Helius Energy Plc : 2012 Full Year Results

February 18, 2013 at 10:57 am

MarketScreener.com By

2012 Full Year Results

18 February 2013

Helius Energy plc

("Helius" or the "Company")

2012 Full Year Results

Helius Energy plc (AIM:HEGY), the Company established to develop, build and operate biomass fired renewable energy power stations, today issued its annual report and accounts for the twelve months ended 30 September 2012.

Highlights:

· The 7.2MW Helius CoRDe project at Rothes is largely complete and is currently being commissioned with commercial handover expected for Q2 2013. The plant has progressed on time and within anticipated budget;

· Good progress has been made with the 100MW Avonmouth project:

?The Company is pressing ahead towards financial close on the project and continues to work with a number of banks with a view to securing project financing. The Company is also working closely with a number of equity investors, including a potential cornerstone investor with whom heads of terms have been agreed. The Board now expects to reach financial close within H1 2013;

?Material progress has also been made with detailed negotiations ongoing for construction, equipment and fuel supply contracts. The Company is also the process of appointing a preferred party to take 100 per cent of the plant's output;

· Initial statutory consultation process on the 100MW Southampton project now completed and an application for a Development Consent Order is expected to be submitted in H1 2013

· Following a delay in the financing process for the Avonmouth project, the Company is currently expecting to announce a conditional share issue to enable the planned development program to continue

· Operating loss of £11.6m

· Significant cost reductions delivered following restructuring in 2011

· £3.2m invested in the development of projects in the period

John Seed, Chairman of Helius Energy, said:

"We have made a lot of progress in 2012 in continuing with our development programme and we now have projects set for commercial handover, financial close and submission of application for planning all in the first half of this year. We remain well positioned to build upon our previous successes and have the expertise and flexibility to deliver the Avonmouth and Southampton projects and to adapt as required to any changes in the market."

Helius Energy plc Adrian Bowles, Chief Executive Officer Alan Lyons, Chief Financial Officer	Tel: +44 (0) 20 7723 6272

Numis Securities Ltd Alastair Stratton, Richard Thomas (as Nominated Adviser) James Black (as Corporate Broker)	Tel: +44 (0) 20 7260 1000

Kreab Gavin Anderson Chris Phillipsborn, Andrew Jones, Anna Schoeffler	Tel: +44 (0) 20 7074 1800

Notes to Editors:

Helius Energy plc was established to identify, develop, own and operate biomass fired renewable electricity generation plants. These will help meet the growing need for reliable power from renewable sources.

Helius possesses a significant combination of knowledge of renewable energy markets, biomass energy technologies, biomass fuel sources, project development, implementation and operation of power generation plants.

Helius' current portfolio of projects is as follows:

Avonmouth

The Avonmouth plant near Bristol, UK, is a 100MWe export capacity facility, providing despatchable, renewable, low carbon electricity as part of the UK's aim to reduce carbon emissions and combat climate change. It received planning consent in March 2010.

The project will cost around £300m to construct and will create approximately 450 full time jobs during the construction phase. Once in operation, it will generate 40 new full-time long-term operations jobs. Further jobs will be created in relation to the maintenance and supply of the plant.

The plant will be fuelled using a combination of imported wood from a number of countries, including the United States, and recycled wood fibre from the local environs. Helius' intention will be to source material that meets the stringent sustainability measures as recommended by the UK Committee on Climate Change.

Helius CoRDe Ltd

The Helius CoRDe plant is a combined heat and power plant currently in construction in Rothes, Morayshire Scotland. The project, generating 7.2 MW of electricity, enough for 9,000 homes, is a joint venture between Helius Energy, Rabo Project Equity BV and The Combination of Rothes Distillers Limited.

The CHP unit will cost a total of £60.5m and use a combination of distillery co-products and wood chip, while the energy being produced can be used onsite or exported to the local electrical distribution network.

The plant is now in the process of commissioning and is expected to be fully operational during the first half of 2013. It will create approximately 100 jobs during construction and employ around 20 full time people once operational.

Southampton

Public consultations have now been completed with regard to proposals for a 100MW plant in Southampton and submission of an application for a Development Consent Order is expected in H1 2013. The proposed plant would be fuelled by sustainably sourced biomass and would generate approximately 100 MW of energy - enough to power 200,000 homes.

It is estimated the scheme will create 100 direct and indirect jobs in Southampton and contribute around £10m every year to the city's economy. Helius will provide an employment and skills training programme in conjunction with Southampton City Council to enable local people to benefit from the employment opportunities during both construction and operational phases.

Chairman's Report

The priorities for the Company over the past financial year have been taking forward the construction of Helius CoRDe Limited's 7.2 MWe biomass power project at Rothes, Morayshire, and progressing the Company's 100 MWe projects at Avonmouth and Southampton.

I am delighted to report that construction of the Rothes project has progressed on time and within anticipated budget. The project is now substantially complete and is currently being commissioned with performance tests scheduled to commence in February 2013. Commercial handover is expected to occur in the second quarter of 2013. Once operational, the Company will benefit from ongoing management service fees and dividends paid by the project.

We have made good progress with our Avonmouth project, and continue to work with a group of banks, including Lloyds Bank Wholesale Banking & Markets and the Royal Bank of Scotland, to finance the project. The Company has also been working closely with a number of equity investors, including a potential cornerstone investor with whom heads of terms have been agreed. The construction contracts in respect of the project have been substantially negotiated. A robust fuel strategy has been developed, and contracts substantially negotiated pursuant to that strategy with suppliers from the United States of America, the United Kingdom and the European Union. The Company has received a number of offers to take the energy and related products, including Renewables Obligation Certificates (ROCS), and is in the process of appointing a preferred party to take 100 per cent of the plant's output. We are pressing to reach financial close in respect of the Avonmouth project, and commence construction, as early as possible in 2013.

We welcomed the confirmation by the Department for Energy and Climate Change (DECC), on 25th July 2012, of the levels of banding support under the Renewables Obligation legislation for the period 2013-17. The Company's management are of the opinion that the retention of the existing support levels for dedicated biomass of 1.5 ROCs per MWhr until 1st April 2016 (when the level will drop slightly to 1.4 ROCS per MWhr for new accreditations), effectively maintains the existing levels for those projects already under construction or approaching financial close. The process of securing project funding for the Avonmouth Project has taken longer than expected due, in part, to the delays in the release of Government announcements relating both to the levels of support for dedicated biomass projects under the Renewables Obligation ("RO") legislation and to other aspects of the regulatory regime.

We have now completed the initial statutory consultation process in respect of our Southampton project and the next steps in relation to that project include the preparation and submission to the Infrastructure Planning Directorate of an application for a Development Consent Order. It is currently expected that the application will be submitted in the first half of 2013. The Southampton project is likely to fall under the new regime providing feed-in-tariff support through a "Contract for Differences" which will be implemented by the Electricity Market Reform legislation published in November 2012.

The Company was notified by RWE Innogy in September 2012 that RWE Innogy wished to revert to the original earn-out provisions of the 2008 sale and purchase agreement in respect of the Stallingborough project. This provides the board with objective evidence of significant delay and uncertainty of cash in flows under the project and the Company has therefore performed an impairment review. The board has considered carefully the valuation of the earn out entitlement and concluded that there is such uncertainty in the key assumptions used in the original earn out valuation, in particular the commencement date of the construction phase, that currently it can attribute no present value to the estimated future cash flows. Management intend to work with RWE Innogy with the aim of securing value from the project in the future. Notwithstanding the need to impair the earn out, the agreement is still contractually binding and following the impairment of £8.8m in the current year the project has delivered revenues of £28.5m to date.

As mentioned above, the finalisation of financing for the Avonmouth project has taken longer than the Company previously expected, and the Directors are now targeting financial close within H1 2013. As a consequence of this delay, the Company is currently expecting to announce a conditional share issue which the Directors are confident will provide sufficient funding to enable the Company to continue with its planned development programme.

We remain well positioned to build upon our previous successes and have the expertise and flexibility to deliver the Avonmouth and Southampton projects and to adapt as required to any changes in the market.

On behalf of myself and the Board, I would like to thank all of our employees for their continuing hard work and support, which is very much appreciated.

