TIDMCWR
RNS Number : 9104N
Ceres Power Holdings plc
28 September 2023
28 September 2023
Ceres Power Holdings plc
Interim results for the six months ended 30 June 2023
Horsham, UK: Ceres Power Holdings plc ("Ceres", the "Company")
(CWR.L), a global leader in fuel cell, electrolysis and electrochemical
technology, announces its interim results for the six months
ended 30 June 2023.
Financial update
* Revenue increased by 17% to GBP11.3 million (H1 2022:
GBP9.7 million)
* Gross profit of GBP6.9 million (H1 2022: GBP4.7
million), maintaining sector-leading gross margin at
61% (H1 2022: restated to 49%)
* "Investment in the future"(1) increased by 19% to
GBP30.6 million (H1 2022: GBP25.7 million), in line
with strategy to expand into electrolysis for green
hydrogen and deliver the next generation of fuel cell
technology
* Reduction in equity free cash outflow by 24% to
GBP21.8m from GBP28.6m
* Cash and investments of GBP161.2 million as at 30
June 2023 (31 December 2022: GBP182.3 million)
Strategic highlights
* Bosch's 'Power Units' have received European funding
of EUR160 million as an Important Project of Common
European Interest (IPCEI) to support the development
and mass production of its solid oxide fuel cell
product, utilising Ceres' stack technology
* Building construction for Doosan's 50MW factory in
South Korea is now complete. All machinery and
processes have undergone factory acceptance testing,
installation is almost complete, and commissioning is
on schedule for completion in H2 2024
* Our second-generation design of fuel cell stacks has
passed Critical Design Review (a key milestone),
which offers improvements in performance and cost for
SOFC partners
* The first-of-a-kind megawatt-scale electrolyser is
undergoing commissioning and initial testing at AVL
in Germany, in preparation for deployment at the end
of this year to Shell's R&D centre in Bangalore,
India, in line with the timetable set out in the 28
June 2022 announcement
* A two-year collaboration with Linde Engineering and
Bosch has been signed to validate the performance,
cost, and operational functionality of Ceres'
electrolyser technology, which starts next year
* Ceres has been announced as the Winner of the Royal
Academy of Engineering's 2023 MacRobert Award, widely
regarded as the UK's most prestigious prize for
engineering innovation
* Further augmented the Board with Karen Bomba and
Caroline Brown joining as Non-Executive Directors
* As of 18 September 2023, Ceres has joined the FTSE
250 index, following its graduation from AIM to a
Premium Listing on the Main Market of the London
Stock Exchange
Current trading and outlook
* As previously announced, given the continued delay of
signing the China JVs with Bosch and Weichai, as well
as taking into account time needed for regulatory
clearances, we do not expect revenue associated with
these to be recognised this year
* Full-year growth against the prior year is subject to
the timing of securing new licensees
Phil Caldwell, Chief Executive Officer of Ceres said: "We are
at an important stage of the Company's growth as we support
our partners to scale manufacture for our existing fuel cell
business, and make rapid progress in the development of our
game-changing electrolyser technology, which will enable new
partnerships to address the huge market opportunity for green
hydrogen. Our recent inclusion in the FTSE250 index and the
recognition for engineering innovation of the MacRobert Award
have been made possible by the progress of the Company, and
the hard work the team has put into maturing the Ceres technology
over many years."
1. "Investment in the future" comprises R&D costs, capitalised
development and capital expenditure.
Financial Summary: Six months
Six months ended 12 months
ended 30 June ended 31
30 June 2022 December
2023 Unaudited 2022
Unaudited Restated(1) Audited
GBP'000 GBP'000 GBP'000
----------- ------------- ----------
Total revenue, comprising: 11,310 9,687 22,130
Licence fees 3,401 3,404 7,711
Engineering services revenue 4,679 4,206 9,039
Provision of technology hardware 3,230 2,077 5,380
Gross profit 6,868 4,735 13,051
Gross margin(1) % 61% 49% 59%
Adjusted EBITDA loss(2) (23,769) (20,808) (43,230)
Operating loss (28,482) (25,516) (51,522)
Net cash used in operating activities (15,457) (20,599) (51,522)
Net cash and investments 161,230 221,625 182,320
----------- ------------- ----------
(1) The results for the six months ended 30 June 2022 has
been restated (gross margin was previously 55%) to reflect
the classification of the RDEC tax credit within other operating
income rather than offsetting cost of sales and to reduce
the credit by GBP313,000 following the adjustment of prior
year R&D tax credit claims. See Note 1 for details.
(2) Adjusted EBITDA loss is an Alternative Performance Measure,
as defined and reconciled to operating loss in the non-GAAP
section at the end of this report.
Analyst presentation
Ceres Power Holdings plc will be hosting a live webcast for analysts and investors on 28 September
2023 at 09.30 BST. To register your interest in participating, please go to: https://www.investormeetcompany.com/ceres-power-holdings-plc/register-investor
.
For further information visit www.ceres.tech or contact: Ceres Power Holdings plc Tel: +44 (0)7932 023 283
Elizabeth Skerritt
FTI Consulting (Financial Tel: +44 (0)203 727 1000
PR) Email: ceres_power@fticonsulting.com
Dwight Burden / Ben Brewerton
About Ceres Power
Ceres is a world-leading developer of electrochemical technologies: fuel cells for power generation,
electrolysis for the creation of green hydrogen and energy storage. Its asset-light, licensing
model has seen it establish partnerships with some of the world's largest engineering and
technology companies, such Bosch, Doosan, Shell, Linde and Weichai, to develop systems and
products that address climate change for power generation, transportation, industry, data
centres and everyday living. Ceres is listed on the London Stock Exchange ("LSE") (LSE: CWR)
and is classified by the LSE Green Economy Mark, which recognises listed companies that derive
more than 50% of their activity from the green economy.
Chief Executive's Statement
Over the summer, we have yet again witnessed record high
temperatures, flooding across northern China and devastating
fires in Canada, southern Europe and Hawaii. It seems nowhere
is immune from the effects of climate change, and the need
for rapid deployment of technologies that significantly
reduce greenhouse gas emissions, whilst continuing to meet
our energy and economic demands, is as urgent as ever.
Wholesale change of our energy systems is not straightforward,
and it is contingent on bold decisions from governments
and corporates at a time when we are also seeing rising
inflation and higher costs of capital. Nonetheless, many
parts of the world including Europe, Asia and North America
are pursuing wide-ranging decarbonisation plans.
Ceres' licensing business model provides unique and powerful
advantages: enabling the adoption of green energy technology
at speed and building on the existing capability of global
partners to establish localised supply chains, skills,
manufacturing and systems and products suited to their
end markets and applications.
Strategic update
Our aim is to enable multi-gigawatts of capacity producing
hydrogen and fuel cell technologies to decarbonise the
hard-to-abate sectors of the energy system and in the process
build a sustainable business that delivers long-term benefits
for our people and shareholders, our communities, and our
planet.
The strategy is based on three pillars: to enable our licence
partners to succeed; to build commercial scale; and to
maintain our technology leadership. Our partners are investing
significant time and resources into manufacturing Ceres'
solid oxide technology, and we have expanded our engineering
and specialist teams to ensure these early adopters are
supported and successful in deploying new technology into
new market opportunities.
We create commercial scale by generating more demand through
increasing commercial partnerships and licences, growing
applications and addressing new markets. This year we have
increased the commercial team's presence in several global
locations including in the US, Europe and Asia.
