EX-99.2 3 exh99_2.htm EXHIBIT 99.2  

 

Brookfield Renewable Energy Partners L.P.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

AS AT SEPTEMBER 30, 2014 AND DECEMBER 31, 2013 AND

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

UNAUDITED

 

 

Sep 30

 

Dec 31

(MILLIONS)

Notes

 

2014

 

2013

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

196

$

203

 

Restricted cash

 

 

212

 

169

 

Trade receivables and other current assets

 

 

178

 

184

 

Financial instrument assets

4

 

51

 

2

 

Due from related parties

 

 

46

 

48

 

 

 

 

 

683

 

606

Financial instrument assets

4

 

6

 

15

Equity-accounted investments

6

 

232

 

290

Property, plant and equipment, at fair value

7

 

17,364

 

15,741

Deferred income tax assets

10

 

149

 

117

Other long-term assets

 

 

121

 

210

 

 

$

18,555

$

16,979

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued liabilities

8

$

280

$

209

 

Financial instrument liabilities

4

 

90

 

64

 

Due to related parties

 

 

83

 

110

 

Current portion of long-term debt

9

 

494

 

517

 

 

 

 

 

947

 

900

Financial instrument liabilities

4

 

55

 

9

Long-term debt and credit facilities

9

 

6,828

 

6,106

Deferred income tax liabilities

10

 

2,332

 

2,265

Other long-term liabilities

 

 

123

 

163

 

 

 

 

 

10,285

 

9,443

Equity

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

Preferred equity

11

 

756

 

796

 

Participating non-controlling interests - in operating

 

 

 

 

 

 

 

subsidiaries

11

 

2,202

 

1,303

 

General partnership interest in a holding subsidiary

 

 

 

 

 

 

 

held by Brookfield

11

 

51

 

54

 

Participating non-controlling interests - in a holding subsidiary

 

 

 

 

 

 

 

 - Redeemable/Exchangeable units held by Brookfield

11

 

2,499

 

2,657

Limited partners' equity

12

 

2,762

 

2,726

 

 

 

 

 

8,270

 

7,536

 

 

 

 

$

18,555

$

16,979

 

 

 

 

 

 

 

 

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

Director

David Mann

Director
         

  

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 1 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

 

 

 

 

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED

Notes

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS, EXCEPT AS NOTED)

 

 

 

2014

 

2013

 

2014

 

2013

Revenues

 

 

5

$

342

$

392

$

1,296

$

1,313

Other income

 

 

3

 

1

 

8

 

5

Direct operating costs

 

 

(132)

 

(140)

 

(386)

 

(401)

Management service costs

5

 

(14)

 

(9)

 

(38)

 

(32)

Interest expense – borrowings

9

 

(106)

 

(105)

 

(309)

 

(313)

Share of earnings from equity-accounted

 

 

 

 

 

 

 

 

 

 

investments

6

 

7

 

3

 

10

 

9

Unrealized financial instruments gain

4

 

9

 

11

 

5

 

30

Depreciation

7

 

(145)

 

(133)

 

(400)

 

(398)

Other

3

 

(11)

 

2

 

(3)

 

(6)

(Loss) income before income taxes

 

 

(47)

 

22

 

183

 

207

Income tax recovery (expense)

 

 

 

 

 

 

 

 

 

 

Current

10

 

(5)

 

(4)

 

(19)

 

(15)

 

Deferred

10

 

27

 

10

 

8

 

(1)

 

 

 

22

 

6

 

(11)

 

(16)

Net (loss) income

 

$

(25)

$

28

$

172

$

191

Net (loss) income attributable to:

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

Preferred equity

11

$

10

$

10

$

29

$

27

 

Participating non-controlling interests - in

 

 

 

 

 

 

 

 

 

 

 

operating subsidiaries

11

 

(2)

 

8

 

59

 

48

 

General partnership interest in a holding

 

 

 

 

 

 

 

 

 

 

 

subsidiary held by Brookfield

11

 

-

 

-

 

1

 

1

 

Participating non-controlling interests - in a

 

 

 

 

 

 

 

 

 

 

 

holding subsidiary - Redeemable/

 

 

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

11

 

(16)

 

5

 

41

 

57

Limited partners' equity

12

 

(17)

 

5

 

42

 

58

 

 

 

 

$

(25)

$

28

$

172

$

191

Basic and diluted (loss) earnings per LP Unit

 

$

(0.13)

$

0.04

$

0.31

$

0.44

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

 

 

 

 

  

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 2 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

 

 

 

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

Notes

 

2014

 

2013

 

2014

 

2013

Net (loss) income

$

(25)

$

28

$

172

$

191

Other comprehensive (loss) income that will not be

 

 

 

 

 

 

 

 

 

reclassified to net (loss) income

 

 

 

 

 

 

 

 

 

 

 

Actuarial (losses) gains on defined benefit plans

 

 

(10)

 

9

 

(10)

 

9

 

 

Deferred income taxes on above items

 

 

3

 

(2)

 

3

 

(2)

Total items that will not be reclassified to net income (loss)

 

(7)

 

7

 

(7)

 

7

Other comprehensive (loss) income that may be

 

 

 

 

 

 

 

 

 

reclassified to net (loss) income

 

 

 

 

 

 

 

 

 

 

Financial instruments designated as cash-flow

 

 

 

 

 

 

 

 

 

 

 

hedges

 

 

 

 

 

 

 

 

 

 

 

(Losses) gains arising during the period

4

 

(2)

 

(1)

 

(55)

 

49

 

 

Reclassification adjustments for amounts

 

 

 

 

 

 

 

 

 

 

 

 

 recognized in net (loss) income

4

 

(3)

 

(9)

 

5

 

(5)

 

Foreign currency translation

 

 

(304)

 

31

 

(201)

 

(316)

 

Deferred income taxes on above items

 

 

(3)

 

(1)

 

7

 

(13)

Total items that may be reclassified subsequently to

   

 

 

 

 

 

 

 

 

 

 

net (loss) income

 

 

(312)

 

20

 

(244)

 

(285)

Other comprehensive (loss) income

 

 

(319)

 

27

 

(251)

 

(278)

Comprehensive (loss) income

 

$

(344)

$

55

$

(79)

$

(87)

Comprehensive (loss) income attributable to:

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

Preferred equity

11

$

(27)

$

27

$

(12)

$

(1)

 

Participating non-controlling interests - in

 

 

 

 

 

 

 

 

 

 

 

operating subsidiaries

11

 

(38)

 

6

 

29

 

34

 

General partnership interest in a holding subsidiary

 

 

 

 

 

 

 

 

 

 

 

held by Brookfield

11

 

(3)

 

-

 

(1)

 

(1)

 

Participating non-controlling interests - in a holding

 

 

 

 

 

 

 

 

 

 

 

subsidiary - Redeemable/Exchangeable

 

 

 

 

 

 

 

 

 

 

 

units held by Brookfield

11

 

(135)

 

11

 

(46)

 

(59)

Limited partners' equity

12

 

(141)

 

11

 

(49)

 

(60)

 

 

 

 

 

$

(344)

$

55

$

(79)

$

(87)

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these interim consolidated financial statements. 

