Final Results

RNS Number : 4606Z

Atlantis Resources Limited

27 May 2016

 

27 May 2016

ATLANTIS RESOURCES LIMITED

("Atlantis", the "Company" or the "Group")

Final Results

Atlantis Resources Limited, a vertically integrated turbine supplier and project owner in the tidal power industry, is pleased to announce its final results for the year ended 31 December 2015.

The full Annual Report and Group financial statements can be read and downloaded from the Company's website: http://www.atlantisresourcesltd.com

Financial highlights

·      Group generated a maiden profit of S$4.3 million, largely as a result of the gain from the acquisition of Marine Current Turbines Ltd ("MCT").

·      The consolidated group cash position at 31 December 2015 was S$25.6 million including S$16.5 million held at MeyGen Limited.

·      Net assets increased to S$120.8 million over the year from S$98.0 million.

·      In August 2015 Atlantis raised £2.5 million before expenses from new and existing shareholders to fund project development activities across the Atlantis portfolio and to secure opportunities for portfolio growth.

Operational highlights

·      In January 2015, construction works commenced at the MeyGen project in northern Scotland. The project is on track to deliver first power in 2016.

·      In July 2015, the Group completed the acquisition of MCT from Siemens AG. On completion of the acquisition, the Atlantis UK project portfolio was boosted by 50% and the turbine product offering expanded to include the SeaGen system.

·      In September 2015 Atlantis and DP Energy launched a partnership to develop a multi-turbine array at FORCE in Canada.

·      In September 2015 the laying of four subsea cables was completed at MeyGen. The cables will connect the tidal turbines to the onshore substation, from where the power will be fed into the wider grid.

·      In October 2015 we announced that the European Commission's Climate Change Committee had approved the transfer of €17 million of funding from the Kyle Rhea project to MeyGen. The funding will be applied to Phase 1B of MeyGen.

·      In December 2015 Atlantis agreed to acquire two projects comprising the 10MW Sound of Islay site in western Scotland and the 100MW Ness of Duncansby site from ScottishPower Renewables (UK) Limited ("SPR") for its Scottish tidal development company, Tidal Power Scotland Limited ("TPSL").

o  The consideration payable for the projects, which the Company values at £6.6 million, was 3,859,703 shares in TPSL, which equates to 6% of the issued share capital. The transaction completed in May 2016.

Post period end highlights

·      In April 2016 the Group announced a partnership agreement with Equitix, a market leading developer, investor and fund manager of infrastructure assets.

o  Under this agreement, Atlantis and Equitix will work together to advance Atlantis's portfolio of tidal power projects in Scotland, which represent a combined potential capacity of almost 650MW.

o  Equitix intends to acquire at least 25% of each Atlantis project vehicle at financial close of that project.

·      In April 2016 Atlantis announced an agreement in principle to sell a minority stake in TPSL to DEME subject to the successful completion of several conditions precedent that we are working hard in an attempt to satisfy in the coming weeks.

o    DEME has agreed to pay Atlantis £2 million in cash consideration for a 2% stake in TPSL and a right to contribute equity funding to the Sound of Islay project.

·      In April 2016 Atlantis raised approximately £6.5 million before expenses from new and existing shareholders to fund project development activities across the Atlantis project portfolio and working capital.

·      In April 2016 Atlantis announced that it has entered into a memorandum of understanding with SBS, a privately owned international marine, subsea and renewable energy developer to establish a joint venture to develop a 150MW tidal stream site in Indonesia.

Tim Cornelius, Chief Executive of Atlantis Resources Limited commented:

"2015 has been a year of amazing progress for Atlantis culminating in the Company's maiden profit. I am pleased that we have been able to make great strides in furthering the development of the tidal stream industry in the UK and beyond. We commenced construction of the world's largest commercial tidal array, remain on track to deliver our new 1.5 MW AR1500 turbine to Phase 1A of the project for installation in 2016 and have managed to consolidate the industry in the UK via two well timed, strategic acquisitions from Siemens and ScottishPower Renewables.