As a licensing company it is imperative that we stay at
the leading edge of our technology - and that is why we
continue to innovate, from the next generation of our solid
oxide technology, continued innovation of our IP for both
fuel cell and electrolyser systems, to digitalisation programmes
and what further technologies we may need to hit a net
zero future.
For the first six months of 2023 the group reported revenues
of GBP11.3 million (H1 2022: GBP9.7 million). The 17% increase
when compared with the prior period is primarily driven
by both hardware and engineering services revenue relating
to ongoing progress being made with Bosch and Doosan as
we industrialise our technology in readiness for partner
product launch. The improvement of gross margin to 61%
(H1 2022: 49%) is partly due to reduced scrap and warranty
provisions compared to prior year, and also higher cost
absorption from increased hardware revenue. We expect a
long-term trend of high gross margins reflecting Ceres'
unique technology and licencing business model.
We have continued our investment in future growth, focused
on scaling our technology for use in multiple applications
and geographies. We have continued the planned development
of our fuel cell business (SOFC) with global partners,
with the development of a second-generation cell and stack
design resulting in a stack focused on cost and manufacturability
to enable scale production. We have also made progress
with the expansion of our electrolysis activities (SOEC),
and signed new partnerships with Linde Engineering and
Bosch in addition to the earlier Shell agreement. Furthermore,
we have strengthened the business development team to address
the substantial market opportunities globally that exist
for our clean energy technology.
In July, Ceres was very proud to be named as the winner
of the Royal Academy of Engineering MacRobert Award , the
UK's longest-running and most coveted prize for engineering
innovation. The Company's pioneering and highly differentiated
solid oxide stack technology, including fuel cells for
power generation and electrolysers for green hydrogen,
was hailed by the MacRobert Award judges as a huge breakthrough
in the clean energy revolution, enabling low-cost materials,
fuel-flexibility, higher efficiency and improved performance.
Ceres Power - fuel cells
The fuel cells business recorded revenues of GBP10.6 million
(H1 2022: GBP9.7 million) and a gross profit of GBP6.3 million
(H1 2022: GBP4.7 million), with the year-on-year revenue increase
reflecting the progress made with our commercial partners
as they work toward scaling manufacture in Germany and South
Korea.
In July, the stationary power SOFC system being developed
by our partner Bosch received European funding of EUR160
million following its designation as an IPCEI aimed at developing
an integrated hydrogen economy in Europe. The EU funding is
to enable the mass production of Bosch 'Power Units', utilising
Ceres' stack technology, with the aim of strengthening innovative
capacity, global competitiveness and creating new jobs in
Germany.
Construction of Doosan's 50MW factory in South Korea is complete.
All machinery and processes have undergone factory acceptance
testing, installation on site is underway, and factory commissioning
is on track for H2 2024. Doosan is also pursuing the market
for maritime power using SOFC technology, the operation of
which meets the International Maritime Organization's regulations
to achieve the 2050 GHG reduction goals. It has an ongoing
programme with Shell and Korea Shipbuilding & Offshore Engineering
for auxiliary propulsion and is seeking to launch its first
marine fuel cell (using Ceres' stack technology) in 2025.
Ceres Hydrogen - electrolysis
Earlier this year, we announced significant initial results
from the testing of our first 120kW electrolyser modules,
providing confidence that the technology can deliver green
hydrogen at <40kWh/kg, around 25% more efficiently than incumbent
lower temperature technologies. The team is now working on
the next SOEC product concept for a 2-3MW modularised system,
which would facilitate larger scale installations. You can
hear the team talking about our SOEC technology, programmes
and partners from the Technology Teach-in held in June via
the investor section of the Ceres website https://www.ceres.tech/investors/presentations/
.
Meanwhile, the first-of-a-kind megawatt-scale electrolyser
is undergoing commissioning and testing at AVL in Germany,
in preparation for deployment later in the year to Shell's
R&D centre in Bangalore, India , where the hydrogen will be
used in industrial processes on site. The testing programme
is intended to run for at least three years, forming the first
stage of a collaborative relationship. Shell and Ceres are
building this partnership to utilise SOEC technology to deliver
high-efficiency, low-cost green hydrogen, which has a significant
role to play in harder-to-decarbonise industrial sectors.
It also allows for future generations of technology to be
tested.
In March 2023, we signed contracts with Linde Engineering
and Bosch to start a collaboration to validate the performance,
cost, and operational functionality of our SOEC technology.
The companies are preparing a two-year demonstration of another
megawatt class SOEC system, starting in 2024 and to be located
at a Bosch site in Stuttgart, Germany. Its aim is to showcase
that the technology provides a highly efficient pathway to
low-cost green hydrogen.
Our electrolysis business has recognised revenues of GBP0.7m
(H1 2022: GBPnil), which relates to early-stage evaluation
contracts with prospective partners.
Focused investment for the future
The first six months of 2023 saw continued investment into
people and capabilities to deliver our technology roadmap
and drive future growth. Our highly skilled employee base
grew as planned, with 586 people employed as at 30 June 2023
compared to 570 as at 31 December 2022. Recruitment will level
off as we reach critical mass and fully resource the core
business activities for SOFC and SOEC. Additional growth will
be to support new customer programmes. Research and development
expenditure increased by 27% to GBP26.7 million as planned
progress is made with both the expansion of our SOFC business
and development of our SOEC business.
Capitalised development costs in the period, which only relate
to ongoing SOFC development, increased to GBP3.4 million compared
to GBP2.9 million for H1 2022. We have capitalised GBP16.2
million to 30 June 2023 (31 December 2022: GBP13.3 million).
Amortisation of this to the income statement was in line with
the prior period being a charge of GBP0.5 million (H1 2022:
GBP0.5 million).
As planned, we have continued the expansion of our test capability
to support demand from our partners, and to cater for additional
market opportunities including SOEC, and SOFC applications
such as marine and alternative fuels. We have also continued
expanding and upgrading our Redhill manufacturing capacity
for prototype production of the next generation of our SOFC
cell and stack technology. As a result, our committed investment
in property, plant and equipment was GBP4.7 million in H1
2023 (H1 2022: GBP5.5 million) and depreciation charged increased
to GBP3.4 million compared to GBP2.6 million in H1 2022.
Overall, this focused "investment in the future" (R&D costs,
capitalised development and capital expenditure) increased
by 19% to GBP30.6 million (H1 2022: GBP25.7 million). The
GBP30.6 million comprises GBP22.5 million (H1 2022: GBP17.3
million) in R&D (excluding depreciation, amortisation and
share-based payments), GBP4.7 million (H1 2022: GBP5.5 million)
in capital expenditure and GBP3.4 million (H1 2022: GBP2.9
million) in capitalised development.
As a result of these investments, increased amortisation and
depreciation, and other operating income of GBP1.6 million
(H1 2022: GBP0.5 million) primarily relating to RDEC tax credits,
the Group reported an increased operating loss of GBP28.5
million in H1 2023, up from a loss of GBP25.5 million in H1
2022.
Strong financial position: the foundation for continued development
and growth
The Group ended the period with a strong cash position of
GBP161.2 million in cash and investments as at 30 June 2023
(31 December 2022: GBP182.3 million), with the decrease since
31 December 2022 reflecting the investment in the period and
is in line with our plans to invest for future growth and
further expansion into electrolysis.
Interest income (on an accrual basis) on cash, cash equivalents
and investments increased to GBP2.8 million (H1 2022: GBP0.7
million) due to improved interest rates on money market funds
and short-term investments.
