REG - OPG Power Ventures - Half-year Report
08/12/2021 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211208:nRSH9038Ua&default-theme=true
RNS Number : 9038U OPG Power Ventures plc 08 December 2021
8 December 2021
OPG Power Ventures plc
("OPG", the "Group" or the "Company")
Unaudited results for the six months ended 30 September 2021
OPG (AIM: OPG), the developer and operator of power generation plants in
India, announces its unaudited results for the six months ended 30 September
2021 ("H1 FY22").
Highlights
· Revenue for the period increased by 54% to £55.6m (H1 FY21: £36.1m)
· H1 FY22 total generation, including deemed generation, of 1.3 billion
units (H1 FY21: 0.8 billion units)
· Average tariff for group captive users in H1 FY22 was Rs5.47 per kWh
(H1 FY21: Rs5.60 kWh)
· Diluted EPS (in pence) at 1.05p (H1 FY21: 2.92p)
· Net debt, including Non-Convertible Debentures ("NCDs"), reduced by 69
per cent to £5.0m in H1 FY22 (31 March 2021: £16.2m; 30 September 2020:
£34.9m)
Summary financial information (including historic financial data):
HY 30 Sep 21 HY 30 Sep 20 FY 31 Mar 21
£ million £ million £ million
Revenue 55.6 36.1 93.8
Adjusted EBITDA* 11.6 19.4 33.7
Profit Before Tax 7.4 12.8 21.6
Profit After Tax 4.2 11.8 14.1
Diluted Earnings Per Share ("EPS") (pence) 1.05 2.92 3.50
* Adjusted EBITDA is calculated as operating profit before depreciation,
amortisation and share based compensation.
Post period end developments and highlights
· Indonesian coal prices have steadily increased and reached its peak at
the end of October 2021 and since then decreased by c.50% by the beginning of
December 2021;
· Due to high coal prices and freight costs generation decreased and
Plant Load Factor ("PLF"), incl. deemed, in October 2021 and November 2021 was
19.43% and 21.8% respectively (H1 FY20: 46%);
· Subsequent to 30 September 2021, OPG sold a cargo of coal and realised
a profit of £3.8 million (Rs.0.4 billion);
Arvind Gupta, Chairman, commented:
"OPG's power generation recovered during H1 FY21. However, the prices of
international coal and freight significantly increased during the second
quarter of FY22 because of an unprecedented increase in demand for coal due to
Chinese related geopolitical issues, revival of economies and heavy rains in
certain coal-mining areas. Post period, our power generation was reduced due
to high coal prices and freight costs. This is expected to affect our
operational volumes, revenue and operating profit significantly for the 12
months ending 31 March 2022. However, coal prices moderated in November 2021
which provides us with confidence that the coal markets are normalising."
Presentation
The Company will be presenting via the Investor Meet Company at 11 am on 13
December 2021. The presentation will give investors and analysts the
opportunity to listen to management discuss the Company's interim results for
the six months ended 30 September 2021.
The presentation will be hosted by Dmitri Tsvetkov (Chief Financial Officer)
and there will be an opportunity for Q&A at the end of the meeting.
Questions can be submitted pre-event via the Investor Meet Company dashboard
up until 9am the day before the meeting or at any time during the live
presentation.
To sign up to the Company's presentation for free via Investor Meet Company
please click the following link:
https://www.investormeetcompany.com/opg-power-ventures-plc/register-investor
(https://www.investormeetcompany.com/opg-power-ventures-plc/register-investor)
Investors who already follow the Company on the Investor Meet Company platform
will automatically be invited.
For further information, please visit www.opgpower.com or contact:
OPG Power Ventures PLC +44 (0) 782 734 1323
Dmitri Tsvetkov
Cenkos Securities (Nominated Adviser & Broker) +44 (0) 20 7397 8900
Stephen Keys / Katy Birkin
Tavistock (Financial PR) +44 (0) 20 7920 3150
Simon Hudson / Nick Elwes
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the EU
Market Abuse Regulation (2014/596) which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended and supplemented from time to
time.
Chairman's Statement
Introduction
Events of H1 FY22 have been dominated by the abnormal increase of coal prices
and freight tariffs and the global impact of COVID-19. The Board remains
convinced that our strategy of maintaining operational excellence and paying
down borrowings has helped the Company to mitigate the impact of the
commodities prices volatility and the pandemic while providing a sound
platform for the long term benefit of all our stakeholders.
Operations Summary
Details HY HY FY
30 Sep 21 30 Sep 20 31 Mar 21
Generation (million kWh)
414 MW Plant generation 1,040 635 1,701
Additional "deemed" offtake at Chennai 255 196 406
Total Generation (MUe)(1) 1,296 831 2,107
Reported Average PLF (%) 71.3% 46% 58%
Average Tariff Realised (Rs) 5.47 5.60 5.52
Note: (1) MU / Mue - millions units or kWh of equivalent power
Focus on Maximizing Asset Performance and Deleveraging
Total Generation, including deemed generation, in H1 FY22 was 1.3 billion
units, 56 per cent higher than in H1 FY21. Average group captive users'
tariffs realised in H1 FY22 were Rs5.47 per kWh (H1 FY21: Rs5.60 per kWh;
FY21: Rs5.52 per kWh).
Subsequent to 30 September 2021, the Company sold a cargo of coal and realised
a profit of £3.8 million (Rs.0.4 billion).
As at 30 September 2021 net debt has been significantly reduced to £5.0m (31
March 2021: £16.2m; 30 September 2020: £34.9m) while total borrowings were
£47.8 million, comprised of £19.6 million of NCDs and £19.6 million of
existing term loans, with scheduled repayments spread from June 2022 to June
2024, as well as working capital loans of £8.6 million.
Over the last several months the prices of thermal coal and freight have
surged primarily due to Chinese related geopolitical issues, increased imports
of coal and other goods by China and other Asian countries on the back of post
COVID-19 economic recovery. Whilst OPG was partially covered from increases in
prices with fixed price agreements for coal and freight, the Company remains
exposed to market fluctuations for the unhedged portion of coal consumption
and freight. However, the Company is exploring various options including
sourcing the coal from other geographies (including domestic sources) to
reduce the per unit cost of electricity. The Company is expecting to cover at
least a portion of its coal needs from the domestic sources under long-term
fixed price arrangements. We continue to believe that the prices of coal and
freight will moderate later in the short-term.
62 MW Karnataka Solar projects
As previously announced, the Board has decided to sell OPG's interest in 62MW
Karnataka solar projects and these assets remain in a disposal process.
Building a sustainable future
Rapid growth in urbanisation, universal electrification, and a renewable
energy transition driven by climate change, implies that India's incremental
power needs will largely be met by renewable energy. Our business strategy is
perfectly aligned with this, offering us an opportunity to unlock value for
all our stakeholders in the years to come. OPG has been developing its ESG
strategy which, among other matters, includes objectives to reduce its carbon
footprint. As part of this strategy, the Company is evaluating various
options to increase its renewable energy asset base, notably solar power, and
to establish joint ventures to roll out various energy transition
technologies, including energy efficiency improvements, green hydrogen, etc.
These initiatives will ensure that OPG delivers year-on-year improvements to
reach the Company's emissions reduction targets in the medium and longer-term.
The Indian Economy and Power Sector
As a consequence of COVID-19 the IMF's World Economic Update in November
2021 estimated that the Indian annual GDP growth rate will be 9.5 per cent in
2021 and 8.5 per cent in 2022.
The Reserve Bank of India, the country's central bank and banking regulator,
has taken several steps to mitigate the negative impact of the lockdown on the
economy through various monetary policy measures: including a reduction in
repo and reverse repo rates, a moratorium on loan repayments, a 90 days freeze
on non-performing assets declaration, helping MSMEs with stimulus packages and
credit lines for incentivising industries. These measures coupled with the
easing of lockdown restrictions in a phased manner are helping economic
activity to resume.
Indian power consumption per capita was only 1,208 kWh in FY 2020. It is
expected that this will catch up with developed economies with similar social
and economic conditions over time.
The all-India electricity demand during the period from April 2021 to
September 2021 has increased by 12.7% to 707 billion units ("BU") on a
year-on-year (YoY) basis supported by a lower base, improvement in economic
activity and lower than normal monsoons leading to higher demand from the
agriculture segment during July and August 2021.
