Exhibit 99.2
Brookfield Renewable Energy Partners L.P.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
Sep 30 | Dec 31 | |||||||||||
2013 | 2012 | |||||||||||
Restated | ||||||||||||
UNAUDITED (MILLIONS) | Notes | (See Note 2(c)) | ||||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 185 | $ | 137 | ||||||||
Restricted cash | 206 | 157 | ||||||||||
Trade receivables and other current assets | 159 | 194 | ||||||||||
Due from related parties | 28 | 34 | ||||||||||
578 | 522 | |||||||||||
Due from related parties | - | 22 | ||||||||||
Equity-accounted investments | 6 | 314 | 344 | |||||||||
Property, plant and equipment, at fair value | 7 | 16,336 | 15,658 | |||||||||
Intangible assets | 35 | 44 | ||||||||||
Deferred income tax assets | 10 | 112 | 81 | |||||||||
Other long-term assets | 216 | 254 | ||||||||||
$ | 17,591 | $ | 16,925 | |||||||||
Liabilities | ||||||||||||
Current liabilities | ||||||||||||
Accounts payable and accrued liabilities | 8 | $ | 280 | $ | 207 | |||||||
Financial instrument liabilities | 4 | 74 | 113 | |||||||||
Due to related parties | 116 | 109 | ||||||||||
Current portion of long-term debt | 9 | 520 | 532 | |||||||||
990 | 961 | |||||||||||
Financial instrument liabilities | 4 | - | 32 | |||||||||
Long-term debt and credit facilities | 9 | 6,134 | 5,587 | |||||||||
Deferred income tax liabilities | 10 | 2,414 | 2,349 | |||||||||
Other long-term liabilities | 174 | 188 | ||||||||||
9,712 | 9,117 | |||||||||||
Equity | ||||||||||||
Non-controlling interests | ||||||||||||
Preferred equity | 11 | 821 | 500 | |||||||||
Participating non-controlling interests - in operating subsidiaries | 11 | 1,188 | 1,028 | |||||||||
General partnership interest in a holding subsidiary held by | ||||||||||||
Brookfield | 11 | 59 | 63 | |||||||||
Participating non-controlling interests - in a holding subsidiary - | ||||||||||||
Redeemable/Exchangeable units held by Brookfield | 11 | 2,869 | 3,070 | |||||||||
Limited partners' equity | 12 | 2,942 | 3,147 | |||||||||
7,879 | 7,808 | |||||||||||
$ | 17,591 | $ | 16,925 | |||||||||
The accompanying notes are an integral part of these interim consolidated financial statements. |
Approved on behalf of Brookfield Renewable Energy Partners L.P.: |
Patricia Zuccotti | David Mann | |
Director | Director |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||||||||||||||||||||
Three months ended Sep 30 | Nine months ended Sep 30 | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
UNAUDITED | Restated | Restated | ||||||||||||||||||
(MILLIONS, EXCEPT PER UNIT AMOUNTS) | Notes | (see note 16) | (see note 16) | |||||||||||||||||
Revenues | 5 | $ | 392 | $ | 229 | $ | 1,313 | $ | 992 | |||||||||||
Other income | 1 | 2 | 5 | 12 | ||||||||||||||||
Direct operating costs | (140 | ) | (116 | ) | (401 | ) | (358 | ) | ||||||||||||
Management service costs | 5 | (9 | ) | (10 | ) | (32 | ) | (25 | ) | |||||||||||
Interest expense – borrowings | (105 | ) | (99 | ) | (313 | ) | (313 | ) | ||||||||||||
Share of earnings (loss) from equity-accounted | ||||||||||||||||||||
investments | 6 | 3 | (2 | ) | 9 | (2 | ) | |||||||||||||
Unrealized financial instrument gain (loss) | 4 | 11 | 6 | 30 | (6 | ) | ||||||||||||||
Depreciation and amortization | 7 | (133 | ) | (117 | ) | (398 | ) | (360 | ) | |||||||||||
Other | 3 | 2 | 10 | (6 | ) | 1 | ||||||||||||||
Income (loss) before income taxes | 22 | (97 | ) | 207 | (59 | ) | ||||||||||||||
Income tax recovery (expense) | ||||||||||||||||||||
Current | 10 | (4 | ) | 1 | (15 | ) | (12 | ) | ||||||||||||
Deferred | 10 | 10 | 37 | (1 | ) | 40 | ||||||||||||||
6 | 38 | (16 | ) | 28 | ||||||||||||||||
Net income (loss) | $ | 28 | $ | (59 | ) | $ | 191 | $ | (31 | ) | ||||||||||
Net income (loss) attributable to: | ||||||||||||||||||||
Non-controlling interests | ||||||||||||||||||||
Preferred equity | 11 | $ | 10 | $ | 4 | $ | 27 | $ | 10 | |||||||||||
Participating non-controlling interests - in | ||||||||||||||||||||
operating subsidiaries | 11 | 8 | (11 | ) | 48 | (26 | ) | |||||||||||||
General partnership interest in a holding | ||||||||||||||||||||
subsidiary held by Brookfield | 11 | - | - | 1 | - | |||||||||||||||
Participating non-controlling interests - in a | ||||||||||||||||||||
holding subsidiary - | ||||||||||||||||||||
Redeemable/Exchangeable units held by | ||||||||||||||||||||
Brookfield | 11 | 5 | (26 | ) | 57 | (8 | ) | |||||||||||||
Limited partners' equity | 12 | 5 | (26 | ) | 58 | (7 | ) | |||||||||||||
$ | 28 | $ | (59 | ) | $ | 191 | $ | (31 | ) | |||||||||||
Basic and diluted earnings (loss) per LP Unit | $ | 0.04 | $ | (0.20 | ) | $ | 0.44 | $ | (0.06 | ) | ||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||||||
Three months ended Sep 30 | Nine months ended Sep 30 | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
UNAUDITED | Restated | Restated | ||||||||||||||||||
(MILLIONS) | Notes | (See Notes 2(c) and 16) | (See Notes 2(c) and 16) | |||||||||||||||||
Net income (loss) | $ | 28 | $ | (59 | ) | $ | 191 | $ | (31 | ) | ||||||||||
Other comprehensive income (loss) that will not be | ||||||||||||||||||||
reclassified to net income (loss) | ||||||||||||||||||||
Revaluations of property, plant and equipment | 6,7 | - | - | - | 53 | |||||||||||||||
Actuarial losses on defined benefit plans | 2 | 9 | - | 9 | (8 | ) | ||||||||||||||
Deferred income taxes on above items | 10 | (2 | ) | - | (2 | ) | 1 | |||||||||||||
Total items that will not be reclassified to net income (loss) | 7 | - | 7 | 46 | ||||||||||||||||
Other comprehensive income (loss) that may be | ||||||||||||||||||||
reclassified to net income (loss) | ||||||||||||||||||||
Financial instruments designated as cash-flow | ||||||||||||||||||||
hedges | ||||||||||||||||||||
Gains (losses) arising during the period | 4 | (1 | ) | (2 | ) | 49 | (5 | ) | ||||||||||||
Reclassification adjustments for amounts | ||||||||||||||||||||
recognized in net income (loss) | 4 | (9 | ) | (3 | ) | (5 | ) | 8 | ||||||||||||
Foreign currency translation | 31 | 66 | (316 | ) | (114 | ) | ||||||||||||||
Deferred income taxes on above items | 10 | (1 | ) | - | (13 | ) | (3 | ) | ||||||||||||
Total items that may be reclassified subsequently | ||||||||||||||||||||
to net income (loss) | 20 | 61 | (285 | ) | (114 | ) | ||||||||||||||
Other comprehensive income (loss) | 27 | 61 | (278 | ) | (68 | ) | ||||||||||||||
Comprehensive income (loss) | $ | 55 | $ | 2 | $ | (87 | ) | $ | (99 | ) | ||||||||||
Comprehensive income (loss) attributable to: | ||||||||||||||||||||
Non-controlling interests | ||||||||||||||||||||
Preferred equity | 11 | $ | 27 | $ | 12 | $ | (1 | ) | $ | 19 | ||||||||||
Participating non-controlling interests - in | ||||||||||||||||||||
operating subsidiaries | 11 | 6 | (10 | ) | 34 | (26 | ) | |||||||||||||
General partnership interest in a holding | ||||||||||||||||||||
subsidiary held by Brookfield | 11 | - | - | (1 | ) | (2 | ) | |||||||||||||
Participating non-controlling interests - in a | ||||||||||||||||||||
holding subsidiary - Redeemable/Exchangeable | ||||||||||||||||||||
units held by Brookfield | 11 | 11 | - | (59 | ) | (45 | ) | |||||||||||||
Limited partners' equity | 12 | 11 | - | (60 | ) | (45 | ) | |||||||||||||
$ | 55 | $ | 2 | $ | (87 | ) | $ | (99 | ) | |||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. | ||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||
THREE MONTHS ENDED SEPTEMBER 30 | Limited | Foreign | Actuarial losses on | Total limited | Participating non-controlling | General interest in | Participating non-controlling interests - in a - Redeemable /Exchangeable | |||||||||||||||||||||||||||||||||||||
UNAUDITED | partners' | currency | Revaluation | benefit | Cash flow | partners' | Preferred | operating | held by | units held by | Total | |||||||||||||||||||||||||||||||||
(MILLIONS) | equity | translation | surplus | plans | hedges | equity | equity | subsidiaries | Brookfield | Brookfield | equity | |||||||||||||||||||||||||||||||||
Balance, as at June 30, 2012 | $ | (81 | ) | $ | 111 | $ | 3,039 | $ | - | $ | (33 | ) | $ | 3,036 | $ | 242 | $ | 724 | $ | 60 | $ | 2,966 | $ | 7,028 | ||||||||||||||||||||
Effect of retrospectively adopting IAS 19R | - | - | - | (11 | ) | - | (11 | ) | - | - | - | (11 | ) | (22 | ) | |||||||||||||||||||||||||||||
Balance at June 30, 2012 (restated) | $ | (81 | ) | $ | 111 | $ | 3,039 | $ | (11 | ) | $ | (33 | ) | $ | 3,025 | $ | 242 | $ | 724 | $ | 60 | $ | 2,955 | $ | 7,006 | |||||||||||||||||||