Equity free cash outflow (defined and reconciled to net cash
from operating activities at the end of this report) reduced
by 24% at GBP21.8 million (H1 2022: GBP28.6 million), being
driven by net cash used in operating activities of GBP15.5
million (H1 2022: GBP20.6 million) reflecting the Group's
operating loss in the period, capital expenditure (net of
disposal proceeds) of GBP4.6 million (H2 2022: GBP5.5 million),
capitalised development of GBP3.4 million (H1 2022: GBP2.9
million), net interest receipts of GBP1.8 million (H1 2022:
GBP0.2 million) and exchange rate movements. Movements in
working capital included a GBP2.0 million decrease in inventories
(H1 2022: GBP4.0 million increase), reflecting stacks shipped
in the period and used in internal R&D projects, and a GBP3.6
million decrease in trade and other receivables (H1 2022:
increase of GBP2.8 million) following the successful receipt
of outstanding trade receivable balances in the first half
of 2023.
Order Backlog as at 30 June 2023 was GBP61.1 million (31 December
2022: GBP67.8 million).
Main Market and Board
In June this year, we graduated to the Main Market of the
London Stock Exchange and, as of 18 September, joined the
FTSE 250 index. This follows almost 20 years on the Alternative
Investment Market ("AIM"). Being on the Main Market with a
Premium Listing enables Ceres to access new pools of investment
and build greater international appeal.
We already operate to high levels of governance and this year
we welcomed Karen Bomba and Caroline Brown as Non-Executive
Directors. They each possess extensive business and sector
knowledge as well as experience in growing teams to support
international expansion. Their skills and perspectives are
highly relevant to Ceres as we mature the business and continue
to scale our partnership model globally.
Professor Dame Julia King, Baroness Brown of Cambridge, also
assumed the position of Senior Independent Director succeeding
Steve Callaghan who stepped down from the Board after 11 years'
service. Julia has served on the Ceres Board since June 2021.
She brings huge experience across industry, academia and government
and a focus on climate change and the low carbon economy,
which has been hugely valuable in the progression of the Company's
sustainability strategy as Chair of the ESG Committee.
The company would like to thank Steve for his outstanding
contribution over many years seeing the company through a
difficult turnaround in 2012 to positioning it to the FTSE
250 and to whom we owe a great deal.
Outlook
The business is continuing to make strong progress in award-winning
green hydrogen technology following the significant investment
we have made in this area over the past two years and our
first demonstration at a megawatt-scale will be a major proof
point for the business. We expect SOEC will grow to become
the largest part of the business in the second half of this
decade and we are building our technical and commercial offering
to address this market.
As flagged in our recent trading update, the timing of the
establishment of the China JVs with Bosch and Weichai, and
the associated revenue, remains uncertain. We continue to
make good progress in other areas of the SOFC business particularly
in our partnerships with Bosch and Doosan.
The revenue for the full year will be impacted by the China
JVs as already flagged in our recent trading update, and full-year
numbers will depend on the timing of securing new licence
partners.
Despite what has been a challenging market backdrop over the
past 12 months, we are approaching an important time for the
business as we scale manufacturing and new developments in
our first megawatt-scale deployment of SOEC, and our core
cell, stack and systems come to fruition. I have confidence
that the investments we have made in the business, and the
level of interest we are now seeing from new and existing
partners, position us well to exploit the significant future
global market for clean power and green hydrogen.
Responsibility Statement
The directors confirm that to the best of their knowledge:
* the condensed set of financial statements has been
prepared in accordance with UK adopted IAS 34
'Interim Financial Reporting'; and
* the interim management report includes a fair review
of the information required by DTR 4.2.7 (indication
of important events and their impact, and a
description of principal risks and uncertainties for
the remaining six months of the financial year) and
DTR 4.2.8 (disclosure of related parties'
transactions and changes therein).
The full list of current Directors can be found on the Ceres
website at https://www.ceres.tech
Philip Caldwell
Chief Executive Officer
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
For the six months ended 30 June 2023
6 months 6 months
ended ended Year ended
30 June 30 June 2022 31 December
2023 Unaudited 2022
Unaudited Restated(1) Audited
Note GBP'000 GBP'000 GBP'000
Revenue 2 11,310 9,687 22,130
Cost of sales (4,442) (4,952) (9,079)
Gross profit 6,868 4,735 13,051
Other operating income (2) 1,583 464 1,332
Operating costs 4 (36,933) (30,715) (65,905)
Operating loss (28,482) (25,516) (51,522)
Finance income 5 2,834 1,153 2,830
Finance expense 5 (724) (143) (304)
Loss before taxation (26,372) (24,506) (48,996)
Taxation (charge)/credit 6 (68) 1,908 3,872
----------- -------------- -------------
Loss for the financial
period and total comprehensive
loss (26,440) (22,598) (45,124)
Loss per GBP0.10 ordinary
share expressed in pence
per share:
Basic and diluted loss per
share 7 (13.74)p (11.83)p (23.58)p
The accompanying notes are an integral part of these consolidated
financial statements.
(1) The results for the 6 months ended 30 June 2022 have
been re-presented to reflect the re-classification of the
Group's RDEC tax credit of GBP610,000 to align to the change
in presentation applied for the Group's 2022 full year results.
This was previously disclosed within cost of sales but is
now presented within other operating income. The Group's RDEC
tax credit for the 6 months results to 30 June 2022 has also
been restated to decrease the credit by GBP313,000 following
the adjustment of prior year R&D tax credit claims. See Note
1 for details.
