28 July 2022

Pod Point Group Holdings PLC (Symbol: PODP)

 

Half-year results for the 6 months ended 30 June 2022

 

"Excellent H1 with strong execution and market share gains; EV supply chain creates challenges in H2"

 

Pod Point Group Holdings plc (the "Company") and its subsidiaries (the "Group"), one of the UK's market leading providers of Electric Vehicle ("EV") charging solutions is pleased to announce its unaudited half-year results for the period ended 30 June 2022.

 

Financial Summary

 

	6 months to 30.06.22 £'000	6 months to 30.06.21 £'000	Period on period change
Total revenue	41,552	26,497	57%
Home	27,219	16,576	64%
Commercial	12,084	8,659	40%
Other(2)	2,249	1,262	78%
Gross profit	10,388	7,039	48%
Gross margin	25%	27%	-2pp
Home gross profit	6,285	4,621	36%
Home gross margin	23%	28%	-5pp
Commercial gross profit(3)	2,776	1,747	59%
Commercial gross margin	23%	20%	+3pp
Adjusted EBITDA(1)	(1,414)	487	(1,901)
EBITDA	(3,992)	(3,784)	(208)
Loss before tax	(7,546)	(6,667)	(879)
Loss per share (£)	(0.05)	(0.07)	(0.02)
	As at 30.06.22 £'000	As at 31.12.21 £'000
Closing cash and short term investments	82,086	96,112	(14,026)

 

1) See Notes below for definition of Adjusted EBITDA

2) See Notes for definition

 

Notes

(1)   Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortisation and also excluding both amounts charged to the income statement in respect of the Group's share based payments arrangements and adjusting for large corporate transaction and restructuring costs.  These have been separately identified by the Directors and adjusted to provide an underlying measure of financial performance.  The reconciliation is set out on the income statement and note 5 provides a summary of the amounts arising from the large corporate transactions and restructuring costs.

(2)   "Other" revenue includes Recurring revenue for  H1 2022 of £0.8 million (2021: £0.4 million) and Owned Asset revenue for  H1 2022 of £1.5 million (2021: £0.9 million).

(3)   Amounts previously recorded in the Norway segment for H1 2021 have been reclassified into Commercial as described in note 2.

 

 

Group Highlights

 

·      Strong performance with 57% revenue growth to £41.6 million compared to H1 2021

·      48% growth in gross profit to £10.4 million with gross percentage margin decreasing to 25% from 27% in H1 2021

·      The financial impact of additional component costs resulting from supply chain issues is estimated to be £0.9 million, contributing to the reduction in Home gross margin in H1 2022 of 5pp compared to H1 2021

·      Strong expansion of the customer base across both Home and Commercial segments

·      Increase in headcount to 531 (30 June 2021: 316) including 74 inhouse installers and 103 technology and hardware staff. Technology and hardware staff have increased from 57 at 30 June 2021 and from 71 at 31 December 2021 as the business deployed investment funds raised at IPO

·      Adjusted EBITDA loss of £1.4 million was a result of reduced gross margin resulting from additional component costs and the additional costs of being a listed business. Compared to a positive H1 2021 adjusted EBITDA of £0.5 million

·      Closing cash of £82.1 million

 

Strategic and Operational Highlights

 

·      10.6 million charging sessions enabled, supporting 952 million kilometres of low carbon travel and helping to avoid 129,000 tonnes of CO2e in H1 2022

·      Over 45,000 charge points installed and shipped in H1 2022 (H1 2021: 27,554) while maintaining outstanding levels of customer service with a 4.4 out of 5 rating on Trust Pilot and a 4.6 out of 5 rating on reviews.io with a 91% recommendation rate

·      Market share in home charging⁽¹⁾ increased to 22% in H1 2022 (H1 2021: 17%) driven by new deals with car manufacturers and operators of business car fleets

·      Total number of units installed and able to communicate at the period end increased to 175,130 (30 June 2021: 102,370) providing an excellent base to expand recurring revenue products in the future

·      Key OEM contract was won with BMW and the business now has 20 contracts with car OEMs

