REG - Saietta Group PLC - Full Year Results March 2023 & Operational Update
19/10/2023 07:00
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RNS Number : 6528Q Saietta Group PLC 19 October 2023
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 which forms part of UK law by virtue of the
European Union (Withdrawal) Act 2018 ("MAR").
19 October 2023
Saietta Group Plc
("Saietta", the "Company" or the "Group")
Full Year Results Ending March 2023 & Operational Update
Saietta Group plc (AIM: SED), the multi-national business which designs,
engineers and manufactures complete electric drivetrain (eDrive) solutions for
electric vehicles, announces its full year results for the 12 months ended 31
March 2023 and provides an operational and financial update.
Since floating on the London Stock Exchange in July 2021, in 28 months Saietta
has transformed from being just an axial flux technology (AFT) R&D company
into a designer of a range of complete eDrive solutions for vehicle
manufacturers, secured a major global OEM (original equipment manufacturer) as
its launch customer for a range of their vehicle lines, established leading
manufacturing facilities in both Sunderland and Delhi (through its JV partner
Saietta VNA) and appointed high quality local supply chains.
The Company believes that it has reached its inflection point for its core
business based on its proven AFT eDrives. The orders in place provide a firm
launch pad and the Board is confident that it is now able to convert a
significant proportion of its rapidly growing sales pipeline into firm
commercial orders, thereby leveraging many months of development work and
investment in its design and manufacturing capabilities.
This communication also sets out a very significant step-change business
opportunity for Saietta by industrialising a proven all-new second model line
based on its new in-house radial flux technology (RFT) motor family.
The Company has resolved the frustrating technical accountancy issues around
accounting for the post balance sheet event of the new agreements
with Consolidated Metco Inc ("ConMet") which were signed on 1st August
2023 and has accordingly published its fully audited accounts for the year
ended 31 March 2023.
Financial highlights for FY ending March 2023
· Revenue and Other Income from continuing operations increased 132% to £4.8m
(2022: £2.1m)
· Revenue and Other Income from continuing and discontinued operations increased
19% to £5.1m (2022: £4.3m)
· Revenue and Other Income reduced from previously disclosed unaudited
values by £1.2m, of which £0.3m relates to the reclassification of certain
revenue as relating to a discontinued operation and £0.9m relates to ConMet
engineering and design services payments being treated as proceeds on a
disposal of an intangible asset, rather than revenue
· EBITDA reduced from previously disclosed unaudited values by £4.0m by virtue
of the reduction in turnover and due to capitalized development costs being
reclassified as expenditure
· Gross profit of £0.7m (2022: £0.8m profit) following above reclassification
· Adjusted EBITDA loss of £14.0m (2022: loss of £4.4m) which excludes
exceptional losses from the discontinued activities of £7.9m
· Statutory Loss before Tax of £28.3 million (2022: £11.1m) accounting for all
write downs and discontinued activities
· Cash as at 31 March 2023 of £7.2m (2022: £18.4m)
· Total Assets of £39.7m at 31 March 2023 (2022: £42.7m)
· Net Assets of £29.2m at 31 March 2023 (2022: £32.8m)
For information on the Company's current working capital position post period
end, please see the Finance Update post-period section below.
Operational highlights for FY ending March 2023
· Strategic adjustment to narrow near-term focus onto high volume revenue
generating opportunities with established OEMs rather than a myriad of
start-ups in the rapidly expanding global lightweight electric vehicle (EV)
sector with a particular focus on India and the wider Asian region. The Board
believes that the content of this communication clearly confirms the success
of this strategy.
· Expansion of the product portfolio from a stand-alone axial flux technology
(AFT) motor at IPO (July 2021) to a supplier of complete proprietary eDrive
solutions consisting of an AFT motor with integrated electronic controller in
the same housing, modular transmission, mechanical axle and a mated vehicle
control unit (VCU). The breadth of this extended product offering has been
proven to generate significant market pull from OEMs.
· In December 2022, Saietta announced what the Board now views as a major
commercial breakthrough - the signature of a Development Agreement with a
leading Indian OEM which is one of the largest manufacturers of light
commercial vehicles (LCVs) in the Indian market. For clarity, this OEM is
referred to as the "Lead OEM" in the rest of this document. This agreement
immediately triggered an engineering design services (EDS) contract for
approximately £3.2m of revenue spread over two financial years for eDrive
solutions powered by Saietta's AFT motors for two product lines with
indicative minimum volumes across the first five years of 80,000 units. As
outlined in this announcement, this initial agreement has to date matured into
Saietta potentially providing eDrive solutions to the Lead OEM for four
product lines in 2, 3 and 4 wheel vehicles in the very large Indian
lightweight vehicle sector.
· Established a production facility in Sunderland, UK for North American and
European clients.
· Discontinued its loss-making bus retrofit business branded "RetroMotion" in
the Netherlands which it inherited when it bought e-Traction in November 2021.
RetroMotion was sold to a Saietta customer in January 2023 which included
transferring the seven employees and the associated premises and thereby
reduced the burn rate to £0.
· Strengthened the Board with the appointment of a new Non-Executive Director,
Devyani Vaishampayan.
Operational update post-period
· In April 2023 the Company was awarded a contract for 3,000 bespoke eDrive
units from AYRO Inc., a US manufacturer of lightweight electric urban delivery
vehicles. AYRO announced on 28 September 2023 that it had commenced deliveries
of vehicles to end customers.
· In April 2023 Saietta opened its Global Technical Centre in Silverstone, UK
which saw all of its engineering team co-located for the first time.
· In July 2023 Saietta confirmed the signature of an additional Letter of
Assignment (LOA) between Saietta VNA and the Lead OEM for a third product line
featuring the Company's all-new Radial Flux Technology (RFT), mated to an
all-new Saietta controller, gearbox and vehicle control unit. This application
is for a lower powered L5 category small commercial vehicle than the two model
lines to be powered by Saietta's AFT motors. Once the RFT eDrive has been
fully proven to fully meet the client's requirements, a minimum of 60,000
units sales are forecast over a five year period in addition to the 80,000
units detailed above for AFT eDrive solutions across two product lines.
· In July 2023 Saietta successfully completed proof of concept for complete
inboard and outboard motor products in the leisure marine sector powered
by Saietta's AFT motors under the 'Propel' brand. The Saietta Board believes
both product variants will be highly successful but recognises the strategic
imperative to focus time and resources on the lightweight EV market, where the
commercial opportunities are bigger, nearer and more certain. The Propel
operations in the Netherlands were therefore suspended and the operation
moved to Saietta's Global Technical Centre in Silverstone, UK. This
reduced annual operating expenses by approximately £1.2m to £0, but also
resulting in an impairment of intangible assets of £2.1m. Saietta is now
actively engaged in discussion with two potential partners for the marine
business for an arrangement to take-on the industrialisation and
commercialisation of the proven Propel products for which Saietta will
receive ongoing revenue from product sales of the AFT motor to power the
inboard and outboard systems as well as seeking technology transfer fees and
ongoing royalties for the innovation delivered by Saietta.
· In August 2023 in the heavy goods vehicle sector, Saietta restructured the
contractual arrangements with their North American client ConMet, which
resulted in an upfront payment to Saietta of €3.3 million, potential
additional future license payments to Saietta of up to €20 million, and
the transfer of the relevant project team in the Netherlands to ConMet which
reduced Saietta's annual operating costs by approximately €2 million to
€0. It also meant that Saietta had no further costs for the development or
production of the ConMet products. Saietta's Heavy-Duty eDrive division was
moved to Saietta's Global Technical Centre in Silverstone, UK and the
Company remains free to develop any eDrive products for trucks and buses apart
from the ConMet in-wheel products for truck hubs. However, this also led to
an inventory write down of £2.1m.
· In September 2023 the AFT eDrive went into series production
at Saietta's UK manufacturing hub in Sunderland for North American and
European customers with AYRO Inc. being the initial launch customer.
· In September 2023 Saietta announced that its Indian joint venture, Saietta
VNA, received a purchase order for supply of complete eDrives from the Lead
OEM. The purchase order was for approximately £420,000 of systems for the
first three months of vehicle production. Target volumes indicated by the
client for the first year of production is expected to generate revenue for
Saietta VNA in excess of £11.2 million. The Directors believe that the
purchase order established Saietta VNA as the sole eDrive supplier for one of
the Lead OEM's light commercial vehicle (LCV) product lines and is expected to
build to a minimum of 40,000 complete systems over a five-year period. An
order for a second LCV product line also powered by Saietta's AFT technology
is expected over the coming months, and the two product lines combined are
forecast to generate a minimum of 80,000 orders over a five-year period.
· In October 2023 production of the AFT eDrive for the Lead OEM commenced
in Delhi, India at Saietta VNA's all new 33,000 sq-ft factory.
· In October 2023, building on the work for the three LCV product lines for the
Lead OEM, Saietta commenced work to evaluate RFT motor solutions for a fourth
product line, this time for the 2 wheel market. This is very significant for
Saietta given that in the 12 months ending September 2023, some 835,000
electric 2W vehicles were registered in India. This equated to approximately
5% of the total 2 wheel registrations, indicating the scale of the opportunity
as this sector in India fully transitions to electric propulsion. The Lead OEM
client has indicated sales aspirations of a minimum of 50,000 units over a 5
year period with start of production targeted for 2025.
· As at October 2023, Saietta is progressing towards successful agreement for an
aftermarket manufacturing contract to be undertaken by its Sunderland
manufacturing facility.
· As at October 2023, Saietta has a live engineering project with a second,
separate major Indian OEM to complete a final proof of concept for another RFT
motor variant for the very large 2-wheeler sector. Forecast 5-year vehicle
volumes from the client are 800,000 units.
· On 6 October Steven Harrison resigned for personal reasons from his role as
Chief Financial Officer. Saietta is pleased to announce that David Wilkinson
is appointed as Interim CFO with immediate effect. David understands the
Saietta business intimately having joined the Board at IPO in July 2021 as
Non-Executive Deputy Chairman and Chair of the Audit Committee. David will
lead the Finance function with the support of Mr Harrison who will remain
engaged in the business for a period of time to support Mr Wilkinson and
assist the Company with a smooth transition of responsibilities to a new full
time CFO. The Board has initiated a search for a new CFO and the Company will
announce details of such appointment and Mr Harrison's departure date in due
course.
As Saietta has now secured contracts from a leading OEM, the Board has high
confidence that a significant proportion of the material items in the
Company's sales pipeline will mature into commercial contracts in the current
financial year.
Finance update post-period
As announced on 25 September 2023, at the end of August 2023 the Company had
cash resources of £1.2m and stated that this, combined with additional sums
receivable from key customers and JV partners would meet the requirements for
its focused AFT eDrive production plan.
As part of its joint venture relationship, the Company has recently formalized
the advanced payment of £1.5m for certain machinery that is scheduled to be
transferred from its Sunderland facility to the Saietta VNA joint venture in
India. The Company is due to receive these funds from the JV in the coming
days providing a significant increase to the September-end cash balance of
£0.4m and, absent other financial resources becoming available, are deemed to
provide the Group sufficient working capital into December 2023.
The Board believes that the increased scale of the commercial opportunities
from the current sales pipeline, described in the Operational Update above,
presents a unique opportunity to make a step-change and thereby secure
substantial recurring long-term revenues over a range of high-volume product
lifecycles.
Consequently, the Board has concluded that the Company will need to secure
additional funding in Q4 2023 for further working capital and to generate the
financial resources required to fully capitalize on the potential from the
anticipated additional sales contracts within its pipeline.
The Company will accordingly proactively engage with stakeholders to explore
financing opportunities which may include an equity raise.
Tony Gott, Executive Chairman of Saietta, said:
"We have finally resolved frustrating technical accountancy issues around
accounting for the post balance sheet event of the new agreements
with Consolidated Metco Inc ("ConMet") which were signed on 1st August
2023 after our financial year end and released our fully audited accounts for
the year ended 31 March 2023, which will recommence trading in our shares on
AIM.
Saietta has made huge strides since the end of the last financial year and we
believe we have reached the inflection point for the business. At IPO just 28
months ago we planned to build Saietta organically based on revenues from
sales of our ground-breaking axial flux technology (AFT) motors before scaling
up into additional product lines. However, the market is transitioning to
electric propulsion much faster than even we predicted, especially in Asia.
As Saietta has now secured contracts from a leading OEM, the Board has high
confidence that a significant proportion of the material items in our sales
pipeline will mature into commercial contracts within the current financial
year. This includes market pull from the Indian 2 wheel (2W) sector for
Saietta's all-new eDrives based on our radial flux technology (RFT) motors.
This is highly significant given in the 12 months to September 2023 some
835,000 electric 2W vehicles were registered in India which equated to
approximately 5% of the total 2W registrations, indicating the scale of
opportunity in India as this sector transitions fully to electric propulsion.
The automotive market globally stands at an unprecedented moment of
disruption, arguably the biggest since vehicles were first introduced over 120
years ago. With major disruption comes major commercial opportunity. We
passionately believe that Saietta has the right product breadth and depth, at
the right prices, at the right time, with the right people and the right
business partners to fully capitalize on this huge opportunity.
The Saietta Board has therefore taken the decision to seek step-change
additional funding in part to underpin our current working capital and,
importantly, to also generate the financial resources required to fully
capitalize on the potential from the anticipated additional contracts within
our sales pipeline, including the huge 2W sector in India. We are open on how
best to achieve this and are commencing discussions with our key investors to
get their advice, but we are determined to appropriately capitalize the
business and maximise the ROI for our investors."
The financial information set out below does not constitute the Group's
statutory accounts for the year ended 31 March 2023, but is derived from those
accounts. References within the document may refer to information in the
statutory accounts and these will be sent to shareholders shortly and be
published on the Company's website imminently.
For any further enquiries, please contact:
Saietta Group via FTI
Tony Gott, Executive Chair
David Woolley, Chief Executive Officer
Canaccord Genuity (Nomad and Broker) 0207 523 8000
Henry Fitzgerald-O'Connor / Harry Pardoe
FTI Consulting (Financial PR advisor) Tel: +44 (0) 20 3727 1000
Ben Brewerton / Dhruv Soni saietta@fticonsulting.com
About Saietta Group plc
Listed on the London Stock Exchange's AIM, Saietta is a global business that
designs, develops and manufactures complete electric drivetrain (eDrive)
solutions for established manufacturers of a broad range of electric
vehicles.
Saietta's breakthrough proprietary technologies include AFT (Axial Flux
Technology) and RFT (Radial Flux Technology) motors, power electronics,
powertrain controls, mechanical axles, transmissions and vehicle control
units. Considerable flexibility is built into the core design, meaning
solutions can be quickly and cost effectively tailored to a specific
application.
Saietta works in a highly collaborative way with clients, driven by the belief
that partnership is key to delivering world-class tailored solutions at pace.
Saietta's engineering team takes time to deeply understand a client's brand,
target market sector, competition and the services they require. Then Saietta
develops a bespoke suite of products and services to fast-track the client to
production with eDrive solutions which deliver a sustainable competitive
advantage.
Chairman's Statement
Saietta has transitioned from its beginnings as an R&D motor designer to a
provider of engineering design services and supplier of light-duty vehicle
e-axle products to OEM's. Such a transformation within two years of raising
funds through an IPO is an exceptional achievement.
Facilitated primarily by the proceeds from the IPO and subsequent fund raise,
Saietta has made considerable progress in its core focus lightweight mobility
market having secured orders for design and delivery of light-duty vehicle
e-axles to customers in India and the United States. Saietta remains
dedicated to further securing a number of long-term, high volume OEM
relationships globally.
These achievements have required a considerable amount of transformation
within the business and there have been changes at Board level and operating
level as a consequence.
In particular, whilst the E-Traction acquisition made in November 2021 brought
in new valuable intellectual property and skills to the Group, it also
contained operational activities that were non-core such as the Retromotion,
bus conversion category.
Successfully releasing this activity and deciding to seek an industrialisation
partner to take forward the Netherlands-based marine operation, Propel, have
together made it possible for the Group to reach the milestones set out with
OEM's in the light duty sector.
The decision regarding Propel has led to an impairment of the assets in that
business unit as there is uncertainty over the timescale to complete such a
transition.
Outlook
Moving from an R&D-focused technology start-up to a large-scale
manufacturer with international sales is clearly a dramatic transformation and
the Group continues to encounter the challenges commensurate with such.
However, its market acceptance is now firmly in place, which provides a much
clearer path towards its goals and aspirations.
Saietta employees Group-wide have been integral to delivering on its ambitious
growth plans and the Board is confident that our short- and long-term goals
remain achievable. Saietta's ramp up of delivery of light-duty vehicle e-axle
products to our customers remains firmly in place to ensure the future
prosperity of the Group.
The Board has confidence that the commercial opportunities for Saietta across
global markets and particularly in India remain readily apparent and the rapid
scale-up of its business will allow it to access these opportunities in the
near future.
Chief Executive Officer's Review
This was a challenging transitional year for the Group with commercial success
and operational delivery becoming a dominant feature of the business as
opposed to the research and development start up phases of the past. Our
turnover in the 12 months ended 31 March 2023 increased by 50% to £2.1
million (2022: £1.4m) from continued operations.
The Group now consists of:
· An international light duty division offering an entire, integrated e-drive
system (comprising gear box, axle, inverter, and controller) packaged around
an AFT 140 motor. The Board believes this increases the value of the AFT
product offering and accelerates the timeline for its adoption into vehicle
platforms;
· An international heavy-duty division which which holds an agreement post year
end for future licence revenues due on two products under development by
Consolidated Metco Inc., a leading US supplier of hubs to OEM's; and
· A world class automotive electric motor factory in Sunderland with 4 motor
production lines and an electronic circuit board production line.
Our achievements during the year
Saietta VNA awarded contract with Tier 1 Indian OEM
In December 2022, the Group signed a Development Agreement with a Tier 1
Indian OEM for engineering design services of approximately £3.2m for a
series of products with assumed minimum volumes across the next five years of
80,000 units and a start of production in the fourth quarter of 2023.
Ayro Inc. awarded contract and initial purchase order of USD6.0m
In April 2023, the Group received an order for 3,000 bespoke eDrive units from
Ayro Inc., a US customer that commenced delivery of prototype units earlier in
the year. The award reflected Ayro's confidence in Saietta's engineering
design and support as well as its clear delivery capability, having secured a
production facility in Sunderland in April 2022.
Strategy, recent developments and commercial opportunities
The Group's strategy has evolved throughout the year driven by market pull,
particularly in the area of light-duty solutions and by resource constraints
that have led to prioritization on the original AFT technology away from the
ancillary areas of Marine and Heavy Duty.
The decision to find an industrialization partner for Propel and to
renegotiate the arrangements with ConMet were necessary steps in this
evolution.
Looking ahead, the outlook for the business with a refocused operating model
is highly positive for Saietta. We envisage the growth experienced in 2022/23
will accelerate as the scaled up production of AFT and RFT motors in India and
other markets will occur in the coming year.
Future growth strategy
The Group intends to invest for growth in the following areas:
· Saietta VNA scale up to meet client orders
· Securing a number of long-term, high volume OEM relationships
globally; and
· Continue to secure crucial patents across all key international
markets.
To make such growth possible, the Group has had to apply rigorous rationing of
its capital and its subsequent renegotiation of arrangements with ConMet are
an example of the discipline and refocus applied.
Saietta is quickly positioning itself to become a prominent participant in
drive train systems and technology for applications across the electric
vehicle segments.
Review of the Group's Business and Financial Performance
Overview
Having commenced the year acquiring a facility in Sunderland with 86,000
square feet of factory space designed specifically for electric motor
production, the Group moved away from its research and development origins and
pivoted towards a phase of industrialization of motor production in order to
address the opportunities materializing in contract wins.
The Group delivered moderate results during the year, generating total revenue
of £2.1m (2022: £1.4m) from continued operations whilst formalising its
business structure and strategy for its principal divisions*:
a) Lightweight mobility division addressing India through Saietta VNA and
the United States of America directly from its Sunderland plant.
b) Heavy-duty commercial division with licence revenue in place for future
products.
* the marine division has now been discontinued whilst an industrialization
partner is being sought.
Establishment of production facility
On 4 April 2022, the Group acquired fixtures and fittings, plant equipment and
a lease for an 86,000 square feet production facility in Sunderland which will
ultimately be able to produce in excess of 100,000 units per annum. The
Sunderland plant will service non-India based customers through semi-automated
lines for both AFT and RFT requirements. Saietta VNA, the Group's Indian joint
venture, will service customers through a fully automated AFT line and RFT
lines due to be in place in quarter four 2023.
Furthermore, in the event that additional contractual orders for eDrives are
received in the near term (ahead of cashflows from the AFT eDrive vehicle
programmes referenced above) then the Company may also require additional
capital to fund the set up and production implementation of those additional
contracts.
Business development - Lightweight mobility division
The development order from India with production to follow and the order from
the USA confirmed the Group's strategy to concentrate on lightweight mobility
as the most effective means to harness the potential of its AFT technology
with a view to rapid profitable growth in the coming years.
Business development - Heavy-duty and Marine divisions
The Group has needed to concentrate its attention and capital on the areas of
most substantial returns both in terms of internal rates of return and
immediacy.
As a consequence the arrangements with ConMet, the discontinuance of the
Retromotion activity and the redirection of marine retail operations in the
Netherlands all became necessary steps towards the focused Group strategy.
Gross profit
Saietta delivered gross profit of £0.7m (2022: £0.8m) with a lower gross
profit margin of 31% (2022: 58%) from continuing operations. The fall in gross
margin is driven by revenue mix and the changing nature of the ConMet
contract.
Other income
£1.0m gain on disposal of the intangibles created in the ConMet projects and
£1.7m (2022: £0.7) of grant income from two projects (2022: 3 projects) were
recognized in the year. Grant income included the projects with Innovate UK
("APC 6" and "APC 16") which generated income of £1.0m (2022: £0.6m).
Administrative expenses
Administrative costs for the year of £21.8m (2022:£13.1m) represents an
increase of £8.7m.This increase is driven by the Group expanding its
operations across geographies which in turn has served to increase its fixed
cost base. In particular, the Group deployed funds to grow its existing
operations with the addition of the Netherlands based heavy duty division for
the entire year, a Sunderland plant and expanded Propel B.V. which has caused
total, average staff numbers to increase from 100 in 2022 to 189 in 2023.
The share-based payment charge decreased from £4.4m in 2022 to £2.3m in
2023, due to performance below target for the new Long-Term Incentive Plan
('LTIP') awards.
Discontinued operations
The strategic adjustment to narrow near-term focus on immediate revenue
generating opportunities in the rapidly expanding global lightweight electric
vehicle (EV) sector through the discontinuance of the Retromotion activity and
the redirection of marine retail operations in the Netherlands lead to
significant losses in the year £7.9m (2022: £0.05m)
Adjusted EBITDA
The underlying level of loss that is measured by Earnings Before Interest,
Tax, Depreciation and Amortisation, discontinued operations and non-recurring
expenditure, which excludes expenses associated with the Admission to AIM in
the prior year and the raising of additional funds through a placement in the
financial year ended March 2023 and share-based payments (adjusted EBITDA),
shows an increase in adjusted EBITDA loss from £4.4m in 2022 to £14.0m in
2023.
For full details on how the adjusted EBITDA figure is calculated, please see
note 4.
Consolidated statement of financial position and cash flows
Non-current assets
As at 31 March 2023, non-current assets amounted to £25.5m (2022: £15.5m),
including intangible assets of £10.9m (2022: £8.4m) and property, plant and
equipment of £8.1m (2022: £3.5m).
Of the increase in intangible assets, internally-generated development costs
and the purchase of intangible assets accounted for £3.3m (2022: £3.6m) and
£1.0m (2022: £0.5m) respectively whilst disposal groups held for sale
accounted for £(1.7)m (2022: nil).
Current assets
As at 31 March 2023, current assets amounted to £14.2m (2022: £27.2m),
including cash balances of £7.2m (2022: £18.4m).
The principal elements of the decrease in cash were:
· Gross proceeds through placing and subscription of £23.6m (2022: £37.5);
· Operating cash outflow of £18.2m (2022: £6.8m);
· Investing activities including the acquisition of intangibles, property, plant
& equipment and the capitalization of development costs which totaled
£10.5m (2022: £8.9m); and
· Movements in working capital of 3.4m outflow (2022: £1.0m outflow).
