Half Yearly Report

RNS Number : 0539Z
OPG Power Ventures plc
08 December 2014
 



8th December 2014

 

OPG Power Ventures plc

("OPG", the "Group" or the "Company")

 

Unaudited results for the six months ended 30th September 2014

 

Earnings per share up 44%

Projects entering the commissioning phase

 

OPG Power Ventures plc, the developer and operator of group captive power generation plants in India, announces its unaudited results for the six months ended 30th September 2014.

 

Highlights

 

Financial

·   Revenues of £46.5m with underlying rupee revenues up 7%

·   EBITDA margin of 36% up from 29%

·   Pre-tax profits up 35% to £10.3m from £7.6m

·   Earnings per share up  47% to 2.2 pence from 1.5 pence

·   Gearing of 56% with projects now entering the commissioning phase

 

Operational

·   Plant Load Factor (PLF) of 88% in H1 FY15 in spite of maintenance shutdown at Chennai

·   Average realised tariff constant at Rs5.57 per kWh

·   New agreement for additional sale of 255 MW to TANGEDCO at Rs5.50 per kWh until Sep 2015

·   Imported coal booked for Chennai until March 2015 and first deliveries received for Gujarat

·   480 MW Projects - pre-commissioning trials underway; commercial ops expected to commence in Q1 CY2015

·   Gujarat - construction of interim transmission line now complete

 

Commenting on the results, Mr M C Gupta, Chairman stated:  "Another solid operating performance and we are now putting the final touches to our 750 MW program.  We can look forward to our new facilities being ramped up during the course of next year at a time when India and its economic promise are firmly back in the limelight.  Growth and foreign investment are picking up and the rupee's recent relative stability, in my view, provides further confidence as to the investment outlook.  With the government's stated commitment to supporting the growth of the power sector, we intend to play our part with sustainable growth and by being a supplier of choice to our customers.  And we intend to commence dividends following the successful and sustainable profitable operation of our 750 MW capacity."

 

Chief Executive's Review

 

Consistently performing operating assets

I am pleased to report that your Company has delivered good results during the six months ended 30th September 2014. At Rs5.57 for the six months under review, our average tariffs remain attractive and our generating assets have performed consistently well, delivering rupee revenues up by 7% compared with the corresponding period in the previous year. The improvements in gross profits at 38% (H1 2013/14: 35%) and EBITDA margins at 36% (H1 2013/14: 29%) is a function of gradually declining coal costs and the stabilisation of the Rupee against the Dollar. Overall, earnings per share was 47% higher at 2.2 pence (H1 2013/14: 1.5 pence). 

 

The following table summarises the operations of our principal units during the period under review.

 

Operations Summary

 

Parameter

Quarter ended

30 Sep 14

Quarter ended

30 Jun 14

Quarter ended

30 Sep 13

Half year ended

30 Sep 14

Half year ended

30 Sep 13

Year ended    

31 Mar 14

 

Generation (million units)







Chennai I

115

148

164

263

332

646

Chennai II

158

169

172

327

334

668

Chennai III

152

160

143

312

177

527

Total (million units)

425

477

479

902

843

1,841








PLF (%)







Chennai I

67

88

97

78

98

96

Chennai II

93

100

101

97

99

99

Chennai III

86

92

81

89

78

92

Average (%)

82

93

93

88

93

96








Tariff (Rs/kWh)

5.58

5.56

5.52

5.57

5.56

5.55

 

Following its first major planned shutdown in 42 months in July, Chennai I resumed service in August and has achieved an average load factor of over 90% since then. 

 

Improved visibility of revenues and coal costs at 414 MW Chennai plant

We were pleased to announce that the Company secured additional power sales contracts with TANGEDCO that mean 329 MW of our power from the Chennai plant is to be sold to TANGEDCO, of which 255 MW will be at a fixed Rs5.50 per kWh until September 2015, and 74 MW on a 15 year forex protected sales contract.  Since August 2014, some 55 MW of our Chennai capacity has been sold directly to industrial customers on short term arrangements at unit rates exceeding Rs5.50.  This combination gives us a good mix of attractive tariffs, revenue visibility in the shorter term and flexibility in the longer term - a key component in the adoption of our business model to date.  We have taken the opportunity presented to us during the period to firm up the visibility over our key input cost by securing imported coal supplies for the remainder of the current financial year at attractive rates.

 

750 MW - within touching distance and keeping gearing in check

Turning to our projects of 480 MW - Chennai IV 180MW and Gujarat 300 MW - our team has made substantial progress and pre-commissioning trials are underway.  Management are prepared for commercial operations to commence at both projects during the next three months.  We have also received initial coal shipments for both projects.

