UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 20-F/A
(AMENDMENT NO. 1)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-35530
BROOKFIELD RENEWABLE PARTNERS L.P.
(Exact name of Registrant as specified in its charter)
Bermuda
(Jurisdiction of incorporation or organization)
73 Front Street, 5th Floor, Hamilton HM 12, Bermuda
(Address of principal executive offices)
Jane Sheere
73 Front Street, 5th Floor, Hamilton HM 12, Bermuda
Telephone: 441-294-3304
Facsimile: 441-296-4475
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of Class | Name of each exchange on which registered | |
| Limited Partnership Units | New York Stock Exchange, Toronto Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 178,821,204 Limited Partnership Units as of December 31, 2018
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definitions of “accelerated filer”, “large accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):
| Large accelerated filer ý | Accelerated filer ☐ | Non-accelerated filer ☐ | Emerging growth company ☐ | ||
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| ☐ U.S. GAAP |
ý International Financial Reporting Standards as
issued by the International
|
☐ Other |
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ý
EXPLANATORY NOTE
Brookfield Renewable Partners L.P. (the “Partnership”) is filing this amendment (this “Amendment”) to its Annual Report on Form 20-F for the year ended December 31, 2018 (the “Original Form 20-F”) to correct the dates contained in the reports of its independent auditors, Ernst & Young LLP, as well as the dates and incorporation by reference language in the corresponding consent of Ernst & Young LLP. Accordingly, the financial statements of the Partnership (with the corrected auditor reports thereon and the revised auditor consent) are being refiled in this Amendment.
In addition, the Partnership is including in this Amendment currently dated certifications from its Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 12.1 and 12.2 and Exhibits 13.1 and 13.2, respectively. Except as described above, this Amendment does not modify or update disclosures presented in the Original Form 20-F to reflect events occurring after the filing of the Original Form 20-F. Accordingly, this Amendment should be read in conjunction with the Original Form 20-F and the Partnership’s filings with the U.S. Securities and Exchange Commission subsequent to the filing of the Original Form 20-F.
ITEM 18. FINANCIAL STATEMENTS
See our financial statements beginning on page F-1, which are filed as part of this Form 20-F.
ITEM 19. EXHIBITS
| Number | Description |
| 1.1 | Certificate of Registration of Brookfield Renewable Energy Partners L.P., dated June 29, 2011. (1) |
| 1.2 | Certificate of Deposit of Supplementary Certificate of Brookfield Renewable Energy Partners L.P., dated August 29, 2011. (1) |
| 1.3 | Certificate of Deposit of Supplementary Certificate of Brookfield Renewable Energy Partners L.P., dated December 21, 2011. (1) |
| 1.4 | Certificate of Deposit of Supplementary Certificate of Brookfield Renewable Energy Partners L.P., dated May 11, 2012. (1) |
| 1.5 | Certificate of Deposit of Supplementary Certificate of Brookfield Renewable Partners L.P., dated May 4, 2016. (6) |
| 1.6 | Certificate of Deposit of Memorandum of Increase of Share Capital, dated November 23, 2011. (1) |
| 1.7 | Fourth Amended and Restated Limited Partnership Agreement of Brookfield Renewable Partners L.P., dated May 3, 2016. (7) |
| 1.8 | First Amendment to the Fourth Amended and Restated Limited Partnership Agreement of Brookfield Renewable Partners L.P., dated May 25, 2016. (8) |
| 1.9 | Second Amendment to the Fourth Amended and Restated Limited Partnership Agreement of Brookfield Renewable Partners L.P., dated February 14, 2017. (9) |
| 1.10 | Third Amendment to the Fourth Amended and Restated Limited Partnership Agreement of Brookfield Renewable Partners L.P., dated January 16, 2018. (10) |
| 1.11 | Fourth Amendment to the Fourth Amended and Restated Limited Partnership Agreement of Brookfield Renewable Partners L.P., dated February 28, 2019. (12) |
| 1.12 | Articles of Incorporation of Brookfield Renewable Partners Limited. (1) |
| 1.13 | Form 13 Amending the Registered Office of Brookfield Renewable Partners Limited. (1) |
| 1.14 | Bye-laws of Brookfield Renewable Partners Limited. (5) |
| 4.1 | Third Amended and Restated Limited Partnership Agreement of Brookfield Renewable Energy L.P., dated February 11, 2016. (4) |
| 4.2 | First Amendment to the Third Amended and Restated Limited Partnership Agreement of Brookfield Renewable Energy L.P., dated May 25, 2016. (8) |
| 4.3 | Second Amendment to the Third Amended and Restated Limited Partnership Agreement of Brookfield Renewable Energy L.P., dated February 14, 2017. (9) |
| 4.4 | Third Amendment to the Third Amended and Restated Limited Partnership Agreement of Brookfield Renewable Energy L.P., dated January 16, 2018. (10) |
| 4.5 | Fourth Amendment to the Third Amended and Restated Limited Partnership Agreement of Brookfield Renewable Energy L.P., dated February 28, 2019. (12) |
| 4.6 | Amended and Restated Master Services Agreement, dated February 26, 2015, by and among Brookfield Asset Management Inc., Brookfield Renewable Energy Partners L.P., Brookfield Renewable Energy L.P., and others.(2) |
| 4.7 | Relationship Agreement, dated November 28, 2011, by and among Brookfield Renewable Energy Partners L.P., Brookfield Renewable Energy L.P., the Service Provider, Brookfield Asset Management Inc., and others. (1) |
| 4.8 | Registration Rights Agreement, dated November 28, 2011, between Brookfield Renewable Energy Partners L.P. and Brookfield Renewable Power Inc. (1) |
| 4.9 | Combination Agreement, dated September 12, 2011, by and among Brookfield Renewable Power Inc., Brookfield Renewable Power Fund, Brookfield Renewable Power Trust and Brookfield Renewable Energy Partners L.P. (1) |
| 4.10 | Amended and Restated Indenture, dated as of November 23, 2011, among Brookfield Renewable Energy Partners ULC (formerly BRP Finance ULC), BNY Trust Company of Canada and The Bank of New York Mellon. (1) |
| 4.11 | Amended and Restated Guarantee Indenture, dated November 25, 2011, by and among the Preference Share Guarantors from time to time party thereto, Brookfield Renewable Power Preferred Equity Inc., and Computershare Trust Company of Canada (Class A Preference Shares, Series 1). (1) |
| 4.12 | Amended and Restated Guarantee Indenture, dated November 25, 2011, by and among the Preference Share Guarantors from time to time party thereto, Brookfield Renewable Power Preferred Equity Inc., and Computershare Trust Company of Canada (Class A Preference Shares, Series 2). (1) |
| 4.13 | Guarantee, dated November 23, 2011, by Brookfield Renewable Energy L.P. and BNY Trust Company of Canada. (1) |
| 4.14 | Guarantee, dated November 23, 2011, by Brookfield Renewable Energy Partners L.P. and BNY Trust Company of Canada. (1) |
| 4.15 | Guarantee, dated November 23, 2011, by BRP Bermuda Holdings I Limited and BNY Trust Company of Canada. (1) |
| 4.16 | Guarantee, dated November 23, 2011, by Brookfield BRP Holdings (Canada) Inc. and BNY Trust Company of Canada. (1) |
| 4.17 | Energy Revenue Agreement, dated November 23, 2011, between Brookfield Energy Marketing LP and Brookfield Power US Holding America Co. (1) |
| 4.18 | Amended and Restated Guarantee Indenture, dated November 25, 2011, by and among the Preference Share Guarantors from time to time party thereto, Brookfield Renewable Power Preferred Equity Inc. and Computershare Trust Company of Canada (Class A Preference Shares, Series 1). (1) |
| 4.19 | Amended and Restated Guarantee Indenture, dated November 25, 2011, by and among the Preference Share Guarantors from time to time party thereto, Brookfield Renewable Power Preferred Equity Inc. and Computershare Trust Company of Canada (Class A Preference Shares, Series 2). (1) |
| 4.20 | Guarantee Indenture, dated October 11, 2012, by and among the Preference Share Guarantors from time to time party thereto, Brookfield Renewable Power Preferred Equity Inc. and Computershare Trust Company of Canada (Class A Preference Shares, Series 3). (1) |
| 4.21 | Guarantee Indenture, dated October 11, 2012, by and among the Preference Share Guarantors from time to time party thereto, Brookfield Renewable Power Preferred Equity Inc., and Computershare Trust Company of Canada (Class A Preference Shares, Series 4). (1) |
| 4.22 | Guarantee Indenture, dated January 29, 2013, by and among the Preference Share Guarantors from time to time party thereto, Brookfield Renewable Power Preferred Equity Inc., and Computershare Trust Company of Canada (Class A Preference Shares, Series 5). (1) |
| 4.23 | Guarantee Indenture, dated May 1, 2013, by and among the Preference Share Guarantors from time to time party thereto, Brookfield Renewable Power Preferred Equity Inc., and Computershare Trust Company of Canada (Class A Preference Shares, Series 6). (1) |
| 4.24 | Guarantee, dated October 7, 2014, by Brookfield BRP Europe Holdings (Bermuda) Limited and BNY Trust Company of Canada. (2) |
| 4.25 | Guarantee, dated February 26, 2015, by Brookfield Renewable Investments Limited and BNY Trust Company of Canada. (2) |
| 4.26 | Guarantee Indenture, dated November 25, 2015, by and among the Preferred Unit Guarantors from time to time party thereto, Brookfield Renewable Energy Partners L.P., and Computershare Trust Company of Canada (Series 7 Preferred Units). (3) |
| 4.27 | Guarantee Indenture, dated November 25, 2015, by and among the Preferred Unit Guarantors from time to time party thereto, Brookfield Renewable Energy Partners L.P., and Computershare Trust Company of Canada (Series 8 Preferred Units). (3) |
| 4.28 | Guarantee Indenture, dated February 11, 2016, by and among the Preferred Unit Guarantors from time to time party thereto, Brookfield Renewable Energy Partners L.P., and Computershare Trust Company of Canada (Series 5 Preferred Units). (4) |
| 4.29 | Guarantee Indenture, dated May 25, 2016, by and among the Preferred Unit Guarantors from time to time party thereto, Brookfield Renewable Partners L.P., and Computershare Trust Company of Canada (Series 9 Preferred Units). (8) |
| 4.30 | Guarantee Indenture, dated May 25, 2016, by and among the Preferred Unit Guarantors from time to time party thereto, Brookfield Renewable Partners L.P., and Computershare Trust Company of Canada (Series 10 Preferred Units). (8) |
| 4.31 | Guarantee Indenture, dated February 14, 2017, by and among the Preferred Unit Guarantors from time to time party thereto, Brookfield Renewable Partners L.P., and Computershare Trust Company of Canada (Series 11 Preferred Units). (9) |
| 4.32 | Guarantee Indenture, dated February 14, 2017, by and among the Preferred Unit Guarantors from time to time party thereto, Brookfield Renewable Partners L.P., and Computershare Trust Company of Canada (Series 12 Preferred Units). (9) |
| 4.33 | Guarantee Indenture, dated January 16, 2018, by and among the Preferred Unit Guarantors from time to time party thereto, Brookfield Renewable Partners L.P., and Computershare Trust Company of Canada (Series 13 Preferred Units). (10) |
| 4.34 | Guarantee Indenture, dated January 16, 2018, by and among the Preferred Unit Guarantors from time to time party thereto, Brookfield Renewable Partners L.P., and Computershare Trust Company of Canada (Series 14 Preferred Units). (10) |
| 8.1 | Significant subsidiaries (as defined in §210-1.02(w) of Regulation S-X) of Brookfield Renewable Partners L.P. (incorporated by reference to Item 4.C “Organizational Structure”). |
| 11.1 | Code of Business Conduct and Ethics. (11) |
| 12.1 | Certification of Sachin Shah, Chief Executive Officer of BRP Energy Group L.P., the Service Provider of Brookfield Renewable Partners L.P., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (13) |
| (1) | Filed as an exhibit to Registration Statement on Form 20-F including all amendments thereto, with the last such amendment having been made on May 16, 2013, and incorporated herein by reference. |
| (2) | Filed as an exhibit to our 2014 Form 20-F as filed on February 27, 2015 and incorporated herein by reference. |
| (3) | Filed as an exhibit to Form 6-K on November 27, 2015, and incorporated herein by reference. |
| (4) | Filed as an exhibit to Form 6-K on February 11, 2016, and incorporated herein by reference. |
| (5) | Filed as an exhibit to our 2015 Form 20-F as filed on February 26, 2016, and incorporated herein by reference. |
| (6) | Filed as an exhibit to Form 6-K on May 4, 2016, and incorporated herein by reference. |
| (7) | Filed as an exhibit to Form 6-K on May 6, 2016, and incorporated herein by reference. |
| (8) | Filed as an exhibit to Form 6-K on May 26, 2016, and incorporated herein by reference. |
| (9) | Filed as an exhibit to Form 6-K on February 14, 2017, and incorporated herein by reference. |
| (10) | Filed as an exhibit to Form 6-K on January 17, 2018, and incorporated herein by reference. |
| (11) | Filed as an exhibit to Form 6-K on July 12, 2018, and incorporated herein by reference. |
| (12) | Filed as an exhibit to Form 6-K on February 28, 2019, and incorporated herein by reference. |
| (13) | Filed herewith. |
| (14) | Previously filed. |
SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to its Form 20-F on its behalf.
Dated: March 1, 2019
| BROOKFIELD RENEWABLE PARTNERS L.P. by its general partner, Brookfield Renewable Partners Limited | ||||
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By: |
Name: Wyatt Hartley
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BROOKFIELD RENEWABLE PARTNERS L.P.
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Audited Consolidated Financial Statements as at December 31, 2018 and 2017 and |
F-2 |
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for the Years Ended December 31, 2018, 2017 and 2016 |
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F - 1
MANAGEMENT’S RESPONSIBILITY
Management’s Responsibility for Financial Statements
The accompanying consolidated financial statements have been prepared by Brookfield Renewable Partners L.P. (“Brookfield Renewable”) management which is responsible for their integrity, consistency, objectivity and reliability. To fulfill this responsibility, Brookfield Renewable maintains policies, procedures and systems of internal control to ensure that its reporting practices and accounting and administrative procedures are appropriate to provide a high degree of assurance that relevant and reliable financial information is produced and assets are safeguarded. These controls include the careful selection and training of employees, the establishment of well-defined areas of responsibility and accountability for performance, and the communication of policies and the code of conduct throughout the company.
These consolidated financial statements have been prepared in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board and, where appropriate, reflect estimates based on management’s judgment.
Ernst & Young LLP, the Independent Registered Public Accountants appointed by the directors of the general partner of Brookfield Renewable, have audited the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) to enable them to express to the partners their opinion on the consolidated financial statements. Their report outlines the scope of their examination and opinion on the consolidated financial statements.
The consolidated financial statements have been further reviewed and approved by the Board of Directors of the general partner of Brookfield Renewable acting through its Audit Committee, which is comprised of directors who are not officers or employees of Brookfield Renewable. The Audit Committee, which meets with the auditors and management to review the activities of each and reports to the Board of Directors, oversees management’s responsibilities for the financial reporting and internal control systems. The auditors have full and direct access to the Audit Committee and meet periodically with the committee both with and without management present to discuss their audit and related findings.
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Sachin Shah Chief Executive Officer |
Wyatt Hartley Chief Financial Officer |
February 28, 2019
F - 2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Brookfield Renewable Partners Limited (General Partner of Brookfield Renewable Partners L.P.) and Partners of Brookfield Renewable Partners L.P.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Brookfield Renewable Partners L.P. (“Brookfield Renewable”) as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Brookfield Renewable as at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board.
Report on internal control over financial reporting
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), Brookfield Renewable’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“2013 framework”) and our report dated February 28, 2019 expressed an unqualified opinion thereon.
Adoption of New Accounting Standard
As discussed in Note 1 to the consolidated financial statements, Brookfield Renewable changed its method of accounting for Revenue and Financial Instruments in 2018 due to the adoption of IFRS 15, Revenue from Contracts with Customers and IFRS 9, Financial Instruments.
Basis for Opinion
These financial statements are the responsibility of Brookfield Renewable’s management. Our responsibility is to express an opinion on Brookfield Renewable’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Brookfield Renewable in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
F - 3
We have served as Brookfield Renewable’s auditors since 2011.
Toronto, Canada
February 28, 2019
F - 4
INTERNAL CONTROL OVER FINANCIAL REPORTING
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Brookfield Renewable Partners L.P. (“Brookfield Renewable”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Chief Financial Officer and effected by the Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board as defined in Regulation 240.13a–15(f) or 240.15d–15(f).
Management assessed the effectiveness of Brookfield Renewable’s internal control over financial reporting as of December 31, 2018, based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concludes that, as of December 31, 2018, Brookfield Renewable’s internal control over financial reporting is effective. Management excluded from its design and assessment of the internal controls of investments acquired in 2018, which include the 23 MW wind project in Northern Ireland and the 49 MW of the Biotherm wind and solar project in South Africa which we agreed to sell in 2018, whose total assets, net assets on a combined basis constitute approximately 1% and 1%, respectively, of the consolidated financial statement amounts as of December 31, 2018 and 1% and 2% of revenues and net income respectively, for the year then ended.
B rookfield Renewable’s internal control over financial reporting as of December 31, 2018, has been audited by Ernst & Young LLP, the Independent Registered Public Accounting Firm, who also audited Brookfield Renewable’s consolidated financial statements for the year ended December 31, 2018. As stated in the Report of Independent Registered Public Accounting Firm, Ernst & Young LLP expressed an unqualified opinion on the effectiveness of Brookfield Renewable’s internal control over financial reporting as of December 31, 2018.
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Sachin Shah Chief Executive Officer |
Wyatt Hartley Chief Financial Officer |
February 28, 2019
F - 5
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Brookfield Renewable Partners Limited (General Partner of Brookfield Renewable Partners L.P.) and Partners of Brookfield Renewable Partners L.P.
Opinion on Internal Control over Financial Reporting
We ha v e audited Brookfield Renewable Partners L.P. (“Brookfield Renewable”)’s internal control o v er financial reporting as of D ecember 31, 2018, based on criteria established in Inte r nal Control—Integrated Frame w ork issued b y the Committee of Spon s oring Organi z ations of the Tread w a y Commission (2013 framework) (“COSO criteria”). In our opin i on, Brookfield Renewable maintained, in a l l material respe c ts, effecti v e internal c ontrol o v er financial reporting as of D ecember 31, 2018, based on the COSO criteria .
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the 23 MW wind project in Northern Ireland and the 49 MW Biotherm wind and solar project in South Africa acquired in 2018, which are included in the 2018 consolidated financial statements of Brookfield Renewable and constituted approximately 1% and 1% of total and net assets, respectively, as of December 31, 2018 and 1% and 2% of revenues and net income for the year then ended. Our audit of internal control over financial reporting of Brookfield Renewable also did not include an evaluation of the internal control over financial reporting of the 23 MW wind project in Northern Ireland and the 49 MW Biotherm wind and solar project in South Africa acquired in 2018.
We al s o ha v e audited, in accordance w ith the standards of the Publi c Compan y Accounting O v ersight Board (United States) (“PCAOB”), the 2018 consolidated financial statements of Brookfield Renewable and our report dated February 28, 2019 e x pre s sed an unqualified opinion on those consolidated financial statements.
Basis for O p inion
Brookfield Renewable’s management is responsible for maintain i ng effe c tive internal control o v er financial reporting and for its asses s ment of the effecti v enes s of internal cont r ol o v er f i nan c ial reporting included in the accompan y ing Management’s Report on Internal Control over Financial Reporting. Our responsibilit y is to e x press an opinion on Brookfield Renewable’s internal cont r ol o v er f i nan c ial reporting ba s ed on our audit. We are a public accounting firm registered w ith the PCAOB and are required to be independent w ith respect to Brookfield Renewable in accordance w ith the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, the U.S. federal s ecurities la w s and the applicable ru l es and regulation s of the Se c urities and E x change Commission and the PCAOB.
F - 6
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limita t ions of Internal Cont r ol O v er Financial Re p orting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Toronto, Canada
February 28, 2019
F - 7
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Approved on behalf of Brookfield Renewable Partners L.P.:
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Patricia Zuccotti Director |
David Mann Director |
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F - 13
brookfield renewable partners l.p.
notes to the audited annual consolidated financial statements
T he business activities of Brookfield Renewable Partners L.P. (“Brookfield Renewable”) consist of owning a portfolio of renewable power generating facilities primarily in North America, Colombia, Brazil, Europe, India and China.
Unless the context indicates or requires otherwise, the term “Brookfield Renewable” means Brookfield Renewable Partners L.P. and its controlled entities.
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. Brookfield Renewable’s Class A Series 5, Series 7, Series 9, Series 11 and Series 13 preferred limited partners’ equity are traded under the symbols “BEP.PR.E”, “BEP.PR.G”, “BEP.PR.I”, “BEP.PR.K” and “BEP.PR.M” respectively, on the Toronto Stock Exchange.
F - 14
1. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The accounting policies used in the consolidated financial statements are based on the IFRS applicable as at December 31, 2018, which encompass individual IFRS, International Accounting Standards (“IAS”), and interpretations made by the International Financial Reporting Interpretations Committee (“IFRIC”) and the Standard Interpretations Committee (“SIC”). The policies set out below are consistently applied to all periods presented, unless otherwise noted.
These consolidated financial statements have been authorized for issuance by the Board of Directors of Brookfield Renewable’s general partner, BRPL, on February 28, 2019.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
References to $, C$, €, £ ,R$, COP, ZAR, THB and MYR are to United States (“U.S.”) dollars, Canadian dollars, Euros, British pound sterling, Brazilian reais, Colombian pesos, South African rand, Thai baht and Malaysian ringgit, respectively.
All figures are presented in millions of U.S. dollars unless otherwise noted.
The consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of property, plant and equipment and certain assets and liabilities which have been measured at fair value. Cost is recorded based on the fair value of the consideration given in exchange for assets.
(i) Consolidation
These 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 statements of financial position.
Brookfield Renewable has entered into a voting agreement with Brookfield, which provides Brookfield Renewable with control of the general partner of Brookfield Renewable Energy L.P. (“BRELP”), a holding subsidiary. Accordingly, Brookfield Renewable consolidates the accounts of BRELP and its subsidiaries. In addition, BRELP issued redeemable/exchangeable limited partnership units to Brookfield (“Redeemable/Exchangeable Partnership Units”), pursuant to which the holder may at its request require BRELP to redeem the Redeemable/Exchangeable Partnership Units for cash consideration. This right is subject to Brookfield Renewable’s right of first refusal which entitles it, at its sole discretion, to elect to acquire all of the Redeemable/Exchangeable Partnership Units so presented to BRELP that are tendered for redemption in exchange for LP Units on a one for one basis. As Brookfield Renewable, at its sole discretion, has the right to settle the obligation with LP Units, the Redeemable/Exchangeable Partnership Units are classified as equity of Brookfield Renewable (“Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable Units held by Brookfield”).
Brookfield Renewable has entered into voting agreements with Brookfield, whereby Brookfield Renewable gained control of the entities that own certain renewable power generating operations in the United States, Brazil, Europe and other countries (including India and China). Brookfield Renewable has
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also entered into a voting agreement with our consortium partners in respect of our Colombian operations. These voting agreements provide Brookfield Renewable the authority to direct the election of the Boards of Directors of the relevant entities, among other things, and therefore provide Brookfield Renewable with control. Accordingly, Brookfield Renewable consolidates the accounts of these entities. Refer to Note 27 - Related party transactions for further information.
For entities previously controlled by Brookfield Asset Management, the voting agreements entered into do not represent business combinations in accordance with IFRS 3, Business Combinations (“IFRS 3”) , as all combining businesses are ultimately controlled by Brookfield Asset Management both before and after the transactions were completed. Brookfield Renewable accounts for these transactions involving entities under common control in a manner similar to a pooling of interest, which requires the presentation of pre-voting agreement financial information as if the transactions had always been in place. Refer to Note 1(r)(ii) - Critical judgments in applying accounting policies - Common control transactions for Brookfield Renewable’s policy on accounting for transactions under common control.
(ii) Equity-accounted investments
Equity-accounted investments are entities over which Brookfield Renewable has significant influence or joint arrangements representing joint ventures. Significant influence is the ability to participate in the financial and operating policy decisions of the investee, but without controlling or jointly controlling those investees. Such investments are accounted for using the equity method.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Brookfield Renewable accounts for its interests in joint ventures using the equity method.
Under the equity method, the carrying value of an interest in an investee is initially recognized at cost and adjusted for Brookfield Renewable’s share of net income, other comprehensive income (“OCI”), distributions by the equity-accounted investment and other adjustments to Brookfield Renewable’s proportionate interest in the investee.
(c) Recently adopted accounting standards
(i) IFRS 15, Revenue from contracts with customers (“IFRS 15”)
On January 1, 2018 Brookfield Renewable adopted IFRS 15 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related interpretations and it applies, with limited exceptions, to all revenue arising from contracts with its customers. IFRS 15 requires that revenue be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer using a five-step model , which requires the identification of a contract with a customer, the identification of performance obligations within the contract, determination of the transaction price, the allocation of the transaction price to the performance obligations and the recognition of revenue when performance obligations have been satisfied.
IFRS 15 requires entities to exercise judgement, taking into consideration all the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.
The pattern and timing of revenue recognition under the new standard is consistent with prior practice. There were no adjustments recognized on the adoption of IFRS 15.
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(ii) IFRS 9, Financial instruments (“IFRS 9”)
Brookfield Renewable adopted IFRS 9, as issued by the IASB in 2014, which provides more reliable and relevant information for users to assess the amounts, timing and uncertainty of future cash flows. The new accounting policy was applied prospectively, with an initial application date of January 1, 2018. Brookfield Renewable has not restated the comparative information, which continues to be reported under IAS 39, Financial Instruments Recognition and Measurement (“IAS 39”). The adoption of IFRS 9 did not result in any material transition adjustments being recognized as at January 1, 2018
IFRS 9 replaces certain provisions of IAS 39 that relate to the recognition, classification and measurement of financial assets and financial liabilities; derecognition of financial instruments; impairment of financial assets; and hedge accounting. IFRS 9 also significantly amends other standards dealing with financial instruments such as IFRS 7, Financial Instruments: Disclosures .
(d) Changes to and impact of financial instrument accounting policies
Classification and measurement
Under IFRS 9, financial assets are subsequently measured at fair value through profit or loss, amortized cost, or fair value through OCI. The classification is based on two criteria: Brookfield Renewable’s business objectives for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding.
The assessment of Brookfield Renewable’s business objectives was made as of January 1, 2018, the date of initial application. The assessment of whether contractual cash flows on debt instruments are solely comprised of principal and interest was made based on the facts and circumstances as at the initial recognition of the assets.
