Macquarie Power & Infrastructure Income Fund Announces Increased Cash Distribution And Second Quarter 2006 Results
TORONTO, August 9, 2006 – Macquarie Power & Infrastructure Income Fund (TSX: MPT.UN
– “MPT”, the “Fund”) today announced results for the second quarter ended June 30, 2006.
The Fund also announced a 3% increase to its monthly cash distributions from $0.08333 to
$0.08583 per unit, the equivalent of $1.03 per unit on an annualized basis. The distribution
increase will apply commencing with the August 2006 distribution payable in September 2006.
Fund Results for the Second Quarter ended June 30, 2006
The Fund generated revenue for the quarter of $16.3 million, a 17.3% decrease on revenue
from the previous corresponding quarter of $19.7 million. The decrease in revenue versus the
period in 2005 was due largely to the scheduled major maintenance of the Cardinal plant
which happens every six years. Loss from operations1 for the Fund was $1.3 million for the
quarter, compared to income of $1.9 million for the previous corresponding quarter.
The Fund’s distributable cash2 for the quarter was $6.3 million ($0.210 per fully diluted unit),
compared to the previous corresponding quarter of $4.3 million ($0.202 per fully diluted unit).
Declared distributions to unitholders for the quarter were $7.5 million ($0.250 per unit),
representing a payout ratio of 119% (Q2 2005 – 113%).
The increase in the Fund’s distributable cash and distributable cash per unit for the quarter
reflected distributions of $2.6 million from Leisureworld as well as the continuing impact of
electricity rate increases under Cardinal’s Power Purchase Agreement with Ontario Electricity
Financial Corporation and decreased fuel transportation costs for the quarter.
The improvement in the Fund’s distributable cash for the quarter was partially offset by the
major maintenance outage during the quarter. The major maintenance program occurs every
six years and required the facility to be shut down for 22 days during the quarter. Also
impacting the change in distributable cash is the accrual of the Fund’s administration expenses
on a quarterly basis to better align revenues and costs going forward. Prior to 2006, these
costs were primarily recorded in the fourth quarter.
1 Income from operations is net income less unrealized gains or losses, interest and equity accounted income or loss.
2 Distributable cash is cash flows from operating activities after removing changes in working capital and reflecting the
impacts of releases from maintenance reserves, allocations to major maintenance and capital expenditure reserves
and distributions from Leisureworld.
As at June 30, 2006, the Fund had cash and cash equivalents totalling $18.0 million, of which
$5.1 million was allocated to its general, major maintenance and capital expenditure reserve
accounts. The balance of this amount is maintained as free cash on hand and is available to
finance the seasonality of operations and investment opportunities.
Mr. Gregory Smith, Chief Executive Officer of the Fund, said, “The Fund has continued its solid
performance for the year, with the second quarter displaying growing cash flows and strong
operating performances generated from the underlying Cardinal and Leisureworld businesses.
“We are pleased to report the completion of Cardinal’s major maintenance program. The
program was completed ahead of schedule with costs fully funded from our major
maintenance reserve. Each of Leisureworld’s most recently opened facilities have also
demonstrated consistent growth in occupancy levels, with the new Orillia facility on track to be
opened in the fourth quarter.”
Cardinal Operational Performance
During the quarter the Cardinal plant had availability of 77.4% (Q2 2005 – 95.6%), capacity of
75.0% (Q2 2005 – 94.1%) and electricity sales of 243,000 MWh (Q2 2005 – 306 MWh). The
change, when compared with the prior corresponding period, was due to the scheduled major
maintenance of the Cardinal plant.
Leisureworld Operational Performance
Through its 45% indirect interest in Leisureworld Senior Care LP (“LSCLP”), the Fund owns a
45% interest in Leisureworld which it accounts for as an equity investment.
During the quarter, Leisureworld continued to operate in line with expectations, demonstrating
steady growth in revenue. Of Leisureworld’s 19 facilities, 17 LTC facilities are considered
mature and have average total occupancy of 98% for the six months ended June 30, 2006
(2005 – 90.8%). One facility, Vaughan, is still in ramp up and recorded average total
occupancy of 66.0% for the six months ended June 30, 2006 (2005 – 29.6%). The remaining
facility, Spencer House, is in the process of being closed and replaced by a new facility in
Orillia, scheduled to open in the fourth quarter of 2006. Average total occupancy at the
Spencer House facility for the six months ended June 30, 2006 was 84.5% (2005 – 93.3%).