In the last few days Gujarat Energy Transmission Company Limited ("GETCO") have completed the construction of the interim, double circuit transmission line for power evacuation from the Gujarat plant.  This means we remain on track to start selling power and executing our phased ramp up at Gujarat during the next quarter.  In the meantime, the construction of the new multi circuit transmission line, along with supporting dedicated sub-station terminals, also continues with a currently estimated completion date of around Q2 CY2015. 

 

On this basis and having invested £60 million on capital projects in the period under review, we expect long term debt to peak at around Rs26 billion (£265 million) during the next few months.  Our current gearing level is 56% as at 30th September 2014. 

 

The big picture is improving and the pace of change is accelerating

Whilst we have focused upon delivery, the Indian macro economic environment has been improving.  The Indian rupee has strengthened from its lows and has been relatively stable of late with inflation coming down and the Central Bank taking measures to improve the current account deficit and to maintain interest rates. During the current year we have also witnessed initiatives designed to accelerate reforms in the permitting of infrastructure projects and to raise the foreign investment appeal of the country. 

 

The power sector is at the forefront of new policy.  The Government has set out its agenda to providing reliable power as a foundation for social, industrial and economic growth.  Improvements to coal availability and to transportation in addition to support for energy technologies should help our industry too.  We even expect some mothballed projects to be revived pursuant to these changes.

 

These developments help set a positive course for our industry and I remain excited about the prospect of us having 750 MW in operation shortly and about the potential for further growth that lies ahead.  In selecting our opportunities, we intend to remain focused on being a supplier of choice for our customers and on creating sustainable returns for our shareholders. 

 

A strong performance - a strong team

The Board and I extend our gratitude to our team for their individual and combined efforts in doing everything possible to manage our operations efficiently and to keep our projects on track and thereby enabling me to deliver this positive review of the period.  As we turn the corner to becoming a 750 MW generator, our team's capabilities give me the confidence to look forward to reporting further progress over the coming weeks and months. 

 

Arvind Gupta

Chief Executive Officer

 

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

 

OPG Power Ventures PLC

+91 (0) 44 429 11 211

Arvind Gupta

 

V Narayan Swami

Ajay Paliwal

 

 

 

Cenkos Securities (Nominated Adviser & Broker)

 

Stephen Keys / Mark Connelly / Callum Davidson

+44 (0) 20 7397 8900

 

 

Tavistock Communications

 

Simon Hudson / James Collins

+44 (0) 20 7920 3150

 

About OPG

OPG is operating and developing power plants in India under the group captive model with 270 MW in operation and a further 480 MW currently in commissioning.  In the six months ended 30 September 2014, the Company generated revenues of £46.5 million, EBITDA of £16.6 million and earnings per share of 2.2 pence.

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 30 September 2014

(All amounts in £, unless otherwise stated)

 

Particulars

Note

30-Sep-2014

30-Sep-2013

31-Mar-2014





Revenue

46,530,712

47,682,629

98,805,940

Cost of revenue

(28,681,798)

(31,136,071)

(62,155,041)

Gross profit

17,848,914

16,546,558

36,650,899





Other income

61,900

306,291

260,738

Distribution cost

(382,481)

(249,169)

(1,202,301)

General and administrative expenses

(2,490,806)

(4,276,317)

(7,638,875)

Operating profit

15,037,527

12,327,363

28,070,461

Financial costs

(4,781,123)

(4,637,272)

(9,791,910)

Financial income

441,332

633,970

985,156

Income from continuing operations (before tax, non-operational and/ or exceptional items)


10,697,736

8,324,061

19,263,707

Employee Share Option expenses


(242,888)

(487,111)

(974,222)

Pre-operative expenses (relating to project under construction)

(172,828)

(192,981)

(340,224)

Profit/(loss) before tax

10,282,020

7,643,969 

17,949,261

Tax expense

(2,412,680)

(2,108,975)

(3,385,087)

Profit for the year


7,869,340

5,534,994

14,564,174

Attributable to:





-       Owners of the parent

7,860,470

5,469,254

14,545,956

-       Non-controlling interest

8,870

65,741

18,218


7,869,340

5,534,994

14,565,174

Earnings per share




Basic earnings per share (in Pence)

2.236

1.556

4.138

Diluted earnings per share (in Pence)

2.185

1.556

4.117





Other Comprehensive Income




Items that will be reclassified subsequently to profit or loss




Available-for- Sale financial Assets




-       reclassification to profit or loss

(32,633)

85,013

(22,394)

-       current year gains / (losses)

(5,133)

(112,538)

32,633

Currency translation differences on translation of foreign operations


(1,829,802)