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As at January 1, 2018, the date of initial application, Brookfield Renewable’s financial instruments and new classification categories under IFRS 9 were as follows:
|
|
Classification category |
|
|
|
|
IAS 39 |
IFRS 9 |
Carrying amount IAS 39 and IFRS 9 ($ Millions) |
|
Financial assets |
|
|
|
|
Cash and cash equivalents |
FVPL |
Amortized cost |
799 |
|
Restricted cash (1) |
FVPL |
Amortized cost |
284 |
|
Trade receivables and other current assets |
Loans and receivables |
Amortized cost |
554 |
|
Financial instrument assets - investments in equity securities (1)(2) |
Available-for-sale |
FVOCI |
159 |
|
Financial instrument assets - derivative financial instruments (1)(3) |
FVPL |
FVPL |
20 |
|
Financial instrument assets - derivative financial instruments designated as hedges (1)(3) |
Financial instruments designated as hedges |
Financial instruments designated as hedges |
6 |
|
Due from related parties |
Loans and receivables |
Amortized cost |
60 |
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
Other liabilities |
Amortized cost |
542 |
|
Financial instrument liabilities - derivative financial instruments (1)(3) |
FVPL |
FVPL |
145 |
|
Financial instrument liabilities - derivative financial instruments designated as hedges (1)(3) |
Financial instruments designated as hedges |
Financial instruments designated as hedges |
125 |
|
Due to related parties |
Other liabilities |
Amortized cost |
112 |
|
Corporate borrowings (1) |
Other liabilities |
Amortized cost |
2,552 |
|
Non-recourse borrowings (1) |
Other liabilities |
Amortized cost |
9,214 |
(1) Includes both current and non-current portions.
(2) Investments in equity securities were originally referred to as available-for-sale securities in the 2017 annual consolidated financial statements.
(3) Derivative financial instruments comprise of energy derivative contracts, interest rate swaps and foreign exchange swaps.
The classification and measurement requirements of IFRS 9 did not have a significant impact to Brookfield Renewable. Brookfield Renewable continued measuring at fair value all financial assets previously held at fair value under IAS 39. There are no changes in classification and measurement for Brookfield Renewable’s financial liabilities and there have been no financial liabilities designated at fair value through profit or loss.
Impairment
From January 1, 2018, Brookfield Renewable assesses on a forward-looking basis the expected credit losses (“ECL”) associated with its assets carried at amortized cost and FVOCI, including finance lease receivables. For trade receivables only, Brookfield Renewable applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables. The simplified approach to the recognition of ECL does not require entities to track the changes in credit risk; rather, entities recognize a loss allowance at each reporting date based on the lifetime ECL since the date of initial recognition of the trade receivable.
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Evidence of impairment may include:
· Indications that a debtor or group of debtors is experiencing significant financial difficulty;
· A default of delinquency in interest or principal payments;
· Probability that a debtor or a group of debtors will enter into bankruptcy or other financial reorganization;
· Changes in arrears or economic conditions that correlate with defaults, where observable data indicates that there is a measurable decrease in the estimated future cash flows.
Trade receivables are reviewed qualitatively on a case by case basis to determine if they need to be written off.
ECL are measured as the difference in the present value of the contractual cash flows that are due under contract and the cash flows expected to be received. ECL is measured by considering the risk of default over the contract period and incorporates forward looking information into its measurement.
Measurement of ECL on financial assets resulted in immaterial amounts; therefore, an allowance for doubtful accounts was not recorded.
Derivatives and hedge accounting
Before January 1, 2018, hedge documentation included identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how Brookfield Renewable will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges were expected to be highly effective in achieving offsetting changes in fair value or cash flows and were assessed on an ongoing basis to determine that they had actually been highly effective throughout the financial reporting periods for which they were designated.
Beginning January 1, 2018, the documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how Brookfield Renewable will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
· There is ‘an economic relationship’ between the hedged item and the hedging instrument.
· The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship.
· The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that Brookfield Renewable actually hedges and the quantity of the hedging instrument that Brookfield Renewable actually uses to hedge that quantity of hedged item.
Refer to Note 1(k) – Financial Instruments for details of Brookfield Renewable’s accounting policies for hedge accounting from January 1, 2018 under IFRS 9.
(e) Foreign currency translation
All figures reported in the consolidated financial statements and tabular disclosures to the consolidated financial statements are reflected in millions of U.S. dollars, which is the functional currency of Brookfield Renewable. Each of the foreign operations included in these consolidated financial statements determines its own functional currency, and items included in the financial statements of each subsidiary are measured using that functional currency.
Assets and liabilities of foreign operations having a functional currency other than the U.S. dollar are translated at the rate of exchange prevailing at the reporting date and revenues and expenses at the rate
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of exchange prevailing at the dates of the transactions during the period. Gains or losses on translation of foreign subsidiaries are included in OCI. Gains or losses on foreign currency denominated balances and transactions that are designated as hedges of net investments in these operations are reported in the same manner.
In preparing the consolidated financial statements of Brookfield Renewable, foreign currency denominated monetary assets and liabilities are translated into the functional currency using the closing rate at the applicable consolidated statement of financial position dates. Non-monetary assets and liabilities, denominated in a foreign currency and measured at fair value, are translated at the rate of exchange prevailing at the date when the fair value was determined and non-monetary assets measured at historical cost are translated at the historical rate. Revenues and expenses are measured in the functional currency at the rates of exchange prevailing at the dates of the transactions with gains or losses included in income.
Cash and cash equivalents include cash, term deposits and money market instruments with original maturities of less than 90 days.
Restricted cash includes cash and cash equivalents, where the availability of funds is restricted primarily by credit agreements.
(h) Property, plant and equipment and revaluation method
Power generating assets are classified as property, plant and equipment and are accounted for using the revaluation method under IAS 16, Property, Plant and Equipment (“IAS 16”). Property, plant and equipment are initially measured at cost and subsequently carried at their revalued amount, being the fair value at the date of the revaluation, less any subsequent accumulated depreciation and any subsequent accumulated impairment losses.
Brookfield Renewable generally determines the fair value of its property, plant and equipment by using a 20-year discounted cash flow model for the majority of its assets. This model incorporates future cash flows from long-term power purchase agreements that are in place where it is determined that the power purchase agreements are linked specifically to the related power generating assets. The model also includes estimates of future electricity prices, anticipated long-term average generation, estimated operating and capital expenditures, and assumptions about future inflation rates and discount rates by geographical location. Construction work-in-progress (“CWIP”) is revalued when sufficient information exists to determine fair value using the discounted cash flow method. Revaluations are made on an annual basis as at December 31 to ensure that the carrying amount does not differ significantly from fair value. For power generating assets acquired through business combinations during the year, Brookfield Renewable initially measures the assets at fair value consistent with the policy described in Note 1(n) – Business combinations. Accordingly, in the year of acquisition, power generating assets are not revalued at year-end unless there is an indication that assets are impaired.
Where the carrying amount of an asset increased as a result of a revaluation, the increase is recognized in income to the extent the increase reverses a previously recognized decrease recorded through income, with the remainder of the increase recognized in OCI and accumulated in equity under revaluation surplus and non-controlling interest. Where the carrying amount of an asset decreased, the decrease is recognized in OCI to the extent that a balance exists in revaluation surplus with respect to the asset, with the remainder of the decrease recognized in income.
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Depreciation on power generating assets is calculated on a straight-line basis over the estimated service lives of the assets, which are as follows:
|
|
Estimated service lives |
|
Dams |
Up to 115 years |
|
Penstocks |
Up to 60 years |
|
Powerhouses |
Up to 115 years |
|
Hydroelectric generating units |
Up to 115 years |
|
Wind generating units |
Up to 30 years |
|
Solar generating units |
Up to 30 years |
|
Gas-fired cogenerating (“Cogeneration”) units |
Up to 40 years |
|
Other assets |
Up to 60 years |
Costs are allocated to significant components of property, plant and equipment. When items of property, plant and equipment have different useful lives, they are accounted for as separate items (significant components) and depreciated separately. To ensure the accuracy of useful lives and residual values, a review is conducted annually.
Depreciation is calculated based on the cost of the asset less its residual value. Depreciation commences when the asset is in the location and conditions necessary for it to be capable of operating in the manner intended by management. It ceases at the earlier of the date the asset is classified as held-for-sale and the date the asset is derecognized. An item of property, plant and equipment and any significant component is derecognized upon disposal or when no future economic benefits are expected from its use. Other assets include equipment, buildings and leasehold improvements. Buildings, furniture and fixtures, leasehold improvements and office equipment are recorded at historical cost, less accumulated depreciation. Land and CWIP are not subject to depreciation.
The depreciation of property, plant and equipment in Brazil is based on the duration of the authorization or the useful life of a concession asset. The weighted-average remaining duration at December 31, 2018 is 29 years (2017: 15 years). Since land rights are part of the concession or authorization, this cost is also subject to depreciation. In June of 2018, the federal government of Brazil provided further clarification to a law that was passed in 2016, which resulted in Brookfield Renewable including a one-time thirty year concession renewal period in the valuation of certain of its hydroelectric facilities in Brazil.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is applied to the revalued amount of the asset.
Gains and losses on disposal of an item of property, plant and equipment are recognized in Other income in the consolidated statements of income. The revaluation surplus is reclassified within the respective components of equity and not reclassified to net income when the assets are disposed.
At each statement of financial position date, management assesses whether there is any indication that assets are impaired. For non-financial tangible and intangible assets (including equity-accounted investments), an impairment is recognized if the recoverable amount, determined as the greater of the estimated fair value, less costs to sell, and the discounted future cash flows generated from use and eventual disposal of an asset or cash-generating unit, is less than its carrying value. The projections of future cash flows take into account the relevant operating plans and management’s best estimate of the most probable set of conditions anticipated to prevail. Should an impairment loss subsequently reverse, the carrying amount of the asset is increased to the lesser of the revised estimate of the recoverable
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amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously.
(j) Trade receivables and other current assets
Trade receivables and other current assets are recognized initially at fair value, and subsequently measured at amortized cost using the effective interest method, less any provision for expected credit losses.
(k) Financial instruments
The following accounting policies are applicable to the accounting for financial instruments from January 1, 2018 under IFRS 9. The impact to the Consolidated Financial Statements of the adoption of IFRS 9 in the current period and comparison to IAS 39 applied in the comparative period is explained in Note 1(d) - Changes to and Impact of Financial Instrument Accounting Policies.
Initial recognition
Under IFRS 9, regular purchases and sales of financial assets are recognized on the trade date, being the date on which Brookfield Renewable commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and Brookfield Renewable has transferred substantially all the risks and rewards of ownership.
At initial recognition, Brookfield Renewable measures a financial asset at its fair value. In the case of a financial asset not categorized as FVPL, transaction costs that are directly attributable to the acquisition of the financial asset are included at initial recognition. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Classification and measurement
Subsequent measurement of financial assets depends on Brookfield Renewable’s business objective for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which Brookfield Renewable classifies its financial assets:
Amortized cost – Financial assets held for collection of contractual cash flows that represent solely payments of principal and interest are measured at amortized cost. Interest income is recognized as other income in the financial statements, and gains/losses are recognized in profit or loss when the asset is derecognized or impaired.
FVOCI – Financial assets held to achieve a particular business objective other than short-term trading are designated at FVOCI. Unlike debt instruments designated at FVOCI, there is no recycling of gains or losses through profit and loss. Upon derecognition of the asset, accumulated gains or losses are transferred from OCI directly to retained earnings.
FVPL – Financial assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL.
Financial liabilities are classified as financial liabilities at fair value through profit and loss, amortized cost, or derivatives designated as hedging instruments in an effective hedge. Brookfield Renewable determines the classification of its financial liabilities at initial recognition. Brookfield Renewable’s financial liabilities include accounts payable and accrued liabilities, corporate borrowings, non-recourse borrowings, derivative liabilities, and due to related party balances. Financial liabilities are initially measured at fair value, with subsequent measurement determined based on their classification as follows:
FVPL – Financial liabilities held for trading, such as those acquired for the purpose of selling in the near term, and derivative financial instruments entered into by Brookfield Renewable that do not meet hedge
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accounting criteria are classified as fair value through profit and loss. Gains or losses on these types of liabilities are recognized in profit and loss.
Amortized cost – All other financial liabilities are classified as amortized cost using the effective interest rate method. Gains and losses are recognized in profit and loss when the liabilities are derecognized as well as through the amortization process. Amortized cost is computed using the effective interest method less any principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. This category includes trade and other payables, dividends payable, interest-bearing loans and borrowings, and corporate credit facilities.
Derivatives and hedge accounting
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated.
Brookfield Renewable designates its derivatives as hedges of:
· Foreign exchange risk associated with the cash flows of highly probable forecast transactions (cash flow hedges);
· Foreign exchange risk associated with net investment in foreign operations (net investment hedges);
· Commodity price risk associated with cash flows of highly probable forecast transactions (cash flow hedges); and
· Floating interest rate risk associated with payments of debts (cash flow hedges).
The fair values of various derivative financial instruments used for hedging purposes and movements in the hedge reserve within equity are shown in Note 5 – Risk Management and Financial Instruments.
When a hedging instrument expires, is sold, is terminated, or no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remain in equity until the forecasted transaction occurs. When the forecasted transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging are immediately reclassified to profit and loss.
If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in profit and loss at the time of the hedge relationship rebalancing.
(i) Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the cash flow hedge reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognized immediately in profit and loss, within unrealized financial instruments gain (loss) .
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Gains and losses relating to the effective portion of the change in fair value of the entire forward contract are recognized in the cash flow hedge reserve within equity. Amounts accumulated in equity are reclassified in the period when the hedged item affects profit and loss.
(ii) Net investment hedges that qualify for hedge accounting
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in OCI and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognized immediately in profit and loss within foreign exchange and unrealized financial instruments gain (loss) . Gains and losses accumulated in equity will be reclassified to profit and loss when the foreign operation is partially disposed of or sold.
(iii) Hedge ineffectiveness
Brookfield Renewable’s hedging policy only allows for the use of derivative instruments that form effective hedge relationships. Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. Where the critical terms of the hedging instrument match exactly with the terms of the hedged item, a qualitative assessment of effectiveness is performed. For other hedge relationships, the hypothetical derivative method to assess effectiveness is used.
(l) Revenue and expense recognition
The majority of revenue is derived from the sale of power and power related ancillary services both under contract and in the open market, sourced from Brookfield Renewable’s power generating facilities. The obligations are satisfied over time as the customer simultaneously receives and consumes benefits as Brookfield Renewable delivers electricity and related products. Revenue is recorded based upon the output delivered and capacity provided at rates specified under either contract terms or prevailing market rates. The revenue reflects the consideration Brookfield Renewable expects to be entitled to in exchange for those goods or services. Costs related to the purchases of power or fuel are recorded upon delivery. All other costs are recorded as incurred.
Details of the revenue recognized per geographical region are included in Note 6 – Segmented information.
Where available, Brookfield Renewable has elected the practical expedient available under IFRS 15 for measuring progress toward complete satisfaction of a performance obligation and for disclosure requirements of remaining performance obligations. The practical expedient allows an entity to recognize revenue in the amount to which the entity has the right to invoice such that the entity has a right to the consideration in an amount that corresponds directly with the value to the customer for performance completed to date by the entity.
If the consideration in a contract that does not apply the practical expedient available under IFRS 15 for measuring progress toward complete satisfaction of a performance obligation includes a variable amount, Brookfield Renewable estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Brookfield Renewable also sells power and related products under bundled arrangements. Energy, capacity and renewable credits within power purchase agreements are considered to be distinct performance obligations. A contract’s transaction price is allocated to each distinct performance
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obligation and recognized as revenue when, or as, the performance obligation is satisfied under IFRS 15. Brookfield Renewable views the sale of energy and capacity as a series of distinct goods that is substantially the same and has the same pattern of transfer measured by the output method. Brookfield Renewable views renewable credits to be performance obligations satisfied at a point in time. During the year ended December 31, 2018, revenues recognized at a point in time corresponding to the sale of renewable credits were $17 million (2017: $18 million). Measurement of satisfaction and transfer of control to the customer of renewable credits in a bundled arrangement coincides with the pattern of revenue recognition of the underlying energy generation. Accordingly, Brookfield Renewable has determined that the pattern of revenue recognition under IFRS 15 is consistent with IAS 18.
Revenues recognized that are outside the scope of IFRS 15 include realized gains and losses from derivatives used in the risk management of the Brookfield Renewable's generation activities related to commodity prices. Financial transactions included in revenues for the year ended December 31, 2018 decreased revenues by $ 21 million (2017: $ 16 million).
Contract Balances
Contract assets – A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If Brookfield Renewable performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration that is conditional.
Trade receivables – A receivable represents Brookfield Renewable’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
Contract liabilities – A contract liability is the obligation to transfer goods or services to a customer for which Brookfield Renewable has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before Brookfield Renewable transfers goods or services to the customer, a contract liability is recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognized as revenue when Brookfield Renewable performs under the contract.
Current income tax assets and liabilities are measured at the amount expected to be paid to tax authorities, net of recoveries, based on the tax rates and laws enacted or substantively enacted at the statement of financial position dates. Current income tax assets and liabilities are included in trade receivables and other current assets and accounts payable and accrued liabilities, respectively.
Deferred tax is recognized on taxable temporary differences between the tax bases and the carrying amounts of assets and liabilities. Deferred tax is not recognized if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither taxable profit nor accounting profit. Deferred income tax assets are recognized for all deductible temporary differences, carry forwards of unused tax credits and unused tax losses, to the extent that it is probable that deductions, tax credits and tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent it is no longer probable that the income tax assets will be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the assets are realized or the liabilities settled, using the tax rates and laws enacted or substantively enacted at the statement of financial position dates.
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Current and deferred income taxes relating to items recognized directly in OCI are also recognized directly in OCI.
(n) Business combinations
The acquisition of a business is accounted for using the acquisition method. The consideration for an acquisition is measured at the aggregate of the fair values, at the date of exchange, of the assets transferred, the liabilities incurred to former owners of the acquired business, and equity instruments issued by the acquirer in exchange for control of the acquired business. The acquired business’ identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3, Business Combinations , are recognized at their fair values at the acquisition date, except for income taxes which are measured in accordance with IAS 12, Income Taxes , share-based payments which are measured in accordance with IFRS 2, Share-based Payment and non-current assets that are classified as held-for-sale which are measured at fair value less costs to sell in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations . The non-controlling interest in the acquiree is initially measured at the non-controlling interest’s proportion of the net fair value of the identifiable assets, liabilities and contingent liabilities recognized or when applicable, at the fair value of the shares outstanding.
To the extent that the aggregate of the fair value of consideration paid, the amount of any non-controlling interest and the fair value of any previously held interest in the acquiree exceeds the fair value of the net identifiable tangible and intangible assets acquired, goodwill is recognized. To the extent that this difference is negative, the amount is recognized as a gain in income. Goodwill is not amortized and is not deductible for tax purposes. However, after initial recognition, goodwill will be measured at cost less any accumulated impairment losses. An impairment assessment will be performed at least annually, and whenever circumstances such as significant declines in expected revenues, earnings or cash flows indicate that it is more likely than not that goodwill might be impaired. Goodwill impairment charges are not reversible.
When a business combination is achieved in stages, previously held interests in the acquired entity are re-measured to fair value at the acquisition date, which is the date control is obtained, and the resulting gain or loss, if any, is recognized in income. Amounts arising from interests in the acquired business prior to the acquisition date that have previously been recognized in OCI are reclassified to income. Upon disposal or loss of control of a subsidiary, the carrying amount of the net assets of the subsidiary (including any OCI relating to the subsidiary) are derecognized with the difference between any proceeds received and the carrying amount of the net assets recognized as a gain or loss in income.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in fair values are adjusted against the cost of the acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingent consideration classified as liabilities will be recognized in the consolidated statements of income , whereas changes in the fair values of contingent consideration classified within equity are not subsequently re-measured.
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(o) Assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification subject to limited exceptions.
When Brookfield Renewable is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether Brookfield Renewable will retain a non-controlling interest in its former subsidiary after the sale.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.
Non-current assets classified as held for sale and the assets of a disposal group are presented separately from other assets in the consolidated statements of financial position and are classified as current. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the consolidated statements of financial position.
Once classified as held for sale, property, plant and equipment and intangible assets are not depreciated or amortized.
(i) Capitalized costs
Capitalized costs related to CWIP include all eligible expenditures incurred in connection with the development and construction of the power generating asset. The expenditures consist of cost of materials, direct labor and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Interest and borrowing costs are capitalized when activities that are necessary to prepare the asset for its intended use or sale are in progress, expenditures for the asset have been incurred and funds have been used or borrowed to fund the construction or development. Capitalization of costs ceases when the asset is ready for its intended use.
(ii) Pension and employee future benefits
Pension and employee future benefits are recognized in the consolidated financial statements in respect of employees of the operating entities within Brookfield Renewable. The costs of retirement benefits for defined benefit plans and post-employment benefits are recognized as the benefits are earned by employees. The project unit credit method, using the length of service and management’s best estimate assumptions, is used to value its pension and other retirement benefits. All actuarial gains and losses are recognized immediately through OCI in order for the net pension asset or liability recognized in the consolidated statements of financial position to reflect the full value of the plan deficit or surplus. Net interest is calculated by applying the discount rate to the net defined benefit asset or liability. Changes in the net defined benefit obligation related to service costs (comprising of current service costs, past services costs, gains and losses on curtailments and non-routine settlements), and net interest expense or income are recognized in the consolidated statements of income.
Re-measurements, comprising of actuarial gains or losses, the effect of the asset ceiling, and the return on plan assets (excluding net interest), are recognized immediately in the consolidated statements of financial position with a corresponding debit or credit to OCI in the period in which they occur. Re-
F - 27
measurements are not reclassified to profit or loss in subsequent periods. For defined contribution plans, amounts are expensed based on employee entitlement.
(iii) Decommissioning, restoration and environmental liabilities
Legal and constructive obligations associated with the retirement of property, plant and equipment are recorded as liabilities when those obligations are incurred and are measured at the present value of the expected costs to settle the liability, using a discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability . The liability is accreted up to the date the liability will be incurred with a corresponding charge to operating expenses. The carrying amount of decommissioning, restoration and environmental liabilities is reviewed annually with changes in the estimates of timing or amount of cash flows added to or deducted from the cost of the related asset.
(iv) Interest and borrowing costs
Interest and borrowing costs are capitalized when such costs are directly attributable to the acquisition, construction or production of a qualifying asset. A qualifying asset is an asset that takes a substantial period of time to prepare for its intended use.
(v) Provisions
A provision is a liability of uncertain timing or amount. A provision is recognized if Brookfield Renewable has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses. The provision is measured at the present value of the best estimate of the expenditures expected to be required to settle the obligation using a discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. Provisions are re-measured at each statement of financial position date using the current discount rate. The increase in the provision due to the passage of time is recognized as interest expense.
(vi) Interest income
Interest income is earned with the passage of time and is recorded on an accrual basis.
(vii) Government grants
Brookfield Renewable becomes eligible for government grants by constructing or purchasing renewable power generating assets, and by bringing those assets to commercial operation, coupled with a successful application to the applicable program or agency. The assessment of whether or not a project has complied with the conditions and that there is reasonable assurance the grants will be received will be undertaken on a case by case basis. Brookfield Renewable reduces the cost of the asset by the amount of the grant. The grant amounts are recognized in income on a systematic basis as a reduction of depreciation over the periods, and in the proportions, in which depreciation on those assets is charged.
With respect to grants related to income, the government assistance (in the form of the difference between market price and guaranteed fixed price) typically becomes payable once electricity is produced and delivered to the relevant grid. It is at this point that the receipt of the grant becomes reasonably assured, and therefore the grant is recognized as revenue in the month that delivery of the electricity occurs.
Brookfield Renewable makes estimates and assumptions that affect the carrying value of assets and liabilities, disclosure of contingent assets and liabilities and the reported amount of income and OCI for the year. Actual results could differ from these estimates. The estimates and assumptions that are critical
F - 28
to the determination of the amounts reported in the consolidated financial statements relate to the following:
(i) Property, plant and equipment
The fair value of Brookfield Renewable’s property, plant and equipment is calculated using estimates and assumptions about future electricity prices from renewable sources, anticipated long-term average generation, estimated operating and capital expenditures, future inflation rates and discount rates, as described in Note 12 - Property, plant and equipment, at fair value. Judgment is involved in determining the appropriate estimates and assumptions in the valuation of Brookfield Renewable’s property, plant and equipment. See Note 1(r)(iii) - Critical judgments in applying accounting policies - Property, plant and equipment for further details.
Estimates of useful lives and residual values are used in determining depreciation and amortization. To ensure the accuracy of useful lives and residual values, these estimates are reviewed on an annual basis.
(ii) Financial instruments
Brookfield Renewable makes estimates and assumptions that affect the carrying value of its financial instruments, including estimates and assumptions about future electricity prices, long-term average generation, capacity prices, discount rates and the timing of energy delivery. The fair value of interest rate swaps is the estimated amount that another party would receive or pay to terminate the swap agreements at the reporting date, taking into account current market interest rates. This valuation technique approximates the net present value of future cash flows. See Note 5 - Risk management and financial instruments for more details.
(iii) Deferred income taxes
The consolidated financial statements include estimates and assumptions for determining the future tax rates applicable to subsidiaries and identifying the temporary differences that relate to each subsidiary. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply during the year when the assets are realized or the liabilities settled, using the tax rates and laws enacted or substantively enacted at the consolidated statement of financial position dates. Operating plans and forecasts are used to estimate when the temporary difference will reverse.
(r) Critical judgments in applying accounting policies
The following are the critical judgments that have been made in applying the accounting policies used in the consolidated financial statements and that have the most significant effect on the amounts in the consolidated financial statements:
(i) Preparation of consolidated financial statements
These consolidated financial statements present the financial position, results of operations and cash flows of Brookfield Renewable. Brookfield Renewable exercises judgment in determining whether non-wholly owned subsidiaries are controlled by Brookfield Renewable. Brookfield Renewable’s judgement included the determination of (i) how the relevant activities of the subsidiary are directed; (ii) whether the rights of shareholdings are substantive or protective in nature; and (iii) Brookfield Renewable’s ability to influence the returns of the subsidiary.
(ii) Common control transactions
Common control business combinations specifically fall outside of scope of IFRS 3 and as such management has used its judgment to determine an appropriate policy to account for these transactions, considering other relevant accounting guidance that is within the framework of principles in IFRS and that reflects the economic reality of the transactions, in accordance with IAS 8, Accounting Policies, Changes
F - 29
in Accounting Estimates and Errors . As a result, the consolidated financial statements account for assets and liabilities acquired at the previous carrying value on the predecessor’s financial statements. Differences between the consideration given and the assets and liabilities received are recorded directly to equity.
