REG - DG Innovate PLC - Final results for the year ended 31 December 2021
12/08/2022 14:30
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RNS Number : 9081V DG Innovate PLC 12 August 2022
12 August 2022
DG Innovate plc
("DG Innovate " or the "Company")
Final results for the year ended 31 December 2021
DG Innovate (LSE: DGI), the advanced research and development company
pioneering sustainable and environmentally considerate improvements to
electric mobility and storage, announces the Company's audited results for the
year ended 31 December 2021. DG Innovate was previously Path Investments plc
and the results cover a period prior to the Company's acquisition of
Deregallera Holdings Ltd (formerly DG Innovate Limited) ("DGI") on 8 April
2022, when the Company was an investment company.
Restoration of Trading
Following the publication of the Company's final results for the year ended 31
December 2021, the Company will apply to the Financial Conduct Authority to
request a restoration of its listing on the Official List and to resume
trading on the London Stock Exchange.
Results Highlights
• Successful fund raise with gross proceeds of £3.85 million in March 2021
• Conditional Sale and Purchase Agreement with DG Innovate Limited ("DGI")
signed 12 August 2021
• Secured loans extended to DGI totalling £600,000 to accelerate technology
development during 2021
• Post year end successful completion of acquisition of DGI and accompanying
funding, raising £4.6 million gross proceeds in April 2022
Post period Highlights
• Successful completion of the acquisition of DGI and accompanying funding,
raising £4.6 million in gross proceeds in April 2022
• Commencement of an acceleration programme to advance commercial progress with
the Company's suite of electric mobility and storage technologies
• Continuing Innovate UK funding to support DG Innovate's Pareta(© )range of
high-performance electric vehicle drives
• Funding secured from the Ford Low Carbon Vehicle Transformation Fund to
support the Company's ongoing electric motor development programme
• Appointment of Peter Tierney as the Company's new Chief Executive Officer from
1 July 2022
Commenting Peter Tierney, Chief Executive Officer of DG Innovate said: "Whilst
the delay to the publication of the accounts was disappointing, I believe we
have now put the challenges of the DGI reverse takeover transaction behind us
and we can focus solely on progressing the commercialisation of the Company's
exciting suite of electric mobility and storage technologies. Since joining
the Company I have been very impressed by both the technology and the quality
of the DG Innovate team. I believe DG Innovate has world class solutions for
both electric vehicle drives and energy storage that can address unmet needs
using readily available materials and that can be manufactured at commercial
scale.
We will be commencing formal testing of our 250kW Pareta(©) integrated
E-drive shortly and I look forward to reporting on this in due course. In
addition, support from the Ford Fund will enable us to continue to work with
electric powertrain experts at the Cwmbran-based firm Meritor and Cardiff
University to design and test a new motor which uses less "rare earth"
material than conventional motors, making them cheaper and minimising
environmental and climate impacts.
We also hope to be shortly in a position to detail the results of the
performance of our anode active materials, a key enabling technology for
sodium-ion batteries, within the industrial scale up trials being undertaken
by our consortium partners. These are very exciting times for DG Innovate
and I look forward to making further announcements as we progress."
The audited results for the year ended 31 December 2021 have been published
today on the company's investor website at
https://dgiplc.com/reports-documents (https://dgiplc.com/reports-documents) ,
and will be made available on the National Storage Mechanism shortly at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism.
- Ends -
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information please contact:
DG Innovate plc C/O IFC
Peter Tierney
Jack Allardyce
IFC Advisory (Financial PR & IR) 020 3934 6630
Tim Metcalfe
Zach Cohen
Grant Thornton UK LLP (Financial Adviser) 020 7383 5100
Samantha Harrison
Jamie Barklem
Daphne Zhang
Ciara Donnelly
OvalX (Broker) 020 7392 1400
Tom Curran
Thomas Smith
About DG Innovate
DG Innovate is an advanced research and development company pioneering
sustainable and environmentally considerate improvements to electric mobility
and storage, using abundant materials and the best engineering and scientific
practices. DG Innovate is currently developing its products alongside a number
of major manufacturers across the transportation and energy sectors, research
institutions and the UK Government, and has filed 18 patents worldwide. DG
Innovate's current research and development activities are broadly split into
two areas, focusing on novel electric motor technologies and energy storage
solutions. Its two main products are:
- Enhanced Drive Technology (EDT) - High efficiency, lightweight,
cost-effective electric motors and electronics;
- Enhanced Battery Technology (EBT) - Sodium-ion batteries offering a
sustainable energy storage solution at similar/greater energy density to
incumbent technologies at a lower cost, increased safety with lower
environmental footprint.
Further information may be found at: https://www.dgiplc.com
(https://www.dgiplc.com)
CHAIRMAN'S STATEMENT
Review
In March 2021 the Company was delighted to receive the welcome support of new
shareholders and certain existing holders in a fund raising with gross
proceeds of £3.85 million received to accelerate the Company's investment
strategy.
Having considered several opportunities during the prior period, the Company
entered a period of exclusivity to undertake detailed due diligence on DGI,
culminating in the signing of a conditional Sale and Purchase Agreement on 12
August 2021, reflecting an agreed all share Reverse Takeover ("RTO")
transaction.
In the intervening period and prior to completion of the transaction, The
Company advanced secured loans to DGI totalling £600,000 by year end 2021.
These loans, together with an additional secured advance of £300,000 prior to
completion (but following the year end), are carried as secured debtors on our
balance sheet.
Post year end in April 2022, the transaction successfully completed which,
together with an accompanying fundraise provided by existing shareholders,
positions the enlarged group to further the development of DGI's Enhanced
Drive and Enhanced Battery Technologies to commercialisation. The Company
changed its name to DG Innovate plc to reflect the new group structure at
completion.
We are pleased with the progress that has been made as the two businesses have
come together post the RTO. We are already seeing the benefits of the
complimentary skillsets that our new Board members bring to the business which
has invigorated the push towards commercialisation of both the Enhanced Drive
and Battery Technologies. Formal testing of the new 250kW
Pareta(©) integrated E-drive shall commence imminently, with results
expected during the coming weeks. We also hope to be shortly in a position to
detail the results of the performance of our anode within the industrial scale
up of our consortium partners' Sodium-Ion battery trials.
I want to take this opportunity to express my gratitude to our shareholders
and investors for the continued support that they have shown us over the years
and welcome our new shareholders and staff that join us with this successful
transaction. We look forward to the future with confidence.
Nicholas Tulloch
Non-Executive Chairman
OPERATIONAL REVIEW
The Company was incorporated and registered in England and Wales on 2 June
2000 under the Companies Act 1985 as a public company limited by shares with
the name Hallco 459 Plc and with registered number 04006413. On 28 November
2000, the Company changed its name to The Niche Group Plc. On 20 February
2016, the Company changed its name to Path Investments Plc. On 8 April 2022,
the Company changed its name to DG Innovate Plc. It is domiciled and its
principal place of business is in the United Kingdom and is subject to the
City Code.
