Northland Power Income Fund

Northland Power Income Fund

November 08, 2007 18:13 ET

Northland Power Income Fund Increases Distributable Cash Per Unit 9% in Third Quarter 2007

TORONTO, ONTARIO--(Marketwire - Nov. 8, 2007) -


Northland Power Income Fund (the "Fund") (TSX:NPI.UN)(TSX:NPI.DB) today reported financial results for the three-month and nine-month periods ended September 30, 2007.

3 Months Ended 9 Months Ended
Sept. 30 Sept. 30
2007 2006 2007 2006
FINANCIAL (thousands, except per
unit amounts)
Sales $41,163 $40,463 $135,666 $116,855
Net income $1,603 $5,770 ($58,483) $21,403

Funds from operations before
changes in working capital(1) $17,920 $16,484 $63,349 $50,093
Standardized Distributable Cash $5,990 $8,033 $64,726 $52,325
Distributable cash(1) $19,113 $17,490 $60,974 $52,109

Distributions declared to
Unitholders $16,835 $16,625 $50,499 $47,016

Units Outstanding at Quarter End 62,352 62,194 62,352 62,194
Average Number of Units
Outstanding - basic 62,352 62,107 62,343 58,306
Average Number of Units
Outstanding - diluted 62,352 62,107 62,343 58,306

Per Unit - basic
Funds from operations before
changes in working capital(1) $0.2874 $0.2654 $1.0161 $0.8591
Standardized Distributable Cash $0.0961 $0.1293 $1.0382 $0.8974
Distributable cash(1) $0.3065 $0.2816 $0.9780 $0.8937
Distributions declared to
Unitholders $0.2700 $0.2675 $0.8100 $0.7925
Electricity sales volume
(megawatthours) 320,259 302,642 1,109,782 893,870
Steam sales volume (thousands of
pounds) 233,348 263,517 991,859 956,365
Fuel consumption (thousands of
gigajoules) 2,613 2,543 8,220 7,565

(1) These are non-GAAP financial measures. Please refer to schedule of
Distributable Cash and Distributions to Unitholders in the Fund's
second quarter Management's, Discussion and Analysis ("MD&A") for the
calculations of funds from operations before changes in working capital
and distributable cash.

Consolidated Results

Consolidated sales of $41.2 million exceeded the third quarter of 2006 by $0.7 million (2%) while net income of $1.6 million was down $4.2 million as a result of a non-cash foreign exchange loss on the translation of the Panda Energy Corp. senior loan balance to the quarter-end U.S. dollar/Canadian dollar exchange rate.

Sales and operating income at the Iroquois Falls plant increased from last year largely due to higher electricity sales both under the terms of the power purchase agreement and to the wholesale market; also, sales in the 3rd quarter of 2006 were adversely affected by downtime for a scheduled steam turbine inspection and overhaul. Financial results from the Kingston facility were in line with the same quarter last year while production at the Mont Miller and German wind farms continued to exceed last year, as a result of better wind resources.

In the nine months ended September 30, sales increased 16%, net income before taxes was up 17% and distributions per unit increased by 2%. These results included additional contributions from the Fund's increased ownership interest in the Kingston facility (the Fund acquired its final 50% interest on March 23, 2006), and from its investment in two German wind farms (acquired in the second quarter of 2006). Differences in financial results between 2007 and 2006 are largely accounted for by these events and by good performance at all of the Fund's facilities.

Distributable cash in the three months ended September 30, as calculated by the Fund's manager, of $19.1 million exceeded that of 2006 by $1.6 million (9%), and was $2.3 million higher than the distributions paid to Unitholders.

Consistent with changes approved in January 2007 to the Fund's Trust Indenture, management maintains a prudent, sustainable level of distributions in relation to distributable cash, with excess cash being retained and held for reinvestment, future acquisitions, funding of the loan commitment for the Thorold project and as a cushion against potential future tax obligations commencing in 2011.

The Fund has taken a proactive approach this quarter by implementing the Canadian Institute of Chartered Accountant's ("CICA") interpretative release entitled "Standardized Distributable Cash in Income Trusts and Other Flow-through Entities". The objective of the guidance is to standardize the reporting of distributable cash within the income trust industry. The calculation of standardized distributable cash is prescriptive and provides little room for interpretation; as a result, the CICA foresees that additional entity-specific adjustments will be recorded. Readers should refer to the Fund's Management Discussion & Analysis, which will be filed on along with the Fund's unaudited Consolidated Financial Statements for the periods ended September 30, 2007, for the calculation of standardized distributable cash.

