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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 6-K
____________________
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Dated August 12, 2022
Commission File Number: 001-40286
Arrival
(Exact Name of Registrant as Specified in Its Charter)
Grand Duchy of Luxembourg
(Jurisdiction of Incorporation or Organization)
60a, rue des Bruyeres, L-1274 Howald,
Grand Duchy of Luxembourg
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):
☐
Note: Regulation S-T Rule 101(b)(1) only permits the submission in
paper of a Form 6-K if submitted solely to provide an attached
annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):
☐
INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K
Arrival (the “Company”) is issuing an interim report for the
six-month period ended June 30, 2022, which is attached hereto as
Exhibit 99.1.
INCORPORATION BY REFERENCE
This report on Form 6-K shall be deemed to be incorporated by
reference in each of the Registration Statement on Form F-3 (File
no. 333-254885), the Registration Statement on Form F-3 (File no.
333-266472), the Registration Statement on Form S-8 (File no.
333-257101) and the Registration Statement on Form S-8 (File no.
333-259673) of Arrival and to be a part thereof from the date on
which this report is filed, to the extent not superseded by
documents or reports subsequently filed or furnished.
EXHIBITS
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Exhibit No. |
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Description |
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99.1 |
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Financial results for six months ended June 30, 2022 |
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101.INS |
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XBRL Instance Document - the instance document does not appear in
the Interactive Data File because its XBRL tags are embedded within
the Inline XBRL document.
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101.SCH |
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INLINE XBRL Taxonomy Extension Schema Document. |
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101.DEF |
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INLINE XBRL Taxonomy Extension Calculation Linkbase
Document. |
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101.CAL |
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INLINE XBRL Taxonomy Extension Definition Linkbase
Document. |
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101.LAB |
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INLINE XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
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INLINE XBRL Taxonomy Extension Presentation Linkbase
Document. |
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104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and
contained in Exhibit 101)
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SIGNATURES
The registrant hereby certifies that it meets all of the
requirements for filing on Form 6-K and that it has duly caused and
authorized the undersigned to sign this report on its
behalf.
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August 12, 2022 |
ARRIVAL |
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By: |
/s/ John Wozniak |
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Name: |
John Wozniak |
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Title: |
Chief Financial Officer |
HIGHLIGHTS
Arrival Reports Second Quarter 2022 Financial Results
Reaffirms start of production in Bicester in Q3
At The Market (ATM) platform established to access additional
capital
Luxembourg, August 12, 2022
- Arrival (NASDAQ: ARVL), inventor of a unique new method of design
and production of equitable electric vehicles (EVs) by local
Microfactories, today reported financial results for the second
quarter ended June 30, 2022.
“We have had big achievements in Q2 including the European
certification of our Van and Bus products and successful internal
trials of both Van and Bus on public roads. In addition, we’ve made
recent strategic decisions that will allow us to start production
this quarter in Bicester (UK), deliver our first vehicles to UPS
this year, and start production in Charlotte (US) in 2023. We are
excited to be drawing closer to producing vehicles in our first
ever Microfactory in a few weeks - a moment that we believe will
fundamentally change the automotive industry. The start of our
first Microfactory is a big step towards achieving our vision, it
is the move from 0 to 1,” said Denis Sverdlov, Arrival founder and
CEO.
Recent Business Highlights
Arrival ended Q2 with approximately $513 million of cash and cash
equivalents, began restructuring the business to reduce costs, and
today is establishing a $300 million At The Market (“ATM”)
platform. These actions will allow the Company to start production
this quarter in Bicester, deliver its first vehicles to UPS this
year and start production in Charlotte in 2023. The Company expects
lower production volumes in 2022 compared to previous estimates.
These changes allow the Company to operate the business through at
least 2023 without needing to raise additional capital, other than
through the ATM, and prepare the Company for growth. The Company
will continue to opportunistically consider additional sources of
capital.
Demand for products grew with non-binding MOUs and Orders
increasing to c.149k vehicles, which, if all completed, is over $6
billion in potential revenue.
Van
•Arrival
Van achieved European Whole Vehicle Type Approval in
May
•Vans
are currently being tested on public roads; customer trials
scheduled to commence in Central London this
quarter with vehicles integrated into customer operations
delivering packages through Q4
•Trials
in Europe and North America to commence in 2023
•Van
production in Bicester expected to start this quarter with
deliveries to customers expected this year
•Charlotte
Microfactory timeline moved to 2023, capitalizing on learnings and
efficiencies from the Bicester
Microfactory
Bus
•Achieved
European certification in Q2
•The
Arrival Bus has started operating on public roads, taking employees
from site to site
•Customer
trials and investment in the Bus microfactory will continue once
the Company secures additional capital
Non-IFRS Financial Measures
The below unaudited information includes Adjusted EBITDA which
Arrival utilizes to assess the financial performance of its
business that is not a measure recognized under IFRS. This non-IFRS
measure should not be considered an alternative to performance
measures determined in accordance with IFRS and may not be
comparable to similar measures presented by other issuers.
“Adjusted EBITDA” represents earnings before interest, tax,
depreciation and amortization, adjusted for impairment of
intangible assets and financial assets, share option expenses,
listing expenses, fair value adjustments on
Warrants, reversal of difference between fair value and nominal
value of loans that got settled during the period, fair value
movement of embedded derivative, realized and unrealized foreign
exchange gains/losses and transaction bonuses. For a reconciliation
of Adjusted EBITDA to Operating loss, see the reconciliation table
included later in this press release.
About Arrival
Arrival was founded in 2015 with a mission to make air clean by
replacing all vehicles with affordable electric solutions -
produced by local Microfactories. Arrival is driving the transition
to EVs globally by creating products that are zero-emission, more
desirable, more sustainable and more equitable than ever before.
Their in-house technologies enable their unique new method of
design and production using rapidly-scalable, local Microfactories
around the world. This method facilitates cities and governments in
achieving their sustainability goals whilst also supercharging
their communities. This vertically integrated business model is how
Arrival can have the radical impact our world needs today. Arrival
(NASDAQ: ARVL) is a joint stock company governed by Luxembourg
law.
Forward-looking statements
This press release contains certain forward-looking statements
within the meaning of the federal securities laws, including
statements regarding the products offered by Arrival and the
markets in which it operates and Arrival’s projected future
results. These forward-looking statements generally are identified
by the words “believe,” “project,” “expect,” “anticipate,”
“estimate,” “intend,” “positioned,” “strategy,” “outlook,”
“future,” “opportunity,” “plan,” “potential,” “predict,” “may,”
“should,” “could,” “will,” “would,” “will be,” “will continue,”
“will likely result,” and similar expressions and include, among
other things, their 2022 outlook. Such statements are made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and are based on management’s belief or
interpretation of information currently available. Forward-looking
statements are predictions, projections and other statements about
future events that are based on current expectations and
assumptions and, as a result, are subject to risks and
uncertainties. Many factors could cause actual future results and
events to differ materially from the results expressed in the
forward-looking statements in this document. Among the key factors
that could cause actual results to differ materially from those
projected in the forward-looking statements include, but are not
limited to: (i) the impact of COVID-19 on Arrival’s business; (ii)
economic disruptions from war and other geopolitical tensions (such
as the ongoing military conflict between Russia and Ukraine); (iii)
the risk of downturns and the possibility of rapid change in the
highly competitive industry in which Arrival operates, (iv) the
risk that Arrival and its current and future collaborators are
unable to successfully develop and commercialize Arrival’s products
or services, or experience significant delays in doing so; (v) the
risk that Arrival may never achieve or sustain profitability; (vi)
the risk that Arrival experiences difficulties in managing its
growth and expanding operations, (vii) the risk that third-parties
suppliers and manufacturers are not able to fully and timely meet
their obligations; (viii) the risk that the utilization of
Microfactories will not provide the expected benefits due to, among
other things, the inability to locate appropriate buildings to use
as Microfactories, Microfactories needing a larger than anticipated
factory footprint, and the inability of Arrival to deploy
Microfactories in the anticipated time frame; (ix) the risk that
the orders that have been placed for vehicles, including the order
from UPS, are cancelled or modified; (x) the risk of product
liability or regulatory lawsuits or proceedings relating to
Arrival’s products and services; and (xi) the risk that Arrival
will not be able to raise additional capital to execute its
business plan, which may not be available on acceptable terms or at
all; and (xii) the risk that Arrival is unable to secure or protect
its intellectual property.
The foregoing list of factors is not exhaustive. You should
carefully consider the foregoing factors and the other risks and
uncertainties described in the “Risk Factors” section of Arrival’s
annual report on Form 20-F filed with the U.S. Securities and
Exchange Commission (the “SEC”) on April 27, 2022, and other
documents filed by Arrival with the SEC from time to time. In
addition, forecasts about future costs and other financial metrics
and our expectations as to our ability to execute on our current
business plan in the near term and the longer term are based on a
number of assumptions we make, including the following assumptions
that Arrival’s management believed to be material:
•Operational
assumptions, including, the development and commercialization of
Arrival’s vehicles, the roll out of Arrival’s Microfactory
manufacturing locations, the production capacity of Arrival’s
Microfactories, the selection of Arrival’s products by customers in
the commercial Van and Bus industry, growth in the various markets
Arrival is targeting, average selling prices and resulting sales of
vehicles.
•The
mix of products produced and sold in combination with corresponding
costs, including material and component costs, assembly costs,
manufacturing costs, and costs related to product warranties. Many
of these costs are forecasted to vary significantly as Arrival
commences production in its Microfactories.
•Our
ability to raise capital necessary to execute on our current
business plan and production timeline, including the roll-out of
our Microfactories, as well as to maintain our ongoing operations,
continue research, development and design efforts and improve
infrastructure
•Capital
expenditure is based on a number of assumptions regarding the
expenditure required to build Arrival’s Microfactories, including
the cost of initial set up of factory facilities and the cost of
manufacturing and assembly equipment.
•In
making the foregoing assumptions, Arrival’s management relied on a
number of factors, including: its experience in the automotive
industry, its experience in the period since the inception of the
company and current pricing estimates for prototype vehicles and
vehicle components as well as the projected costs for first factory
locations that are already in development; its best estimates of
the timing for the development and commercialization of its
vehicles and overall vehicle development process; its best
estimates of current and future customers purchasing Arrival’s
vehicles; and third-party forecasts for industry growth. Forecasts
of future financial metrics are inherently uncertain, and actual
results may differ significantly from forecasts based on our
assumptions underlying those forecasts at this time.
Readers are cautioned not to put undue reliance on forward-looking
statements as they are subject to numerous uncertainties and
factors relating to Arrival’s operations and business environment,
all of which are difficult to predict and many of which are beyond
Arrival’s control. Except as required by applicable law, Arrival
assumes no obligation to and does not intend to update or revise
these forward-looking statements after the date of this press
release, whether as a result of new information, future events, or
otherwise. In light of these risks and uncertainties, you should
keep in mind that any event described in a forward-looking
statement made in this press release or elsewhere might not occur.
Arrival does not give any assurance that Arrival will achieve its
expectations.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis provides information which
Arrival’s management believes is relevant to an assessment and
understanding of Arrival’s results of operations and financial
condition. Some of the information contained in this discussion and
analysis or set forth elsewhere in this interim report, including
information with respect to Arrival’s plans and strategy for its
business and related financing, includes forward-looking statements
that involve risks and uncertainties. Arrival’s actual results
could differ materially from the results described in or implied by
the forward-looking statements contained in the following
discussion and analysis. This discussion should be read in
conjunction with Arrival’s audited historical consolidated
financial statements and other financial information.
Overview
Arrival was founded with a mission to transform the design,
assembly and distribution of commercial EVs and accelerate the mass
adoption of EVs globally. Founded in 2015, Arrival develops
technologies and products that create a new approach to the design
and assembly of EVs. Arrival believes its in-house developed
components, materials, software and robotic technologies, when
combined with its low cost and scalable microfactories, will enable
it to produce EVs that are tailored to the needs of local markets
with an attractive TCO to its customers.
The initial focus for Arrival is the production of commercial EV
vans and buses. Arrival believes this segment of the automotive
market is currently underserved by other EV manufacturers and is a
global market with significant scale opportunities. Arrival also
believes the commercial vehicle segment will move quickly to EVs,
and that this migration will be supported worldwide by local,
state, and national government policies that either encourage EV
usage via subsidies or enact usage taxes on fleet operators who
continue to operate internal combustion engine vehicles. Arrival
also believes that commercial fleet operators will be attracted to
Arrival’s vehicles in particular, because of their attractive TCO.
Commercial fleet operators have well understood range requirements,
and the vehicles typically return to a central depot every evening
where they can be charged overnight. For these reasons, Arrival
expects the commercial vehicle fleets to migrate to EVs even more
quickly than automotive retail segments.
The Arrival Van is designed for commercial use by large fleet
owners particularly in the transportation, e-commerce and logistics
industries with an estimated total addressable market of
approximately $280 billion. The expected start of production for
the Arrival Van is the third quarter of 2022. In 2020, Arrival
finalized an investment and signed a vehicle sales agreement with
UPS, which included an initial non binding order of 10,000 electric
vans EVs with an option to
purchase an additional 10,000 electric vans, subject to
modifications or cancellation at any time. This agreement has a
total aggregate order value of up to $1.2 billion (€1.0 billion) in
revenue (including the option) and may be canceled or modified by
UPS at any time. In July 2021, Arrival and LeasePlan, one of the
world’s leading “car-as-a-service” companies, entered into an
agreement pursuant to which LeasePlan will be the preferred
operational leasing partner for Arrival Vans. Additionally, Arrival
and LeasePlan entered into a vehicle sales agreement in September
2021, pursuant to which Arrival agreed to provide LeasePlan with
priority to purchase an initial amount of 3,000 vans and LeasePlan
agreed on a best efforts basis to purchase such vans. In July 2021,
Arrival partnered with ATN to produce Arrival Buses in connection
with a $2.0 million grant ATN received from the FTA.
On November 4, 2019, Arrival and HKMC entered into an agreement to
jointly develop vehicles using Arrival’s technologies. This
partnership will leverage the use of Arrival’s microfactories and
software innovation. Arrival benefits from HKMC’s global footprint
and economies of scale with the aim to reduce the cost of
components. The joint development agreement will expire on November
3, 2024. This development agreement prevents Arrival from
developing EVs with other traditional OEMs until November 3,
2022.
