TIDMAPR
RNS Number : 5851M
APR Energy PLC
28 August 2013
For Immediate Release 28 August 2013
APR Energy plc
Interim Results 2013
Strong Contract Wins Drive Record Order Book Growth.
Libya Installation Complete and Set to Drive H2 Revenues.
147MW of New Deals Awarded.
APR Energy plc (LSE: APR) (the "Company" and together with its
subsidiaries, "APR Energy" or the "Group"), a global leader in
fast-track power solutions, today announces its interim results for
the six-month period ended 30 June 2013.
Reported Reported Adjusted(1) Adjusted(1)
6 mths 6 mths 6 mths 6 mths
ended ended ended ended
30 Jun 30 Jun 30 Jun 30 Jun
13 12 13 12
$m Unaudited Unaudited Unaudited Unaudited
Revenue 87.2 155.0 87.2 155.0
Operating profit 0.4 4.1 5.2 52.8
(Loss)/profit before
taxation (16.1) (1.9) (3.1) 51.8
Net (loss)/income (11.8) (6.9) 1.1 46.8
(Loss)/earnings per
share
(cents) (15.14) (8.82) 1.45 59.81
Adjusted EBITDA - - 43.7 96.1
Adjusted EBITDA
margin
(%) - - 50.1 62.0
(1) Adjusted figures for 2013 and 2012 cover the 6 month periods
ended 30 June 2013 and 2012 for APR Energy and exclude non-cash
expenses for amortisation of intangible assets ($4.8 million and
$48.7 million) and Founder securities revaluation ($8.2 million and
$5.0 million).
KEY HIGHLIGHTS
-- 593MW of new contracts signed in H1 2013 - up 72% on prior year period
-- 111MW of extensions year to date
-- Order book at 14,439 MW-months - up 59% on prior year period
-- Further increase in new fleet investment to $280 million
(from $250 million previous guidance)
-- Diesel utilisation of 81%; total fleet utilisation at 79%
-- Fleet expanded to 1,607MW - up by 53% on prior year period
-- All Libya plants installed and commercially operational
-- 40MW deal awarded in Mozambique for natural gas power modules
-- Diesel power module contracts awarded in Indonesia (75MW) and Senegal (32MW)
John Campion, Chief Executive Officer, said:
"APR Energy has made significant progress during the first half
of 2013, winning 593MW of new contracts - more than in the whole of
2012. Our regional hub strategy has also delivered results, helping
to secure contracts in Indonesia and Oman, and enabling us to
service these in record time. The new business wins, together with
111MW of extensions, bring our order book to a record 14,439
MW-Months - a rise of 59% on the same period a year ago and 25%
ahead of 31 December 2012.
"Our plants in Libya are now all fully installed and
commercially operational - a tremendous achievement given that the
project is APR Energy's largest-ever installation and was
successfully executed despite a challenging operating environment.
Due to the scheduled timing of Libya and Uruguay commissioning,
revenues and operating profits will skew towards the second
half.
"Following upon our momentum of the first half, we announce
today 147MW of new contract awards in Mozambique, Indonesia, and
Senegal. The Mozambique deal for gas power modules aligns closely
with APR Energy's strategy to increase its natural gas footprint,
taking advantage of the lower-cost, lower-emissions fuel. Our
awards in Indonesia and Senegal will further strengthen our
presence in those strategic markets, and will enable us to
significantly increase our diesel fleet utilisation."
Enquiries:
APR Energy plc +44 (0) 203 427 3747
Brian Gallagher +44 (0) 777 590 6076
Capital MSL
Ian Brown +44 (0) 20 7307 5344 / +44 (0) 7908 251 123
Richard Campbell +44 (0) 20 7307 5344 / +44 (0) 7775 784 933
Analyst Conference
There will be an analyst conference this morning at 10.30 am GMT
at the offices of Numis Securities, London Stock Exchange, London
EC1R 0HL. A webcast will be available 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 and installation of
scalable turnkey power solutions. APR Energy's solutions, coupled
with comprehensive operation and maintenance services and flexible
commercial terms, have established it as a leader in its industry.
Serving both utility and industrial segments, APR Energy provides
power generation solutions to customers and communities around the
world, with an emphasis on Africa, Latin America, the Middle East,
and Asia. APR Energy also implements philanthropic projects at each
plant location through its Community Development Programme, which
aims to build and maintain close relationships with its neighbours
through projects focused on health, education, and
infrastructure.
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 Group'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.
This information is provided by RNS
The company news service from the London Stock Exchange
-End-
APR Energy plc
Interim Management Report
CHAIRMAN'S STATEMENT
Introduction
The six months to 30 June 2013 has been a period of significant
investment as we build the platform for long-term sustainable
growth. Our investments in fleet and our regional hubs have
positioned us well to seize emerging opportunities. Whilst our
financial results are lower than 2012, the comparable period in
2012 was significantly skewed by a large contract in Japan, which
concluded in Q1 2013. In addition, a large portion of the Group's
fleet was being repositioned during the first half of 2013 to two
of the Group's largest-ever projects, Uruguay and Libya. The
majority of the revenue from these two projects will be generated
in the second half of the year and beyond.
Performance
Revenue in the period was $87.2 million (H1 2012: $155.0
million), reflecting lower utilisation during the early part of the
first half largely due to abnormally high fleet repositioning. This
is against a strong comparative period in 2012 that included a
203MW contract in Japan, which ended in part in Q2 2012 and
completed in Q1 2013. The fleet used in the Japan contract has now
been fully redeployed to other projects, with the large majority
now operating in Libya and Uruguay. Unlike Japan, these projects
are a result of structural power deficits, which are expected to
continue into the longer term. The management team's focus on
increasing fleet utilisation, particularly of diesel power modules,
has been successful and should reflect an enhanced operational
performance for the business during the second half.
