SIMEC Atlantis Energy : Annual report 2023

ANNUAL 2023

REPORT

SAE: We develop, build and operate sustainable energy projects, focussed on finding ways to deliver and unlock opportunities that others can't.

We are SAE, a developer, owner and operator of sustainable energy projects. Our business is aligned with the UK's binding Net Zero targets to ensure we are working in harmony with the UK government's national objectives.

We are passionate about what we do and use that passion to drive forward our business, delivering for our shareholders, stakeholders and communities. Our long-term success will be underpinned by the revenue generated from operating our sustainable energy projects, ensuring a profitable and sustainable business.

Our Vision	Our Values
To develop, own and operate	Today - We are an innovative and
sustainable energy projects for the	dedicated team.
benefit of our shareholders and
our planet.	Tomorrow - Through collaboration
Our Mission	and teamwork we will achieve our
vision.
To collaborate and innovate to	Always - We always value the safety
reduce costs and successfully deliver	of each other, our communities and
our projects.	the environment.

Contents

STRATEGIC REPORT	CORPORATE GOVERNANCE
1	Highlights	18	Directors' Report
3	SAE Strategy	19	The Board of Directors
5	Reasons to Invest	21	Board Operation
7	Chairman Statement	23	Audit Committee Report
9	CEO Statement	26	Group Governance
13	CFO Statement	27	Directors' Remuneration Report
		30	Directors' Responsibility
			Statement
		31	Independent Auditor's Report

FINANCIAL STATEMENTS

1. Consolidated Statement of Comprehensive Income
2. Statements of Financial Position
3. Statements of Changes in Equity

1. Consolidated Statement of Cash Flows
2. Notes to the Financial Statements IBC Company Information

1

HIGHLIGHTS

Financial

ProfitRevenue

£23.2m* +292%

(2022: £-11.1m)	£15.3m (2022: £3.9m)
2023	23.2		2023	15.3
2022	-11.1					2022	3.9
								2021
2021	-71.6				7.5
Net assets	EBITDA
+678%			£8.3m
£44.2m (2022: £5.7m)	(2022: £-5.8m)
2023	44.2		2023	8.3
2022	5.7							2022			-5.8
2021	16.7						2021		-6.8
Group debt (excluding MeyGen debt)	Operating costs
-30%					-29%
£13.7m (2022: £19.7m)	£5.0m (2022: £7m)
2023	13.7				2023	5.0
2022	19.7		2022	7.0
2021				2021
15.5			14.9

*Includes a net upwards revaluation adjustment of £22.6m. See note 11.

"2023 has seen the business establish a solid foundation for growth …a more focussed, lower risk business delivering predictable performance."

Graham Reid

CEO

Operational

Uskmouth Battery Energy System Storage (BESS) projects

• Final payment received on 230MW/460MWh BESS, now under construction by Uskmouth Energy Storage Ltd.
• Signed conditional land sales agreement with Electric Land for £9.9 million for the 230MW BESS. Milestone income to be received during 2024.
• Achieved planning for a new 120MW/240MWh BESS which repurposes the site of the stations cooling towers.
• Commenced development of an additional 600MW/1,200MWh of BESS at the site.

Mey BESS project

• Agreed option to lease land.
• Modified MeyGen Grid connection to increase capacity to 287MW with full import and export rights.

MeyGen

• Secured 22MW in AR5 auction at £198/MWh.
• During 2023 MeyGen generated 93% of all UK tidal energy.
• The array has generated 64 GWh of predictable tidal energy.
• Successful maintenance, repair and reinstallation of Turbine 2 including retrofit of an advanced wet mate connection system.

GWh generated

11.9GWh (2022: 8.7GWh)

2023

11.9

20228.7

2021 4.6

3

SAE

STRATEGY

Building a sustainable future to 2035

SAE has a clear strategy for success that will see it unlock value in the business and deliver returns for our shareholders.

It's a path to deliver a pipeline of projects that will achieve our goal of being a leading sustainable project developer, owner and operator, ensuring long-term value for our shareholders.