John Seed

Chairman

[1] In this report the "Company" shall mean Helius Energy Plc and/or, where the context otherwise requires, any relevant subsidiary of Helius Energy Plc and its subsidiaries

Business Review

Our Business

Strategy and key goals

Helius was established to develop biomass energy projects to address the increasing importance that has been given to climate change, through cutting greenhouse gas emissions of energy production using sustainably sourced biomass fuel.

Our strategy is to identify, develop, own and operate biomass projects using established technologies and sustainably sourced fuels. The Helius team has extensive knowledge of the UK renewable energy market, technologies and the consenting process and uses this knowledge and experience to identify and realise opportunities.

Our goal for all projects is to ensure that a competitive design is achieved for the plant and its fuel source, which will maximise project returns while mitigating operational and performance risk and minimizing emissions.

Since the Company's inception in 2005, and admission to AIM in 2007, the Helius team has secured consent for 170MWe of biomass capacity in the UK, successfully sold a 65MWe project to RWE and secured financing for a 7.2MWe project in Scotland which is now in construction. The Company is now focused on delivering value from its consented 100MWe site in Avonmouth, as well as securing additional consents for Southampton and possibly other sites.

Rothes Project

The construction of the Rothes plant is now largely complete and commissioning activities are taking place, including the first burning of wood fuel. Once commissioning is complete, the plant will commence a 30 day continuous reliability run. Following successful completion of the reliability run, the plant will be handed over to commercial operation. This is still on schedule for H1 2013. Once operational, the plant will generate 7.2MWe of electricity using both distillery residues and wood fuel and will provide the Company with an ongoing source of income in the form of both management fees and dividends.

Avonmouth Project

The Avonmouth project resides within the Avonmouth dock area of Bristol port. The site has excellent transport links that will enable the delivery of fuel to the power station and it is envisaged a large proportion of these supplies will be delivered by sea. The plant will utilise up to 850,000 tonnes of sustainably sourced solid biomass fuel per annum to generate at 100MWe export capacity, delivering over 0.76Twh per year of electricity, enough to power approximately 200,000 homes. The Company has agreed commercial terms for materials handling with Bristol Port, and has secured a grid connection.

The project was granted consent and deemed planning permission under S36 of the electricity act 1989 by the Secretary of State in June 2010. The Company has negotiated contracts for the construction and long term fuel supply requirements of the plant. The company has received a number of non binding offers for the long term off-take of electricity, ROCs and other products generated by the plant and is working to appoint a preferred partner. The Company is working with a group of lenders with respect to a project finance facility and lender due diligence is at an advanced stage. The Company has agreed heads of terms with a cornerstone equity provider for the project and is currently working with that equity provider and its advisors to secure the balance of equity required for the plant. It is intended that the Company will secure some form of development fee as well as retaining some form of long term interest in the profits generated by the project. The finalisation of financing for the Avonmouth project has taken longer than the Company previously expected, and the Directors are now targeting financial close within H1 2013.

Stallingborough Project

In January 2011 the Company agreed with RWE Innogy an amendment to the earn out provision included within the 2008 sale and purchase agreement allowing RWE to settle this earn-out in return for a lump sum payment. This amendment provided the Company with a cash payment of £0.1 million on signature, further quarterly payments of £0.1m and a £8.8 million payment on commencement of the project as signified by the award of certain key contracts. In September 2012 the Company received notification that RWE Innogy wished to revert to the terms of the original earn out agreement. The Company is aware that RWE Innogy secured a revised planning consent for the plant in July 2012 although there is no clarity over the timing or cost of construction. The Directors consider that this provides objective evidence of the uncertainty surrounding the receipt of contractual cash flows and as a result have impaired the balance of £8.8m in the financial statements to £nil, although the Company intends to continue to seek clarity from RWE Innogy on the future plans for the project and will work to secure future value for Helius.

Southampton Project

The Southampton project is based in an industrial area within Southampton port. The project will be 100MWe export capacity and investigations are underway for the possible use of heat supply to local industrial, commercial and residential developments.

The majority of the fuel will be delivered to the plant by sea through the Port of Southampton with some locally sourced fuel being delivered to the site by road.

We started the public consultation for this project in February 2011 and received a high level of local interest in our proposals. Taking account of the feedback from the local community we prepared an amended scheme which was the subject of a second public consultation during 2012. It is expected that a full application to the Infrastructure Planning Commission for a Development Consent Order will be submitted during H1 2013.

Project Portfolio

The Company is currently in discussions with a number of UK site owners regarding future sites for the development of biomass projects. The intention is to secure sites that will enable the commencement of development of at least a further 200M We of capacity within the next two years. The Company intends to avoid making significant cost commitments to new sites until the Avonmouth project is financed and some form of development fee generated. The Directors have reviewed the recoverability of all projects and made adjustments to carrying values where necessary.

Financial Position and Key Performance Indicators

During the year the Company expended £4.8 million of cash through its operating and investing activities (2011 £10.2m). This was made up of £1.6 million (2011 £2.1m) of corporate and administration costs (operating activities) and £3.2 million (2011 £8.2m) of project development costs (investing activities). The primary focus for this expenditure was progressing the Avonmouth and Southampton projects. Cash and short-term deposits held by the Company as at 30 September 2012 were £2.0 million. During the year the Company secured a loan facility of £1m from one of its major shareholders to mitigate any delays in closing the Avonmouth project. This facility effectively ensured cash would be available until the end of March 2013. As a consequence of the delay in the Avonmouth project, the current status of both the debt and equity negotiations for this project, the Company has been considering the working capital position of the Company and is expecting to announce a conditional share issue which the Directors are confident will provide additional funding for the Company.

The operating loss for the period was £11.6 million including operating costs of £1.6 million, non cash share based payment charges of £0.1 million and impairments of £9.9 million. The overall loss for the period was £10.8m which comprises the operating loss of £11.6m and non cash finance income of £0.8 million.

Key financial highlights

Income statement	2012	2011
	£'000	£'000
Revenue	310	148
Cost of sales	(269)	(132)
Administrative costs including share based payments Impairment of the earn out asset Project impairments	(1,753) (8,800) (1,087)	(2,575) (739) -
Gain on loss of control in subsidiary undertaking	-	2,541
Operating loss	(11,599)

As a requirement of the project finance facility, the CoRDe (Rothes) joint venture company entered into hedging agreements for foreign currency and interest rates in order to mitigate any risk associated with volatility in those rates. The Group has recognised its share of the movement in the fair value of the hedging agreements in the period to 30 September 2012 of £0.8m (2011, £2.5m) in the consolidated statement of total comprehensive income.

The following milestones were achieved during the year:

· Significant progress with the construction of Rothes project

· Boiler Installation largely complete at Rothes

· Material progress of detailed negotiations for Avonmouth equipment supply, construction and fuel supply contracts

· Significant costs reductions delivered following restructuring in 2011

· Progressed the consenting process for Southampton project

· Further developed relationships with local and international suppliers of sustainable fuel

· Secured a shareholder loan facility of £1m from Angus MacDonald

· Impairment of the RWE earn-out asset to £nil

Outlook

Our strategy remains one of focusing the Company's resources on delivering projects to financial closure and managing the implementation and operation of those projects. Our intent 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.

