REG - APR Energy PLC - Interim Results

Thu Aug 30, 2012 2:01am EDT

* Reuters is not responsible for the content in this press release.

RNS Number : 0507L
APR Energy PLC
30 August 2012
 



For Immediate Release                                                                                                                                                      30 August 2012

 

 

APR Energy plc

 

Interim Results 2012

 

Pro Forma Profits Above Expectations.

344MW New Contracts and 356MW Extensions in 2012 to 30 June. 

Increased Investment in Fleet. Positive Outlook.

 

 

APR Energy plc (LSE: APR) (the "Company" and together with its subsidiaries, "APR Energy" or the "Group"), a global leader in temporary power solutions, today announces its interim results for the six month period ended 30 June 2012.

The reported financial statements cover a six month period from 1 January 2012 to 30 June 2012. The Group is also providing pro forma financial data for the six month period from 1 January 2011 to 30 June 2011 to aid in historical comparative analysis. Pro forma financial data is used by the Group in managing the business and measuring the Group's underlying performance and cash flows.

 




Reported (1)

Pro forma (2)


($ million)


H1 2012

H1 2011

H1 2012

H1 2011

Change


Revenue


155.0

10.9

155.0

59.1

162%


Operating (loss)/profit


(0.8)

(43.4)

52.8

15.7

236%


(Loss)/profit before tax


(1.9)

(32.3)

51.8

13.9

273%


Net (loss)/income


(6.9)

(33.3)

46.8

5.7

721%


Earnings per share (cents)


(8.82)

(75.34)

59.81

12.79

368%


Pro forma EBITDA


-

-

96.1

28.5

237%


Pro forma EBITDA margin (%)


-

-

62.0

48.3

1,370bps

 

HIGHLIGHTS

·      Pro forma revenues of $155.0 million up 162%

·      Pro forma profits above expectations:

Pro forma EBITDA up 237% to $96.1 million

Pro forma net income up 721% to $46.8 million

·      Pro forma EBITDA margin up to 62% from 48%

·      344MW of new contracts and 356MW of extensions delivered in the period

·      Successful opening of Panama and Dubai Hubs; Malaysian Hub on schedule for September

·     New fleet investment of $290-310 million planned based on improved outlook for natural gas opportunities

·      25MW of new contracts and 83MW of extensions since 30 June 2012

 

 

(1)   Reported figures for 2011 cover the 6 month period from 1 January to 30 June 2011 and include the trading results of APR Energy Cayman Limited and Falconbridge Services LLC and their subsidiaries (together, the "APR Group") for 17 days post the date of acquisition.

(2)   Pro forma figures for 2012 cover the 6 month period ended 30 June 2012 for APR Energy and exclude non-cash expense for amortisation of intangible assets ($48.7 million) and founder shares and securities revaluation ($5.0 million). Pro forma figures for 2011 cover the 6 month period ended 30 June 2011 for the APR Group, and include items of income and expense of APR Energy plc and APR Energy Holdings Limited for 17 days post the date of acquisition.  Figures exclude one-time transaction costs ($30.7 million), non-cash expense for amortisation of intangible assets ($0.4 million) and founder shares and securities revaluation ($27.7 million).  Pro forma net income also excludes a pre-acquisition foreign exchange gain ($8.5 million).

John Campion, Chief Executive Officer, said:

APR Energy has continued to make good progress during the first half of 2012. New contracts of 344MW have been awarded in the period ended 30 June 2012 - this compares to 513MW for the whole of 2011. In addition, we have delivered 356MW of contract extensions - a profitable and important cornerstone of the business. This provides us with an order book of 9,082MW-Months as of 30 June 2012 - an increase of 41% since the end of 2011.  Since 30 June 2012, we have also gained 25 MW of new contracts and 83 MW of extensions. In addition, we have significantly improved EBITDA margins, reflecting the discipline with which we have taken on new business and improvements in our operational structure and mobilisation technologies. Underlying revenue in the second half of the year will be lower than the first half due to early closure on one Japanese site and contractual project delays, nevertheless, we currently anticipate beating consensus net income.

We see 2012 as an important year of investment for the future growth of APR Energy. The longer term key growth drivers of the temporary power business remain strong. With the Hub strategy now largely completed, today we are announcing an expansion in our planned fleet investment to $290-310 million for 2012. The additional expenditure will be focused on our dual-fuel technologies reflecting confidence in the natural gas market for which we feel APR Energy is uniquely positioned.

 

Enquiries:

APR Energy plc

Brian Gallagher                                                                                                  +44 (0) 20 3427 3747

                                                                                                                        +44 (0) 7775 906 075

Citigate Dewe Rogerson Consultancy                                                              + 44 (0) 20 7638 9571

Anthony Carlisle                                                                                                + 44 (0) 7973 611 888

Lydia-Claire Halliday                                                                                           + 44 (0) 7866 617 671

 

Analyst Conference

There will be an analyst conference this morning at 10.15 am GMT at the offices of Citigate Dewe Rogerson at 3 London Wall Buildings, London EC1R 0HL. 

A webcast will available be on the APR Energy website - www.aprenergy.com

 

About APR Energy

APR Energy specialises in the sale of reliable and efficient electricity through the rapid global deployment of customised, turnkey power solutions. APR's fast-track approach, flexible offerings, and comprehensive operation and maintenance services have established it as a leader in the utility and industrial segments. APR Energy provides its power generation solutions to customers and communities around the world, with an emphasis in Africa, South America, Central America, the Middle East and Asia. APR Energy also implements philanthropic initiatives at each plant location through its Community Development Programme, which aims to build and maintain close relationships in the areas in which it works through projects and donations in health and education.

