund: Financial Results for the Second Quarter of 2007



    MONTREAL, Aug. 3 /CNW Telbec/ - Boralex Power Income Fund (the "Fund")
recorded revenue of $23.9 million in the second quarter of 2007, down
$3.3 million compared to the same period in 2006.
    Earnings before interest, taxes, depreciation and amortization ("EBITDA")
amounted to $11.2 million, versus $16.1 million in 2006. The $4.9 million
decrease stems partly from naturally lower hydrology, which led to a 12.7%
decrease in total hydroelectric power generation. Production in the
hydroelectric segment was thus 19.6% below that of the second quarter of 2006
and 11% below its historical average.
    Excluding the impact of the change in Canadian income tax legislation
(see paragraph below), net earnings would have been $2.8 million ($0.05 per
trust unit) for the second quarter of 2007, compared to $7.2 million ($0.12
per trust unit) for the same period in 2006. The Fund thus recorded a net loss
of $44.3 million, including an adjustment of $47.1 million for future income
taxes.
    The amendments to Canada's Income Tax Act related to publicly traded
income trusts announced in October 2006 took effect on June 22, 2007. The
consequence of the changes to Canadian income tax legislation is that public
income trusts will no longer be able to deduct distributions from taxable
income (which transfers the tax burden to unitholders). Starting in 2011,
public income trusts must pay income taxes of 31.5%. Distributions will be
taxed as dividends. As a result, in line with Canadian accounting policies,
the Fund has recorded future income taxes of $47.1 million related to the
legislative amendments that will take effect in 2011. The adjustment has been
recorded as income taxes for the second quarter of 2007.
    Revenue from the hydroelectric segment was $11.6 million, down
$3.0 million from the same period in 2006. The seven hydroelectric power
stations generated 137,553 MWh, compared to 171,006 MWh in the second quarter
of 2006, a 19.6% decrease stemming from lower hydrology. Given the relatively
fixed cost structure in this segment, the decrease in power generation had a
direct impact on EBITDA, which amounted to $9.7 million in the second quarter
of 2007, compared to $13.2 million in 2006.
    The wood-residue segment reported revenue of $7.3 million compared to
$7.5 million for the second quarter of 2006. EBITDA was $1.8 million, compared
to $2.3 million for the same quarter a year earlier, due to non-recurring
items related to municipal taxes and downtime due to scheduled maintenance.
This segment is showing excellent operating and production stability,
reflecting the positive impact of the wood-residue supply strategy and the
sustained improvement in productivity at Senneterre power station since the
major work done in April 2006.
    The natural gas segment recorded revenue of $5.0 million, down
$0.2 million compared to the second quarter of 2006.
    In summary, results for the second quarter of 2007 mainly reflect the
lower productivity of the hydroelectric segment, due to the fact that
hydrology was much lower than it was during the corresponding period in 2006.
    The Fund is continuing to solicit proposals with a view to selling or
merging the Fund. A number of offers have been received to date and the Fund
is currently reviewing them all. It is impossible at this time to establish a
time frame for this process or to predict the final result.

    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, 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.
    The Fund uses EBITDA and the pay-out ratio as performance measures with
respect to its operations. These terms are not defined financial measures
according to Canadian generally accepted accounting principles (GAAP) and they
do not have standardized meanings prescribed by GAAP. Therefore, these
measures may not be comparable to similar measures presented by other
enterprises. EBITDA is defined in note 8 of the financial statements
accompanying this press release, and in the Fund's latest annual report. The
pay-out ratio expresses the percentage of distributions paid out during the
period, compared to distributable cash generated during the period.
Distributable cash is defined as cash flow from operations before net change
in working capital balances, net of capital asset acquisitions and proceeds
from the sale of options on forward exchange-rate contracts.


    
    Notice to unitholders

    These quarterly financial statements for the periods ended June 30, 2007
and 2006 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.


