TIDMARL
RNS Number : 0500Y
Atlantis Resources Limited
04 September 2015
4 September 2015
ATLANTIS RESOURCES LIMITED
("Atlantis", the "Company" or the "Group")
Interim Results
Atlantis Resources Limited, a vertically integrated turbine
supplier and project owner in the tidal power industry, is pleased
to announce its Interim Results for the six months to 30 June
2015.
Highlights
MeyGen Project
-- In January, works started in Caithness in northern Scotland
at the MeyGen onshore control centre site. Access roads and
construction infrastructure began to take shape throughout
February
-- Since the beginning of the year, almost 6,000 tonnes of steel
delivered for ballast fabrication which will be used to weigh down
the turbine foundations
-- In April directional drilling works started on the MeyGen site
-- Onshore drilling rig bored beneath the low cliffs of the
shoreline to create the first of four ducts, each more than half a
kilometre in length. This first duct was completed and lined in
April, with progress continuing at the rate of one per month
thereafter - all ducts were completed by end of July
Turbine Technology
-- In March, Atlantis cemented its long standing relationship
with Lockheed Martin ("Lockheed") with entry into a turbine
construction contract which will see Lockheed delivering the first
AR1500 turbine to the MeyGen project in 2016
-- In July, we entered into a lease with Global Energy Group for
a workshop and turbine assembly facility at the Nigg Energy Park on
Scotland's Cromarty Firth
-- The Group was strengthened with the addition of the
experienced Marine Current Turbines team, the proven SeaGen turbine
system, and a significant portfolio of UK tidal power project
opportunities
Corporate
-- In April, we executed a sale and purchase agreement with
Siemens AG for the acquisition of Marine Current Turbines Limited
("MCT") in an all share deal - Siemens is now our second largest
shareholder
-- In August we welcomed Ian Cobban onto our board of directors.
Ian has over 30 years of experience in the subsea sector, which
will be invaluable to Atlantis as the MeyGen project enters its
offshore construction phase
Tim Cornelius, Chief Executive of Atlantis, commented:
"The first half of 2016 has been full of exciting developments
for Atlantis, with construction works starting on the MeyGen
onshore control centre in January and onshore drilling of all four
ducts completed by the end of July. We successfully acquired MCT
which adds the proven SeaGen turbine system to Atlantis' portfolio,
along with MCT's experienced team, and we were pleased to welcome
Siemens as our second largest shareholder.
"Post the period end, the Company raised GBP2.5m in a placing
which provides the funds to continue to progress the Company's
strategy and bring further projects around the UK towards
development. The newly strengthened Board, following the
appointment of Ian Cobban in August, continues to look to the
future with confidence."
For further information please contact:
Atlantis Resources Limited via FTI Consulting
Tim Cornelius, Chief Executive Officer
Duncan Black, Chief Financial Officer
Peel Hunt LLP (Nominated Adviser +44 (0) 20 7418
and Broker) 8900
Daniel Harris
Jock Maxwell Macdonald
Euan Brown
+44 (0) 20 3727
FTI Consulting 1000
Ben Brewerton / Alex Beagley / Stephanie
Blott / James Styles
CHAIRMAN'S STATEMENT
After the first six months of 2015 we can look back on several
landmarks in the development of the tidal power sector and in the
growth of the Atlantis group.
In January, works started in Caithness in northern Scotland at
the site of the onshore control centre for the MeyGen project. The
access roads and construction infrastructure began to take shape
throughout February, as Atlantis celebrated its first anniversary
as a public company. In March, Atlantis cemented its long standing
relationship with Lockheed Martin with entry into a turbine
construction contract which will see Lockheed delivering the first
AR1500 turbine to the MeyGen project next year.
Meanwhile, in Caithness, almost 6,000 tonnes of steel has been
delivered for fabrication of the ballast which will weigh down the
turbine foundations, and in April directional drilling works
started on the MeyGen site. The onshore drilling rig bored beneath
the low cliffs of the shoreline to create the first of four ducts,
each more than half a kilometre in length. This first duct was
completed and lined by the end of the month, with progress
continuing at the rate of one per month thereafter with all ducts
completed by the end of July. These ducts will carry the subsea
power cables which connect the onshore control centre to the
turbines on the seabed, allowing the tidally generated electricity
to be exported to the grid when the turbines are installed and
connected next year.
