Last checked at 2 Jun 2014 07:00
2 June 2014
ATLANTIS RESOURCES LIMITED
Final Results
London - Atlantis Resources Limited ("Atlantis"), a vertically integrated turbine supplier and project owner in the tidal power industry, is pleased to announce its maiden final results for the year ended 31 December 2013.
The full Annual Report and group financial statements can be read and downloaded from the company website: http://www.atlantisresourcesltd.com/company-documents/annual-reports.html
Highlights
Projects
· In March 2013, The Highland Council announced that it would grant planning permission for the onshore works required for the MeyGen project. This was followed in September 2013 by confirmation from the Scottish government of the award of the offshore consents for the first 86MW of capacity
· Following award of the consents, Atlantis reached agreement with its fellow shareholders in MeyGen, Morgan Stanley and International Power Marine Developments, to regain full ownership of the project company. Atlantis will now capitalise on over five years of project planning and engineering to bring this milestone development to construction. Construction of Phase 1A of the MeyGen project is expected to commence in the second half of 2014, with first power expected in 2016
Turbine technology
· In September 2013, Atlantis and Lockheed Martin Corporation signed a detailed design and systems integration contract for the AR1500, and this programme of work was formally commenced in March 2014
· In October 2013, Atlantis completed a £3.4 million programme of work for the Energy Technologies Institute. Working with 100 industry participants, Atlantis identified a system architecture which could offer a 50% reduction in the cost of tidal energy
· During 2013, the Atlantis engineering team completed the front end design for the AR1500, in readiness for commencing detailed design with its component suppliers and Lockheed Martin
· Atlantis was awarded a consulting contract with Carnegie Wave Energy Limited for analysis of array configurations to reduce the cost of wave energy
Strategic relationships
· In January 2013, Atlantis signed a strategic agreement with Dongfang Electric Machinery Co. Ltd, under which Dongfang committed to a turbine supply price of US$3 million for commercial production of the AR1500, more than 40% less than the cost of initial turbine units from European manufacturers
· In September 2013, Atlantis and Lockheed Martin strengthened their longstanding relationship under a teaming agreement, through which Lockheed committed to investing US$10 million in technology and projects with Atlantis
Funding and revenue
· In January 2013, Atlantis shipped US$2 million of onshore electrical and control equipment to China under a supply agreement with the China Energy Conservation and Environmental Protection Group, which is leading a project to deploy an Atlantis 1MW turbine in the Zhejiang province in 2014
· In February 2013, the UK's Energy and Climate Change Minister announced that the MeyGen project would be awarded a £10 million grant from the Marine Energy Array Demonstrator scheme
· In February 2014, Atlantis announced that it had been awarded €7.7 million for the development of a multi-turbine array at the MeyGen site, following a grant application to the European Commission's Seventh Framework Programme during 2013
Tim Cornelius, Chief Executive of Atlantis Resources Limited commented:
"2013 was a transformational year for Atlantis Resources in which many corporate milestones were achieved and subsequently the decision was taken to pursue an IPO on the London Stock Exchange. Following the successful fundraising and admission to AIM in February 2014, the group is well placed to continue the development of its cornerstone MeyGen project in Scotland, the world's largest tidal energy power project.
We have made significant progress since February in finalising the construction and supply contracts for MeyGen, and in reaching agreement with the project funding syndicate in readiness for financial close and the commencement of construction for Phase 1A in H2 2014. Excellent progress has been made on the detailed design of our AR1500 turbine with Lockheed Martin with the program on track for completion in October of this year and the first AR1500 turbine to be installed at MeyGen in H2 2015.
Further, our other key supplier, Andritz Hammerfest Hydro, remains on schedule to deliver turbines on time and to budget and post IPO, we have also announced a number of significant strategic alliances with large multinational corporations which will allow us to broaden our product and service offering in the future.
It is exciting times for Atlantis Resources Limited".
