ANNUAL
REPORT
2023
SAE: We develop, build and operate sustainable
energy projects, focussed on finding ways to deliver
and unlock opportunities that others can’t.
We are SAE, a developer, owner and operator of
sustainable energy projects. Our business is aligned
with the UK’s binding Net Zero targets to ensure we
are working in harmony with the UK government’s
national objectives.
We are passionate about what we do and use that passion to drive forward our business,
delivering for our shareholders, stakeholders and communities. Our long-term success will
be underpinned by the revenue generated from operating our sustainable energy projects,
ensuring a profitable and sustainable business.
Our Vision
Our Values
To develop, own and operate
sustainable energy projects for the
benefit of our shareholders and
our planet.
Our Mission
Today – We are an innovative and
dedicated team.
Tomorrow – Through collaboration
and teamwork we will achieve our
vision.
To collaborate and innovate to
reduce costs and successfully deliver
our projects.
Always – We always value the safety
of each other, our communities and
the environment.
Contents
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
1
3
5
7
9
Highlights
SAE Strategy
18 Directors’ Report
19 The Board of Directors
Reasons to Invest
21 Board Operation
Chairman Statement
23 Audit Committee Report
CEO Statement
26 Group Governance
13 CFO Statement
27 Directors’ Remuneration Report
30
Directors’ Responsibility
Statement
31
Independent Auditor’s Report
37
38
39
Consolidated Statement of
Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
41 Consolidated Statement of Cash Flows
42 Notes to the Financial Statements
IBC Company Information
1
HIGHLIGHTS
Financial
Profit
£23.2m*
(2022: £-11.1m)
Revenue
+292%
£15.3m (2022: £3.9m)
2023
2022
2021
23.2
2023
15.3
-11.1
-71.6
2022
3.9
2021
7.5
Net assets
+678%
£44.2m (2022: £5.7m)
EBITDA
£8.3m
(2022: £-5.8m)
2023
2022
5.7
2021
16.7
44.2
8.3
2023
2022
2021
-5.8
-6.8
Group debt (excluding MeyGen debt)
Operating costs
-30%
£13.7m (2022: £19.7m)
-29%
£5.0m (2022: £7m)
2023
2022
2021
13.7
19.7
15.5
5.0
7.0
2023
2022
2021
14.9
Graham Reid
CEO
Operational
Uskmouth Battery Energy System
Storage (BESS) projects
▶
▶
▶
▶
Final payment received on
230MW/460MWh BESS,
now under construction by
Uskmouth Energy Storage Ltd.
Signed conditional land sales
agreement with Electric Land
for £9.9 million for the 230MW
BESS. Milestone income to be
received during 2024.
Achieved planning for a new
120MW/240MWh BESS which
repurposes the site of the
stations cooling towers.
Commenced development
of an additional
600MW/1,200MWh of BESS at
the site.
Mey BESS project
Agreed option to lease land.
▶
▶ Modified MeyGen Grid
connection to increase
capacity to 287MW with full
import and export rights.
MeyGen
▶
Secured 22MW in AR5 auction
at £198/MWh.
▶ During 2023 MeyGen
▶
▶
generated 93% of all UK tidal
energy.
The array has generated 64
GWh of predictable tidal
energy.
Successful maintenance,
repair and reinstallation of
Turbine 2 including retrofit
of an advanced wet mate
connection system.
GWh generated
+37%
11.9GWh (2022: 8.7GWh)
2023
2022
2021
4.6
11.9
8.7
“2023 has seen the business establish a solid foundation for growth …a more focussed, lower risk business delivering predictable performance.”*Includes a net upwards revaluation adjustment of £22.6m. See note 11. Operational
2
3
SAE
STRATEGY
Building a sustainable future to 2035
SAE has a clear strategy for success that will
see it unlock value in the business and deliver
returns for our shareholders.
It’s a path to deliver a pipeline of projects
that will achieve our goal of being a leading
sustainable project developer, owner and
operator, ensuring long-term value for our
shareholders.
Our strategy directly supports UK government
policy to improve energy security and achieve
Net Zero by 2050.
Develop, own and operate a
207MW/414MWh battery storage
project at Mey in Caithness.
SAE has gained significant experience of BESS
development projects at its Uskmouth site. It also
knows the local area of Caithness exceptionally well
having been involved there for nearly 20 years. With
the large number of new wind projects in North
Scotland there is demand for BESS to help manage
the grid. SAE’s strategy is to use its experience to
meet the demand.
Develop, own and operate
900MW/1,800MWh of 2-hour
duration battery storage projects
SAE’s strategy is to remain focussed on
maximising all the potential at the Uskmouth and
Mey sites. In delivering this target SAE will become
a leading Independent Power Producer in the UK
and will benefit from the long-term sustainable
revenue streams these assets will provide.
SAE has the foundations and strategy to deliver.To achieve its goals SAE’s strategy will be focused on: 4
Financially close 80MW of
tidal capacity at MeyGen
Deliver 600MW/1,200MWh of
sustainable BESS projects at Uskmouth
SAE already has the experience, 50MW
of revenue support from the CfD scheme
and the project partners to deliver,
and our strategy is to work closely and
collaboratively alongside the Scottish
Government to ensure we hit this
milestone.
The Uskmouth site is arguably one of the best
locations for large scale BESS in the country. SAE
is the owner and operator of the site and plans
to use this unique position to maximise the site
potential.
Develop, own and operate
the remainder of the MeyGen
tidal site up to 398MW
SAE will continue to engage with the UK
Government and use its broad support
base to continue to make the case for tidal
stream at scale. SAE will also continue to
ensure that MeyGen is at the forefront of
the technology’s deployment. SAE will
continue to be the world’s largest tidal
stream IPP and benefit from the long
term sustainable and predictable revenue
streams this asset will provide.
To
2030
Double our BESS projects capacity
from 1,800MWh to 3,600MWh
In designing our BESS schemes SAE has sought
to secure development and land rights to enable
all our BESS projects to be easily augmented
from 2-hour to 4-hour duration doubling the
energy capacity of our assets from 1,800MWh to
3,600MWh. As intermittent renewable energy
penetration increases, and fossil fuel generation
reduces we expect an increase in demand for
longer duration storage systems. SAE will be well
placed to rapidly serve this increased demand
through expansion of our BESS assets.
To
2035
5
Reasons to
INVEST
01
02
03
Fantastic opportunity
to invest in one of the
largest, single location
BESS portfolios in the
UK, the Uskmouth
Sustainable Energy
Park
The single location
advantages are:
▶ Wholly owned site de-
risks the development as
SAE has no reliance on
agreements with third
party landownwers.
▶
Access to existing grid
infrastructure lowers the
cost and time to connect.
▶ Owner of a rail
connection, meaning
lower transport costs
and a more sustainable
means of importing
materials and plant for
construction.
▶
▶
Brownfield industrial
permitted generation site
favorable for BESS from a
planning perspective.
SAE retain land and
design the projects for
expansion in future from
2-hour duration to 4
hours.
▶ O&M team at Uskmouth
have extensive historical
knowledge of the site and
local supply chain.
SAE is already
growing its portfolio
and applying its
experience to another
BESS site near to Mey
in Caithness.
▶
▶
▶
Additional
207MW/414MWh BESS
project under planning at
our site in Scotland.
287MW grid capacity
secured with full import
and export rights.
Capacity will be shared
between the BESS project
and our tidal project.
This grid connection was
secured by SAE in 2009
as part of the early stages
of MeyGen’s project
development and is a
fully consented “ready
to build” connection
with a favourable grid
connection date.
The SAE operations team
in Scotland have extensive
local knowledge and are
an established developer
and O&M operator
in the area following
our development and
operation of the MeyGen
project.
▶ Mey BESS is strategically
located in a region of high
renewable generation
and can help National
Grid to bring these
renewables onto the grid
sooner.
SAE has diversified
revenue streams
▶
▶
BESS projects will deliver
long term revenue
streams through both
operation of the assets
and land income where
SAE own the land at
Uskmouth.
The new tidal projects
will deliver long term
predictable revenue
streams supported by a
predictable resource and
Contract for Difference
(CfD) revenue support.
▶ We aim to become an
Independent Power
Producer (IPP) for over
900MW/1,800MWh
of storage capacity
and 398MW of tidal
generation capacity,
thereby securing long-
term predictable revenue
streams for the business.
▶
The Group will seek to
double the capacity
of our BESS sites from
1,800MWh to 3,600MWh
between 2030 - 2035.
6
04
05
06
Experienced and
invested team
▶
▶
An Executive and
management team
with a strong record of
stabilising the Group and
growing this business.
Invested and strategic
Board focused on
ambitious growth.
SAE has developed a
strong financial base
from which to deliver
its strategy and
achieve its goals.
▶
▶
▶
Strong focus on profitable
business performance
and solid investment
return.
Relentless focus
on disciplined cash
management and
positive cashflows.
Exceptional origination,
development,
planning, construction
and operations and
maintenance expertise.
Strong alignment
with macro-economic
and regulatory drivers
▶ UK BESS requirement in
excess of 50GW by 2050
to provide grid services
as renewable generation
comes on line.
▶
▶
Capitalize on energy
security concerns and
supports large scale
expansion of offshore
wind in the region.
Accelerated route to
market for BESS projects
with National Grid
connection reform.
Uskmouth Sustainable Energy Park
is a prime site for BESS expansion
SAE is the world’s leader in tidal
operations and development
▶ Uskmouth Sustainable Energy Park currently
▶ With the opportunity for significant
hosts a 230MW/460MWh BESS under
construction with expansion potential to
350MW/700MWh, and a new 120MW/240MWh
BESS under development which has now
received planning permission. When fully
built out the site has sufficient land and
grid to host a total of 3,600MWh of storage
projects.
expansion SAE remains at the forefront of
the deployment of this new technology.
▶ While the revenue will deliver in the long
term, SAE remains perfectly placed to
benefit as the industry develops.
SAE presents an exciting opportunity to invest in one of the leading BESS and renewable energy developers in the UK. SAE has everything needed for rapid delivery of projects and a team with a record of success. 7
Chairman
STATEMENT
Duncan Black
Non-executive chairman
2023 Highlights:
The Board set very clear objectives for the
business last year, and I’m pleased to report
each of these were met or exceeded.
1. Restructure SAE’s debt and put the
business on a sustainable footing for
growth.
2. Continue to deliver one of the largest
Battery Energy Storage System (BESS)
developments in the UK.
3. Secure more funding for SAE’s MeyGen
project through the Contracts for
Difference (CfD) Application Round 5 (AR5)
auction.
Strategy - Building a Sustainable Future to 2035
With the significant deployment of intermittent
renewable energy generation, the electricity transmission
grid needs a means to store and release the excess energy
that is being generated as supply and demand fluctuates.
The UK government has identified BESS as an essential
energy infrastructure to ensure the delivery of net zero by
2050. There is currently a significant shortage of electricity
transmission grid capacity in the UK, which is severely
limiting the ability of new renewable energy projects
and BESS projects to connect to the grid in a meaningful
timescale. While Ofgem and National Grid are working to
address these shortages, there is a large demand for BESS
projects which can be delivered quickly located around
existing transmission connections.
At our Uskmouth facility we have a significant amount
of existing electricity grid connection capacity, and we
have additional grid connection capacity coming on-line
from 2026. This makes Uskmouth an ideal site for the
development of BESS projects with a potential capacity of
1,200MWh capable of being deployed by 2030.
We also have the land and rail connection to ensure
the most cost-effective and carbon-efficient delivery of
materials with minimal local disruption. The benefit of
having one major site is that our time and resources can
be focused on one area for delivery. The SAE team has a
long association with and knows the site, the community,
local stakeholders, and planners very well. This knowledge
has enabled the team to take our first BESS project at the
Uskmouth site from concept to construction ready within
a very short space of time.
SAE is developing several BESS projects at Uskmouth and
in Scotland, with the goal of maintaining a significant
equity ownership in these projects and delivering
sustainable revenue for the future.
We continue to successfully operate the MeyGen 1 project
and gain valuable long term operating experience and
data. The award of 50MWs of CfDs for the MeyGen 2
project through AR4 and AR5 provides a path forward for
the development of this exciting project in partnership
with the Scottish government. Tidal power remains an
important part of the future energy mix in providing a
source of reliable, predictable renewable energy.
“We have a clear path to deliver a pipeline of projects that will achieve our goal of being a leading sustainable project developer, owner and operator, ensuring long-term value for our shareholders and playing a key role in delivering on net zero by 2050.”
8
Strategy - (continued)
Outlook
Our projects align with Government policies and help
ensure the delivery of Net Zero by 2050. We aspire
to deliver over 3,600MWh of BESS projects by 2035.
In excess of 1,400MWh is expected to be built at the
Uskmouth Sustainable Energy Park with the balance
derived from increasing the duration of our BESS
schemes at Uskmouth and fully building out the Mey
BESS project.
The team has been working tirelessly to produce a
roadmap to deliver over 1,400MWh of BESS projects on
the Uskmouth site, the successful development of which
will make SAE one of the largest developers of BESS
projects in the UK. We have demonstrated the value that
BESS project development can add to our business, and
as we move into a business model of full development and
ownership, this value will increase.
We target to complete the next phase of the MeyGen
tidal project with the support of the 50MW of CfDs
already secured, and intend to secure further offtake
to enable the build out of the remainder of the
MeyGen site. These are all long term assets that will
provide the business with long-term sustainable
revenue streams.
Tidal energy remains exciting and very much a technology
of the future. SAE has worked to ensure that MeyGen
remains at the forefront of the technology’s development
by securing CfDs in AR4 and AR5.
Board activity
The Board has focused on ensuring the team has
the resources that it needs to realise the value
we have created at our existing sites and to put
the building blocks in place for expansion. We
have a good balance on our Board of knowledge,
experience and innovation to support the
business.
“I have worked and helped deliver projects
around the world. We have all the building
blocks, including the experience and expertise,
to deliver an exciting pipeline of sustainable
energy projects, which we can develop, build,
own and operate.”
John Woodley
Non-executive director
Conclusion
I am excited about the future for SAE. We have the funding and visibility on future revenues we need to deliver our
development projects and service our debt. We have a pipeline of projects that would be the envy of many much larger
companies, and we have a Board and Executive team who have a track record of successful delivery. I would sincerely
like to thank all the members of our team whose hard work and dedication during the past 12 months has delivered
outstanding results for SAE. To the stakeholders in our projects, bondholders, shareholders and governments thank you
for your continued support of our business.
9
CEO
STATEMENT
Graham Reid
CEO
2023 Highlights:
1.
Financial stability – 2023 saw an adjusted
EBITDA of £8.3 Million.
2. Established a development pipeline of over
900MW/1,800MWh of BESS projects.
3. Built a high performing team with a track
record of delivery.
Revenue
+292%
£15.3m (2022: £3.9m)
2023
2022
3.9
2021
7.5
15.3
A major milestone in 2023 was the successful conclusion
of the sale of our first Battery Energy Storage System
(BESS) project, which will see a 230MW/460MWh project
being completed at our Uskmouth site in 2025. We also
created significant value for the business from the land on
which this project is being built. This unlocked significant
revenue, which is key for future project development. We
continue to develop a project portfolio of 1,800MWh, a
portfolio that presents real opportunity and growth for our
company.
The MeyGen project continues to break records in tidal
stream generation, demonstrating our capabilities and
experience in power production, a key pillar of our future
strategy.
Results:
The business has made significant progress in the last
12 months, and we are in a strong position to deliver an
exciting future for our company and our shareholders.
Throughout the year we have focussed on three key
priorities:
▶
▶
Creating a streamlined business, which can identify,
respond, and deliver opportunities.
Significantly reduce costs and improve efficiency,
aligned around 2 business areas: BESS and tidal
stream generation.
▶ Maximise the return on our assets at Uskmouth and
MeyGen.
For the year ended 31st December 2023 we posted a set
of results which are a significant improvement on last
year. The year resulted in revenues of £15.3 million (2022:
revenue £3.9 million). I am also pleased to report that
this led to an adjusted EBITDA of £8.3 million (2022: £5.8
million loss).
Group debt (excluding non-recourse debt) fell to £13.7
million (2022: £19.7 million) following the successful
execution of the lease agreement for the 230MW
BESS project with Uskmouth Energy Storage Limited.
Operational efficiency was improved with a reduction in
cash burn to £5.0 million (2022: £7.0 million) whilst still
increasing our development pipeline which now sits at
900MW/1,800MWh. As at 31 December 2023 the Group
had £4.2 million cash at bank.
Our Meygen tidal stream project has been successful in
securing an additional 22MW of capacity in Application
Round 5 (AR5) which is the UK Government’s annual
auction for contracts for difference.
“During 2023, the business has met or exceeded all of its objectives. This provides a great platform from which we can embark on our new strategy: Building a Sustainable Future to 2035, advancing our transition towards becoming an Independent Power Producer (IPP).”
10
Strategy – Building a Sustainable future to 2035:
We are transitioning to becoming an IPP in BESS
and Tidal stream generation. We have several
projects located at our facilities at Uskmouth,
Mey and MeyGen all of which are being actively
developed. We will be constructing these
projects and expect to retain ownership of the
completed projects. Our ambition is to deliver
900MW/1,800MWh of BESS capacity and 80MW
of tidal capacity over the next 10 years whilst
still maintaining a robust pipeline of projects for
future delivery.
Outlook
We remain confident that we will deliver on our
ambitious plans for 2024. We expect to make
major progress towards financial close on our
second BESS project at Uskmouth which will be
for the 120MW/240MWh BESS with commercial
operation scheduled for 2026 providing a long-
term revenue stream for the business. The next
project will be our 207MW/414MWh project at
Mey, for which planning permission is expected
to be received later in 2024. During 2029 our third
project at Uskmouth and our MeyGen phase 2
project are scheduled to achieve commercial
operation, adding 250MW/500MWh storage and
50MW tidal respectively to our portfolio of assets.
Highlight: The revenue provided from closing
the Electric Land deal is a fundamental step in
developing our project pipeline and supports our
strategy of taking majority equity positions in each
of these projects.
“The last few years have seen us build the foundations
to become a sustainable energy developer, owner and
operator. We have the sites, the team and the projects
to deliver a great future.”
11
CEO
STATEMENT
A leading pipeline of projects:
2023 has seen us work with multiple experts
in identifying a substantial pipeline that will
position SAE as one of the country’s leading
BESS and tidal developers, owners and operators.
This huge piece of work has seen us reimagine
and reinvent the Uskmouth power station and
MeyGen sites.
Uskmouth
The Uskmouth Sustainable Energy Park is one
of the UK’s largest BESS development sites.
We have unlocked value to bring in funds to
the business with the first 230MW/460MWh
BESS project but our strategy moving forward
is to retain ownership of the projects. With over
1,400MWh identified to be delivered at the site,
this places us as a key deliverer of a technology
that has been identified as essential to meet our
national climate targets.
MeyGen
Tidal - with the CfDs awarded, we are working to
unlock this complex project. It is not easy, but we
have strong support from a range of stakeholders
including Government, who understand the
importance of this project for the broader tidal
sector.
MEY
BESS – with the GWs of offshore wind projects
off the Scottish coast, BESS will be critical for the
region in balancing generation with demand. We
are working on bringing our experience gained at
Uskmouth to deliver this vital technology in the
region.
“Batteries will play an essential role in
our energy transition and our ability to
successfully achieve net zero by 2050”
Minister of State for Industry and
Economic Security*
12
A strategy to deliver sustainable projects
for our shareholders and planet:
by
2030
Deliver 207MW of
BESS at Mey
by
2030
by
2030
Deliver 1,200MWh
of sustainable
projects at
Uskmouth
Financial close
of 80MW of tidal
capacity at MeyGen
by
2035
by
2035
by
2035
Develop, own and
operate 3,600MWh
of battery storage
projects
Build out the
remainder of the
MeyGen tidal site
Focus on long-term,
reliable operation of
our assets to secure
sustainable revenue
*https://assets.publishing.service.gov.uk/
media/656ef4871104cf000dfa74f3/uk-battery-strategy.pdf
13
CFO
STATEMENT
Simon Hirst
CFO
Introduction
2023 has been a transformational year for the Group. In
the battery space the Group has converted promising
project development opportunities at its Uskmouth site
into tangible financial results with the realisation of a
£10.0 million development premium during 2023 from
the sale of the ready to build 230MW BESS project with
grid connection at the Uskmouth Sustainable Energy
Park. In March 2024 the completion milestone in the land
sale contract with EL (Uskmouth) Ltd was completed
triggering the recognition of £9.9 million of revenue in
the 2024 accounts. Our tidal team won 22MW of tidal
capacity / revenue support in Allocation Round 5 of
the UK Governments Contracts for Difference auction,
augmenting the 28MW won a year earlier in Allocation
Round 4 and, with the support of our bondholders, we
agreed a new repayment schedule which gives the
Group the time and space it needs to deliver each of its
development opportunities.
