TIDMHFI
Hydrogen Future Industries plc
("HFI", the "Group" or the "Company")
Final Results for the 13 Months Ended 31 July 2022
Hydrogen Future Industries plc (AQSE:HFI), a developer of proprietary wind and
water-based green hydrogen production systems, presents its audited financial
results for the 13 months ended 31 July 2022.
Highlights
* Shares admitted to trading on Aquis Stock Exchange Growth Market on 1
December 2021
* Raised gross proceeds of £2.23 million to pursue a strategy to identify
investment opportunities within the Hydrogen Economy
* Announced on 29 March 2022 the formation of a wholly owned subsidiary, HFI
Energy Systems Limited ("HESL"), to develop proprietary wind and
water-based hydrogen production systems, incorporating hydrogen compression
and storage
* Appointed Timothy Blake as Chief Executive Officer of HESL to lead this
development
* Cash balance at period end of £1.38 million
Daniel Maling, Non-Executive Chairman, commented:
"HFI has made progress since listing on the Aquis Stock Exchange Growth Market
in December 2021. We have entered the green hydrogen development space and
wasted no time in progressing the development of our first system. Our
development activities are being led by a recognised expert in wind turbine
systems, Timothy Blake; we have built and installed our first prototype in
Montana; and we have acquired valuable patents which strengthen our
intellectual property. With positive results already being achieved from
prototype testing, I believe we are well on our way to the Company's goal of
producing cheaper green hydrogen."
This announcement contains inside information for the purposes of the UK Market
Abuse Regulation and the Directors of the Company are responsible for the
release of this announcement.
Chairman's Statement
Introduction
I am pleased to present the financial results for the 13 months ended 31 July
2022, a period which included the admission in December 2021 of the Company's
shares to the Aquis Stock Exchange ("AQSE") Growth Market as a Special Purpose
Acquisition Company and, in March 2022, the formation of a wholly owned
subsidiary, HFI Energy Systems Limited ("HESL"), to develop proprietary wind
and water-based hydrogen production systems, incorporating hydrogen compression
and storage.
Alongside the AQSE listing, Hydrogen Future Industries ("HFI") successfully
raised £2.23 million as investors supported the Company's strategy to invest in
hydrogen, widely regarded as the 'future fuel' and essential in achieving net
zero emissions. In March 2022, HFI became actively engaged in the development
of proprietary wind and water-based hydrogen production systems and we are
making exciting progress on this technology.
The Hydrogen Economy
The 'Hydrogen Economy' refers to a vision that the Company shares of using
hydrogen as a clean, low-carbon energy resource to meet a portion of the
world's energy needs. The potential of hydrogen to replace traditional fossil
fuels and form a substantial part of a global clean energy portfolio is already
being realised - particularly within transportation sectors - and the Hydrogen
Council predicts the global hydrogen market will grow to US$2.5 trillion by
2050, meeting 18% of global energy demand.
A limiting factor to the expansive growth of the Hydrogen Economy has been the
high cost of production of green hydrogen, which refers to hydrogen produced
entirely from renewable sources, and this is largely due to the cost of
renewable energy generation. The cost of green hydrogen production currently
sits at anywhere between US$4 and US$6 per kilogram and must be reduced to
under US$2 to meet global targets this decade.
This is precisely what we aim to achieve through HESL's development of our
wind-based hydrogen production system.
HFI Energy Systems Limited ("HESL")
HESL, a wholly owned subsidiary of HFI, was formed in March 2022 in
collaboration with wind turbine engineer, and now HESL Chief Executive Officer,
Timothy Blake to develop and commercialise proprietary technologies based on
development work carried out by Mr Blake which the Company's Directors believe
will have a significant positive impact on the hydrogen production market by
materially lowering the cost of green hydrogen production.
The most advanced system under development is a wind-based hydrogen production
system combined with electrolyser technologies which aims to generate hydrogen
for under $2 per kilogram (the "System").
A key element of the System is its proprietary wind turbine, which has been
designed with notably distinct features which allow the turbines to be more
efficient than current open rotor turbines due to modified aerodynamics, with
cowling directing air flow across the rotor blades to create a multiple factor
increase in wind speed. The cowling also directs the flow of wind out and away
from the rear of the turbine, reducing the potential for still air to block the
flow through the turbines.
The Directors believe the increased efficiency of the turbine could in turn
increase the efficiency and ultimately lower the cost of hydrogen production.
We will seek in due course to incorporate hydrogen compression and on-demand
energy storage technology, allowing energy to be stored in the form of hydrogen
at a fraction of the cost of lithium-ion battery storage, solving the
challenges faced by current windfarms during periods of reduced energy demand.
The System aims to generate hydrogen from a choice of feed stocks including
waste or contaminated water, saline or fresh water, and remediation processes,
meaning it can be operated in a variety of settings, including offshore,
mining, and industrial.
Financial Review
For the year ended 31 July 2022, the Company reported a net loss of
approximately £700k mostly relating to administrative expenses in connection
with the listing on Aquis Stock Exchange Growth Market, due diligence in
relation to prospective investments, and development activities related to the
System. The Company's cash position at 31 July 2022 was £1.38 million.
The independent audit report draws attention to note 2.2 in the financial
statements which indicates that, whilst forecast cash inflows are in advanced
stages of negotiation, there is no certainty regarding the quantum or timing of
these cashflows. As stated in note 2.2, these events or conditions indicate
that a material uncertainty exists that may cast significant doubt on the
Group's and Parent Company's ability to continue as a going concern. The
auditor's opinion is not modified in respect of this matter. The Independent
Auditor's Report is set out in full below.
Post Period End
On 5 October 2022, HFI announced the acquisition of a suite of international
patents which are relevant to the System by the Company's joint venture
subsidiary HFI IP Holdings Limited. The patents acquired cover a range of works
including ducted wind turbine rotor configurations; a dynamic telescopic tower
to optimise wind farm energy production and reduce maintenance cost; a variable
hydraulic drive and electro-magnetic clutch to increase efficiency and lower
cost of energy production; and the conversion of stored energy to green
hydrogen. These patents significantly enhance the intellectual property around
the System and have potential wider commercial applications beyond HFI's
systems which could represent opportunities for early cash flow.
