Last checked at 24 Mar 2023 07:00
CWR.L 24 March 2023 Ceres Power Holdings plc
Final results for the year ended 31 December 2022 2022 investments lay strong foundations for future growth
Horsham, UK: Ceres Power Holdings plc ("Ceres", the "Company") (AIM: CWR.L), a global leader in fuel cell and electrochemical technology, announces its results for the year ended 31 December 2022.
Financial highlights · Revenue of £22.1 million (2021: £30.8 million) in line with previous guidance · Gross profit of £13.1 million (2021: £19.0 million), maintaining sector-leading gross margin at 59% (2021: 62%) · Investment in the future1 increased by 67% to £58.4 million (2021: £34.9 million), in line with strategy to expand into electrolysis for green hydrogen and deliver the next generation of fuel cell technology · Strong cash and short-term investments position of £182.3 million (2021: £249.6 million)
Strategic highlights · First 100kW solid oxide electrolyser ("SOEC") module is on test ahead of scaling into a 1MW demonstrator. Initial results are positive and give confidence that this technology can deliver green hydrogen at · SOEC technology evaluation programme progressing well with Shell for deployment later this year in India · Ceres' fuel cell and electrolysis test facility, developed with Horiba Mira at its site in the UK, is now open and supporting technology and system development · Continued expansion of Ceres' highly skilled workforce to 570 employees (2021: 489) with significant investment in commercial resource in global locations with strong momentum and policy support for hydrogen and fuel cells
Current trading and outlook · Agreements signed for a collaboration on electrolysis with Bosch and Linde Engineering to validate Ceres' technology, as a highly efficient pathway to low-cost green hydrogen. Builds on Bosch's expertise in solid oxide fuel cells ("SOFC") and Linde Engineering's capabilities in industrial process engineering · Weichai's SOFC power system using Ceres' technology has passed the EU CE certification of the international authoritative testing organisation, TÜV SÜD. Weichai estimates that when its products reach 1GW of distributed power deployed, it has the potential to reduce carbon emissions by around 2 million tonnes per year compared with grid electricity · The structure of the China joint ventures has been agreed. We now await the final agreement between Bosch and Weichai · We continue to work towards a move up to the Premium Listing on the Main Market of the London Stock Exchange Phil Caldwell, Chief Executive Officer of Ceres, said: "It has been another productive year at Ceres with our first electrolyser modules on test, an exciting new partnership with Shell, and a collaboration with Linde Engineering and Bosch for green hydrogen. We are making good progress on power systems with existing partners Bosch and Doosan to scale production. "Investment in our business has ensured we are well-positioned to deliver on our strategy; to support our partners to install manufacturing capacity at the scale and pace needed to decarbonise our energy systems and enable a net zero future." 1. Investment in the future comprises R&D costs, capitalised development and capital expenditure. |
Financial Summary | 2022 | 2021 |
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£'000 | £'000 |
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Total revenue, comprising: | 22,130 | 30,776 |
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Licence fees | 7,711 | 16,646 |
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Engineering services revenue | 9,039 | 6,777 |
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Provision of technology hardware | 5,380 | 7,353 |
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Gross margin %1 | 59% | 62% |
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Adjusted EBITDA loss2 - Power SOFC3 | (21,557) | (4,492) |
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Adjusted EBITDA loss2 - Hydrogen SOEC3 | (21,673) | (12,183) |
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Adjusted EBITDA loss2 - total Group | (43,230) | (16,675) |
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Operating loss | (51,522) | (23,430) |
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Net cash used in operating activities | (51,522) | (20,342) |
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Net cash and investments | 182,320 | 249,584 |
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1. 2021 gross margin restated (previously 66%) to reflect the classification of the RDEC tax credit within other operating income rather than offsetting cost of sales. 2. Adjusted EBITDA loss is an Alternative Performance Measure, as defined and reconciled to operating loss in the non-GAAP section at the end of this report. 3. Adjusted EBITDA by segment is reconciled to operating loss in Note 3. | ||||||||||||
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CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2022 |
2022 | 2021 Restated1 | ||
Note | £'000 | £'000 | |
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Revenue | 2 | 22,130 | 30,776 |
Cost of sales | (9,079) | (11,731) | |
Gross profit |
| 13,051 | 19,045 |
Other operating income2 | 1,332 | 2,228 | |
Operating costs | 4 | (65,905) | (44,703) |
Operating loss |
| (51,522) | (23,430) |
Finance income | 5 | 2,830 | 438 |