The medium-term Group cash forecast shows good
liquidity throughout the going concern period, in part
due to the agreement reached with bondholders to
rephase the repayments on their bonds and the receipt of
£11.0 million of cash during the past 12 months. In addition,
the cashflow forecast has been stress tested to ensure it
has sufficient flexibility to adapt to different eventualities.
All of these developments position SAE strongly for
growth, and in particular to add up to 30% to the BESS
capacity currently deployed across the UK.
2023 Highlights:
1.
Sale of ready to build BESS project with grid
connection for £10 million
2. Sale of BESS project land for £9.9 million
Near term developments
3. 22MW of tidal capacity / revenue support
awarded
4. A new bond repayment schedule agreed
Profit
£23.2m*
(2022: £-11.1m)
2023
2022
2021
23.2
-11.1
-71.6
The value inherent in BESS projects for the UK grid
combined with the unique properties of our Uskmouth
site are now starting to be reflected in our financial
results. £11 million of cash received from BESS project
developments, critical to provide working capital and
development expenditure to the Group, was received
during the past 12 months. £4 million in July 2023,
£5 million in March 2024 and £2 million in May 2024. This
income will allow the Group the opportunity to build and
operate the next 120MW/240MWh BESS at Uskmouth
and the 207MW/414MWh BESS in Scotland near MeyGen.
Revenues from these projects will in turn provide
recurring revenue streams which the Group will be able
to recycle into new project opportunities and meet its
obligations to bondholders.
*Includes a net upwards revaluation adjustment of £22.6m. See note 11.“Revenues from a portfolio of BESS projects will provide a strong financial foundation for further growth of the Group.” 14
Reporting on the Results
The Group reported revenue of £15.3 million
in 2023 compared with £3.9 million in 2022.
Revenues available to the Group, which excludes
ring-fenced revenue earned by the MeyGen tidal
array, rose to £10.7 million from £nil in 2022.
The development premium for the 230MW BESS
at Uskmouth power station received in June 2023
for £10.0 million accounts for the majority of 2023
revenues with the balance of £0.7 million being
rental income from the Uskmouth site.
Operating costs, excluding asset impairment
adjustments, fell to £7.2 million from £11.6 million
in 2022. The improvement reflects a 67%
reduction to £3.5 million (2022: 5.9 million) in
operating costs at the MeyGen array following
the successful installation of the third turbine in
June 2023, and a 35% reduction in Group costs to
£3.7 million (2022: £5.7 million) due to cost savings
following the sale of the turbine technology
business in October 2022 and cost rationalisation
at the Uskmouth site.
The Group closed the year with cash of
£4.2 million (2022: £3.7 million).
The Group will remain focussed on keeping its annual
operating cash expenditure of £5.0 million (2022:
£7.0 million) at similar levels to those experienced during
2023. The Group has annual committed expenditures
for employees, operating expenses and interest expense
to bondholders. In each category the Group will remain
focussed on maintaining costs at similar levels to those
of 2023.
▶
Employee costs were stable at £2.1 million (2022
£2.5 million): Our strategy of engaging relevant
contract expertise to support delivery of specific
projects, as and when required will ensure our
headcount and associated employee costs
remain steady.
▶ Operating expenses £1.7 million (2022 £2.2 million)
(excluding MeyGen): comprising costs associated with
running an AIM listed and Singapore incorporated
group, development expenditures for specific
projects and expenditure incurred maintaining the
Uskmouth site.
▶
Annual interest payable to bondholders remains
unchanged at £1.3 million (2022: £1.3 million): Annual
interest expense will remain largely unchanged until
bond repayments commence in December 2025.
“The Group’s strong liquidity position enables it to
proceed with the development and construction of
our two near term BESS projects and the flexibility to
invest development capital into opportunities that will
realise value thereafter.”
15
CFO
STATEMENT
Project valuations
The major increase in the valuation of the Group arises
from the reassessment of the value and size of the
BESS commercial opportunity. During 2024 the Group
appointed a financial advisor specifically experienced in
completing both buy and sell transactions for BESS. Their
expertise applied to the Group’s specific circumstances,
not least our unique position as landowner at Uskmouth,
has informed our develop, build and operate strategy.
We have engaged with the BESS supply chain to get an
accurate view of the construction costs for our projects
and combined with robust financial modelling and
market tested revenue assumptions, have created project
valuations from first principles.
The valuation of the tidal business shows an impairment
of £5.6 million versus 2022 due to an unexpected turbine
outage from June 2023 on the Phase 1 array and an
increase in the discount rate to 12%. Three of the four
turbines comprising the Phase 1 array are performing well
with the fourth turbine due to return to service in Q3-
24. The valuation of the remaining 80MW of consented
capacity primarily relies on the delivery of the 50MW array
for which we already have Contracts for Difference.
The Group reached agreement with its bondholders
to rephase the repayments on their bonds out of 2024
and into periods commencing in December 2025 and
culminating in a final £7.7 million repayment in December
2029.
We have introduced a new reporting segment, Battery
Storage, which captures the performance of our BESS
portfolio. It reports the income from each of our BESS
projects, the operating costs associated with the
Uskmouth site and the valuation of the BESS portfolio.
Development expenditures incurred on any projects
continue to be reported in the Project Development
segment.
Ultimately, revenues from a portfolio of battery storage
projects will provide a strong financial foundation for
further growth of the Group.
Conclusion
The Group is well positioned to take advantage of the
tremendous opportunities afforded by the UK demand
for battery storage, through its 100% ownership of the
Uskmouth site and the repurposing of the MeyGen
Grid Connection Agreement to provide import and
export capacity for the Mey BESS, as well as through
the development of future phases of the MeyGen tidal
project. The Group’s strong liquidity position enables it to
proceed with the development and construction of our
two near term BESS projects and the flexibility to invest
development capital into opportunities that will realise
value thereafter.
Cash
+14%
£4.2m (2022: £3.7m)
2023
2022
2021
4.2
3.7
3.8
Operating costs
-29%
£5.0m (2022: £7m)
5.0
7.0
2023
2022
2021
14.9
Group debt (excluding MeyGen debt)
-30%
£13.7m (2022: £19.7m)
2023
2022
2021
13.7
19.7
15.5
16
“The major
increase in the
valuation of the
Group arises from
the reassessment
of the value and
size of the BESS
commercial
opportunity”
CORPORATE
GOVERNANCE
IN THIS SECTION:
18 Directors’ Report
19 The Board of Directors
21 Board Operation
23 Audit Committee Report
26 Group Governance
27 Directors’ Remuneration Report
30 Directors’ Responsibility Statement
Independent Auditor’s Report
31
18
Directors’
REPORT
The Directors present their Annual Report together with the audited
financial statements for the year ended 31 December 2023.
Principal Activities
Annual General Meeting
The Group is a developer, builder, owner and operator
of sustainable energy projects. The Group holds equity
positions in the world’s flagship tidal stream project,
MeyGen, and in one of the UK’s largest single location
BESS portfolios, the Uskmouth Sustainable Energy Park.
The Company’s Annual General Meeting will take place
on 18 July 2024 at 11.00am. Further details
of the AGM can be found within the separate
Notice of Annual General Meeting available at
▶ www.saerenewables.com.
Directors
The following Directors of the Company were in office
during the whole of the year ended 31 December 2023:
▶ Duncan Black – Independent Non-Executive
Chairman
▶ Graham Reid – Chief Executive Officer
▶ Simon Hirst – Chief Financial Officer
This report was approved by the Board on
24 June 2024 and signed on its behalf by:
Duncan Black
Graham Reid
Chair of the Board
Chief Executive Officer
▶ John Woodley – Independent Non-Executive Director
24 June 2024
24 June 2024
No directors joined or left the company during the year.
Directors Remuneration
The report on Directors Remuneration is set out on
pages 27 to 29.
Directors Interest in Shares
The interests of Directors in shares of the Company are
disclosed in the Remuneration Report on pages 27 to 29.
19
The Board
DIRECTORS
Committee membership key
*
Chair of Committee
Audit Committee
Technical Committee
Remuneration Committee
Nominations Committee
DUNCAN BLACK
Chairman
*
GRAHAM REID
Chief Executive Officer
Appointment date: 1 September 2021
Appointment date: 18 January 2021
Skills and experience
Duncan was appointed Chair of the Board on
1 September 2021, following his return to the Board
as a Non-Executive Director in October 2020. Duncan
previously served as the Chief Financial Officer and an
Executive Director of the Company from 2012-2015, and
subsequently, in 2020 as a Non-Executive Director. He
has been based in Asia for over 20 years working in the
power and infrastructure sectors as a project developer,
CFO, investment banker and fund manager. Duncan’s
previous roles have included Co-Head of Infrastructure
Investment at Eastspring Investments (part of
Prudential plc), Asia Head of Acquisitions at Deutsche
Asset Management’s infrastructure funds management
business, and CFO of CLP Holdings’ Australian electricity
and gas utility business, now Energy Australia. Duncan
is currently engaged in the asset management of
renewable energy power projects in Asia for a leading
impact fund manager. Duncan has a BEng (Hons) in
Civil Engineering and a PhD in Fluid Dynamics, each
from Imperial College, London.
Skills and experience
Graham was appointed Chief Executive Officer on
18 January 2021. Under his leadership the company has
undergone a significant transformation, streamlining
operations, redefining its strategy, and aligning
resources for growth. Graham has been instrumental in
positioning the company to become an Independent
Power Producer and one of the largest Battery Energy
Storage System developers in the UK. Prior to joining
SAE, Graham was CEO of RES Americas, CEO of Arcadis
Middle East, and earlier in his career was the UK
Managing Director and an Executive Board member of
Hyder Consulting plc. Graham has a BSc (Hons) in Civil
Engineering from the University of Westminster and is a
Fellow of the Institution of Civil Engineers
Key strengths
International project origination, development, finance
and construction, business turnaround, transformational
leadership, business performance improvement.
Construction management and civil engineering.
Key strengths
International project origination, development,
finance and construction, in power and infrastructure.
Operational & corporate finance; strategy; mergers
and acquisitions; international; public markets; listed
company governance requirements.
20
Directors’ Election/Re-election
Under the Company’s Articles of Association, Directors are
required to stand for election at the first Annual General
Meeting (“AGM”) after their appointment. All Directors
thereafter are obliged by the Articles of Association to
retire on a rotating basis and are subject to re-election at
the AGM, which will be applied at the 2024 AGM.
Accordingly, Simon Hirst and John Woodley will stand for
re-election at the forthcoming AGM.
With regard to those Directors who are offering
themselves for re-election at the next AGM, the Board
believes that they will continue to make effective and
important contributions to the Company’s success and
that Shareholders should support their re-election.
During 2023, the Board comprised four Directors, an independent Non-Executive
Chairman, one independent Non-Executive Director and two Executive Directors:
the Chief Executive Officer and the Chief Financial Officer.
SIMON HIRST
Chief Financial Officer
John Woodley
Non-Executive Director
*
*
*
Appointment date: 25 April 2022
Appointment date: 22 September 2008
Skills and experience
Simon was appointed Chief Financial Officer on
25 April 2022 and has been instrumental in refinancing
the company debt, managing cash, maintaining
external stakeholder relationships and ensuring strong
corporate governance. In the seven years prior to his
appointment as Chief Financial Officer, Simon was
primarily responsible for all financial and commercial
aspects of the MeyGen project including senior
creditor compliance. Prior to joining SAE in 2015, Simon
gained international blue-chip corporate experience
at several organisations including ExxonMobil,
Pepsi Cola, Iron Mountain and international power
generation company InterGen. Simon is a Chartered
Management Accountant and holds a BSc (Hons) from
Aston University.
Skills and experience
John Woodley joined the Board on 22 September 2008.
He was at that time 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, having worked as a power plant operator and
then as an industrial marketing engineer for electric
utilities. 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 acted as a senior
adviser to Morgan Stanley until Q1 2021. John has a BSc
Eng (Elec) from Wits University, Johannesburg, an MBA
from Valdosta State University and an MS in Finance from
Georgia State University.
Key strengths
Financial management throughout construction
and operation, corporate finance, project origination,
development, corporate strategy, listed company
governance external stakeholder relationships.
Key strengths
International project development, finance and
construction, commodity trading, business turnaround,
transformational leadership. Listed company corporate
governance. Electrical engineering, Grid stabilisation and
Battery Energy Storage Systems
21
Board
OPERATION
Meetings
The Board met 13 times in 2023 and the attendance of each Director at the board and each of the commitees is set
out in the table below.
Board
Audit
Committee
Remuneration
Committee
Nominations
Committee
Technical
Committee
12
13
13
10
1
1*
1*
1
3
3*
3*
3
1
1
1*
1
4
4*
4*
4
Duncan Black
Graham Reid
Simon Hirst
John Woodley
*by invitation
The Chairman
The Chairman, Duncan Black, is deemed by his fellow
Directors to be independent and to have no conflicting
relationships.
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 running Board
meetings, ensuring there is sufficient challenge from
Non-Executive Directors and 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. Board members
are encouraged to openly and constructively challenge
proposals made by executive management. Board
agendas are reviewed and agreed in advance to ensure
each Board meeting utilises the Board’s time most
efficiently. 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.
The Board
The Board is collectively responsible for the effective
oversight and long-term success of the Company. It has
responsibility for formulating, reviewing and approving
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 guided by a Delegated Authority
Matrix which is reviewed by, and approved by, the
Board on an annual basis, or more frequently as may
be required. The Delegated Authority Matrix states
the approval thresholds that senior management and
the subcommittees of the Board can operate to. It is
intended to ensure that the day-to-day operation of
the business can operate in accordance with Board
approved budgets while ensuring that any deviations are
appropriately escalated.
The Board’s responsibilities are set out in a formal schedule
of matters reserved for the Board. This schedule is reviewed
and updated by the Board when considered appropriate.
The Board receives appropriate and timely information
prior to each meeting, A formal agenda is produced for
each meeting, and Board and Committee members are
given a sufficient period of time to review these prior to the
meetings taking place. Directors are encouraged to attend
all Board meetings and meetings of Committees of which
they are members.
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 is on
pages 23 to 25.
The role of the Chairman and the Chief Executive Officer
are separate with a distinct division of responsibilities.
Notwithstanding that Duncan Black holds Company’s
ordinary shares (as detailed on page 27), the Board has
considered his independence and has concluded that
Duncan has demonstrated the utmost regard for his
independence, appropriately challenging the Board during
his tenure as Chairman and maintains high standards
of corporate governance on the Board. Furthermore,
the Board considers that Duncan has not served as a
Non-Executive Director for an undue length of time.
In accordance with the QCA code, the Board consists of
at least two Independent non-Executive Directors, being
Duncan Black and John Woodley.
The Board is aware of the other commitments and
interests of its Directors and effective procedures are in
place to deal with any conflicts of interest which may
arise. Any changes to these commitments and interests
are reported to the Board at the earliest opportunity.
Board Operation
continued
22
Board
COMMITTEES
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 delegates authority to four Committees,
including three Committees recommended by the
QCA guidelines: the Nomination Committee, the
Remuneration Committee and the Audit Committee, as
well as an additional Technology Committee.
A third party advises newly appointed Directors of
their regulatory responsibilities in connection with
becoming a director of an AIM company. All Directors,
including those newly appointed, receive advice, where
applicable, from the Company’s nominated adviser and
external lawyers.
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.saerenewables.com. These terms of reference
were reviewed and updated during 2023.
Each Committee is responsible for reviewing the
effectiveness of its own terms of reference and for
making recommendations to the Board for changes
when necessary. Other than Graham Reid’s membership
of the Nomination Committee, Executive Directors are
not members of the Board Committees, although they
may be invited to attend meetings.
Outside of statutory membership of the above
Committees, the Chairman, in agreement with the
Chairs of each Committee, encourages all Board
Directors to attend any Committee meeting as observers,
as appropriate. Graham Reid and Simon Hirst in their
positions as Executive Directors are not formal members
of the Audit Committee, Remuneration Committee or
Technology Committee, however they attend meetings
on a regular basis and as deemed appropriate by the
Committee Chairs.
Board Diversity
Diversity, equality and inclusion are very important
to the Board of Directors and the Executive Team.
All candidates are selected for roles on the basis of
their credentials and suitability for that role. Further
information about our approach to diversity, equality
and inclusion can be found in the Our People section on
page 26 and on our website www.saerenewables.com.
Board Evaluation
The Directors are aware that they need to continually
monitor and improve performance and recognise this
can be achieved through regular Board evaluation,
which provides a valuable feedback mechanism for
improving Board effectiveness.
The Board is satisfied that all of the current Directors
contribute effectively and have the appropriate balance
of skills and experience relevant to the leadership
and direction of the Company. The Board is also
satisfied that it has suitable levels of experience and
independence to allow the Directors to discharge their
duties and responsibilities effectively. The Board further
concluded that the Chairman remained independent
and his performance was satisfactory, with strong
leadership capability.
Succession planning is given consideration by the
Nomination Committee as and when needed.
Senior Independent Director
The Company has not identified a Senior Independent
Director of the Company in view of the size of the Board,
and the Company’s stage of development.
See following pages for more information on each committee 23
Board Committees
continued
AUDIT COMMITTEE REPORT
Chairman: John Woodley
Committee membership
▶ Duncan Black
Introduction
I am pleased to present the Audit
Committee (the “Committee”)
report for the year ended
31 December 2023.
The Committee has primary responsibility for
monitoring the quality of internal controls and ensuring
that the financial performance of the Group is properly
measured and reported.
It receives and reviews reports from the Chief Financial
Officer and auditor relating to interim and annual
accounts, and the accounting and internal control
systems in use throughout the Group.
The Committee comprises two Non-Executive Directors
both of whom have the necessary financial experience
in compliance with the UK Corporate Governance Code.
The Chief Executive Officer, Chief Finance Officer, Group
Financial Controller and external audit partners and
managers attend meetings as and when required.
Role of the Audit Committee
The principal duties of the Audit Committee, which
reports its findings to the Board, are to:
▶ monitor the integrity of the Company’s financial
reporting and significant financial accounting
policies and judgements;
▶ review the content of the Annual Report and
audited financial statements where requested by
the Board, and advise on whether it is fair, balanced,
understandable and provides the information
necessary for shareholders to assess the Company’s
performance, business model and strategy;
▶ monitor the effectiveness of the Company’s internal
controls and risk management framework;
▶ consider whether the Company should initiate an
internal audit function and make a recommendation
to the Board accordingly;
▶ consider and make recommendations to the
Board, to be put to shareholders for approval at the
Company’s AGM, in relation to the appointment,
re-appointment and removal of the Company’s
external auditor;
▶ advise the Board on the appointment, terms of
engagement and remuneration of the external
auditor and monitor their independence and
effectiveness;
▶ review the effectiveness of the Company’s systems for
the detection of fraud and the prevention of bribery;
and
▶ review the adequacy and security of the Company’s
arrangements for its employees and contractors
to raise concerns, in confidence, about possible
wrongdoing in financial reporting or other matters.
The Audit Committee works closely with the Chief
Financial Officer and senior management to ensure the
Committee is provided with the necessary information it
requires to discharge its duties. The Audit Committee’s
meeting agendas are based on annual reporting
requirements and other ad-hoc issues which arise
during the course of the year.
Board Committees
continued
24
Matters Considered During the year
The Audit Committee met three times post year end
until the date of this report. At these meetings, the Audit
Committee has considered the following:
Resignation of external auditor
Moore Stephens LLP announced its desire not to seek
reappointment as the Company’s external auditor as a
result of its own internal resources issues and difficulties
with the timelines, however, it agreed to stay in office
until such time as a replacement auditor was appointed
prior to the Company’s next annual general meeting.
The Committee initiated a search for a replacement
auditor immediately.
Appointment of external auditor
The Committee reviewed the Audit Proposal from Nexia
Singapore PAC and subsequently recommended their
appointment to the Board. Nexia Singapore PAC were
appointed as the Company’s external auditor following an
Extraordinary General Meeting held on 9 November 2023
and subsequent receipt of Singapore regulatory approval.
The Audit Committee regularly monitors the objectivity
and independence of the external auditor to ensure
its continued effectiveness, value for money and
compliance with statutory duties.
Financial statements and key assumptions
Going concern and longer-term viability – the Audit
Committee reviewed the current liquidity position,
Management’s financial forecasts including stress
testing of potential risks, and Management’s conclusions
that there is a reasonable expectation that the Company
and Group have sufficient resources to continue in
operation for the period of going concern assessment.
