3rd Sep 2008 07:00
3 September 2008
Renewable Energy Holdings plc
("REH" or "the Company")
Interim results for the six months ended 30 June 2008
Renewable Energy Holdings plc (AIM: REH), the AIM quoted investor and operator of proven and innovative renewable energy technologies, is pleased to announce its interim results for the six months ended 30 June 2008.
Financial Highlights
Operational Highlights
Commenting on the results, Mike Proffitt, Chief Executive of REH, said:
"We have created a platform for the growth of REH's asset portfolio, both in terms of our financial and human resources. We continue to make good progress on the expansion of our proven technology assets and are moving towards the commercialisation of CETO, our proprietary wave energy technology.
"There is growing interest in sound renewable energy technologies and REH is well positioned to take advantage of the increasing opportunities."
For further information please contact:
|
Mike Proffitt, Chief Executive |
|
|
Renewable Energy Holdings plc |
Tel: 01624 641199 |
|
Richard Swindells / Andrew Craig |
|
|
Ambrian Partners - Nominated Adviser & broker to REH |
Tel: 020 7634 7405 |
|
Samantha Robbins / Paul Dulieu |
|
|
Redleaf Communications |
Tel: 020 7822 0200 |
Chairman's Statement
The half year to 30 June 2008 has been a positive and encouraging period, both in relation to the Group and the environment in which we operate.
Taking the Group first, the €135 million credit facility with Standard Chartered Bank has been increased to €183 million to secure project financing sufficient for the whole of our immediate pipeline of wind projects: the further expansion of our assets in Germany to 45MW, our 30MW project in Poland and 69MW project in Wales have all made sound progress.
We upgraded the Power Purchase Agreement for our landfill gas plant in Wales from £52.10 per MWH to £104.60 per MWH with positive impact on cash flow.
The pre-commercial design of CETO, the Group's unique wave energy technology, has been undergoing tests and sea trials in Perth, Western Australia and the first milestone under the EDF EN agreement has been reached. Whilst the development of a new technology such as CETO cannot be without risk in terms of the need to modify the engineering or of possible delays, we have increasing confidence in the technology and its commercial viability. The costs to commercialise the CETO technology are now estimated to be some £4.75 million and the Group has de-risked these costs through a Licence Agreement with the Carnegie Corporation Limited. Carnegie has agreed to pay £4.75 million to purchase the rights to use the CETO technology in the Southern Hemisphere (with the exception of Ile de la Reunion) subject to the payment of licence fees and royalties on each project that they develop. Carnegie has paid approximately £2.75 million in terms of its obligation under the Licence Agreement, and we expect the balance will largely be paid by 31 December 2008.
CETO Development Company Limited, our joint venture with EDF Energy Nouvelles SA to commercialise CETO in the Northern Hemisphere, has been active in the identification of suitable target sites for a development pipeline of projects. Memorandums of Understanding have been signed in respect of possible projects in Vancouver and the Bermuda, and we have also identified suitable sites in Ireland and the west coast of France.
The pace of development both in relation to possible wind projects and CETO has led us to strengthen our team. We have appointed a New Business Director, a Science and Intellectual Property Manager and a Senior Project Engineer. Whilst we remain a small and highly motivated team, we believe we have the capacity to grow the Group towards its initial goal of 150MW of wind power by the end of 2010, together with the commercial roll out of CETO at locations around the world.
As regards the business environment in which we operate, and in contrast to the generally pessimistic business outlook in relation to developed economies and financial markets, the headline news for the group has been largely very positive. Global warming, high gas and oil prices, and threats to the security of energy supplies, whilst challenging in themselves, all point to increasing opportunities for sound renewable energy technologies, and REH is well placed to seize these opportunities.