India's power consumption rose by 3.6% to 100.42 BU in November 2021 compared with 96.88 BU in November 2020 and 93.94 BU in November 2019.
Outlook
During the first seven months to the end of October 2021 the prices of thermal
coal and freight have surged primarily due to increased imports of coal and
other goods by China and other Asian countries on the back of post COVID-19
economic recovery. However, coal prices decreased by approximately 50% by the
beginning of December 2021 and the Company anticipates that coal prices will
normalise over time.
While generation and revenue recovered in H1 FY22, and the Company was
profitable and cash generative but we expect that the Company's full year FY22
generation, we will not be operating at full capacity and revenue and net
profit will reduce in comparison with FY21 due to the negative impact of high
coal prices and freight costs. This will also impact the Company's net debt
position as at 31 March 2022.
We believe that the medium-term and long-term fundamentals of the Group remain
unchanged and post-COVID-19 recovery and normalisation of coal prices and
freight costs, the Company expects to prosper as management seeks to deliver
its long term, profitable and sustainable business model. We will also
continue to focus on advancing our ESG agenda.
Consolidated Statement of Financial Position
As at 30 September 2021
(All amount in £, unless otherwise stated) As at As at As at
Notes 30 Sep 2021 30 Sep 2020 31 March 2021
Assets
Non-current assets
Intangible assets 14 1,206 5,716 2,394
Property, plant and equipment 15 171,809,578 186,412,926 172,716,040
Other long-term assets 16 83,308 405,534 69,853
Restricted cash 19 9,262,942 26,567 8,194,412
181,157,034 186,850,743 180,982,699
Current assets
Inventories 18 13,634,187 7,866,415 12,186,644
Trade and other receivables 17 17,329,073 24,238,726 14,829,989
Other short-term assets 16 32,026,018 6,837,783 17,805,554
Current tax assets (net) 1,147,676 1,292,128 1,131,342
Restricted cash 19(b) 3,122,794 4,859,556 3,219,356
Cash and cash equivalents 19(a) 9,440,379 9,374,849 8,920,952
Assets held for sale 7 16,638,171 14,720,769 16,425,368
93,338,298 69,190,226 74,519,205
Total assets 274,495,332 256,040,969 255,501,904
Equity and liabilities
Equity
Share capital 20 58,909 58,909 58,909
Share premium 20 131,451,482 131,451,482 131,451,482
Other components of equity (11,055,720) (3,746,172) (12,735,470)
Retained earnings 46,123,296 39,587,495 41,910,280
Equity attributable to owners of the Company 166,577,967 167,351,714 160,685,201
Non-controlling interests 876,369 881,530 881,869
Total equity 167,454,336 168,233,244 161,567,070
Liabilities
Non-current liabilities
Borrowings 22 17,938,299 21,740,994 22,260,206
Non-Convertible Debentures 22 20,043,153 21,110,407 19,840,089
Trade and other payables 613,923 176,936 607,702
Deferred tax liabilities (net) 13 16,369,637 7,485,509 12,994,371
54,965,012 50,513,846 55,702,368
Current liabilities
Borrowings 22 9,830,045 1,430,290 4,510,358
Trade and other payables 37,103,471 35,358,949 32,495,799
Other liabilities 6(a) 5,142,468 504,640 1,226,309
52,075,984 37,293,879 38,232,466
Total liabilities 107,040,996 87,807,725 93,934,834
Total equity and liabilities 274,495,332 256,040,969 255,501,904
The notes are an integral part of these consolidated financial statements.
The financial statements were authorised for issue by the board of directors
on 7 December 2021 and were signed on its behalf by Arvind Gupta, Chairman and
Dmitri Tsvetkov, Chief Financial Officer.
Consolidated Statement of Comprehensive Income
For the six months period ended 30 September 2021
(All amount in £, unless otherwise stated) Six months Six months Year ended
Period ended Period ended
Notes 30 Sep 2021 30 Sep 2020 31 March 2021
Revenue 8 55,603,742 36,089,887 93,823,933
Cost of revenue 9 (41,068,565) (22,134,375) (56,893,065)
Gross profit 14,535,177 13,955,512 36,930,868
Other Operating income 10(a) - 9,628,703 9,420,712
Other income 10(b) 1,240,131 505,562 1,921,546
Distribution cost (2,037,380) (2,947,582) (4,791,056)
General and administrative expenses (2,247,971) (2,000,180) (7,256,153)
Expected credit loss on trade receivables - - (3,025,055)
Depreciation and amortisation (2,800,143) (2,983,195) (5,705,538)
Operating profit 8,689,814 16,158,820 27,495,324
Finance costs 11 (2,675,395) (3,681,194) (6,803,137)
Finance income 12 1,367,175 284,328 868,439
Profit before tax 7,381,594 12,761,954 21,560,626
Tax expense 13 (3,390,062) (1,865,120) (8,447,699)
Profit for the year from continued operations 3,991,532 10,896,834 13,112,927
Gain/(Loss) from discontinued operations, including Non-Controlling Interest 7 212,803 881,687 999,398
Profit for the year 4,204,335 11,778,521 14,112,325
Profit for the year attributable to:
Owners of the Company 4,213,016 11,769,020 14,091,806
Non - controlling interests (8,682) 9,501 20,518
4,204,334 11,778,521 14,112,324
Earnings per share from continued operations
Basic earnings per share (in pence) 1.00 2.72 3.27
Diluted earnings per share (in pence) 0.99 2.70 3.25
Earnings per share from discontinued operations
Basic earnings per share (in pence) 0.05 0.27 0.30
Diluted earnings per share (in pence) 0.05 0.27 0.30
Earnings per share
-Basic (in pence) 1.05 2.94 3.52
-Diluted (in pence) 1.05 2.92 3.50
Other comprehensive income / (loss)
Items that will be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 1,582,361 (2,746,435) (12,860,261)
Items that will be not reclassified subsequently to profit or loss
Exchange differences on translating foreign operations, relating to 3,182 (2,644) (13,322)
non-controlling interests
Total other comprehensive income / (loss) 1,585,544 (2,749,079) (12,873,583)
Total comprehensive income 5,789,878 9,029,442 1,238,741
Total comprehensive income / (loss) attributable to:
Owners of the Company 5,795,377 9,022,585 1,231,546
Non-controlling interest (5,500) 6,857 7,196
5,789,878 9,029,442 1,238,741
The notes are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity
For the six months period ended 30 September 2021
(All amount in £, unless otherwise stated) Issued capital (No. of shares) Ordinary shares Share premium Other reserves Foreign currency translation reserve Retained earnings Total attributable to owners of parent Non-controlling interests Total equity
At 1 April 2020 400,733,511 58,909 131,451,482 7,486,127 (8,809,114) 27,818,474 158,005,878 497,955 158,503,832
Employee Share based payment LTIP - - - 535,247 - - 535,247 - 535,247
(Note 21)
Transaction with owners - - - 535,247 - - 535,247 - 535,247
Profit for the year - - - - - 14,091,806 14,091,806 20,518 14,112,324
Deconsolidation - - - - 912,531 - 912,531 376,718 1,289,249
Other comprehensive income - - - - (12,860,261) - (12,860,261) (13,322) (12,873,583)
Total comprehensive income - - - - (11,947,730) 14,091,806 2,144,076 383,914 2,527,990
At 31 March 2021 400,733,511 58,909 131,451,482 8,021,374 (20,756,844) 41,910,280 160,685,201 881,869 161,567,070
At 1 April 2021 400,733,511 58,909 131,451,482 8,021,374 (20,756,844) 41,910,280 160,685,201 881,869 161,567,070
Employee Share based payment LTIP - - - 97,389 - - 97,389 - 97,389
(Note 21)
Transaction with owners - - - 97,389 - - 97,389 - 97,389
Profit for the year - - - - - 4,213,016 4,213,016 (8,682) 4,204,334
Other comprehensive income - - - - 1,582,361 - 1,582,361 3,182 1,585,543
Total comprehensive income - - - - 1,582,361 4,213,016 5,795,377 (5,500) 5,789,877
At 30 Sep 2021 400,733,511 58,909 131,451,482 8,118,763 (19,174,483) 46,123,296 166,577,967 876,369 167,454,336
The notes are an integral part of these consolidated financial statements.
