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Shorrock’s Pot Of Gold

July 9, 2018

By Paul Homewood

 

 

Don’t Cry For Me Argentina Swansea Bay

 

 

Mark Shorrock

 

Anybody who might be tempted to feel sorry for Mark Shorrock for losing pots of money now that the government has rejected his lagoon project might like to think again.

The Annual Accounts for Tidal Lagoon (Swansea Bay) plc have just been published.

 

image

https://beta.companieshouse.gov.uk/company/08141301/filing-history

 

 

But first, to backtrack. As the Accounts state, TLSB is a special purpose vehicle, set up to develop, finance, build and operate the lagoon at Swansea Bay, and nothing else:

image

 

Nearly all of the equity provided so far has come from Prudential and InfraRed Capital, who in return have the right to provide all of the construction equity:

image

 

So far, £16m has been raised in equity, which has already been wiped out by losses since the company was set up in 2012:

image

In other words, it is Prudential and InfraRed who have lost their shirts.

 

 

Shorrock’s lagoon business is run via a complex network of companies:

  • Tidal Lagoon plc (TLPLC)
  • Tidal Lagoon Power Ltd (TLP) – acquired by TLPLC in 2016
  • Shire Oak Energy Ltd (SOE)
  • Shorrock has ultimate control of all three companies, with SOE listed as the TLPLC’s “Controlling Party”

     

    TLSB’s accounts state that TLP supplies it with development resource and management services, for which it paid £2.4m last year.

    image

    Between 2012 and 2017, the Annual Accounts confirm that TLSB paid £13.3m to Shorrock’s company, TLP, for these services.

     

    In addition, TLPLC has lent money to TLSB at 20% interest, earning £1.2m in interest in the last two years alone.

    image

     

    The loans are secured against a floating charge against TLSB’s assets, although these don’t appear to be worth much at the moment.

    However, even if the loan goes bad, it seems that Shorrock will barely lose out. Although he has a controlling interest in TLPLC, it would appear that nearly all of the equity has been provided by outside investors, with InfraRed and SIMEC mentioned.

    This is the trick, as explained in the 2015 Accounts:

    image

    https://beta.companieshouse.gov.uk/company/09359280/filing-history

    The original 50,000 shares were purchased at £1 each. The owner of them appears to be Shire Oak Energy (SOE), who are of course listed as TLPLC’s ultimate parent company. SOE of course is controlled by Shorrock. SOE’s Accounts tally with this valuation:

     image

    Subsequently, those 50,000 shares were subdivided into 5,000,000 at 1p each. When outside investors came along, they paid £5,219,000 for 1,056,656 shares at £4.94 each.

    During 2016, a further 893,735 shares were issued for £5,934,000, ie £6.64 each.

    image

    https://beta.companieshouse.gov.uk/company/09359280/filing-history

    As at Dec 2016, (the most recently filed Accounts), SOE appear to own 5,000,000 shares, 77% of the total, but have only paid £50,000, 0.44% of the total equity.

    Shorrock receives most or all of his remuneration from SOE, who recharge some to TLPLC and TLP (who you may recall also recharge to TLSB:

    image

    image

    As a small private company, SOE is allowed to file abbreviated accounts, in particular not having to declare directors emoluments.

    But it is clear that SOE and Shorrock have done very nicely out of the tidal lagoon businesses, despite the huge losses racked up so far.

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    31 Comments
    1. Ian Magness permalink
      July 9, 2018 5:43 pm

      So, to be clear Paul, Shorrock’s company has taken over £13m out for a financial outlay of £50k and with no recourse?
      Given the political risks, how stupid were the other investors? I wonder what they are saying and doing now?

      • July 9, 2018 5:55 pm

        That’s about it.

        If the lagoon was built, he would make a nice handsome dividend (although the construction equity of £1.3bn would take the bulk). If it does not get built, he has made himself some nice fat “consultancy fees”, which dwarf that £50000.

