TIDMIES
RNS Number : 1175E
Invinity Energy Systems PLC
28 June 2023
28 June 2023
Invinity Energy Systems plc
("Invinity" or the "Company")
2022 Financial Results and Current Trading
Invinity Energy Systems plc (AIM: IES) (AQSE: IES) (OTCQX:
IESVF), a leading global manufacturer of utility-grade energy
storage , is pleased to announce its Full Year Results for the year
ended 31 December 2022 and provide an update on current trading.
The Company's 2022 Annual Report will be posted to shareholders and
available for download from the Company's shareholder documents
portal shortly.
The Company will hold a virtual meeting for analysts at 12 noon
(UK time) today. Analysts wishing to attend are kindly asked to
email IR@invinity.com .
Invinity's management team will also host a virtual results
presentation and interactive Q&A for all shareholders at 4pm
(UK time) on Monday 3 July 2023. Those wishing to join the session
can sign up to Investor Meet Company for free via this registration
link .
2022 Highlights
Financial
-- GBP3.6m total income including sales revenue and project
related grant income, a 13% increase YoY (2021: GBP3.2m).
-- 12% YoY reduction in loss from operations - GBP19.0m (2021: GBP21.3m).
-- Inventory and Pre-paid inventory increased 51% to GBP14.9m (2021: GBP9.9m).
-- GBP15.3m current cash as at 31 May 2023. Year-end cash GBP5.1m.
-- Post Period: Completion of an oversubscribed GBP23m fundraise
(March 2023) including securing a GBP2.5m strategic investment from
Taiwanese technology group Everbrite. Further discussions with a
number of potential strategic partners are ongoing.
-- Post Period: Repayment of the Riverfort Loan Facility (March 2023).
Commercial
-- 39.2 MWh of Closed sales in 2022 (2021: GBP0.5 MWh).
-- Secured government and agency support for key projects
including the Viejas Microgrid, funded by the California Energy
Commission, and the first phase of the UK Department of Energy
Security and Net Zero's LODES competition (which Invinity
subsequently won in April 2023).
-- Independent bankability review completed by leading assurance
and risk management company DNV. The associated report
independently confirmed Invinity's products meet or exceed their
stated specifications and validated the Company's position as a
leader in the flow battery industry and as a strong challenger to
lithium-ion incumbents.
-- Signed commercial partnerships in the UK, EU and Asia, all of
which have subsequently resulted in product sales including those
with:
o Hyosung Heavy Industries in South Korea,
o Everdura Technology Company in Taiwan, and
o Bei Ying International in Taiwan.
Operational
-- Delivered 4.56 MWh of products between January and December
2022 to projects in the UK, EU, U.S. and Asia.
-- Manufactured 13.2 MWh of products during 2022 representing a 100% increase YoY.
-- Further expanded manufacturing capabilities in line with demand:
o Completed manufacturing expansion in Asia with the move to
new, larger manufacturing partner Baojia New Energy;
o Significantly expanded Invinity's Vancouver manufacturing
facility (which was officially opened in June 2023).
-- Gained certification as compliant with multiple ISO and UL standards in April 2022.
Current Trading
In the year to date and against a background of increasingly
positive policy and regulatory developments looking to further
incentivise global deployment of longer duration, high-throughput
energy storage technologies, the Company has achieved significant
milestones across all facets of its business. These include:
-- Closing 2023 year to date sales totalling 5.38 MWh for
vanadium flow batteries ("VFBs") to customers including The Wave
(UK), OPALCO (U.S.) and IBEW (U.S.);
o Year to date sales also include initial and follow-on orders
with new regional partners Dawsongroup plc in the UK and STS Group
in the EU.
-- Delivering an 8.4 MWh VFB to Elemental Energy for its
Chappice Lake Solar Storage project in Alberta, Canada;
-- Delivering an 8 MWh VFB to Yadlamalka Energy for its Spencer
Energy project in South Australia;
-- Securing GBP11m of matched-funding for the UK LODES project; and
-- Announcing the Company's first Mistral pilot prototype project.
Revenue Backlog and Commercial Pipeline
The Company's 2023 revenue backlog (defined as both contracted
orders already recognised in 2023 and contracted orders still to be
delivered over the remainder of 2023) was GBP23.7m as at 31 May
2023.
Invinity's current commercial pipeline as at 24 May 2023, is
detailed below:
Date Closed Base (MWh) Advanced Qualified Qualified
(MWh) (MWh) Near Term(1) Further Term(1)
(MWh) (MWh)
25-May-22 28.0 11.6 66.3 608.3 -(2)
(2021 Annual
Report)
-------- ----------- --------- -------------- -----------------
22-Sept-22 28.0 22.8 63.5 405.8 -(2)
(HY22 results)
-------- ----------- --------- -------------- -----------------
20 Jan-23 59.8 15.6 129.4 766.4 1,190.0
(Operational
Update)
-------- ----------- --------- -------------- -----------------
24-May-23 64.3 42.8 73.4 957.1 1,397.4
(FY22 Results)
-------- ----------- --------- -------------- -----------------
% change
(May 2022 to
May 2023) +129.6% +269.0% +10.7% +57.3% +17.4%(3)
-------- ----------- --------- -------------- -----------------
(1) Near term dates in the Qualified categories are where
estimated delivery is within the next 24 months. Further term
reflects estimated deliveries that are beyond the next 24
months.
(2) Not reported at time of pipeline publication.
(3) Increase given from when figure first reported.
The significant year-on-year increases across all categories of
the Company's sales pipeline continues to reinforce both the
Company's strengthening position in the market for non-lithium,
longer duration energy storage, reinforced by the growing global
demand for products within that segment. Additionally, the pipeline
now includes over 1 GWh of qualified commercial interest for
Invinity's next-generation product.
Next-Generation Product Development Progress
Invinity continues to make significant progress in designing and
developing its next-generation vanadium flow battery. In June 2023
the Company announced its first Mistral prototype project,
supported by the British Columbia Centre for Innovation and Clean
Energy, at a site near the Company's recently expanded Vancouver
manufacturing facility.
The ongoing achievement of developmental and engineering
milestones has continued to validate the commercial and technical
targets established for the programme. Invinity continues to expect
more contracts for a limited number of initial pilot projects to be
announced later in 2023, with publication of full product details,
product certification and unrestricted sale of the product expected
mid-2024.
Larry Zulch, Chief Executive Officer at Invinity said:
"We're pleased with the progress we made in 2022 along
Invinity's pathway to profitability. Achieving and exceeding our
expectations for signing new deals was foundational for achieving
the significant increase in revenue we expect in 2023. Government
support around the globe demonstrated acknowledgement of the long
duration energy storage imperative. And progress on our next
generation product, code-named Mistral, keeps us on target for
first customer shipments next year of an offering we expect to be
transformative for the prospects for non-lithium storage. Our
confidence and optimism have never been higher."
Stay up to date with news from Invinity. Join the distribution
list for the Company's monthly investor newsletter here .
Enquiries :
Invinity Energy Systems plc +44 (0)20 4551 0361
Jonathan Marren, Chief Development Officer and Interim
CFO
Joe Worthington, Director of Communications
Canaccord Genuity (Nominated Adviser and Joint Broker) +44 (0) 20 7523 8000
Henry Fitzgerald-O'Connor / Harry Pardoe / Gordon
Hamilton
VSA Capital (Financial Adviser and Joint Broker) +44 (0)20 3005 5000
Andrew Monk / Simon Barton
Tavistock (Financial PR Advisor) +44 (0)20 7920 3150
Simon Hudson / Charles Baister invinity@tavistock.co.uk
Notes to Editors
Invinity Energy Systems plc (AIM: IES) (AQSE: IES) (OTCQX:
IESVF) manufactures vanadium flow batteries for large-scale,
high-throughput energy storage requirements of business, industry
and electrical networks.
Invinity's factory-built flow batteries run continually with no
degradation for over 25 years, making them suitable for the most
demanding applications in renewable energy production. Energy
storage systems based on Invinity's batteries are safe, reliable,
and economical, and range in size from less than 250 kilowatt-hours
to tens of megawatt-hours.
Invinity was created in April 2020 through the merger of two
flow battery industry leaders: redT energy plc and Avalon Battery
Corporation. With over 65 MWh of systems already deployed or
contracted for delivery across over 70 sites in 15 countries,
Invinity is active in all major global energy storage markets and
has operations in the UK, Canada, USA, China and Australia.
Invinity Energy Systems plc is listed in the UK on AIM and AQSE and
trades in the USA on OTCQX.
To find out more, visit invinity.com , sign up to our monthly
Investor Newsletter here or contact Investor Relations on via +44
(0)20 4551 0361 or ir@invinity.com .
Audited financial results for the year ended 31 December
2022
Introduction: A Company and an Industry Race Forward
By Matt Harper, Chief Commercial Officer
Last year I talked about how Invinity was at a critical
threshold where the three pillars of value, cost and proof - value
to our customers, cost of delivering that value, and proof that we
and our products can deliver - were the foundation for
significantly growing our commercial opportunities. Since that time
we were able to solidify those pillars, and I'm thrilled that doing
so massively accelerated the commercial acceptance of our
product.
The Three Pillars
We and our customers now have data that shows the value our
pioneering projects are delivering; going above and beyond
traditional lithium-ion systems to deliver multiple value streams
in parallel. At the Energy Superhub Oxford, for instance, our 5 MWh
battery has been operating in wholesale electricity markets and
performing ancillary services since the summer of 2022, proving the
range of capabilities our products provide for customers. Similarly
at Scottish Water Perth, our battery is increasing the on-site use
of self-generated, low carbon electricity while also saving the
site operator money by decreasing the amount of electricity they
purchase when electricity tariffs are at their peak.
But even the most valuable assets need to be purchased and
financed - so cost matters, and Invinity made significant
advancements in 2022. Product design simplifications, new supply
chain partners and new, more streamlined facilities have decreased
our production costs, allowing us to sell at prices that contribute
to our bottom line while keeping customer business cases
resoundingly positive. We have also worked to further decrease the
costs our customers incur to operate and maintain our products over
a service life measured in decades rather than years, truly
maximizing their return on investment. And perhaps most
importantly, the focus on full lifecycle cost reduction has set the
stage for our next generation product, code-named "Mistral", whose
fundamentally simpler, lower-cost design will allow us to compete
directly with the most aggressively priced energy storage systems
on the market.
Finally when we think about proof, we have made significant
leaps in giving new partners - be they customers, financiers,
resellers or regulators - confidence that our batteries are the
right solution for solving the toughest problems on the electric
grid. Not only have we implemented data analytics and reporting
tools that show our existing customers how our products are
befitting them both in real-time and in aggregate, but we have
developed assets such as a bankability report from global assurance
and risk management leader DNV to prove how Invinity's vanadium
flow batteries deliver as expected.
From a Strong Foundation
And it worked. Invinity saw tremendous commercial success
through the latter half of 2022 building directly on these pillars,
contracting for more business in that period than in the history of
the Company to date. Excitingly this included projects that are in
potentially massive new segments like data centres (with Kinetic
Solutions in Arizona); that present a first engagement with
regional partners who plan to revamp entire national electricity
grids (with Hyosung in South Korea, Everdura in Taiwan and, more
recently, both Equans and STS in Europe); and that will demonstrate
how at any scale our batteries, combined with renewables, can
decrease costs and accelerate decarbonization for major electricity
users (with Indian Energy in Southern California). With each of
these projects progressing towards delivery, we are looking forward
to further proving how our batteries can revolutionise energy
storage applications the world over in 2023.
From One to Many
The above-stated developments are impressive, and I am energized
every day by being part of a team that continues to deliver
commercial success year after year. Beyond Invinity's walls,
though, those same three pillars of value, cost and proof are
beginning to deliver huge leaps forward for grid-connected energy
storage in general. In the last year, industry associations like
the Long Duration Energy Storage Council have worked to advance a
consensus view of how longer duration storage, especially
incorporating non-lithium technologies, can create enormous value
while unlocking a renewables-fueled global path to net zero. Across
the nascent long duration energy storage ("LDES") industry costs
are decreasing and supply chains are normalizing; by contrast, the
growing EV market is driving costs up and availability down for
lithium-ion batteries, broadening the opportunity for
competition.
And the proof? One only needs to look to the funding governments
and regulators are putting into our industry, from the California
Energy Commission (or CEC)'s US$380m for non-lithium LDES to the UK
Department of Energy Security and Net Zero (DESNZ)'s GBP69m for
Longer Duration Energy Storage (LODES) solutions for the UK grid.
We are delighted to see broad support for our sector and especially
thrilled that, in both cases, Invinity is at the forefront, with
the CEC and DESNZ providing financial support to our Viejas Resort
and Casino project in California and our Phase 2 LODES competition
project in the UK , respectively. Additionally, the U.S. Department
of Energy has recently published a report titled "Pathways to
Commercial Liftoff: Long Duration Energy Storage", which projects
that the intra-day LDES market, on which Invinity is focused, is
expected to be as large as 274 GW in the U.S. alone by 2050. These
and other agencies the world over are convinced long duration
storage is critical to a net zero grid; their support of Invinity
to date proves they see us as leaders in delivering that
vision.
The Best is Yet to Come
In 2023 Invinity will build on this momentum. First, we expect
to deliver a fleet of flow batteries totaling over 35 MWh across
four continents, embodying almost 1000 individual flow batteries.
That's not just a commercial success; it will give us operational
experience, applications expertise and an unparalleled dataset from
which to draw the customer, technical and data-driven insights that
will accelerate our progress and advance our market-leading
position.
Perhaps most exciting though are our plans to initiate on our
first projects this year for our next-generation battery, Mistral.
This isn't just about developing a cheaper, higher-performance
battery; we expect Mistral will define a new category of
high-throughput grid-connected energy storage. A major trend in
renewables over the last five years has been the combination of
solar photovoltaic generation with storage as the dominant paradigm
for utility-scale plants. By contrast, maximising intermittent wind
output with fast-responding, durable battery storage is a much more
demanding service, requiring intervention by the second, by the
hour and over days. The economics of delivering that level of
throughput over the decades-long service life of a wind farm by
lithium-ion batteries simply do not add up.
Mistral, whose development draws from deep expertise from the
wind industry, will be the first product designed from the ground
up to maximise the benefits storage can deliver to renewable
generation. This matters because in the UK, wind dominates over
solar; but even with recent increases in the cost of gas generation
driven by geopolitical uncertainty, wind power's intermittency has
limited its ability to substitute for gas as prices rise. Mistral
will close that gap, delivering energy on demand from wind and
helping to stabilize UK energy prices with low-cost, low-carbon,
domestically-produced power.
No matter what proportion of the global energy storage market
Invinity is able to capture - and we think we are ideally
positioned to capture a large slice of the pie - it is unequivocal
that this is a revolutionary opportunity of the kind that comes
about only once in a generation. The last two decades have proven
that renewables are an inexpensive, effective source of clean
energy for the electric grid; the next two will prove that energy
storage can turn that energy into on-demand, low-cost power our
homes, our industry, and our institutions in a net zero future. The
year ahead will see Invinity continue to accelerate our part in
making that future a reality.
Chairman's Report: Breaking New Ground
I am delighted to report to shareholders that Invinity has
accelerated its deployment of working assets and built up a
significant order book for delivery in 2023 and 2024. We are
focused on deploying and operating the units that have been
shipped, winning new contracts and developing the next generation
of our vanadium flow battery which we believe will play a
significant role in Invinity's rapid progression through the
current loss-making phase towards becoming a self-sustaining,
profitable business. It is worth restating why we see Invinity
winning a significant market share in the global energy storage
market. Invinity has created a modular, long-duration battery with
a 20+ year asset life, capable of achieving some of the lowest
possible levelised cost of storage metrics. This means our
technology is an ideal solution for both commercial and
utility-scale customers wishing to reduce their energy costs,
utilise greater amounts of renewable energy and accelerate progress
towards net zero. Given the world's urgent focus across these key
areas, this opens up a potentially huge addressable global market
for Invinity, who are uniquely positioned with a mature,
production-ready product which has already been proven in the
field.
2022 saw record global deployment of energy storage,
particularly in the U.S. and the UK, and I am pleased to note
Invinity's own contribution to this trend. We sold a record number
of vanadium flow batteries during the period to customers in both
new and existing markets, making this our best commercial year to
date, and underscoring my belief that the Company has reached a key
milestone in terms of commercial acceptance. One of the key drivers
of this success was potential customers being able to see our
batteries in operation at key sites and I was proud to represent
Invinity at the launch of our 5 MWh vanadium flow battery, the UK's
largest operational VFB, at the Energy Superhub Oxford in July
2022. Projects such as this attract worldwide attention and have
helped to place Invinity at the forefront of many developers'
minds.
Delivery is an important target for Invinity. Signing contracts
is the first step of the commercial process, but the follow through
to delivery and handover generates revenue and ultimately long-term
value for our shareholders. Having operational systems in the field
is an important indicator of the significant progress the Company
has made in this regard, but as a manufacturer of 'emerging'
battery technology, at the core of our business will always be our
ability to build and deliver our products effectively. Notably, the
expansion of our manufacturing capabilities has set us on the path
towards delivering even larger projects, faster and more
economically than ever before.
During 2022 the team successfully deployed funds that were
raised in late 2021 to support our operational and commercial
growth and I'm greatly encouraged to report demonstrable progress
in both areas during the period. The funds raised at the beginning
of 2023 are already supporting the next steps of our growth as we
progress from a revenue-generating to a profit-generating business.
The work we have done means I remain confident that Invinity is now
even better positioned to take advantage of this buoyant market
evidenced by our well-developed commercial pipeline, which now
includes a first look at the over 1 GWh of qualified commercial
interest for our next-generation vanadium flow battery and confirms
Invinity's place as one of the global market leaders for vanadium
flow battery technology.
My Board and I have ensured Invinity continues to follow a clear
and well-developed strategy, set out in detail later in this
report. Invinity's core markets remain the UK, North America and
Australia and we maintain our belief that these are the most
appropriate areas for focus given the Company's current
capabilities. However, new markets are also emerging in Europe and
Asia and the formation of key partnerships that enable us to expand
our reach commercially and operationally without the need for a
full corporate presence and the associated overhead costs is
another important strategic decision that has been made.
To this end, I am pleased to note we signed three new reseller
partnerships in 2022 that enable us to access some of the fastest
growing markets in the world, such as Korea and Taiwan.
Encouragingly, this momentum has continued into 2023 with entry
into new European markets and further important business
relationships initiated in our core UK and U.S. markets. The hard
work carried out by our team in establishing and supporting these
strategic relationships is already bearing fruit with our largest
sale of 2022 being a 15 MWh deal with our Taiwanese partner
Everdura.
