26th Aug 2015 07:55
LONDON (Alliance News) - APR Energy PLC Wednesday said it swung to a pretax loss in the first half of 2015, following the company's decision to pull out of Libya and Yemen and as it continues talks to amend its finances to ensure it can meet its financial covenants.
The company said its financial performance was "muted" in the period and said it does not expect its performance to improve in the second half of the year.
The electricity generator said it swung to a USD58.4 million pretax loss in the first half of 2015 from a USD54.3 million profit a year earlier after revenue halved to USD122.2 million from USD254.2 million.
APR's cost of sales totalled USD151.3 million in the period, outstripping revenue to lead to a gross loss of USD29.1 million compared to a USD76.1 million gross profit a year before. A USD24.2 million impairment against its Yemen assets also contributed to the loss.
The fall in revenue was the result of the company's decision to close down its operations in Libya and in Yemen due to "geopolitical challenges".
"It was a particularly challenging first half of 2015 as the company readjusted to the early termination of its project in Libya and controlled shutdown in Yemen, as well as the customer latency in the broader marketplace, all of which has impacted revenues and profits," said Chief Executive Laurence Anderson.
The company has now removed the "majority of assets" from Libya, following a period where the company could not access the project, but said the "demobilisation [is] more expensive than anticipated".
"The remaining assets [in Libya] are insured. We expect the demobilisation will be completed in the third quarter," APR said.
Following those problems, APR swiftly moved to acquire new projects, most notably a 12 month contract in Egypt to build three gas turbines as part of a "major industrial facility". That project will start in 2016.
Another new project secured was a two-year contract for 35 megawatts of new capacity for Botswana Power Co, adjacent to an existing facility previously installed by APR Energy and later sold to Botswana Power. That project will be commissioned in the third quarter of 2015 and will include equipment that has been removed from Libya, APR said.
In addition to those new projects, APR secured a number of contractual renewals in Uruguay, Indonesia, Myanmar and Senegal. Total contract renewals in the period totalled 767 megawatts, equating to an average of 88% of its contracts being renewed, it said.
"With four months remaining in 2015, and considering the typical interval between contract signature and revenue generation, we anticipate limited additional benefit to our year-end financial performance," said APR.
"Nonetheless, we remain confident in our pipeline and believe a number of these opportunities will become revenue-generating projects - albeit later than anticipated," it added.
Back in June, the company said it expected to meet its financial covenants when they are next tested at the end of the second quarter, but warned there was a "realistic possibility" that the delays in revenue may mean it is unable to meet these covenants on future quarter-end testing dates.
On Wednesday, APR said it expects to breach its covenants on the September 30 testing date and the subsequent testing dates thereafter unless it can secure or amend its loan facilities.
"Due to this risk, the group is currently engaging with its lenders regarding a modification of its financial covenants and loan facilities. To achieve this, the group has proactively engaged the services of legal counsel and financial advisors with relevant experience to assist with a prospective renegotiation of the group's current loan facilities or refinancing of the facilities," said APR.
APR shares were down 6.0% to 78.00 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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