Equipmake Holdings - Results for the year ended 31 May 2023
02/10/2023 07:00
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RNS Number : 2619O Equipmake Holdings PLC 02 October 2023
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR").
2 October 2023
Equipmake Holdings plc
("Equipmake" or the "Company")
Results for the year ended 31 May 2023
Equipmake, the UK-based engineering specialist pioneering the development and
production of electrification products across the automotive, aerospace, bus,
and coach industries, is pleased to announce its audited results for the
12-month period ended 31 May 2023.
Financial Highlights
• Listed on the Aquis Stock Exchange and raised £16.2m of
gross proceeds during the year.
• Total Revenue of £5.1m (FY2022: £3.7m), comprising:
o £0.8m from Powertrain sales (supply only) (FY2022: £0.2m);
o £0.9m from Powertrain sales (including vehicle integration) (FY2022:
£Nil);
o £1.6m from Electric Vehicle ("EV") component sales (FY2022: £0.4m);
o £1.3m of Engineering projects revenue (FY2022: £2.0m);
o £0.3m of licensing / royalty revenue (FY2022: £nil); and
o £0.1m of grant income (FY2022: £1.0m).
• Gross margin (inclusive of grants) of £1.2m or 23.9%
(FY2022: Gross loss of £2.4m). Gross margin (exclusive of grants) of £1.3m
or 25.5% (FY2022: no comparative available).
• Loss after tax was £4.8m (FY2022: £5.3m).
• Loss per share was 0.60p (FY2022: 2.3p).
• Cash at 31 May 23 was £7.0m (31 May 22: £1.9m).
Operational Highlights
• Delivering vehicles into service for First Bus York and
Transport for London ("TfL"), and secured orders for further bus repowers from
both new and existing clients.
• Signed licensing agreement with Sona BLW Precision
Forgings Ltd ("Sonar Comstar") in India for the application of certain
products in electric cars, buses, commercial vehicles and off-road vehicles in
India, Thailand and other select South Asian countries.
• Secured, and successfully delivered, further orders for
EV powertrains for fire trucks for both the UK and US markets.
• Obtained Innovate UK / Advanced Propulsion Centre
("APC") grant funding of up to £1.6m for the Hydrogen Electric Integrated
Drivetrain Initiative ("HEIDI").
• Secured a flexible lease on a 50,000 sq. ft unit to
facilitate the production of the growing repowering business.
Post Year End Highlights
• Agreed a term sheet with H55 for the provision of an
aerospace electric motor - 26 June.
• Supplied cutting edge E-Drivetrain for luxury long-range
electric flying boat - 10 July.
• Awarded £1.47m electric bus repower contract by Newport
Transport - 3 August.
• Awarded £1.75m electric bus repower contract by Big Bus
Tours - 29 September.
Ian Foley, CEO of Equipmake said: "The Company is buoyed by the successes
achieved since the IPO and is confident that it will achieve both its
short-term and long-term goals. It is converting opportunities and
establishing itself across multiple markets and the scaling-up of its
production capability is underway, demonstrating a leading role that Equipmake
has in the transition to zero-emission powertrains.
Investments in areas including supply chain management, product development
and improved facilities are targeted to improve margins, in the current and
subsequent financial years, and whilst there are signs that recent, well
documented, inflationary pressures are abating, the Company remains alive to
further potential opportunities and impacts going forward.
The Board's expectations for FY2024 are underpinned by a contracted
orderbook(*) of £9.2m (excluding pending opportunities above), as of 29
September 2023 with a number of opportunities at advanced stages which are
expected to be converted into contracted orders in the coming months."
(*)The contracted orderbook is orders that have been contracted but where
revenue hasn't been recognised.
**ENDS**
For further information, please contact:
Equipmake Via St Brides Partners
Ian Foley, Founder and CEO
Steven McGillivray, CFO
Panmure Gordon (Corporate Adviser & Joint Broker) Tel: +44 (0) 20 7886 2500
John Prior / James Sinclair-Ford / Freddie Twist
Hugh Rich / Sam Elder
VSA Capital Limited (Joint Broker)
Simon Barton / Simba Khatai / Alex Cabral Tel: +44 (0) 20 3005 5000
St Brides Partners (Financial PR Adviser) Tel: +44 (0) 20 7236 1177
equipmake@stbridespartners.co.uk
Susie Geliher / Paul Dulieu
About Equipmake
Equipmake is the UK-based engineering specialist pioneering the development
and production of electrification products to meet the needs of the
automotive, aerospace and other sectors in support of the transition from
fossil-fuelled to zero-emission powertrains.
Equipmake is a leader in ultra-high performance electric motors and complete
EV drivetrains and ultra-fast power electronic systems. As well as developing
proprietary technology - such as an ultra-compact, lightweight high
performance spoke motor - it also offers industry-leading EV consultancy.
Equipmake has developed a vertically integrated solution providing fully
bespoke solutions. The Company has built a significant pipeline of
opportunities, as demand for electric vehicles increases as part of the global
decarbonisation movement.
Chairman's Statement
The route to net zero is firmly on the agenda for governments, businesses and
individual consumers, and the stakes are high.
The transition to electric vehicles is important in this journey and with the
cost and efficiency of the key components including batteries, motors and
inverters, their mainstream adoption is increasingly economically attractive
and compelling.
Electric passenger cars receive a great deal of press attention and their
volume and impact is very significant. This however is just one facet of a
universal EV movement, and it is thanks to the innovation and vision of the
Equipmake executive team, that our company is pioneering electrification
products across multiple transport sectors, helping many industries adopt
their own paths to carbon reduction.
Investors who joined us early in our journey as a public company will have
noted our prominence in the bus and coach industries, a core pillar of our
business. We are scaling up to meet increasing demand for repowering in this
sector, including adding a second site, as it continues to provide significant
opportunity for growth.
Retrofitting buses and coaches, by replacing incumbent Diesel technology with
battery solutions, enables operators to accelerate their net zero ambitions,
whilst providing a sustainable approach to extending the life of their assets
and reducing spend on new electric vehicles. There are approximately 6,000
non-electric buses currently operating across the UK alone that are between 6
and 10 years old, being strong candidates for such retrofitting.
Government support, through various Research & Development (R&D)
programmes, has been important to Equipmake's development over the past 10
years. It is pleasing however that as we begin to mature our product
offering, we saw in our last financial year that 97.7% of revenue was
delivered from commercial contracts, up from 72.1% in the previous period. UK
government affiliated agencies, most notably Innovate UK and the Advanced
Propulsion Centre, continue to strongly support the transition towards net
zero and we are delighted to maintain a close relationship with them and play
our role in helping meet these nationwide objectives. One demonstration of
this was the grant funding of up to £1.6m, announced in April 2023, under the
Hydrogen Electric Integrated Drivetrain Initiative (HEIDI). This funding is
being directed to the development of an integrated Hydrogen fuel cell battery
hybrid system, featuring Equipmake's motor, inverter, and related technologies
for use across multiple vehicle systems including buses, goods and passenger
vehicles.
Our intellectual property (IP) in particularly electric motors and inverters
is central to our long-term growth. During the year we saw the start of how
we intend to generate incremental returns from these assets, with our
licensing agreement with Sona Comstar. This agreement sees Equipmake license
certain products from its range of drive motors, inverter, and electric
powertrain technology to Sona Comstar for applications in electric cars,
buses, commercial vehicles and off-road vehicles in India, Thailand and other
select South Asian countries. These are important markets for Equipmake, and
addressing them via an agreement with Sona Comstar, a leading locally based
automotive industry supplier, is a key milestone for us. In India alone, the
share of electric passenger vehicles is forecast to increase to 25% by 2032,
up from less than 1% in 2022, and electric buses to increase to 21% by 2032,
up from 5% in 2022.
The importance of this agreement is that, in addition to the one-time licence
fee received during the period, Equipmake will receive royalties on the
licensed products manufactured and sold by Sona Comstar.
This is a good example of how Equipmake's IP, which has been developed over
the past 10 years, can be leveraged to access new markets at minimal cost,
through contractual relations with high quality partners. We expect to use
this model with other suitable original equipment manufacturers (OEMs) and
tier 1 suppliers over the coming years as we look to scale revenue and address
new geographies and sectors.
Our strategy to diversify our sector penetration, using a common pool of core
product IP, has gained momentum during the year as we have proven our product
applications in selected industries. We are now working with customers in
markets directly adjacent to the bus industry, including coaches, but also in
natural extensions to these, with for example Emergency One, the largest fire
truck manufacturer in the UK. We have also entered a technology partnership
with H55 S.A. ("H55"), a leading aerospace electric propulsion company, for
the intended supply of an aerospace variant of our electric motor, have
supplied an ultra-high-performance motor and inverter for a rocket fuel pump
with Gilmour Space and an ultra-lightweight motor and inverter for Vertical
Aerospace.
Post period end, in July 2023, we announced that we had supplied a variant of
our e-drivetrain system for use in a world-first long-range electric flying
boat, opening up further possibilities in the marine industry.
Our core IP and product family is directly applicable across many
multi-billion-pound sectors, and our strategy is a careful and manageable
route to several of those markets over time. Whilst this nascent
electrification movement feels, to many, that it is only just beginning, it is
important to note that Ian Foley and the Equipmake R&D team have been at
its forefront for decades, which is what sets our business apart. Indeed, the
majority of our business comes to us through word of mouth, with OEMs seeking
us out as experts with proven production capabilities, and a track record of
innovation.
It is with this in mind that I look to the future with enormous enthusiasm for
how we anticipate growing our business over time, and in supporting our
customers ambitions toward a lower carbon future.
I would like to extend my gratitude to the whole Equipmake team and to our
shareholders for their hard work, shared vision and commitment to our
company's growth.