Consolidated statement of cash flows
For the six months period ended 30 September 2021
Six months Six months Year ended
Period ended Period ended
(All amount in £, unless otherwise stated) Notes 30 Sep 2021 30 Sep 2020 31 March 2021
Cash flows from operating activities
Profit before income tax including discontinued operations 7,594,397 13,643,638 22,560,024
Adjustments for:
(Profit)/Loss from discontinued operations, net 7 (212,803) (881,687) (999,398)
Unrealised foreign exchange loss 9(c) 35,633 231,416 46,931
Financial costs 11 2,638,111 3,449,773 6,756,206
Financial income 12 (1,367,175) (284,328) (864,156)
Share based compensation costs 21 97,389 267,623 535,247
Depreciation and amortisation 2,800,143 2,983,195 5,705,538
Expected credit loss on Trade receivables - - 3,025,055
Changes in working capital
Trade and other receivables (2,297,761) 2,190,563 7,404,759
Inventories (1,294,895) 3,414,812 (1,654,539)
Other assets (2,590,907) 1,750,744 4,976,235
Trade and other payables 3,507,337 (6,025,769) (7,106,516)
Other liabilities 3,611,458 (62,560) 490,711
Cash generated from continuing operations 12,520,927 20,677,420 40,876,097
Taxes paid (673,053) (730,037) (709,277)
Cash provided by operating activities of continuing operations 11,847,874 19,947,383 40,166,820
Net cash provided by operating activities 11,847,874 19,947,383 40,166,820
Cash flows from investing activities
Purchase of property, plant and equipment (including capital advances) (181,177) (320,380) (506,222)
Interest received 1,367,175 284,329 864,156
Movement in restricted cash (837,100) 2,508,449 (4,655,096)
Purchase of investments (10,490,070) (754,439) (25,250,994)
Cash (used in) / from investing activities of continuing operations (10,141,172) 1,717,959 (29,548,156)
Net cash (used in) / from investing activities (10,141,172) 1,717,959 (29,548,156)
Cash flows from financing activities
Proceeds from borrowings (net of costs) 1,799,014 21,133,852 21,981,043
Repayment of borrowings (1,095,275) (33,339,333) (27,938,844)
Finance costs paid (1,992,151) (3,449,773) (5,812,498)
Cash used in financing activities of continuing operations (1,288,412) (15,655,254) (11,770,299)
Net cash used in financing activities (1,288,412) (15,655,254) (11,770,299)
Net (decrease) / Increase in cash and cash equivalents from continuing 418,290 6,010,088 (1,151,635)
operations
Net (decrease) / increase in cash and cash equivalents 418,290 6,010,088 (1,151,635)
Cash and cash equivalents at the beginning of the year 8,920,952 3,438,830 3,438,830
Cash and cash equivalents on deconsolidation - - (28,560)
Exchange differences on cash and cash equivalents 101,137 (74,069) 6,662,317
Cash and cash equivalents at the end of the year 9,440,379 9,374,849 8,920,952
The notes are an integral part of these consolidated financial statements.
Notes
(All amount in £, unless otherwise stated)
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.
2. Statement of compliance
The consolidated financial statements of the Group have been prepared in
accordance with International Financial Reporting Standards (IFRS) - as issued
by the International Accounting Standards Board and the provisions of the Isle
of Man, Companies Act 2006 applicable to companies reporting under IFRS.
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 55 Athol street, Douglas, Isle of Man IM1 1LA.
The Company's equity shares are listed on the AIM Market of the London Stock
Exchange ("AIM").
The Consolidated Financial statements for the period ended 30 September 2021
were approved and authorised for issue by the Board of Directors on 7 December
2021.
4. Recent accounting pronouncements
a) Standards, amendments and interpretations to existing standards that are
not yet effective and have not been adopted early by the Group
At the date of authorisation of these financial statements, certain new
standards, and amendments to existing standards have been published by the
IASB that are not yet effective, and have not been adopted early by the Group.
Information on those expected to be relevant to the Group's financial
statements is provided below.
Management anticipates that all relevant pronouncements will be adopted in the
Group's accounting policies for the first period beginning after the effective
date of the pronouncement. New standards, interpretations and amendments not
either adopted or listed below are not expected to have a material impact on
the Group's financial statements.
b) Changes in accounting Standards
Amendments to IFRS 16, "Covid-19-Related Rent Concessions-Amendment to IFRS
16,"
In May 2020, the IASB issued Covid-19-Related Rent Concessions (Amendment to
IFRS 16) that provides practical relief to lessees in accounting for rent
concessions occurring as a direct consequence of Covid-19, by introducing a
practical expedient to IFRS 16. The practical expedient permits a lessee to
elect not to assess whether a Covid-19-related rent concession is a lease
modification. A lessee that makes this election shall account for any change
in lease payments resulting from the Covid-19-related rent concession the same
way it would account for the change applying IFRS 16 if the change were not a
lease modification. The practical expedient applies only to rent concessions
occurring as a direct consequence of Covid-19 and only if all of the
prescribed conditions are met. The Group has not received any rent concessions
hence so there is no impact on the presentation of these Financial Statements.
c) Standards and Interpretations Not Yet Applicable
The IASB and the IFRS IC have issued the following additional standards and
interpretations. Group does not apply these rules because their application is
not yet mandatory. Currently, however, these adjustments are not expected to
have a material impact on the consolidated financial statements of the Group:
Mandatorily effective for periods beginning on or after 1 January 2022
i) IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended
Use)
ii) AS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment
- Onerous Contracts - Cost of Fulfilling a Contract)
iii) IFRS 3 Business Combinations (Amendment - Reference to the Conceptual
Framework)
Mandatorily effective for periods beginning on or after 1 January 2023
i) IFRS 17, "Insurance Contracts," published in May 2017, expected first-time
application in next fiscal year.
ii) IAS 1 Presentation of Financial Statements and IAS8 Accounting Policies,
Changes in Accounting Estimates and Errors(Amendment - Classification of
Liabilities as Current or Non-current)
iii) IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2
(Amendment - Disclosure of Accounting Policies)
iv) IAS 8 Accounting policies, Changes in Accounting Estimates and Errors
(Amendment - Definition of Accounting Estimates)
v) IAS 12 Income Taxes (Amendment - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction)
5. Summary of significant accounting policies
a) Basis of preparation
The consolidated financial statements of the Group have been prepared on a
historical cost basis, except for financial assets and liabilities at fair
value through profit or loss and financial assets measured at FVPL.
The consolidated financial statements are presented in accordance with IAS 1
Presentation of Financial Statements and have been presented in Great Britain
Pounds ('₤'), the functional and presentation currency of the Company.
During FY2019, the Company obtained a right to exercise an option to buy
additional 30% equity interest in solar companies. Effective from FY2021 this
right was re-assigned to a third party along with the related obligations and
the results of the operations of solar companies Aavanti Solar Energy Private
Limited, Mayfair Renewable Energy (I) Private Limited, Aavanti Renewable
Energy Private Limited and Brics Renewable Energy Private Limited are not
consolidated in Group's consolidated financial statements due to loss of
control. The Group continues owning a 31% equity interest in the solar
companies. As it was previously reported, after evaluation of all options, the
Company decided that the most efficient way to maximise shareholders' value
from solar operations is to dispose solar companies and it initiated process
of disposition of solar companies which met all conditions of IFRS 5 for
classification of solar business as Assets held for sale at 30 September 2021
(Note 7).
Going concern
As at 30 September 2021 the Group had £9.4m in cash and net current assets of
£41.3m. The directors and management have prepared a cash flow forecast to
December 2022, 12 months from the date this report has been approved.
The Group experiences sensitivity in its cash flow forecasts due to the
exposure to potential increase in USD denominated coal prices and a decrease
in the value of the Indian Rupee. The Directors and management are confident
that the Group will be trading in line with its forecast and that any exposure
to a fluctuation in coal prices or the exchange rate INR/USD has been taken
into consideration and therefore prepared the financial statements on a going
concern basis.
For the year ended 31 March 2021, the Group had considered the probable impact
arising due to Covid-19 and included a specific accounting judgement and
estimation uncertainty in relation to the impact of coronavirus on its
operations and going concern assessments. During the six months ended 30
September 2021, the economy has continued to recover from the effects of the
pandemic, and accordingly the specific accounting judgement and estimation
uncertainty in relation to the impact of coronavirus is significantly reduced.
b) Basis of consolidation
The consolidated financial statements include the assets, liabilities and
results of the operation of the Company and all of its subsidiaries as of 30
September 2021. All subsidiaries have a reporting date of 31 March.