Carrying value of property, plant and equipment – the
review for impairment of property, plant and equipment
is based on cash flow projections to calculate a fair
value less cost to sell for each of the Group’s projects.
The achievability of the forecast is a risk, given inherent
uncertainty within any financial projection. The Audit
Committee evaluated a paper from Management
on the results of the impairment assessment. Key
assumptions were reviewed and challenged by the
Committee, including discount rates, business risk
factors and cash flow projections based on the most
recent budget and strategic reviews. Actions and factors
likely to influence levels of impairment were reviewed
with alternative scenarios requested for further analysis.
Taking into account the documentation presented, the
Audit Committee was satisfied with the approach and
judgements made.
Review of the audit plan and External auditor’s report to
the Committee
The Committee reviewed and approved both the
external auditor’s audit plan and its findings in respect of
its audit of the Company’s financial statements, carefully
monitoring these to ensure completeness, accuracy,
clarity and integrity.
Internal Audit Function
The Audit Committee considered the need for an internal
audit function and determined that there is no current
need given the limited size of the Group and the Group’s
internal controls. The need for an internal audit function
will be reviewed on a periodic basis.
Auditor Objectivity and Independence
With the recent appointment of Nexia Singapore PAC
as external auditor, the Audit Committee considers that
the objectivity and independence of the external auditor
is assured.
The Audit Committee reviewed the audit plan and the
audit results report. The Audit Committee has assessed
the performance of the external auditor in respect of the
2023 audit. The Audit Committee has satisfied itself that
safeguards were in place to protect the objectivity and
independence of the external auditor.
Following the consideration of the above matters and its
detailed review, the Audit Committee was of the opinion
that the Annual Report and Accounts, taken as a whole,
are fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy.
Terms of Reference
The Audit Committee keeps its terms of reference under
review and makes recommendations for changes to the
Board. The full terms of reference are available on the
Company’s website at www.saerenewables.com.
John Woodley
Chairman of the Audit Committee
24 June 2024
25
Board Committees
continued
REMUNERATION
COMMITTEE REPORT
NOMINATION
COMMITTEE REPORT
TECHNOLOGY
COMMITTEE REPORT
Chairman: John Woodley
Chairman: Duncan Black
Chairman: John Woodley
Committee membership
Committee membership
Committee membership
▶ Duncan Black
▶ John Woodley
▶ Graham Reid
▶ Duncan Black
The Technology Committee is
responsible for monitoring the
integrity of the regular internal
reporting on the status of technology
operations and maintenance within
the Company and for sanctioning
the external reporting of key
technology milestones.
The Technology 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
operated to plan and within agreed
risk parameters. The Technology
Committee met four times during
the year.
The Remuneration Committee
is required to meet as and when
required to fulfil its responsibilities.
The Remuneration Committee
met three times during 2023.
The Remuneration Committee
is responsible for reviewing the
performance of the Executive
Directors and setting the
remuneration policy for 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. The
Remuneration Committee monitors
and makes recommendations to
the Board on matters relating to
level and structure of executive
management remuneration. The
Remuneration Committee will also
make recommendations to the Board
on proposals for the granting of share
options and other equity incentives
pursuant to any share option
scheme or equity incentive scheme
in operation from time to time. The
Directors’ Remuneration Report from
the Remuneration Committee is set
out on pages 27 to 29.
The Nomination Committee is
required to meet as and when
required to fulfil its responsibilities.
During 2023, the committee met once
to review the Terms of Reference of
the Committee and the composition
of the Board and management
team. There was no other business to
consider in the year so the committee
did not meet further.
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.
No external consultants were
engaged during this period. The
Nomination Committee is mindful of
the need to maintain an appropriate
balance of skills, experience and
personalities to shape the direction of
the Company going forward. Building
a diverse Board that is reflective of our
Company is one of the factors that
will be taken into consideration when
appointing new directors.
Group
GOVERNANCE
26
The Directors acknowledge the importance of high standards
of corporate governance and as a company listed on AIM,
(Alternative Investment Market), and a member of the Quoted
Companies Alliance, QCA, SAE has sought to apply the QCA
Corporate Governance Code and its principles throughout the
year. The QCA Code identifies ten principles to be followed
for companies to deliver growth in long-term shareholder
value, having regard to the interest of other stakeholders. The
Company’s application of the QCA Code is set out in this report
and in further detail on the Company’s website.
Shareholder and Social Responsibilities
The Directors are aware of the importance of considering
the Company’s impact on its wider stakeholders. Where
appropriate, the Company endeavours to take account of
feedback received from stakeholders.
The Company has developed and implemented a Business
Ethics Policy which provides a framework and guidance on
its approach to achieving and maintaining good business
behaviour by means of sound ethical conduct.
Internal Controls and Management
Shareholder Engagement
The Board has overall responsibility for the Group’s system
of internal control and for reviewing its effectiveness. With
the active involvement of the executive management team,
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.
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, loss and the prevention
and detection of fraud and other irregularities.
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 policies, and the Board monitors risk
exposures, risk management activities and the effectiveness
of controls. In particular, Health and Safety (“H&S”) has been
identified as a key area of risk to the business.
The Group’s internal financial control procedures and
monitoring systems include:
▶ financial policies and approval procedures with proper
authorisation level and segregation of duties for
financial management;
▶ maintenance policies and approval procedures with
proper authorisation level and segregation of duties for
financial management;
▶ an annual budgetary process to set the appropriate
target for monitoring the progress of the Group;
▶ a detailed monthly financial reporting system that reports
on operating results, cash flows, assets and liabilities;
▶ reporting on any non-compliance with internal financial
controls and procedures; and
▶ review of the audit findings report issued by the external
auditor.
Our People
Our people are integral to our success and their fulfillment
and development is core to our people proposition.
The Company is committed to ensuring that there is
effective and regular communication with shareholders
on matters such as governance and strategy so 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 AGM which
provides an opportunity for shareholders to meet and ask
questions of Directors and management. The CEO presents
a detailed presentation to shareholders at the AGM on the
Group’s business. The Company continues its dialogue with
investors by periodical public correspondence between
the management and the shareholders, via the use of the
Company website and social media.
A range of corporate information is also available to
shareholders, investors and the public on the Company’s
website www.saerenewables.com. All shareholders will
receive a copy of the audited financial statements, either via
hardcopy or the website. The Company’s Annual Report and
Accounts are made available on the Company’s website.
The Company’s website is regularly updated and
announcements or details of presentations and events are
posted onto this website.
Major Shareholder and Shareholder Arrangement
On 21 May 2018, the Company and SIMEC, which at the end
of May held 29.7% of the Company’s share capital, entered
into a relationship agreement. The principal purpose
of this agreement was to ensure that the Company
would be capable at all times of carrying on its business
independently of SIMEC and its connected persons and to
ensure all transactions and relationships between them
and the Group were conducted at arm’s length and on
normal commercial terms. The relationship agreement
included restrictions on Board voting rights of the two
SIMEC representative Directors on SIMEC related matters.
The relationship agreement has formally terminated as
a result of SIMEC’s shareholding in the Company falling
below 30.0%, however, certain provisions, including the
right to appoint up to two Directors, continue to apply
until SIMEC’s shareholding falls below certain further
lower thresholds.
At the time of writing, SIMEC has no appointed Directors on
the Board or representatives appointed to any Committees.
27
Directors’
REMUNERATION REPORT
This report includes details of the Directors’ remuneration
in 2023. Shareholders will be asked to approve the
Directors’ Remuneration Report at the forthcoming AGM.
Remuneration Committee
The members of the Remuneration Committee and the
Remuneration Committee’s role are set out on page 25.
Remuneration Framework
The overall aim of the Company’s remuneration
framework is to provide appropriate incentives that
reflect the Company’s performance, culture and values.
The Company also attempts to ensure the remuneration
guidelines and culture are sustainable, transparent and
appropriate. The Company’s framework aims to attract
and retain high-performing employees and reward both
short-term and long-term contributions to the Company.
The Remuneration Committee is satisfied that this
framework successfully aligns the interests of executive
Directors, senior managers and other employees with the
Shareholders’ long-term interests, by ensuring that an
appropriate proportion of remuneration is directly linked
to overall performance, in both the long and short term.
In determining the practicalities of the approach, the
Remuneration Committee considers a range of internal
and external factors and appropriate market comparisons
against other companies of a similar size and nature.
Arrangements to Enable Directors to Acquire Shares
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 body corporate, except as
disclosed in this report.
Directors’ Interests in Shares
According to the Register of Directors’ Shareholdings
kept by the Company under Section 164 of the Singapore
Companies Act 1967 (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:
Executive Directors’ Service Contracts and
Payments for Loss of Office
The Chief Executive Officer and Chief Financial Officer are
employed under a service contract with a fixed period of
notice of termination. Their services may be terminated
on a maximum of six months’ notice by either party.
Non-Executive Directors’ Letters of Appointment
The Company’s Non-Executive Directors are not
committed by service contracts to the Company and
are engaged by letters of appointment. These provide
for a maximum of three months’ notice of termination
by either party at any time, with no pre-determined
amounts of compensation.
Payments to Past Directors
There have been no payments made to past directors
during the year.
Payments for Loss of Office
There have been no payments made to Directors for loss
of office during the year.
Annual Remuneration of Directors
The table below sets out the annual remuneration of
the Directors for the years ended 31 December 2023
and 31 December 2022. This includes any pension
and employer’s National Insurance contributions and
excludes share-based payments.
Director
Graham Reid
Simon Hirst(1)
Duncan Black
John Woodley(2)
Andrew Charters(3)
Andrew Dagley(4)
ANNUAL REMUNERATION
2023
£’000
420
199
72
42
-
-
2022
£’000
349
137
72
44
50
21
(1)
Simon Hirst was appointed to the Board on 25 April 2022.
(2)
John Woodley was remunerated in Singapore dollars. Figures
shown above are Great British Pounds equivalents, converted at
the prevailing exchange rate.
SHAREHOLDINGS REGISTERED
IN THE NAME OF DIRECTORS
(3)
Andrew Charters resigned from the Board on 25 April 2022.
(4)
Andrew Dagley resigned from the Board on 19 August 2022.
Ordinary shares
Duncan Black
Simon Hirst
At beginning
of the year
At end
of the year
1,042,419
82,034
4,642,419
82,034
Directors’ Remuneration Report
continued
28
Long Term Incentive Plan (“LTIP”)
On 11 December 2013, it was agreed, contingent on admission of the Company’s shares to trading on AIM, that the
Company offered certain senior management and Directors options over shares through an LTIP. In 2015, the rules of the
LTIP were amended to allow the Board to determine the date on which awards granted under the LTIP can vest. As at the
date of this report, there has been no change to vesting dates. On 2 January 2024 the Board adopted the SIMEC Atlantis
Energy Limited 2023 Long-Term Incentive Plan which replaces the Atlantis Resources 2013 Long-Term Incentive Plan.
The options granted to Directors as at the end of the financial year are shown below:
Name
Date of grant
Ordinary
shares
Nature of
award
Exercise
price
Vesting period
Graham Reid
4 January 2021
1,000,000
Option
£0.25
Graham Reid
05 February 2021
1,000,000
Option
£0.25
Graham Reid
19 March 2021
1,000,000
Option
£0.20
Graham Reid
31 December 2021
5,000,000
Option
£0.0221
Graham Reid
6 April 2023
3,913,043
Option
£0.0115
Simon Hirst
31 December 2021
1,000,000
Option
£0.0221
Simon Hirst
6 April 2023
5,260,870
Option
£0.0115
1/3 on each of first, second and third
anniversary of grant
1/3 on each of first, second and third
anniversary of grant
1/3 on each of first, second and third
anniversary of grant
1/3 on each of first, second and third
anniversary of grant
1/3 on each of first, second and third
anniversary of grant
1/3 on each of first, second and third
anniversary of grant
1/3 on each of first, second and third
anniversary of grant
Awards issues are exercisable up to the tenth anniversary of the 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.
Details of the options granted under the LTIP on unissued ordinary shares of the Company are as follows:
Date of grant /
modification
Balance at
1.1.2023
Granted
Exercised
Cancelled /
lapsed
Balance at
31.12.2023
Exercise
price
per share Exercisable period
01.01.2016
30.09.2016
15.06.2018
04.12.2020
04.01.2021
05.02.2021
19.03.2021
31.12.2021
28.04.2022
31.10.2022
06.04.2023
150,000
250,000
75,480
300,000
1,000,000
1,500,000
1,250,000
12,550,000
1,500,000
1,000,000
-
-
-
-
-
-
-
-
-
-
-
10,608,696
Total
19,575,480
10,608,696
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
250,000
£0.50 01.01.2016 to 01.01.2026
£0.50 30.09.2016 to 30.09.2026
(75,480)
-
£0.50 15.06.2018 to 15.06.2028
-
-
-
-
300,000
£0.30 04.12.2020 to 04.12.2030
1,000,000
£0.25 04.01.2021 to 04.01.2031
1,500,000
1,250,000
£0.25 05.02.2021 to 05.02.2031
£0.20 19.03.2021 to 19.03.2031
(250,000)
12,300,000
£0.02 31.12.2021 to 31.12.2031
(500,000)
1,000,000
£0.02 28.04.2022 to 28.04.2032
(1,000,000)
-
£0.01 31.10.2022 to 31.10.2032
-
10,608,696
£0.0115 06.04.2023 to 06.04.2033
(1,825,480)
28,358,696
29
Directors’ Remuneration Report
continued
Company Share Option Plan (“CSOP”)
On 10 November 2016, the Company established a Company Share Option Plan (“CSOP”) to offer share options
to employees. Under this program, holders of the vested options are entitled to purchase shares at the proposed
exercise price. The options are fully vested on the third anniversary of the date of the grant, and exercisable up until
the tenth anniversary of the date of the grant. The shares acquired on the exercise of the option shall rank pari passu
with all other 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.
The options granted to Directors at the end of the financial year are shown below:
Name
Simon Hirst
Graham Reid
Date of grant
Ordinary
shares
Nature of
award
Exercise
price
Vesting period
6 April 2023
3,913,043
6 April 2023
3,913,043
Option
Option
£0.0115
3 years from grant
£0.0115
3 years from grant
Details of the options granted under the CSOP on unissued ordinary shares of the Company are as follow:
Date of grant /
modification
Balance at
1.1.2023
Granted
Exercised
Cancelled /
lapsed
Balance at
31.12.2023
Exercise
price
per share Exercisable period
10.11.2016
19.08.2019
25.03.2021
06.04.2023
57,140
450,000
1,555,554
-
-
-
-
25,073,983
Total
2,062,694
25,073,983
-
-
-
-
-
(57,140)
(450,000)
(1,555,554)
-
-
-
£0.70 11.11.2016 to 11.11.2026
£0.20 19.08.2019 to 19.08.2029
£0.09 25.03.2021 to 25.03.2031
(3,627,983)
21,446,000
£0.0115 06.04.2023 to 06.04.2033
(5,690,677) 21,446,000
Other than the above, 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, there were no unissued shares of any corporation in the Group under option.
Shareholder Vote at the Annual General Meeting
The 2023 Directors’ Remuneration Report will be put to a shareholder vote at the 2024 AGM.
The 2022 Directors’ Remuneration Report was approved by shareholders at the Company’s AGM held on 11th August
2023.
Approved and signed on behalf of the Board.
John Woodley
Chairman of the Remuneration Committee
24 June 2024
30
Directors’ Responsibility
STATEMENT
We are pleased to submit this Annual Report to the
members of the Company together with the audited
financial statements for the financial year ended
31 December 2023.
The Board of Directors has, on the date of this statement,
authorised these financial statements for issue.
On behalf of the Board of Directors
In our opinion:
▶ the financial statements set out on pages 37 to 80
are drawn up so as to give a true and fair view of
the financial position and changes in equity of the
Group and of the Company as at 31 December 2023
and the financial performance and cash flows of the
Group for the year ended on that date in accordance
with the provisions of the Singapore Companies
Act 1967, Singapore Financial Reporting Standards
(International) and International Financial Reporting
Standards; and
▶ at the date of this statement, there are reasonable
grounds to believe that the Company will be able to
pay its debts as and when they fall due.
Duncan Black
Graham Reid
Chairman of the Board
Chief Executive Officer
24 June 2024
24 June 2024
31
Independent Auditor’s Report
TO THE MEMBERS OF SIMEC ATLANTIS
ENERGY LIMITED
(INCORPORATED IN SINGAPORE)
REPORT ON THE AUDIT OF THE
FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of Simec
Atlantis Energy Limited (the “Company”) and its
subsidiaries (the “Group”), which comprise the
consolidated statement of financial position of the Group
and the statement of financial position of the Company
as at 31 December 2023, and the consolidated statement
of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash
flows of the Group and the statement of changes in
equity of the Company for the year then ended, and
notes to the financial statements, including material
accounting policy information.
In our opinion, the accompanying consolidated financial
statements of the Group and the statement of financial
position of the Company are properly drawn up in
accordance with the provisions of the Companies Act
1967 (the “Act”), Singapore Financial Reporting Standards
(International) (“SFRS(I)s”), and International Financial
Standards (“IFRSs”) so as to give a true and fair view of
the consolidated financial position of the Group and the
financial position of the Company as at 31 December
2023, and of the consolidated financial performance,
consolidated changes in equity and consolidated
cash flows of the Group and changes in equity of the
Company for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with Singapore
Standards on Auditing (“SSAs”). Our responsibilities
under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent
of the Group in accordance with the Accounting and
Corporate Regulatory Authority (“ACRA”) Code of
Professional Conduct and Ethics for Public Accountants
and Accounting Entities (“ACRA Code”) together with
the ethical requirements that are relevant to our audit
of the financial statements in Singapore, and we have
fulfilled our other ethical responsibilities in accordance
with these requirements and the ACRA Code. We believe
that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the financial statements of the current period.
These matters were addressed in the context of our audit
of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
Independent Auditor’s Report
continued
32
Key Audit Matters
How our audit addressed the key audit matters
Valuation of property, plant and equipment (“PPE”)
and investment property
We refer to Note 3(f) under “Summary of Material
Accounting Policies” and Note 4(a) under “Critical
Accounting Judgements and Key Sources of Estimation
Uncertainty” and Notes 12 and 13 to the consolidated
financial statements.
Certain classes of PPE are measured at revaluation
method. There was a revaluation gain on PPE of
£23,127,000 with respect to MeyGen’s Battery Energy
Storage System (“BESS”) project and an impairment loss
of £5,630,000 relating to the tidal projects.
During the financial year, the management has
reclassified Uskmouth’s power plant from PPE to
investment property due to the change in the usage of
the power plant. Investment properties are measured
at fair value. There was a fair value gain of £28,200,000
recognised with respect to the Uskmouth’s power plant.
Both revaluation and fair value are determined using
the income approach. This requires management to
make significant estimates and assumptions relating
to future revenue, development and operating costs,
development risk, and discount rates.
We focus on these areas because the assessments
made by management involved the use of significant
judgement and estimates in the determination of the
fair value of PPE and investment property.
Our response
In obtaining sufficient audit evidence, the following
procedures were carried out:
▶ Discussed with management their plans and
intention for the change of use of the Uskmouth’s
power plant.
▶ Obtained and evaluated the fair value calculation
prepared by the management with respect to both
the MeyGen’s BESS project and Uskmouth’s power
plant.
▶ Checked the mathematical accuracy of the
underlying calculation.
▶ Challenged the appropriateness of the key
assumptions used by management in the cash
flow projection, including the Group’s forecasts of
revenue, development costs, forecasts operating and
maintenance expenses, and discount rate used.
▶ Assessed and tested the key assumptions and inputs
to which the outcome of the measurement or value is
most sensitive to.
We found the underlying key assumptions and inputs
used by management in measuring the fair value within
a reasonable range.
33
Independent Auditor’s Report
continued
Key Audit Matters
How our audit addressed the key audit matters
Our response
In obtaining sufficient audit evidence, the following
procedures were carried out:
▶ Obtained and evaluated management’s assessment
of the Group’s ability to continue as a going concern
by obtaining an understanding of the Group’s
business plans and financing requirements
▶ Obtained and evaluated the cash flows forecasts
prepared by management for the following 12
months from the date of the financial statements and
assessed the reasonableness of the key assumptions
used with reference to the Group’s business plans and
historical performance;
▶ Challenged the appropriateness of the key
assumptions used by management in the cash flow
projection, including the timing of cash required
for operations, the Group’s forecasts of revenue,
development costs, forecasts operating and
maintenance expenses, and discount rate used.;
▶ Performed stress test of the cash flows projections
and analysed mitigating factors;
▶ Evaluated the adequacy and appropriateness of the
disclosures made in the financial statements.
