REG - i(x) Net Zero PLC - Interim Results
29/09/2023 07:15
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RNS Number : 1464O i(x) Net Zero PLC 29 September 2023
29 September 2023
i(x) Net Zero PLC
("i(x) Net Zero" or the "Company")
Half Year Results for the Six Months Ended 30 June 2023
i(x) Net Zero PLC (AIM: IX.), the investing company which focuses on the
Energy Transition, is pleased to announce its half year results for the six
months ended 30 June 2023 ("HY 2023", "H1 2023"). All amounts are in USD
unless otherwise stated.
Financial and Investment Highlights
· Fair value of investments in i(x)'s portfolio companies ("Portfolio
NAV") as at 30 June 2023 increased by 133.56% to $149.11 million (31 December
2022: $63.84 million), largely driven by WasteFuel Global Inc. ("WasteFuel")
investment from bp;
· Portfolio NAV per share at 30 June 2023, including cash of $4.35
million (£3.43 million), of $1.79 per share (£1.41 per share) (31 December
2022: $0.90 per share (£0.75 per share);
· $81.05 million profit before non-cash deferred tax provision and
share-based compensation (H1 2022: $0.50 million);
· As at 30 June 2023, the Company had $0.8 million borrowings and cash
of $4.35 million (31 December 2022: no borrowings and cash of $7.48 million);
and
· In the first six months of the year, i(x) made portfolio investments
of $0.55 million (H1 2022: $0.50 million).
Corporate and Portfolio Highlights
· Pär Lindström, the Company's Chief Investment Officer, appointed as
CEO; Jonathan Carpenter Stearns appointed as CFO
· Strategic refresh to focus firmly on growing the Net Asset Value
("NAV") of the Company's investments, by sourcing high growth investment
opportunities and identifying and executing profitable investment realisations
from the existing investment companies in the short term and
· Set near term target of reducing operating expenditure to 2% of NAV,
down more than 50% from the 2022 operating expenditure
· Entered into new secured $7.5 million 2 year term loan facility with
European Depositary Bank S.A.
· WasteFuel secured a $10 million investment from bp, to further assist
WasteFuel's plans to develop a global network of plants to convert municipal
and agricultural waste into bio-methanol, a biofuel which could play a
significant role in decarbonising hard-to-abate sectors like shipping. Pre
money valuation was $400 million and conservatively valued through i(x) Net
Zero's third party valuation group at $387 million which increased the NAV of
the Company's holding in WasteFuel by $84.78 million
· Sustainable Living Innovations, Inc. ("SLI"), the building technology
and product development company, entered into a non-binding letter of intent
in relation to a proposed business combination with NYSE listed Churchill
Capital Corp V, in a potentially transformative combination for SLI that, if
completed, will provide the ideal platform to execute the next stage of SLI's
growth strategy and significantly improve access to capital
· Made $0.55 million follow on investments, including $0.4 million into
EMC and an additional $0.15 million into SLI via an Unsecured Convertible
Promissory Note
Events subsequent to HY 2023
The following are key developments subsequent to the six-month period end:
· Commitment to invest an additional US$2.5 million into Enphys
Management Company ("EMC"), for budgeted working capital, certain other
approved costs and investments into new assets as it initially progresses
towards a merger opportunity for its SPAC, Enphys Acquisition Corp, with the
intention of forming a major renewables energy group that can be a regional
champion for sustainability
· Conditional agreement reached for the sale of Carbon Engineering Ltd.
("Carbon Engineering"), to Occidental Petroleum Corporation ("Occidental"),
the international energy company
· Enphys signed a non-binding letter of intent for a business
combination with a leading and well-established advanced biofuels company in
Latin America
· The Company added an additional company to its portfolio via a $0.6
million investment into Citron Energy Inc ("Citron Energy"), a US based
alternative fuels business. This investment will result in i(x) Net Zero
owning approximately 34% of Citron Energy
Pär Lindström, CEO, commented:
"The first six months of the year have seen us make significant progress
towards our aim of growing our NAV and creating a more streamlined business.
In the six months to June 2023 and in the months since, we have seen exciting
developments in our portfolio companies, with WasteFuel securing a meaningful
investment from bp and Enphys signing a letter of intent ("LoI") for a
business combination with a leading and well-established advanced biofuels
company in Latin America. SLI has signed a LoI for a business combination and
we have reached a conditional agreement for the sale of Carbon Engineering and
we recently made an investment in a new company, Citron, that continues our
focus on opportunities in energy transition.
"As policy-makers in the US and the Americas advance their plans for achieving
net zero, i(x) is perfectly positioned to grant shareholders exposure to the
exciting and growing companies which are engaged in the journey towards a more
sustainable future. We continue to streamline and sharpen the business, and we
look forward to reporting further progress for the year as a whole."
For further information visit https://ixnetzero.com/
(https://url.avanan.click/v2/___https:/ixnetzero.com/___.YXAzOml4bmV0emVybzphOm86N2IwNzI5ZjFjNmRmYzY5Yjg5ODRhOGZiZWRiYWVmOTk6NjoyMjBhOjRmMGM4Yjg2ZmVkOWZiMzQwN2MwYjQ5ZDVjM2Q0N2I5ZjdmYjRmNDZmYTQ1NjM4Y2NkYTkwYmVjZGEyZTA4YWM6cDpU)
or contact:
i(x) Net Zero Via Buchanan below
Pär Lindström - Chief Executive Officer
Canaccord Genuity Limited +44 20 7523 8000
Nominated Adviser & Broker
Max Hartley
Harry Pardoe
Buchanan
Helen Tarbet +44 7872 604 453
Simon Compton +44 7979 497 324
Notes to Editors
About i(x) Net Zero PLC
i(x) Net Zero PLC is an AIM quoted investing company that seeks to provide its
shareholders with the opportunity to create long-term capital growth with
positive, scalable, measurable and sustainable impact on the environment and
on the communities it serves.
In accordance with its belief that the world's biggest problems are also the
biggest market opportunities, i(x) Net Zero focuses on two critical areas in
which it aims to make a positive impact: (i) Energy Transition and (ii)
Sustainability in the Built Environment.
The Company uses a multi-strategy investment approach, providing the companies
in which it invests with the expertise and catalytic capital to help them
grow. To date, i(x) Net Zero has invested in biofuels, direct air capture
(carbon removal), renewable energy, sustainable workforce housing and net zero
construction technology.
i(x) Net Zero is a signatory to the UN Principles for Responsible Investing.
The Company has received the London Stock Exchange's Green Economy Mark.
Operational Review
NAV Update
$m $m $m
Investee Company Equity interest (30/6/2023) Unaudited Audited Portfolio NAV as at (31/12/2022) Increase/
Portfolio (Decrease) during H1 2023
NAV as at (30/6/2023)
WasteFuel Global, Inc. 34.8% 131.69 46.91 84.78
Enphys Management Company, LLC 14.5% 10.92 10.34 0.58
MultiGreen Properties, LLC 10.0% 2.19 2.26 -0.07
Sustainable Living Innovations ("SLI") 0.1% 0.77 0.74 0.03
Carbon Engineering Ltd 0.5% 2.64 2.58 0.06
Context Labs B.V. 0.5% 0.50 0.51 -0.01
Simple Agreement For Future Equity (SAFE) with WasteFuel Global, Inc. - 0.25 -0.25
Convertible note of MultiGreen Properties, LLC 0.25 0.25 -
Unsecured Convertible Promissory Note of SLI 0.15 - 0.15
Total 149.11 63.84 85.26
Portfolio Review
WasteFuel Global, Inc. ("WasteFuel") is focused on developing renewable,
non-fossil fuels to help reduce the carbon emissions of the transportation
sector with a particular focus on waste to energy for trucks, planes and
ships.
