TIDMPPG
RNS Number : 6929Q
Plutus PowerGen PLC
14 September 2017
Plutus PowerGen Plc / Ticker: PPG / Index: AIM
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ('MAR'). Upon the
publication of this announcement via a Regulatory Information
Service ('RIS'), this inside information is now considered to be in
the public domain.
14 September 2017
Plutus PowerGen plc ('PPG' or 'the Company')
Final Results
Plutus PowerGen plc, the AIM listed power company focused on the
development, construction and operation of flexible power
generation facilities in the UK, announces its final results for
the year ended 30 April 2017.
Highlights
-- Milestone year, with the commissioning of first site and
generation of revenue in excess of GBP1.35 million
-- Maiden profit before development site write-offs
-- Commissioning and successful operation of first 20MW facility
at Plymouth, with construction proceeding at five further
facilities to be connected by year end
-- Including post year end, all Rockpool co-owned sites are
either operating, in or about to commence construction, amounting
to a total of 180MW
-- Strategic shift to the development of higher margin gas operations - 80MW in planning
-- Post year end joint venture agreed to develop battery storage sites
-- Positive outlook post Ofgem review, and favourable energy
dynamic due to energy supply deficit and imbalances - UK power
prices peaked above GBP1,500 per MW hour
-- Strong pipeline of future gas and battery sites expected to
significantly increase revenue and profitability
Charles Tatnall, Executive Chairman of the Company, said: "We
are delighted with the progress we have made as we look to build on
our early successes in the FlexGen arena and expand our business
model into gas powered generation and power storage. We are now at
an inflection point with one site in operation and all nine of the
Rockpool sites in, or about to commence, construction. With the
development of higher margin gas sites, of which 80MW is already in
planning, and further expansion into the energy storage arena, I am
truly excited about the future. We remain extremely positive about
the future for Plutus with the changes in UK power generation
energy mix creating imbalances in supply and therefore market
opportunities for our operations in FlexGen, Gas powered generation
and power storage. We have a proven business model and are
executing our strategy with further exciting opportunities in the
pipeline."
Chairman's Statement
In a year that saw our first site become operational, I am
pleased to report our maiden trading profits, indicating the
viability of our business model and our confidence in our
pipeline.
Key areas of focus
With the commissioning of our inaugural project in Plymouth in
November 2016, I am delighted to report that we generated a maiden
profit at the half year and a trading profit at the year end,
before write offs with regard to irrecoverable disbursements for
sites that are not going ahead for various reasons. Such reasons
include planning permission not being achieved, overly expensive or
impractical connections for a variety of reasons such as location
expense or likely construction difficulties. Nevertheless, at the
time of writing we now have all nine sites with Rockpool in various
stages of development; one of which is operating, a further five
are currently being built and should be operating by the New Year,
with the balance to be built out in 2018. Our primary operational
focus has therefore been on the continued execution and delivery of
the nine sites equity funded by Rockpool Investments LLP of which
we have a 44.5% interest in each.
As a complement to our green diesel projects, the group is now
diversifying into gas fuelled power generation and battery powered
energy storage projects, which may also be used in conjunction with
SolarFlex and gas-powered generation sites. The management team has
been working to develop and progress a pipeline of gas powered
sites in which we intend to hold majority stakes of typically 80%
but may also be joint ventures. We retain complete flexibility in
financing projects going forward but aim to ensure that all future
gas sites operated via new companies, typically holding 20MW each
as before, are able to be consolidated in our accounts. With this
in mind, we recently launched a GBP50 million bond advised by
Bedford Row Capital, to be listed in Frankfurt, that is about to be
marketed to investors. The bond is to fund the 'equity' portion of
each site; each site has a typical capacity of 20MW, is held in a
special purpose vehicle, and will normally have 20-40% of equity,
with the balance funded with asset or project finance.
Market context
There has been some uncertainty in the market on account of
regulatory reviews from DEFRA and Ofgem (read more in the Market
Overview below). In light of these reviews and the proposed phasing
out of Triad payments over the next three years, we have remodelled
the existing businesses and future gas operated sites. We are still
able to achieve a reasonable IRR for FlexGen projects and a very
good IRR (well in excess of 20%) for all gas projects, which will
likely operate for a longer number of hours per annum.
The underlying drivers of overall supply and demand for power
have not changed, however, and we believe that the markets for STOR
and FFR, for example, will firm over the coming years. The power
supply mix to the National Grid will also mean that there will be
many opportunities to trade electrons in future, due to the peaks
and troughs in the market. Over winter 2016/17, Attune Energy Ltd
(our site in Plymouth) could have earned c.GBP1.5-GBP1.8m by taking
advantage of market prices when these spiked. Because of
commitments to FFR, Triad and STOR, we have not always been able to
take advantage of such fluctuations, but expect to be in a better
position to do so with gas powered sites. Attune Energy operated
very successfully during last winter with an above budget operating
profit.
Strategy
In addition to our planned focus on installing gas engine
capacity and the bond to finance this, we are looking at the use of
power storage, i.e. batteries or capacitor technologies, in
conjunction with our gas sites, which will open up FFR markets and
other fast response tariffs to gas. Our strategy with respect to
the green diesel sites is - alongside Rockpool - to either sell
these after the end of the EIS qualification period or to make an
offer for the 55.5% we do not already own. Our relationship with a
leading Big Six multinational utility company to fund up to 20% of
any 20MW renewable fuel or gas powered flexible energy projects
going forward fits ideally with the Company's strategy to deliver
projects in which it holds an 80% interest, and this relationship
is envisaged to provide sufficient equity to allow PPG to develop
majority owned assets while maintaining its policy of limiting
dilution to shareholders as far as possible. It also gives us
additional flexibility in funding our various project types going
forward including Gas, SolarFlex and Battery Power Storage.
Dividend
We do not propose to pay a dividend as we plan to reinvest all
internally generated funds for the foreseeable future.
Outlook
At the end of a busy and productive year, I wish to thank the
staff and Directors for their valued contributions, as well as our
partners and advisors, who provide invaluable support in developing
our operations. In February 2017, we appointed Cantor Fitzgerald
Europe as Nominated Advisor and Broker to the Company with whom we
also look forward to a long and fruitful relationship.
We have a robust pipeline, with 240MW in the active pipeline
(building, planned and expected planning) and a total pipeline of
all types of generation and storage of around 700MW. In light of
the foregoing, we view the year ahead with confidence, and look
forward to securing planning permission on our pipeline of gas and
battery sites and building out that portfolio over the coming
years.
Charles Tatnall
Executive Chairman
13 September 2017
CHIEF EXECUTIVE'S REVIEW
We continue to roll out our model, which is designed to address
fundamental market drivers and to be resilient in the face of
current regulatory uncertainty.
Highlights
The last year saw the achievement of two related milestones for
Plutus Powergen. Our first site - Attune Energy in Plymouth - came
online in November 2016 and, as a result of meeting the three Triad
periods, the site was profitable over the small number of hours it
generated. Secondly, as a result of securing access to planning for
the Rockpool sites, the Company was pleased to be able to report
achieving our maiden trading profit before development site write
offs at the year end.
We have made good progress with the installation of power
generation projects, and will have 6 operational facilities
representing 120MW of capacity by the end of 2017. We have the
remaining three Rockpool sites with planning and anticipate having
these built in time for next winter.
Further sites will be based on gas powered engines (see
Strategy, below). We have submitted planning applications for 80MW
of gas capacity, and have a total pipeline of gas, (mains and LNG),
and battery sites of 700MW.
In last December's capacity auction, we were awarded Capacity
Mechanism contracts for three 20MW sites and have entered a further
eight sites for the next auction in February 2018.
Market context
There remains regulatory uncertainty in the market. In March
2017, Ofgem published a 'minded to' decision, which it confirmed
recently. From the winter of 2020/21, this would reduce the
embedded benefits received by distribution connected generators
such as PPG to the residual charge. While this change settles down,
there is concern among industry participants that price volatility
will increase, which in turn will lead to higher energy prices.
Additionally, third party analysis indicates that generators
generating for the Triad market have acted to depress volatility
over the winter - or peak demand - months. The effect of increased
volatility over the winter months, when demand is high, increases
the risk that energy prices will spike. While there is a price cap
of GBP1,500/MWh, there are plans in place for this to be raised to
GBP3,000 initially and then to GBP6,000 per MWh. This cost must
either be absorbed by suppliers or passed on to the consumer, but
we may be able to benefit from such spikes.
Despite Ofgem's decision, our returns are still anticipated to
be at or above our base case projections. Any loss of Triad income
is expected to be offset by firmer prices in the balancing markets
as National Grid seeks to physically balance the grid and the
market for flexible power as suppliers seek to balance their retail
power books and mitigate energy price volatility.
The outcome of DEFRA's consultation on lower emissions limits
was delayed by the general election until just recently, but we are
confident of being able to comply with the proposed new rules
without any material impact on investor returns. The proposed
outcomes in relation to the transposition into UK law of the Medium
Combustion Plant Directive (MCPD) will require us to fit selective
catalytic reduction (SCR) or other measures to reduce the NOx from
our green fuel fleet, but the cost of this is manageable. We
continue to monitor and be involved in the consultation
process.
National Grid launched a review in June of all markets which
seeks to make the balancing markets in which we compete more
dynamic and closer to real-time. Over the next 18 months National
Grid plans to rationalise the number of markets they operate for
balancing, and also be more transparent with the data and the way
that they balance. They also want to make the markets more real
time: a day ahead FFR market and STOR, and an in-day trading market
around frequency response. They are consulting about shifting the
market away from auctions to a traded market, to trade capacity in
the same way as the market trades electrons. These changes will
cement the role of local, reliable, flexible generation in the UK
energy mix.
