INFI.L Regulatory News (INFI)

Infinis Energy plc (Symbol: INFI)

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2015

Delivering in a challenging environment

Infinis Energy plc (Infinis or the Group), the UK's leading independent generator of renewable power, is pleased to announce its preliminary financial results for the year ended 31 March 2015.

Eric Machiels, Chief Executive Officer of Infinis, commented:

"This is our second year reporting as a listed company and we are pleased to announce financial results in line with expectations. Infinis Energy exported a total of 2.5 TWh of renewable power across its landfill gas and onshore wind power plants. Despite the weakening of UK wholesale power prices experienced throughout the year, our EBITDA before operating exceptionals1,5 of £142.8 million, was in line with expectations.

The highly cash generative nature of our business continues to underpin our dividend policy and I am pleased to confirm that we intend to pay a final dividend of 12.2 pence per share, bringing the total to 18.3 pence per share for the year. This is in line with our dividend commitment of £55 million for our first full financial year. We are also well on our way to deliver on our growth commitments in onshore wind with 43 MW of new wind plant capacity currently in construction and 66 MW expected to reach financial close shortly."

Summary financial performance

* In both FY14 and FY15 revenue, EBITDA from continuing operations and adjusted net income excludes Hydro which has been treated as a discontinued operation. As a consequence, FY14 has been restated for these measures. Hydro EBITDA of £2.5 million (2014: £2.3 million) is included within EBITDA before operating exceptional items as a discontinued operation.

** Excluding the contribution of Hydro EBITDA, net debt to EBITDA before operating exceptional items would have been 3.8x (FY14: 3.7x)

Financial and operating highlights

· Revenue of £236.0 million, 1.0% lower than the prior year

Ø LFG revenue and gross profit were 5% higher than last year;

Ø Lower contribution from our Wind business due to lower wind speeds;

Ø Weaker wholesale power prices for assets priced on a day-ahead basis;

· EBITDA before operating exceptional items of £142.8 million was 3.8% lower than the prior year;

· Strategic divestment of our non-core Hydro business for £20.5 million in February 2015, the proceeds of which will be reinvested in our onshore wind pipeline;

· Net debt reduced to £534.7 million and leverage was flat year on year at 3.7x;

· Final dividend declared of 12.2 pence per share, bringing the total dividend for the year to 18.3 pence per share.

Outlook

· Our landfill gas and wind businesses are performing in line with expectations. Due to our contracted position, combined with 50% of expected revenues increasing in line with inflation, we have good visibility of cash generation for the coming year. The increase in the carbon price floor to £18 per tonne of CO2 on 1 April 2015 and the ongoing tightness of the reserve margin during the Winter season are supportive of wholesale power prices for Summer and Winter 2015;

· Our onshore wind capacity growth plans are on track with A'Chruach (43 MW) in full construction. Pre-construction work has begun at Galawhistle (66 MW) with financial close expected shortly. Sisters (8MW) is at advanced stages of contract negotiation. Our IPO commitment to increase operational wind capacity by 130 to 150 MW by March 2017 remains unchanged;

· We have a strong operational platform and a track record of delivery which we believe will allow us to take advantage of opportunities for further growth in the clean and affordable energy space in the future.

Forward-looking statements

Certain statements made in this announcement are forward-looking. These represent expectations for the Group's business and involve risks and uncertainties. The Group has based these forward-looking statements on current expectations and projections about future events. The Group believes that expectations and assumptions with respect to these forward-looking statements are reasonable. However, because they involve known and unknown risks, uncertainties and other factors, which in some cases are beyond the Group's control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

Footnotes

1 EBITDA before operating exceptional items: Earnings before interest, tax, depreciation, amortisation, impairment, and before operating exceptional items. This measure includes the contribution from the Hydro division which was sold in February 2015 and has been treated as a discontinued operation.

2 EBITDA from continuing operations: Earnings before interest, tax, depreciation, amortisation and impairment. This is stated excluding the EBITDA contribution from the discontinued Hydro division and operating exceptional items. Hydro contributed £2.5 million in FY15 (2014: £2.3 million). In FY15 there were no operating exceptional items (FY14: £39.4 million relating to the costs of listing the Group and refinancing costs).

3Adjusted net income is net income after adjusting for amortisation of intangible fixed assets, total exceptional items and tax thereon and excludes any contribution from the discontinued Hydro business.

4 Net debt is current and non-current interest bearing loans and borrowings less cash and cash equivalents, excluding mark to market derivative positions.

5Non-GAAP measure.

Investor Relations 

Analyst presentation and conference call

Management will host a presentation for analysts at 9.15am (London BST) today at RBC, Thames Court, 1 Queenhithe, London, EC4V 3DX.

The meeting can also be accessed via a conference call. After the meeting, a recording of the call will be available. Access details are set out below.

A copy of the presentation will be made available from 8.45am (London BST) on 28 May 2015.

Details for the call are provided below:

UK Number: +44 (0) 1452 555566

Pass code: 11896421

Upcoming investor timetable:

For further information, please contact:

Investors and analysts: Will Cooper, Head of Investor Relations

Infinis Energy plc

Telephone: +44 (0) 1604 742338

Email: equityinvestors@infinis.com

Media: David Litterick

Brunswick LLP

Telephone: +44 (0) 20 7404 5959

Email: infinis@brunswick.com

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Chairman's Statement

This is the second Infinis annual report and accounts as a listed company and like many other aspects of life, the second year has proved at least as challenging as the first. Nonetheless, the team at Infinis has continued its focus on delivering on its IPO commitments. This focus has served shareholders well.

Let me begin by outlining some of the challenging aspects of the business environment.

