KSK POWER VENTUR PLC Regulatory Story
Half Yearly Report
Released 09:18 26-Nov-2015
RNS Number : 0478H KSK Power Ventur PLC 26 November 2015
KSK Power Ventur PLC 26 November 2015
KSK Power Ventur plc
('KSK' or the 'Group' or the 'Company')
Interim Results for the half year ended 30 Sep 2015KSK Power Ventur plc (KSK.L), the power project company listed on the London Stock Exchange, with interests in multiple power plants and businesses across India, announces its interim results for the half year ended 30 Sep 2015.
Gross Revenue increased by 40% to $ 245.47 m (H1 2015: $ 175.86 m)
Gross Profit increased by 40% to $ 52.64 m (H1 2015: $ 37.66 m)
Operating Profit remains constant at $ 28.68 m (H1 2015: $ 28.62 m)
Loss before tax* moved to a loss of $ 146.49 m (H1 2015: loss of $ 69.03 m)
Investments in Property Plant and Equipment** decreased 4% to $ 3,313 m (March 2015: $ 3,457 m)
*This includes an unrealised exchange loss of $ 27.93 million due to restatement of the foreign currency component of certain bank financing facilities and trade payables.
** Underlying increase of 1 % on a constant currency basis, but headline decrease on account of translation difference from base currency of INR 66.2958 per $ at closing as against INR 62.6788 per $ at March 2015.
While underlying revenue and gross profit have both grown compared to the same period last year, operating profit has remained constant and loss before tax has increased, due to higher finance costs. During the period, the pending PPA finalisation at Sai Wardha, coupled
with continuing transmission corridor constraints of the national grid at KSK Mahanadi restricted actual generation, resulting in lower than expected PLF at Sai Wardha and KSK Mahanadi, causing mismatches in meeting overall financing costs.
However, we are pleased to report that, starting early October 2015, the two 600 MW units at KSK Mahanadi became fully operational. Compared to the gross generation of 2,134 GWh during the first half, generation rose to 1,156 GWh during the first 45 days of the second half, and improvements both in revenue and gross profit are expected in the second half of the current financial year, with full benefits on a full year basis during FY2017.
30 Sep | 30 Sep | % change | 30 Sep | 30 Sep | % change | |
2015 | 2014 | 2015* | 2014 | |||
(USD | (USD | (USD | (USD | |||
m) | m) | m) | m) | |||
Revenue | 245.47 | 175.86 | 40% | 261.95 | 175.86 | 49% |
Gross profit | 52.64 | 37.66 | 40% | 56.17 | 37.66 | 49% |
Operating profit | 28.68 | 28.62 | - | 30.60 | 28.62 | 7% |
(Loss) / profit | (146.49) | (69.03) | 112% | (156.33) | (69.03) | 126% |
before tax | ||||||
Average exchange | Rs | Rs | ||||
rate Rs/USD | 64.250 | 60.207 |
*September 2015 translated at September 2014 Rs/USD exchange
Operating assets generated 4,026 GWh in the first half, compared to 2,950 GWh for the similar period in the previous year, an increase of 36%, with the following plant load factors ('PLF'):
KSK Mahanadi (1200 MW)* 2,134 GWh
(40%) 1,444 GWh (55%)
Sai Wardha (540 MW) 986 GWh (42%) 547 GWh (23%)
VS Lignite (135 MW) 418 GWh (70%) 473 GWh (80%)
Sai Regency (58 MW) 228 GWh (91%) 217 GWh (85%)
Sai Lilagar (86 MW) 93 GWh (25%) 95 GWh (25%)
Sitapuram Power (43 MW) 159 GWh (84%) 166 GWh (88%)
Solar Project (10 MW) 8 GWh (19%) 8 GWh (18%)
Previous year calculated on 600 MW basis
With the recent commissioning of the first two 600 MW units at the 3.6 GW KSK Mahanadi power project, phased construction in line with available incremental capital expenditure is underway to commission the next two 600 MW units during the second half of FY 2017 with the remaining 1,200 MWs scheduled to be completed during the second half of FY 2018.
