Saietta Group Full Year Results
03/08/2022 16:40
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RNS Number : 8277U Saietta Group PLC 03 August 2022
Wednesday 3 August 2022
Saietta Group plc
("Saietta", "the Company" or "the Group")
Full Year Results
Saietta Group plc (AIM SED), the international electric powertrain group,
announces its maiden full year results for the 12 months ended 31 March 2022
following its successful Admission to AIM in July 2021 ("Admission").
During the period, Saietta has continued to develop and commercialise its
electric drive solutions technology. The Admission to AIM has provided the
Company with the opportunity to execute its growth plans including
establishing a manufacturing facility and a pilot production facility which is
expected to expand its UK-based production capacity to 100,000 units per annum
by mid-2024.
At Admission, Saietta had 37 employees in one location since when it has grown
in capability and scale and now encompasses 5 divisions in 7 locations across
the UK and Netherlands with c. 180 employees.
Wicher (Vic) Kist, Chief Executive Officer of Saietta, commented:
"I am delighted to announce Saietta's first full year results as a public
company following our Admission to AIM last year. The IPO proceeds have
enabled us to dramatically accelerate the growth and development of the
business. Since the IPO we have added a world class factory, entered the bus
and truck markets, added an in-house power electronics capability, launched a
marine division, and evolved our AFT motor into a fully integrated E-drive
system.
"The scope of these developments reflects the range of exciting market
opportunities presented by the electrification of the global automotive and
marine industries. Our aim is to grow into one of the leading e-drive
businesses and be a showcase of engineering and production excellence as we
help the world transition to zero emission mobility.
"We are increasingly confident about the opportunity for Saietta and continue
to focus on the rapid scale-up of our business to allow us to continue to
accelerate our growth."
Financial Highlights
· Turnover increased fourfold to £3.6 million (2021: £0.9m)
· Grant income of £0.7 million (2021: £0.02m) meaning a total
Group income of £4.3 million (2021: £0.9m)
· Gross Profit increased by c.150% to £1.7 million (2021: £0.7m)
· Adjusted EBITDA loss for the year of £4.4 million (2021: £1.0m
loss)
· Cash and cash equivalents at 31 March 2022 of £18.4 million
(2021: £2.9m)
Operational Highlights
· Developed from a one location business with 37 employees into a
business with 5 divisions in 7 locations across the UK and Netherlands and
with c. 180 employees
· Acquisition of e-Traction Europe B.V. (subsequently renamed
Saietta Europe B.V.) on 11 November 2021 to accelerate Saietta's growth
strategy by adding new commercial and technical capabilities in the heavy-duty
sector and an established power electronics production facility
· Achieved substantial progress toward the establishment of a new
manufacturing facility at Silverstone Park
· Signed joint venture agreement with Padmini VNA Mechatronics
Private Limited, a leading Tier 1 Indian automotive supplier to fast-track AFT
into the rapidly expanding Asian market
· Launched Propel, a state-of-the-art marine propulsion division
based in the Netherlands. Propel manufactures two highly innovative propulsion
technologies - the Propel S1 and Propel D1 - which have been designed and
developed from Saietta's Axial Flux Technology (AFT) programmes
· Signed an agreement to help develop a next-generation
zero-emissions inner-city transport solution in collaboration with Electric
Assisted Vehicles ("EAV"), a market leader in lightweight vehicle engineering
and sustainable technologies
· Strengthened the Board with the appointment of two new
Non-Executive Directors, David Wilkinson and Seshu Bhagavathula, and a new
Non-Executive Chairman, Anthony ("Tony") Gott, bringing substantial experience
in accounting and public companies, heavy duty vehicles and the Indian market
and the global automotive industry respectively.
· Subsequent to the year-end, it is proposed that Tony Gott will
move to an Executive Chairman role from Non-Executive, in order to support the
Company's continued growth.
Post-Period Events
· Acquired the lease on a EV motor production facility in
Sunderland plus the purchase of 4 motor production lines and an electronic
circuit board production line for a consideration of £1.1 million
· Initial contract wins for prototype integrated AFT140 based
e-drive systems from four Light-duty vehicle manufacturers: Ayro Inc
(USA), Electric Assisted Vehicles Limited (UK), an established OEM of
Light-duty vehicles (India) and a new European vehicle platform developer
· Working on proof-of-concept e-drive system designs for two
potential high-volume Light-duty commercial vehicle customers (India) which
have the potential to develop into volumes in excess of 87,000 integrated
AFT140 e-drive systems per annum
· Notified of its successful application for a £2 million grant
from the UK Government's Automotive Transformation Fund under the Scale up
Readiness Validation (SuRV) to support Saietta's investment in commercial
vehicle e-axle pilot production and preparation for scale-up
· Reflecting the Company's rapid expansion, the Board has asked
Tony Gott to take on the role of Executive Chairman in order to support the
Executive team on the management and control of this growth and integration
process. Tony has a great depth of experience in establishing successful
large and complex organisations in the automotive industry including VW AG and
the BMW group where he was responsible for the establishment and commissioning
of the Goodwood Rolls Royce Factory. Vic Kist, CEO, will continue to focus
on business development activities. The Board is commencing a search for an
additional Independent Non-Executive Director.
Outlook
· Saietta is well placed to address the exciting market
opportunities presented by the electrification of the global automotive and
marine industries and remains dedicated to securing a number of long-term,
high volume OEM relationships globally
· Commercialisation remains on track with the first pilot
production facility in the advanced stages of development
· The Board is extremely confident, given the exceptional
operational and technical progress and key hires in strategically important
positions, of achieving or exceeding the Company's short- and long-term goals
including revenue expectations for FY 2023
For any further enquiries, please contact:
Saietta Group via FTI
Wicher (Vic) Kist, Group Chief Executive Officer
Steven Harrison, Group Chief Financial Officer
Canaccord Genuity (Nomad and Broker) Tel: +44 (0) 207 523 8000
Henry Fitzgerald-O'Connor
Patrick Dolaghan
FTI Consulting (Financial PR advisor) Tel: +44 (0) 20 3727 1000
Ben Brewerton saietta@fticonsulting.com
Dhruv Soni
About Saietta:
Saietta is an AIM-quoted, multi-national business which designs, engineers and
manufactures complete Light-duty and Heavy-duty e-drive systems for electric
vehicles on land from scooters to buses (Vehicle categories L, M, N and T) as
well as marine applications. (www.saietta.com (http://www.saietta.com) )
Saietta has engineered breakthrough electric motor technology including
proprietary AFT (Axial Flux Technology) and RFT (Radial Flux Technology) which
can be combined with in-house power electronics, powertrain controls,
mechanical axles and transmissions. The designs are unique and modular,
delivering both high and low voltage electric drive solutions. Saietta's
difference lies in its ability to conceive powertrain solutions tailored to
deliver competitive advantage and its turnkey engineering services designed to
fast-track electric vehicle manufacturers from concept to start of production.
