The information contained within
this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014 (MAR). Upon the publication of this announcement via
Regulatory Information Service (RIS), this inside information is
now considered to be in the public domain.
EnergyPathways plc
("EnergyPathways" or the
"Company")
Results for the half year ended 30 June
2024
EnergyPathways (AIM: EPP), an integrated energy
transition company, is pleased to announce its unaudited results
for the six months ended 30 June 2024.
Highlights:
·
Developing a fully-electrified subsea gas development concept
to be 100% powered with renewable energy at the wholly-owned and
operated Marram field project in the UK Irish Sea ("Marram" or the
"Marram Project") for a best-in-class decarbonised development
aligned to Government energy strategy
·
Material progress made on Front-End Engineering Design
("FEED") workstreams including commencement of discussions with
infrastructure hosts
·
Signed a Memorandum of Understanding with MCS Subsea
Solutions Limited and Mermaid Subsea Services (UK) Limited in
relation to negotiating the provision of subsea FEED engineering,
project support, procurement and offshore construction services for
its
·
Cash at period end of £1,173,492 and a net loss of £550,159
for the 6 months to 30 June 2024
Post
period-end:
·
Progressed a long-term growth energy storage strategy for the
development of the Marram Energy
Storage Hub ("MESH" or
"MESH Project"), a clean energy hub to harness the large
untapped gas resources, wind energy and high-quality geo-storage
reservoirs of the UK Irish Sea
·
Submitted a gas storage licence application to the North Sea
Transition Authority ("NSTA") for its planned MESH Project
Requests for gas storage licence applications have also been made
for the Knox & Lowry fields, Marram 'lookalikes' identified by
EnergyPathways which are also high-quality geo-storage
reservoirs
·
Engaging with various tier-1 entities with a view to
establishing a consortium of energy-related companies to develop
MESH, comprising one of the world's largest developers of wind
power, a 'Major' integrated oil and gas company, a FTSE 250 leading
global engineering consultancy and an international market leader
in industrial automation and industrial software
·
Assessed the potential for hydrogen production and storage as
part of the MESH project that would harness the excess offshore
wind of the region energy that is located close to the core MESH
development and could be readily integrated and potentially treble
MESH's energy storage capacity
Ben Clube,
EnergyPathways' CEO, commented:
"It
has been a very eventful first six months for EnergyPathways. With
material changes to the regulatory and fiscal energy environment in
the UK and further changes being introduced under the new
government, EnergyPathways has moved directly to our more
ambitious and higher value MESH Project rather than the phased
approach that we had originally intended when we came to market
last year. MESH is precisely the kind of project being sought
under the new administration, given its goals of both Energy
Security and Net Zero, and we are therefore confident of receiving
the necessary regulatory support as we continue to outline our
vision to the NSTA. We also believe that the MESH Project is
commercially attractive, given the strong cash flow and attractive
rate of return associated with an infrastructure project of this
type. This provides confidence that we will obtain the necessary
financing to turn this vision into a reality for the benefit of
EnergyPathways' shareholders and the UK as a whole. We look
forward to an eventful year ahead as we progress the key
workstreams to reach FID towards the end of
2025."
For further information on the Company please
visit the Company's website:
https://energypathways.uk
Contact:
|
EnergyPathways
Ben Clube / Ben Hodges
|
Tel: +44 (0)20 7466 5000, c/o Buchanan
(Financial PR)
Email : info@energypathways.uk
|
|
Cairn
Financial Advisers LLP (Nominated Adviser)
Jo Turner / Louise O'Driscoll / Sandy Jamieson
|
Tel: +44 (0)20 7213 0880
|
|
SP Angel
Corporate Finance LLP (Joint Broker)
Richard Hail / Adam Cowl
|
Tel: +44 (0)20 3470 0470
|
|
Global
Investment Strategy UK Limited (Joint Broker)
Callum Hill / James Sheehan
|
Tel: +44 (0)20 7048 9000
|
|
Buchanan
(Financial PR)
Ben Romney / Barry
Archer
|
Tel: +44 (0)20 7466 5000
Email: energy@buchanan.uk.com
|
About
EnergyPathways
Energy Pathways is developing the Marram Energy
Storage Hub, or MESH, in the UK Irish Sea. MESH is designed to be a
decarbonised, fully electrified storage facility that can supply
natural gas and green hydrogen to the UK market, at scale. The
Company is developing the MESH project so that it is wholly in line
with the UK government's energy policy and ambitions, to deliver
both Energy Security and Net Zero. EnergyPathways currently expects
that Final Investment Decision (FID) for the MESH project will be
late 2025, with first energy supply commencing in 2027.