Clive Scrivener
Non-Executive Chairman
29th September 2023
Chief Executive's Review
Introduction
The financial year ending 31 May 2023 ("FY2023") has been a pivotal year for
Equipmake, during which it has continued to prove itself as a true pioneer of
electrification solutions that address the global demand for zero-emission
products. During the past financial year, the Company reported a 36.3%
year-on-year increase in revenue (inc. grants) to £5.1m, and secured £16.2m
of gross investment, enabling the execution of its growth plans.
Business Overview
FY2023 was transformational for Equipmake. The admission to the Aquis Stock
Exchange in July 2022 enabled the Company to progress its plans for growth, in
particular the commercialisation of its EV powertrain solution, which
culminated in the delivery of repowered buses into service for First Bus York
and TfL, as well as the delivery of fire truck powertrains for both the UK and
US markets.
To facilitate further expansion, in March 2023, the Company secured a flexible
lease on a 50,000 sq. ft unit in Norfolk, which will provide an annual
capacity for vehicle repowering of 200 units per annum, and space to increase
production capacity for motor and battery build. Scaling-up will be completed
in phases, with the first phase to be completed by the end of FY2024.
Following completion of phase one, the Company will have the capability to
deliver at a monthly run rate that equates to 100 repowers per annum.
The profile of Equipmake was enhanced further by the signing of the licencing
agreement with Sona Comstar, securing an established manufacturing partner
that enables it to address demand for certain EV products in India, Thailand
and other select South Asian countries. Product development commenced during
Q4 of FY2023, with production expected to commence in 2025.
The Company reinforced its position as a market leader of electrification
products for Aerospace by delivering motors and inverters to existing clients
and by securing a new partnership with Swiss electric propulsion company, H55,
to certify an Electric Propulsion System (EPS) for production. The EPS will
initially be used on the Bristell B23 Energic aircraft, a two-seater electric
training aircraft, with initial sales expected in 2025.
The Company did experience a myriad of supply chain challenges during FY2023,
particularly in respect of electrical components which impacted both
availability and price, and significant one-off price spikes resulting from
the Russia/Ukraine war. This ultimately impacted gross margin through the
absorption of higher prices and/or the redesign of products to incorporate
alternative components. The in-house engineering capability to pivot to
alternative components mitigated the severity of these issues on customer
deliveries and enabled the Company to report its highest annual revenue number
to date.
Innovation and new product development are core principles of Equipmake and in
FY2023, the Company continued to invest in these areas. During the year, it
capitalised £0.8m of development costs relating to its powertrain products
and was successful in obtaining up to £1.6m of grant funding via Innovate UK
/ APC to develop a powertrain (including the battery management system and
thermal management system) that integrates with a hydrogen fuel cell. The
project spans 27 months and further advances the capability of Equipmake's
product range.
Current Trading
The business is trading in line with market expectations, with a strong
opening orderbook and significantly advanced discussions with new and existing
clients, underpinning the revenue expectation for FY2024. This includes the
delivery and trial of the repowered double deck diesel vehicle for First Bus,
which is still to be completed. Since the balance sheet date, the business has
been successful in securing the following opportunities:
• Bus repower contracts for delivery in FY2024:
o Newport Transport - eight repowers for £1.475m.
o Big Bus Tours - nine repowers for £1.575m.
• Emergency One - three fire truck powertrains for £0.6m.
• Contract with a new OEM for the repower of an airside
operational vehicle. The prototype project is for £0.6m and will be delivered
in FY2024, but also provides a timeframe for the commencement of discussions
regarding manufacturing and a supply agreement.
Outlook
The Company is buoyed by the successes achieved since the IPO and is confident
that it will achieve both its short-term and long-term goals. It is converting
opportunities and establishing itself across multiple markets and the
scaling-up of its production capability is underway, demonstrating the leading
role that Equipmake has in the transition to zero-emission powertrains.
Investments in areas including supply chain management, product development
and improved facilities are targeted to improve margins, in the current and
subsequent financial years, and whilst there are signs that the recent price
spikes are abating, the Company remains alive to further potential
opportunities and impacts going forward.
The Board's expectations for FY2024 are underpinned by a contracted orderbook
of £9.2m (excluding pending opportunities above), as of 29th September 2023
with a number of opportunities at advanced stages which are expected to be
converted into contracted orders in the coming months. The contracted
orderbook is orders that have been contracted but where revenue hasn't been
recognised.
This report was approved by the board on 29th September 2023 and signed on its
behalf.
Ian Foley
Chief Executive Officer
Group Strategic Report
Introduction
The directors present their strategic report and the audited financial
consolidated statements for the year ended 31 May 2023. The company acts as a
holding company for Equipmake Limited, collectively referred to as Equipmake.
Principal Activity
Equipmake is a UK-based engineering specialist pioneering the development and
production of electrification products across the automotive, aerospace, bus,
coach, and fire truck industries, supporting the transition from
fossil-fuelled to zero-emission powertrains.
Business model
Through its vertically integrated business model, Equipmake designs and
manufactures a significant number of the core technologies that constitute an
EV powertrain (motors, inverters, battery packs, control systems) and
integrates these components into a working system. The individual components
or the full powertrain can be sold to an OEM, or Equipmake can integrate the
powertrain into the vehicle for the end user. It also licences its products to
select partners for volume manufacture.
A key differentiator for Equipmake is its ability to provide the most
appropriate solution for a given application, customising its solution to
match the cost and performance demands of its customers. Given the relative
immaturity of the EV market, the Company looks beyond a transactional
relationship and positions itself to partner its customers with their own
electrification journey. This approach has helped the Company to establish a
leading position in the bus and coach repowering market and secure key
customers in the electric fire truck market.
The above approach, coupled with Equipmake's reputation for innovation and
high-performance products has led to it securing contracts to supply EV
components into the aerospace market and facilitated the partnership with H55
to design prototype motors for its propulsion system, with the intention to
develop a fully certified system for production.
Innovation and new product development is integral to the strategic direction
of Equipmake. Historically, a significant amount of development has been
completed with support from Innovate UK / APC grant projects and this
continues to be the case. In addition to receiving funding towards
development, the Company also benefits from the wider collaboration that these
projects provide.
Business review
Total revenue (exclusive of grant revenue) increased to £4.9m, which
represents year-on-year increase of 84.8% (FY2022: £2.7m). Total revenue
(inclusive of grant revenue) increased to £5.1m, an increase of 36.3%
(FY2022: £3.7m). This growth is driven by the commencement of delivery of
repowered vehicles to First Bus York and motors and inverters to Equipmake's
aerospace customers, increases in the delivery volumes of fire truck
powertrains and its ASIL-D inverter to an electric hyper car OEM. The signing
of the Sona Comstar licencing agreement also contributed £0.3m of licencing
revenue which was not present in the prior year. Grant revenue decreased by
£0.9m due to the timing of the completion of historic projects and the
commencement of new ones.
Gross margin is reported both inclusive and exclusive of grants. Whilst grants
have a positive impact on the Company, the partially funded nature of these
projects results in a gross loss which distorts the operational performance of
the Company. Gross margin (inclusive of grants) was £1.2m or 23.9% (FY2022:
loss £2.4m). Total gross margin (exclusive of grants) was 25.5% (FY2022: no
comparative available).
Administrative costs were £5.3m (FY2022: £1.9m), reflecting the investments
made in a number of areas. £2.8m of the year-on-year increase relates to
staff costs, reflecting a 19% increase in the average headcount (FY2023: 82,
FY2022: 69) and the reporting of development costs within overheads. Costs
relating to property increased by £0.2m, due to the new property lease signed
at the end of March 23 and increased electricity costs. There has also been
a year-on-year increase in professional fees since the IPO of £0.2m.
During the year, the Company received £16.2m in gross proceeds from the IPO
and the subsequent fundraise in January/February 2023, to support the
expansion plans of the business.
The cash balance at the end of the year was £7.0m (FY2022: 1.9m), an increase
of £5.1m. This reflects the impact of the fundraising activities during the
year, less the investments made into the business, principally funding trading
activities and working capital requirements.
As part of the Company's strategy for mitigating supply chain issues and its
plans for expansion, there has been a significant investment in stock. The
closing value as at the balance sheet date was £3.0m, (FY2022: £0.8m).
Total debtors have increased to £4.5m (FY2022: £1.9m) due to the non-linear
phasing of revenue recognition and the overall increase in revenue. The value
of creditors due within one year has decreased by £3.8m to £2m (FY2022:
£5.8m) due to the inclusion of a £3.8m convertible loan note in the prior
year total. This was converted into equity at the IPO.
Loss after taxation was £4.8m (FY2022: £5.3m) leading to a loss per share of
0.60p (FY2022: 2.3p).
Other key performance indicators
The Directors monitor the business internally with several performance
indicators: orderbook, cash flow, health and safety, adherence to plan and
quality. The board has assessed results against these KPIs and are happy with
the progress that has been made.
The contracted orderbook value as at 31 May 2023 was £5.5m, increasing to
£8.6m as at 27th September 23, reflecting the successful conversion of
opportunities into orders since the start of the FY2024 financial year.
Cash at 31st May 2023 was £7.0m (2022: £1.9m), reflecting the external
funding received and the significant investment made in the business during
the financial year.
Principal risks and uncertainties
The directors continuously review and take steps to ensure that the risks and
uncertainties faced by the Company and its subsidiary are appropriately
managed and mitigated against. These risks are categorised in the table below.
Risk Description Mitigation Strategy
Financial risks - Price risk The Group is exposed to price variations in respect of its purchases and its Contractual clauses to flex the sales price when there are unavoidable
sales price. significant increases in component costs.
Maintain strong relationships with customers and suppliers to facilitate lower
cost alternatives.
Financial risks - Liquidity risk The Group is currently loss making and therefore requires access to cash to The listing provides access to investors and transparency to investors of
fund development. market value.
Financial risks - foreign exchange risk The Group is exposed to foreign exchange risk with a small number of overseas When no natural hedge is possible and the currency exposure cannot be avoided,
customers and procures certain components in foreign currency. the Company will utilise forward contracts to hedge against foreign exchange
risk.
