TIDMDGI
RNS Number : 9081V
DG Innovate PLC
12 August 2022
12 August 2022
DG Innovate plc
("DG Innovate " or the "Company")
Final results for the year ended 31 December 2021
DG Innovate (LSE: DGI), the advanced research and development
company pioneering sustainable and environmentally considerate
improvements to electric mobility and storage, announces the
Company's audited results for the year ended 31 December 2021. DG
Innovate was previously Path Investments plc and the results cover
a period prior to the Company's acquisition of Deregallera Holdings
Ltd (formerly DG Innovate Limited) ("DGI") on 8 April 2022, when
the Company was an investment company.
Restoration of Trading
Following the publication of the Company's final results for the
year ended 31 December 2021, the Company will apply to the
Financial Conduct Authority to request a restoration of its listing
on the Official List and to resume trading on the London Stock
Exchange.
Results Highlights
Successful fund raise with gross proceeds of GBP3.85 million
-- in March 2021
Conditional Sale and Purchase Agreement with DG Innovate
-- Limited ("DGI") signed 12 August 2021
Secured loans extended to DGI totalling GBP600,000 to accelerate
-- technology development during 2021
Post year end successful completion of acquisition of DGI
-- and accompanying funding, raising GBP4.6 million gross
proceeds in April 2022
Post period Highlights
Successful completion of the acquisition of DGI and accompanying
-- funding, raising GBP4.6 million in gross proceeds in April
2022
Commencement of an acceleration programme to advance commercial
-- progress with the Company's suite of electric mobility
and storage technologies
Continuing Innovate UK funding to support DG Innovate's
-- Pareta(c) range of high-performance electric vehicle drives
Funding secured from the Ford Low Carbon Vehicle Transformation
-- Fund to support the Company's ongoing electric motor development
programme
Appointment of Peter Tierney as the Company's new Chief
-- Executive Officer from 1 July 2022
Commenting Peter Tierney, Chief Executive Officer of DG Innovate
said: "Whilst the delay to the publication of the accounts was
disappointing, I believe we have now put the challenges of the DGI
reverse takeover transaction behind us and we can focus solely on
progressing the commercialisation of the Company's exciting suite
of electric mobility and storage technologies. Since joining the
Company I have been very impressed by both the technology and the
quality of the DG Innovate team. I believe DG Innovate has world
class solutions for both electric vehicle drives and energy storage
that can address unmet needs using readily available materials and
that can be manufactured at commercial scale.
We will be commencing formal testing of our 250kW Pareta(c)
integrated E-drive shortly and I look forward to reporting on this
in due course. In addition, support from the Ford Fund will enable
us to continue to work with electric powertrain experts at the
Cwmbran-based firm Meritor and Cardiff University to design and
test a new motor which uses less "rare earth" material than
conventional motors, making them cheaper and minimising
environmental and climate impacts.
We also hope to be shortly in a position to detail the results
of the performance of our anode active materials, a key enabling
technology for sodium-ion batteries, within the industrial scale up
trials being undertaken by our consortium partners. These are very
exciting times for DG Innovate and I look forward to making further
announcements as we progress."
The audited results for the year ended 31 December 2021 have
been published today on the company's investor website at
https://dgiplc.com/reports-documents , and will be made available
on the National Storage Mechanism shortly at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism.
- Ends -
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
For further information please contact:
DG Innovate plc C/O IFC
Peter Tierney
Jack Allardyce
IFC Advisory (Financial PR & IR) 020 3934 6630
Tim Metcalfe
Zach Cohen
Grant Thornton UK LLP (Financial Adviser)
Samantha Harrison
Jamie Barklem
Daphne Zhang
Ciara Donnelly 020 7383 5100
OvalX (Broker) 020 7392 1400
Tom Curran
Thomas Smith
About DG Innovate
DG Innovate is an advanced research and development company
pioneering sustainable and environmentally considerate improvements
to electric mobility and storage, using abundant materials and the
best engineering and scientific practices. DG Innovate is currently
developing its products alongside a number of major manufacturers
across the transportation and energy sectors, research institutions
and the UK Government, and has filed 18 patents worldwide. DG
Innovate's current research and development activities are broadly
split into two areas, focusing on novel electric motor technologies
and energy storage solutions. Its two main products are:
- Enhanced Drive Technology (EDT) - High efficiency,
lightweight, cost-effective electric motors and electronics;
- Enhanced Battery Technology (EBT) - Sodium-ion batteries
offering a sustainable energy storage solution at similar/greater
energy density to incumbent technologies at a lower cost, increased
safety with lower environmental footprint.
Further information may be found at: https://www.dgiplc.com
CHAIRMAN'S STATEMENT
Review
In March 2021 the Company was delighted to receive the welcome
support of new shareholders and certain existing holders in a fund
raising with gross proceeds of GBP3.85 million received to
accelerate the Company's investment strategy.
Having considered several opportunities during the prior period,
the Company entered a period of exclusivity to undertake detailed
due diligence on DGI, culminating in the signing of a conditional
Sale and Purchase Agreement on 12 August 2021, reflecting an agreed
all share Reverse Takeover ("RTO") transaction.
In the intervening period and prior to completion of the
transaction, The Company advanced secured loans to DGI totalling
GBP600,000 by year end 2021. These loans, together with an
additional secured advance of GBP300,000 prior to completion (but
following the year end), are carried as secured debtors on our
balance sheet.
Post year end in April 2022, the transaction successfully
completed which, together with an accompanying fundraise provided
by existing shareholders, positions the enlarged group to further
the development of DGI's Enhanced Drive and Enhanced Battery
Technologies to commercialisation. The Company changed its name to
DG Innovate plc to reflect the new group structure at
completion.
We are pleased with the progress that has been made as the two
businesses have come together post the RTO. We are already seeing
the benefits of the complimentary skillsets that our new Board
members bring to the business which has invigorated the push
towards commercialisation of both the Enhanced Drive and Battery
Technologies. Formal testing of the new 250kW Pareta(c) integrated
E-drive shall commence imminently, with results expected during the
coming weeks. We also hope to be shortly in a position to detail
the results of the performance of our anode within the industrial
scale up of our consortium partners' Sodium-Ion battery trials.
I want to take this opportunity to express my gratitude to our
shareholders and investors for the continued support that they have
shown us over the years and welcome our new shareholders and staff
that join us with this successful transaction. We look forward to
the future with confidence.
Nicholas Tulloch
Non-Executive Chairman
OPERATIONAL REVIEW
The Company was incorporated and registered in England and Wales
on 2 June 2000 under the Companies Act 1985 as a public company
limited by shares with the name Hallco 459 Plc and with registered
number 04006413. On 28 November 2000, the Company changed its name
to The Niche Group Plc. On 20 February 2016, the Company changed
its name to Path Investments Plc. On 8 April 2022, the Company
changed its name to DG Innovate Plc. It is domiciled and its
principal place of business is in the United Kingdom and is subject
to the City Code.
The Company was admitted to the Official List by way of a
Standard Listing and to trading on the London Stock Exchange's Main
Market for listed securities on 30 March 2017.
