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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Mytrah Energy | LSE:MYT | London | Ordinary Share | GG00B64BJ143 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 44.75 | 44.60 | 44.90 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMMYT
RNS Number : 7422H
Mytrah Energy Ltd
12 June 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN
12 June 2017
Mytrah Energy Limited
("Mytrah" or the "Company")
Final Results for the year ended 31 December 2016
Power generation capacity increased 72% in 2016, reaching 1000 MW 6 months ahead of our initial target
Reported EBITDA increased 94%
Secured close to $1 billion of capital to refinance and support growth
Mytrah Energy Limited, the India-based renewable focused Independent Power Producer, is pleased to announce its full year results for the year ended 31 December 2016.
2016 marked a major milestone and acceleration in Mytrah's development. The company reached 1 GW of wind power generation capacity - adding 417 MW in just one year - as well as delivering a strong operating result and moving its new solar business into the construction phase. To do this, Mytrah secured close to $1bn of financing during the year.
Financial highlights
-- The 2016 results reflect adoption of IFRIC 12 - Service Concession Arrangements, which has affected the treatment of revenue and revision of estimated useful life of property, plant and equipment which has accelerated depreciation/amortisation, as previously announced and detailed below
-- Reported Revenue of USD 362.23m, an increase of 385% (63% on a directly comparable basis as per previous year policies) over the previous year (2015: USD 74.72m)
-- Reported EBITDA of USD 128.13m, up 94% (70% on a directly comparable basis as per previous year policies) (2015: 65.92m)
-- Underlying Profit Before Tax of USD 4.76m, up by 121% (2015 2.15m)
-- Secured a direct loan facility of up to USD 175m from Asian Development Bank to fund the development of a portfolio of wind and solar projects
-- Refinanced the existing portfolio of sites through a USD 380m debt package with three banks, the largest such domestic refinancing in India's renewables sector
-- Received USD 23m from GE Energy Financial Services for an equity stake in Mytrah Vayu (Tungabhadra) Private Limited, a subsidiary of Mytrah Energy
-- Repaid remaining mezzanine debt of USD 14.91m outstanding with PTC India Financial Services Limited
Operational highlights
-- Completed construction of 417 MW wind projects, enhancing installed capacity to 1 GW (over 600 wind turbines), significantly ahead of the Company's initial target
-- Entered into power purchase agreements for 140 MW of solar power capacity, bringing the total to 422 MW AC (480MW DC) in Telangana, Punjab and Karnataka
-- Signed contracts with Tier-1 suppliers for 175MW solar modules and 150MW solar inverters -- Initiated the construction of solar projects in Telangana and Punjab
-- Post period end, won 250MW wind power project in auction through the first competitive bid in the Indian wind power sector
-- Vikram Kailas and Shirish Navlekar were appointed as the CEO and CFO of Mytrah Energy Limited respectively
Commenting on the results, Ravi Kailas, Chairman, said:
"I am delighted with these results, which show just how far Mytrah has come in only 6 years. In 2016 we commissioned more wind capacity than ever before, underlining both the capability of our team and the depth of our pipeline. This additional capacity helped to drive our EBITDA up 70% from last year on a directly comparable basis. India also experienced better wind conditions in 2016, which led to a 7% increase in power production on a like-for-like basis.
Our ability to re-finance 543 MW of wind assets with USD 380 million from sophisticated lenders in India demonstrates the quality and revenue visibility in our operating wind farms. This was the single largest domestic refinancing in the sector ever, continuing our leadership in financial innovation. This innovation has also been applied to solar this year, and I am pleased to say that we have managed to secure senior loans of over USD 300 million to build out our solar projects."
For further information please visit www.mytrah.com or contact:
Mytrah Energy Limited +44 (0)20 3402 Ravi Kailas / Bob Smith 5790 Investec Bank plc +44 (0)20 7597 Jeremy Ellis / Chris Sim 4000 Mirabaud Securities LLP +44 (0)20 7878 Peter Krens / Rory Scott 3360 Yellow Jersey PR Limited +44 (0)77 4778 Charles Goodwin / Abena Affum 8221
Chairman's statement
India's renewable energy sector is still in its early development stages, but a lot has happened in such a short time, and a lot continues to happen. Mytrah can't stand still, and it won't.
Yes, we want to build on what we've already successfully achieved. But we also have to respond quickly to capture the opportunities presented by changing markets and technologies.
Five years of growth in just one year
We commissioned 417MW of wind energy capacity for 2016 - close to the total amount we'd commissioned during the first five years of our existence, up to the end of 2015. So we closed 2016 with 1 GW of wind energy capacity with total of 617 wind turbines now installed. I believe this could be the quickest time a renewable energy company has taken to reach this coveted milestone, anywhere in the world.
The sun starts to shine
Our business had been focused on wind energy for its first five years. As tempting as it is to focus just on your strengths, we continued to look for new opportunities. During this period, the solar energy business was becoming more viable, as the commissioning costs of solar plants were coming down, and electricity sales prices were becoming attractive.
We entered this new market in 2016 with vigour. More than 100 people are working on our maiden projects in 21 locations, with a sizeable 480MW of capacity. We secured these projects in competitive bidding processes, with attractive 25-year contracted electricity sales prices. I expect this combination of scale and attractive prices to give us years of profitable growth.
Data mining and analysis - a worthwhile investment
We recognise that a series of one-off profitable projects doesn't necessarily lead to multi-year growth and outperformance. We need to find new ways to do things better, and, indeed, find completely new approaches to take.
One method of doing this is to 'mine' and analyse large amounts of operational data, leading to many small improvements in how we do things. When all these are added together, this leads to better spreads, cash flows, and returns on investment. It's the so-called 'aggregation of marginal gains' that is critical to get the very best performance from our assets.
World recognition
We're constantly comparing ourselves with our competitors - if only to make sure what we're doing is still cutting edge. So we were, of course, thrilled that two of our research papers were shortlisted as breakthrough papers at the 2016 European Wind Energy Awards, reflecting our achievements in the market.
Dealing with market trends
In the past 18 months, solar has joined wind as a cost competitive renewable energy supply source. This means competition is increasing, and electricity prices are declining. Being able to adapt quickly and efficiently is crucial.
While prices have fallen for new plants, we have continued to achieve good margins by carefully selecting our projects. In fact, the larger we've grown, the more profitable we've become. I believe this validates our business model, and confirms our commitment to it.
Operational performance
2016 has been a strong year for Mytrah's operating wind plant portfolio, with revenues and EBITDA ahead of market expectations on an underlying basis, and well ahead as reported.
This result has been facilitated by good winds across much of the portfolio - and by the tireless work of our asset management team in driving continuous improvements in wind farm availability. 2016 has seen a marked improvement in machine performance across a number of plants, particularly in Rajasthan where our Kaladonger plant showed a 4% improvement in availability.
Overall, we believe that our portfolio approach, with plants spread across multiple geographies, equipment suppliers and regulatory regimes continues to benefit the company in smoothing our cash flow, and is increasingly effective as our fleet size increases.
Project Construction
The construction portfolio described in Mytrah's 2016 half year results has been completed, taking us to 1000 MW well ahead of our target of mid-2017. This fantastic result, achieved through the focused dedication of our projects, business development and finance teams, clearly demonstrates the level of execution capability which Mytrah has built. The plants constructed during 2016 are listed below.
Project Capacity ------------------------ ----------- Capacity at 31 Dec 2015 583.00 MW ------------------------ ----------- Bhesada 10.40 MW ------------------------ ----------- Vajrakarur 2 105.00 MW ------------------------ ----------- Nazeerabad 100.80 MW ------------------------ ----------- Nidhi 90.10 MW ------------------------ ----------- Nipaniya 30.00 MW ------------------------ ----------- Aspari 79.90 MW ------------------------ ----------- Burgula Extension 1.60 MW ------------------------ ----------- Total 1000.80 MW ------------------------ -----------
In addition to completing construction of these projects, we have also begun construction on a number of wind and solar plants which are due for completion in 2017 / 18. These are summarised below. We will provide further details of progress on these projects in due course.
Hot Features
Premium
Project Capacity
---------------- -------------------- ---------
Capacity at 31 Dec 2016 1000.80
MW
-------------------------------------- ---------
Wind Additions Aspari Extension, 69.90
AP MW
---------------- -------------------- ---------
Maniyachi, 250.00
Tamil Nadu MW
---------------- -------------------- ---------
Solar Additions Bareta, Punjab 25.00
MW
---------------- -------------------- ---------
Balran, Punjab 25.00
MW
---------------- -------------------- ---------
Telangana Portfolio 327.00
MW
-------------------- ---------
Karnataka Portfolio 45.00
MW
---------------- -------------------- ---------
Totals 1742.70
MW
---------------- -------------------- ---------
Project pipeline
In addition to the projects under construction, Mytrah has an extensive pipeline of wind projects exceeding 4000 MW. With data from 221 wind masts across 10 states, the Company's wind database provides differentiated access to new project sites. For solar, we continue to develop project options and participate in auctions as these are announced. We never bid so low in an auction that this compromises our returns, and so we do not win all of the bids we participate in. We have a wide range of options for developing our solar business, including more large-scale government contracted plants as well as direct sales to private business customers and, when the time is right, consumers.
Financing
During 2016, the Group secured close to USD 1bn of financing in various forms, including a USD 380m refinancing of all the senior debt in its first 543 MW operating wind plants which set a new benchmark for the industry. This new facility was used to refinance twenty-two existing senior lenders in operating wind projects, reducing the interest rate by an average of 140 basis points and extending the average maturity of debt by approximately 3 years.
In addition to the refinancing, we closed USD 150m senior debt financing for our wind projects in construction and USD 315m for our solar projects. Part of this debt was a USD 175m credit line agreed with ADB, the first time this prestigious institution has approved such a structure. Finally, we secured a USD 100m equity line of credit with GE Energy Financial Services which enabled us to invest USD 23m into one of our SPVs and gives us further support for growth.
These transactions, conducted with sophisticated financial institutions, underline the growing maturity of our business and the quality of our asset portfolio.
Macro environment
India continues to be one of the world's fastest-growing economies and renewable energy is contributing to this growth through the rapid deployment of low cost, distributed, generation capability, as well as by generating substantial employment.
As a consequence, the renewable energy sector continues to enjoy strong support from the central Government, with the Prime Minister, in 2015, creating a target of 175 GW of renewable capacity installed by 2022. Of this 100 GW is expected to be solar, 60 GW wind, and 15 GW other technologies. The benefits of this target and the supporting policies were clearly evident, with 3.4 GW of wind capacity installed in 2015 - 16 (2014 - 15, 2.3 GW), and solar installation almost doubling to 4 GW.
A key outcome of the Government's focus is the "UDAY" (Ujwal DISCOM Assurance Yojana) reform approved in November 2015. The scheme has improved the financial health of the state electricity boards (SEBs) which purchase most of Mytrah's electricity under long-term contracts, improving the security of our revenue streams.
Maturing business
Mytrah is a pure-play renewable power generation company with a clear focus on maximising performance of its operating assets, delivering new capacity on time and within budget, and building a sustainable pipeline of future opportunities. Focused on investor returns, the business is growing and maturing in all aspects; setting visible and achievable targets, delivering projects on time and continually improving financial structures.
Experienced management and high quality technical staff, strong relationships with a diverse group of wind turbine suppliers and strong financial capability are now well proven and Mytrah will continue to make a significant investment in its people, systems and processes to ensure we have the foundation needed to support sustained growth and an ever-expanding footprint.
Outlook
Operating in a fast growing and rapidly developing country of 1.2bn people, Mytrah is ideally placed. India is expected to grow at over 7% pa according to the IMF, and there is clear evidence that electricity consumption is correlated to GDP growth. Both wind and solar power are faster to market and cost-competitive with alternative sources of power, which in India is primarily coal. As a result, the Government has set aggressive targets to deliver capacity addition in renewable energy.
Mytrah is among the largest providers of renewable energy, has a strong pipeline of development options and deep capability across the entire value chain in both wind and solar. This, combined with our proven financial capability, gives us a strong platform to continue to grow our business and create value for our investors.
Business Review
Particulars Year ended Year ended Change
31 December 31 December
2016 2015
---------------------------------- ------------- ------------- ---------
USD mn USD mn USD
mn
---------------------------------- ------------- ------------- ---------
Revenue 362.23 74.72 287.51
---------------------------------- ------------- ------------- ---------
Other operating income 6.22 0.88 5.34
---------------------------------- ------------- ------------- ---------
Construction cost (224.67) 0.00 (224.67)
------------- ------------- ---------
(2.40)
Employee benefits expenses (2.66) (1) (0.26)
---------------------------------- ------------- ------------- ---------
Other operating expenses (12.99) (7.28) (5.71)
---------------------------------- ------------- ------------- ---------
Earnings before interest,
tax, depreciation and
amortisation (EBITDA) 128.13 65.92 62.21
---------------------------------- ------------- ------------- ---------
Depreciation and amortisation
expense (47.42) (16.40) (31.02)
---------------------------------- ------------- ------------- ---------
Equity Settled Employee
Benefits (2.99) (0.64) (2.35)
---------------------------------- ------------- ------------- ---------
Operating Profit 77.72 48.88 28.84
---------------------------------- ------------- ------------- ---------
Finance income 4.93 3.34 1.59
---------------------------------- ------------- ------------- ---------
Finance costs (81.84) (51.22) (30.62)
---------------------------------- ------------- ------------- ---------
Other finance costs on
refinancing (6.39) (0.54) (5.85)
---------------------------------- ------------- ------------- ---------
Profit/ (loss) before
tax (5.58) 0.46 (6.04)
---------------------------------- ------------- ------------- ---------
Taxation expense 0.98 (0.08) 1.06
---------------------------------- ------------- ------------- ---------
Profit/ (loss) after tax (4.60) 0.38 (4.98)
---------------------------------- ------------- ------------- ---------
Reported EBITDA as above 128.13 65.92 62.21
---------------------------------- ------------- ------------- ---------
Non-recurring and non-cash
adjustments:
---------------------------------- ------------- ------------- ---------
Doubtful advances written-off 0.42 0.00 0.42
---------------------------------- ------------- ------------- ---------
Provision for trade receivables 0.10 0.23 (0.13)
---------------------------------- ------------- ------------- ---------
Indirect-tax cost on inter-group
transactions 0.00 0.28 (0.28)
---------------------------------- ------------- ------------- ---------
GBI Registration fee 0.44 0.00 0.44
---------------------------------- ------------- ------------- ---------
Total adjustments 0.96 0.51 0.45 ---------------------------------- ------------- ------------- --------- Underlying EBITDA 129.09 66.43 62.66 ---------------------------------- ------------- ------------- --------- Reported profit/ (loss) before tax as above (5.58) 0.46 (6.04) ---------------------------------- ------------- ------------- --------- Adjustments as referred above 0.96 0.51 0.45 ---------------------------------- ------------- ------------- --------- Equity Settled Employee Benefits 2.99 0.64 2.35 ---------------------------------- ------------- ------------- --------- One-off interest cost on re-financing of existing term loans 6.39 0.54 5.85 ---------------------------------- ------------- ------------- --------- Underlying profit/ (loss) before tax 4.76 2.15 2.61 ---------------------------------- ------------- ------------- ---------
([1]) In the published 2015 results, Employee Benefit Expenses was reported including Equity Settled Employee Benefits of (0.64) m. In this presentation, this cost is shown below the EBITDA line.
Adoption of IFRIC 12 Service Concession Arrangement Accounting
As a result of our continued focus on prudent accounting, and changes in the Indian accounting standards, the management have reviewed the useful life of our assets and decided to reduce it. We have also determined that this change brings some of our assets into a different accounting treatment, specifically Service Concession Agreements (SCA) referred to above. We have decided to apply these policies to all of our plants prospectively. The impact is illustrated in the table below, which shows how the 2016 results would have looked under our 2015 accounting policies (this table is presented for information only and is not audited).
The impact of the change in useful life for our assets can be seen in the increased depreciation charge in the reported accounts relative to the direct comparison below. As noted under 'Revenue' below, the impact of the SCA treatment is to increase the reported EBITDA because of the inclusion of construction revenue.
