2021 Full Year Results and Current Trading

RNS Number : 2065Q

Invinity Energy Systems PLC

27 June 2022

The information contained within this Announcement is deemed by Invinity Energy Systems plc to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

27 June 2022

Invinity Energy Systems plc

("Invinity" or the "Company")

2021 Full Year Results and Current Trading

Invinity Energy Systems plc (AIM:IES), a leading global manufacturer of utility-grade energy storage , is pleased to announce its Full Year Results for the year ended 31 December 2021 and provide an update on current trading.

Invinity's 2021 Annual Report and Financial Statements will shortly be available for download from the Company's investor portal . The report will be posted to shareholders in the coming days.

2021 Highlights

Financial

· Revenue for the year of £3.2m, a 690% increase vs 2020;

· Year-end closed sales backlog of £13.8m^*;

· Year-end inventory of £9.9m, including prepaid inventory;

· Year-end Cash of £26.4m (2020: 22.0m);

· The Group remains debt free, excluding leases.

*This figure includes the Elemental Energy deal which was signed on 31 December 2021 subject to two conditions precedent, which were satisfied by 2 February 2022.

Commercial

· The Group significantly expanded its commercial opportunities pipeline during 2021 and the first half of 2022, closing significant deals from the 'Base' category whilst expanding 'Advanced' and 'Qualified' categories. Year-on-Year commercial pipeline progression can be seen below:

Date	Closed (MWh)	Base (MWh)	Advanced (MWh)	Qualified (MWh)
17-May-21 (2020 Annual Report)	19.1	10.1	30.8	232.0
02-Nov-21 (2021 Placing)	19.1	17.1	40.1	207.5
25-May-22 (Current Trading)	28.0	11.6	66.3	608.3
% change (May 2021 to May 2022)	+46.6%	+14.9%	+115.3%	+162.1%

For further commentary on customer pipeline progression including definition of terms used, see the Chief Commercial Officer's report.

· Throughout the period, commercial activities focused on Invinity's three core markets: the UK, North America and Australia. This focus has continued in 2022 and Invinity's commercial team has been strengthened with the addition of Regional Sales Directors in the UK, US and Australia.

· Work undertaken during 2021 was rewarded in early 2022 with the closure of key opportunities including Invinity's largest North American sale to date, an 8.4 MWh sale to a Canadian Solar + Storage project developer; and securing funding under Phase 1, Stream 1 of the UK Government's Longer Duration Energy Storage (LODES) competition to plan a 40 MWh VFB that, if advanced to Phase 2 of the programme, will become one of the UK's largest co-located solar + storage projects.

· Between January 2021 and June 2022, Invinity sold 9.34 MWh of products contributing to a closed sales backlog of £13.8m, the majority of which, if not all, is expected to be delivered during the remainder of 2022.

Operational

· Despite significant supply chain and logistics challenges during the period, the Company was able to deliver 8.19 MWh of products between January 2021 and June 2022. This included:

o The UK's largest flow battery, a 5 MWh system at the Energy Superhub Oxford, installed and energised by Invinity alongside partners Pivot Power, Habitat Energy and Gamesa Electric;

o A 1.8 MWh flow battery delivered to the European Marine Energy Centre (EMEC) at their site in Eday, Orkney, on which commissioning is currently being finalised;

o A 0.8 MWh flow battery delivered to Scottish Water which is now operating at the site in Perth, UK;

o A 0.5 MWh flow battery delivered to the Soboba Fire Station near San Jacinto, CA, one of two California Energy Commission (CEC) funded Invinity projects currently in their delivery phase.

· Invinity's operational focus remains on converting the £13.8m year-end backlog into 2022 revenue and to this end, significant progress continues to be made in the build-up of the remaining inventory and delivery of certain key projects including:

o 8.4 MWh Elemental Energy project in Chappice Lake, Alberta, Canada, where site preparation is underway ahead of battery delivery;

o 8.0 MWh Yadlamalka Energy project in South Australia, where Invinity's customer is in advanced stages of relocating the project to a new site after which delivery of Invinity batteries can commence.

· To allow the Group to scale faster in line with demand Invinity is in the process of expanding its manufacturing capabilities with a new partner, Baojia New Energy. With over 1,000 employees and facilities of over 180,000 square meters located across Asia, Baojia will provide increased capacity and an option to manufacture outside of China should such a move be advantageous.

Corporate

Throughout 2021 and during the year to date, Invinity has made a number of important strategic developments relating to its products, partners and corporate positioning. These include:

· In May 2021 Invinity entered into a Joint Development and Commercialisation Agreement (JCDA) with Gamesa Electric S.A.U. ("Gamesa"), a wholly owned subsidiary of Siemens Gamesa Renewable Energy

o The JDCA will see Invinity and Gamesa develop a gird-scale Vanadium Flow Battery based on Invinity's proven technology and incorporating Gamesa Electric's advanced power conversion systems;

o Invinity and Gamesa have now been working together over 12 months and continue to make good progress towards the milestones and stage gates set out as part of the agreed product development roadmap;

· In March 2022 Invinity's shares and warrants created in the last placing were admitted to trading on the Aquis Stock Exchange to provide increased liquidity for Invinity shareholders;

· In April 2022, Invinity signed a Memorandum of Understanding with Hyosung Heavy Industries to initiate a global distribution partnership;

· In May 2022 the Company appointed EAS Advisers to materially expand Invinity's presence in US commercial and financial markets.

Larry Zulch, Chief Executive Officer at Invinity said:

"2021 was a year of tremendous accomplishments, some challenging setbacks, but overall significant progress for Invinity. The conversion of some of 2020's record order flow into meaningful revenues for the first time in the Group's history is an important milestone. Our order book made progress, culminating with the closure of the Chappice Lake project, Canada's largest flow battery, we delivered Invinity's first projects with ESO and Scottish Water, and we set product development in an important direction through our Joint Development and Commercialisation activities with Siemens Gamesa.

With a macro environment extremely favourable for safe and reliable non-lithium storage, and with our increasing ability to execute, I remain increasingly confident that Invinity will continue to deliver as the world electrifies and accelerates to Net Zero ."

Enquiries :

Invinity Energy Systems plc	+44 (0)204 551 0361
Peter Dixon-Clarke, Chief Financial Officer Joe Worthington, Director of Communications

Canaccord Genuity (Nominated Adviser and Joint Broker)	+44 (0) 20 7523 8000
Henry Fitzgerald-O'Connor / James Asensio

VSA Capital (Financial Adviser and Joint Broker)	+44 (0)20 3005 5000
Andrew Monk / Simon Barton

EAS Advisors LLC (US Corporate Advisor)	+1 (646) 495 2225
Matthew Bonner / Chris Hutchinson

Notes to Editors

Invinity Energy Systems plc (AIM:IES) manufactures vanadium flow batteries for large-scale, high-throughput energy storage requirements of business, industry and electrical networks.

Invinity's factory-built flow batteries run continually with no degradation for over 25 years, making them suitable for the most demanding applications in renewable energy production. Energy storage systems based on Invinity's batteries are safe, reliable, and economical, and range in size from less than 250 kilowatt-hours to tens of megawatt-hours.

Invinity was created in April 2020 through the merger of two flow battery industry leaders: redT energy plc and Avalon Battery Corporation. With over 33 MWh of systems deployed to date across more than 50 sites in 15 countries, Invinity is active in all major global energy storage markets and has operations in the UK, Canada, USA, China and Australia. Invinity Energy Systems plc is listed on the London Stock Exchange.

To find out more, visit invinity.com or call Investor Relations on +44 (0)204 551 0361

Audited financial results for the year ended 31 December 2021

Chairman's report: Motivating Real Change

The past 12 months in energy have illustrated that only a crisis can motivate real change. Much of the world now recognises that the clean energy transition must be a global priority. Unlocking low-cost, low-carbon electricity through the widespread adoption of safe and reliable battery storage has therefore become an urgent necessity.

It is widely recognised that the electricity grids of the future will require storage to balance out the inherent volatility of solar and wind generation. According to Bloomberg New Energy Finance (BNEF), the global energy storage market is expected to grow eight-fold from 22 GWh installed today to up to 178 GWh installed annually by the end of the decade. Our growing pipeline of commercial opportunities confirms that Invinity's vanadium flow batteries will play an important part in this market, dispatching renewable energy into the 'missing hours' of wind and solar.

Encouraged by this uptick in demand, I am pleased to note we have secured major cornerstone projects in each of our core markets: the UK, North America and Australia. Our largest flow battery to date at the Energy Superhub Oxford (ESO) has become a key reference site for the Company. Despite global supply chain and logistics headwinds, throughout 2021 and early 2022 we delivered approximately 250 of our battery modules with a combined capacity of more than 8 MWh to customers across the world. This achievement underlines how Invinity stands apart from others in the flow battery industry. We will continue to build on this strong foundation in the years to come.

Our 5 MWh flow battery, an integral part of the ESO project, was energised in 2021 alongside a lithium-ion battery. This hybrid system is currently the UK's largest transmission-connected battery. To deliver this project, Invinity worked alongside Pivot Power (part of EDF Renewables), Habitat Energy, Siemens Gamesa and other leading industry players to provide a model for urban decarbonisation. I was delighted to note that, working again with Pivot Power, Invinity received funding in February of this year from the Longer Duration Energy Storage Demonstration (LODES) competition toward developing a project almost ten times the size of ESO. Building relationships such as this with major players across the industry is core to our corporate strategy and is intended to result in securing ever larger orders for our products and support our efforts to reduce our operating costs still further.

Another key highlight of the year was the commencement of a Joint Development and Commercialisation Agreement (JDCA) with Gamesa Electric, part of Siemens Gamesa Renewable Energy (SGRE), in May 2021. This exciting partnership will support the development and commercialisation of a new Invinity battery product specifically targeting grid-scale projects an order of magnitude larger than the project sizes the Company currently focuses on.

Looking inward, Invinity has assembled what the Board believes to be a market-leading team which focuses on winning new contracts, deploying our product and continuing to develop our leading-edge technology, whilst improving performance and reducing costs yet further. In a year which saw the challenges of COVID and supply chain disruption continue to impact on our plans, I would like to take this opportunity to thank the entire Invinity team for their efforts and successes in 2021. The dedication and diligence of our staff has been exemplary, especially during the long ISO audit process which resulted in the recent awarding of three major certifications concurrently. Finally, I would particularly like to thank all my Board colleagues for their support and assistance over the year. Our latest addition to the Board, Kristina Peterson, is already making an impact with her knowledge of the wider renewable industry and I am grateful to Rajat Kohli who now leads our newly formed Environmental, Social & Governance (ESG) Committee.

In summary, 2021 saw Invinity continue to close sales for our products, begin to recognise meaningful revenue as a result of contract deliveries and raise funds which enable us to scale and grow in line with expanding global demand for energy storage. 2022 has already seen Invinity making further progress on both sales and delivery. I look forward to the team converting more of our pipeline leads into sales contracts throughout 2022 and continuing to generate long-term value for shareholders.

Energy storage technologies such as vanadium flow batteries hold the key to the next stage of the global energy transition. I continue to be extremely optimistic in relation to Invinity's position within one of the fastest growing areas in the global energy market and look forward to further success as we deliver on this opportunity in 2022 and beyond.

Neil O'Brien

Chairman

27 June 2022

Chief Executive Officer's Report: Executing on Our Vision

2021 was a year of tremendous accomplishments, some challenging setbacks, but overall significant progress for Invinity. I will report to you in three areas: 1) the macro environment, 2) Invinity's products, and 3) our strategic growth.

The Macro Environment

The entire world is electrifying. The reasons are many: to reduce carbon emissions, improve air quality and more recently, to achieve national energy security. This architectonic shift toward electrification won't occur smoothly or consistently, but the eventual outcome is not in doubt.

During 2021, the market for battery energy storage continued a year-long shift from potential to actual. The view that battery energy storage will play an essential part in the energy transition has become accepted at every level of the energy industry and especially among government leaders. Our Chief Commercial Officer, Matt Harper, recently addressed the House of Lords Economic Affairs Committee on the roles battery energy storage will play in the years to come. Those roles are: 1) compensating for shifts in demand and 2) dispatching low-carbon energy over hours, not minutes. Both needs are becoming more acute as intermittent renewables sources increasingly form the foundation of the world's electricity system.

But which battery technology to use? Lithium, the most common, has achieved that position without a viable alternative. Lithium may be ahead today, but it has not won the race. We are already delivering projects at a scale equivalent to the largest lithium-ion battery deployments achieved just a few years ago. The BEIS funded 40 MWh LODES project we are pursuing with Pivot Power / EDF is just one example.

There are many concerns about lithium batteries; they catch fire and wear out, and when they do, they leave a legacy of difficult-to-recycle toxic waste. Their components - lithium and nickel in particular - are dramatically increasing in price. Cobalt is sourced from areas of conflict. Recent industry analyses have concluded that there won't be enough lithium produced to come close to meeting the world's ambitions for the electrification of mobility, of cars and transport, much less supply the demand for stationary storage at massive scale to support the transition to renewable energy. In 10 years, we're going to look back and wonder why we put large quantities of perfectly good lithium, essential for electrifying mobility and portable uses, into boxes in a field to deteriorate.

For these reasons, the California Energy Commission (CEC) - charged with setting energy policy for the world's fifth-largest economy - recently conducted a day-long workshop on long-duration non-lithium storage. I was invited to speak and was proud to not only show photographs of our products in operation but note that I was the only presenter with a working product in the field. This brings us to the core of our business, supplying what we believe to be the world's most advanced vanadium flow battery.

Invinity's Products

Invinity is fundamentally a product company. Our current product, the VS3, has been installed and is operating at the Energy Superhub Oxford, Scottish Water Perth, EMEC and soon in projects in California, at Chappice Lake in Canada and Yadlamalka in South Australia.

Our product design strategy is three pronged: first and foremost, our batteries must be safe and reliable. Second, they must perform; they must efficiently store and discharge energy on command so that a battery owner can depend on their reliability. Third, they must be long-lived, a characteristic that is core to our value proposition.

But these are just table stakes; they are what our customers expect. The real driver for everything we do and why our customers buy our products comes down to economics. Our success will derive from continuing to communicate our superior capabilities in economic terms, which often translates into a lower cost per unit of energy stored and discharged during the life of the battery.

An important component of this calculation is the system cost, a key focus for Invinity and an area the Company continues to improve upon. We're working hard to reduce costs across all areas for our VS3. In 2021 we had some backward steps, including supply chain disruptions and skyrocketing shipping charges. But these challenges have driven us to improve, and I'm delighted to report that despite a trend towards higher overall costs, we increased the efficiency of building our cellstack, reduced manufacturing costs, and qualified better performing materials across our supply chain. These efforts support our work on the LODES competition from the UK Government, for which cost reduction is a key parameter.

A significant step change in our customer-facing economic proposition is underway through our work with Siemens Gamesa Renewable Energy (SGRE) and their subsidiary Gamesa Electric. We are co-developing a grid-scale flow battery that I firmly believe will be head and shoulders above any other flow battery ever developed. The development process is complex and requires everything we know and have learned as one of the most experienced teams in vanadium flow batteries. Our joint activities are progressing well and we're looking forward to providing product details once we reach the stage where it is appropriate to do so.

Strategic Growth

We are continuing our focus on three core markets: UK, North America, and Australia, and expanding our engagement with them as I discuss below. Our strategy in other important global markets requires finding a substantial partner who can represent us and our products by providing sales, installation, and service support. A template for this strategy is in South Korea where Hyosung has become our distributor. I can't imagine a better partner than Hyosung in South Korea with their impressive infrastructure and capabilities in what is a very exciting market for flow batteries.

