TIDMSAE
RNS Number : 3411V
SIMEC Atlantis Energy Limited
06 August 2020
6(th) August 2020
SIMEC ATLANTIS ENERGY LIMITED
("Atlantis", the "Company" or the "Group")
Preliminary Results Announcement
SIMEC Atlantis Energy Limited, the global developer, owner and
operator of sustainable energy projects with a diversified
portfolio of more than 1,000 megawatts in various stages of
development, is pleased to announce its preliminary results for the
year ended 31 December 2019.
FINANCIAL HIGHLIGHTS
-- The consolidated Group cash position at 31 December 2019 was
GBP4.5 million (2018: GBP9.3 million), including GBP1.8 million
held in MeyGen Limited (2018: GBP2.4 million).
-- The MeyGen project generated revenues of GBP4.1 million.
-- GHR hydro division O&M and project management contributed
GBP0.5m revenue from the date of acquisition.
-- Overall Group losses for the year were GBP35.4 million (2018:
GBP24.1 million). The increase in this loss is primarily
attributable to a GBP16.1 million non-cash disposal of seabed
options for five development sites.
Additionally, the increased loss in the year reflects the full
year results of significant changes to the Group during 2018, being
the acquisition of SIMEC Uskmouth Power Ltd ("SUP") in June 2018
and the results of MeyGen becoming operational in April 2018.
Included in the 2019 results is a GBP2.9 million non-cash gain on
bargain purchase as a results of fair value calculation on the
acquisition of Green Highland Renewables.
-- Group total equity at 31 December 2019 of GBP94.0 million (2018: GBP119.6 million).
-- In March 2019, Atlantis raised over GBP5 million, before
expenses, through an equity fundraising to secure funding for the
acquisition of GHR. As a result of the revised transaction the net
proceeds were used for the Company's general corporate
purposes.
OPERATIONAL HIGHLIGHTS
-- 2019 saw the flagship MeyGen Phase 1A tidal energy project of
our marine energy division, deliver the longest ever period of
uninterrupted generation from a multi-megawatt tidal turbine
installation. The array, which is located in Scotland, continues to
break world records and has now exported over 30 GWh of electricity
to the grid.
-- In March 2019, the Group established a joint venture
Normandie Hydroliennes ("NH") between Atlantis, the Development
Agency for Normandy, the regional agency for economic development
in Normandy, the regional investment fund Normandie Participations
and local industrial group EFINORS in France for the purpose of
developing a phased large-scale tidal power project in the Raz
Blanchard, Normandy, France.
-- In July 2019, the Group successfully decommissioned SeaGen
tidal support structure in Strangford Narrows, Northern Ireland.
This marks the completion of the 1.2MW SeaGen tidal stream energy
project lifecycle and is the first commercial scale tidal turbine
development to be fully decommissioned.
-- In October 2019, Atlantis acquired the entire issued share
capital of SIMEC GHR Ltd from SIMEC GHR Acquisitions Topco Limited
a subsidiary of SIMEC Energy, a member of the GFG Alliance. The
acquisition was undertaken to further diversify the Atlantis energy
platform and combine the project management and delivery expertise
of the two companies whilst bringing positive revenue streams to
the Group. Consideration for the purchase was GBP1.
-- Also in October 2019, Atlantis announced that it had been
awarded the contract for combustion system design for SUP to
Mitsubishi Hitachi Power Systems Europe GmbH ("MHPS Europe"). The
contract included completion of industrial scale milling tests on
the fuel pellets; completion of industrial scale combustion tests
on the fuel; and completion of Uskmouth furnace burner system
designs.
-- And again in October 2019, Atlantis announced that it had
signed a contract to supply tidal generation equipment and offshore
construction services to Japan's Kyuden Mirai Energy ("KME") for a
demonstration project in Japan. The project, located in the straits
of Naru Island within the southern Japanese Goto island chain, has
a total budget of 1,800mYen.
POST YEAR HIGHLIGHTS
Tidal Stream Highlights
-- In February 2020 Atlantis announced it had opened an office
in Nagasaki Japan as a base for the Groups newest entity Atlantis
Operations Japan ("AOJ") that will manage the construction works
being carried out under the Atlantis EPC contract with KME.
-- In March 2020, the MeyGen project was awarded GBP1.5 million
in grant funding from the Scottish Government's Saltire Tidal
Energy Challenge Fund to develop a subsea tidal turbine connection
hub for the next phase of development of the MeyGen tidal power
array.
-- In June 2020 Atlantis announced that the prefecture de la
Manche approved the transfer of the lease to develop the 12MW tidal
power project in Raz Blanchard from ENGIE to NH.