    Boralex Power Income Fund
    Consolidated Balance Sheets
    (in thousands of dollars)
    (unaudited)

                                                          As at        As at
                                                        June 30, December 31,
                                              Note         2007         2006
    -------------------------------------------------------------------------

    Assets

    Current assets
    Cash and cash equivalents                            24,350       25,877
    Income taxes                                          1,186            -
    Accounts receivable                                   9,446       16,025
    Prepaid and others                                    1,713        2,017
    -------------------------------------------------------------------------
                                                         36,695       43,919
    Property, plant and equipment                       382,535      399,273
    Intangible assets                                    89,682       97,907
    Goodwill                                             30,240       30,240
    Other long-term assets                     2,4        9,093       12,104
    -------------------------------------------------------------------------
                                                        548,245      583,443
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and unitholders' equity

    Current liabilities
    Short-term revolving credit                           3,500        3,100
    Accounts payable and accrued liabilities              7,397       12,873
    Income taxes                                              -          393
    Distributions payable to unitholders                  4,430        4,430
    Current portion of long-term debt            5          230            -
    -------------------------------------------------------------------------
                                                         15,557       20,796
    Future income tax liabilities                6       53,451        6,463
    Long-term debt                             2,5      107,724      117,387
    Other long-term liabilities                           1,798        1,766
    -------------------------------------------------------------------------
                                                        178,530      146,412
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Unitholders' equity
    Capital contribution                                422,174      422,174
    Capital contribution - exchangeable
     Class B units                                      112,867      112,867
    Deficit                                            (140,368)     (82,128)
    Deferred translation adjustements            2                   (15,882)
    Accumulated other comprehensive income     2,7      (24,958)
    -------------------------------------------------------------------------
                                                        369,715      437,031
    -------------------------------------------------------------------------
                                                        548,245      583,443
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes


    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,
                          Note     2007        2006        2007         2006
    -------------------------------------------------------------------------

    Revenue                      23,898      27,219      57,818       61,700
    -------------------------------------------------------------------------

    Expenses
    Operating costs              11,658      10,778      22,753       22,451
    Administration                  995         348       1,989          879
    -------------------------------------------------------------------------
                                 12,653      11,126      24,742       23,330
    -------------------------------------------------------------------------
    Operating income
     before amortization         11,245      16,093      33,076       38,370
    Amortization of
     property, plant and
     equipment                    3,858       3,749       7,813        7,530
    Amortization of
     intangible assets            1,941       2,132       4,098        4,322
    -------------------------------------------------------------------------
    Operating income              5,446      10,212      21,165       26,518
    Financial expenses,
     net                          1,692       1,709       3,438        3,593
    Loss (Gain) on foreign
     currency translation           864        (460)        407       (1,018)
    Change in fair value
     of derivative
     instruments                      -         (79)        (31)        (131)
    -------------------------------------------------------------------------
    Earnings before income
     taxes                        2,890       9,042      17,351       24,074
    Income taxes             6   47,214       1,868      49,010        3,777
    -------------------------------------------------------------------------
    (Net loss) Net earnings     (44,324)      7,174     (31,659)      20,297
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic and diluted
     (net loss) net earnings
     per trust unit
     (in dollars)                 (0,75)       0,12       (0,54)        0,34
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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,
                                                           2007         2006
    -------------------------------------------------------------------------

    Deficit - beginning of period                       (82,128)     (62,933)
    (Net loss) Net earnings                             (31,659)      20,297
    Distributions to unitholders                        (26,581)     (26,581)
    -------------------------------------------------------------------------

    Deficit - end of period                            (140,368)     (69,217)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Statement of Comprehensive Income
    (in thousands of dollars)
    (unaudited)
                                                                     For the
                                                        For the    six-month
                                                        quarter       period
                                                          ended        ended
                                                        June 30,     June 30,
                                                           2007         2007
    -------------------------------------------------------------------------

    Net loss for the period                             (44,324)     (31,659)

    Other components of comprehensive income :
     Non-realized exchange losses on translation of
     the financial statements of self- sustaining
     foreign operations                                  (9,089)     (10,341)
    Variation in the fair value of derivatives
     designated as hedges of the net investment in
     self-sustaining foreign operations                     585          286
    Reclassification of accumulated exchange loss upon
     translation of financial statement for
     self-sustaining foreign operations following a
     reduction in net investment                          1,055          979
    -------------------------------------------------------------------------
                                                         (7,449)      (9,076)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Comprehensive income for the period                 (51,773)     (40,735)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes


    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,
                          Note     2007        2006        2007         2006
    -------------------------------------------------------------------------

    Operating activities
    (Net loss)
     Net earnings               (44,324)      7,174     (31,659)      20,297
    Items not affecting cash:
      Amortization of
       property, plant and
       equipment                  3,858       3,749       7,813        7,530
      Amortization of
       intangible assets          1,941       2,132       4,098        4,322
      Amortization of
       deferred financing
       costs                        106         107         216          216
      Long-term lease
       accruals                     109         114         226          232
      Future income taxes    6   46,672         215      46,825          566
      Others                          -         (79)        174         (131)
    -------------------------------------------------------------------------
                                  8,362      13,412      27,693       33,032
    Net change in non-cash
     working capital
     balances                     3,009       1,597        (196)       1,517
    -------------------------------------------------------------------------

