Simec Atlantis Energy Share Discussion Threads

[robertspc1] 11/11/2024 08:49

Further to earlier post, I think Meygen has been a poison pill for investors in SAE, and once it has been recapitalised by new investors, SAEs development pipeline will attract the attention of strategic investors. First step would be someone Eg Octopus or Quinbrook buying the SIMEC 30 per cent stake.

[robertspc1] 11/11/2024 08:37

For me the main value in SAE remains the Uskmouth site. Obviously lots of BESS potential and thankfully that market is improving, see GRID statement today. Meygen has debt it can't service and is still risky immature technology. SAE don't have the funds to invest in it and it needs GBE or others to recapitalise it with SAE becoming a minority shareholder. That has to happen to soon as debt repayments due end Nov.

[wheeze] 11/11/2024 07:51

htTps://www.current-news.co.uk/proteus-power-conversion-and-skf-marine-partner-to-supply-tidal-turbine-generation-systems/

[wheeze] 11/11/2024 07:50

The term free energy was used loosely, as going forward, using the new turbines which generate 3mwh, maintenance is projected to be very low. Last week SKF marine and GE Vernova sigbed a MOU with Proteus marine to develop MeyGen with an initial commitment to provide at least 59MW of tidal energy capacity. I believe a sum of 200 million was mentioned. A large investment indeed if tidal energy is such a non-profitable business don't you think?

[jaknife] 10/11/2024 21:35

wheeze,

The interims don’t give the same level of detail for MeyGen as the full-year numbers. The full paragraph that you refer to also refers to employee costs as if they might need to be added. But regardless:

A. From the accounts that I’ve highlighted MeyGen had significant costs that meant that it definitely ran at a material loss for both 2022 and 2023.

B. Accepting that your numbers for H1 2024 might be correct and no employment costs need to be added then MeyGen cost £1.5m to run in H1.

And so it must follow that it is incorrect to describe MeyGen as “its almost free energy”.

At best, if your comment on costs is correct, then MeyGen ran on a c. 21.1% gross profit margin for H1, which is definitely not “free”!

JakNife

[wheeze] 10/11/2024 20:38

You maybe reading a different set of accounts JakNife, the last set of interim results clearly states Revenue generated from the sale of electricity from the MeyGen Phase 1 tidal array remained steady at £1.9million. Costs associated with running the MeyGen array halved to £1.5million in the latest six month period following completion of turbine repairs in the first half of 2023. The newer turbines are expected to be bigger, generate more electricity and will be more reliable. The four turbines in the water are effectively prototypes which have exceeded expectations. It is misleading to attribute costs of developing BESS projects with the cost of running MeyGen. https://saerenewables.com/wp-content/uploads/2024/10/24-06-SAE-interim-report-FY2024_240920_CL-3.pdf

[jaknife] 10/11/2024 19:57

wheeze,

”What many folk don't realise is that once the turbines are in the water, its almost free energy for around 25 years. Do you wonder why some investors would rsther kill it off ?”

I fear that you’ve not properly understood the MeyGen accounts:



In 2023 they generated £4.5m worth of electricity at a cost of £8.5m!!

Far from being “free” the electricity cost 90% more to produce than it was sold for!!!!!

JakNife

[wheeze] 10/11/2024 13:51

I wish I were a young investor with the knowledge gained from past mistakes. Have had a few of those big winners but none where I bet the house ! I tend to invest in companies I believe in - to me Simec had the perfect solution- twice daily predictable energy generation, turbines out of sight unlike wind energy and solar. I first bought in around 80p if I remember right , not a big stake but not money I would want to lose - have averaged down to around 2.5p. Accept it may go bust but no gain to be had without some risk. What many folk don't realise is that once the turbines are in the water, its almost free energy for around 25 years. Do you wonder why some investors would rsther kill it off ?

[muckshifter] 10/11/2024 11:01

I hope you're right wheeze but would avoid betting your shirt on it if I were you, unless of course you are a very young investor who has plenty of time to recover from mistakes. To put that in context, as a young man my first stockmarket purchase was a company predicted by all to be about to go bang, which I bought in spite of the stockbroker I was dealing with also saying he was convinced it would not survive. My purchase price was 7p/share and I sold the last of my shares about ten years later for £2.60/share, iirc.

[wheeze] 10/11/2024 10:05

An excellent synopsis muckshifter, which illustrates why engineering is all but dead in this once great country. Against all the odds MeyGen has delivered most of the Tidal stream energy generated over the past decade. Hopefully with the help of GBE, Proteus and their backing investors, the vision they had, may someday become a reality.

[muckshifter] 10/11/2024 08:55

Three of the four turbines in phase 1 of Meygen were Andritz turbines. They have been in the turbine business for decades, I believe, so it was not really surprising that the only AR1500 installed in that phase was more or less a prototype and needed repairs and maintenance quite a few times since start up.

