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
· £14.8m total income including sales revenue and project-related grant income, a 10x increase YoY (H1 2022: £1.5m)
· £3.3m gross loss reflecting previously disclosed and accounted for contract losses on Canadian and Australian projects (H1 2022: loss £2.1m)
· 10 MWh California project delivered at positive project gross margin*
· £12.6m loss from operating activities (H1 2022 loss: £12.1m)
· £4.7m of total inventory and net related working capital (H1 2022: £1.2m)
· £12.9m Period-end cash (H1 2022: £16.1m)
* 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 £11m 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 |
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 £14.8m in H1 2023 (H1 2022: £1.5m).
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 £14.8m 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 £9.3m (H1 2022: £8.9m). 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 £0.1m on cash balances held following the fundraising in March 2023.
Total inventory and net related working capital rose to £4.7m at the end of the Period (H1 2022: £1.2m) as a result of increased activity to deliver on the 2023 sales pipeline as follows:
| | | H1 2023 |
| H1 2022 | ||
| | | £ 000 | £ 000 |
| £ 000 | £ 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 £23m from an equity fundraising including securing a £2.5m 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 £11m 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 £24.9m as at 22 September 2023.
Invinity's current commercial pipeline as at 22 September 2023, is detailed below:
| Date | Base (MWh) | Advanced (MWh) | Qualified | Qualified |
| 22-Sep-2022 (HY22 Results) | 22.8 | 63.5 | 405.8 | -- |
| 24-May-2023 (FY22 Results) | 42.8 | 73.4 | 957.1 | 1,397 |
| 22-Sep-2023 (Current Trading) | 43.1 | 137.3* | 1,415.0 | 3,057.8 |
| % 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 (HY22 Results) | 28.0 |
| 24-May-2023 (FY22 Results) | 64.3 |
| 22-Sep-2023 (Current Trading) | 65.0 |
| % 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 ended 30 June 2023 | Six months ended 30 June 2022 (Restated) | Year ended 31 December 2022 |
| Continuing operations | Note | £000 | £000 | £000 |
| 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, £140,841 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| Continuing operations | Note | £000 | £000 | £000 |
| 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| | Note | £000 | £000 | £000 |
| 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 up share capital | Share premium | Share-based payment reserve | Accum-ulated losses | Currency translation reserve | Other reserves | Total |
| | £000 | £000 | £000 | £000 | £000 | £000 | £000 |
| | | | | | | | |
| 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 up share capital | Share premium | Share-based payment reserve | Accum-ulated losses | Currency translation reserve | Other reserves | Total |
| | £000 | £000 | £000 | £000 | £000 | £000 | £000 |
| | | | | | | | |
| 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 up share capita | Share premium | Share-based payment reserve | Accumulated losses | Currency translation reserve | Other reserves | Total |
| | £000 | £000 | £000 | £000 | £000 | £000 | £000 |
| | | | | | | | |
| 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| | Note | £000 | £000 | £000 |
| 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 £2.5 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| | £000 | £000 | £000 |
| (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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 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 ended 30 June 2023 | Six months ended 30 June 2022 | Year ended 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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
| | Goodwill | Patents and certifications | Software and domain names | Total |
| | £000 | £000 | £000 | £000 |
| 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 |
| | Goodwill | Patents and certifications |
Software and domain names | Total |
| | £000 | £000 | £000 | £000 |
| 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 |
| | Goodwill | Patents and certifications | Software and domain names | Total |
| | £000 | £000 | £000 | £000 |
| 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 £80.23m 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 equipment | Leasehold improvements | Vehicles and equipment | Total |
| | £000 | £000 | £000 | £000 |
| 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 equipment | Leasehold improvements | Vehicles and equipment | Total |
| | £000 | £000 | £000 | £000 |
| 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 equipment | Leasehold improvements | Vehicles and equipment | Total |
| | £000 | £000 | £000 | £000 |
| 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: £nil).
12: Inventory
| | 30 June 2023 | 30 June 2022 | 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 2023 | 30 June 2022 | 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 £845,863 (2022: £nil).
14: Contract related balances
| |
30 June 2023 |
30 June 2022 |
31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 £5,504,212 (2022: £428,417).
Provisions related to contracts with customers
| | Warranty provision | Legacy products provision | Provision for contract losses | Total |
| | £000 | £000 | £000 | £000 |
| |
|
| | |
| 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 |
| | Warranty provision | Legacy products provision | Provision for contract losses | Total |
| | £000 | £000 | £000 | £000 |
| |
|
| | |
| 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 |
| | Warranty provision | Legacy products provision | Provision for contract losses | Total |
| | £000 | £000 | £000 | £000 |
| |
|
| | |
| 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 2023 | 30 June 2022 | 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 2023 | 30 June 2022 | 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 2023 | 30 June 2022 | 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 2023 | 30 June 2022 | 31 December 2022 |
| | £000 | £000 | £000 |
| |
| | |
| 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 £10,000 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).
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