    Cash flows related to
     operating activities        11,371      15,009      27,497       34,549
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Investing activities
    Acquisition of property,
     plant and equipment         (1,654)       (642)     (1,914)      (1,234)
    Acquisition of other
     assets                         (37)       (101)       (187)        (354)
    Others                           (5)        (15)        (11)         (25)
    -------------------------------------------------------------------------
    Cash flows related to
     investing activities        (1,696)       (758)     (2,112)      (1,613)
    -------------------------------------------------------------------------

    Financing activities
    Distributions paid to
     unitholders                (13,291)    (13,291)    (26,581)     (26,581)
    Net change of the short-
     term revolving credit       (2,100)     (4,400)        400       (3,500)
    Decrease in long-term debt      (57)          -        (121)           -
    Proceeds from sale of
     options on forward
     exchange rate contracts        193         196         341          345
    -------------------------------------------------------------------------
    Cash flows related to
     financing activities       (15,255)    (17,495)    (25,961)     (29,736)
    -------------------------------------------------------------------------

    Translation adjustments on
     cash and cash equivalents     (621)     (1,004)       (951)        (983)
    -------------------------------------------------------------------------
    Net change in cash and
     cash equivalents during
     the period                  (6,201)     (4,248)     (1,527)       2,217
    Cash and cash
     equivalents -
     beginning of period         30,551      30,541      25,877       24,076
    -------------------------------------------------------------------------
    Cash and cash
     equivalents -
     end of the period           24,350      26,293      24,350       26,293
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information

    Interest paid                 1,491       1,299       3,939        3,796
    Income taxes paid             2,266       3,178       3,849        4,189
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes


    Boralex Power Income Fund
    Notes to Interim Consolidated Financial Statements
    (tabular amounts are in thousands of dollars, unless otherwise specified)
    (unaudited, unless otherwise specified)

    Note 1 - Accounting policies

    These unaudited interim consolidated financial statements were prepared
following the same accounting policies as the audited consolidated financial
statements of Boralex Power Income Fund (the ''Fund'') for the period ended
December 31, 2006, except for the new accounting policies described in Note 2.
These unaudited interim consolidated financial statements and accompanying
notes should be read in conjunction with the latest audited consolidated
financial statements.

    Note 2 - New accounting policies

    On January 1, 2007, the Fund 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 unitholders. 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, the Fund's financial statements now include information on
comprehensive income and its other components. On January 1, 2007, an amount
of $15,882,000, previously recorded as Deferred translation adjustments, was
reclassified in Other comprehensive income.
    Section 3855 "Financial Instruments - Recognition and Measurement"
establishes standards for recognizing and measuring financial assets,
financial liabilities and derivatives. These standards prescribe when to
recognize a financial instrument in the balance sheet and at what amount as
well as the presentation for gains and losses on financial instruments in the
consolidated financial statements.

    The Fund has made the following classifications:

        - Cash and cash equivalents 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.

        - Deposits in trust related to long-term debt 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.

        - Short-term revolving credit, accounts payable and accrued
          liabilities, distributions payable to unitholders as well as 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
$3,006,000 as at January 1, 2007, previously recognized under Other long-term
assets, have been reclassified under Long-term debt.
    Section 3865 "Hedges," of optional application, specifies the manner in
which hedge accounting is applied. The Fund decided, in accordance with its
risk management strategy, to continue to apply hedge accounting for its
forward exchange rate contracts that hedge its net investment in
self-sustaining foreign operations. These derivatives are recognized at their
fair value and the gains or losses resulting from their periodic remeasurement
are recognized in comprehensive income, to the extent that the hedging is
deemed effective.
    The Fund chose January 1, 2003 as the transition date for embedded
derivatives. An embedded derivative is a component of a financial instrument
or of another contract with features similar to a derivative. This had no
impact on the consolidated financial statements.

