Company Registration No. 08141301 (England and Wales)
TIDAL LAGOON (SWANSEA BAY) PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
TIDAL LAGOON (SWANSEA BAY) PLC
COMPANY INFORMATION
Directors
Mr M C Shorrock
Mr A Matthews
Mr P J Carter
Mr J E Hall-Smith
Secretary
Mr P J Carter
Company number
08141301
Registered office
8th Floor
One Central Square
Cardiff
Wales
CF10 1FS
Auditor
Azets Audit Services
Epsilon House
The Square
Gloucester Business Park
Gloucester
United Kingdom
GL3 4AD
TIDAL LAGOON (SWANSEA BAY) PLC
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 21
TIDAL LAGOON (SWANSEA BAY) PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2021
- 1 -
Introduction to the Swansea Bay tidal lagoon project
Swansea Bay tidal lagoon (the “Project” or “Lagoon”) would be a first-of-a-kind tidal range powered energy plant comprising a 9.5km land-attached breakwater structure situated in Swansea Bay, at the western end of the Severn Estuary, within which a section of hydro turbines will be installed, specifically designed to generate electricity from the 8.5m tidal range. Tidal Lagoon (Swansea Bay) Plc (“TLSB” or the “
company
”) was established in 2012 as a special purpose vehicle company to develop, finance, build and operate the Project.
The Severn Estuary has the second highest tidal range in the world and Swansea Bay spring tides reach up to 12m, allowing for significant tidal head and thus power potential. Tidal range presents a long
-
term 120
-
year opportunity far exceeding the typical design life for a wind farm, gas fired power station, or even a nuclear power plant.
Once operational, the Lagoon is expected to be capable of delivering over 500GWh of the UK’s energy needs per annum of tidal power in a predictable fashion: sufficient electricity to power over 155,000 homes, more than Swansea’s domestic electricity requirement.
The resulting development is understood would be the first man-made tidal lagoon and the largest tidal energy plant in the world. The Project is designed to include a visitor centre, sporting facilities, mariculture farm and other amenities for the benefit of the local community.
Further information regarding tidal lagoons and the Project can be found on our website at
www.
tidallagoonpower.com/projects/swansea-bay
Fair review of the business
As we reported last year, and given its limited financial resources, the
company
remains reliant
upon other stakeholders, including Tidal Power Plc (a related party company established by
executive management), to progress the Project at their risk. Should progress be made on this
basis then value may be delivered back to shareholders.
As part of this strategy, in March 2021, the company initiated legal action to have the Development Consent Order ("DCO") declared extant. In November 2021, the High Court ruled against the company. On the back of strong legal advice, the company has appealed the decision and the case is scheduled to be heard before the end of 2022. The company has been holding preliminary talks with several third-party entities who, in the event that the company wins its appeal, have expressed an interest in taking the Project forwards
Operating results
The
company
made a small operating loss for the period of £
3,000
(20
20
: £
76,000
) which
reflects the limited activities of the
company.
Funding
The
company
has been funded to date by public share offerings and loan capital. This includes
strategic backing from Prudential Greenfield LP and InfraRed Capital Partners Limited (on
behalf of funds that it manages).
TIDAL LAGOON (SWANSEA BAY) PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
- 2 -
Principal risks and uncertainties
The
directors
consider that the principal risks and uncertainties facing the
company
are as follows:
Dependence on other entities
In the current circumstances, restricted access to additional funds means the
company
is
dependent on other entities, including related party companies, to progress plans for the
Project (for which the
company
holds the rights) at risk. Any such schemes are speculative in
nature and are likely to require political support from, as a minimum, the Welsh Government
for the Project to get to financial close.
As noted above, the company is appealing the High Court's adverse ruling in respect of the status of the DCO.
Failure of the DCO validity being determined in the
company's
favour
or one of these initiatives subsequently being realised
,
may lead to the
company
ceasing to
trade.
Short-term financial
risk
The
company
has met its day-to-day working capital requirements through loans from its
strategic sponsors
, with its strategic costs being met by a related company, Tidal Power Plc, and other related parties
.
The
directors
have prepared projected cash flow information for the next twelve months on
the basis that value remains in the assets of the
company
, taking account of projected
expenditure and available funds from the
company's
strategic sponsors. The
directors
have
taken into consideration actions they could take in response to reasonable cash flow
sensitivities. On this basis, the
directors
believe that the
company
will continue to operate
within funds available to it provided that
related parties and
the loan note holders continue in their support for
the
company
and do not call
in
their loans.