·      Pod Point now has over 160 active fleet business accounts with businesses including Thames Water, Aldi and Savills all won

·      In the Commerical segment significant orders were won during H1 from DHL, Hammerson for the Bullring in Birmingham, Landsec for Bluewater and Custodian Capital

·      Second manufacturing partner, Celestica, contracted and delivering units from Q2

·      Owned asset sites increased to 500 with 1,109 charging points including 101 DC rapid units

 

⁽¹⁾        Calculated as number of Home installs divided by new PiV registrations in the same period

 

 

 

Headline KPIs

 

	6 months to 30.06.2022	6 months to 31.06.21	Period on period change
Total UK new PiV(1) sales	166,512	132,094	26%
Home units installed	36,576	22,647	62%
Commercial units installed and shipped	8,844	4,840	83%
Effective Home market share	22%	17%	+5pp
Effective Commercial market share	5%	4%	+1pp
Total Home units installed and able to communicate	156,398	89,195	75%
Total Commercial units installed and able to communicate	18,732	13,175	42%
Average annual recurring revenue per unit(2)	£41	£30	+£11
Total Owned Asset sites	500	396	26%
Total Owned Asset Charge Points	1,109	853	30%
Total Owned Asset Rapid/DC Charge Points	101	61	66%

 

(1)   PiV defined as "Plug-in Vehicles"

(2)   Calculated as total recurring revenue divided by number of commercial units installed and able to communicate

 

 

Erik Fairbairn, Chief Executive Officer of Pod Point, said:

 

"This was a strong first half year performance for Pod Point. We have continued to make progress towards our goal of travel which doesn't damage the earth. We installed and sold over 45,000 charge points (H1 2021: over 27,000), maintained outstanding customer satisfaction ratings, enabled enough electricity to power 952 million kilometres¹ of electric (H1 2021: 326 million kilometres) driving through our network and helped to avoid 129,000 tonnes of CO2e. In addition, our network of installed and able to communicate units has increased by 71% to 175,130.

 

Revenues grew by 57% to £41.6 million (H1 2021: £26.5 million), with our Home segment growing by 64% to £27.2 million and our Commercial segment growing by 40% to £12.1 million. Signing BMW was another great win for the team and we now have contracts with 20 automotive OEMs.

 

The backdrop of severe component shortages and extreme cost inflation exacerbated by the war in Ukraine and the lengthy Covid lockdowns in China did impact the business,  resulting in a negative impact of £0.9 million to gross margin and adjusted EBITDA as we sourced components to increase charge point production to meet the needs of our customers. Even with this impact overall gross profit grew by 48% to £10.4 million with headline percentage gross margin of 25% compared to 27% in 2021. Adjusted EBITDA was a loss of £1.4 million compared to a positive adjusted EBITDA of £0.5 million in H1 2021. Loss before tax of £7.5 million arose following share based payment charges, amortisation and depreciation, and any adjusting transactions (H1 2021: £6.7 million).

 

Our peak Home install month was March with over 8,500 charging points installed. To deliver this was an amazing achievement by the Pod Point team as well as our manufacturing and installation partners. At no point in H1 did we run out of our charging units and this continuous production was delivered by the limited re-design of products to match component availability and the spot buying of components to ensure production targets were met. We clearly demonstrated the scalability and flexibility of the Pod Point business model and with the addition of our second manufacturing partner Celestica we have further enhanced our ability to scale the business.

 

Demand for PiVs remains strong. Registrations of new PiVs for the half year increased 26% to 166,512 from the first half of 2021and PiVs represented 21% of all new vehicles compared to 15% in the first half of 2021. Overall vehicle sales, however, decreased by 12% in the same period and in Q2 2022 PiV sales were down 2% on the same quarter in 2021 with delivery dates for newly ordered vehicles increasing to over nine months. Whilst it is pleasing to see improvements in our core market share metrics in the Home and Commercial segments shortages of new vehicles make it very difficult to predict PiV registrations for H2 2022; it is clear, however, that some of the growth we expected this year will be delayed into 2023 and will impact our H2 results to some extent.

