Pristine Power Inc. Reports Fiscal 2009 Year-End Financial Results
CALGARY, Feb. 24 /CNW/ - Pristine Power Inc. (TSX: PPX) ("Pristine" or the "Company"), an independent Canadian developer and operator of electricity and steam generation facilities, today reported its financial results for the three- and twelve-month periods ended December 31, 2009.
2009 Highlights
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- Net power production increased to 71,533 MWh in F2009 from 5,768 MWh
in F2008 as the East Windsor Cogeneration Centre (EWCC) began
commercial operations in Q4 2009;
- With EWCC in operation, steam production totaled 91,656 mmbtu in
F2009 compared to nil in F2008
- Revenue increased 225.7% to $6.5 million from $2.0 million in F2008;
- Net loss of $9.3 million ($0.30 per share, basic and diluted)
compares to net loss of $9.4 million ($0.35 per share, basic and
diluted) in F2008;
- Funds used in operations totaled $7.0 million in F2009 compared to
$8.0 million if F2008. Cash used in operations totaled $9.4 million
in F2009 compared to $10.0 million in F2008;
- Cash and cash equivalents totaled $4.2 million as at December 31,
2009 compared to $37.7 as at December 31, 2008;
- Increased interest in the 600 MW run-of-river Kleana Power project
from 10% to 57% in October 2009;
- EWCC commenced commercial operations on November 6, 2009
Subsequent Events
-----------------
- On January 7, 2010, the Company raised gross proceeds of
$11.5 million through a bought deal financing of units consisting of
one common share and one half warrant. Each whole warrant entitles
the holder to acquire one common share of Pristine Power at a price
of $3.25 at any time up to January 13, 2012;
- On January 7, 2010, the Company closed a $5 million debt facility
having a term of one year. The funds were used to fund working
capital requirements. As additional consideration for the facility,
500,000 warrants were issued to the lenders. Each warrant entitles
the holder to acquire one common share of Pristine Power at a price
of $3.25 at any time up to January 13, 2012;
- On January 19, 2010, the Township of King, Ontario passed an Interim
Control By-Law allowing the Township to study certain land use
planning matters pertaining to the York Energy Centre ("YEC");
- On February 22, 2010, the Company filed an appeal of the Interim
Control By-law with the Ontario Municipal Board as well as with the
Ontario Superior Court requesting such by-law be struck down.
"2009 has been very productive for Pristine and we increased our gross operating capacity from 10 MW to 102 MW with the successful commercialization of the East Windsor Cogeneration Centre," said Jeff Myers, President and CEO of Pristine. "We continued to submit bids to request for proposals for environmentally responsible power generation and are awaiting awards on the Clean Call for Power in British Columbia and the Feed-in-Tariff process in Ontario. Going forward, we will continue to actively develop potential projects in British Columbia and Ontario, and identify opportunities in advance of request-for-proposals. Although our YEC project may be delayed as a result of the Interim Control By-Law passed by the Township of King, there are several remedies that we are pursuing to overcome this challenge. We remain committed to the ultimate success of the YEC project and will work with our suppliers and partners to minimize the impact to the project's schedule and economics."
Financial Summary
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For the three month For the twelve month
period ended period ended
December 31 December 31
2009 2008 2009 2008
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Net production
Power (MWh)(1) 56,403 4,947 71,533 5,768
Steam (mmbtu)(1) 91,656 na 91,656 na
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C$ (000's) C$ (000's) C$ (000's) C$ (000's)
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Revenue 4,467 802 6,549 2,011
Expenses 4,870 3,933 15,939 11,077
Net loss and comprehensive
loss (776) (3,316) (9,262) (9,423)
Net loss per share (basic
& diluted) (0.03) (0.12) (0.30) (0.35)
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Notes:
(1) Before non-controlling interest share
(2) Funds used in operations is a non-GAAP measure. Refer to the
paragraph titled "Cash Flow from Operations" for an explanation of
its use and reconciliation with the Company's GAAP measures
For the Year Ended December 31
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Revenue in F2009 increased 225.7% to $6.5 million from $2.0 million in F2008. The increase is primarily attributable to: i) increases in power and steam sales from $0.5 million in F2008 to $4.9 million in F2009 with contribution from EWCC which commenced operation on November 6, 2009; and ii) increases in project management fees charged to Pristine's partners of 32.7% from $0.6 million to $0.9 million, reflecting the commercial operation of EWCC and increased activity related to YEC. These increases were partially offset by slightly lower interest earned on cash invested in short-term investments of $0.7 million in F2009 compared to $0.9 million in F2008.