SIMEC Uskmouth Power
-- In February 2020, Atlantis completed the raise of over GBP3.8
million, before expenses, through a future energy bond subscription
to further the successful delivery of the SUP conversion.
-- In March 2020, Atlantis announced the successful production
of 100 tonnes of fuel pellets for large scale combustion testing
and successful completion of large scale milling tests on the 100%
waste derived fuel pellets to be used at the Uskmouth power station
post conversion.
-- In June 2020, Atlantis announced the successful completion of
the combustion testing as a significant milestone for the project.
The test conclusively proves that a pulverised fuel burner based on
MHPS's DS(R) Ultra Low NOx burner can be used to stably combust the
waste derived fuel unsupported (i.e. without any oil or gas support
firing). The burner was able to operate continuously at 25MW
thermal power using the fuel and is comparable in rating to the
burners required for the Uskmouth Conversion Project.
Today, the Company also announced a proposed placing of the
Company's ordinary shares to conditionally raise gross proceeds
(before expenses) of approximately GBP6 million to be conducted by
way of an accelerated bookbuild process. In addition to the
placing, the Company has made arrangements with PrimaryBid Limited
for retail and other investors to conditionally subscribe for the
Company's ordinary shares through the PrimaryBid platform. It is
intended that the net proceeds of the fundraising will be used to
fund the Group's working capital as well as for investment in a new
fuel supply joint venture as also announced today.
The full Annual Report and Group financial statements will
shortly be available to download from the Company's website
www.simecatlantis.com and the Annual Report will be distributed to
shareholders.
This announcement contains inside information
Enquiries:
SIMEC Atlantis Energy Limited Via FTI Consulting
Tim Cornelius, Chief Executive Officer
Stephen Hutt, Chief Financial Officer
Investec Bank Plc
(Nominated Adviser and Broker) +44 (0)20 7597 5714
Sara Hale
Jeremy Ellis
Chairman's Statement
Coronavirus has provided a stark reminder of what happens when
humanity's relationship with nature breaks down. As we recover
economically, we have an opportunity to protect and restore nature,
reducing our exposure to the impact of climate change. We note that
Governments around the world are prioritising investment into green
and digital technologies and that is positive news for Atlantis
given our knowledge and experience built up over many years.
During 2019, we took great strides towards consolidating our
position as a leader in the renewable and sustainable energy
generation sector. We delivered clean electricity to the grid at
Meygen, continued our important development work on the Uskmouth
conversion project and diversified our portfolio through the
acquisition of Green Highland Renewables.
MeyGen delivered the longest ever period of uninterrupted
generation from a multi-megawatt tidal turbine installation in the
world. MeyGen has now produced over 30 GWh of electricity,
equivalent to the annual consumption of some 12,000 UK households.
At the other end of the life-cycle, the Group demonstrated its
commitment to corporate responsibility and sustainability by
successfully decommissioning the SeaGen tidal turbine support
structure in Strangford Narrows, Northern Ireland. This was the
first full scale decommissioning of a tidal generator ever
successfully undertaken. This globally significant installation
which delivered more than 10GWhrs of generation into the grid over
its lifetime provided lessons which have underpinned development of
tidal turbine development worldwide.
The Uskmouth power station conversion project, commenced in
2018, has continued to complete significant milestones in its
development. The Front End Engineering and Design ("FEED") contract
awarded in November 2018 was successfully completed in July 2019.
The contract tender issued to Mitsubishi Hitachi Power Systems
Europe GmbH ("MHPS Europe") in October 2019 delivered successful
industrial-scale combustion testing of the waste derived fuel
pellets.
To put this in context, successfully operating a converted
coal-fired power plant on 100% refuse-derived pellets requires a
bespoke pellet with specific combustion capabilities and emissions
profile that conforms with the strictest regulatory requirements.
Delivering such a pellet has required a significant amount of
development and engineering work from our team and our dedicated
group of world leading consultants, advisors and strategic
partners.
In early 2019, the Uskmouth fuel pellet development team carried
out a series of 'medium-scale' combustion tests, at 300kW
(generating the level of energy that would be required to boil 150
kettles) combusting 0.5MT milled Subcoal pellets per hour at IFK
Stuttgart (Stuttgart University, Institute of Combustion and Power
Plant Technology). These tests demonstrated that a self-sustaining,
stable flame could be achieved.
On 23 June 2020, Atlantis announced that it had successfully
completed 'large-scale' combustion testing, running on its bespoke
Subcoal waste-derived fuel pellets at Mitsubishi Heavy Industries'
Research & Innovation Centre in Nagasaki, Japan. This is a
positive and significant milestone for the Uskmouth Power Station
Conversion Project and the culmination of more than two years of
bespoke fuel pellet work.
