Pristine Power announces results for the year ended December 31, 2008 and updates operations, construction and development activities



    CALGARY, Feb. 26 /CNW/ - Pristine Power Inc. ("Pristine" or the
"Company") today announced its financial results for the year ending December
31, 2008 and provided updates to its operations, construction activities and
development initiatives. Pristine has filed with Canadian securities
regulatory authorities its audited financial statements and related
Management's Discussion and Analysis for the year ended December 31, 2008.
These filings are available for review on the Corporation's SEDAR profile at
www.sedar.com and on Pristine's website at www.pristinepower.ca.
    "2008 was a breakout year in the evolution of Pristine as a leading
Canadian-based independent power producer" commented Mr. Jeffry M. Myers,
President and Chief Executive Officer. "We completed our $55 million initial
public offering on the Toronto Stock Exchange in March of 2008, laying the
financial foundation for the future growth of the Company. We commenced
commercial operations of our two 5 MW EnPower Energy Recovery Generation
("ERG(R)") facilities in the second half of 2008, followed by the closing of a
$24.6 million non-recourse financing in the midst of turbulent capital
markets. Our East Windsor project continued construction as planned and on
budget and is scheduled for completion in mid 2009. In December, we were
awarded a 20 year contract by the Ontario Power Authority to build the 393 MW
York Energy Centre in Ontario, our share of which is expected be 50%. With
this win, Pristine's net MW under contract grew 817% to 220 MW at the end of
2008 from 24 MW at the end of 2007, excluding the Mackenzie Green Energy
Centre. During 2008, the amount of capital to be deployed by Pristine grew
from $60 million to over $240 million, excluding the Mackenzie Green Energy
Centre project. All in all, 2008 was an outstanding year for the Company and a
testament to the hard work of all of our employees and contractors."

    Summary of Selected Financial Information

    Selected annual financial information for the three most recently
completed financial years is set forth below. All tabular amounts are in
thousands of dollars, unless otherwise noted, except share and per share
amounts

    
    -------------------------------------------------------------------------
    Year ended December 31,                 2008          2007          2006
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Net production (MWh)(1)                5,768             -             -
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Revenue                                2,011           944           518
    -------------------------------------------------------------------------
    Expenses                              11,077         5,036         3,654
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    Net income (loss) and
     comprehensive income (loss)          (9,423)        1,274        (3,106)
    -------------------------------------------------------------------------
    Net income (loss) per share
    -------------------------------------------------------------------------
      Basic                                (0.35)         0.12         (0.30)
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      Diluted                              (0.35)         0.11         (0.30)
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    Shareholders' equity                  55,828        13,290         5,935
    -------------------------------------------------------------------------
    Cash used in operations               (9,971)       (3,057)       (4,285)
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    Cash used in operations per share
    -------------------------------------------------------------------------
      Basic                                (0.37)        (0.27)        (0.41)
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      Diluted                              (0.37)        (0.25)        (0.41)
    -------------------------------------------------------------------------
    Funds used in operations(2)           (7,996)       (4,034)       (2,861)
    -------------------------------------------------------------------------
    Funds used in operations per share(2)
    -------------------------------------------------------------------------
      Basic                                (0.29)        (0.36)        (0.27)
    -------------------------------------------------------------------------
      Diluted                              (0.29)        (0.33)        (0.27)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    As at December 31                       2008          2007          2006
    -------------------------------------------------------------------------
    Total assets                         181,587       123,648         6,796
    -------------------------------------------------------------------------
    Long term debt                       100,311        88,444             -
    -------------------------------------------------------------------------

