TIDMREH
RNS Number : 4281P
Renewable Energy Holdings plc
08 June 2015
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:
Renewable Energy Holdings plc:
David Weir (Chairman)
Clive Callister (Chief Operating
Officer) +44 (0) 1624 641199
Strand Hanson Limited: +44 (0)20 7409 3494
Rory Murphy/James Spinney
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 GBP462k in the year,
the comparable figure for 2013 being GBP733k. The loss for the year
was GBP3.65m (2013: GBP1.6m), mainly due to a charge taken for the
impairment of the Polish project amounting to GBP2.17m and interest
on the Utilico loans of GBP889k (2013: GBP677k).
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 GBP2m.
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 GBP607k (2013:
Net Assets GBP2.59m). 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 GBP2.5 million is fully utilised and is subject
to a finance cost of 15% per annum. The second facility was
originally GBP3.25 million, but was increased to GBP4.25 million on
15(th) 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 GBP4 million of
this loan and expects the remaining GBP0.25 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 GBP3,651,000 (2013:
loss of GBP1,595,000). GBP2,169,000 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.
Name Number of shares % of shareholding
Utilico Limited 19,987,092 28.71
Weiss Asset Management 14,913,250 21.42
TD Direct Investing 4,123,723 5.92
Nominees
Barclayshare Nominees 3,535,462 5.08
Limited
EDF Energies Nouvelles 3,000,000 4.31
SA
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.
31 December 31 December 31 December 31 December
2014 2014 2013 2013
Options Ordinary Options Ordinary
& similar shares & similar shares
interests interests
Mr David Weir - 500,000 - 500,000
Mr Clive Callister (appointed 19 August - 900,000 - -
2013)
Mr Alexander Bush (appointed 1 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.
Auditor
The 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 Board
David Weir
Chairman
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
for the year ended 31 December 2014 2014 2013
Continuing operations Notes GBP GBP
(000s) (000s)
Revenue - -
Cost of sales - -
Gross loss - -
Other operating income - -
Development expenditure (4) (38)
Administrative expenses (458) (695)
Loss from operations (462) (733)
Finance income - 1
Finance costs (889) (677)
Loss before income tax (1,351) (1,409)
Income tax credit/(expense) - -
Loss for the year from continuing operations 3,6 (1,351) (1,409)
Discontinued operations
Loss for the year from discontinued
operations 26 (2,300) (186)
Loss for the year (3,651) (1,595)
Loss attributable to: (3,651) (1,595)
Owners of the parent - -
Non-controlling interests 2 (3,651) (1,595)
Loss per share attributable to the
equity holders of the parent during
the year:
Basic and diluted
From continuing operations (1.94)p (2.02)p
From discontinued operations (3.30)p (0.27)p
(5.24)p (2.29)p
Consolidated statement of comprehensive income
for the year ended 31 December 2014
Note 2014 2013
GBP GBP
(000s) (000s)
Loss for the year (3,651) (1,595)
Other comprehensive income/(expense)
Exchange differences on (119) 43
translating foreign operations
Gain/(loss) arising on revaluation
of Available for Sale Financial
asset 16 576 (115)
Total comprehensive expense
for the year (3,194) (1,667)
Attributable to: (3,194) (1,667)
Owners of the parent - -
Non-controlling interests 2 (3,194) (1,667)
Total comprehensive expense
attributable to owners of the
parent arising from:
Continuing operations
Discontinued operations
(894) (1,481)
(2,300) (186)
(3,194) (1,667)
Consolidated statement of changes in equity
for the year ended 31 December 2014
Attributable to owners of the parent
Non-controlling
Share Available interest
Share Foreign based for Total
Share premium exchange payment Merger sale Retained Total
capital reserve reserve reserve reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
(000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s)
Balance at
1 January 2014 696 26,740 (343) 1,134 4,410 79 (29,597) 3,119 (532) 2,587
Comprehensive
expense
Loss for the
year - - - - - - (3,651) (3,651) - (3,651)
Other
comprehensive
income:
Exchange
differences
on translating
foreign
operations - - (119) - - - - (119) - (119)
Gain arising
on revaluation
of Available
for sale
Investment - - - - - 576 - 576 - 576
Total
comprehensive
income/(expense) - - (119) - - 576 (3,651) (3,194) - (3,194)
Transactions
with owners
Share based
payment charge - - - - - - - - - -
Balance at
31 December
2014 696 26,740 (462) 1,134 4,410 655 (33,248) (75) (532) (607)
Consolidated statement of changes in equity
for the year ended 31 December 2013
Attributable to owners of the parent
Non-controlling
Share Available interest
Share Foreign based for Total
Share premium exchange payment Merger sale Retained Total
capital reserve reserve reserve reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
(000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s) (000s)
Balance at
1 January 2013 696 26,740 (386) 1,134 4,410 194 (28,002) 4,786 (532) 4,254
Comprehensive
expense
Loss for the
year - - - - - - (1,595) (1,595) - (1,595)
Other
comprehensive
income:
Exchange
differences