In the third quarter, standardized distributable cash per unit of $0.10 was down $0.03, while distributable cash per unit was $0.31, 9% higher than the $0.28 achieved in 2006. During the nine-month period standardized distributable cash was $1.04, 16% higher than in 2006, and distributable cash was $0.98 per unit, also up 9% from $0.89 in the prior year.

Distributions to Unitholders declared for the quarter totalled $0.27 per unit, slightly higher than in the third quarter of 2006.

As announced on August 16th, the Fund has committed to provide a $30 million loan to Thorold CoGen LP to assist in the financing of the 265 megawatt ("MW") Thorold Cogeneration project. Recourse under the loan is limited to the assets of Thorold CoGen LP and subordinated to the senior secured project debt. Northland Power Inc. (the parent of the Manager of the Fund) is the project sponsor and has provided the required equity financing. As at September 30th, the Fund had loaned Thorold CoGen LP $1.4 million, including accrued interest. For additional information on the Thorold Cogeneration project, please refer to the Fund's most recent annual report.

During the quarter, the Fund also announced that in conjunction with Northland Power Inc., it had jointly submitted non-binding bids for five wind power projects totaling approximately 450 MW and a sixth for a 300 MW project in association with Energie Eolienne Pessamit SEC (owned by the Pessamit First Nation) in response to Hydro-Quebec's request for proposals. Northland Power Inc. will assume the lead role and bear all costs required to confirm the viability of any projects selected by Hydro-Quebec. Any investment by the Fund will be subject to the project(s) meeting the Fund's investment criteria and the approval of the Board of Trustees of NPIF Commercial Trust.


The Fund's overall financial performance for the remainder of 2007 is expected to exceed that of 2006, as results at the Mont Miller wind farm are anticipated to be closer to the Fund's long-term projections, contracted electricity rates at the Iroquois Falls facility will continue to be positively affected by higher electricity wholesale market prices experienced in prior years through the three-year averaging mechanism in its power purchase agreement, the addition of investment income from the loan to Thorold CoGen LP, and lower management and administration costs due to certain one-time costs incurred in 2006.

About the Fund

Northland Power Income Fund indirectly owns interests in six power generating facilities: three natural gas-fired combined-cycle cogeneration power plants that efficiently and cleanly produce electricity and steam for sale, and three wind farms. Two cogeneration plants are located in Ontario: the 120 megawatt ("MW") Iroquois Falls facility that has been wholly-owned by the Fund since its inception in 1997, and the 110 MW Kingston facility which has been wholly-owned by the Fund since it acquired an additional 50% interest on March 23, 2006. Through its 19% equity interest in Panda Energy Corp (PEC) and loan to a PEC subsidiary, the Fund has an interest in the 230 MW Panda-Brandywine cogeneration power plant located just outside Washington, D.C. Electricity produced from the cogeneration plants is sold under long-term power purchase agreements (PPAs) with creditworthy entities to ensure revenue stability, and long-term contracts assure the supply and price of natural gas, which is the Fund's largest cost. The 54 MW Mont Miller wind farm in the Gaspesie region of Quebec supplies electricity to Hydro-Quebec under a long-term PPA while the Fund's two wind farms in Germany, with a combined capacity of 21.5 MW, sell electricity to regional power utilities under the provisions of German renewable energy legislation. The Fund has committed to provide $30 million as subordinated debt to Northland Power Inc.'s 265 MW Thorold Cogeneration Project that is under construction near the Town of Thorold, Ontario.

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

The disclosure above contains certain forward-looking statements. Although these forward-looking statements are based upon Northland Power Income Fund's Manager'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 2006 annual report and in the Fund's Annual Information Form dated March 30, 2007, certain of which are beyond the Manager's control. For this purpose, any statements that are contained herein that are not statements of historical fact may be forward-looking statements. 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.

Contact Information

  • Northland Power Income Fund Management Inc.
    Barb Bokla
    Manager, Investor Relations
    (416) 962-6262 x156
    Northland Power Income Fund Management Inc.
    Boris Balan
    Director of Communications
    (416) 962-6262 x116
    (416) 962-6266 (FAX)