REG - Corre Energy B.V. - Full Year Results and Publication of Annual Report
26/05/2023 07:00
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RNS Number : 7386A Corre Energy B.V. 26 May 2023
26 May 2023
Corre Energy B.V.
(the "Company")
Full Year Results and publication of Annual Report and Accounts
Corre Energy is a leader in the development, operation and commercialisation
of Long Duration Energy Storage (LDES) projects that will enable the
construction and integration of large-scale renewables, accelerating
decarbonisation and enhancing the security and flexibility of energy systems.
Corre Energy today announces the publication of its financial results for the
year ended 31 December 2022.
2022 Highlights
· Industry-first offtake agreement, with 15-year contract with Eneco at
ZW1 project in the Netherlands
· ZW1 Commercial Close target affirmed for H1 2023
· GHH project in Denmark accelerated and supported H2 2023 Commercial
Close target
· Investment phase sees €10.6m loss recorded after tax, in line with
expectations (after elimination of non-cash share option revaluation)
· European policy environment significantly enhanced with launch of
REPowerEU
· North American subsidiary launched with local projects and funding
discussions underway
· Investment market buoyed by Inflation Reduction Act in US and
supportive policies in Canada
· Energy sector ramping up plans to integrate long duration storage
into future schemes
· Progress in 2022 triggered successful capital raises in May 2022 and
February 2023
Keith McGrane, CEO of Corre Energy, commented:
"2022 was about putting in place the building blocks for our growth whilst
maintaining prudent capital deployment. Our standout priority was to progress
our key sites to meet customer demand for long-term storage solutions from a
rapidly growing renewables sector seeking to secure and balance future
electricity supplies. Our projects in the Netherlands and Denmark both made
strong progress in 2022, underpinning our focus on the successful Commercial
Close targets for both sites during 2023.
"Off the back of our strong commercial performance we successfully raised
€10.9m in May 2022 and a €8.9m in February 2023. This has allowed the
Company to advance its near-term projects whilst positioning the business for
further planned pipeline growth. Corre Energy continues to make significant
commercial progress on existing and prospective projects in 2023, and we look
forward to providing a further market update in the near term."
The 31 December 2022 financial results - comprising a CEO Statement summary,
Financial Review and Financial Statements - is provided below. For a
comprehensive review of the year, please refer to the published Annual Report
and Accounts.
Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 December 2022 is now
available to view on the Company's website at: https://corre.energy/
(https://corre.energy/) .
Corre Energy B.V.
investors@corre.energy or +31 (0) 50 799 5060
Davy (Euronext Growth Listing Sponsor)
Barry Dixon, Head of Decarbonization Finance
barry.dixon@davy.ie or +353 87 689 9195
Murray Group (Financial PR and IR)
Pat Walsh, Managing Director
pwalsh@murraygroup.ie or + 353 87 226 9345
CEO STATEMENT
Policy in the right direction
I welcome the response by the EU Commission to addressing the energy security
and energy affordability crisis. Published in May 2022, REPowerEU set out a
number of critical policy responses such as accelerated permitting of
renewable energy, major increases in renewable energy targets and recognition
of the importance of energy storage where it is referenced as "acting in the
overriding public interest". In December 2022, the EU Commission announced
that REPowerEU rules for accelerated permitting be applied to all energy
storage. The decision of the European Parliament to include all energy storage
(standalone as well as co-located with renewables) under the new, accelerated
permitting rules for renewable projects in identified "go-to areas" is a
step-forward to realise strategic energy storage for Europe.
Setting clear timelines and developing better provisions on permitting for
energy storage will render it even more attractive to investors and accelerate
its deployment.
On 14 March 2023, the 'Commission Recommendation Energy Storage - Underpinning
a decarbonised and secure EU energy system' was adopted by the EU. It
addresses EU countries on the most important issues contributing to the
broader deployment of energy storage. Member states are to consider the double
role of "consumer-producer" of storage by applying the EU electricity
regulatory framework and by removing barriers, including avoiding double
taxation and facilitating permitting procedures. It also provides
recommendations to identify flexibility needs across different timescales and
to ensure that system operators assess these needs when planning network
developments.
On the financing side, the EU document suggests increasing the long-term
visibility and predictability of revenues to facilitate access to finance. The
energy storage industry has proposed a number of remuneration mechanisms to
the EU such as flexibility contracts for difference and long-term contracts
for peak shaving including market rules which would allow for stacking of
multiple ancillary services. All these measures are very welcome, and I look
forward to further details and the final recommendations which are to be made
in the coming months.
An Industry First Offtake Contract and Partnership for ZW1
Having made considerable commercial progress during 2022 at our ZW1 project in
the Netherlands, we ended the year with a major announcement that project has
secured a 15-year offtake agreement and partnership with Eneco. This accounts
for 100% of the storage capacity of the project involving an 84 hour or 3.5
day electricity storage duration. At the time of writing, it is understood
that the contract is an industry first for LDES whereby a multiday storage
solution in the form of hydrogen fuelled CAES has secured a long-term offtake
with an investment grade utility.
The ZW1 agreement was a watershed moment not just for the project but for our
business more generally. The offtake signing has underpinned the business
model of Corre Energy and the economics of ZW1. It recognises the value of
CAES based LDES in the wholesale market and confirms a significant hedging
value in a renewables' portfolio given the storage duration of 84 hours. In
addition, it confirms a viable and scalable use case for green hydrogen as a
renewable fuel for power generation through our CAES projects.
The announcement of the offtake agreement has attracted much interest from the
industry regarding potential offtake from the emerging pipeline of projects
and I expect this to continue into 2023. This achievement reflects the
maturing of the ZW1 project with final stage Front End Engineering Design
(FEED) nearing completion and validation of the revenue performance through
the Eneco contract. Permitting progress can benefit significantly from the
emergence of accelerated permitting policies and the company is engaging
heavily with stakeholders to achieve this for ZW1.
Accelerating the GHH
The Green Hydrogen Hub (GHH) across 2022 has seen much progress with a fresh
impetus coming from policy sentiment to put the project onto an accelerated
development timeline. Corre Energy's project team and our partners in Eurowind
and Gas Storage Denmark have responded well to a heightened objective to the
call for accelerating the project. Critical workstreams such as FEED and
permitting are progressing well, whilst considerable progress has been made
with Gas Storage Denmark towards an agreement to access an existing salt
cavern for the CAES facility. The project already enjoys interest from a range
of potential offtakers and market access parties and I look forward to the GHH
achieving a similar "offtake" commercial milestone in 2023 to that achieved by
ZW1 in December 2022.
Further Pipeline and North America
The company continued to progress negotiations regarding the origination of
new sites in Germany and across 2022 made considerable progress towards
agreeing penultimate terms to secure rights to several caverns. Into 2023,
these efforts continue in line with increasing interest from a range of
potential JV partners, storage offtakers and salt owners for further expansion
of pipeline opportunities across Denmark, Netherlands and Germany.
The Inflation Reduction Act which was passed by Congress and signed into law
by President Biden in August 2022 was the US equivalent to REPowerEU. An
investment Tax Credit (ITC) which can unlock funding support of 30-40% for
capital costs of stand-alone energy storage projects and a green hydrogen
Production Tax Credit (PTC) of $3/kg provided a clear market signal for Corre
Energy to enter the US market and position ourselves for project
opportunities. Since the announcement in the US, the Canadian Government has
announced an equivalent ITC for storage. We progressed two CAES project
opportunities in North America to advanced stages of negotiation and will seek
to close out at least one of these projects in 2023.
Funding and Finance
Firstly, I want to thank all of our investors for the continuing support to
Corre Energy across 2022 whereby a capital increase of €10.9m was achieved
in May 2022. This allowed the company to further its near-term projects whilst
positioning the company for further pipeline growth. The operational progress
of the near-term projects underpinned a strong share price performance across
the year and the company continued to experience inbound interest from a range
of industry operators and financial institutions regarding its activities,
which has continued into 2023. A further capital raise of €8.9m was secured
in February 2023, underpinning the continuing support from existing and new
investors towards the achievement of key commercial milestones for the near
term projects this year.
In line with expectations, we report a €30.2m loss after tax, or €10.6m
excluding the effect of non-cash revaluation of share options. This was
primarily driven by employee related costs of €5.6m and administration costs
of €7.0m. The Group's funding profile remains strong with €8.9m received
in the period. The Group capitalised project costs in the period of €6.7m.
Our people
I want to pay tribute to our incredible team of people who every day commit
themselves to break through the conventional boundaries of the industry. The
energy transition is about people as much as it is about engineering, finance,
permits and so on. Without great people we can't build a great company. It's
only right to commend dedication and tireless work of the Corre Energy team to
our mission, the unwavering support and loyalty of our investors, and the
commitment of our strategic industry partners. The team continues to
demonstrate our values of Visionary, Collaborative, Empowering, Challenging
and Integrity - all of which are key to delivering our mission to support the
transition to net zero and deliver material progress towards a decarbonised
world.
Outlook
Corre Energy has continued to build a market leading LDES team since its
inception. Comprising pioneers in energy storage, innovation, engineering
design, salt cavern expertise, regulatory specialists and financiers, the
company possesses the technical, commercial and financial skills to deliver on
its ambitions. We are addressing a fundamental problem to meaningfully
contribute towards the promise of a decarbonised world - the storage of
renewable energy, not just for hours but for many days. By doing so, fossil
based electricity generation is displaced, carbon emissions are avoided,
energy security is greatly increased whilst electricity prices are reduced.
