TIDMAPR
RNS Number : 5879N
APR Energy PLC
05 September 2011
For immediate release September 5, 2011
APR Energy plc (the "Company")
(Ticker Symbol: 'APR')
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR
INDIRECTLY IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR
JAPAN.
This announcement is not a prospectus and not an offer for sale,
or a solicitation of an offer to acquire, securities in any
jurisdiction including in or into the United States, Canada,
Australia, or Japan. Investors should not subscribe for or purchase
any transferable securities referred to in this announcement except
on the basis of information in the prospectus intended to be
published by the Company in due course in connection with the
readmission of the Company's ordinary shares ("Ordinary Shares") to
the Official List of the UK Listing Authority and to trading on the
London Stock Exchange plc's main market for listed securities.
Copies of the prospectus will, following publication, be available
from the Company's registered office.
APR Energy plc confirms timetable for re-listing of shares
High growth company in the global temporary power market
Timetable
-- Investor roadshow commences Monday 5 September
-- Prospectus Thursday 15 September
-- Re-admission and dealings in shares Monday 19 September
APR
-- Rapid growth. High margins. Strong ROCE. Strong cash
flows
o 2008-2010 83% compound annual revenue growth. 2009-2010 102%
growth
o 2010 adjusted EBITDA margin 51%
o 2010 return on capital employed 32%
o Revenue growth strongly correlated with fleet capacity. Fleet
doubled over past 12 months
o Full year 2010 adjusted EBITDA $64m on average fleet capacity
of 286 MW
o Capacity December 31, 2010: 358MW
o Capacity July 31, 2011: 734MW
o Modern, efficient fleet combining advanced diesel engines and
dual fuel turbines
-- Strong order book, current trading and full year outlook
o Revenue for August 2011 up 93% to $22.8m
o Five project wins in 2011 as at 31 August 2011, adding 408
MW
o Three additional contract extensions gained in the eight
months to 31 August 2011
o Starting to commit $279m cash to increase fleet and establish
regional hubs
o Order book as at 31 August 2011 6,935 MW-months (31 August
2010 3,611 MW-months)
-- Intention to pay an annual dividend
On June 13, 2011, the reverse takeover of the APR Energy group
of companies and its management company (the "APR Group" or "APR")
by Horizon Acquisition Company plc ("Horizon") was announced. As
planned, Horizon's shares were immediately suspended from trading
with the intention of readmitting its enlarged ordinary share
capital to trading on the London Stock Exchange as APR Energy plc
in September, 2011.
The Company confirms that it will be starting investor
presentations this week. The prospectus is expected to be published
on Thursday, 15 September, with the shares then being re-admitted
and dealings starting on Monday 19 September. 78,215,164 Ordinary
Shares will be admitted. No new Ordinary Shares are being issued in
connection with the readmission.
John Campion, CEO and Founder of APR, said:
"Reliable electricity is vital to economic growth. In many
regions across the globe, there is a substantial, structural
shortage of electricity, which results in damaging power cuts and
constrains economic growth. This shortage is forecast to grow
substantially, particularly in emerging markets. APR provides
rapidly deployed temporary power solutions to help solve the
problem.
"Although we have experienced rapid historic growth, to date we
have been constrained by a shortage of capital. The cash introduced
through our reverse into Horizon, coupled with the access to
capital markets and our fast growing cash flows, will enable us to
compete across the whole market and accelerate our growth
further.
"We are confident in our ability to continue delivering
significant growth and driving shareholder value this year and in
the years to come."
APR
Based in Jacksonville, Florida, APR is a "pure play" fast track
provider of large scale, temporary power solutions. It is the
number 2 competitor to Aggreko in this global market, with a big
gap to the next tier of regional players, which operate smaller
fleets. It focuses solely on the, historically, more rapidly
growing and higher margin global power plant market in emerging
markets, where the supply/demand imbalance is most acute, as well
as event-led opportunities. It is not engaged in the lower margin
local power market.
APR designs, installs, operates and maintains turnkey power
solutions. Contracts are typically for 12 months to 3 years, with
historically high rates of renewal. Typically APR's revenues are
fixed monthly capacity charges, with an additional variable charge
for actual power generation.
It has active projects in Latin America, Africa and Asia,
serving sovereign owned utilities, governmental institutions and
industrial customers.
