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ANNUAL REPORT 2013
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CONTENTS
2013 Highlights
Chairman’s Statement
Chief Executive Officer’s Statement
Corporate Governance Report
Board of Directors
Report of the Directors
Directors’ Remuneration Report
Statement of Directors
Independent Auditors’ Report to the Members
Financial Statements
Notes to the Financial Statements
Company Information
Page
02
03
04
06
09
11
14
16
17
19
23
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ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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2013 HIGHLIGHTS
PROJECTS
TURBINE TECHNOLOGY
• 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 by confirmation from the
Scottish government of the award of the
offshore consents for the first 86MW of
capacity
its
International
• Following award of the consents, Atlantis
reached agreement with
fellow
shareholders in MeyGen, Morgan Stanley
Power Marine
and
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
• 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
• 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
FUNDING AND REVENUE
• 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, Atlantis and Lockheed
Martin Corporation strengthened their
longstanding relationship under a teaming
agreement, through which Lockheed
committed to investing US$10 million in
technology and projects with Atlantis
• In
January
2013, Atlantis
shipped
US$2 million of onshore electrical and
control equipment to China under a supply
agreement with
the China Energy
Environmental
and
Conservation
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
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ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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CHAIRMAN’S STATEMENT
UPDATE
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 accompanies this 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
30 May 2014
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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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 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 a sales agent for other renewable energy
technology, we have reached a similar arrangement with RusHydro, one of Russia’s largest power generating companies,
to identify and pursue opportunities for its tidal barrage system. We principally aim to derive revenue through three main
channels:
1.
2.
3.
Turbines and associated technology
Project development rights
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 1 to 10 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.
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ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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CHIEF EXECUTIVE OFFICER’S STATEMENT continued
•
•
•
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 group’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 Note 11 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
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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CORPORATE GOVERNANCE REPORT
The company was admitted to trading on the Alternative Investment Market (“AIM”) on 20 February 2014. Admission to
AIM does not require the company to apply the UK Corporate Governance Code. Nevertheless, the directors are committed
to high standards of corporate governance, and although not required to do so, it is their intention that the company will
comply with the Corporate Governance Guidelines issued by the Quoted Companies Alliance (the “QCA Code”) where
considered relevant and appropriate for a company of its size, nature and stage of development.
Just prior to admission to AIM, the company established the three committees recommended by the QCA guidelines, a
Nomination Committee, a Remuneration Committee and an Audit Committee, as well as an additional Technology
Committee. These committees operate within a scope and remit defined by specific terms of reference, as determined by
the Board. The committees’ full terms of reference are available on the company’s website, www.atlantisresourcesltd.com.
THE BOARD OF DIRECTORS
The Board is collectively responsible for the effective oversight and long term success of the company. It agrees the strategic
direction and governance structure to achieve the long-term success of the company and deliver shareholder value. In
addition to setting the strategy, the Board takes the lead in areas such as financial policy and making sure the company
maintains a sound system of internal control. The Board’s full responsibilities are set out in a formal schedule of matters
reserved for the Board.
The Board delegates authority to its committees to carry out certain tasks on its behalf, so that it can operate efficiently
and give an appropriate level of attention and consideration to relevant matters. The composition and role of each
committee is summarised below and on page 7.
The role of the Chairman and the Chief Executive Officer are separate with a distinct division of responsibilities. The Board’s
independent oversight is enhanced by the separation of authority by ensuring that no one individual on the Board has
unfettered authority. The Board delegates authority to the Chief Executive Officer to manage the day-to-day operations
and implementation of the strategy of the company. In turn, the Chief Executive Officer delegates a number of his duties
to the company’s management team.
The Board of directors comprises a non-executive chairman, four non-executive directors and two executive directors; the
company’s Chief Executive Officer and Chief Financial Officer. The profiles of the current executive and non-executive
directors illustrating their relevant skills and experience can be found on pages 9 and 10.
The non-executive directors contribute a wide range of skills and experience, forming a strong element within the Board
and they have a key role in constructively challenging in all areas. All directors are obliged by the Articles of Association
to retire on a rotating basis and are subject to re-election at the Annual General Meeting. None of the non-executive
directors have been employees of the company at any time. Their opinions are influential in the decision-making of the
company, both in financial and operational terms.
The Chairman is responsible for providing leadership for the Board and ensuring its effectiveness in all aspects of its role,
ensuring that directors have sufficient resources available to them to fulfil their statutory duties. The Chairman is responsible
for setting the Board’s agenda, ensuring that adequate time is available to discuss all items on the agenda and ensuring
a particular focus on strategic issues. The Chairman promotes a culture of openness and debate by facilitating the effective
contribution of non-executive directors in particular, and by encouraging a constructive relationship between executive
and non-executive directors. The Board and its committees are provided with information on a timely basis in order to
ensure proper assessment can be made of the matters requiring a decision or insight.
As well as the support of the Company Secretary, there is a procedure in place for any director to take independent
professional advice at the company’s expense in the furtherance of their duties, where considered necessary. The Board
may appoint a director as it thinks fit; however, any director appointed by the Board must offer himself or herself for
reappointment at the first Annual General Meeting following appointment, and then must retire by rotation in accordance
with the Articles of Association. The shareholders of the company may also remove a director by ordinary resolution.
BOARD MEETINGS AND ATTENDANCE
The Board in its current form was established on 11 December 2013 and no further meetings were held prior to the year
end, although meetings have been held subsequently. Details of meetings held in 2014 and the attendance of directors
will be reported in next year’s Annual Report.
AUDIT COMMITTEE
The Audit Committee is chaired by Ian Macdonald and its other members are John Woodley and Rune Nilsen. It is required
to meet not less than three times a year at appropriate times in the financial reporting and audit cycle and whenever
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ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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CORPORATE GOVERNANCE REPORT continued
otherwise necessary to fulfil its responsibilities. The Audit Committee’s role is to assist the Board in discharging its
responsibilities with regard to monitoring the integrity of financial reporting, overseeing the relationship with the external
auditor, making recommendations to the Board regarding the appointment of the external auditor, and reviewing the
adequacy and effectiveness of the company’s internal controls and risk management systems. The ultimate responsibility
for reviewing and approving the Annual Report and Accounts and the half-yearly reports remains with the Board. The
Audit Committee did not meet prior to the company’s admission, but has met subsequently and has advised the Board
that this Annual Report and Accounts, taken as a whole, is fair, balanced and understandable for shareholders to assess
the company’s performance, strategy and business model.
The QCA Code recommends that a separate report from the Audit Committee is included within the Annual Report. As
the committee has only recently been constituted and was not in place in the reporting year, the committee’s first report
will be included in the 2014 Annual Report.
REMUNERATION COMMITTEE
The Remuneration Committee is chaired by John Neill and its other members are Michael Lloyd and John Woodley. The
Remuneration Committee is required to meet at least twice a year and whenever otherwise necessary to fulfil its
responsibilities. The role of the Remuneration Committee includes setting policy on executive remuneration and
recommending and monitoring the level and structure of remuneration for each of the executive directors. The objective
of the policy is to attract, retain and motivate executive management of suitable calibre without paying more than
necessary, having regard to the views of shareholders and stakeholders. Prior to admission, no committee meetings were
held, but the committee has met subsequently.
The Directors’ Remuneration Report from the Remuneration Committee is set out on pages 14 and 15.
NOMINATION COMMITTEE
The Nomination Committee is chaired by John Neill and its other members are Michael Lloyd and John Woodley. It is
required to meet at least twice a year and whenever otherwise necessary to fulfil its responsibilities. The role of the
Nomination Committee is to assist the Board in determining its composition, and that of the committees of the Board. It
is also responsible for periodically reviewing the Board’s structure and identifying potential candidates to be appointed as
directors as the need arises. The Nomination Committee is responsible for evaluating the balance of skills, knowledge,
experience and diversity of the Board and keeps under review the leadership needs of the company. It makes appropriate
recommendations to the Board on such matters. Prior to admission, no committee meetings were held.
TECHNOLOGY COMMITTEE
The Technology Committee is chaired by Michael Lloyd and its other members are Rune Nilsen and John Woodley. The
Technology Committee is responsible for monitoring the integrity of the regular internal reporting on the status of
technology development within the company and for sanctioning the external reporting of key technology milestones.
The committee also keeps under review the adequacy and effectiveness of the company’s internal engineering, internal
management controls and risk management systems and ensures that core technology is being developed to plan and
within agreed risk parameters. The committee is required to meet at least three times a year. Prior to admission, no
committee meetings were held, although the committee has met subsequently.
INTERNAL CONTROLS AND RISK MANAGEMENT
The Board has overall responsibility for the group’s system of internal control and for reviewing its effectiveness. It approves
all aspects of the overall risk management framework, including the strategic direction of the business, annual budgets
and business plans, the risk management policy and delegations of authority. There is an agreed risk tolerance which is
reflected in the group’s strategy and risk management activities are geared towards achieving business plans whilst
safeguarding the group’s assets.
The group’s system of internal control includes an on-going process of identifying, monitoring and managing risks by
executive management, who ensure that adequate systems, processes and controls are in place. Reports are provided by
management to the Audit Committee on internal control and risk management and the Audit Committee monitors risk
exposures, risk management activities and the effectiveness of controls. The Audit Committee reports to the Board on
these matters.
This system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only
provide reasonable and not absolute assurance against material misstatement and loss, and to prevent and detect fraud
and other irregularities.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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CORPORATE GOVERNANCE REPORT continued
MAJOR SHAREHOLDER AND SHAREHOLDER ARRANGEMENT
In February 2014 the company, N+1 Singer and Morgan Stanley Renewables Development 1 (Cayman) Limited (“Morgan
Stanley Renewables”), which on admission held 42.4% of the company’s share capital, entered into a relationship
agreement, the principal purpose of which is to ensure that the company is capable at all times of carrying on its business
independently of Morgan Stanley Renewables and its connected persons and to ensure all transactions and relationships
between them and the group will be conducted at arm’s length and on normal commercial terms. Terms of the relationship
agreement remain unchanged from the AIM admission document.
SHAREHOLDER ENGAGEMENT
The company is committed to ensuring that there is effective communication with shareholders on matters such as
governance and strategy, that the Board understands the views of large shareholders on these issues, and that shareholders
receive a balanced and consistent view of the company’s performance. Communication is primarily through the Annual
General Meeting which provides an opportunity for shareholders to meet and ask questions of management. All
shareholders will receive a copy of the Annual Report and an interim report at the half year will be available on the
company’s website.
As a part of a comprehensive investor relations programme, formal meetings with investors are scheduled to discuss the
company’s interim and final results. In the periods between these reporting times, the company continues its dialogue
with investors by periodical public correspondence between the Chairman and the shareholders.
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BOARD OF DIRECTORS
JOHN NEILL CBE
Non Executive Chairman
John became a director and non-executive Chairman of the company on 11 December
2013. He is also Chairman and Group Chief Executive of the Unipart Group of companies
which he joined from General Motors in 1974, setting out to establish a more independent
and broadly based role for what was then British Leyland’s Parts Division. In 1987 he led
the management buyout of the company and began the process of changing not only the
culture of the company but also the whole philosophy by which the business was run. He
is a non-executive director of Rolls-Royce plc and was formerly a director of the Court of
the Bank of England and a non-executive director of Royal Mail and Charter International
plc. John was appointed Prince’s Ambassador for the South East for 2009 by HRH The
Prince of Wales.
TIMOTHY CORNELIUS
Chief Executive Officer
Timothy acquired a combination of academic, practical and commercial experience before
taking the role of Chief Executive Officer of Atlantis in 2006. He joined the Board on
11 December 2013. He has accumulated a wealth of engineering and concept
development experience through previous roles in underwater research and subsea
engineering in the oil and gas sector with Submarine Escape and Rescue Service (Australia),
Subsea Offshore, Halliburton Subsea and Subsea 7, as well as business development and
corporate accountability experience through director and executive roles.
Timothy has a BSc in Marine Biology from Flinders University, an MBA from Bond University
and remains a fully certified submersible engineer, ROV pilot and commercial diver.
DUNCAN BLACK
Chief Financial Officer
Duncan joined the Board on 11 December 2013. He has seventeen years of experience in
the power generation and infrastructure sectors in senior operational and development roles,
and as a fund manager, investment banker and engineer. Duncan’s experience prior to
joining Atlantis includes time as Chief Executive Officer of Babcock & Brown’s Asia
Infrastructure Fund LP, Chief Financial Officer of TRUenergy (now Energy Australia), which is
owned by CLP Holdings Limited and is one of Australia’s largest power generator and retail
businesses, and business development and finance roles with CLP Holdings Ltd and InterGen
focused on power projects in Asia and Australia. Duncan previously worked for Schroders
Investment Bank, where he focused on project financing and M&A for power generation
assets in Asia Pacific, prior to which he was an engineer for a UK construction firm.
Duncan graduated from Imperial College, London with a BEng (Hons) in Civil Engineering
and PhD in Hydrodynamics.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
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BOARD OF DIRECTORS continued
MIKE LLOYD
Non Executive Director
Mike was appointed to the Board on 11 December 2013. He has more than forty years of
experience in engineering, manufacturing and supply chain roles in the electrical machinery
and power sectors. His senior leadership roles have included Group Manufacturing
Director, President of Rolls Royce Gas Turbines Operations, Technical Director of GEC Large
Machines and Managing Director of Alstom Transport. Mike is currently Chairman of
Magnomatics, a venture capital-backed technology company, specialising in the
development of innovative magnetic transmission drives for applications including wind
turbines and hybrid vehicles. Mike is also a non-executive director of Ceres Power Holdings
plc, Aerospace Tooling Ltd and RIMOR Ltd. He has a BSc in Electrical Engineering, a PhD
in Electrical Machines and is a Fellow of the Royal Academy of Engineering.
JOHN WOODLEY
Non Executive Director
John joined the Board on 22 September 2008. He was previously co-head of the power
and gas-related commodity business for Europe and Asia at Morgan Stanley. He founded
the very successful US electricity trading operations for Morgan Stanley in New York in
1994. After ten years with Morgan Stanley in New York, John moved to London to help
build the electricity and electricity related energy business outside the US. John is now
based in Switzerland and acts as a senior adviser to Morgan Stanley.
IAN MACDONALD
Non Executive Director
Ian was appointed to the Board on 11 December 2013. He has been the President of Hong
Leong Finance Ltd since February 2002. Hong Leong Finance Ltd is Singapore’s largest
finance company with a network of 28 branches island-wide. Ian has been in the financial
industry for more than 30 years and brings with him a wealth of experience in all aspects
of financial services, particularly in the areas of business and consumer equipment
financing. Ian was formerly the National Manager of Business Finance at Australian
Guarantee Corporation Limited, a subsidiary of Australian financial giant Westpac Banking
Corporation.
