REG - AMTE Power PLC - Half Year Results
08/03/2023 07:15
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RNS Number : 2193S AMTE Power PLC 08 March 2023
AMTE POWER PLC
("AMTE Power" or the "Company")
Market-leading UK technology developer and manufacturer of battery cells for
specialised applications in global markets
Half Year Results and Conclusion of Strategic Review
"Strategic Review drives vision and shapes evolutionary changes at AMTE Power"
AMTE Power Plc, a leading UK developer and manufacturer of lithium-ion and
sodium-ion battery cells for specialist applications in global markets,
announces its results for the half year ended 31 December 2022 and the
conclusion of its new CEO's strategic review.
Alan Hollis, CEO of AMTE Power, commented:
"I am pleased to report that AMTE Power continued to make good progress in the
half year ended 31 December 2022, with progress continuing in line with market
expectations of loss before tax for the full financial year.
"Since my arrival at AMTE Power I have been undertaking a strategic review of
the people, markets, products, operational capability, functional capability
and processes with a clear focus on positioning the business for success
through commercialisation of its products and scaling up of the organisation
to support our ambitious plans to accelerate routes to market.
"AMTE Power has rich technical capabilities and a highly differentiated
product range across multiple markets. We have identified where the business
needs to be positioned as a market leading cell provider for specialist
applications, with planned scale up at our existing manufacturing facility in
Thurso, Scotland and the UKBIC, ahead of Gigafactory scales of production in
due course in our proposed new facility.
"AMTE Power is one of the few manufacturers of battery cells in the UK today
and has three products in development that are close to commercialisation with
samples already in the hands of customers for testing from whom we are
receiving positive feedback.
"This strong foundation underpins our growth plans and, combined with the
renewed vision and the team's energy, means we look forward with confidence
and focus to the year ahead."
Operational Highlights:
Ultra High Power
· Fully functional and operationally tested cells (A-samples)
leading to UN38.3 certification and abuse testing to be completed in H1 2023
· Planning to supply samples to customers in Q2 2023
· Production planning at UKBIC ("UK Battery Industrialisation
Centre") for larger scale production
Ultra Safe
· Initial order received for Ultra Safe cells and focus on
strengthening the opportunity pipeline
· A-Samples already shipped to customers in Q1
Ultra Prime
· Initial batch of cells produced at Thurso shipped to customer
Financial Highlights:
Half Year Financial Performance reflects continued investment in
commercialisation plans
· Turnover of £0.55 million (H1 2022: £0.82 million)
· Loss before tax of £3.72 million (H1 2022: loss £2.65 million)
Balance sheet strength underpins investment phase
· Cash and cash equivalents of £1.21 million (H1 2022: £6.26
million)
· £2 million of convertible bond facility remains undrawn
Current trading:
· Focus on converting opportunities to orders with in excess of
100% of planned capacity already covered by existing MoU's / JDA's.
· Cost base continuing in line with market expectations for the
current year
· Positive outlook with healthy pipeline
Refined focus following new CEO strategic review:
· Growth Strategy increasingly focused on accelerating the
evolution of AMTE Power from technology research to full commercialisation of
products in order to capitalise on unique market opportunities.
· Products aligned to the growing high performance and fuel cell
electric vehicles ("FCEV") sectors, battery energy storage systems ("BESS")
and other specialist markets.
· Fully functional and operationally tested cells leading to UN38.3
certification and abuse testing to be completed for all products during H1
2023.
· Dundee remains the preferred site for AMTE Power's new facility,
with the long-term objective of Gigafactory scale.