Investment in the mobilisation, site preparation, and
installation of the Group's two largest projects, Uruguay
(additional 200MW) and Libya (450MW), affected its first half
performance, as the majority of revenue from these assets will not
be generated until the second half.
Planned fleet investment is being increased to $280 million for
2013 (previous guidance $250 million), as we believe the prospects
for our mobile gas turbine technology continue to increase. During
the first half, capital expenditure in the fleet was $245 million,
primarily in mobile gas turbines and reflecting the installation of
the Libya contract announced in March 2013.
The Group balance sheet has gross debt of $440 million
(excluding capitalised financing costs) and cash of $35 million,
resulting in net debt of $405 million at 30 June 2013 (31 December
2012: $184 million). The Group also secured a $150 million term
loan expansion of its credit facilities from $400 million to $550
million. This expansion was arranged with its existing consortium
of relationship banks and underpins the growth ambitions of the
Group into the medium term.
Dividend
The Board declared an interim 2013 dividend of 3.3 pence per
ordinary share in the half year to 30 June 2013. This interim
dividend will be paid on 26 November 2013 to shareholders on the
register of members of the Company as at 1 November 2013, with an
ex-dividend date of 30 October 2013.
Outlook
The Group continues to see strong structural demand for power
solutions across its primary markets in Africa, Latin America, the
Middle East, and South East Asia, particularly for large-scale,
fast-track power projects. Our commercial pipeline remains strong,
with ongoing discussions on a significant number of opportunities
across all our technologies. APR Energy's focus on leading-edge
technology, including mobile gas turbines, positions us well for
such opportunities, expanding our addressable market, and providing
a competitive advantage that will help us continue to grow market
share. Our solutions provide essential power in markets with
significant structural power deficits and, as such, contract
renewal rates are expected to remain high.
Chairman
Mike Fairey
27 August 2013
BUSINESS REVIEW
Overview
Group revenues totalled $87.2 million for the six-months ending
30 June 2013, down from the prior period. However, the comparison
is skewed by the roll-off of the large post-Tsunami contract in
Japan, which largely finished in the second half of 2012, with
completion in Q1 2013. Lower utilisation of our fleet in the early
part of the period, as we demobilised the plant in Japan, also
affected financial performance. However, during the first six
months of 2013, the Group achieved new contract wins of 593MW and
contract extensions of 111MW, a significant achievement,
representing more than the total contract wins for the whole of
2012.
As of 30 June 2013, total fleet capacity was 1,607MW (31
December 2012: 1311MW) with an order book of 14,439 MW-Months, an
increase of 25% from the end of 2012.
APR Energy continues to focus on improving its operational
performance. Utilisation has been a key target for management, with
diesel utilisation reaching 81% at the period end. This operational
achievement should reflect stronger margins and growth during the
second half.
Trading
The structural growth drivers within the Group's business are
intact and the prospects for fast-track, large-scale power in all
its chosen geographies remain very strong. During the period, the
Group signed 593MW of new contracts, with an additional 111MW in
contract extensions (including Botswana and Senegal).
In June, APR Energy announced the expansion of its 250MW
contract in Libya by an additional 200MW, making it the largest
single contract in the history of the fast-track power industry.
The 450MW solution will help cover demand during the critical
summer high heat season, as well as provide interim power while the
country continues to rebuild and improve its infrastructure.
In Uruguay, the 100MW La Tablada site and 100MW Punta del Tigre
site expansion went operational, bringing APR Energy's total power
generation capacity in the country to 300MW. The Group's 32MW plant
in Oman went operational as one of the fastest installations in its
history, facilitated by its patent-pending modular block building
system and supported by the regional hub in Dubai.
APR Energy signed its first ever cross-border agreement, a 40MW
diesel power module solution, with the government of Mali. The
solution is being installed and operated in Senegal to feed into
the OMVS interconnected grid that connects Mali, Senegal, and
Mauritania. The deal is the Group's first sale of power to Mali.
The project further reinforces APR Energy's commitment to West
Africa, with other recent projects across the region including
Senegal, Burkina Faso, and Gabon.
The 40MW contract in Indonesia, APR Energy's second in the
country during 2013, brings its total power capacity in the country
to 55MW. The recent success in Indonesia, one of the largest
fast-track power markets in the world, is the result of APR
Energy's increased focus in Asia, following the opening of its
regional hub in Malaysia in September 2012.
Strategy
We continue to make good progress on our key strategic
initiatives during the first half, from which we are already
reaping significant benefits.
Focus on large-scale power projects. APR Energy has placed an
increased focus on larger-scale and longer-term power projects, as
seen with our 300MW project in Uruguay and our 450MW project in
Libya. Compared to traditional plants, which require significant
up-front financing and take years to build, our fast-track,
large-scale plants offer a compelling alternative to customers in
urgent need of power. A key part of that strategy has been
investment in our mobile gas turbines, which, with their high power
density, dual-fuel flexibility, high reliability, and low
emissions, have been the technology of choice for many customers
with large-scale projects. As one of the world's largest providers
of mobile gas turbine technology, APR Energy is well positioned to
further execute upon this strategy.
Continued improvement in operational execution. To maintain our
leadership in fast-track, large-scale power, APR Energy places a
major focus on driving continuous operational improvement across
engineering, logistics, purchasing, and installations. Progress can
be seen through the successful execution of our 450MW project in
Libya, the Group's largest ever installation, spanning six plant
sites, and featuring multiple technologies. APR Energy's 32MW plant
in Oman is another example. Featuring our proprietary modular block
building system, and leveraging support from our regional hub in
Dubai, the site went operational within days as one of the fastest
installations in our history.
