EX-99.2 3 exh99_2.htm EXHIBIT 99.2  

 

Brookfield Renewable Energy Partners L.P.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

AS AT JUNE 30, 2015 AND December 31, 2014 AND

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

UNAUDITED

 

 

Jun 30

 

Dec 31

(MILLIONS)

Notes

 

2015

 

2014

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

113

$

150

 

Restricted cash

 

 

245

 

232

 

Trade receivables and other current assets

 

 

218

 

201

 

Financial instrument assets

5

 

13

 

48

 

Due from related parties

 

 

54

 

63

 

Assets held for sale

4

 

238

 

-

 

 

 

 

 

881

 

694

Financial instrument assets

5

 

16

 

18

Equity-accounted investments

7

 

251

 

273

Property, plant and equipment, at fair value

8

 

18,521

 

18,566

Deferred income tax assets

11

 

148

 

142

Other long-term assets

 

 

165

 

156

 

 

$

19,982

$

19,849

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued liabilities

9

$

282

$

253

 

Financial instrument liabilities

5

 

106

 

99

 

Due to related parties

 

 

67

 

79

 

Current portion of long-term debt

10

 

503

 

256

 

Liabilities directly associated with assets held for sale

4

 

152

 

-

 

 

 

 

 

1,110

 

687

Financial instrument liabilities

5

 

54

 

75

Long-term debt and credit facilities

10

 

7,387

 

7,422

Deferred income tax liabilities

11

 

2,581

 

2,637

Other long-term liabilities

 

 

200

 

147

 

 

 

 

 

11,332

 

10,968

Equity

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

Preferred equity

12

 

677

 

728

 

Participating non-controlling interests - in operating

 

 

 

 

 

 

 

subsidiaries

12

 

2,394

 

2,062

 

General partnership interest in a holding subsidiary

 

 

 

 

 

 

 

held by Brookfield

12

 

54

 

59

 

Participating non-controlling interests - in a holding subsidiary

 

 

 

 

 

 

 

 - Redeemable/Exchangeable units held by Brookfield

12

 

2,624

 

2,865

Limited partners' equity

13

 

2,901

 

3,167

 

 

 

 

 

8,650

 

8,881

 

 

 

 

$

19,982

$

19,849

 

 

 

 

 

 

 

 

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                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 1 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED

 

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS, EXCEPT AS NOTED)

Notes

2015

2014

2015

2014

Revenues

6

$

458

$

474

$

899

$

954

Other income

 

 

6

 

2

 

33

 

5

Direct operating costs

6

 

(134)

 

(124)

 

(268)

 

(254)

Management service costs

6

 

(13)

 

(13)

 

(27)

 

(24)

Interest expense – borrowings

10

 

(114)

 

(102)

 

(219)

 

(203)

Share of earnings from equity-accounted

 

 

 

 

 

 

 

 

 

 

investments

7

 

4

 

2

 

7

 

3

Unrealized financial instruments loss

5

 

-

 

(4)

 

(8)

 

(4)

Depreciation

8

 

(161)

 

(129)

 

(319)

 

(255)

Other

 

 

(12)

 

(11)

 

(14)

 

8

Income before income taxes

 

 

34

 

95

 

84

 

230

Income tax recovery(expense)

 

 

 

 

 

 

 

 

 

 

Current

11

 

(5)

 

(6)

 

(10)

 

(14)

 

Deferred

11

 

6

 

(17)

 

12

 

(19)

 

 

 

1

 

(23)

 

2

 

(33)

Net income

 

$

35

$

72

$

86

$

197

Net income attributable to:

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

Preferred equity

12

$

8

$

10

$

16

$

19

 

Participating non-controlling interests - in

 

 

 

 

 

 

 

 

 

 

 

operating subsidiaries

12

 

10

 

21

 

24

 

61

 

General partnership interest in a holding

 

 

 

 

 

 

 

 

 

 

 

subsidiary held by Brookfield

12

 

-

 

-

 

-

 

1

 

Participating non-controlling interests - in a

 

 

 

 

 

 

 

 

 

 

 

holding subsidiary - Redeemable/

 

 

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

12

 

8

 

20

 

22

 

57

Limited partners' equity

13

 

9

 

21

 

24

 

59

 

 

 

 

$

35

$

72

$

86

$

197

Basic and diluted earnings per LP Unit

 

$

0.07

$

0.15

$

0.17

$

0.44

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 2 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

 

 

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED

Notes

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS)

2015

2014

2015

2014

Net income

 

$

35

$

72

$

86

$

197

Other comprehensive income that will not be

 

 

 

 

 

 

 

 

 

 

reclassified to net income

 

 

 

 

 

 

 

 

 

 

 

Revaluations of property, plant and equipment

8

 

39

 

-

 

39

 

-

Total items that will not be reclassified to net income

 

 

39

 

-

 

39

 

-

Other comprehensive income (loss) that may be

 

 

 

 

 

 

 

 

 

 

reclassified to net income

 

 

 

 

 

 

 

 

 

 

Financial instruments designated as cash-flow

 

 

 

 

 

 

 

 

 

 

 

hedges

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) arising during the period

5

 

69

 

(17)

 

21

 

(53)

 

 

Reclassification adjustments for amounts

 

 

 

 

 

 

 

 

 

 

 

 

 recognized in net income

5

 

(11)

 

-

 

(18)

 

8

 

Unrealized loss on available-for-sale securities

 

 

(7)

 

-

 

(7)

 

-

 

Foreign currency translation

 

 

84

 

117

 

(424)

 

103

 

Deferred income taxes on above items

11

 

(10)

 

5

 

(6)

 

10

Total items that may be reclassified subsequently to

 

 

 

 

 

 

 

 

 

net income

 

 

125

 

105

 

(434)

 

68

Other comprehensive income (loss)

 

 

164

 

105

 

(395)

 

68

Comprehensive income (loss)

 

$

199

$

177

$

(309)

$

265

Comprehensive income (loss) attributable to:

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

Preferred equity

12

$

18

$

36

$

(35)

$

15

 

Participating non-controlling interests - in

 

 

 

 

 

 

 

 

 

 

 

operating subsidiaries

12

 

50

 

27

 

3

 

67

 

General partnership interest in a holding

 

 

 

 

 

 

 

 

 

 

 

subsidiary held by Brookfield

12

 

1

 

1

 

(3)

 

2

 

Participating non-controlling interests - in a

 

 

 

 

 

 

 

 

 

 

 

holding subsidiary -Redeemable/

 

 

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

12

 

61

 

55

 

(130)

 

89

Limited partners' equity

13

 

69

 

58

 

(144)

 

92

 

 

 

 

 

$

199

$

177

$

(309)

$

265

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Brookfield Renewable Energy Partners L.P                                Q2 2015 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

 

Available -

Total

 

 

non-controlling

a holding

- Redeemable

 

 

UNAUDITED

Limited

Foreign

 

 

defined

 

for-sale

limited

 

 

interests - in

subsidiary

/Exchangeable

 

 

THREE MONTHS ENDED JUNE 30

partners'

currency

Revaluation

benefit

Cash flow

invest-

partners'

Preferred

operating

held by

units held by

Total

(MILLIONS)

equity

translation

surplus

plans

hedges

ments

equity

equity

subsidiaries

Brookfield

Brookfield

equity

Balance, as at March 31, 2014

$

(348)

$

(78)

$

3,158

$

(7)

$

(16)

$

  -

$

2,709

$

766

$

1,571

$

54

$

2,641

$

7,741

Net income

 

21

 

  -

 

  -

 

  -

 

  -

 

  -

 

21

 

10

 

21

 

  -

 

20

 

72

Other comprehensive (loss) income

 

  -

 

41

 

  -

 

  -

 

(4)

 

  -

 

37

 

26

 

6

 

1

 

35

 

105

LP Units issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net proceeds

 

285

 

  -

 

  -

 

  -

 

  -

 

  -

 

285

 

  -

 

  -

 

  -

 

  -

 

285

 

Adjustments

 

(38)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(38)

 

  -

 

  -

 