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 3 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income

 

 

 

 

 

 

 

Participating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General

non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

partnership

interests - in a

 

 

 

 

 

 

 

 

 

 

Actuarial

 

 

 

 

 

 

Participating

interest in

holding subsidiary

 

 

 

 

 

 

 

 

 

 

losses on

 

 

Total

 

 

non-controlling

a holding

- Redeemable

 

 

THREE MONTHS ENDED SEPTEMBER 30

Limited

Foreign

 

 

defined

 

 

limited

 

 

interests - in

subsidiary

/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, 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

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

205

 

  -

 

  -

 

205

Distributions or dividends declared

 

(49)

 

  -

 

  -

 

  -

 

  -

 

(49)

 

(10)

 

(33)

 

(1)

 

(47)

 

(140)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, as at June 30, 2014

$

(131)

$

(37)

$

3,158

$

(7)

$

(20)

$

2,963

$

793

$

2,011

$

55

$

2,681

$

8,503

Net (loss) income

 

(17)

 

  -

 

  -

 

  -

 

  -

 

(17)

 

10

 

(2)

 

  -

 

(16)

 

(25)

Other comprehensive loss

 

  -

 

(120)

 

  -

 

(3)

 

(1)

 

(124)

 

(37)

 

(36)

 

(3)

 

(119)

 

(319)

Acquisitions (Note 3)

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

273

 

  -

 

  -

 

273

Distributions or dividends declared

 

(56)

 

  -

 

  -

 

  -

 

  -

 

(56)

 

(10)

 

(45)

 

(2)

 

(50)

 

(163)

Other

 

(4)

 

  -

 

  -

 

  -

 

  -

 

(4)

 

  -

 

1

 

1

 

3

 

1

Change in period

 

(77)

 

(120)

 

  -

 

(3)

 

(1)

 

(201)

 

(37)

 

191

 

(4)

 

(182)

 

(233)

Balance, as at September 30, 2014

$

(208)

$

(157)

$

3,158

$

(10)

$

(21)

$

2,762

$

756

$

2,202

$

51

$

2,499

$

8,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 4 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income

 

 

 

 

 

 

 

Participating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General

non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

partnership

interests - in a

 

 

 

 

 

 

 

 

 

 

Actuarial

 

 

 

 

 

 

Participating

interest in

holding subsidiary

 

 

 

 

 

 

 

 

 

 

losses on

 

 

Total

 

 

non-controlling

a holding

- Redeemable

 

 

NINE MONTHS ENDED SEPTEMBER 30

Limited

Foreign

 

 

defined

 

 

limited

 

 

interests - in

subsidiary

/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 December 31, 2012

 

$

(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)

Preferred shares issued

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

349

 

  -

 

  -

 

  -

 

349

Acquisitions

 

14

 

  -

 

(14)

 

  -

 

  -

 

  -

 

  -

 

205

 

  -

 

  -

 

205

Distributions or dividends declared

 

(145)

 

  -

 

  -

 

  -

 

  -

 

(145)

 

(27)

 

(113)

 

(3)

 

(141)

 

(429)

Distribution reinvestment plan

 

1

 

  -

 

  -

 

  -

 

  -

 

1

 

  -

 

  -

 

  -

 

  -

 

1

Other

 

(1)

 

  -

 

  -

 

  -

 

  -

 

(1)

 

  -

 

34

 

  -

 

(1)

 

32

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, as at December 31, 2013

$

(337)

$

(83)

$

3,160

$

(7)

$

(7)

$

2,726

$

796

$

1,303

$

54

$

2,657

$

7,536

Net income

 

42

 

  -

 

  -

 

  -

 

  -

 

42

 

29

 

59

 

1

 

41

 

172

Other comprehensive loss

 

  -

 

(74)

 

  -

 

(3)

 

(14)

 

(91)

 

(41)

 

(30)

 

(2)

 

(87)

 

(251)

LP Unit issued (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net proceeds

 

285

 

  -

 

  -

 

  -

 

  -

 

285

 

  -

 

  -

 

  -

 

  -

 

285

 

Adjustment

 

(38)

 

  -

 

  -

 

  -

 

  -

 

(38)

 

  -

 

  -

 

1

 

37

 

  -

Acquisitions (Note 3)

 

2

 

  -

 

(2)

 

  -

 

  -

 

  -

 

  -

 

967

 

  -

 

  -

 

967

Distributions or dividends declared

 

(160)

 

  -

 

  -

 

  -

 

  -

 

(160)

 

(29)

 

(97)

 

(5)

 

(151)

 

(442)

Distribution reinvestment plan

 

2

 

  -

 

  -

 

  -

 

  -

 

2

 

  -

 

  -

 

  -

 

  -

 

2

Other

 

(4)

 

  -

 

  -

 

  -

 

  -

 

(4)

 

1

 

  -

 

2

 

2

 

1

Change in period

 

129

 

(74)

 

(2)

 

(3)

 

(14)

 

36

 

(40)

 

899

 

(3)

 

(158)

 

734

Balance, as at September 30, 2014

$

(208)

$

(157)

$

3,158

$

(10)

$

(21)

$

2,762

$

756

$

2,202

$

51

$

2,499

$

8,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 5 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

 

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

Three months ended

Nine months ended

UNAUDITED

 

Sep 30

 

Sep 30

(MILLIONS)

 

2014

 

2013

 

2014

 

2013

Operating activities

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(25)

$

28

$

172

$

191

Adjustments for the following non-cash items:

 

 