The scale of the ambition at Corre Energy continues to rise. We are led by an
exceptionally motivated and dedicated management team who believe in our
purpose - to store, secure and share the world's limitless renewable energy.
We also greatly benefit from an equally dedicated, committed and loyal
shareholder base. It's why we are here and it's why we will continue to
prosper as a company into 2023. I am confident that we can continue to
succeed, matching our growth ambitions with scaling the capital base of the
business to meet the substantial addressable market which is in front of us.
As with 2022, I see 2023 as another year of breakthrough moments for Corre
Energy and I am thoroughly looking forward to the remainder of the year
ahead.
Financial Review
In 2022 the Group continued to carefully manage its financial position to
enable it to focus on and progress its main near-term projects, while
identifying further growth opportunities. This included raising additional
equity funding and rationalising the organisational structure to maximise
progress and sustainability.
Projects
Details of operational and strategic project progress are shared in the CEO's
Statement.
In the year we capitalised €5.9 million of project costs on the ZW1 project
to enable delivery of milestones such as the signing of the offtake agreement
with Eneco. For the first time we also capitalised costs relating to the GHH
project as it reached the appropriate stage of development, €0.7 million in
total. All capitalised project costs are classified as Caverns under
Construction in the financial statements. A further €0.3 million classified
as Project Costs in the financial statements was spent on early stage
development of the GHH project and progressing options on opportunities in
Germany, the USA and Canada.
The business continued to focus on progressing the flagship projects and, in
the period, incurred €5.6 million of employee expenses for staff that are
either directly involved in these activities or supporting in back-office
functions, and €7.0 million of associated administrative expenses.
We currently forecast that the ZW1 and GHH projects will continue in the
development phase until 2025. Once the construction phases commence, capital
expenditure on ZW1 and GHH is forecast to be around €450 million and €420
million respectively.
Funding
The Group ended the year with €3.4 million of cash, having successfully
raised €10.9 million of equity capital in June 2022. After the end of the
period, the Company raised a further €8.9 million in February 2023. These
successful funding rounds demonstrated the ongoing support of investors, both
old and new, for Corre Energy's proposition and the potential value of the
business model and future project success. The share price performed well in
the period, rising from €1.20 at the start of 2022 to €2.90 by the end of
the year, and continued to outperform the market through the early part of
2023.
An important element of the business funding relates to the achievement of key
project milestones, derisking projects and the business model for investors,
such as the signing of the Eneco offtake agreement for ZW1, or the acquisition
of land for GHH. Certainty of these milestones also unlock specific
pre-agreed funding sources, such as additional borrowing, developers' fees or
the potential for equity sell-down events. Commercial close on both the ZW1
and GHH projects, expected in 2023, should bring such significant funding
benefits.
As projects progress and mature, a wider range of funding options can become
available. We are constantly assessing the best and most efficient
combinations of debt, equity and ownership levels to enable us to achieve our
objectives, particularly as the projects move through the development and
construction phases.
Right-sizing for future success
Given the sharper focus on nearer-term projects, at the end of 2022 Corre
Energy streamlined its operations and cost base. This will significantly
lower operating costs for 2023, without impacting the speed of strategic and
operational progress on the Group's key projects.
Other key figures
The Group's loss after tax for the period was €30.2 million, including
€19.6 million of finance expenses, the majority of which are non-cash,
relating to revaluation of share options embedded in the IEEF II financing
agreement. The loss also includes €1.9 million reversal of CINEA grant
income, for more information see note 2 to the consolidated financial
statements.
Excluding the revaluation of share options the result is as expected, with an
adjusted loss after tax of €10.6 million. Expenditure remains focused on
project development, raising funds and strengthening back-office functions to
oversee and support these key activities.
Consolidated statement of comprehensive income for the period ended 31
December 2022
Note 2022 2021
€'000 €'000
Revenue 1 0 5
Other operating income 2 (1,709) 903
Expenses
Employee expenses 3 (5,623) (2,662)
Project costs 4 (328) (7)
Other Administrative expenses 5 (7,029) (4,808)
Operating result (14,689) (6,569)
Finance expense 6 (19,572) (1,031)
Result before tax (34,261) (7,600)
Corporation tax 7 4,044 3,653
Loss after tax (30,217) (3,947)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign exchange differences on translation of foreign operations 74 (4)
Total comprehensive income (30,143) (3,951)
Consolidated balance sheet at 31 December 2022
Note 2022 2021
€'000 €'000
Assets
Non-current assets
Intangible fixed assets 8 618 618
Tangible fixed assets 9 12,012 5,261
Lease right of use assets 10 517 99
Deferred tax assets 7 7,704 3,641
Total non-current assets 20,851 9,619
Current assets
Cash 11 3,432 13,375
Receivables, prepayments and accrued income 12 9,678 2,582
Total current assets 13,110 15,957
Total assets 33,961 25,576
Equity
Share capital 15 306 279
Share premium 15 21,560 11,501
Retained earnings (33,467) (3,250)
Foreign currency translation 70 (4)
Total equity (11,531) 8,526
Liabilities
Non-current liabilities
Long-term loans 13 31,559 11,646
Long-term lease liability 13 294 79
Long-term payables to participating interests 13 1,845 1,845
Total non-current liabilities 33,698 13,570
Current liabilities
Trade creditors 14 1,044 823
Payables to participating interests 14 7,293 1,123
Other current liabilities 14 3,457 1,534
Total current liabilities 11,794 3,480
Total liabilities 45,492 17,050
Total equity and liabilities 33,961 25,576
Consolidated statement of changes in equity for the period ended 31 December
2022
Share capital Share premium Retained earnings Foreign currency translation Total
€'000 €'000 €'000 €'000 €'000
Incorporation on 1 March 2021 0 - - - 0
Capital contribution - 742 - - 742
Issue of share capital 225 10 - - 235
Business combinations - - 664 - 664
Initial public offering (IPO) 54 11,965 - - 12,019
IPO transaction costs - (1,216) 33 - (1,183)
Loss for the period - - (3,947) - (3,947)
Other comprehensive income - - - (4) (4)
At 31 December 2021 279 11,501 (3,250) (4) 8,526
Issue of share capital 26 10,852 - - 10,878
Share issue transaction costs - (794) - - (794)
Loss for the period - - (30,217) - (30,217)
Other comprehensive income - - - 74 74
At 31 December 2022 306 21,560 (33,467) 70 (11,531)
Consolidated statement of cash flows for the period ended 31 December 2022
2022 2021
€'000 €'000
Cash flow from operating activities
Operating result (14,689) (6,569)
Depreciation 67 15
(Increase)/Decrease in Receivables, prepayments and accrued income (5,665) (2,330)
Increase/(Decrease) in Trade creditors 220 234
Increase/(Decrease) in Other Payables 5,875 1,096
Taxes paid (12) (107)
Total cash flow from operating activities (14,204) (7,661)
Cash flow from investment activities
Investments in Tangible fixed assets (6,771) (2,107)
Investments in Intangible fixed assets - (618)
New consolidations - 538
Total cash flow from investment activities (6,771) (2,187)
Cash flow from financing activities
Inflows from Capital Increases 10,085 10,837
Proceeds/(Repayment) of Borrowings 1,053 12,488
Interest Paid (17) (24)
Total cash flow from investment activities 11,121 23,300
Effect of changes in foreign exchange rates (89) (78)
Total cash flow (9,943) 13,375
Cash at start of period 13,375 -
Cash at end of period 3,432 13,375
Accounting policies
1 Corporate information
The Directors present the consolidated financial statements of Corre Energy
B.V. (the Company) for the year ended 31 December 2022. The Company was
incorporated in the Netherlands on 1 March 2021, and is registered as a
private company with limited liability under the Chamber of Commerce number
82068046, with its legal address and principal place of business in Groningen,
the Netherlands.
The Company is engaged in the development and construction of energy storage
facilities.
These consolidated financial statements were authorised for issue in
accordance with a resolution of the Directors on 25 May 2023.
2 Statement of compliance
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union (EU).
The principal accounting policies are summarised below and have been applied
consistently throughout the year, unless stated otherwise.
3 New and revised IFRS Accounting Standards
3.1 New and amended IFRS Accounting Standards that are effective for the current year
The Group has not early adopted any standard, interpretation or amendment that
has been issued but is not yet effective.
IAS 41 Agriculture and IFRS 1 First-time Adoption of International Financial
Reporting Standards are not applicable for the Group and therefore the
amendments to these standards have no impact on the financial statements.
A number of amendments to IFRS standards are mandatorily effective for
accounting periods that begin on or after 1 January 2022. These have been
adopted, although their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial statements. If the
relevant situations arise in future, the Group will apply the amendments
accordingly.
3.1.1 Amendments to IFRS 3 Reference to the Conceptual Framework
The Group has adopted the amendments to IFRS 3 Business Combinations for the
first time in the current year. The amendments update IFRS 3 so that it refers
to the 2018 Conceptual Framework instead of the 1989 Framework. They also add
to IFRS 3 a requirement that, for obligations within the scope of IAS 37
Provisions, Contingent Liabilities and Contingent Assets, an acquirer applies
IAS 37 to determine whether at the acquisition date a present obligation
exists as a result of past events. For a levy that would be within the scope
of IFRIC 21 Levies, the acquirer applies IFRIC 21 to determine whether the
obligating event that gives rise to a liability to pay the levy has occurred
by the acquisition date.