Total expenses in F2009 increased 43.9% to $15.9 million from $11.1 million in F2008. The increase primarily reflects higher plant operating costs, interest and bank charges and depreciation arising from the commencement of commercial operations of East Windsor and a full year of operation of the EnPower assets. General and administrative expenses increased as well to support the Company's development activities, but were more than offset by reduced third party development costs.
Plant operating cost associated with plant maintenance, repairs, insurance, property taxes, and fees paid to the plant operator increased from $0.2 million in F2008 to $1.8 million in F2009 primarily due to the commercial operation of EWCC starting on November 6, 2009. Plant operating costs for the waste heat recovery EnPower ERG(R) plants totaled $0.5 million in F2009 compared to $0.2 million in F2008 since the Savona facility began commercial operations in August 2008 and the 150 Mile House facility began commercial operations in October 2008.
General and Administrative expenses totaled $6.9 million in F2009 compared to $5.8 million in the prior year. The increase reflects the larger staff required to: i) support the Company's growth; ii) reduce the reliance on higher cost external consultants; and iii) consultants for the IFRS conversion reporting obligations.
Development cost of $2.4 million in F2009 was 40.3% lower than $4.0 million in F2008. Although Pristine submitted a comparable number of bids in F2009 compared to F2008 and continued to actively develop potential projects in British Columbia and Ontario, there were significant costs associated with the successful YEC bid submission in the fall of 2008 resulting in higher costs in the prior year.
With the EWCC facility operational in November 2009, depreciation and amortization expense increased in F2009 to $1.4 million compared to $0.4 million in F2008.
Interest and bank charges totaled $1.8 million in F2009 compared to $0.2 million in F2008. F2009 interest expense primarily reflects the long-term debt associated for both the EnPower and EWCC projects. The expense was lower in F2008 as the Company's cash balance was higher following its initial share offering and the interest associated with the construction of EWCC was largely capitalized to the project. In addition, during 2009, the Company incurred a foreign exchange loss of $0.7 million on US dollars purchased to hedge certain US dollar payments related to the YEC project compared to a foreign exchange gain of $0.5 million in 2008.
Net loss in F2009 of $9.3 million was slightly lower than $9.4 million in F2008. On a per share basis (basic and fully diluted), net loss in F2009 decreased 14% to $0.30 from $0.35 in F2008. Net income contributions from the commencement of operations of the EWCC and a full year of operations at EnPower combined with lower development costs were substantially offset by the increased foreign exchange loss and higher general and administrative costs in 2009 over 2008.
Funds used in Operations
Funds used in operations of $7.0 million in F2009 were 12.2% lower than $8.0 million in F2008. In F2009, increased revenue from full-year operation of the two EnPower facilities, the commencement of operations at EWCC and reduced development costs was partially offset by corresponding increases in plant operating costs, interest and finance charges, and general and administrative expenses. In F2008, development costs reflected higher bid costs associated with the York Energy Centre project.