During the period under review the Company was a cash shell,
whose stated strategy was to deliver acquisitions in the energy
sector, and a number of opportunities were evaluated.
The Company has not traded over the past twelve months. Over
that period its expenses have related to pre-deal costs,
professional and associated expenses related to advisory and
consultancy fees, along with general administration expenses.
In March 2021 the Company was delighted to receive the welcome
support of new shareholders and certain existing holders in a fund
raising with gross proceeds of GBP3.85 million to accelerate the
Company's investment strategy.
The Company entered a period of exclusivity to undertake
detailed due diligence on DGI, with particular detailed
investigation of its proprietary Enhanced Drive and Enhanced
Battery Technologies, culminating in the signing of a binding Sale
and Purchase Agreement on 12 August 2021, reflecting an agreed all
share Reverse Takeover transaction.
FINANCIAL REVIEW
Loss for the year
In the year ended 31 December 2021, the Company recorded a loss
of GBP3,903,459 (2020 loss: GBP377,103).
Cash flow
On 18 March 2021, the Company successfully raised GBP3.85
million (before expenses) through a placing of new ordinary shares
and admitted the new shares to trading on the Standard List of the
Main Market of the London Stock Exchange. On the same date the
GBP108,767 of convertible loan notes were settled in full by issue
of shares.
During the year ended 31 December 2021, the Company advanced
secured loans to DGI totalling GBP600,000.
Post year end the Company advanced a further GBP300,000 in
secured loans to DGI.
Peter Tierney
Chief Executive Officer
INDEPENT AUDITORS' REPORT
FOR THE YEARED 31 DECEMBER 2021
Opinion
We have audited the financial statements of DG Innovate Plc
(previously known as Path Investments Plc) (the 'Company') for the
year ended 31 December 2021 which comprise the Statement of
Comprehensive Income, the Statement of Changes in Equity, the
Statement of Financial Position, the Statement of Cash Flows, and
notes to the financial statements, including significant accounting
policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK adopted international
accounting standards.
In our opinion the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 December 2021 and of the Company's
loss for the year then ended;
-- have been properly prepared in accordance with UK adopted
international accounting standards; and
-- have been prepared in accordance with the requirements
of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's Responsibilities for the audit of the financial
statements section of our report. We are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Our approach to the audit
As part of scoping our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant
accounting estimates such as the fair value of the share options
and warrants that involved making assumptions and considering
future events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed
sufficient audit work to be able to give an opinion on the
financial statements as a whole, taking into account an
understanding of the Company and its environment, including the
Company's system of internal control. We also addressed the risk of
management override of internal controls. Our planned audit testing
was directed accordingly and was focused on areas where we assessed
there to be the highest risk of material misstatements.
We conducted our audit from our City of London office and the
audit team communicated regularly throughout the audit with the
Audit Committee and the directors in order to ensure we had a good
knowledge of the operations of the Company. During the audit, we
reassessed and re-evaluated audit risks and tailored our approach
accordingly if needed.
The audit testing included substantive testing on significant
transactions, balances and disclosures, the extent of which was
based on various factors such as our overall assessment of the
control environment, and the relevant specific risks.
We communicated with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant findings, including any significant deficiencies in
internal controls that we identified during the audit.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of risks identified during our
audit.
Key Audit Matters How our scope addressed this matter
Going concern Our audit work and conclusion in
respect of going concern has been
The Company has no revenue for detailed in the 'Material uncertainty
the year ended 31 December 2021 related to going concern section
(2020: GBPNil) and has incurred of our audit report'.
an operating loss of GBP3,914,764
(2020: GBP266,693) including a
GBP2,042,335 non-cash exceptional
share options and warrants charge.
The Company has outstanding creditors
of GBP737,166 at 31 December 2021
(2020: GBP2,145,256) and cash funds
of GBP686,400 (2020: GBP468).
The Company has continued incurring
further losses subsequent to the
year end.
Given the performance in the year,
including the significant losses,
creditor balances and decreasing
cash funds, going concern was considered
to be a key audit risk area.
-------------------------------------------
Share options and warrants expense Our audit work included, but was
not restricted to:
In the previous year and during - Reconciling the number of share
the year ended 31 December 2020, options and warrants to their respective
the Company issued share options agreements.
and warrants to its directors and
one of its creditors in lieu of - Re-performing the option pricing
salary and settlement of the outstanding model calculation of the share
creditor balance respectively. options and warrants charge prepared
by the directors to determine if
As detailed in note 18, the Company it had been calculated in accordance
has incurred a share options and with the requirements of IFRS 2.
warrants charge of GBP2,042,335
in the year (2020: GBP87,501). - Critically assessing the judgements
The recognition of the share-based made by management in determining
payment and warrants expense requires the share options and warrants
estimates to be made regarding charges and the assumptions underlying
the fair value of the share options them to determine whether the options
and warrants granted. These are and warrants charge in the financial
dependent on the assumptions made statements had been calculated
in respect of the inputs into the in accordance with the requirements
relevant options pricing model. of IFRS 2 and all relevant disclosures
The use of the model and the assumptions had been appropriately made.
made by management thus involve
a number of judgements to establish Key observations:
the appropriate inputs into the Based on our audit work, we identified
model. a material error of GBP2,042,335
in the calculation of the share
options and warrants charge which
has now been adjusted in these
financial statements by management.
Following this audit adjustment,
we have concluded that the treatment
of the share options and warrants
within the financial statements
is not materially misstated.
-------------------------------------------
Our application of materiality
The scope and focus of our audit was influenced by our
assessment and application of materiality. We define materiality as
the magnitude of misstatement that could reasonably be expected to
influence the readers and the economic decisions of the users of
the financial statements. We use materiality to determine the scope
of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both
individually and on the financial statements as a whole.
Due to the nature of the Company we considered expenditure
incurred to be the main focus for the readers of the financial
statements, accordingly this consideration influenced our judgement
of materiality. Based on our professional judgement, we determined
materiality for the Company to be GBP34,885 based on a percentage
of expenditure incurred before share options and warrants charge
(2%). This was based on expenditure per the draft financial
statements at the planning stage of the audit.
On the basis of our risk assessment, together with our
assessment of the overall control environment, our judgement was
that performance materiality (i.e. our tolerance for misstatement
in an individual account or balance) for the Company was 50% of
materiality, namely GBP17,442.
We agreed to report to the Audit Committee all audit differences
in respect of the Company in excess of GBP1,744 and, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds. We also reported to the Audit
Committee on disclosure matters that we identified when assessing
the overall presentation of the financial statements.
Material uncertainty related to going concern
We draw attention to note 1.2 to the financial statements, which
indicates that the Company's cash flow projections show that the
Company will need to raise debt or equity funding in order to
continue in business and meet its liabilities as they fall due for
at least twelve months from the date of approval of the financial
statements. The Company incurred an operating loss of GBP3,914,764
(2020: GBP266,693) for the year ended 31 December 2021.
These events or conditions indicate that a material uncertainty
exists that may cast significant doubt on the Company's ability to
continue as a going concern. Our opinion is not modified in respect
of this matter.