"We have started 2016 where we left off in 2015 and the announcement of our partnership agreement with Equitix represented a major turning point in the transition from demonstration projects to the deployment of commercial scale arrays. Furthermore, the proposed sale of our stake to DEME brings a key long-term strategic partner for the future build out of our project portfolio. We are striving to satisfy the conditions required to complete the transaction. There is no doubt that 2016 will be an exciting year for the Company and its shareholders as well as the wider tidal sector, as our flagship MeyGen project delivers first power to the grid."

Enquiries: Atlantis Resources	[phone]
Tim Cornelius, Chief Executive Officer
Simon Counsell, Chief Financial Officer
Peel Hunt LLP (Nominated Adviser and Broker)	[phone]
Adrian Trimmings Jock Maxwell Macdonald Euan Brown
FTI Consulting	[phone]
Ben Brewerton Alex Beagley Stephanie Blott James Styles

 

CHAIRMAN'S STATEMENT

2015 has been another year of firsts for the Atlantis Group and for the tidal industry as a whole and we have seen this continue during the first months of 2016.

January 2015 marked the commencement of construction on our flagship MeyGen project, for which we were successful in securing funding in 2014. This is the first 6MW phase in developing a site with the potential for almost 400MW of capacity - enough to power an estimated 175,000 homes with predictable and emissions free generation.

The initial construction works focused on MeyGen's onshore site, close to John o' Groats in north eastern Scotland. From this site our team of contractors drilled a set of four bores, each approximately half a kilometre in length, which pass under the rocky coastline and emerge on the seabed. This paved the way for the first part of the offshore construction works in September 2015, when four cables (with an aggregate length of some 11 kilometres) were laid through these bore holes and along the seabed to the turbine locations. Each of the four turbines will be connected to one of the cables which will allow for the electricity generated to be exported to shore for connection into the distribution grid. This connection will happen in the onshore control centre, construction of which is also close to completion.   We are now working hard with our team of contractors to prepare for installation of the remaining offshore project infrastructure later this year. In northern Scotland fabrication continues apace on the huge steel foundation structures and the two hundred tonne ballast blocks which together will hold the turbines in position on the seabed. Just south of the border the Atlantis turbine is being readied for its onshore testing programme, whilst the first turbine from Andritz Hydro Hammerfest nears completion at the Andritz factory in Germany.

We are always looking ahead to our next challenge, and it was with future project development in mind that we announced in December 2015 our agreement with SPR to bring the Sound of Islay and Ness of Duncansby projects into our portfolio and to welcome SPR as our fellow shareholder in our Scottish project vehicle, TPSL, which also owns the majority of MeyGen. Earlier this year we announced that we had reached agreement with DEME Concessions NV, part of the giant DEME offshore construction group, to sell a further minority stake in TPSL, thus gaining an important strategic shareholder, subject to achieving various conditions and securing the necessary consents. As I write we are continuing to work hard on achieving those conditions. We've also entered into an exciting partnership agreement with Equitix Limited in respect of future financing of our Scottish project pipeline.

Due to its strong governance framework that aims to follow the principles embedded in the QCA Guidelines, Atlantis is able to run its operations in a fair, transparent and sustainable way for the benefit of its shareholders, employees and the general community as a whole. We are now on the cusp of realising our ambition of providing sustainable and predictable green energy on a commercial scale, and when I write my statement this time next year I expect MeyGen Phase 1A to be generating electricity for distribution to the Scottish grid.

Finally, I would like to thank the Atlantis staff and my fellow directors for all of their hard work in delivering on our objectives, and to thank our shareholders and other key stakeholders whose continuing support we very much appreciate,

ANNUAL GENERAL MEETING

Our Annual General Meeting will be held on 30 June 2016 and the notice of meeting accompanies this annual report. I look forward to this opportunity to meet our shareholders and to discuss our performance and the opportunities which lie ahead.

