Interim Results

RNS Number : 9254S

KSK Power Ventur PLC

29 November 2011

 



29 November 2011

KSK Power Ventur plc
("KSKPV" or the "Company" or the "Group")

Interim Results for the 6 months ended 30 September 2011

KSK Power Ventur plc (KSK.L), the power project company listed on the London Stock Exchange, with interests in multiple power plants and businesses across India, is pleased to announce the interim un-audited results for the six months ended 30 September 2011.

Financial Highlights

·          Group Revenue increased 124% to $182.97m (H1 2010: $81.85m)

·          Gross Profit increased 23% to $54.98 m (H1 2010: $44.74m)

·          Operating Profit increased 9% to $43.92m (H1 2010: $40.32m)

·          Investments in Property Plant and Equipment increased 18% to $2,306m (Mar 2011: $1,955m)

Operational Highlights

·          Operating capacity at 933 MW recorded an aggregate generation of 2,252 million units ("MU")  as against 2,793 MU for the entire previous year of 2010-11, with the following individual plant wise Plant Load Factors ("PLF")

Wardha power (540 MW)	1,214 MU	(62%)
VS Lignite (135 MW)	436 MU	(73%)
Sai Regency (58 MW)	225 MU	(89%)
Arasmeta & Arasemta expansion (86 MW)	141 MU	(64%)
Sitapuram Power (43 MW)	135 MU	(71%)
Wind projects (71 MW)	101 MU	(32%)

·          Construction assets of 3,720MW with good progress being made at 3,600MW KSK Mahanadi power project.

·          More than 6 GW of development opportunities under planning stage including development of 1.8 GW thermal power project in Orissa based on Naini coal block.

Commenting on the results, T.L.Sankar, Chairman of KSKPV said:

"During the first half, KSKPV made good progress on the Mahanadi site and remains on track to deliver power from this plant in late 2012. The Wardha power plant operated at lower PLF through the period due to local government decision making and more specifically open access permitting for power supplies. The Company has made considerable progress on this issue and anticipates supplies to industrial consumers to begin very shortly with an associated increase in PLF of the Wardha project, once such permission comes through.

The Reserve Bank of India has made numerous rupee interest rate rises on its lending to banks in India. As a consequence, the banks have also been passing on such increases and the Group is currently formulating necessary plans to refinance its bank funding, more specifically for the operating assets including Wardha. The Company anticipates that with these alternatives, if successful, it should bring interest payments back to originally planned amounts.

It is our belief that sustainable and continual progress by power plant developers requires them to: have a low cost structure base; be innovative; have the ability to adapt to the changing situations including addressing government policy asymmetries; and have a flexible approach on the ground, so as to develop and implement strong and sustainable power generation assets.

We look forward to the future as KSKPV emerges as one of the stronger and more stable players in the Indian power generation landscape."

For further information, please contact:

KSK Power Ventur plc Mr. S. Kishore, Executive Director Mr. K. A. Sastry, Executive Director	[phone]
Arden Partners plc                                                  Richard Day / Adrian Trimmings	[phone]

Key business updates

Wardha Warora 540MW

While the Company is currently receiving part of its coal requirements from linkage supplies and its dependence on short term e-auction coal / contracts has come down, the Company anticipates shortly receiving the confirmation of full quantity supply commencement from cost plus blocks. This will allow the plant to run at the planned load factor of 85% and above current levels. Commencement of this cost block coal supply is expected to commence once the necessary agreement is executed. KSKPV also expects that once open access power supplies to industrial consumers commence, the asset utilisation and associated revenue realisation of the Wardha plant will further strengthen.

 Other Operating Power Assets 393 MW

The other operating projects, consisting of thermal and wind energy projects, have been demonstrating sustained generation, with Sai Regency providing exceptional operating and financial performance during the current period. Certain localised issues have impacted the PLF of the smaller coal based assets of Arasemta and Sitapuram and we expect a catch-up during the second half for sustained generation from these as well.

On power pricing and realisations, we anticipate that industrial customers, who have been experiencing extremely high alternate tariffs from local utilities and who would see further increases from utilities on account of fuel surcharges, will continue to find our power plant tariffs attractive and validate the captured business model.

KSK Mahanadi 3.6 GW

The construction activity of this large, single location, greenfield private power plant at KSK Mahanadi has witnessed good progress during the recent months. The second half of the current year will witness certain interim milestone completions with respect to the first two units of 600 MW each and this should facilitate the commencement of power generation from these two units during the second half of 2012. Some of the immediate term objectives with respect to the KSK Mahanadi asset include:

o Immediate focus and priority with respect to the first two units of 600MW each and supporting common infrastructure for synchronisation during calendar year 2012.

o The Boiler Hydro Test for the first unit is expected to be completed in the Jan-Mar 2012 quarter and the next unit taken up thereafter. First Chimney is expected to cross the 150 metre level and is on programme for timely completion.

o Continued progress on the balance four units of 600 MW each with the Boilers Drum Lifting expected at periodic intervals through the 2012 and 2013 calendar years.

