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, 2015 AND December 31, 2014 AND

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014

 

 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

UNAUDITED

 

 

Sep 30

 

Dec 31

(MILLIONS)

Notes

 

2015

 

2014

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

106

$

150

 

Restricted cash

 

 

223

 

232

 

Trade receivables and other current assets

 

 

202

 

201

 

Financial instrument assets

5

 

21

 

48

 

Due from related parties

 

 

33

 

63

 

 

 

 

 

585

 

694

Financial instrument assets

5

 

9

 

18

Equity-accounted investments

7

 

239

 

273

Property, plant and equipment, at fair value

8

 

17,511

 

18,566

Deferred income tax assets

11

 

155

 

142

Other long-term assets

 

 

198

 

156

 

 

$

18,697

$

19,849

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued liabilities

9

$

299

$

253

 

Financial instrument liabilities

5

 

132

 

99

 

Due to related parties

 

 

67

 

79

 

Current portion of long-term debt

10

 

527

 

256

 

 

 

 

 

1,025

 

687

Financial instrument liabilities

5

 

77

 

75

Long-term debt and credit facilities

10

 

7,089

 

7,422

Deferred income tax liabilities

11

 

2,485

 

2,637

Other long-term liabilities

 

 

188

 

147

 

 

 

 

 

10,864

 

10,968

Equity

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

Preferred equity

12

 

634

 

728

 

Participating non-controlling interests - in operating

 

 

 

 

 

 

 

subsidiaries

12

 

2,231

 

2,062

 

General partnership interest in a holding subsidiary

 

 

 

 

 

 

 

held by Brookfield

12

 

48

 

59

 

Participating non-controlling interests - in a holding subsidiary

 

 

 

 

 

 

 

 - Redeemable/Exchangeable units held by Brookfield

12

 

2,337

 

2,865

Limited partners' equity

13

 

2,583

 

3,167

 

 

 

 

 

7,833

 

8,881

 

 

 

 

$

18,697

$

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                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 1 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS, EXCEPT AS NOTED)

Notes

2015

2014

2015

2014

Revenues

6

$

337

$

342

$

1,236

$

1,296

Other income

4, 15

 

83

 

3

 

116

 

8

Direct operating costs

6

 

(142)

 

(132)

 

(410)

 

(386)

Management service costs

6

 

(11)

 

(14)

 

(38)

 

(38)

Interest expense – borrowings

10

 

(107)

 

(106)

 

(326)

 

(309)

Share of earnings from equity-accounted

 

 

 

 

 

 

 

 

 

 

investments

7

 

3

 

7

 

10

 

10

Unrealized financial instruments (loss) gain

5

 

(1)

 

9

 

(9)

 

5

Depreciation

8

 

(153)

 

(145)

 

(472)

 

(400)

Other

 

 

(1)

 

(11)

 

(15)

 

(3)

Income (loss) before income taxes

 

 

8

 

(47)

 

92

 

183

Income tax recovery(expense)

 

 

 

 

 

 

 

 

 

 

Current

11

 

(7)

 

(5)

 

(17)

 

(19)

 

Deferred

11

 

26

 

27

 

38

 

8

 

 

 

19

 

22

 

21

 

(11)

Net income (loss)

 

$

27

$

(25)

$

113

$

172

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

Preferred equity

12

$

7

$

10

$

23

$

29

 

Participating non-controlling interests - in

 

 

 

 

 

 

 

 

 

 

 

operating subsidiaries

12

 

37

 

(2)

 

61

 

59

 

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)

 

(16)

 

14

 

41

Limited partners' equity

13

 

(9)

 

(17)

 

15

 

42

 

 

 

 

$

27

$

(25)

$

113

$

172

Basic and diluted (loss) earnings per LP Unit

 

$

(0.07)

$

(0.13)

$

0.10

$

0.31

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 2 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

 

 

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNAUDITED

Notes

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

2015

2014

2015

2014

Net income (loss)

 

$

27

$

(25)

$

113

$

172

Other comprehensive (loss) income that will not be

 

 

 

 

 

 

 

 

 

 

reclassified to net income (loss)

 

 

 

 

 

 

 

 

 

 

 

Revaluations of property, plant and equipment

8

 

-

 

-

 

39

 

-

 

 

Actuarial loss on defined benefit plans

 

 

-

 

(10)

 

-

 

(10)

 

 

Deferred income taxes on above items

11

 

-

 

3

 

-

 

3

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

 

 

-

 

(7)

 

39

 

(7)

Other comprehensive loss that may be

 

 

 

 

 

 

 

 

 

 

reclassified to net income (loss)

 

 

 

 

 

 

 

 

 

 

Financial instruments designated as cash-flow

 

 

 

 

 

 

 

 

 

 

 

hedges

 

 

 

 

 

 

 

 

 

 

 

Loss arising during the period

5

 

(44)

 

(2)

 

(23)

 

(55)

 

 

Reclassification adjustments for amounts

 

 

 

 

 

 

 

 

 

 

 

 

 recognized in net income (loss)

5

 

(7)

 

(3)

 

(25)

 

5

 

Unrealized loss on available-for-sale securities

 

 

(18)

 

-

 

(25)

 

-

 

Foreign currency translation

 

 

(596)

 

(304)

 

(1,020)

 

(201)

 

Deferred income taxes on above items

11

 

8

 

(3)

