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Interim Results (unaudited)

INTERIM RESULTS (UNAUDITED)

30 September 2020

SIMEC ATLANTIS ENERGY LIMITED
(“Atlantis”, the “Company” or the “Group”)

Interim Results (unaudited)

SIMEC Atlantis Energy Limited, the global developer, owner and operator of sustainable energy projects is pleased to announce its unaudited Interim Results for the six months ended 30 June 2020.

Trading Statement

The first six months of 2020 have seen significant global economic and social challenges as a result of the COVID-19 pandemic. Despite these challenges, we have maintained a high level of activity across each of our business units and we continue to see encouraging progress on all key projects notwithstanding all of the logistical and workplace challenges COVID-19 social distancing restrictions present.  In particular, we note the major technical, planning and commercial milestones that have been achieved recently on the Uskmouth power station conversion project in Wales, our recent entry into the NPA Fuels joint venture with the N+P Group, the performance from the MeyGen project in Scotland and the recent over-subscribed equity placement in August 2020.

Financial summary

The overall loss before tax of £6.1 million for the six months ended 30 June 2020 was almost half of the loss of £11.8 million reported for the same period in 2019. This improvement is largely attributable to strong revenue contributions generated by the Atlantis tidal turbine and engineering services division, together with good performance from the MeyGen project in Scotland.  Six months of revenue contributions from GHR added to the improved performance relative to 2019. Overall, costs were in line with expectations with significant contractors’ costs being incurred in delivery of the subsea hub project and the AR500 turbine for Japan, as well as the ongoing Uskmouth operational costs.

Depreciation, as expected, has remained stable and is being driven by Uskmouth and MeyGen.

Finance costs in the current period are materially in line with the same period last year and also included five months of the £3.79 million Abundance bond raise, which closed in February 2020.

The unaudited consolidated cash position of the Atlantis Group at 30 June 2020 was £9.8 million.

Tim Cornelius, Chief Executive of Atlantis, commented:

The impact of COVID-19 on our business, society and personal lives cannot be underestimated and we have all had to find new ways to work and to live. I am immensely proud of all the team at Atlantis who have ensured that during these unprecedented times we have continued to make material progress on our important portfolio of projects, where we connect carbon cutting projects with industries looking to ensure that they can reduce their carbon intensity and be at the forefront of the green agenda.

Each of our business units, being tidal energy, hydro power and power station conversions, have delivered exceptional performance under challenging conditions. 

Enquiries:

Investec Bank PLC +44 (0) 20 7597 5970
Jeremy Ellis

Sara Hale

Ben Griffiths

SIMEC Atlantis Energy Limited +44 (0) 7739 832 446
Sean Parsons, Director of External Affairs

 

Notes to Editors

SIMEC Atlantis Energy

Atlantis is a global developer, owner and operator of sustainable energy projects with a diverse portfolio in various stages of development. This includes a 77 per cent. stake in the world’s largest tidal stream power project, MeyGen, 100 per cent. of the 220MW Uskmouth Power Station conversion project and 100 per cent. of Green Highland Renewables, a leading developer of mini-hydro projects.

https://www.simecatlantis.com/

 

SIMEC Atlantis Energy Limited

Registration Number: 200517551R

Consolidated Interim Financial Statements

(unaudited)

For the six months ended 30 June 2020

 

Trading Update Statement

The first six months of 2020 have seen significant global economic and social challenges as a result of the COVID-19 pandemic. Here at Atlantis we have maintained activity across each of our business units and we continue to see encouraging progress despite the logistical and workplace challenges COVID-19 social distancing restrictions present.  In particular, we note the continued progress of the Uskmouth power station conversion project in Wales with major technical, planning and commercial milestones having been successfully achieved, the entry into the NPA Fuels joint venture with the N+P Group, and the resulting over-subscribed equity placement in August 2020.

