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Interim Results (unaudited), Proposed Share Placing & Directorate Change

28th September 2021

SIMEC ATLANTIS ENERGY LIMITED
(“SAE”, the “Company” and, together with its subsidiaries, the “Group”)

Interim Results (unaudited)
Proposed Share Placing
Directorate Change

Interim Results

SAE announces its unaudited Interim Results for the six months ended 30 June 2021

Summary of Results

The overall loss before tax of £10.7 million for the six months ended 30 June 2021 compares to the loss of £6.2 million reported for the same period in 2020. There are a number of factors behind this increase. There was reduced revenue performance from the MeyGen project as a result of significant outages in three of its four turbines, which necessitated retrieval for onshore repair. 2021 results for the tidal turbine and engineering services division have seen a drop off following a very strong 2020, which benefitted from revenues on the phase 1 Japanese tidal project. GHR continued to deliver stable growth.

Overall, costs were in line with expectations, with increased contractors’ costs being incurred in the MeyGen retrievals and the ongoing Uskmouth development costs.

Graham Reid, CEO of SAE, commented

“I am immensely proud and inspired by my team’s unwavering commitment to the delivery of our projects and I can see that commitment paying off as our projects continue to make progress, in often challenging environments. Our projects, and the technologies we are developing with our partners, will be critical in the global fight against climate change. Energy is at the forefront of our minds as the impact of climate change becomes more common and extreme but so too is the cost and security of our energy. We have the solutions. Our projects tackle climate change, deliver predictable, local, low carbon electricity while creating jobs and powering vital industries. We are proud of our projects and will continue to focus on their successful delivery.”

Share Placing

On 28 September 2021 the Company announced a proposed Placing at 2.5 pence per Ordinary Share to raise gross proceeds (before expenses) of approximately £2.5 million.

Directorate Change

SAE announces that Mr Jay Hambro has today resigned his position as a SIMEC representative on the SAE Board of Directors.

The Chairman and the Board of Directors would like to thank Mr Hambro for his support and hard work during his time on the Board and wish him well in his future endeavours.

For more information please contact:

SIMEC Atlantis Energy Limited +44 (0) 7739 832 446
Sean Parsons, Director of External Affairs
Investec Bank PLC – NOMAD and Joint Broker +44 (0) 20 7597 5970
Jeremy Ellis

Ben Griffiths

Arden Partners PLC – Joint Broker  +44 (0) 20 7614 5900
Ruari McGirr

Richard Johnson

Simon Johnson

 

Notes to Editors

SIMEC Atlantis Energy

SAE 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/

More on the MeyGen Project: https://simecatlantis.com/projects/meygen/

More on the Uskmouth Project: https://simecatlantis.com/project-development-operation/simec-uskmouth-power/

Chairman’s Statement

SIMEC Atlantis Energy Limited (“SAE”) commenced 2021 under the leadership of our new Chief Executive Officer, Graham Reid. As the economy started to return to some semblance of normality, we have continued to make progress in all key areas of our business.

Power Station Conversion

The Uskmouth conversion project continues to progress and the statement of case response to the Welsh Government’s decision to call the planning in was made earlier this year. This outlined the existing consents that the power station holds and emphasised the broader economic case for the facility. Natural Resources Wales (NRW) is undertaking a final peer review before it issues an interim permit for public consultation. This supports the technical case for the project and gives increased confidence in the ability of the SAE team to deliver this ‘first-of-a-kind’ project.

The global significance of this project was further underlined by the announcement of our partnership with Remediiate (UK) Ltd, an integrated sustainable developer of patented technologies that utilise waste gases to deliver high value algae products. This technology has the potential to make the Uskmouth conversion project carbon negative and creates a high value economic product.

SAE’s development of the detailed engineering design, fuel specification and CO2 removal solution for the conversion of coal-fired power plants to burn low carbon waste derived fuel pellets on a carbon negative basis provides a significant contribution to the world’s journey to net zero.  Utilising end-of-waste plastics in the fuel pellets provides an important solution to the plastic waste issue.  We look forward to moving ahead with the Uskmouth project following the grant of the permit from NRW and further developing a pipeline of coal-fired generation conversion projects globally to meaningfully contribute to the global challenges of carbon emissions and waste plastic pollution.