3.1.2 Amendments to IAS 16 Property, Plant and Equipment - Proceeds before Intended Use
The Group has adopted the amendments to IAS 16 Property, Plant and Equipment
for the first time in the current year. The amendments prohibit deducting from
the cost of an item of property, plant and equipment any proceeds from selling
items produced before that asset is available for use, i.e. proceeds while
bringing the asset to the location and condition necessary for it to be
capable of operating in the manner intended by management. Consequently, an
entity recognises such sales proceeds and related costs in profit or loss. The
entity measures the cost of those items in accordance with IAS 2 Inventories.
The amendments also clarify the meaning of 'testing whether an asset is
functioning properly'. IAS 16 now specifies this as assessing whether the
technical and physical performance of the asset is such that it is capable of
being used in the production or supply of goods or services, for rental to
others, or for administrative purposes.
If not presented separately in the statement of comprehensive income, the
financial statements shall disclose the amounts of proceeds and cost included
in profit or loss that relate to items produced that are not an output of the
entity's ordinary activities, and which line item(s) in the statement of
comprehensive income include(s) such proceeds and cost.
3.1.3 Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract
The Group has adopted the amendments to IAS 37 for the first time in the
current year. The amendments specify that the cost of fulfilling a contract
comprises the costs that relate directly to the contract. Costs that relate
directly to a contract consist of both the incremental costs of fulfilling
that contract (examples would be direct labour or materials) and an allocation
of other costs that relate directly to fulfilling contracts (an example would
be the allocation of the depreciation charge for an item of property, plant
and equipment used in fulfilling the contract).
3.1.4 Annual Improvements to IFRS Accounting Standards 2018-2020 Cycle
The Group has adopted the amendments included in the Annual Improvements to
IFRS Accounting Standards 2018-2020 Cycle for the first time in the current
year. The Annual Improvements include amendments to IFRS 9 Financial
Instruments. The amendments clarify that in applying the '10 per cent' test to
assess whether to derecognise a financial liability, an entity includes only
fees paid or received between the entity (the borrower) and the lender,
including fees paid or received by either the entity or the lender on the
other's behalf.
3.2 New and revised IFRS Accounting Standards in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not
applied the following new standards and amendments to existing standards that
have been issued but are not yet effective:
New standard / amendment Title / significant changes Effective from
IFRS 17 (including the June 2020 and December 2021 amendments to IFRS 17) Insurance contracts 1 January 2023
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Effective date has been removed by IASB
Venture
Amendments to IAS 1 Classification of Liabilities as Current or Non-current 1 January 2023
Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies 1 January 2023
Amendments to IAS 8 Definition of Accounting Estimates 1 January 2023
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single 1 January 2023
Transaction
IFRS 17 is not applicable for the Group and therefore the amendments to this
standard have no impact on the financial statements.
The Directors do not expect that the adoption of the amendments to the other
standards listed above will have a material impact on the consolidated
financial statements of the Group, although if the relevant situations arise
in future, the Group will apply the amendments accordingly. Each new standard
or amendment is summarised below.
3.2.1 Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a
sale or contribution of assets between an investor and its associate or joint
venture. Specifically, the amendments state that gains or losses resulting
from the loss of control of a subsidiary that does not contain a business in a
transaction with an associate or a joint venture that is accounted for using
the equity method, are recognised in the parent's profit or loss only to the
extent of the unrelated investors' interests in that associate or joint
venture. Similarly, gains and losses resulting from the remeasurement of
investments retained in any former subsidiary (that has become an associate or
a joint venture that is accounted for using the equity method) to fair value
are recognised in the former parent's profit or loss only to the extent of the
unrelated investors' interests in the new associate or joint venture.
The effective date of the amendments has yet to be set by the IASB; however,
earlier application of the amendments is permitted. The directors of the
Company anticipate that the application of these amendments may have an impact
on the Group's consolidated financial statements in future periods should such
transactions arise.
3.2.2 Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current
The amendments to IAS 1 published in January 2020 affect only the presentation
of liabilities as current or non-current in the statement of financial
position and not the amount or timing of recognition of any asset, liability,
income or expenses, or the information disclosed about those items.
The amendments clarify that the classification of liabilities as current or
non-current is based on rights that are in existence at the end of the
reporting period, specify that classification is unaffected by expectations
about whether an entity will exercise its right to defer settlement of a
liability, explain that rights are in existence if covenants are complied with
at the end of the reporting period, and introduce a definition of 'settlement'
to make clear that settlement refers to the transfer to the counterparty of
cash, equity instruments, other assets or services.
The amendments are applied retrospectively for annual periods beginning on or
after 1 January 2023, with early application permitted. The IASB is currently
considering further amendments to the requirements in IAS 1 on classification
of liabilities as current or non-current, including deferring the application
of the January 2020 amendments.
3.2.3 Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements-Disclosure of Accounting Policies
The amendments change the requirements in IAS 1 with regard to disclosure of
accounting policies. The amendments replace all instances of the term
'significant accounting policies' with 'material accounting policy
information'. Accounting policy information is material if, when considered
together with other information included in an entity's financial statements,
it can reasonably be expected to influence decisions that the primary users of
general purpose financial statements make on the basis of those financial
statements.
The supporting paragraphs in IAS 1 are also amended to clarify that accounting
policy information that relates to immaterial transactions, other events or
conditions is immaterial and need not be disclosed. Accounting policy
information may be material because of the nature of the related transactions,
other events or conditions, even if the amounts are immaterial. However, not
all accounting policy information relating to material transactions, other
events or conditions is itself material.
The IASB has also developed guidance and examples to explain and demonstrate
the application of the 'four-step materiality process' described in IFRS
Practice Statement 2.
The amendments to IAS 1 are effective for annual periods beginning on or after
1 January 2023, with earlier application permitted and are applied
prospectively. The amendments to IFRS Practice Statement 2 do not contain an
effective date or transition requirements.
3.2.4 Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors-Definition of Accounting Estimates
The amendments replace the definition of a change in accounting estimates with
a definition of accounting estimates. Under the new definition, accounting
estimates are "monetary amounts in financial statements that are subject to
measurement uncertainty".
The definition of a change in accounting estimates was deleted. However, the
IASB retained the concept of changes in accounting estimates in the Standard
with the following clarifications:
· A change in accounting estimate that results from new information or
new developments is not the correction of an error; and
· The effects of a change in an input or a measurement technique used
to develop an accounting estimate are changes in accounting estimates if they
do not result from the correction of prior period errors.
The IASB added two examples (Examples 4-5) to the Guidance on implementing IAS
8, which accompanies the Standard. The IASB has deleted one example (Example
3) as it could cause confusion in light of the amendments.
The amendments are effective for annual periods beginning on or after 1
January 2023 to changes in accounting policies and changes in accounting
estimates that occur on or after the beginning of that period, with earlier
application permitted.
3.2.5 Amendments to IAS 12 Income Taxes - Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The amendments introduce a further exception from the initial recognition
exemption. Under the amendments, an entity does not apply the initial
recognition exemption for transactions that give rise to equal taxable and
deductible temporary differences.
Depending on the applicable tax law, equal taxable and deductible temporary
differences may arise on initial recognition of an asset and liability in a
transaction that is not a business combination and affects neither accounting
nor taxable profit. For example, this may arise upon recognition of a lease
liability and the corresponding right-of-use asset applying IFRS 16 at the
commencement date of a lease.
Following the amendments to IAS 12, an entity is required to recognise the
related deferred tax asset and liability, with the recognition of any deferred
tax asset being subject to the recoverability criteria in IAS 12.
The IASB also adds an illustrative example to IAS 12 that explains how the
amendments are applied.
The amendments apply to transactions that occur on or after the beginning of
the earliest comparative period presented. In addition, at the beginning of
the earliest comparative period an entity recognises:
· A deferred tax asset (to the extent that it is probable that taxable
profit will be available against which the deductible temporary difference can
be utilised) and a deferred tax liability for all deductible and taxable
temporary differences associated with:
o Right-of-use assets and lease liabilities; and
o Decommissioning, restoration and similar liabilities and the corresponding
amounts recognised as part of the cost of the related asset.
· The cumulative effect of initially applying the amendments as an
adjustment to the opening balance of retained earnings (or other component of
equity, as appropriate) at that date.
The amendments are effective for annual reporting periods beginning on or
after 1 January 2023, with earlier application permitted.
4 Going concern
The business is at an early stage of development, and as such requires future
funding to continue its activities. The Group has been successful to date in
raising the required funding and has a clear plan to raise further funding to
allow the business to continue to trade until it becomes cash generative. The
Directors have made an assessment of the Group's ability to continue as a
going concern and are satisfied that the Group has, or has plans to mobilise,
sufficient resources to continue into the foreseeable future. Therefore these
financial statements have been prepared on the going concern basis.
5 Basis of preparation
The consolidated financial statements have been prepared on the historical
cost basis. Historical cost is generally based on the fair value of the
consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date, regardless of whether that price is directly observable
or estimated using another valuation technique. In estimating the fair value
of an asset or a liability, the Company takes into account the characteristics
of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the
measurement date. Fair value for measurement and/or disclosure purposes in
these financial statements is determined on such a basis.
For financial reporting purposes, fair value measurements are categorised into
Level 1, 2 or 3 based on the degree to which the inputs to the fair value
measurements are observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as follows:
· Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the measurement
date;
· Level 2 inputs are inputs, other than quoted prices included within
level 1, that are observable for the asset or liability, either directly or
indirectly; and
· Level 3 inputs are unobservable inputs for the asset or liability.
6 Basis of consolidation
These consolidated financial statements incorporate the financial statements
of the Company and entities controlled by the Company. Control is achieved
when the Company is exposed, or has rights, to variable returns from its
involvement with the entity, and can affect those returns through its power to
direct the activities of the entity. The Company reassesses whether it
controls an entity if facts and circumstances indicate that there are changes
to one or more of the elements of control.