The United States is an area with much potential for Invinity in two areas: corporate development and market development, both aided by our recent announcement that we have engaged EAS Partners to advance our US presence. EAS's initial focus is on increasing the level of US investor activity in Invinity shares. We've brought on Matt Walz as Vice President of Business Development, whose extensive experience in energy businesses from AES Corporation to Duke Energy brings considerable depth to the US Invinity team. Matt's work on our US market development includes building on our relationship with the CEC and pursuing US government support for energy storage initiatives that were part of President Biden's infrastructure bill.

In the UK, we are now admitted to trading on the Aquis Stock Exchange (AQSE) which has increased liquidity in Invinity's shares and facilitated trading in the warrants that were created as part of our fundraise in late 2021. We've hired Peter Strassheim as director of sales in the UK and EU. Peter will enhance our commercial capabilities in the UK, building on work we've done with BEIS including the LODES competition, jointly with Pivot Power, to help advance the commercial viability of non-lithium energy storage. We're planning to soon enhance our senior executive presence in the UK, further underscoring our commitment to our home market.

In Australia, the Yadlamalka project site is in the process of being successfully relocated. We're eager to begin delivery of the products we've built for it. We're pursuing even larger projects with ARENA under the leadership of Michael Rutt, our recently hired Regional Director of Australia Pacific based in Melbourne. The Australians, blessed with ample sunshine and wind, are acutely aware of the need to augment their renewable power with energy storage.

Our activities in the three focus regions are one of three major areas where we are deploying the funds we raised late in 2021. The other two are advancing the previously discussed development of a grid-scale battery with SGRE and Gamesa Electric (which I have discussed earlier in this report) and delivering on the project commitments we've signed and announced. Our work in these three areas significantly advances our mission to make our vanadium flow batteries a commercially viable alternative to lithium storage.

Delivering on our announced project commitments, the third area, has required significant effort and resources as we have learned to successfully navigate a world much different than it was just a few years ago. Every business with a global supply chain, especially those manufacturing components in China, as we do, has had to find ways to turn obstacles into opportunities.

In recognition of our growing sales backlog, which we aim to deliver and recognise as revenue in 2022 and beyond, we have taken the strategic decision to expand our capacity by establishing a manufacturing relationship with long-time Invinity supporter Suzhou Baojia New Energy Technology Co. (Baojia). With over 1,000 employees and facilities of over 180,000 square meters located across Asia, Baojia will be an important partner for Invinity at this exciting stage of growth and can help us to rapidly achieve greater scale in a rapidly expanding market. Our current manufacturing partner, BCI, an early investor in Avalon, one of Invinity's predecessors, remains a supportive shareholder as they look to focus their manufacturing capabilities within the US market.

Our attention to delivery means more than smoothing our global supply chain and upgrading manufacturing; we must source vanadium electrolyte from partners around the world and assist the developers of projects that will be incorporating our batteries to overcome obstacles. We have deepened our relationships with global vanadium and vanadium electrolyte suppliers to reduce our exposure to commodity pricing as they and we look to much greater quantities in 2022 and yet greater volume in 2023. Our very capable UK-based solutions engineering team has been engaging with developers of projects that plan to use our batteries around the world, providing crucial assistance as the developers engage with innovative energy transition opportunities.

Looking to the Future

Although undeniably challenging, 2021 saw the Company convert record order-flow in 2020 into meaningful revenue for the first time in its history. In my 2020 report, I noted that 2021 would be the year that Invinity would demonstrate its capabilities on a wider stage. Despite significant challenges, I believe we have made important progress on this front. Invinity ended 2021 in the best position it has ever been in terms of products, finances, market opportunity, and our ability to execute. Since then, we've made substantial further progress despite delays in announcing product deliveries and, not entirely unrelated, delayed announcements of product sales. With a macro environment extremely favourable for non-lithium storage, an ability to execute increasing daily, and a future vision that is compelling, I not only retain my optimism toward our business, I grow increasingly confident in our ability to realise our potential. Thank you for your support of Invinity. We continue to work with everything we have to merit your confidence.

Larry Zulch

Chief Executive Officer

27 June 2022

Chief Commercial Officer's report: Addressing Value, Cost and Proof

Vision

Invinity was founded on the belief that success lies in commercial opportunities where our products deliver more to our customers - more revenue, more cycles, more profits.

In 2021 the global energy storage market started to recognise that the grid of the future will need a new asset class - higher-throughput, longer-duration, non-lithium storage solutions. Lithium batteries have been successful delivering minutes to hours of power at irregular intervals, but to reliably deliver low-cost, low-carbon energy, renewables need support from energy storage multiple times per day and for hours at a time. This is where we believe Invinity's vanadium flow batteries are without equal.

Current Sales Pipeline

	Closed (MWh)	Base (MWh)	Advanced (MWh)	Qualified (MWh)
2 November 2021 (2021 Placing)	19.1	17.1	40.1	207.5
25 May 2022 (Current Trading)	28.0	11.6	66.3	608.3
% Change	+ 46.6 %	- 32.2 %	+ 65.3 %	+ 193.2 %

This recognition is driving growth in our sales pipeline over the last six months. We track our sales pipeline in stages: Qualified, Advanced, Base and Closed. Qualified opportunities have a solid revenue case, well-established project and site details, and a reason why Invinity's batteries are the best possible solution. Advanced opportunities are those where Invinity has been selected as the battery supplier and site engineering and planning are well underway. The Base category contains projects upon which we base our business: prices have been agreed, contracts are in process, and we have reserved working capital and manufacturing production slots to ensure we deliver on schedule. Closed opportunities are those which we are in the process of delivering or have already delivered.

The 8.4 MWh project with Elemental Energy announced in February 2022 increased Closed and decreased Base in 2022 in the table above. Advanced grew mainly from the 40 MWh project we are developing with our partners at Pivot Power and EDF Renewables for Phase 2 of the UK's LODES competition. Qualified opportunities grew because of the increasing number of high-quality opportunities in development.

We focus our sales efforts by segmenting opportunities among our three core markets - the UK, North America and Australia - and pursue projects outside these markets only when we have a strong partner such as Hyosung in South Korea. Since early 2022 we have strengthened our sales team: Michael Rutt joined our team as Regional Director in Australia, Jan Petrenko as Regional Manager for North America, and most recently Peter Strassheim as Regional Director for the UK and Europe.

We focus on customer categories most receptive to our products' inherent advantages: behind-the-meter commercial or industrial customers and front-of-meter project owners or operators. Helping drive the focus and relationships needed for success in these segments is Matt Walz, who recently joined Invinity as Vice President of Business Development, based in the US.

Progress in 2021

2021 was a year where renewable energy and energy storage made unprecedented progress in the face of extraordinary challenges. Solar and wind power are delivering results: for example, for a few hours in early May 2022 California powered its electric grid with 100% renewable generation for the first time ever. 2021 also saw significant headwinds emerging. Prices for everything from solar PV racking to transformers were up by 70% or more and shortages of components and personnel severely impacted the ability to get projects built and operational. Despite these challenges, the unwavering support of our employees, customers and suppliers allowed Invinity to deliver ground-breaking projects at the Energy Superhub Oxford and to Scottish Water, yielding significant revenue for the first time.

The past year also saw both progress and challenges to lithium battery projects. Some of the largest battery arrays ever conceived have come online, yet developers struggle with lithium battery price increases of up to 50% driven by supply chain disruptions and increasing demand. Safety has come to the forefront following lithium battery fires in Australia, the US and the UK, triggering tougher standards (and increased costs) for fire detection, fire suppression and emergency responder access. Finally, the operational limits of very large lithium arrays are becoming better understood, limiting their revenue potential.

Recognition of these challenges is pushing developers to seek alternatives as reflected in the considerable growth in the Qualified section of Invinity's sales pipeline. Similarly, government agencies like the CEC, BEIS and ARENA and independent bodies like Breakthrough Energy are funding broad programmes, such as LODES in the UK, to spur the growth of non-lithium long-duration storage.

Despite these generally supportive market conditions, individual deals tend to focus on three factors: value, cost and proof. The value delivered by our product must be well established, the cost of our product must align with the market, and the proof that our products perform must be unassailable.

The value of longer-duration, higher-throughput batteries is qualitatively well established, but the market and financial structures to fully exploit their advantages remain underdeveloped. Multiple revenue streams in a single project - "stacking" energy trading and frequency regulation, for instance - don't fully compensate for markets designed for hydrocarbon-fuelled peaking plants or short-duration lithium batteries. Fortunately, we see change on the horizon.

The initial cost of purchasing one of Invinity's VFBs is typically more than an equivalent lithium battery. However, customers tell us that the additional safety and siting costs required for lithium often bring us to cost parity, especially on projects under two megawatt-hours. We focus on those customers that need high throughput storage. An example is our project at EMEC, where four charge and discharge cycles per day mean our batteries deliver technically and economically superior performance.

The final factor is proof that our products perform. Historically, dozens of energy storage companies have attempted to deliver novel technologies to market, only to fail to navigate the chasm between the lab bench and a customer's site. Our customers know this and rightly insist on seeing proven operation in comparable projects before committing. Supply chain challenges in 2021 meant key projects in California, Australia and the UK were delayed, stalling our ability to demonstrate that our products deliver. But with our projects at ESO, Scottish Water and EMEC now delivered and major projects in the US, Canada and Australia not far behind, proof is at hand.

Early 2022: Enhancing Proof

February 2022 was a remarkable month. We announced an 8.4 MWh DC-coupled solar-plus-storage project, North America's largest flow battery, at Chappice Lake, Alberta, Canada alongside Elemental Energy, a developer, owner and operator of over 800 MW of wind and solar projects. This project is nearly identical to our project at Yadlamalka, South Australia, demonstrating the repeatability of our business model.

Later in February, we announced £0.7m of Phase 1 funding from BEIS as part of their LODES programme. Our joint entry with ESO partner Pivot Power underscores the strength of our relationship. Phase 2, if selected - and with five companies vying for at least three spots, our chances are good - will see us deliver the UK's largest flow battery, a 40 MWh Invinity VFB, co-located with lithium batteries and solar generation to deliver low-carbon power on demand.

Finally, during April we announced a relationship with Hyosung, one of Korea's largest energy storage systems integrators. In 2018 Korea was the single largest global market for storage, but the large number of lithium battery fires there has curtailed growth. Hyosung extensively tested Invinity's batteries and sees tremendous opportunities in deploying them in Korea and beyond.

Next in 2022: Reducing Cost

Our growing production volumes will deliver another benefit: lower costs. The combined 16.4 MWh we will deliver to Yadlamalka Energy and Elemental Energy more than doubles Invinity's total production to date. We will use the expertise gained in doing so to increase quality and reduce manufacturing costs at a faster rate than lithium batteries which have already benefited from decades of high-volume manufacturing.

Cost reduction also comes from refining our product design, and part of our Phase 1 LODES funding is allocated to reducing the cost of our current product. Further improvement will come through our development programme with Siemens Gamesa to develop and commercialise an Invinity VFB that delivers lower costs than our competitors at the gigawatt-hour scale of today's largest energy storage projects. We have made good progress on this programme and expect to release details of that product in the first half of 2023.

Beyond 2022: Increasing Value

The groundwork for regulatory changes that will massively increase Invinity's value to our customers is being laid through pathfinder projects from government agencies like BEIS, the CEC and ARENA. Our projects with Pivot Power, Elemental Energy and Yadlamalka Energy will be at the forefront of informing future policies.

Policymakers value independent analysis such as Aurora Energy Research's February 2022 report titled "Long duration electricity storage in GB" that noted that the UK grid would need up to 24 GW of long duration storage by 2035, saving UK ratepayers £1.13bn per year while decreasing UK annual CO₂ emissions by 10 million tons. Amongst the range of storage solutions analysed, VFBs were highlighted favourably on factors such as lifetime cost and durability.

We have been encouraged by policymakers seeking Invinity's input on delivering a net zero grid while creating employment opportunities and improving domestic economies. Invinity engaged in a CEC workshop on Advancing Non-Lithium-Ion Long Duration Energy Storage Technologies, presented evidence to the House of Lords' Economic Affairs Committee on UK energy supply and investment, participated in an industry roundtable with UK Energy Minister the Rt Hon Greg Hands MP, hosted the Scottish Cabinet Secretary for Net Zero, Michael Matheson MSP at our facility in Bathgate, and hosted British Consul General Thomas Codrington at our facility in Vancouver. In each case, our message was very well received.

Aligning and Accelerating

Despite delays, 2021 saw Invinity start to generate significant revenue by delivering major contracts, secure important follow-on opportunities and grow the pipeline of qualified deals. Invinity's commercial position, stronger than ever, will become even more robust as we establish Value, Cost and Proof for our customers. Taken together, this combination of position and traction give us tremendous confidence in our future commercial prospects and makes us excited for the role that Invinity and our VFBs have to play as a necessary part of our future net zero grid.

Matt Harper

Chief Commercial Officer

27 June 2022

Chief Financial Officer's report: Recognising Revenue

Financial Highlights

· Revenue for the year of £3.2m, a 690% increase vs 2020;

· Year-end closed sales backlog of £13.8m;

· Year-end inventory of £9.9m, including prepaid inventory;

· Year-end cash of £26.4m (2020: £22.0m);

· May 2022 month-end cash of £18.3m;

· The Group remains debt free, excluding leases.

Operational

The four significant operational and financial highlights that characterised 2021 for the Group were:

1. First revenue recognised from its VS3 battery product;

2. An oversubscribed fundraising of £28.9m before expenses;

3. Submitting Phase 1 of the UK LODES competition; and;

4. Continued supply chain and cost challenges to delivering contracts;

2021 was the first year to recognise revenue from the VS3 battery product. Of the total revenue of £3.2m (2020: £0.4m), most came from the Energy Superhub Oxford (ESO) contract, with the balance from a number of other contracts, including pre-VS3 contracts, but particularly from the Scottish Water contract for its site in Perth.

Where contracts are for the delivery of both goods and services, the revenue on the goods is recognised when control of the goods transfers, usually on delivery to site, and on the services when the performance obligation is fulfilled, usually when the contract is handed over. Both ESO and Scottish Water were delivered during 2021 with the service element of the revenue to be recognised in 2022.

Delivering the contracts in 2021 tested every area of the business and the supply chain in particular. Whilst each challenge was successfully overcome, there were impacts on the costs of key inputs which, despite promising signs in late 2020, at best remained stubbornly high during the year. Particular examples were evident in the indices for shipping costs, which peaked at about $20,600 per container during Q3 2021 from about $2,000 in Q1 2020 and steel 10-ton futures contracts which peaked at about $900 from about $600 over the same period.

Largely as a result of high global input and shipping prices, the Group's cost of sales was £6.6m (2020: £1.2m) which was the key driver of the gross loss for the year of £3.4m (2020: £0.8m).

Administrative costs were £14.4m (2020: £9.6m) of which £9.0m (2020: £5.8m) related to staff costs, particularly within our customer facing departments (being Commercial, Solutions Engineering and Customer Operations) and product facing departments (being Product Development and Technology). This increase represents the continued investment in the Group's capabilities of much of the cash raised in 2020.

Other items of operating income and expense for the year were £3.4m (2020: £9.8m), of which £3.8m (2020: £1.1m) relates to the movement on the provision for onerous contracts. This movement, along with those on finance costs and foreign exchange, meant a reduced loss after income tax of £21.4m (2020: £26.4m). As all of the £4.9m onerous contract provision is expected to unwind in 2022, this will mean a gross loss for the year ended 2022.

2021 closed with an inventory balance of £9.9m (2020: £1.9m) including prepaid inventory of £4.1m (2020: £0.7m). Current terms of trade mean that most inventory payments are currently recorded as prepaid inventory within other current assets because most suppliers require payment prior to physical delivery. Upon physical receipt, prepaid inventory is transferred to inventory.

