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REG - Clean Power Hydrogen - Interim Results

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RNS Number : 1332N  Clean Power Hydrogen  21 September 2023

 

The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014 which is part of UK law by virtue of the European Union (withdrawal)
Act 2018. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

21 September 2023

Clean Power Hydrogen plc

("CPH2", the "Company" or the "Group)

Interim Results for the six months ended 30 June 2023

Clean Power Hydrogen plc (AIM: CPH2), the UK-based green hydrogen technology
and manufacturing group that has developed the IP-protected Membrane-Free
Electrolyser ("MFE"), is pleased to announce its unaudited results for the six
months ended 30 June 2023.

Financial Highlights

·      Cash position remains strong at £12.9m

·      £1.3m investment on development work in the six months to June
2023

·      Loss of £1.6m in the six months to June 2023

 

Technology Highlights

·      The MFE110, the Company's first scaled membrane free
electrolyser, is in the final stage of testing.

·      Thorough testing of the MFE110 has identified upgrades and the
Company has successfully redesigned the cryogenic system as well as validated
the stack design.

·      Results of the MFE110 have informed valuable enhancements to the
MFE220 design as expected.

·      Following the delivery of the MFE110, the Company will turn its
focus to finalising the design and build programme of the MFE220, CPH2's 1MW
System.

·    Applications now submitted to certifying bodies for CE marking, UKCA
marking, NI CE marking.

Significant engineering milestones have been reached during the period and
although delivery of the MFE110 has been delayed to ensure operational and
safety compliance, delivery, commissioning and installation of the unit at our
customer's site will take place imminently.

The commissioning process has given valuable design and operability feedback
which has resulted in further iterations of the MFE design.  This redesign
process has been done in a methodical and diligent manner and led to a number
of components being reworked, re-engineered, and reordered, which in turn has
had a knock-on impact on the commissioning schedule especially when new
components have long lead times. However, the Company has largely finished
this process and the improvement in the components and design means that CPH2
is more confident now in its ability to fully commercialise the product. The
data and the learnings the team has accrued place the Company in a much
stronger position to roll out the technology at CPH2's own facilities and at
licence holder facilities.

Commercially, CPH2 is in a strong position. The Group's pipeline and order
book is expected to increase once customers are able to verify having a
working unit in operation in the field. In tandem, the Company is working with
its licence partners to deliver the blueprints for their own production and
hope to have these ready for late Q4 2023 or early Q1 2024. As a result of the
delays the Company does not expect any significant income in FY2023.

 

 

Change of Name of Nominated Adviser and Broker

The Company also announces that Cenkos Securities, its Nominated Adviser and
Broker, has changed its name to Cavendish Securities plc following completion
of its own corporate merger.

 

 

For more information, please contact:

 

 Clean Power Hydrogen plc                       via Camarco
 Jon Duffy, Chief Executive Officer
 James Hobson, Chief Financial Officer

 Cavendish Securities plc - NOMAD & Broker
 Neil McDonald                                  +44 (0)131 220 9771
 Peter Lynch                                    +44 (0)131 220 9772
 Adam Rae                                       +44 (0)131 220 9778

 Camarco PR                                     + 44(0) 20 3757 4980
 Billy Clegg
 Owen Roberts
 Lily Pettifar

 

To find out more, please visit: https://www.cph2.com (https://www.cph2.com)

 

Overview of CPH2

CPH2 is the holding company of Clean Power Hydrogen Group Limited ("Clean
Power") which has almost a decade of dedicated research and product
development experience. This experience has resulted in the creation of
simple, safe and sustainable technology which is designed to deliver a modular
solution to the hydrogen production market in a cost-effective, scalable,
reliable and long-lasting manner. The Group's strategic objective is to
deliver the lowest LCOH in the market in relation to the production of green
hydrogen. The Group's MFE technology is already commercially available and
demonstrating cost efficiencies and technological advantages. CPH2 is listed
on the AIM market and trades under the ticker LON:CPH2.

 

 

Chief Executive's Statement
Technology update

Work during the period has concentrated on completion of the MFE110
electrolysers, our 0.5 MW system being used to validate the technology at
scale and verify the design, following which they will be shipped to customer
sites for site validation.

The design of the MFE110 was completed in Q1 2023, following which the Company
undertook the pre-commissioning and then commissioning of the system under the
watchful eye of Paul Cassidy, our CTO who joined in March 2023.

