The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 which is part of UK law by virtue of the European Union (withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
21 September 2023
Clean Power Hydrogen plc
("CPH2", the "Company" or the "Group)
Interim Results for the six months ended 30 June 2023
Clean Power Hydrogen plc (AIM: CPH2), the UK-based green hydrogen technology and manufacturing group that has developed the IP-protected Membrane-Free Electrolyser ("MFE"), is pleased to announce its unaudited results for the six months ended 30 June 2023.
Financial Highlights
· Cash position remains strong at £12.9m
· £1.3m investment on development work in the six months to June 2023
· Loss of £1.6m in the six months to June 2023
Technology Highlights
· The MFE110, the Company's first scaled membrane free electrolyser, is in the final stage of testing.
· Thorough testing of the MFE110 has identified upgrades and the Company has successfully redesigned the cryogenic system as well as validated the stack design.
· Results of the MFE110 have informed valuable enhancements to the MFE220 design as expected.
· Following the delivery of the MFE110, the Company will turn its focus to finalising the design and build programme of the MFE220, CPH2's 1MW System.
· Applications now submitted to certifying bodies for CE marking, UKCA marking, NI CE marking.
Significant engineering milestones have been reached during the period and although delivery of the MFE110 has been delayed to ensure operational and safety compliance, delivery, commissioning and installation of the unit at our customer's site will take place imminently.
The commissioning process has given valuable design and operability feedback which has resulted in further iterations of the MFE design. This redesign process has been done in a methodical and diligent manner and led to a number of components being reworked, re-engineered, and reordered, which in turn has had a knock-on impact on the commissioning schedule especially when new components have long lead times. However, the Company has largely finished this process and the improvement in the components and design means that CPH2 is more confident now in its ability to fully commercialise the product. The data and the learnings the team has accrued place the Company in a much stronger position to roll out the technology at CPH2's own facilities and at licence holder facilities.
Commercially, CPH2 is in a strong position. The Group's pipeline and order book is expected to increase once customers are able to verify having a working unit in operation in the field. In tandem, the Company is working with its licence partners to deliver the blueprints for their own production and hope to have these ready for late Q4 2023 or early Q1 2024. As a result of the delays the Company does not expect any significant income in FY2023.
Change of Name of Nominated Adviser and Broker
The Company also announces that Cenkos Securities, its Nominated Adviser and Broker, has changed its name to Cavendish Securities plc following completion of its own corporate merger.
For more information, please contact:
Clean Power Hydrogen plc | via Camarco |
Jon Duffy, Chief Executive Officer | |
James Hobson, Chief Financial Officer | |
| |
Cavendish Securities plc - NOMAD & Broker | |
Neil McDonald | +44 (0)131 220 9771 |
Peter Lynch | +44 (0)131 220 9772 |
Adam Rae | +44 (0)131 220 9778 |
| |
Camarco PR | + 44(0) 20 3757 4980 |
Billy Clegg | |
Owen Roberts | |
Lily Pettifar | |
To find out more, please visit: https://www.cph2.com
Overview of CPH2
CPH2 is the holding company of Clean Power Hydrogen Group Limited ("Clean Power") which has almost a decade of dedicated research and product development experience. This experience has resulted in the creation of simple, safe and sustainable technology which is designed to deliver a modular solution to the hydrogen production market in a cost-effective, scalable, reliable and long-lasting manner. The Group's strategic objective is to deliver the lowest LCOH in the market in relation to the production of green hydrogen. The Group's MFE technology is already commercially available and demonstrating cost efficiencies and technological advantages. CPH2 is listed on the AIM market and trades under the ticker LON:CPH2.
Chief Executive's Statement
Technology update
Work during the period has concentrated on completion of the MFE110 electrolysers, our 0.5 MW system being used to validate the technology at scale and verify the design, following which they will be shipped to customer sites for site validation.
The design of the MFE110 was completed in Q1 2023, following which the Company undertook the pre-commissioning and then commissioning of the system under the watchful eye of Paul Cassidy, our CTO who joined in March 2023.