    (1) Before non-controlling interest share
    (2) Non-GAAP measure
    

    Highlights

    The Company's operating results for the year ended December 31, 2008 are
compared below to the operating results for the year ended December 31, 2007.
    In the year ended December 31, 2008 Pristine incurred a net loss of $9.4
million ($0.35 per share basic and diluted) compared to income of $1.3 million
($0.12 per share basic and $0.11 per share diluted) in the same period in
2007. Included in 2007 was a gain of $5.5 million on disposal of the Company's
25% interest in the East Windsor Cogeneration project. Following such
disposition, Pristine retained a 25% effective interest in the project.
Increased development, general and administrative costs and stock based
compensation also accounted for the increased loss during the year.
    Development activities increased in 2008 compared to the same period in
2007, reflecting a significant increase in requests for proposals and requests
for qualifications in British Columbia, Ontario and Saskatchewan to which
Pristine responded. During 2008, Pristine submitted five project proposals and
three qualification submissions, compared to no such proposals or submissions
in 2007. Of these proposals, Pristine was awarded the York Energy Centre
contract and is awaiting the results of the Kleana Power run-of-river project
proposal, a project in which Pristine has a 10% net interest. While the
Company's three proposals bid to Phase I of BC Hydro's Bioenergy Call for
Power were not selected, the Company intends to resubmit these proposals to
Phase II of Bioenergy Call later in 2009. Subsequent to year end, the Company
also submitted two bids for 200 MW gas fired peaking plants in New Mexico,
United States. The Company expects to hold a 50 percent interest in both of
these projects.
    General administrative costs increased due to a higher staff complement
required to support the Company's development and operational initiatives,
increased consulting and legal costs due to the Company's public listing
requirements and higher rent expense. Stock based compensation expense
increased as a result of options issued to employees and existing and new
directors at the time of the IPO. Options were issued to directors in lieu of
cash compensation for 2008.
    Funds used in operations during the year ended December 31, 2008 were
$8.0 million ($0.29 per share basic and diluted) compared to $4.0 million
($0.36 per share basic and $0.33 per share diluted) for the year ended
December 31, 2007, reflecting the aforementioned higher development and
general administrative costs. Funds used in operations represent funds used in
operations before changes in non-cash working capital (see "Non-GAAP
Measures"). Cash used in operations during the year ended December 31, 2008
was $10.0 million ($0.37 per share basic and diluted) compared to cash used in
operations of $3.1 million ($0.28 per share basic and $0.26 per share diluted)
for the year ended December 31, 2007.
    At December 31, 2008, Pristine had approximately $37.7 million of cash on
hand and $2.3 million of cash held in trust that was subsequently released for
general purposes in February, 2009. The Company expects to use these monies to
fund future development and administrative activities as well as funding the
project equity requirements of its newly awarded York Energy Centre project.

    Projects in Operation

    In 2008, the Company completed its first two power development projects,
the 5MW waste heat recovery projects at Savona and 150 Mile House, British
Columbia. Power generated from these two plants is sold to BC Hydro at fixed
prices under the terms of related twenty-year contracts. Production at the
plants in the fourth quarter of 2008 was negatively impacted by post-COD
issues relating to construction quality control that is the responsibility of
the major equipment supplier. The cost to rectify a significant portion of
these issues is fully recoverable under warranty. Both plants returned to full
availability in the third week of January, 2009. During 2008, the two plants
generated 11,536 gross MWh (5,768 MW net) of electricity and revenues of
$475,000, net, with a combined capacity factor of 47% compared to an expected
capacity factor of 82%.

    Project under Construction

    Construction of the $207 million, 84 MW East Windsor Cogeneration Centre
continued in 2008, and is on schedule and on budget. By year end, all major
equipment had been installed and interconnection to the grid was completed.
Back feed power will be available in April, 2009 upon completion and
verification of all protections and relays. Commissioning is expected to begin
in the second quarter of 2009 and commencement of commercial operation is
anticipated in mid 2009. Remaining construction costs are expected to be fully
funded by restricted cash on hand at December 31, 2008.

    
    Projects under Contract

    York Energy Centre
    ------------------
    

    In December 2008, the Company was awarded a 20 year contract by the
Ontario Power Authority to construct and operate the York Energy Centre, a 393
MW natural gas fired peaking generation facility, located in the Township of
King, Region of York, Ontario. Pristine is expected to hold a 50% interest in
the project with total project costs expected to be up to $365 million. The
Company has received confirmation from municipal authorities that all land use
approvals are in place, and the Company is currently completing the necessary
provincial environmental assessment, permitting and site plan process to
obtain the necessary approvals required for construction, with completion of
the permitting process expected in the third quarter of 2009. The Company is
also in the process of finalizing negotiations with engineering, procurement
and construction contractors and major equipment suppliers for the facility.
Preliminary discussions have commenced with potential lenders for long-term
non-recourse financing, with such financing expected to be in place later in
2009 following receipt of all necessary construction permits. Construction is
expected to commence in mid 2010 with completion anticipated late in 2011.

    
    Mackenzie Green Energy Centre
    -----------------------------
    

    Development of the proposed 65 MW Green Energy Centre has been deferred
until resolution of fundamental project issues related to site and fuel
supply.
    "In addition to the specific project developments outlined above, we are
anticipating the implementation of the Green Energy Act announced in the
Province of Ontario," added Mr. Myers. "We also expect significant positive
industry developments in British Columbia after the provincial election in May
of this year. These developments are in addition to the major announcements by
the Obama administration in the United States to implement incentives to
effect major increases in green energy generation. With the New Mexico bids,
Pristine is responding to a clear increase in demand for natural gas fired
peaking as a compliment to the proliferation of less reliable wind
generation."

