REG - SIMEC AtlantisEnergy - Interim Results
27/09/2023 07:00
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RNS Number : 6888N SIMEC Atlantis Energy Limited 27 September 2023
27 September 2023
SIMEC ATLANTIS ENERGY LIMITED
("SAE", the "Company" and, together with its subsidiaries, the "Group")
Interim results
SAE announces its unaudited interim results for the six months ended 30 June
2023. A complete version of the interim results can be found on the Company
website (www.saerenewables.com/investor-relations/company-documents)
(http://www.saerenewables.com/investor-relations/company-documents)) .
Chairman's Statement
I am pleased to report a strong first half of 2023 for SIMEC Atlantis Energy
Limited ("SAE"), with SAE completing the sale of its first battery energy
storage system ("BESS") development project at Uskmouth and delivering much
improved financial performance with a profit of £4.5million, a result both of
the development premium realised from the sale of this first BESS development
project as well as the significant restructuring of the business undertaken in
2022.
SAE has built and continues to develop a strong pipeline of projects on which
it is actively executing with a clear focus on delivering on our strategy to
develop alternative energy solutions.
Marine Energy
MeyGen Phase 1
The MeyGen Phase 1 array continues to operate successfully, with three
turbines in stable operations whilst the fourth is currently undergoing
preventative maintenance and upgrade works and will return to operation next
year.
The MeyGen operations team is doing an excellent job operating and maintaining
the MeyGen Phase 1 turbines and has developed invaluable expertise and
experience that is both enabling the ongoing successful operation of MeyGen
Phase 1 and which is being brought to the development of MeyGen Phase 2.
Whilst MeyGen Phase 1 has had its challenges, the operating track record and
learnings that have been accumulated since the commissioning of the MeyGen
Phase 1 project have proven the economic viability of tidal stream generation.
I would particularly like to thank the MeyGen funders, Scottish Enterprise and
Crown Estate Scotland, for their continued unwavering support and patience, as
well as the junior lenders, Engie and Morgan Stanley.
MeyGen Phase 2
On 8 September 2023, we were delighted to announce that we had secured a total
of 22 MW over four Contracts for Difference ("CfDs") from the UK government
in the AR5 allocation round for the MeyGen site. This is in addition to the
28 MW CfD that we secured in the AR4 allocation round for MeyGen in July
2022, providing an aggregate of 50 MW of CfDs for the next phase of the
MeyGen project. The higher strike price of the CfDs awarded under AR5
compared with AR4, coupled with the economies of scale afforded by the
increase in the size of the project to 50 MW, provide a significant boost to
the project economics.
Work continues apace on the development of the MeyGen Phase 2 project, with
financial close targeted for Q2 2025 and operation of the 50 MW array
commencing in 2027. Whilst MeyGen Phase 2 remains a hugely challenging
project, securing the revenue for 50 MW of capacity is a huge step forwards
and we will now turn our attention to securing tidal turbine supply for 3MW
turbines, consenting variations to enable the larger turbines and financing
for the project.
Battery Energy Storage Systems
A key highlight for the first half of 2023 was the successful execution of the
lease agreement for the 230 MW BESS project with Uskmouth Energy Storage
Limited, a portfolio company of Quinbrook Infrastructure Partners, in June
2023, following which in July 2023 we received the final £4.0 million
instalment of the £10.0 million upfront premium. We are currently exploring
options for monetising the lease income from this project which could deliver
further cashflows to SAE in the short to medium term.
Since closing the sale of this project, we have turned our focus to developing
a pipeline of further BESS projects at Uskmouth and are actively working on
three new BESS projects at Uskmouth that have the potential to deliver further
significant value to shareholders. We continue to work on the development of
a comprehensive plan for the redevelopment of the Uskmouth site into a
Sustainable Energy Park, in which these BESS projects will form a key part.
We also continue work on a more than 200 MW BESS project at MeyGen that could
be connected as early as 2027.
The development of BESS projects is critical in support of the growing
dependence of electricity grids on weather dependent renewable energy
sources. With its existing grid connections, real estate portfolio and
experienced engineering and project development teams, SAE is ideally placed
to capitalise on this opportunity.
Summary of Results
The profit before tax of £4.5 million for the six months ended 30 June 2023
compares to a loss of £8.6 million reported for the same period in 2022. The
profit reported in this period arises from the recognition of the £10 million
development premium received from Uskmouth Energy Storage Ltd as revenue,
following the signing of the Uskmouth land lease agreement on 20 June 2023.
The Group continues to see the benefits of the restructure it completed in
2022 with lower employee and depreciation costs compared to the same period
last year. Whilst the results were adversely affected by tidal turbine repair
and maintenance costs at MeyGen, these were also lower than the same period
last year.
The £4.0 million balance of the development premium described above was
received in July 2023. The initial £6.0 million was received in 2022 as a
loan and was recognised as income on the signing of the Uskmouth land lease in
June 2023.
Finance costs in the period are materially in line with the same period last
year.