on translating
foreign
operations - - 43 - - - - 43 - 43
Gain arising
on revaluation
of Available
for sale
Investment - - - - - (115) - (115) - (115)
Total
comprehensive
income/(expense) - - 43 - - (115) (1,595) (1,667) - (1,667)
Transactions
with owners
Share based
payment charge - - - - - - - - - -
Balance at
31 December
2013 696 26,740 (343) 1,134 4,410 79 (29,597) 3,119 (532) 2,587
Company statement of changes in equity
for the year ended 31 December 2014
Share
Share based Available
Share premium payment Merger for sale Retained Total
capital reserve reserve reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP GBP
(000s) (000s) (000s) (000s) (000s) (000s) (000s)
Balance at 1
January 2014 696 26,740 1,134 4,410 55 (30,066) 2,969
Comprehensive
expense
Loss for the
year - - - - - (3,889) (3,889)
Other
Comprehensive
income
Gain arising on
revaluation
of available
for sale
investment - - - - 398 - 398
Total
comprehensive ____ _______ _______ _______ _______ _______ _______
income
/ (expense) - - - - 398 (3,889) (3,491)
Transactions
with owners `
Share based
payment charge - - - - - - -
___ ______ _____ _____ _____ _______ ______
Balance at 31
December
2014 696 26,740 1,134 4,410 453 (33,955) (522)
Company statement of changes in equity
for the year ended 31 December 2013
Share
Share based Available
Share premium payment Merger for sale Retained Total
capital reserve reserve reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP GBP
(000s) (000s) (000s) (000s) (000s) (000s) (000s)
Balance at 1
January 2013 696 26,740 1,134 4,410 134 (28,540) 4,574
Comprehensive
expense
Loss for the
year - - - - - (1,526) (1,526)
Other
Comprehensive
income
Gain arising on
revaluation
of available
for sale
investment - - - - (79) - (79)
____ _______ _______ _______ _______ _______ _______
Total
comprehensive - - - - (79) (1,526) (1,605)
income
/ (expense)
Transactions `
with owners
Share based
payment charge - - - - - - -
___ ______ _____ _____ _____ _______ ______
Balance at 31
December
2013 696 26,740 1,134 4,410 55 (30,066) 2,969
Consolidated balance sheet at 31 December 2014
2014 2013
Note GBP GBP
(000s) (000s)
Non-current assets
Property, plant & equipment 13 2,133 1,505
Total non-current assets 2,133 1,505
Current assets
Cash and cash equivalents 25 94 332
Trade and other receivables 18 852 853
Available for sale financial asset 16 3,194 2,618
Assets classified as held for sale 27 2,094 4,393
Total current assets 6,234 8,196
Total assets 8,367 9,701
Current liabilities
Trade and other payables 19 267 1,499
Liabilities directly associated with assets
classified as held for sale 27 521 562
Borrowings 20(a),28 7,686 4,553
Total current liabilities 8,474 6,614
Non-current liabilities
Borrowings 2,20(a) 500 500
Total non-current liabilities 500 500
Total liabilities 8,974 7,114
NET (LIABILITIES)/ASSETS (607) 2,587
Capital and reserves attributable to equity
holders of the parent
Share capital 22 696 696
Share premium reserve 26,740 26,740
Foreign exchange reserve (462) (343)
Share based payment reserve 1,134 1,134
Merger reserve 4,410 4,410
Available for Sale reserve 655 79
Retained earnings (33,248) (29,597)
(75) 3,119
Non-controlling interests 2 (532) (532)
TOTAL EQUITY (607) 2,587
Company balance sheet at 31 December 2014
2014 2013
Note GBP GBP
(000s) (000s)
Non-current assets
Property, plant & equipment 13 1,431 1,157
Investment in subsidiaries 15 6 6
Total non-current assets 1,437 1,163
Current assets
Cash and cash equivalents 25 85 325
Trade and other receivables 18 841 849
Available for sale financial asset 2,209 1,811
Assets classified as held for
sale 2,000 2,906
Amounts due from subsidiaries 17 788 1,926
Total current assets 5,923 7,817
Total assets 7,360 8,980
Current liabilities
Trade and other payables 19 196 1,458
Borrowings 28, 20(a) 7,686 4,553
Total current liabilities 7,882 6,011
NET (LIABILITIES)/ASSETS (522) 2,969
Capital and reserves attributable
to equity holders of the company
Share capital 22 696 696
Share premium reserve 26,740 26,740
Share based payment reserve 1,134 1,134
Merger reserve 4,410 4,410
Available for sale reserve 453 55
Retained earnings (33,955) (30,066)
TOTAL EQUITY (522) 2,969
Consolidated and company cash flow statements
for the year ended 31 December 2014
2014 2014 2013 2013
Group Company Group Company
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Operating activities
Loss after tax including discontinued
operations (3,651) (3,889) (1,595) (1,526)
Adjustments for :
Depreciation - - 2 1
Foreign exchange gain (4) - - -
Finance income - - (1) (1)
Finance expense 889 889 677 677
Non cash income - (360) - (360)
Impairment of asset classified as
held for sale 2,169 906 - -
Write down of intercompany loan - 2,002 - 478
Cash flows from operating activities
before changes in working capital (597) (452) (917) (731)
Increase/(Decrease) in trade and
other receivables (7) 8 188 83
(Decrease)/increase in trade and
other payables (40) (93) 186 49
Cash used in operations (644) (537) (543) (599)
Income taxes paid - - - -
Cash flows from operating activities (644) (537) (543) (599)
2014 2014 2013 2013
Note Group Company Group Company
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Cash flows from operating