Adrian Bowles Alan Lyons

Chief Executive Officer Chief Financial Officer

Consolidated income statement

For the year ended 30 September 2012

		Year ended	Year ended
		30 September	30 September
		2012	2011
	Note	£	£
Revenue	4	309,713	148,308
Cost of sales		(269,104)	(132,302)
Gross profit		40,609	16,006
Other administrative expenses		(1,644,805)	(2,112,513)
Share-based payment costs		(108,410)	(462,409)
Impairment of property, plant and equipment	11	(1,086,491)	-
Total administrative expenses		(2,839,706)	(2,574,922)
Adjustment to the earn-out receivable from changes in expected cash flows	13	-	(739,435)

Consolidated statement of total comprehensive income

For the year ended 30 September 2012

		Year ended 30 September 2012 £	Year ended 30 September 2011 £
(Loss)/profit for the year attributable to equity holders of the parent company		(10,841,142)	71,764
Other comprehensive income net of tax		-	-
Share of other comprehensive income, net of tax, from Joint Venture	15	(818,862)	(2,517,588)
Total comprehensive loss for the year attributable to equity holders of the parent company		(11,660,004)	(2,445,824)

Consolidated statement of financial position

As at 30 September 2012

		Year ended	Year ended
		30 September	30 September
		2012	2011
	Note	£	£
Non-current assets
Property, plant and equipment	11	9,292,890	6,772,929
Investment in joint venture	15	7,043,207	7,865,944
Total non-current assets		16,336,097	14,638,873
Current assets
Loans and receivables	13	-	8,460,565
Trade and other receivables	16	662,360	357,554
Cash and cash equivalents		1,969,784	554,873
Total current assets		2,632,144	9,372,992
Total assets		18,968,241	24,011,865
Current liabilities
Trade and other payables	17	(996,392)	(734,078)
Total current liabilities		(996,392)	(734,078)
Total liabilities		(996,392)	(734,078)
Total net assets		17,971,849	23,277,787
Total capital and reserves attributable to equity holders of the parent company
Share capital	18	1,328,537	915,742
Share premium reserve	18	11,563,076	5,730,215
Capital redemption reserve	18	10,130	10,130
Merger reserve	18	410,833	410,833
Cash flow hedge reserve	18	(3,336,450)	(2,517,588)
Retained earnings	18	7,995,723	18,728,455
Total equity		17,971,849	23,277,787

Consolidated statement of cash flows

For the year ended 30 September 2012

		Year ended	Year ended
		30 September	30 September
		2012	2011

Consolidated statement of changes in equity

For the year ended 30 September 2012

	Capital
	redemption	Share	Share	Merger	Cash flow hedge	Retained
	reserve	capital	premium	reserve	reserve	earnings	Total
2011	£	£	£	£	£	£	£
Changes in equity
At 1 October 2010	10,130	871,235	5,066,214	410,833	-	18,194,282	24,552,694
Profit for the year	-	-	-	-	-	71,764	71,764
Other comprehensive income	-	-	-	-	(2,517,588)	-	(2,517,588)
Total comprehensive loss for the year	-	-	-	-	(2,517,588)	71,764	(2,445,824)

	Capital
	redemption	Share	Share	Merger	Cash flow hedge	Retained
	reserve	capital	premium	reserve	reserve	earnings	Total
2012	£	£	£	£	£	£	£
Changes in equity
At 1 October 2011	10,130	915,742	5,730,215	410,833	(2,517,588)	18,728,455	23,277,787
Loss for the year	-	-	-	-	-	(10,841,142)	(10,841,142)
Other comprehensive income	-	-	-	-	(818,862)	-	(818,862)
Total comprehensive loss for the year	-	-	-	-	(818,862)	(10,841,142)	(11,660,004)
Issue of share capital (net of costs)	-	412,795	5,832,861	-	-	-	6,245,656
Share-based payments	-	-	-	-	-	108,410	108,410
At 30 September 2012	10,130	1,328,537	11,563,076	410,833	(3,336,450)	7,995,723	17,971,849

The cash flow hedge reserve relates to the share of the movements of the cash flow hedges in the Helius CoRDe Ltd, a joint venture. Further details are provided in note 15.

Notes to the consolidated financial statements

1. Accounting policies

Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC Interpretations issued by the International Accounting Standards Board ("IASB") as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS.

The Group has elected to prepare its parent company financial statements in accordance with UK GAAP.

The financial information set out in this announcement does not constitute the Group's statutory accounts for the years ended 30 September 2011 or 30 September 2012 within the meaning of section 435 of the Companies Act 2006, but is derived from those accounts. Statutory accounts for the year ended 30 September 2011 have been delivered to the Registrar of Companies and those for 30 September 2012 will be delivered following the Company's Annual General Meeting. The reports of the auditors for the years ended 30 September 2011 and 30 September 2012 did not contain statements under s498(2) or (3) of the Companies Act 2006. Their report for the year ended 30 September 2012 includes reference to the material uncertainty in respect of the Group requiring additional funds to continue with its activities and its planned development program which the auditors drew attention to by way of emphasis of matter without qualifying their report

Going concern

The financial statements have been prepared on the going concern basis which assumes that the Group will have sufficient funds available to enable it to continue to trade for the foreseeable future.

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 eighteen 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 the Group will require additional funds to continue with its activities and its planned development program.

As a result, the Directors are expecting to announce a conditional share issue which is contingent on shareholder approval. The Directors are confident that sufficient funding will be obtained through the share issue which will enable the Group to continue with its planned development programme until the intended financial close of the Avonmouth project in H1 2013.

The Directors are confident that additional funds will be generated through the financial close on the Avonmouth project. The share issue and the funds from financial close would provide sufficient working capital to the Group for the foreseeable future. For these reasons, the Directors have prepared the financial statements on a going concern basis.

Should the share issue not be approved the Group will need to seek alternative funds by March 2013 to meet its obligations as they fall due. In the event that the share issue is approved or the Group obtains alternative sources of funding by March 2013, the Directors believe that, in the event that the Group is unable to secure financing for the Avonmouth Project on suitable terms, or at all, it is likely that the Company will need to raise additional financing within twelve months.

These conditions indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. The financial statements do not contain any adjustments which may be required if the Group is unable to secure additional funding.

Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. Intercompany transactions and balances between Group companiesare therefore eliminated in full as at 30 September 2012.

The consolidated financial statements incorporate the results of Helius Energy plc and all of its subsidiary undertakings as at 30 September 2012,using the acquisition or merger method of accounting as required. Where the acquisition method is used, the results of the subsidiary undertakings are included from the date of acquisition.

On 9 June 2006 Helius Energy plc entered into a share for share exchange agreements with the shareholders of Helius Power Limited, whereby Helius Energy plc acquired the entire share capital of Helius Power Limited, the consideration being satisfied by the allotment of ordinary shares in Helius Energy plc to the shareholders of Helius Power Limited.

As this transaction is outside the scope of IFRS 3 and in the absence of any relevant guidance under International Financial Reporting Standards, the acquisition has been accounted for as a Company reconstruction as permitted under UK Financial Reporting Standard 6, the most relevant accounting treatment that can be applied to the situation.

Under merger accounting the acquisition has been accounted for as though the Company, as currently constituted, has been in place for the whole of the period covered by these financial statements. As such, the results have been presented as though Helius Power Limited and its subsidiary company had always been part of Helius Energy plc.

Joint ventures are those entities over whose activities the Company has joint control established by contractual agreement. Interests in joint ventures through which the Company carries on its business are classified as jointly controlled entities and accounted for using the equity method. This involves recording the investment initially at cost and then in subsequent periods adjusting the carrying amount of the investment to reflect the Company's share of the joint venture's results.

Gains and losses on transactions between the Company and its joint ventures are eliminated to the extent of the Group's interest in the joint venture.

Changes in accounting policies

(a) New standards, amendments to published standards and interpretations to existing standards effective in the year ended 30 September 2012 adopted by the Company:

§Amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets. This Amendment provides a presumption that recovery of the carrying amount of the asset will, normally be, through sale. Management has concluded that to date there has been no impact on the results or net assets of the Company as a result of this amendment.

§Amendments to IAS 1.This Amendment requires companies to group together items within Other Comprehensive Income that may be reclassified to the profit or loss section of the income statement. This is a disclosure amendment and has no impact on the results or net assets of the Company.

(b) Standards, amendments and interpretations to published standards not yet effective and not adopted early by the Company

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Company's accounting periods beginning on or after 1 January 2013 or later periods and which the Company has decided not to adopt early. Managementare currently assessing the impact of these amendments.

§IFRS 10 establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. The new standard replaces the consolidation requirements in SIC-12 Consolidation-Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements. Management are currently assessing the impact of this standard.

§IFRS 11 Joint Arrangements .The principle in IFRS 11 is that a party to a joint arrangement recognises its rights and obligations arising from the arrangement rather than focussing on the legal form. There will no longer be an option to use proportionate consolidation. The new standard supersedes IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities - Non - monetary Contributions by Venturers. Management are currently assessing the impact of this standard

§IFRS 12 Disclosure of Interests in Other Entities includes the disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. The standard requires a reporting entity to disclose information that helps users to assess the nature and financial effects of the reporting entity's relationship with other entities. Management are currently assessing the impact of this standard.

§IFRS 13 defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. The standard applies, except in some specified cases (e.g. share-based payments) when other IFRSs require or permit fair value measurements. Management are currently assessing the impact of this standard.