The balance above included the European Marine Energy Centre (EMEC) contract which has since been delivered, along with the two CEC contracts, Webcor and Soboba, both due for delivery in the third quarter 2022. Along with Yadlamalka and Elemental, these contracts equate to revenue of £13.4m.

Remaining inventory consisted mainly of stacks and balance of system, along with some electrolyte, which means there are already sufficient balance of systems, completed or near complete, to cover the remaining closed sales of Yadlamalka and Elemental.

Cost Down

Whilst the plan at the outset of 2021 was very much to drive down costs through a number of measures including increased output and further supply chain efficiencies, the reality of the continued COVID-related global disruptions was that almost all of our input costs increased and almost all of our potential customers' project timelines were extended.

2022 will see continued cost down focus on the measures above, an illustration being our decision to commence the switch of suppliers of our balance of system from BCI to Baojia whose sister company (Hong Kong Hao Yuan Shen Trading) owns 3.08% of the company's equity. Whilst this transition will take most of the rest of 2022 to complete, the greater size and reach of Baojia is already highlighting cost savings in the supply chain. This will allow us to scale faster when the time comes and maintain the option to manufacture outside of China should the current US tariffs make it advantageous.

Furthermore, moving from single sourcing to dual, or multiple, sourcing will also drive down costs and improve resilience. Opportunities exist in a number of areas, most notably regarding sourcing electrolyte where we have qualified one additional supplier and are well advanced with another. The scale and access to fixed-price offtake agreements of our new supplier has already proved its value by insulating us to a degree from the recent peak in the price of vanadium pentoxide.

As a counterpoint to the cost challenges of 2021, we saw increasing government support for non-lithium storage solutions in each of our three key markets, some of which include explicit financial support for further cost down measures as part of the programme. The best example being our winning of Phase One of the UK Government's LODES competition run by BEIS.

Phase 1 of LODES is worth about £0.7m of reimbursed costs to Invinity towards the cost of submitting, in conjunction with Pivot Power (part of EDF Renewables) and EDF R&D UK (both of whom we also worked with on ESO), a fully engineered and costed proposal for Phase 2, which is a 40 MWh storage installation co-located with solar in the UK. Phase 2 has to be delivered at a material cost down relative to 2021 and therefore encapsulates our short-term cost down roadmap in much the same way that our medium-term cost down roadmap is encapsulated within our JDCA with Siemens Gamesa.

Financial

The Group opened 2021 with £22.0m in cash (2020: £1.2m) and closed with £26.4m. Outside of the £23.0m (2020: £10.9m) of cash outflows from operating activities, the two highlights were a £7.9m increase in combined prepaid inventory and inventory (2020: £1.4m) and £27.4m (net of expenses) of receipts from the Q4 fundraising, by way of a placing and open offer.

An analysis of cash flows for 2021 shows:

	£'m
Loss after income tax	(21.4)
Adjustments for non-cash items	2.2
Increase in inventory & prepaid inventory	(7.9)
Other changes in operating assets/ liabilities	4.2
Investing activities	(0.7)
Financing activities	28.1
Movement	4.4
Opening cash	22.0
Closing cash	26.4

As part of the placing and open offer, the company granted a total of 14.5m short-term and 14.5m long-term warrants. The exercise prices are 150p and 225p for the short-term and long-term warrants respectively and the expiry dates are 15 September 2022 and 16 December 2024.

In response to the delays discussed elsewhere and to better align working capital requirements with expected sales, the Company is considering a modest extension to the expiry period of the short-term warrants. Should this occur, the Company will seek approval from warrantholders at the Company's next Annual General Meeting.

Going concern

The successful winner, or winners, of the second phase of the UK Government's LODES competition is expected to be announced in the first half of 2023. Due to the extensive work required in preparing for the submission, contracting is expected to complete soon after the winner is announced, along with the payment of a material deposit on signing. Similar government supported opportunities are in progress in both the US and Australia, though LODES is considered the most advanced of the three.

Absent the exercise of any warrants, but including a deposit from the LODES, or similar contract, the latest cash flow forecasts indicate that provided existing contracts are delivered, new contracts are closed and manufacturing costs reduce as forecast, the existing cash will be sufficient to fund the business for at least 12 months from the signing of the balance sheet.

14.5m short-term warrants were granted in 2021 and should all, or some, of these warrants be exercised prior to expiry on 15 September 2022 then the Company will receive up to an additional £21.8m of cash. The Group's cash balances at the end of May 2022 totalled £18.1m. Should all of the short-term warrants be exercised within the next 12 months then the existing cash will be sufficient to fund the business for at least 12 months from the signing of the balance sheet.

However, the exercise price of the short-term warrants is 150p and, at the market close on 22 June 2022, the Company's share price is below this exercise price at 53p. Accordingly there is no certainty that any of the warrants will be exercised.

A change to the terms of the short-term warrants, such as the expiry date, is conditional upon the approval of the holders of the short-term warrants and requires at least 50% of the subscription rights for such class of warrants to vote in favour at a General Meeting and there can be no certainty that any such change in the terms will be approved.

Whilst 2021 demonstrated both the support of the Company's investors and the resilience of its organisation, as with many groups at this stage of development it remains reliant on timely receipts and closely managed costs. Should insufficient short-term warrants be exercised, existing contracts be delivered more than six-months late or the Group fail to win the LODES, or an equivalent, contract or close it later than the second quarter of 2023 then, assuming the Group maintains its forecast operational capacity, it will be necessary to raise further funding within the next 12 months in order to continue trading and deliver on the strategic objectives.

The Group's need to secure receipts from the exercise of the warrants or through winning new contracts, customers or additional funding creates a material uncertainty that casts significant doubt about its ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

In addition to the issues discussed above, the directors have also reviewed other varying, and wide-ranging information relating to both present and future conditions when reaching their conclusion regarding going concern. These included the:

· growing opportunities presented by the emergent energy storage market;

· growing levels of Government engagement and support in the three key markets;

· growing sales pipeline of 686 MWh in May 2022 vs 273 MWh in May 2021; and

· validation of the business provided by the continued engagement of EDF following the ESO contract in bidding together for Phase 2 of the LODES contract (following its winning of Phase 1).

Outlook

Despite the recent lockdowns in China, there are increasing signs of a return to global normality. Whilst doing so will take time, the ease of doing business, both internally and externally, is already improving and allowing us to be more proactive in pursuing sales and cost down opportunities.

Combining the cost down opportunities with a growing appreciation of the true value of energy security (in part driven by geopolitical events such as the war in Ukraine) and the critical role of a safe, high throughput non-lithium storage alternative, means that the gap between the sales price and our product cost should narrow increasingly rapidly and generate the commensurate revenue growth at a suitable margin.

Peter Dixon-Clarke

Chief Financial Officer

27 June 2022

Financial Statements

Consolidated Statement of Profit and Loss

For the year ended 31 December 2021

		2021	2020
Continuing operations	Note	£000	£000
Revenue	4	3,185	406
Cost of sales	5	(6,622)	(1,221)
Gross loss		(3,437)	(815)
Operating costs
Administrative expenses	6	(14,439)	(9,593)
Other items of operating income and expense	10	(3,388)	(9,822)
Loss from operations		(21,264)	(20,230)
Finance income	11	-	1
Finance costs	11	(45)	(2,298)
(Loss)/gain on foreign currency transactions	11	(63)	(1,744)
Net finance costs	11	(108)	(4,041)
Loss before income tax		(21,372)	(24,271)
Income tax expense	12	-	-
Loss for the year		(21,372)	(24,271)


Loss per ordinary share in pence
Basic	13	(24.1)	(41.0)
Diluted	13	(24.1)	(41.0)

The above consolidated statement of profit and loss should be read in conjunction with the accompanying notes.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2021

		2021	2020
Continuing operations	Note	£000	£000
Loss for the year		(21,372)	(24,271)
Other comprehensive income/(expense)
Exchange differences on the translation of foreign operations		10	(2,162)
Total comprehensive loss for the year		(21,362)	(26,433)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Consolidated Statement of Financial Position

For the year ended 31 December 2021

		2021	2020
	Note	£000	£000
Non-current assets
Goodwill and other intangible assets	15	24,097	24,127
Property, plant and equipment	16	1,130	695
Right-of-use assets	17	975	1,014
Total non-current assets		26,202	25,836

Current assets
Inventory	19	5,797	905
Other current assets	20	6,280	1,414
Contract assets	21	324	5
Trade receivables	22	1,683	33
Cash and cash equivalents	23	26,355	21,953
Total current assets		40,439	24,310
Total assets		66,641	50,146

Current liabilities
Trade and other payables	24	(3,513)	(2,468)
Contract liabilities	21	(5,142)	(2,644)
Lease liabilities	25	(350)	(161)
Provisions	21	(5,976)	(1,927)
Total current liabilities		(14,981)	(7,200)
Net current assets		25,458	17,110

Non-current liabilities
Lease liabilities	25	(420)	(595)
Total non-current liabilities		(420)	(595)
Total liabilities		(15,401)	(7,795)
Net assets		51,240	42,351

Equity
Called up share capital	26	50,690	37,870
Share premium		140,445	124,545
Share-based payment reserve	26	5,293	3,762
Accumulated losses		(143,557)	(122,185)
Currency translation reserve	26	(1,670)	(1,680)
Other reserves	26	39	39
Total equity		51,240	42,351

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

The financial statements were authorised by the board of directors and authorised for issue on 27 June 2022 and were signed on its behalf by:

Michael Farrow

Director

Consolidated Statement of Changes in Equity

For the year ended 31 December 2021

	Called up share capital	Share premium	Share-based payment reserve	Accumul-ated losses	Currency transla-tion reserve	Other reserves	Total
	£000	£000	£000	£000	£000	£000	£000
At 1 January 2021	37,870	124,545	3,762	(122,185)	(1,680)	39	42,351
Loss for the year	-	-	-	(21,372)	-	-	(21,372)
Other comprehensive income
Foreign currency translation differences	-	-	-	-	10	-	10
Total comprehensive loss for the year	-	-	-	(21,372)	10	-	(21,362)
Transactions with owners in their capacity as owners
Contribution of equity, net of transaction costs	12,286	15,148	-	-	-	-	27,434
Exercise of share options	534	752	(296)	-	-	-	990
Share-based payments	-	-	1,827	-	-	-	1,827
Total contributions by owners	12,820	15,900	1,531	-	-	-	30,251
At 31 December 2021	50,690	140,445	5,293	(143,557)	(1,670)	39	51,240

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

	Called up share capital	Share premium	Share-based payment reserve	Accumul-ated losses	Currency transla-tion reserve	Other reserves	Total
	£000	£000	£000	£000	£000	£000	£000
At 1 January 2020	8,157	101,035	2,250	(97,914)	482	(1,422)	12,588
Loss for the year	-	-	-	(24,271)	-	-	(24,271)
Other comprehensive loss
Foreign currency translation differences	-	-	-	-	(2,162)	-	(2,162)
Total comprehensive loss for the year	-	-	-	(24,271)	(2,162)	-	(26,433)
Transactions with owners in their capacity as owners
Contribution of equity, net of transaction costs	11,704	20,030	-	-	-	-	31,734
Issue of ordinary shares as a consideration for a business combination, net of transaction costs	17,980	3,423	-	-	-	-	21,403
Exercise of share options	29	57	-	-	-	-	86
Share-based payments	-	-	1,512	-	-	-	1,512
Fair value realised on note conversion	-	-	-	-	-	1,461	1,461
Total contributions by owners	29,713	23,510	1,512	-	-	1,461	56,196
At 31 December 2020	37,870	124,545	3,762	(122,185)	(1,680)	39	42,351

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

For the year ended 31 December 2021

	Note	£000	£000
Cash flows from operating activities
Cash used in operations	14	(22,964)	(10,885)
Interest received		-	1
Interest paid		-	(32)
Net cash outflow from operating activities		(22,964)	(10,916)

Cash flows from investing activities
Acquisition of intangible assets	15	(18)	(9)
Acquisition of property, plant and equipment	16	(733)	(349)
Net cash outflows from investing activities		(751)	(358)

Cash flows from financing activities
Payment of lease liabilities	25	(320)	(163)
Proceeds from the issue of share capital, net of transaction costs		27,434	28,915
Proceeds from the issue of convertible notes, net of transaction costs		-	1,944
Acquisition of cash through business combination		-	1,264
Proceeds from the exercise of share options and warrants		990	37
Net cash inflow from financing activities		28,104	31,997

Net increase/(decrease) in cash and cash equivalents		4,389	20,723
Cash and cash equivalents at the beginning of the year		21,953	1,243
Effects of exchange rate changes on cash and cash equivalents		13	(13)
Cash and cash equivalents at the end of the year		26,355	21,953

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Notes

1 General Information

Invinity Energy Systems plc (the 'Company') is a public company limited by shares incorporated and domiciled in Jersey. The registered office address is Third Floor, IFC5, Castle Street, St. Helier, JE2 3BY, Jersey.

The Company is listed on the AIM Market of the London Stock Exchange with the ticker symbol IES.L.

The principal activities of the Company and its subsidiaries (together the 'Group') relate to the manufacture and sale of vanadium flow battery systems and associated installation, warranty and other services.

2 Summary of significant accounting policies

Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, the associated interpretations issued by the IFRS Interpretations Committee (together 'IFRS') and in accordance with the Companies (Jersey) Law 1991.

Separate presentation of the parent company financial statements is not required by the Companies (Jersey) Law 1991 and, accordingly, such statements have not been included in this report.

The significant accounting policies applied in preparing these consolidated financial statements are set out below. These policies have been consistently applied throughout the period and to each subsidiary within the Group.

The financial statements have been prepared under the historical cost convention except where stated.

Going concern

Absent the exercise of any warrants as described below, but including a deposit from the LODES, or similar contract, the latest cash flow forecasts indicate that provided existing contracts are delivered, new contracts are closed and manufacturing costs reduce as forecast, the existing cash will be sufficient to fund the business for at least 12 months from the signing of the balance sheet.

· growing opportunities presented by the emergent energy storage market;

· growing levels of Government engagement and support in the three key markets;

· growing sales pipeline of 686 MWh in May 2022 vs 273 MWh in May 2021; and

· validation of the business provided by the continued engagement of EDF following the ESO contract in bidding together for Phase 2 of the LODES contract (following its winning of Phase 1).

Foreign currency

Presentation currency

The consolidated financial statements are presented in Great British Pounds (GBP) rounded to the nearest thousand (£000), except where otherwise indicated.

Functional currency

Items included in the financial information of the individual companies that comprise the Group are measured using the currency of the primary economic environment in which each subsidiary operates (its functional currency).

Whilst Jersey uses the Jersey Pound as its currency, Jersey is in a currency union with the United Kingdom and so the functional currency of the parent company of the Group has been determined to be GBP.

Foreign currency transactions

Transactions in currencies other than an entity's functional currency (foreign currencies) are translated using the exchange rate on the date of the transaction. Foreign exchange gains and losses resulting from the settlement of transactions denominated in a foreign currency are translated into GBP using the relevant exchange rate at the date of the transaction.

Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at the balance sheet date of monetary assets and liabilities denominated in foreign currencies, are recognised in the consolidated statement of comprehensive loss within gains/ (losses) on foreign currency transactions.

Foreign currency gains/(losses) realised on the retranslation of subsidiaries as part of the year-end consolidation are recorded in the translation reserve that forms a part of shareholders' funds in the consolidated financial statements of the Group.

Consolidation of subsidiaries

Subsidiaries are all entities over which the Company has control. The Company controls an entity when it is exposed to, or has rights over, variable returns from its involvement with the entity and can affect those returns through its ability to exercise control over the entity. Subsidiaries are consolidated in the Group financial statements from the date at which control is transferred to the Company.

Subsidiaries are deconsolidated from the date that control ceases. The ability to control an entity may cease because of the sale of a subsidiary or other change in the Company's shareholding in that subsidiary, voting rights or board representation.