Directors' Report
The Directors present their report and the consolidated financial statements
for the year ended 31 March 2023. The Directors who served during the year and
their beneficial interest in the Company's issued share capital at year end
were:
Ordinary shares of Ordinary shares of
Date of appointment Date of resignation £0.011 each £0.011 each
2023 2022
Executive Directors:
Anthony Gott(1) 7 July 2021 N/A 21,739 -
Wicher Kist 23 November 2018 17(th) April 2023 1,313,289 1,295,174
Steven Harrison 22 April 2021 N/A - -
Non-Executive Directors:
Emmanuel Clair 23 November 2018 N/A 12,777,622 12,603,709
David Wilkinson 7 July 2021 N/A 11,956 8,333
Seshu Bhagavathula 17 December 2021 N/A - -
Devyani Vaishampayan 5 December 2022 N/A - -
(1)On 1 August 2022, Anthony Gott was appointed Executive Chairman and on the
18(th) April 2023 as Interim Chief Executive Officer. On 2 October 2023 David
Wooley was appointed as Chief Executive Officer.
Principal Activities
Saietta Group plc is a company registered in England and Wales that has
developed the innovative AFT electric motor, designed to deliver class-leading
performance for its target markets whilst being low cost and built for mass
market production. Saietta's initial target market is the high volume,
fast-growing lightweight mobility market including motorcycles in Asia.
Review of Business
A review of the business, its development and performance for the year and its
position at the year end, together with the future prospects of the Group, is
contained in the Chairman & Chief Executive Officer's Report and the
Strategic Report.
Going concern
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis, the directors have considered the financial
position of the Group and the Company, their cash flows and their liquidity
position. The Group and Company's financial risk management objectives and
exposures to liquidity and other financial risks and uncertainties are set out
on pages 15 to 18 of the Group's financial statements. The Group had net
assets of £29,189,193 (2022: £32,814,791) as at 31 March 2023 and available
liquidity of £7,247,267 (2022: £18,402,055) comprised of cash and cash
equivalents.
The Group and Company have modelled scenarios for a period up to October 2024
from the March 2023 year end and stress tested its financial position in such
scenarios. These stress tests modelled the variability in financial
performance and free cash flows when incorporating certain hypothetical events
such as a reduction in forecast revenue and a delay in the receipt of payments
for equipment from Saietta VNA.
The Group and Company operate in markets that are rapidly growing and has
strategic plans that respond to such growth. In delivering those plans, the
Group is mindful of the ultimate benefits from maintaining control over the
deployment of its intellectual property in applications with major OEMs and
within its joint venture arrangements. In order to do so, it recognises that
at times it will potentially need to co-invest or defer investment to its
partners to enhance the future value it can achieve from application of its
products. In such instances the commercial merits will be weighed in
determining whether funding is sought.
These forecasts align to the business strategy which was based on the
assumption that the Group and Company will significantly increase its revenue
and be able to generate significant gross profit in the next 12 months.
Furthermore, the forecasts also include payments from Saietta VNA, the Group's
joint venture in India, for equipment for fully automated production of AFT
motors. The Group has spent £3m on such equipment and this amount is to be
reimbursed by Saietta VNA. In the absence of such reimbursement there may
also be a need to raise additional funding
Whilst the Directors expect that additional funding can be raised this is not
guaranteed and when continuing with an accelerated expansion this presents a
material uncertainty which may cast significant doubt over the Group's and the
Company's ability to continue as a going concern and therefore its ability to
realise its assets and discharge its liabilities in the normal course of
business. The financial statements do not reflect any adjustments that would
be required to be made if they were prepared on a basis other than the going
concern basis.
Whilst acknowledging the uncertainties described above, the Board have
concluded, on the basis of all scenarios and related expected cashflows and
available sources of finance, that the Group and Company will be able to
continue as a Going Concern for at least twelve months from the date of
signing these financial statements and therefore it remains appropriate to
prepare the Group and Company's results on the basis of a going concern.
Results and Dividends
The Group loss for the year, before taxation (including discontinued
operations), amounted to £28,041,921 (2022: 10,782,252). The Directors do not
recommend a final dividend this year (2022: £nil).
Research and development costs
In accordance with the policy outlined in note 2, the Group incurred research
and development expenditure of £3.3m (2022: £3.8m) in the year. Commentary
on the major activities is given in the Strategic Report.
Financial instruments
The use of financial instruments and financial risk management policies is
covered in the Strategic Report and also in note 33 of the financial
statements.
Substantial shareholdings
At 31 March 2023, the Company had been notified that (other than Directors)
the following were interested in 3% or more of the issued capital of the
Company:
Number of Ordinary % of issued
shares share capital
Amati AIM VCT plc 10,980,174 10.67%
Lawrence Marazzi 5,794,799 5.63%
John Michael Winn 6,326,934 6.15%
Premier Miton Investors 7,122,114 6.92%
Schroder Investment Management 7,167,665 6.96%
Canaccord Genuity Wealth 6,003,963 5.83%
At 18 October 2023, there were 102,917,675 Ordinary shares in issue.
Governance and the Board
The Board's governance system provides balanced support for the executive
management team in the development of the Group's strategy and with the need
to ensure effective monitoring of its implementation. The Board and its
committees have considered the significant events of the year and their impact
on the Group's business and reputation.
During the year the Audit & Risk Committee was chaired by David Wilkinson,
the Remuneration Committee was chaired by Devyani Vaishampayan (previously
David Wilkinson) and the Nomination Committee was chaired by Devyani
Vaishampayan (previously David Wilkinson). The Board remains confident in the
work of those committees and the overall system of governance.
Events after the reporting period
The events after the year end of 31 March 2023 are detailed in note 36 to the
financial statements.
Strategy and future developments
The Group's strategy and future developments is covered in the Chief Executive
Officer's Report.
Major macroeconomic impacts
Covid-19 and its aftershocks: We are mindful that the legacy of the COVID-19
pandemic and the friction it placed into international trade continues to have
a notable impact on global supply chains; however, after negotiation and
supplier development we currently do not anticipate that our production and
sales volumes projections will be adversely affected in FY2023/24.
Economic and geopolitical factors: Inflationary pressures have been increasing
throughout the first half of 2023, with major economies across the globe
experiencing high energy prices linked to the conflict in Ukraine. This has
fed through into higher interest rates and inflation on supplier costs. This
has directly impacted the business as some prices we pay our suppliers are
directly indexed to market rates which then puts pressure onto profit
margins. Cost down measures to reduce the bill of materials and labour
requirement have been pursued during the year to mitigate the effect of the
increased raw material costs. Looking ahead, we will continue to monitor the
impact of changes in material costs on our margins and continue to review
areas where cost can be taken out of the manufacturing through process
engineering. Ultimately, we may also look to adjust sales prices if we
cannot avoid passing cost increases on to our consumers.
Auditors
Each of the persons who is a director at the date of approval of this annual
report confirms that:
· so far as the director is aware, there is no relevant audit information of
which the company's auditors are unaware; and
· the director has taken all the steps that he/she ought to have taken as a
director in order to make himself/herself aware of any relevant audit
information and to establish that the company's auditors are aware of that
information.
This confirmation is given and should be interpreted in accordance with the
provisions of section 418 of the Companies Act 2006. The auditors, BDO LLP,
will be proposed for reappointment in accordance with section 489 of the
Companies Act 2006.
Saietta Group plc has not included the requirements of Streamlined Energy and
Carbon Reporting (SECR) due to the Group and its subsidiaries not meeting the
threshold for reporting.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2023
Year ended 31 March 2023 Year ended 31 March 2022*
Notes £ £
Continuing operations
Revenue 6 2,102,959 1,382,777
Cost of sales (1,450,435) (586,966)
Gross profit 652,524 795,811
Other income 7 2,674,520 678,411
Other costs of sale 7 (918,291) -
Administrative expenses (21,784,959) (13,091,952)
Share option costs 9 (2,335,944) (4,406,334)
Other administrative expenses 9 (19,449,015) (8,685,618)
-
Gain on bargain purchase - 704,761
Operating loss 8 (19,376,206) (10,912,969)
Finance income 11 75,338 5,523
Finance expense 11 (278,046) (99,604)
Share of results of associate 17 (243,406) -
Other gains and losses 18 (605,377) (78,058)
Loss before taxation (20,427,697) (11,085,108)
Tax credit 12 490,188 377,420
Loss for the year from continuing operations (19,937,509) (10,707,688)
Discontinued operations
Loss for the year from discontinued operations 38 (7,868,640) (46,977)
Loss for the year attributable to equity holders of the parent company (27,806,149) (10,754,665)
Other comprehensive loss, net of income tax, to be reclassified to profit and
loss in subsequent periods
Exchange differences on translation of foreign operations (235,772) (27,587)
Total comprehensive loss for the year (28,041,921) (10,782,252)
Basic and diluted loss per share in pence 13
- Continuing operations (0.21) (0.14)
The earnings per share calculation relates to continuing operations. The notes
on pages 44 to 92 form part of these financial statements.
*Comparative figures have been restated to exclude income and expenditure
relating to discontinued operations. A reconciliation of the balances is
included in note 38.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
2023 2022
ASSETS Notes £ £
Non-current assets
Intangible assets 14 10,916,016 8,365,506
Property, plant and equipment 15 8,113,009 3,498,541
Right-of-use assets 16 5,715,671 2,815,049
Investment in associate 17 1,285 -
Other financial assets 23 500,000 -
Trade and other receivables 21 141,195 734,526
Prepayments and accrued income 22 129,016 101,825
Total non-current assets 25,516,192 15,515,447
Current assets
Inventories 19 498,407 2,470,043
Trade and other receivables 21 2,984,033 5,070,139
Prepayments and accrued income 22 3,209,304 1,237,197
Cash and cash equivalents 20 7,247,267 18,402,055
Assets of disposal groups held for sale 38 227,474 -
Total current assets 14,166,485 27,179,434
TOTAL ASSETS 39,682,677 42,694,881
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 24 3,035,454 6,819,521
Lease liabilities 33 1,123,085 470,069
Contract liabilities 25 326,286 -
Liabilities of disposal groups held for sale 38 918,828 -
Total current liabilities 5,403,653 7,289,590
Non-current liabilities
Lease liabilities 33 5,058,290 2,380,537
Provisions 29 31,541 168,130
Liabilities for financial guarantees 28 - 41,833
Total non-current liabilities 5,089,831 2,590,500
EQUITY
Share capital 30 113,209 93,557
Share premium 30 56,670,326 34,671,275
Share options reserve 31 14,615,611 12,217,991
Translation reserve (157,537) (27,939)
Translation reserves of disposal groups (106,174) -
Accumulated losses (41,946,242) (14,140,093)
Total equity 29,189,193 32,814,791
TOTAL EQUITY AND LIABILITIES 39,682,677 42,694,881
The notes on pages 48 to 92 form part of these financial statements.
The financial statements were approved and authorised for issue by the Board
on 18th October 2023 and were signed on its behalf by:
Steven Harrison
Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2023
Share
Share Share options Translation Accumulated
Notes capital premium reserve reserves losses Total
£ £ £ £ £ £
Balance at 1 April 2021 51,921 - 7,318,820 (352) (3,457,911) 3,912,478
Comprehensive loss for the period
Loss for the period - - - - (10,754,665) (10,754,665)
Exchange differences on translation of foreign operations - - - (27,587) - (27,587)
Total comprehensive loss - - - (27,587) (10,754,665) (10,782,252)
Contributions by owners
Issue of shares 30 32,245 35,145,382 - - - 35,177,627
Share issue costs offset against share premium 30 - (2,868,972) - - - (2,868,972)
Share-based payments 31 - - 4,899,171 - - 4,899,171
Share issues on exercise of employee share options 30 6,091 58,165 - - - 64,256
Settlement of the convertible loan notes - - - - 72,483 72,483
Shares issued on conversion of convertible loan notes 30 3,300 2,336,700 - - - 2,340,000
Balance at 31 March 2022 93,557 34,671,275 12,217,991 (27,939) (14,140,093) 32,814,791
Balance at 1 April 2022 93,557 34,671,275 12,217,991 (27,939) (14,140,093) 32,814,791
Comprehensive loss for the period
Loss for the period - - - - (27,806,149) (27,806,149)
Exchange differences on translation of foreign operations - - - (129,598) - (129,598)
Translation reserves of disposal groups - - - (106,174) - (106,174)
Total comprehensive loss - - - (235,772) (27,806,149) (28,041,921)
Contributions by owners
Issue of shares 30 18,812 23,581,189 - - - 23,600,001
Share issue costs offset against share premium 30 - (1,590,469) - - - (1,590,469)
Share-based payments 31 - - 2,397,620 - - 2,397,620
Share issues on exercise of employee share options 30 840 8,331 - - - 9,171
Balance at 31 March 2023 113,209 56,670,326 14,615,611 (263,711) (41,946,242) 29,189,193
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2023
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Operating activities
Loss after taxation (27,806,149) (10,754,665)
Adjustments for non-cash items:
Taxation 12 (490,188) (377,420)
Depreciation of property, plant and equipment 15 578,010 174,451
Impairment of property, plant and equipment 15 137,668 -
Depreciation of right-of-use assets 16 989,021 270,477
Amortisation of intangible assets 14 286,222 72,384
Impairment of intangible assets 14 107,166 -
Impairment of net assets held for sale 2,538,209 -
Charge for share options granted 31 2,397,620 4,406,334
Loss on disposal of property, plant and equipment 34,369 1,900
Loss on disposal of right of use assets 485,473 -
(Profit)/loss on currency exchange (435,738) 3,204
Interest income 11 (75,338) (5,523)
Interest expense 11 278,046 104,621
Loss provision against other receivable 18 600,000 -
Share of results of associate 17 243,406 -
Provision for bad debts 89,936 -
Provision for inventory obsolescence 1,860,993 -
(Decrease)/increase in financial guarantee contract 28 (41,833) 41,833
Gain on bargain purchase - (704,761)
Cash used in operating activities before changes in working capital (18,223,106) (6,767,165)
Change in working capital
Decrease/(increase) in debtors (194,606) (4,869,032)
Decrease/(increase) in inventories 110,643 (669,692)
(Decrease)/increase in non-interest bearing liabilities (3,457,781) 4,802,519
Decrease in provisions (136,589) (279,826)
Tax received 289,075 -
Net cash flow used in operating activities (21,612,364) (7,783,196)
Investing activities
Interest received 11 75,338 5,523
Intangible fixed asset additions 14 (968,427) (515,939)
Capitalised internally generated development costs 14 (3,311,152) (3,594,038)
Purchase of property, plant and equipment 15 (5,535,108) (3,389,798)
Investment in equity accounted associate 17 (267,784) -
Loan advanced to associate 23 (500,000) -
Acquisition of subsidiary, net of cash - (1,427,246)
Net cash used in investing activities (10,507,133) (8,921,498)
Financing activities
Proceeds on issue of shares 30 23,609,172 35,241,809
Repayment of lease liabilities 27 (659,993) (281,872)
Share issue costs 30 (1,590,469) (2,507,409)
Interest paid on lease liabilities 11 (274,891) (18,609)
Repayment of borrowings - (176,111)
Interest paid 11 (3,155) (13,529)
Net cash flow from financing activities 21,080,664 32,244,279
Net change in cash and cash equivalents (11,038,833) 15,539,585
Cash and cash equivalents, beginning of year 18,402,055 2,862,470
Exchange variances on cash and cash equivalents (12,476) -
Cash and cash equivalents for continuing and discontinued operations 7,350,746 18,402,055
The cash and cash equivalents balance includes cash from discontinued
operations which are included in the held for sale line on the balance sheet.
The cash for this is disclosed separately in note 38.
Notes to the Consolidated Financial Statements
1. General information
Saietta Group plc ("the Company") and its subsidiaries are collectively
referred to as "the Group". The Company is a public limited company,
registered in England and Wales. The address of its registered office is
Riverbank House, 2 Swan Lane, London, EC4R 3TT.
The principal activity of the company is the provision of electric drive
solutions including the manufacture of prototype and production electric
motors for vehicles.
2. Basis of preparation and significant accounting policies
(a) Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The financial statements have been prepared under the historical cost
convention. The presentation currency used is sterling and amounts have been
presented rounded to the nearest £.
Preparation of consolidated financial statements
Where the company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the practical
ability to direct the relevant activities of the investee without holding the
majority of the voting rights. In determining whether de-facto control exists
the company considers all relevant facts and circumstances, including:
• The size of the company's voting rights relative to both the size and
dispersion of other parties who hold voting rights
• Substantive potential voting rights held by the company and by other
parties
• Other contractual arrangements
• Historic patterns in voting attendance
The consolidated financial statements present the results of the company and
its subsidiaries ("the Group") as if they formed a single entity. Intercompany
transactions and balances between group companies are therefore eliminated in
full. The subsidiaries are consolidated from the date on which they were
incorporated or acquired.
The consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the statement of financial
position, the acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The results of acquired operations are included in the consolidated
statement of comprehensive income from the date on which control is obtained.
They are deconsolidated from the date on which control ceases.
(b) Changes in accounting policies
(i) New standards, amendments to standards or interpretations
No new standards, interpretations and amendments adopted in the year have had
a material impact on the Group.
(ii) New standards, amendments to standards or interpretations not yet applied
There have been amendments to some accounting standards:
IFRS 3 Business Combinations: Reference to the Conceptual Framework IAS 16
Property, Plant and Equipment-Proceeds before Intended Use IAS 37 Onerous
Contracts - Cost of Fulfilling a Contract
There are no new standards, interpretations or amendments not yet applied
which the Directors anticipate will have a material impact on the Group.
(c) Significant accounting policies
Revenue recognition
Performance obligations and timing of revenue recognition
A portion of the Group's revenue is derived from selling goods with revenue
recognised at a point in time when control of the goods has transferred to the
customer. This is generally when the goods are delivered to the customer.
However, for export sales, control might also be transferred when delivered
either to the port of departure or port of arrival, depending on the specific
terms of the contract with a customer. There is limited judgement needed in
identifying the point control passes: once physical delivery of the products
to the agreed location has occurred, the Company no longer has physical
possession, usually will have a present right to payment (as a single payment
on delivery) and retains none of the significant risks and rewards of the
goods in question.
Some goods sold by the Group include warranties which require the Group to
either replace or mend a defective product during the warranty period if the
goods fail to comply with agreed-upon specifications. In accordance with IFRS
15, such warranties are not accounted for as separate performance obligations
and hence no revenue is allocated to them. Instead, a provision is made for
the costs of satisfying the warranties in accordance with IAS 37 Provisions,
Contingent Liabilities and Contingent Assets. On some product lines, a
customer is able to take out extended warranties. These are accounted for as
separate performance obligations, with the revenue earned recognised on a
straight-line basis over the term of the warranty.
The Group's Lightweight and Heavy-duty divisions both carry out design
(consultancy-type) services for clients, with revenue recognised typically on
an over time basis. This is because the designs created have no alternative
use for the Group and the contracts would require payment to be received for
the time and effort spent by the Group on progressing the contracts in the
event of the customer cancelling the contract prior to completion for any
reason other than the Group's failure to perform its obligations under the
contract. On partially complete design contracts, the Group recognises revenue
based on stage of completion of the project which is estimated by comparing
the number of hours actually spent on the project with the total number of
hours expected to complete the project (i.e. an input based method). This is
considered a faithful depiction of the transfer of services as the contracts
are initially priced on the basis of anticipated hours to complete the
projects and therefore also represents the amount to which the Group would be
entitled based on its performance to date. These design contracts include
commitment fees which are fees payable by customers in order to secure
exclusive access to certain goods and services of the Group and thus precludes
the Group from offering those goods and services to other customers. They are
recognised over the period of the contract.
Determining the transaction price
Most of the Group's revenue is derived from fixed price contracts and
therefore the amount of revenue to be earned from each contract is determined
by reference to those fixed prices.
Revenue recognition (continued)
Allocating amounts to performance obligations
For most contracts for goods, there is a fixed unit price for each product
sold, with reductions given for bulk orders placed at a specific time.
Therefore, there is no judgement involved in allocating the contract price to
each unit ordered in such contracts (it is the total contract price divided by
the number of units ordered). Where a customer orders more than one product
line, the Group is able to determine the split of the total contract price
between each product line by reference to each product's standalone selling
prices (all product lines are capable of being, and are, sold separately).
For most contracts for design services, revenue is recognised over time in
accordance with percentage completion. Accordingly, the transaction price is
allocated in accordance by reference to the actual costs incurred as a
proportion of the total expected cost of the products and services to be
provided for each performance obligation. Allocation of transaction price may
include allocation of discounts, which are applied on a proportionate basis to
all performance obligations based on the stand-alone selling price of each
performance obligation (observable or estimated).
In order to win significant repeat business with key customers, the Group
might enter into contracts entitling them to discounts if it places repeat
orders in the future. Such discounts constitute a 'material right' and result
in some of the consideration received for the initial sale being deferred and
recognised as revenue when subsequent sales are fulfilled or (if later) when
the rights to receive a discount expire. The Group estimates both the
probability that the customer will take up its future discount offer and the
value of future purchases that might be made in order to estimate the value of
the rights granted. This has to be done on a contract-by-contract basis for
each customer to whom material rights have been granted. The Directors do not
consider past experience an appropriate basis for estimating the amount of
total contract revenue to allocate to future discount rights for two reasons.
Firstly, there is not a significant number of such contracts on which past
experience can be extrapolated. And secondly, each customer has unique
circumstances which will impact both the probability and value of additional
orders being placed. Therefore, the estimates are made by reference to
discussions had with the relevant customers as to the extent the discount
options will be taken up when the original contracts were negotiated.
Costs of fulfilling contracts
The costs of fulfilling contracts do not result in the recognition of a
separate asset because:
· for RetroMotion contracts, where the Group retrofits
existing diesel-engine powered buses with in-wheel electric motor technology,
revenue is recognised over time by reference to the stage of completion with
control of the asset remaining with the customer for the duration of the
contract. Consequently, no asset for work in progress is recognised.
· such costs are included in the carrying amount of inventory
for contracts involving the sale of goods; and
· for engineering design service contracts, revenue is
recognised over time by reference to the stage of completion meaning that
control of the asset (the design service) is transferred to the customer on a
continuous basis as work is carried out. Consequently, no asset for work in
progress is recognised.
Practical expedients
The company has taken advantage of the practical expedients:
· not to account for significant financing components where
the time difference between receiving consideration and transferring control
of goods (or services) to its customer is one year or less; and
· to expense the incremental costs of obtaining a contract
when the amortisation period of the asset otherwise recognised would have been
one year or less.
Grant income
The Group enters into consortiums with partners who together will apply for
grant income to be paid out against a project that contains defined
deliverables, clear outcomes and a set level of expenditure.
Expenditure comprises both capital purchases for equipment and operational
expenditure for labour and supplies.
Each partner agrees a set level of expenditure at the start of the project and
a level of grant income paid for by the grant provider is allocated for
payment against the expenditure incurred, however the deliverables on the
project for each partner are linked. Such projects are sought by the Group as
they provide funding over one or more work streams that form part of the
Group's programme(s) to deliver increased production capacity.
The Group recognises the costs of a project in the period in which they are
incurred when related to qualifying expenditure. The grant income that is
provided against this total expenditure is recognised as income when received
from the issuing authority. Recognition occurs at this point as its release is
subject to the issuer's review and confirmation of compliance with all
conditions for release. The grant related to assets is deferred and recognised
as income in the same period in which the grant-related asset is being
depreciated.
Assets acquired for use in such projects are depreciated in accordance with
the Group's depreciation policy.
The grant programmes that the Group participates in typically operate on a
three month cycle, with recoverable income over each three month period paid
in the month following that period.
Expenditure
Expenditure is recognised in respect of goods and services received when
supplied in accordance with contractual terms. Provisions are made when a
present obligation exists for a future liability relating to a past event and
where the amount of the obligation can be reliably estimated.
Foreign currencies
Items included in the financial statements are measured using the currency of
the primary economic environment in which the entity operates ('the functional
currency'). The financial statements are presented in 'sterling', which is
also the Group's functional currency.
Transactions entered into by the Group in a currency other than the functional
currency are recorded at the rates ruling when the transactions occur. Foreign
currency monetary assets and liabilities are translated at the rates ruling at
the reporting date. Exchange differences arising on the retranslation of
unsettled monetary assets and liabilities are recognised immediately in profit
or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash
equivalents are presented in profit or loss within 'finance income or costs'.
All other foreign exchange gains and losses are presented in profit or loss
within 'other operating income or expense'.
Intangible assets
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and
subsequently amortised on a straight-line basis over their useful economic
lives.
Intangible assets are recognised on business combinations if they are
separable from the acquired entity or give rise to other contractual/legal
rights. The amounts ascribed to such intangibles are arrived at by using
appropriate valuation techniques (see section related to critical estimates
and judgements below).
The significant externally acquired intangibles recognised by the company and
their useful economic lives are as follows: Intellectual property
patents 10% straight
line
Software
25% reducing balance
Intangible assets (continued)
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if it can be
demonstrated that:
• it is technically feasible to develop the product for it to be sold;
• adequate resources are available to complete the development;
• there is an intention to complete and sell the product;
• the company is able to sell the product;
• sale of the product will generate future economic benefits; and
• expenditure on the project can be measured reliably.
