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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| React Energy | LSE:REAC | London | Ordinary Share | IE00BH3XCL94 | ORD EUR0.1 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 7.125 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMREAC
RNS Number : 6171T
React Energy PLC
31 March 2016
31 March 2016
REACT Energy plc
("REACT", "Company" or the "Group")
Interim results
for the six months ended 31 December 2015
REACT Energy plc (AIM:REAC), the energy infrastructure developer and operator which focuses on the production of clean energy in the UK and Ireland, announces its unaudited interim results for the six months ended 31 December 2015.
Highlights
-- Successful exit from Examinership after the Scheme of Arrangement with creditors, loan notes holders and contingent guarantee creditors was approved by the High Court in July 2015
-- Newry Biomass Limited ("NBL"), a 50.01% subsidiary of the Company, entered into an agreement with EBIOSS Energy AD ("EBIOSS") to purchase its gasification power Plant equipment to repower the Newry biomass gasification project ("Newry Project")
-- Equipment purchased from EBIOSS will form part of an Engineer, Procure and Construct ("EPC") contract to be signed between NBL and EQTEC Iberia ("EQTEC"), a subsidiary of EBIOSS, in respect of the Newry Project
-- NBL applied and received confirmation from Ofgem that they have been granted an extension to 31 March 2018 for the ROCs registration of the Newry Project
Financial Summary
-- Group revenue of EUR0.13 million (H1 2014: EUR0.15 million) -- Administrative costs of EUR0.25 million (H1 2014: EUR0.61 million)
-- Loss for the period from continuing operations of EUR0.4 million (H1 2014: Loss for period EUR1.3 million)
-- Entered into a GBP1,000,000 secured loan facility ("SLF") with EcoFinance GLI Limited ("EcoFinance") to fund on-going working capital requirements including the continued development of its project pipeline
-- Refinanced Altair Group Investment Limited's ("Altair") existing secured debt, comprising a 9% secured loan note of GBP1.5 million and the Examinership financing facility of EUR500,000, with a new two year 7.5% GBP2.0 million convertible secured loan note ("CSLN") with Altair
-- As part of the Examinership, liabilities reduced by EUR5.7 million following a debt for equity swap resulting in the issue of, in aggregate, 37,470,972 ordinary shares
Post-period end events
-- Secured a EUR750,000 loan facility from EBIOSS (the "EBIOSS Facility"), for continuing investment in its portfolio of biomass gasification projects in the UK. Subsequently amended so that the proceeds from the second tranche, amounting to, in aggregate, EUR250,000, can now be drawn down for working capital needs of the Company as well as for project development costs. To date EUR400,000 has been drawn down
-- React has granted EQTEC exclusivity to provide gasification technology as part of EPC contracts for its biomass gasification project pipeline in the UK
The Chairman and Chief Executive's Statement and the unaudited interim results for the six months ended 31 December 2015, which are contained below and form part of this announcement, include further important information and disclosures. The announcement should be read in its entirety.
- Ends -
For further information:
REACT Energy plc Gerry Madden / Brendan Halpin +353 (0)21 2409 056 Strand Hanson Limited - Nomad & Broker James Harris / Richard Tulloch / Ritchie Balmer +44 (0)20 7409 3494
About REACT:
REACT Energy plc is committed to operating clean electricity and heat generation plants in the UK and Ireland. The Company seeks to identify, build, own and operate renewable projects and possesses significant knowledge of energy markets, clean technologies, fuel sources, project development, project finance and project delivery. REACT currently has an interest in four operational clean energy plants generating revenue from the sale of electricity and heat. The generation of clean electricity and heat from sustainable sources has the potential to address the key energy challenges of energy security and carbon commitment and provide strong returns on capital employed.
The Company is quoted on AIM and trades as REAC. Further information on the Company can be found at www.reactenergyplc.com.
Chairman's and Chief Executive's Report
The Group's objectives during the period were very clear:
-- Obtain Court approval for a Scheme of Arrangement and complete the Examinership process; -- Complete the financing facility with EcoFinance; -- Restore trading in the Company's shares on AIM; and -- Select a commercially viable gasification technology for the Newry Project.
Having achieved these objectives the Group's business strategy remains one of focusing the Group's resources on delivering projects to financial closure and managing the implementation and operation of those projects. The intention is to retain a long-term income stream linked to profits generated by projects in addition to receiving a development fee from third parties in exchange for project equity. The Group has projects at various stages of development, and, subject to funding, will look to bring them into operation.
EXAMINERSHIP
On 27 July 2015, the Group announced the restoration of its shares to trading on AIM following the successful exit of the Company from an examinership process (the procedure under Irish Law introduced to provide a mechanism for the rescue and return to health of ailing, but potentially viable, companies) (the "Examinership"). As part of the Examinership process the Company:
-- Reduced liabilities by EUR5.7 million through a debt for equity swap resulting in the issue of, in aggregate, 37,470,972 ordinary shares to relevant creditors;
-- Raised GBP1.0 million (before expenses) by way of the SLF with EcoFinance. The SLF, to be utilised for corporate development and general working capital purposes, is for a term of five years at a 15% per annum fixed rate of interest, payable monthly in arrears;
-- Refinanced Altair's existing secured debt, comprising a 9% secured loan note of GBP1.5 million and the Examinership financing facility of EUR500,000, with a new two year 7.5% GBP2.0 million CSLN with Altair; and
-- Issued, in aggregate, 38,450,000 warrants to certain parties related to EcoFinance and Altair, which are exercisable at a price of 10 pence per share.
