TIDMAPR
RNS Number : 5080A
APR Energy PLC
21 March 2013
For Immediate Release 21 March 2013
APR Energy plc
Full Year Results 2012
Strong Performance and Growth in 2012.
Growing Order Book and New Contract Wins Drive Further
Progress.
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 results for the
year ended 31 December 2012.
The Group also is providing pro forma financial data for the
twelve-month period from 1 January 2011 to 31 December 2011 to aid
in historical comparative analysis. Pro forma financial data is
used by the Group in managing the business and measuring the
Group's underlying performance and cash flows.
Revised
Reported Reported(1) Pro forma(2) Pro forma(2)
12 mths 14 mths 12 mths 12 mths
ended ended ended ended
31 Dec 31 Dec 31 Dec 31 Dec Change
$m 12 11 12 11
Revenue 265.7 164.6 265.7 212.8 25%
Operating profit/(loss) 9.2 (17.5) 67.2 60.6 11%
(Loss)/profit before
taxation (4.9) (33.0) 63.3 57.3 10%
Net (loss)/income (14.9) (42.7) 53.2 40.4 32%
Earnings per share
(cents) (19.09) (73.05) 68.06 51.65 32%
Pro forma EBITDA - - 157.0 110.6 42%
Pro forma EBITDA margin
(%) - - 59.1 52.0 710bps
HIGHLIGHTS
-- Pro forma revenues up 25% to $265.7 million
-- Pro forma net income up 32% to $53.2 million
-- Pro forma EBITDA up 42% to $157.0 million
-- Pro forma EBITDA margin up to 59% from 52%
-- 2012 contract wins of 569MW and contract extensions of 724MW
-- Fleet at year end 1,311MW up 46% year on year
-- Order backlog of 11,592MW-Months, up 80% year on year
o Order backlog of 14,651MW-Months as of 15 March 2013
-- Global hub strategy completed during 2012
-- Strong start to 2013 with 281MW of new business and 80MW of contract extensions
-- Total dividend remains at 10 pence per share
-- Fleet capex raised to $225 million reflecting confidence in market dynamics
(1) Reported figures for 2011 cover the fourteen-month period
from 1 November 2010 to 31 December 2011, and include the trading
results of APR Energy Cayman Limited and Falconbridge Services LLC
and their subsidiaries (together, the "APR Group") post the date of
acquisition on 13 June 2011.
(2) Pro forma figures for 2012 cover the twelve-month period
ended 31 December 2012 for APR Energy and exclude the non-cash
expense for amortisation of intangible assets ($58.0 million) and
founder shares and securities revaluation ($10.2 million). Pro
forma figures for 2011 cover the twelve-month period ended 31
December 2011 for the APR Group, and include items of income and
expense of APR Energy plc and APR Energy Holdings Limited post the
date of acquisition on 13 June 2011. Figures exclude one-time
transaction costs ($30.7 million), non-cash expense for
amortisation of intangible assets ($46.7 million), and founder
shares and securities revaluation ($27.7 million). Pro forma net
income also excludes a pre-acquisition foreign exchange gain ($9.9
million).
John Campion, Chief Executive Officer, said: "I am delighted to
report the substantial and sustained progress that APR Energy has
made during 2012, supported by the 569MW of new contracts and 724MW
of contract extensions won during the year. This included a 300MW
contract award in Uruguay for our dual-fuel turbine technology,
along with further penetration in our key markets of Latin America,
Middle East, Africa, and South East Asia.
As of 31 December 2012, the Group had a fleet of 1,311MW, a
growth of 46 per cent over the year, and an order book of
11,592MW-Months, an increase of 80 per cent over the year. APR
Energy has now completed over 1.5GW of power projects since its
inception in 2003. In addition, during the year we completed the
roll out of our hub strategy giving the Company an infrastructure
platform from which to deliver further growth in the medium
term.
Since the year end, APR Energy has secured 281MW of new
contracts and 80MW of extensions. The recent 250MW contract win in
Libya confirms the structural demand for dual-fuel turbines, for
which we are well positioned as one of the world's largest
providers. The current order book stands at 14,651 MW-months, up 26
per cent from 31 Dec 2012, and translates into revenue visibility
through the end of 2014.
In addition, we have significantly improved EBITDA margins,
reflecting the discipline with which we have taken on new business
and improvements in our operational structure and mobilisation
technologies.
APR Energy remains confident in the structural growth trends
within the temporary power market and, specifically, in the
application of mobile dual-fuel turbine technology, which is
driving a strong commercial pipeline. The Group is focused on
making additional operational improvements during 2013 and, in
particular, on increasing utilisation in our diesel fleet. We
expect to continue to make good progress in 2013 and deliver
improved margin performance over the medium term."
Enquiries:
APR Energy plc
Brian Gallagher +44 (0) 20 3427 3747 / +44 (0) 7775 906 075
Citigate Dewe Rogerson Consultancy
Anthony Carlisle +44 (0) 20 7638 9571 / +44 (0) 7973 611 888
Analyst Conference
There will be an analyst conference this morning at 8.30 am GMT
at the offices of JP Morgan Cazenove, Holborn Bars, 138-142
Holborn, London, EC1N 2NQ. 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 of customised,
turnkey power solutions. APR's fast-track approach, flexible
offerings, and comprehensive operation and maintenance services
have established it as a leader in the utility and industrial
segments. APR Energy provides its power generation solutions to
customers and communities around the world, with an emphasis in
Africa, South America, Central America, the Middle East, and Asia.
APR Energy also implements philanthropic initiatives at each plant
location through its Community Development Programme, which aims to
build and maintain close relationships in the areas in which it
works through projects and donations in health and education.
Certain statements included in this announcement constitute, or
may constitute, forward-looking statements. Any statement in this
announcement that is not a statement of historical fact (including,
without limitation, statements regarding the Company's future
expectations, operations, financial performance, financial
condition and business) is or may be a forward-looking statement.
Such forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially
from those projected or implied in any forward-looking statement.
These risks and uncertainties include, among other factors,
changing economic, financial, business or other market conditions.
Although any such forward-looking statements reflect knowledge and
information available at the date of this announcement, reliance
should not be placed on them. Without limitation to the foregoing,
nothing in this announcement should be construed as a profit
forecast.
-End-
CHAIRMAN'S STATEMENT
INDUSTRY INNOVATION. PROVEN PERFORMANCE
It is a pleasure to report on the growth and performance of APR
Energy for the year ended 31 December 2012. We are pleased with the
results achieved in 2012, and believe our progress during the year
has positioned us well to deliver sustainable growth into 2013 and
beyond.
Performance
The reported figures for APR Energy cover a twelve-month period
to 31 December 2012 (prior period fourteen-months to 31 December
2011). The Group reported a solid performance for 2012. The
statutory results for the enlarged group show revenue of $265.7
million, up 61 per cent over 2011 ($164.6 million), and an
operating profit of $9.2 million (2011 operating loss: $17.5
million) after the amortisation of intangible assets ($58.0
million).
However, on a pro forma basis, the results of APR Energy (year
ending 31 December 2012 and adjusted for exceptional items) show
strong growth with revenue up 25 per cent over 2011 ($212.8),
operating profit up 11 per cent to $67.2 million, and net profit of
$53.2 million (2011: $40.4 million), up 32 per cent. This growth
was fuelled by record contract wins of 569MW and contract renewals
of 724MW. Our order book, expressed as MW-Months, grew steadily
through the year to record an impressive rate of 80 per cent growth
year-on-year as at 31 December 2012.
