REG - DG Innovate PLC - Interim Results
30/09/2022 07:00
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RNS Number : 2587B DG Innovate PLC 30 September 2022
30 September 2022
DG Innovate plc
("DG Innovate ", the "Company", or the "Group")
Interim results for the six months ended 30 June 2022
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 unaudited interim
results for the six months ended 30 June 2022.
DG Innovate was previously Path Investments plc and the results cover both the
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, and post the consolidation of DGI from 8 April 2022.
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
• Funding secured from the Ford Low Carbon Vehicle Transformation Fund to
support the Company's ongoing electric motor development programme being
carried out in conjunction with global heavy vehicle components supplier,
Meritor
Post Period Highlights
• Appointment of Peter Tierney as the Company's new Chief Executive Officer from
1 July 2022
• Testing of 250kW Pareta(©) high-performance electric vehicle drive underway
with further cycle testing ongoing
• Collaborative commercial dialogue continues to gather momentum with key
partners and launch customers
• UK Government Advanced Propulsion Centre funding secured for the Company's
SUPAR pilot production project, designed to optimise the Pareta® high
performance electric vehicle drives to enable substantial upscaling to
commercial scale production
• Hard carbon anode material testing underway with positive initial results
Commenting Nick Tulloch, Non-Executive Chairman of DG Innovate said: "The
first half of 2022 was transformational for the Company, as we completed the
reverse takeover of DGI to become DG Innovate plc. Since the completion of the
reverse takeover significant progress has been made and post-period end, Peter
Tierney was appointed as our new CEO. We believe Peter's significant
experience in operating and developing growth-orientated service and
manufacturing businesses makes him the ideal candidate to lead the Company as
we seek to commercialise our exciting suite of electric mobility and storage
technologies, evolving into a differentiated supplier to a number of industry
sectors. We look forward to providing further updates in due course."
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 dginnovate@investor-focus.co.uk
Zach Cohen
Grant Thornton UK LLP (Financial Adviser) 020 7383 5100
Samantha Harrison
Jamie Barklem
Daphne Zhang
Ciara Donnelly
OvalX (Joint Broker) 020 7392 1400
Tom Curran
Thomas Smith
WH Ireland (Joint Broker) 020 7220 1666
Chris Hardie
Megan Liddell
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.
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 Report
The period under review was transformational for the Company, as we published
our prospectus and completed the reverse takeover of DGI, becoming DG Innovate
plc in the process. We continue to believe that DGI's IP and the quality of
the team offers exciting growth opportunities in the electric mobility and
energy storage sectors and remain committed to DGI's ethos of developing
sustainable and environmentally considerate technologies.
We were also delighted with the support of new and existing shareholders in
raising £4.6 million and to strengthen our Board through the appointments of
a number of new non-executive directors. Their varied but very relevant
experience across sectors and disciplines will be put to excellent use as DGI
seeks to commercialise its technologies and widen its opportunity set.
Post-period, we announced the appointment of Peter Tierney as our new CEO. We
believe Peter's significant experience in operating and developing
growth-orientated service and manufacturing businesses makes him the ideal
candidate to lead the Company as we seek to commercialise our exciting suite
of electric mobility and storage technologies, evolving into a differentiated
supplier to a number of industry sectors.
As subsequently announced, the testing of our 250kw Pareta(©)
high-performance electric vehicle drive is underway, we have been fortunate to
attract financial support from the UK Government's Advanced Propulsion Centre
for our Scale up Readiness Validation of Parallel Motor for Automotive
Applications' ("SUPAR") project and work continues on our sustainable hard
carbon anode material.
We look forward to providing further updates in due course.
Nick Tulloch
Non-Executive Chairman
30 September 2022
Financial Review
For the six months to 30 June 2022, the Group recorded a loss before tax of
£6,227,231, of which 5,094,074 was an exceptional charge relating to the
reverse takeover of DGI. There was negligible revenue in the period other than
£344,831 of grant income.
Cash flow
As at 30 June 2022 the Group held cash of £1,650,352.