Capitalised development costs are subsequently amortised on a straight line
basis over the periods the company expects to benefit from selling the
products developed, which ranges from 8 to 10 years. The amortisation expense
is included within the administrative expenses in the statement of
comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on
the research phase of internal projects are recognised in the statement of
comprehensive income as incurred.
The aggregate value of the capitalised development expenditure for each
product is reviewed at the end of each accounting period and where the
circumstances which have justified the deferral of the expenditure set out
above no longer apply, or are considered doubtful, the expenditure, to the
extent to which it is considered to be irrecoverable, is impaired. Where an
impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset in prior
years. A reversal of an impairment loss is recognised as income immediately.
Intangible assets that are yet to be amortised are tested for impairment
annually.
Property, plant and equipment
Plant, machinery, fixtures and fittings are stated at cost less accumulated
depreciation and accumulated impairment loss. Depreciation is provided at the
following annual rates in order to write off each asset over its estimated
useful life.
Short leasehold
Remaining lease term Plant and machinery
25% reducing balance Fixtures and
fittings 25% reducing balance
Motor vehicles Four
years
Useful lives are based on management's estimates of the period that the assets
will generate revenue, which are reviewed annually for continued
appropriateness and events which may cause the estimate to be revised. At the
end of the initial period, asset lives reach a residual value at which they
are either suitable for replacement or extended life after maintenance and
overhaul.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of
the asset. The gain or loss arising on the disposal or retirement of an asset
is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
Property, plant and equipment (continued)
Assets under construction
Assets under construction relates to the construction of an automated
production line which at 31 March 2023 was not yet ready for use.
Assets under construction are initially recognised at cost. As well as the
purchase price, cost includes directly attributable costs and the estimated
present value of any future unavoidable costs of dismantling and removing
items.
Any costs not capitalised as part of the factory cost will be expensed to the
statement of profit or loss as incurred. Depreciation on assets under
construction does not commence until they are complete and available for use.
When necessary, the entire carrying amount of the assets under construction is
tested for impairment in accordance with IAS 36 Impairment of assets as a
single asset by comparing its recoverable amount (the higher of value in use
and fair value less costs of disposal) with its carrying amount. Any
impairment loss recognised forms part of the carrying amount of the
investment. Any reversal of that impairment loss is recognised in accordance
with IAS 36 to the extent that the recoverable amount of the investment
subsequently increases.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of
cost and net realisable value. Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their
present location and condition.
Weighted average cost is used to determine the cost of ordinarily
interchangeable items.
Financial instruments
Financial assets and financial liabilities are recognized in the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
· Financial assets
The Group carries its financial assets at amortised cost.
Amortised Cost
These assets arise principally from the provision of goods and services to
customers (eg trade receivables), but also incorporate other types of
financial assets where the objective is to hold these assets in order to
collect contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognised at fair
value plus transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Financial instruments (continued)
Impairment provisions for current and non-current trade receivables are
recognised based on the simplified approach within IFRS 9 using a provision
matrix in the determination of the lifetime expected credit losses. During
this process the probability of the non- payment of the trade receivable is
assessed. This probability is then multiplied by the amount of the expected
loss arising from default to determine the lifetime expected credit loss for
the trade receivables. For trade receivables, which are reported net, such
provisions are recorded in a separate provision account with the loss being
recognised separately in the statement of comprehensive income. On
confirmation that the trade debtor will not be collectable, the gross carrying
value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to
related parties are recognised based on a forward looking expected credit loss
model. The methodology used to determine the amount of the provision is based
on whether there has been a significant increase in credit risk since initial
recognition of the financial asset. For those where the credit risk has not
increased significantly since initial recognition of the financial asset,
twelve month expected credit losses along with gross interest income are
recognised. For those for which credit risk has increased significantly,
lifetime expected credit losses along with the gross interest income are
recognised. For those that are determined to be credit impaired, lifetime
expected credit losses along with interest income on a net basis are
recognised.
The Group's financial assets measured at amortised cost comprise trade and
other receivables and accrued income, and cash and cash equivalents in the
balance sheet. Cash and cash equivalents includes cash in hand, deposits held
at call with banks and other short term highly liquid investments with
original maturities of three months or less.
· Financial liabilities
The Group does not have any borrowings or liabilities held for trading nor
does it voluntarily classify any financial liabilities as being at fair value
through profit or loss.
Trade payables and other short-term monetary liabilities are initially
recognised at fair value and are subsequently carried at amortised cost using
the effective interest method.
· Financial guarantee contract liabilities
Financial guarantee contracts are recognised as a financial liability at the
time the guarantee is issued. The liability is initially measured at fair
value and subsequently at the higher of:
· the amount determined in accordance with the expected credit loss model
under IFRS 9 Financial Instruments; and
· the amount initially recognised less, where appropriate, the cumulative
amount of income recognised in accordance with the principles of IFRS 15
Revenue from Contracts with Customers.
The fair value of financial guarantees is determined based on the present
value of the difference in cash flows between the contractual payments
required under the debt instrument and the payments that would be required
without the guarantee, or the estimated amount that would be payable to a
third party for assuming the obligations. Where guarantees in relation to
loans or other payables of associates are provided for no compensation, the
fair values are accounted for as contributions and recognised as part of the
cost of the investment.
Financial instruments (continued)
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the
statement of financial position sheet when there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on
a net basis, or realise the asset and settle the liability simultaneously.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or have expired. The difference between
the carrying amount of the financial liability derecognised and the
consideration paid and payable is recognised in profit or loss.
When the Group exchanges with the existing lender one debt instrument into
another one with substantially different terms, such exchange is accounted for
as an extinguishment of the original financial liability and the recognition
of a new financial liability. Similarly, the Group accounts for substantial
modification of terms of an existing liability or part of it as an
extinguishment of the original financial liability and the recognition of a
new liability. It is assumed that the terms are substantially different if the
discounted present value of the cash flows under the new terms, including any
fees paid net of any fees received and discounted using the original effective
interest rate is at least 10 per cent different from the discounted present
value of the remaining cash flows of the original financial liability. If the
modification is not substantial, the difference between: (1) the carrying
amount of the liability before the modification; and (2) the present value of
the cash flows after modification is recognised in profit or loss as the
modification gain or loss within other gains and losses.
Taxation
Current taxes are based on the results shown in the financial statements and
are calculated according to local tax rules, using tax rates enacted or
substantially enacted by the statement of financial position date.
Deferred tax is recognised on the difference between the carrying amount of an
asset or liability and the amount at which that asset or liability is assessed
for tax purposes (tax base). Historical accumulated tax losses would give rise
to a net deferred tax asset for the Group. However, due to the uncertainty on
future recovery the Directors considered it prudent not to recognize such
asset at this time.
Investments in associates and joint
ventures
An associate is an entity over which the Group has significant influence and
that is neither a subsidiary nor an interest in a joint venture. Significant
influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those
policies.
A joint venture is a joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the joint
arrangement. Joint control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about the relevant activities
require unanimous consent of the parties sharing control.
The results and assets and liabilities of associates or joint ventures are
incorporated in these financial statements using the equity method of
accounting, except when the investment is classified as held for sale, in
which case it is accounted for in accordance with IFRS 5.
Under the equity method, an investment in an associate or a joint venture is
recognised initially in the consolidated statement of financial position at
cost and adjusted thereafter to recognise the Group's share of the profit or
loss and other comprehensive income of the associate or joint venture. When
the Group's share of losses of an associate or a joint venture exceeds the
Group's interest in that associate or joint venture (which includes any
long-term interests that, in substance, form part of the Group's net
investment in the associate or joint venture), the Group discontinues
recognising its share of further losses. Additional losses are recognised only
to the extent that the Group has incurred legal or constructive obligations or
made payments on behalf of the associate or joint venture.
Investments in associates and joint ventures
(continued)
An investment in an associate or a joint venture is accounted for using the
equity method from the date on which the investee becomes an associate or a
joint venture. On acquisition of the investment in an associate or a joint
venture, any excess of the cost of the investment over the Group's share of
the net fair value of the identifiable assets and liabilities of the investee
is recognised as goodwill, which is included within the carrying amount of the
investment. Any excess of the Group's share of the net fair value of the
identifiable assets and liabilities over the cost of the investment, after
reassessment, is recognised immediately in profit or loss in the period in
which the investment is acquired.
If there is objective evidence that the Group's net investment in an associate
or joint venture is impaired, the requirements of IAS 36 are applied to
determine whether it is necessary to recognise any impairment loss with
respect to the Group's investment. When necessary, the entire carrying amount
of the investment (including goodwill) is tested for impairment in accordance
with IAS 36 as a single asset by comparing its recoverable amount (higher of
value in use and fair value less costs of disposal) with its carrying amount.
Any impairment loss recognised is not allocated to any asset, including
goodwill that forms part of the carrying amount of the investment. Any
reversal of that impairment loss is recognised in accordance with IAS 36 to
the extent that the recoverable amount of the investment subsequently
increases.
The Group discontinues the use of the equity method from the date when the
investment ceases to be an associate or a joint venture. When the Group
retains an interest in the former associate or a joint venture and the
retained interest is a financial asset, the Group measures the retained
interest at fair value at that date and the fair value is regarded as its fair
value on initial recognition in accordance with IFRS 9. The difference between
the carrying amount of the associate or a joint venture at the date the equity
method was discontinued, and the fair value of any retained interest and any
proceeds from disposing of a part interest in the associate or a joint venture
is included in the determination of the gain or loss on disposal of the
associate or joint venture. In addition, the Group accounts for all amounts
previously recognised in other comprehensive income in relation to that
associate on the same basis as would be required if that associate had
directly disposed of the related assets or liabilities. Therefore, if a gain
or loss previously recognised in other comprehensive income by that associate
or joint venture would be reclassified to profit or loss on the disposal of
the related assets or liabilities, the Group reclassifies the gain or loss
from equity to profit or loss (as a reclassification adjustment) when the
associate or joint venture is disposed of.
When the Group reduces its ownership interest in an associate or a joint
venture but the Group continues to use the equity method, the Group
reclassifies to profit or loss the proportion of the gain or loss that had
previously been recognised in other comprehensive income relating to that
reduction in ownership interest if that gain or loss would be reclassified to
profit or loss on the disposal of the related assets or liabilities.
When a Group entity transacts with an associate or a joint venture of the
Group, profits and losses resulting from the transactions with the associate
or joint venture are recognised in the Group's consolidated financial
statements only to the extent of interests in the associate or joint venture
that are not related to the Group.
The Group applies IFRS 9, including the impairment requirements, to long-term
interests in an associate or joint venture to which the equity method is not
applied and which form part of the net investment in the investee.
Furthermore, in applying IFRS 9 to long-term interests, the Group does not
take into account adjustments to their carrying amount required by IAS 28
Investments in Associates and Joint Ventures (i.e. adjustments to the carrying
amount of long-term interests arising from the allocation of losses of the
investee or assessment of impairment in accordance with IAS 28).
Non-current assets held for
sale
Non-current assets (and disposal groups) classified as held for sale are
measured at the lower of carrying amount and fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if
their carrying amount will be recovered through a sale transaction rather than
through continuing use. This condition is regarded as met only when the sale
is highly probable and the asset (or disposal group) is available for
immediate sale in its present condition. Management must be committed to the
sale which should be expected to qualify for recognition as a completed sale
within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a
subsidiary, all of the assets and liabilities of that subsidiary are
classified as held for sale when the criteria described above are met,
regardless of whether the Group will retain a non-controlling interest in its
former subsidiary after the sale.
When the Group is committed to a sale plan involving disposal of an investment
in an associate or, a portion of an investment in an associate, the
investment, or the portion of the investment in the associate that will be
disposed of is classified as held for sale when the criteria described above
are met. The Group then ceases to apply the equity method in relation to the
portion that is classified a held for sale. Any retained portion of an
investment in an associate that has not been classified as held for sale
continues to be accounted for using the equity method.
Prepayments
Prepayments are recognised as assets in the statement of financial position
when:
- The Group has made an advance payment for goods or services to be received
in the future,
- It is probable that economic benefits associated with the prepayment will
flow to the Group, and
- the amount of the prepayment can be measured reliably.
Prepayments are initially measured at the amount paid, and are released over
the period over which the related goods or services are consumed or utilised.
Prepayments are presented as current assets in the statement of financial
position to the extent that they are expected to be realised within the
following 12 months. The portion of prepayments to be realised following one
year from the reporting date is presented in non-current assets.
Prepayments are derecognised when the related goods or services are received
or consumed, or when the right to receive the goods or service no longer
exists. Any remaining balance is removed from the statement of financial
position and the relevant expense is recognised in the statement of
comprehensive income.
Accrued
income
Accrued income represents revenue and grant income that has become due to the
Group but has not been claimed or received at the reporting date.
Accrued income is recognised when:
- There is an unconditional right to receive the income
- The income can be reliably measured, and
- It is probable that the economic benefits associated with the income will
flow to the company.
Accrued income is presented in current assets as it is expected to be realised
within 12 months of the reporting date.
Leases
At inception of a contract, the Group assesses whether a contract is, or
contains a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group assesses whether:
- The contract involves the use of an identified asset - this may be
specified explicitly or implicitly, and should be physically distinct or
represent substantially all of the capacity of a physically distinct asset. If
the supplier has a substantive substitution right, then the asset is not
identified;
- The Group has the right to substantially all of the economic benefits from
the use of the asset throughout the period of use; and
- The Group has the right to direct the use of the asset. The Group has this
right when it has the decision making rights that are most relevant to
changing how and for what purposes the asset is used. In rare cases where the
decision about how and for what purpose the asset is used is predetermined,
the Group has the right to direct the use of the asset if either:
· The Group has the right to operate the asset; or
· The Group designed the asset in a way that predetermines how
and for what purposes it will be used.
At inception or on reassessment of a contract that contains a lease component,
the Group allocates the consideration in the contract to each lease component
on the basis of their relative stand-alone prices.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises of the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is allocated,
less any lease incentives received. The right-of-use asset is subsequently
depreciated using the straight-line method over the shorter of the useful life
of the leased asset and the expected lease term. If ownership of the leased
asset is automatically transferred at the end of the lease term or the
exercise of a purchase option is reflected in the lease payments,the
right-of-use asset is amortised on a straight-line basis over the expected
useful life of the leased asset.
The lease liability is initially measured at the present value of the lease
payments that are not paid at commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the
Group's incremental borrowing rate. Generally, the Group uses its incremental
borrowing rate as a discount rate. The lease liability is measured at
amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments.
The Group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases that have a lease term of 12 months or less
and leases of low value assets. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis over the
lease term.
Lease payments include fixed payments, i.e. amounts expected to be payable by
the Company under residual value guarantee, the exercise price of a purchase
option and lease payments in relation to lease extension option if the Company
is reasonably certain to exercise purchase or extension options and payment of
penalties for terminating the lease if the lease term considered reflects that
the Company shall exercise termination option.
Provisions
The Group applies IAS 37 Provisions, Contingent Liabilities and Contingent
Assets in accounting for non-financial liabilities. A provision is recognised
if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow
of economic benefits will be required to settle the obligation. When the
effect of the time value of money is material, provisions are determined by
discounting the expected future cash flows using a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific
to the liability.
Provisions are held for product warranty as detailed in note 29 to the
consolidated financial statements.
Warranty provisions
Provisions for the expected cost of warranty obligations under local sale of
goods legislation are recognised at the date of sale of the relevant products,
at the directors' best estimate of the expenditure required to settle the
Group's obligation.
Onerous contract provisions
Present obligations arising under onerous contracts are recognised and
measured as provisions. An onerous contract is considered to exist where the
Group has a contract under which the unavoidable costs of meeting the
obligations under the contract exceed the economic benefits expected to be
received under it.
Employee benefit
costs
The Group operates a defined contribution pension scheme. Contributions
payable to the company's pension scheme are charged to the consolidated income
statement in the period to which they relate.
Share-based
payments
The Group also enters into arrangements that are equity-settled, share-based
payments with certain employees (including directors) in the form of share
options. During the period covered by the financial statements, the Group
operated a HM Revenue and Customs approved share option scheme. This scheme is
an Enterprise Management Incentive scheme where equity options are made to
certain qualifying employees to reward and incentivise them. The equity share
based payments are measured at the fair value of the equity at the grant date.
The scheme was open to all qualifying employees who are an employee within the
Group working 25 hours per week for the Group, or if less, at least 75% of
their working time.
The Listing was a necessary condition for exercise.
Employees who leave the Group are entitled to exercise their vested options
after they leave the employment of the Group if they meet the requirements of
a "good leaver", defined to be exit from the business for grounds other than
dismissal.
The value of the share options is determined using the Black Scholes option
pricing model and Monte Carlo simulation, and recorded as a share option
reserve in the consolidated statements of financial position, with movements
in the reserve treated as operating expenditure in the respective year.
The options have varying vesting periods from one month up to four years, with
exercise of vested shares immediately in advance of a proposed Listing.
Share-based payments (continued)
Long-Term Incentive Plan ("LTIP" )
The Group operated a share-based payment LTIP arrangement for certain
employees. The scheme awards share options to the employee based on a specific
number of shares at grant date and the share price of Saietta Group plc at the
vesting date, subject to profitability and employment conditions. These were
accounted for as equity-settled arrangements. For these awards, fair value is
to be measured at the date of grant and charged to the profit and loss over
the vesting period. The vesting period is the period of time before shares in
an employee plan are unconditionally owned by an employee. Fair value at the
date of grant is determined using the Black-Scholes model or the Monte Carlo
Simulation model where appropriate.
Share
capital
Financial instruments issued by the company are treated as equity only to the
extent that they do not meet the definition of a financial liability. The
company's ordinary shares are classified as equity instruments.
Going
concern
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis, the directors have considered the financial
position of the Group and the Company, their cash flows and their liquidity
position. The Group and Company's financial risk management objectives and
exposures to liquidity and other financial risks and uncertainties are set out
on pages 15 to 18. The Group had net assets of £29,189,193 (2022:
£32,814,791) as at 31 March 2023 and available liquidity of
£7,247,267 (2022: £18,402,055) comprised of cash and cash equivalents.
The Group and Company have modelled scenarios for a period up to October 2024
from the March 2023 year end and stress tested its financial position in such
scenarios. These stress tests modelled the variability in financial
performance and free cash flows when incorporating certain hypothetical events
such as a reduction in forecast revenue and a delay in the receipt of payments
for equipment from Saietta VNA.
The Group and Company operate in markets that are rapidly growing and has
strategic plans that respond to such growth. In delivering those plans, the
Group is mindful of the ultimate benefits from maintaining control over the
deployment of its intellectual property in applications with major OEMs and
within its joint venture arrangements. In order to do so, it recognises that
at times it will potentially need to co-invest or defer investment to its
partners to enhance the future value it can achieve from application of its
products. In such instances the commercial merits will be weighed in
determining whether funding is sought.
These forecasts align to the business strategy which was based on the
assumption that the Group and Company will significantly increase its revenue
and be able to generate significant gross profit in the next 12 months.
Furthermore, the forecasts also include payments from Saietta VNA, the Group's
joint venture in India, for equipment for fully automated production of AFT
motors. The Group has spent £3m on such equipment and this amount is to be
reimbursed by Saietta VNA. In the absence of such reimbursement there may also
be a need to raise additional funding.
Whilst the Directors expect that additional funding can be raised this is not
guaranteed and when continuing with an accelerated expansion this presents a
material uncertainty which may cast significant doubt over the Group's and the
Company's ability to continue as a going concern and therefore its ability to
realise its assets and discharge its liabilities in the normal course of
business. The financial statements do not reflect any adjustments that would
be required to be made if they were prepared on a basis other than the going
concern basis.
Whilst acknowledging the uncertainties described above, the Board have
concluded, on the basis of all scenarios and related expected cashflows and
available sources of finance, that the Group and Company will be able to
continue as a Going Concern for at least twelve months from the date of
signing these financial statements and therefore it remains appropriate to
prepare the Group and Company's results on the basis of a going concern.
3. Critical Accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including the expectations of future events that
are believed to be reasonable under the circumstances and any further evidence
that arises relevant to judgements taken. In the future, actual experience may
differ from these estimates and assumptions. The estimates and judgements that
have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed
below.
Useful lives of property, plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives
of the assets: Short
leasehold Remaining
lease term
Plant and machinery 25% reducing balance
Fixtures and fittings 25% reducing
balance
Motor vehicles Four
years
Useful lives are based on management's estimates of the period that the assets
will generate revenue, which are reviewed annually for continued
appropriateness and events which may cause the estimate to be revised. At the
end of the initial period, asset lives reach a residual value at which they
are either suitable for replacement or extended life after maintenance and
overhaul. The key areas of estimation uncertainty regarding depreciation is
the determination of the life time capacity; risk of obsolescence from
technological and regulatory changes; and required future capital expenditure
(refurbishment or replacement of key components).
The carrying amount of property, plant and equipment at 31 March 2023 is
£8,113,009 (2022: £3,498,541) and a reasonable adjustment sensitivity if
assets were to have a reduced useful life of a year would be a reduction in
carrying value of £358,800.
Useful lives and carrying value of intangible assets
The carrying values of these assets are tested for impairment when there is an
indication that the value of the assets might not be realisable or impaired
either at an individual cash generating unit level or for the company as a
whole. An intangible asset with an indefinite useful life or an intangible
asset not yet available for use for impairment annually by comparing its
carrying amount with its recoverable amount. This impairment test may be
performed at any time during an annual period, provided it is performed at the
same time every year. Different intangible assets may be tested for impairment
at different times. However, if such an intangible asset was initially
recognised during the current annual period, that intangible asset shall be
tested for impairment before the end of the current annual period.
Patents are recognised at cost and development costs include both purchases
and capitalized employee costs directly attributable to the development.
3. Critical Accounting estimates and judgements (continued)
Useful lives and carrying value of intangible assets
(continued)
The nature of the estimation uncertainty is both to the eventual integration
of such an intangible asset into commercial production and the successful cash
generation from such production. The underlying assumption is that an
impairment occurs if either the achievement of project milestones that meet
client's roadmaps to commercialization are not met (and thereby indicate
uncertainty over the viability to start of production ("SOP")), or if the
commercial potential is reduced to such an extent that recovery of all
invested amounts are uncertain.
The carrying amount is sensitive to both write-off of any intangible asset
that is impaired and to amortisation either before all criteria to amortise
are met, or after such criteria have been met. When carrying out impairment
tests these are based upon future cash flow forecasts and these forecasts
include management estimates.
Future events or changes in the market could cause the assumptions to change,
therefore this could also have an adverse effect on the future results of the
group.
Recognition of internally generated intangible assets arising from the
development phase of a project is dependent upon application of specific
criteria detailed in note 2. Management judgement is required as to the extent
that each of the criteria is met and to the point where development is
complete.
The carrying amount of intangible assets at 31 March 2023 was £10,916,016
(2022: £8,365,506). If the Group were to require amortisation for an
additional year for patents and immediately at the start of the year for
development costs this would have an impact of £99,088.
Research and Development ("R&D")
credits
Research and Development credits arising in the United Kingdom under
Corporation Tax Act 2009 Section 1308 claims are recognised upon success and
recognised within Accrued Income. Successful Section 1308 R&D credits are
considered to be UK
Government grants arising as a direct result of the Company's investment in
its R&D assets and for which no further obligation
exists upon the Company. The R&D credits are charged to the P&L at the
same time that the asset is expensed to P&L, therefore amortised over 8
years as their benefit is derived over the use of the Company's R&D
assets.
Expected credit losses and asset
impairment
Expected credit losses are assessed under IFRS9 using reasonable information
about past events and current conditions and forecasts of future events. Asset
impairment considers the likely returns from financial assets owned by the
Group and their recoverability, based on market values and management's
judgement of any other relevant factors.
Please refer to Note 33 for further detail.
Incremental borrowing rate used to measure lease
liabilities
Where the interest rate implicit in the lease cannot be readily determined,
lease liabilities are discounted at the lessee's incremental borrowing rate.
This is the rate of interest that the lessee would have to pay to borrow over
a similar term, and with a similar security, the funds necessary to obtain an
asset of a similar value to the right-of-use asset in a similar economic
environment. This involves assumptions and estimates, which would affect the
carrying value of the lease liabilities (note 26) and the corresponding
right-of-use assets (note 16).
To determine the incremental borrowing rate the company uses recent
third-party financing as a starting point, and adjusts this for conditions
specific to the lease such as its term and security. The company used
incremental borrowing rates specific to each lease which ranged from 4.1% to
7.25%. A 5% increase in the rate would cause the lease liability to reduce by
£839,673 with a corresponding movement in the 'cost' of the right-of-use
asset which would reduce the associated amortisation.
