REH.L Regulatory News (REH)

Renewable Energy Holdings plc

("REH" the "Company" or the "Group")

Final Results for the year ended 31 December 2014

Renewable Energy Holdings plc announces the financial results for the year ended 31 December 2014, a copy of which is available on its website www.reh-plc.com. The full Accounts will be posted to shareholders today.

Enquiries:

Chairman's statement

The main focus for the Group continues to be the planning application for the Mynydd y Gwynt ("MYG") wind farm in Mid-Wales. As announced on 21 May 2015 the examination phase for the application is now over and the Examining Authority has three months during which he considers the various representations made and writes his report to the Secretary of State for Energy and Climate Change. The Secretary of State then has a further three months to decide whether to award consent. Given this timetable, notification of the decision will be no later than 20 November 2015.

Financial performance

The Group made a Loss from Operations of £462k in the year, the comparable figure for 2013 being £733k. The loss for the year was £3.65m (2013: £1.6m), mainly due to a charge taken for the impairment of the Polish project amounting to £2.17m and interest on the Utilico loans of £889k (2013: £677k).

Wales

The planning examination process closed on 20 May, with a consent decision due by 20 November 2015. If consent is granted then the wind farm would need to be connected to the proposed new Mid-Wales hub substation via a 132kV overhead line, which will require a separate planning application by SP Manweb. In turn the new hub substation is also the subject of another planning application by National Grid. Both grid projects are currently scheduled for completion in October 2019.

As the connection date is October 2019 the wind farm will not be eligible for Renewable Obligation ("RO") support, which closes in 2017, but will be eligible to apply for support using a 'Contract for Difference' ("CfD") tariff under the electricity market reform arrangements (Electricity Act 2013). Achieving a CfD is a competitive auction process dependent on several factors including the money allocated by DECC. For a discussion and explanation of the new CfD regime please refer to the www.emrdeliverybody.com and www. lowcarboncontracts.uk websites.

On 27 May 2015 the Queen's Speech contained an intention to introduce a new energy Bill, which in relation to onshore wind projects included a 'commitment to end new subsidy for onshore wind farms… and DECC will be announcing measures to deliver this soon.' It is currently unclear how this will affect the MYG project but the board of directors of the Company ("Board") will update the market as and when there is more clarity.

Whilst the Board will consider all possible deals should consent be granted it is its view that the sale of the wind farm is likely to achieve the best value for shareholders only after the grid connection projects have both been consented and the CfD auction process successfully completed. MYG will not be eligible for the next CfD auction in November 2015 and will have to wait for the following auction, currently expected to be winter 2016.

Poland

Recent clarifications in the available tariff regime in Poland have caused an upturn in the number of transactions in the market. All projects connected before the end of 2015 will be eligible for the original Green Certificate scheme. Later projects will fall into an auction system not unlike that operating in the UK.

Despite marketing the project for sale and attracting reasonable interest, the feedback received from prospective buyers is that they are focusing resources on simpler projects and may reconsider our project in later rounds of development.

The Group continues to believe that the project will be successful and efforts to make a sale will continue, but in the meanwhile ongoing expenditure is severely restricted. Due to the anticipated reduction in tariffs in Poland and the failure to sell the project over the last two years the Directors have written down the project's value to £2m.

Carnegie Wave Energy Limited ("Carnegie" or "CWE")

The Group's holding of 101,330,192 shares in Carnegie is unchanged from December 2012 but following rounds of capital raising by Carnegie it now represents 5.8% of their equity assuming conversion of outstanding loans. The equivalent percentage at December 2013 was 5.9%.

Carnegie has successfully commissioned and connected their Garden Island CETO 5 demonstration project to the grid. They have also secured further funding for the next generation CETO 6 which reportedly will have a much improved power output and simplified design.

Since July 2012 the Carnegie shares held by Renewable Energy Holdings have been locked in an ASX 'voluntary escrow' mechanism following an agreement with CWE. This can only be released with the agreement of CWE or as an "in specie" distribution. However the shares form part of the security held by Utilico Investments Limited ("Utilico") for the loans extended to the Group, so any "in specie" distribution remains only possible if the loans have been repaid to Utilico in full.

Going Concern and future funding

In the event of planning for Wales, the Board believes the project will return value to shareholders. Under accounting standards the Group's investment in its wind farm in Wales is accounted for at cost.

