VANCOUVER, April 30, 2014 /CNW/ - Run of River Power Inc. ("ROR" or the "Company") (TSX-V:ROR) announces its financial and operating results for the
year ended December 31, 2013. The audited consolidated annual
financial statements and management discussion and analysis for the
year ended December 31, 2013 have been filed on SEDAR and posted on
ROR's website (www.runofriverpower.com). All figures reported herein are in Canadian dollars unless otherwise
stated.
Financial Report for the Year Ended December 31, 2013
Financial Highlights
For the year ended December 31, 2013 ("fiscal 2013"), the Company recorded a total comprehensive loss of $11,346,691
compared to a total comprehensive loss of $2,301,191 for the year ended
December 31, 2012 ("fiscal 2012"). The significantly increased total comprehensive losses during
fiscal 2013 compared to fiscal 2012 are mainly due to the recognition
of an impairment on the Company's projects under development in the
amount of $5,006,548 (fiscal 2012: $287,836), the recognition of an
adjustment to the fair value of the convertible royalty interest in the
amount of $2,665,441 (fiscal 2012: Nil), and a loss on project cost
overrun of $1,164,499 (fiscal 2012: Nil)
Selected Financial Information
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($000's except per share and generation amounts)
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For the years ended December 31
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2013
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2012
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2011
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Electricity sales
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1,933
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1,936
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2,090
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EBITDA(1)
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(3,997)
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195
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(744)
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Loss
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(11,347)
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(2,301)
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(2,717)
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Basic and diluted loss per share
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(0.11)
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(0.02)
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(0.03)
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Cash flow from (used in) operations
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735
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(180)
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(280)
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Total assets
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23,146
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27,278
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28,497
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Long-term debt
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-
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13,314
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13,737
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Generation-MWh
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32,126
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32,314
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35,281
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(1)
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EBITA is earnings before interest, taxes, depreciation and amortization
and is not a measure under International Financial Reporting Standards
("IFRS") and may not be comparable to similar measures presented by other
companies. Refer to the Non-GAAP Measures section of the MD&A for the
year ended December 31, 2013 for an explanation and reconciliation.
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Operating Results
During fiscal 2013, electricity sales from the Brandywine generating
facility decreased by $3,297 or 0.2% to $1,933,147 from $1,936,444
during fiscal 2012 as a direct result of a decrease in electricity
generated from 32,314 MWh to 32,126 MWh. Electricity production was
down due to lower hydrology conditions for the year despite an overall
improvement in the facility's conversion effectiveness.
Plant operating expenses decreased by $28,419 or 2.2% from $1,286,555
during fiscal 2012 to $1,258,136 during fiscal 2013. The decrease was
due to increased reliability at the plant.
General and administrative expenses of the Company were $1,421,398
during fiscal 2013, being $169,229, or 13.5%, higher than the
comparable expenses of $1,252,169 during fiscal 2012. Increased general
and administrative costs during fiscal 2013 were primarily attributable
to costs associated with the Skookum Creek Power Project no longer
being capitalized.
The Company incurred net finance costs of $1,647,385 during fiscal 2013
compared to $1,537,259 during fiscal 2012. The increase of $110,126 of
7.2% was due to the secured subordinated debentures being outstanding
for an entire year.
The Company was provided $734,637 from operating activities during
fiscal 2013 compared to funds of $179,921 being used in operating
activities during fiscal 2012. The improvement of $914,558 was due to
the receipt of a development fee for the Skookum Creek Power Project.
Financial Position and Going Concern
As at December 31, 2013, the Company had $1,951,834 (December 31, 2012:
$3,818,558) cash on hand, of which $1,364,580 (December 31, 2012:
$1,301,983) was restricted cash. These cash resources will be used to
fund the Company's ongoing working capital requirements.
The success of the Company is dependent on its ability to economically
generate electrical power and its ability to sell the electricity
generated on a profitable basis to BC Hydro and other Electricity
Purchase Agreements. There is no certainty that such events will occur
and that sources of financing will be obtained on acceptable terms.
Whether and when the Company can achieve profitability and positive
cash flow is also uncertain. These material uncertainties cast
significant doubt on the Company's ability to continue as a going
concern.
The Company has entered into a Letter of Intent with Concord Green
Energy Corp., its wholly-owned subsidiary and 0999130 B.C. Ltd to sell
Rockford Energy Corporation and to sell the Company and the remaining
development assets held in the Company. If the completion of the
transaction is unsuccessful and the Company is unable to find another
entity to fund operations, the Company would be considered insolvent.
Convertible Royalty Interest
At December 31, 2013, the fair value of the convertible royalty interest
is estimated to be $1, which resulted in a fair value loss of
$2,665,441 for the year ended December 31, 2013. The decrease in the
fair value of the convertible royalty interest is due primarily as a
result of the dilution of the Company's financial interests in the
Skookum Creek Power Partnership (the "Partnership") as a result of a cost-over run. Subsequent to year end, the
forecasted cost over-runs reached a point where the amount of equity in
the Partnership that the Company can acquire upon exercising its
convertible royalty interest decreased from 50% to 0%. The annual
royalty amount has been diluted from 10% to 0%.