 

Certain statements included in this announcement constitute, or may constitute, forward-looking statements. Any statement in this announcement that is not a statement of historical fact (including, without limitation, statements regarding the Company's future expectations, operations, financial performance, financial condition and business) is or may be a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected or implied in any forward-looking statement. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. Although any such forward-looking statements reflect knowledge and information available at the date of this announcement, reliance should not be placed on them. Without limitation to the foregoing, nothing in this announcement should be construed as a profit forecast.

-End-


APR Energy plc
Chairman’s Statement

 

Introduction

I am pleased to report that the Group's performance has been strong over the six months to 30 June 2012, with pro forma net income rising 721% to $46.8 million over the comparable period.

Performance

Pro forma revenue in the first half was $155.0 million (H1 2011: $59.1 million), a rise of 162% as the Group invested the capital received in H1 2011 from the Horizon transaction. Pro forma net income rose by 721% due to important contract wins, which were supplemented by strong contract extension activity across our portfolio. The reported net loss decreased by 79% to $(6.9) million.

Planned fleet investment is being increased to $290-310 million for 2012 (previous guidance $230-260 million), as we believe the prospects for natural gas and dual fuel turbine temporary power continue to improve. We continue to invest in a disciplined manner in both natural gas reciprocating and dual-fuel turbine technologies. During the first half, capital expenditure in the fleet was $147.1 million in a mix of diesel engines and dual-fuel turbines.

The Group balance sheet has gross debt of $104.5 million (excluding capitalised financing costs) and cash of $33.6 million, resulting in net debt of $70.9 million at 30 June 2012. 

Unfortunately we were delayed in announcing our preliminary 2011 results against our deadline in March. Since that time a number of changes and additions have been made to the finance function, which have yielded immediate improvements in the reporting structure and the Board is satisfied that these changes are appropriate for the business going forward. Our auditors have undertaken a review of our half year results and the Board remains fully committed to obtaining a Premium Listing on the London Stock Exchange in 2013.

In a parallel Stock Exchange release today, we are announcing that Rick Greene, our CFO, is leaving the Group effective 30 September 2012, and that Andrew Martinez, our Vice President of Finance, is appointed CFO of the Company with effect from 30 August 2012.

Dividend

The Board declared an interim 2012 dividend of 3.3 pence per ordinary share in the half year to 30 June 2012. This interim dividend will be paid on 27 November 2012 to shareholders on the register of members of the Company as at 2 November 2012, with an ex-dividend date of 31 October 2012.

Our Board of Directors

As announced on 23 July 2012, Shonaid Jemmett-Page joined the Board as an independent Non-Executive Director and Chair of the Audit Committee. Shonaid brings an extensive amount of financial experience from her time as the Chief Operating Officer of CDC Group plc, as an Executive Board member of Unilever's HPC Business, and as a partner at KPMG. Shonaid is also currently a Board member and sits on the Audit Committees of GKN plc, Close Brothers Group plc and Amlin plc.

Outlook 

The Group expects to deliver on our commercial pipeline in the second half of 2012 and to build on recent contract wins and existing contract extensions. Our three hubs in Panama, Dubai and Malaysia will provide an important strategic platform for the Group's growth, with Panama and Dubai already driving contract wins and faster installation times. We also expect to see operational efficiencies delivering improved EBITDA and net income performance going forward. APR Energy remains confident in the strong medium- and long-term expansion trends within the temporary power market.

 

 

Chairman

Michael Fairey

29 August 2012


APR Energy plc
Interim management report

 

BUSINESS REVIEW

Overview

The first half of the year was a busy period for APR Energy. Group revenues totalled $155.0 million for the six-months ending 30 June 2012, up 162% over the prior period on a pro forma basis. As previously announced, during the last six months the Group achieved new contract wins of 344MW and contract extensions of 356MW.

As of 30 June 2012, total fleet capacity was 1,052MW (31 December 2011: 900MW) with an order book of 9,082MW-Months, an increase of 41% from the end of 2011.

APR Energy continues to make progress in expanding our profitability. During the first half of 2012, pro forma EBITDA margins were strong. The Group has consistently and prudently invested in its operational structure to service its growing portfolio of contracts and fleet of assets.

Review of Strategy

We continue to make good progress on our key strategic initiatives during the first half, from which we are already seeing benefits.

Improved operational execution. Through our newly enhanced mobilisation methodologies, APR Energy has been able to increase its deployment and installation speed, reduce costs and increase flexibility. The accelerated installation and operation of the 120MW power facility in Cyprus in June is a notable success resulting from these efforts. Through our advancements in plant design, deployment and logistics, we were able to have the plant operational within 20 days of equipment arrival, which was ahead of the contracted schedule.

Regional expansion and responsiveness. The successful execution of the Hub strategy during 2012 also has strengthened further our ability to respond quickly to customer needs and emerging opportunities. The opening of the Dubai Hub in Q1 has been instrumental in facilitating significant contract wins in the Middle East, an important region for the Group. In addition, the opening of the Malaysian Hub in Q3 will play a key role in expanding business in the strategically important Southeast Asia region.