The pre-commissioning and commissioning process is a necessary procedure to undertake in all engineering projects as it is the first time we are commissioning our groundbreaking technology at scale. The commissioning process has given valuable design and operability feedback which has resulted in further iterations of the MFE design. This design evolution has resulted in a longer commissioning process than first anticipated, however, we are confident that these iterations put the technology on a sound basis.
Every component and system - including each valve, gauge, pipe, electrical wire and pump - has been tested to ensure it is correctly installed and functioning according to its specification. Any components that were not working according to the design specification, or otherwise as expected, were reviewed by the engineering and research & development departments, who found a solution to resolve the issue. At times this resulted in a redesign of the component, which then were procured, for which in some cases incurred additional lead time.
The Company is executing a staged commissioning process testing firstly the stacks, then the stacks with the dryers, the cryogenics, and then finally bringing together the stacks, dryers, and cryogenics to have the complete system working together, successfully generating separated hydrogen and oxygen gases. This has given the Company the opportunity to make modifications before bringing the entire system online.
Over the last five months we have been working through this process in a methodical way, successfully resolving issues found, while ensuring that safety is paramount, which has resulted in an improvement to the unit operability, validation of stack design, and design improvements of the cryogenic system.
I am pleased to advise that as at the date of this report, the Company has reached the final stage of the commissioning process, which will be to generate separated hydrogen and oxygen gases of its first MFE110 electrolyser in the coming weeks, having already successfully generated mixed gas. Significant firsts have been achieved, and having successfully gone through nearly the whole commissioning process, confidence is high as we embark on the closing stage of commissioning.
The next stage of the process is achieving Factory Acceptance Testing which includes customer acceptance, upon which the first MFE110 will be shipped to the customer site.
The commissioning process has taken two months longer than expected but has been a crucial learning experience for the Company which has instilled the necessary disciplined approach which will prove valuable going forward. In addition, the successful proving of the technology at scale gives great confidence in the Company's 1MW system, the MFE220.
Work has continued on completing the design of the MFE220, and the issues that were found and resolved in the commissioning process of the MFE110, is informing the MFE220's development. We are expecting to complete the design and then begin building the unit in Q4 2023, with commissioning and customer delivery in the new year.
Commercial update
We have been working closely with our licence partners, as well as our customers and their respective engineering consultants, and appreciate the strong support we have received.
During the period we signed a 10-year licensing deal with Fabrum, an advanced energy company with deep expertise in cryogenics and an important customer of CPH2, alongside two MFE220 orders. The licensing deal allows Fabrum to manufacture membrane-free electrolysers in their factory in Christchurch, New Zealand as well as a non-exclusive sales licence for Australia and New Zealand. Under the agreement Fabrum will manufacture either upon a CPH2 order or their own sale. The MFE220s built by Fabrum will be in accordance with Australian & New Zealand standards, and upon completion of the design and compliance work, there will be a membrane free electrolyser ready for the Australian and New Zealand market. Fabrum has since secured its first customer order under the licencing agreement from Obayashi Construction Company.
Financial review
The Company has prudently and carefully managed its cash resources during the period, ensuring the cash spend is controlled and focused on our route to commercialization. We remain in a strong cash position with cash resources of £12.9m at 30 June 2023 (comprising term deposits of £8m and cash and cash equivalents of £4.9m), a reduction of £2.4m from 31 December 2022 when the cash resources of the Company were £15.3m. The Company incurred a loss of £1.6m for the six months ended 30 June 2023, an increase of £0.5m from the comparative period, but down from the loss of £2.3m incurred in H2 2022. The Company invested £1.3m in development work during the period.
Conclusion and Outlook
It has been a crucial time for the Company, and whilst we have had delays, strong strides have been made during the period in proving at scale the differentiated, groundbreaking membrane free electrolyser technology on the back of a disciplined engineering approach. Our key focus for the rest of the year is to complete and ship MFE110s, to have a scaled working electrolyser at a customer site, and to complete the design of the CPH2 1MW system, the MFE220, in line with our stated milestones. The enormous global hydrogen opportunity only continues to strengthen and we are confident that our technology provides a compelling, disruptive and attractive offering.