§IAS27 contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. The Standard requires an entity preparing separate financial statements to account for those investments at cost or in accordance with the applicable financial instruments standard (i.e. IAS 39 or IFRS 9). Management are currently assessing its impact on the financial statements

§IAS 28 now includes the required accounting for joint ventures as well as the definition and required accounting for associates. Equity accounting is required in consolidated or individual financial statements for both of these types of investment unless the investing group is a venture capital organisation, mutual fund, unit trust or similar entity in which case the entity may account for those investments in accordance with the applicable financial instruments standard. Proportionate consolidation is no longer an option for joint ventures. Management are currently assessing its impact on the financial statements.

§IAS 19 Employee Benefits. The main changes introduced by the amendment revolve around the accounting for defined benefit pension schemes. The amendments will have no impact on the financial statements of the company.

§IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine. This will have no impact on the statements of the company.

§IFRS 7 Disclosures-Offsetting Financial Assets & Liabilities. This Amendment introduces disclosures intended to enable users of financial statements to evaluate the effect or potential effect of netting arrangements on an entity's financial position. Management are currently assessing its impact on the financial statements.

§IFRS 1 Government Loans. The Amendments add an exception to the retrospective application of IFRSs to require that first-time adopters apply the requirements in IFRS 9 Financial Instruments (or IAS 39, if IFRS 9 has not yet been adopted) and IAS 20 Accounting for Government Grants and Disclosure of Government Assistance prospectively to government loans existing at the date of transition to IFRSs. These amendments will have no impact on the financial statements of the company.

§Annual improvements to IFRS. Improvements in this amendment clarify the requirements of IFRS and eliminate inconsistencies within and between standards. The changes include amendments to:

o IFRS 1 'First-time Adoption of International Financial Reporting Standards'.

o IAS 1 'Presentation of Financial Statements'

o IAS 16 'Property, plant and equipment'.

o IAS 32 'Presentation of Financial Statements'.

Management are currently assessing the impact of these improvements on the financial statements.

Changes in accounting policies continued

§Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) Management are currently assessing the impact of these amendments on the financial statements.

§IAS32 This Amendment to IAS 32 seeks to clarify rather than to change the off-setting requirements to financial assets & financial liabilities previously set out in IAS 32 .Management are currently assessing the impact of this amendment.

§Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27).The exception means that investment entities will be able to measure all of their investments at fair value using the requirements in IFRS. These amendments will have no impact on the financial statements of the company.

§IFRS 9 will eventually replace IAS 39 in its entirety. However, the process has been divided into three main components: Classification and measurement; impairment; and, hedge accounting. As each phase is completed, it will delete the relevant portions of IAS39 and create new chapters in IFRS 9. This is effective for annual periods beginning on or after 1st January 2015, this standard is not yet endorsed by the European Union. Management are currently assessing the impact of this standard.

Revenue recognition

Revenue for the Company is measured at the fair value of the consideration received or receivable. Revenue comprises the amounts receivable for services provided netof value added tax.

The Companyrecognises revenue for services provided when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.

Impairment of non-financial assets

Intangible and other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in useand fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit (the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows).

Impairment charges are included in the administrative expenses line item in the consolidated income statement, except to the extent they reverse gains previously recognised in the consolidated statement of recognised income and expense.

Foreign currencies

Transactions entered into by Company entities in a currency other than the currency of the primary economic environment in which they operate(their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated income statement.

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "foreign exchange reserve").

Financial assets

The Company classifies all of its financial assets as loans and receivables as discussed below. The Company has not classified any of its financial assets as held to maturity.

Loans and receivables: these assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method.

The Company's loans and receivables comprise both loans and receivables and trade and other receivables in the Consolidated Statement of Financial Position.

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of six months or less and bank overdrafts. Bank overdrafts are shown within loans and borrowings in current liabilities on the balance sheet.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterpartyor default or significant delay in payment) that the Company will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowanceaccount with the loss being recognised within administrative expenses in the income statement. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

1.Accounting policies continued

Financial liabilities

The Company classifies its financial liabilities as other financial liabilities which include the following items:

§bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the balance sheet. Interest expense in this context includes initial transaction costs and premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding; and

§trade payables, other borrowings and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Hedge accounting

Hedge accounting is only applicable for transactions undertaken in Helius CoRDe Limited, the joint venture entity. No additional hedging transactions have been undertaken in the Group in the year ended 30 September 2012. Hedge accounting is applied to financial assets and financial liabilities where all of the following criteria are met:

§At the inception of the hedge there is formal designation and documentation of the hedging relationship and the Group's risk management objective and strategy for undertaking the hedge.

§For cash flow hedges, the hedged item in a forecast transaction is highly probable and presents an exposure to variations in cash flows that could ultimately affect profit or loss.

§The cumulative change in the fair value of the hedging instrument is expected to be between 80-125% of the cumulative change in the fair value or cash flows of the hedged item attributable to the risk hedged (i.e. it is expected to be highly effective).

§The effectiveness of the hedge can be reliably measured.

§The hedge remains highly effective on each date tested. Effectiveness is tested quarterly.

Cash flow hedges

The effective part of forward contracts designated as a hedge of the variability in cash flows of foreign currency risk arising from firm commitments, and highly probable forecast transactions, are measured at fair value with changes in fair value recognised in other comprehensive income and accumulated in the cash flow hedge reserve. The effective portion of gains and losses on derivatives used to manage cash flow interest rate risk (such as floating to fixed interest rate swaps) are also recognised in other comprehensive income and accumulated in the cash flow hedge reserve.

The joint venture has adopted the basis adjustment where the hedge of a forecast transaction results in a non-financial asset, whereby associated gains and losses recognised directly inequity are included in the initial cost of the non-financial asset.

Under the equity method of accounting for the joint venture in Helius CoRDe Limited, the share of the changes in fair values recognised in other comprehensive income in relation to cash flow hedges are reflected in the consolidated statement of comprehensive income.

Where the hedging designation is revoked the cumulative gain or loss on the hedging instrument recognised directly in equity when the hedge was effective remains in equity until the forecast transaction occurs.

Share capital

Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group's ordinary shares are classified as equity instruments.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future costs of dismantling and removing items. The corresponding liability is recognised within provisions.

Office equipment - 25% per annum straight-line
Computer equipment - 25% per annum straight-line

Development projects in progress

Development projects in progress are assets arising from the project development phase of internal projects. The project development phase covers costs incurred from the point at which the Company secures a site, or an agreement for the purchase or lease of a site, through to the point at which the project can either be sold, or finance is secured for construction of the project and the construction phase starts. During this phase costs are incurred in securing planning consent and negotiating the suite of contracts required that will enable project finance to be secured, and allow the Company to build, own and operate a power plant.

These costs are treated as development projects in progress and capitalised if the Group can demonstrate all of the following:

a) there is a strong probability that any planning application for the site will be successful;

b) the technical feasibility of completing the asset so that it will be available for use or sale;

c) its intention and ability to obtain economic benefit through its use or sale;

d) the extent and nature of the future economic benefits. Among other things the Company must demonstrate the existence of a market for the output of the asset and a fuel supply that will deliver an appropriate financial return;

e) the availability and probability of obtaining appropriate technical and other resources to complete the development and to use or sell the asset;

f) the availability of project finance, or the existence of a market for the project to be sold; and

g) its ability to measure reliably the expenditure attributable to the asset during the development phase.

Development projects in progress continued

In accordance with IAS 36, the Company is required to test these assets for impairment by comparing their recoverable amount with their carrying amount, annually and whenever there is an indication that the asset may be impaired.

The Company tests these assets for impairment by reference to a project model which takes all of the expected income streams and costs of both building and operating a plant and calculates the expected profitability of the plant through its lifetime operation. Based on this measure,the Company is able to make an assessment of the ability to secure finance to construct the plant or, alternatively can make an assessmentas to its potential sale value prior to construction. In the event and to the extent that the Company believes the project will be unable to attract finance or, sold to a third party the costs will be impaired.

Development projects in progress are not depreciated until they have been completed and have been commissioned for use within the Company.

Leased assets

Where substantially all of the risks and rewards incidental to ownership of a leased asset are not transferred to the Group (an "operating lease"),the total rentals payable under the lease are charged to the consolidated income statement on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

Retirement benefits: defined contribution schemes

Contributions to defined contribution pension schemes are charged to the income statement in the year to which they relate.