Particulars Year ended Year ended Change Change
31 December 31 December Increase/ in %
2016 2015 (Decrease) Increase/
(Decrease)
------------------------------- ------------- ------------- ------------ ------------
USD mn USD mn USD mn
------------------------------- ------------- ------------- ------------ ------------
Revenue 121.64 74.72 46.92 63%
------------------------------- ------------- ------------- ------------ ------------
Other operating income 6.22 0.88 5.34 607%
------------------------------- ------------- ------------- ------------ ------------
Construction Cost 0.00 0.00 0.00 -
------------- ------------- ------------ ------------
Employee benefits
expenses (2.66) (2.40) (0.26) 11%
------------------------------- ------------- ------------- ------------ ------------
Other operating expenses (12.99) (7.28) (5.71) 78%
------------------------------- ------------- ------------- ------------ ------------
Earnings before interest,
tax, depreciation
and amortisation (EBITDA) 112.21 65.92 46.29 70%
------------------------------- ------------- ------------- ------------ ------------
Depreciation and amortisation
expense (25.67) (16.40) (9.27) 56%
------------------------------- ------------- ------------- ------------ ------------
Equity Settled Employee
Benefits (2.99) (0.64) (2.35) 367%
------------------------------- ------------- ------------- ------------ ------------
Operating Profit 83.55 48.88 34.67 71%
------------------------------- ------------- ------------- ------------ ------------
Finance income 4.93 3.35 1.58 47%
------------------------------- ------------- ------------- ------------ ------------
Finance costs (81.84) (51.22) (30.62) 60%
------------------------------- ------------- ------------- ------------ ------------
Other finance costs
on refinancing (6.39) (0.54) (5.85) 1083%
------------------------------- ------------- ------------- ------------ ------------
Profit/ (Loss) Before
Tax 0.25 0.47 (0.22) (47%)
------------------------------- ------------- ------------- ------------ ------------
Reported EBITDA as
above 112.21 65.92 46.29 70%
------------------------------- ------------- ------------- ------------ ------------
Non-recurring and
non-cash adjustments:
------------------------------- ------------- ------------- ------------ ------------
Doubtful advances
written-off 0.42 0.00 0.42 -
------------------------------- ------------- ------------- ------------ ------------
Provision for trade
receivables 0.10 0.23 (0.13) (56%)
------------------------------- ------------- ------------- ------------ ------------
Indirect-tax cost
on inter-group transactions 0.00 0.28 (0.28) 100%
------------------------------- ------------- ------------- ------------ ------------
GBI Registration fee 0.44 0.00 0.44 -
------------------------------- ------------- ------------- ------------ ------------
Total adjustments 0.96 0.51 0.45 88%
------------------------------- ------------- ------------- ------------ ------------
Underlying EBITDA 113.17 66.43 46.74 70%
------------------------------- ------------- ------------- ------------ ------------
Reported PBT as above 0.25 0.47 (0.22) (47%)
------------------------------- ------------- ------------- ------------ ------------
Adjustments as referred
above 0.96 0.51 0.45 88%
------------------------------- ------------- ------------- ------------ ------------
Equity Settled Employee
Benefits 2.99 0.64 2.35 367%
------------------------------- ------------- ------------- ------------ ------------
One-off interest cost
on re-financing of
existing term loans 6.39 0.54 5.85 1083%
------------------------------- ------------- ------------- ------------ ------------
Underlying profit
before tax 10.59 2.16 8.43 390%
------------------------------- ------------- ------------- ------------ ------------
Revenue
For the year ended 31 December 2016 the Group's revenue has increased by USD 287.51m, reflecting the capacity growth from 583 MW at 31 December 2015 to 1000 MW at current year end. On a like for like basis, revenue increased by USD 46.92m.
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. During the 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 current 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 now as per the 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 year financials of this change in accounting policy is given below:
a) Impact on revenue and EBITDA
Particulars Amount
(USDm)
------------------------ ---------
Construction Revenue 240.59
------------------------ ---------
Construction Cost (224.67)
------------------------ ---------
Margin added to EBITDA 15.92
------------------------ ---------
b) Impact on Balance Sheet
Assets valued at USD 406.86 million, 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. These assets would have been classified as Property, Plant and Equipment earlier.
EBITDA
EBITDA for the year 2016 increased to USD 128.13m (2015: USD 65.92m) an increase of USD 62.21m, a 94% increase, reflecting the increase in revenue due to capacity expansion and a slight improvement in EBITDA margin as new plants in their initial free O&M period come into the mix.
Finance cost
Financing costs at USD 81.84m were USD 30.62m higher than the prior year due to the increased debt level associated with the capacity expansion.
Finance income
Higher finance income of USD 4.93m (2015: USD 3.34m) was generated due to higher cash balance in the system and resultant increase in interest on bank deposits and investments.
Profit before tax
Profit before tax (PBT) of USD (5.58)m for the period 2016 (2015: USD 0.46m). PBT was affected by the interest costs associated with assets which were not fully performing in 2016, and the change in the estimated useful life of assets, increased depreciation/ amortisation expense. PBT was also affected by one-off costs associated with refinancing. On an underlying basis, PBT was USD 4.76m (2015 USD 2.15m), and increase of 121%.
Taxation
The tax for the year 2016 was a credit of USD 0.98m (2015: cost of USD 0.08m).
Earnings per share:
Basic and diluted earnings per share for the year 2016 was USD (2.5) cents (2015 USD: 0.71 cents) and USD (2.5) cents (2015 USD: 0.71 cents) respectively.
Financial position
The net book value of our Property, plant and equipment and associated intangible assets has increased by USD 257.97m (increase by 33%), almost all of which relates to investments made during the year in the construction of our new plants and that have started generating revenues in the year 2016 and will be operational throughout 2017.
Capital structure
Strong financial capital management is an integral part of the Directors' strategy to achieve the Group's stated objectives. The Directors review financial capital reports on a quarterly basis and the Group treasury function does the review on a weekly basis, ensuring that the Group has adequate liquidity.
As at 31 December 2016 the Group had gross debt of USD 945.09m (2015: USD 674.19m). During the year ended 31 December 2016, additional loans of USD 290.73m (net of repayments) were drawn for the construction of new assets that will start generating revenue in the year ending 2017. The Group continues to borrow at competitive rates and therefore currently deems this to be the most effective means of raising finance. The Group has established good relationships with banks and financial institutions enabling it to raise further financing on competitive terms.
As the assets under construction start generating revenues in 2017, we expect that the Leverage (expressed as Net Debt/EBITDA) position of the Company will improve substantially with the increasing EBITDA.
Further information on the Group's capital structure is provided in the notes to the consolidated financial statements, including details of how the Group manages risk in respect of capital, interest rates, foreign currencies and liquidity.
Cash flow
The cash generated from operations during the year was USD 74.52m (2015: inflow USD 74.64m). Cash flow did not increase in line with EBITDA due to an increase in receivables, primarily those associated with operations in Rajasthan. This situation was resolved post-period end, with an inflow of USD 27.7m received in March 2017 bringing receivables back into line with historic norms.
Investing activities for the current year resulted in a cash outflow of USD 288.67m (2015: outflow of USD 236.62m). Net financing cash inflows were USD 221.73m (2015: inflows of USD 162.72m). The increase in financing cash inflows was mainly due to draw down of loan facilities (net of refinancing) of USD 290.73 m (2015: USD 370.8m) during the current year. At 31 December 2016, the Group had cash and bank balances of USD 45.18m (31 December 2015: USD 55.58m).
Liquidity and investments
At 31 December 2016, the Group had a strong liquidity position comprising of liquid assets of USD 56.22m and undrawn/committed credit facilities of USD 71.31m, which will be used for financing the projects under construction. The Group's net debt position at 31 December 2016 has increased to USD 945.10 m (31 December 2015: USD 674.20m). The increase is mainly on account of drawdown of loan facilities during the year.
Ravi Kailas
Chairman
Mytrah Energy Limited
Consolidated income statement for the year ended 31
December 2016
Year ended Year ended
31 December 31 December
Note 2016 2015
Continuing operations USD USD
Revenue 6 362,232,072 74,719,666
Other operating income 6 6,221,785 881,589
Construction Cost (224,672,249) -
Employee benefits expense 7 (2,656,137) (2,398,525)
Other expenses 8 (12,994,790) (7,280,624)
-------------- -------------
Earnings before interest,
tax, depreciation and amortisation
(EBITDA) 128,130,681 65,922,106
Depreciation and amortisation 15
charge & 16 (47,422,935) (16,403,741)
Equity settled employee benefits 38 (2,990,421) (641,188)
-------------- -------------
Operating profit 77,717,325 48,877,177
-------------- -------------
Finance income 10 4,933,555 3,347,383
Finance costs 11 (81,843,197) (51,221,870)
Other finance costs on refinancing 12 (6,386,413) (541,185)
-------------- -------------
Net finance costs (83,296,055) (48,415,672)
-------------- -------------
(Loss) / Profit before tax (5,578,730) 461,505
Income tax expense 13 976,277 (80,763)
(Loss)/ Profit for the year
from continuing operations (4,602,453) 380,742
-------------- -------------
(Loss)/ Profit attributable
to
-Owners of the Company (4,086,048) 1,162,991
-Non-controlling interest (516,405) (782,249)
(Loss) / Earnings per share
Basic 14 (0.02497) 0.00711
Diluted 14 (0.02497) 0.00711
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated statement of other comprehensive income
for the year ended 31 December 2016
Year ended Year ended
31 December 31 December
2016 2015
USD USD
(Loss) / Profit for the year (4,602,453) 380,742
Other comprehensive income /
(loss)
a) Items that will never be
reclassified to profit and loss
Actuarial gain/ (loss) on employment
benefit obligations (note 32d) 189,424 (283,309)
b) Items that may be reclassified
to profit or loss
Change in fair value of available-for-sale
financial assets (note 32c) (462,900) 355,167
Foreign currency translation
adjustments (note 32a) (916,189) (3,510,858)
Other comprehensive loss (1,189,665) (3,439,000)
------------- -------------
Total comprehensive loss (5,792,118) (3,058,258)
------------- -------------
Total comprehensive loss attributable
to
* Owners of the Company (5,275,713) (2,276,009)
* Non-controlling interest (516,405) (782,249)
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated statement of financial
position as at 31 December 2016
Note As at As at
31 December 31 December
2016 2015
USD USD
Assets
Non-current assets
Intangible assets 15 440,884,000 195,248
Property, plant and equipment 16 597,218,572 779,930,202
Other non-current assets 17 31,183,297 33,697,599
Other investments 18 344,355 2,055,483
Deferred tax assets 19 8,347,337 5,744,587
---------------- ---------------
Total non-current assets 1,077,977,561 821,623,119
---------------- ---------------
Current assets
Trade receivables 20 52,491,512 17,487,165
Other current assets 21 21,463,598 10,986,956
Current investments 22 10,700,833 43,384,798
Cash and bank balances 23 45,172,919 55,577,280
---------------- ---------------
Total current assets 129,828,862 127,436,199
---------------- ---------------
Total assets 1,207,806,423 949,059,318
---------------- ---------------
Liabilities
Current liabilities
Borrowings 24 68,976,071 49,764,216
Finance lease obligations 25 218,208 101,165
Trade and other payables 27 26,389,922 23,130,462
Retirement benefit obligations 28 47,103 33,035
Current tax liabilities 13 414,987 3,176,482
---------------- ---------------
Total current liabilities 96,046,291 76,205,360
---------------- ---------------
Non-current liabilities
Borrowings 24 876,121,830 624,433,184
Finance lease obligations 25 11,797,678 6,316,717
Derivative financial instruments 26 3,375,881 3,429,381
Other payables 27 79,505,674 114,422,081
Retirement benefit obligations 28 526,652 298,615
---------------- ---------------
Total non-current liabilities 971,327,715 748,899,978
---------------- ---------------
Total liabilities 1,067,374,006 825,105,338
---------------- ---------------
Net assets 140,432,417 123,953,980
Equity
Share capital 29 72,858,278 72,858,278
Capital contribution 30 16,721,636 16,721,636
Retained earnings 31 1,139,870 9,767,315
Other reserves 32 (20,432,502) (26,098,232)
---------------- ---------------
Equity attributable to owners
of the Company 70,287,282 73,248,997
Non-controlling interests 33 70,145,135 50,704,983
Total equity 140,432,417 123,953,980
---------------- ---------------
These consolidated financial statements were approved by the Board of Directors and authorised for release on 24 May 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 consolidated financial statements.
Consolidated statement of changes in equity for the year ended 31 December 2016 Amount USD
Equity
Foreign settled Debenture Share
Currency employee Fair Actuarial Capital redemption warrant
Share Capital translation benefits value valuation Retained redemption reserve reserve Non-controlling
capital contribution reserve reserve reserve reserve earnings reserve interest Total
Balance as at 31
December 2014 72,858,278 16,721,636 (36,870,962) 4,003,406 195,253 4,526 15,520,003 567,248 - - 55,532,625 128,532,013
Profit for the year - - - - - - 1,162,991 - - - (782,249) 380,742
Other comprehensive
income:
Foreign currency
translation
adjustments (note
32a) - - (3,510,858) - - - - - - - - (3,510,858)
Actuarial loss on
employee benefit
obligations (note
32d) - - - - - (283,309) - - - - - (283,309)
Issue of share
warrants (note
32g) - - - - - - - - - 2,038,960 - 2,038,960
Purchase of CCPS
from NCI (note 33) - - - - - - - - - - (2,345,085) (2,345,085)
Buy back of CCPS
from NCI (note 33) - - - - - - - - - - (1,777,864) (1,777,864)
Tax on buy back of
CCPS (note 31) - - - - - - (253,976) - - - - (253,976)
Issue of shares to
NCI (note 33) - - - - - - - - - - 77,556 77,556
Creation of DRR
(note 32f) - - - - - - (5,560,906) - 5,560,906 - - -
CRR on buy-back
(note 32e) - - - - - - (1,100,797) 1,100,797 - - - -
Change in fair
value of
available-for-sale
financial
instruments (note
32c) - - - - 355,167 - - - - - - 355,167
Equity settled
share based
payments (note 32b
and note 38) - - - 740,634 - - - - - - - 740,634
Balance as at 31
December 2015 72,858,278 16,721,636 (40,381,820) 4,744,040 550,420 (278,783) 9,767,315 1,668,045 5,560,906 2,038,960 50,704,983 123,953,980
------------------- ---------- ------------ ------------ --------- --------- --------- ------------ ---------- ----------- ---------- --------------- -----------
(Loss) for the year - - - - - - (4,086,048) - - - (516,405) (4,602,453)
Other comprehensive
income:
Foreign currency
translation
adjustments (note
32a) - - (916,189) - - - - - - - - (916,189)
Actuarial gain on
employee benefit
obligations (note
32d) - - - - - 189,424 - - - - - 189,424
Tax on dividend
paid to NCI (note
31) - - - - - - (424,820) - - - - (424,820)
Buy back of CCPS
from NCI (note 33) - - - - - - - - - - (3,126,782) (3,126,782)
Tax on buy back of
CCPS (note 31) - - - - - - (480,245) - - - - (480,245)
Issue of shares to
NCI (note 33) - - - - - - - - - - 23,083,339 23,083,339
Creation of DRR
(note 32f) - - - - - - (1,434,744) - 1,434,744 - - -
CRR on buy-back
(note 32e) - - - - - - (2,201,588) 2,201,588 - - - -
Change in fair
value of
available-for-sale
financial
instruments (note
32c) - - - - (462,900) - - - - - - (462,900)
Equity settled
share based
payments (note 32b
and note 38) - - - 3,219,063 - - - - - - - 3,219,063
------------------- ---------- ------------ ------------ --------- --------- --------- ------------ ---------- ----------- ---------- --------------- -----------
Balance as at 31
December 2016 72,858,278 16,721,636 (41,298,009) 7,963,103 87,520 (89,359) 1,139,870 3,869,633 6,995,650 2,038,960 70,145,135 140,432,417
=================== ========== ============ ============ ========= ========= ========= ============ ========== =========== ========== =============== ===========
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated statement of cash flow for
the year ended 31 December 2016
Year ended Year ended
31 December 31 December
2016 2015
USD USD
Cash flows from operating
activities
(Loss) / profit before tax (5,578,731) 461,505
Adjustments:
Depreciation and amortisation
charge 47,422,935 16,403,741
Interest on bank deposits (2,155,159) (1,237,561)
Finance lease income (527,781) (421,815)
Finance costs including other
finance costs on refinancing 88,229,610 51,763,055
Loss on derivative financial
instruments 31,900 220,985
Gain on disposal of current
investments (2,185,775) (1,796,093)
Profit on sale of property,
plant and equipment (16,738) (3,770)
Equity settled employees
benefits 2,990,421 641,188
Advances written off 424,142 -
Provision of trade receivables 101,010 225,991
Changes in working capital:
Trade receivables and accrued
income (44,083,220) (320,766)
Other assets (2,711,621) (2,697,290)
Trade and other payables (2,912,442) 12,522,231
------------- -------------
Cash generated from operating
activities 79,028,551 75,761,401
Taxes paid (net) (4,509,861) (1,117,253)
------------- -------------
Net cash generated from operating
activities 74,518,690 74,644,148
------------- -------------
Cash flows from investing
activities
Purchase of property, plant
& equipment and intangible
assets (342,959,017) (162,676,708)
Redemption / (investment)
in mutual funds (net) 33,669,617 (31,758,406)
Acquisition of business,
net of cash acquired - (314,229)
Redemption /(deposits) placed
with banks (net) 18,418,171 (43,046,142)
Interest income on bank deposits 2,204,121 1,176,577
------------- -------------
Net cash used in investing
activities (288,667,108) (236,618,908)
------------- -------------
Cash flows from financing
activities
Dividends to Series A CCPS
holders including tax thereon (2,511,609) -
Buy back of non-controlling
interest and taxes thereon (4,643,260) (2,455,569)
Proceeds from issue of shares
to non-controlling interest 23,083,339 77,556
Purchase of shares from non-controlling
interest - (3,378,980)
Payment under finance lease
obligations (1,993,090) (895,783)
Proceeds from borrowings 639,679,649 317,085,724
Proceeds from issue of non-convertible
bonds - 53,710,035
Repayment of borrowings (348,946,823) (128,289,905)
Interest paid (82,942,718) (73,128,253)
------------- -------------
Net cash generated from finance
activities 221,725,488 162,724,825
------------- -------------
Net increase /(decrease)
in cash and cash equivalents 7,577,070 750,065
Cash and cash equivalents
at beginning of the year 5,910,786 5,423,092
Effect of exchange rates
on cash and cash equivalents (186,861) (262,371)
Cash and cash equivalents
at end of the year (note
23) 13,300,995 5,910,786
------------- -------------
Notes to the consolidated financial statements for the year ended 31 December 2016
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. Mytrah Energy Limited has the following subsidiary undertakings, (together the "Group" or the "Company"), all of which are directly or indirectly held by the Company, for which consolidated financial statements have been prepared, as set out below:
Subsidiaries Country of Date of Proportion of ownership interest / Activity
incorporation or Incorporation voting power
residence
------------------- ------------------ ------------------- ------------------------------------ ------------------
31 December 31 December
2016 2015
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Bindu Vayu
(Mauritius) Investment
Limited ("BVML") Mauritius 15 June 2010 100.00 100.00 company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Energy
(Singapore) Pte. Investment
Ltd ("MESPL") Singapore 16 August 2013 100.00 100.00 company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Cygnus Capital Singapore 19 March 2014 - 100.00 Refer Note 1
(Singapore) Pte.