 

2

 

7

Total items that may be reclassified subsequently to

 

 

 

 

 

 

 

 

 

net income (loss)

 

 

(657)

 

(312)

 

(1,091)

 

(244)

Other comprehensive loss

 

 

(657)

 

(319)

 

(1,052)

 

(251)

Comprehensive loss

 

$

(630)

$

(344)

$

(939)

$

(79)

Comprehensive loss attributable to:

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

Preferred equity

12

$

(35)

$

(27)

$

(70)

$

(12)

 

Participating non-controlling interests - in

 

 

 

 

 

 

 

 

 

 

 

operating subsidiaries

12

 

(104)

 

(38)

 

(101)

 

29

 

General partnership interest in a holding

 

 

 

 

 

 

 

 

 

 

 

subsidiary held by Brookfield

12

 

(4)

 

(3)

 

(7)

 

(1)

 

Participating non-controlling interests - in a

 

 

 

 

 

 

 

 

 

 

 

holding subsidiary -Redeemable/

 

 

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

12

 

(231)

 

(135)

 

(361)

 

(46)

Limited partners' equity

13

 

(256)

 

(141)

 

(400)

 

(49)

 

 

 

 

 

$

(630)

$

(344)

$

(939)

$

(79)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Brookfield Renewable Energy Partners L.P                                Q3 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

 

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 SEPTEMBER 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 June 30, 2014

$

(131)

$

(37)

$

3,158

$

(7)

$

(20)

$

  -

$

2,963

$

793

$

2,011

$

55

$

2,681

$

8,503

Net income

 

(17)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(17)

 

10

 

(2)

 

  -

 

(16)

 

(25)

Other comprehensive (loss) income

 

  -

 

(120)

 

  -

 

(3)

 

(1)

 

  -

 

(124)

 

(37)

 

(36)

 

(3)

 

(119)

 

(319)

LP Units issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital contributions

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, as at June 30, 2015

$

(339)

$

(424)

$

3,701

$

(9)

$

(25)

$

(3)

$

2,901

$

677

$

2,394

$

54

$

2,624

$

8,650

Net (loss) income

 

(9)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(9)

 

7

 

37

 

  -

 

(8)

 

27

Other comprehensive loss

 

  -

 

(226)

 

  -

 

  -

 

(13)

 

(8)

 

(247)

 

(42)

 

(141)

 

(4)

 

(223)

 

(657)

LP Units and preferred shares purchased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for cancellation (Note 12, 13)

 

(4)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(4)

 

(1)

 

  -

 

  -

 

  -

 

(5)

Capital contributions (Note 12)

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

37

 

  -

 

  -

 

37

Distributions or dividends declared

 

(59)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(59)

 

(7)

 

(93)

 

(3)

 

(54)

 

(216)

Distribution reinvestment plan

 

1

 

  -

 

  -

 

  -

 

  -

 

  -

 

1

 

  -

 

  -

 

  -

 

  -

 

1

Other (Note 3)

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

(3)

 

1

 

(2)

 

(4)

Change in period

 

(71)

 

(226)

 

  -

 

  -

 

(13)

 

(8)

 

(318)

 

(43)

 

(163)

 

(6)

 

(287)

 

(817)

Balance, as at September 30, 2015

$

(410)

$

(650)

$

3,701

$

(9)

$

(38)

$

(11)

$

2,583

$

634

$

2,231

$

48

$

2,337

$

7,833

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Brookfield Renewable Energy Partners L.P                                Q3 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

 

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

NINE MONTHS ENDED SEPTEMBER 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

 

42

 

  -

 

  -

 

  -

 

  -

 

  -

 

42

 

29

 

59

 

1

 

41

 

172

Other comprehensive (loss) income

 

  -

 

(74)

 

  -

 

(3)

 

(14)

 

  -

 

(91)

 

(41)

 

(30)

 

(2)

 

(87)

 

(251)

LP Units issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net proceeds

 

285

 

  -

 

  -

 

  -

 

  -

 

  -

 

285

 

  -

 

  -

 

  -

 

  -

 

285

 

Adjustments

 

(38)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(38)

 

  -

 

  -

 

1

 

37

 

  -

Capital contributions

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

967

 

  -

 

  -

 

967

Distributions or dividends declared

 

(160)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(160)

 

(29)

 

(97)

 

(5)

 

(151)

 

(442)

Distribution reinvestment plan

 

2

 

  -

 

  -

 

  -

 

  -

 

  -

 

2

 

  -

 

  -

 

  -

 

  -

 

2

Other

 

(2)

 

  -

 

(2)

 

  -

 

  -

 

  -

 

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, as at December 31, 2014

$

(241)

$

(241)

$

3,685

$

(9)

$

(27)

$

  -

$

3,167

$

728

$

2,062

$

59

$

2,865

$

8,881

Net income

 

15

 

  -

 

  -

 

  -

 

  -

 

  -

 

15

 

23

 

61

 

  -

 

14

 

113

Other comprehensive loss

 

  -

 

(409)

 

16

 

  -

 

(11)

 

(11)

 

(415)

 

(93)

 

(162)

 

(7)

 

(375)

 

(1,052)

LP Units and preferred shares purchased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for cancellation (Note 12, 13)

 

(5)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(5)

 

(1)

 

  -

 

  -

 

  -

 

(6)

Capital contributions (Note 12)

