TIDMIES

RNS Number : 4434N

Invinity Energy Systems PLC

25 September 2023

25 September 2023

Invinity Energy Systems plc

("Invinity" or the "Company")

Interim Results

Invinity Energy Systems plc (AIM: IES) (AQSE: IES) (OTCQX: IESVF), a leading global manufacturer of utility-grade energy storage , is pleased to announce its unaudited consolidated results for the six months ended 30 June 2023 (the "Period") and an update on current trading.

The Company will hold a virtual meeting for analysts at 3pm (UK time) today. Analysts wishing to attend are kindly asked to email ir@invinity.com .

Invinity's management team will host a virtual results presentation and interactive Q&A for all shareholders at 3pm (UK time) on Thursday 28 September 2023. Those wishing to join the session can sign up to Investor Meet Company for free via this registration link .

HIGHLIGHTS

Financial

-- GBP14.8m total income including sales revenue and project-related grant income, a 10x increase YoY (H1 2022: GBP1.5m)

-- GBP3.3m gross loss reflecting previously disclosed and accounted for contract losses on Canadian and Australian projects (H1 2022: loss GBP2.1m)

   --    10 MWh California project delivered at positive project gross margin* 
   --    GBP12.6m loss from operating activities (H1 2022 loss: GBP12.1m) 
   --    GBP4.7m of total inventory and net related working capital (H1 2022: GBP1.2m) 
   --    GBP12.9m Period-end cash (H1 2022: GBP16.1m) 

* Project gross margin excludes absorbed indirect overheads.

Operational performance and delivery

-- 26.5 MWh delivered during the Period, a 7x increase YoY (H1 2022: 3.4 MWh); the largest number of batteries the Company has ever delivered in a 6-month period.

-- 15.6 MWh manufactured during the Period, a 2.6x increase YoY (H1 2022: 5.94 MWh); the largest number of batteries the Company has ever manufactured in a 6-month period.

Commercial (including Post Period)

-- Announced significant progress regarding the Company's next-generation product, code-named "Mistral," as expected under the programme's timelines.

-- 100 MWh of Mistral product have now either been ordered or selected to receive funding. This includes:

o 72 MWh Mistral project portfolio selected for funding by U.S. Department of Energy;

o 12 MWh 10-year Mistral demonstration project selected for funding by U.S. Department of Energy;

o 14.4 MWh order from Everdura, via variation of existing VS3 sales contract;

o 1.2 MWh pilot project, funded by the B.C. Centre for Innovation & Clean Energy.

-- Secured GBP11m of matched funding under Phase 2 of the UK LODES project for a 30 MWh system, subject to final contracting.

-- 5.38 MWh of closed VS3 sales during Period from 5 customers (H1 2022: 8.4 MWh from 1 customer).

Board update

-- Jonathan Marren confirmed as permanent Chief Financial Officer to continue alongside his existing role as Chief Development Officer.

Larry Zulch, Chief Executive Officer at Invinity said:

"When we released our final results for 2022, I wrote that 2023 would be an inflection point and it appears I was correct. We saw record income first half, up by ten times year over year. We made significant progress on Mistral, our joint product development with Gamesa Electric and Siemens Gamesa Renewable Energy. We achieved positive product gross margin on the largest vanadium flow battery in the United States. And then it got better just after the half year with our first Mistral sale to Everdura, our partners in Taiwan, followed by the U.S. Department of Energy's announcement that they plan to fund 84 MWh of Mistral projects, more than we've delivered in our history to date. Jonathan Marren's agreement to be our CFO was another positive development. All of this, combined with the increasing awareness in energy markets of the critical role Invinity's vanadium flow batteries will play in the transition to renewable energy, supports our belief that we are the leading company in non-lithium stationary storage."

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, CFO and Chief Development Officer 
 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 / Andrew Raca 
 
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 70 MWh of systems already deployed or contracted for delivery across 79 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 .

CEO Report

H1 2023 Financial Results

Total income including sales revenue and project related grant income increased 10x to GBP14.8m in H1 2023 (H1 2022: GBP1.5m).

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.

Almost all of the GBP14.8m was driven by successful deliveries relating to the Company's three biggest projects to date, being:

-- 8.4 MWh VFB to Elemental Energy for its Chappice Lake Solar Storage project in Alberta, Canada;

   --    8 MWh VFB to Yadlamalka Energy for its Spencer Energy project in South Australia; 

-- 10 MWh VFB to the Viejas Band of Kumeyaay Indians for its solar-plus-storage microgrid project in Southern California, in part funded by the California Energy Commission.

As previously disclosed in Company accounts, the Elemental Energy and Yadlamalka Energy projects were both delivered at a project gross margin loss as the Company chose to invest in the deployment of its VS3 product into these two important reference projects, the deployment of which has played an important part in the Company signing more than 66 MWh of further orders. Some of this loss was offset by the release of a provision for contract losses.

The Company is pleased to report that the more recently announced 10 MWh Viejas project, referenced in the section above, was delivered at a small positive project gross margin. (Note project gross margin excludes absorbed indirect overheads).

Administration costs increased marginally to GBP9.3m (H1 2022: GBP8.9m). The Company continues to invest in its staff so as to develop an operation capable of supporting the significant growth potential available whilst also developing Mistral. Research and Development costs are shown on a net basis after cost recoveries from Gamesa Electric under our Joint Development and Commercialisation Agreement with the decrease year-on-year partly a result of increased recoveries under this agreement.

Finance income and finance costs are both impacted by the unwinding of the associated balance sheet captions following the repayment of the Riverfort Loan facility in March 2023. As part of Finance income, interest was received of GBP0.1m on cash balances held following the fundraising in March 2023.

Total inventory and net related working capital rose to GBP4.7m at the end of the Period (H1 2022: GBP1.2m) as a result of increased activity to deliver on the 2023 sales pipeline as follows:

 
                                        H1 2023             H1 2022 
                                        GBP       GBP     GBP 
                                        000       000     000   GBP 000 
 
 Total inventory                      3,681             5,794 
 Pre-paid inventory                   3,136             5,074 
                                  ---------            ------ 
 Total inventory and pre-paid inventory         6,817            10,868 
 
 Trade and other receivables                    4,151             1,731 
 Accrued income                                 1,857               326 
 Deferred revenue                             (3,884)           (4,988) 
 Trade payables                               (3,341)           (2,262) 
 Onerous contract provision                     (856)           (4,495) 
                                             --------          -------- 
 
 Net position                                   4,744             1,180 
 

During the Period the Company raised GBP23m from an equity fundraising including securing a GBP2.5m strategic investment from Taiwanese technology group Everbrite. Following the repayment of the Riverfort Loan facility in March 2023 the Group is debt free, excluding leases.