Reconciliation of Funds Used in Operations
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For the three month For the twelve month
period ended period ended
December 31 December 31
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2009 2008 2009 2008
C$ (000's) C$ (000's) C$ (000's) C$ (000's)
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Funds used in operations 412 2,888 7,017 7,996
Change in operating
working capital 2,339 378 2,412 1,975
Cash used in operations 2,751 3,266 9,429 9,971
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For the Three Month Period Ended December 31
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For the three month period ended December 31, 2009, revenue increased 457% to $4.5 million compared to $0.8 million in 2008; expenses increased 23.8% to $4.9 million from $3.9 million in 2008; and net loss of $0.8 million (or $0.03 per basic and diluted share) in 2009 compares with net loss of $3.3 million (or $0.12 per basic and diluted share) in 2008. Funds used in operations of $0.4 million for the three month period ended December 31, 2009 was 86% lower than the same period in 2008 of $2.9 million, reflecting the commencement of commercial operations at East Windsor in November 2009 and lower development costs.
Project Highlights
East Windsor Cogeneration Centre (EWCC)
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Commercial operations began in November, 2009. The facility which was originally designed for 84 MW achieved 86 MW, resulting in incremental merchant capacity above contracted amounts. After taking into account a bonus payable to the equipment supplier for better than guaranteed performance, the project was effectively completed on budget.
York Energy Centre (YEC)
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In November 2009, Pristine executed a Partnership agreement with Harbert York Canada Company ("Harbert") in which Pristine transferred 50% of its interest in YEC to Harbert, as previously anticipated. Development of the YEC project continued in Q4 2009 with the Company executing the Engineering, Procurement and Construction agreement with Lill and DiFazio Constructors Canada on December 19, 2009. On November 10, 2009, as part of the process of obtaining the required approvals for construction, Pristine filed an appeal to the Ontario Municipal Board ("OMB") regarding the Site Plan application. A preliminary hearing with the OMB was held on February 2, 2010 with a formal hearing scheduled to commence on March 31, 2010. Subsequent to the year end, the Township of King passed an Interim Control By-Law allowing the Township to study certain land use planning matters pertaining to YEC. While the Company continues to assess the potential impact of this by-law on the overall project schedule, on February 22, 2010 the Company filed an appeal of the Interim Control by-law with the OMB as well as with the Ontario Superior Court requesting such by-law be struck down. Pristine remains committed to the ultimate success of the project, and continue to work closely with its suppliers, contractors and other stakeholders to minimize potential impacts to the project schedule and economics.
Mackenzie Green Energy Centre (MGEC)
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The Company continues to evaluate its options regarding the MGEC project, a proposed 65 MW biomass facility located in Mackenzie, British Columbia. Although under the Forest Act, MGEC has a designated bioenergy supply contract with BC Hydro and could apply for a non-replaceable forest license to supply a portion of the necessary fuel requirements; additional long term biomass feedstock supply contract is required to ensure profitability and the project's overall viability. In support of ongoing discussions, BC Hydro agreed to remove contract security requirements until November 15, 2009. That deadline has since been extended twice to February 15, 2010 and subsequently to March 15, 2010 to allow for the issuance of request for proposals for Phase II of the BC BioEnergy Call for Power, and to further assess the impact of such framework on the MGEC project. If the security requirements are not replaced by such date or the deadline extended, the MGEC contract will terminate with no additional financial liabilities to Pristine.
Other Development Activities
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In 2009, Pristine continued to pursue development opportunities of cost effective, environmentally responsible power generation facilities.
Ontario
In 2009, the Ontario Power Authority announced a Feed-in-Tariff (FIT) program providing predetermined fixed prices to promote the development of onshore and offshore wind, bioenergy, small hydroelectric, and solar resources. Pristine has evaluated a number of projects and along with its partners, has submitted four bids for onshore wind power generation projects totaling up to 90 MW. Pristine's interest in these projects range from 75% to 85%. Awards for the FIT program are expected to begin in March 2010.
Pristine has identified combined heat and power opportunities totaling 85 MW of generation and plans to bring these projects forward to the OPA for discussion in 2010.
