TIDMKED
RNS Number : 7376U
Kedco PLC
21 October 2010 Kedco plc ("Kedco" or the "Company") Preliminary
Results for the year ended 30 June 2010 Kedco plc (LSE: KED
21 October 2010
Kedco plc
("Kedco" or the "Company")
Preliminary Results for the year ended 30 June 2010
Kedco plc (LSE: KED.L), the cleantech group focusing on clean
energy production in the UK, Ireland and Eastern Europe, announces
today its preliminary results for the year ended 30 June 2010.
Key Operational Highlights
-- Site secured on 20 year lease for a biomass wood gasification
plant located in Newry, Northern Ireland, which has full permitting
approval and will be capable of generating 4 megawatt ("MW") of
electricity and 3MW of heat.The plant has an estimated capital cost
of GBP15 million and is expected to generate EBITDA of
approximately GBP2 million per year once complete. In excess of
GBP6 million has been invested in the Newry project to date and
site construction is almost complete.Completed factory acceptance
of 2MW gasifier and produced gas of sufficient quantity and quality
to meet the engine specifications for power generation. The
gasifier is on site in Newry. The project can be completed in two
stages of 2MW each. In order to complete the first 2MW a further
GBP2.0 million needs to be invested in the project. The second
stage to bring the project to 4MW would require a further GBP6.5
million of investment.
-- Received planning permission to build a biomass wood
gasification plant in Enfield, North London capable of generating
12MW of electricity and 10 MW of heat. Plant has an estimated
capital cost of GBP45 million and is expected to generate EBITDA of
approximately GBP9 million per year once complete. Site secured on
20 year lease and 10 year feedstock supply agreement signed with
local waste operator.
-- Generating electricity for sale to national grid from 75KW
containerised biomass wood gasification plant located in Cork,
Ireland.
-- Signed a joint venture agreement with AgriKomp GmbH, a
leading German supplier of biogas plants, with the aim of building
and selling anaerobic digestion plants to convert primarily
agricultural wastes into clean energy in the United Kingdom and
Ireland.
-- Group can now take advantage of UK Government decision to
"grandfather" biomass plants effectively guaranteeing Renewable
Obligation Certificates ("ROCs") levels for 20 years.
-- Successfully completed capacity and efficiency increases at
group's biomass wood processing plant in Vudlande in Latvia which
resulted in an increase in sales to EUR8 million from EUR4 million
in the year. Vudlande reported EBITDA of EUR1.5m in the year.
Key Financial Highlights
-- Revenue of EUR9.0 million, in line with revised expectations
(FY 2009: EUR5.9 million).
-- Gross profit of EUR2.0 million, a substantial increase on the
prior year (FY 2009: EUR0.8 million)
-- Loss for the period of EUR3.2 million, a significant decrease
on the prior year (FY 2009: EUR6.2 million).
-- Additional capital of EUR3.5 million raised during the
financial year.
-- Post-period end loan capital of EUR3.2 million sourced from a
variety of private and institutional investors.
Donal Buckley, Chief Executive Officer of Kedco, commented:
"Kedco continues to progress its strategy of identifying,
developing, owning and building biomass electricity and heat
generating plants in the UK and Ireland. Our current focus is in UK
and Ireland and we have been very successful in progressing our
projects through the various stages from procuring sites and
securing planning and permitting to actual construction.
As projects progress through the various stages their value
increases. By achieving financial closure on projects we
significantly increase their value. We are currently working
through five projects where full planning permissions have been
granted either to Kedco or to Kedco and its partners.
The current economic climate is challenging. Preserving cash and
securing additional finance remain a priority. However the decision
of the UK government to grandfather biomass plants has removed some
of the uncertainty from the sector. This is a time of opportunity
for biomass and in our view this sector now has the best risk
return profile in the renewable energy space. Our model of taking
"best of breed" technology, which exceeds all current environmental
regulations ensures that we can rapidly maximise any opportunities
presented to the Company.
We will continue to progress our pipeline of large scale biomass
projects and to advance our strategy of deploying smaller anaerobic
digestion and gasification plants to the marketplace through our
joint venture with AgriKomp.
For additional information please contact:
Kedco plc +353 (0)21
Donal Buckley, Chief Executive 467 0427
/ Gerry Madden, Finance Director
Deloitte Corporate Finance - +44 (0)20
Nomad 7936 3000
Jonathan Hinton / David Smith
Chairman's Statement
I am pleased to report that the year ended 30 June 2010 proved
to be an important and successful one in the progression of Kedco
plc.