· Investment strategy to accelerate time to market by scaling up
production capabilities at Thurso facility and UKBIC:
o Ultra Prime commercial contract signed and initial batch of cells shipped
o Investment to support scale up at Thurso planned to commence in 2023
o Phased ramp up of Ultra Prime and Ultra Safe cells at Thurso and Ultra
High Power at UKBIC
o Planned Gigafactory scale of production for Ultra Safe and Ultra High
Power will be our proposed Gigafactory
o Ultra Prime will continue to be manufactured at Thurso
· Senior leadership team bolstered with augmented skills and
resources critical to scale up the business and drive ambitious plans
o Appointment of Anita Breslin, Chief Finance Officer
o Appointment of Wes Simons, Corporate Development Director
o Appointment of John Valentine, Supply Chain Director
ESG is central to our business, and we continue to make good progress against
our ESG strategy targets. In partnership with the leadership team, our
sustainability lead and our third party consultant, we have developed an ESG
strategy that comprises six pillars aligned to a number of the key goals
identified in the UN Sustainable Development Goals framework. We have already
made significant progress having already achieved scope 1 and 2 emissions of
337 tonnes CO(2) equivalent for FY 2022, secured 100% renewable electricity
saving 136 tonnes CO(2) equivalent, been recommended for accreditation to
ISO14001 at Thurso and started to include sustainability as a key criteria
within our procurement policies. Without a focus on this metric our current
outturn would have been 472 tonnes CO(2) equivalent. We have also shipped
samples to a recycling company to test and confirm recyclability of product
and process wastes.
Outlook:
· Developing capabilities to scale up and commercialise whilst
retaining R&D expertise at our core
· Healthy pipeline:
o Five MoUs and development agreements for the supply of Ultra High Power
o First order received for Ultra Safe
o One supplier agreement already in place for Ultra Prime
o Samples for two of our three products already in customer hands with
positive feedback
· Continue to focus on converting existing customer pipeline
· Complete investment plans to increase production capacity at our
existing facility in Thurso
· Continue to make progress on new facility planned for start of
production in 2026 and eventual Gigafactory scale
· Secure supply chain through responsible sourcing
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE UK VERSION OF REGULATION (EU) NO 596/2014 WHICH IS PART OF UK LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED.
The person responsible for arranging the release of this announcement on
behalf of the Company is Anita Breslin, Chief Financial Officer of the
Company.
Enquiries:
AMTE Power plc Tel: +44 (0)1847 867 200
Alan Hollis (Chief Executive Officer)
Anita Breslin (Chief Financial Officer)
WH Ireland Limited (NOMAD and Joint Broker) Tel: +44 (0)207 220 1666
Chris Fielding / James Bavister (Corporate Finance)
Fraser Marshall (Corporate Broking)
Panmure Gordon (Joint Broker) Tel: +44 (0)207 886 2500
John Prior / James Sinclair-Ford (Corporate Finance)
Hugh Rich (Corporate Broking)
Camarco (Financial PR) Tel: +44 (0)20 3757 4992 / 4981
Ginny Pulbrook / Tom Huddart / Rosie Driscoll
About AMTE Power
AMTE Power was founded in 2013 and is a leading UK developer and manufacturer
of lithium-ion and sodium-ion battery cells for specialist markets. In March
2021, the Company was admitted to trading on the AIM market of the London
Stock Exchange. The Company is focused on launching a series of next
generation battery cells based on new chemistries and cell structures that are
designed to solve key problems in power delivery, energy performance, and
safety. These new products are targeted at a range of specialist markets
including the electric vehicle industry and energy storage sector.
AMTE Power's purpose-built cell manufacturing facility in Thurso, Scotland has
the second largest cell manufacturing capacity in the UK and the Company also
has a product development team based in Oxford. AMTE's proposed Gigafactory in
Dundee, Scotland is expected to be capable of producing over 8 million battery
cells per annum enabling the Company to rapidly scale up cell production.
For further information visit the Company's website: www.amtepower.com
(http://www.amtepower.com)
Chief Executive's Statement
Introduction
AMTE Power is the only manufacturer in the UK with three highly differentiated
battery cells in development that are close to commercialisation.
I am pleased to report that the business has continued to make good progress
in the half year ended 31 December 2022.
Since joining AMTE Power, I have been undertaking a strategic review of the
people, markets, products, operational capability, functional capability, and
processes with a clear focus on positioning the business for success through
commercialisation of its products and scaling up of the organisation to
support our ambitious plans and to accelerate routes to market.