To demonstrate the outstanding attributes of the AFT technology and the
company also founded its own next-generation marine propulsion division Propel
(www.propel.me (http://www.propel.me) ) which delivers solutions for boating
in the electric era that support the transition to decarbonization and clean
mobility on waterways.
Chairman's Statement
Saietta has enjoyed its most successful year since incorporation despite the
numerous headwinds faced by manufacturing industries during 2021/22, including
the continuing global impact of Covid-19 and the trade tensions and risks
associated with Brexit.
Facilitated primarily by the proceeds raised by the admission to AIM, Saietta
has made considerable progress in its core focus lightweight mobility market,
commencing the planned expansion of its UK production and testing
capabilities, and has, through its marine division, opened-up access to a new
market segment with significant potential.
As anticipated the financial resources secured through the IPO have enabled
the Company to accelerate its interaction with a number of Original Equipment
Manufacturers ("OEM") and Saietta remains dedicated to securing a number of
long-term, high volume OEM relationships globally.
Saietta has deployed a considerable portion of the capital raised at IPO to:
a) establish a new production facility at Silverstone Park and,
shortly after the year-end, in Sunderland that is being purposed to ramp up
Saietta's production capacity to approximately 100,000 units per year on an
annualised basis within the next three financial years; and
b) acquire 100% of the Netherlands based electric drive train
manufacturer e-Traction from the Evergrande New Energy Automotive group for a
total consideration of up to €2 million which is delivering an acceleration
of both commercial and technical growth plans, particularly with regards to
the truck, bus and coach sector.
In response to market demand a key recent development in Saietta's business
goal regarding its core axial flux technology ("AFT") has been a move to
prioritise the provision of fully integrated e-drive systems. By combining the
Saietta AFT motor with integrated power electronics, a gearbox and a bespoke
axle configuration the Company intends to capture vertically integrated
margins as opposed to focusing on standalone motor sales.
Saietta had previously aspired to offer such solutions; however, its ability
to deliver integrated e-drive systems has been accelerated by the acquisition
of e-Traction in November 2021 which has enabled it to progress the
development of its in-house integrated inverter for AFT products. This
additional capability means that inverter and powertrain controls may be
supplied to end customers fully integrated with AFT motors.
The accelerated commercial success of Saietta's marine products subsidiary
"Propel" which has developed an award winning fully integrated marine e-drive
system and generated approximately €1.5 million of revenue in its first full
year of operations. This has proven the ability of the Group to leverage AFT
technology into commercially successful vertically integrated e-drivetrain
systems and get them to market within months.
At our IPO, Saietta had 37 employees in one location with designs and
intellectual property for a series of branded AFT motors and a business plan
for a marine application. Fast-forward just twelve months and the Company has
grown in capability and scale. It now encompasses 5 divisions in 7 locations
across the UK and Netherlands with c. 180 employees. Following this rapid
expansion, and at the Board's request, I intend to take on the role of
Executive Chairman in order to concentrate fully on the management and control
of this growth and integration process. This will allow Wicher Kist ("Vic"),
as CEO, to continue to focus on business development and commercialisation.
The Board is commencing a search for an additional Non-Executive Director.
Outlook
Saietta employees Group-wide have been integral to delivering on its ambitious
growth plans and the Board is extremely confident that our short- and
long-term goals remain firmly within our grasp. Saietta's commercialisation
remains on track and its first pilot production facility is into the advanced
stages of development. We remain confident that, once operational, this will
ramp up the delivery of products to our customers.
Saietta and its innovative technology are well placed to address the exciting
market opportunities presented by the electrification of the global automotive
and marine industries. Saietta has made exceptional progress operationally and
technically in 2021/22 and a number of key hires in strategically important
positions means that it is well equipped to capture the opportunities
presented by the EV revolution.
The Board has confidence that the commercial opportunities for Saietta across
global markets remain readily apparent and the rapid scale-up of its business
will allow it to access these opportunities in the near future.
Chief Executive's Review
This was a ground-breaking year for Saietta in many ways. From launching new
divisions, expanding global reach and meeting external challenges, the past
year has shown the fundamental strength of our contrarian approach and seen
some significant milestones reached even earlier than expected. Our turnover
in the 12 months ended 31 March 2022 increased 300% to £3.6 million (2021:
£0.9m).
The business has transformed from a single-facility firm with designs for a
series of branded AFT motors into a multi-faceted, fast-growing, international
business. 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 by 500% and accelerates the
timeline for its adoption into vehicle platforms;
• A marine division with an award-winning suite of marine
propulsion products which is already capturing sales and is ready for further
commercial scale up;
• An international heavy-duty division addressing commercial EVs
across both the truck and bus markets globally which has supplied 7 OEMs
across Europe to date and has its products operated by 8 different commercial
enterprises;
• An in-house power electronics division enabling certain products
to be offered in a higher value, full system package; and
• A world class automotive electric motor factory in Sunderland
with 4 motor production lines and an electronic circuit board production line
which has to date manufactured over 25 million electric motors for automotive
OEMs.
Our achievements during the year
Padmini VNA Mechatronics Private Limited ("Padmini VNA") Partnership
In May 2021, the Group announced a landmark partnership agreement with Padmini
VNA, one of India's premier Tier 1 automotive suppliers.
The commercial agreement will see Padmini partner with Saietta to develop new
and exciting opportunities in India's fast-growing electric two-wheel market.
Padmini's customer base includes many of India's revered two-wheeler OEMs
including Hero MotorCorp, TVS, Bajaj Auto and Royal Enfield.
We now expect the share investment to be finalised by the end of August 2022.
AIM admission
On 7 July 2021, the Group listed on the London Stock Exchange's AIM market,
raising gross proceeds of £37.5m. This capital was raised to provide Saietta
with the funds to execute its growth plans, including establishing a motor
durability testing facility and contributing to the expansion of a pilot
production facility, which will increase the Company's European production
capacity to 100,000 units per annum.
