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Interim Results (unaudited)

20 September 2017

ATLANTIS RESOURCES LIMITED (“Atlantis”, the “Company” or the “Group”)

 Interim Results (unaudited)

 Atlantis Resources Limited, a vertically integrated turbine supplier and project owner in the tidal power industry, is pleased to announce its unaudited Interim Results for the six months to 30 June 2017.

Highlights

Financial highlights

  • The consolidated group cash position at 30 June 2017 was £6.9 million (31 December 2016; £10.2 million), including £3.3 million held at MeyGen (31 December 2016; £8.7 million).
  • Group total equity increased to £67.4 million over the six-month period (31 December 2016; £66.6 million).
  • In May 2017, Atlantis raised £4.1 million before expenses from new and existing shareholders to fund project development activities across the Atlantis portfolio and to secure opportunities for portfolio growth.
  • Subsequent to the reporting period, in July 2017, Atlantis raised £5.0 million, before expenses, through a five-year bond with a coupon of 8%, maturing in 2022. The proceeds will be used to fund incremental project development activities across the Atlantis portfolio and to secure opportunities for portfolio growth.

MeyGen Project

  • In January 2017, the final of the three Andritz Hydro Hammerfest (AHH) turbines was successfully installed and started generating to the grid.
  • In February 2017, the Company’s AR1500 turbine, was installed in Phase 1A of the MeyGen project.  The turbine reached full power output shortly afterwards and demonstrated levels of performance above the contractual baseline required.
  • In March 2017, Phase 1A of the MeyGen project was granted full accreditation by Ofgem under the Renewables Obligation Order. The decision by Ofgem was made in respect to the 6MW tidal stream generating station which commenced generation in November 2016. The MeyGen project is now receiving five Renewables Obligations Certificates (ROCs) for every MWh of renewable electricity generated at the station.
  • The MeyGen project confirmed in March 2017 that generation from the installed turbines was approaching 400MWh. It was also confirmed that through this period of generation both turbines supplied by Atlantis and Andritz Hydro Hammerfest were performing above their contractual guarantee levels.
  • By the end of March 2017 all three AHH turbines were recovered to undergo onshore inspection to permit AHH to implement system enhancements derived from the lessons learned during the initial period of operations.
  • In April 2017, the AR1500 was retrieved to allow a full systems inspection before undergoing the contractual performance testing regime reflecting the approach taken on the AHH systems. This followed an unplanned grid outage which was unrelated to the turbine itself, following a period of sustained generation.
  • In early July 2017, two of the three AHH turbines were reinstalled and commenced generation at full power.
  • The MeyGen project confirmed in August 2017 that the project had surpassed 1,000MWh of generation onto the grid.
  • The third AHH turbine was reinstalled in August 2017.
  • The MeyGen project confirmed in August 2017 that it had set a new world record for monthly production from a tidal stream power station of over 700MWh in August.
  • The AR1500 is expected to be redeployed in early October to complete the four 1.5MW turbines for completion of Phase 1A to be operating at full 6 MW capacity.

Corporate

  • In January 2017, the European Commission awarded £17.3 million (€20.3 million) in Horizon 2020 grant funding for the next phase of the MeyGen project, Phase 1B, or Project Stroma. This funding is in addition to the previously awarded NER300 funding of €16.8 million.
  • In January 2017,Atlantis also announced the formation of a new division, Atlantis Energy, to apply its skills and experience in complementary sectors in marine renewable energy.  This was supported by memoranda of understanding with floating wind developer Ideol and with Natural Energy Wyre, a key player in the proposed Wyre Valley tidal barrage and flood protection scheme.
  • In March 2017, Atlantis signed a preferred supplier agreement with SBS INTL LTD, a privately-owned international marine, subsea and renewable energy project developer, for the supply of turbines, engineering services and equipment for a 150MW tidal-stream array located in Lombok, Indonesia.  Atlantis also announced its intentions to pursue projects in France, where commercial seabed leasing rounds are planned.
  • In May 2017, the Group signed a strategic partnership agreement with Hyundai Engineering and Construction Co. Ltd for collaboration on the development of ocean power renewable projects globally, and in particular the development of tidal stream projects in South Korea.
  • In August 2017, Andrew Dagley was appointed Chief Finance Officer, replacing Simon Counsell who stepped down to pursue other business interests. Atlantis also announced that it was in negotiation with the Duchy of Lancaster as its preferred developer for the proposed Wyre estuary tidal barrage and flood protection project, with a planned installed capacity of 160MW.