The Company was admitted to the Official List by way of a Standard Listing and
to trading on the London Stock Exchange's Main Market for listed securities on
30 March 2017.
During the period under review the Company was a cash shell, whose stated
strategy was to deliver acquisitions in the energy sector, and a number of
opportunities were evaluated.
The Company has not traded over the past twelve months. Over that period its
expenses have related to pre-deal costs, professional and associated expenses
related to advisory and consultancy fees, along with general administration
expenses.
In March 2021 the Company was delighted to receive the welcome support of new
shareholders and certain existing holders in a fund raising with gross
proceeds of £3.85 million to accelerate the Company's investment strategy.
The Company entered a period of exclusivity to undertake detailed due
diligence on DGI, with particular detailed investigation of its proprietary
Enhanced Drive and Enhanced Battery Technologies, culminating in the signing
of a binding Sale and Purchase Agreement on 12 August 2021, reflecting an
agreed all share Reverse Takeover transaction.
FINANCIAL REVIEW
Loss for the year
In the year ended 31 December 2021, the Company recorded a loss of £3,903,459
(2020 loss: £377,103).
Cash flow
On 18 March 2021, the Company successfully raised £3.85 million (before
expenses) through a placing of new ordinary shares and admitted the new shares
to trading on the Standard List of the Main Market of the London Stock
Exchange. On the same date the £108,767 of convertible loan notes were
settled in full by issue of shares.
During the year ended 31 December 2021, the Company advanced secured loans to
DGI totalling £600,000.
Post year end the Company advanced a further £300,000 in secured loans to
DGI.
Peter Tierney
Chief Executive Officer
INDEPENDENT AUDITORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Opinion
We have audited the financial statements of DG Innovate Plc (previously known
as Path Investments Plc) (the 'Company') for the year ended 31 December 2021
which comprise the Statement of Comprehensive Income, the Statement of Changes
in Equity, the Statement of Financial Position, the Statement of Cash Flows,
and notes to the financial statements, including significant accounting
policies. The financial reporting framework that has been applied in their
preparation is applicable law and UK adopted international accounting
standards.
In our opinion the financial statements:
· give a true and fair view of the state of the Company's affairs as at 31
December 2021 and of the Company's loss for the year then ended;
· have been properly prepared in accordance with UK adopted international
accounting standards; and
· have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the
audit of the financial statements section of our report. We are independent of
the group in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Our approach to the audit
As part of scoping our audit, we determined materiality and assessed the risks
of material misstatement in the financial statements. In particular, we looked
at where the directors made subjective judgements, for example in respect of
significant accounting estimates such as the fair value of the share options
and warrants that involved making assumptions and considering future events
that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed sufficient
audit work to be able to give an opinion on the financial statements as a
whole, taking into account an understanding of the Company and its
environment, including the Company's system of internal control. We also
addressed the risk of management override of internal controls. Our planned
audit testing was directed accordingly and was focused on areas where we
assessed there to be the highest risk of material misstatements.
We conducted our audit from our City of London office and the audit team
communicated regularly throughout the audit with the Audit Committee and the
directors in order to ensure we had a good knowledge of the operations of the
Company. During the audit, we reassessed and re-evaluated audit risks and
tailored our approach accordingly if needed.
The audit testing included substantive testing on significant transactions,
balances and disclosures, the extent of which was based on various factors
such as our overall assessment of the control environment, and the relevant
specific risks.
We communicated with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant findings,
including any significant deficiencies in internal controls that we identified
during the audit.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. This is not a complete list of
risks identified during our audit.
Key Audit Matters How our scope addressed this matter
Going concern Our audit work and conclusion in respect of going concern has been detailed in
the 'Material uncertainty related to going concern section of our audit
report'.
The Company has no revenue for the year ended 31 December 2021 (2020: £Nil)
and has incurred an operating loss of £3,914,764 (2020: £266,693) including
a £2,042,335 non-cash exceptional share options and warrants charge.
The Company has outstanding creditors of £737,166 at 31 December 2021 (2020:
£2,145,256) and cash funds of £686,400 (2020: £468).
The Company has continued incurring further losses subsequent to the year end.
Given the performance in the year, including the significant losses, creditor
balances and decreasing cash funds, going concern was considered to be a key
audit risk area.
Share options and warrants expense Our audit work included, but was not restricted to:
In the previous year and during the year ended 31 December 2020, the Company
issued share options and warrants to its directors and one of its creditors in
lieu of salary and settlement of the outstanding creditor balance - Reconciling the number of share options and warrants to their respective
respectively. agreements.
As detailed in note 18, the Company has incurred a share options and warrants - Re-performing the option pricing model calculation of the share options and
charge of £2,042,335 in the year (2020: £87,501). The recognition of the warrants charge prepared by the directors to determine if it had been
share-based payment and warrants expense requires estimates to be made calculated in accordance with the requirements of IFRS 2.
regarding the fair value of the share options and warrants granted. These are
dependent on the assumptions made in respect of the inputs into the relevant
options pricing model. The use of the model and the assumptions made by
management thus involve a number of judgements to establish the appropriate - Critically assessing the judgements made by management in determining the
inputs into the model. share options and warrants charges and the assumptions underlying them to
determine whether the options and warrants charge in the financial statements
had been calculated in accordance with the requirements of IFRS 2 and all
relevant disclosures had been appropriately made.
Key observations:
Based on our audit work, we identified a material error of £2,042,335 in the
calculation of the share options and warrants charge which has now been
adjusted in these financial statements by management. Following this audit
adjustment, we have concluded that the treatment of the share options and
warrants within the financial statements is not materially misstated.
Our application of materiality
The scope and focus of our audit was influenced by our assessment and
application of materiality. We define materiality as the magnitude of
misstatement that could reasonably be expected to influence the readers and
the economic decisions of the users of the financial statements. We use
materiality to determine the scope of our audit and the nature, timing and
extent of our audit procedures and to evaluate the effect of misstatements,
both individually and on the financial statements as a whole.
Due to the nature of the Company we considered expenditure incurred to be the
main focus for the readers of the financial statements, accordingly this
consideration influenced our judgement of materiality. Based on our
professional judgement, we determined materiality for the Company to be
£34,885 based on a percentage of expenditure incurred before share options
and warrants charge (2%). This was based on expenditure per the draft
financial statements at the planning stage of the audit.
On the basis of our risk assessment, together with our assessment of the
overall control environment, our judgement was that performance materiality
(i.e. our tolerance for misstatement in an individual account or balance) for
the Company was 50% of materiality, namely £17,442.
We agreed to report to the Audit Committee all audit differences in respect of
the Company in excess of £1,744 and, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds. We
also reported to the Audit Committee on disclosure matters that we identified
when assessing the overall presentation of the financial statements.