Collaboration with Electric Assisted Vehicles ("EAV")
September 2021 saw the Group announce its technical collaboration project
focusing on inner-city mobility solutions with Electric Assisted Vehicles
("EAV").
The collaboration will first centre on EAV's Lightweight Inner-City Solution
(LINCS) vehicle, which incorporates a modular lightweight skateboard-style
platform intended to be an emissions free alternative to the traditional
transit van in urban environments. As part of the agreement, Saietta will
become the exclusive supplier of advanced in-wheel traction motors to Electric
Assisted Vehicles.
Launch of Propel
In November 2021, the Group announced the launch of Propel, its
state-of-the-art marine propulsion division.
Propel is dedicated to designing, developing and commercialising a range of
innovative electric motors to advance the electrification of the marine
industry. This will support decarbonisation and delivery of sustainable and
clean mobility on waterways, while helping boat owners to meet increasingly
stringent legislation. Premiering at the Marine Equipment Trade Show (METS) in
Amsterdam in November 2021, Propel showcased two highly innovative propulsion
technologies - the Propel S1 and Propel D1 - which have been designed and
developed from Saietta's AFT programmes.
Following this successful launch, commercial sales of £1.3m (€1.5m) were
achieved within the financial year and the order book for the 2022/23
financial year is already at €500,000. There are now 11 domestic dealers
signed up in Holland as well as commercial approaches from a number of larger
international distributors. Saietta is targeting average revenues per unit of
€3,500 and new regulations governing the usage of ICE motors in inland
waterway applications in Europe lead the management to anticipate material
demand going forward.
Acquisition of e-Traction Europe B.V.
In November 2021, the Group acquired 100% of e-Traction Europe B.V.
("e-Traction"), a Netherlands-based company which is a designer and supplier
of electric drivetrains for heavy goods vehicles (HGVs) and buses, as well as
a designer and manufacturer of high voltage power electronics, including
inverters and control systems.
The acquisition of e-Traction advances the development and commercial
deployment of the Group's high voltage electric motor designs, and brings
additional product variants into Saietta's portfolio - encompassing
complementary power electronics and heavy-vehicle drivetrains. The Power
Electronics division that Saietta has established following the acquisition is
allowing the other divisions to accelerate their business plans and enhance
the value of their product offerings.
The acquisition is also expected to provide the Group with an increased share
of the electric motor market through access to the heavy duty market segment.
Strategy, recent developments and commercial opportunities
Looking ahead, the outlook is incredibly positive for Saietta. We envisage the
development and growth experienced in 2021/22 will continue and accelerate, as
the Group's development milestones are met.
The evolution of the AFT business model towards the development and supply of
integrated e-drive systems is expected to materially enhance Saietta's long
term revenue and margin expectations. However, the Directors believe that the
manufacturing scale-up of the product programme will require a greater
investment than the original standalone motor supply plan. To allow for a
strategic re-allocation of resources, the scope for the development of the
previously planned motor durability test centre has been reduced to a smaller
facility purposed for internal testing only. The Directors believe that the
accelerated move into complete e-drive systems can deliver greater revenue
than the proposed test centre.
This new business model has already resulted in initial contract wins for
prototype integrated AFT140 based e-drive systems from four light duty vehicle
manufacturers around the world. In combination, these customers estimate they
will require in the region of 350,000 e-drive systems over the next 5 years
and the Company estimates an average unit price of £1,250 (any such sales
will remain subject to contract and will likely be through separate or joint
venture entities and therefore should in no circumstances been considered as a
revenue forecast for the Group).
As a result of these commercial developments, Saietta will be prioritising the
mass production of the AFT140 over other products in the AFT portfolio. Since
the post-period acquisition of the Sunderland Factory, the Company has
received further enquiries of interest from a range of European vehicle OEMs
in different market segments, in addition to the above-mentioned commercial
progress.
Since its acquisition in November 2021, e-Traction has been renamed as Saietta
Europe B.V. and, through collaboration with the rest of the Group, has
developed new products to expand its focus from the niche EU bus market to the
far larger global truck market. Given regulatory developments in the global
HGV market, we are confident of material demand for these e-drive systems in
the short and medium term.
Our Manufacturing Division is now a 39-person strong team with established
functions in procurement, production, quality control and aftersales - as well
as an established supply and logistics framework. This proven volume and
quality capability has been instrumental in the recent increase of commercial
traction across the Group.
Post-period end, Saietta was notified of its successful application for a £2
million grant from the UK Government's Automotive Transformation Fund under
the Scale up Readiness Validation (SuRV). The grant, which commenced on 1
August 2022 and runs for 18 months, forms part of Saietta's investment
programme in Commercial Vehicle E-axle pilot production and preparation for
scale-up.
I am delighted that Tony Gott has agreed to become Executive Chairman for a
four-year period to drive the management and control of our growth and oversee
the various integration processes we have underway. This will allow me to
continue to focus on business development and commercialisation.
Future growth strategy
The Group intends to invest for growth in the following areas:
• Completion of pilot production facility at Silverstone Park
which will increase the Company's European production capacity to 6,000 units
per annum;
• Repurposing the 86,000 square feet Sunderland factory to deliver
100,000 AFT units per annum;
• Securing a number of long-term, high volume OEM relationships
globally;
• Increase brand awareness and reputation of the Group, both
domestically and globally; and
• Continue to secure crucial patents across all key international
markets.
Saietta is quickly positioning to become a world leader in drive train systems
and technology for applications across the electric vehicle and marine
segments. We believe that the process of global transport transition is
accelerating while expanding into heavy commercial functions and that, with
our advanced automotive technology and engineering capabilities, we are well
placed to become a force to be reckoned with in this new global landscape.
Financial Review
The Financial Review should be read in conjunction with the consolidated
financial statements of the Group and the notes thereto. 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 of the Company continue to be prepared in accordance with
Financial Reporting Standard 101 'Reduced Disclosure Framework' (FRS 101) and
in accordance with the Companies Act 2006.
Overview
Following the successful Admission to AIM in July 2021, Saietta began
utilising the funds raised to fulfill its expansion plans as laid out during
the admission process. This included the purchase of plant and machinery which
will form the cornerstone of Saietta's automated production facility,
expanding its commercial operations and furthering the Group's ability to
generate revenue across a number of divisions and geographies.