A subsidiary is defined as an entity controlled by the Company. The parent
controls a subsidiary if it is exposed, or has rights, to variable returns
from its involvement with the subsidiary and has the ability to affect those
returns through its power over the subsidiary. Subsidiaries are fully
consolidated from the date of acquisition, being the date on which effective
control is acquired by the Group, and continue to be consolidated until the
date that such control ceases.
All transactions and balances between Group companies are eliminated on
consolidation, including unrealised gains and losses on transactions between
Group companies. Where unrealised losses on intra-group asset sales are
reversed on consolidation, the underlying asset is also tested for impairment
from a group perspective. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
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 non-controlling 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 to or received from and the book
value of the share of the net assets is recognised in 'other reserve' within
statement of changes in equity.
c) Investments in associates and joint ventures
Investments in associates and joint ventures are accounted for using the
equity method. The carrying amount of the investment in associates and joint
ventures is increased or decreased to recognise the Group's share of the
profit or loss and other comprehensive income of the associate and joint
venture, adjusted where necessary to ensure consistency with the accounting
policies of the Group.
Unrealised gains and losses on transactions between the Group and its
associates and joint ventures are eliminated to the extent of the Group's
interest in those entities. Where unrealised losses are eliminated, the
underlying asset is also tested for impairment.
d) List of subsidiaries, joint ventures, and associates
Details of the Group's subsidiaries and joint ventures, which are consolidated
into the Group's consolidated financial statements, are as follows:
i) Subsidiaries
Immediate parent Country of incorporation % Voting Right % Economic interest
Sept. 2021 Sept. 2020 March 2021 Sept. 2021 Sept. 2020 March 2021
Caromia Holdings limited ('CHL') OPGPV Cyprus 100 100 100 100 100 100
Gita Power and Infrastructure Private Limited, ('GPIPL') CHL India 100 100 100 100 100 100
OPG Power Generation Private Limited ('OPGPG') GPIPL India 73.77 73.16 71.25 71.25 99.91 99.91
Samriddhi Solar Power LLP(*) OPGPG India - 73.16 - - 99.91 -
Samriddhi Surya Vidyut Private Limited OPGPG India 71.25 73.16 71.25 71.25 99.91 99.91
OPG Surya Vidyut LLP(*) OPGPG India - 73.16 - - 99.91 -
Powergen Resources Pte Ltd OPGPV Singapore 98.69 98.56 98.56 100 100 100
(*)During FY21 withdrawn as a partner from LLP
ii) Associates
Avanti Solar Energy Private Limited OPGPG India 31 31 31 31 31 31
Mayfair Renewable Energy (I) Private Limited) OPGPG India 31 31 31 31 31 31
Avanti Renewable Energy Private Limited OPGPG India 31 31 31 31 31 31
Brics Renewable Energy Private Limited OPGPG India 31 31 31 31 31 31
e) 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 ('₹' or
'INR'). 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 at the rate of exchange prevailing at the
reporting date and the income and expense for each statement of profit or loss
are translated at the average exchange rate (unless this average rate is not a
reasonable approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expense are translated at the
rate on the date of the transactions). 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
prevailing 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.
INR exchange rates used to translate the INR financial information into the
presentation currency of Great Britain Pound (£) are the closing rate as at
30 September 2021: 99.78 (2021: 100.81, 2020: 94.74) and the average rate for
the period ended 30 September 2021: 101.94 (2021 96.72, 2020 : 87.97).
f) Revenue recognition
In accordance with IFRS 15 - Revenue from contracts with customers, the group
recognises revenue to the extent that it reflects the expected consideration
for goods or services provided to the customer under contract, over the
performance obligations they are being provided. For each separable
performance obligation identified, the Group determines whether it is
satisfied at a "point in time" or "over time" based upon an evaluation of the
receipt and consumption of benefits, control of assets and enforceable payment
rights associated with that obligation. If the criteria required for "over
time" recognition are not met, the performance obligation is deemed to be
satisfied at a "point in time". Revenue principally arises as a result of the
Group's activities in electricity generation and distribution. Supply of power
and billing satisfies performance obligations. The supply of power is invoiced
in arrears on a monthly basis and generally the payment terms within the Group
are 10 to 45 days.
Revenue
Revenue from providing electricity to captive power shareholders and sales to
other customers is recognised on the basis of biling cycle under the
contractual arrangement with the captive power shareholders & customers
respectively and reflects the value of units of power supplied and the
applicable tariff after deductions or discounts. Revenue is earned at a point
in time of joint meter reading by both buyer and seller for each billing
month.
Interest and dividend
Revenue from interest is recognised as interest accrued (using the effective
interest rate method). Revenue from dividends is recognised when the right to
receive the payment is established.
g) Operating expenses
Operating expenses are recognised in the statement of profit or loss upon
utilisation of the service or as incurred.
h) 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.
Calculation of current tax is based on tax rates and tax laws that have been
enacted or substantively enacted by the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary
differences between the carrying amounts of assets and liabilities and their
tax bases. However, deferred tax is not provided on the initial recognition of
goodwill, nor on the initial recognition of an asset or liability unless the
related transaction is a business combination or affects tax or accounting
profit. Deferred tax on temporary differences associated with investments in
subsidiaries is not provided if reversal of these temporary differences can be
controlled by the Group and it is probable that reversal will not occur in the
foreseeable future.
Deferred tax assets and liabilities are calculated, without discounting, at
tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted by the end of
the reporting period. Deferred tax liabilities are always provided for in
full.
Deferred tax assets are recognised to the extent that it is probable that they
will be able to be utilised against future taxable income. Deferred tax assets
and liabilities are offset only when the Group has a right and the intention
to set off current tax assets and liabilities from the same taxation
authority. Changes in deferred tax assets or liabilities are recognised as a
component of tax income or expense in profit or loss, except where they relate
to items that are recognised in other comprehensive income or directly in
equity, in which case the related deferred tax is also recognised in other
comprehensive income or equity, respectively.
i) Financial assets
IFRS 9 Financial Instruments contains regulations on measurement categories
for financial assets and financial liabilities. It also contains regulations
on impairments, which are based on expected losses.
"Financial assets are classified as financial assets measured at amortized
cost, financial assets measured at fair value through other comprehensive
income (FVOCI) and financial assets measured at fair value through profit and
loss (FVPL) based on the business model and the characteristics of the cash
flows. If a financial asset is held for the purpose of collecting contractual
cash flows and the cash flows of the financial asset represent exclusively
interest and principal payments, then the financial asset is measured at
amortized cost. A financial asset is measured at fair value through other
comprehensive income (FVOCI) if it is used both to collect contractual cash
flows and for sales purposes and the cash flows of the financial asset consist
exclusively of interest and principal payments. Unrealized gains and losses
from financial assets measured at fair value through other comprehensive
income (FVOCI), net of related deferred taxes, are reported as a component of
equity (other comprehensive income) until realized. Realized gains and losses
are determined by analysing each transaction individually. Debt instruments
that do not exclusively serve to collect contractual cash flows or to both
generate contractual cash flows and sales revenue, or whose cash flows do not
exclusively consist of interest and principal payments are measured at fair
value through profit and loss (FVPL). For equity instruments that are held for
trading purposes the group has uniformly exercised the option of recognizing
changes in fair value through profit or loss (FVPL). Refer to note 29""Summary
of financial assets and liabilities by category and their fair values"".
