Pod Point : Annual Report and Accounts 2023

Annual Report and Accounts 2023

We believe driving shouldn't cost the earth

Our mission is to make living with an EV easy and affordable for everyone

Strategic Report

Governance

Financials

01

Our purpose, vision and mission

Purpose

Driving shouldn't cost the earth

• Pod Point was founded with the aim of making travel not damage the earth. We still believe passionately that energy transition and decarbonisation of transport are huge priorities for all of us
• Our updated purpose represents our motivation and reason for succeeding. It's what we care about and it's the world we want to help create
• We believe that driving, powered by renewable electricity, will protect our planet as well as being the most cost-effective form of car transportation
• As a market leader, we will play a major role in making that a reality

Vision

Powering up 1 million customers in a profitable network

• Our success will be good for all our stakeholders
• We aim to deliver value to our shareholders and investors who have placed their trust in us. We will drive the business past breakeven, into profitability and onto positive
  cash generation
• Our award-winning products attract leading customer reviews. We have built a network of over 226,000 connected chargepoints across our customer base and we aim to please many, many more
• By being part of the Pod Point network of connected chargepoints and customers, we will bring ongoing value such as participating in grid and energy flex value, in a way that our competitors will find hard to match
• The future for Pod Point is all about scale and our vision is deliberately big. We're aiming at 1 million customers

Mission

Make living with an EV easy and affordable for everyone

• This is what we do, every day. It's the problem we solve. It's who we are
• We believe that EVs promise the lowest total cost of ownership. But once people own their EV it's our job to make that promise come true
• Mass adoption is what we want to promote, and we believe that will happen as people realise that living with an EV can save them cash and that charging their EV is easier and cleaner than visiting a fossil fuel forecourt

Pod PointAnnual Report and Accounts 2023

Strategic Report

Governance

Financials

02

In this report

Strategic Report

At a glance	04
Chair's statement	07
Chief Executive Officer's statement	09
Market context	14
Business model	17
Our strategy	22
Chief Financial Officer's statement	26
Key performance indicators	33
ESG	34
Section 172 statement	69
Non-financial information statement	75
Risk management	76

Governance

Chair's introduction	93
Compliance statement	94
Board Leadership and Purpose	95
Division of Responsibilities	106
Nomination Committee report	109
Audit & Risk Committee report	112
ESG Committee report	117
Directors' remuneration report	119
Directors' report	132
Statement of Directors' Responsibilities	135

Financials

Independent Auditor's report	137
Consolidated financial statements	146
Notes to financial statements	150
Company financial statements	182
Notes to the Company financial statements	184
Glossary	190
Shareholder information	191

Pod PointAnnual Report and Accounts 2023

Financial summary

• 11% year-on-year revenue decline from £71.4 million to £63.8 million
• Marked revenue improvement during the second half.
  Despite overall reduction of 11%, the first half declined by 26% on 2022, but this turned around to a growth of
  11% year-on-year in the second half, driven by improved performance in our UK Home segment
• The plug-in vehicle ('PiV') market grew by 24% year-on-year, primarily driven by growth in the fleet market, as demand for private vehicles was flat. This, combined with impact of the OZEV grants, which benefited 2022, saw revenue in our
  UK Home segment declined by 35% across the full year to £27.0 million
• Revenue growth in all other segments besides UK Home, with UK Commercial, UK Distribution and Owned Assets growing by 7%, 26% and 97% respectively
• First revenues generated from our Energy Flex business
• Strong progress on gross margin, which increased by 7ppts to 30% following improvements to our supply chain, operational efficiencies and an increasing mix of business coming from higher margin revenue streams
• Adjusted EBITDA loss of £15.3 million was, as expected, a result of increased costs combined with the revenue decline in UK Home (adjusted EBITDA is defined on page 163)
• The loss before tax for 2023 was £83.2 million after share- based payment costs and inclusive of a non-cash goodwill and intangibles impairment charge of £53.2 million
• With £48.7 million cash at year end, the Group retains a healthy balance sheet to enable delivery of the Powering Up strategy

For more details, see our business segments on pages 5 to 6 and KPIs on page 33

Operational summary

• Continuing expansion of the customer base across both UK Home and UK Commercial segments with 226,000 chargepoints installed and able to communicate up 16% year-on-year
• Market leadership in the UK Home sector. Cumulative total of 199,442 home chargepoints installed and able to communicate, with a further 33,513 home chargepoints installed in the year
• Significant progress in the UK Commercial and UK
  Distribution segments, with 17,213 chargepoints installed and shipped across both segments in the year - an increase of 9% from 2022, with directly sold units increasing by 20%
• Completion of our Owned Asset roll-out with our Tesco partnership, with 1,344 total chargepoints, including 142 rapid units, installed across 598 sites
• 2.5 billion kilometres of electric driving powered by our chargepoints in 2023 - up by 4% compared to 2.4 billion in 2022
• 25.3 million charging sessions delivered in 2023 - up by 12% compared to 22.5 million in 2022
• 448 million kWh delivered by our chargepoints in 2023 up 22% year-on-year, avoiding the equivalent of circa 399,000 tonnes of CO2e
• Started the first phase of our restructuring programme as part of the £6 million annualised cost reduction goal in our Powering Up strategy
• Signed contracts to deliver energy flex value in partnership with energy retailers (EDF and Centrica) and network operators (UK Power Networks)