Material uncertainty related to going concern
We draw attention to note 1.2 to the financial statements, which indicates
that the Company's cash flow projections show that the Company will need to
raise debt or equity funding in order to continue in business and meet its
liabilities as they fall due for at least twelve months from the date of
approval of the financial statements. The Company incurred an operating loss
of £3,914,764 (2020: £266,693) for the year ended 31 December 2021.
These events or conditions indicate that a material uncertainty exists that
may cast significant doubt on the Company's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the use of the
going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the directors' assessment of the
Company's ability to continue to adopt the going concern basis of accounting
included:
- a critical assessment of the detailed cash flow projections prepared by the
directors, which are based on their current expectations of trading prospects,
we also evaluated the sensitivities that the directors performed against this
forecast.
- We evaluated the key assumptions in the forecast, which were consistent with
our knowledge of the business and considered whether these were supported by
the evidence we obtained. We obtained an understanding of all relevant
uncertainties, including those arising as a result of the impact of the
COVID-19 pandemic over the past years. We have factored the ongoing impact of
COVID-19 into our analysis of the risks affecting the ability of the Company
to continue to trade and meet its liabilities as they fall due for at least
twelve months from the date of approval of the financial statements.
- We examined the disclosures relating to the going concern basis of
preparation and found that these provided an explanation of the directors'
assessment that was consistent with the evidence we obtained.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there is a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the strategic report and the directors' report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements;
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters where the
Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept by the Company, or returns
adequate for our audit have not been received from branches not visited by us;
or
- the financial statements and the part of the directors' remuneration report
to be audited are not in agreement with the accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not
made; or
- we have not received all the information and explanations we require for our
audit; or
- a corporate governance statement has not been prepared by the Company.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out
on page 10, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities is available on the FRC's
website at
https://wwww.frc.org.uk/auditors/auditor-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor's-responsibilities-for
(https://www.frc.org.uk/auditors/audit-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor%E2%80%99s-responsibilities-for)
This description forms part of our auditor's report.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess
the risks of material misstatement of the financial statements due to fraud;
to obtain sufficient appropriate audit evidence regarding the assessed risks
of material misstatement due to fraud, through designing and implementing
appropriate responses to those assessed risks; and to respond appropriately to
instances of fraud or suspected fraud identified during the audit. However,
the primary responsibility for the prevention and detection of fraud rests
with both management and those charged with governance of the Company.
Our approach was as follows:
- We obtained an understanding of the legal and regulatory requirements
applicable to the Company and considered that the most significant are the
Companies Act 2006, UK adopted international financial reporting standards,
the Listing Rules, the Disclosure and Transparency Rules, QCA Compliance and
UK taxation legislation.
- We obtained an understanding of how the company complies with these
requirements by discussions with management and those charged with governance.
- We assessed the risk of material misstatement of the financial statements,
including the risk of material misstatement due to fraud and how it might
occur, by holding discussions with management and those charged with
governance.
- We reviewed board minutes, legal expenses, and RNS announcements and
inquired of management and those charged with governance as to any known
instances of non-compliance or suspected non-compliance with laws and
regulations.
- Based on this understanding, we designed specific appropriate audit
procedures to identify instances of non-compliance with laws and regulations.
This included making enquiries of management and those charged with governance
and obtaining additional corroborative evidence as required.
- We evaluated managements' incentives to fraudulently manipulate the
financial statements and determined that the principal risks related to
management bias in accounting estimates and judgemental areas of the financial
statements. We challenged the assumptions and judgements made by management in
respect of the significant areas of estimation, as described in the key audit
matters section. Further audit procedures performed to address the risk of
fraud included but were not limited to: the testing of journals and evaluating
the business rationale of any significant transactions that are unusual or
outside the normal course of business.
There are inherent limitations in the audit procedures described above. We are
less likely to become aware of instances of non-compliance with laws and
regulations that are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
Other matters which we are required to address
We were appointed by the Audit Committee on 3 May 2022 to audit the financial
statements for the year ended 31 December 2021. Our total uninterrupted period
of engagement is 1 year, covering the year ended 31 December 2021.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the Company and we remain independent of the Company in conducting
our audit.
Our audit opinion is consistent with the additional report to the Audit
Committee.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken for no purpose other than to draw to the attention of the company's
members those matters which we are required to include in an auditor's report
addressed to them. To the fullest extent permitted by law, we do not accept or
assume responsibility to any party other than the company and company's
members as a body, for our work, for this report, or for the opinions we have
formed.
MITAL SHAH
Partner
On behalf of Moore Kingston Smith LLP
Statutory Auditor
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Year Year
ended ended
31 December 31 December
Note 2021 2020
£ £
Administrative expenses (1,872,429) (179,192)
Share based payments 18 (2,042,335) (87,501)
Operating loss 3 (3,914,764) (266,693)
Finance income 7 11,934 -
Finance cost 7 (629) (110,410)
Loss on ordinary activities before taxation (3,903,459) (377,103)
Income tax 8 - -
Loss for the year and total comprehensive loss attributable to the equity (3,903,459) (377,103)
holders
Earnings per share
- Basic and diluted earnings attributable to the equity holders from 9 (0.22) (0.19)
continuing and total operations
All operating income and operating gains and losses relate to continuing
activities.
There was no other comprehensive income for the year (2020: £Nil).
The notes form an integral part of the financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Share Capital Share Premium Capital Redemption Share Option Reserve Retained earnings Total
Reserve
£ £ £ £ £ £
As at 1 January 2020 8,979,767 25,413,617 - - (36,298,570) (1,905,186)
Comprehensive income
Loss for the period - - - - (377,103) (377,103)
Share based payments - - - 87,501 - 87,501
Total Comprehensive loss - - - 87,501 (377,103) (289,602)
Total contributions by and distributions to owners of the Company - - - - - -
Issued share capital 6,667 43,333 - - - 50,000
Cancellation of deferred shares (8,783,824) - 8,783,824 - - -
As at 31 December 202,610 25,456,950 8,783,824 87,501 (36,675,673) (2,144,788)
2020
As at 31 December 2020 202,610 25,456,950 8,783,824 87,501 (36,675,673) (2,144,788)
Comprehensive income
Loss for the period - - - - (3,903,459) (3,903,459)
Share based payments - - - 2,889,504 - 2,889,504
Total Comprehensive loss - - - 2,889,504 (3,903,459) (1,013,955)
Total contributions by and distributions to owners of the Company
Issue of share capital 1,826,854 2,266,324 - - - 4,093,178
As at 31 December 2021 2,029,464 27,723,274 8,783,824 2,977,005 (40,579,132) 934,435
The Share Capital represents the nominal value of the equity shares. The Share
Premium represents the amount subscribed for share capital, in excess of the
nominal amount, less costs directly relating to the issue of shares.
