Mytrah Energy Regulatory News (MYT)

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29 September 2017

Mytrah Energy Limited

("Mytrah" or the "Company")

Interim consolidated Results for the six months ended 30 June 2017

Mytrah Energy Limited, the India-based renewable focused Independent Power Producer, is pleased to announce its interim results for the six months to 30 June 2017.

Financial Highlights:

· These interim consolidated results reflect the adoption of IFRIC 12 Service concession arrangement which has affected the treatment of revenue and revision of estimated useful life of the property plant and equipment and accelerated depreciation/ amortization.

· Reported Revenue of USD 228.53 million, an increase of 360% (53% on a directly comparable basis) over the comparative period (1H 2016: USD 49.66m)

· Reported EBITDA of USD 82.29 million up 85% (45% on a directly comparable basis) (1H 2016: USD 44.60m)

· Cash and bank balances of USD 48.84 million

· Post period-end issued approximately USD 277 million non-convertible debentures to Piramal Group and replaced existing investments from IDFC Alternatives Limited, AION Capital, Merrill Lynch and Goldman Sachs, with part of the facility also providing growth capital to the Company.

Operational Highlights:

· Won 250 MW wind power project in auction through the first competitive bid in the Indian wind power sector

· Completed construction of 74 MW projects in the period, taking the installed capacity to 1075 MW

· Post period-end added 105 MW of solar plants, taking the total installed wind and solar capacity to 1180 MW

· Additional 563 MW of wind and solar in construction, taking the total to 1743 MW by mid 2018

· Post period-end won up to 57 MW in solar rooftop auctions

Commenting on Mytrah's performance, Ravi Kailas, Chairman, said:

"We are pleased to report another strong set of first half results, reflecting the quality of our assets and our focus on driving operational performance. The first half of 2016 also saw the addition of more wind capacity, and our first solar plants began operating.

The commencement of our solar operations is a significant milestone for the company, further diversifying our cash flow, and expanding our renewable energy capability significantly. With our total installed capacity currently at 1180 MW, Mytrah is firmly established as a leading player in the Indian renewable energy sector, with a significant amount of further capacity now in construction.

The Indian Government's adoption of auctions as the principal source of new capacity is an exciting development. We've built a strong depth of capability across the full value chain in both wind and solar, along with an excellent pipeline of future opportunities. Our success in recent wind and solar auctions demonstrates this capability and we believe that we are well positioned to win substantial power capacity in future auctions, underpinning our continued expansion.

The USD 277 million financing from Piramal is a major milestone for Mytrah, re-financing the last part of our early-stage mezzanine funding and providing support for future growth. Attracting this level of investment from an investor of Piramal's stature reaffirms the quality of Mytrah's operating portfolio and the resulting strong, stable and well diversified cash flow it generates."

For further information please visit www.mytrah.com or contact:

Chairman's Statement:

On behalf of the Board, I am pleased to announce the interim consolidated results for Mytrah Energy Limited ("Mytrah" or the "Company", and with the subsidiary companies, the "Group") for the six months ended 30 June 2017.

Projects in operation

During the reporting period Mytrah grew its generation capacity to 1075 MW. This growth has continued post period-end, taking the total capacity to 1180 MW. Our strategically diversified portfolio, spread across wind and solar projects in over 30 locations and 8 states is working well, with good growth in generation from our combined portfolio of assets. Wind power generation was higher during the first six months compared to the first half of 2016 due to additional capacity coming into operation, resulting in a 53% revenue increase on a like-for-like basis. This revenue growth has been achieved despite the impact of a transformer failure at a Government substation in Rajasthan. This has now been rectified, and our portfolio diversification has limited the impact to around 6% of revenue in 1H 2017.

Projects under construction

We expect capacity growth to continue over the next few quarters as we complete the 563 MW of wind and solar projects currently under construction. As such we expect to meet our power capacity target of 1743 MW by mid 2018.

Financial Results

Revenue

The Group's revenue for the six months ended 30 June 2017 was USD 228.53m (1H 2016: USD 49.66m), an increase of USD 178.87m, or USD 26.51m on a like for like basis. The increase in revenues on a like for like basis is primarily on account of capacity additions during the year.

In India, the Group is adopting Ind-AS, (Indian - adoption of International Financial Reporting Standards (IFRS)) for the first time, with effect from 1st April 2016. As part of the first-time adoption, the Group needs to evaluate and align all its accounting treatment under both Ind-AS and IFRS. In the previous year, the Group has reviewed its accounting treatment with respect to revenue recognition and started implementing IFRIC 12 accounting for revenue recognition from Service Concession Arrangements.

