AMTE Power Plc (LON:AMTE), a leading UK developer and manufacturer of lithium-ion and sodium-ion battery cells for specialist applications in global markets, has today announced its results for the half year ended 31 December 2022 and the conclusion of its new CEO’s strategic review.
Alan Hollis, CEO of AMTE Power, commented:
“I am pleased to report that AMTE Power continued to make good progress in the half year ended 31 December 2022, with progress continuing in line with market expectations of loss before tax for the full financial year.
“Since my arrival at AMTE Power I have been undertaking a strategic review of the people, markets, products, operational capability, functional capability and processes with a clear focus on positioning the business for success through commercialisation of its products and scaling up of the organisation to support our ambitious plans to accelerate routes to market.
“AMTE Power has rich technical capabilities and a highly differentiated product range across multiple markets. We have identified where the business needs to be positioned as a market leading cell provider for specialist applications, with planned scale up at our existing manufacturing facility in Thurso, Scotland and the UKBIC, ahead of Gigafactory scales of production in due course in our proposed new facility.
“AMTE Power is one of the few manufacturers of battery cells in the UK today and has three products in development that are close to commercialisation with samples already in the hands of customers for testing from whom we are receiving positive feedback.
“This strong foundation underpins our growth plans and, combined with the renewed vision and the team’s energy, means we look forward with confidence and focus to the year ahead.”
Ultra High Power
· Fully functional and operationally tested cells (A-samples) leading to UN38.3 certification and abuse testing to be completed in H1 2023
· Planning to supply samples to customers in Q2 2023
· Production planning at UKBIC (“UK Battery Industrialisation Centre”) for larger scale production
· Initial order received for Ultra Safe cells and focus on strengthening the opportunity pipeline
· A-Samples already shipped to customers in Q1
· Initial batch of cells produced at Thurso shipped to customer
Half Year Financial Performance reflects continued investment in commercialisation plans
· Turnover of £0.55 million (H1 2022: £0.82 million)
· Loss before tax of £3.72 million (H1 2022: loss £2.65 million)
Balance sheet strength underpins investment phase
· Cash and cash equivalents of £1.21 million (H1 2022: £6.26 million)
· £2 million of convertible bond facility remains undrawn
· Focus on converting opportunities to orders with in excess of 100% of planned capacity already covered by existing MoU’s / JDA’s.
· Cost base continuing in line with market expectations for the current year
· Positive outlook with healthy pipeline
Refined focus following new CEO strategic review:
· Growth Strategy increasingly focused on accelerating the evolution of AMTE Power from technology research to full commercialisation of products in order to capitalise on unique market opportunities.
· Products aligned to the growing high performance and fuel cell electric vehicles (“FCEV”) sectors, battery energy storage systems (“BESS”) and other specialist markets.
· Fully functional and operationally tested cells leading to UN38.3 certification and abuse testing to be completed for all products during H1 2023.
· Dundee remains the preferred site for AMTE Power’s new facility, with the long-term objective of Gigafactory scale.
· Investment strategy to accelerate time to market by scaling up production capabilities at Thurso facility and UKBIC:
o Ultra Prime commercial contract signed and initial batch of cells shipped
o Investment to support scale up at Thurso planned to commence in 2023
o Phased ramp up of Ultra Prime and Ultra Safe cells at Thurso and Ultra High Power at UKBIC
o Planned Gigafactory scale of production for Ultra Safe and Ultra High Power will be our proposed Gigafactory
o Ultra Prime will continue to be manufactured at Thurso
· Senior leadership team bolstered with augmented skills and resources critical to scale up the business and drive ambitious plans
o Appointment of Anita Breslin, Chief Finance Officer
o Appointment of Wes Simons, Corporate Development Director
o Appointment of John Valentine, Supply Chain Director
ESG is central to our business, and we continue to make good progress against our ESG strategy targets. In partnership with the leadership team, our sustainability lead and our third party consultant, we have developed an ESG strategy that comprises six pillars aligned to a number of the key goals identified in the UN Sustainable Development Goals framework. We have already made significant progress having already achieved scope 1 and 2 emissions of 337 tonnes CO2 equivalent for FY 2022, secured 100% renewable electricity saving 136 tonnes CO2 equivalent, been recommended for accreditation to ISO14001 at Thurso and started to include sustainability as a key criteria within our procurement policies. Without a focus on this metric our current outturn would have been 472 tonnes CO2 equivalent. We have also shipped samples to a recycling company to test and confirm recyclability of product and process wastes.