As we sit at the cusp of commercialising a truly ground-breaking technology in the hydrogen sector, I would like to thank to all our staff whose passion is inspiring and who have worked tirelessly to progress the technology and the Company.
Jon Duffy
Chief Executive Officer
Consolidated Statement of Comprehensive Income
FOR THE PERIOD ENDED 30 JUNE 2023
| Note | 6 months ended 30 June 2023 | 6 months ended 30 June 2022 | Year ended 31 December 2022 |
| | Unaudited | Unaudited | Audited |
| | £'000 | £'000 | £'000 |
Revenue | | - | - | - |
Cost of sales | | - | - | - |
Gross profit | | - | - | - |
Other operating income | | 2 | 2 | - |
Administrative expenses excluding exceptional items | | (2,262) | (2,158) | (4,765) |
Exceptional net credit | 4 | - | 987 | 986 |
Total administrative expenses | | (2,262) | (1,171) | (3,779) |
Operating loss | | (2,260) | (1,169) | (3,779) |
Finance income | | 163 | 91 | 216 |
Finance expense | | (24) | (28) | (55) |
Loss before taxation | | (2,121) | (1,106) | (3,618) |
Taxation | 5 | 512 | - | 174 |
Loss for the financial period | | (1,609) | (1,106) | (3,444) |
| |
| | |
Items that may be reclassified subsequently to profit or loss: |
| | | |
Foreign currency translation differences | | 12 | (9) | (19) |
Fair value decrease in respect of investments | | (42) | - | (3) |
Total comprehensive expense for the period | | (1,639) | (1,115) | (3,466) |
Basic and diluted earnings per share (pence) |
6 |
(0.60) |
(0.45) |
(1.35) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Consolidated Statement of Financial Position
AS AT 30 JUNE 2023
| Note |
| 30 June 2023 | 30 June 2022 | 31 December 2022 |
| |
| Unaudited | Unaudited | Audited |
| |
| £'000 | £'000 | £'000 |
Assets | |
|
| | |
Non-current assets | |
|
| | |
Intangible assets | 7 |
| 6,828 | 1,527 | 5,476 |
Property, plant and equipment | |
| 1,626 | 1,347 | 1,387 |
Fair value through OCI investments | 8 |
| 1,455 | - | 1,497 |
Trade and other receivables | |
| 120 | 120 | 120 |
| |
| 10,029 | 2,994 | 8,480 |
Current assets | |
|
| | |
Inventories | 9 |
| 2,443 | 3,889 | 2,363 |
Trade and other receivables | 10 |
| 2,304 | 2,085 | 3,239 |
Current asset investments | |
| 8,000 | 21,000 | 13,500 |
Cash and cash equivalents | |
| 4,907 | 2,175 | 1,790 |
| |
| 17,654 | 29,149 | 20,892 |
Total assets | |
| 27,683 | 32,143 | 29,372 |
Liabilities | |
|
| | |
Current liabilities | |
|
| | |
Trade and other payables | |
| (717) | (894) | (844) |
Deferred income | |
| (1,802) | (2,636) | (1,858) |
Lease liabilities | |
| (124) | (117) | (121) |
| |
| (2,643) | (3,647) | (2,823) |
Non-current liabilities | |
|
| | |
Deferred income | |
| (630) | (278) | (641) |
Lease liabilities | |
| (673) | (797) | (737) |
| |
| (1,303) | (1,075) | (1,378) |
Total liabilities | |
| (3,946) | (4,722) | (4,201) |
Net assets | |
| 23,737 | 27,421 | 25,171 |
Equity | |
|
| | |
Called up share capital | |
| 2,682 | 2,654 | 2,654 |
Share premium account | |
| 27,707 | 27,638 | 27,638 |
Merger reserve | |
| 3,702 | 3,702 | 3,702 |
Currency translation reserve | |
| (3) | (5) | (15) |
Accumulated loss | |
| (10,351) | (6,568) | (8,808) |
Total equity | |
| 23,737 | 27,421 | 25,171 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Consolidated Statement of Changes in Equity
FOR THE PERIOD ENDED 30 JUNE 2023
| Called up share capital
£'000 | Share premium account
£'000 | Merger reserve
£'000
| Foreign currency reserve
£'000 | Accumulated loss
£'000 | Total equity
£'000 |
Balance as at 1 January 2022 | 9 | 5,545 | - | 4 | (5,910) | (352) |
Loss for the financial year | - | - | - | - | (3,444) | (3,444) |
Other comprehensive expense | - | - | - | (19) | (3) | (22) |
Total comprehensive expense for the year | - | - | - | (19) | (3,447) | (3,466) |
Share based payments | - | - |
| - | 549 | 549 |
Capital reorganisation | 1,843 | (5,545) | 3,702 | - | - | - |
Issue of share capital | 802 | 27,638 | - | - | - | 28,440 |
Total contributions by owners | 2,645 | 22,093 | 3,702 | - | 549 | 28,989 |