Consolidation of an entity begins when the Company obtains control over the
entity and ceases when the Company loses control of the entity. Specifically,
income and expenses of a subsidiary acquired or disposed of during the year
are included in the consolidated statement of comprehensive income from the
date the Company gains control until the date when the Company ceases to
control the subsidiary.
All intra group assets and liabilities, equity, income expenses and cash flows
relating to transactions between members of the Group are eliminated in full
on consolidation.
6.1 List of participating interests
Corre Energy B.V. is the holding company of a group of legal entities.
The Company incorporated a new 100% owned subsidiary Corre Energy US LLC on 11
April 2022.
Corre Energy US LLC in turn incorporated a new 100% owned subsidiary Corre
Energy US Development Company LLC on 11 April 2022. Corre Energy US
Development Company LLC is researching new opportunities in North America.
The overview of the data as required in accordance with Articles 2:379 and
2:414 of the Dutch Civil Code is included below:
Name Country of registration Share in issued capital Included in consolidation
Corre Energy Storage B.V. The Netherlands 100% Yes
Corre Energy ApS Denmark 100% Yes
Corre Energy Ltd United Kingdom 100% Yes
Corre Energy Storage Limited Ireland 100% Yes
Corre Energy US LLC USA 100% Yes
Corre Energy US Development Company LLC USA 100% Yes
7 Foreign currency
Items included in the financial statements of Group companies are measured
using the currency of the primary economic environment in which the respective
group company operates (the functional currency). The consolidated financial
statements are presented in Euros, which is the functional and presentation
currency of Corre Energy B.V. All amounts have been rounded to the nearest
thousand, except where otherwise indicated.
Transactions in foreign currencies are stated in the financial statements at
the exchange rate ruling on the transaction date.
Assets, liabilities, income and expenses of consolidated subsidiaries with a
functional currency other than the presentation currency are translated at the
closing rate of exchange prevailing at the balance sheet date. Foreign
currency differences are recognised in Other Comprehensive Income and
accumulated in the Foreign Currency Translation Reserve within equity.
The following exchange rates for the most significant countries in which the
Group operates were used in the preparation of these financial statements:
In € Year-end 2021 Average 2021 Year-end 2022 Average 2022
UK Pounds Sterling 1.1768 1.1734 1.2748 1.1732
Danish Krone 0.1345 0.1345 0.1345 0.1344
US Dollar 0.8829 0.8847 0.9376 0.9509
8 Significant judgements and estimates
The preparation of these financial statements requires the Group to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the balance sheet date, and the reported loss for the period.
The Group uses estimates, assumptions and judgements which can have a
significant impact on the amounts recognised in the financial statements.
These estimates and assumptions are based on the most recent information
available, and the actual amounts may differ in the future.
Estimates and underlying assumptions are reviewed on a regular basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised or in the period of revision and future periods if the
revision impacts both the reporting period and future periods.
The judgements that the Directors consider to be the most important to these
financial statements are described below.
8.1 Capitalisation of project costs
IAS 16 requires costs that are directly attributable to bringing an asset to
the location and condition necessary for it to be capable of operating in the
manner intended by management to be capitalised, provided that these costs can
be measured reliably, and it is probable that future economic benefits
associated with the asset will flow to the Group. The Group is developing and
building two energy storage facilities; Zuidwending 1 and the Green Hydrogen
Hub, so costs that are incremental to the development of these projects must
be capitalised.
There is some judgement required to determine the point at which
capitalisation should begin, as management must determine whether it is
probable that future economic benefits associated with the asset will flow to
the Group. To decide this the long-term cash flows associated with the project
must be assessed in some detail.
The Group's Portfolio Governance Manual identifies seven phases in the life
cycle of a project, which are Initiate, Assess, Select, Refine, Construct,
Operate and Abandon. To move from one phase to the next a decision gate must
be passed, which requires the Decision Review Board, made up of senior
management, to agree to proceed with the project.
During the Assess phase project economics including funding strategy are
assessed in detail. Therefore management's judgement is that project costs
should be capitalised from the Select phase. Zuidwending 1 is in the Select
phase so its costs have been capitalised from December 2019 onwards, and the
Green Hydrogen Hub entered the Select phase in July 2022, so its costs have
been capitalised from this date.
The Directors currently expect Zuidwending 1 and the Green Hydrogen Hub to be
operational from 2027, and when operational cash flows are expected to exceed
the carrying values capitalised for both projects. There are no indicators of
impairment so project costs incurred are recognised in full at historical
cost.
8.2 Deferred tax
Due to the early stage of the business, some Group companies are loss making
as they incur costs to develop projects and to grow the business more
generally. This gives rise to deferred tax assets because losses can be offset
against future profits of the companies involved.
Management's judgement is that in the cases of Corre Energy B.V., Corre Energy
Storage B.V., Corre Energy ApS and Corre Energy Ltd there will be sufficient
future profits against which to offset these losses, so deferred tax assets
are recognised in full for these companies. Although it has carried forward
losses, no deferred tax asset is recognised for Corre Energy US Development
Company LLC due to its early stage of development.
8.3 Option valuation
As described in more detail in note 13 to the financial statements, as part of
a financing agreement Italian Energy Efficiency Fund II (IEEF II), an Italian
reserved alternative investment fund set up and managed by Fondo Italiano per
L'Efficienza Energetica SGR S.P.A. (FIEE), has been granted the option to
convert debt instruments into shares in the Company. The valuation of these
options requires the use of complex models operated by an external valuer, and
management judgement to be applied when selecting inputs. The key estimates
are projections of the Company's dividend yield, share price volatility and
probability of default.
9 Intangible fixed assets
Intangible fixed assets are presented at cost less accumulated amortisation
and impairment losses. Amortisation is charged as a fixed percentage of cost,
as specified in more detail in the notes to the balance sheet. The useful life
and the amortisation method are reassessed at the end of each financial year.
Cavern options are not amortised but are transferred to Tangible fixed assets
as Cavern development costs when cavern development commences.
10 Tangible fixed assets
Tangible fixed assets are presented at cost less accumulated depreciation and
impairment losses.
Depreciation is charged to the statement of comprehensive income on a
straight-line basis so as to write off the depreciable amount of each tangible
fixed asset over its estimated useful life, from the date it comes into use.
The depreciable amount is the cost of an asset less its residual value.
The estimated useful lives of the Group's Tangible fixed assets are:
· Leasehold property: 40 years (or lease term if shorter)
· Leased vehicles: 5 years (or lease term
if shorter)
· Furniture and fittings: 5 years
· IT equipment: 3 years
The residual value and useful life of property, plant and equipment are
reviewed at each balance sheet date and updated for any changes to previous
estimates.
Cavern development costs are valued at the lower of cost and the expected
realised value upon completion. They are not depreciated as they are not
available for use.
11 Leases
11.1 As a lessee
The Group assesses whether a contract is or contains a lease at inception of a
contract. The Group recognises a right of use asset and a corresponding lease
liability with respect to all lease agreements in which it is the lessee,
except for short-term leases (defined as leases with a lease term of 12 months
or less) and leases of low value assets. For these leases, the Group
recognises the lease payments as an operating expense on a straight-line basis
over the term of the lease unless another systematic basis is more
representative of the time pattern in which economic benefits from the leased
asset are consumed.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
Group uses the incremental borrowing rate of the lessee company.
Lease payments included in the measurement of the lease liability comprise:
· Fixed lease payments (including in-substance fixed payments), less
any lease incentives;
· Variable lease payments that depend on an index or rate, initially
measured using the index or rate at the commencement date;
· The amount expected to be payable by the lessee under residual value
guarantees;
· The exercise price of purchase options, if the lessee is reasonably
certain to exercise the options;
· Payments of penalties for terminating the lease, if the lease term
reflects the exercise of an option to terminate the lease; and
· Lease payments to be made under reasonably certain extension options.
The lease liability is subsequently measured by increasing the carrying amount
to reflect interest on the lease liability (using the effective interest rate
method) and by reducing the carrying amount to reflect the lease payments
made.
The Group remeasures the lease liability (and makes a corresponding adjustment
to the related right of use asset) whenever:
· The lease term has changed or there is a change in the assessment of
exercise of a purchase option, in which case the lease liability is remeasured
by discounting the revised lease payments using a revised discount rate;
· The lease payments change due to changes in an index or rate or a
change in expected payment under a guaranteed residual value, in which cases
the lease liability is remeasured by discounting the revised lease payments
using the initial discount rate (unless the lease payments change due to a
change in a floating interest rate, in which case a revised discount rate is
used); or
· A lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease liability is
remeasured by discounting the revised lease payments using a revised discount
rate.
The right of use assets comprise the initial measurement of the corresponding
lease liability, lease payments made at or before the commencement day and any
initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to restore a leased asset to
the condition required by the terms and conditions of the lease, a provision
is recognised and measured under IAS 37.
Right of use assets are depreciated over the shorter period of lease term and
useful life of the underlying asset. If a lease transfers ownership of the
underlying asset or the cost of the right-of-use asset reflects that the Group
expects to exercise a purchase option, the related right-of-use asset is
depreciated over the useful life of the underlying asset. The depreciation
starts at the commencement date of the lease.
The impacts on the statement of comprehensive income are the depreciation
charges on the right of use assets and the interest charges on the lease
liabilities.
11.2 As a lessor
The Group enters into lease agreements as a lessor with respect to some of its
office space.