Pristine also continues to hold strategic sites in anticipation of future bid processes. The Company's Milton site acquired in 2008 and located at a critical electrical grid location may be affected by the Town of Milton's potential redesignation of the site to commercial use instead of electricity generation. Pristine is participating in the land use planning review with the Town of Milton. The Company also maintains an option to acquire a site at strategic grid location in the Kitchener/Waterloo/Cambridge/Guelph region. Due to several factors including a drop in overall electricity demand and the introduction of Ontario's FIT program for renewable power, the request for proposal for this region has been delayed, pending a reevaluation of system needs following the initial award of contracts under the FIT program in March 2010.
British Columbia
On November 17, 2009, BC Hydro announced that Pristine's 600 MW run-of-river Kleana Power project is among 34 projects that continue to be considered in the Clean Power Call for clean, renewable and cost-effective energy. Pristine's negotiations with BC Hydro are ongoing. Currently, Pristine has a 57% interest in the Kleana Power project.
Pristine's bio-energy initiatives in the central and southern interior British Columbia consist of four or more 30 MW facilities located at existing saw mill sites and using wood residue from the saw mills, road side debris, and whole logs infested by the Mountain Pine Beetle and no longer useable in sawmills. The Company is in early discussions at each proposed site to gain contractual access to the saw mill residues and for support in accessing road-side debris and timber rights. On October 9, 2009, BC Hydro provided an update regarding the BioEnergy Call for Power Phase II. One key issue that could impact Pristine's bio-energy initiatives is the potential fuel risk sharing options and mechanisms, which could also support the Company's MGEC project.
Balance Sheet
As at December 31, 2009, the Company had working capital of $22.7 million, including cash and cash equivalents of $4.2 million, compared to working capital of $37.1 million, including cash and cash equivalents of $37.7 million as at December 31, 2008. Long-term debt of the Company, including the current portion, was $99.4 million as at December 31, 2009, compared to $100.3 million as at December 31, 2008. As at December 31, 2009, there were 30,710,886 shares issued and outstanding.
Subsequent to year-end, Pristine issued 4,791,670 units at a price of $2.40 per unit on January 7, 2010 for gross proceeds of $11.5 million. Each unit consists on one common share and one half warrant. In addition, the Company closed a $5.0 million secured bridge loan facility. As additional consideration for the facility, 500,000 warrants were issued to the lenders. Each warrant entitles the holder to acquire one common share. Funds from both transactions will be used to develop projects already identified.
Cautionary Statement Regarding Forward-Looking Information
Certain statements in this news release may constitute "forward-looking information" or "forward-looking statements" which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. When used in this news release, such information uses such words as "estimates", "expects", "plans", "anticipates" and other similar terminology. This information reflects the Company's current expectations regarding future events, including the timing of and progression of development, construction and operation of the York Energy Centre, Mackenzie Green Energy Centre and other development projects in Ontario, British Columbia and Saskatchewan. Forward-looking information involves significant uncertainties, should not be read as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information. Although the forward-looking information in this news release is based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with this forward-looking information. This forward-looking information is provided as of the date of this news release, and, subject to applicable securities laws, the Company assumes no obligation to update or revise such information to reflect new events or circumstances.
About Pristine
Pristine (TSX: PPX) is in the business of developing, owning and operating independent power plants that produce and sell electricity and in some cases, sell process steam to industrial users. Pristine capitalizes on opportunities in the independent power market by actively pursuing the development of dependable, cost-effective and environmentally responsible power generation facilities utilizing technology with proven past performance. Pristine pursues a mix of large gas-fired, bioenergy and hydroelectric projects, and smaller replicable waste heat recovery ERG(R) and bioenergy projects. Pristine currently has three projects in operation, and two under contract and in advanced development. Pristine is developing projects in strategic regions of North America. Visit www.pristinepower.ca for more information.
For further information: The Equicom Group Inc., Alice Dunning, Telephone: (416) 815-0700 x255, [email protected]
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