RUNE NILSEN
Non Executive Director
Rune joined the Board on 22 September 2011. He has an MSc in Business and Economics
from BI Norwegian Business School. He has worked at Statkraft since 1996, starting as a
group controller and later heading the finance department in Innovation and Growth.
Rune is currently working on a major project related to Statkraft’s performance
management and financial reporting systems. In addition to this he is engaged in projects
related to Statkraft’s osmotic power programme.
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REPORT OF THE DIRECTORS
The directors present their report to the members together with the audited consolidated financial statements of the
group and the statement of the financial position and statement of changes in equity of the company for the financial
year ended 31 December 2013.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The group is a vertically integrated turbine supplier and project developer in the tidal power industry. It also holds equity
positions in a diverse portfolio of tidal stream development projects. Further information on the group’s activities is
contained in the Chief Executive Officer’s Statement on pages 4 to 5.
A review of the business during the financial year is contained in the Chairman’s Statement and Chief Executive Officer’s
Statement on pages 3 to 5.
On 2 October 2013 the company was converted to a public limited company and changed its name to Atlantis Resources
Corporation Limited. Subsequently, on 11 November 2013, the company changed its name to Atlantis Resources Limited.
EVENTS AFTER THE FINANCIAL YEAR END
On 20 February 2014 the company’s entire issued ordinary share capital was admitted to trading on AIM, a market of the
London Stock Exchange. On admission to AIM (“admission”) the company’s share capital was reorganised and the
company’s “B” non-voting preference shares (“B” shares) and “C” non-voting preference shares (“C” shares) were
converted into “A” ordinary shares (“A” shares). The “A” shares were then consolidated into new ordinary shares on the
basis of one new ordinary share for every 30 “A” shares. In addition, certain convertible loans of the company were
converted into ordinary shares and the company undertook a placing of a further 12,765,957 new ordinary shares.
Following admission the company’s share capital comprised 76,704,200 ordinary shares. Further information is provided
in note 31 on page 55.
DIRECTORS
The directors of the company at the date of this report are:
John Neill (Non-Executive Chairman)
– Appointed 11 December 2013
Timothy Cornelius (Chief Executive Officer) – Appointed 11 December 2013
– Appointed 11 December 2013
Duncan Black (Chief Financial Officer)
– Appointed 11 December 2013
Michael Lloyd (Non-Executive Director)
Ian Macdonald (Non-Executive Director)
– Appointed 11 December 2013
Rune Nilsen (Non-Executive Director)
John Woodley (Non-Executive Director)
In addition to the above, the following served as directors during the year:
Basil McIlhagga
Ian Potter
Kim Manley
Nicholas Elliot
(Resigned on 11 December 2013)
(Resigned on 11 December 2013)
(Resigned on 11 February 2014)
(Resigned on 11 December 2013)
Biographies of the directors as at the date of this report are provided on pages 9 and 10.
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES
During and at the end of the financial year, neither the company nor any of its subsidiaries was a party to any arrangement
whose purpose was to enable the directors to acquire benefits by acquiring shares in, or debentures of, the company or
any other corporate body, except as disclosed in the Directors’ Remuneration Report on pages 14 and 15.
DIRECTORS’ INTEREST IN SHARES OR DEBENTURES AND DIRECTORS’ CONTRACTUAL BENEFITS
Details of the Directors’ Interests in Shares or Debentures and Directors’ Contractual Benefits are set out in the Directors’
Remuneration Report on pages 14 and 15.
SHARE OPTIONS
(a) Options to take up unissued shares
On 19 November 2013 the company granted options over 25,000,000 “B” shares (2012: Nil) under the Atlantis
Resources Company Share Option Plan (the “Plan”) which was established in 2009. The options vested and were
exercisable at a price of S$0.0001 at any time from 19 November 2013 to 18 November 2018.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
11
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 10:03 Page 12
REPORT OF THE DIRECTORS continued
(b) Unissued shares under option and shares exercised
Number of options to subscribe for “A” shares
Date of Grant
Balance at
01.01.2013
05.06.2009
15,713,730
Total
15,713,730
Granted
Modified
Cancelled/
Lapsed
Balance at
31.12.2013
Exercise price
per share
Exercise
Period
–
–
–
–
15,713,730
–
$0.20
01.10.2006
to 26.02.2013
15,713,730
Number of options to subscribe for “B” shares(1)
Granted
Exercised
Cancelled/
Lapsed
Balance at
31.12.2013
Exercise price
per share
Exercise
Period
Date of Grant
Balance at
01.01.2013
05.06.2009
4,342,746
05.06.2009
27,114,254
14.12.2009
4,809,000
05.06.2010
2,000,000
10.06.2010
1,000,000
–
–
–
–
–
–
–
–
–
–
19.11.2013
–
25,000,000
25,000,000
Total
39,266,000
25,000,000
25,000,000
–
–
–
–
–
–
–
4,342,746
S$0.1553 to
05.06.2009
S$0.1972 to 04.06.2014
27,114,254
S$0.1553 to
05.06.2009
S$0.1972 to 04.06.2014
4,809,000
S$0.1972
2,000,000
S$0.20
1,000,000
S$0.20
–
S$0.0001
14.12.2009
to 04.06.2014
05.06.2010
to 04.06.2015
10.06.2010
to 09.06.2015
19.11.2013
to 18.11.2018
39,266,000
(1) On 11 December 2013 the Board approved certain amendments to the Plan, including an adjustment to the options outstanding over “B” shares, conditional
on admission. The outstanding options over 39,266,000 “B” shares, exercisable at prices between S$0.1553 and S$0.20 per share, upon admission, became
options over a total of 1,308,866 ordinary shares at prices between S$4.659 and S$6.00 per share. The outstanding options are not subject to any performance
conditions. No further options have been issued under the Plan since the financial year end. The Plan was terminated on admission, without prejudice to the
rights conferred by the outstanding options. The outstanding options are fully vested and exercisable.
Following the adjustment, the outstanding options will generally lapse on the earlier of 4 June 2014 or five years from grant (9 June 2015 for one participant).
Until options are exercised, participants have no voting or other rights in respect of the options held. “B” shares issued or transferred pursuant to the Plan ranked
pari passu in all respects with the “B” shares then already in issue except that they did not rank for any dividend or other distribution of the company paid or
made by reference to a record date falling prior to the date of exercise of the relevant option. Following the adjustment, ordinary shares resulting from the
exercise of the outstanding options will rank pari passu in all respects with the ordinary shares in issue. Options are not pensionable, assignable or transferable.
(c)
In accordance with the Deed of Undertaking between Atlantis Resources Limited and Morgan Stanley Renewables
dated October 2008, the company irrevocably undertook to grant a call option upon the occurrence of a fund raising
exercise in respect of such number of option shares as required to restore Morgan Stanley Renewables’ shareholding
in the company to 49.9% (2012: 49.9%) of the issued share capital of the company, subject to an aggregate cap of
239,263,119 option shares. As a result of a rights issue undertaken by the company in July 2013, Morgan Stanley
Renewables’ shareholding in the company fell below 49.9%. Morgan Stanley Renewables exercised all of its
remaining 134,194,544 (2012: Nil) options and was issued a corresponding number of “A” shares in the company.
(d) Other than the above, during the financial year no option to take up unissued shares of any corporation in the group
was granted and there were no shares of any corporation in the group issued by virtue of the exercise of an option
to take up unissued shares. At the end of the financial year, other than the above, there were no unissued shares of
any corporation in the group under option.
INDEPENDENT AUDITOR
KPMG LLP has expressed its willingness to be appointed at the company’s Annual General Meeting in place of Deloitte
LLP who are standing down following the audit of these financial statements. This follows a tender process for the group’s
independent auditor role, following AIM guidelines, given that Deloitte LLP has been the group’s auditor for a period of
ten years.
12
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 10:03 Page 13
REPORT OF THE DIRECTORS continued
ANNUAL GENERAL MEETING (“AGM”)
The company’s AGM will take place on 30 June 2014 at 10.00 am at the offices of Ashurst LLP, Broadwalk House, 5 Appold
Street, London EC2A 2HA.
For and on behalf of the Board
Timothy Cornelius
Duncan Black
Date: 30 May 2014
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
13
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 10:03 Page 14
DIRECTORS’ REMUNERATION REPORT
This report sets out details of the directors’ remuneration in 2013 and 2012.
REMUNERATION COMMITTEE
The members of the Remuneration Committee and the Remuneration Committee’s role are set out on page 7.
DIRECTORS’ INTEREST IN SHARES OR DEBENTURES
According to the Register of Directors’ Shareholdings kept by the company under Section 164 of the Singapore Companies
Act (the “Act”), none of the directors of the company holding office at the end of the financial year had any interests in
the shares or debentures of the company and its related corporations, except as follows:
Name of directors and company Shareholdings registered in Shareholdings in which directors
in which interests are held the name of directors are deemed to have an interest
At 1 January At 1 January
Atlantis Resources 2013/date of At 31 December 2013/date of At 31 December
Limited appointment(1) 2013 appointment(1) 2013
Kim Manley:
“A” shares(2) – – 79,052,717 80,451,540
Options to subscribe for “A” shares 3,142,746 – – –
Duncan Black:
“B” shares 25,000,000 25,000,000 – –
Timothy Cornelius:
“C” shares – – 29,761,963 29,761,963(3)
(1) Timothy Cornelius and Duncan Black were both appointed as directors on 11 December 2013.
(2) Kim Manley is sole shareholder of Minnow Holdings Pty Limited which, at the beginning of the year, held 77,877,716 “A” shares and which is a 3.2% shareholder in
Enetec Holdings through which he had an interest equivalent to a further 1,175,000 “A” shares. He also has a 0.000002% shareholding in Yamba Energy Limited
through which he had an interest equivalent to a further 1 “A” share. During the financial year his interest was increased by an additional 1,398,823 “A” shares,
subscribed for by Minnow Holdings Pty Limited.
(3) Timothy Cornelius is the sole shareholder of Languedoc Pte Limited which held 29,761,963 “C” shares in the company. These shares were subject to a Singapore law
charge in favour of Bank Morgan Stanley AG as security for a S$1,500,000 loan to Tim Cornelius dated 12 November 2008.
John Neill, Michael Lloyd and Ian Macdonald held convertible loans in the company for the amounts of £200,000, £50,000
and £100,000 respectively at their date of appointment and at the end of the year. On admission these loans converted
into “A” shares and were then consolidated into ordinary shares on the basis of one ordinary share for every 30 “A”
shares. Following consolidation, John Neill, Michael Lloyd and Ian Macdonald held 252,501, 63,287 and 125,020 ordinary
shares respectively.
Following admission, and as at the date of this report, the directors held the following interests in the ordinary shares of
the company:
Shareholdings in which
Shareholdings registered directors are deemed
Director in the name of directors to have an interest
Timothy Cornelius 84,041 992,065(1)
Duncan Black 917,419 –
John Neill 252,501 –
John Woodley – –
Rune Nilsen – –
Michael Lloyd 63,287 –
Ian Macdonald 125,020 –
(1) Shares held by Languedoc Pte Limited, of which Timothy Cornelius is the sole shareholder. These shares are subject to a Singapore law change in favour of Bank Morgan
Stanley AG.
DIRECTORS’ CONTRACTUAL BENEFITS
Since the end of the previous financial year, no director of the company has received, or become entitled to receive, a
benefit which is required to be disclosed under Section 201(8) of the Act under a contract made by the company or a
related corporation with the director, or with a firm of which he is a member, or with a company in which he has a
substantial financial interest, other than salaries, bonuses and other benefits as shown in these financial statements.
Certain directors received remuneration from a related corporation in their capacity as directors and/or executives of those
related corporations.
14
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 10:03 Page 15
DIRECTORS’ REMUNERATION REPORT continued
ANNUAL REMUNERATION
The table below sets out the annual remuneration of the directors for the years ended 31 December 2013 and
31 December 2012. This information relates to the remuneration paid under the remuneration policy arrangements prior
to the company’s admission to AIM.
2013 2012
Director S$’000 S$’000
Timothy Cornelius(1) 419 –
Duncan Black 408 –
John Neill 9 –
Rune Nilsen – –
John Woodley 4 –
Michael Lloyd 4 –
Ian Macdonald 4 –
Kim Manley 236 140
(1) Timothy Cornelius is employed by Atlantis Operations (UK) Limited.
In December 2013 it was agreed, contingent on admission, that bonuses would be paid to certain directors in respect of
achievement against key performance indicators and targets. Tim Cornelius and Duncan Black received bonuses of £50,000
each following admission.
LONG TERM INCENTIVE SCHEME (“LTIP”)
On 11 December 2013, contingent on admission of the company’s shares to AIM, the company offered certain senior
management and directors options over shares through a LTIP. The options granted to directors are shown below:
Number of
Name Date of Grant Ordinary Shares Nature of Award Exercise Price Vesting Period
Timothy Cornelius 20 February 2014 1,063,830 Option £0.94 1/3 on each of first, second and
third anniversary of grant
Duncan Black 20 February 2014 851,064 Option £0.94 1/3 on each of first, second and
third anniversary of grant
John Neill 20 February 2014 1,063,830 Option £0.94 1/3 on each of first, second and
third anniversary of grant
Michael Lloyd 20 February 2014 106,383 Option £0.94 1/3 on each of first, second and
third anniversary of grant
Ian Macdonald 20 February 2014 265,958 Option £0.94 1/3 on each of first, second and
third anniversary of grant
Vested awards are exercisable up until the tenth anniversary date of the grant.
Until awards vest or options are exercised, participants have no voting or other rights in the shares subject to the award.
Ordinary shares issued or transferred pursuant to the LTIP rank pari passu in all respects with the ordinary shares then in
issue except that they will not rank for any dividend/distribution of the company paid or made by reference to a record
date falling before the exercise date. The option is not assignable or transferable.
At the date of this report, the company had 5,564,187 options over ordinary shares of the company outstanding, which
represented 7.3% of the company’s outstanding share capital.
SHAREHOLDER VOTE AT THE AGM
The 2013 Directors’ Remuneration Report is the first remuneration report for the company and will be put to the
shareholder vote at the 2014 AGM.
Approved and signed on behalf of the board
John Neill
Chairman of the Remuneration Committee
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
15
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 10:03 Page 16
STATEMENT OF DIRECTORS
In the opinion of the directors, the consolidated financial statements of the group and the statement of financial position
and statement of changes in equity of the company as set out on pages 19 to 55 are drawn up so as to give a true and
fair view of the state of affairs of the group and of the company as at 31 December 2013 and of the results, changes in
equity and cash flows of the group and changes in equity of the company for the financial year then ended and at the
date of this statement, there are reasonable grounds to believe that the company will be able to pay its debts when they
fall due.