Foreign operations

Subsidiaries of the Company that are based in countries other than the UK or Jersey may have functional currencies that are different from that of the Company. In addition, the Group financial statements are presented in GBP. The assets and liabilities of foreign subsidiaries consolidated into these financial statements are translated into the Group's presentational currency using exchange rates prevailing at the end of the reporting period. Income and expense items are similarly translated using the month-end rate for each month during the year. The exchange rates on the actual dates of transactions are used where exchange rates fluctuate significantly within a month. Exchange differences arising on consolidation are recognised in other comprehensive income and are accumulated as part of shareholder's equity.

Investments in associates and joint arrangements

Associates are entities where the Company can exert significant influence but is not able to exercise control.

Joint arrangements may be incorporated, where an entity exists, or may be unincorporated, where the venture or joint operation is governed by contract or other arrangement between two or more parties. The Company is not currently party to any unincorporated joint arrangements.

The Group accounts for its interests in associates and incorporated joint ventures using the equity method of accounting where the relevant investment is initially recorded at the cost to acquire the interest. After initial recognition, the Group recognises its share in the post-acquisition income and expenses of the associate in the statement of profit and loss with a corresponding increase (for income) or decrease (for losses) in the carrying value of the investment in the associate.

Dividends received by the Company from an associate are treated as a reduction in the carrying value of the associate (as its net assets have reduced by it giving the dividend) and income for the Group (as its net assets have increased by receiving the dividend).

The Group assesses the carrying value of associates for impairment at each reporting period end or at any other time where there is an indication that an impairment may exist. Where there is an indication of impairment of an investment, the Group assesses if an actual impairment loss exists by comparing the carrying value of the investment to its recoverable amount which is the lower of its fair value less cost to sell or its value in use.

Fair value less costs to sell is determined by reference to the proceeds that could be expected to be received should the interest in the associate be sold less the costs of doing so. Value-in-use is typically calculated by reference to the value of the discounted cash flows expected to be received from the associate.

Where there is a deficit of recoverable value as compared to the carrying value of the investment then an impairment loss is recognised in the consolidated statement of profit and loss in the amount of the calculated deficit. The carrying value of the investment in the associate is also reduced by a corresponding amount.

Acquisitions

The Group allocates the purchase consideration given in respect of the acquisition of a subsidiary to the assets acquired and liabilities assumed based on an assessment of their individual fair values at the date of acquisition. Any excess of the cost of the acquisition over the fair value of assets acquired and liabilities assumed in the business combination is recognised as goodwill.

The assessment of fair value is made by comparing the discounted value of the future cash flows expected to be generated from the CGU to which the goodwill has been allocated to the net book value of the assets and liabilities of that CGU including the allocated goodwill. Where a deficit of discounted cash flows compared to the carrying value of the CGU's net assets and allocated goodwill exists, the goodwill is reduced to its recoverable amount with a corresponding amount recognised as an impairment charge in profit or loss. A corresponding reduction is made to the carrying value of goodwill and then to the net assets of the CGU if goodwill is insufficient to absorb the loss. Goodwill may also be tested for impairment under the fair value less costs to sell method where the recorded value of goodwill is compared to the market or value of the Company calculated by reference to its share price.

Any such impairment loss is recognised in profit and loss in the period in which it is identified. Impairment losses related to goodwill cannot be reversed in future years.

Transaction between entities within the Group

Transactions and balances between companies forming part of the Group together with any unrealised income and expenses arising from intra-group transactions are eliminated in the preparation of the consolidated financial statements of the Group.

Discontinued operations

A discontinued operation is a component of the Company's business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale. Classification as a discontinued operation occurs on actual disposal or earlier if the operation meets the criteria to be held for sale. When an operation is classified as a discontinued operation, the comparative consolidated statement of profit and loss is restated as if the operation had been discontinued from the start of the comparative period.

Disposal of subsidiaries

Transactions that result in the loss of control of a subsidiary are accounted for as disposals. The previously consolidated assets and liabilities and the carrying amount of any non-controlling interests in the subsidiary are derecognised. Any retained interest in the former subsidiary is recognised at its fair value at the date when control is lost. A gain or loss on disposal is recognised as the difference between the fair value of the consideration received together with the fair value adjustment made in respect of any retained interest in the subsidiary as offset by the carrying value of the assets and liabilities derecognised. Any gains or losses of the disposed entity that were previously recognised in other comprehensive income or loss and that require to be recycled to profit or loss also form part of the gain or loss on disposal.

New standards, amendments and interpretations effective and adopted by the Group in 2021

No new standards became effective for the preparation of financial statements in accordance with IFRS for the year ended 31 December 2021.

Amendments to existing standards previously issued by the IASB with effective dates during the year ended 31 December 2021 are summarised below. There was no effect on the Group's consolidated financial statements for the year ended 31 December 2021 as a result of the adoption of these amendments.

Amendment to 'IAS 37 Provisions, contingent liabilities and contingent assets'

An amendment to IAS 37 was published in May 2020 and requires the provision in respect of an onerous contract to also include an assessment of the indirect costs, such as production overhead or indirect labour, that are expected to be incurred in servicing a contract considered to be onerous.

The Company elected to early adopt the amendment as of 1 January 2020.

New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by the Company. These standards are not expected to have a material impact on the entity in the current or future reporting periods or on foreseeable future transactions

Amendment to 'IFRS 16 Leases'

IFRS 16 was issued by the IASB in January 2016 with an effective date of 1 January 2019 and introduced a single lease model requiring the recognition of right-of-use assets for all leases with a term greater than 12 months together with a corresponding lease liability. There is no longer any distinction between the accounting treatment for lease contracts that were previously classified as either operating leases or finance leases. IFRS 16 was adopted by the Group in its 2019 annual report and financial statements, as required by the standard.

On 28 May 2020, the IASB issued an amendment to the standard related to the treatment of rent concessions given by lessors in relation to COVID-19. The Group did not receive any rent concessions related to COVID-19 that would require consideration of the amendment to IFRS 16 and, accordingly, the amendment had no impact on the consolidated financial statements for the years ended 31 December 2020 or 2021.

Amendments to 'IFRS 9 Financial Instruments', 'IAS 39 Financial Instruments: Recognition and Measurement' and 'IFRS 7 Financial Instruments: Disclosures'

On 26 September 2019, the IASB issued 'Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)' related to potential effects of the IBOR reform on financial reporting related to hedging instruments. The amendment was effective for accounting periods starting on or after 1 January 2020. The Company does not currently use hedges or other purchased derivative instruments and therefore there is no impact on the Group financial statements for the year ended 31 December 2021.

A second amendment related to the IBOR reform was issued on 27 August 2020 with an effective date of 1 January 2021. This amendment is similarly not expected to have an impact on the financial reporting for the Group.

Critical accounting judgments and key sources of estimation uncertainty

The preparation of the financial statements in conformity with generally accepted accounting practice (GAAP) requires management to make estimates and judgments. Those estimates and judgments can affect the reported values for assets and liabilities as well as the disclosure of contingent assets and liabilities at the balance sheet date.

Management is also required to make estimates and judgments related to the reported amounts of revenues and expenses and related to the timing of the recognition of those revenues and expenses.

Judgments made and estimates applied are based on historical experience and other factors including management's expectations of future events that are considered relevant. Actual results may differ from these estimates. The estimates, judgments and underlying assumptions made are reviewed on an ongoing basis and specifically in the preparation of the interim and annual published financial information.

Revisions to accounting estimates are recognised in the period in which the estimate is revised and applied consistently in future periods subject to the ongoing reassessment of estimates.

Critical judgments for the year under review

Going concern

The directors are required to assess whether it is appropriate to prepare the financial statements on a going concern basis. In making this assessment the directors need to be satisfied that the Group can meet its obligations as they fall due and will remain cash-positive for a period of at least 12 months from the date of approval of the financial statements. Potential additional funding that is not yet committed at the date of approval of the financial statements cannot be anticipated in making the assessment of going concern.

The directors make their assessment based on a cash flow model prepared by management and based on its expectation of cash flows for the 18-month period from the date of approval of the financial statements. The extended period in the model provides additional comfort that the 12-month solvency requirement can be met when making the assessment of going concern.

In preparing the cash flow model, assumptions have been made regarding the timing of cash collection from customers based on the expected cash receipt under contracts that require milestone payments to be made by customers. The timing of the receipt of milestone payments may not always align with or precede the costs incurred by the Company in performing its obligations under a contract.

Downside sensitivities have been applied to the cash flows primarily related to the delay of customer receipts, from existing or expected sales contracts, and fluctuations in the price of input materials, particularly electrolyte. Refer to 'Basis of preparation' for details of the going concern analysis performed and the directors' conclusions regarding going concern.

Notwithstanding the material uncertainty articulated in relation to the basis of preparation, the directors expect that the business will continue to be viable throughout the model period and, accordingly, the financial statements have been prepared on a going concern basis.

Revenue recognition

Sales contracts are assessed in accordance with the Group accounting policy for revenue recognition. The policy requires the separate performance obligations, or promises, under the contract to be identified. Revenue is recognised only when a distinct performance obligation under a contract is satisfied.

Some performance obligations are satisfied separately - for instance, the delivery of equipment, other obligations may be satisfied in conjunction with other contract promises or where a contract calls for equipment sold under the contract to be integrated into a larger project before formal acceptance is notified by the customer.

Where the ability of a customer to benefit from a product or service is dependent on the satisfaction of other performance obligations, more than one promise may need to be bundled together as a combined performance obligation that must be satisfied before the revenue related to each element can be recognised.

Identifying where equipment or, more likely, services are readily available from other providers is a key determinant as to whether a contract promise represents a separate performance obligation or if it should be bundled with other promises that, together, represent a single performance obligation.

The assessment of what constitutes a performance obligation can be complex and requires judgment. Revenue is only recognised for each performance obligation under a contract when that performance obligation, bundled or otherwise, is satisfied. The requirement to bundle combinations of goods and/or services together as a single performance obligation could delay the timing of revenue recognition where the separate promises comprising the performance obligation are delivered sequentially.

Key sources of estimation uncertainty for the year under review

Warranty provision

The Company provides time-limited standard warranties in its contracts for sale of battery systems. In addition, customers may elect to purchase separate, standalone extended warranties. Extended warranties are for periods greater than the standard warranties that are provided with the purchase of all battery systems.

Estimating the costs that may be incurred by the Company in servicing warranty agreements requires management to estimate the number of expected claims in relation to the total number of battery systems sold. In addition, an estimate of costs that the Company could expect to incur to remedy each warranty claim should also be made to determine the amount of the total provision that should be recorded for warranties.

Provisions made in respect of expected warranty obligations are reassessed and remeasured where actual experience indicates the claim rate may be higher or lower than initially expected or where costs to remedy warranty claims differ from the assumptions used in calculating the provision. The release of an over-provision of warranty costs results in other operating income being recognised in the period whereas an additional provision for warranties results in a charge being recognised.

Refer to note 21, contract related balances.

Provision for legacy products

Management has elected to provide ongoing maintenance for certain legacy contracts not otherwise covered under warranty. Management has determined that it is necessary to provide for the costs of this ongoing maintenance or to provide for outright decommissioning.

Refer to note 21, contract related balances.

Provision for onerous contracts

A contract is onerous when the unavoidable costs of meeting the Company's obligations under the contract are expected to be greater than the revenue earned under that contract. Previously, assessment of the unavoidable costs under a contract only required direct costs such as parts and labour to be considered.

An amendment to 'IAS 37 Provisions, contingent liabilities and contingent assets' was published in May 2020 and requires the provision in respect of an onerous contract to also include an assessment of the indirect costs, such as production overhead or indirect labour, that are expected to be incurred in servicing a warranty claim. The Company elected to early adopt the amendment as of 1 January 2020.

The assessment of future costs is inherently subjective and requires the exercise of judgment in determining the appropriate amount of provision that may be required.

Refer to note 21, contract related balances.

Share based payments, warrants and employee options

The Company determines the fair value of share-based payments and employee options using a Black-Scholes methodology. Black-Scholes uses certain assumptions to determine fair value including measures of share price volatility, expected conversion or exercise rates and levels of employee retention, among others.

In estimating the value of future share price volatility, a key input of the Black-Scholes methodology, the Company uses historic data relating to its share price. As the short and long-term warrants are listed, and therefore can be publicly traded, this provides an alternative arms-length determination of fair value.

Operating segments

The Group is organised internally to report to the Executive Directors as a whole. The Executive Directors comprise the Chief Executive Officer, the Chief Commercial Officer and the Chief Financial Officer. The Executive Directors, as a group, have been determined, collectively, to prosecute the role of chief operating decision maker of the Group.

The chief operating decision maker is ultimately responsible for entity-wide resource allocation decisions, the evaluation of the financial, operating and ESG performance of the Group.

The Group's activities have been determined to represent a single operating segment being the provision of vanadium flow batteries and ancillary services, principally comprising installation and integration services, and the provision of extended warranties for battery units sold.

3 Accounting policies

Revenue

The Group measures revenue based on the consideration specified in the contracts for sale with customers. Revenue is recognised when a performance obligation is satisfied by transferring control over a good or service to a customer. Control is usually considered to have transferred to a customer on delivery of equipment to the customer's site of operations. Revenue excludes any taxes such as sales taxes, value added tax or other levies that are invoiced and collected on behalf of third parties, such as government tax authorities.

The Group generates revenue from the sale of battery storage systems and related hardware and services. The main portion of sales is derived from contractual arrangements with customers that have multiple elements (or performance obligations), those elements usually being the sale of battery systems, system related options, installation, and extended warranties. The sales contracts do not include a general right of return.

For contracts that contain multiple elements or promises, the Group accounts for individual goods and services separately if they are distinct. A product or service is distinct if it is separately identifiable from other items in the agreement and where a customer can benefit from the good or service on its own or together with other resources that are readily available.

The consideration paid for each performance obligation is typically fixed. A significant portion of the aggregate payment due under a contract for sale is normally due before delivery or completion of the service. The total consideration under the contract is allocated between the distinct performance obligations contained in the contract based on their stand-alone selling prices. The stand-alone selling price is estimated using an adjusted market assessment approach that looks to industry benchmarks or pricing surveys for certain standalone products or services.

In addition, under the terms of its contracts for sale, the Group may be responsible for delivering battery systems to its customers. When this is the case, the Group will invoice the relevant customer for, and will recognise as revenue, any charges incurred together with any associated handling costs. The related costs incurred by the Group for shipping and handling services are recognised as cost of sales concurrent with the recognition of the associated revenue.

Grant income

Government and other grants received are recognised in the consolidated statement of profit and loss in the period that the related expenditure is incurred. Grant income received in respect of costs incurred is presented net within the associated cost category. Capital grants are similarly netted against the relevant asset acquired or constructed.

Grant income received in advance of the associated expenditure is presented as deferred income within contract liabilities and released to profit and loss as the associated expenditure is incurred. Grant income receivable is presented as accrued income within contract assets until such time as it can be claimed or is received.

Finance income and costs

Finance income comprises interest on cash deposits, foreign currency gains and the unwind of discount on any assets that are carried at amortised cost. Interest income is recognised as it accrues using the effective interest rate method.

Finance costs include foreign currency losses and the unwind of the discount on any liabilities held at amortised cost, such as lease liabilities arising from lease contracts.

Employee benefits

Short-term benefits

Benefits provided to employees that are short-term in nature are recognised as expenses in the statement of profit and loss as the related service is provided. The principal short-term benefits given to employees are salaries, associated holiday pay and other periodic benefits such as healthcare and pension contributions made by the Company for the benefit of the employee. A liability is recognised for the amount expected to be paid under short-term cash bonus plans if there is either a present legal or constructive obligation to pay the amount and the amount can be reliably estimated.