Fuel security for the initial units of this large project has been planned through access to the Gare Pelma coal block and / or associated coal linkage. In planning for the second phase of commissioning of the balance units suitable fuel solution with respect to re-instating or replacing the Morga-II capture coal block continues to be anticipated. With continual progress on the power plant, we anticipate that the Government of India will offer a favourable solution in the coming months with respect to the coal supplies for the balance of the units if permission from the Government of India on Morga-II is not forthcoming.

JR Power 1.8 GW

A thermal initiative of the group, JR Power has experienced initial progress in Orissa, based on guaranteed coal supplies from the Naini coal block by Pondicherry Industrial Promotion Development and Investment Corporation ("PIPDIC"). KSKPV is currently engaged in the land acquisition process along with the state government and is also undertaking initial discussions with potential engineering and construction contractors.

Hydro

With regards to the hydro project portfolio in Arunachal Pradesh, the Group anticipates collaboration with large reputed hydro power plant developers as a potential basis to move forward to the next stage of development of these hydro initiatives totalling close to 3+ GW.

Wind Initiatives

The Group continues its efforts on this portfolio and has recently secured an allotment of approx 300MW of wind generation capacity concessions in the state of Karnataka and Andhra Pradesh. The Company is planning the necessary preparatory work, including land acquisition efforts and advance equipment ordering to develop these concessions into large wind generation farms.

Mineral Interests

In addition to facilitating the development of 210MT Gare Pelma Sector III coal block in anticipation of commissioning the first two units at Mahanadi in late 2012, the Group is working on multiple coal development opportunities with a strategy to leverage the mining expertise and undertake Mine Developer & Operator work on high opportunity mineral resources of both steam and metallurgical coal specifications. This would also enable the Group to strengthen the coal supplies for its power plants.

Financial Performance

The performance during the current period has been held back due to the significant rise in fuel costs and non cash book adjustments for foreign exchange on the offshore supplies with respect to the Mahanadi project. While gross revenue has increased significantly from $81.85m to $182.97m reflecting the robust underlying growth in our operations, operating profits moved up marginally from $40.32m to $43.92m reflecting the margin squeeze primarily on account of rising fuel costs.

The significant increase of finance costs from $21.31m to $98.22m, first on account of raising finance costs and secondly on account of unrealised currency exchange effects with respect to offshore supplies to the Mahanadi project during the current period) resulted in a decrease in earnings before taxes.

The Profit After Tax ("PAT") pre MTM* stood at $0.64m (six month period ended 30 September 2010: PAT pre MTM* of $38.31m).

Loss After Tax post MTM* stood at $35.71m (six month period ended 30 September 2010: PAT after MTM* of $37.31m).

* MTM (Mark to Market) is on account of the restatement of the foreign currency loans and trade payables. There is no MTM impact on cash flows during the period.

Tender offer

As previously announced, a total of 74,526,091 shares in KSKEV have been acquired, mostly by the Indian subsidiary, under the tender offer and in total the Group now owns 279,232,677 shares in KSKEV, representing 74.94 per cent of the issued share capital of KSKEV, through the following companies:

KSK Energy Limited, Mauritius                           191,222,031 (51.32%)

KSK Power Holdings Limited, Mauritius              8,665,639 (2.33%)

KSK Energy Company Private Limited, India       79,345,007 (21.29%)

This acquisition under tender offer for shares in KSKEV has been funded through rupee debt financing at the acquiring Indian subsidiary. The terms of financing include an initial moratorium with repayment periods spread over 3 to 5 years thereafter. The facilities have been secured by the pledge of shares in KSKEV acquired and held by the Group.

Outlook

The Indian economic growth potential and unfulfilled demand for power generation is expected to continue through the coming decade in spite of temporary disruptions. KSKPV is well positioned in this regard and expects significant margin improvement in the coming year as increased asset utilisation on commencement of supplies to industrial consumers, cheaper fuel supply is implemented at the Wardha Warora power asset and potential refinancing are achieved.

We look forward to the future as KSKPV emerges as one of the stronger and more stable players in the Indian power generation landscape.