(iii) Property, plant and equipment
The accounting policy relating to Brookfield Renewable’s property, plant and equipment is described in Note 1(h) - Property, plant and equipment and revaluation method. In applying this policy, judgment is used in determining whether certain costs are additions to the carrying amount of the property, plant and equipment as opposed to repairs and maintenance. If an asset has been developed, judgment is required to identify the point at which the asset is capable of being used as intended and to identify the directly attributable costs to be included in the carrying value of the development asset. The useful lives of property, plant and equipment are determined by independent engineers periodically with an annual review by management.
Annually, Brookfield Renewable determines the fair value of its property, plant and equipment using a methodology that it has judged to be reasonable. The methodology is generally a 20-year discounted cash flow model. Twenty years is the period considered reasonable as Brookfield Renewable has 20-year capital plans and it believes a reasonable third party would be indifferent between extending the cash flows further in the model versus using a discounted terminal value.
The valuation model incorporates future cash flows from long-term power purchase agreements that are in place where it is determined that the power purchase agreements are linked specifically to the related power generating assets. With respect to estimated future generation that does not incorporate long-term power purchase agreement pricing, the cash flow model uses estimates of future electricity prices using broker quotes from independent sources for the years in which there is a liquid market. The valuation of power generating assets not linked to long-term power purchase agreements also requires the development of a long-term estimate of future electricity prices. In this regard the valuation model uses a discount to the all-in cost of construction with a reasonable return, to secure energy from new renewable on-shore wind development resources as the benchmark that will establish the market price for electricity for renewable resources.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from renewable sources to meet future demand growth by the year 2025 in North America and Colombia, 2023 in Europe, and 2022 in Brazil. The year of new entry is viewed as the point when generators must build additional capacity to maintain system reliability and provide an adequate level of reserve generation with the retirement of older coal fired plants and rising environmental compliance costs in North America and Europe, and overall increasing demand in Colombia and Brazil. For the North American and European businesses, Brookfield Renewable has estimated a discount to these new-build wind prices to determine renewable electricity prices for hydroelectric and wind facilities. In Brazil and Colombia, the estimate of future electricity prices is based on a similar approach as applied in North America using a forecast of the all-in cost of development.
Terminal values are included in the valuation of hydroelectric assets in North America and Colombia. For the hydroelectric assets in Brazil, cash flows have been included based on the duration of the authorization or useful life of a concession asset with consideration of a one-time 30-year renewal on our qualifying hydroelectric assets.
Discount rates are determined each year by considering the current interest rates, average market cost of capital as well as the price risk and the geographical location of the operational facilities as judged by management. Inflation rates are also determined by considering the current inflation rates and the
F - 30
expectations of future rates by economists. Operating costs are based on long-term budgets escalated for inflation. Each operational facility has a 20-year capital plan that it follows to ensure the maximum life of its assets is achieved. Foreign exchange rates are forecasted by using the spot rates and the available forward rates, extrapolated beyond the period available. The inputs described above to the discounted cash flow model require management to consider facts, trends and plans in making its judgments as to what derives a reasonable fair value of its property, plant and equipment.
(iv) Financial instruments
The accounting policy relating to Brookfield Renewable’s financial instruments is described in Note 1(k) - Financial instruments. In applying the policy, judgments are made in applying the criteria set out in IFRS 9 and IAS 39, to record financial instruments at fair value through profit and loss, fair value through other comprehensive income and the assessments of the effectiveness of hedging relationships.
(v) Deferred income taxes
The accounting policy relating to Brookfield Renewable’s income taxes is described in Note 1(m) - Income taxes. In applying this policy, judgments are made in determining the probability of whether deductions, tax credits and tax losses can be utilized.
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(s) Future changes in accounting policies
The following table provides a brief description of accounting standards issued but not yet effective, none of which will be early adopted by Brookfield Renewable:
|
Standard |
Description |
|
Effective date |
|
Effect on financial statements |
|
In January 2016, the IASB issued IFRS 16, Leases (“IFRS 16”). |
IFRS 16 was issued by the IASB on January 13, 2016. IFRS 16 brings most leases onto the statement of financial position for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor accounting remains largely unchanged and the distinction between operating and finance leases is retained. Under IFRS 16, a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly, and the liability accrues interest. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease or an entity's incremental borrowing rate if the implicit rate cannot be readily determined. Lessees are permitted to make an accounting policy election, by class of underlying asset, to apply a method like IAS 17, Leases (“IAS 17”) operating lease accounting and not recognize lease assets and lease liabilities for leases with a lease term of 12 months or less, and on a lease-by-lease basis, to apply a method similar to current operating lease accounting to leases for which the underlying asset is of low value. A lessee will apply IFRS 16 to its leases either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying IFRS 16 being recognized at the date of initial application. IFRS 16 supersedes IAS 17 and related interpretations and is effective for periods beginning on or after January 1, 2019, with earlier adoption permitted if IFRS 15 has also been applied. |
|
The standard has a mandatory effective date for annual periods beginning on or after January 1, 2019, with early adoption permitted. |
|
Management has chosen to adopt the standard retrospectively in accordance with IFRS 16 paragraph C5(b), recognizing the cumulative effect at the date of initial application as an adjustment to the statement of financial position. For leases that meet the short-term recognition exemption of being less than 12 months in length from the date of initial application, or leases that meet the low-value recognition exemption, Management has elected to apply the respective practical expedients and these leases will be accounted for using IAS 17 operating lease accounting, whereby the lease payments will be recognized as an expense on either a straight line basis over the lease term or another systematic basis. At the date of initial application excluding the subsidiaries that are accounted for as held for sale (Note 4 – Assets held for sale), Brookfield Renewable anticipates recognizing a right-of-use asset of $149 million and a corresponding lease liability of $151 million.
|
F - 32
2. PRINCIPAL SUBSIDIARIES
The following table lists the subsidiaries of Brookfield Renewable which, in the opinion of management, significantly affect its financial position and results of operations as at December 31, 2018:
|
|
Jurisdiction of |
Percentage of |
|
|
Incorporation |
voting securities |
|
|
or Organization |
owned or controlled (%) |
|
Alta Wind VIII LLC (1) |
Delaware |
100 |
|
BIF II Safe Harbor Holdings LLC (1) |
Delaware |
100 |
|
BIF III Holtwood LLC (1) |
Delaware |
100 |
|
BRE GLBL Holdings L.P. (1) |
Bermuda |
100 |
|
BRI Green Energy Limited (1) |
Republic of Ireland |
100 |
|
Brookfield BRP Canada Corp. |
Alberta |
100 |
|
Brookfield Energia Comercializadora Ltda |
Brazil |
100 |
|
Brookfield Power US Holding America Co. |
Delaware |
100 |
|
Brookfield Renewable UK Hydro Limited |
England and Wales |
100 |
|
Brookfield Smoky Mountain Hydropower LLC (1) |
Delaware |
100 |
|
Brookfield White Pine Hydro LLC (1) |
Delaware |
100 |
|
Catalyst Old River Hydroelectric Limited Partnership (2) |
Louisiana |
75 |
|
Erie Boulevard Hydropower, L.P. |
Delaware |
100 |
|
Great Lakes Hydro America, LLC |
Delaware |
100 |
|
Great Lakes Power Limited |
Ontario |
75 |
|
Hawks Nest Hydro LLC |
Delaware |
100 |
|
Isagen S.A. E.S.P. (1) |
Colombia |
99.5 |
|
Kwagis Power Limited Partnership |
British Columbia |
75 |
|
Lièvre Power L.P. |
Québec |
100 |
|
Mississagi Power Trust |
Québec |
100 |
|
Orion Canadian Holdings 1 AIV L.P. |
Ontario |
100 |
|
Powell River Energy Inc. |
Canada |
100 |
|
Rumford Falls Hydro LLC |
Delaware |
100 |
|
Safe Harbor Water Power Corporation (1) |
Pennsylvania |
100 |
|
Tangará Energia S.A. (1) |
Brazil - São Paulo |
100 |
|
Windstar Energy, LLC |
California |
100 |
|
2016 Comber Wind Limited Partnership |
Ontario |
100 |
(1) Voting control held through voting agreements with Brookfield.
(2) Non-voting economic interest held through preferred shares and secured notes.
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3. ACQUISITIONS
The following investments were accounted for using the acquisition method, and the results of operations have been included in the consolidated financial statements since the date of acquisition.
Biotherm
Brookfield Renewable previously acquired TerraForm Global, Inc. (“ TerraForm Global ”) on December 28th, 2017 . Included in the net identifiable assets of TerraForm Global was $ 56 million in restricted cash and deposits for the acquisition of controlling interests (ranging between 65 % and 70 %) in three separate companies that cumulatively operate 49 MW of wind and solar assets in South Africa (“Biotherm”).
In March 2018, Brookfield Renewable acquired Biotherm for a total consideration of $ 71 million. This amount was transferred in two tranches and included the aforementioned deposit, a cash payment of $ 12 million and deferred consideration of $ 3 million.
The total acquisition costs of less than $ 1 million were expensed as incurred and have been classified under Other in the consolidated statement of income (loss).
Northern Ireland Wind
In March 2018, Brookfield Renewable entered into an agreement to acquire, along with its institutional partners, a 100 % interest in a 23 MW wind facility in Northern Ireland (“ Northern Ireland Wind ”).
In October 2018, Brookfield Renewable, along with its institutional partners, completed the acquisition of Northern Ireland Wind. The total consideration was £ 22 million ($ 28 million). Brookfield Renewable retains an approximate 40 % controlling interest.
The total acquisition costs of less than $ 1 million were expensed as incurred and have been classified under Other in the consolidated statement of income (loss).
Purchase price allocations
Final purchase price allocations, at fair value, with respect to the acquisitions are as follows:
|
|
|
|
Northern |
|
|||
|
|
|
|
|
Ireland |
|
|
|
|
(MILLIONS) |
Note |
Biotherm |
Wind |
Total |
|||
|
Cash and cash equivalents |
|
$ |
12 |
$ |
1 |
$ |
13 |
|
Trade receivables and other current assets |
|
|
7 |
|
- |
|
7 |
|
Property, plant and equipment, at fair value |
|
|
158 |
|
53 |
|
211 |
|
Current liabilities |
|
|
(3) |
|
(4) |
|
(7) |
|
Current portion of non-recourse borrowings |
|
|
(3) |
|
- |
|
(3) |
|
Financial instruments |
|
|
(2) |
|
- |
|
(2) |
|
Non-recourse borrowings |
|
|
(69) |
|
(18) |
|
(87) |
|
Deferred income tax liabilities |
|
|
(35) |
|
(4) |
|
(39) |
|
Non-controlling interests |
|
|
(21) |
|
- |
|
(21) |
|
Fair value of net assets acquired |
|
|
44 |
|
28 |
|
72 |
|
Goodwill |
17 |
|
27 |
|
- |
|
27 |
|
Purchase price |
|
$ |
71 |
$ |
28 |
$ |
99 |
F - 34
Completed in 2017
The following investments were accounted for using the equity method as Brookfield Renewable has significant influence through its position in the business, and the results of operations have been included in the audited annual consolidated financial statements since the date of investment.
European Storage
In August 2017 , Brookfield Renewable, along with its institutional partners, acquired a 25 % interest in FHH Guernsey Ltd which owns a 2.1 GW pumped storage portfolio in the United Kingdom (“European Storage”) . Brookfield Renewable retains an approximate 7 % economic interest in the portfolio. Total consideration was £ 194 million ($ 248 million). The acquisition costs of £1 million ($1 million) were incurred and capitalized.
In October 2017 , along with its institutional partners, Brookfield Renewable closed the acquisition of a 51% interest in TerraForm Power, Inc . (“TerraForm Power”). TerraForm Power is a 2,600 MW large scale diversified portfolio of solar and wind assets located predominately in the U.S. Brookfield Renewable retains an indirect economic interest of approximately 16 % in TerraForm Power for a total net investment of $ 203 million.
Brookfield Renewable had previously accounted for its indirect interest in TerraForm Power as an available for sale investment. The change from available for sale accounting to equity method accounting resulted in a gain of $ 13 million being reclassified from the audited annual consolidated statement of comprehensive income to the statement of income and included in Other income, representing the accumulated gain on the previously held indirect investment. The acquisition costs of $ 1 million were incurred and capitalized .
In October 2017, Brookfield Renewable entered into a voting agreement with the Brookfield subsidiary that ultimately controls TerraForm Power. Pursuant to this voting agreement, Brookfield Renewable is entitled to direct the election for one of the four directors of the Brookfield subsidiary, thereby providing Brookfield Renewable with significant influence over this subsidiary.
The following investments were accounted for using the acquisition method, and the results of operations have been included in the audited annual consolidated financial statements since the date of acquisition.
European Wind
In February 2017 , Brookfield Renewable entered into an agreement to acquire, along with its institutional partners, a 100 % interest in a 16 MW wind facility in Northern Ireland (“ European Wind ”).
In August 2017 , Brookfield Renewable, along with its institutional partners, completed the acquisition of European Wind, which was commissioned in July of 2017. If the acquisition had taken place at the beginning of the year, the revenue from European Wind earned prior to the date of acquisition would have been immaterial. The total consideration was £ 24 million ($ 32 million). Brookfield Renewable retains an approximate 40% controlling interest in the asset. The total acquisition costs of less than $ 1 million were expensed as incurred and have been classified under Other in the audited annual consolidated statements of income.
F - 35
TerraForm Global
In December 2017, along with its institutional partners, Brookfield Renewable closed the acquisition of a 100% interest in TerraForm Global . TerraForm Global is a 919 MW portfolio of diversified solar and wind assets located predominately in Brazil and Asia. The total consideration paid was $ 657 million and the fair value of the interest previously held was $ 100 million. Brookfield Renewable retains a 31 % economic interest in TerraForm Global with its share of the fair value of previously held interest on the acquisition date totaling $ 30 million. Brookfield Renewable’s share of the consideration paid was $ 202 million.
Brookfield Renewable had previously accounted for its indirect interest in TerraForm Global as an available for sale investment. The change from available for sale accounting to consolidation accounting resulted in a gain of $ 2 million being reclassified from the audited annual consolidated statement of comprehensive income to the statement of income and included in Other income, representing the accumulated gain on the previously held indirect investment.
If the acquisition had taken place at the beginning of the year, the revenue from TerraForm Global for the year ended December 31, 2017 would have been $ 250 million. The total acquisition costs of $ 1 million were expensed as incurred and have been classified under Other in the audited annual consolidated statements of income.
In December 2017, Brookfield Renewable entered into a voting agreement with an affiliate of Brookfield Renewable that ultimately controls TerraForm Global. Pursuant to this voting agreement, Brookfield Renewable is entitled to direct the election of the directors of the Brookfield subsidiary.
Final purchase price allocations, at fair value, with respect to the acquisitions completed in 2017 are as follows:
|
|
TerraForm |
European |
|
|
||
|
(MILLIONS) |
Global |
Wind |
Total |
|||
|
Cash and cash equivalents |
$ |
611 |
$ |
- |
$ |
611 |
|
Restricted cash |
|
90 |
|
- |
|
90 |
|
Trade receivables and other current assets |
|
62 |
|
1 |
|
63 |
|
Financial instruments |
|
20 |
|
- |
|
20 |
|
Property, plant and equipment, at fair value |
|
1,208 |
|
37 |
|
1,245 |
|
Deferred tax assets |
|
18 |
|
- |
|
18 |
|
Other long-term assets |
|
94 |
|
- |
|
94 |
|
Current liabilities |
|
(73) |
|
(4) |
|
(77) |
|
Current portion of non-recourse borrowings |
|
(1,183) |
|
- |
|
(1,183) |
|
Financial instruments |
|
(15) |
|
- |
|
(15) |
|
Non-recourse borrowings |
|
(5) |
|
- |
|
(5) |
|
Deferred income tax liabilities |
|
(15) |
|
(2) |
|
(17) |
|
Other long-term liabilities |
|
(54) |
|
- |
|
(54) |
|
Non-controlling interests |
|
(1) |
|
- |
|
(1) |
|
Fair value of net assets acquired |
$ |
757 |
$ |
32 |
$ |
789 |
F - 36
Completed in 2016
The following investments were accounted for using the acquisition method, and the results of operations have been included in the audited annual consolidated financial statements since the respective dates of acquisition.
Colombia Portfolio
On January 22, 2016, Brookfield Renewable and its institutional partners (the “consortium”) acquired a 57.6 % interest in Isagen S.A. E.S.P (“Isagen”) from the Colombian government (the “Initial Investment”). Isagen was a listed entity in Colombia. It is Colombia’s third-largest power generation company and owns and operates a 3,032 MW portfolio, consisting predominantly of a portfolio of largely reservoir-based, hydroelectric facilities. Annual generation is expected to approximate 15,000 GWh.
Following the closing of the Initial Investment, the consortium was required to conduct two mandatory tender offers (“MTOs”) for the Isagen public shareholders at the same price per share paid for its initial 57.6% controlling interest.
The consortium closed the First MTO and the Second MTO on May 13, 2016 and September 14, 2016, respectively. During 2017, the consortium acquired further shares from public shareholders and completed delisting of Isagen from the Colombia Stock Exchange. After giving effect to the MTOs and additional shares the consortium ownership stands at 99.5 % as of December 31, 2018.
Brookfield Renewable is the general partner of and controls the entity that holds the consortium’s 99.5% interest in Isagen. Brookfield Renewable’s investment is equivalent to an approximate 24% economic interest. The total acquisition costs of $ 13 million were expensed as incurred and have been classified under Other in the audited annual consolidated statements of income in 2016.
If the acquisition had taken place at the beginning of the year, the revenue from Isagen for the year ended December 31, 2016 would have been $ 900 million.
Brazil Portfolio
In January 2016 , Brookfield Renewable acquired a 51 MW hydroelectric portfolio in Brazil (“Brazil Portfolio”). Total consideration of R$ 417 million ($ 103 million) included cash paid of R$ 355 million ($ 88 million), deferred consideration of R$ 35 million ($ 9 million) and the impact of the foreign currency contracts of R$ 24 million ($ 6 million). Brookfield Renewable retains a 100 % interest in the portfolio.
The total acquisition costs of less than $ 1 million were expensed as incurred and classified under Other in the audited annual consolidated statements of income in 2016.
North American Portfolio
In April 2016 , Brookfield Renewable acquired a 296 MW portfolio of hydroelectric facilities in Pennsylvania that are expected to generate 1,109 GWh annually (“ Pennsylvania Hydro ”). The acquisition was completed with institutional partners, and Brookfield Renewable retains approximately 28.6% interest in the portfolio.
Total cash consideration was $ 859 million. The acquisition costs of $ 6 million were expensed as incurred and have been classified under Other in the audited annual consolidated statements of income in 2016.
If the acquisition had taken place at the beginning of the year, the revenue from Pennsylvania Hydro for the year ended December 31, 2016 would have been $ 46 million.
In April 2016, Brookfield Renewable entered into a voting agreement with a Brookfield subsidiary that forms part of Brookfield Infrastructure Fund III. Pursuant to this voting agreement, Brookfield Renewable
F - 37
is entitled to direct the election of the directors of the entity that ultimately controls and operates the Pennsylvania Hydro assets.
European Wind Development Project
In September 2016 , Brookfield Renewable acquired a 19 MW wind development project in Ireland. The total consideration of € 8 million ($ 9 million) included cash consideration of € 7 million ($ 8 million) and deferred consideration and working capital adjustments of € 1 million ($ 1 million). The acquisition was completed with institutional partners, and Brookfield Renewable retained an approximately 40 % controlling interest in the asset. The total acquisition costs of less than $ 1 million were expensed as incurred and have been classified under Other in the audited annual consolidated statements of income.
Final purchase price allocations, at fair value, with respect to the acquisitions completed in 2016 are as follows:
|
(MILLIONS) |
Colombia |
Brazil |
Pennsylvania |
Ireland |
Total |
|||||
|
Cash and cash equivalents |
$ |
113 |
$ |
4 |
$ |
- |
$ |
- |
$ |
117 |
|
Trade receivables and other current assets |
|
174 |
|
2 |
|
1 |
|
- |
|
177 |
|
Property, plant and equipment, at fair value |
|
4,772 |
|
100 |
|
859 |
|
10 |
|
5,741 |
|
Other long-term assets |
|
15 |
|
- |
|
- |
|
- |
|
15 |
|
Current liabilities |
|
(463) |
|
(3) |
|
(1) |
|
- |
|
(467) |
|
Non-recourse borrowings |
|
(899) |
|
- |
|
- |
|
- |
|
(899) |
|
Deferred income tax liabilities |
|
(1,019) |
|
- |
|
- |
|
(1) |
|
(1,020) |
|
Other long-term liabilities |
|
(149) |
|
- |
|
- |
|
- |
|
(149) |
|
Non-controlling interests |
|
(1,417) |
|
- |
|
- |
|
- |
|
(1,417) |
|
Fair value of net assets acquired |
|
1,127 |
|
103 |
|
859 |
|
9 |
|
2,098 |
|
Goodwill |
|
799 |
|
- |
|
- |
|
- |
|
799 |
|
Purchase price |
$ |
1,926 |
$ |
103 |
$ |
859 |
$ |
9 |
$ |
2,897 |
During the years ended December 31, 2018 and 2017, the purchase price allocations for the acquisitions in 2017 and 2016, respectively, were finalized. No material changes to the provisional purchase price allocations disclosed in the audited annual consolidated financial statements for 2017 and 2016 had to be considered for acquisitions made in the respective years.
F - 38
4. assets held for sale
The following is a summary of the major items of assets and liabilities classified as held for sale as at December 31, 2018:
|
(MILLIONS) |
Total |
|
|
Assets |
|
|
|
Cash and cash equivalents |
$ |
8 |
|
Restricted cash |
|
47 |
|
Trade receivables and other current assets |
|
28 |
|
Property, plant and equipment, at fair value |
|
749 |
|
Goodwill |
|
22 |
|
Other long-term assets |
|
66 |
|
Assets held for sale |
$ |
920 |
|
Liabilities |
|
|
|
Current liabilities |
$ |
23 |
|
Non-recourse borrowings |
|
360 |
|
Other long-term liabilities |
|
150 |
|
Liabilities directly associated with assets held for sale |
$ |
533 |
A revaluation of the property, plant, and equipment associated with the disposal groups discussed below was performed immediately prior to classification as held for sale in accordance with our accounting policy election to apply the revaluation method. The cumulative amount recognized in other comprehensive income relating to limited partners’ equity for the assets held for sale is $ 21 million.
Brookfield Renewable continues to consolidate and recognize, in the consolidated statements of income (loss), consolidated statements of comprehensive income, and the consolidated statements of cash flows, the revenues, expenses and cash flows associated with assets held for sale. Non-current assets classified as held for sale are not depreciated.
South Africa Portfolio
In July 2018, Brookfield Renewable, along with its institutional partners, entered into an agreement to sell its controlling interest in a 178 MW wind and solar portfolio in South Africa (“South Africa Portfolio”) for a total consideration of ZAR 2,031 million (approximately $ 166 million – Brookfield Renewable’s share totaling approximately $ 50 million). The transaction is subject to closing conditions, including regulatory and lender approvals. Brookfield Renewable holds a 31 % economic interest and 100 % voting interest in the South Africa Portfolio. The proportionate amount of consideration attributable to the institutional partners upon the closing of the transaction approximates their economic interest in the South Africa Portfolio. Each of the project entities included in the South Africa Portfolio contain additional non-controlling economic interest ranging between 30 % and 49 %.
Thailand Portfolio
In December 2018, Brookfield Renewable, along with its institutional partners, entered into an agreement to sell its controlling interest in a 40 MW solar portfolio in Thailand (“Thailand Portfolio”) for a total consideration of THB 3,070 million (approximately $ 95 million – Brookfield Renewable’s share totaling approximately $ 29 million). The transaction is subject to the satisfaction of closing conditions. The proportionate amount of consideration attributable to the institutional partners upon the closing of the transaction approximates their economic interest in the Thailand Portfolio. Brookfield Renewable holds a 31 % economic interest and 100 % voting interest in the Thailand Portfolio.
F - 39
Malaysia Portfolio
In December 2018, Brookfield Renewable, along with its institutional partners, entered into an agreement to sell its controlling interest in a 19 MW solar portfolio in Malaysia (“Malaysia Portfolio”) for a total consideration of MYR 154 million (approximately $ 37 million – Brookfield Renewable’s share totaling approximately $ 11 million). The transaction is subject to the satisfaction of closing conditions. Brookfield Renewable holds a 31 % economic interest and 100% voting interest in the Malaysia Portfolio. The proportionate amount of consideration attributable to the institutional partners upon the closing of the transaction approximates their economic interest in the Malaysia Portfolio. Each of the project entities included in the Malaysia Portfolio contain additional non-controlling economic interest ranging between 5 % and 49 %.
F - 40
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.
The sensitivity analysis discussed below reflect the risks associated with instruments that Brookfield Renewable considers are market sensitive and the potential loss resulting from one or more selected hypothetical changes. Therefore, the discussion below is not intended to fully reflect Brookfield Renewable’s risk exposure.
(a) Market risk
Market risk is defined for these purposes as the risk that the fair value or future cash flows of a financial instrument held by Brookfield Renewable will fluctuate because of changes in market prices.
Brookfield Renewable faces market risk from foreign currency assets and liabilities, the impact of changes in interest rates, and floating rate liabilities. Market risk is managed by funding assets with financial liabilities in the same currency and with similar interest rate characteristics and holding financial contracts, such as interest rate swaps and foreign exchange contracts, to minimize residual exposures. Financial instruments held by Brookfield Renewable that are subject to market risk include borrowings and financial instruments, such as interest rate, currency and commodity contracts. The categories of financial instruments that can give rise to significant variability are described below:
(i) Electricity price risk
Electricity price risk is defined for these purposes as the risk that the fair value or future cash flows of a financial instrument held by Brookfield Renewable will fluctuate because of changes in electricity prices. Electricity price risk arises from the sale of Brookfield Renewable’s uncontracted generation. Brookfield Renewable aims to sell electricity under long-term contracts to secure stable prices and mitigate its exposure to wholesale markets.
The table below summarizes the impact of changes in the market price of electricity as at December 31. The impact is expressed in terms of the effect on net income and OCI. The sensitivities are based on the assumption that the market price changes by 5% with all other variables held constant.
Impact of a 5% change in the market price of electricity, on outstanding energy derivative contracts, for the year ended December 31:
|
|
Effect on net income (1) |
Effect on OCI (1) |
||||||||||
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
2018 |
|
2017 |
|
2016 |
|
5% increase |
$ |
(3) |
$ |
(3) |
$ |
(1) |
$ |
(10) |
$ |
(4) |
$ |
(7) |
|
5% decrease |
|
3 |
|
3 |
|
1 |
|
10 |
|
4 |
|
7 |
(1) Amounts represent the potential annual net pretax impact.