The Group delivered encouraging results during the year, generating total
revenue of £3.6m (2021: £0.9m) whilst formalising its business structure and
establishing five principal divisions, discussed in greater detail in the
CEO's statement, which will form the foundation of its expansion plans:
a) Lightweight mobility division
b) Heavy-duty commercial division
c) Marine division
d) Manufacturing plant
e) Saietta VNA - India
Establishment of production facility
As at 31 March 2022, the Group had invested £1.9m into developing the
automated production line which will serve to increase the Group's AFT motor
production capacity from 1,000 per annum to approximately 6,000 per annum in
its first full year of operation. A further £3.6m has also been allocated for
specific machinery which is on order.
On 4 April 2022, the Group completed 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 automated production lines will be
completed in Sunderland with full-automation scheduled for March 2023 and full
automation in by the end of 2023.
At the time of the IPO, £10m was assigned to this task. The propitious
selection of the Sunderland plant and synergies from the E-Traction
acquisition have both materially reduced the capital outlay necessary.
Business development - Lightweight mobility division
Despite the impact of external factors including the continuing global impact
of Covid-19 and the trade tensions and the risks associated with Brexit and
latterly, Ukraine, Saietta was able to achieve considerable operational and
financial success during the year.
Sales within the UK totaled £1.2m, an increase of £0.4m from 2021 (£0.8m).
This was driven primarily by engineering design service revenue of £0.9m
(2021: £0.8m), motor sales revenue of £0.1m (2021: £0.1m) and commitment
fees of £0.2m (2021: £nil).
The volume of sales from Engineering Design Services varies year to year and
is dependent upon the stage reached for each project. As the commercial
production of the Group's electric motors has increased, revenue from the sale
of motors now comprises a greater proportion of total revenue.
Business development - Heavy-duty and Marine divisions
In 2021/22 the Group's Heavy-duty and Marine divisions, which are primarily
centered in the Netherlands, achieved European sales of £2.2m (2021: £nil)
and Rest of World sales of £0.2m (2021: £nil).
This was driven by the launch of the Group's Propel inboard and outboard
motors, for which there has been very positive initial customer demand, and
translated into sales of £1.3m (2021: £nil) in its first months of
operations.
Similarly, within the Group's Heavy-duty division, the sales pipeline is
strong and the acquisition of e-Traction Europe B.V., subsequently renamed
Saietta Europe B.V., has contributed additional revenue of £0.6m in respect
of retrofit sales since the acquisition in November 2021.
Gross profit
Saietta delivered gross profit of £1.7m (2021: £0.7m) with a healthy gross
profit margin of 48% (2021: 78%). The fall in gross margin is driven by
revenue mix, in particular through the additional revenue generated by the
Heavy-duty and Marine divisions.
Other income
£0.7m (2021: £0.0m) of grant income was recognised from three projects
(2021: 1 project). Principal amongst these were the projects with Innovate UK
("APC 16") which generated income of £0.6m (2021: £nil) and two Dutch
partners which generated £0.1m (2021: £nil).
Administrative expenses
Administrative costs for the year of £14.1m represents an increase of £12.3m
(2021: £7.0m). 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 IPO provided funds to grow its existing operations, launch
Propel B.V., and acquire e-Traction Europe B.V. which has caused total,
average staff numbers to increase from 25 in 2021 to 100 in 2022.
The share-based payment charge decreased from £5.7m in 2021 to £4.4m in
2022, due to most historical share options vesting at Admission. This is
offset against a full year charge associated with the new Long-Term Incentive
Plan ('LTIP') awards from April 2021 and an increased number of employees
resulting in greater numbers qualifying for the Company's share option scheme.
Adjusted EBITDA
The underlying level of loss that is measured by Earnings Before Interest,
Tax, Depreciation and Amortisation and non-recurring expenditure, which
excludes expenses associated with the Admission to AIM and share-based
payments (adjusted EBITDA), shows an increase in adjusted EBITDA loss from
£1.0m in 2021 to £4.4m in 2022.
For full details on how the adjusted EBITDA figure is calculated, please see
note 4.
Non-current assets
As at 31 March 2022, non-current assets amounted to £15.5m (2021: £4.0m),
including intangible assets of £8.4m (2021: £3.4m) and property, plant and
equipment of £3.5m (2021: £0.2m).
Intangible assets increased by £5.0m during the year. Capitalised,
internally-generated development costs and the purchase of intangible assets
accounted for £3.8m (2021: £0.8m) and £0.8m (2021: £nil) respectively.
Current assets
As at 31 March 2022, current assets amounted to £27.2m (2021: £3.6m),
including net funds of £18.4m (2021: £2.9m).
The principal elements of the increase in net funds were:
• Gross proceeds through placing and subscription of £37.5m
(2021: £nil);
• Share issue costs associated with the listing of £2.5m (2021:
£nil);
• Operating cash outflow of £7.6m (2021: £0.2m);
• Conversion of the convertible loan notes of £2.34m (2021:
£nil) into Equity at Admission on 7 July 2021;
• Investing activities including the acquisition of intangibles,
property, plant & equipment and the capitalisation of development costs
which totalled £8.9m (2021: £0.9m); and
• Movements in working capital of £1.2m outflow (2021: £1.7m
inflow).
Director's Report
The Directors present their report and the consolidated financial statements
for the year ended 31 March 2022.
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
2022 2021
Executive Directors:
Wicher Kist 23 November 2018 N/A 1,295,174 -
Steven Harrison 22 April 2021 N/A - -
Paul Preece 23 November 2018 7 July 2021 1,043,517 -
Non-Executive Directors:
Emmanuel Clair 23 November 2018 N/A 12,603,709 12,467,615
David Wilkinson 7 July 2021 N/A 8,333 -
Anthony Gott(1) 7 July 2021 N/A - -
Seshu Bhagavathula 17 December 2021 N/A - -
John Winn 1 March 2020 7 July 2021 6,326,934 6,646,526
(1)On 1 August 2022, Anthony Gott was appointed Executive Chairman.
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.
Following its acquisition of e-Traction in November 2021, Saietta is also a
provider of electric drive solutions to OEMs and transport operations in the
Heavy Goods Vehicle ("HGV") sector.
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 to be included in the Annual Report and Accounts.
