Northland Power Income Fund
TSX : NPI.UN
TSX : NPI.DB

Northland Power Income Fund

August 06, 2009 17:52 ET

Northland Power Income Fund Announces Results for the Second Quarter of 2009

TORONTO, ONTARIO--(Marketwire - Aug. 6, 2009) -

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Northland Power Income Fund (the "Fund") (TSX:NPI.UN)(TSX:NPI.DB) reported its financial results today for the quarter ended June 30, 2009.



FINANCIAL AND OPERATING HIGHLIGHTS

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3 Months Ended June 30 6 Months Ended June 30
2009 2008 2009 2008
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FINANCIAL (thousands,
except per unit amounts)
Sales $44,686 $44,970 $97,563 $97,321
Income from operations $14,445 $15,279 $36,002 $37,983
Net income (loss) ($3,097) $11,240 $13,816 $26,962

Standardized
distributable cash $18,935 $34,976 $41,540 $56,614
Distributable cash $17,113 $19,522 $39,628 $42,793

Distributions declared
to Unitholders $16,836 $16,835 $33,671 $33,670

Units Outstanding at
Quarter End 62,353 62,353 62,353 62,353
Average Number of
Units Outstanding
- basic 62,353 62,353 62,353 62,353
Average Number of
Units Outstanding
- diluted 62,353 62,353 62,353 64,916

Per Unit - basic
Standardized
distributable cash $0.3037 $0.5609 $0.6662 $0.9080
Distributable cash $0.2745 $0.3131 $0.6355 $0.6863
Distributions declared
to Unitholders $0.2700 $0.2700 $0.5400 $0.5400
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OPERATIONS
Electricity sales
volume (megawatthours) 366,214 300,211 737,842 685,783
Steam sales volume
(thousands of pounds) 236,313 271,928 603,602 652,921
Fuel consumption
(thousands of gigajoules) 2,905 2,556 5,831 5,613
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Consolidated sales in the second quarter of 2009 were $44.7 million while income from operations was $14.4 million for the quarter. The facilities operated well during the quarter, however financial results were impacted by low market prices for natural gas, one-time legal and bank fees associated with the Fund renewing its credit facility and the Iroquois Falls facility shifting the annual maintenance outage to June versus the third quarter of 2008. As a result, income from operations fell short of a year ago by $0.8 million.

Net income was $14.3 million below the same quarter last year. Most of the change was the result of non-cash items relating to future taxes, foreign exchange and changes in fair value adjustments; $0.8 million was due to lower income from operations and $0.7 million was related to one-time fees associated with renewal of the Fund's line of credit. As a result of the agreement reached this quarter with the Canada Revenue Agency that the Fund will not be required to re-file its trust income tax returns and associated T-3s for the years 2005, 2006 and 2007, the Fund reversed the (non-cash) $9.1 million future tax recovery recognized in the fourth quarter of 2008.

Distributable cash as determined by the Fund was $17.1 million during the second quarter; in line with distributions declared to Unitholders. Distributable cash per unit for the quarter was $0.27, compared with $0.31 in 2008 largely due to the factors discussed above.

Cash and cash equivalents of $41.6 million at June 30th decreased by $4.0 million from December 31, 2008 as the $41.7 million of cash generated by operations was more than offset by $4.5 million of investing activities and $41.0 million of financing activities comprising mainly distributions to Unitholders.

Distributions to Unitholders declared for the quarter totalled $0.27 per unit.

During the quarter, the Fund and its subsidiary, Iroquois Falls Power Corp., renewed their $95 million credit facility for two years until May 20, 2011.

Merger of the Fund and Northland Power Inc.

Subsequent to quarter end, on July 16th the Fund agreed to merge with Northland Power Inc. ("NPI") by acquiring all of the issued and outstanding shares of NPI. The merger was paid for largely with securities that are exchangeable into trust units of the Fund on or after January 16, 2012. Until then, these securities will not receive cash distributions. The merger with NPI was approved by the requisite majorities of the Fund's Unitholders on July 16, 2009. The merger of NPI and all related transactions are described in detail in the Notice of Annual and Special Meeting and Management Information Circular dated May 1, 2009 and the Supplement to the Management Information Circular dated July 10, 2009, both of which have been posted on SEDAR, at www.sedar.com, and on the Fund's website, www.npifund.com.

