IGAS.L Regulatory News (IGAS)

30 Jun 2006 07:01

KP Renewables PLC30 June 2006 Press Release 30 June 2006 KP Renewables plc ("KPR" or the "Company") Preliminary Results for the year ended 31 December 2005 Highlights • Admitted to AIM on 29 July 2005• Operating loss of £1.94m (2004: £0.22m)• Strong pipeline of projects• Actively seeking additional funding Dr J Watkins, Chief Executive, comments: "KP Renewables' aggregation strategy has been shown to be successful and we arenow working with a number of co-developers to bring both Carbon Recycling in theform of biomass, and wind renewables projects to market. We are excited aboutthe prospects for the ventures in which we are already engaged and are currentlynegotiating further finance to enable these and future schemes to happen." John Bryant, Chairman, comments: "Further investment in renewables remains a major objective for the UKgovernment's energy policy. To that end KP Renewables is at the forefront ofsignificant developments in the power markets in this country." For further information please contact:KP Renewables plcDr James Watkins, CEO Tel: +44 (0) 20 8231 8820drjwatkins@kprenewables.comRobert Smyth, Finance Directorrsmyth@kprenewables.com www.kprenewables.com Media enquiries:AbchurchMartin Sutton / Gareth Mead Tel: +44 (0) 20 7398 7700martin.sutton@abchurch-group.com www.abchurch-group.com Notes to Editors KP Renewables plc KP Renewables plc was established to be the leading independent renewable energycompany in the UK. The Company has already agreed framework Power PurchaseAgreements to sell long term renewable energy on pre-agreed terms to a number ofUK electricity retailers. This energy will be based on a mix of biomass and "Carbon Recycling" projects along with wind and wave projects which qualify forRenewable Obligation Certificates ("ROC"s). Electricity retailers have an obligation to source an increasing percentage oftheir supplies from renewable energy (15.4% by 2015). Failure to meet thesetargets will result in ROC buy-out penalties. The framework agreements aredesigned to help these companies reach their renewable energy obligations. The agreements, and the Company's project financing capabilities, willparticularly help small to mid-sized renewable energy developers whose outputcan be aggregated. The Company was listed on the AIM market of the London Stock Exchange in July2005 under the symbol KPR and is also quoted on the Frankfurt, Munich and BerlinStock Exchanges under the symbol K1P. It has recently signed an agreement withMarathon Capital Partners LLC of Chicago to arrange substantial financing forinvestment in renewable projects. CHAIRMAN'S STATEMENTFor the year ended 31 December 2005 2005 was a year of dramatic change for the company, marked by our admission toAIM at the end of July. Since that time, the company has been expanding itsresource base, largely by the addition of specialist individual consultants. Wehave extended our office premises at Brentford and have entered 2006 with astructure in place to deliver the exciting growth prospects, which were outlinedin our admission document. We believe the renewables market continues to present a tremendous opportunityfor the Company. It is becoming increasingly clear that the UK electricityindustry is facing potential supply shortfalls. There has been much debate aboutthe future of nuclear power and its role within the UK energy sector. However,we believe that without utilising the full potential of the renewables sector,the supply situation will become increasingly stretched. The Group has produced a loss for the year of £1,939,380 after charging £244,000in respect of share-based payments as required by IFRS 2. This is in line withthe expectations at the time of our admission to AIM. It represents both anexpansion of resource and early investment in a number of development projects. A number of specific projects are now in the later stages of negotiation. Thesewill contribute towards our 2006 objectives. However, delays in obtainingplanning permission and grid connections are likely to result in the majority ofprojects scheduled for completion in 2006 being delayed until 2007 and beyond. As stated in its admission document, the company has always required additionalfunding to meet its longer-term objectives. To this end, approval for a capitalincrease was granted at an EGM in December 2005. Negotiations are ongoing with anumber of potential equity providers, both in relation to corporate equity andspecific project funding. In the short-term our parent company, KwikpowerInternational Plc, has agreed to support the company in respect of its fundingrequirements. John BryantChairman29 June 2006 Chief Executive's