Chairman's
Statement
EnergyPathways was admitted to AIM and raised
circa £2,000,000 (before costs) on 23 December 2023, shortly before
the end of the Company's financial year. This therefore is the
first Half-yearly Report for EnergyPathways as an AIM quoted
business.
As at 30 June 2024, the Company had a cash
balance of £1,173,492. As will be evident from our
highlighted bullet points, a great deal of desktop work has been
undertaken through the period to progress the MESH Project from
concept into reality.
To oversee EnergyPathways' team and ensure
progress towards our near-term objectives, in June CEO Ben Clube
relocated to the UK from Australia since which time the overall
team's workstreams have intensified. On 5 July 2024, a new
Labour Government was elected in the UK. EnergyPathways has
since sought to position itself firmly in the Energy Transition & Infrastructure
space as we seek to deliver a project that aligns strongly with the
new government's energy policy and its ambitions to deliver Energy
Security and Net Zero.
We are aligned with the new government's energy
policy and aim to meet its expectations, targets and fiscal
demands. The Company's main focus is now to move straight to
development of the upscaled MESH Project rather than be limited by
the fast track standalone development of Marram. This
decision was taken by the Board following an assessment of the
challenges in obtaining financial and regulatory support for a
standalone gas development versus the more ambitious and
significantly higher value MESH Project.
Based on our dialogue with the government, the
NSTA (the regulator) and industry stakeholders with whom we are
seeking to finalise a project consortium, we are confident that in
MESH, we are tabling a compelling concept that will deliver not
only broad environmental and social benefits to the UK in the form
of decarbonised energy solutions and power for up 2.2 million homes
in Britain, but also an economically attractive project that has
the potential to generate significant cash flows and high yield
returns with estimated rates of return of ~20+% over the project's
20+ year life.
As a result of the acceleration of the more
ambitious MESH Project, FID is now expected to occur in late 2025,
with first energy supply in 2027. I must emphasise that the MESH
Project is not only higher value than the original stand-alone gas
development, but it is also eminently more deliverable from a
financing and approval perspective. Accordingly, we are presently
engaged in constructive discussions with the lending arm of a Major
integrated oil and gas company for project financing, with the vast
majority of capex to be in the form of debt, given the
infrastructure-type annuity cash flows associated with such a
project.
As I write, I am still conscious, however, of
the ongoing challenge arising from the newly elected Labour
government in navigating the energy industry landscape that has
also resulted in a backlog and higher level of scrutiny regarding
licence applications. It should be understood though, that it
was always the ambition of the Company to be an Energy Transition
and Infrastructure company. This is evident in our name -
EnergyPathways - and the change in narrative under the new
government merely helps to emphasise our positioning the Company to
play a vital role in delivering a project aligned with the future
of the UK energy landscape. We are also pleased to be able to
clearly differentiate ourselves and our investment proposition from
traditional UK-focused oil and gas development companies - and
believe that our strategy aligns strongly with the new government's
energy policy and to the current and future outlook for the UK's
energy sector.
