15th Sep 2006 07:01
Renewable Energy Holdings plc15 September 2006 Renewable Energy Holdings plc Preliminary Unaudited Results for the year ended 30 June 2006 Renewable Energy Holdings plc ("REH" or "the Company"), the AIM listed investorand operator of proven and innovative renewable energy technologies, announcespreliminary results for the year ended 30 June 2006, the Company's first fullyear of operations. REH floated on AIM in February 2005. REH owns two wind farm sites in Germany -Kesfeld, established to build a 32.5MW wind farm of which stage 1, 27.9MW is nowfully operational and stage 2, 4.6MW is underway, and Kirf, established to builda 9.2MW wind farm. REH also owns and operates a 1MW landfill gas project in BrynPosteg, Wales which produces electricity from collected methane gas. REH is alsocontinuing to develop CETO, a unique wave energy device which has been proven togenerate electricity and desalinated water. Highlights: • Revenues from first investments representing only six months of operation of £1.47m (2005: nil) • Loss before tax of £2.06m (2005: £1.39m) after charging £1.0m in respect of project task costs written off, share options expense and CETO development costs, all in compliance with IFRS • 27.9MW German wind farm built in 2005 and accruing income since January 2006 • Ongoing expansion of German wind farm with an additional 4.6MW underway and a further 8MW planned • Landfill gas project in Wales now under REH ownership with rights to all methane extraction secured • Current Welsh Landfill gas power purchase agreement of £52.10 per MW of electricity per hour, expected to rise in November 2007 • CETO tests completed with commercial demonstration projects in Australia and UK to follow next year Mike Proffitt, Chief Executive of REH, said: "I believe your Company is now soundly positioned to grow its renewable energycapacity across the UK and Europe working with each of its strategic partnersand advisors. The Group is now established in the sector and has an active dealflow which has already led to a substantial pipeline of potential investments." Renewable Energy Holdings plc Parkgreen Communications Ltd Nabarro Wells & Co. LtdMike Proffitt, Chief Executive Paul McManus Richard SwindellsTel: 01624 641199 Tel: 020 7493 3716 Tel: 020 7710 7400 Mob: 07980 541 893 Chairman's Statement I am pleased to report that, in this our first full year of operations, we arereceiving income from our first investments in line with the aspirations we setout a year ago. The Board has elected to change the Group's year end from June30th to December 31st. Accordingly, the Group's next year end will be the 6months to December 31st 2006 and will then report income from our windgeneration and methane recovery operations for a full twelve months. The sustained high price of fossil fuels, and the broadening awareness ofclimate change issues, has continued to focus attention in many countries onnon-carbon-based fuels and renewable energy technologies in particular. Againstthis background, the sector developers are now markedly aware of the Group'sactivities and our deal pipeline has become a continuous flow of investmentopportunities across Europe and the UK. Several of these are being activelyexplored, and we are optimistic that we will add new profitable projects to ourasset base in the coming months. Our CETO wave energy device has come through extensive sea-trials in the firsthalf of 2006, with all key milestones having been met successfully and proof ofprinciple fully established. We will now be taking the technology forward byway of commercial demonstration projects that will exploit its desalination aswell as its energy generation potential. The Group's Corporate Governance has further developed during the year, withregular Board meetings along with Audit Committee and Remuneration Committeemeetings. During the year the Board changed the Group's Nominated Advisor and CorporateBroker to Nabarro Wells and Panmure Gordon respectively, and these relationshipsare now well embedded. Admiral Roger Lane-Nott retired as a Director during the year and I would liketo thank him for his valuable contribution during his tenure on the Board. We believe that the business model promoted by the Group at its IPO in February2005 has been successfully prosecuted and prospects for growth are now atangible reality. I would like to thank my fellow Board members, along withthe Executive team, for their hard work and dedication during the year. John W BakerChairman Chief