Ltd ("CCSPL")(1)
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Energy Singapore 10 April 2014 - 100.00 Refer Note 1
Capital Pte. Ltd
("MECPL")(1)
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Energy
(India) Private
Limited ("MEIPL")
(formerly 'Mytrah
Energy (India)
Limited') India 12 November 2009 99.99 99.99 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Bindu Vayu Urja
Private Limited
("BVUPL") India 5 January 2011 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu Urja
Private Limited
("MVUPL") India 24 November 2011 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu
(Pennar) Private
Limited ("MVPPL") India 21 December 2011 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu
(Gujarat) Private
Limited ("MVGPL") India 24 December 2011 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Engineering
& Infrastructure
Private Limited
("ME&IPL") India 29 March 2012 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Engineering
Private Limited
("MEPL") India 30 March 2012 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu
(Krishna) Private
Limited ("MVKPL") India 18 June 2012 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu
(Manjira) Private
Limited ("MVMPL") India 18 June 2012 70.49 72.97 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu
(Bhima) Private Investment
Limited ("MVBPL") India 22 June 2012 100.00 100.00 company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu
(Indravati)
Private Limited
("MVIPL") India 22 June 2012 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Power
(India) Limited
("MPIL") India 12 September 2013 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu
(Godavari)
Private Limited
("MVGoPL") India 21 February 2014 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Tejas Power
Private Limited
("MTPPL") India 22 August 2014 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu (Som)
Private Limited
("MVSPL") India 30 March 2015 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu
(Tungabhadra)
Private Limited
("MVTPL") India 30 March 2015 95.00 99.99 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Aadhya
Power Private
Limited
("MADPPL") India 16 July 2015 99.90 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Nidhi Wind Farms
Private Limited
("NWFPL") (2) India 16 July 2010 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Aakash
Power Private
Limited 09 September
("MAKPPL") India 2015 100.00 100.00 Operating company
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Agriya India 04 January 2016 100.00 - Operating company
Power Private
Limited
("MAGRPPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Abhinav India 04 January 2016 100.00 - Operating company
Power Private
Limited
("MABHPPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Adarsh India 04 January 2016 100.00 - Operating company
Power Private
Limited
("MADAPPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Advaith India 04 January 2016 99.90 - Operating company
Power Private
Limited
("MADVPPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Akshaya India 02 June 2016 99.90 - Operating company
Energy Private
Limited
("MAKEPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Ainesh India 10 June 2016 100.00 - Operating company
Power Private
Limitted
("MAIPPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Bhannuj India 29 July 2016 100.00 - Operating company
Power Private
Limited
("MBHAPPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Bhagiratha India 01 August 2016 73.50 - Operating company
Power Private
Limited
("MBHGPPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu India 23 September 2016 100.00 - Operating company
(Arkavati)
Private Limited
("MVARPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu India 05 October 2016 100.00 - Operating company
(Hemavati)
Private Limited
("MVHPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
Mytrah Vayu India 25 October 2016 100.00 - Operating company
(Narmada) Private
Limited ("MVNPL")
------------------- ------------------ ------------------- ----------------- ----------------- ------------------
(1) Wound off against application by the Group to concerned authority with effect from 02 January 2016.
(2) Acquired by the Group on 01 August 2015.
The principal activity of the Group is to operate Wind Energy Farms and Solar Power Plants as a leading independent power producer and to engage in the sale of energy to the Indian market through the Company's subsidiaries.
2. Adoption of new and revised accounting standards and interpretations
2.1 New and amended standards adopted during the year
The Group has adopted the following new standards and amendments, including any consequential amendments to other standards with date of initial application of 01 January 2016:
Standard or interpretation Effective for reporting periods starting on or after --------------------------------------------------------------- ----------------------------------------------------- IFRS 14 Regulatory Deferral Accounts Annual periods beginning on or after 1 January 2016 --------------------------------------------------------------- ----------------------------------------------------- Accounting for Acquisitions of Interests in Joint Operations Annual periods beginning on or after 1 January 2016 (Amendments to IFRS 11) --------------------------------------------------------------- ----------------------------------------------------- Clarification of Acceptable Methods of Depreciation and Annual periods beginning on or after 1 January 2016 Amortisation (Amendments to IAS 16 and IAS 38) --------------------------------------------------------------- ----------------------------------------------------- Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) Annual periods beginning on or after 1 January 2016 --------------------------------------------------------------- ----------------------------------------------------- Equity Method in Separate Financial Statements (Amendments to Annual periods beginning on or after 1 January 2016 IAS 27) --------------------------------------------------------------- ----------------------------------------------------- Annual Improvements to IFRSs 2012-2014 Cycle - various Annual periods beginning on or after 1 January 2016 standards --------------------------------------------------------------- ----------------------------------------------------- Investment Entities: Applying the Consolidated Exception Annual periods beginning on or after 1 January 2016 (Amendments to IFRS 10, IFRS 12 and IAS 28) --------------------------------------------------------------- ----------------------------------------------------- Disclosure Initiative (Amendments to IAS 1) Annual periods beginning on or after 1 January 2016 --------------------------------------------------------------- ----------------------------------------------------- 2. Adoption of new and revised accounting standards and interpretations (Continued)
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 consolidated 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 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 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.
At the date of authorisation of these financial statements, the following Standards and relevant Interpretations, have not been applied in these financial statements and were effective for the actual period beginning on or after the below mentioned respective dates, but not yet endorsed by EU.
IASB effective Standard EU effective
date date
--------------- ----------------------------------------- -------------
1 January Disclosure initiative (Amendments Not yet
2017 to IAS 7) endorsed
--------------- ----------------------------------------- -------------
1 January Recognition of Deferred Tax Assets Not yet
2017 for Unrealised Losses (Amendment endorsed
to IAS 12)
--------------- ----------------------------------------- -------------
1 January Annual Improvement's to IFRSs 2014-2016 Not yet
2017 Cycle (Amendments to IFRS 12 Disclosure endorsed
of interest in Other Entities)
--------------- ----------------------------------------- -------------
1 January Classification and Measurement of Not yet
2018 Share-based Payment Transactions endorsed
(Amendments to IFRS 2)
--------------- ----------------------------------------- -------------
1 January Applying IFRS 9 Financial instruments Not yet
2018 with IFRS 4 Insurance contracts endorsed
(Amendments to IFRS 4)
--------------- ----------------------------------------- -------------
1 January Annual improvement's to IFRSs 2014-2016 Not yet
2018 Cycle (Amendments to IFRS 1 First-time endorsed
Adoption of IFRSs and IAS 28 Investment
in Associates and Joint Ventures)
--------------- ----------------------------------------- -------------
1 January IFRIC 22 Foreign Currency Transactions Not yet
2018 and Advance consideration endorsed
--------------- ----------------------------------------- -------------
3. Significant accounting policies
The Group accounting policies are summarized below:
3.1 Basis of accounting
These financial statements comprise of the consolidated statement of financial position, consolidated income statement, consolidated statement of other comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows, significant accounting policies and notes to the accounts (together referred as the "consolidated financial statements").
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standard and its interpretations as adopted by the European Union (EU) ('IFRS').
The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the statement of financial position. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
a) Derivative financial instruments are measured at fair value; b) Available-for-sale financial assets are measured at fair value;
c) Long term borrowings, except obligations under finance leases which are measured at amortised cost using the effective interest rate method;
d) Share based payment expenses are measured at fair value; and e) Net employee benefit (asset) / liability that is measured based on actuarial valuation.
The Directors have taken advantage of the exemption offered by Section 244 (5) of the Companies (Guernsey) Law, 2008 from preparation of standalone financial statements of the Company as the Company is preparing and presenting consolidated financial statements for the financial year ended 31 December 2016.
The accounting policies set out below have been applied consistently to all years and presented in these consolidated financial statements.
3.2 Consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control is ceased.
Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. The interests of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests' proportionate share of the fair value of the acquiree's identifiable net assets. The choice of measurement basis is made on the acquiree's identifiable net asset basis. Subsequent to acquisition, the carrying amount of non-controlling interest is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity.
The Group builds solar and wind power plants under public-to-private Service Concession Arrangements (SCAs), and the same are treated as Intangible assets and gains/ losses arising from construction / development services, (where work is sub-contracted within the Group) are treated as realized and not eliminated on consolidation.
3.3 Going concern
The Directors have considered the financial position of the Group, its cash position and forecast cash flows for the 18 months' period from the date of these consolidated financial statements. The Directors have, at the time of approving the consolidated 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 consolidated financial statements. Further details are contained in the Directors Report.
3. Significant accounting policies (Continued)
3.4 Foreign currencies
The consolidated financial statements are presented in 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 the subsidiaries is Indian Rupee (INR), except for BVML and MESPL, which are determined as USD. These financial statements are presented in US dollars (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 year, 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 year. For the purposes of presenting consolidated 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 year. Income and expense items are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during that year, 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 following exchange rates were used to translate the INR financial information into USD:
31 December 31 December
2016 2015
--------------------------- ------------ ------------
Closing rate 67.8080 66.1261
Average rate for the year 67.0887 64.0387
---------------------------- ------------ ------------
The following exchange rates were used to translate the GBP financial information into USD:
31 December 31 December
2016 2015
--------------------------- ------------ ------------
Closing rate 1.2336 1.4802
Average rate for the year 1.3552 1.5283
---------------------------- ------------ ------------
3.5 Revenue recognition
Revenue is recognised when it is probable that future economic benefits will flow to the group and these benefits can be measured reliably.
Sale of electricity
Revenue from the sale of electricity is recognised when earned on the basis of contractual arrangements and reflects the number of units supplied in accordance with joint meter readings undertaken on a monthly basis by representatives of the buyer and the Group at rates stated in the contract or as applicable, net of any actual or expected trade discounts. Electricity generated from the last bill cycle date to the end of the period/ year are recognized as unbilled revenue and are billed in subsequent period on actualization basis as per the terms of contractual arrangements.
Generation-based incentives
Revenue from generation-based incentives are recognised based on the number of units supplied, when registration under the relevant programme has taken place or if the eligibility criteria is met under the Indian Renewable Energy Development Agency Limited - Generation Based Incentive scheme.
Sale of Renewable Energy Certificates (RECs)
Revenue from sale of RECs is recognised after registration of the project with central and state government authorities, generation of power and execution of a contract for sale through recognised exchanges in India.
Sale of Verified Carbon Units (VCUs) and Certified Emission Reductions (CERs)
Revenue from sale of VCUs/CERs is recognized after registration of the project with United Nations Framework Convention on Climate Change (UNFCCC), generation of emission reductions and on execution of a firm contract of sale and billing to the customers.
3. Significant accounting policies (Continued)
Interest income
Interest income is recognised as it accrues using the effective interest rate method.
Construction Revenue from Service Concession Arrangements
Revenue related to construction under a service concession arrangement is recognised based on the stage of completion of the work performed, consistent with the accounting policy on recognising revenue on construction contracts. Operation or Service revenue is recognised in the period in which services are provided by the Group.
Contract expenses are recognized as incurred unless they create an asset related to future contract activity. An expected loss on a contract is recognised immediately in profit or loss.
3.6 Financial instruments
Financial instruments
Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
Non-derivative financial assets
All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs.
Financial assets within the scope of IAS 39 are classified into the following specified categories as:
-- Loans and receivables
-- Financial assets at fair value through profit or loss
-- Available-for-sale financial assets
-- Held-to-maturity investments
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are categorised as current assets if they are expected to be settled within 12 months otherwise they are classified as non-current.
Effective interest rate method
The effective interest rate method is a method of calculating the amortised cost of a financial asset held at amortised cost and of allocating interest income over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or (where appropriate) a shorter year, to the net carrying amount on initial recognition.
Loans and receivables (including cash and bank balances)
Cash and bank balances and trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are initially recognised at fair value plus any directly attributable costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment.
Cash and bank balances comprise cash in hand and cash at bank and deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, which are subject to an insignificant risk of change in value. Deposits with banks and financial institutions maturing after 12 months from the date of balance sheet have been classified under non-current assets as 'other investments'.
3. Significant accounting policies (Continued)
Financial assets at fair value through profit and loss
Financial assets at fair value through profit or loss include financial assets that are held for trading or are designated by the entity to be carried at fair value through profit or loss upon initial recognition. Financial assets at fair value through consolidated profit and loss are carried in the statement of financial position at fair value with gains or losses recognised in the income statement. Directly attributable costs are recognised in profit and loss as incurred.
Available-for-sale financial assets ("AFS")
Investments in mutual funds held by the Group that are traded in an active market are classified as being AFS and are stated at fair value plus any attributable transaction costs. Subsequent to initial recognition they are measured at fair value with changes in fair value being recognised in other comprehensive income and accumulated in fair value reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in the income statement.
Held-to-maturity investments ("HTM")
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity. Investments are classified as held-to-maturity if it is the positive intention and ability of Group's management to hold them until maturity. Held-to-maturity investments are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the consolidated statement of comprehensive income when the investments are derecognised or impaired, as well as through the amortisation process.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting year. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited. Changes in the carrying amount of the allowance account are recognised in the consolidated income statement.