Finance expense | 5 | (304) | (380) |
Loss before taxation | (48,996) | (23,372) | |
Taxation credit | 6 | 3,872 | 2,280 |
Loss for the financial period and total comprehensive loss | (45,124) | (21,092) | |
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Loss per £0.10 ordinary share expressed in pence per share: |
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Basic and diluted loss per share | 7 | (23.58)p | (11.36)p |
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The accompanying notes are an integral part of these consolidated financial statements. 1 The 2021 taxation credit has been restated to increase the credit by £310,000 following the adjustment of prior year R&D tax credit claims and a related tax provision reported in 2021. The 2021 results have further been re-presented to reflect the re-classification of the Group's RDEC tax credit of £1,304,000. This was previously disclosed within cost of sales but is now presented within other operating income to align to the change in presentation applied to the Group's 2022 results. See Note 1 for details. 2 Other operating income comprises grant income and the Group's RDEC tax credit. |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2022 |
| 31 Dec 2022 | 31 Dec 2021 Restated1 | 31 Dec 2020 Restated1 | |
Note | £'000 | £'000 | £'000 | |
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Assets |
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Non-current assets |
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Property, plant and equipment | 8 | 25,964 | 18,141 | 14,979 |
Right-of-use assets | 9 | 2,647 | 2,438 | 3,971 |
Intangible assets | 10 | 13,278 | 8,478 | 4,909 |
Long-term investments | 14 | 5,000 | 8,000 | |
Investment in associate | 2,460 | 500 | ||
Other receivables | 12 | 741 | 741 | 741 |
Total non-current assets | 45,090 | 35,298 | 32,600 | |
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Current assets |
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Inventories | 11 | 5,714 | 3,145 | 2,107 |
Contract assets | 2 | 3,309 | 7,331 | 864 |
Other current assets | 13 | 957 | 1,133 | 1,002 |
Derivative financial instruments | 17 | 54 | 1,073 | 59 |
Current tax receivable | 7,396 | 1,615 | 1,208 | |
Trade and other receivables | 12 | 17,153 | 5,813 | 6,208 |
Short-term investments | 14 | 119,011 | 93,129 | 69,231 |
Cash and cash equivalents | 14 | 63,309 | 151,455 | 32,955 |
Total current assets | 216,903 | 264,694 | 113,634 | |
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Liabilities |
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Current liabilities |
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Trade and other payables | 15 | (4,933) | (2,783) | (9,112) |
Contract liabilities | 2 | (6,387) | (4,290) | (7,505) |
Other current liabilities | 16 | (7,286) | (5,818) | (2,675) |
Derivative financial instruments | (43) | |||
Lease liabilities | 18 | (610) | (754) | (823) |
Provisions | 19 | (929) | (1,579) | (612) |
Total current liabilities | (20,145) | (15,224) | (20,770) | |
Net current assets | 196,758 | 249,470 | 92,864 | |
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Non-current liabilities |
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Lease liabilities | 18 | (2,514) | (2,285) | (3,622) |
Provisions | 19 | (1,933) | (1,828) | (1,610) |
Total non-current liabilities | (4,447) | (4,113) | (5,232) | |
Net assets | 237,401 | 280,655 | 120,232 | |
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Equity attributable to the owners of the parent |
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Share capital | 20 | 19,209 | 19,073 | 17,217 |
Share premium | 405,463 | 404,726 | 227,682 | |
Capital redemption reserve | 3,449 | 3,449 | 3,449 | |
Merger reserve | 7,463 | 7,463 | 7,463 | |
Accumulated losses | (198,183) | (154,056) | (135,579) | |
Total equity | 237,401 | 280,655 | 120,232 | |
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1 2020 and 2021 trade and other receivables and current tax receivable have been restated to reflect an adjustment to prior year R&D tax claims as set out in Note 1. The accompanying notes are an integral part of these consolidated financial statements. |
CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2022 |
Note | 2022 | 2021 | |
| £'000 | £'000 | |
Cash flows from operating activities |
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Loss before taxation |
| (48,996) | (23,372) |
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Adjustments for: |
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Finance income |
| (2,830) | (438) |
Finance expense |
| 304 | 380 |
Depreciation of property, plant and equipment | 5,486 | 4,215 | |
Depreciation of right-of-use assets | 620 | 541 | |
Amortisation of intangible assets | 1,032 | 1,004 | |
Net foreign exchange gains | (690) | (563) | |
Net change in fair value of financial instruments | 1,020 | (1,057) | |
Share-based payments charge | 997 | 2,615 | |
Operating cash flows before movements in working capital |
| (43,057) | (16,675) |
(Increase)/decrease in trade and other receivables | (12,693) | 22 | |
Increase in inventories | (2,569) | (1,038) | |
Increase in trade and other payables | 2,655 | 2,832 | |
Decrease/(increase) in contract assets | 4,022 | (6,467) | |
Increase/(decrease) in contract liabilities | 1,137 | (3,215) | |
(Decrease)/increase in provisions | (637) | 1,121 | |
Net cash used in operations |