Further details on the Examinesrhip are set out in the Company's Annual Report and Accounts for the year ended 30 June 2015 and in the circular to shareholders dated 22 September 2015.
STRATEGY AND PROSPECTS
The Group is a renewable energy project developer and operator. The Group seeks to take projects from "Greenfield" (greenfield land) stage to "Shovel Ready" stage (projects where planning and development is advanced enough that, given sufficient funding, construction can begin within a very short time frame) with turnkey construction contracts and financial packages in place. Debt and equity partners are sought to fund the construction phase in return for a share of the project equity.
The political and regulatory environment within the UK has continued to be challenging, with a lack of direction and continued changes to the long term support mechanisms available for renewable energy projects developed under the Electricity Market Review (EMR), with the recent introduction of Contracts for Difference (CfD) in place of the Renewables Obligation Certificate (ROC) regime.
The Group welcomes the recent announcement made in the recent UK budget, 16 March 2016, the key relevant points of which are:
-- The UK Government has confirmed that, in aggregate, GBP730 million, for the 15 year contracts of support, has been allocated to the next set of CfD auctions to be held this Parliament.
- The technologies covered by this support are offshore and other less established technologies (including Advanced Conversion Technologies which the Group is in the process of deploying).
-- GBP290 million, for the 15 year contracts of support, will be made available for this year's CfD round, expected to be in late 2016.
Current Portfolio
The Group's business is broken down into Biomass Combined Heat and Power (CHP) projects in the UK, Biomass Heat Projects in the UK and Wind Turbine projects in Ireland.
Biomass Combined Heat and Power (CHP)
Newry
NBL, a 50.01% subsidiary of the Company, which owns the Newry Project, has entered into an agreement with Spanish MAB-listed EBIOSS to purchase its EQTEC Integrated Biomass Gasification Power Plant, with a power output of 4MW, which NBL will use in the repowering of the Newry biomass gasification project.
The gasification equipment purchased from EBIOSS will cost EUR4.963 million, fully payable in cash. It has been contractually agreed between NBL and EBIOSS that the equipment purchased will form part of an EPC contract to be signed between EQTEC Iberia, a subsidiary company of EBIOSS or a company designated by EQTEC Iberia, and NBL. The equipment has been delivered and is currently on site in Newry. The credit terms obtained under the purchase and sale agreement with EBIOSS provide for full payment by NBL not later than 30 June 2016. The Company and NBL are currently in discussions with a number of parties with regards to securing the necessary financing to repower the Newry Project and it is the intention to reach a conclusion on such discussions before the end of Q2 2016.
Once financial close on repowering the Newry Project is achieved, the Company expects that the plant will be able to again export electricity to the grid within 15 months.
NBL applied and received confirmation from Ofgem that they have granted an extension to 31 March 2018 for the ROCs registration of the Newry Project, at which point the Newry Project will need to have been repowered and commissioned.
Clay Cross
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In Derbyshire, the Group, together with its partner Larkfleet Energy, is seeking approval to construct and operate a 12MW biomass conversion power plant. The planning and permit application have been made. A decision on planning is expected by mid-2016.
Biomass Heat
The Company owns 30% of a special purpose vehicle ("SPV") set up with Equitix ESI Finance Limited ("Equitix") and receives development and on-going management fees from it. The SPV currently operates three biomass heat projects.
RHI (Renewable Heat Incentive) is the primary incentive scheme in operation for these projects. The digression in RHI tariffs for boilers below 200kw range is impeding progress on projects within our pipeline and represents a continuing challenge to completion of project financing.
Wind Electricity Generation
In Ireland, the Group is currently operating a cash generating 800kW wind turbine in Pluckanes, County Cork. This project, which has a 15 year power purchase agreement with Viridian Energy Limited, was part financed by AIB Bank plc with the turbine supplied by Enercon. The project has exceeded management expectations since commissioning and continues to perform well.
It is the Group's intention to finance a number of small-scale projects together, thereby creating a small-scale wind portfolio. The Group is also working on creating a master supply agreement with a turbine manufacturer arising from wind measurement and site analysis. Altilow and Moneygorm will be the first of such portfolios into which further projects can be added.
The Altilow 500kW wind turbine project in County Donegal has applied and received confirmation of REFIT2 (Renewable Energy Feed in Tariff 2 in Ireland) support. The Moneygorm 500kW wind turbine project in County Cork, applied for REFIT2 support before the December 2015 deadline and we are awaiting confirmation that it has been accepted. On receipt of the confirmation, the Company will be seeking to advance these projects subject to securing the necessary funding.
The Irish Government is developing a new support scheme for renewable electricity to be available from 2016. We await publication and approval of this scheme for the other consented single wind turbine projects in our pipeline.
