Notes to the Financial Statements

For the period ended 31 December 2022

1.    General Information

AMTE Power plc is a public company incorporated in the England and Wales. The address of its registered office is Suite 1, 3rd Floor 11-12 St. James's Square, London, United Kingdom, SW1Y 4LB.

AMTE Power Plc is a developer of lithium-ion and sodium-ion battery cells for specialist markets. Such customers, which include manufacturers of high-performance vehicles, energy storage solutions and specialist engineering equipment, are not the primary focus of the international battery cell manufacturers and thereby offer a significant and scalable opportunity for the Group.

2.    Accounting policies

2.1. Basis of preparation

The financial information set out in these interim consolidated financial statements for the six months ended 31 December 2022 is unaudited. The financial information presented are not statutory accounts prepared in accordance with the Companies Act 2006, and are prepared only to comply with AIM requirements for interim reporting. Statutory accounts for the year ended 30 June 2022, on which the auditors gave an audit report which was unqualified and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies. The annual financial statements of the Group are prepared in accordance with UK-adopted International Accounting Standards (IAS).

The interim consolidated financial statements have been prepared using consistent accounting policies as those adopted in the financial statements for the year ended 30 June 2022.

2.2. Basis of consolidation

The interim condensed consolidated group financial statements consist of the financial statements of the parent company AMTE Power Plc together with all entities controlled by the parent company (its subsidiaries) and the group's share of its interests in joint ventures and associates.

All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group's financial statements from the date that control commences until the date that control ceases.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group at cost plus post-acquisition changes in the group's share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

If the group's share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

2.3. Going Concern

As at 31 December 2022 the Group had net assets of £4,663,349 and cash and cash equivalents of £1,214,894.  As set out in the 30 June 2022 financial statements, the Group is dependent on the continued support of its shareholders in the development of its three core cells which are expected to reach mass production by the end of 2023.

The £5m loan facility referred to in the annual report has been completed as set out in note 7 with £3m of funding drawn down.  The remaining £2m will be drawn down as required. We also reported that additional funds will need to be raised by April 2023 and good progress is being made with these negotiations. Those funds will finance the Group through to the summer 2023 when the directors plan to raise further capital which will be predicated on meeting the milestones within the production plans for each of the Group's three core cells.  The directors remain confident that the fundraising prospects for the Group remain strong.

While the Directors remain confident that necessary funds will be available as and when required, as at the date of this report the future required funding arrangements are not secured, and accordingly there is material uncertainty that may cast significant doubt over the Group's ability to continue as a going concern. The interim financial statements have been prepared on a going concern basis. The interim financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

3.    Segmental analysis

Operating segments are determined by the chief operating decision maker based on information used to allocate the Group's resources. The information as presented to internal management is consistent with the statement of comprehensive income. It has been determined that there is one operating segment, the development of battery cells. In the periods covered in the interim condensed consolidated financial information, the Group operated mainly in the United Kingdom. All non-current assets are located in the United Kingdom.

4.    Intangible fixed assets

The Group's intangible fixed assets, which include Development Battery Cells and IP Rights, had additions of £2,113,205 in the six months to 31 December 2022 (six months to 31 December 2021: £1,811,839; 12 months to 30 June 2022: £3,602,025).

The Group capitalised the development costs relating to the products it is developing, in line with IAS 38, however it has not yet amortised the costs. The Group also records the value of the IP Rights it holds through licences. The amortisation of the IP Rights and the interest arising from the licence obligations has been capitalised into the intangible assets (Development Battery Cells) whilst the battery cells are being developed. Amortisation of IP Rights were £323,112 (six months to 31 December 2021: £257,836; 12 months to 30 June 2022: £532,821).

No impairments of intangible assets were made.

5.    Property, plant and equipment

There were no significant movements on tangible fixed assets (excluding right-of-use assets as disclosed below) over the period of the interim accounts.

6.    Right-of-use assets

The Group has lease contracts for buildings and equipment used in its operations, which have the following lease terms:

·      Leased equipment has terms of between 3 and 5 years,

·      Property leases have terms of under 3 years in the case of office space near Oxford and for 10      

       years for manufacturing facility in Thurso,

·      The sub-lease has a duration of under 3 years.

Right-of-use assets include additions of £339,113, £312,068 being property and the remining £12,045 equipment, for the six months to 31 December 2022 (six months to 31 December 2021: £nil; 12 months to 30 June 2022: £nil).  £312,068 being property and the remining £12,045 equipment, for The charge for depreciation was £141,603 (six months to 31 December 2021: £87,445; 12 months to 30 June 2022: £174,887). Within this depreciation charge relating to property was £119,146 (six months to 31 December 2021: £69,212; 12 months to 30 June 2022: £138,423).

7.      Convertible loan notes

On 4 November 2022, the company authorised the issue of £5,000,000 convertible loan notes ("CLN"). The CLN are to be issued in three tranches and as at the time of signing, £3,000,000 loan notes have been issued through a subscription agreement dated 11 November 2022, using terms agreed on 14 October 2022; the remaining £2,000,000 CLN can be drawn at least 60 days after the first tranche.

The CLN carry no coupon but are issued at a discount of 8% and are redeemable either in cash at a premium of 15% or via a conversion to ordinary share capital of the company at a 5% discount to specified average recent market prices of those shares, within 2 years of drawdown. In addition, 1,829,269 warrants have been issued to the CLN holders at zero additional cost. The warrants permit a subscription for a further £1.5m of ordinary shares at a fixed price of £0.8204 per share. These warrants can be exercised at any time until the third anniversary.

The CLN are provisionally included within 'borrowings' (non-current liabilities) and 'derivative financial instruments' (current liabilities). The debt element is subject to finance charges at a provisional rate of 24.27% per annum. The derivative portion is re-measured at fair value at each reporting date with any fair value gains/losses recognised immediately in the profit or loss account.

£150,000 of the £3,000,000 CLN were converted to equity in November 2022.

8.      Earnings per share

The calculation of the basic loss per share is based on the following data:

In all periods presented the Group has incurred losses and as such has not presented any dilutive shares    in accordance with IAS 33 'Earnings per share'. However, the Group does have a number of share options and warrants that would dilute the earnings per share should the Group become profitable.

9.         Restatement

The comparative share premium and retained earnings balances as at 31 December 2021 have been restated. On presentation of the unaudited interim financial statements for that period, the accumulated share option expense relating to the options exercised during the period had been allocated to share premium. Upon review of IFRS 2 this was reallocated to retained earnings. This restatement brings the accounting in line with how it was presented in the audited 30 June 2022 financial statements.