Interim Results

RNS Number : 2587B

DG Innovate PLC

30 September 2022

 

30 September 2022

DG Innovate plc  
("DG Innovate ", the "Company", or the "Group")

Interim results for the six months ended 30 June 2022

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 unaudited interim results for the six months ended 30 June 2022.

DG Innovate was previously Path Investments plc and the results cover both the 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, and post the consolidation of DGI from 8 April 2022.

Highlights

•	Successful completion of the acquisition of DGI and accompanying funding, raising £4.6 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
•	Funding secured from the Ford Low Carbon Vehicle Transformation Fund to support the Company's ongoing electric motor development programme being carried out in conjunction with global heavy vehicle components supplier, Meritor

Post Period Highlights

•	Appointment of Peter Tierney as the Company's new Chief Executive Officer from 1 July 2022
•	Testing of 250kW Pareta© high-performance electric vehicle drive underway with further cycle testing ongoing
•	Collaborative commercial dialogue continues to gather momentum with key partners and launch customers
•	UK Government Advanced Propulsion Centre funding secured for the Company's SUPAR pilot production project, designed to optimise the Pareta® high performance electric vehicle drives to enable substantial upscaling to commercial scale production
•	Hard carbon anode material testing underway with positive initial results

Commenting Nick Tulloch, Non-Executive Chairman of DG Innovate said: "The first half of 2022 was transformational for the Company, as we completed the reverse takeover of DGI to become DG Innovate plc. Since the completion of the reverse takeover significant progress has been made and post-period end, Peter Tierney was appointed as our new CEO. We believe Peter's significant experience in operating and developing growth-orientated service and manufacturing businesses makes him the ideal candidate to lead the Company as we seek to commercialise our exciting suite of electric mobility and storage technologies, evolving into a differentiated supplier to a number of industry sectors. We look forward to providing further updates in due course."

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	[e-mail]
Grant Thornton UK LLP (Financial Adviser) Samantha Harrison Jamie Barklem Daphne Zhang Ciara Donnelly	020 7383 5100
OvalX (Joint Broker)	020 7392 1400
Tom Curran Thomas Smith
WH Ireland (Joint Broker)	020 7220 1666
Chris Hardie Megan Liddell

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.

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 Report

The period under review was transformational for the Company, as we published our prospectus and completed the reverse takeover of DGI, becoming DG Innovate plc in the process. We continue to believe that DGI's IP and the quality of the team offers exciting growth opportunities in the electric mobility and energy storage sectors and remain committed to DGI's ethos of developing sustainable and environmentally considerate technologies.

We were also delighted with the support of new and existing shareholders in raising £4.6 million and to strengthen our Board through the appointments of a number of new non-executive directors. Their varied but very relevant experience across sectors and disciplines will be put to excellent use as DGI seeks to commercialise its technologies and widen its opportunity set.

Post-period, we announced the appointment of Peter Tierney as our new CEO. We believe Peter's significant experience in operating and developing growth-orientated service and manufacturing businesses makes him the ideal candidate to lead the Company as we seek to commercialise our exciting suite of electric mobility and storage technologies, evolving into a differentiated supplier to a number of industry sectors.

As subsequently announced, the testing of our 250kw Pareta^© high-performance electric vehicle drive is underway, we have been fortunate to attract financial support from the UK Government's Advanced Propulsion Centre for our Scale up Readiness Validation of Parallel Motor for Automotive Applications' ("SUPAR") project and work continues on our sustainable hard carbon anode material.

We look forward to providing further updates in due course.

Nick Tulloch

Non-Executive Chairman

30 September 2022

Financial Review

For the six months to 30 June 2022, the Group recorded a loss before tax of £6,227,231, of which 5,094,074 was an exceptional charge relating to the reverse takeover of DGI. There was negligible revenue in the period other than £344,831 of grant income.

Cash flow

As at 30 June 2022 the Group held cash of £1,650,352.