Operational risks - supply chain risk Reliance on key suppliers / single source components. Supply chain In-house engineering of components to design products around multi-sourced
disruptions. commodities.
In-house Procurement expertise to
identify component shortages and dynamically manage stock levels.
Operational risks - execution risk The Group is introducing new products and technology to the market. In-house testing process that exceeds customer requirements coupled with
operational trials.
Operational risks - Dependence on key executives and personnel The Group's success depends to a significant degree upon the vision, technical Contractual terms and incentives to retain existing employees.
and specialist skills, experience and performance of its Directors, senior
management and other key personnel. Plans to invest in formal training and development programme to facilitate
development of in-house talent together with a strategy to build the senior
team through external hires.
Intellectual Property (IP) risks The Group may not be able to sufficiently protect its IP and proprietary The Group reduces this risk by utilising the services of patent and trademark
expertise. attorney and technology is patented where possible.
It also controls access to the technology through software controls and
encryptions.
Directors' statement of compliance with duty to promote the success of the
Group (Section 172 Statement)
Section 172 of the Companies Act 2006 requires that Directors of a company
must act in ways that they consider, in good faith, would be most likely to
promote the success of the company for the benefit of its members as a whole,
and in doing so have regard (amongst other matters) to:
• the likely consequences of any decision in the long
term;
• the interests of the company's employees;
• the need to foster the company's business relationships
with suppliers, customers and others;
• the impact of the company's operations on the community
and the environment;
• the desirability of the company maintaining a reputation
for high standards of business conduct; and
• the need to act fairly as between members of the
company.
The board has identified the following stakeholder groups and engages with
them to foster strong relations and to act fairly between them:
• Customers: Equipmake engages with customers at all
stages of the project life cycle - from concept design through to the
production phase and after sales service and support. This is mutually
beneficial and ensures that relationships with customers are not purely
transactional and are instead focused on long-term relationships.
• Employees: the employees are critical to the long-term
success of Equipmake. The Company has introduced a strategy which rewards and
retains its staff. Staff received share options in the previous financial
year, it continually reviews its overall benefits package to maximise its
value to employees and is addressing development needs through in-house and
external training. Post balance sheet date, it has set up an apprenticeship
scheme and a formal management training programme.
• Grant bodies and other government agencies: Equipmake
has benefited from a number of Innovate UK Research and Development grants in
recent years and maintains a good relationship with the grant issuing bodies.
The Advanced Propulsion Centre (APC) has supported multiple projects and
participated in press events post-completion of the grant projects.
• Investors and shareholders: The Company engages with
investors through its annual and interim reports, AGM and analyst and investor
presentations.
• Partnerships: Equipmake has established partnerships
with multiple companies to facilitate the exploitation of the opportunities in
the automotive, bus and aerospace markets.
This report was approved by the board on 29th September 2023 and signed on its
behalf.
Ian Foley
Chief Executive Officer
Consolidated Statement of Comprehensive Income
Year ended Year ended
31 May 31 May
2023 2022
Note £'s £'s
Turnover 4 5,053,540 3,706,785
Cost of sales (3,845,263) (6,087,868)
Gross loss 1,208,277 (2,381,083)
Administrative expenses (5,346,307) (1,919,378)
Other operating income 5 280,658 565,132
Share based payment charge 29 (475,321) (574,227)
Exceptional items 12 (615,064) (750,000)
Operating loss 6 (4,947,757) (5,059,556)
Interest receivable and similar income 10 16,908 (1,182)
Interest payable and similar expenses 11 (86,505) (144,994)
Loss before taxation (5,017,354) (5,205,732)
Tax on loss 13 185,979 (104,499)
Loss for the financial year (4,831,375) (5,310,231)
Total other comprehensive income - -
Total comprehensive loss for the year (4,831,375) (5,310,231)
Loss for the year attributable to:
Non-controlling interests - (692,772)
Owners of the parent Company (4,831,375) (4,617,459)
(4,831,375) (5,310,231)
Loss per share £'s £'s
Basic and diluted 27 (0.0060) (0.023)
The Group's activities derive from continuing operations.
The notes below form an integral part of these Financial Statements.
Consolidated Balance Sheet
As at As at
31 May 31 May
2023 2022
Assets Note £'s £'s
Fixed assets
Intangible assets 15 783,037 -
Tangible assets 16 772,681 527,139
1,555,718 527,139
Current assets
Stocks 18 2,958,325 807,973
Debtors: amounts falling due within one year 19 4,501,978 1,920,728
Cash at bank and in hand 20 6,999,686 1,876,083
Total current assets 14,459,989 4,604,784
Liabilities
Creditors: amounts falling due within one year 21 (1,957,276) (5,794,645)
Net current assets /(liabilities) 12,502,713 (1,189,861)
Total assets less current liabilities 14,058,431 (662,722)
Creditors: amounts falling due after more than one year 22 (255,183) (307,169)
Provisions for liabilities:
Other provisions 25 - (44,057)
Net assets /(liabilities) 13,803,248 (1,013,948)
Capital and reserves
Share capital 26 94,823 50,000
Share premium 28 19,128,427 -
Other reserves 28 5,748,311 5,748,311
Profit and loss account 28 (12,217,861) (7,386,486)
Share-based payment reserve 28 1,049,548 574,227
Total capital and reserves 13,803,248 (1,013,948)
The notes below form an integral part of these Financial Statements.
The Financial Statements were approved by the Board of Directors on 29th
September 2023 and were signed on its behalf by:
Ian Foley
Chief Executive Officer
Company number: 04303233
Company Balance Sheet
Assets Note As at As at
31 May 31 May
2023 2022
£'s £'s
Fixed assets
Investments 17 17,933,408 6,458,087
17,933,408 6,458,087
Current assets
Debtors: amounts falling due within one year 19 50,452 1,269,386
Cash at bank and in hand 20 6,601,712 1,737,118
Total current assets 6,652,164 3,006,504
Liabilities
Creditors: amounts falling due within one year 21 (504,334) (3,859,315)
Net current assets/ (liabilities) 6,147,830 (852,811)
Total assets less current liabilities 24,081,238 5,605,276
Net assets 24,081,238 5,605,276
Capital and reserves
Share capital 26 94,823 50,000
Share premium 28 19,128,427 -
Other reserves 28 4,962,502 4,962,502
Merger relief reserve 28 849,982 849,982
Profit and loss account 28 (2,004,044) (831,435)
Share-based payment reserve 28 1,049,548 574,227
Total capital and reserves 24,081,238 5,605,276
As permitted by s408 Companies Act 2006, the Company has not presented its own
profit and loss account and related notes. The Company's loss for the year was
£1,172,609 (2022: £876,485).
The notes below form an integral part of these Financial Statements.
The Financial Statements were approved by the Board of Directors on 29th
September 2023 and were signed on its behalf by:
Ian Foley
Chief Executive Officer
Company number: 04303233
Consolidated Statement In Changes Of Equity
Note Share capital Share premium Other reserves Profit and loss account Share based payment reserve Equity attributable to owners of parent company Non-controlling interests Total equity
£'s £'s £'s £'s £'s £'s £'s £'s
Balance at 01 June 2021 2 - 5,835,579 (2,987,394) - 2,848,187 1,302,639 4,150,826
Comprehensive loss for the year
Loss for the year - - - (4,617,459) - (4,617,459) (692,772) (5,310,231)
- - - (4,617,459) - (4,617,459) (692,772) (5,310,231)
Transactions with owners
Reclassification of non-controlling interest following share-for-share - - - 609,867 - 609,867 (609,867) -
exchange
Dividends: Equity capital 14 - - - (395,000) - (395,000) - (395,000)
Share-based payments movement 29 - - - - 574,227 574,227 - 574,227
Share-for-share exchange 26 16,000 - (49,770) - - (33,770) - (33,770)
Issue of B shares 26 5,000,000 - (5,000,000) - - - - -
Cancellation of B shares 26 (5,000,000) - 5,000,000 - - - - -
Purchase of own shares 26 (3,500) - - 3,500 - - - -
Bonus issue of shares 26 37,498 - (37,498) - - - - -
Total transactions with owners 49,998 - (87,268) 218,367 574,227 755,324 (609,867) 145,457
Balance at 31 May 2022 50,000 - 5,748,311 (7,386,486) 574,227 (1,013,948) - (1,013,948)
The notes below form an integral part of these Financial Statements.
Consolidated Statement In Changes Of Equity
Note Share capital Share premium Other reserves Profit and loss account Share based payment reserve Equity attributable to owners of parent company Non-controlling interests Total equity
£'s £'s £'s £'s £'s £'s £'s £'s
Balance at 01 June 2022 50,000 - 5,748,311 (7,386,486) 574,227 (1,013,948) - (1,013,948)
Comprehensive loss for the year
Loss for the year - - - (4,831,375) - (4,831,375) - (4,831,375)
- - - (4,831,375) - (4,831,375) - (4,831,375)
Transactions with owners
Loan conversion 26 8,824 3,741,176 - - - 3,750,000 - 3,750,000
Issue of shares 26 35,999 16,199,001 - - - 16,235,000 - 16,235,000
Share issue costs - (811,750) - - - (811,750) - (811,750)
Share-based payments charge 29 - - - - 475,321 475,321 - 475,321
Total transactions with owners 44,823 19,128,427 - - 475,321 19,648,571 - 19,648,571
-
Balance at 31 May 2023 94,823 19,128,427 5,748,311 (12,217,861) 1,049,548 13,803,248 - 13,803,248
The notes below form an integral part of these Financial Statements.