 

 

 

 

 

 

 

 

Depreciation

7

 

145

 

133

 

400

 

398

 

Unrealized financial instrument loss

4

 

(9)

 

(11)

 

(5)

 

(30)

 

Share of earnings from equity accounted investments

6

 

(7)

 

(3)

 

(10)

 

(9)

 

Deferred income tax expense

10

 

(27)

 

(10)

 

(8)

 

1

 

Other non-cash items

 

 

5

 

1

 

2

 

3

Dividends received from equity-accounted investments

6

 

10

 

8

 

28

 

14

Changes in due to or from related parties

 

 

8

 

24

 

14

 

14

Net change in working capital balances

 

 

88

 

79

 

47

 

87

 

 

 

 

 

188

 

249

 

640

 

669

Financing activities

 

 

 

 

 

 

 

 

 

Long-term debt - borrowings

9

 

420

 

-

 

1,126

 

1,222

Long-term debt - repayments

9

 

(22)

 

(341)

 

(556)

 

(1,631)

Capital provided by participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

in operating subsidiaries

11

 

273

 

205

 

967

 

246

Issuance of preferred shares

11

 

-

 

-

 

-

 

337

Issuance of LP Units

12

 

-

 

-

 

285

 

-

Distributions paid:

 

 

 

 

 

 

 

 

 

 

To participating non-controlling interests - in operating

 

 

 

 

 

 

 

 

 

 

 

subsidiaries and preferred equity

11

 

(54)

 

(44)

 

(125)

 

(138)

     

To unitholders of Brookfield Renewable or BRELP

12

 

(107)

 

(95)

 

(374)

 

(282)

 

 

 

 

 

510

 

(275)

 

1,323

 

(246)

Investing activities

 

 

 

 

 

 

 

 

 

Acquisitions

3

 

(599)

 

-

 

(1,827)

 

(243)

Investment in:

 

 

 

 

 

 

 

 

 

 

Sustaining capital expenditures

 

 

(42)

 

(23)

 

(69)

 

(44)

 

Development and construction of renewable power

 

 

 

 

 

 

 

 

 

 

 

generating assets

 

 

(36)

 

(33)

 

(53)

 

(113)

Investment tax credits related to renewable power

 

 

 

 

 

 

 

 

 

 

generating assets

 

 

11

 

-

 

23

 

-

Restricted cash

 

 

(50)

 

36

 

(36)

 

31

 

 

 

 

 

(716)

 

(20)

 

(1,962)

 

(369)

Foreign exchange loss on cash

 

 

(11)

 

-

 

(8)

 

(6)

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

(Decrease) increase

 

 

(29)

 

(46)

 

(7)

 

48

 

Balance, beginning of period

 

 

225

 

231

 

203

 

137

 

Balance, end of period

 

$

196

$

185

$

196

$

185

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

 

Interest paid

 

$

54

$

52

$

251

$

249

 

Interest received

 

 

3

 

1

 

8

 

5

 

Income taxes paid

 

 

6

 

5

 

28

 

24

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these interim consolidated financial statements.

 

 

 

 

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 6 

 

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, Brazil and Europe.

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 SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The 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, 2013.

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 December 31, 2013 audited 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, 2014.  

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

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 7 

 

equity of Brookfield Renewable’s subsidiaries are shown separately in equity in the consolidated balance sheets.

(c) New interpretation adopted by Brookfield Renewable

IFRIC 21, Levies  was adopted and applied by Brookfield Renewable on January 1, 2014, which had no material impact on the interim consolidated financial statements.

(d) Future changes

IFRS 15, Revenue from Contracts with Customers (“IFRS 15”)

IFRS 15 was issued by the IASB on May 28, 2014. IFRS 15 outlines a single comprehensive model to account for revenue arising from contracts with customers and will replace the majority of existing IFRS requirements on revenue recognition including IAS 18, Revenue,  IAS 11, Construction Contracts and related interpretations. The core principle of the standard is to recognize revenue to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard has prescribed a five-step model to apply the principles. The standard also specifies how to account for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. IFRS 15 is effective for annual periods beginning on or after January 1, 2017. Management is currently evaluating the impact of IFRS 15 on the consolidated financial statements.

Please refer to the December 31, 2013 audited consolidated financial statements for other future changes to IFRS with potential impact on Brookfield Renewable.

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.

Maine Hydroelectric Generation Facilities

In January 2014, Brookfield Renewable acquired a 70 MW hydroelectric portfolio of generation facilities that are expected to generate approximately 400 GWh annually (“Maine Hydro”). The acquisition was completed with institutional partners, and Brookfield Renewable retains an approximate 40% controlling interest in the portfolio. Total cash consideration was $244 million. The acquisition costs of $2 million were expensed as incurred. 

California Hydroelectric Generation Facility

In February 2014, Brookfield Renewable acquired the remaining 50% interest in a 30 MW hydroelectric generation facility in California. The total cash consideration was $11 million (the “California Hydro Step Acquisition”). The acquisition was completed with institutional partners, and Brookfield Renewable retains an approximate 22% controlling interest in the facility.

Pennsylvania Hydroelectric Generation Facility   

In March 2014, Brookfield Renewable acquired a 33% economic and 50% voting interest in a 417 MW hydroelectric generation facility in Pennsylvania (“Pennsylvania Hydro”) which is expected to generate approximately 1,100 GWh annually. Total cash consideration was $295 million.  Brookfield Renewable accounted for its acquired 33% economic interest using the equity method.  

In August 2014, Brookfield Renewable acquired the remaining 67% economic and 50% voting interest in Pennsylvania Hydro (the “Pennsylvania Hydro Step Acquisition”) for additional cash consideration of $614 million, and began consolidating the operating results, cash flows and net assets of Pennsylvania Hydro. Prior to the Pennsylvania Hydro Step Acquisition, Brookfield Renewable re-measured its previously held

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 8 

 

33% economic interest to fair value, and the net impact of this re-measurement was not material. The Pennsylvania Hydro Step Acquisition was completed with institutional partners, and Brookfield Renewable retains an approximate 40% controlling interest. Total acquisition costs of $2 million relating to both the Pennsylvania Hydro and Pennsylvania Hydro Step Acquisition were expensed as incurred.