Chief Executive Remuneration

The Company's announcement on 16 May 2022 detailing the appointment of Peter Tierney as the Company's new Chief Executive Officer stated, inter alia, that It had been agreed by the Company and Mr Tierney, at his election and request, that for the months of July, August and September 2022 his monthly salary value, would be paid to him in the equivalent value of shares in the Company, based on the closing offer price of the Company's shares, on the last business day of each relevant month.  Given the relatively depressed price of the Company's shares on the London Stock Exchange over this period Mr Tierney has agreed with the Company to instead take his remuneration in cash to avoid unnecessary dilutive share issuance at this time.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2022

	Notes	Six months ended 30 June	Six months ended 30 June	Year ended 31 December
		2022	2021	2021
		Unaudited	Unaudited	Unaudited
		£	£	£
Revenue
Grant income		344,831	675,816	985,623
Other income		5,307	833	3,037
Administrative expenses	3	(1,171,059)	(777,670)	(1,884,976)
Loss on investment		-	(49,463)	(49,463)
Share based payments		(265,934)	-	-
Total administrative expenses		(1,436,993)	(827,133)	(1,934,439)
Operating loss		(1,086,855)	(150,484)	(945,779)
Reverse acquisition expenses		(5,094,074)	-	-
Finance income		81	4	230
Finance cost		(49,855)	(50,676)	(113,134)
Loss on ordinary activities before taxation		(6,230,703)	(201,156)	(1,058,683)
Tax on loss on ordinary activities		3,472	52,068	52,068
Loss for the period and total comprehensive loss for period		(6,227,231)	(149,088)	(1,006,615)
Loss per share (pence)
- Basic & diluted	4	(0.15)	(3.84)	(25.90)

All operating income and operating gains and losses relate to continuing activities.

There was no other comprehensive income for the year (30 June 2021: £Nil; 31 December 2021: £Nil).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2022

	Share Capital	Share Premium	Reverse Acquisition  Reserve	Share Option Reserve	Retained Earnings	Total
	£	£	£	£	£	£
As at 1 January 2022	2,029,464	-	67,843	-	87,453	2,184,760
Comprehensive income Loss for the period	-	-	-	-	(6,227,231)	(6,227,231)
Share based payments	-	-	-	265,934	-	265,934
Total comprehensive loss	-	-	-	265,934	(6,227,231)	(5,961,297)
Transactions with owners
Share issue	5,397,451	26,987,256	(26,576,428)	-	-	5,808,279
Share issue	1,415,800	3,036,806	-	-	-	4,452,606
As at 30 June 2022	8,842,715	30,024,062	(26,508,585)	265,934	(6,139,778)	6,484,348

	Share Capital	Share Premium	Reverse Acquisition Reserve	Share Option Reserve	Retained Earnings	Total
	£	£	£	£	£	£
As at 1 January 2021	14,613	2,082,694	-	-	1,094,068	3,191,375
Comprehensive income Loss for the period	-	-	-	-	(1,006,615)	(1,006,615)
Total comprehensive loss	-	-	-	-	(1,006,615)	(1,006,615)
Reverse acquisition	(14,613)	(2,082,694)	2,097,307	-	-	-
Parent Company equity	2,029,464	-	(2,029,464)	-	-	-
As at 31 December 2021	2,029,464	-	67,843	-	87,453	2,184,760

	Share Capital	Share Premium	Reverse Acquisition Reserve	Share Option Reserve	Retained Earnings	Total
	£	£	£	£	£	£
As at 1 January 2021	14,613	2,082,694	-	-	1,094,068	3,191,375
Comprehensive income Loss for the period	-	-	-	-	(149,088)	(149,088)
Total comprehensive loss	-	-	-	-	(149,088)	(149,088)
Reverse acquisition	(14,613)	(2,082,694)	2,097,307	-	-	-
Parent Company equity	2,029,464	-	(2,029,464)	-	-	-
As at 30 June 2021	2,029,464	-	67,843	-	944,980	3,042,287

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 Share option reserve represents share-based payments which represents the cumulative fair value of options and warrants granted.

Reverse acquisition reserve was created due to the reverse acquisition of DGI.

CONSOLIDATED statement of financial position

FOR THE SIX MONTHS ENDED 30 JUNE 2022

	Notes	As at 30 June	As at 30 June	As at 31 December
		2022	2021	2021
		Unaudited	Unaudited	Unaudited
		£	£	£
ASSETS
Fixed assets	5	868,540	528,701	859,651
Intangible asset	6	4,171,835	3,666,811	3,459,484
Current assets
Trade and other receivables	7	969,736	235,178	164,082
Cash and cash equivalents		1,650,352	138,502	57,455
		2,620,088	373,680	221,537
LIABILITIES
Current liabilities
Trade and other payables	8	(620,032)	(1,151,483)	(1,151,615)
Net Current Assets/(Liabilities)		2,000,056	(777,803)	(930,078)
NON CURRENT LIABILITIES	9	(556,082)	(375,422)	(1,204,297)
		(556,082)	(375,422)	(1,204,297)
NET ASSETS		6,484,349	3,042,287	2,184,760
SHAREHOLDERS' EQUITY
Called up share capital	10	8,842,715	2,029,464	2,029,464
Share premium account		30,024,062	-	-
Share option reserve		265,934	-	-
Reverse acquisition reserve		(26,508,585)	67,843	67,843
Retained earnings		(6,139,778)	944,980	87,453
TOTAL EQUITY		6,484,349	3,042,287	2,184,760