1

 

37

 

  -

Capital contributions

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

449

 

  -

 

  -

 

449

Distributions or dividends declared

 

(53)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(53)

 

(10)

 

(35)

 

(1)

 

(51)

 

(150)

Distribution reinvestment plan

 

2

 

  -

 

  -

 

  -

 

  -

 

  -

 

2

 

  -

 

  -

 

  -

 

  -

 

2

Other

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

1

 

(1)

 

  -

 

(1)

 

(1)

Change in period

 

217

 

41

 

  -

 

  -

 

(4)

 

  -

 

254

 

27

 

440

 

1

 

40

 

762

Balance, as at June 30, 2014

$

(131)

$

(37)

$

3,158

$

(7)

$

(20)

$

  -

$

2,963

$

793

$

2,011

$

55

$

2,681

$

8,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, as at March 31, 2015

$

(286)

$

(458)

$

3,685

$

(9)

$

(38)

$

  -

$

2,894

$

667

$

2,323

$

54

$

2,617

$

8,555

Net income

 

9

 

  -

 

  -

 

  -

 

  -

 

  -

 

9

 

8

 

10

 

  -

 

8

 

35

Other comprehensive income

 

  -

 

34

 

16

 

  -

 

13

 

(3)

 

60

 

10

 

40

 

1

 

53

 

164

LP Units purchased for

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

cancellation (Note 13)

 

(1)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(1)

 

  -

 

  -

 

  -

 

  -

 

(1)

Capital contributions (Note 12)

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

93

 

  -

 

  -

 

93

Distributions or dividends declared

 

(60)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(60)

 

(8)

 

(62)

 

(3)

 

(54)

 

(187)

Distribution reinvestment plan

 

1

 

  -

 

  -

 

  -

 

  -

 

  -

 

1

 

  -

 

  -

 

  -

 

  -

 

1

Other (Note 3)

 

(2)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(2)

 

  -

 

(10)

 

2

 

  -

 

(10)

Change in period

 

(53)

 

34

 

16

 

  -

 

13

 

(3)

 

7

 

10

 

71

 

  -

 

7

 

95

Balance, as at June 30, 2015

$

(339)

$

(424)

$

3,701

$

(9)

$

(25)

$

(3)

$

2,901

$

677

$

2,394

$

54

$

2,624

$

8,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Brookfield Renewable Energy Partners L.P                                Q2 2015 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

 

Available-

Total

 

 

non-controlling

a holding

- Redeemable

 

 

UNAUDITED

Limited

Foreign

 

 

defined

 

for-sale

limited

 

 

interests - in

subsidiary

/Exchangeable

 

 

SIX MONTHS ENDED JUNE 30

partners'

currency

Revaluation

benefit

Cash flow

invest-

partners'

Preferred

operating

held by

units held by

Total

(MILLIONS)

equity

translation

surplus

plans

hedges

ments

equity

equity

subsidiaries

Brookfield

Brookfield

equity

Balance, as at December 31, 2013

$

(337)

$

(83)

$

3,160

$

(7)

$

(7)

$

  -

$

2,726

$

796

$

1,303

$

54

$

2,657

$

7,536

Net income

 

59

 

  -

 

  -

 

  -

 

  -

 

  -

 

59

 

19

 

61

 

1

 

57

 

197

Other comprehensive (loss) income

 

  -

 

46

 

  -

 

  -

 

(13)

 

  -

 

33

 

(4)

 

6

 

1

 

32

 

68

LP Units issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net proceeds

 

285

 

  -

 

  -

 

  -

 

  -

 

  -

 

285

 

  -

 

  -

 

  -

 

  -

 

285

 

Adjustments

 

(38)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(38)

 

  -

 

  -

 

1

 

37

 

  -

Capital contributions

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

694

 

  -

 

  -

 

694

Distributions or dividends declared

 

(104)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(104)

 

(19)

 

(52)

 

(3)

 

(101)

 

(279)

Distribution reinvestment plan

 

2

 

  -

 

  -

 

  -

 

  -

 

  -

 

2

 

  -

 

  -

 

  -

 

  -

 

2

Other

 

2

 

  -

 

(2)

 

  -

 

  -

 

  -

 

  -

 

1

 

(1)

 

1

 

(1)

 

  -

Change in period

 

206

 

46

 

(2)

 

  -

 

(13)

 

  -

 

237

 

(3)

 

708

 

1

 

24

 

967

Balance, as at June 30, 2014

$

(131)

$

(37)

$

3,158

$

(7)

$

(20)

$

  -

$

2,963

$

793

$

2,011

$

55

$

2,681

$

8,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, as at December 31, 2014

$

(241)

$

(241)

$

3,685

$

(9)

$

(27)

$

  -

$

3,167

$

728

$

2,062

$

59

$

2,865

$

8,881

Net income

 

24

 

  -

 

  -

 

  -

 

  -

 

  -

 

24

 

16

 

24

 

  -

 

22

 

86

Other comprehensive loss

 

  -

 

(183)

 

16

 

  -

 

2

 

(3)

 

(168)

 

(51)

 

(21)

 

(3)

 

(152)

 

(395)

LP Units purchased for

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

cancellation (Note 13)

 

(1)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(1)

 

  -

 

  -

 

  -

 

  -

 

(1)

Capital contributions (Note 12)

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

423

 

  -

 

  -

 

423

Distributions or dividends declared

 

(121)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(121)

 

(16)

 

(97)

 

(6)

 

(109)

 

(349)

Distribution reinvestment plan

 

2

 

  -

 

  -

 

  -

 

  -

 

  -

 

2

 

  -

 

  -

 

  -

 

  -

 

2

Other (Note 3)

 

(2)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(2)

 

  -

 

3

 

4

 

(2)

 

3

Change in period

 

(98)

 

(183)

 

16

 

  -

 

2

 

(3)

 

(266)

 

(51)

 

332

 

(5)

 

(241)

 

(231)

Balance, as at June 30, 2015

$

(339)

$

(424)

$

3,701

$

(9)

$

(25)

$

(3)

$

2,901

$

677

$

2,394

$

54

$

2,624

$

8,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 5 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

Six months ended

UNAUDITED

 

Jun 30

Jun 30

(MILLIONS)

 

 

2015

 

2014

 

2015

 

2014

Operating activities

 

 

 

 

 

 

 

 

 

Net income

 

$

35

$

72

$

86

$

197

Adjustments for the following non-cash items:

 

 

 

 

 

 

 

 

 

 

Depreciation

8

 

161

 

129

 

319

 

255

 

Unrealized financial instrument loss

5

 

-

 

4

 

8

 

4

 

Share of earnings from equity accounted investments

7

 

(4)

 

(2)

 

(7)

 

(3)

 

Deferred income tax (recovery) expense

11

 

(6)

 

17

 

(12)

 

19

 

Other non-cash items

 

 

3

 

5

 

12

 

(3)

Dividends received from equity-accounted investments

7

 

12

 

12

 

20

 

18

Changes in due to or from related parties

 

 

(21)

 

(34)

 

(7)

 

6

Net change in working capital balances

 

 

(16)

 

(23)

 

(23)

 

(41)

 

 

 

 

 

164

 

180

 

396

 

452

Financing activities

 

 

 

 

 

 

 

 

 

Long-term debt - borrowings

10

 

269

 

125

 

790

 

706

Long-term debt - repayments

10

 

(238)

 

(238)

 

(555)

 

(534)

Capital contributions from participating non-controlling

 

 

 

 

 

 

 

 

 

 

interests - in operating subsidiaries

12

 

93

 

449

 

423

 

694

Issuance of LP Units

 

 

-

 

285

 

-

 

285

Distributions paid:

 

 

 

 

 

 

 

 

 

 

To participating non-controlling interests - in operating

 

 

 

 

 

 

 

 

 

 

 

subsidiaries

12

 

(62)

 

(35)

 

(97)

 

(52)

 

To preferred shareholders

 

 

(8)

 

(10)

 

(17)

 

(19)

     

To unitholders of Brookfield Renewable or BRELP

13

 