Updated Microfactory and Other Cost Estimates
Arrival’s Bicester, U.K. microfactory is expected to start
production of Arrival Vans in the third quarter of 2022 and deliver
the first Vans to customers in the fourth quarter of 2022.
Charlotte, North Carolina, USA is expected to start production of
Arrival Vans in 2023 using the learnings of Bicester to scale up
production more efficiently. The installation and production in
Arrival’s Bus Microfactory in Rock Hill was put on hold in the
first half of 2022 as initial Bus demand came from the UK. In the
third quarter of 2022, Arrival announced they will be deferring
further investment in the Bus program so the company can focus on
the start of production of the Arrival Van, which makes up the
largest share of LOI and pre-order volume.
As of August 12, 2022, total capital expenditure at Arrival’s
microfactories consists of capital expenditure for both production
and non-production, including site readiness and
logistics:
Bicester, is Arrival’s lab microfactory where it has prioritized
being on time for the start of production of the Arrival Van. As a
result, Arrival expects total capital expenditure at Bicester, to
be approximately $100 million, through 2022.
From the learnings gained at Bicester, Arrival expects total
capital expenditure at Charlotte to be significantly lower than at
Bicester, with continued reductions in capital expenditure per
microfactory as it scales beyond the initial
microfactories.
Other Company Costs
Arrival is experiencing industry-wide increases in the expected
cost of raw materials including aluminum and
petrochemicals.
Arrival also expects higher working capital in Bicester to ensure
it has the necessary components and parts to start production of
its vehicles. The company has ordered 200 sets of parts to support
initial production in Bicester.
Vehicle Volumes and Revenue Expectations for 2022
On July 12th, Arrival announced a restructuring of its business,
including an approximately 30% percent reduction in its work force
to focus resources on the start of production in Bicester. It was
also decided that production in the Charlotte microfactory would be
moved and is now expected to occur in 2023. Utilizing the $512.6
million of cash and cash equivilants at the end of Q2 2022,
together with the recently established At The Market Program (ATM),
the company believes it can start production in Bicester and
deliver vehicles to customers beginning in Q4 of 2022, hard tool
the Arrival Van, continue start production in Charlotte in 2023 and
run the business through at least 2023 without the need to raise
additional capital.
In the second quarter of 2022, Arrival achieved an important
milestone with both the Arrival Bus and Van achieving European
Whole Vehicle Type Approval. The company will begin Arrival Van
production in Bicester in the third quarter of 2022 with first
deliveries to customers in the fourth quarter of 2022. Focusing on
one Microfactory and one product running on one shift will be a
critical enabler to Arrival’s initial ramp up, cost and quality of
production. As many parts are soft-tooled, Arrival will begin
production with lower volumes than initially
anticipated.
The Charlotte, USA Microfactory start of production is now
anticipated in 2023, taking valuable production learnings from
Bicester that can be carried over to Charlotte. Once Charlotte
begins production next year, it will produce both the Large and XL
Arrival Vans for the North American market, two variants which are
in high demand by UPS and other parcel delivery
companies.
The priorities for 2022 are starting production of the Van in
Bicester with Arrival’s unique method and ensuring the highest
possible quality for its first vehicles. With this in mind, Arrival
is deferring further investment in the Bus program at this
time.
Key Factors Affecting Operating Results
Arrival is a pre-revenue company and believes that its performance
and future success depends on several factors that present
significant opportunities for it but also pose risks and
challenges, including those discussed below and in the our Annual
20-F filing in “Item 3D Risk Factors.”
Product Development
Arrival has announced five vehicle programs: the Arrival Bus, Bus
for emerging markets, Arrival Large Van, XL Van and Arrival Car.
The Arrival Bus and Large Van achieved European certification in
the second quarter of 2022. However, Arrival has decided to defer
further investment in the Bus program and the Car program while it
focuses on the start of production of the Van in Bicester followed
by Charlotte, to meet the order volume requested of its first
customers.
Arrival has made significant progress in the design of its EVs and
components parts, as well as in the development of its
manufacturing and assembly processes and vehicle and manufacturing
technology platform:
Prototype Arrival Vans have been built and are being tested on
public roads. In Q2 2022 Arrival completed the first assembly of an
Arrival Van skateboard, hoop and cabin structure robotically in a
microfactory technology cell using its proprietary AMRs marking a
significant step towards start of production.
The first two Bus milestones of Trial Bus production and Bus
Proving Ground trials are achieved. The Arrival Bus and Van have
both achieved European Whole Vehicle Type Approval. Arrival has
installed and is running production equipment to manufacture the
battery modules used on both the Arrival Bus and Arrival Van.
Arrival has installed and is running production equipment to
manufacture composite panels at its Bicester
microfactory.
Arrival is striving to successfully complete certain major
development activities in order to meet its expected production
dates.
Arrival’s employee base includes engineers, scientists, technicians
and staff who are committed to achieving the company’s milestones
to meet its current production and commercialization timelines. For
example, since completing Van certification, the Bicester
Microfactory has begun commissioning the final prototype builds in
a robofacturing tech cell to prepare for the start of production
and delivery of its first saleable vans before the end of the year.
These milestones are critical to Arrival’s development timelines,
though may be subject to unanticipated delays outside of the
Company’s control such as the ability to obtain sufficient capital
to support an increased rate of production.
Capital Requirements
Until Arrival can generate sufficient revenue from product sales,
it is dependent on its ability to raise sufficient capital from
third-party sources. Arrival finances its operations with the
proceeds from the Business Combination, private placements of its
securities, public offerings of equity and/or equity-linked
securities, debt financings, collaborations, and licensing
arrangements.
Commercialization
Arrival plans to initially market its EVs directly to large van
fleet owners through its sales teams in the U.S., U.K. and Europe.
Over time these sales teams will be expanded to cover more regions.
Arrival is also developing an online sales tool for small to medium
enterprises. Arrival’s customer outreach will be supported through
marketing campaigns on Arrival’s website, social media platforms,
interviews, podcasts, press releases and potentially physical
experience centers to build
awareness. Arrival will also work with key partners for additional
coverage. Arrival’s marketing strategy is focused primarily on
using online methods and positive experiences that generate word of
mouth.
Arrival currently has a non binding order from UPS for its Arrival
Van for 10,000 vehicles with an option to purchase an additional
10,000 Arrival Vans, subject to amendment and cancellation by UPS.
The total aggregate value of this order is approximately $1.2
billion (€1.0 billion) in revenue (including the option). Arrival
has also received non-binding orders, letters of interest and /or
memorandums of understanding from several other customers
expressing interest in the Arrival Van and Arrival Bus, with total
orders, letters of interest or memorandums of understanding of
approximately 149,000 vehicles as of August 12, 2022, including the
10,000 vehicle order and 10,000 vehicle option from UPS. Although
all orders, letters of interest and/or memorandums of understanding
are non-binding and subject to cancellation or modification at any
time, Arrival believes they demonstrate demand that will
potentially lead to binding orders once the Company begins
production of the Arrival Van and potential customers are able to
see first-hand the performance and value of these vehicles. In July
2021, Arrival and LeasePlan, one of the world’s leading
“car-as-a-service” companies, entered into an agreement pursuant to
which LeasePlan will be the preferred operational leasing partner
for Arrival Vans. Additionally, Arrival and LeasePlan entered into
a vehicle sales agreement in September 2021, pursuant to which
Arrival agreed to provide LeasePlan with priority to purchase an
initial amount of 3,000 Arrival Vans and LeasePlan agreed on a best
efforts basis to purchase such vans. In July 2021, Arrival
partnered with ATN to produce Arrival Buses in connection with a
$2.0 million grant ATN received from the FTA.
Important Information About Non-IFRS Financial
Measures
In this interim report, Arrival presents certain financial
measures, ratios and adjustments that are not required by, or
presented in accordance with, IFRS or any other generally accepted
accounting principles, including EBITDA and Adjusted
EBITDA.
EBITDA means the net loss before interest income or expense, tax
income or expense, depreciation and amortization.
Adjusted EBITDA means EBITDA adjusted for impairments and
write-offs, share option expenses, listing expense, fair value
adjustments on Warrants, reversal of difference between fair value
and nominal value of loans that got repaid/settled, fair value
movement of embedded derivative, fair value movement on employee
loans, foreign exchange gains/losses and transaction
bonuses.
Arrival’s executive officers believe that Adjusted EBITDA is
important as it provides an additional tool to investors to use in
evaluating ongoing operating results, key insights and metrics as
well as it enables investors to compare Arrival's financial
measures with those of comparable companies, which may present
similar non-GAAP financial measures.
EBITDA and Adjusted EBITDA should not be considered as alternatives
to the consolidated financial results or other indicators of
Arrival’s performance based on IFRS measures. They should not be
considered as alternatives to operating profit/(loss) or
profit/(loss) for the year as an indicator of Arrival’s performance
or profitability. EBITDA and Adjusted EBITDA, as defined by
Arrival, may not be comparable to similarly titled measures as
presented by other companies due to differences in the way they are
calculated. Even though EBITDA and Adjusted EBITDA are used by
management to assess ongoing operating performance and are commonly
used by investors, EBITDA and Adjusted EBITDA have important
limitations as analytical tools, and they should not be considered
in isolation or as substitutes for analysis of Arrival’s results as
reported under IFRS.
Critical Accounting Estimates
Arrival’s financial statements have been prepared in accordance
with IFRS. The preparation of these financial statements requires
Arrival to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
assets and liabilities as of the date of the financial statements,
as well as the reported expenses incurred during the reporting
periods. Arrival’s estimates are based on its historical experience
and on various other factors that Arrival believes are reasonable
under the circumstances, the results of which form the basis for
making judgments
about the carrying value of assets and liabilities that are not
readily apparent from other sources.
Arrival’s significant accounting policies are described in the
notes to its financial statements.
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
(unaudited)
|
|
|
|
|
|
|
|
|
|
in thousands of USD |
Six months ended June 30, |
|
|
2022 |
2021 |
|
(Loss) for the period |
(99,950) |
|
(1,207,256) |
|
|
Interest
expense/ (income), net
|
8,609 |
|
(2,854) |
|
|
Tax expense |
4,152 |
|
7,570 |
|
|
Depreciation and amortization |
18,481 |
|
10,997 |
|
|
EBITDA |
(68,708) |
|
(1,191,543) |
|
|
Impairment losses and write-offs7
|
47,191 |
|
2,406 |
|
|
Share option expense |
9,870 |
|
1,563 |
|
|
Listing expense1
|
— |
|
1,188,335 |
|
|
Change in fair value of warrants2
|
(3,277) |
|
(97,021) |
|
|
Reversal of difference between fair value and nominal value of
loans that got repaid3
|
(295) |
|
(1,742) |
|
|
Fair value movement of embedded derivative5
|
(104,931) |
|
— |
|
|
Fair value movement on employee loans including fair value charge
for the extended employee loans provided as April 8,
2022.4
|
3,537 |
|
|
|
Foreign exchange (gain)/loss, net |
(26,491) |
|
9,630 |
|
|
Transaction bonuses6
|
— |
|
16,062 |
|
|
Adjusted EBITDA |
(143,104) |
|
(72,310) |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
1.During
the prior period ended June 30, 2021, as a result of the conclusion
of the merger with CIIG, Arrival issued shares and warrants to CIIG
shareholders, comprised of the fair value of the Company’s shares
that were issued to CIIG shareholders, and in exchange, the Company
received the identifiable net assets held by CIIG. The excess of
the fair value of the equity instruments issued over the fair value
of the identified net assets received, represents a non-cash
expense in accordance with IFRS 2. This one-time expense as a
result of the transaction, in the amount of USD $1,888.3 million,
is recognized as a share listing expense presented as part of the
operating results within the consolidated statement of profit or
loss. Listing expense also includes USD $19.8 million of other
related transaction expenses.
2.Warrants
are fair valued as of the balance sheet date. The change in value
is recorded in the consolidated statement of profit or
loss.
3.Employee
loans initially recognized at their fair value are amortized over
the period which they are expected to be repaid. Employee loans,
which get repaid/settled at an earlier date than what was initially
anticipated results in gain in the consolidated statement of profit
or loss.
4.The
Group has re-financed some loans given to employees in April 2022.
As per IFRS 9 the the difference between the fair value of the new
loans and the carrying amount has been recognized in the
consolidated statement of profit or loss
5.An
embedded derivative is a component of a hybrid contract that also
includes a non-derivative host. The Company has recognized the
embedded derivative as part of the convertible notes issued in
November 2021 which is fair valued as at balance sheet date for the
six months to June 30,2022. There was no such movement in the prior
period of six months to June 30,2021.
6.Following
the successful merger with CIIG certain executive officers of the
Group received a one time bonus. This is included in administrative
expenses in the consolidated statement of profit or loss in the
prior period of six months to June 30,2021.
7.Impairment
losses and write-offs include impairment for lease locations no
longer utilized by the Group, impairment on assets as a result of
stopping operations in Russia, internally developed intangible
assets impaired as a result of business reorganization and
write-offs of aged batteries cells.
The Q2 2021 USD amounts have been translated based on the average
rate of USD/EUR of 1.20248333 from January 1, 2021 to June 2021.
The Q2 2022 figures are actual EUR amounts. Prior year figures
include immaterial adjustments and reclassifications.
Operating Results
Key Components of Statements of Operations
Basis of Presentation
Currently, Arrival conducts business through one operating segment.
As of the date of this interim report, Arrival is a pre-revenue
company with no commercial operations, and its activities to date
have been conducted in Europe and North America. Arrival’s
historical results are reported in IFRS as issued by the IASB. For
more information on Basis of Presentation, please see note
2.
Revenue
Arrival has not begun commercial operations and currently does not
generate revenue. Once Arrival reaches commercialization and
commences production and sales of its Electric Vehicles (EVs), it
expects that the significant majority of its revenue will be
derived from the direct sales of its commercial electric vans and
buses and thereafter other related products and services.
Production of saleable vans is expected to begin in the second half
of 2022.
Cost of Revenue
As of the date of this interim report, Arrival has not recorded
cost of revenue, as it has not generated revenue. Once Arrival
reaches commercialization and commences production of its EVs, it
expects cost of revenue to include vehicle components and parts,
including batteries, raw materials, direct labor costs, warranty
costs and costs related to the operation of manufacturing
facilities.
Administrative Expenses
Administrative expenses consist of the costs associated with
employment of Arrival’s staff, the costs associated with Arrival’s
properties, and the depreciation of Arrival’s fixed assets,
including depreciation of “right of use” assets in relation to
Arrival’s leased property.