3. Critical Accounting estimates and judgements (continued)
Share Options - estimates and assumptions
The valuation of share options issued in the year has been based on a Black
Scholes model for options with no market based vesting conditions and a Monte
Carlo simulation for options with market based vesting conditions. The inputs
to both models represent the Director's best estimates for the likely exercise
behaviour of the option holders. The expected future share price volatility
was estimated based on the historical volatility of the Company's share price
and a representative peer group of similar companies. For the share options
with market based vesting conditions an independent specialist consultant was
engaged to simulate the impact on the market-based conditions on the fair
value of the options issued.
Revenue recognition
The Group's revenue recognition policies, which are set out under Revenue
recognition in Note 2, are central to how the Group measures the work it has
performed in each financial year. Management is required to form a number of
key judgements in the determination of the amount of revenue and profits to
record, and related statement of financial position items such as contract
assets, accrued income and deferred income to recognise. This includes an
assessment of the costs the Group incurs to deliver the contractual
commitments and whether such costs should be expensed as incurred or
capitalised, as well as assessments of when key changes to contracts occurred,
in order to appropriately recognise and measure revenue.
The key estimation judgements are in the forecasting of costs to complete
deliverables under contracts as these impact the timings and amounts of
revenue recognised through the percentage of completion method.
4. Alternative Performance Measures ("APMs")
In reporting financial information, the Group presents alternative performance
measures ("APMs") that are not defined or specified under the requirements of
IFRS. The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders with
additional helpful information on the performance of the business. The APMs
used within this Annual Report are defined below.
Alternative performance measures
Adjusted EBITDA Adjusted EBITDA is defined as the
Group's earnings before interest, tax, depreciation, amortisation, share of
profit/loss from equity accounted investments and exceptional items. These
include the share-based payment charges, the gain on bargain purchase, costs
related to Saietta Group plc's admission to the AIM and subsequent share issue
costs, legal fees related to Saietta Group plc's investment in its equity-
accounted associate, professional fees in respect of share options issued
pre-Admission, legal fees in respect of company reorganisations,the write-off
of related party receivables, provision for loss allowance on financial
guarantee, a write-off of inventory, pension scheme set-up costs and losses
from discontinued operations.
Gross proceeds raised through
Gross proceeds are the amount that a seller receives from the sale of a
shares. These proceeds include all costs and expenses.
Working capital Changes in assets and liabilities as
presented in the Consolidated Statement of Cash Flows. This comprises
movements in assets and liabilities excluding movements relating to financing
or investing cash flows or non-cash items that are not included in adjusted
EBIT or adjusted EBITDA.
4. Alternative Performance Measures ("APMs") (continued)
The Group uses adjusted EBITDA as an APM to review and measure the underlying
profitability of the Group on an ongoing basis for comparability as it
recognises that increased capital expenditure year on year will lead to a
corresponding increase in depreciation and amortisation expense recognised
within the consolidated income statement. Working capital is considered by the
Group to be a key measure in assessing short-term assets and liabilities that
are expected to be converted into cash within the next 12-month period.
Reconciliations between these alternative performance measures and statutory
reported measures are shown below.
Adjusted EBITDA Year ended 31 Year ended 31
Note March 2023 March 2022*
£ £
Adjusted EBITDA (14,050,624) (4,357,061)
Depreciation and amortization (1,882,963) (509,895)
Finance income 75,338 5,523
Finance expense (278,046) (104,621)
Share-based payment charges Note 31 (2,335,944) (4,406,334)
Gain on bargain purchase recognised as part of subsidiary acquisition - 704,761
Costs related to Saietta Group plc's admission to the AIM - (1,219,296)
Costs related to the acquisition of e-Traction Europe B.V. - (358,358)
Costs related to the co-operation with Padmini VNA (59,925) (95,510)
IPO-dependent staff expenses - (361,157)
M&A support fees - (101,569)
One-off legal fees in respect of share option advice pre-IPO - (75,000)
One-off legal fees in respect of company reorganisation - (44,176)
Net increase in financial liabilities (3,507) (78,058)
Contractor fees to secure grants - (73,432)
One-off enterprise resource planning consultancy fees - (10,925)
Impairment against other receivable - (600,000) -
Provision for inventory obsolescence (1,292,026) -
Losses from discontinued operations (7,868,640) (46,977)
Loss before taxation (28,296,337) (11,132,085)
Taxation 490,188 377,420
Loss for the year (27,806,149) (10,754,665)
¹Comparative figures have been restated to exclude income and expenditure
related to discontinued operations.
²Share based payment charges stated excluding an amount of £61,676
capitalised to development costs.
Gross proceeds raising through placing
A reconciliation from Gross Proceeds raised through placing to proceeds on
issue of shares per Consolidated Cash Flow Statement is detailed below:
Proceeds on issue of shares £ 23,609,172 £ 35,241,809
Shares issued from loan conversion £ - £ 2,258,191
Gross proceeds from settled shares £ 23,609,172 £ 37,500,000
5. Segment information
The Group operates through three distinct business divisions:
(a) Lightweight mobility which focuses on AFT developments particularly low
voltage two and three wheelers;
(b) Heavy-duty commercial which covers the truck, bus and coach markets; and
(c) Marine division, fronted by Propel, which is the Group's marine division
selling inboard and outboard motors both via distributors and direct to
customers. This has been discontinued and the Group is seeking an
industrialization partner, with a linked sale of intellectual property and
distribution rights.
Factors that management used to identify the Group's reportable segments
The Group's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and marketing strategies.
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision- maker. The chief operating
decision makers have been identified as the management team including the
Chief Executive Officer, Executive Chairman and Chief Financial Officer.
Measurement of operating segment profit or loss, assets and liabilities
The Group evaluates segmental performance on the basis of profit or loss from
operations calculated in accordance with IFRS but excluding non-recurring
losses, such as goodwill impairment, and the effects of share-based payments.
Inter-segment sales are priced along the same lines as sales to external
customers, with an appropriate discount being applied to encourage use of
group resources at a rate acceptable to local tax authorities. This policy was
applied consistently throughout the current and prior period.
Segment assets exclude tax assets and assets used primarily for corporate
purposes. Segment liabilities exclude tax liabilities and defined benefit
liabilities. Loans and borrowings are allocated to the segments based on
relevant factors (e.g. funding requirements). Details are provided in the
reconciliation from segment assets and liabilities to the Group position.
Non-current assets by geography
Year ended 31 Year ended 31
March 2023 March 2022
£ £
UK 19,002,591 13,162,815
European Union 6,513,601 2,352,632
Rest of World - -
Total 25,516,192 15,515,447
Contract assets and contract liabilities arise from the Group's Lightweight
and Heavy-duty divisions, which enter into contracts that can take between 1 -
2 years to complete, because cumulative payments received from customers at
each balance sheet date do not necessarily equal the amount of revenue
recognised on the contracts.
Year ended 31 March 2023
Other Continuing Discontinued
Lightweight Heavy-duty segments operations operations Total
Revenue £ £ £ £ £ £
Revenue from Engineering design services 1,039,880 61,717 - 1,101,597 275,789 1,377,386
Revenue from Motor sales 238,981 205,655 - 444,636 27,319 471,955
Other revenue 1,386,106 555,667 - 1,941,773 - 1,941,773
Inter-segmental revenue (846,431) (538,619) - (1,385,050) - (1,385,050)
Groups' revenue per consolidated statement of comprehensive income 1,818,536 284,421 - 2,102,957 303,108 2,406,065
Depreciation 1,528,166 233,799 - 1,761,965 78,386 1,840,351
Segment loss (17,080,623) (3,589,696) - (20,670,319) (7,868,640) (28,538,959)
Share based payments (2,335,944)
Other income 2,777,767
Finance income 75,338
Finance expense (278,046)
Net increase in financial liabilities 3,507
Group loss before tax and discontinued operations (28,296,337)
Revenue has been presented by category. This is a change from the prior year presentation of revenue by customer. This change was made to allow comparison between current and prior year and to better present the segmental and inter-segmental revenue.
Year ended 31 March 2022
Other Continuing Discontinued
Lightweight Heavy-duty¹ segments operations¹ operations¹ Total²
Revenue £ £ £ £ £ £
Revenue from Apollo Future Mobility Group Limited 635,984 - - 635,984 - 635,984
Revenue from Consolidated Metco, Inc. 400,000 - - 400,000 - 400,000
Revenue from Sloepmakerij B.V. - - - - 1,261,008 1,261,008
Revenue from other customers 555,266 - - 555,266 952,018 1,507,284
Inter-segmental revenue (186,407) - - (186,407) (22,066) (208,473)
Groups' revenue per consolidated statement of comprehensive income 1,404,843 - - 1,404,843 1,261,008 3,595,803
Depreciation 300,017 65,844 - 365,861 71,650 437,511
Costs associated with Listing 1,006,323 - - 1,006,323 - 1,006,323
1,306,340 65,844 - 1,372,184 71,650 1,443,834
Segment loss (6,243,109) (1,688,815) (446,371) (7,931,924) (46,977) (7,978,901)
Share based payments (4,406,334)
Gain on bargain purchase 704,761
Other income 725,545
Finance income 5,523
Finance expense (104,621)
Net increase in financial liabilities (78,058)
Group loss before tax and discontinued operations (11,132,085)
¹Change in presentation to show prior year comparative figures for continued
and discontinued operations.
²Total segment losses and Group loss before tax and discontinued operations
restated for discontinued operations. Refer to note 38 for a reconciliation of
losses from discontinued operations.
Year ended 31 March 2023
Continuing Discontinued
Lightweight Heavy-duty operations operations Total
£ £ £ £ £
Additions to non-current assets 12,888,263 632,095 13,520,358 838,529 14,358,887
Inventories 498,407 - 498,407 - 498,407
Reportable segment assets 35,675,582 3,779,621 39,455,203 227,474 39,682,677
Total group assets 39,682,677
Reportable segment liabilities 8,726,735 847,921 9,574,656 918,828 10,493,484
Total group liabilities 10,493,484
Year ended 31 March 2022
Continuing Discontinued
Lightweight Heavy-duty operations operations Total
£ £ £ £ £
Additions to non-current assets 6,980,426 1,504,820 8,485,246 2,747,335 11,232,581
Inventories 405,048 1,417,015 1,822,063 647,980 2,470,043
Reportable segment assets 35,704,947 3,885,118 39,590,065 5,047,375 44,637,440
Total group assets 44,637,440
Reportable segment liabilities 7,303,308 1,005,269 8,308,577 1,529,680 9,838,257
Liabilities for financial guarantees 41,833
Total group liabilities 9,880,090
Segmental information has been presented as continuing and discontinued
operations in the current year, and the prior year presentation has been
modified accordingly for comparability. Refer to note 38 for a reconciliation
of discontinued assets and liabilities.
6. Revenue analysis
A significant portion of revenue in the year was from two customers:
Year ended 31 Year ended 31
March 2023 March 2022
Current year £ £
Customer 1 855,605 -
Customer 2 393,096 -
Prior year
Customer 1 - 635,984
Customer 2 - 400,000
1,248,701 1,035,984
Revenue by category, type and and geography is as follows:
Year ended 31 Year ended 31
March 2023 March 2022
Revenue by category £ £
Light-duty division 1,818,539 1,404,843
Heavy-duty division 284,421 -
Total 2,102,959 1,404,843
-
Revenue by type
Revenue recognised over time 1,101,599 814,095
Revenue recognised at a point in time 1,001,360 590,748
2,102,959 1,404,843
Revenue by geography
UK 372,634 1,191,607
European Union 229,771 -
Rest of World 1,500,554 213,236
Total 2,102,959 1,404,843
7. Other income
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Grant income 1,652,982 678,411
Income from engineering design services 1,021,538 -
2,674,520 678,411
The Group received development government grants from the Advanced Propulsion
Centre against qualifying expenditure of
£1,008,515 (2022: £661,122) in the years ended 31 March 2023 and 31 March
2022 respectively, which has been recorded as grant income. There are no
unfulfilled conditions or other contingent liabilities attached to the grant,
however, as is customary the final instalment claim amount of £378,362 (2022:
£330,326) remains due, subject to submitted assessment. This has been treated
as a contingent gain at the year end. The remaining £nil (2022: £64,423)
balance included within 'Other income' relates to individually immaterial
grants received by subsidiaries during the year.
Other income from engineering design services relates to the renegotiation of
the ConMet contract which resulted in the recovery of costs incurred on
products which were developed in connection with the JCDA IP but were not part
of the original JCDA plan. The cost related to this are shown in other costs
of sales on the face of the statement of comprehensive income.
8. Operating loss
Year ended 31 Year ended 31
March 2023 March 2022
Operating loss has been stated after: £ £
Cost of inventories recognised as expense 4,018,866 1,971,725
Depreciation of right-of-use assets 989,021 270,477
Depreciation of property, plant and equipment 578,010 174,451
Amortisation of intangible assets 286,222 72,384
Loss on disposal of property, plant and equipment 34,369 3,204
Auditor's remuneration:
Fees payable to the Group's auditor for the audit of the Group's 375,000 78,750
accounts
Fees payable to the Group's auditor for the audit of the subsidiaries' 83,644 77,766
accounts
Fees payable to the Group's auditor for other services:
- Other fees 50,000 105,410
Share-based payment expense 2,335,944 4,406,334
Foreign exchange differences (435,738) (52,957)
Cost of inventories recognised as an expense includes a write-down of
£1,412,053 to net realisable value.
Share-based payment expense is reduced by £61,676 of capitalised development
costs.
9. Significant administrative expenses
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Wages and salaries excluding share-based employee expense 8,894,749 4,548,583
Share-based employee expense 2,335,944 4,406,334
Costs related to Saietta Group plc's admission to the AIM - 1,219,296
Costs related to the acquisition of e-Traction Europe B.V. - 358,358
Professional fees 3,447,771 1,114,860
Provision for inventory obsolescence 1,012,413 -
Depreciation and amortisation 1,882,963 509,895
Facilities costs 1,799,950 703,068
Other individually immaterial expenses 2,411,169 231,558
Total 21,784,959 13,091,952
The comparative figures in this note have changed due to the exclusion of
amounts pertaining to discontinued operations, and have been presented in more
detail to allow for better comparison with current year figures.
10. Employee benefit expenses
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Wages and salaries 7,187,857 3,768,729
Social security costs 1,076,867 797,796
Employer's pension contributions 630,024 234,115
Share-based employee expense 2,335,944 4,406,334
Total 11,230,693 9,206,974
10. Employee benefit expenses (continued)
The average number of employees during the year was as follows: Year ended 31 Year ended 31
March 2023 March 2022
No. No.
Technical 141 70
Procurement 8 4
Sales and marketing 10 12
Finance and administration 30 14
Total 189 100
The remuneration of department heads who are the key management personnel is
as follows:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Short term employee benefits 867,853 1,297,568
Share based payments 1,610,488 2,768,709
2,478,341 4,066,277
Year ended 31 Year ended 31
March 2023 March 2022
Directors £ £
- Remuneration 867,853 623,277
- Gains on exercise of share options - 2,366,492
867,853 2,989,769
Highest paid director
The highest paid director's emoluments were as follows:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Directors' emoluments 334,469 290,022
Gains on exercise of share options - 1,933,667
Pension contributions - 7,762
334,469 2,231,451
11. Finance income and expense
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Finance income
Deposit account interest 75,338 5,523
Finance expense
Interest on lease liabilities 274,891 18,609
Other interest 3,155 80,995
278,046 99,604
The comparative figures in this note have changed due to the exclusion of
amounts pertaining to discontinued operations.
12. Taxation
Year ended 31 Year ended 31
March 2023 March 2022
£ £
UK tax (credit) for the current year (490,188) (377,420)
A reconciliation of the tax credit to the elements of loss before tax for the
consolidated income statement is as follows:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
(Loss) before income tax (20,427,697) (11,132,085)
Tax at UK rate of 19% (2022: 19%) 3,881,262 2,115,096
Reconciling tax charges for:
Non-deductible expenses (51,462) 98,898
Capital allowances 55,889 400,000
R&D tax credit 490,188 71,710
Gain on bargain purchase - 133,905
Share based payments disallowed (443,829) (837,203)
Deferred tax asset not recognised (3,441,860) (1,604,985)
Tax credit for the year 490,188 377,420
Effective tax rate for the year 2.4% 3.4%
The prior year loss before tax includes a loss on discontinued operations of
£254,299.
The breakdown in deferred tax balances prior to the offsetting of balances
within the same jurisdiction (as permitted by IAS 12) during the period are
shown below:
Asset Liability Net
2023 2023 2023
£ £ £
Accelerated capital allowances - (887,905) (887,905)
Leases - (116,426) (116,426)
Tax losses 1,004,331 - 1,004,331
Net tax assets / liabilities 1,004,331 (1,004,331) -
12. Taxation (continued)
Asset Liability Net
2022 2022 2022
£ £ £
Accelerated capital allowances - (887,905) (714,498)
Leases - (116,426) (60,185)
Tax losses 1,004,331 - 774,683
Net tax assets / liabilities 1,004,331 (1,004,331) -
The Group has recognised the deferred tax assets to the extent that it can be
offset against the deferred tax liability. The deferred tax asset over and
above this utilisation has not been recognised as the business is developing
its products. When there is clear visibility of the profits, the Group will
recognize the net deferred tax assets. Losses carried forward were
£51,607,660 from continuing operations and £9,175,867 from discontinued
operations in the year ended 31 March 2023 (2022: £37,314,108 continuing
operations, £3,845,436 discontinued operations).
13. Loss per share from continuing and discontinued operations
The calculation of the basic loss per share is based upon the net loss after
tax attributable to ordinary shareholders and weighted average number of
shares in issue for the year.
Year ended 31 Year ended 31
March 2023 March 2022
Loss per share £ £
Basic
- Continuing operations (0.21) (0.14)
- Discontinued operations (0.08) (0.00)
The calculation of the basic loss per share is based on the following data:
Year ended 31 Year ended 31
March 2023 March 2022
Loss for the year £ £
Attributable to equity shareholders
- Continuing operations (19,937,509) (10,707,688)
- Discontinued operations (7,868,640) (46,977)
Number of shares
- Weighted average number of Ordinary Shares outstanding 95,701,751 74,884,548
The loss attributable to ordinary shareholders and weighted average number of
Ordinary Shares for the purpose of calculating the diluted earnings per
Ordinary Share are identical to those used for basic earnings per share. This
is because the exercise of share options would have the effect of reducing the
loss per Ordinary Share and is therefore not dilutive.
At 31 March 2023, there were 5,926,243 options outstanding (2022: 6,233,273)
as detailed in note 31.
14. Intangible assets
Patents and Development Software Total
licences costs
£ £ £ £
Cost
At 1 April 2022 456,349 7,793,871 266,497 8,516,717
Additions 534,529 3,278,315 466,735 4,279,579
Assets of disposal groups held for sale - (1,636,566) (27,229) (1,663,795)
Impairment losses - (107,166) - (107,166)
Currency translation differences - 134,427 1,481 135,908
At 31 March 2023 990,878 9,462,881 707,484 11,161,243
Accumulated amortisation
At 1 April 2022 51,720 11,900 87,591 151,211
Amortisation for the year 68,874 174,094 43,254 286,222
Assets of disposal groups held for sale - (189,488) (6,434) (195,922)
Currency translation differences - 3,494 222 3,716
At 31 March 2023 120,594 - 124,633 245,227
Net book value
Net book value at 31 March 2023 870,284 9,462,881 582,851 10,916,016
Net book value
Net book value at 31 March 2022 404,629 7,781,971 178,906 8,365,506
Year ended 31 Year ended 31
Intangible assets includes the following individually material asset: March 2023 March 2022
£ £
The AFT motor 5,423,926 3,592,712
This is not currently being amortised.
The above table includes non-cash movements related to accruals and
prepayments.
Patents and Development Software Total
licences costs
£ £ £ £
Cost
At 1 April 2021 79,168 3,253,554 110,231 3,442,953
Additions 377,181 3,755,989 128,842 4,262,012
Additions acquired through business combination - 815,231 27,080 842,311
Currency translation differences - (30,903) 344 (30,559)
At 31 March 2022 456,349 7,793,871 266,497 8,516,717
Accumulated amortisation
At 1 April 2021 24,168 - 54,629 78,797
Amortisation for the year 27,552 11,931 32,901 72,384
Currency translation differences - (31) 61 30
At 31 March 2022 51,720 11,900 87,591 151,211
Net book value
Net book value at 31 March 2022 404,629 7,781,971 178,906 8,365,506
15. Property, plant and equipment
Short Plant & Fixtures & Motor Assets under Total
leasehold machinery fittings vehicles construction
£ £ £ £ £ £
Cost
At 1 April 2022 539,699 681,901 712,474 439,880 1,938,441 4,312,395
Additions 1,196,841 1,294,367 1,230,264 69,158 1,744,478 5,535,108
Assets of disposal groups held for sale (121,530) - (42,817) (74,531) - (238,878)
Disposals - (34,369) - - - (34,369)
Impairment losses - (137,668) - - - (137,668)
Currency translation differences - 13,855 - 9,597 - 23,452
At 31 March 2023 1,615,010 1,818,086 1,899,921 444,104 3,682,919 9,460,040
Accumulated depreciation
At 1 April 2022 299,326 129,167 265,352 120,009 - 813,854
Depreciation for the year 131,112 198,226 205,870 42,802 - 578,010
Assets of disposal groups held for sale (19,899) - (5,789) (19,354) - (45,042)
Depreciation eliminated on disposal - - - - - -
Currency translation differences - (250) - 459 - 209
At 31 March 2023 410,539 327,143 465,433 143,916 - 1,347,031
Net book value
Net book value at 31 March 2023 1,204,471 1,490,943 1,434,488 300,188 3,682,919 8,113,009
0
The above table includes non-cash movements related to accruals and
prepayments.
Short Plant & Fixtures & Motor Assets under Total
leasehold machinery fittings vehicles construction
£ £ £ £ £ £
Cost
At 1 April 2021 290,932 113,156 323,838 110,044 - 837,970
Additions 248,892 315,158 388,695 74,424 1,938,441 2,965,610
Additions acquired through business combination - 250,064 - 255,691 - 505,755
Disposals - - - (2,400) - (2,400)
Currency translation differences (125) 3,523 (59) 2,121 - 5,460
At 31 March 2022 539,699 681,901 712,474 439,880 1,938,441 4,312,395
Accumulated depreciation
At 1 April 2021 290,932 70,078 177,574 100,907 - 639,491
Depreciation for the year 8,394 58,711 87,781 19,565 - 174,451
Depreciation eliminated on disposal - - - (500) - (500)
Currency translation differences - 378 (3) 37 - 412
At 31 March 2022 299,326 129,167 265,352 120,009 - 813,854
Net book value
Net book value at 31 March 2022 240,373 552,734 447,122 319,871 1,938,441 3,498,541
In May 2023 it was agreed to transfer two production lines from Saietta's
Sunderland plant to the joint venture partner, Saietta VNA. The lines to be
transferred are an RFT line valued at £0.2m presented above in plant and
machinery and an automated AFT production line valued at £3.3m, of which
£2.6m had been completed at 31 March 2023 which is presented above in assets
under construction.
16. Right-of-use assets
Motor
Buildings Equipment vehicles Total
£ £ £ £
Cost
At 1 April 2022 2,873,911 27,021 308,941 3,209,873
Additions 4,315,920 182,230 46,050 4,544,200
Assets of disposal groups held for sale (303,160) - - (303,160)
Disposals (806,637) (27,021) - (833,658)
Currency translation differences 9,570 - - 9,570
At 31 March 2023 6,089,604 182,230 354,991 6,626,825
Accumulated amortisation
At 1 April 2022 342,603 20,872 31,349 394,824
Depreciation for the year 917,968 10,333 60,720 989,021
Assets of disposal groups held for sale (126,619) - - (126,619)
Disposals (326,970) (21,215) - (348,185)
Currency translation differences 2,113 - - 2,113
At 31 March 2023 809,095 9,990 92,069 911,154
Net book value
Net book value at 31 March 2023 5,280,509 172,240 262,922 5,715,671
Net book value
Net book value at 31 March 2022 2,531,308 6,149 277,592 2,815,049
The above table includes non-cash movements related to accruals and
prepayments.
Motor
Buildings Equipment vehicles Total
£ £ £ £
Cost
At 1 April 2021 530,867 27,021 - 557,888
Additions 2,125,113 - 169,120 2,294,233
Additions acquired through business combination 221,223 - 141,437 362,660
Currency translation differences (3,292) - (1,616) (4,908)
At 31 March 2022 2,873,911 27,021 308,941 3,209,873
Accumulated amortisation
At 1 April 2021 105,185 18,820 - 124,005
Depreciation for the year 237,244 2,052 31,181 270,477
Currency translation differences 174 - 168 342
At 31 March 2022 342,603 20,872 31,349 394,824
Net book value
Net book value at 31 March 2022 2,531,308 6,149 277,592 2,815,049
17. Investment in associate
Year ended 31
March 2023
Saietta VNA (Private) Limited £
Opening balance -
Initial investment 267,784
Share of results of associate (243,406)
Foreign exchange loss (23,094)
1,285
During the year the Group obtained a 49% investment in Saietta VNA (Private)
Limited. The associate's registered office is 5 Padmini Enclave, Hauz Khas
Delhi, New Delhi 110016.
