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Clean Power Hydrogen Plc LSE:CPH2 London Ordinary Share GB00BP371R64 ORD GBP0.01
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Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Alternative Energy 0.0 -3.5 0.0 - 69

Clean Power Hydrogen Interim results

23/09/2022 7:01am

UK Regulatory (RNS & others)


Clean Power Hydrogen (LSE:CPH2)
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TIDMCPH2

RNS Number : 3810A

Clean Power Hydrogen

23 September 2022

23 September 2022

Clean Power Hydrogen Plc

("CPH2", the "Company" or the "Group")

Interim results for the six months ending 30 June 2022

CPH2 (AIM: CPH2), the UK-based green hydrogen technology and manufacturing company that has developed the IP-protected Membrane-Free Electrolyser (TM) ("MFE"), is pleased to announce its unaudited results and report for the six months ending 30 June 2022 ("H1 2022").

Highlights

-- Successful admission to AIM, a market operated by the London Stock Exchange, in February 2022, raising gross proceeds of GBP30.5m

o Awarded the London Stock Exchange Green Economy Mark at admission

   --      Order book momentum: 

o Entered into a purchase order with AFCyro, for the sale of a 1MW MFE220 unit, the second unit purchased by the company

o Order placed by ATOME Energy, for one 1MW MFE220 unit

   --      License agreement momentum: 

o Signed a 2 gigawatts ("GW") license to GHFG Ltd, a subsidiary of Alternus Energy Group Plc, over a period of up to 20 years, with production expected in 2023.

o Technical Cooperation Agreement with Bentec GmbH, an operating company entity of Kenera Energy Solutions ("Kenera") providing for the manufacture of up to 30 MFE220 units for CPH2 at its manufacturing facility in Germany. Kenera is a business unit of our strategic shareholder, the KCA Deutag Group.

o Kenera has been awarded a non-exclusive license to sell and manufacture CPH2 products in Germany, Scotland, Azerbaijan, Denmark and Norway up to a maximum of 150 MFE units per annum.

o CPH2 has also granted Kenera an exclusive license to sell and manufacture CPH2 products across the Middle East up to a maximum level of 2GW (including Oman, Saudi Arabia, United Arab Emirates, Qatar, Kuwait and Iraq).

-- The appointment of James Hobson as Chief Financial Officer ("CFO") and executive director joining later in the year

-- Significantly invested in its workforce, increasing the head count from under 30 at IPO to over 50 as at 23 September 2022. This includes the appointment of Arash Selahi as the new Head of Production

-- Period end net asset position of GBP27.4 million, of which GBP23.2 million was in cash or current assets investments (bank deposits).

Jon Duffy, CPH2 CEO commented:

"The first half of 2022 was a notable period for the Company as it listed on AIM and funded itself for a rapid ramp up and expansion. We have also seen both purchase order and license agreement momentum in the period, as customers from around the world have seen the value of the low cost, highly robust membrane free electrolyser technology owned, manufactured and licensed by CPH2. We are working successfully to overcome the engineering challenges and look to the future with confidence."

For more information, please contact:

 
 Clean Power Hydrogen Plc                  via Camarco 
 Jon Duffy, Chief Executive Officer 
 
 Cenkos Securities plc - NOMAD & Broker 
                                           +44 (0)131 220 
 Neil McDonald                              9771 
                                           +44 (0)131 220 
 Peter Lynch                                9772 
                                           +44 (0)131 220 
 Adam Rae                                   9778 
 
                                           + 44(0) 20 3 757 
 Camarco PR                                 4980 
 Billy Clegg 
 Owen Roberts 
 Fergus Young 
 

To find out more, please visit: https://www.cph2.com

Overview of CPH2

CPH2 is the holding company of Clean Power Hydrogen Group Limited ("Clean Power") which has almost a decade of dedicated research and product development experience. This experience has resulted in the creation of simple, safe and sustainable technology which is designed to deliver a modular solution to the hydrogen production market in a cost-effective, scalable, reliable and long-lasting manner. The Group's strategic objective is to deliver the lowest LCOH in the market in relation to the production of green hydrogen. The Group's MFE technology is already commercially available and demonstrating cost efficiencies and technological advantages. CPH2 is listed on the AIM market and trades under the ticker LON:CPH2.