On behalf of the Directors
Timothy Cornelius
Duncan Black
Date: 30 May 2014
16
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 12:39 Page 17
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
ATLANTIS RESOURCES LIMITED
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+",$(cid:0) (cid:26),,(cid:30),,&(cid:30)’-,(cid:3)(cid:0) -!(cid:30)(cid:0) (cid:26).(cid:29)"-(+(cid:0) (cid:28)(’,"(cid:29)(cid:30)+,(cid:0) "’-(cid:30)+’(cid:26)%(cid:0) (cid:28)(’-+(%(cid:0) +(cid:30)%(cid:30)/(cid:26)’-(cid:0) -((cid:0) -!(cid:30)(cid:0) (cid:30)’-"-25,(cid:0) )+(cid:30))(cid:26)+(cid:26)-"(’(cid:0) ((cid:31)(cid:0) (cid:31)"’(cid:26)’(cid:28)"(cid:26)%
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(cid:28)"+(cid:28).&,-(cid:26)’(cid:28)(cid:30),(cid:3)(cid:0)(cid:27).-(cid:0)’(-(cid:0)(cid:31)(+(cid:0)-!(cid:30)(cid:0)).+)(,(cid:30)(cid:0)((cid:31)(cid:0)(cid:30)1)+(cid:30),,"’ (cid:0)(cid:26)’(cid:0)()"’"(’(cid:0)(’(cid:0)-!(cid:30)(cid:0)(cid:30)(cid:31)(cid:31)(cid:30)(cid:28)-"/(cid:30)’(cid:30),,(cid:0)((cid:31)(cid:0)-!(cid:30)(cid:0)(cid:30)’-"-25,(cid:0)"’-(cid:30)+’(cid:26)%
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-!(cid:30)(cid:0)(cid:31)"’(cid:26)’(cid:28)"(cid:26)%(cid:0),-(cid:26)-(cid:30)&(cid:30)’-,(cid:4)(cid:0)(cid:0)
(cid:25)(cid:30)(cid:0)(cid:27)(cid:30)%"(cid:30)/(cid:30)(cid:0)-!(cid:26)-(cid:0)-!(cid:30)(cid:0)(cid:26).(cid:29)"-(cid:0)(cid:30)/"(cid:29)(cid:30)’(cid:28)(cid:30)(cid:0)0(cid:30)(cid:0)!(cid:26)/(cid:30)(cid:0)((cid:27)-(cid:26)"’(cid:30)(cid:29)(cid:0)",(cid:0),.(cid:31)(cid:31)"(cid:28)"(cid:30)’-(cid:0)(cid:26)’(cid:29)(cid:0)(cid:26)))+()+"(cid:26)-(cid:30)(cid:0)-((cid:0))+(/"(cid:29)(cid:30)(cid:0)(cid:26)(cid:0)(cid:27)(cid:26),",(cid:0)(cid:31)(+(cid:0)(.+
(cid:26).(cid:29)"- ()"’"(’(cid:4)
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
17
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 12:39 Page 18
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
ATLANTIS RESOURCES LIMITED continued
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(cid:12)(cid:31)(cid:26)(cid:29)(cid:26)(cid:30)(cid:29)
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(cid:14)(cid:22)(cid:31)(cid:30)!#(cid:0)(cid:30)(cid:29)(cid:0)(cid:12)#(cid:25)(cid:22)!(cid:0)(cid:9)(cid:22)(cid:24)(cid:18)(cid:27)(cid:0)(cid:18)(cid:29)(cid:21)(cid:0)(cid:14)(cid:22)(cid:24)$(cid:27)(cid:18)#(cid:30)!%(cid:0)(cid:14)(cid:22) $(cid:26)!(cid:22)(cid:28)(cid:22)(cid:29)#"
(cid:17)’(cid:0)(.+(cid:0)()"’"(’(cid:3)(cid:0)-!(cid:30)(cid:0)(cid:26)(cid:28)(cid:28)(.’-"’ (cid:0)(cid:26)’(cid:29)(cid:0)(-!(cid:30)+(cid:0)+(cid:30)(cid:28)(+(cid:29),(cid:0)+(cid:30)*."+(cid:30)(cid:29)(cid:0)(cid:27)2(cid:0)-!(cid:30)(cid:0)(cid:13)(cid:28)-(cid:0)-((cid:0)(cid:27)(cid:30)(cid:0)$(cid:30))-(cid:0)(cid:27)2(cid:0)-!(cid:30)(cid:0)(cid:28)(&)(cid:26)’2(cid:0)(cid:26)’(cid:29)(cid:0)(cid:27)2(cid:0)-!(,(cid:30)
,.(cid:27),"(cid:29)"(cid:26)+"(cid:30),(cid:0)"’(cid:28)(+)(+(cid:26)-(cid:30)(cid:29)(cid:0)"’(cid:0)(cid:23)"’ (cid:26))(+(cid:30)(cid:0)((cid:31)(cid:0)0!"(cid:28)!(cid:0)0(cid:30)(cid:0)(cid:26)+(cid:30)(cid:0)-!(cid:30)(cid:0)(cid:26).(cid:29)"-(+,(cid:0)!(cid:26)/(cid:30)(cid:0)(cid:27)(cid:30)(cid:30)’(cid:0))+()(cid:30)+%2(cid:0)$(cid:30))-(cid:0)"’(cid:0)(cid:26)(cid:28)(cid:28)(+(cid:29)(cid:26)’(cid:28)(cid:30)
0"-! -!(cid:30)(cid:0))+(/","(’,(cid:0)((cid:31)(cid:0)-!(cid:30)(cid:0)(cid:13)(cid:28)-(cid:4)
(cid:21).(cid:27)%"(cid:28)(cid:0)(cid:13)(cid:28)(cid:28)(.’-(cid:26)’-,(cid:0)(cid:26)’(cid:29)
(cid:14)!(cid:26)+-(cid:30)+(cid:30)(cid:29)(cid:0)(cid:13)(cid:28)(cid:28)(.’-(cid:26)’-,
(cid:23)"’ (cid:26))(+(cid:30)
(cid:19)(cid:26)2(cid:0)(cid:8)(cid:5)(cid:3)(cid:0)(cid:7)(cid:5)(cid:6)(cid:9)
18
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 10:03 Page 19
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2013
2013 2012
Notes S$’000 S$’000
Revenue 4 6,190 3,003
Cost of sales (4,918) (2,489)
Gross profit 1,272 514
Operating expenditure 5 (11,786) (9,230)
Depreciation and amortisation 9 (3,201) (3,413)
Operating loss (13,715) (12,129)
Other gains and losses 6 19,410 (516)
Finance costs 7 (15,360) (2,395)
Loss before tax (9,665) (15,040)
Income tax (expense)/benefit 8 (11) 66
Loss for the year 9 (9,676) (14,974)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations (1,975) 814
Other comprehensive income for the year, net of tax (1,975) 814
Total comprehensive income for the year (11,651) (14,160)
Losses attributable to:
Owners of the group (9,676) (14,974)
Total comprehensive income attributable to:
Owners of the group (11,651) (14,160)
Loss per share (S$) 25 (0.26) (0.41)
No dividends were proposed or declared in respect of any of the years presented above.
The accompanying notes form part of these financial statements.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
19
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 10:03 Page 20
STATEMENTS OF FINANCIAL POSITION
31 DECEMBER 2013
Group
Company
2013 2012 2013 2012
Notes S$’000 S$’000 S$’000 S$’000
ASSETS
Non-current assets
Investment in subsidiaries 11 – – 17,797 17,788
Loan to a subsidiary 12 – – 1,904 –
Available-for-sale investments 13 – 1,350 – 1,350
Property, plant and equipment 14 3,007 4,448 33 183
Intangible assets 15 44,040 41,984 6,556 7,102
47,047 47,782 26,290 26,423
Current assets
Cash and cash equivalents 16 2,620 2,338 184 168
Trade and other receivables 17 1,601 480 25,883 44,303
Other assets 18 37,052 – – –
41,273 2,818 26,067 44,471
Total assets 88,320 50,600 52,357 70,894
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 19 6,805 3,483 7,975 1,354
Provisions 20 1,104 – – –
Income tax payable 11 – – –
Loans and borrowings 21 38,762 – 38,762 –
46,682 3,483 46,737 1,354
Non-current liabilities
Deferred tax 22 7,602 – – –
Loans and borrowings 21 12,414 18,027 – 18,027
20,016 18,027 – 18,027
Total liabilities 66,698 21,510 46,737 19,381
Net assets 21,622 29,090 5,620 51,513
EQUITY
Share capital 23 114,906 111,282 114,906 111,282
Translation reserve (716) 1,259 – –
Option fee 10 10 10 10
Share option reserve 24 3,994 3,435 3,994 3,435
Accumulated losses (96,572) (86,896) (113,290) (63,214)
Total Equity 21,622 29,090 5,620 51,513
See accompanying notes to financial statements.
20
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 10:03 Page 21
STATEMENTS OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2013
Attributable
to equity
Share Translation Option Share option Accumulated holder of
capital reserve fee Reserve Losses the group Total
Note S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000
Group
Balance at 1 January 2012 111,282 445 10 3,240 (71,922) 43,055 43,055
Total comprehensive income
for the year
Loss for the year – – – – (14,974) (14,974) (14,974)
Other comprehensive income for
the year – 814 – – – 814 814
Total – 814 – – (14,974) (14,160) (14,160)
Transactions with owners, recognised
directly in equity
Recognition of share based
payments, net – – – 195 – 195 195
Total – – – 195 – 195 195
Balance at 31 December 2012 111,282 1,259 10 3,435 (86,896) 29,090 29,090
Total comprehensive loss for the year
Loss for the year – – – – (9,676) (9,676) (9,676)
Other comprehensive income for the year – (1,975) – – – (1,975) (1,975)
Total – (1,975) – – (9,676) (11,651) (11,651)
Transactions with owners, recognised
directly in equity
Issue of share capital 23 3,621 – – – – 3,621 3,621
Exercise of share options, net 24 3 – – – – 3 3
Recognition of share based
payments, net – – – 559 – 559 559
Total 3,624 – – 559 – 4,183 4,183
Balance at 31 December 2013 114,906 (716) 10 3,994 (96,572) 21,622 21,622
Share Translation Option Share option Accumulated
capital reserve fee Reserve Losses Total
Note S$'000 S$'000 S$'000 S$'000 S$'000 S$'000
Company
Balance at 1 January 2012 111,282 – 10 3,240 (55,836) 58,696
Total comprehensive expense for the year – – – – (7,378) (7,378)
Recognition of share based payments, net – – – 195 – 195
Balance at 31 December 2012 111,282 – 10 3,435 (63,214) 51,513
Total comprehensive expense for the year – – – – (50,076) (50,076)
Issue of share capital 23 3,621 – – – – 3,621
Recognition of share based payments, net 24 3 – – 559 – 562
Balance at 31 December 2013 114,906 – 10 3,994 (113,290) 5,620
See accompanying notes to financial statements.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
21
Atlantis AR p01_21_Atlantis AR p01_22 30/05/2014 10:03 Page 22
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED 31 DECEMBER 2013
2013 2012
S$’000 S$’000
Group
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) –
Deposit 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 (Note 16) 908 2,338
See accompanying notes to financial statements.
22
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 23
NOTES TO FINANCIAL STATEMENTS
31 DECEMBER 2013
1. GENERAL
The company (Registration No. 200517551R) is incorporated in Singapore with its principal place of business and registered
office at 65 Niven Road, Singapore 228414.
With effect from 2 October 2013, the company changed its name from Atlantis Resources Corporation Pte Ltd to Atlantis
Resources Corporation Ltd., and subsequently with effect from 11 November 2013, the company changed its name to
Atlantis Resources Limited.
The principal activity of the company is that of pioneering the development of tidal current power as the most reliable,
economic and secure form of renewable energy. The company is an inventor, developer, owner, marketer and licensor of
technology, intellectual property, trademarks, products and services.
The principal activities of the subsidiaries are disclosed in Note 11 to the financial statements.
The consolidated financial statements of the group, the statement of financial position and the statement of changes in equity
of the company for the year ended 31 December 2013 were authorised for issue by the Board of Directors on 30 May 2014.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.
BASIS OF ACCOUNTING – The financial statements have been prepared in accordance with the historical cost basis,
except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore
Companies Act and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”).
The financial statements are expressed in Singapore dollars (S$), rounded to the nearest thousand.
ADOPTION OF IFRS AND REVISED STANDARDS – On 1 January 2013, the group adopted all the new and revised IFRS
that are effective from that date and are relevant to its operations. The adoption of these new/revised IFRSs does not
result in changes to the group’s accounting policies and has no material effect on the amounts reported for the current
or prior years except as disclosed below:
IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial Statements
IFRS 10 replaces the control assessment criteria and consolidation requirements currently in IAS 27 and INT FRS 12
Consolidation – Special Purpose Entities.
IFRS 10 defines the principle of control and establishes control as the basis for determining which entities are consolidated
in the consolidated financial statements. It also provides more extensive application guidance on assessing control based
on voting rights or other contractual rights. Under IFRS 10, control assessment will be based on whether an investor has:
(i) power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the
ability to use its power over the investee to affect the amount of the returns. IAS 27 remains as a standard applicable only
to separate financial statements.
IFRS 11 Joint Arrangements and IAS 28 Investments in Associates and Joint Ventures
IFRS 11 classifies a joint arrangement as either a joint operation or a joint venture based on the parties’ rights and
obligations under the arrangement. The existence of a separate legal vehicle is no longer the key factor. A joint operation
is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities.
A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets.
The joint venturer should use the equity method under the revised IAS 28 Investments in Associates and Joint Ventures to
account for a joint venture. The option to use the proportionate consolidation method has been removed. For joint
operations, the group directly recognises its rights to the assets, liabilities, revenues and expenses of the investee in
accordance with applicable IFRSs.
The application of the IFRS 11 does not have any significant impact on financial statements as the group does not have
any investment in jointly controlled entities.
IFRS 13 Fair Value Measurement
The group has applied IFRS 13 for the first time in the current year. IFRS 13 establishes a single source of guidance for fair
value measurements and disclosures about fair value measurements. The fair value measurement requirements of IFRS 13
apply to both financial instrument items and non-financial assets for which other IFRSs require or permit fair value
measurements and disclosures about fair value measurements, except for share-based payment transactions that are
within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and
measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of
measuring inventories or value in use for impairment assessment purposes).
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
23
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 24
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
2.