Chief Executive Remuneration
The Company's announcement on 16 May 2022 detailing the appointment of Peter
Tierney as the Company's new Chief Executive Officer stated, inter alia, that
It had been agreed by the Company and Mr Tierney, at his election and request,
that for the months of July, August and September 2022 his monthly salary
value, would be paid to him in the equivalent value of shares in the Company,
based on the closing offer price of the Company's shares, on the last business
day of each relevant month. Given the relatively depressed price of the
Company's shares on the London Stock Exchange over this period Mr Tierney has
agreed with the Company to instead take his remuneration in cash to avoid
unnecessary dilutive share issuance at this time.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Six months ended Six months ended Year ended 31 December
30 June 30 June
Notes
2022 2021 2021
Unaudited Unaudited Unaudited
£ £ £
Revenue
Grant income 344,831 675,816 985,623
Other income 5,307 833 3,037
Administrative expenses 3 (1,171,059) (777,670) (1,884,976)
Loss on investment - (49,463) (49,463)
Share based payments (265,934) - -
Total administrative expenses (1,436,993) (827,133) (1,934,439)
Operating loss (1,086,855) (150,484) (945,779)
Reverse acquisition expenses (5,094,074) - -
Finance income 81 4 230
Finance cost (49,855) (50,676) (113,134)
Loss on ordinary activities before taxation (6,230,703) (201,156) (1,058,683)
Tax on loss on ordinary activities 3,472 52,068 52,068
Loss for the period and total comprehensive loss for period (6,227,231) (149,088) (1,006,615)
Loss per share (pence)
- Basic & diluted 4 (0.15) (3.84) (25.90)
All operating income and operating gains and losses relate to continuing
activities.
There was no other comprehensive income for the year (30 June 2021: £Nil; 31
December 2021: £Nil).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Share Capital Share Premium Reverse Acquisition Reserve Share Retained Earnings Total
Option Reserve
£ £ £ £ £ £
As at 1 January 2022 2,029,464 - 67,843 - 87,453 2,184,760
Comprehensive income
Loss for the period - - - - (6,227,231) (6,227,231)
Share based payments - - - 265,934 - 265,934
Total comprehensive loss - - - 265,934 (6,227,231) (5,961,297)
Transactions with owners
Share issue 5,397,451 26,987,256 (26,576,428) - - 5,808,279
Share issue 1,415,800 3,036,806 - - - 4,452,606
As at 30 June 2022 8,842,715 30,024,062 (26,508,585) 265,934 (6,139,778) 6,484,348
Share Capital Share Premium Reverse Acquisition Reserve Share Retained Earnings Total
Option
Reserve
£ £ £ £ £ £
As at 1 January 14,613 2,082,694 - - 1,094,068 3,191,375
2021
Comprehensive income
Loss for the period - - - - (1,006,615) (1,006,615)
Total comprehensive loss - - - - (1,006,615) (1,006,615)
Reverse acquisition (14,613) (2,082,694) 2,097,307 - - -
Parent Company equity 2,029,464 - (2,029,464) - - -
As at 31 December 2021 2,029,464 - 67,843 - 87,453 2,184,760
Share Capital Share Premium Reverse Acquisition Reserve Share Retained Earnings Total
Option
Reserve
£ £ £ £ £ £
As at 1 January 2021 14,613 2,082,694 - - 1,094,068 3,191,375
Comprehensive income
Loss for the period - - - - (149,088) (149,088)
Total comprehensive loss - - - - (149,088) (149,088)
Reverse acquisition (14,613) (2,082,694) 2,097,307 - - -
Parent Company equity 2,029,464 - (2,029,464) - - -
As at 30 June 2021 2,029,464 - 67,843 - 944,980 3,042,287
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 Share option reserve represents share-based payments which represents the
cumulative fair value of options and warrants granted.
Reverse acquisition reserve was created due to the reverse acquisition of DGI.