Financial Position
Key financial highlights
Income statement
Hot Features
Premium
6 Months 6 Months
2015 2014
EUR'000 EUR'000
Revenue from operating
projects 131 154
Cost of sales - (10)
Administrative expenses (251) (611)
Foreign currency (losses)/gains 3 (100)
Impairment of project
costs - (536)
Net finance costs (294) (198)
--------- ---------
Loss for the six month
period before tax from
continuing operations (411) (1,301)
========= =========
Analysis of debt position
As at 31 As at 30
December June 2015
2015
EUR'000s EUR'000s
Non-current liabilities
EcoFinance 15% SLF 1,357 -
Altair 7.5% CSLN 2,810 -
Senior bank loan in respect
of wind turbine* 1,073 1,116
BES Shares 105 105
---------- -----------
Total non-current liabilities 5,345 1,221
---------- -----------
Current liabilities
Trade and other payables re
EBIOSS equipment 4,964 -
Other Trade and other payables
including professional fees 325 344
Trade and other payables cleared
on Examinership - 3,954
Trade and other payables - Examinership
and related fees - 143
Senior bank loan in respect
of wind turbine 50 15
FBD 5% CLN - 1,742
Altair 9% SLN - 2,298
9% Loan Note - 352
12% Loan Note - 100
15% Shareholders' loan - 173
---------- -----------
Total current liabilities 5,339 10,342
---------- -----------
* The proportion of the senior bank loan in respect of the wind turbine not due for repayment within one year, has been included in non-current liabilities.
The debt analysis at 31 December 2015 shows the results of its restructuring agreed as part of the Examinership Scheme of Arrangement.
The increase in trade payables is represented by gasification equipment purchased from EBIOSS to repower the Newry Project.
Following the period end, REACT secured the EUR750,000 EBIOSS Facility to fund the development costs associated with the Company's identified biomass gasification projects in the UK in January 2016. The parties subsequently agreed that the proceeds from the second tranche, amounting to, in aggregate, EUR250,000, could be used for the working capital needs of the Company as well as for project development costs, at the sole discretion of the Company. To date the Company has drawn down EUR400,000 and accordingly, a further EUR350,000 is available pursuant to the EBIOSS Facility, of which EUR100,000 can be used at the sole discretion of the Company and EUR250,000 can be used for project development costs, and the parties have agreed that all subsequent drawdowns will be made as and when required to minimise finance costs.
The Directors believe that the EBIOSS Facility will provide the Company with adequate resources in the short term as it seeks to secure the necessary financing for the repowering of the Group's principal asset, the Newry Project, which is required to be finalised before the end of June 2016 in accordance with the agreement entered into between NBL and EBIOSS. Discussions are ongoing in this regard and to securing additional working capital and we will keep shareholders updated on future developments.
Outlook
The immediate focus of the Group is on securing the necessary financing required to repower the Newry Project and discussions are ongoing in this regard.
The Group will also seek to continue to develop and review its project pipeline, the development of which will be dependent on, inter alia, government support for such schemes and the availability of funding. In this regard the Company will continue to monitor government policies relating to subsidies to the renewables sector, and seek to maintain its existing strong relationships with its funding partners to assist in its development programme. In addition, the Group is focused on utilising EQTEC's proven commercial gasification technology as part of the EPC contracts for its biomass and waste to energy project pipeline in the UK.
Dermot O'Connell Gerry Madden Chairman Chief Executive
REACT Energy plc
Unaudited Condensed Consolidated Income Statement
for the six months ended 31 December 2015
6 months ended 6 months
ended
Notes 31 Dec 2015 31 Dec 2014
Continuing operations: EUR EUR
Revenue 6 131,031 153,985
Cost of sales - (9,772)
--------------- ------------
Gross profit 131,031 144,213
Operating expenses
Administrative expenses (251,257) (610,648)
Impairment of property,
plant and equipment - (506,390)
Impairment of financial
assets - (29,806)
Gains/(Losses) on foreign
exchange 2,533 (100,275)
--------------- ------------
Operating (loss) (117,693) (1,102,906)
Finance costs (294,105) (198,030)
Finance income 4 -
Loss before taxation 6 (411,794) (1,300,936)
Income tax expense 7 - -
--------------- ------------
Loss for the period from
continuing operations (411,794) (1,300,936)
--------------- ------------
Discontinued operations
Profit for the period
from discontinued operations - 120,761
Profit recognised on
de-recognition of subsidiaries - 5,307,258
--------------- ------------
Profit for the period
from discontinued operations - 5,428,019
--------------- ------------
(Loss)/Profit for the
period (411,794) 4,127,083
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=============== ============
(Loss)/Profit attributable
to:
Owners of the Company (410,718) 4,127,083
Non-controlling interest (1,076) -
--------------- ------------
(411,794) 4,127,083
=============== ============
6 months 6 months
ended ended
31 Dec 2015 31 Dec 2014
EUR per EUR per
share share
Basic earnings/(loss)
per share:
From continuing and discontinued
operations 8 (0.006) 0.135
============ ============
From continuing operations 8 (0.006) (0.042)
============ ============
Diluted earnings/(loss)
per share:
From continuing and discontinued
operations 8 (0.006) 0.135
============ ============
From continuing operations 8 (0.006) (0.042)
============ ============
REACT Energy plc
Unaudited Condensed Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2015
6 months 6 months
ended ended
31 Dec 2015 31 Dec 2014
EUR EUR
(Loss)/Profit for the
period (411,794) 4,127,083
Other comprehensive
income and expense
Exchange differences
arising on retranslation
of foreign operations (25,032) (240,147)
------------ ------------