As April drew to a close, we were delighted to announce the
execution of a sale and purchase agreement with Siemens AG for the
acquisition of Marine Current Turbines Limited ("MCT") in an all
share deal. As a result, Siemens is now our second largest
shareholder, and the consolidated Atlantis group was strengthened
with the addition of the experienced MCT team, the proven SeaGen
turbine system, and a significant portfolio of UK tidal power
project opportunities for us to bring to fruition.
By the end of the spring, factory acceptance testing was well
underway for the subsea cable cores and for the onshore power
conditioning equipment which will occupy the new MeyGen control
centre. As we arrived at the halfway point for the year, turbine
manufacture was underway for both the Atlantis AR1500 system and
the three further turbines to be supplied by Andritz Hydro
Hammerfest. Three of the four subsea cables had also been
manufactured and tested, ready for installation. Since the end of
June, the fourth cable has been completed and we are now planning
for the cable deployment offshore this autumn.
Also in July, we entered into a lease with Global Energy Group
for a workshop and turbine assembly facility at the Nigg Energy
Park on Scotland's Cromarty Firth. This is intended to serve as a
hub for the tidal industry, providing a base for turbine assembly
and testing and for future project operations and maintenance. We
are working with the Scottish supply chain in particular to
diversify exposure for traditionally oil and gas focused
contractors, and have consequently entered into a preferred
supplier arrangement with Global Energy Group.
Finally, I am pleased to report that in August we welcomed Ian
Cobban onto our board of directors. Ian has over 30 years of
experience in the subsea sector, which will be invaluable to
Atlantis as the MeyGen project enters its offshore construction
phase. We bid a grateful farewell to outgoing director Rune Nilsen,
who has supported the company for the past four years through a
period of remarkable transition.
We now look forward to building on this successful start to the
year to ensure that the MeyGen project is ready for first power
production in 2016. In parallel, we will continue to advance other
project development opportunities, including those acquired with
MCT, to create a robust and diverse portfolio for the future. I
look forward to updating you on all this and more over the coming
months.
John Mitchell Neill
Chairman
3 September 2015
SUMMARY OF RESULTS
Revenue for the six months to 30 June 2015 was S$1.0 million
(GBP0.5 million) which primarily comprised third party consulting
revenues. Revenues from the sale of the AR1500 turbine to MeyGen
are eliminated on consolidation. Other gains and losses of S$1.4
million (GBP0.7 million) comprised grant income of S$0.8 million
(GBP0.4 million) and a contribution by Lockheed Martin to the
Group's development project in Canada of S$0.4 million (GBP0.2
million).
Total expenses of S$8.6 million (GBP4.0 million) were primarily
driven by employee expenses of S$3.8 million (GBP1.8 million),
depreciation and amortisation of S$1.6 million (GBP0.8 million),
and other operating expenses of S$1.8 million (GBP0.8 million). The
Atlantis group showed a loss of S$7.5 million (GBP3.5 million) for
the six months to 30 June 2015, which is in line with the full year
loss for 2014 of S$16.2 million (GBP7.6 million).
As the acquisition of MCT completed on 1 July 2015, the 30 June
2015 financial statements do not include any impact of the MCT
acquisition. The Group's consolidated total assets increased to
S$155.7 million (GBP73.5 million) at 30 June 2015 from S$146.7
million (GBP69.2 million) at 31 December 2014, primarily as a
result of capital expenditure on MeyGen Phase 1A. The consolidated
cash position of the Group as at 30 June 2015 was S$26.0 million
(GBP12.3 million).
