RNS Number : 1641A
Renewable Energy Generation Ltd
25 September 2015
 

Renewable Energy Generation Limited ("the Company" or "REG")

Trading Update

 

Renewable Energy Generation Limited, the AIM quoted UK focused multi-divisional renewables company announces an update prior to the publication of its annual results on the 2nd November 2015.

 

The Government's intention, announced in June, to close the Renewables Obligation (RO) one year early for onshore wind has created considerable uncertainty for the UK renewables industry. Whilst Government has provided some clarity regarding grace periods for projects meeting certain criteria, the legislation will not be binding until reaching Royal Assent, expected next year. These changes to the RO, together with the disappointing retroactive removal of Levy Exemption Certificates for renewable energy generators and removal of support for large scale solar schemes, is impacting the industry's cost of capital and is additionally creating some difficulty in securing long term finance for certain projects, at least until the legislation has reached Royal Assent.

 

REG is progressing procurement of four new UK onshore wind projects totalling 26MW: Mynydd Portref (12MW); Rodbaston (4MW); Brackagh Quarry (6MW); and French Farm (4MW) and discussions are ongoing with potential funders for these projects.  The total combined annual output of these new projects, once operational, will be approximately 65,000MWh, increasing REG's total annual wind power output to 155,000MWh.  The projects are unaffected by the early closure of the RO for onshore wind.  With respect to the Company's recently consented wind sites at Mynydd Brombil, Abergorki and Pen Bryn Oer, REG is awaiting further clarity from Government regarding support for these projects.

 

In addition to early removal of the RO, the Government has announced substantial changes to both the planning system for onshore wind projects and early closure of the small scale solar feed in tariff. As a result of these changes and as previously announced on 9 July 2015, REG has undertaken a detailed assessment of the carrying value of capitalised development costs. Subject to any further clarification issued by DECC and completion of its external audit, REG expects to report an exceptional, non-cash impairment charge in the year to 30 June 2015 of not less than £7million. Underlying EBITDA, excluding this charge and the profit from asset disposals, is expected to be in line with market expectations at approximately £1.3million. The balance of capitalised development costs will total approximately £6.5million, relating to projects that, in the view of the Board, continue to have development potential. REG has curtailed investment in new onshore wind and solar development whilst initiating a redundancy programme, expected to result in cost savings of approximately £1.3million per annum.

 

Andrew Whalley, CEO of REG, said: "Recent changes to planning in England together with early closure of the RO and elimination of onshore wind from the ongoing support mechanism for UK renewables has inflicted significant damage to a developing industry employing tens of thousands of people and which has made an increasing contribution to the generation of cheap, clean, indigenous energy.  Moreover, the retrospective changes to the Levy Exemption Scheme have undoubtedly impacted the energy sector's cost of capital, which will unnecessarily increase bills for consumers over the longer term. Notwithstanding these far reaching changes to the UK renewables industry, the focus of REG remains on securing value for shareholders from our portfolio of renewable assets".

 

For further information please visit www.renewableenergygeneration.co.uk or contact the following:

Andrew Whalley

Chief Executive Officer

Renewable Energy Generation Ltd

+44 (0)1483 901 796

David Crockford

Finance Director

Renewable Energy Generation Ltd

+44 (0)1483 901 796

Bobbie Hilliam

 

Cenkos (Broker)

+44 (0)20 7397 8900

Martyn Fraser

 

Smith & Williamson Corporate Finance Limited (Nominated Adviser)

+44 (0)117 376 2213

Felicity Winkles

 

St Brides Partners (Public Relations)

+44 (0)20 7236 1177

Frank Buhagiar

St Brides Partners (Public Relations)

 

+44 (0)20 7236 1177

 


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