The business has rich technical capabilities and a strong foundation to
support future growth, with planned scale up at our existing manufacturing
facility in Thurso and the UKBIC ahead of full-scale Giga rates of production
in due course at a proposed new facility.
Refined focus following new CEO strategic review:
Our ambition is to grow AMTE Power production to c.1GWh per annum in due
course. In order to achieve this, our growth strategy is increasingly focused
on accelerating the evolution from technology research to full
commercialisation of our core products to capitalise on the unique market
opportunities ahead.
Achieving this ambition and accelerating time to market will require:
· Scaling up of AMTE Power's existing battery cell manufacturing
equipment and expertise at the production facility in Thurso, complemented by
cell manufacturing at the UKBIC
· Commercialisation of three core products: Ultra High Power, Ultra
Safe and Ultra Prime
· Increasing production rates towards the long-term objective of
Gigafactory scale at the proposed facility in Dundee, Scotland
· Ensuring AMTE Power has a secure supply chain in place
· Investing in our people to build a team with the skill and
resources necessary to support future growth
Our products are aligned to the growing FCEV, BESS and other specialist
markets. We are aiming to achieve A-samples leading to UN38.3certification for
all products during H1 2023 which enables initial customer testing.
AMTE Power's purpose-built cell manufacturing facility in Thurso has the
second largest cell manufacturing capacity in the UK. The investment to
support scale up at Thurso is planned to commence in 2023 where we will begin
a phased ramp up of the production of our Ultra Prime cell, to meet the supply
agreement in place, and our Ultra Safe cells. In tandem, we are planning to
increase the manufacture of our Ultra High Power cell at the UKBIC.
Dundee remains the preferred site for AMTE Power's new facility, with the
long-term objective of Gigafactory scale. We plan for production of our Ultra
Safe and Ultra High Power cells to begin at the proposed Dundee facility in
2026, with Ultra Prime continuing to be manufactured at Thurso.
To support our growth ambitions, we have bolstered the senior leadership team
during the period with the appointments of Anita Breslin as Chief Finance
Officer, Wes Simons as Corporate Development Director and John Valentine as
Supply Chain Director. We are delighted to have them at AMTE Power as we build
a team with the experience, skills and resources necessary to scale up and
commercialise the business. The achievements of the existing AMTE Power
staff must also be recognised for their fantastic contribution so far to take
us to where we are today and their passion and experience for the business,
augmented with our ambitious future plans is essential in driving the business
forward.
Operational Overview
During the first half of the current financial year, good progress continued
to be made across our core product range as we move towards full
commercialisation and meeting growing demand across all applications.
Ultra High Power
Our target market for the Ultra High Power cells is high power density cells
for all FCEV, high-performance BEV and high-power automotive applications.
This includes becoming a first mover, in the European market which is forecast
to grow to c.50GWh by 2030.
We have non-binding MoUs and development agreements in place for the Ultra
High Power cell with key automotive partners including Cosworth, Viritech,
MAHLE Powertrain, TAE (Sprint) power solutions and BMW. During the first half
of this calendar year, we expect to complete UN38.3 certification and abuse
testing of fully functional and operationally tested A-sample cells and
commence first commercialisation by supplying A-samples to our customers in Q2
2023. Production planning is in place for larger scale production at UKBIC in
readiness for the expected demand for high power cells across our target
market.
Ultra Safe
Our Ultra Safe cell is well suited to the battery storage market, which is set
to grow in Europe to approximately 300GWh by 2030, of which AMTE forecasts
approximately 10% is expected to be based on sodium-ion by 2030, as a result
of the need to speed up the replacement of fossil fuels with renewable energy.
Battery storage will play an increasingly pivotal role between green energy
supplies and responding to electricity demands via the grid.
The Ultra Safe product is a greener, safer and cheaper alternative to other
technologies and driven by this increasing demand for continuous power and
energy storage systems in critical infrastructures, adoption of renewable
energy grid storage and balancing solutions.