Given the impact of intangible amortisation and founder shares,
the Group reported a basic loss per share of 19.09 cents. This
compares to a loss per share of 73.05 cents in 2011.
The Group had gross debt of $205 million (2011: $nil) (excluding
capitalised finance costs of $5.5 million (2011: $3.7 million)) at
the year end. Cash and cash equivalents on the balance sheet as of
31 December 2012 was $21.0 million (2011: $63.1 million), resulting
in net debt of $184 million (2011: net cash of $63.1 million). With
a credit facility of $400 million and the organic cash generation
of the business, we believe there is sufficient liquidity to
finance growth.
Positioning for our future
During 2012, APR Energy has expanded its global footprint,
opened regional hubs, increased its fleet size substantially, and
maintained its pro forma EBITDA margins. We have won a significant
number of new contracts and extended existing contracts, further
strengthened our management team, and continued our structured
marketing and investment programmes.
We opened three regional hubs during the year, Panama in
February, the UAE (Dubai) in March, and Malaysia in September. The
hubs further expand our global reach, improve operational
efficiency, and allow us to deploy equipment faster and more
efficiently in addressing regional opportunities and customers in
need. We have already derived benefits from the hub strategy, with
new business being generated and supported in each of our key
regions. In addition, we have realigned our business development
resources to help ensure dedicated focus on our priority markets in
support of this strategy.
Our technology has enabled us to take leadership in reliability,
flexibility, fuel efficiency, and emissions control. Our global
strategic partnerships with Caterpillar Inc. and Pratt &
Whitney Power Systems (PWPS) remain strong and provide us with
reliable, state-of-the-art technology. In December, Mitsubishi
Heavy Industries signed an agreement with United Technologies
Corporation to acquire PWPS, subject to regulatory approval. APR
Energy's previous exclusive agreement with PWPS remains unchanged.
The partnership continues to grant APR Energy exclusivity in the
rental power market with PWPS' mobile dual-fuel turbines, helping
the Group take leadership as one of the largest providers of mobile
gas turbine technology in the world.
We invested over $300 million in our fleet in 2012, bringing
total generation capacity to 1,311MW, up 45 per cent over 31
December 2011 (900MW). This investment includes the acquisition of
additional dual-fuel turbines and diesel and gas power modules.
Having a readily available fleet enables us to better take
advantage of opportunities when and where they occur. Additionally,
by offering our customers a broader choice of technology to meet
their needs, we are able to expand the playing field of
opportunity, and provide solutions that go beyond the temporary
power and rental power markets to bridge customers to longer-term
solutions.
We also made significant strides in our operational execution
and efficiency. Through implementation of our new proprietary
modular building system, we can deliver scalable, fast-track power
even faster than before-with installation as fast as 30 days or
less. For example, we were able to install 120MW in Cyprus within
20 days of the arrival of the equipment on site. This patent
pending system has enabled us to reduce installation and labour
costs, driving significant margin improvements.
Together, these strategic initiatives, investments and
accomplishments executed over the course of the year have put APR
Energy in a strong position for growth in 2013 and beyond.
Dividend
At the upcoming Annual General Meeting on 14 May 2013, the Board
will recommend to shareholders that a resolution is passed to
approve payment of a final dividend for the year ended 31 December
2012 of 6.7 pence per share (2011: 10.0 pence per share), payable
on 28 May 2013 to shareholders on the register at 3 May 2013. The
ex-dividend date will be 1 May 2013. The Board will continue to
maintain a regular review of its dividend policy and reiterates its
intention to pay an annual dividend, with a total dividend pay-out
of 10.0 pence per share for 2012 (2011: 10.0 pence per share).
Board of Directors
APR Energy's board is active in the supervision of the Group's
strategy and execution and in developing a high level of corporate
governance. It provides a mix of skills and experience, which match
APR Energy's areas of strategic focus and growth. In July 2012, we
welcomed a new addition to the Board, Shonaid Jemmett-Page, as
Independent Non-Executive Director and Chair of the Audit
Committee. The wealth of experience she brings in corporate
finance, together with wide familiarity with Asia and developing
countries, makes her a complementary addition that further
strengthens our Board. Ms. Jemmett-Page is also Independent
Non-Executive Director at Amlin PLC, GKN PLC, and Close Brothers
PLC, Director at Greencoat UK Wind PLC, and Vice Chairman and
Non-Executive Director of Origo Partners PLC.
Premium Listing
The Company continues to be engaged on the work to prepare for a
premium listing and we look forward to advising the market on
timing in due course.
Outlook
The structural dynamics of the fast-track power market bode well
for the continued growth of APR Energy in 2013. We continue to see
strong demand for power solutions in Africa, Latin America, Middle
East, and South East Asia, with on-going discussions on a number of
opportunities driving a strong commercial pipeline that spans
across our portfolio of technologies and geographic regions.
The momentum of the business exiting 2012 has already carried
into 2013 with the signing of the contract in Indonesia, giving us
entry into one of the largest temporary power markets, and
Guatemala, strengthening our presence in the lucrative
industrial/extractive industry segment. The establishment of our
regional hubs gives us further entry into priority markets in South
East Asia, Africa, the Middle East, and Latin America.
We remain excited about the outlook for dual-fuel turbines. As
demonstrated with the 200MW win and 100MW extension in Uruguay in
December, as well as the 250MW win in Libya in March of this year,
these units have proven to be a viable and attractive technology
for large utilities wanting a more reliable, emissions-friendly,
and power-dense alternative to diesel and gas reciprocating engine
technology.
At this early stage of our 2013 financial year, APR Energy
anticipates fleet capital expenditure of approximately $225 million
in 2013 for further expansion of our dual-fuel turbine fleet and
associated infrastructure. The Group is focused on making
additional operational improvements during 2013 and, in particular,
on increasing utilisation in our diesel fleet.
Given the strength of our current order book and commercial
pipeline of demand, a strong regional presence through our global
hub network, improved margin performance, and APR Energy's
continued focus on disciplined execution, we expect that 2013 will
be another year of strong growth and expect to make continued
progress on our strategic objectives.
In conclusion, 2012 has been a successful year for APR Energy.
Our advancement upon our strategic objectives and expansion of our
global footprint has positioned us well to continue this success.
These results are due to the tireless efforts of the Group's
management and employees. On behalf of the Board, I sincerely thank
each and every one of them. Without their commitment, dedication,
and hard work during the year, none of these achievements would
have been possible.
Mike Fairey
Chairman
20 March 2013
CHIEF EXECUTIVE OFFICER'S REPORT
2012 AND BEYOND
2012 was a successful year for APR Energy, and we are pleased
with the progress made across all areas of our business. We
delivered another solid performance, and continued to execute our
core strategies.
During the year, APR Energy achieved a number of key milestones
and accomplishments. We opened new hubs in three of our highest
priority regions, and expanded our base of skilled people around
the world. We signed a number of large-scale contracts around the
globe, including Uruguay (300MW in total) and Cyprus (120MW), and
expanded our footprint in the strategically important regions of
Africa, Middle East, and Latin America. We shortened the
mobilisation and installation time to execute new projects, while
making significant improvements on cost and operational efficiency.
We grew our fleet by 46 per cent, and further strengthened our key
strategic partnerships with Caterpillar and PWPS.