CONSOLIDATED statement of cash flows

FOR THE SIX MONTHS ENDED 30 JUNE 2022

		Six months to 30 June	Six months to 30 June	Year ended 31 December
		2022	2021	2021
		Unaudited	Unaudited	Unaudited
		£	£	£
Operating loss		(1,086,855)	(149,088)	(1,006,615)
(Increase)/Decrease in debtors		(805,654)	31,382	102,252
Increase in creditors		28,109	80,252	425,198
Amortisation		207,328	212,326	419,653
Depreciation		95,170	48,505	104,577
Disposal of asset		-	50,151	50,151
Share based payments		265,934	-	-
Net cash generated from/(used in) operating activities		(1,295,968)	273,528	95,216
Cash flows from investing activities
Purchase of fixed assets		(104,059)	(4,082)	(391,104)
Purchase of intangible fixed assets		(919,679)	(505,416)	(505,416)
Interest received		81	4	230
Net cash used in investing activities		(1,023,657)	(509,494)	(896,290)
Cash flows from financing activities
Issue of share capital		5,210,661	-	-
Decrease in borrowings		(1,298,139)	-	(5,939)
Refund of shareholders funds		-	-	(110,000)
Increase in loans		-	-	600,000
Net cash generated from financing activities		3,912,522	-	484,061
Net increase/(decrease) in cash and cash equivalents		1,592,897	(235,966)	(317,013)
Cash and cash equivalents at beginning of period		57,455	374,468	374,468
Cash and cash equivalents at end of period		1,650,352	138,502	57,455

 

CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2022

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. At the start of the period under review the Company was a cash shell whose strategy was to deliver material acquisitions in the energy sector. In April 2022 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 consolidated financial information represents the results of DG Innovate Plc and its subsidiaries (together referred to as Group).

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) ("DGI").

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 2022 have been prepared on the basis of the accounting policies set out in the company's 2021 annual report and accounts along with standards which have become effective after 31 December 2021. The interim accounts do not constitute statutory accounts as defined by section 434 of the Companies Act 2006. The auditor has reported on the 2021 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 2021 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 2021 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

a.  Primary segment - business

The Group has only one business segment, which is development of technology.

b.  Secondary segment - geographical

The Group's loss for the period was derived wholly from activities undertaken in the United Kingdom. The Group's net assets are located entirely in the United Kingdom.

2.4  Reverse acquisition

On 8 April 2022, the Company acquired DGI via a reverse takeover which resulted in the Company becoming the ultimate holding company of the Group. The transaction was accounted for as a reverse acquisition 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, DGI. 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 DGI. For more details on the key terms of the reverse takeover, see note 13.

3.  ADMINISTRATIVE EXPENSES

	Six months to 30 June 2022	Six months to 30 June 2021	Year ended 31 December 2021
	Unaudited	Unaudited	Unaudited
	£	£	£
Directors remuneration	486,241	79,364	160,008
Other administrative expenses	684,818	698,306	1,724,968
	1,171,059	777,670	1,884,976

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 DGI plc shares owned by the accounting acquirer DGI pre and post the reverse takeover on 8 April 2022.

	Six months to 30 June 2022	Six months to 30 June 2021	Year ended 31 December 2021
	Unaudited	Unaudited	Unaudited
	£	£	£
Net loss for the period	(6,227,231)	(149,088)	(1,006,615)
The weighted average number of shares in the period were:
Basic and dilutive ordinary shares	4,105,884,193	3,886,287	3,886,287
Basic and dilutive earnings/(loss) per share (pence)	(0.15)	(3.84)	(25.90)

5.  FIXED ASSETS

	Fixtures & Equipment	Motor Vehicles	Total
	£	£	£
Cost
At 1 January 2022	2,137,062	-	2,137,062
Additions	18,305	85,754	104,059
At 30 June 2022	2,155,367	85,754	2,241,121
Depreciation
Depreciation at 1 January 2022	1,277,411	-	1,277,411
Charge in the period	70,318	24,852	95,170
Depreciation at 30 June 2022	1,347,729	24,852	1,372,581
Carrying value
At 30 June 2022	807,638	60,902	868,540
At 31 December 2021	859,651	-	859,651
At 30 June 2021	528,701	-	528,701