Net income (loss) | (26 | ) | - | - | - | - | (26 | ) | 4 | (11 | ) | - | (26 | ) | (59 | ) | ||||||||||||||||||||||||||||
Other comprehensive income (loss) | - | 29 | - | - | (3 | ) | 26 | 8 | 1 | - | 26 | 61 | ||||||||||||||||||||||||||||||||
Acquisitions | - | - | - | - | - | - | - | 17 | - | - | 17 | |||||||||||||||||||||||||||||||||
Distributions | (46 | ) | - | - | - | - | (46 | ) | (3 | ) | - | (1 | ) | (45 | ) | (95 | ) | |||||||||||||||||||||||||||
Other | (2 | ) | - | 4 | - | - | 2 | (1 | ) | (3 | ) | 1 | - | (1 | ) | |||||||||||||||||||||||||||||
Change in period | (74 | ) | 29 | 4 | - | (3 | ) | (44 | ) | 8 | 4 | - | (45 | ) | (77 | ) | ||||||||||||||||||||||||||||
Balance, as at September 30, 2012 (restated) | $ | (155 | ) | $ | 140 | $ | 3,043 | $ | (11 | ) | $ | (36 | ) | $ | 2,981 | $ | 250 | $ | 728 | $ | 60 | $ | 2,910 | $ | 6,929 | |||||||||||||||||||
Balance as at June 30, 2013 | $ | (258 | ) | $ | (15 | ) | $ | 3,271 | $ | (11 | ) | $ | (9 | ) | $ | 2,978 | $ | 804 | $ | 1,019 | $ | 59 | $ | 2,904 | $ | 7,764 | ||||||||||||||||||
Net income | 5 | - | - | - | - | 5 | 10 | 8 | - | 5 | 28 | |||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | - | 4 | - | 4 | (2 | ) | 6 | 17 | (2 | ) | - | 6 | 27 | |||||||||||||||||||||||||||||||
Acquisitions (note 3) | - | - | - | - | - | - | - | 205 | - | - | 205 | |||||||||||||||||||||||||||||||||
Distributions | (49 | ) | - | - | - | - | (49 | ) | (10 | ) | (33 | ) | (1 | ) | (47 | ) | (140 | ) | ||||||||||||||||||||||||||
Contributions and other | 2 | - | - | - | - | 2 | - | (9 | ) | 1 | 1 | (5) | ||||||||||||||||||||||||||||||||
Change in period | (42 | ) | 4 | - | 4 | (2 | ) | (36 | ) | 17 | 169 | - | (35 | ) | 115 | |||||||||||||||||||||||||||||
Balance, as at September 30, 2013 | $ | (300 | ) | $ | (11 | ) | $ | 3,271 | $ | (7 | ) | $ | (11 | ) | $ | 2,942 | $ | 821 | $ | 1,188 | $ | 59 | $ | 2,869 | $ | 7,879 | ||||||||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. | ||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||||||||||||||||||||||||||||||
Accumulated other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||
NINE MONTHS ENDED SEPTEMBER 30 | Limited | Foreign | Actuarial losses on | Total limited | Participating non-controlling | General partnership | Participating non-controllingholding subsidiary - Redeemable | |||||||||||||||||||||||||||||||||||||
UNAUDITED | partners' | currency | Revaluation | benefit | Cash flow | partners' | Preferred | operating | held by | units held by | Total | |||||||||||||||||||||||||||||||||
(MILLIONS) | equity | translation | surplus | plans | hedges | equity | equity | subsidiaries | Brookfield | Brookfield | equity | |||||||||||||||||||||||||||||||||
Balance, as at January 1, 2012 | $ | (9 | ) | $ | 194 | $ | 3,015 | $ | - | $ | (31 | ) | $ | 3,169 | $ | 241 | $ | 629 | $ | 64 | $ | 3,097 | $ | 7,200 | ||||||||||||||||||||
Effect of retrospectively adopting IAS 19R | - | - | - | (8 | ) | - | (8 | ) | - | - | - | (8 | ) | (16 | ) | |||||||||||||||||||||||||||||
Balance at January 1, 2012 (restated) | $ | (9 | ) | $ | 194 | $ | 3,015 | $ | (8 | ) | $ | (31 | ) | $ | 3,161 | $ | 241 | $ | 629 | $ | 64 | $ | 3,089 | $ | 7,184 | |||||||||||||||||||
Net income (loss) | (7 | ) | - | - | - | - | (7 | ) | 10 | (26 | ) | - | (8 | ) | (31 | ) | ||||||||||||||||||||||||||||
Other comprehensive income (loss) | - | (54 | ) | 24 | (3 | ) | (5 | ) | (38 | ) | 9 | - | (2 | ) | (37 | ) | (68 | ) | ||||||||||||||||||||||||||
Acquisitions | - | - | - | - | - | - | - | 146 | - | - | 146 | |||||||||||||||||||||||||||||||||
Distributions | (138 | ) | - | - | - | - | (138 | ) | (10 | ) | (23 | ) | (3 | ) | (134 | ) | (308 | ) | ||||||||||||||||||||||||||
Other | (1 | ) | - | 4 | - | - | 3 | - | 2 | 1 | - | 6 | ||||||||||||||||||||||||||||||||
Change in period | (146 | ) | (54 | ) | 28 | (3 | ) | (5 | ) | (180 | ) | 9 | 99 | (4 | ) | (179 | ) | (255 | ) | |||||||||||||||||||||||||
Balance, as at September 30, 2012 (restated) | $ | (155 | ) | $ | 140 | $ | 3,043 | $ | (11 | ) | $ | (36 | ) | $ | 2,981 | $ | 250 | $ | 728 | $ | 60 | $ | 2,910 | $ | 6,929 | |||||||||||||||||||
Balance, as at January 1, 2013 | $ | (227 | ) | $ | 125 | $ | 3,285 | $ | - | $ | (25 | ) | $ | 3,158 | $ | 500 | $ | 1,028 | $ | 63 | $ | 3,081 | $ | 7,830 | ||||||||||||||||||||
Effect of retrospectively adopting IAS 19R | - | - | - | (11 | ) | - | (11 | ) | - | - | - | (11 | ) | (22 | ) | |||||||||||||||||||||||||||||
Balance as at January 1, 2013 (restated) | $ | (227 | ) | $ | 125 | $ | 3,285 | $ | (11 | ) | $ | (25 | ) | $ | 3,147 | $ | 500 | $ | 1,028 | $ | 63 | $ | 3,070 | $ | 7,808 | |||||||||||||||||||
Net income | 58 | - | - | - | - | 58 | 27 | 48 | 1 | 57 | 191 | |||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | - | (136 | ) | - | 4 | 14 | (118 | ) | (28 | ) | (14 | ) | (2 | ) | (116 | ) | (278 | ) | ||||||||||||||||||||||||||
Shares issued | - | - | - | - | - | - | 349 | - | - | - | 349 | |||||||||||||||||||||||||||||||||
Acquisitions (note 3) | 14 | - | (14 | ) | - | - | - | - | 205 | - | - | 205 | ||||||||||||||||||||||||||||||||
Distributions | (145 | ) | - | - | - | - | (145 | ) | (27 | ) | (113 | ) | (3 | ) | (141 | ) | (429 | ) | ||||||||||||||||||||||||||
Contributions and other | - | - | - | - | - | - | - | 34 | - | (1 | ) | 33 | ||||||||||||||||||||||||||||||||
Change in period | (73 | ) | (136 | ) | (14 | ) | 4 | 14 | (205 | ) | 321 | 160 | (4 | ) | (201 | ) | 71 | |||||||||||||||||||||||||||
Balance, as at September 30, 2013 | $ | (300 | ) | $ | (11 | ) | $ | 3,271 | $ | (7 | ) | $ | (11 | ) | $ | 2,942 | $ | 821 | $ | 1,188 | $ | 59 | $ | 2,869 | $ | 7,879 | ||||||||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P. | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||
UNAUDITED | Sep 30 | Sep 30 | ||||||||||||||||||
(MILLIONS) | Notes | 2013 | 2012 | 2013 | 2012 | |||||||||||||||
Operating activities | ||||||||||||||||||||
Net income (loss) | $ | 28 | $ | (59 | ) | $ | 191 | $ | (31 | ) | ||||||||||
Adjustments for the following non-cash items: | ||||||||||||||||||||
Depreciation and amortization | 7 | 133 | 117 | 398 | 360 | |||||||||||||||
Unrealized financial instrument (gain) loss | 4 | (11 | ) | (6 | ) | (30 | ) | 6 | ||||||||||||
Share of (earnings) loss from equity accounted | ||||||||||||||||||||
investments | 6 | (3 | ) | 2 | (9 | ) | 2 | |||||||||||||
Deferred income tax expense (recovery) | 10 | (10 | ) | (37 | ) | 1 | (40 | ) | ||||||||||||
Other non-cash items | 1 | (6 | ) | 3 | 23 | |||||||||||||||
Dividends received from equity-accounted investments | 8 | 1 | 14 | 8 | ||||||||||||||||
Net change in working capital balances | 79 | 72 | 87 | 50 | ||||||||||||||||
225 | 84 | 655 | 378 | |||||||||||||||||
Financing activities | ||||||||||||||||||||
Long-term debt – borrowings | 9 | - | 448 | 1,222 | 1,294 | |||||||||||||||
Long-term debt – repayments | 9 | (341 | ) | (582 | ) | (1,631 | ) | (1,534 | ) | |||||||||||
Capital provided by participating non-controlling interests - | ||||||||||||||||||||
in operating subsidiaries | 3,11 | 205 | 25 | 246 | 142 | |||||||||||||||
Issuance of preferred equity | 11 | - | - | 337 | - | |||||||||||||||
Distributions: | ||||||||||||||||||||
To participating non-controlling interests - in operating | ||||||||||||||||||||
subsidiaries and preferred equity | 11 | (44 | ) | (3 | ) | (138 | ) | (33 | ) | |||||||||||
To unitholders of Brookfield Renewable or BRELP | 11,12 | (95 | ) | (92 | ) | (282 | ) | (271 | ) | |||||||||||
(275 | ) | (204 | ) | (246 | ) | (402 | ) | |||||||||||||
Investing activities | ||||||||||||||||||||
Acquisitions | 3 | - | (15 | ) | (243 | ) | (177 | ) | ||||||||||||
Investment in: | ||||||||||||||||||||
Sustaining capital expenditures | (23 | ) | (20 | ) | (44 | ) | (45 | ) | ||||||||||||
Development and construction of renewable power | ||||||||||||||||||||
generating assets | (33 | ) | (63 | ) | (113 | ) | (237 | ) | ||||||||||||
Investment tax credits related to renewable power generating | ||||||||||||||||||||
assets | - | 84 | - | 199 | ||||||||||||||||
Due to or from related parties | 24 | 54 | 14 | 192 | ||||||||||||||||
Investment in securities | - | (28 | ) | - | (28 | ) | ||||||||||||||
Restricted cash and other | 36 | 49 | 31 | 79 | ||||||||||||||||
4 | 61 | (355 | ) | (17 | ) | |||||||||||||||