Balance as at 31 December 2022 | 2,654 | 27,638 | 3,702 | (15) | (8,808) | 25,171 |
Loss for the financial period | - | - | - | - | (1,609) | (1,609) |
Other comprehensive expense | - | - | - | 12 | (42) | (30) |
Total comprehensive expense for the period | - | - | - | 12 | (1,651) | (1,639) |
Share based payments | - | - | - | - | 108 | 108 |
Issue of share capital | 28 | 69 | - | - | - | 97 |
Total contributions by owners | 28 | 69 | - | - | 108 | 205 |
Balance as at 30 June 2023 | 2,682 | 27,707 | 3,702 | (3) | (10,351) | 23,737 |
Comparatives for the six months ended 30 June 2022 are provided separately below:
| Called up share capital
£'000 | Share premium account
£'000 | Merger reserve
£'000
| Foreign currency reserve
£'000 | Accumulated loss
£'000 | Total Equity
£'000 |
Balance as at 1 January 2022 | 9 | 5,545 | - | 4 | (5,910) | (352) |
Loss for the financial period | - | - | - | - | (1,106) | (1,106) |
Other comprehensive expense | - | - | - | (9) | - | (9) |
Total comprehensive expense for the year | - | - | - | (9) | (1,106) | (1,115) |
Share based payments | - | - | - | - | 448 | 448 |
Capital reorganisation | 1,843 | (5,545) | 3,702 | - | - | - |
Issue of share capital | 802 | 27,638 | - | - | - | 28,440 |
Total contributions by owners | 2,645 | 22,093 | 3,702 | - | 448 | 28,888 |
Balance as at 30 June 2022 | 2,654 | 27,638 | 3,702 | (5) | (6,568) | 27,421 |
Consolidated Cash Flow Statement
FOR THE PERIOD ENDED 30 JUNE 2023
| | 6 months ended 30 June 2023 | 6 months ended 30 June 2022 | Year ended 31 December 2022 |
| | Unaudited
£'000 | Unaudited
£'000 | Audited
£'000 |
Cash flow from operating activities | |
| | |
Loss for the financial period | | (1,609) | (1,106) | (3,444) |
Adjustment for: | |
| | |
Depreciation and amortisation | | 177 | 109 | 249 |
Loss on disposal | | - | 10 | 5 |
Share based payments | | 108 | (1,517) | (1,416) |
Foreign exchange | | 16 | - | (25) |
Net finance income | | (139) | (63) | (161) |
Taxation credit | | (512) | - | (174) |
Changes in working capital: | |
| | |
Increase in inventories | | (80) | (1,807) | (281) |
Decrease/(increase) in trade and other receivables | | 1,273 | (1,381) | (2,361) |
(Decrease)/increase in trade and other payables | | (194) | 742 | 293 |
Cash used in operations | | (960) | (5,013) | (7,315) |
Income tax received | | 174 | 143 | 143 |
Net cash used in operating activities | | (786) | (4,870) | (7,172) |
| |
| | |
Cash flows from investing activities | |
| | |
Current asset investments disinvested/(made) | | 5,500 | (21,000) | (13,500) |
Purchase of property, plant and equipment | | (388) | (129) | (292) |
Purchase of intangible assets | | (1,384) | (354) | (4,316) |
Purchase of investments | | - | - | (1,500) |
Net cash generated from/(used in) investing activities | | 3,728 | (21,483) | (19,608) |
| |
| | |
Cash flows from financing activities | |
| | |
Issue of share capital (net of costs) | | 97 | 28,440 | 28,440 |
Interest received | | 163 | 91 | 216 |
Related party loan repaid | | - | (382) | (382) |
Interest paid | | (24) | (28) | (55) |
Payment of lease liabilities | | (61) | (73) | (129) |
Net cash generated from financing activities | | 175 | 28,048 | 28,090 |
| |
| | |
Net increase in cash and cash equivalents | | 3,117 | 1,695 | 1,310 |
Cash and cash equivalents at the beginning of the period | | 1,790 | 480 | 480 |
Cash and cash equivalents at the end of the period | | 4,907 | 2,175 | 1,790 |
Notes to the Condensed Interim Financial Statements
FOR THE PERIOD ENDED 30 JUNE 2023
1 Corporate information
Clean Power Hydrogen plc is a public company incorporated in the United Kingdom and listed on the Alternative Investment Market ("AIM"). The registered address of the Company is Unit D Parkside Business Park, Spinners Road, Doncaster, England, DN2 4BL. The principal activity of the Company is as a holding company for subsidiaries engaged in the development of a patented method of hydrogen and oxygen production together with the development of a gas separation technique which enables hydrogen to be produced as 'Green Hydrogen' and oxygen to medical grade purity.