6.  intangible ASSETS

	IPR & Patents	Total
	£	£
Cost
At 1 January 2022	5,669,081	5,669,081
Additions	919,679	919,679
At 30 June 2022	6,588,760	6,588,760
Amortisation
Amortisation at 1 January 2022	2,209,597	2,209,597
Charge in the period	207,328	207,328
Amortisation at 30 June 2022	2,416,925	2,416,925
Carrying value
At 30 June 2022	4,171,835	4,171,835
At 31 December 2021	3,459,484	3,459,484
At 30 June 2021	3,666,811	3,666,811

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

	As at 30 June 2022	As at 30 June 2021	As at 31 December 2021
	Unaudited	Unaudited	Unaudited
	£	£	£
Prepayments	30,518	28,679	30,607
Other taxes and social security	429,096	71,266	85,270
Other debtors	510,122	135,233	48,205
	969,736	235,178	164,082

Also included in other debtors are amounts repayable of £355,610 (30 June 2021: £Nil; 31 December 2021: £nil) by certain Directors in respect of incorrectly awarded bonuses.

Other taxes and social security comprise the tax suffered on the bonuses noted above and VAT repayable.

8.  TRade and other payables

	As at 30 June 2022	As at 30 June 2021	As at 31 December 2021
	Unaudited	Unaudited	Unaudited
	£	£	£
Trade payables	412,954	497,490	384,265
Accruals and deferred income	46,134	2,500	2,500
Other taxes and social security	32,111	-	-
Loans	79,233	651,493	715,250
Leases	49,600	-	49,600
	620,032	1,151,483	1,151,615

9.  non current liabilities

	As at 30 June 2022	As at 30 June 2021	As at 31 December 2021
	Unaudited	Unaudited	Unaudited
	£	£	£
Loans	228,121	307,353	880,675
Leases	247,235	-	256,803
Other creditors	80,726	68,069	66,819
	556,082	375,422	1,204,297

10.  SHARE Capital

		Unaudited	Unaudited
Allotted, called up and fully paid		No	£
		Ordinary Shares of 0.1p each	Ordinary Shares of 0.1p each
At 1 January 2021 (unaudited)		202,610,469	202,611
Issued in period		1,826,853,333	1,826,853
At 31 December 2021 (unaudited)		2,029,463,802	2,029,464
At 1 January 2022		2,029,463,802	2,029,464
Issued in period		6,813,251,305	6,813,251
At 30 June 2022 (unaudited)		8,842,715,107	8,842,715

11.  share options and warrants

Movement in the number of options and warrants outstanding and their related weighted average exercise price, since 31 December 2021 are as follows:

	At 30  June 2022		At 31 December 2021 & 30 June 2021
	Number of Options & Warrants	Weighted average exercise price per share	Number of Options & Warrants	Weighted average exercise price per share
At 1 January	2,983,297,500	2.5p	73,787,500	3.0p
Granted	1,109,783,754	0.1p	2,910,110,000	0.1p
Exercised	(830,800,000)	0.1p	-	-
Expired or waived	(40,000,000)	0.1p	(600,000)	280p
At period end	3,222,281,254	0.1p	2,983,297,500	2.5p

The following share options have been granted by the Company and are outstanding as at the period end of 30 June 2022:

Date of grant	Number of ordinary shares under option at 1 January 2022	Granted during period	Exercised during period	Lapsed/ waived during period	Number of ordinary shares under option at 30 June 2022	Weighted average exercise price	Expiry date
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	-	-	(40,000,000)	1,249,310,000	0.1p	18/03/2031
13/04/2022	-	439,383,754	-	-	439,383,754	0.1p	13/04/2032
Total	1,362,497,500	439,383,754	-	(40,000,000)	1,761,881,254	0.1p

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

The following warrants have been granted by the Company:

Date of grant	Number of warrants at 1 January 2022	Granted during period	Exercised during period	Lapsed during  period	Number of warrants  at 31 December 2021	Weighted average exercise price	Exercise date
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
08/04/2022	-	670,400,000	-	-	670,400,000	0.25p	08/04/2032
Total	1,620,800,000	1,620,800,000	(830,800,000)	-	1,460,400,000	0.375p

In April 2022 the Company raised (before expenses) £2,550,000 by way of a subscription for 510,000,000 new ordinary shares at a price of 0.5 pence each. Further, the Company raised an additional £2,077,000 following the irrevocable exercise of 830,800,000 Warrants (0.25p). Participants in the Fundraise were issued warrants and the company allotted  a total of 670,400,000 Warrants (1p) on the basis that: (i) one Warrant (1p) was issued to each Subscriber for every two Subscription Shares issued to each Subscriber, resulting in the issue of 255,000,000 Warrants (1p); and (ii) one Warrant (1p) will be issued to each holder of Warrants (0.25p) for every two Warrants (0.25p) exercised pursuant to the Warrant Exercise Notices, which resulted in the issue of 415,400,000 Warrants (1p).

