MANAGEMENT’S DISCUSSION AND ANALYSIS 26 CAPSTONE INFRASTRUCTURE CORPORATION Utilities – water Utilities – district heating Corporate Net income (loss) Net income (loss) for each business segment was as follows: The following table shows the significant changes in Adjusted EBITDA and AFFO from 2012: The following table shows the significant changes in Adjusted EBITDA and AFFO from 2012: The following table shows the significant changes in Adjusted EBITDA and AFFO from 2012: Change Explanations (6,135) Impact of sale of 20% interest in Bristol Water on May 10, 2012. 4,985 Business performance increase primarily due to higher revenue as a result of annual increase in regulated water tariffs, offset by higher operating expenses. 825 Impact of foreign exchange on Adjusted EBITDA. (325) Change in Adjusted EBITDA. (1,391) Impact of sale of 20% interest in Bristol Water on May 10, 2012. (158) Dividend reduction due to payment of higher operational and management fees for outperformance. 5 Impact of foreign exchange on AFFO. (1,544) Change in AFFO. Change Explanations 1,052 Higher dividend due to distribution of surplus cash attributable to prior years' performance. (728) Lower interest income following the March 2012 partial repayment of the shareholder loan from Värmevärden refinancing proceeds. 284 Impact of foreign exchange. 608 Change in Adjusted EBITDA and AFFO. Change Explanations (4,019) Higher project development costs primarily due to acquisition costs for ReD. 701 Lower administrative expenses primarily due to lower staff costs. 161 Higher interest income due to higher average cash balances. (3,157) Change in Adjusted EBITDA. (1,922) Higher taxes paid primarily due to the final payment of 2012 taxes for the preferred share dividends. 806 Lower interest paid on debt primarily due to second quarter 2012 repayment of the senior debt facility and the corporate component of the CPC-Cardinal debt facility. (4,273) Change in AFFO. Net Income (loss) For the year ended Dec 31, 2013 Dec 31, 2012 Power 35,009 19,788 Utilities – water 51,477 41,052 Utilities – district heating 2,850 7,936 Corporate (22,126) (22,805) Total 67,210 45,971