MAST Mast Energy Developments Plc

Mast Energy Developments PLC

(Incorporated in England and Wales)

(Registration Number: 12886458)

Share code on the LSE: MAST

ISIN: GB00BMBSCV12

("MED" or "MAST" or "the Company")

Unaudited interim results for the six-month period ended 30 June 2024

Dated 30 August 2024

MAST Energy Developments PLC ('MED' or the 'Company') the UK-based multi-asset owner, developer and operator in the rapidly growing flexible power market, is pleased to announce its unaudited interim results for the six months ended 30 June 2024.

Overview of key highlights during the interim period and to date:

·    Gross profit margin improved period-on-period as a result of start of optimisations at Pyebridge, including first Capacity Market contract income.

·    Successful in pre-qualification to bid for additional new Capacity Market ("CM") contracts, being T-1 (2024/2025 delivery year) and T-4 (2027/2028 delivery year) for its Pyebridge site ('Pyebridge').  The Capacity Market bid auctions, which were held in February 2024, resulted in Pyebridge getting contractual clearing prices of £35.79/kW/pa for the T-1 contract, and £65.00/kW/pa for the T-4 contract respectively.

·    Signed a Project Finance funding agreement with RiverFort Global Opportunities PCC Limited ("RiverFort"), with Pyebridge as the borrower, with an initial funding facility up to £4,000,000 (the "RiverFort Facility"), with a cumulative total net draw of c. £2.1m to date. Refer to RNS announcement dated 28 February 2024 for more details.

·    Pyebridge was taken out of care & maintenance, and a comprehensive improvement and refurbishment works programme ("Works Programme") was executed. The Works Programme consisted of two main phases, each addressing key areas of the facility to optimise operations and income generation.

·    The first phase of the Works Programme addressed the requirement to meet the Satisfactory Performance Days ("SPD") obligation set by the Electricity Market Reform Delivery Body ('EMR DB') for Pyebridge's existing T-1 Capacity Market ("CM") contract. All required SPD tests were completed successfully, which meant that Pyebridge could continue receiving the current CM contract's associated gross profit margin income of c. £308,000 which is paid and received monthly in arrears.

·    The second phase of the Works Programme, currently in process, focusses on the complete overhaul of each of the Pyebridge site's 3x 2.7MW Jenbacher reciprocal turbine engines. Thus far, the first genset's overhaul has been successfully completed, and the second genset's overhaul has officially commenced.

·    First refurbished genset achieves c. £57k revenue for July 2024 in the first month of operation, resulting in revenue per MW month of c. £21,000, and outperforming market with 40% margin. Refer to RNS announcement dated 7 August 2024 for more details.

·    The Company paid down £325,000 on the outstanding balance on convertible loan notes held by RiverFort via a director loan purchase agreement and a placing, and also secured funding of £325,000 via a new non-convertible fixed term loan with RiverFort for on-going working capital purposes.

This announcement contains inside information for the purposes of the UK version of the Market Abuse Regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ('UK MAR'). Upon the publication of this announcement, this inside information is now considered to be in the public domain.

ENDS

For further information please visit www.med.energy or contact:

DIRECTORS, OFFICERS AND PROFESSIONAL ADVISERS

DIRECTORS' STATEMENT

We are pleased to present our Interim Report for the six-months ending 30 June 2024.

The Company's activities during the first half of 2024 principally focused on getting its Pyebridge site ("Pyebridge") back into operation following a period of care and maintenance. The initial phase of these works (the "Works Programme") was successfully completed during Q1 2024 permitting operations and revenue generation to resume in April 2024. The second phase of the Works Programme, which is currently in process, is focused on optimising the site performance by overhauling each of Pyebridge's 3x 2.7MW gensets.  The Company is presently carrying out refurbishment of the second genset which is anticipated to be completed during Q4 2024.

The Pyebridge Works Programme was enabled by an important Project Finance funding agreement for up to £4 million signed between the Company, its wholly owned subsidiary, Pyebridge Power Ltd ("Pyebridge Power") and RiverFort Global Opportunities PCC Limited ("RiverFort") during February 2024, with a cumulative total net draw of c. £2.1m to date. Refer to RNS announcement dated 28 February 2024 for more details.

During Q1 2024, the Company announced that it had terminated its joint venture agreement with Proventure Holdings (UK) Limited ("Proventure") for material breach of its contractual joint venture payment obligations to MED. The Company is now well along the path of recovery, not least assisted by the RiverFort Project Finance agreement noted earlier.

While the focus during the period has been on the optimisation of Pyebridge to enhance its revenue generating potential, the Company is also maintaining its shovel-ready development projects, Bordesley, Hindlip, Rochdale and Stather in good standing and continues to explore project financing options to expedite construction and is also exploring alternative options that may best realise return on investment to date by the Company on these projects.

Below follows a description of progress and activities at the respective sites:

Pyebridge:

Apart from various T-4 CM contracts, which will all formally start in the future, Pyebridge currently has an active T-1 CM contract, with a gross profit income value of c. £308k. The official start date of this T-1 CM contract was 1 October 2023, and it will end on 30 September 2024. During this period, Pyebridge receives the annual contracted income of c. £308k per annum, paid out monthly.