During the first half of 2023, the business received an initial order for
Ultra Safe cells. Going forward, we will continue to focus on strengthening
the opportunity pipeline. A-Samples have already been shipping to customers in
Q1 for Ultra Safe and Ultra Prime for customer testing.
Ultra Prime
Our Ultra Prime cell is designed for use in some of the most difficult
environments, with very high energy density, high-temperature performance and
low self-discharge. The nature of the work undertaken in decarbonising
industries such as construction, mining, oil and gas, and agriculture requires
a combination of high power and range. With this, and a growing engagement
with the rail industry, we expect additional volume orders from outside of our
core markets, supporting us further to expand our manufacturing footprint in
line with our plans.
During the period, we carried out customer testing of prototype cells in
accordance with the agreement already in place for supply of this cell into
subsea applications. The Ultra Prime cell is on track to be produced from
Thurso with commercial start of production in 2023.
Financial Review: half year to end December 2022
For the 6-month period ended December 2022 the Group's turnover was £0.55m,
32% less than H1 2022 (£0.81m). Grant funding income for the period was
£0.47m, down from £0.62m in the first half year of 2022. Similarly
commercial revenue fell from £0.16m H1 2022 to £0.07m in H1 2023. The
reduction in revenue reflects the reduced strategic investment in research and
development, moving away from contract manufacturing and continued focus
towards commercialising the three core products.
The Group's loss before tax for the period was £3.72m (H1 2022 loss £2.65m)
impacted by the commencement of scaling the organisation and financing costs
of £0.40m incurred in the period related to the Arena convertible bond. Group
loss after tax was £3.67m (H1 2022, loss £2.65m).
At the half year end, cash and cash equivalents amounted to £1.21m (H1 2022;
£6.26m), with two fifths (£2m) of the Arena convertible bond facility
unutilised.
Outlook
AMTE Power is one of the only manufacturers in the UK with three highly
differentiated battery cells in development that are close to
commercialisation. The business is readying itself to scale up and
commercialise whilst retaining R&D expertise at our core.
The business has a healthy pipeline, with five MoU and development agreements
for the supply of Ultra High Power; the first order received for Ultra Safe;
an existing agreement in place for Ultra Prime; and A samples for two of our
three products already in customer hands, with positive feedback received so
far.
We will continue to focus on converting our existing customer pipeline while
completing investment plans that will enable the business to increase
production capacity at our facility in Thurso, in addition to our arrangements
at UKBIC. Led by our new supply chain director, the business is working to
ensure we have a secure supply chain through responsible sourcing as we
progress towards Giga rates of production at our proposed Gigafactory in
Dundee, which is planned to start production in 2026.
AMTE Power has a positive outlook supported by its healthy pipeline. Customer
testing is underway, and we are focused on converting opportunities to orders
and the cost base continues in line with market expectations for the full
year. We are excited about the opportunities ahead.
Alan Hollis
Chief Executive Officer
Consolidated Statement of Comprehensive Income
For the Period Ended 31 December 2022
Unaudited Audited
6 months ended 6 months ended Year ended
31 December 2022 31 December 2021 30 June
2022
£ £ £
Turnover 546,080 815,174 2,193,759
Turnover analysed by class of business:
Revenue 73,733 162,371 238,084
Grant income 472,347 652,803 1,955,675
Cost of sales (551,011) (780,966) (2,511,367)
Gross (loss)/profit (4,931) 34,208 (317,608)
Other operating income 115,962 143,887 478,030
Administrative expenses (3,902,290) (2,729,257) (5,916,772)
Operating loss (3,791,259) (2,551,162) (5,756,350)
Investment revenues 15,996 26,226 7,345
Finance costs (208,790) (120,991) (233,307)
Fair value gains or losses on derivatives 276,500 - -
Other gains and losses (9,077) - (14,547)
Loss before taxation (3,716,630) (2,645,927) (5,996,859)
Income tax 50,026 (8,130) 158,749
Loss and total comprehensive income for the period (3,666,604) (2,654,057) (5,838,110)
Basic loss per share (pence per share) 8 (10.17) (7.47) (16.33)
Diluted loss per share (pence per share) 8 (10.17) (7.47) (16.33)
All results were derived from continuing operations.
