CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Equity attributable to shareholders of Capstone 54 CAPSTONE INFRASTRUCTURE CORPORATION See accompanying notes to these consolidated financial statements Notes Share Capital  (1) Other Equity Items  (2) y AOCI (3) Retained Earnings NCI (4) Total Equity Balance, Dec 31, 2011 725,591 9,284 (6,729) (314,626) 34,450 447,970 Adjustment relating to changes in accounting policy 2 — — — — — — Balance, Jan 1, 2012 2 725,591 9,284 (6,729) (314,626) 34,450 447,970 Common shares issued  (5) (89) — — — — (89) Other comprehensive income (loss) 2 — — 5,171 (11,803) (6,915) (13,547) Net income for the period 2 — — — 28,243 17,728 45,971 Dividends declared to common shareholders of Capstone 21a, f 5,702 — — (33,764) — (28,062) Dividends declared to preferred  shareholders of Capstone  (7) 21f — — — (4,575) — (4,575) Dividends declared by Bristol Water — — — — (5,312) (5,312) Disposal of partial interest in Bristol Water — — 749 15,694 51,659 68,102 Balance, Dec 31, 2012 2 731,204 9,284 (809) (320,831) 91,610 510,458 Other comprehensive income (loss) 2 — — 17,822 1,442 12,690 31,954 Net income for the period — — — 41,362 25,848 67,210 Common shares issued  (5) 21a 75,453 — — — — 75,453 Other equity items issued or assumed on  acquisition of ReD  (6) 3 — 85 — — — 85 Expense recognized through share option reserve — 62 — — — 62 Debenture conversions, net of costs 21a 100 (3) — — — 97 Dividends declared to common shareholders of Capstone 21a,f 2,635 — — (24,333) — (21,698) Dividends declared to preferred  shareholders of Capstone  (7) 21f — — — (3,923) — (3,923) Dividends declared to NCI 22 — — — — (7,773) (7,773) Contributions from NCI 22 — — — — 3,405 3,405 NCI in net assets acquired of ReD 3 — — — — 12,833 12,833 Balance, Dec 31, 2013 809,392 9,428 17,013 (306,283) 138,613 668,163 (1) Share capital includes common and preferred shares and Class B exchangeableunits. (2) Other equity items include the equity portion of convertible debentures, as well as, the warrant and share option reserves. (3) Accumulated other comprehensive income (loss) (“AOCI”). (4) Non-controlling interest (“NCI”). See note 22. (5) Shares issued are net of $224 transaction costs (2012 - $89). (6) Capstone issued 302 replacement options and 1,357 replacement warrants with a fair values of $85and $Nil respectively at thetime  of ReD acquisition. (7) Dividends declared to preferred shareholders of Capstone include $173 of deferred income taxes (2012 - $200).