(2) Other operating income relates to grant income and the
Group's RDEC tax credit.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
30 June
30 June 2022
2023 Unaudited 31 Dec 2022
Unaudited Restated(1) Audited
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 8 25,599 21,092 25,964
Right-of-use assets 9 2,411 2,167 2,647
Intangible assets 10 16,218 10,882 13,278
Investment in associate 2,398 460 2,460
Other receivables 12 741 741 741
Total non-current assets 47,367 35,342 45,090
Current assets
Inventories 11 3,719 7,149 5,714
Contract assets 2 5,316 5,314 3,309
Other current assets 13 1,180 1,024 957
Derivative financial instruments 17 508 703 54
Current tax receivable 7,553 3,386 7,396
Trade and other receivables(1) 12 13,022 8,915 17,153
Short-term investments 14 117,088 114,177 119,011
Cash and cash equivalents 14 44,142 107,448 63,309
Total current assets 192,528 248,116 216,903
Liabilities
Current liabilities
Trade and other payables 15 (4,718) (4,857) (4,933)
Contract liabilities 2 (9,043) (5,004) (6,387)
Other current liabilities 16 (8,479) (7,660) (7,286)
Derivative financial instruments 17 (5)
Lease liabilities 18 (664) (655) (610)
Provisions 19 (449) (1,495) (929)
Total current liabilities (23,353) (19,676) (20,145)
Net current assets 169,175 228,440 196,758
Non-current liabilities
Lease liabilities 18 (2,243) (1,971) (2,514)
Provisions 19 (1,926) (1,910) (1,933)
Total non-current liabilities (4,169) (3,881) (4,447)
Net assets 212,373 259,901 237,401
Equity attributable to the owners
of the parent
Share capital 20 19,272 19,157 19,209
Share premium 406,076 405,272 405,463
Capital redemption reserve 3,449 3,449 3,449
Merger reserve 7,463 7,463 7,463
Accumulated losses(1) (223,887) (175,440) (198,183)
Total equity 212,373 259,901 237,401
(1) Trade and other receivables and accumulated losses as at
30 June 2022 have been restated to reflect an adjustment to
prior year R&D tax claims. See Note 1 for details
The accompanying notes are an integral part of these consolidated
financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2023
6 months
6 months ended 12 months
ended 30 June ended
30 June 2022 31 December
2023 Unaudited 2022
Note Unaudited Restated(1) Audited
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss before taxation (26,372) (24,506) (48,996)
Adjustments for:
Finance income (2,834) (1,153) (2,830)
Finance expense 724 143 304
Depreciation of property, plant
and equipment 3,371 2,578 5,486
Depreciation of right-of-use assets 303 271 620
Amortisation of intangible assets 475 542 1,032
Net foreign exchange losses/(gains) 282 153 (690)
Net change in fair value of financial
instruments (454) 375 1,020
Profit on disposal of property,
plant and equipment (21)
Share-based payments charge 736 1,214 997
Operating cash flows before movements
in working capital (23,790) (20,383) (43,057)
Decrease/(increase) in trade and
other receivables (1) 3,634 (2,804) (12,693)
Decrease/(increase) in inventories 1,995 (4,004) (2,569)
Increase in trade and other payables 2,581 3,900 2,655
(Increase)/decrease in contract
assets (2,007) 2,017 4,022
Increase in contract liabilities 2,656 714 1,137
Decrease in provisions (526) (39) (637)
Net cash used in operations (15,457) (20,599) (51,142)
Taxation received (380)
Net cash used in operating activities (15,457) (20,599) (51,522)
Investing activities
Investment in associate (1,000)
Purchase of property, plant and
equipment (4,725) (5,529) (12,347)
Proceeds received on disposal of
property, plant and equipment 137
Capitalised development expenditure (3,415) (2,946) (5,832)
Repayment of long-term investments 5,000 5,000
Acquisition of short-term investments (37,470) (70,998) (99,618)
Repayment of short-term investments 39,444 49,950 74,950
Finance income received 2,227 730 1,443
Net cash used in investing activities (3,802) (23,793) (37,404)
Financing activities
Proceeds from issuance of ordinary
shares 676 630 873
Repayment of lease liabilities (284) (413) (744)
Interest paid (128) (103) (212)
Net cash generated from/(used
by) financing activities 264 114 (83)
Net decrease in cash and cash
equivalents (18,995) (44,278) (89,009)
Exchange (losses)/gains on cash
and cash equivalents (172) 271 863
Cash and cash equivalents at beginning
of period 63,309 151,455 151,455
Cash and cash equivalents at end
of period 14 44,142 107,448 63,309
----------- ------------- -------------
(1) Loss before taxation and other receivables as at 30 June 2022 have
been restated to reflect the adjustment of prior year R&D tax claims.
See Note 1 for details.
The accompanying notes are an integral part of these consolidated financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2023
Capital
Share Share redemption Merger Accumulated
capital premium reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2022 (audited) 19,073 404,726 3,449 7,463 (154,056) 280,655
Comprehensive income
Loss for the financial
year (45,124) (45,124)
Total comprehensive
loss (45,124) (45,124)
Transactions with owners
Issue of shares, net
of costs 136 737 873
Share-based payments
charge 997 997
Total transactions with
owners 136 737 997 1,870
At 31 December 2022
(audited) 19,209 405,463 3,449 7,463 (198,183) 237,401
Comprehensive income
Loss for the financial
period (26,440) (26,440)
Total comprehensive
loss (26,440) (26,440)
Transactions with owners
Issue of shares 63 613 676
Share-based payments
charge 736 736
Total transactions with
owners 63 613 736 1,412
At 30 June 2023 (unaudited) 19,272 406,076 3,449 7,463 (223,887) 212,373
Comparatives for the six months ended 30 June 2022 are provided
separately below:
Capital
Share Share redemption Merger Accumulated
capital premium reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2022 (audited)
- restated(1) 19,073 404,726 3,449 7,463 (154,056) 280,655
Comprehensive income
Loss for the financial
period(1) (22,598) (22,598)
Total comprehensive loss (22,598) (22,598)
Transactions with owners
Issue of shares 84 546 630
Share-based payments
charge 1,214 1,214
Total transactions with
owners 84 546 1,214 1,844
At 30 June 2022 (unaudited) 19,157 405,272 3,449 7,463 (175,440) 259,901
(1) 2021 results have been restated to reflect an adjustment
to prior year R&D tax claims and as a result the accumulated
losses have increased by GBP968,000 from GBP153,088,000 to
GBP154,056,000. See Note 1 for details.
1. Basis of preparation
The unaudited condensed consolidated interim financial statements
have been prepared in accordance with UK-adopted International
Accounting Standard 34 'Interim financial reporting' (IAS
34). They do not include all of the information required for
full annual financial statements and should be read in conjunction
with the annual financial statements for the year ended 31
December 2022 which were prepared in accordance with UK adopted
international accounting standards. The interim financial
statements have been prepared on a historical cost basis except
derivative financial instruments, which are stated at their
fair value.
The interim financial information has been prepared in accordance
with the recognition and measurement requirements of UK adopted
international accounting standards and applicable law and
regulations. The same accounting policies, presentation and
methods of computation are followed in the interim financial
statements as were applied in the Group's latest annual audited
financial statements. The consolidated interim financial statements
are presented on a condensed basis as permitted by IAS 34
and therefore do not include all disclosures that would otherwise
be required in a full set of financial statements.
The financial information contained in the interim financial
statements is unaudited and does not constitute statutory
financial statements as defined by in Section 434 of the Companies
Act 2006. The financial statements for the year ended 31 December
2022, on which the auditors gave an unqualified audit opinion,
and did not draw attention to any matters by way of emphasis,
and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006, have been filed with the Registrar
of Companies.
The consolidated interim financial information for the six
months ended 30 June 2023 has been reviewed by the Company's
Auditor, BDO LLP in accordance with International Standard
of Review Engagements 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity.
To reflect the presentation adopted by the Group in the preparation
of the 2022 consolidated financial statements, the Research
and Development Expenditure Credit ("RDEC") tax credit within
the consolidated statement of profit and loss has been re-classified.
The RDEC tax credit was previously presented within cost of
sales and is now presented within other operating income.
Prior year comparatives have been re-presented accordingly.
The impact of this change was to increase cost of sales and
other operating income for the six months ended 30 June 2022
by GBP0.6m.
Further, the June 2022 results have been restated to reflect
an adjustment to R&D tax credit claims for certain costs which
were inadvertently claimed in 2019 and 2020 under the Small
and Medium-sized Enterprise (SME) R&D tax credit schemes,
whereas they should have been claimed at a lower claim rate
under the RDEC scheme. As a result, accumulated losses as
at 1 January 2022 have been restated accordingly resulting
in an increase from GBP153,088,000 to GBP154,056,000. At 30
June 2022 the taxation credit and other operating income has
also been restated to increase the tax credit from GBP896,000
to GBP1,908,000 and reduce other operating income by GBP313,000.
Further details are set out in Note 6. Other receivables as
at 30 June 2022 have been restated from GBP3,503,000 to GBP4,264,000,
and current tax receivable as at 30 June 2022 has been restated
from GBP4,416,000 to GBP3,386,000 to reflect the adjustments
of prior year R&D tax claims.