Company Statement Of Changes In Equity
Note Share capital Share premium Other reserves Merger relief reserve Profit and loss account Share based payment reserve Total equity
£'s £'s £'s £'s £'s £'s £'s
Balance at 01 June 2021 2 - - - 436,550 - 436,552
Comprehensive loss for the year
Loss for the year - - - - (876,485) - (876,485)
- - - - (876,485) - (876,485)
Transactions with owners
Dividends: Equity capital 14 - - - - (395,000) - (395,000)
Share-based payments charge 29 - - - - - 574,227 574,227
Share-for-share exchange 26 16,000 - - 5,849,982 - - 5,865,982
Issue of B shares 26 5,000,000 - - (5,000,000) - - -
Cancellation of B shares 26 (5,000,000) - 5,000,000 - - - -
Purchase of own shares 26 (3,500) - - - 3,500 - -
Bonus issue of shares 26 37,498 - (37,498) - - - -
Total transactions with owners 49,998 - 4,962,502 849,982 (1,267,985) 574,227 5,168,724
Balance at 31 May 2022 50,000 - 4,962,502 849,982 (831,435) 574,227 5,605,276
The notes below form an integral part of these Financial Statements.
Company Statement Of Changes In Equity
Note Share capital Share premium Other reserves Merger relief reserve Profit and loss account Share based payment reserve Total equity
£'s £'s £'s £'s £'s £'s £'s
Balance at 01 June 2022 50,000 - 4,962,502 849,982 (831,435) 574,227 5,605,276
Comprehensive income for the year
Loss for the year - - - - (1,172,609) - (1,172,609)
- - - - (1,172,609) - (1,172,609)
Transactions with owners
Loan conversion 26 8,824 3,741,176 - - - - 3,750,000
Issue of shares 26 35,999 16,199,001 - - - - 16,235,000
Share issue costs - (811,750) - - - - (811,750)
Share based payments charge 29 - - - - - 475,321 475,321
Total transactions with owners 44,823 19,128,427 - - - 475,321 19,648,571
Balance at 31 May 2023 94,823 19,128,427 4,962,502 849,982 (2,004,044) 1,049,548 24,081,238
The notes below form an integral part of these Financial Statements.
Consolidated Statement Of Cashflows
For the year ended For the
31 May year ended 31 May
2023 2022
£'s £'s
Cash flows from operating activities
Loss for the year (4,831,375) (5,310,231)
Adjustments for:
Amortisation of intangible assets 27,380 -
Depreciation of tangible assets 187,108 220,668
Profit on disposal of tangible assets (14,951) -
Interest paid 86,505 144,994
Interest received (16,908) 1,182
RDEC Taxation credit (net) (197,854) (445,496)
SME R&D credit (232,389) -
Increase in stocks (2,150,351) (763,526)
Increase in debtors (2,137,644) (443,613)
(Decrease)/increase in creditors (156,025) 598,558
(Decrease)/increase in provisions (44,057) 44,057
Corporation tax received - 353,149
Share-based payments expense 475,321 574,227
Fair value losses - convertible loan - 750,000
Stamp duty paid on share-for-share exchange - (33,770)
Net cash flows used in operating activities (9,005,240) (4,309,801)
Cash flows from investing activities
Purchase of tangible fixed assets (443,198) (135,248)
Sale of tangible fixed assets 25,500 -
Intangible assets - capitalisation of internal development cost (810,417) -
Net cash used in investing activities (1,228,115) (135,248)
Cash flows from financing activities
Issue of ordinary shares 16,235,000 -
Share issue costs (811,750) -
New secured hire purchase loans 106,779 -
Repayment of obligations under finance leases and hire purchase contracts (144,177) (89,488)
Dividends paid - (395,000)
Interest paid (32,434) (35,679)
Interest received 3,540 -
New convertible loan - 3,000,000
Net cash from financing activities 15,356,958 2,479,833
Net increase/(decrease) in cash and cash equivalents 5,123,603 (1,965,216)
Cash and cash equivalents at the beginning of the year 1,876,083 3,841,299
Cash and cash equivalents at the end of the year 6,999,686 1,876,083
Consolidated Analysis Of Net Debt For The Year Ended 31 May 2023
At 1 June 2022 Cash flows Payments made in year Increase in lease liability At 31 May 2023
£'s £'s £'s £'s £'s
Cash at bank and in hand 1,876,083 5,123,603 - - 6,999,686
Finance leases (444,681) - 144,179 (106,779) (407,281)
Convertible loan notes (3,750,000) 3,750,000 - - -
(2,318,598) 8,873,603 144,179 (106,779) 6,592,405
The notes below form an integral part of these Financial Statements.
Notes To The Financial Statements
1. General information
Equipmake Holdings Plc is a public company limited by shares incorporated in
England and Wales. The company registration number is 04303233. The registered
office is Unit 7, Snetterton Business Park, Snetterton, Norfolk, NR16 2JU.
The Group consists of the parent Equipmake Holdings Plc and subsidiary
Equipmake Limited. All Group entities are included within the consolidation.
Equipmake is a UK-based engineering specialist pioneering the development and
production of electrification products across the automotive, aerospace, bus,
coach, and fire truck industries support of the transition from fossil-fuelled
to zero-emission powertrains.
These financial statements are presented in sterling which is the functional
currency of the entity and are rounded to the nearest £1.
2. Accounting policies
2.1 Basis of preparation of financial statements
These financial statements have been prepared in accordance with FRS 102 ''The
Financial Reporting Standard applicable in the UK and Republic of Ireland''
(''FRS 102'') and the requirements of the Companies Act 2006.
The financial statements have been prepared under the historical cost
convention unless otherwise specified within these accounting policies.
The Company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own Statement of
Comprehensive Income in these financial statements.
The Company is a qualifying entity for the purposes of FRS 102, being a member
of a group where parent of that group prepares publicly available consolidated
financial statements, including the Company, which are intended to give a true
and fair view of the assets, liabilities, financial position and profit or
loss of the group. The Company has therefore taken advantage exemptions from
the following disclosure requirements for parent company information presented
within the consolidated financial statements:
- Section 7 'Statement of Cash Flows': Presentation of a statement
of cash flow and related notes and disclosures.
- Section 33 'Related Party Disclosures' - Compensation for key
management personnel.
The following principal accounting policies have been applied:
2.2 Basis of consolidation
The consolidated financial statements present the results of the Company and
its own subsidiaries ("the Group") as if they form a single entity.
Intercompany transactions and balances between group companies are therefore
eliminated in full.
The consolidated financial statements incorporate the results of business
combinations using the purchase method. In the Balance Sheet, the acquiree's
identifiable assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date.
In accordance with the transitional exemption available in FRS 102, the Group
has chosen not to respectively apply the standard to business combinations
that occurred before the date of transition to FRS 102, being 1 June 2016.
2.3 Going concern
The financial statements have been prepared on a going concern basis which the
Directors believe to be appropriate. The loss for the year was in line with
expectations and the £16.2m of gross fundraising completed during the year,
provides adequate funding for the Company to execute its plans for growth.
The Company has prepared detailed financial forecasts and cash flow
projections which reflect the anticipated revenue growth over the next few
years, in line with the strategy communicated at the IPO. After considering
a number of reasonable sensitivities and the availability of a number of
mitigation levers, such as the deferral of capital expenditure, recruitment
and discretionary overhead spend, as well as the re-phasing of working capital
2. Accounting policies (continued)
commitments to align with order conversion, the Directors confirm that
sufficient cash is available to meet the Company's liabilities as they fall
due for the foreseeable future and at least twelve months from the date of
approval of these financial statements. The detailed cash flow calculations
are based on the Company's annual budget, approved by the board and reflect a
number of key assumptions including:
· revenue growth supported by current orderbook and opportunity
pipeline;
· margin rates incorporating expected input costs and sales prices;
· working capital requirements incorporating current customer and
supplier payment terms;
· increased overhead spend to support the anticipated increase in
revenue; and
· continued investment in product development.
Further detail regarding current trading and the outlook for the business is
provided with the CEO statement on pages 4 and 5 of this report. The Directors
believe that the Company is well placed to navigate the challenges that it is
likely to face during a period of significant growth and have a reasonable
expectation that it has sufficient resources to meet its financial obligations
for the foreseeable future. On this basis, the Directors continued to adopt
the going concern basis for preparation of these financial statements.
2.4 Foreign currency translation
Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the spot exchange rates at the dates of the transactions.
At each year end foreign currency monetary items are translated using the
closing rate. Non-monetary items measured at historical cost are translated
using the exchange rate at the date of the transaction and non-monetary items
measured at fair value are measured using the exchange rate when fair value
was determined.
2.5 Revenue
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue is measured as the fair value of the consideration received or
receivable, excluding trade discounts, and net of VAT.
Revenue from the sale of goods is recognised when the significant risks and
rewards of ownership of the goods have passed to the buyer (under "ex works"
incoterms, this is typically when the goods are made available for transport
or collection but the transfer of rights depends on the contractual terms
agreed), the amount of revenue can be measured reliably, it is probable that
the economic benefits associated with the transaction will flow to the entity
and the costs incurred or to be incurred in respect of the transaction can be
measured reliably.
Revenue from contracts for the provision of services is recognised by
reference to the stage of completion when the stage of completion, costs
incurred and costs to complete can be estimated reliably. The stage of
completion is calculated by comparing costs incurred, mainly in relation to
contractual hourly staff rates and materials, as a proportion of total costs.
Where the outcome cannot be estimated reliably, revenue is recognised only to
the extent of the expenses recognised that it is probable will be recovered.
Revenue from licencing agreements is recognised when it is probable that the
economic benefits associated with the transaction will flow to the entity and
the amount of revenue can be measured reliably. Revenue is recognised on an
accrual basis in accordance with the substance of the relevant agreement,
including consideration of ongoing obligations, guaranteed minimum payments
and payments contingent upon future events.
2.6 Leases
Operating leases: the Group as a lessee
Rentals paid under operating leases are charged to profit and loss on a
straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease
are recognised on a straight-line basis over the lease term unless another
systematic basis is representative of the time pattern of the lessee's benefit
from the use of the leased asset.