John Mitchell Neill

Chairman

26 May 2016

 

CHIEF EXECUTIVE OFFICER'S STATEMENT

PROFILE

Atlantis Resources Limited, a global leader in the tidal power sector, is focused on two core business areas - the development of projects and the supply of turbines and associated equipment, both to third parties and to our own projects. Following the acquisition of the MCT group in July 2015 we now have the biggest portfolio of agreements for lease for UK project sites, and we're actively looking to build our pipeline in Asia, North America and Australasia. We're working hard to ensure we build relationships with the right project partners to help us deliver these opportunities and replicate our success in bringing Phase 1A of the MeyGen project to financial close and into construction.

Projects

During the first half of 2015, we reached agreement with Siemens AG for the acquisition of the MCT group, which has long been at the forefront of the tidal sector. We completed the acquisition in July, gaining a first class team of engineers and project developers with the knowledge and experience derived from the long term operations of the 1.2MW SeaGen system in Strangford Lough in Northern Ireland, and boosting our portfolio of UK development sites by some 50%. In September we announced that we had teamed up with DP Energy in a joint venture for development of our berth at the Fundy Ocean Research Centre for Energy in Canada, whilst in the UK we completed the first major offshore works at the MeyGen project with the successful installation of the power export cables.

In October we received confirmation from the European Commission that €17 million of grant funding from the NER300 clean energy scheme could be transferred to the next phase of the MeyGen project, and in December we reached agreement with SPR for the acquisition of the Sound of Islay project, which has also been awarded €21 million of funding through the same programme. We're now working hard to achieve financial close on these two projects, which have grid connection agreements and consents in place.

Turbines

The turbine delivery team is preparing for the onshore testing programme for the 1.5MW AR1500 turbine, which will be one of the four turbines installed at the MeyGen site in the first phase of project roll-out. In parallel, we continue to finalise the design of the StreamTec foundation system for MeyGen Phase 1B, which we have been developing through our contract with the Energy Technologies Institute ("ETI") in pursuit of a shared goal to reduce the cost of energy for the future.

SUMMARY OF RESULTS

Atlantis recorded a profit for the year ending 31 December 2015 of S$4.3 million, an increase of S$20.5 million on the prior year's loss. The primary reasons for the increase are the gain resulting from the MCT acquisition and the gain on disposal of the 50% stake in Atlantis Operations Canada Limited ("AOC").

Revenue for the year ended 31 December 2015 was approximately S$2.9 million, lower than S$5.3 million last year. Both were derived predominantly from the provision of consulting services in relation to the contract with ETI, which has the objective of reducing capital cost for tidal energy projects.

The MCT acquisition resulted in a bargain purchase gain of S$19.3 million reflected in "Other gains". The bargain purchase gain arises mainly from the fair valuation of the MCT turbine technology and seabed options.. Grant income contributed S$6.0 million. The gain arising from the disposal of a 50% stake in AOC to DP Energy Group and a re-measurement gain on the remaining 50% stake upon the formation of the joint venture partnership, in total S$1.9 million, is also included in "Other gains".

Total expenses for the year were S$25.2 million, an increase from S$19.8 million in the prior year. The higher expense is mainly due to the impairment of the AR1000 turbine, which is considered obsolete. Higher employee expenses as a result of the acquisition of MCT and its group of subsidiaries from Siemens AG also contributed to the increase in expenses.

The Group's assets stand at S$191.6 million, an increase of S$45.0 million from the previous year. This primarily results from the fair valuation of MCT's assets upon acquisition and the capitalised development costs of Phase 1A of the MeyGen project. Total liabilities also increased by S$22.3 million from 2014, mainly because of drawdowns of the MeyGen financing, increased borrowings and provision for decommissioning costs acquired as a result of the MCT acquisition.  Total equity attributable to owners of the Company rose to S$120.7 million as at 31 December 2015 from S$98.0 million as at 31 December 2014.