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

460

 

  -

 

  -

 

460

Distributions or dividends declared

 

(180)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(180)

 

(23)

 

(190)

 

(9)

 

(163)

 

(565)

Distribution reinvestment plan

 

3

 

  -

 

  -

 

  -

 

  -

 

  -

 

3

 

  -

 

  -

 

  -

 

  -

 

3

Other

 

(2)

 

  -

 

  -

 

  -

 

  -

 

  -

 

(2)

 

  -

 

  -

 

5

 

(4)

 

(1)

Change in period

 

(169)

 

(409)

 

16

 

  -

 

(11)

 

(11)

 

(584)

 

(94)

 

169

 

(11)

 

(528)

 

(1,048)

Balance, as at September 30, 2015

$

(410)

$

(650)

$

3,701

$

(9)

$

(38)

$

(11)

$

2,583

$

634

$

2,231

$

48

$

2,337

$

7,833

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 5 

 

BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

Nine months ended

UNAUDITED

 

Sep 30

Sep 30

(MILLIONS)

 

 

2015

 

2014

 

2015

 

2014

Operating activities

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

27

$

(25)

$

113

$

172

Adjustments for the following non-cash items:

 

 

 

 

 

 

 

 

 

 

Depreciation

8

 

153

 

145

 

472

 

400

 

Unrealized financial instrument loss

5

 

1

 

(9)

 

9

 

(5)

 

Share of earnings from equity accounted investments

7

 

(3)

 

(7)

 

(10)

 

(10)

 

Deferred income tax recovery

11

 

(26)

 

(27)

 

(38)

 

(8)

 

Gain on disposal

4, 15

 

(53)

 

-

 

(53)

 

-

 

Other non-cash items

 

 

(2)

 

5

 

10

 

2

Dividends received from equity-accounted investments

7

 

6

 

10

 

26

 

28

Changes in due to or from related parties

 

 

18

 

8

 

11

 

14

Net change in working capital balances

 

 

39

 

88

 

16

 

47

 

 

 

 

 

160

 

188

 

556

 

640

Financing activities

 

 

 

 

 

 

 

 

 

Long-term debt - borrowings

10

 

148

 

420

 

938

 

1,126

Long-term debt - repayments

10

 

(143)

 

(22)

 

(698)

 

(556)

Capital contributions from participating non-controlling

 

 

 

 

 

 

 

 

 

 

interests - in operating subsidiaries

12

 

37

 

273

 

460

 

967

Issuance of LP Units

 

 

-

 

-

 

-

 

285

Repurchase of LP Units and preferred shares

12, 13

 

(6)

 

-

 

(6)

 

-

Distributions paid:

 

 

 

 

 

 

 

 

 

 

To participating non-controlling interests - in operating

 

 

 

 

 

 

 

 

 

 

 

subsidiaries

12

 

(93)

 

(44)

 

(190)

 

(96)

 

To preferred shareholders

 

 

(7)

 

(10)

 

(24)

 

(29)

     

To unitholders of Brookfield Renewable or BRELP

12, 13

 

(115)

 

(107)

 

(346)

 

(374)

 

 

 

 

 

(179)

 

510

 

134

 

1,323

Investing activities

 

 

 

 

 

 

 

 

 

Acquisitions

3

 

(3)

 

(599)

 

(663)

 

(1,827)

Investment in:

 

 

 

 

 

 

 

 

 

 

Sustaining capital expenditures

8

 

(21)

 

(42)

 

(49)

 

(69)

 

Development and construction of renewable power

 

 

 

 

 

 

 

 

 

 

 

generating assets

8

 

(59)

 

(36)

 

(137)

 

(53)

Investment tax credits related to renewable power

 

 

 

 

 

 

 

 

 

 

generating assets

8

 

-

 

11

 

-

 

23

Proceeds from disposal of assets

4

 

143

 

-

 

143

 

-

Disposal of (investment in) securities

 

 

3

 

-

 

(13)

 

-

Restricted cash and other

 

 

(39)

 

(50)

 

3

 

(36)

 

 

 

 

 

24

 

(716)

 

(716)

 

(1,962)

Foreign exchange loss on cash

 

 

(12)

 

(11)

 

(18)

 

(8)

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

Decrease

 

 

(7)

 

(29)

 

(44)

 

(7)

 

Balance, beginning of period

 

 

113

 

225

 

150

 

203

 

Balance, end of period

 

$

106

$

196

$

106

$

196

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

 

Interest paid

 

$

61

$

54

$

268

$

251

 

Interest received

 

 

5

 

3

 

13

 

8

 

Income taxes paid

 

 

8

 

6

 

27

 

28

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

Brookfield Renewable Energy Partners L.P                                Q3 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 November 3, 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                                Q3 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 January 1, 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 February 1, 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 January 1, 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                                Q3 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). In August 2015, the remaining non-controlling interests were acquired for R$9 million ($3 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                                Q3 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 nine months ended September 30, 2015, the purchase price allocations for the acquisitions completed during the nine months ended September 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.

4.  DISPOSAL OF assets

In July 2015, Brookfield Renewable, along with its institutional partners, sold its interest in a 102 MW wind facility in California to a third party for gross cash consideration of $143 million, inclusive of working capital adjustments of $7 million. The resulting gain on disposition of $53 million, net of $4 million of transaction costs, was recognized in the Consolidated Statements of Income (Loss) within the Other income line item. Brookfield Renewable’s interest was approximately 22%.