    Conference Call

    Pristine (TSX:PPX) will hold a conference call on Friday, February 27,
2009 at 10:00 am MT (12:00 pm ET) to discuss its fourth quarter and full year
2008 results and provide an update on operations. The call can be accessed at
1-800-588-4942 or 1-416-644-3425. A replay of the call will be available until
March 13, 2009 at 1-877-289-8525 or 1-416-640-1917. The access code for the
replay is 21297813 followed by the pound sign. Pristine will release its
fourth quarter and year end 2008 financial results before the market opens on
February 26, 2009.

    Cautionary Statement Regarding Forward-Looking Information

    Certain statements in this news release may constitute "forward-looking
information" or "forward-looking statements" which involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking information. When used in this
news release, such information uses such words as "estimates", "expects",
"plans", "anticipates" and other similar terminology. This information
reflects the Company's current expectations regarding future events, including
development and financing of the Mackenzie and York projects, development of
new projects and construction and financing of the East Windsor Project as
well as future operating performance and speaks only as of the date of this
news release. Forward-looking information involves significant uncertainties,
should not be read as a guarantee of future performance or results, and will
not necessarily be an accurate indication of whether or not such results will
be achieved. A number of factors could cause actual results to differ
materially from the results discussed in the forward-looking information.
Although the forward-looking information in this news release is based upon
what management of the Company believes are reasonable assumptions, the
Company cannot assure investors that actual results will be consistent with
this forward-looking information. This forward-looking information is provided
as of the date of this news release, and, subject to applicable securities
laws, the Company assumes no obligation to update or revise such information
to reflect new events or circumstances.

    About Pristine

    Pristine (TSX: PPX) is in the business of developing, owning and
operating independent power plants that produce and sell electricity and in
some cases, sell process steam to industrial users. Pristine capitalizes on
opportunities in the independent power market by actively pursuing the
development of dependable, cost-effective and environmentally responsible
power generation facilities utilizing technology with proven past performance.
Pristine pursues a mix of large gas-fired, bioenergy and hydroelectric
projects, and smaller replicable waste heat recovery ERG(R) and bioenergy
projects. Pristine currently has two projects in operation, one under
construction, and two under contract and in advanced development. Pristine is
developing projects in Ontario, British Columbia and the Western United
States. Visit www.pristinepower.ca for more information.


    
    PRISTINE POWER INC.
    CONSOLIDATED BALANCE SHEETS
    (in thousands)

    As at December 31,                                    2008          2007
    -------------------------------------------------------------------------

    ASSETS
    Current assets
      Cash and cash equivalents                     $   37,700    $    1,567
      Cash held in trust                                 2,320             -
      Accounts receivable                                2,581         2,031
      Prepaid expenses and deposits                      1,922           625
      Due from related parties                             490           474
      Derivative financial instruments                     250            49
      Restricted cash                                      770             -
    -------------------------------------------------------------------------
                                                        46,033         4,746

    Restricted cash                                     20,062        75,235
    Investments                                          2,250         2,252
    Property, plant and equipment                      113,242        41,415
    -------------------------------------------------------------------------
                                                    $  181,587    $  123,648
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES
    Current liabilities
      Accounts payable and accrued liabilities      $    7,770    $    8,343
      Income tax payable                                   114             -
      Due to related parties                               164            51
      Current portion of long-term debt                    877             -
    -------------------------------------------------------------------------
                                                         8,925         8,394
    -------------------------------------------------------------------------
    Asset retirement obligation                            321           211
    Long-term debt                                      99,434        88,444
    -------------------------------------------------------------------------
                                                        99,755        88,655
    -------------------------------------------------------------------------
    Non-controlling interest                            17,079        13,309
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital                                       67,441        16,948
    Contributed surplus                                  1,928           464
    Deficit                                            (13,541)       (4,122)
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                                                        55,828        13,290
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                                                    $  181,587    $  123,648
    -------------------------------------------------------------------------
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    Approved on behalf of the Board of Directors of Pristine Power Inc.