Going concern
The Group operates 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. In order to do so, it
recognises that at times it will potentially need to co-invest with certain
major OEMs to enhance the future value it can achieve from application of its
products directly into OEM customer sales. In such instances the commercial
merits will be weighed in determining whether funding is sought.
The Group has prepared forecasts for future scenarios both incorporating such
funding needs and excluding such.
These forecasts align to the strategy set out at IPO which were based on the
assumption that the Group will significantly increase its revenue and be able
to generate significant gross profit in the next 12 months. If the timing of
the increased revenue generation is delayed there may be a need for the Group
to raise additional financing.
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.
Results and Dividends
The Group loss for the year, before taxation, amounted to £11,132,085 (2021:
£7,297,163). The Directors do not recommend a final dividend this year (2021:
£nil).
Research and development costs
In accordance with the policy outlined in note 2, the Group incurred research
and development expenditure of £3,874,385 (2021: £1,319,170) 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 27 of the financial
statements.
Substantial shareholdings
At 31 March 2022, 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 9,530,898 11.21%
Lawrence Marazzi 7,554,543 8.88%
John Michael Winn 6,326,934 7.44%
Premier Milton Investors 6,167,456 7.25%
Schroder Investment Management 5,685,015 6.68%
Scott Roberts 2,681,723 3.15%
Unicorn Asset Management 2,625,497 3.09%
At 31 July 2022, there were 85,051,953 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 Anthony Gott and the Nomination
Committee was chaired by Anthony Gott. The Board remains confident in the work
of those committees and the overall system of governance.
Major macroeconomic impacts
Covid-19: We are mindful that the COVID-19 pandemic continues to have a
notable impact on global supply chains; however, we do not anticipate that our
production and sales volumes projections will be adversely affected in
FY2022/23.
Economic and geopolitical factors: Inflationary pressures have been increasing
throughout the first half of 2022, with major economies across the globe
experiencing high energy prices linked to the conflict in Ukraine. This could
impact the business as some prices we pay our suppliers are directly indexed
to market rates and therefore our profit margins could be slightly reduced by
these increased raw material costs. This increasing inflationary pressure
could also affect consumer inflation expectations and cause a direct response
from central banks in FY2022/23 and beyond, which could negatively affect the
trajectory of future economic growth. Looking ahead, we will continue to
monitor the impact of changes in material costs on our margins and may look to
adjust sales prices if we cannot avoid passing cost increases on to our
consumers.
Semiconductor shortage: Throughout FY2021/22, the automotive industry has had
to respond to the global shortage of semiconductors which has been caused by a
number of factors including supplier production disruption, increasing demand
within the automotive sector driven by the shift to automation, and increased
demand from non-automotive sectors. This has had a direct impact on our supply
chain and our ability to satisfy customer demand but is not expected to impact
on our sales volumes. Looking ahead, we expect gradual improvements in the
availability of semiconductors, driven by increases in production capacity at
suppliers.
Events after the reporting period
On 4 April 2022, Saietta Group plc was assigned the lease of a manufacturing
facility in Sunderland, UK. The lease term commences on 4 April 2022 and
terminates 27 September 2040. In addition, the Company paid consideration of
£1,100,000 for plant & equipment housed within this facility.
In June 2022, Saietta was notified of its successful application for a £2
million grant from the UK Government's Automotive Transformation Fund under
the Scale up Readiness Validation (SuRV) to support Saietta's investment in
commercial vehicle e-axle pilot production and preparation for scale-up.
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 ought to have taken
as a director in order to make himself 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
Year ended 31 March Year ended 31 March
2022 2021
Notes £ £
Revenue 5 3,595,803 870,966
Cost of sales (1,870,238) (190,036)
Gross profit 1,725,565 680,930
Other income 7 725,545 2,097
Write-off of related party receivable - (935,146)
Administrative expenses (14,110,800) (7,021,944)
Share option costs 25 (4,406,334) (5,719,462)
Other administrative expenses 9 (9,704,466) (1,302,482)
Gain on bargain purchase 29 704,761 -
Operating loss 8 (10,954,929) (7,274,063)
Finance income 11 5,523 1
Finance expense 11 (104,621) (23,101)
Net increase in financial liabilities 23 (78,058) -
Loss before taxation (11,132,085) (7,297,163)
Tax credit 12 377,420 304,145
Loss for the year attributable to equity holders of the parent company (10,754,665) (6,993,018)
Other comprehensive loss, net of income tax, to be reclassified to profit and
loss in subsequent periods
Exchange differences on translation of foreign operations (27,587) (352)
Total comprehensive loss for the year (10,782,252) (6,993,370)
Basic loss per share in
pence
13 (0.14) (0.15)
The earnings per share calculation relates to both continuing and total
operations.