As a result of the disposition, the accumulated revaluation surplus of $4 million post-tax was reclassified from other comprehensive income directly to equity. Further, other comprehensive income of $3 million post-tax on financial instruments designated as cash flow hedges was reclassified to the Consolidated Statements of Income (Loss) within the Other line item. Deferred income taxes associated with the disposal were $5 million. 

Summarized financial information relating to the disposal of the facility is shown below:

(MILLIONS)

July 2, 2015

Net proceeds, including working capital adjustments and less transaction costs

$

 139  

Carrying value

 

 

 

Assets

 

 238  

 

Liabilities

 

 (152) 

 

 

 86  

 

 

 

 

Gain on disposal

$

 53  

  

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 10 

 

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                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 11 

 

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

 

 

 

Sep 30, 2015

 

Dec 31

(MILLIONS)

Level 1

Level 2

Level 3

2015

2014

Assets measured at fair value:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

106

$

-

$

-

$

106

$

150

Restricted cash(1)

 

373

 

-

 

-

 

373

 

313

Financial instrument assets(1)

 

 

 

 

 

 

 

 

 

 

 

Energy derivative contracts

 

-

 

26

 

-

 

26

 

31

 

Foreign exchange swaps

 

-

 

4

 

-

 

4

 

35

Available-for-sale investments(2)

 

14

 

-

 

-

 

14

 

31

Property, plant and equipment

 

-

 

-

 

17,511

 

17,511

 

18,566

Liabilities measured at fair value:

 

 

 

 

 

 

 

 

 

 

Financial instrument liabilities(1)

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps

 

-

 

(192)

 

-

 

(192)

 

(170)

 

Foreign exchange swaps

 

-

 

(17)

 

-

 

(17)

 

(4)

Liabilities for which fair value is disclosed:

 

 

 

 

 

 

 

 

 

 

 

Long-term debt and credit facilities(1)

 

-

 

(8,268)

 

-

 

(8,268)

 

(8,434)

Total

$

493

$

(8,447)

$

17,511

$

9,557

$

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 nine months ended September 30, 2015.

Financial instruments disclosures

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

 

 

Sep 30, 2015

Dec 31, 2014

 

 

 

 

 

Net (Assets)

Net (Assets)

(MILLIONS)

Assets

Liabilities

Liabilities

Liabilities

Energy derivative contracts

$

26

$

-

$

(26)

$

(31)

Interest rate swaps

 

-

 

192

 

192

 

170

Foreign exchange swaps

 

4

 

17

 

13

 

(31)

Total

 

30

 

209

 

179

 

108

Less: current portion

 

21

 

132

 

111

 

51

Long-term portion

$

9

$

77

$

68

$

57

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 12 

 

(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 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 (loss):

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Energy derivative contracts

$

2

$

(1)

$

4

$

(1)

Interest rate swaps

 

(1)

 

  -

 

1

 

1

Foreign exchange swaps

 

(2)

 

10

 

(14)

 

5

 

$

(1)

$

9

$

(9)

$

5

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

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Energy derivative contracts

$

9

$

(3)

$

13

$

(4)

Interest rate swaps

 

(47)

 

(9)

 

(34)

 

(63)

Foreign exchange swaps

 

(6)

 

10

 

(2)

 

12

 

$

(44)

$

(2)

$

(23)

$

(55)

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

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Energy derivative contracts

$

(6)

$

(3)

$

(23)

$

3

Interest rate swaps

 

(1)

 

-

 

(2)

 

2

 

$

(7)

$

(3)

$

(25)

$

5

 

 

 

 

 

 

 

 

 

 
                   

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 13 

 

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 (loss):

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Revenues

 

 

 

 

 

 

 

 

 

Power purchase and revenue agreements

$

95

$

99

$

350

$

280

 

Wind levelization agreement

 

2

 

2

 

6

 

5

 

 

$

97

$

101

$

356

$

285

Direct operating costs

 

 

 

 

 

 

 

 

 

Energy purchases

$

(1)

$

(1)

$

(5)

$

(8)

 

Energy marketing fee

 

(6)

 

(6)

 

(17)

 

(16)

 

Insurance services

 

(7)

 

(7)

 

(20)

 

(21)

 

 

$

(14)

$

(14)

$

(42)

$

(45)

Management service costs

$

(11)

$

(14)

$

(38)

$

(38)

7. 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, 2015

Sep 30, 2015

Dec 31, 2014

Balance, beginning of period/year

$

251

$

273

$

290

California hydroelectric step acquisition

 

-

 

-

 

(39)

Revaluation recognized through OCI

 

-

 

-

 

56

Share of OCI

 

-

 

-

 

1

Share of net income

 

3

 

10

 

3

Dividends declared

 

(6)

 

(26)

 

(27)

Foreign exchange loss

 

(9)

 

(18)

 

(11)

Balance, end of period/year

$

239

$

239

$

273

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

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Revenue

$

21

$

30

$

70

$

95

Net income

 

5

 

14

 

18

 

20

Share of net income (loss)

 

 

 

 

 

 

 

 

 

Cash earnings

 

5

 

10

 

18

 

25

 

Non-cash loss

 

(2)

 

(3)

 

(8)

 

(15)

 

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 14 

 

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

 

(1,412)

 

(267)

 

(52)

 

(1,731)

Additions

 

112

 

37

 

45

 

194

Acquisitions through business combinations

 

 307  

 

624

 

229

 

 1,160  

Disposal(4)

 

 -    

 

(230)

 

-

 

 (230) 

Transfers and other

 

(7)

 

(8)

 

-

 

(15)

Change in fair value recognized through OCI(5)

 

 39  

 

 -    

 

 -    

 

 39  

Depreciation

 

(305)

 

(161)

 

(6)

 

(472)

As at September 30, 2015

 

$

13,944

$

3,310

$

257

$

17,511

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

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

(3)       Includes construction work in process (“CWIP”) of $468 million.