Kedco's business strategy is to identify, develop, own, build
and operate biomass electricity and heat generation plants in the
UK and Ireland using two tried and tested technologies:
gasification of wood and wood waste; and anaerobic digestion of
either food or agricultural waste.
Value is created as we move from one stage of a biomass power
project to the next. When we secure a site, value is created; when
we secure planning and permitting further value is created. Moving
to financial close on projects and actual construction and
operation in our view increases value substantially.
Biomass is a renewable energy source and is made from living or
recently living organisms such as wood and waste. Kedco use
anaerobic digestion and gasification conversion technologies to
convert wood and waste into electricity and heat. Both technologies
qualify for two Renewable Obligation Credits ("ROCs") under the UK
renewable energy regime. It has been confirmed that the Renewable
Obligation Order will continue until 2037.
There has been some uncertainty surrounding continuing ROC
support for biomass and this has led to difficulties for lending
instiutions. However in late July of this year the UK government
made the decision to "grandfather" biomass plants effectively
guaranteeing ROC levels from the plants for 20 years. We welcome
this decision and the degree of certainty it brings.
Having achieved planning and securing a 20 year lease for a
GBP15 million, 4MW biomass wood gasification plant in Newry, Co.
Down Northern Ireland and having spent approximately GBP6 million
in constructing and equipping the plant we believe that the removal
of the uncertainty in relation to ROCs will enable us to achieve
financial close and complete the construction of the plant.
Our success in obtaining planning for a 12MW biomass wood
gasification plant in Enfield in North London has also added value
to the Company and points to the successful execution of the
Company's strategy.
The UK has a significant requirement for new sources of
renewable energy; biomass generation as a proven technology is well
placed to satisfy that need. We expect Kedco to be able to
capitalise on the significant growth in the market for biomass
generation. Our experienced management team has demonstrated that
it can create value by developing biomass projects to the
satisfaction of the town and environmental planners as shown by the
granting of full planning to the site in London.
I would like to thank all my fellow directors and all company
employees, stakeholders and shareholders whose combined efforts and
support have positioned the Company to avail itself of what we
continue to believe, more than ever, to be an exciting and
rewarding opportunity.
William Kingston
Non-Executive Chairman
Chief Executive's Report
Operational Review
I am pleased to be able to report the progress we have made
during the financial year ended 30 June 2010.
Kedco continues to progress its strategy of indentifying,
developing, owning and building biomass electricity and heat
generating plants in the UK and Ireland. We continue to progress
our projects through the various stages from securing sites to
securing planning and permitting to actual construction.
As projects progress through the various stages their value
increases. By achieving financial closure on projects we
significantly increase their value. We are currently working
through five projects where full planning permissions have been
granted either to Kedco or to Kedco and its partners.
We identify seven stages in the development of a biomass power
generation project. These are; initial evaluation, sign letter of
intent secure site, obtain planning and permitting, secure
financial closure, construction and finally operation.
During the financial year we secured a site on a 20 year lease
for a biomass wood gasification plant located in Newry, Northern
Ireland which has full permitting approval and is capable of
generating 4MW of electricity and 3MW of heat. In excess of GBP6
million has been invested in the Newry project to date and site
construction is almost complete. We have completed factory
acceptance of one 2MW gasifier and produced gas of sufficient
quantity and quality to meet the engine specifications for power
generation. We also took delivery of the 2MW gasifier on site in
Newry. In order to complete the project to its full capacity we
need to achieve financial close. The project can be completed in
two stages of 2MW each. In order to complete the first 2MW a
further GBP2.0 million needs to be invested in the project. The
second stage to bring the project to 4MW would require a further
GBP6.5 million of investment.
We are extremely pleased to have received planning permission to
build a biomass wood gasification plant in Enfield, North London
capable of generating 12MW of electricity and 10MW of heat. The
plant has an estimated capital cost of GBP45 million and is
expected to generate EBITDA of approximately GBP9 million per year
once complete. The site has been secured on a 20 year lease and a
10 year feedstock supply agreement has been signed with a local
waste operator.
We also commenced operations on a 75KW containerised biomass
wood gasification plant located in Cork, Ireland and are currently
generating electricity for sale to the national grid.
We continue to invest capital in developing customer and partner
relationships and in furthering projects in our pipeline. Excluding
Newry and London we have four projects at full planning and
permitting stage. Our next objective is to progress these to
financial closure. We have a further five projects at letter of
intent stage and we are currently working to secure the sites and
move towards the planning and permitting stage.