Foreign exchange gain (loss) on cash | - | 1 | (6 | ) | (7 | ) | ||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||
(Decrease) increase | (46 | ) | (58 | ) | 48 | (48 | ) | |||||||||||||
Balance, beginning of period | 231 | 235 | 137 | 225 | ||||||||||||||||
Balance, end of period | $ | 185 | $ | 177 | $ | 185 | $ | 177 | ||||||||||||
Supplemental cash flow information: | ||||||||||||||||||||
Interest paid | $ | 52 | $ | 49 | $ | 249 | $ | 232 | ||||||||||||
Interest received | 1 | 3 | 5 | 13 | ||||||||||||||||
Income taxes paid (recovered) | 5 | (1 | ) | 24 | 10 | |||||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS
The business activities of Brookfield Renewable Energy Partners L.P. (“Brookfield Renewable”) consist of owning a portfolio of renewable power generating facilities in the United States, Canada and Brazil.
Brookfield Renewable is a publicly traded limited partnership established under the laws of Bermuda pursuant to an amended and restated limited partnership agreement dated November 20, 2011.
The registered office of Brookfield Renewable is 73 Front Street, Fifth Floor, Hamilton HM12, Bermuda.
The immediate parent of Brookfield Renewable is its general partner. The ultimate parent of Brookfield Renewable is Brookfield Asset Management Inc. (“Brookfield Asset Management”).
2. BASIS OF PREPARATION AND CHANGES TO BROOKFIELD RENEWABLE’S ACCOUNTING POLICIES
(a) Statement of compliance
The condensed interim consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting on a basis consistent with the accounting policies disclosed in the audited consolidated financial statements for the fiscal year ended December 31, 2012, with the exception of the changes in accounting policy related to IAS 19, Employee Benefits.
Certain information and footnote disclosure normally included in the annual audited consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) have been omitted or condensed. These interim consolidated financial statements should be read in conjunction with Brookfield Renewable’s audited 2012 annual consolidated financial statements.
The interim consolidated financial statements are unaudited and reflect any adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to a fair statement of results for the interim periods in accordance with IFRS.
The results reported in these interim consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for an entire year. Certain comparative figures have been reclassified to conform to the current year’s presentation.
These interim consolidated financial statements have been authorized for issuance by the Board of Directors of its general partner, Brookfield Renewable Partners Limited, on November 4, 2013.
All figures are presented in millions of United States (“U.S.”) dollars unless otherwise noted.
(b) Basis of preparation
The interim consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of property, plant and equipment and certain assets and liabilities which have been measured at fair value. Cost is recorded based on the fair value of the consideration given in exchange for assets.
Consolidation
These interim consolidated financial statements include the accounts of Brookfield Renewable and its subsidiaries, which are the entities over which Brookfield Renewable has control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Non-controlling interests in the equity of Brookfield Renewable’s subsidiaries are shown separately in equity in the consolidated balance sheets.
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
(c) New standards, interpretations and amendments adopted by Brookfield Renewable
The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of Brookfield Renewable’s audited 2012 annual consolidated financial statements, except for the adoption of new standards and interpretations effective January 1, 2013.
The following new accounting standards applied or adopted had no material impact on the interim consolidated financial statements. Please see Note 2(q) – Future changes in accounting policies in the audited consolidated financial statements for the year ended December 31, 2012.
● | IFRS 10, Consolidated Financial Statements, |
● | IFRS 11, Joint Arrangements, and IAS 28, Investment in Associates and Joint Ventures, |
● | IFRS 12, Disclosure of Interests in Other Entities, |
● | IFRS 13, Fair Value Measurement, and |
● | IAS 34, Interim Financial Reporting and Segment Information for Total Assets and Liabilities. |
Brookfield Renewable applied, for the first time, certain standards and amendments that require restatement of previous financial statements. These include IAS 19 (Revised 2011), Employee Benefits, and amendments to IAS 1, Presentation of Financial Statements. The nature and the impact of the new standard/amendment are described below:
IAS 1 Presentation of Items of Other Comprehensive Income – Amendments to IAS 1
The amendments to IAS 1 introduced a grouping of items presented in other comprehensive income (“OCI”). Items that could be reclassified (or recycled) to profit or loss at a future point in time (e.g., net gain on hedge of net investment, exchange differences on translation of foreign operations, net movement on cash flow hedges and net loss or gain on available-for-sale financial assets) now have to be presented separately from items that will never be reclassified (e.g., actuarial gains and losses on defined benefit plans and revaluation of power generating assets). The amendment affected presentation only and had no impact on Brookfield Renewable’s financial position or performance.
IAS 19 Employee Benefits (Revised 2011) (IAS 19R)
IAS 19R introduced amendments to the accounting for defined benefit plans, including the treatment of actuarial gains and losses that are now recognized in OCI and permanently excluded from profit and loss. Also, expected returns on plan assets are no longer recognized in profit or loss, instead there is a requirement to recognize interest on the net defined benefit liability (asset) in profit or loss, calculated using the discount rate used to measure the defined benefit obligation.
Brookfield Renewable assessed its accounting policy on the recognition of actuarial gains and losses from its defined benefit plans. Brookfield Renewable previously recognized the net cumulative unrecognized actuarial gains and losses, which exceeded 10% of the higher of the defined benefit obligation and the fair value of the plan assets.
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
The adoption of IAS 19R, Employee Benefits, required Brookfield Renewable to retroactively restate its consolidated financial statements. The following table summarizes these amounts:
As at December 31, 2012 | As at January 1, 2012 | |||||||||||||||||||||||
Previously | Previously | |||||||||||||||||||||||
(MILLIONS) | presented | Adjustment | Restated | presented | Adjustment | Restated | ||||||||||||||||||
Consolidated Balance Sheets: | ||||||||||||||||||||||||
Other long-term liabilities | $ | 157 | $ | 31 | $ | 188 | $ | 164 | $ | 23 | $ | 187 | ||||||||||||
Deferred income tax liabilities | 2,358 | (9 | ) | 2,349 | 2,374 | (7 | ) | 2,367 | ||||||||||||||||
Participating non-controlling interests - in a | ||||||||||||||||||||||||
holding subsidiary - Redeemable/Exchangeable | ||||||||||||||||||||||||
units held by Brookfield | 3,081 | (11 | ) | 3,070 | 3,097 | (8 | ) | 3,089 | ||||||||||||||||
Limited partners' equity | 3,158 | (11 | ) | 3,147 | 3,169 | (8 | ) | 3,161 | ||||||||||||||||
Consolidated Statements of Changes in Equity: | ||||||||||||||||||||||||
Actuarial losses on defined benefit plans | $ | - | $ | (11 | ) | $ | (11 | ) | ||||||||||||||||
For the nine months ended September 30, 2012 | ||||||||||||||||||||||||
Consolidated Statements of Comprehensive Income (Loss): | ||||||||||||||||||||||||
Actuarial losses on defined benefit plans | $ | - | $ | (8 | ) | $ | (8 | ) | ||||||||||||||||
Deferred income taxes on above items, net | (4 | ) | 2 | (2 | ) |
There was no impact to earnings per LP Unit.
(d) Future changes
There are no future changes to IFRS with potential impact on Brookfield Renewable other than the changes disclosed in the 2012 annual consolidated financial statements.
3. BUSINESS COMBINATIONS
The following investments were accounted for using the acquisition method, and the results of operations have been included in the consolidated financial statements since the respective dates of acquisition.