CEO statement

Introduction and IPO

H1 2022 is the first reporting period for CPH2 as a plc and it has been a period of significant progress as we gear up to production of the MFE units. The Company admitted to trading on AIM on 16 February, successfully raising GBP30.5 million (before expenses) in an over-subscribed Placing at 45p per share. These funds enable the Company to build out its Doncaster manufacturing facility and fund the Company's growth. At the same time, we were awarded the London Stock Exchange's Green Economy Mark, which recognises companies that derive 50% or more of their total annual revenues from products and services that contribute to the global green economy.

Order book momentum

Shortly after IPO, the Company announced that ATOME Energy purchased a 1MW MFE220 electrolyser unit to be deployed in ATOME's Paraguay mobility project. At the same time, CPH2 and ATOME entered into non-binding letters of intent confirming the parties' mutual intentions to collaborate in respect of potential future orders of electrolyser units for ATOME's international hydrogen and ammonia projects and to investigate and discuss a potential joint venture for the future production of electrolysers in country to serve the Latin American market using CPH2's technology and know-how. ATOME has confirmed that it expects that further orders will follow in due course.

This first unit for ATOME's Mobility Division will be based within the region of Asuncion, the capital of Paraguay, with commencement of production planned during 2023, which is anticipated to be the first commercial production of hydrogen for transport in Paraguay.

We were also pleased to announce a purchase order with AFCryo, a New Zealand based manufacturer of composite cryostats and cryogenic cooling systems, for the sale of a 1MW MFE220 electrolyser unit to be delivered in 2023. This is the second 1MW electrolyser unit that AFCryo has purchased within 18 months. CPH2 has an established working relationship with AFCryo and utilises the AFCryo cryogenic cooling system in its MFEs. CPH2's MFE220 runs with 1MW of input power with eight stacks and is capable of producing 450kg/day of high purity hydrogen output.

In May 2021 AFCryo placed an order for its first 1MW MFE220 electrolyser, with delivery anticipated in 2023. Additionally, in 2021, AFCryo was appointed as a non-exclusive agent for the marketing and sale of the CPH2 electrolyser system in Australia, New Zealand and the Pacific Islands.

Both of these electrolysers will be used as part of the decarbonisation of New Zealand's heavy transport fleet.

Future order momentum through license agreements

Since IPO, as well as unit sales, we have also announced two significant license agreements, which will play an important role in providing order momentum into the future as we scale up the business and expand overseas.

The first one is with GHFG for the construction of 2GW of MFE electrolysers over a period of up to 20 years. GHFG is a subsidiary of Alternus. Under the licence agreement, GHFG will produce the CPH2 MFE electrolysers at a new facility in Ireland and plans to start production during 2023. Each electrolyser produced by GHFG under this agreement will be installed alongside and powered from solar energy projects owned and operated by Alternus. Under the agreement, CPH2 will receive an upfront licence fee, and thereafter, a technology fee per unit, followed by service and maintenance licences during the unit's life, supplying key components with a margin to CPH2 . The upfront licence fee is expected to be received in Q4 2022 and Q1 2023 and is to be recognised as revenue over the life of the contract.

In September 2022, we also signed a Technology Cooperation Agreement with Bentec GmbH, an operating company entity of Kenera Energy Solutions, a newly formed business unit within leading drilling, engineering and technology company KCA Deutag Group. Kenera has been formed as the platform from which the KCA Deutag Group plans to grow its offering within hydrocarbon and energy transition markets and is a significant investor in CPH2. Under the Agreement, Kenera will manufacture up to 30 MFE220 units for CPH2 at its manufacturing facility in Germany with the first units expected to be produced in late 2023. We have also granted Kenera a non-exclusive license to sell and manufacture CPH2 products in Germany, Scotland, Azerbaijan, Denmark and Norway up to a maximum of 150 MFE units per annum and we have granted Kenera an exclusive license to sell and manufacture CPH2 products across the Middle East up to a maximum level of 2GW over the length of the license (including Oman, Saudi Arabia, United Arab Emirates, Qatar, Kuwait and Iraq).