Application of IFRS 13 has not materially impacted the fair value measurements of the group. Additional disclosures where
required are provided in the individual notes relating to the assets and liabilities whose fair values were determined. Fair
value hierarchy is provided in Note 26.
Other than the additional disclosures, the application of IFRS 13 has not had any material impact on the amounts
recognised in the consolidated financial statements.
At the date of authorisation of these financial statements, the following IFRSs, INT IFRSs and amendments to IFRS that are
relevant to the group were issued but not effective:
•
•
•
•
•
IFRS 9
Financial Instruments(2)
Amendments to IFRS9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosures(2)
Amendments to IFRS 10, IFRS 12
and IAS27
Investment Entities(1)
Amendments to IAS32
Offsetting Financial Assets and Financial Liabilities(1)
Amendments to IAS36
Impairment of Assets(1)
(1) Effective for annual periods beginning on or after 1 January 2014, with earlier application permitted.
(2) Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted.
The management anticipates that the adoption of the above IFRSs, INT IFRSs and amendments to IFRS in future periods
will not have a material impact on the financial statements of the group and of the company in the period of their initial
adoption.
BASIS OF CONSOLIDATION – The consolidated financial statements are prepared in conjunction with IFRS 10
Consolidated Financial Statements and incorporate the financial statements of the company and entities controlled by
the company (its subsidiaries). Control is achieved where the company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into
line with those used by other members of the group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Changes in the group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
The carrying amounts of the group’s interests and the non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted
and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the company.
When the group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between: (i) the
aggregate of the fair value of the consideration received and the fair value of any retained interest; and (ii) the previous
carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests.
Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for
(i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if
the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the
date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 7 Financial
Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an
associate or jointly controlled entity.
In the company’s financial statements, investments in subsidiaries are carried at cost less any impairment in net recoverable
value that has been recognised in profit or loss.
BUSINESS COMBINATIONS – The acquisition of subsidiaries and businesses are accounted for using the acquisition
method. The consideration for each acquisition is measured at the aggregate of the acquisition date fair values of assets
given, liabilities incurred by the group to the former owners of the acquiree, and equity interests issued by the group in
exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
24
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 25
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
2.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent
consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted
against the cost of acquisition where they qualify as measurement period adjustments (see below). The subsequent
accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as
equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity.
Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in
accordance with IFRS 7 Financial Instruments: Recognition and Measurement, or IAS 37 Provisions, Contingent Liabilities
and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the group’s previously held interests in the acquired entity are
remeasured to fair value at the acquisition date (i.e. the date the group attains control) and the resulting gain or loss, if
any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would
be appropriate if that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under the
IFRS are recognised at their fair value at the acquisition date, except that:
•
•
•
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
liabilities or equity instruments related to the replacement by the group of an acquiree’s share based payment awards
are measured in accordance with IAS 2 Share-based Payment; and
assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for
Sale and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the group reports provisional amounts for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are
recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date
that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the group obtains complete information
about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year from
acquisition date.
GOODWILL – The group measures goodwill at the acquisition date as:
•
•
•
the consideration transferred; plus
the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill
is allocated to each of the group’s cash-generating units expected to benefit from the synergies of the combination.
Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its
carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit
and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An
impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary or the relevant cash generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
FINANCIAL INSTRUMENT – Financial assets and financial liabilities are recognised on the group’s statement of financial
position when the group becomes a party to the contractual provisions of the instrument.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
25
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 26
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating
interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or
where appropriate, a shorter period. Income and expense is recognised on an effective interest rate basis for debt
instruments other than those financial instruments “at fair value through profit or loss”.
Financial assets
All financial assets are recognised and de-recognised on a trade date where the purchase or sale of an investment is under
a contract whose terms require delivery of the investment within the timeframe established by the market concerned,
and are initially measured at fair value plus transaction costs except for those financial assets classified as at fair value
through profit and loss which are initially measured at fair value.
Financial assets are classified into the following specified categories: “available-for-sale” financial assets and “trade and
other receivables”. The classification depends on the nature and purpose of financial assets and is determined at the time
of initial recognition.
Available-for-sale financial assets
Certain shares and debt securities held by the group are classified as being available for sale and are stated at fair value.
Investment in equity instruments that do not have a quoted market price in an active market and whose fair value cannot
be reliably measured are stated at cost. Fair value is determined in accordance with IFRS 13 Fair Value Measurement and in
the manner described in Note 26. Gains and losses arising from changes in fair value are recognised in other comprehensive
income with the exception of impairment losses, interest calculated using the effective interest method and foreign
exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is
disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive
income and accumulated in revaluation reserve is reclassified to profit or loss. Dividends on available-for-sale equity
instruments are recognised in profit or loss when the group’s right to receive payments is established. The fair value of
available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated
at the spot rate at end of the reporting date. The change in fair value attributable to translation differences that result
from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in other
comprehensive income.
Loans and receivables
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are classified
as “loans and receivables”. Loans and receivables are measured at amortised cost using the effective interest method less
impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the
recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at fair value through profit and loss, are assessed for indicators of impairment at the
end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or
more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the
difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the
original effective interest rate.
For available-for-sale equity instruments, a significant or prolonged decline in the fair value of the investment below its
cost is considered to be objective evidence of impairment.
For all other financial assets, objective evidence of impairment could include:
•
•
•
26
significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 27
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
2.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the
exception of trade and other receivables where the carrying amount is reduced through the use of an allowance account.
When a receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against the allowance account. Changes in the carrying amount of the allowance
account are recognised in profit or loss.
When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognised
in other comprehensive income are reclassified to profit or loss. With the exception of available-for-sale equity instruments,
if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through
profit or loss to the extent the carrying amount of the investment at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment not been recognised.
In respect of available-for-sale equity instruments, impairment losses previously recognised in profit or loss are not reversed
through profit or loss. Any subsequent increase in fair value after an impairment loss is recognised in other comprehensive
income.
Derecognition of financial assets
The group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the
group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the group recognises its retained interest in the asset and an associated liability for amounts it may have
to pay. If the group retains substantially all the risks and rewards of ownership of a transferred financial asset, the group
continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the group are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its
liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Other financial liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at
amortised cost, using the effective interest rate method, with interest expense recognised on an effective yield basis.
Interest-bearing loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised
cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the
settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the group’s
accounting policy for borrowing costs (see below).
Financial guarantee contract liabilities are measured initially at their fair values and, if not designated as at FVPTL,
subsequently at the higher of the amount of obligation under the contract recognised as a provision in accordance with
IAS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative
amortisation in accordance with IAS 18 Revenue.
Convertible loan notes
Convertible loans are regarded as compound instruments, consisting of a liability component and an equity component.
The component parts of compound instruments are classified separately as financial liabilities and equity in accordance
with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is
estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a
liability on an amortised cost basis until extinguished upon conversion or at the instrument’s maturity date. The equity
component is determined by deducting the amount of the liability component from the fair value of the compound
instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently
remeasured.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
27
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
Derecognition of financial liabilities
The group derecognises financial liabilities when, and only when, the group’s obligations are discharged, cancelled or
they expire.
LEASES – Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant
lease unless another systematic basis is more representative of the time pattern in which economic benefits from the
leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period
in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability.
The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are
consumed.
PROPERTY, PLANT AND EQUIPMENT – Property, plant and equipment are stated at cost less accumulated depreciation
and any accumulated impairment losses.
Freehold land is stated in the consolidated statement of financial position at cost, less any subsequent accumulated
impairment losses.
Plant and equipment in the course of construction (“construction-in-progress”) for production, rental or administrative
purposes, or for purpose not yet determined, are carried at cost, less any recognised impairment loss. Cost includes
professional fees in accordance with the group’s accounting policy. Depreciation of these assets, on the same basis as
other assets, commences when the assets are ready for their intended use.
Depreciation is charged so as to write off the cost of assets, other than freehold land and construction-in-progress, over
their estimated useful lives using the straight-line method, on the following bases:
Furniture, fixtures and equipment – 25%
Computer equipment and software – 25%
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period,
with the effect of any changes in estimate accounted for on a prospective basis.
The gain or loss arising on disposal or retirement of an item of plant and equipment is determined as the difference
between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss.
Fully depreciated assets still in use are retained in the financial statements.
INTANGIBLE ASSETS
Internally-generated intangible assets - research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Capitalisation of an internally generated asset is only permitted during the development phase.
Development activities must apply research findings for a business purpose, such as:
•
•
•
•
the design, construction and testing of pre-production or pre-use prototypes and models;
the design of tools, jigs, moulds and dies involving new technology;
the design, construction and operation of a pilot plant that is not of a scale economically feasible for commercial
production; and
the design, construction and testing of a chosen alternative for new or improved materials, devices, products.
The cost of capitalised development activities should include all directly attributable costs necessary to create, produce
and prepare an asset for a business purpose in the manner intended by management.
An internally-generated intangible asset arising from development (or from the development phase of an internal project)
is recognised if, and only if, all of the following have been demonstrated:
•
The technical feasibility of completing the intangible asset so that it will be available for use or sale.
28
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
2.
•
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
The intention to complete the intangible asset so that it will be available for use or sale.
•
•
•
•
The ability to use or sell the intangible asset.
How the intangible asset will generate probable future economic benefits.
The availability of adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset.
The ability to measure reliably the expenditure attributable to the intangible asset during its development.
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible
asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation
and accumulated impairment losses, on the same basis as intangible assets acquired separately.
Intellectual property
Intellectual property is measured initially at purchase cost and is subsequently measured at cost less any accumulated
amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over the asset’s
estimated useful life. Intellectual property is tested for impairment annually, or more frequently when there is an indication
that it may be impaired (see below for impairment testing).
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination are identified and recognised separately from goodwill. The cost of
such intangible assets is their fair value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL – At the end of each reporting period,
the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the group estimates the recoverable amount of the cash generating unit to
which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are
also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating
units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment
annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss
is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit)
in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is
carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
PROVISIONS – Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a
past event, it is probable that the group will be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
29
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
2.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation
at the end of reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision
is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of
those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
SHARE-BASED PAYMENTS – The group issues equity-settled share-based payments to certain employees and directors.
Equity-settled share-based payments are measured at fair value of the equity instruments (excluding the effect of non
market-based vesting conditions) at the date of grant. Details regarding the determination of the fair value of equity-settled
share-based transactions are set out in Note 24. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting period, based on the group’s estimate of the
number of equity instruments that will eventually vest. At the end of each reporting period, the group revises its estimate
of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment
to the equity-settled employee benefits reserve.
Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioral
considerations.
GOVERNMENT GRANTS – Government grants are not recognised until there is reasonable assurance that the group will
comply with the conditions attached to them and the grants will be received. Government grants whose primary condition
is that the group should purchase, construct or otherwise acquire non-current assets are presented as a deduction from
the carrying amount of the related assets and recognised as income over the useful lives of the assets by way of a reduced
depreciation or amortisation charge.
Other government grants are recognised as income over the periods necessary to match them with the costs for which
they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving immediate financial support to the group with no future
related costs are recognised in profit or loss in the period in which they become receivable.
REVENUE RECOGNITION – Revenue is measured at the fair value of the consideration received or receivable.
License and royalties
License and royalty revenue are recognised on an accrual basis in accordance with the substance of the relevant agreement.
License and royalties determined on a time basis are recognised on a straight-line basis over the period of the agreement.
License and royalty arrangements that are based on production, sales and other measures are recognised by reference to
the underlying arrangement.
Consulting fees and sale of equipment
Consulting fees are measured at the fair value of the consideration received or receivable and represent amounts receivable
for consulting services provided in the normal course of business, net of sales related taxes. Consulting fees are recognised
when project milestones are achieved. Revenues for the sale of equipment are recognised when the risk and rewards of
the product are transferred to the customer.
RETIREMENT BENEFIT OBLIGATIONS – Payments to defined contribution retirement benefit plans are charged as an
expense when employees have rendered the services entitling them to the contributions. Payments made to state-managed
retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined
contribution plans where the group’s obligations under the plans are equivalent to those arising in a defined contribution
retirement benefit plan.
INCOME TAX – Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are not taxable or tax deductible. The group’s liability for
current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where
the company and subsidiaries operate by the end of the reporting period.
30
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 31
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
2.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from
goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised on taxable temporary differences arising on investments in subsidiaries, except where
the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such
investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits
against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in
which the group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends
to settle its current tax assets and liabilities on a net basis.
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited
or debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also
recognised outside profit or loss (either in other comprehensive income or directly in equity, respectively), or where they
arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken
into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over cost.
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION – The individual financial statements of each group entity
are measured and presented in the currency of the primary economic environment in which the entity operates (its
functional currency). The consolidated financial statements of the group and the statement of financial position and
statement of equity of the company are presented in Singapore dollars, which is the functional currency of the company,
and the presentation currency for the consolidated financial statements.
Transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on
the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the end of reporting period. All exchange differences are recognised in profit or loss.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the group’s foreign operations
(including comparatives) are expressed in Singapore dollars using exchange rates prevailing at the end of the reporting
period. Income and expense items (including comparatives) are translated at the average exchange rates for the period,
unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the
transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated
in a separate component of equity.
On the disposal of a foreign operation (i.e. a disposal of the group’s entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity
that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of
the accumulated exchange differences in respect of that operation attributable to the group are reclassified to profit or loss.
In the case of a partial disposal (i.e. no loss of control) of a subsidiary that includes a foreign operation, the proportionate
share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit
or loss. For all other partial disposals (i.e. of associates or jointly controlled entities not involving a change of accounting
basis), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.
CASH AND CASH EQUIVALENTS IN THE CONSOLIDATED STATEMENT OF CASH FLOWS – Cash and cash equivalents
in the consolidated statement of cash flows comprise cash at bank, fixed deposits, and cash on hand and are subject to
an insignificant risk of changes in value.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
31
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the group’s accounting policies, which are described in Note 2, management is required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and other factors that
are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.
Critical judgements in applying the group’s accounting policies and key sources of estimation uncertainty
In the process of applying the group’s accounting policies, which are described in Note 2, the critical accounting
judgements that will have a significant effect on the amounts recognised in the financial statements and the key sources
of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year, are discussed below:
Impairment to the renewable energy business
The group considers the renewable energy business as one cash-generating-unit (“CGU”) and therefore performs
impairment assessment annually on the recoverable amount of this CGU, comprising intellectual property, development
costs, license and other tangible assets, in accordance with the accounting policy stated above.
Determining whether the CGU has been impaired requires an assessment of the recoverable amount and during the year,
in deriving the recoverable amount, management has estimated the fair value less cost to sell of the business, based on
the discounted free cash flow financial model. The recoverable amount then determined, which is in excess of the value
of business recorded, and accordingly, management has taken the view that no impairment loss on the group’s assets is
required.