Executive's Report At the year end 30 June 2006 your Company was still only 17 months old, havingbeen admitted to the AIM in February 2005. At the first year end to 30 June 2005, we reported very little to you other thanstart-up activities. At the end of this second year, I am delighted to report to you the results ofprojects we have worked on and in particular your Group's first revenues. Operating expenses of £3,386,214 include £114,038, £273,522 and £612,289 ofcosts in relation to the stock option plan, deal task costs and CETO developmentcosts respectively. Compliance with IFRS obligates the Group to recognise theseexpenses as costs in the accounting period, even task costs relating to asuccessful project brought to completion in the subsequent accounting period. In Germany our 27.9MW wind farm was built in 2005 and has been accruing incometo the Group since January 2006. The total EBITDA for Germany the six monthperiod to year end was £1,177,708. During this period the project experiencedall of the usual engineering challenges and I am pleased to report that the windfarm has satisfied all the "final completion" conditions of the financingagreements with the project's lender. Civil engineering and associated works are currently underway to expand thiswindfarm by a further 4.6MW with an additional 8.0MW (originally 9.2MW) plannedon a nearby site. It is our intention to acquire both developments. The Group's landfill gas project in Wales was completed shortly before the yearend. The rights to all methane extraction from the landfill for the rest of itsexpected 20 years of life were purchased for £2million. The project has been yielding flows of methane gas for the last 12 months and iscurrently capable of producing up to 1 MW of electricity per hour ("MWH"). Acurrent power purchase agreement of £52.10 per MWH expires in November 2007 andit is anticipated that the replacement power purchase agreement will be at asubstantially higher price. Minor engineering works are underway at Bryn Posteg to increase the efficientcollection of gas and thereby grow the electricity output. The Group intends to seek further investment in landfill gas operations in Walesand throughout the UK. CETO, the Group's Wave Energy device has seen considerable development duringthe year. In May 2006 we were able to demonstrate the prototype, deployed nearPerth, Australia, generating electricity and producing desalinated water. Following this proof of concept, much work has already been done to engineer adesign that will be commercially competitive, and we believe this has beenaccomplished in CETO II, a development of the original concept with much of theengineering costs removed. It is now planned to build and deploy two commercial prototypes of CETO II. TheAlpha project will remain in Perth, Australia with the Beta project planned forUK deployment. To assess and position the commercial development appropriately, a CompetentPerson's Report is being commissioned to provide an external review of theengineering design and commercial assumptions. I believe your Company is now soundly positioned to grow its renewable energycapacity across the UK and Europe, working with each of its strategic partnersand advisors. The Group is now established in the sector and has an active dealflow which has already led to a substantial pipeline of potential investments. Michael J ProffittChief Executive Officer Unaudited consolidated income statement for the year ended 30 June 2006 Year ended 30 June Period ended 30 2006 June 2005 Note £ £ Revenue & gross profit 1,468,178 - CETO development expenses 612,289 535,809Administrative expenses 2,773,925 988,722 ________ ________ Loss from operations (1,918,036) (1,524,531) Finance costs (333,560) - Finance income 194,702 135,631 ________ ________ Loss before tax (2,056,894) (1,388,900) Tax expense 3 108,436 - ________ ________ Loss after tax attributable to the (2,165,330) (1,388,900)equity holders of the parent _________ _________ Basic and diluted loss per share 4 (5.98p) (8.86p) _________ _________ Unaudited consolidated statement of recognised income and expense for the yearended 30 June 2006 Year ended 30 Period ended 30 June 2006 June 2005 Note £ £Loss after tax (2,165,330) (1,388,900) Foreign exchange loss on retranslation of overseas operations (518) (9,778) _________ _________ Total recognised income and expense for the year 8 (2,165,848) (1,398,678) _________ _________ Unaudited consolidated balance sheet at 30 June 2006 2006 2005 Note £ £Non-current assetsProperty, plant & equipment 5 23,293,606 -Intangible assets 6 7,649,485 5,559,878 Current assetsTrade and other receivables 765,658 255,952Cash and cash equivalents 7 5,678,840 7,220,479 ________ ________Total current assets 6,444,498 7,476,431 ________ ________ Total assets 37,387,589 13,036,309 _________ _________ Current liabilitiesTrade and other payables 789,178 134,929Other financial liabilities 7 1,458,063 - ________ _______Total current liabilities 2,247,241 134,929 Non current liabilitiesFinancial liabilities 7 16,067,108 -Deferred tax liability 109,531 -Other creditors 70,000 - ________ ________ Total non current liabilities 16,246,639 - _________ ________Total liabilities 18,493,880 134,929 _________ ________ TOTAL NET ASSETS 18,893,709 12,901,380 £ £Capital and reserves attributable to equity holders of thecompanyShare capital 452,666 290,000Share premium reserve 16,583,898 8,702,425Foreign exchange reserve (10,296) (9,778)Share based payment reserve 956,571 897,633Merger reserve 4,410,000 4,410,000Retained earnings (3,499,130) (1,388,900) ________ ________ TOTAL EQUITY 18,893,709 12,901,380 _________ _________ Unaudited consolidated cash flow statement for the year ended 30 June 2006 Year ended 30 Period ended 30 June June 2006 2005 Note £ £Operating ActivitiesNet loss from operations (1,918,036) (1,524,531)Adjustments for :Depreciation 601,056 -Amortisation 17,560 -Foreign exchange gains 577 -Equity settled share based payment 114,038 445,233 _________ _________ Operating loss before changes in working capital and provisions (1,184,805) (1,079,298)Decrease/(increase) in deferred expenditure 196,569 (196,569)Increase in trade and other receivables (513,129) (58,107)Decrease/(increase) in other financial assets 1,276 (1,276)Increase in trade and other payables 611,730 12,273 _________ _________ Cash absorbed from operations (888,359) (1,322,977) _________ _________ Income taxes paid - - _________ _________ Cash flows from operating activities (888,359) (1,322,977) _________ _________ Unaudited consolidated cash flow statement for the year ended 30 June 2006(continued) Year ended Period ended 30 June 30 June 2005 2006 Note £ £ Cash flows from operating activities (brought forward) (888,359) (1,322,977) Investing activitiesAcquisition of property, plant & equipment (23,601,806) -Acquisition of subsidiary - net of cash acquired (2,481,926) (561,300)Finance income received 194,702 135,631 ________ ________ (25,889,030) (425,669)Financing activitiesIssue of ordinary shares 8,550,000 10,000,000Issue costs (505,861) (1,030,875)Proceeds from bank borrowing 18,655,165 -Issue costs for bank borrowing (500,572) -Repayment of bank borrowing (661,212) -Finance costs paid (301,770) - ________ ________ 25,235,750 8,969,125 ________ ________(Decrease)/increase in cash and cash equivalents 10 (1,541,639) 7,220,479 ________ ________ Notes forming part of the preliminary results for the year ended 30 June 2006 1 Basis of preparation The unaudited financial information set out in this preliminary announcementdoes not constitute the company's statutory accounts for the years ended 30 June2006 or 2005. The financial information for the year ended 30 June 2005 isderived from the statutory accounts for that year which have been delivered tothe Registrar of Companies. The auditors have reported on those accounts; theirreport was unqualified and did not contain a statement under section 15 (4) or15 (6) of the Isle of Man Companies Act 1982. The statutory accounts for theyear ended 30 June 2006 will be finalised on the basis of the financialinformation presented by the directors in this preliminary announcement and willbe delivered to the Registrar of Companies following the company's annualgeneral meeting. 2 Segment information The group's primary reporting format for reporting segment information isbusiness segments, and the segments are defined as Head Office, CETOdevelopment, Windfarm and Landfill gas. This split coincides with a geographicalorigin split of activities; Head Office being in the Isle of Man, CETOdevelopment taking place in Australia, Windfarm being in Germany and Landfillgas being in Wales. 