Share based payments

The Group operates equity-settled share-based compensation plans, under which it compensates employees for services rendered through the issue of equity instruments, deferred share awards or options to subscribe for ordinary shares of the Company. The fair value of the employee services received in exchange for the grant of the equity instruments, shares or options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

· including any market conditions (for example, the Company's share price)

· excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets, and the requirement to remain as an employee of the Group over a specified period)

· including the impact of any non-vesting conditions (for example, the requirement for an employee to save)

Non-market performance and service conditions are included in the assumptions regarding the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied.

In some circumstances, employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement and the grant date.

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the consolidated statement of profit and loss, with a corresponding adjustment to equity.

Any social security contributions payable in connection with the grant of the share options is considered an integral part of the grant itself, and the charge will be treated as a cash-settled transaction.

Taxes

The total tax charge or credit recognised in the statement of profit and loss comprises both current and deferred taxes.

Taxation is recognised in the consolidated statement of profit and loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax

The current tax charge is based on the taxable profit for the year. Taxable profit or loss is different from the profit or loss reported in the statement of profit and loss as it excludes items of income and/or expense that are taxable or deductible in other years (temporary differences) and it further excludes items that are never taxable nor deductible (permanent differences).

Deferred tax

Deferred tax is the tax that is expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding value of those assets and liabilities used to calculate taxable profit or loss.

Deferred tax assets are recognised as deductible temporary differences only where it is probable that taxable profits will be generated against which the carrying value of the deferred tax asset can be recovered. Deductible temporary differences exist where there is a difference in the timing of the recognition of an item of income or expense between the statement of profit and loss and the calculation of taxable profit or loss (a temporary difference).

Deferred tax assets and liabilities are recognised using the liability method for all taxable temporary differences, except in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint operations. Where the timing of the reversal of temporary difference arising from such investment related assets and liabilities can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future then the Group does not recognise deferred tax liabilities on these items.

A deferred tax asset or liability is not recognised if a temporary difference arises on initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Current and deferred tax is calculated using tax rates and laws that have been enacted or substantively enacted at the balance sheet date.

Earnings per share

The Group presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS is determined by adjusting the weighted average number of ordinary shares outstanding used in the EPS calculation to include all potentially dilutive ordinary shares, which, in the case of the Company, represents additional shares that could be issued in relation to 'in-the-money' convertible notes, warrants or share options.

The effects of anti-dilutive potential ordinary shares are ignored in calculating diluted EPS. Anti-dilution is when an increase in earnings per share or a reduction in loss per share would result from the exercise of such options, warrants or convertible instruments.

Intangible assets

Goodwill

The Group allocates the fair value of the purchase consideration on the acquisition of a subsidiary to the assets acquired and liabilities assumed based on an assessment of fair value at the acquisition date. Any excess of purchase consideration is recognised as goodwill. Where goodwill is recognised, it is allocated to the cash generating units (CGUs) in a systematic manner reflective of how the Group expects to recover the value of the goodwill.

Goodwill arising is recognised as an intangible asset in the balance sheet and is subject to annual reviews for impairment. Goodwill is written off where circumstances indicate that the recoverable amount of the underlying CGU may no longer support the carrying value of the goodwill. An impairment charge is recognised in the statement of profit and loss for the period in which it is determined the goodwill is no longer recoverable. Impairment losses related to goodwill cannot be reversed in future periods.

In testing for impairment, goodwill recognised on business combinations is allocated to the Group of CGUs representing the lowest level at which it will be monitored. Because the Group has been determined to consist of a single business unit, the carrying value of goodwill is tested for impairment based on the recoverable value of the Group as a whole.

The recoverable amount of a CGU or a group of CGUs is based on the higher of its assessed fair value less costs of disposal or its value-in-use. Value-in-use is calculated by reference to the expected future cash flows from the CGU, after discounting to take account of the time value of money. Fair value less costs to sell can be based on a similar cash flow measure adjusted for disposal costs or can be estimated by reference to similar comparable reference transactions.

Because the Company is listed, fair value can also be assessed by reference to the Company's market capitalisation. Where cash flows are used, they are risk weighted to reflect an assessment of future commercial success.

The key assumptions in assessing cash flows relate to the ability of the Company to develop existing markets and applications and to establish new markets and applications for the sale and use of its battery systems. Prospective cash flows are also sensitive to the Company's ability to realise economies of scale as market penetration grows.

Internally generated intangible assets - research and development costs

Research

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Research activities are aimed at creating new knowledge or the use of existing knowledge in new or creative ways to generate new concepts. Research activity does not typically have a defined commercial objective at the outset.

Development

Where projects evolve toward commerciality or are related to a specific commercial objective they are assessed to determine whether the activity constitutes development that is associated with a commercial objective or practical application.

The associated costs represent development costs and can be capitalised if, and only if, the following conditions can be demonstrated:

· the technical feasibility of completing the intangible asset so that it can be made available for use or sale;

· the intention to complete the intangible asset for use or sale;

· the availability of adequate technical, financial and other resources to complete the development and to use or sell it;

· an asset is created that can be separately identified for use or sale;

· it is probable that the asset created will generate future economic benefits; and

· the development cost of the asset can be measured reliably.

Development work undertaken by the Group typically relates to the refinement of design, materials selection, construction techniques, firmware and control systems to enhance battery system performance over successive generations. Where development costs are capitalised, they are amortised over the expected period to the introduction of the next generation of battery system.

Amortisation is recorded over that period on a straight-line basis with the corresponding amortisation charge recognised in the statement of profit and loss as a component of administrative expenses.

Four years has historically been the typical cycle time between successive generations of battery system design.

Other intangible assets

Intangible assets other than goodwill that are acquired by the Group are stated at their historical cost of acquisition less accumulated amortisation and any impairment losses.

Software and purchased domain names

Third-party software is initially capitalised at its cost of purchase. Amortisation is charged to administrative expenses over the expected useful life of the software which has been assessed as three years from the date of acquisition.

Acquired domain names are initially capitalised at cost of purchase. Amortisation is charged to administrative expenses over the expected useful life of the domain name which has been assessed as ten years from the date of acquisition.

Patents and certifications

Patent rights and certifications are initially capitalised at the cost of applying for relevant patent rights and other protections, and certifications. Amortisation is charged to administrative expenses over the expected useful life of the patents and certifications which has been assessed as five years from the date of acquisition.

Property, plant and equipment

Items of property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent expenditure is only included in the asset's carrying amount or recognised as a separate asset, as appropriate, when it is probable that future economic benefits associated with that item will flow to the Group.

Costs that do not enhance the value of an asset such as repair and maintenance costs are charged to the statement of profit and loss in the period in which they are incurred.

Depreciation is charged to write off the cost of assets over their estimated useful lives on a straight-line basis. Depreciation commences on the date the asset is brought into use. Work-in-progress assets are not depreciated until they are brought into use and transferred to the appropriate category of property, plant and equipment.

Estimated useful lives for property, plant and equipment are:

Category	Period (years)	Recognition in statement of profit and loss
Computer and office equipment	3 - 5	Administrative expenses
Leasehold improvements	Shorter of lease term or useful life	Administrative expenses / Cost of sales
Vehicles	3	Administrative expenses
Manufacturing equipment and tooling	3 - 20	Cost of sales
R&D Equipment	5 - 10	Administrative expenses
Software and purchased domain names	3	Administrative expenses
Patents and certifications	10	Administrative expenses

Depreciation methods, useful lives and residual values of assets are reviewed, and adjusted prospectively as appropriate, at each reporting date.

Where an asset is disposed of, the corresponding gain or loss on disposal is determined by comparing the sales proceeds received with the carrying amount of that asset at the date of disposal. Gains or losses on disposal of fixed assets are included within other items of operating income and expense in the statement of profit and loss.

Impairment of tangible and intangible assets

The Group reviews the carrying values of its tangible and intangible assets, other than goodwill, at each balance sheet date to determine if any indicators exist that could mean those assets are impaired. Where an indicator of impairment exists the recoverable amount of the relevant asset (or CGU) is estimated to determine the amount of any potential impairment loss.

Recoverable amounts are determined using a discounted cash flow model related to each asset or CGU being assessed. The discount rate applied to the cash flows in the model is a pre-tax discount rate that reflects market assessment of the time value of money and risks specific to the Company or the groups of assets being considered.

If the recoverable value estimated in the cash flow model for a specific asset (or CGU) is lower than the carrying value, then the carrying value of the asset is reduced to its estimated recoverable value with a corresponding charge immediately recognised in the statement of profit and loss.

Where the condition that gave rise to an impairment loss reverses in a subsequent period, the impairment loss is similarly reversed and the carrying value of the asset increased to the revised estimate of its recoverable value. The carrying value of an asset immediately following the reversal of an impairment cannot exceed the carrying value that the asset would have had if the original impairment had not been made and the asset was depreciated as normal.

A reversal of an impairment loss is recognised immediately in profit or loss.

The value of any impairment (or reversal of impairment) of an asset is recorded in the same financial statement line item where depreciation or amortisation of the asset would normally be shown.

Where it is impractical to meaningfully assess recoverable amount using a discounted cash flow model, for instance where near term cash flows are low or negative, an assessment of the fair value adjusted for the costs that would be incurred in the disposal of an asset or operation is used. This is typically the case for development stage assets, operations or associated intangible assets (including goodwill) where the underlying products or technologies have not yet been commercialised.

Provisions

Provisions are established when the Group has a present legal or constructive obligation because of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount of that outflow can be reliably estimated.

Provisions are measured at the present value of the expenditures that are expected to be incurred in settling the obligation using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks related to the obligation. The initial recognition of a provision results in a corresponding charge to profit or loss.

The increase in a provision as the discount rate unwinds due to the passage of time, is recognised in the statement of profit and loss as other items of operating income and expense.

Leases

Group entities only participate in lease contracts as the lessee. Lease contracts typically relate to vehicles and facilities.

On inception of a contract, the Group assesses whether it contains a lease. A contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an identified asset is determined based on whether the Group has the right to obtain substantially all the economic benefits from the use of the asset throughout the period of use, and if the Group has the right to direct the use of the asset.

Obligations under a lease are recognised as a liability with a corresponding right-of-use asset, these are recognised at the commencement date of the lease.

The lease liability is initially measured at the present value of the lease payments that have not yet been paid at the inception of the lease, discounted using the interest rate implicit in the lease contract. Where the interest rate implicit in the lease contract cannot be readily determined, the Group's incremental borrowing rate is used.

Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability. The lease liability is measured at amortised cost using the effective interest rate method.

The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when:

· there is a change in future lease payments arising from a change in an index or rate

· there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or

· the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When a lease liability is remeasured under one of these scenarios, a corresponding adjustment is made to the carrying value of the right-of-use asset or in profit and loss when the carrying amount of the asset has already been reduced to zero.

The corresponding right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, any initial direct costs incurred and an estimate of the costs required to remove or restore the underlying asset, less any lease incentives received. The right-of-use asset is amortised over the shorter of the asset's useful life and the lease term on a straight-line basis.

The Group has elected not to recognise right-of-use assets and corresponding lease liabilities for short-term leases, those existing leases with a remaining lease term of less than 12 months at 1 January 2021 and leases related to low value assets with an annual lease cost of £3,500 or less.

The Group recognises these lease payments as an expense on a straight-line basis over the lease term.

Inventory

Inventory is stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their current location and condition. Cost is calculated using the first-in, first-out method.

Net realisable value is calculated as the estimated selling price for an item of inventory less estimated costs of completion and the costs that would be incurred in the marketing, selling and distribution of an item of inventory.

Prepaid inventory

Prepaid inventory is recognised on inventory payments where physical delivery of that inventory has not yet been taken by the Group and is stated at the lower of cost and net realisable value.

Financial instruments

Financial assets and liabilities are recognised by the Group and recorded in the statement of financial position when the Group is contractually bound to the terms of the financial instrument. Financial assets and liabilities are derecognised when the Group is no longer bound by the terms of the financial instrument through settlement or expiry.

Financial assets

The classification of financial assets to which the Group is a party is determined by the nature of the underlying financial instrument and the characteristics of the contractual cash flows expected to be received under the terms of instrument.

Financial assets are not reclassified after their initial recognition unless there is a contractual change in the nature of the cash flows under the instrument or the business purpose of the instrument has changed.

A financial asset is recorded at amortised cost where it is expected to be held to maturity and the objective of the Group is to collect the contractual cash flows under the financial instrument based on specified contractual terms, including the timing of receipt of cash flows.

Financial assets that the Group is party to are classified and measured as follows:

Financial asset	Measurement basis
Trade receivables and accrued income	Amortised cost
Other current assets	Amortised cost
Contract assets	Amortised cost
Cash and cash equivalents	Amortised cost

Amortised cost

On initial recognition, the Group measures amortised cost for financial assets based on the fair value of each financial asset together with any transaction costs that are directly attributable to the financial asset.

After initial recognition, amortised cost is measured for each financial asset held using the effective interest rate method less any impairment loss identified. Interest income is recognised for all financial assets, other than those that are classified as short-term, by applying the effective interest rate for the instrument. Interest income on short-term financial assets is not considered to be material. Short-term financial instruments are determined as those that have contractual terms of 12-months or less at inception.

Interest income, foreign exchange gains and losses, impairment, and any gain or loss on derecognition are recognised in profit or loss.

Impairment of financial assets

A loss allowance for financial assets is determined based on the lifetime expected credit losses for financial assets. Lifetime expected credit losses are estimated based on factors including the Group's experience of collection, the number and value of delayed payments past the average credit periods across the Group's financial assets. The Group will also consider factors such as changes in national or local economic conditions that correlate with default on receivables and financial difficulties being experienced by the counterparty.

Financial assets are impaired in full and a corresponding charge is recognised in profit or loss where there is no reasonable expectation of recovery.

Financial liabilities

The classification of financial liabilities is determined at initial recognition. Financial liabilities are classified and measured as follows:

Financial liability	Measurement basis
Trade and other payables	Amortised cost
Borrowings	Amortised cost
Lease liabilities	Amortised cost

Amortised cost

At initial recognition, the Group measures financial liabilities at amortised cost using the fair value of the underlying instrument less transaction costs directly attributable to the acquisition of the financial liability.

Derecognition of financial liabilities

The Group derecognises financial liabilities when the Groups obligations under the relevant instrument are discharged, expired or cancelled.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held with financial institutions that can be called on demand together with other short-term, highly liquid investments with maturities of three months or less and are readily convertible to known amounts of cash.

Equity instruments

Instruments are classified as equity instruments if the substance of the relative contract arrangements evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Company are recorded as proceeds received, net of direct issue costs not charged to income.

Offsetting

A financial asset and a financial liability are offset and the net amount presented in the statement of financial position when, and only when, the Group:

1. has a legally enforceable right to set off the recognised amounts; and

2. intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

4 Revenue from contracts with customers and income from government grants

Segment information

The Group derives revenue from a single business segment, being the manufacture and sale of vanadium flow battery systems and related hardware together with the provision of services directly related to battery systems sold to customers.

The Group is organised internally to report on its financial and operational performance to its chief operating decision maker, which has been identified as the three executive directors as a group.

All revenues in 2021 were derived from continuing operations.

	2021	2020
Revenue from contracts with customers	£000	£000
Battery systems and associated control systems	2,481	369
Integration and commissioning	701	34
Other services	3	3
Total revenue in the consolidated statement of profit and loss	3,185	406
Analysed as:
Revenue recognised at a point in time	3,182	369
Revenue recognised over time	3	37
Total revenue in the consolidated statement of profit and loss	3,185	406

Geographic analysis of revenue

The Group's revenue from contracts with customers was derived from the following geographic regions:

	2021	2020
Geographic analysis of revenue	£000	£000
United Kingdom	2,796	15
Asia	273	206
United States of America	116	167
Other	-	18
Total revenue in the consolidated statement of profit and loss	3,185	406

The Group maintains its principal production and assembly facilities in Bathgate, Scotland and Vancouver, Canada. These facilities include office space for design, sales and administrative teams. The Group also has offices, operations and management based in London, England and Oakland, California.