Service Concession Arrangements (SCA) apply to all of the Group's current solar projects and certain wind plants on a prospective basis. As per IFRIC 12 accounting, in the previous year the Group has begun recognising construction revenue, which is earned by the Indian holding company, MEIPL, when it constructs assets for its SPVs. In the past construction revenue was not recognised as the same was eliminated as part of Intra-company eliminations. However, as per the current requirements of IFRIC 12 accounting the same are being recognised as Revenue. Consequent to the adoption of IFRIC 12 accounting, assets which qualify for SCA accounting are treated as intangibles/intangibles under development.

The impact in the current half-year financials on account of SCA accounting is given below:

a) Impact on revenue and EBITDA

b) Impact on Balance Sheet

Assets valued at USD 160.77 m, created based on the Service Concession Arrangement, are classified as intangibles and amortised over a period of 25 years as per Group's accounting policy.

EBITDA

The Group has recorded EBITDA of USD 82.29m for the period (1H 2016: USD 44.60m) up USD 37.69 on a like-for-like basis, an approximate 85% increase, reflecting the increase in revenues and the effects of IFRIC 12 accounting. On a like-for-like basis, the increase over 1H 2016 is USD 20.22m, or 45%.

Finance cost

Financing costs at USD 54.08m were USD 18.29m higher than the prior year due to the increased debt of the recently commissioned capacity leading to higher interest on operating assets commissioned during the past six months, which were under construction during the comparable period last year. 

Profit before tax

At a consolidated level the Group recorded a loss before tax (PBT) of USD (6.66m) during the current period against a loss before tax of USD (6.80m) in the corresponding previous period. Change in PBT in the current period is primarily due to the increased revenues being offset by increased depreciation charges as a result of the changes in useful life assessed for the company's asset portfolio, along with increased finance costs as above.

Taxation

The tax credit for the current period was USD 1.16m (1H 2016: USD 1.19m).

Earnings per share:

Basic and diluted earnings /(loss) per share for the six months ended 30 June 2017 was USD (2.98) cents (1H 2016 USD (3.43) cents each) each respectively.

Financial position

The value of our Asset portfolio increased by USD 239.19m to USD 1,447m (31 Dec 2016: USD 1,207.81m), all of which relates to investments made during the last six months in the construction of our new plants.

As discussed above, the adoption of IFRIC 12 accounting policy for some of our assets on a prospective basis means that they are classified as intangible assets and amortised over a period of 25 years. The remainder of our assets are classified as Property, plant and equipment.

During the period, liabilities increased from USD 1,067.37m to USD 1,302.38m and increase of USD 235.01m, primarily due to increases in long term debt which has been drawn to support construction of the solar projects.

Cash flow

The cash generated from operations during the period was USD 83.67m (1H 2016: inflow USD 16.05m). Investing activities for the current period resulted in a cash outflow of USD 171.33m (1H 2016: outflow of USD 121.79m). Net financing cash inflows were USD 86.78m (1H 2016: inflows of USD 112.13m). At 30 June 2017 the Group had cash and bank balances of USD 48.84m (31 December 2016: USD 45.17m).

Ravi Kailas

Chairman

Mytrah Energy Limited

INDEPENDENT REVIEW REPORT TO MYTRAH ENERGY LIMITED

Conclusion

We have been engaged by Mytrah Energy Limited ("the Company" or "the Group") to review the consolidated condensed set of financial statements in the half-yearly report for the six months ended 30 June 2017 which comprises the Condensed Consolidated Interim Income Statement, Statement of Other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the AIM Rules.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Directors' responsibilities

The half-yearly report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the AIM Rules.

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly report based on our review

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

29 September 2017

KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man

Condensed Consolidated Interim Income Statement for the six months ended 30 June 2017

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

These condensed consolidated interim financial statements were approved by the Board of Directors and authorised for use on 29 September 2017.

Signed on behalf of the Board of Directors by:

Ravi Kailas Russell Walls

Chairman Director

The accompanying notes form an integral part of these condensed consolidated interim financial statements. 