In July 2023, WasteFuel announced that it had secured a $10 million investment
from bp, the multi-national energy company, as part of the first close of a
Series B fundraise. The investment will further assist WasteFuel's plans to
develop a global network of plants to convert municipal and agricultural waste
into bio-methanol, a biofuel which could play a significant role in
decarbonizing hard-to-abate sectors like shipping.
bp's $10 million investment, leading the Series B investment round, resulted
in a material uplift in the NAV attributable to the Company's holding in
WasteFuel. Following bp's investment, the unaudited NAV of the Company's
equity interest in WasteFuel is $131.69 million, a 181% uplift from the last
reported audited NAV ($46.91 million as at 31 December 2022). This NAV uplift
is included in the Company's H1 2023 results.
Also, WasteFuel announced that it entered a partnership including a memorandum
of understanding with bp for the offtake of WasteFuel's bio-methanol and a
technical collaboration to improve bio-methanol production efficiency, yields
and economics. As part of this agreement, the business will be able to
leverage bp's proprietary technology to help optimise and improve its
low-carbon, bio-methanol production.
In August 2023, WastFuel announced the strengthening of its management team
with the appointment of Peter Votkjaer Jorgensen, former Partner in Maersk
Growth, the venture arm of the A.P. Moller - Maersk Group, as Chief Financial
Officer (CFO) effective October 1, 2023.
Enphys Management Company, LLC ("EMC") is i(x) Net Zero's partnership with the
Latin America Investment Group, a business development and investment group.
EMC pursues private and public opportunities focused on renewables and energy
transition in Latin America and has a direct ownership in Enphys Acquisition
Sponsor, LLC ("EAS"), the sponsor company of Enphys Acquisition Corp. ("EAC"),
a NYSE-listed SPAC targeting renewable energy businesses in Latin America, in
which EMC also has an ownership. Its strategy is to create a regional champion
in the Americas for alternative energy through the aggregation of existing,
cash-flow positive wind and solar assets. Latin America provides a rapidly
growing energy market where alternative energy production is often the lowest
cost source. This provides Enphys the opportunity to execute at scale and
become a significant publicly traded leader in energy transition.
In August 2023, the Company announced that it had committed to invest an
additional $2.5 million into EMC and that its wholly owned subsidiary i(x)
Investments LLC had entered into a revised EMC LLC Agreement with LAIG
Investments.
The investment, the cost of which will be spread over the next four years and
immediately took the Company's ownership in Enphys from its previous level of
14.5% to 30.0%. The additional cash investment, together with the increased
valuation at which the investment was agreed generated an uplift in the Net
Asset Value of the Company's total holding in EMC from $10.3 million to $16.7
million, based on the valuation as at 31 December 2022.
The new funding will provide additional support to EMC for budgeted working
capital, certain other approved costs and investments into new assets as it
initially progresses towards a merger opportunity for its SPAC, Enphys
Acquisition Corp, with the intention of forming a major renewables energy
group that can be a regional champion for sustainability in the Americas and
later expanding its assets under management with new assets and new investment
structures.
Enphys Acquisition Corp. (NYSE: NFYS, "EAS", EMC is the sponsor of EAS and has
a direct ownership in EAS) filed its intial preliminary proxy statement in
August 2023 in connection with an extraordinary general meeting of
shareholders of EAS for the purpose of, among other things, extending the time
by which it has to consummate an initial business combination from October 8,
2023 to February 8, 2024 (the "Extension"), as well as other documents filed
by EAS with the U.S. Securities and Exchange Commission. The Extension is
subject to approval by EAS shareholders and a further announcement will be
made in due course.
EAS has also signed a non-binding letter of intent for a business combination
with a leading and well-established advanced biofuels company in Latin
America.
Carbon Engineering Ltd. ("Carbon Engineering") has developed a proprietary
Direct Air Capture ("DAC") technology that removes carbon dioxide directly
from the atmosphere for sequestration and storage. With its DAC and
carbon-to-value proposition, it represents the next generation of industrial
scale decarbonisation. The company has a clear path to global growth and is
focused on licensing its technology to industrial partners to build and
operate.
In August 2023, the Company announced that a conditional agreement had been
reached for the sale of Carbon Engineering, to Occidental Petroleum
Corporation ("Occidental"), the international energy company.
Occidental is an existing strategic partner of Carbon Engineering. The
acquisition would see Occidental acquire the outstanding shares in Carbon
Engineering for a total cash consideration of $1.1 billion, payable in three
approximately equal annual payments with the first to be made at closing.
i(x) Net Zero holds an indirect circa 0.45% interest in Carbon Engineering
through two special purpose vehicles. If the sale completes on the agreed
terms, the Company's indirect interest would equate to approximately $7.2
million, and subject to the distribution of the proceeds over the three years
following completion by those SPVs, this would generate a 7.2x return on the
Company's initial investment of $1 million before any costs of the SPVs. On
this basis the sale price would also represent a 2.8x multiple on the current
holding value of the Company's investment in Carbon Engineering, of $2.6
million.
Context Labs B.V. ("Context Labs") is an impact software company whose
blockchain technology platform enables the harvesting and processing of data
to help businesses track their carbon emissions and their compliance with
regulatory frameworks.
In April 2023, Context Labs and EQT Corporation ("EQT") announced the
establishment of a strategic partnership to advance the commercialisation of
verified low carbon intensity natural gas products and carbon credits. The
partnership will bring together EQT, the largest natural gas producer in the
U.S., and Context Labs, an expert in distributed ledger technology, advanced
climate data and analytics, machine learning and AI-capabilities. EQT is a
leading independent natural gas production company with operations focused in
the cores of the Marcellus and Utica Shales in the Appalachian Basin.
Through tracking, reporting and verification of critical emissions data, the
strategic partnership will support EQT in achieving its industry-leading
emissions reduction targets, which include a commitment to reach net-zero
greenhouse gas (GHG) emissions by 2025. With a focus on emissions
quantification, operational analysis, and the certification of natural gas
production, the companies will work to scale emissions mitigation across the
full energy value chain.
Context Labs' enterprise data fabric platform, DaaS™,will enable
certification and verification of the carbon intensity of EQT's operating
assets, with certificates registered in Context Labs' CLEAR Path™
Repository. Additionally, the relationship will afford EQT the opportunity to
integrate carbon credit projects into CLEAR Path™ in support of generating
asset-grade data-backed carbon credits.
In September 2023, Context Labs
(https://url.avanan.click/v2/___https:/contextlabs.com/___.YXAzOml4bmV0emVybzphOm86YWZjZTIxYjE5OGNjYzc0MDRiZWNhZDRmMDU2ZTM1MDQ6NjoxYTMyOmM3MTExNGQ5N2E0NTQ2MWNjNjRiZmM3YmMyY2QzY2VmYTg2OGY4ZTBkM2JlN2Q5Y2VjYzgwMjA0OGQ4ZmIyNjY6cDpG)
and Viridios
(https://url.avanan.click/v2/___https:/viridios.ai/___.YXAzOml4bmV0emVybzphOm86YWZjZTIxYjE5OGNjYzc0MDRiZWNhZDRmMDU2ZTM1MDQ6Njo5MzAxOjE1MzY4ZDUwNGQwMTVmNTM4NTBhMjBkOGM5ZWNkOTkyNjc4NjhmOTZhYjViZTg5YWQyMWEzNmU2ODUwYWQzM2U6cDpG)
AI
(https://url.avanan.click/v2/___https:/viridios.ai/___.YXAzOml4bmV0emVybzphOm86YWZjZTIxYjE5OGNjYzc0MDRiZWNhZDRmMDU2ZTM1MDQ6Njo5MzAxOjE1MzY4ZDUwNGQwMTVmNTM4NTBhMjBkOGM5ZWNkOTkyNjc4NjhmOTZhYjViZTg5YWQyMWEzNmU2ODUwYWQzM2U6cDpG)
announced a strategic partnership to de-risk and re-build carbon markets.