 

With demand for electric vehicles remaining strong I firmly believe the future remains bright for Pod Point and, as electric vehicles become the norm rather than the exception, the market opportunity is clear, even with the issues we face across the rest of this year. Our investment strategy, as set out at IPO hasn't changed and we will continue to invest in product and our inhouse teams. We look forward to continuing on our vision to create a future where travel doesn't damage the earth."

 

[1] Calculation: Energy transfer (Pod Point Internal Data) multiplied by average EV efficiency 3.46 m/kWh (https://ecocostsavings.com/average-electric-car-kwh-per-mile/) and converted from miles into km (multiply by 1.60934)

 

 

Webcast presentation

There will be a webcast presentation for investors and analysts this morning at 09:00 am. Please contact podpoint@tulchangroup.com if you would like to attend.

Enquiries: 

Tulchan (Public Relations adviser to Pod Point)

James Macey White/ Mark Burgess/ Matt Low/ Laura Marshall / Arthur Rogers

+44 (0)20 7353 4200 / PodPoint@tulchangroup.com

BofA Securities (Joint Corporate broker)

Peter Luck, Mitchell Evans

+44 (0)20 7628 1000

Numis (Joint Corporate broker)

Andrew Coates

 

+44 (0)20 7260 1000

 

 

About Pod Point Group Holdings plc

Pod Point was founded in 2009 by CEO and entrepreneur Erik Fairbairn. Driven by a belief that travel shouldn't damage the earth, Pod Point has installed over 175k charge points and is an official charge point supplier for major automotive brands.

Pod Point installs a broad range of products from smart domestic charge points to high power rapid chargers and load balancing systems. Pod Point works with a broad range of organisations and customers to offer home and commercial charging solutions with customers including major retailers, hotels, restaurants and leisure venues. 

Pod Point is trading on the London Stock Exchange under the ticker symbol "PODP."

For more information, visit https://investors.pod-point.com/results-and-reports

 

Chief Executive's Review

 

It has been a strong H1 for Pod Point, with revenue growing by 57% from H1 2021 to £41.6 million and over 45,000 units installed and shipped in the period, a 65% growth from H1 2021. Our ecosystem focused business model delivered growth across all business segments.

 

Q1 was our most successful quarter ever with £23.8 million of revenues and 22,536 home units installed as the Office for Zero Emission Vehicle ("OZEV") home grant came to a well-publicised end on 31 March 2022, and many customers had charging units installed ahead of the delivery of their PiVs. 8,517 Home units were installed in March alone.

 

Q2 revenues were lower at £17.8 million with 14,040 home units installed. This was partly due to customers having installs of their charge points ahead of the delivery of their vehicles; later in the quarter, the war in Ukraine combined with ongoing Covid lockdowns in China have impacted the production and supply of new PiVs.

 

At no point during the first half of the year did we run out of our charging units. This continuous production was delivered by the limited re-design of products to match component availability and the spot buying of components to ensure production targets were met. Whilst we incurred additional cost as a result of the spot buying, I believe this clearly demonstrated the scalability and flexibility of our business model.

 

We contracted a second manufacturing partner, the international manufacturing company Celestica. They started to deliver units in Q2 from their Romanian production facility, and can scale and adjust production levels rapidly. They can also use their procurement scale to source the best value components for our charging unit production.

 

In the Home segment we delivered revenues of £27.2 million, growth of 64%, and units of 36,576 (H1 2021: 22,647), with Q1 being particularly strong on the back of the end of the OZEV home grant on 31 March 2022. 88% of units were installed by partners and 12% by inhouse installers compared to 87% and 13% in H1 2021.

 

The addition of BMW has increased our contracts with car OEMs to 20. We grew our active domestic fleet accounts to 160, including Thames Water, Aldi and Savills and re-signed our largest fleet customer, the NHS, for an additional three years in March. We also signed a preferred supply, referral agreement with Pendragon Vehicle Management which operates a 15,000 vehicle fleet.