We finished the half year in a good financial
position with a healthy balance sheet, which has been preserved
through our strong commitment to capital discipline. As our
MESH Project workstreams accelerate, so too will our spending, and
we are presently reviewing all the financing options available to
us to ensure we are funded through to MESH FID in late 2025 and it
is the expectation of management that the majority of funding
required will be represented by debt finance. While that
important milestone has moved for all the reasons already addressed
in this statement, the next 12-18 months promise to be an eventful
and exciting period for EnergyPathways, with numerous commercial,
technical and financial catalysts that we believe will enable us to
build both shareholder and wider investor support.
Finally, I would like to pay testament to our
great team led by CEO Ben Clube. When I first came into the
Oil & Gas Industry in the early 1980s, what struck me most was
the 'can-do' mentality of the industry. This same can-do
mindset is evident in the make up of the EnergyPathways executive
team and they have a tremendous energy and enthusiasm to deliver
the Company's vision. I believe that EnergyPathways can be a
significant player geographically in the East Irish Sea, and the
North West of England and a major player in an emerging industry
sector: the Energy Transition & Infrastructure
business.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
LOSS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
|
|
|
Unaudited
|
|
Unaudited
|
|
Audited
|
|
|
|
6 Month Period Ended
30 June
2024
|
|
6 Months Period
Ended 30 June
2023
|
|
12 Month Period
Ended 31 December 2023
|
|
|
Note
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative expenses
|
|
(508,421)
|
|
(253,869)
|
|
(596,376)
|
|
Pre-acquisition license expenses
|
|
(40,530)
|
|
(45,748)
|
|
(35,048)
|
|
|
|
|
|
|
|
|
|
Operating Loss
|
|
(548,951)
|
|
(299,617)
|
|
(631,424)
|
|
|
|
|
|
|
|
|
|
Net finance costs
|
|
(1,208)
|
|
(5,499)
|
|
(737)
|
|
Listing costs
|
|
-
|
|
-
|
|
(213,485)
|
|
Reverse acquisition expense
|
3
|
-
|
|
-
|
|
(1,015,270)
|
|
|
|
|
|
|
|
|
|
Loss before tax
|
|
(550,159)
|
|
(305,116)
|
|
(1,860,916)
|
|
|
|
|
|
|
|
|
|
Taxation
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Loss for the period
|
|
(550,159)
|
|
(305,116)
|
|
(1,860,916)
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
Items that will or may be reclassified to profit
or loss:
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
-
|
|
-
|
|
-
|
|
Total comprehensive loss
|
|
(550,159)
|
|
(305,116)
|
|
(1,860,916)
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per share
(pence)
|
4
|
(0.35)
|
|
(0.19)
|
|
(2.55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All operations are continuing.
NOTES TO THE FINANCIAL STATEMENTS
1.
General Information
EnergyPathways plc (the "Company" or
"EnergyPathways") is a company incorporated in England and Wales
under the Companies Act 2006 with the registered number 13201653.
The Company's registered office is Highdown House, Yeoman
Way, Worthing, West Sussex, BN99 3HH.
The principal activity of the Company is
delivering clean, home-grown energy for the UK. On 3 March 2022,
the Group acquired a 100% interest in, and is administrator for the
Marram gas field located in the East Irish Sea, with proven
reserves of 38.8 Bcf of natural gas.
2.
Summary of significant accounting policies
The principal accounting principles applied in
the preparation of these unaudited interim financial statements are
set out below. These principles have been consistently applied to
all periods presented, unless otherwise stated.
2.1. Basis of preparation
The interim financial information set out above
does not constitute statutory accounts within the meaning of the
Companies Act 2006. It has been prepared on a going concern basis
in accordance with UK-adopted international accounting standards.
Statutory financial statements for the year ended 31 December 2023
were approved by the Board of Directors on 3 June 2024 and
delivered to the Registrar of Companies. The report of the auditors
on those financial statements was unqualified.
The interim financial information for the six
months ended 30 June 2024 has not been reviewed or audited. The
interim financial report was approved by the Board on 26 September
2024.