activities (brought forward) (644) (537) (543) (599)
Investing activities
Acquisition of property,
plant & equipment (670) (274) (591) (306)
Advances to subsidiaries - (504) - (221)
Receipts from subsidiaries - - - 57
Finance income received - - 1 1
Cash flows from investing
activities (670) (778) (590) (469)
Financing activities
Repayment of borrowings - - (750) (750)
Draw down of borrowings 20 1,075 1,075 2,053 2,053
Finance costs paid - - (4) (4)
Cash flows from financing
activities 1,075 1,075 1,299 1,299
Increase/(decrease) in
cash and cash equivalents (239) (240) 166 231
Cash and cash equivalents
at 1 January 25 338 325 176 94
Exchange gains/(losses)
on cash and cash equivalents (4) - (4) -
Cash and cash equivalents
at 31 December 25 95 85 338 325
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 1(st)
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 1(st) 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 1(st) 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 segments
Operating 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:
Intangible asset Useful economic Valuation method
life
Wind farm Planning Not available for Historic cost
Permission and Permits use
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 GBP2,000 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
GBP750,000 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, GBP225,000 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 GBP500,000 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
2014 2013
The following items of expense have been charged GBP GBP
in arriving at the profit or loss before taxation (000s) (000s)
from continuing operations:
Staff costs 248 302
Depreciation charge - 1
Operating lease expense 6 11
Audit fees 30 32
Fees paid to the Company's auditor for non-audit
services provided to the Company and subsidiaries
* Review of Interim Financial Statements 2 2
4. Staff costs
2014 2013
GBP GBP
(000s) (000s)
Staff costs (including Directors) comprise:
Wages and salaries 228 281
Defined contribution pension cost - 3
Employer's national insurance contributions and
similar taxes 20 18
248 302
5. Directors' remuneration
2014 2013
GBP GBP
(000s) (000s)
Directors' emoluments 211 247
Employer's national insurance 19 15
Defined contribution pension cost - -
Key management compensation 230 262
Director's emoluments 2014 2014 2013 2013
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Salaries, Employer Salaries, Employer
bonus' pension bonus' pension
and contributions and Directors' contributions
Directors' fees
fees
Sir John Baker (resigned 30 September - - 33 -
2013)
Mr Michael (resigned 31 March - - 78 -
Proffitt 2013)
Mr Roger (resigned 15 November - - 49 -
Harper 2013)
Mr David Weir 60 - 37 -
Mr Clive (appointed 19 August
Callister 2013) 150 - 50 6
Mr Alexander (appointed 1 December 1 - -
Bush 2014)
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.
Year ended 31 December
2014 CETO
Head office development Wind farms Wind farms
Isle of
Man Australia Poland Wales Total
GBP GBP GBP GBP GBP
(000s) (000s) (000s) (000s) (000s)
Total revenue 360 - - - 360
Inter-segmental revenue (360) - - - (360)
Revenue from external customers - - - - -
Administration expenses (449) - - (9) (458)
Development expenditure (4) - - - (4)
Finance income - - - - -
Finance costs (889) - - - (889)
Other income - - - - -
Depreciation - - - - -
Impairment of asset classified
as held for sale - - (2,169) - (2,169)
Loss from discontinued
operations - - (131) - (131)
Segment loss before tax (1,342) - (2,300) (9) (3,651)
Additions to non-current
assets - - - 628 628
Investment in wind farms - - 2,000 2,883 4,883
Available for sale financial
asset - 3,194 - - 3,194
Other assets 187 - 94 9 290
Reportable segment assets 187 3,194 2,094 2,892 8,367
Reportable segment liabilities (7,879) - (521) (574) (8,974)
Year ended 31 December
2013 CETO
Head office development Wind farms Wind farms
Isle of
Man Australia Poland Wales Total
GBP GBP GBP GBP GBP
(000s) (000s) (000s) (000s) (000s)
Total revenue 360 - - - 360
Inter-segmental revenue (360) - - - (360)
Revenue from external customers - - - - -
Administration expenses (693) - - (1) (694)
Development expenditure (38) - - - (38)
Finance income 1 - - - 1
Finance costs (677) - - - (677)
Depreciation (1) - - - (1)
Loss from discontinued
operations - - (186) - (186)
Segment loss before tax (1,408) - (186) (1) (1,595)
Additions to non-current
assets 1 - 144 321 466
Investment in wind farms - - 4,289 2,255 6,544
Available for sale financial
asset - 2,618 - - 2,618
Other assets 428 - 104 7 539
Reportable segment assets 428 2,618 4,393 2,262 9,701
Reportable segment liabilities (6,013) - (562) (539) (7,114)
Reconciliation of reportable segment loss, assets and
liabilities to the Group's corresponding amounts:
Loss after income tax expense 2014 2013
GBP GBP
(000s) (000s)
Total loss for reportable segments (3,651) (1,595)
Income tax credit/(expense) - -
Loss for the year (3,651) (1,595)
7. Finance costs
2014 2013
GBP GBP
(000s) (000s)
Loan arrangement fees - 35
Loan interest 889 642
889 677
Loan interest includes interest charged under the Utilico loan
agreement (see note 28). In 2013 GBP4,000 of interest was paid
under a previous EDF loan facility (see note 21).