Through major projects we have undertaken in Uruguay, Japan, and
Martinique, we showed that mobile turbine technology does and will
play an important role in the growth of the fast-track power
solutions market as customers look for reliable technology with
greater power-density and emissions control. We have also seen
that, by employing technologies offering the latest advancements in
fuel efficiency, we can reduce significantly the total operating
cost for the customer over the use of older, dated equipment. This
advantage has helped us win projects over the course of the
year.
Overall, APR Energy has made strong progress in its first full
year following the acquisition of the APR Group in 2011 as a
publicly listed company on the London Stock Exchange. Our
accomplishments in 2012, together with a stronger balance sheet and
a $400 million credit facility, have positioned us well for further
penetration in our key markets and for continued success.
Review of Trading
The statutory trading information provided in this report covers
a twelve-month period from 1 January 2012 to 31 December 2012. To
provide greater clarity on operational performance, we have also
included pro forma trading results of the Group for both 2012 and
2011, which in the view of the Directors more accurately reflects
the way in which they manage and measure the performance of the
business.
APR Energy had solid growth in 2012. Reported revenues totalled
$265.7 million. On a pro forma basis, this represented a growth of
25 per cent over 2011 ($212.8 million). Driving this growth were
new order intake of 569MW and contract extensions of 724MW.
Reported gross profit was $42.8 million, which includes the
impact of $58.0 million of non-cash expense for intangible asset
amortisation. On a pro forma basis, gross profit totalled $100.8
million, up 13 per cent from $89.1 million in 2011. The pro forma
gross profit margin was 38 per cent compared to 42 per cent in
2011. This reduction reflects the higher depreciation charge in
2012, offset by proportionally lower direct costs over the prior
year. We expect underlying future gross profit margin to improve,
reflecting operating efficiencies from scaling of the business, the
impact of larger-scale projects, and the implementation of our
patent pending modular building system.
The Group reported an operating profit of $9.2 million in the
year due to the impact of non-cash expenses for the amortisation of
acquired intangible assets in the year. On a pro forma basis
however, the operating profit totalled $67.2 million, up 11 per
cent year on year. Pro forma net profit was $53.2 million, up 32
per cent from $40.4 million in 2011.
Pro forma EBITDA increased 42 per cent from $110.6 million in
2011 to $157.0 million in 2012 as a result of the overall growth in
the business. Pro forma EBITDA margin was 59 per cent (2011: 52 per
cent).
Capital expenditure on new fleet for the twelve-month period
ending 31 December 2012 was $316.5 million, compared to $298.5
million in the same period last year. The growth in fleet to a
total of 1,311MW was the result of investment to support new
project wins and to build out deployable capacity in our regional
hub structure. The fleet investment included diesel and gas
reciprocating engines and dual-fuel turbines.
Operational Progress
To ensure we stay well positioned to meet the challenges of our
market and customers, we enacted the following initiatives to drive
success in 2012 and beyond.
-- APR Energy fleet capacity and utilisation
To address pipeline growth and emerging opportunities, APR
Energy grew its power generation capacity to 1,311MW, up 46 per
cent over 2011. This investment included diesel and gas
reciprocating engines, as well as dual-fuel turbines. The fleet
composition at year end was 63 per cent diesel reciprocating
engines, 8 per cent gas reciprocating engines, and 29 per cent
turbine technology. The rapid growth in the fleet and timing of new
projects coming on line impacted fleet utilisation. At the end of
the year, contracted fleet utilisation was in the mid 60 per cent
range (2011: low 80 per cent range).
-- Investment in dual-fuel turbines
The Group has continued to differentiate itself by offering a
broad choice of technologies in its fleet, with a particular
strategic focus on dual-fuel turbines. This approach has already
proven itself, as seen with the placement of 300MW of our turbines
in Uruguay. We are now one of the largest providers of mobile
turbines in the world. Our units are capable of producing up to
25MW of power, the equivalent of some 15-25 diesel/gas
reciprocating generators. Their small footprint-to-megawatt ratio
radically improves the speed and logistics of transport, while
their advanced turbine technology provides greater reliability,
requires much less maintenance, and produces significantly less
emissions than their reciprocating engine counterparts. The fuel
flexibility of the turbine provides an additional advantage for the
customer, with the ability to switch quickly between diesel and
natural gas depending on customer needs or preference. Where gas is
available to a customer, it can significantly reduce the generating
costs of electricity, as well as cut emissions substantially.
-- Increased regional presence in priority markets
In 2012, we opened three regional hubs: Panama in February, the
UAE (Dubai) in March, and Malaysia in September. The hubs afford us
significant improvements in our response time to customer need and
emerging opportunities, as well as serve as a base for expanding
regional commercial and sourcing activities. By staging inventory
of generating equipment closer to the customer in the hub
locations, we are able to deploy projects rapidly and
cost-effectively. The hub strategy has already made an impact,
playing a key role in generating and supporting new business in
Latin America, the Middle East, and South East Asia. Together with
this strategy, we have realigned our business development resources
to ensure a greater on-shore presence in our priority markets.
-- Introduction of our Modular Building System
APR Energy introduced an innovative new proprietary modular
building system in 2012 that has had a profoundly positive impact
on our operational efficiency. Culminating from many months of
planning, research, and development, this modular building system
significantly improves mobilisation and installation time, while
significantly reducing labour and installation costs. First
introduced during our installation in Cyprus, we were able to
install a 120MW plant within 20 days of the equipment arriving on
site, a significant improvement over installation time of our past
projects. The modular approach also packages all equipment in
standard ISO shipping containers, simplifying logistics and saving
in shipping costs. Scalable and customisable, the system can be
expanded to build plants of 300MW or more. APR Energy has a patent
pending on the system.
-- Strategic partnerships
Our global strategic partnerships with Caterpillar and with
PWPS, continue to provide us with reliable, state-of-the-art
technology, around the clock support across the globe, and
beneficial pricing. The Caterpillar agreement has a five-year term
and covers both diesel and gas reciprocating engine technologies,
as well as aftermarket support and sales/marketing collaboration.
Our exclusive partnership with PWPS, also a five year agreement,
grants us exclusive worldwide rights within the power rental market
to offer their dual-fuel turbines. This agreement will remain
unchanged with Mitsubishi Heavy Industries' recent acquisition of
PWPS from United Technologies Corporation. Both partnerships
continue to generate new leads and business opportunities.
Our People
Our people are the key to APR Energy's success. It is due to
their hard work, passion, and dedication that we were able to
achieve the strong results we enjoyed in 2012. During the year, we
continued to grow and develop our global base of highly skilled
professionals. We have made sizeable investments within our
accounting and finance function, strengthening the skills and
experience of our team, and driving significant improvement across
processes, reporting, and analytical systems. We also strengthened
skills in a number of other key functions around the globe,
including engineering, supply chain, information technology,
business development, marketing, legal, and human resources.
In 2012, we introduced our corporate core values: Speed,
Integrity, Entrepreneurial Spirit, Teamwork, Mutual Respect, and
Stewardship. Our employees live and demonstrate our values every
day, helping to make APR Energy a productive and positive place to
work.
Our Communities
Our brand promise, Powering Your Progress(R), means more than
just providing a reliable source of power. We help our communities
grow by hiring within their local workforce and providing valuable
skills training. In addition, through our Community Development
Programme, APR Energy and our people provide significant
contributions, including volunteer time, to serve local education
and healthcare causes. During 2012, we supported community
development causes in a number of the regions where we operate,
including Senegal, Peru, Cyprus, Argentina, and the USA. Through
these activities, we are able to integrate with and become part of
our local communities, building positive relationships and helping
them prosper.