Notwithstanding this uncertainty and likely changes to the way
that value will be distributed in the market, the fundamental
drivers remain the same. Insufficient base load power generation
capacity is being installed. No large gas power stations are being
built, and still no nuclear, yet demand for energy is increasing
and becoming more reliant on renewable sources to meet it. The
proposed withdrawal of new petrol and diesel cars from the roads by
2040 will further increase demand for power for charging electric
vehicles.
A key indicator of the importance of flexible generation is that
energy suppliers are finding ever more inventive ways to access
that capacity. These solutions range from innovative procurement
arrangements, through to co-investment. Additionally, some
suppliers are starting to develop innovative solutions, such as
using existing energy market contracts to hypothecate or match up
demand and supply, so consumers can be more certain of the price in
a highly volatile market. This is a good thing for big power
consumers or local communities that are a little off grid or can
organise to capitalise on such opportunities, but the net effect is
that the remaining market may become even more volatile, resulting
in further separation between the energy rich and energy poor.
Objectives and strategy
Our original objective was to have 200MW of generating capacity
within three years. By the end of this calendar year we will have
120MW installed and operational, and the remaining three renewable
diesel sites operational in time for next winter. This means we
will have achieved 180MW of renewable diesel sites - or 90% of our
target - after four years, through some very challenging times from
a regulatory and financing perspective.
Our most significant strategic shift is our decision to
diversify into gas powered engines. We started this process in the
new year, and now have 80MW of projects in planning and a further
120MW in the pre-planning stage. This means that we are aiming for
around 200MW of gas-fired generation over the next two to three
years, and we continue develop our overall pipeline of 700MW
further.
There are several factors that favour gas for use in flexible
generation:
-- More hours of running
-- Lower levels of pollution, in terms of NOx, CO2 and CO, and SOx;
-- Negligible soot and particulate emissions, and no smoke or odour in exhaust gases;
-- Similar levels of efficiency as green fuel engines;
-- Greater reliability, allowing higher maintenance intervals
and thus reducing costs as well as waste oil;
-- Reduced noise and vibration;
-- The ability to operate on a wide range of gaseous fuels, from
mains gas and LNG through to digester gas derived from the
anaerobic digestion of sewage and other organic wastes.
Each gas-powered site, which will take approximately eight
months to construct, is anticipated to generate an EBITDA of up to
GBP3m per year when Capacity Mechanism payments commence.
With gas engines, the economics are such that they are able to
run merchant to take advantage of peak prices as well as assist
suppliers in managing volatility in their retail power books.
Looking back over history, peak energy prices suggest these
facilities would need to run in the range of 1200-1400 hours per
year. Since volatility drives peak energy prices, these numbers may
well increase.
We are beginning to look at hybrid technologies whereby both the
gas and green fuel sites would be fitted with a storage (or
exhaustible) capability, such as batteries. Combining firm and
exhaustible generation on the same site allows us to compete in
more real-time markets, which is the strategic direction in which
National Grid is consulting to implement these markets. We will be
piloting these technologies on our sites once we have established
the economic and technical cases.
SolarFlex, which seeks to co-locate firm generation and
intermittent generation sources, and investigate installing
exhaustible generation to build 'real-world' operational data sets,
remains part of our strategy however has been slower to come to
fruition as prospective partners have not yet decided their
preferred approach. We continue to explore this approach and remain
confident we can demonstrate the value to solar operators as our
hybrid sites establish themselves.
Outlook
We have a healthy pipeline, and will continue to progress with
our strategy to develop, build, own and operate flexible generation
capacity. The renewable green diesel sites for Rockpool are
secured, with five to be connected by the end of the year and the
remaining three by the end of next. We are beginning our gas
journey with 80MW in planning with the aim to meet our initial
target of 200MW. Although we are closing the chapter on renewable
diesel fuel, we will seek to make those assets more valuable by
retrofitting appropriate storage technology as it becomes
economic.
Despite some regulatory question marks, we remain confident that
our FlexGen model is a key part of the solution to the challenges
ahead as a result of the structural changes to the UK's energy
mix.
Phil Stephens
Chief Executive Officer
13 September 2017
SUSTAINABILITY
Our flexible, standby sites facilitate the UK's increasing
reliance on renewable energy.
By plugging intermittency gaps from renewable energy power
generation in a cost-effective manner, our sites will assist in
enabling further decarbonisation of the UK energy sector.
Our FlexGen facilities are anticipated to run for no more than
150 hours per year in 60-minute blocks of time during peak demand,
and may not exceed 300 hours as a result of the commitments made in
the planning permission process. Despite providing valuable standby
generating capacity, each facility is expected to be switched off
for more than 97% of the time, ensuring that annualised emissions
are minimal. Our facilities will conform to all UK and EU air
quality standards.
Our Rockpool co-investment power generation sites are fired with
green renewable fuel from HVO (hydrogenated vegetable oil), which
reduces the environmental impact and also stimulates the
development of such fuels by providing a proven market. Relative to
conventional diesel, this fuel eliminates sulphur oxides (SOx),
reduces nitrogen oxides (NOx) by c.30% and reduces
particulates.
We also continually evaluate other types of green fuel and look
at technology to add to our generators to comply with the more
stringent requirements associated with the incoming Medium
Combustion Plant Directive.
OUR MARKET
Despite a considerable degree of regulatory uncertainty, the
fundamental drivers of demand for flexible electricity generation
remain, on account of structural changes to the UK's power
generation mix.
Increasing volatility
As high carbon sources of energy continue to be retired,
renewable power generation has come to account for close to 30% of
the UK's energy supply. With the Government's commitment to closing
all coal-fired power stations by 2025, and with new gas or nuclear
power stations at least 10 to 15 years away from coming online,
reliance on diverse and intermittent sources of energy embedded
within the distribution network (notably wind and solar) is set to
increase. The lower proportion of energy generated from reliable
'baseload' sources has led to increasing challenges in the
balancing of supply and demand. As the energy mix changes, there is
reduced availability of flexibility in the Balancing Mechanism,
and/or this is becoming more costly to access.
Continuing tight capacity margins
Capacity margins - the difference between peak electricity
demand and the capacity available to meet this - have become
tighter in recent years. For winter 2016/17, National Grid continue
to warn of tight margins and the volume procured in the Capacity
Market remains sizeable. The scheduled closure of coal power
stations, coupled with uncertainty and delays in respect of nuclear
and gas sites, are likely only to exacerbate these issues.
Changing need for balancing services
As system operator, National Grid is responsible for ensuring
that the UK electricity system has sufficient supply to match
demand, and operates balancing services to continuously match
supply to demand to avoid frequency distortions, brownouts or
blackouts.
The current markets are complex, unclear and not future-proof,
and not accessible to all potential providers. The changing energy
mix and the increasing need for cost-effective flexibility means a
review of the current markets is required.
As outlined in its System Needs and Product Strategy (SNAPS)
proposal in June 2017, National Grid aims to have in place, by
2021, a smart, flexible system that harnesses all available energy
sources - a simple, transparent marketplace for new and established
providers and technology types. By simplifying balancing services
and improving the sharing of information, the objective is to
remove barriers to allow better use to be made of distributed
energy sources.
National Grid also recently introduced an Enhanced Frequency
Response market, for very rapid response such as could be provided
by battery storage units. Battery storage remains markedly higher
cost than other short-term generation solutions and has
technological limitations. As a result, this new market is likely
to complement, rather than remove demand from existing frequency
response markets.
MARKET DRIVERS FAVOUR FLEXIBLE POWER GENERATION
In the context of the structural changes to the UK energy sector
outlined above and the resulting challenges, flexible power
generation plays a vital role in supporting the pillars of the UK's
energy strategy, as summarised in the table below.
Keeping the lights on Network support
-- Improve operational
capability by lowering
demands on the network
-- Support the distribution
system and provide an
important tool to accommodate
intermittency of renewable
sources
Frequency control
-- Maintain system frequency
within operating parameters
by generating very quickly,
supporting local balancing
System inertia improvement
-- Lower the risk of
failure by increasing
the inertia on the system
Short run back up capacity
-- Add small scale capacity
that can run when larger
assets fail
---------------------- -------------------------------
Affordable Best value to the consumer
-- Derive all revenue
through market-delivered
processes
-- Provide opportunity
for reduced connection
costs by sharing Grid
connections with solar
---------------------- -------------------------------
Low carbon A system that allows
the wider decarbonisation
of energy
-- Provide operational
'cover' for renewables
-- Give network operators
fine tuning capability
rather than large scale
capacity
---------------------- -------------------------------
Unlike large power stations, which connect to the high voltage
transmission grid, most flexible generating assets connect directly
to local distribution networks. This is known as embedded
generation, and confers several advantages that result in lower
consumer bills, as well as generators earning a premium over
wholesale electricity prices:
-- Reduced charges: Although embedded generation providers are
subject to local distribution network fees, they avoid charges
relating to transmission use, distribution system use and system
balancing. Embedded generation also reduces the need for investment
in the transmission and distribution networks, and saves costs
associated with operating and maintaining existing
infrastructure.
-- Reduced thermal losses;
-- Reduced regulation: embedded generation is not subject to
regulatory burdens such as the Carbon Price Floor and Climate
Change Levy.
Embedded generation also generally reduces the volume from
balancing energy and hence can reduce the cost of balancing the
system on a half hourly basis. Controllable plants such as
generators also facilitate management of intermittency at a local
level, allowing greater deployment of renewable generation assets
than would otherwise be viable.
The operational benefits and cost efficiencies in the form of
avoided charges are typically shared between suppliers and the
local producers they contract with, and ultimately benefit
consumers through reduced energy bills.
OUR BUSINESS MODEL
Our multi-revenue stream model is founded upon the development
of 20MW flexible generation facilities, funded through a
combination of equity and asset finance via dedicated investments
and subsidiaries.
WHAT WE DO
We are applying our management expertise to the establishment of
a group of subsidiaries and investments active in the development,
construction and operation of stand-by flexible electricity
generation sites in the UK.
We sell power to energy suppliers and the National Grid via
several mechanisms, and our sites are expected to operate during
periods of peak electricity demand or grid instability.