Addressing engineering issues

As we previously announced, our early-stage commissioning of our initial units highlighted certain engineering and scale up issues. A number of design changes have been made but this has resulted in delays. At the same time, we have experienced delays in the supply chain as the global situation impacted. We are working hard to overcome all these issues. However, as previously reported, these delays will have an impact on the income for the Company during 2022. We are not expecting any income from sales in this financial year as the invoice point for MFE220's shipped in 2022 will get rolled into 2023. We are expecting the first two MFE220's to leave our premises in October 2022, there will then follow a period of commissioning and testing on site. There will be an option to exchange these units for upgraded units in 2023 as design changes are implemented. These would then be upgraded to the new specifications and will be available for sale.

We recognise the importance of getting our first MFE220's working 'in the field' and are deploying all necessary resources to make this happen.

Financial Review

These sixth month interim accounts are the first to be published by the Company since its IPO in February, and this dominated the results for this six month period. The GBP30.5m gross fundraise transforms the Balance Sheet from a net liability position at 31st December 2021 of GBP0.4 million into a net asset position of GBP27.4 million at 30 June 2022. Of this GBP23.2 million was held in cash or current asset investments (cash deposits).

The Statement of Comprehensive Income for the six months set out below shows trading losses continue as the business continues to build work-in-progress on its confirmed orders, ahead of the delivery of those orders to the customer, at which time a sale is taken to Income. Losses continue as expected with administration expenses increasing, as we invest some of the IPO proceeds in building our human and technical resource capability.

Board and team

During the first half we have invested significantly in the team which has increased from 30 people to over 50 people currently, including the appointment of Arash Selahi as the new Head of Production.

Post period end we were pleased to announce the appointment of James Hobson as Chief Financial Officer and Executive Director. It is expected that James' employment will commence in Q4 2022, at which point Clive Brook will retire as an executive director and CFO of the Company. James will join CPH2 from AMTE Power plc, where he has been CFO since October 2021. James has a wealth of experience across the energy sector, having worked as a senior finance executive in the sector for ten years. I would like to take this opportunity of thanking Clive for all his support over the years and speak on behalf of the entire CPH2 team in wishing him all the best in his retirement.

I would like to take this opportunity to thank all my colleagues at CPH2 for their hard work and dedication during the first half of the year and since.

Outlook

The continued drive to net zero combined with the current geo-political situation in Ukraine, has, in the view of the directors, increased the potential market for green hydrogen and the pace at which the technology will be deployed. The Company remains confident that its significant pipeline will start to transition to sales and we expect very positive cash inflows on future orders as they are taken. Production of these orders will be in Doncaster and Germany. Whilst the Company is still planning to launch a 2MW MFE440, final design work on this has been suspended until we have working MFE220's in the field. The Company is progressing the potential opening of a CPH2 run assembly plant in Northern Ireland. Whilst engineering and scale up issues have delayed our initial MFE220 sales, our success in securing license partners of the quality of Kenera and GHFG ensures that we will be able to ramp up production quickly to meet demand.

The Company remains committed to its strategic target of 4GW MFE annual production by 2030; of this 1GW will be in-house manufacturing and assembly and 3GW will be via license agreements.

Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2022

 
                                   Note     Unaudited      Unaudited 
                                           Six months     Six months 
                                             ended 30       ended 30 
                                                 June           June 
                                                 2022           2021 
                                              GBP'000        GBP'000 
 
 Revenue                                            -              - 
 
 Cost of sales                                      -              - 
 
 Gross profit                                  -             - 
 
 Other operating income                        2             36 
 
 Administrative expenses 
  excluding exceptional 
  credits and costs                          (2,158)        (872) 
 Exceptional net credit/(costs)     4         987         (1,256) 
                                         ------------  ------------- 
 Total administrative 
  expenses                                  (1,171)       (2,128) 
 
 
 Operating loss                             (1,169)       (2,092) 
 
 Finance income                               91             6 
 Finance expense                             (28)           (3) 
 
 Loss before taxation                       (1,106)       (2,089) 
 
 Taxation                                      -             5 
 
 Loss for the period                        (1,106)       (2,084) 
 
 Other comprehensive 
  (expense)/income 
 Foreign currency translation 
  differences                                 (9)            19 
                                         ------------  ------------- 
 Loss and total comprehensive 
  expense for the period                     (1,115)       (2,065) 
                                         ------------  ------------- 
 
 Loss per share (pence) 
 Basic and diluted                  5       (0.45)         (1.14) 
                                         ------------  ------------- 
 
 

Consolidated Statement of Financial Position

As at 30 June 2022

 
                                Notes   Unaudited        Audited 
                                          30 June    31 December 
                                             2022           2021 
                                          GBP'000        GBP'000 
 ASSETS 
 Non-current assets 
 Intangible assets                6         1,527          1,176 
 Property, plant and 
  equipment                                 1,347          1,327 
 Trade and other receivables      8           120            120 
                                                   ------------- 
                                            2,994          2,623 
                                       ----------  ------------- 
 
 Current assets 
 Inventories                      7         3,889          2,082 
 Trade and other receivables      8         2,085            704 
 Tax recoverable                                -            143 
 Current asset investments        9        21,000              - 
 Cash and cash equivalents                  2,175            480 
                                       ----------  ------------- 
                                           29,149          3,409 
                                       ----------  ------------- 
 
 Total assets                              32,143          6,032 
                                       ----------  ------------- 
 
 LIABILITIES 
 Current liabilities 
 Trade and other payables        10       (3,530)        (2,772) 
 Loan from a related 
  party                                         -          (382) 
 Lease liabilities                          (117)          (131) 
                                                   ------------- 
                                          (3,647)        (3,285) 
                                       ----------  ------------- 
 
 Non-current liabilities 
 Accruals and deferred 
  income                         10         (278)        (2,243) 
 Lease liabilities                          (797)          (856) 
                                                   ------------- 
                                          (1,075)        (3,099) 
                                       ----------  ------------- 
 
 Total liabilities                        (4,722)        (6,384) 
                                       ----------  ------------- 
 
 Net assets/(liabilities)                  27,421          (352) 
                                       ----------  ------------- 
 
 EQUITY 
 
 Share capital                   11         2,654          1,852 
 Share premium account           11        27,638              - 
 Merger reserve                  11         3,702          3,702 
 Currency differences 
  reserve                                     (5)              4 
 Accumulated loss                         (6,568)        (5,910) 
                                                   ------------- 
 Total equity                              27,421          (352) 
                                       ----------  ------------- 
 

Consolidated Statement of Changes in Equity

As at 30 June 2022

 
 
                                     Share      Share     Merger     Foreign   Accumulated     Total 
                                   capital    premium    reserve    currency          loss    equity 
                                                                     reserve 
                                   GBP'000    GBP'000    GBP'000     GBP'000       GBP'000   GBP'000 
 
 At 1 January 2021                   1,815          -      3,189        (16)       (2,793)     2,195 
 
 Loss for the period                     -          -          -           -       (2,084)   (2,084) 
 Other comprehensive 
  income: 
  Foreign currency differences           -          -          -          19             -        19 
                                 ---------  ---------  ---------  ----------  ------------  -------- 
 Total comprehensive 
  expense for the period                 -          -          -          19       (2,084)   (2,065) 
 
 Share based payment                     -          -          -           -            91        91 
 Issue of share capital                 37          -        513           -             -       550 
                                 ---------  ---------  ---------  ----------  ------------  -------- 
 Total contributions 
  by owners                             37                   513           -            91       641 
 
 At 30 June 2021                     1,852          -      3,702           3       (4,786)       771 
                                 ---------  ---------  ---------  ----------  ------------  -------- 
 