J W Baker
Chairman
Interim condensed consolidated income statement for the six months ended 30 June 2008
|
Notes |
Six months ended 30 June 2008 (Unaudited) |
Six months ended 30 June 2007 (Unaudited) (Restated) |
Year ended 31 December 2007 (Audited) |
||||||
|
£ |
£ |
£ |
|||||||
|
Revenue & gross profit |
4 |
4,634,228 |
1,859,928 |
4,584,910 |
|||||
|
Other operating income |
- |
- |
296,040 |
||||||
|
Administrative expenses |
(2,867,160) |
(2,328,697) |
(5,288,439) |
||||||
|
Profit/(loss) from operations |
1,767,068 |
(468,769) |
(407,489) |
||||||
|
Finance cost |
(911,419) |
(762,989) |
(1,148,699) |
||||||
|
Finance income |
214,552 |
31,627 |
177,458 |
||||||
|
Profit/(loss) before tax |
4 |
1,070,201 |
(1,200,131) |
(1,378,730) |
|||||
|
Taxation |
87,858 |
(51,721) |
(72,732) |
||||||
|
Profit/(loss) after tax attributable to the equity holders of the parent |
1,158,059 |
(1,251,852) |
(1,451,462) |
||||||
|
Basic earnings/(loss) per share |
5 |
1.7 |
(2.8) |
(2.8) |
|||||
|
Diluted earnings/(loss) per share |
5 |
1.6 |
(2.8) |
(2.8) |
|||||
Interim condensed consolidated balance sheet at 30 June 2008
|
Notes |
30 June 2008 (Unaudited) |
30 June 2007 (Unaudited) (Restated) |
31 December 2007 (Audited) |
||||||
|
£ |
£ |
£ |
|||||||
|
Non-current assets |
|||||||||
|
Property, plant and equipment |
4 |
36,876,423 |
26,502,841 |
35,321,316 |
|||||
|
Intangible assets |
4 |
10,589,662 |
8,059,277 |
8,538,143 |
|||||
|
Investments in equity accounted associates |
4 |
49 |
- |
- |
|||||
|
Current assets |
|||||||||
|
Cash and cash equivalents |
9,566,277 |
2,885,944 |
7,115,053 |
||||||
|
Trade and other receivables |
1,609,873 |
670,632 |
1,610,283 |
||||||
|
Income tax receivable |
181,556 |
- |
- |
||||||
|
Total current assets |
4 |
11,357,706 |
3,556,576 |
8,725,336 |
|||||
|
Total assets |
58,823,840 |
38,118,694 |
52,584,795 |
||||||
|
Current liabilities |
|||||||||
|
Trade and other payables |
1,633,021 |
958,501 |
1,257,958 |
||||||
|
Income tax liability |
- |
101,311 |
80,442 |
||||||
|
Other financial liabilities |
2,142,625 |
1,509,799 |
1,938,338 |
||||||
|
Total current liabilities |
3,775,646 |
2,569,611 |
3,276,738 |
||||||
|
Non-current liabilities |
|||||||||
|
Financial liabilities |
24,957,893 |
19,370,297 |
24,623,478 |
||||||
|
Deferred tax liability |
214,113 |
93,497 |
104,344 |
||||||
|
25,172,006 |
19,463,794 |
24,727,822 |
|||||||
|
Total liabilities |
4 |
28,947,652 |
22,033,405 |
28,004,560 |
|||||
|
TOTAL NET ASSETS |
29,876,188 |
16,085,289 |
24,580,235 |
||||||
|
Capital and reserves attributable to equity holders of the company |
|||||||||
|
Share capital |
655,586 |
452,666 |
619,586 |
||||||
|
Share premium reserve |
26,025,411 |
16,583,898 |
24,261,411 |
||||||
|
Convertible loan notes |
2 |
1,500,000 |
- |
- |
|||||
|
Foreign exchange reserve |
1,595,370 |
(84,785) |
769,678 |
||||||
|
Share based payment reserve |
1,021,321 |
1,013,459 |
1,009,119 |
||||||
|
Merger reserve |
4,410,000 |
4,410,000 |
4,410,000 |
||||||
|
Retained earnings |
(5,331,500) |
(6,289,949) |
(6,489,559) |
||||||
|
TOTAL EQUITY |
29,876,188 |
16,085,289 |
24,580,235 |
||||||
Interim condensed consolidated cash flow statement for the six months to 30 June 2008
|
Six months ended 30 June 2008 (Unaudited) |
Six months ended 30 June 2007 (Unaudited) (Restated) |
Year end 31 December 2007 (Audited) |
|||||||
|
£ |
£ |
£ |
|||||||
|
Operating activities |
|||||||||
|
Profit/(loss) before tax |
1,070,201 |
(1,200,131) |
(1,378,730) |
||||||
|
Adjustments for: |
|||||||||
|
Depreciation |
1,042,510 |
722,598 |
1,721,008 |
||||||
|
Amortisation |