(4)       Brookfield Renewable, along with its institutional partners, sold its interest in a 102 MW wind facility in California to a third party for gross cash consideration of $143 million, resulting in a gain of $53 million.  See Note 4.

(5)       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:  

 

 

Sep 30

 

Dec 31

(MILLIONS)

 

2015

 

2014

Operating accrued liabilities

$

129

$

131

Interest payable on corporate and subsidiary borrowings

 

88

 

44

Accounts payable

 

36

 

29

LP Unitholders’ distribution and preferred dividends payable(1)

 

19

 

19

Other

 

27

 

30

 

$

299

$

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                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 15 

 

10.  LONG-TERM DEBT AND CREDIT FACILITIES

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

 

 

 

Sep 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 (C$200)

5.3

3.1

$

150

5.3

3.8

$

172

 

Series 4 (C$150)

5.8

21.1

 

113

5.8

21.9

 

129

 

Series 6 (C$300)

6.1

1.2

 

225

6.1

1.9

 

258

 

Series 7 (C$450)

5.1

5.0

 

337

5.1

5.8

 

388

 

Series 8 (C$400)

4.8

6.4

 

301

4.8

7.1

 

344

 

Series 9 (C$400)

3.8

9.7

 

301

-

-

 

-

 

 

 

5.0

6.8

$

1,427

5.3

6.7

$

1,291

Subsidiary borrowings

 

 

 

 

 

 

 

 

 

North America

 

 

 

 

 

 

 

 

 

 

United States

5.3

7.3

$

3,227

5.3

8.3

$

3,468

 

 

Canada

5.6

13.3

 

1,543

5.7

13.8

 

1,798

 

 

 

5.4

9.3

 

4,770

5.4

10.2

 

5,266

 

Latin America

9.7

11.7

 

354

7.3

10.4

 

189

 

Europe

3.9

11.2

 

662

3.5

12.5

 

594

 

 

 

5.5

9.6

$

5,786

5.3

10.4

$

6,049

Credit facilities

1.4

4.8

$

461

1.4

4.5

$

401

Total debt

 

 

$

7,674

 

 

$

7,741

Add: Unamortized premiums(1)

 

 

 

4

 

 

 

8

Less: Unamortized financing fees(1)

 

 

 

(62)

 

 

 

(71)

Less: Current portion

 

 

 

(527)

 

 

 

(256)

 

 

 

 

 

$

7,089

 

 

$

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                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 16 

 

minimize its exposure to floating interest rates.  Subsidiary borrowings in Brazil consist of floating interest rates of Taxa de Juros de Longo Prazo (“TJLP”), 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%.

The final drawdown of €20 million ($22 million) was made in July 2015 on the construction and term loan associated with 137 MW of wind projects in Ireland, bringing the total draw to €188 million ($227 million) at a weighted average rate of 2.74% and maturing in December 2027.

Effective July 31, 2015, the margin on C$119 million ($95 million) of debt associated with a 51 MW wind facility in Ontario was reduced from 2.25% to 1.625%, and the debt was up-financed by C$7 million ($5 million).

In September 2015, Brookfield Renewable secured financing in the amount of R$187 million ($47 million) with respect to 90 MW of biomass capacity in Brazil, of which we drew R$139 million ($35 million). The loan bears interest at a floating interest rate of the TJLP’s rate plus 1.4%, and matures in October 2035.

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 17 – 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 Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 17 

 

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.

The following table summarizes the available portion of credit facilities:

 

Sep 30

Dec 31

(MILLIONS)

 

2015

 

2014

Authorized credit facilities

$

1,510

$

1,480

Draws on credit facilities(1)

 

(461)

 

(401)

Issued letters of credit

 

(205)

 

(227)

Available portion of credit facilities

$

844

$

852

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

During the nine months ended September 30, 2015, Brookfield Renewable borrowed $279 million from, and repaid $279 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 22.8% for the nine months ended September 30, 2015 (2014: 6%). The effective tax rate is different than the statutory rate primarily due to rate differentials and non-controlling interests’ income not subject to tax.