Total comprehensive
income and expense
for the period (436,826) 3,886,936
============ ============
Attributable to:
Owners of the company (332,774) 3,886,936
Non-controlling interests (104,052) -
------------ ------------
(436,826) 3,886,936
============ ============
REACT Energy plc
Unaudited Condensed Consolidated Statement of Financial Position
As at 31 December 2015
As at As at
Notes 31 Dec 30 June
2015 2015
ASSETS EUR EUR
Non-current assets
Property, plant and equipment 10 11,923,051 7,201,844
Financial assets 9 - -
------------- --------------
Total non-current assets 11,923,051 7,201,844
------------- --------------
Current assets
Amounts due from customers
under construction contracts 150,847 150,847
Trade and other receivables 712,488 141,799
Cash and cash equivalents 421,446 211,346
------------- --------------
Total current assets 1,284,781 503,992
------------- --------------
Total assets 13,207,832 7,705,836
============= ==============
EQUITY AND LIABILITIES
Equity
Share capital 11 17,453,246 13,006,149
Share premium 21,863,190 20,713,637
Retained earnings - deficit (39,144,223) (38,811,449)
------------- --------------
Total equity/(deficit) attributable
to equity holders of the parent 172,213 (5,091,663)
Non-controlling interests 2,351,515 2,455,567
------------- --------------
2,523,728 (2,636,096)
Non-current liabilities
Borrowings 12 4,271,481 -
------------- --------------
Total non-current liabilities 4,271,481 -
------------- --------------
Current liabilities
Trade and other payables 13 5,288,619 4,440,615
Borrowings 12 1,124,004 5,901,317
------------- --------------
Total current liabilities 6,412,623 10,341,932
------------- --------------
Total equity and liabilities 13,207,832 7,705,836
============= ==============
REACT Energy plc
Unaudited Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 December 2015 and the six months ended 31 December 2014
Attributable
to equity
Retained holders of Non-controlling
Share capital Share premium earnings the parent interests Total
EUR EUR EUR EUR EUR EUR
Balance at 1 July
2014 13,006,149 20,713,637 (43,404,358) (9,684,572) - (9,684,572)
Profit for the
financial
period - - 4,127,083 4,127,083 - 4,127,083
Unrealised foreign
exchange loss - - (240,147) (240,147) - (240,147)
-------------- -------------- ------------- ------------- ---------------- ------------
Balance at 31 December
2014 13,006,149 20,713,637 (39,517,422) (5,797,636) - (5,797,636)
============== ============== ============= ============= ================ ============
Balance at 1 July
2015 13,006,149 20,713,637 (38,811,449) (5,091,663) 2,455,567 (2,636,096)
Conversion of debt
into equity under
examinership
settlement 3,747,097 1,977,634 - 5,724,731 - 5,724,731
Issue of equity under
rights of equity
kicker 700,000 (700,000) - - - -
Share issue costs - (128,081) - (128,081) - (128,081)
Loss for the financial
period - - (410,718) (410,718) (1,076) (411,794)
Unrealised foreign
exchange (loss)/gain - - 77,944 77,944 (102,976) (25,032)
-------------- -------------- ------------- ------------- ---------------- ------------
Balance at 31 December
2015 17,453,246 21,863,190 (39,144,223) 172,213 2,351,515 2,523,728
============== ============== ============= ============= ================ ============
REACT Energy plc
Unaudited Condensed Consolidated Statement of Cash Flows
for the six months ended 31 December 2015
Notes 6 months 6 months
ended ended
31 Dec 31 Dec
2015 2014
Cash flows from operating activities EUR EUR
(Loss)/Profit before taxation (411,794) 4,127,083
Adjustments for:
Depreciation of property, plant
and equipment 36,401 42,262
Impairment of property, plant
and equipment - 506,390
Impairment of financial assets - 29,806
Impairment of amounts due from
customers under construction
contracts - 6,301
Profit on disposal of property,
plant and equipment - (10,601)
Gain recognised on de-recognition
of subsidiaries on liquidation - (5,307,258)
Unrealised foreign exchange
gain (629,453) (166,140)
Share of losses of jointly controlled
entities after tax - -
Interest expense 294,105 198,030
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Interest income (4) -
---------- ------------
Operating cash flows before
working capital changes (710,745) (574,127)
Decrease/(increase) in:
Amounts due from customers under
construction contracts - (35,487)
Trade and other receivables 24,283 (4,932)
(Decrease)/increase in:
Amounts due to customers under
construction contracts - (129,197)
Trade and other payables 176,426 683,711
---------- ------------
(510,036) (60,032)
Income taxes paid (2) -
---------- ------------
Net cash used in operating activities (510,038) (60,032)
---------- ------------
Cash flows from investing activities
Payments for property, plant
and equipment (40,274) (592,855)
Proceeds from sale of property,
plant and equipment - 282,699
Net cash inflow on de-recognition
of subsidiaries on liquidation - 165,991
Interest income received 4 -
---------- ------------
Net cash used in investing activities (40,270) (144,165)
---------- ------------
Cash flows from financing activities
Proceeds from borrowings 1,526,631 -
Repayments of borrowings (7,500) (11,250)
Payments for share issue costs (128,081) -
Payment for loan issue costs (521,133) -
Interest paid (109,758) (52,609)
---------- ------------
Net cash from/(used in) financing
activities 760,159 (63,859)
---------- ------------
Net increase/(decrease) in cash
and cash equivalents 209,851 (268,056)
Cash and cash equivalents at
the beginning of the financial
period 211,341 567,511
---------- ------------
Cash and cash equivalents at
the end of the financial period 421,192 299,455
========== ============
REACT Energy plc
Notes to the Unaudited Condensed Consolidated Financial Statements
for the six months ended 31 December 2015
1. GENERAL INFORMATION
REACT Energy plc ("the Company") was incorporated in Ireland on 2 October 2008. The address of its registered office and principal place of business is Building 1000, City Gate, Mahon, Cork, Ireland. The Company's shares are quoted on the AIM market of the London Stock Exchange plc.