Impairments of financial assets are both recognized for losses already
incurred and for expected future credit defaults. The amount of the impairment
loss calculated in the determination of expected credit losses is recognized
on the income statement. Impairment provisions for current and non-current
trade receivables are recognised based on the simplified approach within IFRS
9 using a provision matrix in the determination of the lifetime expected
credit losses. During this process the probability of the non-payment of the
trade receivables is assessed. This probability is then multiplied by the
amount of the expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
j) Financial liabilities
The Group's financial liabilities include borrowings and trade and other
payables. Financial liabilities are measured subsequently at amortised cost
using the effective interest method. All interest-related charges and, if
applicable, changes in an instrument's fair value that are reported in profit
or loss are included within 'finance costs' or 'finance income'.
k) Fair value of financial instruments
The fair value of financial instruments that are actively traded in organised
financial markets is determined by reference to quoted market prices at the
close of business on the Statement of financial position date. For financial
instruments where there is no active market, fair value is determined using
valuation techniques. Such techniques may include using recent arm's length
market transactions; reference to the current fair value of another instrument
that is substantially the same; discounted cash flow analysis or other
valuation models.
l) Property, plant and equipment
Property, plant and equipment are stated at historical cost, less accumulated
depreciation and any impairment in value. Historical cost includes expenditure
that is directly attributable to property plant & equipment such as
employee cost, borrowing costs for long-term construction projects etc, if
recognition criteria are met. Likewise, when a major inspection is
performed, its costs are recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria are satisfied. All
other repairs and maintenance costs are recognised in the profit or loss as
incurred.
Land is not depreciated. Depreciation on all other assets is computed on
straight-line basis over the useful life of the asset based on management's
estimate as follows:
Nature of asset Useful life (years)
Buildings 40
Power stations 40
Other plant and equipment 3-10
Vehicles 5-11
Assets in the course of construction are stated at cost and not depreciated
until commissioned.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or
loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is
included in the profit or loss in the year the asset is derecognised.
The assets residual values, useful lives and methods of depreciation of the
assets are reviewed at each financial year end and adjusted prospectively if
appropriate.
m) Intangible assets
Acquired software
Acquired computer software licences are capitalised on the basis of the costs
incurred to acquire and install the specific software.
Subsequent measurement
All intangible assets, including software are accounted for using the cost
model whereby capitalised costs are amortised on a straight-line basis over
their estimated useful lives, as these assets are considered finite. Residual
values and useful lives are reviewed at each reporting date. The useful life
of software is estimated as 4 years.
n) Leases
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
• Leases of low value assets; and
• Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
group's incremental borrowing rate on commencement of the lease is used.
Variable lease payments are only included in the measurement of the lease
liability if they depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate. On initial recognition, the
carrying value of the lease liability also includes:
• amounts expected to be payable under any residual value guarantee;
• the exercise price of any purchase option granted in favour of the group
if it is reasonable certain to assess that option;
• any penalties payable for terminating the lease, if the term of the lease
has been estimated in the basis of termination option being exercised.
Right of use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
• lease payments made at or before commencement of the lease;
• initial direct costs incurred; and
• the amount of any provision recognised where the group is contractually
required to dismantle, remove or restore the leased asset (typically leasehold
dilapidations).
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remain in economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
When the group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted
using a revised discount rate. The carrying value of lease liabilities is
similarly revised when the variable element of future lease payments dependent
on a rate or index is revised, except the discount rate remains unchanged. In
both cases an equivalent adjustment is made to the carrying value of the
right-of-use asset, with the revised carrying amount being amortised over the
remaining (revised) lease term. If the carrying amount of the right-of-use
asset is adjusted to zero, any further reduction is recognised in profit or
loss.
o) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of qualifying assets, that necessarily take a substantial period of
time to get ready for their intended use or sale, are added to the cost of
those assets. Interest income earned on the temporary investment of specific
borrowing pending its expenditure on qualifying assets is deducted from the
costs of these assets.
Gains and losses on extinguishment of liability, including those arising from
substantial modification from terms of loans are not treated as borrowing
costs and are charged to profit or loss.
All other borrowing costs including transaction costs are recognized in the
statement of profit or loss in the period in which they are incurred, the
amount being determined using the effective interest rate method.
p) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. If any such indication exists, or when annual
impairment testing for an asset is required, the Group estimates the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's
or cash-generating unit's (CGU) fair value less costs to sell and its value in
use and is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets
or Groups of assets. Where the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to
its recoverable amount. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs to sell, an
appropriate valuation model is used. These calculations are corroborated by
valuation multiples, quoted share prices for publicly traded subsidiaries or
other available fair value indicators.
For assets excluding goodwill, an assessment is made at each reporting date as
to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists,
the Group estimates the asset's or cash-generating unit's recoverable amount.
A previously recognised impairment loss is reversed only if there has been a
change in the assumptions used to determine the asset's recoverable amount
since the last impairment loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior
years. Such reversal is recognised in the profit or loss.
q) Non-current Assets Held for Sale and Discontinued Operations
Non-current assets and any corresponding liabilities held for sale and any
directly attributable liabilities are recognized separately from other assets
and liabilities in the balance sheet in the line items "Assets held for sale"
and "Liabilities associated with assets held for sale" if they can be disposed
of in their current condition and if there is sufficient probability of their
disposal actually taking place. Discontinued operations are components of an
entity that are either held for sale or have already been sold and can be
clearly distinguished from other corporate operations, both operationally and
for financial reporting purposes. Additionally, the component classified as a
discontinued operation must represent a major business line or a specific
geographic business segment of the Group. Non-current assets that are held for
sale either individually or collectively as part of a disposal group, or that
belong to a discontinued operation, are no longer depreciated. They are
instead accounted for at the lower of the carrying amount and the fair value
less any remaining costs to sell. If this value is less than the carrying
amount, an impairment loss is recognized. The income and losses resulting from
the measurement of components held for sale as well as the gains and losses
arising from the disposal of discontinued operations, are reported separately
on the face of the income statement under income/loss from discontinued
operations, net, as is the income from the ordinary operating activities of
these divisions. Prior-year income statement figures are adjusted
accordingly. However, there is no reclassification of prior-year balance
sheet line items attributable to discontinued operations.
r) Cash and cash equivalents
Cash and cash equivalents in the Statement of financial position includes cash
in hand and at bank and short-term deposits with original maturity period of 3
months or less.
For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash in hand and at bank and short-term deposits.
Restricted cash represents deposits which are subject to a fixed charge and
held as security for specific borrowings and are not included in cash and cash
equivalents.
s) Inventories
Inventories are stated at the lower of cost and net realisable value. Costs
incurred in bringing each product to its present location and condition is
accounted based on weighted average price. Net realisable value is the
estimated selling price in the ordinary course of business, less estimated
selling expenses.
t) Earnings per share
The earnings considered in ascertaining the Group's earnings per share (EPS)
comprise the net profit for the year attributable to ordinary equity holders
of the parent. The number of shares used for computing the basic EPS is the
weighted average number of shares outstanding during the year. For the purpose
of calculating diluted earnings per share the net profit or loss for the
period attributable to equity shareholders and the weighted average number of
shares outstanding during the period are adjusted for the effects of all
dilutive potential equity share.
u) Other provisions and contingent liabilities
Provisions are recognised when present obligations as a result of a past event
will probably lead to an outflow of economic resources from the Group and
amounts can be estimated reliably. Timing or amount of the outflow may still
be uncertain. A present obligation arises from the presence of a legal or
constructive obligation that has resulted from past events. Restructuring
provisions are recognised only if a detailed formal plan for the restructuring
has been developed and implemented, or management has at least announced the
plan's main features to those affected by it. Provisions are not recognised
for future operating losses.
Provisions are measured at the estimated expenditure required to settle the
present obligation, based on the most reliable evidence available at the
reporting date, including the risks and uncertainties associated with the
present obligation. Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. Provisions are discounted to
their present values, where the time value of money is material.
Any reimbursement that the Group can be virtually certain to collect from a
third party with respect to the obligation is recognised as a separate asset.
However, this asset may not exceed the amount of the related provision. All
provisions are reviewed at each reporting date and adjusted to reflect the
current best estimate.
In those cases where the possible outflow of economic resources as a result of
present obligations is considered improbable or remote, no liability is
recognised, unless it was assumed in the course of a business combination. In
a business combination, contingent liabilities are recognised on the
acquisition date when there is a present obligation that arises from past
events and the fair value can be measured reliably, even if the outflow of
economic resources is not probable. They are subsequently measured at the
higher amount of a comparable provision as described above and the amount
recognised on the acquisition date, less any amortisation.
v) Share based payments
The Group operates equity-settled share-based remuneration plans for its
employees. None of the Group's plans feature any options for a cash
settlement.
All goods and services received in exchange for the grant of any share-based
payment are measured at their fair values. Where employees are rewarded using
share-based payments, the fair values of employees' services is determined
indirectly by reference to the fair value of the equity instruments granted.
This fair value is appraised at the grant date and excludes the impact of
non-market vesting conditions (for example profitability and sales growth
targets and performance conditions).
