Interim Results

RNS Number : 8421J

OPG Power Ventures plc

10 December 2008

 



OPG POWER VENTURES Plc

Maiden Interim results for the six months ended 30 September 2008

OPG Power Ventures Plc ('The Group' or 'OPG') the developer and operator of group captive power plants in India, is pleased to announce its unaudited maiden results for the six months ended 30 September 2008. The Group listed on AIM on the 30 May 2008.

Operational Highlights:

• 10 MW Waste Heat Recovery Facility, near Chennai, commissioned

• Total current generation capacity increased by 51.5% to 29.4 MW 

• Construction of the 77 MW coal fired power station near Chennai is progressing on budget with completion expected in second quarter 2009

• Alternate and stable supply of fuel secured for 77MW plant through a coal linkage (firm allocation of coal from the public sector mines) granted by the Government of India which would also satisfy the requirements of a further 2x77 MW plants

• Capacity of the 2x135MW coal fired project increased to 2x150MW

Financial Highlights:

• Entire debt financing of c.£125million required for the Company's 2x135 MW coal fired power station, under development in Kutch, Gujarat has been secured 

• Total revenue of £2.9m

• Profit from continuing operations of £1.96 million (pre-minority interests and non-recurring items)

• Successful IPO in May 2008 raised £65.1million 

Commenting on the progress made to date, Mr MC Gupta, Chairman of OPG, said: 'The power supply position in India continues to witness a high level of outages with peak demand shortfalls of up to 15.2% for the 10 months ended January 2008. The Directors expect these shortfalls to continue for the foreseeable future. The Group is well placed to benefit from the power supply gap by continuing to focus on the rapid development of power generation assets. Despite extremely difficult economic conditions OPG remains in an exceptionally strong position to forge ahead with its plans and to continue to be a leading group captive power producer and operator in India.'

For further information, please visit www.opgpower.org/ or contact:

OPG Power Ventures Plc
Arvind Gupta (Managing Director)	[phone] [phone] [phone]
V. Narayan Swami (Finance Director)	[phone] [phone] [phone]
Martin Gatto (Senior Non Executive Director)	[phone]
Cenkos Securities (Nominated Adviser & Broker)	[phone]
Stephen Keys/ Camilla Hume
Tavistock Communications	[phone]
Simon Hudson / Nick Peters/ Andrew Dunn

CHAIRMAN'S STATEMENT

As Chairman of OPG Power Ventures Plc, reporting its maiden set of results, I would like to start by welcoming our new shareholders and thanking them for their support. The listing on AIM this year was a major step for the future development of OPG and was achieved despite extremely difficult marketing conditions. The placing raised £65.1 million and provides the funds to finance the building of an additional capacity of power stations, increasing the power output from the existing 19 MW to over 400 MW in less than two and a half years. 

In the relatively short period of time since listing, the Group has made impressive progress. The 19.4 MW gas-fired plant at Mayavaram, Tamil Nadu is in its fifth year of successful operation, whilst construction of the 77 MW coal fired facility in Chennai is ongoing, with production due to commence in the second quarter of 2009. Obtaining the coal linkages from the Government of India is important in giving the Company an alternate and secure source of fuel.  

Outside the reporting period in question, the Group has secured the debt financing for the 2 x 135 MW plants in Kutch, Gujarat and commissioned its 10 MW waste heat based power plant near Chennai. Both of these developments marked important milestones for OPG.

The power supply position in India continues to witness a high level of outages with peak demand shortfalls of up to 15.2% for the 10 months ended January 2008 as compared to 13.8% for the previous full financial year. The Directors expect these shortfalls to continue for the foreseeable future. The Group is well placed to benefit from the power supply gap by continuing to focus on the rapid development of power generation assets. 

Despite extremely difficult economic conditions OPG remains in an exceptionally strong position to forge ahead with its plans and to continue to be a leading group captive power producer and operator in India.

M.C.GUPTA

CHAIRMAN

9 December 2008

CHIEF EXECUTIVE'S REVIEW OF OPERATIONS

Our business continued to develop on all fronts in the six months ending 30 September 2008, with a number of milestones being achieved.

Plant under operation

OPG Energy Pvt. Ltd., the 19.4 MW gas fired power plant in Tamil Nadu, has been in continuous operation since March 2004. The plant, in which the Group has a 44% economic interest, operated at a load factor of 80% during the period and recorded an EBIDTA margin of 70%.  The load factor was down on past performance due to low gas pressure from the adjacent field but this is expected to return to more normal levels in due course. The registration for trading in carbon credits was obtained in November. Prices of carbon credits are volatile at present and the position is under review. 