52,440 |
52,679 |
105,358 |
||||||
|
Foreign exchange gains |
213,726 |
(12,403) |
(1,438,204) |
||||||
|
Finance income |
(214,552) |
(31,627) |
(177,458) |
||||||
|
Finance expense |
911,419 |
762,989 |
1,148,699 |
||||||
|
Equity-settled share based payments |
12,202 |
28,744 |
24,404 |
||||||
|
Operating Profit/(loss) before changes in working capital |
3,087,946 |
322,849 |
5,077 |
||||||
|
(Decrease)/increase in trade and other receivables |
(181,146) |
600,634 |
(339,017) |
||||||
|
Increase/(decrease) in trade and other payables |
404,390 |
(3,484,332) |
(3,174,028) |
||||||
|
Cash generated from/(absorbed by) operations |
3,311,190 |
(2,560,849) |
(3,507,968) |
||||||
|
Taxation |
(47,372) |
(38,794) |
(80,675) |
||||||
|
Cash flows from operating activities |
3,263,818 |
(2,599,643) |
(3,588,643) |
||||||
|
Investing activities |
|||||||||
|
Acquisition of property, plant & equipment |
- |
(537,723) |
(8,074,344) |
||||||
|
Acquisition of intangible assets |
(2,069,853) |
(515,151) |
(1,046,695) |
||||||
|
Investment in associate |
(49) |
- |
- |
||||||
|
Interest received |
214,552 |
31,627 |
177,458 |
||||||
|
Cash flows from investing activities |
(1,855,350) |
(1,021,247) |
(8,943,581) |
||||||
|
Financing activities |
|||||||||
|
Issue of ordinary shares |
1,800,000 |
- |
8,346,000 |
||||||
|
Issue of convertible loan notes |
1,500,000 |
- |
(501,567) |
||||||
|
Proceeds from bank borrowings |
- |
4,571,033 |
11,442,177 |
||||||
|
Issue costs for bank borrowing |
- |
- |
(761,785) |
||||||
|
Repayment of bank borrowing |
(1,345,825) |
- |
(651,970) |
||||||
|
Finance costs paid |
(911,419) |
(762,989) |
(924,367) |
||||||
|
Cash flows from financing activities |
1,042,756 |
3,808,044 |
16,948,488 |
||||||
|
Increase in cash and cash equivalents |
2,451,224 |
187,154 |
4,416,264 |
||||||
Interim consolidated statement of changes in equity (Unaudited)
Six months ended 30 June 2008 (Unaudited)
|
Share Capital |
Share Premium Reserve |
Convertible Loan Notes |
Foreign Exchange Reserve |
Share Based Payment Reserve |
Merger Reserve |
Retained Earnings |
Total Equity |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
|
Balance at 1 Jan 2008 |
619,586 |
24,261,411 |
- |
769,678 |
1,009,119 |
4,410,000 |
(6,489,559) |
24,580,235 |
|
|
|
|
|
|||||
|
Changes in equity 1 Jan 2008 - 30 Jun 2008 |
||||||||
|
Exchange difference arising on translation of foreign operations |
- |
- |
- |
825,692 |
- |
- |
- |
825,692 |
|
Net income recognised directly in equity |
- |
- |
- |
825,692 |
- |
- |
- |
825,692 |
|
Profit for the period |
- |
- |
- |
- |
- |
- |
1,158,059 |
1,158,059 |
|
Total recognised income and expense for the period |
- |
- |
- |
825,692 |
- |
- |
1,158,059 |
1,983,751 |
|
Issue of share capital |
36,000 |
1,764,000 |
- |
- |
- |
- |
- |
1,800,000 |
|
Issue of convertible loan notes |
- |
- |
1,500,000 |
- |
- |
- |
- |
1,500,000 |
|
Equity share options issued. |
- |
- |
- |
- |
12,202 |
- |
- |
12,202 |
|
Balance at 30 June 2008 |
655,586 |
26,025,411 |
1,500,000 |
1,595,370 |
1,021,321 |
4,410,000 |
(5,331,500) |
29,876,188 |
Interim consolidated statement of changes in equity (Unaudited)
Six months ended 30 June 2007 (Unaudited) (Restated)
|
Share Capital |
Share Premium Reserve |
Foreign Exchange Reserve |
Share Based Payment Reserve |
Merger Reserve |
Retained Earnings |
Total Equity |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
||
|
Balance at 1 Jan 2007 |
452,666 |
16,583,898 |
(82,169) |
984,715 |
4,410,000 |
(5,038,097) |
17,311,013 |
|
|
|
|
|
|
|
|
|
|
Changes in equity 1 Jan 2007 - 30 Jun 2007 |
|||||||
|
|
