30 Sep 2013 14:13
30 September 2013
Renewable Energy Holdings plc
("REH" or the "Company")
Interim Report for the six months to 30 June 2013
Chairman's Statement
I am pleased to set out an overview of the Group's strategic situation and a review of the Group's activities and financial results for the half year ended 30 June 2013 together with other material events that have occurred during the course of 2013.
Wales
During the period, work continued on finalising the 'Application for an Order granting Development Consent' (Planning Application) for the Group's 81MW Welsh wind farm project known as Mynydd Y Gwynt ( "MyG"). The project, is a Nationally Significant Infrastucture Project (as defined by the UK Planning Act 2008) and as such will be considered by the National Infrastructure Directorate in the Planning Inspectorate. The statutory consultation for the draft Environmental Statement has been completed and the company is formulating responses to the points which were raised. The directors believe that the whole planning process should be completed within the next 18 months.
Poland
In line with the Group's strategy, it has continued to market its Polish wind project, known as Kobylany, to prospective purchasers. There is considerable uncertainty in the Polish energy market which makes the project less attractive to potential purchasers. The directors have therefore decided to register the grid connection cable route way-leaves, such that it will provide an acquirer with the security that derives from more recently available Land Registry registration. There are a number of other issues which the Company is seeking to address, in order to make Kobylany more marketable. The directors will provide a full update regarding Kobylany as appropriate.
Carnegie Wave Energy Limited ("Carnegie")
At 30 June 2013 the Group owned approximately 6.8 per cent. of Carnegie's issued share capital. The reduction in the percentage reflects the issue of shares by Carnegie in March 2013 and not a disposal by the Group.
Overhead costs
The Group's overhead costs have been reduced as far as possible. After reviewing the operating requirements of the Group it was decided that a Chief Operating Officer should be appointed. Clive Callister whose appointment was announced on 19 August 2013 has taken on this role and is now the Company's only employee. The Group is using consultants and part-time staff for all other work, as required.
Funding
As announced on 30 September 2013, the Group has entered into an agreement with Utilico Limited to increase the loan facility, the terms of which were initially announced in 6 February 2013, by £1.5m to cover the expenditure that is, in the view of the directors, necessary to progress both the Welsh and Polish projects and to provide general working capital. This brings the total facility to £3.25m of which approximately £1.5m has been drawn down to date. The facility continues to accrue interest of 10 per cent. on the amount drawn down and interest accrued on a quarterly basis and all other terms remain unchanged, including the success fee. The directors (excluding David Weir) who are deemed to be independent of Utilico consider, having consulted with Strand Hanson Limited, the Company's Nominated Adviser, that the variation of the terms of the Utilico Facility are fair and reasonable insofar as shareholders are concerned.
The loan for £2.5m which was taken out on 31 July 2009 and repayment of which was subsequently extended to 30 September 2011 and further extended to 30 September 2013 has again been extended to 31 December 2014. The total capital and interest owed on this loan is now approximately £3.5m.The Convertible Loan accrues interest at 10 per cent. per annum and a commitment fee of 5 per cent. per annum. , both of which are calculated on the balance of the loan, accrued interest and commitment fee on a quarterly basis. All other terms for the Convertible Loan remain unchanged other than those that relate to its conversion into 8,264,463 ordinary shares of 1 pence each, the extension of which are subject to the approval of independent shareholders of the Company at a general meeting, in accordance with the Takeover Code. A circular, convening a general meeting, is expected to be posted to shareholders during the course of the next two months. The directors (excluding David Weir) who are deemed to be independent of Utilico consider, having consulted with Strand Hanson Limited, the Company's Nominated Adviser, that the variation of the terms of the Utilico Loan are fair and reasonable insofar as shareholders are concerned.
Financial performance
The Group made a loss for the half year of £849k. Of which £248k was incurred in finance costs, largely associated with the cost of loans from Utilico Limited and EDF, the latter of which was fully repaid on 2 February 2013. The general overhead costs were reduced to £473k (H1 2012: £667k). The rationalisation of the company took effect in the period from April to September so that the full impact of the savings will be reflected, together with a further reduction in overheads, in the full year to 31 December 2013.