High coal costs continue to constrain operations at Sai Wardha in addition to PPA issues on the IPP phase of the output. Regarding coal cost reduction, following a decision made by the Competition Commission of India; Western Coal Fields approached the Competition Appellate Tribunal and ruling on the appeal is awaited shortly and therefore it is anticipated that the issue could be resolved in the second half of the year.
Favourable additional offtake agreements have been received on the captive phase with two PPAs from Lupin Limited and Hindustan Petroleum Corporation Limited totalling 33 MW. A Letter of Intent for 10 MW was also received from RCF Limited. In addition to the long term PPA with MSEDCL (a local state utility company), interim short term power sale arrangements are being explored to improve asset utilisation levels, enabling revenues and profitability to continue to experience marginal improvements in the short term, ahead of the full improvements being realised.
Notwithstanding the challenges across the sector and exchange rate volatility that distorts the Company's performance, the combination of our underlying assets, our risk mitigation strategies and certain recent positive developments should, in the long term, assist in moving the Company back towards meeting market expectations. However, in the short term, owing to capacity utilisation rates remaining below the Board's initial plans, these changes will be gradual.
Commenting on the results, T. L. Sankar, Chairman of KSK said:'The first half of the current year witnessed the Company's power plants' aggregate gross generation increasing to 4.02 TWhs, helped by the commencement of supplies from the second 600 MW unit at KSK Mahanadi. With the challenges at Sai Wardha and KSK Mahanadi being addressed, it is anticipated that gross generation could achieve 9 TWhs during 2015-16.
With regards to fuel supplies, it is understood the Ministry of Power and Ministry of Coal are currently considering a comprehensive new plan and structure wherein the coal linkages could be formulated to address needs of those power plants that have long term PPA commitments to state owned DISCOMS in place, and have made physical progress on the ground. We believe that KSK Mahanadi, with multiple DISCOMS supply PPAs in place, is well positioned to address our coal requirements.
The Company continues to be in discussions with the project stakeholders regarding the terms of existing drawn and undrawn financial facilities and additional financing plans to enable KSK Mahanadi to continue with the project execution. Discussions with all stakeholders regarding such arrangements have been positive to date and the Company's lenders are supportive of the proposed arrangements, subject to them obtaining necessary consents.
KSK's performance during the period would not have been possible without the valuable and appreciated support of its shareholders who have enabled us to pursue appropriate business opportunities in these challenging times.'
For further information, please contact:
KSK Power Ventur plc
Mr. S. Kishore, Executive Director
+91 (0)402 355 9922
Arden Partners plc
James Felix / Patrick Caulfield
+44 (0)207 614 5900
Key Business Updates-
3,600 MW KSK MAHANADI POWER PROJECT:
The construction activity at KSK Mahanadi (a large, single location, greenfield private power plant) continues, with significant achievements during the period under review and post period. To date, progress has been as follows:
the first two units of 600 MW each are in operation;
completion of the construction of the major part of the civil works and common operation infrastructure at the site;
water pipeline infrastructure to meet the water requirements of the entire power plants is operational;
rail connectivity to the power plant for coal transportation has been put in place; and
switch yard and transformer yard commissioned, with the back charging of 400kV switchyard and transmission system, enabling connectivity for evacuation of power generated into the national grid.
Following stabilised generation from the current 1,200 MW, the Company's management is focusing its efforts on expediting the construction of the next 1,200 MW, while the last 1,200 MW unit is also planned to be taken up for completion. Further, it has been proposed by the project lenders that the ancillary infrastructure of KSK Water and Raigarh Champa Rail is to be merged into KSK Mahanadi with the assets and associated debt facilities taken over by KSK Mahanadi.
- 540 MW SAI WARDHA POWER LIMITED (SWPL):
-
3,600 MW KSK MAHANADI POWER PROJECT:
The total gross power generated during the review period was 986 GWh with an average PLF of 42%. This reflects the initial positive movement achieved against the challenging local operating environment and the fuel and open access grid constraints experienced by Sai Wardha Power.
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