19th Mar 2012 07:00
19 March 2012
Renewable Energy Generation Limited
("REG" or the "Group")
Interim Results for the six months to 31 December 2011
RENEWABLE ENERGY GENERATION REPORTS STRONG MOMENTUM IN WIND AND BIO-POWER PROJECTS
Financial highlights
● | Group revenues of £6.3m (H1 2011: £4.3m) |
● | Group EBITDA of £1.6m (H1 2011: loss of £0.9m) |
● | Profit before tax breakeven (H1 2011: loss of £1.9m) |
● | Unrestricted cash resources of £19m as at 31 December 2011 |
● | Proposed interim dividend of 0.5p per ordinary share |
Operational highlights
● | Planning committee approval for 10MW Denzell Downs Wind Farm |
● | Construction underway at 10MW Sancton Hill Wind Farm |
● | Construction commencing for 6MW South Sharpley site |
● | REG Bio-Power's 2MW Leeds North plant begins operating under National Grid STOR contract |
● | Extension to STOR contract provides secure revenues until March 2014 |
● | £25m project financing completed |
● | Receipt of deferred consideration for the sale of AIM Powergen Corp. |
Andrew Whalley, REG Chief Executive Officer said:
"REG has continued to make encouraging progress over the period. We now have 41MWs of operational wind projects with a further 16MWs under construction which will increase our output of renewable energy by around 40%. In addition our development team is delivering a growing number of exciting projects into the planning system, highlighted by the approval last year for our 10MW scheme at Denzell Downs in Cornwall.
"REG Bio-Power too has performed well and the recent contract extension success with National Grid highlights the commercial potential of that business to deliver flexible and green STOR generation for the UK market.
"We remain optimistic that REG can continue to make a sound contribution to overall UK Government renewable energy targets."
A presentation to analysts will be held today at the offices of City Profile at 9.30 am.
Enquiries:
Renewable Energy Generation Limited Andrew Whalley, Chief Executive Officer David Crockford, Finance Director Ian Lawrence, Communications Manager
| +44 (0)1483 901 790 |
Smith & Williamson Corporate Finance Limited (Nominated Adviser) Nick Reeve / Martyn Fraser
| +44 (0)117 376 2213 |
Cenkos (Corporate Broker) Bobbie Hilliam
| +44 (0)20 7397 8900 |
City Profile Simon Courtenay / Abigail Genis | +44 (0)20 7448 3244 |
Notes to editors
Renewable Energy Generation Ltd (REG) is a UK renewable energy group. Its main business is the development, construction and operation of wind farms and generating power from refined used cooking oil.
REG Windpower: based in Truro and Bath, UK, it currently operates ten wind projects in Cambridgeshire, Cornwall, County Durham, Yorkshire, Cumbria and Gwynedd, with a total capacity of 41.15MW and has a development pipeline of over 1,000MW.
REG Bio-Power UK Ltd: based in Nottingham, UK: it operates electricity generation plant fuelled by waste vegetable oil.
Headquartered in Jersey, REG was admitted to trading on AIM, a market operated by the London Stock Exchange, in May 2005 (AIM: WIND).
www.renewableenergygeneration.co.uk
Overview of period
Group revenues increased by 47% to £6.3m compared with the corresponding period last year. As a result Group EBITDA improved from a loss of £0.9m, in the same period last year, to a profit of £1.6m, whilst the Group was pre tax breakeven compared with a loss of £1.9m last year.
UK wind over the period was above expected long term averages. REG's operational fleet generated output of 55,684MWh compared to 29,640MWh in the same period last year.
Installed capacity at December 2011 was 41.15MW, against 37.15MW installed at December 2010. Construction of REG's new projects at Sancton Hill in Yorkshire (10MW) and South Sharpley in County Durham (6MW) remain on track and are expected to be operational by Autumn 2012. The rise in fleet capacity to 57.15MW will ultimately increase REG's annual average wind output by 41% to over 150,000MWh per annum.