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of the grant is charged to the income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored in to the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for the failure to achieve a market vesting condition.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of goods and services received.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs to its tax base,except for differences arising on:

§the initial recognition of goodwill;

§goodwill for which amortisation is not tax deductible;

§the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

§investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

§the same taxable company; or

§different company entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Business segments

The Chief Operating Decision Maker is defined as the executive directors.

The Board considers that the Company's project activity constitutes one operating and reporting segment, as defined under IFRS 8. Management reviews the performance of the Company by reference to total results against budget.

The total profit measures are operating loss and loss for the year, both disclosed on the face of the consolidated income statement. No differences exist between the basis of preparation of the performance measures used by management and the figures in the Company financial statements.

All of the revenues generated relate to management service agreements and are wholly generated within the UK. Accordingly there are no additional disclosures provided to the primary statements.

2. Critical accounting estimates and judgements

The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Earn-out receivable (see note 13)

The Company was notified by RWE Innogy in September 2012 that RWE Innogy wished to revert to the original earn-out provisions of the 2008 sale and purchase agreement in respect of the Stallingborough project. The board considered carefully the valuation of the earn out entitlement and consider that there is such uncertainty in the key assumptions used in the original terms of contract that currently the present value of estimated future cash flows is considered to be £nil for the purposes of valuation at 30th September 2012, hence an impairement of £8.8m has been booked, see note 13.

(b) Development projects in progress

Development projects in progress are assets arising from the development phase of internal projects. These are recognised if the Company can demonstrate all of the following:

a) there is a strong probability that any planning application for the site will be successful;

b) the technical feasibility of completing the asset so that it will be available for use or sale;

c) its intention and ability to complete the asset and obtain economic benefit through its use or sale;

d) the extent and nature of the future economic benefits. Among other things the Company must demonstrate the existence of a market for the output of the asset and the availability of fuel that will deliver an appropriate financial return;

e) the availability and probability of obtaining appropriate technical and other resources to complete the development and to use or sell the asset;

f) the availability of project finance, or the existence of a market for the project if sold; and

g) its ability to measure reliably the expenditure attributable to the asset during the development phase.

Development projects in progress are not depreciated until they have been completed and have been commissioned for use within the Company.

There is a risk that if the market conditions or underlying project assumptions change, such that the forecast project returns are no longer deemed to be sufficient either in part or in total to justify the continued development of the project, then the carrying value of the asset may be written down, or written off in the future. The risks associated with the development projects in progress as at 30 September 2012 are detailed further in note 11.

The Company has two equity-settled share-based schemes for employees and an LTIP scheme. Employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions. The fair value of share options and LTIPs are estimated by using the Black-Scholes model on the date of grant based on certain assumptions. Those assumptions are described in note 20 and include, among others, expected volatility, expected life of the options and number of options expected to vest. Should different assumptions be used then the fair value of the options would be different. Where vesting conditions exist for share options, the Board reviews progress against these vesting conditions annually and reviews the estimated date of financial close of projects which will impact the financial statements. In the event that milestones conditions are not met it is anticipated that certain options will lapse.

(d) Deferred tax assets

Deferred tax assets are only recognised when there is a reasonable anticipation that the Company will make profits in the foreseeable future against which the accumulated tax losses can be utilised.

3. Financial instruments - risk management

Financial instruments

The principal financial instruments used by the Company, from which financial instrument risk arises, are as follows:

§Financial assets

o Loans and receivables

§ Loans and receivables

§ Trade and other receivables

§ Cash and cash equivalents

§Financial liabilities

o Trade and other payables

To the extent financial instruments are not carried at fair value in the consolidated balance sheet, book value approximates to fair value at 30 September 2011 and 30 September 2012.

Loans and receivables are stated on an amortised cost basis with any changes to valuation being charged /credited to the consolidated statement of comprehensive income in the relevant period.

Trade and other receivables are measured at book value. Book values are reviewed by the Board and any impairment charged to the consolidated statement of comprehensive income in the relevant period.

Cash and cash equivalents are held in sterling and placed on deposit with UK banks.

Trade and other payables are measured at book value.

Capital management

The Company's capital is made up of share capital, share premium, capital redemption reserve, merger reserve, cash flow hedge reserve and retained earnings totalling £18.0 million at 30 September 2012 (2011: £23.3 million).

The Company's objectives when maintaining capital are:

§to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and

§to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Company sets the amount of capital it requires in proportion to risk. The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

The Company is reporting a £10,841,142 loss for the period ended 30 September 2012. The directors have recommended that no dividends will be payable for the period (2011: nil).

At a General meeting on 21 October 2011 a resolution was passed to raise approximately £6.55 million (gross), £6.24million (net) by way of a placing of New Ordinary Shares at 16 pence per share. Admission of the 40,946,142 new ordinary shares to trading on AIM occurred on 26 October 2011. All other shares issued in the year ended 2012 were for share options exercised.

In July 2011 non-executive director Angus MacDonald increased his holding in the Company following the issue of 4,360,674 new shares at 16p, representing 5% of the total issued share capital of the Company with an aggregate value of £697,707. All other shares issued in the year ended 2011 were for share options exercised.

3. Financial instruments - risk management continued

The Company is exposed through its operations to the following key risks:

Market price risk

The Company is exposed to risk of variations in the wholesale price of electricity and biofuel material when assessing the financial viability of planned projects. Currently the Company has not entered into any forward contracts to fix prices of these commodities. The directors will continue to monitor the benefit of entering into such contracts.

Foreign currency risk

Foreign currency fluctuations will impact both the cost of construction and potentially fuel for biomass plants.

Credit risk

Credit risk is the risk of financial loss to the Company when a financial instrument due under contract is not received.

At 30 September 2012the Company is exposed to credit risk associated with the earn out entitlement included within the Sale and Purchase Agreement for the sale of the Stallingborough project. In the year ending September 2012 the earn out asset was impaired to £nil due to objective evidence of the significant delay in payments under the agreement. While the earn out is valued at £nil in the financial statements, the Company is still entitled to receive payments under the terms of the original earn out provisions in the event the plant is built. The payment is guaranteed by the parent company of RWE in the UK. As such, management considers this to be a low credit risk to the Company.

Other than the impairment of the loan provided to Carolina Pacific LLC as detailed in note 16, no other trade and other receivable balances are past due or require impairment.

In addition to the financial instruments used by the Company as outlined above, the Company's Joint Venture investment also uses foreign currency and interest rate hedging instruments in order to mitigate foreign currency and interest rate risk in the construction of assets as required under the project finance facility.

The instruments are designated as fair value through profit and loss, measured at fair value and are categorised at Level 1 in the fair value hierarchy. Further details are provided in Note 15.

4. Revenue recognition

Revenue in 2012 represents income arising from the Management Services Agreements with The Combination of Rothes Distillers' (CORD) and Helius CoRDe Ltd a joint venture in which the Company holds 50% plus 1 share. The revenue recognised in 2012 from the joint venture was £219,416 (2011: £110,808) and £90,297(2011: £37,500) from The Combination of Rothes Distillers'.

5. Loss from operations

This has been arrived at after charging:	Year ended	Year ended
	30 September	30 September
	2012	2011
	£	£
Staff costs	1,882,780	2,025,914
Depreciation	36,349	41,370
Auditors
Audit fees	37,500	37,500
Other taxation services	9,100	9,000
All other services	6,817	24,133
Operating lease expense - property	115,909	115,909

6. Staff costs

	Year ended	Year ended
	30 September	30 September
	2012	2011
	£	£
Staff costs (including directors) comprise:
Wages and salaries	1,552,012	1,709,983
Social security costs	195,995	199,626
Defined contribution pension costs	94,081	93,051
Health scheme	30,692	23,254
Bonus	10,000	-
	1,882,780	2,025,914

2011 - the average number of employees (including directors) during the period was 24.

2012 - the average number of employees (including directors) during the period was 21.

Included in other creditors at 30 September 2012 is £12,502 (30 September 2011: £11,968) of pension contributions unpaid at that date.