Unaudited Audited
Notes 31 31 30
December 2022 December 2021 June 2022
Restated
£ £ £
ASSETS
Non-current assets
Intangible assets 4 25,857,405 22,552,109 24,067,313
Property, plant and equipment 5, 6 2,468,828 2,187,527 2,362,153
Investments 2 41,163 9,079
28,326,235 24,780,799 26,438,545
Current assets
Inventories 693,599 363,555 714,668
Investments - - 2,000,000
Trade and other receivables 1,162,484 1,953,071 2,163,173
Current tax recoverable 534,402 361,500 379,077
Cash and cash equivalents 1,214,894 6,264,710 906,917
3,605,379 8,942,836 6,163,835
Total assets 31,931,614 33,723,635 32,602,380
LIABILITIES
Current liabilities
Borrowings 7 (26,343) (5,636) (30,522)
Lease liabilities (349,785) (115,667) (203,052)
Licence liabilities (1,109,219) (830,229) (985,704)
Provisions - - (9,927)
Derivative financial instruments 7 (75,000) (7,002) (3,538)
Trade and other payables (1,728,086) (1,151,565) (2,222,108)
Deferred revenue (46,565) (28,564) (28,564)
(3,334,998) (2,138,663) (3,483,415)
Non-current liabilities
Borrowings 7 (2,231,185) (75,636) (45,681)
Lease liabilities (792,894) (817,993) (778,183)
Licence liabilities (17,945,620) (16,766,525) (17,368,390)
Long term provisions (210,000) (209,495) (200,000)
Deferred revenue (2,753,568) (2,421,131) (2,582,685)
(23,933,267) (20,290,780) (20,974,939)
Total liabilities (27,268,265) (22,429,443) (24,458,354)
Net assets 4,663,349 11,294,192 8,144,026
Consolidated Statement of Financial Position
As at 31 December 2022
EQUITY
Called up share capital 181,170 179,943 179,943
Share premium account 330,869 21,330,877 200,485
Share option reserve 589,429 505,625 536,879
Retained earnings 3,561,881 (10,722,253) 7,226,719
Total equity 4,663,349 11,294,192 8,144,026
Consolidated Statement of Changes in Equity Share Share Share option reserve Retained earnings Total equity attributable to owners of the parent
For the Period Ended 31 December 2022 capital premium
`
£ £ £ £ £
Audited balance at 1 July 2021 176,223 20,808,951 821,641 (8,400,855) 13,405,960
- - - (2,654,057) (2,654,057)
Loss and total comprehensive income
Share option expense - - 16,643 - 16,643
Issue of share capital - - - - -
Exercise of share options 3,720 521,926 (331,693) 331,693 525,646
Share option forfeit - - (966) 966 -
Unaudited balance at 31 December 2021 as restated (note 9) 179,943 21,330,877 505,625 (10,722,253) 11,294,192
Loss and total comprehensive income - - - (3,184,053) (3,184,053)
Capital reduction - (21,130,392) - 21,130,392 -
Share option expense - - 33,887 - 33,887
Share option forfeit - - (2,633) 2,633 -
Audited balance at 30 June 2022 179,943 200,485 536,879 7,226,719 8,144,026
Loss and total comprehensive income - - - (3,666,604) (3,666,604)
Share capital issued 1,227 130,384 - - 131,611
Share option expense - - 54,316 - 54,316
Share option forfeit - - (1,766) 1,766 -
Unaudited balance at 31 December 2022 181,170 330,869 589,429 3,561,881 4,663,349
Consolidated Statement of Cashflows Unaudited Audited
For the period ended 31 December 2022
6 months ended 6 months ended Year
31 December 2022 31 December 2021 ended
30 June 2022
£ £ £
Cash flow from operating activities
Loss after taxation (3,666,604) (2,654,057) (5,838,110)
Adjustment for:
Share of results of associates and joint ventures 9,077 - 14,547