The Group Balance Sheet shows Net Liabilities of £607k (2013: Net Assets £2.59m). The Group's largest shareholder, Utilico, continues to give financial support and with this support in place the Board is comfortable that the Group has sufficient means to fund its liabilities as they fall due.

As previously reported the Group has two loan facilities with Utilico (its largest shareholder with 28.7% of the equity). The initial facility of £2.5 million is fully utilised and is subject to a finance cost of 15% per annum. The second facility was originally £3.25 million, but was increased to £4.25 million on 15th December 2014 and the term extended to 31 July 2015. Interest is at 10% per annum with a success fee linked to the value realised from the Welsh project. As recently announced, on 3 June 2015 a further extension to the maturity of the loans to 31st December 2015 was granted. The Group has utilised £4 million of this loan and expects the remaining £0.25 million available to be sufficient for the rest of the year.

The Board believes that the Group's financial position is dependent upon planning consent for the Welsh wind farm project. If consent is not granted then the Board would then consult with Utilico and any other potential funders but if no further funding was available the Group would likely have to enter administration. However the Board remains optimistic that the Group's application will be successful and therefore have continued to adopt the Going Concern basis in preparing the 2014 Annual Report.

David Weir

Chairman

June 2015

Directors' report

The Directors present their report together with the audited Financial Statements of Renewable Energy Holdings plc ("the Company") and its subsidiaries (together "the Group") for the year ended 31 December 2014.

Results and dividends

The results of the Group for the year are set out below and show a loss for the year ended 31 December 2014 of £3,651,000 (2013: loss of £1,595,000). £2,169,000 of which relates to impairment of the Group's wind farm development in Poland.

The Directors do not recommend the payment of a dividend.

Principal activities, review of business and future developments

The Company is a limited liability company incorporated and domiciled in the Isle of Man. The Group's strategy is to be an owner and operator of European on-shore wind farms. During 2014 the Group continued to implement its strategy of developing its wind farm sites in Poland and Wales.

The Group also owns a stake in Australian wave power technology company Carnegie Wave Energy Limited ("CWE"). The Group held 5.8% of the equity of CWE at the Balance Sheet date.

A review of the business and future developments is given in the Chairman's Statement Report above.

Significant shareholdings

The following table represents shareholdings in the Company of 3% or more as at the 31 December 2014.

Directors

The Directors of the Company during the year and their beneficial interests in the ordinary share capital of the Company as follows at 31 December 2014.

No Director has any interest in the shares of any of the subsidiary companies or in the shares of the associate.

The details of any Directors' interest in transactions of the Group are given in note 28 "Related party transactions" of the Consolidated Financial Statements.

AuditorThe Company's auditor, Crowe Morgan Chartered Accountants, being eligible, has indicated its willingness to continue in office in accordance with Section 12(2) of the Isle of Man Companies Act 1982.

Statement of Directors' Responsibilities in respect of the Annual Report and the financial statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable Isle of Man law.Company law requires the Directors to prepare financial statements for each financial year. The financial statements are required by law to give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.In preparing those financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state that the financial statements comply with IFRSs, as adopted by the European Union subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company and the Group will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Isle of Man Companies Acts 1931 to 2004. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the Isle of Man governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. On behalf of the BoardDavid WeirChairman

Independent auditor's report to the members of REH

Report on the Consolidated and Parent Company Financial Statements

We have audited the accompanying consolidated and parent company financial statements ('the financial statements') of Renewable Energy Holdings plc and its subsidiaries (the 'Group') which comprise the consolidated and parent company balance sheets as at 31 December 2014, and the consolidated income statement, the consolidated statement of comprehensive income, the consolidated and parent company statements of changes in equity and the consolidated and parent company cash flow statements for the year then ended and a summary of significant accounting policies and other explanatory notes.

Directors' Responsibility for the Financial Statements

The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with applicable Isle of Man law and International Financial Reporting Standards as adopted by the European Union, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. This report, including the opinion, has been prepared for and only for the company's members as a body in accordance with Section 15 of the Isle of Man Companies Act 1982 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

Opinion

In our opinion:

· the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2014, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union;

· the parent company financial statements give a true and fair view of the financial position of the parent company as at 31 December 2014, and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union; and

· the financial statements have been properly prepared in accordance with the Isle of Man Companies Acts 1931 to 2004.