CONSOLIDATED statement of financial position
FOR THE SIX MONTHS ENDED 30 JUNE 2022
As at As at As at
30 30 31 December
Notes June June
2022 2021 2021
Unaudited Unaudited Unaudited
£ £ £
ASSETS
Fixed assets 5 868,540 528,701 859,651
Intangible asset 6 4,171,835 3,666,811 3,459,484
Current assets
Trade and other receivables 7 969,736 235,178 164,082
Cash and cash equivalents 1,650,352 138,502 57,455
2,620,088 373,680 221,537
LIABILITIES
Current liabilities
Trade and other payables 8 (620,032) (1,151,483) (1,151,615)
Net Current Assets/(Liabilities) 2,000,056 (777,803) (930,078)
NON CURRENT LIABILITIES 9 (556,082) (375,422) (1,204,297)
(556,082) (375,422) (1,204,297)
NET ASSETS 6,484,349 3,042,287 2,184,760
SHAREHOLDERS' EQUITY
Called up share capital 10 8,842,715 2,029,464 2,029,464
Share premium account 30,024,062 - -
Share option reserve 265,934 - -
Reverse acquisition reserve (26,508,585) 67,843 67,843
Retained earnings (6,139,778) 944,980 87,453
TOTAL EQUITY 6,484,349 3,042,287 2,184,760
CONSOLIDATED statement of cash flows
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Six months to 30 June Six months to 30 June Year ended 31 December
2022 2021 2021
Unaudited Unaudited Unaudited
£ £ £
Operating loss (1,086,855) (149,088) (1,006,615)
(Increase)/Decrease in debtors (805,654) 31,382 102,252
Increase in creditors 28,109 80,252 425,198
Amortisation 207,328 212,326 419,653
Depreciation 95,170 48,505 104,577
Disposal of asset - 50,151 50,151
Share based payments 265,934 - -
Net cash generated from/(used in) operating activities (1,295,968) 273,528 95,216
Cash flows from investing activities
Purchase of fixed assets (104,059) (4,082) (391,104)
Purchase of intangible fixed assets (919,679) (505,416) (505,416)
Interest received 81 4 230
Net cash used in investing activities (1,023,657) (509,494) (896,290)
Cash flows from financing activities
Issue of share capital 5,210,661 - -
Decrease in borrowings (1,298,139) - (5,939)
Refund of shareholders funds - - (110,000)
Increase in loans - - 600,000
Net cash generated from financing activities 3,912,522 - 484,061
Net increase/(decrease) in cash and cash equivalents 1,592,897 (235,966) (317,013)
Cash and cash equivalents at beginning of period 57,455 374,468 374,468
Cash and cash equivalents at end of period 1,650,352 138,502 57,455
CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2022
1. GENERAL INFORMATION
DG Innovate Plc is a public limited company incorporated in the United
Kingdom, registered under company number 04006413. The address of the
registered office is 15 Victoria Mews, Millfield Road, Cottingley Business
Park, Bingley, West Yorkshire, BD16 1PY. At the start of the period under
review the Company was a cash shell whose strategy was to deliver material
acquisitions in the energy sector. In April 2022 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 consolidated financial information represents the results of DG Innovate
Plc and its subsidiaries (together referred to as Group).
On 8 April 2022, Path Investments Plc changed its name to DG Innovate Plc
following the acquisition of Deregallera Holdings Ltd (formerly DG Innovate
Limited) ("DGI").
2. ACCOUNTING POLICIES
2.1 Basis of preparation
The condensed consolidated interim financial statements are presented in UK
Sterling and all values are rounded to the nearest pound except where
indicated otherwise.
The condensed consolidated interim financial statements have been prepared
under the historical cost convention or fair value where appropriate.
The results for the six months to 30 June 2022 have been prepared on the basis
of the accounting policies set out in the company's 2021 annual report and
accounts along with standards which have become effective after 31 December
2021. The interim accounts do not constitute statutory accounts as defined by
section 434 of the Companies Act 2006. The auditor has reported on the 2021
accounts of DG Innovate PLC and the report was unqualified and did not contain
a statement under section 498(2) of (3) of the Companies Act 2006 and the 2021
report and accounts have been filed with the registrar of companies. Under
reverse acquisition accounting the comparatives comprise details of the group
prior to the reverse takeover and as a result these figures are not audited.
