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Renewable Energy Gen (WIND)

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Monday 09 February, 2015

Renewable Energy Gen

Half Yearly Report

RNS Number : 3465E
Renewable Energy Generation Ltd
09 February 2015
 

9 February 2015

 

Renewable Energy Generation Limited

("REG" or the "Group")

Interim Results for the six months to 31 December 2014

 

 

Renewable Energy Generation Limited (AIM: WIND), today announces its interim results for the six months to 31 December 2014.

 

Wind farm planning permission awarded for Hallburn, Cumbria (12MW) and resolution to grant permission at Mynydd Portref, Rhondda Cynon Taf (12MW)

Sale of the St. Breock and Ramsey II wind farms to BlackRock for net proceeds of £13.8m with a profit of £4.6m recognised to date

53MW of consented onshore wind assets now moving to procurement and construction, with a further 124MW of applications awaiting determination in the UK planning system and over 100MW in pre-planning

Whitemoor bio-power plant (18MW) commissioned and operating under National Grid's short term operating reserve

Group revenues of £5.1m (H1 2013: £5.7m) in line with management expectations following the decommissioning of the original St.Breock windfarm during 2014 to allow for repowering

Adjusted EBITDA1 of £4.2m including disposal profits of £4.6m (H1 2013: £9.6m including disposal profits of £9.4m)

Increase of £3.2m in unrestricted cash resources for the six months to £14.6m as at 31 December 2014

Post period end events

Resolution to grant permission for the 4MW Knockshinnoch windfarm in Scotland

 

¹ Earnings before interest, taxation, depreciation and amortisation ("EBITDA") is equal to the Group's continuing operating profit before exceptional items, share based payments, interest, taxation, depreciation and amortization and including profit on disposal of subsidiaries.

 

 

Andrew Whalley, REG Chief Executive Officer said:

"The period is notable for our success in obtaining planning permission at local authority level for the 12MW Hallburn wind farm in Cumbria. This was followed by a local resolution to grant consent for another six turbine scheme at Mynydd Portref in South Wales. Post the end of the period we were delighted to achieve another planning committee resolution for a two turbine project at Knockshinnoch in Scotland.

 

"With a further 124MW across 14 projects in the planning system, we expect to see further planning successes this year.

 

"In addition we have successfully completed asset sales to our long-term partner BlackRock, maintaining a prudent level of liquidity as we continue to invest in our next five wind construction projects.

 

"Our 18MW Whitemoor Bio-Power project is the first of its type in the UK and has started full operation under the National Grid's STOR programme, providing power at short notice to meet unscheduled demand on the system. Our waste cooking oil collection business, Living Fuels, has seen a near 60% increase in volumes also at significantly lower prices than 12 months ago. This has been aided by a large contract win from Mitchells and Butler, which alone has added 10% to volumes.

 

"Our new asset management business already has 56MW of assets under management and is anticipating adding additional projects over the course of the year.

 

"After an extended period of investment our UK businesses are beginning to mature.  This should facilitate a significant increase in REG's operational MWs over the next few years". 

 

A presentation to analysts will be held today at the offices of Broker Profile at 9.30am.  The address is Augustine House, 6A Austin Friars, London, EC2N 2HA.  A dial-in facility will also be available (number: 020 8609 0205, PIN: 250517#).

 

ENDS

 

Enquiries:

 

Renewable Energy Generation Limited

Andrew Whalley, Chief Executive Officer

David Crockford, Finance Director

Ian Lawrence, Communications Manager

 

+44 (0)1483 901 796

Smith & Williamson Corporate Finance Limited

(Nominated Adviser)

Martyn Fraser

 

+44 (0)117 376 2213

Cenkos (Corporate Broker)

Bobbie Hilliam

 

+44 (0)20 7397 8900

Broker Profile

Simon Courtenay / Harry Rippon

+44 (0)20 7448 3244



 

Notes to editors

Renewable Energy Generation Ltd (REG) is an AIM listed 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, Bath and Guildford, it currently operates 14 wind projects in Cambridgeshire, Cornwall, County Durham, Yorkshire, Lancashire, Cumbria and Gwynedd, with a total capacity of 67.15MW and has a development pipeline of over 1,000MW.

