RNS Number:4233F
KP Renewables PLC
30 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 are
now working with a number of co-developers to bring both Carbon Recycling in the
form of biomass, and wind renewables projects to market. We are excited about
the prospects for the ventures in which we are already engaged and are currently
negotiating further finance to enable these and future schemes to happen."
John Bryant, Chairman, comments:
"Further investment in renewables remains a major objective for the UK
government's energy policy. To that end KP Renewables is at the forefront of
significant developments in the power markets in this country."
For further information please contact:
KP Renewables plc
Dr James Watkins, CEO Tel: +44 (0) 20 8231 8820
drjwatkins@kprenewables.com
Robert Smyth, Finance Director
rsmyth@kprenewables.com www.kprenewables.com
Media enquiries:
Abchurch
Martin Sutton / Gareth Mead Tel: +44 (0) 20 7398 7700
martin.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 energy
company in the UK. The Company has already agreed framework Power Purchase
Agreements to sell long term renewable energy on pre-agreed terms to a number of
UK electricity retailers. This energy will be based on a mix of biomass and "
Carbon Recycling" projects along with wind and wave projects which qualify for
Renewable Obligation Certificates ("ROC"s).
Electricity retailers have an obligation to source an increasing percentage of
their supplies from renewable energy (15.4% by 2015). Failure to meet these
targets will result in ROC buy-out penalties. The framework agreements are
designed to help these companies reach their renewable energy obligations.
The agreements, and the Company's project financing capabilities, will
particularly help small to mid-sized renewable energy developers whose output
can be aggregated.
The Company was listed on the AIM market of the London Stock Exchange in July
2005 under the symbol KPR and is also quoted on the Frankfurt, Munich and Berlin
Stock Exchanges under the symbol K1P. It has recently signed an agreement with
Marathon Capital Partners LLC of Chicago to arrange substantial financing for
investment in renewable projects.
CHAIRMAN'S STATEMENT
For the year ended 31 December 2005
2005 was a year of dramatic change for the company, marked by our admission to
AIM at the end of July. Since that time, the company has been expanding its
resource base, largely by the addition of specialist individual consultants. We
have extended our office premises at Brentford and have entered 2006 with a
structure in place to deliver the exciting growth prospects, which were outlined
in our admission document.
We believe the renewables market continues to present a tremendous opportunity
for the Company. It is becoming increasingly clear that the UK electricity
industry is facing potential supply shortfalls. There has been much debate about
the 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 #244,000
in respect of share-based payments as required by IFRS 2. This is in line with
the expectations at the time of our admission to AIM. It represents both an
expansion of resource and early investment in a number of development projects.
A number of specific projects are now in the later stages of negotiation. These
will contribute towards our 2006 objectives. However, delays in obtaining
planning permission and grid connections are likely to result in the majority of
projects scheduled for completion in 2006 being delayed until 2007 and beyond.
As stated in its admission document, the company has always required additional
funding to meet its longer-term objectives. To this end, approval for a capital
increase was granted at an EGM in December 2005. Negotiations are ongoing with a
number of potential equity providers, both in relation to corporate equity and
specific project funding. In the short-term our parent company, Kwikpower
International Plc, has agreed to support the company in respect of its funding
requirements.
John Bryant
Chairman
29 June 2006
Chief Executive's Review
For the year ended 31 December 2005
Summary
Following a successful fund-raising, the Company was admitted to AIM in July
2005 and subsequently to the Frankfurt, Munich and Berlin stock exchanges in
August 2005. Since admission, it has focused on developing projects through
which renewable energy can be delivered, under the terms of the Power Purchase
Agreements ("PPA"), to major power providers.
Market Opportunities
The major focus of the Company since admission has been on developing a
technology independent portfolio of renewable energy projects, either on our own
or in conjunction with third party co-developers. We call co-development with
third parties our "Aggregation Strategy". The Aggregation Strategy assists small
developers, who are frequently unable to negotiate favourable PPAs for their
renewable energy projects. It also brings value to the utility (who is our
counterparty) for which negotiation with small project developers is neither
time nor cost effective. The period for nomination of projects under the PPA
with British Gas Trading has now expired, however, the Company has sufficient
capacity in its remaining PPA agreements to allow the rollout of more than 200MW
of projects between now and mid-2008. In our opinion, the Aggregation Strategy
has been shown to be successful and we are now working with a number of
co-developers to bring renewables projects to market and are currently
negotiating 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 biomass
power 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 and
recycling ("STAR") autoclave treatment of waste to create a bio- fibre feedstock
suitable for the generation of renewable electricity.
RE3 has advised us that several sites are under evaluation. Once the acquisition
of a suitable site has been finalised, RE3 will work with a contractor to
construct the front-end recycling facility. Based on expected completion dates
for the front-end we anticipate that the first commercial operations of
renewable 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 Wave
Dragon Limited ("Wave Dragon"), which provides a framework for the two-stage
development, financing, construction and operation of up to 77MW of wave energy
projects 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 received
which would assist in funding development of the initial prototype 7MW Wave
Dragon unit off the coast of West Wales.
Currently, PMSS (a specialist Consultancy) and six different consultants are
working 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 a
visual impact assessment which will form the basis of a final environmental
impact assessment used as part of a formal submission for planning approval.
These studies are ongoing and are expected to be completed sometime in the late
autumn of 2006.