Leases for which the Group is a lessor are classified as finance or operating
leases. Whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee, the contract is classified as a
finance lease. All other leases are classified as operating leases. The Group
does not act as a lessor for any finance leases.
Rental income from operating leases is recognised on a straight-line basis
over the term of the relevant lease. Initial direct costs incurred in
negotiating and arranging an operating lease are added to the carrying amount
of the leased asset and recognised on a straight-line basis over the lease
term.
When a contract includes lease and non-lease components, the Group allocates
the consideration under the contract to each component.
12 Impairment of fixed assets
On each balance sheet date the Group assesses whether there are any
indications that a fixed asset may
be impaired. If there are such indications it estimates the recoverable amount
of the asset and the impairment loss if any. If an asset does not generate
cash flows that are independent from those of other assets or groups of assets
the recoverable amount of the cash-generating unit to which the asset belongs
is determined.
The recoverable amount of an asset or cash-generating unit is the higher of
its fair value less cost to sell and its value in use. Value in use is the
present value of future cash flows from the asset or cash-generating unit
discounted at a rate that reflects market interest rates adjusted for risks
specific to the asset or cash-generating unit that have not been taken into
account in estimating future cash flows. If the recoverable amount of an asset
is less than its carrying value, an impairment loss is recognised immediately
in the statement of comprehensive income and the carrying value of the asset
reduced by the amount of the loss.
If it is established that an impairment that was recognised in the past no
longer exists or has reduced, the increased carrying amount of the asset
concerned is set no higher than the carrying amount that would have been
determined if no impairment value adjustment for the asset had been reported.
13 Financial instruments
Financial assets and financial liabilities are recognised when a Group entity
becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.
13.1 Effective interest rate method
The effective interest rate method is a method of calculating the amortised
cost of a debt instrument and of allocating interest income over the relevant
period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees and points paid or received
that form an integral part of the effective interest rate, transaction costs
and other premiums or discounts) through the expected life of the debt
instrument, or, where appropriate, a shorter period, to the net carrying
amount on initial recognition.
Income or expense is recognised on an effective interest basis.
13.2 Financial assets
After initial recognition financial assets must be designated as at fair value
through profit or loss, measured at amortised cost, designated as at fair
value through other comprehensive income or measured at fair value through
profit or loss.
A financial asset may be measured at amortised cost if:
· The asset is held within a business model whose objective is solely
to hold assets to collect contractual cash flows; and
· The contractual terms of the financial asset are solely payments of
principal and interest on the outstanding balance.
All financial assets meet these criteria and therefore are subsequently
measured at amortised cost less impairment allowance where applicable.
13.3 Financial liabilities
Debt and equity instruments issued by a Group entity are classified as either
financial liabilities or as equity in accordance with the substance of the
contractual arrangements and the definitions of a financial liability and an
equity instrument. An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting all its
liabilities. Equity instruments issued by the Group are recognised at the
proceeds received, net of direct issue costs.
After initial recognition financial liabilities must be designated as at fair
value through profit or loss or measured at amortised cost. The Group holds
all financial liabilities at amortised cost using the effective interest rate
method.
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire. The difference between
the carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in profit or loss.
13.4 Derivatives
The Group has issued options on the equity of Corre Energy B.V. to an advisor
and a finance provider in exchange for services provided.
These options are initially recognised at fair value in the company that
received the services. Fair value is determined based on the value of the
services provided, or if that is not available the fair value of the options
themselves, calculated using a Black-Scholes model or a more complex equity
convertible model as appropriate.
Options that will be settled by Group companies are revalued at each reporting
date, with the change in fair value recognised in the statement of
comprehensive income.
14 Cash
Cash is valued at fair value, which is its nominal value.
15 Other receivables
Other receivables are initially recognised at fair value and then valued at
amortised cost, which equals the nominal value after deduction of any
provision for expected credit losses. These provisions are determined based on
individual assessment of the receivables.
16 Current liabilities
Current liabilities are initially recognised at fair value. After initial
recognition current liabilities are recognised at amortised cost price, being
the amount received plus or minus any premiums, discounts and transaction
costs. This is usually equal to the nominal value.
17 Revenue
Revenue is recognised at the fair value of the consideration received or
receivable as the right to consideration accrues through the performance of
service obligations to the customer, in line with the requirements of IFRS 15.
The arrangements are always contractual and the cost of providing the service
is incurred as each service is performed. The price is always fixed and
determinable.
18 Other operating income
Other operating income is income that is not linked to the supply of goods or
services as part of normal, non-incidental operations. Other operating income
comprises grant income, NZIP income and rental income.
Grant income is recognised when there is reasonable assurance that the entity
will comply with the conditions attached to the grant and that it will be
received. The Company follows the income approach in accounting for grants,
and therefore recognises grants in income on a systematic basis over the
periods in which the related costs for which the grant is intended to
compensate are recognised. Specifically:
· Grants that are received for expenses already incurred or for the
purpose of giving financial support with no future related costs are
recognised in the statement of comprehensive income when they become
receivable. They are recognised as Other Income.
· Grants received for expenses to be incurred are recognised
proportionally to the expenses incurred.
· Grants related to assets are accounted for as deferred income and
recognised over the same period as the depreciation of the related asset.
Rental income is recognised when the services have been delivered. NZIP income
is recognised as each performance obligation is satisfied.
19 Financial income and expenses
19.1 Interest income and interest expenses
Interest income and expenses are recognised on a pro rata basis using the
effective interest rate of the assets and liabilities to which they relate. In
accounting for interest expenses, the recognised transaction expenses for
loans received are taken into consideration.
19.2 Currency translation differences
Currency translation differences arising upon the settlement or conversion of
monetary items are recognised in the statement of comprehensive income in the
period that they are realised.
20 Tax
Income tax expense or income, comprising current tax and deferred tax, is
recorded in the statement of comprehensive income except income tax on items
recognised outside profit or loss, which is credited or charged to other
comprehensive income or to equity as appropriate.
Current tax is income tax payable or recoverable in respect of the taxable
profit or loss for the year. Provision is made for current tax at rates
enacted or substantively enacted at the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable in respect of
temporary differences between the carrying amount of an asset or liability for
accounting purposes and its carrying amount for tax purposes. Deferred tax
liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that the
asset will be recovered. Deferred tax is not recognised on temporary
differences that arise from initial recognition of an asset or a liability in
a transaction (other than a business combination) that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred
tax is calculated using tax rates expected to apply in the periods when the
assets will be realised or the liabilities settled, based on tax rates and
laws enacted, or substantively enacted, at the balance sheet date.
Deferred tax assets and liabilities are offset where the Group has a legally
enforceable right to offset, and where they relate to income taxes levied by
the same tax authority.
Notes to the consolidated financial statements
1 Revenue
2022 2021
€'000 €'000
Revenue from related parties - 5
Total Revenue - 5
During 2021 the Group earned revenue from related parties for IT and administrative services.
2 Other operating income
2022 2021
€'000 €'000
CINEA grant income (1,934) 903
NZIP income 175 -
Rental income 50 -
Total Other operating income (1,709) 903
2.1 CINEA grant income
In December 2019 Corre Energy Storage B.V. was successful with a grant
application it had submitted to the European Innovation and Networks Executive
Agency (now the European Climate, Infrastructure and Environment Agency,
CINEA). In the grant agreement that followed a 40% prefinancing amount of
€1,774,000 was received in March 2020.
Subsequently the Covid global pandemic began. Like other businesses around the
world the Group had to adapt to new working conditions which presented many
challenges, including to communication and collaboration. Corre Energy Storage
B.V. submitted a grant reclaim in Q3 2022 which was rejected as not all
requirements were met to receive the funds. A challenge was rejected and the
co-financing amount was reduced with no further grant funding received.
Therefore some income previously recognised, including amounts accrued but not
yet received, has been reversed in the statement of comprehensive income in
2022.
The reduction in the co-financing amount will be paid in 24 equal monthly
instalments of €55,000 including interest beginning in December 2022.
2.2 NZIP income
In 2022 Corre Energy Ltd received €175,000 from the UK Government's
Department for Business, Energy & Industrial Strategy (BEIS) for its work
on Phase 1 of the Longer Duration Energy Storage Demonstration Programme, part
of the Net Zero Innovation Portfolio (NZIP).
2.3 Rental income
The Group received rental income for office space provided to Gibson Watts
Limited, a company controlled by Darren Green, a Director. See note 18 for
further information.
3 Employee expenses
2022 2021
€'000 €'000
Salaries 4,839 1,907
Pension costs 286 48
Social security costs 510 220
Other benefits 127 8
Capitalised staff costs (713) (247)
Staff costs 5,049 1,936
Management Fees 451 720
Contractor costs 93 1
Other employee expenses 30 5
5,623 2,662
Capitalised staff costs represent the value of staff costs capitalised to
caverns under construction as part of the Zuidwending 1 and Green Hydrogen Hub
projects.
The average number of full-time equivalent employees during the period is
broken down below.
2022 2021
Corre Energy Storage B.V. 1 1
Corre Energy Ltd 26 13
Corre Energy Storage Limited 7 5
Corre Energy ApS 3 -
Total 37 19
The Group operates defined contribution pension schemes, and as such the
commitment to the participating employees consists of paying any outstanding
contribution. Participation in the pension scheme is optional, employees are
automatically enrolled but can choose to opt out.
4 Project costs
Project costs represent amounts spent on projects that are not capitalisable due to their stage of development. Costs relating to the Green Hydrogen Hub project in Denmark were capitalised from July 2022, so the below table includes costs relating to the Green Hydrogen Hub project for the first half of 2022.