The principal activity of the Company and its subsidiaries (together the "Group") is to identify, develop, build, own and operate renewable energy electricity and heat generating power plants in the UK and Ireland. The Group focuses on both large and small scale projects, providing flexibility to maximise existing land positions while diversifying development and technology risks.
2. BASIS OF PREPARATION
The interim condensed consolidated financial statements are for the six months ended 31 December 2015 and are presented in Euro, which is the functional currency of the parent company. They have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting. They do not include all the information and disclosures required in the annual financial statements in accordance with International Financial Reporting Standards (IFRSs), and should be read in conjunction with the Group's annual financial statements for the year ended 30 June 2015.
The Group incurred a loss on continuing operations of EUR411,794 (6 months ended 31 December 2014: EUR1,300,936) during the period ended 31 December 2015, and it had net current liabilities of EUR5,127,842 (30 June 2015: EUR9,837,940) and net assets of EUR2,523,728 (30 June 2015: net liabilities of EUR2,636,096) at 31 December 2015.
On 8 January 2016 REACT announced that it had secured a EUR750,000 loan facility (the "Facility") from EBIOSS Energy AD ("EBIOSS"). The terms of the Facility stated that the Company would use the proceeds solely to fund the development costs associated with the Company's identified biomass gasification projects in the UK and to date the Company has drawn down EUR250,000. However, the parties to the Facility agreed to amend the terms of the Facility in March 2016 such that the proceeds from the second tranche, amounting to, in aggregate, EUR250,000, to be drawn down by the Company can now be used for the working capital needs of the Company as well as for project development costs, at the sole discretion of the Company.
The Directors believe that the Facility will provide the Company with adequate resources in the short term as it seeks to secure the necessary funding for the repowering of the Group's principal asset, the Newry Project, which is required to be finalised before the end of June 2016 in accordance with the agreement entered into between NBL and EBIOSS.
The Directors have given careful consideration to the appropriateness of the going concern basis in the preparation of the interim financial statements. The validity of the going concern basis is dependent upon additional financing being obtained for the development of, and revenue generation from, the principal assets of the Company and to provide general working capital. As no definite funding has been concluded on a number of developments of the Group, a material uncertainty exists in relation to the Company and the Group's ability to continue as a going concern.
The Directors believe that progress towards securing finance has been made. The Directors have a reasonable expectation that the Company will source the necessary financing and that the Group will have adequate resources to continue in operational existence for the foreseeable future. For these reasons the Directors continue to adopt the going concern basis of accounting in preparing the interim financial statements. The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.
The Group continues to seek to develop its renewable energy projects. The nature of the Group's development programme means that the timing of funds generated from developments is difficult to predict. Management have prepared financial forecasts to estimate the likely cash requirements of the Group over the next 12 months. The forecasts include certain assumptions with regard to the costs of ongoing development projects, overheads and the timing and amount of any funds generated from developments. The forecasts indicate that during this period the Group will require additional funds to continue with its activities and its planned development program.
Whilst the strategy is to build, own and operate plants, once a site has been secured and planning and permitting obtained the Group would be in a position, if it so chose, to monetise the value of the project.
The interim financial information for both the six months ended 31 December 2015 and the comparative six months ended 31 December 2014 are unaudited and have not been reviewed by the auditors. The financial information for the year ended 30 June 2015 represents an abbreviated version of the Group's financial statements for that year. Those financial statements contained an unqualified audit report, with an emphasis of matter paragraph on going concern. The interim condensed consolidated financial statements has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board.
3. BASIS OF CONSOLIDATION
The interim condensed consolidated financial statements include the financial statements of the Group and all subsidiaries. The financial period ends of all entities in the Group are coterminous.
4. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies used in preparing the interim condensed consolidated financial information are unchanged from those disclosed in the Annual Report and Accounts of REACT Energy plc for the year ended 30 June 2015.
5. ESTIMATES
The preparation of the interim condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of certain assets, liabilities, revenues and expenses together with disclosure of contingent assets and liabilities. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions of accounting estimates are recognised in the period in which the estimate is revised.
The judgements, estimations and assumptions applied in the interim financial statements, including the key sources of estimation uncertainty, were the same as those applied in the Group's last annual financial statements for the year ended 30 June 2015.