Looking inward, the Invinity team is operating strongly, winning
new contracts, deploying our batteries and continuing to develop
our leading-edge technology. I would like to take this opportunity
to thank the entire team for their hard work and perseverance
during 2022 and the current year to date. I would also like to
thank all my Board colleagues for their support and assistance over
the year, particularly to Jonathan Marren who, stepping back into
an Executive role, is already making a significant impact on the
strategic and financial side of the business.
In summary, 2022 can be marked as a key inflection point in
Invinity's progress, with almost 40 MWh of sales signed, a GBP23.7m
sales orderbook for delivery across 2023, our largest project to
date launched and operational and a growing partnership network
that is already bringing commercial benefits to the Company. An
improved corporate and operational structure has set us up well for
the future and 2023 is already shaping up to be another
transformational year, supported by the successful March fundraise
and continued commercial progress.
I remain extremely optimistic in the outlook for Invinity. I am
extremely grateful for the continued support from you, our
shareholders, without which we would not be in our strongest
position yet to take this next step on our journey.
Neil O'Brien
Non-executive Chairman
27 June 2023
Chief Executive's Report: Progress on the Pathway to
Profitability
Efforts from years past bore fruit in 2022. We closed deals for
more energy storage than we had closed in our entire previous
history. As expected, we reported a loss for 2022, but were able to
transition from closing loss-making deals to signing ones that are
anticipated to yield positive gross margins. I'm pleased to report
that all but one of the contracts closed in 2022 is forecast to
achieve this requirement. We manufactured more product than in any
previous year, progressed our next generation product and
established significant new partnerships. Perhaps most importantly,
we set the stage for an even better 2023 in every critical
measure.
We have set ourselves to a task that is not easy. The
significant investment we are making now will ensure Invinity is
better prepared commercially, operationally and financially as we
take rapid and significant strides towards profitability. We are
passionately committed to building a profitable, self-sustaining
company that creates a net zero future where vanadium flow
batteries deliver renewable power on demand. This means delivering
large amounts of high-performance stationary energy storage at a
price that customers find compelling and signing contracts in
sufficient volume and at low enough costs that we generate
corporate profit. We believe our next generation product "Mistral"
will play a key role in achieving these goals.
We know what we need to do to achieve this ambition and we are
doing it. Our accomplishments in 2022 were largely presented as
goals in 2021. In my report for that year, I said that we wanted to
achieve demonstrable progress in the fields of sales, partnerships,
and delivery, recognise revenue on our existing VS3 product, and
progress development of our next-generation product, code-named
"Mistral". Our accomplishments in these key areas, despite (or
perhaps enhanced by) the challenges we've encountered and overcome
marks progress toward our goals and will help us deliver long-term
value to our shareholders.
We believe our accomplishments in 2022 allow us to state that we
have successfully navigated the difficult transition from a company
delivering pilot projects to a commercial entity. Our work
continues to require significant effort and resources as we
progress, but we are moving purposefully and determinately along
our pathway to profitability.
Delivery and Sales
Our success derives from delivering our proven technology to a
growing list of customers. I am pleased to report that last year we
delivered more than 100 individual VS3 modules and commissioned
more than 200 to customers across three continents. At the time of
writing, we believe we have delivered more individual flow
batteries-each capable of operating independently-than all other
flow battery companies combined across their histories.
Current installations of each BESS (Battery Energy Storage
System; an industry-standard acronym for stationary storage)
incorporating Invinity's products undergo a multi-step process.
Contracted project objectives are turned into a storage system
architecture and expressed in plans and documentation. Our customer
prepares the battery system's foundations, grid connections and
supporting infrastructure. Once site works are complete, we deliver
the battery modules, ensure those modules are installed correctly
and bring the system online. Demonstrating that the battery system
can properly store and discharge energy allows us to declare the
BESS "energised". Once the system is integrated with site-level
controls and fully operating, we formally hand it over to the
customer and consider it "commissioned".
During 2022, we commissioned our largest site to date, the 5 MWh
system at the Energy Superhub Oxford, in addition to a number of
behind-the-meter systems including a project with Scottish Water
and one with a Taiwanese industrial group. We also delivered two
California Energy Commission-funded projects: for the Soboba Band
of Luiseño Indians and at Marine Corps Air Station Miramar near San
Diego. In August, we energized our project with the European Marine
Energy Centre in the Orkney islands.
Successfully closing a significant number of deals, delivering
those products around the world and ensuring they meet our
customers' requirements provides important proof of our commercial
status. It demonstrates that the market wants our batteries and
that we have built an organisation capable of converting market
interest into revenue.
We and our customers continued to experience various external
challenges, including ongoing supply chain disruptions, in 2022.
Those disruptions caused some delays but did not impact our ability
to sign nearly 40 MWh of sales contracts for our VS3 batteries. In
doing so, the Company sold more batteries in the last three months
of 2022 than in Invinity's entire history. These sales were based
in part on our ability to demonstrate to new customers how existing
projects are already delivered and operating. I am grateful to the
entire Invinity team for the work they carried out to make this
happen.
Importantly, I believe these recent contract wins, expected to
be delivered at positive gross margin, combined with robust growth
in the Company's sales pipeline, reflect an inflection point in the
commercial acceptance of Invinity's products. The Company is
increasingly well positioned to address the growing global demand
for commercial, non-lithium and longer-duration energy storage
solutions.
Partnerships
I stated in my previous report that our strategy included
finding substantial partners who can represent us and our products
by providing sales, installation and service support. These
partnerships are valuable for two reasons.
First, they allow us to reach a wider market without incurring
significant costs that would delay profitable growth for the
Company, particularly outside our core markets of Europe, North
America and Australia. Second, our reputation is enhanced through
association with established entities that have chosen to work with
us because they recognise the size of the opportunity and the
advantages of our product. I am proud that Invinity has developed
important relationships with Hyosung Heavy Industries in Korea,
Everdura Technology Company and Bei Ying International in Taiwan,
Indian Energy in the U.S., and post period, with Dawsongroup in the
UK and Ideona Group and STS Group in the EU. I am delighted that we
have closed sales opportunities with each of these partners and are
developing further opportunities that have contributed to our
growing pipeline of commercial deals.
Our partners recognise the critical need for energy storage, not
just to use renewable energy effectively but to avoid relying on
more expensive, higher-emissions sources of power when renewable
sources-wind, solar and tidal-are not available. They believe that
alternative chemistries are vital to overcome lithium-ion
batteries' limitations in safety and lifetime and because the
demand for lithium-ion batteries needed to support the
electrification of transport is already impacting global supplies
and has increased the price of lithium and other battery materials
significantly.
Our ability to deliver our product has been enhanced through
establishing a manufacturing relationship with long-time Invinity
supporter Suzhou Baojia New Energy Technology Co. (Baojia). They
have taken on the manufacturing of our balance of system from our
previous manufacturing partner, BCI, who provided an important
foundation for Invinity in the early years and for whose continued
support we are grateful. With Baojia's larger facilities, we are
already achieving greater production scale, having so far shipped
more than 25 MWh of batteries directly to project sites and our
facilities in both Bathgate and Vancouver. This level of output
bodes well for the future, brings us greater cost efficiencies and
enhances our ability to expand to meet the growing demand for our
products.
Progressing Mistral
Our most important partnership is with Gamesa Electric and
Siemens Gamesa Renewable Energy (SGRE) as reflected in our
previously announced Joint Development and Commercialisation
Agreement. Nothing on our pathway to profitability is more
important than the investment we are making to progress the joint
development of our next-generation product. The objectives for
Mistral are simple, albeit quite challenging to realize: lower
costs substantially from our current VS3 product while increasing
the suitable project size addressed by our product from 10s to 100s
of MWh. These objectives are captured in a single metric: Levelized
Cost of Storage (LCOS). LCOS captures the total cost of operating a
BESS, including purchase, operating costs and efficiency, on a
throughput (in MWh) basis. Mistral is targeting the best LCOS of
any BESS, bar none, and to beat years early the U.S. Department of
Energy's LCOS target of $50/MWh by 2030.
We are pleased with the progress we are making on Mistral
alongside our partner. We will not be making any specific
announcements of Mistral's specifications until we can do so
jointly and in full confidence that Mistral's capabilities are
validated in field trials and large-scale internal tests. While
this discipline may not be customary in our field-we often hear of
the 'revolutionary' importance of what is only, in reality, a lab
demonstration, or of the 'sales success' of a company that signs
deals at a fraction of their production cost or has yet to prove
capabilities in the field-it is what you should expect from us as
an increasingly mature multinational product company.
Corporate Strength
We continue to be grateful for the support of our investors. The
funds we raised in late 2021 enabled us to progress our pipeline,
sign a record volume of business and invest in Mistral. The support
shown by our existing and new shareholders, particularly including
Everbrite, in March of this year has provided sufficient working
capital to support and grow our existing operations and to advance
Mistral to its next critical milestone.
We are not alone in enduring delays and having challenges to
overcome that cost more than anticipated. The pandemic had a
significant impact on Invinity as it did on countless companies.
But we believe we are alone, and happily so, as the only provider
of products for non-lithium BESS that is successfully deploying
megawatt-scale projects to customers at positive gross margin, and
we are doing so in multiple countries. We celebrate this major step
toward corporate profitability, a step we could not have taken
without our shareholders' support.
Looking to the Future
A future electric grid without renewables as its primary energy
source simply will not meet global objectives for carbon emission
reduction. Yet that future renewable-intensive electric grid will
be unstable-unless it incorporates adequate energy storage. Grid
instability is already increasing with greater renewable
generation, and already significant disruption events have occurred
in the UK, the U.S., Australia and elsewhere.
No single technology will meet all future needs for stationary
battery energy storage, not even our vanadium flow battery
technology. Instead, battery characteristics will be matched to
requirements. Governmental initiatives globally seek to stimulate
more energy storage generally and to support domestically produced
alternatives to lithium-ion batteries able to discharge for longer
durations or operate with greater safety and lower total costs.
Invinity has and will continue to be a significant beneficiary of
these initiatives.
The macro environment continues to strongly support the
Company's business. To meet this opportunity, Invinity has
determined that a four-part strategy is required: 1) deliver
projects; 2) close new and larger deals; 3) progress Mistral; and
4) advance our operational excellence. Our view of the significance
of each of these priorities:
1) Delivering contracted-for projects is not just an obligation
incurred upon signing a contract; rather, each one is an
opportunity. Every installation further demonstrates that our
technology is proven and exceeds customer expectations. We gain
critical field experience that further refines our product
development. And we earn revenue.
2) Closing new deals enhances our position as the clear leader
in large-scale, low-LCOS energy storage that can be deployed
anywhere and provides for future revenue.
3) Mistral will transform our product offering from competitive
to compelling for a great many applications, becoming a platform
for profitable revenue growth bounded, we believe, not by demand
but by supply.
4) Operational excellence is based on putting in the right
processes and operations now and not waiting until the need is
acute. This focus is vital to maintaining our growth trajectory and
enabling us to adroitly address the inevitable challenges-whether
supply chain, competition, macro events, or something else-that we
encounter.
In my 2021 report, I acknowledged the challenges from supply
chain disruptions that we had underestimated and sales processes
that took longer than we anticipated. We continued to see
challenges in 2022, but we have entered 2023 with what we believe
is the best technology we've ever deployed, the largest order book
we've ever had, and the most sales prospects by far. At the same
time, we have made great strides toward the development of our
next-generation VFB which promises both improved performance and
significantly increased margins. It is hard to contain our
excitement at the future which lies ahead for us. Energy storage is
the key to unlocking the potential for the world to be powered by
clean energy and we are well on our way to achieving a profitable
position at the heart of this fundamentally important industry.
I remain highly optimistic for the future of our business and
remain confident that we will realise our potential. I therefore
thank you again for your support for Invinity and look forward to
bringing you more success in 2023.
Larry Zulch
Chief Executive Officer
27 June 2023
Chief Financial Officer's Report: Growth and Investment - a view
to the future
Financial Highlights
2022 2021
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Revenue 2,944 3,185
Project related grant income shown against 647 -
cost of sales
--------------------------------------------- --------- ---------
Total revenue and grant income other than
revenue 3,591 3,185
--------------------------------------------- --------- ---------
Loss from operations (18,982) (21,264)
Inventory on hand for battery projects 9,827 5,797
--------------------------------------------- --------- ---------
2022 Financial Performance
I am pleased to report that total income including sales revenue
and project related grant income increased to GBP3.6 million in
2022 (2021: GBP3.2 million). Revenue is recognised against projects
when specific performance obligations related to those projects
have been satisfied. Grant funding specific to customer projects
has been presented alongside the relevant project revenue and
associated direct costs where that funding is project specific and
represents a direct subsidy against project costs.
Another positive development during the period was that the
Company was able to show a materially reduced cost of delivering
its VS3 products to customers, resulting in a significant GBP3.2
million reduction in the provision for contract losses. This
contributed to an 12% year-on-year reduction in operating loss and
a material improvement in gross margin. Invinity was also able to
narrow the loss before tax by 13% to GBP18.5 million for the year.
These movements represent important progress as the Company moves
along the path to achieving industry standard gross margins which
are expected to be delivered with the launch of the Company's
next-generation product.
Administrative costs were GBP19.0 million (2021: GBP14.4
million), an increase of GBP4.6 million primarily represented by
investment in people with staff costs of GBP10.3 million in 2022
(2021: GBP9.0 million) and IT costs of GBP1.2 million in 2022
(2021: GBP0.6 million). Research and development costs that did not
meet the threshold for capitalisation and were therefore expensed
were GBP2.6 million (2021: GBP1.8 million). In addition,
professional fees increased to GBP3.0 million in 2022 (2021: GBP2.0
million) as a result of predominantly non-recurring matters and
costs of GBP1.0 million in 2022 (2021: GBP0.2 million) were
incurred in relation to the transfer of manufacturing from BCI to
Baojia at year end.
2022 Cash Performance
Year-on-year cash outflow from operations of GBP21.9 million
(2021: GBP23.0 million) is largely consistent with the prior
year.
All bar one of the Company's most recent sales contracts have
been signed with a forecast positive margin. Delivering on this
margin is a key corporate priority and will make an important
contribution to the Company being able to fund its administrative
costs from cash from operations in the future.
To this end, the Company continues to develop its
next-generation battery, code-named "Mistral". Mistral is expected
to be manufactured at significantly lower cost than the Company's
existing product, the VS3, and will occupy a comparatively smaller
physical footprint that will lead to lower costs for operations and
maintenance. These characteristics are expected to enable the
Company to sell this new product at a materially lower and more
competitive price point than currently. This is anticipated to
drive additional sales at a materially better gross margin thus
leading to future cash generation and profitability and reducing
the Company's reliance on external sources of funding.
Growth and Investment - Looking to the Future
In addition to the delivery and commissioning of contracts for
battery systems with customers, 2022 has been a year of growth in
the underlying business of the Company as evidenced by a
significant increase in the number of new contracts for battery
systems closed in the year. In total, 7 new sales contracts were
signed in 2022 with a total potential revenue value of GBP22.0
million. Each of these new contracts (other than one entered for
strategic reasons) are currently expected to be delivered at a
positive gross margin as improvements are made to the Company's
supply chain and manufacturing infrastructure. As a Company, we
continue build on the experience gained from systems delivered to
date and seek to use those learnings improve operational and
financial performance related to contracts.
The expected growth in the business has required investment to
be made in a number of areas including people, facilities,
infrastructure and inventory. Headcount increased by 23 people to
efficiently manage the backlog of orders for delivery in 2023 and
beyond. Other specific operational investments made in 2022
included leasehold improvements related to our production
facilities and offices of GBP0.4 million and an increase in
prepayments and deposits of GBP1.3 million. Buying the equipment
necessary to build our batteries in advance helps the Company to
reduce the delivery timeframe for its vanadium flow battery systems
and accelerates the associated construction and installation of the
units, advancing revenue recognition and as a result, prepaid
inventory rose GBP1.0 million to GBP5.0 million.
These investments are all focused on improving contract
delivery, logistics and providing the necessary funding for further
research and development as Invinity moves forward on its pathway
to profitability. That next stage will come as we mature and
ultimately launch our next-generation product, code-named
"Mistral", currently in joint development with Siemens Gamesa.
Funding and Net Working Capital
At 31 December 2022 the Company had net working capital of
GBP4.3 million, inclusive of cash and cash equivalents of GBP5.1
million. The cash balance of GBP5.1 million included the net cash
proceeds from the initial drawdown of US$2.5 million from a US$10.0
million convertible loan instrument (the "Investment Agreement")
taken out with Riverfort Global Opportunities PCC Ltd ("Riverfort")
and YA II PN ("Yorkville") that was entered into on 14 December
2022 to provide additional working capital for the business.
The Company only made one drawdown under the Investment
Agreement. This was due to the Company successfully raising
additional equity capital of GBP23.0 million through a placing,
subscription and open offer in March 2023. Part of these proceeds
were used to redeem in full the balance then outstanding under the
Investment Agreement. In doing so, the warrants that were issued
alongside the Company entering the Investment Agreement were
repriced to reflect the open offer price of 32p. Those repriced
warrants remain in place. Notwithstanding, any proceeds from the
future exercise of the warrants held by each of Riverfort and
Yorkville will be distributed 97% to the Company and 3% to
Riverfort and Yorkville.
Strategic Investment
Importantly, and as part of the capital raise in March 2023,
Everbrite Technology Co. Ltd. (Everbrite), a leading Taiwanese
manufacturer of industrial technology, subscribed for GBP2.5
million of shares in the Company. The investment by Everbrite
followed the 1 December 2022 reseller agreement and initial 15 MWh
purchase order of vanadium flow batteries with Everdura Technology
Company, a joint venture between Everbrite and Taiwanese clean
energy company, Pronergy Technology Co. Ltd covering Taiwan and
Southeast Asia.
This strategic investment underscores the development progress
of the Company since the 2020 merger transaction that formed the
Group as it is today and is intended to support a closer strategic
relationship for the deployment of vanadium flow batteries in
Taiwan and further afield.
Invinity sees strategic partnerships and investment as an
important pillar of its future corporate growth and as previously
disclosed, discussions with a number of potential strategic
partners remain ongoing.
Grant Funding
The participation in grant schemes is an important source of
funds for the Company. Grant awards may be project specific or
general in nature. Grants that are more general in nature typically
help to defray ongoing costs such as research and development where
projects are seen as strategically important by local or national
governments.
Other grant funding is more project specific and aimed at
increasing the application of new technology and its commercial
uses.
In 2022, the Company received GBP0.6 million of grant funding
related to a specific customer project under Phase One of the UK
Government's Longer Duration Energy Storage (LODES) Competition
that is administered by the Department for Energy Security and Net
Zero (DESNZ). As this income was project specific, it has been
identified in the profit and loss account alongside but separate to
revenue on account of it being recognised against direct costs.