 Loss for the period                     -          -          -           -       (1,233)   (1,233) 
 Other comprehensive 
  income: 
  Foreign currency differences           -          -          -           1             -         1 
                                 ---------  ---------  ---------  ----------  ------------  -------- 
 Total comprehensive 
  expense for the period                 -          -          -           1       (1,233)   (1,232) 
 
 Share based payment                     -          -          -           -           109       109 
 Total contributions 
  by owners                              -          -          -           -           109       109 
 
 At 31 December 2021                 1,852                 3,702           4       (5,910)     (352) 
                                 ---------  ---------  ---------  ----------  ------------  -------- 
 
 Loss for the period                     -          -          -           -       (1,106)   (1,106) 
 Other comprehensive 
  expense: 
  Foreign currency differences           -          -          -         (9)             -       (9) 
                                 ---------  ---------  ---------  ----------  ------------  -------- 
 Total comprehensive 
  expense for the period                 -          -          -         (9)       (1,106)   (1,115) 
 
 Share based payment                     -          -          -           -           448       448 
 Issue of share capital                802     27,638          -           -             -    28,440 
                                 ---------  ---------  ---------  ----------  ------------  -------- 
 Total contributions 
  by owners                            802     27,638          -           -           448    28,888 
 
 At 30 June 2022                     2,654     27,638      3,702         (5)       (6,568)    27,421 
                                 ---------  ---------  ---------  ----------  ------------  -------- 
 

Consolidated Statement of Cash Flows

For the six months ended 30 June 2022

 
                                                    Unaudited     Unaudited 
                                                   Six months    Six months 
                                                     ended 30      ended 30 
                                                    June 2022     June 2021 
                                                      GBP'000       GBP'000 
 Cash flow from operating activities 
 Loss for the financial period                        (1,106)       (2,084) 
 Adjustment for: 
 Depreciation of property, plant 
  and equipment                                           109            39 
 Impairment of right-of-use assets                          -            25 
 Amortisation of intangible assets                         10             4 
 Share based payments including 
  LTIP credit                                         (1,517)            91 
 Net finance costs                                       (63)           (3) 
 Taxation credit                                            -           (5) 
 Changes in working capital: 
 Increase in inventories                              (1,807)         (972) 
 Increase in trade and other receivables              (1,381)         (204) 
 Increase in trade and other payables                     742         2,896 
                                             ----------------  ------------ 
 Cash used in operations                              (5,013)         (213) 
 Income tax received                                      143             5 
                                             ----------------  ------------ 
 Net cash used in operating activities                (4,870)         (208) 
                                             ----------------  ------------ 
 
 Cash flow from investing activities 
 Current asset investments made                      (21,000)             - 
  (in bank term 
  deposits) 
 Purchase of property, plant and 
  equipment                                             (129)          (59) 
 Capital grants received                                    -           117 
 Purchase of intangible assets                          (354)         (315) 
 Net cash used in investing activities               (21,483)         (257) 
                                             ----------------  ------------ 
 
   Cash flow from financing activities 
 Issue of share capital net of                         28,440             - 
  issue costs (note 11) 
 Cash proceeds from financial asset 
  held                                                      -           400 
 Related party loan repaid (note                        (382)             - 
  12) 
 Interest received                                         91             6 
 Interest paid                                           (28)           (3) 
 Payment of lease liabilities                            (73)          (59) 
 
 Net cash generated from financing 
  activities                                           28,048           344 
                                                 ------------  ------------ 
 
 
   Increase/(decrease) in cash and 
   cash equivalents                                     1,695         (121) 
                                                 ------------  ------------ 
 
 Net cash and cash equivalents 
  at beginning of the period                              480         2,937 
 
 Net cash and cash equivalents 
  at end of the period (all cash 
  balances)                                             2,175         2,816 
                                                 ------------  ------------ 
 
 
 

Notes to the condensed interim financial statements f or the six months ended 30 June 2022

   1.    Corporate information 

Clean Power Hydrogen plc is a public company incorporated in the United Kingdom and listed on the Alternative Investment Market. The registered address is Unit D Parkside Business Park, Spinners Road, Doncaster, England, DN2 4BL. The principal activity of the company and its subsidiaries (the 'Group') is the development of a patented method of hydrogen and oxygen production together with the development of a gas separation technique which enables hydrogen to be produced as 'Green Hydrogen' and oxygen to medical grade purity.