The UK has been implementing reforms to the electricity market during 2014 to deliver on its three stated objectives of decarbonising energy generation, ensuring security of supply and providing affordable power. Whilst the overall framework for the promotion of renewable energy at the European level is unchanged, the UK is transitioning to a new regulatory support regime for new generation. This created much debate about the long-term future prospects for new investment in renewable energy, but in reality, the short-term outlook for Infinis has remained largely unchanged. Output of our current and near term pipeline of new projects will continue to be remunerated under the RO scheme. Our longer term pipeline of onshore wind projects are well positioned for the new CfD regime.

The recent general election has created many headlines over the past few months but it is the substance now that needs to be dealt with by the new Conservative government. Following the cross party commitment to combat climate change in February, the Tory manifesto committed to "push for a strong global climate deal that keeps a 2C goal within reach". This points to the need for a long-term plan to reduce the carbon emissions from electricity generation. The UK also has legal obligations on levels of renewable energy in 2020. These create the overall framework for policy in the UK.

There has been more debate about the role of onshore wind developments but, based on the evidence, we remain convinced of the role that onshore wind has to play in the UK energy mix as the lowest cost, clean renewable energy technology. We believe our current wind construction projects will be unaffected by any future policy changes and the Conservatives have said that any change to the support mechanisms for onshore wind would be implemented over the lifetime of this Parliament, we hope that the new government will focus on ensuring there is greater regulatory certainty, rationality of debate and delivery of affordable renewable electricity in the years up to 2020 and beyond.

The significant fall in oil prices seen during 2014 has resulted in lower gas and wholesale power prices. Much of the impact on wholesale power prices in the last financial year and the new financial year has been mitigated due to the Company's contracting strategy. However, should oil prices remain at current levels for a number of years then clearly this will have an adverse impact on the performance of the Company in future years.

I should also comment on the position with our major shareholder, Terra Firma. In early December 2014, Terra Firma, the general partner of our largest shareholder, announced their desire to find a way of selling down their entire and remaining holding of nearly 70%. We have engaged constructively with Terra Firma and continue to seek solutions that are in the interests of all shareholders. We look forward to this issue being resolved in the near future.

Against this background, I believe that the delivery record of the Infinis team is impressive. Our key measure of profit, EBITDA before operational exceptional items1, at £142.8 million, demonstrates the resilience of our business model. We have made good progress on our growth plans with the A'Chruach wind farm construction now well underway and the Galawhistle project expected to achieve financial close shortly. We now have around 109 MW of new wind capacity in construction and pre-construction and we are exploring and developing a number of different options for the remaining commitment to build 130 to 150 MW made at the time of the IPO.

We have also delivered on the dividend commitment we made back in November 2013. We are pleased to declare a final dividend of 12.2 pence per share which brings the total dividend for the full financial year to 18.3 pence per share.

The Board and management team have met regularly during the year and we have taken the opportunity to hold our meetings at various Infinis locations. The highlight was meeting at the Centre of Excellence in Lancaster where our expert engineers overhaul our LFG engine fleet. The Board and management team, as I wrote last year, is a good mix of experience of industry and backgrounds. This, I believe, is serving shareholders' interests well. Sadly, Sam Calder, our Company Secretary passed away in December last year and her valuable input to Infinis and the Board will be greatly missed.

I believe that this track record of delivering in a challenging environment demonstrates both the resilience of the Infinis business model and the commitment of the whole Infinis team, two features that will serve shareholders well in the years ahead.

Chief Executive's statement

Overview

This was our first full financial year after listing on the London Stock Exchange in November 2013 and it was a year of strong delivery against the background of weakening commodity prices and ongoing regulatory uncertainty. Solid operational and financial results in FY15 underpin the Infinis dividend policy, whilst good progress has also been achieved on delivering our growth strategy by March 2017.

Operationally we have continued to perform well, with high levels of engine reliability and availability in our LFG and onshore wind businesses. LFG delivered comfortably above its annual output target whilst wind speeds picked up in the second half of the year, offsetting most of the underperformance reported in the earlier quarters of FY15. Together this translated into delivering 2.5 TWh (FY14: 2.6 TWh) of electricity during the year. This is the equivalent to the annual electricity needs of about half a million homes.

We have delivered this sound operational performance whilst continuing to focus on health and safety. This year our RIDDOR accident rate dropped to 0.2 from 0.3 in the previous financial year. Our health and safety performance has again been recognised externally by the Royal Society for the Prevention of Accidents and the award of the International Safety Award from the British Safety Council. We have now been awarded a Gold Award for each of the last seven years.

As outlined in the Chairman's statement and in more detail in the Financial review, we have delivered a sound financial performance in a period of declining wholesale power prices, with FY15 EBITDA before operating exceptional items of £142.8 million (FY14: £148.4 million). Infinis' resilient business model is supported through 50% of our revenues being fixed and RPI-adjusted. When combined with a forward power contracting policy applied to two thirds of exported output, this has enabled us to partially mitigate the deflationary trends of oil markets on natural gas and wholesale power prices. I am pleased with our results and to confirm that Infinis proposes paying out the full £55 million dividend for FY15.

Strategically, we completed the disposal of our non-core Hydro business in a £20.5 million transaction in February 2015. The proceeds will be used to support and fund the build-out of our onshore wind development portfolio.

Future developments

Growth plans

Construction on the 43 MW A'Chruach wind farm in Argyll & Bute is progressing well and full commissioning of the farm is still expected by March 2016. We expect to announce that Galawhistle wind farm in South Lanarkshire has reached financial close shortly and that final design of the site has enabled us to increase the installed capacity from 55 to 66 MW. Pre-construction work has already started on site to accommodate grid works to be undertaken this summer by Scottish Power Transmission. With grid energisation scheduled for the end of September 2016, the project remains on track to achieve full commissioning well in advance of the March 2017 RO deadline.