Strategic Report	Governance	Financials				03
Strategic		Chair's statement		07
		At a glance		04
Report
	Market context		14
		Chief Executive Officer's statement	09
		Business model		17
		Our strategy		22
		Chief Financial Officer's statement	26
		Key performance indicators	33
		ESG		34
		Section 172 statement	69
		Non-financial information statement	75
		Risk management		76

Our mission is to make living with an EV easy and affordable for everyone

Pod PointAnnual Report and Accounts 2023

Strategic Report

Governance

Financials

04

At a glance

Pod Point is a market-leading provider of EV charging solutions

From the very beginning of Pod Point's journey back in 2009, we recognised the significant role EVs would have in the UK's journey to net zero. We were equally aware back then of the challenges; chiefly, that charging speeds would be unable to match how quickly a petrol or diesel car could be refuelled.

We knew that with cars spending around 95% of their time parked, the best times to charge would be when the driver was busy doing something else, such as working, sleeping, shopping, or exercising. In other words, whenever they

Typical charging pattern

The diagram below sets out the EV charging ecosystem, showing how drivers are charging their EVs.

On-street2%

Destination 2%

weren't driving the car.

The industry has changed a lot since we were founded, with just 1,583 EVs registered in 2010. SMMT data shows that PiV registrations during 2023 increased further to 455,998.

As the market has evolved, so has Pod Point. We've refined our products and made them smarter and implemented the features most relevant to our customers. During Q4 2023, we launched our new strategy - Powering Up - to focus on home and workplace charging, where the majority of charging takes place, as well as energy flex services. We are still as committed as ever to making the switch to EVs as easy as possible for everyone, and to normalising life

Workplace Charging 4%

4% 7%

24%

62%

Home 62%

with an EV. Our reputation has grown substantially, with Pod Point being voted 'Best Home EV Charger 2023' by What Car? and our charger installation service being endorsed as a Which? Trusted Trader Approved Service. Pod Point remains one of the largest EV charging networks in the UK, with more than 226,000 chargepoints installed

Multi-tenant dwelling 7%

Fleet Depot 24%

and able to communicate as at 31st December 2023.

Pod Point is looking ahead to new horizons and new opportunities, including within international markets where we will either leverage existing partnerships, such as with EDF, or forge new relationships to take Pod Point beyond the UK and to the rest of Europe. We will also work with energy companies on our flex proposition, managing the demands on the grid, bringing savings to our customers.

This itself will bring new challenges, but as before when Pod Point first began, we're confident in our ability to overcome them.

Pod PointAnnual Report and Accounts 2023

Strategic Report

Governance

Financials

05

At a glance continued

During the year, we have transitioned to a business unit structure based upon our customer segmentation, which enables the business units to be competitive, agile and effective in their individual markets, while working to overall Group strategic goals.

UK Home

UK Distribution

Customers

• Consumers coming via our website, where we install smart chargepoints in domestic properties, generating one-off installation revenue
• Major automotive manufacturers such as Mercedes, BMW, Mini, Hyundai and Kia through referral agreements, enabling us to provide home chargepoints to their customers
• Fleet companies including Mitie, Sky,
  Lex Autolease and Zenith, providing home charge solutions to customers ranging from end-user van drivers, company car drivers and customers benefitting from salary sacrifice agreements
• This segment is driven by the demand for EVs

Competitive position

• Despite a downturn in revenue in 2023, we remain one of the most recognisable brands for home charging and have the highest volume of website traffic versus our competitors
• We are one of the few chargepoint operators
  ('CPOs') in the UK who offer a true end-to- end service and support the customer from initial referral through to the point of installation and beyond
• Our commitment to providing a proven and trusted service is reflected in our industry- leading customer satisfaction scores, averaging 4.6/5 across over 38,000 reviews

• We have more automotive partners than any other CPO, including 14 OEM brands and 150+ fleet partnerships
• We have a depth of experience unmatched in the industry, with over 226,000 chargepoints installed and able to communicate, and a proven ability to scale with demand