Our strategy directly supports UK government policy to improve energy security and achieve Net Zero by 2050.

Develop, own and operate a 207MW/414MWh battery storage project at Mey in Caithness.

SAE has gained significant experience of BESS development projects at its Uskmouth site. It also knows the local area of Caithness exceptionally well having been involved there for nearly 20 years. With the large number of new wind projects in North Scotland there is demand for BESS to help manage the grid. SAE's strategy is to use its experience to meet the demand.

SAE has the foundations and strategy to deliver.

To achieve its goals SAE's strategy will be focused on:

Develop, own and operate 900MW/1,800MWh of 2-hour duration battery storage projects

SAE's strategy is to remain focussed on maximising all the potential at the Uskmouth and Mey sites. In delivering this target SAE will become a leading Independent Power Producer in the UK and will benefit from the long-term sustainable revenue streams these assets will provide.

Financially close 80MW of tidal capacity at MeyGen

SAE already has the experience, 50MW of revenue support from the CfD scheme and the project partners to deliver,

and our strategy is to work closely and collaboratively alongside the Scottish Government to ensure we hit this milestone.

Develop, own and operate the remainder of the MeyGen tidal site up to 398MW

SAE will continue to engage with the UK Government and use its broad support base to continue to make the case for tidal stream at scale. SAE will also continue to ensure that MeyGen is at the forefront of the technology's deployment. SAE will continue to be the world's largest tidal stream IPP and benefit from the long term sustainable and predictable revenue streams this asset will provide.

4

Deliver 600MW/1,200MWh of sustainable BESS projects at Uskmouth

The Uskmouth site is arguably one of the best locations for large scale BESS in the country. SAE is the owner and operator of the site and plans to use this unique position to maximise the site potential.

To

2030

Double our BESS projects capacity from 1,800MWh to 3,600MWh

In designing our BESS schemes SAE has sought to secure development and land rights to enable all our BESS projects to be easily augmented from 2-hour to 4-hour duration doubling the energy capacity of our assets from 1,800MWh to 3,600MWh. As intermittent renewable energy penetration increases, and fossil fuel generation reduces we expect an increase in demand for longer duration storage systems. SAE will be well placed to rapidly serve this increased demand through expansion of our BESS assets.

To

2035

5

Reasons to

INVEST

01

Fantastic opportunity to invest in one of the largest, single location BESS portfolios in the UK, the Uskmouth Sustainable Energy Park

The single location advantages are:

• Wholly owned site de- risks the development as SAE has no reliance on agreements with third party landownwers.
• Access to existing grid infrastructure lowers the cost and time to connect.
• Owner of a rail connection, meaning lower transport costs and a more sustainable means of importing materials and plant for construction.
• Brownfield industrial permitted generation site favorable for BESS from a planning perspective.
• SAE retain land and design the projects for expansion in future from 2-hour duration to 4 hours.
• O&M team at Uskmouth have extensive historical knowledge of the site and local supply chain.

02

SAE is already growing its portfolio and applying its experience to another BESS site near to Mey in Caithness.

• Additional 207MW/414MWh BESS project under planning at our site in Scotland.
• 287MW grid capacity secured with full import and export rights. Capacity will be shared between the BESS project and our tidal project.
  This grid connection was secured by SAE in 2009 as part of the early stages of MeyGen's project development and is a fully consented "ready to build" connection with a favourable grid connection date.
• The SAE operations team in Scotland have extensive local knowledge and are an established developer and O&M operator
  in the area following our development and operation of the MeyGen project.
• Mey BESS is strategically located in a region of high renewable generation and can help National Grid to bring these renewables onto the grid sooner.

03

SAE has diversified revenue streams

• BESS projects will deliver long term revenue streams through both operation of the assets and land income where SAE own the land at Uskmouth.
• The new tidal projects will deliver long term predictable revenue streams supported by a predictable resource and Contract for Difference (CfD) revenue support.
• We aim to become an Independent Power Producer (IPP) for over 900MW/1,800MWh of storage capacity and 398MW of tidal generation capacity, thereby securing long- term predictable revenue streams for the business.
• The Group will seek to double the capacity of our BESS sites from 1,800MWh to 3,600MWh between 2030 - 2035.