Impairment of available-for-sale
Impairment losses on available-for-sale financial assets are recognised by classifying the losses accumulated in the fair value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment loss previously recognized in profit or loss. If the fair value of an impaired available-for-sale debt security subsequently increases and the increase can be related objectively to an event occurring after the impairment loss was recognized, then the impairment loss is reversed through profit or loss, otherwise, it is reversed through Other Comprehensive Income.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
3. Significant accounting policies (Continued)
Non-derivative financial liabilities
Non-derivative financial liabilities are initially recognised at fair value less any directly attributable costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using effective interest method.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.
Compound instruments
The component parts of compound instruments issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. Subsequent to initial recognition the liability component of compound financial instrument is measured at amortised cost using effective interest method. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently remeasured.
Financial liabilities
Financial liabilities are initially measured at fair value, net of transaction costs and subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.
Embedded derivatives
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value through profit and loss.
An embedded derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the hybrid instrument to which the embedded derivative relates is more than 12 months and is not expected to be realised or settled within 12 months.
The Company has taken an accounting policy choice in accordance with IAS 32 and IAS 39 wherein the Company writes options that give non-controlling shareholders right to put subsidiary's shares to the Company in exchange for a variable number of Company's shares and the Company has an option to settle in cash when the non-controlling shareholders exercise the options. Accordingly, the compulsorily convertible preference shares held by the non-controlling interest (NCI) shareholders are classified as equity and the related put options are accounted for as derivative liabilities under IAS 39 at fair value with changes therein recognised in profit and loss.
3.7 Property, plant and equipment
Recognition and measurement
Property, plant and equipment are recognised as assets in the statement of financial position if it is probable that the Group will derive future economic benefits from them and the cost of the asset can be reliably estimated.
Items of property, plant and equipment are stated at cost less accumulated depreciation and any provision for impairment. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Advances paid in respect of work that is yet to be executed is classified as a capital advance within other non-current assets in the consolidated statement of financial position.
Notes to the consolidated financial statements for the year ended 31 December 2016 (continued)
3. Significant accounting policies (Continued)
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of an item if it is probable that the future economic benefits embedded within the part will flow to the Group and its cost can be measured reliably. The cost of the day-to-day servicing of plant and equipment are recognised in the consolidated income statement as incurred.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised in the consolidated income statement.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction and production of qualifying assets are capitalised as part of the costs of those assets. Qualifying assets are those that take a substantial year of time to prepare for their intended use. Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their use. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
In respect of an intangible asset, borrowing costs attributable to the construction of power plants are capitalised up to the date of commercial operations date (COD). All borrowing costs subsequent to the COD are charged to the Income Statement in the year in which such costs are incurred.
All other borrowing costs are expensed in the year in which they are incurred.
Depreciation
Depreciation is provided to write off the cost of property, plant and equipment over their estimated useful lives after taking into account their estimated residual value, using the straight-line method as stated below:
Furniture and fittings 5 years Office equipment 3-5 years Computers 4 years Vehicles 5 years Plant and machinery 5-50 years Buildings 20 years
Lease acquisition costs, leasehold improvements and leased assets are depreciated over the primary period of the lease or estimated useful lives of the assets, whichever is less. Assets under construction are not depreciated, as they are not available for use.
The depreciation methods, useful lives and residual value, are reviewed at each reporting date and adjusted prospectively, if appropriate. The Group adopted component accounting of depreciation for the plant and machinery class of the property, plant and equipment.
During the year, Management has re-assessed and revised the estimated useful lives to the Wind Turbine Generators (WTG's) based on experience and technical evaluation. The Company also revised the residual value between 0 - 10% (previous year: 20%) of the cost, in order to reflect the actual usage of the assets. The revised useful lives of the components of Plant and Machinery or WTG's are as follows:
Component of plant and Revised useful Prior year machinery life useful life -------------------------------- --------------- ------------- Nacelles and its parts 15 years 25 years Rotor blades 15 years 30 years Tubular towers and Civil 50 years 50 years works - Tower Transformers 25 years 25 years Final testing and commissioning 15 years 25 years Electrical works and 10 years 50 years Civil works - Others Power evacuation 20 years 20 years -------------------------------- --------------- -------------
3. Significant accounting policies (Continued)
Impairment
At each reporting date, management reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately. The recoverable amount of an asset is the greater of its value in use and fair value less cost to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.
3.8 Intangible assets
The Group has identified the following intangible assets.
a) Service Concession Arrangements (SCA) b) Software
Service Concession Arrangements
Under the SCAs, where the Group has received the right to charge the State Electricity Utilities (Grantor), such rights are recognised and classified as "Intangible Assets". Such right is not an unconditional right to receive consideration because the amounts are contingent to the extent the Grantor uses the services and thus are recognised and classified as intangible assets.
Software
Software that are acquired by the Group and have finite useful lives are measured at costs less accumulated amortization and accumulated impairment losses.
Amortisation
The amortization method used is selected on the basis of the expected pattern of consumption of the expected future economic benefits embodied in the asset, and is applied consistently from period to period, unless there is a change in the expected pattern of consumption of those future economic benefits. The Group determined that the amortisation method that reflects appropriately the expected pattern of consumption of the expected future economic benefits is correlated with the amortisation of the asset base.
Intangibles are amortised over its useful life using straight line method as stated below:
Service Concession Arrangements - Over the period of Power Purchase Agreement i.e., 25 years using the differential depreciation methodology under straight line method as per the principles envisaged in the CERC Guidance in this regard.
Application software 4 years ERP software license 4 years
Amortisation method, useful lives and residual values are reviewed at each reporting date and adjusted prospectively if appropriate.
3.9 Taxation
Income tax expense represents the sum of current tax and deferred tax.
Current tax
Current tax is the expected tax payable on the taxable income for the year, using the rates enacted or substantially enacted at the reporting date. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in future years and it further excludes items that are permanently exempt from tax or allowable as a tax deduction.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit, and is accounted for using the balance sheet approach. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
3. Significant accounting policies (Continued)
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Any deferred tax asset or liability arising from deductible or taxable temporary differences in respect of unrealised inter-company profits are recognised using the tax rate enacted or substantially enacted of the jurisdiction in which the company owns the assets.
Deferred tax is calculated at the tax rates that are expected to apply in the year when the liability is settled or the asset is realised on tax laws and rates that have been enacted at the balance sheet date. Deferred tax is charged in the consolidated income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also recognised with in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
3.10 Leases
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether the arrangement is or contains a lease. At inception or on re-assessment of an arrangement that contains a lease, the Group separates the payment and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently, the liability is reduced as the payments are made and an imputed finance cost on the liability is recognised using the Group's incremental borrowing rate.
Leased Assets
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incident to the ownership. The leased assets are measured initially at an amount equal to the lower of their fair value and present value of minimum lease payments. All other leases are classified as operating leases.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the year in which they are incurred. Land taken on lease are amortised over a year ranging upto 25 years in line with the lease agreements.
3.11 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation, as a result of past events, and it is probable that an outflow of resources that can be reliably estimated will be required to settle such an obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognised in the consolidated income statement as a finance cost. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
A contingent liability is disclosed where the existence of an obligation will only be confirmed by one or more future events or where the amount of the obligation cannot be measured reliably. Contingent assets are not recognised, but are disclosed where an inflow of economic benefits is probable.
A provision for onerous contracts, if any, is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.
3.12 Employee benefits
Short term employee benefits
Short term employee benefits are expensed as the related services are provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
3. Significant accounting policies (continued)
Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is provided.
Defined benefit plans
The Group's net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior years, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income (OCI). The Group determines the net interest expense/ (income) on the net defined benefit liability/ (asset) for the year by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual year to the then-net defined benefit liability/ (asset), taking into account any changes in the net defined benefit liability/ (asset) during the year as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognized in consolidated income statement.
3.13 Share-based payments
Equity-settled share-based payments to employees, directors and key management personnel are measured at the fair value of the equity instruments at the grant date with a corresponding increase in the equity over the vesting year, based on the Group's estimate of equity instruments that will eventually vest. The fair value excludes the effect of non-market-based vesting conditions.
At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the income statement such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
Share options granted to employees are treated as cancelled as and when employees cease to contribute to the scheme. This results in accelerated recognition of the expenses that would have arisen over the remainder of the original vesting year.
For cash settled share based payments, a liability is recognised for the amount payable at the balance sheet date with a corresponding charge being made to the income statement.
3.14 Earnings per share
The Group presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees and Directors, CCPS, CCDs and share warrants issued to investors and lenders.
3.15 Government grants
The Group recognises government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants received in relation to assets are presented as a reduction to the carrying amount of the related asset. Grants related to income are recognised as a credit to the consolidated income statement.
3.16 Finance income and expense
Finance income consists of interest income on funds invested (including available-for-sale financial assets), dividend income and gains on the disposal of available-for-sale financial assets. Interest income is recognised as it accrues in the consolidated income statement, using the effective interest method. Dividend income is recognised in the consolidated income statement on the date that the Company's right to receive payment is established. The associated cash flows are classified as investing activities in the statement of cash flows.
Finance expenses consist of interest expense on borrowings. Borrowing costs are recognised in the consolidated income statement using the effective interest method. The associated cash flows are classified as financing activities in the statement of cash flows.
Foreign currency gains and losses are reported on a net basis with in finance income and expense.
4. Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.
Critical judgements and estimates in applying the Group's accounting policies
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
a) Useful life of depreciable assets and intangible assets under service concession arrangement
Management reviews the useful lives of depreciable assets and intangible assets at each reporting date, based on the expected utility of the assets to the Group and any change in useful lives and methods of depreciation/amortisation are adjusted prospectively if appropriate.
b) Classification of financial instruments as equity or liability
Significant judgement is required to apply the rules under IAS 32, Financial Instruments: Presentation and IAS 39: Financial Instruments: Recognition and Measurement to assess whether an instrument is equity or a financial liability. Management has exercised significant judgement to evaluate the terms and conditions of certain financial instruments with reference to the applicability of contingent settlement provisions, evaluation of whether options under the contract will be derivative or a non-derivative, assessing if certain settlement terms are within the control of the Company and if not whether the occurrence of these events are extremely rare, highly abnormal and very unlikely, clarifications between the parties to the agreement subsequent to the date of the agreement to conclude that the instruments be classified as an equity instrument.
c) Deferred tax assets
The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on the Group's latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in India in which the Group operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances.
d) Recoverability of trade receivables
The Group analyses the historical payment patterns of customers, customer concentrations, customer creditworthiness and current economic trends on an ongoing basis. If the financial condition of a customer deteriorates, additional provision is made in the accounts.
e) 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 the ability to determine prices and concluded that the arrangements do not meet the criteria for service concession arrangements in the past.
During the 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.
Critical accounting judgements and key sources of estimation uncertainty (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.
f) Measurement of fair value
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 CFO (Chief Financial Officer).
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from third parties to support the conclusion that such valuation meets the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.
Significant valuation issues are reported to the Group Audit Committee.
When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
-- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3: Inputs for the asset or liability that is not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of asset or liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
g) Measurement of earnings before interest, tax, depreciation and amortization (EBIDTA)
The Group has elected to present earnings before interest, tax, depreciation and amortisation (EBIDTA) as a separate line item on the face of the statement of profit and loss. The Group measures EBIDTA on the basis of profit / (loss) from continuing operations. In its measurement, the Company has not included depreciation and amortisation expenses, finance cost, equity settled employee benefits expenses, tax expense and finance income.
5. Segment information
IFRS 8 establishes standards for the way to report information on operating segments and related disclosures about products and services, geographic areas, and major customers. The Group operations predominantly relate to generation and sale of electricity. The chief operating decision maker evaluates the Group's performance and allocates resources based on an analysis of various performance indicators at operational unit level. Accordingly, there is only a single operating segment "generation and sale of electricity". Consequently, no segment disclosures of the Group are presented.
The Group has all of its non-current assets located within India and earns its revenues from customers located in India.
6. Revenue
The Group's revenue from continuing
operations is as follows:
Year ended Year ended
31 December 31 December
2016 2015
USD USD
Sale of electricity 109,623,601 67,665,168
Generation based incentive (1) 10,226,577 6,374,688
Sale of renewable energy certificates 1,777,778 679,810
Construction revenue (2) 240,590,269 -
Sale of verified carbon units 13,847 -
Total revenue 362,232,072 74,719,666
Finance income (note 10) 4,933,555 3,347,383
Other operating income (3) 6,221,785 881,589
--------------------------------------- ------------ -------------
Total income 373,387,412 78,948,638
--------------------------------------- ------------ -------------
(1) Generation based incentives are recognised on fulfilment of eligibility criteria prescribed under Indian Renewable Energy Development Agency Limited - Generation Based Incentive Scheme.
(2) The amount of revenue, corresponding cost and margin recorded in statement of consolidated income statement on account of exchange of construction services for an intangible asset under service concession arrangement is USD 240,590,269 (31 December 2015: USD Nil), USD 224,672,249 (31 December 2015: USD Nil) and USD 15,918,020 (31 December 2015: USD Nil) respectively.
(3) Other operating income recognised during the year represents liquidated damages claimed from project suppliers in relation to low machine availability as against the guaranteed machine availability amounting to USD 1,118,180 (Previous Year: USD 881,589) and delay in commissioning of wind projects amounting to USD 5,103,605 (31 December 2015: USD Nil).
7. Employee benefits expense
Year ended Year ended
31 December 2016 31 December 2015
USD USD
Salaries and bonus 2,000,594 2,241,999
Contribution to provident fund 50,011 32,150
Staff welfare 116,749 58,039
Gratuity and leave encashment (note 28) 488,783 66,337
Total 2,656,137 2,398,525
----------------------------------------- ---------------------- ----------------------
8. Other operating expenses include costs relating to write-off of doubtful advances USD 424,142 (31 December 2015: USD Nil), provision for trade receivables USD 101,010 (31 December 2015: USD 225,991), repairs and maintenance cost of USD 6,277,548 (31 December 2015: USD 2,421,039).
9. Auditor's remuneration
The auditor's remuneration is as follows (excluding taxes, if any):
Year ended Year ended
31 December 2016 31 December 2015
USD USD
Fees payable to the auditors of Company and its subsidiaries for:
Audit of the Company's annual accounts 68,438 77,179
Audit of the Company's subsidiaries pursuant to legislation 106,800 83,690
Total audit fees 175,238 160,869
-------------------------------------------------------------------- ---------------------- ----------------------
Review of Company's interim accounts 33,202 31,330
Review of the Company's subsidiaries interim accounts pursuant to
legislation 23,141 30,396
Other audit services 29,495 -
Total non-audit fees 85,838 61,726
-------------------------------------------------------------------- ---------------------- ----------------------
10. Finance income
Year ended
31 December Year ended
2016 31 December 2015
USD USD
Interest on bank deposits 2,155,159 1,237,561
Loss on derivative instruments
within CCDs - (88,384)
Loss on derivative instruments
within CCPS (31,900) (132,601)
Finance income on security deposits 527,781 421,815
Gain on disposal of current
investments 2,185,775 1,796,093
Others 96,740 112,899
------------------------------------- ----------------- ----------------------
Total finance income 4,933,555 3,347,383
------------------------------------- ----------------- ----------------------
11. Finance costs
Year ended Year ended
31 December 31 December
2016 2015
USD USD
Interest on borrowings (105,232,479) (70,987,900)
Other borrowing costs(1) (6,253,807) (4,398,853)
Interest on liability portion
of CCPS (495,988) (519,611)
------------------------------- ----------------- -----------------
Total interest expense (111,982,274) (75,906,364)
Less: amounts included in the
cost of qualifying assets(2)
(note 16) 30,139,077 24,684,494
------------------------------- ----------------- -----------------
Total finance cost recognised
in the income statement (81,843,197) (51,221,870)
------------------------------- ----------------- -----------------
(1) Includes finance cost on finance lease obligations USD 1,302,032 (31 December 2015: USD 1,272,277).
(2) Amounts included in the cost of qualifying assets during the year represent interest on project specific as well as general borrowings which are sanctioned for the purpose of construction of a qualifying asset and it represents the actual finance costs incurred on those borrowings, calculated using the effective interest rate method.