In auditing the financial statements, we have concluded that the
use of the going concern basis of accounting in the preparation of
the financial statements is appropriate. Our evaluation of the
directors' assessment of the Company's ability to continue to adopt
the going concern basis of accounting included:
- a critical assessment of the detailed cash flow projections
prepared by the directors, which are based on their current
expectations of trading prospects, we also evaluated the
sensitivities that the directors performed against this
forecast.
- We evaluated the key assumptions in the forecast, which were
consistent with our knowledge of the business and considered
whether these were supported by the evidence we obtained. We
obtained an understanding of all relevant uncertainties, including
those arising as a result of the impact of the COVID-19 pandemic
over the past years. We have factored the ongoing impact of
COVID-19 into our analysis of the risks affecting the ability of
the Company to continue to trade and meet its liabilities as they
fall due for at least twelve months from the date of approval of
the financial statements.
- We examined the disclosures relating to the going concern
basis of preparation and found that these provided an explanation
of the directors' assessment that was consistent with the evidence
we obtained.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there
is a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion the part of the directors' remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements;
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
the directors' report.
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
- adequate accounting records have not been kept by the Company,
or returns adequate for our audit have not been received from
branches not visited by us; or
- the financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the
accounting records and returns; or
- certain disclosures of directors' remuneration specified by
law are not made; or
- we have not received all the information and explanations we
require for our audit; or
- a corporate governance statement has not been prepared by the
Company.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 10, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities is available on
the FRC's website at
https://wwww.frc.org.uk/auditors/auditor-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor's-responsibilities-for
This description forms part of our auditor's report.
Explanation as to what extent the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below.
The objectives of our audit in respect of fraud, are; to
identify and assess the risks of material misstatement of the
financial statements due to fraud; to obtain sufficient appropriate
audit evidence regarding the assessed risks of material
misstatement due to fraud, through designing and implementing
appropriate responses to those assessed risks; and to respond
appropriately to instances of fraud or suspected fraud identified
during the audit. However, the primary responsibility for the
prevention and detection of fraud rests with both management and
those charged with governance of the Company.
Our approach was as follows:
- We obtained an understanding of the legal and regulatory
requirements applicable to the Company and considered that the most
significant are the Companies Act 2006, UK adopted international
financial reporting standards, the Listing Rules, the Disclosure
and Transparency Rules, QCA Compliance and UK taxation
legislation.
- We obtained an understanding of how the company complies with
these requirements by discussions with management and those charged
with governance.
- We assessed the risk of material misstatement of the financial
statements, including the risk of material misstatement due to
fraud and how it might occur, by holding discussions with
management and those charged with governance.
- We reviewed board minutes, legal expenses, and RNS
announcements and inquired of management and those charged with
governance as to any known instances of non-compliance or suspected
non-compliance with laws and regulations.
- Based on this understanding, we designed specific appropriate
audit procedures to identify instances of non-compliance with laws
and regulations. This included making enquiries of management and
those charged with governance and obtaining additional
corroborative evidence as required.
- We evaluated managements' incentives to fraudulently
manipulate the financial statements and determined that the
principal risks related to management bias in accounting estimates
and judgemental areas of the financial statements. We challenged
the assumptions and judgements made by management in respect of the
significant areas of estimation, as described in the key audit
matters section. Further audit procedures performed to address the
risk of fraud included but were not limited to: the testing of
journals and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of
business.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion.
Other matters which we are required to address
We were appointed by the Audit Committee on 3 May 2022 to audit
the financial statements for the year ended 31 December 2021. Our
total uninterrupted period of engagement is 1 year, covering the
year ended 31 December 2021.
The non-audit services prohibited by the FRC's Ethical Standard
were not provided to the Company and we remain independent of the
Company in conducting our audit.
Our audit opinion is consistent with the additional report to
the Audit Committee.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken for no purpose other than to
draw to the attention of the company's members those matters which
we are required to include in an auditor's report addressed to
them. To the fullest extent permitted by law, we do not accept or
assume responsibility to any party other than the company and
company's members as a body, for our work, for this report, or for
the opinions we have formed.
MITAL SHAH
Partner
On behalf of Moore Kingston Smith LLP
Statutory Auditor
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2021
Year Year
ended ended
31 December 31 December
Note 2021 2020
GBP GBP
Administrative expenses (1,872,429) (179,192)
Share based payments 18 (2,042,335) (87,501)
Operating loss 3 (3,914,764) (266,693)
Finance income 7 11,934 -
Finance cost 7 (629) (110,410)
Loss on ordinary activities
before taxation (3,903,459) (377,103)
Income tax 8 - -
Loss for the year and total
comprehensive loss attributable
to the equity holders (3,903,459) (377,103)
Earnings per share
- Basic and diluted earnings
attributable to the equity holders
from continuing and total operations 9 (0.22) (0.19)
All operating income and operating gains and losses relate to
continuing activities.
There was no other comprehensive income for the year (2020:
GBPNil).
The notes form an integral part of the financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2021
Share Share Capital Share Retained Total
Capital Premium Redemption Option earnings
Reserve Reserve
GBP GBP GBP GBP GBP GBP
As at 1 January
2020 8,979,767 25,413,617 - - (36,298,570) (1,905,186)
Comprehensive
income
Loss for the period - - - - (377,103) (377,103)
Share based payments - - - 87,501 - 87,501
Total Comprehensive
loss - - - 87,501 (377,103) (289,602)
Total contributions - - - - - -
by and distributions
to owners of the
Company
Issued share capital 6,667 43,333 - - - 50,000
Cancellation of
deferred shares (8,783,824) - 8,783,824 - - -
As at 31 December
2020 202,610 25,456,950 8,783,824 87,501 (36,675,673) (2,144,788)
As at 31 December
2020 202,610 25,456,950 8,783,824 87,501 (36,675,673) (2,144,788)
Comprehensive
income
Loss for the period - - - - (3,903,459) (3,903,459)
Share based payments - - - 2,889,504 - 2,889,504
Total Comprehensive
loss - - - 2,889,504 (3,903,459) (1,013,955)
Total contributions
by and distributions
to owners of the
Company
Issue of share
capital 1,826,854 2,266,324 - - - 4,093,178
As at 31 December
2021 2,029,464 27,723,274 8,783,824 2,977,005 (40,579,132) 934,435
The Share Capital represents the nominal value of the equity
shares. The Share Premium represents the amount subscribed for
share capital, in excess of the nominal amount, less costs directly
relating to the issue of shares.
The Capital Redemption reserve represents the nominal value of
cancelled deferred shares. The Retained Earnings reserve represents
the cumulative net gains and losses less distributions made.
The Share option reserve represents share-based payments which
represents the cumulative fair value of options and warrants
granted.