(116)

 

(103)

 

(231)

 

(267)

 

 

 

 

 

(62)

 

473

 

313

 

813

Investing activities

 

 

 

 

 

 

 

 

 

Acquisitions

3

 

(132)

 

(688)

 

(660)

 

(1,228)

Investment in:

 

 

 

 

 

 

 

 

 

 

Sustaining capital expenditures

8

 

(13)

 

(16)

 

(28)

 

(27)

 

Development and construction of renewable power

 

 

 

 

 

 

 

 

 

 

 

generating assets

8

 

(57)

 

(6)

 

(78)

 

(17)

Investment tax credits related to renewable power

 

 

 

 

 

 

 

 

 

 

generating assets

8

 

-

 

12

 

-

 

12

Investment in securities

 

 

-

 

-

 

(16)

 

-

Restricted cash and other

 

 

14

 

40

 

42

 

14

 

 

 

 

 

(188)

 

(658)

 

(740)

 

(1,246)

Foreign exchange gain (loss) on cash

 

 

3

 

3

 

(6)

 

3

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

(Decrease) increase

 

 

(83)

 

(2)

 

(37)

 

22

 

Balance, beginning of period

 

 

196

 

227

 

150

 

203

 

Balance, end of period

 

$

113

$

225

$

113

$

225

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

 

Interest paid

 

$

148

$

146

$

207

$

197

 

Interest received

 

 

4

 

2

 

8

 

5

 

Income taxes paid

 

 

9

 

8

 

19

 

22

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Brookfield Renewable Energy Partners L.P                                Q2 2015 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 North America, Latin America 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, Brookfield Renewable Partners Limited (“BRPL”). The ultimate parent of Brookfield Renewable is Brookfield Asset Management Inc. (“Brookfield Asset Management”). Brookfield Asset Management and its subsidiaries, other than Brookfield Renewable, are also individually and collectively referred to as “Brookfield” in these financial statements.

Brookfield Renewable’s non-voting limited partnership units (“LP Units”) are traded under the symbol “BEP” on the New York Stock Exchange and under the symbol “BEP.UN” on the Toronto Stock Exchange.

Unless the context indicates or requires otherwise, the term “Brookfield Renewable” means Brookfield Renewable Energy Partners L.P. and its controlled entities.

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, 2014.

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, 2014 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, BRPL, on August 6, 2015.  

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

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 7 

 

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.

(c) Future changes in accounting policies

(i)      Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments (“IFRS 9”) which reflects all phases of the financial instruments project and replaces IAS 39, Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. Early application of previous versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before 1 February 2015. Management is currently evaluating the impact of IFRS 9 on the consolidated financial statements.

(ii)      Amendments to IFRS 10 and IAS 28

The amendments to IFRS 10, Consolidated Financial Statements (“IFRS 10”) and IAS 28, Investments in Associates and Joint Ventures (2011) (“IAS 28”) address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if the assets are housed in a subsidiary. The amendments are effective for transactions occurring in annual periods beginning on or after 1 January 2016 with earlier application permitted. Management is currently evaluating the impact of the amendments to IFRS 10 and IAS 28 on the consolidated financial statements.

(iii)     Revenue recognition

IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) was issued by 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, 2018. Management is currently evaluating the impact of IFRS 15 on the consolidated financial statements.

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 8 

 

3.  BUSINESS COMBINATIONS

The following investments were accounted for using the acquisition method, and the results of operations have been included in the interim consolidated financial statements since the respective dates of acquisition.

Portugal Wind Portfolio

In February 2015, Brookfield Renewable acquired two wind facilities in Portugal (“Portugal Wind”) with an aggregate capacity of 123 MW, and expected to generate 260 GWh annually.

The acquisition was completed with institutional partners, and Brookfield Renewable retains an approximate 40% controlling interest. Total consideration of €65 million ($71 million) included cash paid on closing of €58 million ($63 million), post-closing adjustments, and deferred consideration.

Brazil Portfolio

In November 2014, Brookfield Renewable entered into an agreement to acquire a 488 MW portfolio in Brazil comprising of hydroelectric, wind and biomass generating capacity (“Brazil Portfolio”).  The acquisitions were completed with institutional partners, and Brookfield Renewable retains an approximate 40% controlling interest, as follows:

·          In March 2015, Brookfield Renewable completed the acquisition of a 313 MW operating renewable power generation portfolio - 43 MW of hydroelectric, 150 MW of wind and 120 MW of biomass - and a 55 MW biomass development project.  The acquisition included R$41 ($13 million) of non-controlling interests.  Total consideration of R$1,678 million ($525 million) included cash paid of R$1,546 million ($484 million) and deferred consideration. In June 2015, the remaining non-controlling interests were acquired for R$41 million ($13 million).

·          In May 2015, Brookfield Renewable completed the acquisition of a 120 MW operating hydroelectric facility. The acquisition included R$9 million ($3 million) of non-controlling interests.  Total consideration of R$189 million ($63 million) included cash paid of R$171 million ($57 million) and deferred consideration of R$18 million ($6 million).

The total acquisition costs of $2 million were expensed as incurred.

Scotland Wind Pipeline

In June 2015, Brookfield Renewable acquired an onshore wind development pipeline in Scotland totaling approximately 1,200 MW, including a mix of contracted, permitted and earlier stage development projects. Total consideration of £55 million ($85 million) included upfront cash paid of £40 million ($62 million), contingent consideration, and working capital adjustments. The acquisition costs of $1 million were expensed as incurred. There is a maximum potential contingent consideration of £63 million ($97 million) undiscounted relating to the build-out of the development pipeline.

Voting Agreements

In March 2015, Brookfield Renewable entered into voting agreements with certain Brookfield subsidiaries (and their managing members) related to Brookfield Infrastructure Fund II (the “BIF II Entities”) which are co-investors along with a subsidiary of Brookfield Renewable in Brazilian entities (the “FIPs”) which hold the Brazil Portfolio power generating operations. Pursuant to these voting agreements, the BIF II Entities agreed to provide Brookfield Renewable, among other things, the authority to direct the election of the manager of the jointly-owned FIPs.  

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 9 

 

Purchase price allocations, at fair values, with respect to the acquisitions are as follows:

(MILLIONS)

Brazil

Portugal

Scotland

Total

Cash and cash equivalents

$

19

$

-

$

-

$

 19  

Restricted cash

 

16

 

5

 

-

 

 21  

Trade receivables and other current assets

 

16

 

3

 

1

 

 20  

Property, plant and equipment, at fair value

 

854

 

209

 

97

 

 1,160  

Current liabilities

 

(21)

 

(19)

 

(1)

 

 (41) 

Long-term debt

 

(280)

 

(111)

 

-

 

 (391) 

Other long-term liabilities

 

-

 

(16)

 

(12)

 

 (28) 

Non-controlling interests

 

(16)

 

-

 

-

 

 (16) 

Net assets acquired

$

588

$

71

$

85

$

 744  

During the six months ended June 30, 2015, the purchase price allocations for the acquisitions completed during the six months ended June 30, 2014 were finalized. No material changes to the provisional purchase price allocations disclosed in the December 31, 2014 audited consolidated financial statements in respect of the acquisitions had to be considered.

The estimated fair values of the assets acquired and liabilities assumed in the current year are expected to be finalized within 12 months of the acquisition date.

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 10 

 

4.  assets CLASSIFIED AS held for sale

In May 2015 Brookfield Renewable entered into an agreement to sell a 102 MW wind facility in California, in which Brookfield Renewable holds 22% economic interest and 100% voting interest. The consideration is subject to post-closing adjustments and transaction costs. The transaction closed in July 2015. The proportionate amount of consideration attributable to the non-controlling interests upon the closing of the transaction approximates their economic interest in the wind facility.

The carrying amounts of the asset and directly associated liabilities classified as held for sale of $238 million and $152 million, respectively, at June 30, 2015 have been presented separately in the consolidated balance sheets. 

Non-current assets classified as held for sale are not depreciated. Had the assets been depreciated, additional depreciation amount for the two-month period would have been approximately $2 million.