18. Other gains and losses
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Loss on fair value through profit and loss items 3,507 78,058
Impairment against other receivable 601,870 -
605,377 78,058
Saietta Group Plc entered into an agreement to guarantee the loan for the
purchase of an aircraft, in return receiving preferential rates for the use
thereof. The aircraft was sold in April 2023 and the deposit of £600,000 paid
was not recoverable.
19. Inventories
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Raw materials 482,407 2,438,533
Finished goods 16,000 31,510
498,407 2,470,043
Finished goods include an amount of £16,000 (2022: £31,510) carried at fair
value less costs to sell.
20. Cash and cash equivalents
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Cash in hand and at bank 7,247,267 18,402,055
21. Trade and other receivables
Year ended 31 Year ended 31
March 2023 March 2022
Non-current assets: £ £
Other receivables 141,195 734,526
Current:
Trade receivables 1,085,229 2,422,019
Other receivables 485,859 1,742,568
R&D tax credit 775,481 574,368
VAT recoverable 637,464 331,184
2,984,033 5,070,139
3,125,228 5,804,665
22. Prepayments and accrued income
Year ended 31 Year ended 31
March 2023 March 2022
Non-current assets: £ £
Prepayments and accrued income 129,016 101,825
129,016 101,825
Current:
Prepayments and accrued income 3,209,304 1,237,197
3,209,304 1,237,197
3,338,320 1,339,022
None of the Group's cash equivalents or other financial assets, are past due
or impaired. Regarding other financial assets that are neither past due nor
impaired, there were no indications as at 31 March 2023 (2022: no indications)
that defaults in payment obligations will occur. However, as required under
IFRS 9, the Company has assessed other financial assets for expected
credit losses.
See note 33 for further detail.
23. Other financial assets
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Saietta VNA Private Limited
Loan receivable 500,000 -
The loan to associate Saietta VNA (Private) Limited is for up to £1,000,000
and can be repaid at any time with one month's notice. The term is until April
2028 and the interest rate is 7.5% starting to accrue in April 2024. A further
£500,000 is drawn down in August 2023. The Group does not expect this loan to
be repaid within the next 12 months.
24. Current trade and other payables
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Trade payables 1,189,425 1,672,548
Accruals and deferred income 861,431 1,157,142
Social security and other taxes 176,408 1,684,705
Pension due 41,627 15,807
Other payables 766,563 2,289,319
3,035,454 6,819,521
Included within 'Other payables' is an amount of £nil (2022: £1,706,498) in
respect of deferred consideration for the acquisition of Saietta Europe B.V.
(formerly e-Traction Europe B.V.).
Year ended 31 Year ended 31
Lease liabilities March 2023 March 2022
£ £
Lease liabilities 1,123,085 470,069
1,123,085 470,069
25. Contract liabilities
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Contract liabilities 326,286 -
326,286 -
Contract assets and contract liabilities arise from the Group's Lightweight
and Heavy-duty divisions, which enter into contracts that can take a few years
to complete, because cumulative payments received from customers at each
balance sheet date do not necessarily equal the amount of revenue recognised
on the contracts.
26. Non-current financial liabilities
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Lease liabilities 5,058,290 2,380,537
Provisions Note 29 31,541 168,130
Liabilities for financial guarantees Note 28 - 41,833
5,089,831 2,590,500
Maturity analysis of lease liabilities:
Due within one year 1,123,085 470,069
Due in more than one but not more than two years 819,774 656,840
Due in more than two but not more than five years 2,167,759 968,423
Due after five years 2,070,756 755,274
6,181,375 2,850,606
27. Leases
In the capacity as lessee
The Group's leases are for offices and manufacturing space as well as the
purchase of capital equipment used in the day to day operating activities of
the business. For all property leases, the period rent is fixed over the lease
term.
The company also leases certain items of plant and equipment. In some
contracts for services with distributors, those contracts contain a lease of
vehicles. Leases of plant, equipment and vehicles comprise only fixed payments
over the lease terms.
All current lease payments are fixed in nature and not subject to any clauses
which allow these payments to vary under certain conditions.
The total cash outflow for leases during the year was comprised of the
following:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Interest expense 274,891 18,609
Principal payments 659,993 263,263
934,884 281,872
The company sometimes negotiates break clauses in its property leases. On a
case-by-case basis, the company will consider whether the absence of a break
clause would exposes the company to excessive risk. Typically factors
considered in deciding to negotiate a break clause include:
· the length of the lease term;
· the economic stability of the environment in which the
property is located; and
· whether the location represents a new area of operations for
the company.
The aggregate undiscounted commitments for short-term leases and low-value
leases not recognised in the balance sheet at year end is £nil (2022: £nil).
28. Liabilities for financial guarantees
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Balance at beginning of financial year 41,833 -
Additions to financial liabilities during the year 3,507 78,058
Amortisation recognised (45,340) (36,225)
Balance at end of financial year - 41,833
On 1 December 2021, the Group entered into an agreement to guarantee the
obligations of its transport provider, Livingstone Aviation Limited in
exchange for preferential access to their services.
Under IFRS9, the financial guarantee contracts was treated as a financial
liability and was initially recognised at fair value. Subsequently, the
financial guarantee contract was measured at the higher of the IFRS 9 expected
credit loss (ECL) allowance and the amount initially recognised less any
cumulative amount of income/amortisation recognised.
Subsequent to year end Livingstone Aviation Limited disposed of its aircraft
and at that moment the Group was released fully from the financial guarantee.
29. Provisions
Onerous
Warranty contracts Provision for
provisions provisions dilapidations Total
£ £ £ £
Provisions at 1 April 2022 38,166 129,964 - 168,130
Amounts provided in the year - - 30,000 30,000
Amounts utilised in the year (36,625) (129,964) - (166,589)
Provisions at 31 March 2023 1,541 - 30,000 31,541
Onerous
Warranty contracts Provision for
provisions provisions dilapidations Total
£ £ £ £
Provisions at 1 April 2021 - - - -
Amounts provided in the year 42,407 121,406 - 163,813
Amounts acquired through acquisition of subsidiary - 405,294 - 405,294
Amounts utilised in the year (4,241) (396,736) - (400,977)
Provisions at 31 March 2022 38,166 129,964 - 168,130
Warranty provisions
The Group offers warranty cover in respect of manufacturing defects, which
become apparent one to eight years after purchase, dependent on the market in
which the purchase occurred and the vehicle/product purchased. The group
offers warranties of up to eight years on batteries in electric vehicles. The
estimated liability for product warranty is recognised when products are sold
or when new warranty programmes are initiated. These estimates are established
using historical information on the nature, frequency and average cost of
warranty claims and management estimates regarding possible future warranty
claims, customer goodwill and recall complaints. The discount on the warranty
provision is calculated using a risk-free discount rate as the risks specific
to the liability, such as inflation, are included in the base calculation. The
timing of outflows will vary as and when a warranty claim will arise, being
typically up to eight years.
Onerous contracts provisions
Onerous contract provisions comprise an estimate of unavoidable costs involved
with fulfilling the terms and conditions of contracts net of any expected
benefits to be received.
Estimates and assumptions
The group has recognised provisions for liabilities of uncertain timing or
amount including those for onerous leases and warranty claims. The provision
is measured at the best estimate of the expenditure required to settle the
obligation at the reporting date, discounted at a pre-tax rate reflecting
current market assessments of the time value of money and risks specific to
the liability.
30. Share capital and share premium
Share capital and share premium
Year ended 31 Year ended 31
Allotted, issued and fully paid: March 2023 March 2022
Number: Type: Nominal £ £
value:
102,917,675 Ordinary Shares £0.0011 113,209 -
85,051,953 Ordinary Shares £0.0011 - 93,557
Share Share
Number capital premium Total
of shares £ £ £
Balance at 1 April 2021 519,205,742 51,921 - 51,921
Consolidation of shares (472,005,220) - - -
Issue of shares 29,320,940 32,245 35,145,382 35,177,627
AIM listing costs offset against share premium - - (2,868,972) (2,868,972)
Shares issued on exercise of employee share options 5,530,491 6,091 58,165 64,256
Shares issued on conversion of convertible loan notes 3,000,000 3,300 2,336,700 2,340,000
Balance at 31 March 2022 85,051,953 93,557 34,671,275 34,764,832
Consolidation of shares - - - -
Issue of shares 17,101,450 18,812 23,581,189 23,600,001
Share issue costs offset - - (1,590,469) (1,590,469)
Shares issued on exercise of employee share options 764,272 840 8,331 9,171
Balance at 31 March 2023 102,917,675 113,209 56,670,326 56,783,535
30. Share capital and share premium (continued)
On 18 June 2021, the Group passed a resolution to consolidate its Ordinary
share capital. Prior to the consolidation, there were 519,205,742 Ordinary
shares with a nominal value of £0.0001 per share. In exchange for these
share, existing shareholders were issued 47,200,522 Ordinary shares with a
nominal value of £0.0011.
On 7 July 2021, the Group raised gross proceeds of £35,177,628 through the
placing of 29,314,690 new Ordinary shares (the "Placing Shares") with new and
existing investors at a price of £1.20 per Placing Share. An amount equal to
the nominal value of the Placing Shares was credited to share capital, with
the proceeds raised in excess of this nominal value being credited to share
premium. The Placing Shares rank pari passu with the Company's existing
ordinary shares.
On 7 July 2021, upon admission to the AIM market, 9,919,457 share options
automatically vested pursuant to the terms of their issue. Of these shares, a
total of 5,530,491 shares ("New Ordinary Shares") were exercised immediately
by the option holders. Of these, 4,437,821 options were exercised by the
option holders at a strike price of £0.012 resulting in the issue of
4,437,821 new Ordinary shares with a nominal value of £0.011p. As a result,
£4,882 was credited to share capital and the amount received in excess of the
nominal value, £48,372, was credited to share premium.
The remaining 1,092,670 options were exercised by the option holders at a
strike price of £0.01 resulting in the issue of 1,092,670 new Ordinary shares
with a nominal value of £0.011p. As a result, £1,202 was credited to share
capital and the amount received in excess of the nominal value, £9,725, was
credited to share premium.
The New Ordinary Shares rank pari passuwith the Company's existing ordinary
shares.
On 30 March 2022, 6,250 share options vested pursuant to the terms of their
issue. These options were exercised by the option holders at a strike price of
£0.012 resulting in the issue of 6,250 new Ordinary shares with a nominal
value of £0.011p. As a result,
£7 was credited to share capital and the amount received in excess of the
nominal value, £68, was credited to share premium.
On 3 August 2022, the Group raised net proceeds of £22,316,001, after broker
fees and other expenses of £1,284,000, through the placing of 17,101,450 new
Ordinary Shares of £0.0011 each in the capital of the Company (the "Placing
Shares") with new and existing investors at a price of £1.38 per share. An
amount equal to the nominal value of the Placing Shares was credited to share
capital, with the proceeds raised in excess of this nominal value being
credited to share premium.
The Placing Shares rank pari passuwith the Company's existing Ordinary shares.
During the period, 764,272 share options which had vested pursuant to the
terms of their issue were exercised by option holders at a strike price of
£0.012 resulting in the issue of 764,272 new Ordinary shares ("New Ordinary
Shares") with a nominal value of
£0.011p. As a result, £840 was credited to share capital and the amount
received in excess of the nominal value, £8,331, was credited to share
premium.
The New Ordinary Shares rank pari passuwith the Company's existing ordinary
shares.
31. Share-based payments
Common share options
Options have been granted to shareholders, directors and employees to purchase
common shares. These options generally vest over a period of up to four years
from grant date and are exercisable in the event of a listing.
Details of the common option plans are as follows:
For the year ended 31 March 2023 For the year ended 31 March 2022
Weighted Weighted
average average
Number exercise price Number exercise price
# £ # £
Outstanding at beginning of year 6,233,273 0.012 10,826,072 0.010
Granted 3,000,000 0.012 8,577,394 0.010
Lapsed (30,000) 0.012 (616,370) 0.010
Vested (3,277,030) 0.012 (12,553,823) 0.010
Outstanding at end of year 5,926,243 0.012 6,233,273 0.012
The fair value of each option granted was estimated on the grant date using
the Black-Scholes, and where appropriate the Monte Carlo simulation
option-pricing model with the following average assumptions:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Exercise price at grant date £0.01 £0.01
Expected life (in years) 2 3
Risk-free interest rate 3.71% 0.58%
Expected volatility 85.00% 87.05%
Weighted average share price 152.99 pence 92.56 pence
The expected volatility is based on the historic volatility (based on the
share price) of a comparator company with publicly available share prices.
The risk-free interest rate is based on the average return on 2 year UK Gilts.
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Cost of options vesting in the year 2,397,620 4,899,171
In the year ended 31 March 2023 an amount of £61,676 (2022: £161,951),
representing the charge for options related to employees whose costs are
allocated to research and development and capitalised as internally generated
development costs was included in additions to intangible assets, whilst the
remainder of the cost of options vesting was charged to the profit and loss
account. A further amount of £1,590,469 (2022: £330,886) was debited in
respect of share issue costs offset against share premium.
The total cost of options vesting in the period has been classified as a
movement in the share option reserve.
31. Share-based payments (continued)
Share option
reserve
£
Balance at 31 March 2021 7,318,820
Share based payments 4,899,171
Balance at 31 March 2022 12,217,991
Share based payments 2,397,620
Balance at 31 March 2023 14,615,611
32. Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share capital Nominal value of share capital subscribed for.
Share premium Amount subscribed for share capital in excess of nominal value.
Share options reserve Used to record the assessed fair value of equity-settled options issued as
share based payment for services received by the consolidated entity.
Translation reserve The currency translation reserve represents the cumulative gains and losses on
the retranslation of the Group's net investment in foreign operations.
Accumulated losses All other net gains and losses and transactions with owners (e.g. dividends)
not recognised elsewhere.
33. Financial instruments
Risk Management objectives
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies. The overall objective of the Board is to
set policies that seek to reduce risk as far as possible without unduly
affecting the Group's competitiveness and flexibility. All funding
requirements and financial risks are managed based on policies and procedures
adopted by the Board of Directors.
The Group is exposed to the following financial risks:
a. Credit risk
b. Liquidity risk
c. Interest rate risk
(i) Principal financial instruments
The Group is exposed to risks that arise from its use of financial
instruments. The principal financial instruments used by the company, from
which financial instrument risk arises, are as follows:
a. Trade and other receivables
b. Cash and cash equivalents
c. Trade and other payables
d. Fixed rate hire purchase agreement (classified within lease liabilities)
e. Investments in unquoted equity securities
(ii) Financial instruments by category
Financial assets Amortised cost
2023 2022
£ £
Cash and cash equivalents 7,247,267 18,402,055
Trade and other receivables 1,712,283 4,899,113
Other financial assets 500,000 -
Total financial assets 9,459,550 23,301,168
Financial liabilities Fair value through
Amortised cost profit and loss
2023 2022 2023 2022
£ £ £ £
Trade and other payables 1,997,615 3,977,674 - -
Accrued liabilities¹ 861,431 1,157,142
Lease liabilities 6,181,375 2,850,606 - -
Liabilities for financial guarantees - - - 41,833
Total financial liabilities 9,040,421 7,985,422 - 41,833
¹In the prior year accrued liabilities were not included in the financial
liabilities and were not included in the table above. The comparatives have
been restated to include these amounts.
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash
equivalents, trade and other receivables and trade and other payables.
Due to their short-term nature, the carrying value of cash and cash
equivalents, trade and other receivables, and trade and other payables
approximates their fair value.
The details of the fair value hierarchy, valuation techniques, and significant
unobservable inputs related to determining the fair value of financial
guarantees, which are classified in level 3 of the fair value hierarchy, are
outlined in this note.
(iv) Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is
provided below.
Financial liabilities Level 1 Level 2 Level 3
2023 2022 2023 2022 2023 2022
£ £ £ £ £ £
Liabilities for financial
guarantees - - - - - 41,833
There were no transfers between levels during the year.
The valuation techniques and significant unobservable inputs used in
determining the fair value measurement of level 2 and level 3 financial
instruments, as well as the inter-relationship between key unobservable inputs
and fair value, are set out in the following table.
Financial instrument Valuation technique Significant Inter-relationship
used unobservable inputs between key
unobservable inputs
and fair value
Equity investments Recognised at cost and adjusted thereafter for the post- acquisition change in Not applicable. Not applicable.
the investor's share of the investee's net assets.
Liabilities for financial Discounted cashflow model using the difference between market rates of Not applicable. Not applicable.
interest and the rate per the loan note instrument adjusted for probability of
default.
guarantees
There were no changes to the valuation techniques during the year.
The reconciliation of the opening and closing fair value balance of level 3
financial instruments is provided below:
Liabilities for
financial guarantees
£
At 1 April 2021 -
Purchases, disposals and reclassifications 41,833
At 31 March 2022 41,833
At 1 April 2022 41,833
Purchases, disposals and reclassifications (41,833)
At 31 March 2023 -
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Group's finance function. The Board receives monthly
reports from the Group Financial Controller through which it reviews the
effectiveness of the processes put in place and the appropriateness of the
objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out below:
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or other financial assets. The ability to do this relies on
the Group expanding its customer base, collecting its trade receivable,
completing financings in a timely manner and by maintaining sufficient cash
and cash equivalents on hand.
The Group monitors its payables on a periodic basis and uses the credit terms
to manage the timing of payments to suppliers. The following tables show the
contractual maturities of financial liabilities:
As at 31 March 2023 Total Less than 1 year Between 1 and 5 years Over 5 years
£ £ £ £
Trade and other payables 1,997,615 1,997,615 -
-
Accrued liabilities 861,431 861,431 -
-
Lease liabilities 7,085,667 1,360,789 3,527,744 2,197,134
9,944,713 4,219,835 3,527,744 2,197,134
As at 31 March 2022 Total Less than 1 year Between 1 and 5 years Over 5 years
£ £ £ £
Trade and other payables 3,977,674 3,977,674 -
-
Accrued liabilities 1,157,142 1,157,142 -
-
Lease liabilities (restated)¹ 2,742,432 344,202 1,360,636 1,037,594
Liabilities for financial guarantees 41,833 - 41,833 -
7,919,081 5,479,018 1,402,469 1,037,594
¹The Liquidity risk table has been restated to include the undiscounted
contractual cashflows for the lease liabilities for 2022 which were omitted in
the prior year
Liquidity risk arises from the company's management of working capital and the
continued availability of its other funding facilities. It is the risk that
the company will encounter difficulty in meeting its financial obligations as
they fall due. The company actively manages its cash generation and maintains
sufficient cash holdings to cover its immediate obligations but is always in
close contact with key shareholders who would assist the company if required.
Market risk
The Group's products are focused on meeting certain current or expected
requirements of individual markets and these requirements could evolve before
the Group is able to complete its licensing agreements.
The Group periodically reviews the markets, and demands expected of products
to minimize the risk to its business. It also reviews new markets to identify
future demand outside of the initial intended markets. As the Group releases
products, it will continue to carry out an assessment of the market risk it is
exposed to and will carry out sensitivity analysis on the impact that each
risk will have on the product(s)' performance and the wider impact on the
Group's income statement and its financial position.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument or customer contract fails to meet its
obligations. The Group is mainly exposed to credit risk from credit sales. At
31 March 2023 the Group has net trade receivables of £1,085,229 (2022:
£2,422,019 (last year disclosed as £2,622,019)).
The company is exposed to credit risk in respect of credit sales such that, if
one or more customers encounter financial difficulties, this could materially
and adversely affect the company's financial results. The company attempts to
mitigate credit risk by assessing the creditworthiness of customers and
closely monitoring payment history. In a limited number of customer contracts,
an initial payment is secured which helps to mitigate the overall credit risk
of a project.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivables
and contract assets. To measure expected credit losses on a collective basis,
trade receivables and contract assets are grouped based on similar credit risk
and aging. The contract assets have similar risk characteristics to the trade
receivables for similar types of contracts.
The following provision matrix is used to determine the initial expected
credit losses. The historical loss rates are then adjusted for current and
forward-looking information on macroeconomic factors affecting the Group's
customers. The Group has identified the gross domestic product (GDP),
unemployment rate and inflation rate as the key macroeconomic factors in the
countries where the Group operates.
None past due 2.3% of carrying value (2022: 1%)
30 days past due 17% of carrying value (2022: 8.6%)
30-60 days past due 100% of carrying value (2022: 9.6%)
60-90 days past due 100% of carrying value (2022: 100%)
>90 days past due 100% of carrying value (2022: 100%)
The resultant loss allowance is £34,259 (2022: £28,132).
Although the Group has its own terms and conditions with a 30 day payment
expectation, under some contracts it accepts longer terms with suitable
customers. Should a trade debtor exceed the payment terms, then the Group
engages to ensure swift payment.
The maximum exposure to loss arising from trade accounts receivable is equal
to their total carrying value as the loss allowance not recognised is
considered to be immaterial to the financial statements.
Credit risk also arises from cash and cash equivalents and deposits with banks
and financial institutions. For banks and financial institutions, only
independently rated parties with minimum rating "A" are accepted.
The maximum exposure to credit risk is as follows:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Cash on deposit 7,247,267 18,402,055
Trade receivables 1,085,229 2,422,019
Other receivables 627,054 2,477,094
Loan to associate 500,000 -
9,459,550 23,301,168
Credit risk (continued)
The ageing of trade receivables at the year-end date was:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Current 1,026,941 2,219,626
More than 30 days past due 60,011 145,652
More than 60 days past due 7,121 28,700
More than 120 days past due 25,415 28,041
1,119,488 2,422,019
Capital risk management
Whilst the Group has no bank debt, it's capital structure comprises cash from
the issuance of equity both at the time of its initial public offering and
subsequently and finance lease obligations arising from its right of use
assets. This constitutes the capital under management. The Group has a low
gearing ratio of 15% debt to equity.
The Group's objectives when maintaining capital are to safeguard the entity's
ability to continue as a going concern, so that it can continue to provide
returns for shareholders and benefits for other stakeholders; and to provide
an adequate return to shareholders by pricing products and services
commensurately with the level of risk.
All working capital requirements are financed from existing cash.
The Group sets the amount of capital it requires in proportion to risk. The
Group manages its capital structure and makes adjustments to it in the light
of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the
company may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares, or sell assets to reduce debt.
Interest rate risk
The Group's activities expose it to the financial risks of interest rates. The
Group reviews its risk management strategy on a regular basis and if
appropriate it will enter into derivative financial instruments in order to
manage interest rate risk. At present, the Group does not have any financial
leases or borrowings that have a floating interest rate, however should it
take on such facilities where this is the case, then it will review the risk
exposure that it has.
The Group analyses the interest rate exposure on at regular intervals. A
sensitivity analysis is performed by applying a simulation technique to the
liabilities that represent major interest-bearing positions. Various scenarios
are run taking into consideration refinancing, renewal of the existing
positions, alternative financing and hedging. Based on the simulations
performed, the impact on profit or loss and net assets of a 100 basis-point
shift (being the maximum reasonable expectation of changes in interest rates)
would not have any financial impact as the Group does not have any
interest-bearing debt.
All borrowing is approved by the Board of Directors.
Foreign currency risk
Foreign exchange risk arises when individual Group entities enter into
transactions denominated in a currency other than their functional currency.
The Group's policy is, where possible, to allow group entities to settle
liabilities denominated in their functional currency with the cash generated
from their own operations in that currency. Where group entities have
liabilities denominated in a currency other than their functional currency
(and have insufficient reserves of that currency to settle them), cash already
denominated in that currency will, where possible, be transferred from
elsewhere within the Group.
33. Financial instruments (continued)
Foreign currency risk (continued)
In order to monitor the continuing effectiveness of this policy, the Board
receives a monthly forecast, analysed by the major currencies held by the
Group, of liabilities due for settlement and expected cash reserves.
The Group aims to fund expenses and investments in the respective currency and
to manage foreign exchange risk at a local level by matching the currency in
which revenue is generated and expenses are incurred.
The following table sets forth information relating to foreign currency
exposure as at 31 March 2023:
Year ended 31 Year ended 31
March 2023 March 2022
Euros Euros
Financial assets 299,379 2,676,434
Financial liabilities (1,637,131) (1,709,759)
Net exposure asset (1,337,751) 966,675
A sensitivity analysis performed showed that an increase of 5% in the Euro to
GBP rate would result in a decrease in financial assets of £12,555 (2022:
£108,096) and a decrease in financial liabilities of £68,653 (2022:
£69,054). A decrease of 5% would result in an increase in financial assets of
£13,876 (2022: £119,474) and an increase in financial liabilities of
£75,880 (2022: £76,323).