Emphasis of matter - Going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the Group's ability to continue as a going concern. The Group's financial position is dependent upon planning consent for the Welsh wind farm project. If consent is not granted then the Board would then consult with Utilico Investments Limited and any other potential funders but if no further funding was available the Group would likely have to enter administration.These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Isle of Man Companies Acts 1931-2004 require us to report to you if, in our opinion:

· proper books of account have not been kept by the parent company or, proper returns adequate for our audit have not been received from branches not visited by us; or

· the parent company's balance sheet is not in agreement with the books of account and returns; or

· we have not received all the information and explanations necessary for the purposes of our audit; and

· certain disclosures of directors' loans and remuneration specified by law have not been complied with.

8 St George's Street Crowe Morgan

Douglas, Isle of Man Chartered Accountants

IM1 1AH

Dated: 4 June 2015

Consolidated income statement

Consolidated statement of comprehensive income

for the year ended 31 December 2014

Consolidated statement of changes in equity

for the year ended 31 December 2014

Consolidated statement of changes in equity

for the year ended 31 December 2013

Company statement of changes in equity

for the year ended 31 December 2014

Company statement of changes in equity

for the year ended 31 December 2013

Consolidated balance sheet at 31 December 2014

Company balance sheet at 31 December 2014

Consolidated and company cash flow statements

for the year ended 31 December 2014

Notes forming part of the financial statements

for the year ended 31 December 2014

1. Accounting policies

The principal accounting policies adopted in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

Basis of preparation

These Consolidated Financial Statements have been prepared under the historical cost or fair value basis as appropriate in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS").

Estimates, judgements and critical accounting policies

The preparation of Consolidated Financial Statements under IFRS requires the Directors to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on the net present value of future cash flows, historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below:

· Going concern

In assessing the going concern basis of preparation of the financial information for the year ended 31 December 2014, the Directors have taken into account anticipated capital raised as the Group draws down on its loan facilities. Forecasts and projections for twelve months from the date of the approval of these accounts have been prepared, taking into account administrative cost savings. The Directors consider that the Group has sufficient facilities for its ongoing operations.

The Board believes that the Group's financial position is dependent upon planning consent for the Welsh wind farm project. If consent is not granted then the Board would then consult with Utilico and any other potential funders but if no further funding was available the Group would likely have to enter administration. However the Board remains optimistic that the Group's application will be successful and therefore have continued to adopt the Going Concern basis in preparing the 2014 Annual Report.

· Impairment of intangible assets

Intangible assets are carried at cost less a provision for impairment. They are required to be assessed for impairment annually and assessed on an ongoing basis to determine whether circumstances exist that could lead to the conclusion that the carrying value of such assets is not supportable or impaired. Such calculations are based on the net present value of future cash flows and require judgement relating to the appropriate discount factors and long term growth prevalent in a particular market as well as short term business performance. The Directors draw upon experience as well as external resources in making these judgements.

· Useful lives of intangible assets and property, plant and equipment

Intangible assets and property, plant and equipment are amortised or depreciated over their useful lives. Useful lives are based on management's estimates of the period over which the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged or credited to the Consolidated Income Statement in specific periods.

New and amended standards adopted by the Group

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on 1 January 2014 that have had a material impact on the Group.

New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2014 and not early adopted.

IFRS 14, 'Regulatory Deferral Accounts' is not applicable to the Group as the Group is not a first-time adopter of IFRS's.

IFRS 15, 'Revenue from Contracts with Customers' was issued in May 2014. It will replace IAS 11 'Construction Contracts', IAS 18 'Revenue' and related interpretations. Contracts are bundled or unbundled into distinct performance obligations with revenue recognised as the obligations are met. It is effective from 1st January 2017. The group is yet to fully assess IFRS 15's impact.

Amendments to IFRS 11, 'Accounting for Acquisitions of Interest in Joint Operations' provide guidance on how to account for the acquisition of a joint operation that constitutes a business as defined in IFRS3 Business Combinations. Specifically, the amendments state that the relevant principles on accounting for business combinations in IFRS 3 and other standards should be applied. The same requirements should be applied to the formation of a joint operation if and only if an existing business is contributed to the joint operation by one of the parties that participate in the joint operation. A joint operator is also required to disclose the relevant information required by IFRS 3 and other standards for business combinations. The amendments to IFRS 11 apply prospectively from 1st January 2016. The group is yet to fully assess IFRS 11's impact.

Amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. Amendments to IAS 38, 'Clarification of Acceptable methods of Depreciation and Amortisation' introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. The Group does not anticipate that the application of these amendments to IAS 16 and IAS 38 will have a material impact on the Group's financial statements.