A significant milestone during the year was the signing of a
joint venture agreement with AgriKomp GmbH, a leading German
supplier of biogas plants, with the aim of building and selling
anaerobic digestion plants to convert primarily agricultural wastes
into clean energy in the United Kingdom and Ireland. Our
partnership with one of the leaders in Europe in this area is an
exciting prospect for the Company and we are already working
closely with AgriKomp in the marketplace.
We are very happy with the progress made in our biomass wood
processing facility at the group's Vudlande plant in Latvia. As
well as being a profitable business in its own right we consider
the waste wood from the plant to be a potential backup biomass
feedstock source for generating plants. We successfully completed
capacity and efficiency increases which resulted in an increase in
sales to EUR8 million from EUR4 million in the year.
Financial Review
Revenue in the period amounted to EUR9 million, in line with
revised expectations (FY 2009: EUR5.9m). The Company increased its
reported gross profit to EUR2.0 million from EUR0.8 million in FY
2009. The Company reported a loss for the period of EUR3.2 million:
a decrease on the prior year figure of EUR6.2 million for FY
2009.
During the year the Company has continued to exercise tight
control over costs whilst, at the same time strengthening its
balance sheet. During the year the Company raised total additional
capital of EUR3.5 million. Following the year-end, the Company has
sourced a further EUR3.2 million in loan capital from a variety of
private, and institutional investors.
On 27 July 2010, the UK government published "Government
Response to the Grandfathering Policy of Support for Dedicated
Biomass, Anaerobic Digestion and Energy from Waste under the
Renewable Obligation". This announced the UK government's decision
to "grandfather" biomass plants, effectively guaranteeing ROC
levels for 20 years. The uncertainty that existed prior to this
decision led many financial and investment entities to give pause.
The removal of this uncertainty in our view opens up the market for
financing biomass plants.
At 30 June 2010, the Company had net debt of EUR9.1 million (30
June 2009: EUR7.8 million) including cash balances of EUR116,753
(30 June 2009: EUR340,242).
Outlook
The current economic climate is challenging. Preserving cash and
securing additional finance remain a priority. However the decision
of the UK Government to grandfather biomass plants has removed a
degree of uncertainty from the sector.
We will continue to progress our pipeline of large-scale biomass
projects and to advance our strategy of deploying smaller anaerobic
digestion and gasification plants to the marketplace through our
joint venture with AgriKomp.
Whilst our strategy is to build own and operate biomass power
generating plants, once the site has been secured and planning and
permitting has been obtained we would be in a position, if we so
chose, to monetise the value of the project.
In our view biomass plants have much greater potential for
higher returns than other renewable sources because they operate
more effectively as a base load power source in comparison to
intermittent technologies such as wind and solar. This is a time of
opportunity for biomass and in our view this sector now has the
best risk return profile in the renewable energy space.
We are a development company. Economic conditions remain
uncertain and the tight credit markets could continue to have an
impact on the availability of finance. We have continued to raise
finance successfully during the period and we expect to continue to
be successful in the coming period.
Donal Buckley
Chief Executive Officer
Kedco plc
Consolidated income statement
for the year ended 30 June 2010
2010 2009
EUR EUR
Revenue 9,023,979 5,914,077
Cost of sales (7,069,165) (5,106,316)
------------ ------------
Gross profit 1,954,814 807,761
Operating expenses
Administrative expenses (4,310,925) (5,525,791)
Once off listing costs - (946,024)
------------ ------------
Operating loss (2,356,111) (5,664,054)
Finance costs (758,567) (690,597)
Share of losses on joint
ventures (113,536) -
Finance income 32,411 114,113
------------ ------------
Loss before taxation (3,195,803) (6,240,538)
Income tax expense (47,098) -
------------ ------------
Loss for the year from
continuing operations (3,242,901) (6,240,538)
============ ============
(Loss)/Profit attributable
to:
Owners of the company (3,388,284) (6,132,743)
Non-controlling interest 145,383 (107,795)
------------ ------------
(3,242,901) (6,240,538)
============ ============
2010 2009
EUR EUR
Euro per Euro per
share share
Basic loss per share:
From continuing operations (0.02) (0.03)
Diluted loss per share:
From continuing operations (0.01) (0.03)
Consolidated statement of comprehensive income and expense
for the year ended 30 June 2010
2010 2009