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 18 

 

12. Non-controlling interests

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

 

 

Sep 30

Dec 31

(MILLIONS)

 

2015

 

2014

Preferred equity

$

634

$

728

Participating non-controlling interests - in operating subsidiaries

 

2,231

 

2,062

General partnership interest in a holding subsidiary held by Brookfield

 

48

 

59

Participating non-controlling interests - in a holding subsidiary -

 

 

 

 

  

 Redeemable/Exchangeable units held by Brookfield

 

2,337

 

2,865

Total

$

5,250

$

5,714

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(1)

date

2015

2014

2015

2014

Series 1 (C$136)

5.45

3.36%

Apr 30, 2020

$

5

$

9

$

102

$

214

Series 2 (C$113)

4.51

3.20%

Apr 30, 2020

 

2

 

-

 

84

 

-

Series 3 (C$249)

9.96

4.40%

Jul 31, 2019

 

6

 

8

 

186

 

214

Series 5 (C$175)

7.00

5.00%

Apr 30, 2018

 

5

 

6

 

131

 

150

Series 6 (C$175)

7.00

5.00%

Jul 31, 2018

 

5

 

6

 

131

 

150

 

33.92

 

 

$

23

$

29

$

634

$

728

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

The Class A Preference Shares do not have a fixed maturity date and are not redeemable at the option of the holders. As at September 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 2.620%. The quarterly dividend in respect of the August 1, 2015 to October 31, 2015 dividend period was paid on October 31, 2015 at an annual rate of 3.200% (C$0.201393 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.

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 19 

 

For the period ended September 30, 2015, 78,537 Series 1, Series 2 and Series 3 Class A Preference Shares were repurchased at a cost of $1 million, and cancelled.

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

 

30

 

15

 

15

 

-

 

1

 

61

OCI

 

(58)

 

(87)

 

-

 

(11)

 

(6)

 

(162)

Capital contributions(1)

 

-

 

460

 

-

 

-

 

-

 

460

Distributions

 

(69)

 

(110)

 

(7)

 

(1)

 

(3)

 

(190)

As at September 30, 2015

 

$

817

$

1,215

$

134

$

20

$

45

$

2,231

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, 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.

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 20 

 

As at September 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 nine months ended September 30 is presented in the following table:

 

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

General partnership interest in a holding

 

 

 

 

 

 

 

 

 

subsidiary held by Brookfield

$

1

$

1

$

3

$

3

 

Incentive distribution

 

2

 

1

 

6

 

2

 

 

 

$

3

$

2

$

9

$

5

 

 

 

 

 

 

 

 

 

 

 

Participating non-controlling interests - in  a

 

 

 

 

 

 

 

 

 

holding subsidiary - Redeemable/

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

$

54

$

50

$

163

$

151

 

 

 

$

57

$

52

$

172

$

156

 

 

 

 

 

 

 

 

 

 

 

13. LIMITED PARTNERS’ EQUITY

Limited partners’ equity

As at September 30, 2015, LP Units outstanding were 143,306,354 (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 nine months ended September 30, 2015, 36,512 LP Units and 112,600 LP Units, respectively (2014: 25,874 and 95,112 LP Units) were issued under the distribution reinvestment plan.

LP Units Purchased for Cancellation – Normal course issuer bid

For the three and nine months ended September 30, 2015, 138,900 LP Units and 163,100 LP Units, respectively were purchased at a cost of $4 million and $5 million, respectively. 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 September 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 48% direct interest in BRELP through the ownership of Redeemable/Exchangeable partnership units and a direct 1% GP interest in BRELP as at September 30, 2015.

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 21 

 

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, 2015, Brookfield Renewable declared distributions on its LP Units of $59 million or $0.415 per LP Unit and $180 million or $1.245 per LP Unit, respectively (2014: $56 million and $160 million or $0.3875 per LP Unit and $1.1625 per LP Unit).

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

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Brookfield

$

16

$

16

$

50

$

47

External LP Unitholders

 

43

 

40

 

130

 

113

 

$

59

$

56

$

180

$

160

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                                Q3 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 September 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

$

21

$

-

$

1,453

$

591

$

(1,480)

$

585

Long-term assets

 

2,584

 

626

 

-

 

18,106

 

(3,204)

 

18,112

Current liabilities

 

22

 

9

 

26

 

2,448

 

(1,480)

 

1,025

Long-term liabilities

 

-

 

-

 

1,422

 

9,037

 

(620)

 

9,839

Preferred equity

 

-

 

634

 

-

 

-

 

-

 

634

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

 in operating subsidiaries

 

-

 

-

 

-

 

2,231

 

-

 

2,231

Participating non-controlling interests -

 

 

 

 

 

 

 

 

 

 

 

 

 

in a holding subsidiary - Redeemable/

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchangeable units held by Brookfield

 

-

 

-

 

-

 

2,337

 

-

 

2,337

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                                Q3 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 Sep 30, 2015

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

337

$

-

$

337

Net income (loss)

 

(9)

 

-

 

-

 

27

 

9

 

27

For the three months ended Sep 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

342

$

-

$

342

Net income (loss)

 

(17)

 

-

 

(1)

 

(24)

 

17

 

(25)

For the nine months ended Sep 30, 2015

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

1,236

$

-

$

1,236

Net

 

15

 

-

 

(1)

 

114

 

(15)

 

113

For the nine months ended Sep 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

-

$

-

$

-

$

1,296

$

-

$

1,296

Net income (loss)

 

42

 

-

 

(1)

 

173

 

(42)

 

172

(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.

  

15.  Other income

Brookfield Renewable’s other income is comprised of the following:  

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

2015

 

2014

 

2015

 

2014

Gain on disposal (Note 4)

$

53

$

-

$

53

$

-

Compensation related to expired

 

 

 

 

 

 

 

 

 

Brazilian concession agreements

 

17

 

-

 

17

 

-

Other

 

13

 

3

 

46

 

8

 

$

83

$

3

$

116

$

8

  

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 24 

 

16.  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 three biomass facilities and two Co-gen 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 Biomass and Co-gen).