| (51,142) | (23,420) |
Taxation (paid)/received | (380) | 3,078 | |
Net cash used in operating activities |
| (51,522) | (20,342) |
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Investing activities |
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Investment in associate | (1,000) | ||
Purchase of property, plant and equipment | (12,347) | (7,377) | |
Capitalised development expenditure | (5,832) | (4,573) | |
Repayment of long-term investments | 5,000 | 3,000 | |
Acquisition of short-term investments | (99,618) | (62,898) | |
Repayment of short-term investments | 74,950 | 39,000 | |
Finance income received | 1,443 | 438 | |
Net cash used in investing activities |
| (37,404) | (32,410) |
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Financing activities |
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Proceeds from issuance of ordinary shares | 873 | 181,472 | |
Net expenses from issuance of ordinary shares | (2,572) | ||
Cash paid on behalf of employees on the sale of share options | (7,490) | ||
Repayment of lease liabilities | (744) | (405) | |
Interest paid | (212) | (316) | |
Net cash (used by)/generated from financing activities |
| (83) | 170,689 |
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Net (decrease)/increase in cash and cash equivalents |
| (89,009) | 117,937 |
Exchange gains on cash and cash equivalents | 863 | 563 | |
Cash and cash equivalents at beginning of year | 151,455 | 32,955 | |
Cash and cash equivalents at end of year | 14 | 63,309 | 151,455 |
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The accompanying notes are an integral part of these consolidated financial statements. |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2022 |
| Share capital | Share premium | Capital redemption reserve | Merger reserve | Accumulated losses | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
At 1 January 2021 - Restated1 | 17,217 | 227,682 | 3,449 | 7,463 | (135,579) | 120,232 |
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Comprehensive income | ||||||
Loss for the financial year1 | (21,092) | (21,092) | ||||
Total comprehensive loss |
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| (21,092) | (21,092) |
Transactions with owners | ||||||
Issue of shares, net of costs | 1,856 | 177,044 | 178,900 | |||
Share-based payments charge | 2,615 | 2,615 | ||||
Total transactions with owners | 1,856 | 177,044 | 2,615 | 181,515 | ||
At 31 December 2021 - Restated1 | 19,073 | 404,726 | 3,449 | 7,463 | (154,056) | 280,655 |
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Comprehensive income |
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Loss for the financial year | (45,124) | (45,124) | ||||
Total comprehensive loss | (45,124) | (45,124) | ||||
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Transactions with owners |
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Issue of shares, net of costs | 136 | 737 | 873 | |||
Share-based payments charge | 997 | 997 | ||||
Total transactions with owners | 136 | 737 | 997 | 1,870 | ||
At 31 December 2022 | 19,209 | 405,463 | 3,449 | 7,463 | (198,183) | 237,401 |
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1 2020 and 2021 results have been restated to reflect an adjustment to prior year R&D tax claims as set out in Note 1. |
Notes to the financial statements for the year ended 31 December 2022 1. Basis of preparation The financial information presented in this preliminary announcement has been prepared in accordance with the recognition and measurement requirements of UK adopted international accounting standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The principal accounting policies adopted in the preparation of the financial information in this preliminary announcement are unchanged from those used in the company's statutory financial statements for the year ended 31 December 2022. Whilst the financial information included in this announcement has been computed in accordance with the recognition and measurement requirements of IFRS, this announcement does not itself contain sufficient disclosures to comply with IFRS. The financial information contained in this final announcement does not constitute statutory financial statements as defined by in Section 434 of the Companies Act 2006. The financial information has been extracted from the financial statements for the year ended 31 December 2022 which have been approved by the Board of Directors, and the comparative figures for the year ended 31 December 2021 are based on the financial statements for that year. During the year the Group re-classified the presentation of the RDEC tax credit within the consolidated statement of profit and loss. The RDEC tax credit was previously presented within cost of sales, however in order to better align with our peers and to achieve consistent presentation with other items that we apply government grant accounting to, the Group now presents the RDEC tax credit within other operating income. Prior year comparatives have been re-classified accordingly. The impact of this change was to increase the current year's cost of sales and other operating income by £1.1m (2021: £1.3m). The 2021 and 2020 results have been restated to reflect an adjustment to R&D tax credit claims for certain costs which were inadvertently claimed in 2019 and 2020 under the Small and Medium-sized Enterprise (SME) R&D tax credit