The Capital Redemption reserve represents the nominal value of cancelled
deferred shares. The Retained Earnings reserve represents the cumulative net
gains and losses less distributions made.
The Share option reserve represents share-based payments which represents the
cumulative fair value of options and warrants granted.
The notes form an integral part of the financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
As at As at
31 December 31 December
Note 2021 2020
£ £
ASSETS
Property, plant and equipment 10 80,546 -
Current assets
Trade and other receivables 11 904,655 -
Cash and cash equivalents 16 686,400 468
1,591,055 468
LIABILITIES
Current liabilities
Trade and other payables 12 (737,166) (2,145,256)
Net Current Assets / (Liabilities) 853,889 (2,144,788)
NET ASSETS / (LIABILITES) 934,435 (2,144,788)
SHAREHOLDERS' EQUITY
Called up share capital 13 2,029,464 202,610
Capital redemption reserve 13 8,783,824 8,783,824
Share premium account 27,723,274 25,456,950
Share option reserve 2,889,504 87,501
Retained earnings (40,491,631) (36,675,673)
TOTAL EQUITY 934,435 (2,144,788)
The notes form an integral part of the financial statements.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
Year ended 31 December Year ended 31 December
Note 2021 2021
£ £
Cash flows from operating activities
Cash expended from operations 14 (2,862,941) (154,284)
Net cash outflow from operating activities (2,862,941) (154,284)
Cash flows from investing activities
Purchase of fixed assets 10 (98,598) -
Finance costs (629) (410)
Net cash used in investing activities (99,227) (410)
Cash flows from financing activities
Issue of share capital 3,850,000 50,000
Loan repayment (50,000) 50,000
Issue of convertible loans 8,100 55,000
Repayment of convertible loans (160,000)
Net cash generated from investing activities 3,648,100 155,000
Net increase in cash and cash equivalents 685,932 306
Cash and cash equivalents at beginning of year 468 162
Cash and cash equivalents at end of year 16 686,400 468
The notes form an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1. ACCOUNTING POLICIES
1.1 Basis of preparation
DG Innovate Plc (formerly known as Path Investments Plc) is a public limited
company incorporated and domiciled in the England and Wales, registered under
company number 04006413. The address of the registered office is 15 Victoria
Mews, Cottingley Business Park, Bingley, BD16 1PY, England. DG Innovate Plc is
a public company incorporated under the Companies Act 1985 and domiciled in
the United Kingdom. During the period under review the Company was a cash
shell whose strategy was deliver material acquisitions in the energy sector.
Post period end the Company completed the acquisition of DGI, becoming an
advanced research and development company pioneering sustainable and
environmentally considerate improvements to electric mobility and storage.
The financial statements have been prepared and approved by the Directors in
accordance with UK-Adopted International Accounting Standards ('IASs') and
with those parts of the Companies Act 2006 applicable to companies reporting
under IAS.
The financial statements are presented in UK pounds Sterling which is the
Company's functional and presentational currency and all values are rounded to
the nearest pound except where indicated otherwise.
The financial statements have been prepared under the historical cost
convention or fair value where appropriate. The significant accounting
policies adopted are described below.
The preparation of the financial statements in conformity with IFRS requires
the use of certain critical accounting estimates, It also requires the board
to exercise its judgement in the process of applying the Company's accounting
policies. The areas involving a higher degree of judgement or complexity or
areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 1.9.
1.2 Going concern
The financial statements have been prepared on the assumption that the Company
will continue as a going concern. Under this assumption, an entity is
ordinarily viewed as continuing in business for the foreseeable future with
neither the intention nor the necessity of liquidation, ceasing trading or
seeking protection from creditors pursuant to laws or regulations. In
assessing whether the going concern assumption is appropriate, the Directors
take into account all available information for the foreseeable future, in
particular for the twelve months from the date of approval of the financial
statements.
The Directors consider the use of the going concern assumption to be
appropriate. At the latest reported date of 31 December 2021, the Company
had cash and cash equivalents totalling £686,400 and net current assets of
£853,889.
On 18 March 2021, the Company successfully raised £3.85 million (before
expenses) through a placing of new ordinary shares and admitted the new shares
to trading on the Standard List of the Main Market of the London Stock
Exchange. On the same date the £108,767 of convertible loan notes were
settled in full by issue of shares. Post year end, in April 2022 the Company
raised a further £4.6 million (before expenses) through the exercise of
shareholder warrants and a subscription for new ordinary shares.
These funds were raised to cover the costs of the DGI acquisition and to fund
the ongoing development of the Company's technologies towards
commercialisation. Significant progress is being made, with testing of DGI's
Pareta© drives planned in the coming weeks. In line with all pre-revenue
companies, further funding will be required as the Company moves through the
development phase. The new group recently announced the extension of its
Pareta© range of high-performance electric vehicle drives to now include a
400kW version suitable for heavy vehicle applications, which is being
developed in collaboration with a tier 1 supplier to the commercial vehicle
industry, to target its growing electric drive needs. Performance and
endurance verification testing of the new drive is planned to begin in the
coming weeks.
The Board have considered a number of detailed cashflow scenarios and have
identified a further funding requirement from late Q2 2023. As this falls
within 12 months of the date of this report, a material uncertainty exists in
relation to the ability of the Company to continue as a going concern.
The Directors would note that the previous two fundraises in March 2021 and
April 2022 were predominantly made up of the same small group of investors,
who remain supportive of the Company's strategy. The Directors therefore
believe that a further equity fundraise would be well supported. The Directors
have also progressed discussions with lenders regarding debt facilities,
should it achieve material customer orders post-testing. Taking this into
account, the Directors have formed the opinion that there are adequate
arrangements in place to enable the settlement of their financial commitments
as and when they fall due.
For this reason, the Directors continue to adopt the going concern basis in
preparing the financial statements. While there are inherent uncertainties
in relation to future events and ultimately no certainty over the outcome of
matters described above the newly formed group will be a going concern for the
next 12 months.
1.3 Financial instruments
Classification and measurement
The Company classifies its financial assets into the following categories:
those to be measured subsequently at fair value (either through other
comprehensive income (FVOCI) or through the profit or loss (FVPL)) and those
to be held at amortised cost.
Classification depends on the business model for managing the financial assets
and the contractual terms of the cash flows.
Management determines the classification of financial assets at initial
recognition. The Company's policy with regard to financial risk management is
set out in note 17. Generally, the Company does not acquire financial assets
for the purpose of selling in the short term.
The Company's business model is primarily that of "hold to collect" (where
assets are held in order to collect contractual cash flows). When the
Company enters into derivative contracts, these transactions are designed to
reduce exposures relating to assets and liabilities, firm commitments or
anticipated transactions.
Financial Assets held at amortised cost
The classification applies to debt instruments which are held under a hold to
collect business model and which have cash flows that meet the "Solely
Payments of Principal and Interest" (SPPI) criteria.