(24,671,747)

(21,677,794)

Items that will not be reclassified subsequently to

profit or loss





Currency translation differences on translation of foreign operations


(1,577)

(160,467)

(20,056)

Other comprehensive income/(loss)

(1,869,145)

(24,859,739)

(21,687,611)





Total comprehensive income/(loss) for the year


6,000,195

(19,324,745)

(7,123,437)

Attributable to:





-       Owners of the parent

5,992,905

(19,229,971)

(7,121,568)

-       Non-controlling interest

7,290

(94,774)

(1,869)



6,000,195

(19,324,745)

(7,123,437)






 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2014

(All amounts in £, unless otherwise stated)

 

Particulars

Note

30-Sep-2014

30-Sep-2013

31-Mar-2014

Assets





Non-Current





Intangible assets

9

403,295

-

474,660

Property, plant and equipment

10

335,817,064

190,630,683

279,621,282

Investments and other assets


2,330,149

970,256

729,261

Restricted cash


360,851

331,490

190,860

Total Non-Current assets


338,911,359

191,932,429

281,016,163






Current





Trade and other receivables

11

19,888,006

17,739,452

21,008,401

Inventories


7,715,681

4,622,691

12,899,204

Cash and cash equivalents

12

4,555,205

16,434,242

6,636,577

Restricted cash


8,656,762

3,226,191

7,456,090

Current tax assets


138,495

92,452

155,061

Investments and other assets


63,401,603

35,772,764

64,135,542

Total Current assets


104,355,752

77,887,792

112,290,875

Total Assets


443,267,111

269,820,221

393,307,038






Equity and Liabilities





Equity:





Equity attributable to owners of the parent:





Share capital


51,671

51,671

51,671

Share premium


124,316,524

124,316,524

124,316,524

Other components of Equity


(23,446,572)

(25,338,920)

(21,821,894)

Retained earnings


41,716,719

24,780,392

33,856,249

Total


 142,638,342

123,809,667

136,402,550

Non-controlling interest


233,007

91,238

225,717

Total Equity


   142,871,349

123,900,905

136,628,267






Liabilities





Non-current





Borrowings

13

215,590,088

119,424,527

186,578,491

Trade and other payables


26,850,937

3,376,321

24,997,526

Deferred tax liability


2,419,532

1,772,559

1,509,853

Total Non-Current liabilities


244,860,557

124,573,407

213,085,870






Current





Borrowings

13

8,593,775

1,768,258

8,191,455

Trade and other payables


46,857,093

19,245,806

35,174,303

Other liabilities


84,337

93,287

227,143

Current tax liabilities


 -

238,558

-

Total Current liabilities


55,535,205

21,345,909

43,592,901

Total Liabilities


300,395,762

145,919,316

256,678,771

Total Equity and Liabilities


443,267,111

269,820,221

393,307,038

 

The financial statements were authorised for issue by the Board of Directors on 05 December 2014 and were signed on behalf by

 

Arvind Gupta

V. Narayan Swami

Chief Executive Officer

Chief Financial Officer


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(All amounts in £, unless otherwise stated)

 

GROUP

Issued Capital (No. of Shares)

Share capital

Share Premium

Other Reserves

Foreign Currency Translation reserve

Retained earnings

Total of Parent equity

Non-Controlling Interest

Total Equity

Balance at 1 April, 2014

351,504,795

51,671

124,316,524

6,962,395

(28,784,289)

33,856,249

136,402,549

225,717

136,628,266

Transfers during the year










Employee Share based payment options




242,888



242,888


242,888

Transactions with owners

351,504,795

51,671

124,316,524

7,205,283

(28,784,289)

33,856,249

136,645,437

225,717

136,871,154











Profit for the year from Operating Activities






7,860,470

7,860,470

8,870

7,869,340

Currency translation differences





(1,829,802)


(1,829,802)

(1,577)

(1,831,379)

Gains on sale / re-measurement of available-for-sale financial assets




(37,763)



(37,763)

(3)

(37,766)

Total comprehensive income for the year

-

-

-

(37,763)

(1,829,802)

7,860,470

5,992,905

7,290

6,000,195











Balance at 30 September, 2014

351,504,795

51,671

124,316,524

7,167,520

(30,614,091)

41,716,719

142,638,342

233,007

142,871,349











Balance at 1 April, 2013

351,504,795

51,671

124,316,524

5,977,855

(7,104,661)

19,311,138

142,552,526

186,012

142,738,538

Transfers during the year




 46

(1,834)

(845)

(2,633)

41,574

38,941

Employee Share based payment options




974,222



974,222


974,222

Transactions with owners

351,504,795

51,671

124,316,524

6,952,123

(7,106,495)