Viridios AI, a Viridios Group company and leader in global carbon market
analytics through data and technology, to create the safest, most trusted
platform for environmental attribute discovery, evaluation, and pricing.
Context Labs joins Viridios AI's solutions development and deployment
ecosystem as a key strategic partner focusing on data integrity, transparency,
and scalability. Sharing a vision for how to re-build and de-risk the emerging
and ongoing needs of the global carbon markets, the companies will help
organizations meet their climate and net-zero targets with the world's safest
carbon credits available to offset residual emissions. Each company will
collaborate with a select group of partners from their respective networks to
identify specific opportunities to provide data-driven, more effective
decarbonisation and monetisation methods.
Sustainable Living Innovations ("SLI") is a construction technology and
product development company producing panelised buildings to address housing
affordability, while delivering a new standard in sustainable living. SLI
continues to capture market share as a leader in delivering net zero buildings
at scale. Its factory-assembled and cost-effective steel panel technology
addresses both the inflationary pressure on material costs and supply chain
issues.
In March 2023, SLI signed a non-binding letter of Intent in relation to a
proposed business combination with NYSE listed Churchill Capital Corp V
("Churchill V"). With the signing of this LOI, i(x) made a follow on
investment of $0.15 million that will allow SLI to complete the combination
and cover the costs associated with its underlying projects development.
MultiGreen Properties, LLC ("MultiGreen") is a developer of sustainable,
multi-family properties that aims to supply affordable workforce rental
housing by reducing construction costs and duration. MultiGreen intends to
become the first net zero energy operator of multi-family projects in the US
by 2025. The company is delivering on its mission to provide attainable,
tech-enabled rental apartments in supply-constrained US markets. We will
continue to monitor this investment closely as it weathers these turbulent
real estate markets.
Citron Energy Inc ("Citron Energy")
In September 2023, the Company added an additional company to its portfolio
via a $0.6 million investment into Citron Energy Inc ("Citron Energy"), a US
based alternative fuels business.
Citron Energy aims to replace the use of fossil fuels by processing
non-recyclable municipal and commercial waste into a combustible fuel. The use
of CitronFuel will allow the replacement of coal as well as helping to reduce
landfill usage and significantly lower CO2 emissions. The $0.6 million
investment will be in the form of a subscription for new shares in Citron
Energy and will result in i(x) Net Zero owning approximately 34% of Citron
Energy. Jonathan Stearns, the Company's Chief Financial Officer, has a
non-controlling holding in Citron Energy and is the chairman of Citron Energy.
Financial Review
The Company continued delivering an improvement in the fair value of
investments in its portfolio companies ("Portfolio NAV") which increased by
133.55% or, $85.26 million to $149.11 million as at 30 June 2023 (31 December
2022: $63.84 million).
The increase in Portfolio NAV over the period of $85.26 million (H1 2022:
$5.20 million) comprises unrealised gains of $84.72 million (H1 2022: $4.70
million) due to the change in fair value of portfolio investments and $0.55
million of additions to investments (H1 2022: $0.50 million). The majority of
unrealised gains relates to an increase in fair value of WasteFuel as a result
of bp's investment entered into on 30 June 2023. As at 30 June 2023, Portfolio
NAV per share, including cash of $4.35 million (£3.43 million), was $1.79 per
share (£1.41 per share) based on the issued number of shares at 30 June 2023
(31 December 2022: $0.90 per share (£0.75 per share) based on the issued
number of shares at 31 December 2022).
Profit before non-cash deferred tax provision and share-based compensation was
$81.05 million in H1 2023 (H1 2022: $0.50 million) ($81.05 million is derived
as profit before tax of $82.09 million (H1 2022: loss $0.28 million) minus
share-based compensation credit of $1.04 million (H1 2022: expense $0.78
million)).
During H1 2023, stock options were granted to management employees under the
Company's Equity Incentive Plan while stock options issued in 2022 were
forfeited and surrendered resulting in non-cash share-based compensation
credit of $1.04 million being recognised (H1 2022: share-based compensation
expense $0.78 million).
General and administrative costs decreased by $2.36 million to $2.61 million
(H1 2022: $4.96 million), largely due to non-cash share-based compensation
credit, lower compensation costs as a result of a smaller team and cost
reductions.
As a result of the corporate inversion and resulting IPO transaction, i(x) Net
Zero PLC is being treated as a U.S. domestic corporation for all purposes of
the U.S. tax code as of the date of the transaction and there will be non-cash
deferred tax implications related to the Company's temporary difference in the
book and tax basis of its assets, the most material of which is the difference
between the tax basis and the fair value of the Company's investments. For the
period ended June 30, 2023, non-cash deferred tax expense of $20.64 million
(H1 2022: $12.69 million) was recognised in the consolidated statement of
comprehensive income.
Profit after tax amounted to $61.45 million in H1 2023 (H1 2022: loss after
tax of $12.97 million) primarily as a result of unrealised gains due to the
change in fair value of portfolio investments and lower general and
administrative costs offset by non-cash deferred tax provision.
In April 2023, the Company issued of 6,820,618 new ordinary shares to Mr.
Lindström in lieu of cash payment of his CEO and incentive bonuses payable of
$0.7 million. Following this transaction the Company has 85,877,429 Ordinary
Shares in issue.
The Company continues to be in a strong financial position and as at 30 June
2023 had cash of $4.35 million and new $7.5 million 2-year term loans facility
($0.8 million loan was drawn) (31 December 2022: no borrowings and cash of
$7.48 million) and net current assets of $3.98 million (31 December 2022:
$6.68 million).
Outlook
With the achievement of a significant increase in NAV and rationalisation of
its operating expenses by new management, i(x) Net Zero is now well positioned
to selectively add to its investment portfolio.
In order to achieve this stated ambition, the Company has identified a number
of accretive opportunities for its existing portfolio. These may include
near-term opportunities to participate in capital raises or add-on
investments. In addition, building on its successes to date, i(x) will look to
replicate its strategy of using its operational expertise and catalytic
capital via new platforms in the energy transition and built environment to
scale proven technology and accelerate new and existing market penetration.
The Company also remains open to exploring an investment in, or other
potential alliance with, a renewables and circular economy platform that has a
mission and purpose that is similar to the Company's; namely to build
profitable businesses that support the achievement of the UN Sustainable
Development Goals.
At the beginning of 2023 the Board of Directors set ambitious NAV and
profitability targets for the executive management team, including a near term
target of reducing operating expenditure to 2% of NAV and growing NAV by more
than 50% over the course of 2023. The business has already started to make
good progress towards achieving these challenging targets and is confident of
delivering further tangible results in the second half in support of enhancing
shareholder value over the near and longer term.