During the period, there have been no changes in the nature of the related
party transactions from those described in the Company's 2021 accounts.
2.2 Responsibility statement
The directors confirm that these condensed interim financial statements have
been prepared in accordance with International Accounting Standard 34 "Interim
Financial Reporting", as adopted by the United Kingdom and as issued by the
IASB and that the interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R, namely;
a) An indication of the important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
b) Material related party transactions in the first six months and any
material changes in related party transactions described in the last annual
report.
2.3 Segmental reporting
a. Primary segment - business
The Group has only one business segment, which is development of technology.
b. Secondary segment - geographical
The Group's loss for the period was derived wholly from activities undertaken
in the United Kingdom. The Group's net assets are located entirely in the
United Kingdom.
2.4 Reverse acquisition
On 8 April 2022, the Company acquired DGI via a reverse takeover which
resulted in the Company becoming the ultimate holding company of the Group.
The transaction was accounted for as a reverse acquisition since it did not
meet the definition of a business combination under IFRS 3. In accordance with
IFRS 2, a share-based payment expense equal to the deemed cost of the
acquisition less the fair value of the net assets of the Company at
acquisition was recognised. The comparatives within the consolidated statement
of financial position, the consolidated statement of comprehensive income,
consolidated statement of changes in equity and the consolidated cashflow
statement represent that of the legal subsidiary and accounting acquirer, DGI.
In the consolidated statement of financial position, the share capital and
premium as at 31 December 2021 is that of the Company (DG Innovate plc) with
the reverse acquisition reserve representing the difference between the deemed
cost of the acquisition and the net assets of the Company as at 7 April 2022.
The consolidated statement of comprehensive income for the period represents
the results of both DG Innovate Plc and DGI. For more details on the key terms
of the reverse takeover, see note 13.
3. ADMINISTRATIVE EXPENSES
Six months to 30 June 2022 Six months to 30 June 2021 Year ended 31 December
2021
Unaudited Unaudited Unaudited
£ £ £
Directors remuneration 486,241 79,364 160,008
Other administrative expenses 684,818 698,306 1,724,968
1,171,059 777,670 1,884,976
4. LOSS PER SHARE
The calculation of the basic and diluted loss per share is based on the loss
on ordinary activities after taxation of and on the weighted average number of
ordinary shares in issue.
There was no dilutive effect from the share options or convertible loan notes
outstanding during the period.
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 IAS33. Dilutive potential
ordinary shares include convertible loan notes and share options granted to
Directors and consultants where the exercise price (adjusted according to
IAS33) is less than the average market price of the Company's ordinary shares
during the period.
The weighted average number of shares is calculated using the number of DGI
plc shares owned by the accounting acquirer DGI pre and post the reverse
takeover on 8 April 2022.
Six months to 30 June 2022 Six months to 30 June 2021 Year ended 31 December
2021
Unaudited Unaudited Unaudited
£ £ £
Net loss for the period (6,227,231) (149,088) (1,006,615)
The weighted average number of shares in the period were:
Basic and dilutive ordinary shares 4,105,884,193 3,886,287 3,886,287
Basic and dilutive earnings/(loss) per share (pence) (0.15) (3.84) (25.90)
5. FIXED ASSETS
Fixtures & Motor Vehicles Total
Equipment
£ £ £
Cost
At 1 January 2022 2,137,062 - 2,137,062
Additions 18,305 85,754 104,059
At 30 June 2022 2,155,367 85,754 2,241,121
Depreciation
Depreciation at 1 January 2022 1,277,411 - 1,277,411
Charge in the period 70,318 24,852 95,170
Depreciation at 30 June 2022 1,347,729 24,852 1,372,581
Carrying value
At 30 June 2022 807,638 60,902 868,540
At 31 December 2021 859,651 - 859,651
At 30 June 2021 528,701 - 528,701
6. intangible ASSETS
IPR & Total
Patents
£ £
Cost
At 1 January 2022 5,669,081 5,669,081
Additions 919,679 919,679
At 30 June 2022 6,588,760 6,588,760
Amortisation
Amortisation at 1 January 2022 2,209,597 2,209,597
Charge in the period 207,328 207,328
Amortisation at 30 June 2022 2,416,925 2,416,925
Carrying value
At 30 June 2022 4,171,835 4,171,835
At 31 December 2021 3,459,484 3,459,484
At 30 June 2021 3,666,811 3,666,811
On 8 April 2022 the Company completed the reverse takeover and acquired 100%
of the ordinary share capital of Deregallera Holdings Ltd, a company
incorporated in England and Wales.