   2.    Basis of preparation 

This unaudited condensed consolidated interim financial information for the six months ended 30 June 2022 and 30 June 2021 has been prepared in accordance with IFRS as adopted by the United Kingdom including IAS 34 'Interim Financial Reporting'.

The accounting policies applied by the Group include those as set out in the financial statements for the subsidiary company, Clean Power Hydrogen Group Limited ('CPHGL'), for the year ended 31 December 2021 and are consistent with those to be used by the Group in its next financial statements for the year ending 31 December 2022. In addition to the policies presented in the 2021 financial statements, the Group will apply the policies below applicable to consolidated financial statements and the Company becoming the parent company for Clean Power Hydrogen Group Limited and to the accounting for term deposits of cash. There are no new standards, interpretations and amendments which are not yet effective in these financial statements, expected to have a material effect on the Group's future financial statements.

The financial information does not contain all of the information that is required to be disclosed in a full set of IFRS financial statements. The financial information for the six months ended 30 June 2022 and 30 June 2021 is unreviewed and unaudited and does not constitute the Group or Company's statutory financial statements for those periods.

The comparative financial information for the full year ended 31 December 2021 has, however, been derived from the audited statutory financial statements for Clean Power Hydrogen Group Limited for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

These policies have been applied consistently to all periods presented, unless otherwise stated.

The interim financial information has been prepared under the historical cost convention with the exception of the fair values applied in accounting for share based payments. The financial information and the notes to the historical financial information are presented in thousands of pounds sterling ('GBP'000'), the functional and presentation currency of the Group, except where otherwise indicated.

Merger accounting and consolidated financial statements

The Company was incorporated on 19 August 2021 with one GBP0.01 ordinary share and on 1 February 2022, became the Group parent company when it issued 185,267,700 GBP0.01 ordinary shares in exchange for all the ordinary shares in CPHGL. In addition, warrants and options over ordinary shares in CPHGL were converted, on equivalent terms, to warrants and options over 26,911,940 shares in the Company. This is considered not to be a business combination within the scope of IFRS3. This is a key judgement, and as a transaction where there was no change in the shareholders or holdings, is accordingly accounted for using merger accounting with no change in the book values of assets and liabilities and no fair value accounting applied.

The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they have always formed a single group. Intercompany transactions and balances between Group companies are therefore eliminated in full. The share capital presented is that of Clean Power Hydrogen plc with the difference on elimination of CPHGL's capital being shown as a merger reserve.

A subsidiary is an entity over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Current asset investments

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value. Deposits of cash with banks that are subject to maturity terms of more than 90 days are presented as current asset investments.

Going concern

The directors have considered the principal risks and uncertainties facing the business, along with the Group's objectives, policies and processes for managing its exposure to financial risk. In making this assessment the directors have prepared cash flows for the foreseeable future, being a period of at least 12 months from the expected date of approval of this financial information.

The Company has successfully raised net proceeds of GBP27.6m from new equity in order to fund investment in the manufacturing operations, working capital and continuing development work. The Group's forecasts and projections to 31 December 2023 based on the current trends in trading and after taking account of the funds currently held, show that the company and the Group will be able to operate within the level of cash reserves.

The directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and consider the going concern basis to be appropriate.

   3.    Segmental reporting 

IFRS 8, Operating Segments, requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the company's chief operating decision maker. The chief operating decision maker is considered to be the executive Directors.

The Group at this stage comprises only one operating segment for the development and sale of equipment for the electrolytic production of clean hydrogen and oxygen. The operating segments are monitored by the chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results.

All material assets, liabilities, revenues and expenses are located in, or derived in, the United Kingdom with the exception of capitalised patent costs and the related party loan liability in the Irish subsidiary of CPHGL which are denominated in Euros.