Plant commissioned recently

OPG Renewable Energy Pvt. Ltd. recently commissioned its 10 MW waste heat based power plant near Chennai. This has increased the Group's total operating capacity by 51% to c.30 MW. Registration for trading in carbon credits has been applied for. The Group has a 33% economic interest in this plant.  

Projects under Construction:

77 MW Plant

OPG Power Generation Pvt. Ltd. has achieved progress in the construction of its 77 MW coal fired power station near Chennai. Boiler installation is progressing, many of the sub-assemblies for the various items of equipment are on site and civil works are at an advanced stage. The plant is due for commissioning in the second quarter of 2009. The Group has a 99% economic interest in this project.

2 x 135 MW Plant

We are pleased to announce that the capacity of this project has been upgraded to 2 x 150 MW. With the land necessary for the project already having been acquired in Bhadreshwar village, Kutch, Gujarat, completion of the banking arrangements was the next key milestone. Full financial closure was achieved with the recent signing of the debt documentation but the turmoil in the banking sector meant that closure of the debt for the project took longer than anticipated This delayed negotiations with major equipment suppliers and the issue was compounded by the increased demand for equipments. The Group can, however, report that  environmental clearances are in progress and negotiations with suppliers of the major equipment are at an advanced stage. The project is now on a fast track and commissioning is expected in the first half of 2011. The interest rate of the rupee debt is expressed as a discount of between 1-1.5% to the Prime Lending Rate for term loans. The amortisation is over 10 years with repayment commencing six months after commissioning. The Group has a 99% economic interest in this project. 

New Projects and Fuel Supply

At the time of the listing on AIM in May 2008 we announced that we had contracted with Knowledge Infrastructure to source coal from Indonesia under a long-term arrangement. Since then there has been significant uncertainty in Indonesian pricing arrangements and as a result we have taken the opportunity to secure additional supply from India via coal linkages granted by the Government of India. This has been achieved for the full requirement of this first 77MW plant and importantly for two additional plants that we expect to build on the same site. 

At the time of IPO in May 2008 we raised sufficient equity funds to finance further expansion beyond the current projects under construction.  Planning for this is still at a preliminary stage but the marginal, additional area of land required has been identified contiguous to the existing site . The engineering specification will be identical to the first 77MW plant which would significantly reduce production lead times. The Company will make a further announcement on this new project as soon as plans are at a more developed stage.

Financial Review

Operating revenue from power generation stood at £2.9million with profit attributable to shareholders of £0.53 million.

Profit from continuing operations, before tax, during the period was £1.96 million Non-controlling interest (formerly minority interest elimination) amounted to £0.76million. Expenses amounting to £0.3million were included within ordinary expenses which relate to projects yet to generate income.

Since the Company's float £38.6million has been invested into OPG Power Gujarat Pvt. Ltd and OPG Power Generation Pvt. Ltd.  

Capital outlays on projects under construction, including advances, amounted to circa £16 million

Outlook

The power scenario in India is one of widening deficits, both peak and normal. It is expected that the power supply position will continue to remain acute in the medium term even if India's GDP moderates as a result of world economic activity. The rapid establishment of power generation assets continues to be our priority. In the second half of the year the Group's output will be based upon the higher capacity now available. The potential exists now for some of the power output to be sold at higher prices in the emerging peak period trans-state market. There is also the possibility of taking advantage of recent emerging rules to allow direct free market sales to large industrial consumers. Trading in both of these new markets is subject to receiving the necessary consents. Ensuring the commencement of commercial operations of the 77 MW plant in the second quarter of 2009 will remain the Company's immediate focus and the board remains confident that OPG is well financed and well placed to take advantage of the  significant opportunities ahead of us.

ARVIND GUPTA

CHIEF EXECUTIVE

9 December 2008

OPG POWER VENTURES PLC

CONSOLIDATED, INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2008.

GROUP INCOME STATEMENT
	For the six months ended  30 September 2008
	£
REVENUES
Operating Revenue	2,897,128
EXPENSES
Cost of power generation	(854,754)
Employee costs	(171,252)
Other expenses	(411,529)
Depreciation	(153,435)
Total expenses	(1,590,970)
Operating profit	1,306,158
Other income	75,766
Finance income	993,231
Finance costs	(412,033)
Profit from continuing operations before tax	1,963,123
Current Tax	(217,556)
Deferred Tax	(50,859)
Profit after tax	1,694,708
Non-Controlling interest	(755,899)
Pre-acquisition Profit, Eliminated	(412,770)
Profit attributable to shareholders of OPG	526,039
Basic and Diluted EPS (in GBP)	0.003
Note:
Period Expenses of Project under construction	(133,524)
Included in Employee cost	(172,940)
Included in Other Expenses	(306,463)