The notes form an integral part of the financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
As at As at
31 December 31 December
Note 2021 2020
GBP GBP
ASSETS
Property, plant and equipment 10 80,546 -
Current assets
Trade and other receivables 11 904,655 -
Cash and cash equivalents 16 686,400 468
1,591,055 468
LIABILITIES
Current liabilities
Trade and other payables 12 (737,166) (2,145,256)
Net Current Assets / (Liabilities) 853,889 (2,144,788)
NET ASSETS / (LIABILITES) 934,435 (2,144,788)
SHAREHOLDERS' EQUITY
Called up share capital 13 2,029,464 202,610
Capital redemption reserve 13 8,783,824 8,783,824
Share premium account 27,723,274 25,456,950
Share option reserve 2,889,504 87,501
Retained earnings (40,491,631) (36,675,673)
TOTAL EQUITY 934,435 (2,144,788)
The notes form an integral part of the financial statements.
STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2021
Year ended Year ended
31 December 31 December
Note 2021 2021
GBP GBP
Cash flows from operating activities
Cash expended from operations 14 (2,862,941) (154,284)
Net cash outflow from operating
activities (2,862,941) (154,284)
Cash flows from investing activities
Purchase of fixed assets 10 (98,598) -
Finance costs (629) (410)
Net cash used in investing activities (99,227) (410)
Cash flows from financing activities
Issue of share capital 3,850,000 50,000
Loan repayment (50,000) 50,000
Issue of convertible loans 8,100 55,000
Repayment of convertible loans (160,000)
Net cash generated from investing
activities 3,648,100 155,000
Net increase in cash and cash
equivalents 685,932 306
Cash and cash equivalents at beginning
of year 468 162
Cash and cash equivalents at end
of year 16 686,400 468
The notes form an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2021
1. ACCOUNTING POLICIES
1.1 Basis of preparation
DG Innovate Plc (formerly known as Path Investments Plc) is a
public limited company incorporated and domiciled in the England
and Wales, registered under company number 04006413. The address of
the registered office is 15 Victoria Mews, Cottingley Business
Park, Bingley, BD16 1PY, England. DG Innovate Plc is a public
company incorporated under the Companies Act 1985 and domiciled in
the United Kingdom. During the period under review the Company was
a cash shell whose strategy was deliver material acquisitions in
the energy sector. Post period end the Company completed the
acquisition of DGI, becoming an advanced research and development
company pioneering sustainable and environmentally considerate
improvements to electric mobility and storage.
The financial statements have been prepared and approved by the
Directors in accordance with UK-Adopted International Accounting
Standards ('IASs') and with those parts of the Companies Act 2006
applicable to companies reporting under IAS.
The financial statements are presented in UK pounds Sterling
which is the Company's functional and presentational currency and
all values are rounded to the nearest pound except where indicated
otherwise.
The financial statements have been prepared under the historical
cost convention or fair value where appropriate. The significant
accounting policies adopted are described below.
The preparation of the financial statements in conformity with
IFRS requires the use of certain critical accounting estimates, It
also requires the board to exercise its judgement in the process of
applying the Company's accounting policies. The areas involving a
higher degree of judgement or complexity or areas where assumptions
and estimates are significant to the financial statements are
disclosed in Note 1.9.
1.2 Going concern
The financial statements have been prepared on the assumption
that the Company will continue as a going concern. Under this
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future with neither the intention nor
the necessity of liquidation, ceasing trading or seeking protection
from creditors pursuant to laws or regulations. In assessing
whether the going concern assumption is appropriate, the Directors
take into account all available information for the foreseeable
future, in particular for the twelve months from the date of
approval of the financial statements.
The Directors consider the use of the going concern assumption
to be appropriate. At the latest reported date of 31 December 2021,
the Company had cash and cash equivalents totalling GBP686,400 and
net current assets of GBP853,889.
On 18 March 2021, the Company successfully raised GBP3.85
million (before expenses) through a placing of new ordinary shares
and admitted the new shares to trading on the Standard List of the
Main Market of the London Stock Exchange. On the same date the
GBP108,767 of convertible loan notes were settled in full by issue
of shares. Post year end, in April 2022 the Company raised a
further GBP4.6 million (before expenses) through the exercise of
shareholder warrants and a subscription for new ordinary
shares.
These funds were raised to cover the costs of the DGI
acquisition and to fund the ongoing development of the Company's
technologies towards commercialisation. Significant progress is
being made, with testing of DGI's Pareta(c) drives planned in the
coming weeks. In line with all pre-revenue companies, further
funding will be required as the Company moves through the
development phase. The new group recently announced the extension
of its Pareta(c) range of high-performance electric vehicle drives
to now include a 400kW version suitable for heavy vehicle
applications, which is being developed in collaboration with a tier
1 supplier to the commercial vehicle industry, to target its
growing electric drive needs. Performance and endurance
verification testing of the new drive is planned to begin in the
coming weeks.
The Board have considered a number of detailed cashflow
scenarios and have identified a further funding requirement from
late Q2 2023. As this falls within 12 months of the date of this
report, a material uncertainty exists in relation to the ability of
the Company to continue as a going concern.
The Directors would note that the previous two fundraises in
March 2021 and April 2022 were predominantly made up of the same
small group of investors, who remain supportive of the Company's
strategy. The Directors therefore believe that a further equity
fundraise would be well supported. The Directors have also
progressed discussions with lenders regarding debt facilities,
should it achieve material customer orders post-testing. Taking
this into account, the Directors have formed the opinion that there
are adequate arrangements in place to enable the settlement of
their financial commitments as and when they fall due.
For this reason, the Directors continue to adopt the going
concern basis in preparing the financial statements. While there
are inherent uncertainties in relation to future events and
ultimately no certainty over the outcome of matters described above
the newly formed group will be a going concern for the next 12
months.
1.3 Financial instruments
Classification and measurement
The Company classifies its financial assets into the following
categories: those to be measured subsequently at fair value (either
through other comprehensive income (FVOCI) or through the profit or
loss (FVPL)) and those to be held at amortised cost.
Classification depends on the business model for managing the
financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at
initial recognition. The Company's policy with regard to financial
risk management is set out in note 17. Generally, the Company does
not acquire financial assets for the purpose of selling in the
short term.
The Company's business model is primarily that of "hold to
collect" (where assets are held in order to collect contractual
cash flows). When the Company enters into derivative contracts,
these transactions are designed to reduce exposures relating to
assets and liabilities, firm commitments or anticipated
transactions.
Financial Assets held at amortised cost
The classification applies to debt instruments which are held
under a hold to collect business model and which have cash flows
that meet the "Solely Payments of Principal and Interest" (SPPI)
criteria.
Other financial assets are initially recognised at fair value
plus related transaction costs, they are subsequently measured at
amortised costs using the effective interest method. Any gain or
loss on derecognition or modification of a financial asset held at
amortised cost is recognised in the income statement.
Financial Assets held at fair value through other comprehensive
income (FVOCI)
The classification applies to the following financial
assets:
- Equity investments where the Company has irrevocably elected
to present fair value gains and losses on revaluation
of such equity investments, including any foreign exchange
component, are recognised in other comprehensive income.
When equity investment is derecognised, there is no reclassification
of fair value gains or losses previously recognised in
other comprehensive income to the income statement. Dividends
are recognised in the income statement when the right
to receive payment is established.