However, whilst the
directors
believe the going concern basis is appropriate at the date of this
report, the inherent uncertainties of the Project at this stage and
,
specifically
,
the dependence
on third
-
party stakeholders have a major impact on this assessment such that if the Project
becomes non-deliverable then the
company
may cease to trade. This is further explained in
note
1.2
to the financial statements.
Future development
The
directors
are looking to deliver value back to shareholders by supporting the efforts of
third parties, including related party companies, to get the Project to financial close. The Board
recognise that there remains significant risk in this approach and there is no guarantee that
the Project will be delivered. However, provided the DCO is declared extant by the courts,
and where
the
company
retains all rights to the Project
,
it
remains well placed to benefit from any
third-party initiative to bring forward a Swansea Bay tidal lagoon project which builds upon
the work undertaken by the
company.
Mr P J Carter
Director
28 July 2022
TIDAL LAGOON (SWANSEA BAY) PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2021
- 3 -
The directors present their annual report and financial statements for the year ended 30 June 2021.
Principal activities
The principal activity of the company continued to be that of the development of renewable energy projects.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr M C Shorrock
Mr A Matthews
Mr P J Carter
Mr J E Hall-Smith
Board of Directors
The
company
is led and controlled by a Board of Directors.
The Board currently comprises two executive directors and two non-executive directors who
bring a wide range of experience and skills to the
company
, neither of whom are considered
independent. The Board meets as required to determine the policy and business strategy of
the
company
.
Political donations
The company has not incurred any political expenditure during the year ended 30 June 2021 (2020: £Nil).
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
TIDAL LAGOON (SWANSEA BAY) PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
- 4 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
Other matters required to be disclosed in the Report of the Directors in accordance with section 416(4) of the Companies Act 2006 in relation to financial risks and future developments are set out in the Strategic Report on pages
1
to
2
in accordance with section 414C(11) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
Environmental policy
The
company
is committed to protecting the environment by complying with all relevant UK legislation, meeting national standards relating to the environment and adopting best working practices currently in use by the industry.
The
company
uses the word environment to cover the natural environment and ecosystems as well as the built environment and the effect the
company's
operations can have on peoples’ lives and heritage.
Health and safety
The
company
seeks to promote all aspects of health and safety at work throughout its operations in the interests of employees, contractors and visitors.
TIDAL LAGOON (SWANSEA BAY) PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
- 5 -
On behalf of the board
Mr P J Carter
Director
28 July 2022
TIDAL LAGOON (SWANSEA BAY) PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TIDAL LAGOON (SWANSEA BAY) PLC
- 6 -
Opinion
We have audited the financial statements of Tidal Lagoon (Swansea Bay) Plc (the 'company') for the year ended 30 June 2021 which comprise the statement of comprehensive income, the balance sheet and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 30 June 2021 and of its loss for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. 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
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw your attention to note 1.2 in the financial statements, which indicates the impact of uncertainties around the current status of the DCO on the business and the
company's
current reliance on third-party stakeholders to progress
its
plans. As stated in note 1.2, these events or conditions, along with other matters set forth in note 1.2, indicate that a material uncertainty exists that may cast significant doubt on the
company's
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors'
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
TIDAL LAGOON (SWANSEA BAY) PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TIDAL LAGOON (SWANSEA BAY) PLC
- 7 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
directors are
responsible for assessing the company
'
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 the
directors
either
intend
to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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
ISAs (UK)
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
.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
TIDAL LAGOON (SWANSEA BAY) PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TIDAL LAGOON (SWANSEA BAY) PLC
- 8 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we 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. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
-
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
-
Reviewing minutes of meetings of those charged with governance;
-
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
-