6

SAE presents an exciting opportunity to invest in one of the leading BESS and renewable energy developers in the UK. SAE has everything needed for rapid delivery of projects and a team with a record of success.

04

Experienced and invested team

• An Executive and management team with a strong record of stabilising the Group and growing this business.
• Invested and strategic Board focused on ambitious growth.

05

SAE has developed a strong financial base from which to deliver its strategy and achieve its goals.

• Strong focus on profitable business performance and solid investment return.
• Relentless focus on disciplined cash management and positive cashflows.
• Exceptional origination, development, planning, construction and operations and maintenance expertise.

06

Strong alignment with macro-economic and regulatory drivers

• UK BESS requirement in excess of 50GW by 2050 to provide grid services as renewable generation comes on line.
• Capitalize on energy security concerns and supports large scale expansion of offshore wind in the region.
• Accelerated route to market for BESS projects with National Grid connection reform.

Uskmouth Sustainable Energy Park is a prime site for BESS expansion

• Uskmouth Sustainable Energy Park currently hosts a 230MW/460MWh BESS under construction with expansion potential to 350MW/700MWh, and a new 120MW/240MWh BESS under development which has now received planning permission. When fully built out the site has sufficient land and
  grid to host a total of 3,600MWh of storage projects.

SAE is the world's leader in tidal operations and development

• With the opportunity for significant expansion SAE remains at the forefront of the deployment of this new technology.
• While the revenue will deliver in the long term, SAE remains perfectly placed to benefit as the industry develops.

7

Chairman

STATEMENT

"We have a clear path to deliver a pipeline of projects that will achieve our goal of being a leading sustainable project developer, owner and operator, ensuring long-term value for our shareholders and playing a key role in delivering on net zero by 2050."

Duncan Black

Non-executive chairman

2023 Highlights:

The Board set very clear objectives for the business last year, and I'm pleased to report each of these were met or exceeded.

1. Restructure SAE's debt and put the business on a sustainable footing for growth.
2. Continue to deliver one of the largest Battery Energy Storage System (BESS) developments in the UK.
3. Secure more funding for SAE's MeyGen project through the Contracts for Difference (CfD) Application Round 5 (AR5) auction.

Strategy - Building a Sustainable Future to 2035

With the significant deployment of intermittent renewable energy generation, the electricity transmission grid needs a means to store and release the excess energy that is being generated as supply and demand fluctuates. The UK government has identified BESS as an essential energy infrastructure to ensure the delivery of net zero by 2050. There is currently a significant shortage of electricity transmission grid capacity in the UK, which is severely limiting the ability of new renewable energy projects and BESS projects to connect to the grid in a meaningful timescale. While Ofgem and National Grid are working to address these shortages, there is a large demand for BESS projects which can be delivered quickly located around existing transmission connections.

At our Uskmouth facility we have a significant amount of existing electricity grid connection capacity, and we have additional grid connection capacity coming on-line from 2026. This makes Uskmouth an ideal site for the development of BESS projects with a potential capacity of 1,200MWh capable of being deployed by 2030.

We also have the land and rail connection to ensure the most cost-effective and carbon-efficient delivery of materials with minimal local disruption. The benefit of having one major site is that our time and resources can be focused on one area for delivery. The SAE team has a long association with and knows the site, the community, local stakeholders, and planners very well. This knowledge has enabled the team to take our first BESS project at the Uskmouth site from concept to construction ready within a very short space of time.

SAE is developing several BESS projects at Uskmouth and in Scotland, with the goal of maintaining a significant equity ownership in these projects and delivering sustainable revenue for the future.

We continue to successfully operate the MeyGen 1 project and gain valuable long term operating experience and data. The award of 50MWs of CfDs for the MeyGen 2 project through AR4 and AR5 provides a path forward for the development of this exciting project in partnership with the Scottish government. Tidal power remains an important part of the future energy mix in providing a source of reliable, predictable renewable energy.