RNS Number : 2620D
Renewable Energy Generation Ltd
21 March 2011
 

Press Release                                                                                                         21 March 2011

 

Renewable Energy Generation Limited

("REG" or the "Group")

 

Interim Results for the six months to 31 December 2010

 

On track to invest £100M in renewable energy schemes by end of 2012

 

Renewable Energy Generation Limited (AIM: WIND), the renewable energy group, today announces its interim results for the six months ended 31 December 2010.

 

Financial highlights

 

·     Group revenues of £4.3m (H1 2010: £3.5m)

·     Group EBITDA loss before exceptional items of £0.6m (H1 2010: profit of £0.4m)

·     Loss before tax from continuing operations of £1.9m (H1 2010: loss of £0.3m)

·     Abnormally low wind speeds across the UK resulting in over £1m of lost EBITDA

·     Total cash resources of £7.6m

·     Proposed interim dividend of 0.5p per ordinary share

 

Operational highlights

 

·     Group generating capacity increased to 42.5MW (31 December 2009: 22.5MW)

·     Goonhilly Wind Farm repowered from 5.6MW to 12MW to treble previous output

·     4.5MW Loscar Wind Farm commissioned

·     Planning consent granted for Sancton Hill (10MW), Orchard End (4.0MW) and French Farm (4MW)

 

Post period end

 

·     Rejection of approach in January at 67.7p per share

·     4MW High Haswell wind farm energised, increasing Group capacity to 46.5MW

·     REG Biopower enters 2 year 8MW STOR contract with National Grid

·     Power Purchase Agreements covering all 41.15MW of wind projects, fixed for 1 to 3 years, now completed

 

Andrew Whalley, REG Chief Executive Officer said:

"The first half of the year has been a period of considerable continued progress, resulting in a near doubling of our operating capacity from the comparable period.

 

"Since the period end, we have successfully concluded a wind power purchase agreement, a significant milestone towards the refinancing of REG's existing operating wind farms and we remain firmly on track to deliver our goal of investing £100m by the end of 2012.

 

"Supported by a sound balance sheet, we are well positioned with the internal infrastructure and skill sets in place to deliver enhanced shareholder value by continuing to successfully marshal projects through our enlarged development pipeline."

 

 

A presentation to analysts will be held at 9.30am at Evolution Securities office, 100 Wood Street, EC2V 7AN. To attend please contact Vicky Watkins on 020 3128 8100.

 

 

 

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

Evolution Securities (Corporate Broker)

Garry Levin / Tim Redfern / Stuart Andrews

 

+44 (0)20 7071 4300

MHP Communications

Katie Hunt / Vicky Watkins

 

+44 (0)20 3128 8100



 

 

Notes to Editors

Renewable Energy Generation Ltd (REG) is a UK orientated renewable energy group. The Group's main business is the development, construction and operation of wind farms in the UK and generating power from refined waste cooking oil in the UK.

 

·    REG Windpower: based in Cornwall 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 900MW.

·     REG Bio-Power UK Ltd: based in Nottingham, UK: it operates electricity generation plant fuelled by waste 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 period

 

The last six months have seen substantial growth in REG's operational wind farm portfolio, with the Group's generating capacity at the period end almost double that twelve months prior, we have made considerable progress with our goal of investing at least £100m into new renewable energy projects in the three year period to the end of 2012.

 

Our principal strategy is to focus on the development, construction and operation of smaller onshore wind projects (typically between 5MW and 20MW) which offer attractive equity returns whilst generally being below the threshold of interest for the larger utility companies.  We are uniquely placed as one of the few well capitalised independent wind power developers able to exploit this opportunity.  We believe that the Group's return on equity will be materially enhanced as we put in place project financing and as we grow our operating capacity through economies of scale and more efficient use of technology.

 

Operational Portfolio

 

By the end of the six month period we had increased the Group's generating capacity to 42.5MW, almost double the 22.5MW of operational capacity as at 31 December 2009.  During the period capacity was added through:

 

·    The completion of our flagship 12MW repowering project at Goonhilly Downs in Cornwall, on time and under budget, which trebled its previous output.  This was a major achievement and testament to the purchase of the original project there in 2006.

·     The 4.5MW Loscar Windfarm near Rotherham being built and commissioned. 

 

The 4MW High Haswell Wind Farm in County Durham which had been delayed by the appalling weather conditions during December was successfully commissioned after the period end in late February.