12. Other finance costs on refinancing
Year ended Year ended
31 December 31 December
2016 2015
USD USD
Loan refinancing costs (6,386,413) (541,185)
------------------------ ----------------- -----------------
Total (6,386,413) (541,185)
------------------------ ----------------- -----------------
Loan refinancing costs represents the cost of prepayment and unamortized transaction costs incurred upon refinancing the existing senior term loans.
13. Taxation
Year ended Year ended
31 December 31 December
2016 2015
USD USD
Current tax charge (1,798,393) (5,560,396)
Deferred tax charge (note 19) 2,774,670 5,479,633
------------------------------- ------------ ------------
Income tax expense 976,277 (80,763)
------------------------------- ------------ ------------
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 1,480. 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 34.61% (31 December 2015:34.61%) 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 of USD 1,558,712 (31 December 2015: USD 3,538,655) as MAT is greater than corporate income tax for the current year. The tax expense represents current tax charge and non-cash net deferred tax liability on timing differences accounted during the year.
The prima-facie tax expense for the year is reconciled to the tax expense recognised in consolidated income statement as follows:
Year ended Year ended
31 December 31 December
2016 2015
USD USD
Profit/ (Loss) before tax (5,578,730) 461,505
Enacted tax rates 34.61% 34.61%
Expected tax income / (expense) 1,930,798 (159,727)
Effect of:
Other permanent differences 1,215,958 2,100,705
MAT charge (1,798,393) (5,560,396)
MAT deferred tax credit 1,558,712 3,538,655
--------------------------------------- ------------ ------------
Income tax expense recognised
in the consolidated income statement 976,277 (80,763)
--------------------------------------- ------------ ------------
Tax assets / liabilities recognised in the consolidated statement of financial position:
As at As at
31 December 31 December
2016 2015
USD USD
Current tax assets - -
Current tax liabilities 414,987 3,176,482
------------------------- ------------ ------------
14. Earnings per share
Basic earnings per share is calculated by dividing profit / (Loss) attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.
Year ended Year ended
31 December 31 December
2016 2015
USD USD
--------------------------------------------- ------------ ------------
Basic and Diluted:
a) Profit/(loss) attributable
to the equity holders of the
Company (4,086,048) 1,162,991
b) Weighted average number
of ordinary shares (basic) 163,636,000 163,636,000
Add: Effect of weighted average
number of share options outstanding - -
c) Weighted average number
of ordinary shares (diluted) 163,636,000 163,636,000
Basic earnings/(loss) per share (0.02497) 0.00711
Diluted earnings/(loss) per
share (0.02497) 0.00711
---------------------------------------------- ------------ ------------
At 31 December 2016, 36,340,389 potential ordinary shares (includes CCPS, share options and share warrants) (31 December 2015: 46,545,082) 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.
15. Intangible assets
Intangibles
under Service
Concession Intangible
Application Arrangements assets under
Software * development Total
USD USD USD USD
-------------------------- ------------ --------------- -------------- --------------
Opening cost as
at 1 January 2015 788,727 - - 788,727
Additions 75,900 - - 75,900
Exchange difference (32,644) - - (32,644)
-------------------------- ------------ --------------- -------------- --------------
Balance as at
31 December 2015 831,983 - - 831,983
Accumulated amortization
as at
1 January 2015
Balance at the
beginning of the
year 460,658 - - 460,658
Charge for the
year 200,059 - - 200,059
Exchange differences (23,982) - - (23,982)
-------------------------- ------------ --------------- -------------- --------------
Balance as at
31 December 2015 636,735 - - 636,735
Net value as at
31 December 2015 195,248 - - 195,248
-------------------------- ------------ --------------- -------------- --------------
Opening cost as
at 1 January 2016 831,983 - - 831,983
Additions 148,478 411,223,875 4,880,110 416,252,462
Transfer from
Property, plant
and equipment - - 455,164,959 455,164,959
Transfer in /
(out) - - (411,223,875) (411,223,874)
Exchange difference (22,211) (4,362,219) (517,890) (4,902,320)
-------------------------- ------------ --------------- -------------- --------------
Balance as at
31 December 2016 958,250 406,861,656 48,303,304 456,123,210
Accumulated amortization
as at
1 January 2016
Balance at the
beginning of the
year 636,736 - - 636,735
Charge for the
year 141,283 14,633,719 - 14,775,002
Exchange differences (17,295) (155,233) - (172,527)
-------------------------- ------------ --------------- -------------- --------------
Balance as at
31 December 2016 760,724 14,478,486 - 15,239,210
-------------------------- ------------ --------------- -------------- --------------
Net value as at
31 December 2016 197,526 392,383,170 48,303,304 440,884,000
-------------------------- ------------ --------------- -------------- --------------
* Refer note 24 for security restrictions on property, plant and equipment/ Intangibles under Service Concession Arrangement.
16. Property, plant and equipment
Assets Assets
Furniture under under course
and Office Land and Plant and Lease hold finance of
fittings equipment buildings Machinery Computers Vehicles improvements lease(2) construction Total
USD USD USD USD USD USD USD USD USD USD
------------- --------- --------- --------- ------------ --------- -------- ------------ ---------- ------------ ------------
Opening cost
as at 1
January 2015 133,711 142,209 1,993,792 500,800,056 247,892 548,823 214,866 6,086,533 26,368,272 536,536,154
Additions 21,989 145,282 - - 76,816 65,110 73,914 28,079,288 286,039,204 314,501,603
Disposals (839) (234) - - (5,921) (49,099) - - - (56,093)
Transfer in /
(out) - - 2,220,748 54,168,898 - - - - (56,389,646) -
Exchange
difference (5,796) (10,033) (146,566) (20,916,114) (12,145) (21,553) (10,573) (534,648) (7,984,279) (29,641,707)
------------- --------- --------- --------- ------------ --------- -------- ------------ ---------- ------------ ------------
Balance as
at 31
December
2015 149,065 277,224 4,067,974 534,052,840 306,642 543,281 278,207 33,631,173 248,033,551 821,339,957
------------- --------- --------- --------- ------------ --------- -------- ------------ ---------- ------------ ------------
Accumulated
depreciation
as at
1 January
2015 73,452 81,024 90,317 25,518,229 182,270 219,825 92,572 168,518 - 26,426,207
Adjustment
for
disposals (839) (225) - - (5,803) (31,323) - - - (38,190)
Depreciation
/
amortization
charge 25,725 40,314 28,137 14,076,631 56,406 104,375 27,071 2,155,804 - 16,514,463
Exchange
difference (3,603) (4,373) (4,352) (1,423,003) (8,979) (10,737) (4,405) (33,273) - (1,492,725)
Balance as at
31 December
2015 94,735 116,740 114,102 38,171,857 223,894 282,140 115,238 2,291,049 - 41,409,755
------------- --------- --------- --------- ------------ --------- -------- ------------ ---------- ------------ ------------
Net value as
at 31
December
2015 54,330 160,484 3,953,872 495,880,983 82,748 261,141 162,969 31,340,124 248,033,551 779,930,202
------------- --------- --------- --------- ------------ --------- -------- ------------ ---------- ------------ ------------
16. Property, plant and equipment (continued)
Assets
Furniture Assets under under course
and Office Land and Plant and Lease hold finance of
fittings equipment buildings Machinery# Computers Vehicles improvements lease(2) construction Total
USD USD USD USD USD USD USD USD USD USD
-------------- --------- --------- ----------- ------------- --------- --------- ------------ ------------ ------------- -------------
Opening cost
as at 1
January 2016 149,065 277,224 4,067,974 534,052,840 306,642 543,281 278,207 33,631,173 248,033,551 821,339,957
Additions 26,482 53,887 - - 171,676 98,198 61,976 22,331,548 294,852,854 317,596,619
Disposals - (149) - (48,304) (6,900) (44,777) - - - (100,130)
Transfer in /
(out) - - 22,078,115 18,689,042 - - - - (40,767,157) -
Transfer to
intangible
assets under
development - - - - - - - - (455,164,959) (455,164,959)
Exchange
difference (3,978) (7,446) (335,103) (13,444,310) (9,354) (14,042) (7,558) (1,071,074) 791,328 (14,101,535)
-------------- --------- --------- ----------- ------------- --------- --------- ------------ ------------ ------------- -------------
Balance as at
31 December
2016 171,569 323,516 25,810,986 539,249,268 462,064 582,660 332,625 54,891,647 47,745,617 669,569,952
-------------- --------- --------- ----------- ------------- --------- --------- ------------ ------------ ------------- -------------
Accumulated
depreciation
as at
1 January
2016 94,735 116,740 114,102 38,171,857 223,894 282,140 115,238 2,291,049 - 41,409,755
Adjustment for
disposals - (81) - (46,203) (6,890) (42,618) - - - (95,792)
Depreciation/
amortisation
charge # 33,445 58,610 104,182 30,121,960 62,805 100,630 41,268 1,925,166 - 32,448,066
Exchange
difference (2,705) (3,516) (3,935) (1,265,850) (6,147) (7,614) (3,296) (117,586) - (1,410,649)
Balance as at
31 December
2016 125,475 171,753 214,349 66,981,764 273,662 332,538 153,210 4,098,629 - 72,351,380
-------------- --------- --------- ----------- ------------- --------- --------- ------------ ------------ ------------- -------------
Net value as
at 31
December 2016 46,094 151,763 25,596,637 472,267,504 188,402 250,122 179,415 50,793,018 47,745,617 597,218,572
-------------- --------- --------- ----------- ------------- --------- --------- ------------ ------------ ------------- -------------
1. An amount of USD 30,139,077 (31 December 2015: USD 24,684,494) pertaining to interest on borrowings is capitalised as the funds were used for construction of qualifying assets (refer note 11). Refer note 24 for security restrictions on property, plant and equipment.
2. The Group leased the rights to use power evacuation facilities under a lease arrangement with related parties.
3. Summary of depreciation and amortization charge:
Year ended Year ended
31 December 31 December
2016 2015
USD USD
Amortization of intangible assets
(refer note 15) 14,775,002 200,059
Depreciation / amortization charge
on tangible assets and intangible
assets 32,448,066 16,514,463
Depreciation and amortization
capitalized during the year,
net relating to wind farm assets
under course of construction 199,867 (310,781)
Total depreciation and amortization
charge 47,422,935 16,403,741
# During the year, the management has revised the estimated useful lives and residual value of certain components of WTGs which has resulted in an additional charge of depreciation amounting to USD 21,749,298 (31 December 2015: Nil) for the year ended 31 December 2016.
17. Other non-current assets
As at As at
31 December 31 December
2016 2015
USD USD
Deposits 9,847,022 6,546,423
Capital advances 8,649,379 14,740,851
Prepayments 12,686,896 12,410,325
------------------------- ------------ ------------
Total other non-current
assets 31,183,297 33,697,599
------------------------- ------------ ------------
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 power evacuation deposits has been classified as assets under finance lease. Further, the difference between the fair value and nominal value of land deposits has been classified as prepayments.
Capital advances represent advance payments made to suppliers and related parties for the construction (including procurement of land) of wind farm and solar plant assets, as part of long-term construction 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 of 20 years and are renewable provided the main lease is renewed by the government authorities and other parties.
18. Other investments
As at As at
31 December 31 December
2016 2015
USD USD
Deposits with banks(1) 344,355 2,055,483
------------------------ ------------ ------------
Total 344,355 2,055,483
------------------------ ------------ ------------
(1) Represents margin money deposits placed with banks towards bank guarantees and letter of credit provided to various third parties with maturity period greater than one year.
19. Deferred tax assets
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current year.
As at Recognised in income As at
31 December 2015 statement Exchange Difference 31 December 2016
USD USD USD USD
---------------------------- ----------------- ---------------------------- ------------------- ------------------
Property, plant and
equipment (18,108,667) (7,207,774) 525,624 (24,790,817)
Provisions 115,021 87,335 (3,779) 198,577
Share issue costs 136,285 (134,330) (1,955) -
MAT credit 5,271,060 1,558,712 (147,277) 6,682,495
Unrealised inter-group
profits 1,825,516 (1,799,323) (26,193) -
Tax losses 16,505,372 10,270,051 (518,341) 26,257,082
---------------------------- ----------------- ---------------------------- ------------------- ------------------
Net deferred tax asset 5,744,587 2,774,671 (171,921) 8,347,337
---------------------------- ----------------- ---------------------------- ------------------- ------------------
As at Recognised in income As at
31 December 2014 statement Exchange Difference 31 December 2015
USD USD USD USD
---------------------------- ----------------- ---------------------------- ------------------- ------------------
Property, plant and
equipment (15,412,758) (3,394,107) 698,198 (18,108,667)
Provisions 18,861 100,041 (3,881) 115,021
Share issue costs 123,158 18,432 (5,305) 136,285
MAT credit 1,917,653 3,538,655 (185,248) 5,271,060
Unrealised inter-group
profits 1,619,272 277,092 (70,848) 1,825,516
Tax losses 12,189,247 4,939,520 (623,395) 16,505,372
---------------------------- ----------------- ---------------------------- ------------------- ------------------
Net deferred tax asset 455,433 5,479,633 (190,479) 5,744,587
---------------------------- ----------------- ---------------------------- ------------------- ------------------
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following are the details of deferred tax balances recognised in the consolidated statement of financial position:
As at As at
31 December 31 December
2016 2015
USD USD
Deferred tax assets 33,138,154 23,853,254
Deferred tax liabilities (24,790,817) (18,108,667)
-------------------------- ------------------ ------------------
Deferred tax asset, net 8,347,337 5,744,587
-------------------------- ------------------ ------------------
20. Trade receivables
As at As at
31 December 31 December
2016 2015
USD USD
Trade receivables 52,804,880 17,706,023
Less: Provision for impairment
of trade receivables (313,368) (218,858)
Net trade receivables 52,491,512 17,487,165
-------------------------------- ---------------- ----------------
Trade receivables disclosed above are classified as loans and receivables in accordance with IAS 32 and are therefore measured at amortised cost. Trade receivables held by the Group which are non-interest bearing and are not generally due within 30 - 45 days.
Trade receivables include amounts which are past due at the reporting date but against which the Group has not recognised any allowance for doubtful receivables because there has not been a significant change in credit quality and the amounts are still recoverable. The average age of the receivables was 118 days during the year ended 31 December 2016 (31 December 2015: 86 days)
The maximum exposure to credit risk at the reporting date is the carrying value of each customer.
Ageing of receivables are as follows:
As at As at
31 December 31 December
2016 2015
USD USD
Not due 3,186,847 4,485,052
0-60 days 15,948,773 3,465,789
61-90 days 8,653,037 5,540,277
91-180 days 20,416,714 2,886,860
More than 180 days 4,286,141 1,109,187
-------------------- ------------ ------------
Total 52,491,512 17,487,165
-------------------- ------------ ------------
The fair value of trade receivables approximates their carrying amounts largely due to the short-term maturities of these instruments and hence management considers the carrying amount of trade receivables to be approximately equal to their fair value. The Group doesn't hold any collateral security.
As at 31 December 2016, the Group has 45 customers (31 December 2015: 26 customers).
21. Other current assets
As at As at
31 December 31 December
2016 2015
USD USD
Deposits 287,702 288,263
Accrued interest 511,960 574,656
Prepayments 1,511,940 991,868
Accrued income 12,982,342 5,029,539
Other receivables 6,169,654 4,102,630
Total other current assets 21,463,598 10,986,956
--------------------------- ------------ ------------
Prepayments primarily relate to amounts paid in advance for lease rentals for land.
Accrued income primarily represents amounts receivable from customers on the sale of electricity and the amount recoverable from Indian Renewable Energy Development Authority ("IREDA") as generation based incentive but not billed for as at 31 December 2016.
Other receivables primarily include advances to vendors of USD 4,980,658 (31 December 2015: USD 2,958,411).
22. Current investments
As at As at
31 December 2016 31 December 2015
USD USD
Available-for-sale investments carried at fair value (mutual funds) 10,669,612 43,384,798
Other investment 31,221 -
Total current investments 10,700,833 43,384,798
---------------------------------------------------------------------- ------------------ ------------------
The Group has investments in the following mutual fund schemes, which are classified as available-for-sale investments.