Finance leases: The Group as a lessee
An asset and corresponding liability are recognised for leasing agreements
that transfer to the Group substantially all of the risks and rewards
incidental to ownership ("finance leases"). The amount capitalised is the fair
value of the leased asset or, if lower, the present value of the minimum lease
payments payable during the lease term, both determined at inception of the
lease. Lease payments are treated as consisting of capital and interest
elements. The interest is charged to statement of comprehensive income, so as
to produce a constant periodic rate of interest on the remaining balance of
the liability. Contingent rents are expensed as incurred.
2.7 Government grants
Grants are accounted under the accruals model as permitted by FRS 102. Grants
relating to expenditure on tangible fixed assets are credited to profit or
loss as other income at the same rate as the depreciation on the assets to
which the grant relates. The deferred element of grants is included in
creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated Statement of
Comprehensive Income within turnover in the same period as the related
expenditure, which is recognised in cost of sales. These grants relate to the
primary function of the business and facilitate the delivery of the Group's
primary purpose. Other grants are shown within other operating income.
2.8 Interest income
Interest income is recognised in profit or loss using the effective interest
method.
2.9 Finance costs
Finance costs are charged to profit or loss over the term of the debt using
the effective interest method so that the amount charged is at a constant rate
on the carrying amount. Issue costs are initially recognised as a reduction in
the proceeds of the associated capital instrument.
2.10 Pensions
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined
contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity. Once the contributions have been paid
the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they
fall due. Amounts not paid are shown in accruals as a liability in the Balance
Sheet. The assets of the plan are held separately from the Group in
independently administered funds.
2.11 Share based payments
Where share options are awarded to employees, the fair value of the options at
the date of grant is charged to profit or loss over the vesting period.
Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each balance sheet date so that,
ultimately, the cumulative amount recognised over the vesting period is based
on the number of options that eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative expense is
not adjusted for failure to achieve a market vesting condition. The fair value
of the award also takes into account non-vesting conditions. These are either
factors beyond the control of either party (such as a target based on an
index) or factors which are within the control of one or other of the parties
(such as the Group keeping the scheme open or the employee maintaining any
contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to profit or loss over the remaining
vesting period.
Where equity instruments are granted to persons other than employees, profit
or loss is charged with fair value of goods and services received.
2.12 Taxation
Tax is recognised in profit or loss except that a charge attributable to an
item of income and expense recognised as other comprehensive income or to an
item recognised directly in equity is also recognised in other comprehensive
income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws
that have been enacted or substantively enacted by the balance sheet date in
the countries where the Company and the Group operate and generate income.
2.13 Exceptional items
Exceptional items are transactions that fall within the ordinary activities of
the Group but are presented separately due to their size or incidence. This
includes fair value adjustments in respect of the convertible loan notes and
transaction costs associated with the IPO.
In respect of IPO transactions fees, £0.6m in the current financial year were
expensed to the Statement of Comprehensive Income and £0.5m of broker fees
was charged to share premium. In FY2022 these costs were prepaid. Fees prepaid
in 2023 were £Nil (2022: £0.1m).
2.14 Tangible fixed assets
Tangible fixed assets under the cost model are stated at historical cost less
accumulated depreciation and any accumulated impairment losses. Historical
cost includes expenditure that is directly attributable to bringing the asset
to the location and condition necessary for it to be capable of operating in
the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their
residual value over their estimated useful lives.
Depreciation is provided on the following basis:
Leasehold improvements
20%
Straight line
Plant and machinery
20-33% Straight line
Specialist
assets
50% Straight line
The assets' residual values, useful lives and depreciation methods are
reviewed, and adjusted prospectively if appropriate, or if there is an
indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised in profit or loss.
Assets under development are recognised at their cost. No depreciation is
charged on these assets until the assets are complete and available for use.
2.15 Intangible items
Intangible assets are initially recognised at cost. After recognition, under
the cost model, intangible assets are measured at cost less any accumulated
amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a
reliable estimate of the useful life cannot be made, the useful life shall not
exceed ten years.
Intangible assets are reviewed for impairment each financial year.
Research and development
Internally generated intangible assets arising from development, or the
development phase of internal projects, have been recognised in the year where
the following can be demonstrated:
a) The technical feasibility of completing the intangible asset so
that it will be available for use or sale;
b) Intention to complete the intangible asset and use or sell it;
c) Ability to use or sell the intangible asset;
d) How the intangible asset will generate probable future economic
benefits (e.g., the existence of a market);
e) Availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset; and
f) Ability to measure reliably the expenditure attributable to the
intangible asset during its development.
Development costs have been recognised as an intangible asset for the first
time in the year, as it can be demonstrated that all of the criteria for
recognition have been met.
In the research phase of an internal project, it is not possible to
demonstrate that the project will generate future economic benefits and hence
all expenditure on research shall be recognised as an expense when it is
incurred. If it is not possible to distinguish between the research phase and
the development phase of an internal project, the expenditure is treated as if
it were all incurred in the research phase only.
All development costs capitalised in the year relate to development of an
integrated electric vehicle powertrain, for which it was considered that there
was insufficient evidence of probable future economic benefits in prior
periods to recognise as an asset. Advancement of the development work and
fulfilment of customer orders, demonstrating feasibility and existence of a
market for the products, has prompted a decision to capitalise development
costs in the year. Expenditure on these assets items previously recognised as
an expense have not been recognised as part of the cost of the asset.
Completed assets are being amortised over 3-5 years straight line.
2.16 Investments
Investments in subsidiaries are initially measured at cost at acquisition and
reviewed for impairment at each reporting date, with any movement in the fair
value recognised in the profit and loss. Where an investment is acquired in
stages, it may be more appropriate to recognise the fair value during initial
recognition and then assess the deemed cost for impairment at each reporting
date.
The investments are assessed for impairment at each reporting date and any
impairment losses or reversals of impairment losses are required immediately
in the profit and loss account.
2.17 Stocks and work-in-progress
Stocks are stated at the lower of cost and net realisable value, being the
estimated selling price less costs to complete and sell. Cost is based on the
cost of purchase on a weighted average basis.
Work-in-progress ("WIP'') includes an allocation of direct labour costs and
overhead appropriate to the stage of manufacture. At each balance sheet date,
stocks and WIP are assessed for impairment. If impairment has occurred, the
carrying amount is reduced to its selling price less costs to complete and
sell. The impairment loss is recognised immediately in profit or loss.
2.18 Debtors
Short-term debtors are measured at transaction price, less any impairment.
2.19 Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions
repayable without penalty on notice of not more than 24 hours. Cash
equivalents are highly liquid investments that mature in no more than three
months from the date of acquisition and that are readily convertible to known
amounts of cash with insignificant risk of change in value.
2.20 Creditors
Short-term creditors are measured at the transaction price. Other financial
liabilities are measured initially at fair value, net of transaction costs,
and are measured subsequently at amortised cost using the effective interest
method.
2.21 Provisions for liabilities
Provisions are made where an event has taken place that gives the Group a
legal or constructive obligation that probably requires settlement by a
transfer of economic benefit, and a reliable estimate can be made of the
amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the
Group becomes aware of the obligation and are measured at the best estimate at
the balance sheet date of the expenditure required to settle the obligation,
taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried
in the Balance Sheet.
2.22 Financial instruments
The Group has elected to apply the provisions of Section 11 'Basic Financial
Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to
all of its financial instruments.
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the instrument, and are
offset only when the Group currently has a legally enforceable right to set
off the recognised amounts and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
Financial assets
Trade, group and other debtors (including accrued income) which are receivable
within one year and which do not constitute a financing transaction are
initially measured at the transaction price and subsequently measured at
amortised cost, being the transaction price less any amounts settled and any
impairment losses.
Where the arrangement with a debtor constitutes a financing transaction, the
debtor is initially measured at the present value of future payments
discounted at a market rate of interest for a similar debt instrument and
subsequently measured at amortised cost.
A provision for impairment of trade debtors is established when there is
objective evidence that the amounts due will not be collected according to the
original terms of the contract. Impairment losses are recognised in profit
or loss for the excess of the carrying value of the trade debtor over the
present value of the future cash flows discounted using the original effective
interest rate. Subsequent reversals of an impairment loss that objectively
relate to an event occurring after the impairment loss was recognised, are
recognised immediately in profit or loss.
Financial liabilities
Financial instruments are classified as liabilities and equity instruments
according to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest in the
assets of the Group after deducting all of its liabilities.
Trade, group and other creditors (including accruals) payable within one year
that do not constitute a financing transaction are initially measured at the
transaction price and subsequently measured at amortised cost, being the
transaction price less any amounts settled.
Where the arrangement with a creditor constitutes a financing transaction, the
creditor is initially measured at the present value of future payments
discounted at a market rate of interest for a similar instrument and
subsequently measured at amortised cost.
Derivatives
Derivatives, including forward foreign exchange contracts, are not basic
financial instruments. Derivatives are initially recognised at fair value at
the date a derivative contract is entered into and are subsequently remeasured
to fair value at each reporting end date. The resulting gain or loss is
recognised in profit or loss immediately unless the derivative is designated
and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset,
whereas a derivative with a negative fair value is recognised as a financial
liability.
The Group enters into currency forward contracts. These are measured at fair
value at the end of the reporting period, with any changes in fair value
recognised in profit or loss.
Equity instruments
Financial instruments classified as equity instruments are recorded at the
fair value of the cash or other resources received or receivable, net of
direct costs of issuing the equity instruments.
2.23 Dividends
Equity dividends are recognised when they become legally payable. Interim
equity dividends are recognised when paid. Final equity dividends are
recognised when approved by the shareholders at an annual general meeting.
3. Judgements in applying accounting policies and key sources of
estimation uncertainty
The preparation of the financial statements requires management to make
judgments, estimates and assumptions that affect the amounts reported for
assets and liabilities as at the balance sheet date, and the amounts reported
for income and expenditure during the year. However, the nature of estimation
means that actual outcomes could materially differ from those estimates. The
key assumptions concerning the future and other key sources of estimating
uncertainty at the reporting date include:
Revenue recognition
The Company has established a clear decision matrix for each order/contract to
ensure a consistent approach for determining the basis for recognising
revenue. In some circumstances, judgements are made in respect of the amount
of revenue to be recognised at each reporting date. For example, where goods
and services supplied on the same contract cannot be split for the purposes of
revenue recognition and the work is performed over a period of months or
years, the Company would recognise revenue based on the stage of completion.
