Trading Emissions has drawn up its accounts under IFRS10 for the first time and has restated its figures for previous years accordingly. On the new basis, its net asset value fell from 15.2p to 15.1p over the second half of 2014. The fall is largely down to increased provisions for legal expenses.
The Chinese counterparties to some of their emissions contracts have taken Trading Emissions to arbitration in Hong Kong, seeking €18m in total. The counterparties are special purpose vehicles running Chinese hydroelectric power schemes. TRE are unhappy that the arbitrations are being held separately despite all relating to roughly the same issue and the parent company behind the SPVs being the same (China Power Investment Group). This is pushing up their legal costs (to about £2.1m now). TRE are disputing that they owe the claimants anything.
Things are not much more straightforward within the rest of the portfolio. The Italian photovoltaic plant’s revenues were down slightly. They have agreed adjustments to the incentive tariffs in response to changes made by the government, this is depressing revenues, but they hope the EU will make the Italians reverse the tariff changes. They sold their Polish wind farm investment, EWG Slupsk, July 2014 and have received €7m so far. They are expecting between €15.4m and €19.1m between 2015 and 2018 based on milestones related to closure of debt financing arrangements and commissioning of the wind farm project in Poland. They say though that the buyer has experienced delays in progressing the project and arranging the debt financing, caused by a combination of changes in the environmental law, amended development approvals and infrastructure issues which may delay receipt of further proceeds by Trading Emissions. They should have taken full control of the biogas project in Brazil, Bionasa, but their joint venture partner hasn’t paid their share of the arbitration fees. Once they have full control they think they have identified a preferred buyer for the project. They sold a Peruvian hydroelectric scheme in 2012 and they are waiting for payment of deferred consideration related to this. TRE say they are hopeful that the purchaser will accelerate this if the project can conclude a deal with the Peruvian government for power sales.
TRE : Trading Emissions under legal cloud