For further information please contact:
Atlantis Resources Limited | via FTI Consulting |
Tim Cornelius, Chief Executive Officer | |
Duncan Black, Chief Financial Officer | |
N+1 Singer Advisory LLP | +44 (0) 20 7496 3000 |
Andrew Craig / Ben Wright / Alex Wright | |
FTI Consulting | +44 (0) 20 3727 1000 |
Ben Brewerton / Alex Beagley / James Styles |
CHAIRMAN'S STATEMENT
Having successfully become the world's first tidal energy company to float on London's AIM in February this year, we now look forward to an exciting twelve months of project execution and pipeline growth. In our AIM admission document we set out a number of key milestones for the company, and the management team is committed to achieving these. We continue to progress well towards commencement of construction during 2014 on MeyGen, Europe's largest planned tidal power project, and we have recently announced the support of key strategic partners including Lockheed Martin Corporation and Dongfang Electric Machinery Co. Ltd, who will assist us in realising our ambition to be the world's leading developer of tidal power projects and tidal turbine technologies. Their domain expertise, size and global presence will augment the team of experts we have in-house, and which we are now consolidating in the new engineering centre of excellence that we are establishing in Edinburgh with the assistance of a £2 million loan from Scottish Enterprise's Renewable Energy Investment Fund.
We were also recently able to announce grant funding support of €7.7 million through the European Commission towards the development of a multi-turbine array on the MeyGen site. This programme, in conjunction with the industry leading research we are undertaking as part of the Energy Technology Institute's Tidal Energy Converter project, should ensure that Atlantis remains at the forefront of tidal energy technology development.
Our newly strengthened relationship with Dongfang is another important step in achieving our technology goals. Dongfang is one of China's largest manufacturers of electro-mechanical equipment, and will be assisting us in the onshore testing of our AR1000 turbine before it is installed offshore later this year. We've also extended our collaboration through an agreement for Atlantis to act as a sales agent for Dongfang's other product lines, including traditional hydro, tidal range and pumped storage equipment. This reflects Dongfang's recognition of our capabilities in global project origination, and creates a new revenue stream for us through sales commission.
BOARD OF DIRECTORS
2013 saw the departure of several valued and long-serving directors to make way for new non-executive directors in readiness for our admission to AIM. I would like to take this opportunity to thank Ian Potter, Nick Elliot and Basil McIlhagga for their service to the company, and to thank Kim Manley for his long tenure as Chairman of the Board. I was honoured to take over this role from Kim, and to welcome my fellow new non-executive directors, Mike Lloyd and Ian Macdonald, each of whom has a wealth of experience to offer for the benefit of shareholders and the executive team.
ANNUAL GENERAL MEETING
Our Annual General Meeting will be held on 30 June 2014 and the notice of meeting will accompany our annual report. I look forward to the opportunity to meet as many of our shareholders as possible at this, our first meeting as a public company.
John Neill
Chairman
2 June 2014
CHIEF EXECUTIVE OFFICER'S STATEMENT
PROFILE
Atlantis Resources Limited is a vertically integrated turbine supplier and project developer in the tidal power industry. We hold interests in a diverse portfolio of tidal stream development projects, including 100% ownership of MeyGen Limited, the company developing the MeyGen project in Scotland. This is the largest consented tidal stream power project in Europe, and we are on track to commence construction of the first phase in 2014. Alongside our project development interests, we own a portfolio of patents and patent applications relating to tidal power generation and we provide tidal generation equipment and engineering services to third party developers and research institutions as well as to projects which we have originated.
It is my belief that our combination of rigorously developed technology and a geographically diverse project portfolio has positioned the company well for future growth. Atlantis has exclusive agreements with a range of international industrial partners; we are working with Lockheed Martin Corporation to complete the detailed design and systems integration of our 1.5MW AR1500 turbine, and we have a path to future low cost manufacturing through our strategic agreement with Dongfang Electric Machinery Co. Ltd. In the projects sphere, we've teamed up with the China Energy Conservation and Environmental Protection Group in China, with Lockheed Martin in Canada and with Gujarat Power Corporation Limited in India, and we're working with The Crown Estate, the Department of Energy and Climate Change and the Scottish government for the delivery of the MeyGen project in Scotland.
