27th Feb 2009 07:00
27 February 2009
Renewable Energy Holdings plc
("REH" or "the Company")
Update on trading and CETO Bermuda project
Renewable Energy Holdings plc (AIM: REH), the AIM quoted investor and operator of proven and innovative renewable energy technologies, expects to announce its preliminary results for the year ended 31 December 2008 on or about 9 March 2009.
Ahead of the results announcement, the Board provides the following updates on trading for the year ended 31 December 2008 and on its CETO Bermuda project.
Trading Update
Revenue during 2008 was below the Board's expectations by £1.21 million due to the delay in development payments from Carnegie Corporation ("Carnegie") in respect of the CETO license agreement. The Board now expect that this payment will be received by REH by September 2009.
In addition, as explained further below, due to a change in the accounting treatment of CETO development payments from Carnegie, which has been under discussion with the Company's auditors, reported revenues in 2008 will be lower by the amount of the CETO license payments from Carnegie during the period of £2.79 million. This technical change in treatment advised does not however impact the funds invested in CETO's development under the CETO licensing arrangements with Carnegie and therefore the progress of CETO towards commercial realisation.
Had the CETO development payments received the same accounting treatment as in the year ended 31 December 2007 as expected by the Board, REH would have reported revenues for 2008 of approximately £8.09 million (2007: £4.58 million) made up as follows:
Before the change of accounting treatment, advised by the Company's auditors, described in this announcement, the Board also expected to report earnings before interest, tax, depreciation and amortisation of approximately £4.20 million (2007: £1.42 million) and profit before tax of approximately £0.81 million (2007: loss before tax £1.38 million). Due to the change in accounting treatment referred to below, this will now be reported as earnings before interest, tax, depreciation and amortisation of approximately £1.41 million (2007: £0.67 million) and a loss before tax of £1.97 million (2007: loss £2.13 million).
While revenues from the Company's wind assets in Germany suffered during the latter part of 2008 as a result of unseasonably light winds caused by a slow moving high pressure weather system across Northern Europe in November and December, the turbines installed in Germany have operated to specification with minimal scheduled maintenance downtime. The wind regime in Germany has continued to be lighter than expected during the beginning of 2009, although the wind regime has improved in the past month. The Company currently has 40.5MW of installed capacity in Germany at its two sites and expects that the net contribution from Habscheid's 4.7MW will commence in H1 2009.
The Board expects to report cash balances at 31 December 2008 of approximately £6.45 million (2007: £7.12 million).
Accounting treatment of CETO related revenue
Under advice from the Company's auditors, all CETO licensing revenues received from Carnegie are now required to be treated as "Deferred Income" and recognised as income over the 30 year life of the Licence Agreement. In addition, as this accounting treatment differs from the accounting policy accepted by the auditors in respect of the audit for the year ended 31 December 2007, the accounts for that period will now be required to be restated. As a result, restated revenues for each of 2008 and 2007 are now expected to be approximately £5.31 million (2007: £3.83 million). Further detail will be provided with the preliminary results.
All income from the licensing of CETO Technology, which totals £3.54 million (2008: £2.79 million and 2007: £0.75 million), has been applied to the development of the CETO Technology. To complete their obligation under its licence, Carnegie must now pay a single payment of £1.21 million which is to be received in cash by September 2009 by REH. It is likely that some or all of that cash will be used to complete the CETO testing and prepare the technology for commercial deployment by late 2009. Should Carnegie not make this payment then the licence could be terminated by REH which would allow the deferred income to be recognised by REH as revenue immediately. In addition, from the time the licence is granted, if Carnegie fails to develop 5MW of commercial plant within the first three years or an average of 10MW every five years, the licence can be terminated and all deferred income would then be recognised as revenue immediately.