Ireland Wind Portfolio   

In June 2014, Brookfield Renewable acquired the wind portfolio of Bord Gáis Energy comprising 326 MW of operating wind capacity across 17 wind projects in  Ireland. The acquisition was completed with institutional partners, and Brookfield Renewable retains an approximate 40% controlling interest. Total consideration of €516 million ($707 million) included €521 million ($713 million) in cash reduced for post-closing working capital adjustments and a deferred consideration amount. The acquisition costs of $12 million were expensed as incurred. 

Voting Agreements

In January 2014 and March 2014, Brookfield Renewable entered into voting agreements with subsidiaries of Brookfield Asset Management whereby these subsidiaries, as managing members of entities related to Brookfield Infrastructure Fund II (the “BIF II Entities”), in which Brookfield Renewable holds its investments in the Maine Hydro, Pennsylvania Hydro and the Irish wind portfolio with institutional investors, agreed to assign to Brookfield Renewable their voting rights to appoint the directors of the BIF II Entities. 

Preliminary price allocations, at fair values, with respect to the acquisitions were as follows:  

(MILLIONS)

Maine

Pennsylvania

Ireland

Cash and cash equivalents

$

7

$

15

$

35

Restricted cash

 

-

 

-

 

12

Trade receivables and other current assets

 

13

 

11

 

10

Property, plant and equipment, at fair value

 

220

 

1,034

 

1,061

Other long-term assets

 

6

 

-

 

-

Current liabilities

 

(1)

 

(4)

 

(72)

Long-term debt

 

-

 

(77)

 

(232)

Other long-term liabilities

 

(1)

 

(70)

 

(107)

Net assets acquired

$

244

$

909

$

707

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, 2013 audited consolidated financial statements.

Financial instruments disclosures

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 9 

 

Fair values determined using 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.

A fair value measurement of a non-financial asset is the consideration that would be received in an orderly transaction between market participants, considering the highest and best use of the asset.

Assets and liabilities  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 assets and liabilities measured and disclosed at fair value classified by the fair value hierarchy:

 

 

Sep 30, 2014

Dec 31

(MILLIONS)

Level 1

Level 2

Level 3

Total

2013

Assets measured at fair value:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

196

$

-

$

-

$

196

$

203

Restricted cash

 

212

 

-

 

-

 

212

 

169

Financial instrument assets

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

-

 

3

 

-

 

3

 

17

 

Foreign exchange swaps

 

-

 

54

 

-

 

54

 

-

Property, plant and equipment(1)

 

-

 

-

 

17,364

 

17,364

 

15,741

Liabilities measured at fair value:

 

 

 

 

 

 

 

 

 

 

Financial instrument liabilities

 

 

 

 

 

 

 

 

 

 

 

Energy derivative contracts

 

-

 

(5)

 

-

 

(5)

 

(3)

 

Interest rate swaps

 

-

 

(140)

 

-

 

(140)

 

(70)

Liabilities for which fair value is disclosed:

 

 

 

 

 

 

 

 

 

 

 

Long-term debt and credit facilities

 

-

 

(8,207)

 

-

 

(8,207)

 

(7,128)

Total

$

408

$

(8,295)

$

17,364

$

9,477

$

8,929

(1)       Refer to Note 7 - Property, plant and equipment, at fair value for further information.

 

There were no transfers between levels during the nine months ended September 30, 2014.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 10 

 

The aggregate amount of Brookfield Renewable’s net financial instrument positions are as follows:

 

 

Sep 30, 2014

Dec 31, 2013

(MILLIONS)

Assets

Liabilities

Net Liabilities

Net Liabilities

Energy derivative contracts

$

-

$

5

$

5

$

3

Interest rate swaps

 

3

 

140

 

137

 

53

Foreign exchange swaps

 

54

 

-

 

(54)

 

-

Total

 

57

 

145

 

88

 

56

Less: current portion

 

51

 

90

 

39

 

62

Long-term portion

$

6

$

55

$

49

$

(6)

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.

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.

Foreign exchange swaps

Brookfield Renewable has entered into foreign exchange swaps to minimize its exposure to currency fluctuations impacting its investments in foreign operations, and to fix the exchange rate on certain anticipated transactions denominated in foreign currencies.

The following table reflects the unrealized gains (losses) included in the consolidated statements of (loss) income:

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2014

 

2013

 

2014

 

2013

Energy derivative contracts

$

(1)

$

2

$

(1)

$

12

Interest rate swaps

 

  -

 

9

 

1

 

18

Foreign exchange swaps

 

10

 

  -

 

5

 

  -

 

$

9

$

11

$

5

$

30

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 11 

 

The following table reflects the unrealized gains (losses) included in the consolidated statements of comprehensive (loss) income:

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2014

 

2013

 

2014

 

2013

Energy derivative contracts

$

(3)

$

  -

$

(4)

$

  -

Interest rate swaps(1)

 

(9)

 

(1)

 

(63)

 

49

Foreign exchange swaps

 

10

 

  -

 

12

 

  -

 

$

(2)

$

(1)

$

(55)

$

49

(1)       Included in the nine months ended September 30, 2013 are unrealized gains of $2 million relating to equity-accounted investments.

The following table reflects the reclassification adjustments recognized in net (loss) income in the consolidated statements of comprehensive (loss) income:

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2014

 

2013

 

2014

 

2013

Energy derivative contracts

$

(3)

$

-

$

3

$

-

Interest rate swaps

 

-

 

(9)

 

2

 

(5)

 

$

(3)

$

(9)

$

5

$

(5)

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.