Research and Development Expenses
Research and development expenses consist of the costs associated
with the employment of Arrival’s engineering staff, third-party
engineering consultants and program consumables. Costs associated
with development projects such as vehicle programs, component
programs and software products are capitalized as intangible assets
under construction.
Impairment Expense
Impairment expense relates to the right-of-use assets for leases,
tangible and intangibles assets that are no longer expected to
generate future cash flows. The impairment of assets occurs when
the carrying value exceeds the determined fair value of the
underlying asset.
Listing expense
Listing expense consist of the difference between the fair value of
the shares deemed to have been issued by Arrival and the fair value
of the identifiable net assets of CIIG and warrants transferred and
the actual costs incurred for the listing of Arrival.
Finance Income/(Expense)
Finance income/(expense) consists of the fair value movement of
warrants and convertible notes which the Company has issued to
finance its operations, interest receivable from the loans granted
to employees of the Group, interest on lease liability, impairment
charges recognized for financial assets as well as realized and
unrealized foreign exchange gains that
have been created due to the fluctuation of the exchange rates
between transactions of group entities with a functional currency
other than USD.
Presentation currency
Effective January 1, 2022, Arrival changed the presentation
currency of its IFRS consolidated financial statements of the Group
from Euro to USD. Prior period results have been translated to
reflect this change and can be found in Arrival's separate 6-K
filing on
August 12, 2022 covering
the change in presentational currency to previously issued
financials. For more information please see note 2.
Results of Operations for the Six Months Ended June 30, 2022 and
June 30, 2021
The following table sets forth Arrival’s historical operating
results for the year to date June 30, 2022 and 2021 followed by an
analysis of Arrival’s results of operations during these
periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
|
For the Six Months Ended June 30, |
|
|
|
|
|
|
|
2022 |
|
2021 |
|
Changes |
|
% Changes |
|
Administrative Expenses |
|
(136,436) |
|
|
(79,687) |
|
|
(56,749) |
|
|
71.2 |
% |
|
Research and Development Expenses |
|
(60,260) |
|
|
(23,112) |
|
|
(37,148) |
|
|
160.7 |
% |
|
Impairment Expense |
|
(24,131) |
|
|
(2,306) |
|
|
(21,825) |
|
|
946.4 |
% |
|
Listing expense |
|
— |
|
|
(1,188,335) |
|
|
1,188,335 |
|
|
* |
|
Other Income |
|
2,403 |
|
|
1,964 |
|
|
439 |
|
|
22.4 |
% |
|
Other Expenses |
|
(104) |
|
|
— |
|
|
(104) |
|
|
* |
|
Operating Loss |
|
(218,528) |
|
|
(1,291,476) |
|
|
1,072,948 |
|
|
(83.1) |
% |
|
Finance Income |
|
137,389 |
|
|
106,188 |
|
|
31,201 |
|
|
29.4 |
% |
|
Finance Expense |
|
(14,659) |
|
|
(14,398) |
|
|
(261) |
|
|
1.8 |
% |
|
Net Finance Income |
|
122,730 |
|
|
91,790 |
|
|
30,940 |
|
|
33.7 |
% |
|
Loss Before Tax |
|
(95,798) |
|
|
(1,199,686) |
|
|
1,103,888 |
|
|
(92.0) |
% |
|
Tax expense |
|
(4,152) |
|
|
(7,570) |
|
|
3,418 |
|
|
(45.2) |
% |
|
Loss for the Period |
|
(99,950) |
|
|
(1,207,256) |
|
|
1,107,306 |
|
|
(91.7) |
% |
|
* The percentage increase from 2021 is not included as variance is
not comparable to the prior year |
All
prior year comparatives have been translated to US Dollars due to a
change in presentational currency. See note 2.
Administrative Expenses
Administrative expenses increased $56.7 million, or 71.2%, from
$79.7 million for the period ended June 30, 2021 to $136.4 million
for the period ended June 30, 2022.
The increase was driven by provisions for obsolete inventory (USD
14.9 million) and related purchase commitment penalties (USD 7.3
million) , share based payment expenses related to new programs
(USD 9.1 million) , asset write offs and other expenses related to
our move from our Russia location and increased wage (USD 3.3
million), travel (USD 1.8 million) and consultative spend (USD 18.9
million) as the company readies for start of
production.
Research and Development Expenses
Research expenses increased by $37.1 million, or 160.7%, from $23.1
million for the period ended June 30, 2021 to $60.3 million for the
period ended June 30, 2022. The increase was primarily due to
increased wages and salaries as Arrival expanded its work on our
programs and readies for start of production.
Impairment Expense
Impairment expense increased by $21.8 million, from $2.3 million
for the period ended June 30, 2021 to $24.1 million for the period
ended June 30, 2022. Impairment charges relate to the impairment of
the specific project components of internally developed intangible
assets and right-of-use assets for leases that are no longer
expected to generate future cash flows. For more information on
impairment expense, please see note 5.
Listing Expenses
In March 2021, the Business Combination Agreement (or Merger
Agreement) between CIIG and Arrival came into effect and both
companies were merged with Arrival becoming the listed entity. In
accordance with IFRS, the difference between the fair value of the
shares deemed to have been issued by Arrival and the fair value of
the identifiable net assets of CIIG and warrants transferred have
been recorded as a listing expense.
Net Finance Income /(Expense),
Net Finance Income/(Expense) increased by $30.9 million from net
finance income of $91.8 million for the period ended June 30, 2021
to net finance income of $122.7 million for the period ended June
30, 2022. The change in net finance income is mainly attributable
to the
fair value increase of the embedded derivatives
which had an impact of $104.9 million and gain in foreign exchange
differences of $26.5 million which is partially offset by a
decrease in fair value of warrants of $93.7 million and a decrease
in interest receivable on employee loans of $5.7
million.
Cash Flows
The following table sets forth a summary of Arrival’s operating,
investing and financing cash flows for the six months ended June
30, 2022 and 2021 followed by an analysis of the cash flows during
these periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in thousands of USD |
|
For the Six Months Ended June 30, |
|
|
2022 |
|
2021 |
|
|
|
|
Net cash used in operating activities |
|
(173,354) |
|
|
(121,397) |
|
|
Net cash used in investing activities |
|
(194,282) |
|
|
(128,905) |
|
|
Net cash from financing activities |
|
(16,389) |
|
|
693,438 |
|
|
Net increase/(decrease) in cash and cash equivalents |
|
(384,025) |
|
|
443,136 |
|
Cash Flows from Operating Activities
Arrival’s cash flows used in operating activities to date have been
primarily comprised of costs related to the development of its
products, manufacturing processes, payroll and changes in accounts
payable and other current assets and liabilities.
Net cash used in operating activities was $173.4 million for the
six months ended June 30, 2022 compared to $121.4 million for the
six months ended June 30, 2021. The increase of $52 million was
primarily due to increased outflows on staff and other project
costs as Arrival expanded its research and development activities
and readies for start of production, as well as outflows on
supporting infrastructure such as property costs and prepayments
made for the acquisition of inventory.
Cash Flows from Investing Activities
Arrival’s cash flows used in investing activities to date are
primarily comprised of capitalized development expenditures related
to vehicle development, vehicle components, software and
microfactories. In addition, Arrival purchases tangible fixed
assets (plant and equipment) in support of both research and
development programs.
Net cash used in investing activities was $194.3 million for the
six months ended June 30, 2022, compared to $128.9 million for the
six months ended June 30, 2021. In both periods this primarily
consisted of cash outflows for development program expenditures
(staff and project costs) capitalized as intangible assets under
construction and the acquisition of plant and equipment for the
microfactories under construction.
Cash Flows from Financing Activities
Net cash from financing activities was $(16.4) million for the six
months ended June 30, 2022, compared to 693.4 million for the six
months ended June 30, 2021 which was primarily due to
prior year merger and issuance activities.
EXHIBIT 99.1
FINANCIAL STATEMENTS
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Arrival
Condensed Interim Consolidated Financial Statements
For the period ended June 30, 2022 and years ended December 31
2021 and 2020 (unaudited)
C O N T E N T S
Arrival
Condensed consolidated statement of profit or (loss)
For the six months period ended June 30, 2022 and 2021
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
In thousands of USD |
|
|
2022 |
|
2021 |
|
|
Note |
|
|
|
|
|
Continuing Operations |
|
|
|
|
|
|
Administrative expenses |
|
|
(136,436) |
|
|
(79,687) |
|
|
Research and development expenses |
|
|
(60,260) |
|
|
(23,112) |
|
|
Impairment expense |
6, 7 |
|
(24,131) |
|
|
(2,306) |
|
|
Listing expense |
15 |
|
— |
|
|
(1,188,335) |
|
|
Other income |
|
|
2,403 |
|
|
1,964 |
|
|
Other expenses |
|
|
(104) |
|
|
— |
|
|
Operating loss |
|
|
(218,528) |
|
|
(1,291,476) |
|
|
Finance income |
16 |
|
137,389 |
|
|
106,188 |
|
|
Finance cost |
16 |
|
(14,659) |
|
|
(14,398) |
|
|
Net finance income |
|
|
122,730 |
|
|
91,790 |
|
|
Loss before tax |
|
|
(95,798) |
|
|
(1,199,686) |
|
|
Tax expense |
12 |
|
(4,152) |
|
|
(7,570) |
|
|
Loss for the period |
|
|
(99,950) |
|
|
(1,207,256) |
|
|
Attributable to: |
|
|
|
|
|
|
Owners of the Company |
|
|
(99,950) |
|
|
(1,207,256) |
|
|
Earnings per share |
14 |
|
|
|
|
|
Basic and diluted earnings per share |
|
|
(0.16) |
|
|
(2.20) |
|
Condensed consolidated statement of other comprehensive
(loss)/income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
|
|
Six months ended June 30, |
|
|
|
|
2022 |
|
2021 |
|
Loss for the period |
|
|
(99,950) |
|
|
(1,207,256) |
|
|
Items that may be reclassified subsequently to the consolidated
statement profit or (loss) |
|
|
|
|
|
|
Exchange differences on translating foreign operations |
|
|
(91,322) |
|
|
10,874 |
|
|
Total other comprehensive (loss)/income |
|
|
(91,322) |
|
|
10,874 |
|
|
Total comprehensive loss for the period |
|
|
(191,272) |
|
|
(1,196,382) |
|
|
Attributable to: |
|
|
|
|
|
|
Owners of the Company |
|
|
(191,272) |
|
|
(1,196,382) |
|
The accompanying notes are an integral part of these consolidated
financial statements. All prior year comparatives have been
translated to US Dollars due to a change in presentational
currency. See note 2.
Arrival
Condensed consolidated statement of financial position
As at June 30, 2022, December 31, 2021 and December 31,2020
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
|
|
June 30,
2022 |
|
December 31, 2021 |
|
December 31, 2020 |
|
ASSETS |
|
|
|
|
|
|
|
|
Non-Current Assets |
Note |
|
|
|
|
|
|
|
Property, plant and equipment |
4 |
|
312,856 |
|
|
271,607 |
|
|
138,317 |
|
|
Intangible assets and goodwill |
5 |
|
473,957 |
|
|
414,674 |
|
|
210,723 |
|
|
Deferred tax asset |
12 |
|
1,463 |
|
|
2,171 |
|
|
1,392 |
|
|
Prepayments |
|
|
24,151 |
|
|
23,384 |
|
|
— |
|
|
Trade and other receivables |
6A |
|
33,647 |
|
40,916 |
|
|
13,235 |
|
|
Total Non-Current Assets |
|
|
846,074 |
|
|
752,752 |
|
|
363,667 |
|
|
Current Assets |
|
|
|
|
|
|
|
|
Inventory |
7 |
|
30,692 |
|
|
22,977 |
|
|
14,504 |
|
|
Loans to executives |
|
|
— |
|
|
— |
|
|
5,207 |
|
|
Trade and other receivables |
6B |
|
61,468 |
|
|
45,312 |
|
|
63,104 |
|
|
Prepayments |
|
|
52,090 |
|
|
48,118 |
|
|
23,262 |
|
|
Cash and cash equivalents |
|
|
512,615 |
|
|
900,606 |
|
|
82,314 |
|
|
Total Current Assets |
|
|
656,865 |
|
|
1,017,013 |
|
|
188,391 |
|
|
TOTAL ASSETS |
|
|
1,502,939 |
|
|
1,769,765 |
|
|
552,058 |
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
|
|
Share capital |
8 |
|
70,317 |
|
|
74,046 |
|
|
274,126 |
|
|
Share premium |
|
|
5,844,397 |
|
|
5,844,397 |
|
|
331,718 |
|
|
Other reserves |
|
|
(3,173,899) |
|
|
(3,095,804) |
|
|
79,888 |
|
|
Accumulated deficit |
|
|
(1,697,011) |
|
|
(1,597,061) |
|
|
(292,680) |
|
|
Total Equity |
|
|
1,043,804 |
|
|
1,225,578 |
|
|
393,052 |
|
|
Non-Current Liabilities |
|
|
|
|
|
|
|
|
Deferred tax liability |
12 |
|
7,077 |
|
|
7,465 |
|
|
3,375 |
|
|
Warrants |
10 |
|
334 |
|
|
3,611 |
|
|
— |
|
|
Loans and borrowings |
9 |
|
364,547 |
|
|
451,525 |
|
|
107,870 |
|
|
Total Non-Current Liabilities |
|
|
371,958 |
|
|
462,601 |
|
|
111,245 |
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Current tax liabilities |
12 |
|
2,619 |
|
|
358 |
|
|
615 |
|
|
Loans and borrowings |
9 |
|
17,221 |
|
|
14,258 |
|
|
5,221 |
|
|
Trade and other payables |
13 |
|
67,337 |
|
|
66,970 |
|
|
41,925 |
|
|
Total Current Liabilities |
|
|
87,177 |
|
|
81,586 |
|
|
47,761 |
|
|
TOTAL EQUITY AND LIABILITIES |
|
|
1,502,939 |
|
|
1,769,765 |
|
|
552,058 |
|
The accompanying notes are an integral part of these consolidated
financial statements. All prior year comparatives have been
translated to US Dollars due to a change in presentational
currency. See note 2.