Pär Lindström
Chief Executive Officer and Chief Investment Officer
29 September 2023
(x) Net Zero Plc
Consolidated Statement of Comprehensive Income
For the Six Months Ended 30 June 2023
(Expressed in US dollars)
(Unaudited) (Audited)
For the Six Months Ended Year Ended
30 June 31 December
Notes 2023 2022 2022
Net changes in fair value on financial assets 3 $84,717,302 $4,695,431 $1,413,805
at fair value through profit or loss
Divided, interest and other income 24,145 156 2,645
General and administrative expenses (2,606,696) (4,964,208) (8,246,839)
OPERATING PROFIT/(LOSS) BEFORE
FINANCING ACTIVITIES 82,134,751 (268,621) (6,830,389)
Finance cost (41,327) (15,839) (27,495)
PROFIT/(LOSS) BEFORE TAX 82,093,424 (284,460) (6,857,884)
Tax provision - deferred tax expenses (20,639,572) (12,685,897) (11,271,318)
PROFIT/(LOSS) AFTER TAX $61,453,852 $(12,970,357) $(18,129,202)
Earnings/(loss) per share:
Basic and diluted 5 $0.76 $(0.16) $(0.23)
Notes:
a) There is no comprehensive income or loss for the periods ended 30 June
2023 and 2022 and the year ended 31 December 2022.
b) As a result of the corporate inversion and resulting IPO on AIM, i(x)
Net Zero PLC is being treated as a U.S. domestic corporation for all purposes
of the U.S. tax code as of the date of the IPO and there will be non-cash
deferred tax implications related to the Company's temporary difference in the
book and tax basis of its assets, the most material of which is the difference
between the tax basis and the fair value of the Company's investments. For the
period ended 30 June 2023, deferred tax expense of $20,639,572 was recognised
in the consolidated statement of comprehensive income.
i(x) Net Zero Plc
Consolidated Statement of Financial Position
30 June 2023
(Expressed in US dollars)
(Unaudited) (Audited)
ASSETS Notes 30 June 2023 30 June 2022 31 December 2022
Non-Current assets
Investments, at fair value 3 $149,108,024 $65,936,183 $63,840,722
Right-of-use asset 190,727 503,443 349,277
Furniture and equipment, net
of accumulated depreciation - 8,567 1,839
Loan origination costs, net 148,500 - -
Security deposit 82,942 82,942 82,942
Member tax advance - 11,500 -
Total Non-Current Assets 149,530,193 66,542,635 64,274,780
Current assets
Cash and cash equivalents 7 4,349,236 11,178,604 7,479,832
Accounts receivable 26,585 - 66,838
Interest receivable 24,145 - -
Prepaid expenses and other current assets 107,356 225,620 135,806
Cash advances for future investments - 86,165 -
Total Current Assets 4,507,322 11,490,389 7,682,476
Total Assets $154,037,515 $78,033,024 $71,957,256
LIABILITIES
Current liabilities
Accounts payable and accrued expenses $283,545 $890,348 $612,788
Lease liability 184,902 349,950 364,336
Interest payable 34,055 - -
Security deposit payable 24,601 49,202 24,601
Total Current Liabilities 527,103 1,289,500 1,001,725
Non-current liabilities
Deferred tax liability 31,910,889 12,685,897 11,271,318
Loan payable 7 800,000 - -
Lease liability 32,051 216,954 32,051
Total Non-Current Liabilities 32,742,940 12,902,851 11,303,369
Total Liabilities 33,270,043 14,192,351 12,305,094
EQUITY
Share Capital, no par value (authorized,
issued and outstanding - 85,877,429 as of 30 June 2023 and 79,056,811 as of 30
June 2022 and 31 December 2022
ordinary shares 4 77,333,361 76,701,569 77,671,903
Retained earnings 43,434,111 (12,860,896) (18,019,741)
Total Equity 120,767,472 63,840,673 59,652,162
Total Liabilities and Equity $154,037,515 $78,033,024 $71,957,256
The financial statements were authorised for issue by the board of directors
on 29 September 2023 and were signed on its behalf by:
Pat
Lindstrom
Jonathan Stearns
Chief Executive Officer
Chief Financial Officer
Company number - 138730
i(x) Net Zero Plc
Consolidated Statement of Changes in Shareholders' Equity
Page 1 of 2
For the Six Months Ended 30 June 2023
(Expressed in US dollars)
Share Capital
Number Members' and Other Retained
of Shares Capital Reserves Earnings Total
At 1 January 2023 79,056,811 $- $77,671,903 (18,019,741) $59,652,162
Net income for the period - - - 61,453,852 61,453,852
(1 January 2023 - 30 June 2023)
Share bonus (Note 4) 6,820,618 - 700,000 - 700,000
Share option credit (Note 6) - (1,038,542) - (1,038,542)
-
At 30 June 2023 85,877,429 $- $77,333,361 $43,434,111 $120,767,472
At 1 January 2022 - $63,877,744 $- $- $63,877,744
Capital contributions - 1,644,981 - - 1,644,981
Distributions of assets held for - (1,216,841) - - (1,216,841)
disposal to i(x) Sustainable Holdings, LLC
Distribution cash to i(x) - (400,000) (400,000)
Sustainable Holdings, LLC - -
Net loss for the period (1 January 2022- - (109,461) - - (109,461)
8 February 2022)
At 9 February 2022 - 63,796,423 - - 63,796,423
Conversion from members' capital to
shareholders' equity 65,000,000 (63,796,423) 63,796,423 - -
Subscription for i(x) Net Zero shares
net of expenses 14,056,811 - 12,125,421 - 12,125,421
Net loss for the period (9 February 2022 - - - - (12,860,896) (12,860,896)
30 June 2022)
Share option expenses - - 779,725 - 779,725
At 30 June 2022 79,056,811 $- $76,701,569 $(12,860,896) $63,840,673
i(x) Net Zero Plc
Consolidated Statement of Changes in Shareholders' Equity
Page 2 of 2
For the Year Ended December 31, 2022
(Expressed in US dollars)
Share Capital
Number Members' and Other Retained
of Shares Capital Reserves Earnings Total
At 1 January 2022 - $63,877,744 $- $- $63,877,744
Capital contributions - 1,644,981 - - 1,644,981
Distribution of assets held
for disposal to i(x)
Sustainable Holdings LLC - (1,216,841) - - (1,216,841)
Distribution of cash to i(x)
Sustainable Holdings, LLC - (400,000) - - (400,000)
Net loss for the period
(1 January 2022 -
8 February 2022) - (109,461) - - (109,461)
At 9 February 2022 - 63,796,423 - - 63,796,423
Conversion from
members' capital to
shareholders' equity 65,000,000 (63,796,423) 63,796,423 - -
Subscription for i(x) Net
Zero share, net of
expenses 14,056,811 - 12,125,421 - 12,125,421
Net loss for the period
(9 February 2022 -
31 December 2022) - - - (18,019,741) (18,019,741)
Share option expense - - 1,750,059 - 1,750,059
At 31 December 2022 79,056,811 $- $77,671,903 $(18,019,741) $59,652,162
The consolidated statement of changes in shareholders' equity is presented as
changes in members' capital up to the date of the acquisition of i(x)
investments, LLC, accounted for under merger principles.
.