Going Concern
In assessing whether the Group has the ability to continue as a
going concern the Directors have modelled cash flow forecasts for a
period up to 31 December 2024. The Directors have prepared a base
case scenario that assumes the 14.5m Short-Term warrants originally
granted in 2021 ("Short-Term Warrants"), the terms of which are
proposed to be amended as set out below are exercised before June
2024. Under this scenario the Group would expect to remain cash
positive for the period up to 31 December 2024 assessed for going
concern purposes. The forecast does indicate that the Group would
move into negative cash shortly after the period assessed for going
concern as a result of working capital investment on future sales.
The Group would defer any working capital investment if it were to
result in exhausting all cash. This forecast is also based on
delivering existing signed sales contracts during 2023 as per
forecast gross margins and existing and future sales contracts
during 2024 at anticipated positive gross margins. The Directors
recognise there is a risk that the Short-Term Warrants will not be
exercised if they are not 'in the money' before the expiry date and
given it is not at the discretion of the Group.
The Directors have also prepared an alternative 'adjusted base
case' scenario which does not include the exercise of the
Short-Term Warrants but also adjusts forecasted costs. The
Directors have a plan to adjust costs in a scenario where it does
not look like the Short-Term Warrants will be exercised. This plan
includes the following:
-- Non-payment or delayed payment of forecasted bonuses;
-- No increase or delayed increase in salaries across the Group;
-- Delayed recruitment of additional headcount;
-- Reduction in planned increase in research and development expenditure.
Under the adjusted base case the Group would expect to remain
cash positive for the period up to 31 December 2024 assessed for
going concern purposes. Therefore the Directors believe it is
appropriate to prepare the accounts on a going concern basis.
The Short-Term Warrants were initially granted in 2021 with an
exercise price of 150p and an expiry date of 15 September 2022. On
31 August 2022, the holders of the Short-Term Warrants agreed at a
general meeting of Short-Term Warrant holders to amend the expiry
date of the Short-Term Warrants to 15 September 2023. The Company
is now planning to seek the approval of Warrant holders at a
general meeting, notice of which will be given shortly, to make the
following amendments to both the Short and Long-Term Warrants. The
Company intends to seek approval to amend the Short-Term Warrant
subscription period to 16 December 2023 (the Long-Term warrant
subscription period will remain unchanged at 16 December 2024) and
amend the exercise prices of the Short and Long-Term warrants to
50p and 100p respectively. There can however be no certainty that
such a change in the terms will be approved.
In assessing going concern the Directors have also prepared a
severe but plausible downside scenario which forecasts delivery of
existing and future sales being made during 2024 being delayed
beyond June 2024 and forecasted margins not being achieved. Under
this scenario the Group would exhaust all available cash by April
2024 and it will be necessary to raise further funding within the
next 12 months in order to continue trading and deliver on the
strategic objectives.
The Directors are in the process of evaluating potential
additional funding options from potential strategic investors but
no such funding is committed as at the date of approval of these
financial statements. The Group has been, and continues in, active
discussions with a number of identified strategic investors and is
confident that it will be able to conclude an equity investment
from one or more of such parties within the period up to 31
December 2024 assessed for going concern purposes. The Directors
also note that the Company concluded an initial strategic
investment from Everbrite Technology Co., Ltd. for GBP2.5 million
in March 2023 which gives them confidence that the Company is
capable of attracting further strategic investment.
Due to the uncertainty in relation to obtaining additional
funding this indicates the existence of a material uncertainty that
may cast significant doubt about the Group's ability to continue as
a going concern.
The financial statements do not include the adjustments that
would result if the Group were unable to continue as a going
concern.
In addition to the issues discussed above, the directors have
also reviewed other varying, and wide-ranging information relating
to both present and future conditions when reaching their
conclusion regarding going concern. These included the:
-- operational performance of the Company's products delivered to customer sites to date;
-- value of contracts signed for delivery in 2023 and 2024;
-- growing sales pipeline of 2,470.3 MWh in May 2023 vs 686.2 MWh in May 2022;
-- growing opportunities presented by the emergent energy storage market;
-- growing levels of Government engagement and support in the three key markets; and
-- positive discussions with potential strategic partners
regarding making an equity investment into the Company.
Jonathan Marren
Chief Development Officer and Interim Chief Financial
Officer
27 June 2023
Financial Statements
Consolidated Statement of Profit and Loss
For the year ended 31 December 2022
2022 2021
Continuing operations Note GBP000 GBP000 GBP000 GBP000
Revenue 4 2,944 3,185
Direct costs (2,927) (6,622)
Grant income against direct
costs 4 647 -
-------- --------- -------- ---------
Cost of sales 5 (2,280) (6,622)
----------------------------- ----- -------- --------- -------- ---------
Gross profit 664 (3,437)
Operating costs
Administrative expenses 6 (19,042) (14,439)
Other items of operating
income and expense 10 (604) (3,388)
----------------------------- ----- -------- --------- -------- ---------
Loss from operations (18,982) (21,264)
Finance income 11 62 -
Finance costs 11 (65) (45)
Gain/(loss) on foreign
currency transactions 11 448 (63)
----------------------------- ----- -------- --------- -------- ---------
Net finance income/(costs) 11 445 (108)
----------------------------- ----- -------- --------- -------- ---------
Loss before income tax (18,537) (21,372)
----------------------------- ----- -------- --------- -------- ---------
Income tax expense 12 - -
Loss for the year (18,537) (21,372)
----------------------------- ----- -------- --------- -------- ---------
Loss per ordinary share
in pence
Basic 13 (16.0) (24.1)
Diluted 13 (16.0) (24.1)
The above consolidated statement of profit and loss should be
read in conjunction with the accompanying notes.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
2022 2021
Continuing operations Note GBP000 GBP000
-------------------------------------------- ------ --------- ---------
Loss for the year
Other comprehensive (Expense)/income (18,537) (21,372)
Exchange differences on the translation of
foreign operations (137) 10
---------------------------------------------------- --------- ---------
Total comprehensive loss for the year (18,674) (21,362)
---------------------------------------------------- --------- ---------
The above consolidated statement of comprehensive income should
be read in conjunction with the accompanying notes.
Consolidated Statement of Financial Position
For the year ended 31 December 2022
2022 2021
Note GBP000 GBP000
-------------------------------------- ----- ---------- ----------
Non-current assets
Goodwill and other intangible assets 15 24,050 24,097
Property, plant and equipment 16 1,208 1,130
Right-of-use assets 17 1,845 975
Total non-current assets 27,103 26,202
Current assets
Inventory 19 9,827 5,797
Other current assets 20 8,781 6,280
Contract assets 21 500 324
Trade receivables 22 1,737 1,683
Cash and cash equivalents 23 5,137 26,355
-------------------------------------- ----- ---------- ----------
Total current assets 25,982 40,439
-------------------------------------- ----- ---------- ----------
Total assets 53,085 66,641
-------------------------------------- ----- ---------- ----------
Current liabilities
Trade and other payables 24 (4,935) (3,513)
Derivative financial instruments 25 (769) -
Contract liabilities 21 (8,375) (5,142)
Lease liabilities 26 (740) (350)
Provisions 21 (2,907) (5,976)
-------------------------------------- ----- ---------- ----------
Total current liabilities (17,726) (14,981)
-------------------------------------- ----- ---------- ----------
Net current assets 8,256 25,458
-------------------------------------- ----- ---------- ----------
Non-current liabilities
Lease liabilities 26 (969) (420)
-------------------------------------- ----- ---------- ----------
Total non-current liabilities (969) (420)
-------------------------------------- ----- ---------- ----------
Total liabilities (18,695) (15,401)
-------------------------------------- ----- ---------- ----------
Net assets 34,390 51,240
-------------------------------------- ----- ---------- ----------
Equity
Called up share capital 27 50,716 50,690
Share premium 27 141,579 140,445
Share-based payment reserve 27 5,957 5,293
Accumulated losses 27 (162,094) (143,557)
Currency translation reserve 27 (1,807) (1,670)
Other reserves 27 39 39
-------------------------------------- ----- ---------- ----------
Total equity 34,390 51,240
-------------------------------------- ----- ---------- ----------
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes.
The financial statements were authorised by the Board of
Directors and authorised for issue on 27 June 2023 and were signed
on its behalf by:
Jonathan Marren
Director
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Called Share-based Currency
up share Share payment Accumul-ated transla-tion Other
capital premium reserve losses reserve reserves Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
At 1 January 2022 50,690 140,445 5,293 (143,557) (1,670) 39 51,240
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
Loss for the year - - - (18,537) - - (18,537)
Other comprehensive income
Foreign currency
translation
differences - - - - (137) - (137)
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
Total comprehensive loss
for the year - - - (18,537) (137) - (18,674)
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
Transactions with owners
in their capacity as
owners
Investment funding
arrangement,
net of transaction costs 25 1,129 (23) - - - 1,131
Exercise of share options 1 5 - - - - 6
Share-based payments - - 681 - - - 681
Equity settled interest
on Investment funding
arrangement - - 6 - - - 6
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
Total contributions by
owners 26 1,134 664 - - - 1,824
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
At 31 December 2022 50,716 141,579 5,957 (162,094) (1,807) 39 34,390
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
The above consolidated statement of changes in equity should be
read in conjunction with the accompanying notes.
Called Share-based Currency
up share Share payment Accumul-ated transla-tion Other
capital premium reserve losses reserve reserves Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
At 1 January 2021 37,870 124,545 3,762 (122,185) (1,680) 39 42,351
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
Loss for the year - - - (21,372) - - (21,372)
Other comprehensive income
Foreign currency
translation
differences - - - - 10 - 10
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
Total comprehensive loss
for the year - - - (21,372) 10 - (21,362)
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
Transactions with owners
in their capacity as
owners
Contribution of equity,
net of transaction costs 12,286 15,148 - - - - 27,434
Exercise of share options 534 752 (296) - - - 990
Share-based payments - - 1,827 - - - 1,827
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
Total contributions by
owners 12,820 15,900 1,531 - - - 30,251
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
At 31 December 2021 50,690 140,445 5,293 (143,557) (1,670) 39 51,240
--------------------------- ---------- --------- ------------ ------------- -------------- ---------- ---------
The above consolidated statement of changes in equity should be
read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
Note GBP000 GBP000
---------------------------------------------- ----- --------- ---------
Cash flows from operating activities
Cash used in operations 14 (21,934) (22,964)
Interest received 62 -
-
Net cash outflow from operating activities (21,872) (22,964)
---------------------------------------------- ----- --------- ---------
Cash flows from investing activities
Acquisition of intangible assets 15 - (18)
Acquisition of property, plant and equipment 16 (708) (733)
Net cash outflows from investing activities (708) (751)
---------------------------------------------- ----- --------- ---------
Cash flows from financing activities
Payment of lease liabilities 26 (591) (320)
Interest paid (59)
Proceeds from the issue of share capital,
net of transaction costs 1,161 27,434
Proceeds from the Investment funding
arrangement, net of transaction costs 25 769 -
Proceeds from the exercise of share
options and warrants 6 990
---------------------------------------------- ----- --------- ---------
Net cash inflow from financing activities 1,286 28,104
---------------------------------------------- ----- --------- ---------
Net (decrease)/increase in cash and
cash equivalents (21,294) 4,389
Cash and cash equivalents at the beginning
of the year 26,355 21,953
Effects of exchange rate changes on
cash and cash equivalents 76 13
---------------------------------------------- ----- --------- ---------
Cash and cash equivalents at the end
of the year 5,137 26,355
---------------------------------------------- ----- --------- ---------
The above consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
Notes
1 General Information
Invinity Energy Systems plc (the 'Company') is a public company
limited by shares incorporated and domiciled in Jersey. The
registered office address is Third Floor, IFC5, Castle Street, St.
Helier, JE2 3BY, Jersey.
The Company is listed on the AIM Market of the London Stock
Exchange with the ticker symbol IES.L, on the AQSE Growth Market in
the United Kingdom with the ticker symbol IES and on the OTCQX Best
Market in the United States of America with the ticker symbol
IESVF.
The principal activities of the Company and its subsidiaries
(together the 'Group') relate to the manufacture and sale of
vanadium flow battery systems and associated installation, warranty
and other services.
2 Summary of significant accounting policies
Basis of preparation
These consolidated financial statements have been prepared in
accordance with International UK-adopted International Accounting
Standards, the associated interpretations issued by the IFRS
Interpretations Committee (together 'IFRS') and in accordance with
the Companies (Jersey) Law 1991.
Separate presentation of the parent company financial statements
is not required by the Companies (Jersey) Law 1991 and,
accordingly, such statements have not been included in this
report.
The significant accounting policies applied in preparing these
consolidated financial statements are set out below. These policies
have been consistently applied throughout the period and to each
subsidiary within the Group.
The financial statements have been prepared under the historical
cost convention except where stated.
Going concern
In assessing whether the Group has the ability to continue as a
going concern the Directors have modelled a base cash flow forecast
for a period up to 31 December 2024. The Directors have prepared a
base case scenario that assumes the 14.5m Short-Term warrants
originally granted in 2021 ("Short-Term Warrants"), the terms of
which are proposed to be amended as set out below are exercised
before June 2024. Under this scenario the Group would expect to
remain cash positive for the period up to 31 December 2024 assessed
for going concern purposes. The forecast does indicate that the
Group would move into negative cash shortly after the period
assessed for going concern as a result of working capital
investment on future sales. The Group would defer any working
capital investment if it were to result in exhausting all cash.
This forecast is also based on delivering existing signed sales
contracts during 2023 as per forecast gross margins and existing
and future sales contracts during 2024 at anticipated positive
gross margins. The Directors recognise there is a risk that the
Short-Term Warrants will not be exercised if they are not 'in the
money' before the expiry date and given it is not at the discretion
of the Group.
The Directors have also prepared an alternative 'adjusted base
case' scenario which does not include the exercise of the
Short-Term Warrants but also adjusts forecasted costs. The
Directors have a plan to adjust costs in a scenario where it does
not look like the Short-Term Warrants will be exercised. This plan
includes the following:
-- Non-payment or delayed payment of forecasted bonuses;
-- No increase or delayed increase in salaries across the Group;
-- Delayed recruitment of additional headcount
-- Reduction in planned increase in research and development expenditure;
Under the adjusted base case the Group would expect to remain
cash positive for the period up to 31 December 2024 assessed for
going concern purposes. Therefore the Directors believe it is
appropriate to prepare the accounts on a going concern basis.
The Short-Term Warrants were initially granted in 2021 with an
exercise price of 150p and an expiry date of 15 September 2022. On
31 August 2022, the holders of the Short-Term Warrants agreed at a
general meeting of Short-Term Warrant holders to amend the expiry
date of the Short-Term Warrants to 15 September 2023. The Company
is now planning to seek the approval of Warrant holders at a
general meeting, notice of which will be given shortly, to make the
following amendments to both the Short and Long-Term Warrants. The
Company intends to seek approval to amend the Short-Term Warrant
subscription period to 16 December 2023 (the Long-Term warrant
subscription period will remain unchanged at 16 December 2024) and
amend the exercise prices of the Short and Long-Term warrants to
50p and 100p respectively. There can however be no certainty that
such a change in the terms will be approved.
In assessing going concern the Directors have also prepared a
severe but plausible downside scenario which forecasts delivery of
existing and future sales being made during 2024 being delayed
beyond June 2024 and forecasted margins not being achieved. Under
this scenario the Group would exhaust all available cash by April
2024 and it will be necessary to raise further funding within the
next 12 months in order to continue trading and deliver on the
strategic objectives.
The Directors are in the process of evaluating potential
additional funding options from potential strategic investors but
no such funding is committed as at the date of approval of these
financial statements. The Group has been, and continues in, active
discussions with a number of potential strategic investors and is
confident that it will be able to conclude an equity investment
from one or more of such parties within the period up to 31
December 2024 assessed for going concern purposes. The Directors
also note that the Company concluded an initial strategic
investment from Everbrite Technology Co., Ltd. for GBP2.5 million
in March 2023 which gives them confidence that the Company is
capable of attracting further strategic investment.
Due to the uncertainty in relation to obtaining additional
funding this indicates the existence of a material uncertainty that
may cast significant doubt about the Group's ability to continue as
a going concern.
The financial statements do not include the adjustments that
would result if the Group were unable to continue as a going
concern.
In addition to the issues discussed above, the directors have
also reviewed other varying, and wide-ranging information relating
to both present and future conditions when reaching their
conclusion regarding going concern. These included the:
-- operational performance of the Company's products delivered to customer sites to date;
-- value of contracts signed for delivery in 2023 and 2024;
-- growing sales pipeline of 2,470.3 MWh in May 2023 vs 686.2 MWh in May 2022;
-- growing opportunities presented by the emergent energy storage market;
-- growing levels of Government engagement and support in the three key markets; and
-- positive discussions with potential strategic partners
regarding making an equity investment into the Company.
Foreign currency
Presentation currency
The consolidated financial statements are presented in Great
British Pounds (GBP) rounded to the nearest thousand (GBP000),
except where otherwise indicated.
Functional currency
Items included in the financial information of the individual
companies that comprise the Group are measured using the currency
of the primary economic environment in which each subsidiary
operates (its functional currency).
Whilst Jersey uses the Jersey Pound as its currency, Jersey is
in a currency union with the United Kingdom and so the functional
currency of the parent company of the Group has been determined to
be GBP.
Foreign currency transactions
Transactions in currencies other than an entity's functional
currency (foreign currencies) are translated using the exchange
rate on the date of the transaction. Foreign exchange gains and
losses resulting from the settlement of transactions denominated in
a foreign currency are translated into GBP using the relevant
exchange rate at the date of the transaction.
Foreign exchange gains and losses resulting from the settlement
of foreign currency transactions and from the translation at the
balance sheet date of monetary assets and liabilities denominated
in foreign currencies, are recognised in the consolidated statement
of comprehensive loss within gains/(losses) on foreign currency
transactions.
Foreign currency gains/(losses) realised on the retranslation of
subsidiaries as part of the year-end consolidation are recorded in
the translation reserve that forms a part of shareholders' funds in
the consolidated financial statements of the Group.
Consolidation of subsidiaries
Subsidiaries are all entities over which the Company has
control. The Company controls an entity when it is exposed to, or
has rights over, variable returns from its involvement with the
entity and can affect those returns through its ability to exercise
control over the entity. Subsidiaries are consolidated in the Group
financial statements from the date at which control is transferred
to the Company.
Subsidiaries are deconsolidated from the date that control
ceases. The ability to control an entity may cease because of the
sale of a subsidiary or other change in the Company's shareholding
in that subsidiary, voting rights or board representation.
Foreign operations
Subsidiaries of the Company that are based in countries other
than the UK or Jersey may have functional currencies that are
different from that of the Company. Since the Group financial
statements are presented in GBP, the assets and liabilities of
foreign subsidiaries consolidated into these financial statements
are translated into the Group's presentational currency using
exchange rates prevailing at the end of the reporting period.