Consolidated statement of financial position
2022 2021
ASSETS Notes £ £
Non-current assets
Intangible assets 14 8,365,506 3,364,156
Property, plant and equipment 15 3,498,541 198,479
Right-of-use assets 16 2,815,049 433,883
Trade and other receivables 18 734,526 -
Prepayments and accrued income 18 101,825
Total non-current assets 15,515,447 3,996,518
Current assets
Inventories 17 2,470,043 116,958
Trade and other receivables 18 5,070,139 659,023
Prepayments and accrued income 18 1,237,197 -
Cash and cash equivalents 18 18,402,055 2,862,470
Total current assets 27,179,434 3,638,451
TOTAL ASSETS 42,694,881 7,634,969
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 19 6,819,521 761,399
Borrowings 20 - 176,111
Lease liabilities 21 470,069 114,555
Total current liabilities 7,289,590 1,052,065
Non-current liabilities
Borrowings 20 - 2,340,000
Lease liabilities 21 2,380,537 330,426
Provisions 22 168,130 -
Liabilities for financial guarantees 23 41,833 -
Total non-current liabilities 2,590,500 2,670,426
EQUITY
Share capital 24 93,557 51,921
Share premium 24 34,671,275 -
Share options reserve 25 12,217,991 7,318,820
Translation reserve (27,939) (352)
Accumulated losses (14,140,093) (3,457,911)
Total equity 32,814,791 3,912,478
TOTAL EQUITY AND LIABILITIES 42,694,881 7,634,969
Consolidated statement of cash flow
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Operating activities
Losses after taxation (10,754,665) (6,993,018)
Adjustments for non-cash items:
Taxation 12 (377,420) (304,145)
Interest income 11 (5,523) (1)
Interest expense 11 104,621 23,101
Share-based payments 24 4,406,334 5,174,957
Amortisation of intangible assets 14 72,384 18,976
Depreciation of property, plant and equipment 15 174,451 39,708
Currency translation differences 15 3,204 -
Depreciation of right-of-use assets 16 270,477 107,381
Net increase in financial liabilities 23 41,833 -
Profit on disposal of property, plant and equipment 1,900 (562)
Tax credits received 12 - 104,145
Gain on bargain purchase 29 (704,761)
Cash used in operating activities before changes in working capital (6,767,165,) (1,829,458)
Change in working capital
Decrease/ (increase) in inventories (669,692) (65,825)
Decrease/ (increase) in receivables (4,869,032) 1,186,455
Increase/ (decrease) in non-interest bearing liabilities 4,802,519 546,114
Decrease/(increase) in provisions (279,826) -
-
Net cash flow used in operating activities (7,783,196) (162,714)
Investing activities
Purchases of intangible assets 14 (515,939) (34,207)
Capitalised internally generated development costs 14 (3,594,038) (774,665)
Purchase of property, plant and equipment 15 (3,389,798) (97,295)
Sale of property, plant and equipment - 3,109
Acquisition of subsidiary, net of cash 29 (1,427,246) -
Interest received 11 5,523 1
Net cash used in investing activities (8,921,498) (903,057)
Financing activities
Proceeds from borrowings 20 - 2,340,000
Repayment of borrowings 20 (176,111) (56,235)
Repayment of lease liabilities 21 (281,872) (94,710)
Proceeds on issue of shares 24 35,241,809 1,434,789
Share issue costs 24 (2,507,409) -
Interest paid on lease liabilities 11 (18,609) (21,177)
Interest paid 11 (13,529) (1,924)
Net cash flow from financing activities 32,244,279 3,600,743
Net change in cash and cash equivalents 15,539,585 2,534,972
Cash and cash equivalents, beginning of year 2,862,470 327,498
Cash and cash equivalents for continuing operations 18,402,055 2,862,470
Notes to the consolidated financial statements
1. General information
The financial information set out above does not constitute the Company's
Annual Report and Accounts for the year ended 31 March 2022. The Annual Report
and Accounts for 2021 have been delivered to the Registrar of Companies and
those for 2022 will be delivered shortly. The auditor's report for the
Company's 2022 Annual Report and Accounts was unqualified but included a
material uncertainty due to Going concern due to the uncertainties regarding
future financing. The opinion did not contain any statement under Section
498 of the Companies Act 2006.
Whilst the financial information included in this results announcement has
been prepared in accordance with UK adopted international accounting
standards, this announcement does not itself contain sufficient information to
comply with UK adopted international accounting standards.
The Annual Report and Accounts for the year ended 31 March 2022 will be
available on the Company's website: www.saietta.com (http://www.saietta.com)
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
building 210, Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE.
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.
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into the UK law and became UK-adopted international accounting
standards, with future changes being subject to endorsement by the UK
Endorsement Board. The Group transitioned to UK-adopted international
accounting standards in its consolidated financial statements on 1 March 2021.
There was no impact or changes in accounting from the transition.
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.
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 are no new standards, interpretations or amendments not yet applied
which the Directors anticipate will have a material impact on the Group.
b) 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 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 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.
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
Intellectual property patents
10% straight line
Software
25% reducing
balance
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.
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.
Assets under construction
Assets under construction relates to the construction of an automated
production line which at 31 March 2022 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 classifies its financial assets into one of the categories discussed
below, depending on the purpose for which the asset was acquired. The Group's
accounting policy for each category is as follows:
Fair value through profit or loss
The Group does not have any assets held for trading nor does it voluntarily
classify any financial assets as being at fair value through profit or loss.
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.
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 within cost of sales 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.
From time to time, the Group elects to renegotiate the terms of trade
receivables due from customers with which it has previously had a good trading
history. Such renegotiations will lead to changes in the timing of payments
rather than changes to the amounts owed and, in consequence, the new expected
cash flows are discounted at the original effective interest rate and any
resulting difference to the carrying value is recognised in the statement of
comprehensive income (operating profit).
The Group's financial assets measured at amortised cost comprise trade and
other receivables and cash and cash equivalents in the balance sheet. 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.
Financial liabilities
The Group classifies its financial liabilities into one of two categories,
depending on the purpose for which the liability was acquired. The Group does
not have any liabilities held for trading nor does it voluntarily classify any
financial liabilities as being at fair value through profit or loss. The
Group's accounting policy for each category is as follows:
· Bank borrowings are initially recognised at fair value net of any
transaction costs directly attributable to the issue of the instrument. Such
interest bearing liabilities are subsequently measured at amortised cost using
the effective interest rate method, which ensures that any interest expense
over the period to repayment is at a constant rate on the balance of the
liability carried in the balance sheet. Interest expense in this context
includes initial transaction costs and premium payable on redemption, as well
as any interest or coupon payable while the liability is outstanding.
· Trade payables and other short-term monetary liabilities, which 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.
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.
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 like 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.
The Group applies the practical expedient to not assess whether rent
concessions occurring as a direct consequence of the COVID-19 pandemic that
meet the following conditions are lease modifications:
· The change in lease payments results in revised consideration that is
substantially the same, or less than the consideration for the lease
immediately preceding the change;
· Any reduction in lease payments affects only payments originally due
on or before 30 June 2021; and
· There no substantive change to other terms and conditions of the
lease.
Changes to lease payments for such leases are accounted for as if they are not
lease modifications.
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 22 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.
Convertible loans
Convertible loans, where conversion is dependent upon an event such as
Listing, are treated as borrowings and recorded in financial liabilities in
accordance with the term of the loan. Whilst the loan is recognized at
amortised cost, the derivative embedded in the host contract is separated and
measured as an option. This element is not considered material.
Convertible loans which do not meet the 'fixed for fixed' criterion due to the
contingency of Listing are classified as liabilities with no equity component.
Borrowing costs
Borrowing costs are capitalised, net of interest received on cash drawn down
yet to be expended when they are directly attributable to the acquisition,
contribution or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale. Other borrowing
costs are expensed in the period in which they are incurred.
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.