The following table reflects the related party agreements and transactions on the consolidated statements of (loss) income:

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2014

 

2013

 

2014

 

2013

Revenues

 

 

 

 

 

 

 

 

 

Purchase and revenue support agreements

$

99

$

102

$

280

$

339

 

Wind levelization agreement

 

2

 

3

 

5

 

5

 

 

$

101

$

105

$

285

$

344

Direct operating costs

 

 

 

 

 

 

 

 

 

Energy purchases

$

(1)

$

(8)

$

(8)

$

(26)

 

Energy marketing fee

 

(6)

 

(5)

 

(16)

 

(15)

 

Insurance services

 

(7)

 

(6)

 

(21)

 

(19)

 

 

$

(14)

$

(19)

$

(45)

$

(60)

Management service costs

$

(14)

$

(9)

$

(38)

$

(32)

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 12 

 

6. EQUITY-ACCOUNTED INVESTMENTS

The following table outlines the changes in Brookfield Renewable’s equity-accounted investments:

 

 

Three months ended

Nine months ended

Year ended

(MILLIONS)

Sep 30, 2014

Sep 30, 2014

Dec 31, 2013

Balance, beginning of period

$

542

$

290

$

344

Acquisitions (see Note 3):

 

 

 

 

 

 

 

California Hydro Step Acquisition

 

-

 

(39)

 

-

 

Pennsylvania Hydro Step Acquisition

 

(301)

 

-

 

-

 

Canada Hydroelectric Step Acquisition

 

-

 

-

 

(19)

Revaluation recognized through OCI

 

-

 

-

 

(15)

Share of OCI

 

1

 

1

 

1

Share of net income

 

7

 

10

 

9

Dividends declared

 

(10)

 

(25)

 

(18)

Foreign exchange loss

 

(8)

 

(5)

 

(12)

Other

 

1

 

-

 

-

Balance, end of period

$

232

$

232

$

290

The following table summarizes certain financial information of equity-accounted investments:

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2014

 

2013

 

2014

 

2013

Revenue

$

30

$

28

$

95

$

87

Net income

 

14

 

5

 

20

 

17

Share of net income (loss)

 

 

 

 

 

 

 

 

 

Cash earnings

 

10

 

7

 

25

 

19

 

Non-cash loss

 

(3)

 

(4)

 

(15)

 

(10)

 

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 13 

 

7.   PROPERTY, PLANT AND EQUIPMENT, AT FAIR VALUE   

The following table presents a reconciliation of property, plant and equipment at fair value:

 

 

 

 

 

 

 

 

Co-

 

 

(MILLIONS)

 

Hydroelectric

Wind energy

CWIP

generation

Total

As at December 31, 2013

 

$

12,806

$

2,448

$

441

$

46

$

15,741

Foreign exchange

 

(347)

 

(142)

 

(6)

 

(1)

 

(496)

Additions(1)

 

1,320

 

1,075

 

124

 

-

 

2,519

Transfers

 

281

 

(1)

 

(280)

 

-

 

-

Depreciation(2)

 

(282)

 

(115)

 

-

 

(3)

 

(400)

As at September 30, 2014

$

13,778

$

3,265

$

279

$

42

$

17,364

(1)       Includes acquisitions of $2,396 million.

(2)       Assets not subject to depreciation include construction work in process (“CWIP”) and land.

8.  accounts payable and accrued liabilities

Brookfield Renewable’s accounts payable and accrued liabilities are as follows:  

 

 

Sep 30

 

Dec 31

(MILLIONS)

 

2014

 

2013

Operating accrued liabilities

$

133

$

101

Interest payable on corporate and subsidiary borrowings

 

93

 

49

Accounts payable

 

23

 

11

LP Unitholders’ distribution(1) and preferred dividends payable

 

20

 

40

Other

 

11

 

8

 

$

280

$

209

(1)       Includes amounts payable to external LP Unitholders. Amounts payable to Brookfield Asset Management are included in due to related parties.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 14 

 

9.  LONG-TERM DEBT AND CREDIT FACILITIES

The composition of debt obligations is presented in the following table:

 

 

Sep 30, 2014

Dec 31, 2013

 

 

Weighted-average

 

 

Weighted-average

 

 

 

 

Interest

Term

 

 

Interest

Term

 

 

(MILLIONS EXCEPT AS NOTED)

rate (%)

(years)

 

rate (%)

(years)

 

Corporate borrowings

 

 

 

 

 

 

 

 

 

Series 3

5.3

4.1

$

179

5.3

4.8

$

188

 

Series 4

5.8

22.1

 

134

5.8

22.9

 

141

 

Series 6

6.1

2.2

 

268

6.1

2.9

 

282

 

Series 7

5.1

6.0

 

402

5.1

6.8

 

424

 

Series 8

4.8

7.4

 

357

4.8

8.1

 

377

 

 

5.3

7.0

$

1,340

5.3

7.7

$

1,412

Subsidiary borrowings

 

 

 

 

 

 

 

 

 

United States

5.9

9.3

$

2,998

6.0

9.7

$

2,826

 

Canada

5.7

14.0

 

1,881

5.8

15.2

 

1,877

 

Brazil

7.3

10.5

 

211

7.4

11.1

 

238

 

Europe

3.8

12.3

 

414

-

-

 

-

 

 

5.7

11.2

$

5,504

6.0

11.8

$

4,941

Credit facilities

1.4

4.8

$

512

1.4

3.8

$

311

Total debt

 

 

$

7,356

 

 

$

6,664

Add: Unamortized premiums(1)

 

 

 

21

 

 

 

11

Less: Unamortized financing fees(1)

 

 

 

(55)

 

 

 

(52)

Less: Current portion

 

 

 

(494)

 

 

 

(517)

 

 

 

 

$

6,828

 

 

$

6,106

(1)            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.

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 Taxa de Juros de Longo Prazo, the Brazil National Bank for Economic Development’s long-term interest rate, or Interbank Deposit Certificate rate, plus a margin.

In January 2014, the $279 million bridge loan associated with a 360 MW operating hydroelectric portfolio located in New England was refinanced to 2017 at LIBOR plus 2.25%. 

In February 2014, as part of the Maine Hydro acquisition, $140 million of financing was obtained through a bond issuance with a 5.5% interest rate maturing in 2024.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 15 

 

In March 2014, Brookfield Renewable up-financed indebtedness associated with a 349 MW Ontario hydroelectric portfolio through the issuance of C$90 million of senior and C$60 million of subordinate bonds with interest rates of 3.8% and 5.0%, respectively, maturing in June 2023.

In June 2014, Brookfield Renewable refinanced a $125 million debt facility associated with a 167 MW hydroelectric portfolio in New England through the issuance of 8-year notes maturing in January 2022 at a fixed rate of 4.59%.

In June 2014, as part of the acquisition of the 326 MW Irish wind portfolio, Brookfield Renewable assumed a €169 million ($232 million) loan with a fixed interest rate of 4.6%, including the related interest rate swaps, maturing in December 2026.

The maturity of the $250 million credit facility associated with a hydroelectric portfolio in the southeastern United States was extended by six months to November 2014. Brookfield Renewable is in the process of extending this facility prior to its expiry.