34. Subsidiaries
The following entities are included in the consolidated financial information
of Saietta Group Plc:
Country of Registered Principal Shareholding
Investment incorporation office activity 2023 2022 Interest
Saietta Sunderland Plant Limited (formerly Saietta Motorcycles Limited) England and Wales Building 210 Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE Trading 100% 100% Direct
Saietta LDE Limited (formerly Saietta Racing Limited) England and Wales Building 210 Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE Dormant 100% 100% Direct
Propel B.V. Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Discontinued 100% 100% Indirect
Saietta Holding B.V. Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Trading 100% N/A Indirect
Saietta Traction Holdings B.V. Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Trading 100% N/A Indirect
Saietta RetroMotion B.V. (formerly Saietta Refit B.V.) Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Discontinued 100% N/A Indirect
Saietta Europe B.V. Netherlands Watermanstraat 40, 7324AH Apeldoorn, Netherlands Trading 100% N/A Indirect
Saietta RetroMotion B.V. ceased operations in January 2023.
Propel B.V. discontinued operations in February 2023 and is presented as a
disposal group held for sale as at 31 March 2023.
35. Related party transactions
During the year, the Group repaid an amount totalling £nil (2022: £176,111)
to Mr. L Marazzi, a shareholder of the company, reducing the outstanding
balance that was included within creditors due within one year at the year end
to £nil.
Year ended 31 Year ended 31
March 2023 March 2022
Trading transactions £ £
Saietta VNA Private Limited
Revenue 855,605 -
Loans to related parties
Saietta VNA Private Limited
Loan receivable 500,000 -
The loan to associate Saietta VNA (Private) Limited is for up to £1,000,000
and can be repaid at any time with one month's notice. The term is until April
2028 and the interest rate is 7.5% starting to accrue in April 2024. A further
£500,000 is drawn down in August 2023.
36. Subsequent events
On 3rd April 2023, the Group received an order for 3,000 eDrives from Ayro
Inc. with a value of approximately £5 million. On 17th April 2023, Mr Wicher
Kist resigned as a director of Saietta Group Plc.
On 1st August 2023 the Group signed a suite of contracts to replace the Joint
Commercialisation and Development Agreement ("JCDA") with Consolidated Metco
Inc ("ConMet").
Under these new arrangements ConMet and its affiliates paid Saietta
approximately €3.3 million comprised of:
- An upfront cash fee of approximately €2.7 million as consideration for the
assignment of jointly developed intellectual property ("IP")
- A further sum of €0.6 million for an agreed list of machinery and
equipment being transferred by Saietta
The parties also entered into a licence agreement under which Saietta has
granted exclusive and non-exclusive licences over its existing IP in
consideration for the payment of 2.5% of an agreed uplift to the product cost
of future IWG and IWM sales incorporating Saietta's licensed IP, capped at
€20 million.
37. Capital commitments
At 31 March 2023, the Group has capital commitments as follows:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Contracted for but not provided in these financial statements
Contracted amounts for the purchase of assets 1,094,320 1,100,000
Loan to associate 500,000 -
1,594,320 1,100,000
Capital commitments comprises contracted amounts for the purchase of assets
and a loan contract with associate.
The Group is commited to advancing a further £500,000 to its associate,
Saietta VNA (Private) Limited, in August 2023. This amount is due at the
earlier of available cash or 5 years (April 2028).
38. Non current assets held for sale and discontinued operations
Saietta RetroMotion B.V.
In January 2023, it was agreed by the Board that Saietta RetroMotion B.V.
would cease its retrofit operations in Apeldoorn, Netherlands and sell the
retrofit business (consisting of premises and nine employees) to a customer of
Saietta Group plc, Duracar. This activity accompanied a general restructuring
of the Netherlands operations.
The transaction consisted of a sale of assets for £173,000 (€200,000), a
novation of the lease premises and the redundancy of Saietta Europe's
RetroMotion employees.
The results of the discontinued operations, which have been included in the
statement of comprehensive income, were as follows:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Revenue 275,789 952,018
Cost of sales (251,156) (568,477)
Other income 103,247 -
Expenses (855,465) (179,884)
Inventory write-down (848,580) -
Loss before tax (1,576,165) 203,657
Impairment of disposal group (480,729) -
Net loss attributable to discontinued operations (attributable to owners of (2,056,894) 203,657
the Company)
Expenses from discontinued operations include a write off of inventory of
£848,580 and severance costs of £107,326. During the year, Saietta
RetroMotion B.V. increased the Group's net operating cash flows by £10,000.
The major classes of assets and liabilities comprising the discontinued
operation are as follows:
Year ended 31
March 2023
£
Trade and other receivables 46,800
Cash and cash equivalents 9,031
Total assets classified as held for sale 55,831
Trade and other payables 251,639
Total liabilities associated with assets classified as held for sale 251,639
Net liabilities of disposal group (195,808)
Propel B.V.
In February 2023, it was agreed by the Saietta Group plc Board that the marine
retail operation (Propel) was representing too high a cash outflow to the
Group and that further investment into marine retail activity should cease
with resources focused on light duty applications going forward.
The Propel activities constituted a discontinued operation from the Board
decision to cease investment at which point the Board commenced actively
seeking an industrialisation partner, with a linked sale being sought for the
intellectual property and distribution rights of the business.
Propel BV is considered a cash generating unit as it operates as a specific
business unit dedicated to marine activities. It has been reviewed for
potential impairment.
An impairment of the assets of Propel has been recognised following the
decision to seek an industrialisation partner to take the marine retail
business forward. This decision creates uncertainty over the recoverability of
the assets of Propel BV until such point that formal arrangements with a
partner are agreed.
Determination of impairment was made on the basis of nil recovery due to the
uncertainties.
The results of the discontinued operations, which have been included in the
statement of comprehensive income for the year, were as follows:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Revenue 27,319 1,261,008
Cost of sales (2,492) (714,795)
Grant income - 50,799
Expenses (3,779,093) (847,646)
Loss before tax (3,754,266) (250,634)
Loss on impairment of disposal group (2,057,480) -
Net loss attributable to discontinued operations (attributable to owners of (5,811,746) (250,634)
the Company)
During the year, Propel B.V reduced the Group's net operating cash flows by
£2.4 million (2022: £1.5 million), paid £1.2 million (2022: £1.3 million)
in respect of investing activities and paid £0.1m (2022 received: £0.3
million) in respect of financing activities.
Propel is expected to be sold within 12 months and has been classified as a
disposal group held for sale and presented separately in the statement of
financial position.The major classes of assets and liabilities comprising the
operations classified as held for sale are as follows:
Year ended 31
March 2023
£
Trade and other receivables 77,195
Cash and bank balances 94,448
Total assets classified as held for sale 171,643
Trade and other payables 495,354
Lease liabilities 171,835
Total liabilities associated with assets classified as held for sale 667,189
Net liabilities of disposal group (495,546)
Non‑current assets (or disposal groups) classified as held for sale are
measured at the lower of carrying amount and fair value less costs to sell.
Costs to sell have been provided for, estimated as follows:
Year ended 31 Year ended 31
March 2023 March 2022
Accrued costs £ £
Severance pay 161,157 -
Lease exit fees 44,032 -
205,189 -
Summary of profits and losses from discontinued operations:
Saietta RetroMotion B.V. (2,056,894) 203,657
Propel B.V. (5,811,746) (250,634)
Total losses from discontinued operations (7,868,640) (46,977)
Year ended 31
March 2023
£
Total assets of disposal groups held for sale 227,474
Total liabilities of disposal groups held for sale 918,828
COMPANY BALANCE SHEET OF SAIETTA GROUP PLC
As at 31 March 2023
Company number 06744840
2023 2022
ASSETS Notes £ £
Non-current assets
Intangible fixed assets 42 8,213,823 5,570,787
Tangible fixed assets 43 7,406,199 2,796,984
Right of use assets 44 5,595,634 2,258,202
Investment in associate 50 267,784 -
Investments in subsidiaries 45 173 173
Trade and other receivables 47 134,526 734,526
Prepayments and accrued income 47 119,590 101,825
Other financial assets 47 500,000 -
Amounts due from group companies 47 1,774,525 1,700,491
Total non-current assets 24,012,254 13,162,988
Current assets
Inventories 46 132,298 297,585
Trade and other receivables 47 2,867,731 3,232,513
Prepayments and accrued income 47 3,017,464 886,675
Amounts due from group companies 47 2,612,104 5,473,694
Cash and cash equivalents 47 7,084,691 17,883,118
Total current assets 15,714,288 27,773,585
TOTAL ASSETS 39,726,542 40,936,573
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 48 2,461,077 5,014,255
Contract liabilities 326,286 -
Lease liabilities 48 1,086,440 259,630
Total current liabilities 3,873,803 5,273,885
Non-current liabilities
Lease liabilities 48 4,975,575 2,029,485
Liabilities for financial guarantees 48 - 41,833
Total non-current liabilities 4,975,575 2,071,318
EQUITY
Share capital 54 113,209 93,557
Share premium 54 56,670,326 34,671,275
Share options reserve 55 14,615,611 12,217,991
Profit and loss account (40,521,982) (13,391,453)
Total equity 30,877,164 33,591,370
TOTAL EQUITY AND LIABILITIES 39,726,542 40,936,573
The Company has elected to take the exemption under section 408 of the
Companies Act 2006 from presenting the parent company income statement. The
loss for the Company for the year was £27.1 million (2022: loss of £10.2
million).
The notes on pages 97 to 129 are an integral part of these financial
statements.
These parent company financial statements were approved by the Saietta Group
plc Board and authorised for issue on [ October 2023 ].
They were signed on its behalf by:
Steven HarrisonChief Financial Officer
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2023
Share Profit
Share Share options and loss
capital premium reserve account Total
Notes £ £ £ £ £
Balance at 1 April 2021 51,921 - 7,318,468 (3,272,084) 4,098,305
Comprehensive loss for the year
Loss for the year - - - (10,191,852) (10,191,852)
Total comprehensive loss - - - (10,191,852) (10,191,852)
Contributions by owners
Issue of shares 54 32,245 35,145,382 - - 35,177,627
Share issue costs offset against share premium 54 - (2,868,972) - - - 2,868,972
Share-based payments 55 - - 4,899,523 - 4,899,523
Share issues on exercise of employee share options 54 6,091 58,165 - - 64,256
Settlement of the convertible loan notes - - - 72,483 72,483
Shares issued on conversion of convertible loan notes 54 3,300 2,336,700 - - 2,340,000
Balance at 31 March 2022 93,557 34,671,275 12,217,991 (13,391,453) 33,591,370
Balance at 1 April 2022 93,557 34,671,275 12,217,991 (13,391,453) 33,591,370
Comprehensive loss for the year
Loss for the year - - - (27,130,529) (27,130,529)
Total comprehensive loss - - - (27,130,529) (27,130,529)
Contributions by owners
Issue of shares 54 18,812 23,581,189 - - 23,600,001
Share issue costs offset against share premium 54 - (1,590,469) - - (1,590,469)
Share-based payments 55 - - 2,397,620 - 2,397,620
Share issues on exercise of employee share options 54 840 8,331 - - 9,171
Balance at 31 March 2023 113,209 56,670,326 14,615,611 (40,521,982) 30,877,164
Share capital
The share capital represents the nominal value of the equity shares in issue.
Share premium account
When shares are issued, any premium paid above the nominal value is credited
to the share premium reserve.
Share options reserve
When shares are issued on the exercise of vested share options, the share
option reserve is debited.
Accumulated losses
The retained earnings reserve records the accumulated profits and losses of
the Company since inception of the business.
The notes on pages 97 to 129 are an integral part of these financial
statements.
40. Accounting policies
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the years presented, unless otherwise stated.
Basis of preparation
Saietta Group plc is a private company incorporated in England & Wales
under the Companies Act. The address of the registered office is given on the
contents page and the nature of the company's operations and its principal
activities are set out in the strategic report. The financial statements have
been prepared in accordance with Financial Reporting Standard 101 'Reduced
Disclosure Framework' (FRS 101). The principal accounting policies adopted in
the preparation of the financial statements are set out below. The policies
have been consistently applied to all the years presented, unless otherwise
stated. The financial statements have been prepared on a historical cost
basis, and in accordance with the Companies Act 2006. The presentation
currency used is sterling and amounts have been presented rounded to the
nearest £.
Disclosure exemptions adopted
In preparing these financial statements the company has taken advantage of
certain disclosure exemptions conferred by FRS 101 and has not provided:
• Additional comparative information as per IAS 1 Presentation of
Financial Statements paragraph 38 in respect of a reconciliation of the number
of shares outstanding at the start and end of the prior period
• A Statement of Cash Flows and related disclosures for cash flows from
discontinued activities.
• A statement of compliance with IFRS (a statement of compliance with FRS
101 is provided instead).
• Additional comparative information for narrative disclosures and
information, beyond IFRS requirements.
• Disclosures in relation to the objectives, policies and process for
managing capital.
• Disclosure of the effect of future accounting standards not yet adopted.
• The remuneration of key management personnel.
• Related party transactions with two or more wholly owned members of the
group.
• Certain disclosures required under IFRS 15 Revenue from Contracts with
Customers, including disaggregation of revenue, details of changes in contract
assets and liabilities, and details of incomplete performance obligations.
• The maturity analysis of lease liabilities, as required by paragraph 58
of IFRS 16 Leases, has not been disclosed separately as details of
indebtedness required by Companies Act has been presented separately for lease
liabilities in note 48.
In addition, and in accordance with FRS 101, further disclosure exemptions
have been applied because equivalent disclosures are included in the
consolidated financial statements of Saietta Group plc. These financial
statements do not include certain disclosures in respect of:
• Share based payments - details of the number and weighted average
exercise prices of share options, and how the fair value of goods or services
received was determined as per paragraphs 45(b) and 46 to 52 of IFRS 2
Share-Based Payment.
• Fair value measurements - details of the valuation techniques and inputs
used for fair value measurement of assets and liabilities as per paragraphs 91
to 99 of IFRS 13 Fair Value Measurement.
The parent company of the following wholly-owned subsidiary companies
guarantees these subsidiary companies under section 479C of the Companies Act
2006 and agrees to the exemption from audit in respect of the year ended 31
March 2023:
- Saietta Sunderland Plant Limited
- Saietta LDE Limited
40. Accounting policies (continued)
Going
concern
The financial statements have been prepared on a going concern basis. In
adopting the going concern basis, the directors have considered the financial
position of the Company, its cash flows and its liquidity position. The
Company's financial risk management objectives and exposures to liquidity and
other financial risks and uncertainties are set out on pages 15 to 18. The
Company had net assets of £30,877,164 (2022: £33,591,370) as at 31 March
2023 and available liquidity of £7,084,691 (2022:
£17,883,118) comprised of cash and cash equivalents.
The Company has modelled scenarios for a period up to October 2024 from the
March 2023 year end and stress tested its financial position in such
scenarios. These stress tests modelled the variability in financial
performance and free cash flows when incorporating certain hypothetical events
such as a reduction in forecast revenue and a delay in the receipt of payments
for equipment from Saietta VNA.
The Company operates in markets that are rapidly growing and has strategic
plans that respond to such growth. In delivering those plans, the Company is
mindful of the ultimate benefits from maintaining control over the deployment
of its intellectual property in applications with major OEMs and within its
joint venture arrangements. In order to do so, it recognises that at times it
will potentially need to co-invest or defer investment to its partners to
enhance the future value it can achieve from application of its products. In
such instances the commercial merits will be weighed in determining whether
funding is sought.
These forecasts align to the business strategy which was based on the
assumption that the Company will significantly increase its revenue and be
able to generate significant gross profit in the next 12 months.
Furthermore, the forecasts also include payments from Saietta VNA, the
Company's joint venture in India, for equipment for fully automated production
of AFT motors. The Company has spent £3m on such equipment and this amount is
to be reimbursed by Saietta VNA. In the absence of such reimbursement there
may also be a need to raise additional funding.
Whilst the Directors expect that additional funding can be raised this is not
guaranteed and when continuing with an accelerated expansion this presents a
material uncertainty which may cast significant doubt over the Company's
ability to continue as a going concern and therefore its ability to realise
its assets and discharge its liabilities in the normal course of business. The
financial statements do not reflect any adjustments that would be required to
be made if they were prepared on a basis other than the going concern basis.
Whilst acknowledging the uncertainties described above, the Board have
concluded, on the basis of all scenarios and related expected cashflows and
available sources of finance, that the Company will be able to continue as a
Going Concern for at least twelve months from the date of signing these
financial statements and therefore it remains appropriate to prepare the
Company's results on the basis of a going concern.
Judgements and key areas of estimation uncertainty
The preparation of financial statements in compliance with FRS 101 requires
the use of certain critical accounting estimates. It also requires the
company's directors to exercise judgement in applying the company's accounting
policies. The areas where significant judgements and estimates have been made
in preparing the financial statements and their effect are disclosed in note
41.
40. Accounting policies (continued)
New standards, interpretations and amendments:
There have been amendments to some accounting standards:
IFRS 3 Business Combinations: Reference to the Conceptual Framework IAS 16
Property, Plant and Equipment-Proceeds before Intended Use IAS 37 Onerous
Contracts - Cost of Fulfilling a Contract
There are no new standards, interpretations or amendments not yet applied
which the Directors anticipate will have a material impact on the Company.
Revenue recognition
Performance obligations and timing of revenue recognition
A portion of the Company's revenue is derived from selling goods with revenue
recognised at a point in time when control of the goods has transferred to the
customer. This is generally when the goods are delivered to the customer.
However, for export sales, control might also be transferred when delivered
either to the port of departure or port of arrival, depending on the specific
terms of the contract with a customer. There is limited judgement needed in
identifying the point control passes: once physical delivery of the products
to the agreed location has occurred, the Company no longer has physical
possession, usually will have a present right to payment (as a single payment
on delivery) and retains none of the significant risks and rewards of the
goods in question.
The Company's Lightweight and Heavy-duty divisions both carry out design
(consultancy-type) services for clients, with revenue recognised typically on
an over time basis. This is because the designs created have no alternative
use for the Company and the contracts would require payment to be received for
the time and effort spent by the Company on progressing the contracts in the
event of the customer cancelling the contract prior to completion for any
reason other than the Company's failure to perform its obligations under the
contract. On partially complete design contracts, the Company recognises
revenue based on stage of completion of the project which is estimated by
comparing the number of hours actually spent on the project with the total
number of hours expected to complete the project (i.e. an input based method).
This is considered a faithful depiction of the transfer of services as the
contracts are initially priced on the basis of anticipated hours to complete
the projects and therefore also represents the amount to which the Company
would be entitled based on its performance to date. These design contracts
include commitment fees are fees which are payable by customers in order to
secure exclusive access to certain goods and services of the company and thus
precludes the Company from offering those goods and services to other
customers. They are recognised over the period of the commitment.
Determining the transaction price
Most of the Company's revenue is derived from fixed price contracts and
therefore the amount of revenue to be earned from each contract is determined
by reference to those fixed prices.
40. Accounting policies (continued)
Revenue recognition (continued)
Allocating amounts to performance obligations
For most contracts for goods, there is a fixed unit price for each product
sold, with reductions given for bulk orders placed at a specific time.
Therefore, there is no judgement involved in allocating the contract price to
each unit ordered in such contracts (it is the total contract price divided by
the number of units ordered). Where a customer orders more than one product
line, the Company is able to determine the split of the total contract price
between each product line by reference to each product's standalone selling
prices (all product lines are capable of being, and are, sold separately).
For most contracts for design services, revenue is recognised over time in
accordance with percentage completion. Accordingly, the transaction price is
allocated in accordance by reference to the actual costs incurred as a
proportion of the total expected cost of the products and services to be
provided for each performance obligation. Allocation of transaction price may
include allocation of discounts, which are applied on a proportionate basis to
all performance obligations based on the stand-alone selling price of each
performance obligation (observable or estimated).
In order to win significant repeat business with key customers, the Company
might enter into contracts entitling them to discounts if it places repeat
orders in the future. Such discounts constitute a 'material right' and result
in some of the consideration received for the initial sale being deferred and
recognised as revenue when subsequent sales are fulfilled or (if later) when
the rights to receive a discount expire. The Company estimates both the
probability that the customer will take up its future discount offer and the
value of future purchases that might be made in order to estimate the value of
the rights granted. This has to be done on a contract-by-contract basis for
each customer to whom material rights have been granted. The Directors do not
consider past experience an appropriate basis for estimating the amount of
total contract revenue to allocate to future discount rights for two reasons.
Firstly, there is not a significant number of such contracts on which past
experience can be extrapolated. And secondly, each customer has unique
circumstances which will impact both the probability and value of additional
orders being placed. Therefore, the estimates are made by reference to
discussions had with the relevant customers as to the extent the discount
options will be taken up when the original contracts were negotiated.
Costs of fulfilling contracts
The costs of fulfilling contracts do not result in the recognition of a
separate asset because:
• such costs are included in the carrying amount of inventory for
contracts involving the sale of goods; and
• for engineering design service contracts, revenue is recognised over
time by reference to the stage of completion meaning that control of the asset
(the design service) is transferred to the customer on a continuous basis as
work is carried out. Consequently, no asset for work in progress is
recognised.
Practical expedients
The company has taken advantage of the practical expedients:
• not to account for significant financing components where the time
difference between receiving consideration and transferring control of goods
(or services) to its customer is one year or less; and
• to expense the incremental costs of obtaining a contract when the
amortisation period of the asset otherwise recognised would have been one year
or less.
Most of the Company's revenue is derived from fixed price contracts and
therefore the amount of revenue to be earned from each contract is determined
by reference to those fixed prices.
40. Accounting policies (continued)
Grant
income
The Company enters into consortiums with partners who together will apply for
grant income to be paid out against a project that contains defined
deliverables, clear outcomes and a set level of expenditure.
Expenditure comprises both capital purchases for equipment and operational
expenditure for labour and supplies.
Each partner agrees a set level of expenditure at the start of the project and
a level of grant income paid for by the grant provider is allocated for
payment against the expenditure incurred, however the deliverables on the
project for each partner are linked. Such projects are sought by the Company
as they provide funding over one or more work streams that form part of the
Company's programme(s) to deliver increased production capacity.
The Company recognises the costs of a project in the period in which they are
incurred when related to qualifying expenditure. The grant income that is
provided against this total expenditure is recognised as income when received
from the issuing authority. Recognition occurs at this point as its release is
subject to the issuer's review and confirmation of compliance with all
conditions for release. The grant related to the asset is deferred and
recognised as income in the same period in which the grant-related asset is
being depreciated.
Assets acquired for use in such projects are depreciated in accordance with
the Company's depreciation policy.
The grant programmes that the Company participates in typically operate on a
three month cycle, with recoverable income over each three month period paid
in the month following that period.
Expenditure
Expenditure is recognised in respect of goods and services received when
supplied in accordance with contractual terms. Provisions are made when a
present obligation exists for a future liability relating to a past event and
where the amount of the obligation can be reliably estimated.
Foreign
currencies
Items included in the financial statements are measured using the currency of
the primary economic environment in which the entity operates ('the functional
currency'). The financial statements are presented in 'sterling', which is
also the Company's functional currency.
Transactions entered into by the Company in a currency other than the
functional currency are recorded at the rates ruling when the transactions
occur. Foreign currency monetary assets and liabilities are translated at the
rates ruling at the reporting date. Exchange differences arising on the
retranslation of unsettled monetary assets and liabilities are recognised
immediately in profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash
equivalents are presented in profit or loss within 'finance income or costs'.
All other foreign exchange gains and losses are presented in profit or loss
within 'other operating income or expense'.
Intangible assets
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and
subsequently amortised on a straight-line basis over their useful economic
lives.
The significant externally acquired intangibles recognised by the company and
their useful economic lives are as follows:
Intellectual property patents
10% straight line
Software
25% reducing balance
40. Accounting policies (continued)
Intangible assets (continued)
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if it can be
demonstrated that:
• it is technically feasible to develop the product for it to be sold;
• adequate resources are available to complete the development;
• there is an intention to complete and sell the product;
• the company is able to sell the product;
• sale of the product will generate future economic benefits; and
• expenditure on the project can be measured reliably.
Capitalised development costs are subsequently amortised on a straight line
basis over the periods the company expects to benefit from selling the
products developed, which ranges from 8 to 10 years. The amortisation expense
is included within the administrative expenses in the statement of
comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on
the research phase of internal projects are recognised in the statement of
comprehensive income as incurred.
Tangible assets
Tangible fixed assets are initially recognised at cost. As well as the
purchase price, cost includes directly attributable costs and the estimated
present value of any future unavoidable costs of dismantling and removing
items. The corresponding liability is recognised within provisions.