2.2. Going concern
The Directors, having made appropriate
enquiries, consider that adequate resources exist for the Company
to continue in operational existence for the foreseeable future and
that, therefore, it is appropriate to adopt the going concern basis
in preparing the interim financial statements for the period ended
30 June 2024.
2.3. Risks and uncertainties
The Board continuously assesses and monitors the
key risks of the business. The key risks that could affect the
Company's medium term performance and the factors that mitigate
those risks have not substantially changed from those set out in
the Company's 2023 Annual Report and Financial Statements, a copy
of which is available on the Company's website: https://energypathways.uk. The key
financial risks are securing finance for the Marram gas project and
an emerging cost inflation risk.
2.4. Critical accounting estimates
The preparation of interim financial statements
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the end of the
reporting period. Significant items subject to such estimates are
set out in note 3 of the Company's 2023 Annual Report and Financial
Statements. The nature and amounts of such estimates have not
changed significantly during the interim period.
The accounting policies applied are consistent
with those of the annual financial statements for the year ended 31
December 2023, as described in those annual financial
statements.
3.
Reverse acquisition and admission to AIM
On 20 December 2023, the Company
acquired the entire issued share capital of EnergyPathways UK
Holdings Ltd, a private company incorporated in the United Kingdom, by way of a share for share
exchange.
Although the transaction resulted in
EnergyPathways UK Holdings Ltd becoming a wholly owned subsidiary
of the Company, the transaction constitutes a reverse acquisition
in as much as the shareholders of EnergyPathways UK Holdings Ltd
own a substantial majority of the outstanding ordinary shares of
the Company and all 6 members of the Board of Directors of the
Company are EnergyPathways UK Holdings Ltd shareholders and
management.
In substance, the shareholders
of EnergyPathways UK Holdings Ltd
acquired a controlling interest in the Company and
the transaction has therefore been accounted for as a reverse
acquisition ("RTO"). As the Company previously discontinued its
investment activities and was engaged in acquiring
EnergyPathways UK Holdings Ltd and raising
equity financing to provide the required funding for the operations
of the acquisition and admission of the Company's shares to trading
on the AIM market of the London Stock Exchange ("AIM"), it did not
meet the definition of a business according to the definition in
IFRS 3. Accordingly, this reverse acquisition does not constitute a
business combination and was accounted for in accordance with IFRS
2, Share-based payment and IFRIC guidance, with the difference
between the equity value given up by the EnergyPathways UK Holdings Ltd shareholders and the share of the fair value of net assets
gained by the EnergyPathways UK Holdings
Ltd shareholders charged to the statement
of comprehensive income as the cost of admission to
AIM.
Following the completion of the transaction the
Company changed its name to EnergyPathways plc.
In accordance with reverse
acquisition accounting principles, these consolidated financial
statements represent a continuation of the consolidated financial
statements of EnergyPathways UK Holdings
Ltd and include:
a. the assets and liabilities of EnergyPathways UK Holdings Ltd at
their pre-acquisition carrying amounts and the results for both
periods; and
b. the
assets and liabilities of the Company as at 31 December
2023 and its results from 20 December
2023 to 31 December 2023.
On 20 December 2023, the Company
issued 68,013,885 shares for all 143,333,324 ordinary shares,
15,100,000 performance shares and 20,000,000 warrants of
EnergyPathways UK Holdings Ltd.
As of 20 December 2023, the last
quoted share price of Dial Square Investments Plc (renamed
EnergyPathways plc upon completion of the transaction) was £0.0325
and therefore this valued the investment in EnergyPathways UK
Holdings Ltd at £862,875.
Because the legal subsidiary,
EnergyPathways UK Holdings Ltd, was treated as the accounting
acquirer and the legal Parent Company, Dial Square Investments Plc,
was treated as the accounting subsidiary, the fair value of the
shares deemed to have been issued by EnergyPathways UK Holdings Ltd
was calculated at £1,213,303 based on an assessment of the purchase
consideration for a 100% holding in EnergyPathways plc.