2006 Head Office CETO Development Windfarm Landfill gas Total Isle of Man Australia Germany Wales £ £ £ £ £IncomeRevenue - - 1,427,280 40,898 1,468,178Finance income 169,485 4,666 20,551 - 194,702 ExpensesContinuing operations 1,890,867 479,146 249,572 39,877 2,659,462Finance costs - - 333,560 - 333,560Depreciation & - - 584,826 27,888 612,714amortisationOther non-cash charge 114,038 - - - 114,038 _________ ________ _______ _______ _________Total profit/(loss) (1,835,420) (474,480) 279,873 (26,867) (2,056,894)before taxation _________ ________ _______ _______ _________ Balance SheetAssetsProperty, plant & - - 23,060,893 232,713 23,293,606equipmentIntangible assets - 5,559,878 - 2,089,607 7,649,485Current assets 3,699,879 125,477 2,455,506 163,636 6,444,498 Liabilities 349,140 35,839 17,979,178 129,723 18,493,880 ________ ________ ________ ________ _________Net assets 3,350,739 5,649,516 7,537,221 2,356,233 18,893,709 _________ _________ _________ _________ _________ Segment information (Continued) 2005 Head Office CETO Development Windfarm Landfill gas Total Isle of Man Australia Germany Wales £ £ £ £ £IncomeRevenue - - - - -Finance income 133,395 2,236 - - 135,631 ExpensesContinuing operations 543,489 535,809 - - 1,079,298Finance costs - - - - -Depreciation & amortisation - - - - -Other non-cash charge 445,233 - - - 445,233 ________ ________ _______ _______ _________ Total loss before taxation (855,327) (533,573) - - (1,388,900) ________ ________ _______ _______ _________Balance SheetAssetsIntangible assets - 5,559,878 - - 5,559,878Current assets 7,353,624 122,807 - - 7,476,431 Liabilities 29,740 105,189 - - 134,929 ________ ________ _______ _______ _________ Net assets 7,323,884 5,577,496 - - 12,901,380 ________ ________ _______ _______ _________ The group's secondary reporting format for reporting segment information isgeographic segments. 3 Tax expense Year ended 30 June Period ended 30 2006 June 2005 £ £Current tax expenseIncome tax on loss for the period - - Deferred tax expenseOrigination and reversal of temporary differences 108,436 - _______ _______ Total current tax 108,436 - _______ _______ 4 Loss Per Share 2006 2005 £ £Numerator Loss used in basic and diluted EPS 2,165,330 1,388,900 ________ ________Denominator Weighed average number of shares used in basic and diluted EPS 36,230,870 15,684,827 _________ _________ The loss figure used in this calculation is the loss for the year. 2006 2005Total share options in issue 5,594,167 4,925,000 ________ ________ The effect of any share options granted are anti-dilutive. 5 Property, plant and equipment £Year ended 30 June 2006 Opening net book value, cost and accumulated depreciation - Additions 23,601,500Acquisitions 293,162 _________ Cost at 30 June 2006 23,894,662 Depreciation 595,154Foreign exchange difference 5,902 _________ Depreciation at 30 June 2006 601,056 _________ Closing net book value 23,293,606 __________ The Group has contracted to build an expansion to the Kesfeld Windfarm at a costof approximately £4.5 million. This contract is conditional upon financingarrangements being concluded. 6 Intangible assets Landfill gas rights In-process research & Total development Ceto devicePeriod ended 30 June 2005 £ £ £At incorporation - - -Acquisitions - 5,559,878 5,559,878 ________ ________ ________ Closing net book value - 5,559,878 5,559,878 ________ ________ ________Year ended 30 June 2006 Opening net book value - 5,559,878 5,559,878 Acquisitions 2,107,167 - 2,107,167 _________ _________ _________ 2,107,167 5,559,878 7,667,045Amortisation charge for the year 17,560 - 17,560 _________ _________ _________ Closing net book value 2,089,607 5,559,878 7,649,485 __________ __________ __________ 7 Financial assets and liabilities - numerical information Maturity of financial liability The carrying amounts of financial liabilities, all of which are exposed to cashflow or fair value interest rate risk, are repayable as follows: 2006 2005 £ £In less than one year 1,458,063 -In more than one year but not more than two years 1,372,264 -In more than two years but not more than three years 1,302,679 -In more than three years but not more than four years 1,334,903 -In more than four years but not more than five years 1,257,718 -In more than five years 10,799,544 - _________ _________ 17,525,171 - _________ _________ The currency and interest profile of the Group's financial assets andliabilities after taking account of interest rate swaps are as follows: 2006 Floating Rate Interest Free Total Assets Interest free Floating rate Fixed rate Total Assets Assets liabilities liabilities liabilities Liabilities £ £ £ £ £ £ £Sterling 3,576,192 - 3,576,192 28,606 - - 28,606Euros 2,006,949 - 2,006,949 - 4,433,600 13,091,571 17,525,171Australian 95,699 - 95,699 26,555 - - 26,555Dollars ________ ________ ________ ________ ________ ________ ________ Total 5,678,840 - 5,678,840 55,161 4,433,600 13,091,571 17,580,332 ________ ________ ________ ________ ________ ________ ________ 2005 Floating Rate Interest Free Total Assets Interest free Floating rate Fixed rate Total Assets Assets liabilities liabilities liabilities Liabilities £ £ £ £ £ £ £Sterling 7,116,330 - 7,116,330 - - - -Australian 104,149 - 104,149 95,935 - - 95,935Dollars ________ ________ ________ ________ ________ ________ ________ Total 7,220,479 - 7,220,479 95,935 - - 95,935 ________ ________ ________ ________ ________ ________ ________ At 30 June 2006 floating rate assets attracted interest rates as follows: Sterling 4.22%Euros 1.33%Australian Dollars 5.12% The fair value is not significantly different to the book value shown above. The current level of financial assets and liabilities is such that management donot employ risk management strategies such as hedging. All the assets and shares in the German subsidiaries are pledged as security forthe euro-denominated loans above. The total net assets of the subsidiaries havea book value of £7,537,222 at 30 June 2006. Cash balances include a Debt Service Reserve Account balance of £993,138, whichis not available to the Group until the loan is repaid, and further restrictedcash balances of £1,013,811, which is not available until January 2007. 8 Changes in shareholder's equity 2006 2005 £ £Total recognized income and expense (2,165,848) (1,398,678)Issue of new ordinary shares for cash (net of expenses) 8,044,139 8,902,425Issue of new ordinary shares other than for cash (net of expenses) - 4,500,000Share based payment expense 114,038 897,633 ________ _________ Total change in the year 5,992,329 12,901,380 Capital and reserves attributable to equity holders of the parent at 12,901,380 -the beginning of the period _________ _________ Capital and reserves attributable to equity holders of the parent atthe end of the period 18,893,709 12,901,380 __________ __________ 9 Acquisitions during the year On 20 July 2005 and 12 August 2005 the group acquired 100% of the equityinterest in both Windpark Kesfeld Heckhuscheid GmbH & Co. KG (Windpark Kesfeld)and Windpark Kirf GmbH & Co. KG (Windpark Kirf) respectively. Details of the fair value of identifiable assets and purchase consideration areas follows: Windpark Windpark Windpark Windpark Kesfeld Kesfeld Kirf Kirf £ Euro £ EuroFair value of assets acquiredPlanning permission and leases 27,484 40,000 22,331 32,500 Cash 6,871 10,000 1,718 2,500 __________ __________ __________ __________ Consideration paid as cash 34,355 50,000 24,049 35,000 __________ __________ __________ __________ Book value prior to acquisition by the group 6,871 10,000 1,718 2,500 __________ __________ __________ __________ Post acquisition profit 171,437 250,486 - - __________ __________ __________ __________ The difference between the book value and fair value relates to a fair valueadjustment made in respect of planning permission and leases. On 12 May 2006 the Group acquired 100% of the voting equity instruments of GwyntCymru Limited, a Company whose principle activity is the production ofelectricity from landfill methane gas. £Fair value of assets acquiredFixed tangible assets 243,041Gas rights (intangible) 2,107,167Cash (17,808)Debtors 194,422Creditors (112,519) _________ 2,414,303 _________ £Consideration paidCash 1,950,000Costs of acquisition 464,303 _________ 2,414,303 _________ Book value of net assets prior to acquisition by the group 307,136 _________ Post acquisition loss (26,867) _________ The difference between the book value and fair value relates to a fair valueadjustment made in respect of gas rights. There is no significant difference between the revenue and profits of the Grouphad the acquisitions been made on 1 July 2005. No goodwill arose on the aboveacquisitions as the consideration paid was equal to the fair value of the netassets acquired including the gas rights acquired. 10 Notes supporting cash flow statement 2006 2005 £ £Cash and cash equivalents comprises: Cash available on demand 521,160 77,953Short-term deposits 5,157,680 7,142,526 ________ ________ 5,678,840 7,220,479 ________ ________ Net (decrease)/increase in cash and cash equivalents (1,541,639) 7,220,479 ________ ________ Cash and cash equivalents at the beginning of the period 7,220,479 - ________ ________ Cash and cash equivalents at end of period 5,678,840 7,220,479 ________ ________ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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