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 Expected volatility Expected life Risk-free interest rate Expected dividend yield Possibility of ceasing employment before vesting Fair value per option/warrant	26 Feb 2021 31% 5 years 2.00% - - - 0.001p	08 Apr 2022 31% 10 years 2.00% - - - 0.19p	18 Mar 2021    31%   2 years   2.00%   -   - -   0.10p	18 Mar 2021 31% 10 years 2.00% - - - 0.15p	18 Oct 2020 50% 10 years 2.50% - - - 0.6p

The expense recognised by the Group for share based payments during the period ended 30 June 2022 £265,934 was (30 June 2021: £nil; 31 December 2021: £nil).

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.

12.  related party transactions

Share Options

The following share options were held by the directors during the year:

Director	Date of grant	Held at 1 January 2022	Surrendered during the year	Granted during the Period	Held at 30 June 2021	Exercise price
C Theis	08/10/2020	42,500,000	-	-	42,500,000	£0.001
	18/03/2021	739,520,000	-	-	739,520,000	£0.001
	13/04/2022	-	-	78,052,051	78,052,051	£0.001
N Fitzpatrick	18/03/2021	162,820,000	-	-	162,820,000	£0.001
J Allardyce	18/03/2021	62,500,000	-	-	62,500,000	£0.001
	13/04/2022	-	-	156,105,002	156,105,002	£0.001
M Boughtwood	13/04/2022	-		156,105,002	156,105,002	£0.001
Total		1,007,340,000	-	390,262,055	1,397,602,052

Transaction with related party

During the period Gareth Boughtwood (son of Martin Boughtwood, a director in the Group) was paid £5,000 (30 June 2021: £Nil; 31 December 2021: £Nil) in respect of IT services. 

Other debtors

Included in other debtors are balances due from the following Directors who served in the period, in respect of bonuses incorrectly awarded during the period and deemed to be held in trust. Chris Theis £137,369 (30 June 2021: £Nil; 31 December 2021: £Nil), Brent Fitzpatrick £83,005 (30 June 2021: £Nil; 31 December 2021: £Nil) Jack Allardyce £96,268 (30 June 2021: £Nil; 31 December 2021: £Nil), Nicholas Tulloch £38,968 (30 June 2021: £Nil; 31 December 2021: £Nil).

13.  Reverse Acquisition

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 £32.4 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 £5.4 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 £5.0 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.

Accordingly the following accounting treatment has been applied in respect of the reverse acquisition:

1.  DGI was the deemed accounting acquirer.

2.  The presentation of the consolidated financial statements of the legal parent (DG Innovate Plc) is a continuation of the accounting acquirer's financial statements.

3.  Consolidated financial statements for the period ended 30 June 2022 for the Group present the results of DGI from 1 January 2022 to 7 April 2022 and the enlarged group thereafter. The comparative results for the period ended 30 June 2021 and 31 December 2021 represent those of the DGI business, prior to the reverse takeover.

4.  The equity structure appearing in the Group financial statements reflects the equity structure of the legal parent (DG Innovate Plc), including the shares issued and shares to be issued under the share for share exchange to effect the business combination.

5.  The retained earnings and other equity balances recognised in the Group financial statements reflect the retained earnings and other equity balances of the DGI business immediately before the business combination and includes that of the group after the reverse takeover on 8 April 2022.

6.  The reverse acquisition reserve relates to adjustments in respect of 4 and 5 above for the reverse acquisition between DG Innovate Plc and DGI. 

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. This difference has been expensed within "reverse acquisition expenses" in accordance with IFRS 2.

Details of the fair value of the acquisition are as follows:

	Fair Value of assets acquired
	£
Cash & Cash equivalents	41,088
Loans	911,934
Fixed assets	82,546
Trade payables	(552,590)
Other payables	(97,500)
Net assets acquired	385,748
Listing expense	5,094,074
Consideration	5,479,552

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. 

 

END

 

 

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