 

Our market share in the Home segment (calculated as number of Home installs divided by new PiV registrations in the same period) was 22% higher than the 17% in H1 2021. Whilst some of this increase was due to customers having installs in advance of vehicle delivery, ahead of the cessation of the grant on 31 March, it was pleasing to grow our market share.

 

Home gross margin was £6.3 million, an increase of 36% from H1 2021.  Percentage gross margin of 23% was lower than the 26%-28% we had expected. This was mainly due to the additional component costs discussed above but also due to the mix of customers, with more customers taking advantage of OEM contracted price discounts as we focused on these customers in Q1.

 

In the Commercial segment we delivered revenues of £12.1 million, growth of 40% with 8,844 units installed or shipped (H1 2021: 4,840), 83% growth. We had significant new orders from DHL, Hammerson for the Bull Ring in Birmingham and Custodian Capital. We reached our 200^th Lidl store DC rapid installation and ended the half year operating 242 sites on their behalf.

 

Our market share in the Commercial segment (calculated as number of Commercial units installed or shipped divided by new PiV registrations in the same period) was 5%, higher than 4% in H1 2021. Our unit sales to our wholesale partners were very strong, helping to increase the volume of units shipped and consequently increasing our market share.

 

Commercial gross margin of £2.8 million, an increase of 59%, from H1 2021 was delivered with percentage gross margin of 23%, slightly higher than the 21% we had expected. This was mainly due to the mix of customers and installations offsetting the additional component costs discussed above.

 

At the end of the half year we had 18,732 commercial units installed and able to communicate, an increase from 13,175 from 30 June 2021 and 16,005 from 31 December 2021. Currently only Commercial units generate revenues and these revenues had increased by 91% to £0.8 million from H1 2021. The average recurring revenue per unit (the KPI we use for these revenues) improved from £30/unit to £41/unit as we grew our share of usage revenues, (where we act as the charge point operator on behalf of the customer and owner of the charge point units).

 

During the period we increased the number of Tesco sites where we have Owned Assets to 500, compared to 396 at 30 June 2021. The total number of units increased to 1,109, from 853 at 30 June 2021, with DC rapid units increasing from 61 at 30 June 2021 to 101. Total gross capital employed increased to £5.5 million from £3.9 million at 30 June 2021; this investment helped to increase revenues to £1.5 million from £0.8 million in H1 2021. The majority of this increase was media related revenues but usage revenue grew to £0.4 million as more drivers used the DC rapid units.

 

During H1 we took the strategic decision to cease our sales activity in Norway since charge point design and supporting technology for the UK and Norway had started to diverge more markedly than in the past and we wanted to prioritise the hardware and software development on UK product and activity. Norway revenues and gross margin were small and are now included in the Commercial business segment.

 

We have started to deploy the funds raised at IPO, with the hardware and software team increasing by 32 staff to 103 staff at the end of H1. This represented a capitalised investment of £2.7 million, compared to £1.1 million in H1 2021.

 

Our strategy and investment plans remain as set out at IPO:

 

·      We continue to expand our product offering to serve additional routes to market, such as multi-tenancy dwellings and on street charging.  It is important that the EV revolution does not leave anybody behind - and both flats and on-street parking are significant segments with customers that require our products and services.

 

·      We remain focused on investment in developing our software capability to realise a number of recurring revenue business models. Our charge points are already smart, so we are building software on top of our network to enable our charging points to work in harmony with the grid at both a local and national level. With so many consumers moving to a reliance on electricity for their driving, as well as potentially for heating, we are going to see a significant increase in the demand for electricity across the UK. Amongst other activities, we plan to use our network of charge points to carefully manage how energy flows into the nation's electric cars and hence manage load on the grid. We expect to do this in a way which doesn't inconvenience the EV driver in a material way. This is going to be a challenge - but as the country's leading provider of charging solutions, it is our responsibility to be part of the solution, not part of the problem.