Arrival
Condensed consolidated statement of changes in equity
For the period ended June 30, 2022 and 2021
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
|
|
Share
capital |
|
Share
premium |
|
Accumulated
deficit |
|
Other
reserves* |
|
Total
equity |
|
Balance at at January 1, 2022 |
|
|
74,046 |
|
|
5,844,397 |
|
|
(1,597,061) |
|
|
(3,095,804) |
|
|
1,225,578 |
|
|
(Loss) for the period |
|
|
— |
|
|
— |
|
|
(99,950) |
|
|
— |
|
|
(99,950) |
|
|
Impact from the change of the currency of the shares from EUR to
USD |
|
|
(3,729) |
|
|
— |
|
|
— |
|
|
3,729 |
|
|
— |
|
|
Other comprehensive income |
|
|
— |
|
|
— |
|
|
— |
|
|
(95,051) |
|
|
(95,051) |
|
|
|
|
|
70,317 |
|
|
5,844,397 |
|
|
(1,697,011) |
|
|
(3,187,126) |
|
|
1,030,577 |
|
|
Transactions with shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
Equity-settled share-based payments |
|
|
— |
|
|
— |
|
|
— |
|
|
13,761 |
|
|
13,761 |
|
|
RSP repurchases |
|
|
— |
|
|
— |
|
|
— |
|
|
(554) |
|
|
(554) |
|
|
SOP exercised |
|
|
— |
|
|
— |
|
|
— |
|
|
20 |
|
|
20 |
|
|
Balance at June 30, 2022 |
|
|
70,317 |
|
|
5,844,397 |
|
|
(1,697,011) |
|
|
(3,173,899) |
|
|
1,043,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2021 |
|
|
274,126 |
|
|
331,718 |
|
|
(292,680) |
|
|
79,888 |
|
|
393,052 |
|
|
Loss for the period |
|
|
— |
|
|
— |
|
|
(1,207,256) |
|
|
— |
|
|
(1,207,256) |
|
|
Other comprehensive income |
|
|
— |
|
|
— |
|
|
— |
|
|
10,874 |
|
|
10,874 |
|
|
|
|
|
274,126 |
|
|
331,718 |
|
|
(1,499,936) |
|
|
90,762 |
|
|
(803,330) |
|
|
Transactions with shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of share capital as consideration for the merger with
CIIG |
|
|
8,543 |
|
|
711,625 |
|
|
— |
|
|
870,922 |
|
|
1,591,090 |
|
|
Adjustment of shareholding transferred from Arrival Luxembourg S.à
r.l. to Arrival |
|
|
(211,064) |
|
|
4,602,685 |
|
|
— |
|
|
(4,391,621) |
|
|
— |
|
|
Initial share capital of Arrival |
|
|
35 |
|
|
— |
|
|
— |
|
|
— |
|
|
35 |
|
|
Reduction of capital of Arrival |
|
|
(35) |
|
|
— |
|
|
— |
|
|
35 |
|
|
— |
|
|
Conversion of warrants |
|
|
954 |
|
|
67,843 |
|
|
— |
|
|
67,521 |
|
|
136,318 |
|
|
Acquisition of own shares |
|
|
— |
|
|
— |
|
|
— |
|
|
(178) |
|
|
(178) |
|
|
Equity settled share base payments |
|
|
— |
|
|
— |
|
|
— |
|
|
4,449 |
|
|
4,449 |
|
|
Balance at June 30, 2021 |
|
|
72,559 |
|
|
5,713,871 |
|
|
(1,499,936) |
|
|
(3,358,110) |
|
|
928,384 |
|
*Other
reserves comprise of foreign currency translation, share base
payments reserves relating to Arrival Share Option Plan 2020
(“SOP”), Restricted Share Plan (“RSP”) and Restricted Stock Unit
(“RSU”) and equity reserves which are not
distributable.
The accompanying notes are an integral part of these consolidated
financial statements. All prior year comparatives have been
translated to US Dollars due to a change in presentational
currency. See note 2.
Arrival
Condensed consolidated statement of cash flows
For the six months period ended June 30, 2022, and 2021
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, |
|
In thousands of USD |
Note |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
Cash flows used in operating activities |
|
|
|
|
|
|
Loss for the period |
|
|
(99,950) |
|
|
(1,207,256) |
|
Adjustments for: |
|
|
|
|
|
|
•Depreciation/Amortization |
4, 5 |
|
18,481 |
|
|
10,997 |
|
|
•Impairment losses and write
-offs |
4, 5, 6, 7 |
|
47,191 |
|
|
2,406 |
|
|
•Net unrealized foreign exchange
differences |
|
|
(19,882) |
|
|
5,150 |
|
|
•Net finance expense |
16 |
|
8,609 |
|
|
(2,854) |
|
|
•Change in fair value of
warrants |
10 |
|
(3,277) |
|
|
(97,021) |
|
|
•Listing expense |
15 |
|
— |
|
|
1,168,515 |
|
|
•Change in fair value of embedded
derivative |
|
|
(104,931) |
|
|
— |
|
|
•Fair value movement on employee loans
including fair value charge for the new employee loans issued on
April 8, 2022 |
|
|
3,537 |
|
|
— |
|
|
•Reversal of difference between fair value
and nominal value of loans repaid |
|
|
(295) |
|
|
(1,742) |
|
|
•Employee share scheme |
17 |
|
9,870 |
|
|
1,563 |
|
|
•Profit on disposal of fixed
assets |
|
|
(109) |
|
|
(1,043) |
|
|
• Profit from the modification of
lease |
|
|
(1,762) |
|
|
— |
|
|
• Deferred taxes |
|
|
1,724 |
|
|
5,072 |
|
|
• Income Tax |
|
|
2,428 |
|
|
107 |
|
|
Cash flows used in operations before working capital
changes |
|
|
(138,366) |
|
|
(116,106) |
|
|
(Increase) in trade and other receivables |
|
|
(26,167) |
|
|
(36,076) |
|
|
Increase in trade and other payables |
|
|
21,796 |
|
|
24,773 |
|
|
(Increase) of inventory |
|
|
(28,379) |
|
|
(1,966) |
|
|
Cash flows used in operations |
|
|
(171,116) |
|
|
(129,375) |
|
|
Income tax and other taxes |
|
|
(2,878) |
|
|
7,923 |
|
|
Interest received |
|
|
640 |
|
|
55 |
|
|
Net cash used in operating activities |
|
|
(173,354) |
|
|
(121,397) |
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Acquisition of intangible assets |
5 |
|
(109,005) |
|
|
(90,666) |
|
|
Acquisition of property, plant and equipment |
4 |
|
(44,045) |
|
|
(23,208) |
|
|
Grants received |
|
|
— |
|
|
175 |
|
|
Prepayments for tangible and intangible assets |
|
|
(41,301) |
|
|
(15,197) |
|
|
Cash received on acquisition of entities, net of consideration
paid |
|
|
— |
|
|
(9) |
|
|
Proceeds from the sale of fixed assets |
|
|
69 |
|
|
— |
|
|
Net cash used in investing activities |
|
|
(194,282) |
|
|
(128,905) |
|
Arrival
Condensed consolidated statement of cash flows
(continued)
For the six months ended June 30, 2022, and 2021
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended June 30, |
|
|
In thousands of USD |
Note |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Cash paid for redemption of public warrants |
|
|
— |
|
|
69,116 |
|
|
|
Proceed from the issuance of new shares |
|
|
— |
|
|
631,297 |
|
|
|
Proceeds from exercise of employee share option plan |
|
|
20 |
|
|
— |
|
|
|
Repayment of borrowings |
|
|
— |
|
|
— |
|
|
|
Repayment of interest |
|
|
(5,888) |
|
|
(53) |
|
|
|
Repayment of lease liabilities |
|
|
(10,521) |
|
|
(6,922) |
|
|
|
Net cash from financing activities |
|
|
(16,389) |
|
|
693,438 |
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
|
(384,025) |
|
|
443,136 |
|
|
|
Cash and cash equivalents at January 1 |
|
|
900,606 |
|
|
82,314 |
|
|
|
Effects of movements in exchange rates on cash held |
|
|
(3,966) |
|
|
3,442 |
|
|
|
Cash and cash equivalents at June 30 |
|
|
512,615 |
|
|
528,892 |
|
|
The accompanying notes are an integral part of these consolidated
financial statements. All prior year comparatives have been
translated to US Dollars due to a change in presentational
currency. See note 2.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
Note 1. INCORPORATION AND PRINCIPAL ACTIVITIES
General
Arrival (the “Company” or the “Group” if together with its
subsidiaries, previously named Arrival Group S.A.) was incorporated
in Luxembourg on October 27, 2020 as a Société Anonyme for an
unlimited period. The Company has its registered address at 60A,
rue des Bruyères, L-1274 Howald, Luxembourg and is registered at
the Luxembourg Commercial Register under number R.C.S Luxembourg n°
B248209.
These unaudited condensed consolidated interim financial statements
as at and for the six months ended June 30, 2022, comprise the
Company and its subsidiaries (together referred to as the
"Group).
The Group’s principal activity is the research & development
(“R&D”) and design of electric commercial vehicles, electric
vehicle components, robotic manufacturing processes for electric
vehicles and associated software. The Group’s main operations are
in the United Kingdom, United States and Europe.
Merger in the prior period
On November 18, 2020 the Company entered into a business
combination agreement (Merger agreement) with CIIG Merger Corp.
(“CIIG”) for the transfer of the shareholding in CIIG to
Arrival.
In line with the terms of the arrangement, on conclusion of the
transaction, on March 24, 2021, the Shareholders of CIIG exchanged
their shareholding in CIIG for new shares issued in Arrival where
one share in CIIG would be exchanged for one share in Arrival. As a
result of this transaction, all the shareholding in CIIG is
transferred to Arrival and CIIG is merged with Arrival, with
Arrival being the resultant entity listed on NASDAQ. Arrival trades
under ticker symbol “ARVL”.
The transaction was accounted for as a reverse merger in accordance
with the International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board (“IASB”).
Under the reverse merger method of accounting, Arrival is treated
as the “acquirer” company.
Operations in Russia
Due to geopolitical considerations and the uncertain nature,
magnitude and duration of Russia’s war in Ukraine and actions taken
by Western and other states and multinational organizations in
response thereto, Arrival has taken the decision to close our
Russia location. In this process the company has expended time and
resources in relocating employees and data from Russia to other
jurisdictions. USD 5,505,697 in costs have been incurred related to
this move, the majority of which (approximately USD 4,563,420)
relate to provisions of property, plant and equipment, inventory
and other assets that can not be moved from Russia due to country
restrictions. The remaining costs relate to relocation of
employees. There are no remaining material costs to be incurred
relating to this move.
2. BASIS OF PREPARATION
These interim financial statements for the six months ended June
30, 2022 have been prepared in accordance with IAS 34 Interim
Financial Reporting, and should be read in conjunction with the
Group’s last annual consolidated financial statements as at and for
the year ended December 31 2021 (‘last annual financial
statements’). They do not include all of the information required
for a complete set of financial statements prepared in accordance
with IFRS Standards. However,
selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the
changes in the Group’s financial position and performance since the
last annual financial statements. Numbers are presented in whole
dollars (USD) unless otherwise stated, following the change in
presentational currency from Euros to US Dollars with effect from
January 1, 2022 as noted in more detail below. Dollar values in
tables are in USD thousands.
These unaudited interim financial statements were authorized for
issue by the Board of Directors (the “Board”) on August 12, 2022
and have been prepared on a going concern basis.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
2. BASIS OF PREPARATION (continued)
Going Concern
The condensed interim consolidated financial statements (‘financial
Statements’) have been prepared on a going concern basis. In
determining the appropriate basis of preparation for the period
ended June 30, 2022, the Board is required to consider whether the
Group and Company will be able to operate within the level of
available cash and liquidity for the
foreseeable future, being a period of at least 12 months following
the approval of the financial statements.
Arrival is a Company with an extremely limited operating history,
it has incurred losses in the operation of its business related to
research and development activities in respect of Electric Vehicles
(EV) since its inception and has generated no revenues to date. As
Arrival attempts to transition from research and development
activities to commercial production and sales, it is difficult to
forecast Arrival’s future cash flows. The estimated costs and
timelines that Arrival has developed to reach full scale commercial
production are subject to inherent risks and
uncertainties.
In the reporting period, there have been significant challenges in
the external and macroeconomic environment in which Arrival
operates such as global supply chain issues, the ongoing pandemic,
geopolitical tensions and rising costs. The Company has also seen
an increase in its estimated build costs impacting its overall
short term profitability targets.
In July 2022, in response to these conditions, the Company
announced restructuring plans, including redundancies and other
cost cutting measures, that required a realignment of the
organization to focus on production of the Large Van product and
Bicester microfactory. The Company has temporarily paused the Bus
program, put its Car program on hold and delayed the build out of
the Charlotte microfactory until further funding is secured which
is currently anticipated to enable Charlotte to re-start during
2023.
Arrival continues to see a great deal of interest in its products,
supported by continuing increases in Letters of Interest but as yet
does not have committed orders for its vehicles prior to production
commencing.
Accordingly, the Company has refreshed its near term and long term
business plans, updating planning assumptions for the latest
understanding of the cost of completing research and development
activities, working capital, capital expenditure, operating
expenditure, average selling price, bills of materials and
revenues. There is however uncertainty as to the achievability and
timing of the business plan including the planned cost cutting
measures.
Additionally, the Company is establishing an At the Market program
(ATM) funding which allows the sale of up to $300 million of equity
into the market at the time of the Company’s choosing, subject to a
percentage of the average daily trading volumes. However, as this
funding is just being established there can be no certainty as to
the actual funds the Company will raise and the timing thereof. If
adequate funding is not secured as and when needed then the Company
will need to further defer the Charlotte Microfactory build and Bus
program as well as undertake additional steps to reduce costs.
There is uncertainty as to the ability of the Company to secure
such funding, the timing of doing so and the ability to take
appropriate mitigating steps
Arrival had $ 512,614,742 cash and cash equivalents at the end of
June 30, 2022. The Board has considered the Group’s cash flow
forecasts for the period to August 2023 being the period assessed
for going concern purposes together with a severe but plausible
downside scenario through to December 2023 reflecting the Group’s
early stage of development, production, there being delays to or no
funding secured and other uncertainties, as noted above. It has
determined that while the company has sufficient cash to meet its
immediate needs for the assessed twelve month period and execute a
reduced near term business plan, including starting production in
2022 for Van, the Board will need to secure additional capital to
execute its full business plan, including the move to hard tooling,
the build out of the Charlotte Microfactory, restart of the Bus
program and in the longer-term the deployment of additional
microfactories and vehicle platforms. Arrival cannot be certain
that additional funds will be available to it on favorable terms
when required, or at all.