Power Station Conversion

The Uskmouth conversion project started the year in March with successful commercial fuel pellet production and milling trials and followed this up in May with the launch of the project pre-application planning consultation. The most significant technical achievement of 2020 was announced in June in relation to the large scale fuel combustion tests which took place in Nagasaki, Japan. These tests were successfully completed by Mitsubishi Power Systems and results exceeded combustion performance expectations. In August, we announced entry into a fuel supply joint venture with the N+P Group to supply fuel to Uskmouth and other future conversion projects.  This joint venture is expected to improve the security of Uskmouth’s fuel supply whilst providing access to additional revenues from the sale of fuel and the gate fees chargeable for receipt of the input waste materials at the fuel production plants.  In order to optimise revenues generated by power sales from Uskmouth we have also announced that we are working with data centre development specialist TechRE to evaluate opportunities to sell output via private wire networks to data centre customers.  Finally, we recently updated the market on our relationship with South Korean infrastructure investor Hana Financial Investment Co, with whom we are seeking to secure debt and equity bridge financing for the conversion of the first 110MW of capacity at Uskmouth.

Marine Energy

The 6MW first phase of the MeyGen project has now exported more than 33GWh to the grid, enough to charge more than 750,000 standard electric vehicles.  Whilst the three Andritz turbines have been performing well, the Atlantis AR1500 turbine requires further repair and maintenance following its redeployment in August. We expect the AR1500 to be reinstated and fully operational by the end of December 2020. The variable pitch upgrade is expected to deliver a 4% increase in annual revenue with no increase in the turbine’s operating cost.  The August operations included the completion of the installation of MeyGen’s new subsea hub, which was provided by Atlantis under a £2.4m delivery contract supported by a grant from the Saltire Tidal Energy Challenge Fund.  This subsea hub is a key enabler for cost reductions in future tidal arrays as it is designed to allow for the connection of multiple turbines offshore.

Atlantis is in the final stages of construction and testing for an AR500 turbine system to be delivered to Japan for our client Kyuden Mirai Energy (“KME”) in Q4 2020. The turbine will be deployed in the Straits of Naru, within the southern Japanese Goto island chain. It is intended that this would be the first phase of a larger testing programme at the site, subject to initial performance.

Hydro Energy

The Atlantis group’s hydro division, SIMEC GHR Ltd (“GHR”), has continued to develop its operations and maintenance business and currently provides services to over 45 separate hydroelectric schemes throughout Scotland. New clients are being added and additional resources are being deployed to ensure that the service levels are of the highest standard. GHR’s project management division is actively involved in the construction of 4 new hydro schemes and, although COVID-19 closed these sites for a short while, construction is now progressing well towards the required commissioning dates.

Equity Placement

On 6 August 2020, the Company announced the launch of a fundraising comprising a placing by way of an accelerated bookbuild process by Investec and Arden and an offer for subscription by PrimaryBid, each at a price of 12 pence per share (together, the “Fundraising”). The placing raised gross proceeds of £6.5 million through the issue of 54,166,666 new ordinary shares and the PrimaryBid offer raised £1 million through the issue of 8,333,333 new ordinary shares. In aggregate, therefore, the Fundraising raised gross proceeds of approximately £7.5 million and resulted in the issue of 62,499,999 new Ordinary Shares at 12 pence per share.  The proceeds are being used to fund the Company’s working capital requirements and in connection with the proposed investment by the Company in NPA Fuels Limited.

Summary of Results

The overall loss before tax of £6.1 million for the six months ended 30 June 2020 was almost half of the loss of £11.8 million reported for the same period in 2019. This improvement is largely attributable to strong revenue contributions generated by the tidal turbines and engineering services division, together with good performance from the MeyGen project in Scotland.  Six months of revenue contributions from GHR added to the improved performance relative to 2019. Overall, costs were in line with expectations with significant contractors’ costs being incurred in delivery of the subsea hub project and the AR500 turbine for Japan, as well as the ongoing Uskmouth operational costs.

Depreciation, as expected, has remained stable and is being driven by Uskmouth and MeyGen.

Finance costs in the current period are materially in line with the same period last year and also included five months of the £3.79 million Abundance bond raise, which closed in February 2020.