2 Basis of preparation
This unaudited condensed consolidated interim financial information for the six months ended 30 June 2023 and 30 June 2022 has been prepared in accordance with UK adopted international accounting standards ('IFRS') including IAS 34 'Interim Financial Reporting'.
The accounting policies applied by the Group include those as set out in the consolidated financial statements for the Group for the year ended 31 December 2022 and are consistent with those to be used by the Group in its next financial statements for the year ending 31 December 2023.
There are no new standards, interpretations and amendments which are not yet effective in these financial statements, expected to have a material effect on the Group's future financial statements.
The financial information does not contain all of the information that is required to be disclosed in a full set of IFRS financial statements. The financial information for the six months ended 30 June 2023 and 30 June 2022 is unaudited and does not constitute the Group or Company's statutory financial statements for those periods.
The comparative financial information for the full year ended 31 December 2022 has, however, been derived from the audited statutory financial statements for Clean Power Hydrogen plc for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.
These policies have been applied consistently to all periods presented, unless otherwise stated.
The interim financial information has been prepared under the historical cost convention with the exception of the fair values applied in accounting for share based payments and investments. The financial information and the notes to the historical financial information are presented in thousands of pounds sterling ('£'000'), the functional and presentation currency of the Group, except where otherwise indicated.
Going Concern
The Group's forecasts and projections to 31 December 2024 based on the current trends in development and trading and after taking account of the funds currently held, show that the Group will be able to operate within the level of cash reserves.
The Directors therefore have a reasonable expectation that the Group have adequate resources to continue in operational existence for the foreseeable future and consider the going concern basis to be appropriate.
3 Segment reporting
IFRS 8, Operating Segments, requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the company's chief operating decision maker. The chief operating decision maker is considered to be the executive Directors.
The Group at this stage comprises only one operating segment for the development and sale of equipment for the electrolytic production of clean hydrogen and oxygen. This is monitored by the chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results.
4 Exceptional costs and credits
| 30 June 2023 | 30 June 2022 | 31 December 2022 |
Cash settled LTIP credit | - | 1,965 | 1,965 |
Accelerated share based payment on IPO | - | (374) | (374) |
IPO related costs | - | (604) | (605) |
| - | 987 | 986 |
Pre IPO, the Group had an LTIP in place for a director with a cash-settled bonus arrangement payable, linked to the Group value and share price over the 3 year period to September 2023. This was replaced with parent company options with new terms and on cancelling the arrangement resulted in the reversal of previous charges and an exceptional credit to income of £1,965,000.
5 Taxation
Tax credits in respect of research and development expenditure have been recognised when submitted and on receipt to date whilst experience of claims being collated and accepted is gained. The credit for the period to 30 June 2023 relates to the claim submitted for the year ended 31 December 2022 and the credit for the year ended 31 December 2022 to the claim submitted and received for 2021.