On 1 November 2022, the Company announced the commencement of testing of the
wind element of the System in the form of a 1 metre diameter prototype ("the
Prototype") in Montana, USA.
The Prototype is being tested in an area selected for its consistent wind
speeds and regulatory support for wind turbine development and wind farm
placement. HFI has a local development facility where the turbines have been
fabricated and mounted onto towers for testing in local wind speeds. The power
output from the turbines will be compared to predicted results. The cowling and
rotor blades are a product of aerodynamic development and have been 3D printed
on site.
The first stage of the outdoor test programme - a 20-hour live test - was
successfully completed, confirming the aerodynamics align to the wind direction
as planned, there was no distinguishing noise from the rotor blades, and there
was no fouling of the blades with the cowling.
Outlook
The testing HFI is undertaking in Montana will hopefully confirm the efficiency
of the key elements of the System, confirming the results of earlier wind
tunnel testing. Additionally, given the considerable efficiency gains we
believe our turbine will offer compared to existing open rotor wind turbines in
use today, the commercial applications for the HFI turbine may not be limited
to hydrogen and could be applied to the wider wind energy sector.
The wind turbine is the key first element of our System as cheaper energy
should ultimately result in lower cost hydrogen. During the period ahead we
intend to gather data from the 1 metre diameter prototype and plan for the next
phase of testing with a larger turbine and with hydrogen production capability
integrated. With positive results already being achieved, I believe we are
progressing to the Company's target of producing cheaper green hydrogen.
Daniel Maling
Non-Executive Chairman
22 December 2022
Enquiries:
Hydrogen Future Industries plc
Daniel Maling +44 (0)20 3475 6834
David Ormerod
Vigo Consulting (Investor Relations)
Ben Simons +44 (0) 20 7390 0230
Peter Jacob
Cairn Financial Advisers LLP (AQSE
Corporate Adviser)
Ludovico Lazzaretti +44 (0) 20 72130 880
Liam Murray
Peterhouse Capital Limited (Broker)
Duncan Vasey +44 (0) 20 7469 0930
Independent auditor's report to the members of Hydrogen Future Industries PLC
Opinion
We have audited the financial statements of Hydrogen Future Industries plc (the
"Parent Company") and its subsidiaries (the "Group") for the period ended 31
July 2022, which comprise:
* the Group statement of comprehensive income for the period ended 31 July
2022;
* the Group and Parent Company statements of financial position as at 31 July
2022;
* the Group and Parent Company statements of changes in equity for the year
then ended;
* the Group and Parent Company statements of cash flows for the year then
ended; and
* the notes to the financial statements, including significant accounting
policies.
The financial reporting framework that has been applied in the preparation of
the financial statements 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 Group's and of the Parent
Company's affairs as at 31 July 2022 and of the Group's loss for the period
then ended;
* have been properly prepared in accordance with UK-adopted international
accounting standards;
* 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 and
the Parent Company 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 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.
Material uncertainty related to going concern
We draw attention to note 2.2 in the financial statements, which indicates that
whilst forecast cash inflows are in advance stages of negotiation there is no
certainty regarding the quantum or timing of these cashflows. As stated in note
2.2, 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 Directors' use
of the going concern basis of accounting in the preparation of the financial
statements is appropriate but there is a material uncertainty in relation to
this matter. Our evaluation of the Directors' assessment of the Group's and
Parent Company's ability to continue to adopt the going concern basis of
accounting included:
* Reviewing management's financial projections which covered a period of at
least 12 months from the date of approval of the financial statements.
* Challenging management on the assumptions underlying those projections
particularly on the nature and timing of forecast cash inflows.
* Obtaining the latest management accounts post period end to benchmark how
the Group is performing toward achieving the forecast.
* Performing sensitivity analysis and reviewing the client's own sensitised
forecasts to consider the impact on the Group's ability to continue as a
going concern.
* Assessing the completeness and accuracy of the matters described in the
going concern disclosure within the significant accounting policies as set
out on note 2.2.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An
item is considered material if it could reasonably be expected to change the
economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality for the
Group financial statements as a whole to be £35,000, based on 5% of Group loss
before tax. Materiality for the Parent Company financial statements as a whole
was set at £25,000 based on 2% of net assets.
We use a different level of materiality ('performance materiality') to
determine the extent of our testing for the audit of the financial statements.
Performance materiality is set based on the audit materiality as adjusted for
the judgements made as to the entity risk and our evaluation of the specific
risk of each audit area having regard to the internal control environment. This
is set at £25,000 for the Group and £17,500 for the parent.
Where considered appropriate performance materiality may be reduced to a lower
level, such as, for related party transactions and Directors' remuneration.
We agreed to report to it all identified errors in excess of £2,000. Errors
below that threshold would also be reported to it if, in our opinion as
auditor, disclosure was required on qualitative grounds.
Overview of the scope of our audit
Our scoping of the Group audit was tailored to enable us to give an opinion on
the financial statements as a whole. The Parent company was subject to a full
scope audit. The subsidiaries incorporated in the final 3 months of the period
where subject to audit considerations sufficient for our reporting on the
group.
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) that we identified. These matters included 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.
Except for the matter described in the material uncertainty relating to going
concern section of our report above, we have not determined any other matters
to be included as key audit matters to be communicated in our report.
Other information
The Directors are responsible for the other information contained within the
annual report. The other information comprises the information included in the
annual report, other than the financial statements and our auditor's report
thereon. 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.
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 audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to
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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our 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 light of the knowledge and understanding of the Group and the Parent Company
and their 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 parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
* the parent company financial statements 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.
Responsibilities of the Directors for the financial statements
As explained more fully in the Directors' responsibilities statement 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 Group's and Parent 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 Group or the Parent 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 the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
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 however the primary
responsibility for the prevention and detection of fraud lies with management
and those charged with governance of the Company.