Focus on dual-fuel turbines. Our strategy of offering customers the alternative of dual-fuel turbines continues to pay dividends, as seen in the recent 100MW contract win in Uruguay.

In addition to these strategic advancements, we also have continued to invest in elevating the skills, experience and expertise of our people, while better structuring our workforce to align with our strategic focus areas. We have made great strides in improving our internal processes across all functional areas, especially accounting and finance, and continue to invest towards increasing our brand presence in key markets.

Trading

The structural growth drivers within our business are intact and the prospects for temporary power in all our chosen geographies remain very strong.

The early termination at one of the two TEPCO sites in Japan will impact second half net income. However, we signed a new extension with TEPCO at the second site through until at least March 2013. The demobilisation and redeployment of the Japan assets took longer than anticipated, with the diesel engines having been placed in Yemen.

On a geographical basis, Europe and the Middle East saw strong progress with major contract wins in Cyprus (120MW), Oman (24MW) and Yemen (60MW). The value and payback of the Dubai Hub has already been established. We believe that Africa will remain a strong market for APR Energy in the medium term as demonstrated by our expansion into new markets such as Angola (40MW). Latin America continues to be a productive region for the Group, as evidenced by the 100MW contract in Uruguay. We anticipate that the opening of the Malaysian Hub in September will provide a similar enhancement to the business in the second half as the opening of the Panama and Dubai Hubs provided in the early part of 2012.

In addition to new contract wins, the Group also benefited from key extensions during the period, including Japan (70MW), Botswana (70MW) and Argentina (93MW).

The implementation of our enhanced mobilisation system has begun to have a positive impact on profitability. While the investment in this improved system requires an increased upfront spend in higher quality equipment, the overall cost per project is reduced due to substantial operating efficiencies and savings. Management looks forward to further margin progression from this level and into the medium term.

Outlook

The longer-term structural trends within temporary power market remain intact. The demand for power solutions - especially in our core geographical markets - is substantial, hence our decision to increase the planned capital investment in our fleet, with a specific focus on natural gas generation, to $290-310 million during the year. We are pleased to report 25MW of new contracts and 83MW of extensions since 30 June 2012.

We remain actively engaged in a wide range of opportunities in different technologies across our core geographical markets. The Group expects to deliver on contract opportunities in the second half of 2012 and into 2013, while benefiting from improved operating efficiencies. Looking ahead, we are confident of another successful year of delivery at APR Energy.  

Key performance indicators

As set out in our most recent annual report, we monitor our performance implementing our strategy using five key performance indicators (KPIs). These KPIs are applied on a Group wide basis. Performance in the six months ended 30 June 2012 is set out in the table below, together with the prior period performance data. The source of data and calculation methods used are consistent with those disclosed in the 2011 annual report.






H1 2012

H1 2011

Change


Capacity




1,052MW

724MW

45%


Order book




9,082MW-Months

5,340MW-Months

70%


Pro forma EBITDA




$96.1m

$28.5m

237%


Pro forma EBITDA margin




62.0%

48.3%

1,370bps


Pro forma ROCE




18.2%

13.2%

500bps


Pro forma earnings per share




59.81c

12.79c

368%


Loss per share




(8.82)c

(75.34)c

(88)%

Capacity, order book, pro forma EBITDA, pro forma EBITDA margin, pro forma ROCE and pro forma earnings per share are non-IFRS measures. The Directors have included these measures in this document because they are used by the Group in managing the business and measuring the Group's core performance and cash flows, and that they will be beneficial to potential investors in understanding the Group. However, the figures disclosed herein may not be comparable to similarly titled measures disclosed by other companies as non-IFRS measures are not uniformly defined.



 

Finance review

  






Revised









Reported


Reported


Reported


Pro forma


Pro forma


Pro forma



6 mths


6 mths


14 mths


6 mths


6 mths


12 mths



ended


ended


ended


ended


ended


ended



30 Jun 12


30 Jun 11


31 Dec 11


30 Jun 12


30 Jun 11


31 Dec 11



$'000


$'000


$'000


$'000


$'000


$'000



(Unaudited)


(Unaudited)


(Audited)


(Unaudited)


(Unaudited)


(Unaudited)














Revenue


155,048


10,935


164,617


155,048


59,095


212,777

Cost of sales


(79,336)


(7,045)


(91,376)


(79,336)


(39,331)


(123,663)

Amortisation of intangible assets


(48,729)


(367)


(46,713)


-


-


-

Gross profit


26,983


3,523


26,528


75,712


19,764


89,114

Selling, general and administrative expenses


(22,863)


(19,263)


(44,022)


(22,863)


(4,024)


(28,554)

Founder shares and securities revaluation


(4,952)


(27,678)


(27,678)


-


-


-

Operating (loss)/profit


(832)


(43,418)


(45,172)


52,849


15,740


60,560

Foreign exchange (loss)/gain


(535)


8,400


9,961


(535)


(82)


41

Finance income


176


3,119


4,810


176


18


644

Finance costs


(675)


(380)


(2,567)


(675)


(1,804)


(3,991)

(Loss)/profit before taxation


(1,866)


(32,279)


(32,968)


51,815


13,872


57,254

Taxation


(5,032)


(1,054)


(9,686)


(5,032)


(8,215)


(16,847)

(Loss)/profit for the period


(6,898)


(33,333)


(42,654)


46,783


5,657


40,407

(6,898)


(33,333)


(42,654)


46,783


5,657


40,407

Revenue for the six month period ended 30 June 2012 was $155.0 million, an increase of 1,322% on a reported basis and 162% on a pro forma basis over the same period last year. The increase in revenue year on year was primarily driven by new contract wins that went into operation in late 2011 and early 2012.