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations; and
-
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Claire Clift (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
28 July 2022
Chartered Accountants
Statutory Auditor
Epsilon House
The Square
Gloucester Business Park
Gloucester
United Kingdom
GL3 4AD
TIDAL LAGOON (SWANSEA BAY) PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2021
- 9 -
Year
Period
ended
ended
30 June
30 June
2021
2020
Notes
£
£
Administrative expenses
(2,938)
(75,553)
Other interest receivable and similar income
144
698
Interest payable and similar expenses
5
(3,352,373)
(5,028,560)
Loss before taxation
(3,355,167)
(5,103,415)
Tax on loss
6
Loss for the financial year
(3,355,167)
(5,103,415)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
TIDAL LAGOON (SWANSEA BAY) PLC
BALANCE SHEET
AS AT
30 JUNE 2021
30 June 2021
- 10 -
2021
2020
Notes
£
£
£
£
Current assets
Debtors
7
3,756
5,873
Cash at bank and in hand
44,630
87,608
48,386
93,481
Creditors: amounts falling due within one year
8
(34,109,199)
(30,799,127)
Net current liabilities
(34,060,813)
(30,705,646)
Capital and reserves
Called up share capital
11
146,100
146,100
Share premium account
12
16,262,397
16,262,397
Profit and loss reserves
13
(50,469,310)
(47,114,143)
Total equity
(34,060,813)
(30,705,646)
The financial statements were approved by the board of directors and authorised for issue on 28 July 2022 and are signed on its behalf by:
Mr P J Carter
Director
Company Registration No. 08141301
TIDAL LAGOON (SWANSEA BAY) PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2021
- 11 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2019
146,100
16,262,397
(42,010,728)
(25,602,231)
Period ended 30 June 2020:
Loss and total comprehensive income for the period
-
-
(5,103,415)
(5,103,415)
Balance at 30 June 2020
146,100
16,262,397
(47,114,143)
(30,705,646)
Year ended 30 June 2021:
Loss and total comprehensive income for the year
-
-
(3,355,167)
(3,355,167)
Balance at 30 June 2021
146,100
16,262,397
(50,469,310)
(34,060,813)
TIDAL LAGOON (SWANSEA BAY) PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2021
- 12 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
17
(43,122)
(29,287)
Investing activities
Interest received
144
698
Net cash generated from investing activities
144
698
Net decrease in cash and cash equivalents
(42,978)
(28,589)
Cash and cash equivalents at beginning of year
87,608
116,197
Cash and cash equivalents at end of year
44,630
87,608
TIDAL LAGOON (SWANSEA BAY) PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2021
- 13 -
1
Accounting policies
Company information
Tidal Lagoon (Swansea Bay) Plc a public company, limited by shares, registered in England and Wales. The company's registered number and registered office can be found on the Company Information page.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
The
true
company's
activities, together with the factors likely to affect its future
development, performance and position, are set out in the Strategic Report
on pages 1 and 2
. The
"Principal
risks and uncertainties
"
section
of the Strategic Report
provides further details of the principal
risks affecting the
company
.
The
directors
have prepared projected cash flow information for
a period of 1
2 months from the
date of approval of the financial statements on the basis that there remains value in the assets
of the
company
. These take account of projected expenditure, committed funds available to the
company
from its strategic sponsors and
related parties including the related company, Tidal Power Plc, and
actions the Board
of Directors
may take in
response to reasonable
cash flow sensitivities.
However, the inherent uncertainty around the future of the Project, the legal status of the DCO
and the ability for any third-party stakeholder to progress their plans further are fundamental
risks. After making enquiries and considering these uncertainties, the
directors
have a
reasonable expectation that the
company
has adequate resources to continue in operational
existence for the foreseeable future
,
provided that
related parties and
the loan note holders continue in their
support of the
company
and do not call in their loans. For these reasons, the
directors
continue
to adopt the going concern basis of accounting in preparing the annual financial statements.
This notwithstanding, were a means to progress the Project not found
and the
company were to
cease
to trade for this
,
or any other reason,
adjustments would have to be made to reduce the value
of the assets to their recoverable amount, to provide for any further liabilities that might arise
and to reclassify
any
long
-
term liabilities as current liabilities.
Available funding may be insufficient
to fully cover current liabilities at
this
point.
1.3
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
TIDAL LAGOON (SWANSEA BAY) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
1
Accounting policies
(Continued)
- 14 -
1.4
Financial instruments
The
company
has chosen to adopt Sections 11 and 12 of FRS102 in respect of financial instruments.
Financial assets
Basic financial assets, including trade and other receivables, cash and bank balances and investment in commercial paper, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts, discounted at a market rate of interest.
Such assets are subsequently carried at amortised costs using the effective interest method.