Commercial

The Company announced today that the United States Department of Energy ("DOE") plans to fund six projects across the U.S. that together will use 84 MWh of Invinity's next generation product, code-named "Mistral".

This award marks important progress for Invinity in building a robust orderbook for its next- generation product that is expected to formally launch in 2024.

Post Period end, the Company also secured its first commercial order for Mistral from strategic partner, Everdura, for a project in central Taiwan to balance the island's electric grid. This order, a varying of the original 15 MWh order announced 1 December 2022, does not change revenue forecasts but is expected to achieve a greater gross margin than previously anticipated.

During the Period, the Company closed 5.38 MWh of sales from 5 customers (H1 2022: 8.4 MWh from 1 customer), each of which are anticipated to contribute positive project gross margin. The Company also secured GBP11m of matched funding under Phase 2 of the UK LODES project for a 30 MWh system. Contracting for this project is ongoing and further updates will be provided in due course.

Post Period, the Company also made a further 0.66 MWh of VS3 sales to 2 customers in the EU and Australia.

The Company also signed three reseller partnerships in North America, covering Defense and Tribal Nations projects (Indian Energy), the UK, covering battery rentals (Dawsongroup), and Hungary (Ideona Group and STS Group).

Post the Period end, the Company entered into a memorandum of understanding with Everdura proposing a strategic manufacturing partnership for Invinity products in Taiwan that would significantly expand the Company's total global manufacturing capacity and provide greater access to Asian energy storage markets in the future.

Finally, strong government and agency engagement occurred in the year to date, with key post Period events including:

-- hosting Scottish Energy Minister, Gillian Martin MSP at the Company's Bathgate facility (July 2023);

-- hosting Canada's Energy and Natural Resources Minister, Jonathan Wilkinson, at the Company's Vancouver facility as he launched Powering Canada Forward alongside B.C.'s Minister for Jobs, Economic Development and Innovation, Brenda Bailey (August 2023);

-- Matt Harper, CCO, addressing the UK House of Lords Science and Technology Committee on the benefits of VFBs for the Net Zero grid (September 2023).

Next-Generation Product Development Progress

The Company continues to be pleased with the progress achieved to date of the development program for its next-generation product code-named Mistral. The securing of B.C. CICE funding support for the pilot prototype, the first commercial order for the product from Everdura, and the DOE's announcement that it plans to fund 84 MWh of Mistral projects are key milestones that continue to underline the attractiveness and suitability of Invinity's durable and flexible vanadium flow batteries to meet the growing global requirement for energy storage.

Invinity continues to expect more contracts for a limited number of initial Mistral projects to be announced later in 2023. The expected full launch, including full product details, certification and unrestricted sale of the product remains on track for mid-2024.

Operational

During the Period the Company delivered a record 26.5 MWh of vanadium flow batteries (H1 2022: 3.4 MWh) including deliveries associated with the 10 MWh system for the Viejas project in California, the 8.4 MWh system for the Chappice Lake project in Canada and the 8 MWh system for the Spencer Energy project in Australia. The Company also remains on track to deliver against its customer commitments for 2023.

The deliveries were achieved from inventory held at the previous year end plus the manufacture of a record 15.62 MWh of vanadium flow batteries during the Period (H1 2022: 5.94 MWh). This achievement is a direct result of continued investment in improving the capacity of the Company's manufacturing facilities, including a significant increase in the Vancouver facility achieved at minimal cost.

The Company also made significant supply chain improvements to further enhance operational efficiencies and margins and increase manufacturing scale at lower cost as part of management's pathway to profitability, including hiring a global Head of Supply Chain.

Corporate & Strategic

Invinity continues to make important strategic developments relating to its products, partners and corporate positioning, including securing DTC Eligibility to allow real-time electronic clearing and settlement in the United States for its OTCQX-listed ordinary shares to provide increased liquidity for U.S.-based investors.

Invinity sees strategic partnerships and investment as an important pillar of its future corporate growth. As previously disclosed, the Company confirms that discussions with a number of potential strategic partners remain ongoing.

Post the Period end, following General Meetings of the Short-Term and Long-Term Warrant holders, the Company secured approval to amend the subscription prices of its Short- and Long-Term Warrants and the exercise date of the Short-Term Warrants.

Throughout the Period and beyond, the Company has continued to focus on delivering its four-part strategy that is taking Invinity forward on its pathway to profitability. These key tenets of 1) delivering projects; 2) closing new and larger deals; 3) progressing Mistral; and 4) advancing its operational excellence are enabling the Company to maintain its growth trajectory and adroitly address challenges as they appear.

Current Trading and Outlook

The Company's 2023 revenue backlog (defined as both contracted orders already recognised in 2023 and contracted orders capable of delivery over the remainder of 2023) was GBP24.9m as at 22 September 2023.

Invinity's current commercial pipeline as at 22 September 2023, is detailed below:

 
        Date           Base (MWh)   Advanced     Qualified        Qualified 
                                      (MWh)     Near Term(1)    Further Term(1) 
                                                   (MWh)             (MWh) 
     22-Sep-2022          22.8        63.5         405.8              -- 
    (HY22 Results) 
                      -----------  ---------  --------------  ----------------- 
     24-May-2023          42.8        73.4         957.1            1,397 
    (FY22 Results) 
                      -----------  ---------  --------------  ----------------- 
     22-Sep-2023          43.1       137.3*       1,415.0          3,057.8 
  (Current Trading) 
                      -----------  ---------  --------------  ----------------- 
    % change vs. 
         FY22             +1%         +87%         +48%             +119% 
                      -----------  ---------  --------------  ----------------- 
 

(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 and was not reported by the Company prior to January 2023.

* The 84 MWh of Mistral projects selected for funding by the DOE are contained within the Advanced category of the commercial pipeline.