6. Staff costs continued

	Year ended	Year ended
	30 September	30 September
	2012	2011
	£	£
Directors' remuneration, included in staff costs
Salaries	740,874	617,750
Company contributions to private pension schemes	45,639	33,731
Bonus	-	-
Health scheme	7,691	4,535
	794,204	656,016

Details of all directors'remuneration, including the remuneration of the highest paid director, for the year ended 30 September 2012 are listed in the directors' report.

7. Finance income

	Year ended	Year ended
	30 September	30 September
	2012	2011
	£	£
Finance income
Bank interest receivable	22,395	20,212
Unwinding of discount from the sale of the Stallingborough project	739,435	819,000

The unwinding of the discount from the sale of the Stallingborough project represents the increased value of the earn-out based upon the discount made in September 2011. Any changes to the valuation as a consequence of changes in the underlying assumptions are shown against the line "adjustment to the earn-out receivable from changes in expected cash flows" in the statement of comprehensive income.

8. Tax expense

	Year ended	Year ended
	30 September	30 September
	2012	2011
	£	£
Current tax expense
UK corporation tax	-	-
	-	-
Deferred tax expense
Origination and reversal of temporary differences	-	-
Total tax charge	-	-

The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the UK applied to losses for the period are as follows:

	Year ended	Year ended
	30 September	30 September
	2012	2011
	£	£
(Loss)/profit before tax	(10,841,142)	71,764
Expected tax charge based on the standard rate of corporation tax in the UK of 25% (prior year 27%)	(2,710,286)	19,376
Expenses not allowable for tax	2,078,724	(561,357)
Other tax differences	8,682	7,720
(Utilisation)/increase in losses	634,130	534,261
Allowable deduction on exercise of share options	(11,250)	-
Total tax charge for the period	-	-

The Group has tax losses carried forward of approximately £12,108,000 for the year ended 30 September 2012 and approximately £9,571,000for 30 September 2011. These can be set off against future trading profits. No deferred tax asset has been recognised in theaccounts in respect of these losses as there is not likely, in the foreseeable future, taxable profits available against which the unused tax loss can be utilised.

9. (Loss)/profit per share

The calculation of the earnings per share is based on the following data:

	Year ended	Year ended
	30 September	30 September
	2012	2011
	£	£
(Loss)/profit
(Loss)/profit used in calculating basic and diluted (loss)/profit	(10,841,142)	71,764
Number of shares
Weighted average number of ordinary shares for the purpose of basic (loss)/profit per share	129,958,110	88,114,915
Effect of employee share options	-	1,836,268
Weighted average number of ordinary shares for the purpose of diluted (loss)/profit per share	129,958,110	89,951,183

The bonus effect of options was excluded from the number of shares used in the diluted EPS calculation for 2012 as those options were antidilutive.

10. Dividends

No dividends were declared in the period.

11. Property, plant and equipment

	Computer	Development
	and office	projects
	equipment	in progress	Total
	£	£	£
Cost or valuation
Balance at 1 October 2010	184,273	6,270,383	6,454,656
Additions	12,645	3,334,528	3,347,173

The impairment of development projects in progress in 2012 relates to costs ofequipment for the Veolia agreement signed in 2008. The Company has been working with Veolia on securing projects that would facilitate the recovery of these costs through agreements with third parties to process liquid bi-products. These activities have failed to lead to any firm contracts so the company have impaired the balance and reflected this in the consolidated income statement. In arriving at the impaired value it has been assumed that there is no value recoverable.

Assets from development projects in progress were disposed of in 2011 as a result of the loss of control of a subsidiary when the CORD project reached financial close and became the joint venture Helius CoRDe Ltd. Helius Energy PLC holds 50% + 1 share for an investment of £7.9 million which included the £2.9 million development costs.

11. Property, plant and equipment continued

The £9.3 million balance of development projects in progress at 30 September 2012 can be further analysed as follows:

	2012	2011
	£	£
Projects in the "planning and development consent" stage	3,320,211	3,085,128
Projects in the "contract negotiation" or "financial close" stage	5,934,207	3,615,135
	9,254,418	6,700,263

The projects in the planning and development consent stage are:

§the Southampton project where the Company expects to make a planning application in 2013; and

Projects in the contract negotiation or financial close stage are:

§the Avonmouth project which was awarded deemed planning consent pursuant to the electricity act 1989 in 2010 and is currently in the development phase. Bids have been obtained for the equipment required to build the plant and negotiations are underway to secure the fuel required for the plant.The Company expect to achieve financial close in 2013.

12. Intangible fixed assets

	Patents
	£
Cost
At 1 October 2011	900,000
Additions during the period	-
At 30 September 2012	900,000
Provision for impairment
At 1 October 2011	900,000
Provision	-
At 30 September 2012	900,000
Net book value
At 30 September 2012	-
At 30 September 2011	-

Due to the management time required for the development of further projects the Board, during 2007, anticipated that no time would be allocated to the application of certain patents held. As a result no revenue streams are expected to be generated from these patents for the foreseeable future therefore the carrying value of £900,000 was fully impaired during 2007. The Board considers the treatment to be appropriate at 30 September 2012.

13. Loans and receivables

Sale of the Stallingborough project

During the year ending 30 September 2008, Helius Energy plc disposed of the Stallingborough project, otherwise referred to as Helius Energy Alpha Ltd ("Alpha") to RWE Innogy (UK) Ltd ("RWE"). Alpha contains the rights to planning permission and IP associated with the construction of a 65MWe biomass powered energy generation plant at a site in Stallingborough in the north of England. The transaction included a cash payment of £28.1 million and a deferred amount of consideration, payable through an earn-out arrangement equal to 13% of the post-tax profits generated by the project during its first 24 years of commercial operation.

13. Loans and receivables continued

At 30 September 2009 the directors reviewed the carrying value of the earn-out in light of expected changes in cash flows relating to the long-term forecast for electricity prices, the latest 20 year forecast for LIBOR, exchange rate impact on construction costs and a delayed date for commercial start up of the power plant and payments under the earn-out agreement. This review was carried out by Helius Energy plcand was not formally agreed with RWE. This review gave a revised carrying value of £12,298,000.

Deed of amendment to earn-out arrangement

During the September 2010 financial year, the Company was involved in extensive negotiations with RWE for a Deed of Amendment to the original earn-out arrangement. The Deed outlined that in the event that construction contracts were awarded later than September 2011, additional payments of £100,000 would become due for each quarter of delay. At an agreed date with RWE the Deed of Amendment becomes invalid and the original earn-out arrangement is reinstated, although no repayments of monies received at signature or as a consequence of quarterly delays are payable.

In arriving at a discounted value of £8,481,000 as at September 2010, the Board made the assumption that a total payment of £9,300,000 would be received, based on contracts being awarded by RWE in September 2012. This revised valuation is therefore made up of the £100,000 initial payment, £8,800,000 at the point of contracts being awarded and £400,000 of delay payments. The original effective interest rate for the transaction of 9% had been applied to the payments. The directors still consider these assumptions to be correct as at 30 September 2011. In the directors view there was no material difference between the carrying value of the earn out receivable at 30 September 2011 and its fair value using appropriate market rates.

The Company was notified by RWE Innogy in September 2012 that RWE Innogy wished to revert to the original earn-out provisions of the 2008 sale and purchase agreement in respect of the Stallingborough project. This was prior to the contracted reversion date of January 2013. The board considered that the revision provided objective evidence of significant delay of receipt of cash under the agreement and have carried out an impairment review. Management consider that there is such uncertainty in the key assumptions used in the original terms of contract, in particular on the date of construction, that currently the present value of estimated future cash flows is considered to be £nil at 30th September 2012.