Consolidated statement of changes in equity for the six-month ended 30 June 2017

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

Notes to the condensed consolidated interim financial statements for the six months ended 30 June 2017

1. General information

Mytrah Energy Limited ("MEL" or the "Company" or the "Parent Company") is a non-cellular company, liability limited by shares, incorporated on 13 August 2010 under the Companies (Guernsey) Law, 2008 and is listed on AIM of the London Stock Exchange. The address of the registered office is PO Box 156, Frances House, Sir William Place, St Peter Port, Guernsey, GY1 4EU. The Company has the following subsidiary undertakings, (together the "Group" or the "Company"), all of which are directly or indirectly held by the Company, for which condensed consolidated interim financial statements are being prepared, as set out below:

1. General information (continued)

1. General information (continued)

1 Wound off against application by the Group to concerned authority with effect from 02 January 2016.

2 Acquired by the group on 27 January 2017.

The principal activity of the Group is to own and operate wind and solar energy farms as a leading independent power producer ("IPP") and to engage in the sale of energy to the Indian market through the Company's subsidiaries.

2. Adoption of new and revised standards and interpretations

2.1 New and amended standards adopted during the period:

The Group has adopted the following new standards and amendments, including any consequential amendments to other standards with date of initial application of 1 January 2017:

Based on the Group's current business model and accounting policies the adoption of these standards or Interpretations did not have a material impact on the condensed consolidated interim financial statements of the Group.

2.2 New standards and interpretations not yet adopted:

At the date of authorisation of these condensed consolidated interim financial statements, the following standards and interpretations, have not been applied in these financial statements, were in issue but not yet effective. The Group is in the process of evaluating the impact of the following new standards on its condensed consolidated interim financial statements.

IFRS 9 Financial instruments

IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption period.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.

IFRS 16 Leases

In January 2016, the IASB issued a new standard, IFRS 16, "Leases". The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor accounting, however, remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 supersedes IAS 17, 'Leases', and related interpretations and is effective for actual period beginning on after 01 January 2019, not yet endorsed by European Union(EU). Earlier adoption of IFRS 16 is permitted if IFRS 15, 'Revenue from Contracts with Customers', has also been applied.

2.2 New standards and interpretations not yet adopted: (continued)

At the date of authorisation of these financial statements, the following Standards and relevant Interpretations, have not been applied in these condensed consolidated interim financial statements and were effective for the actual period beginning on or after the below mentioned respective dates, but not yet endorsed by EU.

3. Significant accounting policies

a) Basis of preparation

The condensed consolidated interim financial statements of the Group have been presented for the six months ended 30 June 2017 in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union.

The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2016, which have been prepared in accordance with International Financial Reporting Standards ("IFRS's") as adopted by the European Union. The condensed consolidated interim financial statements have been reviewed, not audited and were approved for issue by the Board on 29 September 2017. The financial information contained in this report does not constitute statutory accounts as defined by sections 243-245 of the Companies (Guernsey) Law 2008. A copy of the Group's audited statutory accounts for the year ended 31 December 2016 can be obtained from the Company's website or writing to the Company Secretary. The independent auditor's report on those accounts was unqualified and did not include a reference to any matters which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under 263 (3) of the Companies (Guernsey) Law 2008. The condensed consolidated interim financial statements have been prepared on the basis of accounting policies set out in the annual report for the year ended 31 December 2016.

Refer note 2 for the new accounting standards/interpretations adopted with an initial application of 1 January 2017.

b) Going concern

The Directors have considered the financial position of the Group, its cash position and the undrawn credit facilities as at the date of these condensed consolidated interim financial statements. The Directors have, at the time of approving the condensed consolidated interim financial statements, a reasonable expectation that the Group has adequate resources to continue its operational existence for a foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing these condensed consolidated interim financial statements.

c) Foreign currencies

These condensed consolidated interim financial statements are presented in United States Dollar ("USD"), which is the presentational currency of the Company, as the financial statements will be used by international investors and other stakeholders as the Company's shares are listed on AIM. The functional currency of the parent company is Pound Sterling ("GBP"). The functional currency of all subsidiaries listed in note 1 is Indian Rupee ("INR"), except for BVML and MESPL which are determined as USD.  

3. Significant accounting policies (continued)

c) Foreign currencies (continued)

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in income statement in the period. For the purposes of presenting condensed consolidated interim financial statements, the assets and liabilities of the Group's foreign operations are translated into US dollars (USD) using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity.

The exchange rates used to translate the financial information of the subsidiaries into USD were as follows:

d) Use of estimates and judgments

In preparing these condensed consolidated interim financial statements, management has made judgments, 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.