In terms of the Uskmouth fiasco, I believe, from fallible memory, that the "deal" with Simec occurred just after Meygen was declared fully operational, having cost far more than the budget, and after it became clear that UK Gov were not prepared to provide serious support. So I viewed it at the time as a desperate measure (the information provided about how "clean" the Uskmouth scheme generation would be was clearly misleading imo) which allowed the new SAE to refinance to the tune of something like £30 million in a matter of months. They also, iirc, had some sort of a heads of agreement with a fund manager to sell part participation in the Uskmouth project for another £30 odd million at that time, but it was, imo anyway, a totally flawed scheme where they were "hiding" reality. But of course that agreement and a few others were "smoke and mirrors" imo, as was the bs about carbon capture if you remember that one, and underlying the "deception" was the desperate need for cash as it was very clear to me that even on an operational cost basis Meygen could not make any profit during the first few years.

To me, the real problem for the original Atlantis Resources was always their domicile in the UK. The UK had lots of good prospects in terms of areas good for tidal generation but a lousy financial system where no one would come up with a big sum of money sufficient to get tidal up and running successfully, so ARS /SAE had to keep coming up with S&M to keep going and never had enough to really make a breakthrough in tidal - hence the vulnerability to Simec's pitch.

[wheeze] 10/11/2024 07:10

Cheers muckshifter - I didn't realise Andritz made turbines for MeyGen.

[muckshifter] 09/11/2024 16:23

Sorry wheeze, but it was in fact Andritz turbine no3 which was in continual operation - it didn't take me many minutes to check that, and I don't really completely blame Gupta for the original fiasco at Uskmouth, he sold the idea to a board desperate to find something in the absence of government support for Meygen.

[wheeze] 09/11/2024 11:20

Should've mentioned the company us currently priced to fail. If it survives the share price should recover as I believe there may still be significant short activity- hard to prove I know

[wheeze] 09/11/2024 11:17

I respect JakNife's opinion, don't get me wrong, however I think Tidal energy is a viable source of green energy. It has unmatched predictability and the new turbines are expected to last 25 years. JakNife is looking at Simec from a profit and loss perspective- difficult to argue with when they are carrying so much debt. This is where governments need to step in to get big projects like this off the ground. The plastic pellet fiasco caused a lot of harm to a company which was originally an engineering outfit. I blame Gupta.

[dave4545] 09/11/2024 11:05

Worrying thing for me is I have never known jacknife to be wrong. I'm sure some stocks have spiked before he's been negative on but overall he tends to be on the money and I hold Sae so not sure what to do here.

I thought with the battery generating nearly £10 mil ebitda if tidal can eventually do the same it could flip from a heavily loss making to profitable cash generating beast or is that miles out ?

[wheeze] 09/11/2024 10:46

Watch this muckshifter - I have heightened respect for the team having watched itFraser mentions the 'six year bit' 12:45 in but there is a lot more I find interesting. Gor example they can retrieve and replace a turbine in fast moving water in inder twenty minutes- an engineering feat in itselfhttps://vimeo.com/1026524224

[muckshifter] 09/11/2024 10:01

Are you sure about that wheeze? I watched the ins and outs over the years and was fairly sure that the turbine which lasted far better than the rest was the Andritz one.

[wheeze] 08/11/2024 23:42

Should've mentioned that one of the Simec turbines which was one of the original prototypes, has been down there under the sea for six years, generating electricity. It has never been retrieved. A pretty spectacular achievement, really.

[wheeze] 08/11/2024 14:27

Sadly JakNife, history is littered with great engineering projects which have gone way over budget - Eurotunnel just one example. The ability of HS2 to swallow money is simply staggering - it may not turn a profit for another fifty years, nevertheless we invest for the future. Investing in such projects should be long term and in my opinion short selling should not be allowed in such projects until such time they have matured. How do you value what is effectively a startup?Anyhow the point I was trying to make in my previous post, was that it does not take hedge fund cash to drop the share price of Simec . As an individual investor, I can sell enough shares to drop it by 5-10% - ridiculous, I know but this is the crazy Aim market that operates.

[jaknife] 08/11/2024 13:47

Wheeze,

Thank you for the considered response.

Your post 3,484 talked about share price manipulation as the reason for the downward movement in the share price. What I was really trying to do with my response is highlight that there are very good reasons for the decline in Simec’s share price.

In post 3,486 you talk about the MeyGen project being “visionary” but you fail to note any comments on the financials: the key points being that it has incinerated monumental amounts of capital and never made a profit! Take a peak at the accounts for MeyGen Holdings Ltd:



* Running at a material loss – a negative gross profit margin of minus 88.9% in 2023!
* Massive debts
* negative tangible net equity

None of this makes for a good investment. All such companies will eventually become bust and hence the share price of all such companies eventually will tend to zero!