During the period we achieved a local authority planning committee resolution to grant permission for a new five turbine scheme at Denzell Downs in Cornwall. We are discharging a section 106 agreement here and subject to this, we expect this project to move to construction early next financial year. Additionally a number of new planning applications totalling 40MW have been submitted to date and whilst it is difficult to predict with any certainty the outcome of these submissions we believe they all have a good chance of ultimate approval.
REG Bio-Power enjoyed an encouraging period, predominantly through operation of its National Grid Short Term Operating Reserve contract. As part of this growth REG Bio-Power's generating capacity expanded through the addition of a 2MW plant at Leeds. From the date of Leeds North's operation in August 2011 REG Bio-Power has broadly broken even at the EBITDA level compared with an EBITDA loss in the same period last year of £0.7m. Further expansion of the REG Bio-Power portfolio can be expected as new sites are permitted during 2012. As flagged to investors, this growth will be achieved by leveraging REG Bio-Power's existing portfolio.
During the period REG successfully refinanced three further operational wind projects totalling 20.5MWs. This released £25m of funds back to the Group. Whilst a proportion of these proceeds have been reinvested into turbines and associated balance of plant for the Sancton Hill and South Sharply projects, REG's balance sheet retains over £19m in free cash.
The interim dividend is maintained at 0.5p per share and will be paid on 26 April to shareholders on the register as at 30 March 2012.
The Government continues to assert a strong commitment to onshore wind energy as a vital part of the UK's legally binding emissions reductions targets. The recently proposed reduction in tariff support, whilst unhelpful, is countered by ongoing favourable capital cost trends and preserves our view that the returns available to investors in the UK wind market remain acceptable.
Unaudited interim consolidated income statement
For the six months to 31 December 2011
Six months to 31 December 2011 | Six months to 31 December 2010 | Year to30 June 2011 | ||
£'000 | £'000 | £'000 | ||
(un-audited) | (un-audited) | (audited) | ||
Revenue | 6,258 | 4,271 | 9,818 | |
Cost of Sales | (3,279) | (2,805) | (6,020) | |
Gross profit | 2,979 | 1,466 | 3,798 | |
Administrative expenses | (2,300) | (2,401) | (4,881) | |
Exceptional administrative expenses (note 2) | (52) | (249) | (490) | |
Development costs | (646) | (1,135) | (1,742) | |
Other operating income | 12 | - | - | |
Group operating loss from continuing activities | (7) | (2,319) | (3,315) | |
Net finance revenue | 14 | 389 | 333 | |
Profit / (loss) on continuing operations before tax | 7 | (1,930) | (2,982) | |
Tax | - | 96 | 337 | |
Profit / (loss) on continuing operations after tax | 7 | (1,834) | (2,645) | |
Discontinued operations | ||||
Loss from discontinued operations | - | - | (373) | |
Profit / (loss) for the period | 7 | (1,834) | (3,018) | |
Attributable to | ||||
Equity holders of the parent | 7 | (1,834) | (3,018) | |
Non controlling interest | - | - | - | |
Total | 7 | (1,834) | (3,018) | |
Earnings per share for profit / (loss) attributable to the equity holders of the Company during the period | |||||
- basic and diluted from continuing activities | 0.01p | (1.78p) | (2.56p) | ||
- basic and diluted | 0.01p | (1.78p) | (2.92p) | ||
Unaudited interim consolidated balance sheet
As at 31 December 2011
31 December 2011 | 31 December 2010 | 30 June 2011 | ||
£'000 | £'000 | £'000 | ||
ASSETS | (un-audited) | (un-audited) | (audited) | |
Non-current assets | ||||
Goodwill (note 4) | 7,757 | 7,390 | 7,390 | |
Development assets (note 4) | 6,527 | 3,795 | 5,009 | |
Property, plant and equipment (note 5) | 60,188 | 50,087 | 50,578 | |
Deferred tax asset | 342 | - | 342 | |
74,814 | 61,272 | 63,319 | ||
Current Assets | ||||
Assets classified as held for sale | - | 506 | - | |
Inventories | 357 | 222 | 153 | |
Trade and other receivables | 3,753 | 5,573 | 5,454 | |
Intangibles | 2,551 | 2,292 | 2,278 | |