Current Trading and Outlook
We exited 2012 strongly with the signing of an additional 200MW
dual-fuel turbine plant in Uruguay, together with a 100MW extension
of our existing plant in the country. This momentum has continued
into 2013, with the signing of three new contracts in Libya,
Guatemala, and Indonesia, along with extensions of existing
contracts in Senegal and Gabon. These new awards and extensions,
equalling 361MW, represent further development into strategically
important sectors for the Group.
The Indonesia project gives us a foothold in one of the largest
temporary power markets in the world, and follows the opening of
our Malaysia hub in the fall of 2012. The Guatemala project further
broadens our market penetration into the extractive industry
segment, and helps the Group to diversify further our global
customer base. The Libya win represents the largest single contract
in APR Energy history, and further expands our presence in the
Middle East / North Africa (MENA) region. Contract renewals remain
an important part of our business, and reflect our customers'
satisfaction with both the service we provide and our flexibility
to meet their on-going and changing needs.
We continue to see strong demand for power solutions in Africa,
Latin America, Middle East, and South East Asia, with on-going
discussions on a number of opportunities driving a strong
commercial pipeline. With this demand, our order book at 31
December 2012 now stands at over 11,592MW-Months, reflecting an 80
per cent growth rate year-on-year.
At this early stage of our 2013 financial year, the Group
anticipates fleet capital expenditure of approximately $225 million
for further expansion of its dual-fuel turbine fleet and associated
infrastructure. The Group is focused on making additional
operational improvements during 2013 and, in particular, on
increasing utilisation in our diesel fleet.
We expect to continue to make good progress in 2013. APR Energy
remains confident in the structural growth trends within the
temporary power market and, specifically, in the application of
mobile dual-fuel turbine technology.
John Campion
Chief Executive Officer
20 March 2013
FINANCIAL REVIEW
Revised
Reported Reported Pro forma Pro forma
12 mths 14 mths 12 mths 12 mths
ended ended ended ended
31 Dec 31 Dec 31 Dec 31 Dec
12 11 12 11
$'000 $'000 $'000 $'000
(Audited) (Audited) (Unaudited) (Unaudited)
Revenue 265,734 164,617 265,734 212,777
Cost of sales (164,986) (91,376) (164,986) (123,663)
Amortisation of intangible
assets (57,976) (46,713) - -
---------- ---------- ------------ ------------
Gross profit 42,772 26,528 100,748 89,114
Selling, general and administrative
expenses (33,527) (44,022) (33,527) (28,554)
Operating profit/(loss) 9,245 (17,494) 67,221 60,560
Founder shares and securities
revaluation (10,200) (27,678) - -
Foreign exchange gain 389 9,961 389 41
Finance income 333 4,810 333 644
Finance costs (4,620) (2,567) (4,620) (3,991)
---------- ---------- ------------ ------------
(Loss)/profit before taxation (4,853) (32,968) 63,323 57,254
Taxation (10,081) (9,686) (10,081) (16,847)
---------- ---------- ------------ ------------
(Loss)/profit for the period (14,934) (42,654) 53,242 40,407
Total comprehensive (loss)/profit
for the period (14,934) (42,654) 53,242 40,407
---------- ---------- ------------ ------------
During the year APR Energy finalised the provisional fair value
of identifiable assets and liabilities of the APR Group in
accordance with IFRS 3 Business Combinations. These revisions are
made retrospectively to the acquisition balance sheet as of 13 June
2011 of the APR Group and APR Energy has therefore revised the
prior year comparatives accordingly.
Pro Forma Financial Results and Performance Review
On 13 June 2011, APR Energy, through its subsidiary APR Energy
Holdings Limited, acquired the entire issued share capital of APR
Energy Cayman Limited and all of the membership interests of
Falconbridge Services, LLC (these together, the "APR Group") (the
"Acquisition").
To provide investors with greater clarity on the performance of
the APR Group, pro-forma unaudited financial information has been
prepared to show the results of the APR Group for the twelve-months
ended 31 December 2012 and 2011 respectively. The pro forma
unaudited financial information has been prepared on an adjusted
basis as follows:
Operating Net
Revenue profit income
$m $m $m
12 month statutory results to
31 December 2012 265.7 9.2 (14.9)
Amortisation of acquired intangible
assets - 58.0 58.0
Founder shares and securities
revaluation - - 10.2
-------- ---------- --------
12 month pro forma results to
31 December 2012 265.7 67.2 53.2
Operating
Revenue profit Net income
$m $m $m
14 month statutory results to 31 December
2011 - revised 164.6 (17.5) (42.7)
APR Group pre-acquisition date
activity 48.2 (0.2) (8.8)
Horizon pre-acquisition date
activity - 0.9 (3.3)
Amortisation of acquired intangible
assets - 46.7 46.7
Transaction costs - 30.7 30.7
Founder shares and securities
revaluation - - 27.7
Foreign exchange gain on GBP sterling
cash balances held - - (9.9)
-------- ---------- -----------
12 month pro forma results to 31 December
2011 - revised 212.8 60.6 40.4
Pro forma revenue for the twelve-month period ended 31 December
2012 was $265.7 million, an increase of 25 per cent over the same
period last year. The increase in revenue was primarily driven by
new contract wins that went into operation in 2012, as well as
contract extensions.
Operating profit on a pro forma basis increased 11 per cent to
$67.2 million. This percentage increase was less than that for
revenue due to a higher depreciation charge in 2012, offset by
proportionally lower direct costs and administrative expenses over
the prior year. This depreciation charge reflects the capital
expenditure on new fleet during the year and in the second half of
2011. Pro forma net interest expense increased to $4.3 million
(2011: $3.3 million) as the Group drew down debt to purchase fleet
expenditures.
The 2012 tax charge on a pro forma basis was $10.1 million
(2011: $16.8 million), reflecting an effective tax rate of 16 per
cent (2011: 29 per cent). The significant reduction in the
effective tax rate from the prior period is a result of a reduction
in withholding taxes and an increased share of profit from lower
tax jurisdictions.
Pro forma EBITDA totalled $157.0 million, an increase of 42 per
cent over the prior year (2011: $110.6 million). Pro forma EBITDA
margin was 59 per cent (2011: 52 per cent).
Capital expenditures on new fleet for the twelve-month period
ending 31 December 2012 were $316.5 million, up from $298.5 million
in 2011. The continued capital investment represented fleet
investment and build out of inventory for the regional hub
infrastructure.
Return on Capital Employed (ROCE) is a key performance metric
for the business. Given the significant increase in net operating
assets associated with the growth of the business, the ROCE (on a
pro forma basis) decreased to 11.0 per cent (2011: 16.5 per
cent).
Reconciliation of pro forma operating profit to pro forma
EBITDA:
Pro forma Pro forma
12 mths 12 mths
ended ended
31 Dec 31 Dec
12 11
$'000 $'000
Operating profit 67,221 60,560
Depreciation 86,303 48,677
Equity-settled share-based
payment expense 3,436 1,362
------------ ------------
Pro forma EBITDA 156,960 110,599
Statutory Financial Results and Performance Review
The statutory results for APR Energy for the period ended 31
December 2012 cover a twelve-month period (2011: fourteen-month
period ended 31 December 2011).
Revenue
Revenue for the year ended 31 December 2012 was $265.7 million
(2011: $164.6 million).
Operating profit
The reported operating profit was $9.2 million, compared to a
loss in the prior year of $17.5 million. This improved
profitability was mainly as a result of increased revenues in 2012
and the impact of several one-off items recorded in 2011; however,
a loss was reported due to the impact of the amortisation of
intangible assets.