These tests conclusively proved the principle and the practical
operating rationale underpinning the Uskmouth project and also
demonstrate the efficacy of the technology behind the waste
procurement and fuel pelleting process. In parallel with the
development of the technology behind this project, the planning and
permitting required for the change of use from coal fired to pellet
fired power generation has also continued apace. The Pre
Application Consultation (PAC) completed on 29th June 2020 and the
process now continues through to full planning application. The
statutory timescale for this type of planning application
determination is 16 weeks and therefore the Group expects a
determination from Newport City Council in Q4 2020.
In continuing to pursue the objective of geographic and asset
class diversity, the Group saw the continued development of the
Normandie Hydrolienne ("NH") joint venture which was established in
2019 between Atlantis, the Development Agency for Normandy, the
regional agency for economic development in Normandy, the regional
investment fund Normandie Participations and local industrial group
EFINORS in France. This year NH have announced a decarbonisation
agreement between NH and Alderney Electricity Limited and the
launch of the Tidal Stream Industry Energiser Project, known as
TIGER, an ambitious EUR46.8m project, which aims to drive the
growth of the tidal energy industry by installing up to 8MW of new
tidal capacity at sites in and around the Channel region. Most
recently, NH announced that the Prefecture de la Manche has
approved the transfer of the lease to develop a 12MW tidal power
project in Raz Blanchard, in France, from ENGIE to NH. This
finalised the relevant approvals for the transfer for what will be
the first stage of a potential multi-hundred-megawatt marine energy
project in Raz Blanchard.
The Group has continued to seek out export sales opportunities
for our marine energy products and services. It was heartening to
see one of these opportunities come to fruition with the
announcement in October 2019 of a contract to supply tidal
generation equipment and offshore construction services (with a
total project budget of 1,800m JPY) to Japan's Kyuden Mirai Energy
for a demonstration project in Japan. Atlantis expects to deliver
and install the tidal generator by late Q3 2020, with completion of
the demonstration in Q1 the following year. The possibility to
upgrade the project to full output post successful completion
remains, subject to approval.
During 2019, we were delighted to welcome Green Highland
Renewables ("GHR") into the Group when we completed the acquisition
of this experienced development team in November. This acquisition
brought with it a stable stream of long-term income from Operations
and Maintenance Contracts for a portfolio of hydroelectric assets
throughout Scotland as well as an experienced project and business
development team with highly transferrable skills.
The 2019 results reflect the continued expenditure and
investment we have made in the core project development activities
of the Group - particularly the flagship Uskmouth project which is
making excellent progress towards financial close. Once these
development assets are built and commissioned, they will become
significant revenue generating assets like MeyGen Phase 1 for the
Group. Whilst I am pleased to report an increase in annual
revenues, in line with prudent accounting treatment, the Group has
written off the carrying values of tidal development leases that
are no longer considered to have long term benefit when compared to
other development opportunities across our existing portfolio, and
whilst these are non-cash items, this has significantly increased
the underlying loss reported for 2019.
The challenge of Coronavirus was met with a measured and calm
response; the whole team took voluntary pay reductions whilst
maintaining momentum on all our key projects. Our strong internal
technology infrastructure allied with robust and resilient supply
chains and a flexible and agile business framework stands us in
good stead should the virus see further peaks.
We recognise and thank all our stakeholders for their
contribution, commitment and support which has been instrumental in
enabling Atlantis to successfully overcome the many challenges that
we have faced this year.
John Neill
Chairman
5 August 2020
CEO's Statement
The continued focus on the transition to a carbon neutral
economy has received fresh impetus as a result of the impact of
COVID-19 and countries around the world are looking at the
opportunities presented by a move to a carbon free economy as a way
to grow our economies, create jobs and generate sustainable
prosperity. Atlantis is a true pioneer in the field of renewable
energy and our flagship projects have the potential to have a
profound impact on the way we approach renewable and sustainable
power generation globally.
MeyGen, the flagship of our marine energy division, delivered
the longest ever period of uninterrupted generation from a
multi-megawatt tidal turbine installation during 2019. The array,
which is located in Scotland, continues to break world records and
has now exported over 30 GWh of electricity to the grid. To put
that in context, that is enough electricity to fully charge more
than 750,000 electric vehicles.
The Uskmouth Power Station Conversion Project is a pioneering,
flagship project to re-purpose a decommissioned coal-fired power
station located in Newport, Wales. The station which once operated
100% on coal, will operate 100% on bespoke waste-derived fuel
pellets - pellets made 50% from non-recyclable, non-reusable
plastic and 50% from paper and card.