We found the underlying key assumptions and
judgements used by management to determine the
appropriateness of using the going concern assumption
in preparing the financial statements to be reasonable.
Assessment of the going concern basis in the
preparation of the financial statement
We refer to Note 3(a) to the consolidated financial
statements.
During the financial year ended 31 December 2023,
the Group generated profits for the year amounting
to £22,624,000 and net cash inflows of £543,000. The
profit for the year comprised mainly a one-off sale of the
development right of £10,088,000 and a fair value gain on
investment property of £28,200,000. Furthermore, as at
31 December 2023, the Group is in a net current liability
position of £3,422,000.
Management is of the view that the Group will be
able to meet their obligations over the next 12 months
from the date of the financial statements after taking
into consideration the following key measures and
assumptions:
▶ The sales of freehold land subject to lease between
SIMEC Uskmouth Power Ltd and EL (Uskmouth)
Limited was signed on 5 December 2023 for a 230MW
BESS. The consideration for the sale of the land was
£9,925,000 payable in four instalments linked to the
milestones achieved in the BESS construction project.
▶ Deferment of the Group’s Abundance Bonds
repayment of £13,677,000 with the principal
repayment date as follows:
▶ 31 December 2025: £1,000,000
▶ 31 December 2025: £2,000,000
▶ 31 December 2027: £3,000,000
▶ 30 June 2029: £7,677,000
▶ Repayment of the grant funding from the grantor
of £3,760,000. Management believes that they
have sufficient grounds to dispute any clawback of
this grant. Further, there are no parent company
guarantees attached to the grant and the companies
that received the grants are inactive and insolvent.
We have identified the appropriateness of the use of going
concern assumption in preparing the financial statements
as a key audit matter due to the significant degree of
management’s judgement and assumptions involved in
determining the same.
Independent Auditor’s Report
continued
34
Key Audit Matters
How our audit addressed the key audit matters
Impairment assessment of investment in subsidiaries
Our response
We refer to Note 3(i) under “Summary of Material
Accounting Policies” and Note 4(a) under “Critical
Accounting Judgements and Key Sources of Estimation
Uncertainty” and Note 16 to the consolidated financial
statements.
As of 31 December 2023, the Company has investments
in subsidiaries amounting to £25,154,000, representing
90% of its total assets.
Management reviews for any indicators of impairment
and where such an indicator exists, the carrying
amount of the Company’s investment in subsidiaries
is compared against their recoverable amount.
Management assesses the recoverable amount of
the investment in subsidiaries. Where an impairment
loss had previously been made, and the recoverable
amount exceeds the current carrying amount, a reversal
is recognized up to the extent of the impairment loss
previously recognised.
Based on the value in use (“VIU”) calculation prepared
by management, a reversal of impairment loss of
£13,800,000 was recognised with respect to the
Company’s investment in subsidiaries.
We focused on this area as management’s assessments
involved significant estimates and judgment over the
VIU calculation and subsequently the determination of
the recoverable amounts of investment in subsidiaries.
In obtaining sufficient audit evidence, the following
procedures were carried out:
▶ Assessed the indicators of impairment of the
investment in subsidiaries
▶ Obtained and evaluated the discounted cash flow
prepared by management
▶ Checked the mathematical accuracy of the
underlying calculation of the recoverable amount.
▶ Challenged the appropriateness of the key
assumptions used by management in the cash
flow projection, including the Group’s forecasts of
revenue, development costs, forecasts operating and
maintenance expenses, and discount rate used.
▶ Assessed and tested the key assumptions and inputs
to which the outcome of the VIU calculation is most
sensitive to.
We found the underlying key assumptions and inputs
used by management in the VIU calculation within a
reasonable range.
Other Matter
The financial statements of the SIMEC Atlantis Energy
Limited for the year ended 31 December 2022 were
audited by another firm of chartered accountants whose
report dated 25 July 2023 expressed an unmodified
opinion on those financial statements.
Other Information
Management is responsible for the other information.
The other information comprises the information
included in the annual report, but does not include the
financial statements and our auditor’s report thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements
or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required
to report that fact. We have nothing to report in this
regard.
Responsibilities of Management and Directors for
the Financial Statements
Management is responsible for the preparation of
financial statements that give a true and fair view in
accordance with the provisions of the Act, SFRS(I),
and IFRS, and for devising and maintaining a system
of internal accounting controls sufficient to provide
a reasonable assurance that assets are safeguarded
against loss from unauthorised use or disposition; and
transactions are properly authorised and that they
are recorded as necessary to permit the preparation
of true and fair financial statements and to maintain
accountability of assets.
In preparing the financial statements, management is
responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern
basis of accounting unless management either intends
to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
The directors’ responsibilities include overseeing the
Group’s financial reporting process.
35
Independent Auditor’s Report
continued
Auditor’s Responsibilities for the Audit of the
Financial Statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit
conducted in accordance with SSAs will always detect a
material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users
taken on the basis of these financial statements.
As part of an audit in accordance with SSAs, we exercise
professional judgement and maintain professional
scepticism throughout the audit. We also:
▶ Identify and assess the risks of material misstatement
of the financial statements, whether due to fraud
or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than one
resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or
the override of internal control.
▶ Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the Group’s internal control.
▶ Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by management.
▶ Conclude on the appropriateness of management’s
use of the going concern basis of accounting and,
based on the audit evidence obtained, whether
a material uncertainty exists related to events or
conditions that may cast significant doubt on the
Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report.
However, future events or conditions may cause the
Group to cease to continue as a going concern.
▶ Evaluate the overall presentation, structure and
content of the financial statements, including the
disclosures, and whether the financial statements
represent the underlying transactions and events in a
manner that achieves fair presentation.
▶ Obtain sufficient appropriate audit evidence
regarding the financial information of the entities
or business activities within the Group to express an
opinion on the consolidated financial statements.
We are responsible for the direction, supervision and
performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among
other matters, the planned scope and timing of the audit
and significant audit findings, including any significant
deficiencies in internal control that we identify during
our audit.
We also provide the directors with a statement that
we have complied with relevant ethical requirements
regarding independence and to communicate with
them all relationships and other matters that may
reasonably be thought to bear on our independence
and, where applicable, related safeguards.
From the matters communicated with the directors,
we determined those matters that were of most
significance in the audit of the financial statements of
the current year and are therefore the key audit matters.
We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in
our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public
interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
In our opinion, the accounting and other records
required by the Act to be kept by the Company and by
those subsidiary corporations incorporated in Singapore
of which we are the auditors have been properly kept in
accordance with the provisions of the Act.
The engagement partner on the audit resulting in this
independent auditor’s report is Ms. Chua Soo Rui.
NEXIA SINGAPORE PAC
Public Accountants and Chartered Accountants
Singapore
24 June 2024
FINANCIAL
STATEMENTS
IN THIS SECTION:
37 Consolidated Statement of Comprehensive Income
38 Statements of Financial Position
39 Statements of Changes in Equity
41 Consolidated Statement of Cash Flows
42 Notes to the Financial Statements
IBC Company Information
37
Consolidated Statement of
COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
Revenue
Fair value adjustment to investment property
Other income
Employee benefits expense
Subcontractor costs
Depreciation and amortisation
(Impairment loss)/reversal of impairment loss on property,
plant and equipment
Other operating expenses
Share of loss of equity-accounted investees
Total operating expenses before non-recurring items
Loss on impairment of investment in joint venture
(Loss)/Gain on disposal of subsidiaries
Results from operating activities
Finance costs
Profit/(Loss) before income tax
Income tax credit
Profit/(Loss) for the year
Other comprehensive income/(loss)
Items that are or may be reclassified subsequently to profit
or loss:
- Exchange differences on translation of foreign operations
Items that will not be reclassified to profit or loss:
- Gain on revaluation of property, plant and equipment
Income tax relating to revaluation
Total comprehensive income/(loss) for the year
Profit/(Loss) for the year attributable to:
Owners of the Company
Non-controlling interests
Total comprehensive profit/(loss) for the year
attributable to:
Owners of the Company
Non-controlling interests
Profit/(Loss) per share:
Note
5
6
7
8
12, 15
12
9
10
11
26
26
2023
£’000
15,281
28,200
261
43,742
(2,095)
(1,921)
(3,420)
(5,630)
(3,218)
-
(16,284)
-
-
27,458
(4,665)
22,793
385
23,178
31
23,127
(5,788)
40,548
25,394
(2,216)
38,736
1,812
Basic and diluted profit/(loss) per share
27
0.04
The accompanying notes form an integral part of the financial statements
2022
£’000
3,902
-
4,560
8,462
(2,484)
(5,442)
(3,275)
2,000
(3,682)
(28)
(12,911)
(377)
(2,232)
(7,058)
(4,021)
(11,079)
19
(11,060)
(63)
-
-
(11,123)
(9,649)
(1,411)
(9,712)
(1,411)
(0.01)
38
Statements of
FINANCIAL POSITION
AS AT 31 DECEMBER 2023
ASSETS
Non-Current Assets
Property, plant and equipment
Investment property
Intangible assets
Right-of-use assets
Investments in subsidiaries
Investments in joint ventures and other investments
Loans receivable
Current Assets
Trade and other receivables
Inventories
Cash and cash equivalents
Total Assets
EQUITY AND LIABILITIES
Capital and Reserves
Share capital
Capital reserve
Translation reserve
Share option reserve
Revaluation reserve
Accumulated losses
Total equity attributable to owners of the Company
Non-controlling interests
LIABILITIES
Non-current Liabilities
Lease liabilities
Provisions
Loans and borrowings
Deferred tax liabilities
Current Liabilities
Lease liabilities
Loans and borrowings
Trade and other payables
Total Liabilities
Total Equity and Liabilities
GROUP
COMPANY
Note
2023
£’000
2022
£’000
2023
£’000
2022
£’000
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
16
15
28
29
30
15
29
31
59,320
49,532
1,465
1,839
-
133
258
74,455
-
1,465
1,331
-
133
258
-
-
-
-
-
-
-
25,154
11,220
-
258
-
258
112,547
77,642
25,412
11,478
2,962
9,239
4,187
16,388
128,935
3,326
-
3,701
7,027
281
-
2,202
2,483
365
-
172
537
84,669
27,895
12,015
201,496
201,496
201,496
201,496
12,665
7,089
488
13,311
12,665
7,058
420
-
-
(227)
488
-
-
(227)
420
-
(190,825)
(216,285)
(180,113)
(196,845)
44,224
2,140
46,364
1,556
12,323
43,281
6,155
63,315
218
11,471
7,567
19,256
82,571
128,935
5,354
328
5,682
21,644
4,844
-
-
21,644
4,844
1,000
12,581
41,890
752
56,223
296
15,895
6,573
22,764
78,987
84,669
-
-
53
-
53
-
469
5,729
6,198
6,251
27,895
-
-
438
-
438
-
82
6,651
6,733
7,171
12,015
The accompanying notes form an integral part of the financial statements
39
Statements of
CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
Share
capital
£’000
Capital
reserve
£’000
Note
Transla-
tion
reserve
£’000
Share
option
reserve
£’000
Reval-
uation
reserve
£’000
Accumu-
lated
losses
£’000
Non-
controlling
interests
£’000
Total
£’000
Total
£’000
Group
At 1 January 2023
201,496
12,665
7,058
420
Profit for the
financial year
Other
comprehensive
profit
Total
comprehensive
profit for the
financial year
Transactions with
owners, recognised
directly in equity
Recognition of
share-based
payments
Cancellation of
share options
Total transactions
with owners
At 31 December
2023
25
25
Loss for the
financial year
Other
comprehensive loss
Total
comprehensive loss
for the financial
year
Transactions with
owners, recognised
directly in equity
Recognition of
share-based
payments
Transfer between
reserves
Total transactions
with owners
At 31 December
2022
25
25
-
-
-
-
-
-
-
-
-
-
-
-
-
31
31
-
-
-
-
-
-
134
(66)
68
-
-
(216,285)
5,354
328
5,682
25,394 25,394
(2,216)
23,178
13,311
-
13,342
4,028
17,370
13,311
25,394 38,736
1,812 40,548
-
-
-
-
134
66
66
-
134
-
-
134
-
134
-
-
-
-
-
-
-
-
-
-
-
-
7,121
-
(63)
(63)
576
(206,910)
14,948
1,739
16,687
-
-
-
(9,649)
(9,649)
(1,411)
(11,060)
-
(63)
-
(63)
(9,649)
(9,712)
(1,411)
(11,123)
-
-
-
118
(274)
(156)
-
118
274
-
274
118
-
-
-
118
-
118
201,496
12,665
7,058
420
(216,285)
5,354
328
5,682
201,496
12,665
7,089
488
13,311
(190,825) 44,224
2,140 46,364
At 1 January 2022
201,496
12,665
The accompanying notes form an integral part of the financial statements
40
Statements of
CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
Share
capital
£’000
Translation
reserve
£’000
Note
Share
option
reserve
£’000
Accumu-
lated
losses
£’000
201,496
(227)
420
(196,845)
Company
At 1 January 2023
Profit for the financial year
Total comprehensive profit for the financial year
Transactions with owners, recognised directly
in equity
Recognition of share-based payments
Transfer between reserves
Total transactions with owners
At 31 December 2023
At 1 January 2022
Loss for the financial year
Total comprehensive loss for the financial year
Transactions with owners, recognised directly
in equity
Recognition of share-based payments
Transfer between reserves
Total transactions with owners
At 31 December 2022
-
-
-
-
-
-
-
-
-
-
201,496
201,496
(227)
(227)
-
-
-
-
-
-
-
-
-
-
25
25
25
25
Total
£’000
4,844
16,666
16,666
134
-
134
-
-
16,666
16,666
134
(66)
68
488
576
-
-
118
(274)
(156)
-
66
66
(180,113)
21,644
(188,712)
13,133
(8,407)
(8,407)
(8,407)
(8,407)
-
274
274
118
-
118
The accompanying notes form an integral part of the financial statements
201,496
(227)
420
(196,845)
4,844
41
Consolidated Statement of
CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
Cash Flows from Operating Activities
Profit/(Loss) before income tax
Adjustments for:
Grants income
Depreciation of property, plant and equipment
Amortisation of intangible assets
Interest income
Finance costs
Share-based payments
Impairment loss/(Reversal of) loss on property, plant & equipment
Other impairment charges
Impairment loss on investment in joint venture
Movement in provisions
Fair value adjustment to investment property
Loss on sale of subsidiaries
Share of loss of joint venture
Net foreign exchange
Operating cash flow before working capital changes
Changes in working capital:
Movements in trade and other receivables
Movements in trade and other payables
Interest received
Interest paid
Net cash generated from/(used in) operating activities
Cash Flows from Investing Activities
Purchase of property, plant and equipment
Receipt from/(loan to) joint venture
Net cash from disposal of subsidiaries
Net cash generated from investing activities
Cash Flows from Financing Activities
Proceeds from grants received
Proceeds from borrowings
Repayment of borrowings
Interest paid
Payment of lease liabilities
Deposits released/(pledged)
Note
7
12,15
14
7
9
8
12
17
13
16
17
12
18
16
29
29
29
15
21
Net cash (used in)/generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effect of foreign exchange rates on the balance of cash held in foreign
currencies
Cash and cash equivalents at the end of the financial year
21
The accompanying notes form an integral part of the financial statements
2023
£’000
2022
£’000
22,793
(11,079)
-
3,420
-
(94)
4,665
134
5,630
8
-
(297)
(28,200)
-
-
28
8,087
364
872
87
(69)
9,341
(1,318)
1
-
(1,317)
-
-
(6,000)
(1,221)
(318)
58
(7,481)
543
2,929
1
3,473
(56)
3,237
38
(58)
4,021
118
(2,000)
-
377
(13)
-
2,232
28
122
(3,033)
(1,978)
(541)
24
-
(5,528)
-
(194)
570
376
56
8,500
(2,027)
(1,203)
(308)
(5)
5,013
(139)
3,004
64
2,929
42
Notes to the
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023
These notes form an integral part of and should be read in
conjunction with the accompanying financial statements:
1. GENERAL
SIMEC Atlantis Energy Limited (the “Company”) is a
company incorporated in Singapore. The address of the
Company’s registered office is Level 4, 21 Merchant Road,
#04-01 Royal Merukh S.E.A, Singapore 058267. The principal
place of business is 26 Dublin Street, Edinburgh, EH3 6NN,
United Kingdom.
The principal activities of the Group are being a developer,
builder, owner and operator of sustainable energy projects.
The principal activities of the Company are those of a
holding company.
The principal activities of the subsidiaries are disclosed in
Note 16 to the financial statements.
The financial statements of the Group as at and for the
year ended 31 December 2023 comprise the Company and
its subsidiaries (together referred to as the “Group” and
individually as “Group entities”) and the Group’s interest in
equity-accounted investees.
2. APPLICATION OF INTERNATIONAL
FINANCIAL REPORTING
STANDARDS (“IFRSS”)
(a) Application of New and Revised IFRSs
On 1 January 2023, the Group adopted the new or amended
IFRSs that are mandatory for application for the financial
year. Changes to the Group’s accounting policies have
been made as required, in accordance with the transitional
provisions in the respective IFRS.
The adoption of these new or amended IFRS did not result
in substantial changes to the Group’s accounting policies
and had no material effect on the amounts reported for the
current or prior financial year.
(b) IFRSs issued but not yet effective
At the date of authorisation of these financial statements,
the following standards have been issued and are relevant to
the Group and Company but not yet effective:
Description
IFRS 18: Presentation and Disclosure in Financial Statements
Amendments to IAS 1: Non-current Liabilities with Covenants
Amendments to IFRS 16: Lease Liability in a Sale and Leaseback
Amendments to IAS 7 and IFRS 7: Supplier Finance Arrangements
IFRS S1: General Requirements for Disclosure of Sustainability-related Financial
Information
IFRS S2: Climate-related Disclosures
Amendments to IAS 21: Lack of Exchangeability
Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture
Effective for annual periods
beginning on or after
1 January 2027
1 January 2024
1 January 2025
Date to be determined
The Group has not adopted standards applicable to the Group that have been issued but not yet effective. The Group is
currently assessing the impact to the consolidated financial statements. Based on preliminary assessment, the directors
of the Company expect that the adoption of the standards will have no material impact on the financial statements in
the period of initial application. The Group will apply early adoption of the IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-Current. As a result of this early adoption, the debentures are classified as
non-current.
43
Notes to the Financial Statements
continued
3. SUMMARY OF MATERIAL
ACCOUNTING POLICY INFORMATION
(a) Going concern
In adopting the going concern basis for preparing these
financial statements, the Board has considered the Group’s
business activities, together with factors likely to affect its
future development, its performance and principal risks and
uncertainties.
are expected to be delivered within the forecast period. The
forecast has been subject to stress testing.
The Board has identified significant factors that are of a
material amount, and the Board has identified sufficient
evidence of success including achievable new sources of
revenue, that support the Group’s ability to continue as a
going concern. The evidence is summarised as follows:
▶ 230MW BESS project with Uskmouth Energy Storage
Limited
The Board of Directors is required to state whether
it is appropriate to adopt the going concern basis of
accounting in preparing the financial statements, and to
identify any material uncertainties as to the Company’s
ability to continue as a going concern over a period of at
least 12 months from the date of approval of the financial
statements. The period of management’s going concern
assessment is the period to 30 June 2025.
The Board of Directors has undertaken the assessment of
the going concern assumptions using financial forecasts for
the period to 30 June 2025. Management’s forecasts through
to 30 June 2025 anticipate revenues from trading will meet
all of the working capital requirements of the Group.
Details of the Group’s loans and borrowings at year end
can be found in Note 29 of the financial statements. As at
31 December 2023, there were no undrawn loan facilities.
On 27 December 2023 the maturity dates for the debentures
issued in 2017 through Atlantis Ocean Energy, in 2018
through Atlantis Future Energy and in 2019 through Atlantis
Future Energy were extended to 30 June 2029. Early
capital repayments allocated across all three debentures of
£1,000,000 on 31 December 2025, £2,000,000 on 31 December
2026 and £3,000,000 on 31 December 2027 are also included
in the Amendment Agreement. The changes allow the
Group to unlock significant revenue opportunities through
the delivery of multiple utility scale Battery Energy Storage
System (“BESS”) projects, along with further development
of its tidal business. The Group is confident that the income
from these projects will be sufficient to repay the debenture
capital, while still delivering on its business objectives.