The Group does not consider that the locations of its operations constitute geographic segments as they are managed centrally by the executive management team. The location of the manufacturing plants and business development activity is a function of time-zone when servicing customers both pre-sale and during product delivery. The geographic location of offices, facilities and management is not related to distinct markets or customer characteristics at the present time.

Significant customers and concentration of revenue

Revenue from contracts with customers was derived from two (2020: four) customers who each accounted for more than 10% of total revenue as follows:

	2021	2020
Significant customers and concentration of revenue	£000	£000
Customer A	2,300	-
Customer B	495	-
Customer C	-	127
Customer D	-	82
Customer E	-	81
Customer F	-	44

Grant income other than revenue

The Group receives grant income to help fund certain projects that are eligible for support, typically in the form of innovation grants. The Group also received grant income related to operating costs under government subsidy programmes as part of national COVID response efforts. The total grant income that was received in the year was as follows:

	2021	2020
Grant income received	£000	£000
Business support grants against cost of sales - COVID-19	-	17
Business support grants against employee costs - COVID-19	156	240
Grants for research and development	302	203
Economic and social development	-	35
Total government grants	458	495

5 Cost of sales

	2021	2020
	£000	£000
Movement in inventories of finished battery systems	5,240	436
Production costs	826	374
Depreciation of production facilities, equipment and amortisation of intangibles	116	107
Movement in provisions for warranty costs	440	304
Total cost of sales	6,622	1,221

6 Administrative expenses

	2021	2020
	£000	£000
Staff costs	8,980	5,811
Research and development costs	1,792	1,099
Professional fees	1,950	960
Sales and marketing costs	249	96
Facilities and office costs	655	787
Other administrative costs	813	840
Total administrative expenses	14,439	9,593

No development costs were capitalised in the period (2020: £nil).

7 Auditors' Remuneration

	2021	2020
	£000	£000
Fees payable to the Company's associates for the audit of the parent company and consolidated financial statements	172	213
Audit of financial statements of subsidiaries pursuant to legislation	21	20
Fees payable to the Company's auditor for other services:
- Tax compliance services	9	8
- Other assurance related services including Reporting Accountant services associated with readmission to AIM	-	597
	202	838

The Group has a policy in place related to the commissioning of non-audit service from its auditors where all such work requires pre-approval by the audit committee before the commencement of any non-audit work.

Audit fees are discussed with and approved by the audit committee

8 Staff costs and headcount

	2021	2020
Staff costs	£000	£000
Wages and salaries	7,617	5,053
Employer payroll taxes	625	365
Other benefits	508	225
Share-based payments	1,827	854
Total staff costs	10,577	6,497

Administrative staff costs in the year were £8,979,790 (2020: £5,810,887) and staff costs included in cost of sales were £1,596,839 (2020: £687,585).

	2021	2020
Average headcount	Number	Number
United Kingdom	60	52
Canada	55	33
United States of America	7	6
South Africa	2	2
Total	124	93

Increases in staff costs are due to hiring for expansion in operating activity and the delivery of key projects to customers.

Key management compensation

From 1 April 2020, the key management of the Group has been determined to comprise the members of the senior leadership team.

	2021	2020
Key management compensation	£000	£000
Short-term employee benefits	1,590	1,410
Post-employment benefits	-	14
Termination benefits	-	75
Total k ey management compensation	1,590	1,499

The Group made contributions to the defined contribution schemes of key management in the year of £12,917 (2020: £3,000).

9 Share based payments

Since its incorporation, the Company has operated various share-based incentive plans. The purpose of each of the schemes has been to incentivise directors and employees related to improving company performance and building shareholder value.

Set out below is a summary of the option awards in issue at 31 December 2021. The comparative figures for both number of awards outstanding at the end of 2020 and their respective exercise prices have been adjusted to reflect the 50:1 share consolidation that took place on 1 April 2020 (as rounded down to the nearest whole share).

Standard	Grant date	Final Expiry date	Exercise price		2021	Restated* 2020
redT 2015 plan	07 Dec 2015	07 Jan 2020	58.95	€c	137,602	206,911
redT 2018 plan	18 May 2018	18 May 2023	352.50	p	3,888	3,888
redT 2018 plan	18 May 2018	18 May 2023	295.00	P	-	60,000
redT 2018 plan	29 Nov 2018	29 Nov 2023	350.00	p	-	40,000
Invinity Energy 2018 ESOP	01 Apr 2020	12 Mar 2030	82.50	p	185,143	202,000
Invinity Energy 2018 Consultant SOP	01 Apr 2020	12 Mar 2030	82.50	P	378,000	378,000
Invinity Energy 2018 ESOP	01 Apr 2020	07 Jul 2026	4.34	p	1,429,812	1,666,055
Invinity Energy 2018 ESOP	01 Apr 2020	08 May 2029	6.84	p	661,237	697,769
Invinity Energy 2018 ESOP	26 Aug 2020	26 Aug 2030	113.00	p	2,505,000	2,619,0000
Invinity Energy 2018 ESOP	28 Jan 2021	28 Jan 2031	204.00	p	480,000	-
Invinity Energy 2018 ESOP	04 Mar 2021	04 Mar 2031	152.00	p	222,000	-
Invinity Energy 2018 ESOP	15 Apr 2021	15 Apr 2031	151.00	p	126,000	-
Invinity Energy 2018 ESOP	03 Aug 2021	03 Aug 2031	134.50	p	455,000	-
Invinity Energy 2018 ESOP	29 Oct 2021	29 Oct 2031	111.50	p	359,000	-
Invinity Energy 2018 ESOP	20 Dec 2021	20 Dec 2031	91.00	p	135,000
					7,077,682	5,873,623

Non-standard	Grant date	Expiry date	Exercise price		2021	2020
Long-term incentive plan	8 Dec 2009	30 Jul 2023	50.00	€c	15,000	15,000
Camco 2006 Executive Share Plan	30 Jul 2013	30 Jul 2023	50.00	€c	68,127	68,127
redT 2018 plan	30 May 2018	30 Jul 2023	400.00	p	70,000	70,000
					153,127	153,127

Total					7.230,809	6,026,750

Weighted average remaining contractual life of options outstanding at the end of the year					8.82	9.32

*Prior year comparatives have been restated to account for late notification of lapses and the mis-categorisation of certain awards. The net change in the reported prior year comparatives is a reduction of 3,152 share options.

A total of 332,481 options were exercised during the year with a weighted average exercise price of 15.33p per share.

The grant-date fair value of share options issued is calculated using a Black-Scholes methodology at the date of grant. Key inputs to the model include the share price at the date of grant, the option exercise price, the term of the award, share price volatility, the risk-free interest rate (by reference to government bond yields) and the expected dividend yield rate, which has historically been and continues to be zero, reflective of the development-stage nature of the Company.

The Long-term Incentive Plan, Camco 2006 Executive Share Plan and the redT 2015 Plan are now closed. No further options option awards will be made under either of these plans.

The aggregate number of options granted, vested, exercised and forfeited during the year under the plans are summarised and analysed between unvested and vested awards as follows:

	Unvested		Vested
At 1 January 2021	4,034,591	98.84p	1,839,032	29.09p
Granted	2,015,000	149.64p	1,301,543	87.15p
Paralleled	-	-	-	-
Forfeited	(378,460)	134.35p	(100,000)	317.00p
Vested	(1,301,543)	87.15p	-	-
Exercised	-	-	(332,481)	15.33p
At 31 December 2021	4,369,588	113.47p	2,708,094	35.26p

	Unvested		Vested
At 1 January 2020	500,172	284.81p	263,725	143.79p
Granted	4,363,757	86.31p	1,431,214	4.77p
Paralleled	(124,815)	330.21p	(30,259)	342.46p
Forfeited	(358,578)	138.59p	(100,542)	318.56p
Vested	(345,945)	82.68p	345,945	82.68p
Exercised	-	-	(71,051)	52.32p
At 31 December 2020	4,034,591	98.84p	1,839,032	29.09p

Plans with non-standard performance conditions

Long-term incentive plan (LTIP)

The LTIP for directors and employees was approved by the board in 2008 and entitled directors and employees to receive equity settled payments annually based on the achievement of certain market and non-market performance conditions.

The LTIP is now closed. At the end of the year, there were 15,000 (2020: 15,000) options vested and exercisable at €0.5 per share under the LTIP.

CAMCO 2006 executive share plan (the plan)

The plan was established in 2017 to make awards of shares up to an aggregate of 10% of the share capital of the Company over a period of ten years.

The plan is now closed. At the end of the year there were 68,127 (2020: 68,127) options that had vested and were exercisable at €0.50 per share.

2018 plan

Options with non-standard performance conditions were also issued under the 2018 plan. At the end of the year 70,000 (2020: 70,000) options under the 2018 plan had vested and are exercisable at 400p per share.

Plans with standard performance conditions

The primary share plan that remains outstanding at 31 December 2021 is the 2018 plan. The 2018 plan was adopted by the board on 14 May 2018 and introduced HMRC scheme rules related to certain non-taxable option grants. The plan contains provision to issue options as CSOP, EMI or unapproved awards.

In the year ended 31 December 2020 the board approved the expansion of awards to be made under the 2018 plan with grants expected to be made more frequently going forward and to a potentially wider group of employees. The intention of the increase in frequency and quantity of employee share options granted was to incentivise and to better align employee compensation with shareholder return.

Options issued to legacy Avalon employees at the merger date

Following the merger transaction, 1,432,000 options were granted to legacy Avalon employees to replace options held by them in the former Avalon employee share plan. A total of 2,670,492 options are vested and exercisable under the 2018 plan at 31 December 2021 with a further 4,269,588 unvested share options outstanding.

Parallel options issued

In addition, certain legacy redT options were reissued as they were considered by the board to be sufficiently 'out-of-the-money' such that they no longer provided a performance incentive to the holders of the options. As a mechanism to adjust the terms of the unfavourable options, new parallel options were issued on a one-for-one basis with the same terms as the original awards excepting that they were issued with a lower exercise price.

Both the original and parallel option schemes remain in existence. However, the exercise by an employee of a single option from either pool (original or parallel) allocated to them will cause the equivalent value in the other pool to be forfeited. Accordingly, the number of options disclosed above has been adjusted to remove the number of options that is equivalent to the number of parallel options issued.

Other options

On 10 May 2021, the Company granted an option for 8,672,273 shares to Gamesa Electric S.A. Unipersonal (GaE), a wholly-owned subsidiary of Siemens Gamesa Renewable Energy S.A. The options were granted to GaE in consideration of its entering into a joint development and commercialisation agreement with Invinity Energy Nexus Limited, a wholly-owned subsidiary of the Company.

The exercise price of the options is 175 pence and upon exercise of those options then for as long as GaE holds at least 5% of the issued share capital of the Company it shall be entitled, subject to certain conditions, to nominate one non-executive director to the board of the Company.

Warrants issued in the period

Short-term and long-term equity warrants

In December 2021, the Company issued 14,464,571 'placing units' comprised of one share, one short-term warrant and one long-term warrant.

Each short-term warrant gives the holder the right to subscribe for one new Ordinary Share at a price of 150 pence per Ordinary Share at any time from Second Admission until 15 September 2022. Each long-term warrant gives the holder the right to subscribe for one new Ordinary Share at a price of 225 pence per Ordinary Share at any time from Second Admission until 16 December 2024.

The warrants were admitted to trading on the Aquis Stock Exchange (AQSE) on 9 March 2022. There was no adjustment to the issue price in respect of the attached warrants and they have been deemed to have no fair value based on the price at which they are currently being quoted.

10 Other items of operating income and expense

The following items are Included in other comprehensive loss:

	2021	2020
	£000	£000
Income
Gain on disposal of scrap inventory and equipment	-	(27)
Expense
Merger transaction costs	-	1,412
Provision for onerous contracts, net of amounts used	3,762	1,064
Impairment of inventory to net realisable value	-	1,019
Accelerated amortisation of development costs	-	6,138
Impairment of property, plant and equipment	60	56
Reversal of impairment of obsolete inventory and disposal of scrap inventory	(390)	8
Abnormal unabsorbed production overhead costs	-	152
Profit on disposal of subsidiary	(15)	-
Gain on curtailment of right-of-use asset	(29)	-
Total other operating income and expenses (net)	3,388	9,822

11 Net finance income and costs

	2021	2020
	£000	£000
Finance income
Interest on bank deposits and money market funds	-	(1)
Finance costs
Interest on borrowings	-	422
Fair value adjustment on convertible loan notes	-	1,162
Finance charges for loan financing	-	682
Finance charges for lease liabilities held at fair value	45	27
Finance charges for liabilities held at amortised cost	-	5
Losses on foreign currency transactions	63	1,744
Net finance costs/(income)	108	4,041

12 Income tax expense

	2021	2020
	£000	£000
Current tax
Current tax on profits for the year	-	-
Total current tax expense	-	-

Reconciliation of income tax expense calculated using statutory tax rate

	2021	2020
	£000	£000
Loss before tax	(21,372)	(24,271)

Tax at the Jersey rate of nil%	-	-

Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Non-taxable gains and expenses not deductible for tax	(113)	(12)
Differences in overseas tax rates	(3,942)	(2,775)
Unrelieved tax losses carried forward	3,109	2,684
Origination and reversal of timing differences not recognised	946	103
Total income tax expense	-	-

13 Loss per share

	2021	2020
Basic loss per share	£000	£000
From continuing operations	(24.1)	(41.0)
From continuing and discontinued operations	(24.1)	(41.0)

	2021	2020
Diluted loss per share	£000	£000
From continuing operations	(24.1)	(41.0)
From continuing and discontinued operations	(24.1)	(41.0)

	2021	2020
Loss used in calculation of basic and diluted loss per share	£000	£000
From continuing operations	(21,372)	(24,271)
From continuing and discontinued operations	(21,372)	(24,271)

All operational activity in the years ended 31 December 2020 and 2021 relate to continuing operations.

Earnings per share in respect of the year ended 31 December 2020 have been restated to give effect to the 50:1 share consolidation that took place in 2020 and to aid comparability.

	2021	2020
Weighted average number of shares used in calculation	Number	Number
Basic	88,768,750	59,206,588
Diluted	119,792,519	59,637,677

Additional potential shares used in the calculation of diluted earnings per share primarily relate to potential shares outstanding at 31 December 2021 that may be issued in satisfaction of 'in-the-money' employee share options. Potentially dilutive shares related to outstanding warrants to subscribe for ordinary shares in the Company are also included in calculating diluted earnings per share.

Where additional potential shares have an anti-dilutive impact on the calculation of loss per share calculation, such potential shares are excluded from the weighted average number of shares used in the calculation.

	2021	2020
Weighted average number of shares used in loss per share calculation - basic and diluted	Number	Number
In issue at 1 January	85,900,616	19,025,799
Shares issued in the year - weighted average	2,868,134	40,180,789
Weighted average shares in issue 31 December	88,768,750	59,206,588
Effect of employee share options and other warrants not exercised	31,023,769	431,089
Weighted average number of diluted shares in issue 31 December	119,792,519	59,637,677

Additional potential shares are anti-dilutive where their inclusion in the calculation of loss per share results in a lower loss per share. The weighted average number of shares not included in the diluted loss per share calculation because they had an anti-dilutive effect on the calculation was 2,094,626 (2020: 5,475,305).

