A leading Scottish wave energy firm has moved to play down fears over its long-term viability after annual pre-tax losses spiralled to more than £35 million.
Accounts filed by Edinburgh-headquartered Aquamarine Power yesterday raised concerns the group was on the brink financially after the company’s directors stated they were likely to have to raise more cash early next year.
In April, Aquamarine raised £1.35m through the sale of tax losses a further £350,000 receipt is due in September while a further £5m was raised in May through the issue of convertible loan notes to existing shareholders.
The directors said those two developments gave the company “adequate funding” in the short term.
However, they also said there was “no certainty” that Aquamarine could raise the additional cash they identified as being required to stay afloat past next spring.
The accounts state: “The directors have prepared projections of cash flows for an extended period which reflect increased uncertainty surrounding the wave industry due to factors including EMR (electricity market reform), delays to island grid connections and award of capital grants to tidal rather than wave projects.”
The company is one of the UK’s best- known wave energy developers and its full-scale Oyster 800 device, which was built by Fife-based BiFab, has been on test at the European Marine Energy Centre in Orkney over the past year.
It is currently progressing development of the next generation Oyster 801 machine.
In May, subsidiary company Lewis Wave Power was given the go-ahead for a 40MW wave array in waters off the Hebridean island the largest consented development of its kind in the world.
Aquamarine’s accounts show a total pre-tax loss of £35.08m for the year to March 31, compared with a £6.26m loss in the year previous.
Administrative expenses for the year were flat but the 2013 accounts also show an exceptional item of £28.41m.
Chief executive Martin McAdam said: “As a business we took a prudent approach to valuing the company’s assets this year, based primarily on a number of market uncertainties prevailing at the time the accounts were filed.
“These uncertainties were around the strike price for wave energy under the UK Government’s electricity market reform programme, the absence of capital grants for wave energy projects, and no sight of an enduring solution to the current high transmission charges for energy projects located on Scottish islands.
“It is also fair to say that our progress towards having a commercial technology has been slower than anticipated. This means that revenues from future sales are further into the future.
“That, combined with the market uncertainty, has meant that we wrote down the value of the company’s assets.
“Since the accounts have been filed the UK Government has announced a positive strike price for wave energy and the intent to provide a solution to Scottish islands transmission charges, and the Scottish Government has announced the £18 million Marine Renewables Commercialisation Fund will be dedicated principally to wave energy projects.
“We have also seen a huge step forward in the performance of Oyster 800 and we have enjoyed considerable technical success over the past few months.
“We have a refurbishment and redesign programme under way at the moment which has the full support of our investors,” he added.
“These measures have reduced significantly the risk to the wave energy sector and our company, and give greater certainty to our investors who continue to maintain strong support for our business plan.”