schemes, whereas they should have been claimed at a lower claim rate under the RDEC scheme. As a result, the 2021 taxation credit has been increased by £0.3m to remove a provision that was recognised in 2021 against future tax credits that should have been recognised in 2019 and 2020. The 2021 net loss has therefore reduced from £21.4m to £21.1m. The opening statement of financial position as at 1 January 2021 has also been presented, restated by a net £1.3m decrease to current assets reflecting a £1.9m decrease in current tax receivable under the SME tax scheme and a £0.6m increase in other receivables under the RDEC tax scheme. The 2021 other receivables increased by £0.9m and the current tax receivable decreased by £1.9m giving rise to a net decrease in net assets of £1.0m. The financial statements for 2021 have been delivered to the Registrar of Companies and the 2022 financial statements will be delivered after the Annual General Meeting on 18 May 2023. The Auditor has reported on both sets of accounts without qualification, did not draw attention to any matters by way of emphasis without qualifying their report, and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006. The Directors confirm that, to the best of their knowledge, this condensed set of consolidated financial statements has been prepared in accordance with the AIM Rules. Going Concern The Group has reported a loss after tax for the year ended 31 December 2022 of £45.1m (31 December 2021: £21.1m) and net cash used in operating activities of £51.5m (31 December 2021: £20.3m). At 31 December 2022, the Group held cash and cash equivalents and investments of £182.3m (31 December 2021: £249.6m). The directors have prepared annual budgets and cash flow projections that extend 15 months from the date of approval of this report. The increased cash used in the year is in line with the Group's strategy to invest in the development of our electrolysis and fuel cell technology to support future revenue streams. Future projections include management's expectations of the further cash outflows associated with the Group's investment in R&D projects and expansion of manufacturing and testing capacity, together with contracted and anticipated customer contracts and the planned investment in the China collaboration with Bosch and Weichai. The projections were stress tested by applying different scenarios including the loss of significant future revenue and continued adverse macroeconomic factors. In each case the projections demonstrated that the Group would have sufficient cash reserves to meet its liabilities as they fall due and to continue as a going concern. For the above reasons, the directors continue to adopt the going concern basis in preparing the financial statements. New standards and amendments applicable for the reporting period The Group has adopted all standards, interpretations amended or newly issued by the IASB that were effective in the period. Their adoption has not had any material effect on the consolidated financial statements. |
2. Revenue The Group's revenue is disaggregated by geographical market, major product/service lines, and timing of revenue recognition: Geographical market |
2022 | 2021 | |
| £'000 | £'000 |
Europe | 8,460 | 7,676 |
Asia | 13,253 | 22,748 |
North America | 394 | 109 |
Rest of World | 23 | 243 |
| 22,130 | 30,776 |
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For the year ended 31 December 2022, the Group has identified two major customers (defined as customers that individually contributed more than 10% of the Group's total revenue) that accounted for approximately 51% and 36% of the Group's total revenue recognised in the period (31 December 2021: three major customers that accounted for approximately 59%, 25% and 11% of the Group's total revenue recognised for that year). Major product/service lines |
2022 | 2021 | |
| £'000 | £'000 |
Engineering services | 9,039 | 6,777 |
Provision of technology hardware | 5,380 | 7,353 |
Licenses | 7,711 | 16,646 |
| 22,130 | 30,776 |
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Timing of transfer of goods and services |
2022 | 2021 | |
£'000 | £'000 | |
Products and services transferred at a point in time | 4,760 | 15,326 |
Products and services transferred over time | 17,370 | 15,450 |
22,130 | 30,776 | |
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Amounts transferred at a point in time during the prior periods included the recognition of significant license income in the first half of 2021 related to a major contract. The contract-related assets and liabilities are as follows: |
| 31 December 2022 | 31 December 2021 | |
| £'000 | £'000 | |
Trade receivables | 12 | 11,825 | 2,612 |
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Contract assets - accrued income | 3,309 | 7,010 | |
Contract assets - deferred costs |
| 321 | |
Total contract assets |
| 3,309 | 7,331 |
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Contract liabilities - deferred income |
| (6,387) | (4,290) |
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3. Segmental analysis In accordance with IFRS 8 the method applied to identify reporting segments is based on internal management reporting information that is regularly reviewed by the chief operating decision maker, which the Group considers to be the Executive team. The Group's internal segmental reporting continues to separately reflect results down to adjusted EBITDA level from its Power (SOFC) and Hydrogen (SOEC) divisions. |