The fair value of net assets of
Dial Square Investments plc was as
follows:
|
|
£
|
|
Cash and cash equivalents
|
238,320
|
|
Other assets
|
205,545
|
|
Liabilities
|
(245,832)
|
|
Net assets
|
198,033
|
The difference between the deemed
cost and the fair value of the net assets acquired of £1,015,270
has been expensed in accordance with IFRS 2, Share based
payments, reflecting the economic cost to the EnergyPathways UK Holdings Ltd shareholders of acquiring a quoted entity.
The transfers to retained earnings that arose
pursuant to the RTO are as follows:
|
|
Year Ended
31 December 2023
|
|
|
£
|
|
As at start of year
|
-
|
|
Pre-acquisition losses of
EnergyPathways plc 1
|
(695,748)
|
|
EnergyPathways UK Holdings Ltd
issued capital at acquisition2
|
1,108,510
|
|
Investment in EnergyPathways UK
Holdings Ltd 3
|
(2,734,160)
|
|
Reverse acquisition
expense4
|
1,015,270
|
|
Total
|
(1,306,128)
|
The movements within retained
earnings relating to the RTO are as follows:
1) these
consolidated financial statements present the legal capital
structure of the Company. However, under reverse acquisition
accounting rules, the Company was not acquired until 20 December
2023 and therefore the entry above is required to eliminate the
initial retained losses of the Company;
2) EnergyPathways UK Holdings Ltd had issued share capital of
equivalent to £1,108,510 as at 20 December
2023. As these financial statements present the capital structure
of the parent entity, the issue of equity by EnergyPathways UK
Holdings Ltd has been transferred to this reserve;
3) the
Company issued 68,013,885 shares at 4 pence each, totalling
£2,720,555 for the entire issued capital of EnergyPathways UK
Holdings Ltd, as well as stamp duty of £13,605. The above entry is
required to eliminate the balance sheet impact of this transaction;
and
4) the
reverse acquisition accounting is described in detail in note 3.
The entry above represents the difference between the value of the
equity issued by the Company, and the deemed consideration given by
EnergyPathways UK Holdings Ltd to acquire the Company.
4.
Earnings per share
The calculation of the basic and diluted
earnings per share is calculated by dividing the loss for the
period for continuing operations for the EnergyPathways Group by
the weighted average number of ordinary shares in issue during
period year.
The weighted average number of shares is
adjusted for the impact of the reverse acquisition as
follows:
- prior to the reverse takeover, the
number of shares is based on EnergyPathways UK Holdings Ltd,
adjusted using the share exchange ratio arising on the reverse
takeover; and
- from the date of the reverse
takeover, the number of shares is based on the Company.
Dilutive loss per Ordinary Share equals basic
loss per Ordinary Share as, due to the losses incurred in all three
periods presented, there is no dilutive effect from the subsisting
share options and warrants.
|
|
Unaudited
|
|
Unaudited
|
|
Audited
|
|
|
6 months
to 30 June 2024
|
|
6 months
to 30 June 2023
|
|
12 months
to 31 December 2023
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Loss for the purposes of basic
earnings per share being net loss attributable to the
owners
|
(550,159)
|
|
(305,116)
|
|
(1,860,916)
|
|
Weighted average number of ordinary
shares
|
158,508,817
|
|
158,433,324
|
|
72,773,014
|
|
|
|
|
|
|
|
|
Loss per share (pence)
|
(0.35)
|
|
(0.19)
|
|
(2.55)
|
5.
Intangible assets
|
|
|
|
|
|
|
|
£
|
|
Cost
|
|
|
As at 1 January 2023 (Audited)
|
318,001
|
|
Additions
|
362,889
|
|
As at 30 June 2023 (Unaudited)
|
680,890
|
|
Additions
|
49,041
|
|
As at 31 December 2023 (Audited)
|
729,931
|
|
Additions
|
295,325
|
|
As at 30 June 2024 (Unaudited)
|
1,025,256
|
6.