Brookfield Renewable continues to consolidate and recognize, in the consolidated statements of income, consolidated statements of comprehensive income (loss), and the consolidated statements of cash flows, the revenues, expenses and cash flows associated with the asset. The operations of the facility did not have a material impact for the three and six months ended June 30, 2015.

The major items of assets and liabilities reclassified as held for sale are as follows:

(MILLIONS)

Jun 30, 2015

Assets

 

 

 

Cash and cash equivalent

$

 1  

 

Trade receivables and other current assets

 

 7  

 

Property, plant and equipment, at fair value

 

 230  

Assets held for sale

$

 238  

Liabilities

 

 

 

Current liabilities

$

 11  

 

Long-term debt

 

 130  

 

Other liabilities

 

 11  

Liabilities directly associated with assets held for sale

$

 152  

  

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 11 

 

5.  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, 2014 audited consolidated financial statements.

Fair value 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.

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.

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 12 

 

The following table presents Brookfield Renewable’s assets and liabilities measured and disclosed at fair value classified by the fair value hierarchy:

 

 

 

Jun 30, 2015

 

Dec 31

(MILLIONS)

Level 1

Level 2

Level 3

2015

2014

Assets measured at fair value:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

113

$

-

$

-

$

113

$

150

Restricted cash(1)

 

335

 

-

 

-

 

335

 

313

Financial instrument assets(1)

 

 

 

 

 

 

 

 

 

 

 

Energy derivative contracts

 

-

 

21

 

-

 

21

 

31

 

Interest rate swaps

 

-

 

1

 

-

 

1

 

-

 

Foreign exchange swaps

 

-

 

7

 

-

 

7

 

35

Available-for-sale investments(2)

 

35

 

-

 

-

 

35

 

31

Property, plant and equipment

 

-

 

-

 

18,521

 

18,521

 

18,566

Assets classified as held for sale

 

8

 

-

 

230

 

238

 

-

Liabilities measured at fair value:

 

 

 

 

 

 

 

 

 

 

Financial instrument liabilities(1)

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

-

 

(149)

 

-

 

(149)

 

(170)

 

Foreign exchange swaps

 

-

 

(11)

 

-

 

(11)

 

(4)

Liabilities for which fair value is disclosed:

 

 

 

 

 

 

 

 

 

 

 

Long-term debt and credit facilities

 

-

 

(8,563)

 

-

 

(8,563)

 

(8,434)

 

Debt directly associated with asset

 

 

 

 

 

 

 

 

 

 

 

 

classified as held for sale

 

-

 

(148)

 

-

 

(148)

 

-

Total

$

491

$

(8,842)

$

18,751

$

10,400

$

10,518

(1)       Includes both the current and long-term amounts.

(2)       Available-for-sale investments represent investment in securities.

 

There were no transfers between levels during the six months ended June 30, 2015.

Financial instruments disclosures

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

 

 

Jun 30, 2015

Dec 31, 2014

 

 

 

 

 

Net (Assets)

Net (Assets)

(MILLIONS)

Assets

Liabilities

Liabilities

Liabilities

Energy derivative contracts

$

21

$

-

$

(21)

$

(31)

Interest rate swaps

 

1

 

149

 

148

 

170

Foreign exchange swaps

 

7

 

11

 

4

 

(31)

Total

 

29

 

160

 

131

 

108

Less: current portion

 

13

 

106

 

93

 

51

Long-term portion

$

16

$

54

$

38

$

57

(a)   Energy derivative contracts

Brookfield Renewable has entered into long-term energy derivative contracts primarily to stabilize 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

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 13 

 

value, using quoted market prices or, in their absence, a valuation model using both internal and third-party evidence and forecasts.

(b)   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.

(c)   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 interim consolidated statements of income:

 

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Energy derivative contracts

$

  -

$

  -

$

2

$

  -

Interest rate swaps

 

2

 

1

 

2

 

1

Foreign exchange swaps

 

(2)

 

(5)

 

(12)

 

(5)

 

$

  -

$

(4)

$

(8)

$

(4)

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

 

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Energy derivative contracts

$

10

$

4

$

4

$

(1)

Interest rate swaps

 

59

 

(23)

 

13

 

(54)

Foreign exchange swaps

 

  -

 

2

 

4

 

2

 

$

69

$

(17)

$

21

$

(53)

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

 

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Energy derivative contracts

$

(10)

$

(1)

$

(17)

$

6

Interest rate swaps

 

(1)

 

1

 

(1)

 

2

 

$

(11)

$

-

$

(18)

$

8

 

 

 

 

 

 

 

 

 

 
                   

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 14 

 

6.  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 interim consolidated statements of income:

 

 

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Revenues

 

 

 

 

 

 

 

 

 

Power purchase and revenue agreements

$

146

$

146

$

255

$

181

 

Wind levelization agreement

 

2

 

2

 

4

 

3

 

 

$

148

$

148

$

259

$

184

Direct operating costs

 

 

 

 

 

 

 

 

 

Energy purchases

$

(2)

$

(1)

$

(4)

$

(7)

 

Energy marketing fee

 

(6)

 

(5)

 

(11)

 

(10)

 

Insurance services

 

(6)

 

(7)

 

(13)

 

(14)

 

 

$

(14)

$

(13)

$

(28)

$

(31)

Management service costs

$

(13)

$

(13)

$

(27)

$

(24)

7. EQUITY-ACCOUNTED INVESTMENTS

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

 

 

Three months ended

Six months ended

Year ended

(MILLIONS)

 

Jun 30, 2015

Jun 30, 2015

Dec 31, 2014

Balance, beginning of period/year

 

$

256

$

273

$

290

California hydroelectric step acquisition

 

-

 

-

 

(39)

Revaluation recognized through OCI

 

-

 

-

 

56

Share of OCI

 

-

 

-

 

1

Share of net income

 

4

 

7

 

3

Dividends declared

 

(12)

 

(20)

 

(27)

Foreign exchange gain (loss)

 

3

 

(9)

 

(11)

Balance, end of period/year

$

251

$

251

$

273

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

 

 

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Revenue

$

27

$

24

$

49

$

65

Net income

 

7

 

5

 

13

 

6

Share of net income (loss)

 

 

 

 

 

 

 

 

 

Cash earnings

 

9

 

8

 

13

 

15

 

Non-cash loss

 

(5)

 

(6)

 

(6)

 

(12)

 

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 15 

 

8.   PROPERTY, PLANT AND EQUIPMENT, AT FAIR VALUE   

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

(MILLIONS)

 

Hydroelectric(1)

Wind

Other(2)

Total(3)

As at December 31, 2014

 

$

15,210

$

3,315

$

41

$

18,566

Foreign exchange

 

(666)

 

(139)

 

5

 

(800)

Additions(4)

 

69

 

19

 

24

 

112

Acquisitions through business combinations

 

 307  

 

624

 

229

 

 1,160  

Asset held for sale

 

 -    

 

(230)

 

-

 

 (230) 

Transfers and other

 

(2)

 

(5)

 

-

 

(7)

Change in fair value recognized through OCI(5)

 

 39  

 

 -    

 

 -    

 

 39  

Depreciation

 

(208)

 

(108)

 

(3)

 

(319)

As at June 30, 2015

$

14,749

$

3,476

$

296

$

18,521

(1)       Includes intangible assets, the value of which is not material.

(2)       Includes co-generation (“Co-gen”) and biomass.

(3)       Includes construction work in process (“CWIP”) of $446 million.

(4)       Includes $13 million of development assets acquired during the six months ended June 30, 2015.

(5)       During the three months ended June 30, 2015 sufficient information regarding two hydroelectric development projects in Brazil became available to allow Brookfield Renewable to determine fair value using the discounted cash flow method. Accordingly, CWIP associated with these two projects was revalued.

