Content
Management’s Discussion & Analysis
Year ended December 31,
Consolidated Results
|
(millions of Canadian dollars except where otherwise noted) |
2008 |
2007 |
2006 |
|
Cash Provided by Operating Activities |
98.1 |
80.6 |
86.5 |
|
Cash Available for Distribution 1 |
91.2 |
73.5 |
74.3 |
|
Cash Distributions Declared |
74.9 |
69.6 |
67.3 |
|
Cash Distributions Declared Per Unit (dollars per unit) 2 |
1.0320 |
0.9600 |
0.9259 |
- See “Non-GAAP Measures.” Refer to the reconciliation to Cash Provided by Operating Activities.
- Includes trust units and ECT preferred units.
In 2008, Enbridge Income Fund (the Fund) completed growth projects within all three operating segments, including the BC Expansion project in Alliance Canada, the Westspur expansion in the Saskatchewan System and the Loreburn, Estlin and Alameda waste heat recovery facilities within the Green Power segment. The completion of these projects results in increased earnings and cashflows, which has enabled the Fund to increase monthly cash distributions to its unitholders.
For the year ended December 31, 2008, cash distributions declared of $74.9 million (2007 – $69.6 million) represented 82.1% (2007 – 94.7%) of cash available for distribution. The year-to-date decrease in the distribution rate reflected the Calpine Energy Services Canada Partnership (CESCA) bankruptcy settlement received in the first quarter. Excluding the cash received in the second quarter from the CESCA settlement, cash available for distribution to distributions declared for the year ended December 31, 2008, was 88.0%. The Fund pays cash distributions on a monthly basis to unitholders of record on the last business day of each month with distributions payable on or about the 15th day of the month following the declaration. Since inception, the Fund has declared the following distributions.
Annual Cash Distribution per Unit 1,2,3
- Distributions include both a return on capital and a return of capital.
- Includes trust units and ECT preferred units.
- The 2009 estimated annual cash distribution column reflects the annualization of the monthly distribution of $0.096 previously approved by the Board of Trustees payable to unitholders of record on January 30, 2009.
FINANCIAL PERFORMANCE 1
Earnings
|
Year ended December 31, |
2008 |
2007 |
|
(millions of dollars) Alliance Canada |
63.1 |
57.0 |
|
Saskatchewan System |
17.5 |
13.5 |
|
Green Power |
1.1 |
2.3 |
|
Corporate |
(59.8) |
(58.3) |
|
Earnings before the impact of tax changes |
21.9 |
14.5 |
|
Revalue future taxes due to tax rate changes |
– |
8.5 |
|
Future taxes due to Tax Fairness Plan |
– |
(1.9) |
|
Earnings |
21.9 |
21.1 |
- Financial highlights have been extracted from financial statements prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP).
Earnings for the year ended December 31, 2008, increased by $0.8 million over the prior year. After adjusting for the impact of tax changes in 2007, earnings have increased by $7.4 million from the prior year. This increase is primarily due to the receipt of the CESCA settlement of $6.1 million for Alliance Canada as well as higher earnings from the Saskatchewan System due to the Westspur expansion and allowance oil sales. Offsetting these factors is a decline in earnings from the Green Power segment due to an unrealized non-cash mark to market loss on Wind power derivatives as well as shutdowns at NRGreen facilities due to equipment failures.
On June 22, 2007, the “Tax Fairness Plan” income trust taxation legislation, Bill C-52, received Royal Assent. Under the enacted legislation, a distribution tax will be imposed on Enbridge Income Fund starting in 2011. This change resulted in the recognition of future income tax liabilities and expense of $1.9 million in 2007. The impact of the Tax Fairness Plan on the Fund’s reported earnings was relatively small because most of the assets are rate regulated and future taxes are expected to be included in the approved rates charged to customers in the future. However, as enacted in its present form, the Tax Fairness Plan will serve to reduce, all other things being equal, cash available for distribution by the Fund commencing in 2011. The earnings impact of the legislation in 2007 was more than offset by reductions in the 2011 federal corporate income tax rate of 0.5% in June and of 3.5% in December resulting in future income tax recoveries of $8.5 million in the prior year.