i(x) Net Zero Plc
Consolidated Statements of Cash Flows
For the Six Months Ended 30 June 2023
Expressed in US dollars)
(Unaudited) (Audited)
For the Six Months Ended Year Ended
30 June 31 December
Notes 2023 2022 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) attributable to shareholders/members $61,453,852 $(12,970,357) $(18,129,202)
Adjustments for:
Depreciation expense 1,839 6,774 13,472
Amortisation of right-of-use asset 158,550 149,983 304,149
Amortisation of loan facility fees 16,500 - -
Loss on cash advances for future investments - - 86,165
Net changes in fair value on financial
assets at fair value through profit or loss 3 (84,717,302) (4,695,431) (1,499,970)
Bonus expense paid in shares 4 700,000 1,000,000 1,000,000
Incentive stock option grant expense 6 (1,038,542) 779,725 1,750,059
Increase in deferred tax liability 20,639,571 12,685,897 11,271,318
Changes in operating assets and liabilities
Decrease/(increase) in accounts receivable 40,253 40,374 (26,464)
Increase in interest receivable (24,145) - -
Decrease in prepaid expenses
and other current assets 28,450 1,324,096 1,413,910
Decrease in security deposit payable - - (24,601)
Increase in member tax advance - - 11,500
Decrease in accounts payable
and accrued expenses (329,243) (982,165) (1,259,725)
Net Cash Used in Operating Activities (3,070,217) (2,661,134) (5,089,389)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments (550,000) (500,000) (1,600,000)
Net Cash Used in Investing Activities (550,000) (500,000) (1,600,000)
CASH FLOWS FROM FINANCING ACTIVITIES
IPO Proceeds, net of expenses - 12,125,421 12,125,421
Distribution to i(x) Sustainable Holdings, LLC - (400,000) (400,000)
Purchase of i(x) Net Zero shares - (1,000,000) (1,000,000)
Capital contributions - 1,644,981) 1,644,981)
Proceeds from loan facility borrowings 7 800,000 - -
Payment of loan facility fees (165,000) - -
Increase in interest payable 34,055 - -
Decrease in lease liability (179,434) (165,428) (335,945)
Net Cash Provided by Financing
activities 489,621 12,204,974 12,034,457
Net Increase (Decrease) in Cash and
Cash Equivalents (3,130,596) 9,043,840 5,345,068
CASH AND CASH EQUIVALENTS
Beginning of period 7,479,832 2,134,764 2,134,764
End of period $4,349,236 $11,178,604 $7,479,832
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Non-cash financing activity
Share-based compensation 6 $(1,038,542) $779,725 $1,750,059
Distribution of assets held for disposal - 1,216,841 1,216,841
Bonus expense paid in shares 4 700,000 1,000,000 1,000,000
$(338,542) $2,996,566 $3,996,900
i(x) Net Zero Plc
Notes to Consolidated Financial Statements
30 June 2023
1. Organisation and Nature of Business
i(x) Net Zero, PLC (the "Company") is a company incorporated and domiciled in
Jersey, British Isles with Company Number 138730. The Company's shares are
admitted to trading on the AIM market of the London Stock Exchange (ticker:
IX). The Company is an investment company that provides its shareholders with
an opportunity to create long-term capital growth with sustainable impact on
the environment and communities it serves. The registered address of the
Company is 3(rd) Floor, 44 Esplanade Street, Helier, Jersey JE4 9WG. The
Company is governed in accordance with Companies (Jersey) Law 1991.
2. Basis of Preparation and Going Concern
The Company's financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and IFRIC interpretations
issued by the International Accounting Standards Board ("IASB") and with those
parts of the Companies (Jersey) Law 1991 applicable to companies preparing
their financial statements under IFRS. The financial statements have been
prepared on the historical cost basis, as modified by the revaluation of
financial assets and financial liabilities at fair value through profit or
loss. The Company reports cash flows from operating activities using the
indirect method.
These half-year abbreviated financial statements are unaudited and do not
constitute statutory accounts within the meaning of Section 435 of the
Companies Act 2006. The results for the year ended 31 December 2022 set out
above are abridged. Full accounts for that year reported under IFRS, on
which the auditors of the Company made an unqualified report have been
delivered to the Registrar of Companies.
The Company's interim condensed consolidated financial statements are
presented in accordance with IAS 34, Interim Financial Reporting, and should
be read in conjunction with the Company's annual financial statements as of 31
December 2022. The presentation of these interim condensed consolidated
financial statements is consistent with the 2022 financial statements and its
accounting policies, but where necessary comparative information has been
reclassified or expanded from the 2022 interim financial statements to take
into account any presentational changes made in the 2022 financial statements
or in these interim financial statements.
Going Concern
The Company's financial statements have been prepared on a going concern
basis. The financial position of the Company, its cash flows, liquidity
position and borrowing facilities are described in these financial statements
and related notes.
In order to assess the going concern of the Company, the Directors have
prepared cash flow forecasts for the Company. These cash flow forecasts show
the Company expects to have sufficient headroom over available banking
facilities. The Company has obtained banking facilities sufficient to
facilitate the growth forecast in future periods. No matters have come to
the attention of the Directors to suggest that future renewals may not be
forthcoming on acceptable terms.
After making enquiries, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the financial statements.
The financial statements do not include any adjustments that would result if
the forecast were not achieved.
3. Investments in Private Operating Companies
Following are the schedules of investments as of 30 June 2023, 30 June 2022 and 31 December 2022:
30 June 2023
Principal Percent of
Amounts/Shares/ Shareholders'
Units Description Equity Fair Value
Private Operating Companies
United States
Common Shares
Biofuel Developer
10,404,587 Wastefuel Global, Inc. 109.1% $131,687,361
Total Common Shares 109.1% 131,687,361
Limited Liability Company Interests
Real estate development
1,228,063 MultiGreen Properties, LLC 1.8% 2,190,000
Total Limited Liability Company Interests
1.8% 2,190,000
Limited Partnership Interest
Building technology
Sustainable Living Innovations (FKA Multigreen SLI Partners,
LP) 0.7% 771,000
Total Limited Partnership Interests 0.7% 771,000
Convertible Note
Building technology
150,000 Sustainable Living Innovations (FKA Multigreen SLI Partners, LP) 0.1% 150,000
Real estate development
250,000 MultiGreen Properties, LLC 0.2% 250,000
Total Convertible Note 0.3% 400,000
Total United States 111.9% $135,048,361
Canada
Common Shares
Carbon Capture Technology
21,763 Carbon Engineering, Ltd. (1) 2.2% 2,637,710
Total Common Shares - Canada 2.2% 2,637,710
Cayman Islands
Limited Liability Company Interest
Renewable Energy
Enphys Management Company 9.0% 10,919,953
Total Limited Liability Company Interests - 9.0%
Cayman Islands 10,919,953
Netherlands
Preferred Class B1 Shares
499,955 Software/Information Technology
Context Labs, BV 0.4% 502,000
Total Convertible Note - Netherlands 0.4% 502,000
Total Investments 123.5% $149,108,024
(1) Shares of Carbon Engineering, Ltd. are held indirectly through
investments in RCM Carbon Engineering Partners, LLC (12,490 common shares) and
C12 Equity Ltd. (9,273 common shares).
30 June 2022
Principal Percentage of
Amounts/Shares/ Shareholders'
Units Description Equity Fair Value
Private Operating Companies
United States
Limited Liability Company Interests
Biofuel Developer
10,380,581 Wastefuel Global, LLC 73.5% $46,902,564
Real estate development
1,228,063 MultiGreen Properties, LLC 7.8% 5,000,000
Total Limited Liability Company Interests
81.3% 51,902,564
Limited Partnership Interest
Building technology
Sustainable Living Innovations (FKA Multigreen SLI Partners,
LP) 1.2% 742,000
Total Limited Partnership Interests 1.2% 742,000
Total United States 82.5% $52,644,564
Canada
Common Shares
Carbon Capture Technology
21,763 Carbon Engineering, Ltd. (1) 3.7% 2,383,698
Total Common Shares - Canada 3.7% 2,383,698
Cayman Islands
Limited Liability Company Interest
Renewable Energy
Enphys Management Company 16.3% 10,396,921
Total Limited Liability Company Interests -
Cayman Islands 16.3% 10,396,921
Netherlands
Preferred Class B1 Shares
499,955 Software/Information Technology
Context Labs, BV 0.8% 511,000
Total Convertible Note - Netherlands 0.8% 511,000
Total Investments 103.3% $65,936,183
(1) Shares of Carbon Engineering, Ltd. are held indirectly through
investments in RCM Carbon Engineering Partners, LLC (12,490 common shares) and
C12 Equity Ltd. (9,273 common shares).