 

Development Pipeline

 

We have continued to successfully marshal projects through our development pipeline, the engine of growth for REG.  During the period, we were delighted to have achieved the following major milestones:

 

·     Approval was won for a five turbine, 10MW project at Sancton Hill in the East Riding of Yorkshire.  We anticipate commencing construction later this year;

·     Planning consent was achieved for the 4MW French Farm site at Peterborough; and

·     The planning appeal was won for a 4MW, two turbine wind farm at Orchard End in Lancashire (4.0MW); construction of which is expected to commence in the Group's next financial year.

 

In total, the number of new wind projects under active development has more than doubled, from 39 this time last year to over 100 and the equivalent potential capacity from 350MW to more than 900MW.  While some planning attrition is inevitable, our success during this period demonstrates our growing ability to advance sound planning applications in prime locations for wind generation.

 

Over the period we have continued to consider further acquisition opportunities.  However, with a strong portfolio of in-house development schemes, REG has consistently guarded against overpaying for assets.  Although this will remain the case, potential repowering opportunities exist where REG may be able to add value in a similar manner to Goonhilly Downs and we will continue to assess the merits of these.

 

Electricity Market Reform

 

The current UK Electricity Market Reform Consultation, critical to decarbonising electricity generation in the UK, is expected to be completed later this year.  Ministerial confirmation that onshore - as well as offshore - wind is expected to provide a significant proportion of carbon free generation is encouraging.  We have been further encouraged to see our trade body, Renewable UK, agree a protocol with the Government on payments from wind farms to community benefit funds.  We have long believed that local communities should share in the benefits of carbon free energy generation and the mechanism now in place should now hasten this process.  We believe this is a very important step for the UK wind industry.

 

Review of operations

 

During the period the portfolio produced an output of 29,640MWh compared to 23,602MWh in the same period last year, despite UK wind conditions reducing output by 24% below forecast and long-term averages, a trend which continued into January 2011.  Revenue from the operational wind farms was £3.6m compared with £3.1m in the same period last year, Operational and maintenance costs were £0.8m compared to £0.4m last year. EBITDA expectations for the half year were reduced by over £1m due to the low wind speeds experienced across the UK, resulting in an EBITDA for the wind business of £0.4m and a EBITDA loss to the Group of £0.6m.

 

REG Bio-Power was adversely affected by the high price of waste cooking oil in the UK for commercially purchased oil to supplement the amount collected from municipal sites.  Turnover was £0.7m and the EBITDA loss was £0.6m.  However, our recently announced contract award from National Grid to provide carbon neutral Short Term Operating Reserve services provides a sound platform for the growth of that business and substantially decreases our reliance on commercially sourced fuel.

 

REG's balance sheet remains in sound health with over £7.6m of cash on hand.  We expect to put project finance into our first 13.9MW of operating sites by the end of the financial year.  This will not only enhance the return on equity for our existing projects but will also provide significant new equity for funding future growth. 

 

Dividend

 

We have maintained our interim dividend at 0.5p per share and this will be paid on 21 April 2011 to shareholders on the register as at 1 April 2011.

 

Outlook

 

We firmly believe we have the internal infrastructure and skill sets in place to support an expanding renewable energy business in the UK.  We are building significant momentum and are confident about the pace and financing of our growth as we remain on target to achieve our goal of investing £100m in wind assets by the end of 2012.



 

Unaudited interim consolidated statement of comprehensive income

For the six months to 31 December 2010



Six months to 31 December 2010

Six months to 31 December 2009

Year to
30 June 2010



£'000

£'000

£'000



(un-audited)

(un-audited)

(audited)






Revenue


4,271

3,468

6,196

Cost of Sales


(2,805)

(1,803)

(3,676)

Gross profit


1,466

1,665

2,520

Administrative expenses


(2,401)

(1,496)

(3,415)

Exceptional administrative expenses (note 2)


(249)

-

(1,030)

Development costs


(1,135)

(482)

(1,525)

Other operating income


353

-

9

Group operating loss from continuing activities


(1,966)

(313)

(3,441)

Net finance revenue


36

21

(47)

Loss on continuing operations before tax


(1,930)

(292)

(3,488)

Tax


96

15

507

Loss on continuing operations after tax


(1,834)

(277)

(2,981)

Discontinued operations





Profit from discontinued operations


-

5,424

5,440

(Loss)/profit for the period


(1,834)

5,147

2,459






 

 

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







- basic and diluted from continuing activities



(1.78)

(0.27p)

(2.89p)

- basic and diluted



(1.78)

4.98p

2.38p


Unaudited interim consolidated balance sheet

As at 31 December 2010


31 December 2010

31 December 2009

30 June

 2010


£'000

£'000

£'000

ASSETS

(un-audited)

(un-audited)

(audited)