The unaudited consolidated cash position of the Atlantis Group at 30 June 2020 was £9.8 million.

Condensed consolidated statement of profit and loss and

other comprehensive income
For the six months ended 30 June 2020

 

              Group

                Six months ended

   
  Note 30 June

2020

30 June

2019

    £’000 £’000
       
Revenue   7,935 1,974
Other gains and losses   154 76
       
Employee benefits expense   (3,203) (3,125)
Subcontractor costs   (2,251) (1,739)
Depreciation and amortisation   (5,318) (5,219)
Acquisition costs   (980)
Other operating expenses   (1,534) (1,651)
Total expenses   (12,306) (12,714)
       
Results from operating activities   (4,217) (10,664)
       
Finance costs   (1,959) (1,749)
       
Loss before tax   (6,176) (12,413)
 

Tax credit

  69 581
       
Loss for the period   (6,107) (11,832)
       
Other comprehensive income:      
Items that are or may be reclassified subsequently to profit or loss      
Exchange differences on translation of foreign operations   4
Total comprehensive income for the period   (6,103) (11,832)
       
Loss attributable to:      
Owners of the Group   (5,868) (11,436)
Non-controlling interests   (239) (396)
       
Total comprehensive income attributable to:      
Owners of the Group   (5,864) (11,436)
Non-controlling interests   (239) (396)
       
Loss per share (basic and diluted) (pence) 5 (0.01) (0.03)

 

Condensed consolidated statement of financial position
As at
30 June 2020

 

           Group
    30 June
2020
31 December 2019
    £’000 £’000
Assets      
Property, plant and equipment   134,069 136,315
Intangible assets   16,253 17,058
Right-of-use assets   1,296 1,436
Investment in joint venture   47 47
Non-current assets   151,665 154,856
       
Trade and other receivables   2,420 7,830
Inventory   861 864
Cash and cash equivalents   9,819 4,521
Current assets   13,100 13,215
       
Total assets   164,765 168,071
 

Liabilities

     
Trade and other payables   11,195 9,449
Lease liabilities   192 276
Provisions   118 120
Loans and borrowings   3,625 4,559
Current liabilities   15,130 14,404
       
       
Loans and borrowings   42,782 40,662
Lease liabilities   981 1,091
Provisions   14,669 14,539
Deferred tax liabilities   3,275 3,344
Non-current liabilities   61,707 59,636
       
Total liabilities   76,837 74,040
Net assets   87,928 94,031
       
Equity      
Share capital   188,018 188,018
Capital reserve   12,665 12,665
Translation reserve   7,083 7,079
Share option reserve   740 740
Accumulated losses   (126,654) (120,786)
Total equity attributable to owners of the Company   81,852 87,716
Non-controlling interests   6,076 6,315
Total equity   87,928 94,031

 

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2020 

 

 

Attributable to owners of the Company  
Share

capital

Capital
reserve
Translation reserve Share

 option
reserve

Accumulated losses Total Non-
controlling interest
Total  
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000  
Group  
At 1 January 2019 178,218 12,665 7,073 3,224 (88,479) 112,701 6,862 119,563  
Total comprehensive income for the period  
Loss for the period (11,436) (11,436) (396) (11,832)  
Other comprehensive income (1) (1) (1)  
Total comprehensive income for the period (1) (11,436) (11,437) (396) (11,833)  
 
Transactions with owners  
Contributions and distributions  
Issue of share capital 9,800 9,800 9,800  
Recognition of share-based payments 36 36 36  
Transfer between reserves (799) 799  
 
Total transactions with owners 9,800 (763) 799 9,836 9,836  
At 30 June 2019 188,018 12,665 7,072 2,461 (99,116) 111,100 6,466 117,566  
Total comprehensive income for the period                  
Loss for the period (23,436) (23,436) (151) (23,587)  
Other comprehensive income 7 7 7  
Total comprehensive income for the period 7 (23,436) (23,429) (151) (23,580)  
                   
Transactions with owners                  
Contributions and distributions                  
Recognition of share-based payments 45 45 45  
Transfer between reserves (1,766) 1,766  
                   