As part of the audit planning process we assessed the different areas of the
financial statements, including disclosures, for the risk of material
misstatement. This included considering the risk of fraud where Director
enquires were made of management and those charged with governance concerning
both whether that had any knowledge of actual suspected fraud and their
assessment of the susceptibility of fraud.
We considered the risk was greater in areas which involve significant
management estimate or judgement. Based on this assessment we designed audit
procedures to focus on key areas of estimate or judgement, this included
specific testing of journal transactions both at the period end and throughout
the year.
We use data analytic techniques to identify any unusual transactions or
unexpected relationships, including consider the risk of undisclosed related
party transactions.
Owing to the inherent limitations of an audit, there is an unavoidable risk
that some material misstatement of the financial statements may not be detected
even though the audit properly planned in accordance with the ISAs (UK).
The potential effects of inherent limitations are particularly significant in
the case of misstatement resulting from fraud because fraud may involve
sophisticated and carefully organised schemes designed to conceal it, including
deliberate failure to record transactions, collusion or intentional
misrepresentations being made to us.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
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 so that we might state to the Company's members those matters we are
required to state to them in an auditor's report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company's members as a body, for our
audit work, for this report, or for the opinions we have formed.
John Charlton
(Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
55 Ludgate Hill
London EC4M 7JW
22 December 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 13 MONTH PERIODED 31 JULY 2022
Audited
Period ending 31 July
2022
Note £'000
Continuing Operations
Revenue from continuing operations
-
-
Expenditure
Costs associated with listing 4 (159)
Administrative expenses (541)
Operating loss 4 (700)
Loss before taxation (700)
Taxation 7 -
Loss after taxation (700)
Total comprehensive loss for the year (700)
attributable to shareholders from continuing
operations
Basic & dilutive earnings per share - pence 8
(3.433)
The notes form an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 JULY 2022
Audited
As at 31 July
2022
Note £'000
NON-CURRENT ASSETS
Fixed assets 9 18
Right of use assets 11 22
TOTAL NON-CURRENT ASSETS 40
CURRENT ASSETS
Cash and cash equivalents 12 1,383
Trade and other receivables 13 210
TOTAL CURRENT ASSETS 1,593
TOTAL ASSETS 1,633
EQUITY
Share capital 15 298
Share premium 15 1,900
Share based payment reserve 16 31
Retained earnings (700)
TOTAL EQUITY 1,529
NON-CURRENT LIABILITIES
Lease liability 11 5
TOTAL NON-CURRENT LIABILITIES 5
CURRENT LIABILITIES
Trade and other payables 14 82
Lease liability 11 17
TOTAL CURRENT LIABILITIES 99
TOTAL LIABILITIES 104
TOTAL EQUITY AND LIABILITIES 1,633
The notes form an integral part of these consolidated financial statements
The financial statements were approved and authorised for issue by the board on
22 December 2022 and were signed on its behalf by:
David Ormerod
Executive Director
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 JULY 2022
Audited
As at 31 July
2022
Note £'000
NON-CURRENT ASSETS
Right of use assets 11 22
TOTAL NON-CURRENT ASSETS 22
CURRENT ASSETS
Cash and cash equivalents 12 1,294
Trade and other receivables 13 536
TOTAL CURRENT ASSETS 1,830
TOTAL ASSETS 1,852
EQUITY
Share capital 15 298
Share premium 15 1,900
Share based payment reserve 16 31
Retained earnings (477)
TOTAL EQUITY 1,752
NON-CURRENT LIABILITIES
Lease liability 11 5
TOTAL NON-CURRENT LIABILITIES 5
CURRENT LIABILITIES
Trade and other payables 14 78
Lease liability 11 17
TOTAL CURRENT LIABILITIES 95
TOTAL LIABILITIES 100
TOTAL EQUITY AND LIABILITIES 1,852
The Company has taken advantage of section 408 of the Companies Act 2006 and
consequently a profit and loss account has not been presented for the Company.
The Company's loss for the financial period was £476,555.
The notes form an integral part of these consolidated financial statements
The financial statements were approved and authorised for issue by the board on
22 December 2022 and were signed on its behalf by:
David Ormerod
Executive Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
AS AT 31 JULY 2022
Share Share Share based Foreign Retained Total
capital premium payment exchange earnings equity
reserve reserve
£'000 £'000 £'000 £'000 £'000 £'000
Loss for period - - - - (700) (700)
Total comprehensive - - - - (700) (700)
income for the year
Transactions with
owners in own
capacity
Ordinary shares - - - - - -
issued on
incorporation*
Ordinary shares 298 2,007 - - - 2,304
issued in the period
Advisor warrants - - 31 - - 31
Share issue costs (107) (107)
Transactions with 298 1,900 31 - - 2,229
owners in own
capacity
Balance at 31 July 298 1,900 31 - (700) 1,529
2022
*£500 of shares credited to share capital on incorporation not accounted for
above but included in overall reconciliation of equity accounts
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
AS AT 31 JULY 2022
Share capital Share Share Retained Total
premium based earnings equity
payment
reserve
£'000 £'000 £'000 £'000 £'000
Loss for period - - - (477) (477)
Total comprehensive income - - - (477) (477)
for the year
Transactions with owners in
own capacity
Ordinary shares issued on - - - - -
incorporation*
Ordinary shares issued in 298 2,007 - - 2,305
the period
Advisor warrants - - 31 - 31
Share issue costs (107) - - (107)
Transactions with owners in 298 1,900 31 - 2,229
own capacity
Balance at 31 July 2022 298 1,900 31 (477) 1,752
*£500 of shares credited to share capital on incorporation not accounted for
above but included in overall reconciliation of equity accounts
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE 13 MONTH PERIODED 31 JULY 2022
Audited
Period ending
31 July
2022
Note £'000
Cash flow from operating activities
Loss for the financial year 4 (700)
Adjustments for:
Share based payment reserves 16 31
Changes in working capital:
(Increase) in trade and other receivables 13 (210)
Increase in trade and other payables 14 82
Net cash outflow from operating activities (797)
Cash flows from investing activities
Investment in fixed assets 9 (18)
Net cash flow from investing activities (18)
Cash flows from financing activities
Proceeds from issue of shares 15 2,305
Share issue costs 15 (107)
Net cash flow from financing activities 2,198
Net increase in cash and cash equivalents 1,383
Cash and cash equivalents at beginning of the -
period
Foreign exchange impact on cash -
Cash and cash equivalents at end of the period 12 1,383
The notes form an integral part of these consolidated financial statements
PARENT COMPANY STATEMENT OF CASHFLOWS
FOR THE 13 MONTH PERIODED 31 JULY 2022
Audited
Period ending
31 July
2022
Note £'000
Cash flow from operating activities
Loss for the financial year (477)
Adjustments for:
Share based payment reserves 16 31
Changes in working capital:
(Increase) in trade and other receivables 13 (536)
Increase in trade and other payables 14 78
Net cash outflow from operating activities (904)
Cash flows from financing activities
Proceeds from issue of shares 15 2,305
Share issue costs 15 (107)
Net cash flow from financing activities 2,198
Net increase in cash and cash equivalents 1,294
Cash and cash equivalents at beginning of -
the period
Foreign exchange impact on cash -
Cash and cash equivalents at end of the 12 1,294
period
The notes form an integral part of these consolidated financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 JULY 2022
1. General Information
The Company was incorporated on 13 July 2021 in England and Wales with
Registered Number 13508782 under the Companies Act 2006. The principal activity
of the Group is to seek suitable investment opportunities with a particular
focus on the hydrogen industry. Once the Group has identified suitable
opportunities as it has begun to do so in the period, it will look to the
commercialisation of proprietary wind and water-based green hydrogen systems.