The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied during the year ended 31 December 2016, with the exception of the new standards adopted as per note 2.

e) Measurement of fair value

A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established control framework with respect to the measurement of fair values. This includes a Financial reporting team along with an independent external valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Chief Financial Officer ("CFO").

f) Determination if the arrangement meets the definition of a service concession under IFRIC 12 Service Concession Arrangements

Management had assessed the applicability of IFRIC 12: Service Concession Arrangements for certain arrangements. In assessing the applicability, management had exercised significant judgement in relation to the underlying ownership of the assets, the ability to enter into Power Purchase Arrangements ('PPA') with any customer and ability to determine prices and concluded that the arrangements do not meet the criteria for service concession arrangements in the past.

In the previous year, as a result of review of useful lives of Property Plant and Equipment ('PPE'), based on technical evaluation, wherever the estimated economic life of wind and solar projects are in line with the PPA period i.e 25 years, management has adopted IFRIC 12 prospectively for such wind and solar assets. Management believe that the financial statements will provide more reliable and relevant information with the application of IFRIC 12.

3. Significant accounting policies (continued)

f) Determination if the arrangement meets the definition of a service concession under IFRIC 12 Service Concession Arrangements - (continued)

In assessing the applicability of IFRIC 12, Management has exercised significant judgement in relation to (i) the arrangements that are covered under the scope of the accounting for service concessions which in turn depends on the specific terms and conditions of the power purchase agreements with the counter parties and estimates of the life of the related assets, (ii) the understanding of the nature of the payments in order to determine the classification of the service concession arrangement as a financial asset or as an intangible asset and (iii) the recognition of the revenue from construction including the timing and related margin to be recognized.

4. Revenue

1 Generation based incentive are recognised on fulfilment of eligibility criteria prescribed under Indian Renewable Energy Development Agency Limited - Generation Based Incentives Scheme.

2 The amount of revenue, corresponding cost and margin recorded in the statement of consolidated income statement on account of exchange of construction services for an intangible asset under service concession arrangement is USD 152,363,962 and USD 134,893,991.

5. Other expenses include costs relating to operation and maintenance USD 5,577,987 (30 June 2016: USD 2,502,459), Rent USD 758,751 (30 June 2016: USD 766,693), Insurance USD: 702,723 (30 June 2016: USD 305,222), write-off of doubtful advances USD 238,235 (30 June 2016: USD 422,933) and GBI registration fee USD 84,874 (30 June 2016: USD 418,765)

6. Finance income

7. Finance costs

7. Finance costs (continued)

1Includes finance cost on finance lease obligations USD 749,471 (30 June 2016: USD 555,439).

2Amounts included in the cost of qualifying assets during the period arose on borrowings sanctioned for the purpose of financing construction of a qualifying asset and it represents the actual borrowing costs incurred on those borrowings, calculated using the effective interest rate method.

8. Other finance costs on refinancing

Loan refinancing costs represents the cost of prepayment and unamortized transaction costs incurred upon refinancing the existing senior term loans.

9. Taxation

The Company is exempt from Guernsey income tax under the Income Tax (Exempt bodies) (Guernsey) Ordinance, 1989 and is subject to an annual fee. As such, the Company's tax liability is zero. However, considering that the Company's operations are entirely based in India, the effective tax rate of the Group of 17.5% has been computed based on the current tax rates prevailing in India.

Indian companies are subject to corporate income tax or Minimum Alternate Tax ("MAT"). If MAT is greater than corporate income tax then MAT is levied. The Company has recognised MAT/ current tax of USD 1,526,022 (30 June 2016: USD 1,656,257) as MAT is greater than corporate income tax for the current period.

Income tax expense recognised for the period is reconciled to loss before tax as per the income statement as follows:

Tax assets / liabilities recognised in the consolidated statement of financial position:

10. Earnings per share

Basic earnings per share is calculated by dividing profit attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

As at 30 June 2017, 36,340,389 potential ordinary shares (includes CCPS, share options and share warrants) (30 June 2016: 36,340,389) were excluded from the diluted weighted average number of shares calculation because their effect would have been anti-dilutive.

The average market value of the Company's shares for the purpose of calculating the dilutive effect of share options was based on quoted market prices for the year during which the shares and share options were outstanding.

11. Intangible assets

Intangible assets primarily comprise of application software and assets under IFRIC 12.

12. Property Plant and equipment

12. Property Plant and equipment (continued)