Total transactions with owners (1,721) 1,766 45 45  
At 31 December 2019

 

188,018 12,665 7,079 740 (120,786) 87,716 6,315 94,031  
Total comprehensive income for the period                  
Loss for the period (5,868) (5,868) (239) (6,107)  
Other comprehensive income 4 4 4  
Total comprehensive income for the period 4 (5,868) (5,864) (239) (6,103)  
                   
Transactions with owners                  
Contributions and distributions                  
Issue of share capital  
Recognition of share-based payments  
Transfer between reserves  
                   
Total transactions with owners  
At 30 June 2020

 

188,018 12,665 7,083 740 (126,654) 81,852 6,076 87,928  
                   
                   
                   

 

Condensed consolidated statement of cash flows
For the six months ended 30 June 2020

 

 
             Group  
                Six months ended  
    30 June 30 June
    2020 2019
    £’000 £’000
Cash flows from operating activities      
Loss before tax for the period   (6,176) (12,413)
Adjustments for:      
Grant income   (71)  
Depreciation of property, plant and equipment   4,497 4,454
Amortisation of intangible asset   821 765
Interest income   (18) (7)
Finance costs   1,959 1,749
Share-based payments   36
Provision movement   (1,054)
Net foreign exchange   (23) 3
Operating cash flows before movements in working capital   989 (6,467)
Movement in trade and other receivables   1,376 857
Movement in trade and other payables   1,625 (1,946)
Net cash used in operating activities   3,990 (7,556)
       
Cash flows from investing activities      
Purchase of property, plant and equipment   (3,514) (751)
Acquisition of subsidiary, net of cash acquired  
Net cash used in investing activities   (3,514) (751)
       
Cash flows from financing activities      
Proceeds from grants received   1,509
Proceeds from issue of shares (1)   4,000 5,030
Costs related to fund raising   (260)
Proceeds from borrowings   1,056
Repayment of borrowings   (961) (65)
Deposits (pledged) / released   (492) (1)
Payment of lease liabilities   (235) (204)
Interest paid   (547) (394)
Net cash from financing activities   4,330 4,106
       
Net increase / (decrease) in cash and cash balances   4,806 (4,201)
Cash and cash equivalents at beginning of period   3,602 8,351
Cash and cash equivalents at end of period   8,408 4,150

 

Included in cash and cash equivalents in the statements of financial position is £1.4 million (2019: £0.9 million) of encumbered deposits.

  • Shares were issued as part of March 2019 share placing. Cash received from SIMEC in 2020.

Notes to the Consolidated Interim Financial Statements

The condensed consolidated statement of financial position of SIMEC Atlantis Energy Limited (the “Company”) and its subsidiaries (the “Group”) as at 30 June 2020, the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the Group for the six-month period then ended and certain explanatory notes (the “Consolidated Interim Financial Statements”), were approved by the Board of Directors for issue on 29 September 2020

These notes form an integral part of the Consolidated Interim Financial Statements.

The Consolidated Interim Financial Statements do not comprise statutory accounts of the Group within the meaning in the provisions of the Singapore Companies Act, Chapter 50. The Group’s statutory accounts for the year ended 31 December 2019 were prepared in accordance with Singapore Financial Reporting Standards (International) (SFRS(I)) and International Financial Reporting Standards (IFRS). SFRS(I)s are issued by the Accounting Standards Council Singapore, which comprise standards and interpretations that are equivalent to IFRS issued by the International Accounting Standards Board. All references to SFRS(I)s and IFRSs are subsequently referred to as IFRS in these financial statements unless otherwise specified.

The Group’s statutory accounts for the year ended 31 December 2019 were approved by the Board of Directors on 11 August 2020 and have been reported by the Group’s auditors.

 

1                            Domicile and activities

SIMEC Atlantis Energy Limited (the “Company”) is a company incorporated in Singapore. The Company’s registered office address is c/o Level 4, 21 Merchant Road, #04-01, Singapore 058267. The principal place of business is Edinburgh Quay 2, 139 Fountainbridge, Edinburgh, EH3 9QG, United Kingdom.