Further details regarding the calculation are included under note 2.5.
Share based payments
Some of Equipmake Limited's employees have been granted share options by the
Company. The fair value of these options on the date of grant has been
determined using the Black Scholes Model. The directors consider this the most
suitable model for calculating the fair value of the options. For further
details, see note 29.
The management believe that there will not be only one acceptable choice for
estimating the fair value of share- based payment arrangements. The judgements
and estimates that management apply in determination of the share- based
compensation are summarised below:
· Selection of valuation model
· Making assumptions used in determining the variables used in a
valuation model:
I. Expected life
II. Expected volatility
III. Expected dividend yield
IV. Probability of performance-based vesting conditions being met.
Options with both time-based and performance-based vesting conditions were
granted in the year. The vesting thresholds for the performance-linked options
were revised during the year in line but remain consistent with the revenue
forecasts for FY2023 and FY2024. Given that the Directors believe that the
Company will achieve its revenue targets for FY2023 and FY2024, a charge has
been recognised for the relevant portion of the vesting period.
Share options were also granted to two non-employees of the Company. A
share-based payments charge has been recognised in respect of one of these
individuals, for whom it has been judged that share options were awarded as a
result of past services provided to the Company.
Development costs
Management has reviewed activity relating to both customer-related and
internal product development projects during the period and capitalised costs
where it is considered that the FRS102 criteria have been met. The judgements
and estimates that management apply when identifying costs to be capitalised
are summarised below:
· Estimated size and value of the market for the product being
developed;
· Assessment of technical, financial and other resources required
and available to complete development;
· Technical feasibility of completing the development work;
· Completion status of the development work; and
· Expected useful life of the asset once completed.
In the research phase of an internal project, it is not possible to
demonstrate that the project will generate future economic benefits and hence
all expenditure on research shall be recognised as an expense when it is
incurred. If it is not possible to distinguish between the research phase and
the development phase of an internal project, the expenditure is treated as if
it were all incurred in the research phase only.
Impairment of investments and inter-company receivable
The directors have assessed the valuation of the investment in Equipmake
Limited (subsidiary) and inter- company receivable held in Equipmake Holdings
PLC, at the balance sheet date. The Directors believe that due to the ongoing
development of the Company's products, its considerable pipeline of
opportunities and the market capitalisation / share price of the Company
(along with the raising of £10m of gross funding via an IPO on the Aquis
Stock Exchange for Equipmake Holdings Plc and a further £6.2m in a subsequent
funding round), that this investment is not impaired.
Stock
The directors have assessed whether any inventories are impaired by comparing
the estimated selling price less costs to complete to the carrying amount at
year end. Judgements and estimates that management apply in making this
assessment include:
· Identification of defective, slow-moving or obsolete stocks;
· Estimates of prices obtainable for the goods at the time that
they will be available for sale; and
· Projected costs of completion and sale.
Contingent liability
A contingent liability for the provision of warranties is calculated by
management. Warranties requires management's best estimate of the expenditure
that will be incurred in respect of warranty claims, which are detailed in the
terms and conditions of sale. Certain contracts contain an obligation for
Equipmake to provide a warranty on the products that it provides. The precise
terms of the warranty vary on a contract-by-contract basis but currently range
between three and eight years. Given that these products are new to the
market, Equipmake is unable to reference a history of warranty claims in order
to provide a basis for estimating an accurate provision. The Company
acknowledges the contractual obligation but is unable to provide a basis for
estimation of a provision that complies with the requirements of the
accounting standards.
4. Segmental reporting and turnover
Segmental information is presented in respect of the Group's operating
segments based on the format that the Group reports to its chief operating
decision maker, for the purpose of allocating resources and assessing
performance.
The Group considers that the chief operating decision maker comprises the
Executive Directors of the business.
The Directors manage the Group as a single business delivering electric power
train solutions across a range of markets. Information that was made available
to the chief operating decision maker in the reporting period included a split
of gross margin by customer project, and therefore segmental information is
presented along the same lines. Operating segments that share similar
characteristics have been aggregated where the criteria for aggregation have
been met.
Comparative segmental analysis has not been provided for the year ended 31 May
2022 because the information is not available.
Powertrain (inc. vehicle integration) Powertrain (supply only) EV components Engineering projects Licencing/ royalties Total (excluding Grants) Grants Total
£'s £'s £'s £'s £'s £'s £'s £'s
Revenue 900,000 849,700 1,575,545 1,311,951 300,000 4,937,196 116,344 5,053,540
Cost of sales (1,016,277) (875,551) (956,171) (831,472) - (3,679,471) (165,792) (3,845,263)
Gross Margin (116,277) (25,851) 619,374 480,479 300,000 1,257,725 (49,448) 1,208,277
Administrative expenses - - - - - - - (6,436,692)
Other operating income - - - - - - - 280,658
Operating loss - - - - - - - (4,947,757)
Net interest - - - - - - - (69,597)
Loss before taxation - - - - - - - (5,017,354)
Taxation - - - - - - - 185,979
Loss for the financial year - - - - - - - (4,831,375)
For the year For the year
ended 31 May ended 31 May
2023
2022
An analysis of turnover by class of business is as follows:
£'s £'s
Powertrain (inc. vehicle integration) 900,000 -
Powertrain (supply only) 849,700 167,156
EV components 1,575,545 416,946
Engineering projects 1,311,951 2,021,458
Grants receivable 116,344 1,035,396
Other 300,000 65,829
5,053,540 3,706,785
Analysis of turnover by country of destination:
United Kingdom 2,550,385 2,588,683
Rest of Europe 1,265,000 391,646
Asia (exc. Far East) 300,000 -
Rest of world 908,955 649,816
Far East 29,200 76,640
5,053,540 3,706,785
All revenue reported is external to the Group.
Details of external customers where revenue is 10% or more of the Group's
total revenues (inclusive of grants) are as follows:
· £1,021,593 (20.2%) in the EV components segment.
· £900,000 (17.8%) in the Powertrain (inc. vehicle integration)
segment.
· £849,700 (16.8%) in the Powertrain (supply only) segment.
· £786,703 (15.6%) in the Engineering projects and EV components
segments.
· £668,260 (13.2%) in the Engineering projects segment.
5. Other operating income
For the year For the year
ended 31 May ended 31 May
2023
2022
£'s £'s
Government grants receivable - 15,136
RDEC claim 244,265 549,996
Other income 36,393 -
Total other operating income 280,658 565,132
6. Operating loss
The operating loss is stated after charging: For the year For the year
ended 31 May ended 31 May
2023
2022
£'s £'s
Operating lease payments - property 269,645 174,211
Operating lease payments - other 48,154 32,995
Depreciation of tangible fixed assets - owned (note 16) 169,035 209,159
Depreciation of tangible fixed assets - held under finance lease and hire 87,096 141,525
purchase (note 16)
Amortisation of intangible fixed assets (note 17) 27,380 -
Profit on the sale of tangible fixed assets (14,951) -
Foreign exchange loss 84,801 8,081
Share-based payments (note 29) 475,321 574,227
Research and development costs * 1,752,143 4,230,735
Exceptional items (note 12) 615,064 750,000
*Based on qualifying R&D expenditure (of this, a further £724,353 was
capitalised).
7. Auditors' remuneration
Fees payable to the Group's auditor and its associates for the audit of the: For the year For the year
ended 31 May ended 31 May
2023
2022
£'s £'s
Group's annual financial statements 83,500 65,000
Other fees payable to the Group's auditor and its associates in respect of:
Reporting accountant services 85,250 60,000
All other services 2,050 1,200
87,300 61,200
8. Employees
Staff costs, including directors' remuneration, were as follows: Group Group Company Company
2023
2022
2023
2022
£'s £'s
Wages and salaries 3,600,915 2,537,185 413,443 -
Social security costs 405,474 278,944 49,909 -
Cost of defined contribution scheme 112,266 88,286 38,840 -
Share based payments 150,803 574,227 - -
4,269,458 3,478,642 502,192 -
The average monthly number of employees, including the directors, during the
year was as follows:
For the year For the year
ended 31 May ended 31 May
2023
2022
Employees 82 69
The Company has no employees other than the directors, who did not receive any
remuneration (2022: £Nil). Remuneration of Directors is paid from Equipmake
Limited and recharged to Equipmake Holdings Plc.
9. Directors
For the year For the year
ended 31 May ended 31 May
2023
2022
£'s £'s
Directors' emoluments 438,109 102,218
Group contributions to defined contribution pension schemes 45,947 40,220
Share-based payments 76,892 442,714
560,948 585,152
During the year retirement benefits were accruing to 3 directors (2022: 3) in
respect of defined contribution pension schemes. The number of directors who
received shares under long term incentive schemes was 1 (2022: 1).
The highest paid director's emoluments were as follows:
Directors' emoluments and amounts receivable under long-term incentive schemes
£147,584 (2022: £449,099, inclusive of £442,714 related to share-based
payments).
Group contributions to defined contribution pension schemes £40,000 (2022:
£110).
10. Interest receivable
For the year For the year
ended 31 May ended 31 May
2023
2022
£'s £'s
Other interest receivable / (payable) 16,908 (1,182)
16,908 (1,182)
11. Interest payable and similar expenses
For the year For the year
ended 31 May ended 31 May
2023
2022
£'s £'s
Loan interest payable 86,505 32,526
Other interest payable - 112,468
86,505 144,994
12. Exceptional items
For the year For the year
ended 31 May ended 31 May
2023
2022
£'s £'s
Costs relating to Equipmake's admission to AQSE (615,064) -
Fair value adjustment - convertible loan note - (750,000)
(615,064) (750,000)
As at 31 May 2023, exceptional costs are in respect of IPO transactions fees
expensed to the Statement of Comprehensive Income. In FY2022 these costs were
prepaid. Fees prepaid in 2023 were £Nil (2022: £0.1m).