Income and expense items are similarly translated using the
month-end rate for each month during the year. The exchange rates
on the actual dates of transactions are used where exchange rates
fluctuate significantly within a month. Exchange differences
arising on consolidation are recognised in other comprehensive
income and are accumulated as part of shareholder's equity.
Investments in associates and joint arrangements
Associates are entities where the Company can exert significant
influence but is not able to exercise control.
Joint arrangements may be incorporated, where an entity exists,
or may be unincorporated, where the venture or joint operation is
governed by contract or other arrangement between two or more
parties. The Company is not currently party to any unincorporated
joint arrangements.
The Group accounts for its interests in associates and
incorporated joint ventures using the equity method of accounting
where the relevant investment is initially recorded at the cost to
acquire the interest. After initial recognition, the Group
recognises its share in the post-acquisition income and expenses of
the associate in the statement of profit and loss with a
corresponding increase (for income) or decrease (for losses) in the
carrying value of the investment in the associate.
Dividends received by the Company from an associate are treated
as a reduction in the carrying value of the associate (as its net
assets have reduced by it giving the dividend) and income for the
Group (as its net assets have increased by receiving the
dividend).
The Group assesses the carrying value of associates for
impairment at each reporting period end or at any other time where
there is an indication that an impairment may exist. Where there is
an indication of impairment of an investment, the Group assesses if
an actual impairment loss exists by comparing the carrying value of
the investment to its recoverable amount which is the lower of its
fair value less cost to sell or its value in use.
Fair value less costs to sell is determined by reference to the
proceeds that could be expected to be received should the interest
in the associate be sold less the costs of doing so. Value-in-use
is typically calculated by reference to the value of the discounted
cash flows expected to be received from the associate.
Where there is a deficit of recoverable value as compared to the
carrying value of the investment then an impairment loss is
recognised in the consolidated statement of profit and loss in the
amount of the calculated deficit. The carrying value of the
investment in the associate is also reduced by a corresponding
amount.
Acquisitions
The Group allocates the purchase consideration given in respect
of the acquisition of a subsidiary to the assets acquired and
liabilities assumed based on an assessment of their individual fair
values at the date of acquisition. Any excess of the cost of the
acquisition over the fair value of assets acquired and liabilities
assumed in the business combination is recognised as goodwill.
The assessment of fair value is made by comparing the discounted
value of the future net cash flows expected to be generated from
the CGU to which the goodwill has been allocated to the net book
value of the assets and liabilities of that CGU including the
allocated goodwill. Where a deficit of discounted cash flows
compared to the carrying value of the CGU's net assets and
allocated goodwill exists, the goodwill is reduced to its
recoverable amount with a corresponding amount recognised as an
impairment charge in profit or loss. A corresponding reduction is
made to the carrying value of goodwill and then to the net assets
of the CGU if goodwill is insufficient to absorb the loss. Goodwill
may also be tested for impairment under the fair value less costs
to sell method where the recorded value of goodwill is compared to
the market or value of the Company calculated by reference to its
share price.
Any such impairment loss is recognised in profit and loss in the
period in which it is identified. Impairment losses related to
goodwill cannot be reversed in future years.
Transaction between entities within the Group
Transactions and balances between companies forming part of the
Group together with any unrealised income and expenses arising from
intra-group transactions are eliminated in the preparation of the
consolidated financial statements of the Group.
Discontinued operations
A discontinued operation is a component of the Company's
business that represents a separate major line of business or
geographical area of operations that has been disposed of or is
held for sale. Classification as a discontinued operation occurs on
actual disposal or earlier if the operation meets the criteria to
be held for sale. When an operation is classified as a discontinued
operation, the comparative consolidated statement of profit and
loss is restated as if the operation had been discontinued from the
start of the comparative period.
Disposal of subsidiaries
Transactions that result in the loss of control of a subsidiary
are accounted for as disposals. The previously consolidated assets
and liabilities and the carrying amount of any non-controlling
interests in the subsidiary are derecognised. Any retained interest
in the former subsidiary is recognised at its fair value at the
date when control is lost. A gain or loss on disposal is recognised
as the difference between the fair value of the consideration
received together with the fair value adjustment made in respect of
any retained interest in the subsidiary as offset by the carrying
value of the assets and liabilities derecognised. Any gains or
losses of the disposed entity that were previously recognised in
other comprehensive income or loss and that require to be recycled
to profit or loss also form part of the gain or loss on
disposal.
New standards, amendments and interpretations effective and
adopted by the Group in 2022
Amendments to existing standards previously issued by the IASB
with effective dates during the year ended 31 December 2022 are
summarised below. There was no effect on the Group's consolidated
financial statements for the year ended 31 December 2022 as a
result of the adoption of these amendments.
Amendment to 'IFRS 16 Leases'
On 28 May 2020, the IASB issued an amendment to the standard
related to the treatment of rent concessions given by lessors in
relation to COVID-19. The Group did not receive any rent
concessions related to COVID-19 that would require consideration of
the amendment to IFRS 16 and, accordingly, the amendment had no
impact on the consolidated financial statements for the years ended
31 December 2021 or 2022.
Amendments to 'IFRS 3 Business Combinations'
On 2 July 2021, the IASB published amendments to references to
the 2018 version of the Conceptual Framework for Financial
Reporting. The amendment was effective on or after 1 January
2022.
Amendments to 'IAS 16 Property, Plant and Equipment - Proceeds
before Intended Use'
On 2 July 2021, the IASB published an amendment to IAS 16 which
prohibits deducting from the cost of an item of property, plant and
equipment the proceeds from selling items produced before that
asset is available for use. The Company does not deduct revenue
from the cost of assets before they are available for use and
therefore, there is no impact on the Group financial statements for
the year ended 31 December 2022. The amendment was effective on or
after 1 January 2022.
Amendment to 'IAS 37 Provisions, contingent liabilities and
contingent assets'
On 2 July 2021, the IASB published an amendment which requires
the provision in respect of an onerous contract to also include an
assessment of the indirect costs, such as production overhead or
indirect labour, that are expected to be incurred in servicing a
contract considered to be onerous. The amendment was effective on
or after 1 January 2022.
Annual Improvements 2018-2020
-- Improvement to 'IFRS 1 First-time Adoption of IFRS'
(effective for periods beginning on or after 1 January 2022)
-- Improvement to 'IFRS 9 Financial Instruments' (effective for
periods beginning on or after 1 January 2022)
-- Improvement to illustrative examples to 'IFRS 16 Leases'
-- Improvement to 'IAS 41 Agriculture' (effective for periods
beginning on or after 1 January 2022)
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 December 2022 reporting
periods and have not been early adopted by the Company. These
standards are not expected to have a material impact on the entity
in the current or future reporting periods or on foreseeable future
transactions and are summarized below.
-- IAS 1 Classification of Liabilities as Current or Non-Current
(effective for periods beginning on or after 1 January 2024)
-- IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting
Policies from significant to material (effective for periods
beginning on or after 1 January 2023)
-- IAS 8 Amendments to Definition of Accounting Estimates
(effective for periods beginning on or after 1 January 2023)
-- IAS 12 Deferred Tax related to Assets and Liabilities arising
from a Single Transaction (effective for periods beginning on or
after 1 January 2023)
-- IFRS 17 Insurance Contracts (effective for periods beginning on or after 1 January 2023)
Critical accounting judgments and key sources of estimation
uncertainty
The preparation of the financial statements in conformity with
generally accepted accounting practice (GAAP) requires management
to make estimates and judgments. Those estimates and judgments can
affect the reported values for assets and liabilities as well as
the disclosure of contingent assets and liabilities at the balance
sheet date.
Management is also required to make estimates and judgments
related to the reported amounts of revenues and expenses and
related to the timing of the recognition of those revenues and
expenses.
Judgments made and estimates applied are based on historical
experience and other factors including management's expectations of
future events that are considered relevant. Actual results may
differ from these estimates. The estimates, judgments and
underlying assumptions made are reviewed on an ongoing basis and
specifically in the preparation of the interim and annual published
financial information.
Revisions to accounting estimates are recognised in the period
in which the estimate is revised and applied consistently in future
periods subject to the ongoing reassessment of estimates.
Critical judgments for the year under review
Going concern
The Directors are required to assess whether it is appropriate
to prepare the financial statements on a going concern basis. In
making this assessment the Directors need to be satisfied that the
Group can meet its obligations as they fall due and will remain
cash-positive for a period of at least 12 months from the date of
approval of the financial statements. Potential additional funding
that is not yet committed at the date of approval of the financial
statements cannot be anticipated in making the assessment of going
concern.
The Directors make their assessment based on a cash flow model
prepared by management and based on its expectation of cash flows
for the 18-month period from the date of approval of the financial
statements. The extended period in the model provides additional
comfort that the 12-month solvency requirement can be met when
making the assessment of going concern.
In preparing the cash flow model, assumptions have been made
regarding the timing of cash collection from customers based on the
expected cash receipt under contracts that require milestone
payments to be made by customers. The timing of the receipt of
milestone payments may not always align with or precede the costs
incurred by the Company in performing its obligations under a
contract.
Downside sensitivities have been applied to the cash flows
primarily related to no sales being made in 2024 and insufficient
Short-Term Warrants being exercised. Refer to 'Basis of
preparation' for details of the going concern analysis performed
and the Directors' conclusions regarding going concern.
Notwithstanding the material uncertainty articulated in relation
to the basis of preparation, the Directors expect that the business
will continue to be viable throughout the model period and,
accordingly, the financial statements have been prepared on a going
concern basis.
Revenue recognition
Sales contracts are assessed in accordance with the Group
accounting policy for revenue recognition. The policy requires the
identification of the performance obligations, or promises, under
the contract and a determination of the conditions and implications
of each performance obligation. Revenue is recognised only when a
distinct and appropriate performance obligation under a contract is
satisfied.
Some performance obligations are satisfied separately - examples
include the delivery of equipment. Other obligations may be
satisfied in conjunction with other contract promises or where a
contract calls for equipment sold under the contract to be
integrated into a larger project before formal acceptance is
notified by the customer.
Where the ability of a customer to benefit from a product or
service is dependent on the satisfaction of other performance
obligations, more than one promise may need to be bundled together
as a combined performance obligation that must be satisfied before
the revenue related to each element can be recognised.
Identifying where equipment or, more likely, services are
readily available from other providers is a key determinant as to
whether a contract promise represents a separate performance
obligation or if it should be bundled with other promises that,
together, represent a single performance obligation.
The assessment of what constitutes a performance obligation can
be complex and requires judgment. Revenue is only recognised for
each performance obligation under a contract when that performance
obligation, bundled or otherwise, is satisfied. The requirement to
bundle combinations of goods and/or services together as a single
performance obligation could delay the timing of revenue
recognition where the separate promises comprising the performance
obligation are delivered sequentially.
Key sources of estimation uncertainty for the year under
review
Warranty provision
The Company provides time-limited standard warranties in its
contracts for sale of battery systems. In addition, customers may
elect to purchase separate, standalone extended warranties.
Extended warranties are for periods greater than the standard
warranties that are provided with the purchase of all battery
systems.
Estimating the costs that may be incurred by the Company in
servicing warranty agreements requires management to estimate the
number of expected claims in relation to the total number of
battery systems sold. In addition, an estimate of costs that the
Company could expect to incur to remedy each warranty claim should
also be made to determine the amount of the total provision that
should be recorded for warranties.
Provisions made in respect of expected warranty obligations are
reassessed and remeasured where actual experience indicates the
claim rate may be higher or lower than initially expected or where
costs to remedy warranty claims differ from the assumptions used in
calculating the provision. The release of an over-provision of
warranty costs results in other operating income being recognised
in the period whereas an additional provision for warranties
results in a charge being recognised.
A 10% increase in the number of warranty claims or a 10%
increase in the cost to remedy warranty issues would have a
corresponding effect on warranty cost in a given period.
Refer to note 21, contract related balances.
Provision for legacy products
Management has elected to provide ongoing maintenance for
certain legacy contracts not otherwise covered under warranty.
Management has determined that it is necessary to provide for the
costs of this ongoing maintenance or to provide for outright
decommissioning.
Refer to note 21, contract related balances.
Provision for onerous contracts
A contract is onerous when the unavoidable costs of meeting the
Company's obligations under the contract are expected to be greater
than the revenue earned under that contract. Previously, assessment
of the unavoidable costs under a contract only required direct
costs such as parts and labour to be considered.
An amendment to 'IAS 37 Provisions, contingent liabilities and
contingent assets' was published in May 2020 and requires the
provision in respect of an onerous contract to also include an
assessment of the indirect costs, such as production overhead or
indirect labour, that are expected to be incurred in servicing a
warranty claim. The Company elected to early adopt the amendment as
of 1 January 2020 and therefore has applied the provisions of the
standard in the current and prior years.
The assessment of future costs is inherently subjective and
requires the use of estimates in determining the appropriate amount
of provision that may be required.
Refer to note 21, contract related balances.
Share based payments, warrants and employee options
The Company determines the fair value of share-based payments
and employee options using a Black-Scholes methodology.
Black-Scholes uses certain assumptions to determine fair value
including measures of share price volatility, expected conversion
or exercise rates and levels of employee retention, among
others.
In estimating the value of future share price volatility, a key
input of the Black-Scholes methodology, the Company uses historic
data relating to its share price. As the short and long-term
warrants are listed, and therefore can be publicly traded, this
provides an alternative arms-length determination of fair
value.
Operating segments
The Group is organised internally to report to the Executive
Directors as a whole. The Executive Directors comprise the Chief
Executive Officer, the Chief Commercial Officer, and the Chief
Development Officer and Interim Chief Financial Officer. The
Executive Directors, as a group, have been determined,
collectively, to prosecute the role of chief operating decision
maker of the Group.
The chief operating decision maker is ultimately responsible for
entity-wide resource allocation decisions, the evaluation of the
financial, operating and ESG performance of the Group.
The Group's activities have been determined to represent a
single operating segment being the provision of vanadium flow
batteries and ancillary services, principally comprising
installation and integration services, and the provision of
extended warranties for battery units sold.
3 Accounting policies
Revenue
The Group measures revenue based on the consideration specified
in the contracts for sale with customers. Revenue is recognised
when a performance obligation is satisfied by transferring control
over a good or service to a customer. Control is usually considered
to have transferred to a customer on delivery of equipment to the
customer's site of operations or when title to the equipment is
transferred to the customer (if stored offsite). Revenue excludes
any taxes such as sales taxes, value added tax or other levies that
are invoiced and collected on behalf of third parties, such as
government tax authorities.
The Group generates revenue from the sale of battery storage
systems and related hardware and services. The main portion of
sales is derived from contractual arrangements with customers that
have multiple elements (or performance obligations), those elements
usually being the sale of battery systems, system related options,
installation, and extended warranties. The sales contracts do not
include a general right of return.
For contracts that contain multiple elements or promises, the
Group accounts for individual goods and services separately if they
are distinct. A product or service is distinct if it is separately
identifiable from other items in the agreement and where a customer
can benefit from the good or service on its own or together with
other resources that are readily available.
The consideration paid for each performance obligation is
typically fixed. A significant portion of the aggregate payment due
under a contract for sale is normally due before delivery or
completion of the service. The total consideration under the
contract is allocated between the distinct performance obligations
contained in the contract based on their stand-alone selling
prices. The stand-alone selling price is estimated using an
adjusted market assessment approach that looks to industry
benchmarks or pricing surveys for certain standalone products or
services.
In addition, under the terms of its contracts for sale, the
Group may be responsible for delivering battery systems to its
customers. When this is the case, the Group will invoice the
relevant customer for, and will recognise as revenue, any charges
incurred together with any associated handling costs. The related
costs incurred by the Group for shipping and handling services are
recognised as cost of sales concurrent with the recognition of the
associated revenue.
Grant income
Government and other grants received are recognised in the
consolidated statement of profit and loss in the period that the
related expenditure is incurred. Grant income received in respect
of costs incurred is presented net within the associated cost
category. Capital grants are similarly netted against the relevant
asset acquired or constructed.
Grant income received in advance of the associated expenditure
is presented as deferred income within contract liabilities and
released to profit and loss as the associated expenditure is
incurred. Grant income receivable is presented as accrued income
within contract assets until such time as it can be claimed or is
received.
Finance income and costs
Finance income comprises interest on cash deposits, foreign
currency gains and the unwind of discount on any assets that are
carried at amortised cost. Interest income is recognised as it
accrues using the effective interest rate method.
Finance costs include foreign currency losses and the unwind of
the discount on any liabilities held at amortised cost, such as
lease liabilities arising from lease contracts.
Employee benefits
Short-term benefits
Benefits provided to employees that are short-term in nature are
recognised as expenses in the statement of profit and loss as the
related service is provided. The principal short-term benefits
given to employees are salaries, associated holiday pay and other
periodic benefits such as healthcare and pension contributions made
by the Company for the benefit of the employee. A liability is
recognised for the amount expected to be paid under short-term cash
bonus plans if there is either a present legal or constructive
obligation to pay the amount and the amount can be reliably
estimated.
Share-based payments
The Group operates equity-settled share-based compensation
plans, under which it compensates employees for services rendered
through the issue of equity instruments, deferred share awards or
options to subscribe for ordinary shares of the Company. The fair
value of the employee services received in exchange for the grant
of the equity instruments, shares or options is recognised as an
expense. The total amount to be expensed is determined by reference
to the fair value of the options granted:
-- including any market conditions (for example, the Company's share price);
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets, and the requirement to remain as an employee of the
Group over a specified period);
-- including the impact of any non-vesting conditions (for
example, the requirement for an employee to save).
Non-market performance and service conditions are included in
the assumptions regarding the number of options that are expected
to vest. The total expense is recognised over the vesting period,
which is the period over which all the specified vesting conditions
are to be satisfied.
In some circumstances, employees may provide services in advance
of the grant date and therefore the grant date fair value is
estimated for the purposes of recognising the expense during the
period between service commencement and the grant date.
At the end of each reporting period, the Group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in the consolidated
statement of profit and loss, with a corresponding adjustment to
equity.
Any social security contributions payable in connection with the
grant of the share options is considered an integral part of the
grant itself, and the charge will be treated as a cash-settled
transaction.
Taxes
The total tax charge or credit recognised in the statement of
profit and loss comprises both current and deferred taxes.
Taxation is recognised in the consolidated statement of profit
and loss except to the extent that it relates to a business
combination or items recognised directly in equity or other
comprehensive income.
Current tax
The current tax charge is based on the taxable profit for the
year. Taxable profit or loss is different from the profit or loss
reported in the statement of profit and loss as it excludes items
of income and/or expense that are taxable or deductible in other
years (temporary differences) and it further excludes items that
are never taxable nor deductible (permanent differences).
Deferred tax
Deferred tax is the tax that is expected to be payable or
recoverable on differences between the carrying value of assets and
liabilities in the financial statements and the corresponding value
of those assets and liabilities used to calculate taxable profit or
loss.