Preferred bed average total occupancy for the same mature facilities is 81.6% for the six
months ended June 30, 2006 (2005 – 77.5%).
Increase in Monthly Distributions
The Fund’s Board of Trustees has approved an increase in the Fund’s monthly cash
distributions from $0.08333 to $0.08583 per unit. The distribution increase will apply
commencing with the August 2006 distribution payable in September 2006.
“The increase in the Fund’s cash distributions per unit continues our commitment to profitably
grow the Fund and deliver sustainable distributions to unitholders over time,” said Mr Smith.
“The decision to raise the monthly distribution amount to unitholders is underpinned by the
stable and growing cash flows generated by both Cardinal and Leisureworld businesses.
The Board of Trustees also continues to anticipate maintaining an annual payout ratio of less
than 95% for 2006.
Management anticipates that in excess of 75% of distributions for 2006 will reflect a return of
capital, based on current operations and barring any significant external shocks.
Conference Call and Webcast
The Fund will hold a conference call to discuss the second quarter results on Thursday,
August 10, 2006 at 8:30AM. The conference call will be available via webcast through the
Fund’s website at www.macquarie.com/mpt and by telephone at 416-695-9701 (local) or 1-
888-334-9269 (toll free). A replay of the conference call will be available until August 17, 2006
and can be accessed by dialling 416-695-5275 (local) or 1-888-509-0081 (toll free), pass code
About the Fund
Macquarie Power & Infrastructure Income Fund invests in infrastructure assets with an
emphasis on power infrastructure. MPT’s strategy is to acquire and actively manage a highquality
portfolio of long-life infrastructure assets to improve their financial performance and
provide growing and sustainable distributions to unitholders for the long term. MPT’s
infrastructure portfolio includes Cardinal, a 156MW gas-fired cogeneration power station in
Ontario, and a 45% interest in Leisureworld, a leading long-term care provider in Ontario with
over 30 years operating experience. MPT is managed by a wholly-owned subsidiary of
Macquarie Bank Limited and a member of the Macquarie group.
Certain statements in this news release may constitute forward-looking statements which
involve known and unknown risks, uncertainties and other factors which may cause the actual
results to be materially different from any future results expressed or implied by such forward-looking
statements. Forward-looking statements use such words as “may”, “will”, “anticipate”,
“believe”, “expect”, “plan” and other similar terminology. These statements reflect current
expectations regarding future events and operating performance and speak only as of the date
of this news release. Forward-looking statements involve significant risks and uncertainties,
should not be read as guarantees of future performance or results, and will not necessarily be
accurate indications of whether or not such results will be achieved. A number of factors could
cause actual results to differ materially from the results discussed in the forward-looking
statements, including, but not limited to, risks associated with the Cardinal facility and the
power industry, risks associated with MPT’s interest in Leisureworld and the long-term care
sector, and risks associated with the structure of MPT. The risks and uncertainties described
above are not exhaustive and other events and risk factors including risk factors disclosed in
MPT’s filings with Canadian securities regulatory authorities could cause actual results to differ
materially from the results discussed in the forward-looking statements.
The forward-looking statements contained in this news release are based upon information
currently available and what the Manager currently believes are reasonable assumptions,
however neither the Fund nor the Manager can assure investors that actual results will be
consistent with these forward-looking statements. These forward-looking statements are
made as of the date of this news release, and the Fund and the Manager assume no
obligation to update or revise them to reflect new events or circumstances. The Fund and the
Manager caution readers not to place undue reliance on any forward-looking statements,
which speak only as of the date made.
Non-GAAP Financial Measures
"Income from operations" and "distributable cash" do not have any standardized meaning
under Canadian Generally Accepted Accounting Principles (GAAP). Management believes
they are useful measures of performance as they provide investors with indications of income
from operations and the amount of cash available for distribution to unitholders. The Fund's
method of calculating "income from operations" and "distributable cash" may not be
comparable to other similarly named calculations.
For further information, please contact:
Chief Financial Officer
Tel: 416 607 5198
Tel: 212 231 1710
Macquarie Power & Infrastructure Income Fund is not an authorised deposit taking institution for the purposes of the Banking Act (Cth) 1959 and Macquarie Power & Infrastructure Income Fund’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Power & Infrastructure Income Fund.