Going Concern
The Group has reported a loss after tax for the six months
period ended 30 June 2023 of GBP26.4m (six months ended 30
June 2022: GBP22.6m) and net cash used in operating activities
of GBP15.5m (six months ended 30 June 2022: GBP20.6m). At
30 June 2023, the Group held cash and cash equivalents and
investments of GBP161.2m (31 December 2022: GBP182.3m). The
directors have prepared annual budgets and cash flow projections
that extend 15 months from the date of approval of this report.
These projections include management's expectations of the
cash flows associated with the Group's continued investment
in R&D projects and further expansion of our manufacturing
and testing capacity, together with contracted and anticipated
customer contracts and the planned investment in the China
collaboration with Bosch and Weichai which is not expected
to occur until 2024. The projections were stress tested by
applying different scenarios including the loss of significant
future revenue and continued adverse macroeconomic factors
as well as a scenario where the Chinese JV does not progress
at all. In each case the projections demonstrated that the
Group would have sufficient cash reserves to meet its liabilities
as they fall due and to continue as a going concern. For the
above reasons, the directors continue to adopt the going concern
basis in preparing the financial statements.
Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, management
is required to make judgements, estimates and assumptions
about the carrying amounts of assets and liabilities that
are not readily apparent from other sources.
In preparing the interim consolidated financial statements,
the areas where judgement has been exercised remain consistent
with those applied to the annual report and accounts for the
year ended 31 December 2022.
New standards and amendments applicable for the reporting
period
The Group has adopted all standards, interpretations amended
or newly issued by the IASB that were effective in the period.
Their adoption has not had any material effect on the consolidated
financial statements.
2. Revenue
The Group's revenue is disaggregated by geographical market,
major product/service lines, and timing of revenue recognition:
Geographical market
6 months 12 months
ended 6 months ended
30 June ended 31 December
2023 30 June 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- -------------- -------------
Europe 6,801 4,051 8,460
Asia 4,318 5,404 13,253
North America 191 211 394
Rest of World 21 23
----------- -------------- -------------
11,310 9,687 22,130
----------- -------------- -------------
For the six months ended 30 June 2023, the Group has identified
two major customers (defined as customers that individually
contributed more than 10% of the Group's total revenue) that
accounted for approximately 56% and 38% of the Group's total
revenue recognised in the period (6 months ended 30 June 2022
two major customers that accounted for approximately 44% and
39% of the Group's total revenue recognised in the period
and 12 months ended 31 December 2022: two major customers
that accounted for approximately 51% and 36% of the Group's
total revenue recognised for that year).
Major product/service lines
6 months 12 months
ended 6 months ended
30 June ended 31 December
2023 30 June 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- -------------- -------------
Engineering services 4,679 4,206 9,039
Provision of technology hardware 3,230 2,077 5,380
Licenses 3,401 3,404 7,711
11,310 9,687 22,130
----------- -------------- -------------
Timing of transfer of goods and services
6 months 12 months
ended 6 months ended
30 June ended 31 December
2023 30 June 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- -------------- -------------
Products and services transferred
at a point in time 4,155 1,887 4,760
Products and services transferred
over time 7,155 7,800 17,370
----------- -------------- -------------
11,310 9,687 22,130
----------- -------------- -------------
The contract-related assets and liabilities are as follows:
30 June 31 December
2023 30 June 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- ------------- ------------
Trade receivables 12 7,309 4,651 11,825
------------
Contract assets - accrued
income 5,316 5,314 3,309
------------
Contract liabilities
- deferred income (9,043) (5,004) (6,387)
----------- ------------- ------------
3. Segmental analysis
In accordance with IFRS 8 the method applied to identify reporting
segments is based on internal management reporting information
that is regularly reviewed by the chief operating decision
maker, which the Group considers to be the Executive team.
The Group's internal segmental reporting has changed and now
only separately presents results down to gross profit level
from its Power (SOFC) and Hydrogen (SOEC) divisions where
previously presented to adjusted EBITDA.
Power - Hydrogen
SOFC - SOEC Consolidated
Six months ended 30 June GBP'000
2023 (unaudited) GBP'000 GBP'000
Revenue (external) 10,569 741 11,310
Cost of sales (4,271) (171) (4,442)
-------- --------- -------------
Gross profit 6,298 570 6,868
-------- --------- -------------
Hydrogen
Power - SOFC - SOEC Consolidated
Six months ended 30 June GBP'000
2022 (unaudited) GBP'000 GBP'000
Restated(1)
------------- --------- -------------
Revenue (external) 9,687 9,687
Cost of sales(1) (4,952) (4,952)
------------- --------- -------------
Gross profit 4,735 4,735
------------- --------- -------------
Hydrogen
Power - SOFC - SOEC Consolidated
12 months ended 31 December GBP'000
2022 (audited) GBP'000 GBP'000
Revenue (external) 21,950 180 22,130
Cost of sales (9,070) (9) (9,079)
------------- --------- -------------
Gross profit 12,880 171 13,051
------------- --------- -------------
(1) The results for the 6 months to 30 June 2022 have been
restated as a result of prior year R&D tax credit claims and
further re-presented to reflect the re-classification of the
Group's RDEC tax credit from within cost of sales now within
other operating income.
4. Operating costs
Operating costs can be analysed
as follows:
6 months 12 months
ended 6 months ended
30 June ended 31 December
2023 30 June 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- -------------- -------------
Research and development
costs 26,656 20,997 48,348
Administrative expenses 8,821 7,695 15,165
Commercial 1,456 2,023 2,392
36,933 30,715 65,905
----------- -------------- -------------
5. Finance income and expenses
6 months 12 months
ended 6 months ended
30 June ended 31 December
2023 30 June 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- -------------- -------------
Interest income on cash,
cash equivalents and investments 2,834 730 2,657
Foreign exchange gain on
cash, cash equivalents and
short-term deposits 423 173
----------- -------------- -------------
Finance income 2,834 1,153 2,830
Interest on lease liability (128) (103) (212)
Unwinding of discount on
provisions (39) (37) (87)
Other finance costs (3) (5)
Foreign exchange loss on
cash, cash equivalents and
short-term deposits (557)
----------- -------------- -------------
Interest expense (724) (143) (304)
----------- -------------- -------------
6. Taxation
No corporation tax liability has arisen during the period
(6 months ended 30 June 2022 and 12 months ended 31 December
2022: GBPnil) due to the losses incurred. A tax charge has
arisen as a result of foreign withholding taxes suffered and
an overprovisions of R&D tax credit for 2022 under the SME
R&D regime. The SME R&D tax credit regime is no longer accessible
to the Group. The RDEC regime continues to be accessible and
has been recognised within other operating income.
6 months 6 months 12 months
ended ended ended
30 June 30 June 2022 31 December
2023 Unaudited 2022
Unaudited Restated(1) Audited
GBP'000 GBP'000 GBP'000
----------- -------------- -------------
UK corporation tax (2,148) (4,470)
Foreign tax suffered 2 240 828
Adjustment in respect of
prior periods 66 (230)
----------- --------------
68 (1,908) (3,872)
----------- -------------- -------------
(1) The June 2022 taxation credit has been restated to increase
the tax credit from GBP896,000 to GBP1,908,000 relating to
a prior year correction to the R&D tax treatment of costs.
This correction resulted from certain costs that were inadvertently
claimed in 2019 and 2020 under the Small and Medium-sized
Enterprise (SME) R&D tax credit schemes, whereas they should
have been claimed at a lower claim rate under the RDEC scheme.
