Countryside Power Income Fund
TSX : COU.UN

Countryside Power Income Fund

August 09, 2005 07:00 ET

Countryside Power Income Fund Reports Financial Results for the Second Quarter of 2005

LONDON, ONTARIO--(CCNMatthews - Aug. 9, 2005) -

Positioned for Growth with Accretive Acquisition of California Power Assets

Countryside Power Income Fund (TSX:COU.UN) ("the Fund") today announced its financial results for the second quarter period ended June 30, 2005.

"Countryside delivered solid results in the second quarter, benefiting from the predictable revenue stream and stable cash flow that define our business, as well as earnings gains in the district energy business," said Goran Mornhed, President and Chief Executive Officer of Countryside U.S. Power Inc. "The acquisition of two cogeneration plants in California, which further diversifies our portfolio, is expected to be accretive to cash flow and significantly expands our potential revenue and earnings base beginning in the third quarter."

Acquisition of California Cogeneration Plants

On June 29, 2005, Countryside acquired two gas-fired cogeneration plants in California through an indirect investment in Ripon Cogeneration LLC ("Ripon") for a total of US $95.3 million, or approximately CDN $117 million based on current exchange rates. The two facilities have a combined capacity of 95 megawatts and a weighted power purchase agreement expiry of 2017. They posted combined revenues of US $50 million and EBITDA(i) of approximately US $10.5 million for the period from January 27, 2004 to December 31, 2004. The acquisition further diversifies Countryside's asset base, consistent with the Fund's growth strategy. The operating results for Ripon are not included in the reporting period ended June 30, 2005.

"We expect that the addition of the cogeneration plants will add reliable cash flows from the sale of electricity to large, investment-grade utilities and steam to local industrial buyers under long-term contracts," said Edward Campana, Executive Vice President and Chief Financial Officer of Countryside U.S. Power Inc. "These plants have a long and stable operating performance history with predictable cash flow streams."

Operating Results

Countryside's total revenue for the three months ended June 30, 2005 was $7.2 million, up 9.9% from $6.5 million from the prior year period ended June 30, 2004. It should be noted that since the Fund commenced operations on April 8, 2004, the comparable prior year quarterly period is a short period of 83 days. The revenue increase is primarily due to strong results at the district energy systems, which benefited from the addition of a new customer, changes in fuel pricing and improvements in efficiency. Revenue was $16.6 million for the six months ended June 30, 2005. Since the Fund commenced operations on April 8, 2004, there is no comparable period for the first quarter of 2005.

The Fund's EBITDA(i) for the three-months ended June 30, 2005 was $3.1 million, net of certain transaction costs related to the Ripon acquisition. Excluding these costs, EBITDA would have been $3.6 million, unchanged from the comparable operating period last year. These costs were not related to the ongoing operations of the Fund. EBITDA gains of 25% in the district energy systems were offset by higher general and administration costs at the Fund level in the current quarter. For the first six months of 2005, EBITDA was $7.6 million.

Net income for the quarterly period was $0.9 million or $0.06 per unit, compared to $2.7 million or $0.18 per unit in the comparable period of 2004. The year-over-year difference in net income relates primarily to non-cash adjustments for financial hedging transactions, as well as bank refinancing costs and other transaction costs in connection with the Ripon acquisition. Net income was $3.9 million or $0.26 per unit for the six months ended June 30, 2005.

Distributable cash for the quarter was $2.9 million. Excluding the Ripon related transaction costs, distributable cash would have been $3.3 million, unchanged from the comparable period. Distributions declared were $3.8 million. Due to the seasonality of Countryside's district energy systems, distributable cash is typically lower in the second and third quarters than in the first and fourth quarters. As of January 1, 2005, the royalty interest income earned from USEB is included in the calculation of distributable cash when received. In the six-month period ended June 30, 2005, which includes the peak heating season for the district energy systems, distributable cash was $7.2 million. Excluding the Ripon-related transaction costs, distributable cash would have been $7.7 million. Distributions declared year-to-date were $7.6 million.

Conference Call and Webcast

Management will host a conference call at 10 a.m. (ET) on Tuesday, August 9, 2005 to discuss the results. Please call 1-800-814-3911 to access the call.

The call will be webcast live and archived on the Countryside web site at www.countrysidepowerfund.com.

Countryside's financial statements for the period and management's discussion and analysis are available at www.countrysidepowerfund.com.

(i) Non-GAAP Measures

Distributable cash does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. Since the Fund and its subsidiaries distribute substantially all of their available cash on an on-going basis, management believes that distributable cash is an important measure in evaluating the performance of the Fund and determining whether to invest in units of the Fund. For a reconciliation of cash provided by operating activities from the Consolidated Statements of Cash Flows to distributable cash please see the Fund's MD&A for the period ended June 30, 2005.

Earnings before interest, income taxes, unrealized interest rate swap and unrealized foreign exchange gains and losses, and depreciation and amortization ("EBITDA") is not a measure under Canadian GAAP and there is no standardized measure of EBITDA and therefore, it may not be comparable to similar measures presented by other funds or companies. Management uses EBITDA as a key measure of operating performance, and thus has framed a portion of the MD&A comments accordingly. EBITDA can be calculated from the Fund's GAAP statements as operating income, plus depreciation and amortization.

Countryside Power Income Fund has investments in two district energy systems in Canada, with a combined thermal and electric generation capacity of approximately 122 megawatts, and two gas-fired cogeneration plants in California with a combined capacity of 95 megawatts. In addition, the Fund has an indirect investment in 22 renewable power and energy projects located in the United States, which currently have approximately 51 megawatts of electric generation capacity and sold approximately 750,000 MMBtus of boiler fuel in 2004. The Fund's investment in the projects consists of loans to, and a convertible royalty interest in, U.S. Energy Biogas Corp.

Forward-Looking Statements

This press release may contain forward-looking statements relating to expected future events and financial and operating results of the Fund that involve risks and uncertainties. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed from time to time in the Fund's prospectus filed with the Canadian securities regulatory authorities. Due to the potential impact of these factors, the Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

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