Gross profit on a pro forma basis increased 282% to $75.7 million.  Improvement in the gross profit margin was largely due to the Japan TEPCO contract.

Operating loss decreased by 98% to $(0.8) million and pro forma operating profit increased by 236% to $52.8 million due to the Japan contract, but was offset by increases in administrative expenses over the prior period which were driven by the growth in external consulting resources to support the business, share-based compensation expense, and an increase in headcount costs in the business.

Pro forma EBITDA totalled $96.1 million, an increase of 237% over the prior period (H1 2011: $28.5 million). 

Return on Capital Employed (ROCE) is a key performance metric for the business. Despite the significant increase in net operating assets associated with the growth of the business, coupled with the timing of new projects beginning operation, pro forma ROCE increased to 18.2% (31 December 2011: 16.5%, 30 June 2011: 13.2%). This calculation is based on a twelve month rolling average ROCE calculated using industry standard.

During the period APR finalised the provisional fair value of identifiable assets and liabilities of the APR Group in accordance with IFRS 3 Business Combinations. These revisions are made retrospectively to the acquisition balance sheet as of 13 June 2011 of the APR Group and APR has therefore revised the prior year comparatives accordingly.

Provision for bad debt

A provision for bad debt is recognised against trade receivables which are greater than 90 days past due based on estimated recoverable amounts. The net provision movement for bad debt was a $1.5 million credit to the income statement in the period (H1 2011: $nil).

Share-based payments

In accordance with IFRS 2, a non-cash expense of $0.6 million related to equity settled share-based payment transactions was recognised (H1 2011: $0.4 million). This expense relates to equity grants made under the Company's Performance Share Plan and the Non-Executive Director's Share Matching Scheme.

Interest and finance cost

Net interest declined to a $0.5 million expense in the period, compared to a $2.7 million income in the prior period, due mainly to lower cash balances held during the period.

Tax

The Group's tax charge for the interim result on a pro forma basis was $5.0 million, reflecting a pro forma effective tax rate of 10% (H1 2011: 59%). This expense included foreign withholding taxes of $2.2 million. The significant reduction in the effective tax rate from the prior period is a result of a reduction in withholding taxes and an increased share of profit from lower tax jurisdictions. 

Liquidity and capital resources

Net debt (excluding capitalised finance fees) as at 30 June 2012 was $70.9 million. This compared to net cash at 30 June 2011 of $206.3 million. A summary analysis of cash flow is set out in the table below:


($'000)




H1 2012

H1 2011


Cash flow from/(used in) operations




70,869

(26,955)


Cash used in investing activities




(191,500)

(333,007)


Cash from/(used in) financing activities




91,195

(742)


Beginning cash and cash equivalents balance




63,061

647,211


Ending cash and cash equivalents balance




33,625

286,507

During the current period, net cash flow from operations totalled $70.9 million whereas in the prior period cash outflow from operations was negative primarily as a result of transaction costs. The cash outflow in this period from investing activities primarily comprised purchases and deposits for property and equipment.  Net cash inflow from financing activities was a result of drawing on the credit facility used to purchase property and equipment.

Dividends

The Company's shareholders approved a final dividend for the 14 month period ended 31 December 2011 of 10 pence per ordinary share at the Annual General Meeting on 24 May 2012. This amount was paid on 29 May 2012 to shareholders on the register of members of the Company as of 2 May 2012.

The Board declared an interim 2012 dividend of 3.3 pence per ordinary share in the half year to 30 June 2012. This interim dividend will be paid on 27 November 2012 to shareholders on the register of members of the Company as of 2 November 2012, with an ex-dividend date of 31 October 2012.

Principal risks and uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and which could cause actual results to differ materially from expected and historical results. A detailed explanation of the risks summarised below can be found on pages 42 to 45 of the 2011 annual report which is available at www.aprenergy.com.

•     Failure to deliver the growth plan envisaged as part of the recent capital injections;

•     Contracts are temporary in nature;

•     Customer concentration;

•     Global political and economic conditions;

•     Volatility in customer demand, including event-driven demand;

•     Increase in competitive environment;

•     Asset security;

•     Focus on developing markets - operations in difficult regions of the world;

•     Recruitment and retention of key staff;

•     Environmental, health and safety;

•     Movement in cost inputs; and

•     Payment default.

The Directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 December 2011 and believe that these will continue to be the same in the second half of the year.

Related party transactions

Related party transactions are disclosed in note 11 to the condensed set of financial statements.

There have been no material changes in the related party transactions described in the last annual report.

Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. The Group's principal debt facilities (totalling $400.0 million) are provided by a syndicate of banks under a revolving credit facility and expire on 28 November 2016. The Group's forecasts and projections show that the facilities in place currently are anticipated to be sufficient for meeting the Group's operational requirements. Accordingly, they continue to adopt the going concern basis in preparing the condensed set of financial statements.

