- 2015-11-03 02:23:33 PM
Montauk Holdings Limited released its unaudited condensed consolidated interim results for the six months ended 30 September 2015.
During the year ended 31 March 2015 the Company disposed of its 80% interest in Longkloof Limited and its 100% interest in Deepkloof Limited prior to the Company being unbundled to shareholders by its previous holding company, Hosken Consolidated Investments Limited. The results of these operations were included in discontinued operations in the income statement and their assets and liabilities included in disposal groups held for sale in the statement of financial position in the prior comparative periods where applicable.
As of 30 September 2015 the accounting for this acquisition is provisional and is subject to fair value adjustments once finalised.
The results of operations of the acquired facilities are included in the Company's consolidated results from the date of acquisition. Revenues of $1.7 million and operating losses of $0.1 million related to the acquisition are included in the consolidated income statement for the six months ended 30 September 2015. Had the acquisition occurred on the first day of the financial reporting period, $3.4 million in revenues and $0.3 million in operating losses would have been included in the consolidated income statement.
Revenue from the Company's renewable natural gas facilities increased by $3.4 million or 34% for the six months ended 30 September 2015 from the prior period. Excluding revenue from the Leaf acquisition, revenues from gas facilities increased by $1.7 million, or 17% over the prior period. The increase is primarily the result of the monetisation of a portion of the cellulosic renewable identification numbers ("RINs") generated in fiscal 2015 and 2016 from the Company's renewable natural gas facilities participating in the US Environmental Protection Agency's ("EPA") Renewable Fuel Standard II programme. The Company continues to selectively monetise the RINs generated in fiscal 2016 while awaiting the EPA's pending finalisation of the volume obligations for 2014, 2015 and 2016. At 30 September 2015 the Company had 13.3 million RINs generated and unsold in inventory. Excluding the Leaf acquisition, renewable natural gas production increased by 5% while the average commodity index price received for the energy component of the renewable natural gas produced decreased by 38% for the six months ended 30 September 2015 from the prior period.
Revenue from the Company's electric generation facilities decreased by $1.7 million, or 30%, for the six months ended 30 September 2015 from the prior period. The primary driver of the revenue decrease is a 37% decrease in the average price realised on the Company's electric production. The majority of the electric generation facilities continue to be subject to index-based commodity pricing until market conditions provide a longer-term, fixed-price alternative. Renewable electric generation also decreased by 6% for the six months ended 30 September 2015 from the prior period, due to wellfield conditions at the Company's New Jersey facility.
Operating expenses for the six months ended 30 September 2015, excluding the impacts of the Leaf acquisition, decreased by $1.3 million, or 12%, due to timing of scheduled maintenance events. Gains recognised from the Company's hedging programmes decreased by $0.6 million for the six months ended 30 September 2015, as compared to the prior period, due to the timing of changes experienced in natural gas and electric pricing in the US.
In May 2015 the Company realised $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.
Fixed and intangible assets at 30 September 2015 include $32 million and $1 million in costs related to the construction of the 20 Megawatt electric generation facility in Southern California, respectively.
The Company's borrowings at 30 September 2015 were approximately $39 million. Of this amount, $11.2 million was outstanding on the Company's commercial bank facilities, and $22 million was drawn against the $41 million facility available for the construction of the 20 Megawatt electric generation facility in Southern California. Leaf had borrowings of $6 million at the time of acquisition. This balance remained outstanding as at 30 September 2015. Of the $39 million borrowings outstanding at 30 September 2015, approximately $2.7 million is currently due within the next 12 months.
Cash flow from operating activities of $1.5 million for the six months ended 30 September 2015 was approximately $1 million higher from the prior period, excluding discontinued operations. This was driven by a corresponding increase in EBITDA. Included in cash flow from investing activities was $34.4 million in expenditure related to the Bowerman project and $4.5 million for the Leaf acquisition. Also included in cash flow from investing activities was the receipt of $9.9 million related to the one-time sale of ERCs. Cash flow from financing activities included $22 million in draws related to the Bowerman construction.
As of 30 September 2015 the Company had cash on hand of $6.4 million. Approximately $0.9 million capacity remains under the Company's revolving credit facility.
Montauk is a fully integrated renewable energy company specialising in the recovery, management and utilisation of landfill methane.