6 Earnings per share
| 30 June 2023 | 30 June 2022 | 31 December 2022 |
Loss used in calculating earnings per share (£'000) | (1,609) | (1,106) | (3,444) |
Weighted average number of shares for basic EPS ('000) | 266,422 | 245,054 | 255,321 |
Basic and diluted loss per share (pence) | (0.60) | (0.45) | (1.35) |
There is no dilutive effect on a loss. There are potentially dilutive options in place over 22,333,279 ordinary shares at 30 June 2023.
7 Intangible fixed assets
| Development costs £'000 | Patents
£'000 | Software £'000 | Total
£'000 |
Cost | | |
|
|
At 1 January 2023 | 5,291 | 171 | 55 | 5,517 |
Additions | 1,276 | 108 | - | 1,384 |
Reclassification | (5) | 5 | - | - |
Exchange movements | - | (4) | - | (4) |
At 30 June 2023 | 6,562 | 280 | 55 | 6,897 |
Accumulated depreciation | | |
|
|
At 1 January 2023 | - | 21 | 20 | 41 |
Charge for the period | - | 21 | 7 | 28 |
At 30 June 2023 | - | 42 | 27 | 69 |
Net book amount |
|
|
|
|
At 30 June 2023 | 6,562 | 238 | 28 | 6,828 |
At 31 December 2022 | 5,291 | 150 | 35 | 5,476 |
The development costs relate to the direct expenditure incurred on the Group's membrane free electrolysis technology.
8 Investments held at fair value through other comprehensive income
| | £'000 | |
As at 1 January 2023 |
|
| 1,497 |
Movement in fair value |
|
| (42) |
Fair value at 30 June 2023 |
|
| 1,455 |
The Company holds 1,412,429 ordinary £0.02 shares in ATOME Energy plc, representing 3.5% of its issued share capital at 30 June 2023 (3.9% at 1 January 2023). ATOME Energy plc is listed on AIM and is focused on the production, marketing and distribution of green hydrogen and ammonia.
The fair value at 30 June 2023 and 1 January 2023 is measured using the quoted price on the AIM market at that date (a level 1 input using the price from an active market).
9 Inventories
| 30 June 2023 | 30 June 2022 | 31 December 2022 |
|
| | |
Group and Company | £'000 | £'000 | £'000 |
Raw materials and consumables | 1,692 | 570 | 1,692 |
Work in progress | 751 | 3,319 | 671 |
| 2,443 | 3,889 | 2,363 |
No impairment of inventory has arisen.
Work in progress represents the costs incurred in the production of machines for confirmed orders not yet completed at the balance sheet date.
10 Trade and other receivables
| 30 June 2023 | 30 June 2022 | 31 December 2022 |
|
| | |
Current | £'000 | £'000 | £'000 |
Trade receivables | 81 | - | 84 |
Other receivables | 849 | 688 | 2,053 |
Tax recoverable | 512 | - | 174 |
Prepayments and accrued income | 862 | 1,397 | 928 |
| 2,304 | 2,085 | 3,239 |
Non-current |
| | |
Other receivables | 120 | 120 | 120 |
There has been no significant revenue to 30 June 2023 and there have been no impairment charges nor expected credit loss provisions made, as the credit risk in respect of trade and other receivables is considered low. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
£475,000 of other receivables and deferred income relates to cash from a customer held in escrow subject to completion of the order.
11 Related party transactions
Directors remuneration during the 6 month period ended 30 June 2023 amounted to £337,000 (6 month period ended 30 June 2022 : £367,000).
Independent Review Report to Clean Power Hydrogen plc
FOR THE PERIOD ENDED 30 JUNE 2023
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 30 June 2023 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting" and the requirements of the AIM Rules for Companies.
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK), and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with UK adopted IASs. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34 "Interim Financial Reporting".
Conclusions related to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report in accordance with the AIM Rules for Companies.
In preparing the half-yearly financial report, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the group a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange AIM Rules for Companies for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
PKF Littlejohn LLP
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