Following full conversion, Uskmouth Power station is expected to
generate 220MW of baseload, sustainable electricity - enough power
for 220,000 homes. The conversion process is expected to take
approximately 18 months following financial close. Once operating,
the power station is designed to have a 20 years lifespan.
Initially there will be 110MW of power generation output from one
unit in the power station. Subsequently a second 110MW unit is
expected to be converted, enabling the power station to deliver
220MW of net electricity generating output.
The Uskmouth Conversion project shows that power stations can be
reused. The aim is to continue to use these assets to generate
electricity - but to do it in a way that is fit for purpose in a
world where global warming needs solutions to mitigate emissions of
large amounts of carbon into the atmosphere and where generation of
baseload electricity must be done in a sustainable manner. To
demolish and build new power stations would be enormously expensive
and value destructive. To continue to burn coal is not
sustainable.
The power station conversion aims to use the physical buildings
of the power station and much of the other infrastructure and
equipment, where feasible. Equipment and infrastructure will be
replaced or upgraded where necessary to facilitate combustion of
the new pellet fuel and for control of emissions to uphold and
maintain the most up to date environmental permit limits.
Uskmouth is a project that has the potential to demonstrate a
pathway to a solution to help pressing challenges faced by
countries around the world. These include weaning ourselves off
coal as a source of electricity generation - thereby reducing
carbon emissions, in order to help slow an increase in global
warming; maintaining a level of baseload electricity generation, as
increasing amounts of intermittent renewable energy capacity
(wind/solar) come into the energy mix; and funding a solution to
deal with an ever-increasing amount of non-recyclable plastic waste
that does not involve landfilling it and ensuring it does not end
up in the world's oceans.
During 2019, we acquired Green Highland Renewables ("GHR"), a
market leading developer of mini-hydro projects in the UK. The
completion of this transaction secured a best-in-class development
team which added a stable stream of annual income generated by a
growing Operations and Maintenance ("O&M") business providing
24 hour monitoring as well as reactive and planned maintenance to
almost 50 hydroelectric schemes in Scotland. In addition, this
acquisition brought to Atlantis a strong and experienced business
development and project management team with highly transferable
skills - this team is already bringing added value to the pipeline
of projects within the Atlantis Group.
The developments and achievements of 2019, in a challenging
environment, were only possible with the blend of amazingly
supportive and dedicated stakeholders that Atlantis is fortunate
enough to be able to draw on. This includes our great team of
dedicated engineers, project managers, operations and
administrative support staff. Our ability to quickly adapt in the
face of new challenges and remain resilient and productive has
never been more evident than during the unprecedented events of
early 2020. I am proud to lead this team and relish the next high
growth phase of our journey. I look ahead with genuine excitement.
Atlantis has become a world leader in energy, with tidal stream,
energy pellets and hydro. We have the team, the projects and the
ambition to continue to drive forward and I have no doubt that we
will continue to lead the way and help regrow a greener and
brighter economy.
Timothy Cornelius
Chief Executive Officer
5 August 2020
Consolidated statement of profit or loss and other comprehensive
income
Year ended 31 December 2019
Unaudited
2019 2018
GBP'000 GBP'000
Revenue 4,859 2,217
Other gains and losses 1,856 949
Employee benefits expense (6,347) (5,562)
Subcontractor costs (4,069) (4,396)
Depreciation and amortisation (10,479) (7,299)
Acquisition costs (1,336) (4,173)
Other operating expenses (3,862) (2,902)
------------ -----------
Total operating expenses before non-recurring
items * (26,093) (24,332)
------------ -----------
Loss on disposal of intangible seabed
options (16,085) -
Gain on bargain purchase 2,928 -
Loss from operating activities (32,535) (21,166)
Finance costs (3,648) (2,998)
------------ -----------
(36,183) (24,164)
Share of loss of equity-accounted investees (23) -
Loss before tax (36,206) (24,164)
Tax credit 787 120
------------ -----------
Loss for the year (35,419) (24,044)
------------ -----------
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Exchange differences on translation
of foreign operations 6 -
Total comprehensive income for the
year (35,413) (24,044)
============ ===========
Loss attributable to:
Owners of the Group (34,872) (22,579)
Non-controlling interests (547) (1,465)
============ ===========
Total comprehensive income attributable
to:
Owners of the Group (34,872) (22,579)
Non-controlling interests (547) (1,465)
============ ===========
Loss per share
Basic and diluted loss per share (0.09) (0.09)
============ ===========
No dividends were proposed or declared in respect of either of
the years presented above.
* Non-recurring items - Items which individually or, if of a
similar type, in aggregate need to be separately disclosed by
virtue of their nature, size or incidence in order to allow a
proper understanding of the underlying financial performance of the
Group.