 

·      We remain committed to increasing our investment in our owned charge point assets, such as those at destinations and end-route, including retail parks and leisure locations. These charge points will be a mix of AC charge points for those locations with longer dwell times and DC units capable of rapid charging at speed so drivers can get on their way quickly. The speed of this investment will be slower than envisaged at IPO, given the current lead time on the delivery of DC units, and we expect the 2022 investment to be limited to additional Tesco sites and some pilot sites. The Board will also review the phasing and level of investment across 2023 to ensure the business retains a higher level of cash than previously assumed, given the impact of the current supply chain issues on the revenue and cash generation of the business and the increased levels of economic uncertainty.

 

As we expected, the UK Government has continued to wind back direct fiscal incentives and to focus on indirect actions such as the recently implemented changes to planning regulations which require developers to include charge points in new properties. We see this as the right strategy and an opportunity for Pod Point. The Government is also introducing various charging point product regulations and we are updating our products to ensure they comply with these new regulations as they are implemented.

 

The UK has continued to reduce transport carbon emissions and to improve air quality for everyone as demonstrated by over 166k of new PiV registered during the 6 months to June 2022 compared to 132k in the 6 months to June 2021, an increase of 26%, representing 21% of new vehicle registrations compared to 15% in the 6 months 2021 with 802k vehicles registered in 2022 compared to 910k in 2021.

 

In terms of specific sustainability KPIs, in the six months to 30 June 2022 (compared to the six months to 30 June 2021) Pod Point:

 

·      Enabled 10.6 million charging sessions (H1 2021: 4.4 million)

 

·      Helped to avoid 129k tonnes of CO2e (H1 2021: 44k tonnes)

 

·      Enabled 952 million kilometres of low carbon travel (H1 2021: 326 million kilometres)

 

·      Enabled 171.0 GWh of electricity to be delivered (H1 2021: 58.9 GWh)

 

 

Outlook for H2 2022

 

We see demand for electric vehicles remaining strong, however global supply chain challenges are expected to continue through the rest of 2022 and into 2023. This will impact both supply of new vehicles and the manufacture of charge points across all suppliers. As a result, accurate forecasting of the expected number of new PiV registrations across the rest of the year, as well as the resultant impact on gross margin, is very difficult. The strong growth in demand for PiVs together with our improved market share suggests that whilst the EV infrastructure rollout may be slower than expected six months ago, Pod Point remains well positioned to benefit.

 

We have demonstrated our ability to scale both up and down with demand for our products. We are focused on ensuring we continue to have adequate supply of units for our customers and have already incurred, and expect further, additional component cost inflation.

 

The current lead times for DC rapid charging units, which we buy from third parties, have extended from three months to nine months due to these companies having their own supply chain issues. These timeframes do mean that any significant deployment of capital by the business in its Owned Assets charging points will only start in 2023. It is also likely to be at smaller scale than previously expected to ensure the business retains an appropriate cash balance across 2023.

 

Whilst the current price increases in electricity are an obvious concern for consumers and businesses we do not expect them to materially impact sales of electric vehicles, as the ongoing running costs will still be significantly cheaper than vehicles reliant on internal combustion engines. The impact of inflation and the wider economic environment in the UK is obviously significant, and we will monitor carefully whether we see any material impact on the demand for and sales of PiVs.

 

We currently have £82 million of cash in hand and expect to have in excess of £70 million at the year end.

 

Sector Review

 

In the Home business segment:

 

·      The Home business segment delivered a strong performance, with revenue of £27.2 million in H1 2022 (H1 2021: £16.6 million) an increase of 64%. This was driven by growth in Pod Point's core market and market share gains.

 

·      New PiV registrations increased to 166,512 in H1 2022 from 132,094 in H1 2021, an increase of 26% and the number of units installed increased to 36,576 compared to 22,647 in H1 2021, an increase of 62%. This led to Pod Point's market share of new PiV registrations increasing to 22% from 17% in H1 2021.

 

·      This increase in revenues helped to deliver an increased gross margin in H1 2022 of £6.3 million compared to £4.6 million in H1 2021, an increase of 36%. 