Northeastern United States Hydroelectric Generation Assets
In March 2013, Brookfield Renewable acquired a 100% interest in a 360 MW portfolio of hydroelectric generation facilities, located in Northeastern United States. Total consideration paid of $57 million included $55 million in cash and $2 million related to the pre-closing payments and working capital adjustments. Holding and project level notes, with a face value of $700 million, were also assumed. The acquisition costs of $8 million were expensed as incurred. In September 2013, upon closing of a private fund sponsored by Brookfield Asset Management, institutional partners co-invested 49.9% in these facilities for $205 million.
California Wind Generation Assets
In August 2012, Brookfield Renewable acquired 16% of the outstanding common shares of Western Wind Energy Corp. ("Western Wind") for a total cash consideration of $25 million.
On March 1, 2013, the Board of Directors were replaced by directors appointed by Brookfield Renewable and, as a result Brookfield Renewable began consolidating the operating results, cash flows and net assets of Western Wind. Further, Brookfield Renewable was required to re-measure its previously held 16% interest to fair value, and the net impact of this re-measurement was not material.
On March 7, 2013, Brookfield Renewable increased its ownership to 93% of the outstanding common shares for additional cash consideration of $143 million. As Brookfield Renewable held more than 90% of the common shares, on May 21, 2013, it acquired all of the remaining common shares on the same terms that the common shares were acquired under the Offer, for additional cash consideration of $15 million. The common shares of Western Wind were delisted from the TSX Venture Exchange on May 24, 2013.
Canadian Hydroelectric Generation Asset
In March 2013, Brookfield Renewable acquired the remaining 50% interest, previously held by its partner, in a hydroelectric generation facility in Canada taking its total investment to 100% (the “Step Acquisition”).
The Step Acquisition included cash consideration of $32 million and the assumption of the partner’s portion of the non-recourse debt. Prior to the Step Acquisition, Brookfield Renewable’s financial interest amounted to $22 million. Brookfield Renewable re-measured its previously held 50% interest to fair value and reversed any amounts previously recorded in OCI. In addition, $30 million related to revaluation surplus on the initial 50% interest was reclassified within equity of which $14 million related to limited partners’ equity.
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
Purchase price allocations, at fair values, with respect to the acquisitions were as follows:
Northeastern | ||||||||||||||||
(MILLIONS) | United States | California | Canada | Total | ||||||||||||
Cash and cash equivalents | $ | - | $ | 2 | $ | 6 | $ | 8 | ||||||||
Restricted cash | 32 | 8 | - | 40 | ||||||||||||
Other current assets | 12 | 9 | 9 | 30 | ||||||||||||
Property, plant and equipment | 721 | 444 | 213 | 1,378 | ||||||||||||
Other long-term assets | 22 | 30 | - | 52 | ||||||||||||
Current liabilities | (10 | ) | (26 | ) | (29 | ) | (65 | ) | ||||||||
Long-term debt | (720 | ) | (250 | ) | (105 | ) | (1,075 | ) | ||||||||
Other long-term liabilities | - | (31 | ) | (39 | ) | (70 | ) | |||||||||
Non-controlling interests | - | (68 | ) | - | (68 | ) | ||||||||||
Net assets acquired | $ | 57 | $ | 118 | $ | 55 | $ | 230 |
The estimated fair values of the assets acquired and liabilities assumed are expected to be finalized within 12 months of the acquisition date.
4. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Risk Management
Brookfield Renewable’s activities expose it to a variety of financial risks, including market risk (i.e., commodity price risk, interest rate risk, and foreign currency risk), credit risk and liquidity risk. Brookfield Renewable uses financial instruments primarily to manage these risks.
There have been no material changes in exposure to these risks since the December 31, 2012 audited annual consolidated financial statements.
Financial Instrument Disclosures
The fair value of financial instruments is the amount of consideration that would be agreed upon in an arm’s length transaction between knowledgeable willing parties who are under no compulsion to act.
Fair values determined using the valuation models require the use of assumptions concerning the amount and timing of estimated future cash flows and discount rates. In determining those assumptions, management looks primarily to external readily observable market inputs such as interest rate yield curves, currency rates, and price, as applicable. The fair value of interest rate swap contracts, which form part of financing arrangements, is calculated by way of discounted cash flows, using market interest rates and applicable credit spreads.
Financial instruments measured at fair value are categorized into one of three hierarchy levels, described below. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities.
Level 1 – inputs are based on unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2 – inputs, other than quoted prices in Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 – inputs for the asset or liability that are not based on observable market data.
The following table presents Brookfield Renewable’s financial assets and financial liabilities measured at fair value classified by the fair value hierarchy:
Sep 30, 2013 | Dec 31, 2012 | |||||||||||||||||||
(MILLIONS) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Cash and cash equivalents | $ | 185 | $ | - | $ | - | $ | 185 | $ | 137 | ||||||||||
Restricted cash | 206 | - | 206 | 157 | ||||||||||||||||
Available-for-sale investments(1) | - | - | - | - | 26 | |||||||||||||||
Financial instrument liabilities | ||||||||||||||||||||
Energy derivative contracts | - | (4 | ) | - | (4 | ) | (13 | ) | ||||||||||||
Interest rate swaps | - | (70 | ) | - | (70 | ) | (132 | ) | ||||||||||||
Total | $ | 391 | $ | (74 | ) | $ | - | $ | 317 | $ | 175 |
(1) | Available-for-sale investments represent an investment in securities of Western Wind and were included in Other long-term assets. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
There were no transfers between levels during the three and nine months ended September 30, 2013.
The aggregate amount of Brookfield Renewable’s financial instrument positions are as follows:
Sep 30, 2013 | Dec 31, 2012 | |||||||||||||||
(MILLIONS) | Asset | Liabilities | Net Liabilities | Net Liabilities | ||||||||||||
Energy derivative contracts | $ | 7 | $ | 11 | $ | 4 | $ | 13 | ||||||||
Interest rate swaps | 14 | 84 | 70 | 132 | ||||||||||||
Total | 21 | 95 | 74 | 145 | ||||||||||||
Less: current portion | 7 | 81 | 74 | 113 | ||||||||||||
Long-term portion | $ | 14 | $ | 14 | $ | - | $ | 32 |
Energy derivative contracts
Brookfield Renewable has entered into long-term energy derivative contracts primarily to stabilize the price of gas purchases or eliminate the price risk on the sale of certain future power generation. Certain energy contracts are recorded in Brookfield Renewable’s interim consolidated financial statements at an amount equal to fair value, using quoted market prices or, in their absence, a valuation model using both internal and third-party evidence and forecasts.
For the three and nine months ended September 30, 2013, unrealized gains of $2 million and $12 million, respectively, were recognized in the statement of income (loss) (2012: unrealized gains of $7 million and $14 million, respectively).
Interest rate swaps
Brookfield Renewable has entered into interest rate swap contracts primarily to minimize exposure to interest rate fluctuations on its variable rate debt or to lock in interest rates on future debt refinancing. All interest rate swap contracts are recorded in the interim consolidated financial statements at an amount equal to fair value.
For the three and nine months ended September 30, 2013, unrealized gains of $9 million and $18 million respectively were recognized in the statement of income (loss) (2012: unrealized losses of $1 million and $20 million, respectively). For the three and nine months ended September 30, 2013, unrealized losses of $1 million and gains of $47 million, respectively, were recognized in OCI (2012: unrealized losses of $2 million and $5 million, respectively).
For the three and nine months ended September 30, 2013, losses of $9 million and $5 million, respectively, relating to cash flow hedges were reclassified from OCI to net income (loss) (2012: losses of $3 million and gains of $8 million, respectively).
5. RELATED PARTY TRANSACTIONS
Brookfield Renewable’s related party transactions are recorded at the exchange amount. Brookfield Renewable’s related party transactions are primarily with Brookfield Asset Management and its subsidiaries.