An extract of the Interim Condensed Consolidated and Company Financial Statements for the six months ended 30 September 2011 is shown below. A full set of accounts is available from the Company website: www.ksk.co.in/investor

INTERIM CONSOLIDATED AND COMPANY STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 September 2011

(All amount in thousands of US $, unless otherwise stated)

	Consolidated		Company
	30 September 2011	30 September 2010	30 September 2011	30 September 2010
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Revenue	182,966	81,850	-	-
Cost of revenue	(127,990)	(37,109)	-	-
Gross profit	54,976	44,741	-	-
Other operating income, net	(266)	6,202	-	2
Distribution costs	(862)	(547)	-	-
General and administrative expenses	(9,931)	(10,076)	(385)	(432)
Operating profit / (loss)	43,917	40,320	(385)	(430)
Finance costs	(98,221)	(21,307)	(1,427)	(2,323)
Finance income	18,369	16,508	737	5,112
Profit / (loss) before tax	(35,935)	35,521	(1,075)	2,359
Tax income	225	1,784	-	-
Profit / (loss) for the period	(35,710)	37,305	(1,075)	2,359
Attributable to:
Equity holders of the parent	(19,949)	19,358	(1,075)	2,359
Non-controlling interests	(15,761)	17,947	-	-
	(35,710)	37,305	(1,075)	2,359
Other comprehensive income
Foreign currency translation differences	(69,367)	5,063	2,216	2,787
Available-for-sale financial assets
- current period (losses) / gains	(494)	20	-	-
- reclassification to profit or loss	1,061	(57)	-	-
Reclassification of reserve on deemed disposal of interest in joint venture	(2,485)	-	-	-
Other comprehensive income, net of tax	(71,285)	5,026	2,216	2,787
Total comprehensive income for the period	(106,995)	42,331	1,141	5,146
Attributable to:
Equity holders of the parent	(61,549)	22,773	1,141	5,146
Non-controlling interests	(45,446)	19,558	-	-
	(106,995)	42,331	1,141	5,146
Earnings per share
Weighted average number of ordinary shares for basic and diluted earnings per share	151,789,145	139,735,143
Basic and diluted (US $)	(0.13)	0.13

(See accompanying notes to the interim condensed Consolidated and Company financial statements)

Approved by the Board of Directors on 28 November 2011 and signed on behalf by:

S. Kishore                                        K. A. Sastry

Executive Director                          Executive Director 

INTERIM CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION

as at 30 September 2011

(All amount in thousands of US $, unless otherwise stated)

	Consolidated		Company
	30 September 2011	31 March 2011	30 September 2011	31 March 2011
	(Unaudited)	(Audited)	(Unaudited)	(Audited)
ASSETS
Non-current
Goodwill	21,695	52,460	-	-
Property, plant and equipment	2,306,750	1,955,146	1	-
Other non-current assets	42,779	21,532	-	-
Investments and other financial assets	84,666	106,100	182,909	180,047
Trade and other receivables	2,825	5,693	-	-
Deferred tax asset	19,678	20,708	-	-
	2,478,393	2,161,639	182,910	180,047
Current
Inventories	27,483	14,617	-	-
Trade and other receivables	109,605	66,171	246	166
Investments and other financial assets	113,519	116,267	12,530	12,521
Cash and short-term deposits	334,274	338,159	3,792	14,551
Other current assets	41,208	35,108	119	-
	626,089	570,322	16,687	27,238
Total assets	3,104,482	2,731,961	199,597	207,285
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Issued capital	251	251	251	251
Share premium	262,705	262,705	194,435	194,435
Foreign currency translation reserve	(39,682)	(260)	9,727	7,511
Revaluation reserve	2,916	6,219	-	-
Other reserves	146,243	148,842	-	-
Retained earnings/ (Accumulated deficit)	81,010	97,336	(5,652)	(4,577)
	453,443	515,093	198,761	197,620
Non-controlling interests	303,897	335,595	-	-
Total equity	757,340	850,688	198,761	197,620
Non-current liabilities
Trade and other payables	52,424	29,736	-	-
Interest-bearing loans and borrowings	1,033,737	817,516	-	-
Provisions	2,507	2,115	-	-
Deferred revenue	9,661	11,105	-	-
Employee benefit liability	353	571	-	-
Deferred tax liability	38,446	36,542	-	-
	1,137,128	897,585	-	-
Current liabilities
Trade and other payables	305,210	187,321	836	365
Interest-bearing loans and borrowings	899,403	787,465	-	9,300
Other current financial liabilities	-	3,184	-	-
Deferred revenue	1,218	848	-	-
Other current liabilities	2,817	3,784	-	-
Taxes payable	1,366	1,086	-	-
	1,210,014	983,688	836	9,665
Total liabilities	2,347,142	1,881,273	836	9,665
Total equity and liabilities	3,104,482	2,731,961	199,597	207,285

