Mytrah Energy Regulatory News (MYT)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN

Mytrah Energy Limited

("Mytrah" or the "Company")

Interim Results for the six months ended 30 June 2016

Financial Highlights:

· Revenue of USD 49.66m, an increase of 52% over the comparative period (1H 2015: USD 32.59m)

· Underlying EBITDA[1] of USD 45.54m up 56% (1H 2015: USD 29.14m); underlying EBITDA margin of 92%

· In Indian Rupee terms revenue increased by 63%, underlying EBITDA increased by 68%

· Underlying PBT of USD 2.49m

· Cash and bank balances of USD 32.20m

· Signed a new Rupee Term Loan Agreement of INR 25.8 billion (approx. USD 380m) to refinance senior loans from 22 banks across 543 MW of operating wind farms, increasing the credit rating to A, reducing the interest rate by an average of 140 basis points and extending the average maturity of debt by approximately 3 years

· Secured a direct loan facility of up to USD 175m from Asian Development Bank ('ADB') to help fund the development of a portfolio of new wind and solar projects from Mytrah's pipeline

· Post period-end, signed a definitive agreement with GE for USD 31m investment

· Post period-end, Mytrah Energy (India) Private Limited ('MEIPL') has fully repaid the mezzanine debt of USD 14.91m outstanding with PTC India Financial Services Limited ('PFS')

· Long-term debt sanctions received for 237 MW solar photovoltaic projects

Operational Highlights:

· Completed construction and commissioned 295 MW wind projects in the period, taking the operational capacity to 877.9 MW, significantly ahead of the Company's initial target

· Post period-end added a further 39.3 MW, taking total portfolio to 917.2 MW

· 87 MW assets in construction on track for the upcoming wind season, taking the capacity beyond 1000 MW

· Signed power purchase agreements ('PPAs') for 422 MW of solar projects till date. Began construction on solar projects in Telangana

· Signed contracts with tier 1 suppliers for supply of 175MW solar modules and 150MW solar inverters

· Wind speeds were slightly ahead of expectations in first half

· Constitution of Indian holding company, Mytrah Energy (India) Limited ('MEIL') was changed to Mytrah Energy (India) Private Limited ('MEIPL')

· Senior management changes post period-end; introducing separate Chairman and CEO roles

[1]After excluding one-off costs relating to write-off of doubtful advances USD 0.42m (1H 2015: USD nil), provision for doubtful debts included in trade receivables USD 0.10m (1H 2015: USD nil), GBI registration fees USD 0.42m (1H 2015: USD nil). (refer note 5 of financial statements)

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

"We are pleased to report that the performance of our portfolio has been strong in the first half, reflecting the quality of our assets and our focus on driving operational performance. The first half of 2016 saw the commissioning of 295MW, bringing our operating capacity to 877.9MW at the end of the period, which was significantly ahead of our initial target. We have made excellent progress with the construction of our new wind and solar projects and added further wind capacity post period-end, taking our wind portfolio to 917.2 MW. With a further 87 MW of projects currently under construction we are on track to meet our 1000 MW target by mid-2017.

"A number of significant milestones were achieved in the period. The USD 380m refinancing and the Asian Development Bank funding were great achievements by Mytrah and are testament to the skill and tenacity of our financing team. Post period-end, one of our subsidiaries has successfully signed a definitive agreement with GE, whereby GE has agreed to invest up to USD 31m to support the development of a 200 MW wind energy project in Andhra Pradesh. Post period-end, MEIPL has fully repaid the mezzanine debt of USD 14.91m outstanding with PTC India Financial Services.

"Our new solar business has made sound progress during the period and has secured long term PPAs for 422 MW to date, of which we have achieved financial closure for 237 MW. The Company has also signed contracts with suppliers for the supply of 175MW solar modules and 150MW solar inverters. We look forward to the solar projects progressing through to construction once regulatory and land approvals are completed.

"In August we were delighted to strengthen the senior management team by appointing Vikram Kailas and Shirish Navlekar as the Company's Chief Executive Officer and Chief Financial Officer, respectively, which are non-board appointments. The combination of their past experience and successful tenure at Mytrah make them ideal to lead the Company forward.