19,310,293

143,524,115

227,586

143,751,701











Profit for the year from Operating Activities






14,545,956

14,545,956

18.218

14,564,174

Currency translation differences





(21,677,794)


(21,677,794)

(20,056)

(21,697,850)

Gains on sale / re-measurement of available-for-sale financial assets




10,272



10,272

(31)

10,239

Total comprehensive income for the year

-

-

-

10,272

(21,677,794)

14,545,956

(7,121,565)

(1,869)

(7,123,435)











Balance at 31 March, 2014

351,504,795

51,671

124,316,524

6,962,395

(28,784,289)

33,856,249

136,402,550

225,717

136,628,266











Balance at 1 April, 2013

351,504,795

51,671

124,316,524

5977,855

(7,104,661)

19,311,138

142,552,527

186,012

142,738,539

Employee Share based payment options




487,111



487,111


487,111

Transactions with owners

351,504,795

51,671

124,316,524

6,464,966

(7,104,661)

19,311,138

143,039,638

186,012

143,225,650











Profit for the year from Operating Activities






5,469,254

5.469.254

65,741

5,534,995

Currency translation differences





(24,671,747)


(24,671,747)

(160,467)

(24,832,214)

Gains on sale / re-measurement of available-for-sale financial assets




(27,477)



(27,477)

(48)

(27,525)

Total comprehensive income for the year

-

-

-

(27,477)

(24,671,747)

5,469,254

(19,229,970)

(94,774)

(19,324,744)

Balance at 30 September 2013

351,504,795

51,671

124,316,524

6,437,489

(31,776,408)

24,780,392

123,809,668

91,238

123,900,906

 


CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ended 30 September 2014

(All amount in £, unless otherwise stated)

 

Particulars

30-Sep-2014

30-Sep-2013

31-Mar-2014

Cash flows from operating activities




Profit for the year before Tax

10,282,020

7,643,969

17,949,261

Unrealised Foreign Exchange Loss

(273,002)

-

(384,906)

Provision for doubtful debts

-

-

(28,421)

Financial Expenses

4,781,123

4,637,272

9,791,910

Financial Income

(441,332)

(633,970)

(985,156)

Share based compensation costs

242,888

487,111

974,222

Depreciation

1,589,026

1,394,210

2,898,985


16,180,723 

13,528,591

30,215,895

Movements in Working Capital




Increase in trade and other receivables

823,513

11,296,309

8,092,104

Increase in inventories

5,062,803

432,543

(8,086,436)

Decrease in other current assets

(8,709,258)

(1,659,376)

(7,430,911)

Increase  in trade and other payables

11,519,817

(34,218,330)

9,226,055

Increase  in Other liabilities

(99,680)

(9,608,610)

(4,048,037)

Cash generated from operations

24,777,918

(19,598,873)

27,968,670

Income Taxes paid

(1,434,847)

(841,964)

(2,820,669)

Net Cash Generated by Operating activities

23,343,071

(20,440,837)

25,148,001





Cash flow from investing activities




Acquisition of property, plant and equipment

(60,057,795)

(30,318,183)

(128,641,831)

Finance Income

390,562

605,804

945,830

Dividend income

46,300

20,253

30,980

Movement in restricted cash

(1,480,376)

672,798

(3,536,878)

Sale / (Purchase) of Investments, net

7,310,001

16,478,628

(8,077,737)

Net cash used in investing activities

(53,791,308)

(12,540,700)

(139,279,636)





Cash flows from financing activities




Proceeds from borrowings

32,161,141

40,457,872

114,548,210

Repayment of borrowings

-

(4,449,598)

(6,349,335)

Interest paid

(4,781,123)

(4,637,272)

(9,517,729)

Net cash provided by financing activities

27,380,018

31,371,002

98,681,146





Net decrease in cash and cash equivalents

(3,068,219)

(1,610,537)

(15,450,489)





Cash and cash equivalents at the beginning of the year

6,636,577

22,906,776

22,906,776

Effect of Exchange rate changes on the balance of cash held in foreign currencies

986,847

(4,861,999)

(819,710)

Cash and cash equivalents at the end of the year

4,555,205

16,434,242

6,636,577





 

 

NOTES TO THE CONSOLIDATED AND FINANCIAL STATEMENTS

For the period ended 30September 2014

(All amounts in , unless otherwise stated)

 

1.    Corporate information

 

1.1.     Nature of operations

OPG Power Ventures plc ('the Company' or 'OPGPV'), and its subsidiaries (collectively referred to as 'the Group') are primarily engaged in the development, owning, operation and maintenance of private sector power projects In India. The electricity generated from the Group's plants is sold principally to public sector undertakings and heavy industrial companies in India or in the short term market.  The business objective of the group is to focus on the power generation business within India and thereby provide reliable, cost effective power to the industrial consumers and other users under the 'open access' provisions mandated by the Government of India.