ReviewFor the year ended 31 December 2005 Summary Following a successful fund-raising, the Company was admitted to AIM in July2005 and subsequently to the Frankfurt, Munich and Berlin stock exchanges inAugust 2005. Since admission, it has focused on developing projects throughwhich renewable energy can be delivered, under the terms of the Power PurchaseAgreements ("PPA"), to major power providers. Market Opportunities The major focus of the Company since admission has been on developing atechnology independent portfolio of renewable energy projects, either on our ownor in conjunction with third party co-developers. We call co-development withthird parties our "Aggregation Strategy". The Aggregation Strategy assists smalldevelopers, who are frequently unable to negotiate favourable PPAs for theirrenewable energy projects. It also brings value to the utility (who is ourcounterparty) for which negotiation with small project developers is neithertime nor cost effective. The period for nomination of projects under the PPAwith British Gas Trading has now expired, however, the Company has sufficientcapacity in its remaining PPA agreements to allow the rollout of more than 200MWof projects between now and mid-2008. In our opinion, the Aggregation Strategyhas been shown to be successful and we are now working with a number ofco-developers to bring renewables projects to market and are currentlynegotiating the finance to enable this to happen. Business Development Agreements RE3 On 24 November 2005, KPR and Resource, Recycling & Recovery Limited ("RE3")entered into a strategic alliance to develop up to 100MW of renewable biomasspower stations in Northern Ireland and Ireland. The projects will use the "Carbon Recycling" concept of diverting municipal,commercial and industrial waste from landfill using the steam treatment andrecycling ("STAR") autoclave treatment of waste to create a bio- fibre feedstocksuitable for the generation of renewable electricity. RE3 has advised us that several sites are under evaluation. Once the acquisitionof a suitable site has been finalised, RE3 will work with a contractor toconstruct the front-end recycling facility. Based on expected completion datesfor the front-end we anticipate that the first commercial operations ofrenewable power generation on the back-end will commence operation in late 2007- early 2008. Wave Dragon On 14 December 2005 KPR announced that it had entered into a JDA with WaveDragon Limited ("Wave Dragon"), which provides a framework for the two-stagedevelopment, financing, construction and operation of up to 77MW of wave energyprojects in Wales. KPR announced on March 14, 2006 that the formal award letter for the £5m "Objective 1" grant from the Welsh European Funding Office had been receivedwhich would assist in funding development of the initial prototype 7MW WaveDragon unit off the coast of West Wales. Currently, PMSS (a specialist Consultancy) and six different consultants areworking to complete seabed studies, (ecological and anchorage) seawater studies,a grid connection study (seabed, beach and onshore routing of connection),shipping movements, a fisheries assessment, a marine mammal assessment and avisual impact assessment which will form the basis of a final environmentalimpact assessment used as part of a formal submission for planning approval.These studies are ongoing and are expected to be completed sometime in the lateautumn of 2006. Living Buildings On 9 March 2006, KPR announced that it had entered into a Project DevelopmentAgreement with Living Buildings Limited ("Living Buildings") to develop up to15MW per year of small bio-fuel based power projects on industrial sites. The first project is based in Nottinghamshire, and will produce 1.2MW. The firststage of this project was operational on a trial basis in February 2006,producing power for the project customer's own use on site and full commercialoperation of this initial project is expected in the third quarter 2006. It isanticipated that up to four additional projects will be jointly developed laterin 2006. Additional Opportunities Under the Aggregation Strategy, the Company is currently in advancednegotiations with a number of third party co-developers for both CarbonRecycling/Biomass and wind projects. We believe these agreements should assistthe Company in meeting its project development targets for 2007 and beyond. Finance Project finance Financing for the above mentioned projects will be achieved through acombination of debt and equity invested in special purpose vehicles in which, itis intended, KPR will hold a stake of between 20% and 50%. To this end, we announced on 1 February 2006 that, together with its