      • July 9, 2018 7:51 pm

        Bit like the scam in the Mel Brooks film The Producers

    2. Emrys JOnes permalink
      July 9, 2018 5:46 pm

      Paul Shorrock is a ‘made man’ with the Taffia at the WAG. Expect him to re-emerge, lauded by the WAG as one of our visionary entrepreneurs whose world leading Swansea Bay project was crushed by the dead hand of the Tory government etc.

      • Coeur de Lion permalink
        July 9, 2018 6:17 pm

        Didn’t anyone do the sums before venturing capital? It’s not rocket science.

        • John Palmer permalink
          July 9, 2018 7:43 pm

          Ah, but if the wretched project did get off the ground they’d all have made shed-loads-a-money for decades from guess who.
          As far as the big investors are concerned you win some, you lose some. Just a numbers game -with the added value of some green virtue-signalling thrown in and a fat, long term profit stream when it comes good.

        • Emrys Jones permalink
          July 9, 2018 8:19 pm

          WAG politics are a strange phenomenon. Nothing that is said should ever be taken at face value, and whenever a politician talks emotionally about Wales, you can be sure that something grubby is being covered up.

          What I liked was the duelling of the A465. Do you realize that in the rush hour they queues of up to five cars on some of the roundabouts on that road! Something had to be done.

          What Wales actually needed was a motorway standard road up through the middle of the country, but that would have gone through Liberal constituencies. No good at all. Not good for Labour, ergo not good for Wales. The A465 on the the hand serves only Labour areas, so that was alright. Spend money on that.

      • Athelstan permalink
        July 9, 2018 6:17 pm

        “TAFFIA”

        Very good

        and so apt.

        • Emrys Jones permalink
          July 9, 2018 8:19 pm

          The old ones continue to be the best ones.

    3. Athelstan permalink
      July 9, 2018 6:18 pm

      “Nearly all of the equity provided so far has come from Prudential and InfraRed Capital”

      Are we to assume that, the above are on the hook to the tune of;

      “So far, £16m has been raised in equity, which has already been wiped out by losses since the company was set up in 2012”

      InfraRed Capital, have not got infrared sight have they, they’ve been done over, same with Prudential, it’ll all be written off and hidden away, ultimately costs passed on to……. you know who. Corporate malfeasance – you betcha, then again but who cares????? Coz it wuz green and that’s worth it – innit??

      Gob smacked, slippery sid, he saw them coming, I better hold my peace now.

      The thing is, every story everything about that bloke: smacks of ‘cowboy’.

    4. July 9, 2018 6:23 pm

      As my old Maths teacher used to say ( 65 years ago ).

      ” There are only two kinds of people, the fly men and the mugs”.

      My observation in a long life is that he was so right.

    5. Joe Public permalink
      July 9, 2018 7:45 pm

      Paging Christopher Booker:

      Paul’s written you another piece that can can help fulfil your quota of ‘green shenanigans’ articles to the Telegraph!

      • BLACK PEARL permalink
        July 9, 2018 11:33 pm

        +10 Get your mits on this one Chis 🙂

    6. gallopingcamel permalink
      July 9, 2018 8:37 pm

      Another wonderful example of the “Reverse Robin Hood” principle by which the poor are robbed to feed the rich.

      • BLACK PEARL permalink
        July 9, 2018 11:34 pm

        The whole Green Energy is based around this principle

    7. July 9, 2018 8:37 pm

      I seem to recall that there was all so something fishy going on between TL(SB) and Good Energy, run by Shorrock’s wife Juliet Davenport .

      • Garry Baker permalink
        July 9, 2018 9:40 pm

        Yes, I bet Mrs Shorrock aka Juliet Davenport CEO of Good Energy is squirming with conflicted interests. Talk about awkward. On one hand she is duty bound to put her shareholders interests first and do everything she can to claw back £500k worth of shareholder seed in her husbands business. On the other hand forcing her husbands company into administration might cause a chilly atmosphere at the dinner table.