The Company's total sales orders that have been contracted to date are set out below:

 
        Date           Closed 
                        (MWh) 
     22-Sep-2022        28.0 
    (HY22 Results) 
                      ------- 
     24-May-2023        64.3 
    (FY22 Results) 
                      ------- 
     22-Sep-2023        65.0 
  (Current Trading) 
                      ------- 
    % change vs. 
         FY22           +1% 
                      ------- 
 

Invinity expects to make material progress during the remainder of 2023 and beyond on the following key areas:

   --    Deliver order backlog to customers, converting inventory into revenue; 

-- Close new deals and progress existing commercial interest in our products as reported in our growing pipeline; and

-- Progress the development of our next-generation product towards expected commercial release alongside Gamesa Electric in mid-2024.

Unaudited financial results for the period ended 30 June 2023

Unaudited consolidated statement of profit and loss

For the six months ended 30 June 2023

 
                                            Six months      Six months      Year ended 
                                               ended           ended        31 December 
                                                                               2022 
                                            30 June 2023    30 June 2022 
                                                             (Restated) 
 Continuing operations              Note      GBP000          GBP000          GBP000 
---------------------------------  -----  --------------  --------------  ------------- 
 Revenue                             3            14,812           1,416          2,944 
 Direct costs                                   (18,143)         (3,826)        (2,927) 
 Grant income against direct 
  costs                              3                11             141            647 
---------------------------------  -----  --------------  --------------  ------------- 
 Cost of sales                       4          (18,132)         (3,685)        (2,280) 
---------------------------------  -----  --------------  --------------  ------------- 
 Gross loss                                      (3,320)         (2,269)            664 
 Operating costs 
 Administrative expenses             5           (9,259)         (8,860)       (19,042) 
 Other items of operating income 
  and expense                        7               (9)           (928)          (604) 
---------------------------------  -----  --------------  --------------  ------------- 
 Loss from operations                           (12,588)        (12,057)       (18,982) 
 Finance income                                      467              14             62 
 Finance costs                                   (1,134)            (22)           (65) 
 Gain/(loss) on foreign currency 
  transactions                                      (69)             483            448 
---------------------------------  -----  --------------  --------------  ------------- 
 Net finance (costs)/ income                       (736)             475            445 
---------------------------------  -----  --------------  --------------  ------------- 
 Loss before income tax                         (13,324)        (11,582)       (18,537) 
 Income tax expense                                    -               -              - 
---------------------------------  -----  --------------  --------------  ------------- 
 Loss from continuing operations                (13,324)        (11,582)       (18,537) 
---------------------------------  -----  --------------  --------------  ------------- 
 Loss for the period/year                       (13,324)        (11,582)       (18,537) 
 
 Loss per ordinary share in 
  pence 
 Basic                               8             (8.2)          (10.0)         (16.0) 
 Diluted                             8             (8.2)          (10.0)         (16.0) 
 

Grant income against direct costs was restated for the 30 June 2022 period to consistently reflect current period presentation. As a result, GBP140,841 was reclassified to grant income.

The above unaudited consolidated statement of profit and loss should be read in conjunction with the accompanying notes.

Unaudited consolidated statement of comprehensive income

For the six months ended 30 June 2023

 
                                                     Six months      Six months      Year ended 
                                                        ended           ended        31 December 
                                                     30 June 2023    30 June 2022       2022 
 Continuing operations                      Note       GBP000          GBP000          GBP000 
-----------------------------------------  ------  --------------  --------------  ------------- 
 Loss for the year                                       (13,324)        (11,582)       (18,537) 
 
 Other comprehensive income/(expense) 
 Exchange differences on the translation 
  of foreign operations                                      (85)             652          (137) 
-------------------------------------------------  --------------  --------------  ------------- 
 Total comprehensive loss for 
  the period/year                                        (13,409)        (10,930)       (18,674) 
-------------------------------------------------  --------------  --------------  ------------- 
 

The above unaudited consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Unaudited consolidated statement of financial position

At 30 June 2023

 
                                             Six months      Six months      Year ended 
                                                ended           ended        31 December 
                                             30 June 2023    30 June 2022       2022 
                                     Note      GBP000          GBP000             GBP000 
----------------------------------  -----  --------------  --------------  ------------- 
 Non-current assets 
 Goodwill and other intangible 
  assets                              10           24,025          24,075         24,050 
 Property, plant and equipment        11            1,111           1,045          1,208 
 Right-of-use assets                                1,370           1,806          1,845 
 Total non-current assets                          26,506          26,926         27,103 
 
 Current assets 
 Inventories                          12            3,681           5,794          9,827 
 Other current assets                 13            6,344           6,640          8,781 
 Contract assets                      14            1,857             326            500 
 Trade receivables                    15            4,151           1,731          1,737 
 Cash and cash equivalents            16           12,929          16,130          5,137 
----------------------------------  -----  --------------  --------------  ------------- 
 Total current assets                              28,962          30,621         25,982 
----------------------------------  -----  --------------  --------------  ------------- 
 Total assets                                      55,468          57,547         53,085 
----------------------------------  -----  --------------  --------------  ------------- 
 
 Current liabilities 
 Trade and other payables             17          (4,481)         (4,845)        (4,935) 
 Derivative financial instruments     18            (474)               -          (769) 
 Contract liabilities                 14          (3,884)         (4,988)        (8,375) 
 Lease liabilities                                  (601)         (1,075)          (740) 
 Provisions                           14          (2,109)         (5,757)        (2,907) 
----------------------------------  -----  --------------  --------------  ------------- 
 Total current liabilities                       (11,549)        (16,665)       (17,726) 
----------------------------------  -----  --------------  --------------  ------------- 
 Net current assets                                17,413          13,956          8,256 
----------------------------------  -----  --------------  --------------  ------------- 
 
 Non-current liabilities 
 Lease liabilities                                  (670)           (582)          (969) 
----------------------------------  -----  --------------  --------------  ------------- 
 Total non-current liabilities                      (670)           (582)          (969) 
----------------------------------  -----  --------------  --------------  ------------- 
 Total liabilities                               (12,219)        (17,247)       (18,695) 
----------------------------------  -----  --------------  --------------  ------------- 
 Net assets                                        43,249          40,300         34,390 
----------------------------------  -----  --------------  --------------  ------------- 
 
 
 Share capital                                     51,347          50,714         50,716 
 Share premium                                    162,852         140,459        141,579 
 Share based payment reserve                        6,321           5,245          5,957 
 Accumulated losses                             (175,418)       (155,139)      (162,094) 
 Currency translation reserve                     (1,892)         (1,018)        (1,807) 
 Other reserves                                        39              39             39 
----------------------------------  -----  --------------  --------------  ------------- 
 Total equity                                      43,249          40,300         34,390 
----------------------------------  -----  --------------  --------------  ------------- 
 

The above unaudited consolidated statement of financial position should be read in conjunction with the accompanying notes.