6. SEGMENT REPORTING
Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the products sold to customers. The Group's reportable segments under IFRS8 Operating Segments are as follows:
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Power Generation: Being the development and operation of renewable energy electricity and heat generation plants; and
The Chief Operating Decision maker is defined as the Board of Directors.
Information regarding the Group's reportable segments is presented below.
The following is an analysis of the Group's revenue and results from continuing operations by reportable segment:
Segment Revenue Segment (Loss)/Profit
6 months ended 6 months ended
31 Dec 31 Dec 31 Dec 31 Dec
2015 2014 2015 2014
EUR EUR EUR EUR
Power Generation 131,031 153,985 48,485 (129,953)
-------- -------- ---------- ------------
Total from continuing
operations 131,031 153,985 48,485 (129,953)
======== ======== ========== ============
Central administration
costs and directors'
salaries (166,178) (436,757)
Impairment of property,
plant and equipment - (506,390)
Impairment of financial
assets - (29,806)
Interest income 4 -
Interest costs (294,105) (198,030)
---------- ------------
Loss before taxation
(continuing operations) (411,794) (1,300,936)
========== ============
Revenue reported above represents revenue generated from external customers. Inter-segment sales for the six months ended 31 December 2015 amounted to EURNil (2014: EURNil). Included in revenues arising from sales in the Power Generation segment is EUR106,944 (2014: EUR81,273) arising from the sale of electricity; EUR23,887 (2014: EUR43,916) arising from sales to an associated undertaking, GG Eco Energy Limited; and EUR200 (2014: EUR28,796) with respect to the generation of heat.
Segment profit or loss represents the profit or loss earned by each segment without allocation of central administration costs and directors' salaries, other operating income, share of losses of jointly controlled entities, investment revenue and finance costs. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.
Other segment information:
Depreciation and Additions to non-current
amortisation assets
6 months ended 6 months ended
31 Dec 31 Dec 31 Dec 31 Dec
2015 2014 2015 2014
EUR EUR EUR EUR
Power Generation 36,401 42,262 5,004,267 592,855
In addition to the depreciation and amortisation reported above, impairment losses of EURNil (2014: EUR506,390) were recognised in respect of property, plant and equipment. These impairment losses were attributable in full to the Power Generation segment.
The Group operates in two principal geographical areas: Republic of Ireland (country of domicile), and the United Kingdom. The Group's revenue from continuing operations from external customers and information about its non-current assets* by geographical location are detailed below:
Revenue from Jointly Non-current assets*
Controlled Entities
and External Customers
6 months 6 months As at 31 As at 30
to to Dec 2015 Jun 2015
31 Dec 31 Dec
2015 2014
EUR EUR EUR EUR
Republic of
Ireland 106,944 81,273 1,308,369 1,344,713
United Kingdom 24,087 72,712 10,614,682 5,857,131
------------ ------------ ----------- ----------
131,031 153,985 11,923,051 7,201,844
============ ============ =========== ==========
* Non-current assets excluding financial instruments and investment in jointly controlled entities.
The management information provided to the chief operating decision maker does not include an analysis by reportable segment of assets and liabilities and accordingly no analysis by reportable segment of total assets or total liabilities is disclosed.
7. INCOME TAX EXPENSE
6 months 6 months
ended ended
31 Dec 2015 31 Dec 2014
Income tax expense comprises: EUR EUR
Current tax - -
Deferred tax - -
------------ ------------
Income tax expense recognised - -
in profit or loss
============ ============
An income tax charge does not arise for the six months ended 31 December 2015 or 31 December 2014 as the effective tax rate applicable to expected total annual earnings is Nil as the Group has sufficient tax losses coming forward to offset against any taxable profits. A deferred tax asset has not been recognised for the losses coming forward.
8. LOSS/(EARNINGS) PER SHARE
6 months 6 months
ended ended
31 Dec 2015 31 Dec 2014
EUR EUR
Basic and diluted (loss)/earnings
per share
From continuing operations (0.006) (0.042)
From discontinued operations - 0.177
------------ ------------
Total basic earnings/(loss)
per share (0.006) 0.135
============ ============
The loss and weighted average number of ordinary shares used in the calculation of the basic and diluted (loss)/earnings per share are as follows:
6 months 6 months
ended ended
31 Dec 2015 31 Dec 2014
EUR EUR
(Loss)/profit for period attributable
to equity holders of the parent (410,718) 4,127,083
------------ --------------
Profit for period from discontinued
operations used in the calculation
of basic earnings per share
from discontinued operations - 5,428,019
------------ --------------
Losses used in the calculation
of basic loss per share from
continuing operations (410,718) (1,300,936)
------------ --------------
Weighted average number of
ordinary shares for
the purposes of basic (loss)/earnings
per share 64,228,665 30,669,522
------------ --------------
Anti-dilutive Potential Ordinary Shares
The following potential ordinary shares are anti-dilutive and are therefore excluded from the weighted average number of ordinary shares for the purpose of diluted loss per share:
6 months 6 months
ended ended
31 Dec 2015 31 Dec 2014
Share warrants in issue 38,450,000 1,142,248
------------ ------------
Convertible loans in issue 10,000,000 13,239,683
------------ ------------
9. INVESTMENT IN ASSOCIATE UNDERTAKINGS
Details of the Group's interests in associated undertakings at 31 December 2015 are as follows:
Name of jointly Country of Shareholding Principal
activity
controlled entity incorporation
GG Eco Energy England 30% Operator of
Limited biomass heat
generating
projects
Summarised financial information in respect of the group's interests in associate undertakings is as follows:
31 Dec 2015 30 Jun 2015
EUR EUR
Non-current assets 1,734,793 1,826,626
Current Assets 218,002 310,867
Non-current liabilities (1,916,091) (2,034,546)
Current liabilities (447,615) (435,914)
------------ ------------
Net liabilities (410,911) (332,967)
============ ============
Group's share of net assets - -
of associated undertakings
============ ============
6 months ended
31 Dec 2015 31 Dec 2014
EUR EUR
Total revenue 307,373 235,341
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March 31, 2016 02:00 ET (06:00 GMT)
Total expenses (240,626) (175,653)
------------ ------------
Total operating profit for
the period 66,747 59,688
Finance costs (158,654) (124,612)
------------ ------------
Total loss for the period (91,907) (64,924)
============ ============
Group's share of losses of - -
jointly controlled entities
============ ============
The investment in GG Eco Energy Limited is accounted for using the equity method in accordance with IAS 28.