Tim Cornelius, Chief Executive of Atlantis, commented:

“The first half of 2017 has been a very positive step forward for Atlantis and its portfolio of projects. The installation of the four turbines at MeyGen earlier this year, was achieved safely and in record time. We are extremely excited to see the final turbine, our AR1500, be reinstalled at MeyGen in the coming weeks and seeing the project complete its transition into full operations. MeyGen Phase 1A has already set a number of records, with over 2GWh of generation having been dispatched to grid, generating predictable revenue from ROCs and wholesale power sales from the PPA. This now allows us to consider a re-finance of the project to improve returns and liberate capital for new investment opportunities.

“In addition, the first half of 2017 also saw us formally launch Atlantis Energy and the announcement as preferred developer of the 160MW tidal barrage and flood protection infrastructure project in the Wyre Estuary, England. We believe that this is the best pathfinder project in the UK to help demonstrate the benefits of predictable low-cost generation from a fleet of commercial scale tidal barrages across the UK. We are very excited to develop this project alongside the rest of our tidal stream portfolio throughout the UK, Europe, North America and Asia. There are number of very exciting projects being developed in South East Asia at present and we are well positioned to convert these opportunities into equipment sales and project development contracts.”

 Enquiries:

 

Atlantis Resources

 

 

+44 (0)20 3727 1898

Tim Cornelius, Chief Executive Officer
Andrew Dagley, Chief Financial Officer
Peel Hunt LLP (Nominated Adviser and Broker) +44 (0)20 7418 8900
Adrian Trimmings

George Sellar

Jock Maxwell Macdonald

FTI Consulting +44 (0)20 3727 1898
Ben Brewerton

Alex Beagley

James Styles

 

Chairman’s Statement

As we embark on our third year as an AIM listed public company, we have continued to grow and diversify whilst preserving the innovation and enterprise which characterises the Atlantis team. In particular, the launch of the new Atlantis Energy division has enabled us to pursue opportunities which build on our heritage and experience in tidal stream energy, and we’re especially pleased that the Duchy of Lancaster has selected us as the preferred developer for the proposed 160 MW Wyre estuary tidal barrage and flood protection project, near Fleetwood in Lancashire, England.

Having commenced generation from the first phase of our MeyGen project in Scotland we are able to focus on geographic diversification. As well as our portfolio of UK opportunities we are active in Canada, France and Asia, where support remains strong for tidal stream energy as a source of predictable and sustainable electricity. We’ve secured preferred supplier status for a 150 MW project in Indonesia, and have entered into a partnership agreement with Hyundai Engineering and Construction for worldwide projects, including in South Korea.

Scotland, and MeyGen in particular, remains especially important to us as Scottish waters are home to some of the world’s best tidal stream resource, and our agreements for lease with The Crown Estate ensure we are well positioned to exploit this. We installed the fourth and final turbine of Phase 1A of the MeyGen project in February 2017, and following a period of initial operations all the turbines were then retrieved for the manufacturers to implement improvements. The first two turbines, supplied by Andritz Hydro Hammerfest, were reinstalled in July 2017 and are running fully autonomously. The third Andritz Hydro Hammerfest turbine was successfully reinstalled in August 2017 and Atlantis’s own AR1500 is scheduled for redeployment in early October 2017. Aggregate export to grid during this commissioning phase has already exceeded 2 GWh, which equates to approximately £0.6 million of revenue. We are very pleased with turbine performance thus far.

We were disappointed, but not surprised, with the recent contracts for difference (“CfDs”) announcement from the Department for Business, Energy & Industrial Strategy (“BEIS”), where, despite forecasting a two-third reduction in the level of revenue support, we were not awarded a CfD in this allocation in respect of Phase 1C of the MeyGen project. However, our electricity needs are changing.  National Grid’s 2017 Future Energy Scenarios forecasts an increase in demand in all cases, reversing the trend of decreasing electricity use brought about through efficiency initiatives.  This increase must be met by affordable, secure and clean sources of supply, and tidal stream generation from our waters can achieve all three of these objectives and meet an estimated 20% of the UK’s electricity demand.  Additionally, unlike other forms of weather driven renewable generation, tidal energy is wholly predictable for decades in advance.