Regional expansion and diversification. APR Energy remains
committed to expanding our global footprint, whilst diversifying
our market coverage and customer base. We have placed a priority on
developing our key target markets, primarily located within Africa,
Asia Pacific, Latin America, and the Middle East/North Africa
(MENA). The implementation of APR Energy's global hubs has been
highly successful in increasing market access, while the placement
of experienced business development and power project developers in
key markets has been instrumental in increasing market penetration.
For example, in the Asia Pacific region, the opening of the
Malaysian operational hub and Singapore commercial office led to
the signing of our two Indonesia contracts and an increased
commercial pipeline. APR Energy's increased focus and presence in
the MENA region led to the Libya and Oman projects. We expect these
initiatives to continue fuelling new growth and expansion into our
priority markets.
In addition to these strategic advancements, we continue to
invest in elevating the skills, experience, and expertise of our
people across our critical functional areas.
Outlook
APR Energy's commercial pipeline remains strong. The Group
continues to see further opportunities for large-scale, fast-track
power projects, which are its sole focus. The increase in fleet
investment to $280m, primarily focused on mobile gas turbines,
reflects the Group's confidence in the technology and its
advantages for large-scale projects.
The implementation of APR Energy's global hubs has been highly
successful in increasing market access, especially in the Middle
East/North Africa (MENA) and Asia Pacific regions, while the
placement of experienced business development and power project
developers in key markets has been instrumental in increasing
market penetration. We expect these initiatives to continue
fuelling new growth and expansion into our priority markets, and we
look forward to making further progress in the second half of 2013
and beyond.
The momentum from the first half of the year has carried into
the second half with the 40MW contract award in Mozambique for gas
power modules, and the new contract awards in Indonesia (75MW) and
Senegal (32MW) for diesel power modules. These deals will help us
expand our presence in key markets, and will further increase the
Group's total fleet utilisation.
KEY PERFORMANCE INDICATORS
As set out in our most recent annual report, we monitor our
performance in implementing our strategy using five key performance
indicators (KPIs). These KPIs are applied on a Group wide basis.
Performance in the six months ended 30 June 2013 is set out in the
table below, together with the prior period performance data.
H1 2013 H1 2012
Capacity (MW) 1,607MW 1,052MW
Order book (MW-Months) 14,439 9,082
Adjusted EBITDA ($m) 43.7 96.1
Adjusted EBITDA margin (%) 50.1% 62.0%
Adjusted ROCE (%) 2.6% 18.2%
Adjusted earnings per share (cents) 1.45 59.81
Loss per share (cents) (15.14) (8.82)
Capacity, order book, adjusted EBITDA, adjusted EBITDA margin,
adjusted ROCE and adjusted 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.
These measures will also be beneficial to potential investors in
understanding the Group's business. 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.
FINANCIAL REVIEW
Reported Reported Adjusted Adjusted
6 mths 6 mths 6 mths 6 mths
ended ended ended ended
30 30 30 30
Jun Jun Jun Jun
13 12 13 12
$'000 $'000 $'000 $'000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue 87,197 155,048 87,197 155,048
Cost of sales (64,516) (79,336) (64,516) (79,336)
Amortisation of intangible
assets (4,822) (48,729) - -
------------ ------------ ------------ ------------
Gross profit 17,859 26,983 22,681 75,712
Selling, general and
administrative expenses (17,442) (22,863) (17,442) (22,863)
------------ ------------ ------------ ------------
Operating profit 417 4,120 5,239 52,849
Founder shares and securities
revaluation (8,152) (4,952) - -
Foreign exchange gain (34) (535) (34) (535)
Finance income 150 176 150 176
Finance costs (8,490) (675) (8,490) (675)
------------ ------------ ------------ ------------
(Loss)/profit before
taxation (16,109) (1,866) (3,135) 51,815
Taxation 4,266 (5,032) 4,266 (5,032)
------------ ------------ ------------ ------------
(Loss)/profit for the
period (11,843) (6,898) 1,131 46,783
Total comprehensive
(loss)/profit for the
period (11,843) (6,898) 1,131 46,783
------------ ------------ ------------ ------------
Adjusted Financial Results and Performance Review
To provide investors with clarity on the performance of the APR
Group, adjusted unaudited financial information has been prepared
to show the results of the APR Group for the six-month period ended
30 June 2013 and 2012 respectively, as well as the year ended 31
December 2012. The adjusted unaudited financial information has
been prepared on an adjusted basis as follows:
Profit
Operating for the
Revenue profit period
6 month period to 30 June 2013 $m $m $m
Results as reported 87.2 0.4 (11.8)
Amortisation of acquired intangible
assets - 4.8 4.8
Founder shares and securities
revaluation - - 8.2
-------- ---------- ---------
Adjusted results 87.2 5.2 1.1
------------------------------------------------------------------------
Profit
Operating for the
Revenue profit period
6 month period to 30 June 2012 $m $m $m
Results as reported 155.0 4.1 (6.9)
Amortisation of acquired intangible
assets - 48.7 48.7
Founder shares and securities
revaluation - - 5.0
-------- ---------- ---------
Adjusted results 155.0 52.8 46.8
------------------------------------------------------------------------
Profit
Operating for the
Revenue profit period
Year ended 31 December 2012 $m $m $m
Results as reported 265.7 9.2 (14.9)
Amortisation of acquired intangible
assets - 58.0 58.0
Founder shares and securities
revaluation - - 10.2
-------- ---------- ---------
Adjusted results 265.7 67.2 53.2
------------------------------------------------------------------------
Revenue for the six-month period ended 30 June 2013 was $87.2
million, a decrease of 44 per cent over the same period last year.