Foreign currency risk is defined for these purposes as the risk that the fair value of a financial instrument held by Brookfield Renewable will fluctuate because of changes in foreign currency rates.
Brookfield Renewable has exposure to the Canadian dollar, Brazilian real, Euro, British pound sterling, Colombian peso, Indian rupee, South African rand, Malaysian ringgit, Thai baht and Chinese yuan through its investments in foreign operations. Consequently, fluctuations in the U.S. dollar exchange rate
F - 41
against these currencies increase the volatility of net income and other comprehensive income. Brookfield Renewable holds foreign currency contracts primarily to mitigate this exposure.
The table below summarizes the impact to Brookfield Renewable’s financial instruments of changes in the exchange rate as at December 31. The impact is expressed in terms of the effect on income and OCI. The sensitivities are based on the assumption that the currency exchange rate changes by five percent with all other variables held constant.
Impact of a 5% change in U.S. dollar exchange rates, on outstanding foreign exchange swaps, for the year ended December 31:
|
|
Effect on net income (1) |
Effect on OCI (1) |
||||||||||
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
2018 |
|
2017 |
|
2016 |
|
5% increase |
$ |
30 |
$ |
4 |
$ |
1 |
$ |
44 |
$ |
79 |
$ |
51 |
|
5% decrease |
|
(30) |
|
(4) |
|
(1) |
|
(44) |
|
(79) |
|
(51) |
(1) Amounts represent the potential annual net pretax impact.
Interest rate risk is defined for these purposes as the risk that the fair value or future cash flows of a financial instrument held by Brookfield Renewable will fluctuate, because of changes in interest rates.
Brookfield Renewable’s assets largely consist of long duration physical assets. Brookfield Renewable’s financial liabilities consist primarily of long-term fixed rate debt or floating-rate debt that has been swapped to fixed rates with interest rate financial instruments. All non-derivative financial liabilities are recorded at their amortized cost. Brookfield Renewable also holds interest rate contracts to lock-in fixed rates on certain anticipated future debt issuances.
Brookfield Renewable will enter into interest rate swaps designed to minimize the exposure to interest rate fluctuations on its variable rate debt. Fluctuations in interest rates could impact Brookfield Renewable’s cash flows, primarily with respect to the interest payable against Brookfield Renewable’s variable rate debt, which is limited to certain non-recourse borrowings with a total principal value of $ 3,764 million (2017: $ 4,176 million). Of this principal value, $ 1,447 million (2017: $ 824 million) has been hedged through the use of interest rate swaps. The fair values of the recognized liability for the interest rate swaps were calculated using a valuation model with observable interest rates.
The table below summarizes the impact of changes in the interest rate as at December 31. The impact is expressed in terms of the effect on income and OCI. The sensitivities are based on the assumption that the interest rate changes by one percent with all other variables held constant.
Impact of a 1% change in interest rates, on outstanding interest rate swaps and variable rate debt, for the year ended December 31:
|
|
Effect on net income (1) |
Effect on OCI (1) |
||||||||||
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
2018 |
|
2017 |
|
2016 |
|
1% increase |
$ |
(10) |
$ |
17 |
$ |
(17) |
$ |
42 |
$ |
54 |
$ |
115 |
|
1% decrease |
|
11 |
|
(17) |
|
17 |
|
(42) |
|
(54) |
|
(115) |
(1) Amounts represent the potential annual net pretax impact.
Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfill its contractual obligations. Brookfield Renewable’s exposure to credit risk in respect of financial instruments relates
F - 42
primarily to counterparty obligations regarding energy contracts, interest rate swaps, forward foreign exchange contracts and physical electricity and gas transactions.
Brookfield Renewable minimizes credit risk with counterparties through the selection, monitoring and diversification of counterparties, and the use of standard trading contracts, and other credit risk mitigation techniques. In addition, Brookfield Renewable’s power purchase agreements are reviewed regularly and are almost exclusively with customers having long standing credit histories or investment grade ratings, which limit the risk of non-collection. See Note 22 - Trade receivables and other current assets, for additional details regarding Brookfield Renewable’s trade receivables balance.
The maximum credit exposure at December 31 was as follows:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
Trade receivables and other short-term receivables |
|
493 |
|
442 |
|
Due from related parties |
|
65 |
|
60 |
|
Other long-term assets |
|
402 |
|
- |
|
|
$ |
960 |
$ |
502 |
Liquidity risk is the risk that Brookfield Renewable cannot meet a demand for cash or fund an obligation when due. Liquidity risk is mitigated by Brookfield Renewable’s cash and cash equivalent balances and its access to undrawn credit facilities. Details of the available portion of credit facilities are included in Note 13 – Borrowings. Brookfield Renewable also ensures that it has access to public capital markets and maintains a strong investment grade credit rating.
Brookfield Renewable is also subject to the risk associated with debt financing. This risk is mitigated by the long-term duration of debt instruments and the diversification in maturity dates over an extended period of time.
F - 43
CASH OBLIGATIONS
The table below classifies the cash obligations related to Brookfield Renewable’s liabilities into relevant maturity groupings based on the remaining period from the statement of financial position dates to the contractual maturity date. As the amounts are the contractual undiscounted cash flows (gross of unamortized financing fees and accumulated amortization, where applicable), they may not agree with the amounts disclosed in the consolidated statements of financial position.
(1) Includes both the current and long-term amounts.
(2) Represents aggregate interest payable expected to be paid over the entire term of the obligations, if held to maturity. Variable rate interest payments have been calculations based on estimated interest rates.
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, commodity prices and, as 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;
F - 44
Level 2 – inputs, other than quoted prices in Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 – inputs for the asset or liability that are not based on observable market data .
The following table presents Brookfield Renewable’s assets and liabilities measured and disclosed at fair value classified by the fair value hierarchy as at December 31:
|
|
|
|
|
|
|
|||||||
|
(MILLIONS) |
Level 1 |
Level 2 |
Level 3 |
2018 |
2017 |
|||||||
|
Assets measured at fair value: |
|
|
|
|
|
|
|
|
|
|
||
|
Cash and cash equivalents |
$ |
173 |
$ |
- |
$ |
- |
$ |
173 |
$ |
799 |
||
|
Restricted cash (1) |
|
181 |
|
- |
|
- |
|
181 |
|
284 |
||
|
Financial instrument assets (2)(3) |
|
|
|
|
|
|
|
|
|
|
||
|
|
Energy derivative contracts |
|
- |
|
3 |
|
- |
|
3 |
|
- |
|
|
|
Interest rate swaps |
|
- |
|
9 |
|
- |
|
9 |
|
6 |
|
|
|
Foreign exchange swaps |
|
- |
|
55 |
|
- |
|
55 |
|
20 |
|
|
|
Investments in equity securities (2) |
|
60 |
|
57 |
|
- |
|
117 |
|
159 |
|
|
Property, plant and equipment |
|
- |
|
- |
|
29,025 |
|
29,025 |
|
27,096 |
||
|
Liabilities measured at fair value: |
|
|
|
|
|
|
|
|
|
|
||
|
Financial instrument liabilities (3) |
|
|
|
|
|
|
|
|
|
|
||
|
|
Energy derivative contracts |
|
- |
|
(22) |
|
- |
|
(22) |
|
(19) |
|
|
|
Interest rate swaps |
|
- |
|
(116) |
|
- |
|
(116) |
|
(155) |
|
|
|
Foreign exchange swaps |
|
- |
|
- |
|
- |
|
- |
|
(96) |
|
|
Contingent consideration (4) |
|
- |
|
- |
|
(3) |
|
(3) |
|
(18) |
||
|
Assets for which fair value is disclosed: |
|
|
|
|
|
|
|
|
|
|
||
|
|
Equity-accounted investments (5) |
|
703 |
|
- |
|
- |
|
703 |
|
278 |
|
|
Liabilities for which fair value is disclosed: |
|
|
|
|
|
|
|
|
|
|
||
|
|
Corporate borrowings |
|
(1,640) |
|
(727) |
|
- |
|
(2,367) |
|
(2,641) |
|
|
|
Non-recourse borrowings |
|
(370) |
|
(8,326) |
|
- |
|
(8,696) |
|
(9,838) |
|
|
Total |
$ |
(893) |
$ |
(9,067) |
$ |
29,022 |
$ |
19,062 |
$ |
15,875 |
||
(1) Includes both the current amount and long-term amount included in Other long-term assets.
(2) Amounts in Level 2 include Brookfield Infrastructure Debt Fund holdings.
(3) Includes both current and long-term amounts.
(4) Amount relates to business combinations with obligations lapsing in 2021 and 2024.
(5) The fair value corresponds to Brookfield Renewable’s investment in publicly-quoted common shares of TerraForm Power, Inc.
There were no transfers between levels during the year ended December 31, 2018.
F - 45
Financial instruments disclosures
The aggregate amount of Brookfield Renewable’s net financial instrument positions as at December 31 are as follows:
|
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
Net Assets |
Net Assets |
||
|
(MILLIONS) |
Assets |
Liabilities |
(Liabilities) |
(Liabilities) |
||||
|
Energy derivative contracts |
$ |
3 |
$ |
22 |
$ |
(19) |
$ |
(19) |
|
Interest rate swaps |
|
9 |
|
116 |
|
(107) |
|
(149) |
|
Foreign exchange swaps |
|
55 |
|
- |
|
55 |
|
(76) |
|
Investments in equity securities |
|
117 |
|
- |
|
117 |
|
159 |
|
Total |
|
184 |
|
138 |
|
46 |
|
(85) |
|
Less: current portion |
|
60 |
|
27 |
|
33 |
|
(112) |
|
Long-term portion |
$ |
124 |
$ |
111 |
$ |
13 |
$ |
27 |
F - 46
The following table presents the change in Brookfield Renewable’s total net financial instrument asset position as at and for the year ended December 31:
|
(MILLIONS) |
Note |
|
2018 |
|
2017 |
|
2016 |
||
|
Balance, beginning of year |
|
$ |
(85) |
$ |
(28) |
$ |
(145) |
||
|
Increases (decreases) in the net financial instrument liability position: |
|
|
|
|
|
|
|
||
|
|
Unrealized (loss) gain through OCI on investments in equity securities |
(a) |
|
(16) |
|
(20) |
|
52 |
|
|
|
Unrealized (loss) through income on energy derivative contracts |
(b) |
|
(3) |
|
(5) |
|
- |
|
|
|
Unrealized (loss) through OCI on energy derivative contracts |
(b) |
|
- |
|
(17) |
|
(28) |
|
|
|
Unrealized gain (loss) through income on interest rate swaps |
(c) |
|
17 |
|
1 |
|
(7) |
|
|
|
Unrealized gain (loss) through OCI on interest rate swaps |
(c) |
|
14 |
|
18 |
|
(1) |
|
|
|
Unrealized gain (loss) through income on foreign exchange swaps |
(d) |
|
76 |
|
(29) |
|
3 |
|
|
|
Unrealized gain (loss) through OCI on foreign exchange swaps |
(d) |
|
87 |
|
(94) |
|
(61) |
|
|
|
Acquisitions, settlements and other |
|
|
(44) |
|
89 |
|
159 |
|
|
Balance, end of year |
|
$ |
46 |
$ |
(85) |
$ |
(28) |
||
|
|
|
|
|
|
|
|
|
||
|
Financial instrument assets designated at fair value through OCI |
|
|
|
|
|
|
|
||
|
|
Investments in equity securities |
(a) |
|
117 |
|
159 |
|
136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets not designated as hedging instruments: |
|
|
|
|
|
|
|
||
|
|
Energy derivative contracts |
(b) |
$ |
3 |
$ |
- |
$ |
3 |
|
|
|
Interest rate swaps |
(c) |
|
- |
|
1 |
|
1 |
|
|
|
Foreign exchange swaps |
(d) |
|
32 |
|
19 |
|
10 |
|
|
Net positions |
|
$ |
35 |
$ |
20 |
$ |
14 |
||
|
|
|
|
|
|
|
|
|
||
|
Derivative assets designated as hedging instruments: |
|
|
|
|
|
|
|
||
|
|
Energy derivative contracts |
(b) |
$ |
- |
$ |
- |
$ |
5 |
|
|
|
Interest rate swaps |
(c) |
|
9 |
|
5 |
|
6 |
|
|
|
Foreign exchange swaps |
(d) |
|
23 |
|
1 |
|
39 |
|
|
Net positions |
|
$ |
32 |
$ |
6 |
$ |
50 |
||
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities not designated as hedging instruments: |
|
|
|
|
|
|
|
||
|
|
Energy derivative contracts |
(b) |
$ |
(7) |
$ |
(5) |
$ |
(3) |
|
|
|
Interest rate swaps |
(c) |
|
(82) |
|
(107) |
|
(2) |
|
|
|
Foreign exchange swaps |
(d) |
|
- |
|
(33) |
|
(6) |
|
|
Net positions |
|
$ |
(89) |
$ |
(145) |
$ |
(11) |
||
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities designated as hedging instruments: |
|
|
|
|
|
|
|
||
|
|
Energy derivative contracts |
(b) |
$ |
(15) |
$ |
(14) |
$ |
(2) |
|
|
|
Interest rate swaps |
(c) |
|
(34) |
|
(48) |
|
(176) |
|
|
|
Foreign exchange swaps |
(d) |
|
- |
|
(63) |
|
(39) |
|
|
Net positions |
|
$ |
(49) |
$ |
(125) |
$ |
(217) |
||
|
|
|
|
|
|
|
|
|
|
|
|
Total financial instruments, net |
|
$ |
46 |
$ |
(85) |
$ |
(28) |
||
F - 47
(a) Investments in equity securities
Investments in equity securities are held to achieve a particular business objective other than short-term trading and are designated at fair value through OCI. There is no recycling of gains or losses through profit or loss. Upon derecognition of the associated asset, accumulated gains or losses are transferred from OCI directly to retained earnings.
In the comparative periods presented in accordance with IAS 39, investments in equity securities were classified as available-for-sale securities and were assessed for impairment at each reporting date. For the year ended December 31, 2017, gains of $ 2 million (2016: gains of $ 9 million) relating to available-for-sale securities were reclassified from OCI to net income.
(b) 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 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.
There is an economic relationship between the hedged items and the hedging instruments as the terms of the energy derivative contracts match the terms of the expected highly probable forecast transactions (i.e. notional amount and expected payment date). Brookfield Renewable has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the energy derivative contracts are identical to the hedged risks. To test the hedge effectiveness, Brookfield Renewable uses the hypothetical derivative method and compares changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks. The hedge ineffectiveness can arise from different indexes (and accordingly different curves) linked to the hedged risk of the hedged items and hedging instruments.
For the year ended December 31, 2018, losses of $ 6 million relating to energy derivative contracts were realized and reclassified from OCI to revenues in the consolidated statements of income (loss) (2017: $ 23 million gains and 2016: $ 48 million gains).
Based on market prices as of December 31, 2018, unrealized losses of $ 14 million (2017: $ 9 million losses and 2016: $ 6 million gains) recorded in accumulated other comprehensive income (“AOCI”) on energy derivative contracts are expected to be settled or reclassified into income in the next twelve months. The actual amount reclassified from AOCI, however, could vary due to future changes in market prices.
F - 48
The following table summarizes the energy derivative contracts designated as hedging instruments:
|
|
Dec 31 |
|
Energy derivative contracts |
2018 |
|
Carrying amount (asset/(liability)) |
(15) |
|
Notional amount - millions of U.S. dollars |
188 |
|
Notional amount - GWh |
5,024 |
|
Weighted average hedged rate for the year ($/MWh) |
37 |
|
Maturity dates |
Jan 2019 - Dec 2020 |
|
Hedge ratio |
1:1 |
|
Change in discounted spot value of outstanding hedging instruments |
(8) |
|
Change in value of hedged item used to determine hedge effectiveness |
9 |
The hedge ineffectiveness loss recognized in Unrealized financial instruments loss in the consolidated statements of income related to energy derivative contracts (cash flow hedges) for the year ended December 31, 2018 was $ 2 million.
Brookfield Renewable has entered into interest rate hedge 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 hedge contracts are recorded in the consolidated financial statements at fair value.
There is an economic relationship between the hedged items and the hedging instruments as the terms of the interest rate hedges match the terms of the respective fixed rate loans (i.e., notional amount, maturity, payment and reset dates). Brookfield Renewable established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the interest rate swaps are identical to the hedged risks. To test the hedge effectiveness, Brookfield Renewable uses the hypothetical derivative method and compares the changes in the fair value of the hedging instrument against the changes in fair value of the hedged items attributable to the hedged risk.
The hedge ineffectiveness can arise from:
· Different interest rate curves being applied to discount the hedged item and hedging instrument
· Differences in timing of cash flows of the hedged item and hedging instrument
· The counterparties’ credit risk having an asymmetrical impact on the fair value movements of the hedging instrument and hedged item
At December 31, 2018, agreements with a total notional exposure of $ 1,444 million were outstanding (2017: $ 1,704 million) including $ 383 million ( 2017: $ 780 million) associated with agreements that are not formally designated as hedging instruments. The weighted-average fixed interest rate resulting from these agreements is 3.6 % (2017: 4.5 % and 2016: 2.5%).
For the year ended December 31, 2018, net movements relating to cash flow hedges realized and reclassified from OCI to interest expense – borrowings in the consolidated statements of income (loss) were $ 14 million losses (2017: $ 20 million and 2016: $ 16 million).
Based on market prices as of December 31, 2018, unrealized losses of $ 10 million (2017: $ 18 million and 2016: $ 110 million) recorded in AOCI on interest rate swaps are expected to be settled or reclassified into income in the next twelve months. The actual amount reclassified from AOCI, however, could vary due to future changes in market rates.
F - 49
The following table summarizes the interest rate hedges designated as hedging instruments:
|
|
Dec 31 |
|
Interest rate hedges |
2018 |
|
Carrying amount (asset/(liability)) |
(25) |
|
Notional amount - $ |
178 |
|
Notional amount - C$ (1) |
151 |
|
Notional amount - € (1) |
377 |
|
Notional amount - £ (1) |
99 |
|
Notional amount - COP (1) |
256 |
|
Maturity dates |
Aug 2019 - Sep 2036 |
|
Hedge ratio |
1:1 |
|
Change in discounted spot value of outstanding hedging instruments |
8 |
|
Change in value of hedged item used to determine hedge effectiveness |
(2) |
(1) Notional amounts of foreign currency denominated interest rate hedges are presented at the U.S. dollar equivalent value based on the December 31, 2018 foreign currency spot rate
The hedge ineffectiveness gain recognized in Unrealized financial instruments loss in the consolidated statements of income related to interest rate contracts (cash flow hedges) for the year ended December 31, 2018 was $ 9 million.
Brookfield Renewable has entered into foreign exchange swaps to minimize its exposure to currency fluctuations impacting its investments and earnings in foreign operations, and to fix the exchange rate on certain anticipated transactions denominated in foreign currencies.
There is an economic relationship between the hedged item and the hedging instrument as the net investment or anticipated foreign currency transaction creates a translation risk that will match the respective hedging instrument. Brookfield Renewable established a hedge ratio of 1:1 as the underlying risk of the hedging instrument is identical to the hedged risk component.
At December 31, 2018, agreements with a total notional exposure of $ 1,844 million were outstanding (2017: $ 2,306 million) including $ 957 million (2017: $ 718 million) associated with agreements that are not formally designated as hedging instruments.
There are no unrealized gains or losses recorded in AOCI on foreign exchange swaps that are expected to be settled or reclassified into income in the next twelve months (2017: $ 48 million losses and 2016: $ 1 million losses). The actual amount reclassified from AOCI, however, could vary due to future changes in market rates.
F - 50
The following table summarizes the foreign exchange swaps designated as hedging instruments:
|
|
Dec 31 |
|
|
Foreign exchange swaps |
2018 |
|
|
Carrying amount (asset/(liability)) |
23 |
|
|
Notional amount for hedges of the Canadian dollar (1) |
419 |
|
|
Notional amount for hedges of the Euro (1) |
221 |
|
|
Notional amount for hedges of the British pounds sterling (1) |
247 |
|
|
Maturity date |
Jan 2019 - Dec 2019 |
|
|
Hedge ratio |
1:1 |
|
|
Weighted average hedged rate for the year: |
|
|
|
|
C$/$ foreign exchange forward contracts |
1.34 |
|
|
€/$ foreign exchange forward contracts |
0.82 |
|
|
£/$ foreign exchange forward contracts |
0.76 |
(1) Notional amounts expressed in millions of U.S. dollars
The following table presents a reconciliation of the LP unitholder equity reserves impacted by financial instruments:
|
|
|
|
|
|
|
Investments |
|
Foreign |
|
|
|
|
|
Cash flow |
|
in equity |
|
currency |
|
(MILLIONS) |
|
hedges |
|
securities |
|
translation |
||
|
Balance, as at December 31, 2017 |
$ |
(29) |
$ |
15 |
$ |
(378) |
||
|
Effective portion of changes in fair value arising from: |
|
|
|
|
|
|
||
|
|
Energy derivative contracts |
|
(1) |
|
- |
|
- |
|
|
|
Interest rate swaps |
|
1 |
|
- |
|
- |
|
|
|
Foreign exchange swaps |
|
- |
|
- |
|
42 |
|
|
Amount reclassified to profit or loss |
|
7 |
|
- |
|
- |
||
|
Foreign currency revaluation of designated borrowings |
|
- |
|
- |
|
87 |
||
|
Foreign currency revaluation of net foreign operations |
|
- |
|
- |
|
(324) |
||
|
Valuation of investments in equity securities designated FVOCI |
|
- |
|
(8) |
|
- |
||
|
Tax effect |
|
(2) |
|
- |
|
(10) |
||
|
Other |
|
(10) |
|
(3) |
|
(69) |
||
|
Balance, as at December 31, 2018 |
$ |
(34) |
$ |
4 |
$ |
(652) |
||
Brookfield Renewable’s Chief Executive 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 technology.
Our operations are segmented by – 1) hydroelectric, 2) wind, 3) solar, 4) storage & other (cogeneration and biomass), and 5) corporate – with hydroelectric and wind further segmented by geography (i.e., North America, Colombia, Brazil, Europe and Asia). Our investment in the TerraForm Power and TerraForm Global businesses led to the creation of the solar segment which is now reviewed on a standalone basis. Our investment in First Hydro also resulted in the creation of a storage segment which is now reviewed along with our cogeneration and biomass businesses, on an aggregate basis. The Colombia segment aggregates the financial results of its hydroelectric and cogeneration facilities. The results of our wind assets in South Africa that are classified as held for sale have been aggregated in the Asia wind business segment. The corporate segment represents all activity performed above the individual segments for the business.
F - 51
Reporting to the CODM on the measures utilized to assess performance and allocate resources has been on a proportionate basis since the fourth quarter of 2017. Information on a proportionate basis reflects Brookfield Renewable’s share from facilities which it accounts for using consolidation and the equity method whereby Brookfield Renewable either controls or exercises significant influence or joint control over the investment, respectively. Proportionate information provides a Unitholder (holders of the GP interest, Redeemable/Exchangeable partnership units, and LP Units) perspective that the CODM considers important when performing internal analyses and making strategic and operating decisions. The CODM also believes that providing proportionate information helps investors understand the impacts of decisions made by management and financial results allocable to Brookfield Renewable’s Unitholders.
Proportionate financial information is not, and is not intended to be, presented in accordance with IFRS. Tables reconciling IFRS data with data presented on a proportionate consolidation basis have been disclosed. Segment revenues, other income, direct operating costs, interest expense, depreciation, current and deferred income taxes, and other are items that will differ from results presented in accordance with IFRS as these items include Brookfield Renewable’s proportionate share of earnings from equity-accounted investments attributable to each of the above-noted items, and exclude the proportionate share of earnings (loss) of consolidated investments not held by us apportioned to each of the above-noted items.
Brookfield Renewable does not control those entities that have not been consolidated and as such, have been presented as equity-accounted investments in its financial statements. The presentation of the assets and liabilities and revenues and expenses does not represent Brookfield Renewable’s legal claim to such items, and the removal of financial statement amounts that are attributable to non-controlling interests does not extinguish Brookfield Renewable’s legal claims or exposures to such items.
Brookfield Renewable reports its results in accordance with these segments and presents prior period segmented information in a consistent manner.
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. Except as it relates to proportionate financial information discussed above, the accounting policies of the reportable segments are the same as those described in Note 1 – Basis of preparation and significant accounting policies. Brookfield Renewable analyzes the performance of its operating segments based on revenues, Adjusted EBITDA, and Funds From Operations.
Brookfield Renewable uses Adjusted EBITDA to assess the performance of its operations before the effects of interest expense, income taxes, depreciation, management service costs, non-controlling interests, unrealized gain or loss on financial instruments, non-cash gain or loss from equity-accounted investments, distributions to preferred shareholders and preferred limited partners and other typical non-recurring items.
Brookfield Renewable uses Funds From Operations to assess the performance of its operations and is defined as Adjusted EBITDA less management service costs, interest and current income taxes, which is then adjusted for the cash portion of non-controlling interests and distributions to preferred shareholders and preferred limited partners.