 

1.2.     Statement of compliance

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations as adopted by the European Union (EU) and the provisions of the Isle of Man, Companies Act 2006 applicable to companies reporting under IFRS.

 

1.3.     General information

OPG Power Ventures plc, a limited liability corporation, is the Group's ultimate parent Company and is incorporated and domiciled in the Isle of Man.  The address of the Company's registered Office, which is also the principal place of business, is  IOMA House, Hope Street, Douglas, Isle of Man 1M1 1JA.  The Company's equity shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange.

 

The Consolidated Financial statement for the period ended 30 September 2014 were approved and authorised for issue by the Board of Directors on 05 December 2014

 

2.    New and revised standards that are effective for annual periods beginning on or after 1 January 2013

 

IFRS 10 'Consolidated Financial Statements' (IFRS 10)

IFRS 10 supersedes IAS 27 'Consolidated and Separate Financial Statements' (IAS 27) and SIC 12 'Consolidation-Special Purpose Entities'. IFRS 10 revises the definition of control and provides extensive new guidance on its application. These new requirements have the potential to affect which of the Group's investees are considered to be subsidiaries and therefore to change the scope of consolidation. The requirements on consolidation procedures, accounting for changes in non-controlling interests and accounting for loss of control of a subsidiary are unchanged.

 

Management has reviewed its control assessments in accordance with IFRS 10 and has concluded that there is no effect on the classification (as subsidiaries or otherwise) of any of the Group's investees held during the period or comparative periods covered by these financial statements.

 

IFRS 11 'Joint Arrangements' (IFRS 11)

IFRS 11 supersedes IAS 31 'Interests in Joint Ventures' (IAS 31) and SIC 13 'Jointly Controlled Entities- Non-Monetary-Contributions by Venturers'. IFRS 11 revises the categories of joint arrangement, and the criteria for classification into the categories, with the objective of more closely aligning the accounting with the investor's rights and obligations relating to the arrangement. In addition, IAS 31's option of using proportionate consolidation for arrangements classified as jointly controlled entities under that Standard has been eliminated. IFRS 11 now requires the use of the equity method for arrangements classified as joint ventures.

 

Management has reviewed its control assessments in accordance with IFRS 11 and has concluded that there is no effect on the classification of any of the Group's investees held during the period or comparative periods covered by these financial statements.

 

IFRS 12 'Disclosure of Interests in Other Entities' (IFRS 12)

IFRS 12 integrates and makes consistent the disclosure requirements for various types of investments, including unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities.

 

Management has reviewed the impact of IFRS 12 and has concluded that there is no effect on any of the Group's investees held during the period or comparative periods covered by these financial statements.

 

IFRS 13 'Fair Value Measurement' (IFRS 13)

IFRS 13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It does not affect which items are required to be fair-valued. The scope of IFRS 13 is broad and it applies for both financial and non-financial items for which other IFRSs require or permit fair value measurements or disclosures about fair value measurements except in certain circumstances. IFRS 13 applies prospectively for annual periods beginning on or after 1 January 2013. Its disclosure requirements need not be applied to comparative information in the first year of application. The Group has however included as comparative information the IFRS 13 disclosures that were required previously by IFRS 7 'Financial Instruments: Disclosures'. 

 

2.1    Standards, amendments and Interpretations to existing standards that are not effective and have not been early adopted by the group. 

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group.

 

Management anticipates that all of the relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group's financial statements is provided below. Certain other new standards nd interpretations have been issued but are not expected to have a material impact on the Group's financial statements.

 

Standards and Interpretations adopted by the European Union as at 30 September 2014

 

Standard or Interpretation

Effective for in reporting periods starting on or after

IAS 28 Investments in Associates and Joint Ventures

1 January 2014

Offsetting Financial Assets and Financial Liabilities

1 January 2014

IFRS 9 Financial Instruments

1 January 2015

 

The management is yet to assess the impact of IFRS 9 on the group's consolidated financial statements. However they do not expect to implement IFRS 9 until all of its chapters have been published and they can comprehensively assess the impact of all changes.

 

The management does not expect the application of the other standards to have any material impact on its financial statements when those Standards become effective. The Group does not intend to apply any of these pronouncements early.

 

3.  Summary of significant accounting policies

3.1      Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial assets and liabilities at fair value through profit or loss and available-for-sale financial assets measured at fair value.