Condensed consolidated statement of profit or loss and other comprehensive
income
For the six months ended 30 June 2015
Group
For the six months ended 30 June
Note 2015 2014
S$'000 S$'000
Revenue 951 170
Other gains and losses 7 1,395 75
Subcontractors costs (506) -
Depreciation and amortisation
expenses (1,624) (1,673)
Research and development
costs (680) (376)
Employee benefits expenses (3,921) (3,182)
Other operating expenses (1,836) (2,144)
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---------- ----------
Total expenses (8,567) (7,375)
Results from operating
activities (6,221) (7,130)
Finance costs 8 (1,283) (1,585)
Loss before tax (7,504) (8,715)
Income tax expense (27) -
Loss for the period (7,531) (8,715)
Other comprehensive income:
Items that may be reclassified
subsequently to profit
or loss
Exchange differences
on translation of foreign
operation 1,871 2,749
---------- ----------
Total comprehensive income
for the period (5,660) (5,966)
========== ==========
Loss attributable to:
Owners of the group (7,618) (8,715)
Non-controlling interest 87 -
---------- ----------
(7,531) (8,715)
Total comprehensive income
attributable to:
Owners of the group (5,747) (5,966)
Non-controlling interest 87 -
---------- ----------
(5,660) (5,966)
========== ==========
Loss per share (basic
and diluted) 15 (0.09) (0.12)
Condensed consolidated statement of financial position
As at 30 June 2015
Group
30 June 31 December
Note 2015 2014
S$'000 S$'000
ASSETS
Non-current assets
Property, plant and equipment 9 80,357 70,508
Intangible assets 10 44,331 43,194
Prepayment 1,086 -
125,774 113,702
--------- -----------
Current assets
Other receivables 3,991 3,719
Cash and cash equivalents 11 25,966 29,247
29,957 32,966
--------- -----------
Total assets 155,731 146,668
========= ===========
LIABILITIES
Current liabilities
Current tax liabilities 27 -
Trade and other payables 12 16,878 18,562
Provisions 821 795
17,726 19,357
--------- -----------
Non-current liabilities
Deferred taxation 8,115 7,905
Loans and borrowings 13 35,235 21,375
--------- -----------
43,350 29,280
--------- -----------
Total liabilities 61,076 48,637
--------- -----------
Net assets 94,655 98,031
========= ===========
EQUITY
Share capital 185,500 185,500
Capital reserve 12,732 11,448
Translation reserve 1,908 280
Option fee 10 10
Share option reserve 14 5,335 4,932
Accumulated losses (120,385) (112,767)
Total equity attributable
to owners of the Company 85,100 89,403
Non-controlling interests 9,555 8,628
--------- -----------
Total equity 94,655 98,031
========= ===========
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2014
Attributable to owners of the Company
Share Non-
Share Capital Translation Option option Accumulated controlling
capital reserve reserve fee reserve losses Total interest Total
S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000
Group
At 1 January
2014 114,906 - (716) 10 3,994 (96,572) 21,622 - 21,622
---------------------- -------- -------- ----------- ------ -------- ----------- ------- ------------ -------
Total comprehensive
income for the
period
Loss for the
period - - - - - (8,715) (8,715) - (8,715)
Other comprehensive
income - - 2,749 - - - 2,749 - 2,749
---------------------- -------- -------- ----------- ------ -------- ----------- ------- ------------ -------
Total comprehensive
income for the
period - - 2,749 - - (8,715) (5,966) - (5,966)
Transactions
with owners,
recognised directly
in equity
Contributions
by and distributions
to owners
---------------------- -------- -------- ----------- ------ -------- ----------- ------- ------------ -------
Issued for cash
during public
offering 22,872 - - - - - 22,872 - 22,872
Conversion of
convertible loans
into shares during
public offering 37,837 - - - - - 37,837 - 37,837
Total transactions
with owners 60,709 - - - - - 60,709 - 60,709
-------- -------- ----------- ------ -------- ----------- ------- ------------ -------
At 30 June 2014 175,615 - 2,033 10 3,994 (105,287) 76,365 - 76,365
======== ======== =========== ====== ======== =========== ======= ============ =======
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2015
Attributable to owners of the Company
Share Non-
Share Capital Translation Option option Accumulated controlling
capital reserve reserve fee reserve losses Total interest Total
S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000 S$'000
Group
At 1 January
2015 185,500 11,448 280 10 4,932 (112,767) 89,403 8,628 98,031
---------------------- -------- -------- ----------- ------ -------- ----------- ------- ------------ -------
Total comprehensive
income for the
period
Loss for the
period - - - - - (7,618) (7,618) 87 (7,531)
Other comprehensive
income - - 1,628 - - - 1,628 243 1,871
---------------------- -------- -------- ----------- ------ -------- ----------- ------- ------------ -------