The principal activity of the Group is to develop and operate as a global sustainable energy provider. The Company is an inventor, developer, owner, marketer and licensor of technology, intellectual property, trademarks, products and services and an investment holding company.

2                            Significant accounting policies

Basis of preparation

The Consolidated Interim Financial Statements have been prepared in accordance with the AIM Rules for Companies and are therefore not required to comply with International Accounting Standard 34 Interim Financial Reporting to maintain compliance with IFRS.  In all other respects, the financial statements are drawn up in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended 31 December 2019.

The Consolidated Interim Financial Statements, which do not include the full disclosures of the type normally included in a complete set of financial statements, are to be read in conjunction with the last issued consolidated financial statements of the Group as at and for the year ended 31 December 2019.

Accounting policies

The accounting policies and method of computation used in the Consolidated Interim Financial Statements are consistent with those applied in the last issued consolidated financial statements of the Group for the year ended 31 December 2019.

3                            Critical accounting judgements and key sources of estimation uncertainty

In preparing this set of Consolidated Interim Financial Statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2019.

4                            Going concern basis

The Group has prepared financial forecasts for a period beyond 30 September 2021, including sensitivity analysis. These forecasts, which take into account the ongoing committed costs of the Group, demonstrate that the Company is able to operate within its available cash and funding balances for a period beyond 30 September 2021. The forecasts indicate that the Group is projected to operate within its available cash facilities for the forecast period although mitigating action may be required to be taken in advance of periods when cash and cash equivalents available for use are forecast to be limited.

While the Directors cannot envisage all possible circumstances that may impact the Group in the future, the Directors believe that, taking account of the forecasts, future plans and available cash resources, the Group will have sufficient resources to support the Company to meet all ongoing working capital and committed capital expenditure requirements as they fall due. Further details on the going concern assessment are provided in the 31 December 2019 consolidated financial statements published on the 11th August 2020.

5                            Other notes

  • In respect of the six months to 30 June 2020, the diluted earnings per share is calculated on a loss attributable to owners of the Company of £5.8 million on the basic weighted average of 429,077,656 ordinary shares (30 June 2019: loss of £11.8 million and basic weighted average shares of 399,201,964). Share options were excluded from the diluted weighted average number of ordinary shares calculations as their effect would have been anti-dilutive. No dividends has been declared (2019: nil).

6                            Events after the reporting date

On 11 August the Company raised £7.5 million, before expenses, through the placing of 62,499,999 new ordinary shares at a placing price of 12 pence per share.

COMPANY INFORMATION

NON-EXECUTIVE DIRECTORS

John Mitchell Neill

Mark Edward Monckton Elborne

George Jay Hambro

Ian Raymond Wakelin

John Anthony Clifford Woodley

 

AUDITOR

Ernst & Young LLP
One Raffles Quay
North Tower, Level 18
Singapore 048583

 

   
EXECUTIVE DIRECTORS

Timothy James Cornelius

Andrew Luke Dagley

REGISTRAR

Boardroom Corporate & Advisory Services Pte Ltd

50 Raffles Place

#32-01 Singapore Land Tower

Singapore 048623

   
REGISTERED OFFICE AND

COMPANY NUMBER

c/o Level 4, 21 Merchant Road,

#04-01

Singapore 058267

Company Number: 200517551R

 

DEPOSITARY

Link Market Services Trustees Limited

The Registry

34 Beckenham Road

Beckenham BR3 4TU

 

   
COMPANY SECRETARY

Kelly Tock Mui Han

21 Merchant Road

#04-01 Royal Merukh S.E.A

Singapore 058267

 

GUERNSEY BRANCH REGISTER

Link Market Services (Guernsey) Limited

Mont Crevelt House

Bulwer Avenue

St Sampson

Guernsey GY2 4LH

 

   
NOMINATED ADVISER AND BROKER

Investec Bank plc
30 Gresham Street
London
EC2V 7QP

 

 

 

WEBSITE

www.simecatlantis.com