   4.    Exceptional costs and credits 
 
                                         Six months            Six months 
                                           ended 30              ended 30 
                                          June 2022             June 2021 
                                            GBP'000               GBP'000 
 
 Cash settled LTIP credit/(expense)           1,965               (1,256) 
 IPO professional fees and costs              (604)                     - 
 Accelerated share based payment              (374)                     - 
  charges 
                                        -----------  -------------------- 
                                                987               (1,256) 
                                        -----------  -------------------- 
 
 

In addition to equity settled share based payment charges in respect of share options and warrants, the Group, prior to IPO, also had an LTIP in place with a bonus arrangement payable. Under the accounting standard this was treated as cash settled. However, the arrangement has been cancelled as of 10 February 2022 and replaced with a new equity settled arrangement and conditions. The prior LTIP was linked to the CPHGL value and share price over the 3 year period to September 2023 with the accruals booked in non-current liabilities. The charge for the period ended 30 June 2021 was GBP1,256,000 including the related national insurance costs and the total non-current liability accrued at 30 June 2021 was GBP1,965,000 reflecting a significant increase in the share price in the period following the receipt of initial customer orders. The derecognition of this liability has been disclosed as exceptional in view of its impact on the period and that no cash was payable in the short term.

The new equity settled arrangement is in respect of options over up to 10,608,980 shares at an exercise price of GBP0.085 per share. Exercise from 30 June 2024 of 25% is subject to remaining an employee and 75% also to sales related performance conditions.

The accrued cash settlement liability has therefore been credited to the income statement in the period ended 30 June 2022 as an exceptional credit with no liability at the period end resulting in the significant reduction in non current accruals.

The fair value of the total share based payment in respect of the new arrangement is GBP1,810,000 which is being expensed over the vesting period from grant date on 10 February 2022 to the vesting date of 30 June 2024 to the extent to which options are expected to vest, with a charge of GBP74,000 in the period to June 2022.

The share options that were in place in 2021 all vested at the date of the IPO and were exercised or replaced by options exercisable at any time with a consequential acceleration and expense of the remaining associated share based payments of GBP374,000.

As these earlier arrangements were linked to the IPO which is considered to be a one off event and in view of the amounts these have been shown as exceptional credits or charges in the period. The IPO related professional fees and costs directly related to the IPO of GBP604,000 which have been expensed in the period ended 30 June 2022 have also been disclosed as exceptional.

   5.    Earnings per share 

The calculation of the basic and diluted loss per share is based on the following data:

 
 
                                              Six months      Six months 
                                                ended 30        ended 30 
                                               June 2022       June 2021 
                                                 GBP'000         GBP'000 
 
 Loss for the purpose of basic 
  earnings per share being net 
  loss attributable to the shareholders          (1,106)         (2,084) 
                                          --------------  -------------- 
 
                                              Six months      Six months 
                                                ended 30        ended 30 
                                               June 2022       June 2021 
 Number of shares                                GBP'000         GBP'000 
 
 Weighted average number 
  of ordinary shares for the 
  purposes of basic earnings 
  per share                                  245,053,907     183,302,694 
                                                          -------------- 
 
 
 

The weighted average is calculated applying the equivalent number of Clean Power Hydrogen plc shares to each period.

There is no dilutive effect on a loss. There are potentially dilutive options in place over 24,035,420 ordinary shares at 30 June 2022.

   6.    Intangible fixed assets 
 
                               Development   Patents  Software     Total 
                                     costs             GBP'000 
                                   GBP'000   GBP'000             GBP'000 
  Cost 
  At 31 December 2021                1,060       123        17     1,200 
  Additions                            297        23        34       354 
  Foreign exchange movements             -        12         -        12 
-----------------------------  -----------  --------  --------  -------- 
  At 30 June 2022                    1,357       158        51     1,566 
-----------------------------  -----------  --------  --------  -------- 
  Accumulated depreciation 
  At 31 December 2021                    -         7        17        24 
  Charge for the period                  -         6         4        10 
  Foreign exchange movements             -         5         -         5 
-----------------------------  -----------  --------  --------  -------- 
  At 30 June 2022                        -        18        21        39 
-----------------------------  -----------  --------  --------  -------- 
  Net book amount 
  At 30 June 2022                    1,357       140        30     1,527 
-----------------------------  -----------  --------  --------  -------- 
  At 31 December 2021                1,060       116         -     1,176 
-----------------------------  -----------  --------  --------  -------- 
 