 

·      Percentage gross margin in H1 2022 was 23% compared to 28% in H1 2021, a decrease of 5pp. The financial impact of sourcing additional components due to supply chain shortages and cost inflation was £0.9 million.

 

·      A key OEM contract was won with BMW and the business now has 20 contracts with OEMs and over 160 active fleet business accounts with businesses including Thames Water, Aldi and Savills.

 

In the Commercial business segment:

 

·      Strong performance with revenue of £12.1 million in H1 2022, compared to £8.7 million in H1 2021, an increase of 40%. 

 

·      Number of units installed increased to 2,112 compared to 1,717 in H1 2021 and the number of units sold directly increased to 6,732 compared to 3,123 in H1 2021, representing a total increase of 83% with Pod Point's market share of new PiV registrations increasing to 5% from 4% for H1 2021.

 

·      This increase in revenues helped to deliver an increased gross margin in H1 2022 of £2.8 million compared to £1.7 million in H1 2021, an increase of 59%. 

 

·      Percentage gross margin in H1 2022 increased to 23% compared to 20% in H1 2021. Average revenue per unit decreased to £1,356 from £1,767 in H1 2022 to a change in the mix of installations and sales, with higher volumes of wholesale sales and fewer higher value, but lower margin, installations than in 2021.

 

·      Significant new orders in H1 included included DHL, Hammerson for the Bullring in Birmingham, Landsec for Bluewater and Custodian Capital

 

In the Recurring Revenue business segment:

 

·      Good performance, with revenue of £0.8 million in H1 2022, compared to £0.4 million in H1 2021, an increase of 91%. Network revenues increased to £0.5 million compared to £0.3 million in H1 2021 and other revenues increased to £0.3m compared to £0.1 million in H1 2021.

 

·      This increase in revenues helped to deliver an increased gross margin in H1 2022 of £0.4 million compared to £0.2 million in H1 2021, an increase of 169%. 

 

·      Percentage gross margin in H1 2022 increased to 56% compared to 41% in H1 2021, an increase of 15pp, with the average annual recurring revenue per unit installed and unit able to communicate increasing to £41 compared to £30 in H1 2021.

 

·      The number of Commercial units installed and able to communicate at the period end increased to 18,732 compared to 16,005 at the end of 2021 and 13,175 at 30 June 2021. All recurring revenues in both 2022 and 2021 were derived from these units. 

 

·      The number of Home units installed and able to communicate at the period end increased to 156,398 compared to 121,415 at the end of 2021 and 89,195 at 30 June 2021. This growth is strategically significant as the business seeks to expand its recurring revenue products across these units. 

 

In the Owned Asset business segment:

 

·      Strong performance with revenue of £1.5 million in H1 2022, compared to £0.9 million in H1 2021, an increase of 72%. 

 

·      The total number of sites installed at the period end increased to 500 compared to 453 at the end of 2021.  The total number of units installed at the period end increased to 1,109 compared to 984 at the end of 2021, including 101 rapid DC units at the period end compared to 73 at the end of 2021.

 

·      This increase in revenues and units helped to deliver an increased gross margin in H1 2022 of £0.9 million compared to £0.5 million in H1 2021, an increase of 76%. 

 

·      Percentage gross margin in H1 2022 increased to 61% compared to 60% in H1 2021, an increase of 1pp.

 

·      Gross capital deployed on assets increased to £5.5 million at the end of 30 June 2022 (H1 2021: £3.9 million).

 

Financial Performance

 

It was a strong performance by the business in the 6 months ended 30 June 2022 with total revenue of £41.6 million (2021: £26.5 million), an increase of 57%, with the biggest growth from our Home business segment.

 

This increase in revenues helped to deliver an increased total gross margin in H1 2022 of £10.4 million (2021: £7 million) an increase of 47%.

 

Total percentage gross margin in H1 2022 decreased to 25% (2021: £27%).

 

The increase in revenues and resulting gross margin were offset by the increased operating costs of being a larger business and the increased costs of being a listed business which resulted in the business delivering an adjusted EBITDA loss of £1.4 million in H1 2022 (H1 2021: positive £0.5 million)

 

Helped by the funds raised at the IPO in November 2021 period end cash and short term investments were £82 million compared to £96.1 million at the end of 2021.