The outcome of the recent CfD auction will deliver thousands of megawatts of renewable energy projects, with an overwhelming weighting towards offshore wind.  These new additions to the generation portfolio are welcomed, but must be complemented by a more diverse basket of technologies.  The funds are available to facilitate this as 40% of the £290 million budget for the recent auction round was not allocated through the competitive process.

We intend to ask that the UK Government consider entering into bilateral negotiations with us for the award of a 15 year contract for difference which would allow us to proceed with the construction of Phase 1C of the MeyGen project without further delay.  The proposed price per MWh is half of the administrative strike price for our technology used in the recent auction rounds, and demonstrates our commitment to rapid and significant cost reductions.

We are delighted that support for our business remains strong, allowing us to raise over £4 million in May 2017 through the issue of new shares, and a further £5 million through a bond issuance which was fully subscribed within a month of its launch in June 2017. This will provide the capital required to fund investigation and development of various opportunities for creating value and generating revenue.

I am particularly pleased to note that the MeyGen project is now exporting electricity to consumers using only the natural and predictable power of the tides. This remarkable achievement has only been possible because of the dedication and tenacity of our team, our stakeholders and suppliers, and I extend my heartfelt thank you to them all. I now look forward to building on this foundation to fulfil our goal to create a thriving global industry, with Atlantis at its forefront.

SUMMARY OF RESULTS

The capital raise in May 2017 meant that the net assets of the Atlantis Group increased during the period from 31 December 2016 to over £67 million.

Income for the six months to 30 June 2017 was £3.1 million, which included Horizon 2020 grant funding in support of our ongoing development expenditure. In the period, MeyGen generated revenue from electricity production of £0.1 million. During this commissioning phase, income is netted off against the cost of construction. Together with the capital raise from the market and grants received, total cash from financing activities for the period, net of loan repayments, was £7.6 million.

The unaudited consolidated cash position of the Atlantis Group as at 30 June 2017 was £6.9 million.

 

Condensed consolidated statement of profit and loss and other comprehensive income
For the six months ended 30 June 2017

 

  Group
  Six months ended
Note 30 June

2017

30 June

2016

£’000 £’000
Revenue 235
Other gains and losses 7 3,130 645
 
Subcontractor costs (1,013) (346)
Depreciation and amortisation expenses (763) (824)
Research and development costs (78) (144)
Employee benefits expenses (2,440) (2,456)
Other operating expenses (1,510) (973)
Total expenses (5,804) (4,743)
Loss from operating activities   (2,674) (3,863)
Finance costs 8 (508) (525)
 
Share of results of equity-accounted investee (37) (50)
 
Loss before tax (3,219) (4,438)
 

Income tax expense

 
Loss for the period (3,219) (4,438)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations (3) (408)
Total comprehensive income for the period (3,222) (4,846)
Loss attributable to:
Owners of the Company (3,542) (4,438)
Non-controlling interest 323
(3,219) (4,438)
Total comprehensive income attributable to:
Owners of the Company (3,545) (4,846)
Non-controlling interest 323
(3,222) (4,846)
Loss per share (basic and diluted) (pence) 15 (2.99) (4.75)

 

Condensed consolidated statement of financial position
As at
30 June 2017 
  Group
Note 30 June
2017
31 December 2016
£’000 £’000
ASSETS
Property, plant and equipment 9 65,374 62,694
Intangible assets 35,590 36,324
Investment in joint venture
Loan to joint venture 1,316 1,236
Non-current assets 102,280 100,254
Trade and other receivables 4,731 4,868
Cash and cash equivalents 10 6,939 10,232
Current assets 11,670 15,100
Total assets 113,950 115,354
 

LIABILITIES

Trade and other payables 11 7,092 10,172
Provisions 1,629 2,339
Loans and borrowings 12 3,757 2,790
Current liabilities 12,478 15,301
 