BUSINESS MODEL
Our business model focuses on the development of multiple revenue streams across a global marketplace from a combination of government, private developers and utilities via turbine and hardware sales, proceeds from the sale of project development rights, consulting contracts, grants and industry sponsored research and development programmes. Following on from signature of our agreement with Dongfang to act as sales agent for other renewable energy technology, we have reached a similar arrangement with RusHydro, one of Russia's largest power generation companies, to identify and pursue opportunities for its tidal barrage system. We principally aim to derive revenue through three main channels:
1. Turbines and associated technology
2. Project development rights
3. Consultancy and project management services
To support and develop these revenue streams, we have five central business functions:
Technology development and delivery
One of our two core business activities is selling tidal power turbine systems to utility customers and project developers. The technology development team, numbering 15 and located in the UK and Singapore, is responsible for the design and delivery of the Atlantis turbines and for continuing research and development in components and turbine systems. This can involve prototyping and testing for novel components and manufacturing processes and includes the management of any associated intellectual property. The in-house team coordinates and manages a portfolio of subcontractors during design and delivery, including, for the AR1500 design, Lockheed Martin, Garrad Hassan, The Switch and Involution.
Project development
Our other core business is tidal power project development, for which we are recognised as a leading project developer in the tidal power sector. Our project development division, currently comprising a team of 7, has taken the MeyGen project from a greenfield, undeveloped site through to a fully permitted project, including front end engineering design, grid connection and environmental consenting for the first 86MW, and continues to identify resource rich locations at which to replicate this process. For new markets, we expect to continue to be a significant shareholder in the relevant project company during the demonstration phase, which would typically comprise deployment and operation of one to ten turbines, in order to prove the technical and commercial viability of the site. Having secured future turbine supply rights, we would then expect to sell on our stake in the project company to recover the investment as well as an additional developer's premium. Our project development team has already originated over 400MW of planned projects and will continue to be a decisive factor for Atlantis in the future, providing a sales channel for tidal turbine systems, opening new markets and attracting new clients internationally. Atlantis holds 100% of the equity in MeyGen in Scotland, and interests in the Mundra project in India and the FORCE project in Canada.
Consulting
During 2014, it is our aim to build a dedicated consulting team to provide resource analysis, techno-economic feasibility, engineering design and offshore management services to clients either at the preliminary stages of assessing the economic potential of a project location or during more mature project development. These services are currently provided through the technology development and delivery team, but a dedicated unit will allow active pursuit of consulting opportunities and hence growth of this revenue stream. The consulting team will work closely with the project development team to provide expertise through greenfield development and, subsequently, to the project company during development and construction. The consulting team will be able to draw on additional resources from the technology development and delivery team on a contract to contract basis.
Sales and marketing
To promote sales of turbines, consultancy services and project development rights, we engage in sales and marketing efforts globally, responding to tenders and requests for proposals and initiating proactive efforts to promote tidal power generation within target resource rich markets. Our sales and marketing team, comprising 4 staff, works with governments to promote public policy that catalyses investment in marine power projects, including financial incentives, such as feed-in-tariffs, tax incentives and capital grants, and seabed ownership policy, such as leasing rounds, permitting procedures and development rights. In combination these create a domestic investment climate that is attractive to project sponsors and owner/operators, which are then targeted by the sales and marketing team with the ultimate goal of executing a turbine sales agreement for the supply of tidal turbines to be deployed at their project locations. The turbine sales process typically has a long decision timeline, and therefore the project development and consulting teams play an important role in order cultivation and client relationship management during the initial feasibility assessment and permitting phase. More importantly, we aim to control key tracts of seabed through early stage origination in order to limit the possibilities for other companies to enter the market in these locations, despite their turbine development activities. We expect this to give us a competitive advantage that is difficult to displace or replicate at attractive sites.
Corporate services
The corporate services team is responsible for support functions to enable the smooth running of the Atlantis group. This team manages the in-house accounting and finance functions and maintains oversight of the outsourced delivery of legal, human resources and information technology services.
SUMMARY OF RESULTS
Revenue in the year to 31 December 2013 was derived from the sale of equipment to CECEP Ocean Energy for its demonstration project in China, and from the provision of consulting services, including Phase 1 of the Energy Technologies Institute project for cost reduction in tidal energy. The company's total revenue for the financial year ended 31 December 2013 was approximately S$6.2 million.
Our acquisition of the equity in MeyGen which we did not previously own gives Atlantis control of the entire MeyGen project. During the engineering and consenting phase, the project has not generated any revenue from power sales. However, as the project matures, and turbine deployment commences, operating revenue is expected to accrue and the carrying value of the project is expected to have a significant effect on our balance sheet in the short, medium and longer term.