The balance of our 130 to 150 MW pipeline to be built under the RO by March 2017 is expected to come from the combination of Sisters in Northumberland, A'Chruach Extension and one more site, all of which are expected to move to full construction stage by the end of this year. In addition we continue to progress our remaining development pipeline which, subject to achieving planning consent, will participate in the CfD auction process.

Power contracting

Although natural gas and wholesale power prices have declined over the past year, they have held up relatively well in comparison to the decline in oil prices. The doubling of the carbon price floor to £18 per tonne of CO2 on 1 April 2015 and ongoing tightness of the reserve margin during the Winter season are supporting wholesale power price levels available in the day ahead and season ahead market for Spring and Winter 2015.

We have continued to contract forward in line with our contracting strategy. Approximately 50% of our revenues are exposed to wholesale power prices which we seek to mitigate through our contracting strategy. We have fixed the price for 81% of expected generation for the next financial year which means that around 10% of our revenues for the year ending 31 March 2016 remain exposed to fluctuating wholesale power prices.

The table below shows our contracted power position for LFG as at 1 May 2015:

\* The NFFO value reduces by 2p/MWh from Summer 15 to Winter 15 due to higher value NFFO4 contracts expiring.

Power sold at fixed prices under the RO scheme, in respect of expected LFG output, has been contracted at an average selling price of £46.76/MWh for Summer 15, £50.65/MWh for Winter 15 and £47.42/MWh for Summer 16. Summer 15 and Winter 15 correspond to our financial year ending 31 March 2016. In addition to revenues from the sale of power, we also earn revenues from the sale of ROCs and LECs, and receive embedded benefits.

Our onshore wind business sells power through long-term power purchase agreements (PPAs) with prices predominantly set by reference to the day-ahead wholesale power price. For this financial year around two thirds of our expected output is exposed to day ahead power prices. For A'Chruach, we have entered into a PPA that allows the Company to fix forward the wholesale power price up to a period of three years once the wind farm is operational. This is a new feature of the PPA market which, over time, could provide Infinis with the ability to manage the day-ahead risk exposure within our onshore wind business.

Outlook

Much of the regulatory focus of the past year was on the outcome of the Scottish independence referendum. Its rejection brought the regulatory clarity needed for Infinis to progress its two large projects in Scotland (A'Chruach and Galawhistle). Two key initiatives embedded in the Electricity Market Reform Act have now been implemented, with the first capacity market and Contract for Difference (CfD) auctions having taken place. Infinis did not submit any projects in the first CfD auction round as it remains our clear priority to build as much of our pipeline under the RO regime as possible. New accreditations under the RO regime will cease on 31 March 2017.

We have a strong operational platform and a track record of delivery which we believe will allow us to take advantage of opportunities for further growth in the clean and affordable energy space in the future.

Going the extra mile

The achievements of this financial year rest in the teamwork, efforts and dedication of the whole Infinis team. I am thankful to all of the Infinis team who deliver day in, day out in the pursuit of excellence. Stewart Gibbins, our Operations Director for the past ten years and tireless architect of the Infinis operational excellence agenda, retired at the end of April 2015. We wish him well in this new phase of life. He has been succeeded by Shane Pickering who has joined Infinis from Intergen where he was Director of Operations Engineering (Europe). Sadly in December, Samantha Calder, our long serving Company Secretary, unexpectedly passed away. Sam embodied all the energy and cultural values of the Infinis team and she will be fondly remembered and sadly missed by all of us.

Operating and financial performance

* The comparative figures have been restated to reflect the discontinued Hydro operation. EBITDA before operating exceptional items includes the contribution from Hydro.

Financial Performance

Infinis delivered a solid financial performance for the financial year ended 31 March 2015 with EBITDA before operating exceptional items of £142.8 million, a decrease of 3.8% on the prior year. The financial result was underpinned by a strong operating performance in landfill gas offsetting lower wind generation and lower day ahead power prices. The EBITDA margin5 including discontinued operations but before operating exceptional items was 59.7%, 1.5% lower than the prior year of 61.2%, reflecting the lower mix of wind generation in the portfolio. Excluding discontinued operations but before operating exceptional items, the EBITDA margin was 59.4% (2014: 61.3%).

Adjusted net income decreased by £3.0 million to £36.3 million and net debt to EBITDA before operating exceptional items remained flat at 3.7 times.

Group revenue

Group revenue for the financial year was £236.0 million, a decrease of 1.0% on the prior year. LFG contributed £180.0 million (2014: £171.4 million) and onshore wind contributing £56.0 million (2014: £67.0 million). Revenue under the RO regime increased from £206.6 million to £214.4 million reflecting the switching of NFFO contracts to RO contracts in the LFG business and which more than offset the decrease in wind RO revenue due to lower wind output and lower day-ahead prices.

Other income relating to embedded benefits and triad income increased to £13.3 million from £12.6 million. Embedded benefits are received from electricity suppliers and arise from being part of the distribution network.

A key driver of our performance is the average selling price (ASP) received from sales of electricity. The unadjusted ASP includes amounts recognised from sales made under the RO and NFFO schemes during the financial year. An element of RO income, known as recycled ROC, is estimated during the current financial year but the final value is not known until the following year when Ofgem announce the value. Any difference between the estimate and the final amount will give rise to an "out of period" variance. The following table bridges our ASP and the divisional adjusted ASPs are explained within the divisional commentaries:

* Discontinued operation

Operating performance

Exported electricity

Total exported power for the Group (excluding Hydro output) was 2,472 GWh (2014: 2,597 GWh). This is equivalent to 5.3%12 of total generation from renewable sources in the UK. Total installed capacity for the Group at 31 March 2015 was 589 MW of which 315 MW relates to LFG and 274 MW relates to onshore wind. Electricity from LFG remains our largest business contributing 75% of total exported output (2014: 72%) and onshore wind contributed 25% of total exported power (2014: 28%).