Other financial assets are initially recognised at fair value plus related
transaction costs, they are subsequently measured at amortised costs using the
effective interest method. Any gain or loss on derecognition or modification
of a financial asset held at amortised cost is recognised in the income
statement.
Financial Assets held at fair value through other comprehensive income (FVOCI)
The classification applies to the following financial assets:
- Equity investments where the Company has irrevocably elected to present fair
value gains and losses on revaluation of such equity investments, including
any foreign exchange component, are recognised in other comprehensive
income. When equity investment is derecognised, there is no reclassification
of fair value gains or losses previously recognised in other comprehensive
income to the income statement. Dividends are recognised in the income
statement when the right to receive payment is established.
Financial Assets held at fair value through profit or loss (FVPL)
The classification applies to the following financial assets. In all cases,
transaction costs are immediately expensed to the income statement.
- Debt instruments that do not meet the criteria of amortised costs or fair
value through other comprehensive income. The Company has a significant
proportion of trade receivables with embedded derivatives for professional
pricing. These receivables are generally held to collect but do not meet the
SPPI criteria and as a result must be held at FVPL. Subsequent fair value
gains or losses are taken to the income statement.
- Equity investments which are held for trading or where the FVOCI election has
not been applied. All fair value gains or losses and related dividend income
are recognised in the income statement.
- Derivatives which are not designated as a hedging instrument. All subsequent
fair value gains or losses are recognised in the income statement.
Financial liabilities
Borrowings and other financial liabilities (including trade payables but
excluding derivative liabilities) are recognised initially at fair value, net
of transaction costs incurred, and are subsequently measured at amortised
costs.
Impairment of financial assets
A forward looking expected credit loss (ECL) review is required for: debt
instruments measured at amortised costs. Other financial assets are held at
fair value through other comprehensive income: loan commitments and financial
guarantees not measured at fair value through profit or loss; lease
receivables and trade receivables that give rise to an unconditional right to
consideration.
As permitted by IFRS 9, the Company applies the "simplified approach" to trade
receivable balances and the "general approach" to all other financial
assets. The general approach incorporates a review for any significant
increase in counter party credit risk since inception. The ECL reviews
including assumptions about the risk of default and expected loss rates. For
trade receivables, the assessment takes into account the use of credit
enhancements, for example, letters of credit.
1.4 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation. Cost represents the cost of acquisition at historical cost.
Depreciation is provided to allocate the cost less the residual value on a
reducing balance basis over the asset's useful economic life as follows;
Office equipment 33% reducing balance basis
Motor Vehicles 25% reducing balance basis
The carrying amount of fixed assets shall be derecognised on disposal of
assets or when no future economic benefits are expected from its use.
1.5 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at bank and other
short-term deposits. They are stated at carrying value which is deemed to be
fair value.
1.6 New Standards and Interpretations
The IASB and IFRIC have issued the following standards and interpretations
which are in issue but not in force at 31 December 2021:
Description Effective date
Newly effective standards for 1 January 2021 to 31 December 2021
Interest Rate Benchmark Reform Phase2 (amendments to IFRS 9, IAS 39, IFRS 7, 1 January 2021
IFRS 4 and IFRS 16)
Standards available for early adoption
Amendments to IAS 1: Presentation of Financial Statements: Classification of 1 January 2022
Liabilities as Current or Non-current
Annual improvements to IFRS standards 2018 -2020 1 January 2022
Property, plant and equipment: proceeds before intended use (amendments to IAS 1 January 2022
16)
Reference to conceptual framework (amendments to IFRS 3) 1 January 2022
Amendments to IFRS 17 1 January 2023
Disclosure of accounting policies (amendments to IAS 1 and IFRS practice 1 January 2023
statement 2)
Definition of accounting estimate (amendments to IAS 8) 1 January 2023
Deferred tax related to assets and liabilities arising from a single 1 January 2023
transaction - amendments to IAS 12 income taxes)
The Directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the
financial statements other than in terms of presentation.
1.7 Share-based payments
The Company operates a number of equity-settled share-based compensation
plans, under which the entity receives services from employees or suppliers as
consideration for equity instruments (options) of the Company. The fair value
of the employee or supplier services received in exchange for the grant of
options is recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance vesting
conditions (for example, profitability, sales growth targets and remaining an
employee of the entity over a specified time period); and
· excluding the impact of any non-vesting conditions (for example, the
requirement of employees to save).
Non-market vesting conditions are included in assumptions about the number of
options that are expected to vest. The total expense is recognised over the
vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each reporting period, the
entity revises its estimates of the number of options that are expected to
vest based on the non-marketing vesting conditions. It recognises the impact
of the revision to original estimates, if any, in the profit or loss
statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium when the options are
exercised.
1.8 Taxation
Current tax, including UK corporation tax and foreign tax, is provided at
amounts expected to be paid (or recovered) using the tax rates and laws that
have been enacted or substantially enacted by the balance sheet date.
Deferred tax is recognised, using the liability method, in respect of
temporary differences between the carrying amount of the Company's assets and
liabilities and their tax base.
Deferred tax liabilities are offset against deferred tax assets. Any remaining
deferred tax asset is recognised only when, on the basis of all available
evidence, it can be regarded as probable that there will be suitable taxable
profits, within the same jurisdiction, in the foreseeable future against which
the deductible temporary difference can be utilised.
Deferred tax is determined using tax rates that are expected to apply in the
periods in which the asset is realised or liability settled, based on tax
rates and laws that have been enacted or substantially enacted by the balance
sheet date.
Current and deferred tax are recognised in the income statement, except when
the tax relates to items charged or credited directly in equity, in which case
the tax is also recognised in equity.
1.9 Sources of estimation uncertainty
The preparation of financial statements requires the use of estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements and the reporting amount of income and
expenses during the period. Although these estimates are based on management's
best knowledge of the amount, event or actions, actual results ultimately may
differ from those estimates.
Share based payments
The share-based payment charge is calculated using the Black-Scholes model
which requires the estimation of share price volatility, expected life and the
bid price discount.
2. SEGMENTAL REPORTING
a. Primary segment - business
The Company has only one business segment, which is investing in energy and
natural resources, primarily either by way of equity or convertible loans.
b. Secondary segment - geographical
The Company's loss for the period was derived wholly from activities
undertaken in the United Kingdom. The Company's net assets are located
entirely in the United Kingdom.
3. EXPENSES BY NATURE
2021 2020
£ £
Staff costs 513,235 454,205
Other expenses 3,401,529 (187,512)
3,914,764 266,693
Details of the staff costs are shown in note 5.