Unaudited consolidated statement of changes in equity

For the six months ended 30 June 2023

 
                                Called                Share-based                    Currency 
                                up share    Share       payment     Accum-ulated    translation     Other 
                                capital     premium     reserve        losses         reserve      reserves    Total 
                                GBP000      GBP000      GBP000         GBP000         GBP000       GBP000      GBP000 
 
 At 1 January 2023                50,716    141,579         5,957      (162,094)        (1,807)          39     34,390 
 Loss for the period                   -          -             -       (13,324)              -           -   (13,324) 
 Other comprehensive 
  gain/(loss) 
 Foreign currency 
  translation 
  differences                          -          -             -              -           (85)                   (85) 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 Total comprehensive 
  loss for the period                  -          -             -       (13,324)           (85)           -   (13,409) 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 Transactions with 
  owners in their capacity 
  as owners 
 Investment funding 
  arrangement, net of 
  transaction costs                  631     21,272            23              -              -           -     21,926 
 Exercise of share 
  options                              -          1             -              -              -           -          1 
 Share-based payments                  -          -           341              -              -           -        341 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 Total contributions 
  by owners                          631     21,273           364              -              -           -     22,268 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 At 30 June 2023                  51,347    162,852         6,321      (175,418)        (1,892)          39     43,249 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 

For the six months ended 30 June 2022

 
                                Called                Share-based                    Currency 
                                up share    Share       payment     Accum-ulated    translation     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 period 
 Other comprehensive 
  gain/(loss)                          -          -             -       (11,582)              -           -   (11,582) 
 Foreign currency 
  translation 
  differences                          -          -             -              -            652           -        652 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 Total comprehensive 
  loss for the period                  -          -             -       (11,582)            652           -   (10,930) 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 Transactions with owners 
  in their capacity as 
  owners 
 Transaction costs charged 
  directly to equity                   -       (25)             -              -              -           -       (25) 
 Exercise of share options            24         37          (48)              -              -           -         13 
 Exercise of share warrants            -          2             -              -              -           -          2 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 Total contributions 
  by owners                           24         14          (48)              -              -           -       (10) 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 At 30 June 2022                  50,714    140,459         5,245      (155,139)        (1,018)          39     40,300 
----------------------------  ----------  ---------  ------------  -------------  -------------  ----------  --------- 
 

The above unaudited consolidated statements of changes in equity should be read in conjunction with the accompanying note.

Unaudited consolidated statement of changes in equity

For the year ended 31 December 2022

 
                                 Called                Share-based                   Currency 
                                 up share    Share       payment     Accumulated    translation     Other 
                                  capita     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 
  gain/(loss) 
 Foreign currency translation 
  differences                           -          -             -             -          (137)           -      (137) 
-----------------------------  ----------  ---------  ------------  ------------  -------------  ----------  --------- 
 Total comprehensive 
  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 unaudited consolidated statements of changes in equity should be read in conjunction with the accompanying note.

Unaudited consolidated statement of cash flows

For the six months ended 30 June 2023

 
                                                Six months   Six months 
                                                   ended        ended      Year ended 
                                                  30 June      30 June     31 December 
                                                   2023         2022          2022 
                                         Note     GBP000       GBP000        GBP000 
--------------------------------------  -----  -----------  -----------  ------------- 
 Cash flows from operating activities 
 Cash used in operations                  9       (12,228)      (9,938)       (21,934) 
 Interest received                                     115           14             62 
 Interest paid                                        (13)         (22)            (1) 
 Income taxes paid                                       -            -              - 
--------------------------------------  -----  -----------  -----------  ------------- 
 Net cash outflow from operating 
  activities                                      (12,126)      (9,946)       (21,873) 
--------------------------------------  -----  -----------  -----------  ------------- 
 
 Cash flows from investing activities 
 Acquisition of intangible assets         10             -            -              - 
 Acquisition of property, plant 
  and equipment                           11         (191)        (206)          (708) 
--------------------------------------  -----  -----------  -----------  ------------- 
 Net cash outflow from investing 
  activities                                         (191)        (206)          (708) 
--------------------------------------  -----  -----------  -----------  ------------- 
 
 Cash flows from financing activities 
 Payment of lease liabilities                        (403)        (222)          (591) 
 Interest paid on lease liabilities                   (36)            -           (58) 
 Financing charges on repayment 
  of derivative financial instrument                 (992)            -              - 
 Repayment of investment funding 
  arrangement                                        (320)            -              - 
 Proceeds from the issue of share 
  capital, net of transaction costs                 21,927            -          1,161 
 Proceeds from the investment funding 
  arrangement, net of transaction 
  costs                                                  -            -            769 
 Transaction costs charged directly 
  to equity                                              -         (25)              - 
 Proceeds from the exercise of share 
  options and warrants                                   1           62              6 
--------------------------------------  -----  -----------  -----------  ------------- 
 Net cash inflow from financing 
  activities                                        20,177        (185)          1,287 
--------------------------------------  -----  -----------  -----------  ------------- 
 
 Net increase/(decrease) in cash 
  and cash equivalents                               7,860     (10,337)       (21,294) 
 Cash and cash equivalents at the 
  start of the period/year                           5,137       26,355         26,355 
 Effects of exchange rate changes 
  on cash and cash equivalents                        (68)          112             76 
--------------------------------------  -----  -----------  -----------  ------------- 
 Cash and cash equivalents at the 
  end of the period/year                            12,929       16,130          5,137 
--------------------------------------  -----  -----------  -----------  ------------- 
 

The above unaudited consolidated statement of cash flows should be read in conjunction with the accompanying note.

Notes

(forming part of the unaudited consolidated historical financial information)

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 and on the Aquis Stock Exchange (AQSE). The Company also trades in the USA on OTCQX Best Market under the 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

This unaudited condensed consolidated interim financial information for the six-months ended 30 June 2023 (the 'interim financial information') has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The financial information should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2022, that were prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

The annual report and financial statements for the year ended 31 December 2022 are available on the company's website ( www.invinity.com ).