As part of the contracted CM agreement, at least three Satisfactory Performance Days ('SPDs') must be executed before the end of April 2024, to prove that the site can supply the agreed upon electricity export capacity should the National Grid need it. As part of the first phase of the Refurbishment Works Programme, Engines 1 and 2 received critical components and the necessary servicing to be able to generate the 5.4MW required to meet the SPD obligation, which was satisfactorily met at the end of April 2024 and means that Pyebridge will continue to receive the CM income, paid out monthly, until 30 September 2024.

After developing a comprehensive CM auction bid strategy, the Company participated in the CM auction in March 2024 and it successfully secured a T-1 CM Contract at £35.79/kW/annum, which will generate approximately £183,000 in additional income for the site during the October 2024 - September 2025 period. Additionally, the Company also cleared a T-4 CM Contract at £65/kW/annum, resulting in an estimated £322,000 in extra income for the site for the period October 2027 - September 2028.

A major overhaul was successfully completed on the first of the 3x 2.7MW gensets at Pyebridge during June 2024, and the second genset's overhaul has officially commenced. The overhaul works will ensure that the gensets operate at the maximum capable efficiency, and reliability. The first overhauled genset achieved c. £57k revenue in first month of operation (inclusive of initial ramp-up period), resulting in revenue per MW month of c. £21,000, and outperforming market with 40% margin.

In addition to the expected enhanced revenue generation via Pyebridge's PPA with Statkraft, the overhaul of the 2^nd genset enables Pyebridge to apply for its next T-1 CM contract in the upcoming CM pre-qualification assessment window and subsequent bid auction for the 2025/2026 delivery year, at an enhanced generation capacity. It will result in increased contractual gross profit margin income received from that contract.

Once the work on the second genset has been completed, Pyebridge will have two completely refurbished 2.7MW gensets operating and generating at optimum capacity and performance, which should have a direct positive impact regarding the site's PPA revenue generation. The plan remains to overhaul the remaining 3^rd genset in due course, in order to maximise full reliability, efficiency and revenue generating ability of the Pyebridge site in the most cost-efficient manner.

The Project Finance with RiverFort has enabled the successful completion of the first genset's overhaul, as well the commencement of the 2^nd genset's overhaul, and MED is appreciative of RiverFort's ongoing support as its asset-level strategic funding partner, in order to grow the business.

MED's other existing sites

In addition to Pyebridge, MED has a portfolio of other sites that are under development. The following MED sites, Hindlip (7.5MW), Bordesley (5MW) and Rochdale (4.5MW) are each construction-ready, with all the requirements for a flexible generation site in place and in good standing, most notably fully specified EPC and O&M offers, planning consent, gas connection offer, grid connection offer and construction management plan. Subject to capex funding, these sites could immediately continue with their construction phase with an expected timeline to commercial operations date of around 12 months from receipt of funding, to go into production and revenue generation.

Looking forward

MED remains committed to growing a portfolio of sites providing green focused energy generation with a capacity of 100 MW in the short- to medium term. This growth will be achieved through identified sites and the acquisition of new sites, similar to Pyebridge.

Principle Risk

Refer to Note 16 of the RNS for our assessment of the Principle Risks.

Related Parties

Refer to Note 14 of the RNS for key relationships and disclosure of Related Parties.

Financial summary of the MAST Energy Developments PLC Group

The following information is included to highlight the financial performance of the Group for the six months ended.

Group revenue is £202,258 for the six-month period ended 30 June 2024. Revenue is mainly derived from the Pyebridge T-1 Capacity Market payments and from electricity generation at this site. Revenue is marginally higher for the period ended June 2024 compared to the previous interim financial reporting period. It is due to the Pyebridge Works Programme and CM payments. As the Company's projects and operations continue to move from development to commercial production, the growth in revenue is expected to increase.

The overall decrease in loss period-on-period, as disclosed in the table above and in the statement of comprehensive income, is mainly owing to the following reasons:

•     Increase in gross profit margin, due to optimisation of the Pyebridge site, including first Capacity Market contract income.

•     Decrease in administrative expenses due to stringent cost control, including decreased directors' fees and consulting services.

•     Decrease in project expenditure recognised in the Statement of Comprehensive Income as the overhaul costs incurred by Pyebridge during the period are of capital nature.

•     Impairments/fair value adjustments were not required in the current period.

•     Finance fees were lower in 2024 due to the lower implementation fees on external loans obtained.

There have been no dividends declared or paid during the current interim financial period (31 December 2023: £ Nil, 30 June 2023: £ Nil).

RESPONSIBILITY STATEMENT

We confirm to the best of our knowledge that:

a)    the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

b)   the Directors' Statement includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.7R (indication of important events during the six months);

c)    the Directors' Statement includes a fair review of the information required by the Disclosure and Transparency Rule DTR 4.2.8R (disclosure of related party transactions and changes therein); and

d)   this report contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated.

The forward-looking statements reflect knowledge and information available at the date of preparation of this financial report and the Company undertakes no obligation to update these forward-looking statements.

Nothing in this financial report should be construed as a profit forecast.

The board of directors all confirm their combined agreement to this statement.

Board of Directors

Louis Lodewyk Coetzee (Non-Executive Chairman)

Pieter Krügel (Chief Executive Officer)

Paul Venter (Non-Executive Director)

Dominic Traynor (Non-Executive Director)