 

REG Bio-Power UK Ltd: based in Nottingham, UK: it operates electricity generation plant powered by fuel recovered from used cooking 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 the Period

REG's strategy is to develop, own and operate a diversified portfolio of onshore wind and Bio-Power projects as well as managing renewable energy assets on behalf of third parties. REG aims to grow value for its shareholders through sustainable and rising project cash flows coupled to an increasing net asset value.

REG Windpower

This has been a successful period for wind development with a planning permission achieved at Hallburn (12MW) in Cumbria and a council resolution to grant Mynydd Portref (12MW) in Wales.  Post the period end a further resolution was gained for Knockshinnoch (4MW) in Scotland.

The Group now has 53MW of onshore wind sites with a planning permission or a resolution to grant awaiting construction, with a further 124MW in the planning system expecting decisions over the course of the next 12 months.

The sale of the St Breock and Ramsey II windfarms to a fund managed by BlackRock for a total enterprise value of £36m and net proceeds to date of £13.8m, has provided REG with ample liquidity to continue to build investment into its own portfolio of operational wind assets.

Procurement is proceeding on Denzell Downs (10MW), French Farm (4MW), Rodbaston (4MW) and Draperstown (6MW).  We expect these projects to move to construction later this year and be operational under the current Renewable Obligation regime.  Additionally, our project at Barlborough (0.9MW) is proceeding to construction, funded by REG's own equity, to be run under the small scale feed-in-tariff.

REG Bio-Power

Project finance was completed on REG's 18MW facility at Whitemoor Business Park near Selby, Yorkshire.  The plant is now fully operational, together with its sister plants at Bentwaters (6MW) and Leeds North (2MW), within National Grid's Short Term Operating Reserve, with all  achieving excellent operational hours.

Planning was achieved for a new 10MW Bio-Power project in Yorkshire and it is expected that this site, plus one other 18MW project will enter construction later this year.

REG Asset Management

A new business segment for REG, Asset Management already operates 56MW on behalf of a fund managed by BlackRock. We have started marketing this capability to new third parties and expect revenues to grow strongly here over the next few years.

Dividend

The interim dividend of 0.55p per share will be paid on 24 April 2015 to shareholders on the register as at 7 April 2015.

 

 

Unaudited Interim Consolidated Statement of Profit and Loss

For the six months to 31 December 2014



Six months to 31 December 2014

Six months to 31 December 2013

Year to
30 June

 2014



£'000

£'000

£'000



(unaudited)

(unaudited)

(audited)






Revenue


5,076

5,660

11,556

Cost of Sales


(3,541)

(3,723)

(7,411)

Gross profit


1,535

1,937

4,145

Wind administrative expenses


(1,923)

(1,812)

(3,367)

Bio-power administrative expenses


(309)

(297)

(760)

Central administrative expenses


(730)

(870)

(1,484)

Development costs


(906)

(658)

(2,697)

Corporate finance costs


(156)

(180)

(374)

Other operating income


-

-

84

Group operating loss from continuing activities


(2,489)

(1,880)

(4,453)

Profit on disposal of subsidiaries (note 5)


4,558

9,375

9,483

Net finance cost


(997)

(1,040)

(2,166)

Profit  on continuing operations before tax



1,072


6,455


2,864

Tax credit


19

-

1,015

Profit on continuing operations after tax


1,091

6,455

3,879






Attributable to





Equity holders of the parent


1,091

6,455

3,879

Non controlling interest


-

-

-

Total


1,091

6,455

3,879






 

Earnings per share  attributable to the equity holders of the Company during the period







1.05p

6.23p

3.74p

1.02p

6.10p

3.66p

 

 

 

Unaudited Interim Consolidated Statement of Financial Position

As at 31 December 2014


31 December 2014

31 December 2013

30 June

 2014


£'000

£'000

£'000





ASSETS

(unaudited)

(unaudited)

(audited)

Non-current assets




Goodwill (note 3)

4,890

7,390

4,890

Development assets (note 3)

15,653

14,308

19,096

Property, plant and equipment (note 4)

