M********* V***** CHP (Abu) Dec 18, 2020 11:24:27 GMT
Post by optymystic on Dec 18, 2020 11:24:27 GMT
Festive News to bring you good cheer
Update for M***** V***** CHP plc Debenture holders 18 December 2020
As we approach the end of the year, and the next payment date for our investors, we wanted to provide you with a further update. Unfortunately, while there have been some positives since we last updated you in September, we will not be able to make the payment due on 31 December 2021.Cashflow and payments from Ofgem Since our last update to you, we have received a payment from Ofgem within 13 workings days of our first RHI claim since the business restarted generation in Hereford in early August. This represents a significant improvement in payment timings, with Ofgem previously taking their full 40 working day allowance in many instances and with this extending to 50 working days in some cases.We have previously exchanged of letters with Patricia Dreghorn, Director of Ofgem E Serve and while there were disagreements expressed clearly on both sides,we believe that as a result of these being aired we have now moved to a new position in our relationship with Ofgem and their administration of our payments. While we cannot be sure that this improved payment processing will continue (and Ofgem has stated they cannot commit to a timeline other than the 40 working day limit),we are nonetheless hopeful that they may well continue, with the good will of our account manager, to process payments to us more quickly than before.
The importance of timely payments from Ofgem, and the difficulty caused by their inability to commit to shorter payment terms, was highlighted in October when we were forced to temporarily suspend operation of our CHP and biomass units. Without the certainty of when we will receive the RHI payment for our backdated generation, we were unable to continue to purchase the woodchip required to run the units.Once the RHI payment was promptly made in early November we were, however, able to recommence generation. Our cash flow forecast reveals that providing Ofgem maintain a positive payment approach, the company will now be able to stabilise generation at the originally forecast levels and we will not have to curtail generation to manage our cashflow.In terms of the activity at the business park where we operate, which determines the demand for the electricity we generate,this has improved and the businesses are operating the equivalent of 6 full day weeks. We expect this to continue into January.
While we cannot be certain the effects of Covid-19 on the business have come to an end,we believe that prospects for maintaining continuous production are now in place and we are trying hard to achieve this. If we are able to stabilise our operations, and get our income back to the levels we originally forecasted, we will be in a much better position.
Our intention now is to work with our accountants to establish an accurate financial picture including medium term forecasts based upon our assessment of the markets in which we operate, our expected energy generation and wood fuel drying. We will prepare a plan on how we can bring the company to a stable financial position and hopefully go on to deliver on our original plan to create energy from renewable resources. As part of this, we will be preparing proposals to share with investors that outline the options available for you and your investment.We will aim to update you on these proposals as early as possible in the new year.In the meantime we would like to thank you again for the support, patience and forbearance that you have provided. Lastly,we hope and trust that you will have a safe and merry Christmas and New Year.