All share-based remuneration is ultimately recognised as an expense in profit
or loss with a corresponding credit to 'Other Reserves'.
If vesting periods or other vesting conditions apply, the expense is allocated
over the vesting period, based on the best available estimate of the number of
share options expected to vest. Non-market vesting conditions are included in
assumptions about the number of options that are expected to become
exercisable. Estimates are subsequently revised if there is any indication
that the number of share options expected to vest differs from previous
estimates. Any cumulative adjustment prior to vesting is recognised in the
current period. No adjustment is made to any expense recognised in prior
periods if share options ultimately exercised are different to that estimated
on vesting.
Upon exercise of share options, the proceeds received net of any directly
attributable transaction costs up to the nominal value of the shares issued
are allocated to share capital with any excess being recorded as share
premium.
w) Employee benefits
Gratuity
In accordance with applicable Indian laws, the Group provides for gratuity, a
defined benefit retirement plan ("the Gratuity Plan") covering eligible
employees. The Gratuity Plan provides a lump-sum payment to vested employees
at retirement, death, incapacitation or termination of employment, of an
amount based on the respective employee's salary and the tenure of employment.
Liabilities with regard to the gratuity plan are determined by actuarial
valuation, performed by an independent actuary, at each Statement of financial
position date using the projected unit credit method.
The Group recognises the net obligation of a defined benefit plan in its
statement of financial position as an asset or liability, respectively in
accordance with IAS 19, Employee benefits. The discount rate is based on the
Government securities yield. Actuarial gains and losses arising from
experience adjustments and changes in actuarial assumptions are charged or
credited to profit or loss in the statement of comprehensive income in the
period in which they arise.
x) Business combinations
Business combinations arising from transfers of interests in entities that are
under the control of the shareholder that controls the Group are accounted for
as if the acquisition had occurred at the beginning of the earliest
comparative period presented or, if later, at the date that common control was
established using pooling of interest method. The assets and liabilities
acquired are recognised at the carrying amounts recognised previously in the
Group controlling shareholder's consolidated financial statements. The
components of equity of the acquired entities are added to the same components
within Group equity. Any excess consideration paid is directly recognised in
equity.
y) Segment reporting
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 Board of Directors being the chief operating
decision maker evaluate the Group's performance and allocates resources based
on an analysis of various performance indicators at operating segment level.
During the year 2021 the Group has deconsolidated solar entities and are
classified as associates (note 7). Accordingly, there is only only one
operating segment thermal power. The solar power business is classified as
held for sale. There are no geographical segments as all revenues arise from
India. All the non current assets are located in India.
6. 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.
a) Judgements
The following are significant management judgments in applying the accounting
policies of the Group that have the most significant effect on the financial
statements.
Assessing control of subsidiaries, associates, joint ventures
During FY21, the Group has reclassified the 31% equity interest in the solar
entities from Subsidiaries to Associates due to loss of control. The interest
in the solar entities (Avanti Solar Energy Private Limited, Mayfair Renewable
Energy (I) Private Limited, Avanti Renewable Energy Private Limited and Brics
Renewable Energy Private Limited) are disclosed as assets held for sale.
Contractual payments under power supply agreement
The Group has received £4,181,162 during the period on account of change in
law as per terms of power supply agreement. The amount received is grouped
under other current liabilities relates to period 2014-2020 and shall be
recognised as revenue on approval from regulatory authority.
Non-current assets held for sale and discontinued operations
"The Group exercises judgement in whether assets are held for sale. After
evaluation of all options, the Company decided that the most efficient way to
maximise shareholders' value from solar operations is to dispose of the solar
companies and it initiated the process of disposition of the solar companies.
Under IFRS 5, such a transaction meets the 'Asset held for sale' when the
transaction is considered sufficiently probable and other relevant criteria
are met. Management consider that all the conditions under IFRS 5 for
classification of the solar business as held for sale have been met as at 30
September 2021 and expects the interest in the solar companies to be sold
within the next 12 months.
Recoverability of deferred tax assets
The recognition of deferred tax assets requires assessment of future taxable
profit (see note 5(h)).
b) 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 material adjustments to the carrying amounts of
assets and liabilities within the next financial year are discussed below:
i) Estimation of fair value of 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.
Trade Receivables
The group ascertains the expected credit losses (ECL) for all receivables and
adequate impairment provision are made. At the end of each reporting period a
review of the allowance for impairment of trade receivables is performed.
Trade receivables do not contain a significant financing element, and
therefore expected credit losses are measured using the simplified approach
permitted by IFRS 9, which requires lifetime expected credit losses to be
recognised on initial recognition. A provision matrix is utilised to estimate
the lifetime expected credit losses based on the age, status and risk of each
class of receivable, which is periodically updated to include changes to both
forward-looking and historical inputs.
Financial assets measured at FVPL
Management applies valuation techniques to determine the fair value of
financial assets measured at FVPL 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.
ii) 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 for discounting them. Estimation
uncertainty relates to assumptions about future operating results including
fuel prices, foreign currency exchange rates etc. and the determination of a
suitable discount rate;
iii) 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.
7. Profit/(Loss) from discontinued operations
Non-current assets held for sale and Profit/(Loss) from discontinued
operations consists of:
Assets Held for Sale Liabilities classified as held for sale Profit from discontinued operations
At 30 At 30 At 31 March 2021 At 30 Sept. 2021 At 30 Sept. 2020 At 31 March 2021 At 30 Sept. 2021 At 30 Sept. 2020 At 31 March 2021
Sept. Sept.
2021 2020
i Interest in Solar entities 16,638,171 14,720,769 16,425,368 - - - - - -
ii Share of Profit from Solar entities - - - - - - - 117,711
iii Gain on deconsolidation of Solar entities - - - - - 212,803 881,687 881,687
Total 16,638,171 14,720,769 16,425,368 - - - 212,803 881,687 999,398
Assets held for sale and discontinued operations of solar entities
During FY19, the results of the operations of solar entities Avanti Solar
Energy Private Limited, Mayfair Renewable Energy Private Limited, Avanti
Renewable Energy Private Limited and Brics Renewable Energy Private Limited
were classified as Assets held for sale. After evaluation of all the
options, the Company decided that the most efficient way to maximise
shareholders' value from the solar operations is to dispose of the solar
entities and the process of disposition of the solar entities was initiated.
The process of sale could not be implemented during FY21 and six months ended
30 September 2021 due to pandemic Covid-19 and expectation of comparatively
better valuation for sale. However the Management expects the interest in the
solar entities to be sold within the next 12 months and continues to locate a
buyer.
During FY19, the Company obtained a right to exercise an option to buy
additional 30% equity interest in solar companies. Effective from FY2021 this
right was re-assigned to a third party along with the related obligations and
the results of the operations of solar companies Aavanti Solar Energy Private
Limited, Mayfair Renewable Energy (I) Private Limited, Aavanti Renewable
Energy Private Limited and Brics Renewable Energy Private Limited are not
consolidated in Group's consolidated financial statements due to loss of
control. The Group continues owning a 31% equity interest in these solar
associates.
Non-current Assets held-for-sale and discontinued operations
(a) Assets of disposal group classified as held-for-sale As at As at As at
30 Sept. 2021 30 Sept. 2020 31 March 2021
Investment in associates classified as held for sale 16,638,171 14,720,769 16,425,368
Total 16,638,171 14,720,769 16,425,368
(b) Liabilities of disposal group classified as held-for-sale As at As at As at
30 Sept. 2021 30 Sept. 2020 31 March 2021
Liabilities of disposal group classified as held-for-sale - - -
Total - - -
(c) Analysis of the results of discontinued operations is as follows: Six months ended Six months ended FY21
30 Sept. 2021 30 Sept. 2020
Share of Profit from Solar entities 212,803 - 117,711
Gain on deconsolidation of Solar entities - 881,687 881,687
Profit / (Loss) from Solar operations 212,803 881,687 999,398
8. Segment reporting
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 Board of Directors being the chief operating decision
maker evaluate the Group's performance and allocates resources based on an
analysis of various performance indicators at operating segment level. During
the FY21 the Group has deconsolidated solar entities and are classified as
associates (note 7). Accordingly, during FY 21 there is only one operating
segment thermal power. The solar power business is classified as held for
sale. There are no geographical segments as all revenues arise from India. All
the non current assets are located in India.