Deferred tax assets are recognised as deductible temporary
differences only where it is probable that taxable profits will be
generated against which the carrying value of the deferred tax
asset can be recovered. Deductible temporary differences exist
where there is a difference in the timing of the recognition of an
item of income or expense between the statement of profit and loss
and the calculation of taxable profit or loss (a temporary
difference).
Deferred tax assets and liabilities are recognised using the
liability method for all taxable temporary differences, except in
respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint
operations. Where the timing of the reversal of temporary
difference arising from such investment related assets and
liabilities can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future then the
Group does not recognise deferred tax liabilities on these
items.
A deferred tax asset or liability is not recognised if a
temporary difference arises on initial recognition of an asset or
liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss.
Current and deferred tax is calculated using tax rates and laws
that have been enacted or substantively enacted at the balance
sheet date.
Earnings per share
The Group presents basic and diluted earnings per share ("EPS")
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the year.
Diluted EPS is determined by adjusting the weighted average
number of ordinary shares outstanding used in the EPS calculation
to include all potentially dilutive ordinary shares, which, in the
case of the Company, represents additional shares that could be
issued in relation to 'in-the-money' convertible notes, warrants or
share options.
The effects of anti-dilutive potential ordinary shares are
ignored in calculating diluted EPS. Anti-dilution is when an
increase in earnings per share or a reduction in loss per share
would result from the exercise of such options, warrants or
convertible instruments.
Intangible assets
Goodwill
The Group allocates the fair value of the purchase consideration
on the acquisition of a subsidiary to the assets acquired and
liabilities assumed based on an assessment of fair value at the
acquisition date. Any excess of purchase consideration is
recognised as goodwill. Where goodwill is recognised, it is
allocated to the cash generating units (CGUs) in a systematic
manner reflective of how the Group expects to recover the value of
the goodwill.
Goodwill arising is recognised as an intangible asset in the
balance sheet and is subject to annual reviews for impairment.
Goodwill is written off where circumstances indicate that the
recoverable amount of the underlying CGU may no longer support the
carrying value of the goodwill. An impairment charge is recognised
in the statement of profit and loss for the period in which it is
determined the goodwill is no longer recoverable. Impairment losses
related to goodwill cannot be reversed in future periods.
In testing for impairment, goodwill recognised on business
combinations is allocated to the Group of CGUs representing the
lowest level at which it will be monitored. Because the Group has
been determined to consist of a single business unit, the carrying
value of goodwill is tested for impairment based on the recoverable
value of the Group as a whole.
The recoverable amount of a CGU or a group of CGUs is based on
the higher of its assessed fair value less costs of disposal or its
value-in-use. Value-in-use is calculated by reference to the
expected future cash flows from the CGU, after discounting to take
account of the time value of money. Fair value less costs to sell
can be based on a similar cash flow measure adjusted for disposal
costs or can be estimated by reference to similar comparable
reference transactions.
Because the Company is listed, fair value can also be assessed
by reference to the Company's market capitalisation. Where cash
flows are used, they are risk weighted to reflect an assessment of
future commercial success.
The key assumptions in assessing cash flows relate to the
ability of the Company to develop existing markets and applications
and to establish new markets and applications for the sale and use
of its battery systems. Prospective cash flows are also sensitive
to the Company's ability to realise economies of scale as market
penetration grows.
Internally generated intangible assets - research and
development costs
Research
Expenditure on research activities is recognised as an expense
in the period in which it is incurred. Research activities are
aimed at creating new knowledge or the use of existing knowledge in
new or creative ways to generate new concepts. Research activity
does not typically have a defined commercial objective at the
outset.
Development
Where projects evolve toward commerciality or are related to a
specific commercial objective they are assessed to determine
whether the activity constitutes development that is associated
with a commercial objective or practical application.
The associated costs represent development costs and can be
capitalised if, and only if, the following conditions can be
demonstrated:
-- the technical feasibility of completing the intangible asset
so that it can be made available for use or sale;
-- the intention to complete the intangible asset for use or sale;
-- the availability of adequate technical, financial and other
resources to complete the development and to use or sell it;
-- an asset is created that can be separately identified for use or sale;
-- it is probable that the asset created will generate future economic benefits; and
-- the development cost of the asset can be measured reliably.
Development work undertaken by the Group typically relates to
the refinement of design, materials selection, construction
techniques, firmware and control systems to enhance battery system
performance over successive generations. Where development costs
are capitalised, they are amortised over the expected period to the
introduction of the next generation of battery system.
Amortisation is recorded over that period on a straight-line
basis with the corresponding amortisation charge recognised in the
statement of profit and loss as a component of administrative
expenses.
Four years has historically been the typical cycle time between
successive generations of battery system design.
Other intangible assets
Intangible assets other than goodwill that are acquired by the
Group are stated at their historical cost of acquisition less
accumulated amortisation and any impairment losses.
Software and purchased domain names
Third-party software is initially capitalised at its cost of
purchase. Amortisation is charged to administrative expenses over
the expected useful life of the software which has been assessed as
three years from the date of acquisition.
Acquired domain names are initially capitalised at cost of
purchase. Amortisation is charged to administrative expenses over
the expected useful life of the domain name which has been assessed
as ten years from the date of acquisition.
Patents and certifications
Patent rights and certifications are initially capitalised at
the cost of applying for relevant patent rights and other
protections, and certifications. Amortisation is charged to
administrative expenses over the expected useful life of the
patents and certifications which has been assessed as five years
from the date of acquisition.
Property, plant and equipment
Items of property, plant and equipment are stated at historical
cost less accumulated depreciation and any impairment losses.
Historical cost includes expenditure that is directly attributable
to the acquisition of the items. Subsequent expenditure is only
included in the asset's carrying amount or recognised as a separate
asset, as appropriate, when it is probable that future economic
benefits associated with that item will flow to the Group.
Costs that do not enhance the value of an asset such as repair
and maintenance costs are charged to the statement of profit and
loss in the period in which they are incurred.
Depreciation is charged to write off the cost of assets over
their estimated useful lives on a straight-line basis. Depreciation
commences on the date the asset is brought into use.
Work-in-progress assets are not depreciated until they are brought
into use and transferred to the appropriate category of property,
plant and equipment.
Estimated useful lives for property, plant and equipment and
other intangible assets are:
Category Period (years) Recognition in statement
of profit and loss
------------------------------ --------------- -------------------------
Computer and office equipment 3 - 5 Administrative expenses
Leasehold improvements Shorter of Administrative expenses
lease term / Cost of sales
or useful
life
Vehicles 3 Administrative expenses
------------------------------ --------------- -------------------------
Manufacturing equipment 3 - 20 Cost of sales
and tooling
------------------------------ --------------- -------------------------
R&D Equipment 5 - 10 Administrative expenses
------------------------------ --------------- -------------------------
Software and purchased 3 Administrative expenses
domain names
------------------------------ --------------- -------------------------
Patents and certifications 10 Administrative expenses
------------------------------ --------------- -------------------------
Depreciation methods, useful lives and residual values of assets
are reviewed, and adjusted prospectively as appropriate, at each
reporting date.
Where an asset is disposed of, the corresponding gain or loss on
disposal is determined by comparing the sales proceeds received
with the carrying amount of that asset at the date of disposal.
Gains or losses on disposal of fixed assets are included within
other items of operating income and expense in the statement of
profit and loss.
Impairment of tangible and intangible assets
The Group reviews the carrying values of its tangible and
intangible assets, other than goodwill, at each balance sheet date
to determine if any indicators exist that could mean those assets
are impaired. Where an indicator of impairment exists the
recoverable amount of the relevant asset (or CGU) is estimated to
determine the amount of any potential impairment loss.
Recoverable amounts are determined using a discounted cash flow
model related to each asset or CGU being assessed. The discount
rate applied to the cash flows in the model is a pre-tax discount
rate that reflects market assessment of the time value of money and
risks specific to the Company or the groups of assets being
considered.
If the recoverable value estimated in the cash flow model for a
specific asset (or CGU) is lower than the carrying value, then the
carrying value of the asset is reduced to its estimated recoverable
value with a corresponding charge immediately recognised in the
statement of profit and loss.
Where the condition that gave rise to an impairment loss
reverses in a subsequent period, the impairment loss is similarly
reversed and the carrying value of the asset increased to the
revised estimate of its recoverable value. The carrying value of an
asset immediately following the reversal of an impairment cannot
exceed the carrying value that the asset would have had if the
original impairment had not been made and the asset was depreciated
as normal.
A reversal of an impairment loss is recognised immediately in
profit or loss.
The value of any impairment (or reversal of impairment) of an
asset is recorded in the same financial statement line item where
depreciation or amortisation of the asset would normally be
shown.
Where it is impractical to meaningfully assess recoverable
amount using a discounted cash flow model, for instance where near
term cash flows are low or negative, an assessment of the fair
value adjusted for the costs that would be incurred in the disposal
of an asset or operation is used. This is typically the case for
development stage assets, operations or associated intangible
assets (including goodwill) where the underlying products or
technologies have not yet been commercialised.
Provisions
Provisions are established when the Group has a present legal or
constructive obligation because of past events, it is probable that
an outflow of resources will be required to settle the obligation
and the amount of that outflow can be reliably estimated.
Provisions are measured at the present value of the expenditures
that are expected to be incurred in settling the obligation using a
pre-tax discount rate that reflects current market assessment of
the time value of money and the risks related to the obligation.
The initial recognition of a provision results in a corresponding
charge to profit or loss.
The increase in a provision as the discount rate unwinds due to
the passage of time, is recognised in the statement of profit and
loss as other items of operating income and expense.
Leases
Group entities only participate in lease contracts as the
lessee. Lease contracts typically relate to vehicles and
facilities.
On inception of a contract, the Group assesses whether it
contains a lease. A contract is a lease or contains a lease if it
conveys the right to control the use of an identified asset for a
period of time in exchange for consideration. The right to control
the use of an identified asset is determined based on whether the
Group has the right to obtain substantially all the economic
benefits from the use of the asset throughout the period of use,
and if the Group has the right to direct the use of the asset.
Obligations under a lease are recognised as a liability with a
corresponding right-of-use asset, these are recognised at the
commencement date of the lease.
The lease liability is initially measured at the present value
of the lease payments that have not yet been paid at the inception
of the lease, discounted using the interest rate implicit in the
lease contract. Where the interest rate implicit in the lease
contract cannot be readily determined, the Group's incremental
borrowing rate is used.
Variable lease payments that do not depend on an index or rate
are not included in the measurement of the lease liability. The
lease liability is measured at amortised cost using the effective
interest rate method.
The lease liability is subsequently measured at amortised cost
using the effective interest method. It is remeasured when:
-- there is a change in future lease payments arising from a change in an index or rate;
-- there is a change in the Group's estimate of the amount
expected to be payable under a residual value guarantee; or
-- the Group changes its assessment of whether it will exercise
a purchase, extension or termination option.
When a lease liability is remeasured under one of these
scenarios, a corresponding adjustment is made to the carrying value
of the right-of-use asset or in profit and loss when the carrying
amount of the asset has already been reduced to zero.
The corresponding right-of-use asset is initially measured at
cost, which comprises the initial amount of the lease liability
plus any lease payments made at or before the commencement date,
any initial direct costs incurred and an estimate of the costs
required to remove or restore the underlying asset, less any lease
incentives received. The right-of-use asset is amortised over the
shorter of the asset's useful life and the lease term on a
straight-line basis.
The Group has elected not to recognise right-of-use assets and
corresponding lease liabilities for short-term leases, those
existing leases with a remaining lease term of less than 12 months
at 1 January 2022 and leases related to low value assets with an
annual lease cost of GBP3,500 or less.
The Group recognises these lease payments as an expense on a
straight-line basis over the lease term.
Inventory
Inventory is stated at the lower of cost and net realisable
value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been incurred in
bringing the inventories to their current location and condition.
Cost is calculated using the first-in, first-out method.
Net realisable value is calculated as the estimated selling
price for an item of inventory less estimated costs of completion
and the costs that would be incurred in the marketing, selling and
distribution of an item of inventory.
Prepaid inventory
Prepaid inventory is recognised on inventory payments where
physical delivery of that inventory has not yet been taken by the
Group and is stated at the lower of cost and net realisable
value.
Financial instruments
Financial assets and liabilities are recognised by the Group and
recorded in the statement of financial position when the Group is
contractually bound to the terms of the financial instrument.
Financial assets and liabilities are derecognised when the Group is
no longer bound by the terms of the financial instrument through
settlement or expiry.
Financial assets
The classification of financial assets to which the Group is a
party is determined by the nature of the underlying financial
instrument and the characteristics of the contractual cash flows
expected to be received under the terms of instrument.
Financial assets are not reclassified after their initial
recognition unless there is a contractual change in the nature of
the cash flows under the instrument or the business purpose of the
instrument has changed.
A financial asset is recorded at amortised cost where it is
expected to be held to maturity and the objective of the Group is
to collect the contractual cash flows under the financial
instrument based on specified contractual terms, including the
timing of receipt of cash flows.
Financial assets that the Group is party to are classified and
measured as follows:
Financial asset Measurement
basis
Trade receivables and accrued income Amortised cost
Other current assets Amortised cost
Contract assets Amortised cost
Cash and cash equivalents Amortised cost
------------------------------------- ---------------
Amortised cost
On initial recognition, the Group measures amortised cost for
financial assets based on the fair value of each financial asset
together with any transaction costs that are directly attributable
to the financial asset.
After initial recognition, amortised cost is measured for each
financial asset held using the effective interest rate method less
any impairment loss identified. Interest income is recognised for
all financial assets, other than those that are classified as
short-term, by applying the effective interest rate for the
instrument. Interest income on short-term financial assets is not
considered to be material. Short-term financial instruments are
determined as those that have contractual terms of 12-months or
less at inception.
Interest income, foreign exchange gains and losses, impairment,
and any gain or loss on derecognition are recognised in profit or
loss.
Impairment of financial assets
A loss allowance for financial assets is determined based on the
lifetime expected credit losses for financial assets. Lifetime
expected credit losses are estimated based on factors including the
Group's experience of collection, the number and value of delayed
payments past the average credit periods across the Group's
financial assets. The Group will also consider factors such as
changes in national or local economic conditions that correlate
with default on receivables and financial difficulties being
experienced by the counterparty.
Financial assets are impaired in full and a corresponding charge
is recognised in profit or loss where there is no reasonable
expectation of recovery.
Financial liabilities
The classification of financial liabilities is determined at
initial recognition. Financial liabilities are classified and
measured as follows:
Financial liability Measurement basis
Trade and other payables Amortised cost
Derivative Financial Instrument Fair Value through Profit
and Loss
Lease liabilities Amortised cost
-------------------------------- --------------------------
Amortised cost
At initial recognition, the Group measures financial liabilities
at amortised cost using the fair value of the underlying instrument
less transaction costs directly attributable to the acquisition of
the financial liability.
Derecognition of financial liabilities
The Group derecognises financial liabilities when the Group's
obligations under the relevant instrument are discharged, expired
or cancelled.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into, and they are subsequently
remeasured to their fair value at the end of each reporting period.
Changes in the fair value of any derivative instrument is
recognised immediately in profit or loss and are included in other
gains/(losses).
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held
with financial institutions that can be called on demand together
with other short-term, highly liquid investments with maturities of
three months or less and are readily convertible to known amounts
of cash.
Equity instruments
Instruments are classified as equity instruments if the
substance of the relative contract arrangements evidences a
residual interest in the assets of the Group after deducting all of
its liabilities. Equity instruments issued by the Company are
recorded as proceeds received, net of direct issue costs not
charged to income.
Offsetting
A financial asset and a financial liability are offset and the
net amount presented in the statement of financial position when,
and only when, the Group:
-- has a legally enforceable right to set off the recognised amounts; and
-- intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
4 Revenue from contracts with customers and income from
government grants
Segment information
The Group derives revenue from a single business segment, being
the manufacture and sale of vanadium flow battery systems and
related hardware together with the provision of services directly
related to battery systems sold to customers.
The Group is organised internally to report on its financial and
operational performance to its chief operating decision maker,
which has been identified as the three Executive Directors as a
group.
All revenues in 2022 were derived from continuing
operations.
2022 2021
Revenue from contracts with customers GBP000 GBP000
------------------------------------------------------- ------- -------
Battery systems and associated control systems 2,548 2,481
Integration and commissioning 254 701
Other services 142 3
Total revenue in the consolidated statement of profit
and loss 2,944 3,185
------------------------------------------------------- ------- -------
Analysed as:
Revenue recognised at a point in time 2,936 3,182
Revenue recognised over time 8 3
Total revenue in the consolidated statement of profit
and loss 2,944 3,185
------------------------------------------------------- ------- -------
Grant income shown against cost of sales 647 -
------------------------------------------------------- ------- -------
3,591 3,185
Geographic analysis of revenue
The Group's revenue from contracts with customers was derived
from the following geographic regions:
2022 2021
Geographic analysis of revenue GBP000 GBP000
------------------------------------------------------- ------- -------
United Kingdom 1,691 2,796
Asia 160 273
United States of America 1,093 116
Total revenue in the consolidated statement of profit
and loss 2,944 3,185
------------------------------------------------------- ------- -------
The Group maintains its principal production and assembly
facilities in Bathgate, Scotland and Vancouver, Canada. These
facilities include office space for design, sales and
administrative teams. The Group also has offices, operations and
management based in London, England and San Francisco,
California.
The Group does not consider that the locations of its operations
constitute geographic segments as they are managed centrally by the
executive management team. The location of the manufacturing plants
and business development activity is a function of time-zone when
servicing customers both pre-sale and during product delivery. The
geographic location of offices, facilities and management is not
related to distinct markets or customer characteristics at the
present time.
Significant customers and concentration of revenue
Revenue from contracts with customers was derived from three
(2021: two) customers who each accounted for more than 10% of total
revenue as follows:
2022 2021
Significant customers and concentration of revenue GBP000 GBP000
---------------------------------------------------- -------- -------
Customer A 1,247 -
Customer B 466 -
Customer C 466 -
Customer D - 2,300
Customer E - 495
---------------------------------------------------- -------- -------
Grant income other than revenue
The Group receives grant income to help fund certain projects
that are eligible for support, typically in the form of innovation
grants. The Group also received grant income related to operating
costs under government subsidy programmes as part of national COVID
response efforts. The total grant income that was received in the
year was as follows:
2022 2021
Grant income received GBP000 GBP000
----------------------------------------------------------- ------- -------
Business support grants against employee costs - COVID-19 (11) 156
Grants for research and development 647 302
Total government grants 636 458
----------------------------------------------------------- ------- -------
5 Cost of sales
2022 2021
GBP000 GBP000
-------------------------------------------------------- -------- -------
Movement in inventories of finished battery systems 3,356 5,240
Production costs 2,640 826
Depreciation of production facilities, equipment and
amortisation of intangibles 172 116
Movement in provisions for warranty and warranty costs 763 440
Movement in provisions for sales contracts (4,004) -
Total cost of sales 2,927 6,622
-------------------------------------------------------- -------- -------
6 Administrative expenses
2022 2021
GBP000 GBP000
-------------------------------- ------- -------
Staff costs 10,322 8,980
Research and development costs 2,592 1,792
Professional fees 2,983 1,950
Sales and marketing costs 399 249
Facilities and office costs 385 655
Other administrative costs 2,361 813
-------------------------------- ------- -------
Total administrative expenses 19,042 14,439
-------------------------------- ------- -------
No development costs were capitalised in the period (2021:
GBPnil).