In August 2014, as part of the of Pennsylvania Hydro Step Acquisition, Brookfield Renewable assumed a $65 million loan with an interest rate of 7.1% maturing in June 2018.

In August 2014, Brookfield Renewable secured a €160 million ($210 million) loan associated with 153 MW of its wind facilities in Ireland with an initial fixed interest rate of 2.9%, including the related interest rate swaps, maturing in December 2026.

Cash received from borrowings net of repayments was $369 million during the nine months ended September 30, 2014.

Credit facilities

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.

In August 2014, Brookfield Renewable extended the maturity of all corporate credit facilities to June 2019 and reduced the applicable margin by five basis points from 1.25% to 1.20%. The credit facilities now also provide Brookfield Renewable with an option to borrow in Euro (€) and British Pound Sterling (£).

 

Sep 30

Dec 31

(MILLIONS)

 

2014

 

2013

Available revolving credit facilities

$

1,480

$

1,480

Drawings(1)

 

(512)

 

(311)

Issued letters of credit

 

(226)

 

(212)

Unutilized revolving credit facilities

$

742

$

957

(1)            Amounts are unsecured and revolving. Interest rate is at the LIBOR plus 1.20% (December 31, 2013: 1.25%).

Net draws of $201 million were made during the nine months ended September 30, 2014.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 16 

 

10.  Income taxes

Brookfield Renewable’s effective income tax rate was 6% for the nine months ended September 30, 2014 (2013: 7.7%). 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)

 

2014

 

2013

Preferred equity

$

756

$

796

Participating non-controlling interests - in operating subsidiaries

 

2,202

 

1,303

General partnership interest in a holding subsidiary held by Brookfield

 

51

 

54

Participating non-controlling interests - in a holding subsidiary -

 

 

 

 

  

 Redeemable/Exchangeable units held by Brookfield

 

2,499

 

2,657

Total

$

5,508

$

4,810

Preferred equity

Brookfield Renewable’s preferred equity consists of Class A Preference Shares as follows:

 

 

 

Earliest

Dividends declared

 

 

 

 

 

 

Cumulative

permitted

for the nine months

 

 

 

 

 

Shares

dividend

redemption

ended September 30

Sep 30

Dec 31

(MILLIONS)

outstanding

rate

date

2014

2013

2014

2013

Series 1

10

5.25%

Apr 30, 2015

$

9

$

10

$

222

$

234

Series 3

10

4.40%

Jul 31, 2019

 

8

 

8

 

222

 

234

Series 5

7

5.00%

Apr 30, 2018

 

6

 

6

 

156

 

164

Series 6

7

5.00%

Jul 31, 2018

 

6

 

3

 

156

 

164

 

34

 

 

$

29

$

27

$

756

$

796

As at September 30, 2014, none of the issued Class A Preference Shares have been redeemed by Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”).

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 17 

 

Participating non-controlling interests – in operating subsidiaries

The net change in participating non-controlling interests – in operating entities is as follows:

 

Brookfield

 

 

 

 

 

 

 

 

 

 

 

Americas

Brookfield

 

 

Brookfield

 

 

 

 

 

Infrastructure

Infrastructure

The Catalyst

Energia

 

 

 

 

(MILLIONS)

Fund

Fund II

Group

Renovável

Other

Total

As at December 31, 2012

$

806

$

-

$

123

$

58

$

41

$

1,028

Net income

 

21

 

1

 

18

 

1

 

-

 

41

OCI

 

133

 

(2)

 

(26)

 

(10)

 

4

 

99

Acquisitions

 

51

 

214

 

-

 

-

 

-

 

265

Distributions

 

(119)

 

-

 

-

 

(3)

 

-

 

(122)

Other

 

(1)

 

(6)

 

1

 

-

 

(2)

 

(8)

As at December 31, 2013

$

891

$

207

$

116

$

46

$

43

$

1,303

Net income

 

20

 

22

 

17

 

-

 

-

 

59

OCI

 

(21)

 

(5)

 

-

 

(2)

 

(2)

 

(30)

Acquisitions (Note 3)

 

-

 

967

 

-

 

-

 

-

 

967

Distributions

 

(29)

 

(53)

 

(12)

 

(2)

 

-

 

(96)

Other

 

-

 

-

 

-

 

-

 

(1)

 

(1)

As at September 30, 2014

$

861

$

1,138

$

121

$

42

$

40

$

2,202

Interests held by third parties

 

75-80%

 

50-60%

 

25%

 

20-30%

 

23-50%

 

 

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

Brookfield, as the owner of the 1% general partnership interest in Brookfield Renewable Energy L.P. (“BRELP”), is entitled to regular distributions plus an incentive distribution based on the amount by which quarterly distributions exceed specified target levels. To the extent that distributions exceed $0.375 per unit per quarter, the incentive is 15% of distributions above this threshold. To the extent that quarterly distributions exceed $0.4225 per unit, the incentive distribution is equal to 25% of distributions above this threshold.

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. No Redeemable/Exchangeable Partnership Units have been redeemed for cash consideration. 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. The Redeemable/Exchangeable Partnership Units are presented as non-controlling interests since they provide Brookfield the direct economic benefits and exposures to the underlying performance of BRELP. 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.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 18 

 

Issuance of LP Units

On June 10, 2014, Brookfield Renewable completed a bought deal LP Unit offering which included 10,250,000 LP Units at a price of C$31.70 per LP Unit for gross proceeds of C$325 million ($297 million) (the “Offering”).  Brookfield Renewable incurred C$13 million ($12 million) in transaction costs associated with the Offering. Proceeds from the Offering were used to purchase additional limited partnership units of BRELP. The excess of the consideration paid over the carrying value of the additional limited partnership units of BRELP purchased by Brookfield Renewable resulted in adjustments to the 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 of $1 million and $37 million, respectively. BRELP ultimately used the net proceeds to repay outstanding indebtedness and for general corporate purposes.

As at September 30, 2014, General Partnership Units and Redeemable/Exchangeable Partnership Units outstanding were 2,651,506 (December 31, 2013: 2,651,506) and 129,658,623 (December 31, 2013: 129,658,623), respectively.