 
Loans and borrowings 12 29,738 29,592
Provisions 483
Deferred tax liabilities 3,830 3,830
Non-current liabilities 34,051 33,422
Total liabilities 46,529 48,723
Net assets 67,421 66,631
EQUITY
Share capital 13 95,030 91,220
Capital reserve 12,665 12,665
Translation reserve 7,164 7,167
Option fee 6 6
Share option reserve 14 3,393 3,191
Accumulated losses (59,208) (55,666)
Total equity attributable to owners of the Company 59,050 58,583
Non-controlling interests 8,371 8,048
Total equity 67,421 66,631

 

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2017

Attributable to owners of the Company
Share

capital

Capital
reserve
Translation reserve Option

fee

Share

 option
reserve

Accumulated losses Total Non-
controlling interest
Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Group
At 1 January 2016 84,918 5,709 7,315 6 3,078 (47,950) 53,076 4,672 57,748
Total comprehensive income for the period
Loss for the period (4,438) (4,438) (4,438)
Other comprehensive income (408) (408) (408)
Total comprehensive income for the period (408) (4,438) (4,846) (4,846)
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Issuance of shares 6,211 6,211 6,211
Recognition of share-based payments 140 140 140
Changes in ownership interest in subsidiary
Dilution of interest in a subsidiary without change in control 4,434 4,434 2,146 6,580
Total transactions with owners 6,211 4,434 140 10,785 2,146 12,931
At 30 June 2016 91,129 10,143 6,907 6 3,218 (52,388) 59,015 6,818 65,833

 

Condensed consolidated statement of changes in equity

For the six months ended 30 June 2017

Attributable to owners of the Company
Share

capital

Capital
reserve
Translation reserve Option

fee

Share

 option
reserve

Accumulated losses Total Non-
controlling interest
Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Group
At 1 January 2017 91,220 12,665 7,167 6 3,191 (55,666) 58,583 8,048 66,631
Total comprehensive income for the period
Loss for the period (3,542) (3,542) 323 (3,219)
Other comprehensive income (3) (3) (3)
Total comprehensive income for the period (3) (3,542) (3,545) 323 (3,222)
Transactions with owners, recognised directly in equity
Contributions by and distributions to owners
Issuance of shares 3,810 3,810 3,810
Recognition of share-based payment 202 202 202
Total transactions with owners 3,810 202 4,012 4,012
At 30 June 2017 95,030 12,665 7,164 6 3,393 (59,208) 59,050 8,371 67,421

 

Condensed consolidated statement of cash flows
For the six months ended 30 June 2017 
  Group
  Six months ended
  30 June 30 June
Note 2017 2016
£’000 £’000
Cash flows from operating activities
Loss for the period (3,219) (4,438)
Adjustments for:
Depreciation of plant and equipment 21 35
Amortisation of intangible asset 742 789
Interest income (78) (61)
Finance costs 8 508 525
Share-based payments 202 140
Provision movement (227) (41)
Share of results of equity-accounted investee 37 50
Grant income (1,840) (191)
Net foreign exchange loss / (gain) 14 (111)
Operating cash flows before movements in working capital (3,840) (3,303)
Movement in trade and other receivables 137 (28)
Movement in trade and other payables (786) 100
Net cash used in operating activities (4,489) (3,231)
Investing activities
Purchase of property, plant and equipment (6,532) (9,629)
Expenditure on project development (8) (175)
Net cash used in investing activities (6,540) (9,804)
Financing activities
Proceeds from grants received 4,226 3,046
(Repayment of) / proceeds from borrowings (300) 4,823
Deposits (pledged) / released (132) 231
Proceeds from issue of shares 4,050 6,538
Costs related to fund raising (240) (327)
Net cash from financing activities 7,604 14,311
 
Net (decrease) / increase in cash and cash balances (3,425) 1,276
Cash and cash equivalents at beginning of period 8,586 10,182
Effect of foreign exchange rate changes on the balance of cash held in foreign currencies (85)
Cash and cash equivalents at end of period 10 5,161 11,373

Notes to the Consolidated Interim Financial Statements

The condensed consolidated statement of financial position of Atlantis Resources Limited (the “Company”) and its subsidiaries (the “Group”) as at 30 June 2017, the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the Group for the six-month period then ended and certain explanatory notes (the “Consolidated Interim Financial Statements”), were approved by the Board of Directors for issue on 19 September 2017.

These notes form an integral part of the Consolidated Interim Financial Statements.