HOW WE OPERATE
Proven, modular generation technology
We use established, reliable technology based on containerised
generators, fired with renewable green fuel and - going forward -
gas, and possibly in conjunction with battery storage or
independent battery storage projects. Treated as embedded
generation, our unmanned gensets supply the local low voltage
distribution network and are switched on remotely, reaching full
output, depending on generation power type, within 10-150 seconds.
Each plant generally has a maximum generating capacity of 20MW.
This is optimal for two reasons:
-- The planning thresholds - and therefore construction
timescales - are reduced; and
-- The emissions fall below a European threshold, thereby
reducing compliance costs and risk.
Non-dilutive finance model
By setting up a dedicated entity for each site, we have limited
medium-term dilution to existing holding company shareholders. The
first nine sites have been financed with equity from clients of
Rockpool in each of the nine investment entities established for
this purpose, and have advance assurance from Her Majesty's Revenue
and Customs to benefit from EIS-related tax benefits. PPG has a
44.5% stake in each of these entities, and currently derives
revenue from a management contract with each site. From November
2015, EIS was closed off to new standby power generation projects.
Future projects will be held in separate subsidiary companies, in
which PPG will seek to obtain an interest of 80%, however PPG may
enter into joint ventures or other flexible financing options, the
principle generally being that the accounts of each vehicle will be
capable of consolidation into the group accounts.
KEY RELATIONSHIPS AND STAKEHOLDERS IN OUR BUSINESS
The keys to success are land, asset funding and grid connection,
and we enjoy constructive relationships with partners in each of
these core aspects.
Land and Planning
Property developers: we work with developers to identify
suitable sites across the UK.
Land owners: we are able to secure attractive sites through our
relationships with land owners such as London & Devonshire
Trust, with whom we also have a battery storage Joint Venture, and
Associated British Ports.
Reliance Energy: we have an established relationship with
Reliance Energy, who is working with us to secure sites for gas
engines and SolarFlex.
Funding
Debt markets: there are emerging opportunities to provide
development capital for management contracts.
Banks: we have strong relationships with a number of banks and
other financial institutions to provide debt financing, including
JCB.
Third party investors: we continue to work with other potential
and credible investors, including a 'Big 6' utility group with whom
we agreed an indicative partnership to fund 20% of future
projects.
Investors: PPG was readmitted to AIM in August 2014 to
capitalise on the opportunity in flexible power generation and
intends to raise further funding from a GBP50m bond issue to enable
us to develop further sites.
Connections and Contracts
National Grid: we will secure STOR and FFR contracts with
National Grid for our facilities, and we have secured Capacity
Market contracts for five sites and are applying for a further
eight sites in the Capacity Market Auction in February 2018. We are
also entering T-1 CM auction for the 6 facilities that will be
operational by 1st October 2018.
Energy suppliers: we have negotiated Power Purchase Agreements
(PPAs) with two national suppliers.
Connection business: we have relationships with a number of
connection businesses with regard to connections on our sites and
the contestable and non-contestable connection costs.
HOW WE CREATE VALUE
Our model is based upon multiple revenue streams. The current
mechanisms for generating revenue from power sales are outlined in
the table below. Although the precise mechanisms are subject to
review as part of National Grid's consultation into Systems Needs
and Product Strategy, the strategic importance of flexible
generation means that the outcome is thought unlikely to be
unfavourable to embedded power generators. The consultation is
scheduled for completion by the end of 2018.
Aside from earning revenue from the supply energy, we have a
management contract with each Rockpool investor-funded site, which
generates revenue of GBP150,000 per site per year. Under the terms
of these contracts, we manage the asset, from identifying the site,
obtaining planning permission, to managing the connection,
construction and operation of the plant.
Sources of revenue from energy supply:
Mechanism Overview Counterparty
STOR The Short-Term Operating Reserve National
is a mechanism used by National Grid
Grid to balance the UK's power
supply at short notice. The
STOR allows required electricity
supply to be decreased (by incentivising
major consumers to reduce demand)
or increased, by calling on
a pool of stand-by power generators.
Under the terms of two-year
contracts, National Grid pays
STOR providers for making their
capacity available, as well
as for delivery of electricity.
Firm Frequency FFR is a service procured by National
Response National Grid to manage system Grid
(FFR) frequency, the system-wide signal
that indicates whether energy
supply exceeds demand or vice
versa. FFR allows a provider
to supply a service to reduce
demand or increase generation,
when instructed by National
Grid.
FFR is procured via monthly
tender. To take part, generators
must be able to deliver a minimum
of 10MW, and be capable of responding
within 30 seconds and for sufficient
duration. Similar to STOR, providers
are paid for availability as
well as for utilisation. PPG
will compete in the static market,
whereby energy change occurs
at a pre-set frequency and remains
at a set level.
The addition of exhaustible
(battery) power to PPG's generators
would allow access to the dynamic
FFR market, where energy changes
in line with system frequency.
Triad Triad is the scheme under which Energy
the National Grid charges energy Suppliers
suppliers' significant sums
according to their use of the
high voltage transmission network
during Triad periods - the three
half-hour periods of highest
demand in a year, identified
after the winter. The principal
means for National Grid to cover
its costs, Triad also serves
to incentivise users to limit
consumption during peak periods,
thereby easing the need for
investment in the transmission
system. Through the PPA, energy
supply companies pay flexible
generators of electricity to
supply power to local distribution
networks during anticipated
peak periods (both for the power
generated and for Triad avoidance),
as their generation reduces
demand on the transmission network.
Generators must operate during
each of the Triad periods to
be eligible for payments.
Ofgem's 'minded to' decision
of June 2017 will see Triad
benefits earned by small embedded
generators such as PPG reduced
to close to zero by the winter
of 2020/21, effectively reducing
over four years as to 100%,
66%, 33% and zero. There are
likely, however, to be residual
payments which could amount
to up to 20% of the original
Triad which will still make
it a worthwhile income stream.
This is not budgeted for in
our remodelled projections post
the 'minded to' decision
Power Purchase This is simply sales of generated Energy
Agreements power; when operating with an Suppliers
(PPA) objective of Triad avoidance,
power is sold under a PPA, typically
to a large UK energy supplier.
PPAs are typically of a 5+ year
duration.
Capacity To ensure long-term security UK Government
Market of supply, the Capacity Market (via National
provides financial incentives Grid)
to bring forward new investment
while maximising existing generation
capabilities. The structure
of CM ensures technology neutrality,
meaning that the lowest cost
technologies that will guarantee
capacity will be awarded 1,
3 and 15-year contracts, depending
on the level of capex incurred.
These capacity contracts are
procured through a reverse auction,
run by National Grid. Generators
who are successful in the auction
will benefit from a regular,
predictable and index-linked
revenue stream for every hour
they are available. The capacity
obligation means providers must
be available to deliver energy
when needed or face penalties.
Investment Case
We have addressed the financing and costs of FlexGen sites
before and below demonstrates the projected costs and illustrative
returns that may be achieved from a typical gas site:
Component/activity Approx % of total costs
Planning and site assembly 5-10%
Electrical equipment and storage 25-30%
Gas connection/supply 5-10%
Civil engineering/construction 25-30%
Generators 25-30%
Financial Information
Standard Projected Financials for a single 20MW Gas site:
Full Year (GBP'000) 1 2 3 4 5
--------------------- ------ ------ ------ ------ ------
Turnover 2,454 4,489 4,754 5,285 6,192
EBITDA 1,192 2,311 2,508 2,973 3,826
Cash flow 1,192 2,312 2,306 2,754 3,605
There are significant and detailed assumptions behind these
projections which have been reviewed and modelled by banks and
financial institutions willing to lend to our projects. These
projections have satisfied their own internal tests with regard to
their sensitivity modelling and provide third party validation of
our detailed model.
Financial projections for 10 new gas sites funded from GBP50m
bond or other funding (100% owned):
Full Year No of Sites EBITDA
---------- ------------ ---------------
1 3 GBP3,576,689
2 6 GBP10,511,445
3 9 GBP18,034,178
4 10 GBP24,567.293
The potential for the group to generate excellent returns and
cash flow is clearly demonstrated above.
OUR STRATEGY
We have continued to make progress against our strategic
priorities. We will achieve 90% of our goal to reach 200MW of
flexible generation by the end of 2017, a significant achievement
given the fast-evolving market in which we operate and the
evolution of our business model towards gas power generation and
battery storage.
Strategic Priority Progress
Bring online standalone Green Fuel
FlexGen sites The facility in Plymouth
- Nine Rockpool-funded came online in November
investee company green 2016. By the end of 2017
diesel sites we will have 120MW of operational
capacity, and the remaining
three sites already have
secured planning permission.
Rockpool has indicated
that they will realise
their investment in the
nine flexgen sites when
the EIS qualification period
expires. This will give
us the opportunity to make
an offer for the shares
we do not own or sell our
shares in each site alongside
Rockpool
- Majority-owned (non-EIS) 80MW of gas powered sites
gas powered sites are at the planning stage,
and we have a further 160MW
in the pipeline.
Our goal is to develop
at least four sites per
year.
Derive revenue from As well as from the secured
multiple sources management contracts for
each Rockpool site, we
generate income in our
investments from different
markets for flexible power,
although the precise nature
of these may be subject
to regulatory change.
Triad: Our Plymouth site
earned attractive returns
by hitting three Triad
periods since becoming
operational in November
2016. If Ofgem's 'minded
to' decision is implemented,
this would reduce the Triad
benefit received by small
embedded generators such
as PPG to close to zero
from the winter of 2020/21.
Capacity Market: PPG has
been awarded a total of
five Capacity market contracts
for 15 years and one annual
contract to date. This
year the Company is applying
for eight 15-year contracts
(four FlexGen and four
Gas) and six one-year contracts
Power Purchase Agreement:
We have Power Purchase
Agreements (PPAs) with
two national suppliers
and are in detailed negotiations
with a third.