Power - SOFC | Hydrogen - SOEC | Consolidated | |
Year ended 31 December 2022 | £'000 | £'000 | £'000 |
Revenue (external) | 21,950 | 180 | 22,130 |
Cost of sales | (9,070) | (9) | (9,079) |
Gross profit | 12,880 | 171 | 13,051 |
Other operating income | 1,332 | 1,332 | |
Operating costs (excluding adjusting items) | (35,769) | (21,844) | (57,613) |
Adjusted EBITDA1 | (21,557) | (21,673) | (43,230) |
Adjusting items: |
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Depreciation & amortisation |
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| (7,138) |
Share-based payment charge |
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| (997) |
Unrealised foreign exchange losses |
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| 863 |
Fair value adjustment |
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| (1,020) |
Operating loss |
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| (51,522) |
Finance income |
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| 2,830 |
Finance expense |
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| (304) |
Loss before taxation |
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| (48,996) |
Taxation credit |
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| 3,872 |
Loss for the financial year |
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| (45,124) |
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Power - SOFC | Hydrogen - SOEC | Consolidated | |
Year ended 31 December 2021 - Restated2 | £'000 | £'000 | £'000 |
Revenue (external) | 30,776 | 30,776 | |
Cost of sales | (11,731) | (11,731) | |
Gross profit | 19,045 | 19,045 | |
Other operating income | 2,228 | 2,228 | |
Operating costs (excluding adjusting items) | (25,765) | (12,183) | (37,948) |
Adjusted EBITDA1 | (4,492) | (12,183) | (16,675) |
Adjusting items: |
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Depreciation & amortisation | (5,760) | ||
Share-based payment charge | (2,615) | ||
Unrealised foreign exchange losses | 563 | ||
Fair value adjustment | 1,057 | ||
Operating loss | (23,430) | ||
Finance income | 438 | ||
Finance expense | (380) | ||
Loss before taxation | (23,372) | ||
Taxation credit2 | 2,280 | ||
Loss for the financial year | (21,092) | ||
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1Adjusted EBITDA is an alternative performance measure, as defined at the end of this report. 2 The 2021 taxation credit has been restated to remove a provision of £0.3m that was recognised in 2021 against future tax credits, that should have been recognised in 2019 and 2020. Further, the 2021 RDEC tax credit of £1.3m has been re-presented to disclose the credit within other operating income rather than within cost of sales. Note 1 sets out the relevant details. | |||
4. Operating costs | ||
Operating costs can be analysed as follows: |
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2022 | 2021 | |
£'000 | £'000 | |
Research and development costs | 48,348 | 31,290 |
Administrative expenses | 15,165 | 11,245 |
Commercial | 2,392 | 2,168 |
65,905 | 44,703 | |
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5. Finance income and expenses |
2022 | 2021 | |
£'000 | £'000 | |
Interest received | 2,657 | 438 |
Foreign exchange gain on cash, cash equivalents and short-term deposits | 173 | |
Finance income | 2,830 | 438 |
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Interest on lease liability | (212) | (316) |
Unwinding of discount on provisions | (87) | (64) |
Other finance costs | (5) | |
Interest expense | (304) | (380) |
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6. Taxation No corporation tax liability has arisen during the period (31 December 2021: £nil) due to the losses incurred. A tax credit has arisen as a result of the tax losses being surrendered in respect of research and development expenditure. |
2022 | 2021 Restated1 | |
£'000 | £'000 | |
UK corporation tax | (4,470) | (2,917) |
Foreign tax suffered | 828 | 973 |
Adjustment in respect of prior periods | (230) | (336) |
(3,872) | (2,280) | |
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1 The 2021 taxation credit has been restated to remove a provision recognised in 2021 against future R&D tax credits that should have been recognised in 2019 and 2020. The restatement has increased the adjustment in respect of prior periods by £310,000, from a credit of £26,000 to a credit of £336,000. | ||
7. Loss per share | ||
2022 | 2021 Restated1 | |
£'000 | £'000 | |
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Loss for the financial year attributable to shareholders | (45,124) | (21,092) |
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Weighted average number of shares in issue | 191,385,618 | 185,689,432 |
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Loss per £0.10 ordinary share (basic and diluted) | (23.58)p | (11.36)p |
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1 The 2021 loss for the year has been restated to remove a provision recognised in 2021 against future R&D tax credits that should have been recognised in 2019 and 2020. The loss has been decreased by £310,000 compared with the amount previously reported. Details are set out in Note 1. | ||
8. Property, plant and equipment |
Leasehold improvements £'000 |
Plant and machinery£'000 |
Computer equipment£'000 |