"We delivered a good performance in the first half of 2016 and we will continue to focus on further strengthening the business and improving the quality of our asset performance. Maintaining construction momentum of projects under development and maximising the performance of our operational assets are key priorities. Looking at the second half, we expect that power generation will continue to reflect the good monsoon season across India as well as a strong asset performance. Overall, we are well placed to meet expectations for the full year."

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 results for Mytrah Energy Limited ("Mytrah" or the "Company", and with the subsidiary companies, the "Group") for the six months period ended 30 June 2016.

Projects in operation

During the six months ended 30 June 2016 (1H 2016), Mytrah grew its generation capacity to 877.9 MW, a 50% increase over the end of previous year 2015 (2015: 583 MW) and significantly ahead of our initial target. That growth has continued post period-end, taking us to 917.2 MW. Our strategically diversified portfolio, spread across 15 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 with a year earlier due to additional capacity coming into operation. In addition, the wind has been a little ahead of expectation - as an example, the 543 MW portfolio which operated in 1H 2015, produced 6% more revenue (in rupee terms) in 1H 2016.

Projects under construction

We expect capacity growth to continue over the next few quarters as we complete the 87 MW of projects currently under construction. As such we expect to meet our target of developing 1,000 MW of operating wind assets by mid 2017.

The progress of our wind portfolio since the previous interim results is as follows:

In addition to wind projects, construction of solar projects has started at a number of sites in Telangana and Punjab with substantial land pockets identified. The Company has secured long-term power purchase agreements ('PPA'), for 422 MW in Telangana, Karnataka & Punjab, and already has long-term debt sanctioned for 237 MW. The company remains on track for its renewable energy portfolio to exceed 1,400 MW (c. 1.40 GW) in the medium term. 

Financial Results

Revenue

The Group's revenue for the six months ended 30 June 2016 was USD 49.66m (1 H 2015: USD 32.59m), an increase in USD 17.07m, reflecting a 52% growth despite depreciation in the average exchange rate between the Indian rupee and US dollar from 62.75 to 67.28 from June 2015 to June 2016. The increase in revenues is primarily on account of capacity additions during the past one year, and better wind resources in 1H.

EBITDA

The Group has recorded an underlying EBITDA of USD 45.54m for the period ended 30 June 2016 (1H 2015: USD 29.14m) an increase of USD 16.40m, approximately 56% increase (68% in rupee terms), reflecting the increase in revenues.

Finance cost

Financing costs at USD 42.16m were USD 16.05m higher than the prior year due to 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 an underlying profit before tax (PBT) of USD 2.49m during the current period against an underlying loss before tax of USD 2.42m in the corresponding previous period. Increase in underlying PBT in the current period is primarily due to the increased revenues.

Taxation

The tax credit for the current period was USD 1.19m (1H 2015: USD 0.53m).

Earnings per share:

Basic and diluted earnings /(loss) per share for the six months ended 30 June 2016 was USD (3.4) cents (1H 2015 USD: (1.08) cents each) each respectively.

Financial position

The net book value of our property, plant and equipment has increased by USD 190m (increase by 24%), all of which relates to investments made during the last six months in the construction of our new plants.

Cash flow

The cash generated from operations during the period was USD 13.41m (1H 2015: inflow USD 24.26m). Investing activities for the current year resulted in a cash outflow of USD 121.79m (1H 2015: outflow of USD 95.84m). Net financing cash inflows were USD 112.13m (1H 2015: inflows of USD 74.41m). At 30 June 2016 the Group had cash and bank balances of USD 32.20m (31 December 2015: USD 55.58m).

Ravi Kailas

Chairman

Mytrah Energy Limited

Independent review report to Mytrah Energy Limited

We have been engaged by Mytrah Energy Limited ("the Company") to review the condensed consolidated set of interim financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated cash flow statement and related notes 1to 33. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with our engagement letter dated 11 December 2015 and 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. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review 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 formed.

Directors' responsibilities

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

As disclosed in Note 3, the annual financial statements of the company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of interim financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

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

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 United Kingdom and Ireland. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) 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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of interim financial statements in the half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.