2022 2021
€'000 €'000
Commercial Development 120 7
Planning and Permitting 46 -
Engineering Design, Surface and Caverns 90 -
Project Management 40 -
Project Legals 32 -
328 7
5 Other administrative expenses
2022 2021
€'000 €'000
Legal & professional costs 5,557 4,144
Travel costs 708 259
Recruitment costs 152 93
IT costs 192 87
Office costs 330 52
Marketing & Communications costs 39 92
Other operating expenses 51 81
7,029 4,809
Included in legal and professional costs are the following amounts payable to
the auditor, Blue Line Accountants B.V.:
2022 2021
€'000 €'000
Financial statements audit 94 47
Other audit services 10 32
104 79
Fees for financial statements audit comprise the audit of the financial
statements of the Company and its subsidiary Corre Energy Storage B.V.. Fees
for other audit services comprise review of related party transactions in 2022
and special purpose financial statements in 2021.
6 Finance expense
2022 2021
€'000 €'000
Interest and similar expenses 1,058 24
Option revaluation 18,352 933
Foreign exchange losses 162 74
19,572 1,031
The option revaluation charge relates to the equity linked funding agreement
with Italian Energy Efficiency Fund II (IEEF II). See note 13 for further
information on the agreement.
7 Corporation tax
7.1 Income tax recognised in statement of comprehensive income
2022 2021
€'000 €'000
Corporation tax to pay (3) (4)
Deferred tax income 4,047 3,657
4,044 3,653
There is no income tax relating to foreign exchange differences on translation
of foreign operations, which are recognised in other comprehensive income.
7.2 Current tax receivable and payable
2022 2021
€'000 €'000
Other taxes receivable 382 222
Corporate tax payable 1 4
Other taxes payable 238 84
239 88
In the balance sheet other taxes receivable are included in receivables,
prepayments and accrued income, and other taxes payable are included in other
current liabilities.
7.3 Reconciliation of effective tax rate
2022 2021
€'000 €'000
Loss before tax 34,261 7,600
Statutory tax rate 25.6% 25.2%
Tax at statutory tax rate 8,768 1,915
Deferred tax assets recognised in respect of prior years - 442
Deferred tax assets recognised in respect of capital expenditure 498 990
Deferred tax assets not recognised (159)
Expenses not recognised in accounting records 190 314
Non-taxable income (499) 233
Expenses not deductible (4,735) (241)
Other differences (19) -
Effective tax amount 4,044 3,653
The statutory tax rate of 25.6% (2021: 25.2%) has been calculated taking into
account the statutory tax rates in the Netherlands, Denmark, the UK, the
Republic of Ireland and Delaware, USA.
The reconciling items are explained as follows:
· A deferred tax asset exists in respect of differences in the
accounting value and tax basis value of caverns under construction,
specifically the Zuidwending 1 (ZW1) project. During the period this was
adjusted due to changes in CINEA grant income recognised. See note 2 for
further information.
· No deferred tax asset has been recognised for the losses of Corre
Energy US Development Company LLC due to its early stage of development.
· Expenses not recognised in the accounting records are incremental
costs directly attributable to equity raising, which have been accounted for
as a deduction from equity.
· Non-taxable income is grant income, which for the purpose of the tax
computation is offset against caverns under construction. During the period
this was adjusted due to changes in CINEA grant income recognised. See note 2
for further information.
· Expenses not deductible represents the cost of revaluation of the
options contained in the equity linked funding agreement with IEEF II. See
note 6 for further information.
7.4 Deferred tax assets
Deferred tax assets have arisen due to temporary differences attributable to
tax losses. The Group is largely pre-revenue with high initial development
expenditure in early years. The Directors have performed tax planning and
consider it probable based on profit forecasts that future taxable profits
will be generated against which tax losses can be utilised.
A deferred tax asset has also arisen due to differences in the accounting
value and tax basis value of caverns under construction, specifically the ZW1
project.
The deferred tax asset may be analysed as follows:
Tax losses carried forward Caverns under construction Total
€'000 €'000 €'000
At 1 March 2021 - - -
Credited to the income statement 2,667 990 3,657
At 31 December 2021 2,667 990 3,657
Credited to the income statement 3,549 498 4,047
At 31 December 2022 6,216 1,488 7,704
No deferred tax asset was recognised at acquisition of any subsidiary.
8 Intangible fixed assets
The movement in intangible fixed assets is as follows:
Cavern options
€'000
Cost and Net book value
At 1 March 2021 -
Additions 618
At 31 December 2021 618
Additions -
At 31 December 2022 618
Cavern options represent the cost of entering into a contract with Nouryon
Salt B.V., which forms part of the Nobian group (hereafter referred to as
Nobian), to develop caverns for the purpose of the energy storage business in
the Netherlands and Denmark. These contracts are exclusive, preventing the
Group or Nobian from entering into discussions concerning CAES projects in the
Netherlands or Denmark with any other party.
These are held as intangible assets until such time as a project reaches a
capitalisable stage of development, at which point these are transferred to
tangible assets as caverns under construction. Cavern options are not in use,
therefore they are not amortised.
During 2021 the Group acquired the rights to four sites that have not yet
reached capitalisation from its related party Corre Energy Limited, a company
controlled by Darren Green, a director.
9 Tangible fixed assets
The movement in tangible fixed assets is as follows:
Caverns under construction Furniture IT equipment Total
€'000 €'000 €'000 €'000
Cost
At 1 March 2021 - - - -
Acquired through business combination 3,159 - - 3,159
Additions 2,065 3 39 2,107
At 31 December 2021 5,224 3 39 5,266
Additions 6,738 - 33 6,771
At 31 December 2022 11,962 3 72 12,037
Accumulated depreciation
At 1 March 2021 - - - -
Charge for the period - 0 5 5
At 31 December 2021 - 0 5 5
Charge for the period - 1 19 20
At 31 December 2022 - 1 24 25
Net book value at 31 December 2022 11,962 2 48 12,012
Caverns under construction comprises costs that are directly attributable to
development or construction of caverns for use in the energy storage business.
These are not depreciated but are reviewed for indicators of impairment at
each reporting date.
10 Leases
Leases with a contractual term of less than one year and/or a value less than
€5,000 are considered short term and/or leases of low value items. The Group
has elected not to recognise right of use assets and lease liabilities for
these leases. Apart from these the Group leases cars in the Netherlands and
Ireland and offices in the UK and Denmark.
Information about leases is presented below.
10.1 Lease right of use assets
Vehicles Offices Total
€'000 €'000 €'000
Cost
At 1 March 2021 - - -
Additions 109 - 109
At 31 December 2021 109 - 109
Additions 117 341 458
At 31 December 2022 226 341 567
Accumulated depreciation
At 1 March 2021 - - -
Charge for the period 10 - 10
At 31 December 2021 10 - 10
Charge for the period 30 10 40
At 31 December 2022 40 10 50
Net book value at 31 December 2022 186 331 517
10.2 Lease liabilities
2022 2021
€'000 €'000
Current 210 22
Non-current 294 78
504 100
10.3 Amounts recognised in the statement of comprehensive income
2022 2021
€'000 €'000
Interest on lease liabilities 11 3
Depreciation of right of use assets (40) 10
Short-term lease expenses 236 187
207 200
10.4 Amounts recognised in the cash flow statement
The total cash outflow for leases in the period was €372,000 (2021:
€211,000).
11 Cash
2022 2021
€'000 €'000
Cash 3,432 13,375
3,432 13,375
All cash is held in on demand facilities and is at free disposal. The Group
has no current account credit facilities with its banks.
12 Receivables, prepayments and accrued income
Amounts falling due within one year:
2022 2021
€'000 €'000
Accrued grant income - 164
Receivables from participating interests 8,363 1,466
Receivables from other related parties 12 16
Prepayments 921 698
Taxes receivable 382 238
9,678 2,582
See note 7 for information on items included in taxes receivable and note 18
for information on items included in receivables from participating interests
and receivables from other related parties.
Prepayments includes €383,000 (2021: €383,000) of legal and advisory costs
incremental to obtaining a loan facility with Infracapital, this facility is
described in note 21.3. When the loan is drawn these costs will be recognised
over the life of the loan using the effective interest rate method.
The Directors consider that the carrying amount of receivables, prepayments
and accrued income approximates their fair value.
13 Non-current liabilities
2022 2021
€'000 €'000
IEEF II loan 30,942 11,553
N.V. NOM loan - 93
CINEA grant payable 617 -
Long-term loans 31,559 11,646
Long-term lease liability 294 79
Long-term payables to participating interests 1,845 1,845
13.1 IEEF II loan
In June 2021 Corre Energy B.V. entered an equity linked funding agreement with
IEEF II. Under the terms of this agreement the Company drew down €3m in June
2021 and €8m in October 2021, with a further €4m or €9m (at the sole
discretion of IEEF II) payable at commercial close of the Zuidwending 1
project.
No interest shall accrue and be paid on the principal amount of the funding
outstanding, unless Corre Energy B.V. is in breach of certain obligations
under the equity linked funding agreement, in which case interest is payable
at 10%. The principal amount and any accrued interest shall be repaid no later
than the funding end date of 30 June 2028.
IEEF II has the option to convert the instruments to shares in Corre Energy
B.V. at €1 per share at any point from 12 months after a tranche has paid
out to 30 June 2028.
If the Company pays a dividend IEEF II is entitled to receive the same amount
per 'share' as if the amount paid by IEEF II under the equity linked funding
agreement had been converted to shares at that point in time.