Amortisation of intangible assets
As a result of the Acquisition, the Group completed a fair value
analysis of tangible and intangible assets. This analysis
recognised intangible assets of $144.2 million. Included in the
operating profit is a total of $58.0 million of amortisation
expense related to those intangible assets. The amortisation
expense includes $56.5 million associated with acquired customer
contracts and $1.5 million of amortisation of the trade name. The
amortisation related to the customer contracts is expensed over the
remaining terms of the contracts (as of 13 June 2011). The
amortisation of the trade name is being expensed over 25 years.
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. There was a net credit
for bad debts of $1.5 million in the period (2011: $1.9 million
expense), reflecting the collection of debts outstanding from one
customer, which had previously been assessed as at risk in
2011.
Share-based payments
In accordance with IFRS 2, a non-cash charge of $3.4 million was
recognised related to equity-settled share-based payment
transactions in the year ended 31 December 2012 (2011: $1.4
million). This expense relates to equity grants made under the
Company's Performance Share Plans and the Non-Executive Directors'
share matching scheme.
Foreign exchange gain
There was a small foreign exchange gain of $0.4 million made in
the year (2011: $10.0 million).
Interest and finance cost
Net interest expense for the year ended 31 December 2012 was
$4.3 million (2011 net interest income: $2.2 million), reflecting
drawings made on the credit facility as part of the purchase of
fleet capital expenditure.
Taxation
The Group's reported tax charge for the year was $10.1 million
(2011: $9.7 million). The charge primarily comprises withholding
taxes of $4.8 million (2011: $5.5 million) and foreign income taxes
in overseas jurisdictions of $6.7 million ($4.2 million). The
significant reduction in the tax charge from the prior period is a
result of a reduction in withholding taxes and an increased share
of profit from lower tax jurisdictions.
Loss per share
Basic loss per share was 19.09 cents for the reported period
(2011: 73.05 cents).
Liquidity and capital resources
Net debt (excluding capitalised finance fees of $5.5 million) as
at 31 December 2012 was $184.0 million (2011: net cash of $63.1
million). This reflects the Group's continued investment in its
fleet and is consistent with the Group strategy. A summary analysis
of cash flows is set out in the table below.
Revised*
Year 14 months
ended ended
31 December 31 December
2012 2011
$'000 $'000
Net cash from operating activities 117,292 43,704
Net cash used in investing activities (347,120) (540,930)
Net cash from/(used in) financing
activities 187,812 (85,253)
------------ ------------
Net decrease in cash and cash
equivalents (42,016) (582,479)
Cash and cash equivalents at
beginning of the period 63,061 645,540
------------ ------------
Cash and cash equivalents at
end of the period 21,045 63,061
------------ ------------
During the period, net cash flow from operating activities
totalled $117.3 million (2011: $43.7 million). Cash flow from
investing activities primarily comprised the purchases of property
and equipment and was lower in 2012 than 2011 as a result of the
net cash out flow associated with the APR Group acquisition of
$329.1 million. Cash from financing activities included $219.5
million of debt draw-downs. The cash balance at year end was
maintained at a level commensurate with the month ahead forecasted
cash flows, plus leaving a sufficient amount of cash on hand to
cover any eventualities, 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 31 December 2012 and 2011 there were
no interest rate hedges in place.
Credit risk
Credit risk arises from cash and cash equivalents, deposits with
banks and financial institutions, 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 million with a group of international banks.
Going concern
The Group has significant forecast expenditure on dual-fuel
turbines within the next twelve months. As highlighted in note 8,
the Group meets these investment requirements through the secured
credit facility of $400 million with a group of international
banks, the terms of which are described in note 8.
In order to ensure it remains within the terms of this facility
(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, 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 facility for the foreseeable future, being twelve months
from the date of this report.
After making enquiries, the Directors have a reasonable
expectation that the Company and 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 Annual Report and consolidated financial
statements.
Dividends proposed
At the upcoming Annual General Meeting on 14 May 2013, the Board
will recommend to shareholders that a resolution is passed to
approve payment of a final dividend for the year ended 31 December
2012 of 6.7 pence per share (2011: 10.0 pence per share), payable
on 28 May 2013 to shareholders on the register at 3 May 2013. The
ex-dividend date will be 1 May 2013.
Responsibility statement of the Directors on the Annual
Report
The responsibility statement below has been prepared in
connection with the Company's full Annual Report for the year
ending 31 December 2012. Certain parts thereof are not included
within this announcement.
We confirm to the best of our knowledge:
-- The financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- The management report, which is incorporated into the
Director's Report, includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
This responsibility statement was approved by the Board of
Directors on 20 March 2013 and signed on its behalf by:
John Campion
Chief Executive Officer
20 March 2013
Condensed Consolidated Statement of Comprehensive Income
For the year ended 31 December 2012
Revised*
14 months
Year ended ended
31 December 31 December
2012 2011
$'000 $'000
Note
Revenue 265,734 164,617
Cost of sales (164,986) (91,376)
Amortisation of intangible assets (57,976) (46,713)
------------- -------------
Gross profit 42,772 26,528
Selling, general and administrative
expenses (33,527) (44,022)
Operating profit/(loss) 9,245 (17,494)
Founder shares and securities
revaluation (10,200) (27,678)
Foreign exchange gain 389 9,961
Finance income 333 4,810
Finance costs (4,620) (2,567)
------------- -------------
Loss before taxation (4,853) (32,968)
Taxation 3 (10,081) (9,686)
------------- -------------
Loss for the period (14,934) (42,654)
Total comprehensive loss for
the period (14,934) (42,654)
------------- -------------
Loss per share
Basic loss per share - cents 4 (19.09) (73.05)
Diluted loss per share - cents 4 (19.09) (73.05)
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
Condensed Consolidated Statement of Financial Position
As at 31 December 2012
Revised*
31 December 31 December
2012 2011
$'000 $'000
Assets Note
Non-current assets
Goodwill 5 547,069 547,069
Intangible assets 6 39,811 97,787
Property, plant and equipment 7 671,478 402,535
Capitalised financing costs - 3,699
Deferred tax asset 407 1,221
Other non-current assets 5,409 2,865
------------- -------------
Total non-current assets 1,264,174 1,055,176
Current assets
Derivative asset 38 2,258
Inventories 9,366 2,156
Trade and other receivables 53,974 40,673
Cash and cash equivalents 21,045 63,061
Deposits 24,839 27,666
------------- -------------
Total current assets 109,262 135,814
------------- -------------
Total assets 1,373,436 1,190,990
------------- -------------
Liabilities
Current liabilities
Trade and other payables 28,927 31,844
Income tax payable 4,706 3,001
Deferred revenue 8,999 10,479
Derivative liability 342 -
Decommissioning provisions 12,213 17,902
------------- -------------
Total current liabilities 55,187 63,226
Non-current liabilities
Derivative liability 15,161 4,961
Deferred tax liability 4,324 2,939
Borrowings 8 199,476 -
Decommissioning provisions 7,453 161
------------- -------------
Total non-current liabilities 226,414 8,061
------------- -------------
Total liabilities 281,601 71,287
Equity
Share capital 12,620 12,696
Share premium 668,128 668,128
Other reserves 485,854 485,775
Equity reserves 4,544 1,795
Accumulated losses (79,311) (48,691)
------------- -------------
Total equity 1,091,835 1,119,703
------------- -------------
Total liabilities and equity 1,373,436 1,190,990
------------- -------------
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
Condensed Consolidated Statement of Changes in Equity
For the year ended 31 December 2012
Share Share Other Equity Accumulated Total
capital premium reserves reserves losses
$'000 $'000 $'000 $'000 $'000 $'000
Balance at 1
November
2010 6,579 629,914 - 433 (6,037) 630,889
-------- -------- --------- --------- ------------ ----------
Loss for the period - - - - (42,654) (42,654)
-------- -------- --------- --------- ------------ ----------
Total comprehensive
loss for the
period - - - - (42,654) (42,654)
Issued share
capital 6,117 15,336 - - - 21,453
Other reserves - - 485,775 - - 485,775
Credit to share
premium
relating to
Founder
D securities** - 22,878 - - - 22,878
Credit to equity
for
equity-settled
share-based
payment expense - - - 1,362 - 1,362
Balance at 31
December
2011* 12,696 668,128 485,775 1,795 (48,691) 1,119,703
-------- -------- --------- --------- ------------ ----------
Loss for the year - - - - (14,934) (14,934)
-------- -------- --------- --------- ------------ ----------
Total comprehensive
loss for the year - - - - (14,934) (14,934)
Issued share
capital 3 - - (687) 687 3
Credit to equity
for
equity-settled
share-based
payment expense - - - 3,436 - 3,436
Redemption of
deferred
shares (79) - 79 - - -
Dividends - - - - (16,373) (16,373)
Balance at 31
December
2012 12,620 668,128 485,854 4,544 (79,311) 1,091,835
-------- -------- --------- --------- ------------ ----------
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
** During the year the credit to accumulated losses relating to
Founder D securities reported in 2011 was amended to be reflected
in share premium. This did not impact either the comprehensive loss
for the period as reported for the 14 month period to 31 December
2011 or total equity as at 31 December 2011.