F - 52
The following table provides each segment’s results in the format that management organizes its segments to make operating decisions and assess performance and reconciles Brookfield Renewable’s proportionate results to the consolidated statements of income on a line by line basis by aggregating the components comprising the earnings from Brookfield Renewable’s investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution |
|
|
|
|
|
|
|
Attributable to Unitholders |
from |
Attributable |
|
|
||||||||||||||||||||||||
|
|
Hydroelectric |
|
Wind |
Solar |
Storage |
Corporate |
|
Total |
equity |
to non- |
As per |
||||||||||||||||||
|
|
North |
|
|
|
|
|
North |
|
|
|
|
|
|
|
and |
|
|
|
accounted |
controlling |
IFRS |
||||||||
|
($ MILLIONS) |
America |
Brazil |
Colombia |
|
America |
Europe |
Brazil |
Asia |
|
Other |
|
|
|
investments |
interests |
financials (1) |
|||||||||||||
|
Revenues |
|
893 |
|
244 |
|
216 |
|
|
219 |
|
73 |
|
42 |
|
12 |
|
146 |
|
85 |
|
- |
|
1,930 |
|
(286) |
|
1,338 |
|
2,982 |
|
Other income |
|
12 |
|
5 |
|
4 |
|
|
2 |
|
11 |
|
- |
|
- |
|
5 |
|
- |
|
7 |
|
46 |
|
(7) |
|
11 |
|
50 |
|
Direct operating costs |
|
(286) |
|
(76) |
|
(94) |
|
|
(64) |
|
(27) |
|
(9) |
|
(4) |
|
(34) |
|
(36) |
|
(23) |
|
(653) |
|
86 |
|
(469) |
|
(1,036) |
|
Share of Adjusted EBITDA from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity accounted investments |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
207 |
|
20 |
|
227 |
|
Adjusted EBITDA |
|
619 |
|
173 |
|
126 |
|
|
157 |
|
57 |
|
33 |
|
8 |
|
117 |
|
49 |
|
(16) |
|
1,323 |
|
- |
|
900 |
|
- |
|
Management service costs |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(80) |
|
(80) |
|
- |
|
- |
|
(80) |
|
Interest expense - borrowings |
|
(172) |
|
(22) |
|
(38) |
|
|
(63) |
|
(17) |
|
(9) |
|
(4) |
|
(45) |
|
(17) |
|
(99) |
|
(486) |
|
82 |
|
(301) |
|
(705) |
|
Current income taxes |
|
(4) |
|
(9) |
|
(2) |
|
|
(1) |
|
(2) |
|
- |
|
1 |
|
- |
|
- |
|
- |
|
(17) |
|
3 |
|
(16) |
|
(30) |
|
Distributions attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred limited partners equity |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(38) |
|
(38) |
|
- |
|
- |
|
(38) |
|
Preferred equity |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(26) |
|
(26) |
|
- |
|
- |
|
(26) |
|
Share of interest and cash taxes from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity accounted investments |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(85) |
|
(12) |
|
(97) |
|
Share of Funds From Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to non-controlling interests |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(571) |
|
(571) |
|
Funds From Operations |
|
443 |
|
142 |
|
86 |
|
|
93 |
|
38 |
|
24 |
|
5 |
|
72 |
|
32 |
|
(259) |
|
676 |
|
- |
|
- |
|
- |
|
Depreciation |
|
(231) |
|
(136) |
|
(18) |
|
|
(122) |
|
(43) |
|
(13) |
|
(2) |
|
(40) |
|
(23) |
|
(2) |
|
(630) |
|
96 |
|
(285) |
|
(819) |
|
Foreign exchange and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
unrealized financial instrument loss |
|
(1) |
|
(1) |
|
7 |
|
|
2 |
|
9 |
|
(10) |
|
3 |
|
(9) |
|
(2) |
|
- |
|
(2) |
|
(3) |
|
(29) |
|
(34) |
|
Deferred income tax recovery |
|
(1) |
|
1 |
|
18 |
|
|
20 |
|
2 |
|
- |
|
- |
|
21 |
|
- |
|
24 |
|
85 |
|
(50) |
|
54 |
|
89 |
|
Other |
|
(21) |
|
(3) |
|
(6) |
|
|
(11) |
|
(1) |
|
- |
|
(2) |
|
(11) |
|
(9) |
|
(23) |
|
(87) |
|
19 |
|
(14) |
|
(82) |
|
Share of earnings from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity accounted investments |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(62) |
|
- |
|
(62) |
|
Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling interests |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
274 |
|
274 |
|
Net income (loss) attributable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to Unitholders (2) |
|
189 |
|
3 |
|
87 |
|
|
(18) |
|
5 |
|
1 |
|
4 |
|
33 |
|
(2) |
|
(260) |
|
42 |
|
- |
|
- |
|
42 |
(1) Share of earnings from equity-accounted investments of $68 million is comprised of amounts found on the share of Adjusted EBITDA, share of interest and cash taxes and share of earnings lines. Net income attributable to participating non-controlling interests – in operating subsidiaries of $ 297 million is comprised of amounts found on Share of Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests.
(2) Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP Units. Total net income (loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity.
F - 53
The following table provides each segment’s results in the format that management organizes its segments to make operating decisions and assess performance and reconciles Brookfield Renewable’s proportionate results to the consolidated statements of income on a line by line basis by aggregating the components comprising the earnings from Brookfield Renewable’s investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution |
|
|
|
|
|
|
|
Attributable to Unitholders |
from |
Attributable |
|
|
||||||||||||||||||||||
|
|
Hydroelectric |
|
Wind |
Solar |
Storage |
Corporate |
|
Total |
equity |
to non- |
As per |
||||||||||||||||
|
|
North |
|
|
|
|
|
North |
|
|
|
|
|
and |
|
|
|
accounted |
controlling |
IFRS |
||||||||
|
($ MILLIONS) |
America |
Brazil |
Colombia |
|
America |
Europe |
Brazil |
|
Other |
|
|
|
investments |
interests |
financials (1) |
||||||||||||
|
Revenues |
|
945 |
|
243 |
|
191 |
|
|
161 |
|
46 |
|
26 |
|
8 |
|
59 |
|
- |
|
1,679 |
|
(74) |
|
1,020 |
|
2,625 |
|
Other income |
|
1 |
|
12 |
|
2 |
|
|
- |
|
- |
|
- |
|
- |
|
6 |
|
19 |
|
40 |
|
(11) |
|
18 |
|
47 |
|
Direct operating costs |
|
(281) |
|
(77) |
|
(94) |
|
|
(42) |
|
(20) |
|
(4) |
|
(2) |
|
(32) |
|
(25) |
|
(577) |
|
28 |
|
(429) |
|
(978) |
|
Share of Adjusted EBITDA from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity accounted investments |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
|
- |
|
57 |
|
- |
|
57 |
|
Adjusted EBITDA |
|
665 |
|
178 |
|
99 |
|
|
119 |
|
26 |
|
22 |
|
6 |
|
33 |
|
(6) |
|
1,142 |
|
- |
|
609 |
|
- |
|
Management service costs |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
(82) |
|
(82) |
|
- |
|
- |
|
(82) |
|
Interest expense - borrowings |
|
(180) |
|
(18) |
|
(42) |
|
|
(45) |
|
(10) |
|
(6) |
|
(3) |
|
(14) |
|
(89) |
|
(407) |
|
21 |
|
(246) |
|
(632) |
|
Current income taxes |
|
1 |
|
(12) |
|
(5) |
|
|
- |
|
(1) |
|
- |
|
(1) |
|
- |
|
- |
|
(18) |
|
1 |
|
(22) |
|
(39) |
|
Distributions attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred limited partners equity |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
(28) |
|
(28) |
|
- |
|
- |
|
(28) |
|
Preferred equity |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
(26) |
|
(26) |
|
- |
|
- |
|
(26) |
|
Share of interest and cash taxes from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity accounted investments |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
|
- |
|
(22) |
|
- |
|
(22) |
|
Share of Funds From Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to non-controlling interests |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
|
|
- |
|
- |
|
- |
|
- |
|
(341) |
|
(341) |
|
Funds From Operations |
|
486 |
|
148 |
|
52 |
|
|
74 |
|
15 |
|
16 |
|
2 |
|
19 |
|
(231) |
|
581 |
|
- |
|
- |
|
- |
|
Depreciation |
|
(220) |
|
(142) |
|
(26) |
|
|
(90) |
|
(25) |
|
(7) |
|
(4) |
|
(25) |
|
- |
|
(539) |
|
22 |
|
(265) |
|
(782) |
|
Foreign exchange and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
unrealized financial instrument loss |
|
(12) |
|
(3) |
|
(3) |
|
|
1 |
|
(14) |
|
- |
|
(1) |
|
- |
|
(15) |
|
(47) |
|
2 |
|
(1) |
|
(46) |
|
Deferred income tax expense |
|
(67) |
|
2 |
|
(10) |
|
|
28 |
|
5 |
|
- |
|
1 |
|
- |
|
16 |
|
(25) |
|
(3) |
|
(21) |
|
(49) |
|
Other |
|
(17) |
|
(8) |
|
6 |
|
|
(4) |
|
4 |
|
2 |
|
(3) |
|
- |
|
(6) |
|
(26) |
|
12 |
|
(1) |
|
(15) |
|
Share of earnings from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity accounted investments |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(33) |
|
- |
|
(33) |
|
Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling interests |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
288 |
|
288 |
|
Net income (loss) attributable to Unitholders (2) |
|
170 |
|
(3) |
|
19 |
|
|
9 |
|
(15) |
|
11 |
|
(5) |
|
(6) |
|
(236) |
|
(56) |
|
- |
|
- |
|
(56) |
(1) Share of earnings from equity-accounted investments of $2 million is comprised of amounts found on the share of Adjusted EBITDA, share of interest and cash taxes and share of earnings lines. Net income attributable to participating non-controlling interests – in operating subsidiaries of $ 53 million is comprised of amounts found on Share of Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests.
(2) Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP Units. Total net income (loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity.
F - 54
The following table provides each segment’s results in the format that management organizes its segments to make operating decisions and assess performance and reconciles Brookfield Renewable’s proportionate results to our consolidated statements of income on a line by line basis by aggregating the components comprising the earnings from Brookfield Renewable’s investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution |
|
|
|
|
|
|
|
Attributable to Unitholders |
from |
Attributable |
|
|
||||||||||||||||||||
|
|
Hydroelectric |
|
Wind |
Storage |
Corporate |
|
Total |
equity |
to non- |
As per |
|||||||||||||||
|
|
North |
|
|
|
|
|
North |
|
|
|
|
and |
|
|
|
accounted |
controlling |
IFRS |
|||||||
|
($ MILLIONS) |
America |
Brazil |
Colombia |
|
America |
Europe |
Brazil |
Other |
|
|
|
investments |
interests |
financials (1) |
|||||||||||
|
Revenues |
|
819 |
|
187 |
|
192 |
|
|
151 |
|
56 |
|
17 |
|
58 |
|
1 |
|
1,481 |
|
(37) |
|
1,008 |
|
2,452 |
|
Other income |
|
24 |
|
13 |
|
3 |
|
|
- |
|
- |
|
- |
|
(1) |
|
8 |
|
47 |
|
- |
|
17 |
|
64 |
|
Direct operating costs |
|
(295) |
|
(70) |
|
(107) |
|
|
(36) |
|
(24) |
|
(4) |
|
(26) |
|
(24) |
|
(586) |
|
16 |
|
(468) |
|
(1,038) |
|
Share of Adjusted EBITDA from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity accounted investments |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
21 |
|
- |
|
21 |
|
Adjusted EBITDA |
|
548 |
|
130 |
|
88 |
|
|
115 |
|
32 |
|
13 |
|
31 |
|
(15) |
|
942 |
|
- |
|
557 |
|
- |
|
Management service costs |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
(62) |
|
(62) |
|
- |
|
- |
|
(62) |
|
Interest expense - borrowings |
|
(177) |
|
(24) |
|
(36) |
|
|
(41) |
|
(14) |
|
(7) |
|
(12) |
|
(91) |
|
(402) |
|
12 |
|
(216) |
|
(606) |
|
Current income taxes |
|
(4) |
|
(9) |
|
(6) |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
(19) |
|
- |
|
(25) |
|
(44) |
|
Distributions attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred limited partners equity |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
(15) |
|
(15) |
|
- |
|
- |
|
(15) |
|
Preferred equity |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
(25) |
|
(25) |
|
- |
|
- |
|
(25) |
|
Share of interest and cash taxes from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity accounted investments |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(12) |
|
- |
|
(12) |
|
Share of Funds From Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
attributable to non-controlling interests |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(316) |
|
(316) |
|
Funds From Operations |
|
367 |
|
97 |
|
46 |
|
|
74 |
|
18 |
|
6 |
|
19 |
|
(208) |
|
419 |
|
- |
|
- |
|
- |
|
Depreciation |
|
(244) |
|
(125) |
|
(31) |
|
|
(80) |
|
(38) |
|
(4) |
|
(18) |
|
- |
|
(540) |
|
11 |
|
(252) |
|
(781) |
|
Foreign exchange and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
unrealized financial instrument loss |
|
1 |
|
- |
|
1 |
|
|
- |
|
- |
|
- |
|
2 |
|
- |
|
4 |
|
- |
|
- |
|
4 |
|
Deferred income tax expense (recovery) |
|
31 |
|
7 |
|
6 |
|
|
49 |
|
6 |
|
- |
|
- |
|
(21) |
|
78 |
|
- |
|
19 |
|
97 |
|
Other |
|
(27) |
|
(5) |
|
3 |
|
|
4 |
|
6 |
|
(1) |
|
(2) |
|
(4) |
|
(26) |
|
(2) |
|
(18) |
|
(46) |
|
Share of earnings from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity accounted investments |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(9) |
|
- |
|
(9) |
|
Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
non-controlling interests |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
251 |
|
251 |
|
Net income (loss) attributable to Unitholders (2) |
|
128 |
|
(26) |
|
25 |
|
|
47 |
|
(8) |
|
1 |
|
1 |
|
(233) |
|
(65) |
|
- |
|
- |
|
(65) |
(1) Share of earnings from equity-accounted investments of $nil is comprised of amounts found on the share of Adjusted EBITDA, share of interest and cash taxes and share of earnings lines. Net income attributable to participating non-controlling interests – in operating subsidiaries of $ 65 million is comprised of amounts found on Share of Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests.
(2) Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP Units. Total net income (loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity.
F - 56
The following table presents information on a segmented basis about certain items in Brookfield Renewable’s statement of financial position:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution |
|
|
|
|
|
|
|
Attributable to Unitholders |
from |
Attributable |
|
|||||||||||||||||||||||||
|
|
Hydroelectric |
|
Wind |
Solar |
Storage |
Corporate |
Total |
equity |
to non- |
As per |
|||||||||||||||||||
|
|
North |
|
|
|
|
North |
|
|
|
|
|
|
and |
|
|
|
|
accounted |
controlling |
|
IFRS |
||||||||
|
(MILLIONS) |
America |
Colombia |
Brazil |
|
America |
Europe |
Brazil |
Asia |
|
|
Other |
|
|
|
|
investments |
interests |
financials |
|||||||||||
|
As at December 31, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
6 |
$ |
7 |
$ |
37 |
|
$ |
30 |
$ |
29 |
$ |
5 |
$ |
2 |
$ |
41 |
$ |
9 |
$ |
3 |
$ |
169 |
$ |
(81) |
$ |
85 |
$ |
173 |
|
Property, plant and equipment, at fair value |
|
11,498 |
|
1,609 |
|
1,907 |
|
|
2,480 |
|
819 |
|
348 |
|
36 |
|
1,354 |
|
686 |
|
(9) |
|
20,728 |
|
(3,529) |
|
11,826 |
|
29,025 |
|
Total assets |
|
12,125 |
|
1,868 |
|
2,105 |
|
|
2,554 |
|
939 |
|
379 |
|
56 |
|
1,650 |
|
746 |
|
161 |
|
22,583 |
|
(2,483) |
|
14,003 |
|
34,103 |
|
Total borrowings |
|
2,995 |
|
419 |
|
198 |
|
|
1,204 |
|
463 |
|
75 |
|
31 |
|
1,021 |
|
249 |
|
2,334 |
|
8,989 |
|
(1,972) |
|
3,701 |
|
10,718 |
|
Other liabilities |
|
2,764 |
|
434 |
|
150 |
|
|
536 |
|
124 |
|
7 |
|
3 |
|
255 |
|
31 |
|
211 |
|
4,515 |
|
(511) |
|
2,175 |
|
6,179 |
|
For the year ended December 31, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
96 |
|
7 |
|
30 |
|
|
11 |
|
10 |
|
- |
|
- |
|
9 |
|
3 |
|
6 |
|
172 |
|
(16) |
|
145 |
|
301 |
|
As at December 31, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
21 |
$ |
14 |
$ |
40 |
|
$ |
18 |
$ |
19 |
$ |
7 |
$ |
103 |
$ |
90 |
$ |
11 |
$ |
7 |
|
330 |
$ |
(30) |
$ |
499 |
$ |
799 |
|
Property, plant and equipment, at fair value |
|
11,396 |
|
1,303 |
|
1,908 |
|
|
1,798 |
|
482 |
|
304 |
|
11 |
|
602 |
|
625 |
|
- |
|
18,429 |
|
(1,451) |
|
10,118 |
|
27,096 |
|
Total assets |
|
11,709 |
|
1,574 |
|
2,149 |
|
|
1,888 |
|
532 |
|
443 |
|
31 |
|
765 |
|
691 |
|
180 |
|
19,962 |
|
(1,040) |
|
11,982 |
|
30,904 |
|
Total borrowings |
|
3,049 |
|
447 |
|
200 |
|
|
1,005 |
|
233 |
|
192 |
|
9 |
|
499 |
|
253 |
|
2,552 |
|
8,439 |
|
(848) |
|
4,175 |
|
11,766 |
|
Other liabilities |
|
2,188 |
|
354 |
|
180 |
|
|
333 |
|
101 |
|
16 |
|
9 |
|
74 |
|
51 |
|
234 |
|
3,540 |
|
(191) |
|
1,507 |
|
4,856 |
|
For the year ended December 31, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
90 |
|
8 |
|
59 |
|
|
6 |
|
34 |
|
- |
|
- |
|
- |
|
13 |
|
10 |
|
220 |
|
(10) |
|
144 |
|
354 |
F - 57
Geographical Information
The following table presents consolidated revenue split by geographical region for the year ended December 31:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
United States |
$ |
926 |
$ |
871 |
$ |
786 |
|
Colombia |
|
896 |
|
797 |
|
819 |
|
Canada |
|
428 |
|
480 |
|
442 |
|
Brazil |
|
429 |
|
366 |
|
269 |
|
Europe |
|
126 |
|
111 |
|
136 |
|
Asia |
|
177 |
|
- |
|
- |
|
|
$ |
2,982 |
$ |
2,625 |
$ |
2,452 |
|
|
|
|
|
|
|
|
The following table presents consolidated property, plant and equipment and equity-accounted investments split by geographical region:
|
|
|
Dec 31 |
|
Dec 31 |
|
(MILLIONS) |
|
2018 |
|
2017 |
|
United States |
$ |
12,705 |
$ |
11,131 |
|
Colombia |
|
6,665 |
|
5,401 |
|
Canada |
|
5,705 |
|
5,810 |
|
Brazil |
|
3,553 |
|
3,479 |
|
Europe |
|
1,624 |
|
1,332 |
|
Asia |
|
342 |
|
664 |
|
|
$ |
30,594 |
$ |
27,817 |
Brookfield Renewable’s other income for the year ended December 31 is comprised of the following :
|
(MILLIONS) |
Notes |
|
2018 |
|
2017 |
|
2016 |
|
Interest income and other |
|
$ |
22 |
$ |
32 |
$ |
41 |
|
Gain on available for sale investments |
|
|
- |
|
15 |
|
- |
|
Gains on settlement of foreign currency contracts |
|
|
28 |
|
- |
|
23 |
|
|
|
$ |
50 |
$ |
47 |
$ |
64 |
Brookfield Renewable’s direct operating costs for the year ended December 31 are comprised of the following:
|
(MILLIONS) |
Notes |
|
2018 |
|
2017 |
|
2016 |
|
Operations, maintenance and administration |
|
$ |
581 |
$ |
567 |
$ |
553 |
|
Water royalties, property taxes and other |
|
|
142 |
|
161 |
|
149 |
|
Fuel and power purchases (1) |
|
|
289 |
|
226 |
|
313 |
|
Energy marketing fees |
27 |
|
24 |
|
24 |
|
23 |
|
|
|
$ |
1,036 |
$ |
978 |
$ |
1,038 |
(1) Fuel and power purchases are primarily attributable to our portfolio in Colombia.
F - 58
9. OTHER
Brookfield Renewable’s other for the year ended December 31 is comprised of the following :
|
(MILLIONS) |
|
|
2018 |
|
2017 |
|
2016 |
|
Transaction costs |
|
$ |
2 |
$ |
9 |
$ |
22 |
|
Change in fair value of property, plant and equipment |
|
|
44 |
|
33 |
|
36 |
|
Other |
|
|
36 |
|
(27) |
|
(12) |
|
|
|
$ |
82 |
$ |
15 |
$ |
46 |
10. FOREIGN CURRENCY TRANSLATION
Brookfield Renewable’s foreign currency translation for the year ended December 31 shown in the consolidated statements of comprehensive income is comprised of the following :
|
(MILLIONS) |
Notes |
|
2018 |
|
2017 |
|
2016 |
|
Foreign currency translation on |
|
|
|
|
|
|
|
|
Property, plant and equipment, at fair value |
12 |
$ |
(1,512) |
$ |
506 |
$ |
1,186 |
|
Borrowings |
13 |
|
537 |
|
(282) |
|
(244) |
|
Deferred income tax liabilities and assets |
11 |
|
184 |
|
(82) |
|
(157) |
|
Other assets and liabilities |
|
|
(34) |
|
48 |
|
201 |
|
|
|
$ |
(825) |
$ |
190 |
$ |
986 |
The major components of income tax recovery (expense) for the year ended December 31 are as follows:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
Income tax recovery (expense) applicable to: |
|
|
|
|
|
|
|
Current taxes |
|
|
|
|
|
|
|
Attributed to the current period |
$ |
(30) |
$ |
(39) |
$ |
(44) |
|
Deferred taxes |
|
|
|
|
|
|
|
Income taxes - origination and reversal of temporary differences |
$ |
2 |
$ |
8 |
$ |
71 |
|
Relating to change in tax rates / imposition of new tax laws |
|
95 |
|
(42) |
|
35 |
|
Relating to unrecognized temporary differences and tax losses |
|
(8) |
|
(15) |
|
(9) |
|
|
$ |
89 |
$ |
(49) |
$ |
97 |
|
Total income tax recovery (expense) |
$ |
59 |
$ |
(88) |
$ |
53 |
The major components of deferred income tax recovery (expense) for the year ended December 31 recorded directly to OCI are as follows:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
Deferred income taxes attributed to: |
|
|
|
|
|
|
|
Financial instruments designated as cash flow hedges |
$ |
(2) |
$ |
(4) |
$ |
2 |
|
Other |
|
(20) |
|
15 |
|
(7) |
|
Revaluation surplus |
|
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
(1,117) |
|
(248) |
|
(55) |
|
Relating to changes in tax rates / imposition of new tax laws |
|
54 |
|
586 |
|
19 |
|
|
$ |
(1,085) |
$ |
349 |
$ |
(41) |
F - 59
Brookfield Renewable’s effective income tax (expense) recovery for the year ended December 31 is different from its recovery at its statutory income tax rate due to the differences below:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
Statutory income tax (expense) recovery (1) |
$ |
(100) |
$ |
(50) |
$ |
5 |
|
Reduction (increase) resulting from: |
|
|
|
|
|
|
|
Increase in tax assets not recognized |
|
(8) |
|
(15) |
|
(9) |
|
Differences between statutory rate and future tax rate |
|
95 |
|
(37) |
|
43 |
|
Subsidiaries' income taxed at different rates |
|
75 |
|
14 |
|
14 |
|
Other |
|
(3) |
|
- |
|
- |
|
Effective income tax recovery (expense) |
$ |
59 |
$ |
(88) |
$ |
53 |
(1) Statutory income tax expense is calculated at the domestic rates applicable to the profits in the country concerned.
The above reconciliation has been prepared by aggregating the information for all of Brookfield Renewable’s subsidiaries using the domestic rate in each tax jurisdiction.
Brookfield Renewable’s effective income tax rate was (17.15) % for the year ended December 31, 2018 (2017: 63.31 % and 2016: 384.03%). The effective tax rate is less than the statutory rate primarily due to rate differentials, legislative changes in tax rates during the year, and non-controlling interests’ income not subject to tax.
The following table details the expiry date, if applicable, of the unrecognized deferred tax assets as at December 31:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
2019 to 2023 |
$ |
3 |
$ |
8 |
$ |
- |
|
2024 and thereafter |
|
85 |
|
108 |
|
98 |
|
|
$ |
88 |
$ |
116 |
$ |
98 |
The deferred tax assets and liabilities of the following temporary differences have been recognized in the consolidated financial statements for the year ended December 31:
|
|
|
Difference |
Net deferred |
|||
|
|
Non-capital |
between tax and |
tax (liabilities) |
|||
|
(MILLIONS) |
losses |
carrying value |
assets |
|||
|
As at January 1, 2016 |
$ |
458 |
$ |
(2,996) |
$ |
(2,538) |
|
Recognized in Net income (loss) |
|
24 |
|
73 |
|
97 |
|
Recognized in equity |
|
17 |
|
(48) |
|
(31) |
|
Business combination |
|
- |
|
(1,020) |
|
(1,020) |
|
Foreign exchange |
|
- |
|
(160) |
|
(160) |
|
As at December 31, 2016 |
|
499 |
|
(4,151) |
|
(3,652) |
|
Recognized in Net income (loss) |
|
(97) |
|
48 |
|
(49) |
|
Recognized in equity |
|
13 |
|
341 |
|
354 |
|
Business combination |
|
79 |
|
(63) |
|
16 |
|
Foreign exchange |
|
14 |
|
(94) |
|
(80) |
|
As at December 31, 2017 |
|
508 |
|
(3,919) |
|
(3,411) |
|
Recognized in Net income (loss) |
|
(60) |
|
149 |
|
89 |
|
Recognized in equity |
|
1 |
|
(985) |
|
(984) |
|
Business combination |
|
- |
|
73 |
|
73 |
|
Foreign exchange |
|
(20) |
|
204 |
|
184 |
|
As at December 31, 2018 |
$ |
429 |
$ |
(4,478) |
$ |
(4,049) |
F - 60
The deferred income tax liabilities include $ 3,685 million (2017: $ 2,561 million and 2016: $2,948 million) of liabilities which relate to property, plant and equipment revaluations included in equity.
The taxable temporary difference attributable to Brookfield Renewable’s interest in its subsidiaries, branches, associates, and joint ventures is $ 3,398 million (2017: $ 1,549 million and 2016: $1,380 million). No deferred income tax liability has been recognized in the financial statements in respect of this taxable temporary difference.