Marine Energy

MeyGen experienced interruption to generation during the first half of 2021. We expect the AR1500 turbine and Andritz turbine number 1 to be redeployed during Q4 of 2021, at which point 3 out of 4 turbines will be deployed and generating. Andritz turbine number 2 remains out of the water whilst waiting for long lead items, the delivery of which have been affected by COVID-19. Andritz turbine number 3 is deployed and has been generating successfully with above 95% availability since December 2018, continuing to prove the viability of tidal energy.

In Japan, the AR500 tidal turbine was recently recognised as an official power generation facility by the Ministry of Economy, Trade and Industry (METI), a key stakeholder in consenting renewable energy projects in Japan. The turbine tests, which were successfully passed during one of the strongest tides expected this year, follow an exhaustive process of inspection and verification of both the onshore facility and offshore equipment against national electrical standards.

Since January, the AR500 tidal turbine has generated over 100 MWh of power from the tidal flow in the Goto islands. It is the first large scale project of its kind in Japanese waters and continues to support Japan’s ambition in further diversifying its energy supply towards renewable sources.

The Raz Blanchard project continues as planned through its development phase and we remain in close discussions with the French authorities around possible grants and feed in tariffs.

Hydro Power

SIMEC GHR Ltd (“GHR”), SAE’s hydro division, has now commissioned three of the four schemes that remained under construction and continues to develop the asset management and operations and maintenance side of its business. GHR is providing asset management services for most of the circa 50 schemes that it has constructed, predominantly under long term agreements.

Share Placement Agreement

In March 2021 the Company received the second tranche investment of £2,000,000 under the share placement agreement with New Technology Capital Group LLC announced in December 2020. On 28 September 2021 the Company terminated the share placement agreement with New Technology Capital Group LLC. No further funds will be drawn down pursuant to the agreement. The balance of funds due to New Technology Capital Group of £930,000 will be settled as required through the issue of new SAE shares in due course, under the surviving terms of the agreement.

Share Placing

On 28 September 2021 the Company announced a proposed placing at 2.5 pence per Ordinary Share to raise gross proceeds (before expenses) of approximately £2.5 million.

Further Funding

As noted in the recent going concern statement in SAE’s final results for the year ended 31 December 2020, as SAE continues to develop its key projects, it remains dependent upon external financing.

The Directors’ assessment of going concern is described at Note 4 below. In concluding on the appropriateness of the going concern basis for preparation of the financial statements, the Directors have acknowledged the need for further funding in the short term to support continuing Group operations and the development of key projects.

The Board is considering a range of funding options for the Group including the disposal of certain non-core assets within the Group.

Summary of Results

The overall loss before tax of £10.7 million for the six months ended 30 June 2021 compares to the loss of £6.2 million reported for the same period in 2020. There are a number of factors behind the increase. There was reduced revenue performance from the MeyGen project as a result of significant outages in three of its four turbines and which necessitated retrieval for onshore repair. 2021 results for the tidal turbine and engineering services division have seen a drop off following a very strong 2020, which benefitted from revenues on the phase 1 Japanese tidal project. GHR continued to deliver stable growth.

Overall, costs were in line with expectations, with increased contractors’ costs being incurred in the MeyGen retrievals and the ongoing Uskmouth development costs.

Depreciation, as expected, remains stable and is driven by the Uskmouth and MeyGen projects.

Finance costs in the current period are materially in line with the same period last year.

As noted above, in March 2021 the Company received the second tranche investment of £2,000,000 from a subscription for ordinary shares under the share placement deed announced in December 2020. On 28 July 2021 the Company issued 11,904,762 ordinary shares in relation to £500,000 of subscription under this share placement deed. On 20 August 2021 the Company issued 11,904,762 ordinary shares in relation to £500,000 of subscription under this share placement deed.

The unaudited consolidated cash position of the Group at 30 June 2021 was £3.6 million. Included in cash and cash equivalents in the statements of financial position is £1.5 million (2020: £1.4 million) of encumbered deposits. On 31 August 2021 £0.5m was released back to the Group.

On 28 September 2021, George Jay Hambro resigned his position on the Board. I would like to thank Jay for the contribution he made during his time on the Board.