This reduction reflects low utilisation during the early part of
the first half and a strong comparative period in 2012 based on a
203MW contract in Japan. This contract ended in part in July 2012
and completed in March 2013. Management focus on increasing
utilisation, in particular in the diesel fleet, has been successful
and will be reflected in enhanced operational performance of the
business during the second half of the year.
Operating profit on an adjusted basis also decreased to $5.2
million from $52.8 million. This decrease was similarly due to
lower utilisation levels during early part of the first half and
the ending of the Japan contract. Net interest expense increased to
$8.3 million (H1 2012: $0.5 million) as the Group drew down on debt
facilities to fund fleet expenditures.
The 2013 tax charge on an adjusted basis was $4.3 million credit
(H1 2012: $5.0 million charge), reflecting an effective tax rate of
136 per cent (H1 2012: 10 per cent). The tax credit is due to the
Group booking previously unrecognised tax losses in the UK as a
result of contract wins during the period.
Adjusted EBITDA totalled $43.7 million, a decrease of 55 per
cent over the prior year (H1 2012: $96.1 million). Adjusted EBITDA
margin was 50 per cent (H1 2012: 62 per cent). These reductions
were as a result of the lower utilisation during the early part of
the period.
Capital expenditures on new fleet assets for the six-month
period ending 30 June 2013 were $245.2 million, up from $147.1
million in 2012. The continued capital investment represented fleet
investment, primarily in dual fuel turbines.
Return on Capital Employed (ROCE) is a key performance metric
for the business. Given the significant increase in net operating
assets and the fact that certain contracts have only minimally
contributed in H1 2013 the ROCE (on an adjusted basis) decreased to
2.6 per cent (31 December 2012: 11.0 per cent).
Reconciliation of adjusted operating profit to adjusted
EBITDA:
Adjusted Adjusted Adjusted
6 mths 6 mths 12 mths
ended ended ended
30 Jun 30 Jun 31 Dec
13 12 12
$'000 $'000 $'000
Adjusted operating profit 5,239 52,849 67,221
Depreciation 35,761 42,669 86,303
Equity-settled share-based payment
expense 2,680 631 3,436
--------- --------- ---------
Adjusted EBITDA 43,680 96,149 156,960
The reduction in the depreciation charge compared to the
comparative period relates primarily to a reduction in the
mobilisation depreciation as a result of lower contractual
utilisation.
Reported Results and Performance Review
Revenue
Revenue for the six-month period ended 30 June 2013 was $87.2
million (H1 2012: $155.0 million).
Operating profit
The reported operating profit was $0.4 million, compared to $4.1
million in the same period in the prior year. This reduction was
mainly as a result of decreased revenues in 2013 and the strong
comparative period in the prior year, offset by a reduction in
selling, general and administrative expenses in the period due to a
continued focus on the Group's cost structure and a large decrease
in the amortisation of intangible assets as discussed below.
Amortisation of intangible assets
The amortisation of customer contracts concluded in the period,
leaving only the trade name at 30 June 2013 in the statement of
financial position, which is being expensed over 25 years.
Founder securities
In accordance with IAS 39, the Founder securities are fair
valued at each balance sheet date. The charge of $8.2 million
relates to, inter alia, the rise in the Group's share price in the
period and the volatility of the Group's share price.
Provision for bad debt
The Group evaluates the collectability of receivables on a
case-by-case basis depending on the customer's ability to pay. The
Group has recognised an allowance for doubtful debts against trade
receivables which are 90 days or older based on estimated
irrecoverable amounts determined by reference to past default
experience of the counterparty and an analysis of the
counterparty's current financial position. The position at 30 June
2013 remaining unchanged during the period.
Share-based payments
In accordance with IFRS 2, a non-cash charge of $2.7 million was
recognised within selling, general and administrative expenses,
related to equity-settled share-based payment transactions in the
period (H1 2012: $0.6 million). This expense relates to equity
grants made under the Company's Performance Share Plans and the
Non-Executive Directors' share matching scheme and the increase
relates to the timing of those awards.
Loss per share
Basic loss per share was 15.14 cents for the reported period (H1
2012: 8.82 cents), reflecting the larger losses reported in the
period.
Liquidity and capital resources
Net debt (excluding capitalised finance fees of $8.8 million) as
at 30 June 2013 was $405.0 million (31 December 2012: $184.0
million). This reflects the Group's continued investment in its
fleet and is consistent with the Group's strategy. A summary
analysis of cash flows is set out in the table below.
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 30 Jun
2013 2012 2012
$'000 $'000 $'000
Net cash from operating activities 40,326 70,869 117,292
Net cash used in investing activities (247,054) (191,500) (347,120)
Net cash from financing activities 220,704 91,195 187,812
---------- ---------- ----------
Net increase/(decrease) in cash
and cash equivalents 13,976 (29,436) (42,016)
Cash and cash equivalents at
beginning of the period 21,045 63,061 63,061
---------- ---------- ----------
Cash and cash equivalents at
end of the period 35,021 33,625 21,045
---------- ---------- ----------
During the period, net cash flows from operating activities
totalled $40.3 million (H1 2012: $70.9 million). Cash outflows from
investing activities primarily comprised of the purchases of
property and equipment. Cash from financing activities included a
net $235.0 million of debt draw-downs. The cash balance at period
end was maintained at a level to minimise borrowing costs.
Treasury policies and risk management
The Group's activities give rise to a number of financial risks,
particularly market risk comprised of foreign exchange and interest
rate risk, credit risk, liquidity risk, and capital risk
management.
Market risk
Market risk includes foreign exchange risk and interest rate
risk. The Group seeks to manage these risks to acceptable levels by
maintaining appropriate policies and procedures. In its
determination to enter into a contract, the Group will carry out a
risk assessment and determine the appropriate risk mitigations
strategies. Market risk also includes the risk that cash derived
from income for services fulfilled under contract terms will become
restricted and not available for use in the on-going activities of
the business.