F - 61
12. PROPERTY, PLANT AND EQUIPMENT, AT FAIR VALUE
The following table presents a reconciliation of property, plant and equipment at fair value:
|
(MILLIONS) |
Notes |
Hydro |
Wind |
Solar |
Other (1) |
Total (2) |
|||||
|
As at December 31, 2015 |
|
$ |
14,847 |
$ |
3,233 |
|
- |
$ |
278 |
$ |
18,358 |
|
Additions |
|
|
269 |
|
71 |
|
- |
|
18 |
|
358 |
|
Acquisitions through business combinations |
3 |
|
5,731 |
|
10 |
|
- |
|
- |
|
5,741 |
|
Items recognized through OCI |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value |
|
|
190 |
|
187 |
|
- |
|
54 |
|
431 |
|
Foreign exchange |
|
|
1,114 |
|
21 |
|
- |
|
51 |
|
1,186 |
|
Items recognized through net income |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value |
|
|
(17) |
|
(10) |
|
- |
|
(9) |
|
(36) |
|
Depreciation |
|
|
(565) |
|
(199) |
|
- |
|
(17) |
|
(781) |
|
As at December 31, 2016 |
|
$ |
21,569 |
$ |
3,313 |
|
- |
$ |
375 |
$ |
25,257 |
|
Additions |
|
|
253 |
|
95 |
|
- |
|
6 |
|
354 |
|
Acquisitions through business combinations |
3 |
|
- |
|
670 |
|
575 |
|
- |
|
1,245 |
|
Disposal |
|
|
- |
|
(338) |
|
- |
|
- |
|
(338) |
|
Items recognized through OCI |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value |
|
|
828 |
|
91 |
|
- |
|
(32) |
|
887 |
|
Foreign exchange |
|
|
332 |
|
177 |
|
- |
|
(3) |
|
506 |
|
Items recognized through net income |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value |
|
|
(20) |
|
(8) |
|
- |
|
(5) |
|
(33) |
|
Depreciation |
|
|
(563) |
|
(197) |
|
- |
|
(22) |
|
(782) |
|
As at December 31, 2017 |
|
$ |
22,399 |
$ |
3,803 |
$ |
575 |
$ |
319 |
$ |
27,096 |
|
Additions |
|
|
212 |
|
36 |
|
47 |
|
6 |
|
301 |
|
Acquisitions through business combinations |
3 |
|
- |
|
125 |
|
86 |
|
- |
|
211 |
|
Transfer to assets held for sale |
4 |
|
- |
|
(58) |
|
(691) |
|
- |
|
(749) |
|
Items recognized through OCI |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value |
|
|
3,775 |
|
466 |
|
313 |
|
4 |
|
4,558 |
|
Foreign exchange |
|
|
(1,138) |
|
(256) |
|
(77) |
|
(41) |
|
(1,512) |
|
Items recognized through net income |
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value |
|
|
(33) |
|
(20) |
|
- |
|
(8) |
|
(61) |
|
Depreciation |
|
|
(536) |
|
(236) |
|
(25) |
|
(22) |
|
(819) |
|
As at December 31, 2018 |
|
$ |
24,679 |
$ |
3,860 |
$ |
228 |
$ |
258 |
$ |
29,025 |
(1) Includes biomass and cogeneration.
(2) Includes intangible assets of $ 11 million (2017: $ 13 million and 2016: $14 million) and assets under construction of $ 388 million (2017: $ 601 million and 2016: $663 million).
The fair value of Brookfield Renewable’s property, plant and equipment is calculated as described in Notes 1(h) – Property, plant and equipment and revaluation method and 1(q)(i) – Critical estimates – property, plant and equipment. Judgment is involved in determining the appropriate estimates and assumptions in the valuation of Brookfield Renewable’s property, plant and equipment. See Note 1(r)(iii) - Critical judgments in applying accounting policies – Property, plant and equipment. Brookfield Renewable has classified its property, plant and equipment under level 3 of the fair value hierarchy.
F - 62
Discount rates, terminal capitalization rates and exit dates used in the valuation methodology are provided in the following table
(1) Discount rates are not adjusted for asset specific risks.
(2) The terminal capitalization rate applies only to hydroelectric assets in the United States, Canada and Colombia.
The following table summarizes the impact of a change in discount rates, electricity prices and terminal capitalization rates on the fair value of property, plant and equipment:
|
|
2018 |
|||||||||
|
|
North |
|
|
|
|
|||||
|
(MILLIONS) |
America |
Colombia |
Brazil |
Europe |
Total |
|||||
|
25 bps increase in discount rates |
$ |
(770) |
$ |
(180) |
$ |
(80) |
$ |
(20) |
$ |
(1,050) |
|
25 bps decrease in discount rates |
|
840 |
|
190 |
|
80 |
|
20 |
|
1,130 |
|
5% increase in future energy prices |
|
800 |
|
440 |
|
100 |
|
20 |
|
1,360 |
|
5% decrease in future energy prices |
|
(800) |
|
(440) |
|
(100) |
|
(20) |
|
(1,360) |
|
25 bps increase in terminal capitalization rate (1) |
|
(210) |
|
(30) |
|
- |
|
- |
|
(240) |
|
25 bps decrease in terminal capitalization rate (1) |
|
230 |
|
30 |
|
- |
|
- |
|
260 |
|
|
2017 |
|||||||||
|
|
North |
|
|
|
|
|||||
|
(MILLIONS) |
America |
Colombia |
Brazil |
Europe |
Total |
|||||
|
25 bps increase in discount rates |
$ |
(710) |
$ |
(130) |
$ |
(50) |
$ |
(20) |
$ |
(910) |
|
25 bps decrease in discount rates |
|
770 |
|
130 |
|
50 |
|
20 |
|
970 |
|
5% increase in future energy prices |
|
620 |
|
370 |
|
70 |
|
20 |
|
1,080 |
|
5% decrease in future energy prices |
|
(620) |
|
(370) |
|
(70) |
|
(20) |
|
(1,080) |
|
25 bps increase in terminal capitalization rate (1) |
|
(180) |
|
(20) |
|
- |
|
- |
|
(200) |
|
25 bps decrease in terminal capitalization rate (1) |
|
190 |
|
20 |
|
- |
|
- |
|
210 |
(1) The terminal capitalization rate applies only to hydroelectric assets in the United States, Canada and Colombia.
Terminal values are included in the valuation of hydroelectric assets in the United States, Canada and Colombia. For the hydroelectric assets in Brazil, cash flows have been included based on the duration of the authorization or useful life of a concession asset plus a one-time 30-year renewal term for the majority of our hydroelectric assets. In November 2016, the Brazilian federal government published a new law which allowed a one-time extension of authorization licenses of hydroelectric facilities with installed capacities in the range of 5 MW to 50 MW. Only after the Brazilian federal government clarified the technical and cost requirements associated with the authorization extension in June of 2018 did Brookfield Renewable include the one-time 30-year extension in the valuation of the relevant hydroelectric assets in Brazil. The weighted-average remaining duration of the authorization or useful life of a concession asset at December 31, 2018 , including a one-time 30-year renewal for applicable hydroelectric assets , is 29 years (2017: 15 years). Consequently, there is no terminal value attributed to the hydroelectric assets in Brazil at the end of the authorization term .
F - 63
The following table summarizes the percentage of total generation contracted under power purchase agreements as at December 31, 2018:
|
|
North America |
Colombia |
Brazil |
Europe |
|
1 - 10 years |
57% |
22% |
69% |
72% |
|
11 - 20 years |
34% |
0% |
35% |
25% |
The following table summarizes power prices from long-term power purchase agreements that are linked specifically to the related power generating assets:
|
Per MWh (1) |
North America |
Colombia |
Brazil |
Europe |
||||
|
1 - 10 years |
$ |
83 |
COP |
201,000 |
R$ |
286 |
€ |
93 |
|
11 - 20 years |
|
80 |
|
- |
|
397 |
|
111 |
(1) Assumes nominal prices based on weighted-average generation.
The following table summarizes the estimates of future electricity prices:
|
Per MWh (1) |
North America |
Colombia |
Brazil |
Europe |
||||
|
1 - 10 years |
$ |
68 |
COP |
252,000 |
R$ |
287 |
€ |
79 |
|
11 - 20 years |
|
116 |
|
354,000 |
|
452 |
|
92 |
(1) Assumes nominal prices based on weighted-average generation.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from renewable sources to meet future demand growth between 2022 and 2025. A further one year change would increase or decrease the fair value of property, plant and equipment by approximately $ 150 million (2017: $ 160 million).
Had Brookfield Renewable’s revalued property, plant and equipment been measured on a historical cost basis, the carrying amounts, net of accumulated depreciation would have been as follows at December 31:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
Hydroelectric |
$ |
11,888 |
$ |
12,740 |
|
Wind |
|
2,753 |
|
3,030 |
|
Solar |
|
260 |
|
621 |
|
Other (1) |
|
246 |
|
312 |
|
|
$ |
15,147 |
$ |
16,703 |
(1) Includes biomass and cogeneration.
F - 64
13 . BORROWINGS
Corporate Borrowings
The composition of corporate borrowings as at December 31 is presented in the following table:
|
|
2018 |
2017 |
||||||||||
|
|
Weighted-average |
|
|
Estimated |
Weighted-average |
|
|
Estimated |
||||
|
|
Interest |
Term |
Carrying |
fair |
Interest |
Term |
Carrying |
fair |
||||
|
(MILLIONS EXCEPT AS NOTED) |
rate (%) |
(years) |
value |
value |
rate (%) |
(years) |
value |
value |
||||
|
Credit facilities |
3.3 |
4.4 |
$ |
727 |
$ |
727 |
2.6 |
4.5 |
$ |
887 |
$ |
887 |
|
Medium Term Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Series 3 (C$200) |
- |
- |
$ |
- |
$ |
- |
5.3 |
0.8 |
$ |
159 |
$ |
163 |
|
Series 4 (C$150) |
5.8 |
17.9 |
|
110 |
|
124 |
5.8 |
18.9 |
|
119 |
|
144 |
|
Series 7 (C$450) |
5.1 |
1.8 |
|
330 |
|
342 |
5.1 |
2.8 |
|
358 |
|
382 |
|
Series 8 (C$400) |
4.8 |
3.1 |
|
293 |
|
309 |
4.8 |
4.1 |
|
318 |
|
344 |
|
Series 9 (C$400) |
3.8 |
6.4 |
|
293 |
|
288 |
3.8 |
7.4 |
|
318 |
|
321 |
|
Series 10 (C$500) |
3.6 |
8.0 |
|
367 |
|
357 |
3.6 |
9.0 |
|
398 |
|
400 |
|
Series 11 (C$300) |
4.3 |
10.0 |
|
220 |
|
220 |
- |
- |
|
- |
|
- |
|
|
4.4 |
6.5 |
$ |
1,613 |
$ |
1,640 |
4.5 |
6.4 |
$ |
1,670 |
$ |
1,754 |
|
Total corporate borrowings |
|
|
|
2,340 |
|
2,367 |
|
|
|
2,557 |
|
2,641 |
|
Less: Unamortized financing fees (1) |
|
(6) |
|
|
|
|
|
(5) |
|
|
||
|
Less: Current portion |
|
(6) |
|
|
|
|
|
(159) |
|
|
||
|
|
|
|
$ |
2,328 |
|
|
|
|
$ |
2,393 |
|
|
(1) Unamortized premiums and unamortized financing fees are amortized over the terms of the borrowing.
The following table outlines the change in the unamortized financing fees of corporate borrowings for the year ended December 31:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
Corporate borrowings |
|
|
|
|
|
|
|
Unamortized financing fees, beginning of year |
$ |
5 |
$ |
6 |
$ |
5 |
|
Additional financing fees |
|
2 |
|
- |
|
2 |
|
Amortization of financing fees |
|
(1) |
|
(1) |
|
(1) |
|
Unamortized financing fees, end of year |
$ |
6 |
$ |
5 |
$ |
6 |
In June 2018, Brookfield Renewable extended the maturity of $ 1.7 billion of its corporate credit facilities by one year to June 30, 2023. The credit facilities are used for general working capital purposes and issuing letters of credit. The credit facilities bear interest at the applicable rate plus an applicable margin. The applicable margin is tiered on the basis of Brookfield Renewable’s unsecured senior long-term debt rating and is currently 1.20 %.
In May 2018, Brookfield Renewable entered into an agreement for a $ 300 million export credit agency guaranteed letter of credit facility. As at December 31, 2018, $ 201 million is utilized on the facility replacing the previous utilization on Brookfield Renewable’s revolving credit facility.
In December 2018, Brookfield Renewable extended the maturity of the $ 400 million committed unsecured credit facility provided by Brookfield Asset Management by one year to December 2019 . The interest rate is LIBOR plus up to 2 %. Brookfield Renewable repaid all outstanding draws and accrued interest from the
F - 65
$400 million unsecured revolving credit facility as of December 31, 2018. During the year, Brookfield Asset Management had also placed funds on deposit with Brookfield Renewable in the amount of $ 200 million, which have since been paid back in full including any interest that had been accrued. The interest expense on the deposit and draws from the credit facility for the year ended December 31, 2018 totaled $ 8 million (2017: $ 1 million). Subsequent to December 31, 2018, Brookfield Asset Management placed funds on deposit with Brookfield Renewable in the amount of $ 251 million.
Brookfield Renewable issues letters of credit from its corporate 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 corporate credit facilities as at December 31:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
Authorized corporate credit facilities (1) |
$ |
2,100 |
$ |
2,090 |
|
Draws on corporate credit facilities (1) |
|
(721) |
|
(685) |
|
Issued letters of credit |
|
(8) |
|
(193) |
|
Available portion of corporate credit facilities |
|
1,371 |
|
1,212 |
(1) Amounts are guaranteed by Brookfield Renewable. Excludes $ 6 million (2017: $ 202 million) borrowed under a subscription facility of a Brookfield sponsored private fund.
Corporate borrowings are obligations of a finance subsidiary of Brookfield Renewable, Brookfield Renewable Partners ULC (“Finco”) (Note 30 - Subsidiary Public Issuers). Finco 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 Finco are unconditionally guaranteed by Brookfield Renewable, Brookfield Renewable Energy L.P. (“BRELP”) and certain other subsidiaries.
On September 20, 2018, Brookfield Renewable completed the issuance of C$ 300 million ($ 231 million) Series 11 medium-term notes which carry a fixed interest rate of 4.25 % and mature in January 2029 . The financing was Brookfield Renewable’s inaugural corporate-level green bond.
In November 2018, Brookfield Renewable repaid C$ 200 million ($ 153 million) of medium-term notes upon maturity.
Non-recourse borrowings are typically asset-specific, long-term, non-recourse borrowings denominated in the domestic currency of the subsidiary. Non-recourse borrowings in North America and Europe consist of both fixed and floating interest rate debt indexed to the London Interbank Offered Rate (“LIBOR”) and the Canadian Dollar Offered Rate (“CDOR”). Brookfield Renewable uses interest rate swap agreements in North America and Europe to minimize its exposure to floating interest rates. Non-recourse 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. Non-recourse borrowings in Colombia include floating interest rates of Indicador Bancario de Referencia rate (“IBR”), the Banco Central de Colombia short-term interest rate, or Colombian Consumer Price Index (“IPC”), the Banco Central de Colombia inflation rate, plus a margin. Non-recourse borrowings in India consist of fixed interest rate U.S. dollar denominated debt.
F - 66
The composition of non-recourse borrowings as at December 31 is presented in the following table:
|
|
2018 |
2017 |
||||||||||
|
|
Weighted-average |
|
|
Estimated |
Weighted-average |
|
|
Estimated |
||||
|
|
Interest |
Term |
Carrying |
fair |
Interest |
Term |
Carrying |
fair |
||||
|
(MILLIONS EXCEPT AS NOTED) |
rate (%) |
(years) |
value |
value |
rate (%) |
(years) |
value |
value |
||||
|
Non-recourse borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
Hydroelectric |
6.1 |
9.2 |
$ |
6,318 |
$ |
6,517 |
6.3 |
8.8 |
$ |
6,392 |
$ |
6,813 |
|
Wind |
4.7 |
10.8 |
|
1,908 |
|
1,951 |
5.8 |
9.7 |
|
2,211 |
|
2,343 |
|
Solar |
6.0 |
7.1 |
|
142 |
|
133 |
11.1 |
7.6 |
|
643 |
|
643 |
|
Storage and other |
4.0 |
4.9 |
|
91 |
|
95 |
8.4 |
17.8 |
|
39 |
|
39 |
|
Total |
5.7 |
9.5 |
$ |
8,459 |
$ |
8,696 |
6.5 |
9.0 |
$ |
9,285 |
$ |
9,838 |
|
Add: Unamortized premiums (1) |
|
1 |
|
|
|
|
|
1 |
|
|
||
|
Less: Unamortized financing fees (1) |
|
(76) |
|
|
|
|
|
(72) |
|
|
||
|
Less: Current portion |
|
(489) |
|
|
|
|
|
(1,517) |
|
|
||
|
|
|
|
$ |
7,895 |
|
|
|
|
$ |
7,697 |
|
|
(1) Unamortized premiums and unamortized financing fees are amortized over the terms of the borrowing.
Future repayments of Brookfield Renewable’s non-recourse borrowings for each of the next five years and thereafter are as follows:
The following table outlines the change in the unamortized financing fees of non-recourse borrowings for the year ended December 31:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
Non-recourse borrowings |
|
|
|
|
|
|
|
Unamortized financing fees, beginning of year |
$ |
72 |
$ |
74 |
$ |
54 |
|
Additional financing fees |
|
21 |
|
16 |
|
41 |
|
Amortization of financing fees |
|
(12) |
|
(14) |
|
(17) |
|
Foreign exchange translation and other |
|
(5) |
|
(4) |
|
(4) |
|
Unamortized financing fees, end of year |
$ |
76 |
$ |
72 |
$ |
74 |
On January 19, 2018, Brookfield Renewable completed financing associated with its equity-accounted 2.1 GW pumped storage facility in the United Kingdom by securing £ 60 million ($ 83 million) of non-recourse borrowings and £ 90 million ($ 125 million) letter of credit facility. The non-recourse borrowings mature in 2021 and bear interest at LIBOR plus a margin of 2.75 %.
On January 29, 2018, Brookfield Renewable completed R$ 130 million ($ 40 million) of financing with respect to a 19 MW hydroelectric facility currently under construction in Brazil. The loan bears interest at a rate of TJLP plus 2.15 % and matures in 2038 .
F - 67
On February 15, 2018, Brookfield Renewable completed a refinancing associated with a 296 MW hydroelectric facility in the United States. The financing was a $ 350 million interest only green bond bearing interest at 4.5 %, maturing in 2033 . Proceeds were used to repay the existing principal amount of $315 million and the excess was distributed to investors.
On February 22, 2018, TerraForm Global issued $ 400 million of senior notes at 6.13 %, maturing in March 2026 . Along with cash on the balance sheet, proceeds were used to repay the existing $ 760 million of 9.75 % senior notes due in 2022 . Additionally, TerraForm Global secured a $ 45 million revolving credit facility, maturing in February 2021 .
On February 27, 2018, Brookfield Renewable completed bond financing associated with the Colombian business. The financing was a COP 750 billion ($ 262 million) in senior unsecured bonds with maturities of 7 , 12 and 30 years at rates of 7.12 %, IPC + 3.56 % and IPC + 3.99 %, respectively.
On April 20, 2018, Brookfield Renewable completed a R$ 160 million ($ 47 million) refinancing associated with a 120 MW hydroelectric facility in Brazil. The loan bears an interest rate of CDI + 2.00 %, maturing in October 2023 .
In the second quarter of 2018, Brookfield Renewable completed a refinancing of COP 1,762 billion ($ 634 million) of bank debt associated with the Colombian business. The new loans mature between 2025 and 2030 years at rates ranging of IBR + 2.97 % to IBR + 3.70 %.
On August 31, 2018, Brookfield Renewable completed a refinancing of COP 338 billion ($ 111 million) of debt associated with the Colombian business. The amortizing loan bears a fixed interest rate of 7.48 % and matures in August 2025 .
On September 14, 2018, Brookfield Renewable completed a R$ 250 million ($ 60 million) financing associated with the Brazilian hydroelectric business. The debenture bears interest at 113 % of CDI and matures in September 2023 .
On September 28, 2018, Brookfield Renewable increased indebtedness associated with a 166 MW wind portfolio in Ontario through a C$ 60 million ($ 46 million) private placement. The debt bears a fixed rate of 4.86 % and matures in August 2031 .
On October 26, 2018, Brookfield Renewable completed a £ 29 million ($ 37 million) financing associated with the acquisition of a 23 MW Northern Ireland wind facility. The debt matures in September 2036 and bears interest at GBP LIBOR plus a margin of 1.85 %.
On November 26, 2018, Brookfield Renewable completed a commercial paper issuance of COP 250 billion ($ 77 million) associated with the Colombian business. The issuance bears interest at IBR + 0.70 % and has a term of 330 days .
On December 11, 2018, Brookfield Renewable extended the maturity of COP 593 billion ($ 186 million) of local bank debt and $ 196 million of bank debt associated with the Colombian business by 2 years to January 2023 . The COP tranche bears interest at IBR + 3.50 % and the USD tranche bears interest at LIBOR + 2.50 %.
On December 12, 2018, Brookfield Renewable completed a $ 190 million refinancing associated with a 377 MW hydroelectric portfolio in the United States. The loan bears interest at LIBOR plus a margin of 3.00 % and matures in December 2022 .
On December 20, 2018, Brookfield Renewable completed a C$ 150 million ($ 111 million) financing associated with a 488 MW hydroelectric portfolio in Canada. The loan bears interest at CDOR plus a margin of 1.40 % and matures in November 2020 .
F - 68
On December 20, 2018, Brookfield Renewable completed a C$ 160 million ($ 119 million) financing associated with a 351 MW hydroelectric portfolio in Canada. The loan bears interest at CDOR plus a margin of 1.60 % and matures in June 2023 .
The following table outlines changes in Brookfield Renewable’s borrowings for the year ended December 31:
|
|
|
Net cash flows from |
Non-cash |
|
||||||||||
|
(MILLIONS) |
Jan 1 |
financing activities |
Acquisition |
Held for sale |
Disposal |
Other (1) |
Dec 31 |
|||||||
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate borrowings |
$ |
2,552 |
|
(88) |
|
- |
|
- |
|
- |
|
(130) |
$ |
2,334 |
|
Non-recourse borrowings |
$ |
9,214 |
|
(178) |
|
90 |
|
(360) |
|
- |
|
(382) |
$ |
8,384 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate borrowings |
$ |
2,229 |
|
191 |
|
- |
|
- |
|
- |
|
132 |
$ |
2,552 |
|
Non-recourse borrowings |
$ |
7,953 |
|
76 |
|
1,188 |
|
- |
|
(173) |
|
170 |
$ |
9,214 |
(1) Includes foreign exchange and amortization of unamortized premium and financing fees.
Brookfield Renewable’s non-controlling interests are comprised of the following as at December 31:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
Participating non-controlling interests - in operating subsidiaries |
$ |
8,129 |
$ |
6,298 |
|
General partnership interest in a holding subsidiary held by Brookfield |
|
66 |
|
58 |
|
Participating non-controlling interests - in a holding subsidiary - |
|
|
|
|
|
Redeemable/Exchangeable units held by Brookfield |
|
3,252 |
|
2,843 |
|
Preferred equity |
|
568 |
|
616 |
|
|
$ |
12,015 |
$ |
9,815 |
On October 31, 2018, Brookfield Renewable completed the sale of a 25% non-controlling interest in a portfolio of select Canadian hydroelectric assets. Cash consideration of C$390 million was received from the non-controlling shareholders. A revaluation of the associated property, plant and equipment was performed immediately prior to the sale in accordance with our accounting policy election to apply the revaluation method. Upon completion of the sale, Brookfield Renewable recognized an $11 million gain directly in equity.
F - 69
Participating non-controlling interests – in operating subsidiaries
The net change in participating non-controlling interests – in operating subsidiaries is as follows:
F - 70
The following tables summarize certain financial information of operating subsidiaries that have non-controlling interests that are material to Brookfield Renewable:
|
|
Brookfield |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Americas |
Brookfield |
Brookfield |
|
Canadian |
|
The |
|
|
|
|
|
||||
|
|
Infrastructure |
Infrastructure |
Infrastructure |
Hydroelectric |
|
Catalyst |
|
|
|
|
|
|||||
|
(MILLIONS) |
Fund |
Fund II |
Fund III (1) |
|
Portfolio |
|
Group |
Isagen (2) |
Other |
Total |
||||||
|
Interests held by third parties |
|
75-80% |
|
43-60% |
|
69-71% |
|
25-44% |
|
25% |
|
76% |
|
20-50% |
|
|
|
Place of business |
United States, Brazil |
United States, Brazil, Europe |
United States, Brazil, India, China |
|
Canada |
|
United States |
Colombia |
United States, Brazil, Canada |
|
|
|||||
|
Year ended December 31, 2016: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
118 |
$ |
394 |
$ |
28 |
$ |
- |
$ |
164 |
$ |
819 |
$ |
27 |
$ |
1,550 |
|
Net income |
|
(22) |
|
(23) |
|
(8) |
|
- |
|
62 |
|
110 |
|
5 |
|
124 |
|
Total comprehensive income (loss) |
|
37 |
|
356 |
|
(8) |
|
- |
|
70 |
|
502 |
|
31 |
|
988 |
|
Net income allocated to non-controlling interests |
|
(18) |
|
(16) |
|
(5) |
|
- |
|
16 |
|
86 |
|
2 |
|
65 |
|
Year ended December 31, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
123 |
$ |
430 |
$ |
53 |
$ |
- |
$ |
135 |
$ |
797 |
$ |
32 |
$ |
1,570 |
|
Net (loss) income |
|
(34) |
|
(20) |
|
18 |
|
- |
|
47 |
|
89 |
|
7 |
|
107 |
|
Total comprehensive income (loss) |
|
(133) |
|
529 |
|
126 |
|
- |
|
57 |
|
236 |
|
- |
|
815 |
|
Net (loss) income allocated to non-controlling interests |
|
(29) |
|
(13) |
|
13 |
|
- |
|
12 |
|
67 |
|
3 |
|
53 |
|
As at December 31, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at fair value |
$ |
1,667 |
$ |
5,153 |
$ |
2,149 |
$ |
- |
$ |
964 |
$ |
5,401 |
$ |
411 |
$ |
15,745 |
|
Total assets |
|
1,718 |
|
5,430 |
|
3,294 |
|
- |
|
1,066 |
|
6,526 |
|
426 |
|
18,460 |
|
Total borrowings |
|
556 |
|
2,040 |
|
1,502 |
|
- |
|
413 |
|
1,858 |
|
42 |
|
6,411 |
|
Total liabilities |
|
628 |
|
2,422 |
|
1,678 |
|
- |
|
432 |
|
3,336 |
|
63 |
|
8,559 |
|
Carrying value of non-controlling interests |
$ |
850 |
$ |
1,682 |
$ |
1,138 |
$ |
- |
$ |
134 |
$ |
2,424 |
$ |
70 |
$ |
6,298 |
|
Year ended December 31, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
157 |
$ |
447 |
$ |
311 |
$ |
38 |
$ |
142 |
$ |
896 |
$ |
21 |
$ |
2,012 |
|
Net income |
|
2 |
|
17 |
|
19 |
|
15 |
|
56 |
|
331 |
|
2 |
|
442 |
|
Total comprehensive income (loss) |
|
95 |
|
544 |
|
898 |
|
25 |
|
(16) |
|
1,290 |
|
16 |
|
2,852 |
|
Net income allocated to non-controlling interests |
|
1 |
|
9 |
|
15 |
|
6 |
|
14 |
|
251 |
|
1 |
|
297 |
|
As at December 31, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at fair value |
$ |
1,687 |
$ |
5,553 |
$ |
2,322 |
$ |
1,679 |
$ |
875 |
$ |
6,665 |
$ |
253 |
$ |
19,034 |
|
Total assets |
|
1,737 |
|
5,831 |
|
3,725 |
|
1,975 |
|
982 |
|
7,717 |
|
293 |
|
22,260 |
|
Total borrowings |
|
536 |
|
1,979 |
|
838 |
|
924 |
|
369 |
|
1,744 |
|
70 |
|
6,460 |
|
Total liabilities |
|
582 |
|
2,395 |
|
1,441 |
|
1,933 |
|
387 |
|
3,548 |
|
88 |
|
10,374 |
|
Carrying value of non-controlling interests |
$ |
900 |
$ |
1,929 |
$ |
1,641 |
$ |
314 |
$ |
124 |
$ |
3,169 |
$ |
52 |
$ |
8,129 |
(1) Excludes information relating to Isagen which is presented separately.