Growth drivers

• During the year, our newly created Dealer team contracted with 11 dealer groups totalling 280 dealership sites, including Westway, Halliwell Jones, Parks Motor Group and Group 1 Automotive. We expect further growth in this channel in 2024
• Launch of our new home charger, Solo 3S, which will come with solar functionality, unlocking this customer segment for us
• During 2023, we grew our marketing function and capabilities, and as a result expect to see increased conversion of opportunities
• We expect the supply of electric vans to further improve in 2024, enabling us to maximise our existing fleet relationships

Revenue: £27.0 million 42% of total revenue

Customers

• Housing developers such as Barratt Homes, David Wilson Homes, Bellway and Redrow to provide chargepoints for new developments
• Independent contractors and the wholesale market including key relationships with Rexel, YESSS Electrical and Medlock
• Freeholders, managing agents and resident associations to provide supply, installation and ongoing service, having contracts with companies such as McCarthy Stone and
  Inspired Villages

Competitive position

• First mover advantage combined with a recognisable brand has given us strong relationships with the large players in this market
• Our advice and design capabilities are highly regarded by our clients. Until very recently no other CPOs were offering the same level of charging network design services to our customer base
• Our team has been at the forefront of driving policy change through the House Builders
  Federation, and we are well-respected across this industry

Growth drivers

• Continued implementation of Part S Building Regulations, which mandates that a chargepoint must be installed on every new-build house with associated parking
• Launch of our new home charger Solo 3S with solar functionality and Open Charge Point Protocol ('OCPP') capability, creating new opportunities with those businesses where
  OCPP is a mandatory requirement
• Our new Installer App, which targets improvements in installation efficiency and quality, improving its appeal to the wholesale and contractor market

Revenue: £5.4 million 8% of total revenue

Pod PointAnnual Report and Accounts 2023

Strategic Report

Governance

Financials

06

At a glance continued

UK Commercial

Energy Flex

Customers

• Under our Powering Up strategy, we will focus on workplace charging with key customers, including commercial landlords, managing agents, office buildings, distribution centres and depots. We will move away from multi-tenancy dwellings and destination charging
• Our more focused offering will ensure a greater depth of product offering for our workplace customers, which services their specific needs
• We receive ongoing network fees from commercial customers
• We receive a share of revenue from certain groups of chargepoints owned by our commercial customers

Competitive position

• Strong recognisable brand presence in the workplace sector, with a high level of experience across multiple install types
• Some of the largest workplace installations in the UK with several of the UK's largest consumer brands
• Experienced sales team with an in-depth knowledge of hardware, software and corporate social responsibility benefits attached to workplace charging

Growth drivers

• Our ability to leverage the OZEV EV chargepoint and infrastructure grants for our customers, which promote the rollout of charging infrastructure at workplace sites by reducing installation costs
• The introduction of new Twin and Solo 3S chargers, which includes OCPP compatability, giving us access to a larger addressable market
• Our new Installer App targets improvements in installation efficiency and quality, giving us greater access to opportunities in the market

Revenue: £23.0 million 36% of total revenue

Customers

• We 'flex' the time at which vehicles are charged, to minimise cost, with initial focus on our large estate of domestic chargepoints
• Our customers include national and regional grid operators, retail energy suppliers and aggregators via the provision of grid load management services and opportunities for energy trading. This market is currently in an early stage of development
• We are developing a consumer flex proposition, which can be offered to consumers without affecting their existing energy tariff
• We are also developing a flex proposition, which can be offered to consumers via their existing energy supply company

Competitive position

• As one of the earliest providers of chargepoints, we have the largest UK estate of domestic chargepoints
• As a trusted brand, we will work in the consumer's best interest
• Because our architecture allows us to control the chargepoints behaviour directly, we can manage all of the technical parts necessary to deliver flex services

Growth drivers

• With the largest UK network of EV chargepoints, we have critical mass that we can offer to new customers
• We can extend into multiple energy flex and load balancing markets
• Signing up existing and new customers onto flex programmes, providing savings on their energy spend
• Working with a variety of energy companies to assist them to provide flex services to their customers

Revenue: £39,000

Other segments for 2023

Owned Assets

Our portfolio of chargepoints at 598 sites includes AC and rapid DC chargers, funded and owned by Pod Point at locations within the Tesco estate. Whilst this is a profitable segment, we had already signalled during 2022 that this was no longer a key priority for future growth. In our strategic review, we confirmed that the public charging network is a segment that is now non-core, so it will continue to appear as one of our reporting segments for as long as it remains part of the business.

Revenue: £8.4 million, 13% of total revenue

Pod PointAnnual Report and Accounts 2023

Strategic Report

Governance

Financials

Chairman's statement

Gareth Davis

Chairman

of the Board

Pod PointAnnual Report and Accounts 2023

07

Dear Shareholder,

An emphatic response to a challenging year

This was a very busy year for Pod Point, as we worked hard to counter a number of negative macroeconomic factors. Our response was both vigorous and wide-ranging - including changes at the top of our team and the development of our Powering Up strategy - and I believe we now have a robust and very detailed strategic plan, and clear financial targets, and are well-placed to fulfil our purpose of ensuring that driving doesn't cost the earth, underpinned by a strengthened balance sheet.

