DGI Dg Innovate Plc

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2024

1.         GENERAL INFORMATION

DG Innovate Plc is a public limited company incorporated in the United Kingdom, registered under company number 04006413. The address of the registered office is 15 Victoria Mews, Millfield Road, Cottingley Business Park, Bingley, West Yorkshire, BD16 1PY. On 8 April 2022, Path Investments Plc changed its name to DG Innovate Plc following the acquisition of Deregallera Holdings Ltd (formerly DG Innovate Limited) ("DHL"), becoming an advanced research and development company pioneering sustainable and environmentally considerate improvements to electric mobility and storage.

The consolidated financial information represents the results of DG Innovate Plc and its subsidiaries (together referred to as Group).

2.         ACCOUNTING POLICIES

2.1       Basis of preparation

The condensed consolidated interim financial statements are presented in UK Sterling and all values are rounded to the nearest pound except where indicated otherwise.

The condensed consolidated interim financial statements have been prepared under the historical cost convention or fair value where appropriate. 

The results for the six months to 30 June 2024 have been prepared on the basis of the accounting policies set out in the Company's 2023 annual report and accounts along with standards which have become effective after 31 December 2023. The interim accounts do not constitute statutory accounts as defined by section 434 of the Companies Act 2006. The auditor has reported on the 2023 accounts of DG Innovate Plc and the report was unqualified and did not contain a statement under section 498(2) of (3) of the Companies Act 2006 and the 2023 report and accounts have been filed with the registrar of companies. Under reverse acquisition accounting the comparatives comprise details of the group prior to the reverse takeover and as a result these figures are not audited.

During the period, there have been no changes in the nature of the related party transactions from those described in the Company's 2023 accounts.

2.2       Responsibility statement

The directors confirm that these condensed interim financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting", as adopted by the United Kingdom and as issued by the IASB and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely;

a)    An indication of the important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

b)    Material related party transactions in the first six months and any material changes in related party transactions described in the last annual report.

2.3       Segmental reporting

The Group has two distinct areas of focus (Enhanced Drive Technology and Enhanced Battery Technology), and management have identified the Group's series of Pareta® electric drives and hard carbon anode materials as its two cash generating units (CGUs). However, as the Group is currently in the development phase and effectively operates as one operating unit under IFRS 8, segmental information is not available or presented within these accounts.

The aggregate value in use calculated for the two identified CGUs as at 30 June 2023 was in excess of the carrying value of the intangible assets, and the Directors therefore believe the value of these assets is not impaired at 30 June 2023. This accounting treatment resulted in an impairment loss of £Nil (30 June 2023: £Nil; 31 December 2023: £Nil). The carrying value of the intangible assets of the two identified CGUs as at 30 June 2024 are Enhanced Drive Technology £2,217,675 (30 June 2023: £2,252,887; 31 December 2023: £2,280,313) and Enhanced Battery Technology £2,068,154 (30 June 2023: £2,209,789; 31 December 2023: £2,138,973).

2.4       Reverse acquisition

On 8 April 2022, the Company acquired DHL via a reverse takeover which resulted in the Company becoming the ultimate holding company of the Group. The transaction was accounted for in accordance with the principles of reverse acquisition accounting, since it did not meet the definition of a business combination under IFRS 3. In accordance with IFRS 2, a share-based payment expense equal to the deemed cost of the acquisition less the fair value of the net assets of the Company at acquisition was recognised. The comparatives within the consolidated statement of financial position, the consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cashflow statement represent that of the legal subsidiary and accounting acquirer, DHL. In the consolidated statement of financial position, the share capital and premium as at 31 December 2021 is that of the Company (DG Innovate Plc) with the reverse acquisition reserve representing the difference between the deemed cost of the acquisition and the net assets of the Company as at 7 April 2022. The consolidated statement of comprehensive income for the period represents the results of both DG Innovate Plc and DHL.