55,719

44,496

50,093

Deferred tax asset

2,613

1,664

2,347


78,875

67,858

76,426

Current Assets




Assets classified as held for sale

-

8,108

11,652

Inventories

1,263

628

782

Trade and other receivables

6,125

3,212

4,326

Intangibles

1,266

2,087

1,848

Restricted cash

2,640

3,619

2,737

Cash and cash equivalents

14,623

19,262

10,987


25,917

36,916

32,332

Total assets

104,792

104,774

108,758





 

LIABILITIES




Current liabilities




Trade and other payables

4,015

4,061

6,034

Liabilities directly associated with assets classified as held for sale

-

4,246

2,389

Borrowings

1,161

997

1,108


5,176

9,304

9,531

Non-current liabilities




Borrowings

21,353

17,087

21,495

Derivative financial instruments

2,230

620

753

Provisions

3,318

-

3,321

Deferred tax liabilities

-

319

5


26,901

18,026

25,574

Total liabilities

32,077

27,330

35,105





EQUITY




Share capital

10,374

10,366

10,374

Share premium

79,952

79,912

79,952

Own shares

(200)

(197)

(200)

Share- based payment reserve

608

438

528

Hedging reserve

(1,637)

(466)

(1,234)

Retained earnings

(16,935)

(13,159)

(16,320)

Equity attributable to the equity holders of the parent

72,162

76,894

73,100

Non controlling interest

553

550

553

Total equity and liabilities

104,792

104,774

108,758





 

 

 

Unaudited Interim Consolidated Cash Flow Statement

For the six months to 31 December 2014


Six months to
31 December 2014

Six months to
31 December 2013

Year to
30 June

2014


£'000

£'000

£'000


(unaudited)

(unaudited)

(audited)

Cash flows from operating activities




Net cash generated/(used) in operations

(3,908)

(1,148)

(801)





Cash flows from investing activities




Purchase of property, plant and equipment

(2,501)

(8,788)

(19,366)

Capitalised development costs

(2,435)

(2,022)

(6,974)

Acquisition of subsidiary

-

-

(30)

Net proceeds from sale of subsidiary

12,688

9,080

14,187

Interest received

25

-

53

Movement in restricted cash accounts

(79)

3,686

5,316

Net cash generated/(used) in investing activities

7,698

1,956

(6,814)





Cash flows from financing activities




New borrowings net of issue costs

2,738

3,795

6,495

Interest paid (including interest rate swaps)

(1,027)

(759)

(1,775)

Repayment of borrowings

(598)

(462)

(989)

Purchase of own shares

-

(137)

(140)

Issue of shares

-

36

38

Dividends paid to Company's shareholders

(1,706)

(1,552)

(2,121)

Net cash generated from financing activities

(593)

921

1,508





Net (decrease)/increase in cash and cash equivalents

3,197

1,729

(6,107)

Cash at beginning of period

11,426

17,533

17,533

Cash at end of period

14,623

19,262

11,426





Cash included in disposal group classified as held for sale


-


-


439

 

 

 

Unaudited Consolidated Statement of Total Comprehensive Income

For the six months to 31 December 2014

 


Six months ended 31 December 2014

Six months ended 31 December 2013

 

Year ended 30 June 2014


£'000

£'000

£'000


(unaudited)

(unaudited)

(audited)

Profit for the period

1,091

6,455

3,879





Effective portion of change in fair value cash flow hedges net of recycling ( net of tax)


(403)


664


(104)

Total comprehensive income / (expenditure) for the period net of tax


688


7,119


3,775

 

Attributable to




Equity holders of the parent

688

7,119

3,775

Non controlling interest

-

-

-

Total

688

7,119

3,775

 

 

 

Unaudited Interim Consolidated Statement of Changes in Equity

For the six months to 31 December 2014

 


 


Share capital

 

Share premium account

 

 

Own shares

Share based payments
reserve

 


Hedging reserve

 


Retained earnings


Non controlling interest



Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000










At 1 July 2014

10,374

79,952

(200)

528

(1,234)

(16,320)

553

73,653

Total comprehensive income

-

-

-

-

(403)

1,091

-

688

Share based payments

-

-

-

80

-

-

-

80

Dividend (note 2)

-

-

-

-

-

(1,706)

-

(1,706)

Issue of new equity

-

-

-

-

-

-

-

-

Purchase of own shares

-

-

-

-

-

-

-

-

At 31 December 2014

10,374

79,952

(200)