8. Income tax credit/(expense)
2014 2013
GBP GBP
(000s) (000s)
Current tax expense
Income tax on Loss for the year - -
Total tax - -
The reasons for the difference between the actual tax
charge/(credit) for the year and the standard rate of income tax in
the Isle of Man applied to the loss for the year are as
follows:
2014 2013
GBP GBP
(000s) (000s)
Loss before tax (3,651) (1,595)
Expected tax charge based on the standard - -
rate of income tax in the Isle of Man of 0%
(2013: 0%)
- -
9. Deferred tax
Deferred tax is calculated in full on temporary differences
under the liability method.
The movement on the deferred tax accounts are as shown
below:
Deferred tax asset 2014 2013
GBP GBP
(000s) (000s)
At 1 January - -
Origination and reversal of temporary differences - -
At 31 December - -
Deferred tax liability 2014 2013
GBP GBP
(000s) (000s)
At 1 January - -
Origination and reversal of temporary differences - -
At 31 December - -
All of the above temporary differences related to accelerated
and decelerated capital allowances.
10. Loss per share
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations operations operations
2014 2014 2014 2013 2013 2013
GBP GBP GBP GBP GBP GBP
(000s) (000s) (000s) (000s) (000s) (000s)
Numerator
Loss used in
basic and
diluted EPS (1,351) (2,300) (3,651) (1,409) (186) (1,595)
Denominator
Weighted
average
number
of shares
used in
basic
EPS 69,609,501 69,609,501 69,609,501 69,609,501 69,609,501 69,609,501
Weighted
average
number
of shares
used in
diluted
EPS 69,609,501 69,609,501 69,609,501 69,609,501 69,609,501 69,609,501
2014 2013
Total share options in issue (see note 23) 385,700 385,700
The share options in issue have not been included in the
calculation of diluted EPS because their exercise price is greater
than the weighted average share price during the year and therefore
their effect would be anti-dilutive. As a result there is no
difference between the basic and the diluted loss per share for the
periods presented.
11. Parent company results for the year
The Company has taken advantage of the exemption allowed under
Part 1 section 3(5) of the Isle of Man Companies Act 1982 and has
not presented its own Income Statement in these Consolidated
Financial Statements. The Group loss for the year includes a loss
for the Company of GBP3,889,000 (2013: loss GBP1,526,000).
12. Operating lease commitments
The total of future minimum lease payments is due as
follows:
Group
Land & property rental: 2014 2013
Total Total
GBP GBP
(000s) (000s)
Within one year 142 145
Within two to five years 612 625
Over five years 2,960 3,278
3,714 4,048
Land and property rental operating lease commitments at 31
December 2014 together with the majority of the commitments at 31
December 2014 relate to the costs of the land leases at the
Kobylany wind farm.
Company
Land & property rental: 2014 2013
GBP GBP
(000s) (000s)
Within one year - -
Within two to five years - -
- -
13. Property, plant and equipment
Plant, machinery Assets under
Group & motor vehicles construction Total
GBP GBP GBP
(000s) (000s) (000s)
Cost
1 January 2013 30 1,086 1,116
Additions - 419 419
31 December 2013 30 1,505 1,535
1 January 2014 30 1,505 1,535
Additions - 628 628
31 December 2014 30 2,133 2,163
Accumulated Depreciation
1 January 2013 (29) - (29)
Charge for the year (1) - (1)
31 December 2013 (30) - (30)
1 January 2014 (30) - (30)
Charge for the year - - -
(30) - (30)
31 December 2014 - - -
Net Book Value
31 December 2013 - 1,505 1,505
31 December 2014 - 2,133 2,133
The property, plant and equipment associated with the Polish
wind farm project has been classified as assets classified as held
for sale, (see note 27).
Plant, machinery Assets under
Company & motor vehicles construction Total
GBP GBP GBP
(000s) (000s) (000s)
Cost
1 January 2013 30 881 911
Additions - 276 276
31 December 2013 30 1,157 1,187
1 January 2014 30 1,157 1,187
Additions - 273 273
31 December 2014 30 1,431 1,461
Accumulated Depreciation
1 January 2013 (29) - (29)
Charge for the
year (1) - (1)
31 December 2013 (30) - (30)
1 January 2014 (30) - (30)
Charge for the - - -
year
31 December 2014 (30) - (30)
Net Book Value
31 December 2013 - 1,157 1,157
31 December 2014 - 1,431 1,431
Certain costs eligible for capitalisation with respect to the
Group's wind farm project in Wales are included above within Assets
under Construction.
The Group's wind farm project in Poland is accounted for under
"Assets classified as held for sale".