Board
Following the announcement of his resignation as a director of the Company on 30 September 2013, I wanted to reiterate my thanks, and that of my fellow directors, to Sir John Baker for his considerable contribution to REH during the eight and half years that he served on the Board.
Roger Harper
Chairman
30 September 2013
Consolidated income statement for the six months ended 30 June 2013 |
| Six months ended 30 June 2013 (Unaudited) | Six months ended 30 June 2012 (Unaudited) | Year ended 31 December 2012 (Audited) | |
£ | £ | £ | ||
Note | ('000) | ('000) | ('000) | |
Revenue | - | - | - | |
Cost of sales | - | - | - | |
Gross profit/(loss) | - | - | - | |
Other operating income | - | 18 | 24 | |
Development expenditure | (6) | (13) | (20) | |
Administrative expenditure | (467) | (672) | (1,389) | |
Profit/(loss) from operations | (473) | (667) | (1,385) | |
Loss on partial disposal of associate | - | (109) | (185) | |
Share of losses in associate | - | (259) | (305) | |
Loss recognised on disposal of interest in former associate | - | - | (4,333) | |
Impairment of associate | - | (4,542) | - | |
Finance income | 1 | 2 | 10 | |
Finance costs | (248) | (159) | (427) | |
Profit/(loss) before income tax | (720) | (5,734) | (6,625) | |
Income tax credit/(expense) | - | - | - | |
Profit/(loss) for the period from continuing operations | (720) | (5,734) | (6,625) | |
Discontinued operations | ||||
Profit/(loss) for the period from discontinued operations |
4 |
(129) |
(129) |
(282) |
Profit/(loss) for the period | (849) | (5,863) | (6,907) | |
Profit/(loss) attributable to: | ||||
Owners of the parent | (849) | (5,863) | (6,907) | |
Non-controlling interests | - | - | - | |
(849) | (5,863) | (6,907) | ||
Earnings/(loss) per share attributable to the equity holders of the parent during the year: | ||||
Basic and diluted | ||||
From continuing operations | (1.22p) | (8.24p) | (9.52)p | |
From discontinued operations | (0.19p) | (0.19p) | (0.40)p | |
(1.03p) | (8.43p) | (9.92)p | ||
Consolidated statement of comprehensive income for the six months ended 30 June 2013 |
Six months ended 30 June 2013 (Unaudited) | Six months ended 30 June 2012 (Unaudited) | Year ended 31 December 2012 (Audited) | |
£ | £ | £ | |
('000) | ('000) | ('000) | |
Profit/(loss) for the period | (849) | (5,863) | (6,907) |
Other comprehensive income/(expense) | |||
Exchange differences on translating foreign operations | 4 | 584 | 30 |
Gain/(losses) arising on revaluation of Available for Sale Financial asset | (905) | - | 194 |
Total comprehensive income/(expense) for the period | (1,750) | (5,279) | (6,683)
|
Attributable to: | |||
Owners of the parent | (1,750) | (5,279) | (6,683 |
Non-controlling interests | - | - | - |
(1,750) | (5,279) | (6,683) | |
Total comprehensive income/(expense) attributable to owners of the parent arising from: |
|
|
|
Continuing operations | (1,621) | (5,150) | (6,401) |
Discontinued operations | (129) | (129) | (282) |
(1,750) | (5,279) | (6,683) | |
Consolidated statement of changes in equity for the six months ended 30 June 2013 |
Attributable to owners of the parent | |||||||||||
Share capital | Share premium reserve | Foreign exchange reserve | Share based payment reserve | Available for sale Reserve | Merger reserve | Retained earnings | Total | Non Controlling interest | Total equity | ||
£ | £ | £ | £ | £ | £ | £ | £ | £ | £ | ||
('000) | ('000) | ('000) | ('000) | ('000) | ('000) | ('000) | ('000) | ('000) | ('000) | ||
Balance at 1 January 2013 |
696 |
26,740 |
(386) |
1,134 |
194 |
4,410 |
(28,002) |
4,786 |
(532) |
4,254 | |
Comprehensive income/(expense) | |||||||||||