Its fleet had an aggregate capacity of 734 MW as at 31 July
2011. This fleet is technologically advanced and is differentiated
by its low weighted average age of under two years and by the
inclusion of dual fuel turbine generators.
Demand for large-scale temporary power greatly outstrips supply.
The supply/demand gap is estimated to be growing at 50 GW a year to
an overall gap of some 600 GW by 2015.
Barriers to entry are considerable, including access to capital,
the need for exceptional logistics and engineering expertise, an
extensive and varied fleet to meet customer needs, a track record
of operating experience and technical capability, local market
knowledge and good supplier relationships and buying strength.
As at the end of July 2011, approximately 625 people worked for
the APR Group (either as employees or sub-contractors).
Strong Growth Track Record
APR has achieved rapid growth with high returns. Revenue has
grown 235% over the two financial years to 31 December, 2010. The
return on capital employed was 31.9% in 2010 and historic adjusted
EBITDA margins range from 40-51% in the three financial years to 31
December 2010.
Revenue growth is directly correlated with the growth of fleet
capacity and fleet utilisation. In the year ended 31 December 2010,
APR's average fleet capacity was 286 MW and its revenues were
$126.1 million, with adjusted EBITDA of $64.2 million and operating
profit of $34.5 million.
At the end of 2010, APR's fleet capacity was 358 MW. As at 31
July, 2011, it was 734 MW, of which 644 MW was under contract with
customers.
Historically, APR's growth has been constrained through capital
shortage and the dependency on project finance, typically amortised
in line with project specific terms. The reverse takeover by
Horizon in June this year provided APR with access to $279 million
of cash, which is anticipated could expand its fleet by
approximately some 500 to 600 MW, and APR Energy plc's status as a
quoted public company will give it greater access to the debt and
equity capital markets.
Growth Strategy
APR's growth strategy is to expand its fleet and expand its
global footprint through the creation of an international hub
network. It intends to maintain its leading market position in
Latin America, build its growing position in Africa and expand in
Asia, where its profile has been significantly enhanced by its 203
MW contract win with TEPCO in Japan this April.
APR plans to establish regional hubs at strategic locations
around the world, starting with Panama, expected to be established
by the end of February 2012. These hubs will enable faster customer
response time, increased operating efficiencies and enhanced local
sales and marketing knowledge, enabling APR to source and respond
to a greater number of directly negotiated contracts and to broaden
its customer base by marketing 'stand-by' capacity, as opposed to
capacity with attendant equipment ordering times.
Current Trading and Prospects
Upon publication of the Prospectus, the Company will be
reporting on a 14 month financial period to the end of December
2011. Of this, 8 months will represent Horizon Acquisition Company
plc before it acquired the APR Group. The period which will reflect
the performance of the enlarged group, therefore, will be the
second half of 2011.
Revenue for the month of August, 2011, was $22.8 million, up 93%
compared to the same month (for the APR Group) last year. The order
book as at 31 August 2011 was a total of 6,935 MW-months, compared
to 3,611 MW-months as at 31 August 2010.
Since 31 December 2010, the APR Group has continued to expand
with five additional project wins that add an incremental 408 MW
under contract. Some of these projects are expected to begin
commercial operation in the four-month period to 31 December 2011,
and accordingly have not contributed to the August revenue. As a
result, monthly revenue is expected to increase over the remaining
four months of 2011. In addition, in the eight month period to 31
August 2011, the APR Group successfully completed contract
extensions with three existing customers, further securing the
revenue base into 2012. The APR Group is also in advanced
discussions on several incremental opportunities with existing
customers.
As at 31 August 2011 the APR Group's cash totalled $211.2
million.
With the strength of new business gained to date, and a strong
order book and pipeline, APR is well positioned to exploit existing
and future growth opportunities and deliver a strong performance
for the current year and beyond.
Dividend policy
The Board intends to pay an annual dividend - however investors
should note that, given the APR growth strategy and the capital
requirements of the business, the Board anticipates that, in the
short to medium term, the majority of APR's profits will be
re-invested in the APR business.
Advisor
Numis Securities Limited is the Financial Advisor and Broker to
the Company.