Financial Assets held at fair value through profit or loss
(FVPL)
The classification applies to the following financial assets. In
all cases, transaction costs are immediately expensed to the income
statement.
- Debt instruments that do not meet the criteria of amortised
costs or fair value through other comprehensive income.
The Company has a significant proportion of trade receivables
with embedded derivatives for professional pricing. These
receivables are generally held to collect but do not meet
the SPPI criteria and as a result must be held at FVPL.
Subsequent fair value gains or losses are taken to the
income statement.
- Equity investments which are held for trading or where
the FVOCI election has not been applied. All fair value
gains or losses and related dividend income are recognised
in the income statement.
- Derivatives which are not designated as a hedging instrument.
All subsequent fair value gains or losses are recognised
in the income statement.
Financial liabilities
Borrowings and other financial liabilities (including trade
payables but excluding derivative liabilities) are recognised
initially at fair value, net of transaction costs incurred, and are
subsequently measured at amortised costs.
Impairment of financial assets
A forward looking expected credit loss (ECL) review is required
for: debt instruments measured at amortised costs. Other financial
assets are held at fair value through other comprehensive income:
loan commitments and financial guarantees not measured at fair
value through profit or loss; lease receivables and trade
receivables that give rise to an unconditional right to
consideration.
As permitted by IFRS 9, the Company applies the "simplified
approach" to trade receivable balances and the "general approach"
to all other financial assets. The general approach incorporates a
review for any significant increase in counter party credit risk
since inception. The ECL reviews including assumptions about the
risk of default and expected loss rates. For trade receivables, the
assessment takes into account the use of credit enhancements, for
example, letters of credit.
1.4 Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation. Cost represents the cost of acquisition
at historical cost. Depreciation is provided to allocate the cost
less the residual value on a reducing balance basis over the
asset's useful economic life as follows;
Office equipment 33% reducing balance basis
Motor Vehicles 25% reducing balance basis
The carrying amount of fixed assets shall be derecognised on
disposal of assets or when no future economic benefits are expected
from its use.
1.5 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at bank and
other short-term deposits. They are stated at carrying value which
is deemed to be fair value.
1.6 New Standards and Interpretations
The IASB and IFRIC have issued the following standards and
interpretations which are in issue but not in force at 31 December
2021:
Description Effective date
Newly effective standards for 1 January 2021
to 31 December 2021
Interest Rate Benchmark Reform Phase2 (amendments 1 January 2021
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS
16)
Standards available for early adoption
Amendments to IAS 1: Presentation of Financial 1 January 2022
Statements: Classification of Liabilities as
Current or Non-current
Annual improvements to IFRS standards 2018 1 January 2022
-2020
Property, plant and equipment: proceeds before 1 January 2022
intended use (amendments to IAS 16)
Reference to conceptual framework (amendments 1 January 2022
to IFRS 3)
Amendments to IFRS 17 1 January 2023
Disclosure of accounting policies (amendments 1 January 2023
to IAS 1 and IFRS practice statement 2)
Definition of accounting estimate (amendments 1 January 2023
to IAS 8)
Deferred tax related to assets and liabilities 1 January 2023
arising from a single transaction - amendments
to IAS 12 income taxes)
The Directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact
on the financial statements other than in terms of
presentation.
1.7 Share-based payments
The Company operates a number of equity-settled share-based
compensation plans, under which the entity receives services from
employees or suppliers as consideration for equity instruments
(options) of the Company. The fair value of the employee or
supplier services received in exchange for the grant of options is
recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options
granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability,
sales growth targets and remaining an employee of the
entity over a specified time period); and
-- excluding the impact of any non-vesting conditions
(for example, the requirement of employees to save).
Non-market vesting conditions are included in assumptions about
the number of options that are expected to vest. The total expense
is recognised over the vesting period, which is the period over
which all of the specified vesting conditions are to be satisfied.
At the end of each reporting period, the entity revises its
estimates of the number of options that are expected to vest based
on the non-marketing vesting conditions. It recognises the impact
of the revision to original estimates, if any, in the profit or
loss statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium when the options are exercised.
1.8 Taxation
Current tax, including UK corporation tax and foreign tax, is
provided at amounts expected to be paid (or recovered) using the
tax rates and laws that have been enacted or substantially enacted
by the balance sheet date.
Deferred tax is recognised, using the liability method, in
respect of temporary differences between the carrying amount of the
Company's assets and liabilities and their tax base.
Deferred tax liabilities are offset against deferred tax assets.
Any remaining deferred tax asset is recognised only when, on the
basis of all available evidence, it can be regarded as probable
that there will be suitable taxable profits, within the same
jurisdiction, in the foreseeable future against which the
deductible temporary difference can be utilised.
Deferred tax is determined using tax rates that are expected to
apply in the periods in which the asset is realised or liability
settled, based on tax rates and laws that have been enacted or
substantially enacted by the balance sheet date.
Current and deferred tax are recognised in the income statement,
except when the tax relates to items charged or credited directly
in equity, in which case the tax is also recognised in equity.
1.9 Sources of estimation uncertainty
The preparation of financial statements requires the use of
estimates and assumptions that affect the reported amount of assets
and liabilities at the date of the financial statements and the
reporting amount of income and expenses during the period. Although
these estimates are based on management's best knowledge of the
amount, event or actions, actual results ultimately may differ from
those estimates.
Share based payments
The share-based payment charge is calculated using the
Black-Scholes model which requires the estimation of share price
volatility, expected life and the bid price discount.
2. SEGMENTAL REPORTING
a. Primary segment - business
The Company has only one business segment, which is investing in
energy and natural resources, primarily either by way of equity or
convertible loans.
b. Secondary segment - geographical
The Company's loss for the period was derived wholly from
activities undertaken in the United Kingdom. The Company's net
assets are located entirely in the United Kingdom.
3. EXPENSES BY NATURE
2021 2020
GBP GBP
Staff costs 513,235 454,205
Other expenses 3,401,529 (187,512)
3,914,764 266,693
Details of the staff costs are shown
in note 5.
4. OPERATING LOSS
The operating loss is stated after charging:
2021 2020
GBP GBP
Depreciation 18,052 -
Auditors remuneration
Audit services 70,000 15,000
Reporting accountants services - 15,000
Total fees 70,000 30,000
5. EMPLOYEES
Number of employees
The average monthly number of employees (including Directors)
during the period was:
2021 2020 Number
Number
Administration 2 2
2021 2020
GBP GBP
Employment costs
Wages and salaries (including benefits
in kind) 427,786 454,205
Social security costs 52,498 -
Pension costs 34,950 -
515,234 454,205
Included in employment costs above are Directors' accrued
salaries, together with employer's national insurance
contributions, amounting to GBPNil (2020: GBP454,205).