14 Cash flows from operating activities

	2021	2020
	£000	£000
Loss after income tax	(21,372)	(24,271)

Adjustments for:
Depreciation and amortisation	727	577
Impairment of property, plant and equipment	-	56
Accelerated amortisation of intangible asset	-	6,138
Gain on disposal of property, plant and equipment	-	(6)
Impairment of inventory	(390)	1,027
Loss on disposal of scrap inventory	-	27
Share-based payments charge	1,827	-
Equity settled share-based payment expenses	-	707
Equity issued in lieu of service	-	68
Equity settled transaction costs on acquisition of subsidiary	-	(456)
Equity settled interest and transaction costs on convertible notes	-	(592)
Fair value adjustment on convertible notes and warrants	-	300
Net finance costs	-	2,297
Net foreign exchange differences	(27)	(1,220)
	(19,235)	(15,348)

Change in operating assets & liabilities
(Increase) in inventory	(4,487)	(1,359)
(Increase)/decrease in contract assets	(319)	53
(Increase)/decrease in trade receivables and other receivables	(1,650)	115
(Increase) in other current assets and prepaid inventory	(4,866)	(750)
Increase in trade and other payables	1,046	3,348
Increase/(decrease) in warranty provision	293	(380)
Increase in onerous contract provision	3,756	1,060
Increase in contract liabilities	2,498	2,376
	(3,729)	(402)
Cash used in operations	(22,964)	(10,885)

15 Goodwill and other intangible assets

	Goodwill	Development costs	Patents and certifications	Software and domain names	Total
	£000	£000	£000	£000	£000
Cost
At 1 January 2021	23,944	-	203	29	24,176
Additions	-	-	-	18	18
At 31 December 2021	23,944	-	203	47	24,194

Accumulated amortisation
At 1 January 2021	-	-	(30)	(19)	(49)
Amortisation charge	-	-	(41)	(7)	(48)
At 31 December 2021	-	-	(71)	(26)	(97)

Net book value
At 1 January 2021	23,944	-	173	10	24,127
At 31 December 2021	23,944	-	132	21	24,097

	Goodwill	Development costs	Patents and certifications	Software and domain names	Total
	£000	£000	£000	£000	£000
Cost
At 1 January 2020	6,971	5,818	-	-	12,789
Acquisitions of subsidiaries	18,206	-	203	2	18,411
Additions	-	-	-	9	9
Disposals	-	(6,138)	-	-	(6,138)
Foreign currency exchange differences	(1,233)	320	-	18	(895)
At 31 December 2020	23,944	-	203	29	24,176

Accumulated amortisation
At 1 January 2020	-	-	-	-	-
Amortisation charge	-	-	(30)	(2)	(32)
Accelerated amortisation charge	-	(6,138)	-	-	(6,138)
Disposals	-	6,138	-	-	6,138
Foreign currency exchange differences	-	-	-	(17)	(17)
At 31 December 2020	-	-	(30)	(19)	(49)

Net book value
At 1 January 2020	6,971	5,818	-	-	12,789
At 31 December 2020	23,944	-	173	10	24,127

Goodwill

All goodwill is tested annually for impairment. At 31 December 2021, goodwill was tested for impairment using a fair value less costs of disposal methodology by reference to the Company's quoted market capitalisation using the price of 92.5 pence per share at that date. No impairment loss was identified in relation to goodwill. The closing share price on 22 June 2022 was 53p, giving a market capitalisation of £61.5m which may indicate a potential impairment.

Patents and certifications

There have been no events or circumstances that would indicate that the carrying value of patents and certifications may be impaired at 31 December 2021.

16 Property, plant and equipment

	Computer and office equipment	Leasehold improvements	Vehicles and equipment	Total
	£000	£000	£000	£000
Cost
At 1 January 2021	748	513	753	2,014
Additions	158	169	406	733
Disposals	(123)	-	-	(123)
Foreign currency exchange differences	(3)	(1)	6	2
At 31 December 2021	780	681	1,165	2,626

Depreciation
At 1 January 2021	(694)	(357)	(268)	(1,319)
Depreciation charge	(85)	(71)	(145)	(301)
Disposals	123	-	-	123
Foreign currency exchange differences	3	1	(3)	1
At 31 December 2021	(653)	(427)	(416)	(1,496)

Net book value
At 1 January 2021	54	156	485	695
At 31 December 2021	127	254	749	1,130

	Computer and office equipment	Leasehold improvements	Vehicles and equipment	Total
	£000	£000	£000	£000
Cost
At 1 January 2020	747	302	105	1,156
Acquisition of subsidiaries	22	86	364	472
Additions	20	90	239	349
Disposals	(6)	-	-	(6)
Foreign currency exchange differences	(35)	35	45	45
At 31 December 2020	748	513	753	2,014

Depreciation
At 1 January 2020	(595)	(242)	(63)	(900)
Depreciation charge	(136)	(79)	(103)	(318)
Impairment	-	-	(56)	(56)
Foreign currency exchange differences	37	(36)	(46)	(45)
At 31 December 2020	(694)	(357)	(268)	(1,319)

Net book value
At 1 January 2020	152	60	42	254
At 31 December 2020	54	156	485	695

The Group has no assets pledged as security. No amounts of interest have been capitalised within property, plant and equipment at 31 December 2021 (2020: £nil).

17 Right-of-use assets

	Offices and facilities	Vehicles and equipment	Total
	£000	£000	£000
Cost
At 1 January 2021	1,572	28	1,600
Additions	627	-	627
Curtailments¹	(294)	-	(294)
Foreign currency exchange differences	(60)	-	(60)
At 31 December 2021	1,845	28	1873

Depreciation
At 1 January 2021	(576)	(10)	(586)
Depreciation charge	(369)	(9)	(378)
Foreign currency exchange differences	66	-	66
At 31 December 2021	(879)	(19)	(898)

Net book value
At 1 January 2021	996	18	1,014
At 31 December 2021	966	9	975

(1) A lease on a right-of-use asset in Canada has been curtailed in 2021, with the termination date changing from June 2027 to June 2023. There is a corresponding decrease in the outstanding lease creditor and a gain on curtailment recognised in the consolidated statement of profit and loss.

	Offices and facilities	Vehicles and equipment	Total
	£000	£000	£000
Cost
At 1 January 2020	161	-	161
Acquisition of subsidiaries	1,135	25	1,160
Additions	34	-	34
Foreign currency exchange differences	242	3	245
At 31 December 2020	1,572	28	1,600

Depreciation
At 1 January 2020	(90)	-	(90)
Depreciation charge	(223)	(4)	(227)
Foreign currency exchange differences	(263)	(6)	(269)
At 31 December 2020	(576)	(10)	(586)

Net book value
At 1 January 2020	71	-	71
At 31 December 2020	996	18	1,014

Right-of-use assets relate to buildings, vehicles and equipment held under leases with third-party lessors. A right-of-use asset represents the Company's right to use a leased asset over the term of the lease. The Company's rights to use specific buildings, items of equipment or specific vehicles under lease arrangements represent assets to the Group.

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 Group, 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.

To determine the incremental borrowing rate, the Group:

· where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received;

· uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases;

· held by the Group, which does not have recent third party financing; and

· makes adjustments specific to the lease, e.g. term, country, currency and security.

18 Deferred tax balances

	2021	2020
	£000	£000
Timing differences and tax losses on which deferred tax is not recognised:
Accelerated capital allowances	450	221
Share options	1,576	3,704
Accrued liabilities	477	462
Reserves and other	4,161	600
Tax losses	70,880	56,225
Total deferred tax assets	77,544	61,212

Tax losses

The Company's subsidiaries carry on business in other tax regimes where the corporation tax rate is not zero. At 31 December 2021, the Group had the following tax losses carried forward available for use in future periods:

	2021	2020
	£000	£000
United Kingdom	40,530	34,699
Canada	3,799	11,067
United States of America	9,994	7,657
Ireland	16,557	2,802
Total potential tax benefit	70,880	56,225

Under current tax legislation tax losses in the United Kingdom and Ireland can be carried forward indefinitely and be offset against future profits arising from the same activities at the tax rate prevailing at that time. There is a portion of the tax losses in the United States of America that will begin to expire in 2035, whereas the majority can be carried forward indefinitely. The tax losses in Canada can be carried forward 20 years. Tax losses in Canada will begin to expire in 2025.

Due to the uncertainty regarding the timing and extent of future profits within these subsidiaries, no deferred tax assets have been recognised in respect of these tax losses. Deferred tax is also not recognised on the timing differences between accounting and tax treatment in these subsidiaries given the offsetting tax losses on which no deferred tax has been recognised.

In March 2021, the UK Government announced that the rate of Corporation Tax will increase from 19% to 25% on profits of over £250,000. Profits below £50,000 will continue to be chargeable to Corporation Tax at 19% and profits between the two thresholds charged at the marginal rate of 26.5%. In computing the UK deferred tax asset, management has assumed that as neither the deferred tax assets nor the deferred tax liabilities will crystallise in the immediate future, then calculations based on 19% are appropriate.

19 Inventory

	2021	2020
	£000	£000
Raw materials and consumables	1,897	698
Work in progress	3,900	207
Finished goods	-	-
	5,797	905

Inventory recognised as an expense within cost of sales during the current year amounted to £5,239,682 (2020: £436,461).

There was a net reversal of inventory write-downs in 2021 amounting to £389,808 (2020: write-down of £1,045,232). These were recognised as an expense and included in other items of operating income and expense.

20 Other current assets

	2021	2020
	£000	£000
Prepayments and deposits	533	417
Prepaid inventory	4,112	691
Tax credits - recoverable	247	127
Due from joint venture	-	168
Other receivables	1,388	11
Total other current assets	6,280	1,414

Prepaid inventory is recognised on inventory payments where physical delivery of that inventory has not yet been taken by the Group and is stated at the lower of cost and net realisable value.

21 Contract related balances

The Group has recognised the following assets and liabilities related to revenue from contracts with customers that are in progress at the respective year-ends:

	2021	2020
	£000	£000
Amounts due from customer contracts included in trade receivables	1,683	33
Contract assets (accrued income for work done not yet invoiced)	324	5
Contract liabilities (deferred revenue related to advances on customer contracts)	(5,142)	(2,644)
Net position of sales contracts	(3,135)	(2,606)

The amount of revenue recognised in the year that was included in contract liabilities at the end of the prior year was £2,231,000 (2020: £nil).

The aggregate position on customer contracts included in the statement of financial position will change according to the number and size of contracts in progress at a given year-end as well as the status of payment milestones made by customers toward servicing those contracts. The Group structures payment milestones in its customer contracts to cover upfront expenditure for parts and materials and other working capital requirements associated with the delivery of promises under customer contracts to better manage group cash flow.

The timing of revenue recognition is based on the satisfaction of individual performance obligations within a contract and is not based on the timing of advances received. Customer advances are recognised as contract liabilities in the statement of financial position and are released to income progressively as individual performance obligations are met. The difference in timing between the receipt of contract advances and the timing of the satisfaction of performance obligations for revenue recognition can cause values to remain in deferred income. The amount of such deferrals is related to both the overall size of the underlying contract and the planned pace of delivery in the related work schedule. This is expected to occur where satisfaction of performance obligations is evidenced by customer acceptance of the good or service that is the subject of the performance obligation.

Provisions related to contracts with customers

	Warranty provision	Legacy products provision	Provision for contract losses	Total
	£000	£000	£000	£000
At 1 January 2021	-	824	1,103	1,927
Charges to profit or loss:
- Provided in the year	257	36	4,028	4,321
- Unused amounts reversed	-	-	(51)	(51)
Amounts used in the year	-	-	(221)	(221)
At 31 December 2021	257	860	4,859	5,976

	Restated	Restated
	Warranty provision	Legacy products provision	Provision for contract losses	Total
	£000	£000	£000	£000
At 1 January 2020	-	95	-	95
Acquisition of subsidiaries	-	1,011	39	1,050
Charges to profit or loss:
- Provided in the year	-	340	1,084	1,424
- Unused amounts reversed	-	(51)	-	(51)
Amounts used in the year	-	(571)	(20)	(591)
At 31 December 2020	-	824	1,103	1,927

Warranty provision

The warranty provision represents management's best estimate of the costs anticipated to be incurred related to warranty claims, both current and future, from customers in respect of goods and services sold that remain within their warranty period. The estimate of future warranty costs is updated periodically based on the Company's actual experience of warranty claims from customers.

The element of the provision related to potential future claims is based on management's experience and is judgmental in nature. As for any product warranty, there is an inherent uncertainty around the likelihood and timing of a fault occurring that would cause further work to be undertaken or the replacement of equipment parts.

A standard warranty of up to two years from the date of commissioning is provided to all customers on goods and services sold and is included in the original cost of the product. Customers are also able to purchase extended warranties that extend the warranty period for up to a total of ten years.

Provision for legacy products

Where it is considered of commercial value, management has elected to provide ongoing maintenance for certain legacy products not otherwise covered under warranty. Management has determined that it is necessary to provide for the costs of this ongoing maintenance or to provide for outright decommissioning. The prior year presentation has been re-stated to reflect this.

Provisions in respect of legacy products are expected to unwind over the next two years when maintenance is either terminated or the products are decommissioned.

Provision for contract losses

A provision is established for contract losses when it becomes known that a customer contract has become onerous. A contract is onerous when the unavoidable costs of fulfilling the Group's obligations under a contract are greater than the revenue that will be earned from it.

The unavoidable costs of fulfilling contract obligations will include both direct and indirect costs.

The creation of an additional provision is recognised immediately in profit and loss. The provision is used to offset subsequent costs incurred as the contract moves to completion.

In determining the amount to be provided, management has evaluated the likelihood of input costs continuing to rise against a backdrop of inflation and instability due to current macro-economic factors such as the global response to Covid-19, the increasing price of oil feeding through to production and shipping costs and continuing supply chain issues.

Provisions in respect of contract losses relate to contracts which are expected to be delivered in 2022 and will therefore unwind during that year.

22 Trade and other receivables

	2021	2020
	£000	£000
Total trade and other receivables	1,683	33

All trade and other receivables relate to receivables arising from contracts with customers

Trade receivables are amounts due from customers for sales of vanadium flow battery systems in the ordinary course of business. Trade receivables do not bear interest and generally have 30-day payment terms and therefore are all classified as current.

The actual credit loss over 2021 was determined to be 0% of total sales (2020: 0%). No allowance for potential credit loses has been recognised in either period presented.

23 Cash and cash equivalents

	2021	2020
	£000	£000
Cash at bank and in hand	26,355	21,760
Short-term investments	-	193
Total cash and cash equivalents	26,355	21,953

Short term investments

Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of acquisition and are repayable with 24 hours' notice with no loss of interest.

24 Trade and other payables

	2021	2020
	£000	£000
Trade payables	1,484	498
Other payables	456	-
Accrued liabilities	1,013	653
Accrued employee compensation	505	1,010
Government remittances payable	55	307
Total trade and other payables	3,513	2,468

Trade payables are unsecured and are usually paid within 30 days.

The carrying amounts of trade and other payables are the same as their fair values due to the short-term nature of the underlying obligation representing the liability to pay.

25 Lease liabilities

The Group's obligations under lease contracts are presented as follows:

	2021	2020
At 31 December	£000	£000
Current - due within 12 months	350	161
Non-current - due after 12 months	420	595
Total lease liabilities	770	756

Payments of lease principal and interest in the period to 31 December were:

	2021	2020
At 31 December	£000	£000
Payments of lease principal	275	163
Payments of interest	45	26
Total payments under leases	320	189

The contractual undiscounted cash flows for lease obligations at each period end were:

	2021	2020
At 31 December	£000	£000
Less than one year	379	190
One to five years	448	493
More than five years	-	155
Total lease liabilities	827	838

Lease liabilities represent the present value of the minimum lease payments the Group is obliged to make to lessors under contracts for the lease of assets that are presented as right-of-use assets.