Distributions

For the three and nine months ended September 30, 2014, BRELP declared $1 million and $3 million, respectively in distributions on the general partnership interest (2013: $1 million and $3 million, respectively) and an incentive distribution of $1 million and $2 million, respectively (2013: $nil). For the three and nine months ended September 30, 2014, BRELP declared distributions on the Redeemable/Exchangeable Partnership Units held by Brookfield of $50 million and $151 million, respectively (2013: $47 million and $141 million, respectively).

12. LIMITED PARTNERS’ EQUITY

Limited partners’ equity

As at September 30, 2014, LP Units outstanding were 143,330,025 (December 31, 2013: 132,984,913) including 40,026,986 (December 31, 2013: 40,026,986) held by Brookfield Asset Management. General partnership interests represent 0.01% of Brookfield Renewable.

During the three and nine months ended September 30, 2014, 25,874 and 95,112 LP Units, respectively (2013: 21,832 and 57,785 LP Units, respectively) were issued under the distribution reinvestment plan.

As a result of the Offering (Note 11), Brookfield Asset Management’s direct and indirect interest of  169,685,609 LP Units and Redeemable/Exchangeable partnership units, now represents  approximately 62%  of Brookfield Renewable on a fully-exchanged basis.

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, 2014, Brookfield Renewable declared distributions on its LP Units of $56 million and $160 million or $0.3875 per LP Unit and $1.1625 per LP Unit, respectively (2013: $49 million and $145 million or $0.3625 per LP Unit and $1.09 per LP Unit, respectively).

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 19 

 

The composition of the distribution is presented in the following table:

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2014

 

2013

 

2014

 

2013

Brookfield Asset Management

$

16

$

15

$

47

$

44

External LP Unitholders

 

40

 

34

 

113

 

101

 

$

56

$

49

$

160

$

145

In February 2014, unitholder distributions were increased to $1.55 per unit on an annualized basis, an increase of ten cents per unit, and took effect with the distribution paid in March 2014.

13.  subsidiary public issuers

See Note 9 – Long-term debt and credit facilities for additional details regarding corporate notes. See Note 11 – Non-controlling interests for additional details regarding 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, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

$

22

$

-

$

1,365

$

685

$

(1,389)

$

683

Long-term assets

 

2,762

 

744

 

-

 

17,865

 

(3,499)

 

17,872

Current liabilities

 

22

 

9

 

26

 

2,261

 

(1,371)

 

947

Long-term liabilities

 

-

 

-

 

1,334

 

8,742

 

(738)

 

9,338

Preferred equity

 

-

 

756

 

-

 

-

 

-

 

756

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

 in operating subsidiaries

 

-

 

-

 

-

 

2,202

 

-

 

2,202

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

in a holding subsidiary - Redeemable/

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

 

-

 

-

 

-

 

2,499

 

-

 

2,499

As at December 31, 2013:

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

$

48

$

-

$

1,429

$

612

$

(1,483)

$

606

Long-term assets

 

2,728

 

785

 

-

 

16,365

 

(3,505)

 

16,373

Current liabilities

 

50

 

10

 

17

 

2,258

 

(1,435)

 

900

Long-term liabilities

 

-

 

-

 

1,406

 

7,914

 

(777)

 

8,543

Preferred equity

 

-

 

796

 

-

 

-

 

-

 

796

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

in operating subsidiaries

 

-

 

-

 

-

 

1,303

 

-

 

1,303

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

in a holding subsidiary - Redeemable/

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

 

-

 

-

 

-

 

2,657

 

-

 

2,657

(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 2014 Interim Consolidated Financial Statements and Notes

Page 20 

 

 

 

 

 

 

 

 

 

 

 

 

Brookfield

 

Brookfield

BRP

BREP

Other

Consolidating

Renewable

(MILLIONS)

Renewable

Equity

Finance

Subsidiaries(1)

adjustments(2)

consolidated

For the three months ended Sep 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

342

$

-

$

342

Net (loss) income

 

(17)

 

-

 

(1)

 

(24)

 

17

 

(25)

For the three months ended Sep 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

392

$

-

$

392

Net income (loss)

 

5

 

-

 

-

 

28

 

(5)

 

28

For the nine months ended Sep 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

1,296

$

-

$

1,296

Net income (loss)

 

42

 

-

 

(1)

 

173

 

(42)

 

172

For the nine months ended Sep 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

1,313

$

-

$

1,313

Net income (loss)

 

58

 

-

 

1

 

190

 

(58)

 

191

(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 2014 Interim Consolidated Financial Statements and Notes

Page 21 

 

14.  segmented information

Brookfield Renewable operates renewable power assets, which include conventional hydroelectric generating assets located in the United States, Canada and Brazil, and wind farms located in the United States, Canada and Europe. Brookfield Renewable also operates two co-generation (“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 geography (United States, Canada, Brazil and Europe). The “Other” segment includes CWIP and corporate.

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 December 31, 2013 audited consolidated financial statements. Brookfield Renewable analyzes the performance of its operating segments based on revenues, adjusted EBITDA, and funds from operations.

Adjusted EBITDA means 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, management service costs and the cash portion of non-controlling interests.

Funds from operations is defined as adjusted EBITDA less interest, current income taxes and management service costs, which is then adjusted for the cash portion of non-controlling interests. For the nine months ended September 30, 2014, funds from operations include the earnings received from the wind portfolio Brookfield Renewable acquired in Ireland, reflecting its economic interest from January 1, 2014 to June 30, 2014. This amount represents an acquisition price adjustment under IFRS 3, Business Combinations (see note 3) but is included in funds from operations for purposes of reporting operating results to Brookfield Renewable’s chief operating decision maker.

Transactions between the reportable segments occur at fair value.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 22 

 

 

 

Hydroelectric

Wind energy

Co-gen

Other

Total

(MILLIONS)

U.S.

Canada

Brazil

U.S.

Canada

Europe

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

151

$

64

$

60

$

28

$

19

$

18

$

2

$

  -

$

342

Adjusted EBITDA

 

104

 

50

 

44

 

18

 

14

 

11

 

(1)

 

(17)

 

223

Interest expense - borrowings

 

(37)

 

(19)

 

(5)

 

(10)

 

(9)

 

(4)

 

  -

 

(22)

 

(106)

Funds from operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

67

 

31

 

34

 

8

 

5

 

7

 

(1)

 

(53)

 

98

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 interests 

 

(14)

 

  -

 

(4)

 

(4)

 

  -

 

(5)

 

  -

 

(10)

 

(37)

Funds from operations

 

53

 

31

 

30

 

4

 

5

 

2

 

(1)

 

(63)

 

61

Depreciation

 

(40)

 

(19)

 

(37)

 

(16)

 

(19)

 

(13)

 

(1)

 

  -

 

(145)

For the three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 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

 

(37)

 

(20)

 

(37)

 

(17)

 

(19)

 

  -

 

(3)

 

  -

 

(133)

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 23 

 

 

 

Hydroelectric

Wind energy

Co-gen

Other

Total

(MILLIONS)

U.S.