4. OPERATING LOSS
The operating loss is stated after charging:
2021 2020
£ £
Depreciation 18,052 -
Auditors remuneration
Audit services 70,000 15,000
Reporting accountants services - 15,000
Total fees 70,000 30,000
5. EMPLOYEES
Number of employees
The average monthly number of employees (including Directors) during the
period was:
2021 2020 Number
Number
Administration 2 2
2021 2020
£ £
Employment costs
Wages and salaries (including benefits in kind) 427,786 454,205
Social security costs 52,498 -
Pension costs 34,950 -
515,234 454,205
Included in employment costs above are Directors' accrued salaries, together
with employer's national insurance contributions, amounting to £Nil (2020:
£454,205).
6. DIRECTORS' REMUNerATION
2021 2020
£ £
Aggregate emoluments 427,786 454,205
Pension costs 34,950 -
Share based payments 1,517,628 87,501
1,980,364 541,706
Remuneration for the highest paid director was £225,000 (2020: £1,320,288,
which were waived in their entirety during the year ended 31 December 2020).
The amount included within accruals as at 31 December 2021 includes
remuneration accrued during 2020 but remaining unpaid as at 31 December 2021
of £84,000 (2020: £454,205).
During the period, retirement benefits are accruing to two Directors (2020:
retirement benefits are accruing to one Director).
7. FINANCE income and costs
2021 2020
£ £
Finance Income 11,934
Bank interest - -
Total finance income 11,934 -
Finance costs
Bank charges (629) (410)
Convertible loan note interest - (110,000)
Total finance cost 11,305 (110,410)
8. TAXATION
No corporation tax charge arises in respect of the year due to the trading
losses incurred. The Company has surplus management expenses available to
carry forward and use against trading profits arising in future periods of
approximately £8,041,000 (2020: £6,180,000). In addition, the Company has
non-trading loan relationship debits to carry forward to offset against future
non-trading loan relationship credits of approximately £18,917,000 (2020:
£18,917,000).
2021 2020
£ £
Current tax - -
Loss on ordinary activities before taxation (3,903,459) (377,103)
Loss on ordinary activities before taxation multiplied by average effective (741,657) (71,650)
rate of corporation tax of 19% (2020: 19%)
Effects of:
Non-deductible expenses 121,606 760
Short term timing differences (4,476) -
Other adjustments - non taxable gains - -
Tax losses upon which no deemed tax asset is recognised 624,527 70,890
Current tax - -
A deferred tax asset of approximately £531,771 (2020: £114,309) in respect
of losses has not been recognised due to the timing regarding the availability
of future profits against which the losses of the Company could be offset.
The UK corporation tax at the standard rate for the year is 19.0% (2020:
19.0%).
The main UK corporation tax rate for the current and prior year has remained
at 19%. No changes in the UK rate of tax were substantially enacted by the
year end.
9. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the loss on
ordinary activities after taxation of £3,903,459 (2020: £377,103) and on the
weighted average number of ordinary shares in issue of 1,765,828,368 (2020:
199,414,122) in issue. The basic loss per share is 0.22p (2020: 0.19p loss per
share).
In order to calculate the diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume conversion of all
dilutive potential ordinary shares according to IAS 33. Dilutive potential
ordinary shares include convertible loan notes and share options granted to
Directors and consultants where the exercise price (adjusted according to IAS
33) is less than the average market price of the Company's ordinary shares
during the period. However, due to the Company making a loss in the year (and
prior year) any dilutive potential ordinary shares are disregarded and diluted
earnings per share is equal to basic earnings per share.
10. PROPERTY, PLANT AND EQUIPMENT
Office Motor Vehicles TOTAL
Equipment
£ £ £
Cost
At 1 January 2021 - - -
Additions 12,844 85,754 98,598
At 31 December 2021 12,844 85,754 98,598
Depreciation
Depreciation at 1 January 2021 - - -
Charge in the period 1,900 16,152 18,052
Depreciation at 31 December 2021 1,900 16,152 18,052
Carrying value
At 31 December 2021 10,944 69,602 80,546
At 31 December 2020 - - -
11. Trade and other receivables
2021 2020
£ £
Prepayments 20,000 -
Other taxes and social security 145,019 -
Other Debtors 739,636 -
904,655 -
Other debtors comprise amounts loaned to Deregallera Holdings Ltd of £611,934
(2020: £Nil), a company wholly acquired after the reporting period, as
detailed in note 21. The loan attracts an annual 6% interest charge.
Also included in other debtors are amounts repayable of £127,702 by certain
Directors in respect of incorrectly awarded bonuses. Further details are
disclosed on page 26.
Other taxes and social security comprise the tax suffered on the bonuses noted
above.
12. TRade and other payables
2021 2020
£ £
Trade payables 131,959 365,659
Other payables (including convertible loan notes) - 457,830
Accruals and deferred income 605,207 1,271,767
Bank loan - 50,000
737,166 2,145,256
Bank Loan
The loan was repaid in full in May 2021 under the terms and conditions of the
agreement.
Convertible Unsecured Loan Stock
On 3 April 2018 the Company constituted an instrument to issue £150,000
nominal convertible unsecured loan stock. The instrument was subsequently
increased to a £200,000 nominal amount on 23 November 2020, of which a total
of £162,000 was issued.
On admission of the Company to AIM or other recognised investment exchange,
the Convertible Loan Stock, at the option of the loan note holder, was either
convertible into shares at the price at which the Placing associated with the
listing occurs or will be repayable out of the Placing proceeds together with
200% interest to compensate for the risk associated with the loan.
As at the Last Practicable Date the Directors hold the following Convertible
Loan Stock. All Convertible Loan Stock held directly by the Directors will be
converted on Admission into Conversion Shares:
Director Amount
£
C Theis* 51,000
Jack Allardyce 5,000
Brent Fitzpatrick** 46,100
Total 102,100
* £50,000 of the amount was provided by Networkguru Limited, a company owned
and controlled by Chris Theis' son.
** £5,000 of which was provided by Ocean Park Developments, £8,000 by
Pondermatters Limited (both companies ultimately owned by Brent
Fitzpatrick) and £5,000 by Alexander Fitzpatrick (Brent Fitzpatrick's son).
On 18 March 2021, a total of £53,333 (nominal) of Convertible Loan Stock was
repaid in cash and £108,767 (nominal) of Convertible Loan Stock was converted
into ordinary shares of the Company.
13. SHARE Capital
Allotted, called up and fully paid
Ordinary Shares of 0.1p each Deferred shares of 39.9p each
No £ no £
At 1 January 2020 195,943,802 195,943 22,014,596 8,783,824
Issue of shares 6,666,667 6,667
Cancellation of shares (22,014,596) (8,873,824)
At 31 December 2020 202,610,469 202,610 - -
At 1 January 2021 202,610,469 202,610 - -
Issue of shares 1,826,853,333 1,826,855 - -
At 31 December 2021 2,029,463,802 2,029,464 - -
The ordinary shares shall confer upon the holders the right to receive
dividends and other distributions and participate in the income or profits of
the Company.