FFR: Via our subsidiaries
and investee companies,
we intend to build power
generation units which
reach full response within
30 seconds and can sustain
supply for 30 minutes,
allowing us to compete
in the static FFR market.
STOR and FFR are mutually
exclusive, although PPG
may bid for both types
and run FFR outside STOR
hours.
Management contracts: PPG
has been granted nine management
contracts by the entities
financed with equity from
clients of Rockpool Investments.
Under these agreements,
PPG receives monthly payments
equivalent to GBP150,000
per annum for each investee
company.
STOR: We intend to secure
STOR contracts with National
Grid for our facilities.
Continue to pursue We intend to own majority
our limited dilution stakes (typically 80%)
investment model, holding in individual entities
majority stakes in for future development
non-EIS funded, standalone sites. With that objective,
flexible generation we are in the process of
sites with outside raising GBP50 million gross
investors where attractive through the issue of a
7% five-year bond issue
to be listed in Frankfurt.
The net proceeds of this
will - in conjunction with
our existing cash resources
and asset finance - be
used to assist in the development
of ten 20MW gas powered
flexible generation sites.
Explore viability of Over the medium to longer-term,
battery, capacitor our strategy is to explore
or inertial energy commercialisation of storage
storage technologies on our green
fuel, SolarFlex and gas
sites, to compete in more
real-time markets and allow
us to access potentially
more attractive returns.
Progress SolarFlex We have held promising
sites (co-located solar talks with several solar
and farm operators to establish
FlexGen facilities) SolarFlex sites (with shared
connections for solar and
non-intermittent generators)
and are awaiting their
response.
FINANCIAL REVIEW
The Group has achieved considerable growth in fees received
during the year, contributing materially to substantially reduced
losses and attributable losses per share.
The year ended 30 April 2017 is our second full year of
operations in the business of the development and operation of
flexible energy generation projects, which play a crucial role in
the changing UK energy mix as renewable generation replaces carbon
intensive generation. 2017 has been a year of continued progress
for the Group in the execution of its business plan. Throughout the
year we had nine management contracts in place with Rockpool
investee companies, each generating GBP150,000 per annum of fee
income which represented an annualised fee income of GBP1,350,000
for the year ended 30 April 2017.
In addition to the nine Rockpool companies, we continue to make
progress towards the Company's plan to add further capacity in the
form of gas powered generation sites, with 80MW in planning, a
further 120-150MW of viable gas sites in the pipeline for next year
and circa 80MW of battery storage schemes in conjunction with LDT.
Each site will be a subsidiary of the Company and will ordinarily
hold up to 20MW of generating capacity. The Company will also seek
to introduce outside investors so as to maintain its anti-dilution
funding model in the Holding Company and will normally seek to
maintain a shareholding of at least 80%. Our relationship with a
leading Big Six multinational utility company to fund up to 20% of
any 20MW renewable fuel or gas powered flexible energy projects
going forward fits ideally with the Company's strategy to deliver
projects and will provide us with extra financing flexibility. Such
sites will have the ability to be fully consolidated in the Group's
accounts, which will see a strengthening of the Group's balance
sheet and the earnings of each subsidiary will be consolidated into
the profit and loss account of the Group.
The Company has recently launched a GBP50 million (gross)
five-year 7% bond, listed in Frankfurt, to give maximum flexibility
to the suite of funding options available to it. The bond, once
fully funded, will enable the Company to build up to a further ten
new majority owned sites, which together with the Big Six
multinational utility company, assists in maximising our financing
capability and flexibility. We will be in a good financial position
to develop the majority owned portfolio of gas powered, solarflex
and battery storage sites.
During the year under review the Group increased its revenue to
GBP1,350,000 (2016: GBP887,500), a rise of 52%, from the award of
management contracts from the Rockpool investee companies. These
fees are expected to continue under current management contracts at
an annualised rate of GBP1.35 million in future periods. Plutus
Energy Limited, our 100% owned operating subsidiary, will earn
management fees from all future sites, in addition to our existing
portfolio. Administrative expenses have increased marginally to
GBP1,292,700 (2016: GBP1,187,998). There are other operating
expenses of GBP236,164 (2016: GBP79,590) in the year under review.
These relate to write offs of expenses disbursed for sites not
going forward for various reasons. There will be no further write
offs with regard to Rockpool co-investee companies as all nine
sites are now allocated and are in various stages of construction
and development. Sites may continue to be pursued which do not go
forward for various reasons but we expect to be able to minimise
such write offs in the future. Because of these write offs the
Group has made a loss after taxation of GBP201,501 (2016:
GBP407,776) and consequently the basic and diluted loss per share
from continuing operations was 0.03p (2016: 0.07p). However, if we
discount the other non-recurring operating expenses attributable to
site construction not proceeding, the Group would have made a
maiden profit for the year ended 30 April 2017 of GBP34,663 (2016:
Loss of GBP328,186), a positive turnaround in pro forma net profits
of GBP362,849.
After the year end, James Longley and Charles Tatnall each
exercised 10,000,000 warrants in the Company with a net cash
benefit of GBP180,000. In addition, a new Group share option scheme
was implemented after the financial year end. The 2017 Share Option
Scheme is designed to incentivise the Directors as Plutus changes
direction towards gas, solarflex and battery powered flexgen
projects, of which the Company has an overall 700MW pipeline. This
is the first share option scheme to be implemented since the
reverse acquisition of Plutus Energy Limited in August 2014. Since
then, minimal shareholder dilution has been incurred as a result of
external equity financing as the Company has ensured that the
ongoing development of the Rockpool funded portfolio of 180MW of
FlexGen sites have been financed entirely through external equity
and debt thus far.
Post year end, the Company granted an aggregate of 60,000,000
share options with an exercise price of 1.485p pursuant to the 2017
Share Option Scheme, all vesting in three equal annual instalments.
15,000,000 Options were granted to each of Paul Lazarevic, James
Longley, Phil Stephens and Charles Tatnall on 18 May 2017. Charles
Tatnall and James Longley also each hold 4,770,000 existing share
options, which were awarded prior to the reverse acquisition of
Plutus Energy. All of the Directors have indicated that they will
not sell any shares that they hold for at least the next eighteen
months. Following the issue of options and exercise of warrants,
there are a total of 69,540,000 options in the Company outstanding,
representing approximately 9.8% of the Company's issued share
capital.
Cash was GBP71,609 at the year-end (2016: GBP22,608). Trade and
other payables increased to GBP229,635 (2016: GBP166,288), due
largely to the increased level of activity, particularly with
regard to the site planning, lease and connection processes. Our
ongoing overheads will be covered by management fees. In addition
to which we will have the proceeds from the bond raise coming in to
fund new sites and generate further management fees together with
the consolidated operations. Overall, the Company is in a good
situation financially and will continue to manage cash flow,
accounts receivable and accounts payable in a fair and reasonable
manner within the Group resources.
Group net assets at the year-end were GBP995,864 (2016:
GBP1,166,089), a decrease of GBP170,225 (14.6%) due to net losses
in the year generated from other operating costs from site costs
written off.
Key Performance Indicators
The key performance indicators are set out below:
Change
2017 2016 %
-------------------------- ------------ ---------- ------
Turnover GBP1,350,000 GBP887,500 +52%
Cash and cash equivalents GBP71,609 GBP22,608 +217%
Closing share price 1.23p 0.925p +33%
Earnings per share (0.03)p (0.07)p +57%
-------------------------- ------------ ---------- ------
Principal risks and uncertainties
The Board regularly reviews the risks facing the Company and
seeks to exploit, avoid or mitigate those risks as appropriate.
Financial risk management objectives and policies
Financial risk management objectives and policies of the Company
are set out in note 24 to the financial statements.
Going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Company can continue in operational existence for the
foreseeable future. The Group had cash and cash equivalents of
GBP71,609 and net current liabilities of GBP89,288 as at 30 April
2017, and incurred a loss of GBP201,501 for the year then
ended.
The Directors have based their opinions on a cash flow forecast,
which assumes that sufficient revenue will be generated for working
capital purposes and that operating costs will be kept to a minimum
until adequate revenue streams are secured. In addition future
plans for the Group will be funded externally through a mix of debt
and equity financing. So the Directors continue to adopt the going
concern basis in preparing the financial statements. The financial
statements do not include the adjustments that would result if the
Company was unable to continue as a going concern.
James Longley
Director
13 September 2016
Group Statement of Comprehensive Income
For the year ended 30 April 2017
2017 2016
Note GBP GBP
--------------------------------- ---- ----------- -----------
Continuing operations
Revenue 1,350,000 887,500
--------------------------------- ---- ----------- -----------
Gross profit 1,350,000 887,500
Administrative expenses (1,292,700) (1,187,998)
Other operating expenses 8 (236,164) (79,590)
--------------------------------- ---- ----------- -----------
Operating loss (178,864) (380,088)
Interest charge on loan note 17 (22,637) (27,688)
--------------------------------- ---- ----------- -----------
Loss before tax 6 (201,501) (407,776)
Tax 9 - -
--------------------------------- ---- ----------- -----------
Net loss attributable to equity
holders of the Company
and total comprehensive loss (201,501) (407,776)
--------------------------------- ---- ----------- -----------
Earnings per share (pence per
share):
Basic and diluted loss per share
from continuing
and total operations 10 (0.03)p (0.07)p
--------------------------------- ---- ----------- -----------
There are no items of other comprehensive income.
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent company pro t
and loss account. The total comprehensive income for the parent
company for the year was GBP35,987 (2016: loss GBP389,426).