The Consolidated Interim Financial Statements do not comprise statutory accounts of the Group within the meaning in the provisions of the Singapore Companies Act, Chapter 50. The Group’s statutory accounts for the year ended 31 December 2016 were prepared in accordance with the provisions of the Singapore Companies Act and International Financial Reporting Standards (“IFRS”). The Group’s statutory accounts were approved by the Board of Directors on 30 May 2017 and have been reported by the Group’s auditors.

1                            Domicile and activities

Atlantis Resources Limited is incorporated in the Republic of Singapore with its registered office at 80 Raffles Place, Level 36, Singapore 048624.

The principal activity of the Group is that of pioneering the development of tidal current power as the most reliable, economic and secure form of renewable energy. The Company is an inventor, developer, owner, marketer and licensor of technology, intellectual property, trademarks, products and services, and an investment holding company.

2                            Basis of preparation

Statement of compliance

The Consolidated Interim Financial Statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting (“IAS 34”).

Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended 31 December 2016.

The Consolidated Interim Financial Statements, which do not include the full disclosures of the type normally included in a complete set of financial statements, are to be read in conjunction with the last issued consolidated financial statements of the Group as at and for the year ended 31 December 2016.

3                            Significant accounting policies

Except for the new and revised IFRS effective for the financial year beginning 1 January 2017 adopted during the six-month period ended 30 June 2017, the accounting policies and method of computation used in the Consolidated Interim Financial Statements are consistent with those applied in the last issued consolidated financial statements of the Group for the year ended 31 December 2016.

The adoption of the new and revised IFRS for the financial year beginning 1 January 2017 does not have a significant effect on the Consolidated Interim Financial Statements.

New standards, amendments to standards and interpretations that are not effective for the six months ended 30 June 2017 have not been applied in preparing these Consolidated Interim Financial Statements. Except as otherwise indicated below, those new standards, amendments to standards and interpretations are not expected to have a significant effect on the Consolidated Interim Financial Statements. The Group does not plan to adopt these standards early.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 Revenue from Contracts with Customers will replace IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It also introduces new cost guidance which requires certain costs of obtaining and fulfilling contracts to be recognised as separate assets when specified criteria are met.

When effective, IFRS 15 replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and IFRIC 31 Revenue – Barter Transactions Involving Advertising Services.

IFRS 15 is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. IFRS 15 offers a range of transition options including full retrospective adoption where an entity can choose to apply the standard to its historical transactions and retrospectively adjust each comparative period presented in its 2018 financial statements. When applying the full retrospective method, an entity may also elect to use a series of practical expedients to ease transition.

The standard establishes the principle for companies to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled to in exchange for those goods or services. The new standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed (e.g. service revenue and contract modifications) and improved guidance for multi-element arrangements.

The Group has completed an initial assessment of the potential impact of the adoption of this standard on its consolidated financial statements. Based on its initial assessment, the Group does not expect the changes to have any material impact.

IFRS 9 Financial Instruments

IFRS 9 Financial Instruments replaces most of the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. It includes revised guidance on classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.

IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. Retrospective application is generally required, except for hedge accounting. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. Restatement of comparative information is not mandatory. If comparative information is not restated, the cumulative effect is recorded in opening equity as at 1 January 2018.

The Group has completed an initial assessment of the potential impact of the adoption of this standard on its consolidated financial statements. Based on its initial assessment, the Group does not expect the changes to have any material impact.

IFRS 16 Leases

IFRS 16 eliminates the lessee’s classification of leases as either operating leases or finance leases and introduces a single lessee accounting model. Applying the new model, a lessee is required to recognise right-of-use (ROU) assets and lease liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value.

IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17 Leases. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for these two types of leases using the IAS 17 operating lease and finance lease accounting models respectively. However, IFRS 16 requires more extensive disclosures to be provided by a lessor.

When effective, IFRS 16 replaces existing lease accounting guidance, including IAS 17, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC – 15 Operating Leases – Incentives, and SIC – 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

IFRS 16 is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted if IFRS 15 is also applied.The management is currently evaluating the impact of the implementation of this standard, in view of the complexities and the potential wide-ranging implications.

4                            Critical accounting judgements and key sources of estimation uncertainty

The preparation of Consolidated Interim Financial Statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this set of Consolidated Interim Financial Statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2016.