In the year ended 31 May 2022 exceptional cost were expensed as part of the
fair value adjustment in respect of a convertible loan note. As at 31 May
2023, there was a fair value adjustment of £Nil.
13. Taxation
For the year ended 31 May For the year
2023
Ended 31 May 2022
£'s £'s
Corporation tax
Current tax on RDEC 46,410 104,499
Tax credit - R&D SME scheme (232,389)
(185,979) 104,499
Total current tax
Deferred tax - -
Total deferred tax - -
Taxation on loss on ordinary activities (185,979) 104,499
Factors affecting tax charge for the year
The tax assessed for the year is lower than (2022 - lower than) the standard
rate of corporation tax in the UK of 20 % (2022: 19%). The standard rate of
corporation tax for the year is calculated to be 20% as a result of the UK
corporation tax main rate increasing from 19% to 25% on 1(st) April 2023.
The differences are explained below:
Reconciliation of effective rate and tax charge For the year ended 31 May For the year Ended 31 May 2022
2023
£'s £'s
Loss on ordinary activities before tax (5,017,354) (5,205,732)
Loss multiplied by the rate of corporation tax in the UK of 20 % (2022: 19%) (1,003,471) (989,089)
Effects of:
Unrecognised deferred tax assets 1,030,305 607,688
Remeasurement of deferred tax for changes in tax rates (204,624) -
Enhanced super deduction (4,613)
Expenses not deductible for tax purposes 228,412 265,650
Depreciation on ineligible assets 401
SME R&D tax credit (232,389)
Adjustments in respect of prior years - 11,252
Total tax charge for the year (185,979) 104,499
Factors that may affect future tax charges
Changes to the UK corporation tax rates were substantially enacted as part of
the 2021 Budget on 24 May 2021. This included an increase to the main rate
from 19% to 25% from April 2023. The Company will be taxed at a rate of 25%
unless its profits are sufficiently low enough to qualify for a lower rate of
tax, the lowest being 19%.
Where applicable, deferred taxes at the balance sheet date have been measured
using tax rates between 19% and 25% to reflect the rate of the timing
differences are likely to unwind and are reflected in the financial
statements.
Deferred tax is not recognised in respect of losses of £11,632,746 (2022:
£8,281,504) due to the uncertainty that they will be recovered against the
reversal of deferred tax liabilities or other future taxable profits.
14. Dividends
For the year For the year
ended 31 May ended 31 May
2023
2022
£'s £'s
Ordinary dividends - 395,000
- 395,000
15. Intangible assets
Group Development expenditure Other Intangibles Total
£'s £'s £'s
Cost
At 1 June 2022 - 11,471 11,471
Additions - internally developed 810,417 - 810,417
At 31 May 2023 810,417 11,471 821,888
Amortisation
At 1 June 2022 - 11,471 11,471
Charge 27,380 - 27,380
At 31 May 2023 27,380 11,471 38,851
Net book value
At 31 May 2023 783,037 - 783,037
At 31 May 2022 - - -
No intangible assets are held within the parent company.
The average remaining useful life of intangible assets being amortised is 3.6
years. The cost of assets not yet being amortised is £568,694, with
amortisation expected to commence for these assets in the year ending 31 May
2024. Of this, £461,704 will be amortised over 3 years and £106,990 will be
amortised over 5 years.
16. Tangible fixed assets
Group Leasehold property Plant and machinery Specialist equipment Assets in development Total
£'s £'s £'s £'s £'s
Cost or valuation
At 1 June 2021 55,452 722,037 502,119 - 1,279,608
Additions 25,144 58,820 - 51,283 135,247
At 31 May 2022 80,596 780,857 502,119 51,283 1,414,855
Depreciation
At 1 June 2021 18,347 223,807 424,894 - 667,048
Charge for the year 11,509 131,934 77,225 - 220,668
At 31 May 2022 29,856 355,741 502,119 - 887,716
Cost or valuation
At 1 June 2022 80,596 780,857 502,119 51,283 1,414,855
Additions 19,676 317,904 - 105,620 443,200
Disposals - (72,680) - - (72,680)
At 31 May 2023 100,272 1,026,081 502,119 156,903 1,785,375
Depreciation
At 1 June 2022 29,856 355,741 502,119 - 887,716
Charge for the year 18,073 169,035 - - 187,108
Eliminated on disposal - (62,130) - - (62,130)
At 31 May 2023 47,929 462,646 502,119 - 1,012,694
Net book value
At 31 May 2023 52,343 563,435 - 156,903 772,681
At 31 May 2022 50,740 425,116 - 51,283 527,139
Specialist/technical plant and equipment relates to project specific equipment
whose value is consumed over the life of the relevant project. Cost of such
assets are therefore written off over the minimum project duration.
The net book value of fixed assets includes £275,216 (2022: £225,533) in
respect of assets held under finance leases and hire purchase contracts.
17. Fixed asset investments
Investments in subsidiary companies
£'s
Cost or valuation
At 1 June 2021 82
Additions 33,795
Fair value of addition arising on share-for-share exchange 5,849,982
Other movements - share-based payments 574,228
At 31 May 2022 6,458,087
At 1 June 2022 6,458,087
Additions 11,000,000
Other movements - share-based payments 475,321
At 31 May 2023 17,933,408
On 31 May 2023, Equipmake Holdings PLC allotted 11,000 ordinary shares of
£0.01 each in Equipmake Limited, as consideration for releasing Equipmake
Limited from its obligation to repay an £11,000,000 intercompany loan. The
share issue reflects the long-term nature of the funding relationship between
Equipmake Holdings and Equipmake Limited, with Equipmake Limited being the
primary trading and operating entity within the Group.
Subsidiary undertaking
The following was the only subsidiary undertaking of the Company during the
year ended 31 May 2023:
Name Registered office Class of shares Holding
Equipmake Limited Unit 7 Snetterton Business Park, Snetterton, Norfolk, NR16 2JU, Ordinary/ Deferred 100%
England
18. Stocks
Group Group
2023 2022
£'s £'s
Work in progress 485,452 197,418
Raw materials 2,472,873 610,555
2,958,325 807,973
All stock is held within the subsidiary company Equipmake Limited.
The cost of Group stocks recognised as an expense in the year ended 31 May
2023 amounted to £2,961,711 (2022: £3,106,835).
19. Debtors
Group Group Company Company
2023
2022
2023
2022
£'s £'s £'s £'s
Trade debtors 2,463,277 533,740 - -
Amounts owed by group undertakings - - - 1,265,867
Other debtors 231,677 230,956 16,504 3,429
Prepayments and accrued income 931,284 710,536 33,948 90
Tax recoverable 875,740 445,496 - -
4,501,978 1,920,728 50,452 1,269,386
20. Cash and cash equivalents
Group Group Company Company
2023
2022
2023
2022
£'s £'s £'s £'s
Cash at bank and in hand 6,999,686 1,876,083 6,601,712 1,737,118
6,999,686 1,876,083 6,601,712 1,737,118
21. Creditors: Amounts falling due within one year
Group Group Company Company
2023
2022
2023
2022
£'s £'s £'s £'s
Trade creditors 470,449 546,807 22,855 -
Amounts owed to group undertakings - - 282,776 -
Other taxation and social security 138,234 85,371 3,515 -
Obligations under finance lease and hire - purchase contracts 152,098 137,512 - -
Other creditors 216,611 144,163 161,729 109,315
Convertible loan notes - 3,750,000 - 3,750,000
Accruals and deferred income 979,884 1,130,792 33,459 -
1,957,276 5,794,645 504,334 3,859,315
On 18 January 2022, the Company issued convertible loan notes for £3,000,000.
These were subsequently recognised at fair value at the end of the 31 May
2022. The loan notes converted to ordinary shares immediately upon listing of
the Company, and as such there is no such balance as at 31 May 2023. Until the
loan notes converted, interest was accrued on the principal amount at 10% per
annum.
22. Creditors: Amounts falling due after more than one year
Group Group
2023 2022
£'s £'s
Net obligations under finance leases and hire purchase contracts 255,183 307,169
255,183 307,169
No asset under finance lease were held within the parent company.
23. Hire purchase and finance leases
Minimum lease payments under hire purchase fall due as follows: Group Group
2023 2022
£'s £'s
Within one year 152,098 137,512
Between 1-5 years 255,183 307,169
407,281 444,681
Group Group
2023 2022
£'s £'s
HP Loan 1 - £69,300 at 2.49%. Repayable until November 2023 7,694 22,573
HP Loan 2 - £278,010 at 2.70%. Repayable until December 2024 96,036 152,870
HP Loan 3 - £87,750 at 5.51%. Repayable until November 2025 58,611 78,539
HP Loan 4 - £201,600 at 4.33%. Repayable until February 2026 144,828 190,699
HP Loan 5 - £91,400 at 6.03%. Repayable until September 2026 87,402 -
HP Loan 6 - £15,379 at 4.58%. Repayable until October 2025 12,710 -
407,281 444,681
24. Financial instruments
Group Group Company Company
2023
2022
2023
2022
£'s £'s £'s £'s
Financial liabilities
Other financial liabilities measured at fair value through profit or loss (16,231) (3,859,315) (3,922) (3,859,315)
Financial liabilities measured at fair value through profit and loss comprise:
· A convertible loan note which was included in full in creditors
due within 1 year as at 31 May 2022; at 31 May 2023 there was no such balance.
As at 31 May 2023, there was a fair value adjustment of £Nil (2022:
£750,000).
· US dollar forward contracts outstanding at 31 May 2023 of
£16,231 (2022: £Nil).