Profit/(loss) for the year | - | - | - | - |
- | - | (849) |
(849) | - | (849) | |
Other comprehensive income/(expense) | |||||||||||
Loss arising on revaluation of Available for sale investment | - | - | - | - |
(905) | - | - |
(905) |
- | (905) | |
Exchange difference on translating foreign operations | - | - | 4 | - |
- | - | - |
7 |
- | 7 | |
Total comprehensive income/(expense) |
- |
- |
4 |
- |
(905) |
- |
(849) |
(1,750) |
- |
(1,750) | |
Balance at 30 June 2013 |
696 |
26,740 |
(382) |
1,134 |
(711) |
4,410 |
(28,851) |
3,306 |
(532) |
2,504 | |
Consolidated statement of changes in equity for the six months ended 30 June 2012 |
Attributable to owners of the parent | |||||||||
Share capital | Share premium reserve | Foreign exchange reserve | Share based payment reserve | Merger reserve | Retained earnings | Total | Non Controlling interest | Total equity | |
£ | £ | £ | £ | £ | £ | £ | £ | £ | |
('000) | ('000) | ('000) | ('000) | ('000) | ('000) | ('000) | ('000) | ('000) | |
Balance at 1 January 2012 | 696 |
26,740 |
(416) |
1,134 |
4,410 |
(21,095) |
11,469 |
(532) |
10,937 |
Comprehensive income/(expense) | |||||||||
Profit/(loss) for the year | - | - | - | - | - | (5,863) |
(5,863) | - | (5,863) |
Other comprehensive income/(expense) | |||||||||
Exchange difference on translating foreign operations | - | - | 584 | - | - | - |
584 |
- | 584 |
Total comprehensive income/(expense) |
- |
- |
584 |
- |
- |
(5,863) |
(5,279) |
- | (5,279) |
Transactions with owners | |||||||||
Share-based payment charge | - | - | - | - | - | - | - |
- | - |
Non-controlling interests | |||||||||
Profit or loss attributable to NCI |
- | - | - | - | - | - |
- |
- | - |
Balance at 30 June 2012 |
696 |
26,740 |
168 |
1,134 |
4,410 |
(26,958) |
6,190 |
(532) |
5,658 |
Consolidated statement of changes in equity for the year ended 31 December 2012 |
Attributable to owners of the parent | |||||||||||
Share capital | Share premium reserve | Foreign exchange reserve | Share based payment reserve | Merger reserve | Available for sale reserve | Retained earnings |
Total | Non-controlling interest | Total equity | ||
£ | £ | £ | £ | £ | £ | £ | £ | £ | £ | ||
(000s) | (000s) | (000s) | (000s) | (000s) | (000s) | (000s) | (000s) | (000s) | (000s) | ||
Balance at 1 January 2012 | 696 | 26,740 | (416) | 1,134 | 4,410 | - | (21,095) |
11,469 |
(532) | 10,937 | |
Comprehensive income/(expense) | |||||||||||
Profit/(loss) for the year | - | - | - | - | - | - | (6,907) | (6,907) | - | (6,907) | |
Other comprehensive income/(expense): | |||||||||||
Exchange differences on translating foreign operations | - | - | 30 | - | - |
- | - |
30 |
- |
30 | |
Gain arising on revaluation of Available for sale Investment | - | - | - | - | - |
194 | - |
194 |
- |
194 | |
Total comprehensive income/(expense) | - | - | 30 | - | - |
194 | (6,907) |
(6,683) |
- | (6,683) | |
Transactions with owners | |||||||||||
Share based payment charge | - | - | - | - | - | - | - |
- |
- | - | |
Balance at 31 December 2012 | 696 | 26,740 | (386) | 1,134 | 4,410 | 194 | (28,002) |
4,786 |
(532) | 4,254 | |
Consolidated balance sheet at 30 June 2013 |
30 June2013 (Unaudited) | 30 June2012 (Unaudited) | 31 December 2012 (Audited) | ||
£ | £ | £ | ||
Note | ('000) | ('000) | ('000) | |
Non-current assets | ||||
Property, plant & equipment | 1,286 | 908 | 1,087 | |
Intangible assets | - | - | - | |
Investment in associate | - | 3,777 | - | |
Total non-current assets | 1,286 | 4,685 | 1,087 | |
Current assets | ||||
Cash and cash equivalents | 53 | 1,010 | 160 | |
Trade and other receivables | 892 | 991 | 937 | |