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 includes 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                                Q3 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

153

$

55

$

208

$

49

 

$

23

$

16

$

39

$

6

$

25

$

10

$

  -

$

337

Adjusted EBITDA

 

89

 

43

 

132

 

57

 

 

26

 

10

 

36

 

5

 

15

 

2

 

(5)

 

242

Interest expense - borrowings

 

(40)

 

(14)

 

(54)

 

(8)

 

 

(8)

 

(7)

 

(15)

 

(3)

 

(7)

 

(1)

 

(19)

 

(107)

Funds From Operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

46

 

29

 

75

 

45

 

 

18

 

3

 

21

 

2

 

9

 

  -

 

(35)

 

117

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

(17)

 

  -

 

(17)

 

(3)

 

 

(3)

 

  -

 

(3)

 

(1)

 

(6)

 

  -

 

(7)

 

(37)

Funds From Operations

 

29

 

29

 

58

 

42

 

 

15

 

3

 

18

 

1

 

3

 

  -

 

(42)

 

80

Depreciation

 

(49)

 

(17)

 

(66)

 

(31)

 

 

(13)

 

(16)

 

(29)

 

(3)

 

(21)

 

(3)

 

  -

 

(153)

For the three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

151

$

64

$

215

$

60

 

$

28

$

19

$

47

$

  -

$

18

$

2

$

  -

$

342

Adjusted EBITDA

 

98

 

47

 

145

 

44

 

 

17

 

13

 

30

 

  -

 

11

 

(1)

 

(6)

 

223

Interest expense - borrowings

 

(37)

 

(19)

 

(56)

 

(5)

 

 

(10)

 

(9)

 

(19)

 

  -

 

(4)

 

  -

 

(22)

 

(106)

Funds From Operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

61

 

28

 

89

 

34

 

 

7

 

4

 

11

 

  -

 

7

 

(1)

 

(42)

 

98

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

(14)

 

  -

 

(14)

 

(4)

 

 

(4)

 

  -

 

(4)

 

  -

 

(5)

 

  -

 

(10)

 

(37)

Funds From Operations

 

47

 

28

 

75

 

30

 

 

3

 

4

 

7

 

  -

 

2

 

(1)

 

(52)

 

61

Depreciation

 

(40)

 

(19)

 

(59)

 

(37)

 

 

(16)

 

(19)

 

(35)

 

  -

 

(13)

 

(1)

 

  -

 

(145)

(1)            Includes biomass and Co-gen.  

Brookfield Renewable Energy Partners L.P                                Q3 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 nine months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

546

$

245

$

791

$

155

 

$

82

$

72

$

154

$

16

$

93

$

27

$

  -

$

1,236

Adjusted EBITDA

 

365

 

214

 

579

 

134

 

 

65

 

57

 

122

 

15

 

70

 

11

 

(12)

 

919

Interest expense - borrowings

 

(121)

 

(47)

 

(168)

 

(18)

 

 

(26)

 

(23)

 

(49)

 

(6)

 

(22)

 

(2)

 

(61)

 

(326)

Funds From Operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

236

 

167

 

403

 

107

 

 

39

 

34

 

73

 

9

 

49

 

8

 

(111)

 

538

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

(71)

 

(2)

 

(73)

 

(10)

 

 

(19)

 

  -

 

(19)

 

(5)

 

(26)

 

(3)

 

(23)

 

(159)

Funds From Operations

 

165

 

165

 

330

 

97

 

 

20

 

34

 

54

 

4

 

23

 

5

 

(134)

 

379

Depreciation

 

(148)

 

(59)

 

(207)

 

(98)

 

 

(42)

 

(49)

 

(91)

 

(6)

 

(64)

 

(6)

 

  -

 

(472)

For the nine months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

575

$

269

$

844

$

216

 

$

106

$

87

$

193

$

  -

$

18

$

25

$

  -

$

1,296

Adjusted EBITDA

 

412

 

214

 

626

 

168

 

 

71

 

72

 

143

 

  -

 

11

 

11

 

(16)

 

943

Interest expense - borrowings

 

(113)

 

(53)

 

(166)

 

(15)

 

 

(30)

 

(29)

 

(59)

 

  -

 

(4)

 

  -

 

(65)

 

(309)

Funds From Operations prior to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 non-controlling interests

 

295

 

161

 

456

 

138

 

 

41

 

43

 

84

 

  -

 

18

 

11

 

(119)

 

588

Cash portion of non-controlling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests

 

(71)

 

  -

 

(71)

 

(11)

 

 

(28)

 

  -

 

(28)

 

  -

 

(5)

 

  -

 

(29)

 

(144)

Funds From Operations

 

224

 

161

 

385

 

127

 

 

13

 

43

 

56

 

  -

 

13

 

11

 

(148)

 

444

Depreciation

 

(112)

 

(61)

 

(173)

 

(109)

 

 

(47)

 

(55)

 

(102)

 

  -

 

(13)

 

(3)

 

  -

 

(400)

(1)            Includes biomass and Co-gen.  