Group Statement of Changes in Equity
For the year ended 30 April 2017
Share Loan note
Share Share option equity Retained
capital premium reserve reserve losses Total
GBP GBP GBP GBP GBP GBP
--------------- --------- --------- -------- --------- ----------- ---------
At 30 April
2015 1,376,950 6,334,076 74,306 23,657 (7,050,194) 758,795
Comprehensive
income for
the year - - - - (407,776) (407,776)
Credit to
equity in
respect of
share-based
compensation
charge - - 35,070 - - 35,070
Issue of share
capital 120,000 660,000 - - - 780,000
At 30 April
2016 1,496,950 6,994,076 109,376 23,657 (7,457,970) 1,166,089
--------------- --------- --------- -------- --------- ----------- ---------
Comprehensive
income for
the year - - - - (201,501) (201,501)
Credit to
equity in
respect of
share-based
compensation
charge - - 31,276 - - 31,276
At 30 April
2017 1,496,950 6,994,076 140,652 23,657 (7,659,471) 995,864
--------------- --------- --------- -------- --------- ----------- ---------
Company Statement of Changes in Equity
For the year ended 30 April 2017
Share Loan note
Share Share option equity Retained
capital premium reserve reserve losses Total
GBP GBP GBP GBP GBP GBP
--------------- --------- --------- -------- --------- ----------- ---------
At 30 April
2015 1,376,950 6,334,076 74,306 23,657 (7,007,122) 801,867
Comprehensive
income for
the year - - - - (389,426) (389,426)
Credit to
equity in
respect of
share-based
compensation
charge - - 35,070 - - 35,070
Issue of share
capital 120,000 660,000 - - - 780,000
At 30 April
2016 1,496,950 6,994,076 109,376 23,657 (7,396,548) 1,227,511
--------------- --------- --------- -------- --------- ----------- ---------
Comprehensive
income for
the year - - - - 35,987 35,987
Credit to
equity in
respect of
share-based
compensation
charge - - 31,276 - - 31,276
At 30 April
2017 1,496,950 6,994,076 140,652 23,657 (7,360,561) 1,294,774
--------------- --------- --------- -------- --------- ----------- ---------
Group and Company Statements of Financial Position
For the year ended 30 April 2017
Group Company
------------------------ ------------------------
2017 2016 2017 2016
Note GBP GBP GBP GBP
--------------------------------- ---- ----------- ----------- ----------- -----------
Non-current assets
Goodwill 13 1,085,000 1,085,000 - -
Investments in
subsidiaries 11 - - 1,098,333 1,085,000
Investments 12 152 152 152 152
--------------------------------- ---- ----------- ----------- ----------- -----------
1,085,152 1,085,152 1,098,485 1,085,152
--------------------------------- ---- ----------- ----------- ----------- -----------
Current assets
Trade and other
receivables 14 268,738 417,980 455,871 473,929
Cash and cash equivalents 15 71,609 22,608 71,609 20,375
--------------------------------- ---- ----------- ----------- ----------- -----------
340,347 440,588 527,480 494,304
--------------------------------- ---- ----------- ----------- ----------- -----------
Total assets 1,425,499 1,525,740 1,625,965 1,579,456
Current liabilities
Trade and other
payables 16 (229,635) (166,288) (131,191) (158,582)
Borrowings 17 (200,000) (16,000) (200,000) (16,000)
--------------------------------- ---- ----------- ----------- ----------- -----------
(429,635) (182,288) (331,191) (174,582)
--------------------------------- ---- ----------- ----------- ----------- -----------
Net current (liabilities)/assets (89,288) 258,300 196,289 306,389
--------------------------------- ---- ----------- ----------- ----------- -----------
Non-current liabilities
Borrowings 17 - (177,363) - (177,363)
--------------------------------- ---- ----------- ----------- ----------- -----------
Total liabilities (429,635) (359,651) (331,191) (351,945)
--------------------------------- ---- ----------- ----------- ----------- -----------
Net assets 995,864 1,166,089 1,294,774 1,227,511
--------------------------------- ---- ----------- ----------- ----------- -----------
Equity
Share capital 18 1,496,950 1,496,950 1,496,950 1,496,950
Share premium account 19 6,994,076 6,994,076 6,994,076 6,994,076
Share option and
warrant reserve 20 140,652 109,376 140,652 109,376
Loan note equity
reserve 21 23,657 23,657 23,657 23,657
Retained losses 22 (7,659,471) (7,457,970) (7,360,561) (7,396,548)
--------------------------------- ---- ----------- ----------- ----------- -----------
Equity attributable
to owners of the
Company 995,864 1,166,089 1,294,774 1,227,511
--------------------------------- ---- ----------- ----------- ----------- -----------
The financial statements of Plutus PowerGen plc, registered
number 5859612, were approved by the Board of Directors and
authorised for issue on 13 September 2017. They were signed on its
behalf by:
James Longley
Director
Group and Company Statements of Cash Flow
For the year ended 30 April 2017
Group Company
------------------- -------------------
2017 2016 2017 2016
Note GBP GBP GBP GBP
-------------------------- ---- -------- --------- -------- ---------
Net cash generated
by/(used in) operating
activities 26 65,001 (461,772) 38,038 (203,486)
-------------------------- ---- -------- --------- -------- ---------
Investing activities
Investment in associated
undertakings - (105) - (105)
Net repayments
by/(advances to)
subsidiary undertaking - - 29,196 (260,519)
-------------------------- ---- -------- --------- -------- ---------
Net cash generated
from/(used in)
investing activities - (105) 29,196 (260,624)
-------------------------- ---- -------- --------- -------- ---------
Financing activities
Proceeds of share
issues - 180,000 - 180,000
Interest paid (16,000) (16,000) (16,000) (16,000)
-------------------------- ---- -------- --------- -------- ---------
Net cash (used
in)/generated from
financing activities (16,000) 164,000 (16,000) 164,000
-------------------------- ---- -------- --------- -------- ---------
Net increase/(decrease)
in
cash and cash
equivalents 49,001 (297,877) 51,234 (300,110)
Cash and cash equivalents
at beginning of
year 22,608 320,485 20,375 320,485
-------------------------- ---- -------- --------- -------- ---------
Cash and cash equivalents
at end of year 15 71,609 22,608 71,609 20,375
-------------------------- ---- -------- --------- -------- ---------
Notes to the Financial Statements
For the year ended 30 April 2017
1. General information
Plutus PowerGen plc is a Company incorporated in the United
Kingdom under the Companies Act 2006. The address of the registered
office is given on page 41 of the full Report & Accounts. The
nature of the Group's operations and its principal activities are
set out in the Strategic Report on pages 13 to 14 of the full
Report & Accounts and in the Chairman's Statement on pages 2 to
3.
These financial statements are prepared on a going concern basis
and presented in pounds sterling which is the currency of the
primary economic environment in which the Group operates.
2. Statement of compliance
The financial statements comply with IFRS as adopted by the
European Union. The following new and revised Standards and
Interpretations have been adopted in the current period by the
Group for the first time and do not have a material impact on the
Group.
IFRS 12 Disclosures of interests in other entities
A number of new standards and amendments to standards and
interpretations have been issued but are not yet effective and not
early adopted. None of these are expected to have a significant
effect on the financial statements of the Group.
3. Significant accounting policies
Basis of preparation
The consolidated financial statements of Plutus PowerGen plc
(the "Company") and its subsidiaries (the "Group") have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use in the European Union ("EU")
applied in accordance with the provisions of the Companies Act
2006.
IFRS is subject to amendment and interpretation by the
International Accounting Standards Board ("IASB") and the
International Financial Standards Interpretations Committee ("IFRS
IC") and there is an ongoing process of review and endorsement by
the European Commission.
The consolidated financial statements have been prepared on the
historical cost basis except for certain financial instruments that
are measured at amortised cost, as explained in the accounting
policies below.
Basis of consolidation
The Group's consolidated financial statements incorporate the
financial statements of Plutus PowerGen plc (the "Company") and
entities controlled by the Company (its subsidiaries). Subsidiaries
are entities over which the Group has the power to govern the
financial and operating policies generally accompanying a
shareholding of more than one half of the voting rights. The
existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether
the Group controls another entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date that control ceases.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Profits and
losses resulting from inter-company transactions that are
recognised in assets are also eliminated.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
income statement because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the year end date.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted
for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
year end date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and where they relate to income taxes
levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Revenue
Revenue is measured at the fair value of the consideration
received or receivable.
Revenue is derived from the provision of management services
which are invoiced on a monthly basis and are recognised in the
period to which they relate.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
Financial assets are classified into the following specified
categories: 'available for sale investments', 'loans and
receivables' and 'cash and cash equivalents'. The classification
depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
Available for sale investments
Investments are designated as available-for-sale financial
assets if they do not have fixed maturities and fixed or
determinable payments, and management intends to hold them for the
medium to long-term. Financial assets that are not classified into
any of the other categories are also included in the
available-for-sale category.
Investments are initially measured at fair value plus incidental
acquisition costs. Subsequently, they are measured at fair value in
accordance with IAS 39. In respect of quoted investments, this is
either the bid price at the period end date or the last traded
price, depending on the convention of the exchange on which the
investment is quoted, with no deduction for any estimated future
selling cost. Unquoted investments are valued by the Directors
using primary valuation techniques such as recent transactions,
last price or net asset value.
Gains and losses on measurement are recognised in other
comprehensive income except for impairment losses and foreign
exchange gains and losses on monetary items denominated in a
foreign currency, which are recognised directly in profit or loss.
Where the investment is disposed of or is determined to be impaired
the cumulative gain or loss previously recognised in other
comprehensive income is reclassified to profit or loss.
The Group assesses at each period end date whether there is any
objective evidence that a financial asset or group of financial
assets classified as available-for-sale has been impaired. An
impairment loss is recognised if there is objective evidence that
an event or events since initial recognition of the asset have
adversely affected the amount or timing of future cash flows from
the asset. A significant or prolonged decline in the fair value of
a security below its cost shall be considered in determining
whether the asset is impaired.
When a decline in the fair value of a financial asset classified
as available-for-sale has been previously recognised in other
comprehensive income and there is objective evidence that the asset
is impaired, the cumulative loss is removed from other
comprehensive income and recognised in profit or loss. The loss is
measured as the difference between the cost of the financial asset
and its current fair value less any previous impairment.