Operating portfolio: Landfill gas

In the UK, Infinis is the market leader in generating electricity from landfill gas. We account for around 40%13 of all electricity generated in the UK from LFG and the business generated a gross profit of £113.5 million in the year to 31 March 2015 (2014: £107.6 million). In this financial year we exported 1,842 GWh of electricity from LFG sources (2014: 1,871 GWh), representing a 1.5% decline in output.

The performance in exported power was ahead of management expectations and whilst not attributable to any one factor in particular, there was higher availability and collection of gas relating to (i) benign weather conditions that maintained the condition of the landfill caps, and (ii) ongoing improvements in gas field infrastructure and management.

Revenue for the twelve months ended 31 March 2015 increased to £180.0 million from £171.4 million in the comparative period, an increase of £8.6 million or 5.0%. The increase was driven by the higher ASP due to the greater proportion of RO generation in the total revenue mix. LFG exported power under the RO regime increased to 90% (2014: 77%) and the total adjusted ASP achieved in the twelve months of this financial year of £91.41/MWh was £6.50/MWh higher than the comparative period. There are now 9 NFFO contracts remaining with the last terminating and converting to RO in FY19.

Operating expenses were £66.5 million, an increase of £2.7 million on the prior year. The increase was mainly due to higher royalties payable due to higher revenues plus an increase in the number of engine decokes and servicing requirements. The gross profit margin increased marginally to 63.1% from 62.8%.

Operating portfolio: Onshore wind

Infinis is one of the leading onshore wind businesses in the UK operating across 16 sites. In total our wind division exported 630 GWh in the year to 31 March 2015 (2014: 727 GWh), which was slightly below P50 management expectations. The second half of our financial year was in line with P50 expectations but this did not offset the lower wind conditions in the first half of the financial year. Comparatively, 2014 performed ahead of P50 expectations and benefited from high wind speeds in the winter months. Availability for our wind farms remained high at 97% (2014: 96%).

We sell our power through long-term power purchase agreements (PPAs) with prices predominantly set by reference to the day ahead wholesale power price. Renewable power benefits (ROCs and LECs) are also sold under long-term PPAs, either together with the wholesale power element or separately.

Revenue decreased to £56.0 million from £67.0 million driven by a reduction in both exported volume and lower day ahead wholesale power prices. Adjusted ASP decreased by £2.26/MWh to £87.62/MWh from £89.88/MWh in the previous year.

Operating expenses remained broadly flat reflecting the relatively fixed cost nature of the wind portfolio. The onshore wind business' gross profit decreased to £43.5 million from £54.1 million, reflecting the reduction in revenues and gross profit margins decreased by 2.9% to 77.8%.

Discontinued operation: Hydro

The Hydro business was disposed of during the financial year and we include the results up to 31 January 2015. Hydro contributed £2.5 million to EBITDA in this financial year (2014: £2.3 million).

Administrative expenses

Administrative expenses were £16.7 million, £1.1 million higher than the previous year. The increase relates principally to the current year reflecting a full 12 months of costs as a listed company. In both FY15 and FY14, we benefited from releasing provisions totalling £1.7 million and £1.3 million respectively following periodic balance sheet reviews and the collection of bad debts previously provided for.

Depreciation, amortisation and impairment

The depreciation and amortisation charge of £73.7 million was £2.7 million lower than the prior year charge of £76.4 million. The reduction in the overall charge reflects some assets now being fully depreciated.

There has been no impairment of non-current assets during the year (2014: £nil).

Net finance costs

Net finance costs were £38.4 million which compare to net finance costs excluding exceptional finance costs of £39.4 million in the prior year. We have benefited from a full year of lower interest costs following the refinancing of the operational wind portfolio in October 2013. Additionally, we have made scheduled debt repayments on our operational wind facility during the year.

Tax

The Group's tax charge for the full financial year of £8.6 million (FY14: £15.8 million credit) comprised a current tax expense of £10.6 million (FY14: £10.1 million), partially offset by a deferred tax credit of £2.0 million (FY14: £26.0 million).

The underlying effective tax rate of 23% (FY14: 26%) was higher than the standard UK rate of corporation tax of 21% (FY14: 23%) as not all of the Group's income and capital expenditure qualifies for tax relief. The large deferred tax credit of £26.0 million in FY14 was due to two principal non-recurring factors:

· £12.2 million due to timing differences, which mostly related to tax losses within our operational wind business. The credit arose as a result of refinancing and consolidating ten separate operational wind project finance facilities into one syndicated loan. These losses cannot currently be surrendered to Group companies outside this facility; and

· £10.9 million due to substantively enacted future reductions in the mainstream rate of corporation tax.

Adjusted net income

In order to provide an appropriate measure of profitability, the Group reports adjusted net income which is defined as net income after adding back amortisation and exceptional items (excluding discontinued operations) and net of tax thereon. Adjusted net income for the year ended 31 March 2015 was £36.3 million (2014: £39.3 million). The reduction of £3.0 million is due to the post tax impacts of lower EBITDA partially offset by lower net finance costs and depreciation and amortisation.

Cash position and finance facilities

Cash and cash equivalents was £75.4 million at 31 March 2015 compared to £81.1 million at 31 March 2014. An analysis of cash flows is set out below:

Net cash flow from operating activities

The Group generated a net cash inflow from operating activities of £80.0 million in the year to 31 March 2015 compared to £65.3 million in the prior year. EBITDA after operating exceptional items was £142.8 million (FY14: £109.0 million), £33.8 million higher due primarily to one-off operating exceptional costs incurred in FY14 relating to the IPO.