	£
Earn-out valuation as at 30 September 2010	8,481,000
Cash received from earn-out deed of amendment	(100,000)
Unwinding of discount on September 2010 calculation (finance income)	819,000
Adjustment to the earn-out receivable from changes in expected cash flows	(739,435)
Earn-out as at 30 September 2011	8,460,565
Made up of:
Trade and other receivables (receivable <1 year)	8,460,565

Earn-out valuation as at 30 September 2011	8,460,565
Cash received from earn-out deed of amendment	(400,000)
Unwinding of discount on September 2011 calculation (finance income)	739,435
Impairment of the earn-out receivable	(8,800,000)
Earn-out as at 30 September 2012	-

14. Subsidiaries

The principal subsidiaries of the Company, all of which have been included in these consolidated financial statements, are as follows:

		Ownership	Ownership
		as at	as at
		30 September	30 September
Name	Country of incorporation	2012	2011
Helius Power Limited	United Kingdom	100%	100%
Helius Energy Gamma Ltd	United Kingdom	100%	100%
Southampton Biomass Power Ltd	United Kingdom	100%	100%
Liverpool Biomass Power Ltd	United Kingdom	100%	100%

15. Investment in Joint Venture

As at 30 September 2010 Helius CoRDe Limited was accounted for as a subsidiary. On the 13 April 2011 the Company reached financial close on the CoRDe project securing £42.5million of debt funding from Lloyds Banking Group and the Royal Bank of Scotland plc, along with an equity investment for new shares in Helius CoRDe Limited of £9.3 million at project level by Rabo Project Equity BV. The result of the funding and introduction of a contractual arrangement between Helius Energy PLC, Rabo Project Equity BV and The Combination of Rothes Distillers' Ltd was a loss of control and Helius Energy PLC now holds 50% + 1 non-controlling share in a Joint Venture at an investment cost of £7.9 million. All strategic financial and operating decisions in Helius CoRDe Ltd require a super majority between Helius and Rabo

On consolidation the interest in the Joint Venture was initially measured at fair value, being £10.4 million. The fair value was calculated from the amounts paid by the joint venture partners for their stake in the CoRDe project. The difference between the cost of investment, being the net assets of the subsidiary prior to it becoming a joint venture and the fair value of the retained interest in the joint venture was taken to the income statement as a gain of £2.5m on effective loss of control of a subsidiary during the year ended 30 September 2011.

The cost of investment in the joint venture was made up of a £4,947,981 cash payment and £2,904,648 development costs incurred which comprised the net assets of the subsidiary prior to loss of control.

Helius Energy plc values its shareholding in the joint venture initially at fair value, and then in subsequent periods, adjusts the carrying amount of the investment to reflect the company's share of the joint venture's results which include any comprehensive income relating to cashflow hedges.

		2011
		£
Investment in joint venture at cost		7,852,629
Gain on loss of control in subsidiary undertaking		2,540,903
Fair value of interest in joint venture on initial recognition		10,393,532
Share of Loss		(10,000)
Share of other comprehensive income in joint ventures relating to cash flow hedges		(2,517,588)
Investment at 30 September 2011

		2012
		£
Investment at 30 September 2011		7,865,944
Share of other comprehensive income in joint ventures relating to the transfer of the initial carrying amount of property, plant and equipment		825,062
Share of other comprehensive income in joint ventures relating to losses on cash flow hedges as at 30 September 2012		(1,643,924)
Share of other comprehensive income in joint ventures relating to cash flow hedges		(818,862)
Share of Loss		(3,875)
Investment at 30 September 2012		7,043,207

The Joint Venture, which is unlisted, results and assets / liabilities , are as follows:

	Helius CoRDe Ltd	Helius PLC share	Helius CoRDe Ltd	Helius PLC share
	30 Setember2012	30 September 2012	30 September2011	30 September 2011
Property, plant and equipment	45,639,956	50%	21,053,044	50%
Other current assets	2,534,984	50%	3,824,314	50%
Long term assets	-	50%	-	50%
Current liabilities	(5,826,119)	50%	(2,625,648)	50%
Long term liabilities	(24,394,307)	50%	(4,289,446)	50%
Financial instruments relating to cash flow hedges	(6,672,899)	50%	(5,035,176)	50%
Loss	(7,750)	(3,875)	(20,000)	(10,000)
Other comprehensive income relating to cash flow hedges	(1,637,723)	(818,862)	(5,035,176)	(2,517,588)

15. Investment in Joint Venture continued

As a requirement of the project finance facility, the CoRDe joint venture company entered into hedging agreements for foreign currency and interest rates in order to mitigate any risk associated with volatility in those rates. Hedge accounting has been applied to the instruments, with changes in the fair values of the effective portion of the instruments between reporting periods being taken through other comprehensive income statement of the Joint Venture. The Group has recognised its share of the movement in the period to 30 September 2012 of £818,862.

The hedging policy adopted by the project company is as follows:

Foreign currency

In order to ensure no variability in construction costs the project company entered a forward contract for 36,793,500 euros on the 13 April 2011 at a rate of 1.1238. On the 30 September the bank provided a fair value of the outstanding portion of the forward contract and this analysis resulted in a total liability of £1.0m.This liability is recognised as a derivative financial liability in the balance sheet of the joint venture with the change in value in other comprehensive and will reduce to nil through the construction period with the benefit being recognised in the future reporting periods.

Interest rates

In order to mitigate changes in interest rates the project company entered a forward contract for 100% of interest charges through the construction period and 75% of the interest costs through the 12 year repayment period on the 13 April 2011 based on the forward LIBOR rate . The fixed rate leg of the swap is 4.26% against the floating LIBOR rate. On the 30 September the bank provided a fair value valuation on the outstanding portion of the forward contracts and this analysis resulted in a total liability of £5.7m.

During the year ended 30 September 2012 Helius CoRDe contractors have completed installation of major plant and equipment, including boiler, turbine / generator, fuel handling, and evaporator together with associated control building and civil works. The site has been energised and connected to the 33kv grid. The project is still within budget, commissioning has started as programmed during the fourth quarter of 2012 and the plant is expected to enter commercial operation in 2013.

16. Trade and other receivables

	2012	2011
	£	£
Trade and other receivables	105,141	91,484
Prepayments	557,219	266,070
	662,360	357,554

Other than the impairment of the loan provided to Carolina Pacific LLC noted below (2011: none) no other trade and other receivable balancesare past due or impaired.

Impairment of other receivables

During 2007 and 2008 the Company made a number of payments to Carolina Pacific LLC (an organisation formed to supply biomass fuel tothe European market) under a loan agreement with all advances made against promissory notes that would become due on 31 December 2009.At 30 September 2009 the balance outstanding was £290,000 and the Board already had significant doubts over the financial viability of the operation of Carolina Pacific LLC and the ability to repay its debt due to its failure to make significant progress against its business plan. These doubts were confirmed in November 2009 when Carolina Pacific LLC sought to agree an amended repayment schedule for the notes and remove a charge the Company held over a briquetting machine owned by Carolina Pacific LLC. These terms were rejected by the Company. No repayments against the loan were received on the due date or subsequently and Helius Energy plc has since instigated legal proceedings to recover the outstanding amount. The loan is secured against a briquetting machine owned by Carolina Pacific LLC which was purchased during 2008 at a cost of ?116,630 and is, based on information provided, in an as-new condition. The Board considers the machine to have a value of at least £80,000 and as a consequence impaired the loan balance by £210,000 in the financial statements at 30 September 2009 leaving a balance of £80,000. Throughout the financial year to 30 September 2010 the Company had continued to seek recovery of the debt and had initiated legal proceedings. As the machine had not been recovered at 30 September 2010, the Board took the view that the receivable should be impaired to zero, the estimated fair value of the debt. Given that these proceedings are still ongoing the Board consider the treatment to be appropriate at the balance sheet date. The Board has continued to seek the recovery of the debt and expects to reach a conclusion in 2013 when the claim will reach settlement.

17. Trade and other payables

In September 2012 the Company secured a £1,000,000 loan facility with Angus MacDonald a non-executive Director of Helius Energy plc. The Facility is subject to a one off arrangement fee of 1.5% and interest payments of 6% per annum on amounts drawn down. The Facility is available from 1st October 2012. It will mature on 30th September 2013 and contains several events of default, including a material adverse change provision. The Facility replaces the previous facility provided by Angus Macdonald in August 2011 for £302,300. No funds were drawn down on the previous facility.