Statements of financial position
As at 31 December 2019
Group
Unaudited
2019 2018
GBP'000 GBP'000
Assets
Property, plant and
equipment 136,315 142,247
Intangible assets 17,058 32,753
Right of use assets 1,436
Investments in subsidiaries - -
Investment in joint
venture 47 -
Loans receivable - -
Trade and other receivables - -
Non-current assets 154,856 175,000
------------ -----------
Trade and other receivables 7,830 4,156
Inventory 864 986
Cash and cash equivalents 4,521 9,267
Current assets 13,215 14,409
------------ -----------
Total assets 168,071 189,409
============ ===========
Liabilities
Trade and other payables 9,449 8,523
Lease liabilities 276 -
Provisions 120 1,619
Loans and borrowings 4,559 2,765
Current liabilities 14,404 12,907
------------ -----------
Lease liabilities 1,091
Provisions 14,539 14,282
Loans and borrowings 40,662 38,855
Deferred tax liabilities 3,344 3,802
------------ -----------
Non-current liabilities 59,636 56,939
------------ -----------
Total liabilities 74,040 69,846
------------ -----------
Net assets 94,031 119,563
============ ===========
Equity
Share capital 188,018 178,218
Capital reserve 12,665 12,665
Translation reserve 7,079 7,073
Share option reserve 740 3,224
Accumulated losses (120,786) (88,479)
------------ -----------
Total equity attributable
to owners of the Company 87,716 112,701
Non-controlling interests 6,315 6,862
------------ -----------
Total equity 94,031 119,563
============ ===========
Statements of changes in equity
Year ended 31 December 2019
Attributable to owners of the Company
--------------------------------------------------------------------------
Share Non-
Share Capital Translation Option option Accumulated controlling
capital reserve reserve fee reserve losses Total interest Total
GBP GBP GBP
'000 GBP '000 GBP '000 '000 '000 GBP '000 GBP '000 GBP '000 GBP '000
Group
At 1 January
2018 95,030 12,665 7,161 - 3,477 (66,425) 51,908 8,327 60,235
--------------- ------- ------------ ----------- ------ ------- ----------- -------- ------------ --------
Total
comprehensive
income for
the year
Loss for the
year - - - - - (22,579) (22,579) (1,465) (24,044)
Other
comprehensive
expense - - - - - - - - -
--------------- ------- ------------ ----------- ------ ------- ----------- -------- ------------ --------
Total
comprehensive
income for
the year - - - - - (22,579) (22,579) (1,465) (24,044)
Transactions
with owners,
recognised
directly in
equity
--------------- ------- ------------ ----------- ------ ------- ----------- -------- ------------ --------
Issue of
ordinary
shares 83,188 - - - - - 83,188 - 83,188
Recognition of
share-based
payments - - - - 184 - 184 - 184
Transfer
between
reserves - - (88) - (437) 525 - - -
--------------- ------- ------------ ----------- ------ ------- ----------- -------- ------------ --------
Total
transactions
with owners 83,188 - (88) - (253) 525 83,372 - 83,372
------- ------------ ----------- ------ ------- ----------- -------- ------------ --------
At 31 December
2018 178,218 12,665 7,073 - 3,224 (88,479) 112,701 6,862 119,563
------- ------------ ----------- ------ ------- ----------- -------- ------------ --------
Total
comprehensive
income for
the year
Loss for the year - - - - - (34,872) (34,872) (547) (35,419)
Other comprehensive
income - - 6 - - - 6 - 6
------------------- ------- ------------ ----------- ------ ------- ----------- -------- ------------ --------
Total comprehensive
income for
the year - - - - - (34,872) (34,866) (547) (35,413)
Transactions
with owners,
recognised
directly
in equity
Issue of ordinary
shares 9,800 - - - - - 9,800 - 9,800
Recognition of
share-based
payments - - - - 81 - 81 - 81
Transfer between
reserves - - - - (2,565) 2,565 - - -
------------------- ------- ------------ ----------- ------ ------- ----------- -------- ------------ --------
Total transactions
with owners 9,800 - - - (2,484) 2,565 9,881 - 9,881
------- ------------ ----------- ------ ------- ----------- -------- ------------ --------
At 31 December 2019 188,018 12,665 7,079 - 740 (120,786) 87,716 6,315 94,031
======= ============ =========== ====== ======= =========== ======== ============ ========
Consolidated statement of cash flows
Year ended 31 December 2019
Unaudited
2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Loss before tax (36,206) (24,164)
Adjustments for:
Grant income (1,313) (2)
Bargain purchase arising from business
combinations (2,928) -
Depreciation of property, plant and
equipment 8,948 5,782
Amortisation of intangible asset 1,531 1,517
Interest income (16) (8)
Finance costs 3,648 2,998
Share-based payments 81 184
Movement in provisions (1,499) (607)
Disposal of intangible assets 16,085 -
Share of loss of JV, net of tax 23 -
Net foreign exchange 35 96
Operating cash flows before movements
in working capital (11,611) (14,204)
Movements in trade and other receivables 1,907 1,044
Movements in trade and other payables 539 (778)
------------ -----------
Net cash used in operating activities (9,165) (13,938)
------------ -----------
Cash flows from investing activities