majorityshareholder, Kwikpower International plc ("KPI"), KPR had entered into anagreement with Marathon Capital LLC ("Marathon") of Illinois, USA, with theobjective of raising £10 million of equity investment in KPR and £115 million ofadditional project finance to develop, build and acquire a portfolio ofrenewable energy projects in the UK and Europe. The due diligence accompanying this fund raising process has been completed byMarathon, which is proposing to schedule meetings in mid-July at our UK officeswith up to 10 qualified prospective investors who are interesting in investingin renewable projects in the UK and Europe. Investment into the Company As described in its circular to shareholders dated 25 November 2005, KPR isseeking further equity investment. As above, the Company has been working with Marathon to complete the necessarydue diligence and paperwork for an equity placing to raise up to £10 millionfrom Marathon's institutional investor base. It intended that these funds willbe utilised by KPR for both working and project development capital. In addition, we are in discussions with other potential equity providers inrelation to securing ongoing funding for the Company. In the short-term, KPI has agreed to provide financial support in relation tothe Company's funding requirements. Conclusion We strongly believe that KPR is well positioned within the renewables sector asa technology neutral aggregator and developer of independent green energyprojects, which in turn, will allow us to generate value for our shareholders. Dr James WatkinsChief Executive29 June 2006 KP Renewables plcConsolidated Balance SheetAt 31 December 2005 2005 2004 £ £ASSETS Non-current assetsGoodwill - 514,791Investment on product development 217,796 - _________________ _________________ 217,796 514,791 _________________ _________________ Current assetsTrade and other receivables 1,023,974 88,220Cash and cash equivalents 1,100,181 10,740 _________________ _________________ 2,124,155 98,960 _________________ _________________ Total assets 2,341,951 613,751 _________________ _________________ EQUITY AND LIABILITIES Share capital 465,897 404,464Share option reserve 244,000 -Share premium 3,734,347 273,578Retained losses (2,160,331) (220,951) _________________ _________________ Total equity 2,283,913 457,091 _________________ _________________ Current liabilitiesTrade and other payables 58,038 156,660 _________________ _________________Total current liabilities 58,038 156,660 _________________ _________________ Total equity and liabilities 2,341,951 613,751 _________________ _________________ KP Renewables plcConsolidated Income StatementFor the year ended 31 December 2005 13 months from 1 December 2003 to 31 December 2005 2004 £ £ Administrative expenses and operating loss (1,968,099) (220,951)Investment income 30,267 -Interest paid (1,548) - _________________ _________________Loss for the year (1,939,380) (220,951) _________________ _________________ The loss for the year arises from the group's continuing operations. No separateStatement of Total Recognised Gains and Losses has been presented as all suchgains and losses have been dealt with in the Income Statement. KP Renewables plcConsolidated Statement of Changes in EquityFor the year ended 31 December 2005 Share Share Share premium option Accumulated Capital account reserve losses Total £ £ £ £ £ Balance at 1 December 2003 2 - - - 2 Changes in equity for 13 months to31 December 2004Loss for the period - - - (220,951) (220,951)Issue of share capital 404,462 273,578 - - 678,040 __________ __________ __________ __________ __________ Balance at 31 December 2004 404,464 273,578 - (220,951) 457,091 Changes in equity for 2005Loss for the year - - - (1,939,380) (1,939,380)Issue of share capital 61,433 4,510,435 - - 4,571,868Costs of issue of shares - (1,049,666) - - (1,049,666)Equity share options - - 244,000 - 244,000 __________ __________ __________ __________ __________ Balance at 31 December 2005 465,897 3,734,347 244,000 (2,160,331) 2,283,913 __________ __________ __________ __________ __________ KP Renewables plcConsolidated Cash Flow StatementFor the year ended 31 December 2005 13 months from 1 December 2003 to 31 December 2005 2004 Note £ £ Net cash flow from operating activitiesCash outflow from operating activities 4 (1,362,104) (219,701)Interest paid (1,548) - _________________ _________________ (1,363,652) (219,701) Movement in working capital(Increase) in receivables (315,754) (65,630)(Decrease)/increase in payables (78,622) 136,664 _________________ _________________ Net cash used in operating activities (1,758,028) (148,667) _________________ _________________ Cash flows from investing activities Interest