EUR EUR
Loss for the financial
year (3,242,901) (6,240,538)
Other comprehensive
income
Exchange differences
arising on translation
of foreign operations 880 15,568
------------ ------------
Total comprehensive
income and expense
for the year (3,242,021) (6,224,970)
============ ============
Attributable to:
Owners of the company (3,387,404) (6,118,786)
Non-controlling interests 145,383 (106,184)
------------ ------------
(3,242,021) (6,224,970)
============ ============
Consolidated balance sheet
At 30 June 2010
2010 2009
ASSETS EUR EUR
Non-current assets
Goodwill 549,451 549,451
Intangible assets 71,995 157,309
Property, plant and equipment 5,570,812 6,138,936
Financial assets 990,000 990,000
Share of gross assets of
jointly controlled entities 207,109 10,593
------------- -------------
Total non-current assets 7,389,367 7,846,289
Current assets
Inventories 1,610,015 1,327,324
Amounts due from customers
under
construction contracts 9,291,911 7,065,467
Trade and other receivables 2,511,302 2,330,315
Cash and cash equivalents 116,753 340,242
------------- -------------
Total current assets 13,529,981 11,063,348
Total assets 20,919,348 18,909,637
============= =============
EQUITY AND LIABILITIES
Equity
Share capital 3,239,407 3,065,807
Share premium 17,410,077 15,096,219
Shared based payment reserves 328,383 164,188
Retained earnings - deficit (17,639,511) (14,252,107)
------------- -------------
Equity attributable to equity
holders of the parent 3,338,356 4,074,107
Minority interest 635,850 490,467
------------- -------------
Total equity 3,974,206 4,564,574
Non-current liabilities
Borrowings 6,749,672 6,746,220
Deferred income - government
grants 50,653 56,662
Finance lease liabilities 4,693 50,324
Deferred tax liability 128,176 81,078
Total non-current liabilities 6,933,194 6,934,284
Current liabilities
Amounts due to customers
under construction contracts 1,302,357 1,000,000
Trade and other payables 6,221,514 4,915,895
Borrowings 2,445,265 1,371,176
Deferred income - government
grants 6,009 15,033
Finance lease liabilities 36,803 108,675
------------- -------------
Total current liabilities 10,011,948 7,410,779
Total equity and liabilities 20,919,348 18,909,637
============= =============
Consolidated cashflow statement
for the year ended 30 June 2010
2010 2009
EUR EUR
Cash flows from operating
activities
Loss before taxation (3,195,803) (6,240,538)
Adjustments for:
Share based payments 164,195 164,188
Depreciation of property,
plant and equipment 658,599 533,587
Amortisation of intangible
assets 85,314 84,657
(Profit)/Loss on disposal
of property, plant and equipment (13,478) 30,619
Impairment of property, plant
and equipment - 571,710
Unrealised foreign exchange
loss - 2,866
Share of losses of jointly
controlled entities 113,536 -
Interest expense 758,567 690,597
Interest income (32,411) (114,113)
------------ ------------
Operating cash flows before
working capital changes (1,461,481) (4,276,427)
(Increase)/decrease in:
Amounts due from customers
under construction contracts (2,226,444) (7,065,467)
Trade and other receivables (184,785) (458,423)
Inventories (282,691) 297,992
Increase in:
Amounts due to customers
under construction contracts 302,357 1,000,000
Trade and other payables 1,318,622 3,576,830
------------ ------------
(2,534,422) (6,925,495)
Income taxes paid 12,545 -
------------ ------------
Net cash used in operating
activities (2,521,877) (6,925,495)
------------ ------------
Cash flows from investing
activities
Additions to property, plant
and equipment (185,068) (770,552)
Proceeds from sale of property,
plant and equipment 19,051 135,010
Additions to investments
in jointly controlled entities (309,172) (1,000,593)
Additions to intangibles - (7,665)
Interest received 35,950 110,573
------------ ------------
Net cash used in investing
activities (439,239) (1,533,227)
------------ ------------
Cash flows from financing
activities
Proceeds from borrowings 2,584,154 593,027
Repayments of borrowings (1,839,889) (109,670)
Proceeds from issuance of
ordinary shares 2,487,458 8,776,792
Payments of finance leases (117,503) (213,214)
Interest paid (709,869) (694,178)
------------ ------------
Net cash from financing activities 2,404,351 8,352,757
------------ ------------
Net decrease in cash and
cash equivalents (556,765) (105,965)
Cash and cash equivalents
at the beginning of the financial
year (252) 105,713
------------ ------------
Cash and cash equivalents
at the end of the financial
year (557,017) (252)
============ ============
Notes to the consolidated financial statements
for the year ended 30 June 2010
1. Basis of preparation
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRS) effective at 30 June 2010 for all periods presented as
issued by the International Accounting Standards Board. The
consolidated financial statements are also prepared in accordance
with IFRS as adopted by the European Union ('EU').