The company commissioned an independent valuation of MeyGen which resulted in a release of S$16.7 million of negative goodwill to income being recognised in the statement of profit or loss and other comprehensive income, within other gains and losses, partially offset by additional interest expense on loans resulting from conversion and fair value adjustments of S$12.0 million. The majority of the fair value adjustment surrounded the sea bed option, further details of which are provided in the notes to the financial statements.
The net cash used in operating and investing activities was S$10.3 million, a S$1.8 million increase from the previous period. Net cash from financing activities for the year was S$8.8 million of which S$3.6 million was the proceeds from the issue of shares and S$5.2 million from borrowings. The additional loans entered into by the company in 2013 converted to equity on the successful admission to the London AIM exchange.
Timothy Cornelius
Chief Executive Officer
2 June 2014
FINANCIALS
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Year ended December 31, 2013
2013 | 2012 | ||||
S$'000 | S$'000 | ||||
Revenue | 6,190 | 3,003 | |||
Cost of sales | (4,918) | (2,489) | |||
Gross profit | 1,272 | 514 | |||
Operating expenditure | (11,786) | (9,230) | |||
Depreciation and amortisation | (3,201) | (3,413) | |||
Operating loss | (13,715) | (12,129) | |||
Other gains and losses | 19,410 | (516) | |||
Finance costs | (15,360) | (2,395) | |||
Loss before tax | (9,665) | (15,040) | |||
Income tax (expense) benefit | (11) | 66 | |||
Loss for the year | (9,676) | (14,974) | |||
Other comprehensive income: | |||||
Items that may be reclassified subsequently to profit or loss | |||||
Exchange differences on translation of foreign operations | (1,975) | 814 | |||
Other comprehensive income for the year, net of tax | (1,975) | 814 | |||
Total comprehensive income for the year | (11,651) | (14,160) | |||
Losses attributable to: | |||||
Owners of the group | (9,676) | (14,974) | |||
Total comprehensive income attributable to: | |||||
Owners of the group | (11,651) | (14,160) | |||
Loss per share | |||||
Basic and diluted loss per share (S$) | (0.26) | (0.41) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
December 31, 2013
2013 | 2012 | ||||
S$ '000 | S$ '000 | ||||
ASSETS | |||||
Non-current assets | |||||
Available-for-sale investments | - | 1,350 | |||
Property, plant and equipment | 3,007 | 4,448 | |||
Intangible assets | 44,040 | 41,984 | |||
47,047 | 47,782 | ||||
Current assets | |||||
Cash and cash equivalents | 2,620 | 2,338 | |||
Trade and other receivables | 1,601 | 480 | |||
Other assets | 37,052 | - | |||
41,273 | 2,818 | ||||
Total assets | 88,320 | 50,600 | |||
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Trade and other payables | 6,805 | 3,483 | |||
Provisions | 1,104 | - | |||
Income tax payable | 11 | - | |||
Loans and borrowings | 38,762 | - | |||
46,682 | 3,483 | ||||
Non-current liabilities | |||||
Deferred tax | 7,602 | - | |||
Loans and borrowings | 12,414 | 18,027 | |||
20,016 | 18,027 | ||||
Total liabilities | 66,698 | 21,510 | |||
Net assets | 21,622 | 29,090 |
2013 | 2012 | ||||
S$ '000 | S$ '000 | ||||
EQUITY | |||||
Share capital | 114,906 | 111,282 | |||
Translation reserve | (716) | 1,259 | |||
Option fee | 10 | 10 | |||
Share option reserve | 3,994 | 3,435 | |||
Accumulated losses | (96,572) | (86,896) | |||
Total equity | 21,622 | 29,090 |
STATEMENTS OF CHANGES IN EQUITY
Year ended December 31, 2013
Share | Translation | Option | Share option | Accumulated | Attributable to equity holders | ||
capital | reserve | fee | Reserve | losses | of the group | Total | |
S$'000 | S$'000 | S$'000 | S$'000 | S$'000 | S$'000 | S$'000 | |
Group | |||||||
Balance at January 1, 2012 | 111,282 | 445 | 10 | 3,240 | (71,922) | 43,055 | 43,055 |