|||||||
|
Exchange difference arising on translation of foreign operations |
- |
- |
(2,616) |
- |
- |
- |
(2,616) |
|
Net income recognised directly in equity |
- |
- |
(2,616) |
- |
- |
- |
(2,616) |
|
Loss for the period |
- |
- |
- |
- |
- |
(1,251,852) |
(1,251,852) |
|
Total recognised income and expense for the period |
- |
- |
(2,616) |
- |
- |
(1,251,852) |
(1,254,468) |
|
Equity share options issued. |
- |
- |
- |
28,744 |
- |
- |
28,744 |
|
Balance at 30 June 2007 |
452,666 |
16,583,898 |
(84,785) |
1,013,459 |
4,410,000 |
(6,289,949) |
16,085,289 |
Interim consolidated statement of changes in equity (Audited)
Year ended 31 December 2007 (Audited
|
Share Capital |
Share Premium Reserve |
Foreign Exchange Reserve |
Share Based Payment Reserve |
Merger Reserve |
Retained Earnings |
Total Equity |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
|
Balance at 1 January 2007 |
452,666 |
16,583,898 |
(82,169) |
984,715 |
4,410,000 |
(5,038,097) |
17,311,013 |
|
|
|
|
|||||
|
Changes in equity for 2007 |
|||||||
|
|
|
|
|
|
|
|
|
|
Exchange difference arising on translation of foreign operations |
- |
- |
851,847 |
- |
- |
- |
851,847 |
|
Net income recognised directly in equity |
- |
- |
851,847 |
- |
- |
- |
851,847 |
|
Loss for the year |
- |
- |
- |
- |
- |
(1,451,462) |
(1,451,462) |
|
Total recognised income and expense for the year |
- |
- |
851,847 |
- |
- |
(1,451,462) |
(599,615) |
|
Issue of Share Capital |
166,920 |
7,677,513 |
- |
- |
- |
- |
7,844,433 |
|
Equity share options issued. |
- |
- |
- |
24,404 |
- |
- |
24,404 |
|
Balance at 31 December 2007 |
619,586 |
24,261,411 |
769,678 |
1,009,119 |
4,410,000 |
(6,489,559) |
24,580,235 |
Notes to the unaudited interim condensed consolidated financial information for the six months ended 30 June 2008
1. Basis of preparation
This unaudited consolidated interim financial information has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively EU IFRSs). The principal accounting policies used in preparing the interim results are unchanged from those disclosed in the group's financial statements for the year ended 31 December 2007. It is not expected that there will be any changes or additions to these in the 2008 annual financial statements
While the financial information included in this interim consolidated financial information has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the EU (IFRSs), this interim consolidated financial information does not itself contain sufficient information to comply fully with IFRSs.
The financial information for the six months ended 30 June 2008 and 30 June 2007 is unaudited and does not constitute the group's statutory financial statements for those periods. The comparative financial information for the full year ended 31 December 2007 has, however, been derived from the statutory financial statement for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under chapter 2 section 15.4 of the Isle of Man Companies Act 1982.
2. Issue of Shares
On the 14 January 2008 EDF Energies Nouvelles subscribed £1,500,000 for 3,000,000 new ordinary shares of 1 pence each and £1,500,000 of convertible loan notes convertible into 3,000,000 new ordinary shares at a price of 50 pence per new ordinary shares. At the period end the cash was held in an Escrow account. The draw down of the cash and the conversion of the convertible loan notes into equity are contingent on certain CETO development milestones being met. The directors firmly believe that the milestones will be achieved within 12 months, therefore the convertible loan notes have been included within equity.