We maintain a high focus on our working capital. The increase in working capital of £11.3 million mainly relates to the timing of trade and other payables, a reduction in accruals no longer required and the settlement of costs relating to the IPO. The prior year benefited from a debtors cash inflow of £4.3 million, reflecting the focus we placed on improving our billing and cash collection procedures. In FY15, we further improved on this performance with a £1.3 million inflow.

Interest paid was £35.9 million, a decrease of £3.2 million. The decrease primarily relates to the full year benefit of reduced interest rates on the operational wind facility and lower debt balances as we made scheduled debt repayments of £19.9 million on the operational wind facility during the year.

The Group paid £15.6 million of tax (FY14: £2.0 million) which included payments of £6.2 million and £9.4 million in relation to FY15 and prior year tax liabilities, respectively. The £9.4 million in relation to prior years included a payment of £3.7 million relating to the loss of a temporary cash flow benefit following the restructure of the Group prior to the IPO and refinancing of bank facilities, most of which were tax deductible. The prior year cash flow benefited from the deferral of this taxation.

Cash flows from other investing activities

Net cash outflow from investing activities was £26.8 million a decrease of £11.7 million on the prior year. Cash capital expenditure in the year was £41.0 million (2014: £38.7 million) which was in part offset by a net inflow of £14.1 million comprising the proceeds from the disposal of the Hydro business of £20.5 million, Hydro transaction costs of £0.5 million and a payment of £6.0 million for the extension of LFG rights on certain sites.

Financing activities

The Group paid dividends to shareholders post IPO totalling £38.2 million (2014: Pre IPO dividends of £44.3 million) and made net repayments of £20.7 million on loans (net of fees and costs associated with financing and refinancing of bank facilities) compared to a net inflow of £50.4 million. In the prior year the Group issued one new ordinary share to Monterey Capital II S.a r.l in exchange for Monterey funding the Group's obligations in respect of a pre IPO management LTIP resulting in an inflow of £22.6 million. In FY14 swap break costs of £21.5 million were incurred in connection with the refinancing of the Group's operational wind portfolio.

Net debt4

Net debt at 31 March 2015 was £534.7 million (2014: £547.3 million). Net debt to EBITDA before operating exceptional items was 3.7 times at 31 March 2015 (2014: 3.7 times). Net debt decreased principally due to the receipt of £20.5 million from the sale of the Hydro business.

Non-current assets were £878.0 million as at 31 March 2015 a decrease of £48.8 million on the prior year. The decrease predominantly reflects depreciation and amortisation charges in the year of £73.7 million which exceeded capital additions of £43.6 million, and the disposal of the Hydro business.

Capital additions in the current year were £43.6 million, compared to £32.2 million in the year ended 31 March 2014. The year on year increase was predominantly due to construction starting on the A'Chruach wind farm project. Wind capital additions of £24.5 million, were £12.0 million higher than the prior year of £12.5 million. LFG capital additions were £19.2 million compared to £19.4 million in the prior year. The Group's net deferred tax liability as at 31 March 2015 was £67.2 million which was £8.6 million lower than the prior year of £75.8 million. The deferred tax liability has decreased as timing differences unwind.

Capital resources

The Group has three primary funding facilities. The LFG business has a £350 million bond, secured on the LFG assets, maturing in February 2019. The operating wind business has total facilities secured on the wind assets of approximately £325 million, comprising an amortising term loan (of which £265.8 million was outstanding as at 31 March 2015), and £33.3 million of ancillary facilities. This facility matures in October 2020. The Group has a £50 million revolving credit facility (RCF) which matures in September 2017. The RCF was undrawn at the year end.

In addition the Group has a facility to fund A'Chruach. The facility is secured on the assets of the project company and are non-recourse to the Group. A'Chruach facilities total £53 million and mature in September 2020. At 31 March 2015 the term loan facility was undrawn.

Going concern

Having made enquiries, the Directors consider that the Company and its subsidiaries have adequate resources to continue in operation for the foreseeable future, and that it is therefore appropriate to adopt the going concern basis in preparing the consolidated and individual financial statements of the Company. The Directors consider that a robust going concern assessment process was undertaken and the results were discussed and challenged by the Audit Committee.

Liquidity risk, the risk that the Group will have insufficient funds to meet its liabilities, is managed by the Group's Treasury function. The Group can experience significant movements in its liquidity position due to movements in power prices, working capital requirements and phasing of future wind development and construction projects. Treasury is responsible for managing the banking and liquidity requirements of the Group, risk management relating to interest rate risk, and managing the credit risk relating to the banking counterparties with which it transacts, including ensuring compliance with any banking covenants. Short-term liquidity is reviewed daily by Treasury, while the longer term liquidity position is reviewed on a regular basis by the Board.

In relation to the Group's liquidity risk, the Group's policy is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. Based on management forecasts and committed bank facilities with no immediate maturing facilities, the Group considers it has adequate headroom and will continue to meet liabilities as they fall due.

Principal risks and uncertainties

Landfill gas availability

Gas availability across our portfolio may decline faster than anticipated due to inaccurate estimates, changes in waste volumes (including early landfill site closure) or mix resulting in lower revenues and impairment of the carrying value of assets. The proportion of closed sites in our portfolio will increase over the next five years, either in line with the national trend driven by the Landfill Directive or as a result of early landfill closure due to declining margins as a result of increasing landfill tax.

Mitigation/comments:

Estimates and methodology for gas availability and forecasting were independently reviewed prior to the IPO in November 2013. The results of the independent review were consistent with management's estimates. Management's estimates are regularly updated to reflect latest waste volumes/mix and tipping plans provided by landfill operators. We have a good track record of forecasting available gas. Over the last five years output from landfill gas has varied between plus and minus 2% compared with budget. Infinis is the largest landfill generator in the UK operating across a number of sites throughout the country. In the event of early closure of sites by a landfill operator, waste may be diverted to another site from which Infinis extracts landfill gas.

