Indus Gas Regulatory News (INDI)

For Immediate Release

Indus Gas Limited

("Indus" or "the Company")

Interim Results

Indus Gas Limited (AIM:INDI.L), an oil & gas exploration and development company with assets in India, is pleased to report its interim results for the six month period ending 30 September 2016.

Consolidated reported adjusted revenues, operating profit and profit before tax for the interim period ending 30 September 2016 were US$ 27.39m (US$ 22.63m interim 2015), US$ 22.33m (US$ 16.78m interim 2015) and US$ 22.61m (US$ 14.27m interim 2015) respectively.

The Company has continued to make provision for a notional deferred tax liability of US$ 9.94m (US$ 7.79m interim 2015), in accordance with IFRS requirements.

The integrated Field Development Plan in respect of about 2000 sq. kms. outside of the 176 sq. kms. SGL area is under examination by the Directorate General of Hydrocarbons. A revised Field Development Plan in respect of the SGL area for the enhancement of production to about 80 mmscfd has recently been submitted to Management Committee for approval.

The Company continues to realise US$5 per mmBtu in respect of its existing gas sales contract. Discussions for the second contract with GAIL and RRVUNL for the additional gas supplies to the 160 MW turbine at Ramgarh are expected to be finalized in first quarter of 2017. The gas turbine has been procured by RRVUNL and the gas price needs to be mutually agreed. Discussions are also being held for finalising the gas pipeline to evacuate additional gas supply from the Non-SGL area of the block.

Commenting, Peter Cockburn, Chairman of Indus, said:

"Indus has made good progress in the period and continues to see consistent growth in revenue and profits. The revenues are now expected to increase substantially once the additional gas supplies commence."

For further information please contact:

Indus Gas Limited and its subsidiaries

Unaudited Condensed Consolidated Interim Financial Statements

30 September 2016

Unaudited Condensed Consolidated Statement of Financial Position

(All amounts inUS$, unless otherwise stated)

Unaudited Condensed Consolidated Statement of Financial Position (Contd.)

(All amounts in US $, unless otherwise stated)

(The accompanying notes are an integral part of these Unaudited Condensed Consolidated Interim Financial Statements)

Unaudited Condensed Consolidated Statement of Comprehensive Income

(All amounts in US $, unless otherwise stated)

Profit for the period (attributable 12,666,7606,476,980

(The accompanying notes are an integral part of these Unaudited Condensed Consolidated Interim Financial Statements)

Unaudited Condensed Consolidated Statement of Changes in Equity

(All amounts in US $, unless otherwise stated)

(The accompanying notes are an integral part of these Unaudited Condensed Consolidated Interim FinancialStatements).

Unaudited Condensed Consolidated Statement of Cash Flows

(All amounts in US $, unless otherwise stated)

Unaudited Condensed Consolidated Statement of Cash Flows

(All amounts in US $, unless otherwise stated) (Cont'd) 

A The purchase of property, plant and equipment above, includes additions to exploration and evaluation assets amounting to US$ 18,009,154 (previous period: US$ 31,337,095) transferred to development cost, as explained in Note 7.

 (The accompanying notes are an integral part of these Unaudited Condensed Consolidated Interim Financial Statements)

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(All amounts in US $, unless otherwise stated)

1. INTRODUCTION

Indus Gas Limited ("Indus Gas" or "the Company") was incorporated in the Island of Guernsey on 4 March2008 pursuant to an Act of the Royal Court of the Island of Guernsey. The Company was set up to act as the holding company of iServices Investments Limited. ("iServices") and Newbury Oil Co. Limited ("Newbury").iServices and Newbury are companies incorporated in Mauritius and Cyprus, respectively. iServices was incorporated on 18 June 2003 and Newbury was incorporated on 17 February 2005. The Company was listed on the Alternative Investment Market (AIM) of the London Stock Exchange on 6 June 2008. Indus Gas through its wholly owned subsidiaries iServices and Newbury (hereinafter collectively referred to as "the Group") is engaged in the business of oil and gas exploration, development and production.