 

The financial statements have been prepared on going concern basis which assumes the Group will have sufficient funds to continue its operational existence for the foreseeable future covering atleast 12 months. As the Group has forecast it will be able to meet its debt facility interest and repayment obligations, and that sufficient funds will be available to continue with the projects development the assumption that these financial statements are prepared on a going concern basis is appropriate.

 

The consolidated financial statements are presented in accordance with IAS 1 Presentation of Financial Statements (Revised 2007) and have been presented in Great Britain Pound (''), which is the functional and presentation currency of the Company.

 

3.2.     Basis of consolidation

The consolidated financial statements incorporate the financial information of OPG Power Ventures Plc and its subsidiaries for the year ended 30 September 2014

 

A subsidiary is defined as an entity controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.Subsidiaries are fully consolidated from the date of acquisition, being the date on which control is acquired by the Group, and continue to be consolidated until the date that such control ceases. All subsidiaries have a reporting date of 30th September and use consistent accounting policies adopted by the group.

 

All intra-group balances, income and expenses and any resulting unrealized gains arising from intra-group transactions are eliminated in full on consolidation.

 

Non-Controlling interest represents the portion of profit or loss and net assets that is not held by the Group and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from parent shareholders' equity. Acquisitions of additional stake or dilution of stake from/ to minority interests/ other venturer in the Group where there is no loss of control are accounted for as an equity transaction, whereby, the difference between the consideration paid or received and the book value of the share of the net assets is recognised in 'other reserve' within statement of changes in equity.

 

3.3.     List of subsidiaries

Details of the Group's subsidiaries which are consolidated into the Group's consolidated financial statement are as follows:

 

Subsidiaries

Immediate

Parent 2014

Country of incorporation

% Voting

Right

2014

% Economic Interest

2014

Caromia Holdings limited ('CHL')

 


OPGPV

Cyprus

100

100

Gita Power and Infrastructure Private Limited, ('GPIPL')


CHL

India

100

100







OPG Power Generation Private Limited ('OPGPG')

 


GPIPL

India

76.03

99

OPGS Power Gujarat Private Limited ('OPGG')

 


GPIPL

India

74

99

OPGS Industrial Infrastructure Developers Private Ltd ('OPIID')


OPGG

India

100

100







OPGS Infrastructure Private Limited ('OPGIPL')


OPGG

India

100

100

 

3.4. Foreign currency translation

The functional currency of the Company is the Great Britain Pound Sterling (£). The Cyprus entity is an extension of the parent and pass through investment entity. Accordingly the functional currency of the subsidiary in Cyprus is the Great Britain Pound Sterling. The functional currency of the Company's subsidiaries operating in India, determined based on evaluation of the individual and collective economic factors is Indian Rupees (''). The presentation currency of the Group is the Great Britain Pound (£) as submitted to the AIM counter of the London Stock Exchange where the shares of the Company are listed.

 

At the reporting date the assets and liabilities of the Group are translated into the presentation currency which is Great Britain Pound Sterling (£) at the rate of exchange ruling at the Statement of financial position date and the statement of comprehensive income is translated at the average exchange rate for the year. Exchange differences are charged/ credited to other comprehensive income and recognized in the currency translation reserve in equity.

 

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Statement of financial position date are translated into functional currency at the foreign exchange rate ruling at that date. Aggregate gains and losses resulting from foreign currencies are included in finance income or costs within the profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to functional currency at foreign exchange rates ruling at the dates the fair value was determined.

 

Particulars

30-Sep-2014

30-Sep-2013

31-Mar-2014

Closing Rate

100.70

101.17

99.42

Average Rate

99.84

90.89

95.89

 

3.5. Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the Group, and revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable in accordance with the relevant agreements, net of discounts, rebates and other applicable taxes and duties.

 

Sale of electricity

Revenue comprises revenue from sale of electricity. Revenue from the sale of electricity is recognised when earned on the basis of contractual arrangement with the customers and reflects the value of units supplied including an estimated value of units supplied to the customers between the date of their last meter reading and the reporting date.

 

Interest and dividend

Revenue from interest is recognised as interest accrues (using the effective interest rate method). Revenue from dividends is recognised when the right to receive the payment is established.

 

3.6.      Taxes

Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

 

Current income tax assets and/or liabilities comprise those obligations to, or claims from, taxation authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements.

 

3.7.      Financial assets

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss which are measured initially at fair value.

Financial assets are de-recognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is de-recognised when it is extinguished, discharged, cancelled or expires.

 

Financial assets are classified into the following categories upon initial recognition:

·     loans and receivables

·     available-for-sale financial assets.

 

The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income.

 

Loans and receivables:

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

 

Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group.