Restricted cash (note 6) | 10,556 | 1,627 | 900 | |
Cash and cash equivalents | 19,045 | 6,016 | 14,901 | |
36,262 | 16,236 | 23,686 | ||
Total assets | 111,076 | 77,508 | 87,005 | |
| ||||
LIABILITIES | ||||
Non-current liabilities | ||||
Borrowings | 33,812 | - | 10,421 | |
Derivatives | 2,082 | - | - | |
Other long term liabilities | - | 1,200 | 1,200 | |
Deferred tax liabilities | 380 | 58 | 380 | |
36,274 | 1,258 | 12,001 | ||
Current liabilities | ||||
Trade and other payables (note 7) | 5,367 | 3,137 | 2,834 | |
Borrowings | 1,044 | - | 717 | |
6,411 | 3,137 | 3,551 | ||
Total liabilities | 42,685 | 4,395 | 15,552 | |
EQUITY | ||||
Share capital | 10,325 | 10,325 | 10,325 | |
Share premium | 79,707 | 79,707 | 79,707 | |
Share based payment reserve | 1,227 | 1,139 | 1,179 | |
Hedging reserve | (2,118) | - | - | |
Retained earnings | (21,300) | (18,058) | (19,758) | |
Equity attributable to the equity holders of the parent | 67,841 | 73,113 | 71,453 | |
Non controlling interest | 550 | - | - | |
Total equity and liabilities | 111,076 | 77,508 | 87,005 | |
| ||||
Unaudited interim consolidated cash flow statement
For the six months to 31 December 2011
Six months to31 December 2011 | Six months to31 December 2010 | Year to30 June 2011 | |
£'000 | £'000 | £'000 | |
(un-audited) | (un-audited) | (audited) | |
Cash flows from operating activities | |||
Net cash used in operations | (578) | (3,943) | (2,032) |
Cash flows from investing activities | |||
Purchase of property, plant and equipment | (9,517) | (12,591) | (16,041) |
Proceeds from disposal of fixed assets | - | - | 480 |
Capitalised development costs | (1,290) | - | (1,427) |
Business combinations (note 2) | (450) | - | - |
Net proceeds from sale of subsidiary | 2,329 | 3,609 | 3,604 |
Interest received | 14 | 36 | 63 |
Movement in restricted cash accounts | (9,655) | 3,230 | 3,957 |
Net cash (used) in investing activities | (18,569) | (5,716) | (9,364) |
Cash flows from financing activities | |||
New borrowings (net of issue costs) | 23,957 | - | 11,138 |
Interest paid | (366) | - | - |
Repayment of borrowings | (299) | - | - |
Dividends paid to Company's shareholders | - | (1,549) | (2,065) |
Net cash generated/(used) from financing activities | 23,292 | (1,549) | 9,073 |
Net increase/ (decrease) in cash and cash equivalents | 4,144 | (11,208) | (2,323) |
Cash at beginning of period | 14,901 | 17,224 | 17,224 |
Cash at end of period | 19,045 | 6,016 | 14,901 |
Unaudited statement of comprehensive income
For the six months to 31 December 2011
Six months ended 31 December 2011 | Six months ended 31 December 2011 |
Year ended 30 June 2011 | |
£'000 | £'000 | £'000 | |
(un-audited) | (un-audited) | (audited) | |
Profit / (loss) for the period | 7 | (1,834) | (3,018) |
Other comprehensive income / (expenditure) | - | - | - |
Effective portion of change in fair value cash flow hedges net of recycling | (2,118) | - | - |
Total comprehensive income / (expenditure) for the period net of tax | (2,111) | (1,834) | (3,018) |
Attributable to | |||
Equity holders of the parent | (2,111) | (1,834) | (3,018) |
Non controlling interest | - | - | - |
Total | (2,111) | (1,834) | (3,018) |
Unaudited interim consolidated statement of changes in equity
For the six months to 31 December 2011
Share capital |
Share premium account | Share based paymentsreserve |
Hedging reserve |
Retained earnings | Total | Non controlling interest | Total equity | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 July 2011 | 10,325 | 79,707 | 1,179 | - | (19,758) | 71,453 | - | 71,453 |
Total comprehensive income | - | - | - | (2,118) | 7 | (2,111) | - | (2,111) |
Share based payments | - | - | 48 | - | - | 48 | - | 48 |
Dividend (note 3) | - | - | - | - | (1,549) | (1,549) | - | (1,549) |
Acquisitions of non controlling interest with a change of control | - | - | - | - | - | - | 550 | 550 |
At 31 December 2011 | 10,325 | 79,707 | 1,227 | (2,118) | (21,300) | 67,841 | 550 | 68,391 |
Notes to the un-audited interim consolidated financial statements
1. Statement of compliance
While the financial information included in this unaudited interim financial statement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRS.