5                            Going concern basis

The Group meets its day to day working capital requirements through shareholders’ funding, loans and grants. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing the Consolidated Interim Financial Statements, not withstanding the deficiency in net current assets.

6                            Seasonality of operations

The Group’s businesses were not affected significantly by seasonal or cyclical factors during the financial period.

7                            Other gains and losses

  30 June

2017

30 June

2016

£’000 £’000
Grant income 1,840 191
Other income 1,226 282
Interest income 78 61
Net foreign exchange (loss) / gain (14) 111
3,130 645

Other income comprises mainly liquidated damages income.

8                            Finance costs

  30 June

2017

30 June

2016

£’000 £’000
Interest expense arising from:
–    secured bridging loan 327 254
–    secured long term loans 181 271
508 525

9                            Property, plant and equipment

During the period, a further £3.2 million (2016: £7.3 million) of expenditure related to the development of the MeyGen tidal power project at the Inner Sound of the Pentland Firth off the coast of Scotland was capitalised and an aggregate of £617,000 (2016: £451,000) of grants were drawn down. Included in the capitalised development costs is an amount of £919,000 (2016: £812,000) that represents borrowing costs capitalised during the period.  The project is approaching its operational phase and management estimates the recoverable amount of property, plant and equipment and intangible assets to be higher than the carrying amount such that no impairment is required.

10                       Cash and cash equivalents

30 June

2017

31 December 2016
£’000 £’000
Cash at bank 5,160 8,546
Fixed deposits 1,778 1,646
Cash on hand 1 40
Cash and cash equivalents in the statements of financial position 6,939 10,232
Less:   Encumbered deposits (1,778) (1,646)
Cash and cash equivalents in the statement of cash flows 5,161 8,586

The encumbered deposits serve as collateral on behalf of MeyGen Limited, in support of 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.

11                       Trade and other payables

  30 June
2017
31 December 2016
£’000 £’000
Trade payables 3,590 7,353
Other payables 268 63
Accruals 1,006 2,549
Advanced receipts 2,228 207
7,092 10,172

Advanced receipts included deferred grant income of £2.2 million (2016: £0.2 million)

12                       Loans and borrowings

  30 June
2017
31 December 2016
  £’000 £’000
Current loans and borrowings
Secured bridging loan from non-controlling interest 2,815 2,790
Secured long term loans 942
3,757 2,790
Non-current loans and borrowings
Loans from a related party 4,182 4,056
Long term loan 4,109 3,984
Secured long term loans 21,447 21,552
  29,738 29,592
 
Total loans and borrowings 33,495 32,382

During the period, a £300,000 repayment was made of the Secured bridging loan. There were no further loan drawdowns (2016: £4,823,000). Other than as described in note 19(ii), there were no changes in the terms and conditions of any of the loans detailed above and no covenants of any loans have been breached.

13                       Share capital

  Number

of ordinary shares with no

par value

 
’000 £’000
 
Issued and paid up during the period:    
At 1 January 2016 105,068 84,918
Public offerings issued for cash 11,888 6,539
Transaction costs incurred in relation to share issuance (237)
At 31 December 2016 116,956 91,220
Public offerings issued for cash 9,000 4,050
Transaction costs incurred in relation to share issuance (240)
At 30 June 2017 125,956 95,030

In May 2017, the Company raised £4.05 million, before expenses, through the placing of 9 million new ordinary shares at a placing price of 45 pence per share.

14                       Share option reserve

During the period, no further options to take up unissued shares of the Company were granted.  No shares of the Company have been issued by virtue of the exercise of an option to take up unissued shares.

15                       Loss per share

The calculation of loss per share is based on the loss after tax and on the weighted average number of ordinary shares in issue during each period.

Loss attributable to owners of the Company

 

Weighted average number of shares Loss per share
30 June 2017 30 June 2016 30 June 2017 30 June 2016 30 June 2017 30 June 2016
£’000 £’000 ’000 ’000 pence pence
Basic and diluted 3,542 4,438 118,547 93,352 2.99 4.75

 

At 30 June 2017, share options were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.