Going concern assessment
The Group has made excellent progress in the past 12 months
turning its vision of a sustainable energy park into reality. The
commercial agreements that have been reached with third
parties, the unique benefits the Uskmouth site offers to the
Group as both a developer and landowner at the site such as
low grid connection costs, proven success securing planning
permissions (being an existing brownfield, easily accessible
site), and the increasing demand for battery energy storage in
the United Kingdom along with the high rental income that
land developed for BESS attracts, gives the Board of Directors
a great deal of confidence for further planned development
of the sustainable energy park.
Management has prepared a forecast through to 30 June
2025 based on contractually committed revenues and
costs, and an estimate of additional costs required and the
income and costs arising from development projects that
▶ The “Contract for Sale of Freehold Land Subject to
Lease” between SIMEC Uskmouth Power Ltd and EL
(Uskmouth) Limited was signed on 5 December 2023.
The consideration for the sale of the land is £9.925
million payable in four instalments linked to the BESS
construction program.
▶ The first “Completion” milestone, being the
delivery of 30kT of aggregate to the site to build
the foundations, was achieved on 1 March 2024.
The £5.0 million completion payment was received
on 27 March 2024.
▶ The second milestone payment of £2,000,000 was
received on 8 May 2024 following the successful
completion of the earthworks.
▶ The two remaining milestones, worth £1.5 million
and £1.425 million are linked to progress building
the BESS. Construction of the project remains on
time, evidenced by achieving the first and second
milestones, and the project is on schedule to
complete early 2025.
▶ 120MW BESS
▶ The project is progressing very well with the following
key deliverables either already completed or well
advanced.
▶ The project received planning permission and
SuDS Approval Body (“SAB”) approval in January
2024.
▶ The Grid Connection date is 31 October 2026.
▶ Works to prepare the site by demolishing cooling
towers completed in May 2024.
▶ A competitive tender process is underway to
choose the construction partners for the project.
▶ The construction program is forecast to commence
in Q2-25 and as the trigger for lease entry the first
milestone income of 50% of the contract price may
be received during that same period.
▶ The remaining milestone income is forecast to be
received during 2025 and 2026.
▶ The Board has engaged Elgar Middleton, an
independent financial advisory boutique with extensive
experience in renewable energy, to advise on the
commercial opportunities for our circa 1GW battery
portfolio. Financial modelling of the BESS portfolio
concludes that the group would retain a significant
Notes to the Financial Statements
continued
44
equity stake in the projects after having raised equity
and debt funding to build the projects. SAE could sell
down a portion of its equity in the projects should new
working capital be required. This option will next be
available to the Group for the 120MW BESS when it
reaches financial close in Q1 2025.
The Directors’ assessment of the appropriate use of the going
concern basis recognised that there is a risk that the repayment
of historical grant funding of £3.8 million may be pursued by
the grantor. The Board are of the view that there are grounds
for disputing any clawback of this grant and the Company has
evidence to support this position, as reported in the previous
year. Further, the Board notes that there are no parent company
guarantees attached to the grant and the companies that
received the grants are balance sheet insolvent.
Mitigating actions
If cashflows are limited due to a requirement to repay
historical grant funding coupled with then a failure to
agree an appropriate repayment plan with the creditor,
controllable mitigating actions would be available such as:
▶ utilising surplus working capital,
▶ accelerating the sale of an equity interest in the 120MW
BESS, described above,
▶ accelerating the sale of the land or lease for the 120MW
BESS taking a similar approach to that already used in
the first 230MW BESS described above, and for which an
offer has already been received, and
▶ reducing the Group’s cost base.
Going concern conclusion
Accordingly, the Board of Directors concluded that it is
appropriate to adopt the going concern basis of accounting
in preparing the consolidated financial statements and
the parent company financial statements. The Board of
Directors have a reasonable expectation that the Company
and the Group will each continue to operate as a going
concern for at least 12 months from the date of approval of
the financial statements.
(b) Basis of Preparation
The financial statements have been prepared in
accordance with Singapore Financial Reporting Standards
(International) (“SFRS(I)”) and IFRS. SFRS(I)s are issued by
Accounting Standards Council Singapore, which comprise
standards and interpretations that are equivalent to IFRS
issued by International Accounting Standards Board.
All references to SFRS(I)s and IFRSs are subsequently
referred to as IFRS in these financial statements unless
otherwise specified.
The financial statements have been prepared on the
historical cost basis, except as otherwise disclosed in the
accounting policies below.
The accounting policies set out below have been applied
consistently to all periods presented in these financial
statements.
(c) Basis of Consolidation
The consolidated financial statements incorporate the
financial statements of the Company and entities controlled
by the Company (its subsidiaries) at the reporting date.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group
loses control of the subsidiary. Assets, liabilities, income and
expenses of a subsidiary acquired or disposed of during the
year are included in the consolidated financial statements
from the date the Group gains control until the date the Group
ceases to control the subsidiary. When necessary, adjustments
are made to the financial statements of subsidiaries to bring
their accounting policies in line with the Group’s accounting
policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between
members of the Group 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 (capital
reserve) and attributed to the owners of the Company.
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.
(d) Business Combination
The acquisitions 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.
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. 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 classified as an asset or a
liability that is a financial instrument and within the scope
of IFRS 9 Financial Instruments is measured at fair value
with the changes in fair value recognised in the statement
of profit or loss in accordance with IFRS 9. Other contingent
consideration that is not within the scope of IFRS 9 is
measured at fair value at each reporting date with changes
in fair value recognised in profit or loss.
45
Notes to the Financial Statements
continued
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
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 IFRS
2 Share-based Payment;
▶ 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.
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,
less 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.
Investment in joint venture (equity-accounted investee)
A joint venture is an arrangement in which the Group has
joint control, whereby the Group has a right to the net assets
of the arrangement, rather than rights to its assets and
obligations for its liabilities. Joint control is the contractually
agreed sharing of control of an arrangement, which exists
only when decisions about the relevant activities require the
unanimous consent of the parties sharing control.
Investments in joint ventures are accounted for using the
equity method. They are recognised initially at cost, which
includes transaction costs. Subsequent to initial recognition,
the consolidated financial statements include the Group’s
share of the profit or loss and other comprehensive income
of equity accounted investees, after adjustments to align the
accounting policies with those of the Group, from the date
that significant influence or joint control commences until
the date that significant influence or joint control ceases.
When the Group’s share of losses exceeds its interest in
an equity-accounted investee, the carrying amount of the
investment, together with any long-term interest that forms
part thereof, is reduced to zero, and the recognition of
further losses is discontinued except to the extent that the
Group has an obligation to fund the investee’s operations or
has made payments on behalf of the investee. If the equity-
accounted investee subsequently reports profits, the Group
resumes recognising its share of those profits only after its
share of the profits equals the share of losses not recognised.
(e) Financial Instruments
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.
Financial Assets
All financial assets are recognised and derecognised on
the 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
fair value through profit and loss, which are initially measured
at fair value. Financial assets comprise loans and receivables.
Loans and receivables
Trade and other receivables that have fixed or determinable
payments and 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 any allowance for expected credit
losses. Interest is recognised by applying the effective
interest method, except for short-term receivables where
the recognition of interest would be immaterial. Trade
receivables that do not contain a significant financing
component or for which the Group has applied the practical
expedient are measured at the transaction price.
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.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for
Notes to the Financial Statements
continued
46
managing them. In order for a financial asset to be classified
and measured at amortised cost or fair value through other
comprehensive income, it needs to give rise to cash flows
that are ‘solely payments of principal and interest’ (“SPPI”)
on the principal amount outstanding. This assessment
is referred to as the SPPI test and is performed at an
instrument level. Financial assets with cash flows that are
not SPPI are classified and measured at fair value through
profit or loss, irrespective of the business model.
The Group’s business model for managing financial assets
refers to how it manages its financial assets in order to
generate cash flows. The business model determines
whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both. Financial
assets classified and measured at amortised cost are
held within a business model with the objective to hold
financial assets in order to collect contractual cash flows
while financial assets classified and measured at fair value
through other comprehensive income are held within a
business model with the objective of both holding to collect
contractual cash flows and selling.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank, short-
term bank deposits with an original maturity of 3 months or
less and cash on hand.
For the purposes of the consolidated statement of cashflows,
pledged deposits are excluded.
Impairment of financial assets
IFRS 9 requires the Group to recognise an allowance for
expected credit loss (“ECLs”) for financial assets measured at
amortised cost.
ECLs are based on the difference between the contractual
cash flows due in accordance with the contract and all the
cash flows that the Group expects to receive, discounted at
an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale
of collateral held or other credit enhancements that are
integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses
that result from default events that are possible within the
next 12-months (a 12-month ECL). For those credit exposures
for which there has been a significant increase in credit risk
since initial recognition, a loss allowance is required for credit
losses expected over the remaining life of the exposure,
irrespective of the timing of the default (a lifetime ECL).
Additional information about how the Company measures
the allowance for impairment is described in Note 35.
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.
Loans and borrowings (except for financial guarantee
contract liabilities) 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 finance costs (see Note 3 (o)).
Financial guarantee contract liabilities are measured
initially at their fair values and, if not designated as fair value
through profit and loss, subsequently at the higher of the
amount of the loss allowance determined in accordance
with section 5.5 of IFRS 9, and the amount initially
recognised less, when appropriate, the cumulative amount
of income recognised in accordance with IFRS 15.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group’s obligations are discharged, cancelled or
they expire.
(f) Property, Plant and Equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any accumulated
impairment losses.
The cost of self-constructed assets includes:
▶ the cost of materials and direct labour;
▶ any other costs directly attributable to bringing the
assets to a working condition for their intended use;
▶ when the Group has an obligation to remove the asset
or restore the site, an estimate of the discounted costs of
47
Notes to the Financial Statements
continued
dismantling and removing the items and restoring the
site on which they are located; and
▶ capitalised borrowing costs.
The tidal and battery energy storage assets recorded within
property, plant and equipment are stated at their revalued
amounts, being the fair value determined from a value-in-
use calculation as at the reporting date, less any subsequent
accumulated depreciation and accumulated impairment
losses.
A decrease in the carrying amount arising on the revaluation
is recognised in profit or loss to the extent that it exceeds the
balance, if any, held in the revaluation reserve relating to a
previous revaluation of that asset.
Any revaluation increase is recognised in other comprehensive
income and accumulated in equity except to the extent that it
reverses a revaluation decrease for the same asset previously
recognised in the profit or loss, in which case the increase
is credited to the profit or loss to the extent of the decrease
previously recognised.
A revaluation increase has been recognised in the year
of £23.1 million (2022: £Nil million) for the 207MW Battery
Energy Storage System project planned at Mey in Caithness,
Scotland. The credit of £23.1 million to equity has been
reduced to £13.3 million to account for deferred tax liabilities
of £4.0 million (2022: £Nil million) and non-controlling
interests’ share of £5.8 million (2022: £Nil million).
Depreciation of the assets commences when the assets are
ready for their intended use. Depreciation is charged to the
statement of profit or loss using the straight-line method over
the estimated useful life of the asset on the following basis:
Plant, property and equipment
Furniture, fixtures and equipment
Computer equipment and software
Power Plant
-
-
-
-
4% - 7%
25% - 33%
25% - 33%
2% - 6%
Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
Freehold land is stated at cost, less any subsequent
accumulated impairment losses.
(g) Investment Properties
Investment properties are properties which are held either
to earn rental income or for capital appreciation or for
both. Investment properties are initially measured at cost
and subsequently measured using the fair value model,
with changes in fair value under the fair value model being
recognised in profit or loss.
Following the decision in 2022 to terminate the
development of the Uskmouth power station conversion
from coal to waste-derived fuel pellets, there has been
a change in use to redevelop the site as a sustainable
energy park. During the reporting period, the strategy is
to maximise financial returns from the site by developing,
constructing, owning and operating battery energy storage
systems, each one on a designated parcel of land within
the Uskmouth Power Station site. Land previously classified
as power plant within property, plant and equipment was
transferred to investment properties, with the recognition
of the new asset type reflecting management’s strategy on
the site.
(h) 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
expenditure is capitalised only if development costs can be
measured reliably, the product or process is technically and
commercially feasible, future economic benefits are probable,
and the Group intends to and has sufficient resources to
complete development and to use or sell the asset.
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.
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.
Intangible assets are derecognised on disposal or when no
future economic benefits are expected from its use or disposal.
Amortisation
Subsequent to initial recognition, each class of intangible
asset is reported at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised
on a straight-line basis over the expected estimated useful
life of that class of asset. Amortisation will begin when the
asset is available for use, i.e. when it is in the location and
condition necessary for it to be capable of operating in the
manner intended by management.
(i) Impairment of Non-Financial Assets
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, testing for impairment is undertaken.
An asset’s recoverable amount is the higher of an asset’s or
cash-generating unit’s fair value less costs of disposal and its
value in use and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets.
Where the carrying amount of an asset or cash-generating
unit exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.
Notes to the Financial Statements
continued
48
Impairment losses of continuing operations are recognised
in profit or loss, except for assets that are previously revalued
where the revaluation was taken to other comprehensive
income. In this case, the impairment is also recognised
in other comprehensive income up to the amount of any
previous revaluation.
For assets excluding goodwill, a previously recognised
impairment loss is reversed only if there has been a change
in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognised. If
that is the case, the carrying amount of the asset is increased
to its recoverable amount. That increase cannot exceed the
carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised
previously. Such reversal is recognised in profit or loss unless
the asset is measured at revalued amount, in which case the
reversal is treated as a revaluation increase.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment
annually.
(j) Inventories
Land inventories are held at the lower of cost and net
realisable value. Cost is based on the first-in first-out
principle and includes the incurred value of land assets
transferred from investment property or property, plant and
equipment and additional expenditure incurred bringing
them to their present location and condition.
Following the decision in 2022 to terminate the
development of the Uskmouth Power Station conversion
from coal to waste-derived fuel pellets, there has been
a change in use to redevelop the site as a sustainable
energy park. During the reporting period, the strategy is
to maximise financial returns from the site by developing,
constructing, and owning and operating battery energy
storage systems, each one on a designated parcel of land
within the Uskmouth Power Station site. Land inventories
relate to land that is being developed or constructed with
a view to sale rather than to retain ownership of and earn
future rental income from.
On 5th December 2023, an agreement to sell freehold
land used by Quinbrook Infrastructure Partners for their
230MW battery energy storage system was announced for a
milestone-linked total gross consideration of £9.9 million to
be completed in Q1 2025. As a result, the freehold land asset
is identified within land inventories and its net realisable
value measured at £9.2 million as at the reporting date.
(k) 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.
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. If the effect of
the time value of money is material, discounting is applied.
Provision for decommissioning is recognised when the
related facilities are installed. A corresponding amount
equivalent to the provision is also recognised as part of
the cost of the related property, plant and equipment.
The amount recognised is the estimated cost of
decommissioning, discounted to its net present value using
a risk-free rate, and is re-assessed each year.
Changes in the estimated timing of decommissioning
or decommissioning cost estimates are dealt with
prospectively by recording an adjustment to the provision,
and a corresponding adjustment to property, plant
and equipment. The unwinding of the discount on the
decommissioning provision is included as a finance cost.
(l) 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
25. 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
behavioural considerations.
(m) Revenue Recognition
Revenue is measured at the fair value of the consideration
received or receivable, net of sales related taxes. Revenue
from power generation sales and the associated Renewables
Obligation Certificates (ROCs) are recognised based on the
quantity of electricity exported and the contracted rate on the
date of generation. Battery storage income includes one off
developer premium fees received from battery energy storage
system developers, operators and owners. Lease income is
earned from the rental of land at the Uskmouth Site.
ROCs are awarded to the Group from Ofgem based on
generation of power. These ROCs are sold on receipt
of certificates from Ofgem allowing transfer of title.
The amount of revenue recognised on sale is in accordance
49
Notes to the Financial Statements
continued
with a contractual agreement where the pricing is based
on Ofgem’s minimum ROC value (the buy-out).
Battery storage income comprises the sale of ready-to-build
and constructed assets, including land, for the purpose
of battery energy storage systems at the Uskmouth site.
Revenue is recognised when performance obligations are
fulfilled per the contract.
Lease income arises from operating leases recognised by
the lessor on a straight-line basis from the commencement
date over the lease term. Refer to note 3 (p).
(n) 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 profit or loss and other
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
its subsidiaries operate by the end of the reporting period.
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 the
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.
(o) Finance Costs and Income
Finance costs comprise interest expense on borrowings.
All borrowing costs are recognised in the profit or loss using
the effective interest method, except to the extent that
they are capitalised as being directly attributable to the
acquisition, construction or production of an asset which
necessarily takes a substantial period of time to be prepared
for its intended use or sale.
Interest income is accrued on a time basis, by reference to the
principal outstanding and the effective interest rate applicable.
(p) Leases
The Group assesses at contract inception whether a contract
is, or contains, a lease. That is, if the contract conveys the
right to control the use of an identified asset for a period of
time in exchange for consideration.
Group As A Lessee
The Group applies a single recognition and measurement
approach for all leases, except for short-term leases and
leases of low-value assets. The Group recognises lease
liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
Right-of-use Assets
The Group recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognised, initial direct
Notes to the Financial Statements
continued
50
costs incurred, and lease payments made at or before the
commencement date less any lease incentives received.
Unless the Group is reasonably certain to obtain ownership of
the leased asset at the end of the lease term, the recognised
right-of-use assets are depreciated on a straight-line basis
over the shorter of its estimated useful life and the lease term.
Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group
recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease
payments include fixed payments (including in-substance
fixed payments) less any lease incentives receivable,
variable lease payments that depend on an index or a rate,
and amounts expected to be paid under residual value
guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised
by the Group and payments of penalties for terminating
the lease, if the lease term reflects the Group exercising the
option to terminate. The variable lease payments that do not
depend on an index or a rate are recognised as an expense
in the period during which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments,
the Group uses the interest rate implied in the lease
agreements, or if that rate cannot be readily determined,
the Group’s incremental borrowing rate at the lease
commencement date. After the commencement date,
the amount of lease liabilities is increased to reflect the
accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the
lease term, a change in the lease payments (e.g. changes to
future payments resulting from a change in an index or rate
used to determine such lease payments), or a change in the
assessment of an option to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition
exemption to its short-term leases of machinery and
equipment (i.e., those leases that have a lease term of
12 months or less from the commencement date and do
not contain a purchase option). It also applies the lease of
low-value assets recognition exemption to leases of office
equipment that are considered of low value (i.e., individually
below £10,000). Lease payments on short-term leases and
leases of low-value assets are recognised as expense on a
straight-line basis over the lease term.
Group As A Lessor
Leases in which the Group does not transfer substantially
all the risks and rewards incidental to ownership of an asset
are classified as operating leases. Rental income arising is
accounted for on a straight-line basis over the lease terms
and is included in revenue in the statement of profit or loss
due to its operating nature. Initial direct costs incurred in
negotiating and arranging an operating lease are added to
the carrying amount of the leased asset and recognised over
the lease term on the same basis as rental income.
(q) Segment Reporting
The Group is focused on developing, building, owning
and operating sustainable energy projects. It considers its
business as three operating segments: power generation;
battery storage; and project development.
4. CRITICAL ACCOUNTING
JUDGEMENTS AND KEY SOURCES
OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies,
which are described in Note 3, 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 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.
(a) 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 3, the critical accounting
judgements that will have a material 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:
Recognition and Fair Value of Investment Property
The Group determines the fair value of investment
properties based on value-in-use assessments. Following
a change in use of the assets at the Uskmouth site from
power generation to that of developing a sustainable
energy park the asset value previously held in property,
plant and equipment related to SIMEC Uskmouth Power
Limited, “SUP”, has been reclassified as Investment Property
after applying IAS 40 paragraph 57 (c). SUP expects to
earn operating lease income from the site, evidenced by
operating lease income already earned from Uskmouth
Energy Storage Limited in the year. Land that is not forecast
to benefit from operating lease income in the term will
initially benefit from capital appreciation.
The Group will regularly, and at least annually, review the
recognition of land as Investment Property.
New Battery Energy Storage Projects, (BESS), with a
capacity in excess of 900MW are being developed on the
The recoverable amounts for the MeyGen tidal project were
determined to be lower than the carrying value of its property,
plant and equipment and as a result a decrease of £5.6 million
to the value in use was recognised in 2023 (Note 12).
In testing the investment in subsidiaries for impairment,
using the methodology outlined above, the value of the
investments was determined to exceed their carrying
value and as a result a net increase of £13.8 million to the
investment value has been recognised in the year (Note 16).
Provision for decommissioning costs
Provision for decommissioning costs is recognised as
an amount equal to the Directors’ best estimate of the
expenditure required to settle the Group’s obligation.