   7.    Inventories 
 
                                           30   31 December 
                                    June 2022          2021 
                                      GBP'000       GBP'000 
 
 Raw materials and consumables            570             9 
 Work in progress                       3,319         2,073 
                                  -----------  ------------ 
                                        3,889         2,082 
                                  -----------  ------------ 
 
 
   8.    Trade and other receivables 
 
                               30   31 December 
                        June 2022          2021 
                          GBP'000       GBP'000 
 Current 
 Other receivables            688           282 
 Prepayments                1,397           422 
                      -----------  ------------ 
                            2,085           704 
                      -----------  ------------ 
 Non-current 
 Other receivables            120           120 
                      -----------  ------------ 
 
 
 

At 30 June 2022, prepayments include GBP1.1m of payments made in advance to suppliers.

   9.    Current asset investments 

The cash raised from the IPO has been placed in longer term bank deposits where it is not forecast to be needed in the short term, and in accordance with the IFRS accounting policy, this GBP21m of bank deposits is shown in current asset investments.

   10.   Trade and other payables 
 
                                          30   31 December 
                                   June 2022          2021 
                                     GBP'000       GBP'000 
 Current 
 Trade payables                          557           376 
 Other payables                           48            14 
 Taxation and social security 
  costs                                  109            48 
 Accruals                                180            97 
 Deferred income                       2,636         2,237 
                                 -----------  ------------ 
                                       3,530         2,772 
                                 -----------  ------------ 
 Non-current 
 Accruals                                  -         1,965 
 Deferred income                         278           278 
                                 -----------  ------------ 
                                         278         2,243 
                                 -----------  ------------ 
 
 
 

GBP2.6m of the deferred income relates to advance payments from customers (2021: GBP2.1m).

   11.   Share capital 

The movements in the Company's share capital were as follows:

 
                                                 Number   Nominal   Share premium 
                                             of GBP0.01 
                                                 shares 
                                                          GBP'000         GBP'000 
 
 One GBP1 share issued on incorporation,            100         -               - 
  subdivided into 100 GBP0.01 shares 
 Shares issued in exchange for 
  CPHGL shares                              185,267,700     1,852               - 
 Exercise of warrants                         2,075,280        21              75 
 Exercise of options                         11,410,220       114             285 
 Placing shares issued at GBP0.45 
  each                                       66,666,667       667          29,333 
 Share issue costs                                    -         -         (2,055) 
                                           ------------  --------  -------------- 
                                            268,419,967     2,654          27,638 
                                           ------------  --------  -------------- 
 
 

The issue of shares resulted in a share premium of GBP27,638,000 (net of GBP2,055,000 of share issue costs incurred).

The issue of shares with a nominal value of GBP1,852,677 in exchange for the 9,263,385 GBP0.001 shares in CPHGL with a nominal value of GBP9,263 and share premium of GBP5,545,118 results on elimination of the difference in a credit to a merger reserve of GBP3,701,704 in accordance with the merger accounting principles as set out in note 2.

   12.   Related party transactions 

A loan advanced to the group of GBP382,000 at 31 December 2021 (30 June 2021: GBP387,000) from Streamstown Mouldings Limited, incorporated in the Republic of Ireland and controlled by Joe Scott, a director of the company was interest free with no fixed repayment terms. This loan was fully repaid in February 2022. Directors remuneration during the 6 month period ended 30 June 2022 amounted to GBP367,264.

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END

IR ZZGZLMZLGZZZ

(END) Dow Jones Newswires

September 23, 2022 02:01 ET (06:01 GMT)

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