Foreign exchange risk
The Group has an exposure to transactional foreign exchange from
purchases or sales in currencies other than US dollars. In order to
minimise exposure to foreign exchange risk, the Group primarily
contracts in US dollars or in contracts with a price based on US
dollars at the date of transaction or payment if possible. In some
cases, the Group transacts in local currencies when purchasing
materials and supplies for project operations.
In limited circumstances, the Group may use derivative
instruments to economically hedge against foreign exchange risk.
Any hedges are limited in duration and correspond to the applicable
contract payments or receipts to which the derivatives are
associated.
Interest rate risk
The Group is primarily exposed to interest rate risk on its
borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates
expose the Group to fair value interest rate risk. When applicable,
the Group may elect to hedge interest rate risk associated with
debt or borrowings under the credit facility by purchasing
derivative instruments. As at 30 June 2013, 31 December 2012 and 30
June 2012 there were no interest rate hedges in place.
Credit risk
Credit risk arises from counterparty default risk tied to
deposits of cash and cash equivalents, as well as exposures to
outstanding receivables from customers. Due to the nature of the
Group's business in emerging markets, management believes the most
significant of these to be exposures to outstanding receivables
from customers.
To minimise the risk of a significant impact on the business due
to a customer defaulting on its commitments, the Group closely
monitors trade receivables. In addition, the Group utilises letters
of credit, contract insurance policies and up front deposits to
mitigate this risk.
Liquidity risk
Liquidity risk results from insufficient funding being available
to meet the Group's funding requirements as they arise. The Group
manages liquidity risk by maintaining adequate reserves of cash and
available committed facilities to meet the Group's short and
long-term funding requirements. The Group monitors the short-term
forecast and actual cash flows on a daily basis and medium and
long-term requirements in line with the Group's long-term planning
processes.
In 2011, the Group entered into a committed, secured credit
facility of $400.0 million with a group of international banks. In
May 2013, the Group further entered into a committed, secured term
loan of $150.0 million with several of the existing group of
international banks previously involved with the revolving credit
facility.
Dividends
The Company's shareholders approved a final dividend for the
year ended 31 December 2012 of 6.7 pence per ordinary share at the
Annual General Meeting on 14 May 2013. This amount was paid on 28
May 2013 to shareholders on the register of members of the Company
on 3 May 2013.
The Board declared an interim 2013 dividend of 3.3 pence per
ordinary share in the half year to 30 June 2013. This interim
dividend will be paid on 26 November 2013 to shareholders on the
register of members of the Company as at 1 November 2013, with an
ex-dividend date of 30 October 2013.
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 45 to 49 of the 2012 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;
-- Payment default; and
-- Funding risk.
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 2012 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 $550.0 million), which
have been renegotiated during the period, are provided by a
syndicate of banks under a revolving credit facility and a term
loan, which are due to mature on 28 November 2016 and 20 November
2014 respectively.
In order to ensure it remains within the terms of these
facilities (including covenant requirements) the Group regularly
produces cash flow statements, and forecasts and sensitivities are
run for different scenarios including, but not limited to, changes
to contract start dates, pricing and expected contract duration. In
the event of unexpected adverse changes to the Group's cash flows,
the Directors are confident that the Group could manage its
financial affairs, including the securing of additional financing,
portfolio management and deferring of non-essential capital
expenditure, so as to ensure that sufficient funding remains
available for the next twelve months.
Accordingly, notwithstanding the above uncertainties, and the
current uncertain economic environment, the Directors believe that
the Group's forecasts and projections, taking account of reasonably
possible changes in assumptions, show that the Group will be able
to operate within the terms of its current facilities for the
foreseeable future, being twelve months from the date of this
report.
After making enquiries, the Directors have a reasonable
expectation that the Group have adequate resources to continue in
operational existence for the foreseeable future. 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
27 August 2013
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 2013, 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 Conduct 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 2013 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 Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
27 August 2013
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 2013
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
$'000 $'000 $'000
(Unaudited) (Unaudited) (Audited)
Note
Revenue 5 87,197 155,048 265,734
Cost of sales (64,516) (79,336) (164,986)
Amortisation of intangible assets (4,822) (48,729) (57,976)
------------ ------------ ------------
Gross profit 17,859 26,983 42,772
Selling, general and administrative
expenses (17,442) (22,863) (33,527)
------------ ------------ ------------
Operating profit 417 4,120 9,245
Founder securities revaluation 10 (8,152) (4,952) (10,200)
Foreign exchange loss (34) (535) 389
Finance income 150 176 333
Finance costs (8,490) (675) (4,620)
------------ ------------ ------------
Loss before taxation (16,109) (1,866) (4,853)
Taxation credit/(charge) 4 4,266 (5,032) (10,081)
------------ ------------ ------------
Loss for the period (11,843) (6,898) (14,934)
Total comprehensive loss for
the period (11,843) (6,898) (14,934)
------------ ------------ ------------