The address of its registered office is Eccleston Yards, 25 Eccleston Place,
London SW1W 9NF, United Kingdom.
The Company commenced trading on the Aquis Stock Exchange ("AQSE") Growth
Market on 1 December 2021.
2. Accounting policies
The principal accounting policies applied in preparation of these consolidated
financial statements ("financial statements") are set out below. These policies
have been consistently applied unless otherwise stated.
2.1 Basis of preparation
The financial statements for the period ended 31 July 2022 have been prepared
by Hydrogen Future Industries Plc in accordance with UK-adopted International
Accounting Standards ('IFRS'). The financial statements have been prepared
under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts in the financial statements. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions or estimates are significant to the financial statements, are
disclosed in Note 2.15.
The financial statements present the results for the Group and Company for the
period ended 31 July 2022. No comparative figures have been presented as the
financial statements cover the period from incorporation on 13 July 2022
The principal accounting policies are set out below and have, unless otherwise
stated, been applied consistently in the financial statements. The financial
statements are prepared in Pounds Sterling, which is the Group's presentational
currency, and presented to the nearest £'000.
2.2 Going concern
The financial statements have been prepared on a going concern basis, which
assumes that the Group will continue to meet its liabilities as they fall due.
The Group has cash and cash equivalents of £1.383m (Company: £1.294m) at 31
July 2022 following a successful IPO in December 2021. The Directors have
prepared detailed forecasts and analysis that account for their best estimate
of committed expenditure and expected cash inflows and are of the view this is
sufficient to fund the Group's expenditure over the next 12 months from the
date of approval of these financial statements.
Whilst forecast cash inflows are in advance stages of negotiation there is no
certainty regarding the quantum or timing of these cashflows and therefore the
Directors have identified a material uncertainty which may cast doubt over the
Group's ability to continue as a going concern. The financial statements do not
include any adjustments that would result if the Group were unable to continue
as a going concern.
2.3 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, and demand
deposits with banks and other financial institutions.
2.4 Equity
Share capital is determined using the nominal value of shares that have been
issued.
The Share premium account includes any premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of new
shares are deducted from the Share premium account, net of any related income
tax benefits.
Accumulated losses includes all current period results as disclosed in the
income statement.
2.5 Foreign currency translation
(i) Functional and presentation currency
Items included in the individual financial statements of each of the Group's
entities are measured using the currency of the primary economic environment in
which the entity operates ('the functional currency'). The consolidated
financial statements are presented in £ Sterling, which is the Company's
presentational currency. The individual financial statements of each of the
Company's wholly owned subsidiaries are prepared in the currency of the primary
economic environment in which it operates (its functional currency). IAS 21 The
Effects of Changes in Foreign Exchange Rates requires that assets and
liabilities be translated using the exchange rate at period end, and income,
expenses and cash flow items are translated using the rate that approximates
the exchange rates at the dates of the transactions (i.e. the average rate for
the period).
2.6 Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31 July each year. Per IFRS 10, control is achieved when the Company:
* has the power over the investee;
* is exposed, or has rights, to variable returns from its involvement with
the investee; and
* has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control listed above. When the Company has less than a majority of
the voting rights of an investee, it considers that it has power over the
investee when the voting rights are sufficient to give it the practical ability
to direct the relevant activities of the investee unilaterally. The Company
considers all relevant facts and circumstances in assessing whether or not the
Company's voting rights in an investee are sufficient to give it power,
including:
* the size of the Company's holding of voting rights relative to the size and
dispersion of holdings of the other vote holders;
* potential voting rights held by the Company, other vote holders or other
parties;
* rights arising from other contractual arrangements; and
* any additional facts and circumstances that indicate that the Company has,
or does not have, the current ability to direct the relevant activities at
the time that decisions need to be made, including voting patterns at
previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains control over the
subsidiary and ceases when the Company loses control of the subsidiary.
Specifically, the results of subsidiaries acquired or disposed of during the
year are included in profit or loss from the date the Company gains control
until the date when the Company ceases to control the subsidiary. Where
necessary, adjustments are made to the financial statements of subsidiaries to
bring the accounting policies used into line with the Group's accounting
policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows
relating to transactions between the members of the Group are eliminated on
consolidation.
2.7 Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated
depreciation and any accumulated impairment losses.