18. Share capital

	Issued and fully paid
	2012	2012
	Number	£
Ordinary shares of £0.01 each
At 1 October 2011	91,574,157	915,742
Shares issued	41,279,476	412,795
At 30 September 2012	132,853,633	1,328,537

	Issued and fully paid
	2011	2011
	Number	£
Ordinary shares of £0.01 each
At 1 October 2010	87,123,483	871,235
Shares issued	4,450,674	44,507
At 30 September 2011	91,574,157	915,742

The following describes the nature and purpose of each reserve:

Reserve	Description and purpose
Share capital	Amount subscribed for share capital at nominal value
Share premium	Amount subscribed for share in excess of nominal value
Capital redemption reserve	A reserve created for unissued shares as a result of a buyback
Merger reserve	A reserve created on the combinations of companies within the Group
Cash flow hedge reserve	A reserve created on recognition of the company's share of the cash flow hedge movements from joint ventures
Retained earnings	Cumulative net profits recognised in the consolidated income statement

19. Leases

Operating leases - lessee

The Group leases its property. The total future value of minimum lease payments due as follows:

	2012	2011
	£	£
Not later than one year

20. Share-based payment

Total share options and LTIPs granted under the Company's EMI, Unapproved and LTIP schemes are set out in the table below:

	2012		2011
	Weighted		Weighted
	Average	2012	average	2011
	exercise price	Number	exercise price	Number
Outstanding at beginning of the year	14.4p	10,501,550	13.7p	11,411,216
Granted during the year	-	-	-	-
Exercised during the year	1.0p	(333,334)	12.0p	(90,000)
Expired during the year	-	-	-	-
Forfeited during the year	21.8p	(49,000)	4.7p	(819,666)
Outstanding at the end of the year	14.8p	10,119,216	14.4p	10,501,550
These are made up of:
Exercisable at the end of the year	13.9p	5,501,123	13.1p	5,845,457
Outstanding and subject to vesting conditions at the end of the year	15.8p	4,618,093	15.9p	4,656,093

The weighted average share price when options were exercised during the year was 13.4 pence (2011: 20.8 pence).

Equity settled share option schemes

EMI scheme

The Company operates an EMI approved scheme for executive directors and certain senior management. Under the EMI approved scheme, options vest if the market value of the shares is greater than 10% above the floatation price for a period of twelve months since admission to AIM. All of these options have vested.

The number of EMI shares exercisable, and outstanding, at the end of the year 30 September 2012 is 2,893,385, with a weighted average price of 14.5 pence.

The range of exercise prices of share options outstanding at 30 September 2012 are 2,498,748 with exercise price of 12.0 pence which must be exercised by November 2016 and 394,637 with an exercise price range of 30.0 pence to 34.0 pence which must be exercised by May 2017. When these shares will be exercised will depend upon the individuals' circumstances and market price of the shares.

	2012		2011
	Weighted		Weighted
	Average	2012	Average	2011
Total EMI share options	exercise price	Number	exercise price	Number
Outstanding at beginning of the year	14.5p	2,893,385	14.5p	2,893,385
Granted during the year	-	-	-	-
Exercised during the year	-	-	-	-
Expired during the year	-	-	-	-
Forfeited during the year	-	-	-	-
Outstanding at the end of the year	14.5p	2,893,385	14.5p	2,893,385
Exercisable at the end of the year	14.5p	2,893,385	14.5p	2,893,385

20. Share-based payment continued

Equity settled share option schemes continued

Unapproved scheme

The Company operates an unapproved scheme for non-executive directors' and retained consultants. Under the unapproved scheme, options vest if the market value of the shares is greater than 10% above the floatation price for a period of twelve months.

The number of unapproved shares exercisable, at the end of the year 30 September 2012 is 1,497,383, with a weighted average price of 19.8 pence.

The range of exercise prices of share options outstanding at 30 September 2012 are 854,166 with an exercise price of 12.0 pence which mustbe exercised by June 2016 and 643,217 with an exercise price range of 26.0 pence to 31.0 pence which must be exercised by April 2018. When these shares will be exercised will depend upon the individuals' circumstances and market price of the shares.

	2012		2011
	Weighted		Weighted
	average	2012	Average	2011
Total unapproved share options	exercise price	Number	exercise price	Number
Outstanding at beginning of the year	24.2p	4,357,831	24.0p	4,567,831
Granted during the year	-	-	-	-
Exercised during the year	-	-	12.0p	(90,000)
Expired during the year	-	-	-	-
Forfeited during the year	26.5p	(40,000)	26.5p	(120,000)
Outstanding at the end of the year	24.2p	4,317831	24.2p	4,357831
These are made up of:
Exercisable at the end of the year	20.4p	1,638,405	20.4p	1,640,405
Outstanding and subject to vesting conditions at the end of the year	26.5p	2,679,426	26.5p	2,717,426

There were 2,980,448 unapproved options granted to directors and employees as part of a performance incentive scheme in 2009; these vest and are exercisable upon achieving defined objectives. To 30 September 2012 160,000 of these shares have been forfeited and in April 2011 upon reaching financial close of the CoRDe project 141,022 vested. The exercise price of these shares is 26.5 pence which must be exercised by April 2019. When these shares will be exercised will depend upon the individuals' circumstances and market price of the shares.

The outstanding options vest as follows:

	Vest on financial	Vest on financial	Vest on financial	Vest on financial
	close of	close of large	close of large	close of small
Total outstanding options	Avonmouth project	project 2	project 3	project 2
2,679,426	846,134	846,134	846,134	141,024

The Board assess progress against the above objectives on an annual basis, and, when necessary, as a result of the difficulties in accuratelypredicting the timing of planning awards, makes changes to expected delivery dates for vesting and subsequent charge to the financial statements. In the event that the Board take the view that any of the above objectives cannot be delivered within the option period they will be removed with a corresponding adjustment to the share-based payment charge in the year of removal.

20. Share-based payment continued

Equity settled share option schemes continued

Long-term Incentive Plan

The Company implemented a Long-term Incentive Plan in June 2010. The shares awarded under this plan vest over a three year period and are subject to achievement of specific targets agreed with the Remuneration Committee on an annual basis.

There were 3,950,000 shares granted with an exercise price of 1.0 pence to directors' and employees as part of a Long-term Incentive Plan in 2010.As at 30 September 2012 1,938,667 remain not vested. These shares are all expected to be vested during 2013.

There were 969,333 LTIPs exercisable at 30 September 2012 which must be exercised by June 2015. When these shares will be exercised will depend upon the individuals' circumstances and market price of the shares.

	2012		2011
	Weighted		Weighted
	average	2012	Average	2011
Total LTIPs	exercise price	Number	exercise price	Number
Outstanding at beginning of the year	1.0p	3,250,334	1.0p	3,950,000
Granted during the year	-	-	-	-
Exercised during the year	1.0p	(333,334)	-	-
Forfeited during the year	1.0p	(9,000)	1.0p	(699,666)
Outstanding at the end of the year	1.0p	2,908,000	1.0p	3,250,334
These are made up of:
Exercisable at the end of the year	1.0p	969,333	1.0p	1,311,667
Outstanding and subject to vesting conditions at the end of the year	1.0p	1,938,667	1.0p	1,938,667

The outstanding LTIPs vest as follows:

Total outstanding LTIPs granted			Vest 2013
1,938,667			1,938,667

21. Related party transactions

Key management remuneration	Year ended	Year ended
	30 September	30 September
	2012	2011
	£	£
Short-term employee benefits (excluding employers National Insurance contributions)	748,565	622,285
Payments into defined contribution pension schemes	45,639	33,731
Employers National Insurance contributions	97,178	68,789
Subtotal	891,382	724,805
Share-based payments	80,906	340,224
Total	972,288	1,065,029

In addition to above related party transactions, revenue of £219,416(2011: £110,808) is included in the consolidated statement of comprehensive income in relation to a management services agreement with the joint venture Helius CoRDe Ltd. Amounts owing by Helius CoRDe Ltd to Helius Energy plc at the 30 September 2012 were £19,174(2011: £17,694).

Alan Lyons, Director Helius Energy plc, is also the Chairman of Helius CoRDe Ltd.

In September 2012 the Company secured a £1,000,000 loan facility with Angus MacDonald a non-executive Director of Helius Energy plc. The Facility is subject to a one off arrangement fee of 1.5% and interest payments of 6% per annum on amounts drawn down. The Facility is available from 1st October 2012. It will mature on 30th September 2013 and contains several events of default, including a material adverse change provision. The Facility replaces the previous facility provided by Angus Macdonald in Aug 2011 for £302,300. No funds were drawn down on the previous facility.

22. Events after the reporting period

In January 2013 the Company made a drawdown of £200,000 against the loan facility provided by Angus MacDonald.

23. Control

There is no one controlling party. The Company is quoted on the London Alternative Investment Market.

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Helius Energy Plc

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Helius Energy Plc : 2012 Full Year Results

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