The pre-commissioning and commissioning process is a necessary procedure to
undertake in all engineering projects as it is the first time we are
commissioning our groundbreaking technology at scale. The commissioning
process has given valuable design and operability feedback which has resulted
in further iterations of the MFE design. This design evolution has resulted in
a longer commissioning process than first anticipated, however, we are
confident that these iterations put the technology on a sound basis.

Every component and system - including each valve, gauge, pipe, electrical
wire and pump - has been tested to ensure it is correctly installed and
functioning according to its specification. Any components that were not
working according to the design specification, or otherwise as expected, were
reviewed by the engineering and research & development departments, who
found a solution to resolve the issue. At times this resulted in a redesign of
the component, which then were procured, for which in some cases incurred
additional lead time.

The Company is executing a staged commissioning process testing firstly the
stacks, then the stacks with the dryers, the cryogenics, and then finally
bringing together the stacks, dryers, and cryogenics to have the complete
system working together, successfully generating separated hydrogen and oxygen
gases.  This has given the Company the opportunity to make modifications
before bringing the entire system online.

Over the last five months we have been working through this process in a
methodical way, successfully resolving issues found, while ensuring that
safety is paramount, which has resulted in an improvement to the unit
operability, validation of stack design, and design improvements of the
cryogenic system.

I am pleased to advise that as at the date of this report, the Company has
reached the final stage of the commissioning process, which will be to
generate separated hydrogen and oxygen gases of its first MFE110 electrolyser
in the coming weeks, having already successfully generated mixed gas.
Significant firsts have been achieved, and having successfully gone through
nearly the whole commissioning process, confidence is high as we embark on the
closing stage of commissioning.

 

The next stage of the process is achieving Factory Acceptance Testing which
includes customer acceptance, upon which the first MFE110 will be shipped to
the customer site.

The commissioning process has taken two months longer than expected but has
been a crucial learning experience for the Company which has instilled the
necessary disciplined approach which will prove valuable going forward. In
addition, the successful proving of the technology at scale gives great
confidence in the Company's 1MW system, the MFE220.

Work has continued on completing the design of the MFE220, and the issues that
were found and resolved in the commissioning process of the MFE110, is
informing the MFE220's development. We are expecting to complete the design
and then begin building the unit in Q4 2023, with commissioning and customer
delivery in the new year.

Commercial update

We have been working closely with our licence partners, as well as our
customers and their respective engineering consultants, and appreciate the
strong support we have received.

During the period we signed a 10-year licensing deal with Fabrum, an advanced
energy company with deep expertise in cryogenics and an important customer of
CPH2, alongside two MFE220 orders. The licensing deal allows Fabrum to
manufacture membrane-free electrolysers in their factory in Christchurch, New
Zealand as well as a non-exclusive sales licence for Australia and New
Zealand. Under the agreement Fabrum will manufacture either upon a CPH2 order
or their own sale. The MFE220s built by Fabrum will be in accordance with
Australian & New Zealand standards, and upon completion of the design and
compliance work, there will be a membrane free electrolyser ready for the
Australian and New Zealand market. Fabrum has since secured its first customer
order under the licencing agreement from Obayashi Construction Company.

Financial review

The Company has prudently and carefully managed its cash resources during the
period, ensuring the cash spend is controlled and focused on our route to
commercialization. We remain in a strong cash position with cash resources of
£12.9m at 30 June 2023 (comprising term deposits of £8m and cash and cash
equivalents of £4.9m), a reduction of £2.4m from 31 December 2022 when the
cash resources of the Company were £15.3m. The Company incurred a loss of
£1.6m for the six months ended 30 June 2023, an increase of £0.5m from the
comparative period, but down from the loss of £2.3m incurred in H2 2022. The
Company invested £1.3m in development work during the period.

Conclusion and Outlook
It has been a crucial time for the Company, and whilst we have had delays, strong strides have been made during the period in proving at scale the differentiated, groundbreaking membrane free electrolyser technology on the back of a disciplined engineering approach. Our key focus for the rest of the year is to complete and ship MFE110s, to have a scaled working electrolyser at a customer site, and to complete the design of the CPH2 1MW system, the MFE220, in line with our stated milestones. The enormous global hydrogen opportunity only continues to strengthen and we are confident that our technology provides a compelling, disruptive and attractive offering.