The increasing price of electricity, inflation and a general cost-of-living crisis all contributed to a tough business climate for most companies in 2023, including Pod Point. Demand for chargepoints was negatively affected by this fragile consumer environment. Government policy changes, including the move in the ban on the sales of new ICE vehicles from 2030 to 2035, further dampened private customer demand for EVs.

A disappointing performance

Although affected by the unhelpful economic and market backdrop, our financial performance was nevertheless disappointing, with revenue and profit below expectations for the first half of the year. Performance for the second half of the year improved, slightly ahead of our reset expectations.

We took significant steps to preserve cash and maintain a healthy cash position as we move into 2024 and beyond.

In terms of detail, revenue for the year was £63.8 million, down 11% compared to 2022. While revenue was down 26% in the first half, we returned to growth in the second half, which was +11%. Our gross margin saw a strong improvement across both H1 and H2 and was up 700 basis points compared to 2022. This reflected a combination of price increases, supply chain efficiency and better mix. Group adjusted EBITDA loss was £15.3 million, a higher loss than in 2022 as operating expenses grew faster than our gross profit. The increase in costs reflects the excessive complexity of the business and lack of cost discipline of the previous management team, underpinning the importance of delivery of the £6 million targeted cost savings under Powering Up. Our year end cash position was £48.7 million, reflecting tight operational grip on the business and good working capital management. We did not draw on our £30 million credit facility.

Drilling down into the performance of our business units, UK Home revenue reduced by 35%, reflecting the more challenging market and reduced market penetration, whilst UK Commercial revenue and UK Distribution revenue increased by 7% and 26% respectively. Towards the end of the year, we saw encouraging signs that our UK Home performance was showing some recovery and stabilisation.

Changes to the Board

In July, our founder and Chief Executive Officer Erik Fairbairn stepped down from his post to allow new leadership to help Pod Point navigate the growing market for EVs. On behalf of the Board, I would like to thank Erik for his vision and commitment. He not only founded the Company and foresaw future demand for charging solutions, but also took us to a successful flotation, and we wish him well in his future endeavours.

Strategic Report

Governance

Financials

08

Chairman's statement continued

Andy Palmer, our Senior Independent Director (SID), became interim CEO following Erik's departure, with Karen Myers becoming SID. Having pioneered the world's first mass-market electric vehicle, the Nissan LEAF, Andy has enormous experience in EVs and his industry knowledge and track record proved invaluable. On 20th February 2024, we were pleased to announce the appointment of Melanie Lane as our permanent CEO, who brings significant experience in the EV charging sector and the wider energy industry, and will lead the continuing implementation of our Powering Up strategy.

As announced in last year's Annual Report, David Wolffe was appointed as Chief Financial Officer from January 2023. David has over 20 years' experience in Board level roles and during this last year has taken steps to strengthen the Finance team.

A new team, but a familiar destination

We also experienced several other departures and arrivals in 2023, as we moved with pace to replace and strengthen our senior team, especially in the areas of technology, human resources and investor relations. This team has worked closely and tirelessly with Andy Palmer over the last six months to review our business performance alongside external consultants. The results of their endeavours included the Powering Up strategy and operational plans, which were presented at the Capital Markets Day in November.

While we have repositioned our Company and extended our ambitions, the destination remains the same. Despite the short-termcost-of-living crisis and U-turns by the UK Government, the world is moving inexorably away from fossil fuels and towards electrification. Guided by our mission to make living with an EV easy and affordable for everyone, we are ready, focused and determined to reap the rewards.

I would like to thank our people for their hard work and understanding through what was a difficult period for everybody at Pod Point. Change is never easy, but it has without doubt been necessary - and this process will continue as we move into 2024.

Outlook

Despite the temporary setbacks of the last year, the outlook for Pod Point remains positive, given the market potential, our refocused strategy, our strengthened balance sheet, and our strengthened management team. We will launch a new product during the year, build further momentum in Energy Flex, and take our first steps into European expansion: all key strategic initiatives to drive long-term value creation. Thanks are due to our major shareholders for their support and forbearance during the year, and we look forward to rewarding their patience.

Gareth Davis

Chairman

Pod PointAnnual Report and Accounts 2023

Strategic Report

Governance

Financials

Chief Executive Officer's statement

Powering Up to deliver significant growth and value

Pod PointAnnual Report and Accounts 2023

09

A critical milestone for the Group was delivered in November, with the hosting of our first Capital Markets Day and the launch of our transformation plan - Powering Up.

Andy Palmer

Chief Executive Officer