Mutual fund schemes: Units as at Units as at
31 December 2016 31 December 2015
IDFC cash fund - Growth- Regular Plan - 317,137
L&T Liquid Fund - Growth - 29,956
Birla Sun Life Cash Plus - Growth regular(1) 397,749 -
IDFC Cash Fund Growth - Direct plan 159,530 -
HDFC Liquid Fund - Regular plan - Growth(1) 7,570 -
HDFC Liquid Fund - Direct plan - Growth option 48,557 -
Birla Sun Life Cash Plus - Growth - Direct plan(1) 522,795 -
Birla Sun Life Cash Plus - Growth - 7,538,897
SBI Premier Liquid Fund -Regular Plan -Growth - 167,246
Union KBC Liquid Growth Fund - 35,382
(1) Investments in mutual funds include amounts of USD 3,836,643 (31 December 2015: USD 8,627,681) placed as lien with banks and financial institutions.
The fair value of the quoted units is determined by reference to published data. During the year, disposals resulted in a net gain of USD 2,185,775 (31 December 2015: USD 1,796,093) (refer note 10) recognised in the consolidated income statement.
23. Cash and bank balances
As at As at
31 December 2016 31 December 2015
USD USD
Cash on hand 434 15
Bank balances 13,300,561 5,910,771
Cash and cash equivalents 13,300,995 5,910,786
Bank deposits 31,871,924 49,666,494
Total cash and bank balances 45,172,919 55,577,280
----------------------------- ----------------- -----------------
Bank deposits include margin money deposits of USD 27,976,963 (31 December 2015: USD 43,174,683) placed with banks towards bank guarantees provided to various third parties.
24. Borrowings
As at As at
31 December 31 December
2016 2015
USD USD
Borrowings at amortised cost
Non-convertible bonds(1) 107,475,548 109,503,048
Compulsorily convertible debentures(2) 6,119 16,332,726
Term loans from banks and financial
institutions(3) 795,152,378 533,747,671
Working capital loans from banks(4) 42,463,856 14,613,955
---------------------------------------- ------------------------- -------------------------
Total borrowings 945,097,901 674,197,400
---------------------------------------- ------------------------- -------------------------
Amounts due for settlement within 12 months - USD 68,976,071 (31 December 2015: USD 49,764,216)
Amounts due for settlement on or after 12 months - USD 876,121,830 (31 December 2015: USD 624,433,184)
1. The Company's subsidiary, Mytrah Energy (India) Private Limited ("MEIPL") has issued non-convertible bonds (NCBs) for an amount of USD 113.3 million (INR 7,424 million) primarily to partly finance wind farm projects under construction. The NCBs are listed on the wholesale debt segment of Bombay Stock Exchange, India. The NCBs are repayable at the end of fifth anniversary from the draw-down date and carry a cash coupon of 12% per annum payable on semi-annual basis.
The NCBs are secured by collateral support in the form of pledge of 100% of the MEIPL's shares held by Bindu Vayu Mauritius Limited ("BVML"), and pledge of equity shares held by MEIPL in MVUPL (49%), BVUPL (49%), MVPPL (49%), MVKPL (49%), MVBPL (99.98%) and MVMPL (2.37%). Further, hypothecation by way of first and exclusive charge over the monies lying in credit therein from time to time, and by way of first charge over all receivables arising from the loans disbursed by the MEIPL to MVBPL.
As part of the financing arrangement, the Group has incurred an amount of USD 1,501,610 as arrangement fees. The Group accounted for these costs as transaction costs under IAS 39 and are amortised over the term of NCBs using the effective interest rate method. The carrying amount of the liability measured at amortised cost is USD 107,475,548 (31 December 2015: USD 109,503,048)
In the financial year 2014, the Group had issued 8,612,412 warrants to the NCBs investors. These warrants provide an option to the investors to purchase an equivalent number of ordinary shares in Mytrah Energy Limited at a fixed price of GBP 0.7729 based on the Company's share price traded before the day immediately preceding the exercise date of the warrant. The fair value of the warrants as at 31 December 2014 amounted to USD 1,703,053 and was recognised accordingly as derivative financial liability.
Further on 30 March 2015, the Group has replaced the warrants issued in 2014 by issuing 11,439,762 new warrants to the investors. These new warrants provide an option to the investors to purchase an equivalent number of ordinary shares in Mytrah Energy Limited at a fixed price of GBP 0.7729. Accordingly the derivative financial liability of USD 1,703,053 relating to 8,612,412 warrants has been derecognized in the previous year and the fair value of the 11,439,762 warrants amounting to USD 2,038,960 is recognised as equity.
2 (a). In 2012, the Company's subsidiary, MEIPL issued 3,333,333 compulsory convertible debentures ("CCDs") at INR 300 ( USD 5.71) each to PTC India Financial Services Limited (PFS) (the "Investor") amounting to USD 18,285,211 under an agreement between the Group and PFS. The purpose of this is to fund the capital projects of the Group. The following are the significant terms in relation to the CCDs:
-- The CCDs carry a fixed rate of interest payable quarterly in arrears on the principal amount of the CCDs outstanding; and
-- The CCDs, along with unpaid interest, if any, mandatorily convert into such number of equity shares of MEIPL at the end of 49 months from the date of initial disbursement so as to provide the investor a stated rate of return.
Further, the agreement states that PFS can put the CCDs (the "put option") or alternatively, MEIPL can call the CCDs (the "call option") in exchange for cash providing PFS a stated rate of return. The CCDs has call / Put option in exchange for cash providing PFS a stated rate of return.
In accordance with the terms of the agreement, PFS has exercised the put option on the CCDs and accordingly the Company has re-paid the entire CCD amount including redemption premium thereon on 22 July 2016.
24. Borrowings (continued)
2(b). Compulsorily convertible debentures issued to Enerpac AG:
During the year ended 31 December 2016, MADPPL issued 8,298 Compulsorily Convertible Debentures ("CCDs") at INR 50 each to Enerparc AG (the "Investor") under an agreement between Enerparc AG and MADPPL. The said are CCDs, from time to time are entitled to simple interest up to 11.50% p.a, with effect from the Commercial Operating Date (COD) of the projects in MADPPL. The CCDs are compulsorily convertible into equity shares before the expiry of 18 years from the date of allotment of such CCDs or at any earlier date mutually agreed between the parties.
3. The Group has drawn down the term loan facilities with banks and financial institutions to finance the construction of wind farm assets and solar assets. The carrying amount of the liability measured at amortised cost is USD 795,152,378 (31 December 2015: USD 533,747,671). The repayment terms of the term loans range from 13 to 18 years. In compliance with the terms of the loan agreement, the Group has created a charge on all project movable, immovable properties, cash flows, receivables and revenues in favour of banks and financial institutions.
Further, the loan drawn down is secured by way of first charge on the pledge of shares held by MEIPL in the equity shares representing 51% of the total paid up equity share capital of BVUPL, MVKPL, MVPPL and MVUPL, 94.30% of MVTPL, 95.50% of MVSPL and 69.89% of MVMPL. BVUPL, MVPPL, MVMPL, MVUPL and MVKPL are under obligor co-obligor structure. The loans drawn by MVMPL is also secured by pledge of 51% CCPS held by MEIPL in MVMPL. Loan drawn by MVSPL is secured by way of first ranking pledge of 60% of CCDs held by MEIPL. Loans taken by MVIPL and MVGoPL are secured by way of first charge on the pledge of shares to the extent of 22.24% and 20.04% held by MVBPL in MVIPL and MVGoPL respectively.
4. The working capital loan facilities are secured by way of first charge and hypothecation of entire immovable properties pertaining to the respective projects, both present and future, including movable plant and machinery, machinery spares, tools, accessories, entire project cash flows, receivables, book debts and revenues of the respective entities. The working capital facilities relating to wind farm development activities are secured by way of first pari-passu charge on current assets related to wind farm development activity. The facilities are repayable on a yearly rollover basis and carries interest in the range of 10.20% to 13.15% per annum.
5. Refer note 36 for maturity profile of the borrowings.
25. Finance lease obligations
The Group leased the rights to use power evacuation facilities under a lease arrangement with related parties/ third parties. Future finance lease payments due, and their present values, are shown in the following table:
Minimum lease payments Present value of minimum lease payments
As at As at As at As at
31 December 2016 31 December 2015 31 December 2016 31 December 2015
USD USD USD USD
Not later than one year 1,678,008 871,311 218,208 101,165
Later than one year and not later
than five years 6,712,034 3,485,244 1,168,032 541,521
Later than five years 20,688,679 12,198,354 10,629,646 5,775,196
------------------ ------------------ -------------------- --------------------
29,078,721 16,554,909 12,015,886 6,417,882
Less: future finance charges 17,062,835 10,137,027 - -
------------------ ------------------ -------------------- --------------------
Present value of minimum lease
payments 12,015,886 6,417,882 12,015,886 6,417,882
------------------ ------------------ -------------------- --------------------
As at As at
31 December 31 December
2016 2015
USD USD
Included in:
-Current liabilities 218,208 101,165
-Non-current liabilities 11,797,678 6,316,717
-------------------------- ------------------------------------ ------------------------
Total 12,015,886 6,417,882
-------------------------- ------------------------------------ ------------------------
26. Derivative financial instruments
As at As at
31 December 31 December
2016 2015
USD USD
Fair value of options embedded
in:
Compulsorily convertible preference
shares (note 33) 3,375,881 3,429,381
------------------------------------- ------------------------- ------------------------
Total 3,375,881 3,429,381
------------------------------------- ------------------------- ------------------------
27. Trade and other payables
As at As at
31 December 31 December
2016 2015
USD USD
------------ ------------
Current:
Trade payables(1) 9,079,808 10,705,902
Liability component of CCPS (2) 2,597,853 4,234,334
Interest accrued but not due on
borrowings 14,118,208 5,658,409
Other payables 594,052 2,531,817
------------ ------------
26,389,921 23,130,462
Non-current:
Liability component of CCPS(2) - 2,160,722
Other payables(3) 79,505,674 112,261,359
------------ ------------
79,505,674 114,422,081
------------ ------------
(1) Trade payable relate to amounts outstanding for trade purchases and ongoing costs.
(2) Liability component of CCPS includes the mandatory preference share dividend payable to IIF, discounted using interest rate implicit in the arrangement. (refer note 33).
(3) Other payables include payables for purchase of capital assets.
The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
The fair value of trade and other payables approximates their carrying amounts largely due to the short-term maturities of these instruments and hence management considers that the carrying amount of trade and other payables to be approximately equal to their fair value.
28. Retirement benefit obligations
Defined contribution plan
Provident fund:
The Group makes contributions to a defined contribution retirement benefit plan for qualifying employees. Under the plan, the Group is required to contribute a specified percentage of the qualified employees' pay to fund the benefits. These contributions are made to a fund administered and managed by the Government of India. The Group's monthly contributions are charged to the consolidated income statement in the year they are incurred.
The total cost charged to consolidated income statement of USD 50,011 (31 December 2015: USD 32,150) represents contributions payable to these schemes by the Group at rates specified in the rules of the plan. As at 31 December 2016, contributions of USD nil (31 December 2015: USD nil) were due in respect of the current reporting year.
28. Retirement benefit obligations (continued)
Defined benefit plan
(a) Gratuity
In accordance with the Payment of Gratuity Act, 1972 of India, the Group provides for gratuity, a defined benefit retirement plan (the 'Gratuity Plan') covering eligible employees. The Group makes annual contributions under the Gratuity Plan to Life Insurance Corporation of India to fund the benefit obligation.
The present value of the defined benefit obligation, the related current service cost and past service cost was measured using the projected unit credit method.
The projected unit credit method is an accrued benefits valuation method in which the scheme liabilities make allowance for projected earnings. The accumulated benefit obligation (ABO) is an actuarial measure of the present value for service already rendered but differs from the projected unit cost method in that it includes no assumption for future salary increases. At the balance sheet date the gross ABO was USD 340,560 (31 December 2015: USD 193,391).
Movements in the present value of the benefit obligation are as follows:
Year ended Year ended
31 December 2016 31 December 2015
USD USD
Change in benefit obligation
Projected benefit obligation at the beginning of the year 193,391 21,285
Current and past service cost 174,006 44,044
Interest cost 17,442 1,966
Benefits paid (6,174) -
Actuarial loss / (gain) (32,228) 132,550
Translation adjustment (5,877) (6,454)
Projected benefit obligation at the end of the year (A) 340,560 193,391
Movement in fair value of plan assets
Opening balance of fair value of plan assets 17,109 16,277
Contributions made during the year 24,564 -
Expected return 2,190 1,503
Benefits paid (6,174) -
Translation adjustment (475) (671)
Closing balance of fair value of plan assets (B) 37,214 17,109
Net liability recognised in the balance sheet (A-B) 303,346 176,282
Cost of employee benefits for the year
Current service cost 174,006 44,044
Interest cost 17,442 1,966
Expected return 2,190 (1,503)
Net actuarial loss/(gain) recognised in other comprehensive income (32,228) 132,550
Net loss recognised for the year 161,410 177,057
(b) Leave encashment
The Group also provides for leave encashment (the "leave encashment plan"), a defined benefit plan covering eligible employees. Under the leave encashment plan, employees are entitled to future payments upon termination of service with the Company, whether it is by death during service or upon reaching retirement age. Leaves in excess of 50 days are settled to the employee at the end of calendar year.
The present value of the defined benefit obligation and the related current service cost was measured using the projected unit credit method.
The projected unit credit method is an accrued benefits valuation method in which the scheme liabilities make allowance for projected earnings. The accumulated benefit obligation (ABO) is an actuarial measure of the present value for service already rendered but differs from the projected unit credit method in that it includes no assumption for future salary increases. At the balance sheet date the ABO was USD 270,409 (31 December 2015: USD 155,368).
28. Retirement benefit obligations (continued)
Movements in the present value of the benefit obligation were as follows:
Year ended Year ended
31 December 2016 31 December 2015
USD USD
Change in benefit obligation
Projected benefit obligation at the beginning of the year 155,368 8,865
Interest cost 14,689 819
Current service cost 283,441 21,011
Benefits paid (21,647) (20,960)
Actuarial (gain) / loss (156,656) 150,759
Translation adjustment (4,786) (5,126)
Projected benefit obligation at the end of the year 270,409 155,368
Cost of employee benefits for the year
Interest cost 14,689 819
Current service cost 283,441 21,011
Net actuarial (gain) / loss recognised in other comprehensive income (156,656) 150,759
Net loss recognised for the year 141,474 172,589
Key assumptions used in actuarial valuation of gratuity and leave encashment obligations:
Year ended Year ended
31 December 2016 31 December 2015
Discount rate 7.00% 7.90%
Long-term rate of compensation increase (%) 10.00% 12.00%
Attrition 6.00% 10.00%
Mortality table LIC (2006 -08) LIC (2006 -08)
(c) Summary of retirement benefit obligations recognised in the balance sheet
Current portion Non-current
Portion
Liability recognised as at 31 December 2016: USD USD
Gratuity 9,496 293,850
Leave encashment 37,607 232,802
47,103 526,652
Liability recognised as at 31 December 2015:
Gratuity 7,842 168,440
Leave encashment 25,193 130,175
33,035 298,615
29. Share capital
As at As at
31 December 2016 31 December 2015
USD USD
Issued and fully paid up share capital of the Company:
163,636,000 (31 December 2015: 163,636,000) ordinary shares with no par value 72,858,278 72,858,278
After its incorporation on 13 August 2010 MEL acquired 119,999,999 shares in BVML, from its existing shareholders namely, Esrano Overseas Ltd, Bindu Urja Investments Inc, Bindu Urja Holding Inc, Bindu Urja Capital Inc and Sila Energy Inc. In consideration of the said transfer the Company issued shares of the Company at no par value in its capital. Subsequently the Company issued 43,636,000 shares of no par value through listing of its shares on AIM.
The issued share capital refers to ordinary share capital, which carries voting rights with entitlement to an equal share in dividends authorised by the board and in the distribution of the surplus assets of the Company.