 


APR Energy plc
Responsibility statement

              

We confirm that to the best of our knowledge:

(a) the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting;

(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

 

By order of the Board

 

 

Chief Executive Officer

John Campion

29 August 2012

 


APR Energy plc
Independent review report to APR Energy plc                       

 

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012, which comprises the condensed consolidated statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 11. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors.  The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

 

 

Deloitte LLP

Chartered Accountants and Statutory Auditor                                                 

29 August 2012

London, United Kingdom

 

 

Notes:

(a) The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.

(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.


APR Energy plc
Condensed consolidated statement of comprehensive income
For the six month period ended 30 June 2012                        

 

                                                               

 







Revised*



6 months


6 months


14 months



ended

ended

ended



30 June


30 June


31 December



2012

2011

2011



$'000


$'000


$'000


Note

(Unaudited)

(Unaudited)

(Audited)








Revenue

5

155,048


10,935


164,617

Cost of sales


(79,336)


(7,045)


(91,376)

Amortisation of intangible assets


(48,729)


(367)


(46,713)

Gross profit


26,983


3,523


26,528

Selling, general and administrative expenses


(22,863)


(19,263)


(44,022)

Founder shares and securities revaluation


(4,952)


(27,678)


(27,678)

Operating loss


(832)


(43,418)


(45,172)

Foreign exchange (loss)/gain


(535)


8,400


9,961

Finance income


176


3,119


4,810

Finance costs


(675)


(380)


(2,567)

Loss before taxation


(1,866)


(32,279)


(32,968)

Taxation

4

(5,032)


(1,054)


(9,686)

Loss for the period


(6,898)


(33,333)


(42,654)

Total comprehensive loss for the period


(6,898)


(33,333)


(42,654)








Loss per share







Basic loss per share - cents

7

(8.82)


(75.34)


(73.05)

Diluted loss per share - cents

7

(8.82)


(75.34)


(73.05)

 

 

 

* See note 10 relating to the finalisation of the APR Group acquisition fair values under IFRS 3 Business Combinations.


 

 

APR Energy plc
Condensed consolidated statement of financial position
As at 30 June 2012                                   







Revised*



30 June


30 June


31 December



2012

2011

2011



$'000


$'000


$'000


Note

(Unaudited)

(Unaudited)

(Audited)

Assets







Non-current assets







Goodwill

10

547,069


547,069


547,069

Intangible assets


49,058


144,133


97,787

Property, plant and equipment

8

527,348


247,545


402,535

Capitalised financing costs


-


-


3,699

Deferred tax asset


-


714


1,221

Other non-current assets


3,040


103


2,865

Total non-current assets


1,126,515


939,564


1,055,176

Current assets







Derivative asset


1,215


-


2,258

Inventories


11,984


58


2,156

Trade and other receivables


52,371


28,455


40,673

Cash and cash equivalents


33,625


286,507


63,061

Deposits


56,890


13,605


27,666

Total current assets


156,085


328,625


135,814

Total assets


1,282,600


1,268,189


1,190,990

Liabilities







Current liabilities







Trade and other payables


45,757


22,816


31,844

Income tax payable


3,897


2,222


3,001

Deferred revenue


5,186


16,083


10,479

Derivative liability


-


197


-

Borrowings

9

4,473


72,340


-

Decommissioning provisions


12,492


9,865


17,902

Total current liabilities


71,805


123,523


63,226

Non-current liabilities







Derivative liability


9,913


4,961


4,961

Deferred tax liability


2,793


2,163


2,939

Borrowings

9

94,299


7,258


-

Decommissioning provisions


2,832


1,404


161

Total non-current liabilities


109,837


15,786


8,061

Total liabilities


181,642


139,309


71,287

Equity







Share capital


12,620


12,696


12,696

Share premium


645,250


645,250


645,250

Other reserves


485,854


485,775


485,775

Equity reserves


1,739


781


1,795

Accumulated losses


(44,505)


(15,622)


(25,813)

Total equity


1,100,958


1,128,880


1,119,703

Total liabilities and equity


1,282,600


1,268,189


1,190,990

 

 

 

* See note 10 relating to the finalisation of the APR Group acquisition fair values under IFRS 3 Business Combinations.


 

APR Energy plc
Condensed consolidated statement of changes in equity
For the six month period ended 30 June 2012                                      


Share

Share

Other

Equity

Accumulated

Total


capital

premium

reserves1

reserves

losses



$'000

$'000

$'000

$'000

$'000

$'000








Balance at 1 January 2011

6,579

629,914

-

433

(5,167)

631,759








Loss for the period

-

-

-

-

(33,333)

(33,333)

Total comprehensive loss for the period

-

-

-

-

(33,333)

(33,333)








Issued share capital

6,117

15,336

-

-

-

21,453

Other reserves

-

-

485,775

-

-

485,775

Credit to accumulated losses relating to Founder D shares

-

-

-

-

22,878

22,878

Credit to equity for equity-settled share-based payment expense

-

-

-

348

-

348

Balance at 30 June 2011 (Unaudited)

12,696

645,250

485,775

781

(15,622)

1,128,880








Balance at 1 January 2012

12,696

645,250

485,775

1,795

(25,813)

1,119,703








Loss for the period

-

-

-

-

(6,898)

(6,898)

Total comprehensive loss for the period

-

-

-

-

(6,898)

(6,898)








Issued share capital

3

-

-

(687)

687

3

Credit to equity for equity-settled share-based payment expense

-

-

-

631

-

631

Redemption of deferred shares

(79)

-

79

-

-

-

Dividends

-

-

-

-

(12,481)

(12,481)

Balance at 30 June 2012 (Unaudited)

12,620

645,250

485,854

1,739

(44,505)

1,100,958

 

 

1 Other reserves arise mainly as a consequence of the application of merger relief to the acquisition of APR Group in 2011.