3.         ADMINISTRATIVE EXPENSES

4.         LOSS PER SHARE

The calculation of the basic and diluted loss per share is based on the loss on ordinary activities after taxation of and on the weighted average number of ordinary shares in issue.

There was no dilutive effect from the share options or convertible loan notes outstanding during the period.

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 IAS33. Dilutive potential ordinary shares include convertible loan notes and share options granted to Directors and consultants where the exercise price (adjusted according to IAS33) is less than the average market price of the Company's ordinary shares during the period.

The weighted average number of shares is calculated using the number of DG Innovate Plc shares owned by the accounting acquirer DHL pre and post the reverse takeover on 8 April 2022.

5.         PROPERTY, PLANT AND EQUIPMENT

6.         intangible ASSETS

On 8 April 2022 the Company completed the reverse takeover and acquired 100% of the ordinary share capital of Deregallera Holdings Ltd, a company incorporated in England and Wales.

No impairment has been accounted for this interim period. An impairment review will be carried out at the year end.

7.         TRade and other RECEIVABLES

Also included in other debtors are amounts repayable of £87,369 (30 June 2023: £87,369; 31 December 2023: £87,369) by certain Directors in respect of incorrectly awarded bonuses.

Other taxes and social security comprise the R&D tax credit, tax suffered on the bonuses noted above and VAT repayable.

8.         TRade and other payables

9.         non-current liabilities

10.       convertible loan notes

On 11 December 2023, the Company authorised the issue of £2,431,000 in convertible loan notes ("CLNs"). The CLNs have no coupon and are convertible into the Company's ordinary shares of 0.01 pence at a price of 0.035 pence per share. They are convertible (i) after one year, subject to the availability of a valid exemption from the requirement to prepare a prospectus in respect of the Ordinary Shares arising from the conversion; or (ii) following admission of the Company's ordinary share capital to the AIM Market of the London Stock Exchange.

11.       SHARE Capital

*Resolution was passed on 19 July 2023 to subdivide one 0.1p Ordinary Share into one 0.01p Ordinary Share and one 0.09 Deferred Share.

** The deferred shares have no economic rights and therefore have been excluded from earnings per share calculation.

12.       share options and warrants

Movement in the number of options and warrants outstanding and their related weighted average exercise price, since 31 December 2023 are as follows:

The following share options have been granted by the Company and are outstanding as at the period end of 30 June 2024:

All options outstanding at the period end are exercisable at that date.

The following warrants have been granted by the Company:

In June 2024 the Company appointed Pierre Pellerey as Chief Technical Officer and granted him 500,000,000 warrants at an exercise price of 0.1 pence.

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:

The expense recognised by the Group for share based payments during the period ended 30 June 2024 was £931,245, (30 June 2023: £564,292; 31 December 2023: £1,324,443).

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 6-month period.

13.       related party transactions

Share Options

The following share options were held by the active directors during the period:

Transaction with related party

During the period Gareth Boughtwood (son of Martin Boughtwood, an ex-director in the Group) was paid £723 (30 June 2023: £Nil; 31 December 2023: £1,196) in respect of IT services.

Other debtors

Included in other debtors are balances due from the following Directors, and former Directors, in respect of bonuses incorrectly awarded in 2022 and deemed to be held in trust. Chris Theis £87,369 (30 June 2023: £87,369; 31 December 2023: £87,369).

14.       POST PERIOD EVENT

In September 2024 the Company raised gross proceeds of £550,000 via a placing of new ordinary shares with new and existing investors, and a further £67,275 from a retail offer to existing shareholders. The total number of new shares issued was 823,034,007 at a price of 0.075p each, with a further 28,035,840 shares issued at the same price to cover certain liabilities due to a creditor. In addition, the Company announced that certain members of its management team intend to subscribe for, in aggregate, £200,000 through a subscription at the same issue price. This was subject to the publication of the Company's 2024 interim accounts and the end of the associated closed period under UK MAR, and to the relevant individuals not being in possession of any other unpublished price sensitive information at such time.