6. DIRECTORS' REMUNerATION
2021 2020
GBP GBP
Aggregate emoluments 427,786 454,205
Pension costs 34,950 -
Share based payments 1,517,628 87,501
1,980,364 541,706
Remuneration for the highest paid director was GBP225,000 (2020:
GBP1,320,288, which were waived in their entirety during the year
ended 31 December 2020). The amount included within accruals as at
31 December 2021 includes remuneration accrued during 2020 but
remaining unpaid as at 31 December 2021 of GBP84,000 (2020:
GBP454,205).
During the period, retirement benefits are accruing to two
Directors (2020: retirement benefits are accruing to one
Director).
7. FINANCE income and costs
2021 2020
GBP GBP
Finance Income 11,934
Bank interest - -
Total finance income 11,934 -
Finance costs
Bank charges (629) (410)
Convertible loan note interest - (110,000)
Total finance cost 11,305 (110,410)
8. TAXATION
No corporation tax charge arises in respect of the year due to
the trading losses incurred. The Company has surplus management
expenses available to carry forward and use against trading profits
arising in future periods of approximately GBP8,041,000 (2020:
GBP6,180,000). In addition, the Company has non-trading loan
relationship debits to carry forward to offset against future
non-trading loan relationship credits of approximately
GBP18,917,000 (2020: GBP18,917,000).
2021 2020
GBP GBP
Current tax - -
Loss on ordinary activities before
taxation (3,903,459) (377,103)
Loss on ordinary activities before
taxation multiplied by average effective
rate of corporation tax of 19% (2020:
19%) (741,657) (71,650)
Effects of:
Non-deductible expenses 121,606 760
Short term timing differences (4,476) -
Other adjustments - non taxable gains - -
Tax losses upon which no deemed tax
asset is recognised 624,527 70,890
Current tax - -
A deferred tax asset of approximately GBP531,771 (2020:
GBP114,309) in respect of losses has not been recognised due to the
timing regarding the availability of future profits against which
the losses of the Company could be offset.
The UK corporation tax at the standard rate for the year is
19.0% (2020: 19.0%).
The main UK corporation tax rate for the current and prior year
has remained at 19%. No changes in the UK rate of tax were
substantially enacted by the year end.
9. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the
loss on ordinary activities after taxation of GBP3,903,459 (2020:
GBP377,103) and on the weighted average number of ordinary shares
in issue of 1,765,828,368 (2020: 199,414,122) in issue. The basic
loss per share is 0.22p (2020: 0.19p loss per share).
In order to calculate the diluted earnings per share, the
weighted average number of ordinary shares in issue is adjusted to
assume conversion of all dilutive potential ordinary shares
according to IAS 33. Dilutive potential ordinary shares include
convertible loan notes and share options granted to Directors and
consultants where the exercise price (adjusted according to IAS 33)
is less than the average market price of the Company's ordinary
shares during the period. However, due to the Company making a loss
in the year (and prior year) any dilutive potential ordinary shares
are disregarded and diluted earnings per share is equal to basic
earnings per share.
10. PROPERTY, PLANT AND EQUIPMENT
Office Motor Vehicles TOTAL
Equipment
GBP GBP GBP
Cost
At 1 January 2021 - - -
Additions 12,844 85,754 98,598
At 31 December 2021 12,844 85,754 98,598
Depreciation
Depreciation at 1 January - - -
2021
Charge in the period 1,900 16,152 18,052
Depreciation at 31 December
2021 1,900 16,152 18,052
Carrying value
At 31 December 2021 10,944 69,602 80,546
At 31 December 2020 - - -
11. Trade and other receivables
2021 2020
GBP GBP
Prepayments 20,000 -
Other taxes and social security 145,019 -
Other Debtors 739,636 -
904,655 -
Other debtors comprise amounts loaned to Deregallera Holdings
Ltd of GBP611,934 (2020: GBPNil), a company wholly acquired after
the reporting period, as detailed in note 21. The loan attracts an
annual 6% interest charge.
Also included in other debtors are amounts repayable of
GBP127,702 by certain Directors in respect of incorrectly awarded
bonuses. Further details are disclosed on page 26.
Other taxes and social security comprise the tax suffered on the
bonuses noted above.
12. TRade and other payables
2021 2020
GBP GBP
Trade payables 131,959 365,659
Other payables (including convertible
loan notes) - 457,830
Accruals and deferred
income 605,207 1,271,767
Bank loan - 50,000
737,166 2,145,256
Bank Loan
The loan was repaid in full in May 2021 under the terms and
conditions of the agreement.
Convertible Unsecured Loan Stock
On 3 April 2018 the Company constituted an instrument to issue
GBP150,000 nominal convertible unsecured loan stock. The instrument
was subsequently increased to a GBP200,000 nominal amount on 23
November 2020, of which a total of GBP162,000 was issued.
On admission of the Company to AIM or other recognised
investment exchange, the Convertible Loan Stock, at the option of
the loan note holder, was either convertible into shares at the
price at which the Placing associated with the listing occurs or
will be repayable out of the Placing proceeds together with 200%
interest to compensate for the risk associated with the loan.
As at the Last Practicable Date the Directors hold the following
Convertible Loan Stock. All Convertible Loan Stock held directly by
the Directors will be converted on Admission into Conversion
Shares:
Director Amount
GBP
C Theis* 51,000
Jack Allardyce 5,000
Brent Fitzpatrick** 46,100
Total 102,100
* GBP50,000 of the amount was provided by Networkguru
Limited, a company owned and controlled by
Chris Theis' son.
** GBP5,000 of which was provided by Ocean Park
Developments, GBP8,000 by Pondermatters Limited
(both companies ultimately owned by Brent Fitzpatrick)
and GBP5,000 by Alexander Fitzpatrick (Brent
Fitzpatrick's son).
On 18 March 2021, a total of GBP53,333 (nominal) of Convertible
Loan Stock was repaid in cash and GBP108,767 (nominal) of
Convertible Loan Stock was converted into ordinary shares of the
Company.
13. SHARE Capital
Allotted, called up and
fully paid
Ordinary Shares Deferred shares
of 0.1p each of 39.9p each
No GBP no GBP
At 1 January 2020 195,943,802 195,943 22,014,596 8,783,824
Issue of shares 6,666,667 6,667
Cancellation of shares (22,014,596) (8,873,824)
At 31 December 2020 202,610,469 202,610 - -
At 1 January 2021 202,610,469 202,610 - -
Issue of shares 1,826,853,333 1,826,855 - -
At 31 December 2021 2,029,463,802 2,029,464 - -
The ordinary shares shall confer upon the holders the right to
receive dividends and other distributions and participate in the
income or profits of the Company.
The deferred shares conferred upon the holders the following
rights and were subject to the following restrictions,
notwithstanding any other provisions in these Articles:
Return of Capital
On return of assets on a winding up of the Company after the
holders of Ordinary shares have received the aggregate amount paid
up thereon plus GBP10,000,000 for each such share held by them,
there shall be a distribution to the holders of any deferred shares
an amount equal to the nominal value of shares held and thereafter
any surplus held will be distributed to holders of ordinary
shares.
Dividend s
Holders of any deferred shares have no rights to dividends or
other distributions or to participate in the income and profits of
the Company.
Transfers
The Company may acquire all or any of any such deferred shares
in issue at any time for no consideration.