    "Jeff Myers"                      "Stephen White"

    --------------------- Director    --------------------- Director
    (Signed)                          (Signed)



    PRISTINE POWER INC.
    CONSOLIDATED STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE INCOME
    (LOSS) AND DEFICIT
    (in thousands)

    Years Ended December 31,                              2008          2007
    -------------------------------------------------------------------------

    REVENUES
      Project management fees                       $      664    $      794
      Interest and other income                            872           150
      Power generation sales                               475             -
      -----------------------------------------------------------------------
                                                         2,011           944

    EXPENSES
      General and administrative                         5,816         3,988
      Project development costs                          4,043           546
      Stock based compensation                           1,174            63
      Interest, bank, and finance charges                  167           979
      Plant operating costs                                204             -
      Unrealized gain on derivative financial
       instruments                                        (201)          (49)
      Foreign exchanges gain                              (518)         (539)
      Depreciation, amortization and accretion             392            48
    -------------------------------------------------------------------------
                                                        11,077         5,036
    -------------------------------------------------------------------------

    NET LOSS BEFORE THE UNDERNOTED                      (9,066)       (4,092)

    OTHER ITEMS

      Gain on disposal of investments                        -         5,456
    -------------------------------------------------------------------------

    NET INCOME (LOSS) BEFORE INCOME TAXES               (9,066)        1,364

      Current income taxes                                 114             -
    -------------------------------------------------------------------------

    NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST   (9,180)        1,364

    NON-CONTROLLING INTEREST                               243            90
    -------------------------------------------------------------------------

    NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)   (9,423)        1,274

    DEFICIT, BEGINNING OF YEAR                          (4,122)       (5,396)

    ADOPTION OF NEW ACCOUNTING POLICIES                      4             -
    -------------------------------------------------------------------------
    DEFICIT, END OF YEAR                               (13,541)       (4,122)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    NET INCOME (LOSS) PER SHARE
    Basic                                           $    (0.35)   $     0.12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Diluted                                         $    (0.35)   $     0.11
    -------------------------------------------------------------------------
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    PRISTINE POWER INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands)

    Years Ended December 31,                              2008          2007
    -------------------------------------------------------------------------

    OPERATING
    Net income (loss)                               $   (9,423)   $    1,274
      Add (deduct) non-cash items:
      Depreciation, amortization and accretion             392            48
      Stock based compensation                           1,174            63
      Non-controlling interest                             243            90
      Gain on disposal of investments                        -        (5,456)
      Other                                                  7            (4)
      Unrealized foreign exchange gain                    (188)            -
      Unrealized gain on derivative financial
       instrument                                         (201)          (49)
    -------------------------------------------------------------------------
                                                        (7,996)       (4,034)

      Change in non-cash working capital                (1,975)          977
    -------------------------------------------------------------------------

      Cash used in operating activities                 (9,971)       (3,057)
    -------------------------------------------------------------------------

    FINANCING
      Proceeds from debt issued                         12,300        89,500
      Repayment of long-term debt                          (25)            -
      Deferred financing costs                            (357)       (1,056)
      Advances from (to) partners                           96          (387)
      Proceeds from issuance of shares
       (net of share issue costs)                       50,494         5,531
      Proceeds from issuance of warrants
       (net of issue costs)                                  -           335
      Change in non-cash working capital                    35             -
    -------------------------------------------------------------------------

      Cash provided by financing activities             62,543        93,923
    -------------------------------------------------------------------------

    INVESTING
      Restricted cash                                   54,466       (75,235)
      Property, plant and equipment                    (72,132)      (35,802)

      Cash held in trust                                (2,320)            -
      Non-controlling interest contribution              3,789        13,180
      Investments                                            -        (2,250)
      Proceeds on the disposal of investment                 -           700
      Change in non-cash working capital                  (359)        6,130
    -------------------------------------------------------------------------

    Cash used in investing activities                  (16,556)      (93,277)
    -------------------------------------------------------------------------

    Unrealized foreign exchange gain on
     foreign denominated cash                              117             -
    -------------------------------------------------------------------------

    Increase (decrease) in cash and
     cash equivalents                                   36,133        (2,411)

    Cash and cash equivalents, beginning of year         1,567         3,978
    -------------------------------------------------------------------------

    Cash and cash equivalents, end of year          $   37,700    $    1,567
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Jeffry M. Myers, President & Chief Executive
Officer, Telephone: (403) 444-5571, Fax: (403) 444-6784; Geoffrey D. Krause,
Chief Financial Officer, Telephone: (403) 444-6405, Fax: (403) 444-6784

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PRISTINE POWER INC.

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