31 December 2022
Principal Percent of
Amount/Shares/ Shareholders'
Units Description Equity Fair Value
Private Operating Companies
United States
Limited Liability Company Interests
Biofuel Developer
10,380,581 Wastefuel Global, LLC 78.7% $46,908,475
Real estate development
1,228,063 MultiGreen Properties, LLC 3.8% 2,260,000
Total Limited Liability Company Interests
82.5% 49,168,475
Limited Partnership Interest
Building technology
Sustainable Living Innovations (FKA Multigreen SLI Partners,
LP) 1.2% 742,000
Total Limited Partnership Interests 1.2% 742,000
Simple Agreement for Future Equity (SAFE)
Biofuel Developer
Wastefuel Global, LLC 0.4% 250,000
Total SAFE 0.4% 250,000
Convertible Note
Real estate development
MultiGreen Properties, LLC 0.4% 250,000
Total Convertible Note 0.4% 250,000
Total United States 84.5% $50,410,475
Canada
Common Shares
Carbon Capture Technology
21,763 Carbon Engineering, Ltd. (1) 4.3% 2,579,223
Total Common Shares - Canada 4.3% 2,579,223
Cayman Islands
Limited Liability Company Interest
Renewable Energy
Enphys Management Company 17.3% 10,340,024
Total Limited Liability Company Interests - 17.3% 10,340,024
Cayman Islands
Netherlands
Preferred Class B1 Shares
499,955 Software/Information Technology
Context Labs, BV 0.9% 511,000
Total Convertible Note - Netherlands 0.9% 511,000
Total Investments 107.0% $63,840,722
(1) Shares of Carbon Engineering, Ltd. are held indirectly through
investments in RCM Carbon Engineering Partners, LLC (12,490 common shares) and
C12 Equity Ltd. (9,273 common shares).
The following tables present the changes in assets classified in Level 3 of
the fair value hierarchy for the periods ended 30 June 2023 and 2022 and the
year ended 31 December 2022:
30 June 2023
Limited Simple
Liability Agreement
Common Preferred Convertible Company Limited For Future
Stock Stock Note Interests Partnerships Equity (SAFE) Totals
Balance at 31 December
2022 $2,579,223 $511,000 $250,000 $59,508,499 $742,000 $250,000 $63,840,722
Purchases of investments - - 150,000 400,000 - - 550,000
Unrealised gain/(loss) 58,487 (9,000) - 84,638,815 29,000 - 84,717,302
Conversion to shares 131,687,361 - - (131,437,361) - (250,000) -
Balance at 30 June 2023 $134,325,071 $502,000 $400,000 $13,109,953 $771,000 $- $149,108,024
30 June 2022
Limited
Liability
Common Preferred Company Limited
Stock Stock Interests Partnerships Totals
Balance at 31 December 2021 $2,383,698 $499,955 $57,357,099 $500,000 $60,640,752
Purchases of investments - - 500,000 - 500,000
Unrealised gain - 11,045 4,442,386 242,000 4,695,431
Balance at 30 June 2022 $2,383,698 $511,000 $62,299,485 $742,000 $65,936,183
31 December 2022
Limited Simple
Liability Agreement
Common Preferred Convertible Company Limited For Future
Stock Stock Note Interests Partnerships Equity (SAFE) Totals
Balance at 31 December 2021 $2,383,698 $499,955 $- $57,357,099 $500,000 $- $60,740,752
Purchases of investments - - 250,000 1,100,000 - 250,000 1,600,000
Unrealised gain 195,525 11,045 - 1,051,400 242,000 - 1,499,970
Balance at 31 December 2022 $2,579,223 $511,000 $250,000 $59,508,499 $742,000 $250,000 $63,840,722
The following tables summarize the methods and significant assumptions used to
measure investments categorized in Level 3 of the fair value hierarchy and
whose values were determined by management as of 30 June 2023 and 2022, and 31
December 2022:
Fair Value at
30 June 2023 Valuation Unobservable
(in thousands) Technique Input Average
Investments
Common Stock
Biofuel Developer (1) $131,687 Market Approach Recent transaction - capital raise (90% weight) $12.66/unit
Option pricing method (backsolve) Risk free rate - 4.1%, volatility - 120.4%; time to liquidly event - 5 years
(10% weight)
Carbon Capture Technology 2,638 Equity Roll Forward N/A $121.20/share
Total Common Stock 134,325
Limited Liability Company Interests
Real Estate Development 2,190 Income Approach - Discounted Cash flow Discount rate - 85% $1.78 unit
Renewable Energy 10,920 Options Pricing Method (Management Company) Risk free rate - 4.1%, volatility - 4.2%; time to liquidity event - 5 years N/A
Monte Carlo Simulation (Founders' shares owned indirectly by management Risk free rate - 4.68%, volatility - 4.24%; term to maturity - 1.3 years
company) (lockup period)
Total Limited Liability
Company Interests 13,110
Preferred Stock
Software/Information Technology 502 Equity Roll Forward N/A $45.80/share
Total Preferred Stock 502
Limited Partnership Interest
Building technology 771 Equity Roll Forward N/A $241.39/unit
Convertible Notes
Real Estate Development 250 Transaction cost Transaction cost N/A
Building technology 150 Transaction cost Transaction cost N/A
Total Convertible Notes 400
Total $149,108
Fair Value at
30 June 2022 Valuation Unobservable
(in thousands) Technique Input Average
Investments
Common Stock
Carbon Capture Technology $2,384 Market Approach Implied value of equity financing $109.53/share
Total Common Stock 2,384
Limited Liability Company Interests
Biofuel Developer (1) 46,902 Market Approach Recent transaction - capital raise (90% weight) $4.52/unit
Option pricing method (backsolve) Risk free rate - 3%, volatility - 138.8%; time to liquidly event - 5 years
(10% weight)
Real Estate Development 5,000 Income Approach - Discounted Cash flow Discount rate - 55% $3.92 unit
Renewable Energy 9,697 Options Pricing Method (Management Company) Risk free rate - 3%, volatility - 4%; time to liquidity event - 5 years N/A
Monte Carlo Simulation (Founders' shares owned indirectly by management Risk free rate - 2.9%, volatility - 4%; term to maturity - 1.8 years (lockup
company) period)
700 Transaction cost Transaction cost N/A
Total Renewable Energy 10,397
Total Limited Liability Company Interests 62,299
Preferred Stock
Software/Information Technology 511 Market approach Recent transaction cost - capital raise (50% weight) $46.56/share
Option Pricing Method (backsolve) Risk free rate - 3%, volatility - 180.0%;time to liquidity event - 5 years
(50% weight)
Total Preferred Stock 511
Limited Partnership Interest
Building technology 742 Transaction cost Transaction cost $225/unit
Total $65,936
Fair Value at
31 December 2022 Valuation Unobservable
(in thousands) Technique Input Average
Investments
Common Stock
Carbon Capture Technology $2,579 Equity Roll Forward N/A $118.51/share
Total Common Stock 2,579
Limited Liability Company Interests
Biofuel Developer (1) 46,909 Market Approach Recent transaction - capital raise (90% weight) $4.52/unit
Option pricing method (backsolve) Risk free rate - 3.9%, volatility - 139.2%; time to liquidly event - 5 years
(10% weight)
Real Estate Development 2,260 Income Approach - Discounted Cash flow Discount rate - 75% $1.84 /unit
Renewable Energy 9,640 Options Pricing Method (Management Company) Risk free rate - 4%, volatility - 4.4%; time to liquidity event - 5 years N/A
Monte Carlo Simulation (Founders' shares owned indirectly by management Risk free rate - 4.32%, volatility - 4.44%; term to maturity - 1.3 years
company) (lockup period)
700 Transaction cost Transaction cost N/A
Total Renewable Energy 10,340
Total Limited Liability Company Interests 59,509
Preferred Stock
Software/Information Technology 511 Market approach Recent transaction cost - capital raise (50% weight) $46.56/share
Option Pricing Method (backsolve) Risk free rate - 4%, volatility - 202.1% ;time to liquidity event - 5 years
(50% weight)
Total Preferred Stock 511
Limited Partnership Interest
Building technology 742 Transaction cost Transaction cost $225/unit
Simple Agreement For Future Equity (SAFE)
Biofuel Developer 250 Transaction cost Transaction cost N/A
Convertible Note
Real Estate Development 250 Transaction cost Transaction cost N/A
Total $63,841
Note:
The per unit price of WasteFuel Global in the most recent capital raise was
given a 90% weight in the 30 June 2023 and 2022 valuations and the 31 December
2022 valuation. A 10% weight was ascribed to the backsolve method, which is a
method that derives the equity value for a company from a transaction
involving the company's own securities. The rights and preferences of each
class of equity, market interest rates, industry sector volatility data, and
an estimated time period to a liquidity event are all considered and included
in an option pricing model under the backsolve method. The weighting of these
two valuation methods and the unobservable inputs used in the valuation were
based on management judgment. The unobservable inputs are presented in the
Level 3 valuation table as of 30 June 2023 and 2022 and 31 December 2022.