16                       Related company and related party transactions

Other than those disclosed elsewhere in the Consolidated Interim Financial Statements, there were the following significant transactions with related parties companies during the period:

  30 June

2017

30 June

2016

£’000 £’000
 
Interest income from a joint venture 78 61
Interest expense arising from related party loans (327)

Compensation of directors and key management personnel:

The remuneration of directors and other members of key management during the period are as follows:

  30 June

2017

30 June

2016

£’000 £’000
 
Short term employee benefits 264 176
Defined contribution benefits 30 30
Share-based payments 61 88

 

17                       Segment information

(a) Operating segments

The Group is principally engaged in generating energy from tidal current power generation projects, development of these projects, as well as turbine and engineering services. In addition to the development of power projects, the power generation division currently focuses on the development of the MeyGen tidal energy project, whereas the turbine and engineering services division focuses on the development and delivery of turbines and technology solutions for projects worldwide.  The divisions are managed separately because they require different expertise and marketing strategies.

The Board of Directors, who are chief operating decision makers, review internal management reports for each division regularly, in relation to the capital expenditure, resources allocation and funding availability of the three divisions.

Other operations include the provision of corporate services which does not meet any of the quantitative thresholds for determining reportable segments in 2017 and 2016.

There are varying levels of integration between the power generation, project development and turbine and engineering services divisions, including the delivery of a turbine from the turbine and engineering services to the power generation division.

Information regarding the results of each reportable segment is included below.

Six months ended 30 June 2017 Power generation Turbine and engineering services  

Project development

Total
£’000 £’000 £’000 £’000
       
External revenues
Inter-segment revenue 127 127
Interest revenue 8 8
Interest expense (507) (507)
Depreciation and amortisation (358) (358)
Reportable segment profit / (loss) before tax  

1,390 (1)

(4,199)  

(147)

(2,956)

 

(1) Comprise mainly liquidated damages income.

Six months ended 30 June 2016 Power generation Turbine and engineering services  

Project development

Total
£’000 £’000 £’000 £’000
 
External revenues 235 235
Inter-segment revenue 2,141 2,141
Interest revenue 14 14
Interest expense (412) (412)
Depreciation and amortisation (367) (367)
Reportable segment loss before tax (88) (4,832) (4,920)

 

 

As at 30 June 2017 Power

generation

Turbine and engineering

services

 

Project development

Total
£’000 £’000 £’000 £’000
       
Reportable segment assets 73,850 29,151 8,109 111,110
Capital expenditure 2,587 115 2,702
Reportable segment liabilities (37,183) (29,682) (18,071) (84,936)

 

As at 31 December 2016 Power

generation

Turbine and engineering services  

Project development

Total
£’000 £’000 £’000 £’000
Reportable segment assets 76,193 44,321 8,166 128,680
Capital expenditure 22,846 6,580 29,426
Reportable segment liabilities (39,940) (32,536) (16,908) (89,384)

(b) Reconciliation of reportable segment revenue

  30 June  2017 30 June  2016
£’000 £’000
Revenue for reportable segments 127 235
Elimination of inter-segment revenue (127)
Consolidated revenue 235

(c) Reconciliation of reportable segment profit or loss

  30 June  2017 30 June  2016
£’000 £’000
Total loss for reportable segments (2,956) (4,920)
Unallocated amounts (226) 532
Share of loss of equity-accounted investee (37) (50)
Consolidated loss before tax (3,219) (4,438)
     

 

18                       Capital commitments

As at 30 June 2017, the Group had entered into contracts to construct a tidal power plant for £47.7 million (2016: £51.4 million), of which £46.6 million (2016: £36.1 million) had been incurred as at the reporting date.  At 30 June 2017, the Group had outstanding commitments under contracts for design and subcontract works for £1.2 million (2016: £1.9 million), pre-final investment decision costs of £nil (2016: £0.3 million) for new sites.

19                       Events after the reporting period

(i) On 25 July 2017, the Group, via its subsidiary company Atlantis Ocean Energy PLC, raised £5.0 million through a five-year bond with a coupon of 8%, payable semi-annually, and maturing in 2022. The bond was offered through Abundance Investment Limited (“Abundance”), the provider of a regulated green peer-to-peer investment platform.

(ii) On 31 August 2017, one of the subsidiaries, Atlantis Resources (Scotland) Limited entered into an agreement to extend the repayment terms of a bridging loan to 28 February 2018 at an interest rate of 15% per annum. In August 2017, £1.8 million of this loan was repaid using proceeds from the bond issue mentioned above. All other terms remain the same.