30. Capital contribution
As at As at
31 December 2016 31 December 2015
USD USD
Capital contributions at beginning and end of the year 16,721,636 16,721,636
Balance at end of the year 16,721,636 16,721,636
In the financial year 2013, the Company's subsidiary, MEIPL entered into an investment agreement with related parties, Mytrah Wind Developers Private Limited ("MWDPL") and Bindu Urja Infrastructure Limited ('BUIL') to issue 40,000,000 Series B Cumulative Compulsorily Redeemable Preference Shares ("RPS") at INR 300 ( USD 5.71) per share and carry a nominal dividend of 0.01% per annum. Pursuant to the agreement, BUIL and MWDPL made long-term non-reciprocal capital contributions ("capital contributions") of USD 16,721,636 as at 31 December 2016, which as per the terms of agreement are not available for distribution as dividend. Management has evaluated that these contributions are in substance in the nature of equity and accordingly classified the amounts received as "Capital Contributions".
31. Retained earnings
As at As at
31 December 2016 31 December 2015
USD USD
Balance at beginning of the year 9,767,315 15,520,003
(Loss) / profit for the year (4,086,048) 1,162,991
Tax on buy back of CCPS from non-controlling interest (424,820) (253,976)
Tax on distributed income pursuant to the buyback of Series A CCPS (480,245) -
Creation of capital redemption reserve on buy back (2,201,588) (1,100,797)
Creation of debenture redemption reserve (1,434,744) (5,560,906)
Balance at end of the year 1,139,870 9,767,315
32. Other reserves
(a) Foreign currency translation reserve
Foreign currency translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations from their functional currency into the Group's presentational currency.
As at As at
31 December 2016 31 December 2015
USD USD
Balance at beginning of the year (40,381,820) (36,870,962)
Foreign currency translation adjustments (916,189) (3,510,858)
Balance at end of the year (41,298,009) (40,381,820)
(b) Equity-settled employee benefits reserve:
The equity-settled employee benefits reserve relates to the share options granted to employees and key management personnel under the employee share option plan. Further information about share-based payments is set out in note 38.
As at As at
31 December 2016 31 December 2015
USD USD
Balance at beginning of the year 4,744,040 4,003,406
Additional cost during the year 3,219,063 740,634
Balance at end of the year 7,963,103 4,744,040
32. Other reserves (continued)
(c) Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the assets are derecognised or impaired.
As at As at
31 December 2016 31 December 2015
USD USD
Balance at beginning of the year 550,420 195,253
Change in the fair value of available for sale financial instruments (462,900) 355,167
Balance at end of the year 87,520 550,420
(d) Actuarial valuation reserve
Actuarial valuation reserve comprises the cumulative net gains/ losses on actuarial valuation of post-employment obligations. Refer note 28 for further details.
As at As at
31 December 2016 31 December 2015
USD USD
Balance at beginning of the year (278,783) 4,526
Gain / (loss) on actuarial valuation of post-employment benefits 189,424 (283,309)
Balance at end of the year (89,359) (278,783)
(e) Capital redemption reserve (CRR)
Capital redemption reserve is created on redemption of compulsorily convertible preference shares during the year in accordance with the provisions of Indian Companies Act, 2013.
As at As at
31 December 2016 31 December 2015
USD USD
Balance at beginning of the year 1,668,045 567,248
Creation of CRR on buyback 2,201,588 1,100,797
Balance at end of the year 3,869,633 1,668,045
(f) Debenture redemption reserve (DRR)
Debenture redemption reserve is created on outstanding NCBs at the year end in accordance with the provisions of Indian Companies Act, 2013.
As at As at
31 December 2016 31 December 2015
USD USD
Balance at beginning of the year 5,560,906 -
Addition for the year 1,434,744 5,560,906
Balance at end of the year 6,995,650 5,560,906
32. Other reserves (continued)
(g) Share warrant reserve
Share warrant reserve comprises fair value of warrants issued to NCB holders in the previous year. The fair value of share purchase warrants issued during the year was calculated using the Black-Scholes-Merton option-pricing model. The inputs for this model include stock price, exercise price, expected term, volatility, risk free rates, etc.
As at As at
31 December 2016 31 December 2015
USD USD
Balance at beginning of the year 2,038,960 -
Issue of share warrants - 2,038,960
Balance at end of the year 2,038,960 2,038,960
Total other reserves (20,432,502) (26,098,232)
33. Non-controlling interests
As at As at
31 December 2016 31 December 2015
USD USD
Compulsorily convertible preference shares (CCPS) (refer note a)
Balance at beginning of the year 50,704,975 54,827,924
Buy back / purchase of CCPS from non-controlling interest holders (3,126,782) (4,122,949)
Balance at the end of the year 47,578,193 50,704,975
Equity shares held by captive customers (refer note b)
Balance at beginning of the year - 704,701
Issue of equity shares to non-controlling interest holders 127,406 77,548
Share of loss attributable to non-controlling interest holders (92,980) (782,249)
Balance at the end of the year 34,426 -
Equity shares held by others (refer note c)
Balance at beginning of the year 8 -
Issue of equity shares to non-controlling interest holders 22,955,933 8
Share of loss attributable to non-controlling interest holders (423,425) -
Balance at the end of the year 22,532,516 8
Total (a)+(b)+(c ) 70,145,135 50,704,983
33. Non-controlling interest (continued)
a) Compulsorily convertible preference shares
In the year ended 31 March 2012, MEIPL issued 11,666,566 Series A CCPS at INR 300 (USD 6) each to India Infrastructure Fund (IIF) under an Investment Agreement dated 20 June 2011 between the MEIPL, IIF and Mr.Ravi Kailas. The following are the salient features of the CCPS:
-- IIF is entitled to receive a preference dividend before any dividends are declared to the ordinary shareholders. These carry a step-up dividend which is cumulative.
-- The CCPS convert into equity shares of MEIPL at a fixed price of INR 300 (USD 6) per share, for a fixed number of shares, at the end of six years if the call and put options are not exercised by either of the parties.
-- As part of the investment agreement, IIF were issued with 100 ordinary shares in MEIPL.
Further, the Company entered into an option agreement with IIF on the same date whereby the Company can call the CCPS (the "call option") or alternatively, IIF can put the CCPS (the "put option") in exchange for cash or a variable number of shares in the Company providing IIF a stated rate of return. The call option can be exercised at any time after four years three months and the put option can be exercised at any time after five years three months from the date of issue.
In accordance with IAS 32, Financial Instruments: Presentation and IAS 39 Financial Instruments: Measurement, upon initial recognition, the issue proceeds has been segregated in the financial statements as mentioned below.
The issue proceeds of USD 69,932,181 (net of issue costs of USD 1,891,056) were first attributed to the embedded derivatives, with the fair value of the options amounting to USD 2,670,325. As the instrument entitles the holder to a fixed number of shares the remaining value of the proceeds were bifurcated such that there is a liability component and an equity component. The liability component, being USD 11,866,684 was estimated by discounting the mandatory preference share dividend of six year cash flows using an interest rate from an equivalent instrument without a conversion feature, with the residual value of USD 55,395,172 representing equity. The effective interest rate on the financial liability is 5.6%.
The options are subsequently measured at fair value through profit and loss and the financial liability is subsequently measured at amortised cost. The year-end balance of the options was USD 3,375,881 (31 December 2015: USD 3,429,381) (see consolidated statement of financial position), the liability component of the preference shares was USD 2,597,853 (31 December 2015: USD 6,395,056) and the equity component of the CCPS was USD 47,578,193 (31 December 2015: USD 50,704,975).
During the current year, the Group has purchased and bought back 466,667 shares (31 December 2015: 583,334 shares) from IIF at a premium of INR 300. In accordance with the principles enunciated in IAS 32, the Company has reduced face value of the CCPS bought back amounting to USD 3,126,782 (31 December 2015: USD 4,122,949) from the 'non-controlling interest' and the premium, being the dividend payable over the term of the CCPS, amounting to USD 2,086,791 (31 December 2015: USD 2,790,287) has been reduced from the liability component of CCPS.
b) Equity shares held by captive customers
(i) During the year ended 31 December 2014, MVMPL has commissioned a captive power generating plant in Tamilnadu under Captive Group Project ("CGP") framework, where the electricity generated is consumed by a group of consumers. To qualify as a captive generating plant, an entity must meet the requirements set forth under the relevant regulations, which specify that a minimum 26% equity interest in the captive generating plant should be held by a Captive Consumers or group of Captive Consumers. Accordingly, MVMPL has entered into power purchase agreements (PPA) with Captive Consumers and issued 5,344,250 (31 December 2015: 4,729,840) equity shares of INR 10 par value (USD 788,144) (31 December 2015 - USD 782,249). The shares issued to the captive consumers have been classified as non-controlling interest in these consolidated financial statements.
(ii) During the year, 240,000 equity shares (@ INR 10/- per share) of Mytrah Bhagiratha Power Private Limited ("MBHGPPL") have been issued to prospective Captive Consumers.
c) Class A Equity shares and Series A Debentures held by others:
MVTPL has issued 1,691,160 Class A Equity Shares of INR.50 each and 29,180,800 Series A Compulsorily Convertible Debentures ("CCDs") at INR 50 each to Guayama P.R Holdings B.V (the "Investor") under an agreement with Guayama P.R Holdings B.V. As per the terms of the Agreement, MVTPL based on the availability of distributable cash surplus shall pay step up Class A Yield on Series A Debentures as given below:
(i) 7% per annum from the date of investment until 3(rd) anniversary date; (ii) 10% in the 4(th) year;
(iii) 13% in the 5(th) year;
(iv) 15% in the 6(th) years on cumulative basis;
(v) 17% from 7(th) year onwards till the date of conversion on cumulative basis;
33. Non-controlling interest (continued)
Further based on the availability of distributable cash surplus, the investor is also eligible for
(i) Specified Class A Yield from the date of its investment till the date of conversion for the period from the date of investment till 6(th) anniversary date IRR of 15% on cumulative basis excluding interest on class A Debentures and any amount paid as part of buy back of securities.
(ii) After the 6(th) anniversary till the time the investor holds the security is eligible for 17% IRR on cumulative basis.
Series A Compulsorily Convertible Debentures are compulsorily convertible after the completion of 6 years from the date of investment at the fixed ratio of one Class A Equity shares for One Series A Debenture held. Liquidity events mentioned in the agreement are under the discretion of the Group and are not enforceable by the Investor. Management estimated that there is no distributable cash surplus as per the terms of the agreement to record any liability as at 31 December 2016.
34. Commitments
(a) Capital commitments
As at As at
31 December 2016 31 December 2015
USD USD
Capital commitments 128,882,398 269,788,515
The capital expenditures authorised and contracted primarily relate to wind farm and solar plant assets under construction, which have not been provided for in the accounts. These commitments are net of advances paid of USD 8,649,379 (31 December 2015: USD 14,740,851)
(b) Operating leases
The Group leases office premises under cancellable operating lease agreements with a term of three years. The lease arrangement contains a renewal clause providing the Company with the option of extending the lease for a further period of three years to four years at the prevailing market rates.
Total operating lease expense recognised in the consolidated income statement as other expenses is USD 1,381,380 (31 December 2015: USD 789,184). At 31 December 2016, the Group has no outstanding commitments for future minimum lease payments under non-cancellable operating leases.
35. Capital management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through its optimisation of the debt and equity balance.
The capital structure of the Group consists of net debt, which includes the borrowings disclosed in note 24 after deducting cash and bank balances, equity attributable to owners of the Company comprising issued capital and reserves and retained earnings and non-controlling interest as disclosed in notes below.
The Group's risk management committee reviews the capital structure on a semi-annual basis. As part of this review, the committee considers the cost of capital and the risks associated with each class of capital.
The gearing ratio at the year-end is as follows:
As at As at
31 December 2016 31 December 2015
USD USD
Debt (note 24) 945,097,901 674,197,400
Cash and bank balances (note 23) (45,172,919) (55,577,280)
Net debt (a) 899,924,982 618,620,120
Equity (including non-controlling interests) 137,917,154 123,953,980
Net debt and equity (b) 1,037,842,136 742,574,100
Net debt/ (net debt+equity) ratio 87% 83%
Debt is defined as long and short-term borrowings (excluding derivatives) as detailed in note 24. Equity includes all capital and reserves of the Group that are managed as capital, including non-controlling interests of the Group.
Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of measurement and the basis for recognition of income and expenses) for each class of financial asset, financial liability and equity instrument are disclosed in note 3.
35. Capital management (continued)
The Group's objective when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for stakeholders. The Group also proposes to maintain an optimal capital structure to reduce the cost of capital. Hence, the Group may adjust any dividend payments, return capital to shareholders or issue of new shares. Total capital is the equity as shown in the consolidated statement of financial position. Currently, the Group primarily monitors its capital structure in terms of evaluating the funding of wind farm and solar projects. Management is continuously evolving strategies to optimise the returns and reduce the risks. It includes plans to optimise the financial leverage of the Group.
Equity comprises all components of equity and includes the non-controlling interests.
36. Financial instruments - Fair values and risk management
IFRS 13 Fair Value Measurement requires entities to disclose measurement of fair values, for both financial and non-financial assets and liabilities. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
-- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3: Inputs for the asset or liability that is not based on observable market data (unobservable inputs).
36. Financial instruments - Fair values and risk management (continued)
Accounting classifications and fair value
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy.
31 December 2016:
Carrying amount Fair value
Designated Loans and Available-for-sale Other Total Level 1 Level 2 Level
at fair receivables financial 3
value liabilities
through
profit or
loss
----------
Financial assets
measured at fair
value
Current
investments
(note 22) - - 10,700,833 - 10,700,833 10,700,833 - -
Security Deposit
(note 17 and 21) - 7,293,977 - - 7,293,977 - 7,293,977 -
- 7,293,977 10,700,833 - 17,994,810 10,700,833 7,293,977 -
Financial assets
not measured at
fair value
Trade receivables
(note 20) - 52,491,512 - - 52,491,512
Other assets
(note 17 and 21) - 24,984,428 - - 24,984,428
Cash and bank
balances (note
23) - 45,172,919 - - 45,172,919
Other investments
(note 18) - 344,355 - - 344,355
- 122,993,214 - - 122,993,214
Financial
liabilities
measured at fair
value
Derivative
financial
instruments
(note 26) - - - 3,375,881 3,375,881 - 3,375,881 -
Finance lease
obligation (note
25) - - - 12,015,886 12,015,886 - 12,015,886 -
----------
- - - 15,391,767 15,391,767 - 15,391,767 -
Financial
liabilities not
measured at fair
value
Borrowings (note
24) - - - 945,097,901 945,097,901
Trade and other
payables (note
27) - - - 26,389,921 26,389,921
Other payables -
non-current
(note 27) - - - 79,505,674 79,505,674
- - - 1,050,993,496 1,050,993,496
Note:
1. In this table, the Group has disclosed the fair value of each class of financial assets and liabilities in way that permits the information to be compared with the carrying amounts.
2. For all financial assets and financial liabilities not measured at fair value, the carrying value is a reasonable approximation of fair values.
36. Financial instruments - Fair values and risk management (continued)
Accounting classifications and fair value (continued)
31 December 2015:
Carrying amount Fair value
Designated Loans and Available-for-sale Other Total Level 1 Level 2 Level
at fair receivables financial 3
value liabilities
through
profit or
loss
----------
Financial assets
measured at fair
value
Current
investments
(note 22) - - 43,384,798 - 43,384,798 43,384,798 - -
Security Deposit
(note 17 and 21) - 3,812,663 - - 3,812,663 - 3,812,663 -
- 3,812,663 43,384,798 - 47,197,461 43,384,798 3,812,663 -
Financial assets
not measured at
fair value
Trade receivables
(note 20) - 17,487,165 - - 17,487,165
Other assets
(note 17 and 21) - 23,367,069 - - 23,367,069
Cash and bank
balances (note
23) - 55,577,280 - - 55,577,280
Other investments
(note 18) - 2,055,483 - - 2,055,483
- 98,486,997 - - 98,486,997
Financial
liabilities
measured at fair
value
Derivative
financial
instruments
(note 26) - - - 3,429,381 3,429,381 - 3,429,381 -
Finance lease
obligation (note
25) - - - 6,417,882 6,417,882 - 6,417,882 -
----------
- - - 9,847,263 9,847,263 - 9,847,263 -
Financial
liabilities not
measured at fair
value
Borrowings (note
24) - - - 674,197,400 674,197,400
Trade and other
payables (note
27) - - - 23,130,462 23,130,462
Other payables -
non-current
(note 27) - - - 114,422,081 114,422,081
- - - 811,749,943 811,749,943
36. Financial instruments - Fair values and risk management (continued)
Measurement of fair value:
The following is the summary of valuation techniques used in the measurement of fair value of financial instruments:
Current investments:
Current investments represent the investments in traded mutual funds, whose fair value is determined by reference to their quoted market price at the reporting date. The fair value represents the net asset value as stated by the issuer of these mutual fund units in the published statements. Net asset value represents the price at which either the issuer will issue further units in the mutual fund or the investor can redeem the investments.