At the end of every year, management assesses the existing condition and performance of its assets. In 2012 management
concluded the write off of the group’s Solon II turbine of S$1,141,626 as a market for its sale in the near term could not
be identified.
Amortisation of intangible assets
In 2011, management determined that the group would start amortising the intangible assets given that the group had
commenced its construction and successful deployment of a commercial grade turbine. Amortisation is calculated based
on estimated useful life of 15 years. Judgement is required to determine the period over which the propriety technology
(to which the intangibles relate) will continue to have economic value.
Recoverability of internally-generated intangible asset
During the year, management reconsidered the recoverability of its internally-generated intangible asset which is included
in its balance sheet at S$44 million. The development of the turbine technology and associated projects continues to
progress in a very satisfactory manner.
Detailed sensitivity analysis has been carried out and management is confident that the carrying amount of the asset will
be recovered in full, even if returns are reduced. This situation will be closely monitored, and adjustments made in future
periods if future market activity indicates that such adjustments are appropriate.
Fair value measurements and valuation processes
Some of the group’s assets and liabilities are measured at fair value for financial reporting purposes, most notably the
acquisition of the MeyGen Limited (“MeyGen”) business and valuation of the company’s convertible loan notes. The Audit
Committee of the company instructed management to determine the appropriate valuation techniques and inputs for
fair value measurements.
In estimating the fair value of an asset or a liability, the group engages third party qualified valuers to perform the valuation.
The company’s management works closely with the qualified external valuers to establish the appropriate valuation
techniques and inputs to the valuation model. Management reports the findings to the Audit Committee of the company
on a periodic basis to explain the cause of fluctuations in the fair value of the assets and liabilities.
Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities
is disclosed in Notes 11 and 26.
32
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
continued
Provision for decommissioning costs
Provision for decommissioning costs is recognised when the development costs are incurred of an amount equal to the
directors’ best estimate of the expenditure required to settle the group’s obligations.
4. REVENUE
This represents revenue from the provision of consulting services and the sale of turbine related equipment.
5. OPERATING EXPENDITURE
Group
2013 2012
S$’000 S$’000
Consultancy 536 516
Employee benefits expense (Note 10) 4,667 3,790
IPO costs 2,924 –
Patent, trademark and related legal fees 1,032 1,144
Rental expenses 342 375
Research and development costs 961 1,033
Travelling, accommodation and food 604 640
Write-off of property, plant and equipment – 1,144
Provision for warranty 73 –
Other 647 588
11,786 9,230
6. OTHER GAINS AND LOSSES
2013 2012
S$’000 S$’000
Interest income 74 67
Net foreign exchange gains 1,353 (646)
Fair value of pre-existing interest in acquiree 1,938 –
Release of negative goodwill to income (Note 11) 16,674 –
Impairment loss recognised on non-trade receivables (50) –
Other (losses)/income (579) 63
19,410 (516)
Group
Interest income is accrued on a time basis, by reference to the principal outstanding and the effective interest rate
applicable.
Net foreign exchange gain of S$1,353,000 is recorded in 2013 compared with a loss of S$646,000 in 2012 and which
relate to unrealised exchange differences arising from intercompany balances.
Fair value of pre-existing interest in acquiree relates to fair valuation of previously held equity in MeyGen and release of
negative goodwill to income refers to negative goodwill arising from the acquisition (Note 11).
7.
FINANCE COSTS
2013 2012
S$’000 S$’000
Additional interest expense on loans resulting from conversion (Note 21) 8,859 –
Interest expense of shareholders’ loans and other loans 3,312 2,395
Fair value through profit or loss (Note 21) 3,189 –
15,360 2,395
Group
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
33
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
8.
INCOME TAX EXPENSE/(BENEFIT)
2013 2012
S$’000 S$’000
Under/(over) provision for prior year 11 (66)
Group
Domestic income tax is calculated at 17% (2012: 17%) of the estimated assessable loss for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.
The total expense/(benefit) for the year can be reconciled to the accounting loss as follows:
2013 2012
S$’000 S$’000
Loss before tax (9,665) (15,040)
Income tax credit calculated at statutory tax rate (1,794) (2,557)
Non-allowable items 59 580
Tax effect of deferred tax asset not recognised 1,735 1,977
Under/Over provision for prior year 11 (66)
Tax expense/(benefit) for the year 11 (66)
Group
At the end of the reporting period, the group has unutilised tax losses of S$79,913,000 (2012: S$70,248,000) available
for offset against future profits. The company’s unutilised tax losses available for offset against future profits is
S$58,053,000 (2012: S$53,381,000). No deferred tax asset has been recognised due to the unpredictability of future
profit streams.
LOSS FOR THE YEAR
9.
Loss for the year has been arrived at after charging (crediting):
Group
2013 2012
S$’000 S$’000
Depreciation (Note 14) 162 211
Amortisation (Note 15) 3,039 3,202
Auditors’ remuneration
– Audit fees 216 100
– Non-audit fees 813 –
Loss on disposal of property, plant and equipment – 1,144
Net foreign exchange (gains)/losses (1,353) 646
Share-based payments (Note 23) 559 195
Impairment loss recognised on non-trade receivables 50 –
Change in the fair value of derivative liabilities outstanding at year end 3,189 –
10. STAFF COSTS
The average number of employees (including executive directors) was:
2013 2012
Number Number
Average number of employees (including executive directors) 17 16
Group
Their aggregate remuneration comprised:
2013 2012
S$’000 S$’000
Wages and salaries 3,167 3,044
Social security costs 554 119
Share based payment 559 195
Other related costs 387 432
4,667 3,790
Group
34
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
11. INVESTMENTS IN SUBSIDIARIES
Company
2013 2012
S$’000 S$’000
Unquoted equity shares, at cost 18,080 18,071
Less:
Impairment allowance (283) (283)
17,797 17,788
Details of the company’s subsidiaries are as follows:
Name of subsidiary
ARC Operations Pty Limited(3)
Proportion of
ownership interest
Country of and voting Cost of
incorporation power held investment
(or registration) 2013 2012 2013 2012
and operation % % S$ S$ Principal activity
Australia 100 100 120 120 Provision of operational
services to the group
Atlantis Asset Management
Singapore 100 100 100 100 Dormant
Pte Limited(1)
Atlantis Energy Pte Limited(1)
Singapore 100 100 100 100 Dormant
Atlantis Projects Pte Ltd(2)
Singapore 100 100 100 100 Investment holding
Hydrogen (Previously known as
Atlantis Pte Limited)
Atlantis Resources International
Pte Limited(2)
Singapore 100 100 100 100 Provision of operational
services to the group
Atlantis Licensing Pte Limited(1)
Singapore 100 100 100 100 Dormant
ARC Operations (Singapore) Pte
Singapore 100 100 100 100 Dormant
Limited(1)
Atlantis Resources (Gujarat Tidal)
Singapore 50 50 10 10 Dormant
Pte Limited(1)
Atlantis Operations (Canada)
Canada 100 100 125 125 Dormant
Limited(3)
Atlantis Resources (Scotland)
Limited (Previously known as
ARC Venture (UK) Limited(1)
Current Resources (Cayman)
Limited(3)
MeyGen Limited(4)
Subsidiary held by Current
Resources (Cayman) Limited
Atlantis Operations (UK) Limited(4)
Scotland 100 100 269 269 Provision of project
management and
consulting services
Cayman 100 100 17,796,300 17,787,461 Provision of operational
Islands and administrative services
to the group
Scotland 100(5) 10 283,300 283,300 Development of tidal
power generation project
England 100 100 – – Provision of operational
services to the group
18,080,724 18,071,885
(1) Not required to be audited as the subsidiaries are dormant.
(2) Audited by Deloitte & Touche LLP, Singapore.
(3) Not required to be audited by law in its country of incorporation.
(4) Audited by Deloitte LLP, United Kingdom.
(5) At year end, 10% of MeyGen’s shareholding was held by the company and 90% was held by Atlantis Projects Pte Ltd, which is a wholly owned subsidiary of the company.
Subsequent to year end, Atlantis Projects Pte Ltd acquired the 10% shareholding from the company, resulting in Atlantis Projects Pte Ltd becoming the 100% shareholder
of MeyGen.
(i)
Share based payments
During the financial year, share based payments granted by the company have resulted in an increase in deemed
investments in Current Resources (Cayman) Limited amounting to S$9,000 (£4,000) and S$53,000, (£27,000) in
2013 and 2012 respectively, and correspondingly increased the investment in Current Resources (Cayman) Limited
to S$17,796,300 (2012: S$17,787,461).
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
35
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
11. INVESTMENTS IN SUBSIDIARIES continued
(ii) Acquisition of subsidiary
On 31 October 2013, Atlantis Projects Pte. Ltd., a wholly owned subsidiary of the company, entered into agreements for
and completed the acquisition of an aggregate 90% shareholding in MeyGen, the company developing the MeyGen tidal
power project in the Pentland Firth, Scotland. The company already owned a 10% shareholding in MeyGen directly, and
through this acquisition, became the 100% owner of MeyGen. An additional 45% equity interest in MeyGen was acquired
from Morgan Stanley Capital Group Inc. (“MSCGI”) for S$771,000 (£386,000) and a further 45% equity interest was
acquired from International Power Marine Developments Limited (“IPMDL”), a subsidiary of GDF Suez, for S$2 (£1). The
existing shareholder loans from each of MSCGI, IPMDL and the company were retained by MeyGen, and restructured such
that they were no longer at call, and repayable in February 2021 in the case of the MSCGI and IPMDL loans, and in February
2030 in the case of the loan from the company, with all distributions from MeyGen to be applied to repaying these loans
before any distributions to shareholders. The S$771,000 (£386,000) price payable to MSCGI was funded by way of a
convertible loan from Morgan Stanley Renewables to the company. The principal amount of the loan together with accrued
interest were converted into ordinary shares in the company upon admission of the shares of the company to trading on
the AIM market of the London Stock Exchange at a price equal to the initial public offering price discounted by 10%.
MeyGen is a special purpose vehicle set up to develop, operate and manage a tidal stream power project in the Pentland
Firth, Scotland. The project is scheduled to commence power production in 2015 and the acquisition is expected to enhance
the group’s position as a vertically integrated turbine supplier and project developer in the tidal power industry with different
streams of revenue. MeyGen was awarded the final consents required for construction and operation of the first phase of
the project in 2013. With technical feasibility and commercial viability in place, all development costs incurred from
1 November 2013 have been capitalised, and will be through until the commissioning of the first phase of the project. In
the two months to 31 December 2013, expenses incurred by MeyGen totalling S$601,000 (£292,000) were capitalised. If
the acquisition had occurred on 1 January 2013, management estimates that the loss would have increased by S$4,479,000.
Acquisition-related costs amounting to S$166,000 have been excluded from the consideration transferred and have been
recognised as an expense in profit and loss in the current year within the “other operating expenses”.
An independent valuation was conducted to determine the values of the acquisition. The following summarises the
identifiable assets acquired and liabilities at the acquisition date.
Identifiable assets acquired and liabilities assumed at 31 October 2013.
Acquiree’s carrying
amount before Fair value
combination adjustments Fair value
Notes S$’000 S$’000 S$’000
Non-current assets
Property, plant and equipment 235 (173) 62
Intangible assets – 2,908 2,908
Total non-current assets 235 2,735 2,970
Current assets
Cash and cash equivalents 353 – 353
Trade and other receivables 95 – 95
Sea bed option 1,826 35,102 36,928
Total current assets 2,274 35,102 37,376
Current liabilities
Trade and other payables (898) – (898)
Total current liabilities (898) – (898)
Long term liabilities
Deferred Tax – (7,602) (7,602)
Loans from ultimate holding company (1,608) 625 (983)
Long term loans (14,509) 3,029 (11,480)
Total long term liabilities (16,117) (3,948) (20,065)
Total identifiable net (liabilities)/assets (14,506) 33,889 19,383
36
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 37
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
11. INVESTMENTS IN SUBSIDIARIES continued
The following fair values have been determined on the following basis:
•
•
•
Property, plant and equipment has been determined by an independent valuation.
For the intangible asset (tidal data) that was previously acquired by MeyGen from Atlantis and is critical to the
development of the project, the fair value has been determined after taking into account the historical costs,
obsolescence and expenses incurred in improving the data.
The sea bed option allows MeyGen to enter into a 25 year lease of the tidal development site on the seabed
at the Inner Sound for the development and operation of the tidal stream energy project. The fair value of the
option, amounting to S$36,928,000 (£18,606,000) takes into account the future cash flows based on market
information, third party reports and detailed studies based on the following assumptions:
–
–
–
–
Operating revenues are a function of the number of turbines installed, the energy generated and price
received for each MWh of electricity exported to the grid.
Debt financing is projected based on funding a proportion of the capital requirements of the project with
an interest expense of LIBOR forward rates plus a margin.
Capital expenditure relates to the purchase of the turbines, grid connection, seabed lease, construction,
cabling power conditioning, installation and onshore works.
Discount rate includes a project specific premium of 12% with an overall cost of equity of 20%.
The fair value of the seabed option is estimated based on the discounted cash flows of a notional start-up
(greenfield) business with no assets but the seabed option.
•
The loans have been fair valued based on market rates.
Negative goodwill arising on acquisition
The negative goodwill was recognised as a result of the acquisition as follows:
S$’000
Total consideration transferred 771
Fair value pre-existing interest in the acquiree 1,938
Fair value of identifiable net assets (19,383)
Negative goodwill (16,674)
Negative goodwill arose in the acquisition of MeyGen because of the future revenue growth forecast to be realised
from the development of the project and which has been recognised in the profit and loss.
The remeasurement to fair value of the group’s existing 10% interest in the acquiree resulted in a gain of S$1,938,000
(S$1,938,000 less S$Nil carrying value of equity-accounted investee at acquisition date), which has been recognised
in other gains and losses in the statement of profit or loss and other comprehensive income (Note 6).
The negative goodwill is attributable mainly to the revenue growth and future market development as well as unique
knowledge and experience pertaining to building the tidal project. It has been assumed that none of the goodwill
recognised will be deductible for tax purposes.
12. LOAN TO A SUBSIDIARY
The loan to a subsidiary (MeyGen) is interest bearing at 12-month LIBOR plus 5% per annum, unsecured and repayable
in February 2030. At the end of the reporting period, the fair value of the loan is approximately S$1,029,000.
