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Unaudited condensed consolidated interim results
for the six months ended 30 September 2016
MONTAUK HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number: 2010/017811/06
Share code: MNK
ISIN: ZAE000197455
("Montauk" or "the Company" or "the Group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
Revenue +142.9%
EBITDA +603.2%
Headline earnings per share +273.3%
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015* 2016
$'000 $'000 $'000
ASSETS
Non-current assets 122 833 121 637 134 965
Property, plant and equipment 92 767 86 119 98 438
Other non-current financial assets 3 357 - 2 235
Intangibles 25 663 32 760 32 378
Long-term receivables 1 046 2 758 1 914
Current assets 22 285 13 854 21 583
Inventories 1 187 1 581 1 109
Other current financial assets 3 808 450 7 159
Trade and other receivables 7 571 5 399 3 305
Bank balances and deposits 9 719 6 424 10 010
Disposal group assets held for sale 2 621 - -
Total assets 147 739 135 491 156 548
EQUITY AND LIABILITIES
Equity 85 738 83 019 79 253
Equity attributable to equity
holders of the parent 85 738 83 019 79 253
Non-current liabilities 52 382 43 867 59 219
Borrowings 45 706 36 815 52 332
Long-term provisions 6 676 7 005 6 871
Other non-current financial liabilities - 47 16
Current liabilities 9 619 8 605 18 076
Trade and other payables 5 773 4 954 12 869
Other current financial liabilities 148 123 38
Current portion of borrowings 2 937 2 393 3 691
Taxation 175 1 1
Provisions 586 1 134 1 477
Total equity and liabilities 147 739 135 491 156 548
Net asset carrying value per share (cents) 63 61 59
* Restated
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited
30 September 30 September
% 2016 2015*
change $'000 $'000
Revenue 142.9% 42 054 17 310
Expenses (25 051) (14 892)
EBITDA 603.2% 17 003 2 418
Other (losses)/income (91) 9 763
Depreciation and amortisation (8 232) (6 214)
Operating profit (8 680) 5 967
Investment income 19 24
Finance costs (2 471) (232)
Gain on bargain purchase - 265
Profit before taxation 3.4% 6 228 6 024
Taxation (174) -
Profit for the period 6 054 6 024
Attributable to:
Equity holders of the parent 6 054 6 024
* Restated
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited
30 September 30 September
2016 2015*
$'000 $'000
Profit for the period 6 054 6 024
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences 33 (106)
Total comprehensive income 6 087 5 918
Attributable to:
Equity holders of the parent 6 087 5 918
* Restated
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
30 September 30 September
2016 2015*
$'000 $'000
Balance at the beginning of the period 79 253 77 101
Current operations
Total comprehensive profit/(loss) 6 087 5 918
Equity-settled share-based payments 398 -
Balance at the end of the period 85 738 83 019
* Restated
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited
six months ended six months ended
30 September 2016 30 September 2015*
% $'000 $'000
change Gross Net Gross Net
Earnings attributable to equity holders
of the parent 0.5% 6 054 6 024
Losses on disposal of plant and equipment 97 97 296 296
Gains on disposal of intangible assets - - (9 869) (9 869)
Headline profit/(loss) 273.3% 6 151 (3 549)
Basic earnings per share (cents)
Earnings 0.5% 4.48 4.45
Headline earnings 273.3% 4.55 (2.62)
Weighted average number of shares in issue ('000) 135 256 135 256
Actual number of share in issue at the end of
the period (net of treasury shares and shares
issued in respect of restricted stock plan) ('000) 135 256 135 256
Diluted earnings per share (cents)
Earnings 0.2% 4.46 4.45
Headline earnings 272.8% 4.53 (2.62)
Weighted average number of shares in issue ('000) 135 635 135 256
* Restated
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
30 September 30 September
2016 2015
$'000 $'000
Cash flows from operating activities 5 521 1 466
Cash flows from investing activities 1 718 (31 965)
Cash flows from financing activities (7 564) 21 145
Decrease in cash and cash equivalents (325) (9 354)
Cash and cash equivalents
At the beginning of the period 10 010 15 891
Foreign exchange differences 34 (113)
At the end of the period 9 719 6 424
Bank balances and deposits 9 719 6 424
Cash and cash equivalents 9 719 6 424
NOTES
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The results for the six months ended 30 September 2016 have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), the disclosure requirements
of IAS 34, the South African Institute of Chartered Accountants ("SAICA") Financial
Reporting Guides as issued by the Accounting Practices Committee, the requirements
of the South African Companies Act, 2008, and the Listings Requirements of the
JSE Limited. The accounting policies applied by the Company in the preparation of
these consolidated financial statements are consistent with those applied by the
Company in its consolidated financial statements as at and for the year ended
31 March 2016. As required by the JSE Limited Listings Requirements, the Company
reports headline earnings in accordance with Circular 2/2015: Headline Earnings as
issued by the SAICA.