The restatement has increased the June 2022 SME R&D tax credit
by GBP126,000 from GBP2,022,000 to GBP2,148,000 and has reversed
the movement in R&D tax credit provision in respect of prior
periods from GBP886,000 to GBPnil since this has now been
recognised in the restated opening balance sheet position
at 1 January 2022.
7. Loss per share
6 months 12 months
ended 6 months ended
30 June ended 31 December
2023 30 June 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Loss for the financial period attributable
to shareholders (26,440) (22,598) (45,124)
Weighted average number of shares
in issue 192,442,672 190,972,969 191,385,618
Loss per GBP0.10 ordinary share
(basic and diluted) (13.74)p (11.83)p (23.58)p
8. Property, plant and equipment
Assets
Leasehold Plant Computer Fixtures under Motor
improvements and machinery equipment and fittings construction vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- --------------- ----------- -------------- ---------------- ---------- ---------
Cost
At 1 January
2022 7,412 25,502 2,563 348 1,975 12 37,812
Additions 1,111 5,147 203 6,848 13,309
Transfers 71 893 (964)
Disposal (1,621) (6,669) (831) (72) (9,193)
------------- --------------- ----------- -------------- ---------------- ---------- ---------
At 31 December
2022
(audited) 6,973 24,873 1,935 276 7,859 12 41,928
------------- --------------- ----------- -------------- ---------------- ---------- ---------
Additions 489 1,614 134 90 795 3,122
Disposal (225) (225)
Transfers 419 833 (1,252)
At 30 June 2023
(unaudited) 7,881 27,095 2,069 366 7,402 12 44,825
------------- --------------- ----------- -------------- ---------------- ---------- ---------
Accumulated
depreciation
At 1 January
2022 3,358 14,285 1,790 232 6 19,671
Charge for the
year 936 4,030 444 73 3 5,486
Depreciation on
disposals (1,621) (6,669) (831) (72) (9,193)
------------- --------------- ----------- -------------- ---------------- ---------- ---------
At 31 December
2022
(audited) 2,673 11,646 1,403 233 9 15,964
------------- --------------- ----------- -------------- ---------------- ---------- ---------
Charge for the
period 663 2,487 209 11 1 3,371
Depreciation on
disposals (109) (109)
At 30 June 2023
(unaudited) 3,336 14,024 1,612 244 10 19,226
------------- --------------- ----------- -------------- ---------------- ---------- ---------
Net book value
------------- --------------- ----------- -------------- ---------------- ---------- ---------
At 30 June 2023
(unaudited) 4,545 13,071 457 122 7,402 2 25,599
At 31 December
2022
(audited) 4,300 13,227 532 43 7,859 3 25,964
------------- --------------- ----------- -------------- ---------------- ---------- ---------
'Assets under construction' represents the cost of purchasing,
constructing and installing property, plant and equipment
ahead of their productive use. The category is temporary,
pending completion of the assets and their transfer to the
appropriate and permanent category of property, plant and
equipment. As such, no depreciation is charged on assets under
construction.
Assets under construction consist entirely of plant and machinery
that will be used in the manufacturing, development and testing
of fuel cells.
Comparatives for the six months ended 30 June 2022 are provided
separately below:
Assets
Leasehold Plant Computer Fixtures under Motor
improvements and machinery equipment and fittings construction vehicles Total
Unaudited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- --------------- ----------- -------------- ---------------- ---------- ---------
Cost
At 1 January
2022 7,412 25,502 2,563 348 1,975 12 37,812
Additions 238 2,437 169 2,685 5,529
Transfers 22 264 (286)
At 30 June 2022 7,672 28,203 2,732 348 4,374 12 43,341
------------- --------------- ----------- -------------- ---------------- ---------- ---------
Accumulated
depreciation
At 1 January
2022 3,358 14,285 1,790 232 6 19,671
Charge for the
period 442 1,872 226 37 1 2,578
At 30 June 2022 3,800 16,157 2,016 269 7 22,249
------------- --------------- ----------- -------------- ---------------- ---------- ---------
Net book value
------------- --------------- ----------- -------------- ---------------- ---------- ---------
At 30 June 2022 3,872 12,046 716 79 4,374 5 21,092
------------- --------------- ----------- -------------- ---------------- ---------- ---------
9. Right of use assets
Land and Computer
Buildings equipment Total
GBP'000 GBP'000 GBP'000
----------- ----------- --------
Cost
At 1 January 2022 3,694 43 3,737
Adjustment to lease term 829 829
At 31 December 2022 (audited) 4,523 43 4,566
----------- ----------- --------
Additions 67 67
----------- ----------- --------
At 30 June 2023 (unaudited) 4,590 43 4,633
----------- ----------- --------
Accumulated depreciation
At 1 January 2022 1,289 10 1,299
Charge for the year 606 14 620
At 31 December 2022 (audited) 1,895 24 1,919
----------- ----------- --------
Charge for the period 296 7 303
----------- ----------- --------
At 30 June 2023 (unaudited) 2,191 31 2,222
----------- ----------- --------
Net book value
----------- ----------- --------
At 30 June 2023 (unaudited) 2,399 12 2,411
At 31 December 2022 (audited) 2,628 19 2,647
----------- ----------- --------
The lease liabilities are detailed in Note 18.
Comparatives for the six months ended 30 June 2022 are provided
separately below:
Land and Computer
Unaudited Buildings equipment Total
GBP'000 GBP'000 GBP'000
----------- ----------- --------
Cost
At 1 January 2022 3,694 43 3,737
At 30 June 2022 3,694 43 3,737
----------- ----------- --------
Accumulated depreciation
At 1 January 2022 1,289 10 1,299
Charge for the period 264 7 271
At 30 June 2022 1,553 17 1,570
----------- ----------- --------
Net book value
----------- ----------- --------
At 30 June 2022 2,141 26 2,167
----------- ----------- --------
10. Intangible assets
Internal
developments Customer
in relation and internal Perpetual
to manufacturing development software
site programmes licences Patent costs Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------------- ----------- ------------ ---------
Cost
At 1 January 2022 411 8,407 252 633 9,703
Additions 5,340 273 219 5,832
----------------- ------------- ----------- ------------ ---------
At 31 December
2022 (audited) 411 13,747 525 852 15,535
Additions 3,236 8 171 3,415
----------------- ------------- ----------- ------------ ---------
At 30 June 2023
(unaudited) 411 16,983 533 1,023 18,950
----------------- ------------- ----------- ------------ ---------
Accumulated amortisation
At 1 January 2022 164 1,038 23 1,225
Charge for the year 82 748 125 77 1,032
----------------- ------------- ----------- ------------ ---------
At 31 December
2022 (audited) 246 1,786 148 77 2,257
Charge for the period 41 359 70 5 475
----------------- ------------- ----------- ------------ ---------
At 30 June 2023
(unaudited) 287 2,145 218 82 2,732
----------------- ------------- ----------- ------------ ---------
Net book value
----------------- ------------- ----------- ------------ ---------
At 30 June 2023
(unaudited) 124 14,838 315 941 16,218
At 31 December 2022
(audited) 165 11,961 377 775 13,278
----------------- ------------- ----------- ------------ ---------
The customer and internal development intangible primarily
relates to the design, development and configuration of the
Company's core fuel cell and system technology. Amortisation
of capitalised development commences once the development
is complete and is available for use.