When the Company acquires any plant and equipment it is stated in the accounts
at its cost of acquisition less depreciation and any impairments.
Depreciation is charged to write off the costs less estimated residual value of
plant and equipment on a straight line basis over their estimated useful lives
being:
* Plant and equipment 5 - 7 years
* Computer equipment 4 years
Estimated useful lives and residual values are reviewed each year and amended
as required.
2.8 Financial instruments
IFRS 9 requires an entity to address the classification, measurement and
recognition of financial assets and liabilities.
a. Classification
The Company classifies its financial assets in the following measurement
categories:
* those to be measured subsequently at fair value (either through OCI or
through profit or loss);
* those to be measured at amortised cost; and
* those to be measured subsequently at fair value through profit or loss.
The classification depends on the Company's business model for managing the
financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will be recorded either in
profit or loss or in OCI. For investments in equity instruments that are not
held for trading, this will depend on whether the Company has made an
irrevocable election at the time of initial recognition to account for the
equity investment at fair value through other comprehensive income (FVOCI).
b. Recognition
Purchases and sales of financial assets are recognised on trade date (that is,
the date on which the Company commits to purchase or sell the asset). Financial
assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Company has
transferred substantially all the risks and rewards of ownership.
c. Measurement
At initial recognition, the Company measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value through profit
or loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or
loss.
Debt instruments
Amortised cost: Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and interest, are
measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method. Any gain
or loss arising on derecognition is recognised directly in profit or loss and
presented in other gains/(losses) together with foreign exchange gains and
losses. Impairment losses are presented as a separate line item in the
statement of profit or loss.
Equity instruments
The Company subsequently measures all equity investments at fair value. Where
the Company's management has elected to present fair value gains and losses on
equity investments in OCI, there is no subsequent reclassification of fair
value gains and losses to profit or loss following the derecognition of the
investment.
d. Impairment
The Company assesses, on a forward-looking basis, the expected credit losses
associated with any debt instruments carried at amortised cost. The impairment
methodology applied depends on whether there has been a significant increase in
credit risk. For trade receivables, the Company applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be recognised
from initial recognition of the receivables.
2.9 Leases
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases in the Company, the lessee's incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and conditions. In
all instances the leases were discounted using the incremental borrowing rate.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period. Right-of-use assets
are measured at cost which comprises the following:
* The amount of the initial measurement of the lease liability;
* Any lease payments made at or before the commencement date less any lease
incentives received;
* Any initial direct costs; and
* Restoration costs.
Right-of-use assets are depreciated over the shorter of the asset's useful life
and the lease term on a straight line basis. If the Company is reasonably
certain to exercise a purchase option, the right-of-use asset is depreciated
over the underlying asset's useful life.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
Payments associated with short-term leases (term less than 12 months) and all
leases of low-value assets (generally less than £5k) are recognised on a
straight-line basis as an expense in profit or loss. The short term lease
exemption has been utilised by the Company in relation to property leases held
in the US based subsidiary HFI ES US Inc. These leases are on a rolling
month-month basis and hence there is no long term commitment entered into.
2.10 Intangible assets
Intangible assets acquired as part of a business combination or asset
acquisition are initially measured at their fair value at the date of
acquisition. Intangible assets acquired separately are initially recognised at
cost.
Amortisation is charged to write off the cost less estimated residual value of
plant and equipment on a straight line basis over their estimated useful lives
which are:
* Brand and trade names 10 years
* Customer relationships 10 years
* Software 5 years
Estimated useful lives and residual values are reviewed each year and amended
as required.
Other intangible assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount might not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less costs of disposal and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows which are largely independent of
the cash inflows from other assets or group of assets (cash-generating units).
2.11 Intangible assets
Expenditure on internally developed products is capitalised if it can be
demonstrated that:
- it is technically feasible to develop the product for it to be sold
- adequate resources are available to complete the development
- there is an intention to complete and sell the product
- the Group is able to sell the product
- sale of the product will generate future economic benefits, and - expenditure
on the project can be measured reliably.
Capitalised development costs are amortised over the periods the Group expects
to benefit from selling the products developed. The amortisation expense is
included within the administrative expenses, in the consolidated statement of
comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on
the research phase of internal projects are recognised in the consolidated
statement of comprehensive income as incurred.
2.12 Taxation
Tax currently payable is based on taxable profit for the period. Taxable profit
differs from profit as reported in the income statement because it excludes
items of income and expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The liability
for current tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
No deferred tax assets in respect of tax losses have not been recognised in the
accounts because there is currently insufficient evidence of the timing of
suitable future taxable profits against which they can be recovered.
2.13 Share based payments
The Company has made awards of warrants on its unissued share capital to
certain parties in return for services provided to the Company. The valuation
of these warrants involved making a number of critical estimates relating to
price volatility, future dividend yields, expected life of the options and
interest rates. These assumptions have been integrated into the Black Scholes
Option Pricing model in this instance to derive a value for any share-based
payments. These assumptions are described in more detail in note 16.
The expense charged to the Statement of Comprehensive Income during the year in
relation to share based payments was £30,939.
2.14 New standards and interpretations not yet adopted
At the date of approval of these financial statements, the following standards
and interpretations which have not been applied in these financial statements
were in issue but not yet effective (and in some cases have not yet been
adopted by the UK):
Standard Impact on initial application Effective date
Annual Improvements 2018-2020 Cycle 1 January 2023
IAS 1 Classification of liabilities 1 January 2023
Current or Non-current
IAS 8 Accounting estimates 1 January 2023
IAS 12 Deferred tax arising from a 1 January 2023
single transaction
The effect of these amended Standards and Interpretations which are in issue
but not yet mandatorily effective is not expected to be material.
The Directors are evaluating the impact that these standards may have on the
financial statements of Company.
2.15 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with IFRSs requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expense. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected. The areas
involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are
disclosed below:
* Share Based Payments: valuation of warrants valued using Black Scholes
method
3. Segmental analysis
The Group manages its operations in one segment, being the development of
proprietary wind and water-based green hydrogen production systems.