The unaudited consolidated cash position of the Group as at 30 June 2023 was
£1.5 million (30 June 2022: £3.4 million). Included in cash and cash
equivalents in the statement of financial position are encumbered deposits of
£0.8 million (30 June 2022: £0.8 million).
Duncan Black
Chairman
Condensed consolidated statement of profit and loss and
other comprehensive income
For the six months ended 30 June 2023
Group
Six months ended
Note 30 June 30 June
2023 2022
£'000 £'000
Revenue 12,440 1,266
Other gains and losses 507 2,167
Employee benefits expense (938) (1,323)
Subcontractor costs (2,422) (3,067)
Depreciation and amortisation (1,623) (4,037)
Other operating expenses (1,230) (1,675)
Total expenses (6,213) (10,102)
Results from operating activities 6,734 (6,669)
Finance costs (2,258) (1,933)
Profit/(loss) before tax 4,476 (8,602)
- (1)
Tax (charge)/ credit
Profit/(loss) for the period 4,476 (8,603)
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations 43 16
Total comprehensive income for the period 4,519 (8,587)
Profit/(loss) attributable to:
Owners of the Group 5,228 (7,859)
Non-controlling interests (752) (744)
Total comprehensive income/(loss) attributable to:
Owners of the Group 5,271 (7,843)
Non-controlling interests (752) (744)
Profit/(loss) per share (basic and diluted) (pence) 5 0.68 (1.09)
Condensed consolidated statement of financial position
As at 30 June 2023
Group
30 June 31 December 2022
2022
£'000 £'000
Assets
Property, plant and equipment 72,842 74,455
Intangible assets 1,465 1,465
Right-of-use assets 1,489 1,331
Investment in joint venture 133 133
Non-current assets 75,929 77,384
Trade and other receivables 6,928 3,584
Cash and cash equivalents 2,282 3,701
Current assets 9,210 7,285
Total assets 85,139 84,669
Liabilities
Trade and other payables (6,768) (6,573)
Lease liabilities (296) (296)
Loans and borrowings (12,876) (15,895)
Current liabilities (19,940) (22,764)
Lease liabilities (1,166) (1,000)
Provisions (12,688) (12,581)
Loans and borrowings (40,345) (41,890)
Deferred tax liabilities (752) (752)
Non-current liabilities (54,951) (56,223)
Total liabilities (74,891) (78,987)
Net assets 10,248 5,682
Equity
Share capital 201,496 201,496
Capital reserve 12,665 12,665
Translation reserve 7,101 7,058
Share option reserve 419 420
Accumulated losses (211,009) (216,285)
Total equity attributable to owners of the Company 10,672 5,354
Non-controlling interests (424) 328
Total equity 10,248 5,682
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2023
Attributable to owners of the Company
Share Capital Translation reserve Share Accumulated losses Total Non- Total
reserve
controlling interest
capital option
reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Group
At 1 January 2022 201,496 12,665 7,121 576 (206,910) 14,948 1,739 16,687
Total comprehensive income for the period
Loss for the period - - - - (7,859) (7,859) (744) (8,603)
Other comprehensive income - - 16 - - 16 - 16
Total comprehensive income for the period - - 16 - (7,859) (7,843) (744) (8,587)
Transactions with owners
Contributions and distributions
Issue of share capital - - - - - - - -
Recognition of share-based payments - - - 53 - 53 - 53
Transfer between reserves - - - (250) 250 - - -
Total transactions with owners - - - (198) 250 53 - 53
At 30 June 2022 201,496 12,665 7,137 379 (214,519) 7,158 995 8,153
Total comprehensive income for the period
Loss for the period - - - - (1,790) (1,790) (667) (2,457)
Other comprehensive loss - - (79) - - (79) - (79)
Total comprehensive income for the period - - (79) - (1,790) (1,869) (667) (2,536)
Transactions with owners
Contributions and distributions
Issue of share capital net of issue costs - - - - - - - -
Recognition of share-based payments - - - 65 - 65 - 65
Transfer between reserves - - - (24) 24 - - -
Total transactions with owners - - - 41 24 65 - 65
At 31 December 2022 201,496 12,665 7,058 420 (216,285) 5,354 328 5,682
Total comprehensive income for the period
Profit/(Loss) for the period - - - - 5,228 5,228 (752) 4,476
Other comprehensive income - - 43 - - 43 - 43
Total comprehensive income for the period - - 43 - 5,228 5,271 (752) 4,519
Transactions with owners
Contributions and distributions
Issue of share capital net of issue costs - - - - - - - -
Recognition of share-based payments - - - 47 - 47 - 47
Transfer between reserves - - - (48) 48 - - -
Total transactions with owners - - - (1) 48 47 - 47
At 30 June 2023 201,496 12,665 7,101 419 (211,009) 10,672 (424) 10,248
Condensed consolidated statement of cash flows
For the six months ended 30 June 2023
Group
Six months ended
30 June 30 June
2023 2022
£'000 £'000
Cash flows from operating activities
Profit/(loss) before tax for the period 4,476 (8,602)
Adjustments for:
Grant income - (31)
Depreciation of property, plant and equipment 1,623 4,018
Amortisation of intangible asset - 19
Interest income (31) (10)
Finance costs 2,258 1,933
Share-based payments 47 53
Provision movement - (84)
Net foreign exchange (83) 103
Operating cash flows before movements in working capital 8,290 (2,601)
Movement in trade and other receivables (3,344) (301)
Movement in trade and other payables 195 (354)
Interest received 31 -
Net cash used in operating activities 5,172 (3,256)
Cash flows from investing activities
Purchase of property, plant and equipment - -
Loan to joint venture - (24)
Proceeds from disposal of scrap - 1,155
Net cash used in investing activities - 1,131
Cash flows from financing activities
Proceeds from grants received - 31
Proceeds from borrowings - 2,500
Repayment of borrowings (6,000) -
Deposits (pledged) / released (13) (1)
Payment of lease liabilities (44) (31)
Interest paid (571) -
Net cash from financing activities (6,628) 2,499
Net (decrease)/increase in cash and cash balances (1,456) 375
Cash and cash equivalents at beginning of period 2,929 3,004
Effect of foreign exchange on cash held in currency 24 (4)
Cash and cash equivalents at end of period 1,497 3,375
Included in cash and cash equivalents in the statements of financial position
is £0.8 million (2022: £0.8 million) of encumbered deposits.