Amendments to IAS 19, 'Defined Benefit Plans: Employer Contributions' was issued in November 2013. This amendment distinguishes the accounting for employee contributions that are related to service from that for those that are independent of service. It is effective from 1st July 2014. The Group does not anticipate that the application of this amendment to IAS 19 will have a material impact on the Group's financial statements.

Annual Improvements to IFRS's 2010-2012 Cycle and 2011-2013 Cycle were issued in December 2013 making a number of minor amendments to IFRS. Implementation of these changes is not expected to have a material effect on the Group's financial statements.

Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The Consolidated Financial Statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity.

Subsidiaries Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than half the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method of accounting for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of the acquiree's identifiable net assets.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Investments

Investments in the Company Balance Sheet represent investments in subsidiary companies and associates and are stated at cost less provision for impairment.

Operating segmentsOperating segments are reported in a manner consistent with the internal reporting provided to the board of Directors, who are responsible for allocating resources and assessing performance of the operating segments.

Associates

Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the Consolidated Balance Sheet at cost. The Group's share of post-acquisition profits and losses is recognised in the Consolidated Income Statement, except that losses in excess of the Group's investment in the associate are not recognised unless there is an obligation to make good those losses.

Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated investors' interests in the associate. The Group's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.

Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Impairment of non-financial assets

Impairment tests on intangible assets with indefinite useful economic lives or that are not yet in use, are undertaken annually at the end of each accounting period.

Assets that are amortised and depreciated are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. At each reporting date the Directors' assess whether there is any objective evidence that the Group's investment in associate is impaired.

In the event of an impairment, a loss is recognised in the Consolidated Income Statement for the amount by which the asset's carrying value may not be recoverable. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use. An impairment charge is generally recognised when there is a significant or prolonged decline in an asset's fair value for a period of two years or more.

Foreign currency

Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the Balance Sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the Consolidated Income Statement.

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the Balance Sheet date. Resulting exchange differences are recognised directly in Other Comprehensive Income ("Foreign Exchange Reserve").

Exchange differences recognised in the Income Statements of group entities' separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to the foreign exchange reserve on consolidation.

On disposal of a foreign operation, the cumulative exchange differences recognised in the Foreign Exchange Reserve relating to that operation up to the date of disposal are transferred to the Consolidated Income Statement as part of the profit or loss on disposal.

Assets classified as held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered

principally through a sale transaction rather than continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its current condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of the classification.

When the group is committed to the sale plan involving the loss of control of a subsidiary, all the assets and liabilities of that subsidiary are classified held for sale when the above criteria are met.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying value and fair value less cost to sell.

Financial assets

The Group classifies its financial assets as loans and receivables, available for sale assets and cash and cash equivalents. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The Group's accounting policies for loans and receivables and available for sale assets are as follows:

Available for sale financial assets

Quoted shares held by the Group that are traded on an active market are classified as available for sale and are stated at fair value. Fair value is determined with reference to the market value of the shares.

Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the available for sale reserve, with the exception of impairment losses which are recognised in profit and loss.

The fair value of available for sale assets denominated in a foreign currency is determined in that currency and translated at the spot rate at the end of the reporting period.

Loans and receivables 

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. They are carried at fair value on recognition and held at amortised cost less any provision for impairment.

The Company classifies amounts due from subsidiaries as loans and receivables.

Financial liabilities

Other financial liabilities include the following items:

· Trade payables and other short-term monetary liabilities are recognised initially at fair value and subsequently measured at amortised cost.

· Loans payable are initially recognised at fair value. Such interest bearing liabilities are subsequently measured at amortised cost to ensure that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the Balance Sheet. "Interest expense" in this context includes initial transaction costs and premiums payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Retirement benefits: Defined contribution schemes

The Group operates a defined contribution pension scheme. A defined contribution scheme is a pension scheme under which the Group pays fixed contributions to a separate entity.

The Group has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current or prior periods.

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Consolidated Income Statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Balance Sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where equity instruments are granted to persons other than employees, the Consolidated Income Statement is charged with the fair value of goods and services received.

The charge for share-based payment is calculated in accordance with the analysis described in note 23. The option valuation models used require highly subjective assumptions to be made including the future volatility of the Group's share price, expected dividend yield, risk-free interest rates and expected staff turnover. The Directors draw upon a variety of external sources to aid in the determination of the appropriate data to use in such calculations.