No impairment has been accounted for this interim period. An impairment review
will be carried out at the year-end.
7. TRade and other RECEIVABLES
As at 30 As at 30 As at 31 December 2021
June June
2022 2021
Unaudited Unaudited Unaudited
£ £ £
Prepayments 30,518 28,679 30,607
Other taxes and social security 429,096 71,266 85,270
Other debtors 510,122 135,233 48,205
969,736 235,178 164,082
Also included in other debtors are amounts repayable of £355,610 (30 June
2021: £Nil; 31 December 2021: £nil) by certain Directors in respect of
incorrectly awarded bonuses.
Other taxes and social security comprise the tax suffered on the bonuses noted
above and VAT repayable.
8. TRade and other payables
As at 30 As at 30 As at 31 December 2021
June June
2022 2021
Unaudited Unaudited Unaudited
£ £ £
Trade payables 412,954 497,490 384,265
Accruals and deferred income 46,134 2,500 2,500
Other taxes and social security 32,111 - -
Loans 79,233 651,493 715,250
Leases 49,600 - 49,600
620,032 1,151,483 1,151,615
9. non current liabilities
As at 30 As at 30 As at 31 December 2021
June June
2022 2021
Unaudited Unaudited Unaudited
£ £ £
Loans 228,121 307,353 880,675
Leases 247,235 - 256,803
Other creditors 80,726 68,069 66,819
556,082 375,422 1,204,297
10. SHARE Capital
Unaudited Unaudited
Allotted, called up and fully paid No £
Ordinary Shares of 0.1p each Ordinary Shares of 0.1p each
At 1 January 2021 (unaudited) 202,610,469 202,611
Issued in period 1,826,853,333 1,826,853
At 31 December 2021 (unaudited) 2,029,463,802 2,029,464
At 1 January 2022 2,029,463,802 2,029,464
Issued in period 6,813,251,305 6,813,251
At 30 June 2022 (unaudited) 8,842,715,107 8,842,715
11. share options and warrants
Movement in the number of options and warrants outstanding and their related
weighted average exercise price, since 31 December 2021 are as follows:
At 30 June 2022 At 31 December 2021
& 30 June 2021
Number of Weighted average exercise price per share Number of Weighted average exercise price per share
Options & Options &
Warrants Warrants
At 1 January 2,983,297,500 2.5p 73,787,500 3.0p
Granted 1,109,783,754 0.1p 2,910,110,000 0.1p
Exercised (830,800,000) 0.1p - -
Expired or waived (40,000,000) 0.1p (600,000) 280p
At period end 3,222,281,254 0.1p 2,983,297,500 2.5p
The following share options have been granted by the Company and are
outstanding as at the period end of 30 June 2022:
Date of grant Number of ordinary shares under option at 1 January 2022 Granted during period Exercised during period Lapsed/ waived during period Number of ordinary shares under option at 30 June 2022 Weighted average exercise price Expiry date
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 - - (40,000,000) 1,249,310,000 0.1p 18/03/2031
13/04/2022 - 439,383,754 - - 439,383,754 0.1p 13/04/2032
Total 1,362,497,500 439,383,754 - (40,000,000) 1,761,881,254 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 period Exercised during period Lapsed during Number of warrants at 31 December 2021 Weighted average exercise price Exercise date
1 January 2022 period
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
08/04/2022 - 670,400,000 - - 670,400,000 0.25p 08/04/2032
Total 1,620,800,000 1,620,800,000 (830,800,000) - 1,460,400,000 0.375p
In April 2022 the Company raised (before expenses) £2,550,000 by way of a
subscription for 510,000,000 new ordinary shares at a price of 0.5 pence each.