The deferred shares conferred upon the holders the following rights and were
subject to the following restrictions, notwithstanding any other provisions in
these Articles:
Return of Capital
On return of assets on a winding up of the Company after the holders of
Ordinary shares have received the aggregate amount paid up thereon plus
£10,000,000 for each such share held by them, there shall be a distribution
to the holders of any deferred shares an amount equal to the nominal value of
shares held and thereafter any surplus held will be distributed to holders of
ordinary shares.
Dividends
Holders of any deferred shares have no rights to dividends or other
distributions or to participate in the income and profits of the Company.
Transfers
The Company may acquire all or any of any such deferred shares in issue at any
time for no consideration.
On 30 September 2020 and in accordance with Article 3.4(iii) of the Company's
Articles of Association, the Company acquired and cancelled the Deferred
Shares of £0.399 nominal value per Deferred Share for no consideration.
After which no Deferred Shares will remain in issue and has been reflected in
the creation of a capital redemption reserve account.
In February 2021 the Company raised (before expenses) £3,850,000 by way of a
subscription and placing of 1,400,000,000 new ordinary shares of 0.1 pence
each in the Company at a price of 0.25 pence per Ordinary Share. In
addition, participants in the Fundraise were issued with one warrant for every
two Placing Shares subscribed for with an exercise price of 0.25 pence per
Ordinary Share and one warrant for every two Placing Shares subscribed for
with an exercise price of 0.5 pence per Ordinary Share. The Warrants have a
five-year exercise period from the date of grant.
Further shares were issued post year end, as detailed in note 21.
14. Reconciliation of operating loss to net cash outflow from OPERATING
ACTIVITIES
2021 2020
£ £
Operating loss (3,903,459) (266,693)
(Increase)/decrease in debtors (904,655) 10,056
(Decrease)/increase in creditors within one year (115,214) 124,852
Depreciation 18,052 -
Share based payments 2,042,335 87,501
Convertible loan note interest - (110,000)
Net cash outflow from operating activities (2,862,941) (154,284)
15. Net Debt Reconcilliation
This section sets out an analysis of net debt and the movements in net debt
for each of the periods presented.
Year ended 31 December Year ended 31 December
2021 2020
£ £
Cash and cash equivalents 686,400 468
Borrowings - (536,300)
Net debt 686,400 (535,832)
Borrowings Cash and cash equivalents Total
£ £ £
Net debt as at 1 January 2020 (321,300) 162 (321,138)
Interest expense (110,000) - (110,000)
Financing cash flows (105,000) 306 (104,694)
Net debt as at 31 January 2020 (536,300) 468 (535,832)
Financing cash flows 209,999 685,932 895,931
Share based payments 326,301 - 326,301
Net debt as at 31 January 2021 - 686,400 686,400
16. CASH & CASH EQUIVALENTS
2021 2020
£ £
Cash at bank and in hand 686,400 468
17. financial instruments
The Company's financial instruments comprise cash and cash equivalents and
various other items, such as trade receivables and payables, which arise
directly from its operations. It is, and has been throughout the period under
review, the Company's policy to ensure that there is no trading in financial
instruments. The main purpose of these financial instruments is to finance the
Company's operations.
Categories of Financial Instruments
2021 2020
£ £
Financial Assets at amortised cost
Cash and cash equivalents 686,400 468
Other debtors 884,655 -
1,571,055 468
Financial Liabilities at amortised cost
Trade and other payables 737,166 1,687,426
Convertible loan notes - 457,830
737,166 2,145,256
Net Financial Assets/(Liabilities) 833,889 (2,144,788)
Financial Assets and Liabilities
Financial assets and financial liabilities are recognised on the Company's
Statement of Financial Position when the Company becomes party to the
contractual provisions of the instrument.
Financial Risk Factors
The Company's activities expose it to liquidity risk. The Company's overall
risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Company's financial
performance.
Liquidity Risk
The Company has to date financed its operations from cash reserves funded from
share issues. Management's objectives are now to manage liquid assets in the
short term through closely monitoring costs. The Company has no borrowing
facilities that require repayment and therefore has no interest rate risk
exposure.
Fair Values of Financial Assets and Liabilities
The Directors consider that the fair value of the Company's financial assets
and liabilities are not considered to be materially different from their book
values.
18. Share options AND WARRANTS
Movement in the number of options and warrants outstanding and their related
weighted average exercise price are as follows:
At 31 December 2021 At 31 December 2020
Number of Weighted average exercise price per share Number of Weighted average exercise price per share
Options & Options &
Warrants Warrants
At 1 January 73,787,500 2.5p 73,787,500 3.0p
Granted 2,910,110,000 0.3p 60,375,000 0.1p
Exercised - - - -
Expired or waived (600,000) 280.0p (60,375,000) 0.7p
At 31 December 2,983,297,500 0.3p 73,787,500 2.5p
The weighted average remaining contractual life of options as at 31 December
2021 was 9 years (2020: 7.2 years).
The following share options have been granted by the Company and are
outstanding as at the year end of 31 December 2021:
Date of grant Number of ordinary shares under Granted during year Exercised during year Lapsed/ waived during year Number of ordinary shares under option at 31 December 2020 Weighted average exercise price Expiry date
option at 1 January 2020
03/05/2011 600,000 - - - 600,000 £2.80 02/05/2021
30/03/2017 32,500,000 - - (28,500,000) 4,000,000 0.1p 29/03/2027
30/03/2017 28,375,000 - - (22,500,000) 5,875,000 1p 29/03/2027
30/03/2017 12,312,500 - - (9,375,000) 2,937,500 2p 29/03/2027
08/10/2020 - 60,375,000 - - 60,375,000 0.1p 07/10/2030
Total 73,787,500 60,375,000 - (60,375,000) 73,787,500 2.5p
Date of grant Number of ordinary shares under option at 1 January 2021 Granted during year Exercised during year Lapsed/ waived during year Number of ordinary shares under option at 31 December 2021 Weighted average exercise price Expiry date
03/05/2011 600,000 - - (600,000) - £2.80 02/05/2021
30/03/2017 4,000,000 - - - 4,000,000 0.1p 29/03/2027
30/03/2017 5,875,000 - - - 5,875,000 1p 29/03/2027
30/03/2017 2,937,500 - - - 2,937,500 2p 29/03/2027
08/10/2020 60,375,000 - - - 60,375,000 0.1p 07/10/2030
18/03/2021 - 1,289,310,000 - - 1,289,310,000 0.1p 18/03/2031
Total 73,787,500 1,289,310,000 - (600,000) 1,362,497,500 0.1p
All options outstanding at the year end are exercisable at that date.