Duncan Black
Chairman

Condensed consolidated statement of profit and loss and other comprehensive income
For the six months ended 30 June 2021
            Group

                Six months ended

 
Note 30 June

2021

30 June

2020

£’000 £’000
Revenue 5,203 7,935
Other gains and losses 696 154
 
Employee benefits expense (3,153) (3,203)
Subcontractor costs (4,237) (2,251)
Depreciation and amortisation (5,378) (5,318)
Acquisition costs
Other operating expenses (2,122) (1,534)
Total expenses (14,922) (12,306)
 
Results from operating activities (8,991) (4,217)
   
Finance costs (1,741) (1,959)
Loss before tax (10,732) (6,176)
 

Tax (charge)/ credit

(943) 69
Loss for the period (11,675) (6,107)
 
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations 34 4
Total comprehensive income for the period (11,641) (6,103)
Loss attributable to:
Owners of the Group (10,915) (5,868)
Non-controlling interests (760) (239)
Total comprehensive income attributable to:
Owners of the Group (10,881) (5,864)
Non-controlling interests (760) (239)
Loss per share (basic and diluted) (pence) 5 (0.02) (0.01)
 

 

Condensed consolidated statement of financial position
As at
30 June 2021
         Group
  30 June
2021
31 December 2020
£’000 £’000
Assets
Property, plant and equipment 128,011 131,085
Intangible assets 14,575 15,434
Right-of-use assets 1,563 1,739
Investment in joint venture 511 511
Loan to joint venture 410
Non-current assets 145,070 148,769
Trade and other receivables 2,374 3,216
Inventory 861 861
Cash and cash equivalents 3,626 5,814
Current assets 6,861 9,891
Total assets 151,931 158,660
 

Liabilities

Trade and other payables 9,245 8,055
Lease liabilities 231 327
Provisions 126 162
Loans and borrowings 3,751 5,488
Current liabilities 13,353 14,032
 
 
Lease liabilities 1,350 1,350
Provisions 14,925 14,879
Loans and borrowings 45,422 43,041
Deferred tax liabilities 4,504 3,582
Non-current liabilities 66,201 62,852
Total liabilities 79,554 76,884
Net assets 72,377 81,776
Equity
Share capital 197,376 195,375
Capital reserve 12,665 12,665
Translation reserve 7,114 7,080
Share option reserve 901 787
Accumulated losses (150,629) (139,841)
Total equity attributable to owners of the Company 67,427 76,066
Non-controlling interests 4,950 5,710
Total equity 72,377 81,776

 

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2021 

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 2020 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
Total comprehensive income for the period
Loss for the period (13,211) (13,211) (366) (13,577)
Other comprehensive income (3) (3) (3)
Total comprehensive income for the period (3) (13,211) (13,214) (366) (13,580)
 
Transactions with owners
Contributions and distributions
Issue of share capital net of issue costs 7,357 7,357 7,357
Recognition of share-based payments 71 71 71
Transfer between reserves (24) 24
Total transactions with owners 7,357 47 24 7,428 7,428
At 31 December 2020

 

195,375 12,665 7,080 787 (139,841) 76,066 5,710 81,776
Total comprehensive income for the period
Loss for the period (10,915) (10,915) (760) (11,675)
Other comprehensive income 34 34 34
Total comprehensive income for the period 34 (10,915) (10,881) (760) (11,641)
 
Transactions with owners
Contributions and distributions
Issue of share capital net of issue costs 2,001 2,001 2,001
Recognition of share-based payments 241 241 241
Transfer between reserves (127) 127
Total transactions with owners 2,001 114 127 2,242 2,242
At 30 June 2021

 

197,376 12,665 7,114 901 (150,629) 67,427 4,950 72,377

 

Condensed consolidated statement of cash flows
For the six months ended 30 June 2021
           Group
              Six months ended
  30 June 30 June
  2021 2020
£’000 £’000
Cash flows from operating activities
Loss before tax for the period (10,732) (6,176)
Adjustments for:
Grant income (9) (71)
Depreciation of property, plant and equipment 4,531 4,497
Amortisation of intangible asset 847 821
Interest income (8) (18)
Finance costs 1,741 1,959
Share-based payments 241
Provision movement (35)
Net foreign exchange 190 (23)
Operating cash flows before movements in working capital (3,234) 989
Movement in trade and other receivables 842 1,376
Movement in trade and other payables 819 1,625
Net cash used in operating activities (1,573) 3,990
Cash flows from investing activities
Purchase of property, plant and equipment (1,282) (3,514)
Loan to joint venture (410)
Net cash used in investing activities (1,692) (3,514)
Cash flows from financing activities
Proceeds from grants received 9 1,509
Proceeds from issue of shares 2,250 4,000
Costs related to fund raising (249)
Proceeds from borrowings 1,056
Repayment of borrowings (383) (961)
Deposits (pledged) / released (18) (492)
Payment of lease liabilities (147) (235)
Interest paid (544) (547)
Net cash from financing activities 918 4,330
 