WasteFuel Global, Inc. ("WasteFuel")
Effective 30 June 2023, WasteFuel finalised an agreement with bp, the
multi-national energy company, to secure a $10 million investment in
WasteFuel. The $10 million investment, which was the lead investment in
WasteFuel's Series B investment round, resulted in a material increase in the
fair value attributable to the Company's holding in WasteFuel. Following bp's
investment, the unaudited fair value of the Company's equity interest in
WasteFuel was $131.69 million, an increase of 181% from the last reported
audited fair value ($46.91 million as at 31 December 2022). This increase in
the fair value of WasteFuel was included in the Company's H1 2023 results.
In addition, effective 30 June 2023, WasteFuel was reorganized from a limited
liability company to a corporation.
On a semi-annual basis, the Company's management reviews the fair value
calculation for each Level 3 security and assesses, among other things, the
reasonableness of the pricing models, the inputs to the pricing models and the
significant assumptions developed internally or by independent valuation
experts.
4. Share Capital
The Company has 85,877,429 ordinary shares, at no par value, authorised,
issued and outstanding as of 30 June 2023.
Ordinary shares were issued upon completion of the Company's IPO on 9 February
2022, as disclosed in Note 1, Organisation and Nature of Business.
Following is the equity roll forward schedule for the periods ended 30 June
2023 and 2022 and the year ended 31 December 2022:
1 January to 30 June 2023 1 January to 30 June 2022 1 January to 31 December 2022
Shares Amount Shares Amount Shares Amount
Equity, beginning
of period 79,056,811 $59,652,162 - $63,877,744 - $63,877,744
Conversion of
members' capital
to shares - - 65,000,000 - 65,000,000 -
Subscriptions/
contributions - - 14,056,811 13,770,402 14,056,811 13,770,402
Net income/(loss) - 61,453,852 - (12,970,357) - (18,129,202)
Share bonus 6,820,618 700,000 - - - -
Share option - - - - - -
expense (credit) - (1,038,542) - 779,725 - 1,750,059
Distribution of
assets - - - (1,616,841) - (1,616,841)
Equity, end of
period 85,877,429 $120,767,472 79,056,811 $63,840,673 79,058,811 $59,652,162
Total Voting Rights
Following the issuance of 2022 Bonus Shares and CEO Bonus Shares in April
2023, the Company has 85,877,429 Ordinary Shares in issue, each carrying the
right to one vote. No Ordinary Shares are held by the Company in treasury. The
total number of voting rights in the Company is therefore 85,877,429.
CEO Bonuses
In December 2022, the Company agreed to pay to Pär Lindström an incentive
bonus of $200,000 (£160,772) in respect of the year ended 31 December 2022
and, as part of his promotion to CEO in January 2023, the Company agreed to
pay Mr. Lindström a promotion bonus based on increased responsibilities as
CEO of $500,000 (£401,929). In total, these bonuses represent approximately
170% of Mr. Lindström's 2023 annual compensation. In order to preserve the
Company's cash resources and to demonstrate his commitment to the Company, Mr.
Lindström agreed to apply both of these bonuses to subscriptions of new
ordinary shares at the previous day's closing price of 8.25 pence per share.
This resulted in the issuance of 6,820,618 new ordinary shares to Mr.
Lindström ("Bonus Shares"). The Bonus Shares represent 8.7% of the issued
share capital prior to the issuance of these shares. Both of these bonuses
were recorded in 2023 and are included in general and administrative expenses
for the period from 1 January to 30 June 2023. The shares subscribed for by
Mr. Lindström pursuant to each of these bonus schemes were subject to a risk
of forfeiture if the Company's Net Asset Value ("NAV") did not meet the hurdle
of $120 million within the 24-month period following their issue ("NAV
Hurdle"). The forfeiture risk expired when the Company's Net Asset Value
("NAV") exceeded $120 million during the period from 1 January to 30 June
2023. The Bonus Shares were admitted to trading on AIM London Stock Exchange
on 26 April 2023.
5. Earnings per Share
Basic earnings per share is calculated by dividing the earnings attributable
to shareholders by the weighted average number of ordinary shares outstanding
during the period. The stock options granted to management employees in 2023
have an exercise price which is less than the average market price of the
Company's shares during H1 and therefore do not have a dilutive effect on
earnings per share.
30 June 2023 30 June 2022 31 December 2022
Basic and Basic and Basic and
Diluted Diluted Diluted
Earnings attributable to the
ordinary Shareholders of
the Company $61,453,852 $(12,860,896) $(18,019,741)
Weighted average number
of shares 80,879,324 79,056,811 79,056,811
Earnings/(loss) per share $0.76 $(0.16) $(0.23)
6. Share Based Compensation
Pursuant to the Company's Equity Incentive Plan for 2022 (the "Incentive
Plan"), stock options ("Options") were granted to management employees during
2022. Each management employee was granted the option to purchase shares of
the Company's stock in accordance with each employee's Stock Option Grant.
In February 2023, 2,703,967 Options were forfeited, resulting in a reversal of
expense previously recorded by the Company for these Options of $1,145,141.
Also, effective 22 April 2023, 2,166,157 Options were surrendered and replaced
with new options (the "New Options") and 4,158,388 additional New Options were
granted to management employees. The total number of New Options granted
during the period from 1 January to 30 June 2023 was 6,324,545. The New
Options have an exercise price of 20 pence, being a 142.4 per cent premium to
the previous day's closing share price on AIM of 8.25 pence. The New Options
vest over a period of three years, with a third vesting on each of the three
successive anniversaries of the date of grant. The New Options granted on 22
April 2023 are expected to be fully vested as of 22 April 2026.
The aggregate fair value of the options granted on 22 April 2023 was $293,360,
which was determined using the Black Scholes options pricing model. The
expected volatility used to determine the fair values of the options was 60%
and the annual risk-free rate used in the determination of the fair values of
the options was 3.57%.
Details of the stock options outstanding during the periods from 1 January to
30 June 2023 and 2022, and the year ended 2022 are as follows:
Period from Period from Period from Period from Period from Period from
1 January 1 January 1 January 1 January 1 January 1 January
2023 to 2023 to 2022 to 2022 to 2022 to 2022 to
30 June 30 June 30 June 30 June 31 December 31 December
2023 2023 2022 2022 2022 2022
Expense/ Expense/ Expense/
Credit Credit Credit
Recognised Recognised Recognised
Number of During the Number of During the Number of During the
Options Period Options Period Options Period
Beginning of
period 4,870,124 $- - $- - $-
2022 Option
Granted during
the period - - 5,779,277 906,915 5,779,227 2,091,220
Forfeited (2,703,967) (1,145,141) (909,153) (127,190) (909,153) (341,161)
Surrendered (2,166,157) (604,918) - - - -
2023 Options
Granted during
the period 6,324,545 711,571 - - - -
End of period 6,324,545 $(1,038,542) 4,870,124 $779,725 4,870,124 $1,750,059
The (credit)/expense recognised for the periods 1 January to 30 June 2023 and
2022, and the year ended 31 December 2022 was $(1,038,542), $779,725 and
$1,750,059, respectively. These amounts are included in general and
administrative expenses on the accompanying consolidated statement of
comprehensive income.