7 Auditors' Remuneration
2022 2021
GBP000 GBP000
-------------------------------------------------------- ------- -------
Fees payable to the Company's auditors for the audit
of the consolidated financial statements 271 172
Audit of financial statements of subsidiaries pursuant
to legislation 33 21
Fees payable to the Company's auditor for other
services:
* Tax compliance services 19 9
323 202
-------------------------------------------------------- ------- -------
The Group has a policy in place related to the commissioning of
non-audit service from its auditors where all such work requires
pre-approval by the Audit & Risk Committee before the
commencement of any non-audit work.
Audit fees are discussed with and approved by the Audit &
Risk Committee.
8 Staff costs and headcount
2022 2021
Staff costs GBP000 GBP000
------------------------ ------- -------
Wages and salaries 9,280 7,617
Employer payroll taxes 840 625
Other benefits 917 508
Share-based payments 388 1,827
Total staff costs 11,425 10,577
------------------------ ------- -------
Administrative staff costs in the year were GBP10,321,870 (2021:
GBP8,979,790) and staff costs included in cost of sales were
GBP1,103,027 (2021: GBP1,596,839).
2022 2021
Average headcount Number Number
-------------------------- ------- -------
Canada 71 55
United Kingdom 68 60
United States of America 7 7
South Africa 1 2
Total 147 124
-------------------------- ------- -------
Increases in staff costs are due to hiring for expansion in
operating activity and the delivery of key projects to
customers.
Key management compensation
From 1 April 2020, the key management of the Group has been
determined to comprise the members of the senior leadership
team.
2022 2021
Key management compensation GBP000 GBP000
------------------------------------ ------- -------
Short-term employee benefits 1,828 1,590
Total k ey management compensation 1,828 1,590
------------------------------------ ------- -------
The Group made contributions to the defined contribution schemes
of key management in the year of GBP16,078 (2021: GBP12,917).
9 Share based payments
Since its incorporation, the Company has operated various
share-based incentive plans. The purpose of each of the schemes has
been to incentivise Directors and employees related to improving
Company performance and building shareholder value.
Set out below is a summary of the option awards in issue at 31
December 2022.
Standard Grant Final Expiry Exercise 2022 2021
date date price
---------------------- ------------- --------------- ------------- ----- ---------- ----------
07 Dec
redT 2015 plan 2015 07 Jan 2020 58.95 EURc 68,803 137,602
18 May
redT 2018 plan 2018 18 May 2023 352.50 p 3,888 3,888
Invinity Energy 01 Apr
2018 ESOP 2020 12 Mar 2030 82.50 p 185,143 185,143
Invinity Energy
2018 Consultant 01 Apr
SOP 2020 12 Mar 2030 82.50 P 378,000 378,000
Invinity Energy 01 Apr
2018 ESOP 2020 07 Jul 2026 4.34 p 1,342,134 1,429,812
Invinity Energy 01 Apr
2018 ESOP 2020 08 May 2029 6.84 p 658,314 661,237
Invinity Energy 26 Aug
2018 ESOP 2020 26 Aug 2030 113.00 p 2,043,334 2,505,000
Invinity Energy 28 Jan
2018 ESOP 2021 28 Jan 2031 204.00 p 372,000 480,000
Invinity Energy 04 Mar
2018 ESOP 2021 04 Mar 2031 152.00 p 194,000 222,000
Invinity Energy 15 Apr
2018 ESOP 2021 15 Apr 2031 151.00 p 108,000 126,000
Invinity Energy 03 Aug
2018 ESOP 2021 03 Aug 2031 134.50 p 375,000 455,000
Invinity Energy 29 Oct
2018 ESOP 2021 29 Oct 2031 111.50 p 297,000 359,000
Invinity Energy 20 Dec
2018 ESOP 2021 20 Dec 2031 91.00 p 135,000 135,000
Invinity Energy 03 Feb
2018 ESOP 2022 03 Feb 2032 64.50 p 186,000 -
Invinity Energy 02 Mar
2018 ESOP 2022 APR 02 Mar 2032 93.50 p 60,000 -
Invinity Energy 11 Apr
2018 ESOP 2022 11 Apr 2032 90.00 p 60,000 -
Invinity Energy 11 Jul
2018 ESOP 2022 11 Jul 2032 45.50 p 500,000 -
Invinity Energy 08 Dec
2018 ESOP 2022 08 Dec 2032 38.00 p 822,000 -
---------------------- ------------- --------------- ------------- ----- ---------- ----------
7,788,616 7,077,682
-------------- ------------------------------------- ------------- ----- ---------- ----------
Non-standard Grant date Expiry date Exercise 2022 2021
price
---------------------- -------------- -------------- ------------- ----- ---------- ----------
Long-term Incentive
plan 8 Dec 2009 30 Jul 2023 50.00 EURc 15,000 15,000
Camco 2006 Executive
Share Plan 30 Jul 2013 30 Jul 2023 50.00 EURc 68,127 68,127
redT 2018 plan 30 May 2018 30 Jul 2023 400.00 p 70,000 70,000
---------------------- -------------- -------------- ------------- ----- ---------- ----------
153,127 153,127
-------------- ------------------------------------- ------------- ----- ---------- ----------
Total 7,941,743 7,230,809
------------------------------------------------------ ------------- ----- ---------- ----------
Weighted average remaining contractual life
of options outstanding at the end of the year 7.18 8.82
--------------------------------------------------------------------- ----- ---------- ----------
A total of 87,678 options were exercised during the year with a
weighted average exercise price of 4.34p per share.
The grant-date fair value of share options issued is calculated
using a Black-Scholes methodology at the date of grant. Key inputs
to the model include the share price at the date of grant, the
option exercise price, the term of the award, share price
volatility, the risk-free interest rate (by reference to government
bond yields) and the expected dividend yield rate, which has
historically been and continues to be zero, reflective of the
development-stage nature of the Company.
The Long-term Incentive Plan, Camco 2006 Executive Share Plan
and the redT 2015 Plan are now closed. No further option awards
will be made under either of these plans.
The aggregate number of options granted, vested, exercised and
forfeited during the year under the plans are summarised and
analysed between unvested and vested awards as follows:
Unvested Vested
--------------------- ---------------------- --------------------
At 1 January 2022 4,369,588 113.47p 2,708,094 35.26p
Granted 1,781,000 50.39p - -
Forfeited (900,589) 121.89p (81,799) 96.31p
Vested (1,711,308) 108.00p 1,711,308 108.00p
Exercised - - (87,678) 4.34p
--------------------- ------------ -------- ---------- --------
At 31 December 2022 3,538,691 82.73p 4,249,925 69.24p
--------------------- ------------ -------- ---------- --------
Unvested Vested
--------------------- ---------------------- --------------------
At 1 January 2021 4,034,591 98.84p 1,839,032 29.09p
Granted 2,015,000 149.64p 1,301,543 87.15p
Forfeited (378,460) 134.35p (100,000) 317.00p
Vested (1,301,543) 87.15p - -
Exercised - - (332,481) 15.33p
--------------------- ------------ -------- ---------- --------
At 31 December 2021 4,369,588 113.47p 2,708,094 35.26p
--------------------- ------------ -------- ---------- --------
Plans with non-standard performance conditions
Long-term incentive plan (LTIP)
The LTIP for Directors and employees was approved by the Board
in 2008 and entitled Directors and employees to receive equity
settled payments annually based on the achievement of certain
market and non-market performance conditions.
The LTIP is now closed. At the end of the year, there were
15,000 (2021: 15,000) options vested and exercisable at EUR0.50 per
share.
CAMCO 2006 executive share plan (the plan)
The plan was established in 2017 to make awards of shares up to
an aggregate of 10% of the share capital of the Company over a
period of ten years.
The plan is now closed. At the end of the year there were 68,127
(2021: 68,127) options vested exercisable at EUR0.50 per share.
redT 2018 plan
Options with non-standard performance conditions were also
issued under the 2018 plan. At the end of the year there were
70,000 (2021: 70,000) options vested and exercisable at 400p per
share.
Plans with standard performance conditions
The primary share plan that remains outstanding at 31 December
2022 is the 2018 plan. The 2018 plan was adopted by the Board on 14
May 2018 and introduced HMRC scheme rules related to certain
non-taxable option grants. The plan contains a provision to issue
options as CSOP, EMI or unapproved awards.
In the year ended 31 December 2020 the Board approved the
expansion of awards to be made under the 2018 plan with grants
expected to be made more frequently going forward and to a
potentially wider group of employees. The intention of the increase
in frequency and quantity of employee share options granted was to
incentivise and to better align employee compensation with
shareholder return.
Options issued to legacy Avalon employees at the merger date
Following the merger transaction, 1,432,000 options were granted
to legacy Avalon employees to replace options held by them in the
former Avalon employee share plan.
Parallel options issued
In addition, certain legacy redT options were reissued as they
were considered by the Board to be sufficiently 'out-of-the-money'
such that they no longer provided a performance incentive to the
holders of the options. As a mechanism to adjust the terms of the
unfavourable options, new parallel options were issued on a
one-for-one basis with the same terms as the original awards
excepting that they were issued with a lower exercise price.
Both the original and parallel option schemes remain in
existence. However, the exercise by an employee of a single option
from either pool (original or parallel) allocated to them will
cause the equivalent value in the other pool to be forfeited.
Accordingly, the number of options disclosed above has been
adjusted to remove the number of options that is equivalent to the
number of parallel options issued.
Other options
On 10 May 2021, the Company granted an option for 8,672,273
shares to Gamesa Electric S.A. Unipersonal (GaE), a wholly-owned
subsidiary of Siemens Gamesa Renewable Energy S.A. The options were
granted to GaE in consideration of its entering into a joint
development and commercialisation agreement with Invinity Energy
Nexus Limited, a wholly-owned subsidiary of the Company.
The exercise price of the options is 175 pence and upon exercise
of those options then for as long as GaE holds at least 5% of the
issued share capital of the Company it shall be entitled, subject
to certain conditions, to nominate one non-executive director to
the Board of the Company.
Warrants issued in the period or outstanding
In December 2021, the Company issued 14,464,571 'placing units'
comprised of one share, one short-term warrant and one long-term
warrant.
At 31 December 2022, the Company had 14,464,317 short-term
warrants and 14,464,478 long-term warrants outstanding.
Each short-term warrant gives the holder the right to subscribe
for one new Ordinary Share at a price of 150 pence per Ordinary
Share at any time from Second Admission until 15 September 2023.
Each long-term warrant gives the holder the right to subscribe for
one new Ordinary Share at a price of 225 pence per Ordinary Share
at any time from Second Admission until 16 December 2024.
The warrants were admitted to trading on the Aquis Stock
Exchange (AQSE) on 9 March 2022. There was no adjustment to the
issue price in respect of the attached warrants and they have been
deemed to have no fair value based on the price at which they are
currently being quoted.
In December 2022, the Company issued 1,350,020 warrants as part
of the convertible loan facility with Riverfort Global
Opportunities and YA II PN Ltd ("Noteholders"). Each warrant gives
the holder the right to subscribe for one new Ordinary Share at a
price of 67.35 pence per Ordinary Share until 14 December 2026.
Subsequent to year-end, the Company was required to amend the
exercise price of these warrants to 32 pence, being the issue price
of the Placing and Open Offer on 22 February 2023. In consideration
of the Noteholders undertakings, the Company has agreed to grant a
further 449,980 warrants at an exercise price of 32p which will
expire on 14 December 2026.
10 Other items of operating income and expense
The following items are included in comprehensive loss:
2022 2021
GBP000 GBP000
--------------------------------------------------- ------- -------
(Income)/expense
Provision for onerous contracts, net of amounts
used 554 3,762
Impairment of property, plant and equipment - 60
Loss on disposal of property, plant and equipment 33
Reversal of impairment of obsolete inventory and
disposal of scrap inventory - (390)
Impairment of obsolete inventory and disposal of 25 -
scrap inventory
Profit on disposal of subsidiary - (15)
Gain on curtailment of right-of-use asset (8) (29)
--------------------------------------------------- ------- -------
Total other operating expenses (net) 604 3,388
--------------------------------------------------- ------- -------
11 Net finance income and costs
2022 2021
GBP000 GBP000
------------------------------------------------- ------- -------
Finance income
Interest on bank deposits and money market -
funds (62)
Finance costs
Finance charges on convertible loan notes 6 -
Finance charges for lease liabilities
held at fair value 58 45
Finance charges for liabilities held at 1 -
amortised cost
(Gains)/losses on foreign currency transactions (448) 63
------------------------------------------------- ------- -------
Net finance (income)/costs (445) 108
------------------------------------------------- ------- -------
12 Income tax expense
2022 221
GBP000 GBP000
------------------------------------- ------- -------
Current tax
Current tax on profits for the year - -
------------------------------------- ------- -------
Total current tax expense - -
------------------------------------- ------- -------
Reconciliation of income tax expense calculated using statutory
tax rate
2022 2021
GBP000 GBP000
------------------------------------------------ --------- ---------
Loss before tax (18,537) (21,372)
Tax at the Jersey rate of nil% - -
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income:
Non-taxable gains and expenses not deductible
for tax 181 (113)
Differences in overseas tax rates (4,707) (3,942)
Unrelieved tax losses carried forward 4,350 3,109
Origination and reversal of timing differences
not recognised 176 946
------------------------------------------------ --------- ---------
Total income tax expense - -
------------------------------------------------ --------- ---------
13 Loss per share
2022 2021
Basic loss per share In pence In pence
--------------------------------------------- --------- ---------
From continuing operations (16.0) (24.1)
From continuing and discontinued operations (16.0) (24.1)
--------------------------------------------- --------- ---------
2022 2021
Diluted loss per share In pence In pence
--------------------------------------------- --------- ---------
From continuing operations (16.0) (24.1)
From continuing and discontinued operations (16.0) (24.1)
--------------------------------------------- --------- ---------
2022 2021
Loss used in calculation of basic and GBP000 GBP000
diluted loss per share
--------------------------------------------- --------- ---------
From continuing operations (18,537) (21,372)
From continuing and discontinued operations (18,537) (21,372)
--------------------------------------------- --------- ---------
All operational activity in the years ended 31 December 2022 and
2021 relate to continuing operations.
2022 2021
Weighted average number of shares Number Number
used in calculation
----------------------------------- ------------ ------------
Basic 116,151,378 88,768,750
Diluted 117,754,966 119,792,519
----------------------------------- ------------ ------------
Additional potential shares used in the calculation of diluted
earnings per share primarily relate to potential shares outstanding
at 31 December 2022 that may be issued in satisfaction of
'in-the-money' employee share options. Potentially dilutive shares
related to 'in-the-money' outstanding warrants to subscribe for
ordinary shares in the Company are also included in calculating
diluted earnings per share.
Where additional potential shares have an anti-dilutive impact
on the calculation of loss per share calculation, such potential
shares are excluded from the weighted average number of shares used
in the calculation.
2022 2021
Weighted average number of shares
used in loss per share calculation Number Number
- basic and diluted
-------------------------------------- ------------ ------------
In issue at 1 January 116,048,761 85,900,616
Shares issued in the year - weighted
average 102,617 2,868,134
-------------------------------------- ------------ ------------
Weighted average shares in issue 31
December 116,151,378 88,768,750
Effect of employee share options and
other warrants not exercised 1,603,588 31,023,769
-------------------------------------- ------------ ------------
Weighted average number of diluted
shares in issue 31 December 117,754,966 119,792,519
-------------------------------------- ------------ ------------
Additional potential shares are anti-dilutive where their
inclusion in the calculation of loss per share results in a lower
loss per share. The weighted average number of shares not included
in the diluted loss per share calculation because they had an
anti-dilutive effect on the calculation was 29,170,511 (2021:
2,094,626).
14 Cash flows from operating activities
2022 2021
GBP000 GBP000
---------------------------------------------- --------- ---------
Loss after income tax (18,537) (21,372)
Adjustments for:
Depreciation and amortisation 1,350 727
Loss on disposal of property, plant and 33 -
equipment
Gain on curtailment of right-of-use asset (8) -
Impairment of inventory 24 (390)
Share-based payments charge 681 1,827
Equity settled interest and transaction 6 -
costs on Investment funding arrangement
Net foreign exchange differences (168) (27)
(16,619) (19,235)
---------------------------------------------- --------- ---------
Change in operating assets & liabilities
Increase in inventory (3,875) (4,487)
Increase in contract assets (174) (319)
Increase in trade receivables and other
receivables (88) (1,650)
Increase in other current assets and prepaid
inventory (2,354) (4,866)
Increase in trade and other payables 1,263 1,046
Increase in warranty provision 183 293
(Decrease)/increase in onerous contract
provision (3,252) 3,756
Increase in contract liabilities 2,982 2,498
(5,315) (3,729)
---------------------------------------------- --------- ---------
Cash used in operations (21,934) (22,964)
---------------------------------------------- --------- ---------
15 Goodwill and other intangible assets
Software
Patents and domain
Goodwill and certifications names Total
GBP000 GBP000 GBP000 GBP000
--------------------------- --------- -------------------- ------------ -------
Cost
At 1 January 2022 23,944 203 47 24,194
Additions - - - -
Foreign currency exchange
differences - - 3 3
--------------------------- --------- -------------------- ------------ -------
At 31 December 2022 23,944 203 50 24,197
--------------------------- --------- -------------------- ------------ -------
Accumulated amortisation
At 1 January 2022 - (71) (26) (97)
Amortisation charge - (41) (8) (49)
Foreign currency exchange
differences - - (1) (1)
--------------------------- --------- -------------------- ------------ -------
At 31 December 2022 - (112) (35) (147)
--------------------------- --------- -------------------- ------------ -------
Net book value
At 1 January 2022 23,944 132 21 24,097
At 31 December 2022 23,944 91 15 24,050
Software
Patents and domain
Goodwill and certifications names Total
GBP000 GBP000 GBP000 GBP000
-------------------------- --------- -------------------- ------------ -------
Cost
At 1 January 2021 23,944 203 29 24,176
Additions - - 18 18
-------------------------- --------- -------------------- ------------ -------
At 31 December 2021 23,944 203 47 24,194
-------------------------- --------- -------------------- ------------ -------
Accumulated amortisation
At 1 January 2021 - (30) (19) (49)
Amortisation charge - (41) (7) (48)
-------------------------- --------- -------------------- ------------ -------
At 31 December 2021 - (71) (26) (97)
-------------------------- --------- -------------------- ------------ -------
Net book value
At 1 January 2021 23,944 173 10 24,127
At 31 December 2021 23,944 132 21 24,097
Goodwill
All goodwill is tested annually for impairment. At 31 December
2022, goodwill was tested for impairment using a fair value less
costs of disposal methodology by reference to the Company's quoted
market capitalisation using the price of 43.0 pence per share at
that date. No impairment loss was identified in relation to
goodwill.