Trade and other receivables
|
|
Unaudited
|
|
Unaudited
|
|
Audited
|
|
|
As at
30 June
2024
|
|
As at
30 June
2023
|
|
As at
31
December
2023
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Other receivables
|
5,530
|
|
-
|
|
1,714,645
|
|
Prepayments
|
37,609
|
|
34,808
|
|
56,050
|
|
VAT receivable
|
41,856
|
|
12,900
|
|
58,584
|
|
|
84,995
|
|
47,708
|
|
1,829,279
|
7.
Trade and other payables - due within one year
|
|
Unaudited
|
|
Unaudited
|
|
Audited
|
|
|
As at
30 June
2024
|
|
As at
30 June
2023
|
|
As at
31
December
2023
|
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Trade payables
|
185,074
|
|
401,479
|
|
782,647
|
|
Accruals
|
609,215
|
|
605,083
|
|
405,141
|
|
|
794,289
|
|
1,006,562
|
|
1,187,788
|
8.
Borrowings
|
|
£
|
|
As at 31 December 2022 (Audited)
|
-
|
|
Drawdowns
|
200,000
|
|
Interest accrued
|
4,910
|
|
As at 30 June 2023 (Unaudited)
|
204,910
|
On 9 March 2023, EnergyPathways Uk Holdings
Limited entered in to a loan agreement with the Company for a
facility of £200,000. The facility was fully drawn down as at 30
June 2023. The loan has been eliminated on consolidation as at 31
December 2023 following the completion of the RTO on 20 December
2023 (refer to note 3).
9.
Ordinary share capital and share premium
|
|
|
|
|
|
Issued
|
Number of
shares
|
Ordinary share
capital
£
|
Share
premium
£
|
Performance
shares
£
|
|
As at 31 December 2022 (Audited)
|
158,433,324
|
14,333
|
1,092,667
|
1,510
|
|
As at 30 June 2023 (Unaudited)
|
158,433,324
|
14,333
|
1,092,667
|
1,510
|
|
Transfer of EPL paid up capital to Reverse
acquisition reserve 20 Dec 2023
|
(158,433,324)
|
(14,333)
|
(1,092,667)
|
(1,510)
|
|
Issued capital of plc at acquisition 20 Dec
2023
|
26,550,000
|
265,500
|
628,281
|
-
|
|
Issue of shares for acquisition of
subsidiary
|
68,013,885
|
680,139
|
2,040,417
|
-
|
|
Issue of shares for services
|
13,352,674
|
133,527
|
400,580
|
-
|
|
Issue of shares - share subscription
|
50,000,000
|
500,000
|
1,500,000
|
-
|
|
Share issue costs
|
-
|
-
|
(117,326)
|
-
|
|
As at 31 December 2023 (Audited)
|
157,916,559
|
1,579,166
|
4,451,952
|
-
|
|
Issue of shares for services
|
1,204,486
|
12,045
|
29,455
|
-
|
|
As at 30 June 2024 (Unaudited)
|
159,121,045
|
1,591,211
|
4,481,407
|
-
|
The ordinary shares confer the right to vote at
general meetings of the Company, to a repayment of capital in the
event of liquidation or winding up and certain other rights as set
out in the Company's articles of association.
The issued capital of the Group for the period
31 December 2022 to 20 December 2023 is that of EnergyPathways UK
Holdings Ltd. ("EPL"). Upon completion of the acquisition the share
capital of EPL was transferred to the Reverse acquisition reserve
(see note 3) and the share capital of EnergyPathways plc was
brought to account.
10.
Events after the reporting period
On 7 August 2024 the Company issued
791,233 ordinary shares at 2.09 pence each in settlement of
consultancy fees to a member of the Marram Project management team
in lieu of cash.