Provisions are determined by discounting the expected
future cash flows at a pre-tax discount rate that reflects
current market assessment of the time value of money
and risk specific to the liability as set out in the summary of
significant accounting policies 3(k). The unwinding of the
discount is recognised as a finance cost.
The Uskmouth Power Station decommissioning provision
is the present value of the best estimate of direct costs
that may be incurred to restore the site of the Uskmouth
Power Station to a condition that complies with
applicable legislation, which is anticipated to take place in
approximately 2043. The original provision was recognised
on acquisition of the Uskmouth Power Station in 2018 and
conversion of the financial statements to IFRS and updated
as of 31 December 2023 based on latest estimates.
51
Notes to the Financial Statements
continued
site following the sale of the land on which the first 230MW
BESS is being built. These new projects form the basis of the
value in use calculations at Uskmouth.
The key assumptions used to determine the value-in-use at
Uskmouth are the up-front development costs, expected
capital costs to build each BESS, the financing structure and
cost, forecast operating and maintenance costs, revenue
per MWh and the discount rate to calculate present values.
The model is based on cash flows using a weighted average
cost of capital of 10%. Capital costs are based upon third
party quotes of the capital cost of developing the project.
Operating and maintenance costs are based upon market
tested assumptions.
The valuations are adjusted for the Group’s future expected
equity ownership of each project. Different development risk
factors are applied to the net present value of those projects,
delivery of which is less certain than that of projects for
which any of planning permission, a land lease option or a
near term grid connection date are already secured.
Recoverability of property, plant and equipment and
investment in subsidiaries
The Group tests its property, plant and equipment annually for
impairment, or more frequently if there are indicators that it
might be impaired. In the year, the entire property, plant and
equipment related to Uskmouth was transferred to investment
property. The Company also tests its investment in subsidiaries
for impairment where indicators of impairment exist. The
recoverable amounts for the Group’s property, plant and
equipment and the Company’s investment in subsidiaries are
supported by the estimated value-in-use of these assets. The
value-in-use is calculated using a net present value cash flow
model which compares the costs of completing each of the
respective projects, including financing costs, with expected
revenues, net of operating and maintenance expenditure, over
its operating life.
The key assumptions used to determine the MeyGen tidal
project’s value-in-use are the expected capital costs to
further develop the project, the financing structure and
cost, forecast operating and maintenance costs, revenue per
MWh and the discount rate to calculate present values. The
model is based on cash flows using a weighted average cost
of capital of 12% (2022: 12%). Capital costs for the subsequent
phases of the MeyGen project are based upon third party
quotes where available and estimates ofthe capital cost
of developing the 50MW Phase 2 array. Operating and
maintenance costs are based upon experience gained since
2018 from the operation of the MeyGen Phase 1 tidal array.
The key assumptions used to determine the 207MW Battery
Energy Storage System, “207MW BESS”, project’s value-in-use
are the up-front development costs, expected capital costs
to further develop the project, the financing structure and
cost, forecast operating and maintenance costs, revenue per
MWh and the discount rate to calculate present values. The
model is based on cash flows using a weighted average cost
of capital of 10%. Operating and maintenance costs are based
upon market tested assumptions.
Notes to the Financial Statements
continued
5. REVENUE
Power sales
Battery storage income
Lease income
52
GROUP
2023
£’000
4,513
10,088
680
15,281
2022
£’000
3,902
-
-
3,902
Power sales is the income received from electricity generation at the MeyGen Phase 1 array and includes the associated
revenue from renewable obligation certificates (“ROCs”). Battery storage income arises from the sale of the development
rights to the 230MW BESS at the Uskmouth Sustainable Energy Park to Uskmouth Energy Storage Limited. Lease income
comprises rental income and other fees from development of battery storage opportunities at the Uskmouth site.
6. FAIR VALUE ADJUSTMENT TO INVESTMENT PROPERTY
Fair value adjustment to investment property
GROUP
2023
£’000
28,200
2022
£’000
-
The fair value adjustment recognised in the year reflects the net gain from fair value adjusting the land sites at Uskmouth
held for future battery energy storage. The adjustment has been determined from applying a value-in-use calculation as
disclosed in Note 13.
7. OTHER INCOME
Interest income
Grant income
Income generated from sale of consumable goods and scrap items
Insurance proceeds
Other income
Other income relates to the temporary provision of shared corporate services to a third party.
GROUP
2023
£’000
94
-
-
39
128
261
2022
£’000
58
56
2,142
1,007
1,297
4,560
53
Notes to the Financial Statements
continued
8. EMPLOYEE BENEFITS EXPENSE
The average number of employees (including Executive Directors) was:
Average number of employees (including Executive Directors)
Their aggregate remuneration comprised:
Wages, salaries and other short-term benefits
Social security costs
Share-based payments (Note 25)
Contributions to defined contribution plan
Other related costs
9. FINANCE COSTS
Interest expense arising from:
- long term loans
- secured long term loans
- long term debentures
- lease liabilities
Unwinding of discount on decommissioning provision
Other finance costs
10. TAX CREDIT
Current tax credit
Deferred Income tax
Decrease in deferred tax liabilities (Note 30)
GROUP
2023
£’000
14
GROUP
2023
£’000
1,570
170
134
211
10
2022
£’000
22
2022
£’000
1,938
228
118
198
2
2,095
2,484
GROUP
2023
£’000
1,136
1,768
1,221
73
213
254
4,665
GROUP
2023
£’000
-
385
385
2022
£’000
845
1,630
1,101
80
161
204
4,021
2022
£’000
-
19
19
As a result of the Company’s management and control moving from Singapore to the United Kingdom on 1 January 2016,
the Company became tax resident in the United Kingdom and all filing requirements are met in both jurisdictions.
In the United Kingdom, the applicable rate of tax is computed at 23.5% (2022: 19%).
Notes to the Financial Statements
continued
54
Singapore domestic income tax is calculated at 17% (2021: 17%) of the estimated assessable loss for the year. Taxation for
other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.
Reconciliation of effective tax rate
Profit/(Loss) before tax
Tax at the domestic rates applicable to losses in the country concerned
Non-allowable items at rates concerned
Non-taxable income at rates concerned
Accelerated capital allowances
Previously unrecognised tax losses utilised
Tax effect of deferred tax asset not recognised
Tax effect of unwinding deferred tax
Tax effect of asset impairment on deferred tax
GROUP
2023
£’000
2022
£’000
22,239
(11,079)
5,231
2,756
(6,597)
(346)
(1,176)
2
19
366
385
(2,105)
1,119
(52)
-
-
1,038
19
-
19
At the end of the reporting period, the Group has unutilised tax losses of £60.1 million (2022: £172.3 million) available for
offset against future profits. The amount of the Company’s unutilised tax losses available for offset against future profits is
£33.6 million (2022: £31.3 million). No deferred tax asset has been recognised due to the unpredictability of future profit streams.
Included in the Group and Company losses are £27.4 million (2022: £27.3 million) of losses relating to Singapore corporation
tax, which will only be utilised against taxable income realised in Singapore.
11. PROFIT / (LOSS) FOR THE YEAR
The following items have been included in arriving at the profit (2022: loss) for the year:
Fair value adjustment to investment property
Depreciation of property, plant and equipment
(Impairment loss)/reversal of impairment loss on property,
plant and equipment
Auditor’s remuneration:
- Audit and audit related fees (a)
Share-based payments
Loss on sales of subsidiaries
6
12
12
26
11
GROUP
2023
£’000
28,200
(3,205)
(5,630)
(245)
(134)
-
2022
£’000
-
(3,217)
2,000
(190)
(118)
(2,232)
(a) Includes audit and audit related fees receivable by the auditor of parent company’s consolidated financial statements in
the year of £0.07 million (2022: £0.04 million).
55
Notes to the Financial Statements
continued
12. PROPERTY, PLANT AND EQUIPMENT
Freehold
land
£’000
Property,
plant and
equipment
£’000
Furniture,
fixture and
equipment
£’000
Computer
equipment
and software
£’000
Group
Cost
At 1 January 2022
Additions
At 31 December 2022
Additions
Revaluation surplus
Transfer to revaluation reserve
Transfer to Investment
Property
Assets transfer to inventories
20
-
20
-
-
-
-
-
68,823
137
68,960
1,315
23,127
(34,106)
-
-
At 31 December 2023
20
59,296
Accumulated depreciation
At 1 January 2022
Depreciation for the year
Reversal of impairment loss
At 31 December 2022
Depreciation for the year
Impairment loss
Transfer to revaluation reserve
Transfer to Investment
Property
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
-
-
-
-
-
-
-
-
-
24,222
2,125
-
26,347
2,129
5,630
(34,106)
-
-
20
20
42,613
59,296
17
-
17
-
-
-
-
-
17
17
-
-
17
-
-
-
-
17
-
-
87
-
87
3
-
-
-
-
90
72
12
-
84
2
-
-
-
86
3
4
Power
plant
£’000
85,058
(1,261)
83,797
(174)
-
-
(74,384)
(9,239)
-
52,898
1,080
(2,000)
51,978
1,074
-
-
(53,052)
Total
£’000
154,005
(1,124)
152,881
1,144
23,127
(34,106)
(74,384)
(9,239)
59,423
77,209
3,217
(2,000)
78,426
3,205
5,630
(34,106)
(53,052)
-
123
31,819
-
74,455
59,320
Notes to the Financial Statements
continued
56
(a) Plant, property and equipment
In 2020, MeyGen was awarded £1.5 million from the Scottish Government’s Saltire Tidal Energy Challenge Fund and £0.1 million
from Highlands and Islands Enterprise to develop and install a subsea tidal turbine connection hub. Prior to the 2020 award,
aggregate grants of £13.3 million, comprising a £10 million grant from the United Kingdom’s Department of Energy and Climate
Change, and two grants from Scotland’s Highlands and Islands Enterprise totalling £3.3 million, were awarded to MeyGen in
August 2014. Grants received where the conditions attached to them have been complied with were recorded as a deduction
from the carrying amount of the project-under-construction in accordance with the accounting policy in Note 3. As disclosed
in Note 4, a value-in-use calculation is undertaken each year to determine the need for impairment of the asset. A revaluation
surplus of £23.1 million was credited to equity in the year (2022: £nil) reflecting the addition of the 207MW Mey battery energy
storage system project to the valuation. The 5.6 million impairment loss relates to the tidal asset.
(b) Power Plant
On the 5 December 2023, an agreement to sell freehold land at Uskmouth was announced as disclosed in Note 3. The
land as at the reporting date was not in the condition for immediate sale, with the agreement requiring 30,000 tonnes of
aggregate to be imported for laying of foundations to trigger the completion milestone. As a result, the land is recognised
within inventories at the reporting date.
As disclosed in Note 4, the remaining property, plant and equipment balance at the Uskmouth site was transferred into
Investment Property reflecting the change of use at the site.
(c) Security
At 31 December 2023, assets of subsidiaries with carrying amounts of £60.7 million (2022: £75.7 million) were pledged as
security on long term loans (Note 29). In June 2023 a security held over the Power plant assets with a carrying value of
£31.3 million was released.
13. INVESTMENT PROPERTY
Group
At 1 January 2023
Transfer from owner occupied property
Net gain from fair value adjustment
At 31 December 2023
Investment
Property
£’000
-
21,332
28,200
49,532
Total
£’000
-
21,332
28,200
49,532
In the year, land and buildings at Uskmouth was transferred from Power Plant under Property, Plant and Equipment
to Investment Property at their net book value. Subsequently, the land and buildings have been reassessed as separate
identifiable plots of land for future BESS projects and as disclosed in Note 4, applying a value-in-use calculation to determine
their fair value, resulting in an increase of £28.2 million.
57
Notes to the Financial Statements
continued
14. INTANGIBLE ASSETS
Group
Cost
At 1 January 2022
Disposal1
At 31 December 2022
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Amortisation for the year
Disposal1
At 31 December 2022
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
Company
Cost
At 1 January 2022
Disposal1
At 31 December 2022
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Amortisation for the year
Disposal1
At 31 December 2022
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
Global
technology
licence
£’000
Intellectual
Property
£’000
Development
costs
£’000
Tidal data
£’000
Total
£’000
8,223
(8,223)
-
-
8,223
-
(8,223)
-
-
-
-
3,133
(3,133)
-
-
420
38
(458)
-
-
-
-
15,996
(15,996)
-
-
15,996
-
(15,996)
-
-
-
-
1,465
-
1,465
1,465
-
-
-
-
-
1,465
1,465
Development
costs
£’000
Intellectual
Property
£’000
3,347
(3,347)
-
-
3,347
-
(3,347)
-
-
-
-
573
(573)
-
-
420
38
(458)
-
-
-
-
28,817
(27,352)
1,465
1,465
24,639
38
(24,677)
-
-
1,465
1,465
Total
£’000
3,920
(573)
-
-
3,767
38
(3,805)
-
-
-
-
Tidal data relates to key information on tidal flows that is crucial to the development of the MeyGen project and little or
no obsolescence is expected. The tidal data will be amortised over the life of the project upon final commissioning of the
project.
1
The Development Cost and Global Technology License data formed part of the business that was sold to Proteus in 2022
therefore 2022 figures are restated to reflect this.
Notes to the Financial Statements
continued
58
15. LEASES
As a Lessee
The Group has lease contracts for land, buildings and the seabed at the MeyGen site. Those leases have lease terms of
between 5 and 99 years. Land and buildings have a remaining useful life between 5-91 years.
Set out below are the carrying amount of land and buildings right-of-use assets recognised and the movements during the
period:
Group
At 1 January 2022
Depreciation expense
Additions
Disposals
At 31 December 2022
Depreciation expense
Additions
Adjustments
At 31 December 2023
Set out below are the carrying amount of lease liabilities and movements during the period:
At 1 January
Additions
Accretion of interest
Payments
Adjustments
Disposals
At 31 December
Current
Non-current
The maturity analysis of lease liabilities is disclosed in Note 35(b).
Land and
buildings
£’000
779
(20)
194
378
1,331
(215)
770
(47)
1,839
2022
£’000
759
194
80
(308)
571
-
1,296
296
1,000
1,296
GROUP
2023
£’000
1,296
770
73
(318)
(47)
-
1,774
218
1,556
1,774
59
Notes to the Financial Statements
continued
The following are the amounts recognised in the profit or loss:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to
-
-
Lease of low value assets (included in other operating expenses)
Variable lease payments (included in other operating expenses)
At 31 December
GROUP
2023
£’000
215
73
4
2
294
2022
£’000
20
80
4
2
106
The Group had total cash outflows for leases of £0.3 million (2022: £0.3 million). The Group had non-cash additions to right-of-
use assets and lease liabilities of £0.8 million (2022: £0.2 million).
The Group has leases which contain variable lease payment terms that are linked to power generation. Variable lease
payments had the following effect:
Fixed rent
Variable payment
GROUP
2023
£’000
12
52
64
2022
£’000
12
50
62
Overall, the variable payments constitute 16% (2022: 16%) of the Group’s entire lease payments. The variable lease payments
depend on generation, and whilst the Group expects the ratio to remain constant in future years, a 5% increase in variable
payments would result in a £2,600 increase to lease payments.
As a Lessor
At the end of the reporting period, the Group had amounts due to it under non-cancellable operating leases, which fall due
as follows:
Within one year
Between two and five years
More than five years
GROUP
2023
£’000
-
-
99
99
2022
£’000
-
-
95
95
One of the subsidiaries of the Group, SIMEC Uskmouth Power Limited (“SUP”), leases land available at the Uskmouth Power
Station site to a related party, SIMEC Power 4 Limited. The lease is agreed on a 999-year basis and includes a lease premium
of £1.5 million, which is recognised in advanced receipts (Note 31).
Notes to the Financial Statements
continued
60
16. INVESTMENTS IN SUBSIDIARIES
Unquoted equity shares, at cost
Less: Impairment loss
Details of the subsidiaries are as follows:
Name of Subsidiaries
Principal activities
COMPANY
2023
£’000
63,589
(38,435)
25,154
2022
£’000
63,455
(52,235)
11,220
Country of
incorporation/
registration and
operation
Effective equity interest
held by the Company
2023
%
2022
%
Held by the Company
Atlantis Turbines Pte. Limited(3)
Investment holding
Singapore
Atlantis Projects Pte. Ltd(3)
Investment holding
Singapore
Atlantis Resources (Gujarat Tidal) Pte Limited(1)(6) Dormant
ARC Operations Pty Limited(4)
Atlantis Resources (Scotland) Limited(5)
Atlantis Ocean Energy PLC(5)
Atlantis Future Energy PLC(5)
SIMEC Uskmouth Power Limited(5)
Provision of operational
services to the Group
Provision of project
management and
consulting services
Singapore
Australia
United Kingdom
Financial services
United Kingdom
Financial services
United Kingdom
Development of
sustainable energy
projects
United Kingdom
SA Energy Storage Holdings Limited(1)
Investment holding
United Kingdom
SIMEC Atlantis Energy SPV1 Limited(1)
Held by Atlantis Projects Pte. Ltd,
Developer of battery
storage projects
United Kingdom
Tidal Power Scotland Limited(5)
Investment holding
United Kingdom
Stroma Tidal Power Limited(5)
Development of tidal
power generation project
United Kingdom
Mey Energy Storage Holdings Limited(1)
Investment holding
United Kingdom
Held by Tidal Power Scotland Limited
MeyGen Holdings Limited(5)
Investment holding
United Kingdom
Islay Holding Limited(5)
Investment holding
United Kingdom
Duncansby Tidal Power Limited(1)
Dormant
United Kingdom
Held by MeyGen Holdings Limited
100
100
50
100
100
100
100
100
100
100
92
100
100
83
100
100
100
100
50
100
100
100
100
100
-
-
92
100
-
83
100
100
61
Notes to the Financial Statements
continued
Name of Subsidiaries
Principal activities
Country of
incorporation/
registration and
operation
MeyGen PLC(2)(5)
Development of tidal
power generation project
United Kingdom
Held by Mey Energy Storage Limited
Meygrid Limited(1)
Held by Meygen Plc
Meygrid Limited(1)
Held by Mey Energy Storage Holdings Limited
Mey Energy Storage Limited(1)
Held by SA Energy Storage Holdings Limited
Grid Connection Sharing
Company
United Kingdom
Grid Connection Sharing
Company
United Kingdom
Battery Energy Storage
Special Purpose Vehicle
United Kingdom
AW2 Storage Holdings Limited(1)
Investment holding
United Kingdom
Held by Atlantis Turbines Pte Limited
Atlantis Operations (UK) Limited(5)
Non-operational
United Kingdom
Marine Current Turbines Limited(5)
Non-operational
United Kingdom
Effective equity interest
held by the Company
2023
%
100
2022
%
100
50
50
100
100
100
100
100
-
-
-
-
100
100
-
Held by AW2 Energy Storage Holding Limited
AW2 Energy Storage Limited(1)
Held by Islay Holding Limited
Islay Tidal Power Limited(1)
Held by Marine Current Turbines Limited
Sea Generation Limited(1)
Battery Energy Storage
Special Purpose Vehicle
United Kingdom
Development of tidal
power generation project
Development of tidal
power generation project
United Kingdom
100
100
United Kingdom
100
100
(1) Not required to be audited as the subsidiaries are dormant.
(2) As at 31 December 2023 and 31 December 2022, shares in MeyGen PLC were pledged as security on long term loans
(see Note 29).
(3) Audited by Nexia Singapore PAC, Singapore.
(4) Not required to be audited by law in its country of incorporation.
(5) Audited by Kreston Reeves LLP, United Kingdom.
(6) The Company has control over the entity through shareholder voting rights.
(a) Impairment in investment in subsidiaries
The Directors reviewed the value of the investments in subsidiaries held by the Company at year end and concluded that
the investment in Atlantis Operations (UK) Limited, Atlantis Resources (Scotland) Limited, Atlantis Ocean Energy PLC and
Atlantis Future Energy PLC should be impaired in full. The Directors identified a reversal in impairment for the Company’s
investment in SIMEC Uskmouth Power Limited of £14.2 million (2022: impairment loss of £7.3 million), increasing the carrying
value to £25.0 million.
(b) Share-Based Payments
During the financial year, share-based payments granted by the Company to the employing subsidiaries, Atlantis Resources
(Scotland) Limited (“ARSL”) and SIMEC Uskmouth Power Limited (“SUP”) resulted in an increase to the deemed investments
by the Company in those subsidiaries totalling £0.13m (2022: £0.12m).