These financial statements were prepared under the supervision of the chief financial
officer, Mr SF McClain (CPA).
RESTATEMENT OF PRIOR-PERIOD RESULTS
On 25 June 2015 the Company completed the acquisition of 100% of Leaf LFG US
Investments, Inc. ("Leaf"). The acquisition qualified as a business combination in
terms of IFRS 3: Business Combinations. The results as at 30 September 2015 were
determined based on all information available at the acquisition date ("provisional
accounting"). The provisional accounting was adjusted in the prior year, but
subsequent to 30 September 2015, for new information obtained. This was within a
time frame of 12 months after the acquisition date, as permitted by IFRS 3. These
adjustments to the fair values determined in the provisional purchase price allocation
are treated as adjustments to the comparative results as at 30 September 2015.
The Company restated its comparative results for the six months ended 30 September 2015
as follows:
Change ($'000)
Statement of financial position
Property, plant and equipment (177)
Intangibles (576)
Borrowings 266
Long-term provisions (1 165)
Trade and other payables (190)
Current portion of borrowings (266)
Equity attributable to equity holders of the parent 602
Income statement
Expenses (2)
Other income 190
Depreciation and amortisation 149
Gain on bargain purchase 265
Earnings attributable to equity holders of the parent 602
Change (cents)
Earnings per share
Basic earnings per share from continuing operations: 0.44
Headline earnings per share from continuing operations: 0.44
DISPOSAL GROUPS HELD FOR SALE
Disposal group assets held for sale consist of $2.6 million in electric generation equipment.
RESULTS
GROUP INCOME STATEMENT
Revenue from the Company's renewable natural gas facilities increased by approximately
$21.5 million or 161% for the six months ended 30 September 2016 from the prior period.
The Company produced approximately 1.9 million MMBtus in renewable natural gas volumes,
an increase of 12% over the prior period. The majority of this favourable variance is
due to full period operations of three facilities associated with the 2015 acquisition
of Leaf. During the six months ended 30 September 2016, the Company monetised
approximately 15.7 million RINs, a 5.5 million increase in the number of RINs sold
during the six months ended 30 September 2015. At 30 September 2016 the Company had
approximately 2.9 million RINs generated and unsold in inventory. Average commodity
pricing for natural gas during the six months ended 30 September 2016 was $2.38 vs
$2.70 during the prior period. Average pricing realised on RIN sales during the
six months ended 30 September 2016, was approximately 91% higher than average pricing
realised in the prior period. For the six months ended 30 September 2016, the Company
monetised approximately 34% of renewable natural gas production under fixed-price contracts.
Revenue from the Company's electric generation facilities increased by approximately
$3.2 million or 83% for the six months ended 30 September 2016 from the prior period.
The Company produced approximately 155 000 MWh in renewable electric volumes, an
increase of 37% over the prior period. The first quarter commencement of commercial
operations of Bowerman Power LFG, LLC ("Bowerman"), a 20 MW electric generation
facility in Southern California, is the leading contributor to this favourable
variance. Average commodity pricing for electricity during the six months ended
30 September 2016 was approximately 7% lower than the prior period. For the six months
ended 30 September 2016, the Company monetised approximately 57% of renewable electric
production under fixed-price contracts.