CETO Bermuda
On 5 August 2008, REH announced that it had entered in to a Memorandum of Understanding ("MOU") with Triton Renewable Energy Limited ("Triton"), based in Bermuda, for an initial CETO test site off Bermuda. REH submitted a joint statement of intent ("SOI") with Triton to Bermuda Electric Light Company Limited ("Belco") for a demonstration site of 2MW to be developed and subsequently a grid connected 20MW installation.
The Board is now pleased to announce that it has received notification that its joint SOI with Triton has been successful and it expects to move forwards with development of the 2MW CETO test site in 2010, and then following acceptance and negotiation with Belco, this is likely to be followed by a roll-out to a 20MW installation.
Commenting on today's announcement, Mike Proffitt, Chief Executive Officer of REH said: "We are delighted with the growth of sales from the German wind assets, despite the poor wind conditions at the end off the year, and with our Welsh landfill gas, both showing marked increases over 2007.
"These sales have produced sufficient revenue to cover our central operating costs as we plan the future growth of the company.
"Carnegie Corporation have substantially completed their acquisition of rights to use the CETO technology in the Southern Hemisphere and a payment of approximately £1.2 million is payable to REH during 2009 to complete this transaction. We look forward to the further development of CETO as a commercial product in the short to medium term."
For further information please contact:
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Mike Proffitt, Chief Executive |
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Renewable Energy Holdings plc |
Tel: 01624 641199 |
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Richard Swindells/ Andrew Craig |
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Ambrian Partners - Nominated Adviser & Broker to REH |
Tel: 020 7634 4700 |
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Samantha Robbins / Paul Dulieu / Anna Dunkin |
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Redleaf Communications |
Tel: 020 7566 6700 |
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Notes to Editors
About Renewable Energy Holdings plc
Renewable Energy Holdings ("REH") is an international company established to be an investor in and operator of both proven and innovative renewable energy technologies.
REH owns two operational wind farm sites in Germany, Kesfeld (32.5MW) and Kirf (8MW). In addition, REH is at various stages of development of further wind farm sites in Poland and Wales.
REH owns a methane Landfill Gas Project in Powys, Wales which is at an early stage of gas collection, currently producing at 1MW and which is expected to increase as the landfill matures.
CETO is REH's innovative wave power technology. It is the first wave power converter to sit on the seabed, where it is invisible, safe from storms and ocean forces, and self contained. Unlike other wave energy technologies that require undersea grids and costly marine qualified plant, CETO requires only a small diameter pipe to carry high pressure seawater ashore to either a turbine to produce electricity, or to a reverse osmosis filter to produce fresh water. CETO is currently deployed off Fremantle, Western Australia undergoing commercial testing.
The Directors and executive team of REH have extensive experience in both the conventional and renewable energy sectors, both in the UK and overseas, and through their experience have built a broad international network of relationships with individuals, companies, governments and lobby groups.
The Company was incorporated in the Isle of Man on 8 October 2004 and listed on the London Stock Exchange's AIM in February 2005.
Further information can be found at www.reh-plc.com
Recent news
Potential CETO development site in Vancouver, Canada - an Investigative Permit has been granted by British Columbia's Ministry of Agriculture and Lands to conduct a wave energy investigation over an area of approximately 475 hectares within the Clayoquot District, off the west coast of Vancouver Island in British Columbia, Canada.
Wind farm development in Wales - REH has entered into a conditional sale and purchase agreement with Mynnydd y Gwynt regarding the development of the wind farm site at Llangurig, mid-Wales. The site is believed to be capable of providing up to 69MW of generating capacity. An independent wind study has indicated a net capacity factor of 36% for this site. This capacity factor compares well against the UK average of 28-32% and is on a par with North West Scotland at the top of the range.
Wind farm development in Poland - REH has entered into a conditional sale and purchase agreement with Gamar GHL to develop a wind farm site in Kobylany, Poland. The site is believed to be capable of providing up to 30MW of generating capacity and an independent wind study has indicated a net capacity factor of 32% for this site. This capacity factor compares well against the European average of 26-30%.
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