Total comprehensive
income for the
period - - 1,628 - - (7,618) (5,990) 330 (5,660)
Transactions
with owners,
recognised directly
in equity
Contributions
by and distributions
to owners
---------------------- -------- -------- ----------- ------ -------- ----------- ------- ------------ -------
Recognition of
share-based payments - - - - 403 - 403 - 403
Changes in ownership
interest in subsidiary
Dilution of interest
in a subsidiary
without change
in control - 1,284 - - - - 1,284 597 1,881
---------------------- -------- -------- ----------- ------ -------- ----------- ------- ------------ -------
Total transactions
with owners - 1,284 - - 403 - 1,687 597 2,284
-------- -------- ----------- ------ -------- ----------- ------- ------------ -------
At 30 June 2015 185,500 12,732 1,908 10 5,335 (120,385) 85,100 9,555 94,655
======== ======== =========== ====== ======== =========== ======= ============ =======
Condensed consolidated statement of cash flows
For the six months ended 30 June 2015
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Group
For the six months ended
30 June
Note 2015 2014
S$'000 S$'000
Cash flows from operating
activities
Loss before tax (7,504) (8,715)
Adjustments for:
Depreciation of plant
and equipment 25 15
Amortisation of intangible
asset 1,599 1,658
Finance costs 8 1,283 1,585
Share-based payments 403 -
Grant income (817) -
Net foreign exchange
loss - 12
Operating cash flows
before movements in working
capital (5,011) (5,445)
Trade and other receivables (1,242) (1,651)
Trade and other payables (994) (2,873)
Income tax paid - (11)
---------- --------
Net cash used in operating
activities (7,247) (9,980)
---------- --------
Investing activities
Purchase of property,
plant and equipment (16,209) (14)
Expenditure on project
development (2,111) (4,959)
Net cash used in investing
activities (18,320) (4,973)
---------- --------
Financing activities
Proceeds from grants
received 8,332 3,954
Proceeds from borrowings 11,309 4,913
Repayment of borrowings - (504)
Interest paid - (89)
Deposits released/(pledged) 21 1,743 (4,233)
Proceeds from issue of
shares - 25,214
Costs related to fundraising - (2,342)
Non-controlling interest 1,881 -
---------- --------
Net cash from financing
activities 23,265 26,913
---------- --------
Net (decrease)/increase
in cash and cash balances (2,302) 11,960
Cash and cash equivalents
at beginning of period 23,089 2,620
Effect of foreign exchange
rate changes on the balance
of cash held in foreign
currencies 764 32
---------- --------
Cash and cash equivalents
at end of period 11 21,551 14,612
========== ========
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 2015, 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 3 September 2015.
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 2014 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 19 May 2015 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 principal place of business and registered
office at 65 Niven Road, Singapore 228414.
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
2.1 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 2014.
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 2014.
3 Significant accounting policies
Except for the new and revised IAS's effective for the financial
year beginning 1 January 2015 adopted during the six-months period
ended 30 June 2015, 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
2014.
The adoption of the new and revised IASs for the financial year
beginning 1 January 2015 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 2015 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. 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 is currently assessing the impact upon
adoption this standard in financial year ending 31 December
2018.
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
2014.
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.
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 30 June
2015 2014
S$'000 S$'000
Grant income 817 -
Other income 409 87
Net foreign exchange gains/(losses) 169 (12)
1,395 75
======= =======
8 Finance costs
30 June 30 June
2015 2014
S$'000 S$'000
Interest expense arising
from:
* shareholders' loans - 144
* related party loans 505 149
* long term loan 503 698
* secured long term loans 275 -
* convertible loans - 594
1,283 1,585
======= =======
9 Property, plant and equipment
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During the period, a further S$15,076,000 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 S$7,515,000 of grants were drawn
down. Included in the capitalised development costs is an amount of
S$618,000 that represents borrowing costs capitalised during the
period. The project is progressing according to plan 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 was required.