Taxation charge (50,026) 8,130 (158,749)
Taxation charge - RDEC included in operating income (105,300) (129,630) (212,864)
Finance costs 208,790 120,991 240,391
Investment income (15,996) (21,762) (7,345)
Fair value movement on derivatives (276,500) (4,464) (7,928)
Depreciation of property, plant and equipment 278,248 181,320 397,485
Amortisation of intangible assets 76,276 76,275 152,553
Decrease in provisions 505 413 845
Deferred income released to P&L - (14,257) (28,514)
Share-based payment expense 54,316 16,643 50,530
Changes in working capital:
Decrease/(increase) in inventories 21,069 (82,889) (434,002)
Decrease/(increase) in trade and other receivables 824,851 (443,094) (658,913)
(Decrease)/increase in trade and other payables (662,600) 193,778 1,266,905
Cash absorbed by operations (3,303,894) (2,752,603) (5,223,169)
Interest paid (59,438) (48,442) (96,403)
Income tax refunded - - 232,536
Net cash used in operating activities (3,363,332) (2,801,045) (5,087,036)
Cash flow from investing activities
Purchase of intangible assets (653,735) (529,121) (964,481)
Purchase of property, plant and equipment (48,190) (133,408) (368,542)
Sale/(purchase) of investments 2,000,000 - (2,000,000)
Government grants received 231,186 135,707 311,567
Interest received 15,996 4,225 7,345
Net cash from /(used in) investing activities 1,545,257 (522,597) (3,014,111)
Cash flow from financing activities
Proceeds from issue of own shares - 839,173 839,173
Proceeds from issue of convertible loan notes 2,580,000
Repayment of borrowings (14,344) (14,729) (19,798)
Payment of lease obligations (189,604) (67,258) (175,727)
Payment of licence obligations (250,000) (441,250) (908,000)
Net cash from financing activities 2,126,052 315,936 (264,352)
Net increase/(decrease) in cash and cash equivalents 307,977 (3,007,706) (8,365,499)
Cash and cash equivalents at beginning of the period 906,917 9,272,416 9,272,416
Cash and cash equivalents at end of period 1,214,894 6,264,710 906,917
Changes in liabilities arising from financing activities:
At 1 July 2021 Financing cash flows Inception Non-cash movement At 31 December 2021
£ £ £ £ £
Borrowings 96,001 (14,729) - - 81,272
Lease liabilities 1,000,918 (67,258) - - 933,660
Licence liabilities 16,864,548 (441,250) - 1,173,456 17,596,754
17,961,467 (523,237) - 1,173,456 18,611,686
At 1 January 2022 Financing cash flows Inception Non-cash movement At 30 June 2022
£ £ £ £ £
Borrowings 81,272 (5,069) - - 76,203
Lease liabilities 933,660 (108,469) 156,044 - 981,235
Licence liabilities 17,596,754 (466,750) - 1,224,090 18,354,094
18,611,686 (580,288) 156,044 1,224,090 19,411,532
At 1 July 2022 Financing cash flows Inception Non-cash movement At 31 December 2022
£ £ £ £ £
Borrowings (including convertible loan notes) 76,203 (14,344) 2,580,000 (384,331) 2,257,528
Lease liabilities 981,235 (189,604) 351,048 - 1,142,679
Licence liabilities 18,354,094 (250,000) - 950,745 19,054,839
19,411,532 (453,948) 2,931,048 566,414 22,455,046
Notes to the Financial Statements
For the period ended 31 December 2022
1. General Information
AMTE Power plc is a public company incorporated in the England and Wales. The
address of its registered office is Suite 1, 3rd Floor 11-12 St. James's
Square, London, United Kingdom, SW1Y 4LB.