The unvested amount of the Company's stock options as of 30 June 2023 was
$1,225,000.
7. Loan Facility
In April 2023, the Company's wholly owned subsidiary, i(X) investments, LLC
entered into a secured $7.5 million 2-year term loan facility with European
Depositary Bank S.A. ("EDB") ("Loan"). Amounts drawn down on the loan facility
bear interest at 10.5% (subject to periodic change in line with EDB's USD Base
rate) which is payable quarterly. The Loan can be utilised for the purposes of
the financing of investments and general working capital purposes. The Loan is
guaranteed by the Company.
i(x) investments, LLC has agreed to pay an arrangement fee equal to 2% of the
amount of the facility and a commitment fee of 1.75% per annum on any undrawn
funds, payable quarterly in arrears.
Drawdown of the Loan is conditional upon there being no event of default and
other customary provisions including delivery of documents. The Loan is
repayable together with default interest in the event of default which, inter
alia, includes a change of control and a reduction of aggregate NAV of the
Company below $50 million.
The Loan is secured by a pledge granted by the Company and its nominee of the
shares held by it including those in i(x) investments, LLC and all other
proceeds and property and assets owned by it. In addition, as part of the
Facility Agreement, i(x) investments, LLC has pledged $4.0 million as security
in a deposit account with EDB. The Company will be able to invest this
security deposit in certain money market funds and other financial instruments
and generate a return on deposited funds (currently expected to be
approximately 4-5% per annum) thereby mitigating the interest payable. In
addition, i(x) investments, LLC has undertaken to maintain a minimum cash
balance in an operating account at EDB with an amount varying depending on the
remaining time to facility maturity but being zero if drawdowns are below $4
million.
In connection with the facility, i(x) investments, LLC has also agreed to give
customary undertakings, warranties and indemnities to the Lender, the Agent
and Security Agent including as to tax and undertakings not to undertake
certain corporate transactions without consent.
The amount of the loan drawn down as of 30 June 2023 was $800,000. This
amount is recorded on the consolidated statement of financial condition as
Loan Payable. Interest accrued on the amount drawn down was $34,055 during the
period from 1 January to 30 June 2023.
8. Commitments and Contingencies
In January 2022, Lion Point Capital, LP, on behalf of funds managed by it,
("Lion Point") and the Company entered into a strategic relationship to
identify and pursue certain transactions together, with an initial focus on
opportunities in Energy Transition. At the time of the Company's IPO, Lion
Point Master, LP ("Lion Point Master") entered into a subscription agreement
and subscribed for $6.8 million (approximately £5.0 million) in ordinary
shares of the Company at the placing price as part of the fundraising. Lion
Point Master was granted a put option and pursuant to the put option, the
Company is obliged to repurchase 6,672,161 Ordinary Shares of Lion Point
Master's Ordinary Shares at the Placing Price (£0.76 per share ($1.02 per
share)) amounting up to $6.8 million at any time during the three-year term
following the Company's admission to trading on AIM. Lion Point has also
granted to the Company a call option to purchase $6.8 million of common shares
of Suniva, Inc. Further details are set out in paragraph 5.6 of Part 1 and
paragraphs 18.1(j), (k) and (l) of Part 7 of the Company's Admission document
dated 4 February 2022, which is available on the Company's website
https://ixnetzero.com/.
9. Subsequent Events
Enphys
In August 2023, the Company announced that it has committed to invest an
additional $2.5 million into Enphys Management Company ("EMC") and that its
wholly owned subsidiary i(x) Investments LLC has entered into a revised EMC
LLC Agreement with LAIG Investments.
The investment, the cost of which will be spread over the next four years and
will immediately take the Company's ownership in Enphys from its current level
of 14.5% to 30.0%. The additional cash investment, together with the increased
valuation at which the investment was agreed generates an uplift in the Net
Asset Value of the Company's total holding in EMC from $10.3 million to $16.7
million, based on the valuation as at 31 December 2022. 10% of the issued
capital in EMC is subject to pro-rata clawback if payments by the Company are
either stopped or not made when due in accordance with the revised terms and a
further portion subject to additional clawback if a minimum of US $1 million
is not funded in full, provided that the Company will retain at least a 20%
interest in EMC. In addition, if before 5 August 2025 EMC's fair market value
falls below $25 million and EMC issues additional equity securities, the
Company will benefit from anti dilution provisions to ensure that that the
value of its equity interest does not fall below the amount contributed.
The new funding, being made from the Company's existing cash resources, will
provide additional support to EMC for budgeted working capital, certain other
approved costs and investments into new assets as it initially progresses
towards a merger opportunity for its SPAC, Enphys Acquisition Corp, with the
intention of forming a major renewables energy group that can be a regional
champion for sustainability in the Americas and later expanding its assets
under management with new assets and new investment structures.
Following this announcement Enphys Acquisition Corp. (NYSE: NFYS, "EAS", EMC
is the sponsor of EAS and has a direct ownership in EAS) has filed
a preliminary proxy statement in connection with an extraordinary general
meeting of shareholders of EAS for the purpose of, among other things,
extending the time by which it has to consummate an initial business
combination from 8 October 2023 to 8 July 2024 (the "Extension"), as well as
other documents filed by EAS with the U.S. Securities and Exchange Commission.
The Extension is subject to approval by EAS shareholders and a further
announcement will be made in due course.
EAS has also signed a non-binding letter of intent for a business combination
with a leading and well-established advanced biofuels company in Latin America
Carbon Engineering
In August 2023, the Company announced that a conditional agreement has been
reached for the sale of Carbon Engineering Ltd. ("Carbon Engineering"), to
Occidental Petroleum Corporation ("Occidental"), the international energy
company.
Occidental is an existing strategic partner of Carbon Engineering. The
acquisition would see Occidental acquire the outstanding shares in Carbon
Engineering for a total cash consideration of $1.1 billion, payable in three
approximately equal annual payments with the first to be made at closing.
i(x) Net Zero holds an indirect circa 0.45% interest in Carbon Engineering
through two special purpose vehicles. If the sale completes on the agreed
terms, the Company's indirect interest would equate to approximately $7.2
million, and subject to the distribution of the proceeds over the three years
following completion by those SPVs, this would generate a 7.2x return on the
Company's initial investment of $1 million before any costs of the SPVs. On
this basis the sale price would also represent a 2.8x multiple on the current
holding value of the Company's investment in Carbon Engineering, of $2.6
million.
The sale, which remains subject to certain US and Canadian regulatory
approvals and Canadian Court reviews along with other customary closing
conditions is expected to complete before the end of 2023 at which point
Carbon Engineering will become a wholly owned subsidiary of Occidental.
Citron Energy Inc.
In September 2023, the Company announced that it has added an additional
company to its portfolio via a $600,000 investment into Citron Energy Inc.
("Citron Energy"), a U.S. based alternative fuels business.
Citron Energy aims to replace the use of fossil fuels by processing
non-recyclable municipal and commercial waste into a combustible fuel. The use
of CitronFuel will allow the replacement of coal as well as helping to reduce
landfill usage and significantly lower CO2 emissions. The Company's $600,000
investment will be in the form of a subscription for new shares in Citron
Energy and will result in i(x) Net Zero owning approximately 34% of Citron
Energy. Jonathan Stearns, the Company's Chief Financial Officer, has a
non-controlling holding in Citron Energy and is the chairman of Citron Energy.
There were no other subsequent events identified by the Company's management
which would require adjustment to, or disclosure in, the financial statements.
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. END IR SEDSIUEDSEIURecent news on I (X) Net Zero
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