Further, the Company raised an additional £2,077,000 following the
irrevocable exercise of 830,800,000 Warrants (0.25p). Participants in the
Fundraise were issued warrants and the company allotted a total of
670,400,000 Warrants (1p) on the basis that: (i) one Warrant (1p) was issued
to each Subscriber for every two Subscription Shares issued to each
Subscriber, resulting in the issue of 255,000,000 Warrants (1p); and (ii) one
Warrant (1p) will be issued to each holder of Warrants (0.25p) for every two
Warrants (0.25p) exercised pursuant to the Warrant Exercise Notices, which
resulted in the issue of 415,400,000 Warrants (1p).
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 08 Apr 2022 18 Mar 2021 18 Mar 2021 18 Oct 2020
Expected volatility 31% 31% 31% 31% 50%
Expected life 5 years 10 years 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 0.19p 0.10p 0.15p 0.6p
The expense recognised by the Group for share based payments during the period
ended 30 June 2022 £265,934 was (30 June 2021: £nil; 31 December 2021:
£nil).
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.
12. related party transactions
Share Options
The following share options were held by the directors during the year:
Director Date of grant Held at 1 January 2022 Surrendered during the year Granted during the Period Held at 30 June 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
13/04/2022 - - 78,052,051 78,052,051 £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
13/04/2022 - - 156,105,002 156,105,002 £0.001
M Boughtwood 13/04/2022 - 156,105,002 156,105,002 £0.001
Total 1,007,340,000 - 390,262,055 1,397,602,052
Transaction with related party
During the period Gareth Boughtwood (son of Martin Boughtwood, a director in
the Group) was paid £5,000 (30 June 2021: £Nil; 31 December 2021: £Nil) in
respect of IT services.
Other debtors
Included in other debtors are balances due from the following Directors who
served in the period, in respect of bonuses incorrectly awarded during the
period and deemed to be held in trust. Chris Theis £137,369 (30 June 2021:
£Nil; 31 December 2021: £Nil), Brent Fitzpatrick £83,005 (30 June 2021:
£Nil; 31 December 2021: £Nil) Jack Allardyce £96,268 (30 June 2021: £Nil;
31 December 2021: £Nil), Nicholas Tulloch £38,968 (30 June 2021: £Nil; 31
December 2021: £Nil).
13. Reverse Acquisition
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.
Accordingly the following accounting treatment has been applied in respect of
the reverse acquisition:
1. DGI was the deemed accounting acquirer.
2. The presentation of the consolidated financial statements of the
legal parent (DG Innovate Plc) is a continuation of the accounting acquirer's
financial statements.
3. Consolidated financial statements for the period ended 30 June 2022
for the Group present the results of DGI from 1 January 2022 to 7 April 2022
and the enlarged group thereafter. The comparative results for the period
ended 30 June 2021 and 31 December 2021 represent those of the DGI business,
prior to the reverse takeover.
4. The equity structure appearing in the Group financial statements
reflects the equity structure of the legal parent (DG Innovate Plc), including
the shares issued and shares to be issued under the share for share exchange
to effect the business combination.
5. The retained earnings and other equity balances recognised in the
Group financial statements reflect the retained earnings and other equity
balances of the DGI business immediately before the business combination and
includes that of the group after the reverse takeover on 8 April 2022.
6. The reverse acquisition reserve relates to adjustments in respect
of 4 and 5 above for the reverse acquisition between DG Innovate Plc and
DGI.
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. This
difference has been expensed within "reverse acquisition expenses" in
accordance with IFRS 2.
Details of the fair value of the acquisition are as follows:
Fair Value of assets acquired
£
Cash & Cash equivalents 41,088
Loans 911,934
Fixed assets 82,546
Trade payables (552,590)
Other payables (97,500)
Net assets acquired 385,748
Listing expense 5,094,074
Consideration 5,479,552
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.
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