Loss per share
Basic loss per share - cents 7 (15.14) (8.82) (19.09)
Diluted loss per share - cents 7 (15.14) (8.82) (19.09)
APR Energy plc
Condensed consolidated statement of financial position
As at 30 June 2013
30 June 30 June 31 December
2013 2012 2012
$'000 $'000 $'000
(Unaudited) (Unaudited) (Audited)
Assets Note
Non-current assets
Goodwill 547,069 547,069 547,069
Intangible assets 34,989 49,058 39,811
Property, plant and equipment 8 927,884 527,348 671,478
Deferred tax asset 8,882 - 407
Other non-current assets 6,137 3,040 5,409
------------ ------------ ------------
Total non-current assets 1,524,961 1,126,515 1,264,174
Current assets
Derivative asset 10 209 1,215 38
Inventories 14,354 11,984 9,366
Income tax receivable 5,734 771 915
Trade and other receivables 71,089 51,600 53,059
Cash and cash equivalents 35,021 33,625 21,045
Deposits 11,389 56,890 24,839
------------ ------------ ------------
Total current assets 137,796 156,085 109,262
------------ ------------ ------------
Total assets 1,662,757 1,282,600 1,373,436
------------ ------------ ------------
Liabilities
Current liabilities
Trade and other payables 77,512 45,757 28,927
Income tax payable 5,872 3,897 4,706
Deferred revenue 26,075 5,186 8,999
Derivative liability 10 69 - 342
Borrowings - 4,473 -
Decommissioning provisions 8,014 12,492 12,213
------------ ------------ ------------
Total current liabilities 117,542 71,805 55,187
Non-current liabilities
Derivative liability 10 23,313 9,913 15,161
Deferred tax liability 4,116 2,793 4,324
Borrowings 9 431,164 94,299 199,476
Decommissioning provisions 11,852 2,832 7,453
------------ ------------ ------------
Total non-current liabilities 470,445 109,837 226,414
------------ ------------ ------------
Total liabilities 587,987 181,642 281,601
Equity
Share capital 12,620 12,620 12,620
Share premium 668,128 668,128 668,128
Other reserves 485,854 485,854 485,854
Equity reserves 7,224 1,739 4,544
Accumulated losses (99,056) (67,383) (79,311)
------------ ------------ ------------
Total equity 1,074,770 1,100,958 1,091,835
------------ ------------ ------------
Total liabilities and equity 1,662,757 1,282,600 1,373,436
------------ ------------ ------------
APR Energy plc
Condensed consolidated statement of changes in equity
For the six month period ended 30 June 2013
Share Share Other Equity Accumulated Total
capital premium reserves(1) reserves losses equity
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1
January
2012 12,696 668,128 485,775 1,795 (48,691) 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) 12,620 668,128 485,854 1,739 (67,383) 1,100,958
-------- -------- ------------ --------- ------------ ----------
Balance at 1
January
2013 12,620 668,128 485,854 4,544 (79,311) 1,091,835
-------- -------- ------------ --------- ------------ ----------
Loss for the
period - - - - (11,843) (11,843)
-------- -------- ------------ --------- ------------ ----------
Total
comprehensive
loss for the
period - - - - (11,843) (11,843)
Credit to equity
for
equity-settled
share-based
payment expense - - - 2,680 - 2,680
Dividends - - - - (7,902) (7,902)
Balance at 30
June
2013
(unaudited) 12,620 668,128 485,854 7,224 (99,056) 1,074,770
-------- -------- ------------ --------- ------------ ----------
(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 2013
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
$'000 $'000 $'000
(Unaudited) (Unaudited) (Audited)
Cash flows from operating activities Note
Loss for the period before
taxation (16,109) (1,866) (4,853)
Adjustments for:
Depreciation and amortisation 40,583 91,398 144,279
Loss on sale or disposal of
fixed assets - 333 418
Provision for bad debt - (1,468) (1,490)
Equity-settled share-based
payment expense 2,680 631 3,436
Founder securities revaluation 8,152 4,952 10,200
(Gain)/loss on derivative instruments (444) 1,044 2,562
Finance income (150) (176) (333)
Finance costs 8,490 675 4,620
Movements in working capital:
Increase in trade and other
receivables (18,030) (10,539) (10,896)
Increase in inventories (4,988) (9,828) (7,210)
Increase in other current and
non-current assets (1,003) (375) (3,602)
Decrease in trade and other
payables 24,354 11,859 758
Settlement of decommissioning
provisions (7,364) (5,896) (9,376)
Increase/(decrease) in other
liabilities 17,076 (5,293) (1,480)
------------ ------------ ------------
53,247 75,451 127,033
Interest paid (5,000) (1,182) (3,229)
Interest received 150 176 333
Income taxes paid (8,071) (3,576) (6,845)
------------ ------------ ------------
Net cash from operating activities 40,326 70,869 117,292
Cash flows from investing activities
Purchases of property, plant
and equipment (260,778) (163,299) (351,006)
Decrease/(increase) in deposits 13,724 (28,201) 3,886
------------ ------------ ------------
Net cash used in investing
activities (247,054) (191,500) (347,120)
Cash flows from financing activities
Increase in borrowings 325,000 104,473 219,473
Repayment of borrowings (90,000) - (14,473)
Dividends paid 6 (7,902) (12,478) (16,373)
Debt issuance costs (6,394) (803) (818)
Proceeds from the issue of
ordinary shares - 3 3
------------ ------------ ------------
Net cash from financing activities 220,704 91,195 187,812
Net increase/(decrease) in
cash and cash equivalents 13,976 (29,436) (42,016)
Cash and cash equivalents at
beginning of the period 21,045 63,061 63,061
------------ ------------ ------------
Cash and cash equivalents at
end of the period 35,021 33,625 21,045
------------ ------------ ------------
Included within cash and cash equivalents at 30 June 2013 is an
amount of $7.7 million which backs letters of credit and as such is
classified as restricted cash (31 December 2012: $4.8 million).
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 27 August 2013.
The information for the year ended 31 December 2012 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 and have been prepared on the basis of the
accounting policies set out in the Group's financial statements for
the year ended 31 December 2012.
Changes in accounting policy
In 2012, a number of new standards and interpretations became
effective as noted in the 2012 Annual report and accounts (page
92). The adoption of these standards and interpretations has not
had a material impact on the financial statements of the Group.