10. PROPERTY, PLANT AND EQUIPMENT
During the six month period ended 31 December 2015, the group incurred expenditure of EUR5,004,267 with respect to costs incurred in the development of various projects. Included in this is a transaction of EUR4,963,993 related to the purchase of biomass gasifier equipment for the Newry Biomass project.
11. SHARE CAPITAL
On 24 July 2015, as part of the Scheme of Arrangement approved by the High Court in Dublin, the Company issued 37,470,972 new Ordinary Shares to creditors of the Company and its related companies to the value of EUR5,724,732 (giving an effective price per share of GBP0.11) through a debt for equity exchange.
On 21 October 2015, as part of an equity kicker attached to the Ecofinance loan (see note 12 below), the Concert Party exercised its right to be issued shares as part of the Equity Kicker, and the maximum number of shares, 7,000,000 new Ordinary Shares, was issued as a result.
12. BORROWINGS
31 Dec 2015 30 June
2015
Non-current liabilities EUR EUR
at amortised cost
7.5% convertible secured c 2,809,260 -
loan note
15% secured loan facility b 1,357,221 -
------------ ------------
4,166,481 -
------------ ------------
Financial liabilities
carried at FVTPL
Business Expansion Scheme 105,000 -
Shares
------------ ------------
4,271,481 -
============ ============
Current liabilities at
amortised cost
Bank overdrafts 254 5
Convertible shareholder
loan a - 1,742,027
Secured loan note c - 2,298,377
9% Loan Note c - 351,445
12% Loan note a - 100,098
15% Shareholder loans a - 173,115
Bank borrowings d 1,123,750 1,131,250
------------ ----------
1,124,004 5,796,317
------------ ----------
Financial liabilities
carried at FVTPL
Business Expansion Scheme
Shares - 105,000
------------ ----------
1,124,004 5,901,317
============ ==========
Borrowings at amortised cost
(a) Borrowings of, in aggregate, EUR2,015,240 at 30 June 2015 were converted to equity on 24 July 2015 as part of the Scheme of Arrangement announced on 14 July 2015 (see Note 11 above).
(b) On 15 July 2015, the Board of REACT announces that it has raised GBP1,000,000 (before expenses) through a Secured Loan Facility ("SLF"). EcoFinance, a group which sources finance for renewable energy projects, has provided the SLF. The SLF is at a fixed rate of 15% per annum, the interest on which will be paid monthly in arrears. The SLF is for a five-year term and the principal together with any accrued interest will be repayable by a bullet repayment at the end of the term. The SLF is secured by mortgage debentures, cross guarantees and share pledges over REACT and its subsidiary companies.
(c) On 24 July 2015, as part of the Scheme of Arrangement announced on 14 July 2015 as approved by the High Court in Dublin, the existing secured debt held by Altair Group Investment Limited ("Altair" or "the Secured Creditor"), comprising the 9% Secured Loan Note of GBP1.5 million issued in 2014 and the Examinership financing facility of EUR500,000, was refinanced by way of a new two-year 7.5% GBP2 million Convertible Secured Loan Note ("CSLN"), repayable in July 2017, and is secured by the same security package granted in favour of EcoFinance. This is governed by an inter-creditor deed under which the SLF security plus interest and costs shall rank in priority to the CSLN security plus interest and costs. Under the terms of the CSLN, the Secured Creditor has the right to convert up to GBP1 million into new Ordinary Shares at GBP0.10.
(d) Bank borrowings amounting to EUR1,123,750 at the balance sheet date are secured by a charge over the shares and assets of Pluckanes Windfarm Limited, a subsidiary of the Group. Current interest rates are variable and average 4.0% per annum, including the Bank's margin. All amounts due with respect to this facility are repayable on demand by the bank at any time at its absolute discretion. However, without prejudice to the Bank's right to demand immediate payment, the facility is to be repaid by way of 60 quarterly instalments. The repayment schedule of these instalments is as follows:
31 Dec 30 June
2015 2015
Payable by instalments EUR EUR
Due less than one year 50,500 15,000
Due between one and
five years 344,000 344,000
Due more than five years 729,250 772,250
---------- ----------
1,123,750 1,131,250
========== ==========
The Directors consider the carrying amount of the borrowings approximates to their fair value.