  

9.  accounts payable and accrued liabilities

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

 

 

Jun 30

 

Dec 31

(MILLIONS)

 

2015

 

2014

Operating accrued liabilities

$

145

$

131

Interest payable on corporate and subsidiary borrowings

 

45

 

44

Accounts payable

 

37

 

29

LP Unitholders’ distribution and preferred dividends payable(1)

 

19

 

19

Other

 

36

 

30

 

$

282

$

253

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

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 16 

 

10.  LONG-TERM DEBT AND CREDIT FACILITIES

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

 

 

 

Jun 30, 2015

Dec 31, 2014

 

 

 

Weighted-average

 

 

Weighted-average

 

 

 

 

 

Interest

Term

 

 

Interest

Term

 

 

(MILLIONS EXCEPT AS NOTED)

rate (%)

(years)

 

rate (%)

(years)

 

Corporate borrowings

 

 

 

 

 

 

 

 

 

Series 3 (CDN$200)

5.3

3.4

$

160

5.3

3.8

$

172

 

Series 4 (CDN$150)

5.8

21.4

 

120

5.8

21.9

 

129

 

Series 6 (CDN$300)

6.1

1.4

 

240

6.1

1.9

 

258

 

Series 7 (CDN$450)

5.1

5.3

 

361

5.1

5.8

 

388

 

Series 8 (CDN$400)

4.8

6.6

 

320

4.8

7.1

 

344

 

Series 9 (CDN$400)

3.8

9.9

 

320

-

-

 

-

 

 

 

5.0

7.0

$

1,521

5.3

6.7

$

1,291

Subsidiary borrowings

 

 

 

 

 

 

 

 

 

North America

 

 

 

 

 

 

 

 

 

 

United States

5.2

7.4

$

3,291

5.3

8.3

$

3,468

 

 

Canada

5.6

13.5

 

1,644

5.7

13.8

 

1,798

 

 

 

5.3

9.5

 

4,935

5.4

10.2

 

5,266

 

Latin America

9.6

10.6

 

429

7.3

10.4

 

189

 

Europe

3.9

11.5

 

637

3.5

12.5

 

594

 

 

 

5.5

9.8

$

6,001

5.3

10.4

 

6,049

Credit facilities

1.4

5.0

$

431

1.4

4.5

 

401

Total debt

 

 

$

7,953

 

 

$

7,741

Add: Unamortized premiums(1)

 

 

 

6

 

 

 

8

Less: Unamortized financing fees(1)

 

 

 

(69)

 

 

 

(71)

Less: Current portion

 

 

 

(503)

 

 

 

(256)

 

 

 

 

 

$

7,387

 

 

$

7,422

(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, Brookfield Renewable Energy Partners ULC (“BREP Finance”) (Note 14  - Subsidiary public issuers). BREP Finance 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. The term notes payable by BREP Finance are unconditionally guaranteed by Brookfield Renewable, Brookfield Renewable Energy L.P. (“BRELP”) and certain other subsidiaries.

In March 2015, Brookfield Renewable issued C$400 million ($317 million) of medium-term corporate notes, maturing in June 2025 at a fixed rate of 3.75%.

Subsidiary borrowings

Subsidiary borrowings are generally asset-specific, long-term, non-recourse borrowings denominated in the domestic currency of the subsidiary. Subsidiary borrowings in North America and Europe consist of both fixed and floating interest rate debt.  Brookfield Renewable uses interest rate swap agreements to

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 17 

 

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 (“CDI”), plus a margin.

In February 2015, Brookfield Renewable secured an 18-month extension on $75 million of debt associated with a portfolio of hydroelectric and wind facilities in the United States held through the Brookfield Americas Infrastructure Fund. The debt bears interest at LIBOR plus 2.75%, and matures in August 2016.

In February 2015, Brookfield Renewable refinanced indebtedness associated with a 45 MW hydroelectric facility in British Columbia by issuing C$90 million ($76 million) of bonds with an interest rate of 2.95%, maturing in May 2023. Brookfield Renewable owns a 50%, equity-accounted interest in this facility.

In February 2015, as part of the acquisition of a 123 MW wind portfolio in Portugal, Brookfield Renewable assumed loans with principal balances totaling €99 million ($109 million). The loans bear interest at an initial weighted-average fixed rate of 6.28%, including the related interest rate swaps, and have a weighted-average remaining term of 9.5 years.

In March 2015, as part of the acquisition of a 313 MW operating renewable power generation portfolio in Brazil comprising of 43 MW of hydroelectric, 150 MW of wind, and 120 MW of biomass generating capacity and a 55 MW biomass development project, Brookfield Renewable assumed R$631 million ($197 million) of debt with a combination of variable and fixed interest rates, and a weighted-average remaining term of 12.7 years.

In May 2015, as part of the acquisition of a 120 MW hydroelectric facility in Brazil, Brookfield Renewable assumed R$254 million ($83 million) of debt with variable interest rates of CDI plus 0.5% and 2.0%, and a weighted-average remaining term of 7.6 years.

Effective June 30, 2015, the margin on C$194 million ($155 million) of debt associated with a 189 MW wind facility in Ontario was reduced from 2.25% to 1.625%.

Credit facilities

In May 2015, Brookfield Renewable extended the maturity of its corporate credit facilities by one year to June 2020 and also expanded the available amount to $1,310 million from $1,280 million. The applicable margin is 1.20% and the credit facilities are used for general working capital purposes. The credit facilities are available by way of advances in Canadian dollars, U.S. dollars, Euro (€) or British Pound Sterling (£) in the form of (i) Canadian prime rate loans (ii) U.S. base rate loans (iii) bankers’ acceptance (“BA”) rate loans (iv) LIBOR loans (v) EURIBOR loans and (vi) letters of credit. Refer to Note 16 – Commitments, contingencies and guarantees for further details regarding letters of credit. The credit facilities bear interest at the applicable BA rate, LIBOR or EURIBOR plus an applicable margin. The applicable margin is tiered on the basis of Brookfield Renewable’s unsecured long-term debt rating. Standby fees are charged on the undrawn balance.

Brookfield Asset Management has provided a $200 million committed unsecured revolving credit facility maturing in December 2015, at LIBOR plus 2%.

Brookfield Renewable and its subsidiaries issue letters of credit from some of 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                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 18 

 

The following table summarizes the available portion of credit facilities:

 

Jun 30

Dec 31

(MILLIONS)

 

2015

 

2014

Authorized credit facilities

$

1,510

$

1,480

Draws on credit facilities(1)

 

(385)

 

(401)

Issued letters of credit

 

(213)

 

(227)

Available portion of credit facilities

$

912

$

852

(1)            Amounts are unsecured and revolving. Interest rate is at the LIBOR plus 1.20% (December 31, 2014: 1.20%).

During the six months ended June 30, 2015, Brookfield Renewable borrowed $246 million from, and repaid $200 million to, a subscription credit facility made available by a private fund sponsored by Brookfield. This subscription credit facility is only available to Brookfield Renewable on a limited basis. The facility has an interest rate of LIBOR plus 1.55% and is secured by capital contributed to the private fund.  

11.  Income taxes

Brookfield Renewable’s effective income tax rate was negative 2.4% for the six months ended June 30, 2015 (2014: 14.3%). The effective tax rate is less than the statutory rate primarily due to rate differentials and non-controlling interests’ income not subject to tax.  

12. Non-controlling interests

Brookfield Renewable’s non-controlling interests are comprised of the following:

 

 

Jun 30

Dec 31

(MILLIONS)

 

2015

 

2014

Preferred equity

$

677

$

728

Participating non-controlling interests - in operating subsidiaries

 

2,394

 

2,062

General partnership interest in a holding subsidiary held by Brookfield

 

54

 

59

Participating non-controlling interests - in a holding subsidiary -

 

 

 

 

  

 Redeemable/Exchangeable units held by Brookfield

 

2,624

 

2,865

Total

$

5,749

$

5,714

Preferred equity

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

 

 

 

Earliest

Dividends declared

 

 

 

 

 

 

Cumulative

permitted

for the six months

 

 

 

 

 

Shares

dividend

redemption

ended June 30

Jun 30

Dec 31

(MILLIONS)

outstanding

rate(1)

date

2015

2014

2015

2014

Series 1 (CDN$137)

5.5

3.36%

Apr 30, 2020

$

3

$

6

$

109

$

214

Series 2 (CDN$113)

4.5

3.15%

Apr 30, 2020

 

1

 

-

 

90

 

-

Series 3 (CDN$250)

10.0

4.40%

Jul 31, 2019

 

4

 

5

 

200

 

214

Series 5 (CDN$175)

7.0

5.00%

Apr 30, 2018

 

4

 

4

 

139

 

150

Series 6 (CDN$175)

7.0

5.00%

Jul 31, 2018

 

4

 

4

 

139

 

150

 

34

 

 

$

16

$

19

$

677

$

728

(1)       Series 2 dividend rate represents annualized distribution based on the most recent quarterly floating rate.