13.2 N.V. NOM loan
This represents amounts due to N.V. NOM, Investerings- en
Ontwikkelingsmaatschappij voor Noord-Nederland more than 12 months after the
balance sheet date. See note 14 for more information.
13.3 CINEA grant payable
This represents amounts due to CINEA more than 12 months after the balance
sheet date. See note 2 for more information.
13.4 Long-term payables to participating interests
This represents amounts payable to Corre Energy Partnership SCSp. See note 18
for further information.
13.5 Fair value
The Directors consider that the fair values of the N.V. NOM loan, CINEA loan
repayment and non-current lease liability are not materially different to
their carrying amounts, since in all cases the interest payable is close to
the current market rate and the value is relatively low.
In accordance with our accounting policies, the embedded derivative in the
IEEF II loan is held at fair value, and the host loan is held at amortised
cost. The below table compares the fair value of the whole instrument with its
carrying value. It is classified as Level 3 in the fair value hierarchy due to
the use of unobservable inputs, including own credit risk.
2022 2021
€'000 €'000
IEEF II loan 32,729 15,839
Long-term payables to participating interests 1,517 1,590
14 Current liabilities
Amounts falling due within one year:
2022 2021
€'000 €'000
Third party creditors 1,016 765
Payables to related parties 28 58
Trade creditors 1,044 823
Corre Energy Group Holdings C.V. 7,172 - 1,123
Corre Energy General Partner B.V. 121 -
Payables to participating interests 7,293 1,123
Long-term debt due within 12 months 780 186
Taxes payable 238 88
Deferred income 482 -
Accruals and other liabilities to third parties 1,934 642
Accruals and other liabilities to related parties 23 618
Other current liabilities 3,457 1,534
Long-term debt due within 12 months represents amounts due to N.V. NOM and
CINEA. In August 2021 Corre Energy Storage B.V. drew down €360,000 on a loan
facility from N.V. NOM, Investerings- en Ontwikkelingsmaatschappij voor
Noord-Nederland. The loan is repayable in eight quarterly instalments
beginning on 30 September 2021, with interest payable at 3% per annum,
therefore the remaining balance is due within 12 months of the balance sheet
date. See note 2 for more information on the CINEA grant.
Deferred income represents amounts received under grant agreements that are
not yet recognisable in the statement of comprehensive income, including
amounts received under the CINEA grant. See note 2 for more information.
For further information on payables to related parties, payables to
participating interests and accruals and other liabilities to related parties
see note 18.
The Directors consider that the carrying amount of current liabilities
approximates their fair value.
15 Called up share capital
The below table shows the movements in allotted, called up and fully paid
ordinary shares of Corre Energy B.V.:
Number Nominal value Share capital Share premium
€ € €
At 1 March 2021 100 0.1000 10 -
Capital contribution 742,110
Capital conversion 2,300 0.0045 10 742,110
Issue of share capital 49,997,700 0.0045 224,990 10,004
Initial public offering (IPO) 12,018,846 0.0045 54,085 11,964,761
IPO transaction costs - - - (1,215,548)
At 31 December 2021 62,018,846 0.0045 279,085 11,501,327
Issued share capital 5,880,498 0.0045 26,462 10,852,459
Share issue transaction costs - - - (794,240)
At 31 December 2022 67,899,344 0.0045 305,547 21,559,546
On 1 March 2021 the Company was incorporated with an initial issued share
capital of 100 ordinary shares of €0.10, which were issued to Corre Energy
Partnership SCSp.
On 29 March 2021 the Company acquired 100% of the share capital of Corre
Energy Storage B.V. as a contribution with an attributed value of €742,110.
On 7 May 2021:
· Corre Energy Partnership SCSp transferred the 100 ordinary shares to
Corre Energy Group Holdings C.V. by means of a deed of transfer of shares;
· The Company executed a deed of amendment to its Articles of
Association to divide the issued share capital of 100 ordinary shares of
€0.10 each into 2,300 ordinary shares of €0.0045 each; and
· The Company issued a further 49,997,700 ordinary shares with a
nominal value of €0.0045 each to Corre Energy Group Holdings C.V., which
settled these by payment of €234,994, the additional €10,004 above the
nominal value being accounted for as share premium.
On 23 September 2021 the Company completed its initial public offering (IPO),
issuing 12,018,846 new shares at €1 per share. Incremental costs directly
attributable to the IPO that otherwise would have been avoided have been
accounted for as a deduction from equity.
On 8 June 2022 the Company issued a further 5,880,498 shares at €1.85 per
share, increasing share capital by €26,462 and share premium by
€10,058,229 after accounting for costs incremental to the placing.
As documented more fully in note 13, the Company has entered an equity linked
funding arrangement with IEEF II. Under the terms of this agreement IEEF II
may provide up to €20m of funding, and has the option to convert the funding
to shares in Corre Energy B.V. at €1 per share. If the Company pays a
dividend IEEF II is entitled to receive the same amount per 'share' as if the
amount paid by IEEF II under the equity linked funding agreement had been
converted to shares at that point in time.
16 Cameron Barney share options
Included in IPO transaction costs in the statement of changes in equity is
€33,000 of cost for share options issued to Cameron Barney LLP (Cameron
Barney), a financial advisor. As part of their remuneration for work performed
on the IPO Cameron Barney were granted share options in the Company, which
will be filled using shares held by the Company's parent, Corre Energy Group
Holdings C.V.. This has been recognised as a deduction to share premium and an
increase in retained earnings in accordance with the requirements of IFRS 2
and IAS 32.
17 Earnings per share
2022 2021
€ cents € cents
Basic (46.2) (9.2)
Diluted (14.2) (6.4)
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings
2022 2021
€'000 €'000
Earnings for the purpose of basic earnings per share
- Net loss attributable to owners of the Company (30,217) (3,942)
Effect of dilutive potential ordinary shares:
- Finance costs of equity linked funding agreement 19,388 945
Earnings for the purpose of diluted earnings per share (10,829) (2,997)
Number of shares
2022 2021
Number Number
Weighted average number of ordinary shares for basic earnings per share 65,353,813 42,918,098
Effect of dilutive potential ordinary shares:
- Equity linked funding agreement 11,000,000 3,770,492
Weighted average number of ordinary shares for diluted earnings per share 76,353,813 46,688,590
The equity linked funding agreement with IEEF II, which is described in more
detail in note 13, gives rise to potential ordinary shares. These have been
included in the determination of diluted earnings per share but not basic
earnings per share.
18 Related party transactions
Balances and transactions between the Company and its subsidiaries, which are
related parties of the Company, have been eliminated on consolidation and are
not disclosed in this note. Details of transactions between the Group and
other related parties are disclosed below.
18.1 Remuneration of key management personnel
The Group's key management personnel are the Executive Directors and
Non-Executive Directors. The remuneration of key management personnel is set
out below in aggregate for each of the categories specified in IAS 24 Related
Party Disclosures, with additional disclosures in the Directors' remuneration
report. Note that some key management personnel were remunerated via
management companies, and this is included here to improve disclosure.
2022 2021
€'000 €'000
Short-term employee benefits - 127
Post-employment benefits - 4
Remuneration via group companies 307 212
Remuneration via management companies 422 270
729 613
18.2 Other transactions with related parties
The following other transactions occurred with related parties:
2022 2021
€'000 €'000
Income
Sales to entities controlled by key management personnel - 5
Other income from entities controlled by key management personnel 50 -
Purchases
Reimbursement of expenses 59 31
Purchases of services from participating interests 4,732 3,113
Purchases of services from other entities controlled by key management 321 1,191
personnel
Capital purchase from other entity controlled by key management personnel - 618
Other income from entities controlled by key management personnel represents
rental income for office space leased to Gibson Watts Ltd, a company
controlled by Darren Green, a Director.
Purchases of services from participating interests represent the following
services acquired from the Company's parent, Corre Energy Group Holdings C.V.:
· Consultancy and management services;
· Recruitment services;
· IT services; and
· Use of office space.
Corre Energy Group Holdings C.V. is the head office of the wider group and as
such incurs the majority of corporate costs, either on its own account or
through its general partner Corre Energy General Partner B.V.. Invoiced costs
relating to activities of the Group are recharged to Group companies at cost
with no mark-up. Staff costs relating to activities of the Group are recharged
with a small mark-up, appropriate to compensate Corre Energy Group Holdings
C.V. for its work performed.
During the period the Group acquired the following services from Procorre UK
Ltd and Gibson Watts UK Ltd, companies controlled by Darren Green, a Director:
· Marketing and social media services; and
· Recruitment services and provision of consultants.
In 2021 the capital purchase from other entities controlled by key management
personnel is the purchase of cavern options from Corre Energy Limited, a
company controlled by Darren Green, a Director.
18.3 Balances with related parties
At the end of the period the following balances were outstanding with related
parties:
2022 2021
€'000 €'000
Current receivables:
- Participating interests 8,363 1,466
- Companies controlled by key management personnel 12 16
Current payables:
- Payables to key management personnel - 30
- Payables to companies controlled by key management personnel 28 28
- Payables to participating interests 7,293 1,123
- Accruals and other liabilities to key management personnel 72 -
- Accruals and other liabilities to companies controlled by key management - 618
personnel
Loans from related parties:
- Participating interests 1,845 1,845
Receivables from participating interests comprises €4,601,000 due from Corre
Energy Group Holdings C.V., the Company's immediate parent, and €3,640,000
due from Corre Energy General Partner B.V., which is Corre Energy Group
Holdings C.V.'s general partner. No interest is payable on these amounts and
there are no repayment schedules.