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
The following table reflects the related party agreements and transactions on the interim consolidated statements of income (loss):
Three months ended Sep 30 | Nine months ended Sep 30 | |||||||||||||||
(MILLIONS) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | ||||||||||||||||
Purchase and revenue support agreements | $ | 102 | $ | 54 | $ | 339 | $ | 289 | ||||||||
Wind levelization agreement | 3 | 1 | 5 | 1 | ||||||||||||
$ | 105 | $ | 55 | $ | 344 | $ | 290 | |||||||||
Direct operating costs | ||||||||||||||||
Energy purchases | $ | (8 | ) | $ | (8 | ) | $ | (26 | ) | $ | (38 | ) | ||||
Energy marketing fee | (5 | ) | (5 | ) | (15 | ) | (14 | ) | ||||||||
Insurance services | (6 | ) | (5 | ) | (19 | ) | (13 | ) | ||||||||
$ | (19 | ) | $ | (18 | ) | $ | (60 | ) | $ | (65 | ) | |||||
Management service costs | $ | (9 | ) | $ | (10 | ) | $ | (32 | ) | $ | (25 | ) |
6. EQUITY-ACCOUNTED INVESTMENTS
The following table presents the changes in Brookfield Renewable’s equity-accounted investments:
Three months ended | Nine months ended | Year ended | ||||||||||
(MILLIONS) | Sep 30, 2013 | Sep 30, 2013 | Dec 31, 2012 | |||||||||
Balance, beginning of period | $ | 318 | $ | 344 | $ | 405 | ||||||
Step acquisitions | - | (22 | ) | (63 | ) | |||||||
Revaluation recognized through OCI | - | - | 16 | |||||||||
Share of OCI | - | 2 | - | |||||||||
Share of net income (loss) | 3 | 9 | (5 | ) | ||||||||
Dividends received | (8 | ) | (14 | ) | (12 | ) | ||||||
Foreign exchange loss | - | (9 | ) | (5 | ) | |||||||
Other | 1 | 4 | 8 | |||||||||
Balance, end of period | $ | 314 | $ | 314 | $ | 344 |
The following table summarizes certain financial information of equity-accounted investments:
Three months ended Sep 30 | Nine months ended Sep 30 | |||||||||||||||
(MILLIONS) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue | $ | 28 | $ | 27 | $ | 87 | $ | 80 | ||||||||
Net income (loss) | 5 | (4 | ) | 17 | (4 | ) | ||||||||||
Share of net income (loss) | ||||||||||||||||
Cash earnings | 7 | 3 | 19 | 11 | ||||||||||||
Non-cash loss | (4 | ) | (5 | ) | (10 | ) | (13 | ) |
7. PROPERTY, PLANT AND EQUIPMENT, AT FAIR VALUE
The composition of the net book value of Brookfield Renewable’s property, plant and equipment, is presented in the following table:
(MILLIONS) | Hydroelectric | Wind energy | CWIP | Other(1) | Total | |||||||||||||||
As at December 31, 2012 | $ | 12,947 | $ | 2,249 | $ | 392 | $ | 70 | $ | 15,658 | ||||||||||
Foreign exchange | (404 | ) | (52 | ) | (13 | ) | (2 | ) | (471 | ) | ||||||||||
Additions(2) | 945 | 421 | 186 | - | 1,552 | |||||||||||||||
Transfers and other | 103 | (4 | ) | (110 | ) | - | (11 | ) | ||||||||||||
Depreciation(3) | (280 | ) | (103 | ) | - | (9 | ) | (392 | ) | |||||||||||
As at September 30, 2013 | $ | 13,311 | $ | 2,511 | $ | 455 | $ | 59 | $ | 16,336 |
(1) | Included in “Other” are gas-fired generating (“co-gen”) units. |
(2) | Includes acquisitions of $1,378 (Note 3). |
(3) | Assets not subject to depreciation include construction work in process (“CWIP”) and land. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The composition of accounts payable and accrued liabilities are as follows:
Sep 30 | Dec 31 | |||||||
(MILLIONS) | 2013 | 2012 | ||||||
Operating accrued liabilities | $ | 119 | $ | 97 | ||||
Interest payable on corporate and subsidiary borrowings | 97 | 41 | ||||||
Accounts payable | 17 | 23 | ||||||
LP Unitholders’ distribution and preferred dividends payable | 40 | 34 | ||||||
Other | 7 | 12 | ||||||
$ | 280 | $ | 207 |
9. LONG-TERM DEBT AND CREDIT FACILITIES
The composition of debt obligations is presented in the following table:
Sep 30, 2013 | Dec 31, 2012 | |||||||||||||||||||||||
Weighted-average | Weighted-average | |||||||||||||||||||||||
(MILLIONS EXCEPT AS NOTED) | Interest rate (%) | Term (years) | Interest rate (%) | Term (years) | ||||||||||||||||||||
Corporate borrowings | ||||||||||||||||||||||||
Series 3 (CDN$200) | 5.3 | 5.1 | $ | 194 | 5.3 | 5.8 | $ | 202 | ||||||||||||||||
Series 4 (CDN$150) | 5.8 | 23.1 | 146 | 5.8 | 23.9 | 151 | ||||||||||||||||||
Series 6 (CDN$300) | 6.1 | 3.2 | 291 | 6.1 | 3.9 | 302 | ||||||||||||||||||
Series 7 (CDN$450) | 5.1 | 7.1 | 437 | 5.1 | 7.8 | 454 | ||||||||||||||||||
Series 8 (CDN$400) | 4.8 | 8.4 | 388 | 4.8 | 9.1 | 403 | ||||||||||||||||||
5.3 | 8.0 | $ | 1,456 | 5.3 | 8.7 | $ | 1,512 | |||||||||||||||||
Subsidiary borrowings | ||||||||||||||||||||||||
United States | 6.1 | 10.0 | $ | 2,856 | 6.4 | 11.4 | $ | 2,264 | ||||||||||||||||
Canada | 5.8 | 15.4 | 1,951 | 5.9 | 12.7 | 1,781 | ||||||||||||||||||
Brazil | 7.4 | 11.2 | 256 | 8.5 | 9.7 | 348 | ||||||||||||||||||
6.0 | 12.1 | $ | 5,063 | 6.4 | 11.8 | $ | 4,393 | |||||||||||||||||
Credit facilities(1) | 1.5 | 4.1 | $ | 178 | 2.0 | 3.8 | $ | 268 | ||||||||||||||||
Total debt | $ | 6,697 | $ | 6,173 | ||||||||||||||||||||
Add: Unamortized premiums(2) | 14 | - | ||||||||||||||||||||||
Less: Unamortized financing fees(2) | (57 | ) | (54 | ) | ||||||||||||||||||||
Less: Current portion | (520 | ) | (532 | ) | ||||||||||||||||||||
$ | 6,134 | $ | 5,587 |
(1) | Amounts are unsecured and revolving. Interest rate is at the London Interbank Offered Rate (“LIBOR”) plus 1.25% (2012: 1.75%). |
(2) | Unamortized premiums and unamortized financing fees are amortized to interest expense over the terms of the borrowing. |
Corporate borrowings
Corporate borrowings are obligations of a finance subsidiary of Brookfield Renewable (Note 13 – Subsidiary Public Issuers). The finance subsidiary may redeem some or all of the borrowings from time to time, pursuant to the terms of the indenture. The balance is payable upon maturity, and interest on corporate borrowings is paid semi-annually.
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
Subsidiary borrowings
Subsidiary borrowings are generally asset-specific, long-term, non-recourse borrowings denominated in the domestic currency of the subsidiary. Subsidiary borrowings in the United States and Canada consist of both fixed and floating interest rate debt. Brookfield Renewable uses interest rate swap agreements to minimize its exposure to floating interest rates. Subsidiary borrowings in Brazil consist of floating interest rates of TJLP, the Brazil National Bank for Economic Development’s long-term interest rate, or Interbank Deposit Certificate rate, plus a margin.
In February 2013, Brookfield Renewable refinanced indebtedness associated with a 166 MW Ontario wind facility through a C$450 million loan for a term of 18 years at 5.1%.
In February 2013, a subsidiary of Brookfield Renewable issued a $75 million floating rate credit facility maturing in 2015.
In March 2013, Brookfield Renewable refinanced indebtedness associated with a 51 MW Ontario wind facility through a C$130 million loan for a term of 19 years at 5.0%.
In March 2013, Brookfield Renewable purchased 88% of the $575 million in operating company notes outstanding with respect to the recently acquired, 360 MW hydroelectric portfolio in Northeastern United States. In May 2013, Brookfield Renewable purchased 100% of the $125 million of holding level notes with respect to the same facilities. Brookfield Renewable financed a portion of the tendered notes through a 24-month, bridge loan of up to $350 million.
As part of the acquisition of wind assets in California, Brookfield Renewable assumed an aggregate of $250 million in subsidiary borrowings, of which $200 million is subject to a fixed interest rate of 7.2% and matures in 2032.
With the Step Acquisition and the assumption of the other partners’ portion of the non-recourse debt, Brookfield Renewable increased subsidiary borrowings by $96 million. The debt matures in 2016 and bears a fixed interest rate of 6.5%.
Net repayments of $671 million made during the nine months ended September 30, 2013 were primarily funded from proceeds of preferred share issuances.
Credit facilities
In 2013, Brookfield Renewable expanded its revolving credit facilities from $990 million to $1,280 million and in September 2013, extended the maturity date by one year to October 31, 2017.
In May 2013, Brookfield Asset Management provided a $200 million committed unsecured revolving credit facility, expiring in December 2013, at LIBOR plus 2%.
Brookfield Renewable and its subsidiaries issue letters of credit from its credit facilities for general corporate purposes, which include, but are not limited to, security deposits, performance bonds and guarantees for debt service reserve accounts.
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
Sep 30 | Dec 31 | |||||||
(MILLIONS) | 2013 | 2012 | ||||||
Available revolving credit facilities | $ | 1,480 | $ | 990 | ||||
Drawings | (178 | ) | (268 | ) | ||||
Issued letters of credit | (240 | ) | (182 | ) | ||||
Unutilized revolving credit facilities | $ | 1,062 | $ | 540 |
Net repayments of $90 million were made during the nine months ended September 30, 2013. The repayments were financed primarily by funds from operations.
10. INCOME TAXES
Brookfield Renewable’s effective income tax rate was 7.7% for the nine months ended September 30, 2013 (2012: 47.4%). The effective tax rate is less than the statutory rate primarily due to rate differentials and non-controlling interests income not subject to tax.
11. NON-CONTROLLING INTERESTS
Brookfield Renewable’s non-controlling interests are comprised of the following:
Sep 30 | Dec 31 | |||||||
(MILLIONS) | 2013 | 2012 | ||||||
Preferred equity | $ | 821 | $ | 500 | ||||
Participating non-controlling interests - in operating subsidiaries | 1,188 | 1,028 | ||||||
General partnership interest in a holding subsidiary held by Brookfield | 59 | 63 | ||||||
Participating non-controlling interests - in a holding subsidiary - | ||||||||
Redeemable/Exchangeable units held by Brookfield | 2,869 | 3,070 | ||||||
Total | $ | 4,937 | $ | 4,661 |
Preferred equity
In January 2013 and May 2013, Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”) issued 7 million of Series 5 and Series 6 perpetual preferred shares respectively at a price of C$25 per share. The holders of the preferred shares are entitled to receive fixed cumulative dividends at an annual rate of C$1.25 per share, for a yield of 5%.
