Interim Results (unaudited)

SIMEC Atlantis Energy Limited

Registration Number: 200517551R

Consolidated Interim Financial Statements

(unaudited)

For the six months ended 30 June 2020

Trading Update Statement

The first six months of 2020 have seen significant global economic and social challenges as a result of the COVID-19 pandemic. Here at Atlantis we have maintained activity across each of our business units and we continue to see encouraging progress despite the logistical and workplace challenges COVID-19 social distancing restrictions present.  In particular, we note the continued progress of the Uskmouth power station conversion project in Wales with major technical, planning and commercial milestones having been successfully achieved, the entry into the NPA Fuels joint venture with the N+P Group, and the resulting over-subscribed equity placement in August 2020.

Power Station Conversion

The Uskmouth conversion project started the year in March with successful commercial fuel pellet production and milling trials and followed this up in May with the launch of the project pre-application planning consultation. The most significant technical achievement of 2020 was announced in June in relation to the large scale fuel combustion tests which took place in Nagasaki, Japan. These tests were successfully completed by Mitsubishi Power Systems and results exceeded combustion performance expectations. In August, we announced entry into a fuel supply joint venture with the N+P Group to supply fuel to Uskmouth and other future conversion projects.  This joint venture is expected to improve the security of Uskmouth's fuel supply whilst providing access to additional revenues from the sale of fuel and the gate fees chargeable for receipt of the input waste materials at the fuel production plants.  In order to optimise revenues generated by power sales from Uskmouth we have also announced that we are working with data centre development specialist TechRE to evaluate opportunities to sell output via private wire networks to data centre customers.  Finally, we recently updated the market on our relationship with South Korean infrastructure investor Hana Financial Investment Co, with whom we are seeking to secure debt and equity bridge financing for the conversion of the first 110MW of capacity at Uskmouth.

Marine Energy

The 6MW first phase of the MeyGen project has now exported more than 33GWh to the grid, enough to charge more than 750,000 standard electric vehicles.  Whilst the three Andritz turbines have been performing well, the Atlantis AR1500 turbine requires further repair and maintenance following its redeployment in August. We expect the AR1500 to be reinstated and fully operational by the end of December 2020. The variable pitch upgrade is expected to deliver a 4% increase in annual revenue with no increase in the turbine's operating cost.  The August operations included the completion of the installation of MeyGen's new subsea hub, which was provided by Atlantis under a £2.4m delivery contract supported by a grant from the Saltire Tidal Energy Challenge Fund.  This subsea hub is a key enabler for cost reductions in future tidal arrays as it is designed to allow for the connection of multiple turbines offshore.

Atlantis is in the final stages of construction and testing for an AR500 turbine system to be delivered to Japan for our client Kyuden Mirai Energy ("KME") in Q4 2020. The turbine will be deployed in the Straits of Naru, within the southern Japanese Goto island chain. It is intended that this would be the first phase of a larger testing programme at the site, subject to initial performance.

Hydro Energy

The Atlantis group's hydro division, SIMEC GHR Ltd ("GHR"), has continued to develop its operations and maintenance business and currently provides services to over 45 separate hydroelectric schemes throughout Scotland. New clients are being added and additional resources are being deployed to ensure that the service levels are of the highest standard. GHR's project management division is actively involved in the construction of 4 new hydro schemes and, although COVID-19 closed these sites for a short while, construction is now progressing well towards the required commissioning dates.

Equity Placement

On 6 August 2020, the Company announced the launch of a fundraising comprising a placing by way of an accelerated bookbuild process by Investec and Arden and an offer for subscription by PrimaryBid, each at a price of 12 pence per share (together, the "Fundraising"). The placing raised gross proceeds of £6.5 million through the issue of 54,166,666 new ordinary shares and the PrimaryBid offer raised £1 million through the issue of 8,333,333 new ordinary shares. In aggregate, therefore, the Fundraising raised gross proceeds of approximately £7.5 million and resulted in the issue of 62,499,999 new Ordinary Shares at 12 pence per share.  The proceeds are being used to fund the Company's working capital requirements and in connection with the proposed investment by the Company in NPA Fuels Limited.

Summary of Results

The overall loss before tax of £6.1 million for the six months ended 30 June 2020 was almost half of the loss of £11.8 million reported for the same period in 2019. This improvement is largely attributable to strong revenue contributions generated by the tidal turbines and engineering services division, together with good performance from the MeyGen project in Scotland.  Six months of revenue contributions from GHR added to the improved performance relative to 2019. Overall, costs were in line with expectations with significant contractors' costs being incurred in delivery of the subsea hub project and the AR500 turbine for Japan, as well as the ongoing Uskmouth operational costs.

Depreciation, as expected, has remained stable and is being driven by Uskmouth and MeyGen.

Finance costs in the current period are materially in line with the same period last year and also included five months of the £3.79 million Abundance bond raise, which closed in February 2020.

The unaudited consolidated cash position of the Atlantis Group at 30 June 2020 was £9.8 million.