Condensed Consolidated Cash Flow Statement
For the year ended 31 December 2012
Revised*
14 months
Year ended ended
31 December 31 December
2012 2011
Note $'000 $'000
Cash flows from operating activities
Loss for the period before taxation (4,853) (32,968)
Adjustments for:
Depreciation and amortisation 6,7 144,279 85,603
Loss on sale or disposal of fixed
assets 7 418 1,012
Provision for bad debt (1,490) 1,943
Equity-settled share-based payment
expense 3,436 1,362
Founder shares and securities
revaluation 10,200 27,678
Loss/(gain) on derivative instruments 2,562 (2,258)
Interest income (333) (4,810)
Interest expense 4,620 2,567
Movements in working capital:
Increase in trade and other receivables (10,896) (18,809)
Increase in inventories (7,210) (2,156)
Increase in other current and
non-current assets (3,602) (2,248)
Decrease in trade and other payables 758 (8,404)
Settlement of decommissioning
provisions (9,376) (593)
(Decrease)/increase in other
liabilities (1,480) 2,804
------------- -------------
127,033 50,723
Interest paid (3,229) (2,224)
Interest received 333 4,810
Income taxes paid (6,845) (9,605)
------------- -------------
Net cash from operating activities 117,292 43,704
Cash flows from investing activities
Purchases of property, plant
and equipment (351,006) (195,802)
Decrease/(increase) in deposits 3,886 (16,044)
Acquisition of subsidiary (net
of cash acquired) 9 - (329,084)
------------- -------------
Net cash used in investing activities (347,120) (540,930)
Cash flows from financing activities
Cash from borrowings 219,473 15,246
Repayment of borrowings (14,473) (96,816)
Dividends paid 10 (16,373) -
Debt issuance costs (818) (3,762)
Proceeds from the issue of ordinary
shares 3 -
Proceeds from the issue of deferred
shares - 79
------------- -------------
Net cash from/(used in) financing
activities 187,812 (85,253)
Net decrease in cash and cash
equivalents (42,016) (582,479)
Cash and cash equivalents at
beginning of the period 63,061 645,540
------------- -------------
Cash and cash equivalents at
end of the period 21,045 63,061
------------- -------------
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
Included within cash and cash equivalents at 31 December 2012 is
an amount of $4.8 million which backs a letter of credit and as
such is classified as restricted cash (2011: $nil).
Notes to the Preliminary Financial Statements
For the year ended 31 December 2012
1. Basis of accounting and presentation of financial information
Whilst the financial information in this preliminary
announcement has been prepared in accordance with International
Financial Reporting Standards (IFRS) and International Financial
Reporting Interpretation Committee (IFRIC) interpretations adopted
for use by the European Union, with those parts of the Companies
Act 2006 applicable to companies reporting under IFRS and with the
requirements of the United Kingdom Listing Authority (UKLA) Listing
Rules, this announcement does not contain sufficient information to
comply with IFRS. The Group will publish full financial statements
that comply with IFRS in April 2013.
The financial information for the year ended 31 December 2012
does not constitute statutory accounts as defined in sections 435
(1) and (2) of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2011 have been delivered to the Registrar of
Companies and those for 2012 will be delivered following the
Company's annual general meeting. The auditor has reported on these
accounts; their reports were unqualified, did not include a
reference to any matters to which the auditor drew attention by way
of emphasis of matter and did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
The accounting policies applied are consistent with those
adopted and disclosed in the Group's financial statements for the
year ended 31 December 2011. There have been a number of amendments
to accounting standards and new interpretations issued by the
International Accounting Standards Board which were applicable from
1 January 2012; however these have not had a material impact on the
accounting policies, methods of computation or presentation applied
by the Group.
2. Geographical information
The Group's revenue from continuing operations from external
customers by location of operations and information about its
non-current assets (excluding any applicable deferred tax balances)
by location of assets is detailed below.
Japan and Senegal revenues represent single individual customers
which individually form more than 10% of total revenues. Of these
revenues, there was $nil and $15.8 million of trade receivables
outstanding at 31 December 2012 (2011: $nil and $14.1 million).
Revised*
14 months
Year ended ended
31 December 31 December
Revenue by geographic location 2012 2011
$'000 $'000
Japan 106,867 73,630
Senegal 43,361 17,805
South America 34,801 33,174
Africa 31,715 30,460
Caribbean 18,776 7,461
Uruguay 13,776 -
Europe 8,765 -
Middle East 7,135 -
Central America 538 2,087
------------- -------------
265,734 164,617
Revised*
31 December 31 December
Non-current assets by geographical 2012 2011
location
$'000 $'000
Europe 114,929 -
US 91,846 4,234
Japan 89,930 126,185
Senegal 81,059 99,669
Uruguay 72,522 -
Africa 60,643 20,431
Middle East 50,389 94
South America 43,745 45,686
Central America 19,174 9,121
Caribbean 16,410 19,234
Corporate and other 623,120 729,301
------------- -------------
1,263,767 1,053,955
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
The corporate non-current assets primarily relate to the
goodwill and intangible assets that arose on the date of
acquisition.
3. Income and deferred taxes
The Group's tax expenses are summarised in the following
tables:
Revised*
14 months
Year ended ended
31 December 31 December
2012 2011
$'000 $'000
Current tax
Current period 9,343 9,409
Capitalisation of 2011 intra-group
lease charges (1,211) -
Prior period adjustments (250) -
------------- -------------
7,882 9,409
Deferred tax
Current period 2,199 277
------------- -------------
2,199 277
Total tax expense 10,081 9,686
------------- -------------
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
The tax expense for the year can be reconciled to the accounting
loss as follows:
Revised*
14 months
Year ended ended
31 December 31 December
2012 2011
$'000 $'000
Loss before tax on continuing
operations (4,853) (32,968)
Tax at the Cayman Corporation tax
rate of 0% (2011: 0%) - -
Withholding taxes 4,814 5,460
Effect of different tax rates of subsidiaries
operating in other jurisdictions 6,728 4,226
Capitalisation of 2011
intra-group
lease charges (1,211) -
Prior period adjustments (250) -
------------ ------------
10,081 9,686
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
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 rate and the effective tax
rate is a result of withholding taxes and taxes in foreign
jurisdictions as shown above.