ENQUIRIES
For further information contact:
Citigate Dewe Rogerson Consultancy +44 (0) 20 7638 9571
Anthony Carlisle + 44 (0) 7973 611 888
Numis Securities + 44 (0) 20 7260 1000
Alex Ham
Stuart Skinner
NOTES TO EDITORS
1. APR
APR provides solutions primarily for:
-- seasonal demand (known as "peak shaving");
-- distributed generation (for areas with limited electricity
distribution infrastructure such as
remote/rural areas);
-- supplemental power (for increased electricity on a fast track
basis, for instance, to offset
electricity shortages due to increased demand/disrupted
supply);
-- grid stability and support (for improving efficiency and
reliability);
-- emergency generation (for instance, for disaster relief and
unscheduled outages);
-- industrial power generation (for instance for mining and
dedicated on-site power).
APR's business was established in August 2001 as part of the
Customer Service segment of Alstom Power Inc. Led by John Campion
and Laurence Anderson, the business was awarded its first temporary
power contract, a 20 MW project, in Sri Lanka in 2002, with a
further 100 MW gas fired project in Central America, and a 50 MW
diesel solution in the Caribbean, in 2003.
The APR Group was founded in March 2004 by John Campion, the
Chief Executive Officer and Laurence Anderson, the Chief Operating
Officer, with the purchase of Alstom Power Rentals from Alstom
Power Inc., and the business continued to operate under the Alstom
brand, under a license agreement, until June 2008, when the
business was rebranded as APR Energy.
2. Market Overview
The demand for large-scale temporary power greatly outstrips
supply and this demand is expected to continue to increase over the
medium to long term.
The World Bank has a target date of 2030 to close the
supply/demand gap on the basis of spending $36bn a year to achieve
this, but only $6bn was spent in 2010.
The imbalance is particularly acute in developing countries
where, as standards of living increase, electricity demand grows
rapidly, with the result that many of these countries are reaching
the point of frequent and damaging power cuts.
Non-OECD Electricity Consumption Growth
Region (Million MWh) 2006 2030 CAGR
------------------------- ------ ------- -----
Africa 543 996 2.6%
------------------------- ------ ------- -----
China 2,773 8,547 4.8%
------------------------- ------ ------- -----
Other Non-OECD 927 2,186 3.6%
------------------------- ------ ------- -----
Asia
------------------------- ------ ------- -----
Central & South America 946 1,601 2.2%
------------------------- ------ ------- -----
Middle East 646 1,099 2.2%
------------------------- ------ ------- -----
India 691 1,687 3.8%
------------------------- ------ ------- -----
Weighted Average 6,526 16,116 3.8%
------------------------- ------ ------- -----
Source: Energy Information Administration ("EIA") - May 2009,
"International Energy Outlook 2009" (www.eia.doe.gov/iea).
It is estimated that electricity consumption in non-OECD
countries will grow at a CAGR of approximately 3.8 per cent over
the 24 year period to 2030. As a result of this significant
increase in power generation need, short-term solutions will be
required to bridge the supply gap until permanent generating
resources can be developed.
It is anticipated that, by 2015, 25% of the current global
electricity generation sources will be over 40 years old, with the
ageing being particularly marked in developed markets. Any
replacement cycle for this current infrastructure will add further
to demand for temporary power capacity. Renewable energy sources
such as wind and solar energy inevitably require stand-by capacity
for downtimes and therefore growth in the use of renewable energy
sources is also expected to lead to further growth in demand for
temporary power solutions.
3. The Temporary Power Market
A new permanent power generation plant usually takes many years
to plan, finance and construct, at a cost of hundreds of millions
of dollars and frequently with attendant distribution network and
other infrastructure demands. Financing such plants can also
present significant challenges and delays, particularly for
emerging economies.
Against this backdrop, temporary power solutions are compelling
alternatives, as they can provide power within weeks, rather than
years, and with a low up-front capital requirement compared to
permanent plants. Temporary power solutions provide reliable power,
whether for efficient 'peaking' capacity or for 24 hour-a-day base
load operation, and are also well suited to the rapid expansion of
mining and industrial operations. They can be distributed across
the grid, eliminating or reducing the need for additional
transmission infrastructure, and, if and when permanent capacity
can meet demand, temporary power solutions can be demobilised
efficiently to other customers.
The temporary power market has two leading global providers
(Aggreko plc and APR), as well as numerous smaller competitors
engaged on more local/regional opportunities. Those providers of
large scale temporary power solutions, which are able to deliver
effective and reliable power solutions in a time effective way are
also able to command premium pricing in response to urgent customer
requirements.