608

(1,637)

(16,935)

553

72,715

 

 

 

Notes to the unaudited 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 2014. The Group does not anticipate any change in these accounting policies for the year ended 30 June 2015. 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.    Dividends


Six months to
31 December 2014

Six months to
31 December 2013

Year to
30 June

2014

Declared and paid during the period on
ordinary equity shares

£'000

£'000

£'000


(unaudited)

(unaudited)

(audited)

  Final dividend declared and paid

1,706

1,552

1,552

  Interim dividend declared and paid

-

-

569


1,706

1,552

2,121

Proposed but not recognised as a liability at 31 December 2014

Equity dividends on ordinary shares:




  Interim dividend declared and paid - 0.55p (2013 - 0.55p)

570

570

-

The dividend will be paid on 24 April 2015 to members on the register on 7 April 2015.  Shares will be marked ex-dividend on 2 April 2015.

 

3.    Intangible assets

 

(unaudited)

Development costs

Goodwill

Total


£'000

£'000

£'000

Cost




At 1 January 2014

16,552

7,390

23,942

Additions

10,131

-

  10,131

Transfers to property, plant and equipment

(1,772)

-

(1,772)

Asset held for sale

(2,188)

(2,500)

(4,688)

At 30 June 2014

22,723

4,890

27,613

Additions

2,435

-

2,435

Transfers to property, plant and equipment

(5,299)

-

(5,299)

At 31 December 2014

19,859

4,890

24,749





Amortisation and impairment




At 1 January 2014

2,244

-

2,244

Impairment charge

1,383

-

1,383

At 30 June 2014

3,627

-

3,627

Impairment charge

579

-

579

At 31 December 2014

4,206

-

4,206


Net book value




At 31 December 2014

15,653

4,890

20,543

At 30 June 2014

19,096

4,890

23,986

At 1 January 2014

14,308

7,390

21,698

Included within additions to development costs are internal development costs of £164,000 (2013: £250,000).

 

4.    Property, plant and equipment

 

(unaudited)



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 2014

41,999

5,798

4,750

1,252

2,483

56,282

Additions

1,354

4,965

3,511

391

176

10,397

Movements

1,788

-

(1,788)

-

-

-

Transfers from Development Costs

-

26

1,746



1,772

Assets no longer  held for sale

5,682

-

-

-

-

5,682

Asset held for sale

-

-

(5,260)



(5,260)

Disposals

-

(5,068)

(122)

-

(1)

(5,191)

At 30 June 2014

50,823

5,721

2,837

1,643

2,658

63,682

Additions

149

169

1,578

-

145

2,041

Movements

54


10

-

(64)

-

Transfers from Development Costs

-

-

5,299

-


5,299

Disposals


(143)



(5)

(148)

At 31 December 2014

51,026

5,747

9,724

1,643

2,734

70,874








Depreciation







At 1 January 2014

9,770

1,037

-

-

979

11,786

Depreciation charge

1,540

138

-

-

196

1,874

Assets classified as held for sale

23

-

-

-

-

23

Disposals

-

(93)

-

-

(1)

(94)

At 30 June 2014

11,333

1,082

-

-

1,174

13,589

Depreciation charge

1,247

176

-

-

175

1,598

Disposals

-

(32)

-

-

-

(32)

At 31 December 2014

12,580

1,226

-

-

1,349

15,155








Net book value







At 31 December 2014

38,446

4,521

9,724

1,643

1,385

55,719

At 30 June 2014

39,490

4,639

2,837

1,643

1,484

50,093

At 1 January 2014

32,229

4,761

4,750

1,252

1,504

44,496

During the period an amount of £100,000 (2013 - £45,000) 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.

 

5.    Disposal of subsidiary


2014


£'000


(unaudited)

Proceeds

18,246

Assignment of project debt

(3,796)

Unrestricted cash included in disposal group

(380)

Fees

(277)

Net proceeds

13,793

Net assets of disposal group

(9,235)

Profit on disposals

4,558

Gross proceeds include £1,323,000 deferred consideration.

Further consideration of up to £1,500,000 in relation to the disposal has not yet been recognised in the financial statement of the Group, its recognition being contingent on the completion of construction at the sites and satisfaction of various performance conditions thereon.


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