13. AVAILABLE-FOR-SALE INVESTMENTS
Group and Company
2013 2012
$’000 $’000
Unquoted equity shares, at cost – 283
Add: Loans granted to MeyGen – 1,350
– 1,633
Less: Impairment allowance – (283)
– 1,350
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
37
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
13. AVAILABLE-FOR-SALE INVESTMENTS continued
Details of the group’s and company’s investment are as follows:
Name of investment
Proportion of
ownership
interest
Country of and voting Cost of
incorporation power held investment
(or registration) 2013 2012 2013 2012
and operation % % $’000 $’000 Principal activity
Atlantis Brands Corporation Pte Limited
Singapore 4 4 – – Dormant
MeyGen Limited
Scotland 100 10 – 1,633 Development of tidal
power generation project
– 1,633
On 31 October 2013, Atlantis Projects Pte. Ltd., a wholly owned subsidiary of the company, acquired a 90% shareholding
in MeyGen. In February 2014, the company transferred its 10% direct shareholding in MeyGen to Atlantis Projects Pte.
Ltd., thereby increasing the shareholding of Atlantis Projects Pte. Ltd. in MeyGen to 100% (Note 11).
14. PROPERTY, PLANT AND EQUIPMENT
Furniture Computer
Freehold fixture and equipment Construction-
Land equipment and software in-progress Total
Group S$’000 S$’000 S$’000 S$’000 S$’000
Cost:
At 1 January 2012 – 103 874 5,202 6,179
Additions – – 11 489 500
Reimbursed by grants – – – (288) (288)
Exchange Differences – 10 1 (2) 9
Disposals – – (17) (1,142) (1,159)
At 31 December 2012 – 113 869 4,259 5,241
Additions – – 15 449 464
Acquired on acquisition of a subsidiary 42 – 20 – 62
Exchange Differences – – (5) (168) (173)
Reclassifications – – – (1,636) (1,636)
At 31 December 2013 42 113 899 2,904 3,958
Accumulated depreciation:
At 1 January 2012 – 78 518 – 596
Depreciation for the year – 24 187 – 211
Exchange Differences – – – – –
Disposals – – (14) – (14)
At 31 December 2012 – 102 691 – 793
Depreciation for the year – 5 157 – 162
Exchange Differences – – (4) – (4)
Disposals – – – – –
At 31 December 2013 – 107 844 – 951
Carrying amount:
At 31 December 2013 42 6 55 2,904 3,007
At 31 December 2012 – 11 178 4,259 4,448
At the end of the reporting period, included in construction-in-progress is the group’s AR-1000 turbine, which is still
under development and will start to be depreciated once it is commissioned. The carrying amount of the
construction-in-progress at the end of the reporting period is S$2,905,000 (2012: S$4,259,000). At the end of every year,
management assesses the existing condition and performance of its assets.
Reclassification pertains mainly to equipment under construction that was transferred to inventory upon completion and
subsequently to cost of sales upon sale to a customer.
38
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 39
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
14. PROPERTY, PLANT AND EQUIPMENT continued
During the year, the group acquired land upon the acquisition of a subsidiary (Note 11).
Grants received have been recorded as a deduction from the carrying amount of the acquisitions recognised as construction
in progress and additions to development costs (Note 15), in accordance with the accounting policy stated in Note 2.
During the year, the company completed the sale of certain turbine equipment to a third party customer.
Furniture Computer
fixture and equipment
equipment and software Total
Company S$’000 S$’000 S$’000
Cost:
At 1 January 2012 103 832 935
Additions 9 7 16
At 31 December 2012 112 839 951
Additions – 10 10
At 31 December 2013 112 849 961
Accumulated depreciation:
At 1 January 2012 78 483 561
Depreciation for the year 24 183 207
At 31 December 2012 102 666 768
Depreciation for the year 5 155 160
At 31 December 2013 107 821 928
Carrying amount:
At 31 December 2013 5 28 33
At 31 December 2012 10 173 183
15. INTANGIBLE ASSETS
Global
technology Intellectual Development
licence property costs Tidal data Total
Group S$’000 S$’000 S$’000 S$’000 S$’000
Cost:
At 1 January 2012 17,190 1,199 28,958 – 47,347
Additions – – 1,373 – 1,373
Reimbursed by grants – – (524) – (524)
Exchange difference – – (324) – (324)
At 31 December 2012 17,190 1,199 29,483 – 47,872
Additions – – 1,908 – 1,908
Acquired on acquisition of a subsidiary – – – 2,908 2,908
Exchange difference – – 897 – 897
At 31 December 2013 17,190 1,199 32,288 2,908 53,585
Accumulated depreciation:
At 1 January 2012 1,146 80 1,934 – 3,160
Amortisation for the year 1,146 80 1,976 – 3,202
Exchange difference – – (474) – (474)
At 31 December 2012 2,292 160 3,436 – 5,888
Amortisation for the year 1,146 80 1,813 – 3,039
Exchange Differences – – 618 – 618
At 31 December 2013 3,438 240 5,867 – 9,545
Carrying amount:
At 31 December 2013 13,752 959 26,421 2,908 44,040
At 31 December 2012 14,898 1,039 26,047 – 41,984
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
39
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 40
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
15. INTANGIBLE ASSETS continued
Intellectual Development
property costs Total
Company S$’000 S$’000 S$’000
Cost:
At 1 January 2012 1,199 6,996 8,195
At 31 December 2012 and 31 December 2013 1,199 6,996 8,195
Accumulated depreciation:
At 1 January 2012 80 466 546
Amortisation for the year 80 467 547
At 31 December 2012 160 933 1,093
Amortisation for the year 80 466 546
At 31 December 2013 240 1,399 1,639
Carrying amount:
At 31 December 2013 959 5,597 6,556
At 31 December 2012 1,039 6,063 7,102
(a) Global technology licence
This licence grants the group exclusive perpetual world-wide license of the rights to use, deploy and manufacture
proprietary technology in respect of turbines and related infrastructure used in tidal energy generation including the
Aquanator technology.
The group estimated that the technology has a useful life of approximately 15 years and amortisation started
beginning from 1 January 2012 when it was put to use for the successful deployment of commercial grade turbines.
(b)
Intellectual property
Intellectual property includes two international patent applications and three registered trademarks to the company.
The group estimated that the intellectual property costs have a useful life of approximately 15 years and the group
started amortising the intellectual property costs for the financial period beginning from 1 January 2011.
The group tests intangible assets annually for impairment, or more frequently if there are indications that the asset
might be impaired. During the financial year, based on a detailed review performed, management is of the view that
no impairment on intangible assets is required, as disclosed in Note 3.
(c) Development cost
The group estimated that the development costs have a useful life of approximately 15 years, and the group started
amortising the development costs for the financial period beginning from 1 January 2011.
(d) Tidal data
During the year, the group acquired tidal data upon the acquisition of a subsidiary, MeyGen (Note 11). The tidal data
was acquired from the company for a consideration of S$1,394,000 (£700,000) as part of a share subscription for
share capital in MeyGen on 21 October 2010. Since then, more work has been done and more data collected. The
tidal data is crucial to the development of the MeyGen project and little or no obsolescence is expected. The tidal
data will be amortised starting upon the commissioning of the project.
Both offshore and onshore consents were obtained in 2013 for the first phase of the MeyGen project and MeyGen
is now a fully permitted and commercially viable project, with the completion of front end engineering design, grid
connection, and environmental consenting, and sources of financing identified. Having satisfied all of the
capitalisation criteria, with effect from 1 November 2013, all development costs incurred by MeyGen were capitalised
to present a more accurate picture of the project. These costs will be amortised starting upon commissioning of the
project.
40
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 41
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
16. CASH AND CASH EQUIVALENTS
Group
Company
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Cash at bank 895 2,326 174 156
Fixed deposits 1,712 11 – 11
Cash on hand 13 1 10 1
2,620 2,338 184 168
Less: encumbered deposits (1,712) – – –
Cash and cash equivalents in the statement of cash flows 908 2,338 184 168
Bank balances and cash comprise cash held by the group and short-term bank deposits with an original maturity of
3 months. The carrying amounts of these assets approximate their fair values.
Included in the fixed deposits are encumbered deposits amounting to S$1,712,000 that served as collateral in relation to
the provision of bank guarantees in relation to a subsidiary (Note 30).
The group’s and company’s cash and bank balances that are not denominated in the functional currencies of the respective
entities are as follows:
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Australian dollars 15 13 9 9
British pound 1,563 23 8 8
Euros 6 9 2 6
United States dollars 29 1,272 2 5
Group
Company
17. TRADE AND OTHER RECEIVABLES
Group
Company
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Other receivables due from:
– subsidiaries – – 24,725 44,009
– shareholder 57 50 57 50
– director 209 – 209 –
Deposits 194 228 38 109
Prepayments 1,083 131 854 64
Value added tax recoverable 12 – – –
Other receivables 46 71 – 71
1,601 480 25,883 44,303
The remaining receivables due from other subsidiaries are interest-free, unsecured and repayable on demand.
During the year, the company waived the receivables due from one of its subsidiaries amounting to S$27,753,000 and
wrote off a bad debt for an amount due from a shareholder amounting to S$50,000. The company has not recognised
any allowance for the other receivables as the directors are of the view that these receivables are recoverable.
Prepayments relates mainly to qualifying expenses incurred for the public offering, annual insurance premiums for the
group’s AR-1000 turbine, as well as other working capital advances.
The group’s and company’s other receivables (excluding prepayments) that are not denominated in the functional
currencies of the respective entities are as follows:
Group
Company
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Australian dollars 22 – 6,931 7,435
British pound 1,903 – 6,901 26,828
Euros – – 238 220
United States dollars 126 – 2,975 2,268
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
41
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 42
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
18. OTHER ASSETS
On 31 October 2013, as part of a business combination, the group acquired an option to enter into a sea bed lease for
the development and operation of the tidal stream energy project (Note 11). At year end the carrying value of the option
is S$37,027,000 (£18,606,000).
In addition, the subsidiary also took up a lease option over land at Ness of Quoys in Caithness, Scotland, for S$25,000
(£13,000) for the construction of onshore facilities for the MeyGen project.
19. TRADE AND OTHER PAYABLES
Group
Company
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Trade payables 2,273 824 1,264 158
Value added tax payable – 36 – –
Other payables 221 98 110 10
Accruals 4,157 1,260 3,843 581
Advance receipts 154 1,265 – –
Other payables due to subsidiaries – – 2,758 605
6,805 3,483 7,975 1,354
The average credit period on purchases of goods is 30 days (2012: 30 days). The outstanding balances as at the end of
the reporting period are interest free.
The group’s and company’s trade and other payables that are not denominated in the functional currencies of the
respective entities are as follows:
Group
Company
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Australian dollars 317 79 1,597 663
British pound 3,837 490 2,302 490
Norwegian krone – 13 – –
United States dollars 539 457 1,939 –
20. PROVISIONS
Provision for
Warranty Decommissioning
Provision costs Total
2013 S$‘000 S$‘000 S$‘000
At 1 January 2013 – – –
Provision during the year 73 1,031 1,104
At 31 December 2013 73 1,031 1,104
The provision for warranty claims represents the present value of the directors’ best estimate of the future outflow of
economic benefits that will be required in relation to equipment sales made during the year. The estimate has been made
on the basis of quotes obtained from external contractors.
The provision for decommissioning costs represents the present value of the directors’ best estimate of direct costs that
may be incurred to remove the AR-1000 turbine foundation from the group’s testing berth at the European Marine Energy
Centre in Scotland and make good the site, expected to be required in 2015. The anticipated expenditure for the
decommissioning of the foundation, net of its scrap value, is S$1,031,000 (£500,000). This expenditure is capitalised as
a development cost and amortised together with the other AR-1000 turbine development costs over a further 13 years.
42
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 43
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
21. LOANS AND BORROWINGS
The group’s and the company’s total loans and borrowings are as follows:
Group
Company
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Current loans and borrowings
Shareholders’ loans 1,520 – 1,520 –
Convertible loans 37,242 – 37,242 –
Total current loans and borrowings 38,762 – 38,762 –
Non-current loans and borrowings
Shareholders’ loans – 18,027 – 18,027
Related party loans 6,207 – – –
Long term loans 6,207 – – –
Total non-current loans and borrowings 12,414 18,027 – 18,027
Total loans and borrowings 51,176 18,027 38,762 18,027
(a) Shareholders’ loans
In 2011, unsecured long term loans with an aggregate principal amount of S$14,667,000 were raised from ten
shareholders of the company. In 2012, the company raised a further S$500,000 from one further shareholder.
The shareholder loans are interest bearing at a rate of 15% per annum with interest accruing daily but compounded
in arrears every 6 months on 30 June and 31 December. The repayment date for all of the loans was originally August
2014.
During the year, an offer was made to the lenders of these existing shareholder loans to convert the entire principal
amount plus all interest into shares upon the occurrence of the listing of the shares of the company at a conversion
price of 90% of the initial public offering price. All but two of the eleven lenders of these shareholder loans accepted
the company’s offer.
Therefore, before 31 December 2013, all but two of the eleven shareholder loans became convertible to equity upon
an initial public offering of shares in the company, at a 10% discount to the initial public offer price. As a result, the
outstanding shareholders’ loans balance including accrued interest, was reduced to S$1,520,000 as at the end of
the reporting period, comprising only the two shareholder loans, the lenders of which did not accept the company’s
offer for the loans to convert to shares upon an initial public offering of the company. Given the August 2014
repayment date, these loans were classified as current at 31 December 2013. The other nine loans that were amended
to be convertible on an initial public offering of the company were classified as convertible loans (see below).
With effect from 31 October 2013, the shareholders’ loans owing to Morgan Stanley Capital Group (Singapore)
Pte Ltd were transferred to Morgan Stanley Renewables by way of novation.
As at the end of the reporting period, the fair value of the shareholders’ loans was approximately S$1,554,000
(2012: S$14,902,000).
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
43
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 44
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
21. LOANS AND BORROWINGS continued
The amortised costs of these loans are as follows:
Group and Company
2013 2012
S$’000 S$’000
Minnow Holdings Pty Ltd – 1,790
Aloa Pty Ltd – 894
ABSS Investments Pty Ltd – 598
Armstrong Industries HK Ltd – 1,795
GCL Holdings (BVI) Pte Ltd – 537
Morgan Stanley Capital Group (Singapore) Pte Ltd – 10,304
Agnes Antonia Baten – 120
Basil McIlhagga – 597
Ben Bourgeois – 76
EDB Investments Pte Ltd 1,382 1,196
Austower Pty Ltd 138 120
1,520 18,027
Analysis of the loans are as follows:
– current 1,520 –
– long-term – 18,027
1,520 18,027
(b) Loan from a related party
Upon acquisition of the additional 90% shareholding in MeyGen by Atlantis Projects Pte. Ltd. on 31 October 2013,
the existing loans from MSCGI and IPMDL were restructured such that they were no longer at call, and instead
became repayable in February 2021, with all distributions from MeyGen to be applied to the repayment of these
loans before any distributions to shareholders of MeyGen. These loans were revalued by an independent valuer at
the point of acquisition.