4. Fleet
The APR Group currently has a fleet of diesel engines and dual
fuel turbine generators (including those on order) with an
aggregate current capacity of 734 MW as at 31 July 2011. There is
an increasing focus on the more fuel-efficient dual fuel turbines.
The turbines have a significantly longer life than that of diesel
engines, require fewer man hours to monitor and maintain their
operation, produce 25 MW of power per one containerised dual fuel
turbine (equivalent to 20 containerised diesel engine units), are
significantly quicker to deliver, install and then decommission and
have significantly cleaner emissions than diesel engines -
emissions criteria being a regular consideration in tenders.
5. About Horizon Acquisition Company plc
Horizon Acquisition Company is the former corporate name of the
Company. The Company's Ordinary Shares were admitted to the
standard listing segment of the Official List and to trading on the
London Stock Exchange on 4 February 2010, simultaneously with which
the Company raised GBP417 million before expenses through a
placing.
The Company was formed with the purpose of acquiring a
fundamentally sound business which has been constrained by its
ownership or capital structure. Following its initial public
offering in February 2010, the Company set out two principal
criteria for any acquisition - that it should represent immediate
value to the Company's investors, and that it should be a business
where providing new equity, and a listing on the London Stock
Exchange, would substantially enhance the prospects of the business
and provide it with key advantages in its market.
Following the review of a number of acquisition targets, the
Company completed the acquisition of the APR Group on 13 June 2011.
The Acquisition comprised the purchase of 100 per cent. of the
issued share capital of APR Energy Cayman Limited and all the
membership interests of its management services company,
Falconbridge Services, LLC. The Company was re- named APR Energy
plc.
The Acquisition constituted a "Reverse Takeover" under the
Listing Rules. The existing Ordinary Shares were suspended from
trading on 13 June 2011 pending the Company publishing a prospectus
in relation to the readmission of its enlarged ordinary share
capital to trading.
DISCLAIMERS
Exchange rates taken at GBP1= US$1.623, being the closing
mid-market rate as at the close of
business on Friday 11 June 2011 (being the last business day
prior to the completion of the Acquisition).
This announcement has been issued by and is the sole
responsibility of the Company. No
representation or warranty express or implied is, or will be,
made as to, or in relation to (and no responsibility or liability
is or will be accepted by Numis Securities Limited ("Numis") or by
any of its affiliates or agents as to or in relation to) the
accuracy or completeness of this announcement or any other written
or oral information made available to (or publicly available) to
any interested party or its advisers, and any liability therefore
is expressly disclaimed.
Numis Securities Limited ("Numis"), which is authorised and
regulated by the Financial Services Authority, is acting for the
Company in connection with the readmission of the Company's
Ordinary Shares to the Official List of the Financial Services
Authority and to trading on the London Stock Exchange plc and for
no one else and will not be responsible to anyone other than the
Company for providing the protections afforded to clients of
Numis.
This announcement does not constitute or form part of any offer
or invitation to purchase, otherwise acquire, issue, subscribe for,
sell or otherwise dispose of any securities, nor any solicitation
of any offer to purchase, otherwise acquire, issue, subscribe for,
sell, or otherwise dispose of any securities.
This announcement is not an offer of securities for sale or a
solicitation of an offer to purchase securities. The securities of
the Company referred to herein have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered or sold in the United
States unless they are registered with the U.S. Securities and
Exchange Commission or an exemption from the registration
requirements of the Securities Act is available.
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law and therefore
persons in such jurisdictions into which this announcement is
released, published or distributed should inform themselves about
and observe such restrictions.
Certain statements in this announcement are forward-looking
statements which are based on the Company's expectations,
intentions and projections regarding its future performance,
anticipated events or trends and other matters that are not
historical facts. These statements are not guarantees of future
performance and are subject to known and unknown risks,
uncertainties and other factors that could cause actual results to
differ materially from those expressed or implied by such
forward-looking statements. Given these risks and uncertainties,
prospective investors are cautioned not to place undue reliance on
forward-looking statements. Forward-looking statements speak only
as of the date of such statements and, except as required by
applicable law, the Company undertakes no obligation to update or
revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise.
No statement in this announcement is intended as a profit
forecast and no statement in this announcement should be
interpreted to mean that earnings per Ordinary Share for the
current or future financial years would necessarily match or exceed
any historical published earnings per Ordinary Share.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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