There can be no assurance that Arrival’s estimates related to the
costs and timing necessary to complete design and engineering of
its Electric Vehicles will prove accurate or that its plans to
transition from soft to hard tooling, which is a
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
2. BASIS OF PREPARATION (continued)
key part of the Company’s ability to manage the vehicle build costs
to produce at profitable levels, will be achieved in the timelines
proposed, and that the required funding to do so will be secured.
The tooling required within Arrival’s microfactories may also be
more expensive to produce than predicted, or have a shorter
lifespan, resulting in additional replacement and maintenance
costs, which could have an impact on Arrival’s results of
operations and financial condition. Similarly, Arrival may
experience higher raw material waste in the composite process than
it expects, resulting in higher operating costs and hampering its
ability to be profitable.
Notwithstanding the uncertainties noted above, the Board is
satisfied that the Group has sufficient funds to continue to be
able to realize its assets and discharge its liabilities as they
fall due for a period of at least 12 months from the date of
approval of the financial statements and therefore it remains
appropriate that the financial statements have been prepared on a
going concern basis. However, these matters indicate the existence
of a material uncertainty related to events or conditions that may
cast significant doubt on the group’s and the company’s ability to
continue as a going concern and, therefore, that the group and
company may be unable to realize their assets and discharge their
liabilities in the normal course of business. The financial
statements do not include any adjustments that would result from
the basis of preparation being inappropriate.
Incorporation and prior period merger
Arrival was incorporated on October 27, 2020 and had no material
operations. As a result of the reorganization, it become the parent
company of Arrival Luxembourg S.à r.l., the operating company as of
March 24, 2021. The transaction with CIIG was accounted for as a
reverse merger. In accordance with IFRS 2 guidance on reverse
mergers, the unaudited condensed consolidated interim financial
statements of the Group presented as of June 30, 2022 are a
continuation of those of Arrival Luxembourg S.à r.l. consolidated
financial statements which were prepared in accordance with the
IFRS as issued by IASB for the immediately preceding financial year
ended December 31, 2021 and activity prior to the transaction date
is presented, being that of Arrival Luxembourg S.à r.l.. The net
assets (predominantly cash & cash equivalents) acquired from
CIIG at the transaction date are included only from the date of
merger.
Presentation currency
On January 1, 2022 the Group changed its presentational currency
from Euro to US dollars in order to provide users of our financial
statements with greater transparency of company performance. Given
that a significant amount of group transactions are in USD we
believe this is more reflective of the economic environment across
the group.
In accordance with IAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors, this change in presentational
currency was applied retrospectively and accordingly, prior year
financial statements have been restated.
Financial information included in the consolidated financial
statements for years ended 31 December 2021 and 2020 have been
restated in US dollars as follows:
•assets
and liabilities in non-US denominated currencies were translated
into US dollars at the rate of exchange ruling at the relevant
balance sheet date;
•non-US
dollar income statements and cash flows were translated into US
dollars at average rates of exchange for the relevant
period;
•share
capital, share premium and all other equity items were translated
at the historical rates prevailing on the date of each relevant
transaction;
•non-US
dollar capital transactions including the listing expenses were
translated into US dollars at the historical rates prevailing on
the date of each relevant transaction; and
•the
cumulative foreign exchange translation reserve has been restated
on the basis that the Group has reported in US dollars since
incorporation.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
2. BASIS OF PREPARATION (continued)
In preparing these financial statements, the exchange rates used in
respect of the Euro (€) are:
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing Rate June 30 |
Closing rate December 31 |
|
Average rate for the period ended June 30 |
|
Average rate for the year ended December 31 |
|
ISO Code |
|
2022 |
2021 |
2021 |
|
2020 |
|
2022 |
2021 |
|
2021 |
|
2020 |
|
EUR |
|
1.047414 |
1.092998 |
1.131610 |
|
1.227100 |
|
1.092998 |
1.202483 |
|
1.183269 |
|
1.147000 |
On
June 3, 2022, as part of the Extraordinary General Meetings
(‘EGM’) held on that day, the shareholders approved the change of
currency of the issued share capital of Arrival from Euro (EUR) to
United States dollars (USD) by applying the EUR / USD exchange rate
published on the website of the European Central Bank on June 2,
2022.
The rate used for the conversion is 1.0692.
Significant Accounting Policies
The accounting policies applied in these unaudited condensed
consolidated interim financial statements are the same as those
applied in the Consolidated financial statements of Arrival as at
and for the year ended December 31, 2021, with the exception of the
adoption of the new standards that have become effective as from
January 1, 2022. The new standards and the amendments to them that
become effective as of January 1, 2022, did not have a material
impact on Arrival's financials.
3. USE OF JUDGEMENTS AND ESTIMATES
In preparing these unaudited condensed consolidated interim
financial statements, management has made judgements and estimates
that affect the application of accounting policies and the reported
amounts of assets and liabilities. Actual results may differ from
these estimates.
The significant judgements made by management in applying the
Group’s accounting policies and key sources of estimation
uncertainty were the same as those described in the last annual
consolidated financial statements for the year ended December 31,
2021 for Arrival Luxembourg S.à r.l. except for:
Going Concern
The Company has refreshed its near term and long term business
plans, updating planning assumptions for the latest understanding
of the cost of completing research and development activities,
working capital, capital expenditure, operating expenditure,
average selling price, bills of materials and
revenues.
In assessing going concern, the The Board has considered the
Group’s cash flow forecasts for the period to August 2023 being the
period assessed for going concern purposes together with a severe
but plausible downside scenario through to December 2023 reflecting
the Group’s early stage of development, production, there being
delays to or no funding secured and other uncertainties, as noted
above. It has determined that while the company has sufficient cash
to meet its immediate needs for the assessed twelve month period
and execute a reduced near term business plan, including starting
production in 2022 for Van, the Board will need to secure
additional capital to execute its full business plan, including the
move to hard tooling, the full build out of the Charlotte
Microfactory, restart of the Bus program and in the longer-term the
deployment of additional microfactories and vehicle platforms. For
more information see note 2.
(i) Impairment Assessment
Arrival performs an annual impairment test for its assets or when
there is an indication of impairment at the reporting date. The
Group performs a quarterly assessment of all impairment indicators
for all assets within the scope of IAS 36.
Right of Use Assets
For the six months period ended June 30, 2022, it was identified
that the right of use assets of three of our leases needed to be
impaired. Further information on the impairment of the leases is
included in note 4.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
as of and for the three and six months ended June 30, 2022,
2021 and 2020 (unaudited)
3.
USE OF JUDGEMENTS AND ESTIMATES (continued)
Intangible Assets and Goodwill
The group also performs a quarterly review of all projects
classified as internally developed intangible assets in our
Consolidated statement of financial position. Under the
requirements of IAS 38, an entity is required to recognize an
intangible asset if specified criteria are met.
With the Company's recently announced proposed reorganization of
its business in response to the challenging economic environment
and as it focuses on its next major milestone (starting production
of the Arrival Van in Q3 2022), certain development projects
elements have been temporarily paused in order to focus efforts on
the vehicle launch for Vans or pending further funding. While the
company does intend to complete these projects over time, this
pause, as per IAS 36, may indicate that such assets will be
assessed on an individual basis and should be assessed separately
for impairment rather than on a CGU level. As a result of this,
Arrival has considered such projects within the CGU to identify any
impacted by the revised business plan and assessed for impairment
and recorded an impairment of USD 8,938,226 as of June 30, 2022
related to these assets. For further information please see note
5.
Cash Generating Unit (CGU) Assets
Arrival performs an annual impairment test for its CGU assets or
when there is an indication of impairment at the reporting date.
During the quarter, the share price reduction of Arrival led to a
corresponding decrease in the company's market capitalization and
this was deemed by Management to be an indication of impairment. In
accordance with IFRS 13 management used a valuation technique based
on the quoted market price for the Company’s equity shares to
determine best estimate of the fair value less cost to disposal of
the Auto CGU. This assessment was performed considering the level 1
input of stock price and market capitalization compared to total
CGU assets. As at June 30, 2022 Auto CGU consisted of intangible
assets of $473,957,000 and tangible assets of $312,856,000. The
market capitalization as at June 30, 2022 was $1,008,415,884.
Adjustments were made for cash and debt to provide a comparable
analysis, considering corporate assets or liabilities that are not
related to the CGU. Based on this evaluation no impairment was
considered necessary.
Financial Assets
IFRS 9 requires that a valuation allowance for expected credit
losses (“expected loss model”) is recognized for all financial
assets measured at amortized cost or at fair value through other
comprehensive income. Arrival considers a wide range of information
when assessing credit risk and measuring expected credit losses,
including past events and current conditions, but also reasonable
and supportable forecasts that affect the expected collectability
of the future cash flows of the instrument. Based on the
instruments expected credit quality, it must be differentiated
between the following three conditions.
Stage 1
financial assets are those for which credit quality has not
deteriorated significantly since initial recognition or that have a
low credit risk.
Stage 2
financial assets are those that have deteriorated significantly in
credit quality since initial recognition and whose credit risk is
not low.
Stage 3
covers financial assets for which objective evidence of impairment
are present at the reporting date.
For all assets within the first category (Stage 1) “12-month
expected credit losses” are recognized. For all assets within the
second category we recognize “lifetime expected credit losses”.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected
life of the financial instrument.
Instruments within the scope of these requirements include loans
that were granted to some employees in connection with Arrival`s
Restricted Share Plan (RSP). For estimating the expected credit
loss for such loans, we have obtained the help of a professional
third-party valuation expert for valuation inputs and determining
the fair value and the expected credit losses for the RSP loans. As
of June 30, 2022, the RSP employee loans were subject to additional
expected credit losses charged to finance cost after management
adopted revised estimates about expected repayment dates from
employees.
For further information, please see note 6.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
as of and for the three and six months ended June 30, 2022,
2021 and 2020 (unaudited)
3.
USE OF JUDGEMENTS AND ESTIMATES (continued)
(ii) Share-based payments
The Company had certain share-based payment plans in effect at the
beginning of the year, and during the first half of 2022, the
Company has introduced two more share-based payment plans; an RSU
agreement and a Long-Term Incentive Plan (LTIP). In determining the
periodic compensation expense for these share-based payment
programs, certain estimates have to be made. For further
information about the newly introduced share-based payment plans,
the underlying assumptions used to determine the periodic
compensation expense, and the effect of the change in estimates,
please see note 17.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
as of and for the three and six months ended June 30, 2022,
2021 and 2020 (unaudited)
4. PROPERTY, PLANT AND EQUIPMENT
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of dollars |
Land and
Buildings |
|
Plant and
Equipment |
|
Furniture and
fittings |
|
Motor
Vehicles |
|
Assets under
Construction |
|
TOTAL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
225,252 |
|
66,630 |
|
8,170 |
|
1,108 |
|
90,708 |
|
391,868 |
|
Depreciation |
(27,446) |
|
(25,001) |
|
(3,566) |
|
(659) |
|
— |
|
|
(56,672) |
|
Impairment |
(15,843) |
|
(5,537) |
|
(89) |
|
(162) |
|
(709) |
|
(22,340) |
|
Net book value at June 30, 2022 |
181,963 |
|
36,092 |
|
4,515 |
|
287 |
|
89,999 |
|
312,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
207,378 |
|
|
52,822 |
|
|
8,598 |
|
|
1,146 |
|
|
55,128 |
|
|
325,072 |
|
Depreciation |
(22,013) |
|
|
(20,728) |
|
|
(3,183) |
|
|
(595) |
|
|
— |
|
|
(46,519) |
|
Impairment |
(3,543) |
|
|
(2,733) |
|
|
(210) |
|
|
(219) |
|
|
(241) |
|
|
(6,946) |
|
Net book value at December 31, 2021 |
181,822 |
|
|
29,361 |
|
|
5,205 |
|
|
332 |
|
|
54,887 |
|
|
271,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
114,999 |
|
|
31,848 |
|
|
6,984 |
|
|
738 |
|
|
6,310 |
|
|
160,879 |
|
Depreciation |
(7,912) |
|
|
(12,636) |
|
|
(1,713) |
|
|
(272) |
|
|
— |
|
|
(22,533) |
|
Impairment |
— |
|
|
(29) |
|
|
— |
|
|
— |
|
|
— |
|
|
(29) |
|
Net book value at December 31, 2020 |
107,087 |
|
|
19,183 |
|
|
5,271 |
|
|
466 |
|
|
6,310 |
|
|
138,317 |
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
During the period under review, Management has decided to impair
certain leases in Russia, the U.S. and in Spain as the Group plans
to no longer utilize these lease locations. The total impairment of
these leases amounted to
USD 13,035,632. In addition, as the Group plans to stop its
operations in Russia, an impairment of USD 2,862,462 has been
recognized relating to plant and equipment that the Group has in
Russia. In addition there was a reversal of impairment for an
amount of USD 1,093,152 as assets that have been fully impaired in
2021 relating to Charging CGU, have been move during the period to
our new office in Georgia and have been put into use.
During the first half of 2022 the Company entered into new lease
agreements in Georgia, England, the U.S., and China. Those
additional leases resulted in a corresponding increase of the
right-of-use asset by USD 41,659,841 which is reflected in the
table above within land and buildings. The foreign exchange impact
on leases was a decrease and amounted to USD 15,321,963.
Furthermore, the Group has cancelled several leases which resulted
in a decrease of the right-of use of asset for an amount of USD
13,996,489.
Additions during the 6 month period ended June 30, 2022, for plant
and equipment include acquisition for USD 12,910,000 and
reclassification from assets under construction of USD 3,680,752.
The total foreign exchange difference for plant and equipment
decrease the total amount by USD 3,309,561
During the 6 months period ended June 30, 2022, the Group the
additions to the assets under construction amounted to USD
47,350,742. An amount of USD 28,268,000 relates to addition to the
plant, machinery and tooling classified under this category as well
as leasehold improvements under construction of USD 14,402,000.