4. Operating Loss
Operating loss for the Group is stated after charging:
Period ending
31 July 2022
£'000
Costs associated with listing (159)
Professional fees (52)
Directors fees (70)
Salary & wages (90)
Insurance (34)
Travel & entertainment (7)
Exclusivity fees (15)
Share based payments (31)
Other administrative expenses (242)
(700)
5. Employees
The average number of persons employed by the Group (including Directors)
during the period ended 31 July 2022 was:
No of employees
3
3
The aggregate payroll costs of these persons (including Directors) were as
follows:
£'000
Wages and salaries* 160
160
6. Auditor's Remuneration
Auditor's remuneration Period ending
31 July
2022
£'000
In respect of the audit of the Company accounts 35
Other non-audit services 20
Total 55
7. Taxation
Period ending
31 July
2022
£'000
The charge / (credit) for the year is made up
as follows:
Corporation taxation on the results for the -
year
Taxation charge / credit for the year -
A reconciliation of the tax charge / credit
appearing in the income statement to the tax
that would result from applying the standard
rate of tax to the results for the year is:
Loss per accounts (700)
Tax credit at the standard rate of (133)
corporation tax in the UK of 19%
Tax effect of capital items disallowed for 30
corporation tax purposes
Tax losses for which no deferred tax is 103
recognised
-
The Company has total carried forward losses of £699,974. The taxed value of
the unrecognised deferred tax asset is £102,995 and these losses do not expire.
No deferred tax assets in respect of tax losses have not been recognised in the
accounts because there is currently insufficient evidence of the timing of
suitable future taxable profits against which they can be recovered.
On 23 September 2022, the Chancellor announced that he has cancelled the
planned corporation tax increase and rather than rising to 25 per cent from
April 2023, the rate will remain at 19 per cent for all firms, regardless of
the amount of profit made.
8. Earnings per share
The calculation of the basic and diluted earnings per share is calculated by
dividing the profit or loss for the year by the weighted average number of
ordinary shares in issue during the year.
Audited
Period ending
31 July
2022
£
Net loss for the period attributable to ordinary equity holders for
continuing operations (£) (699,974)
Weighted average number of ordinary shares in issue
20,388,381
Basic and diluted earnings per share for continuing operations (pence)
(3.433)
There is no difference between the diluted loss per share and the basic loss
per share presented. Share options and warrants could potentially dilute basic
earnings per share in the future but were not included in the calculation of
diluted earnings per share as they are anti-dilutive for the year presented.
9. Fixed assets
Group Total
Property, plant Computer Total
& equipment equipment £ £'000
£'000 '000
Cost
Opening balance - - -
Additions in the period 3 15 18
At 31 July 2022 3 15 18
Depreciation
Opening balance - - -
Charge for the period - - -
At 31 July 2022 - - -
Net book value 31 July 2022 3 15 18
Net book value 31 July 2022 3 15 18
10. Intangibles
On 5 October 2022 the Group successfully completed the acquisition of a suite
of international patents which are relevant to the systems being developed by
the Company. The board believes the patents may have commercial applications
within both the Group's future wind based green hydrogen production systems and
the wider wind energy generation sector. The payment of $150,000 USD was made
during the period as a loan and then subsequently re-assigned as consideration
for the patents along with other equity consideration. The $150,000 is included
in prepayments currently and will be transferred to Intangibles on completion
of the transaction on 5 October 2022 after the year end (Note 23).
The Group is also investing heavily into the development of wind turbine
technology. The current phase of development does not support the
capitalisation of these resources as of yet under IAS 38 - Intangible assets
however once satisfied the Group will reassess in relation to capitalisation.
Further details of the nature of the expected future development capitalisation
is included in the Strategic report which can be found in the Annual Report on
the Company's website.
11. Leases
Company Group
July 2022 July 2022
£'000 £'000
Right-of-use assets
Motor vehicles 22 22
22 22
Lease liabilities
Current 5 5
Non-current 17 17
22 22
Right of use assets
A reconciliation of the carrying amount of the right-of-use asset is as
follows:
Company Group
July 2022 July 2022
£'000 £'000
Motor vehicles
Opening balance - -
Additions 22 22
Depreciation - -
22 22
Lease liabilities
A reconciliation of the carrying amount of the lease liabilities is as follows:
Company Group
July 2022 July 2022
£'000 £'000
Opening balance - -
Additions 22 22
Finance charge - -
22 22
12. Cash and cash equivalents
Company Group
July 2022 July 2022
£'000 £'000
Cash at bank 1,294 1,383
1,294 1,383
Majority of the cash is held with Alpha FX foreign exchange trading platform
who utilise the banking facilities of Lloyds Banking Group Plc (credit ratings:
S&P's BBB+, A3, Fitch A). Daily working capital amounts are held through the
Wise online banking platform in the UK and Rocky Mountain Online Bank in the
US. These online banking platforms do not currently have credit ratings
available.
The denomination of amounts in foreign currencies is as follows:
Company Group
July 2022 July 2022
£'000 £'000
USD 32 71
GBP 1,262 1,312
1,294 1,383
13. Trade and other receivables
Company Group
July 2022 July 2022
£'000 £'000
Intercompany receivables 326 -
Prepayments 140 140
VAT receivable 70 70
536 210
14. Trade and other payables
Company Group
July 2022 July 2022
£'000 £'000
Trade creditors 36 36
Accruals 42 42
Employer obligations - 4
78 82
15. Share capital and share premium
Ordinary Share Share Total
shares capital premium
# £'000 £'000 £'000
Issue of ordinary shares on 50,000 1 - 1
incorporation1
Issue of ordinary shares 2 5,850,000 58 - 58
Issue of ordinary shares 3 1,600,000 16 - 16
Issue of ordinary shares4 22,300,000 223 2,007 2,230
Share issue costs - - (107) (107)
At 31 July 2022 29,800,000 298 1,900 2,198
1 On incorporation on 13 July 2021, the Company issued 50,000 ordinary shares
of £0.01 at their nominal value of £0.01.