Comparatives for the six months ended 30 June 2022 are provided separately below:
Internal
developments
in relation Customer
to and internal Perpetual
manufacturing development software licences Patent costs
site programmes GBP'000 GBP'000 Total
Unaudited GBP'000 GBP'000 GBP'000
---------------------------- ------------- ------------------- -------------- ---------
Cost
At 1 January 2022 411 8,407 252 633 9,703
Additions 2,709 151 86 2,946
---------------------------- ------------- ------------------- -------------- ---------
At 30 June 2022 411 11,116 403 719 12,649
---------------------------- ------------- ------------------- -------------- ---------
Accumulated amortisation
At 1 January 2022 164 1,038 23 1,225
Charge for the
period 41 377 56 68 542
---------------------------- ------------- ------------------- -------------- ---------
At 30 June 2022 205 1,415 79 68 1,767
---------------------------- ------------- ------------------- -------------- ---------
Net book value
---------------------------- ------------- ------------------- -------------- ---------
At 30 June 2022 206 9,701 324 651 10,882
---------------------------- ------------- ------------------- -------------- ---------
11. Inventories
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- ----------- ------------
Raw materials 975 1,381 1,566
Work in progress 1,423 1,186 1,477
Finished goods 1,321 4,582 2,671
----------- ----------- ------------
Total inventory 3,719 7,149 5,714
----------- ----------- ------------
Inventories have reduced which reflects the stacks shipped
to customers and the use of stacks for internal R&D projects,
particularly the SOEC demonstrator.
12. Trade and other receivables
30 June
30 June 2022 31 December
2023 Unaudited 2022
Unaudited Restated(1) Audited
Current: GBP'000 GBP'000 GBP'000
----------- ------------- ------------
Trade receivables 7,309 4,651 11,825
Other receivables 5,713 4,264 5,328
----------- ------------- ------------
13,022 8,915 17,153
----------- ------------- ------------
Non-current:
Other receivables 741 741 741
----------- ------------- ------------
(1) Other receivables as at 30 June 2022 have been restated
to reflect the adjustment of prior year R&D tax claims. See
Note 1 for details.
Of the GBP7.3m trade receivables due at 30 June 2023, cGBP6.3m
was received in the first two months after the reporting period.
Included within other current receivables is the research
and development tax credit of GBP4,822,000 (30 June 2022:
GBP1,551,000; 31 December 2022: GBP2,084,000). All of which
has been received in H2 2023.
13. Other current assets
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- ----------- ------------
Prepayments 1,180 880 869
Accrued grant income 144 88
1,180 1,024 957
14. Net cash and cash equivalents, short-term and long-term
investments
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- ----------- ------------
Cash at bank and in hand 4,969 6,601 7,837
Money market funds 39,173 100,847 55,472
----------- ----------- ------------
Cash and cash equivalents 44,142 107,448 63,309
Short-term investments(1) 117,088 114,177 119,011
----------- ----------- ------------
Cash and cash equivalents and
investments 161,230 221,625 182,320
----------- ----------- ------------
(1) Short-term investments comprise bank deposits with a
maturity greater than 3 months but less than 12 months.
The Group typically places surplus funds into pooled money
market funds with same day access and bank deposits with durations
of up to 24 months. The Group's treasury policy restricts
investments in short-term sterling money market funds to those
which carry short-term credit ratings of at least two of AAAm
(Standard & Poor's), Aaa-mf (Moody's) and AAAmmf (Fitch) and
deposits with banks with minimum long-term rating of A-/A3/A
and short-term rating of A-2/P-2/F-1 for banks which the UK
Government holds less than 10% ordinary equity.
15. Trade and other payables
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Current: GBP'000 GBP'000 GBP'000
----------- ----------- ------------
Trade payables 4,349 4,537 4,795
Other payables 369 320 138
----------- ----------- ------------
4,718 4,857 4,933
----------- ----------- ------------
16. Other current liabilities
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- ----------- ------------
Accruals 7,829 6,767 6,515
Deferred grant income 650 893 771
----------- ----------- ------------
8,479 7,660 7,286
----------- ----------- ------------
17. Derivative financial instruments
Carrying Carrying
amount Fair value amount Fair value
30 June 30 June 31 December 31 December
Fair 2023 2023 2022 2022
value Unaudited Unaudited Audited Audited
hierarchy GBP'000 GBP'000 GBP'000 GBP'000
Financial assets measured
at fair value through
profit or loss
Level
Forward exchange contracts 2 80 80 26 26
Non-deliverable forward Level
contracts 2 428 428 28 28
Total derivative assets 508 508 54 54
Financial liabilities
measured at fair value
through profit or loss
Forward exchange contracts
Total derivative liabilities
Comparatives for the six months ended 30 June 2022 are provided separately below:
Carrying
amount Fair value
30 June 30 June
Fair 2022 2022
value Unaudited Unaudited
hierarchy GBP'000 GBP'000
Financial assets measured
at fair value through
profit or loss
Level
Forward exchange contracts 2 241 241
Non-deliverable forward Level
contracts 2 462 462
Total derivative assets 703 703
Financial liabilities
measured at fair value
through profit or loss
Forward exchange contracts (5) (5)
Total derivative liabilities (5) (5)
In 2020, the Group entered into a non-deliverable forward (NDF) to hedge its exposure to Korean
Won (KRW) with respect to a major customer contract. As at 30 June 2023, the unrealised fair
value gain was GBP428,000 (31 December 2022: GBP28,000). The Group also had a number of forward
exchange contracts in place to hedge expected transactions in other currencies including EUR
and CAD, with an unrealised total gain of GBP80,000 as at 30 June 2023 (31 December 2022:
GBP25,000). All derivative financial instruments are measured using techniques consistent
with level 2 of the fair value hierarchy.
18. Lease liabilities
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------- ----------- ------------
At the start of the period 3,124 3,039 3,039
New finance leases recognised 67
Lease payments (412) (516) (956)
Interest expense 128 103 212
Adjustment to lease term 829
----------- ----------- ------------
At the end of the period 2,907 2,626 3,124
----------- ----------- ------------
Current 664 655 610
Non-current 2,243 1,971 2,514
----------- ----------- ------------
Total at the end of the period 2,907 2,626 3,124
19. Provisions
Property Contract
Dilapidations Warranties Losses Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------- ----------- --------
At 1 January 2022 1,828 1,253 326 3,407
Movements in the Consolidated
Statement of Profit and
Loss:
Amounts used (137) (137)
Unused amounts reversed (707) (135) (842)
Unwinding of discount 87 87
Increase in provision 18 329 347
--------------- ------------- ----------- --------
At 31 December 2022 (audited) 1,933 875 54 2,862
Movements in the Consolidated
Statement of Profit and
Loss:
Unused amounts reversed (567) (567)
Unwinding of discount 39 39
Change in provision (46) 87 41
At 30 June 2023 (unaudited) 1,926 395 54 2,375
--------------- ------------- ----------- --------
Current 395 54 449
Non-current 1,926 1,926
--------------- ------------- ----------- --------
At 30 June 2023 (unaudited) 1,926 395 54 2,375
--------------- ------------- ----------- --------
Current 875 54 929
Non-current 1,933 1,933
--------------- ------------- ----------- --------
At 31 December 2022 (audited) 1,933 875 54 2,862
--------------- ------------- ----------- --------
Following further progress on contracts and no new warranty
issues identified in the period, GBP0.5m of the warranty provision
was released to the Consolidated Statement of Profit or Loss.
As at 30 June 2023 the Group has recorded a contingent liability
of approximately GBP0.4m (30 June 2022: GBPnil, 31 December
2022: GBP0.3m) to reflect the lower possibility of the Group
paying out on any potential failures for certain additional
stacks that may still be running where the contracts have
concluded.