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 16 to 19. The Group had net assets of £32,814,791 (2021:
£3,912,478) as at 31 March 2022 and available liquidity of £18,402,055
comprised of cash and cash equivalents which is a net increase of £15,539,585
compared to the liquidity position of £2,862,470 as at 31 March 2021 which
has been achieved through Admission to the AIM which raised gross proceeds of
£37.5m and the Group's operational trading activities.
The Group and Company have modelled scenarios for periods up to four years
from the March 2022 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 to include only revenue committed to
date, modifications to capital expenditure and variations in gross margins
achieved.
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 OEM's. In
order to do so, it recognises that at times it will potentially need to
co-invest with certain major OEM's to enhance the future value it can achieve
from application of its products directly into OEM customer sales. The Group
has prepared forecasts for future scenarios both incorporating such funding
needs and excluding such.
These forecasts align to the strategy set out at IPO which were based on the
assumption that the Group and Company will significantly increase their
revenue and be able to generate significant gross profit in the next 12
months. If the timing of the increased revenue generation is delayed there may
be a need for the Group to raise additional financing.
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.
In particular, when looking further ahead, the Directors acknowledge that if
it elects to achieve greater participation in future value, the potential then
arises for a funds shortfall to arise and that in such circumstances it would
need to seek further funding to pursue such a contractual route. In such
instances the commercial merits will be weighed in determining whether funding
is sought.
The Group and Company have assessed the projected cash flows of the Group and
Company for the twelve-month period from the date of authorisation of the
financial statements and beyond it later years and have carried out a stress
test to determine the under-performance level that would ultimately result in
insolvency.
The model takes into account the Group and Company's expectations of external
factors including continued supply chain challenges related to semiconductor
shortages and prevailing macroeconomic conditions including inflationary
pressures. The stress test scenario models the impact of sustained reduction
in forecast revenue over the twelve month period and the impact of
contractually obliged outflows of cash in respect of capital expenditure.
Whilst acknowledging the direct relationship of commercial decisions with
OEM's over needs for future funds beyond the coming twelve months, the Board
have concluded, on the basis of all scenarios and of current and forecast
trading and related expected cashflows and available sources of finance, that
it 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 2022 is
£3,489,541 (2021: £198,479) 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 £366,000.
Accounting for business combinations and fair value - estimates and
assumptions
Business combinations are accounted for at fair value. The assessment of fair
value is subjective and depends on a number of assumptions. These assumptions
include assessment of discount rates, and the amount and timing of expected
future cash flows from assets and liabilities. In addition, the selection of
specific valuation methods for individual assets and liabilities requires
judgment. The specific valuation methods applied will be driven by the nature
of the asset or liability being assessed. The consideration given to a seller
for the purchase of a business or a company is accounted for at its fair
value. When the consideration given includes elements that are not cash, such
as shares or options to acquire shares, the fair value of the consideration
given is calculated by reference to the specific nature of the consideration
given to the seller.
Please refer to Note 29 for further detail.
Useful lives and carrying value of intangible assets
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 2022 was £8,365,507
(2021: £3,364,156) and a reasonable adjustment sensitivity if intangible
assets related to a motor variant were impaired or if the Group were to
require amortisation for an additional year for patents and immediately at the
start of the year for development costs would have an impact of £72,000.
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 27 for further detail.
Carrying value of provisions for onerous contracts
IAS 37 defines an onerous contract as a contract in which the unavoidable
costs of meeting the obligations under the contract exceed the economic
benefits expected to be received under it. The unavoidable costs under a
contract reflect the least net cost of exiting from the contract, which is the
lower of the cost of fulfilling it and any compensation or penalties arising
from failure to fulfil it. Unavoidable costs are defined as the lower of the
cost of fulfilling the contract and any compensations or penalties arising
failure to fulfil it.
The Group currently has agreed to fulfil multiple customer contracts that will
see unavoidable costs of meeting their obligations exceed the revenues
received. As such, these contracts are classified as onerous. The contracts
need to be valued at a best estimate of fair value, including the costs
directly associated with fulfilling the contract and also the costs from
assets used to complete the contracts (Equipment, labour costs, etc). For the
purpose of estimating their fair value, the costs are based on the anticipated
material, staffing and additional operating expenses. The economic costs are
taken as a percentage of the revenue to costs as forecast in 2022.
If the total unavoidable costs of meeting the unavoidable obligations under
these contracts were to be 10% higher, this would cause the provision to
increase by £9,330 with the corresponding movement recognised as an expense
in the Statement of Comprehensive Income. The total provision is expected to
be utilised in its entirety before the end of the financial year ended 31
March 2023.
Please refer to Note 22 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 21) 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 between 4.1%
and 4.5%. A 5% increase in the rate would cause the lease liability to reduce
by £413,014 with a corresponding movement in the 'cost' of the right-of-use
asset which would reduce the associated amortisation.
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.
4. Alternative Performance Measures
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 measure Definition
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 including the share-based payment charges,
the gain on bargain purchase, costs related to Saietta Group plc's admission
to the AIM, costs related to the acquisition of e-Traction Europe B.V., 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.
Gross proceeds raised through placing 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.
Adjusted
EBITDA
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
March 2022 March 2021
£ £
Adjusted EBITDA (4,404,039) (997,895)
Depreciation and amortization (509,895) (166,065)
Finance income 5,523 1
Finance expense (104,621) (23,101)
Share-based payment charges Note 25 (4,406,334) (5,174,957)
Gain on bargain purchase recognised as part of subsidiary acquisition Note 29 704,761 -
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 (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 (78,058) -
Contractor fees to secure grants (73,432)
One-off enterprise resource planning consultancy fees (10,925)
Write-off of related party receivables - (935,146)
Loss before taxation (11,132,085) (7,297,163)
Taxation 377,420 304,145
Loss for the year (10,754,665) (6,993,018)
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 £35,241,809
Commission and corporate finance fees £2,125,000
Other fees £133,191
Gross proceeds from settled shares £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.
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 maker has 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.