Change: Increase in risk profile

Failure to extend leases/early termination

We do not own any of our operating sites and are dependent on lease arrangements. Failure to renew expiring leases could result in a reduction in revenues.

Failure to comply with existing lease terms could result in early termination resulting in a reduction in revenues.

Mitigation/comments:

To date we have a 100% success rate for lease renewals. Infinis has a dedicated compliance function to monitor compliance with our environmental obligations (e.g. maintaining permits). In the year ended 31 March 2015 we completed an improvement programme to streamline our royalties payment process and to improve the level of service provided to counterparties.

Change: No change to risk profile

Increasing proportion of revenues dependent on wholesale power prices

A proportion of our LFG output is sold at fixed prices under the NFFO regime. All of these contracts will expire by 2019 and, as they expire, output will be sold under the RO regime. A significant proportion of revenues derived from RO sales is dependent on wholesale power prices. Due to the volatility of wholesale power prices, our revenues are likely to be more volatile than has been the case historically. The proportion of Group revenue derived from wind generation is expected to increase as we deliver on our growth agenda. We have historically sold wind output under long-term sales agreements where the price is referenced to day-ahead wholesale power prices. Due to the volatility of wholesale power prices (and intermittency of wind), our revenues are likely to be more volatile than has been the case historically.

Mitigation/comments:

Although year-on-year revenues may be more volatile as a result of the migration of LFG output from the NFFO to RO regime, all-in prices achieved from RO sales are significantly higher. A significant proportion of revenue obtained from RO sales is fixed and increases annually by RPI. We mitigate short- to medium-term wholesale power price volatility by selling ahead a proportion of our expected LFG output at fixed prices. All of our existing wind generation has been accredited under the RO regime, with a significant proportion of expected revenue fixed and increasing annually by RPI. Exposure to the wholesale power price element in a number of our existing wind farms is mitigated by a £30/MWh floor price included in long-term sales agreements. New wind farms will either be accredited under the RO regime or under the CfD regime currently being introduced (which offers fixed prices). On our A'Chruach wind farm we have entered into a long term sales agreement which allows us to fix a proportion of expected output up to three years ahead at fixed prices. A similar contracting arrangement is planned for Galawhistle.

Change: No change to risk profile

Counterparty risk

We sell our generation output and related products to a small number of UK counterparties under a variety of contractual relationships. Failure of a counterparty to honour a contract may result in loss of revenue for power already delivered or, for power not yet delivered, a loss of future revenue where we are unable to enter into a replacement contract with another counterparty.

Mitigation/comments:

We enter into contracts with creditworthy counterparties and have recently added additional counterparties to reduce concentration risk. We are also exploring alternative routes to market.

We maintain a strong focus on working capital management which ensures that any potential loss for power already delivered is minimised.

Change: No change to risk profile

Commodity price risk

Electricity prices are determined by a number of factors including electricity demand and the price of certain commodities (oil, gas, coal and carbon). Commodity prices have a direct impact on the cost of generation and therefore electricity prices. As we are a price taker and do not set the price of electricity our revenues will be affected by changes in commodity prices.

Mitigation/Comments:

A significant proportion of our revenue is fixed and increases annually in line with inflation. We reduce short to medium term revenue volatility by selling power forward at fixed prices in accordance with our trading strategy. Our largest single cost item is royalties which are directly correlated with revenues and is therefore naturally hedged.

Change: No change to risk profile

Funding risk

Although we have sufficient liquidity to meet our current needs, our plan to build 130 MW to 150 MW of new wind capacity by March 2017 is dependent on being able to raise new debt. If we are unable to so then our ability to grow the business may be threatened.

Mitigation/comments:

The Group has no refinancing risk until 2019 and has a £50 million revolving credit facility in place to September 2017. We have experience of raising project finance and are well known to lenders. Until we refinanced our operational wind portfolio in October 2013 with a single facility we operated ten separate project finance facilities provided by nine lenders. In November 2014 we completed the financing of A'Chruach wind farm (43 MW) which is now under construction. We are currently raising funds to support the construction of a wind farm to be built at Galawhistle and which we expect to reach financial close shortly.

Change: No change to risk profile

Changes in government support for renewables

The Group is dependent on regulatory support for its existing generating capacity, through the NFFO and RO regimes, for a significant proportion of its revenues. Changes to this support could have a material impact on our revenues.

Continued regulatory support is required for our plans to build 130 MW to 150 MW of new wind capacity by 2017. New wind farms commissioned after 2017 will receive support under new arrangements (the CfD regime), with a three-year transition period between 2014 and 2017. Prices achieved in competitive CfD auctions may not meet our investment hurdle rates resulting in stranded development assets. The recently elected Conservative government is expected to be less supportive of renewable energy than the previous coalition government and in particular on providing support for new on-shore wind farm construction.

Mitigation/comments:

Over the years the UK has made several changes to the support mechanisms for renewable power but has adopted a consistent 'grandfathering' approach throughout. There are no indications that this approach will change. For all of our wind farm developments expected to be constructed under the CfD regime we have assumed lower power prices being achieved than under the RO regime. Expenditure is only incurred on new developments where we believe we will meet our investment hurdle rates. The UK requires additional renewable generation to meet its binding 2020 targets. We will continue to engage with government, through industry trade bodies, on the advantages of continued on-shore wind investment as being the lowest cost source of renewable energy.

Change: Increase in risk profile

Weather

Weather impacts both demand for electricity and our ability to generate. Weather can have a small impact on LFG production but has a much greater impact on wind. As wind assumes an ever greater share of our generating capacity, output volatility is likely to increase resulting in greater revenue volatility.