As we sit at the cusp of commercialising a truly ground-breaking technology in
the hydrogen sector, I would like to thank to all our staff whose passion is
inspiring and who have worked tirelessly to progress the technology and the
Company.

 

 
Jon Duffy
Chief Executive Officer

 

 

 

Consolidated Statement of Comprehensive Income

FOR THE PERIOD ENDED 30 JUNE 2023

                                                      Note                                   6 months ended      6 months ended                Year ended

                                                                                        30 June 2023             30 June 2022                  31 December 2022
                                                                                        Unaudited                Unaudited                     Audited
                                                                                        £'000                    £'000                         £'000
 Revenue                                                                                -                        -                             -
 Cost of sales                                                                          -                        -                             -
 Gross profit                                                                           -                        -                             -
 Other operating income                                                                 2                        2                             -
 Administrative expenses excluding exceptional items                                    (2,262)                  (2,158)                       (4,765)
 Exceptional net credit                               4                                 -                        987                           986
 Total administrative expenses                                                          (2,262)                  (1,171)                       (3,779)
 Operating loss                                                                         (2,260)                  (1,169)                       (3,779)
 Finance income                                                                         163                      91                            216
 Finance expense                                                                        (24)                     (28)                          (55)
 Loss before taxation                                                                   (2,121)                  (1,106)                       (3,618)
 Taxation                                             5                                 512                      -                             174
 Loss for the financial period                                                          (1,609)                  (1,106)                       (3,444)

 Items that may be reclassified subsequently to profit or loss:
 Foreign currency translation differences                                               12                       (9)                           (19)
 Fair value decrease in respect of investments                                          (42)                     -                             (3)
 Total comprehensive expense for the period                                             (1,639)                  (1,115)                       (3,466)

 Basic and diluted earnings per share (pence)         6                                 (0.60)                              (0.45)                        (1.35)

 

 

The accompanying notes are an integral part of these condensed consolidated
financial statements.

 

Consolidated Statement of Financial Position

AS AT 30 JUNE 2023

                                     Note           30 June 2023      30 June    31 December 2022

                                                                      2022
                                               Unaudited              Unaudited  Audited
                                               £'000                  £'000      £'000
 Assets
 Non-current assets
 Intangible assets                   7         6,828                  1,527      5,476
 Property, plant and equipment                 1,626                  1,347      1,387
 Fair value through OCI investments  8         1,455                  -          1,497
 Trade and other receivables                   120                    120        120
                                               10,029                 2,994      8,480
 Current assets
 Inventories                         9         2,443                  3,889      2,363
 Trade and other receivables         10        2,304                  2,085      3,239
 Current asset investments                     8,000                  21,000     13,500
 Cash and cash equivalents                     4,907                  2,175      1,790
                                               17,654                 29,149     20,892
 Total assets                                  27,683                 32,143     29,372
 Liabilities
 Current liabilities
 Trade and other payables                      (717)                  (894)      (844)
 Deferred income                               (1,802)                (2,636)    (1,858)
 Lease liabilities                             (124)                  (117)      (121)
                                               (2,643)                (3,647)    (2,823)
 Non-current liabilities
 Deferred income                               (630)                  (278)      (641)
 Lease liabilities                             (673)                  (797)      (737)
                                               (1,303)                (1,075)    (1,378)
 Total liabilities                             (3,946)                (4,722)    (4,201)
 Net assets                                    23,737                 27,421     25,171
 Equity
 Called up share capital                       2,682                  2,654      2,654
 Share premium account                         27,707                 27,638     27,638
 Merger reserve                                3,702                  3,702      3,702
 Currency translation reserve                  (3)                    (5)        (15)
 Accumulated loss                              (10,351)               (6,568)    (8,808)
 Total equity                                  23,737                 27,421     25,171

 

 

The accompanying notes are an integral part of these condensed consolidated
financial statements.