13. TRADE AND OTHER PAYABLES
Included in trade and other payables at 31 December 2015 is a liability of EUR4,963,993 related to the purchase of biomass gasifier equipment for the Newry biomass project (see note 10).
14. COMMITMENTS AND CONTINGENCIES
There have been no other changes in commitments and contingent liabilities since the end of the previous reporting period, 30 June 2015.
15. RELATED PARTY TRANSACTIONS
During the period ended 31 December 2015, the Group realised EUR23,887 (2014: EUR43,916) from its associated undertaking, GG Eco Energy Limited, on consultancy fees associated with the generation of heat. Included in trade and other receivables at 31 December 2015 is EURNil due from GG Eco Energy Limited (30 June 2015: EURNil).
During the period ended 31 December 2015, the group accrued interest on loan facilities received from Farmer Business Developments plc ("FBD"), its 23.15% shareholder totalling EUR40,972 (6 months to 31 December 2014: EUR40,972). As part of the Scheme of Arrangement to exit the Examinership process, FBD loan facilities totalling EUR1,742,027 were converted into 11,402,360 ordinary shares on 24 July 2015 (see note 12). At 31 December 2015, the balances due to FBD with respect to the loan facilities, including rolled up interest, totalled EURNil (30 June 2015: EUR1,742,027).
16. FAIR VALUES
For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: valuation techniques for which the lowest level of inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: valuation techniques for which the lowest level of inputs that have a significant effect on the recorded fair value are not based on observable market data.
Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date. The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair value on a recurring basis at period-end.
Level Level Level Total
1 2 3
31 December 2015 EUR EUR EUR EUR
--------------------------- -------- ------------ ------ ------------
Financial assets
Amounts due from
customers under
construction contracts - 150,847 - 150,847
Trade and other
receivables - 712,488 - 712,488
Cash and cash equivalents 421,446 - - 421,446
Financial liabilities
Trade and other
payables - (5,288,619) - (5,288,619)
Investor loans - (4,166,481) - (4,166,481)
BES Shares - (105,000) - (105,000)
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Bank overdrafts (254) - - (254)
Bank loans - (1,123,750) - (1,123,750)
--------------------------- -------- ------------ ------ ------------
421,192 (9,820,515) - (9,399,323)
=========================== ======== ============ ====== ============
Level Level Level Total
1 2 3
30 June 2015 EUR EUR EUR EUR
--------------------------- -------- ------------- ------ ------------
Financial assets
Amounts due from
customers under
construction contracts - 150,847 - 150,847
Trade and other
receivables - 141,799 - 141,799
Cash and cash equivalents 211,346 - - 211,346
Financial liabilities
Trade and other
payables - (4,440,615) - (4,440,615)
Investor loans - (4,665,062) - (4,665,062)
BES Shares - (105,000) - (105,000)
Bank overdrafts (5) - - (5)
Bank loans - (1,131,250) - (1,131,250)
--------------------------- -------- ------------- ------ ------------
211,341 (10,049,281) - (9,837,940)
=========================== ======== ============= ====== ============
The carrying amount of the following financial assets and liabilities is considered a reasonable approximation of fair value:
-- Amounts due from customers under construction contracts; -- trade and other receivables; -- cash and cash equivalents; -- trade and other payables; and -- borrowings. 17. EVENTS AFTER THE REPORTING DATE
On 8 January 2016, (subsequently amended in March 2016), the Company announced that it had secured a EUR750,000 Facility from EBIOSS. The Company may use the proceeds from the Facility for the continuing investment in its portfolio of biomass gasification projects in the UK, and for working capital for the Group.
The key terms of the Facility are as follows:
-- quantum of EUR750,000, which may be drawn down in three equal monthly instalments of EUR250,000;
-- interest rate of 8% per annum on outstanding capital balances, which will accrue and be repaid in full on repayment of the Facility;
-- proceeds from the Facility, which is unsecured, will be, other than in respect of the second tranche of EUR250,000, used solely to fund development costs associated with the Company's identified biomass gasification projects in the UK;
-- drawdown of the Facility will be subject to the agreement of the Company and EBIOSS; and
-- from 7 January 2017, EBIOSS may, at any time, demand that the Company repays the drawn down proportion of the Facility plus accrued interest. The Company may, at any time, elect to repay the Facility plus accrued interest.
EUR400,000 has been drawn down since 31 December 2015 with respect to the above facility.
On 8 January 2016, the Company also announced that it had granted EQTEC Iberia, a subsidiary of EBIOSS, exclusivity to provide gasification technology as part of Engineer Procure and Construct ("EPC") contracts for its biomass gasification project pipeline in the UK.
18. APPROVAL OF FINANCIAL STATEMENTS
The condensed consolidated financial statements for the six months ended 31 December 2015, which comply with IAS 34, were approved by the Board of Directors on 30 March 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR URRBRNNAOOAR
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