Non-current assets




Goodwill

7,390

4,890

7,390

Development assets

3,795

3,845

3,821

Property, plant and equipment

50,087

26,481

37,916


61,272

35,216

49,127

Current Assets




Assets classified as held for sale (note 2)

506

-

-

Inventories

222

125

106

Trade and other receivables (note 3)

5,573

16,548

7,908

Intangibles

2,292

1,332

1,828

Restricted cash

1,627

-

4,856

Cash and cash equivalents

6,016

28,477

17,224


16,236

46,482

31,922

Total assets

77,508

81,698

81,049





 

LIABILITIES




Non-current liabilities




Other long term liabilities

1,200

-

1,200

Deferred tax liabilities

58

683

154


1,258

683

1,354

Current liabilities




Trade and other payables

3,136

1,390

3,235


3,136

1,390

3,235

Total liabilities

4,394

2,073

4,589





EQUITY




Share capital

10,325

10,325

10,325

Share premium

79,708

79,708

79,708

Share based payment reserve

1,139

1,063

1,102

Retained earnings

(18,058)

(11,471)

(14,675)

Equity attributable to the equity holders of the parent

73,114

79,625

76,460

Total equity and liabilities

77,508

81,698

81,049





 

 

 

 

 

 

Unaudited interim consolidated cash flow statement

For the six months to 31 December 2010


Six months to
31 December 2010

Six months to
31 December 2009

Year to
30 June 
2010


£'000

£'000

£'000


(un-audited)

(un-audited)

(audited)

Cash flows from operating activities




Net cash used in operations

(3,943)

(7,381)

(771)





Cash flows from investing activities




Purchase of property, plant and equipment

(12,591)

(3,302)

(29,140)

Business combinations

-

-

(2,550)

Net proceeds from sale of subsidiary

3,609

48,596

51,600

Interest received

36

25

150

Movement in restricted cash accounts

3,230

5,223

(34,216)

Net cash (used in) / generated from investing activities

(5,716)

50,542

(14,156)





Cash flows from financing activities




New borrowings

-

1,000

48,477

Interest paid

-

(725)

(15,958)

Repayment of borrowings

-

(15,958)

(1,011)

Dividends paid to Company's shareholders

(1,549)

(1,549)

(2,065)

Net cash (used in)/generated from financing activities

(1,549)

(17,232)

29,443





Net (decrease) / increase in cash and cash equivalents

(11,208)

25,929

14,516

Cash at beginning of period

17,224

2,522

2,522

Exchange gains

-

26

186

Cash at end of period

6,016

28,477

17,224





 


Unaudited interim consolidated statement of changes in equity

For the six months to 31 December 2010

 


Share capital

Share premium account

Share based payments
reserve

Retained earnings


Total equity


£'000

£'000

£'000

£'000


£'000








At 1 July 2010

10,325

79,708

1,102

(14,675)


76,460








(Loss) for the period

-

-

-

(1,834)


(1,834)

Total income and expense for the period


-


-


-


(1,834)



(1,834)

Share based payments

-

-

37

-


37

Dividend
(note 4)

-

-

-

(1,549)


(1,549)

At 31 December 2010

10,325

79,708

1,139

(18,058)


73,114

 

 


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 IFRSs. 

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 2010. The Group does not anticipate any change in these accounting policies for the year ended 30 June 2011. 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.    Non current assets held for sale

On 10 November 2010 the Board committed to the resale of the old generation facilities at Goonhilly. As part of this arrangement, the Property, plant and equipment was actively marketed and a purchaser identified. In accordance with IFRS 5, a fair value impairment loss of £249,000 was recognised to value the assets at the lower amount of their carrying value and the fair value less costs to sell. Deferred tax of £96,000 was credited to the income statement in respect of the disposal.

The transaction completed in January 2011 and there was no further change to the carrying value.

3.    Trade and other receivables


Six months to
31 December 2010

Six months to
31 December 2009

Year to
30 June
 2010


£'000

£'000

£'000


(un-audited)

(un-audited)

(audited)

Trade receivables and other receivables

2,871

1,054

1,597

Deferred consideration on disposal of subsidiary

2,702

15,494

6,311


5,573

16,548

7,908

4.    Dividends


Six months to
31 December 2010

Six months to
31 December 2009

Year to
30 June
 2010


£'000

£'000

£'000


(un-audited)

(un-audited)

(audited)

Declared and paid during the period




Equity dividends on ordinary shares:




  Second interim dividend declared and paid

1,549

1,549

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 2010

 

Equity dividends on ordinary shares:




 

First interim dividend declared and paid - 0.5p

516



 

 


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