On 30 September 2020 and in accordance with Article 3.4(iii) of
the Company's Articles of Association, the Company acquired and
cancelled the Deferred Shares of GBP0.399 nominal value per
Deferred Share for no consideration. After which no Deferred Shares
will remain in issue and has been reflected in the creation of a
capital redemption reserve account.
In February 2021 the Company r aised (before expenses)
GBP3,850,000 by way of a subscription and placing of 1,400,000,000
new ordinary shares of 0.1 pence each in the Company at a price of
0.25 pence per Ordinary Share. In addition, participants in the
Fundraise were issued with one warrant for every two Placing Shares
subscribed for with an exercise price of 0.25 pence per Ordinary
Share and one warrant for every two Placing Shares subscribed for
with an exercise price of 0.5 pence per Ordinary Share. The
Warrants have a five-year exercise period from the date of
grant.
Further shares were issued post year end, as detailed in note
21.
14. Reconciliation of operating loss to net cash outflow from
OPERATING ACTIVITIES
2021 2020
GBP GBP
Operating loss (3,903,459) (266,693)
(Increase)/decrease in debtors (904,655) 10,056
(Decrease)/increase in creditors within
one year (115,214) 124,852
Depreciation 18,052 -
Share based payments 2,042,335 87,501
Convertible loan note interest - (110,000)
Net cash outflow from operating activities (2,862,941) (154,284)
15. Net Debt Reconcilliation
This section sets out an analysis of net debt and the movements
in net debt for each of the periods presented.
Year ended Year ended
31 December 31 December
2021 2020
GBP GBP
Cash and cash equivalents 686,400 468
Borrowings - (536,300)
Net debt 686,400 (535,832)
Borrowings Cash and Total
GBP cash equivalents GBP
GBP
Net debt as at 1 January
2020 (321,300) 162 (321,138)
Interest expense (110,000) - (110,000)
Financing cash flows (105,000) 306 (104,694)
Net debt as at 31 January
2020 (536,300) 468 (535,832)
Financing cash flows 209,999 685,932 895,931
Share based payments 326,301 - 326,301
Net debt as at 31 January
2021 - 686,400 686,400
16. CASH & CASH EQUIVALENTS
2021 2020
GBP GBP
Cash at bank and in hand 686,400 468
17. financial instruments
The Company's financial instruments comprise cash and cash
equivalents and various other items, such as trade receivables and
payables, which arise directly from its operations. It is, and has
been throughout the period under review, the Company's policy to
ensure that there is no trading in financial instruments. The main
purpose of these financial instruments is to finance the Company's
operations.
Categories of Financial Instruments
2021 2020
GBP GBP
Financial Assets at amortised
cost
Cash and cash equivalents 686,400 468
Other debtors 884,655 -
1,571,055 468
Financial Liabilities at amortised
cost
Trade and other payables 737,166 1,687,426
Convertible loan notes - 457,830
737,166 2,145,256
Net Financial Assets/(Liabilities) 833,889 (2,144,788)
Financial Assets and Liabilities
Financial assets and financial liabilities are recognised on the
Company's Statement of Financial Position when the Company becomes
party to the contractual provisions of the instrument.
Financial Risk Factors
The Company's activities expose it to liquidity risk. The
Company's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Company's financial
performance.
Liquidity Risk
The Company has to date financed its operations from cash
reserves funded from share issues. Management's objectives are now
to manage liquid assets in the short term through closely
monitoring costs. The Company has no borrowing facilities that
require repayment and therefore has no interest rate risk
exposure.
Fair Values of Financial Assets and Liabilities
The Directors consider that the fair value of the Company's
financial assets and liabilities are not considered to be
materially different from their book values.
18. Share options AND WARRANTS
Movement in the number of options and warrants outstanding and
their related weighted average exercise price are as follows:
At 31 December 2021 At 31 December 2020
Number of Weighted average exercise price Number of Weighted average exercise price
Options & per share Options & per share
Warrants Warrants
At 1 January 73,787,500 2.5p 73,787,500 3.0p
Granted 2,910,110,000 0.3p 60,375,000 0.1p
Exercised - - - -
Expired or waived (600,000) 280.0p (60,375,000) 0.7p
------------------- -------------- -------------------------------- ------------- --------------------------------
At 31 December 2,983,297,500 0.3p 73,787,500 2.5p
------------------- -------------- -------------------------------- ------------- --------------------------------
The weighted average remaining contractual life of options as at
31 December 2021 was 9 years (2020: 7.2 years).
The following share options have been granted by the Company and
are outstanding as at the year end of 31 December 2021:
Date Number Granted Exercised Lapsed/ Number Weighted Expiry
of grant of ordinary during during waived of ordinary average date
shares under year year during shares under exercise
option year option at price
at 1 January 31 December
2020 2020
03/05/2011 600,000 - - - 600,000 GBP2.80 02/05/2021
30/03/2017 32,500,000 - - (28,500,000) 4,000,000 0.1p 29/03/2027
30/03/2017 28,375,000 - - (22,500,000) 5,875,000 1p 29/03/2027
30/03/2017 12,312,500 - - (9,375,000) 2,937,500 2p 29/03/2027
08/10/2020 - 60,375,000 - - 60,375,000 0.1p 07/10/2030
Total 73,787,500 60,375,000 - (60,375,000) 73,787,500 2.5p
------------ -------------- ----------- ---------- ------------- -------------- ---------- -----------
Date Number Granted Exercised Lapsed/ Number Weighted Expiry
of grant of ordinary during during waived of ordinary average date
shares under year year during shares under exercise
option at year option at price
1 January 31 December
2021 2021
03/05/2011 600,000 - - (600,000) - GBP2.80 02/05/2021
30/03/2017 4,000,000 - - - 4,000,000 0.1p 29/03/2027
30/03/2017 5,875,000 - - - 5,875,000 1p 29/03/2027
30/03/2017 2,937,500 - - - 2,937,500 2p 29/03/2027
08/10/2020 60,375,000 - - - 60,375,000 0.1p 07/10/2030
18/03/2021 - 1,289,310,000 - - 1,289,310,000 0.1p 18/03/2031
Total 73,787,500 1,289,310,000 - (600,000) 1,362,497,500 0.1p
------------ -------------- -------------- ---------- ---------- -------------- ---------- -----------
All options outstanding at the year end are exercisable at that
date.
The following warrants have been granted by the Company:
Date Number Granted Exercised Lapsed Number Weighted Exercise
of grant of warrants during during during of warrants average date
at year year year at 31 December exercise
1 January 2021 price
2021
18/03/2021 830,800,000 830,800,000 0.25p 18/03/2026
18/03/2021 790,000,000 790,000,000 0.5p 18/03/2026
---------------------------- -------------- ---------- -------- ---------------- ---------- -----------
Total - 1,620,800,000 - - 1,620,800,000 0.375p
------------ -------------- -------------- ---------- -------- ---------------- ---------- -----------
In March 2021 the Company r aised (before expenses) GBP3,850,000
by way of a subscription and placing of 1,400,000,000 new ordinary
shares of 0.1 pence each in the Company at a price of 0.25 pence
per Ordinary Share. In addition, participants in the Fundraise were
issued with one warrant for every two Placing Shares subscribed for
with an exercise price of 0.25 pence per Ordinary Share and one
warrant for every two Placing Shares subscribed for with an
exercise price of 0.5 pence per Ordinary Share. The Warrants have a
five-year exercise period from the date of grant.