 

Unadjusted losses after tax increased to £7.5 million in H1 2022 (H1 2021: £6.7 million).  EBITDA losses increased in H1 2022 with losses of £4.0 million (H1 2021: £3.8 million).  There were increased depreciation and amortisation costs of £3.5 million in H1 2022 (H1 2021: £2.3 million) and decreased net financing costs of £77k (H1 2021: £0.6 million).

 

Total administrative expenses as disclosed on the Income Statement increased to £17.9 million in H1 2022 compared to H1 2021 of £13.1 million, an increase of 37%.  This increase was due to the growth in the size of the business and the additional staff required to deliver this growth, the one off and ongoing cost of being a listed company (including Share Based Payments) and additional depreciation and amortisation costs as a result of additional funds being invested in Owned Assets and intangible asset development. The business continues to increase its support costs to support the growth, and its requirements as a listed business and incurred significant one off costs in both periods.  Looking at these individually:

 

·      Administrative expenses excluding one off large corporate transaction and restructuring costs, share based payments and depreciation and amortisation costs increased to £11.8 million in H1 2022 compared to H1 2021 of £6.6 million, an increase of 80%.  This increase was due to the growth in the size of the business and the additional staff required to deliver this growth and the ongoing costs of being a Listed company.

 

·      Depreciation and amortisation costs increased in H1 2022 to £3.5 million compared to £2.3 million for H1 2021, as a result of additional funds being invested in Owned Assets and research and development.

 

·      Following the listing in November 2021, Pod Point incurred share based payment charges relating to a number of share awards which were implemented at or soon after listing resulting in a charge to the Income Statement of £2.6 million for H1 2022 (H1 2021: nil).

 

·      One-off large corporate transaction and restructuring costs, relating primarily to the Listing were £nil for H1 2022, compared to £4.3 million for H1 2021.

 

Net finance costs, primarily related to borrowing costs on a loan to fund owned assets, decreased to £0.1 million in H1 2022, compared to £0.6 million in H1 2021 as a result of borrowings being repaid to Pod Point's pre-listing shareholders in Q4 2021.

 

Trade and other receivables grew due to growth in the business. Inventories remained roughly the same and included the costs of additional component stock acquired. Trade and other payables reduced from the year end as the remaining IPO costs were paid during H1 2022.

 

Closing cash and short term investments were £82.1 million (31 December 2021: £96.1 million). At 30 June 2022 £nil cash had been placed on a six month bank deposit and so has been classified as a short term investment (31 December 2021: £50 million). Closing net assets were £194.5 million (31 December 2021: £199.8 million).

 

Cash outflow from operating activities increased in H1 2022 by £3.6 million to £8.7 million as compared to H1 2021. This was primarily due to a larger operating loss, once the non-cash impact of share-based payments had been taken into account.

 

Cash flows used in investing activities had inflows of £44.3 million in H1 2022 as compared to outflows of £3.5 million in H1 2021 primarily due to the redemption of cash invested in short term deposits which was required to be disclosed separately from cash. The cash is now invested in shorter term interest deposits so can be categorised as cash.

 

Cash inflow from financing activities decreased to £0.3 million H1 2022 compared to £7.1 million in H1 2021 with new borrowings of £1.3 million in H1 2022 compared to new borrowings from shareholders to fund the business in H1 2021 of £8.1 million.

 

During H1 2022, transactions with related parties included sale of goods of £43k (2021: £245k) purchase of goods of £273k (2021: £247k), and interest on intercompany loans of £nil (2021: £510k). These transactions were undertaken with the two shareholders EDF Energy Customers Limited and Legal & General Capital Investments Limited and their subsidiaries.

 

Principal Risks and Uncertainties

 

Effective risk management is essential to the achievement of our strategic objectives and driving sustainable

business growth. We aim to maintain an appropriate balance between protecting the company against specific

risks while being able to encourage appropriate and monitored risk-taking and innovation that allows us to take advantage of business opportunities.