Fair Value Measurements:
The Group holds investments that are measured at fair value at
the end of each reporting period using the IFRS 7 fair value
hierarchy as set out below.
Level 1 - valued using quoted prices in active markets for
identical assets.
Level 2 - valued by reference to valuation techniques using
observable inputs other than quoted prices included within Level
1.
Level 3 - valued by reference to valuation techniques using
inputs that are not based on observable market data.
Loans and receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as loans and receivables. Loans and receivables are
initially measured at fair value and subsequently measured at
amortised cost using the effective interest method, less any
impairment. Interest income is recognised by applying the effective
interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments that are
readily convertible to a known amount of cash and are subject to an
insignificant risk of changes in value.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire; or it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. If the Group
neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at
the proceeds received net of direct issue costs.
The share capital account represents the amount subscribed for
shares at nominal value.
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits.
The share option reserve represents the fair value, calculated
at the date of grant, of options unexercised at the balance sheet
date.
The loan note equity reserve represents the fair value,
calculated at issuance of the loan notes.
Retained losses include all current and prior period results as
disclosed in the statement of comprehensive income.
Financial liabilities
Financial liabilities are recognised in the Group's balance
sheet when the Group becomes a party to the contractual provisions
of the instrument. All interest related charges are recognised as
an expense in finance cost in the income statement using the
effective interest rate method.
The Group's financial liabilities comprise trade and other
payables and borrowings.
Trade payables are recognised initially at their fair value and
subsequently measured at amortised cost less settlement
payments.
Borrowings represent convertible loans that are accounted for as
compound instruments. The fair value of the liability portion of
the convertible loan notes is determined using a market interest
rate for an equivalent non-convertible loan note. This amount is
recorded as a liability on an amortised cost basis until
extinguished on conversion or maturity of the loan notes. The
remainder of the proceeds is allocated to the conversion option,
which is recognised and included in shareholders' equity, net of
tax effects, and is not subsequently re-measured.
Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors' best estimate of the expenditure
required to settle the obligation at the balance sheet date, and
are discounted to present value where the effect is material.
Share-based payments
The Group has applied the requirements of IFRS 2 'Share-based
Payments'.
The Group issues equity-settled share based payments to certain
employees. Equity settled share based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date of the equity settled share based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest and adjusted for the
effect of non-market based vesting conditions.
Fair value is measured by use of the Black Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
4. Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the Group's accounting
policies
In the application of the Group's accounting policies, which are
described in note 3, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period; or in the period of the revision and future
periods if the revision affects both current and future
periods.
(i) Going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Company can continue in operational existence for the
foreseeable future. The Group had cash and cash equivalents of
GBP71,609 and net current liabilities of GBP89,288 as at 30 April
2017, and incurred a loss of GBP201,501 for the year then
ended.
The Directors have based their opinions on a cash flow forecast,
which assumes that sufficient revenue will be generated for working
capital purposes and that operating costs will be kept to a minimum
until adequate revenue streams are secured. In addition future
plans for the Group will be funded externally through a mix of debt
and equity financing, which at the time of signing the accounts had
not yet been completed. So whilst there are uncertainties, the
Directors continue to adopt the going concern basis in preparing
the financial statements. The financial statements do not include
the adjustments that would result if the Company was unable to
continue as a going concern.
(ii) Classification of investments as available for sale
Note 11 describes the investments in nine operating companies
where the Group's shareholdings exceed 20% as 'Available for Sale
Investments'. Based on the contractual agreements between the Group
and other investors, the Group does not have any power to appoint
or remove board of directors' members of the investees. Therefore,
the Directors of the Company concluded that the Group does not have
significant influence over these companies.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources
of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are set out below.
(i) Share options
In order to calculate the charge for share-options as required
by IFRS 2, the Group makes estimates principally relating to the
assumptions used in its Black-Scholes option pricing model as set
out in note 23.
(i) Impairment of goodwill
Determining whether goodwill is impaired required an estimation
of the value in use of the cash-generating units to which goodwill
has been allocated. The value in use calculation requires the
directors to estimate the future cash flows expected to arise from
the cash-generating unit and a suitable discount rate in order to
calculate present value. Where the future cash flows are less than
expected, a material impairment loss may arise.
5. Business segments
In accordance with IFRS 8, the Group is required to define its
operating segments based on the internal reports presented to its
Chief Operating decision maker in order to allocate resources and
assess performance. The Chief Operating decision maker is the Chief
Executive. There is only one continuing class of business, being
the investment in the natural resources sector.
Given that there is only one continuing class of business,
operating within the UK, no further segmental information has been
provided.
6. Loss for the year
Loss for the year from continuing operations has been arrived at
after charging:
2017 2016
GBP GBP
--------------------------------------- ------- -------
Operating lease expense in respect
of property 75,426 63,839
Employee costs - including share-based
compensation costs
(see note 7) 738,354 766,010
--------------------------------------- ------- -------
The analysis of auditors' remuneration is as follows:
2017 2016
GBP GBP
---------------------------------------- ------ ------
Fees payable to the Group's auditor
for the audit of the Group's annual
accounts 20,000 17,500
---------------------------------------- ------ ------
Other services pursuant to legislation:
- tax services 2,000 2,000
---------------------------------------- ------ ------
Total non-audit fees 2,000 2,000
---------------------------------------- ------ ------
7. Employee costs (including Directors)
2017 2016
GBP GBP
-------------------------------------------- ------- -------
Salaries and fees 733,672 752,091
Employee share option charge - 3,794
Employer's national insurance contributions 4,682 10,125
-------------------------------------------- ------- -------
738,354 766,010
-------------------------------------------- ------- -------
The average monthly number of employees (including Executive
Directors) employed by the Group during the year was 4, all of whom
were involved in management and administration activities
(2016:4).
Details of Directors' remuneration and gains on the exercise of
share options can be found in the section of the Directors'
Remuneration Report of the full Report & Accounts.
8. OTHER OPERATING EXPENSES
2017 2016
GBP GBP
-------------------------------------- ------- ------
Pre-planning project expenses written
off 236,164 79,590
236,164 79,590
-------------------------------------- ------- ------
9. Tax
2017 2016
GBP GBP
------------ ---- ----
Current tax - -
Deferred tax - -
------------ ---- ----
- -
------------ ---- ----
Corporation tax is calculated at 20% (2016: 20%) of the
estimated assessable loss for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the
respective jurisdictions. The charge for the year can be reconciled
to the profit per the statement of comprehensive income as
follows:
Tax reconciliation
2017 2016
GBP GBP
---------------------------------- --------- ---------
Loss before tax (201,501) (405,426)
---------------------------------- --------- ---------
Tax at UK corporation tax rate of
20% (2016: 20%) (40,300) (81,085)
Effects of:
Expenses not deductible for tax
purposes 8,161 10,650
Tax losses carried forward 32,139 70,435
---------------------------------- --------- ---------
Total tax charge - -
---------------------------------- --------- ---------
Deferred tax assets of approximately GBP494,000 (2016:
GBP458,000) have not been recognised as the Directors consider
there to be insufficient evidence that the assets will be
recovered.
10. Earnings per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
In order to calculate diluted loss per share, the weighted
average number of ordinary shares in issue was adjusted to assume
conversion of all dilutive potential ordinary shares according to
IAS 33. Dilutive potential ordinary shares include share options
granted to employees and Directors where the exercise price
(adjusted according to IAS 33) is less than the average market
price of the Company's ordinary shares during the year.
IAS 33 'Earnings per share' requires presentation of diluted
earnings per share when a company could be called upon to issue
shares that would decrease net profit or increase net loss per
share. Only options that are 'in the money' are treated as dilutive
and net loss per share would not be increased by the exercise of
such options.
2017 2016
Loss GBP GBP
---------------------------------------- ----------- -----------
Loss for the purposes of basic and
diluted earnings per share:
Continuing and total operations (201,501) (405,426)
---------------------------------------- ----------- -----------
Number of shares Number Number
---------------------------------------- ----------- -----------
Weighted average number of ordinary
shares for the purposes of basic
and diluted loss per share 691,428,935 602,254,768
---------------------------------------- ----------- -----------
Earnings per share - basic and diluted,
pence per share (0.03) (0.07)
---------------------------------------- ----------- -----------
11. Investments in subsidiaries
The Group holds the following investments in subsidiary
undertakings:
Percentage
of
Country of ordinary Principal
Subsidiary Incorporation shares held activity
------------------- --------------- ------------ ----------------
Plutus Energy England and 100% Management
Limited Wales services to
the electricity
generating
entities (Note
12)
Electricity
England and generation
LF Flexgen Limited Wales 100% (dormant)
Electricity
England and generation
KI Power Limited Wales 100% (dormant)
Electricity
England and generation
FC Powergen Limited Wales 100% (dormant)
Electricity
England and generation
NRS Power Limited Wales 100% (dormant)
Electricity
England and generation
GW Power Limited Wales 80% (dormant)
The carrying value of the investments in the Company is as
follows:
2017 2016
GBP GBP
---------------------------------- --------- ---------
At 1 May 1,085,000 485,000
Reclassification of investment in
Plutus Energy Limited 13,333 -
Purchase of investments - 600,000
---------------------------------- --------- ---------
At 30 April 1,098,333 1,085,000
---------------------------------- --------- ---------
12. Available for sale investments
Available for sale investments comprise investments in nine
operating entities. As explained in Note 4, these investments are
not equity accounted for as the Group does not meet the criteria
for exerting significant influence as set out in IAS 28.
All investments are classified as Level 3 under the IFRS 7 fair
value hierarchy as set out under Fair Value Measurements in the
full Report & Accounts.