This interim financial information has been prepared using the historical cost basis of accounting. The accounting policies applied across all the Group's subsidiaries when preparing the financial information are consistent with those adopted and disclosed in the annual financial statements for the year ended 31 December 2022. The accounting policies have been consistently applied across all Group entities for the purpose of producing this interim financial information.

The financial information included in this document does not comprise statutory accounts within the meaning of Companies (Jersey) Law 1991. The comparative figures for the financial year ended 31 December 2022 are not the company's statutory accounts for that financial year within the meaning of Companies (Jersey) Law 1991. Those accounts have been reported on by the company's auditors and delivered to the Jersey Financial Services Commission.

The report of the auditors included in the annual report and financial statements for the year ended 31 December 2022 was unqualified. However, the auditors' report did contain an emphasis of matter related to the application of the going concern basis of preparation.

The Group's business activities, together with factors likely to affect its future development, performance and position, are set out in the operations and financial review sections of this report.

The financial position of the Group, its cash flows and liquidity position are described in the financial review section.

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"), are exercised. 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.

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, and the Short-Term warrants not being exercised. 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 4,653.2 MWh in September 2023 vs 2,470.3 MWh in May 2023; 
   --    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.

Estimates and judgements

The preparation of interim financial information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and of items of income and expense. Actual results may differ from these estimates.

In preparing this interim financial information, the significant judgments made by management in applying the Group's accounting policies were the same as those that applied to the consolidated financial statements for the year ended 31 December 2022. Similarly, the key sources of estimation uncertainty related to the financial information were the same as those encountered when applying the Group's accounting policies in relation to the preparation of the consolidated financial statements for the year ended 31 December 2022.

Principal risks and uncertainties

In preparing the condensed consolidated financial information, management is required to consider the principal risks and uncertainties facing the Group. In management's opinion the principal risks and uncertainties facing the Group are unchanged since the preparation of the consolidated financial statements for the year ended 31 December 2022. Those risks and uncertainties, together with management's response to them are described in the risk review section of the annual report and financial statements for the year ended 31 December 2022.

Accounting policies

The accounting policies applied in this condensed consolidated financial information are consistent with those applied in preparing the financial statements for the year ended 31 December 2022.

3: 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 were derived from continuing operations.

Revenue from contracts with customers

 
                                           Six months   Six months    Year ended 
                                              ended        ended      31 December 
                                             30 June      30 June        2022 
                                              2023         2022 
                                             GBP000       GBP000        GBP000 
 
 Battery systems and associated control 
  systems                                      13,653        1,412          2,548 
 Integration, commissioning and other 
  related services                                705            -            254 
 Other services                                   454            4            142 
----------------------------------------  -----------  -----------  ------------- 
 Total revenue in the statement 
  of profit and loss                           14,812        1,416          2,944 
----------------------------------------  -----------  -----------  ------------- 
 

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 period was as follows:

 
                                        Six months   Six months    Year ended 
                                           ended        ended      31 December 
                                          30 June      30 June        2022 
                                           2023         2022 
                                          GBP000       GBP000        GBP000 
 
 Business support grants against 
  employee costs COVID-19                        -            -           (11) 
 Grants for research and development            11          282            647 
-------------------------------------  -----------  -----------  ------------- 
 Total government grants received               11          282            636 
-------------------------------------  -----------  -----------  ------------- 
 

4: Cost of sales

 
                                               Six months   Six months 
                                                  ended        ended      Year ended 
                                                 30 June      30 June     31 December 
                                                  2023         2022          2022 
                                                 GBP000       GBP000        GBP000 
 
 Movement in inventories of finished 
  battery systems                                  16,404        1,679          3,356 
 Production costs                                   2,286        1,617          2,640 
 Depreciation of production facilities, 
  equipment and amortisation of intangibles             8           88            172 
 Movement in provisions for warranty 
  costs                                               142          301            763 
 Movement in provisions for sales 
  contracts                                         (697)            -        (4,004) 
--------------------------------------------  -----------  -----------  ------------- 
 Total cost of sales                               18,143        3,685          2,927 
--------------------------------------------  -----------  -----------  ------------- 
 

5: Administrative expenses

 
                                    Six months     Six months    Year ended 
                                       ended          ended      31 December 
                                    30 June 2023     30 June        2022 
                                                      2022 
                                      GBP000         GBP000        GBP000 
 
 Staff costs                               6,205     4,378         10,322 
 Research and development costs              428     1,428         2,592 
 Professional fees                           409     1,496         2,983 
 Sales and marketing costs                   299      183           399 
 Facilities and office costs                 154      210           385 
 Other administrative costs                1,764     1,165         2,361 
--------------------------------  --------------  -----------  ------------- 
 Total administrative expenses             9,259     8,860         19,042 
--------------------------------  --------------  -----------  ------------- 
 

6: Staff costs

 
                            Six months      Six months      Year ended 
                               ended           ended        31 December 
                            30 June 2023    30 June 2022       2022 
                              GBP000          GBP000          GBP000 
 
 Wages and salaries                5,511           5,239          9,280 
 Employer payroll taxes              477             530            840 
 Other benefits                      186             534            919 
 Share-based payments                341           (281)            388 
------------------------  --------------  --------------  ------------- 
 Total staff costs                 6,515           6,022         11,425 
------------------------  --------------  --------------  ------------- 
 
 
                                                  Six months   Six months    Year ended 
                                                     ended        ended      31 December 
                                                    30 June      30 June        2022 
                                                     2023         2022 
 
 Staff costs charged to cost of sales                    310        1,644          1,103 
 Staff costs charged to cost of administrative 
  expenses                                             6,205        4,378         10,322 
 Total staff costs                                     6,515        6,022         11,425 
-----------------------------------------------  -----------  -----------  ------------- 
 

7: Other items of operating income and expense

 
                                                         Six months 
                                          Six months        ended      Year ended 
                                             ended         30 June     31 December 
                                          30 June 2023      2022          2022 
                                            GBP000         GBP000        GBP000 
 (Income)/expenses 
 Provision for onerous contracts, net 
  of amounts used                                    -        (364)            554 
 Transfer agreement                                  -        1,240              - 
 Loss on disposal of property, plant 
  and equipment                                      -            -             33 
 Impairment of obsolete inventory and 
  disposal of scrap inventory                        9           52             25 
 Gain on curtailment of right-of-use 
  asset                                              -            -            (8) 
--------------------------------------  --------------  -----------  ------------- 
 Total other operating expenses (net)                9          928            604 
--------------------------------------  --------------  -----------  ------------- 
 