25. Provisions and contingent liabilities
Warranty provision Group Group
2023 2022
£'s £'s
Opening balance - 1 June 44,057 -
Charged to the profit and loss (44,057) 44,057
Closing balance 31 May - 44,057
No warranty provisions were held within the parent company.
The warranty provision relates to management's best estimate of costs be
incurred in respect of warranty claims for items sold in the year, where
warranty terms have been agreed in the terms and conditions of sale. As at 31
May 2023 no such warranty provision was held. The warranty provision in the
previous year was not considered material.
Certain sales contracts contain an obligation for Equipmake to provide a
warranty; however, the products sold are new to the market and intended for
long-term use. This lack of historical data, combined with a lack of
comparable data on similar products and known challenges in establishing the
party responsible in the event of a warranty claim, has led to management
making the assessment that a provision for warranty costs cannot be
reliability estimated at this point in time. It is expected that a provision
for warranty costs will be recognised in future periods once sufficient data
becomes available.
26. Share capital
As at As at
31 May
31 May
2023
2022
Allotted, called up and fully paid £'s £'s
948,229,409 (2022: 500,000,000) Ordinary Shares of £0.0001 each 94,823 50,000
The following amendments to Share Capital took place in the year:
Share issue on conversion of convertible loan - 88,235,294 Ordinary Shares of 8,824 -
£0.0001 each
Share issue - 235,294,115 Ordinary Shares of £0.0001 each 23,529 -
Share issue - 124,700,000 Ordinary Shares of £0.0001 each 12,470 -
Total 94,823 50,000
The following other movements in relation to Share Capital are as follows:
In January 2022, prior to its IPO, the Company secured £3m of investment from
an existing shareholder in the form of a convertible loan note. The loan was
converted into equity as part of the IPO process at a 20% discount to the
market rate, resulting in a share issue of 88,235,294 Ordinary Shares.
On 28 July 2022, the Company issued 198,823,529 £0.0001 Ordinary Shares at an
issue price of £0.0425 and subsequentially on 29 July 2022, the Company
issued 36,470,586 £0.0001 Ordinary Shares at an issue price of £0.0425.
On 29 July 2022, the Company was admitted to the Aquis Access Stock Exchange
(Ticker: EQIP).
On 31 January 2023, the Company issued 23,626,996 £0.0001 Ordinary Shares at
an issue price of £0.05, raising a total of £1.181 million for the Company
(before expenses).
On 1 February 2023, the Company issued 101,073,004 Ordinary Shares at an issue
price of £0.05, raising a total of £5.054 million for the Company (before
expenses).
27. Earnings per share
Basic loss per share of 0.60p (2022: 2.3p) is based on the following data:
2023 2022
£'s £'s
Earnings used in calculation of total earnings per share: (4,831,375) (4,617,459)
Earnings on total losses attributable to equity holders of the parent
Shares in issue
Weighted average number of ordinary £0.0001 shares in issue 811,174,508 208,333,375
Earnings/(loss) per share (0.0060) (0.023)
27. Earnings per share (continued)
Diluted EPS is calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all dilutive potential ordinary
shares. The Company, being loss making in both this year and the comparative
year would mean that any exercise would be anti-dilutive.
28. Reserves
Share premium- Group and Company
The share premium account represents amounts subscribed for share capital in
excess of nominal value, net of directly attributable issue costs.
Other reserves - Group
Brought forward other reserves comprise the amount attributable to the owners
of the Company following the issue of shares in the subsidiary at a premium to
non-controlling interests in previous financial years.
Other reserves - Company
Brought forward result of a reduction in capital which resulted in the
cancellation of 5,000,000 £1 B ordinary shares during the financial year
ended 31 May 2022, £5,000,000 was credited against the proceeds of this
issue.
Share-based payments reserve - Group and Company
Used to reflect the assessed fair value of the equity settled options issued
as share-based payments.
Merger relief reserve - Company only
The merger relief reserve accounts for the uncapitalised fair value adjustment
in respect of the investment in the wholly owned subsidiary Equipmake Limited
which is eliminated on consolidation and therefore not presented on a Group
basis.
Profit and loss account - Group and Company
Profit and loss account represents cumulative profits and losses net of
dividends and other adjustments.
29. Share-based payments
The parent company (Equipmake Holdings Plc) operates an equity based share
based remuneration scheme for employees of Equipmake Limited. These share
options have been granted to employees of Equipmake Limited but will
ultimately be settled in equity in Equipmake Holdings Plc. The share based
payments charge has been recognised as an expense in the financial statements
of Equipmake Limited, in accordance with the accounting standards. The fair
value is measured by use of the Black Scholes option pricing method.
Under the schemes listed below, options have been granted to subscribe for
shares in Equipmake Holdings Plc.
Equipmake Holdings Plc granted share options on the 26 November 2021 with
138,888 options granted in respect of A Ordinary shares of £0.0001 each. The
vesting criteria of the options were based on the exit price (vesting of
option on an exit event other than a listing) or the Company value on the
exercise date (vesting of option on listing). Across all option holders, 1.5%
of the fully diluted share capital vested when the Company completed the IPO
in July 2022. A further 1% would vest when the Company value exceeds £200m. A
further 1% would vest when the Company value exceeds £400m. 0.5% would vest
when the Company value exceeds £800m. The share-based payments charge in
respect of these options was recognised in full in the year to 31 May 2022.
Equipmake Holdings Plc granted non-EMI options over A Ordinary shares in the
year to 31 May 2022, of which 2,308,744 were substantially modified on 1 June
2022. The revised non-EMI options updated the terms of the agreements to
prevent dilution on a listing. Subject to the EMI options being capable of
exercise in full, the recipient will be granted the option to acquire a number
of A Ordinary shares which, when added to the A Ordinary shares issuable on
exercise of the EMI options, equates to 4% of the fully diluted share capital.
These options shall lapse on the same date as the EMI options. The initial
fair value of the combined EMI and non-EMI share options were recognised 31
May 2022 and so only the revised fair value from modification has been
recognised.
Equipmake Holdings Plc granted 24,950,000 share options on 19 July 2022. At
the year ended 31 May 2023 700,000 options had lapsed. The vesting conditions
of these options were either performance related or time based, vesting over a
period of 3 to 8 years. Performance related vesting conditions are linked to
revenue, though the option agreements state that the options can vest on
management discretion. The expected life used in the model has been adjusted,
based on management's best estimate, for the effect of non-transferability,
exercise restrictions and behavioural considerations. If options remain
unexercised after a period of 10 years from the date of grant, the options
expire. Non-vesting conditions and market conditions are taken into account
when estimating the fair value of the option on the grant date. Options shall
lapse on the tenth anniversary of the Grant Date (other lapses conditions are
outlined in the Options Agreement).
In addition, share options were also granted on 25 July 2022, to two
non-employees of the Company. A share-based payments charge has been
recognised in respect of 7,653,061 options granted to one of these
individuals, for whom it has been judged that share options were awarded as a
result of past services provided to the Company.
Weighted average exercise price (pence) Number Weighted average exercise price (pence) Number
2023
2023
2022
2022
B/fwd. 0.01 22,201,056 - -
Granted during the year 6.54 34,911,805 0.01 22,201,056
Lapsed 10.00 (700,000) - -
Outstanding at the end of the year 3.92 56,412,861 0.01 22,201,056
Exercisable at the end of the year 1.01 18,555,643 0.01 -
The presentation in the comparative period included options presented over A
Ordinary shares. Following IPO this has been restated to present as options
over Ordinary shares only.
1 June 2022 19 July 2022 25 July 2022 2022
Option pricing model used Black Scholes Black Scholes Black Scholes Black Scholes
Weighted average share price (pence) 4.25 4.25 4.25 3,012
Exercise price (pence) 0.01 9 0.01 0.000001
Weighted average contractual life (years) 10 5.7 2 1
Expected volatility 50.79% 50.79% 50.79% 50.79%
Risk-free interest rate 1.940% 1.940% 1.940% 0.612%
2023 2022
£'s £'s
Equity-settled schemes recognised in the profit or loss for the year 475,321 574,227
475,321 574,227
30. Capital commitments
Group and Company had capital commitments as follows:
Group Group
2023 2022
£'s £'s
Contracted for but not provided in these financial statements 676,082 66,267
676,082 66,267
31. Pension commitments
The Group operates a defined contributions pension scheme. The assets of the
scheme are held separately from those of the Group in an independently
administered fund. The pension cost charge represents contributions payable by
the Group to the fund and amounted to £112,266 (2022: £88,286).
Contributions totalling £34,992 (2022: £20,642) were payable to the fund at
the balance sheet date and are included in creditors.
32. Commitments under operating lease
The Group and the Company had future minimum lease payments due under
non-cancellable operating leases for each of the following years:
Group Group
2023 2022
£'s £'s
Not later than 1 year 430,886 205,130
Later than 1 year and not later than 5 years 241,932 512,635
672,818 717,765
33. Related party transactions
As permitted by FRS102 paragraphs 1.12e and 33.1a, the Company has taken
advantage of the exemption from disclosing the transactions entered into
between two or more members of a group as all subsidiary undertakings are
wholly-owned by a member of that group.
The Key Management Personnel of Equipmake Limited are the same as Equipmake
Holdings Plc, being the Directors.
The following director loans existed during the year within the consolidated
figures:
The balance brought forward on the director loan account was £70 (2022:
£4,192). During the year there were drawings of £4,443 (2022: £1,242) and
repayments of £4,512 (2022: £5,364) with a carry forward balance owed to the
Company of £1 (2022: £70). No interest was charged during the year (2022:
£Nil).
34. Post balance sheet events
There are no other post balance sheet events that require adjustment or
disclosure in these financial statements.
35. Controlling Party
The Directors do not consider there to be one ultimate controlling party.
The ultimate controlling party of the Group, by virtue of his majority
shareholding, was Ian Foley as at 31 May 2022. As at 31st May 2023, Ian Foley
controlled 39.55% (2022: 75%) of the shareholding.
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