 

APR Energy plc
Condensed consolidated cash flow statement
For the six month period ended 30 June 2012                                      


 

  






Revised*



6 months


6 months


14 months



ended

ended

ended



30 June


30 June


31 December



2012

2011

2011



$'000


$'000


$'000



(Unaudited)

(Unaudited)

(Audited)








Cash flows from operating activities







Loss for the period before taxation


(1,866)


(32,279)


(32,968)

Adjustments for:







Depreciation and amortisation


91,398


3,030


85,603

Loss on sale or disposal of fixed assets


333


-


1,012

Provision for bad debt


(1,468)


-


1,943

Equity-settled share-based payment expense


631


348


1,362

Founder shares and securities revaluation


4,952


27,678


27,678

Loss/(gain) on derivative instruments


1,044


197


(2,258)

Interest income


(176)


(3,119)


(4,810)

Interest expense


675


380


2,567

Movements in working capital:







Increase in trade and other receivables


(10,539)


(5,608)


(18,809)

Increase in inventories


(9,828)


(58)


(2,156)

Increase in other current and non-current assets


(375)


(1,596)


(2,248)

Increase/(decrease) in trade and other payables


11,859


(16,719)


(8,404)

Settlement of decommissioning provisions


(5,896)


-


(593)

(Decrease)/increase in other liabilities


(5,293)


-


2,804



75,451


(27,746)


50,723

Interest paid


(1,182)


(306)


(2,224)

Interest received


176


3,119


4,810

Income taxes paid


(3,576)


(2,022)


(9,605)

Net cash from/(used in) operating activities


70,869


(26,955)


43,704

Cash flows from investing activities







Purchases of property, plant and equipment


(163,299)


(3,278)


(195,802)

Increase in deposits


(28,201)


(645)


(16,044)

Acquisition of subsidiary (net of cash acquired)


-


(329,084)


(329,084)

Net cash used in investing activities


(191,500)


(333,007)


(540,930)

Cash flows from financing activities







Cash from borrowings


104,473


-


15,246

Repayment of borrowings


-


(821)


(96,816)

Dividends paid


(12,478)


-


-

Debt issuance costs


(803)


-


(3,762)

Proceeds from the issue of ordinary shares


3


-


-

Proceeds from the issue of deferred shares


-


79


79

Net cash from/(used in) financing activities


91,195


(742)


(85,253)








Net decrease in cash and cash equivalents


(29,436)


(360,704)


(582,479)

Cash and cash equivalents at beginning of the period


63,061


647,211


645,540

Cash and cash equivalents at end of the period


33,625


286,507


63,061

 

 

* See note 10 relating to the finalisation of the APR Group acquisition fair values under IFRS 3 Business Combinations.

 

 


APR Energy plc
Notes to the condensed set of financial statements

           

1.     General information

APR Energy plc ("the Company" and together with its subsidiaries, "APR Energy" or "the Group") is incorporated in the United Kingdom under the Companies Act. The address of the registered office is 54 Baker Street, London, W1U 7BU, United Kingdom.

This condensed set of financial statements was approved by the Board of Directors on 29 August 2012.

The information for the 14 month period ended 31 December 2011 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2.     Accounting policies

Basis of preparation

The annual financial statements of APR Energy plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as adopted by the European Union.

Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. The Group's principal debt facilities (totalling $400.0 million) are provided by a syndicate of banks under a revolving credit facility and expire on 28 November 2016. The Group's forecasts and projections show that the facilities in place currently are anticipated to be sufficient for meeting the Group's operational requirements. Accordingly, they continue to adopt the going concern basis in preparing the condensed set of financial statements.

Changes in accounting policy

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.

3.     Segment reporting

Consistent with the Group's latest annual audited financial statements, the Group continues to identify one operating segment based on the financial information regularly provided to the chief operating decision maker and the methods by which the chief operating decision maker assesses the Group's performance and makes decisions about resource allocation. As such, no segment reporting is shown in this condensed set of financial statements.

4.     Taxation

Tax for the 6 month period is charged at (270)% (6 months ended 30 June 2011: (3)%; 14 months ended 31 December 2011: (29)%), representing the consolidated best estimate of the average annual effective tax rate for each tax paying jurisdiction expected for the full year, applied to the pre-tax income of the 6 month period.

The Group is not taxable in certain jurisdictions where either the jurisdictions do not impose an income tax or the entity is treated as a flow-through entity for local country tax purposes. The difference between the statutory income tax rate and the effective tax rate is a result of withholding taxes and income taxes in foreign jurisdictions.

5.     Revenue

The following is an analysis of the Group's revenue from continuing operations from its major products and services:



6 months


6 months


14 months



ended

ended

ended



30 June


30 June


31 December



2012

2011

2011



$'000


$'000


$'000








Lease revenues*


143,514


9,279


137,492

Power revenues


5,355


758


6,355

Fuel revenues


2,945


517


3,671

Other revenues


3,234


381


17,099

Total revenues


155,048


10,935


164,617

 

* Includes the lease revenue associated with the cessation of 133MW of the TEPCO contract.