Available for sale financial asset | 1,828 | - | 2,733 | |
Assets of a disposal group classified as held for sale | 4,275 | 3,359 | 4,318 | |
Total current assets | 7,048 | 5,360 | 8,184 | |
Total assets | 2 | 8,334 | 10,045 | 9,235 |
Current liabilities | ||||
Trade and other payables | 1,157 | 579 | 736 | |
Borrowings | 3,679 | 3,250 | 3,250 | |
Liabilities directly associated with assets of a disposal group classified as held for sale | 494 | 58 | 495 | |
Total current liabilities | 5,330 | 3,887 | 4,481 | |
Non-current liabilities | ||||
Borrowings | 500 | 500 | 500 | |
Total non-current liabilities | - | - | 500 | |
Total liabilities | 2 | 5,830 | 4,387 | 4,981 |
NET ASSETS | 2,504 | 5,658 | 4,254 | |
Capital and reserves attributable to equity holders of the parent | ||||
Share capital | 696 | 696 | 696 | |
Share premium reserve | 26,740 | 26,740 | 26,740 | |
Foreign exchange reserve | (382) | 168 | (386) | |
Share-based payment reserve | 1,134 | 1,134 | 1,134 | |
Merger reserve | 4,410 | 4,410 | 4,410 | |
Available for sale reserve | (711) | - | 194 | |
Retained earnings | (28,851) | (26,958) | (28,002) | |
3,036 | 6,190 | 4,786 | ||
Non-controlling interests | (532) | (532) | (532) | |
TOTAL EQUITY | 2,504 | 5,658 | 4 ,254 | |
These interim financial statements were approved by the Board of Directors and authorised for issue on 30 September 2013 and they were signed on its behalf by:
Roger Harper, Chairman Clive Callister, Director
Consolidated cash flow statement for the six months ended 30 June 2013 |
30 June2013 (Unaudited) | 30 June2012 (Unaudited) | 31 December 2012 (Audited) | |
£ | £ | £ | |
('000) | ('000) | ('000) | |
Operating activities | |||
Loss after tax, including discontinued operations | (849) | (5,863) | (6,907) |
Adjustments for : | |||
Depreciation | - | 6 | 15 |
Foreign exchange gain | 7 | (6) | (92) |
Finance income | (1) | (2) | (10) |
Finance expense | 248 | 159 | 427 |
Share of loss in the associate | - | 259 | 305 |
Impairment of associate | - | 4,542 | - |
Loss on partial disposal of associate | - | - | 185 |
Loss on disposal in associate | - | - | 4,333 |
Impairment of property, plant & equipment | - | - | 6 |
Cash flows from operating activities before changes in working capital | (595) |
(905) | (1,738) |
Decrease/(increase) in trade and other receivables | 156 | 278 | 124 |
Increase/(decrease) in trade and other payables | 176 | (146) | 193 |
Cash generated from/(used in) operations | (263) | (773) | (1,421) |
Income taxes paid | - | - | - |
Cash flows from operating activities | (263) | (773) | (1,421) |
Investing activities | |||
Acquisition of property, plant & equipment | (277) | (215) | (1,170) |
Proceeds from disposal of shares in associate | - | - | 1,216 |
Disposal of shares in associate | - | 461 | - |
Finance income received | 1 | - | 8 |
Cash flows from investing activities | (276) | 355 | 54 |
Financing activities | |||
Draw down of loan facility | 1,179 | 750 | 750 |
Repayment of loan facility | (750) | - | - |
Finance costs paid | - | - | (13) |
Cash flows from financing activities | 429 | 750 | 737 |
Increase/(decrease) in cash and cash equivalents | (110) |
332 |
(630) |
Cash and cash equivalents brought forward | 176 | 746 | 746 |
Exchange losses on cash and cash equivalents | (3) | (68) | 60 |
Cash and cash equivalents at carried forward | 63 | 1,010 | 176 |
Cash included in assets held for sale | (10) | - | (16) |
53 | 1,010 | 160 | |
Notes to the financial statements
1. Basis of preparation
This unaudited consolidated interim financial information has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively IFRSs).