The loan from MSCGI is treated as a related party loan given MSGI is a related party of Morgan Stanley Renewables,
a shareholder of the company. The fair value of the MSCGI loan at period end 2013 was S$6,207,000 (2012: Nil).
2013 2012
S$’000 S$’000
Morgan Stanley Capital Group Inc. 6,207 –
Group
(c) Convertible loans
In March and April 2013, the company entered into and drew down two unsecured term loan facilitates with principal
amounts of S$620,000 and US$100,000, respectively. The loans were repayable three years from the drawdown
date. The interest rate on the loans was 5.0% per annum for the first 12 months, increasing at a rate of 0.75% per
annum each six months thereafter until the repayment date. In the event of a change of control or the company
transferring or entering into an agreement to transfer all or substantially all of its assets, whether in a single
transaction or a series of transactions, then in each case, the company would have been required, within 20 business
days thereof, to repay the loans plus any accrued but unpaid interest, together with a prepayment premium of 10%
of the loan. Further, in the event of an initial public offering of shares in the company, the company was required
issue the lender with shares in the company, with the number of shares to be calculated based on the offer price at
the initial public offering discounted by 10%. At the balance sheet date, these convertible loans are classified as
current liabilities given the initial public offering of the company in February 2014, at which time the outstanding
balance of these loans converted to shares in the company.
44
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 45
NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
21. LOANS AND BORROWINGS continued
In October 2013, the company launched a convertible loan offering to its existing shareholders by way of a rights
issuance. The company entered into convertible loan agreements with an aggregate principal amount of S$3,915,000
(£1,958,000) through this offering from six existing shareholders of the company and three directors of the company,
with proceeds received between October 2013 and January 2014. The convertible loans had a 12 months term and
a 10% p.a. interest rate, with interest payable quarterly in arrears. A penalty of 6 months’ interest (i.e. 5%) was
payable upon any prepayment before the end of the term. Upon an initial public offering of the company, the loans
would convert to shares in the company at a conversion price of 90% of the initial public offering price (subject in
the case of Morgan Stanley Renewables’ loan to a cap on conversion of its convertible loan to the extent any such
conversion would result in Morgan Stanley Renewables’ shareholding in the company exceeding 42.5%). The
prepayment penalty was also payable in the event of an initial public offering of shares in the company, also to be
paid in shares in the company. An amount of S$2,302,000 (£1.1 million) of this convertible loan offering was
underwritten by two shareholders of the company for a 10% fee of S$221,000 (£110,000). At the balance sheet
date, these convertible loans are classified as current liabilities given the initial public offering of the company in
February 2014, at which time the outstanding balance of these loans converted to shares in the company.
At the balance sheet date, the nine shareholder loans, the lenders of which had agreed to amend their shareholders’
loan agreements to include for conversion upon an initial public offering of shares in the company (as described in
Note 21(a)), are classified as convertible loans. At the balance sheet date, these convertible loans are classified as
current liabilities given the initial public offering of the company in February 2014, at which time the outstanding
balance of these loans converted to shares in the company.
Analysis of the fair values of the convertible loans is as follows:
Group and Company
2013 2012
S$’000 S$’000
Convertible loans from shareholders
ABSS Investments Pty Ltd 1,200 –
Agnes Antonia Baten 223 –
Aloa Pty Ltd 1,260 –
Armstrong Industries HK Ltd 5,939 –
Basil McIlhagga 1,111 –
Ben Bourgeois 226 –
Byrne Trust Company Ltd 10 –
GCL Holdings (BVI) Pte Ltd 1,075 –
Leeton Securities Limited 299 –
Minnow Holdings Pty Ltd 3,329 –
Morgan Stanley Capital Group (Singapore) Pte Ltd 19,176 –
Morgan Stanley Renewables 954 –
Statkraft AS 733 –
Convertible loans from others
Robin Shenfield 143 –
George Philips 710 –
Convertible loans from directors
John Neill 489 –
Ian Macdonald 242 –
Michael Lloyd 123 –
37,242 –
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
45
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
21. LOANS AND BORROWINGS continued
(d) Long term loans
As described in Note 21(b), upon acquisition of the 90% shareholding in MeyGen by Atlantis Projects Pte. Ltd. on
31 October 2013, an existing loan from IPMDL was restructured such that it was no longer repayable at call, and
instead became repayable in February 2021, with all distributions from MeyGen to be applied to the repayment of
this and the Morgan Stanley Renewables loans before any distributions to MeyGen shareholders. This loan was
revalued by an independent valuer at the point of acquisition.
The fair value of the IPMDL loan is as follows:
2013 2012
S$’000 S$’000
International Power Marine Development Ltd 6,207 –
Group
22. DEFERRED TAX
Group
2013 2012
S$’000 S$’000
Deferred tax liabilities 7,602 –
The deferred tax liability has been recognised due to the fair valuation of the MeyGen sea bed option and tidal data
(Note 11) and made on the assumption that the amortisation of these costs is not tax-deductible.
23. SHARE CAPITAL
Group and Company
Number of Number of
Number of non-voting non-voting
ordinary “A” preference preference
shares “B” shares “C” shares Total
2013 ‘000 ‘000 ‘000 S$’000
Issued and paid up during the year:
At the beginning of the year 900,493 2,250 59,524 111,282
Issued for cash 223,529 – – 3,621
Exercise of contingent options 134,195 – – 3
Exercise of share options, net – 25,000 – –
At end of year 1,258,217 27,250 59,524 114,906
Number of Number of
Number of non-voting non-voting
ordinary “A” preference preference
shares “B” shares “C” shares Total
2012 ‘000 ‘000 ‘000 S$’000
Issued and paid up during the year:
At the beginning and end of the year 900,493 2,250 59,524 111,282
Group and Company
The company has one class of ordinary “A” shares which have no par value and carries no right to fixed income and
two classes of preference shares. A holder of class “B” or “C” non-voting preference shares is not entitled to any voting
rights and is entitled to liquidation distributions not exceeding S$2 billion and dividend payments not exceeding
S$100 million. Class “B” and “C” non-voting preference shares convert to ordinary “A” shares upon initial public offering
of ordinary shares, a trade sale or change in control of the company.
On 18 July 2013, the company undertook a rights issue pursuant to which existing shareholders in the company were offered
the opportunity to subscribe for up to 223,529,411 new ordinary “A” shares in the company at a price of S$0.017 per share,
a target equity raising of S$3.8 million. As a result of this rights issue, Morgan Stanley Renewables’ shareholding in the
company fell below 49.9%. As a result, Morgan Stanley Renewables was able to exercise all of its remaining 134,194,544
contingent options and was issued a corresponding number of new ordinary “A” shares in the company.
During the year, S$179,000 expenses (2012: $Nil) were incurred incidental to the rights issue.
Subsequent to the year end, on 20 February 2014, the company successfully listed its shares during the initial public
offering (Note 31).
46
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
24. SHARE OPTIONS
Option fee reserve represents call option fees paid up-front by the call option holders.
Options over ordinary “A” shares were issued prior to 1 July 2010 with no further options of this type granted in the four
years to 31 December 2013. The options could have been exercised at any time within the exercisable period but no later
than the expiry date. The options could have been exercised in full or a portion thereof upon payment of the exercise
price. Holders of the above share options had no right to participate in any share issues of the company or any of its
subsidiaries.
Details of the share options outstanding during the year are as follows:
Ordinary “A” share options
Preference “B” share options
Weighted Weighted
Number of average Number of average
share options exercise price share options exercise price
Group and Company ‘000 S$ ‘000 S$
2013
Outstanding at the beginning of the year 15,714 0.200 39,266 0.195
Granted during the year – – 25,000 0.0001
Exercised during the year – – (25,000) 0.0001
Lapsed during the year (15,714) 0.200 – –
Outstanding at the end of the year – 0.200 39,266 0.195
Exercisable at the end of the year – 39,266 0.195
As at 31 December 2013, the number of share options and their expiration dates are as follows:
Number of options Expiry on
36,266,000 4 June 2014
2,000,000 4 June 2015
1,000,000 9 June 2015
Ordinary “A” share options
Preference “B” share options
Weighted Weighted
Number of average Number of average
share options exercise price share options exercise price
Group and Company ‘000 S$ ‘000 S$
2012
Outstanding at the beginning of the year 15,714 0.200 44,066 0.196
Lapsed/terminated during the year – – (4,800) 0.200
Outstanding at the end of the year 15,714 0.200 39,266 0.195
Exercisable at the end of the year 15,714 39,266 0.195
As at 31 December 2012, the number of share options and their expiration dates are as follows:
Number of options Expiry on
15,713,730 26 February 2013
36,266,000 4 June 2014
2,000,000 4 June 2015
1,000,000 9 June 2015
15,713,730 share options for Ordinary “A” shares lapsed in February 2013. These options had a weighted average
remaining contractual life of 0.2 year as at the end of 2012. Preference “B” share options outstanding at the end of the
year have a weighted average remaining contractual life of 0.45 year (2012: 1.45 years).
During the financial year, the company granted 25,000,000 non-voting preference “B” shares under option to an executive
of the company, via the Company Share Option Plan (“CSOP”) established in 2009.
Share options granted under the CSOP carry no rights to dividends and no voting rights until the options become vested
and are exercised. Holders of these share options have no right to participate in any share issues of the company or any
of its subsidiaries.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
47
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
24. SHARE OPTIONS continued
The fair value for the above share options granted during the year were calculated using the Black-Scholes pricing model.
The inputs into the model were as follows:
2013 2012
Weighted average share price 0.017 –
Weighted average exercise price 0.0001 –
Expected volatility 56.94% –
Expected life 1 year –
Risk free rate 2.71% –
Expected dividend yield 0% –
Expected volatility was determined by calculating the historical volatility of comparable companies in the same industry.
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non
transferability, exercise restrictions and behavioral considerations.
The group and the company recognised total expenses of S$559,000 and S$551,000 respectively (2012: $195,000 and
$142,000 respectively), related to equity-settled share-based payment transactions during the year and this is included as
part of employee benefits expense.
Contingent options
Under the terms of the Deed of Undertaking between the company and Morgan Stanley Renewables dated October 2008,
the company irrevocably undertook to grant a call option upon the occurrence of a fund raising exercise in respect of
such number of option shares as is required to restore Morgan Stanley Renewables’ shareholding in the company to
49.9% of the issued share capital of the company up to a maximum issuance of 239,263,119 issued for a nominal amount
of S$100 on each exercise. At 31 December 2012, the group had 134,194,544 shares subject to this contingent option.
The option fee reserve of S$9,929 represents the consideration paid for this right.
As a result of a rights issue undertaken by the company in July 2013, Morgan Stanley Renewables’ shareholding in the
company fell below 49.9%. Morgan Stanley Renewables exercised all of its remaining 134,194,544 (2012: Nil) options
and was issued a corresponding number of class “A” ordinary shares in the company.
On 11 December 2013, with grant contingent upon admission of the company’s shares to the AIM market of the London
Stock Exchange, the company offered 7 of its directors and senior management options over shares in the company
through the company’s Long Term Incentive Programme (“LTIP”). Under the terms of the awards, the company awarded
a total of 4,255,321 options at the initial public offering price.
These options were granted subsequent to the year-end upon the admission of the company’s shares to AIM on
20 February 2014.
25. LOSS PER SHARE
The calculation of loss per share is based on the loss after tax and on the weighted average number of ordinary shares in
issue during each year.
Basic and diluted loss per share are calculated as follows:
2013 2012 2013 2012 2013 2012
S$‘000 S$‘000 ‘000 ‘000 S$ S$
Basic and diluted 9,676 14,974 37,970 36,549 0.26 0.41
Loss after tax
Weighted average
number of shares
Loss per share
Subsequent to the year end, the company’s class “A” ordinary shares were consolidated on the basis of one new ordinary
consolidated share to each holder of “A” shares for every 30 “A” shares held by such person on admission (Note 31).
48
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
26. FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT
(a) Categories of financial instruments
The following table sets out the financial instruments as at the end of reporting period:
Group
Company
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Financial assets
Cash and cash equivalents 2,620 2,338 184 168
Loans and receivables
Trade and other receivables 506 349 25,029 44,239
Loan to a subsidiary – – 1,904 –
Available-for-sale investments – 1,350 – 1,350
3,126 4,037 27,117 42,757
Financial liabilities
Amortised cost
Trade and other payables 6,651 2,218 7,975 1,354
Loans and borrowings 13,934 18,027 1,520 18,027
Fair value through profit or loss
Loans and borrowings 37,242 – 37,242 –
57,827 20,245 46,737 19,381
(b) Financial risk management policies and objectives
The group is exposed to various financial risks arising in the normal course of business. It has adopted financial risk
management policies and utilised a variety of techniques to manage its exposure to these risks.
The group does not hold or issue derivative financial instruments for speculative purposes.
There has been no change to the group’s exposure to these financial risks or the manner in which it manages and
measures the risk. Market risk exposures are measured using sensitivity analysis indicated below.
(i)
Foreign exchange risk management
The group transacts business in various foreign currencies, including the Australian dollar, United States dollar
and British pound, and therefore is exposed to foreign exchange risk.
At the end of the reporting period, the carrying amounts of monetary assets and monetary liabilities
denominated in currencies other than the respective group entities’ functional currencies are as follows:
Liabilities
Assets
Liabilities
Assets
Group
Company
2013 2012 2013 2012 2013 2012 2013 2012
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Australian dollars 266 79 12 13 1,597 663 6,940 7,444
British pound 12,181 490 10,822 23 1,618 490 9,296 26,863
Euros – – 6 9 – – 241 226
United States dollars 682 457 29 1,272 2,083 – 2,851 2,273
Foreign currency sensitivity
The sensitivity rate used when reporting foreign currency risk to key management personnel is 10%, which is
the sensitivity rate which represents management’s assessment of the likely potential change in foreign
exchange rates.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
49
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
26. FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT continued
If the relevant foreign currencies were to strengthen by 10% against the functional currency of each group
entity, profit and loss will increase/(decrease) by:
2013 2012 2013 2012 2013 2012 2013 2012
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Australian dollars
British pound
Euros
United States dollars
Group
Profit or loss (25) (7) (136) (47) 1 1 (65) 82
Company
Profit or loss 534 678 (768) 2,634 24 23 (77) 227
If the relevant foreign currency weakens by 10% against the functional currency of each group entity, the
effects on profit and loss will be vice versa.