Brookfield Renewable, Brookfield Renewable Energy L.P. (“BRELP”), and certain holding company subsidiaries fully and unconditionally guarantee the payment of dividends on the preferred shares, the amount due on redemption, and the amounts due on the liquidation, dissolution or winding-up of BRP Equity.
For the three and nine months ended September 30, 2013, dividends declared on the issued preferred shares were $10 million and $27 million, respectively (2012: $3 million and $10 million, respectively).
As at September 30, 2013, none of the issued preferred shares have been redeemed.
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
Participating non-controlling interests – in operating subsidiaries
The net change in participating non-controlling interests – in operating entities is as follows:
Brookfield | ||||||||||||||||||||||||
Americas | Brookfield | |||||||||||||||||||||||
Infrastructure | Infrastructure | The Catalyst | Brascan | |||||||||||||||||||||
(MILLIONS) | Fund | Fund | Group | Energetica | Other | Total | ||||||||||||||||||
As at December 31, 2011 | $ | 380 | $ | - | $ | 167 | $ | 74 | $ | 8 | $ | 629 | ||||||||||||
Net income (loss) | (44 | ) | - | 2 | 2 | - | (40 | ) | ||||||||||||||||
OCI | 24 | - | (28 | ) | (7 | ) | 25 | 14 | ||||||||||||||||
Acquisitions | 447 | - | - | (9 | ) | 8 | 446 | |||||||||||||||||
Distributions | - | - | (18 | ) | (6 | ) | - | (24 | ) | |||||||||||||||
Other | (1 | ) | - | - | 4 | - | 3 | |||||||||||||||||
As at December 31, 2012 | $ | 806 | $ | - | $ | 123 | $ | 58 | $ | 41 | $ | 1,028 | ||||||||||||
Net income | 26 | - | 22 | - | - | 48 | ||||||||||||||||||
OCI | (8 | ) | - | - | (5 | ) | (1 | ) | (14 | ) | ||||||||||||||
Acquisitions and contributions | 42 | 205 | - | - | 1 | 248 | ||||||||||||||||||
Distributions | (111 | ) | - | - | (2 | ) | - | (113 | ) | |||||||||||||||
Other | (2 | ) | (7 | ) | - | 1 | (1 | ) | (9 | ) | ||||||||||||||
As at September 30, 2013 | $ | 753 | $ | 198 | $ | 145 | $ | 52 | $ | 40 | $ | 1,188 | ||||||||||||
Interests held by third parties | 75-80 | % | 50 | % | 25 | % | 20-30 | % | 24-50 | % |
General partnership interest in a holding subsidiary held by Brookfield
Brookfield, as the owner of the 1% general partnership interest in BRELP, is entitled to regular distributions plus an incentive distribution based on the amount by which quarterly distributions exceed specified target levels. For the three and nine months ended September 30, 2013, BRELP declared $1 million and $3 million, respectively, in distributions on the general partnership interest (2012: $1 million and $3 million, respectively) and no incentive distributions have been paid since the formation of Brookfield Renewable.
Participating non-controlling interests – in a holding subsidiary - Redeemable/Exchangeable units held by Brookfield
Consolidated equity includes Redeemable/Exchangeable Partnership Units issued by BRELP. The Redeemable/Exchangeable Partnership Units are held 100% by Brookfield Asset Management, which at its discretion has the right to redeem these units for cash consideration after a mandatory holding period expiring on November 28, 2013. Since this redemption right is subject to Brookfield Renewable’s right, at its sole discretion, to satisfy the redemption request with LP Units of Brookfield Renewable, the Redeemable/Exchangeable Partnership Units are classified as equity in accordance with IAS 32, Financial Instruments: Presentation. Both the LP Units issued by Brookfield Renewable and the Redeemable/Exchangeable Partnership Units issued by its subsidiary BRELP have the same economic attributes in all respects, except for the redemption right described above. The Redeemable/Exchangeable Partnership Units participate in earnings and distributions on a per unit basis equivalent to the per unit participation of the LP Units of Brookfield Renewable.
As at September 30, 2013, Redeemable/Exchangeable Partnership Units outstanding were 129,658,623 (December 31, 2012: 129,658,623).
For the three and nine months ended September 30, 2013, BRELP declared distributions on the Redeemable/Exchangeable Partnership Units held by Brookfield of $47 million and $141 million, respectively (2012: $45 million and $134 million, respectively).
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
12. LIMITED PARTNERS’ EQUITY
Limited partners’ equity
As at September 30, 2013, LP Units outstanding were 132,959,701 (December 31, 2012: 132,901,916) including 40,026,986 (December 31, 2012: 48,091,986) held by Brookfield Asset Management. General partnership interests represent 0.01% of Brookfield Renewable.
During 2012, a distribution re-investment plan was implemented, allowing holders of LP Units who are resident in Canada to acquire additional LP Units by reinvesting all or a portion of their cash distributions without paying commissions. During the three and nine months ended September 30, 2013, respectively, 21,832 and 57,785 LP Units were issued (2012: 11,587 and 57,359 LP Units, respectively).
Distributions
Distributions may be made by the general partner of Brookfield Renewable with the exception of instances that there is insufficient cash available, payment rends Brookfield Renewable unable to pay its debt or payment of which might leave Brookfield Renewable unable to meet any future contingent obligations.
For the three and nine months ended September 30, 2013, Brookfield Renewable declared distributions on its LP Units of $49 million and $145 million or $0.3625 per LP Unit and $1.09 per LP Unit, respectively (2012: $46 million and $138 million or $0.345 and $1.04 per LP Unit).
The composition of the distribution is presented in the following table:
(MILLIONS) | Three months ended Sep 30 | Nine months ended Sep 30 | ||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Brookfield Asset Management | $ | 15 | $ | 17 | $ | 44 | $ | 50 | ||||||||
External LP Unitholders | 34 | 29 | 101 | 88 | ||||||||||||
$ | 49 | $ | 46 | $ | 145 | $ | 138 |
In March 2013, unitholder distributions were increased to $1.45 per unit from $1.38 per unit, on an annualized basis.
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
13. SUBSIDIARY PUBLIC ISSUERS
See Note 9 – Long-term debt and credit facilities for additional details regarding issuances of mid-term corporate notes. See Note 11 – Non-controlling Interests for additional details regarding the issuances of Class A Preference Shares.
The following tables provide consolidated summary financial information for Brookfield Renewable, BRP Equity, and Brookfield Renewable Energy Partners ULC (“BREP Finance”):
Brookfield | ||||||||||||||||||||||||
Brookfield | BRP | BREP | Other | Consolidating | Renewable | |||||||||||||||||||
(MILLIONS) | Renewable | Equity | Finance | Subsidiaries(1) | adjustments(2) | consolidated | ||||||||||||||||||
As at September 30, 2013: | ||||||||||||||||||||||||
Current assets | $ | 48 | $ | - | $ | 1,483 | $ | 584 | $ | (1,537 | ) | $ | 578 | |||||||||||
Long-term assets | 2,942 | 809 | - | 17,008 | (3,746 | ) | 17,013 | |||||||||||||||||
Current liabilities | 48 | 10 | 28 | 2,408 | (1,504 | ) | 990 | |||||||||||||||||
Long-term liabilities | - | - | 1,449 | 8,077 | (804 | ) | 8,722 | |||||||||||||||||
Preferred equity | - | 821 | - | - | - | 821 | ||||||||||||||||||
Participating non-controlling interests - | ||||||||||||||||||||||||
in operating subsidiaries | - | - | - | 1,188 | - | 1,188 | ||||||||||||||||||
Participating non-controlling interests - | ||||||||||||||||||||||||
in a holding subsidiary - Redeemable/ | ||||||||||||||||||||||||
Exchangeable units held by Brookfield | - | - | - | 2,869 | - | 2,869 | ||||||||||||||||||
As at December 31, 2012: | ||||||||||||||||||||||||
Current assets | $ | 46 | $ | - | $ | 1,528 | $ | 530 | $ | (1,582 | ) | $ | 522 | |||||||||||
Long-term assets | 3,153 | 495 | - | 16,398 | (3,643 | ) | 16,403 | |||||||||||||||||
Current liabilities | 52 | 7 | 16 | 2,468 | (1,582 | ) | 961 | |||||||||||||||||
Long-term liabilities | - | - | 1,506 | 7,142 | (492 | ) | 8,156 | |||||||||||||||||
Preferred equity | - | 500 | - | - | - | 500 | ||||||||||||||||||
Participating non-controlling interests - | ||||||||||||||||||||||||
in operating subsidiaries | - | - | - | 1,028 | - | 1,028 | ||||||||||||||||||
Participating non-controlling interests - | ||||||||||||||||||||||||
in a holding subsidiary - Redeemable/ | ||||||||||||||||||||||||
Exchangeable units held by Brookfield | - | - | - | 3,070 | - | 3,070 |
(1) | Includes subsidiaries of Brookfield Renewable, other than BRP Equity and BREP Finance. |
(2) | Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a consolidated basis. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
Brookfield | ||||||||||||||||||||||||
Brookfield | BRP | BREP | Other | Consolidating | Renewable | |||||||||||||||||||
(MILLIONS) | Renewable | Equity | Finance | Subsidiaries(1) | adjustments(2) | consolidated | ||||||||||||||||||
For the three months ended Sep 30, 2013 | ||||||||||||||||||||||||
Revenues | $ | - | $ | - | $ | - | $ | 392 | $ | - | $ | 392 | ||||||||||||
Net income (loss) | 5 | - | - | 28 | (5 | ) | 28 | |||||||||||||||||
For the three months ended Sep 30, 2012 | ||||||||||||||||||||||||
Revenues | $ | - | $ | - | $ | - | $ | 229 | $ | - | $ | 229 | ||||||||||||
Net income (loss) | (26 | ) | - | - | (59 | ) | 26 | (59 | ) |
For the nine months ended Sep 30, 2013 | ||||||||||||||||||||||||
Revenues | $ | - | $ | - | $ | - | $ | 1,313 | $ | - | $ | 1,313 | ||||||||||||
Net income (loss) | 58 | - | 1 | 190 | (58 | ) | 191 | |||||||||||||||||
For the nine months ended Sep 30, 2012 | ||||||||||||||||||||||||
Revenues | $ | - | $ | - | $ | - | $ | 992 | $ | - | $ | 992 | ||||||||||||
Net income (loss) | (7 | ) | 1 | (2 | ) | (30 | ) | 7 | (31 | ) |
(1) | Includes subsidiaries of Brookfield Renewable, other than BRP Equity and BREP Finance, general partnership interest in a holding subsidiary held by Brookfield and participating non-controlling interests - in a holding subsidiary - Redeemable/Exchangeable units held by Brookfield. |
(2) | Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a consolidated basis. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
14. SEGMENTED INFORMATION
Brookfield Renewable operates renewable power assets, which include conventional hydroelectric generating assets located in the United States, Canada and Brazil, wind farms located in the United States and Canada and a pumped storage hydroelectric facility located in the United States. Brookfield Renewable also operates two natural gas-fired co-gen facilities. Management evaluates the business based on the type of power generation (Hydroelectric, Wind and Co-gen). Hydroelectric and wind are further evaluated by major region (United States, Canada and Brazil). “Equity-accounted investments” includes Brookfield Renewable’s interest in hydroelectric facilities. The “Other” segment includes CWIP and corporate costs.