8: Loss per share

The weighted average number of shares used to calculate basic and diluted loss per share as presented in the consolidated statement of comprehensive loss was as follows:

 
                                                            Six months 
                                            Six months         ended        Year ended 
                                               ended          30 June       31 December 
                                            30 June 2023        2022            2022 
 
 
 In issue at 1 January                       119,007,846     116,048,604     116,048,761 
 Shares issued in the period - weighted 
  average                                     42,978,571             363         102,617 
 Weighted average shares in issue 
  at the end of the period                   161,986,417     116,048,967     116,151,378 
 Effect of employee share options 
  and warrants not exercised                   3,104,440      30,609,160       1,603,588 
----------------------------------------  --------------  --------------  -------------- 
 Weighted average number of diluted 
  shares at the period end                   165,090,857     146,658,127     117,754,966 
----------------------------------------  --------------  --------------  -------------- 
 

Additional potential shares used in the calculation of diluted earnings per share primarily relate to potential shares outstanding at 30 June 2023 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.

Additional potential shares are anti-dilutive where their inclusion in the calculation of loss per share results in a lower loss per share.

9: Cash flows from operating activities

 
                                                Six months   Six months 
                                                   ended        ended      Year ended 
                                                  30 June      30 June     31 December 
                                                   2023         2022          2022 
                                                  GBP000       GBP000        GBP000 
 
 Loss after income tax                            (13,324)     (11,582)       (18,537) 
 Adjustments for: 
 Depreciation and amortisation                         727          655          1,350 
 Loss on disposal of property, plant 
  and equipment                                          -            -             33 
 Gain on curtailment of right-of-use 
  asset                                                  -            -            (8) 
 Impairment of inventory                                 -           51             24 
 Share-based payments charge                           341         (48)            681 
 Equity settled interest and transaction 
  costs on investment funding agreement                  -            -              6 
 Net finance costs/income                              732            9              - 
 Net foreign exchange differences                      126          562          (168) 
---------------------------------------------  -----------  -----------  ------------- 
                                                  (11,398)     (10,353)       (16,619) 
---------------------------------------------  -----------  -----------  ------------- 
 Changes in operating assets and liabilities 
 (Increase)/decrease in inventory                    5,945          260        (3,875) 
 (Increase)/decrease in contract assets            (1,359)            -          (174) 
 (Increase) in trade receivables and 
  other receivables                                (2,559)         (12)           (88) 
 (Increase) in other assets and prepaid 
  inventory                                          2,513        (130)        (2,354) 
 Increase in trade payables                          (342)        1,164          1,263 
 Increase/(decrease) in warranty provision            (47)           46            183 
 Increase/(decrease) in onerous contract 
  provision                                          (751)        (622)        (3,252) 
 Increase/(decrease) in contract liabilities       (4,230)        (291)          2,982 
---------------------------------------------  -----------  -----------  ------------- 
                                                     (830)          415        (5,315) 
---------------------------------------------  -----------  -----------  ------------- 
 Cash used in operations                          (12,228)      (9,938)       (21,934) 
---------------------------------------------  -----------  -----------  ------------- 
 

10: Goodwill and intangible assets

 
                                                                   Software 
                                                 Patents and      and domain 
                                    Goodwill    certifications       names      Total 
                                     GBP000        GBP000           GBP000      GBP000 
---------------------------------  ---------  ----------------  -------------  ------- 
 Cost 
 At 1 January 2023                    23,944               203             50   24,197 
 Additions                                 -                 -              -        - 
 Disposals                                 -                 -              -        - 
 Effects of movements in foreign 
  exchange                                 -                 -            (2)      (2) 
---------------------------------  ---------  ----------------  -------------  ------- 
 At 30 June 2023                      23,944               203             48   24,195 
---------------------------------  ---------  ----------------  -------------  ------- 
 
 Accumulated amortisation 
 At 1 January 2023                         -             (112)           (35)    (147) 
 Amortisation charge                       -              (20)            (4)     (24) 
 Disposals                                 -                 -              -        - 
 Effects of movements in foreign 
  exchange                                 -                 -              1        1 
---------------------------------  ---------  ----------------  -------------  ------- 
 At 30 June 2023                           -             (132)           (38)    (170) 
---------------------------------  ---------  ----------------  -------------  ------- 
 
 Net book value 
 At 1 January 2023                    23,944                91             15   24,050 
---------------------------------  ---------  ----------------  -------------  ------- 
 At 30 June 2023                      23,944                71             10   24,025 
---------------------------------  ---------  ----------------  -------------  ------- 
 
                                                                    Software 
                                                 Patents and       and domain 
                                    Goodwill    certifications       names      Total 
                                     GBP000        GBP000           GBP000      GBP000 
 Cost 
 At 1 January 2022                    23,944               203             47   24,194 
 Additions                                 -                 -              -        - 
 Disposals                                 -                 -              -        - 
 Effects of movements in foreign 
  exchange                                 -                 -              5        5 
---------------------------------  ---------  ----------------  -------------  ------- 
 At 30 June 2022                      23,944               203             52   24,199 
---------------------------------  ---------  ----------------  -------------  ------- 
 
 Accumulated amortisation 
 At 1 January 2022                         -              (71)           (26)     (97) 
 Amortisation charge                       -              (20)            (4)     (24) 
 Disposals                                 -                 -              -        - 
 Effects of movements in foreign 
  exchange                                 -                 -            (3)      (3) 
---------------------------------  ---------  ----------------  -------------  ------- 
 Amortisation at 30 June 2022              -              (91)           (33)    (124) 
---------------------------------  ---------  ----------------  -------------  ------- 
 
 Net book value 
 At 1 January 2022                    23,944               132             21   24,097 
---------------------------------  ---------  ----------------  -------------  ------- 
 At 30 June 2022                      23,944               112             19   24,075 
---------------------------------  ---------  ----------------  -------------  ------- 
 
 
                                                                      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                                 -                     -             -        - 
 Disposals                                 -                     -             -        - 
 Effects of movements in foreign 
  exchange                                 -                     -             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) 
 Disposals                                 -                     -             -        - 
 Effects of movements in foreign 
  exchange                                 -                     -           (1)      (1) 
---------------------------------  ---------  --------------------  ------------  ------- 
 Amortisation 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 
---------------------------------  ---------  --------------------  ------------  ------- 
 

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.