On 15 March 2023, the Company announced the results of a
placing, open offer, and subscription. The fundraising was
oversubscribed and together raised total proceeds of GBP23.0
million through placing of 72,012,592 new Ordinary Shares at 32.0
pence per share.
The closing share price on 30 May 2023 was 35.5 pence, giving a
market capitalisation of GBP67.8 million which does not indicate
impairment of goodwill or net assets.
Patents and certifications
There have been no events or circumstances that would indicate
that the carrying value of patents and certifications may be
impaired at 31 December 2022.
16 Property, plant and equipment
Computer Leasehold Vehicles Total
and office improvements and equipment
equipment
GBP000 GBP000 GBP000 GBP000
Cost
At 1 January
2022 780 681 1,165 2,626
Additions 45 429 234 708
Disposals (136) (2) (37) (175)
Foreign currency
exchange differences 10 11 40 61
-------------------------- ------------ -------------- --------------- --------
At 31 December
2022 699 1,119 1,402 3,220
-------------------------- ------------ -------------- --------------- --------
Accumulated Depreciation
At 1 January
2022 (653) (427) (416) (1,496)
Depreciation charge (129) (204) (301) (634)
Disposals 125 1 16 142
Foreign currency
exchange differences (5) (5) (14) (24)
-------------------------- ------------ -------------- --------------- --------
At 31 December
2022 (662) (635) (715) (2,012)
-------------------------- ------------ -------------- --------------- --------
Net book value
At 1 January 2022 127 254 749 1,130
At 31 December
2022 37 484 687 1,208
Computer Leasehold Vehicles Total
and office improvements and equipment
equipment
GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2021 748 513 753 2,014
Additions 158 169 406 733
Disposals (123) - - (123)
Foreign currency exchange
differences (3) (1) 6 2
--------------------------- ------------ -------------- --------------- --------
At 31 December 2021 780 681 1,165 2,626
--------------------------- ------------ -------------- --------------- --------
Accumulated Depreciation
At 1 January 2021 (694) (357) (268) (1,319)
Depreciation charge (85) (71) (145) (301)
Disposals 123 - - 123
Foreign currency exchange
differences 3 1 (3) 1
--------------------------- ------------ -------------- --------------- --------
At 31 December 2021 (653) (427) (416) (1,496)
--------------------------- ------------ -------------- --------------- --------
Net book value
At 1 January 2021 54 156 485 695
At 31 December 2021 127 254 749 1,130
The Group has no assets pledged as security. No amounts of
interest have been capitalised within property, plant and equipment
at 31 December 2022 (2021: GBPnil).
17 Right-of-use assets
Offices Vehicles Total
and facilities and equipment
GBP000 GBP000 GBP000
Cost
At 1 January
2022 1,845 28 1,873
Additions 1,512 - 1,512
Curtailments and
disposals(1) (106) - (106)
Foreign currency
exchange differences 79 3 82
-------------------------- ---------------- --------------- --------
At 31 December
2022 3,330 31 3,361
-------------------------- ---------------- --------------- --------
Accumulated Depreciation
At 1 January
2022 (879) (19) (898)
Depreciation charge (661) (6) (667)
Curtailments and
disposals 106 - 106
Foreign currency
exchange differences (55) (2) (57)
-------------------------- ---------------- --------------- --------
At 31 December
2022 (1,489) (27) (1,516)
-------------------------- ---------------- --------------- --------
Net book value
At 1 January 2022 966 9 975
At 31 December
2022 1841 4 1,845
Offices Vehicles Total
and facilities and equipment
GBP000 GBP000 GBP000
Cost
At 1 January
2021 1,572 28 1,600
Additions 627 - 627
Curtailments(2) (294) - (294)
Foreign currency
exchange differences (60) - (60)
-------------------------- ---------------- --------------- -------
At 31 December
2021 1,845 28 1873
-------------------------- ---------------- --------------- -------
Accumulated Depreciation
At 1 January
2021 (576) (10) (586)
Depreciation charge (369) (9) (378)
Foreign currency
exchange differences 66 - 66
-------------------------- ---------------- --------------- -------
At 31 December
2021 (879) (19) (898)
-------------------------- ---------------- --------------- -------
Net book value
At 1 January 2021 996 18 1,014
At 31 December
2021 966 9 975
1. In 2022, a lease on a right-of-use asset in South Africa was
curtailed by five months. There was a corresponding decrease in the
outstanding lease creditor and a gain on curtailment recognised in
the consolidated statement of profit and loss in 2022.
2. In 2021, a lease on a right-of-use asset in Canada was
curtailed, with the termination date changing from June 2027 to
June 2023. There was a corresponding decrease in the outstanding
lease creditor and a gain on curtailment recognised in the
consolidated statement of profit and loss in 2021.
Right-of-use assets relate to buildings, vehicles and equipment
held under leases with third-party lessors. A right-of-use asset
represents the Company's right to use a leased asset over the term
of the lease. The Company's rights to use specific buildings, items
of equipment or specific vehicles under lease arrangements
represent assets to the Group.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and
conditions.
To determine the incremental borrowing rate, the Group:
-- where possible, uses recent third-party financing received by
the individual lessee as a starting point, adjusted to reflect
changes in financing conditions since third party financing was
received;
-- uses a build-up approach that starts with a risk-free
interest rate adjusted for credit risk for leases held by the
Group, which does not have recent third party financing; and
-- makes adjustments specific to the lease, e.g. term, country, currency and security.
18 Deferred tax balances
2022 2021
GBP000 GBP000
----------------------------------------------------- ------- -------
Timing differences and tax losses on which deferred
tax is not recognised:
Accelerated capital allowances 1,003 450
Share options 595 1,576
Accrued liabilities 137 477
Reserves and other 3,008 4,161
Tax losses 91,482 70,880
Total deferred tax assets 96,225 77,544
----------------------------------------------------- ------- -------
Tax losses
The Company's subsidiaries carry on business in other tax
regimes where the corporation tax rate is not zero. At 31 December
2022, the Group had the following tax losses carried forward
available for use in future periods:
2022 2021
GBP000 GBP000
----------------------------- ------- -------
United Kingdom 46,416 40,530
Canada 27,707 16,557
United States of America 12,892 9,994
Ireland 4,467 3,799
Total potential tax benefit 91,482 70,880
----------------------------- ------- -------
Under current tax legislation tax losses in the United Kingdom
and Ireland can be carried forward indefinitely and be offset
against future profits arising from the same activities at the tax
rate prevailing at that time. There is a portion of the tax losses
in the United States of America that will begin to expire in 2035,
whereas the majority can be carried forward indefinitely. The tax
losses in Canada can be carried forward 20 years and will begin to
expire in 2035.
Due to the uncertainty regarding the timing and extent of future
profits within these subsidiaries, no deferred tax assets have been
recognised in respect of these tax losses. Deferred tax is also not
recognised on the timing differences between accounting and tax
treatment in these subsidiaries given the offsetting tax losses on
which no deferred tax has been recognised.
In March 2021, the UK Government announced that the rate of
Corporation Tax will increase from 19% to 25% on profits of over
GBP250,000, effective 1 April 2023. Profits below GBP50,000 will
continue to be chargeable to Corporation Tax at 19% and profits
between the two thresholds charged at the marginal rate of 26.5%.
In computing the UK deferred tax asset, management has assumed that
as neither the deferred tax assets nor the deferred tax liabilities
will crystallise in the immediate future, calculations based on 19%
are appropriate.
19 Inventory
2022 2021
GBP000 GBP000
------------------------------- ------- -------
Raw materials and consumables 1,815 1,897
Work in progress 6,370 3,900
Finished goods 1,642 -
------------------------------- ------- -------
Total inventory 9,827 5,797
------------------------------- ------- -------
Inventory recognised as an expense within cost of sales during
the current year amounted to GBP3,356,045 (2021: GBP5,239,682).
Net reversal of inventory write-downs during the current year
amounted to GBP5,154 (2021: GBP389,808).
20 Other current assets
2022 2021
GBP000 GBP000
---------------------------- ------- -------
Prepayments and deposits 1,879 533
Prepaid inventory 5,102 4,112
Tax credits - recoverable 551 247
Other receivables 1,249 1,388
---------------------------- ------- -------
Total other current assets 8,781 6,280
---------------------------- ------- -------
Prepaid inventory is recognised on inventory payments where
physical delivery of that inventory has not yet been taken by the
Group and is stated at the lower of cost and net realisable
value.
21 Contract related balances
The Group has recognised the following assets and liabilities
related to revenue from contracts with customers that are in
progress at the respective year-ends:
2022 2021
GBP000 GBP000
--------------------------------------------------- -------- --------
Amounts due from customer contracts included in
trade receivables 1,737 1,683
Contract assets (accrued income for work done not
yet invoiced) 500 324
Contract liabilities (deferred revenue related
to advances on customer contracts) (8,375) (5,142)
Net position of sales contracts (6,138) (3,135)
--------------------------------------------------- -------- --------
The amount of revenue recognised in the year that was included
in contract liabilities at the end of the prior year was GBP428,417
(2021: GBP2,231,000).
The aggregate position on customer contracts included in the
statement of financial position will change according to the number
and size of contracts in progress at a given year-end as well as
the status of payment milestones made by customers toward servicing
those contracts. The Group structures payment milestones in its
customer contracts to cover upfront expenditure for parts and
materials and other working capital requirements associated with
the delivery of promises under customer contracts to better manage
Group cash flow.
The timing of revenue recognition is based on the satisfaction
of individual performance obligations within a contract and is not
based on the timing of advances received. Customer advances are
recognised as contract liabilities in the statement of financial
position and are released to income progressively as individual
performance obligations are met. The difference in timing between
the receipt of contract advances and the timing of the satisfaction
of performance obligations for revenue recognition can cause values
to remain in deferred income. The amount of such deferrals is
related to both the overall size of the underlying contract and the
planned pace of delivery in the related work schedule. This is
expected to occur where satisfaction of performance obligations is
evidenced by customer acceptance of the good or service that is the
subject of the performance obligation.
Provisions related to contracts with customers
Legacy Provision
Warranty products for contract
provision provision losses Total
GBP000 GBP000 GBP000 GBP000
------------------------------------- ------------ ----------- -------------- --------
At 1 January 2022 257 860 4,859 5,976
Charges to profit or loss:
* Provided in the year 204 578 565 1,347
* Unused amounts reversed (24) (16) (2,059) (2,099)
Amounts used in the year (153) (406) (1,758) (2,317)
------------------------------------- ------------ ----------- -------------- --------
At 31 December 2022 284 1,016 1,607 2,907
------------------------------------- ------------ ----------- -------------- --------
Legacy Provision
Warranty products for contract
provision provision losses Total
GBP000 GBP000 GBP000 GBP000
------------------------------------- ------------ ----------- -------------- --------
At 1 January 2021 - 824 1,103 1,927
Charges to profit or loss:
* Provided in the year 257 36 4,028 4,321
* Unused amounts reversed - - (51) (51)
Amounts used in the year - - (221) (221)
------------------------------------- ------------ ----------- -------------- --------
At 31 December 2021 257 860 4,859 5,976
------------------------------------- ------------ ----------- -------------- --------
Warranty provision
The warranty provision represents management's best estimate of
the costs anticipated to be incurred related to warranty claims,
both current and future, from customers in respect of goods and
services sold that remain within their warranty period. The
estimate of future warranty costs is updated periodically based on
the Company's actual experience of warranty claims from
customers.
The element of the provision related to potential future claims
is based on management's experience and is judgmental in nature. As
for any product warranty, there is an inherent uncertainty around
the likelihood and timing of a fault occurring that would cause
further work to be undertaken or the replacement of equipment
parts.
A standard warranty of up to two years from the date of
commissioning is provided to all customers on goods and services
sold and is included in the original cost of the product. Customers
are also able to purchase extended warranties that extend the
warranty period for up to a total of ten years.
Provision for legacy products
Where it is considered of commercial value, management has
elected to provide ongoing maintenance for certain legacy products
not otherwise covered under warranty. Management has determined
that it is necessary to provide for the costs of this ongoing
maintenance or to provide for outright decommissioning.
Provisions in respect of legacy products are expected to unwind
over the next two years when maintenance is either terminated or
the products are decommissioned.
Provision for contract losses
A provision is established for contract losses when it becomes
known that a customer contract has become onerous. A contract is
onerous when the unavoidable costs of fulfilling the Group's
obligations under a contract are greater than the revenue that will
be earned from it.
The unavoidable costs of fulfilling contract obligations will
include both direct and indirect costs.
The creation of an additional provision is recognised
immediately in profit and loss. The provision is used to offset
subsequent costs incurred as the contract moves to completion.
In determining the amount to be provided, management has
evaluated the likelihood of input costs continuing to rise against
a backdrop of inflation and instability due to current
macro-economic factors such as the, albeit receding, impact of
Covid-19, the increasing price of oil feeding through to production
and shipping costs and continuing supply chain issues.
Provisions in respect of contract losses relate to contracts
which are expected to be delivered in 2023 and will therefore
unwind during that year.
22 Trade and other receivables
2022 2021
GBP000 GBP000
Total trade and other receivables 1,737 1,683
----------------------------------- ------- -------
All trade and other receivables relate to receivables arising
from contracts with customers.
Trade receivables are amounts due from customers for sales of
vanadium flow battery systems in the ordinary course of business.
Trade receivables do not bear interest and generally have 30-day
payment terms and therefore are all classified as current.
The actual credit loss over 2022 was determined to be less than
1% of total sales (2021: 0%). An allowance for potential credit
losses of GBP23,953 (2021: GBPnil) has been recognised.
23 Cash and cash equivalents
2022 2021
GBP000 GBP000
--------------------------------- ------- -------
Total cash and cash equivalents 5,137 26,355
--------------------------------- ------- -------
Short term investments
Term deposits are presented as cash equivalents if they have a
maturity of three months or less from the date of acquisition and
are repayable with 24 hours' notice with no loss of interest. The
Company had no short-term investments at 31 December 2022 (2021:
GBPnil).
24 Trade and other payables
2022 2021
GBP000 GBP000
-------------------------------- ------- -------
Trade payables 3,706 1,484
Other payables 78 456
Accrued liabilities 701 1,013
Accrued employee compensation 143 505
Government remittances payable 306 55
-------------------------------- ------- -------
Total trade and other payables 4,934 3,513
-------------------------------- ------- -------
Trade payables are unsecured and are usually paid within 30
days.
The carrying amounts of trade and other payables are the same as
their fair values due to the short-term nature of the underlying
obligation representing the liability to pay.
25 Derivative financial instruments
2022 2021
GBP000 GBP000
---------------------------------------- ------- -------
Derivative value of warrants issued 449 -
Other 320 -
---------------------------------------- ------- -------
Total d erivative financial instruments 769 -
---------------------------------------- ------- -------
Information about the Group's exposure to interest rate, foreign
currency and liquidity risks is included in Note 29.
Investment funding arrangement
On 14 December 2022, the Company entered into an investment
agreement with Riverfort Global Opportunities PCC Limited and YA II
PN Ltd. ("Noteholders"). The instrument was entered by way of an
initial drawdown in the amount of US$2.5 million and related
subscription of 2,870,038 shares priced at nominal value of EUR0.01
and to be used to facilitate the conversion of amounts advanced
under the investment agreement. Following the redemption of the
investment agreement any proceeds from the sale of the conversion
shares are to be split 97% to the company and 3% to the
Noteholders.
Pursuant to the facility, the Noteholders were granted warrants
exercisable at 67.35p to subscribe for 1,350,020 ordinary shares
for a period of up to four years. These warrants remain outstanding
and have been repriced to 32p being the price per share achieved in
the capital raise.
Prepayment was at the Company's option and carried a redemption
premium of 10% paid to the Noteholders at the date of
prepayment.
The convertible notes balance was fully repaid by 31 March 2023
using funds from the 2023 capital raise. The warrants issued to the
Noteholders were repriced to the price achieved in the 2023 capital
raise of 32p per share.
See Note 32 for detailed events occurring after the report
period.
26 Lease liabilities
The Group's obligations under lease contracts are presented as
follows:
2022 2021
At 31 December GBP000 GBP000
----------------------------------- ------- -------
Current - due within 12 months 740 350
Non-current - due after 12 months 969 420
----------------------------------- ------- -------
Total lease liabilities 1,709 770
----------------------------------- ------- -------
Payments of lease principal and interest in the period to 31
December were:
2022 2021
At 31 December GBP000 GBP000
----------------------------- ------- -------
Payments of lease principal 591 275
Payments of interest 58 45
----------------------------- ------- -------
Total payments under leases 649 320
----------------------------- ------- -------
The contractual undiscounted cash flows for lease obligations at
each period end were:
2022 2021
At 31 December GBP000 GBP000
------------------------- ------- -------
Less than one year 804 379
One to five years 1,009 448
More than five years - -
------------------------- ------- -------
Total lease liabilities 1,813 827
------------------------- ------- -------
Lease liabilities represent the present value of the minimum
lease payments the Group is obliged to make to lessors under
contracts for the lease of assets that are presented as
right-of-use assets.
27 Issued share capital and reserves
2022 2021
----------------- -----------------
No: 000 GBP000 No: 000 GBP000
--------------------------- -------- ------- -------- -------
Authorised at 31 December 121,500 - 120,000 -
Issued and fully paid
At 1 January 116,048 50,690 85,900 37,870
Issued in the year 2,959 26 30,148 12,820
--------------------------- -------- ------- -------- -------
At 31 December 119,007 50,716 116,048 50,690
--------------------------- -------- ------- -------- -------
During the year, 2,959,085 new shares were issued with a nominal
value of GBP25,974. The total gross proceeds were GBP80,927 with
the balance credited to the share premium account. Total costs of
issuance were GBP82,442 and these costs were charged directly to
the share premium account.
On 22 November 2022, the Company subdivided each Ordinary Share
of EUR0.50 nominal value into one Ordinary Share of EUR0.01 each
and one deferred A share of EUR0.49 each. The Deferred A Shares do
not have any voting rights and are not admitted to trading on AIM
or any other market. They carry only a priority right to
participate in any return of capital or in any dividend to the
extent of EUR1 in aggregate over the class. The Deferred A Shares
are, for all practical purposes, valueless and it is the Board's
intention, at an appropriate time, to have the Deferred A Shares
cancelled in accordance with Companies Law.