In accordance with IFRS 8, Operating Segments, Brookfield Renewable discloses information about its reportable segments based upon the measures used by management in assessing performance. The accounting policies of the reportable segments are the same as those described in Note 2 of the audited 2012 consolidated financial statements. Brookfield Renewable analyzes the performance of its operating segments based on revenues less direct costs (including energy marketing costs), plus Brookfield Renewable’s share of cash earnings from equity-accounted investments and other income, before interest, income taxes, depreciation, amortization and management service costs and the cash portion of non-controlling interests (“Adjusted EBITDA”). Funds from operations is defined as Adjusted EBITDA less interest, current income taxes and management service cost, which is then adjusted for the cash portion of non-controlling interests included in funds from operations. Transactions between the reportable segments occur at fair value.
Hydroelectric | Wind energy | |||||||||||||||||||||||||||||||
(MILLIONS) | U.S. | Canada | Brazil | U.S. | Canada | Co-gen | Other | Total | ||||||||||||||||||||||||
For the three months ended Sep 30, 2013: | ||||||||||||||||||||||||||||||||
Revenues | $ | 160 | $ | 93 | $ | 69 | $ | 34 | $ | 19 | $ | 17 | $ | - | $ | 392 | ||||||||||||||||
Adjusted EBITDA | 111 | 76 | 47 | 24 | 14 | 4 | (16 | ) | 260 | |||||||||||||||||||||||
Interest expense - borrowings | (38 | ) | (17 | ) | (5 | ) | (11 | ) | (10 | ) | - | (24 | ) | (105 | ) | |||||||||||||||||
Funds from operations prior to | ||||||||||||||||||||||||||||||||
non-controlling interests | 73 | 59 | 38 | 13 | 4 | 4 | (49 | ) | 142 | |||||||||||||||||||||||
Cash portion of non-controlling interests | (15 | ) | - | (2 | ) | (7 | ) | - | - | (10 | ) | (34 | ) | |||||||||||||||||||
Funds from operations | 58 | 59 | 36 | 6 | 4 | 4 | (59 | ) | 108 | |||||||||||||||||||||||
Depreciation and amortization | (37 | ) | (20 | ) | (37 | ) | (17 | ) | (19 | ) | (3 | ) | - | (133 | ) | |||||||||||||||||
For the three months ended Sep 30, 2012: | ||||||||||||||||||||||||||||||||
Revenues | $ | 55 | $ | 42 | $ | 83 | $ | 17 | $ | 18 | $ | 14 | $ | - | $ | 229 | ||||||||||||||||
Adjusted EBITDA | 23 | 28 | 56 | 6 | 14 | 3 | (12 | ) | 118 | |||||||||||||||||||||||
Interest expense - borrowings | (34 | ) | (18 | ) | (8 | ) | (7 | ) | (11 | ) | - | (21 | ) | (99 | ) | |||||||||||||||||
Funds from operations prior to | ||||||||||||||||||||||||||||||||
non-controlling interests | (6 | ) | 10 | 44 | (1 | ) | 3 | 3 | (43 | ) | 10 | |||||||||||||||||||||
Cash portion of non-controlling interests | 4 | - | (2 | ) | 2 | - | - | (3 | ) | 1 | ||||||||||||||||||||||
Funds from operations | (2 | ) | 10 | 42 | 1 | 3 | 3 | (46 | ) | 11 | ||||||||||||||||||||||
Depreciation and amortization | (27 | ) | (18 | ) | (36 | ) | (12 | ) | (19 | ) | (5 | ) | - | (117 | ) |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
Hydroelectric | Wind energy | |||||||||||||||||||||||||||||||
(MILLIONS) | U.S. | Canada | Brazil | U.S. | Canada | Co-gen | Other | Total | ||||||||||||||||||||||||
For the nine months ended Sep 30, 2013: | ||||||||||||||||||||||||||||||||
Revenues | $ | 546 | $ | 294 | $ | 223 | $ | 107 | $ | 93 | $ | 50 | $ | - | $ | 1,313 | ||||||||||||||||
Adjusted EBITDA | 407 | 243 | 160 | 77 | 78 | 15 | (44 | ) | 936 | |||||||||||||||||||||||
Interest expense - borrowings | (111 | ) | (50 | ) | (18 | ) | (29 | ) | (34 | ) | - | (71 | ) | (313 | ) | |||||||||||||||||
Funds from operations prior to | ||||||||||||||||||||||||||||||||
non-controlling interests | 293 | 193 | 129 | 48 | 44 | 15 | (146 | ) | 576 | |||||||||||||||||||||||
Cash portion of non-controlling interests | (57 | ) | - | (9 | ) | (26 | ) | - | - | (27 | ) | (119 | ) | |||||||||||||||||||
Funds from operations | 236 | 193 | 120 | 22 | 44 | 15 | (173 | ) | 457 | |||||||||||||||||||||||
Depreciation and amortization | (104 | ) | (64 | ) | (118 | ) | (46 | ) | (57 | ) | (9 | ) | - | (398 | ) | |||||||||||||||||
For the nine months ended Sep 30, 2012: | ||||||||||||||||||||||||||||||||
Revenues | $ | 343 | $ | 207 | $ | 262 | $ | 42 | $ | 89 | $ | 49 | $ | - | $ | 992 | ||||||||||||||||
Adjusted EBITDA | 239 | 163 | 186 | 22 | 76 | 13 | (42 | ) | 657 | |||||||||||||||||||||||
Interest expense - borrowings | (102 | ) | (51 | ) | (51 | ) | (17 | ) | (32 | ) | - | (60 | ) | (313 | ) | |||||||||||||||||
Funds from operations prior to | ||||||||||||||||||||||||||||||||
non-controlling interests | 138 | 112 | 122 | 5 | 44 | 13 | (127 | ) | 307 | |||||||||||||||||||||||
Cash portion of non-controlling interests | (12 | ) | - | (10 | ) | (2 | ) | - | - | (10 | ) | (34 | ) | |||||||||||||||||||
Funds from operations | 126 | 112 | 112 | 3 | 44 | 13 | (137 | ) | 273 | |||||||||||||||||||||||
Depreciation and amortization | (86 | ) | (60 | ) | (114 | ) | (29 | ) | (56 | ) | (15 | ) | - | (360 | ) |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
The following table reconciles Adjusted EBITDA and funds from operations, presented in the above tables, to net income as presented in the interim consolidated statements of income (loss):
Three months ended Sep 30 | Nine months ended Sep 30 | |||||||||||||||||||
(MILLIONS) | Notes | 2013 | 2012 | 2013 | 2012 | |||||||||||||||
Revenues | 5 | $ | 392 | $ | 229 | $ | 1,313 | $ | 992 | |||||||||||
Other income | 1 | 2 | 5 | 12 | ||||||||||||||||
Share of cash earnings from equity-accounted | ||||||||||||||||||||
investments | 6 | 7 | 3 | 19 | 11 | |||||||||||||||
Direct operating costs | (140 | ) | (116 | ) | (401 | ) | (358 | ) | ||||||||||||
Adjusted EBITDA | 260 | 118 | 936 | 657 | ||||||||||||||||
Interest expense - borrowings | 9 | (105 | ) | (99 | ) | (313 | ) | (313 | ) | |||||||||||
Management service costs | 5 | (9 | ) | (10 | ) | (32 | ) | (25 | ) | |||||||||||
Current income tax (expense) recovery | 10 | (4 | ) | 1 | (15 | ) | (12 | ) | ||||||||||||
Funds from operations prior to non-controlling interests | 142 | 10 | 576 | 307 | ||||||||||||||||
Less: cash portion of non-controlling interests | ||||||||||||||||||||
Preferred equity | (10 | ) | (3 | ) | (27 | ) | (10 | ) | ||||||||||||
Participating non-controlling interests - in operating | ||||||||||||||||||||
subsidiaries | (24 | ) | 4 | (92 | ) | (24 | ) | |||||||||||||
Funds from operations | 108 | 11 | 457 | 273 | ||||||||||||||||
Add: cash portion of non-controlling interests | 34 | (1 | ) | 119 | 34 | |||||||||||||||
Depreciation and amortization | 7 | (133 | ) | (117 | ) | (398 | ) | (360 | ) | |||||||||||
Unrealized financial instruments gain (loss) | 3,4 | 11 | 6 | 30 | (6 | ) | ||||||||||||||
Share of non-cash loss from equity-accounted | ||||||||||||||||||||
investments | 6 | (4 | ) | (5 | ) | (10 | ) | (13 | ) | |||||||||||
Deferred income tax (expense) recovery | 10 | 10 | 37 | (1 | ) | 40 | ||||||||||||||
Other | 2 | 10 | (6 | ) | 1 | |||||||||||||||
Net income (loss) | $ | 28 | $ | (59 | ) | $ | 191 | $ | (31 | ) |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
The following table presents information about Brookfield Renewable’s certain balance sheet items on a segmented basis:
Hydroelectric | Wind energy | Equity- | Co-gen | Other | Total | |||||||||||||||||||||||||||||||
accounted | ||||||||||||||||||||||||||||||||||||
(MILLIONS) | U.S. | Canada | Brazil | U.S. | Canada | investments | ||||||||||||||||||||||||||||||
As at September 30, 2013: | ||||||||||||||||||||||||||||||||||||
Property, plant and | ||||||||||||||||||||||||||||||||||||
equipment | $ | 5,862 | $ | 5,132 | $ | 2,317 | $ | 1,206 | $ | 1,305 | $ | - | $ | 59 | $ | 455 | $ | 16,336 | ||||||||||||||||||
Total assets | 6,153 | 5,219 | 2,610 | 1,304 | 1,327 | 314 | 67 | 597 | 17,591 | |||||||||||||||||||||||||||
Total borrowings | 2,179 | 1,184 | 255 | 654 | 755 | - | - | 1,627 | 6,654 | |||||||||||||||||||||||||||