14. Intangible assets
During the year ending 31 December 2010 the Kobylany permissions
and permits were acquired upon the Group's acquisition of the
Polish wind development company GAMAR GHL. The amount recognised in
the Consolidated Balance Sheet in Intangible Assets for these
permissions and permits at 31 December 2011 was GBP1,565,000. No
accumulated depreciation has been recognised at any period as the
asset has not yet been brought into use. During 2012 the Intangible
asset were reclassified as part of a Disposal Group classified as
held for sale, (see note 27). During 2014, the Directors considered
the intangible asset to be impaired, and wrote it down by
GBP814,000, to GBP751,000 (see note 27)
15. Subsidiaries
The principal subsidiaries of Renewable Energy Holdings plc, all
of which have been included in these Consolidated Financial
Statements, are as follows:
Country of Proportion Proportion
incorporation of ownership of ownership
interest interest
____________ 2014 2013
GAMAR GHL Sp. Z o.o. Poland 100% 100%
REH Intellectual Property
Limited Isle of Man 100% 100%
REH Landfill Gas (Wales)
Limited Isle of Man 100% 100%
REH Verwaltung GmbH Germany 100% 100%
REH Global Limited Isle of Man 100% 100%
Mynydd Y Gwynt Limited United Kingdom 0% 0%
Unless otherwise stated, the shareholders as listed below have
share capital consisting solely of ordinary shares, which are held
directly by the Group and the proportion of ownership interests
held equals the voting rights held by the Group.
GAMAR GHL Sp. Z o.o. is developing a wind farm at Kobylany in
Poland.
REH Intellectual Property Limited currently holds a proportion
of the Group's investment in Carnegie Wave Energy Limited.
REH Landfill Gas (Wales) Ltd, REH Verwaltung GmbH and REH Global
Limited are intermediate
holding companies.
Investment in subsidiary 2014 2013
undertakings
GBP GBP
(000s) (000s)
1 January 6 6
31 December 6 6
16. Available for sale Investments carried at fair value
2014 2013
GBP GBP
(000's) (000's)
Fair value at 1(st) January 2,618 2,733
Increase/(decrease) in fair value 576 (115)
Fair value at 31(st) December 3,194 2,618
At December 2014 the Group continues to hold 101,330,192 shares,
being a 5.8% interest in Carnegie Wave Energy Limited ("CWE"), a
former associate. The 100% owned subsidiary, REH Intellectual
Property Limited, held 31,240,613 of CWE shares with the remaining
70,089,579 shares being held by Renewable Energy Holdings plc.
In the years since 2009, the Group's combined holding in CWE has
been diluted as a result of equity raising exercise by CWE in which
the Group did not participate and certain sales of CWE shares
undertaken by the Group.
17. Amounts due from subsidiaries
Company Company
2014 2013
GBP GBP
(000s) (000s)
REH Verwaltung GmbH 96 96
Mynydd Y Gwynt Limited 692 352
GAMAR GHL Sp. Z o.o. - 1,478
788 1,926
At the 31 December 2014 the Board reviewed the recoverability of
the amounts due from subsidiaries and impaired the amount due from
GAMAR GHL Sp. Z o.o. by GBP2,002,000 (2013: GBP478,000)
18. Trade and other receivables
Group Company Group Company
2014 2014 2013 2013
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Sales tax 38 24 38 34
Other receivables - - - -
Prepayments and accrued
income 814 817 815 815
852 841 853 849
19. Trade and other payables
Group Company Group Company
2014 2014 2013 2013
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Accounts payable 142 67 205 166
Accruals and other payables 125 129 1,294 1,292
267 196 1,499 1,458
At 31 December 2014 the Directors reclassified the Finance Costs
accrued on the Loans due to Utilico from Trade and Other Payables
to Current Liabilities - Borrowings.
20. Financial assets and liabilities-numerical information
a) Maturity of borrowings
The carrying amounts of borrowings, all of which are exposed to
cash flow or fair value interest rate risk, are undiscounted and
repayable as follows:
Group 2014 2014 2014 2013 2013 2013
Principal Interest Total Principal Interest Total
GBP GBP GBP GBP GBP GBP
(000s) (000s) (000s) (000s) (000s) (000s)
In less than one year 5,628 2,058 7,686 4,553 673 5,226
In more than one year but
not more than two years 500 - 500 500 - 500
In more than two years but - - - - - -
not more than five years
In more than five years - - - - - -
6,128 2,058 8,186 5,053 673 5,726
Mynydd Y Gwynt Limited holds a GBP500,000 loan with Howard
Evans, founder, Director and Shareholder of Mynydd Y Gwynt Limited.
The loan is unsecured, interest free and repayable three months
from financial completion of the on-sale of the wind farm at
Sweetlamb.
At 31 December 2014 the Directors reclassified the Finance Costs
accrued on the Loans due to Utilico from Trade and Other Payables
to Other Financial Liabilities.
At 31 December 2014 the Directors reclassified the Finance Costs
accrued on the Loans due to Utilico from Trade and Other Payables
to Current Liabilities - Borrowings
Company 2014 2014 2014 2013 2013 2013
Principal Interest Total Principal Interest Total
GBP GBP GBP GBP GBP GBP
(000s) (000s) (000s) (000s) (000s) (000s)
In less than one year 5,628 2,058 7,686 4,553 673 5,226
In more than one year but - - - - - -
not more than two years
In more than two years but - - - - - -
not more than five years
In more than five years - - - - - -
5,628 2,058 7,686 4,553 673 5,226
On the 5 February 2013 the Company entered into a loan agreement
with Utilico Limited providing a loan facility of up to GBP1.75
million. On 30 September 2013 REH entered into a further agreement
with Utilico Limited to increase the loan facility by GBP1.5m
taking the total facility size to GBP3.25m. On the 12 December 2014
Utilico agreed to further extend the loan facility by an additional
GBP1m taking the total facility to GBP4.25m. The loan facility is
subject to an interest rate of 10%. This extension was necessary 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.