· Developing capabilities to scale up and commercialise whilst retaining R&D expertise at our core
· Healthy pipeline:
o Five MoUs and development agreements for the supply of Ultra High Power
o First order received for Ultra Safe
o One supplier agreement already in place for Ultra Prime
o Samples for two of our three products already in customer hands with positive feedback
· Continue to focus on converting existing customer pipeline
· Complete investment plans to increase production capacity at our existing facility in Thurso
· Continue to make progress on new facility planned for start of production in 2026 and eventual Gigafactory scale
· Secure supply chain through responsible sourcing
Chief Executive’s Statement
AMTE Power is the only manufacturer in the UK with three highly differentiated battery cells in development that are close to commercialisation.
I am pleased to report that the business has continued to make good progress in the half year ended 31 December 2022.
Since joining AMTE Power, I have been undertaking a strategic review of the people, markets, products, operational capability, functional capability, and processes with a clear focus on positioning the business for success through commercialisation of its products and scaling up of the organisation to support our ambitious plans and to accelerate routes to market.
The business has rich technical capabilities and a strong foundation to support future growth, with planned scale up at our existing manufacturing facility in Thurso and the UKBIC ahead of full-scale Giga rates of production in due course at a proposed new facility.
Refined focus following new CEO strategic review:
Our ambition is to grow AMTE Power production to c.1GWh per annum in due course. In order to achieve this, our growth strategy is increasingly focused on accelerating the evolution from technology research to full commercialisation of our core products to capitalise on the unique market opportunities ahead.
Achieving this ambition and accelerating time to market will require:
· Scaling up of AMTE Power’s existing battery cell manufacturing equipment and expertise at the production facility in Thurso, complemented by cell manufacturing at the UKBIC
· Commercialisation of three core products: Ultra High Power, Ultra Safe and Ultra Prime
· Increasing production rates towards the long-term objective of Gigafactory scale at the proposed facility in Dundee, Scotland
· Ensuring AMTE Power has a secure supply chain in place
· Investing in our people to build a team with the skill and resources necessary to support future growth
Our products are aligned to the growing FCEV, BESS and other specialist markets. We are aiming to achieve A-samples leading to UN38.3certification for all products during H1 2023 which enables initial customer testing.
AMTE Power’s purpose-built cell manufacturing facility in Thurso has the second largest cell manufacturing capacity in the UK. The investment to support scale up at Thurso is planned to commence in 2023 where we will begin a phased ramp up of the production of our Ultra Prime cell, to meet the supply agreement in place, and our Ultra Safe cells. In tandem, we are planning to increase the manufacture of our Ultra High Power cell at the UKBIC.
Dundee remains the preferred site for AMTE Power’s new facility, with the long-term objective of Gigafactory scale. We plan for production of our Ultra Safe and Ultra High Power cells to begin at the proposed Dundee facility in 2026, with Ultra Prime continuing to be manufactured at Thurso.
To support our growth ambitions, we have bolstered the senior leadership team during the period with the appointments of Anita Breslin as Chief Finance Officer, Wes Simons as Corporate Development Director and John Valentine as Supply Chain Director. We are delighted to have them at AMTE Power as we build a team with the experience, skills and resources necessary to scale up and commercialise the business. The achievements of the existing AMTE Power staff must also be recognised for their fantastic contribution so far to take us to where we are today and their passion and experience for the business, augmented with our ambitious future plans is essential in driving the business forward.
During the first half of the current financial year, good progress continued to be made across our core product range as we move towards full commercialisation and meeting growing demand across all applications.