Focus Energy Limited ("Focus"), an entity incorporated in India, entered into a Production Sharing Contract("PSC") with the Government of India ("GOI") and Oil and Natural Gas Corporation Limited ("ONGC") on30 June 1998 for petroleum exploration and development concession in India known as RJ-ON/06 ("the Block"). Focus is the Operator of the Block. On 13 January 2006, iServices and Newbury entered into an interest sharing agreement with Focus and obtained a 65 per cent and 25 per cent share respectively in the Block. Consequent to this, the Group acquired an aggregate of 90 per cent participating interest in the Block and the balance 10 per cent of participating interest is owned by Focus. The participating interest explained above is subject to any option exercised by ONGC in respect of field (already exercised for SGL field as further explained in Note 4).

2. BASIS OF PREPARATION

The unaudited condensed consolidated interim financial statements are for the six months ended 30 September 2016 and are presented in United States Dollar (US$), which is the functional currency of the parent company and other entities in the Group. They have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with International Financial Reporting Standards as adopted by the European union, and should be read in conjunction with the consolidated financial statements and related notes of the Group for the year ended 31 March 2016.

The unaudited condensed consolidated interim financial statements have been prepared on a going concern basis.

The accounting policies applied in these unaudited condensed consolidated interim financial statements are consistent with the policies that were applied for the preparation of the consolidated financial statements for the year ended 31 March 2016.

These unaudited condensed consolidated interim financial statements are for the six months ended 30 September 2016 and have been approved for issue by the Board of Directors.----

3. STANDARDS AND INTERPRETATIONS ISSUED BUT NOT EFFECTIVE AND YET TO BEAPPLIED BY THE GROUP

Summarised in the paragraphs below are standards, interpretations or amendments that have been issued prior to the date of approval of these consolidated financial statements and endorsed by EU and will be applicable for transactions in the Group but are not yet effective. These have not been adopted early by the Group and accordingly, have not been considered in the preparation of the consolidated financial statements of the Group.

Management anticipates that all of these pronouncements will be adopted by the Group in the first accounting period beginning after the effective date of each of the pronouncements. Information on the new standards, interpretations and amendments that are expected to be relevant to the Group's consolidated financial statements is provided below.

- IFRS 9 Financial Instruments Classification and Measurement

In July 2014, the International Accounting Standards Board issued the final version of IFRS 9, Financial Instruments. The standard reduces the complexity of the current rules on financial instruments as mandated in IAS 39. IFRS 9 has fewer classification and measurement categories as compared to IAS 39 and has eliminated the categories of held to maturity, available for sale and loans and receivables. Further it eliminates the rule-based requirement of segregating embedded derivatives and tainting rules pertaining to held to maturity investments. For an investment in an equity instrument which is not held for trading, IFRS 9 permits an irrevocable election, on initial recognition, on an individual share-by-share basis, to present all fair value changes from the investment in other comprehensive income. No amount recognized in other comprehensive income would ever be reclassified to profit or loss. It requires the entity, which chooses to measure a liability at fair value, to present the portion of the fair value change attributable to the entity's own credit risk in other comprehensive income.

IFRS 9 replaces the 'incurred loss model' in IAS 39 with an 'expected credit loss' model. The measurement uses a dual measurement approach, under which the loss allowance is measured as either 12 month expected credit losses or lifetime expected credit losses. The standard also introduces new presentation and disclosure requirements.

This standard is effective for reporting periods beginning on or after 1 January 2018 with early adoption permitted. The management is currently evaluating the impact that this new standard will have on its consolidated financial statements.

- IFRS 15 Revenue from Contracts with Customers

The International Accounting Standards Board (IASB) has published a new standard, IFRS 15 Revenue from Contracts with customers. This standard replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers, and SIC-31 Revenue- Barter Transactions involving advertising services. It sets out the requirements for recognising revenue that apply to contracts with customers, except for those covered by standards on leases, insurance contracts and financial instruments. The new standard establishes a control-based revenue recognition model and provides additional guidance

in many areas not covered in detail under existing IFRSs, including how to account for arrangements with multiple performance obligations, variable pricing, customer refund rights, supplier repurchase options, and other common complexities.

This standard is effective for reporting periods beginning on or after 1 January 2017 with early adoption permitted. It applies to new contracts created on or after the effective date and to the existing contracts that are not yet complete as of the effective date.

Management is currently evaluating the impact that this new standard will have on its consolidated financial statements.