    Note 3 - Seasonality

    Since all of the Fund's power stations have long-term sales contracts with
fixed prices, their results are not affected by price fluctuations resulting
from seasonal demand for electricity.
    However, from December to March, which is a period of peak demand in
Québec, the wood-residue thermal power stations, the natural gas cogeneration
power station and a hydroelectric plant receive significant capacity premiums
when power generation is maintained at a level set in their power sales
contracts. All of these stations except the hydroelectric facility control how
much power they generate, and to the extent that they do not experience any
major downtime, they usually operate at full capacity for that period. Regular
maintenance is then done in the second and third quarters, which generally
lowers the operating results for those periods. In all, these facilities
account for more than 50% of the Fund's installed capacity.
    For the Fund's hydroelectric facilities in Québec and the northeastern
United States, production volume is dependent on water flows, which tend to be
at their maximum in the spring and are generally good in the fall - the second
and fourth quarters of the Fund's financial year; they are lower in the winter
and summer. Note that the Fund's hydroelectric power stations do not have
reservoirs that would help regulate fluctuations in water flows.
    Also, steam revenues, which account for about 20% of the Fund's
consolidated revenue, are fairly stable from quarter to quarter because steam
is produced to meet client demand, which is more predictable and stable.
    As a result, the first quarter is generally the most profitable, followed
by the fourth quarter. Next is the second quarter, when water flows are
usually significant, so that power generation in the hydroelectric sector
partially compensates for the scheduled downtime at the wood-residue and
natural gas cogeneration facilities. The third quarter is normally the least
profitable quarter of the year.


    Note 4 - Other long-term assets

                                                          As at        As at
                                                        June 30, December 31,
                                                           2007         2006
    -------------------------------------------------------------------------
                                                                    (audited)

    Fair value of forward exchange rate contracts
     (note 2)                                             3,867        3,581
    Deferred financing costs, net of accumulated
     amortization (note 2)                                    -        3,006
    Deposits in trust related to long-term debt           1,594        1,735
    Proceeds from sale of options on forward exchange
     rate contracts receivable                              307          644
    Project development costs                             3,325        3,138
    -------------------------------------------------------------------------
                                                          9,093       12,104
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 5 - Long-term debt
                                                          As at        As at
                                                        June 30, December 31,
                                                           2007         2006
    -------------------------------------------------------------------------
                                                                    (audited)

    Senior secured notes of an original amount of
     $ 35,000,000 bearing interest at a fixed rate
     of 6.6%, with no repayment until maturity on
     July 9, 2014                                        35,000       35,000

    Senior secured notes of an original amount of
     US$70,000,000 bearing interest at a fixed rate
     of 6.2%, with no repayment until maturity on
     August 31, 2013                                     75,182       82,387

    Other                                                   367            -
    -------------------------------------------------------------------------
                                                        110,549      117,387

    Less:
      Current portion                                       230            -
      Deferred financing costs (note 2)                   2,595            -
    -------------------------------------------------------------------------
                                                        107,724      117,387
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The $35,000,000 notes are guaranteed by all current Canadian assets and
the US$70,700,000 notes are guaranteed by all current U.S. assets. Under these
agreements, the Fund is subject to a number of restrictive clauses, including
the maintenance of certain financial ratios.

    For the US$70,700,000 notes, the loan agreement requires the Fund to
maintain two reserve accounts at all times. The first, containing a minimum of
US$300,000 ($319,000), is to provide for capital expenditures. The second is a
debt service reserve containing a minimum of 3 months of interest payments on
this debt, which amounts to US$1,100,000 ($1,170,000). If certain ratios fall
below a set level, the Fund will be required to deposit an additional
US 400,000 ($424,000) each month until this reserve contains a maximum of
12 months of interest payments. If the financial ratios subsequently rise
above the set threshold for more than two consecutive quarters, the Fund will
be able to recover the surplus deposits above the required minimum. Throughout
fiscal 2006 and during the first semester of 2007, the Fund met the
requirements for all financial ratios.

    Note 6 - Income taxes

    The amendments to Canada's Income Tax Act ( ITA ) related to publicly
traded income trusts took effect on June 22, 2007. The former rules allowed
for the deduction of amounts distributed from the income trust's taxable
income, which made it possible to transfer the tax burden to unitholders. The
consequence of the ITA amendment is that public income trusts will no longer
be able to claim this deduction, and starting in 2011, they must pay income
taxes at a rate of 31.5%. Distributions will be considered dividends, just as
they are for other Canadian corporations. As a result, the Fund has recorded
future income taxes of $47.1 million related to the legislative amendment that
will take effect in 2011. Since this results from an amendment to the ITA, the
adjustment amount has been recorded as an expense in the income statement of
the second quarter of 2007.
    To calculate the adjustment required, the Fund forecasted the changes in
its tax attributes between June 30, 2007 and December 31, 2010. This
calculation also takes into account the temporary differences attributable to
the holders of exchangeable class B units.These forecasts will be updated
quarterly and any change will be recorded in net earnings.