 

 

Consolidated Statement of Changes in Equity

FOR THE PERIOD ENDED 30 JUNE 2023

                                             Called up share capital  Share premium account  Merger reserve  Foreign currency reserve  Accumulated loss  Total

                                                                                                                                                          equity

                                             £'000                    £'000                                           £'000

                                                                                             £'000                                     £'000

                                                                                                                                                         £'000
 Balance as at 1 January 2022                9                        5,545                  -               4                         (5,910)           (352)
 Loss for the financial year                 -                        -                      -               -                         (3,444)           (3,444)
 Other comprehensive expense                 -                        -                      -               (19)                      (3)               (22)
 Total comprehensive expense for the year    -                        -                      -               (19)                      (3,447)           (3,466)
 Share based payments                        -                        -                                      -                         549               549
 Capital reorganisation                      1,843                    (5,545)                3,702           -                         -                 -
 Issue of share capital                      802                      27,638                 -               -                         -                 28,440
 Total contributions by owners               2,645                    22,093                 3,702           -                         549               28,989
 Balance as at 31 December 2022              2,654                    27,638                 3,702           (15)                      (8,808)           25,171
 Loss for the financial period               -                        -                      -               -                         (1,609)           (1,609)
 Other comprehensive expense                 -                        -                      -               12                        (42)              (30)
 Total comprehensive expense for the period  -                        -                      -               12                        (1,651)           (1,639)
 Share based payments                        -                        -                      -               -                         108               108
 Issue of share capital                      28                       69                     -               -                         -                 97
 Total contributions by owners               28                       69                     -               -                         108               205
 Balance as at 30 June 2023                  2,682                    27,707                 3,702           (3)                       (10,351)          23,737

 

Comparatives for the six months ended 30 June 2022 are provided separately
below:

                                           Called up share capital  Share premium account  Merger reserve  Foreign currency reserve  Accumulated loss  Total

                                                                                                                                                        Equity

                                           £'000                    £'000                                    £'000

                                                                                           £'000                                     £'000

                                                                                                                                                       £'000
 Balance as at 1 January 2022              9                        5,545                  -               4                         (5,910)           (352)
 Loss for the financial period             -                        -                      -               -                         (1,106)           (1,106)
 Other comprehensive expense               -                        -                      -               (9)                       -                 (9)
 Total comprehensive expense for the year  -                        -                      -               (9)                       (1,106)           (1,115)
 Share based payments                      -                        -                      -               -                         448               448
 Capital reorganisation                    1,843                    (5,545)                3,702           -                         -                 -
 Issue of share capital                    802                      27,638                 -               -                         -                 28,440
 Total contributions by owners             2,645                    22,093                 3,702           -                         448               28,888
 Balance as at 30 June 2022                2,654                    27,638                 3,702           (5)                       (6,568)           27,421

 

Consolidated Cash Flow Statement

FOR THE PERIOD ENDED 30 JUNE 2023

                                                              6 months ended 30 June 2023   6 months ended 30 June 2022  Year ended

                                                                                                                         31 December 2022
                                                             Unaudited                      Unaudited                    Audited

                                                             £'000                          £'000                        £'000
 Cash flow from operating activities
 Loss for the financial period                               (1,609)                        (1,106)                      (3,444)
 Adjustment for:
 Depreciation and amortisation                               177                            109                          249
 Loss on disposal                                            -                              10                           5
 Share based payments                                        108                            (1,517)                      (1,416)
 Foreign exchange                                            16                             -                            (25)
 Net finance income                                          (139)                          (63)                         (161)
 Taxation credit                                             (512)                          -                            (174)
 Changes in working capital:
 Increase in inventories                                     (80)                           (1,807)                      (281)
 Decrease/(increase) in trade and other receivables          1,273                          (1,381)                      (2,361)
 (Decrease)/increase in trade and other payables             (194)                          742                          293
 Cash used in operations                                     (960)                          (5,013)                      (7,315)
 Income tax received                                         174                            143                          143
 Net cash used in operating activities                       (786)                          (4,870)                      (7,172)

 Cash flows from investing activities
 Current asset investments disinvested/(made)                5,500                          (21,000)                     (13,500)
 Purchase of property, plant and equipment                   (388)                          (129)                        (292)
 Purchase of intangible assets                               (1,384)                        (354)                        (4,316)
 Purchase of investments                                     -                              -                            (1,500)
 Net cash generated from/(used in) investing activities      3,728                          (21,483)                     (19,608)

 Cash flows from financing activities
 Issue of share capital (net of costs)                       97                             28,440                       28,440
 Interest received                                           163                            91                           216
 Related party loan repaid                                   -                              (382)                        (382)
 Interest paid                                               (24)                           (28)                         (55)
 Payment of lease liabilities                                (61)                           (73)                         (129)
 Net cash generated from financing activities                175                            28,048                       28,090