Notes to the Financial Statements
continued
62
(c) Non-Controlling Interest in Subsidiaries
Tidal Power Scotland Limited (“TPSL”)
As at 31 December 2023, Scottish Power Renewables (“SPR”) has an equity investment of 6% of the shareholding in TPSL.
The Group retains a 92% (2022: 92%) shareholding of TPSL.
MeyGen Holdings Limited (“MGHL”)
The following table summarises the information relating to the material non-controlling interest (“NCI”) in MeyGen PLC,
based on its financial statements prepared in accordance with IFRS, modified for fair value adjustments on acquisition and
differences in the Group’s accounting policies.
NCI percentage
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Net assets attributable to NCI
Cash flows from operating activities
Cash flows used in investing activities
Cash flows used in financing activities
Net increase/(decrease) in cash and cash equivalents
Loss for the year
Other comprehensive gain
Total comprehensive gain/(loss)
Attributable to NCI:
Loss for the year
Other comprehensive gain
Total comprehensive income
GROUP
2023
£’000
23.23%
61,850
3,263
(54,548)
(1,351)
9,214
2,140
827
(1,289)
(210)
(672)
(9,541)
17,339
7,798
(2,216)
4,028
1,812
2022
£’000
23.23%
44,280
3,535
(45,422)
(978)
1,415
328
1,866
(345)
(995)
526
(6,075)
-
(6,075)
(1,411)
-
(1,411)
On 19 October 2022 the Group disposed of its tidal turbine development business including the entire shareholding in
Wide Range Developments Limited (“WRDL”) and Atlantis Operations Japan Good Kaisha (“AOJ”), an investment holding
company and a company that provided operational services, for a cash consideration of £0.6 million. The Group recognised a
loss on disposal of £2.2 million as a non-recurring item in the consolidated income statement. Following the disposal, WRDL
and AOJ ceased to be subsidiaries of the Group.
63
Notes to the Financial Statements
continued
The following table summarises the carrying amount of the major classes of identifiable assets and liabilities disposed:
Cash and cash equivalents
Intangible assets
Current assets
Other payables and liabilities
Net assets disposed
Net fair value adjustments disposed
Loss on disposal of a subsidiary
Total consideration from disposal of a subsidiary
Less: Cash and cash equivalents from disposed subsidiary
Less: Receipt of shares in other investment
17 INVESTMENT IN JOINT VENTURES AND OTHER INVESTMENTS
Investment in joint ventures, at cost
Investment in other investment, at fair value through profit and loss
Share of post-acquisition results
Loss on impairment of investment in joint venture
GROUP
2023
£’000
-
133
-
-
133
£’000
1
2,675
166
(776)
2,066
870
(2,232)
704
(1)
(133)
2022
£’000
405
133
(28)
(377)
133
The detail of the Company’s equity interests in joint ventures and associates is as follows:
Name of entity
Principal activities
Nature of
relationship
Country of
incorporation/
registration and
operation
NPA Fuels Ltd(1)
Marketing, production
and delivery of waste
derived fuel pellets
Joint Venture
United Kingdom
Effective equity interest
held by the Company
2023
%
50
2022
%
50
Proteus Marine
Renewables Limited
Development of Tidal
turbine technology
Other
investment
(1) Audited by Kreston Reeves LLP, United Kingdom.
United Kingdom
11
21
Notes to the Financial Statements
continued
64
The summarised financial information for these entities that are material to the Group are set out below and are not
adjusted for the percentage of ownership held by the Company.
Assets and liabilities:
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net liabilities
Group’s share of joint venture’s net liabilities
Results
Revenue
Loss for the year
Group’s share of joint ventures’ profit for the year
Carrying amount of the investment as at 31 December
NPA FUELS LTD
2023
£’000
2022
£’000
-
-
-
(233)
(233)
(233)
(116)
-
(26)
-
-
8
8
(207)
(8)
(215)
(207)
(104)
-
(55)
(28)
-
NPA Fuels Ltd
On 22 December 2020, Atlantis Projects Pte. Ltd., a subsidiary of the Group, entered into a Joint Venture agreement with
N&P Holdings 2, a subsidiary of N+P Group, to create NPA Fuels Ltd (“NPA”) a company domiciled in the UK. Each partner
has a 50% interest in the joint venture. The purpose of the joint venture is to principally be involved in the marketing,
production and delivery of waste derived fuel pellets to convert coal fired power stations throughout the UK. The initial cost
of investment is £463,981.
The Group’s interest in NPA is accounted for using the equity method in the consolidated financial statements due to
the terms of the joint venture agreement. In 2022, the Group’s share of NPA’s loss for the year totalling £Nil has been
recognised (2022: £27,569) This investment was fully impaired in 2022. In addition, as at 31 December 2023, the Group has a
loan receivable from NPA of £110,377 (2022: £103,213) which has been provided against in full. As of 31 December 2023, the
directors have commenced the process to dissolve the joint venture. The financial statements of NPA are prepared under
IFRS in £.
Proteus Marine Renewables Limited
On 19 October 2022, Atlantis Projects Pte. Limited, a subsidiary of the company, acquired a 21% interest in Proteus Marine
Renewables Limited as part of the divestment of the tidal turbine development business. In accordance with paragraph 6
of IAS 28 Investments in Associates and Joint Ventures, the Group’s interest in Proteus Marine Renewables Limited has been
recognised as an “Other investment”, due to the Group not exercising significant influence as demonstrated by:
▶ No board representation;
▶ Does not participate in policy-making processes, including in participating in decisions about dividends or other
distributions
Any subsequent fair value movement will be recognised through the profit and loss. In the reporting period the Group
disposed of 10% equity interest in Proteus Marine Renewables Limited.
Management has determined that the carrying value of the investment is at the approximate fair value as at 31 December
2023, due to the current start-up phase of the investment.
65
Notes to the Financial Statements
continued
18 LOANS RECEIVABLE
Loans to subsidiaries
- Interest bearing (a)
- Non-interest bearing (b)
Less: provision for impairment
Loans to joint ventures (c)
Less: Impairment loss
Third party loan (d)
Loans receivable
(d) Interest bearing
GROUP
2023
£’000
-
-
-
111
(111)
258
258
2022
£’000
-
-
-
104
(104)
258
258
COMPANY
2023
£’000
1,481
11,075
(12,556)
111
(111)
258
258
2022
£’000
1,349
11,075
(12,424)
104
(104)
258
258
The Company has provided a loan to MeyGen PLC which is interest-bearing with an interest rate of 12-month LIBOR plus
5% per annum, unsecured and repayable in February 2030. The Company has provided in full against the potential non-
repayment of this loan.
(e) Non-interest bearing
In 2014, the Company extended a loan to APPL, which is interest-free and unsecured. The loan is repayable on demand.
Management has no current intention to recall this loan in the foreseeable future and has provided in full against the
potential non-repayment of this loan.
(f) Loans to joint ventures
As disclosed in Note 17, the Company has extended a loan of £103,890 to NPA. The loan is interest bearing at a fixed rate of
10% per annum, is unsecured and the repayment is subject to the distribution arrangements in the joint venture agreement.
The loan has been impaired in full.
The loan extended by the company to Normandie Hydroliennes, which was fully provided for at 31 December 2021, was
settled as part of its sale in October 2022.
(g) Third party loan
In 2021, the Company extended a loan to a former employee of its subsidiary Green Highland Renewables. The loan is
unsecured, interest free and repayable in December 2026.
19 TRADE AND OTHER RECEIVABLES
GROUP
COMPANY
Trade receivables
Deposits
Accrued revenue
Other receivables
Non-trade receivables due from
subsidiaries
Less:
Impairment loss
2023
£’000
683
2
1,095
636
-
-
2022
£’000
109
3
1,149
1,404
-
-
2023
£’000
-
2
-
214
67,456
2022
£’000
-
3
-
262
70,874
(67,456)
(70,874)
Notes to the Financial Statements
continued
66
Financial assets at amortised cost
under IFRS 9
Prepayments
Value added tax (payable)/recoverable
Non-current
Current
GROUP
COMPANY
2023
£’000
2,416
735
(189)
2,962
-
2,962
2,962
2022
£’000
2,665
749
(88)
3,326
-
3,326
3,326
2023
£’000
2022
£’000
216
48
17
281
-
281
281
265
84
16
365
-
365
365
The trade receivables balance comprises power generation and battery rent due to the Group. Other receivables relate to a
grant debtor and amounts due following the disposal of a subsidiary.
The non-trade receivables due from subsidiaries are unsecured, interest-free, and settlement is neither planned nor likely
to occur in the foreseeable future. The balances are stated at cost less impairment losses. At the end of the reporting period,
the Company had a provision for impairment loss of £67.5 million (2022: £70.9 million) in relation to balances receivable from
subsidiaries as recovery of the amounts due is not considered probable.
The Group’s and the Company’s exposure to credit and currency risks are as set out in Note 35.
20 INVENTORIES
Land
GROUP
2023
£’000
9,239
Land inventory is land at Uskmouth that is intended for sale to EL (Uskmouth) Limited held at the gross consideration of
£9.9 million less costs to sell, due for completion in Q1 2025 as described in Note 3 (j).
21 CASH AND CASH EQUIVALENTS
Cash at bank
Fixed deposits
Cash and cash equivalents in the
statements of financial position
Less: Encumbered deposits
Cash and cash equivalents in the
statement of cash flows
GROUP
COMPANY
2023
£’000
3,473
714
4,187
(714)
3,473
2022
£’000
2,929
772
3,701
(772)
2,929
2023
£’000
2,202
-
2,202
-
2,202
2022
£’000
172
-
172
-
172
The encumbered deposits serve as collateral on behalf of MeyGen PLC. MeyGen’s deposit supports the provision of bank
guarantees and standby letters of credit as required under the terms of MeyGen’s seabed lease and to secure the MeyGen
project’s electricity transmission capacity. The Group’s exposure to interest rate risks is described in Note 35.
67
Notes to the Financial Statements
continued
22 SHARE CAPITAL
Issued and fully paid:
At the beginning of the financial year
At the end of the financial year
GROUP AND COMPANY
2023
2022
No. of
shares with
no par value
’000
722,812
722,812
No. of
shares with
no par value
’000
722,812
722,812
£’000
201,496
201,496
£’000
201,496
201,496
23 CAPITAL RESERVE
The capital reserve consists of the difference between the carrying value of net assets transferred to and the consideration
received from the non-controlling interest.
24 TRANSLATION RESERVE
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of
foreign operations.
25 SHARE OPTIONS
The share option reserve represents the equity-settled share options granted to employees. The reserve is made up of the
cumulative value of services received from employees recorded on the grant date. The expense for services received will be
recognised over the vesting period.
Long Term Incentive Plan (“LTIP”)
In 2013, the Company approved an LTIP. During the year, 10.6 million (2022: 2.5 million) share options were granted under
the LTIP.
The options outstanding at 31 December 2023 have a weighted average contractual life of 7.4 years (2022: 8.2 years).
Details of the share options outstanding are as follows:
GROUP AND COMPANY
2023
2022
No. of
share options
’000
Weighted
average
exercise price
£
No. of
share options
’000
Weighted
average
exercise price
£
Outstanding at end of the year
Exercisable at end of the year
28,359
12,317
0.056
0.098
19,575
8,442
0.078
0.124
The share options on issue as at the reporting date expire between 2026 and 2033.
In 2023, the Group and the Company recognised total expenses of £0.08 million (2022: £0.12 million), related to equity-settled
share-based payment transactions during the year and this is included as part of employee benefits expense (Note 8). A total
of £0.01 million (2022: £0.07 million) was transferred from the share option reserve to accumulated losses upon cancellation/
expiry of the share options.
Notes to the Financial Statements
continued
68
Company Share Option Plan (“CSOP”)
On 10 November 2016, the Company established a CSOP to offer share options to employees. During the year, 25.1 million
share options were granted under the CSOP (2022: Nil).
The options outstanding at 31 December 2023 have a weighted average contractual life of 9.3 years (2022: 7.8 years).
No options were exercised in 2023 and 2022.
GROUP AND COMPANY
2023
2022
No. of
share options
’000
Weighted
average
exercise price
£
No. of
share options
’000
Weighted
average
exercise price
£
Outstanding at end of the year
Exercisable at end of the year
21,446
-
0.01
-
2,063
2,063
0.13
0.13
The fair values for the above share options were calculated using the Black-Scholes pricing model. The inputs into the model
for share options granted are as follows:
Fair value of options on date of grant
Share price
Exercise price
Expected volatility
Expected life
Risk free rate
Expected dividend yield
2023
£0.01
£0.01
£0.01
111.65%
3 years
3.43%
0%
2022
£0.01 - £0.02
£0.02 - £0.03
£0.01 - £0.02
81.12% - 90.91%
3 years
3.52%
0%
Expected volatility was determined by calculating the historical volatility of the Company’s stock. 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 behavioural considerations.
The Group and the Company recognised £0.0 5 million expenses (2022: £Nil million), related to equity-settled share-
based payment transactions during the year and this is included as part of employee benefits expense (Note 8). A total of
£0.06 million (2022: £0.20 million) was transferred from the share option reserve to accumulated losses upon cancellation/expiry
of the share options.
26 REVALUATION RESERVE
The revaluation reserve arises on the revaluation of property, plant and equipment and is non-distributable. At the reporting
date, a credit of £13.3 million (2022: £Nil million) to the reserve was recognised for the fair value adjustment of battery energy
storage assets held by the Group (Note 12). The amount was net of adjustments for allocation of gain to non-controlling
interests of £4.0 million (2022: £Nil million) and tax of £5.8 million (2022: £Nil million).
69
Notes to the Financial Statements
continued
27 PROFIT/(LOSS) PER SHARE
The calculation of profit/(loss) per share is based on the loss after tax attributable to ordinary equity holders of the Company
and on the weighted average number of ordinary shares in issue during each year.
TOTAL PROFIT/(LOSS)
ATTRIBUTABLE TO
OWNERS OF THE
COMPANY
WEIGHTED AVERAGE
NUMBER OF SHARES
PROFIT/(LOSS)
PER SHARE
Basic and diluted
2023
£’000
25,394
2022
£’000
2023
’000
2022
’000
(9,649)
722,812
722,812
2023
£
0.04
COMPANY
2023
’000
2022
£
(0.01)
2022
’000
Weighted average number of ordinary shares
Issued ordinary share at beginning of the year
Effect of public offerings issued for cash
Effect of shares issued other than cash (Note 22)
722,812
722,812
-
-
-
-
Weighted average number of shares at the end of the year
722,812
722,812
The average market value of the Company’s shares for the purposes of calculating the dilutive effect of share options was
based on quoted market prices for the period during which the options were outstanding.
28 PROVISIONS
2023
At 1 January
Provision utilised during the year
Remeasurement of provision
Unwinding of discount on decommissioning costs
At 31 December
Non-current
Current
GROUP
COMPANY
Provision for
decommissioning
costs
£’000
Other
provision
£’000
12,581
(471)
213
12,323
12,323
-
12,323
-
-
-
-
-
-
-
Total
£’000
12,581
(471)
213
12,323
12,323
-
12,323
Other
provision
£’000
-
-
-
-
-
-
-
Notes to the Financial Statements
continued
70
2022
At 1 January
Provision made during the year
Provision utilised during the year
Remeasurement of provision
Unwinding of discount on decommissioning costs
At 31 December
Non-current
Current
GROUP
COMPANY
Provision for
decommissioning
costs
£’000
Other
provision
£’000
Total
£’000
Other
provision
£’000
13,546
172
13,718
-
(1,124)
159
12,581
12,581
-
12,581
(172)
-
-
-
-
-
-
(172)
(1,124)
159
12,581
12,581
-
12,581
30
(30)
-
-
-
-
-
-
Provision for decommissioning costs
The provision for decommissioning costs includes the present value of the best estimate of direct costs that may be
incurred to remove turbine foundations from the seabed, and the decommissioning of the Uskmouth Power Station. The
remeasurement credit in the income statement of £0.471m has resulted from using a 4% discount rate for present value
calculation. The turbine seabed foundations relate to the MeyGen project located in the Inner Sound of the Pentland Firth,
which are anticipated to be decommissioned in 2043.
The Uskmouth Power Station provision is the present value of the best estimate of direct costs that may be incurred to
restore the site of the Uskmouth Power Station to a condition that complies with applicable legislation, which is anticipated
to take place in approximately 2043. The provision is based upon an estimate of the timing and current cost of this exercise,
adjusted for the effects of inflation and discounted to present value using an appropriate discount rate as set out in the
summary of significant accounting policies 3 (k). A 5% increase in the estimate of current cost would increase the recorded
provision by approximately £0.62 million in each financial year, a 0.1% increase in estimated inflation would increase the
recorded provision by approximately £0.2 million in each financial year and a 0.1% increase in discount rate would decrease
the recorded provision by approximately £0.2 million in each financial year.
Other Provisions
The other short-term provisions for payroll liabilities and lease dilapidations were settled during 2022.
71
Notes to the Financial Statements
continued
29 LOANS AND BORROWINGS
The Group’s and the Company’s total loans and borrowings are as follows:
Current loans and borrowings
Short term debentures
Short term loan
Secured short term loans
Loan from a subsidiary
Financial guarantees
Non-current loans and borrowings
Financial guarantees
Loan from a subsidiary
Long term loans
Secured long term loans
Long term debentures
Total loans and borrowings
GROUP
COMPANY
Note
(d)
(e)
(c)
(a)
(a)
(b)
(c)
(d)
2023
£’000
-
-
11,471
-
-
2022
£’000
9,895
6,000
-
-
-
11,471
15,895
-
-
13,492
16,112
13,677
43,281
54,752
-
-
12,356
25,815
3,719
41,890
57,785
2023
£’000
2022
£’000
-
-
-
454
15
469
53
-
-
-
-
53
522
-
-
-
-
82
82
-
438
-
-
-
438
520
(a) Loan from a subsidiary
The loan from a subsidiary is denominated in Great British Pounds, is interest-bearing with an interest rate of 5.0% per
annum and unsecured. The loan was due for repayment in 2021 and both parties have agreed to continue the loan
under existing terms and was settled in full in May 2024. The fair value of the loan at the end of the reporting period was
approximately £0.45 million (2022: £0.44 million).
(b) Long-Term Loans
The loan is denominated in Great British Pounds, with an interest rate of 5.0% plus LIBOR, to transfer post year end to SONIA,
resulting in aggregate floating rates of interest over the year in the range 6.5% to 9.7% per annum, is unsecured and is
repayable in February 2028. At the end of the reporting period, the carrying value of the loan approximates its fair value.
(c) Secured Short-Term and Long-Term Loans
MeyGen PLC (“MeyGen”)
In August 2014, as part of the MeyGen Phase 1A project financing, Scottish Enterprise (as administrator of the Renewable
Energy Investment Fund) extended a loan of £7.5 million to MeyGen to finance the construction of the project. The Crown
Estate Commissioners committed an investment of £9.8 million to MeyGen, also to finance the construction of the MeyGen
Phase 1A project, which will be serviced through the payment of “enhanced rent”, with an exit payment at or before the date
10 years from commissioning of Phase 1A of the project. During 2023 enhanced rent payments to The Crown Estate of £Nil
million (2022: £0.09 million) were paid.
The Scottish Enterprise loan and the Crown Estates Scotland investment to MeyGen are denominated in Great British
Pounds and are repayable in the period from 2018 to 2027. The effective interest rates on these loans are in the range of 7%
to 7.8% per annum. During 2023 £Nil million (2022: £Nil million) was repaid. On 1 November 2022 two new remedial plans
were agreed which suspend any further senior debt repayments until 1 November 2024. The Company has provided a parent
company guarantee for £2 million of the Scottish Enterprise loan.
On 30 March 2022, MeyGen PLC agreed an additional loan facility of £2.5m with Scottish Enterprise with interest
compounded semi-annually at a rate of 15% per annum. On 31 May 2024 the repayment date of this loan was extended to
1 November 2024.
Notes to the Financial Statements
continued
72
The Group’s secured long-term loans are secured by way of fixed and floating charges over the assets of subsidiaries as well
as MeyGen shares.
At the reporting date, the Company does not consider it probable that a claim will be made against the Company under the
guarantee described above.
The Group’s and the Company’s exposures to interest rate, foreign currency and liquidity risks are described in Note 35.
(d) Short-Term and Long-Term Debentures
On 25 July 2017, the Group, via its subsidiary company Atlantis Ocean Energy PLC, raised £4.95 million through a five-year
bond with a coupon of 8% per annum, payable semi-annually, and maturing in June 2022. The bond was offered through
Abundance Investment Limited, the provider of a regulated green peer-to-peer investment platform.