On the 4 March 2008 warrants were exercised for 600,000 new ordinary shares of 1 pence each in the capital of the Company at a price of 50 pence each. There were no outstanding warrants at the end of the period.
3. Related party transactions
Group
Mr Alan Burns, a Director of Renewable Energy Holdings Plc and Seapower Pacific Pty Limited is Chairman of Carnegie Corporation Limited. During the prior year Carnegie Corporation Limited agreed to purchase the rights to use the CETO technology in the Southern Hemisphere for £4,750,000 plus a licence fee of 2% of total investment for each project and an annual royalty of 2.5% of net earnings. £2,000,000 (31 December 2007: £750,000) has been recognised in revenue during the current reporting period. At the period end £2,151,370 (31 December 2007: £529,011) had been received in cash. During the period £753 (31 December 2007: nil) was paid to Carnegie Corporation Limited in respect of administration services received.
An amount of £260 (31 December 2007: £2,441) has been invoiced and received from BPC Ltd in respect of office costs. No amounts were outstanding at the period end (31 December 2007: £34,305). Mr Alan Burns and Mr Michael Proffitt are Directors of both Renewable Energy Holdings plc and BPC Ltd.
4. Segment information
The group's primary reporting format for reporting segment information is business segments, and the segments are defined as Head Office, CETO development, Windfarms and Landfill gas. This split coincides with a geographical origin split of activities; Head Office being in the Isle of Man, CETO development taking place in Australia, Windfarms in Germany and Landfill gas in Wales.
|
Head Office |
CETO Development |
Windfarms |
Landfill Gas |
|||||||
|
Isle of Man |
Australia |
Germany |
Wales |
Total |
||||||
|
£ |
£ |
£ |
£ |
£ |
||||||
|
|
|
|||||||||
|
Six months ended 30 June 2008 (Unaudited) |
||||||||||
|
Revenue & gross profit |
2,007,824 |
2,985 |
2,335,333 |
288,086 |
4,634,228 |
|||||
|
Finance income |
156,776 |
14,069 |
43,635 |
72 |
214,552 |
|||||
|
2,164,600 |
17,054 |
2,378,968 |
288,158 |
4,848,780 |
||||||
|
Total profit/(loss) before taxation |
964,828 |
17,054 |
(8,554) |
96,873 |
1,070,201 |
|||||
|
Property, plant & equipment |
- |
- |
36,709,366 |
167,057 |
36,876,423 |
|||||
|
Intangible assets |
- |
8,710,532 |
- |
1,879,130 |
10,589,662 |
|||||
|
Equity accounted associates |
49 |
- |
- |
- |
49 |
|||||
|
Current assets |
7,148,700 |
160,674 |
3,825,009 |
41,766 |
11,176,150 |
|||||
|
Liabilities |
(289,298) |
(168,445) |
(28,230,150) |
(259,758) |
(28,947,652) |
|||||
|
Net assets |
6,859,451 |
8,702,761 |
12,304,224 |
1,828,195 |
29,694,632 |
|||||
|
Six months ended 30 June 2007 (Unaudited) (Restated) |
||||||||||
|
Revenue & gross profit |
- |
- |
1,734,460 |
125,468 |
1,859,928 |
|||||
|
Finance income |
8,773 |
6,209 |
16,645 |
- |
31,627 |
|||||
|
8,773 |
6,209 |
1,751,105 |
125,468 |
1,891,555 |
||||||
|
Total profit/(loss) before taxation |
(896,734) |
(508,942) |
(244,889) |
(64,717) |
(1,200,131) |
|||||
|
Property, plant & equipment |
- |
- |
26,267,278 |
235,563 |
26,502,841 |
|||||
|
Intangible assets |
- |
6,075,029 |
- |
1,984,248 |
8,059,277 |
|||||
|
Equity accounted associates |
- |
- |
- |
- |
||||||
|
Current assets |
992,698 |
113,387 |
2,339,076 |
111,415 |
3,556,576 |
|||||
|
Liabilities |
(175,655) |
(317,888) |
(21,345,599) |
(194,263) |
(22,033,405) |
|||||
|
Net assets |
817,043 |
5,870,528 |
7,260,755 |
2,136,963 |
16,085,289 |
|||||
|
Head Office |
CETO Development |
Windfarms |
Landfill Gas |
|||||||
|
Isle of Man |
