For the period ending on 30 September 2023
- Commencement of construction at the Narromine clean energy project as part of MPower’s phased national rollout of renewable energy assets, following successful procurement of all development rights
- $6.1 million gain recognised on the Lakeland Solar & Storage project, based on an independent external valuation following the implementation of operational and financial improvements
- Strategic investment from Oceania Capital Partners Limited, comprising the refinancing of existing debt facilities and the acquisition by OCP of a 14.5% stake in the business
- $10 million funding facility with AMPYR Energy, a global renewable energy development and investment firm, advanced to unconditional status
- Ongoing development work across MPower’s multi-asset portfolio with respect to regulatory approvals and supply of best-in-class components
Sydney – 31 October 2023 – MPower Group Limited (ASX: MPR)
Leading specialist renewable energy, battery storage and microgrid business MPower Group Limited (ASX: MPR) is pleased to provide the following report on its activities for the quarter ending 30 September 2023 (Quarter).
Activities in the September Quarter were led by successful execution of long-term financing initiatives, which position MPower with the funding flexibility to carry out its multi-phase project development strategy, alongside ongoing operational momentum and a material valuation uplift of the Lakeland Solar & Storage project.
$6.1 million valuation gain for Lakeland Solar & Storage
During the Quarter, MPower commissioned an independent valuation of the Lakeland Solar & Storage Project in North Queensland – a 10.8MWac solar farm with an associated 1.4MWac/5.3MWh lithium-ion battery storage facility that the Company acquired in August 2022.
A valuation of $12.7 million has been adopted, resulting in a one-off revaluation gain of $6.1 million that was subsequently recognised as profit in the Company’s audited 2023 financial statements.
MPower successfully reduced annual operating costs at Lakeland by over $1 million by taking operational control over the project and implementing streamlined cost initiatives, that also resulted in improvements to project reliability and performance.
The project continues to generate consistent revenues for MPower through a long-term Power Purchase Agreement with Origin Energy at a fixed price that escalates annually based on a CPI index.
Narromine clean energy project – construction underway
Quarterly operations were also highlighted by key developments at MPower’s fully-owned Narromine clean energy project, where the Company successfully procured all project development rights – including the Connection Agreement for connection to the grid, land rights and key planning approvals – that were required before construction can commence.
With regulatory approvals in place, MPower has commenced the construction phase at Narromine – the next near-term priority as part of the Company’s stated strategy to establish a significant Build Own Operate portfolio of renewable energy projects across Australia.
The Narromine project will be comprised 6.7 MWdc of Bifacial PV Modules with the capacity to produce more than 14,000MWh of energy in its first year of operations. The project is due to be completed in 2024 and will earn revenue from the sale of renewable energy and certificates.
Strategic investment from Oceania Capital Partners
Alongside its operational momentum, MPower materially strengthened its balance sheet during the Quarter with a new loan facility and equity position from diversified Australian investment group Oceania Capital Partners Limited (OCP).
The transaction allowed the Company to fully extinguish its $4.5 million debt facility with St George Bank and replace it with a new $1.8 million loan from OCP, which has also taken a 14.5% equity stake in MPower through the issue of 50 million ordinary shares in consideration for providing the loan facility.
Combined with the Company’s strategic $10 million project funding facility with AMPYR – which was granted unconditional status during the Quarter and will fund the development of the Narromine project through to completion – the funding agreement with OCP provides MPower with improved balance sheet strength to execute on the rollout of its clean energy asset portfolio.
The refinancing also significantly reduced ongoing debt service obligations and delivered a one-time financial benefit of $2.8 million to the Company.
Financial overview
Cash receipts during the Quarter were $1.314 million that mainly relate to consistent ongoing revenues generated through the Company’s service and maintenance activities. The main cash outflows were operating costs of $1.025 million and staff costs of $0.827 million. Net cash used in operating activities was $0.878 million, which includes costs associated with project construction activities that are capitalised as assets on the consolidated balance sheet.
Chief Executive Officer Nathan Wise commented: “The September quarter resulted in the achievement of another round of key milestones for the group, underpinned by long-term financing arrangements that set the business up for the execution of our renewably energy development strategy on a project-by-project basis. The commencement of construction at Narromine is an exciting step forward in that regard, and we look forward to providing more updates into CY2024 as MPower continues to play a leading role in the clean energy transition across Australia.”
Payments to related parties
Payments of $122K to related parties and their associates relate to remuneration payments made to the directors of the company.
Ends
Contact
For further information, please contact:
Nathan Wise
Chief Executive Officer
(02) 8788 4600
Ben Jarvis
Six Degrees Investor Relations
0413 150 448
This announcement has been authorised by the board of MPower Group Limited.
About MPower
MPower Group Limited (ASX: MPR) is a technology-led company with a long history specialising in the delivery of reliable on-grid and off-grid power solutions for blue chip corporate and government customers. Headquartered in Sydney, MPower's team of professionals has successfully delivered turn-key solar, battery storage and micro grid projects across the region.