    8. Ben Vorlich permalink
      July 9, 2018 9:06 pm

      Aot of this money would be supplied by venture capitalists. When I started work in the electronics industry core memory was just being replaced by, not very reliable, semiconductor memory. Many of the startups were backed by venture capitalisrs. At that time it was said you only needed to find one Intel, AMD or Microsoft to make you wealthy beyond the dreams of Croesus despite investing in 100 turkeys. I suppose it is the same with renewable energy power generation schemes.

      • Ian permalink
        July 9, 2018 9:59 pm

        Except that in this case you have a government hellbent on throwing taxpayers’ money at it. As said above, once they’e on the gravy train, it’s a doddle.

        Shouldn’t Welsh taxpayers be asking pointed questions instead of just believing the rubbish pushed out by their politicians? Where are the investigative journos in Wales? They don’t even have to put their coats on – all they have to do is read this and its brother blogs. Perhaps Paul has a Welsh cousin?

        • Garry Baker permalink
          July 9, 2018 10:14 pm

          It’s not just Wales that has been lacking in good old fashioned investigative journalism over this story. The Times & Telegraph have certainly gone shy. The guardian are like a rabbit in headlights on this issue. Perhaps the good journalists out there are embarrassed that they fell for the Piped Piper of Swansea Bay in the early days and fear the truth might upset there readers. Shame on them.

        • Graeme No.3 permalink
          July 9, 2018 10:18 pm

          Shorrock might not have built a tidal barrage but he has managed to build a rather large trough.

      • tom0mason permalink
        July 9, 2018 10:21 pm

        Indeed that was so.
        However some venture capital companies these days look like fronts to allow big banks to vacuum up government subsidy worldwide.

        • Athelstan permalink
          July 10, 2018 6:59 am

          spot on, right over the target.

      • Ben Vorlich permalink
        July 10, 2018 7:09 am

        To a venture capitalist the source of his wealth isn’t really a concern. Just that one investment makes him very wealthy. Granted taxpayers who have no real choice in the matter may feel differently and electricity consumers who pay through the nose in what is a cartel market may also feel differently. For the investor the end result is a healthy bank balance, whether it came from willing customers buying a product or unwilling taxpayers doesn’t matter when you’re on your super-yacht at Monte Carlo.

    9. tom0mason permalink
      July 9, 2018 10:41 pm

      An interesting…. from an old 2011 report —
      http://citywire.co.uk/wealth-manager/news/hsbcs-2-4bn-property-and-infrastructure-fund-arm-completes-mbo/a489572#
      “HSBC Holdings will retain a 19.9% stake in the business, which has been named InfraRed Capital Partners.”

      So who is the remarkable Werner von Guionneau CEO of this specialist infrastructure and real estate fund business? What is the rest of InfraRed and associated companies?

      Other investment of InfraRed in Australia —
      https://en.prnasia.com/releases/apac/vestas-receives-228-mw-order-in-australia-with-30-year-service-agreement-supporting-local-job-creation-in-victoria-214322.shtml

      Interesting company…

      • Garry Baker permalink
        July 9, 2018 10:45 pm

        Whoever they are, they fell hook, line and sinker for this one. Let’s hope they look after their other pension fu d investments with more care.

        • Garry Baker permalink
          July 10, 2018 8:47 am

          “fund”

    10. July 10, 2018 12:29 am

      Reblogged this on WeatherAction News and commented:
      Hmmm…

      How many others have followed this business model?

    11. dodgy geezer permalink
      July 10, 2018 4:09 am

      …In other words, it is Prudential and InfraRed who have lost their shirts….

      In other words, it is Prudential and InfraRed SHAREHOLDERS who have lost their shirts.

      There. Fixed that for you

    12. Bitter@twisted permalink
      July 10, 2018 7:22 am

      Shorrock sounds like a smaller version of Enron Musk.
      They would get on great.
      Maybe Shorrock should as Enron for a bung.

      • Bitter@twisted permalink
        July 10, 2018 7:23 am

        “Ask”

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