In the period from April to June 2018, the Group, via its subsidiary company Atlantis Future Energy PLC, raised £4.97 million
through a five-year bond with a coupon of 8% per annum, payable semi-annually, and maturing in 2023. This bond was
offered through Abundance Investment Limited.
In the period from August 2019 to February 2020, the Group, via its subsidiary company Atlantis Future Energy PLC, raised
£3.79 million through a five-year bond with a coupon of 8%, payable semi-annually, and maturing in 2024. This bond was
offered through Abundance Investment Limited.
On 28 March 2023 the Atlantis Future Energy PLC debenture holders voted to accept a special resolution to defer the
principal repayment of £4.97 million from 31 March 2023 until 31 March 2024. The coupon increased from 8% to 10% per
annum for the period 1 April 2023 to 31 March 2024.
On 20 June 2023, the Atlantis Ocean Energy debenture holders voted to accept a special resolution to defer the principal
repayment of £4.95 million from 30 June 2023 until 30 June 2024. The coupon increased from 8% to 10% per annum for the
period 1 July 2023 to 30 June 2024.
On 27 December 2023, the Atlantis Ocean Energy debenture holders voted to accept a special resolution to defer the
principal repayment of £4.97 million from 30 June 2024 to 31 December 2029. The coupon increases from 10% to 11%
per annum from 1 January 2027 to and including 31 December 2027, then to 12% from 1 January 2028 to and including
31 December 2028 and then to 13% per annum from 1 January 2029 to and including 31 December 2029. Scheduled
redemption dates of the principal balance arise on 31 December 2025 in the amount of £410,000, on 31 December 2026 in the
amount of £820,000 and on 31 December 2027 in the amount of £1,230,000.
On 27 December 2023, the Atlantis Future Energy debenture holders voted to accept a special resolution to defer the
principal repayment of £4.95 million from 30 June 2024 to 31 December 2029. The coupon increases from 10% to 11%
per annum from 1 January 2027 to and including 31 December 2027, then to 12% from 1 January 2028 to and including
31 December 2028 and then to 13% per annum from 1 January 2029 to and including 31 December 2029. Scheduled
redemption dates of the principal balance arise on 31 December 2025 in the amount of £360,000, on 31 December 2026 in
the amount of £720,000 and on 31 December 2027 in the amount of £1,080,000.
On 27 December 2023, the Atlantis Future Energy debenture holders voted to accept a special resolution to defer the
principal repayment of £3.79 million from 30 June 2024 to 31 December 2029. The coupon increases from 8% to 10% per
annum from 1 October 2024 to and including 31 December 2026, then to 11% per annum from 1 January 2027 to and
including 31 December 2027, then to 12% from 1 January 2028 to and including 31 December 2028 and then to 13% per
annum from 1 January 2029 to and including 31 December 2029. Scheduled redemption dates of the principal balance arise
on 31 December 2025 in the amount of £230,000, on 31 December 2026 in the amount of £460,000 and on 31 December 2027
in the amount of £690,000.
73
Notes to the Financial Statements
continued
(e) Short-term loan
On 23 May 2022, the Group, via its subsidiary SIMEC Uskmouth Power Limited, entered into a loan agreement with
Uskmouth Energy Storage Limited for an interest-free loan of £6 million. The loan provided funding for working capital for
the Group. On 20 June 2023 the loan was repaid via a set-off with the lender for the sale of development rights to the 230MW
BESS to the lender.
Reconciliation of movements of liabilities to cash flows arising from financing activities:
At 1 January
Proceeds from borrowings
Repayment of borrowings
Interest expense*
Interest paid
Amortisation of loan costs*
At 31 December
* non-cash movements
30 DEFERRED TAX LIABILITIES
Movements in deferred tax liabilities of the Group are as follows:
At 1 January
Unwind historic fair value adjustment
Tax effect on impairment of assets
Revaluation of property, plant and equipment
At 31 December
LOANS AND
OTHER BORROWINGS
2023
£’000
57,785
-
(6,000)
4,125
(1,221)
63
54,752
GROUP
2023
£’000
752
(19)
(366)
5,788
6,155
2022
£’000
48,820
8,500
(2,027)
3,576
(1,203)
119
57,785
2022
£’000
771
(19)
-
-
752
The deferred tax liabilities dating from 2022 were recognised due to the fair valuation of assets upon acquisition of MeyGen
in 2013 and are unwinding over the MeyGen Phase 1 operating period, which was fully impaired in the year. New deferred tax
liabilities recognised in 2023 arise from the fair value recognition of the Mey battery energy storage system asset (Note 12).
Notes to the Financial Statements
continued
74
31 TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals
Non-trade payables due to subsidiaries
Other financial liabilities
Advance receipts
Corporate tax payable
GROUP
COMPANY
2023
£’000
1,392
3,822
743
-
5,957
1,610
-
7,567
2022
£’000
685
3,814
605
-
5,104
1,469
-
6,573
2023
£’000
125
-
131
5,473
5,729
-
-
2022
£’000
29
4
227
6,391
6,651
-
-
5,729
6,651
Other payables include £3.8 million relating to historical grant income previously received by Atlantis Resources (Scotland)
Limited (£1.09 million) and Marine Current Turbines Limited (£2.67 million), for which the Group has been notified may be
subject to clawback. As disclosed in Note 3 under the Going Concern commentary, the Group is of the view that there are
grounds for disputing any clawback of this grant.
The non-trade balances due to subsidiaries and related parties are unsecured, interest-free and repayable on demand.
Advanced receipts include the lease premium of £1.5 million (2022: £1.5 million) received as part of the acquisition of SUP
in 2018.
The Group’s and the Company’s exposure to currency and liquidity risks related to trade and other payables are described in
Note 35.
32 RELATED COMPANY AND PARTIES TRANSACTIONS
During the year, Group entities were engaged in the following significant transactions with related parties/companies:
Interest income from a subsidiary
- MeyGen PLC
Service fee income from a subsidiary
- Atlantis Resources (Scotland) Limited
Interest expense arising from a subsidiary
- Atlantis Resources (Scotland) Limited
GROUP
COMPANY
2023
£’000
2022
£’000
2023
£’000
2022
£’000
-
-
-
-
-
-
132
146
15
65
91
15
75
Notes to the Financial Statements
continued
Compensation of Directors and Key Management Personnel
The remuneration of Directors and other members of key management during the year was as follows.
Short-term benefits
Defined contribution benefits
Share-based payments
GROUP
2023
£’000
693
40
67
800
2022
£’000
580
65
71
716
33. COMMITMENTS
As at 31 December 2023, the Group held £Nil million commitments (2022: £Nil million)
34. CONTINGENT LIABILITIES
The Group, through its subsidiary MeyGen PLC, has guaranteed credit facilities of £1.4 million (2022: £1.4 million) granted to
subsidiaries. The Company has provided a parent company guarantee in relation to the £1.4 million.
The Company has provided a parent company guarantee in respect of the debentures issued by its subsidiaries Atlantis
Ocean Energy PLC and Atlantis Future Energy PLC.
The Company has provided a parent company guarantee for £2 million in respect of the Tranche B loan issued by Scottish
Enterprise to MeyGen PLC.
The Company has provided a parent company guarantee in respect of the performance of its subsidiary Atlantis Operations
(UK) Limited under a turbine supply agreement to MeyGen PLC. The maximum liability under this agreement to the end of
the latent defect period on 28 March 2024 is £3.3 million (2022: £3.3 million).
35. FINANCIAL INSTRUMENTS
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.
a. Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the
Group.
There are no significant concentrations of credit risk.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset as at the end of the
reporting period.
Loans and receivables
Loans and receivables are detailed in section (d) below.
The Group’s balances are considered to be recoverable and are not past due. The total provision for impairment loss
relating to loans and receivables for the Group is insignificant but the impairment loss for the Company is £80.1 million
(2022: £83.4 million). See Notes 18 and 19 for further detail of loans and receivables balances.
Cash and cash equivalents
The Group held cash of £4.2 million (2022: £3.7 million) at 31 December 2023. Cash at bank is held with banks and financial
institution counterparties that are licensed banks in the countries in which the Group operates and that are rated A+ based
on Standard & Poor’s ratings.
Guarantees
At 31 December 2023 and 2022, the Company issued guarantees to a lender in respect of credit facilities granted to a
subsidiary (Note 34).
Notes to the Financial Statements
continued
76
b. Liquidity Risk
The Group actively manages its operating cash flows and the availability of funding through maintaining sufficient cash and
cash equivalents to finance its activities.
Current financial liabilities in 2023 and 2022 are repayable on demand or due within one year from the end of the reporting
period. Other than certain loans, the remaining financial liabilities are non-interest bearing.
Analysis of financial instruments by remaining contractual maturities. The table below summarises the maturity profile of
the Group’s and the Company’s financial liabilities at the end of the reporting period based on the contractual undiscounted
repayment obligations.
CONTRACTUAL CASH FLOWS
Carrying
amount
£’000
Total
£’000
One year
or less
£’000
Two to
five years
£’000
Over
five years
£’000
Note
Group
2023
Financial liabilities
Trade and other payables
Long-term loan
Debentures
Secured short-term and long-term loans
Lease liabilities
2022
Financial liabilities
Trade and other payables
Short-term loan
Long-term loan
Debentures
Secured short-term and long-term loans
Lease liabilities
Company
2023
Financial liabilities
Trade and other payables
Financial guarantees
Loan from a subsidiary
2022
Financial liabilities
Trade and other payables
Financial guarantees
Loan from a subsidiary
31
29
29
29
15
31
29
29
29
29
15
31
29
29
31
29
29
5,957
13,492
13,677
27,583
1,774
62,483
5,104
6,000
12,356
13,614
25,815
1,296
64,185
5,729
68
454
6,251
6,651
82
438
7,171
5,957
18,179
20,267
32,231
4,947
81,581
5,104
6,000
16,854
15,525
34,026
5,150
82.659
5,729
68
454
6,521
6,651
82
438
7,171
5,957
-
1,222
12,149
224
19,552
5,104
6,000
-
1,221
-
303
-
18,179
10,842
20,082
307
49,410
-
-
-
14,304
34,026
338
12,628
48,668
5,729
15
454
5,744
6,651
82
-
6,733
-
53
-
507
-
-
438
438
-
-
8,203
-
4,416
12,619
-
-
16,854
-
-
4,509
21,363
-
-
-
-
-
-
-
-
77
Notes to the Financial Statements
continued
c. Market Risk
Currency risk
The Group transacts the majority of its business in £ and is not exposed to foreign exchange risk. At the end of the reporting
period the Group held an insignificant cash balance denominated in foreign currencies.
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:
GROUP
COMPANY
Liabilities
Assets
Liabilities
Assets
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
1
2
-
-
-
1
-
-
-
-
2
-
-
34
-
2
199
-
20
610
1
-
-
-
-
1
-
-
-
-
-
-
-
32
-
-
-
-
18
-
Australian dollars
Euros
United States dollars
Singapore dollars
Japanese yen
Foreign Currency Sensitivity
The sensitivity rate used when reporting foreign currency risk is 10%, which is the sensitivity rate that represents
management’s assessment of the likely potential change in foreign exchange rates.
If the relevant foreign currencies were to strengthen by 10% against the functional currency of each Group entity, profit and
loss (before tax) and equity will increase (decrease) by:
GROUP
COMPANY
Equity
Profit and loss
before tax
Equity
Profit and loss
before tax
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
(3)
-
-
(20)
-
(2)
(61)
-
-
-
-
-
-
-
-
-
-
-
-
-
(3)
-
-
-
-
(2)
-
Australian dollars
Euros
United States dollars
Singapore dollars
Japanese yen
If the relevant foreign currency weakens by 10% against the functional currency of each Group entity, the effects on profit
and loss and equity will be vice versa.
Interest rate risk
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 certain loans and borrowings.
For variable rate financial instruments, a change of 100 basis points (bps) in interest rate with all other variables held
constant would increase/decrease profit/loss before tax by £0.1 million (2022: £0.1 million).
A fundamental financial industry reform of interest rate benchmarks is being undertaken globally, including the cessation
and replacement of interbank offered rates (“IBORs”) with alternative nearly risk-free rates (referred to as “interest
rate benchmark reform”). The Group’s interest rate risk that is directly affected by the interest rate benchmark reform
Notes to the Financial Statements
continued
78
predominantly comprises its variable rate borrowings. As at 31 December 2023, the Group has variable rate borrowings of
£13.5 million and the Company has variable rate receivables of £1.5 million that were indexed to LIBOR rates which has now
transitioned to SONIA rates.
Equity price risk
The Group and the Company are not exposed to equity price risks as they do not hold any quoted equity investments.
Capital 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 and the Company consists of equity attributable to owners of the parent and loans and
borrowings amounting to £98.4 million (2022: £63.1 million) and £22.2 million (2022: £5.4 million), respectively.
There are no changes in the Group’s approach to capital management during the financial year. The Company is not subject
to externally imposed capital requirements. Except for one subsidiary that is subject to loan restrictions and dividend
distributions, such restrictions are complied with and capital relating to that subsidiary is ring fenced as required by these
capital requirements. None of the other subsidiaries are subject to externally imposed capital requirements.
d. Accounting Classifications and Fair Values
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. The fair values of the
financial instruments have been determined based on discounted future cash flows using Level 3 hierarchy, which are
derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data.
Group
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial assets at amortised cost under IFRS 9
Other investments
Financial assets at FVPL
Financial liabilities
Trade and other payables
Secured long term loans
Other loans and borrowings
Liabilities at amortised cost
Company
Financial assets
Loans receivables
Trade and other receivables
Cash and cash equivalents
Financial assets at amortised cost under IFRS 9
Financial liabilities
Trade and other payables
Loan from a subsidiary
Other loans and borrowings
Liabilities at amortised cost
2023
2022
Carrying
value
£’000
Fair
value
£’000
Carrying
value
£’000
Fair
value
£’000
Note
19
21
17
31
29
29
18
19
21
31
29
29
2,416
4,187
6,603
133
133
5,957
16,112
38,640
60,709
258
216
2,202
2,676
5,729
454
68
6,251
2,665
3,701
6,366
133
133
5,104
25,815
31,970
62,889
258
265
172
695
6,651
438
82
7,171
16,165
41,128
454
25,820
31,970
418
79
Notes to the Financial Statements
continued
a. Fair Value Hierarchy
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair
value measurements held by the Group.
Fair value at:
31 Dec 2023
£ ‘000
31 Dec 2022
£ ‘000
Note
Un-observable Inputs
Non-financial asset
Property, plant and equipment measured
under revaluation basisFVPL
12
59,296
42,613
Discount factor WACC, Cost of capital,
Development Risk Premium, Capital cost
estimates, Operational cost estimates,
Revenue forecasts
Other investments
Investment property
17
13
133
49,532
133
Risk Premium
-
Discount factor WACC, Cost of capital,
Development Risk Premium, Capital cost
estimates, Operational cost estimates,
Revenue forecasts
The Group currently does not have any assets recognised under Level 1 or Level 2.
108,961
42,746
The investment in other investments is a start-up nature in a newly formed industry. Considered high risk. Current equity
holding is 10.64%.
Further information regarding the Battery Energy Storage System key assumptions for valuation can be found in Note 4.
The following table represents the changes in level 3 items for the period ended 31 December 2023:
Opening balance as at 31 December 2022
Gains recognised in other comprehensive income
Impairment loss
Additions
Investment Property – Net gain from fair value adjustment
Investment Property – Transfer from owner occupied property
Depreciation
Closing balance as at 31 December 2023
36. SEGMENT INFORMATION
GROUP
£’000
42,746
23,127
(5,630)
1,315
28,200
21,332
(2,129)
108,961
a. Operating Segments
The Group is a developer, owner and operator of sustainable energy projects. The Power Generation segment focuses on the
operation and further development of the world’s flagship tidal stream project, MeyGen. Revenues from power generation
are derived from MeyGen’s contract to sell generation and renewable obligation certificates. The Battery Storage segment
reports the income from each of our BESS projects, the operating costs associated with the Uskmouth site and the valuation
of the battery storage project portfolio. The Project Development segment reports the project development costs incurred
on all of our projects. The Group divested its Turbine and Engineering Services business in October 2022.
The unallocated segment comprises costs associated with running an AIM listed and Singapore incorporated group and
unallocated expenditure, assets and liabilities including amounts of a corporate nature as well as corporate and inter-
segment elimination which are not specifically attributable to another segment.
Notes to the Financial Statements
continued
80
Information regarding the results of each reportable segment is included below.
2023
External revenues
Interest revenue
Interest expense
Operating costs
Depreciation and amortisation
Fair value adjustments to
investment property
Impairment loss reversal recognised
on non-trade receivables
Reportable segment profit/(loss) before
tax
Power
generation
£’000
Battery
storage
£’000
Project
development
£’000
Unallocated
£’000
Turbine and
Engineering
Services
£’000
4,513
-
(3,131)
(21,503)
(2,148)
10,767
-
-
(2,277)
(1,074)
-
-
-
94
-
(1,534)
(853)
17,679
-
(198)
-
28,200
(5,630)
-
-
-
-
-
-
-
(280)
-
-
-
Total
£’000
15,281
94
(4,665)
(7,234)
(3,420)
28,200
(5,630)
(27,745)
35,469
(852)
16,304
(383)
22,793
Reportable segment assets
43,813
80,454
Capital expenditure
1,315
-
67
-
4,558
3
43
-
128,935
1,318
Reportable segment liabilities
(45,020)
(19,286)
(469)
(15,080)
(2,716)
(82,571)
2022
External revenues
Inter-segment revenue
Interest revenue
Interest expense
Depreciation and amortisation
Reversal of impairment loss
(Loss)/Gain on disposal of subsidiaries
Reportable segment loss before tax
Reportable segment assets
Capital expenditure
Reportable segment liabilities
3,902
-
-
(2,541)
(2,004)
-
-
(5,798)
48,668
-
(41,924)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,081)
2,000
-
-
-
58
(1,404)
(183)
-
-
2,308
(4,566)
32,521
-
1,813
-
-
-
-
(76)
(7)
-
(2,232)
(3,023)
1,667
-
3,902
-
58
(4,021)
(3,275)
2,000
(2,232)
(11,079)
84,669
-
(18,352)
(15,995)
(2,716)
(78,987)
a. Geographical Segments
Total segment revenue for the Group is £15.3 million (2022: £3.9 million). The Group power generation and project development
operations are entirely based in the United Kingdom. All of the Group’s assets are located in the United Kingdom.
37. EVENTS AFTER THE REPORTING PERIOD
On 11 January 2024, the 120MW Battery Energy Storage System (“BESS”) project at the Uskmouth site was granted planning
consent with conditions by Newport City Council.
On 28 March 2024 the Group received the first £5.0 million completion payment under its agreement with EL (Uskmouth)
Limited (“EL”), a subsidiary of FPC Electric Land.
On 28 March 2024 the parent company guarantee provided by the Company in respect of the performance of its subsidiary
Atlantis Operations (UK) Limited under a turbine supply agreement with MeyGen PLC expired.
On 28 May 2024 the Group received the next £2.0 million milestone payment under its agreement with EL (Uskmouth)
Limited (“EL”), a subsidiary of FPC Electric Land.
On 31 May 2024 MeyGen plc extended the repayment date of the Tranche C loan facility of £2.5m with Scottish Enterprise
from 1 May 2024 to 1 November 2024.
On 11 June 2024 SAE applied for the planning permission relating to the “Mey BESS” project to build a Battery Energy
Storage System (“BESS”) of up to 300MW/1.2GWh located near SAE’s MeyGen tidal project.
COMPANY INFORMATION
Non-Executive Directors
Duncan Stuart Black
John Anthony Clifford Woodley
Executive Directors
Graham Matthew Reid
Simon Matthew Hirst
Company Number
200517551R
Registered Office
c/o Level 4
21 Merchant Road
#04-01 Royal Merukh S.E.A.
Singapore 058267
Company Secretary
Kelly Tock Mui Han
21 Merchant Road
#04-01 Royal Merukh S.E.A.
Singapore 058267
Nominated Advisor and Broker
Strand Hanson Ltd
26 Mount Row
Mayfair
London
W1K 3SQ
Auditor
Nexia Singapore PAC
120 Robinson Road
#16-01
Singapore 068913
Broker
Zeus Capital Limited
125 Old Broad Street
London
EC2N 1AR
Registrar
Boardroom Corporate St Advisory Services Pte Ltd
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
Depositary
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Guernsey Branch Registrar
Link Market Services (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Website
www.saerenewables.com
WWW.SAERENEWABLES.COM
Registered Office and Company Number
c/o Level 4, 21 Merchant Road, #04-01 Singapore
058267 Company Number: 200517551R