Comparatives for the six months ended 30 June 2022 are provided separately below:
Property Contract
Unaudited Dilapidations Warranties Losses Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------- ------------- ----------- --------
At 1 January 2022 1,828 1,253 326 3,407
Movements in the Consolidated
Statement of Profit and
Loss:
Amounts used (138) (138)
Unused amounts reversed (124) (124)
Unwinding of the discount 37 37
Increase in provision 45 178 223
--------------- ------------- ----------- --------
At 30 June 2022 (unaudited) 1,910 1,431 64 3,405
Current 1,431 64 1,495
Non-current 1,910 1,910
--------------- ------------- ----------- --------
At 30 June 2022 (unaudited) 1,910 1,431 64 3,405
--------------- ------------- ----------- --------
20. Share capital
31 December 2022
30 June 2023 (unaudited) (audited)
--------------------------- ------------------------
Number Number
of GBP0.10 of GBP0.10
Ordinary Ordinary
shares GBP'000 shares GBP'000
--------------- ---------- ------------ ----------
Allotted and fully paid
At 1 January 192,086,775 19,209 190,729,638 19,073
Allotted GBP0.10 Ordinary
shares on exercise of employee
share options 630,205 63 1,357,137 136
At 30 June 2023 / 31 December
2022 192,716,980 19,272 192,086,775 19,209
--------------- ---------- ------------ ----------
During the six months ended 30 June 2023, 630,205 ordinary
GBP0.10 shares were allotted for cash consideration of GBP676,359
on the exercise of employee share options (six months ended
30 June 2022: 844,978 ordinary GBP0.10 shares were allotted
for cash consideration of GBP627,427; year ended 31 December
2022: 1,357,137 ordinary GBP0.10 shares were allotted for
cash consideration of GBP866,717).
Comparatives for the six months ended 30 June 2022 are provided
separately below:
30 June 2022 (unaudited)
---------------------------
Number
of GBP0.10
Ordinary
shares GBP'000
-------------- -----------
Allotted and fully paid
At 1 January 2022 190,729,638 19,073
Allotted GBP0.10 Ordinary shares on exercise
of employee share options 844,978 84
Allotted GBP0.10 Ordinary shares on cash
placing
-------------- -----------
At 30 June 2022 191,574,616 19,157
-------------- -----------
Reserves
The Consolidated Statement of Financial Position includes
a merger reserve and a capital redemption reserve. The merger
reserve represents a reserve arising on consolidation using
book value accounting for the acquisition of Ceres Power Limited
at 1 July 2004. The reserve represents the difference between
the book value and the nominal value of the shares issued
by the Company to acquire Ceres Power Limited. The capital
redemption reserve was created in the year ended 30 June 2014
when 86,215,662 deferred ordinary shares of GBP0.04 each were
cancelled.
21. Capital commitments
Capital expenditure that has been contracted for but has not
been provided for in the financial statements amounts to GBP7,710,000
as at 30 June 2023 (as at 30 June 2022: GBP8,131,000 and as
at 31 December 2022: GBP8,679,000), in respect of the acquisition
of property, plant and equipment.
22. Related party transactions
As at 30 June 2023, as at 30 June 2022 and as at 31 December
2022, the Group's related parties were its Directors and RFC
Power Limited.
During the six months ended 30 June 2023, one Director exercised
and retained 200,000 share options under the Company's Long
Term Incentive Plan and also exercised and retained 4,610
share options under the Company's employee share save scheme.
There were no other transactions between the Company and the
Directors during the period.
During the year ended 31 December 2022 and period ending 30
June 2022 one Director exercised and retained 7,109 share
options under the Company's employee share save scheme and
one Director exercised and sold 14,218 share options under
the Company's employee share save scheme. There were no other
transactions between the Company and the Directors during
the year ended 31 December 2022.
Transactions in H1 2023 between the Group and RFC Power Limited,
being an associated entity of the Group, comprised engineering
consultancy services provided by the Group to RFC Power Limited
for the value of GBP0.3m (6 months ended 30 June 2022: GBP0.3m
and 12 months ended 31 December 2022: GBP0.4m).
Reconciliation between operating loss and Adjusted EBITDA
Management believes that presenting Adjusted EBITDA loss allows
for a more direct comparison of the Group's performance against
its peers and provides a better understanding of the underlying
performance of the Group by excluding non-recurring, irregular
and one-off costs. The Group currently defines Adjusted EBITDA
loss as the operating loss for the period excluding depreciation
and amortisation charges, share-based payment charges, unrealised
losses on forward contracts and exchange gains/losses.
6 months
6 months ended 12 months
ended 30 June ended
30 June 2022 31 Dec
2023 Restated(1) 2022
GBP'000 GBP'000 GBP'000
--------- ------------- ----------
Operating loss (28,482) (25,516) (51,522)
Depreciation and amortisation 4,149 3,391 7,138
Share-based payment charges 736 1,214 997
Unrealised (gains)/losses on forward
contracts (454) 374 1,020
Exchange losses/(gains) 282 (271) (863)
--------- ------------- ----------
Adjusted EBITDA (23,769) (20,808) (43,230)
--------- ------------- ----------
(1) The Group's operating loss has been restated due to the
adjustment of prior year R&D tax claims which has decreased
the RDEC tax credit by GBP313,000.
Reconciliation between net cash used in operating activities
and equity free cash flow
The Group defines equity free cash flow as net cash from operating
activities plus capital expenditure and adjusted for interest
payments and receipts and exchange rate movements. The table
below reconciles net cash from operating activities to equity
free cash flow for each period.
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------- --------- ----------
Net cash from operating activities (15,457) (20,599) (51,522)
Capital expenditure (total) (8,003) (8,475) (18,179)
Interest and lease receipts (net) 1,815 214 487
Exchange rate movements (172) 271 863
--------- --------- ----------
Equity free cash flow (21,817) (28,589) (68,351)
--------- --------- ----------
INDEPENT REVIEW REPORT TO Ceres power holdings plc
Conclusion
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements in
the half-yearly financial report for the six months ended 30 June
2023 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standard 34 and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for
the six months ended 30 June 2023 which comprises Condensed Consolidated
Statement of Profit and Loss and Other Comprehensive Income, Condensed
Consolidated Statement of Financial Position, Condensed Consolidated
Cash Flow Statement and the Condensed Consolidated Statement of
Changes in Equity and the Notes to the financial statements for
the six months ended 30 June 2023.
Basis for conclusion
We conducted our review in accordance with International Standard
on Review Engagements (UK) 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity"
("ISRE (UK) 2410"). A review of interim financial information
consists of making enquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical
and other review procedures. A review is substantially less in
scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us
to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
As disclosed in note one, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared
in accordance with UK adopted International Accounting Standard
34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for conclusion
section of this report, nothing has come to our attention to suggest
that the directors have inappropriately adopted the going concern
basis of accounting or that the directors have identified material
uncertainties relating to going concern that are not appropriately
disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial
report in accordance with the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as
a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing
to the Company a conclusion on the condensed set of financial
statement in the half-yearly financial report. Our conclusion,
including our Conclusions Relating to Going Concern, are based
on procedures that are less extensive than audit procedures, as
described in the Basis for Conclusion paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of
the Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person
is entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to
do so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any
other purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
Gatwick, UK
Date
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
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END
IR BCGDCXDDDGXR
(END) Dow Jones Newswires
September 28, 2023 02:00 ET (06:00 GMT)
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