Operating expenses for the six months ended 30 September 2016 increased by
approximately $10.2 million or 68%. The unfavourable variance was due to royalties
on increased commodity and attribute revenue, full-period operations of three
facilities associated with the 2015 acquisition of Leaf and the first-quarter
commencement of commercial operations of Bowerman. The change in gains recognised
from the Company's hedging programmes for the six months ended 30 September 2016,
as compared to the prior period, was immaterial.
In May 2015 the Company realised once-off proceeds of approximately $9.9 million on
the sale of retired emission reduction credits ("ERCs") for its Texas-based renewable
natural gas facility, as a result of the installation of pollution control equipment
that permanently reduced the emissions profile of the facility.
GROUP STATEMENT OF FINANCIAL POSITION AND CASH FLOW
Fixed and intangible assets at 30 September 2016 include approximately $54.3 million
and $3.3 million in costs related to the construction of the Bowerman facility,
respectively. The Company's borrowings at 30 September 2016 were approximately
$49.3 million. Of this amount, approximately $10.3 million was outstanding on the
Company's commercial bank facilities, and approximately $39.0 million was outstanding
on the facility to construct Bowerman. At 30 September 2015 approximately $6 million
remained outstanding on borrowings acquired in conjunction with the Leaf acquisition
completed in June 2015. As of 30 September 2016 those borrowings acquired with the
Leaf acquisition have been fully satisfied. Of the approximately $49.3 million in
borrowings outstanding at 30 September 2016, approximately $2.9 million is currently
due within the next 12 months.
Cash flow from operating activities of $5.5 million for the six months ended
30 September 2016 was approximately $4.1 million higher from the prior period, driven
by a corresponding increase in EBITDA. Included in cash flow from investing activities
was a $4.8 million refund received for amounts not utilised under an agreement to
construct an interconnection for the Bowerman facility. Included in cash flow from
financing activities was the satisfaction of approximately $5.5 million outstanding
borrowings acquired in conjunction with the Leaf acquisition. As of 30 September 2016,
the Company had cash on hand of approximately $9.7 million. Approximately $2.3 million
capacity remains under the Company's revolving credit facility.
SUBSEQUENT EVENT
In October 2016, the Company entered into a 20-year agreement with one of its existing
landfill counterparties that provides the option to build, own and operate a renewable
natural gas facility. Upon commercial operation this new facility will process up to
7 000 scfm of methane currently being allocated to the Company's on-site electric
facility that monetises power at market-rate commodity pricing. The project is in the
design and engineering phase, with commercial operations targeted early in the
2019 financial year.
CHANGES IN DIRECTORATE
Mr DR Herrman resigned as executive director and chief executive officer with effect
from 10 June 2016. Mr ML Ryan was appointed as executive director and chief executive
officer on 27 May 2016.
DIVIDEND TO SHAREHOLDERS
The directors have resolved not to declare an interim dividend.
For and on behalf of the board of directors
JA Copelyn ML Ryan SF McClain
Chairman Chief Executive Officer Chief Financial Officer
Cape Town
28 October 2016
Directors: JA Copelyn (Chairman)*, ML Ryan (Chief Executive Officer)#;
SF McClain (Chief Financial Officer)#, MH Ahmed*; MA Jacobson*##; NB Jappie*;
BS Raynor*#; A van der Veen*
* Non-executive; # United States of America; ## Australia
Company secretary: HCI Managerial Services Proprietary Limited
Registered office: 5th Floor, 4 Stirling Street, Zonnebloem, Cape Town, 7925
Postal address: PO Box 5251, Cape Town, 8000
Transfer secretaries: Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107
Sponsor: Investec Bank Limited
www.montauk.co.za
Date: 28/10/2016 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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