Purchase of property, plant and equipment (1,789) (802)
Investment in joint venture (70) -
Cash from disposal of joint venture - 168
Acquisition of subsidiary, net of
cash acquired(1) 423 57
Net cash used in investing activities (1,436) (577)
------------ -----------
Cash flows from financing activities
Proceeds from grants received - 16
Proceeds from issue of shares 6,030 20,000
Share issuance cost (260) (897)
Proceeds from borrowings 2,730 4,970
Repayment of borrowings (1,376) (5,192)
Interest paid (849) (696)
Payment of lease liabilities (420) -
Deposits released/(pledged) (3) 864
Net cash from financing activities 5,852 19,065
------------ -----------
Net (decrease)/increase in cash and
cash equivalents (4,749) 4,550
Cash and cash equivalents at 1 January 8,351 3,801
Cash and cash equivalents at 31 December 3,602 8,351
============ ===========
(1) In 2018, the acquisition of SIMEC Uskmouth Power Limited was
settled via the issue of ordinary shares of the Company.
Further detail may be read and downloaded from the company
website at www.simecatlantis.com.
Annual General Meeting
Atlantis also announces that a Notice will be sent to
shareholders to convene the Annual General Meeting ("AGM") of the
Company.
The AGM will be held at 11.00 a.m. (London time) on 28 August
2020. In light of the continued UK and Singapore Government
guidance in relation to the Covid-19 outbreak this year's meeting
will take place as a closed meeting by electronic means and
shareholders will not be able to attend in person. Shareholders are
encouraged to vote using the methods set out in the Notice. The AGM
Notice will also be made available on the Company's website at
www.simecatlantis.com.
NOTES
Basis of preparation
The unaudited summary accounts set out above do not constitute
statutory accounts of the Group within the meaning in the
provisions of the Singapore Companies Act, Chapter 50.
The unaudited consolidated balance sheet as at 31 December 2019
and the consolidated statement of comprehensive income,
consolidated cash flow statement, consolidated statement of changes
in equity and associated notes for the year then ended have been
extracted from the Group's unaudited financial statements.
The Directors have identified a material uncertainty in relation
to going concern relating to their ability to raise a minimum of
GBP3m by way of a placing of new shares. If these minimum funds are
not raised, the Company will not be able to operate within
available cash and debt facilities throughout the going concern
period.
The Company has commenced this fundraising and based on
expressions of interest from investors to date, the directors are
confident that this will be successful. The Company cannot formally
raise the funds until the placing is completed and the new shares
are admitted to AIM which is targeted for 11th August 2020. Whilst
the directors are confident that proceeds in excess of GBP3million
will be raised, this represents a material uncertainty that casts
significant doubt upon the company's ability to continue as a going
concern. The Directors have concluded that should the fundraising
complete for an amount of at least GBP3m, this material uncertainty
will be removed. The Directors anticipate this happening prior to
the approval of the statutory financial statements within the next
10 days.
The audited financial statements of the Group for 2019 will be
finalised on the basis of the financial information presented in
this preliminary announcement updated for the completion of the
fundraise and will be presented to the shareholders at the
Company's Annual General Meeting and thereafter filed with the
Accounting and Corporate Regulatory Authority ("ACRA") of
Singapore. The auditor's opinion in respect of the statutory
accounts for 2019 will include a material uncertainty in relation
to going concern if an amount of at least GBP3m is not raised prior
to the approval of the statutory financial statements.
The comparative consolidated financial information for the year
ended 31 December 2018 is based on an abridged version of the
Group's published financial statements for that year, which
contained an unqualified audit report. A copy of the 2018 financial
statements has been filed with ACRA.
The financial statements have been 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 unless otherwise specified.
The financial statements have been prepared on the historical
cost basis except as otherwise disclosed in the accounting policies
included in the 2018 accounts available on the Company website. The
accounting policies have been applied consistently to all periods
presented in these financial statements, other than new standards
applied for the first time in 2019.
Adoption of New and Revised Standards
A number of amendments to standards and interpretations are
effective for annual periods beginning after 1 January 2019. Except
from the introduction of IFRS 16, amendments to standards and
interpretations had no impact on the consolidated financial
statements of the Group.