Net cash used in operating and investing activities was S$55.3 million, an increase of S$19.5 million on the previous year, again largely driven by the investment in capital items for the MeyGen project. Net cash from financing activities was S$53.2 million of which S$27.9 million was proceeds from grants, S$16.3 was from borrowings and S$5.5 million was from issuance of shares. Total cash and cash equivalents as at 31 December 2015 stood at S$25.6 million, of which S$4.3 million is encumbered, compared with S$29.2 million, of which S$6.2 million was encumbered, as at 31 December 2014.

Timothy James Cornelius

Chief Executive Officer

26 May 2016

 

FINANCIALS

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Year ended 31 December 2015

	2015	2014
	S$'000	S$'000
Revenue	2,889	5,279
Other gains	27,913	1,129
Employee benefits expenses	(9,734)	(7,016)
Other operating expenses	(5,573)	(5,375)
Subcontractor costs	(1,292)	(3,363)
Depreciation and amortisation	(3,301)	(3,185)
Impairment loss on property, plant and equipment	(3,951)	-
Research and development costs	(1,299)	(840)
Total expenses	(25,150)	(19,779)
Results from operating activities	5,652	(13,371)
Finance costs	(1,290)	(2,835)
	4,362	(16,206)
Share of results of equity-accounted investees	(103)	-
Profit/(Loss) before tax	4,259	(16,206)
Tax credit	-	11
Profit/(Loss) for the year	4,259	(16,195)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations	553	996
Related tax	-	-
Other comprehensive income for the year, net of tax	553	996
Total comprehensive income for the year	4,812	(15,199)
Profit/(Loss) attributable to:
Owners of the Group	4,413	(16,195)
Non-controlling interests	(154)	-
Total comprehensive income attributable to:
Owners of the Group	5,096	(15,199)
Non-controlling interests	(284)	-
Earnings/(Loss) per share
Basic and diluted earnings/(loss) per share (S$)	0.04	(0.22)

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 December  2015
		2015	2014
		S$'000	S$'000
Assets
Property, plant and equipment		85,947	70,508
Intangible assets		64,718	43,194
Investment in joint venture		442	-
Loan to joint venture		1,903	-
Non-current assets		153,010	113,702
Trade and other receivables		12,972	3,719
Cash and cash equivalents		25,645	29,247
Current assets		38,617	32,966
Total assets		191,627	146,668
Trade and other payables		17,721	18,562
Provisions		4,257	795
Loans and borrowings		4,448	-
Current liabilities		26,426	19,357
Liabilities
Loans and borrowings		36,479	21,375
Deferred tax liabilities		8,006	7,905
Non-current liabilities		44,485	29,280
Total liabilities		70,911	48,637
Net assets		120,716	98,031
Equity
Share capital		199,659	185,500
Capital reserve		11,917	11,448
Translation reserve		963	280
Option fee		10	10
Share option reserve		6,763	4,932
Accumulated losses		(108,354)	(112,767)
Total equity attributable to owners of the Company		110,958	89,403
Non-controlling interests		9,758	8,628
Total equity		120,716	98,031

		Share capital	Capital reserve	Translation reserve	Option fee	Share  option reserve	Accumulated losses	Total	Non- controlling interest	Total
		S$'000	S$'000	S$'000	S$'000	S$'000	S$'000	S$'000	S$'000	S$'000
Group
At 1 January 2014		114,906	-	(716)	10	3,994	(96,572)	21,622	-	21,622
Total comprehensive income for the year
Loss for the year		-	-	-	-	-	(16,195)	(16,195)	-	(16,195)
Other comprehensive income		-	-	996	-	-	-	996	-	996
Total comprehensive income for the year		-	-	996	-	-	(16,195)	(15,199)	-	(15,199)
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Issue of ordinary shares		32,758	-	-	-	-	-	32,758	-	32,758
Conversion of convertible loans into shares during public offering		37,836	-	-	-	-	-	37,836	-	37,836
Recognition of share-based payments		-	-	-	-	938	-	938	-	938
Changes in ownership interest in subsidiary
Dilution of interest in a subsidiary without change in control		-	11,448	-	-	-	-	11,448	8,628	20,076
Total transactions with owners		70,594	11,448	-	-	938	-	82,980	8,628	91,608
At 31 December 2014		185,500	11,448	280	10	4,932	(112,767)	89,403	8,628	98,031