Payables to participating interests represents amounts payable to Corre Energy
Group Holdings C.V. resulting from purchases of services described in note
18.2. No interest is payable on this amount and there is no repayment
schedule.
Loans from participating interests represents amounts payable to Corre Energy
Partnership SCSp under the following facilities:
· On 28 March 2021, Corre Energy Partnership SCSp provided Corre Energy
Storage B.V. with an interest free shareholder loan in the amount of
€1,800,000. At the balance sheet date €1,600,000 was outstanding. The loan
has a term of five years and is repayable in full at the end of the term or as
the parties may otherwise agree.
· On 19 April 2021 Corre Energy Partnership SCSp provided the Company
with an interest free shareholder loan in the amount of €500,000. At the
balance sheet date €245,000 was outstanding. The latest date for full
repayment of this loan is 30 April 2026 unless otherwise agreed by the
parties.
19 Financial risk management
This note explains the Group's exposure to financial risks and how these risks
could affect the Group's future financial performance. Current year profit and
loss information has been included where relevant to add further context.
The Group's financial risk management is controlled by Finance under policies
approved by the Board of Directors. Finance identifies, evaluates and manages
financial risks in close cooperation with other teams across the Group as
required, reporting risk exposures and actions to the Board. The key financial
risks facing the Group are market risk (including foreign exchange risk and
interest rate risk) and liquidity risk.
19.1 Market risk
19.1.1 Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk,
primarily from UK Pounds Sterling (GBP). Foreign exchange risk arises from
future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the functional currency of the relevant
Group entity.
The Group's balance sheet exposure to foreign exchange risk at the end of the
period, expressed in Euro, was as follows:
2022
GBP DKK USD
€'000 €'000 €'000
Cash 547 46 66
Receivables, prepayments and accrued income 78 3 -
Trade creditors (119) (141) (2)
Other current liabilities (288) (255) (35)
2021
GBP DKK USD
€'000 €'000 €'000
Cash 14 7 2
Receivables, prepayments and accrued income 11 6 -
Trade creditors (49) (61) -
Other current liabilities (103) - -
The aggregate foreign exchange loss recognised in the statement of
comprehensive income was €162,000 (2021: €74,000).
The sensitivity of profit or loss to changes in exchange rates arises
primarily from GBP denominated salaries and supplier costs. The impact on
pre-tax loss of an increase or decrease of 10% in the Euro/GBP exchange rate
would have been €568,000 increase or decrease respectively (2021:
€314,000).
19.1.2 Interest rate risk
The Group has no borrowings or deposits that are directly exposed to changes
in interest rates, therefore profit or loss is not directly affected by higher
or lower interest cost as a result of changes in interest rates.
19.2 Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its financial
obligations as they fall due.
Developing projects requires large amounts of funding to be raised and spent
to reach milestones that unlock further liquidity. In some cases these
milestones are formally agreed with funding providers, and in other cases
these are the milestones that management judge to be most important. Funding
comes from a variety of sources including institutional investors, high net
worth individuals, individual small shareholders and grants.
The Directors are ultimately responsible for liquidity management, with
day-to-day management performed by Finance. The key controls to manage
liquidity risk are robust budgeting and purchase approval processes, and the
Directors monitor key liquidity risk metrics including comparison of cash flow
with budget and review of downside forecasts.
The following table sets out the earliest possible contractual maturities of
the Group's financial liabilities and financial assets. Deferred tax assets
are shown in the period that the Directors expect them to reverse.
2022
Carrying amount Contractual cash flows < 1 year 1 to 2 years 2 to 5 years > 5 years
€'000 €'000 €'000 €'000 €'000 €'000
Deferred tax assets 7,704 7,704 - 58 - 7,646
Other receivables, prepayments and accrued income 9,678 9,678 9,678 - - -
Cash 3,432 3,432 3,432 - - -
Total inflows 20,814 20,814 13,110 58 - 7,646
Long-term loans 32,339 12,397 780 617 - 11,000
Lease liability 504 551 233 223 95 -
Trade creditors 1,044 1,044 1,044 - - -
Payables to participating interests 9,138 9,138 7,293 - 1,845 -
Other current liabilities 2,469 2,469 2,469 - - -
Total outflows 45,494 25,599 11,819 840 1,941 11,000
2021
Carrying amount Contractual cash flows < 1 year 1 to 2 years 2 to 5 years > 5 years
€'000 €'000 €'000 €'000 €'000 €'000
Deferred tax assets 3,657 3,657 16 2,362 314 965
Other receivables, prepayments and accrued income 2,566 2,566 2,566 - - -
Cash 13,375 13,375 13,375 - - -
Total inflows 19,598 19,598 15,957 2,362 314 965
Long-term loans 11,832 11,279 186 93 - 11,000
Lease liability 100 146 35 35 76 -
Trade creditors 823 823 823 - - -
Payables to participating interests 2,968 2,968 1,123 - 1,845 -
Other current liabilities 1,534 1,534 1,534 - - -
Total outflows 17,257 16,750 3,701 128 1,921 11,000
19.3 Credit risk
The Group's exposure to credit risk arises from holdings of cash, and if a
counterparty fails to meet its contractual obligations.
The Group's primary objective when managing credit risk from its holdings of
cash is to minimise the risk of a loss of capital and eliminate loss of
liquidity having a detrimental effect on the business. Of the Group's year-end
cash holding of €3,432,000, €1,857,000 was held with Coöperatieve
Rabobank U.A., which has a credit rating of A+ (Fitch) and €1,351,000 was
held with UBS Switzerland AG, which has a credit rating of AA- (Fitch). All
funds are instant access.
Receivables at the period end relate to Group companies and related parties.
The Directors therefore have good insight into the creditworthiness of these
counterparties, and do not consider that they add significantly to the Group's
credit risk exposure. All trade receivables are due within the agreed credit
terms for the current period and preceding year and are consequently stated at
cost.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses which uses a lifetime expected loss allowance for all receivables. To
measure expected credit losses, receivables are analysed based on their credit
risk characteristics including days past due to determine a suitable
historical loss rate. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors that the
Group considers could affect the ability of its customers to settle the
receivables. Following this approach, the Group has not recognised a loss
allowance for receivables.
20 Capital management
The Company's capital comprises ordinary shares which carry one vote each. The
shares are entitled to dividends when declared.
Under the terms of the equity linked funding agreement entered into with IEEF
II described more fully in note 13, if the Company pays a dividend IEEF II is
entitled to receive the same amount per 'share' as if the amount paid by IEEF
II under the terms of the equity linked funding agreement had been converted
to shares at that point in time.
The Group's policy is to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of
the business, ultimately providing returns for shareholders and benefits for
other stakeholders.
The Group is not subject to any externally imposed capital requirements.
21 Commitments
21.1 Capital commitments
Capital expenditure that has been contracted but not provided for in the
financial statements amounts to €187,000 as at 31 December 2022 (2021:
€428,000), in respect of caverns under construction.
21.2 Cavern development agreement
The Group has entered into a series of agreements with Nouryon Salt B.V.,
which forms part of the Nobian group and is hereafter referred to as Nobian.
These give the Group exclusive access to salt caverns in Denmark and the
Netherlands for CAES and/or hydrogen storage projects, and set out the terms
of development of the Zuidwending 1 project.
Under the cavern development agreement the Group is liable for the costs of
abandonment of the Zuidwending 1 cavern from the point that the cavern is
handed over by the supplier, with the exception of any liabilities
attributable to historical activities of the supplier. At the balance sheet
date the cost of abandonment is €nil, so no allowance has been made.
The cavern development agreement also includes extensive provisions which
apply in the event of termination, including in situations where Corre Energy
fails to deliver according to the contract or is unable to continue as party
to the contract. These include relinquishment of the mining and/or storage
licence to Nobian free of charge if co-held by Corre Energy at the time of
termination and payment of liquidated damages to Nobian equal to €10m minus
all fees paid and increased with costs incurred in abandoning the first CAES
cavern.
21.3 Infracapital agreement
The Company entered into a non-binding heads of terms in March 2021 with
Infracapital Greenfield Partners II (Infracapital) documenting the terms on
which the parties propose to jointly develop the Zuidwending 1 project,
subject to the satisfaction of certain milestones by the Company.
Under the proposed terms Infracapital will fund the project to reach financial
close. At financial close Infracapital will have exclusive rights to acquire a
majority stake in the project through acquisition of shares in Corre Energy
Storage B.V., and the exclusive right and obligation to fund 100% of the
projected construction costs of the project through commitments for ordinary
equity and/or shareholder loans (of up to €276.2m) at a proposed rate of 10%
per annum. The Company will retain a significant minority shareholding in
Corre Energy Storage B.V.
21.4 Lease commitments
Note 19 shows the undiscounted commitment for lease payments for vehicles
recognised as a lease liability on the balance sheet, totalling €551,000.
21.5 Other commitments
The Group has no significant commitments other than those listed above.
22 Events after the reporting period
On 3 February 2023 the Company created a Long-Term Incentive Plan (LTIP) for
employees of the Group and participating interests. Under the LTIP the Company
issued the following options over its shares:
· On 3 February 2023, 345,000 options to purchase shares for €0.0045
per share, vesting on 3 February 2025;
· On 27 February 2023, 145,000 options to purchase shares for €0.0045
per share, vesting on 27 February 2026; and
· On 22 March 2023, 30,000 options to purchase shares for €0.0045 per
share, vesting on 22 March 2026.
On 22 February 2023 the Company issued a further 2,561,798 shares at €3.50
per share, increasing share capital by €11,528 and share premium by
€8,416,346 after accounting for costs incremental to the placing.
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