10 Intangible assets
On-going development costs related to the Group's tidal turbine
development programme, in particular expenditure on the detailed
design of and system integration for the Group's AR1500 turbine
amounted to S$2,111,000 for the period.
11 Cash and cash equivalents
30 June 31 December
2015 2014
S$'000 S$'000
Cash at bank 21,513 23,039
Fixed deposits 4,415 6,158
Cash on hand 38 50
------- -----------
25,966 29,247
Less: Encumbered deposits (4,415) (6,158)
Cash and cash equivalents in
the statement of cash flows 21,551 23,089
======= ===========
The encumbered deposits served as collateral on behalf of MeyGen
Limited, in support of the provision of bank guarantees and standby
letters of credit as required under the terms of MeyGen's seabed
lease and to secure the MeyGen project's electricity transmission
capacity.
12 Trade and other payables
30 June 31 December
2015 2014
S$'000 S$'000
Trade payables 9,822 9,894
Other payables 110 127
Accruals 3,082 4,065
------- -----------
13,014 14,086
Advance receipts 3,864 4,476
------- -----------
16,878 18,562
======= ===========
Advance receipts include S$3,300,000 initial draw down of grant
that was received from European Commission.
13 Loans and borrowings
30 June 31 December
2015 2014
S$'000 S$'000
Non-current
Related party loans 8,294 7,376
Long term loan 8,207 7,293
Secured long-term loans 18,734 6,706
------- -----------
35,235 21,375
======= ===========
During the period, a total of S$11,309,000 (GBP5,393,000) of
loans were drawn down. There were no changes in the terms and
conditions of any of the loans detailed above, other than as
described below, and no covenants of any loans have been
breached.
On 28 April 2015, Atlantis Resources (Scotland) Limited
("ARSL"), a wholly owned subsidiary of the Company, as borrower,
with the Company as guarantor, entered into a loan agreement with
GEG (Holdings) Ltd to borrow S$5,295,000 (GBP2,500,000). This loan
was to have a three-year term and was to be repayable as a single
bullet at the end of the term, with interest at a rate of 4.5% per
annum capitalising and not payable until maturity of the loan. Of
this loan, S$4,236,000 (GBP2,000,000) was to benefit from a
Scottish Enterprise guarantee. Drawdown of this loan was
conditional upon completion of the proposed acquisition of Marine
Current Turbines Limited ("MCT") by the Group.
Following negotiation with GEG (Holdings) Ltd and Scottish
Enterprise, on 30 June 2015, the loan with GEG (Holdings) Ltd was
amended to reduce the loan amount to S$1,059,000 (GBP500,000) with
no guarantee to be provided by Scottish Enterprise but with other
key terms, as disclosed in the last issued consolidated financial
statements of the Group for the year ended 31 December 2014,
unchanged. As a condition of this amendment, a loan was entered
into with Scottish Enterprise to borrow S$4,236,000 (GBP2,000,000),
with a one-year term and the loan repayable as a single bullet at
the end of the term. Interest is payable on the loan from Scottish
Enterprise at a rate of 10% per annum, but with interest
capitalising and not payable until maturity of the loan.
Drawdown of both the loan from GEG (Holdings) Limited and the
new loan from Scottish Enterprise was conditional upon completion
of the proposed acquisition of MCT by Atlantis, and as such neither
loan had not been drawn on 30 June 2015.
Both the loan from GEG (Holdings) Limited and the new loan from
Scottish Enterprise will benefit from fixed and floating charges
over Atlantis Operations (UK) Limited, ARSL and MCT and its
subsidiaries. The terms of ARSL's existing loan from Scottish
Enterprise were amended to provide Scottish Enterprise with the
same security package in respect of its existing loan to ARSL as
provided for its new loan.
14 Share options reserve
During the period, no option to take up unissued shares of the
Company was granted and no shares of the Company have been issued
by virtue of the exercise of an option to take up unissued
shares.