 

		Share capital	Capital reserve	Translation reserve	Option fee	Share  option reserve	Accumulated losses	Total	Non- controlling interest	Total
		S$'000	S$'000	S$'000	S$'000	S$'000	S$'000	S$'000	S$'000	S$'000
Group
At 1 January 2015		185,500	11,448	280	10	4,932	(112,767)	89,403	8,628	98,031
Total comprehensive income for the year
Profit for the year		-	-	-	-	-	4,413	4,413	(154)	4,259
Other comprehensive income		-	-	683	-	-	-	683	(130)	553
Total comprehensive income for the year		-	-	683	-	-	4,413	5,096	(284)	4,812
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Issue of ordinary shares		14,159	-	-	-	-	-	14,159	-	14,159
Recognition of share-based payments		-	-	-	-	1,831	-	1,831	-	1,831
Changes in ownership interest in subsidiary
Dilution of interest in a subsidiary without change in control		-	469	-	-	-	-	469	1,414	1,883
Total transactions with owners		14,159	469	-	-	1,831	-	16,459	1,414	17,873
At 31 December 2015		199,659	11,917	963	10	6,763	(108,354)	110,958	9,758	120,716

CONSOLIDATED STATEMENT OF CASH FLOWS Year ended 31 December 2015
		2015	2014
		S$'000	S$'000
Cash flows from operating activities
Profit/(Loss) before tax		4,259	(16,206)
Adjustments for:
Bargain purchase arising from business combination		(19,270)	-
Gain on disposal of subsidiary		(947)	-
Re-measurement gain on investment retained in the former subsidiary		(947)	-
Grant income		(5,953)	(668)
Impairment loss on property, plant and equipment		3,951	-
Depreciation of property, plant and equipment		75	37
Amortisation of intangible asset		3,226	3,148
Interest expense		1,290	2,835
Share-based payments		1,831	938
Provisions reversed during the year		316	(309)
Share of loss of joint venture, net of tax		103	-
Net foreign exchange		(548)	727
Operating cash flows before movements in working capital		(12,614)	(9,498)
Movements in trade and other receivables		237	(2,411)
Movements in trade and other payables		(2,784)	7,574
Net cash used in operating activities		(15,161)	(4,335)
Cash flows from investing activities
Purchase of property, plant and equipment		(38,340)	(27,361)
Expenditure on project development		(2,508)	(4,080)
Cash received from disposal of subsidiary		545	-
Acquisition of subsidiary, net of cash acquired		117	-
Net cash used in investing activities		(40,186)	(31,441)
Cash flows from financing activities
Proceeds from grants received		27,922	4,990
Proceeds from issue of shares		5,541	35,558
Share issuance cost		(277)	(2,800)
Proceeds from borrowings		16,290	7,293
Repayment of borrowings		-	(2,400)
Deposits released/(pledged)		1,798	(4,446)
Interest paid		-	(262)
Non-controlling interest		1,883	20,076
Net cash from financing activities		53,157	58,009
Net (decrease)/increase in cash and cash equivalents		(2,190)	22,233
Cash and cash equivalents at 1 January		23,089	908
Effect of foreign exchange rate changes on the balance of cash held in foreign currencies		386	(52)
Cash and cash equivalents at 31 December		21,285	23,089

 

Further detail may be read and downloaded from the company website: http://www.atlantisresourcesltd.com/company-documents.html

Annual General Meeting

Atlantis also announces that a Notice will be sent to shareholders today to convene the Annual General Meeting ("AGM") of the company.

The AGM will be held at the offices of Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA at 10:00 a.m. (London time) on Thursday, 30 June 2016. The AGM Notice is also available on the company's website: http://www.atlantisresourcesltd.com/company-documents/notices.html.                                                                                                                                                   

 

END

 

 

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