The principal accounting policies used in preparing the interim results are those the Company expects to apply in its Financial Statements for the year ended 31 December 2013 and are unchanged from those disclosed in the Company's audited Annual Report and Financial Statements for the year ended 31 December 2012 which are available at www.reh-plc.com.
In assessing the going concern basis of preparation of the financial information for the period ended 30 June 2013, the Directors have taken into account the status of current negotiations on the sale of assets, forecasts and projections through to June 2014 and taken into account the disposal plans and cost savings previously outlined.. The Directors consider that the Group has sufficient facilities for its ongoing operations and therefore have continued to adopt the going concern basis in preparing the June 2013 financial results.
While the financial information included in this consolidated interim financial information has been prepared in accordance with the AIM Rules for Companies and with IFRSs, this interim consolidated financial information does not itself contain sufficient information to comply fully with IFRSs. As permitted, the Company has chosen not to adopt IAS 34 'Interim Financial Statements' in preparing these interim financial statements.
The financial information for the six months ended 30 June 2013 and 30 June 2012 is unaudited and does not constitute the Company's statutory financial statements for those periods. The comparative financial information for the full year ended 31 December 2012 has, however, been derived from the statutory financial statements for that period. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 15.4 of the Isle of Man Companies Act 1982.
2. Segment Information
The Group had four main reportable segments during the periods ended 30 June 2013, 30 June 2012 and during the year ended 31 December 2012. The four segments 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 the Group's shareholding in Carnegie Wave Energy Limited.
· Polish windfarms - this segment represents the windfarm under construction at Kobylany, Poland.
· Welsh windfarms - this segment represents the windfarm development project at Sweetlamb, Wales.
Six months ended June 2013 | Head office | CETO development | Wind farms |
Wind farms | |
Isle of Man | Australia | Poland | Wales | Total | |
£ | £ | £ | £ | £ | |
('000) | ('000) | ('000) | ('000) | ('000) | |
Revenue | |||||
Total revenue | 180 | - | - | - | 180 |
Inter-segmental revenue | (180) | - | - | - | (180) |
Revenue from external customers | - | - | - | - | - |
Other income | - | - | - | - | - |
Administration expenses | (467) | - | - | - | (467) |
Development expenditure | (6) | - | - | - | (6) |
Finance income | 1 | - | - | - | 1 |
Finance costs | (248) | - | - | - | (248) |
Losses from discontinued operations | - | - | (129) | - | (129) |
Segment profit/(loss) before tax | (720) | - | (129) | - | (849) |
Additions to non-current assets | - | - | - | 277 | 277 |
Investment in wind farms | |||||
Windfarms | - | - | - | 2,035 | 2,035 |
Assets held for sale | - | - | 4,169 | - | 4,169 |
Total investment in windfarms | - | - | 4,169 | 2,035 | 6,204 |
Available for sale financial asset | - | 1,828 | - | - | 18,28 |
Other assets | 182 | 106 | 14 | 302 | |
Reportable segment assets | 182 | 1,828 | 4,275 | 2,049 | 8,334 |
Liabilities associated with assets held for sale | - | - | (494) | - | (494) |
Other Liabilities | (4,789) | - | - | (500) | (5,289) |
Reportable segment liabilities | (4,789) | - | (494) | (500) | (5,783) |
Six months ended June 2012 | Head office | CETO development | Wind farms |
Wind farms | |
Isle of Man | Australia | Poland | Wales | Total | |
£ | £ | £ | £ | £ | |
('000) | ('000) | ('000) | ('000) | ('000) | |
Revenue | |||||
Total revenue | 180 | - | - | - | 180 |
Inter-segmental revenue | (180) | - | - | - | (180) |
Revenue from external customers | - | - | - | - | - |
Other income | 18 | - | - | - | 18 |
Administration expenses | (671) | - | - | (1) | (672) |
Development expenditure | (13) | - | - | - | (13) |
Finance income | 2 | - | - | - | 2 |