The original corporate loan of GBP2,500,000 is subject to an
interest rate of 10%, in addition to a commitment fee of 2.5% per
annum in the first twelve months, rising to an additional
commitment fee of 5% per annum thereafter. The repayment date of
the loan is 31 December 2015 and has been included within current
liabilities.
At 31 December 2014 the Directors reclassified the Finance Costs
accrued on the Loans due to Utilico from Trade and Other Payables
to Current Liabilities - Borrowings
b) Currency and interest profile
The currency and interest profile of the Group's and Company's
financial assets and liabilities is as follows:
2014 Interest Floating Interest Fixed rate Interest Total assets
free assets rate assets rate assets rate
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Group
Sterling 885 - - - 885
Australian Dollars 3,194 - - - 3,194
Zloty 94 - - - 94
Total 4,173 - - 4,173
Company
Sterling 862 - - - 862
Australian dollars 2,209 - - 2,209
Total 3,071 - - 3,071
2014 Interest Floating Interest Fixed rate Interest Total Liabilities
free liabilities rate liabilities rate liabilities rate
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Group
Sterling 767 - - 7,686 11% 8,453
Zloty 521 - - - 521
Total 1,288 - 7,686 8,974
Company
Sterling 196 - 7,686 11% 7,882
2013 Interest Floating Interest Fixed rate Interest Total assets
free assets rate assets rate assets rate
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Group
Sterling 1,120 - - - 1,120
Australian
Dollars 2,618 - - - 2,618
Zloty 103 - - - 103
Total 3,841 - - 3,841
Company
Sterling 1,109 - - - 1,109
Australian
dollars 1,811 - - 1,811
Total 2,920 - - 2,920
2013 Interest Floating Interest Fixed rate Interest Total
free rate liabilities rate liabilities rate Liabilities
liabilities
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Group
Sterling 1,837 - - 4,553 11% 6,390
Zloty 562 - - - 562
Total 2,399 - 4,553 6,952
Company
Sterling 1,296 - - 4,553 11% 5,849
c) Fair value
The fair value of the Group's and Company's financial assets and
fixed rate liabilities is not materially different to the values
shown above.
d) Security and restrictions
At the 31 December 2014 there were no restrictions over the cash
balance.
21. Financial Instruments - Risk Management
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
-- Available for sale financial asset
-- Trade and other receivables
-- Cash and cash equivalents
-- Financial liabilities
-- Trade and other payables
All financial assets are designated as cash and cash equivalents
or loans and receivables and all financial liabilities are measured
at amortised cost.
Group Loans and receivables Financial liabilities
measured at amortised
cost
2014 2013 2014 2013
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Current financial assets
Available for sale financial asset 3,194 2,618 - -
Trade and other receivables 852 853 - -
Cash at bank 94 332 - -
Non-current financial liabilities
Borrowings - - 500 500
Current financial liabilities
Liabilities directly associated
with assets classified as held
for sale - - 521 562
Trade and other payables - - 267 1,499
Borrowings - - 7,686 4,553
Total 4,140 3,803 8,974 7,114
Company Loans and receivables Financial liabilities
measured at amortised
cost
2014 2013 2014 2013
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Current financial assets
Intercompany accounts 788 1,926 - -
Available for sale financial
asset 2,209 1,811 - -
Trade and other receivables 841 849 - -
Cash and cash equivalents 85 325 - -
Current financial liabilities
Borrowings - - 7,686 4,553
Trade and other payables - - 196 1,458
Total 3,923 4,911 7,882 6,011
General objectives, policies and procedures
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below:
Credit Risk
Credit risk arises principally from the Group's cash holdings
and other receivables.
The Group's exposure to credit risk arising from other financial
assets of the Group, which comprise cash and cash equivalents and
other receivables, arises from default of the counterparty. The
maximum exposure is equal to the carrying amount of these
assets.
The Group's cash holdings are held only with reputable financial
institutions. The Group's principal bankers are Barclays Private
Clients International Limited. The Group also has deposits with
Barclay's Group plc, HSBC plc and ING Bank.
These Banks have the following credit ratings at 31 December
2014 (Standard & Poor's):
Entity Rating
Barclays Private A+
Clients International
Barclays Group A+
plc
HSBC plc A+
ING AA-
The Group trades only with reputable third parties. For this
reason the Group does not formally credit check customers before it
enters into business with them. Receivable balances are monitored
on an ongoing basis with the result that the Group's exposure to
bad debts is not significant. The Group does not have any overdue
debts.
Liquidity Risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. See maturity
table in note 20a. The Group has structured the repayment of its
loans in such a manner that it should generate sufficient cash
flows from the sale of the Group's assets to service the debt as
repayment falls due.
The Group's financial liabilities comprise trade and other
payables, which all fall due within one year. The Directors expect
to settle the loan with Utilico Limited in 2015. The Group's
payment policy is to settle trade and other payables in accordance
with agreed terms which is typically 30 days.