 

Available-for-sale financial assets:

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets. The Group's available-for-sale financial assets include Mutual funds and equity instruments. Available-for-sale financial assets are measured at fair value. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income.

 

Reversals of impairment losses are recognized in other comprehensive income, except for financial assets that are debt securities which are recognised in profit or loss only if the reversal can be objectively related to an event occurring after the impairment loss was recognised.

 

4.    Significant accounting judgements, estimates and assumptions

The preparation of financial statements in conformity with IFRS requires management to make certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

 

The principal accounting policies adopted by the Group in the consolidated financial statements are as set out above. The application of a number of these policies requires the Group to use a variety of estimation techniques and apply judgment to best reflect the substance of underlying transactions.

 

The Group has determined that a number of its accounting policies can be considered significant, in terms of the management judgment that has been required to determine the various assumptions underpinning their application in the consolidated financial statements presented which, under different conditions, could lead to material differences in these statements. The actual results may differ from the judgments, estimates and assumptions made by the management and will seldom equal the estimated results.

 

The following are significant management judgments in applying the accounting policies of the Group that have the most significant effect on the financial statements.

 

·      Deferred tax assets:

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group's latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in India in which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances.

·      Application of lease accounting

Significant  judgment is required to apply lease accounting rules under IFRIC 4 Determining whether an arrangement contains a Lease and IAS 17 Leases. In assessing the applicability to arrangements entered into by the Group, management has exercised judgment to evaluate customer's right to use the underlying assets, substance of the transaction including legally enforced arrangements and other significant terms and conditions of the arrangement to conclude whether the arrangements meet the criteria under IFRIC 4.

 

Estimates and uncertainties:

The key assumptions concerning the future and other key sources of estimation uncertainty at the Statement of financial position date, that have a significant risk of causing a material adjustments to the carrying amounts of assets and liabilities within the next financial year are discussed below:

§  Recoverability of deferred tax assets: The recognition of deferred tax assets requires assessment of future taxable profit.

§  Estimation of fair value of acquired financial assets and financial liabilities: While preparing the financial statements the Group makes estimates and assumptions that affect the reported amount of financial assets and financial liabilities.

o Available for sale financial assets:Management apply valuation techniques to determine the fair value of available for sale financial assets where active market quotes are not available. This requires management to develop estimates and assumptions based on market inputs, using observable data that market participants would use in pricing the asset. Where such data is not observable, management uses its best estimate. Estimated fair values of the asset  may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date

o Other financial liabilities: Borrowings held by the Group are measured at amortised cost except where designated at fair value through profit or loss. Further, liabilities associated with financial guarantee contracts in the Company financial statements are initially measured at fair value and re-measured at each Statement of financial position date and

o Impairment tests: In assessing impairment, management estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and use an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate;

 

§  Useful life of depreciable assets: Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets.

 

5.    Segment information

The Group has adopted the "management approach" in identifying the operating segments as outlined in IFRS 8 - Operating segments. Segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker evaluates the Group's performance and allocates resources based on an analysis of various performance indicators at operating segment level. Accordingly, there is only a single operating segment "generation and sale of electricity. The accounting policies used by the Group for segment reporting are the same as those used for consolidated financial statements. There are no geographical segments as all revenues arise from India.

 

6.    Other income

Other income comprises of:

 


30-Sep-2014

30-Sep-2013

31-Mar-2014

Sale of fly ash and coal

61,900

-

140,429

Others

-

306,291

120,309

Total

61,900

306,291

260,738

 

7.    Finance Cost

  Finance cost comprises of:

 


30-Sep-2014

30-Sep-2013

31-Mar-2014

Interest expense on loans & borrowings

4,430,007

4,250,602

8,155,215

Impairment of Available-for-sale financial assets

-

-

274,181

Other finance costs

351,116

386,670

1,362,514

Total

4,781,123

4,637,272

9,791,910

 

8.    Finance income

  Finance income comprises of:

 


30-Sep-2014

30-Sep-2013

31-Mar-2014

Interest income




    - Bank deposits

94,444

418,073

652,088

    -Loans and receivables

-

5,513

5,513

Dividend income

46,300

20,253

30,980

Profit on disposal of financial instruments

300,588

190,132

296,575

Total

441,332

633,970

985,156

 

9.      Intangible Assets

 

A. Gross Block



Particulars

Intangible Assets

 Total

As at 1 April 2013



 - Additions

548,893

548,893

 - Transfers on capitalisation



 - Exchange adjustments

(19,478)

As at 31 March 2014

529,415

As at 1 April 2014

529,415

529,415

 - Additions



 - Transfers on capitalization



 - Exchange adjustments

(6,725)