AMTE Power Plc is a developer of lithium-ion and sodium-ion battery cells for
specialist markets. Such customers, which include manufacturers of
high-performance vehicles, energy storage solutions and specialist engineering
equipment, are not the primary focus of the international battery cell
manufacturers and thereby offer a significant and scalable opportunity for the
Group.
2. Accounting policies
2.1. Basis of preparation
The financial information set out in these interim consolidated financial
statements for the six months ended 31 December 2022 is unaudited. The
financial information presented are not statutory accounts prepared in
accordance with the Companies Act 2006, and are prepared only to comply with
AIM requirements for interim reporting. Statutory accounts for the year ended
30 June 2022, on which the auditors gave an audit report which was unqualified
and did not contain a statement under Section 498(2) or (3) of the Companies
Act 2006, have been filed with the Registrar of Companies. The annual
financial statements of the Group are prepared in accordance with UK-adopted
International Accounting Standards (IAS).
The interim consolidated financial statements have been prepared using
consistent accounting policies as those adopted in the financial statements
for the year ended 30 June 2022.
2.2. Basis of consolidation
The interim condensed consolidated group financial statements consist of the
financial statements of the parent company AMTE Power Plc together with all
entities controlled by the parent company (its subsidiaries) and the group's
share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2022. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by other members of the
group.
All intra-group transactions, balances and unrealised gains on transactions
between group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
Subsidiaries are consolidated in the group's financial statements from the
date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled
by the group and one or more other venturers under a contractual arrangement
are treated as joint ventures. Entities other than subsidiary undertakings or
joint ventures, in which the group has a participating interest and over whose
operating and financial policies the group exercises a significant influence,
are treated as associates.
Investments in joint ventures and associates are carried in the group at cost
plus post-acquisition changes in the group's share of the net assets of the
entity, less any impairment in value. The carrying values of investments in
joint ventures and associates include acquired goodwill.
If the group's share of losses in a joint venture or associate equals or
exceeds its investment in the joint venture or associate, the group does not
recognise further losses unless it has incurred obligations to do so or has
made payments on behalf of the joint venture or associate.
2.3. Going Concern
As at 31 December 2022 the Group had net assets of £4,663,349 and cash and
cash equivalents of £1,214,894. As set out in the 30 June 2022 financial
statements, the Group is dependent on the continued support of its
shareholders in the development of its three core cells which are expected to
reach mass production by the end of 2023.
The £5m loan facility referred to in the annual report has been completed as
set out in note 7 with £3m of funding drawn down. The remaining £2m will
be drawn down as required. We also reported that additional funds will need to
be raised by April 2023 and good progress is being made with these
negotiations. Those funds will finance the Group through to the summer 2023
when the directors plan to raise further capital which will be predicated on
meeting the milestones within the production plans for each of the Group's
three core cells. The directors remain confident that the fundraising
prospects for the Group remain strong.
While the Directors remain confident that necessary funds will be available as
and when required, as at the date of this report the future required funding
arrangements are not secured, and accordingly there is material uncertainty
that may cast significant doubt over the Group's ability to continue as a
going concern. The interim financial statements have been prepared on a going
concern basis. The interim financial statements do not include the adjustments
that would result if the Group was unable to continue as a going concern.
3. Segmental analysis
Operating segments are determined by the chief operating decision maker based
on information used to allocate the Group's resources. The information as
presented to internal management is consistent with the statement of
comprehensive income. It has been determined that there is one operating
segment, the development of battery cells. In the periods covered in the
interim condensed consolidated financial information, the Group operated
mainly in the United Kingdom. All non-current assets are located in the United
Kingdom.
4. Intangible fixed assets
The Group's intangible fixed assets, which include Development Battery Cells
and IP Rights, had additions of £2,113,205 in the six months to 31 December
2022 (six months to 31 December 2021: £1,811,839; 12 months to 30 June 2022:
£3,602,025).
The Group capitalised the development costs relating to the products it is
developing, in line with IAS 38, however it has not yet amortised the costs.
The Group also records the value of the IP Rights it holds through licences.