2017 2016
Level 3 investments GBP GBP
---------------------------------- ---- ----
Brought forward 152 47
Purchase of investments (see note
below) - 105
---------------------------------- ---- ----
152 152
---------------------------------- ---- ----
The details of investments classified as available for sale are
as follows:
Percentage
of
Country of ordinary Principal
Investment Company Incorporation shares held activity
------------------- --------------- ------------ -----------
Attune Energy England and Electricity
Limited Wales 44.5% generation
Flexible Generation England and Electricity
Limited Wales 44.5% generation
Balance Power England and Electricity
Limited Wales 44.5% generation
Equivalence Energy England and Electricity
Limited Wales 44.5% generation
Precise Energy England and Electricity
Limited Wales 44.5% generation
Valence Power England and Electricity
Limited Wales 44.5% generation
Portman Power England and Electricity
Limited Wales 44.5% generation
Reliance Generation England and Electricity
Limited Wales 44.5% generation
England and Electricity
Selectgen Limited Wales 44.5% generation
13. Goodwill
2017 2016
GBP GBP
----------------------------------- --------- ---------
Brought forward 1,085,000 485,000
On issue of deferred consideration
shares (Note 18) - 600,000
----------------------------------- --------- ---------
Carried forward at 30 April 2017 1,085,000 1,085,000
----------------------------------- --------- ---------
Goodwill arises on acquisition of a 100% of the equity of Plutus
Energy Limited ("PEL").
The recoverable amount is determined based on value-in-use
calculations which uses cash flow projections based on financial
budgets approved by the Directors covering a five-year period, and
a discount rate of 12% per annum.
Cash flows beyond the five-year period are extrapolated using
the estimated growth rates of 10% which is based on the average
growth for 5 years covered by the projections. The Directors
believe that any reasonably possible change in key assumptions on
which recoverable amount is based would not cause the aggregate
carrying amount to exceed the aggregate recoverable amount of the
cash-generating unit.
The Directors have reviewed the carrying value of goodwill as at
30 April 2017 and consider that no impairment provision is
required.
The Directors continue to review goodwill on an on-going basis
and where necessary in future periods will request external
valuations to further support the valuation basis.
14. Trade and other receivables
Group Company
---------------- ----------------
2017 2016 2017 2016
GBP GBP GBP GBP
---------------------------- ------- ------- ------- -------
Trade receivables 28,339 - - -
Amounts due from subsidiary
undertakings - - 407,870 437,066
Expenses rechargeable
to operating entities 192,398 394,450 - -
Other receivables 24,633 4,600 24,633 4,600
Prepayments and accrued
income 23,368 18,930 23,368 18,930
---------------------------- ------- ------- ------- -------
268,738 417,980 455,871 457,929
---------------------------- ------- ------- ------- -------
The Directors consider the carrying amount of trade and other
receivables approximates to their fair value.
15. Cash and cash equivalents
Group Company
-------------- --------------
2017 2016 2017 2016
GBP GBP GBP GBP
-------------------------- ------ ------ ------ ------
Cash and cash equivalents 71,609 22,608 71,609 20,375
-------------------------- ------ ------ ------ ------
71,609 22,608 71,609 20,375
-------------------------- ------ ------ ------ ------
Cash and cash equivalents comprise cash held by the Group and
short-term bank deposits with an original maturity of three months
or less. The carrying amount of these assets approximates their
fair value.
16. Trade and other payables
Group Company
---------------- ----------------
2017 2016 2017 2016
GBP GBP GBP GBP
---------------------- ------- ------- ------- -------
Trade payables 135,524 82,665 56,341 74,959
Other payables 19,361 20,273 100 20,273
Accruals and deferred
income 74,750 63,350 74,750 63,350
---------------------- ------- ------- ------- -------
229,635 166,288 131,191 158,582
---------------------- ------- ------- ------- -------
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and on-going costs. The Directors
consider that the carrying amount of trade and other payables
approximates to their fair value. No trade payables were older than
90 days.
17. Borrowings
Group and Company
Convertible loans
On 22 December 2014, the Company issued GBP200,000 convertible
loan notes, repayable on 18 December 2016 if not converted into
shares prior to that date, and bearing interest at 8% p.a, payable
quarterly in arrears. In December 2016, the terms of the loan were
amended so that the loan notes are repayable on demand.
The net proceeds from the issue of the loan notes have been
split between the liability element and an equity component,
representing the fair value of the embedded option to convert the
liability into equity of the Company as follows:
The Directors estimate the fair value of the liability component
of the loan notes at 30 April 2017 to be approximately GBP200,000
(2016: GBP193,363). This fair value has been calculated by
discounting the future cash flows at the market rate of 8%.
2017 2016
GBP GBP
------------------------------------ -------- --------
Liability component brought forward 193,363 181,675
Interest charge for the period 22,637 27,688
Interest paid (16,000) (16,000)
------------------------------------ -------- --------
Liability component of convertible
loans at 30 April 2017 200,000 193,363
Other loans - -
------------------------------------ -------- --------
Total borrowings 193,363 193,363
------------------------------------ -------- --------
Current liabilities 200,000 16,000
Non-current liabilities - 177,363
------------------------------------ -------- --------
200,000 193,363
------------------------------------ -------- --------
18. Share capital
2017 2017 2016 2016
Number GBP Number GBP
---------------------- ----------- --------- ----------- ---------
Issued and fully paid
Ordinary shares of
GBP0.001 each 691,428,935 691,429 691,428,935 691,429
Deferred shares of
GBP0.049 each 16,439,210 805,521 16,439,210 805,521
---------------------- ----------- --------- ----------- ---------
Total 1,496,950 1,496,950
---------------------- ----------- --------- ----------- ---------
Share issues
Nominal
value
Ordinary shares Number GBP GBP
-------------------------- ----------- ------- -------
Issued shares on 30 April
2015 571,428,935 0.001 571,429
Issue of shares 120,000,000 0.001 120,000
-------------------------- ----------- ------- -------
Issued ordinary shares on
30 April 2016
and 30 April 2017 691,428,935 0.001 691,429
-------------------------- ----------- ------- -------
19. Share premium account
Share premium account GBP
------------------------------------------- ---------
Balance at 30 April 2015 6,334,076
Premium arising on issue of equity shares 660,000
Balance at 30 April 2016 and 30 April 2017 6,994,076
------------------------------------------- ---------
20. Share option and warrant reserve
GBP
--------------------------- -------
Balance at 30 April 2015 74,306
Share-based payment charge 35,070
--------------------------- -------
Balance at 30 April 2016 109,376
Share-based payment charge 31,276
--------------------------- -------
Balance at 30 April 2017 140,652
--------------------------- -------
21. loan note equity reserve
GBP
------------------------------------------- ------
Balance at 30 April 2016 and 30 April 2017 23,657
------------------------------------------- ------
22. GROUP Retained losses
GBP
-------------------------------- -----------
Balance at 30 April 2015 (7,050,194)
Comprehensive loss for the year (407,776)
Balance at 30 April 2016 (7,457,970)
Comprehensive loss for the year (201,501)
-------------------------------- -----------
Balance at 30 April 2017 (7,659,471)
-------------------------------- -----------
23. Share options and warrants
Options
On 8 March 2013, options over, in aggregate, 14,310,000 ordinary
shares of 0.1 pence were granted to the Directors of the Company.
Each option carries the right to subscribe to one new Ordinary
Share in the capital of the Company at a price of 0.675p per
Ordinary Share, being the closing mid-market price of the Company's
ordinary shares on 8 March 2013. These options vest over a period
of three years from the date of the Grant, with a third of the
options vesting on the first, second and third anniversaries of the
Grant respectively. These options are exercisable for a period of
ten years from the date of the Grant subject to the vesting
conditions.
The fair value of the options was calculated using the
Black-Scholes model and the Group recognised total expenses of
GBPnil (2016: GBP3,794) related to the grant of these options
during the year. The inputs to the Black-Scholes model were as
follows:
Grant date share price 0.675p
Exercise share price 0.675p
Risk free rate 2.5%
Expected volatility 50%
Option life 10 years
Calculated fair value per share 0.420p
The table below summarises the share options extant during the
year:
Number
Number of
of options Issued Lapsed options Exercisable
at 30 in Exercised in at at 30
April the in the the 30 April April Exercise Expiry
2016 year year year 2017 2017 price date
----------- ------ --------- ------ --------- ----------- -------- ---------
9,540,000 - - - 9,540,000 9,540,000 0.675p 8.03.2023
----------- ------ --------- ------ --------- ----------- -------- ---------
Warrants
On 22 August 2014, warrants over, in aggregate, 40,000,000
ordinary shares of 0.1 pence each ("Director Warrants") were issued
to James Longley and Charles Tatnall, directors of the Company.
Each warrant carries the right to subscribe for one new Ordinary
Share in the capital of the Company at a price of 0.9p per Ordinary
at any time prior to 22 August 2016.