Derivative financial instruments:
The fair value of the option contracts embedded in the derivative financial instruments are determined using binomial lattice model. The inputs for this model include stock price, internal rate of return, expected time for option expiry, volatility, risk free rate, etc.
Financial risk management:
The Group's activities expose it to a variety of financial risks, including market risk, credit risk and liquidity risk. The Group's primary risk management focus is to minimise potential adverse effects of market risk on its financial performance. The Group's risk management assessment and policies and processes are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Group's activities. The Board of Directors and the Audit Committee is responsible for overseeing the Group's risk assessment and management policies and processes.
A. Market Risk (i) Currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate. The Group's presentation currency is the US dollar. The Group's exposure to foreign currency arises in part when the Group holds financial assets and liabilities denominated in a currency different from the functional currency of the entity. Based on the current profile of the Group, the net liability held in foreign currency is not significant and as such the Group's exposure to currency risk is limited.
(ii) Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group is exposed to interest rate risk on its cash and bank balances. Cash and bank balances expose the Group to cash flow interest rate risk. However, the Group does not carry any fixed interest bearing financial liabilities that are designated at fair value through profit or loss except for the derivative financial instruments embedded in the CCPS, CCDs and share warrants. Hence, the Group is exposed to the fair value risk on such derivative financial instruments.
The average interest rate on short-term bank deposits during the year was 7.11% (31 December 2015: 7.23%).
Interest rate risk management
The primary goal of the Group's investment strategy is to ensure risk free returns are earned on surplus funds. Market price risk arises from cash and bank balances held by the Group. The Group monitors its investment portfolio based on market expectations and creditworthiness. Material investments within the portfolio are managed on an individual basis.
36. Financial instruments - Fair values and risk management (continued)
(ii) Interest rate risk (continued)
The Group's exposure to interest rates on financial instruments is detailed below:
As at As at
31 December 31 December
2016 2015
USD USD
Financial assets
Cash and bank balances (note 23) 45,172,919 55,577,280
------------ ------------
Total interest rate dependent financial assets 45,172,919 55,577,280
Financial liabilities
Borrowings (note 24) 945,097,901 674,197,400
------------ ------------
Total interest rate dependent financial liabilities 945,097,901 674,197,400
The amounts included above for interest rate dependent financial assets are fixed interest bearing financial assets.
If the interest rate on INR denominated borrowings had been increased or decreased by 100 basis points, with all other variables held constant, post tax income for the year ended 31 December 2016 would have been increased/ decreased by USD 7,599,146 (31 December 2015: USD 4,369,594).
(iii) Price risk
The Group is exposed to mutual funds price (Net Asset Value - 'NAV') risk because of investments in debt-based mutual fund units held by the Group and classi ed on the statement of financial position as available-for-sale financial assets. The Group is not exposed to any commodity price risk. In order to manage its price risk arising from investment in mutual fund units, the Group diversi es its portfolio; in accordance with the limits set by the Group risk management policies.
As the Group invests in mutual fund units which in turn invest in short-term (in the range 30-90 days) equity instruments with low yield and hence carry a very minimal mark-to-market risk. Moreover, the accruals earned by the said units are distributed on a daily basis; which mainly represents the dividend accruals rather than the fair value movements. Hence, any reasonable movement in interest yields are not expected to have any impact on the NAV of the said units.
B. Liquidity risk
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Details of additional undrawn facilities that the Group has at its disposal to reduce further liquidity risk are set out below.
As at
31 December As at
2016 31 December 2015
USD USD
------------
Amount used 812,413,702 688,203,430
Amount unused 71,313,882 223,024,206
Total finance facilities 883,727,584 911,227,636
The Group has access to financing facilities as described below, of which USD 71,313,882 (31 December 2015: USD 223,024,206) were unused at the balance sheet date. The Group expects to meet its other obligations from operating cash flows and proceeds of maturing financial assets.
36. Financial instruments - Fair values and risk management (continued)
The following table details the Group's remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay as at 31 December 2016 and 31 December 2015:
As at 31 December 2016:
2017 2018 2019 2020 Thereafter Total
USD USD USD USD USD USD
Non-derivative financial liabilities:
Borrowings 68,976,072 42,674,585 158,742,881 46,947,256 627,757,107 945,097,901
Trade and other payables 23,792,068 - - - - 23,792,068
Liability component of CCPS 2,597,853 2,597,853 - - - 5,195,706
Finance lease obligations 218,208 244,392 273,720 306,566 10,973,002 12,015,888
Other non-current liabilities 6,083,218 17,560,311 3,149,845 - - 26,793,374
Derivative Financial liabilities:
Derivative instruments not
designated as hedge 3,375,881 - - - - 3,375,881
Total financial liabilities 105,043,300 63,077,141 162,166,446 47,253,822 638,730,109 1,016,270,818
As at 31 December 2015:
2016 2017 2018 2019 Thereafter Total
USD USD USD USD USD USD
Non-derivative financial liabilities:
Borrowings 49,764,216 27,435,882 33,127,511 152,798,868 411,070,923 674,197,400
Trade and other payables 18,896,128 - - - - 18,896,128
Liability component of CCPS 4,234,334 2,160,722 - - - 6,395,056
Finance lease obligations 101,165 113,305 126,902 142,130 5,934,381 6,417,883
Other non-current liabilities 97,511,227 8,431,342 8,479,512 - - 114,422,081
Derivative Financial liabilities:
Derivative instruments not designated
as hedge 1,158,698 2,270,683 - - - 3,429,381
Total financial liabilities 171,665,768 40,411,934 41,733,925 152,940,998 417,005,304 823,757,929
C. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The group's credit risk arises from accounts receivable balances on the sale of electricity. The Indian entities have entered into power purchase agreements with transmission / distribution companies incorporated by the Indian State Governments and captive customers. The Group is therefore committed to sell power to these customers and any potential risk of default is on Government parties. The Group is paid monthly by the transmission companies and captive customers for the electricity it supplies. The Group assesses the credit quality of the purchaser based on its financial position and other information.
Financial assets that potentially expose the Company to credit risk consist principally of cash and bank balances, which are held with institutions with a minimum credit rating of AA. The fair value of financial assets represents the maximum credit exposure.
The Group is reliant on a small number of suppliers and customers. Refer note 20 for the ageing of trade receivables.
The industry currently gets benefits / support from the Indian Government. Changes in the Government policy could impact tariffs / taxes which could have an impact on the revenue and the profit of the Group.
37. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated and are not disclosed in this note. The transactions with related parties are priced on an arm's length basis and are settled as per agreed terms. Details of transactions between the Group and related parties are disclosed below.
The key management personnel of the Group are:
1. Mr Ravi Kailas * Chairman and Director (#) 2. Mr Rohit Phansalkar * Non-Executive Director 3. Mr Russell Walls - Non-Executive Director 4. Mr. Vikram Kailas - Chief Executive Officer (w.e.f 09 August 2016)
# Chief Executive Officer up to 08 August 2016.
The entities where certain key management personnel have significant influence are:
1. Bindu Urja Infrastructure Limited
2. Mytrah Wind Developers Private Limited
The following related party transactions occurred during the year: Year ended Year ended
31 December 2016 31 December 2015
USD USD
Advance given/ (adjusted) towards development and construction of wind farm
projects:
Bindu Urja Infrastructure Limited 6,773,992 2,396,019
Mytrah Wind Developers Private Limited - (24,120)
Purchase towards development and construction of wind farm projects:
Bindu Urja Infrastructure Limited 4,440,552 604,166
Security deposits for usage of land and power evacuation facilities:
Bindu Urja Infrastructure Limited 634,384 2,862,561
Upfront lease rentals paid for land and leased power evacuation facilities:
Bindu Urja Infrastructure Limited 6,080,381 1,151,762
Reimbursement of expenses:
Bindu Urja Infrastructure Limited 1,299,237 1,361,116
The following balances were outstanding at the end of the year: As at
As at 31 December
31 December 2016 2015
USD USD
Advance towards development and construction of wind farm projects:
Bindu Urja Infrastructure Limited 3,260,388 7,144,801
Security deposits for usage of land and power evacuation facilities (note 16, 17 & 21 ):
Bindu Urja Infrastructure Limited 20,764,584 20,649,107
Mytrah Wind Developers Private Limited 6,333,137 6,494,218
Other payables
Bindu Urja Infrastructure Limited - 1,318,150
Capital contributions received from (note 30):
Bindu Urja Infrastructure Limited 9,904,122 9,904,122
Mytrah Wind Developers Private Limited 6,817,514 6,817,514
37. Related party transactions (continued)
Remuneration of key management personnel:
The remuneration of key management personnel of the Group, is set out below for each of the categories specified in IAS 24 Related Party Disclosures.
Year ended Year ended
31 December 2016 31 December 2015
USD USD
Salaries and bonus 2,038,368 1,434,244
Share-based payments 2,344,575 639,228
Total 4,382,943 2,073,472
Mr. Ravi Kailas (Chairman) transferred 11,544,989 options (includes 1,320,000 options transferred from Mr. Vikram Kailas), which were granted to him by the company, to R&H Trust Co (Jersey) Limited on 13 May 2016.
38. Share-based payments
The Group has an equity-settled share option scheme for certain directors of the Company and employees in the Group. In addition to the equity-settled share options, the Group makes other minor issues of cash settled options to its certain employees. These cash settled grants do not result in the issuance of common stock and are considered immaterial by the Group. All options have a vesting period over three years. Each share option converts into one ordinary share of the concerned entity on exercise. Options may be exercised at any time from the date of vesting to the date of the expiry. No amounts are paid or payable by the recipient until the receipt of the option. The options carry neither rights to dividends nor voting rights. Options lapse if the employee leaves the concerned entity before the options vest.
Mytrah Energy Limited:
During the year, the Company has reissued 11,893,324 share options to directors and group employees at the exercise price of GBP 0.01 by replacing 21,640,058 share options which were issued to directors and group employees at the exercise price of GBP 1.15, GBP 0.75 and GBP 0.772 as the case may be. In accordance with IFRS 2, the Group has charged the incremental fair value of the modified options issued over the vesting period of the options.
Details of the share options outstanding at the end of the year are as follows
Year ended Year ended
31 December 2016 31 December 2015
Number of share Weighted average Number of share Weighted average
options exercise price options exercise price
(GBP) (GBP)
Outstanding at
beginning of year 24,138,758 0.95 14,668,839 1.06
Granted during the
year 11,893,324 0.01 9,680,000 0.78
Exercised during the
year * (85,434) 0.01 - -
Cancelled during the
year (21,641,158) 0.92 (210,081) 0.77
Outstanding at the end
of the year 14,305,490 0.21 24,138,758 0.95
The options outstanding as at 31 December 2016 had a weighted average exercise price of GBP 0.21, and a weighted average remaining contractual life of 3 years and 4 months.
Details of options granted during the year are as follows:
Options granted Expiry date Exercise price Fair value at grant
Year ended Employees / Directors during the year (GBP) date (GBP)
31 December 2016 Employees and Directors 11,893,324 23.12. 2021 0.01 0.50
31 December 2015 Directors 9,680,000 23.12. 2021 0.78 0.76
The aggregate incremental fair value of the share options issued during the year was USD 4,267,131. The incremental fair value of options is measured using the Black-Scholes Merton valuation model. Service and non-market performance conditions attached to the arrangements were not taken into account in measuring fair value. Measurement inputs include the following:
* represents cash settled share options.
38. Share-based payments (continued)
Weighted average share price (GBP) 0.50 Weighted average exercise price (GBP) 0.01 Expected volatility 43.41% Expected life 3 years Risk-free interest rate 0.94%
Expected volatility is determined based on the evaluation of the historical volatility of the Company's share price from the date of listing on 12 October 2010 to the date of issue of options. During the year the Group recognised expense of USD 2,973,768 (net of employee benefits expense capitalized USD 30,383) (31 December 2015: USD 639,228 (net of employee benefits cost capitalized USD 68,528)) in relation to share-based payment transactions and the unamortised expense as at 31 December 2016 is USD 1,149,654 (31 December 2015: USD 2,681,038).
Further, Mr. Ravi Kailas (Chairman) transferred 11,544,989 options (includes 1,320,000 options transferred by Mr. Vikram Kailas), which were granted to him by the company, to R&H Trust Co (Jersey) Limited on 13 May 2016.
Mytrah Energy (India) Private Limited:
MEIPL has issued 56,900 options to group employees at the exercise price of INR 1,200 and cancelled 18,584 share options which were issued to group employees at the exercise price of INR 1,200. In accordance with IFRS 2, the Group has charged the fair value of the options issued over the vesting period of the options.
Details of the share options outstanding at the end of the year are as follows.
Year ended Year ended
31 December 2016 31 December 2015
Number of share Weighted average Number of share Weighted average
options exercise price options exercise price
(INR) (INR)
Outstanding at
beginning of year 273,450 1,200 - -
Granted during the
year 56,900 1,200 277,450 1,200
Cancelled during the
year (18,584) 1,200 (4,000) 1,200
Outstanding at the end
of the year 311,766 1,200 273,450 1,200
The options outstanding as at 31 December 2016 had a weighted average exercise price of INR 1,200.
Details of options granted during the year are as follows:
Fair value at
Options granted Exercise price grant date
Year ended Employees / Directors during the year (INR) (INR)
31 December 2016 56,900 1,200 600-1800
31 December 2015 Employees and Directors Employees and Directors 277,450 1,200 600
The aggregate fair value of the share options issued during the year was USD 98,543 (31 December 2015: USD 291,487). The fair value of options is measured using the Black-Scholes-Merton valuation model. Service and non-market performance conditions attached to the arrangements were not taken into account in measuring fair value. Measurement inputs include the following:
Weighted average share price (INR) 682 Weighted average exercise price (INR) 1,200 Expected volatility 43.41% Expected life 3 years Risk-free interest rate 7.38%
Expected volatility is determined based on the evaluation of the historical volatility of the Parent Company's share price from the date of listing on 12 October 2010 to the date of issue of options. During the year, the Group recognised expense of USD 16,653 (net of employee benefits expense capitalized USD 198,258) (31 December 2015: USD 1,960 (net of employee benefits expense capitalized USD 30,918)) in relation to share-based payment transactions and the unamortised expense as at 31 December 2016 is USD 143,513 (31 December 2015 : USD 258,612).
39. Contingent liabilities
The Group is involved in appeals, claims, inspections and other matters that arise from time to time in the ordinary course of business. Following are the details of contingent liabilities not recognised in these consolidated financial statements.
As at As at
31 December 2016 31 December 2015
USD USD
a) Indirect tax matters pending in appeal 1,490,166 1,528,068
b) Direct tax matters pending in appeal 5,255,326 -
c) Guarantees given towards construction and execution of wind power projects - 903,057
6,745,492 2,431,125
40. Other matters
In the previous year, one of the suppliers of a "Wind turbine generator" filed an arbitration application before the High Court of Telangana and Andhra Pradesh ('Honorable High Court') seeking appointment of an arbitrator alleging that MEIPL has breached the terms of an agreement and is liable for liquidated damages. The High Court, accordingly, appointed an Arbitrator and the application was disposed. Subsequently, the Arbitrator appointed by the High Court has passed away. MEIPL is yet to receive any notice from High Court on any fresh proceedings in this regard. Management has not acknowledged these claims as debts, given the nature of the underlying dispute, allegations between the parties and significant uncertainties relating to the financial claims. Further, based on a legal opinion, no additional disclosure is considered necessary as required under IAS 37.
41. Comparatives
Previous year's figures have been regrouped / reclassified wherever necessary to conform with the current year's classification / disclosure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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June 12, 2017 02:00 ET (06:00 GMT)
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