Net (decrease)/increase in cash and cash balances (2,347) 4,806
Cash and cash equivalents at beginning of period 4,315 3,602
Effect of foreign exchange on cash held in currency 141
Cash and cash equivalents at end of period 2,109 8,408

Included in cash and cash equivalents in the statements of financial position is £1.5 million (2020: £1.4 million) of encumbered deposits. On 31 August 2021 £0.5m was released back to the Group

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 2021, 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 28 September 2021.

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 2020 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 2020 were approved by the Board of Directors on 29 June 2021.

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 2020.

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 2020.

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 2020.

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 2020.

4.     Going concern basis

In adopting the going concern basis for preparing the Interim Financial Statements, the Board has considered the Group’s business activities, together with factors likely to affect its future development, its performance and principal risks and uncertainties. The Board has undertaken the assessment of the going concern assumptions using financial forecasts for the period to 31 December 2022.

The Directors cannot envisage all possible circumstances that may impact the Group in the future. However, after reviewing the current liquidity position, financial forecasts, stress testing of risks and taking account of future plans and available cash resources, the Directors have a reasonable expectation that 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. As a result, the Board continues to adopt the going concern basis of accounting in preparing the Interim Financial Statements. In arriving at this assessment the Directors have acknowledged the need to secure further funding in the short term to support continuing Group operations and the development of key projects. The Board is considering a range of funding options for the Group including the disposal of certain non-core assets within the Group.

On 28 September 2021 the Company announced a proposed placing at 2.5 pence per Ordinary Share to raise gross proceeds (before expenses) of approximately £2.5 million.

The Directors draw attention to the material uncertainties, highlighted in the 31 December 2020 consolidated financial statements, published on 29 June 2021, which may cast doubt upon the Group’s ability to continue as a going concern:

  • Access to related party loans from SIMEC UK Energy Holdings Ltd and SIMEC Group Ltd.
  • Refinancing of the Abundance bonds due for repayment in June 2022.
  • Timing of the repayment of EU grant funding.

The Interim Financial Statements do not include any adjustments that would result if the Group were unable to continue as a going concern.

5.     Other notes

In respect of the six months to 30 June 2021, the diluted earnings per share is calculated on a loss attributable to owners of the Company of £10.9 million on the basic weighted average of 514,099,831 ordinary shares (30 June 2020: loss of £5.8 million and basic weighted average shares of 429,077,656). Share options were excluded from the diluted weighted average number of ordinary shares calculations as their effect would have been anti-dilutive. No dividend has been declared (2020: nil).

6.     Events after the reporting date

On 28 July 2021 the Company issued 11,904,762 ordinary shares in relation to £500,000 of subscription under the share placement deed announced to the market on 16 December 2020.
On 20 August 2021 the Company issued 11,904,762 ordinary shares in relation to £500,000 of subscription under the share placement deed announced to the market on 16 December 2020.
On 28 September 2021 the Company announced a proposed placing at 2.5 pence per Ordinary Share to raise gross proceeds (before expenses) of approximately £2.5 million.
On 28 September 2021 the Company terminated the share placing agreement with New Technology Capital Group LLC.

COMPANY INFORMATION

NON-EXECUTIVE DIRECTORS

Mark Edward Monckton Elborne
George Jay Hambro (resigned 28/9/21)
Duncan Stuart Black
John Anthony Clifford Woodley

AUDITOR

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

EXECUTIVE DIRECTORS

Graham Matthew Reid
Andrew Luke Dagley

REGISTRAR

Boardroom Corporate & Advisory Services Pte Ltd
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623

REGISTERED OFFICE AND
COMPANY NUMBERc/o Level 4, 21 Merchant Road,
#04-01
Singapore 058267
Company Number: 200517551R
DEPOSITARY

Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL

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

 

BROKER

Arden Partners plc
125 Old Broad Street
London
EC2N 1AR

WEBSITE

www.simecatlantis.com