Total comprehensive income for the year |
|
| |||||
Loss for the year | - | - | - | - | (14,974) | (14,974) | (14,974) |
Other comprehensive income for the year | - | 814 | - | - | - | 814 | 814 |
Total | - | 814 | - | - | (14,974) | (14,160) | (14,160) |
Transactions with owners, recognised directly in equity | |||||||
Recognition of share based payments, net | - | - | - | 195 | - | 195 | 195 |
Total | - | - | - | 195 | - | 195 | 195 |
Balance at December 31, 2012 | 111,282 | 1,259 | 10 | 3,435 | (86,896) | 29,090 | 29,090 |
STATEMENTS OF CHANGES IN EQUITY (cont'd)
Year ended December 31, 2013
Share capital | Translation reserve | Option fee | Share option reserve | Accumulated losses | Attributable to equity holder of the group | Total | |
S$'000 | S$'000 | S$'000 | S$'000 | S$'000 | S$'000 | S$'000 | |
Balance at January 1, 2013 | 111,282 | 1,259 | 10 | 3,435 | (86,896) |
29,090 | 29,090 |
Total comprehensive loss for the year | |||||||
Loss for the year | - | - | - | - | (9,676) | (9,676) | (9,676) |
Other comprehensive income for the year | - | (1,975) | - | - | - | (1,975) | (1,975) |
Total | - | (1,975) | - | - | (9,676) | (11,651) | (11,651) |
Transactions with owners, recognised directly in equity | |||||||
Issue of share capital | 3,621 | - | - | - | - | 3,621 | 3,621 |
Exercise of share options, net | 3 | - | - | - | - | 3 | 3 |
Recognition of share based payments, net | - | - | - | 559 | - | 559 | 559 |
Total | 3,624 | - | - | 559 | - | 4,183 | 4,183 |
Balance at December 31, 2013 | 114,906 | (716) | 10 | 3,994 | (96,572) | 21,622 | 21,622 |
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended December 31, 2013
2013 S$ '000 | 2012 S$ '000 | ||
Operating activities | |||
Loss before tax | (9,665) | (15,040) | |
Adjustments for: | |||
Release of negative goodwill to income | (16,674) | - | |
Fair value of pre-existing interest in acquiree | (1,938) | - | |
FVTPL | 3,189 | - | |
Depreciation of property, plant and equipment | 162 | 211 | |
Amortisation of intangible asset | 3,039 | 3,202 | |
Net loss on disposal of property, plant and equipment | - | 1,144 | |
Interest income | - | (67) | |
Interest expense | 12,171 | 2,395 | |
Bad debt expense | 50 | - | |
Share-based payments | 559 | 195 | |
Provisions made during the year | 1,104 | - | |
Net foreign exchange | (1,348) | 646 | |
Operating cash flows before movements in working capital | (9,351) | (7,314) | |
Trade and other receivables | (852) | 67 | |
Inventory | 1,636 | - | |
Trade and other payables | 2,759 | 1,052 | |
Cash used in operations | (5,808) | (6,195) | |
Interest paid | - | (2) | |
Income tax paid | - | (2) | |
Net cash used in operating activities | (5,808) | (6,199) | |
Investing activities | |||
Purchase of property, plant and equipment | (464) | (500) | |
Expenditure on project development | (1,908) | (1,373) | |
Purchase of available-for-sale investments | - | (477) | |
Acquisition of subsidiary, net of cash acquired | (418) | - | |
Deposits pledged | (1,712) | - | |
Net cash used in investing activities | (4,502) | (2,350) | |
Financing activities | |||
Proceeds from grants received | - | 811 | |
Proceeds from issue of shares | 3,621 | - | |
Proceeds from exercising of share options | 3 | - | |
Proceeds from borrowings | 5,165 | 500 | |
Net cash from financing activities | 8,789 | 1,311 | |
Net increase (decrease) in cash and bank balances | (1,521) | (7,238) | |
Cash and cash equivalents at the beginning of the year | 2,338 | 9,567 | |
Effect of foreign exchange rate changes on the balance of cash held in foreign currencies | 91 | 9 | |
Cash and cash equivalents at the end of the year | 908 | 2,338 |
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 Monday, 30 June 2014. The AGM Notice is also available on the company's website: http://www.atlantisresourcesltd.com/company-documents/notices.html
Notes to editors
[TBA]