Ultra High Power
Our target market for the Ultra High Power cells is high power density cells for all FCEV, high-performance BEV and high-power automotive applications. This includes becoming a first mover, in the European market which is forecast to grow to c.50GWh by 2030.
We have non-binding MoUs and development agreements in place for the Ultra High Power cell with key automotive partners including Cosworth, Viritech, MAHLE Powertrain, TAE (Sprint) power solutions and BMW. During the first half of this calendar year, we expect to complete UN38.3 certification and abuse testing of fully functional and operationally tested A-sample cells and commence first commercialisation by supplying A-samples to our customers in Q2 2023. Production planning is in place for larger scale production at UKBIC in readiness for the expected demand for high power cells across our target market.
Our Ultra Safe cell is well suited to the battery storage market, which is set to grow in Europe to approximately 300GWh by 2030, of which AMTE forecasts approximately 10% is expected to be based on sodium-ion by 2030, as a result of the need to speed up the replacement of fossil fuels with renewable energy. Battery storage will play an increasingly pivotal role between green energy supplies and responding to electricity demands via the grid.
The Ultra Safe product is a greener, safer and cheaper alternative to other technologies and driven by this increasing demand for continuous power and energy storage systems in critical infrastructures, adoption of renewable energy grid storage and balancing solutions.
During the first half of 2023, the business received an initial order for Ultra Safe cells. Going forward, we will continue to focus on strengthening the opportunity pipeline. A-Samples have already been shipping to customers in Q1 for Ultra Safe and Ultra Prime for customer testing.
Our Ultra Prime cell is designed for use in some of the most difficult environments, with very high energy density, high-temperature performance and low self-discharge. The nature of the work undertaken in decarbonising industries such as construction, mining, oil and gas, and agriculture requires a combination of high power and range. With this, and a growing engagement with the rail industry, we expect additional volume orders from outside of our core markets, supporting us further to expand our manufacturing footprint in line with our plans.
During the period, we carried out customer testing of prototype cells in accordance with the agreement already in place for supply of this cell into subsea applications. The Ultra Prime cell is on track to be produced from Thurso with commercial start of production in 2023.
Financial Review: half year to end December 2022
For the 6-month period ended December 2022 the Group’s turnover was £0.55m, 32% less than H1 2022 (£0.81m). Grant funding income for the period was £0.47m, down from £0.62m in the first half year of 2022. Similarly commercial revenue fell from £0.16m H1 2022 to £0.07m in H1 2023. The reduction in revenue reflects the reduced strategic investment in research and development, moving away from contract manufacturing and continued focus towards commercialising the three core products.
The Group’s loss before tax for the period was £3.72m (H1 2022 loss £2.65m) impacted by the commencement of scaling the organisation and financing costs of £0.40m incurred in the period related to the Arena convertible bond. Group loss after tax was £3.67m (H1 2022, loss £2.65m).
At the half year end, cash and cash equivalents amounted to £1.21m (H1 2022; £6.26m), with two fifths (£2m) of the Arena convertible bond facility unutilised.
AMTE Power is one of the only manufacturers in the UK with three highly differentiated battery cells in development that are close to commercialisation. The business is readying itself to scale up and commercialise whilst retaining R&D expertise at our core.
The business has a healthy pipeline, with five MoU and development agreements for the supply of Ultra High Power; the first order received for Ultra Safe; an existing agreement in place for Ultra Prime; and A samples for two of our three products already in customer hands, with positive feedback received so far.
We will continue to focus on converting our existing customer pipeline while completing investment plans that will enable the business to increase production capacity at our facility in Thurso, in addition to our arrangements at UKBIC. Led by our new supply chain director, the business is working to ensure we have a secure supply chain through responsible sourcing as we progress towards Giga rates of production at our proposed Gigafactory in Dundee, which is planned to start production in 2026.
AMTE Power has a positive outlook supported by its healthy pipeline. Customer testing is underway, and we are focused on converting opportunities to orders and the cost base continues in line with market expectations for the full year. We are excited about the opportunities ahead.
Chief Executive Officer