 

6.     Dividends

The Company's shareholders approved a final dividend for the 14 month period ended 31 December 2011 of 10 pence per ordinary share at the Annual General Meeting on 24 May 2012. This amount was paid on 29 May 2012 to shareholders on the register of members of the Company on 2 May 2012.

The Board declared an interim 2012 dividend of 3.3 pence per ordinary share in the half year to 30 June 2012. This interim dividend will be paid on 27 November 2012 to shareholders on the register of members of the Company as at 2 November 2012, with an ex-dividend date of 31 October 2012.

7.     Loss per share from continuing operations

The calculation of the basic and diluted loss per ordinary share is based on the following data:

  


6 months


6 months


14 months



ended

ended

ended



30 June


30 June


31 December



2012

2011

2011

Loss for the purposes of basic and diluted loss per share being net loss attributable to the owners of the Company ($'000)

(6,898)


(33,333)


(42,654)



Weighted average number of ordinary shares for the purpose of basic and diluted loss per share1 (number of shares)

78,223,296


44,243,317


58,391,446










Loss per ordinary share







Basic and diluted loss per share (cents)

(8.82)


(75.34)


(73.05)

 

1 Share options and Founder shares are considered anti-dilutive for the periods ended 30 June 2012, 30 June 2011 and 31 December 2011 as the inclusion of these securities would reduce the loss per share. Potentially dilutive ordinary shares for the period ended 30 June 2012 were nil (6 months ended 30 June 2011: nil; 14 months ended 31 December 2011: nil).  The Founder shares are also not considered to be potentially dilutive as the associated performance conditions had not been met at 30 June 2012.

8.     Property, plant and equipment

  

Machinery and equipment

Mobilisation

Demobilisation

Other     equipment

Total



$'000

$'000

$'000

$'000

$'000

Cost:






At 31 October 2010

-

-

-

-

-

Additions on acquisition of subsidiaries, net book value

223,809

18,485

1,235

1,006

244,535

Additions

161,789

19,243

16,441

429

197,902

Disposals

(2,130)

-

(782)

-

(2,912)

At 31 December 2011

383,468

37,728

16,894

1,435

439,525

Additions

147,066

16,794

2,956

999

167,815

Disposals

(656)

-

-

3

(653)

At 30 June 2012

529,878

54,522

19,850

2,437

606,687

Accumulated depreciation:






At 31 October 2010

-

-

-

-

-

Charge for the period

16,535

10,144

12,031

180

38,890

Disposals

(1,118)

-

(782)

-

(1,900)

At 31 December 2011

15,417

10,144

11,249

180

36,990

Charge for the period

19,255

18,524

4,654

236

42,669

Disposals

(323)

-

-

3

(320)

At 30 June 2012

34,349

28,668

15,903

419

79,339

Net book value:






30 June 2012

495,529

25,854

3,947

2,018

527,348

31 December 2011

368,051

27,584

5,645

1,255

402,535

 

 

As of 30 June 2012, the Group's commitments related to the purchase of property, plant and equipment was $127.7 million (31 December 2011: $29.0 million).

9.     Borrowings

Additional loans of $100.0 million were drawn down under the Group's existing loan facility partly to fund the additions to property, plant and equipment. An additional $4.5 million loan was secured outside the loan facility, which has subsequently been repaid in July 2012.

As previously disclosed, the Group's principal debt facilities (totalling $400.0 million) are provided by a syndicate of banks under a revolving credit facility and expire on 28 November 2016.

10.  Acquisition accounting

On 13 June 2011, the Group acquired 100% of the issued share capital and obtained control of the following companies (comprising the "APR Group"):

·      APR Energy Cayman Limited, and its subsidiaries and branches;

APR International LLC,

APR Energy LLC, 

APR LLC, 

APR Energy SRL Argentina Company,

SRL Costa Rica Company,

APR Ecuador,

APR Energy LLC Sucursal del Peru,

APR Energy II LLC,

APR Energy III LLC; and

·      Falconbridge Services LLC and its subsidiary First Coast Travel International LLC.

 

The provisional and revised amounts recognised in respect of the identifiable assets acquired and liabilities assumed are as set out in the table below:



Provisional fair value as previously reported


Fair value adjustments


Fair value as revised















$'000


$'000


$'000








Cash and cash equivalents


30,182


-


30,182

Deposits


13,014


-


13,014

Accounts receivable


17,883


(229)


17,654

Other assets


5,117


(1,124)


3,993

Property, plant and equipment (including mobilisation and installation)


249,042


(4,507)


244,535




Identifiable intangible assets


144,200


300


144,500

Trade and other payables


(37,556)


(463)


(38,019)

Decommissioning provisions


(8,874)


-


(8,874)

Other liabilities


(22,854)


-


(22,854)

Borrowings


(80,993)


-


(80,993)

Total identifiable assets


309,161


(6,023)


303,138

Goodwill


541,046


6,023


547,069

Total consideration


850,207


-


850,207








Satisfied by:







Cash






359,266

Equity instruments (31,841,071 ordinary shares of the Company)




490,941

Total consideration






850,207

 

The revised goodwill of $547.1 million arising from the acquisition is reflective of the recent track record of APR Group and expected strong growth prospects. None of the goodwill is expected to be deductible for income tax purposes.

The fair value of the 31,841,071 ordinary shares issued as part of the consideration paid for the APR Group of $490.9 million was determined on the basis of the share price as at 13 June 2011, being the date the subsidiary was acquired.  