Impact of initial application of IFRS 16 Lease
In the current year, the Group has applied IFRS 16 (as issued by
the IASB in January 2016) that is effective for annual periods that
begin on or after 1 January 2019. The Group has applied IFRS 16
from 1 January 2019 using the modified retrospective approach and
therefore the comparative information has not been restated and
continues to be reported under IAS17. The Group has land, office
premises and office equipment leases. The Group has made use of the
practical expedient available on transition to IFRS 16 not to
reassess whether a contract is or contains a lease. Accordingly,
the definition of a lease in accordance with IAS 17 and IFRIC 4
will continue to be applied to those contracts entered or modified
before 1 January 2019. The group applied the available practical
expedient to rely on its assessment of where leases are onerous
immediately before the date of initial application. Following
application of IFRS 16 as at 1 January 2019, the Group recognised
ROU assets and lease liabilities totalling GBP1.7 million, the
impact to on profit and loss opening retained earnings is
immaterial. Full details of the treatment will be provided in the
2019 Annual Report and audited financial statements.
Going concern
These unaudited summary financial statements have been prepared
on a going concern basis. The Board of Directors have undertaken a
rigorous assessment of the going concern assumptions using
committed case financial forecasts and considering a wide range of
downside scenarios. The projections prepared for the going concern
assessment are based on a cautious approach with only committed
income and expenditure included. For the going concern assessment,
the Board of Directors have considered the committed case for the
period to 31 December 2021.
As set out above, the Company have commenced a fundraising via a
placing of new shares to raise approximately GBP6 million. Whilst
the directors are confident that the placing will be completed,
until such time as the placing is completed and for an amount of at
least GBP3m, this represents a material uncertainty that will cast
significant doubt on the Group's ability to continue as a going
concern.
The forecasts indicate that if the fundraise of at least GBP3m
is successful, the Group is projected to operate within its cash
balances and available facilities for the forecast period.
Going concern assessment and reverse stress testing
The broader political and economic uncertainty coupled with the
potential future impact on the Group of the recent COVID-19
outbreak has been factored into the scenarios considered as part of
the Group's adoption of the going concern assumption.
In reaching its conclusion on the going concern assessment, the
Board of Directors also assessed forecasts of severe but plausible
downside scenarios related to our principal risks, including:
-- A review of the timing and risks included in the delivery of
major existing and potential contracts. In particular, the
directors considered the impact that extended restrictions as a
result of COVID-19 may have on the deployment of a turbine in
Nagasaki, Japan. Whilst a delay is not anticipated, a downside
scenario considered the impact of a 3 month delay to the
installation of the turbine. The Board of Directors are satisfied
that this is not expected to materialise due to mitigating actions
that have been taken to minimise risk in any slippage of delivery
date.
-- The directors considered the certainty of various sources of
funding and other income streams. In particular, the directors
assessed the conditions precedent to obtaining access to the GBP2m
funding from SIMEC and whilst satisfied that this funding will be
available in the going concern period, a downside scenario
considered the impact of a 2 month delay to this funding. The Board
of Directors are satisfied that this is not expected to materialise
as the formal test report is expected to be ready for submission in
August and evidence has been considered which indicate that the
conditions have been met.
-- The ability to manage and mitigate any material delay in the
financial close of the Uskmouth Power Station project. As funding
from the financial close is not within the control of management,
this has not been included in the going concern forecasts. However,
a downside scenario considered the impact of a delay to financial
close by way of increased running costs through the going concern
period.
Mitigating actions
In the event that cashflows are limited due to delays in the
Japanese contract milestone or delays in the receipt of the SIMEC
funds, the key mitigation available would be to further reduce the
Group's cost base, in particular the ability to delay key freight
and insurance costs associated with the Japanese project (to match
any delay caused by COVID-19), matching of expenditure on the
Uskmouth Power Station Project to projected financial close,
suspension of directors fees, and taking the full benefit of
payment terms with suppliers.
In addition, the following non-controllable mitigations could be
available to the Group, the benefits of which have not been
reflected in our going concern assessment:
-- The refinancing of certain corporate debt which would allow
for the release of additional restricted funds back into the
group
-- The successful application of Central and Local Government grants available
-- Access to additional funding
Liquidity headroom
In line with previous practice, the Company funds its short and
medium term funding requirements through a combination of equity
and debt. As noted above, the Company have commenced a fundraising
via a placing of new shares to raise approximately GBP6 million.