(See accompanying notes to the interim condensed Consolidated and Company financial statements)

Approved by the Board of Directors on 28 November 2011 and signed on behalf by:

S. Kishore                                        K. A. Sastry

Executive Director                          Executive Director

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 September  2010

(All amount in thousands of US $, unless otherwise stated)

	Attributable to equity holders of the parent											Non- controlling interest	Total equity
	Issued capital  (No. of shares)	Issued capital (Amount)	Share premium	Foreign currency translation reserve	Revaluation reserve		Other reserves	Retained  earnings		Total
At 1 April  2010 (Audited)	139,534,243	232	167,228	968	9,731		157,304	81,927		417,390		303,081	720,471
Issue of  equity shares	12,254,902	19	95,445	-	-		-	-		95,464		-	95,464
Deferred tax on share issue expenses	-	-	-	-	-		(436)	-		(436)		-	(436)
Non-controlling interests arising on business combination	-	-	-	-	-		-	-		-		10,930	10,930
Transfer of economic interest to non-controlling interests1								(1,173)		(1,173)		1,173	-
Non controlling interests arising on conversion of partly paid up shares to fully paid up in subsidiary	-	-	-	-	-		-	-		-		7,791	7,791
Net depreciation transfer for property, plant and equipment	-	-	-	-	(136)		-	136		-		-	-
Transaction with owners	151,789,145	251	262,673	968	9,595		156,868	80,890		511,245		322,975	834,220
Profit/(loss) for the period	-	-	-	-	-		-	19,358		19,358		17,947	37,305
Other comprehensive income
Foreign currency translation differences	-	-	-	3,487	-		-	-		3,487		1,576	5,063
Available-for-sale financial assets
- current period gains / (losses)	-	-	-	-	-		(15)	-		(15)		35	20
- reclassification to profit or loss	-	-	-	-	-		(57)	-		(57)		-	(57)
Total comprehensive income for the period	-	-	-	3,487	-		(72)	19,358		22,773		19,558	42,331
Balance as at 30 September 2010 (Unaudited)	151,789,145	251	262,673	4,455	9,595		156,796	100,248		534,018		342,533	876,551
(See accompanying notes to the condensed interim Consolidated and Company financial statements)
1 The group entities have arrangements of sharing of profits with its non-controlling share holders, through which the non controlling shareholders are entitled to a dividend of 0.01% of the face value of the equity share capital held and the same is also reflected in statement of comprehensive income.  However, the non controlling interest disclosed in Statement of changes in equity is calculated in the proportion of the actual shareholding as at the reporting date.

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 30 September 2011 (All amount in thousands of US $, unless otherwise stated)
	Attributable to equity holders of the parent								Non - controlling interests	Total equity
	Issued capital (No. of shares)	Issued capital (amount)	Share premium	Foreign currency translation reserve	Revaluation reserve	Other reserves	Retained  earnings	Total
As at 1 April 2011 (Audited)	151,789,145	251	262,705	(260)	6,219	148,842	97,336	515,093	335,595	850,688
Deferred tax on share issue expenses	-	-	-	-	-	(421)	-	(421)	-	(421)
Non-controlling interests arising on business combination (see note 7)	-	-	-	-	-	-	-	-	14,077	14,077
Acquisition of non-controlling interests without change in control	-	-	-	-	-	-	-	-	(9)	(9)
Transfer of economic interest to non-controlling interests1	-	-	-	-	-	-	320	320	(320)	-
Net depreciation transfer for property, plant and equipment	-	-	-	-	(64)	-	64	-	-	-
Transaction with owners	151,789,145	251	262,705	(260)	6,155	148,421	97,720	514,992	349,343	864,335
Profit/(loss) for the period	-	-	-	-	-	-	(19,949)	(19,949)	(15,761)	(35,710)
Other comprehensive income
Foreign currency translation differences	-	-	-	(39,422)	-	-	-	(39,422)	(29,945)	(69,367)
Available-for-sale financial assets
- current period gains / (losses)	-	-	-	-	-	(369)	-	(369)	(125)	(494)
- reclassification to profit or loss	-	-	-	-	-	676	-	676	385	1,061
Reclassification of reserves on deemed disposal of interest in Joint venture	-	-	-	-	(3,239)	(2,485)	3,239	(2,485)	-	(2,485)
Total comprehensive income for the period	-	-	-	(39,422)	(3,239)	(2,178)	(16,710)	(61,549)	(45,446)	(106,995)
Balance as at 30 September 2011 (Unaudited)	151,789,145	251	262,705	(39,682)	2,916	146,243	81,010	453,443	303,897	757,340

(See accompanying notes to the condensed interim Consolidated and Company financial statements)
1 The group entities have arrangements of sharing of profits with its non-controlling share holders, through which the non controlling shareholders are entitled to a dividend of 0.01% of the face value of the equity share capital held and the same is also reflected in statement of comprehensive income.  However, the non controlling interest disclosed in Statement of changes in equity is calculated in the proportion of the actual shareholding as at the reporting date.