26 Issued share capital and reserves

	2021		2020
	No: 000	£000	No: 000	£000
Authorised at 31 December	120,000	-	120,000	-

Issued and fully paid
At 1 January	85,900	37,870	19,025	8,157
Issued in the year	30,148	12,820	66,875	29,713
At 31 December	116,048	50,690	85,900	37,870

During the year, 30,148,145 new shares were issued with a nominal value of £12,819,729. The total gross proceeds were £30,216,444 with the balance credited to the share premium account. Total costs of issuance were £1,496,412 and these costs were charged directly to the share premium account.

On 1 April 2020, the Company consolidated each ordinary share of €0.01 nominal value on a 50 to 1 basis, such that every 50 ordinary shares consolidated into one ordinary share of €0.50. The closing balance of shares at 31 December 2020 equated to 19,025,008 consolidated shares.

The holders of ordinary shares are entitled to receive dividends as may be declared from time to time and are entitled to one vote per share at meetings of the Company.

In the year ended 31 December 2021, Yorkville Advisors exercised 909,090 warrants at 107 pence to subscribe for ordinary shares in the Company. A total of 909,090 new ordinary shares were issued to Yorkville Advisors in return for total subscription proceeds of £972,726.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Share-based payment reserve

The share-based payment reserve comprises the equity component of the Company's share-based payments charges.

Currency translation reserve

The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations.

Other reserve

Other reserve comprises the portion of the consideration paid for redT energy Holdings (Ireland) Limited's minority interests over the fair value of the shares purchased.

27 Financial assets and liabilities

All financial assets are held at amortised cost. There were no financial assets measured at fair value through other comprehensive income nor through profit and loss in either period presented.

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial asset presented above. The carrying value of the financial assets approximate their fair values due to the short-term maturities of these instruments.

The Group does not currently use derivative instruments for managing financial risk. All financial liabilities are held at amortised cost.

Recognised fair value measurements

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1:	The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading securities) is based on quoted market prices at the end of the reporting period.
	The battery systems manufactured by the Company use vanadium metal as a key component in the electrolyte. Vanadium is an actively traded commodity for which quoted market prices are available.
	The Company does not currently hold inventories of vanadium. Vanadium purchased from third parties is solely for the use in electrolyte and open purchase contracts are not accounted for as derivatives.
Level 2:	The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques that maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value instrument are observable, the instrument is included in Level 2. The Group did not hold any financial assets or liabilities that were required to be valued using level 2 inputs (2020: none)
Level 3:	If one or more of the significant inputs is not based on observable market data the instrument is included in Level 3.
	The Group did not hold any financial assets or liabilities that were required to be valued using level 3 inputs at 31 December 2021. At 31 December 2020, the warrant deed remained outstanding. No other financial instruments were outstanding at the period end that required to be valued using a methodology that uses Level 1, 2 or 3 inputs.

28 Financial risk management

This note explains the Group's exposure to financial risks and how these risks could affect the Group's future financial performance. Current year profit and loss information has been included where relevant to add further context.

Risk	Exposure arising from	Measurement	Management
Market risk - foreign exchange	Future commercial transactions Recognised financial assets and liabilities not denominated in GBP	Cash flow forecasting Sensitivity analysis	Cash is held in GBP until non-GBP requirements for up to the next six-months are established, at which point the GBP is sold in favour of the required currency, which is then remitted to the relevant Group entity
Market risk - commodity price risk	Purchases of vanadium to be used in the battery electrolyte	Quoted market prices for vanadium	Strategic supply arrangements with multiple pre-qualified suppliers
Credit risk	Cash and cash equivalents, trade receivables and contract assets	Ageing analysis Credit ratings	Monitoring accumulation of bank balances Credit risk assessment for customers and pre-agreed deposits and interim payments within customer contracts
Liquidity risk	Borrowings and other liabilities	Rolling cash flow forecasts	Access to capital markets for equity or debt funding

Market risk - foreign exchange risk

The Group is primarily exposed to foreign exchange risk related to bank deposits, receivables or payables balances and other monetary working capital items that are denominated in a currency other than the Company's functional currency which has been determined to be GBP.

The Group does not speculate on foreign exchange and aims to mitigate its overall foreign exchange risk by holding currency in line with forecast regional operating expenses, providing an element of natural hedge against adverse foreign exchange movement.

The Group's exposure to foreign exchange risk at the end of the reporting period, expressed in GBP, was as follows:

	Sterling	Euro	Canadian dollar	US dollar
31 December 2021	£000	£000	£000	£000
Cash and cash equivalents	24,141	96	284	1,174
Trade receivables	1,288	23	223	150
Other current assets	2,985	278	2,113	345
Trade and other payables	(1,438)	(382)	(1,229)	(460)
Lease liabilities	(356)	-	(299)	(102)
Net exposure	26,220	15	1,092	1,107

	Chinese Yuan	South African rand	Australian dollar	Total
31 December 2021 (continued)	£000	£000	£000	£000
Cash and cash equivalents	-	28	632	26,355
Trade receivables	-	-	-	1,684
Other current assets	-	10	-	5,731
Trade and other payables	-	(4)	-	(3,513)
Lease liabilities	-	(13)	-	(770)
Net exposure	-	21	632	29,487

	Sterling	Euro	Canadian dollar	US dollar
31 December 2020	£000	£000	£000	£000
Cash and cash equivalents	19,536	136	1,122	929
Trade receivables	4	-	-	29
Other current assets	10	63	9	26
Trade and other payables	(933)	(208)	(424)	(750)
Lease liabilities	-	-	(548)	(178)
Net exposure	18,617	(9)	159	56

	Chinese yuan	South African rand	Australian dollar	Total
31 December 2020 (continued)	£000	£000	£000	£000
Cash and cash equivalents	82	8	140	21,953
Trade receivables	-	-	-	33
Other current assets	-	5	-	113
Trade and other payables	-	(7)	(146)	(2,468)
Lease liabilities	-	(30)	-	(756)
Net exposure	82	(24)	(6)	18,875

Sensitivity - exchange rates

The sensitivity of profit or loss to changes in quoted exchange rates for currencies to which the Group is exposed is as follows, based on each relevant exchange rate strengthening (or weakening) by 5%.

There is no impact on other components of equity as the Group is not party to any derivative financial instruments, such as hedging instruments, where currency gains and losses would be recognised in other comprehensive loss.

	2021	2020
At 31 December +/- 5%	£000	£000
Euro	(5)	4
Canadian dollar	(14)	(8)
US dollar	(56)	(3)
Chinese yuan	(1)	(4)
South African rand	(30)	2
	(106)	(9)

Market risk - commodity price risk

The Group's batteries use vanadium as the key component of their electrolyte. Vanadium is an elemental metal and is used primarily to toughen steel, particularly for the construction industry.

Whilst it is not a mature market traded commodity, such that one can buy forward or derivative contracts, market prices for vanadium pentoxide (V2O5) at 98% purity are quoted in US dollars per pound.

Vanadium forms about two-thirds of the value of the electrolyte, which in turn forms about a quarter of the landed cost of a battery, and so a fluctuation in the price of vanadium will impact the profitability of battery sales. An increase or decrease in the market price of vanadium of 5% would cause the value of the electrolyte component of a battery to increase or decrease by approximately 3%.

Credit risk - cash held on deposit with banks

Credit risk arises from cash and cash equivalents and deposits with banks and other financial institutions.

Credit risk related to holdings with financial institutions is managed by only maintaining bank accounts with reputable financial institutions. The Group aims only to place funds on deposit with institutions with a minimum credit rating of B2 Moody's.

The Group's cash at bank and short-term deposits are held with institutions with credit ratings as follows:

	2021	2020
At 31 December	£000	£000
Aa2	1,087	1,531
A1	25,240
A2	-	20,221
Ba2	28	8
B2	-	193
	26,355	21,953

Credit risk - trade and other receivables

Past due but not impaired

The Group's credit risk from receivables encompasses the default risk of its customers and other

counterparties.

Its exposure to credit risk is influenced mainly by the individual characteristics of each customer or counterparty. The creditworthiness of potential and existing customers is assessed prior to entering each new transaction. A credit analysis is performed, and appropriate payment terms implemented that may include increased level of upfront deposits for the purchase of battery units.

Notwithstanding the above, the Group's standard terms of trade provide that up to 90% of the sales price of a battery unit is paid prior to delivery.

Receivables are considered for impairment on a case-by-case basis when they are past due or

where there is objective evidence that the customer or counter party may be a default risk. The Group takes into consideration the customer or counter party payment history, its credit worthiness together with the prevailing economic environment in which it operates to assess the potential impairment of receivables.

On an ongoing basis, receivable balances attributable to each customer or other counterparty are monitored and appropriate action is taken when the relevant balance becomes or is considered likely to become overdue. The maximum exposure to loss arising from receivables is equal to invoiced value.

The ageing of trade receivable balances was:

	2021	2020
At 31 December	£000	£000
Current	249	-
Past due - less than 30 days	-	-
Past due - more than 30 days	1,434	33
Total trade and other receivables	1,683	33

Of the past due amounts at 31 December 2021, £nil was considered to be impaired and related to eight customers (2020: £nil, three customers).

Liquidity risk

Liquidity risk relates to the Group's ability to meet its obligations as they fall due.

The Group generates cash from its operations that are principally related to the manufacture and installation of vanadium flow batteries. The market for reliable and flexible grid-scale storage solutions for energy generated from renewable sources is growing and the technology continues to develop.

The development of new and enhanced storage technologies can be capital intensive and the Group has historically funded development and early-stage commercial activity primarily from equity investment but also using cash from operations and loan funding.

The Group forecasts cash generation using a comprehensive company financial model and monitors the timing and amount of its payment obligations.

The following table shows the Group's financial liabilities by relevant maturity grouping based on contractual maturities. The amounts included in the analysis are contractual, undiscounted cashflows.

	Less than one year	One to two years	Two to five years	Over five years	Total contracted cash flows	Carrying amount
31 December 2021	£000	£000	£000	£000	£000	£000
Trade and other payables	3,513	-	-	-	3,513	3,513
Lease liabilities	379	331	117	-	827	770
Total financial liabilities	3,892	331	117	-	4,340	4,283

	Less than one year	One to two years	Two to five years	Over five years	Total contracted cash flows	Carrying amount
31 December 2020	£000	£000	£000	£000	£000	£000
Trade and other payables	2,468	-	-	-	2,468	2,468
Lease liabilities	190	179	314	155	838	756
Total financial liabilities	2,658	179	314	155	3,306	3,224

Capital management

The Group currently has no debt and is funded by proceeds raised through equity placings during 2021 and proceeds from the conversion of warrants in 2021.

The board regularly reviews the Group's cash requirements and future projections to monitor cash usage and assess the need for additional funding. At 30 April 2021, the Group had £20.8 million of cash on hand.

29 Related parties

The only related parties of the Company are the key management of the Group. Key management has been determined as the CEO and his direct reports.

Invinity Energy Systems plc purchased a total of 24,000 100p shares in the latest fundraising on behalf of two directors. 12,000 shares were purchased on behalf of Larry Zulch and 12,000 on behalf of Peter Dixon-Clarke. At 31 December 2021 the £12,000 owed by Peter Dixon-Clarke in respect of the shares had been settled. The £12,000 owed by Larry Zulch has since been settled.

Key management compensation is disclosed in note 8, Staff costs and headcount.

30 Group entities

				Ownership %

Direct subsidiary undertakings	Country of incorporation	Registered office	Principal activity	2021	2020
Camco Holdings UK Limited	England	Unit 4.12 Clerkenwell Workshops 27-31 Clerkenwell Close London EC1R 0AT United Kingdom	Holding company	100%	100%
Camco Services (UK) Limited	England	Unit 4.12 Clerkenwell Workshops 27-31 Clerkenwell Close London EC1R 0AT United Kingdom	Support services	100%	100%
Camco (Mauritius) Limited	Mauritius	24 Dr Joseph Rivière Street 1st Floor, Felix House Port Lewis, Mauritius	Holding company	100%	100%
Invinity Energy Systems (US) Corporation	United States of America	1201 Orange St. #600 Wilmington, DE USA 19899	Energy storage	100%	-
Invinity Energy Nexus Limited	England	Unit 4.12 Clerkenwell Workshops 27-31 Clerkenwell Close London EC1R 0AT United Kingdom	Energy storage	100%	100%

Indirect subsidiary undertakings
redT Energy Holdings (UK) Limited	England	Unit 4.12 Clerkenwell Workshops 27-31 Clerkenwell Close London EC1R 0AT United Kingdom	Research and consultancy	100%	100%
Re-Fuel Technology Limited	England	Unit 4.12 Clerkenwell Workshops 27-31 Clerkenwell Close London EC1R 0AT United Kingdom	Energy storage	99%	99%
Invinity Energy (UK) Limited	England	Unit 4.12 Clerkenwell Workshops 27-31 Clerkenwell Close London EC1R 0AT United Kingdom	Energy storage	99%	99%
redT Energy Holdings (Ireland) Limited	Ireland	22 Northumberland Road Ballsbridge, Dublin 4	Energy storage	99%	99%
Invinity Energy Systems (Ireland) Limited	Ireland	22 Northumberland Road Ballsbridge, Dublin 4	Energy storage	99%	99%
redT energy (Australia) (Pty) Ltd	Australia	RSK Advisory, Level 2, Suite 7 66 Victoria Crescent Narre Warren, Victoria 3805 Australia	Energy storage	99%	99%
Invinity Energy (South Africa) (Pty) Ltd	South Africa	1st Floor, Kiepersol House Stonemill Office Park 300 Acacia Road Darrenwood Randburg 2194	Business Services	100%	100%
Invinity Energy Systems (Canada) Corporation	Canada	2900-550 Burrard Street Vancouver, BC Canada V6C 0A3	Energy storage	100%	-
Suzhou Avalon Battery Company Limited	The People's Republic of China	1809 Building 4 no.11888 East Taihu Avenue, Songling Town, Wujiang District, Suzhou City	Business Services	100%	-

Associates

Vanadium Electrolyte Rental Limited

England

Unit 4.12 Clerkenwell Workshops

27-31 Clerkenwell Close

London EC1R 0AT

United Kingdom

Vanadium procurement

50%

The following entity was a subsidiary undertaking at 1 January 2021 but was wound up during 2021:

Direct subsidiary undertakings

Country of incorporation

Registered office

Principal activity

Camco International Carbon Asset Information Consulting (Beijing) Co. Limited

The People's Republic of China

Room 1408, Tower A, Lucky Tower

No.3 North Road

East Third Ring

Chaoyang District

PRC, Beijing

Business Services

31 Events occurring after the report period

On 3 February 2022, the Company announced its largest North American energy storage sale to date, an 8.4 MWh VS3 flow battery to be co-located with a 21 MWp solar array in Alberta, Canada to be constructed by Elemental Energy. The contract with Elemental was signed on 31 December 2021 subject to two conditions precedent, both of which were satisfied by 2 February 2022.

On 23 February 2022, Invinity was awarded £708,271 of funding under Phase 1 of the Longer Duration Energy Storage (LODES) demonstration competition.

On 9 March 2022, the Company's shares were dual listed on the Aquis Stock Exchange, in addition to the AIM Market, alongside the short-term and long-term warrants, which were simultaneously listed on Aquis.

On 8 April 2022, the Company announced the conclusion of a successful test and validation program of its energy storage system by Hyosung Heavy Industries and a subsequent signing of a non-binding Memorandum of Understanding for a global partnership with an exclusive relationship in Korea.

On 19 April 2022, the Company was certified as compliant with ISO standards for Quality Management (ISO 9001), Environmental Management (ISO 14001) and Health & Safety Management (ISO 45001) following an extensive audit process.

The ongoing events in Ukraine have led to international macro-economic instability. The impact on sterling has fed through to increased input costs and these are expected to continue while the situation remains unresolved.

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