Canada

Brazil

U.S.

Canada

Europe

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

575

$

269

$

216

$

106

$

87

$

18

$

25

$

  -

$

1,296

Adjusted EBITDA

 

431

 

224

 

168

 

74

 

75

 

11

 

11

 

(51)

 

943

Interest expense - borrowings

 

(113)

 

(53)

 

(15)

 

(30)

 

(29)

 

(4)

 

  -

 

(65)

 

(309)

Funds from operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

314

 

171

 

138

 

44

 

46

 

18

 

11

 

(154)

 

588

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

(71)

 

  -

 

(11)

 

(28)

 

  -

 

(5)

 

  -

 

(29)

 

(144)

Funds from operations

 

243

 

171

 

127

 

16

 

46

 

13

 

11

 

(183)

 

444

Depreciation

 

(112)

 

(61)

 

(109)

 

(47)

 

(55)

 

(13)

 

(3)

 

  -

 

(400)

For the nine months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 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

 

(104)

 

(64)

 

(118)

 

(46)

 

(57)

 

  -

 

(9)

 

  -

 

(398)

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 24 

 

The following table reconciles adjusted EBITDA and funds from operations, presented in the above tables, to net (loss) income as presented in the interim consolidated statements of (loss) income:

 

 

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

 

 

 

2014

 

2013

 

2014

 

2013

Revenues

 

 

 

$

342

$

392

$

1,296

$

1,313

Other income

 

3

 

1

 

8

 

5

Share of cash earnings from equity-accounted investments

 

10

 

7

 

25

 

19

Direct operating costs

 

 

 

 

(132)

 

(140)

 

(386)

 

(401)

Adjusted EBITDA

 

 

 

 

223

 

260

 

943

 

936

Fixed earnings adjustment(1)

 

-

 

-

 

11

 

-

Interest expense - borrowings

 

(106)

 

(105)

 

(309)

 

(313)

Management service costs

 

(14)

 

(9)

 

(38)

 

(32)

Current income tax expense

 

(5)

 

(4)

 

(19)

 

(15)

Funds from operations prior to non-controlling interests

 

98

 

142

 

588

 

576

Less: cash portion of non-controlling interests

 

 

 

 

 

 

 

 

 

 

Preferred equity

 

(10)

 

(10)

 

(29)

 

(27)

 

 

Participating non-controlling interests - in operating

 

 

 

 

 

 

 

 

    

 

 

subsidiaries

 

(27)

 

(24)

 

(115)

 

(92)

Funds from operations

 

61

 

108

 

444

 

457

Add: cash portion of non-controlling interests

 

37

 

34

 

144

 

119

Less: fixed earnings adjustment

 

-

 

-

 

(11)

 

-

Depreciation

 

(145)

 

(133)

 

(400)

 

(398)

Unrealized financial instruments gain

 

9

 

11

 

5

 

30

Share of non-cash loss from equity-accounted investments

 

(3)

 

(4)

 

(15)

 

(10)

Deferred income tax recovery (expense)

 

27

 

10

 

8

 

(1)

Other

 

(11)

 

2

 

(3)

 

(6)

Net (loss) income

$

(25)

$

28

$

172

$

191

(1)            The fixed earnings adjustment relates to Brookfield Renewable’s investment in the acquisition of the wind portfolio in Ireland. Pursuant to the terms of the purchase and sale agreement, Brookfield Renewable acquired an economic interest in the wind portfolio from January 1, 2014. The transaction closed on June 30, 2014, and accordingly under IFRS, the $11 million net funds from operations contribution was recorded as part of the purchase price.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 25 

 

The following table presents information about Brookfield Renewable’s certain balance sheet items on a segmented basis:

 

 

 Hydroelectric 

Wind energy

 

Co-gen

Other(1)

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(MILLIONS)

U.S.

Canada

Brazil

U.S.

Canada

Europe

 

 

 

 

 

As at September 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 equipment, at fair value

$

6,979

$

4,788

$

2,011

$

1,151

$

1,134

$

980

$

42

$

279

$

17,364

Total assets

 

7,415

 

4,884

 

2,224

 

1,249

 

1,159

 

1,099

 

43

 

482

 

18,555

Total borrowings

 

2,362

 

1,205

 

211

 

627

 

662

 

409

 

-

 

1,846

 

7,322

Total liabilities

 

3,642

 

2,194

 

304

 

706

 

886

 

579

 

-

 

1,974

 

10,285

For the nine months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to property, plant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 and equipment

 

1,320

 

-

 

-

 

-

 

-

 

1,075

 

-

 

124

 

2,519

As at December 31, 2013:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 equipment, at fair value

$

5,771

$

4,830

$

2,205

$

1,198

$

1,250

$

-

$

46

$

441

$

15,741

Total assets

 

6,246

 

4,998

 

2,484

 

1,282

 

1,297

 

-

 

62

 

610

 

16,979

Total borrowings

 

2,157

 

1,143

 

238

 

647

 

721

 

-

 

-

 

1,717

 

6,623

Total liabilities

 

3,328

 

2,144

 

398

 

720

 

995

 

-

 

4

 

1,854

 

9,443

For the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to property, plant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 and equipment

 

715

 

206

 

-

 

430

 

-

 

-

 

-

 

255

 

1,606

(1)            Includes CWIP and corporate.

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 26 

 

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.

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, 2014, letters of credit issued by subsidiaries of Brookfield Renewable amounted to $119 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.  subsequent event

On October 1, 2014 Brookfield Renewable secured financing in the amount of $480 million related to the acquisition of a 417 MW hydroelectric facility in Pennsylvania. The debt bears interest at LIBOR plus 1.75%, and matures in June 2018.

 

Brookfield Renewable Energy Partners L.P                                Q3 2014 Interim Consolidated Financial Statements and Notes

Page 27