Mitigation/comments:

Although wind is increasing as a proportion of total generating capacity, LFG remains significant due to a combination of higher installed capacity and its base load characteristics. We have sufficient liquidity to be able to continue to meet all of our commitments regardless of wind revenue volatility for the foreseeable future.

Change: No change to risk profile

Footnotes

1 EBITDA before operating exceptional items: Earnings before interest, tax, depreciation, amortisation, impairment, and before operating exceptional items. This measure includes the contribution from the Hydro division which was disposed in February 2015 and has been treated as a discontinued operation.

2 EBITDA from continuing operations: Earnings before interest, tax, depreciation, amortisation and impairment. This is stated excluding the EBITDA contribution from the discontinued Hydro division and after operating exceptional items. Hydro contributed £2.5 million in FY15 (2014: £2.3 million). In FY15 there were no operating exceptional items (FY14: £39.4 million relating to the costs of listing the Group and refinancing costs).

3Adjusted net income: Net income after adjusting for amortisation of intangible fixed assets, total exceptional items and tax thereon, and excludes any contribution from the discontinued Hydro business.

4 Net debt: current and non-current interest bearing loans and borrowings less cash and cash equivalents, excluding mark to market derivative positions.

5EBITDA before operating exceptional items expressed as a percentage of revenue.

6Non-GAAP measure.

7 There were no operating exceptional items in 2015 (2014: £39.4 million comprising IPO related costs of £37.1 million and operating exceptional refinancing costs of £2.3 million).

8There were no exceptional finance costs in 2015 (2014: £19.8 million of costs incurred in relation to refinancing the Operational Wind portfolio under a single facility.

9Adjusted earnings per share: Basic earnings per share calculated using adjusted net income as the numerator rather than profit for the year.

10 Average Selling Price (ASP): Defined as RO and NFFO revenue recognised in the period divided by exported power.

11 An element of ROC revenue, known as the recycled element, is received following the publication of the recycle price by Ofgem. We estimate the value of the recycled ROC during the financial year. When Ofgem subsequently announce the value of the recycled ROC, which normally occurs during the October immediately following the financial year, any difference between the amount announced and our estimate will give rise to an "out of period" variance. The comparative year is restated to include the adjustment for FY15.

12 Ofgem Renewables and CHP Register MWh generated in CP13 (latest available figures).

13 Ofgem Renewables and CHP Register MWh generated in 2014 (latest available figures). The numbers are based on Jan-Dec 2014, not the compliance period, which runs from April to March.

Infinis Energy plc

Consolidated statement of comprehensive income

for the year ended 31 March 2015

1 The comparative figures have been restated to reflect the hydro segment as a discontinued operation. Refer to note 2 for further details2 EBITDA before operating exceptional items comprises continuing and discontinued operations3 Adjusted net income is defined as the adjusted net income from continuing operations before amortisation and the associated tax thereon4 Adjusted earnings per share is defined as the adjusted net income from continuing operations per share

Infinis Energy plcConsolidated statement of financial positionat 31 March 2015

The financial statements were approved by the Board of Directors on 28 May 2015 and were signed on its behalf by:

G A Boyd Director E P M Machiels DirectorCompany number: 08714174

Infinis Energy plc

Consolidated statement of changes in equityfor the year ended 31 March 2015

Infinis Energy plc

Consolidated cash flow statementFor the year ended 31 March 2015

The Group has elected to present a statement of cash flows that analyses all cash flows in total, including both continuing and discontinued operations. Amounts relating to the discontinued operation are disclosed in note 2.

Infinis Energy plc

Notes forming part of the preliminary financial statementsfor the year ended 31 March 2015

Basis of preparation

The financial information presented within this document does not comprise the statutory accounts of Infinis Energy plc for the financial years ended 31 March 2015 and 31 March 2014 but represents extracts from them. These extracts do not provide as full an understanding of the financial performance and position, or financial and investing activities, of the Company as the complete Annual Report.

The statutory accounts for the financial year ended 31 March 2015 have been reported on by the Company's auditor and will be delivered to the registrar of companies in due course. The reports of the auditor were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The Annual Report, including the auditor's report, can be downloaded at www.Infinis.com.

On 3 February 2015, the Group completed its sale of its entire hydro segment, and consequently the hydro segment is classified as a discontinued operation in the financial statements. It was not previously classified as discontinued and the comparative period (consolidated statement of comprehensive income and associated notes) has been restated to show the discontinued operation separately from continuing operations.

(a) Significant accounting policies

The accounting policies applied in these financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 March 2015. During the year the Group has adopted the following new standards and amendments to standards:

- IFRS 10: Consolidated Financial Statements

- IFRS 11: Joint Arrangements

- IFRS 12: Disclosure of Interests in Other Entities

- Amendments to IFRS 10, IFRS 11 and IFRS 12 - Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities

- IAS 27: Separate Financial Statements (revised)

- IAS 28: Investments in Associates and Joint Ventures (revised)

- Amendments to IAS 32: Financial Instruments: Presentation

(b) Judgments and estimates

In preparing these financial statements, management necessarily makes judgments and estimates that have a significant effect on the values recognised in the financial statements. Changes in the assumptions underlying these judgments and estimates could result in a significant impact to the financial statements.The significant judgments made by management in applying the Group's accounting policies and key sources of estimation uncertainty are the same as those applied to the consolidated financial statements as at and for the year ended 31 March 2015.

Infinis Energy plc

Notes forming part of the preliminary financial statementsfor the year ended 31 March 2015

1. Segment information

Segment information is prepared in conformity with the accounting policies of the entity as disclosed in note 5 of the annual report and IFRS accounting standard IFRS 8, Operating Segments.