Fixtures and fittings £'000 | Assets under construction £'000 |
Motor vehicles £'000 |
Total £'000 | |
Cost | |||||||
At 1 January 2021 | 5,883 | 21,409 | 2,061 | 314 | 756 | 12 | 30,435 |
Additions | 1,529 | 3,521 | 502 | 34 | 1,791 | 7,377 | |
Transfers | 572 | (572) | |||||
At 31 December 2021 | 7,412 | 25,502 | 2,563 | 348 | 1,975 | 12 | 37,812 |
Additions | 1,111 | 5,147 | 203 | 6,848 | 13,309 | ||
Transfers | 71 | 893 | (964) | ||||
Disposal | (1,621) | (6,669) | (831) | (72) | (9,193) | ||
At 31 December 2022 | 6,973 | 24,873 | 1,935 | 276 | 7,859 | 12 | 41,928 |
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Accumulated depreciation | |||||||
At 1 January 2021 | 2,712 | 11,196 | 1,398 | 149 | 1 | 15,456 | |
Charge for the year | 646 | 3,089 | 392 | 83 | 5 | 4,215 | |
At 31 December 2021 | 3,358 | 14,285 | 1,790 | 232 | 6 | 19,671 | |
Charge for the year | 936 | 4,030 | 444 | 73 | 3 | 5,486 | |
Depreciation on disposals | (1,621) | (6,669) | (831) | (72) | (9,193) | ||
At 31 December 2022 | 2,673 | 11,646 | 1,403 | 233 | 9 | 15,964 | |
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Net book value | |||||||
At 31 December 2022 | 4,300 | 13,227 | 532 | 43 | 7,859 | 3 | 25,964 |
At 31 December 2021 | 4,054 | 11,217 | 773 | 116 | 1,975 | 6 | 18,141 |
'Assets under construction' represents the cost of purchasing, constructing and installing property, plant and equipment ahead of their productive use. The category is temporary, pending completion of the assets and their transfer to the appropriate and permanent category of property, plant and equipment. As such, no depreciation is charged on assets under construction. Assets under construction consist entirely of plant and machinery that will be used in the manufacturing, development and testing of fuel cells. |
9. Right of use assets |
Land and Buildings | Computer equipment | Total | |
£'000 | £'000 | £'000 | |
Cost |
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At 1 January 2021 | 4,729 | 18 | 4,747 |
Additions | 43 | 43 | |
Adjustment to lease term | (1,035) | (1,035) | |
Disposals | (18) | (18) | |
At 31 December 2021 | 3,694 | 43 | 3,737 |
Adjustment of lease term | 829 | 829 | |
At 31 December 2022 | 4,523 | 43 | 4,566 |
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Accumulated depreciation |
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At 1 January 2021 | 766 | 10 | 776 |
Charge for the year | 523 | 18 | 541 |
Disposals | (18) | (18) | |
At 31 December 2021 | 1,289 | 10 | 1,299 |
Charge for the year | 606 | 14 | 620 |
At 31 December 2022 | 1,895 | 24 | 1,919 |
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Net book value |
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At 31 December 2022 | 2,628 | 19 | 2,647 |
At 31 December 2021 | 2,405 | 33 | 2,438 |
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During the year, the Group signed an extension to a property lease and revised the expected term of that least accordingly. An adjustment of £0.8m was recognised to increase the right-of-use asset, with a corresponding adjustment to the lease liability. During the prior year, the Group revised the expected term on one of its property leases, recognising an adjustment of £1.0m to reduce the right-of-use asset, with a corresponding adjustment to the lease liability. |
10. Intangible assets |
Internal developments in relation to manufacturing site £'000 | Customer and internal development programmes £'000 |
Perpetual software licences £'000 | Patent costs£'000 |
Total £'000 | |
Cost | |||||
At 1 January 2021 | 411 | 4,424 | 295 | 5,130 | |
Additions | 3,983 | 252 | 338 | 4,573 | |
At 31 December 2021 | 411 | 8,407 | 252 | 633 | 9,703 |
Additions | 5,340 | 273 | 219 | 5,832 | |
At 31 December 2022 | 411 | 13,747 | 525 | 852 | 15,535 |
Accumulated amortisation | |||||
At 1 January 2021 | 82 | 139 | 221 | ||
Charge for the year | 82 | 899 | 23 | 1,004 | |
At 31 December 2021 | 164 | 1,038 | 23 | 1,225 | |
Charge for the year | 82 | 748 | 125 | 77 | 1,032 |
At 31 December 2022 | 246 | 1,786 | 148 | 77 | 2,257 |
Net book value | |||||
At 31 December 2022 | 165 | 11,961 | 377 | 775 | 13,278 |
At 31 December 2021 | 247 | 7,369 | 229 | 633 | 8,478 |
The customer and internal development intangible primarily relates to the design, development and configuration of the Company's core fuel cell and system technology. Amortisation of capitalised development commences once the development is complete and is available for use. |
11. Inventories |
31 December 2022 | 31 December 2021 | |
£'000 | £'000 | |
Raw materials | 1,566 | 1,299 |
Work in progress | 1,477 | 969 |
Finished goods | 2,671 | 877 |
Total inventory | 5,714 | 3,145 |
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Inventories have increased in line with the continued improvement in manufacturing capacity and to ensure the Group can satisfy existing and anticipated customer demand for technology hardware. During the year ended 31 December 2022, inventories of £5.0m (12 months ended 31 December 2021: £5.9m) were recognised as an expense and were included within Cost of Sales. In addition, as at 31 December 2022, a provision of £0.7m (2021: £nil) was recognised following the downgrading of a number of stacks that failed our initial quality control testing. These stacks potentially have a more limited life than expected and have therefore been provided against to reflect their lower net realisable value. |