15 Loss per share
The calculation of loss per share is based on the loss after tax
and on the weighted average number of ordinary shares in issue
during each period.
Weighted average
Loss after
tax number of shares Loss per share
30 June 30 June 30 June 30 June 30 June 30 June
2015 2014 2015 2014 2015 2014
S$'000 S$'000 '000 '000 S$ S$
Basic and
diluted 7,618 8,715 89,204 73,158 0.09 0.12
========= ======== ============ ============ ========== ==========
At 30 June 2015, share options were excluded from the diluted
weighted average number of ordinary shares calculation as their
effect would have been anti-dilutive.
16 Financial instruments, financial risks and capital risks management
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.
All the balances are not past due.
Cash and cash equivalents
Cash at bank is held with creditworthy financial institutions
which are licensed banks in the countries that the Group
operates.
(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 at 30 June 2015 and 31 December
2014 are repayable on demand or due within one year from the end of
the reporting period. Other than loans and borrowings, trade and
other payables are non-interest bearing.
Analysis of financial instruments by remaining contractual
maturities
The table below summarises the maturity profile of the Group's
financial liabilities at the end of the reporting period based on
the contractual undiscounted repayment obligations.
Contractual cash flows
------------------------------------------
Carrying One year Two to Over five
Note amount Total or less five years years
Group S$'000 S$'000 S$'000 S$'000 S$'000
30 June 2015
Financial liabilities
Trade and other
payables 12 (13,014) (13,014) (13,014) - -
Loans from
a related party 13 (8,294) (11,851) - - (11,851)
Long term loan 13 (8,207) (11,736) - - (11,736)
Secured long
term loans 13 (18,734) (23,405) - (8,809) (14,596)
---------- -------- -------- ----------- ---------
(48,249) (60,006) (13,014) (8,809) (38,183)
========== ======== ======== =========== =========
Contractual cash flows
------------------------------------------
Carrying One year Two to Over five
amount Total or less five years years
S$'000 S$'000 S$'000 S$'000 S$'000
31 December
2014
Financial liabilities
Trade and other
payables 12 (14,086) (14,086) (14,086) - -
Loans from
a related party 13 (7,376) (11,544) - - (11,544)
Long term loan 13 (7,293) (11,432) - - (11,432)
Secured long
term loans 13 (6,706) (10,630) - (7,540) (3,090)
-------- -------- -------- ----------- ---------
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(35,461) (47,692) (14,086) (7,540) (26,066)
======== ======== ======== =========== =========
(c) Market risk
Currency risk
The Group transacts business in various foreign currencies,
including the Australian dollar, Euro, United States dollar and
British pound, and is hence exposed to foreign exchange risk.
At the end of the reporting period, the carrying amounts of
monetary assets and monetary liabilities denominated in currencies
other than the respective Group entities' functional currencies are
as follows:
Group
Liabilities Assets
30 June 31 December 30 June 31 December
2015 2014 2015 2014
S$'000 S$'000 S$'000 S$'000
Australian dollars (108) (179) 2 11
British pounds (369) (1,062) 23 61
Euros (349) (142) 38 41
United States
dollars (1,384) (823) 4 5
======== ============ ======= ===========
Foreign currency sensitivity
The sensitivity rate used when reporting foreign currency risk
to key management personnel is 10%, which is the sensitivity rate
which represents management's assessment of the likely potential
change in foreign exchange rates.
If the relevant foreign currencies were to strengthen by 10%
against the functional currency of each Group entity, loss will
increase (decrease) by:
30 June 31 December
2015 2014
Group S$'000 S$'000
Australian dollars 11 17
British pounds 35 100
Euros 31 10
United States dollars 138 82
======= ===========
If the relevant foreign currency weakens by 10% against the
functional currency of each Group entity, the effects on loss 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.
At the end of the reporting period, if the 12-month LIBOR rates
had been 100 basis points higher/lower with all other variables
held constant, the Group's loss before tax would have been
approximately S$173,000 higher/lower, arising mainly as a result of
higher/lower finance costs.
