I am extremely proud to have been appointed CEO of SAE in January. Joining SAE in the middle of a pandemic has been both challenging and very exciting; on the one hand it has allowed me to spend time fully understanding the various parts of the business whilst on the other it’s been disappointing not being able to engage face-to-face with the internal team and the immensely valued stakeholders and partners. However, I am hugely impressed by the dedication, professionalism, and delivery of the whole team. In the year that the UK is scheduled to host COP26, the opportunities presented by the technologies in which SAE plays such a leading role are substantial.
MeyGen, the flagship of our marine energy division, continues to break world records and has now exported over 37 GWh of electricity to the grid. What is as exciting is that the next round of the contract for difference regime is expected to be announced later this summer. This could present SAE with the opportunity to develop MeyGen phase 2 – utilising the consents, grid connections and licences that are already in place taking the existing capacity to 86 MW. Our confidence in being able to deliver such a project has been further bolstered by the success of the AR500 tidal turbine that was commissioned in Japan early in 2021 and, at the start of May, had already clocked up 10MWh of generation and has met the stringent acceptance standards of the Japanese Ministry of Economy, Trade and Industry. The final piece in the tidal jigsaw is the continuing work via our Normandie Hydrolienne joint venture on the Raz Blanchard project which will utilise the experience from MeyGen and Japan to connect four turbines via a subsea hub – this is fundamental to continued progress in reducing the levelized cost of energy for tidal deployments.
The Uskmouth Power Station Conversion Project demonstrates some of the challenges involved in pioneering projects. Converting the power station to run on a sustainable, lower carbon fuel benefits both the local area and the country as a whole. Our current work on planning and permitting will not only breath life back into the Uskmouth Power Station but will provide a transitional roadmap for countless other coal-fired power stations around the globe – a journey in which SAE hopes to play a pivotal role, utilising the experience gained at Uskmouth.
The Chairman has noted in his report the feasibility work on carbon capture and storage that SAE has been awarded funding for – I am pleased to report that work on this has already started – success in this area would move the Uskmouth Power Station project into the territory of negative CO2 emissions as well as creating new, sustainable, and high value industries and jobs for the region.
SAE’s positive and meaningful impact on local economies is further demonstrated in the projects being commissioned by the Green Highland Renewables (“GHR”) business acquired in 2019. The GHR team are commissioning three run-of-river hydro schemes in the Scottish Highlands – during the construction phase these projects generated significant value in the local economy and, when operational, will create annual value for the local communities for future generations whilst at the same time contributing to the move towards a sustainable and renewable energy model for the UK.
I am proud to have been entrusted with the leadership of the SAE team; whose dedicated engineers, project managers, operations and administrative support staff have proved their mettle in challenging circumstances. The future holds more challenges and huge opportunities, and we will need to adapt and improve to take advantage of them and create value for all stakeholders. I am enthused by the prospect of the next 12 months and beyond and am convinced that SAE will be at the vanguard of meaningful, commercial development in each of our chosen technologies and market segments.
The Group recorded a loss after tax of £19.7 million for the year ended 31 December 2020, compared with a £35.4 million loss in the prior year. The reduction in this loss is driven by two main elements; 2019 saw a non-cash charge to the P&L of £16.1 million because of the impairment of seabed options for five development sites – this was not repeated in 2020. The second key element was the increased revenue from the tidal project in Japan which generated £6.5 million of additional revenue in 2020.
Group revenue increased by 152% to £12.2 million for the year (2019 – £ 4.9 million) with an increase of £6.5 million from contract revenues from our Atlantis Turbines and Engineering Services Division (“ATES”) for works completed in Japan on the KME contract. Power sales from the MeyGen tidal power project were £2.5 million (2019 £4.2 million) due to turbine outages and £2.5 million (2019 £0.5million) from a full year of performance from the GHR’s hydro division O&M and project management contract revenue.
Total Expenses for the year were £29.0 million (2019: £26.1 million). The main elements of the increase of £2.6 million relate to the increase in sub-contractor costs of £3.9 million (mainly driven by the ATES Japanese project and a full year of GHR costs) partially offset by there being no acquisitions costs in 2020 (2019 saw £1.3 million GHR acquisition costs). The other adjustments that impact on the dramatic improvement of results from operating activities was the lack of any adjustment for the non-cash seabed options write off in 2019 (£16.1 million), partially offset by there being no Gain on bargain purchase for GHR (2019 £2.9 million).
The Groups closing net asset balance was £81.8 million (2019: £94 million), the decrease is largely reflective of the trading performance in the year.
In January 2020, Atlantis raised £3.8m via a bond issued on the Abundance ethical investment platform. The bond has a coupon of 8%, payable semi-annually and matures in 2024. The proceeds continue to be deployed to further the successful delivery of our world leading portfolio of renewable and sustainable energy projects. In August 2020 SAE raised approximately £7.5 million through a placing and PrimaryBid share sale which resulted in 62,499,999 new Ordinary shares being issued. In December 2020 SAE announced that it had entered into a share placement agreement with New Technology Capital Group, LLC, a U.S.-based investor, in relation to the issuance of new ordinary shares to raise up to £12,000,000. As at the date of the issue of these accounts £4,000,000 has been raised under this arrangement.