 

The Board, as part of its half year processes, considered reports from management reviewing the principal risks and uncertainties and how these might evolve during the second half of 2022.

 

Following this review the Board is satisfied that the Group's principal risks remain largely unchanged, however there are a few updates to the list contained in our 2021 Annual Report to bring to your attention. These are detailed below:

 

Dependency on the continuing adoption of and demand for EVs: As recognised earlier in the CEO Report there has been a deceleration of new PiV registrations as component shortages have restricted restrict vehicle production and this has resuled in increased delivery lead times. The result is a delay to EV demand which in turn creates uncertainty for our H2 forecasts.

 

Ongoing and potential future disruptions to the global supply chain: As recognised earlier in the CEO Report, rising component costs and other supply chain delays and disruption (resulting in higher costs from spot buying and additional brokerage costs) are impacting gross margin and EBITDA. As supply chain conditions are not expected to improve in the short-term and whilst further disruption remains possible in light of the ongoing conflict in Ukraine and Covid-19 lockdowns, notwithstanding the mitigating effects of building resilience in our supply chain during H1, this remains a key risk being which is being closely monitored for H2.

 

No Longer Reliant on a Single Manufacturer: We have now on-boarded and are increasing production with Celestica, a global leader in manufacturing and supply chain solutions, to manufacture some of our AC EV charge point product range. Whilst we continue to pursue greater resilience and flexibility across our supply chain, the addition of Celestica together with our incumbent suppliers, means that our reliance on a single manufacturer has been reduced and so this risk can now be removed from the list of principal risks.

 

Delays to Product Development: Global supply chain challenges and component cost increases in H1 have required us to direct product development resources towards limited redesign of our existing products to facilitate greater component flexibility, supply chain resilience and protect margins. This has mitigated our exposure to market-wide supply and production disruption and enabled us to continue to meet customer demand during some of the most challenging global macro-economic conditions. The consequence of this, is that new technology developments and innovation have been delayed affecting the roll out of new products against our anticipated roadmap, however, we continue to recruit heavily into our technology team to build resources and aim to regain some ground in H2.

 

In light of the above, our Principal Risks & Uncertainties have been updated as follows:

 

1. Dependency on the continuing adoption of and demand for EVs

2. Competition in the industry and market segment

3. Delays to Product Development

4. Ongoing and potential future disruptions to the global supply chain

5. Government and regulatory initiatives with unknown outcomes

6. Health and safety risks related to our products, installation, maintenance and operation of electrical equipment

7. Potential undetected defects, errors or bugs in hardware or software

8. Deterioration of economic conditions in the UK, the UK's economic relationship with the EU and the      possibility of a future health pandemic

9. Disruptions to our network and IT systems

10. Ability to hire and retain management, key, and other skilled employees

 

Further details of the Group's principal risks and uncertainties can be found on pages 45-51 of the 2021 Annual Report, which is available on https://investors.pod-point.com/

Covid-19

 

The ongoing Covid-19 pandemic continues to have a significant impact on many aspects of the global economy, and the duration and depth of the impacts remain uncertain. During 2021, vehicle production increased after the various Covid-19 effects of 2020, however the global supply chain disruptions continued to affect the availability of semiconductors and therefore the ability of manufacturers to return production to pre-pandemic levels. This has continued into H1 2022, exacerbated by Covid-19 related lockdowns in China. To date, we have managed to ensure manufacturing volumes have met customer demand, and our Director of Manufacturing and supply chain team continue to monitor the situation.

 

We continue to encourage our people to work from wherever suits them best and provide financial support for this. We also carefully monitor and assess any Covid-19 related health and safety issues of our employees and sub-contractor partners in the field.

 

 

 

Director's Responsibilities Statement

 

We confirm that to the best of our knowledge:

 

a) The condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting"

 

b) The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risk and uncertainties for the remaining six months of the year); and

 

c) The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

 

By order of the Board

 

 

D Surtees

Director

27 July 2022