The fair value of equity settled share options and warrants
granted is estimated at the date of grant using a Black-Scholes
option pricing model, taking into account the terms and conditions
upon which the options were granted. The following table lists the
inputs to the model:
Warrants Options Options Options Options
------------------------ --------- ------------ ----------- ------------ ------------
Date of grant 26 Feb 18 Mar 2021 18 Mar 18 Mar 2021 18 Oct 2020
2021 2021
Expected volatility 31% 31% 31% 31% 50%
Expected life 5 years 1 year 2 years 10 years 10 years
Risk-free interest 2.00% 2.00% 2.00% 2.00% 2.50%
rate
Expected dividend - - - - -
yield
Possibility - - - - -
of ceasing employment
before vesting
Fair value per - - - - -
option/warrant
0.001p 0.17p 0.10p 0.15p 0.6p
------------------------ --------- ------------ ----------- ------------ ------------
On 8 October 2020 the options dated 30 March 2017, held by Chris
Theis and Andrew Yeo were surrendered and reissued with an exercise
price of 0.1p and an expiry date of 7 October 2030.
The expense recognised by the Company for share based payments
during the year ended 31 December 2021 was GBP2,042,335 (2020:
GBP87,501).
The average volatility is used in determining the share based
payment expense to be recognised in the period. This was calculated
by reference to the standard deviation of the share price over the
preceding 12-month period.
19. RELATED PARTY TRANSACTIONS
The following share options were held by the directors during
the year:
Director Date Held at Surrendered Granted Held at Exercise
of grant 1 January during the during the 31 December price
2021 year Period 2021
--------------- ------------ ----------- ------------ ------------ -------------- ---------
C Theis 08/10/2020 42,500,000 - - 42,500,000 GBP0.001
18/03/2021 - - 739,520,000 739,520,000 GBP0.001
N Fitzpatrick 18/03/2021 - - 162,820,000 162,820,000 GBP0.001
J Allardyce 18/03/2021 - - 62,500,000 62,500,000 GBP0.001
----------- ------------ ------------ --------------
Total 42,500,000 - 964,840,000 1,007,340,000
----------- ------------ ------------ --------------
Outstanding Convertible Interest Converted Repaid Outstanding
at 31 December loan notes accrued during during at 31 December
2020 issued during the year the year 2021
during the year
year
Director GBP GBP GBP GBP GBP GBP
C Theis* 150,000 - - - (150,000) -
C Theis 3,000 - - (3,000) - -
A Yeo 75,000 - - (75,000) - -
B Fitzpatrick 54,000 - - (54,000) - -
J Allardyce - 15,000 - (15,000) - -
Total 282,000 15,000 - (147,000) (150,000) -
---------------- ------------ ---------- ---------- ---------- ----------------
On 8 October 2020 the options dated 30 March 2017 were
surrendered and reissued with an exercise price of 0.1p and an
expiry date of 7 October 2030.
As at 31 December 2020, included in other payables were the
following convertible loan notes issued to the Directors together
with accrued interest thereon.
* these loan notes were issued to Networkguru Limited, a company
owned by Chris Theis' son, who subscribed under the convertible
loan note instrument.
Included in other payables are loans of GBPNil (2020: GBPNil),
and GBPNil (2020: GBP2,067) made by each of the Directors Brent
Fitzpatrick and Chris Theis.
Included in other debtors are balances due from the following
Directors in respect of bonuses incorrectly awarded during the year
and deemed to be held in trust. Chris Theis GBP37,021 (2020:
GBPNil), Brent Fitzpatrick GBP27,005 (2020: GBPNil), Jack Allardyce
GBP36,651 (2020: GBPNil), Nicholas Tulloch GBP27,025 (2020:
GBPNil).
Included in accruals is a balance of GBP70,000 (2020: GBPNil)
reimbursed to Chris Theis, a director of the company, in respect of
IT support provided by his son Elliot Theis.
20. ultimate controlling party
The Company considers there to be no ultimate controlling
party.
21. SUBSEQUENT EVENTS
On 8 April 2022 the Company announced the completion of the
reverse acquisition of Deregallera Holdings Ltd (formerly DG
Innovate Limited) ("DGI") for an initial consideration of GBP32.4
million satisfied by the issue to the DGI Shareholders of
5,397,451,305 Initial Consideration Shares at a deemed issue price
of 0.6 pence per Ordinary Share.
Further conditional deferred consideration of up to GBP5.4
million, to be satisfied by the issue of up to 895,610,844 Deferred
Consideration Shares on the first anniversary of completion, will
become payable should DGI sign one or more supply agreements for
the provision of their motor technology with certain defined
customers prior to this date with a combined potential value of
GBP5.0 million or more.
On acquisition, the assets, liabilities and contingent
liabilities of subsidiaries are measured at their fair values at
the date of acquisition. Any excess cost of acquisition over net
fair values of the identifiable assets, liabilities and contingent
liabilities acquired is recognised as an expense under IFRS 2
equity settled transactions. Any deficiency of the cost of
acquisition below the net fair values of the identifiable assets,
liabilities and contingent liabilities acquired is credited to the
Statement of Comprehensive Income in the year of acquisition.
Due to the Company being a non-operating entity which was not
classified as a business under IFRS 3 Business Combinations ("IFRS
3"), the transaction does not fall under the scope of this standard
and is not a business combination but an equity-settled transaction
which should be accounted for in accordance with IFRS 2 Share-based
Payment ("IFRS 2"). However, the IFRS 3 guidance on reverse
acquisitions should still be followed, under which despite the
Company being the legal acquirer of DGI, it should be considered
the acquiree for accounting purposes.
As the accounting acquirer (DGI) is deemed to have acquired the
shares of the Company, the fair value of the shares of the Company
should be used to measure the consideration paid. This is
calculated as the number of DGI plc shares multiplied by the quoted
market price of DGI plc (Path Investments plc at the time) The
consideration is then split into net assets acquired, with the
difference representing the cost to DGI for obtaining a
listing.
Details of the fair value of the acquisition are as follows;
Fair Value of assets acquired
GBP'000
Cash & Cash equivalents 41
Loans 912
Fixed assets 83
Trade payables (553)
Other payables (98)
Net assets acquired 385
Listing expense 5,094
Consideration 5,480
The Listing Expense is attributable to the difference between
the net assets acquired and the fair value of the Company on the 7
April 2022.
These are provisional figures with consolidated financial
statements to be presented in DG Innovate plc's combined interim
financial statements and full year results to 30 June 2022 and 31
December 2022, respectively.
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END
FR FLFFVTFIFLIF
(END) Dow Jones Newswires
August 12, 2022 09:25 ET (13:25 GMT)
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