Segment revenues, expenses and capital expenditure are those directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis.Description of segments

The Group is organised into the following segments, all of which operate in the UK and form the basis of reporting to management and the Board:LFG

The LFG segment operates and maintains electricity generators, fuelled by methane gas extracted from landfill sites.Wind

The wind segment operates and maintains wind farms, and a number of wind farm sites at various stages of development.Hydro

The hydro segment operated hydroelectric generators at sites across the UK. This segment was classified as a discontinued operation as disclosed in note 2.

Unallocated

Unallocated costs relate to central overheads and other costs not directly attributable to the segments.

Segment revenues, expenses and capital expenditure are those directly attributable to a segment. Information regarding the results of each segment is included below. Performance is measured based on divisional EBITDA, as included in the internal management reports. Divisional EBITDA is used to measure performance as management believes that such information is the most relevant in evaluating the results of segments relative to other entities that operate within these industries.

Non-GAAP measure

EBITDA before operating exceptional items is a non-GAAP measure defined as earnings before interest, tax, depreciation, amortisation and impairment, and before operating exceptional items.

Infinis Energy plc

Notes forming part of the preliminary financial statementsfor the year ended 31 March 2015

1. Segment information continued

Included in revenue is revenue of approximately £153,388,000 (2014: £143,054,000) which arose from sales to the Group's largest three customers. No other single customers contributed 10% or more to the Group's revenue in either 2015 or 2014.

(i) Operating expenses represent cost of sales excluding depreciation

(ii) Administrative expenses exclude operating exceptional items, amortisation expense and the element of depreciation charged on administrative assets

(iii) Operating exceptional items comprise costs incurred in relation to refinancing of operations and IPO related expenses (see note 3)

Infinis Energy plc

Notes forming part of the preliminary financial statementsfor the year ended 31 March 2015

2. Discontinued operation

On 3 February 2015, the Group completed the sale of its entire hydro segment for cash consideration of £20.5 million. Management committed to the sale of the non-core hydro business in December 2014.

The hydro segment was not previously classified as held-for-sale or as a discontinued operation. The comparative consolidated income statement has been restated to show the discontinued operation separately from continuing operations.

(a) Results of discontinued operation

Infinis Energy plc

Notes forming part of the preliminary financial statementsfor the year ended 31 March 2015

3. Expenses

(a) Operating expensesIncluded in operating profit are the following:

(b) Exceptional items and amortisation

The Group has adjusted for the following items, in order to provide a more appropriate measure of its underlying profitability:

Operating exceptional items

 (i) Refinancing costs in the year to 31 March 2015 were £nil (2014: £2,318,000). During the year ended 31 March 2014 the Group restructured and refinanced its wind operations

(ii) IPO related costs in the year to 31 March 2015 were £nil (2014: £37,086,000). During the year ended 31 March 2014 these costs incorporated external advisers' fees and bonus payments to Directors and staff

(iii) Exceptional finance costs in the year to 31 March 2015 were £nil. In the prior year, costs associated with the recycling of derivative interest rate swaps (£12,823,000) and exceptional refinancing costs (£7,022,000) were considered to be unusual in nature

 (iv) Corporation tax on operating exceptional items and exceptional finance costs is calculated based upon whether these costs are deductible for tax purposes. Deferred tax credits on amortisation of intangible fixed assets represent tax at the standard rate on the amortisation charge and the benefit the Group has received from the falling rate of Corporation tax which requires year end deferred taxes to be re-measured

Infinis Energy plcNotes forming part of the preliminary financial statementsfor the year ended 31 March 2015

4. Earnings per share

The table below presents earnings per share for Infinis Energy plc. The earnings per share of Infinis Energy plc has been prepared for FY14, on a proforma basis, as if the Group had existed throughout the year presented, and had the same share capital throughout the year as it had on the day of listing on the London Stock Exchange, being 20 November 2013.

Infinis Energy plc

Notes forming part of the preliminary financial statementsfor the year ended 31 March 2015

5. Non-current assets

Infinis Energy plc

Notes forming part of the preliminary financial statementsfor the year ended 31 March 2015

6. Interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings, which are measured at amortised cost.

Interest-bearing loans and borrowings:

Transactions during the years under consideration

On 4 November 2014, in order to finance the construction of A'Chruach wind farm, the Group entered into a new finance facility comprising (i) a five year loan facility of £43,379,000 to be drawn down over a period to March 2016 (floating rate of LIBOR + 2.25% to date of accreditation and 2.1% thereafter); and (ii) ancillary facilities of £7,541,000. The Group also entered into new interest rate swap agreements to hedge 80% of the interest rate risk. As at 31 March 2015 the facility was undrawn.

On 15 October 2013 the Group negotiated a new Revolving Credit Facility of £50,000,000, which at 31 March 2015 and 31 March 2014 was undrawn.

On 9 October 2013 the Group entered into a new finance facility comprising (i) a seven year term loan facility of £296,000,000 (floating rate of LIBOR + 2.1%); and (ii) ancillary facilities of £33,300,000. The Group also entered into new interest rate swap agreements to hedge 80% of the interest rate risk. Subsequently, on 10 October 2013, those funds were used to extinguish certain outstanding bank facilities totaling £254,800,000 and related interest rate hedging contract liabilities of £21,500,000.

Security

Bank facilities are secured against the assets of the entities within the Group that entered into those debt arrangements.

Undrawn borrowing facilities

The Group had undrawn borrowing facilities at 31 March 2015 of £118,803,000 (2014: £67,540,000).

Infinis Energy plc

Notes forming part of the preliminary financial statementsfor the year ended 31 March 2015

7. Related parties

Sales/(purchases) to/from joint arrangements for the year ended 31 March 2015 totaled £20,000 (31 March 2014: £22,652,000). Receivables from joint arrangements were £742,000 (year ended 31 March 2014: £722,000).

Transactions with Terra Firma relating to the provision of management services for the year ended 31 March 2015 were £nil (year ended 31 March 2014: £265,000).