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 19 

 

The Class A Preference Shares do not have a fixed maturity date and are not redeemable at the option of the holders. As at June 30, 2015, none of the issued Class A Preference Shares have ever been redeemed by Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”).

On April 1, 2015, the fixed dividend rate on the Series 1 Preference Shares for the five years commencing May 1, 2015 and ending April 30, 2020 was reset and, if declared, will be paid at an annual rate of 3.355% (C$0.2096875 per share per quarter). The holders of 4,518,289 Series 1 Preference Shares exercised their right to convert their shares into Class A, Series 2 Preference Shares on a one-for-one basis. The holders of the Series 2 Preference Shares will be entitled to receive floating rate cumulative preferential cash dividends, equal to the T-Bill Rate plus 2.62%. The quarterly dividend in respect of the May 1, 2015 to July 31, 2015 dividend period was paid on July 31, 2015 at an annual rate of 3.148% (C$0.198367 per share).  

Class A Preference Shares for Cancellation – Normal course issuer bid

On June 23, 2015, Brookfield Renewable announced that the Toronto Stock Exchange had accepted a notice of Brookfield Renewable Power Preferred Equity Inc.’s intention to commence a normal course issuer bid in connection with its outstanding Class A Preference Shares. Under this normal course issuer bid, Brookfield Renewable is permitted to repurchase up to 10% of the total public float for each respective series of the Class A Preference Shares. Shareholders may obtain a copy of the notice, free of charge, by contacting Brookfield Renewable. Repurchases are authorized to commence on June 26, 2015 and will terminate on June 25, 2016, or earlier should Brookfield Renewable complete its repurchases prior to such date. For the three months ended June 30, 2015, no Class A Preference Shares were repurchased.

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, 2013

 

$

891

$

207

$

116

$

46

$

43

$

1,303

Net income

 

 

14

 

22

 

14

 

-

 

1

 

51

OCI

 

 

54

 

187

 

8

 

-

 

10

 

259

Capital contributions(1)

 

 

-

 

610

 

-

 

-

 

-

 

610

Distributions

 

 

(45)

 

(89)

 

(12)

 

(3)

 

-

 

(149)

Other

 

 

-

 

-

 

-

 

(11)

 

(1)

 

(12)

As at December 31, 2014

 

$

914

$

937

$

126

$

32

$

53

$

2,062

Net income

 

 

(9)

 

22

 

9

 

-

 

2

 

24

OCI

 

(22)

 

9

 

-

 

(5)

 

(3)

 

(21)

Capital contributions(1)

 

-

 

423

 

-

 

-

 

-

 

423

Distributions

 

(17)

 

(69)

 

(7)

 

(1)

 

(3)

 

(97)

Other

 

-

 

3

 

-

 

-

 

-

 

3

As at June 30, 2015

$

866

$

1,325

$

128

$

26

$

49

$

2,394

Interests held by third parties

 

75-80%

 

50-60%

 

25%

 

24-30%

 

23-50%

 

 

(1)         Capital contributions are for the purposes of acquisitions and fund expenses.

  

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 Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 20 

 

Brookfield, as the owner of the 1% general partnership interest in BRELP held by Brookfield (“GP interest”), 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 LP Unit distributions exceed $0.375 per LP Unit per quarter, the incentive is 15% of distributions above this threshold. To the extent that quarterly LP Unit distributions exceed $0.4225 per LP Unit, the incentive distribution is equal to 25% of distributions above this threshold.

Consolidated equity includes Redeemable/Exchangeable partnership units and the GP interest. The Redeemable/Exchangeable partnership units are held 100% by Brookfield, 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 and GP interest are presented as non-controlling interests since they provide Brookfield the direct economic benefits and exposures to the underlying performance of BRELP. 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 and the GP interest 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 June 30, 2015, general partnership units, representing the GP interest and Redeemable/Exchangeable partnership units outstanding were 2,651,506 (December 31, 2014: 2,651,506) and 129,658,623 (December 31, 2014: 129,658,623), respectively.

Distributions

The composition of the distributions for the three and six months ended June 30 is presented in the following table:

 

 

 

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

General partnership interest in a holding

 

 

 

 

 

 

 

 

 

subsidiary held by Brookfield

$

1

$

1

$

2

$

2

 

Incentive distribution

 

2

 

  -

 

4

 

1

 

 

 

$

3

$

1

$

6

$

3

 

 

 

 

 

 

 

 

 

 

 

Participating non-controlling interests - in  a

 

 

 

 

 

 

 

 

 

holding subsidiary - Redeemable/

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

$

54

$

51

$

109

$

101

 

 

 

$

57

$

52

$

115

$

104

 

 

 

 

 

 

 

 

 

 

 

13. LIMITED PARTNERS’ EQUITY

Limited partners’ equity

As at June 30, 2015, LP Units outstanding were 143,408,742 (December 31, 2014: 143,356,854) including 40,026,986 (December 31, 2014: 40,026,986) held by Brookfield. Brookfield owns all general partnership interests in Brookfield Renewable representing a 0.01% interest.

During the three and six months ended June 30, 2015, 32,339 LP Units and 76,088 LP Units, respectively (2014: 23,779 and 69,238 LP Units) were issued under the distribution reinvestment plan.

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 21 

 

LP Units Purchased for Cancellation – Normal course issuer bid

For the three and six months ended June 30, 2015, 24,200 LP Units were purchased at a cost of $1 million. The premium paid to purchase the LP Units in excess of the stated value was charged to limited partners’ equity. Repurchases were authorized to commence on December 29, 2014 and will terminate on December 28, 2015, or earlier should Brookfield Renewable complete its repurchases prior to such date. Pursuant to this bid, the Board of Directors of BRPL authorized Brookfield Renewable to repurchase up to 7.1 million LP Units, representing approximately 5% of the issued and outstanding LP Units.  All LP Units acquired under the normal course issuer bid are cancelled.  Outside of pre-determined trading blackout periods, purchases under Brookfield Renewable’s normal course issuer bid will be completed based upon management’s discretion.  Brookfield Renewable has not established an automatic securities purchase plan for its LP Units.

As at June 30, 2015, Brookfield’s direct and indirect interest of 169,685,609 LP Units and Redeemable/Exchangeable partnership units represents approximately 62% of Brookfield Renewable on a fully-exchanged basis.

On an unexchanged basis, Brookfield holds a 28% direct limited partnership interest in Brookfield Renewable, a 47% direct interest in BRELP through the ownership of Redeemable/Exchangeable partnership units and a direct 1% GP interest in BRELP as at June 30, 2015.

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 six months ended June 30, 2015, Brookfield Renewable declared distributions on its LP Units of $60 million or $0.415 per LP Unit and $121 million or $0.83 per LP Unit, respectively (2014: $53 million and $104 million or $0.3875 per LP Unit and $0.775 per LP Unit).

The composition of the distribution for the three and six months ended June 30 is presented in the following table:

 

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Brookfield

$

17

$

16

$

34

$

31

External LP Unitholders

 

43

 

37

 

87

 

73

 

$

60

$

53

$

121

$

104

In February 2015, unitholder distributions were increased to $1.66 per unit on an annualized basis, an increase of eleven cents per unit, which took effect with the distribution payable in March 2015.  