 Net increase in cash and cash equivalents                   3,117                          1,695                        1,310
 Cash and cash equivalents at the beginning of the period    1,790                          480                          480
 Cash and cash equivalents at the end of the period          4,907                          2,175                        1,790

 

 

Notes to the Condensed Interim Financial Statements

FOR THE PERIOD ENDED 30 JUNE 2023

 

 

1          Corporate information

Clean Power Hydrogen plc is a public company incorporated in the United
Kingdom and listed on the Alternative Investment Market ("AIM"). The
registered address of the Company is Unit D Parkside Business Park, Spinners
Road, Doncaster, England, DN2 4BL. The principal activity of the Company is as
a holding company for subsidiaries engaged in the development of a patented
method of hydrogen and oxygen production together with the development of a
gas separation technique which enables hydrogen to be produced as 'Green
Hydrogen' and oxygen to medical grade purity.

 

2          Basis of preparation

This unaudited condensed consolidated interim financial information for the
six months ended 30 June 2023 and 30 June 2022 has been prepared in accordance
with UK adopted international accounting standards ('IFRS') including IAS 34
'Interim Financial Reporting'.

 

The accounting policies applied by the Group include those as set out in the
consolidated financial statements for the Group for the year ended 31 December
2022 and are consistent with those to be used by the Group in its next
financial statements for the year ending 31 December 2023.

 

There are no new standards, interpretations and amendments which are not yet
effective in these financial statements, expected to have a material effect on
the Group's future financial statements.

 

The financial information does not contain all of the information that is
required to be disclosed in a full set of IFRS financial statements. The
financial information for the six months ended 30 June 2023 and 30 June 2022
is unaudited and does not constitute the Group or Company's statutory
financial statements for those periods.

 

The comparative financial information for the full year ended 31 December 2022
has, however, been derived from the audited statutory financial statements for
Clean Power Hydrogen plc for that period. A copy of those statutory financial
statements has been delivered to the Registrar of Companies. The auditor's
report on those accounts was unqualified and did not contain a statement under
section 498(2)-(3) of the Companies Act 2006.

These policies have been applied consistently to all periods presented, unless
otherwise stated.

 

The interim financial information has been prepared under the historical cost
convention with the exception of the fair values applied in accounting for
share based payments and investments. The financial information and the notes
to the historical financial information are presented in thousands of pounds
sterling ('£'000'), the functional and presentation currency of the Group,
except where otherwise indicated.

 

Going Concern

The Group's forecasts and projections to 31 December 2024 based on the current
trends in development and trading and after taking account of the funds
currently held, show that the Group will be able to operate within the level
of cash reserves.

 

The Directors therefore have a reasonable expectation that the Group have
adequate resources to continue in operational existence for the foreseeable
future and consider the going concern basis to be appropriate.

 

 

3          Segment reporting

IFRS 8, Operating Segments, requires operating segments to be identified on
the basis of internal reports that are regularly reviewed by the company's
chief operating decision maker. The chief operating decision maker is
considered to be the executive Directors.

 

The Group at this stage comprises only one operating segment for the
development and sale of equipment for the electrolytic production of clean
hydrogen and oxygen. This is monitored by the chief operating decision maker
and strategic decisions are made on the basis of adjusted segment operating
results.

4          Exceptional costs and credits
                                              30 June 2023      30 June  31 December 2022

                                                                2022
 Cash settled LTIP credit                -                      1,965    1,965
 Accelerated share based payment on IPO  -                      (374)    (374)
 IPO related costs                       -                      (604)    (605)
                                         -                      987      986

 

Pre IPO, the Group had an LTIP in place for a director with a cash-settled
bonus arrangement payable, linked to the Group value and share price over the
3 year period to September 2023. This was replaced with parent company options
with new terms and on cancelling the arrangement resulted in the reversal of
previous charges and an exceptional credit to income of £1,965,000.

5          Taxation

Tax credits in respect of research and development expenditure have been
recognised when submitted and on receipt to date whilst experience of claims
being collated and accepted is gained. The credit for the period to 30 June
2023 relates to the claim submitted for the year ended 31 December 2022 and
the credit for the year ended 31 December 2022 to the claim submitted and
received for 2021.