Details of the Group's loans and borrowings at year end can be
found in the statutory financial statements. As at the 31 December
2019, the only undrawn loan was the GBP2.0 million SIMEC
convertible loan which will be repayable in May 2022 and its
availability is subject to the satisfaction of defined targets
relating to the Uskmouth project. The only covenant is in respect
of the Group's long term debentures and relate to balance sheet
coverage which require the entity to have a total debt to asset
ratio of at least 1:2.8. Under all of the modelled scenarios,
positive liquidity headroom exists throughout the going concern
period and the Group remains in compliance with this covenant. In
the downside scenarios modelled as set out above, liquidity
headroom exists throughout the going concern period after taking
account of controllable, plausible mitigating actions.
Going concern conclusion
The Directors have identified a material uncertainty in relation
to going concern relating to the requirement to raise a minimum of
GBP3m by way of a placing of new shares. Whilst the directors are
confident that proceeds in excess of GBP3m will be raised, if these
minimum funds are not raised, the Company will not be able to
operate within available cash and debt facilities throughout the
going concern period. The Directors have concluded that should the
fundraising complete for an amount of at least GBP3m, this material
uncertainty will be removed. The Directors anticipate this
happening prior to the approval of the statutory financial
statements within the next 10 days. Having taken account of all the
factors above, the Directors have concluded that it remains
appropriate to prepare the financial statements on a going concern
basis. Accordingly, these financial statements do not include any
adjustments to the carrying amount or classification of assets and
liabilities that would result if the Group were unable to continue
as a going concern.
Acquisition of SIMEC GHR Limited ("GHR") and bargain purchase
gain
On 31 October 2019, the Company successfully completed the
acquisition of the whole of the issued share capital of GHR, a
company incorporated in the United Kingdom, from SIMEC GHR
Acquisitions Topco Limited a subsidiary of SIMEC Energy ("SIMEC"),
a member of the GFG Alliance. The acquisition was undertaken to
further diversify the Atlantis energy platform and combine the
project management and delivery expertise of the two companies
whilst bringing positive revenue streams to the Group.
Consideration for the purchase of the share capital was GBP1.
The acquired business contributed losses and revenue amounting to
GBP0.2 million and GBP0.5 million respectively to the Group's
results for the period from 31 October 2019 to 31 December 2019.
Had GHR been consolidated from 1 January 2019 then the Group's
consolidated loss before tax and consolidated revenue for the year
to 31 December 2019 would have been GBP39.2 million and GBP7.2
million respectively.
A purchase price allocation was conducted to determine the
valuation of the acquisition resulting in a fair value adjustment
to intangible assets. The bargain purchase was recognised as a
result of the business combination as follows:
GBP'000
Total consideration transferred
(GBP1) -
Fair value of identifiable
net assets 2,928
-------
Bargain purchase 2,928
-------
COVID-19 and events since the balance sheet date
On 30th January 2020 the spread of the Coronavirus (COVID 19)
was declared a public health emergency by the World Health
Organisation. The impact of COVID 19 did not materially impact the
Group in the year ended 31 December 2019 and in line with IAS 10
has been considered a non-adjusting post balance sheet event. We
have considered the impact of COVID-19 on the carrying value of the
Group's property, plant and equipment and intangible assets and
concluded there to be sufficient headroom in impairment
assessments. We have also considered the impact on the
recoverability of receivables. Furthermore, the impact of COVID 19
on the Group's ability to raise finance and potential delays to the
supply chain have been considered within the forecast scenarios
prepared by management to support the going concern assessment.
On 6(th) August 2020, we announced a proposed placing of the
Company's ordinary shares to raise net proceeds of approximately
GBP6 million to be conducted by way of an accelerated bookbuild
process. In addition to the placing, the Company has made
arrangements with PrimaryBid Limited for retail and other investors
to conditionally subscribe for the Company's ordinary shares
through the PrimaryBid platform. It is intended that the net
proceeds of the fundraising will be used to fund the Group's
working capital as well as to fund the investment in a new fuel
supply joint venture.
Important Notice
Certain statements in this announcement are forward-looking
statements which are based on the Company's expectations,
intentions and projections regarding its future performance,
anticipated events or trends and other matters that are not
historical facts. These forward-looking statements, which may use
words such as "aim", "anticipate", "believe", "could", "intend",
"estimate", "expect" and words of similar meaning, include all
matters that are not historical facts. These forward-looking
statements involve risks, assumptions and uncertainties that could
cause the actual results of operations, financial condition,
liquidity and dividend policy and the development of the industries
in which the Group will operate to differ materially from the
impression created by the forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties and other factors that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. Given
those risks and uncertainties, undue reliance should not be placed
on such forward-looking statements. Forward-looking statements
speak only as of the date of such statements and, except as
required by the Financial Conduct Authority, the London Stock
Exchange or applicable law, the Company undertakes no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SSESIMESSEDA
(END) Dow Jones Newswires
August 06, 2020 02:00 ET (06:00 GMT)
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