The structure of the Group generally results in each entity or
branch operating within only one tax jurisdiction. In general,
income tax is imposed on taxable income earned in the applicable
tax jurisdiction. Withholding taxes are imposed based upon local
country tax laws. In the jurisdictions where the Group operates,
these taxes may be imposed on cross border payments to related
parties. In general, withholding taxes are imposed on payments such
as rents, dividends, and certain service payments or gross receipts
from customers.
Deferred income taxes
The deferred tax assets and liabilities as of 31 December 2012
and 2011 respectively and the associated movements were as
follows:
Revised*
Credit/(charge)
to the
statement
31 December of comprehensive 31 December
2011 income 2012
$'000 $'000 $'000
Deferred tax
assets
Lease equipment fees not
paid 1,220 (1,220) -
Holiday provision 1 (1) -
Decommissioning provisions - 162 162
Losses recognised - 245 245
------------- ----------------- ------------
1,221 (814) 407
Deferred tax
liabilities
Withholding taxes (2,729) (1,294) (4,023)
Capital allowances in excess
of depreciation (210) (91) (301)
------------- ----------------- ------------
(2,939) (1,385) (4,324)
(1,718) (2,199) (3,917)
------------- ----------------- ------------
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
Losses carried forward that have not been recognised are $13.8
million (2011: $nil) due to a lack of future anticipated profits in
that jurisdiction.
4. Loss per share
From continuing operations
The calculation of the basic and diluted loss per share is based
on the following data:
Revised*
Year ended 14 months
31 December ended 31
2012 December
2011
Loss for the purposes of basic and
diluted loss per share being net loss
attributable to the owners of the Company
($'000) (14,934) (42,654)
Weighted average number of ordinary
shares for the purpose of basic and
diluted loss per share(1) (number of
shares) 78,229,262 58,391,446
Loss per ordinary share
Basic and diluted loss per share (cents) (19.09) (73.05)
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
(1) Share options and Founder securities are considered
anti-dilutive for the periods ended 31 December 2012 and 2011 as
the inclusion of these securities would reduce the loss per share.
Potentially dilutive ordinary shares for the period ended 31
December 2012 were nil (2011: nil). The Founder securities are also
not considered to be potentially dilutive as the associated
performance conditions had not been met at 31 December 2012 or
2011.
5. Goodwill
Revised*
2012 2011
$'000 $'000
Opening 547,069 -
Acquisition of subsidiary - 547,069
-------- ---------
Balance at 31 December 547,069 547,069
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units (CGU's) that are expected
to benefit from that business combination. The Directors have
determined the business to have one CGU and the goodwill is
allocated to this unit.
The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be
impaired.
The recoverable amount of the CGU is determined from a value in
use calculation. The key assumptions for the value in use
calculation are:
-- Revenue - Management uses current contract portfolio pricing
for the relevant portion of the forecast period and pricing
guidelines for expected future contract wins. The timing and size
of new contracts is based on historic data and also the sales and
opportunities pipeline. The downtime between contracts and contract
duration are based on Management's best expectations using
historical data, whilst factoring in recent developments in
creating our proprietary modular building system.
-- Costs - Management has a good understanding of historic
realised margins and use this to estimate expected future margins
achievable, which are used to drive direct costs in the model.
Corporate and administrative overheads are then factored in and
adjusted for expected future growth. Also included in the model is
the forecasted capital expenditure, which is based off supplier
schedules from contractual arrangements and the growth profile.
-- Growth rate - Short-term growth rates are based on industry
growth forecasts. A terminal cash flow was calculated using a
long-term growth rate of 3.0% (2011: 3.0%).
-- Discount rate - Management estimates discount rates using
pre-tax rates that reflect current market assessments of the time
value of money and the risks specific to the CGU. The assumed
discount rate used was 14.6% (2011: 14.6%) before tax which in the
view of management best reflects the premium the market would
require for such cash flows.
The Group has conducted a sensitivity analysis on the impairment
test of the CGU carrying value. As a growth company, APR Energy is
subject to meeting certain levels of growth in order to support the
CGU carrying value. The short-term growth rates in 2015-2017 would
have to drop by almost two thirds in order to give rise to an
impairment. The Directors therefore consider that there is no
reasonably possible change in the key assumptions utilised in the
impairment calculations, that would give rise to an impairment.
6. Intangible assets
The intangible assets shown in the table below have arisen
through fair value accounting for the APR Group in 2011.
Customer Brand Total
contracts
$'000 $'000 $'000
Cost:
At 31 October 2010 - - -
Acquisition of subsidiary
(as revised*) 106,400 38,100 144,500
----------- ------- --------
At 31 December 2011
(as revised*) 106,400 38,100 144,500
Additions - - -
----------- ------- --------
At 31 December 2012 106,400 38,100 144,500
Accumulated amortisation:
At 31 October 2010 - - -
Charge for the period 45,888 825 46,713
----------- ------- --------
At 31 December 2011
(as revised*) 45,888 825 46,713
Charge for the year 56,452 1,524 57,976
At 31 December 2012 102,340 2,349 104,689
----------- ------- --------
Net book value:
31 December 2012 4,060 35,751 39,811
31 December 2011 (as
revised*) 60,512 37,275 97,787
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
Customer contracts are amortised over the contract term. The
brand is amortised over its estimated useful economic life of 25
years.
7. Property, plant and equipment
Machinery Mobilisation Demobilisation Other Total
and equipment
equipment
$'000 $'000 $'000 $'000 $'000
Cost:
At 31 October
2010 - - - - -
Additions on
acquisition
of
subsidiaries,
net
book value
(as revised*) 223,809 18,485 1,235 1,006 244,535
Additions 161,789 19,243 16,441 429 197,902
Disposals (2,130) - (782) - (2,912)
------------- ------------- --------------- ------------- ---------
At 31 December
2011
(as revised*) 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
------------- ------------- --------------- ------------- ---------
Accumulated
depreciation:
At 31 October
2010 - - - - -
Charge for the
period 16,535 10,144 12,031 180 38,890
Disposals (1,118) - (782) - (1,900)
------------- ------------- --------------- ------------- ---------
At 31 December
2011
(as revised*) 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
------------- ------------- --------------- ------------- ---------
Net book
value:
31 December
2012 641,927 21,946 5,632 1,973 671,478
31 December
2011 (as
revised*) 368,051 27,584 5,645 1,255 402,535
* See note 9 relating to the finalisation of the APR Group
acquisition fair values under IFRS 3 Business Combinations.
Depreciation is presented within the cost of sales in the
statement of comprehensive income.
8. Borrowings
Credit facility
In 2011, the Group entered into a committed, secured credit
facility of $400 million with a group of international banks. Loans
made under this facility will bear an interest cost at LIBOR plus
2.25%. As of 31 December 2012 $19.4 million (2011: $15.1 million)
of letters of credit have been drawn against the facility.
As of 31 December 2012 the amount drawn down under the facility
was $205.0 million (2011: $nil million) with associated capitalised
financing costs of $5.5 million (2011: $3.7 million). As of 31
December 2012 the available amount of the undrawn facility was
$175.6 million (2011: $384.9 million).