Loss on Project Cost Over-Run and Project Development Revenue
As a result of project cost-over runs on the Skookum Power Project the
Company is obligated to repay $2.7 million of the cost-over runs to the
Partnership which has been recognized in its statement of financial
position at December 31, 2013. The $2.7 million has been offset with
$336,609 owing to the Company from the Partnership for project
development services.
During the year ended December 31, 2013, final financing arrangements
were agreed upon for the Skookum Project and the Company was entitled
to receive $1,697,977 for project development. During fiscal 2013, the
Company received another advance of $921,267. At December 31, 2013 a
total of 88.3% of the Skookum Power Project was complete; however, as a
result of the forecasted cost over-runs the Company has reduced the
project development fee earned to $nil and offset the remaining amount
receivable of $336,609, with the cost over-run provision. A loss of
$1,164,499 was recognized in fiscal 2013.
Projects Under Development
Due to the economic outlook in British Columbia, the Company has
impaired its projects under development to reflect the increased risk
of obtaining an economic benefit from the successful development of its
assets. The Company recognized an impairment on its projects under
development in the amount of $5,006,548.
In November 2013, the government of British Columbia confirmed its
approval of BC Hydro's Integrated Resource Plan ("IRP"). The IRP provides a 20-year outlook of how BC Hydro expects to
reliably and cost-effectively meet the anticipated future electricity
needs of the Province through conservation, the acquisition of
sufficient generation capacity, transmission resource upgrades and the
advancement of the Site C hydroelectric project on the Peace River. A
summary of BC Hydro's views as set out in the IRP is included in the
Company's MD&A for the year ended December 31, 2013, a copy of which
has been filed on SEDAR. As a result of BC Hydro's current views
respecting future power shortfalls in the 2013 IRP, it is not expected
that there will be any formal calls for clean energy for at least the
next ten years. This outlook provides for limited renewable energy
development opportunities in British Columbia unless the supply demand
picture changes dramatically from what is outlined in the IRP.
Non-GAAP Measures
The Company reports its financial position, results of operations and
cash flows in accordance with IFRS.
About Run of River Power Inc.
ROR develops renewable, sustainable energy through its portfolio of
clean energy projects. The Company helps diversify BC's energy mix by
providing a cleaner way to generate power and increasing the security
of BC's energy supply. ROR operates an Eco Logo© certified
hydroelectric power generation station at Brandywine Creek, near
Whistler, BC that provides green power for about 4,000 homes.
Disclaimer Regarding Forward Looking Information
Certain information included in this press release constitutes
forward-looking information under applicable securities legislation.
Forward-looking information typically contains statements with words
such as "anticipate", "believe", "expect", "plan", "intend",
"estimate", "propose", "project" or similar words suggesting future
outcomes or statements regarding an outlook, or statements that certain
events or conditions "may" occur. Forward-looking information in this
press release includes, but is not limited to, statements regarding the
expectations of management of ROR regarding: (i) the Transaction; (ii)
completion of the Transaction; (iii) entry into the Payment Indenture;
(iv) the intended results of the Transaction; (v) the conditions to
completion of the Transaction; (vi) the calculation of and timing for
payment of the ROR Consideration to the Shareholders; (vii) the
Shareholders' meeting in connection with the Transaction; (viii)
receipt of a fairness opinion and valuation in connection with the
Transaction; (ix) the preparation and delivery of an information
circular in connection with a Shareholders meeting to consider the
Transaction; and * the proposed de-listing of the ROR Shares and the
proposed ceasing to be a reporting issuer of ROR.
Although ROR believes that the expectations reflected in the
forward-looking information are reasonable, undue reliance should not
be placed on forward-looking information because ROR can give no
assurance that such expectations will prove to be correct. Such
forward-looking statements are subject to risks and uncertainties that
may cause actual results, performance or developments to differ
materially from those contained in the statements including, without
limitation, the risks that: (1) the Transaction may not be completed
for any reason whatsoever, including that the requisite Shareholder,
court and/or regulatory approval of the Transaction may not be obtained
or that AcquireCo and/or the REC Acquirer may not have the necessary
funds to make the Advance and the REC Purchase Price available to ROR;
(2) an Payment Indenture may never be entered into for any reason
whatsoever; (3) the Transaction, if completed, may not have the
intended effect as set out in this news release; (4) the aggregate
amount of the ROR liabilities to be deducted from the Available Funds
may be significant, and the resulting ROR Consideration, if any, may be
nominal; (5) the meeting of Shareholders to consider the Transaction
may not occur; (6) a fairness opinion and/or valuation may not be
obtained, or if obtained, may not provide a favourable opinion as to
the fairness or value of the Transaction; (7) the information circular
and other materials for the meeting of Shareholders may not be prepared
or delivered to Shareholders as expected; (8) the ROR Shares may not be
de-listed and ROR may not cease to be a reporting issuer following
closing for any reason whatsoever, and (9) such other risks and
uncertainties beyond the control of ROR.
Readers are cautioned that the foregoing list is not exhaustive of all
factors and assumptions which have been used. The forward-looking
information contained in this press release is made as of the date
hereof and ROR undertakes no obligation to update publicly or revise
any forward-looking information, whether as a result of new
information, future events or otherwise, unless required by applicable
securities laws. The forward looking information contained in this
press release is expressly qualified by this cautionary statement.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
powering a cleaner tomorrow®
SOURCE Run of River Power Inc.