INTERIM COMPANY STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 September 2011

(All amount in thousands of US $, unless otherwise stated)

	Issued capital  (No. of shares)	Issued capital  (Amount)	Share premium	Foreign currency translation reserve	Retained  earnings /Accumulated deficit	Total equity
As at 1 April 2010 (Audited)	139,534,243	232	98,958	2,788	(146)	101,832
Issue of equity shares	12,254,902	19	95,445	-	-	95,464
Profit for the period	-	-	-	-	2,359	2,359
Other comprehensive income
Foreign currency translation differences	-	-	-	2,787	-	2,787
Total comprehensive income for the period	-	-	-	2,787	2,359	5,146
Balance as at 30 September 2010 (Unaudited)	151,789,145	251	194,403	5,575	2,213	202,442
As at 1 April 2011 (Audited)	151,789,145	251	194,435	7,511	(4,577)	197,620
Loss for the period	-	-	-	-	(1,075)	(1,075)
Other comprehensive income
Foreign currency translation differences	-	-	-	2,216	-	2,216
Total comprehensive income for the period	-	-	-	2,216	(1,075)	1,141
Balance as at 30 September 2011(Unaudited)	151,789,145	251	194,435	9,727	(5,652)	198,761

(See accompanying notes to the interim condensed Consolidated and Company financial statements)

INTERIM CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
for the six months ended 30 September 2011 (All amount in thousands of US $, unless otherwise stated)
	Consolidated			Company
	30 September 2011	30 September 2010		30 September 2011	30 September 2010
	(Unaudited)	(Unaudited)		(Unaudited)	(Unaudited)
Cash inflow / (outflow) from operating activities
Profit / (loss) before tax	(35,935)	35,521		(1,075)	2,359
Adjustments
Depreciation and amortization	21,114	8,685		-	-
Finance cost	92,312	21,307		1,427	2,148
Finance income	(18,369)	(17,324)		(690)	(5,112)
Provision for impairment of other assets	1,084	143		-	-
(Gain) / loss on re-measurement of existing equity interest	1,640	(4,906)		-	-
Others	(171)	(64)		-	(2)
Changes in assets / liabilities
Trade receivables and unbilled revenues	(39,068)	(32,772)		-	-
Inventory	(12,126)	(5,460)		-	-
Other assets	(5,885)	(9,468)		(126)	(15)
Trade payables and other liabilities	18,327	9,737		500	(920)
Provisions and employee benefit liability	(232)	209		-	-
Taxes paid	(3,486)	(4,426)		-	-
Net cash (used in) / provided by operating activities	19,205	1,182		36	(1,542)
Cash inflow / (outflow) from investing activities
Movement in restricted cash	(11,685)	28,889		9,980	3,000
Purchase of property, plant and equipment & other non current assets	(302,865)	(105,733)		(1)	-
Sale of property, plant and equipment	-	508		-	-
Purchase of financial instruments	(78,296)	(43,699)		(18)	(16,193)
Proceeds from sale of  financial instruments	76,206	47,772		-	157
Dividend received	22	98		-	-
Net cash flow on business combination	4,015	(14,673)		-	-
Finance income received	15,182	12,398		37	64
Net cash flow (used in)/provided by investing activities	(297,421)	(74,440)		9,998	(12,972)
Cash inflow / (outflow) from financing activities
Proceeds from borrowings	626,408	387,105		-	9,300
Repayment of borrowings	(236,915)	(249,294)		(9,300)	-
Interest and other finance charges paid	(94,470)	(69,535)		(1,427)	(2)
Net proceeds from issue of shares  and share application money	204	508		-	-
Net cash flow provided by / (used in) financing activities	295,227	68,784		(10,727)	9,298
Effect of exchange rate changes on cash	(32,615)	3,305		(87)	(105)
Net increase/(decrease) in cash and cash equivalent	(15,604)	(1,169)		(780)	(5,321)
Cash and cash equivalent at the beginning of the period	61,215	37,669		1,512	10,133
Cash and cash equivalent at the end of the period (note 20)	45,611	36,500		732	4,812

(See accompanying notes to the condensed interim consolidated and Company financial statements)

 

END

 

 

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