The consolidated financial statements are prepared under the
historical cost convention. The principal accounting policies set
out below have been applied consistently by the parent company and
by all of the Company's subsidiaries to all periods presented in
these consolidated financial statements.
The financial statements of the parent company, Kedco plc have
been prepared in accordance with accounting standards generally
accepted in Ireland and Irish statute comprising the Companies Acts
1963 to 2009.
As described in the Chief Executive's Report, the Company
continues to invest capital in developing customer and partner
relationships in the UK and Ireland. The Company has also continued
to develop and expand its pipeline of projects. These activities
together with the current challenging economic environment have
resulted in the Company continuing to report losses for the year to
30 June 2010.
The Company secured additional finance of EUR3.2 million in July
2010. The Directors have instituted a number of measures to
preserve cash and also to secure additional finance. The board is
currently engaged in advanced discussions with a number of
different parties around the potential investment of equity and/or
debt finance into the Company and in the meantime continues to
manage its working capital position tightly. The board remains
confident that suitable investment will be secured.
The financial statements have been prepared on a going concern
basis. The Directors have given careful consideration to the
appropriateness of the going concern concept in the preparation of
the financial statements. The validity of the going concern concept
is dependent upon finance being available for the Company's working
capital requirements and for the continued investment in the
Company's strategy of identifying, developing, building and
operating power generating plants so that the Group can continue to
realise its assets and discharge its liabilities in the normal
course ofbusiness. Whilst the strategy is to build, own and operate
plants, once a site has been secured and planning and permitting
obtainedthe Company would be in a position, if it so chose, to
monetise the value of the project. The financial statements do not
include any adjustments that would result should the above
conditions not be met.
After making enquiries and considering the items referred to
above, the Directors believe that solid progress towards securing
finance is being made and that, whilst there is no guarantee that
such investment will be forthcoming, the Directors have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. For
these reasons the Directors continue to adopt the going concern
basis of accounting in preparing the financial statements.
2. Loss per share 2010 2009
EUR EUR
Euro per Euro per
share share
Basic loss per share
From continuing operations (0.02) (0.03)
Diluted loss per share
From continuing operations (0.01) (0.03)
Basic loss per share
The loss and weighted average number of ordinary shares used in
the calculation of the basic loss per share are as follows:
2010 2009
EUR EUR
Loss for year attributable to
equity holders of the parent (3,388,284) (6,132,743)
Weighted average number of ordinary
shares for
the purposes of basic loss per
share 220,482,654 192,591,780
Diluted loss per share
The loss used in the calculation of all diluted earnings per
share measures is the same as those for the equivalent basic
earnings per share measures, as outlined above.
The weighted average number of ordinary shares for the purposes
of diluted loss per share reconciles to the weighted average number
of ordinary shares used in the calculation of basic loss per share
as follows:
2010 2009
Weighted average number of ordinary
shares used
in the calculation of basic
loss per share 220,482,654 192,591,780
Shares deemed to be issued in
respect of
long term incentive plan 49,256,332 32,837,555
Weighted average number of ordinary
shares used in the
calculation of diluted earnings
per share 269,738,986 225,429,335
Share warrants which could potentially dilute basic earnings per
share in the future have not been included in the calculation of
diluted earnings per share as they are anti-dilutive for the
periods presented. The dilutive effect as a result of share
warrants in issue as at 30 June 2010 would be to increase the
weighted average number of shares by 8,075 766 (2009: 130,480).
Convertible preference shares which could potentially dilute
basic earnings per share in the future have not been included in
the calculation of diluted earnings per share as they are
anti-dilutive for the periods presented. The dilutive effect as a
result of preference shares in issue as at 30 June 2010 would be to
increase the weighted average number of shares by 1,562,500 (2009:
nil).
2. Loss per share (continued)
Convertible loans which could potentially dilute basic earnings
per share have not been included in the calculation of diluted
earnings per share as they are anti-dilutive for the periods
presented. The dilutive effect as a result of loans in issue as at
30 June 2010 would be to increase the weighted average of shares by
1,208,333.
3. Events after the balance sheet date
During July 2010, the Company raised EUR3.2 million from a loan
note placing with a variety of investors including Kedco directors.
The proceeds from the placing will be used to develop identified
opportunities for joint ventures and working capital purposes.
The annual report and financial statements for the year ended 30
June 2010 will be posted to shareholders shortly. The annual report
and financial statements will also be available on the Company's
website - www.kedco.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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