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party, or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
Financial liabilities
Basic financial liabilities, including trade and other payables, bank loans and preference shares that are classified as debt, are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facilities will be drawn down the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Non-basic financial instruments are initially recognised at fair value on the date they are entered into and are subsequently re-measured at fair value. Changes in the fair value of non-basic financial instruments are recognised in profit or loss as finance costs or finance income as appropriate.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
TIDAL LAGOON (SWANSEA BAY) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
1
Accounting policies
(Continued)
- 15 -
Compound financial instruments
Compound financial instruments issued by the company comprise loan notes that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value.
The liability component of a compound financial instrument is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.
Offsetting
Financial assets and liabilities are offset and the net amount presented in the financial statements where there is a legally enforceable right to set off the recognised amounts and there is an intention on a net basis or to realise the asset and settle the liability simultaneously.
1.5
Equity instruments
Ordinary shares and E Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction from the proceeds.
1.6
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
1.7
The cost of equity-settled transactions is recognised in profit or loss, together with a
corresponding increase in equity, measured by reference to the fair value of the equity
instruments granted in respect of the services provided.
1.8
Expenditure on research activities, undertaken with the prospect of gaining new scientific
or technical knowledge and understanding, is recognised in profit or loss when it is incurred.
Expenditure on development activities, which can be separately distinguished from the
research phase of a project, is capitalised if the product or process can be demonstrated
as
technically and commercially feasible, will generate probable future economic benefits and
that the
company
has adequate technical, financial and other resources available to
complete the development. Other development expenditure is recognised in profit or loss
as incurred.
TIDAL LAGOON (SWANSEA BAY) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
1
Accounting policies
(Continued)
- 16 -
1.9
Provisions are recognised when the
company
has a legal or constructive present obligation as a result of a past event, it is probable that the
company
will be required to settle that 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 reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i
s
measured at present value
,
the unwinding of the discount is recognised as a finance cost in
profit
or
loss
in the period
in which
it arises.
2
Judgements and key sources of estimation uncertainty
The directors make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below:
Fair value of the 2018 Loan Note liability
The fair value of the loan notes requires an assessment as to the level of certainty of the outcome of a number of contingent events and the impact on potential lender returns.
3
Auditor's remuneration
2021
2020
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
3,000
5,500
For other services
All other non-audit services
2,500
2,000
4
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Directors
4
4
Certain directors and key management personnel received their emoluments from the related companies Shire Oak Energy Limited and Tidal Lagoon Power Limited
.
Certain directors have bonus arrangements that crystallise on financial close
of the Project
. These have been included within contingent liabilities
as at the balance sheet date. Note 14 refers
.
TIDAL LAGOON (SWANSEA BAY) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
- 17 -
5
Interest payable and similar expenses
2021
2020
£
£
Other finance costs:
Finance costs for financial instruments measured at fair value through profit or loss
3,352,373
5,028,560
6
Taxation
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2021
2020
£
£
Loss before taxation
(3,355,167)
(5,103,415)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
(637,482)
(969,649)
Tax effect of expenses that are not deductible in determining taxable profit
256,950
385,000
Unutilised tax losses carried forward
380,532
584,649
Taxation charge for the year
-
-
Taxable losses in the order of £3
5
,000,000 have been incurred and are available for use
against
future taxable profits (
2020
: £3
3
,000,000). A deferred tax asset has not been
recognised as the
company
does not anticipate taxable profits to arise within the
immediate future.
Change of corporation tax rate
An increase in the main rate of Corporation Tax to 25% is due to take effect from 1 April 2023.
7
Debtors
2021
2020
Amounts falling due within one year:
£
£
Other debtors
3,756
5,873
All debtor balances held by the
company
are pledged as security for the protection of an
option granted to a related third party by way of a fixed and floating charge
. Note 16 refers
.
All debtor balances held by the
company
are pledged as security for the 2018 Loan Notes
issued by way of a floating charge.
TIDAL LAGOON (SWANSEA BAY) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
- 18 -
8
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Other borrowings
9
34,096,889
30,744,516
Trade creditors
8,060
7,871
Accruals and deferred income
4,250
46,740
34,109,199
30,799,127
9
Other borrowings
2021
2020
£
£
2018 Loan Notes
34,096,889
30,744,516
Payable within one year
34,096,889
30,744,516
The 2018 Loan Notes are secured against a floating charge against all assets of the company.
As at 30 June 2021, the 2018 Loan Notes were redeemable on the earlier of financial close or at the option of at least 60% of the Note Holders. These have been fair valued through the loss for the year at their subscription price plus accrued interest at 20%.