Additions to the assets under construction include capitalized
borrowing costs of an amount USD 3,680,752. Assets that have been
put into use which were classified under assets under construction
have been reclassified to the appropriate category. More
specifically, USD 3,149,189 has been reclassified to plant and
equipment and USD 3,615,467 to land and buildings. Foreign exchange
differences for the 6 months period ended June 30, 2022 were USD
4,888,441.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
5. INTANGIBLE ASSETS AND GOODWILL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
Goodwill |
|
Assets under
construction |
|
Patent, trademarks
and other rights |
|
Software |
|
TOTAL |
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
30 |
|
|
522,801 |
|
|
510 |
|
|
24,600 |
|
|
547,941 |
|
|
Amortization |
— |
|
|
— |
|
|
(162) |
|
|
(6,600) |
|
|
(6,762) |
|
|
Impairment |
— |
|
|
(66,936) |
|
|
(286) |
|
|
— |
|
|
(67,222) |
|
|
Net book value at June 30, 2022 |
30 |
|
455,865 |
|
62 |
|
18,000 |
|
473,957 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
32 |
|
|
473,841 |
|
|
568 |
|
|
10,841 |
|
|
485,282 |
|
|
Amortization |
— |
|
|
— |
|
|
(169) |
|
|
(4,464) |
|
|
(4,633) |
|
|
Impairment |
(2) |
|
|
(65,648) |
|
|
(325) |
|
|
— |
|
|
(65,975) |
|
|
Net book value at December 31, 2021 |
30 |
|
|
408,193 |
|
|
74 |
|
|
6,377 |
|
|
414,674 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
35 |
|
|
256,200 |
|
|
573 |
|
|
5,575 |
|
|
262,383 |
|
|
Amortization |
— |
|
|
— |
|
|
(102) |
|
|
(2,498) |
|
|
(2,600) |
|
|
Impairment |
(2) |
|
|
(49,058) |
|
|
— |
|
|
— |
|
|
(49,060) |
|
|
Net book value at December 31, 2020 |
33 |
|
|
207,142 |
|
|
471 |
|
|
3,077 |
|
|
210,723 |
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Assets under construction include all costs of projects that are in
development phase. The projects under development relate to
electric vehicles, electric vehicle components and software. Assets
under construction include equipment, tooling and parts that have
been acquired during the period and will be used for the
development of Arrival's projects. The amount of additions to
Assets under construction during the period amounted to USD
88,338,757 (2021: USD 151,764,964) and are net of grants and
research and development tax incentives of USD 8,301,721 (2021: USD
16,602,818). Additions to the assets under construction includes
capitalized borrowing cost for an amount of USD
7,583,368.
With the company's recently announced proposed reorganization of
its business in response to the challenging economic environment as
it focuses on its next major milestone – starting production of the
Arrival Van in Q3 2022, certain development projects elements
within our internally developed intangible assets have been
temporarily paused in order to focus efforts on the vehicle launch
for Vans or pending further funding. While the company does intend
to complete these projects over time, this pause, as per IAS 36,
may indicate that such assets should be assessed separately for
impairment rather than on a CGU level. Arrival has considered such
projects within the CGU to identify any impacted by the revised
business plan and assessed for impairment. As a result, the Company
has recorded an impairment of USD 8,938,226 as of June 30,
2022. The impairment charge relates to the initial development cost
of the Cars project which remains in the Group’s longer term
business plans to develop further but for which funding will be
needed to progress and having considered the criteria for
capitalization of initial development costs under IAS 38 and the
likely timelines to secure funding the Company has determined to
impair the associated assets in full, there being no future cash
flows that can be reasonably attributed to these assets as at June
30, 2022.
Impairments for assets under construction have increase during the
period by USD 9,086,718 million due to impairments recognized
during the period (see note above). This increase in the impairment
account was net-off by the change of foreign exchange differences
which amounted to USD 7,799,066 million.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
6. TRADE AND OTHER RECEIVABLES
A.Non-Current
trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of dollars |
June 30, 2022 |
31 December,
2021 |
December 31, 2020 |
|
Loans receivable |
17,801 |
|
21,613 |
|
2,259 |
|
|
Call deposit |
4,457 |
|
4,584 |
|
1,984 |
|
|
Cash Guarantees and deposits |
11,344 |
|
14,663 |
|
8,992 |
|
|
Other |
45 |
|
56 |
|
— |
|
|
Total |
33,647 |
|
40,916 |
|
13,235 |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Non - current trade and other receivables are composed of financial
assets classified at amortized cost. The Group classifies its
financial asset at amortized cost if both of the following criteria
are met:
•The
assets are held within a business model whose objective is to
collect the contractual cash flows and
•The
contractual terms give rise to cash flows that are solely the
payments of principal and interest
(i) Loans receivable
On September 30, 2021, the Group signed new loan agreements in
order to refinance RSP loans that were expiring in October 2021.
Due to the refinancing, IFRS 9 required de-recognition of the
carrying amounts of the loans re-financed and recognition of the
new loans granted. Certain Loans were re-financed on April 8, 2022,
resulting in de-recognition of the old loans and recognition of the
new loans granted.
As of December 31, 2021, management decided to extend the terms of
the loans maturing in October 2022 to October 10, 2027 and was then
approved by the Board of Directors on April 8, 2022. Accordingly,
management has reassessed the expected redemption date for all
loans and based on the updated redemption dates the BSMOPM yields a
fair value of the loans maturing in October 2027 of USD 20,582,787
and a fair value for the loans maturing on October 10, 2030, of USD
2,347,153. The difference between the carrying amount of the loans
expected to mature in 2027 and the fair value of these loans has
been recorded as impairment of RSP for USD 13,117,000 loans as of
December 31, 2021.
Subsequent to the re-financing on April 8,2022, a net loss on
refinancing of RSP loans of USD 2,459,862 was included in finance
costs for the period ended June 30, 2022.
Correspondingly, certain impairments recognized in first quarter of
2022 were reversed in the second quarter of 2022, with a net
impairment loss of USD 1,076,896 being recognized in finance cost
for the six months period ended June 30,2022. This impairment loss
reflects management's re-assessment of the recoverability of the
loans.
The loss on refinancing of RSP Loans and the impairments or
impairment reversals of RSP loans are disclosed in note 16, Finance
Income and Costs.
During the reporting period, the company reassessed
the timing of cash flows of the RSP loans. It is now estimated that
the loans will be paid back as per the timelines presented in the
table below. Management has reassess the expected repayment of the
loans given the extension that has been granted as well as the
current market conditions. As of December 31, 2021 it was estimated
that the loans were going to be repaid as follows: 20% in 2023, 20%
in 2024, 30% in 2025 and 30% in 2026.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
A.Non-Current
trade and other receivables (continued)
|
|
|
|
|
|
|
|
|
|
Year of Projected Payback |
% Payback Estimate
Loans Maturing 2027 |
% Payback Estimate Loans Maturing 2030 |
|
2022 |
— |
— |
|
2023 |
— |
— |
|
2024 |
— |
— |
|
2025 |
20% |
10% |
|
2026 |
20% |
10% |
|
2027 |
60% |
20% |
|
2028 |
— |
20% |
|
2029 |
— |
20% |
|
2030 |
— |
20% |
(ii) Call deposits
Call deposits are comprised of deposits the Group have made for
facilities in the US for which the Group does not have the right to
withdraw the money. Call deposits are maintained and renewed as
needed in order to comply with the terms of certain lease
agreements.
(iii) Cash guarantees and deposits
Cash guarantees and deposits are amounts that some companies of the
Group have deposited in escrow accounts in order to obtain a lease
and/or to obtain services provided by third parties. The cash
guarantees match each lease duration. The leases expire between 2
to 15 years.
B. Current trade and other receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
June 30, 2022 |
|
December 31, 2021 |
|
December 31, 2020 |
|
R&D tax credits |
22,892 |
|
|
14,847 |
|
|
26,135 |
|
|
VAT receivable |
17,981 |
|
|
13,772 |
|
|
6,455 |
|
|
Other tax receivables |
12,307 |
|
|
13,807 |
|
|
— |
|
|
Call deposit |
— |
|
|
— |
|
|
524 |
|
|
Deferred charges |
7,384 |
|
|
1,116 |
|
|
53 |
|
|
Loans receivable |
— |
|
|
143 |
|
|
29,344 |
|
|
Impairment of other receivables |
(151) |
|
|
(42) |
|
|
(7) |
|
|
Other receivables |
1,055 |
|
|
1,669 |
|
|
600 |
|
|
Total |
61,468 |
|
|
45,312 |
|
|
63,104 |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Research and Development (R&D) Tax Credits are credits that our
UK companies have claimed based on the R&D incentive program of
the UK government. The Research and Development Expenditure Credit
("RDEC") incentive program credits are recognized in intangible
assets and as a credit in the statements of profit or loss against
non-capitalized program expenses. Small and Medium Enterprise
Research and Development ("SME R&D") relief is credited to tax
expense in the consolidated statement of profit or loss Loans
receivable comprises short term loans to employees including
mobility incentive scheme of cycling to work. R&D Tax Credits
are credits that our UK companies have claimed based on the R&D
incentive program of the UK government.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
7. INVENTORY
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
June 30, 2022 |
December 31, 2021 |
December 31, 2020 |
|
Raw materials, consumables and others |
44,671 |
24,642 |
|
14,504 |
|
Inventory write-downs |
(13,979) |
|
(1,665) |
|
— |
|
|
Inventory |
30,692 |
|
22,977 |
|
14,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges to the statement of profit or (loss) |
13,979 |
|
1,665 |
|
— |
|
|
|
|
|
|
Inventory write-downs - closing balance |
13,979 |
|
1,665 |
|
— |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Inventory write-downs consist primarily of aged batteries cells
that are no longer suitable for production use and no longer have a
viable alternative use case.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
8. CAPITAL AND RESERVES
Share capital and share premium
On June 3, 2022, during the Extraordinary General Meeting of
Arrival, the following was resolved to abolish the nominal value of
all shares issued by the Company, so that the value of each share
will forthwith be its accounting par value and the issued capital
will be changed from Euro to USD by applying the EUR/USD exchange
rate published on the website of the European Central Bank on June
2, 2022 (the "Exchange Rate"). The rate used for the conversion is
1.0692. Existing issued capital amounting to EUR 65,766,108 is
converted into its equivalent amount in USD 70,317,122 per the
exchange of USD.
9. LOANS AND BORROWINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
June 30, 2022 |
December 31, 2021 |
December 31, 2020 |
|
Non-current loans and borrowings |
|
|
|
|
Lease liability |
181,804 |
173,904 |
107,870 |
|
|
Convertible notes |
169,243 |
159,021 |
— |
|
|
Embedded derivatives |
13,500 |
118,600 |
— |
|
|
Total non-current loans and borrowings |
364,547 |
451,525 |
107,870 |
|
|
|
|
|
|
|
Current loans and borrowings |
|
|
|
|
Current portion of lease liabilities |
16,281 |
13,076 |
5,221 |
|
|
Accrued interest on convertible notes |
933 |
1,182 |
— |
|
|
Other |
7 |
— |
|
— |
|
|
Total current loans and borrowings |
17,221 |
14,258 |
5,221 |
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
9. LOANS AND BORROWINGS
(continued)
The following table shows the change of the lease liability over
the last six months ended June 30, 2022, and the additional lease
liabilities that arose from new and modified leases during the
period:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
Currency |
Weighted average of incremental borrowing rate |
Carrying amount |
|
January 1, 2022 |
|
|
186,980 |
|
New leases |
|
|
|
|
Office in Georgia |
USD |
9.80% |
1,022 |
|
Warehouse/R&D facility in Georgia |
USD |
9.40% |
322 |
|
Battery Module facility in England |
GBP |
5.40% |
12,845 |
|
Office in China |
CNY |
5.40% |
96 |
|
Composite/logistic and Van assembly in the USA |
USD |
5.50% |
27,375 |
|
Modification of leases |
|
|
|
|
Office in RUS |
RUB |
9.20% |
(99) |
|
Office, warehouse and factory in Lithuania |
EUR |
6.20% |
380 |
|
Office in Germany |
EUR |
4.00% |
613 |
|
Office in Israel |
ILS |
6.20% |
(773) |
|
Repayments |
Multi-currency |
|
(10,521) |
|
Interest on leases |
|
|
6,312 |
|
Cancellation of leases |
|
|
(10,734) |
|
Foreign exchange impact |
Multi-currency |
|
(15,733) |
|
June 30, 2022 |
|
|
198,085 |
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
9. LOANS AND BORROWINGS
(continued)
The following table shows the carrying amount of the lease
liabilities and the convertible notes and their expected future
cash outflows split based on their maturities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
Carrying amount |
Total |
Within one year |
Between 1 and 5 years |
More than 5 years |
|
June 30, 2022 |
|
|
|
|
|
|
Leases |
198,085 |
|
268,582 |
|
25,499 |
|
93,736 |
|
149,347 |
|
|
Convertible notes |
170,176 |
|
370,400 |
|
11,200 |
|
359,200 |
|
— |
|
|
December 31, 2021 |
|
|
|
|
|
|
Leases |
186,980 |
|
259,883 |
|
24,074 |
|
89,284 |
|
146,525 |
|
|
Convertible notes |
160,203 |
|
376,248 |
|
11,448 |
|
364,800 |
|
— |
|
|
December 31, 2020 |
|
|
|
|
|
|
Leases |
113,091 |
|
166,389 |
|
12,137 |
|
52,649 |
|
101,603 |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
The Group leases office buildings and industrial buildings used for
the development and production of our products. Depending on the
type of lease and the location, the lease durations vary from 1 to
15 years.
Where practical, the Group seeks to have an option to extend and/or
to renew the lease. This option is exercisable only by the Group.
The Group assess at the lease commencement date whether it is
reasonably certain to exercise the extension option. For the leases
that it is estimated that the option will be exercised, the
extended lease maturity date has been factored-in when discounting
the lease liability. The lease commitments shown in the above table
also include the amounts that the Group will have to pay related to
these leases.