10.    Acquisition accounting (continued)

Acquisition-related costs (included in administrative expenses) amounted to $16.5 million. These costs were primarily related to legal and professional fees and early termination fee of the operator's fees.

The APR Group contributed $164.6 million revenue and $6.6 million to the Group's loss for the period between the date of acquisition and the balance sheet date.

If the acquisition of the APR Group had been completed on the first day of the financial period (1 November 2010), Group revenues for the period would have been $236.5 million and loss would have been $55.2 million.

Fair value adjustments

The provisional fair value of identifiable assets and liabilities were finalised during 2012 to reflect additional information which became available concerning conditions that existed at the date of acquisition, in accordance with IFRS 3 Business Combinations.

The changes in fair values have arisen mainly as a result of the finalisation of the fair value of certain items of machinery and equipment and the expected recoverability of the deferred tax asset. A reduction in depreciation ($0.1 million) has been offset by an increase in the amortisation of the intangible assets ($0.2 million) and the taxation expense ($1.2 million) in the 14 month period to 31 December 2011, which have arisen following the above fair value changes and have been reflected in the revised comparative financial statements.

11.  Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

JCLA Holdings LLC, a company related by common control by the CEO and COO, received $85.5 million in 2011 on completion of the acquisition.

Consulting services from JCLA Holdings LLC (and its subsidiaries) were incurred by the Group during the period presented. These consulting services were made at an arm's length market price. The total expense for the period was $0.1 million (6 months ended 30 June 2011: $0.2 million; 14 months ended 31 December 2011: $0.3 million). The services rendered were all paid in cash. No guarantees have been given or received.

EJJ LLC is a related party due to its owner being the CEO of APR Energy plc. 

EJJ LLC provides travel arrangement services to the Group. These services were made at an arm's length market price. The total expense for the period was $nil (6 months ended 30 June 2011: $nil; 14 months ended 31 December 2011: $0.2 million). The services rendered were all paid in cash. No guarantees have been given or received.

JCLA Developments II LLC is a company related by common control by the CEO and COO.

JCLA Developments II LLC rents office space to the Group. These rental services were made at an arm's length market price. The total expense for the period was $0.1 million (6 months ended 30 June 2011: $nil; 14 months ended 31 December 2011: $nil). The services rendered were all paid in cash. No guarantees have been given or received.

At 30 June 2012, JCLA Holdings LLC owed $nil to the Group due to expenses being paid by the Group (31 December 2011: $0.4 million, 30 June 2011: $nil).



Key financial definitions:

 

Pro forma EBITDA

Operating profit adjusted to add back depreciation of property, plant and equipment, equity-settled share-based payment expense, amortisation of intangible assets, founder shares and securities revaluation and exceptional items.  Exceptional items are those items believed to be exceptional in nature by virtue of size and/or incidence.

 

Pro forma EBITDA margin

Pro forma EBITDA divided by pro forma revenue.

 

Pro forma earnings per share

Pro forma net income divided by the weighted average number of ordinary shares. Pro forma net income is net income adjusted to add back exceptional items.  Exceptional items are those items believed to be exceptional in nature by virtue of size and/or incidence.

 

Pro forma ROCE (return on capital employed)

Operating profit for the previous twelve months adjusted to add back amortisation of intangible assets, founder shares and securities revaluation and exceptional items divided by the average of the net operating assets at the previous three balance sheet dates (for 30 June 2012 this comprises the 30 June 2012, 31 December 2011 and 30 June 2011 and for 31 December 2011 this comprises the 31 December 2011, 30 June 2011 and 31 December 2010).  "Net operating assets" is defined as total equity adjusted to exclude goodwill, intangible assets, borrowings, deferred tax assets and liabilities and current tax assets and liabilities.

 

Reconciliations of reported results to pro forma results

 

6 month period to 30 June 2012










Revenue


Operating Profit


Net Income









$m


$m


$m









Results as reported


155.0


(0.8)


(6.9)

Amortisation of acquired intangible assets


-


48.7


48.7

Founder shares and securities revaluation


-


5.0


5.0

Pro forma results


155.0


52.8


46.8

 

6 month period to 30 June 2011










Revenue


Operating Profit


Net Income









$m


$m


$m









Results as reported


10.9


(43.4)


(33.3)

APR Group pre-acquisition date activity


48.2


(0.2)


(8.8)

Horizon pre-acquisition date activity


-


0.5


(2.5)

Amortisation of acquired intangible assets


-


0.4


0.4

Transaction costs


-


30.7


30.7

Founder shares and securities revaluation


-


27.7


27.7

Foreign exchange gain on GBP sterling cash balances held


-


-


(8.5)

Pro forma results


59.1


15.7


5.7

 

 

14 month period to 31 December 2011 - revised










Revenue


Operating Profit


Net Income









$m


$m


$m









Results as reported


164.6


(45.2)


(42.7)

APR Group pre-acquisition date activity


48.2


(0.2)


(8.8)

Horizon pre-acquisition date activity


-


0.9


(3.3)

Amortisation of acquired intangible assets


-


46.7


46.7

Transaction costs


-


30.7


30.7

Founder shares and securities revaluation


-


27.7


27.7

Foreign exchange gain on GBP sterling cash balances held


-


-


(9.9)

Pro forma results


212.8


60.6


40.4

 

 

 

 

 

 

 

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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