The contractual return on the 2018 Loan Notes is contingent on a number of events at financial close, including the lenders subscribing for construction equity at that point. The maximum amount that might be paid out on financial close were all contingent events satisfied is £50,286,000 (2020: £50,286,000).
10
Financial instruments
2021
2020
£
£
Carrying amount of financial liabilities
Measured at fair value through profit or loss
- Other financial liabilities
34,096,889
30,744,516
Details of other
financial liabilities
held at fair value through the profit and loss are disclosed in note
9
to the financial statements.
TIDAL LAGOON (SWANSEA BAY) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
- 19 -
11
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £5 each
28,220
28,220
141,100
141,100
E Ordinary of £5 each
1,000
1,000
5,000
5,000
29,220
29,220
146,100
146,100
Neither the Ordinary shares and E Ordinary shares are redeemable and both entitle the
holders: a) to receive notice of, attend and vote at general meetings of the company and
on a poll to one vote for each ordinary share held; b) to receive rateably in accordance
with the number of shares held by them, any profits available for distribution and resolved
to be distributed by the
company
; and c) on a return of capital, to receive in accordance
with the number of shares held, any amounts payable to shareholder on a liquidation or
reduction of capital.
12
Share premium account
2021
2020
£
£
At the beginning and end of the year
16,262,397
16,262,397
The share premium reserve contains the premium arising on the issue of equity shares,
net of issue expenses.
13
Profit and loss reserves
2021
2020
£
£
At the beginning of the year
(47,114,143)
(42,010,728)
Loss for the year
(3,355,167)
(5,103,415)
At the end of the year
(50,469,310)
(47,114,143)
Retained earnings includes all current and prior period retained profits and losses.
14
Contingent liabilities
The
company
has agreed a contingent fee basis with certain suppliers that is dependent
on the outcome of future events. At the balance sheet date, the maximum liability of the
company
to these suppliers amounted to £
3
,
911
,000 (
2020
: £4,
437
,000).
Details of contingent liabilities relating to outstanding
2018 Loan Notes
are set out in note
9
.
15
Capital commitments
The
company
had no capital commitments at the balance sheet date (
2020
: £
N
il).
TIDAL LAGOON (SWANSEA BAY) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
- 20 -
16
Related party transactions
Tidal Lagoon Power Limited (“TLP
L
”)
The
company
directors, M C Shorrock and P J Carter
,
are members of the Board of TLP
L
and ultimate control of
TLPL
also resides with M C Shorrock.
TLP
L
provides development resource and management services to the
company
under a
services agreement.
At the
year
end, amounts were held on the balance sheet as owing by the
company
to
TLP
L
as follows:
30 Jun
e 2021 - Trade creditors - (£675)
30 Jun
e 2020 - Trade creditors - (£675)
Tidal Lagoon Plc (“TLP
"
)
The
company
directors, M C Shorrock and P J Carter
,
are members of the Board of TLP
a
nd ultimate control of
TLP
also resides with M C Shorrock.
At the period end, amounts were held on the balance sheet as owing by the
company
to
TL
P
as follows:
30 Jun
e 2021 -
2018 Loan Notes
- (£7,985,923)
30 Jun
e 2020 -
2018 Loan Notes
- (£7,192,003)
Included in the profit and loss account in the year is accrued interest, charged at a rate of
20% per annum, in respect of this loan amounting to £
793
,
920
(20
20
: £
1,190
,
880
).
TLP has provided a guarantee amounting to £3,860,000 plus accrued interest over
certain 2018 Loan Notes issued
.
Note 14 refers
.
At the balance sheet date
,
the
company
also had a contingent liability due to TLP of
£7
67
,000 (
2020
: £
705
,000).
Good Energy Limited (“GE”) and Good Energy Tidal Limited (“GET”)
The
ex-spouse of the
director, M C Shorrock
,
is a director of GE and
GET. In 2014, the
company
entered into a power
-
purchase agreement with GE and GET,
providing an option to purchase 10% of the future power output from the Project on arm’s
length commercial terms.
At the same time
,
a fixed and floating charge over the assets of the
company
was granted
to GE for the purposes of protecting that option.
