Press release from CNW Group
Run of River Power Inc. Announces Financial Results for the Year Ended December 31, 2013
Wednesday, April 30, 2014
Run of River Power Inc. Announces Financial Results for the Year Ended December 31, 201319:00 EDT Wednesday, April 30, 2014
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
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
|($000's except per share and generation amounts)|
|For the years ended December 31||2013||2012||2011|
|Basic and diluted loss per share||(0.11)||(0.02)||(0.03)|
|Cash flow from (used in) operations||735||(180)||(280)|
|(1)||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.|
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.
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.
For further information:
Richard W. Hopp
President and CEO