Revenue on account of sale of power to one customer exceeding 10% of total
sales revenue amounts to £5,883,758 (2021: £28,720,575).
Segmental information disclosure
Continuing operations Discontinued operations
Thermal Solar
Segment Revenue Six months ended Six months ended FY 21 Six months ended Six months ended FY 21
30 Sept. 2021 30 Sept. 2020 30 Sept. 2021 30 Sept. 2020
Sales 55,603,742 36,089,887 93,823,933 - - -
Total 55,603,742 36,089,887 93,823,933 - - -
Other Operating income - 9,628,703 9,420,712 - -
Depreciation, impairment (2,800,143) (2,983,195) (5,705,538) - - -
- - -
Profit from operation 8,689,814 16,158,820 27,495,324 - - -
Finance Income 1,367,175 284,328 868,439 - - -
Finance Cost (2,675,395) (3,681,194) (6,803,137) - - -
Tax expenses (3,390,062) (1,865,120) (8,447,699) - - -
Gain on deconsolidation of Solar entities - - - - 881,687 881,687
Share of Profit in Solar entities - - - 212,803 - 117,711
Profit for the year / Period 3,991,532 10,896,834 13,112,927 212,803 881,687 999,398
Assets 257,857,161 241,320,200 239,076,536 16,425,368 16,638,171 16,425,368
Liabilities 107,040,996 87,807,725 93,934,834 - - -
9. Costs of inventories and employee benefit expenses included in the
consolidated statements of comprehensive income
Cost of fuel
Six months ended Six months ended FY21
30 Sept. 2021 30 Sept. 2020
Included in cost of revenue:
Cost of fuel consumed 38,721,460 20,965,590 54,095,390
Other direct costs 2,347,105 1,168,785 2,797,675
Total 41,068,565 22,134,375 56,893,065
-
Employee benefit expenses forming part of general and administrative expenses
are as follows:
Six months ended Six months ended FY21
30 Sept. 2021 30 Sept. 2020
Salaries and wages 1,037,241 960,822 2,139,303
Employee benefit costs 96,035 70,241 228,112
Long Tern Incentive Plan 97,389 267,624 535,247
Total 1,230,665 1,298,686 2,902,662
Foreign exchange movements (realised and unrealised) included in the Finance
costs is as follows:
Six months ended Six months ended FY21
30 Sept. 2021 30 Sept. 2020
Foreign exchange realised loss / (gain) 202,607 (68,866) 213,524
Foreign exchange unrealised- loss / (gain) 44,532 231,416 46,931
Total 247,139 162,550 260,455
10. Other operating income and expenses
Other operating income
Six months ended Six months ended FY21
30 Sept. 2021 30 Sept. 2020
Contractual claims payments - 9,628,703 9,420,712
Total - 9,628,703 9,420,712
Other operating income represents contractual claims payments from company's
customers under the power purchase agreements which were accumulated over
several periods.
Other income
Six months ended Six months ended FY21
30 Sept. 2021 30 Sept. 2020
Sale of coal 749,197 208,437 616,708
Sale of fly ash 41,392 7,697 16,271
Power trading commission and other services 120,242 4,367 147,166
Others 329,300 285,062 1,141,401
Total 1,240,131 505,562 1,921,546
11. Finance costs
Finance costs are comprised of:
Six months ended Six months ended FY21
30 Sept. 2021 30 Sept. 2020
Interest expenses on borrowings 2,128,085 3,495,422 5,848,895
Net foreign exchange loss (Note 9) 126,565 162,550 260,455
Other finance costs 420,745 23,222 693,787
Total 2,675,395 3,681,194 6,803,137
Other finance costs include charges and cost related to LC's for import of
coal and other charges levied by bank on transactions
12. Finance income
Finance income is comprised of:
Six months ended Six months ended FY21
30 Sept. 2021 30 Sept. 2020
Interest income on bank deposits and advances 302,883 284,328 401,194
Gain on disposal / fair value of financial instruments* 1,064,293 - 467,245
Total 1,367,176 284,328 868,439
*Financial instruments represent the mutual funds held during the period.
13. Tax expenses
Six months ended Six months ended FY21
30 Sept. 2021 30 Sept. 2020
Current tax 216,220 155 412,513
Deferred tax 3,173,842 1,864,965 8,035,186
Tax reported in the statement of comprehensive income 3,390,062 1,865,120 8,447,699
The Company is subject to Isle of Man corporate tax at the standard rate of
zero percent. As such, the Company's tax liability is zero. Additionally, Isle
of Man does not levy tax on capital gains. However, considering that the
group's operations are primarily based in India, the effective tax rate of the
Group has been computed based on the current tax rates prevailing in India.
Further, a substantial portion of the profits of the Group's India operations
are exempt from Indian income taxes being profits attributable to generation
of power in India. Under the tax holiday the taxpayer can utilize an exemption
from income taxes for a period of any ten consecutive years out of a total of
fifteen consecutive years from the date of commencement of the operations.
However, the entities in India are still liable for Minimum Alternate Tax
(MAT) which is calculated on the book profits of the respective entities
currently at a rate of 17.47% (31 March 2021: 17.47%).
14. Intangible assets
Acquired software licences
Cost 30 Sept. 2021 30 Sept. 2020 31 March 2021
Opening 763,595 827,065 827,065
Additions - - -
Exchange adjustments 7,816 (14,610) (63,470)
Total 771,410 812,455 763,595
Accumulated depreciation and impairment
Opening 761,201 818,020 818,020
Charge for the year / Period 1,187 3,173 6,209
Exchange adjustments 7,817 (14,454) (63,028)
At 31 March 2021 770,205 806,739 761,201
Net book value 1,206 5,716 2,394
15. Property, plant and equipment
The property, plant and equipment comprises of:
Land & Buildings Power stations Other plant & equipment Vehicles Asset under construction Total
Cost
At 1 April 2020 8,765,490 216,622,367 1,886,252 2,356,081 280,776 229,910,967
Additions 271,158 318,038 24,375 134,659 36,206 784,436
Transfers on capitalisation 13,598 159,120 - - (172,718) -
Sale / Disposals - - - (1,561,762) - (1,561,762)
Exchange adjustments (661,265) (16,639,299) (143,908) (180,354) (21,547) (17,646,373)
At 31 March 2021 8,388,982 200,460,226 1,766,719 748,624 122,717 211,487,267
At 1 April 2021 8,388,982 200,460,226 1,766,719 748,624 122,717 211,487,267
Additions - 62,898 10,853 1,588 83,634 158,973
Transfers on capitalisation - - - - - -
Sale / Disposals - - - - - -
Exchange adjustments 84,610 2,053,769 17,970 7,601 986 2,164,936
At 30 September 2021 8,473,592 202,576,893 1,795,541 757,813 207,337 213,811,176
Accumulated depreciation and impairment
At 1 April 2021 55,601 34,683,662 878,072 1,824,237 - 37,441,572
Charge for the year 12,081 5,230,238 262,333 194,677 - 5,699,329
Sale / Disposals - - - (1,263,537) - (1,263,537)
Exchange adjustments (6,363) (2,874,452) (77,955) (147,367) - (3,106,137)
At 31 March 2021 61,319 37,039,448 1,062,450 608,010 - 38,771,227
At 1 April 2021 61,319 37,039,448 1,062,450 608,010 - 38,771,227
Charge for the period 6,351 2,648,699 128,242 15,664 - 2,798,956
Sale / Disposals - - - - - -
Exchange adjustments 979 410,311 13,632 6,493 - 431,415
At 30 September 2021 68,649 40,098,458 1,204,324 630,167 - 42,001,598
Net book value
At 30 September 2021 8,404,943 162,478,435 591,218 127,646 207,337 171,809,578
At 31 March 2021 8,327,663 163,420,778 704,269 140,614 122,717 172,716,040
At 30 September 2020 8,648,100 176,122,741 901,135 351,466 389,484 186,412,926
16. Other assets
As at As at As at
30 Sept. 2021 30 Sept. 2020 31 March 2021
A. Short-term
Capital advances 105,907 112,070 124,601
Financial instruments measured at fair value through P&L 24,125,311 1,480,545 13,253,663
Advances and other receivables 7,794,800 5,245,168 4,427,290
Total 32,026,018 6,837,783 17,805,554
B. Long-term
Lease deposits - 389,022 -
Bank deposits 71,168 - 57,713
Other advances 12,140 16,512 12,140
Total 83,308 405,534 69,853
The financial instruments of £24,125,311 (2021: £13,253,663) represent
investments in mutual funds and their fair value is determined by reference to
published data.