Brookfield Renewable Energy Partners L.P                                Q3 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 (loss) as presented in the interim consolidated statements of income (loss):

 

 

 

 

Three months ended Sep 30

Nine months ended Sep 30

(MILLIONS)

 

 

 

 

2015

 

2014

 

2015

 

2014

Revenues

$

337

$

342

$

1,236

$

1,296

Other income(1)(2)

 

83

 

3

 

116

 

8

Share of cash earnings from equity-accounted investments

 

5

 

10

 

18

 

25

Direct operating costs

 

 

 

 

(142)

 

(132)

 

(410)

 

(386)

 

 

 

 

 

283

 

223

 

960

 

943

Less: cash portion of non-controlling interests - other income(1)

 

 

 

 

(41)

 

-

 

(41)

 

-

Adjusted EBITDA

 

 

 

 

242

 

223

 

919

 

943

Fixed earnings adjustment(3)

 

-

 

-

 

-

 

11

Interest expense - borrowings

 

(107)

 

(106)

 

(326)

 

(309)

Management service costs

 

(11)

 

(14)

 

(38)

 

(38)

Current income tax expense

 

 

 

 

(7)

 

(5)

 

(17)

 

(19)

Funds From Operations prior to non-controlling interests

 

117

 

98

 

538

 

588

Less: cash portion of non-controlling interests

 

 

 

 

 

 

 

 

 

 

Preferred equity

 

(7)

 

(10)

 

(23)

 

(29)

 

 

Participating non-controlling interests - in operating

 

 

 

 

 

 

 

 

    

 

 

subsidiaries

 

(30)

 

(27)

 

(136)

 

(115)

Funds From Operations

 

80

 

61

 

379

 

444

Add: cash portion of non-controlling interests(1)

 

78

 

37

 

200

 

144

Less: fixed earnings adjustment

 

-

 

-

 

-

 

(11)

Depreciation

 

(153)

 

(145)

 

(472)

 

(400)

Unrealized financial instruments (loss) gain

 

(1)

 

9

 

(9)

 

5

Share of non-cash loss from equity-accounted investments

 

(2)

 

(3)

 

(8)

 

(15)

Deferred income tax recovery

 

26

 

27

 

38

 

8

Other

 

(1)

 

(11)

 

(15)

 

(3)

Net income (loss)

 

 

 

$

27

$

(25)

$

113

$

172

(1)       Brookfield Renewable, along with its institutional partners, sold its interest in a 102 MW wind facility in California to a third party for gross cash consideration of $143 million, resulting in a gain of $53 million.  See Note 4 - Disposal of assets and 15 - Other income. Brookfield Renewable’s share of the gain was $12 million, representing the 22% interest in the facility and is net of the cash portion of non-controlling interests. 

(2)       In July 2015, concession agreements relating to two Brazilian hydroelectric facilities expired. Brookfield Renewable elected not to renew these concession agreements in exchange for compensation of $17 million.

(3)       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 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 September 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 equipment, at fair value

$

7,808

$

4,481

$

12,289

$

1,655

 

$

933

$

954

$

1,887

$

248

$

1,175

$

257

$

-

$

17,511

Total assets

 

8,256

 

4,686

 

12,942

 

1,887

 

 

1,010

 

975

 

1,985

 

271

 

1,291

 

298

 

23

 

18,697

Total borrowings

 

2,737

 

996

 

3,733

 

212

 

 

464

 

533

 

997

 

107

 

649

 

35

 

1,883

 

7,616

Total liabilities

 

4,205

 

1,890

 

6,095

 

312

 

 

588

 

747

 

1,335

 

111

 

874

 

77

 

2,060

 

10,864

For the nine months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to property, plant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 and equipment

 

37

 

26

 

63

 

356

 

 

5

 

3

 

8

 

318

 

335

 

274

 

-

 

1,354

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 biomass and Co-gen.  

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 29 

 

17.  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.

In July 2015, Brookfield Renewable entered into an agreement to acquire two hydroelectric facilities in Brazil with an aggregate capacity of 51 MW and expected to generate 293 GWh annually. The transaction is expected to close in the fourth quarter of 2015, subject to typical closing conditions.  Brookfield Renewable will retain a 100% interest in these facilities.

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 Northern Ireland are expected to be $221 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 September 30, 2015, letters of credit issued by Brookfield Renewable along with institutional investors were $75 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                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 30 

 

18.  subsequent eventS

In October 2015, Brookfield Renewable completed a $400 million bond financing associated with its 600 MW pumped storage and 10 MW hydroelectric facilities in New England. The bond matures in 2025, and bears interest at a fixed interest rate of 4.89% on $375 million and a floating interest rate of LIBOR plus a margin of 270 basis points on the remaining $25 million. Simultaneously, Brookfield Renewable also completed a $26 million letter of credit and working capital facility with a three-year term and a floating interest rate of LIBOR plus a margin of 170 basis points. Brookfield Renewable retains a 50%, equity-accounted interest in this facility.

In October 2015, Brookfield Renewable entered into an agreement to acquire two hydroelectric facilities in Pennsylvania with an aggregate generating capacity of 292 MW. The facilities are expected to generate 1,109 GWh annually. Brookfield Renewable is pursuing this transaction with its institutional partners, and is expected to retain an approximate 40% controlling interest in the facilities. The transaction is expected to close in the first quarter 2016, subject to typical closing conditions.

 

 

 

Brookfield Renewable Energy Partners L.P                                Q3 2015 Interim Consolidated Financial Statements and Notes

Page 31