Notes to the Consolidated Interim Financial Statements
The unaudited condensed consolidated statement of financial position of SIMEC
Atlantis Energy Limited (the "Company") and its subsidiaries (the "Group") as
at 30 June 2023, 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 the 26(th) September 2023.
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 2022 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 2022 were
approved by the Board of Directors on 25 July 2022.
1 Domicile and activities
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 26 Dublin Street, Edinburgh, EH3 6NN, United
Kingdom.
The principal activity of the Group is to develop and operate as a global
sustainable energy provider. The Group holds equity positions in the world's
flagship tidal stream project, MeyGen, and the Uskmouth power station site,
that is being repurposed into a Sustainable Energy Park initially housing
battery energy storage projects.
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 2022.
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
2022.
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 2022.
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 2022.
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 2024.
Management has prepared a forecast through to 31 December 2024 based on
contractually committed revenues and costs, an estimate of additional costs
required and the income arising from development projects that are expected to
be delivered within the forecast period.
The Directors' assessment of the appropriate use of the going concern basis
included the following factors:
· Repayment of the Abundance bond principals falling due in March 2024,
June 2024 and September 2024. The Company may either seek to repay the bonds,
extend the repayment date of the bonds or refinance the bonds with new debt.
· Timing of the potential repayment of historical grant funding of an
amount of £3.4 million as reported in the consolidated financial statements
for the year ended 31 December 2022. The Board are of the view that there are
grounds for disputing any clawback of this grant and
the Company has evidence to support this position.
The Board has identified significant factors that are of a material amount as
outlined above, and the Board has identified sufficient evidence of success
that includes achievable new sources of revenue that mitigate against the
existence of material uncertainties about the Group's ability to continue as a
going concern. The evidence is summarised as follows:
· Monetising the rental income from the first battery energy storage
system lease at Uskmouth
· Sale of a ready to build site for a 120MW battery energy storage system
at Uskmouth, with a targeted completion date in 2024.
Accordingly, the Board of Directors concluded that it is appropriate to adopt
the going concern basis of accounting in preparing the Interim Financial
Statements.
5 Other notes
In respect of the six months to 30 June 2023, the diluted earnings per share
is calculated on a profit attributable to owners of the Company of £5.3
million on the weighted average of 722,812,335 ordinary shares (30 June 2022:
loss of £7.9 million and basic weighted average shares of 722,812,335). Share
options were excluded from the diluted weighted average number of ordinary
shares calculation as their effect would have been anti-dilutive. No dividend
has been declared (2022: nil).
6 Events after the reporting date
As announced on 8 September 2023, the Group secured a Contract for Difference
(CfD) allocation from the UK Government guaranteeing £198/MWh for 15 years
for 22MW of clean, predictable power from the MeyGen site.
For further information, please contact:
SAE Renewables +44 (0)7739 832 446
Sean Parsons, Director of External Affair
Strand Hanson Limited (Nominated and Financial Adviser) +44 (0)20 7409 3494
Richard Johnson
Rory Murphy
David Asquith
Zeus Capital Limited (Broker) +44 (0)20 3829 5000
Louisa Waddell
Simon Johnson
Notes to Editors
SAE is a global developer, owner and operator of sustainable energy projects.
SAE owns the world's flagship tidal stream project, MeyGen. SAE is also the
owner of the Uskmouth Power Station site that is being repurposed into a
sustainable energy park, initially housing one of the UK's largest battery
energy storage projects.
https://www.saerenewables.com/ (https://www.saerenewables.com/)
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