2 On 10 September 2021, the Company issued 5,850,000 ordinary shares at their
nominal value of £0.01.
3 On 23 September 2021, the Company issued 1,600,000 ordinary shares at their
nominal value of £0.01.
4 On admission to the Aquis Stock Exchange Growth Market on 1 December 2021,
22,300,000 shares were issued at a placing price of £0.10.
There is currently an authorised share capital limit in place for the Company
which is subject to review at the next Annual General Meeting.
16. Share based payment reserves
Company Group
July 2022 July 2022
£'000 £'000
Broker warrants issued 1 6 6
Advisor warrants issued2 25 25
At 31 July 2022 31 31
On 10 September 2021, 7.5 million warrants were issued linked to existing
shares that vested on admission (10 December 2021). Each warrant entitles the
holder to subscribe for one share at a price of £0.05 for a period of two years
from admission. These warrants have not been valued separately as their value
is included in the consideration transferred for the shares.
1 On 29 October 2021, the Company entered into an agreement to issue 150,000
broker warrants to Peterhouse Capital Limited subject to and conditional on
admission. The broker warrants are exercisable at the price of £0.10 per
ordinary share and are exercisable, either in whole or part, for a period of
three years from the date of admission.
2 On 29 October 2021, the Company entered into an agreement to issue 400,000
advisor warrants to Cairn Financial Advisors LLP subject to and conditional on
admission. The advisor warrants are exercisable at the price of £0.05 per
ordinary share and are exercisable, either in whole or part, for a period of 5
years from the date of admission.
The estimated fair values of options which fall under IFRS 2, and the inputs
used in the Black-Scholes pricing model to calculate those fair values are as
follows:
Date of grant Number of Share Exercise Expected Expected Risk free Expected
warrants price price volatility life rate dividends
1 December 2021 150,000 £0.10 £0.10 59.00% 3 20.00% 0.00%
1 December 2021 400,000 £0.10 £0.05 59.00% 5 20.00% 0.00%
The total warrants issued in September 2021 were issued alongside the placing
of ordinary shares and, as such, are not fair valued separately.
Warrants
Number of warrants Exercise Expiry date
price
Grant Date
10 September 2021 7,500,000 £0.05 10 December 2023
1 December 2021 150,000 £0.10 1 December 2024
1 December 2021 400,000 £0.05 1 December 2026
As at 31 July 2022 8,050,000
17. Investments
Name Holding Business Country of Registered Address
Activity Incorporation
HFI Energy 100% Research & England & Wales Eccleston Yards, 25
Systems Ltd development Eccleston Place, London
SW1W 9NF
HFI Energy 100% Research & United States 16 Nugget Court,
Systems US Inc development of America Whitehall, MT 59759
HFI IP Holdings 51% IP holding England & Wales Eccleston Yards, 25
Ltd company Eccleston Place, London
SW1W 9NF
HFI Development 100% Research & England & Wales Eccleston Yards, 25
Ltd development Eccleston Place, London
SW1W 9NF
18. Financial Instruments and Risk Management
Principal financial instruments
The principal financial instruments used by the Group from which the financial
risk arises are as follows:
As at 31 July 2022
£'000
Financial Assets
Cash and cash equivalents 1,383
Trade and other receivables* 70
1,453
Financial Liabilities
Trade payables and accruals 82
82
*Trade and other receivables exclude prepayments
The financial liabilities are payable within one year.
General objectives and policies
In the Directors report the overall objective of the Board is to set policies
that seek to reduce risk as far as practical without unduly affecting the
Group's competitiveness and flexibility. Further details regarding these
policies are:
Policy on financial risk management
The Company's principal financial instruments comprise cash and cash
equivalents, trade and other receivables and intangible assets. The Company's
accounting policies and methods adopted, including the criteria for
recognition, the basis on which income and expenses are recognised in respect
of each class of financial asset, financial liability and equity instrument are
set out in note 2 - "Accounting Policies".
The Company does not use financial instruments for speculative purposes. The
carrying value of all financial assets and liabilities approximates to their
fair value.
Derivatives, financial instruments and risk management
The Company does not use derivative instruments or other financial instruments
to manage its exposure to fluctuations in foreign currency exchange rates,
interest rates and commodity prices.
Foreign currency risk management
The Company does have foreign currency exposure as the functional currency of
its subsidiary HFI Energy Systems Us Inc ("HFI US") is USD. The Company
regularly sends funds to the HFI US to pay for operational expenditure relating
to its research and development activities. Although funds are sent regularly
the absolute value of funds is not considered by the Directors to be large
enough to require additional risk mitigation. The Directors have assessed the
foreign currency risk as moderate but will continue to assess this risk at
regular intervals going forward.
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Company. The Company
has adopted a policy of only dealing with creditworthy counterparties. The
Company's exposure and the credit ratings of its counterparties are monitored
by the Board of Directors to ensure that the aggregate value of transactions is
spread amongst approved counterparties.
The Company's principal financial assets are cash and cash equivalents and
trade and other receivables.
Cash equivalents include amounts held on deposit with financial institutions.
The credit risk on liquid funds held in current accounts and available on
demand is limited because the Group's counterparties are banks with high
credit-ratings assigned by international credit-rating agencies. The majority
of the Group's funds are held with Lloyds Bank are reputable high street bank
and only small working capital amounts are held via online institutions.
The Company applies IFRS 9 to measure expected credit losses for receivables,
these are regularly monitored and assessed. The Group does not generate revenue
so there is minimal credit risk in relation to receivables.
The Company's maximum exposure to credit risk is limited to the carrying amount
of financial assets recorded in the financial statements.
Liquidity risk
During the period ended 31 July 2022, the Group was financed by cash raised
through equity funding. Funds raised surplus to immediate requirements are held
as cash deposits in Sterling.
In managing liquidity risk, the main objective of the Group is to ensure that
it has the ability to pay all of its liabilities as they fall due. The Group
monitors its levels of working capital to ensure that it can meet its
liabilities as they fall due.