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 22 

 

14.  subsidiary public issuers

The following tables provide consolidated summary financial information for Brookfield Renewable, BRP Equity, and BREP Finance:  

 

 

 

 

 

  

  

Brookfield

 

 

Brookfield

BRP

BREP

Other

Consolidating

Renewable

(MILLIONS)

 

Renewable

Equity

Finance

Subsidiaries(1)

adjustments(2)

consolidated

As at June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

$

22

$

-

$

1,536

$

885

$

(1,562)

$

881

Long-term assets

 

2,901

 

666

 

-

 

19,094

 

(3,560)

 

19,101

Current liabilities

 

22

 

8

 

16

 

2,626

 

(1,562)

 

1,110

Long-term liabilities

 

-

 

-

 

1,515

 

9,368

 

(661)

 

10,222

Preferred equity

 

-

 

677

 

-

 

-

 

-

 

677

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

 in operating subsidiaries

 

-

 

-

 

-

 

2,394

 

-

 

2,394

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

in a holding subsidiary - Redeemable/

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

 

-

 

-

 

-

 

2,624

 

-

 

2,624

As at December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

$

21

$

-

$

1,307

$

697

$

(1,331)

$

694

Long-term assets

 

3,166

 

717

 

-

 

19,148

 

(3,876)

 

19,155

Current liabilities

 

20

 

9

 

16

 

1,954

 

(1,312)

 

687

Long-term liabilities

 

-

 

-

 

1,286

 

9,706

 

(711)

 

10,281

Preferred equity

 

-

 

728

 

-

 

-

 

-

 

728

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

in operating subsidiaries

 

-

 

-

 

-

 

2,062

 

-

 

2,062

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

in a holding subsidiary - Redeemable/

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

 

-

 

-

 

-

 

2,865

 

-

 

2,865

(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                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 23 

 

 

 

 

 

 

 

 

 

 

 

 

Brookfield

 

Brookfield

BRP

BREP

Other

Consolidating

Renewable

(MILLIONS)

Renewable

Equity

Finance

Subsidiaries(1)

adjustments(2)

consolidated

For the three months ended June 30, 2015

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

458

$

-

$

458

Net income (loss)

 

9

 

-

 

-

 

35

 

(9)

 

35

For the three months ended June 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

474

$

-

$

474

Net income (loss)

 

21

 

-

 

-

 

72

 

(21)

 

72

For the six months ended June 30, 2015

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

899

$

-

$

899

Net

 

24

 

-

 

(1)

 

87

 

(24)

 

86

For the six months ended June 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

954

$

-

$

954

Net income (loss)

 

59

 

-

 

-

 

197

 

(59)

 

197

(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.

See Note 10 – Long-term debt and credit facilities for additional details regarding the mid-term corporate notes issued by BREP Finance. See Note 12 – Non-controlling interests for additional details regarding Class A Preference Shares issued by BRP Equity.

  

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 24 

 

15.  segmented information

Brookfield Renewable operates renewable power generating assets, which include conventional hydroelectric facilities and wind facilities located in North America, Latin America and Europe. Brookfield Renewable also operates two Co-gen facilities and three biomass facilities. Brookfield Renewable’s Chief Executive Officer, President and Chief Operating Officer, and Chief Financial Officer (collectively, the chief operating decision maker or “CODM”) review the results of the business, manage operations, and allocate resources based on the type of power generation (Hydroelectric, Wind, and Other, which includes Co-gen and Biomass).

Effective January 1, 2015, the geographies by which the Hydroelectric and Wind segments are further evaluated and for which information is disclosed have changed in order to allow the CODM to more effectively evaluate the business in a manner aligned with the continental operating platforms. Accordingly, while information regarding the United States and Canada will continue to be disclosed in a manner consistent with prior periods, these two segments have been further combined into the “North America” segment. The “Latin America” segment includes the former Brazil segment, while the “Europe” segment was not affected as a result of these changes.

In accordance with IFRS 8, Operating Segments, Brookfield Renewable discloses information about its reportable segments based upon the measures used by the CODM in assessing performance. The accounting policies of the reportable segments are the same as those described in Note 2 – Basis of presentation and significant accounting policies of the December 31, 2014 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 three and six months ended June 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 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.

In August 2015, Brookfield Renewable announced the promotions of the President and Chief Operating Officer to the Chief Executive Officer, and the Chief Executive Officer to the role of Executive Group Chairman, Renewable Power for Brookfield Asset Management, which includes oversight of all of Brookfield’s renewable investments. Accordingly, beginning on the date of the promotions, the CODM will collectively include the Chief Executive Officer and Chief Financial Officer who will evaluate Brookfield Renewable’s results, manage its operations and allocate its resources by segment.

The following segmented information is regularly reported to our CODM.

 

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 25 

 

 

 

Hydroelectric

 

Wind

Other(1)

Corporate

Total

 

 

North America

Latin

 

North America

Latin

 

 

 

 

 

 

 

(MILLIONS)

U.S.

Canada

Total

America

 

U.S.

Canada

Total

America

Europe

 

 

 

For the three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

202

$

84

$

286

$

61

 

$

39

$

25

$

64

$

10

$

27

$

10

$

  -

$

458

Adjusted EBITDA

 

149

 

67

 

216

 

46

 

 

29

 

21

 

50

 

10

 

16

 

5

 

(4)

 

339

Interest expense - borrowings

 

(40)

 

(17)

 

(57)

 

(6)

 

 

(9)

 

(8)

 

(17)

 

(3)

 

(8)

 

(1)

 

(22)

 

(114)

Funds From Operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

105

 

50

 

155

 

38

 

 

20

 

13

 

33

 

7

 

9

 

4

 

(39)

 

207

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

(23)

 

  -

 

(23)

 

(4)

 

 

(13)

 

  -

 

(13)

 

(4)

 

(6)

 

(3)

 

(8)

 

(61)

Funds From Operations

 

82

 

50

 

132

 

34

 

 

7

 

13

 

20

 

3

 

3

 

1

 

(47)

 

146

Depreciation

 

(50)

 

(22)

 

(72)

 

(33)

 

 

(13)

 

(16)

 

(29)

 

(3)

 

(22)

 

(2)

 

  -

 

(161)

For the three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

218

$

107

$

325

$

67

 

$

49

$

29

$

78

$

  -

$

  -

$

4

$

  -

$

474

Adjusted EBITDA

 

163

 

88

 

251

 

51

 

 

38

 

24

 

62

 

  -

 

  -

 

1

 

(5)

 

360

Interest expense - borrowings

 

(37)

 

(18)

 

(55)

 

(5)

 

 

(10)

 

(10)

 

(20)

 

  -

 

  -

 

  -

 

(22)

 

(102)

Funds From Operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

124

 

70

 

194

 

42

 

 

28

 

14

 

42

 

  -

 

11

 

1

 

(40)

 

250

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

(22)

 

  -

 

(22)

 

(3)

 

 

(17)

 

  -

 

(17)

 

  -

 

  -

 

  -

 

(10)

 

(52)

Funds From Operations

 

102

 

70

 

172

 

39

 

 

11

 

14

 

25

 

  -

 

11

 

1

 

(50)

 

198

Depreciation

 

(35)

 

(22)

 

(57)

 

(38)

 

 

(13)

 

(20)

 

(33)

 

  -

 

  -

 

(1)

 

  -

 

(129)

(1)            Includes Co-gen and biomass.  

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 26 

 

 

 

Hydroelectric

 

Wind

Other(1)

Corporate

Total

 

 

North America

Latin

 

North America

Latin

 

 

 

 

 

 

 

(MILLIONS)

U.S.

Canada

Total

America

 

U.S.