 
6          Earnings per share
                                                              30 June 2023      30 June  31 December 2022

                                                                                2022
 Loss used in calculating earnings per share (£'000)     (1,609)                (1,106)  (3,444)
 Weighted average number of shares for basic EPS ('000)  266,422                245,054  255,321
 Basic and diluted loss per share (pence)                (0.60)                 (0.45)   (1.35)

 

There is no dilutive effect on a loss. There are potentially dilutive options
in place over 22,333,279 ordinary shares at 30 June 2023.

 

 

7          Intangible fixed assets
                           Development costs  Patents                      Software  Total

                           £'000                                           £'000

                                              £'000                                  £'000
 Cost
 At 1 January 2023         5,291              171                          55        5,517
 Additions                 1,276              108                          -         1,384
 Reclassification          (5)                5                            -         -
 Exchange movements        -                  (4)                          -         (4)
 At 30 June 2023           6,562              280                          55        6,897
 Accumulated depreciation
 At 1 January 2023         -                  21                           20        41
 Charge for the period     -                  21                           7         28
 At 30 June 2023           -                  42                           27        69
 Net book amount
 At 30 June 2023           6,562              238                          28        6,828
 At 31 December 2022       5,291              150                          35        5,476

 The development costs relate to the direct expenditure incurred on the
Group's membrane free electrolysis technology.

8          Investments held at fair value through other comprehensive income
                                 £'000
 As at 1 January 2023                  1,497
 Movement in fair value                (42)
 Fair value at 30 June 2023            1,455

 

The Company holds 1,412,429 ordinary £0.02 shares in ATOME Energy plc,
representing 3.5% of its issued share capital at 30 June 2023 (3.9% at 1
January 2023).  ATOME Energy plc is listed on AIM and is focused on the
production, marketing and distribution of green hydrogen and ammonia.

 

The fair value at 30 June 2023 and 1 January 2023 is measured using the quoted
price on the AIM market at that date (a level 1 input using the price from an
active market).

 

 

 

9          Inventories
                                     30 June 2023      30 June  31 December 2022

                                                       2022

 Group and Company              £'000                  £'000    £'000
 Raw materials and consumables  1,692                  570      1,692
 Work in progress               751                    3,319    671
                                2,443                  3,889    2,363

No impairment of inventory has arisen.

 

Work in progress represents the costs incurred in the production of machines
for confirmed orders not yet completed at the balance sheet date.

 

 

10        Trade and other receivables
                                      30 June 2023      30 June  31 December 2022

                                                        2022

 Current                         £'000                  £'000    £'000
 Trade receivables               81                     -        84
 Other receivables               849                    688      2,053
 Tax recoverable                 512                    -        174
 Prepayments and accrued income  862                    1,397    928
                                 2,304                  2,085    3,239
 Non-current
 Other receivables               120                    120      120

 

There has been no significant revenue to 30 June 2023 and there have been no
impairment charges nor expected credit loss provisions made, as the credit
risk in respect of trade and other receivables is considered low. The
Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.

£475,000 of other receivables and deferred income relates to cash from a
customer held in escrow subject to completion of the order.

 

11            Related party transactions

Directors remuneration during the 6 month period ended 30 June 2023 amounted
to £337,000 (6 month period ended 30 June 2022 : £367,000).

 

 

Independent Review Report to Clean Power Hydrogen plc

FOR THE PERIOD ENDED 30 JUNE 2023

 

 

Conclusion

Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
report for the six months ended 30 June 2023 is not prepared, in all material
respects, in accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting" and the requirements of the AIM Rules for
Companies.

 

Basis for conclusion

We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity", issued for use in the United Kingdom.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with International
Standards on Auditing (UK), and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.

 

As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with UK adopted IASs. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34 "Interim
Financial Reporting".

 

Conclusions related to going concern

Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.

 

This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.

 

Responsibilities of directors

The directors are responsible for preparing the half-yearly financial report
in accordance with the AIM Rules for Companies.

 

In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the group
or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the
group a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
relating to going concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for conclusion paragraph of
this report.

 

Use of our report

Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London
Stock Exchange AIM Rules for Companies for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to any
other person or for any other purpose and we hereby expressly disclaim any and
all such liability.

 

 

PKF Littlejohn LLP

 

 

 

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