Depreciation on assets under construction does not commence until they are
complete and available for use. Depreciation is provided on all other items of
property, plant and equipment so as to write off their carrying value over
their expected useful economic lives. It is provided at the following rates:
Short leasehold
Remaining lease term Plant and machinery
25% reducing balance Fixtures and
fittings 25% reducing balance
Motor vehicles Four
years
Useful lives are based on management's estimates of the period that the assets
will generate revenue, which are reviewed annually for continued
appropriateness and events which may cause the estimate to be revised. At the
end of the initial period, asset lives reach a residual value at which they
are either suitable for replacement or extended life after maintenance and
overhaul.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of
the asset. The gain or loss arising on the disposal or retirement of an asset
is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
Useful lives are based on management's estimates of the period that the assets
will generate revenue, which are reviewed annually for continued
appropriateness and events which may cause the estimate to be revised. At the
end of the initial period, asset lives reach a residual value at which they
are either suitable for replacement or extended life after maintenance and
overhaul. The key areas of estimation uncertainty regarding depreciation is
the determination of the life time capacity; risk of obsolescence from
technological and regulatory changes; and required future capital expenditure
(refurbishment or replacement of key components).
40. Accounting policies (continued)
Tangible assets (continued)
Assets under construction
Assets under construction relates to the construction of an automated
production line which at 31 March 2023 was not yet ready for use.
Assets under construction are initially recognised at cost. As well as the
purchase price, cost includes directly attributable costs and the estimated
present value of any future unavoidable costs of dismantling and removing
items.
Any costs not capitalised as part of the factory cost will be expensed to the
statement of profit or loss as incurred. Depreciation on assets under
construction does not commence until they are complete and available for use.
When necessary, the entire carrying amount of the assets under construction is
tested for impairment in accordance with IAS 36 Impairment of assets as a
single asset by comparing its recoverable amount (the higher of value in use
and fair value less costs of disposal) with its carrying amount. Any
impairment loss recognised forms part of the carrying amount of the
investment. Any reversal of that impairment loss is recognised in accordance
with IAS 36 to the extent that the recoverable amount of the investment
subsequently increases.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of
cost and net realisable value. Cost comprises all costs of purchase, costs of
conversion and other costs incurred in bringing the inventories to their
present location and condition.
Inventory is valued at the weighted average cost and is held at the lower of
the weighted average cost or the selling price less costs to sell.
Investments in subsidiaries
Investments in subsidiary undertakings where the Company has control are
stated at cost less any provision for impairment.
Financial
instruments
Financial assets and financial liabilities are recognized in the Company's
balance sheet when the Company becomes a party to the contractual provisions
of the instrument.
· Financial assets
All financial assets are held at amortised cost.
Amortised Cost
These assets arise principally from the provision of goods and services to
customers (eg trade receivables), but also incorporate other types of
financial assets where the objective is to hold these assets in order to
collect contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognised at fair
value plus transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Financial assets (continued)
Amortised Cost (continued)
Impairment provisions for current and non-current trade debtors are recognised
based on the simplified approach within IFRS 9 using a provision matrix in the
determination of the lifetime expected credit losses. During this process the
probability of the non- payment of the trade debtors is assessed. This
probability is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the trade debtors.
For trade debtors, which are reported net, such provisions are recorded in a
separate provision account with the loss being recognised separately within
the statement of comprehensive income. On confirmation that the trade debtor
will not be collectable, the gross carrying value of the asset is written off
against the associated provision.
Impairment provisions for receivables from related parties and loans to
related parties are recognised based on a forward looking expected credit loss
model. The methodology used to determine the amount of the provision is based
on whether there has been a significant increase in credit risk since initial
recognition of the financial asset. For those where the credit risk has not
increased significantly since initial recognition of the financial asset,
twelve month expected credit losses along with gross interest income are
recognised. For those for which credit risk has increased significantly,
lifetime expected credit losses along with the gross interest income are
recognised. For those that are determined to be credit impaired, lifetime
expected credit losses along with interest income on a net basis are
recognised.
The maximum exposure to loss arising from trade accounts receivable is equal
to their total carrying value as the loss allowance not recognised is
considered to be immaterial to the financial statements.
The Company's financial assets measured at amortised cost comprise trade and
other debtors, accrued income and cash and cash equivalents in the statement
of financial position. Cash and cash equivalents includes cash in hand,
deposits held at call with banks, other short term highly liquid investments
with original maturities of three months or less, and - for the purpose of the
statement of cash flows - bank overdrafts. Bank overdrafts are shown within
'Creditors: amounts falling due within one year' on the statement of financial
position.
Financial liabilities
The Company does not have any borrowings or liabilities held for trading nor
does it voluntarily classify any financial liabilities as being at fair value
through profit or loss.
Trade payables and other short-term monetary liabilities are initially
recognised at fair value and are subsequently carried at amortised cost using
the effective interest method.
· Financial guarantee contract liabilities
Financial guarantee contracts are recognised as a financial liability at the
time the guarantee is issued. The liability is initially measured at fair
value and subsequently at the higher of:
· the amount determined in accordance with the expected credit loss model
under IFRS 9 Financial Instruments; and
· the amount initially recognised less, where appropriate, the cumulative
amount of income recognised in accordance with the principles of IFRS 15
Revenue from Contracts with Customers.
The fair value of financial guarantees is determined based on the present
value of the difference in cash flows between the contractual payments
required under the debt instrument and the payments that would be required
without the guarantee, or the estimated amount that would be payable to a
third party for assuming the obligations. Where guarantees in relation to
loans or other payables of associates are provided for no compensation, the
fair values are accounted for as contributions and recognised as part of the
cost of the investment.
40. Accounting policies (continued)
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the
balance sheet when there is a legally enforceable right to offset the
recognised amounts and there is an intention to settle on a net basis, or
realise the asset and settle the liability simultaneously.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the
Company's obligations are discharged, cancelled or have expired. The
difference between the carrying amount of the financial liability derecognised
and the consideration paid and payable is recognised in profit or loss.
When the Company exchanges with the existing lender one debt instrument into
another one with substantially different terms, such exchange is accounted for
as an extinguishment of the original financial liability and the recognition
of a new financial liability. Similarly, the Company accounts for substantial
modification of terms of an existing liability or part of it as an
extinguishment of the original financial liability and the recognition of a
new liability. It is assumed that the terms are substantially different if the
discounted present value of the cash flows under the new terms, including any
fees paid net of any fees received and discounted using the original effective
interest rate is at least 10 per cent different from the discounted present
value of the remaining cash flows of the original financial liability. If the
modification is not substantial, the difference between:
(1) the carrying amount of the liability before the modification; and (2) the
present value of the cash flows after modification is recognised in profit or
loss as the modification gain or loss within other gains and losses.
Taxation
Current taxes are based on the results shown in the financial statements and
are calculated according to local tax rules, using tax rates enacted or
substantially enacted by the statement of financial position date.
Deferred tax is recognised on the difference between the carrying amount of an
asset or liability and the amount at which that asset or liability is assessed
for tax purposes (tax base). Historical accumulated tax losses would give rise
to a net deferred tax asset for the Company. However, due to the uncertainty
on future recovery the Directors considered it prudent not to recognise such
asset at this time.
Investments in associates and joint ventures
An associate is an entity over which the Company has significant influence and
that is neither a subsidiary nor an interest in a joint venture. Significant
influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control over those
policies.
The results and assets and liabilities of associates are incorporated in these
financial statements using the equity method of accounting, except when the
investment is classified as held for sale, in which case it is accounted for
in accordance with IFRS 5.
Under the equity method, an investment in an associate is recognised initially
in the consolidated statement of financial position at cost and adjusted
thereafter to recognise the Company's share of the profit or loss and other
comprehensive income of the associate or joint venture. When the Company's
share of losses of an associate exceeds the Company's interest in that
associate (which includes any long-term interests that, in substance, form
part of the Company's net investment in the associate or joint venture), the
Company discontinues recognising its share of further losses. Additional
losses are recognised only to the extent that the Company has incurred legal
or constructive obligations or made payments on behalf of the associate.
Share capital
Financial instruments issued by the Company are classified as equity only to
the extent that they do not meet the definition of a financial liability or
financial asset.
The Company's ordinary shares are classified as equity instruments.
Leases
Identifying Leases
The Company accounts for a contract, or a portion of a contract, as a lease
when it conveys the right to use an asset for a period of time in exchange for
consideration. Leases are those contracts that satisfy the following criteria:
(a) There is an identified asset;
(b) The company obtains substantially all the economic benefits from use of
the asset; and
(c) The company has the right to direct use of the asset.
The Company considers whether the supplier has substantive substitution
rights. If the supplier does have those rights, the contract is not identified
as giving rise to a lease. In determining whether the Company obtains
substantially all the economic benefits from use of the asset, the Company
considers only the economic benefits that arise use of the asset, not those
incidental to legal ownership or other potential benefits.
In determining whether the Company has the right to direct use of the asset,
the company considers whether it directs how and for what purpose the asset is
used throughout the period of use. If there are no significant decisions to be
made because they are pre-determined due to the nature of the asset, the
Company considers whether it was involved in the design of the asset in a way
that predetermines how and for what purpose the asset will be used throughout
the period of use. If the contract or portion of a contract does not satisfy
these criteria, the Company applies other applicable IFRSs rather than IFRS
16.
On initial recognition, the carrying value of the lease liability also
includes:
• amounts expected to be payable under any residual value guarantee;
• the exercise price of any purchase option granted in favour of the
Company if it is reasonable certain to assess that option;
• any penalties payable for terminating the lease, if the term of the
lease has been estimated on the basis of termination option being exercised.
Right of use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
• lease payments made at or before commencement of the lease;
• initial direct costs incurred; and
• the amount of any provision recognised where the company is
contractually required to dismantle, remove or restore the leased asset
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
When the Company revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted
using a revised discount rate. The carrying value of lease liabilities is
similarly revised when the variable element of future lease payments dependent
on a rate or index is revised, except the discount rate remains unchanged. In
both cases an equivalent adjustment is made to the carrying value of the
right-of-use asset, with the revised carrying amount being amortised over the
remaining (revised) lease term. If the carrying amount of the right-of-use
asset is adjusted to zero, any further reduction is recognised in profit or
loss.
Leases (continued)
Identifying Leases (continued)
When the Company renegotiates the contractual terms of a lease with the
lessor, the accounting depends on the nature of the modification:
• if the renegotiation results in one or more additional assets being
leased for an amount commensurate with the standalone price for the additional
rights-of-use obtained, the modification is accounted for as a separate lease
in accordance with the above policy.
• if the renegotiation results in a decrease in the scope of the lease,
both the carrying amount of the lease liability and right-of- use asset are
reduced by the same proportion to reflect the partial of full termination of
the lease with any difference recognised in profit or loss. The lease
liability is then further adjusted to ensure its carrying amount reflects the
amount of the renegotiated payments over the renegotiated term, with the
modified lease payments discounted at the rate applicable on the modification
date. The right-of-use asset is adjusted by the same amount.
For contracts that both convey a right to the company to use an identified
asset and require services to be provided to the Company by the lessor, the
Company has elected to account for the entire contract as a lease, i.e. it
does allocate any amount of the contractual payments to, and account
separately for, any services provided by the supplier as part of the contract.
Share-based payments
The Company operates a share based compensation plan whereby employees are
awarded equity settled share options by the parent company for services
provided to this Company. The Company has no obligation to settle the awards.
The fair value of the options at the date of grant is charged to profit or
loss over the vesting period with a corresponding entry in retained earnings.
Non-market vesting conditions are taken into account by adjusting the number
of equity instruments expected to vest at each reporting date so that,
ultimately, the cumulative amount recognised over the vesting period is based
on the number of options that eventually vest. Non-vesting conditions and
market vesting conditions are factored into the fair value of the options
granted. As long as all other vesting conditions are satisfied, a charge is
made irrespective of whether the market vesting conditions are satisfied. The
cumulative expense is not adjusted for failure to achieve a market vesting
condition or where a non-vesting condition is not satisfied.
Share-based payments (continued)
Where equity instruments are granted to persons other than employees, the
statement of comprehensive income is charged with the fair value of goods and
services received.
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 the statement of comprehensive
income over the remaining vesting period.
Retirement benefits: Defined contribution schemes
Contributions to defined contribution pension schemes are charged to profit or
loss in the year to which they relate.
Prepayments
Prepayments are recognised as assets in the statement of financial position
when:
- The Company has made an advance payment for goods or services to be received
in the future,
- It is probable that economic benefits associated with the prepayment will
flow to the Company, and
- the amount of the prepayment can be measured reliably.
Prepayments are initially measured at the amount paid, and are released over
the period over which the related goods or services are consumed or utilised.
Prepayments are presented as current assets in the statement of financial
position to the extent that they are expected to be realised within the
following 12 months. The portion of prepayments to be realised following one
year from the balance sheet date is presented in non-current assets.
Prepayments are derecognised when the related goods or services are received
or consumed, or when the right to receive the goods or service no longer
exists. Any remaining balance is removed from the statement of financial
position and the relevant expense is recognised in the statement of
comprehensive income.
Accrued income
Accrued income represents grant income that has become due to the Company but
has not been received at the reporting date.
Accrued income is recognised when:
- There is an unconditional right to receive the income
- The income can be reliably measured, and
- It is probable that the economic benefits associated with the income will
flow to the company.
Accrued income is presented in current assets as it is expected to be realised
within 12 months of the reporting date.
41. Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The company has
not made any significant judgements when applying the accounting policies. The
estimates that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are
discussed below.
Judgements and key areas of estimation uncertainty
Useful lives of property, plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives
of the assets: Short
leasehold Remaining
lease term
Plant and machinery Eight years to a
residual value Fixtures and fittings
Eight years to a residual value Motor
vehicles Four years
Useful lives are based on management's estimates of the period that the assets
will generate revenue, which are reviewed annually for continued
appropriateness and events which may cause the estimate to be revised. At the
end of the initial period, asset lives reach a residual value at which they
are either suitable for replacement or extended life after maintenance and
overhaul. The key areas of estimation uncertainty regarding depreciation is
the determination of the life time capacity; risk of obsolescence from
technological and regulatory changes; and required future capital expenditure
(refurbishment or replacement of key components).
Useful lives of intangible assets
The carrying values of these assets are tested for impairment when there is an
indication that the value of the assets might not be realisable or impaired
either at an individual cash generating unit level or for the Company as a
whole.
Patents are recognised at cost and development costs include both purchases
and capitalized employee costs directly attributable to the development.
The nature of the estimation uncertainty is both to the eventual integration
of such an intangible asset into commercial production and the successful cash
generation from such production. The underlying assumption is that impairment
occurs if either the achievement of project milestones that meet client's
roadmaps to commercialization are not met (and thereby indicate uncertainty
over the viability to start of production ("SOP")), or if the commercial
potential is reduced to such an extent that recovery of all invested amounts
are uncertain.
41. Critical accounting estimates and judgements (continued)
Useful lives of intangible assets
(continued)
The carrying amount is sensitive to both write-off of any intangible asset
that is impaired and to amortisation either before all criteria to amortise
are met, or after such criteria have been met. When carrying out impairment
tests these are based upon future cash flow forecasts and these forecasts
include management estimates. Future events or changes in the market could
cause the assumptions to change, therefore this could also have an adverse
effect on the future results of the Company.
Recognition of internally generated intangible assets arising from the
development phase of a project is dependent upon application of specific
criteria detailed in note 40. Management judgement is required as to the
extent that each of the criteria is met and to the point where development is
complete.
Research and Development
credits
Research and Development ("R&D") credits arising in the United Kingdom
under Corporation Tax Act 2009 Section 1308 claims are recognised upon success
and recognised within Accrued Income. Successful Section 1308 R&D credits
are considered to be UK Government grants arising as a direct result of the
Company's investment in its R&D assets and for which no further obligation
exists upon the Company. The R&D credits are charged to the P&L at the
same time that the asset is expensed to P&L, therefore amortised over 8
years as their benefit is derived over the use of the Company's R&D
assets.
Expected credit losses and asset
impairment
Expected credit losses are assessed under IFRS9 using reasonable information
about past events and current conditions and forecasts of future events. Asset
impairment considers the likely returns from financial assets owned by the
Group and their recoverability, based on market values and management's
judgement of any other relevant factors.
Please refer to Note 49 for further detail.
Incremental borrowing rate used to measure lease
liabilities
Where the interest rate implicit in the lease cannot be readily determined,
lease liabilities are discounted at the lessee's incremental borrowing rate.
This is the rate of interest that the lessee would have to pay to borrow over
a similar term, and with a similar security, the funds necessary to obtain an
asset of a similar value to the right-of-use asset in a similar economic
environment. This involves assumptions and estimates, which would affect the
carrying value of the lease liabilities (note 48) and the corresponding
right-of-use assets (note 44).
To determine the incremental borrowing rate the Company uses recent
third-party financing as a starting point, and adjusts this for conditions
specific to the lease such as its term and security.
The Company used incremental borrowing rates specific to each lease which
ranged between 4.0% and 7.25%. A 5% increase in the rate would cause the lease
liability to reduce by £830,676 with a corresponding movement in the 'cost'
of the right-of-use asset which would reduce the associated amortisation.
Share Options - estimates and
assumptions
Key sources of estimation uncertainty the valuation of share options issued in
the year has been based on a Black Scholes model for options with no market
based vesting conditions and a Monte Carlo simulation for options with market
based vesting conditions. The inputs to both models represent the Director's
best estimates for the likely exercise behaviour of the option holders. The
expected future share price volatility was estimated based on the historical
volatility of the Company's share price and a representative peer group of
similar companies. For the share options with market based vesting conditions
an independent specialist consultant was engaged to simulate the impact on the
market-based conditions on the fair value of the options issued.
42. Intangible assets
Patents and Development Software Total
licences costs
Cost £ £ £ £
At 1 April 2022 456,349 5,019,108 227,836 5,703,293
Additions 534,529 1,884,088 439,506 2,858,123
Impairment - (107,166) - (107,166)
At 31 March 2023 990,878 6,796,030 667,342 8,454,250
Accumulated amortisation
At 1 April 2022 51,720 - 80,786 132,506
Amortisation for the year 68,874 - 39,047 107,921
At 31 March 2023 120,594 - 119,833 240,427
Net book value
Net book value at 31 March 2023 870,284 6,796,030 547,509 8,213,823
Patents and Development Software Total
licences costs
Cost £ £ £ £
At 1 April 2021 79,168 3,253,554 110,231 3,442,953
Additions 377,181 1,765,554 117,605 2,260,340
At 31 March 2022 456,349 5,019,108 227,836 5,703,293
Accumulated amortisation
At 1 April 2021 24,168 - 54,629 78,797
Amortisation for the year 27,552 - 26,157 53,709
At 31 March 2022 51,720 - 80,786 132,506
Net book value
Net book value at 31 March 2022 404,629 5,019,108 147,050 5,570,787
43. Tangible fixed assets
Short Plant & Fixtures & Motor Assets under Total
leasehold machinery fittings vehicles construction
£ £ £ £ £ £
Cost
At 1 April 2022 492,028 286,044 689,806 147,844 1,938,441 3,554,163
Additions 1,122,982 1,294,569 1,204,865 36,144 1,724,230 5,382,790
Impairment losses - (137,668) - - - (137,668)
Disposals - - - - - -
At 31 March 2023 1,615,010 1,442,945 1,894,671 183,988 3,662,671 8,799,285
Accumulated depreciation
At 1 April 2022 299,326 86,730 264,167 106,956 - 757,179
Depreciation for the year 111,213 305,723 201,266 17,705 - 635,907
At 31 March 2023 410,539 392,453 465,433 124,661 - 1,393,086
Net book value
Net book value at 31 March 2023
1,204,471 1,050,492 1,429,238 59,327 3,662,671 7,406,199
Short Plant & Fixtures & Motor Assets under Total
leasehold machinery fittings vehicles construction
£ £ £ £ £ £
Cost
At 1 April 2021 290,932 113,156 323,838 110,044 - 837,970
Additions 201,096 172,888 365,968 40,200 1,938,441 2,718,593
Disposals - - - (2,400) - (2,400)
At 31 March 2022 492,028 286,044 689,806 147,844 1,938,441 3,554,163
Accumulated depreciation
At 1 April 2021 290,932 70,078 177,574 100,907 - 639,491
Depreciation for the year 8,394 16,652 86,593 6,549 - 118,188
Depreciation eliminated on disposal - - - (500) - (500)
At 31 March 2022 299,326 86,730 264,167 106,956 - 757,179
Net book value
Net book value at 31 March 2022
192,702 199,314 425,639 40,888 1,938,441 2,796,984
44. Right-of-use assets
The net book value and depreciation charge for right-of-use assets by class of
underlying asset is as follows:
Motor
Buildings Restorations Equipment vehicles Total
£ £ £ £ £
Cost
At 1 April 2022 2,363,240 - 27,021 169,120 2,559,381
Additions 4,302,717 - 124,707 46,050 4,473,474
Disposals (566,093) - (27,021) - (593,114)
At 31 March 2023 6,099,864 - 124,707 215,170 6,439,741
Accumulated amortisation
At 1 April 2022 267,833 - 20,872 12,474 301,179
Depreciation for the year 821,204 - 5,539 60,720 887,463
Depreciation eliminated on disposal (323,320) - (21,215) - (344,535)
At 31 March 2023 765,717 - 5,196 73,194 844,107
Net book value
At 31 March 2023 5,334,147 - 119,511 141,976 5,595,634
Motor
Buildings Restorations Equipment vehicles Total
£ £ £ £ £
Cost
At 1 April 2021 530,867 - 27,021 - 557,888
Additions 1,832,373 - - 169,120 2,001,493
At 31 March 2022 2,363,240 - 27,021 169,120 2,559,381
Accumulated amortisation
At 1 April 2021 105,185 - 18,820 - 124,005
Amortisation for the year 162,648 - 2,052 12,474 177,174
At 31 March 2022 267,833 - 20,872 12,474 301,179
Net book value
At 31 March 2022 2,095,407 - 6,149 156,646 2,258,202
45. Investment in subsidiary undertakings
Investments in Company undertakings are stated at cost.
Year ended 31 Year ended 31
Cost March 2023 March 2022
£ £
At 1 April 173 88
Additions - 85
At 31 March 173 173
The Company's subsidiary undertakings at the year-end are as follows:
Country of Registered Principal Shareholding
Investment incorporation office activity 2023 2022 Interest
Saietta Sunderland Plant Limited (formerly Saietta Motorcycles Limited) England and Wales Building 210 Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE Trading 100% 100% Direct
Saietta LDE Limited (formerly Saietta Racing Limited) England and Wales Building 210 Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE Dormant 100% 100% Direct
Propel B.V. Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Discontinued 100% 100% Indirect
Saietta Holding B.V. Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Trading 100% N/A Indirect
Saietta Traction Holdings B.V. Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Trading 100% N/A Indirect
Saietta RetroMotion B.V. (formerly Saietta Refit B.V.) Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Discontinued 100% N/A Indirect
Saietta Europe B.V. Netherlands Watermanstraat 40, 7324AH Apeldoorn, Netherlands Trading 100% N/A Indirect
Saietta RetroMotion B.V. ceased operations in January 2023.
Propel B.V. discontinued operations in February 2023 and is presented as a
disposal group held for sale as at 31 March 2023.
46. Inventories
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Raw materials and work in progress 132,298 297,585
Finished goods include an amount of £16,000 (2022: £31,510) carried at fair
value less costs to sell.
47. Financial and non-financial assets
(a) Cash and cash equivalents Year ended 31 Year ended 31
March 2023 March 2022
£ £
Cash in hand and at bank 7,084,691 17,883,118
(b) Trade and other receivables Year ended 31 Year ended 31
March 2023 March 2022
Non-current: £ £
Other debtors 134,526 734,526
134,526 734,526
Current:
Trade debtors 1,072,940 670,945
Other debtors 485,771 1,742,568
R&D tax credit 775,481 574,368
VAT recoverable 533,539 244,632
2,867,731 3,232,513
3,002,257 3,967,039
The ECL model is required to be applied to the intercompany loans receivable
from subsidiary companies, which are held at amortised cost. Please refer to
note 1 of the parent company financial statements for the detail on the impact
and the financial assets accounting policy included in this note.
(c) Prepayments and accrued income Year ended 31 Year ended 31
March 2023 March 2022
Non-current: £ £
Prepayments and accrued income 119,590 101,825
119,590 101,825
Current:
Prepayments and accrued income 3,017,464 886,675
3,017,464 886,675
3,137,054 988,500
(d) Amounts due from subsidiaries Year ended 31 Year ended 31
March 2023 March 2022
Non-current: £ £
Amounts due from subsidiaries 1,774,525 1,700,491
1,774,525 1,700,491
Current:
Amounts due from subsidiaries 2,612,104 5,473,694
2,612,104 5,473,694
4,386,629 7,174,185
Included within non-current amounts due from subsidiaries is a balance of
£1,774,525 (2022: £1,700,491) due in respect of a loan extended to
subsidiary, Saietta Traction Holdings B.V. on 8 November 2021. The loan is
unsecured and repayable on demand after 5 years from the date on which the
loan was extended. Interest on the loan accrues at a rate of 0.5% per annum.