17. Trade and other receivables
As at As at As at
30 Sept. 2021 30 Sept. 2020 31 March 2021
Current
Trade receivables 17,329,073 24,238,726 14,829,989
17,329,073 24,238,726 14,829,989
18. Inventories
As at As at As at
30 Sept. 2021 30 Sept. 2020 31 March 2021
Coal and fuel 12,230,429 6,790,041 11,228,377
Stores and spares 1,403,758 1,076,374 958,267
Total 13,634,187 7,866,415 12,186,644
The entire amount of above inventories has been pledged as security for
borrowings
19. Cash and cash equivalents and Restricted cash
a) Cash and short term deposits comprise of the following:
As at As at As at
30 Sept. 2021 30 Sept. 2020 31 March 2021
Investment in Mutual funds 1,834,212 - 1,815,629
Cash at banks and on hand 7,606,168 9,374,849 7,105,323
Total 9,440,379 9,374,849 8,920,952
Short-term deposits are placed for varying periods, depending on the immediate
cash requirements of the Group. They are recoverable on demand.
b) Restricted cash
Current restricted cash represents deposits maturing between three to twelve
months amounting to £3,122,794 (2021: £3,219,356) which have been pledged by
the Group in order to secure borrowing limits with the banks.
Non-current restricted represents investments in mutual funds maturing after
twelve months amounting to £9,262,942 (2021: £8,194,412). Investments of £
8,266,192 (2021: £8,182,445) are allocated to debenture redemption fund
earmarked towards redemption of non-convertible debentures scheduled during
FY2024 of £20,043,153.
20. Issued share capital
Share Capital
The Company presently has only one class of ordinary shares. For all matters
submitted to vote in the shareholders meeting, every holder of ordinary
shares, as reflected in the records of the Group on the date of the
shareholders' meeting, has one vote in respect of each share held. All shares
are equally eligible to receive dividends and the repayment of capital in the
event of liquidation of the Group.
As at 30 September 2021, the Company has an authorised and issued share
capital of 400,733,511 (31 March 2021: 400,733,511) equity shares at par value
of £ 0.000147 (31 March 2021: £ 0.000147) per share amounting to £58,909
(31 March 2021: £58,909) in total.
Reserves
Share premium represents the amount received by the Group over and above the
par value of shares issued. Any transaction costs associated with the issuing
of shares are deducted from share premium, net of any related income tax
benefits.
Foreign currency translation reserve is used to record the exchange
differences arising from the translation of the financial statements of the
foreign subsidiaries.
Other reserve represents the difference between the consideration paid and the
adjustment to net assets on change of controlling interest, without change in
control, other reserves also includes any costs related with share options
granted and gain/losses on re-measurement of financial assets measured at fair
value through other comprehensive income.
Retained earnings include all current and prior period results as disclosed in
the consolidated statement of comprehensive income less dividend distribution.
21. Share based payments
Long Term Incentive Plan
In April 2019, the Board of Directors has approved the introduction of Long
Term Incentive Plan (""LTIP""). The key terms of the LTIP are:
The number of performance-related awards is 14 million ordinary shares (the
"LTIP Shares") (representing approximately 3.6 per cent of the Company's
issued share capital). The grant date is 24 April 2019.
The LTIP Shares were awarded to certain members of the senior management team
as Nominal Cost Shares and will vest in three tranches subject to continued
service with Group until vesting and meeting the following share price
performance targets, plant load factor ("PLF") and term loan repayments of the
Chennai thermal plant.
- 20% of the LTIP Shares shall vest upon meeting the target share
price of 25.16p before the first anniversary for the first tranche, i.e. 24
April 2020, achievement of PLF during the period April 2019 to March 2020 of
at least 70% at the Chennai thermal plant and repayment of all scheduled term
loans;
- 40% of the LTIP Shares shall vest upon meeting the target share
price of 30.07p before the second anniversary for the second tranche, i.e. 24
April 2021, achievement of PLF during the period April 2020 to March 2021 of
at least 70% at the Chennai thermal plant and repayment of all scheduled term
loans;
- 40% of the LTIP Shares shall vest upon meeting the target share
price of 35.00p before the third anniversary for the third tranche, i.e. 24
April 2022, achievement of PLF of at least 70% at the Chennai thermal plant
during the period April 2021 to March 2022 and repayment of all scheduled term
loans.
The nominal cost of performance share, i.e. upon the exercise of awards,
individuals will be required to pay up 0.0147p per share to exercise their
awards
The share price performance metric will be deemed achieved if the average
share price over a fifteen day period exceeds the applicable target price. In
the event that the share price or other performance targets do not meet the
applicable target, the number of vesting shares would be reduced pro-rata, for
that particular year. However, no LTIP Shares will vest if actual performance
is less than 80 per cent of any of the performance targets in any particular
year. The terms of the LTIP provide that the Company may elect to pay a cash
award of an equivalent value of the vesting LTIP Shares.
In April 2020, and upon meeting relevant performance targets, 2,190,519 LTIP
shares vested (80% of the 1st tranche). These shares will be issued later this
year.
None of the LTIP Shares, once vested, can be sold until the third anniversary
of the award, unless required to meet personal taxation obligations in
relation to the LTIP award.
For LTIP Shares awards, £97,389 (FY20: £535,247) has been recognised in
general and administrative expenses.
Grant date 24-Apr-19 24-Apr-19 24-Apr-19
Vesting date 24-Apr-20 24-Apr-21 24-Apr-22
Method of Settlement Equity/ Cash Equity/ Cash Equity/ Cash
Vesting of shares (%) 20% 40% 40%
Number of LTIP Shares granted 2,800,000 5,600,000 5,600,000
Exercise Price (pence per share) 0.0147 0.0147 0.0147
Fair Value of LTIP Shares granted (pence per share) 0.1075 0.1217 0.1045
Expected Volatility (%) 68.00% 64.18% 55.97%
22. Borrowings
The borrowings comprise of the following:
Interest rate (range %) Final maturity 30 Sept. 2021 30 Sept. 2020 31 March 2021
Borrowings at amortised cost 10.35-11.40 June 2024 27,768,344 23,171,284 26,770,564
Non-Convertible Debentures at amortised cost 9.85 June 2023 20,043,153 21,110,407 19,840,089
Total 47,811,497 44,281,691 46,610,653
The term loans of £23.8m, non-convertible debentures of £20.0m and working
capital loans of £4.0m taken by the Group are fully secured by the property,
plant, assets under construction and other current assets of subsidiaries
which have availed such loans. All term loans and working capital loans are
personally guaranteed by a director.
Term loans contain certain covenants stipulated by the facility providers and
primarily require the Group to maintain specified levels of certain financial
metrics and operating results. As of 30 September 2021, the Group has met all
the relevant covenants. The Group raised approximately £20.0 million (₹2000
million) during June 2020 through non-convertible debentures (NCDs) issue with
a three years term and coupon rate of 9.85%. NCD's proceeds was used to repay
the FY21 and FY22 (i.e. to March 2022) principal term loans obligations.
The fair value of borrowings at 30 September 2021 was £47,811,497 (2021:
£46,610,653, 30 September 2020 44,281,691). The fair values have been
calculated by discounting cash flows at prevailing interest rates.
The borrowings are reconciled to the statement of financial position as
follows:
30 Sept. 2021 30 Sept. 2020 31 March 2021
Current liabilities
Amounts falling due within one year 9,830,045 1,430,290 4,510,358
Non-current liabilities
Amounts falling due after 1 year but not more than 5 years 37,981,452 42,851,401 42,100,295
Total 47,811,497 44,281,691 46,610,653
-ends-
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR FFFVVFELDIILRecent news on OPG Power Ventures
See all newsREG - OPG Power Ventures - Trading Update
AnnouncementREG - OPG Power Ventures - Change of Reg Office, Co Sec & Administrator
AnnouncementREG - OPG Power Ventures - Result of AGM
AnnouncementREG - OPG Power Ventures - Half-year Report
AnnouncementREG - OPG Power Ventures - Notice of Annual General Meeting
Announcement