Living Buildings
On 9 March 2006, KPR announced that it had entered into a Project Development
Agreement with Living Buildings Limited ("Living Buildings") to develop up to
15MW 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 first
stage 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 commercial
operation of this initial project is expected in the third quarter 2006. It is
anticipated that up to four additional projects will be jointly developed later
in 2006.
Additional Opportunities
Under the Aggregation Strategy, the Company is currently in advanced
negotiations with a number of third party co-developers for both Carbon
Recycling/Biomass and wind projects. We believe these agreements should assist
the Company in meeting its project development targets for 2007 and beyond.
Finance
Project finance
Financing for the above mentioned projects will be achieved through a
combination of debt and equity invested in special purpose vehicles in which, it
is intended, KPR will hold a stake of between 20% and 50%.
To this end, we announced on 1 February 2006 that, together with its majority
shareholder, Kwikpower International plc ("KPI"), KPR had entered into an
agreement with Marathon Capital LLC ("Marathon") of Illinois, USA, with the
objective of raising #10 million of equity investment in KPR and #115 million of
additional project finance to develop, build and acquire a portfolio of
renewable energy projects in the UK and Europe.
The due diligence accompanying this fund raising process has been completed by
Marathon, which is proposing to schedule meetings in mid-July at our UK offices
with up to 10 qualified prospective investors who are interesting in investing
in renewable projects in the UK and Europe.
Investment into the Company
As described in its circular to shareholders dated 25 November 2005, KPR is
seeking further equity investment.
As above, the Company has been working with Marathon to complete the necessary
due diligence and paperwork for an equity placing to raise up to #10 million
from Marathon's institutional investor base. It intended that these funds will
be utilised by KPR for both working and project development capital.
In addition, we are in discussions with other potential equity providers in
relation to securing ongoing funding for the Company.
In the short-term, KPI has agreed to provide financial support in relation to
the Company's funding requirements.
Conclusion
We strongly believe that KPR is well positioned within the renewables sector as
a technology neutral aggregator and developer of independent green energy
projects, which in turn, will allow us to generate value for our shareholders.
Dr James Watkins
Chief Executive
29 June 2006
KP Renewables plc
Consolidated Balance Sheet
At 31 December 2005
2005 2004
# #
ASSETS
Non-current assets
Goodwill - 514,791
Investment on product development 217,796 -
_________________ _________________
217,796 514,791
_________________ _________________
Current assets
Trade and other receivables 1,023,974 88,220
Cash 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 465,897 404,464
Share option reserve 244,000 -
Share premium 3,734,347 273,578
Retained losses (2,160,331) (220,951)
_________________ _________________
Total equity 2,283,913 457,091
_________________ _________________
Current liabilities
Trade 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 plc
Consolidated Income Statement
For 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 separate
Statement of Total Recognised Gains and Losses has been presented as all such
gains and losses have been dealt with in the Income Statement.
KP Renewables plc
Consolidated Statement of Changes in Equity
For 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 to
31 December 2004
Loss 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 2005
Loss for the year - - - (1,939,380) (1,939,380)
Issue of share capital 61,433 4,510,435 - - 4,571,868
Costs 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 plc
Consolidated Cash Flow Statement
For the year ended 31 December 2005
13 months from
1 December 2003
to 31 December
2005 2004
Note # #
Net cash flow from operating activities
Cash 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) 50,000
Proceeds 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 plc
Notes to the Financial Statements
For the year ended 31 December 2005
1. Basis of preparation
These financial statements do not constitute statutory accounts of KP Renewables
plc and its subsidiaries ("the Group") for the year ended 31 December 2005
within the meaning of Section 240 of the Companies Act 1985, but are derived
from those accounts. The statutory accounts for 2005, which have been prepared
under IFRS as adopted by the European Union, will be finalised on the basis of
the financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies in due course.
The comparative figures are stated for the period from incorporation on 1
December 2003 to 31 December 2004 and will therefore not be directly comparable.
The group has adopted all new and revised Standards and Interpretations issued
by the International Accounting Standards Board ("IASB") and the International
Financial Reporting Interpretations Committee ("IFRIC") of the IASB that are
relevant to the group's operations and effective for accounting periods
beginning on 1 January 2005.
2. Financial Statements
KP Renewables plc commenced trading on 1 December 2003. The results for the
period ended 31 December 2004 have been extracted from the Annual Report and
Financial Statements for that period, which have been reported on by the
Company's auditors and delivered to the Registrar of Companies. The report of
the 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 2004
Loss for the financial year
attributable 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 the
financial year attributable to shareholders by 43,524,396 being the weighted
average number of shares in issue during the year (2004 - 26,087,559). The
impact of shares held in option schemes has not been disclosed as this would be
anti-dilutive.
KP Renewables plc
Notes 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 10.740
Cash 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's
statutory accounts for the year ended 31 December 2005 and the period ended 31
December 2004, but is derived from those accounts. Statutory accounts for the
period ended 31 December 2004 have been delivered to the Registrar of Companies.
Those for the year ended 31 December 2005 will be delivered following the
Company'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 in
respect of going concern.
7. Annual General Meeting
Copies of the full Annual Report and Accounts for the period ended 31 December
2004 are available from the Company's website www.kprenewables.com or by calling
at 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 report
and Financial Statements for the year ended 31 December 2005 will be sent to
shareholders 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
END
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