10. WARRANTS
During the reporting period no warrants were newly issued or
redeemed. The movement of the warrants during the period was as
follows:
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
Number of Warrants |
Value (USD thousand) |
|
January 1, 2021 |
|
|
|
Warrants issued by Arrival |
20,112,493 |
|
208,586 |
|
|
Change in fair value |
— |
|
(122,299) |
|
|
Warrants exercised |
(17,009,291) |
|
(82,669) |
|
|
Warrants redeemed |
(711,536) |
|
(7) |
|
|
December 31, 2021 |
2,391,666 |
|
3,611 |
|
|
Change in fair value |
— |
|
(3,277) |
|
|
June 30, 2022 |
2,391,666 |
|
334 |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
During the first half of 2022 no additional warrants were issued,
exercised, or redeemed. The fair value of the outstanding warrants
decreased from USD 3,611,417 as of December 31, 2021, by USD
3,276,584 to USD 334,000 as of June 30, 2022.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
11. FINANCIAL INSTRUMENTS – FAIR VALUES
The following table shows the carrying amounts, and if applicable,
the fair values and measurement categories of the Group’s financial
instruments within the scope of IFRS 7. The fair value is the price
that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at
the measurement date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
Measurement category |
|
Carrying amount |
|
Fair value1,2
|
|
Level in the fair value hierarchy |
|
June 30, 2022 |
|
|
|
|
|
|
|
|
Trade and other receivables1
|
AC |
|
77,314 |
|
— |
|
— |
|
Loans to employees |
AC |
|
17,801 |
|
20,441 |
|
3 |
|
Cash and cash equivalents1
|
AC |
|
512,615 |
|
— |
|
1 |
|
Total financial assets |
|
|
607,730 |
|
|
|
|
|
Trade and other payables1
|
AC |
|
67,337 |
|
— |
|
— |
|
Lease liabilities2
|
AC |
|
198,085 |
|
— |
|
— |
|
Convertible notes |
AC |
|
170,176 |
|
110,340 |
|
3 |
|
Embedded derivative |
FVTPL |
|
13,500 |
|
13,500 |
|
3 |
|
Warrants |
FVTPL |
|
334 |
|
334 |
|
3 |
|
Total financial liabilities |
|
|
449,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregated according to measurement categories: |
|
|
|
|
|
|
|
|
Financial assets measured at amortized cost (AC) |
AC |
|
607,730 |
|
— |
|
1/3 |
|
Financial assets measured at fair value through profit or loss
(FVTPL) |
FVTPL |
|
— |
|
— |
|
— |
|
Financial liabilities measured at amortized cost (AC) |
AC |
|
435,597 |
|
— |
|
3 |
|
Financial liabilities measured at fair value through profit or loss
(FVTPL) |
FVTPL |
|
13,835 |
|
13,835 |
|
3 |
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
11. FINANCIAL INSTRUMENTS - FAIR VALUES
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
Measurement category |
|
Carrying amount |
|
Fair value1,2 |
|
Level in the fair value hierarchy |
|
December 31, 2021 |
|
|
|
|
|
|
|
|
Trade and other receivables1 |
AC |
|
64,615 |
|
|
— |
|
|
- |
|
Employee loans |
AC |
|
21,613 |
|
|
22,930 |
|
|
3 |
|
Cash and cash equivalents1 |
AC |
|
900,606 |
|
|
— |
|
|
1 |
|
Total financial assets |
|
|
986,834 |
|
|
— |
|
|
|
|
Trade and other payables1 |
AC |
|
66,970 |
|
|
— |
|
|
- |
|
Lease liabilities2 |
AC |
|
186,980 |
|
|
— |
|
|
- |
|
Convertible notes |
AC |
|
160,203 |
|
|
174,616 |
|
|
3 |
|
Embedded derivative |
FVTPL |
|
118,600 |
|
|
118,601 |
|
|
3 |
|
Warrants |
FVTPL |
|
3,611 |
|
|
3,611 |
|
|
3 |
|
Total financial liabilities |
|
|
536,364 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregated according to measurement categories: |
|
|
|
|
|
|
|
|
Financial assets measured at amortized cost (AC) |
AC |
|
986,832 |
|
— |
|
1/3 |
|
Financial assets measured at fair value through profit or loss
(FVTPL) |
FVTPL |
|
— |
|
— |
|
— |
|
Financial liabilities measured at amortized cost (AC) |
AC |
|
414,152 |
|
— |
|
3 |
|
Financial liabilities measured at fair value through profit or loss
(FVTPL) |
FVTPL |
|
122,212 |
|
122,212 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
Measurement category |
Carrying amount |
Fair value1,2 |
Level in the fair value hierarchy |
|
December 31, 2020 |
|
|
|
|
|
Trade and other receivables1 |
AC |
44,735 |
|
— |
|
- |
|
RSP loans |
AC |
36,811 |
|
37,096 |
|
3 |
|
Cash and cash equivalents1 |
AC |
82,314 |
|
— |
|
1 |
|
Total financial assets |
|
163,860 |
|
37,096 |
|
|
|
Trade and other payables1 |
AC |
41,924 |
|
— |
|
- |
|
Lease liabilities2 |
AC |
113,091 |
|
— |
|
- |
|
Total financial liabilities |
|
155,015 |
|
— |
|
|
|
|
|
|
|
|
|
Aggregated according to categories in IFRS 9: |
|
|
|
|
|
Financial assets measured at amortized cost (AC) |
AC |
163,860 |
|
37,096 |
|
1/3 |
|
Financial assets measured at fair value through profit or loss
(FVTPL) |
FVTPL |
— |
|
— |
|
- |
|
Financial liabilities measured at amortized cost (AC) |
AC |
155,015 |
|
— |
|
3 |
|
Financial liabilities measured at fair value through profit or loss
(FVTPL) |
FVTPL |
— |
|
— |
|
- |
|
1The
simplification option under IFRS 7.29(a) was used for disclosures
of certain fair values where the carrying amount is a reasonable
approximation of the instruments fair value.
|
|
2Measurements
within the scope of IFRS 16 are exempted from the requirements of
IFRS 13 (IFRS 13.6(b))
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
12. INCOME TAXES
Income tax expense is recognized at an amount determined by
multiplying the profit/(loss) before tax for the interim reporting
period by the Company’s best estimate of the weighted-average
annual income tax rate expected for the full financial year,
adjusted for the tax effect of certain items recognized in full in
the interim period. As such, the effective tax rate in the interim
financial
statements may differ from the Company’s estimate of the effective
tax rate ("ETR") for the annual financial statements. The Group’s
consolidated effective tax rate in respect of continuing operations
for the six months ended June 30, 2022 was (4.33)% (2021: (0.62)%).
The decrease in the ETR between the period ended June 30, 2022 and
June 30, 2021 is mainly attributed to a reduction in the amount of
losses incurred before tax and a decrease in expenses which are
considered not deductible for tax purposes, including listing
expenses and Fair Value of the warrants as a result of the CIIG
merger.
13. TRADE AND OTHER PAYABLES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of USD |
June 30, 2022 |
|
December 31, 2021 |
December 31, 2020 |
|
Current liabilities |
|
|
|
|
|
Trade payables |
41,531 |
|
|
41,238 |
|
11,221 |
|
|
Wages, Salaries, Bonus & Payroll Charges |
7,723 |
|
|
9,332 |
|
19,480 |
|
|
Accrued expenses |
15,068 |
|
|
15,599 |
|
10,817 |
|
|
Other payables |
3,015 |
|
|
801 |
|
407 |
|
|
67,337 |
|
|
66,970 |
|
41,925 |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Other payables includes Income Tax and National Insurance
contributions for employees.
Accruals primarily relate to goods and services received but yet to
receive invoice.
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
14. LOSS PER SHARE
The calculation of basic loss per share has been based on the
following losses attributable to ordinary shareholders and weighted
number of shares outstanding:
i. (Loss) attributable to ordinary
shareholders from continuing operations:
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
In thousands of USD |
2022 |
2021 |
|
(Loss) for the period, attributable to the owners of the Company
(basic) |
(99,950) |
(1,207,256) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
In thousands of shares |
2022 |
2021 |
|
Ordinary shares as at January 1 |
633,289 |
|
466,762 |
|
|
Conversion of preferred A shares into ordinary shares |
— |
|
41,944 |
|
|
Issue of shares to CIIG shareholders |
— |
|
39,557 |
|
|
Issue of shares for exercise of warrants |
— |
|
292 |
|
|
Exercise of options by SOP participants |
2 |
|
— |
|
|
Shares repurchased from RSP participants |
(98) |
|
(4) |
|
|
Shares granted to RSU scheme’s participants |
782 |
|
— |
|
|
Weighted-average number of Ordinary shares as at the end of the
period |
633,975 |
|
548,551 |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
15. LISTING EXPENSE
On November 18, 2020 the Business Combination Agreement (or Merger
Agreement) was executed between CIIG and Arrival. As a result of
the completion of the business combination, the shareholders of
CIIG exchanged their shares in CIIG for shares in Arrival on March
24, 2021. Additionally, warrants issued by CIIG to its shareholders
were cancelled and re-issued by Arrival. As a result of this
arrangement, CIIG was merged with Arrival with Arrival being the
listed entity. CIIG pre-acquisition by Arrival did not have any
operations and did not meet the definition of Business and hence
the transaction was accounted an equity transaction in accordance
with IFRS 2 “Share based Payments”.
In accordance with the guidance provided by the IFRS
Interpretations Committee in March 2013, management identified the
difference between the fair value of the shares deemed to have been
issued by Arrival and the fair value of the identifiable net assets
of CIIG and warrants transferred have been recorded as a Listing
expense as a part of the Operating expenses in the Consolidated
statement of profit or (loss).
The fair value of the issued shares was determined by multiplying
the share price as of the date of the transaction with the shares
issued. The warrants issued consisted of private and public
warrants. The fair value of the public warrants were determined on
the opening quoted price subsequent to the listing. The fair value
of the private warrants was determined using a Black Scholes
model.
The table below sets out the listing expense incurred in the six
months to June 30, 2021.
|
|
|
|
|
|
|
|
Six months ended |
|
In thousands of USD |
June 30, 2021 |
|
Listing expenses |
|
|
Reverse merger impact in the consolidated statement of profit or
(loss) due to IFRS 2 accounting treatment |
|
|
Fair value of shares issued |
1,591,090 |
|
|
Fair Value of Warrants transferred |
208,586 |
|
|
Total value of consideration |
1,799,676 |
|
|
Less |
|
|
Fair Value of net asset received |
(631,161) |
|
|
Total reverse merger impact in the consolidated statement of profit
or (loss) due to IFRS 2 accounting treatment |
1,168,515 |
|
|
Other expenses directly linked to the listing expense** |
19,820 |
|
|
Total listing expense |
1,188,335 |
|
**Additionally, the company had incurred additional costs of USD
19,820,009 in relation to the SPAC transaction and reverse merger
which has been presented as a part of the Listing expense.
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
16. FINANCIAL INCOME/EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 months ended |
|
In thousands of USD |
Note |
30 June 2022 |
|
30 June 2021 |
|
Finance income |
|
|
|
|
|
Change in fair value of warrants |
|
3,277 |
|
|
97,021 |
|
|
Change in fair value of embedded derivatives |
|
104,931 |
|
|
— |
|
|
Interest receivable on RSP loans calculated using effective
interest rate |
|
1,526 |
|
|
7,252 |
|
|
Other interest |
|
775 |
|
|
172 |
|
|
Reversal of difference between fair value and nominal value of
loans repaid |
|
295 |
|
|
1,742 |
|
|
Foreign exchange differences |
|
26,491 |
|
|
— |
|
|
Other finance income |
|
94 |
|
|
1 |
|
|
Total finance income |
|
137,389 |
|
|
106,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance cost |
|
|
|
|
|
Bank charges |
|
(212) |
|
|
(197) |
|
|
Interest on convertible notes |
|
(4,558) |
|
|
— |
|
|
Other interest payable |
|
(40) |
|
|
(181) |
|
|
Interest on leases |
|
(6,312) |
|
|
(4,390) |
|
|
Foreign exchange differences |
|
— |
|
|
(9,630) |
|
|
|
|
|
|
|
Loss on refinancing of RSP loans |
|
(2,460) |
|
|
— |
|
|
Impairment of financial assets |
|
(1,077) |
|
|
— |
|
|
Other |
|
— |
|
|
— |
|
|
Total finance cost |
|
(14,659) |
|
|
(14,398) |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
Change in the fair value of embedded derivative represents the
movement in fair value of the embedded derivative during the
period. The significant decrease in the value of the embedded
derivative is mainly driven by the decrease in the share price of
Arrival, the increase in volatility as well as the increase in risk
free rate.
In addition, the Group has recognized significant foreign exchange
gains for the six months period ended June 30, 2022 as the Group
benefited from the strengthening of the USD compared to other
currencies. The Group maintains the majority of it cash in
USD.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
17. SHARE BASED PAYMENTS
During
the first half of 2022, Arrival introduced two new share-based
payment plans as part of its Incentive Compensation Plan (ICP)
program, (A) a Restrictive Stock Units (RSU) and Performance Stock
Units (PSUs) Plan and (B) a Long-Term Incentive Plan (LTIP) which
includes 3 different types of share-based compensation (i)
Performance Stock Units (ii) Restrictive Stock Units (RSU) plan and
(iii) Stock Option Plan (SOP)s; details of which are described as
follows:
(A) Restrictive Stock Units (RSUs) and Performance Stock Units
(PSUs)
RSU and PSUs were introduced on January 10, 2022 for all employees
who joined the company on or before August 31, 2021. The number of
RSUs granted to each employee is based on the job level and tenure
at Arrival. The respective employees obtain the right to receive
Arrival common stock when certain vesting conditions are met. If an
employee leaves prior to the vesting conditions being met, the RSUs
will be forfeited. This program is accounted for as an
equity-settled share-based payment transaction. The total number of
RSU and PSUs granted were 1,730,013 and 1,730,909 respectively and
the total fair value of the awards as of the grant date amounted to
USD 13,912,906.
The vesting conditions are based on the satisfaction of service
conditions and other non-market performance
conditions:
•time-based
vesting condition where 50% of the RSUs vest at a specific point of
time
•performance-based
vesting conditions
◦25%
of the RSUs vest based on achievement of a production rate
milestone when the board determines that a microfactory is fully
operational, met the confirmed vehicle output, and when the
Participant has provided its services until the respective
milestone achievement date.
◦25%
vest based on achievement of a contribution milestone determined by
the Board the total contribution of any one microfactory was
greater than or equal to the contribution target, and when the
participant has provided services until the respective Milestone
achievement date. Based on the current stipulations,
▪50%
of the contribution milestone are met once a microfactory generates
a gross margin of at least USD 80 million
▪100%
of this milestone are met once the gross margin equals or exceeds
USD 100 million
▪125%
of this milestone are met once a microfactory reports a gross
profit of at least USD 120 million.
The period over which the RSU expense is spread in the consolidated
statement of profit or (loss) is based on the achievement of the
production rate milestone and the contribution milestone. An
increase/(decrease) in the estimated number of awards expected to
vest would result in an increase (decrease) of total compensation
expense dependable on (i) achievement of the milestones and (ii)
employee turnover rate which are based on management's best
estimates relying on the below assumptions.