Since the 2012 Annual report and accounts was published no
significant new standards and interpretations have been issued. The
following new and revised standards became effective during
2013:
-- IAS 1 Presentation of Items of Other Comprehensive Income - Amendments to IAS 1
-- IAS 19 (revised) Employee Benefits
-- IFRS 7 (amended) Disclosures - Offsetting Financial Assets and Financial Liabilities
-- IFRS 13 Fair Value Measurement
The adoption of these standards has not had a material impact on
the financial statements of the Group.
In addition, the following standards, which are endorsed by the
European Union but are not effective until 1 January 2014 will be
adopted for the period beginning 1 January 2014:
-- IFRS 10 Consolidated Financial Statements
-- IFRS 11 Joint Arrangements
-- IFRS 12 Disclosure of Interests in Other Entities
-- IAS 28 (revised) Investment in Associates and Joint Ventures
The Directors do not expect that the adoption of these standards
will have a material impact on the financial statements of the
Group in future periods.
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 $550.0 million) are
provided by a syndicate of banks under a revolving credit facility
and a term loan and mature on 28 November 2016 and 20 November 2014
respectively. 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. Further details are found in
the financial review.
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 comprises a current tax charge of
$4.4 million (H1 2012: $3.9 million) and a deferred tax credit of
$8.7 million (H1 2012: $1.1 million charge). It has been charged at
26% (6 months ended 30 June 2012: (270)%; year ended 31 December
2012: (208)%), 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 and adjusted for the discrete recognition of deferred
tax assets.
APR Energy plc
Notes to the condensed set of financial statements
(continued)
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 as a result of withholding taxes and income
taxes in foreign jurisdictions, as well as the recognition of
previously unrecognised tax losses in the UK as a result of
contract wins during the current period.
The Group periodically assesses its liabilities and
contingencies for all tax years open to audit based upon the latest
information available. For those matters where it is probable that
an adjustment will be made, the Group record its best estimate of
these tax liabilities, including related interest charges. Inherent
uncertainties exist in estimates of tax contingencies due to
changes in tax laws. Whilst management believes they have
adequately provided for the probable outcome of these matters,
future results may include favourable or unfavourable adjustments
to these estimated tax liabilities in the period the assessments
are made, or resolved, or when the statute of limitation lapses.
The final outcome of tax examinations may result in a materially
different outcome than estimated in the tax liabilities.
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 Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
$'000 $'000 $'000
Lease revenues 81,709 143,514 242,214
Power revenues 3,722 5,355 11,439
Other revenues 1,766 3,234 6,847
Fuel revenues - 2,945 5,234
--------- --------- ------------
Total revenues 87,197 155,048 265,734
6. Dividends
The Company's shareholders approved a final dividend for the
year ended 31 December 2012 of 6.7 pence per ordinary share at the
Annual General Meeting on 14 May 2013. This amount was paid on 28
May 2013 to shareholders on the register of members of the Company
on 3 May 2013.
The Board declared an interim 2013 dividend of 3.3 pence per
ordinary share in the half year to 30 June 2013. This interim
dividend will be paid on 26 November 2013 to shareholders on the
register of members of the Company as at 1 November 2013, with an
ex-dividend date of 30 October 2013.
7. Loss per share from continuing operations
The calculation of the basic and diluted loss per ordinary share
is based on the following data:
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
Loss for the purposes of basic
and diluted loss per share being
net loss attributable to the
owners of the Company ($'000) (11,843) (6,898) (14,934)
Weighted average number of ordinary
shares for the purpose of basic
and diluted loss per share(1)
(number of shares) 78,235,164 78,223,296 78,229,262
Loss per ordinary share
Basic and diluted loss per share
(cents) (15.14) (8.82) (19.09)
(1) Share options and Founder securities are considered
anti-dilutive for the periods ended 30 June 2013, 30 June 2012 and
31 December 2012 as the inclusion of these securities would reduce
the loss per share. The Founder securities are also not considered
to be potentially dilutive as the associated performance conditions
had not been met at 30 June 2013.
8. Property, plant and equipment
Machinery
and Other
equipment Mobilisation Demobilisation equipment Total
$'000 $'000 $'000 $'000 $'000
Cost:
At 1 January
2012 383,468 37,728 16,894 1,435 439,525
Additions 316,475 27,292 10,482 1,415 355,664
Disposals (2,580) (21,610) (15,174) 3 (39,361)
------------- ------------- --------------- ------------ ----------
At 31 December
2012 697,363 43,410 12,202 2,853 755,828
Additions 245,228 41,852 7,326 410 294,816
Transfers (5,099) - - - (5,099)
Disposals (13) (17,669) (4,335) (103) (22,120)
------------- ------------- --------------- ------------ ----------
At 30 June
2013 937,479 67,593 15,193 3,160 1,023,425
------------- ------------- --------------- ------------ ----------
Accumulated
depreciation:
At 1 January
2012 15,417 10,144 11,249 180 36,990
Charge for the
year 42,181 32,930 10,495 697 86,303
Disposals (2,162) (21,610) (15,174) 3 (38,943)
------------- ------------- --------------- ------------ ----------
At 31 December
2012 55,436 21,464 6,570 880 84,350
Charge for the
period 25,209 6,688 3,402 462 35,761
Transfers (2,547) - - - (2,547)
Disposals - (17,669) (4,335) (19) (22,023)
------------- ------------- --------------- ------------ ----------
At 30 June
2013 78,098 10,483 5,637 1,323 95,541
------------- ------------- --------------- ------------ ----------
Net book
value:
30 June 2013 859,381 57,110 9,556 1,837 927,884
31 December
2012 641,927 21,946 5,632 1,973 671,478
As of 30 June 2013, the Group's commitments related to the
purchase of property, plant and equipment was $9.1 million (31
December 2012: $117.5 million).
9. Borrowings
Additional net loans of $235.0 million were drawn down during
the period under both the Group's existing revolving credit
facility and a new term loan primarily to fund the additions to
property, plant and equipment.