Interest Rate Risk
The Group does not have any financial instruments with any
interest rate risk as the Group has no borrowings at a variable
rate of interest.
Currency Risk
Foreign exchange risk arises because the Group has operations
located in various parts of the world whose functional currency is
not the same as the Company's functional currency. Although its
geographic spread arguably reduces the Group's risk in that it has
diversified into several markets, the net assets from such overseas
operations are exposed to currency risk giving rise to gains or
losses on translation into sterling. Only in exceptional
circumstances will the Company consider hedging its net investments
in overseas operations as generally it does not consider that the
cash flow risk created from such hedging techniques warrants the
reduction in volatility in consolidated net assets.
The table below shows the Group's currency exposures that give
rise to the net currency gains and losses recognised in the
Consolidated Income Statement. Such exposures comprise the
financial assets and financial liabilities of the Group that are
not denominated in the operating ('functional') currency of the
operating unit involved.
As at 31 December 2014 and 2013, these exposures were as
follows:
Foreign currency financial assets and liabilities
Financial assets Financial liabilities
2014 2013 2014 2013
GBP GBP GBP GBP
(000s) (000s) (000s) (000s)
Australian dollar 3,194 2,618 - -
Euro - - - -
Zloty 94 103 521 562
As at 31 December 3,288 2,721 521 562
Through the financial assets and liabilities that the Group
holds in foreign currencies the Group is subject to foreign
exchange risk. If Sterling was to fall in value by 5% with all
other variables held constant the value of financial assets and
liabilities in the Consolidated Balance Sheet would have fallen by
GBP164,000 and GBP26,000 respectively (2013: GBP136,000 and
GBP28,000).
The Company is not exposed to any significant foreign currency
risks.
The Group's overseas subsidiaries' functional currencies are
Polish Zlotys, and Euros. The Group has no significant exposure to
other currencies.
Capital
The Group considers its capital to comprise its ordinary share
capital, share premium, accumulated retained earnings and long term
debt. In managing its capital, the Group's primary objective is to
provide a return for its equity shareholders through a strategy of
realising the Group's assets as explained in the Chairman's
reports. The Group has historically considered equity and long term
debt funding as the most appropriate form of financing the Group's
activities but keeps this under review bearing in mind the risks,
costs and benefits to equity shareholders of introducing debt
finance.
22. Share capital
Authorised Authorised
2014 2014 2013 2013
Number GBP Number GBP
Ordinary shares of 1p
each
At the end of the year 300,000,000 3,000,000 300,000,000 3,000,000
Issued and Issued and
fully paid fully paid
up up
2014 2014 2013 2013
Number GBP Number GBP
Ordinary shares of 1p
each
At the beginning of the
year 69,609,501 696,094 69,609,501 696,094
Issues for cash during nil nil nil nil
the year
At the end of the year 69,609,501 696,094 69,609,501 696,094
23. Share-based payment
The Company operates a share option scheme for employees. The
only vesting condition being that the individual remains an
employee as at the vesting date.
Options granted during the year
There were no options granted during the year (2013: nil).
2014 2014 2013 2013
Number Weighted Number Weighted
average average
exercise exercise
price price (pps)
(pps)
Outstanding at the
beginning of the year 385,700 90.00 3,123,000 72.16
Outstanding at the
end of the year 385,700 95.00 385,700 90.00
Exercisable at the
end of the year 385,700 95.00 385,700 90.00
2014 Number Options Number Grant Exercise Vesting Option
of options granted/ of options date price period period
1 January (expired) 31 December (pps) (yrs) (yrs)
2014 in the 2014
year
Founder
options(Exercise
price increasing
by
10% of original
price
each year) 385,700 - 385,700 11/02/05 95.0 - 10
Total options 385,700 385,700
2013 Number Options Number Grant Exercise Vesting Option
of options granted/ of options date price period period
1 January (expired) 31 December (pps) (yrs) (yrs)
2013 in the 2013
year
Founder
options(Exercise
price increasing
by
10% of original
price
each year) 2,125,700 (1,740,000) 385,700 11/02/05 90.0 - 10
Staff options
(2005) 30,000 (30,000) - 10/05/05 56.5 3 10
Staff options
(2006) 280,000 (280,000) - 28/03/06 56.0 3 10
Staff options
(2007) 325,000 (325,000) - 21/08/07 49.5 3 10
Staff options
(2008) 162,500 (162,500) - 17/12/08 50.0 3 10
Staff options
(2011) 200,000 (200,000) - 14/02/11 15.5 3 10
Total options 3,123,200 385,700
24. Reserves
The following describes the nature and purpose of each reserve
within owner's equity.
Share capital Amount subscribed for share capital at nominal
value.
Share premium reserve Amount subscribed for share capital in excess
of nominal value.
Foreign exchange reserve Gains/ losses arising on retranslating the
net assets of overseas operations into sterling.
Available for sale Accumulated gains/losses arising on revaluation
reserve of available-for-sale financial assets that
have been recognised in other comprehensive
income, net of amounts reclassified to profit
or loss when those assets have been disposed
of or are determined to be impaired.
Share based payment Cumulative charge for share options issued.
reserve
Merger reserve Share premium arising on share for share acquisition.
Retained earnings Cumulative net gains/ losses recognised in
the Consolidated Income
Statement.