The point of investing in shares is to make money, if the underlying business always makes losses then it’s unlikely that the value of the business, and hence the value of the shares, will go up.

JakNife

[muckshifter] 08/11/2024 08:35

Strangely enough I find myself agreeing with much of what both Wheeze and JakNife wrote in the two posts above. I originally invested in Atlantis years ago and sold at a reasonable profit when it became apparent to me that the short sighted UK government would not support the tidal venture, which needed a bit of faith to bring it to maturity, and could have ended up as a world leading business. Not long after that, imo, a somewhat desperate Atlantis board ended up giving half the company away for what to me was, right from the start, a very dubious plan for the burning of plastics and paper in an old coal fired power station. Needless to say I didn't buy into that.

The result has been financial disaster as highlighted by JakNife, and lots of what looks like smoke and mirrors. I very much hope that the company somehow manages to survive and eventually prosper with a few successful tidal arrays and at least some profit from Uskmouth, which is after all a finite resource that they are attempting to turn from an albatross into a success, but it has to survive for a long time to get there, imo, and that doesn't look an easy task.

[thiopia] 08/11/2024 08:06

Think either the divorce or him going bald has hit him hard. Usually one of those things which sends these middle-aged/old men over the edge.

[wheeze] 08/11/2024 08:00

Many valid points there JakNife, buried within a lot that is not so valid.Before I proceed, I should declare I am a long term holder with a significant stake in the company. I do not plan to sell my holding anytime soon. A while ago, I asked you what your interest in Simec was and you admitted you were short. I appreciate your candour in this regard.I have been invested in Simec Atlantis way before Simec and Gupta came on the scene. imho this was the worst turn of events for Atlantic energy shareholders. The whole plastic pellets fiasco cost us dearly as it was shot down in the planning stage.I believe the MeyGen project was visionary. It was way ahead of its time when first proposed. You do not build an engineering behemoth like that without spending money - I would think 200 million would be entirely reasonable given the significant challenges from the harsh environment they face off the north coast of Scotland. The technology has proved itself and as with all technologies in their infancy, has been expensive. Wind and solar have only come down in price due to economies of scale.MeyGen has to date generated most of the tidal energy generated on this planet. Their turbines keep turning, twice a day, every day, with predictable output unlike other forms of green energy. I believe the planet needs all the sources of green energy we can get to wean ourselves off fossil fuels.You make a lot of comments about director's remuneration. I for one do not expect them to work for free. They effected a masterstroke in separating off the engineering team as Proteus. Proteus has done well securing industry investment and now Crowdcube funding. Simec still have a 10% stake in Proteus.This is getting long so I will wind up. Simec is not dead in the water as you would have hoped. Those of us who averaged down heavily are sitting on a goldmine if the company is turned around. If you are still short, I only have one remaining question. Do you feel lucky ?Best wishesWheeze

[jaknife] 07/11/2024 19:51

wheeze,

"There is mischief afoot."

The real "mischief" is that Simec's directors have conned you into thinking that it's a half decent business when the reality is that Simec is a total and utter pile of poo!

Open your eyes and look at the results:

Year net profit2018 loss of £22.6m2019 loss of £34.9m2020 loss of £19.1m2021 loss of £67.6m2022 loss of £90.7m2023 profit of £25.4m



And then you find out that in 2023 they included in the P&L a "fair value adjustment for land/property" of £28.2m and a further property revaluation of £23.1m. Both of these were non-cash adjustments and, without them, the real profit was a loss of £25.9m!

If you don't like this then look at the cash burn

2018 - £20m placing at 35p a share in May
2019 - £5m placing at 16p a share in March
2020 - £6.5m placing at 12p a share in August
2021 - £2.6m placing at 2.6p a share in September

On top of that they've also raised c. £14m in bonds from retail investors that they've then had to renegotiate as they didn't/couldn't repay them when they had promised to do so.

All of this cash has disappeared! Some has gone on pointless vanity projects that have failed to generate sensible returns. A good chunk has gone on rewards for failure for the directors.

And notice the pattern of the ever decreasing share price on the placings?

Simec is, quite simply, a dreadful business. Its core business of generating electricity from tidal power is horribly loss-making and the business is burdened with significant debt. The directors overpay themselves whilst delivering losses for shareholders and dressing up the accounts with dubious accounting.

It only continues to survive because it's tapped shareholders on a regular basis for more cash and it's borrowed large amounts of cash from unsophisticated retail investors. Those bonds now carry coupons of between 10% to as high as 13% and have had their scheduled maturity date pushed back to the end of 2029. But how will they ever be repaid if Simec simply pretends to make profits when it really makes losses and burns cash?

There's the possibility of another battery storage project though and that would keep the wolves from the door a little longer, as well as keeping the directors richly rewarded. But once the regular bills are paid will there be enough to repay the bonds? And, if the bonds can't be repaid, then why should shareholders expect anything?

JakNife