The following warrants have been granted by the Company:
Date of grant Number of warrants at Granted during year Exercised during year Lapsed during Number of warrants at 31 December 2021 Weighted average exercise price Exercise date
1 January 2021 year
18/03/2021 830,800,000 830,800,000 0.25p 18/03/2026
18/03/2021 790,000,000 790,000,000 0.5p 18/03/2026
Total - 1,620,800,000 - - 1,620,800,000 0.375p
In March 2021 the Company raised (before expenses) £3,850,000 by way of a
subscription and placing of 1,400,000,000 new ordinary shares of 0.1 pence
each in the Company at a price of 0.25 pence per Ordinary Share. In
addition, participants in the Fundraise were issued with one warrant for every
two Placing Shares subscribed for with an exercise price of 0.25 pence per
Ordinary Share and one warrant for every two Placing Shares subscribed for
with an exercise price of 0.5 pence per Ordinary Share. The Warrants have a
five-year exercise period from the date of grant.
The fair value of equity settled share options and warrants granted is
estimated at the date of grant using a Black-Scholes option pricing model,
taking into account the terms and conditions upon which the options were
granted. The following table lists the inputs to the model:
Warrants Options Options Options Options
Date of grant 26 Feb 2021 18 Mar 2021 18 Mar 2021 18 Mar 2021 18 Oct 2020
Expected volatility 31% 31% 31% 31% 50%
Expected life 5 years 1 year 2 years 10 years 10 years
Risk-free interest rate 2.00% 2.00% 2.00% 2.00% 2.50%
Expected dividend yield - - - - -
Possibility of ceasing employment before vesting - - - - -
Fair value per option/warrant - - - - -
0.001p 0.17p 0.10p 0.15p 0.6p
On 8 October 2020 the options dated 30 March 2017, held by Chris Theis and
Andrew Yeo were surrendered and reissued with an exercise price of 0.1p and an
expiry date of 7 October 2030.
The expense recognised by the Company for share based payments during the year
ended 31 December 2021 was £2,042,335 (2020: £87,501).
The average volatility is used in determining the share based payment expense
to be recognised in the period. This was calculated by reference to the
standard deviation of the share price over the preceding 12-month period.
19. RELATED PARTY TRANSACTIONS
The following share options were held by the directors during the year:
Director Date of grant Held at 1 January 2021 Surrendered during the year Granted during the Period Held at 31 December Exercise price
2021
C Theis 08/10/2020 42,500,000 - - 42,500,000 £0.001
18/03/2021 - - 739,520,000 739,520,000 £0.001
N Fitzpatrick 18/03/2021 - - 162,820,000 162,820,000 £0.001
J Allardyce 18/03/2021 - - 62,500,000 62,500,000 £0.001
Total 42,500,000 - 964,840,000 1,007,340,000
Outstanding at 31 December 2020 Convertible loan notes issued during year Interest accrued during the year Converted during the year Repaid during the year Outstanding at 31 December 2021
Director £ £ £ £ £ £
C Theis* 150,000 - - - (150,000) -
C Theis 3,000 - - (3,000) - -
A Yeo 75,000 - - (75,000) - -
B Fitzpatrick 54,000 - - (54,000) - -
J Allardyce - 15,000 - (15,000) - -
Total 282,000 15,000 - (147,000) (150,000) -
On 8 October 2020 the options dated 30 March 2017 were surrendered and
reissued with an exercise price of 0.1p and an expiry date of 7 October 2030.
As at 31 December 2020, included in other payables were the following
convertible loan notes issued to the Directors together with accrued interest
thereon.
* these loan notes were issued to Networkguru Limited, a company owned by
Chris Theis' son, who subscribed under the convertible loan note
instrument.
Included in other payables are loans of £Nil (2020: £Nil), and £Nil (2020:
£2,067) made by each of the Directors Brent Fitzpatrick and Chris Theis.
Included in other debtors are balances due from the following Directors in
respect of bonuses incorrectly awarded during the year and deemed to be held
in trust. Chris Theis £37,021 (2020: £Nil), Brent Fitzpatrick £27,005
(2020: £Nil), Jack Allardyce £36,651 (2020: £Nil), Nicholas Tulloch
£27,025 (2020: £Nil).
Included in accruals is a balance of £70,000 (2020: £Nil) reimbursed to
Chris Theis, a director of the company, in respect of IT support provided by
his son Elliot Theis.
20. ultimate controlling party
The Company considers there to be no ultimate controlling party.
21. SUBSEQUENT EVENTS
On 8 April 2022 the Company announced the completion of the reverse
acquisition of Deregallera Holdings Ltd (formerly DG Innovate Limited) ("DGI")
for an initial consideration of £32.4 million satisfied by the issue to
the DGI Shareholders of 5,397,451,305 Initial Consideration Shares at a deemed
issue price of 0.6 pence per Ordinary Share.
Further conditional deferred consideration of up to £5.4 million, to be
satisfied by the issue of up to 895,610,844 Deferred Consideration Shares on
the first anniversary of completion, will become payable should DGI sign one
or more supply agreements for the provision of their motor technology with
certain defined customers prior to this date with a combined potential value
of £5.0 million or more.
On acquisition, the assets, liabilities and contingent liabilities of
subsidiaries are measured at their fair values at the date of acquisition.
Any excess cost of acquisition over net fair values of the identifiable
assets, liabilities and contingent liabilities acquired is recognised as an
expense under IFRS 2 equity settled transactions. Any deficiency of the cost
of acquisition below the net fair values of the identifiable assets,
liabilities and contingent liabilities acquired is credited to the Statement
of Comprehensive Income in the year of acquisition.
Due to the Company being a non-operating entity which was not classified as a
business under IFRS 3 Business Combinations ("IFRS 3"), the transaction does
not fall under the scope of this standard and is not a business combination
but an equity-settled transaction which should be accounted for in accordance
with IFRS 2 Share-based Payment ("IFRS 2"). However, the IFRS 3 guidance on
reverse acquisitions should still be followed, under which despite the Company
being the legal acquirer of DGI, it should be considered the acquiree for
accounting purposes.
As the accounting acquirer (DGI) is deemed to have acquired the shares of the
Company, the fair value of the shares of the Company should be used to measure
the consideration paid. This is calculated as the number of DGI plc shares
multiplied by the quoted market price of DGI plc (Path Investments plc at the
time) The consideration is then split into net assets acquired, with the
difference representing the cost to DGI for obtaining a listing.
Details of the fair value of the acquisition are as follows;
Fair Value of assets acquired
£'000
Cash & Cash equivalents 41
Loans 912
Fixed assets 83
Trade payables (553)
Other payables (98)
Net assets acquired 385
Listing expense 5,094
Consideration 5,480
The Listing Expense is attributable to the difference between the net assets
acquired and the fair value of the Company on the 7 April 2022.
These are provisional figures with consolidated financial statements to be
presented in DG Innovate plc's combined interim financial statements and full
year results to 30 June 2022 and 31 December 2022, respectively.
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