received 30,267 -Acquisition of subsidiary - 14,367 _________________ _________________ Net cash from investment activities 30,267 14,367 _________________ _________________ Cash flows from financing activities Loan from parent (20,000) 50,000Proceeds from issue of share capital 2,837,202 95,040 _________________ _________________ Net cash from financing activities 2,817,202 145,040 _________________ _________________ Net increase in cash 1,089,441 10,740 Cash and cash equivalents at beginning of year 10,740 - _________________ _________________ Cash and cash equivalents at end of year 1,100,181 10,740 _________________ _________________ KP Renewables plcNotes to the Financial StatementsFor the year ended 31 December 2005 1. Basis of preparation These financial statements do not constitute statutory accounts of KP Renewablesplc and its subsidiaries ("the Group") for the year ended 31 December 2005within the meaning of Section 240 of the Companies Act 1985, but are derivedfrom those accounts. The statutory accounts for 2005, which have been preparedunder IFRS as adopted by the European Union, will be finalised on the basis ofthe financial information presented by the directors in this preliminaryannouncement and will be delivered to the Registrar of Companies in due course. The comparative figures are stated for the period from incorporation on 1December 2003 to 31 December 2004 and will therefore not be directly comparable. The group has adopted all new and revised Standards and Interpretations issuedby the International Accounting Standards Board ("IASB") and the InternationalFinancial Reporting Interpretations Committee ("IFRIC") of the IASB that arerelevant to the group's operations and effective for accounting periodsbeginning on 1 January 2005. 2. Financial Statements KP Renewables plc commenced trading on 1 December 2003. The results for theperiod ended 31 December 2004 have been extracted from the Annual Report andFinancial Statements for that period, which have been reported on by theCompany's auditors and delivered to the Registrar of Companies. The report ofthe auditors was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. 3. Loss per share 13 months from 1 December 2003 to 31 December 2005 2004Loss for the financial yearattributable to ordinary shareholders £1,939,380 £220,951 Basic losses per share 0.04p 0.01p Basic losses per share has been calculated by dividing the loss for thefinancial year attributable to shareholders by 43,524,396 being the weightedaverage number of shares in issue during the year (2004 - 26,087,559). Theimpact of shares held in option schemes has not been disclosed as this would beanti-dilutive. KP Renewables plcNotes to the Financial Statements (continued)For the year ended 31 December 2005 4. Net cash outflow from operating activities Period from Year to 1 Dec 03 to 31 Dec 05 31 Dec 04 £ £ Operating loss (1,968,099) (220,951)Impairment loss 296,995 -Share-based payments 244,000 -Administration costs paid by issue of shares 65,000 1,250 _________________ _________________ Net cash (outflow) from operating activities (1,362,104) (219,701) _________________ _________________ 5. Analysis of changes in net funds 2005 2004 £ £ Increase / (decrease) in cash for the period 1,109,441 (9,260) Loan from parent (20,000) 20,000 _________________ _________________Change in net funds 1,089,441 10.740Cash and cash equivalents at 31 December 2004 10,740 - _________________ _________________ Cash and cash equivalents at 31 December 2005 1,100,181 10,740 _________________ _________________ 6. Annual Report and Financial Statements The financial information set out above does not constitute the Group'sstatutory accounts for the year ended 31 December 2005 and the period ended 31December 2004, but is derived from those accounts. Statutory accounts for theperiod ended 31 December 2004 have been delivered to the Registrar of Companies.Those for the year ended 31 December 2005 will be delivered following theCompany's annual general meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. However, their opinion was modified inrespect of going concern. 7. Annual General Meeting Copies of the full Annual Report and Accounts for the period ended 31 December2004 are available from the Company's website www.kprenewables.com or by callingat or writing to KP Renewables plc, Boston House, 69-75 Boston Manor Road,Brentford, Middlesex TW8 9JJ. Telephone: +44 (0)20 8231 8820. The Annual reportand Financial Statements for the year ended 31 December 2005 will be sent toshareholders shortly and will be available from the Company's website. This information is provided by RNS The company news service from the London Stock Exchange