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Quarterly Report

For the period ending on 30 June 2022



- Forthcoming acquisition of Lakeland Solar & Storage Project, a strategic asset forecast to generate additional annual revenues of ~$1.8 million


- Continued development of Build Own Operate platform, comprising a national project portfolio of clean energy assets


- Successful 12-month extension agreement with St George Bank in respect of $5.1 million term loan


- Cash receipts from operating activities totalled $1.187 million, an improvement from $0.984 million in the previous quarter



Sydney – 29 July 2022 – 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 on 30 June 2022 (Quarter).


Operational overview

During the Quarter, MPower’s operational initiatives were highlighted by its successful agreement to acquire the Lakeland Solar & Storage Project in Far North Queensland. Along with a new source of established recurring revenues, the acquisition aligns with MPower’s Build Own Operate strategy, to establish diversified revenue streams through a national portfolio of clean energy assets.


Lakeland Solar & Storage Project


Located in Cooktown Shire, North Queensland, Lakeland comprises a 10.8MWac solar farm and an associated 1.4MWac/5.3MWh lithium-ion battery storage facility. The project has been in operation since 2017 and has a future operating life of around 20 years. It benefits from a long-term power purchase agreement with Origin Energy for 100% of the solar power output, which runs until 2030.


Image: Lakeland Solar & Storage Project


Accretive earnings through a proven asset


Through its acquisition of Lakeland, MPower expects to generate additional annual revenues of around $1.8 million from the sale of energy and large-scale generation certificates to a major power provider.


MPower also flagged the opportunity to generate cost efficiencies through the deployment of its in-house engineering team to drive operational improvements, including upgrades to project infrastructure and implementation of MPower’s proprietary solution for the control and monitoring of renewable energy projects.


Combining Lakeland’s established revenue streams with operational cost savings, MPower expects the acquisition to contribute around $0.8 million in annual earnings before interest, tax, depreciation and amortisation (EBITDA).


Along with the sale of solar energy, Lakeland’s lithium-ion battery storage capacity further enhances MPower’s capacity to own and manage assets in the burgeoning battery storage sector. It marks the Company’s first entry into Queensland, further nationalising its planned market footprint beyond sites in New South Wales, Victoria and South Australia.


Deal terms


During the quarter, MPower entered into a Share Purchase Agreement with Kawa Australia Developments Pty Limited to acquire 100% of the shares in Lakeland Solar & Storage Pty Ltd. The transaction has an enterprise value of $8 million.


Total consideration for Lakeland comprises a deferred consideration of up to $0.35 million over a three-year period following completion, and the assumption of an existing $7.66 million limited recourse long-term debt facility in place with German bank, NORD/LB.


Headquartered in Hanover, NORD/LB is one of Europe’s largest renewable energy project finance banks.


At the time of its announcement, the transaction remained subject to a number of conditions including third party consents being obtained and the finalisation of amendments to the existing debt facility structure. The parties have been working towards satisfying the conditions and the Company currently expects the deal to be finalised in August 2022.


Build Own Operate Pipeline


Following on from its operational developments in the last quarter, MPower continued to advance the development of its Australia-wide network of clean energy assets in the June quarter.


The Company has entered into separate binding Asset Purchase Agreements with respect to the acquisitions of three Build Own Operate clean energy sites at Narromine (NSW), Mangalore (Victoria) and Faraday (Victoria).


All three projects were further advanced in the June quarter, and MPower remains fully engaged with its site development partners to bring the sites up to shovel-ready status. Once each project is fully permitted, completion of the asset purchases will be finalised which is expected to take place in the coming months.


MPower plans to build clean energy assets on each of these sites, and currently intends to sell the generated electricity into the grid at market prices, rather than under fixed offtake contracts. Prevailing market prices are very high by historical standards while the National Electricity Market faces a number of challenges. MPower remains committed to the immediate development of its renewable energy assets and continues to engage with a number of potential partners to accelerate the roll-out. There are several value catalysts pending and updates will be provided as these materialise.


The Company has also significantly progressed development of two hybrid solar battery projects in South Australia during the Quarter. A hybrid 5MW solar farm with a DC-coupled 5MW/10MWh battery project is being planned at each site. MPower is actively seeking planning approvals and grid connections for the sites which are expected to be shovel-ready this calendar year.

MPower continues to seek new project sites to expand its existing pipeline of 10 sites, representing more than 50MW of proposed generation capacity, over which it currently holds exclusivity. The Company is targeting 100MW of proposed generation capacity in the first phase of its Build Own Operate strategy.


Corporate

Firm commitments secured to raise $1.7 million

Subsequent to the end of the Quarter, MPower received firm commitments to raise $1.7 million (before costs) in new equity funding to advance the Company’s Build Own Operate strategy and for working capital purposes.

The placement includes the issue of 55 million new fully paid ordinary shares at 2.4 cents per share to a range of sophisticated and professional investors to raise $1.32 million under the Company’s ASX Listing Rule 7.1 and 7.1A placement capacity. Each new share will include a 2:3 attaching option, with a strike price of 4.5 cents and expiry four years from the date of issue. Attaching options will be issued and quoted on the ASX, subject to approval at an upcoming EGM and ASX listing requirements being met.


The Tag Private Group, MPower’s largest shareholder that is associated with the Company’s Chairman and CEO, is also supporting the capital raising. A further $0.38 million (15.8 million shares and attaching options) is to be issued to the Tag Private Group on the same terms, subject to shareholder approval at the upcoming EGM.


Funds from the placement will be used to advance project development initiatives across MPower’s Build Own Operate portfolio of renewable energy assets, support the acquisition of the Lakeland Solar and Storage Project (refer ASX announcement: 16 May 2022) and for working capital purposes.


Activities post quarter-end

MPower has extended its $5.1 million term loan with St George Bank for an additional 12 months and will make recurring principal repayments amounting to $50,000 per month.


Financial overview

MPower’s cash balance was $0.537 million at the end of the Quarter. Cash receipts from operating activities amounted to $1.187 million, up from $0.984m in the previous Quarter. The cash balance excludes the proceeds from the subsequent $1.7 million capital raising.


Payments to related parties

Payments of $117K 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.