- IFRS 16Leases

On January 13, 2016, the IASB issued the final version of IFRS 16, Leases. IFRS 16 will replace the existing leases Standard, IAS 17 Leases, and related interpretations. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset isof low value. The Standard also contains enhanced disclosure requirements for lessees. The effective date for adoption of IFRS 16 is annual periods beginning on or after January 1, 2019 (but not yet endorsed in EU), though early adoption is permitted for companies applying IFRS 15 Revenue from Contracts with Customers.

Management is currently evaluating the impact that this new standard will have on its consolidated financial statements.

4. JOINTLY CONTROLLED ASSETS

As explained above, the Group through its subsidiaries has an interest sharing arrangement with Focus in the block which under IFRS 11: Joint Arrangements, classified as a 'Joint operation'. All rights and obligations in respect of exploration, development and production of oil and gas resources under the 'Interest sharing agreement' are shared between Focus, iServices and Newbury in the ratio of 10 per cent, 65 per cent and 25 per cent respectively.

Under the PSC, the GOI, through ONGC had an option to acquire a 30 per cent participating interest in any discovered field, upon such successful discovery of oil or gas reserves, which has been declared as commercially feasible to develop.

Subsequent to the declaration of commercial discovery in SGL field on 21 January 2008, ONGC had exercised the option to acquire a 30 per cent participating interest in the discovered fields on 6 June 2008.The exercise of this option would reduce the interest of the existing partners proportionately.

On exercise of this option, ONGC is liable to pay its share of 30 per cent of the SGL field development costs and production costs incurred after 21 January 2008 and are entitled to a 30 per cent share in the production of gas subject to recovery of contract costs as explained below.

The allocation of the production from the field to each participant in any year is determined on the basis of the respective proportion of each participant's cumulative unrecovered contract costs as at the end of the previous year or where there are no unrecovered contract cost at the end of previous year on the basis of participating interest of each such participant in the field. For recovery of past contract cost, production from the field is first allocated towards exploration and evaluation cost and thereafter towards development cost.

On the basis of above, gas production for the period ended 30 September 2016 is shared between Focus, iServices and Newbury in the ratio of 10 percent, 65 percent and 25 percent respectively.

The aggregate amounts relating to jointly controlled assets, liabilities, expenses and commitments related thereto that have been included in the consolidated financial statements are as follows:

5. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these unaudited condensed interim consolidated financial statements, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were consistent with those that applied to the consolidated financial statements as at and for the year ended 31 March 2016.

6. SEGMENT REPORTING

Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. The Company considers that it operates in a single operating segment being the production and sale of gas.

7. INTANGIBLE ASSETS: EXPLORATION AND EVALUATION ASSETS

Intangible assets comprise of exploration and evaluation assets. Movement in intangible assets was as under:

AThe above includes borrowing costs of US$ 133,303for the period ended 30 September 2016(30 September 2015: US$439,064 and 31 March 2016: US$2,034,442). The weighted average capitalisation rate on funds borrowed generally is 5.89 per cent per annum (30 September 2015: 5.68 per cent per annum and 31 March 2016: 5.84 per cent per annum).

BOn 19 November 2013, Focus Energy Limited submitted an integrated declaration of commerciality (DOC) to the Directorate General of Hydrocarbons, ONGC, the Government of India and the Ministry of Petroleum and Natural Gas. Upon submission of DOC, exploration and evaluation cost incurred on SSF and SSG field was transferred to development cost. Focus continues to carry out further appraisal activities in the Block, and exploration and evaluation cost incurred subsequent to 19 November 2013, to the extent considered recoverable as per DOC submitted by Focus, is immediately transferred on incurrence to development assets.

8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment comprise of the following:

Borrowing costs capitalised for the period ended 30 September 2016 amounted to US$ 13,657,072(30 September 2015: US$ 9,530,722 and 31 March 2016: US$ 23,304,470).

9. LONG TERM DEBT

From Banks

Current interest rates are variable and weighted average interest for the period was5.89per cent per annum (30 September 2015: 5.68 per cent per annum and 31 March 2016:5.84 per cent per annum). The fair value of the above variable rate borrowings are considered to approximate their carrying amounts.

The term loans are secured by following:-

· First charge on all project assets of the Group both present and future, to the extent of SGL Field Development and to the extent of capex incurred out of this facility in the rest of RJ-ON/6 field.

· First charge on the current assets (inclusive of condensate receivable) of the Group to the extent of SGL field.