GROUP BALANCE SHEET
	As at 30 September 2008
	£
ASSETS
Current
Inventories	54,175
Trade receivables	1,823,295
Cash and cash equivalents	51,863,611
Restricted cash	431,611
Investments held for trading	1,162,450
Available for sale investments	53,340
Other current assets	5,852,133
Total current assets	61,240,614
Non current
Goodwill	1,157,819
Property, plant and equipment	6,087,517
Capital Work in Progress	7,984,793
Capital advances	7,683,683
Other Non-Current Assets	1,063,489
Total non current assets	23,977,302
Total assets	85,217,916
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade and other payables	1,405,456
Current tax liabilities	63,338
Other liabilities	391,203
Borrowings	2,435,135
Total current liabilities	4,295,132
Non current liabilities
Borrowings, net of current portion	9,878,497
Deferred tax liability	312,596
Total non current liabilities	10,191,093
Total liabilities	14,486,224
Shareholders' equity
Share capital	42,186
Securities Premium	66,943,321
Excess of share of assets acquired over acquisition cost	575,243
Amounts recognised directly in equity relating to assets classified as held for sale	(2,614)
Translation reserve	226,680
Retained earnings	526,039
Total shareholders' equity	68,310,856
Non-Controllong Interest	2,420,835
Total liabilities and shareholders' equity	85,217,916

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008
	Equity share Capital	Share capital Amount	Securities Premium	Investments revaluation reserve	Translation reserve	Retained earnings	Excess of share of assets acquired over acquisition cost	Total of Parent equity
	No.	£	£	£	£	£	£	£
Balance as at 1 April 2008	170,068,027	25000	-	-	-	-	-	25,000
Proceeds from issue of shares	116,921,768	17,187	70,135,873	-	-	-	-	70,153,060
Share issue expenses adjusted	-	-	(3,192,552)	-	-	-	-	(3,192,552)
Revaluation loss on AFS Investments	-	-	-	(2,614)	-	-	-	(2,614)
Exchange difference arising on translation of overseas operation	-	-	-	-	226,680	-	-	226,680
Profit/(Loss) for the period	-	-	-	-	-	526,039	-	526,039
Excess of share of assets acquired over acquisition cost	-	-	-	-	-	-	575,243	575,243
	-	-	-	-	-	-	-	-
Balance at 30 September, 2008	286,989,795	42,187	66,943,321	(2,614)	226,680	526,039	575,243	68,310,856

STATEMENT OF CASH FLOWS
	Group
Particulars	For the six months ended 30 September 2008
	£
(A) Cash inflow/ ouflow from operating activities
Net result before tax	1,963,123
Adjustments
Interest paid	411,471
Depreciation	153,435
Interest income	(993,231)
Amortisation of deferred rent	16,768
Unrealised (gain)/ loss on trading investment	(376)
Changes in assets/liabilties and changes in controlling interest
Trade receivable -( Increase)/Decrease	(1,426,811)
Inventories- (Increase)/Decrease	(1,443)
Other current assets-(Increase) / Decrease	(1,969,623)
Accounts Payable - Increase/(Decrease)	1,112,896
Tax liabilities - Increase/(Decrease)	(3,184)
Other liabilities - Increase/(Decrease)	6,164
Net changes in assets and liabilities	(2,282,002)
Taxes paid	(148,909)
Net cash provided by/(used in) operating activities	(879,722)
(B) Cash inflow/ outflow from investing activities
Movement in restricted cash	(130,991)
Interest income	952,062
Payments/Advances for purchase of property, plant and equipment	(10,643,463)
Advances, Net	(7,134,836)
Purchase of financial assets	(1,211,432)
Purchase of investment - in subsidiary	(2,575)
Net cash provided by investing activities	(18,171,235)
(C) Cash inflow/ outflow from financing activities
Proceeds from issue of Share capital	66,577,087
Proceeds from issue of shares in subsidiary to Minority	213,542
Interest paid	(738,612)
Proceeds from secured loan	4,444,203
Repayment of secured loans	(1,192,070)
Net cash provided by financing activities	69,304,150
(D) Effects of exchange rate changes on cash	251,537
Net increase/(Decrease) in cash and cash Equivalents	50,504,730
Cash and cash equivalents at the beginning of the period	1,358,882
Cash and cash equivalents at the end of the period	51,863,611
Cash and Cash Equivalents comprise
Cash In hand	54,150
Balance with banks	51,809,461
	51,863,611

Notes to consolidated financial statements

1. Group Structure

The Group had the following economic interest and voting power in the following entities as on 30 September 2008:

Sl.No	Name of the Entity	Country of Incorporation	Economic Interest	Voting Rights
1	Gita Energy Pvt Ltd	Cyprus	100 %	100%
2	Gita Holdings Pvt Ltd	Cyprus	100%	100%
3	OPG Power Generation Pvt Ltd	India	99%	70%
4	OPG Power Gujarat Pvt Ltd	India	99%	70%
5	OPG Renewable Energy Pvt Ltd	India	33%	22%
6	OPG Power Energy Ltd	India	44%	29.78%

2. Summary of significant Accounting Policies

(a) Basis of preparation

The consolidated, unaudited, interim financial statements of the Group for the six months ended 30 September 2008 were approved by the Board of Directors at its meeting held on 9 December 2008.

These interim consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

The consolidated financial statements for the six months ended 30 September 2008, in the opinion of the Directors, present fairly the financial position of the Group's operations and cash flows in accordance with IFRS.

These interim consolidated financial statements are prepared on a going concern basis and also are predicated on the Director's opinion that the Group is in a position to meet its obligations at present and in the foreseeable future.

Comparative results for a corresponding period under 30 September 2007 are not shown; since the Group was not constituted as of that date:

(b) Basis of Consolidation

The consolidated interim financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Non-Controlling (Minority) interests in the net assets (excluding goodwill) of these consolidated statements are identified separately from the Group's equity therein. 

(c) Management Estimates/Judgments

The preparation of financial statements necessarily involves the making of assumptions and estimations by the Management which impact on amounts of assets and liabilities as well as on contingent assets/liabilities reported in these statements. Similar estimations and assumptions by the Management are involved in the compilation of revenues and expenses for the period.

Management formulates its estimates and assumptions based on past experience and current developments as well as other factors to reach what it considers to be reasonable judgment in the total circumstances. Actual results may differ from the estimates depending on the assumptions used and conditions prevailed prevailing at the relevant point in time.

(d) Segment Reporting

The Group considers that it operates in a single national location, i.e. India and that its operations viz. generation and sale of power constitute a single business segment.

(e) Revenue Recognition

• Income from sale of electricity is recognized on the basis of number of units of power delivered to the grid per the joint monthly meter reading taken by the Group and theUtility and allocation to the Group's customers as instructed to the grid.

• Interest income is recognized on an accrual basis.

(f) Taxes

Current tax provision in these statements represents amounts of tax payable based on applicable taxation Law in the Group's country of operations.

Deferred income is determined based on timing differences as at reporting date between the amounts of assets and liabilities carried in these financial reports and their tax bases.

3. Foreign Currencies

The unaudited consolidated interim financial information is reported in a currency different from OPG Group's functional currency. Assets, liabilities and cash flows have been translated into UK Pounds ('GBP') at the closing rate at the balance sheet date. Income and Expenses are translated at the average rates of exchange over the reporting period. The resulting translation adjustments are recorded under the currency translation reserve in equity.

4. Share Capital

Authorised

The Company is registered in the Isle of Man. The Isle of Man Company's Act does not prescribe that a company shall have an authorised share capital.

Share Split

2,500,000 previously issued, ordinary shares of £0.01 were spilt into 170,068,027 ordinary shares of 0.0147p.

Issue during the year

116,921,768 further ordinary shares of 0.0147p each were issued and allotted at an issue price of 60p per share during the period. Share issue expenses has been adjusted against the gross proceeds of the issue.  

5. Acquisition of Property, Plant and Equipment for the period ended 30 September 2008 

Particulars	£
Freehold Land	216,984
Plant & Machinery	4,742
Furniture & Fixtures	5,551
Office Equipment	9,159
Vehicles	78,585
Computer	310
Total	315,330

Outlays relating to plant & machinery with respect to the ongoing projects of the Company (by way of advances to vendors, capital works-in-progress etc) are capitalized on commissioning.

6. Earnings per share

The following is the reconciliation of the weighted average number of equity shares used in the computation of basic EPS for the period ended 30 September 2008.

For the half year ended 30 September 2008
Weighted average number of shares  outstanding used in computing basic EPS	286,989,795
Profit for the Period (Excl. Minority Int. but incl. Pre-acquisition profit)	£938,865
Basic Earning per Share	0.003

7. Business Acquisitions

Any excess of the Group's share of the identifiable net assets acquired over the acquisition cost is recognized in Equity. Goodwill represents the excess of the acquisition cost over the value of the group's share of the identifiable net assets acquired. The Company has elected to carry the assets and liabilities at the carrying cost of the acquiree in these consolidated, unaudited, interim financial statements.

 

END

 

 

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