Finance costs | (159) | - | - | - | (159) |
Loss on disposal of shares in associate | - | (109) | - | - | (109) |
Loss from discontinued operations | - | - | (129) | - | (129) |
Impairment of associate | - | (4,542) | - | - | (4,542) |
Share of losses in associate | - | (259) | - | - | (259) |
Segment profit/(loss) before tax | (823) | (4,910) | (129) | (1) | (5,863) |
Additions to non-current assets | - | - | 131 | 85 | 216 |
Investment in wind farms | |||||
Windfarms | - | - | - | 1,645 | 1,645 |
Assets held for sale | - | - | 3,366 | - | 3,366 |
Total investment in windfarms | - | - | 3,366 | 1,645 | 5,011 |
Investment in associate | - | 3,777 | - | - | 3,777 |
Other assets | 1,224 | 27 | - | 6 | 1,257 |
Reportable segment assets | 1,224 | 3,804 | 3,366 | 1,651 | 10,045 |
Liabilities associated with assets held for sale | - | - | (58) | - | (58) |
Other Liabilities | (3,817) | (12) | - | (500) | (4,329) |
Reportable segment liabilities | (3,817) | (12) | (58) | (500) | (4,387) |
Year ended 31 December 2012 | CETO | ||||
Head office | development | Wind farms | Wind farms | ||
Isle of Man | Australia | Poland | Wales | Total | |
£ | £ | £ | £ | £ | |
(000s) | (000s) | (000s) | (000s) | (000s) | |
Total revenue | 360 | - | - | - | 360 |
Inter-segmental revenue | (360) | - | - | - | (360) |
Revenue from external customers | - | - | - | - | - |
Administration expenses | (1,387) | - | - | - | (1,387) |
Development expenditure | (20) | - | - | - | (20) |
Finance income | 10 | - | - | - | 10 |
Finance costs | (427) | - | - | - | (427) |
Other income | 24 | - | - | - | 24 |
Depreciation | (2) | - | - | - | (2) |
Loss from discontinued operations | - | - | (282) | - | (282) |
Loss on disposal of interest in associate | - | (4,333) | - | - | (4,333) |
Loss on partial disposal of associate | - | (185) | - | - | (185) |
Share of losses in associate | - | (305) | - | - | (305) |
Segment profit/(loss) before tax | (1,802) | (4,823) | (282) | - | (6,907) |
Additions to non-current assets | 1 | - | 920 | 277 | 1,198 |
Investment in wind farms | - | - | 4,097 | 1,836 | 5,933 |
Available for sale financial asset Other assets | - 339 | 2,733 - | - 221 | - 9 | 2,733 569 |
Reportable segment assets | 339 | 2,733 | 4,318 | 1,845 | 9,235 |
Reportable segment liabilities | (3,986) | - | (495) | (500) | (4,981) |
3. Director's Fees
From 1 April 2012 fifty per cent of the Non Executive Director's fees have been paid and fifty per cent have been deferred and recognised in accruals. The deferred portion of the fees will be paid on the return of cash to shareholders.
4. Discontinued operations
Plan to dispose of wind farm project
On 30 April 2012 the Group announced the orderly sale of its assets and the return of cash to shareholders. The Group is actively seeking a buyer for its Polish wind farm project. It is the Director's judgement that the Polish wind farm project meets the criteria under IFRS 5 "Non Current Assets and Discontinued Operations" to be classified as held for sale. Accordingly the Group's Polish operations have been presented as discontinued operations.
Analysis of loss for the year from discontinued operations
The results of the discontinued operations (i.e. the Polish wind farm project) included in the consolidated income statements are set out below. The comparative loss and cash flows from discontinued operations have been re-presented to include those operations classified as discontinued in the current year.
Loss from discontinued operations | 30 June | 30 June | 31 December | |
2013 | 2012 | 2012 | ||
£ | £ | £ | ||
(000s) | (000s) | (000s) | ||
Cost of sales* | (60) | (67) | (134) | |
Expenses other than finance costs | (69) | (62) | (148) | |
Finance costs | - | - | - | |
Profit/(loss) before tax from discontinued operations | (129) | (129) | (282) | |
Tax | - | - | - | |
Profit/(loss) after tax from discontinued operations | (129) | (129) | (282) |
* "Cost of Sales" represents the cost of the land leases at the site of the Kobylany wind farm.
These group interim accounts to 30 June 2013 are available for download from the company's website at www.reh-plc.com