· First Charge on the entire current assets of the SGL Field and to the extent of capex incurred out of this facility in the rest of RJON/6 field.

From Bond

During the year ended 31 March 2016, the Group has issued Singapore Dollar ("SGD") 100 million (USD74.18 million) notes under the US$ 300 million MTN programme which carries interest at the rate of 8 percent per annum. These notes are unsecured notes and are fully repayable at the end of 3 years i.e. April2018.Further, interest on these notes is paid semi-annually.

10. RELATED PARTY TRANSACTIONS

The related parties for each of the entities in the Group have been summarised in the table below:

Disclosure of transactions between the Group and related parties and the outstanding balances as of 30 September 2016, 30 September 2015 and 31 March 2016are as follows:

Transactions during the period

Amount outstanding towards related parties

*including interest

Directors' remuneration

Directors' remuneration is included under administrative expenses, evaluation and exploration assets or development assets in the unaudited consolidated financial statements allocated on a systematic and rational manner.

11.ADVANCE FOR EXPENSES/PAYABLE TO RELATED PARTIES

Advance for expenditure/payable to Focus

Receivable from/payable to Focus represents advance for expenditure given to related party in respect of the Group's share of contract costs, for its participating interest in Block RJ-ON/6 pursuant to the terms of Agreement for Assignment dated13 January 2006 and its subsequent amendments from time to time. Advance for expenditure to Focus for meeting company's share of expenses in the block RJ-ON-6/SGL Field.

The management estimates the current borrowings to be repaid on demand within twelve months from the statement of financial position date and these have been classified as current borrowings.

Liability payable to Gynia

* Borrowings from Gynia Holdings Ltd. carry interest rate of 6.5 per cent per annum compounded annually. During the current year, the entire outstanding balance (including interest) was made subordinate to the loans taken from the banks (detailed in note 13) and therefore, is payable along with related interest subsequent to repayment of bank loan in year 2024.

Interest capitalised on loans above have been disclosed in notes 7 and 8.

12. EARNINGSPER SHARE

The calculation of the earnings per share is based on the profits attributable to ordinary shareholders divided by the weighted average number of shares issued during the period.

Calculation of basic and diluted earnings per share is as follows:

*Rounded off to the nearest two decimal places.

13. COMMITMENTS AND CONTINGENCIES

At 30 September 2016, the Group had capital commitments of US$ Nil (30 September 2015: US$ Nil; 31 March 2016: US$ Nil) in relation to property, plant & equipment - development/producing assets, in the Block.

The Group has no contingencies as at 30 September 2016(30 September 2015: Nil; 31 March 2016: Nil).

14. FINANCIAL RISK MANAGEMENT

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 March 2016.

15. INCOME TAX CREDIT

Indus Gas profits are taxable as per the tax laws applicable in Guernsey where zero per cent tax rate has been prescribed for corporates. Accordingly, there is no tax liability for the Group in Guernsey. iServices and Newbury being participants in the PSC are covered under the Indian Income tax laws as well as tax laws for their respective countries. However, considering the existence of double tax avoidance arrangement between Cyprus and India, and Mauritius and India, profits in Newbury and iServices are not likely to attract any additional tax in their local jurisdiction. Under Indian tax laws, Newbury and iServices are allowed to claim the entire expenditure in respect of the Oil Block incurred until the start of commercial production (whether included in the exploration and evaluation assets or development assets) as deductible expense in the first year of commercial production or over a period of 10 years. The Company has opted to claim the expenditure in the first year of commercial production. As the Group has commenced commercial production in 2011 and has generated profits in Newbury and iServices, the management believes there is reasonable certainty of utilisation of such losses in the future years and thus a deferred tax asset has been created in respect of these.

16. BASIS OF GOING CONCERNASSUMPTION

As at 30 September 2016, the Group had current liabilities amounting to US$ 50,521,440majority of which is towards current portion of borrowings from banks and related party, Focus. The Group expects to meet its next year (year ended 30 September 2016) obligation towards existing bank loans from internal generation of cash from operations.

17. FINANCIAL INSTRUMENTS

A summary of the Group's financial assets and liabilities by category is mentioned in the table below.

The carrying amounts of the Group's financial assets and liabilities as recognised at the end of the reporting periods under review may also be categorised as follows:

The fair value of the financial assets and liabilities described above closely approximates their carrying value on the statement of financial position dates.