The amortisation of the IP Rights and the interest arising from the licence
obligations has been capitalised into the intangible assets (Development
Battery Cells) whilst the battery cells are being developed. Amortisation of
IP Rights were £323,112 (six months to 31 December 2021: £257,836; 12 months
to 30 June 2022: £532,821).
No impairments of intangible assets were made.
5. Property, plant and equipment
There were no significant movements on tangible fixed assets (excluding
right-of-use assets as disclosed below) over the period of the interim
accounts.
6. Right-of-use assets
The Group has lease contracts for buildings and equipment used in its
operations, which have the following lease terms:
· Leased equipment has terms of between 3 and 5 years,
· Property leases have terms of under 3 years in the case of office
space near Oxford and for 10
years for manufacturing facility in Thurso,
· The sub-lease has a duration of under 3 years.
Right-of-use assets include additions of £339,113, £312,068 being property
and the remining £12,045 equipment, for the six months to 31 December 2022
(six months to 31 December 2021: £nil; 12 months to 30 June 2022: £nil).
£312,068 being property and the remining £12,045 equipment, for The charge
for depreciation was £141,603 (six months to 31 December 2021: £87,445; 12
months to 30 June 2022: £174,887). Within this depreciation charge relating
to property was £119,146 (six months to 31 December 2021: £69,212; 12 months
to 30 June 2022: £138,423).
7. Convertible loan notes
On 4 November 2022, the company authorised the issue of £5,000,000
convertible loan notes ("CLN"). The CLN are to be issued in three tranches and
as at the time of signing, £3,000,000 loan notes have been issued through a
subscription agreement dated 11 November 2022, using terms agreed on 14
October 2022; the remaining £2,000,000 CLN can be drawn at least 60 days
after the first tranche.
The CLN carry no coupon but are issued at a discount of 8% and are redeemable
either in cash at a premium of 15% or via a conversion to ordinary share
capital of the company at a 5% discount to specified average recent market
prices of those shares, within 2 years of drawdown. In addition, 1,829,269
warrants have been issued to the CLN holders at zero additional cost. The
warrants permit a subscription for a further £1.5m of ordinary shares at a
fixed price of £0.8204 per share. These warrants can be exercised at any time
until the third anniversary.
The CLN are provisionally included within 'borrowings' (non-current
liabilities) and 'derivative financial instruments' (current liabilities). The
debt element is subject to finance charges at a provisional rate of 24.27% per
annum. The derivative portion is re-measured at fair value at each reporting
date with any fair value gains/losses recognised immediately in the profit or
loss account.
£150,000 of the £3,000,000 CLN were converted to equity in November 2022.
8. Earnings per share
The calculation of the basic loss per share is based on the following data:
Number of shares 6 months ended 6 months ended Year
31 December 2022 31 December 2021 ended
30 June 2022
Weighted average number of ordinary shares for diluted earnings per share 36,036,615 35,535,654 35,755,700
In all periods presented the Group has incurred losses and as such has not
presented any dilutive shares in accordance with IAS 33 'Earnings per
share'. However, the Group does have a number of share options and warrants
that would dilute the earnings per share should the Group become profitable.
Earnings (all attributable to equity shareholders of the company) 6 months ended 6 months ended Year
31 December 2022 31 December 2021 ended
30 June 2022
£ £ £
Loss for the period from continued operations (3,666,604) (2,654,057) (5,838,110)
Earnings per share for continuing operations
Basic earnings per share (pence per share) (10.17) (7.47) (16.33)
Diluted earnings per share (pence per share) (10.17) (7.47) (16.33)
9. Restatement
The comparative share premium and retained earnings balances as at 31 December
2021 have been restated. On presentation of the unaudited interim financial
statements for that period, the accumulated share option expense relating to
the options exercised during the period had been allocated to share premium.
Upon review of IFRS 2 this was reallocated to retained earnings. This
restatement brings the accounting in line with how it was presented in the
audited 30 June 2022 financial statements.
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