This interim financial statement has been prepared on the basis of accounting policies adopted by the Group and set out in the annual report and accounts for the year ended 30 June 2011. The Group does not anticipate any change in these accounting policies for the year ended 30 June 2012. As permitted, this interim report has been prepared in accordance with the AIM rules and not in accordance with IAS 34 "Interim financial reporting".
2. Business combinations
On 28 July 2011 the Group acquired a 66.67% controlling stake in the ordinary share capital of REG Creagh JV Company Limited for initial consideration of £450,000.
REG Creagh JV Company Limited is a strategic partnership with Creagh Concrete to develop wind farms in Northern Ireland. At the time of acquisition the primary asset of the company was a conditional consent to build a 6MW wind farm.
Following clearance of the remaining planning conditions, a further £550,000 of cash and REG shares to the value of £100,000 will be paid bringing the maximum consideration to £1,100,000. As at the 31 December 2011, £650,000 remains as deferred consideration and is included within trade and other payables.
The preliminary assessment of the assets acquired and goodwill are as follows:
£'000 | |
(un-audited) | |
Development assets (note 4) | 1,283 |
Goodwill (note 4) | 367 |
Total assets on acquisition | 1,650 |
Total purchase consideration for controlling interest | (1,100) |
Non controlling interest | (550) |
Acquisition related costs
The Group incurred acquisition related costs of £52,000 related to external legal fees and due diligence costs. Under IFRS3 (Revised), the legal fees and due diligence costs have been disclosed as exceptional administrative expenses in the Group's consolidated income statement.
3. Dividends
Six months to31 December 2011 | Six months to31 December 2010 | Year to30 June 2011 | |
Declared and paid during the period onordinary equity shares | £'000 | £'000 | £'000 |
(un-audited) | (un-audited) | (audited) | |
Second interim dividend declared and paid | - | 1,549 | 1,549 |
Second interim dividend declared and not paid (note 7) | 1,549 | - | - |
First interim dividend declared and paid | - | - | 516 |
1,549 | 1,549 | 2,065 | |
Proposed but not recognised as a liability at 31 December 2011 | |||
Equity dividends on ordinary shares: | |||
First interim dividend declared and paid - 0.5p | 516 | 516 | - |
The dividend will be paid on 26 April 2012 to members on the register on 30 March 2012. Shares will be marked ex-dividend on 28 March 2012.
4. Intangible assets
(un-audited) | Development costs | Goodwill | Total |
£'000 | £'000 | £'000 | |
Cost | |||
At 1 January 2011 | 4,156 | 7,390 | 11,546 |
Additions | 1,427 | - | 1,427 |
At 30 June 2011 | 5,583 | 7,390 | 12,973 |
Additions | 2,882 | 367 | 2,699 |
Transfers to property, plant and equipment | (1,554) | - | (1,554) |
At 31 December 2011 | 6,911 | 7,757 | 14,118 |
Amortisation and impairment | |||
At 1 January 2011 | 361 | - | 361 |
Amortisation charge | 33 | - | 33 |
Impairment charge | 362 | - | 362 |
Reversal of prior year impairment | (182) | - | (182) |
At 30 June 2011 | 574 | - | 574 |
Amortisation charge | 36 | - | 39 |
Transfers to property, plant and equipment | (229) | - | (229) |
At 31 December 2011 | 384 | - | 384 |
Net book value | |||
At 31 December 2011 | 6,527 | 7,757 | 14,284 |
At 30 June 2011 | 5,009 | 7,390 | 11,210 |
At 1 January 2011 | 3,795 | 7,390 | 8,760 |
Included within additions to development costs are internal development costs of £160,000 (2011: £nil). Also included within development costs is £1,283,000 acquired as part of the acquisition of REG Creagh JV Company disclosed in note 2.