The table below shows the undiscounted cash flows on the Company's financial
liabilities as at 31 July 2022 on the basis of their earliest possible
contractual maturity.
Total Within 2 Within 2-6
£'000 months months
At 31 July 2022
Trade payables 82 33 49
Capital management
The Group considers its capital to be equal to the sum of its total equity. The
Group monitors its capital using a number of key performance indicators
including cash flow projections, working capital ratios, the cost to achieve
development milestones and potential revenue from partnerships and ongoing
licensing activities.
The Group's objective when managing its capital is to ensure it obtains
sufficient funding for continuing as a going concern. The Group funds its
capital requirements through the issue of new shares to investors.
19. Financial assets and liabilities
Financial assets at Financial liabilities Total
amortised cost at amortised cost £'000
£'000 £'000
At 31 July 2022
Trade and other receivables* 70 - 70
Cash and cash equivalents 1,383 1,383
Trade and other payables - (82) (82)
1,453 (82) 1,371
*Trade and other receivables exclude prepayments
20. Related Party Transactions
Directors Shares & Warrants
On incorporation, the Company issued 50,000 ordinary shares of £0.01 at £0.01
per ordinary share to Orana Corporate LLP, an entity of which Director Daniel
Maling is a partner.
Subsequently, shares were subscribed to the founding shareholders and 1,750,000
transferred to Directors, including 1,000,000 shares to Daniel Maling, 500,000
shares to David Ormerod and 250,000 shares to Fungai Ndoro. Daniel Maling,
David Ormerod and Fungai Ndoro were all Directors of the Company at the end of
the period. All of the shares held by Daniel Maling, David Ormerod and Fungai
Ndoro were paid up during the period.
In connection with the founders' shares, subscribers were issued with warrants
on a 1:1 basis. Consequently, the Directors held the following warrants at
period end:
* Daniel Maling: 1,000,000
* David Ormerod: 500,000
* Fungai Ndoro: 250,000
The warrants give the Directors the option to subscribe for ordinary shares on
a 1:1 basis at £0.05 for a period of 2 years from vesting. Subsequent to period
end the Directors were issued additional options (Note 23).
Key management personnel remuneration
Base salary Pension Total
£ Contribution £
£
David Ormerod 30,954 - 30,954
Daniel Maling 23,216 - 23,216
Fungai Ndoro 15,477 - 15,477
69,647 - 69,647
Service Agreements
Orana Corporate LLP, of which Director Daniel Maling is a partner, has a
service agreement with the Company for the provision of accounting and company
secretarial services as well as corporate finance services in relation to the
listing. In the period, Orana Corporate LLP accrued £65,163 for these services
from the Company of which £12,120 was owed at year end.
Proposed investment in LGT Hydrogen
On 15 December 2021 the Company signed a term sheet with LGT Hydrogen Limited
to finalise a formal investment agreement to acquire 23.1% of the issued share
capital of LGT Hydrogen. On signing of the agreement $150,000 USD was
transferred granting the Company a 3 month exclusivity period. Although the
transaction was not completed in the initial format the payment was used in the
acquisition of patents in 2022 (Note 23). LGT Hydrogen Directors Eamonn McCann
and Jonathan Colville are both shareholders in the Company. HFI Energy Systems
Ltd CEO Timothy Blake is also a past Director of LGT Hydrogen.
21. Ultimate Controlling Party
As at 31 July 2022, there was no ultimate controlling party of the Company.
22. Capital Commitments
Initial funding commitment
Through the employment of HFI Energy Systems Ltd CEO, Timothy Blake, the
Company has committed to providing $1 million USD in funding for the purposes
of assisting the development of hydrogen systems.
23. Events Subsequent to period end
Acquisition of patents
On 10 October 2022 announced the successful acquisition of a suite of
international patents which are relevant to the systems being developed by the
Company, by its joint venture subsidiary HFI IP Holdings Limited. The patents
acquired can be viewed at the Company's page on the AQSE website and were
transferred in exchange for the following consideration:
* the issue to HW Power Limited ("HW") of 5,200,000 new ordinary shares in
HFI at an issue price of 10 pence per share;
* the forgiving of a loan made to HW by the Company on 16 December 2021
of US$150,000 which was to acquire exclusivity rights for the acquisition
of the patents;
* additional aggregate cash payments of £33,000 and
* the issue to HW of warrants over a further 2,500,000 new ordinary shares in
the Company with an exercise price of 12 pence per warrant, which will
expire three years from the date of issue
Incorporation HFI Consulting Limited
On 2 September 2022 a new subsidiary, HFI Consulting Limited ("HFI Con") was
incorporated. HFI Con has 100 shares with a nominal value of £0.01 and is
wholly owned by the Company.
Issue of options
On 4 November 2022 a total of 6,000,000 options were granted to the Directors
of the Company, the CEO of HFI Energy Systems Ltd (Timothy Blake) and a
financial consultant (Ryan Neates). These options vest immediately and are
exercisable for a period of 5 years from the issue date at a price of £0.10.
Breakdown of options issued is detailed below:
* Timothy Blake: 3,000,000
* David Ormerod: 1,000,000
* Daniel Maling: 1,000,000
* Fungai Ndoro: 500,000
* Ryan Neates 500,000
Note:
Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Company's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,'
'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These statements are not a
guarantee of future performance and are subject to known and unknown risks,
uncertainties, and other factors, some of which are beyond the Company's
control, are difficult to predict, and could cause actual results to differ
materially from those expressed or forecasted in the forward-looking
statements. The Company cautions security holders and prospective security
holders not to place undue reliance on these forward-looking statements, which
reflect the view of the Company only as of the date of this announcement. The
forward-looking statements made in this announcement relate only to events as
of the date on which the statements are made. The Company will not undertake
any obligation to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or unanticipated
events occurring after the date of this announcement except as required by law
or by any appropriate regulatory authority.
END
(END) Dow Jones Newswires
December 23, 2022 02:00 ET (07:00 GMT)
Hydrogen Future Industries (AQSE:HFI)
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Hydrogen Future Industries (AQSE:HFI)
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