17
Cash absorbed by operations
2021
2020
£
£
Loss for the year after tax
(3,355,167)
(5,103,415)
Adjustments for:
Finance costs
3,352,373
5,028,560
Investment income
(144)
(698)
Movements in working capital:
Decrease in debtors
2,117
59,185
Decrease in creditors
(42,301)
(12,919)
Cash absorbed by operations
(43,122)
(29,287)
TIDAL LAGOON (SWANSEA BAY) PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2021
- 21 -
18
Analysis of changes in net debt
1 July 2020
Cash flows
Other non-cash changes
30 June 2021
£
£
£
£
Cash at bank and in hand
87,608
(42,978)
-
44,630
Borrowings excluding overdrafts
(30,744,516)
-
(3,352,373)
(34,096,889)
(30,656,908)
(42,978)
(3,352,373)
(34,052,259)
19
Shareholder Information
Registrars
Enquiries relating to matters such as loss of a share certificate, dividend payments or
notification of a change of address should be directed to SLC Registrars who are the
company's
registrars at Highdown House
,
Yeoman Way
,
Worthing
,
West Sussex
,
BN99 3HH. Telephone: 01903 706150.
Investor Relations
Periodic project updates are provided to existing investors.
You can view your shareholding in Tidal Lagoon (Swansea Bay) Plc through Shareview, the
online shareholder portal provided by our Share Registrar, Equiniti David Venus Limited,
trading as SLC Registrars. Visit the Equiniti Shareview website (shareview.co.uk) and access the
Registration page by using the link at top-centre of the page. Once registered, you will be able
to view and confirm your holding in Tidal Lagoon (Swansea Bay) Plc and holdings in any other
companies for which Equiniti are Registrar.
Further information
Further information and news for Swansea Bay tidal lagoon can be found at
www.
tidallagoonpower.com
2021-06-30
2020-07-01
false
CCH Software
CCH Accounts Production 2022.100
Mr M C Shorrock
Mr A Matthews
Mr J E Hall-Smith
Mr James Hall-Smith
Mr P J Carter
08141301
2020-07-01
2021-06-30
08141301
bus:Director1
2020-07-01
2021-06-30
08141301
bus:Director2
2020-07-01
2021-06-30
08141301
bus:CompanySecretaryDirector1
2020-07-01
2021-06-30
08141301
bus:Director3
2020-07-01
2021-06-30
08141301
bus:CompanySecretary1
2020-07-01
2021-06-30
08141301
bus:Director4
2020-07-01
2021-06-30
08141301
bus:RegisteredOffice
2020-07-01
2021-06-30
08141301
2021-06-30
08141301
2019-01-01
2020-06-30
08141301
core:RetainedEarningsAccumulatedLosses
2019-01-01
2020-06-30
08141301
core:RetainedEarningsAccumulatedLosses
2020-07-01
2021-06-30
08141301
2020-06-30
08141301
core:CurrentFinancialInstruments
core:WithinOneYear
2021-06-30
08141301
core:CurrentFinancialInstruments
core:WithinOneYear
2020-06-30
08141301
core:CurrentFinancialInstruments
2021-06-30
08141301
core:CurrentFinancialInstruments
2020-06-30
08141301
core:ShareCapital
2021-06-30
08141301
core:ShareCapital
2020-06-30
08141301
core:SharePremium
2021-06-30
08141301
core:SharePremium
2020-06-30
08141301
core:RetainedEarningsAccumulatedLosses
2021-06-30
08141301
core:RetainedEarningsAccumulatedLosses
2020-06-30
08141301
core:ShareCapital
2018-12-31
08141301
core:SharePremium
2018-12-31
08141301
core:RetainedEarningsAccumulatedLosses
2018-12-31
08141301
2018-12-31
08141301
core:ShareCapitalOrdinaryShares
2021-06-30
08141301
core:ShareCapitalOrdinaryShares
2020-06-30
08141301
core:RetainedEarningsAccumulatedLosses
2020-06-30
08141301
2020-06-30
08141301
core:UKTax
2020-07-01
2021-06-30
08141301
core:UKTax
2019-01-01
2020-06-30
08141301
bus:PrivateLimitedCompanyLtd
2020-07-01
2021-06-30
08141301
bus:FRS102
2020-07-01
2021-06-30
08141301
bus:Audited
2020-07-01
2021-06-30
08141301
bus:FullAccounts
2020-07-01
2021-06-30
xbrli:pure
xbrli:shares
iso4217:GBP