In addition, the shares of the Company were admitted to trading
on the AQSE Growth Market in the UK and the OTCQX Best Market in
the U.S. during the year.
The holders of ordinary shares are entitled to receive dividends
as may be declared from time to time and are entitled to one vote
per share at meetings of the Company.
Share-based payment reserve
The share-based payment reserve comprises the equity component
of the Company's share-based payments charges.
Currency translation reserve
The translation reserve comprises foreign currency differences
arising from the translation of the financial statements of foreign
operations.
Other reserve
Other reserve comprises the portion of the consideration paid
for redT energy Holdings (Ireland) Limited's minority interests
over the fair value of the shares purchased.
28 Financial assets and liabilities
All financial assets are held at amortised cost. There were no
financial assets measured at fair value through other comprehensive
income nor through profit and loss in either period presented.
The maximum exposure to credit risk at the end of the reporting
period is the carrying amount of each class of financial asset
presented above. The carrying value of the financial assets
approximate their fair values due to the short-term maturities of
these instruments.
The Group does not currently use derivative instruments for
managing financial risk. All financial liabilities are held at
amortised cost.
Recognised fair value measurements
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: The fair value of financial instruments traded in
active markets (such as publicly traded derivatives, and trading
securities) is based on quoted market prices at the end of the
reporting period.
The battery systems manufactured by the Company use vanadium
metal as a key component in the electrolyte. Vanadium is an
actively traded commodity for which quoted market prices are
available.
The Company does not currently hold inventories of vanadium.
Vanadium purchased from third parties is solely for the use in
electrolyte and open purchase contracts are not accounted for as
derivatives.
Level 2: The fair value of financial instruments that are not
traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques that maximise
the use of observable market data and rely as little as possible on
entity-specific estimates. If all significant inputs required to
fair value instrument are observable, the instrument is included in
Level 2.
At 31 December 2022, the Company held warrants issued to
Riverfort Global Opportunities and YA II PN Ltd as part of the
December 2022 financing event. The warrants are valued using Level
2 inputs as they do not represent a fixed-for-fixed equity
instrument and are valued using observable market factors such as
the share price at the date of the grant, the term of the award,
the share price volatility and the risk-free interest rate (2021:
none).
Level 3: If one or more of the significant inputs is not based
on observable market data the instrument is included in Level
3.
The Group did not hold any financial assets or liabilities that
were required to be valued using Level 3 inputs at 31 December 2022
(2021: none).
No other financial instruments were outstanding at the period
end that required to be valued using a methodology that uses Level
1, 2 or 3 inputs.
29 Financial risk management
This note explains the Group's exposure to financial risks and
how these risks could affect the Group's future financial
performance. Current year profit and loss information has been
included where relevant to add further context.
Risk Exposure arising Measurement Management
from
Market risk Future commercial Cash flow forecasting Cash is held
- foreign exchange transactions Sensitivity analysis in GBP until
non-GBP requirements
Recognised financial for up to the
assets and liabilities next six-months
not denominated are established,
in GBP at which point
the GBP is sold
in favour of
the required
currency, which
is then remitted
to the relevant
Group entity
------------------------- ---------------------- ------------------------
Market risk Price of vanadium Quoted market Strategic supply
- commodity price to be used in prices for vanadium arrangements
risk the battery electrolyte with multiple
pre-qualified
suppliers
------------------------- ---------------------- ------------------------
Credit risk Cash and cash Ageing analysis Monitoring accumulation
equivalents, Credit ratings of bank balances.
trade receivables Credit risk assessment
and contract for customers
assets and pre-agreed
deposits and
interim payments
within customer
contracts
------------------------- ---------------------- ------------------------
Liquidity risk Borrowings and Rolling cash Access to capital
other liabilities flow forecasts markets for equity
or debt funding
------------------------- ---------------------- ------------------------
Market risk - foreign exchange risk
The Group is primarily exposed to foreign exchange risk related
to bank deposits, receivables or payables balances and other
monetary working capital items that are denominated in a currency
other than the Company's functional currency which has been
determined to be GBP.
The Group does not speculate on foreign exchange and aims to
mitigate its overall foreign exchange risk by holding currency in
line with forecast regional operating expenses, providing an
element of natural hedge against adverse foreign exchange
movement.
The Group's exposure to foreign exchange risk at the end of the
reporting period, expressed in GBP, was as follows:
Canadian US
Sterling Euro dollar dollar
31 December 2022 GBP000 GBP000 GBP000 GBP000
---------------------------------- ----------- ------- --------- --------
Cash and cash equivalents 1,545 354 106 2,810
Trade receivables 350 - 1,475 (88)
Other current assets 491 690 7,172 421
Trade and other payables (1,197) (557) (2,867) (313)
Derivative financial instruments (769) - - -
Lease liabilities (279) - (1,347) (83)
---------------------------------- ----------- ------- --------- --------
Net exposure 141 487 4,539 2,747
---------------------------------- ----------- ------- --------- --------
South Australian
African dollar Total
rand
31 December 2022 (continued) GBP000 GBP000 GBP000
---------------------------------- --------- ----------- --------
Cash and cash equivalents 5 317 5,137
Trade receivables - - 1,737
Other current assets 7 - 8,781
Trade and other payables - - (4,934)
Derivative financial instruments - - (769)
Lease liabilities - - (1,709)
---------------------------------- --------- ----------- --------
Net exposure 12 317 8,243
---------------------------------- --------- ----------- --------
Canadian US
Sterling Euro dollar dollar
31 December 2021 GBP000 GBP000 GBP000 GBP000
--------------------------- ----------- ------- --------- --------
Cash and cash equivalents 24,141 96 284 1,174
Trade receivables 1,288 23 223 150
Other current assets 2,985 278 2,113 345
Trade and other payables (1,438) (382) (1,229) (460)
Lease liabilities (356) - (299) (102)
--------------------------- ----------- ------- --------- --------
Net exposure 26,620 15 1,092 1,107
--------------------------- ----------- ------- --------- --------
South Australian
African dollar Total
rand
31 December 2021 (continued) GBP000 GBP000 GBP000
------------------------------ --------- ----------- --------
Cash and cash equivalents 28 632 26,355
Trade receivables - - 1,684
Other current assets 10 - 5,731
Trade and other payables (4) - (3,513)
Lease liabilities (13) - (770)
------------------------------ --------- ----------- --------
Net exposure 21 632 29,487
------------------------------ --------- ----------- --------
Sensitivity - exchange rates
The sensitivity of profit or loss to changes in quoted exchange
rates for currencies to which the Group is exposed is as follows,
based on each relevant exchange rate strengthening (or weakening)
by 5%.
There is no impact on other components of equity as the Group is
not party to any derivative financial instruments, such as hedging
instruments, where currency gains and losses would be recognised in
other comprehensive loss.
Prior year sensitivity of profit or loss was restated to
consistently use monetary working capital as basis for
analysis.
Restated
2022 2021
At 31 December +/- 5% GBP000 GBP000
----------------------- ------- ---------
Euro 24 1
Canadian dollar 227 55
US dollar 137 55
South African rand 1 1
Australian dollar 16 32
405 144
----------------------- ------- ---------
Market risk - commodity price risk
The Group's batteries use an electrolyte incorporating vanadium.
Vanadium is an elemental metal and is used primarily to strengthen
steel, particularly for the construction industry.
Whilst it is not a mature market traded commodity, such that one
can buy forward or derivative contracts, market prices for vanadium
pentoxide (V2O5) at 98% purity are quoted in US dollars per
pound.
Vanadium forms about two-thirds of the value of the electrolyte,
which in turn forms about a quarter of the landed cost of a
battery, and so a fluctuation in the price of vanadium will impact
the profitability of battery sales. An increase or decrease in the
market price of vanadium of 5% could cause the value of the
electrolyte component of a battery to increase or decrease by
approximately 3%.
Credit risk - cash held on deposit with banks
Credit risk arises from cash and cash equivalents and deposits
with banks and other financial institutions.
Credit risk related to holdings with financial institutions is
managed by only maintaining bank accounts with reputable financial
institutions. The Group aims only to place funds on deposit with
institutions with a minimum credit rating of B2 Moody's.
The Group's cash at bank and short-term deposits are held with
institutions with credit ratings as follows:
2022 2021
At 31 December GBP000 GBP000
---------------- ------- -------
Aa1 780 -
Aa2 1,315 1,087
A1 3,037 25,240
Ba2 5 28
5,137 26,355
---------------- ------- -------
Credit risk - trade and other receivables
Past due but not impaired
The Group's credit risk from receivables encompasses the default
risk of its customers and other counterparties.
Its exposure to credit risk is influenced mainly by the
individual characteristics of each customer or counterparty. The
creditworthiness of potential and existing customers is assessed
prior to entering each new transaction. A credit analysis is
performed, and appropriate payment terms implemented that may
include increased level of upfront deposits for the purchase of
battery units.
Notwithstanding the above, the Group's standard terms of trade
provide that up to 90% of the sales price of a battery unit is paid
prior to delivery.
Receivables are considered for impairment on a case-by-case
basis when they are past due or where there is objective evidence
that the customer or counter party may be a default risk. The Group
takes into consideration the customer or counter party payment
history, its credit worthiness together with the prevailing
economic environment in which it operates to assess the potential
impairment of receivables.
On an ongoing basis, receivable balances attributable to each
customer or other counterparty are monitored and appropriate action
is taken when the relevant balance becomes or is considered likely
to become overdue. The maximum exposure to loss arising from
receivables is equal to invoiced value.
The ageing of trade receivable balances was:
2022 2021
At 31 December GBP000 GBP000
----------------------------------- ------- -------
Current 1,582 249
Past due - less than 30 days 112 -
Past due - more than 30 days 43 1,434
Total trade and other receivables 1,737 1,683
----------------------------------- ------- -------
Past due amounts at 31 December 2022, related to four customers
(2021: eight customers) and GBP23,953 (2021: GBPnil) was considered
to be impaired.
Liquidity risk
Liquidity risk relates to the Group's ability to meet its
obligations as they fall due.
The Group generates cash from its operations that are
principally related to the manufacture and installation of vanadium
flow batteries. The market for reliable and flexible grid-scale
storage solutions for energy generated from renewable sources is
growing and the technology continues to develop.
The development of new and enhanced storage technologies can be
capital intensive and the Group has historically funded development
and early-stage commercial activity primarily from equity
investment but also using cash from operations and loan
funding.
The Group forecasts cash generation using a comprehensive
company financial model and monitors the timing and amount of its
payment obligations.
The following table shows the Group's financial liabilities by
relevant maturity grouping based on contractual maturities. The
amounts included in the analysis are contractual, undiscounted
cashflows.
Less One Two Over Total Carrying
than to two to five five contracted amount
one years years years cash
year flows
31 December 2022 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- -------- --------- ------- ------------ ---------
Trade and other payables 4,582 352 - - 4,934 4,934
Derivative financial instruments 769 - - - 769 769
Lease liabilities 740 630 339 - 1,813 1,709
---------------------------------- ------- -------- --------- ------- ------------ ---------
Total financial liabilities 6,091 982 339 - 7,516 7,412
---------------------------------- ------- -------- --------- ------- ------------ ---------
Less One Two Over Total Carrying
than to two to five five contracted amount
one years years years cash
year flows
31 December 2021 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- ------- -------- --------- ------- ------------ ---------
Trade and other payables 3,513 - - - 3,513 3,513
Lease liabilities 379 331 117 - 827 770
----------------------------- ------- -------- --------- ------- ------------ ---------
Total financial liabilities 3,892 331 117 - 4,340 4,283
----------------------------- ------- -------- --------- ------- ------------ ---------
Capital management
At 31 December the Group had debt from an investment agreement
entered with Riverfort Global Opportunities PCC Ltd and YA II PN
Ltd. At 31 March 2023, the loan has been repaid in full using
proceeds from the March 2023 equity raise. Following the loan
redemption, the Company has no external debt outstanding.
The Board regularly reviews the Group's cash requirements and
future projections to monitor cash usage and assess the need for
additional funding. At 31 May 2023, the Group had GBP15 million of
cash on hand.
30 Related parties
The only related parties of the Company are the key management
of the Group and close members of their family. Key management has
been determined as the CEO and his direct reports.
During the year, the Company employed The Headhunters
Recruitment Inc. to perform recruitment services and paid a
placement fee of GBP27,369 all of which was outstanding as at 31
December 2022. The Headhunters Recruitment Inc. did at the time
employ Georgia Harper, Matt Harper's spouse.
During the year, Larry Zulch repaid GBP12,000 in respect of
shares purchased on his behalf in relation to fundraising in
2021.
Key management compensation is disclosed in note 8, Staff costs
and headcount.
31 Group entities
Ownership %
Direct subsidiary Country Registered Principal
undertakings of incorporation office activity 2022 2021
------------------- ------------------- ------------------- ----------- ------ ------
Office 501 New
Broad Street
House, 35 New
Broad Street,
London, England,
Camco Holdings EC2M 1NH Holding
UK Limited England United Kingdom company 100% 100%
Office 501 New
Broad Street
House, 35 New
Broad Street,
London, England,
Camco Services EC2M 1NH Support
(UK) Limited England United Kingdom services 100% 100%
24 Dr Joseph
Rivière
Street
1st Floor, Felix
House
Camco (Mauritius) Port Lewis, Holding
Limited Mauritius Mauritius company 100% 100%
------------------- ------------------- ------------------- ----------- ------ ------
1201 Orange
St. #600
Invinity Energy Wilmington,
Systems (U.S.) United States DE Energy
Corporation of America USA 19899 storage 100% -100%
------------------- ------------------- ------------------- ----------- ------ ------
Office 501 New
Broad Street
House, 35 New
Broad Street,
London, England,
Invinity Energy EC2M 1NH Energy
Nexus Limited England United Kingdom storage 100% 100%
Indirect subsidiary
undertakings
------------------------- -------------- ---------------------- ------------------ ----- -----
Office 501 New
Broad Street
House, 35 New
Broad Street,
London, England,
redT Energy Holdings EC2M 1NH Research
(UK) Limited England United Kingdom and consultancy 100% 100%
Office 501 New
Broad Street
House, 35 New
Broad Street,
London, England,
Re-Fuel Technology EC2M 1NH Energy
Limited England United Kingdom storage 99% 99%
Office 501 New
Broad Street
House, 35 New
Broad Street,
London, England,
Invinity Energy EC2M 1NH Energy
(UK) Limited England United Kingdom storage 99% 99%
22 Northumberland
Road
redT Energy Holdings Ballsbridge, Energy
(Ireland) Limited Ireland Dublin 4 storage 99% 99%
------------------------- -------------- ---------------------- ------------------ ----- -----
22 Northumberland
Invinity Energy Road
Systems (Ireland) Ballsbridge, Energy
Limited Ireland Dublin 4 storage 99% 99%
------------------------- -------------- ---------------------- ------------------ ----- -----
RSK Advisory,
Level 2, Suite
7
66 Victoria
Crescent
Narre Warren,
redT energy (Australia) Victoria 3805 Energy
(Pty) Ltd Australia Australia storage 99% 99%
------------------------- -------------- ---------------------- ------------------ ----- -----
1st Floor, Kiepersol
House
Stonemill Office
Park
Invinity Energy 300 Acacia Road
(South Africa) Darrenwood Business
(Pty) Ltd South Africa Randburg 2194 Services 100% 100%
------------------------- -------------- ---------------------- ------------------ ----- -----
2900-550 Burrard
Invinity Energy Street
Systems (Canada) Vancouver, BC Energy
Corporation Canada Canada V6C 0A3 storage 100% 100%
------------------------- -------------- ---------------------- ------------------ ----- -----
1809 Building
4 no.11888 East
Taihu Avenue,
Suzhou Avalon The People's Songling Town,
Battery Company Republic Wujiang District, Business
Limited of China Suzhou City Services 100% 100%
------------------------- -------------- ---------------------- ------------------ ----- -----
Associates
---------------------- --------- ------------------- -------------- ---- ----
Office 501 New
Broad Street
House, 35 New
Broad Street,
London, England,
Vanadium Electrolyte EC2M 1NH Vanadium
Rental Limited England United Kingdom procurement 50% 50%
---------------------- --------- ------------------- -------------- ---- ----
32 Events occurring after the report period
On 23 February 2023, the Company announced it had raised gross
proceeds of GBP19 million through a placing of 59,375,000 new
ordinary shares of EUR0.01 each and GBP2.5 million through
subscription by Everbrite Technology Co., Ltd. of 7,812,500 new
ordinary shares, both at an issue price of 32 pence per new
ordinary share.
The Company also offered to all qualifying shareholders the
opportunity to participate in an open offer to raise up to GBP4
million at issue price. The open offer was made on the basis of: 2
open offer shares for every 19 ordinary shares held.
On 14 March 2023, the Company announced it had received valid
acceptances from qualifying shareholders in respect of 4,825,092
open offer shares, therefore raising an additional GBP1.5 million
of proceeds.
As part of the placing and open offer, the Directors subscribed
for new ordinary shares which raised gross proceeds of
approximately GBP60,000 in aggregate.
The Company has therefore raised, in aggregate, gross proceeds
of approximately GBP23 million through the placing, subscription
and open offer.
In addition, on 3 March 2023, the Company announced it had
entered into a repayment agreement to repay the outstanding drawn
amount of the convertible loan facility with Riverfort Global
Opportunities PCC Ltd and YA II PN Ltd ("Noteholders"). The Company
has settled the outstanding drawn amount together with the
redemption premium of 10% (US$208,107.53).
Pursuant to the facility, on 14 December 2022 the Noteholders
were granted warrants exercisable at 67.35p to subscribe for
1,350,020 ordinary shares for a period of up to four years. In
accordance with the terms of the warrant instrument, the Company
was required to amend the exercise price of these warrants to 32p,
being the issue price of the recently announced placing and open
offer. In consideration of the Noteholders undertakings, the
Company has agreed to grant a further 449,980 warrants at an
exercise price of 32p which will expire on 14 December 2026.
As part of the facility, 2,700,038 ordinary shares were issued
to the Noteholders to effect initial conversions relating to the
initial advance. Any shares held by Noteholders after the facility
has been repaid will be sold with relevant net proceeds remitted to
the Company. At 3 March 2023, 1,779,640 of the Initial Shares are
remaining and held by the Noteholders.
The ongoing events in Ukraine have led to international
macro-economic instability. The impact on sterling has fed through
to increased input costs and these are expected to continue while
the situation remains unresolved.
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END
FR UBURROBUNUUR
(END) Dow Jones Newswires
June 28, 2023 02:00 ET (06:00 GMT)
Ord Eur0.5 (AQSE:IES)
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