12. Trade and other receivables |
31 December 2022 | 31 December 2021 Restated1 | |
Current: | £'000 | £'000 |
Trade receivables | 11,825 | 2,612 |
Other receivables | 5,328 | 3,201 |
17,153 | 5,813 | |
Non-current: |
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Other receivables | 741 | 741 |
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1 2021 other receivables have been restated to reflect the adjustment of prior year R&D tax claims, as set out in Note 1. The R&D tax claim receivable has been increased by £948,000 accordingly. | ||
The Group's trade receivables balance at 31 December 2022 is significantly higher than at 31 December 2021 primarily reflecting a number of significant invoices raised in the last quarter of 2022 with two major customers. Of the £11.8m due at 31 December 2022, c.£10m was received in the first two months of 2023. Included within other current receivables is the research and development tax credit of £1,350,000 (31 December 2021: £1,304,000). |
13. Other current assets |
31 December 2022 | 31 December 2021 | |
| £'000 | £'000 |
Prepayments | 869 | 673 |
Accrued interest | 322 | |
Accrued grant income | 88 | 138 |
957 | 1,133 | |
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14. Net cash and cash equivalents, short-term and long-term investments |
31 December 2022 | 31 December 2021 | |
£'000 | £'000 | |
Cash at bank and in hand | 7,837 | 4,957 |
Money market funds | 55,472 | 146,498 |
Cash and cash equivalents | 63,309 | 151,455 |
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Short-term investments1 | 119,011 | 93,129 |
Long-term investments | 5,000 | |
Cash and cash equivalents and investments | 182,320 | 249,584 |
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1 Short-term investments comprise bank deposits with a maturity greater than 3 months but less than 12 months.
The Group typically places surplus funds into pooled money market funds with same day access and bank deposits with durations of up to 24 months. The Group's treasury policy restricts investments in short-term sterling money market funds to those which carry short-term credit ratings of at least two of AAAm (Standard & Poor's), Aaa-mf (Moody's) and AAAmmf (Fitch) and deposits with banks with minimum long-term rating of A-/A3/A and short-term rating of A-2/P-2/F-1 for banks which the UK Government holds less than 10% ordinary equity. |
15. Trade and other payables |
31 December 2022 | 31 December 2021 | |
Current: | £'000 | £'000 |
Trade payables | 4,795 | 2,425 |
Other payables | 138 | 358 |
4,933 | 2,783 | |
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16. Other current liabilities |
31 December 2022 | 31 December 2021 | |
| £'000 | £'000 |
Accruals | 6,515 | 4,803 |
Deferred grant income | 771 | 1,015 |
7,286 | 5,818 | |
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17. Derivative financial instruments |
31 December 2022 | 31 December 2021 | |
£'000 | £'000 | |
Financial assets measured at fair value through profit or loss |
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Forward exchange contracts | 26 | 321 |
Non-deliverable forward contracts | 28 | 752 |
Total derivative assets | 54 | 1,073 |
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In 2020, the Group entered into a non-deliverable forward (NDF) to hedge its exposure to Korean Won (KRW) with respect to a major customer contract. The Group also had forward exchange contracts in place to hedge expected transactions in EUR and CAD. All derivative financial instruments are measured using techniques consistent with level 2 of the fair value hierarchy. |
18. Lease liabilities |
31 December 2022 | 31 December 2021 | |
£'000 | £'000 | |
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At 1 January | 3,039 | 4,445 |
New finance leases recognised | 41 | |
Lease payments | (956) | (721) |
Interest expense | 212 | 316 |
Adjustment to lease term | 829 | (1,042) |
At 31 December | 3,124 | 3,039 |
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Current | 610 | 754 |
Non-current | 2,514 | 2,285 |
At 31 December | 3,124 | 3,039 |
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19. Provisions and contingent liabilities | ||||
Property Dilapidations |
Warranties |
Contract Losses | Total | |
£'000 | £'000 | £'000 | £'000 | |
At 1 January 2021 | 1,610 | 418 | 194 | 2,222 |
Movements in the Consolidated Statement of Profit and Loss: | ||||
Amounts used | (404) | (175) | (579) | |
Unwinding of discount | 64 | 64 | ||
Increase in provision | 154 | 1,239 | 307 | 1,700 |
At 31 December 2021 | 1,828 | 1,253 | 326 | 3,407 |
Movements in the Consolidated Statement of Profit and Loss: |
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Amounts used | (137) | (137) | ||
Unused amounts reversed | (707) | (135) | (842) | |
Unwinding of discount | 87 | 87 | ||
Increase in provision | 18 | 329 | 347 | |
At 31 December 2022 | 1,933 | 875 | 54 | 2,862 |
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Current | 875 | 54 | 929 | |
Non-current | 1,933 | 1,933 | ||
At 31 December 2022 | 1,933 | 875 | 54 | 2,862 |
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Current | 1,253 | 326 | 1,579 | |
Non-current | 1,828 | 1,828 | ||
At 31 December 2021 | 1,828 | 1,253 | 326 | 3,407 |
