Simec Atlantis Energy : 2022 Interim Financial Statements

SIMEC Atlantis Energy Limited

Registration Number: 200517551R

Consolidated Interim Financial Statements

(unaudited)

For the six months ended 30 June 2022

Contents

Chairman's Statement

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Consolidated Interim Financial Statements

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Notes to the Consolidated Interim Financial Statements

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Company Information

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Chairman's Statement

SIMEC Atlantis Energy Limited ("SAE") moved in to 2022 having made significant structural changes to the business with a clear focus on delivering on our strategy for developing alternative energy solutions.

Uksmouth Energy Park

Following our termination of the Uskmouth Power Station conversion project, the Group has decided to redevelop the site into a sustainable energy park. In May we were very pleased to announce the first phase of this redevelopment with an agreement with Energy Optimisation Solutions to establish a 230MW Battery Energy Storage System (BESS) facility at the site. This project is proceeding on schedule with the first key milestone achieved in August 2022 and financial close expected in the first quarter of 2023. We are exploring opportunities to further develop the sustainable energy park at the Uskmouth site and maximise value to shareholders.

We are also looking at opportunities to leverage the expertise gained in the development of our Uskmouth conversion project at potential sites in eastern Europe. While the war in Ukraine has created immediate energy supply challenges, it has also highlighted the importance of diversifying energy sources and improving energy security across Europe. This will improve the attractiveness of our proposition to repurpose existing power generation facilities to utilise waste derived fuel pellets in place of coal. We look forward to bringing forward these projects for development in due course.

Marine Energy

MeyGen Phase 1

The MeyGen operating array has made significant progress this year with the successful redeployment of the AR1500 turbine in March and one of the Andritz turbines in September following a period of technical challenges for the project so that at the date of this report three of the four MeyGen turbines are in full operation.

The project remains on schedule to re-deploy the final turbine in March 2023. This turbine will be retrofitted with a wet mate connection system, which more than halves the costs of future turbine recoveries and deployments.

This will return the Phase 1 array to full power, demonstrating tidal technology at commercial scale in support of the 28MW Phase 2 development.

MeyGen Phase 2

In November 2021, the UK Government announced "ring fenced" funding support for tidal power and a commitment for ongoing support for the development of the tidal power sector. We were very pleased to announce that MeyGen had successfully secured a Contract for Difference (CfD) in the Allocation Round 4 announced by the UK government on 7th July which guarantees MeyGen Phase 2 a power price of £178.54 (£/MWh) for 15 years and will allow SAE to deliver 28MW of clean, predicable power. The award represented the highest capacity allocation to a single site and will create the world's largest tidal array of 34MW, reaffirming MeyGen as the global home of tidal stream energy. We are working to achieve financial close for this next phase in 2024 with operation expected to start in 2027.

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The MeyGen project remains a key priority for the group and we look forwards to further develop the site through future CfD rounds.

Funding

As noted in the recent going concern statement in SAE's final results for the year ended 31 December 2021, 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.

Summary of Results

The overall loss before tax of £8.6 million for the six months ended 30 June 2021 compares to a loss of £10.7 million reported for the same period in 2021. The reduction in loss compared to the corresponding period last year was mainly as a result of the restructuring implemented during the second half of 2021 that resulted in a significant reduction in costs and various asset impairments. However, the results were adversely impacted by the service outages of three of the four turbines at MeyGen during the first half of this year. The position is expected to improve during the second half of the year with contributions from the two turbines that have been successfully redeployed in March and September. The results for the interim period also exclude GHR, the hydro projects development business that was disposed of in December 2021.

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

The unaudited consolidated cash position of the Group at 30 June 2022 was £4.1 million (30 June 2021: £3.8 million). Included in cash and cash equivalents in the statement of financial position are encumbered deposits of £0.8 million (30 June 2021: £1.5 million).

Duncan Black

Chairman

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SIMEC Atlantis Energy Limited

Consolidated Interim Financial Statements

For the six months ended 30 June 2022

Condensed consolidated statement of profit and loss and other comprehensive income

For the six months ended 30 June 2022

			Group
		Six months ended
		30 June	30 June
	Note	2022	2021
		£'000	£'000
Revenue		1,266	5,203
Other gains and losses		2,167	696
Employee benefits expense		(1,323)	(3,153)
Subcontractor costs		(3,067)	(4,237)
Depreciation and amortisation		(4,037)	(5,378)
Acquisition costs		-	-
Other operating expenses		(1,675)	(2,154)
Total expenses		(10,102)	(14,922)
Results from operating activities		(6,669)	(8,991)
Finance costs		(1,933)	(1,741)
Loss before tax		(8,602)	(10,732)
Tax (charge)/ credit		(1)	(943)
Loss for the period		(8,603)	(11,675)
Other comprehensive income:
Items that are or may be reclassified
subsequently to profit or loss
Exchange differences on translation of foreign
operations		16	34
Total comprehensive income for the period		(8,587)	(11,641)
Loss attributable to:
Owners of the Group		(7,859)	(10,915)
Non-controlling interests		(744)	(760)
Total comprehensive income attributable
to:
Owners of the Group		(7,843)	(10,881)
Non-controlling interests		(744)	(760)
Loss per share (basic and diluted) (pence)	5	(0.01)	(0.01)

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