(ii)
Interest rate risk management
Interest rate risk arises from the potential change in interest rates that may have an adverse effect on the group
in the current reporting year or in future years.
The group’s exposure to interest rate risk is limited to the effects of fluctuation in bank interest rate on cash
and cash equivalents as well as LIBOR rates on loans and borrowings.
No sensitivity analysis is prepared as the group does not expect any material effect on the group’s profit or loss
arising from the effects of reasonably possible changes to interest rates on interest bearing financial instruments
at the end of the reporting period.
(iii) Equity price risk management
The group is not exposed to equity price risks as it holds minimal equity investments. Equity price sensitivity has
not been analysed as the impact on the group’s profit or loss is not expected to be significant.
(iv) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial
loss to the group.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset as at the
end of the reporting period.
Cash at bank is held with creditworthy financial institutions.
(v)
Liquidity risk management
The group actively manages its operating cash flows and the availability of funding through maintaining
sufficient cash and cash equivalents to finance their activities.
Current financial liabilities in 2012 and 2013 are repayable on demand or due within one year from the end of
the reporting period. Other than shareholders’ loans and convertible loans, the remaining financial liabilities
are non-interest bearing.
The non-current liabilities comprise third party and related party loans that are interest bearing at LIBOR plus
5% repayable in February 2021.
(vi) Analysis of financial instruments by remaining contractual maturities.
The table below summarises the maturity profile of the group’s financial assets and liabilities at the end of the
reporting period based on the contractual undiscounted repayment obligations.
50
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
26. FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT continued
Group One year or less One to five years Over five years Adjustment Total
2013 S$’000 S$’000 S$’000 S$’000 S$’000
Financial assets
Cash and cash equivalents 2,620 – – – 2,620
Trade and other receivables 506 – – – 506
3,126 – – – 3,126
Financial liabilities
Trade and other payables 6,651 – – – 6,651
Shareholders’ loans 1,675 – – (155) 1,520
Convertible loans 37,837 – – (595) 37,242
Loans from related party – – 13,762 (7,555) 6,207
Long term loans – – 13,762 (7,555) 6,207
46,163 – 27,524 (15,860) 57,827
One year or less One to five years Over five years Adjustment Total
2012 S$’000 S$’000 S$’000 S$’000 S$’000
Financial assets
Cash and cash equivalents 2,338 – – – 2,338
Trade and other receivables 349 – – – 349
Available-for-sale investments 1,350 – – – 1,350
4,037 – – – 4,037
Financial liabilities
Trade payables and other payables 2,218 – – – 2,218
Loans and borrowings – 22,992 – (4,965) 18,027
2,218 22,992 – (4,965) 20,245
Company One year or less One to five years Over five years Adjustment Total
2013 S$’000 S$’000 S$’000 S$’000 S$’000
Financial assets
Loan to a subsidiary – – 6,546 (4,642) 1,904
Cash and cash equivalents 184 – – – 184
Trade and other receivables 25,029 – – – 25,029
25,213 – 6,546 (4,642) 27,117
Financial liabilities
Trade and other payables 7,975 – – – 7,975
Shareholders’ loans 1,675 – – (155) 1,520
Convertible loans 37,837 – – (595) 37,242
47,487 – – (750) 46,737
One year or less One to five years Over five years Adjustment Total
2012 S$’000 S$’000 S$’000 S$’000 S$’000
Financial assets
Cash and cash equivalents 168 – – – 168
Trade and other receivables 44,239 – – – 44,239
Available-for-sale investments 1,350 – – – 1,350
45,757 – – – 45,757
Financial liabilities
Trade payables and other payables 1,354 – – – 1,354
Loans and borrowings – 22,992 – (4,965) 18,027
1,354 22,992 – (4,965) 19,381
(vii) Fair value of financial assets and financial liabilities
Except as detailed in the following table, the directors consider that the carrying amounts of the financial assets
and financial liabilities recognised in the consolidated financial statements approximate their fair values.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
51
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
26. FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT continued
2013 2013 2012 2012
Carrying Value Fair Value Carrying Value Fair Value
Group S$’000 S$’000 S$’000 S$’000
Financial Assets
Available for sale investment – – 1,350 1,350
Financial Liabilities
Shareholders’ loans 1,520 1,554 18,027 14,902
Convertible loans 37,242 37,242 – –
Loans from related party 6,207 6,207 – –
Long term loans 6,207 6,207 – –
2013 2013 2012 2012
Carrying Value Fair Value Carrying Value Fair Value
Company S$’000 S$’000 S$’000 S$’000
Financial Assets
Available for sale – – 1,350 1,350
Loan to a subsidiary 1,904 1,029 – –
1,904 1,029 1,350 1,350
Financial Liabilities
Shareholders’ loans 1,520 1,554 18,027 14,902
Convertible loans 37, 242 37, 242 – –
38,762 38,796 18,027 14,902
Group
2013 Level 1 Level 2 Level 3 Total Fair Value
Financial Liabilities
Shareholders’ loans – – 1,554 1,554
Convertible loans – – 37,242 37,242
Loans from related party – – 6,207 6,207
Long term loans – – 6,207 6,207
– – 51,210 51,210
2012 Level 1 Level 2 Level 3 Total Fair Value
Financial Assets
Available for sale of investment – – 1,350 1,350
Financial Liabilities
Shareholders’ loans – – 14,902 14,902
Company
2013 Level 1 Level 2 Level 3 Total Fair Value
Financial Assets
Loan to a subsidiary – – 1,029 1,029
Financial Liabilities
Shareholders’ loans – – 1,554 1,554
Convertible loans – – 37,242 37,242
– – 38,796 38,796
2012 Level 1 Level 2 Level 3 Total Fair Value
Financial Assets
Available for sale of investment – – 1,350 1,350
Financial Liabilities
Shareholders’ loans – – 14,902 14,902
The fair values of the financial liabilities included in level 3 category of Note 26 have been determined in
accordance with generally accepted pricing models based on discounted cash flow analysis, with the most
significant inputs being the discount rate that reflects the credit risk of the company and counterparties.
There were no transfers between level 2 and 3 during the period.
52
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
26. FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT continued
(c) Capital risk management policies and objectives
The group manages its capital to ensure that entities in the group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balances.
The capital structure of the group consists of equity attributable to owners of the parent, comprising issued capital
and accumulated losses as well as loans due to shareholders, related parties and third parties.
The company’s capital is made up of share capital, share option reserve and accumulated losses totalling as at
31 December 2013: S$29,822,000 (2012: S$29,090,000).
The company’s objectives when maintaining capital are:
(i)
(ii)
to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
to provide an adequate return to shareholders by pricing products and services commensurately with the level
of risk.
27. RELATED COMPANY AND RELATED PARTY TRANSACTIONS
During the year, group entities entered into the following significant transactions with related parties/companies:
Group
Company
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Interest income from a related party – MeyGen 74 67 74 67
Service fees income from a related party – MeyGen – 30 – 30
Rental expense paid to companies with common director 162 66 101 1
Consultancy fees paid to company with common director 105 – – –
Interest expense arising from shareholders’ loans
EDB Investments Pte. Ltd. 186 161 186 161
Austower Pty Ltd 19 16 19 16
Interest expense arising from related party
Morgan Stanley Capital Group Inc. 74 – – –
Group and Company
2013 2012
S$’000 S$’000
Interest expense arising from convertible loans from shareholders
Minnow Holdings Pty Ltd 1,255 241
Aloa Pty Ltd 258 120
ABSS Investments Pty Ltd 426 81
Armstrong Industries HK Ltd 1,438 242
GCL Holdings (BVI) Pte Ltd 446 37
Statkraft AS 103 –
Morgan Stanley Renewables Devt I (Cayman) Ltd 65 –
J. Ben Bourgeois 108 14
Other shareholders 545 107
Interest expense arising from convertible loans from a related party
Morgan Stanley Capital Group (Singapore) Pte Ltd 7,230 1,388
Interest expense arising from convertible loans from directors
John Neill 28 –
Mike Lloyd 7 –
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
53
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
27. RELATED COMPANY AND RELATED PARTY TRANSACTIONS continued
Group and Company
2013 2012
S$’000 S$’000
Loans entered into with shareholders
GCL Holdings (BVI) Ltd – 500
Convertible loans entered into with shareholders
Statkraft AS 567 –
Morgan Stanley Renewables Devt I (Cayman) Ltd 807 –
Armstrong Industries HK Ltd 2,198 –
ABSS Investments Pty Ltd 74 –
Leeton Securities Ltd 256 –
J. Ben Bourgeois 57 –
Byrne Trust Company Ltd 9 –
Convertible loans from directors
John Neill 420 –
Mike Lloyd 105 –
Ian Macdonald 209 –
Compensation of directors and key management personnel:
The remuneration of directors and other members of key management during the year was as follows:
Group
2013 2012
S$’000 S$’000
Short-term benefits 1,507 553
28. OPERATING LEASE COMMITMENTS
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Minimum lease payments under operating lease 1,334 714 99 101
Group
Company
At the end of the reporting period, the group has outstanding commitments under non-cancellable operating leases,
which fall due as follows:
2013 2012 2013 2012
S$’000 S$’000 S$’000 S$’000
Within one year 583 560 99 101
In the second to fifth year inclusive 751 154 – –
1,334 714 99 101
Group
Company
Operating lease payments represent rentals payable by the group for its office premises and berth lease. Office leases are
negotiated for an average term of one year and rentals are fixed for an average of one year.
29. OTHER COMMITMENTS
2013 2012
S$’000 S$’000
Commitments for the acquisition of plant and equipment 52 257
Group
54
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
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NOTES TO FINANCIAL STATEMENTS continued
31 DECEMBER 2013
30. CONTINGENT LIABILITIES
2013 2012
S$’000 S$’000
Guarantee given to bank in respect of bank facilities utilised by an investment – 116
Guarantee given to bank in respect of bank facilities utilised by a subsidiary 1,712 –
Group
During the year, Atlantis Operations (UK) Limited, a wholly owned subsidiary of the company, provided bank guarantees
in an aggregate amount of £817,570 (2012: £58,600) on behalf of MeyGen. These bank guarantees were renewed in
March 2014, at which time the aggregate amount of these guarantees was increased to £885,270.
31. EVENTS AFTER THE REPORTING PERIOD
Subsequent to 31 December 2013, the subsequent events of the group are as follows:
(a)
(b)
In January 2014, Atlantis Operations (UK) Limited, a wholly owned subsidiary of the company, entered into a grant
agreement with the Directorate-General for Energy of the European Commission for the award of an up to
€7,294,905 grant towards the design, build, installation and operation of three AR1500 turbines at the MeyGen
site. An initial drawdown of €2,320,895 was received in February 2014. Atlantis Operations (UK) Limited was required
to provide a bank guarantee in respect of this initial payment.
In February 2014, Atlantis Resources (Scotland) Limited, a wholly owned subsidiary of the company, entered into a
loan agreement with Scottish Enterprise (as administrator of the Renewable Energy Investment Fund) and the
company as guarantor. Of the £2 million principal amount of the loan, £1.5 million had already been drawn at the
date of this report, with the final £0.5 million expected to be drawn in July 2014. The loan is to be used to support
the development of Atlantis Resources (Scotland) Limited’s engineering hub in Scotland and in support of the
development of the initial phase of the MeyGen project. The interest rate on the loan is 12% per annum with interest
capitalised each six months. The loan plus all accrued and capitalised interest is repayable on the fifth anniversary of
the first drawdown.
(c) On 20 February 2014, the company’s entire share capital was admitted to trading on AIM, a market of the London
Stock Exchange. On the point of admission, the company’s class “A” ordinary shares were consolidated on the basis
of one new ordinary consolidated share to each holder of “A” shares for every 30 “A” shares held by such person
on admission. Further, upon admission of the company’s shares to trading on AIM, in accordance with their terms,
the class “B” non-voting preference shares and class “C” non-voting preference shares in the capital of the company
converted into class “A” ordinary shares in the capital of the company (“A shares”), and were immediately
consolidated to ordinary shares of the company on the basis of one consolidated share to each holder of “A” shares
for every 30 “A” shares held by such person on admission.
If the shares had not been consolidated, the basic and diluted loss per share would have appeared as follows:
Loss after tax
Weighted average
number of shares
Loss per share
2013 2012 2013 2012 2013 2012
S$ '000 S$’000 ‘000 ‘000 S$ S$
Basic and diluted
– Ordinary “A” Share 9,141 14,131 1,076,087 1,034,687 0.008 0.014
Basic and diluted
– Preference “B” Share 30 31 3,483 2,250 0.008 0.014
Basic and diluted
– Preference “C” Share 505 813 59,524 59,524 0.008 0.014
(d) At the same time as the admission of the company’s shares to AIM, the company made an initial public offering of
shares in the company with the issuance of 12,765,957 new ordinary shares at £0.94 per share. These ordinary
shares rank pari passu in all respects with the existing issued ordinary shares. Gross proceeds raised in February 2014
from the share placement were S$25,107,000 (£12,000,000) which, net of transaction costs, were classified as share
capital.
(e) Also upon admission of the company’s shares to AIM, certain shareholder loans and third party loans of the company
converted into shares in the company. In accordance with their terms, the principal amounts of the loans, together
with all capitalised and accrued interest thereon, were converted to ordinary shares of the company at the price of
shares issued in the initial public offering, less a discount of 10%.
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
55
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 12:57 Page 56
COMPANY INFORMATION
Non-Executive Directors
John Neill
Michael Lloyd
Ian Macdonald
Rune Nilsen
John Woodley
Executive Directors
Timothy Cornelius
Duncan Black
Registered Office and Company Number
65 Niven Road
Singapore 228414
Company Number: 200517551R
Company Secretary
Chang Ai Ling
c/o 50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
Nominated Adviser and Broker
N+1 Singer Advisory LLP
One Bartholomew Lane
London
EC2N 2AX
Auditor
Deloitte & Touche LLP
6 Shenton Way
OUE Downtown 2
#32-00
Singapore 068809
Registrar
Boardroom Corporate & Advisory Services Pte Ltd
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
Depositary
Capita IRG Trustees Limited
The Registry
34 Beckenham Road
Beckenham BR3 4TU
Guernsey Branch Register
Capita Registrars (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Website
www.atlantisresourcesltd.com
56
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
Atlantis AR p23_58_Atlantis AR p23_58 30/05/2014 10:02 Page 57
NOTES
ATLANTIS RESOURCES LIMITED
(FORMERLY KNOWN AS ATLANTIS RESOURCES CORPORATION PTE. LIMITED)
AND ITS SUBSIDIARIES
57
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Linkway 16347
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www.atlantisresourcesltd.com
Registered Office and Company Number
65 Niven Road, Singapore 228414, Company Number: 200517551R