The closing share price on 22 September 2023 was 44.0p, giving a market capitalisation of GBP80.23m which does not indicate impairment of goodwill.

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 30 June 2023

11: Property, plant and equipment

 
                                     Computer 
                                     and office     Leasehold        Vehicles 
                                     equipment     improvements    and equipment    Total 
                                      GBP000         GBP000           GBP000       GBP000 
 Cost 
 At 1 January 2023                          699           1,119            1,402     3,220 
 Additions                                    -               9              182       191 
 Disposals                                    -               -             (44)      (44) 
 Effects of movements in foreign 
  exchange                                  (6)            (16)             (27)      (49) 
---------------------------------  ------------  --------------  ---------------  -------- 
 At 30 June 2023                            693           1,112            1,513     3,318 
---------------------------------  ------------  --------------  ---------------  -------- 
 
 Accumulated Depreciation 
 At 1 January 2023                        (662)           (635)            (715)   (2,012) 
 Depreciation charge                        (8)           (152)            (103)     (263) 
 Disposals                                    -               -               44        44 
 Effects of movements in foreign 
  exchange                                    5               6               13        24 
---------------------------------  ------------  --------------  ---------------  -------- 
 Depreciation at 30 June 2023             (665)           (781)            (761)   (2,207) 
---------------------------------  ------------  --------------  ---------------  -------- 
 
 Net book value 
 At 1 January 2023                           37             484              687     1,208 
---------------------------------  ------------  --------------  ---------------  -------- 
 At 30 June 2023                             28             331              752     1,111 
---------------------------------  ------------  --------------  ---------------  -------- 
 
 
                                     Computer 
                                     and office     Leasehold        Vehicles 
                                     equipment     improvements    and equipment    Total 
                                      GBP000         GBP000           GBP000       GBP000 
 Cost 
 At 1 January 2022                          780             681            1,165     2,626 
 Additions                                   35              96               75       206 
 Disposals                                    -               -                -         - 
 Effects of movements in foreign 
  exchange                                   20              19               77       116 
---------------------------------  ------------  --------------  ---------------  -------- 
 At 30 June 2022                            835             796            1,317     2,948 
---------------------------------  ------------  --------------  ---------------  -------- 
 
 Accumulated Depreciation 
 At 1 January 2022                        (653)           (427)            (416)   (1,496) 
 Depreciation charge                      (120)            (78)            (152)     (350) 
 Disposals                                    -               -                -         - 
 Effects of movements in foreign 
  exchange                                 (14)            (11)             (32)      (57) 
---------------------------------  ------------  --------------  ---------------  -------- 
 Depreciation at 30 June 2022             (787)           (516)            (600)   (1,903) 
---------------------------------  ------------  --------------  ---------------  -------- 
 
 Net book value 
 At 1 January 2022                          127             254              749     1,130 
---------------------------------  ------------  --------------  ---------------  -------- 
 At 30 June 2022                             48             280              717     1,045 
---------------------------------  ------------  --------------  ---------------  -------- 
 
 
                                     Computer 
                                     and office     Leasehold        Vehicles 
                                     equipment     improvements    and equipment    Total 
                                      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 
 Effects of movements in foreign 
  exchange                                  (5)             (5)             (14)      (24) 
---------------------------------  ------------  --------------  ---------------  -------- 
 Depreciation 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 
---------------------------------  ------------  --------------  ---------------  -------- 
 

The Group has no assets pledged as security. No amounts of interest have been capitalised within property, plant and equipment at 30 June 2023 (2022: GBPnil).

12: Inventory

 
                                  30 June   30 June   31 December 
                                    2023      2022        2022 
                                  GBP000    GBP000      GBP000 
 
 Raw materials and consumables      1,421       695         1,815 
 Work in progress                   1,503     5,099         6,370 
 Finished goods                       756         -         1,642 
-------------------------------  --------  --------  ------------ 
 Total inventory                    3,681     5,794         9,827 
-------------------------------  --------  --------  ------------ 
 

13: Other current assets

 
                               30 June   30 June   31 December 
                                 2023      2022        2022 
                               GBP000    GBP000      GBP000 
 
 Prepayments and deposits        1,108     1,182         1,879 
 Prepaid inventory               3,136     5,074         5,102 
 Tax credits recoverable         1,179       345           551 
 Other receivables                 921        39         1,249 
----------------------------  --------  --------  ------------ 
 Total other current assets      6,344     6,640         8,781 
----------------------------  --------  --------  ------------ 
 

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.

On 14 December 2022 the Company entered a US$ 10.0 million Investment Agreement with Riverfort Global Opportunities PCC LTD (Riverfort) and YA II PN, Ltd (Yorkville) (together, the Noteholders). The Investment Agreement was intended to provide additional working capital to the Company ahead of a planned fundraise.

An initial amount of US$ 2.5 million was drawn by the Company on inception of the facility (the First Advance). Amounts drawn under the Investment Agreement were convertible to ordinary shares of the Company at the option of each of Riverfort and Yorkville. To facilitate the conversion of amounts drawn by the Company under the Investment Agreement, a total of 2,700,038 ordinary shares (the Initial Shares) were issued in advance to Riverfort and Yorkville on a 50/ 50 basis.

Following the Company's successful fundraise in March 2023 the Investment Agreement was redeemed in full. At the redemption date 1,779,640 of the Initial Shares remained outstanding and held by the Noteholders.

To the extent that the Noteholders still held Initial Shares after the Facility had been repaid in full, the shares will be sold by the Noteholders with the relevant net proceeds remitted to the Company. To ensure an orderly market, the Company and the Noteholders agreed that, for a period of 24 months from the date of the Repayment Agreement, these remaining shares may only be sold following instruction from the Company, given an agreement that 97% of the net proceeds are to be remitted to the Company.

Because the Company will receive 97% of the proceeds on any sale of the Initial Shares that it instructs, the outstanding balance of the Initial Shares represent a financial asset to the Company.

Accordingly, the outstanding Initial Shares have been designated as Fair Value Through Profit and Loss in accordance with IFRS 9. The outstanding Initial Shares were recognised as a receivable at fair value based on the share price (32.5p) on the date of the agreement to repay all amounts outstanding under the Investment Agreement together with any relevant redemption charges.