The key assumptions for this program as of June 30, 2022 are
summarized below:
•The
grant date is January 24, 2022 based on the date that management
signed and dated on the RSU agreements and the fair value of the
RSUs is USD 4.02, which is Arrival`s closing share price on this
date.
•The
vesting period and the expense recognition starts on January 10,
2022 (at the service commencement date when an explanatory letter
was sent to employees explaining when the share-based program would
be issued)
•The
time vesting condition vests automatically once an individual
employee has completed 12 months of service
•The
end of the vesting period is different per each tranche of the
award, as the performance conditions are expected to be met at
different points in time
•Based
on the current business plan it is expected that the production
rate milestone will be fulfilled in April 2024, and the
contribution milestone will be met in November 2024
•The
expected annual employee turnover rate is 17%.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
17. SHARE BASED PAYMENTS
(continued)
(B) Long-Term Incentive Plan (LTIP)
LTIP awards was introduced on May 9, 2022 (the "grant date") and
are subjected to the terms, definitions, and provisions of the
Company’s 2021 incentive compensation plan (ICP). The LTIP program
comprises of three different types of share-based
compensation
(i) Performance Stock Units (PSUs) (ii) Restricted Stock Units
(RSUs) and (iii) Stock Options which are awarded based on job level
and are tied to employment.
The underlying instrument of the RSU and PSU awards and the stock
options are Arrival common stock which are traded on the NASDAQ
under stock symbol ARVL.
The PSUs are granted annually, and the RSUs and the Stock Options
are granted quarterly. The options vest as to 25% on the first
anniversary of the grant date and thereafter 25% on every
subsequent anniversary, until all options are fully vested, i.e.
the options vest equally over a four year period. The RSUs and PSUs
are accounted for as an equity-settled share-based payment
transaction. The fair value of the RSUs and PSUs are based on
Arrival`s closing share price on the grant date.
(i) LTIP - Restrictive Stock Units (LTIP RSUs)
The RSUs are granted quarterly to the employees and vest in equal
installments over a three-year period. i.e. 33.33% vest after the
first anniversary of the grant date, 33.33% vest after two years,
and the remaining 33.33% vest three years after the grant date. The
requirement for the RSUs to vest is that the employee remains
employed within the Arrival Group until the vesting date. The first
vesting of the RSUs will occur on May 9, 2023, one year after the
commencement date.
The total number of LTIP RSUs granted were to 13,347,757 having a
fair value as of grant date of USD 22,936,786.
(ii) LTIP - Performance Stock Units (LTIP PSUs)
The PSUs grant the employee the right to receive Arrival common
stock when the vesting conditions are met i.e. a performance target
is reached. The vesting conditions are based on the satisfaction of
two different performance conditions as follows:
(a) production rate milestone - 50% of the PSUs vest when the Board
determines that a microfactory has been fully operational and met
the confirmed vehicle output. The quantity of the vehicle output
determines the quantity of the awards granted:
•with
a minimum achievement criteria equal to 8,000 vans per year, 50% of
the PSU awards that have been granted for the production rate
milestone vest, which is equal to 25% of all PSU
awards.
•with
vehicle output equal to 10,000 vans per year, the predefined target
is considered to be met to 100% and all PSU awards that have been
granted for the production rate milestone will vest. This would be
equal to 50% of the total PSU awards granted.
•with
vehicle output equal to 12,000 vans per year, the target is
considered to be exceeded and 125% of the PSU awards that have been
granted for the production rate milestone will vest. This would be
equal to 62.5% of the total PSU awards granted.
(b) contribution milestone vest based upon achievement of a
“contribution milestone” determined by the Board where the total
contribution of any one microfactory was greater than or equal to
the contribution target which is based on the sales price received
in cleared funds, the bill of material for the vehicles produced
and the resulting level of gross profit. The contribution milestone
vest in stages once a certain gross profit margin has been achieved
by a microfactory. Based on the current stipulations,
▪50%
of the contribution milestone are met once a microfactory generates
a gross margin of at least USD 80 million
▪100%
of this milestone are met once the gross margin equals or exceeds
USD 100 million
▪125%
of this milestone are met once a microfactory reports a gross
profit of at least USD 120 million.
The total number of LTIPs PSUs granted amounted to 37,365,637
having a fair value as of grant date of USD
64,209,111.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
17. SHARE BASED PAYMENTS
(continued)
(iii) LTIP - Stock Options Plan (SOPs)
The fair value of the stock options has been determined using the
Black-Scholes-Merton Option Pricing Model (BSMOPM). The options
have been granted in three different tranches which have slightly
different terms. The Management Options and the Employee Options
are subject to time-based vesting conditions (i.e., service
conditions). 25% of the options shall vest on the first anniversary
of the contractual grant date; and thereafter 25% of the options
shall vest on every subsequent anniversary, until fully-vested. The
Company granted 10,879,959 SOPs having a fair value as of grant
date of USD 10,162,424.
During the six months
ending June 30, 2022, the total cost for the forementioned new
programs that were implemented in 2022 amounted to USD 12,121,929.
Of that amount a total share-based payment expense of USD 9,136,291
has been recognized in the P&L and the remainder of USD
2,985,638 has been capitalized on the balance sheet.
The total number of outstanding awards as of June 30, 2022 for all
the forementioned new programs was 60,791,472.
The following table sets out the model inputs used in the BSMOPM
for determining the fair value of the options that were granted in
2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Options |
Employee Options |
Topup
Options |
|
|
Grant date |
May 20, 2022 |
May 16, 2022 |
May 22, 2022 |
The grant date is based on the volume-weighted average date on
which each employee signed their option agreement. |
|
Share price at grant date |
$1.8280 |
$1.7315 |
$1.7335 |
This is based on the volume-weighted average opening share price on
each date the employee signed their option agreement. |
|
Exercise price |
$1.90 |
$1.90 |
$1.90 |
The exercise price is the same for all three batches. |
|
Expected term |
5.47 - 6.97 years
|
0.98 - 3.98 years
|
0.96 years |
The expected term is based on theoretical considerations and
typical market practice taking into account the contractual
exercise period and the expected exercise behavior of the
recipients. |
|
Number of options |
1,046,956 |
9,574,913 |
258,090 |
Reflects the total number of options that were granted to the
participants. |
|
Risk-free rate |
2.84% - 2.89%
|
2.05% - 2.76%
|
2.05% |
Based on the market yield on zero-coupon US treasury bonds with a
maturity commensurate to the expected term. |
|
Dividend yield |
—% |
—% |
—% |
It is expected that no dividends are paid out during the expected
terms to exercise. |
|
Volatility |
98.90% |
85.40% - 111.60%
|
85.40% |
Estimate based on the historical volatility of Arrival and a range
of comparators over a period commensurate to the expected
term. |
The following table displays the sensitivity of the stock options
fair value to a change in the expected term:
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
17. SHARE BASED PAYMENTS
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensitivity of total fair value to expected term |
|
In
thousands USD |
|
|
|
|
Expected term |
Management Options |
Employee Options |
Topup Options |
|
Base case -0.5 years |
1,485 |
11,284 |
235 |
|
Base case -0.25 years |
1,505 |
11,495 |
248 |
|
Base case |
1,524 |
11,967 |
253 |
|
Base case +0.25 years |
1,541 |
12,069 |
258 |
|
Base case +0.5 years |
1,558 |
12,264 |
262 |
The following table displays the sensitivity of the stock options
to a change in the expected share price volatility:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensitivity of total fair value to expected volatility |
|
In
thousands USD |
|
|
|
|
Expected volatility |
Management Options |
Employee Options |
Topup Options |
|
Base case -20% |
2 |
10,307 |
209 |
|
Base case -10% |
1,435 |
11,179 |
231 |
|
Base case |
1,524 |
11,967 |
253 |
|
Base case +10% |
1,600 |
12,671 |
273 |
|
Base case +20% |
1,665 |
13,293 |
292 |
For the LTIP program, the employee turnover rate is estimated to be
17% and the performance conditions are expected to be met in April
2024 (production milestone) and November 2024 (contribution
milestone). The expectations regarding the employee turnover rate
and the milestone achievement dates are subject to quarterly
revision and can naturally change as time passes. A change in any
of such assumptions as well as a change in any of the inputs used
in the BSMOPM would result in a change of the periodic compensation
expense.
(C). Stock Option Plans 2020 (SOPs 2020)
For the SOP 2020 program that was implemented in 2020 a total
expense of
USD 1,469,467 has
been recognized in the first half of 2022. For the expense
calculation it is assumed that the annual employee turnover rate
equals 17%, that the profitability milestone is achieved in
November 2024, and that the production milestone is achieved in
April 2024.
There has been a revision in production milestone in the second
quarter of 2022 from October 31, 2023 to April 30, 2024. This
change in estimate resulted in a reduced expense recognition as a
result of the total compensation expense is now spread out over a
longer period. The
impact of the change in the period amounted to USD 1,246,249. The
total number of outstanding SOPs 2020 awards as of June 30, 2022
was 13,128,512.
18. RELATED PARTY TRANSACTIONS
The Group’s related parties include its ultimate parent company
Kinetik, key management personnel and any subsidiaries or entities
under the significant influence of Kinetik. Transactions between
Group entities which have been eliminated on consolidation are not
disclosed.
Table of Contents
Arrival
Notes to the condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
18. RELATED PARTY TRANSACTIONS
(continued)
The following transactions were carried out with related
parties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands USD |
Transactions for the period |
Balance as at |
|
Six months ended June 30, |
|
June 30, 2022 |
December 31, 2021 |
|
December 31, 2020 |
|
Related party |
2022 |
|
2021 |
|
|
|
Hyundai Kia |
— |
|
|
— |
|
|
— |
|
283 |
|
|
— |
|
|
Hyundai Mobis |
1,125 |
|
|
254 |
|
|
(351) |
|
— |
|
|
— |
|
|
Hyundai Motor Company |
— |
|
|
(534) |
|
|
— |
|
— |
|
|
— |
|
All prior year comparatives have been translated to US Dollars due
to a change in presentational currency. See note 2.
The related party transactions
relate mainly to acquisition of materials and
services.
Key management personnel compensation during the six months ended
June 30, 2022 was USD
1,694,915
and it represents the remunerations and benefits 5 key employees of
the Group received during the period. Compensation was comprised of
wages and salaries, social contributions and other
benefits.
In addition the Key management personnel has received a total
number of new awards (RSUs and LTIPs see note 17) of 3,165,049
having a fair value USD 5,529,178. The expense charged statement of
profit or (loss) and other comprehensive income/(loss) in regards
to this Scheme amounted to USD 845,518. An expense of USD 332,294
was also charged during the period in the statement of profit or
(loss) and other comprehensive income/(loss) which relates to SOP
schemes granted in 2020. Furthermore, an amount of USD 656,447 has
been paid to 5 non-executive Directors during the six months period
ended June 30, 2022. During the period an amount of USD 144,896 has
been charged to the statement of profit or (loss) and other
comprehensive income/(loss) in regards to RSUs that have been
granted to the non-executive Directors.
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended 31 December
2021 and 2020 (unaudited)
19. Claims and Litigations
From time to time, Arrival may become involved in additional legal
proceedings arising in the ordinary course of its
business.
On December 22, 2021, plaintiffs Bruce Schmutter and Dean Samet,
purported Arrival stockholders, filed a putative class action
complaint against Arrival, Denis Sverdlov, Tim Holbrow, Michael
Ableson, and Avinash Rugoobur in the U.S. District Court for the
Southern District of New York captioned Schmutter, et al. v.
Arrival S.A., et al. (1:21-11016-NRB). Plaintiffs asserted claims
on behalf of all persons and entities that purchased or otherwise
acquired Arrival common stock between November 18, 2020 and
November 19, 2021 under Section 10(b) and 20(a) of the Securities
Exchange Act of 1934. The complaint alleged that defendants made
false and/or misleading statements or omissions concerning
Arrival’s operations, financial performance, and future growth
prospects and profitability. On March 7, 2022, plaintiffs filed a
notice of voluntary dismissal of the Schmutter action.
On January 12, 2022, plaintiff Miguel Sanchez filed a putative
class action complaint against Arrival, Denis Sverdlov, Tim
Holbrow, Michael Ableson, and Avinash Rugoobur in the United States
District Court for the Eastern District of New York captioned
Sanchez v. Arrival S.A., et al. (1:22-cv-00172) asserting
substantially the same claims and allegations as those asserted in
the Schmutter complaint. On February 22, 2022, and February 23,
2022,a number of purported Arrival shareholders filed motions for
appointment as lead plaintiff in the Sanchez action. On April 15,
2022, the court appointed Mostaco Corp. as lead plaintiff in that
action.
On April 8, 2022, another purported Arrival shareholder, Alexandre
Lioubinine, filed a putative class action complaint in the Supreme
Court of the State of New York captioned Lioubinine v. Arrival, et.
al. (651783/2022). The complaint asserts claims against Arrival and
certain of its current and former executives and members of the
board of directors under Sections 11, 12(a)(2), and 15 of the
Securities Act of 1933. The complaint alleges that Arrival’s
Registration Statement on Form F-4 filed with the SEC on December
15, 2020, as amended on January 21, February 16, and February 25,
2021, and declared effective on February 26, 2021 (the
“Registration Statement”) contained material misstatements and
omissions concerning the Company’s operations, financial
performance, and future growth prospects and profitability.
Lioubinine purports to assert his claims on behalf of all persons
and entities who purchased or otherwise acquired Arrival ordinary
shares pursuant or traceable to the Registration
Statement.
As the cases are still in their early stages, it is not possible to
determine the likelihood of success on the merits or any potential
liability. Arrival intends to vigorously defend the
actions.
Table of Contents
Arrival
Notes to the Condensed consolidated interim financial
statements
For the period ended June 30, 2022 and years ended December 31
2021 and 2020 (unaudited)
20. SUBSEQUENT EVENTS
On July 12, 2022, Arrival has proposed plans that include a
realignment of the organization that would enable it to deliver
business priorities until late 2023 primarily utilizing the USD
512,614,742 cash and cash equivalents. Arrival’s proposal includes
a targeted 30% reduction in spend across the organization and
anticipates that it could potentially impact up to 30% of employees
globally.
Due to geopolitical considerations and the uncertain nature,
magnitude and duration of Russia’s war in Ukraine and actions taken
by Western and other states and multinational organizations in
response thereto, Arrival has taken the decision to close our
Russia location and
on August 8, 2022, Arrival completed the sale of the subsidiary,
Arrival RUS, LLC. This sale did not have a material impact on the
consolidated results of the company.
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