(2) The total third parties ownership interest in Isagen as of December 31, 2018 was 75.9% and comprised of Brookfield Infrastructure Fund III: 22.9 %, Isagen Institutional investors 52.5 % and other non-controlling interests: 0.5 %.
F - 71
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 on a one for one basis, the Redeemable/Exchangeable partnership units are classified as equity in accordance with IAS 32, Financial Instruments: Presentation. The Redeemable/Exchangeable partnership units and GP interest are presented as non-controlling interests since they provide Brookfield the direct economic benefits and exposures to the underlying performance of BRELP. The LP Units issued by Brookfield Renewable and the Redeemable/Exchangeable partnership units issued by its subsidiary BRELP have the same economic attributes in all respects, except for the redemption right described above. The Redeemable/Exchangeable partnership units and the GP interest participate in earnings and distributions on a per unit basis equivalent to the per unit participation of the LP Units of Brookfield Renewable.
As at December 31, 2018, general partnership units and Redeemable/Exchangeable partnership units outstanding were 2,651,506 (December 31, 2017: 2,651,506 ) and 129,658,623 (December 31, 2017: 129,658,623 ), respectively.
Distributions
The composition of the distributions are presented in the following table:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
General partnership interest in a holding |
|
|
|
|
|
subsidiary held by Brookfield |
$ |
5 |
$ |
5 |
|
Incentive distribution |
|
40 |
|
30 |
|
|
$ |
45 |
$ |
35 |
|
|
|
|
|
|
|
Participating non-controlling interests - in a |
|
|
|
|
|
holding subsidiary - Redeemable/ |
|
|
|
|
|
Exchangeable units held by Brookfield |
$ |
255 |
$ |
243 |
|
|
$ |
300 |
$ |
278 |
F - 72
The following table summarizes certain financial information regarding General partnership interest in a holding subsidiary held by Brookfield and Participating non-controlling interests – in a holding subsidiary – R edeemable/Exchangeable units held by Brookfield :
|
(MILLIONS) |
2018 |
2017 |
2016 |
|||
|
For the year ended December 31: |
|
|
|
|
|
|
|
Revenue |
$ |
2,982 |
$ |
2,625 |
$ |
2,452 |
|
Net income |
|
403 |
|
51 |
|
40 |
|
Comprehensive income |
|
3,667 |
|
1,401 |
|
1,369 |
|
Net income allocated to (1) : |
|
|
|
|
|
|
|
GP interest |
|
1 |
|
(1) |
|
- |
|
Redeemable/Exchangeable partnership units |
|
17 |
|
(23) |
|
(29) |
|
As at December 31: |
|
|
|
|
|
|
|
Property, plant and equipment, at fair value |
$ |
29,025 |
$ |
27,096 |
|
|
|
Total assets |
|
34,103 |
|
30,904 |
|
|
|
Total borrowings |
|
10,718 |
|
11,766 |
|
|
|
Total liabilities |
|
16,897 |
|
16,622 |
|
|
|
Carrying value of (2) : |
|
|
|
|
|
|
|
GP interest |
|
66 |
|
58 |
|
|
|
Redeemable/Exchangeable partnership units |
|
3,252 |
|
2,843 |
|
|
(1) Allocated based on weighted-average GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and 180.2 million, respectively (2017: 2.7 million, 129.7 million, and 173.5 million, respectively and 2016: 2.7 million, 129.7 million, and 156.4 million, respectively).
(2) Allocated based on outstanding GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and 178.8 million, respectively (2017: 2.7 million, 129.7 million, and 180.4 million, respectively).
Brookfield Renewable’s preferred equity as at December 31 consists of Class A Preference Shares of Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”) as follows:
|
|
|
|
Earliest |
Dividends declared for |
|
|
|
|
|||
|
|
|
Cumulative |
permitted |
the year ended |
Carrying value as at |
||||||
|
(MILLIONS, EXCEPT |
Shares |
dividend |
redemption |
December 31 |
|
|
|||||
|
AS NOTED) |
outstanding |
rate (%) |
date |
2018 |
2017 |
2018 |
2017 |
||||
|
Series 1 (C$136) |
5.45 |
3.36 |
Apr 2020 |
$ |
4 |
$ |
4 |
$ |
100 |
$ |
108 |
|
Series 2 (C$113) (1) |
4.51 |
4.29 |
Apr 2020 |
|
3 |
|
3 |
|
83 |
|
90 |
|
Series 3 (C$249) |
9.96 |
4.40 |
Jul 2019 |
|
8 |
|
8 |
|
182 |
|
197 |
|
Series 5 (C$103) |
4.11 |
5.00 |
Apr 2018 |
|
4 |
|
4 |
|
75 |
|
82 |
|
Series 6 (C$175) |
7.00 |
5.00 |
Jul 2018 |
|
7 |
|
7 |
|
128 |
|
139 |
|
|
31.03 |
|
|
$ |
26 |
$ |
26 |
$ |
568 |
$ |
616 |
(1) 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 December 31, 2018, none of the issued Class A Preference Shares have been redeemed by BRP Equity.
Class A Preference Shares – Normal Course Issuer Bid
In June 2018, the TSX accepted notice of BRP Equity’s intention to renew the normal course issuer bid in connection with its outstanding Class A Preference Shares for another year to June 26, 2019, or earlier should the repurchases be completed prior to such date. Under this normal course issuer bid, it is permitted to repurchase up to 10 % of the total public float for each respective series of the Class A Preference Shares. Unitholders may receive a copy of the notice, free of charge, by contacting Brookfield Renewable. No shares have been repurchased as of December 31, 2018.
F - 73
15. PREFERRED LIMITED PARTNERS’ EQUITY
Brookfield Renewable’s preferred limited partners’ equity comprises of Class A Preferred Units as follows:
|
|
|
|
Earliest |
Distributions declared for |
|
|
|
|
|||
|
|
|
Cumulative |
permitted |
the year ended |
Carrying value as at |
||||||
|
(MILLIONS, EXCEPT |
Shares |
distribution |
redemption |
December 31 |
Dec 31 |
Dec 31 |
|||||
|
AS NOTED) |
outstanding |
rate (%) |
date |
2018 |
2017 |
2018 |
2017 |
||||
|
Series 5 (C$72) |
2.89 |
5.59 |
Apr 2018 |
$ |
4 |
$ |
4 |
$ |
49 |
$ |
49 |
|
Series 7 (C$175) |
7.00 |
5.50 |
Jan 2021 |
|
7 |
|
8 |
|
128 |
|
128 |
|
Series 9 (C$200) |
8.00 |
5.75 |
Jul 2021 |
|
9 |
|
8 |
|
147 |
|
147 |
|
Series 11 (C$250) |
10.00 |
5.00 |
Apr 2022 |
|
9 |
|
8 |
|
187 |
|
187 |
|
Series 13 (C$250) |
10.00 |
5.00 |
Apr 2023 |
|
9 |
|
- |
|
196 |
|
- |
|
|
37.89 |
|
|
$ |
38 |
$ |
28 |
$ |
707 |
$ |
511 |
On January 16, 2018, Brookfield Renewable issued 10,000,000 Class A Preferred Limited Partnership Units, Series 13 (the “Series 13 Preferred Units”) at a price of C$ 25 per unit for gross proceeds of C$ 250 million ($ 201 million). Brookfield Renewable incurred C$ 7 million ($ 5 million) in related transaction costs inclusive of fees paid to underwriters. The holders of the Series 13 Preferred Units are entitled to receive a cumulative quarterly fixed distribution yielding 5.0 % for the initial period ending April 30, 2023 . Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of: (i) the 5-year Government of Canada bond yield plus 3.00 %, and (ii) 5.00%.
The holders of the Series 13 Preferred Units will have the right, at their option, to convert their Series 13 Preferred Units into Class A Preferred Limited Partnership Units, Series 14 (the “Series 14 Preferred Units”), subject to certain conditions, on April 30, 2023 and on April 30 every five years thereafter. The holders of Series 14 Preferred Units will be entitled to receive floating rate cumulative preferential cash distributions equal to the sum of the three month Government of Canada Treasury Bill rate plus 3.00%.
As at December 31, 2018, none of the Class A, Series 5 Preferred Limited Partnership Units have been redeemed.
Limited partners’ equity
As at December 31, 2018, 178,821,204 LP Units were outstanding (December 31, 2017: 180,388,361) including 56,068,944 (December 31, 2017: 56,068,944 ) held by Brookfield. Brookfield owns all general partnership interests in Brookfield Renewable representing a 0.01 % interest.
During the year ended December 31, 2018, 289,641 LP Units (2017: 302,037 LP Units) were issued under the distribution reinvestment plan at a total cost of 8 million (2017: $ 10 million).
As at December 31, 2018, Brookfield Asset Management’s direct and indirect interest of 185,727,567 LP Units and Redeemable/Exchangeable partnership units represents approximately 60 % of Brookfield Renewable on a fully-exchanged basis and the remaining approximate 40 % is held by public investors.
On an unexchanged basis, Brookfield holds a 31 % direct limited partnership interest in Brookfield Renewable, a 42 % direct interest in BRELP through the ownership of Redeemable/Exchangeable partnership units and a direct 1 % GP interest in BRELP as at December 31, 2018.
In December 2018, Brookfield Renewable renewed its normal course issuer bid in connection with its LP Units. Under this normal course issuer bid Brookfield Renewable is permitted to repurchase up to 8.9 million LP Units, representing approximately 5 % of the issued and outstanding LP Units, for capital
F - 74
management purposes. The bid will expire on December 30, 2019, or earlier should Brookfield Renewable complete its repurchases prior to such date. Under the prior normal course issuer bid that expired on December 28, 2018, Brookfield Renewable had repurchased 1,856,798 LP Units, on the Toronto Stock Exchange and the New York Stock Exchange, at a total cost of $ 51 million (2017: $nil). An additional 20,000 LP Units were repurchased on December 28, 2018 but not cancelled as at December 31, 2018.
Distributions
The composition of the distributions are presented in the following table:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
Brookfield |
$ |
110 |
$ |
101 |
|
External LP Unitholders |
|
245 |
|
227 |
|
|
$ |
355 |
$ |
328 |
In February 2019, unitholder distributions were increased to $ 2.06 per LP Unit on an annualized basis, an increase of $ 0.10 per LP Unit, which will take effect on the distribution payable in March 2019.
The following table provides a reconciliation of goodwill:
|
(MILLIONS) |
Notes |
|
Total |
|
Balance, as at December 31, 2016 |
|
$ |
896 |
|
Foreign exchange |
|
|
5 |
|
Balance, as at December 31, 2017 |
|
$ |
901 |
|
Acquired through acquisition |
3 |
|
27 |
|
Transfer to Assets held for sale |
4 |
|
(22) |
|
Foreign exchange |
|
|
(78) |
|
Balance, as at December 31, 2018 |
|
$ |
828 |
The purchase price allocation for Biotherm (Note 3 – Acquisitions) includes a deferred tax liability of $35 million. The deferred tax liability arises because the tax basis of the Biotherm net assets are significantly lower than their acquisition date fair value. As required by IFRS 3, this deferred tax liability is calculated in accordance with IAS 12, and is not measured at fair value. IAS 12 requires provisions to be made for all differences between the carrying value of assets and liabilities other than goodwill acquired in a business combination and their tax base at their nominal amount, irrespective of whether or not this will result in additional (or less) tax being paid or when any tax cash flows may occur. The fair value of the deferred tax liability would be lower than its nominal amount and Brookfield Renewable has determined that goodwill of $27 million arises primarily from such difference.
Brookfield Renewable’s primary capital management objectives are to ensure the sustainability of its capital to support continuing operations, meet its financial obligations, allow for growth opportunities and provide stable distributions to its LP Unitholders. Brookfield Renewable’s capital is monitored through debt to total capitalization ratio on a consolidated and corporate basis, as at December 31, 2018 these ratios were 34 % and 20 %, respectively (2017: 40 % and 24 %, respectively).
Brookfield Renewable has provided covenants to certain of its lenders for its corporate borrowings and credit facilities. The covenants require Brookfield Renewable to meet minimum debt to capitalization ratios. Subsidiaries of Brookfield Renewable have provided covenants to certain of their lenders for their
F - 75
non-recourse borrowings. These covenants vary from one credit agreement to another and include ratios that address debt service coverage. Certain lenders have also put in place requirements that oblige Brookfield Renewable and its subsidiaries to maintain debt and capital expenditure reserve accounts. The consequences to the subsidiaries as a result of failure to comply with their covenants could include a limitation of distributions from the subsidiaries to Brookfield Renewable, as well as repayment of outstanding debt. Brookfield Renewable is dependent on the distributions made by its subsidiaries to service its debt.
As part of the TerraForm Global transaction, Brookfield Renewable acquired assets with non-recourse financings that were in default prior to the acquisition. As at December 31, 2018, the loans had outstanding principal amounts totaling $ 183 million, and mature between 2026 and 2031 . These loans have remained not in compliance with certain covenants due to conditions that existed prior to the acquisition of TerraForm Global, including issues with contractors under engineering, procurement and construction contracts. The loan balances relating to the South African Portfolio have been classified as Liabilities directly associated with assets held for sale. See Note 4 – Assets held for sale. The remaining balances have been classified as current as at December 31, 2018 in the annual audited consolidated financial statements. These loans have a total outstanding balance as at December 31, 2018 of $ 13 million. Brookfield Renewable is currently working with all the lenders to cure such defaults and release the restrictions placed on the projects. Except for the aforementioned defaults, Brookfield Renewable complied with all material financial covenants as of December 31, 2018.
Brookfield Renewable’s strategy during 2018, which was unchanged from 2017, was to maintain the measures set out in the following schedule as at December 31:
|
|
Corporate |
Consolidated |
||||||
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Corporate borrowings |
$ |
2,334 |
$ |
2,552 |
$ |
2,334 |
$ |
2,552 |
|
Non-recourse borrowings |
|
- |
|
- |
|
8,384 |
|
9,214 |
|
|
|
2,334 |
|
2,552 |
|
10,718 |
|
11,766 |
|
Deferred income tax liabilities, net (1) |
|
- |
|
- |
|
4,049 |
|
3,411 |
|
Equity |
|
|
|
|
|
|
|
|
|
Participating non-controlling interest - |
|
|
|
|
|
|
|
|
|
in operating subsidiaries |
|
- |
|
- |
|
8,129 |
|
6,298 |
|
Preferred equity |
|
568 |
|
616 |
|
568 |
|
616 |
|
Preferred limted partners' equity |
|
707 |
|
511 |
|
707 |
|
511 |
|
Unitholders' equity (2) |
|
7,802 |
|
6,857 |
|
7,802 |
|
6,857 |
|
Total capitalization |
$ |
11,411 |
$ |
10,536 |
$ |
31,973 |
$ |
29,459 |
|
Debt to total capitalization |
|
20% |
|
24% |
|
34% |
|
40% |
(1) Deferred income tax liabilities less deferred income tax assets.
(2) Unitholders’ equity includes equity attributable to Limited partner’s equity, Redeemable/Exchangeable partnership units, and GP interest.
F - 76
19. EQUITY-ACCOUNTED INVESTMENTS
The following table outlines the changes in Brookfield Renewable’s equity-accounted investments :
|
(MILLIONS) |
|
2018 |
|
2017 |
2016 |
|
|
Balance, beginning of year |
$ |
721 |
$ |
206 |
$ |
197 |
|
Investment |
|
420 |
|
469 |
|
- |
|
Share of net income |
|
68 |
|
2 |
|
- |
|
Share of other comprehensive income |
|
426 |
|
56 |
|
8 |
|
Dividends received |
|
(42) |
|
(31) |
|
(6) |
|
Foreign exchange translation and other |
|
(24) |
|
19 |
|
7 |
|
Balance, end of year |
$ |
1,569 |
$ |
721 |
$ |
206 |
The following tables summarize gross revenues, net income, assets and liabilities of equity-accounted investments in aggregate:
|
(MILLIONS) |
2018 |
2017 |
2016 |
|||
|
For the year ended December 31 |
|
|
|
|
|
|
|
Revenue |
$ |
1,305 |
|
310 |
$ |
74 |
|
Net income (loss) |
|
223 |
|
(24) |
|
- |
|
Share of net income (1) |
|
68 |
|
2 |
|
- |
|
(1) Brookfield Renewable's ownership interest in these entities ranges from 14-50%. |
|
|
||||
|
|
|
|
|
|
|
|
|
(MILLIONS) |
|
|
2018 |
|
2017 |
|
|
As at December 31: |
|
|
|
|
|
|
|
Current assets |
|
|
$ |
682 |
$ |
477 |
|
Property, plant and equipment, at fair value |
|
|
|
11,999 |
|
8,098 |
|
Other assets |
|
|
|
608 |
|
213 |
|
Current liabilities |
|
|
|
1,080 |
|
687 |
|
Non-recourse borrowings |
|
|
|
6,078 |
|
4,294 |
|
Other liabilities |
|
|
|
1,197 |
|
822 |
F - 77
20. CASH AND CASH EQUIVALENTS
Brookfield Renewable’s cash and cash equivalents as at December 31 are as follows:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
Cash |
$ |
127 |
$ |
790 |
|
Short-term deposits |
|
46 |
|
9 |
|
|
$ |
173 |
$ |
799 |
Brookfield Renewable’s restricted cash as at December 31 is as follows:
|
(MILLIONS) |
Note |
|
2018 |
|
2017 |
|
Operations |
|
$ |
119 |
$ |
195 |
|
Credit obligations |
|
|
60 |
|
85 |
|
Capital expenditures and development projects |
|
|
2 |
|
4 |
|
Total |
|
|
181 |
|
284 |
|
Less: non-current |
23 |
|
(45) |
|
(103) |
|
Current |
|
$ |
136 |
$ |
181 |
22. TRADE RECEIVABLES AND OTHER CURRENT ASSETS
Brookfield Renewable’s trade receivables and other current assets as at December 31 are as follows:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
Trade receivables |
$ |
339 |
$ |
360 |
|
Prepaids and others |
|
114 |
|
112 |
|
Other short-term receivables |
|
109 |
|
82 |
|
Current portion of contract asset |
|
45 |
|
- |
|
|
$ |
607 |
$ |
554 |
As at December 31, 2018, 74% (2017: 99%) of trade receivables were current. The decrease in current receivables is due to timing of settlement. Brookfield Renewable does not expect issues with collectability of these amounts. Accordingly, as at December 31, 2018 and 2017 an allowance for doubtful accounts for trade receivables was not deemed necessary. Trade receivables are generally on 30-day terms and credit limits are assigned and monitored for all counterparties. In determining the recoverability of trade receivables, management performs a risk analysis considering the type and age of the outstanding receivables and the credit worthiness of the counterparties. Management also reviews trade receivable balances on an ongoing basis.
F - 78
23. OTHER LONG-TERM ASSETS
The composition of Brookfield Renewable’s other long-term assets as at December 31 is presented in the following table:
|
(MILLIONS) |
Note |
2018 |
2017 |
||
|
Contract asset |
|
$ |
402 |
$ |
- |
|
Restricted cash |
21 |
|
45 |
|
103 |
|
Acquisition downpayment |
|
|
- |
|
46 |
|
Other |
|
|
58 |
|
81 |
|
|
|
$ |
505 |
$ |
230 |
At December 31, 2018 and 2017, restricted cash was held primarily to satisfy lease payments and credit agreements.
Contract assets are the result of contract amendments made during the year to Brookfield Renewable’s long-term power purchase agreements with Brookfield associated with generating assets in Ontario held by Great Lakes Power Limited and Mississagi Power Trust. The net impact of these changes were offset by changes to Brookfield Renewable’s long-term energy revenue agreement with Brookfield associated with several entities owned by Brookfield Renewable in the United States, however the changes resulted in a difference in timing of cash flows. As a result, the amendments were accounted for in reflection of their substance, with the recognition of contract asset and liability balances and net financing charges to be recognized over the remainder of the term of the agreements. There are no material provisions for expected credit losses on contract assets. See Note 27 – Related party transactions, for additional details regarding Brookfield Renewable’s revenue agreements with Brookfield.
24. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Brookfield Renewable’s accounts payable and accrued liabilities as at December 31 are as follows:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
Operating accrued liabilities |
$ |
263 |
$ |
271 |
|
Accounts payable |
|
76 |
|
117 |
|
Interest payable on corporate and non-recourse borrowings |
|
76 |
|
64 |
|
Deferred consideration |
|
30 |
|
35 |
|
LP Unitholders’ distributions, preferred limited partnership unit |
|
|
|
|
|
distributions and preferred dividends payable (1) |
|
30 |
|
29 |
|
Other |
|
58 |
|
26 |
|
|
$ |
533 |
$ |
542 |
(1) Includes amounts payable only to external LP Unitholders. Amounts payable to Brookfield are included in due to related parties.
F - 79
25. OTHER LONG-TERM LIABILITIES
Brookfield Renewable’s other long-term liabilities as at December 31 are comprised of the following:
|
(MILLIONS) |
Notes |
2018 |
|
2017 |
|
|
Contract liabilities |
|
$ |
479 |
$ |
9 |
|
Pension obligations |
29 |
|
80 |
|
89 |
|
Acquisition related provisions |
|
|
69 |
|
80 |
|
Decommissioning retirement obligations |
|
|
67 |
|
85 |
|
Concession payment liability |
|
|
7 |
|
9 |
|
Commitments for power purchase agreement |
|
|
6 |
|
13 |
|
Contingent considerations |
|
|
3 |
|
18 |
|
Other |
|
|
23 |
|
41 |
|
|
|
$ |
734 |
$ |
344 |
Brookfield Renewable has recorded decommissioning retirement obligations associated with certain power generating assets. The decommissioning retirement obligation has been established for hydroelectric, wind and solar operation sites that are expected to be restored between the years 2031 to 2138 . The estimated cost of decommissioning activities is based on a third-party assessment.
Contract liabilities are the result of the amendment to the energy revenue agreement between Brookfield and several entities owned by Brookfield Renewable in the United States. See Note 23 – Other long-term assets, for additional details regarding Brookfield Renewable’s contract balances. See Note 27 – Related party transactions, for additional details regarding Brookfield Renewable’s revenue agreements with Brookfield.
26. 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 can be renewed and are extendable up to 2091 .
In the normal course of business, Brookfield Renewable will enter into capital expenditure commitments which primarily relate to contracted project costs for various growth initiatives. As at December 31, 2018, Brookfield Renewable had $ 71 million (2017: $ 44 million) of capital expenditure commitments outstanding, of which $ 46 million is payable in less than one year, and $ 25 million in two years.
F - 80
As at December 31, 2018, Brookfield Renewable had commitments for future operating lease payments under non-cancellable leases which fall due as follows:
|
(MILLIONS) |
|
|
|
2019 |
$ |
31 |
|
2020 |
|
29 |
|
2021 |
|
25 |
|
2022 |
|
22 |
|
2023 |
|
18 |
|
Thereafter |
|
125 |
|
Total |
$ |
250 |
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 13 – Borrowings.
Brookfield Renewable, along with institutional investors, has 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, the Brookfield Infrastructure Fund II, and the Brookfield Infrastructure Fund III. Brookfield Renewable’s subsidiaries have similarly provided letters of credit, which include, but are not limited to, guarantees for debt service reserves, capital reserves, construction completion and performance.
Letters of credit issued by Brookfield Renewable along with institutional investors and its subsidiaries were as at the following dates:
|
(MILLIONS) |
|
2018 |
2017 |
|
|
Brookfield Renewable along with institutional investors |
$ |
51 |
$ |
76 |
|
Brookfield Renewable's subsidiaries |
|
338 |
|
468 |
|
|
$ |
389 |
$ |
544 |
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.
F - 81
27. 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.
Brookfield Renewable and Brookfield have entered into, or amended, the following material agreements:
Principal Agreements
Limited Partnership Agreements
Each of the amended and restated limited partnership agreements of Brookfield Renewable and BRELP outline the key terms of the partnerships, including provisions relating to management, protections for limited partners, capital contributions, distributions and allocation of income and losses. BRELP’s general partner is entitled to receive incentive distributions from BRELP as a result of its ownership of the general partnership interest in BRELP. The incentive distributions are to be calculated in increments based on the amount by which quarterly distributions on the limited partnership units of BRELP exceed specified target levels as set forth in the amended and restated partnership agreement.
Master Services Agreement
Brookfield Renewable entered into an agreement with Brookfield Asset Management pursuant to which Brookfield Asset Management has agreed to provide oversight of the business and provide the services of senior officers to Brookfield Renewable for a management service fee. The fee is paid on a quarterly basis and has a fixed quarterly component of $ 5 million and a variable component calculated as a percentage of the increase in the total capitalization value of Brookfield Renewable over an initial reference value (subject to an annual escalation by a specified inflation factor beginning on January 1, 2013). Total capitalization value as of December 31, 2018 is $ 16 billion, which against the initial reference value of $ 8 billion and factoring in the annual amount of $ 21 million (as adjusted for inflation), resulted in a management service fee payment for the year ended December 31, 2018 of $ 80 million (2017: $ 82 million and 2016: $ 62 million).
BRELP Voting Agreement
In 2011, Brookfield Renewable entered into a voting agreement with Brookfield pursuant to which Brookfield Renewable, through BRPL, has a number of voting rights, including the right to direct all eligible votes in the election of the directors of BRELP’s general partner.
Power Services Agreements
Energy Marketing Internalization
On October 30, 2018, Brookfield Renewable and Brookfield entered into an agreement (the “Power Marketing Purchase Agreement”) to internalize all energy marketing capabilities in North America into Brookfield Renewable. The Power Marketing Purchase Agreement provides for the transfer of Brookfield’s existing marketing business to Brookfield Renewable, which includes the marketing, purchasing and trading of energy and energy related products in North America, providing energy marketing services and all matters incidental thereto (the “Energy Marketing Internalization”). The Energy Marketing Internalization will also include transfer of all third party power purchase agreements and, subject to certain exceptions, related party power purchase and revenue support agreements as described in further detail below.