Remaining amounts due from subsidiaries are repayable on demand and are
unsecured. The Company balance sheet includes intercompany loans with two
subsidiaries of the Company that have impairments in the year: specifically,
Propel BV, where an industrialisation partner is being sought and Saietta
Europe BV, where activities were transferred to ConMet. The impairments in the
subsidiaries themselves are indicative that sufficient funds will not be
generated within those subsidiaries to extinguish the intercompany balances
with the Company. The impairments have been determined after applying discount
rates appropriate for the risk profile of future economic flows from the
potential arrangements with industrialisation partners in the case of Propel
BV and the ConMet licence payments in the case of Saietta Europe BV.
Specifically discount rates of 10% and 11.8% have been applied and impairments
with a value of £6,275,604 and £6,536,249 made for Propel BV and Saietta
Europe BV respectively.
The impaired value for the intercompany loan from Saietta Europe BV was
determined in accordance with a model of its value in use whilst the impaired
value for the intercompany loan from Propel BV was determined according to
recoverable amount.
(e) Other financial assets Year ended 31 Year ended 31
March 2023 March 2022
Non-current: £ £
Loan receivable from associate 500,000 -
The loan to associate Saietta VNA (Private) Limited is for up to £1,000,000
and can be repaid at any time with one month's notice. The term is until April
2028 and the interest rate is 7.5% starting to accrue in April 2024. A further
£500,000 is drawn down in August 2023.
48. Trade and other payables
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Current:
Trade creditors 1,056,512 867,043
Social security and other taxes 200,532 1,489,057
Pension due 58,225 20,224
Accruals and deferred income 355,613 348,612
Other creditors 790,194 2,289,319
2,461,076 5,014,255
Lease liabilities
Year ended 31 Year ended 31
March 2023 March 2022
Current: £ £
Lease liabilities 1,086,440 259,630
1,086,440 259,630
Non-current:
Lease liabilities 4,975,575 2,029,485
4,975,575 2,029,485
6,062,015 2,289,115
Included within lease liabilities are the following amounts:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Due within one year 1,086,440 259,630
Due in more than one but not more than two years 773,474 366,593
Due in more than two but not more than five years 2,131,345 907,618
Due after five years 2,070,756 755,274
6,062,015 2,289,115
Liabilities for financial guarantees
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Current:
Liabilities for financial guarantees - 41,833
49. Financial instruments
Risk Management objectives
The Board has overall responsibility for the determination of the Company's
risk management objectives and policies. The overall objective of the Board is
to set policies that seek to reduce risk as far as possible without unduly
affecting the company's competitiveness and flexibility. All funding
requirements and financial risks are managed based on policies and procedures
adopted by the Board of Directors.
The Company is exposed to the following financial risks:
a. Credit risk
b. Liquidity risk
c. Interest rate risk
(i) Principal financial instruments
The Company is exposed to risks that arise from its use of financial
instruments. The principal financial instruments used by the company, from
which financial instrument risk arises, are as follows:
a. Trade and other receivables
b. Cash and cash equivalents
c. Trade and other payables
d. Fixed rate hire purchase agreement (classified within lease liabilities)
e. Investments in unquoted equity securities
(ii) Financial instruments by category
Financial assets
Amortised cost
2023 2022
£ £
Cash and cash equivalents 7,084,691 17,883,118
Trade and other receivables 1,693,237 3,148,039
Amounts due from subsidiaries 4,386,629 7,174,185
Loan to associate 500,000 -
Total financial assets 13,664,557 28,205,342
Financial liabilities Fair value through
Amortised cost profit and loss
2023 2022 2023 2022
£ £ £ £
Trade and other payables 2,202,319 3,156,362 - -
Lease liabilities 6,062,015 2,289,115 - -
Liabilities for financial guarantees - - - 41,833
Total financial liabilities 8,264,334 5,445,477 - 41,833
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash
equivalents, trade and other receivables, trade and other payables, and loans
and borrowings.
Due to their short-term nature, the carrying value of cash and cash
equivalents, trade and other receivables, and trade and other payables
approximates their fair value.
(iv) Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is
provided below.
Financial liabilities Level 1 Level 2 Level 3
2023 2022 2023 2022 2023 2022
£ £ £ £ £ £
Liabilities for financial guarantees
- - - - - 41,833
There were no transfers between levels during the year.
The valuation techniques and significant unobservable inputs used in
determining the fair value measurement of level 2 and level 3 financial
instruments, as well as the inter-relationship between key unobservable inputs
and fair value, are set out in the table below.
Financial instrument Valuation technique Significant Inter-relationship
used unobservable inputs between key
unobservable inputs
and fair value
Equity Recognised at cost and adjusted thereafter for the post- acquisition change in Not applicable. Not applicable.
the investor's share of the investee's net assets.
investments
Liabilities for Discounted cashflow model using the difference between market rates of Not applicable. Not applicable.
interest and the rate per the loan note instrument adjusted for probability of
default.
financial
guarantees
(iv) Financial instruments measured at fair value (continued)
There were no changes to the valuation techniques during the year.
The reconciliation of the opening and closing fair value balance of level 3
financial instruments is provided below:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Balance at beginning of financial year 41,833 -
Additions to financial liabilities during the year - 78,058
Amortisation recognised (41,833) (36,225)
Balance at end of financial year - 41,833
On 1 December 2021, the Company entered into an agreement to guarantee the
obligations of its transport provider, Livingstone Aviation Limited in
exchange for preferential access to their services.
Under IFRS9, the financial guarantee contracts was treated as a financial
liability and was initially recognised at fair value. Subsequently, the
financial guarantee contract was measured at the higher of the IFRS 9 expected
credit loss (ECL) allowance and the amount initially recognised less any
cumulative amount of income/amortisation recognised.
Subsequent to year end Livingstone Aviation Limited disposed of its aircraft
and at that moment the Company was released fully from the financial
guarantee.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Company's
risk management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Company's finance function. The Board receives monthly
reports from the Company Financial Controller through which it reviews the
effectiveness of the processes put in place and the appropriateness of the
objectives and policies it sets. The Company's internal auditors also review
the risk management policies and processes and report their findings to the
Audit & Risk Committee.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Company's competitiveness and
flexibility. Further details regarding these policies are set out below:
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in
meeting the obligations associated with its financial liabilities that are
settled by delivering cash or other financial assets. The ability to do this
relies on the Company expanding its customer base, collecting its trade
receivable, completing financings in a timely manner and by maintaining
sufficient cash and cash equivalents on hand.
The following tables show the contractual maturities of financial liabilities:
As at 31 March 2023 Total Less than 1 year Between 1 and 5 years Over 5 years
£ £ £ £
Trade and other payables 1,846,706 1,845,706 - -
Lease liabilities 7,027,635 1,331,773 3,498,728 2,197,134
Accrued liabilities 355,613 355,613 - -
9,229,954 3,534,092 3,498,728 2,197,134
As at 31 March 2022 Total Less than 1 year Between 1 and 5 years Over 5 years
£ £ £ £
Trade and other payables 3,156,362 3,156,362 - -
Accrued liabilities 348,612 348,612 - -
Lease liabilities (restated)¹ 2,742,432 344,202 1,360,636 1,037,594
Liabilities for financial guarantees 41,833 - 41,833 -
6,289,239 3,849,176 1,402,469 1,037,594
1. The Liquidity risk table has been restated to include the undiscounted
contractual cashflows for the lease liabilities for 2022 which were omitted in
the prior year.
Liquidity risk arises from the Company's management of working capital and the
continued availability of its other funding facilities. It is the risk that
the Company will encounter difficulty in meeting its financial obligations as
they fall due. The company actively manages its cash generation and maintains
sufficient cash holdings to cover its immediate obligations but is always in
close contact with key shareholders who would assist the Company if required.
Market risk
The Company's products are focused on meeting certain current or expected
requirements of individual markets and these requirements could evolve before
the Company is able to complete its licensing agreements.
The Company periodically reviews the markets, and demands expected of products
to minimize the risk to its business. It also reviews new markets to identify
future demand outside of the initial intended markets. As the Company releases
products, it will continue to carry out an assessment of the market risk it is
exposed to and will carry out sensitivity analysis on the impact that each
risk will have on the product(s)' performance and the wider impact on the
Company's income statement and its financial position.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or
counterparty to a financial instrument or customer contract fails to meet its
obligations. The Company is mainly exposed to credit risk from credit sales.
At 31 March 2023 the company has net trade receivables of £1,072,940 (2022:
£670,945 (last year disclosed as £734,526)).
The Company is exposed to credit risk in respect of credit sales such that, if
one or more customers encounter financial difficulties, this could materially
and adversely affect the company's financial results. The Company attempts to
mitigate credit risk by assessing the creditworthiness of customers and
closely monitoring payment history. In a limited number of customer contracts,
an initial payment is secured which helps to mitigate the overall credit risk
of a project.
The Company applies the IFRS 9 simplified approach to measuring expected
credit losses using a lifetime expected credit loss provision for trade
receivables and contract assets. To measure expected credit losses on a
collective basis, trade receivables and contract assets are grouped based on
similar credit risk and aging. The contract assets have similar risk
characteristics to the trade receivables for similar types of contracts.
The following provision matrix is used to determine the initial expected
credit losses. The historical loss rates are then adjusted for current and
forward-looking information on macroeconomic factors affecting the Company's
customers. The Company has identified the gross domestic product (GDP),
unemployment rate and inflation rate as the key macroeconomic factors in the
countries where the Company operates.
None past due 2.3% of carrying value (2022: 1%)
30 days past due 17% of carrying value (2022: 8.6%)
30-60 days past due 100% of carrying value (2022: 9.6%)
60-90 days past due 100% of carrying value (2022: 100%)
>90 days past due 100% of carrying value (2022: 100%)
Although the Company has its own terms and conditions with a 30 day payment
expectation, under some contracts it accepts longer terms with suitable
customers. Should a trade debtor exceed the payment terms, then the Company
engages to ensure swift payment.
The maximum exposure to loss arising from trade accounts receivable is equal
to their total carrying value.
Credit risk also arises from cash and cash equivalents and deposits with banks
and financial institutions. For banks and financial institutions, only
independently rated parties with minimum rating "A" are accepted.
The maximum exposure to credit risk is as follows: Year ended 31 Year ended 31
March 2023 March 2022
£ £
Cash on deposit 7,084,691 17,883,118
Trade receivables 1,072,940 670,945
Other receivables 620,297 2,477,094
Amounts owed by subsidiaries 4,386,629 7,174,185
Loan advanced to associate 500,000 -
13,664,557 28,205,342
The ageing of trade receivables at the year-end date was: Year ended 31 Year ended 31
March 2023 March 2022
£ £
Current 1,082,162 518,690
More than 30 days past due - 110,600
More than 60 days past due 7,121 13,614
More than 120 days past due 17,916 28,041
1,107,199 670,945
Balances with maturity requiring a credit loss provision were individually
reviewed and the ultimate conclusion that there would be full recoverability
thereby determined.
The Company has made unsecured loans to its subsidiary companies. Although the
loans are repayable on demand, they are unlikely to be repaid until the
projects become successful and the subsidiaries start to generate revenues.
The method of assessment of the expected credit loss arising on intercompany
loans is detailed in note 49 of the Company financial statements.
The maximum exposure to loss arising from amounts owed by subsidiaries is
equal to their total carrying value. The loan receivable from Propel B.V. has
been fully impaired by £6,275,604. The loan receivable from Saietta Europe
B.V. has been impaired by £6,536,249.
Capital risk management
Whilst the Group has no bank debt, it's capital structure comprises cash from
the issuance of equity both at the time of its initial public offering and
subsequently and finance lease obligations arising from its right of use
assets. This constitutes the capital under management. The company has low
gearing with a debt equity ratio of 12%.
The Company's objectives when maintaining capital are to safeguard the
entity's ability to continue as a going concern, so that it can continue to
provide returns for shareholders and benefits for other stakeholders; and to
provide an adequate return to shareholders by pricing products and services
commensurately with the level of risk.
All working capital requirements are financed from existing cash.
The Company sets the amount of capital it requires in proportion to risk. The
Company manages its capital structure and makes adjustments to it in the light
of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the
company may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares, or sell assets to reduce debt.
Interest rate risk
The Company's activities expose it to the financial risks of interest rates.
The Company reviews its risk management strategy on a regular basis and if
appropriate it will enter into derivative financial instruments in order to
manage interest rate risk. At present, the Company does not have any financial
leases or borrowings that have a floating interest rate, however should it
take on such facilities where this is the case, then it will review the risk
exposure that it has.
The Company analyses the interest rate exposure on at regular intervals. A
sensitivity analysis is performed by applying a simulation technique to the
liabilities that represent major interest-bearing positions. Various scenarios
are run taking into consideration refinancing, renewal of the existing
positions, alternative financing and hedging. Based on the simulations
performed, the impact on profit or loss and net assets of a 100 basis-point
shift (being the maximum reasonable expectation of changes in interest rates)
would not have any financial impact as the Company does not have any
interest-bearing debt.
All borrowing is approved by the Board of Directors.
Foreign currency risk
Foreign exchange risk arises when the Company enters into transactions
denominated in a currency other than its functional currency. The Company's
policy is, where possible, to settle liabilities denominated in its functional
currency with the cash generated from its own operations in that currency.
Where the Company has liabilities denominated in a currency other than its
functional currency (and has insufficient reserves of that currency to settle
them), cash already denominated in that currency will, where possible, be
transferred from elsewhere in the Group.
In order to monitor the continuing effectiveness of this policy, the Board
receives a monthly forecast, analysed by the major currencies held by the
Company, of liabilities due for settlement and expected cash reserves.
The Company aims to fund expenses and investments in the respective currency
and to manage foreign exchange risk at a local level by matching the currency
in which revenue is generated and expenses are incurred.
The following table sets forth information relating to foreign currency
exposure as at 31 March 2023:
Year ended 31 Year ended 31
March 2023 March 2022
Euros Euros
Financial assets 1,774,525 1,700,491
Financial liabilities (85) (85)
Net exposure asset 1,774,440 1,700,406
An increase of 5% in the Euro - GBP exchange rate would have the effect of the
GBP amount by £89,380.
50. Investment in associate
Year ended 31 Year ended 31
March 2023 March 2022
Saietta VNA (Private) Limited £ £
Investment held at cost 267,784 -
During the year, the company obtained a 49% investment in Saietta VNA
(Private) Limited.
51. Other gains and losses
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Loss on other receivable 600,000 -
Saietta Group Plc entered into an agreement to guarantee the loan for the
purchase of an aircraft, in return receiving preferential rates for the use
thereof. The aircraft was sold in April 2023 and the deposit of £600,000 paid
was not recoverable.
52. Leases
In the capacity as lessee
The Company's leases are for offices and manufacturing space as well as the
purchase of capital equipment used in the day to day operating activities of
the business. For all property leases, the period rent is fixed over the lease
term.
The Company also leases certain items of plant and equipment. In some
contracts for services with distributors, those contracts contain a lease of
vehicles. Leases of plant, equipment and vehicles comprise only fixed payments
over the lease terms.
All current lease payments are fixed in nature and not subject to any clauses
which allow these payments to vary under certain conditions.
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Interest expense 170,755 18,609
Principal payments 486,227 187,522
656,982 206,131
The Company sometimes negotiates break clauses in its property leases. On a
case-by-case basis, the Company will consider whether the absence of a break
clause would exposes the company to excessive risk. Typically factors
considered in deciding to negotiate a break clause include:
· the length of the lease term;
· the economic stability of the environment in which the
property is located; and
· whether the location represents a new area of operations for
the Company.
At 31 March 2023 the carrying amounts of lease liabilities are reduced by the
amount of payments that would be avoided from exercising break clauses because
on both dates it was considered reasonably certain that the Company would not
exercise its right to exercise any right to break the lease.
53. Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share capital Nominal value of share capital subscribed for.
Share premium Amount subscribed for share capital in excess of nominal value.
Share options reserve Used to record the assessed fair value of equity-settled options issued as
share based payment for services received by the consolidated entity.
Accumulated losses All other net gains and losses and transactions with owners (e.g. dividends)
not recognised elsewhere.
54. Share capital
Share capital and share premium
Year ended 31 Year ended 31
Allotted, issued and fully paid: March 2023 March 2022
Number: Type: Nominal £ £
value:
102,917,675 Ordinary Shares £0.0011 113,209 -
85,051,953 Ordinary Shares £0.0011 - 93,557
Share Share
Number capital premium Total
of shares £ £ £
Balance at 1 April 2021 519,205,742 51,921 - 51,921
Consolidation of shares (472,005,220) - - -
Issue of shares 29,320,940 32,245 35,145,382 35,177,627
AIM listing costs offset against share premium - - (2,868,972) (2,868,972)
Shares issued on exercise of employee share options 5,530,491 6,091 58,165 64,256
Shares issued on conversion of convertible loan notes 3,000,000 3,300 2,336,700 2,340,000
Balance at 31 March 2022 85,051,953 93,557 34,671,275 34,764,832
Issue of shares 17,101,450 18,812 23,581,189 23,600,001
Share issue costs offset against share premium - - (1,590,469) (1,590,469)
Shares issued on exercise of employee share options 764,272 840 8,331 9,171
Balance at 31 March 2023 102,917,675 113,209 56,670,326 56,783,535
The cancellation of share premium was approved by shareholder resolution on 25
March 2021.
On 18 June 2021, the Company passed a resolution to consolidate its Ordinary
share capital. Prior to the consolidation, there were 519,205,742 Ordinary
shares with a nominal value of £0.0001 per share. In exchange for these
share, existing shareholders were issued 47,200,522 Ordinary shares with a
nominal value of £0.0011.
On 7 July 2021, the Company raised gross proceeds of £35,177,628 through the
placing of 29,314,690 new Ordinary shares (the "Placing Shares") with new and
existing investors at a price of £1.20 per Placing Share. An amount equal to
the nominal value of the Placing Shares was credited to share capital, with
the proceeds raised in excess of this nominal value being credited to share
premium. The Placing Shares rank pari passu with the Company's existing
ordinary shares.
On 7 July 2021, upon admission to the AIM market, 9,919,457 share options
automatically vested pursuant to the terms of their issue. Of these shares, a
total of 5,530,491 shares ("New Ordinary Shares") were exercised immediately
by the option holders. Of these, 4,437,821 options were exercised by the
option holders at a strike price of £0.012 resulting in the issue of
4,437,821 new Ordinary shares with a nominal value of £0.011p. As a result,
£4,882 was credited to share capital and the amount received in excess of the
nominal value, £48,372, was credited to share premium.
The remaining 1,092,670 options were exercised by the option holders at a
strike price of £0.01 resulting in the issue of 1,092,670 new Ordinary shares
with a nominal value of £0.011p. As a result, £1,202 was credited to share
capital and the amount received in excess of the nominal value, £9,725, was
credited to share premium.
The New Ordinary Shares rank pari passuwith the Company's existing ordinary
shares.
On 30 March 2022, 6,250 share options vested pursuant to the terms of their
issue. These options were exercised by the option holders at a strike price of
£0.012 resulting in the issue of 6,250 new Ordinary shares with a nominal
value of £0.011p. As a result,
£7 was credited to share capital and the amount received in excess of the
nominal value, £68, was credited to share premium.
On 3 August 2022, the Company raised net proceeds of £22,316,001, after
broker fees and other expenses of £1,284,000, through the placing of
17,101,450 new Ordinary Shares of £0.0011 each in the capital of the Company
(the "Placing Shares") with new and existing investors at a price of £1.38
per share. An amount equal to the nominal value of the Placing Shares was
credited to share capital, with the proceeds raised in excess of this nominal
value being credited to share premium.
The Placing Shares rank pari passuwith the Company's existing Ordinary shares.
During the period, 764,272 share options which had vested pursuant to the
terms of their issue were exercised by option holders at a strike price of
£0.012 resulting in the issue of 764,272 new Ordinary shares ("New Ordinary
Shares") with a nominal value of
£0.011p. As a result, £840 was credited to share capital and the amount
received in excess of the nominal value, £8,331, was credited to share
premium.
The New Ordinary Shares rank pari passuwith the Company's existing ordinary
shares.
54. Share-based payments
Share option
reserve
£
Balance at 1 April 2021 7,318,820
Share based payments 4,899,171
Balance at 31 March 2022 12,217,991
Share based payments 2,397,620
Balance at 31 March 2023 14,615,611
Common share options
Options have been granted to shareholders, directors and employees to purchase
common shares. These options generally vest over a period of up to four years
from grant date and are exercisable in the event of a listing.
Details of the common option plans are as follows:
For the year ended 31 March 2023 For the year ended 31 March 2022
Weighted Weighted
average average
Number exercise price Number exercise price
# £ # £
Outstanding at beginning of year 6,233,273 0.012 10,826,072 0.010
Granted 3,000,000 0.012 8,577,394
Lapsed (30,000) 0.012 (616,370)
Vested (3,277,030) 0.012 (12,553,823)
Outstanding at end of year 5,926,243 0.012 6,233,273 0.012
The fair value of each option granted was estimated on the grant date using
the Black-Scholes, and where appropriate the Monte Carlo simulation
option-pricing model with the following average assumptions:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Exercise price at grant date £0.01 £0.01
Expected life (in years) 2 3
Risk-free interest rate 3.71% 0.58%
Expected volatility 85% 87.05%
Weighted average share price 152.99 pence 92.56 pence
The expected volatility is based on the historic volatility (based on the
share price) of a comparator company with publicly available share prices.
The risk-free interest rate is based on the average return on 2 year UK Gilts.
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Cost of options vesting in the year 2,397,620 4,899,171
In the year ended 31 March 2023 an amount of £61,676 (2022: £161,951),
representing the charge for options related to employees whose costs are
allocated to research and development and capitalised as internally generated
development costs was included in additions to intangible assets, whilst the
remainder of the cost of options vesting was charged to the profit and loss
account. A further amount of £1,590,469 (2022: £330,886) was debited in
respect of share issue costs offset against share premium.
The total cost of options vesting in the period has been classified as a
movement in the share option reserve.
56. Related party transactions
During the year the Company recharged the following costs to its subsidiaries:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Saietta Sunderland Plant Limited 1,394,430 -
Propel B.V. 3,640 10,765
Saietta Europe B.V. 201,462 6,082
1,599,532 16,847
Amounts owed by the Company's subsidiaries are disclosed in note 47.
The Directors consider that no one party controls the Company.
57. Capital commitments
At 31 March 2023, the Company has capital commitments as follows:
Year ended 31 Year ended 31
March 2023 March 2022
£ £
Contracted for but not provided in these financial statements
Contracted amounts for the purchase of assets 1,094,320 1,100,000
Loan to associate 500,000 -
1,594,320 1,100,000
Capital commitments comprises contracted amounts for the purchase of assets
and a loan contract with associate.
The Company is commited to advancing a further £500,000 to its associate,
Saietta VNA (Private) Limited, in August 2023. This amount is due at the
earlier of available cash or 5 years (April 2028).
58. Events after the reporting date
On 3rd April 2023, the Company received an order for 3,000 eDrives from Ayro
Inc. with a value of approximately £5 million. On 17th April 2023, Mr Wicher
Kist resigned as a director of Saietta Group Plc.
On 1st August 2023 the Company signed a suite of contracts to replace the
Joint Commercialisation and Development Agreement ("JCDA") with Consolidated
Metco Inc ("ConMet").
Under these new arrangements ConMet and its affiliates paid Saietta
approximately €3.3 million comprised of:
o An upfront cash fee of approximately €2.7 million as consideration for
the assignment of jointly developed intellectual property ("IP")
o A further sum of €0.6 million for an agreed list of machinery and
equipment being transferred by Saietta
The parties also entered into a licence agreement under which Saietta has
granted exclusive and non-exclusive licences over its existing IP in
consideration for the payment of 2.5% of an agreed uplift to the product cost
of future IWG and IWM sales incorporating Saietta's licensed IP, capped at
€20 million.
59. Related parties
Trading transactions Year ended 31 Year ended 31
March 2023 March 2022
£ £
Saietta VNA Private Limited
Revenue 823,866 -
Loans to related parties
Saietta VNA Private Limited 500,000 -
The loan to associate Saietta VNA (Private) Limited is for up to £1,000,000
and can be repaid at any time with one month's notice. The term is until April
2028 and the interest rate is 7.5% starting to accrue in April 2024. A further
£500,000 is drawn down in August 2023.
Saietta Sunderland Plant Limited 1,601,845 -
Saietta Traction Holdings B.V. 1,774,525 1,700,491
Saietta Europe B.V. 1,011,714 2,800,879
Propel B.V. - 2,672,874
With the exception of the loan to Saietta Traction Holdings B.V. which earns
interest at 0.5%, these loans are non-interest bearing.
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