With the merger, the Fund now has ownership or economic interests in 10 power projects totaling over 1,100 megawatts ("MWs") (net 872 MWs) that include clean natural-gas-fired plants as well as renewable wind and biomass projects. The merger has internalized management and created significant alignment through management's ownership of up to 47% of the Fund if all exchangeable securities are converted to trust units. The Fund's average power purchase agreement duration has been extended to 14 years. The merger has provided the Fund with an additional $600 million of tax deduction pools which, combined with cash flow from NPI's four projects, will provide cash available for distribution to help to maintain the Fund's distribution of $1.08 per unit even after the Fund becomes taxable in 2011. In addition, the merger provides the Fund with the ability to grow organically by generating its own development opportunities, as well as bringing in NPI's 3,600 MW pipeline of high-quality development prospects.

Outlook

The Fund's distributable cash is expected to continue to comfortably exceed cash distributions. However, due to the one-time payments from the Panda-Brandywine-related transactions in 2008, management expects the Fund's 2009 distributable cash to be lower than last year. Kingston LP has locked in a large portion of its gas resales at attractive prices for the balance of 2009 which will help protect margins against the forecasted continuation of low natural gas market prices. The merger with NPI is expected to add only marginally to the Fund's income from operations until late in 2009 when the Jardin d'Eole wind farm is scheduled to be operational.

Distributable cash is expected to increase significantly in 2010 due to contributions from the Jardin d'Eole wind farm and from the Thorold cogeneration facility, scheduled to be operational in early 2010. Longer term, it is anticipated that selling prices under Iroquois Falls Power Corp.'s PPA, which are indirectly related to the wholesale cost of electricity in Ontario, will be subject to upward pressure due to the entry into commercial operation of new power plants and wind farms contracted by the Ontario Power Authority as well as Ontario Power Generation's success in having its administered rates increased.

Distributions to Unitholders in 2009 are expected to continue at the level of $1.08 per unit.

ABOUT THE FUND

Northland Power Income Fund is a Canadian income trust that indirectly has ownership or economic interests in 10 power projects totaling over 1,100 megawatts ("MWs") (net 872 MWs). The Fund's assets comprise natural-gas-fired plants which efficiently and cleanly produce electricity and steam as well as facilities generating renewable energy from wind and biomass. Sales are made almost entirely under long-term contracts with a current average duration of 14 years. The Fund's plants are located in Canada, the United States and Germany. The merger with NPI on July 16, 2009 internalized management and provided the Fund with the ability to grow organically by generating its own development opportunities, as well as bringing in NPI's 3,600 MW pipeline of high-quality development prospects.

The Fund's trust units and convertible debentures, which trade on the Toronto Stock Exchange under the symbols NPI.UN and NPI.DB respectively, are qualified investments for RRSPs and DPSPs under the Canadian Income Tax Act. The Fund has in place a distribution re-investment plan that allows Unitholders who are residents of Canada to automatically have their monthly cash distributions reinvested in additional units. Participants do not pay any costs associated with the plan, including brokerage commissions. For further information or to join the plan, contact your financial advisor or broker.

FORWARD LOOKING STATEMENTS

Certain statements in this news release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Fund's and its subsidiaries' current expectations. Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, priorities, ongoing objectives, strategies and outlook of the Fund's and its subsidiaries' for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon management's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties, including those set out in the management's discussion and analysis section of the Fund's 2008 annual report, the Fund's Annual Information Form dated March 13, 2009, the Fund's Management Information Circular dated May 1, 2009, and the Supplement to the Management Information Circular dated July 10, 2009 certain of which are beyond management's control. The Fund's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or what benefits, including the amount of distributions, the Fund and Unitholders will derive therefrom.

The forward-looking statements contained in this news release are made as of the date hereof for the purpose of providing readers with the Fund's expectations for the coming year. The forward-looking statements may not be appropriate for other purposes. Other than as specifically required by law, the Fund undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Contact Information

  • Northland Power Income Fund
    Barb Bokla
    Manager, Investor Relations
    (416) 962-6262 x156
    (416) 962-6266 (FAX)
    or
    Northland Power Income Fund
    Boris Balan
    Director of Communications
    (416) 962-6262 x116
    (416) 962-6266 (FAX)
    info@NPIFund.com
    www.NPIFund.com