The facility provides for funding of capital expenditures,
working capital requirements and letters of credit. Key financial
covenants at 31 December 2012 and 2011 included a Total Leverage
Ratio (Pro forma EBITDA/Total Leverage) at a maximum of 2:1 and an
Interest Coverage Ratio (Pro forma EBITDA/Net Interest) at a
minimum of 4:1.
Post 31 December 2012, the Total Leverage Ratio was changed by
amendment and is now 2.5:1 for the quarter ending 31 March 2013,
3:1 for the quarter ending 30 June 2013, 2.75:1 for the quarter
ending 30 September 2013 and 2.5:1 thereafter. The LIBOR spread has
also been changed and is LIBOR plus 2.25% for when the Total
Leverage Ratio is less than or equal to 2:1, LIBOR plus 2.50% if
greater that 2:1 but less than or equal to 2.5:1 and LIBOR plus
2.75% when the Total Leverage Ratio is greater than 2.5:1.
The credit facility is secured over the equity of all the
Group's subsidiary undertakings. The Directors believe that the
carrying value of borrowings approximate their fair value.
If the interest rates had been 50 basis points higher/lower and
all other variables were held constant, the Group's total
comprehensive loss would have increased/decreased by $0.4 million
(2011: $nil). This is mainly due to the Group's exposure to
interest rates on its variable rate borrowings.
Bid/performance bonds
The Group has a need to post bid or performance bonds associated
with customer contracts. The bid bonds are typically issued from
the Group's $400 million credit facility or backed by a cash
deposit. As of 31 December 2012 the Group also had $5.1 million
(2011: $2.8 million) backed by cash deposits and $1.6 million
(2011: $nil) with other international banks.
Other
On acquisition, the APR Group had short-term and long-term debt
totalling $81.0 million. This was repaid in full during the period
ended 31 December 2011. The interest costs relating to the
borrowings in the months between acquisition and repayment totalled
$2.2 million inclusive of amortisation of debt issuance.
9. Acquisition of subsidiary
On 13 June 2011, the Group acquired 100% of the issued share
capital and obtained control of the following companies (comprising
the "APR Group"):
-- APR Energy Cayman Limited, and its subsidiaries and branches;
o APR International LLC,
o APR Energy, LLC,
o APR LLC,
o APR Energy SRL,
o SRL Costa Rica Company,
o APR Ecuador,
o APR Energy LLC Sucursal del Peru,
o APR Energy II LLC,
o APR Energy III LLC; and
-- Falconbridge Services LLC and its subsidiary First Coast Travel International LLC.
The provisional and revised amounts recognised in respect of the
identifiable assets acquired and liabilities assumed are as set out
in the table below:
Provisional
fair value
as previously Fair value Fair value
reported adjustments as revised
$'000 $'000 $'000
Cash and cash equivalents 30,182 - 30,182
Deposits 13,014 - 13,014
Accounts receivable 17,883 (229) 17,654
Other assets 5,117 (1,124) 3,993
Property, plant and equipment
(including mobilisation and
installation) 249,042 (4,507) 244,535
Identifiable intangible assets 144,200 300 144,500
Trade and other payables (37,556) (463) (38,019)
Decommissioning provisions (8,874) - (8,874)
Other liabilities (22,854) - (22,854)
Borrowings (80,993) - (80,993)
--------------- ------------- ------------
Total identifiable assets 309,161 (6,023) 303,138
Goodwill 541,046 6,023 547,069
--------------- ------------- ------------
Total consideration 850,207 - 850,207
Satisfied by:
Cash 359,266
Equity instruments (31,841,071 ordinary
shares of the Company) 490,941
------------
Total consideration 850,207
The revised goodwill of $547.1 million arising from the
acquisition is reflective of the recent track record of APR Group
and expected strong growth prospects. None of the goodwill is
expected to be deductible for income tax purposes.
The fair value of the 31,841,071 ordinary shares issued as part
of the consideration paid for the APR Group of $490.9 million was
determined on the basis of the share price as at 13 June 2011,
being the date the subsidiary was acquired.
Acquisition-related costs (included in administrative expenses)
amounted to $16.5 million. These costs were primarily related to
legal and professional fees and early termination fee of the
operator's fees.
The APR Group contributed $164.6 million revenue and $6.6
million to the Group's loss for the period between the date of
acquisition and the 31 December 2011.
If the acquisition of the APR Group had been completed on the
first day of the financial period (1 November 2010), Group revenues
for the period to 31 December 2011 would have been $236.5 million
and loss would have been $55.2 million.
Fair value adjustments
The provisional fair value of identifiable assets and
liabilities were finalised during 2012 to reflect additional
information which became available concerning conditions that
existed at the date of acquisition, in accordance with IFRS 3
Business Combinations.
The changes in fair values have arisen mainly as a result of the
finalisation of the fair value of certain items of machinery and
equipment and the expected recoverability of the deferred tax
asset. A reduction in depreciation ($0.1 million) has been offset
by an increase in the amortisation of the intangible assets ($0.2
million) and the taxation expense ($1.2 million) in the 14 month
period to 31 December 2011, which have arisen following the above
fair value changes and have been reflected in the revised
comparative financial statements.
10. Dividends
14 months
Year ended ended
31 December 31 December
2012 2011
$'000 $'000
Declared and paid during
the period
Final dividend for 2011: 10.0 pence
(2010: nil) per ordinary share 12,481 -
Interim dividend for 2012: 3.3 pence
(2011: nil) per ordinary share 3,892 -
------------- -------------
Dividends paid 16,373 -
Proposed for approval by the
shareholders
at the AGM
Final dividend for 2012: 6.7 pence (2011:
10.0 pence) per ordinary share 8,514 12,481
The proposed final dividend is subject to approval by the
shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements. The Annual
General Meeting is due to be held at JP Morgan Cazenove at Holborn
Bars,138-142 Holborn, London, EC1N 2NQ on Tuesday 14 May 2013 at
11:00am.
11. Events after the balance sheet date
In March 2013, the Group announced a new 250MW contract in Libya
to provide a turnkey power solution. This represents the largest
contract in APR Energy's history, and one of the largest single
temporary power contracts ever to be signed. The initial term of
the contract will run into mid-2014.
The power solution, which showcases APR Energy's highly mobile,
dual-fuel turbines, will help cover anticipated power demand during
the critical summer high-heat season, as well as provide interim
power while the country continues to rebuild and improve its
infrastructure.
Key financial definitions:
Pro forma EBITDA
Operating profit adjusted to add back depreciation of property,
plant and equipment, equity-settled share-based payment expense,
amortisation of intangible assets and exceptional items.
Exceptional items are those items believed to be exceptional in
nature by virtue of size and/or incidence.
Pro forma EBITDA margin
Pro forma EBITDA divided by pro forma revenue.
Pro forma earnings per share
Pro forma net income divided by the weighted average number of
ordinary shares. The weighted average number of ordinary shares
used to calculate the 2011 pro forma earnings per share was
78,229,262. Pro forma net income is net income adjusted to add back
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.
Pro forma 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 31 December 2012 this comprises the
31 December 2012, 30 June 2012 and 31 December 2011 and for 31
December 2011 this comprises the 31 December 2011, 30 June 2011 and
31 December 2010). "Net operating assets" is defined as total
equity adjusted to exclude goodwill, intangible assets, borrowings,
Founder shares and 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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