Canada

Total

America

Europe

 

 

 

For the six months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

393

$

190

$

583

$

106

 

$

59

$

56

$

115

$

10

$

68

$

17

$

  -

$

899

Adjusted EBITDA

 

276

 

171

 

447

 

77

 

 

39

 

47

 

86

 

10

 

55

 

9

 

(7)

 

677

Interest expense - borrowings

 

(81)

 

(33)

 

(114)

 

(10)

 

 

(18)

 

(16)

 

(34)

 

(3)

 

(15)

 

(1)

 

(42)

 

(219)

Funds From Operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

190

 

138

 

328

 

62

 

 

21

 

31

 

52

 

7

 

40

 

8

 

(76)

 

421

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

(54)

 

(2)

 

(56)

 

(7)

 

 

(16)

 

  -

 

(16)

 

(4)

 

(20)

 

(3)

 

(16)

 

(122)

Funds From Operations

 

136

 

136

 

272

 

55

 

 

5

 

31

 

36

 

3

 

20

 

5

 

(92)

 

299

Depreciation

 

(99)

 

(42)

 

(141)

 

(67)

 

 

(29)

 

(33)

 

(62)

 

(3)

 

(43)

 

(3)

 

  -

 

(319)

For the six months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

424

$

205

$

629

$

156

 

$

78

$

68

$

146

$

  -

$

  -

$

23

$

  -

$

954

Adjusted EBITDA

 

314

 

167

 

481

 

124

 

 

54

 

59

 

113

 

  -

 

  -

 

12

 

(10)

 

720

Interest expense - borrowings

 

(76)

 

(34)

 

(110)

 

(10)

 

 

(20)

 

(20)

 

(40)

 

  -

 

  -

 

  -

 

(43)

 

(203)

Funds From Operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

234

 

133

 

367

 

104

 

 

34

 

39

 

73

 

  -

 

11

 

12

 

(77)

 

490

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

(57)

 

  -

 

(57)

 

(7)

 

 

(24)

 

  -

 

(24)

 

  -

 

  -

 

  -

 

(19)

 

(107)

Funds From Operations

 

177

 

133

 

310

 

97

 

 

10

 

39

 

49

 

  -

 

11

 

12

 

(96)

 

383

Depreciation

 

(72)

 

(42)

 

(114)

 

(72)

 

 

(31)

 

(36)

 

(67)

 

  -

 

  -

 

(2)

 

  -

 

(255)

(1)            Includes Co-gen and biomass.  

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 27 

 

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:

 

 

 

 

Three months ended Jun 30

Six months ended Jun 30

(MILLIONS)

 

 

 

 

2015

 

2014

 

2015

 

2014

Revenues

 

 

 

$

458

$

474

$

899

$

954

Other income

 

 

 

 

6

 

2

 

33

 

5

Share of cash earnings from equity-accounted investments

 

 

 

 

9

 

8

 

13

 

15

Direct operating costs

 

 

 

 

(134)

 

(124)

 

(268)

 

(254)

Adjusted EBITDA

 

 

 

 

339

 

360

 

677

 

720

Fixed earnings adjustment(1)

 

-

 

11

 

-

 

11

Interest expense - borrowings

 

(114)

 

(102)

 

(219)

 

(203)

Management service costs

 

(13)

 

(13)

 

(27)

 

(24)

Current income tax expense

 

(5)

 

(6)

 

(10)

 

(14)

Funds From Operations prior to non-controlling interests

 

207

 

250

 

421

 

490

Less: cash portion of non-controlling interests

 

 

 

 

 

 

 

 

 

 

Preferred equity

 

(8)

 

(10)

 

(16)

 

(19)

 

 

Participating non-controlling interests - in operating

 

 

 

 

 

 

 

 

    

 

 

subsidiaries

 

(53)

 

(42)

 

(106)

 

(88)

Funds From Operations

 

146

 

198

 

299

 

383

Add: cash portion of non-controlling interests

 

61

 

52

 

122

 

107

Less: fixed earnings adjustment

 

-

 

(11)

 

-

 

(11)

Depreciation

 

(161)

 

(129)

 

(319)

 

(255)

Unrealized financial instruments loss

 

-

 

(4)

 

(8)

 

(4)

Share of non-cash loss from equity-accounted investments

 

(5)

 

(6)

 

(6)

 

(12)

Deferred income tax recovery(expense)

 

6

 

(17)

 

12

 

(19)

Other

 

(12)

 

(11)

 

(14)

 

8

Net income

$

35

$

72

$

86

$

197

(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                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 28 

 

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

 

 

 Hydroelectric 

 

Wind energy

Other(1)

Corporate

Total

 

 

North America

Latin

 

North America

Latin

 

 

 

 

 

(MILLIONS)

U.S.

Canada

Total

America

 

U.S.

Canada

Total

America

Europe

 

 

 

 

 

As at June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 equipment, at fair value

$

7,840

$

4,780

$

12,620

$

2,129

 

$

945

$

1,028

$

1,973

$

320

$

1,183

$

296

$

-

$

18,521

Total assets

 

8,318

 

4,989

 

13,307

 

2,355

 

 

1,253

 

1,052

 

2,305

 

348

 

1,298

 

319

 

50

 

19,982

Total borrowings

 

2,795

 

1,063

 

3,858

 

320

 

 

468

 

567

 

1,035

 

138

 

625

 

14

 

1,900

 

7,890

Total liabilities

 

4,235

 

2,009

 

6,244

 

457

 

 

740

 

790

 

1,530

 

143

 

864

 

51

 

2,043

 

11,332

For the six months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to property, plant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 and equipment

 

19

 

13

 

32

 

344

 

 

1

 

1

 

2

 

318

 

323

 

253

 

-

 

1,272

As at December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 equipment, at fair value

$

7,922

$

5,168

$

13,090

$

2,120

 

$

1,203

$

1,137

$

2,340

$

-

$

975

$

41

$

-

$

18,566

Total assets

 

8,463

 

5,286

 

13,749

 

2,287

 

 

1,292

 

1,164

 

2,456

 

-

 

1,108

 

43

 

206

 

19,849

Total borrowings

 

2,814

 

1,155

 

3,969

 

189

 

 

621

 

629

 

1,250

 

-

 

583

 

-

 

1,687

 

7,678

Total liabilities

 

4,345

 

2,214

 

6,559

 

300

 

 

706

 

865

 

1,571

 

-

 

747

 

1

 

1,790

 

10,968

For the year ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to property, plant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 and equipment

 

1,415

 

40

 

1,455

 

19

 

 

10

 

17

 

27

 

-

 

1,129

 

-

 

-

 

2,630

(1)            Includes Co-gen and biomass.  

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

Page 29 

 

16.  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 2091.

The remaining development project costs on three Brazilian hydroelectric projects totaling 72 MW, a 55 MW biomass facility in Brazil, and a 14 MW wind project in Ireland are expected to be $312 million. The biomass facility and the wind project are expected to be fully operational in 2016. Two hydroelectric projects with a combined capacity of 53 MW are expected to be fully operational in 2017, and the 19 MW hydroelectric project is expected to be fully operational in 2018.

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.

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 10 – Long-term debt and credit facilities.

Brookfield Renewable along with institutional investors have provided letters of credit, which include, but are not limited to, guarantees for debt service reserves, capital reserves, construction completion and performance as it relates to interests in the Brookfield Americas Infrastructure Fund and the Brookfield Infrastructure Fund II. As at June 30, 2015, letters of credit issued by Brookfield Renewable along with institutional investors were $112 million (2014: $125 million).

Guarantees

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.  

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

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17.  subsequent eventS

In July 2015, Brookfield Renewable completed the disposal of the 102 MW wind facility in California for gross cash consideration of $136 million. The sale was completed with institutional partners, and Brookfield Renewable’s interest was approximately 22%.

In July 2015, Brookfield Renewable entered into an agreement to acquire two hydroelectric facilities in Brazil with an aggregate capacity of 51 MW. The facilities are expected to generate 293 GWh annually. The transaction is expected to close in the first quarter of 2016, subject to typical closing conditions.

Brookfield Renewable entered into an automatic purchase plan to allow for purchases of its Series 1, Series 2, and Series 3 Class A Preference Shares. The automatic purchase plan commenced on July 1, 2015 and will terminate on August 6, 2015. Subsequent to June 30, 2015, 75,537 Class A Preference Shares and 22,900 LP Units were repurchased and cancelled.

 

 

 

Brookfield Renewable Energy Partners L.P                                Q2 2015 Interim Consolidated Financial Statements and Notes

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