Following the successful planning decisions and commencement of construction at Sancton Hill and South Sharpley, development costs totalling £552,000 have been transferred to assets under construction within Tangible Fixed Assets. A further £1,002,000 of costs and £229,000 of amortisation relating to 5 sites already operational have also been transferred to Tangible Fixed Assets.
5. Property, plant and equipment
(un-audited) | Operating wind sites | Other generation plant | Assets in the course of construction | Freehold land | Fixtures, fittings and equipment | Total |
£000 | £000 | £000 | £000 | £000 | £000 | |
Cost | ||||||
At 1 January 2011 | 47,701 | 4,490 | 70 | 1,252 | 1,265 | 54,778 |
Additions | 551 | 92 | 385 | - | 136 | 1,164 |
At 30 June 2011 | 48,252 | 4,582 | 455 | 1,252 | 1,401 | 55,942 |
Additions | 118 | 118 | 9,505 | - | 99 | 9,840 |
Transfers from Development costs | 1,002 | - | 552 | - | - | 1,554 |
Movements | - | 888 | (888) | - | - | - |
At 31 December 2011 | 49,372 | 5,588 | 9,624 | 1,252 | 1,500 | 67,336 |
Depreciation | ||||||
At 1 January 2011 | 4,238 | 252 | - | - | 201 | 4,691 |
Depreciation charge | 450 | 108 | - | - | 115 | 673 |
At 30 June 2011 | 4,688 | 360 | - | - | 316 | 5,364 |
Depreciation charge | 1,337 | 121 | - | - | 97 | 1,525 |
Transfers from Development costs | 229 | - | - | - | - | 229 |
At 31 December 2011 | 6,254 | 481 | - | - | 413 | 7,148 |
Net book value | ||||||
At 31 December 2011 | 43,098 | 5,107 | 9,624 | 1,252 | 1,087 | 60,188 |
At 30 June 2011 | 43,564 | 4,222 | 455 | 1,252 | 1,085 | 50,578 |
At 1 January 2011 | 43,463 | 4,238 | 70 | 1,252 | 1,064 | 50,087 |
During the year an amount of £427,000 (2011 - £nil) of borrowing costs were capitalised into assets in the course of construction. Capitalisation of borrowing costs has increased as a result of new additions being funded from debt.
Assets under construction at the period end included the 10MW Sancton Hill wind farm in Yorkshire and the 6MW South Sharpley wind farm in County Durham.
6. Restricted cash
Six months to31 December 2011 | Six months to31 December 2010 | Year to30 June 2011 | |
£'000 | £'000 | £'000 | |
(un-audited) | (un-audited) | (audited) | |
Amounts deposited as security for letters of credit for settlement of turbine acquisitions | 6,003 | 1,627 | - |
Amounts placed as security for future operating costs | 427 | - | - |
Amounts placed as security against maintenance contractor | 2,000 | - | - |
Amounts placed as security for future debt service costs | 2,126 | - | 900 |
10,556 | 1,627 | 900 |
7. Trade and other payables
Six months to31 December 2011 | Six months to31 December 2010 | Year to30 June 2011 | |
£'000 | £'000 | £'000 | |
(un-audited) | (un-audited) | (audited) | |
Trade payables | 806 | 2,309 | 1,617 |
VAT | - | - | 80 |
Final dividend, paid 13 January 2012 | 1,549 | - | - |
Deferred consideration | 1,850 | - | - |
Accruals | 1,162 | 828 | 1,137 |
5,367 | 3,137 | 2,834 |
Included within deferred consideration is £1,200,000 which relates to the acquisition of the St. Breock wind farm from E.ON Climate and Renewables UK Operations Ltd and is payable on gaining satisfactory planning permission to repower the site.
Also included within deferred consideration is £650,000 on the acquisition of REG Creagh JV Limited, which is payable on financial close.
Related Shares:
WIND.L