As at 30 September 2014

522,690

 

B. Accumulated Depreciation



Particulars

Intangible Assets

Total

As at 1 April 2013

-


 - Depreciation charged during the year

56,769

56,769

 - Exchange adjustments

(2,014)

As at 31 March 2014

54,755

As at 1 April 2014

54,755

54,755

 - Depreciation charged during the year

65,897

65,897

 - Exchange adjustments

(1,257)

As at 30 September 2014

119,395

C.Net Block



As at 31st March 2014

474,660

474,660

As at 30 September2014

403,295

403,295

 

10.    Property, plant and equipment

The property, plant and equipment comprises of:

 

A. Gross Block







Particulars

 Land and Buildings

 Power Stations

Other plant and equipment

Vehicles

 Assets under construction

 Total

As at 1 April 2013

10,001,465

80,357,096

456,895

642,786

94,314,130

185,772,372

 - Additions

3,411,870

-

198,690

99,527

131,905,058

135,615,145

 - Transfers on capitalisation

564,112

43,988,116

-

-

(44,552,228)

-

 - Exchange adjustments

(1,836,696)

(15,234,307)

(67,520)

(81,614)

(19,093,953)

(36,314,090)

As at 31 March 2014

12,140,751

109,110,905

588,065

660,699

162,573,007

285,073,427

As at 1 April 2014

12,140,751

109,110,905

588,065

660,699

162,573,007

285,073,427

 - Additions


183,283

80,047

26,024

61,453,526

61,742,880

 - Transfers on capitalization







 - Exchange adjustments

(793,268)

(1,327,853)

(76,209)

(214,756)

(1,693,874)

(4,105,960)

As at 30 September 2014

11,347,483

107,966,335

591.902

471,966

222,332,660

342,710,346

 

B. Accumulated Depreciation







Particulars

Land and Buildings

Power Stations

Other plant and equipment

Vehicles

Assets under construction

Total

As at 1 April 2013

36,903

2,896,537

144,495

185,641

-

3,263,576

 - Depreciation charged during the year

26,336

2,635,100

114,198

66,582

-

2,898,985

 - Exchange adjustments

(7,289)

(582,616)

(30,151)

(33,592)

-

(655,662)

As at 31 March 2014

55,950

4,949,021

228,542

218,631

-

5,506,900

As at 1 April 2014

55,950

4,949,021

228,542

218,631

-

5,506,900

 - Depreciation charged during the year

27,593

1,360,754

94,492

39,149

-

1,521,987

 - Exchange adjustments

332

(76,425)

(7,207)

2,452


(80,849)

As at 30 September 2014

83,874

6,233,349

315,826

260,232

-

6,893,282

 

C.Net Block







As at 31st March 2014

12,084,801

104,161,884

359,523

442,068

162,573,007

279,621,283

As at 30 September2014

11,263,609

101,732,986

276,076

211,734

222,332,660

335,817,064

 

11. Trade and other receivables

 


30-Sep-2014

30-Sep-2013

31-Mar-2014


(GBP Mn)

(GBP Mn)

(GBP Mn)

Current




Receivables from sale of power (OPGPG)

19.88

16.31

20.65

Other receivables

0.01

1.42

0.36

Total

19.89

17.73

21.01

 

Ageing of receivables from sale of power (In GBP Mn)

 


30-Sep-2014

30-Sep-2013

31-Mar-2014





Due & Outstanding

9.13

7.42

9.39

Accrued, not due

10.75

8.89

11.26

Total

19.88

16.31

20.65





Since collected

11.23

2.18

13.13

 

12.    Cash and cash equivalents

Cash and short term deposits comprise of the following:

 


30-Sep-2014

30-Sep-2013

31-Mar-2014

 Cash at banks and on hand

4,031,514

12,459,721

6,283,204

 Short-term deposits

523,691

3,974,521

353,373

 Total

4,555,205

16,434,242

6,636,577

Short-term deposits are placed for varying periods, depending on the immediate cash requirements of the Group. They are recoverable on demand.

 

13.  Borrowings

The borrowings comprises of the following:

 


Final Maturity

30-Sep-2014

30-Sep-2013

31-Mar-2014

Term loans at amortised cost

March - 25

224,068,704

121,076,988

192,426,677

Other borrowings

March - 15

115,160

115,797

2,343,269

Total


224,183,863

121,192,785

194,769,946

 

Approved by the Board of Directors on 05 December 2014 and signed on behalf by:

 

Arvind Gupta

V. Narayan Swami

Chief Executive Officer

Chief Financial Officer

 

-ends-


This information is provided by RNS
The company news service from the London Stock Exchange
 
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