At each reporting date going forward, any outstanding Initial Shares will be revalued by reference to the Company's share price (AIM:IES) and a fair value gain or loss based on the increase or decrease in the aggregate fair value of the outstanding Initial Shares will be recorded in profit and loss accordingly.

On 30 June 2023, the outstanding Initial Shares have been revalued based on the Company's closing share price of 49.0p per share at that date. A corresponding gain representing the difference between the original valuation of the Initial Shares that was calculated on redemption of the Investment Agreement that closed in March 2023 and based on a share price of 32.5p.

The fair value of the outstanding Initial Shares on 30 June 2023 was GBP845,863 (2022: GBPnil).

14: Contract related balances

 
 
                                             30 June     30 June     31 December 
                                              2023        2022          2022 
                                            GBP000      GBP000        GBP000 
 
 Amounts due from customer contracts 
  included in trade receivables                4,151       1,731           1,737 
 Contract assets (accrued income 
  for work done not yet invoiced)              1,857         326             500 
 Contract liabilities (deferred revenue 
  related to advances on customer 
  contracts)                                 (3,884)     (4,988)         (8,375) 
----------------------------------------  ----------  ----------  -------------- 
 Net position of sales contracts               2,124     (2,931)         (6,138) 
----------------------------------------  ----------  ----------  -------------- 
 

The amount of revenue recognised in the period that was included in contract liabilities at the end of the prior year was GBP5,504,212 (2022: GBP428,417).

Provisions related to contracts with customers

 
                                                                         Provision 
                                         Warranty    Legacy products    for contract 
                                         provision      provision          losses      Total 
                                          GBP000         GBP000           GBP000       GBP000 
 
 At 1 January 2023                             284             1,016           1,607    2,907 
 Charges to profit or loss 
 
        *    Provided in period                 75                63               -      138 
 
        *    Unused amounts reversed             -                 -           (697)    (697) 
 Amounts used in period                       (75)              (63)               -    (138) 
 Movement due to foreign exchange              (1)              (46)            (54)    (101) 
 At 30 June 2023                               283               970             856    2,109 
-------------------------------------  -----------  ----------------  --------------  ------- 
 
 
                                                                         Provision 
                                         Warranty    Legacy 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 period                 46                 -               -       46 
                                                 -                 -               -        - 
        *    Unused amounts reversed 
 Amounts used in period                                                        (364)    (364) 
 Movement due to foreign exchange                3                96               -       99 
-------------------------------------  -----------  ----------------  --------------  ------- 
 At 30 June 2022                               306               956           4,495    5,757 
-------------------------------------  -----------  ----------------  --------------  ------- 
 
 
                                                                         Provision 
                                         Warranty    Legacy 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 period                204               578             565     1,347 
 
        *    Unused amounts reversed          (24)              (16)         (2,059)   (2,099) 
 Amounts used in period                      (153)             (406)         (1,758)   (2,317) 
-------------------------------------  -----------  ----------------  --------------  -------- 
 At 31 December 2022                           284             1,016           1,607     2,907 
-------------------------------------  -----------  ----------------  --------------  -------- 
 

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. The prior year presentation has been re-stated to reflect this.

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 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.

15: Trade and other receivables

 
                                       30 June   30 June   31 December 
                                         2023      2022        2022 
                                       GBP000    GBP000      GBP000 
 
 Trade receivables from contracts 
  with customers                         4,210     1,754         1,761 
 Provision for doubtful receivables       (59)      (23)          (24) 
------------------------------------  --------  --------  ------------ 
 Total trade and other receivables       4,151     1,731         1,737 
------------------------------------  --------  --------  ------------ 
 

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.

16: Cash and cash equivalents

 
                                    30 June   30 June   31 December 
                                      2023      2022        2022 
                                    GBP000    GBP000      GBP000 
 
 Cash at bank and in hand             3,929    16,130         5,137 
 Short term investments               9,000         -             - 
---------------------------------  --------  --------  ------------ 
 Total cash and cash equivalents     12,929    16,130         5,137 
---------------------------------  --------  --------  ------------ 
 

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.

17: Trade and other payables

 
                                   30 June   30 June   31 December 
                                     2023      2022        2022 
                                   GBP000    GBP000      GBP000 
 
 Trade payables                      3,341     2,262         3,706 
 Other payables                         89       371            78 
 Accrued liabilities                   706     1,964           701 
 Accrued employee compensation         324       247           143 
 Government remittances payable         21         1           306 
--------------------------------  --------  --------  ------------ 
 Total trade and other payables      4,481     4,845         4,934 
--------------------------------  --------  --------  ------------ 
 

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.

18: Derivative financial instruments

 
                                        30 June   30 June   31 December 
                                          2023      2022        2022 
                                        GBP000    GBP000      GBP000 
 
 Derivative value of warrants issued        474         -           449 
 Other                                        -         -           320 
 Total trade and other payables             474         -           769 
-------------------------------------  --------  --------  ------------ 
 

19: Related parties

The only related parties of the Company are the key management of the Group. Key management has been determined as the CEO and his direct reports.

Invinity Energy Systems plc purchased a total of 70,312 shares in the latest fundraise. 31,250 shares were purchased on behalf of Larry Zulch, 15,625 shares were purchased on behalf of Matt Harper and 23,437 shares were purchased on behalf of an additional member of staff. At 30 June 2023, the amounts owed by the additional member of staff and Matt Harper in respect of the shares had been settled. The GBP10,000 owed by Larry Zulch is outstanding.

20: Events occurring after the reporting period

Short-Term Warrants

At the General Meeting of the holders of Short-Term Warrants held on 19 July 2023, the company was authorised by way of resolution to re-price the Short-Term Warrant Instrument to a subscription price of 50p (previously 150p).

In addition, the subscription period for the Short-Term Warrants was extended to 16 December 2023 (previously 15 September 2023).

Long-Term Warrants

At the General Meeting of the holders of Long-Term Warrants held on 23 July 2023, the Company was authorised by way of resolution to re-price the Long-Term Warrant Instrument to a subscription price of 100p (previously 225p).

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END

IR FFFSLARISFIV

(END) Dow Jones Newswires

September 25, 2023 02:01 ET (06:01 GMT)

Invinity Energy Systems (AQSE:IES)
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