Total liabilities | 3,463 | 2,244 | 439 | 725 | 1,025 | - | 7 | 1,809 | 9,712 | |||||||||||||||||||||||||||
For the nine months ended | ||||||||||||||||||||||||||||||||||||
September 30, 2013: | ||||||||||||||||||||||||||||||||||||
Additions to property, plant | ||||||||||||||||||||||||||||||||||||
and equipment | 738 | 207 | - | 421 | - | - | - | 186 | 1,552 | |||||||||||||||||||||||||||
As at December 31, 2012: | ||||||||||||||||||||||||||||||||||||
Property, plant and | ||||||||||||||||||||||||||||||||||||
equipment | $ | 5,244 | $ | 5,191 | $ | 2,526 | $ | 834 | $ | 1,410 | $ | - | $ | 71 | $ | 382 | $ | 15,658 | ||||||||||||||||||
Total assets | 5,418 | 5,386 | 2,805 | 910 | 1,452 | 344 | 83 | 527 | 16,925 | |||||||||||||||||||||||||||
Total borrowings | 1,784 | 1,126 | 348 | 460 | 629 | - | - | 1,772 | 6,119 | |||||||||||||||||||||||||||
Total liabilities | 2,997 | 2,162 | 556 | 531 | 957 | - | 15 | 1,899 | 9,117 | |||||||||||||||||||||||||||
For the year ended | ||||||||||||||||||||||||||||||||||||
December 31, 2012: | ||||||||||||||||||||||||||||||||||||
Additions to property, plant and equipment | 621 | 85 | 147 | 610 | 14 | - | 5 | - | 1,482 |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
15. COMMITMENTS, CONTINGENCIES AND GUARANTEES
Commitments
In the course of its operations, Brookfield Renewable and its subsidiaries have entered into agreements for the use of water, land and dams. Payment under those agreements varies with the amount of power generated. The various agreements are renewable and extend up to 2054.
Project costs on the 45 MW hydroelectric project in British Columbia are expected to total $200 million.
Contingencies
Brookfield Renewable and its subsidiaries are subject to various legal proceedings, arbitrations and actions arising in the normal course of business. While the final outcome of such legal proceedings and actions cannot be predicted with certainty, it is the opinion of management that the resolution of such proceedings and actions will not have a material impact on Brookfield Renewable’s consolidated financial position or results of operations.
Guarantees
Brookfield Renewable, on behalf of Brookfield Renewable’s subsidiaries, and the subsidiaries themselves have provided letters of credit, which include, but are not limited to, guarantees for debt service reserves, capital reserves, construction completion and performance. The activity on the issued letters of credit by Brookfield Renewable can be found in Note 9 – Long-term debt and credit facilities. As at September 30, 2013, letters of credit issued by subsidiaries of Brookfield Renewable amounted to $93 million.
In the normal course of operations, Brookfield Renewable and its subsidiaries execute agreements that provide for indemnification and guarantees to third parties of transactions such as business dispositions, capital project purchases, business acquisitions, and sales and purchases of assets and services. Brookfield Renewable has also agreed to indemnify its directors and certain of its officers and employees. The nature of substantially all of the indemnification undertakings prevents Brookfield Renewable from making a reasonable estimate of the maximum potential amount that Brookfield Renewable could be required to pay third parties as the agreements do not always specify a maximum amount and the amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. Historically, neither Brookfield Renewable nor its subsidiaries have made material payments under such indemnification agreements.
16. RESTATEMENT
During the year ended December 31, 2012, Brookfield Renewable changed its accounting policy to reflect the Redeemable/Exchangeable Partnership Units issued to Brookfield Asset Management by BRELP as Participating non-controlling interests - in a holding subsidiary - Redeemable/Exchangeable units held by Brookfield since the Redeemable/Exchangeable Partnership Units provide Brookfield Asset Management the direct economic benefits and exposures to the underlying performance of BRELP. Brookfield Renewable also reclassified the general partnership interest in BRELP held by Brookfield Asset Management to non-controlling interests.
This restatement has no impact on Brookfield Renewable’s reported consolidated income (loss), income (loss) per LP Unit, comprehensive income (loss) or total equity. The impact of this restatement on the consolidated balance sheet, statements of income (loss), comprehensive income (loss) and changes in equity as at September 30, 2012 and for the three and nine months ended September 30, 2012 is shown in the following table.
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |
The following table also includes Brookfield Renewable’s retroactive restatements to its consolidated financial statements resulting from the adoption of the amended IAS 19, Employee Benefits, as discussed in Note 2(c).
Change in | ||||||||||||||||
accounting | ||||||||||||||||
Previously | policy | |||||||||||||||
(MILLIONS) | Presented | Adjustment | (Note 2(c)) | Restated | ||||||||||||
As at and for the three and nine months ended September 30, 2012: | ||||||||||||||||
Consolidated Balance Sheet and Consolidated Statements of Changes in Equity | ||||||||||||||||
General partnership interest in a holding subsidiary held by | ||||||||||||||||
Brookfield | $ | - | $ | 60 | $ | - | $ | 60 | ||||||||
Participating non-controlling interests - in a holding subsidiary | ||||||||||||||||
- Redeemable/Exchangeable units held by Brookfield | - | 2,921 | (11 | ) | 2,910 | |||||||||||
Limited partners' equity | 5,973 | (2,981 | ) | (11 | ) | 2,981 | ||||||||||
For the three months ended September 30, 2012: | ||||||||||||||||
Consolidated Statements of Income (Loss) | ||||||||||||||||
Net loss attributable to: | ||||||||||||||||
Participating non-controlling interests - in a holding subsidiary | ||||||||||||||||
- Redeemable/Exchangeable units held by Brookfield | $ | - | $ | (26 | ) | $ | - | $ | (26 | ) | ||||||
Limited partners' equity | (52 | ) | 26 | - | (26 | ) | ||||||||||
For the nine months ended September 30, 2012: | ||||||||||||||||
Consolidated Statements of Income (Loss) | ||||||||||||||||
Net loss attributable to: | ||||||||||||||||
Participating non-controlling interests - in a holding subsidiary | ||||||||||||||||
- Redeemable/Exchangeable units held by Brookfield | $ | - | $ | (8 | ) | $ | - | $ | (8 | ) | ||||||
Limited partners' equity | (15 | ) | 8 | - | (7 | ) | ||||||||||
Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||||||
Comprehensive loss attributable to: | ||||||||||||||||
General partnership interest in a holding subsidiary held by | ||||||||||||||||
Brookfield | $ | - | $ | (2 | ) | $ | - | $ | (2 | ) | ||||||
Participating non-controlling interests - in a holding subsidiary | ||||||||||||||||
- Redeemable/Exchangeable units held by Brookfield | - | (42 | ) | (3 | ) | (45 | ) | |||||||||
Limited partners' equity | (86 | ) | 44 | (3 | ) | (45 | ) |
17. SUBSEQUENT EVENTS |
In November 2013, Brookfield Renewable announced an agreement to acquire a 70 MW hydroelectric portfolio in Maine consisting of nine facilities on three rivers. The portfolio is expected to generate approximately 375 GWh annually. The acquisition is being pursued with institutional partners and Brookfield Renewable will assume an approximate 40% interest in the portfolio. |
Brookfield Renewable also announced an agreement to acquire, with our institutional partners, the remaining 50% interest in the 30 MW Malacha Hydro facility in California. Brookfield Renewable will retain an approximate 25% interest in the facility. |
The transactions above are subject to regulatory approvals and other customary closing conditions and are expected to close before the end of 2013. |
Brookfield Renewable Energy Partners L.P. | Q3 2013 Interim Consolidated Financial Statements and Notes |