Revolving
credit facility Term loan Total
$'000 $'000 $'000
At 1 January 2013 205,000 - 205,000
Cash from borrowings 175,000 150,000 325,000
Repayment of borrowings (90,000) - (90,000)
---------------- ---------- ---------
At 30 June 2013 290,000 150,000 440,000
Capitalised fees (8,836)
---------
431,164
In 2011, the Group entered into a committed, secured revolving
credit facility of $400.0 million with a group of international
banks, with a maturity date of 28 November 2016. In May 2013, the
Group further entered into a committed, secured term loan of $150.0
million with several of the existing group of international banks
involved with the revolving credit facility, with a maturity date
of 20 November 2014.
As of 30 June 2013, $14.1 million (31 December 2012: $19.4
million) of letters of credit have been drawn against the revolving
credit facility. As of 30 June 2013, the available amount of the
undrawn facilities was $95.9 million (31 December 2012: $175.6
million).
The facilities provide for funding of capital expenditures,
working capital requirements and letters of credit. Key financial
covenants include a Total Leverage Ratio (Adjusted EBITDA/Total
Indebtedness) at a maximum of 5.00:1 which reduces to 2.50:1 by 30
June 2014, and an Interest Coverage Ratio (Adjusted EBITDA/Net
Interest) at a minimum of 4.00:1. The LIBOR spread is LIBOR plus
2.25% - 3.75% dependent on the Total Leverage Ratio.
The revolving credit facility and term loan are secured with the
equity and assets of the majority of the Group's subsidiary
undertakings. The Directors believe that the carrying value of
borrowings approximate their fair value.
10. Financial instruments
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
Level Level Level Total
At 30 June 2013 1 2 3
$'000 $'000 $'000 $'000
Derivative asset - 209 - 209
Derivative liability - (69) (23,313) (23,382)
------- ------ --------- ---------
- 140 (23,313) (23,173)
Level Level Level Total
At 31 December 2012 1 2 3
$'000 $'000 $'000 $'000
Derivative asset - 38 - 38
Derivative liability - (342) (15,161) (15,503)
------- ------ --------- ---------
- (304) (15,161) (15,465)
There were no transfers between Level 1 and 2 during the current
or prior period.
Founder
securities
liability
(level 3)
$'000
At 1 January 2012 4,961
Change in fair value 10,200
------------
At 31 December 2012 15,161
Change in fair value 8,152
------------
At 30 June 2013 23,313
The Founder securities revaluation in the current period
resulted in a loss of $8.2 million (6 months ended 30 June 2012:
$5.0 million; year ended 31 December 2012: $10.2 million)
recognised in the statement of comprehensive income.
Subject to the satisfaction of the performance condition, the
holders of the Founder securities have the right to require the
Company to acquire the Founder securities in exchange for the issue
to the holders of the Founder securities of such number of ordinary
shares, as described in the 2012 Annual report and accounts.
For 30 June 2013, the Group continues to use a Monte Carlo
simulation model to value the Founder securities, which
incorporates a binomial tree to value the Founder securities as of
the date of the performance condition being achieved within the
Monte Carlo simulation. This model simulates the future Company
ordinary share price, on a daily basis, using a Geometric Brownian
Motion in a risk-neutral framework. The valuation output of this
model is then discounted to reflect the lack of marketability of
the Founder securities using a protective put option method.
The inputs used for the Monte Carlo simulation model were:
30 June 31 December
2013 2012
Balance sheet date share price $15.29 $13.17
Expected volatility 30% 33%
Remaining life 1,078 days 1,259 days
Lack of marketability period 730 days 730 days
Risk-free rate 0.4%-0.6% 0.3%-0.5%
Expected dividend yield 1.50% 1.50%
A change in the expected volatility by 1% would have a $1.2
million impact on the reported fair value.
The expected volatility was determined by calculating the
historical and implied volatilities of the Company and several
comparable listed entity share prices over the previous 3
years.
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 is a related party due to its owners being the
CEO and COO of APR Energy plc.
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 2012: $0.1 million; year ended 31 December
2012: $0.3 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
to 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 $nil million (6 months ended 30
June 2012: $0.1 million; year ended 31 December 2012: $0.1
million). The services rendered were all paid in cash. No
guarantees have been given or received.
At 30 June 2013, JCLA Holdings LLC and JCLA Developments II LLC
owed $nil to the Group due to expenses having been paid by the
Group (31 December 2012: $nil).
Key financial definitions:
Adjusted EBITDA
Operating profit adjusted to add back depreciation of property,
plant and equipment, equity-settled share-based payment expense,
amortisation of intangible assets and exceptional items.
Exceptional items are those items believed to be exceptional in
nature by virtue of size and/or incidence.
Adjusted EBITDA margin
Adjusted EBITDA divided by adjusted revenue.
Adjusted earnings per share
Adjusted net income divided by the weighted average number of
ordinary shares. Adjusted net income is net income adjusted to add
back amortisation of intangibles, revaluation of Founder securities
and exceptional items. Exceptional items are those items believed
to be exceptional in nature by virtue of size and/or incidence.
Adjusted ROCE (return on capital employed)
Operating profit for the previous twelve months adjusted to add
back amortisation of intangible assets and exceptional items
divided by the average of the net operating assets at the previous
three balance sheet dates (for 30 June 2013 this comprises the 30
June 2013, 31 December 2012 and 30 June 2012 and for 31 December
2012 this comprises the 31 December 2012, 30 June 2012 and 31
December 2011). "Net operating assets" is defined as total equity
adjusted to exclude goodwill, intangible assets, borrowings,
Founder securities, deferred tax assets and liabilities and current
tax assets and liabilities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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