25. Notes supporting the Cash Flow Statements
Group 2014 2013
GBP GBP
(000s) (000s)
Cash and cash equivalents comprises:
Cash available on demand 94 332
Cash classified as Assets of a disposal
group classified as held for sale 1 6
95 338
Company 2014 2013
GBP GBP
Cash and cash equivalents comprises: (000s) (000s)
Cash available on demand 85 325
26. 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 Discontinue
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.
Loss from discontinued operations 2014 2013
GBP GBP
(000s) (000's)
Impairment of assets of Polish Wind farm (2,169) -
Cost of sales* (84) (92)
Expenses other than finance costs (47) (94)
Finance costs - -
--------- ---------
Loss before tax from discontinued operations (2,300) (186)
Tax - -
--------- ---------
Loss after tax from discontinued operations (2,300) (186)
========= =========
* "Cost of Sales" represents the cost of the land leases at the
site of the Kobylany wind farm.
Cash flows from discontinued operations 2014 2013
GBP GBP
(000s) (000's)
Net cash inflows from operating activities (145) (372)
Net cash outflows from investing activities (42) (114)
Net cash in/outflows from financing activities - -
-------- ---------
Net cash flows from discontinued operations (187) (486)
======== =========
27. Assets classified as held for sale
The major classes of assets and liabilities of the Polish wind
farm project are as follows:-
2014 2013
GBP GBP
(000's) (000's)
Intangible assets - permissions and permits 751 1,565
Property, plant & equipment 1,249 2,725
Cash and cash equivalents 1 6
Trade and other receivables 93 97
Assets classified as held for sale 2,094 4,393
Trade and other payables (521) (562)
Liabilities directly associated with assets
classified as held for sale (521) (562)
. .
Net assets classified as held for sale 1,573 3,831
28. Related party transactions
Utilico Limited
Utilico Limited owns 28.71% of the shares in the Company. David
Weir is Utilico Limited's representative on the Board and has been
awarded GBP60,000 (2013: GBP37,000) in Director's fees during the
year.
The Company has two loan facilities with Utilico Limited.
The first loan was agreed on 31 July 2009. The loan amount is
for GBP2,500,000 and subject to an interest rate of 10% per annum
and a commitment fee of 5% per annum. The repayment date of the
loan is 31 December 2015.
The second loan was agreed on the 5 February 2013. This loan was
structured as a facility drawn down as required. The Original size
of the facility was GBP1.75 million and has subsequently been
increased to GBP4.25 million.
To support the Loan, the Company granted to Utilico Limited
security over substantially all of its assets (see note 20).
Under the terms of the Loan, the Company will pay a GBP50,000
arrangement fee and 10% interest per annum on the outstanding
balance, such interest to be capitalised and paid on repayment of
the Loan. In addition a success fee will be payable to Utilico as
follows:
1. GBP4.75 million if the Company receives final planning permission to develop MYG and
i. disposes of its entire interest in MYG;
ii. enters into a joint venture agreement with any party other
than Utilico Limited to construct the wind farm;
iii. incurs financial indebtedness owing to any party other than
Utilico Limited to construct the wind farm; or
iv. enters into any amalgamation, demerger or merger,
2. In the event that disposal proceeds exceed GBP37,500,000 a
further fee is levied. The further fee is capped at an additional
GBP5,000,000 and is calculated using the following formula.
Further fee = (A - 37,500,000)/4) + 1,000,000
(Where A is the gross consideration payable to the Company
pursuant to a disposal of the Company's interest in MYG.)
In addition, if the Company receives final planning permission
to develop MYG and does not dispose of the asset within 12 months
of the date of the planning permission being obtained (or such
later time as agreed between the Company and Utilico Limited), then
Utilico Limited has the right to recall the Loan. In these
circumstances, a fee of GBP4.75 million will be paid to Utilico
Limited upon the recall of the Loan. Following a recall of the Loan
and the payment of the GBP4.75 million fee, the Company will remain
liable to Utilico Limited for a further fee, payable upon a
subsequent disposal of the Company's interest in MYG, such that the
total fee (including the fee payable upon the recall of the loan)
payable by the Company to Utilico Limited is the greater of the
aforementioned GBP4.75 million and an amount calculated using the
formula set out in point 2 above.
On 30 September 2013 REH entered into a further agreement with
Utilico Limited to increase the loan facility by GBP1.5m 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 GBP3.25m. The
loan facility is subject to an interest rate of 10%.
On 12 December 2014 REH amended its agreement with Utilico
Limited. The Loan Facility was increased from GBP3.25 million to
GBP4.25 million and the maturity date amended. All other terms
remain the same other than the success fee payable to Utilico which
is increased by GBP0.5 million. The increase in the facility was
necessary 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 GBP4.25m. The loan facility is subject to an interest
rate of 10%. The maturity date of the loan is 31 December 2015.
Intergroup Balances
The Company has intercompany accounts with subsidiaries as shown
in note 17.
(Increase) /decrease of funding in subsidiaries 2014 2013
GBP GBP
(000s) (000s)
REH Global Limited - 57
Mynydd Y Gwynt Limited (340) (103)
GAMAR GHL Sp. z o.o (-) (478)
(340) (524)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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