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During the year, following the conclusion of certain contracts utilising our fuel cell stacks, and based on a further year's data around stack failure and degradation rates, £0.7m of the existing warranty provision was released to the consolidated statement of profit or loss. Of this amount, approximately £0.3m was re-classified as a contingent liability as the likelihood of the stacks failing or of the Group paying out on any potential subsequent stack failures for certain stacks that may still be run by customers is no longer considered to be probable, but is considered to be more than remote. | ||||
20. Share capital | ||||
2022 | 2021 | |||
Number of £0.10Ordinaryshares | £'000 | Number of £0.10Ordinaryshares | £'000 | |
Allotted and fully paid |
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At 1 January | 190,729,638 | 19,073 | 172,171,527 | 17,217 |
Allotted £0.10 Ordinary shares on exercise of employee share options | 1,357,137 | 136 | 1,490,531 | 149 |
Allotted £0.10 Ordinary shares on cash placing (see below) | 17,067,580 | 1,707 | ||
At 31 December | 192,086,775 | 19,209 | 190,729,638 | 19,073 |
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On 17 March 2021 the Group announced a fundraise that would allot 17,067,580 new ordinary shares of £0.10 each in the Company, for a total gross cash consideration of £180,916,340. In conjunction with the placing, 12,967,629 shares were allotted on 17 March 2021 which included Bosch and certain Directors of the Company subscribing for 3,649,150 and 24,376 shares respectively. On 19 May 2021 Weichai subscribed for and were allotted the remaining 4,099,951 shares. During the year ended 31 December 2022, 1,357,137 ordinary £0.10 shares were allotted for cash consideration of £866,717 on the exercise of employee share options (31 December 2021: 1,490,531 ordinary £0.10 shares were allotted for cash consideration of £705,636). |
Reserves The Consolidated Statement of Financial Position includes a merger reserve and a capital redemption reserve. The merger reserve represents a reserve arising on consolidation using book value accounting for the acquisition of Ceres Power Limited at 1 July 2004. The reserve represents the difference between the book value and the nominal value of the shares issued by the Company to acquire Ceres Power Limited. The capital redemption reserve was created in the year ended 30 June 2014 when 86,215,662 deferred ordinary shares of £0.04 each were cancelled.
21. Capital commitments Capital expenditure that has been contracted for but has not been provided for in the financial statements amounts to £8,679,000 as at 31 December 2022 (31 December 2021: £8,086,000), in respect of the acquisition of property, plant and equipment, primarily related to the Group's planned test stand expansion. |
22. Related party transactions As at 31 December 2022 and as at 31 December 2021, the Group's related parties were its Directors and RFC Power Ltd. During the year ended 31 December 2022, one Director exercised and retained 7,109 share options under the Company's employee share save scheme and one Director exercised and sold 14,218 share options under the Company's employee share save scheme. There were no other transactions between the Company and the Directors during the year. During the year ended 31 December 2021 one Director exercised and retained 8,491 share options under the Company's employee share save scheme. There were no other transactions between the Company and the Directors. Transactions between the Group and RFC Power Ltd, being an associated entity of the Group, comprised engineering consultancy services provided by the Group to RFC Power for the value of £0.4m (31 December 2021: £0.1m) in return for equity share capital.
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Non-GAAP Alternative Performance Measures (unaudited)
Reconciliation between operating loss and Adjusted EBITDA Management believes that presenting Adjusted EBITDA loss allows for a more direct comparison of the Group's performance against its peers and provides a better understanding of the underlying performance of the Group by excluding non-recurring, irregular and one-off costs. The Group currently defines Adjusted EBITDA loss as the operating loss for the period excluding depreciation and amortisation charges, share-based payment charges, unrealised losses on forward contracts and exchange gains/losses. |
2022 £'000 | 2021 £'000 | ||
Operating loss | (51,522) | (23,430) | |
Depreciation and amortisation | 7,138 | 5,760 | |
Share-based payment charges | 997 | 2,615 | |
Unrealised losses/(gains) on forward contracts | 1,020 | (1,057) | |
Exchange gains | (863) | (563) | |
Adjusted EBITDA | (43,230) | (16,675) | |
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Reconciliation between net cash from operating activities and equity-free cash flow The Group defines equity-free cash flow as net cash from operating activities plus capital expenditure and adjusted for interest payments and receipts and exchange rate movements. The table below reconciles net cash from operating activities to equity-free cash flow for each period. |
2022 £'000 | 2021 £'000 | ||
Net cash used in operating activities | (51,522) | (20,342) | |
Capital expenditure (total) | (18,179) | (11,950) | |
Interest and lease receipts/(payments) (net) | 487 | (283) | |
Exchange rate movements | 863 | 563 | |
Equity-free cash flow | (68,351) | (32,012) | |
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