The closing of the Energy Marketing Internalization is targeted to occur in the first half of 2019, subject to the satisfaction of customary closing conditions. It is anticipated that on closing of the Energy Marketing Internalization, Brookfield Renewable and Brookfield will enter into an agreement pursuant to which Brookfield Renewable will provide energy marketing services to Brookfield for a fee.
F - 82
Also on October 30, 2018, Brookfield Renewable and Brookfield separately amended certain related party agreements, as described in further detail below.
Power Agency Agreements
Certain Brookfield Renewable subsidiaries have entered into Power Agency Agreements appointing Brookfield as their exclusive agent in respect of the sales of electricity, including the procurement of transmission and other additional services. In addition, Brookfield will schedule, dispatch and arrange for transmission of the power produced and the power supplied to third-parties in accordance with prudent industry practice. Pursuant to each Agreement, Brookfield will be entitled to be reimbursed for any third party costs incurred, and, in certain cases, receives an additional fee for its services in connection with the sale of power and for providing the other services.
On closing of the Energy Marketing Internalization, all Power Agency Agreements will be transferred by Brookfield to Brookfield Renewable.
Energy Marketing Agreement
Brookfield has agreed to provide energy marketing services to Brookfield Renewable’s North American businesses. Under this Agreement, Brookfield Renewable pays an annual energy marketing fee of $ 18 million per year (subject to increase by a specified inflation factor beginning on January 1, 2013). See Note 8 - Direct operating costs.
On closing of the Energy Marketing Internalization, the Energy Marketing Agreement will be transferred from Brookfield to Brookfield Renewable.
Revenue Agreements
Contract Amendments
In 2018, two long-term power purchase agreements associated with the generating assets in Ontario held by Great Lakes Power Limited (“GLPL”) and Mississagi Power Trust (“MPT”), were amended.
The amended GLPL power purchase agreement requires Brookfield to purchase the energy generated by certain facilities in Canada owned by GLPL at an average price of C$ 100 per MWh subject to an annual adjustment equal to a 3 % fixed rate. The GLPL agreement has an initial term to 2029 , and Brookfield Renewable will have an option to extend a fixed price commitment to GLPL from Brookfield Asset Management through 2044 at a price of C$ 60 per MWh.
The amended MPT power purchase agreement requires Brookfield to purchase the energy generated by certain facilities in Canada owned by MPT at an average price of C$ 127 per MWh subject to an annual adjustment equal to a 3 % fixed rate. The MPT contract terminates on December 1, 2029 .
Energy Revenue Agreement
In 2018, the energy revenue agreement between Brookfield and several entities owned by Brookfield Renewable was effectively amended.
Brookfield will support the price that Brookfield Renewable receives for energy generated by certain facilities in the United States at a price $ 75 per MWh. This price is to be increased annually on January 1 until 2021 by an amount equal to 40 % of the increase in the CPI during the previous calendar year, but not exceeding an increase of 3 % in any calendar year. The price will be reduced by $ 3 per MWh per year from 2021 to 2025 and then further reduced by $ 5.03 per MWh in 2026 . The energy revenue agreement will terminate in 2046 .
F - 83
Other Revenue Agreements
Pursuant to a 20-year power purchase agreement, Brookfield purchases all energy from several power facilities in Maine and New Hampshire held by Great Lakes Holding America (“GLHA”) at $ 37 per MWh. The energy rates are subject to an annual adjustment equal to 20 % of the increase in the CPI during the previous year. On closing of the Energy Marketing Internalization, the power purchase agreement with GLHA will be transferred to Brookfield Renewable.
Pursuant to a 20-year power purchase agreement, Brookfield purchases all energy from Lievre Power in Quebec at C$ 68 per MWh. The energy rates are subject to an annual adjustment equal to the lesser of 40 % of the increase in the CPI during the previous calendar year or 3 %. On closing of the Energy Marketing Internalization, the power purchase agreement with Lievre Power will be transferred to Brookfield Renewable.
Pursuant to a power guarantee agreement, Brookfield will purchase all energy from the two facilities of Hydro Pontiac Inc. at a price of C$ 68 per MWh, to be increased annually each calendar year beginning in 2010 by an amount equal to 40 % of the increase in the CPI during the previous calendar year. This power guarantee agreement is scheduled to commence in 2019 for one facility and in 2020 for the other, upon the expiration of existing third-party power agreements. The agreement with Brookfield has an initial term to 2029 and automatically renews for successive 20-year period with certain termination provisions. On closing of the Energy Marketing Internalization, the power guarantee agreement with Hydro Pontiac Inc. will be transferred to Brookfield Renewable.
Pursuant to a 10-year Wind Levelization agreement expiring in 2019 , Brookfield mitigates any potential wind variation from the expected annual generation of 506 GWh with regards to the Prince Wind assets in Ontario. Any excess generation compared to the expected generation results in a payment from Brookfield Renewable to Brookfield, while a shortfall would result in a payment from Brookfield to Brookfield Renewable.
Voting Agreements
Brookfield Renewable entered into voting agreements with Brookfield whereby Brookfield, as managing member of entities related to the Brookfield Americas Infrastructure Fund (the “BAIF Entities”) in which Brookfield Renewable holds investments in power generating operations with institutional investors, agreed to assign to Brookfield Renewable their voting rights to elect the Boards of Directors of the BAIF Entities. Brookfield Renewable’s economic interests in the BAIF Entities in the United States and Brazil are 22 % and 25 %, respectively.
Brookfield Renewable entered into voting agreements with certain Brookfield subsidiaries whereby these subsidiaries, as managing members of entities related to Brookfield Infrastructure Fund II (the “BIF II Entities”) in which Brookfield Renewable holds investments in power generating operations with institutional investors, agreed to provide to Brookfield Renewable the authority to direct the election of the Boards of Directors of the BIF II Entities. Brookfield Renewable’s economic interests in the BIF II Entities are between 40 % and 50.1 %.
Except as set out below in respect to TerraForm Power and Isagen, Brookfield Renewable entered into a voting agreement with certain Brookfield subsidiaries that form part of Brookfield Infrastructure Fund III (the “BIF III Entities”) in which Brookfield Renewable holds investments in power generating operations with institutional investors, Brookfield agreed to provide to Brookfield Renewable the authority to direct the election of the Boards of Directors of the BIF III Entities. Brookfield Renewable’s economic interests in the BIF III Entities are between 24 % and 31 %.
F - 84
The consortium holds its interest in Isagen through an entity (“Hydro Holdings”) which is entitled to appoint a majority of the board of directors of Isagen. The general partner of Hydro Holdings is a controlled subsidiary of Brookfield Renewable. Brookfield Renewable is entitled to appoint a majority of Hydro Holdings’ board of directors, provided that Brookfield Asset Management and its subsidiaries (including Brookfield Renewable) collectively are (i) the largest holder of Hydro Holdings’ limited partnership interests, and (ii) hold over 30 % of Hydro Holdings’ limited partnership interests (the “Ownership Test”). Brookfield Asset Management and its subsidiaries currently meet the Ownership Test.
Brookfield Renewable entered into a voting agreement with the Brookfield subsidiary that ultimately controls TerraForm Power. Pursuant to this voting agreement, Brookfield Renewable is entitled to direct the election of one of the four directors of the Brookfield subsidiary, thereby providing Brookfield Renewable with significant influence over this subsidiary.
F - 85
The following table reflects the related party agreements and transactions in the consolidated statements of income, for the year ended December 31:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
Revenues |
|
|
|
|
|
|
|
Power purchase and revenue agreements |
$ |
535 |
$ |
601 |
$ |
527 |
|
Wind levelization agreement |
|
7 |
|
6 |
|
8 |
|
|
$ |
542 |
$ |
607 |
$ |
535 |
|
Direct operating costs |
|
|
|
|
|
|
|
Energy purchases |
$ |
(20) |
$ |
(13) |
$ |
(3) |
|
Energy marketing fee |
|
(24) |
|
(24) |
|
(23) |
|
Insurance services |
|
(25) |
|
(19) |
|
(20) |
|
|
$ |
(69) |
$ |
(56) |
$ |
(46) |
|
Interest (expense) income - borrowings |
$ |
(8) |
$ |
- |
$ |
6 |
|
Management service costs |
$ |
(80) |
$ |
(82) |
$ |
(62) |
The following table reflects the impact of the related party agreements and transactions on the consolidated statements of financial position as at December 31:
|
(MILLIONS) |
Related party |
|
2018 |
|
2017 |
|
Current assets |
|
|
|
|
|
|
Contract asset |
Brookfield |
$ |
45 |
$ |
- |
|
Due from related parties |
|
|
|
|
|
|
Amounts due from |
Brookfield |
|
55 |
|
54 |
|
|
Equity-accounted investments and other |
|
10 |
|
6 |
|
|
|
$ |
110 |
$ |
60 |
|
Non-current assets |
|
|
|
|
|
|
Contract asset |
Brookfield |
$ |
402 |
$ |
- |
|
Current liabilities |
|
|
|
|
|
|
Due to related parties |
|
|
|
|
|
|
Amount due to |
Brookfield |
$ |
54 |
$ |
48 |
|
|
Equity-accounted investments and other |
|
12 |
|
32 |
|
Accrued distributions payable on |
|
|
|
|
|
|
LP Units and Redeemable/ |
|
|
|
|
|
|
Exchangeable partnership units |
Brookfield |
|
35 |
|
32 |
|
|
|
$ |
101 |
$ |
112 |
|
Non-current liabilities |
|
|
|
|
|
|
Contract liability |
Brookfield |
$ |
479 |
|
9 |
Amounts due from Brookfield are non-interest bearing, unsecured and due on demand.
Current liabilities
Amounts due to Brookfield are unsecured, payable on demand and relate to recurring transactions.
F - 86
28. SUPPLEMENTAL INFORMATION
The net change in working capital balances for the year ended December 31 shown in the consolidated statements of cash flows is comprised of the following:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
|
Trade receivables and other current assets |
$ |
(122) |
$ |
(40) |
$ |
30 |
|
Accounts payable and accrued liabilities |
|
32 |
|
32 |
|
(160) |
|
Other assets and liabilities |
|
22 |
|
(17) |
|
(7) |
|
|
$ |
(68) |
$ |
(25) |
$ |
(137) |
29. PENSION AND EMPLOYEE FUTURE BENEFITS
Brookfield Renewable offers a number of pension plans to its employees, as well as certain health care, dental care, life insurance and other benefits to certain retired employees pursuant to Brookfield Renewable’s policy. The plans are funded by contributions from Brookfield Renewable and from plan members. Pension benefits are based on length of service and final average earnings and some plans are indexed for inflation after retirement. The pension plans relating to employees of Brookfield Renewable have been included in the consolidated financial statements.
The Brookfield Renewable Pension Governance Committee (BRGC) is responsible for the implementation of strategic decisions and monitoring of the administration of Brookfield Renewable’s defined benefit pension plans. Specifically, the BRGC will establish the investment strategies, approve the funding policies as well as assess that Brookfield Renewable has complied with all applicable law, fiduciary, reporting and disclosure requirements.
Actuarial valuations for Brookfield Renewable’s pension plans are required as per governing provincial or federal regulations. For the United States registered plans, actuarial valuations are required annually. For the Canadian registered plans, actuarial valuations are required on a triennial basis if the funding level of the plan is above a certain threshold. Currently, all Canadian plans are on a triennial schedule. In the Colombian business, there are obligations for pension plans and other employee benefits. Actuarial valuations on these obligations are performed annually by qualified, independent actuaries.
The dates of the most recent actuarial valuations for Brookfield Renewable’s pension and non-pension benefit plans range from January 2016 to January 2018. Brookfield Renewable measures its accrued benefit obligations and the fair value of plan assets for accounting purposes as at December 31 of each year.
The benefit liabilities represent the amount of pension and other employee future benefits that Brookfield Renewable’s employees and retirees have earned at year-end. The benefit obligation under these plans is determined through periodic actuarial reports which were based on the assumptions indicated in the following table.
F - 87
Actuarial assumptions as at December 31:
|
(%) |
2018 |
2017 |
2016 |
|||||||||||||||
|
|
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
||||||||||||
|
|
pension plans |
benefit plans |
pension plans |
benefit plans |
pension plans |
benefit plans |
||||||||||||
|
Discount rate |
2.5 |
- |
7.2 |
3.9 |
- |
7.4 |
2.4 |
- |
7.3 |
3.7 |
- |
7.1 |
2.2 |
- |
7.3 |
4.1 |
- |
7.3 |
|
Rate of price inflation |
1.5 |
- |
3.5 |
N/A |
1.5 |
- |
3.5 |
N/A |
1.5 |
- |
3.5 |
N/A |
||||||
|
Rate of compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
increases |
2.5 |
- |
4.0 |
2.5 |
- |
4.0 |
2.5 |
- |
4.0 |
2.5 |
- |
4.0 |
2.5 |
- |
4.0 |
2.5 |
- |
4.0 |
|
Health care trend rate (1) |
N/A |
5.3 |
- |
6.9 |
N/A |
5.3 |
- |
6.9 |
N/A |
5.3 |
- |
6.9 |
||||||
(1) Assumed immediate trend rate at year-end.
Plan obligations and the annual pension expense are determined on an actuarial basis and are affected by numerous assumptions and estimates including the market value of plan assets, discount rates, rate of compensation increases and other assumptions. The discount rate, rate of price inflation and inflation-linked assumptions and health care cost trend rate are the assumptions that generally have the most significant impact on the benefit obligations.
The discount rate for benefit obligation purposes is determined, as far as possible, by reference to market yields on high quality corporate bonds. In Colombia deep market in bonds does not exist. Accordingly, the discount rate is determined by reference to yields on government bonds. Rate of compensation increases reflect the best estimate of merit increases to be provided, consistent with assumed inflation rates.
A 50 basis point change in the assumptions mentioned before, used for the calculation of the benefit obligations as at December 31, 2018, would result in the following increase (decrease) of the benefit obligations:
|
|
Defined benefit |
Non-pension |
||
|
(MILLIONS) |
pension plans |
benefit plans |
||
|
Discount rate |
|
|
|
|
|
50 basis point increase |
$ |
(7) |
$ |
(4) |
|
50 basis point decrease |
|
8 |
|
4 |
|
Rate of price inflation and inflation-linked assumptions |
|
|
|
|
|
50 basis point increase |
|
4 |
|
N/A |
|
50 basis point decrease |
|
(4) |
|
N/A |
|
Health care cost trend rate |
|
|
|
|
|
50 basis point increase |
|
N/A |
|
3 |
|
50 basis point decrease |
|
N/A |
|
(3) |
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
F - 88
The pension expense recognized in the consolidated statements of income and consolidated statements of comprehensive income for the year ended December 31:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
||||||
|
|
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
||||||
|
|
pension plans |
benefit plans |
pension plans |
benefit plans |
pension plans |
benefit plans |
||||||
|
Current service costs |
$ |
3 |
$ |
2 |
$ |
3 |
$ |
1 |
$ |
3 |
$ |
1 |
|
Past service costs (recovery) |
|
- |
|
- |
|
(1) |
|
- |
|
- |
|
- |
|
Interest expense |
|
2 |
|
3 |
|
2 |
|
3 |
|
2 |
|
3 |
|
Administrative expenses |
|
1 |
|
- |
|
1 |
|
- |
|
1 |
|
- |
|
Recognized in consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
statement of income |
|
6 |
|
5 |
|
5 |
|
4 |
|
6 |
|
4 |
|
Remeasurement of the net |
|
|
|
|
|
|
|
|
|
|
|
|
|
defined benefit liability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on plan assets |
|
5 |
|
- |
|
(8) |
|
- |
|
(2) |
|
- |
|
Actuarial changes arising |
|
|
|
|
|
|
|
|
|
|
|
|
|
from changes in |
|
|
|
|
|
|
|
|
|
|
|
|
|
demographic assumptions |
|
(1) |
|
- |
|
1 |
|
(2) |
|
(1) |
|
(1) |
|
Actuarial changes arising |
|
|
|
|
|
|
|
|
|
|
|
|
|
from changes in |
|
|
|
|
|
|
|
|
|
|
|
|
|
financial assumptions |
|
(9) |
|
(4) |
|
7 |
|
3 |
|
5 |
|
1 |
|
Experience adjustments |
|
1 |
|
(1) |
|
- |
|
1 |
|
- |
|
- |
|
Recognized in consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
statement of comprehensive |
|
|
|
|
|
|
|
|
|
|
|
|
|
income |
|
(4) |
|
(5) |
|
- |
|
2 |
|
2 |
|
- |
|
Total |
$ |
2 |
$ |
- |
$ |
5 |
$ |
6 |
$ |
8 |
$ |
4 |
The amounts included in the consolidated statements of financial position arising from Brookfield Renewable’s obligations in respect of its defined benefit plans are as follows:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
||||||
|
|
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
||||||
|
|
pension plans |
benefit plans |
pension plans |
benefit plans |
pension plans |
benefit plans |
||||||
|
Present value of defined |
|
|
|
|
|
|
|
|
|
|
|
|
|
benefit obligation |
$ |
157 |
$ |
53 |
$ |
172 |
$ |
57 |
$ |
158 |
$ |
53 |
|
Fair value of plan assets |
|
(126) |
|
(4) |
|
(135) |
|
(5) |
|
(119) |
|
(5) |
|
Net liability |
$ |
31 |
$ |
49 |
$ |
37 |
$ |
52 |
$ |
39 |
$ |
48 |
F - 89
Defined benefit obligations
The movement of the defined benefit obligation for the year ended December 31 is as follows:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
||||||
|
|
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
||||||
|
|
pension plans |
benefit plans |
pension plans |
benefit plans |
pension plans |
benefit plans |
||||||
|
Balance, beginning of year |
$ |
172 |
$ |
57 |
$ |
158 |
$ |
53 |
$ |
124 |
$ |
35 |
|
Current service cost |
|
3 |
|
2 |
|
3 |
|
1 |
|
3 |
|
1 |
|
Past service (recovery) cost |
|
- |
|
- |
|
(1) |
|
- |
|
- |
|
- |
|
Interest expense |
|
7 |
|
3 |
|
7 |
|
3 |
|
7 |
|
3 |
|
Remeasurement losses (gains) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial changes arising |
|
|
|
|
|
|
|
|
|
|
|
|
|
from changes in |
|
|
|
|
|
|
|
|
|
|
|
|
|
demographic assumptions |
|
(1) |
|
- |
|
1 |
|
(2) |
|
(1) |
|
(1) |
|
Actuarial changes arising |
|
|
|
|
|
|
|
|
|
|
|
|
|
from changes in |
|
|
|
|
|
|
|
|
|
|
|
|
|
financial assumptions |
|
(9) |
|
(4) |
|
7 |
|
3 |
|
5 |
|
1 |
|
Experience adjustments |
|
1 |
|
(1) |
|
- |
|
1 |
|
- |
|
- |
|
Benefits paid |
|
(9) |
|
(2) |
|
(7) |
|
(2) |
|
(8) |
|
(2) |
|
Business combination |
|
- |
|
- |
|
- |
|
- |
|
25 |
|
14 |
|
Exchange differences |
|
(7) |
|
(2) |
|
4 |
|
- |
|
3 |
|
2 |
|
Balance, end of year |
$ |
157 |
$ |
53 |
$ |
172 |
$ |
57 |
$ |
158 |
$ |
53 |
Expected employer’s contributions to the defined benefit plans for the year ended December 31, 2019 are $ 10 million.
Fair value of plan assets
The movement in the fair value of plan assets for the year ended December 31 is as follows:
|
(MILLIONS) |
|
2018 |
|
2017 |
|
2016 |
||||||
|
|
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
Defined benefit |
Non-pension |
||||||
|
|
pension plans |
benefit plans |
pension plans |
benefit plans |
pension plans |
benefit plans |
||||||
|
Balance, beginning of year |
$ |
135 |
$ |
5 |
$ |
119 |
$ |
5 |
$ |
103 |
$ |
- |
|
Interest income |
|
5 |
|
- |
|
5 |
|
- |
|
5 |
|
- |
|
Return on plan assets |
|
(5) |
|
(1) |
|
8 |
|
- |
|
2 |
|
- |
|
Employer contributions |
|
5 |
|
2 |
|
5 |
|
2 |
|
7 |
|
3 |
|
Business combination |
|
- |
|
- |
|
- |
|
- |
|
9 |
|
4 |
|
Benefits paid |
|
(9) |
|
(2) |
|
(7) |
|
(2) |
|
(8) |
|
(2) |
|
Exchange differences |
|
(5) |
|
- |
|
5 |
|
- |
|
1 |
|
- |
|
Balance, end of year |
$ |
126 |
$ |
4 |
$ |
135 |
$ |
5 |
$ |
119 |
$ |
5 |
The composition of plan assets as at December 31 are as follows:
|
(%) |
2018 |
2017 |
|
Asset category: |
|
|
|
Cash and cash equivalents |
2 |
2 |
|
Equity securities |
47 |
54 |
|
Debt securities |
51 |
44 |
|
|
100 |
100 |
F - 90
30. SUBSIDIARY PUBLIC ISSUERS
The following tables provide consolidated summary financial information for Brookfield Renewable, BRP Equity, and Finco:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookfield |
|
|
|
Brookfield |
BRP |
|
Holding |
Other |
Consolidating |
Renewable |
|||||||
|
(MILLIONS) |
Renewable (1) |
Equity |
Finco |
Entities (1)(2) |
Subsidiaries (1)(3) |
adjustments (4) |
consolidated |
|||||||
|
As at December 31, 2018: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
$ |
32 |
$ |
389 |
$ |
1,631 |
$ |
93 |
$ |
3,639 |
$ |
(3,823) |
$ |
1,961 |
|
Long-term assets |
|
5,208 |
|
239 |
|
1 |
|
24,078 |
|
32,433 |
|
(29,817) |
|
32,142 |
|
Current liabilities |
|
38 |
|
6 |
|
21 |
|
3,096 |
|
2,351 |
|
(3,823) |
|
1,689 |
|
Long-term liabilities |
|
- |
|
- |
|
1,607 |
|
798 |
|
13,445 |
|
(642) |
|
15,208 |
|
Participating non-controlling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests - in operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subsidiaries |
|
- |
|
- |
|
- |
|
- |
|
8,129 |
|
- |
|
8,129 |
|
Participating non-controlling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests -in a holding subsidiary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Redeemable/Exchangeable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
units held by Brookfield |
|
- |
|
- |
|
- |
|
3,252 |
|
- |
|
- |
|
3,252 |
|
Preferred equity |
|
- |
|
568 |
|
- |
|
- |
|
- |
|
- |
|
568 |
|
Preferred limited partners' equity |
|
707 |
|
- |
|
- |
|
718 |
|
- |
|
(718) |
|
707 |
|
As at December 31, 2017: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
$ |
32 |
$ |
412 |
$ |
1,691 |
$ |
525 |
$ |
2,816 |
$ |
(3,810) |
$ |
1,666 |
|
Long-term assets |
|
4,483 |
|
262 |
|
- |
|
20,142 |
|
29,508 |
|
(25,157) |
|
29,238 |
|
Current liabilities |
|
43 |
|
7 |
|
180 |
|
3,024 |
|
3,071 |
|
(3,811) |
|
2,514 |
|
Long-term liabilities |
|
- |
|
- |
|
1,505 |
|
693 |
|
12,670 |
|
(760) |
|
14,108 |
|
Participating non-controlling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests - in operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subsidiaries |
|
- |
|
- |
|
- |
|
- |
|
6,298 |
|
- |
|
6,298 |
|
Participating non-controlling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interests -in a holding subsidiary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Redeemable/Exchangeable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
units held by Brookfield |
|
- |
|
- |
|
- |
|
2,843 |
|
- |
|
- |
|
2,843 |
|
Preferred equity |
|
- |
|
616 |
|
- |
|
- |
|
- |
|
- |
|
616 |
|
Preferred limited partners' equity |
|
511 |
|
- |
|
- |
|
516 |
|
- |
|
(516) |
|
511 |
(1) Includes investments in subsidiaries under the equity method.
(2) Includes BRELP, BRP Bermuda Holdings I Limited, Brookfield BRP Holdings (Canada) Inc. and Brookfield BRP Europe Holdings Limited, together the “Holding Entities”.
(3) Includes subsidiaries of Brookfield Renewable, other than BRP Equity, Finco and the Holding Entities.
(4) Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a consolidated basis.
F - 91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brookfield |
|
|
|
Brookfield |
BRP |
|
Holding |
Other |
Consolidating |
Renewable |
|||||||
|
(MILLIONS) |
Renewable (1) |
Equity |
Finco |
Entities (1)(2) |
Subsidiaries (1)(3) |
adjustments (4) |
consolidated |
|||||||
|
For the year ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
2,983 |
$ |
(1) |
$ |
2,982 |
|
Net income (loss) |
|
62 |
|
7 |
|
(1) |
|
(25) |
|
1,305 |
|
(945) |
|
403 |
|
For the year ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
2,625 |
$ |
- |
$ |
2,625 |
|
Net income (loss) |
|
(4) |
|
10 |
|
(1) |
|
(435) |
|
631 |
|
(150) |
|
51 |
|
For the year ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
- |
$ |
- |
$ |
- |
$ |
1 |
$ |
2,451 |
$ |
- |
$ |
2,452 |
|
Net income (loss) |
|
(20) |
|
- |
|
(1) |
|
(100) |
|
558 |
|
(397) |
|
40 |
(1) Includes investments in subsidiaries under the equity method.
(2) Includes the Holding Entities .
(3) Includes subsidiaries of Brookfield Renewable, other than BRP Equity, Finco, and the Holding Entities.
(4) Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a consolidated basis.
See Note 13 – Borrowings for additional details regarding the medium-term corporate notes issued by Finco. See Note 14 – Non-controlling interests for additional details regarding Class A Preference Shares issued by BRP Equity.
31. SUBSEQUENT EVENTS
On February 25, 2019, Brookfield Renewable completed a C$ 70 ($ 53 million) non-recourse financing associated with a 20 MW hydroelectric facility in Ontario. The debt bears an interest rate of 4.13 % and matures in 2045 .
In February 2019, Brookfield Renewable entered into an agreement to sell an additional 25 % non-controlling, indirect interest in a 413 MW portfolio of select Canadian hydroelectric assets to a consortium of buyers for the same price, subject to an adjustment for an approximate $ 45 million dividend recapitalization completed in the fourth quarter of 2018, as our initial 25% non-controlling, direct interest sale. The closing of the sale of the additional 25% interest remains subject to the satisfaction of customary conditions. Following closing, Brookfield Renewable will retain a 50 % economic interest in this portfolio and will continue to manage and operate the assets in the portfolio.
F - 92