On 28 May 2015, warrants over, in aggregate, 30,075,207 ordinary
shares of 0.1 pence each ("Rockpool Warrants") were issued to
Rockpool LLP, an advisor to the Company. Each warrant carries the
right to subscribe for one new Ordinary Share in the capital of the
Company at a price of 1.15p per ordinary share at any time between
27 May 2018 and 27 May 2021.
The fair value of the warrants was calculated using the
Black-Scholes model and the Group recognised total expenses of
GBP31,276 (2016: GBP31,726) in relation to the issue of the
Rockpool warrants during the year. The inputs to the Black-Scholes
model were as follows:
Rockpool Director
Warrants Warrants
Grant date share
price 0.8p 0.6p
Exercise share
price 1.15p 0.9p
Risk free rate 2% 2%
Expected volatility 50% 50%
Life of warrant 6 years 2 years
Calculated fair
value per share 0.312p 0.095p
The table below summarises the share warrants extant during the
year:
Number Number
of of
warrants Issued Lapsed warrants Exercisable
at in Exercised in at at 30
30 April the in the the 30 April April Exercise Vesting Expiry
2016 year year year 2017 2017 price date date
---------- ------ --------- ------ ---------- ----------- -------- ---------- ----------
20,000,000 - - - 20,000,000 20,000,000 0.9p 22.08.2014 27.08.2017
30,075,207 - - - 30,075,207 - 1.15p 27.05.2018 27.05.2021
---------- ------ --------- ------ ---------- ----------- -------- ---------- ----------
50,075,207 - - - 50,075,207 20,000,000
---------- ------ --------- ------ ---------- ----------- -------- ---------- ----------
24. Financial instruments
Categories of financial instruments
Carrying value
----------------
2017 2016
GBP GBP
------------------------------------ ------- -------
Group Financial assets
Investments designated as available
for sale on initial recognition 152 152
Trade receivables 28,339 -
Cash and cash equivalents 71,609 22,608
------------------------------------ ------- -------
100,100 22,760
------------------------------------ ------- -------
Financial liabilities at amortised
cost:
Convertible unsecured loan notes 200,000 193,363
Trade and other payables 154,885 102,938
------------------------------------ ------- -------
354,885 296,301
------------------------------------ ------- -------
25. Risk management objectives and policies
The Group's finance function monitors and manages the financial
risks relating to the operations of the Group. These risks include
credit risk, liquidity risk and cash flow interest rate risk.
The Group seeks to minimise the effects of these risks, in
accordance with the Group's policies approved by the Board of
Directors, which provide written principles on interest rate risk,
credit risk and the investment of excess liquidity. The Group does
not enter into or trade financial instruments, including derivative
financial instruments, for any purpose.
Capital risk management
The Group's objectives when managing capital are:
-- to safeguard the Group's ability to continue as a going
concern, so that it continues to provide returns and benefits for
shareholders;
-- to support the Group's growth; and
-- to provide capital for the purpose of strengthening the Group's risk management capability.
The Group actively and regularly reviews and manages its capital
structure to ensure an optimal capital structure and equity holder
returns, taking into consideration the future capital requirements
of the Group and capital efficiency, prevailing and projected
profitability, projected operating cash flows, projected capital
expenditures and projected strategic investment opportunities. The
capital structure consists of capital and reserves and convertible
loan notes, for capital management purposes.
Interest rate risk
The Group's exposure to interest rate risk is limited to the
interest payable on the convertible unsecured loan notes, which are
at fixed rates of interest.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group.
The Group's principal financial assets are bank balances and
cash and other receivables.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings assigned by
international credit rating agencies.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the Board of Directors. The Group manages liquidity risk by
maintaining adequate reserves and banking facilities by
continuously monitoring forecast and actual cash flows and matching
the maturity profiles of financial assets and liabilities.
26. Notes to the cash flow statement
Group Company
-------------------- -------------------
2017 2016 2017 2016
GBP GBP GBP GBP
------------------------- --------- --------- -------- ---------
(Loss)/profit before
tax (201,501) (407,776) 35,987 (389,426)
Share-based compensation
charge 31,276 35,070 31,276 35,070
Loan note interest
charge 22,637 27,688 22,637 27,688
Operating cash flow
before movements
in working capital (147,588) (345,018) 89,900 (326,668)
Decrease/(increase)
in receivables 149,242 (139,973) (24,471) 103,637
Increase/(decrease)
in payables 63,347 21,886 (27,391) 19,545
------------------------- --------- --------- -------- ---------
Net cash generated
by/(used in) operating
activities 65,001 (463,105) 38,038 (203,486)
------------------------- --------- --------- -------- ---------
Cash and cash equivalents (which are presented as a single class
of assets on the face of the balance sheet) comprise cash at bank
and other short-term highly liquid investments with a maturity of
three months or less.
27. Operating lease arrangements
The Group and Company as lessee
2017 2016
GBP GBP
--------------------------------------- ------ ------
Minimum lease payments under operating
leases recognised
as an expense in the year 58,000 41,400
--------------------------------------- ------ ------
Minimum future lease payments under non-cancellable operating
lease agreements:
2017 2016
GBP GBP
------------------ ------ ------
Due within 1 year 47,700 55,200
------------------ ------ ------
28. Related party transactions
During the year ended 30 April 2017 GBP145,500 fees were paid to
Tatbels Limited and in 2016 fees of GBP116,750 were paid to Yum
Management Limited in respect of Charles Tatnall's services as
Executive Chairman.
During the year ended 30 April 2017, fees of GBP145,500 (2016:
GBP116,750) were paid to Dearden Chapman Accountants Limited in
respect of James Longley's services as Chief Financial Officer.
During the year ended 30 April 2017, fees of GBP231,125 (2016:
GBP158,167) were paid to PPT Capital Limited in respect of services
rendered by Phil Stephens and Paul Lazarevic. Phil Stephens and
Paul Lazarevic were both directors and shareholders of PPT Capital
Ltd during the year. Also, fees of GBP72,375 (2016: GBP45,000) were
paid to Helvic Limited, GBP26,500 (2016: GBPnil) to Ennerco
Limited, and GBP12,000 to Catmadboo Limited, in respect of services
rendered by Paul Lazarevic and Phil Stephens, and of which either
Paul Lazarevic, Phil Stephens or a connected party to the two were
the Directors and major shareholders or those three companies.
During the year ended 30 April 2017 fees of GBP13,133 were paid
to Kinloch Corporate Finance Limited in respect of Tim Cottier's
services as an independent non-executive director and of which Tim
Cottier was a director and major shareholder.
Remuneration of key management personnel
The remuneration of the Directors, who are the key management
personnel of the Group, is set out below in aggregate for each of
the categories specified in IAS 24 Related Party Disclosures.
Further information about the remuneration of individual Directors
is provided in the Directors' Remuneration Report on page 15 of the
full Report & Accounts.
2017 2016
GBP GBP
----------------------------- ------- -------
Short-term employee benefits 738,354 766,010
----------------------------- ------- -------
738,354 766,010
----------------------------- ------- -------
In addition to the information disclosed in Note 23, movement on
warrants held by the Directors is as follows:
Charles
James Longley Tatnall
Exercise Vesting Number Number
price date of warrants of warrants
------------------- -------- ---------- ------------- ------------
At 30 April 2015 0.9 27.08.2017 20,000,000 20,000,000
Exercised during
the year 0.9 27.08.2017 (10,000,000) (10,000,000)
------------------- -------- ---------- ------------- ------------
At 30 April 2016
and 30 April 2017 0.9 27.08.2017 10,000,000 10,000,000
------------------- -------- ---------- ------------- ------------
On 1 February 2016, 10,000,000 shares were issued at 0.9p per
share to each of Charles Tatnall and James Longley on the exercise
of warrants. The aggregate of the amount of gains made by each
director on the exercise of warrants is GBP20,000.
29. Events after the year end
Exercise of warrants
On 19 May 2017 10,000,000 Ordinary Shares have been issued to
Charles Tatnall, Executive Director, and a further 10,000,000
Ordinary Shares have been issued to James Longley, Chief Financial
Officer, following the exercise of an aggregate of 20 million
warrants at an exercise price of 0.9p per ordinary share,
representing a cash subscription to the Company of GBP180,000.
New Share Option Incentive scheme
On 18 May 2017, the Company adopted a new share option scheme
(the "2017 Share Option Scheme"). On the same day, the Company
granted an aggregate of 60,000,000 share options with an exercise
price of 1.485p (representing a 7.6% premium to the mid-market
closing price on 18 May of the Ordinary Shares of the Company)
pursuant to the 2017 Share Option Scheme, all vesting in three
equal annual instalments (the "Options"). 15,000,000 Options were
granted to each of Paul Lazarevic, James Longley, Phil Stephens and
Charles Tatnall.
Charles Tatnall and James Longley hold 4,770,000 existing share
options each which were awarded prior to the Reverse Acquisition.
All of the Directors have indicated that they will not sell any
shares that they hold for at least the next eighteen months.
Following the issue of options and exercise of warrants, there
are a total of 69,540,000 options in the Company outstanding,
representing approximately 9.8% of the Company's issued share
capital.
Director Dealings
Following the warrant exercise, the interests of the Directors
in the issued share capital of the Company before and after the
issue of the New Ordinary Shares is as follows:
Existing Percentage
interest Total interest interest
in ordinary in ordinary in the issued
shares Number of shares ordinary
of 0.1p New Ordinary of 0.1p share capital
Name each Shares each of the Company
---------------- ------------- -------------- --------------- ----------------
Philip
Stephens 88,012,823 - 88,012,823 12.37%
Paul Lazerevic 82,203,379 - 82,203,379 11.55%
Charles
Tatnall 65,500,000 10,000,000 75,500,000 10.61%
James
Longley 57,500,000 10,000,000 67,500,000 9.49%
**ENDS**
For further information, please visit www.plutuspowergen.com, or
contact:
Charles Tatnall Plutus PowerGen Plc Tel: +44 (0) 20
3705 8350
Phil Stephens Plutus PowerGen Plc Tel: +44 (0) 20
3705 8352
Andrew Craig Cantor Fitzgerald Tel: +44 (0) 20
Europe 7894 7000
Richard Salmond Cantor Fitzgerald Tel: +44 (0) 20
Europe 7894 7000
Isabel de St Brides Partners Tel: +44 (0) 20
Salis Limited 7236 1177
Olivia Vita St Brides Partners Tel: +44 (0) 20
Limited 7236 1177
Notes to Editors
Plutus PowerGen Plc is an AIM listed company focused on the
development, construction and operation of flexible stand-by power
generation sites in the UK. At present, the market dynamics for
flexible power generation are positive due to the continued
downward pressure on capacity available to National Grid to balance
supply and demand, leading to their announcements about possible
power shortages over the next few years. Flexible power generators
such as PPG offer a viable and timely solution to the power
capacity shortfall in the UK.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKNDDFBKDCCD
(END) Dow Jones Newswires
September 14, 2017 02:00 ET (06:00 GMT)
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