12 September 2016

KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man

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 financial statements were approved by the Board of Directors and authorised for use on 12 September 2016.

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

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 2016

1. General information

Mytrah Energy Limited ("MEL" or the "Company") is a non-cellular company, liability limited by shares, incorporated on 13 August 2010 under the Companies (Guernsey) Law, 2008 and is admitted to trading on Alternate Investment Market, a market operated by the London Stock Exchange plc. 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"), 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 Wound off against application by the Group to concerned authority.

2 Acquired by the Group on 01 August 2015.

The principal activity of the Group is to own and operate wind 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 2016:

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 consolidated 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 (and in some cases had not yet been endorsed by the EU). The Group is in the process of evaluating the impact of the following new standard on its consolidated 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 periods beginning on or after January 1, 2019. Earlier adoption of IFRS 16 is permitted if IFRS 15, 'Revenue from Contracts with Customers', has also been applied.

Further, the following new or amended standards are not expected to have a significant impact on the Group's condensed consolidated interim financial statements:

§ Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12) is effective on 1 January 2017;

§ Disclosure Initiative (Amendments to IAS 7) is effective on 1 January 2017; and

§ Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) effective date to be determined.

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 2016 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 2015, 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 12 September 2016. 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 2015 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 2015.

Refer note 2 for the new accounting standards/interpretations adopted with an initial application of 1 January 2016.

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, MESPL, MECPL and CCSPL which are determined as USD.

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 2015, 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 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) Change in presentation and analysis of expenses in the income statement

During the previous year, the Group has changed the presentation analysis expenses from function to nature by including 'Earnings before interest, tax, depreciation and amortization' (EBITDA) as a separate line item in the income statement to provide more reliable and more relevant information to the users of financial statements. Management believes that disclosure of expenses by nature is meaningful measure for investors because it provides an analysis of our operating results, ability to service debt and performance of the Company. Further EBITDA is considered by chief operating decision makers to track business evolution, establish operational and strategic targets and make important business decisions. The Company measures EBIDTA on the basis of profit/(loss) from operations. For EBITDA measurement, the Company has not included the depreciation and amortisation expenses, equity settled employee benefits, finance cost, tax expense and other income.

4. Revenue

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

5. Other expenses include costs relating to write-off of doubtful advances USD 422,933 (30 June 2015: USD Nil), provision for doubtful debts included in trade receivables USD 100,722 (30 June 2015: USD Nil) and GBI registration fee USD 417,048 (30 June 2015: USD Nil) .

6. Finance income

7. Finance costs

1Includes finance cost on finance lease obligations USD 555,439 (30 June 2015: USD Nil).

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 of USD 962. 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 1,656,257 (30 June 2015: USD 965,115) as MAT is greater than corporate income tax for the current period.

Income tax expense recognised for the period is reconciled to (loss) / profit before tax 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.

11. Intangible assets

Intangible assets primarily comprise of application software and is amortised over four years.

12. Property Plant and equipment

1. An amount of USD 14,943,312 (30 June 2015: USD 8,956,485) pertaining to interest on borrowings was capitalized as the funds were used for the construction of qualifying assets (refer note 7).

2. Summary of depreciation and amortization charge:

13. Other non-current assets

Deposits mainly comprise of refundable security deposits placed with related parties towards usage of land and power evacuation facilities for a period of 20 years. The difference between the fair value and the nominal value of the deposits has been classified as assets under finance lease.

Capital advances represent advance payments made to suppliers and related parties for the construction of wind farm assets, as part of long-term construction and service contracts.

Prepayments primarily relate to amounts paid in advance towards lease rentals for lands which have been taken on lease basis from the suppliers of wind turbine generators and related parties for a period ranging up to 20 years and are renewable provided the main lease is renewed by the government authorities and other parties.

14. Other investments

1Represents margin money and fixed deposits placed with banks and financial institutions with maturity period greater than one year.

15. Deferred tax assets

The following are the major components of deferred tax liabilities and assets recognized by the Group and movements thereon during the current period.

Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) recognized in the consolidate balance sheet:

16. Trade receivables