    Note 7 - Accumulated other comprehensive income

                                                           For the six-month
                                                                period ended
                                                                     June 30,
                                                                        2007
    -------------------------------------------------------------------------
    Deferred translation adjustment reclassified in
     accordance with the new accounting policies (note 2)            (15,882)

    Other comprehensive income for the period                         (9,076)
    -------------------------------------------------------------------------
    Balance end of period                                            (24,958)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Note 8 - Segmented information

    The Fund's power stations are grouped under three distinct segments:
hydroelectric power, wood-residue thermal power and natural gas power, and are
engaged mainly in the production of energy in Canada and in the United States.
The classification of these segments is based on the different cost structures
relating to each type of power station.
    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 under Canadian generally
accepted accounting principles; however, management uses this performance
measure to assess the operating performance of its reportable segments.
Earnings for each segment are presented on the same accounting policies as
those of the Fund. In the consolidated statement of earnings, EBITDA
corresponds to Operating income before amortization.

    The following table reconciles EBITDA with net loss or net earnings :

                                                           For the six-month
                                   For the quarters            periods ended
                                      ended June 30,                 June 30,
                                   2007        2006        2007         2006
    -------------------------------------------------------------------------

    (Net loss) Net earnings     (44,324)      7,174     (31,659)      20,297
    Income taxes                 47,214       1,868      49,010        3,777
    Change in fair value of
     derivative instruments           -         (79)        (31)        (131)
    Loss (Gain) on foreign
     currency translation           864        (460)        407       (1,018)
    Financial expenses, net       1,692       1,709       3,438        3,593
    Amortization of intangible
     assets                       1,941       2,132       4,098        4,322
    Amortization of property,
     plant and equipment          3,858       3,749       7,813        7,530
    -------------------------------------------------------------------------
    EBITDA                       11,245      16,093      33,076       38,370
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Information by operating segment

    -------------------------------------------------------------------------
    PRODUCTION (in MWh)
    Hydroelectric power
     stations                   137,553     171,006     272,584       318,033
    Wood-residue thermal
     power stations              86,988      88,548     185,164       184,077
    Natural gas power
     station                     41,318      44,890     100,599       105,618
    -------------------------------------------------------------------------
                                265,859     304,444     558,347       607,728
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    REVENUE
    Hydroelectric power
     stations                    11,570      14,579      25,497       29,354
    Wood-residue thermal
     power stations               7,345       7,476      19,226       18,786
    Natural gas power
     station                      4,983       5,164      13,095       13,560
    -------------------------------------------------------------------------
                                 23,898      27,219      57,818       61,700
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EBITDA
    Hydroelectric power
     stations                     9,748      13,236      21,519       26,085
    Wood-residue thermal
     power stations               1,800       2,304       9,648        8,944
    Natural gas power
     station                      1,793       2,094       6,026        6,612
    Corporate and eliminations   (2,096)     (1,541)     (4,117)      (3,271)
    -------------------------------------------------------------------------
                                 11,245      16,093      33,076       38,370
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT

    Hydroelectric power
     stations                        73         100         123          135
    Wood-residue thermal
     power stations                  57         471          69          589
    Natural gas power
     station                      1,524          71       1,722          510
    -------------------------------------------------------------------------
                                  1,654         642       1,914        1,234
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                          As at        As at
                                                        June 30, December 31,
                                                           2007         2006
    -------------------------------------------------------------------------
                                                                    (audited)

    ASSETS
    Hydroelectric power stations                        289,453      315,631
    Wood-residue thermal power stations                 191,481      195,970
    Natural gas power station                            61,544       62,878
    Corporate and eliminations                            5,767        8,964
    -------------------------------------------------------------------------
                                                        548,245      583,443
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Note 9 - Subsequent Event

    On August 1st, 2007, Bowater Canadian Forest Products Inc. (Bowater) gave
the Fund termination notice of the operation and maintenance service agreement
for the Dolbeau plant. The termination notice alleges that the Fund did not
comply with its obligations towards Bowater as operator of the plant and that
consequently Bowater has suffered financial losses. The Fund feels that the
unilateral termination notice is without merit, that it has duly fulfilled its
obligations towards Bowater, and that the service agreement is valid. To this
end, the Fund will take every available recourse so as to vigorously defend
and assert its rights. Consequently, no accrual was recorded concerning this
termination notice.




For further information:

For further information: Ms. Patricia Lemaire, Director, Communications 
Boralex Power Inc., (514) 985-1353, patricia_lemaire@cascades.com

Organization Profile

BORALEX POWER INCOME FUND

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