Australia |
Germany |
Wales |
Total |
||||||
|
|
£ |
£ |
£ |
£ |
£ |
|||||
|
Year ended 31 December 2007 (Audited) |
||||||||||
|
Revenue & gross profit |
756,027 |
333,341 |
3,513,491 |
278,091 |
4,880,950 |
|||||
|
Finance income |
97,315 |
7,539 |
72,604 |
- |
177,458 |
|||||
|
853,342 |
340,880 |
3,586,095 |
278,091 |
5,058,408 |
||||||
|
|
|
|||||||||
|
Total profit/(loss) before taxation |
(1,446,428) |
340,739 |
(163,282) |
(109,759) |
(1,378,730) |
|||||
|
Property, plant & equipment |
- |
- |
35,115,121 |
206,195 |
35,321,316 |
|||||
|
Intangible assets |
- |
6,606,574 |
- |
1,931,569 |
8,538,143 |
|||||
|
Current assets |
6,193,103 |
429,346 |
1,967,534 |
135,353 |
8,725,336 |
|||||
|
Liabilities |
(101,510) |
(185,903) |
(27,597,758) |
(119,389) |
(28,004,560) |
|||||
|
Net assets |
6,091,593 |
6,850,017 |
9,484,897 |
2,153,728 |
24,580,235 |
|||||
The basis of segmentation is consistent with that applied in the financial statements for the year ended 31 December 2007.
5. Earnings per share
The calculation of basic earnings/ (loss) per share is based on the weighted average number of shares in issue throughout the period. For the purpose of the calculation the convertable loan notes have been treated as equity. The diluted loss per share has been calculated in accordance with the provisions of IAS 33.
|
Six months ended 30 June 2008 (Unaudited) |
Six months ended 30 June 2007 (Unaudited) |
Year ended 31 December 2007 (Audited) |
||||
|
|
||||||
|
Weighted average number of ordinary shares - basic |
65,116,911 |
45,266,669 |
51,540,532 |
|||
|
Dilutive effect of share options & convertible loan notes |
8,130,384 |
- |
- |
|||
|
Weighted average number of ordinary shares - diluted |
73,247,295 |
45,266,669 |
51,540,532 |
Share options of 548,394 (30 June 2007: 5,349,167, 31 December 2007: 5,939,167) were not included in the calculation of the diluted EPS for the period because their effect was anti dilutive.
6. CETO development expenditure
In accordance with group accounting policies, CETO development expenditure has been capitalised from 1 January 2007 being the date from which commercial success became probable in the view of the board. Accordingly expenditure of £515,151 in the six months to June 2007 has now been capitalised and the Balance Sheet, Income Statement, Cash Flow Statement and related notes have been restated accordingly.
|
Effect on Six Months ended 30 June 2007 |
|
|
£ |
|
|
Decrease in CETO development expenditure |
515,151 |
|
Decrease in loss for the year |
515,151 |
|
Increase intangible assets |
515,151 |
|
Increase in net assets |
515,151 |
7. Events after the balance sheet date
After the period end the company has entered into a Memorandum of Understanding with Triton Renewable Energy Limited, based in Bermuda.
Under the terms of the Memorandum of Understanding, REH and Triton will negotiate and agree the terms of a joint venture to build and operate wave farms in Bermuda, pending regulatory approvals, using REH's proprietary CETO wave power technology, with an initial test site of 2MW to be developed and subsequently a grid connected 20MW installation. It is intended that Triton provides services to facilitate the development of the wave farms and REH grants the rights to use its CETO technology and provides engineering support during the construction and on-going operation of the wave farms. Negotiations are expected to be concluded by the end of 2008.
Copies of these interim results will be posted to REH shareholders shortly and will be available from the Company's website at www.reh-plc.com
Related Shares:
REH.L