Equity price risk
The Group is not exposed to equity price risks as it does 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 consists of equity
attributable to owners of the parent and loans and borrowings
amounting to S$121,218,000 (2014: S$110,778,000).
There are no changes in the Group's approach to capital
management during the period.
(d) Accounting classifications and fair values
Except as detailed in the following table, the directors
consider that the carrying amounts of the financial assets and
financial liabilities recognised in the Consolidated Interim
Financial Statements approximate their fair values.
31 December
30 June 2015 2014
Carrying Fair Carrying Fair
Note value value value value
S$'000 S$'000 S$'000 S$'000
Loans and receivables
Cash and cash
equivalents 11 21,551 21,551 23,089 23,089
Other receivables* 3,003 3,003 2,479 2,479
------------- ------------ ---------- ----------
24,554 24,554 25,568 25,568
============= ============ ========== ==========
Financial liabilities
Loans from a
related party 13 (8,294) (8,268) (7,376) (7,376)
Long term loan 13 (8,207) (8,207) (7,293) (7,293)
Secured long
term loans 13 (18,734) (18,355) (6,706) (8,188)
------------- ------------ ---------- ----------
(35,235) (34,830) (21,375) (22,857)
============= ============ ========== ==========
*Exclude prepayments
Fair value hierarchy
The table below analyses the fair value of financial instruments
as disclosed, according to their levels in the fair value
hierarchy. It does not include fair value information of
instruments if the carrying amount is a reasonable approximation of
fair value. The different levels have been defined as follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
-- Level 2: inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices)
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
Level Level Level
1 2 3 Total
Group S$'000 S$'000 S$'000 S$'000
30 June 2015
Financial liabilities
Loans from a related
party - - (8,268) (8,268)
Long term loan - - (8,207) (8,207)
Secured long term
loans - - (18,355) (18,355)
------ ------ -------- --------
- - (34,830) (34,830)
====== ====== ======== ========
31 December 2014
Financial liabilities
Loans from a related
party - - (7,376) (7,376)
Long term loan - - (7,293) (7,293)
Secured long term
loans - - (8,188) (8,188)
- - (22,857) (22,857)
====== ====== ======== ========
There were no transfers between levels in 2014 and 2015.
Estimating the fair value
The following summarises the significant methods and assumptions
used in estimating the fair values of financial instruments of the
Group.
Financial assets and liabilities
The notional amounts of financial assets and liabilities with a
maturity of less than one year (including trade and other
receivables, cash and cash equivalents and trade and other
payables) are assumed to approximate their fair values. The
carrying value of a loan from related party and long term loan
approximate its fair value as the interest rates approximate market
rate of interest at the reporting date. One of the loans from
related party and secured long term loan are discounted to
determine its fair value as below.
Financial instruments not measured at fair value
Type Valuation technique
------------------ ----------------------------
Group
Secured long term
loans Discounted cash flow method.
Loans from related
party Discounted cash flow method.
17 Related company and related party transactions
Other than those disclosed elsewhere in the Consolidated Interim
Financial Statements, there were the following significant
transactions with related parties companies during the period:
30 June 30 June
2015 2014
S$'000 S$'000
Rental expense paid to companies with common
director - 25
Interest expense arising from related party
loans 505 216
Interest expense arising from shareholders'
loans - 202
======= =======
Compensation of directors and key management personnel:
The remuneration of directors and other members of key
management during the period are as follows:
30 June 30 June
2015 2014
S$'000 S$'000
Short term employee benefits 707 747
Defined contribution benefits 22 -
Share-based payments 403 -
======= =======
18 Segment information
(a) Operating segments
The Group is principally engaged in development of the MeyGen
tidal current power project and the supply of a tidal power turbine
to it. The assets, liabilities and capital expenditure of the Group
are mainly employed in activities supporting the development of the
tidal current power project in MeyGen, being the main reportable
segment within the Group.
The Group's Chief Executive Officer and Chief Financial Officer,
the Group's key operating decision makers, review internal
management reports in relation to the funding availability and
capital expenditure of MeyGen project.
(b) Geographical segments
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