Operating leases

Where substantially all of the risks and rewards incidental to ownership are retained by the lessor (an "operating lease"), the total rental payable under the lease is charged to the Consolidated Income Statement on a straight-line basis over the lease term.

Internally generated intangible assets (research and development costs)

Expenditure on internally developed products is capitalised if it can be demonstrated that:

· it is technically feasible to develop the asset so that it will be available for use;

· adequate technical, financial and other resources are available to complete the development;

· there is an intention to complete, use or sell the asset;

· the Group is able to use or sell the asset;

· sale of the asset will generate future economic benefits; and

· expenditure on the asset can be measured reliably.

Capitalised development costs are amortised from the point at which they are available for use, over the period the Group expects to benefit from using or selling the products developed. The amortisation expense is included in administrative expenses in the Consolidated Income Statement.

Research and development expenditure not satisfying the above criteria and expenditure on the research phase of projects are recognised and disclosed separately in the Consolidated Income Statement as incurred.

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within administrative expenses in the Consolidated Income Statement.

Intangible assets are recognised at fair value on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights.

In-process research and development programmes acquired in such combinations are recognised as an asset even if subsequent expenditure is written off because the criteria specified in the policy for research and development costs above are not met.

The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

Historic cost is the market value on the date of acquisition. Wind farm planning permission and permits and Wind farm planning application are subject to an annual impairment review.

Whilst a wind farm is under construction or pending planning consent and therefore is not available for use, the Board will review the carrying value for impairment at least annually.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.

Depreciation is provided on all items of property, plant and equipment to write off the carrying value of items over their expected useful economic lives, at the following rates:

Plant, machinery and motor vehicles: 10% - 33% per annum straight line

Assets under construction are recognised at cost and will be depreciated when brought into use.

2. Acquisition of Mynydd Y Gwynt Limited

During 2011, the Group paid £2,000 for 2,000 "A" preference shares of Mynydd Y Gwynt Limited ("MYG"). MYG has the right to the land leases at the proposed 81 MW Mynydd y Gwynt wind farm and is responsible for the related planning application. MYG also has 1,000 ordinary shares in issue owned by its founders.

The Group controls MYG due to it owning over 50% of the voting rights and having the power to appoint the majority of the board of directors. In addition, an "A" preference shareholder has to be present for quorum to exist. The "A" preference shares are not entitled to participate in the profits of MYG and therefore the "A" preference shares are not classified as equity resulting in the non-controlling interest being 100% of MYG. MYG has been consolidated from 24 November 2011, the date the Group achieved control.

MYG's assets and liabilities have been recognised in the Group's Consolidated Balance Sheet at fair value. The non-controlling interest in MYG has been recognised at the fair value of the non-controlling interests proportionate share of identifiable net assets. As all expenditure of MYG has been capitalised into property, plant and equipment, there is no profit or loss attributable to the non-controlling interest.

Under the terms of an existing agreement between the Group and the ordinary shareholders of MYG for which the Group paid £750,000 included in "other receivables and prepayments", the Group has the option to acquire the ordinary shares of MYG once MYG achieves planning permission.

Upon exercising the option, £225,000 per MW is payable to the ordinary shareholders of MYG. Under the terms of the agreement, these ordinary shares will be acquired by the Group on payment of the consideration. This amount is included within "Trade and other receivables" on the Consolidated Balance Sheet.

Prior to the Group gaining control over Mynydd Y Gwynt, Mynydd Y Gwynt's working capital requirements of up to £500,000 were funded by Howard Evans, an original shareholder. This amount is repayable and contingent on receiving planning consent for the Mynydd Y Gwynt wind farm (and will be settled from the consideration paid to the original shareholders).

3. Loss for the year from continuing operations

4. Staff costs

5. Directors' remuneration

Only 50% of David Weir's Directors' fees have been paid the remainder is contingent on returning funds to shareholders.

6. Segment information

The Group had four main reportable segments during the year ended 31 December 2014. The segments at 31 December 2014 were:

· Head office - this segment represents the operation of the Group's head office facility in the Isle of Man.

· CETO development - this segment represents the Group's investment in CETO technology development operations in Perth, Western Australia. This technology was sold in 2009 and the amounts in this segment relate to costs associated with the Group's Australian subsidiary and its shareholding in Carnegie Wave Energy Limited.

· Polish wind farms - this segment represents the wind farm under development at Kobylany.

· Welsh wind farms - this segment represents the wind farm development project at Sweetlamb.