Year ended 31 March 2022
All other
Lightweight Heavy-duty Marine segments Total
Revenue £ £ £ £ £
Revenue from Apollo Future Mobility Group Limited 635,984 635,984
- -
Revenue from Consolidated Metco, Inc. 400,000 - 400,000
- -
Revenue from Sloepmakerij B.V. - - - 1,261,008
1,261,008
Revenue from other customers 555,266 952,018 - - 1,507,284
Inter-segmental revenue (186,407) (22,066) - - (208,473)
Groups' revenue per consolidated statement of 1,404,843 929,952 1,261,008 - 3,595,803
comprehensive income
Depreciation 300,017 98,766 38,728 - 437,511
Costs associated with Listing 1,006,323 - - - 1,006,323
1,306,340 98,766 38,728 - 1,443,834
Segment loss (6,243,109) (993,005) (296,416) (446,371) (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)
Year ended 31 March 2021
All other
Lightweight Heavy-duty Marine segments Total
Revenue £ £ £ £ £
Revenue from Apollo Future Mobility Group Limited 624,110 - - - 624,110
Revenue from Consolidated Metco, Inc. - - - - -
Revenue from Sloepmakerij B.V. - - - - -
Revenue from other customers 246,856 - - - 246,856
Inter-segmental revenue - - - - -
Groups' revenue per consolidated statement of 870,966 - 870,966
- -
comprehensive income
Depreciation (147,089) - (147,089)
- -
Costs associated with Listing - - - - -
(147,089) - (147,089)
- -
Segment loss (2,869,826) - (2,869,826)
- -
Share based payments (4,406,334)
Other income 2,097
Finance income 1
Finance expense (23,101)
Group loss before tax and discontinued operations (7,297,163)
Year ended 31 March 2022
All other
Lightweight Heavy-duty Marine segments Total
£ £ £ £ £
Additions to non-current assets 6,980,426 3,107,667 1,320,308 - 11,408,401
Inventories 297,585 1,943,775 - - 2,241,360
Reportable segment assets 33,962,388 5,827,677 3,055,995 48,821 42,894,881
Total group assets 42,894,881
Reportable segment liabilities 7,503,370 1,507,903 901,228 125,756 9,838,257
Loans and borrowings -
Liabilities for financial guarantees 41,833
Deferred tax liabilities -
Total group liabilities 9,880,090
Year ended 31 March 2021
All other
Lightweight Heavy-duty Marine segments Total
£ £ £ £ £
Additions to non-current assets 906,167 - 906,167
- -
Inventories 116,958 - 116,958
- -
Reportable segment assets 7,634,969 - 7,634,969
- -
Total group assets 7,634,969
Reportable segment liabilities 1,206,380 -
- -
1,206,380
Loans and borrowings 2,516,111
Liabilities for financial guarantees -
Deferred tax liabilities -
Total group liabilities 3,722,491
Non-current assets by geography
Year ended 31 Year ended 31
March 2022 March 2021
£ £
UK 13,162,815 3,993,009
European Union 2,352,632 3,509
Rest of World - -
Total 15,515,447 3,996,518
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.
6. Revenue analysis
Revenue by category and by geography is as follows:
Revenue by category
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Lightweight division 1,404,843 870,966
Heavy-duty division 929,952 -
Marine division 1,261,008 -
Total 3,595,803 870,966
Revenue by geography
Year ended 31 Year ended 31
March 2022 March 2021
£ £
UK 1,221,049 810,840
European Union 2,161,518 15,000
Rest of World 213,236 45,126
Total 3,595,803 870,966
Under one design contract entered into during the year, £200,000 (2021:
£nil) was received in advance of performance and not recognised as revenue
during the year. The balance is included within accruals and deferred income.
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Grant income 725,545 2,097
The Group received development government grants from the Advanced Propulsion
Centre against qualifying expenditure of £661,122 (2021: £2,097) in the
years ended 31 March 2022 and 31 March 2021 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 £330,326 (2021: £39,225) remains due,
subject to submitted assessment. This has been treated as a contingent gain at
the year ended 31 March 2022.
The remaining £64,423 (2021: £nil) balance included within 'Other income'
relates to individually immaterial grants received by subsidiaries during the
year.
8. Operating loss
Year ended 31 Year ended 31
March 2022 March 2021
Operating loss has been stated after: £ £
Cost of inventories recognised as expense 1,971,725 68,007
Depreciation of right-of-use assets 270,477 107,381
Depreciation of property, plant and equipment 174,451 39,708
Amortisation of intangible assets 72,384 18,976
Profit on disposal of fixed assets 2,160 (562)
Auditor's remuneration:
Fees payable to the Group's auditor for the audit of the Group's accounts 108,750 90,000
Fees payable to the Group's auditor for the audit of the subsidiaries accounts 77,766 -
Fees payable to the Group's auditor for other services:
- Other fees 153,176 -
Share-based payment expense 4,406,334 5,174,957
Foreign exchange differences (52,957) 4,562
The presentation of the Statement of Comprehensive Income has been amended to
show the share option expense as part of administrative expenses based on the
business's operations.
9. Significant administrative expenses
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Wages and salaries excluding share-based employee expense 4,800,640 781,236
Share-based employee expense 4,406,334 5,040,848
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 -
Other individually immaterial expenses 3,326,172 1,199,860
Total 14,110,800 7,021,944
10. Employee benefit expenses (including directors)
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Wages and salaries 3,768,729 604,553
Social security costs 797,796 153,185
Employer's pension contributions 234,115 23,498
Share-based employee expense 4,406,334 5,040,848
Total 9,206,974 5,822,084
Average number of employees during the year was as follows: Year ended 31 March 2022
No.
Year ended 31
March 2021
No.
Technical 70 18
Procurement 4 2
Sales and marketing 12 1
Finance and administration 14 4
Total 100 25
The remuneration of department heads who are the key management personnel is
as follows:
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Short term employee benefits 1,297,568 183,584
Unexercised share options awarded in the year 2,768,709 736,377
4,066,277 919,961
Year ended 31 March 2022 Year ended 31 March 2021
Directors £ £
Remuneration 623,277 393,600
Unexercised share options awarded in the year 2,366,492 3,639,703
2,989,769 4,033,303
Highest paid director
The highest paid director's emoluments were as follows:
£ Directors' emoluments and amounts receivable under long-term incentive Year ended 31 Year ended 31
schemes
March 2022 March 2021
£ £
Defined contribution schemes: 2,223,689 2,171,670
Accrued pension at the end of the year 7,762 -
2,231,451 2,171,670
11. Finance income and expense
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Finance income 5,523 1
Deposit account interest
Finance expense
Interest on lease liabilities 18,609 21,117
Other interest 86,012 1,924
104,621 23,101
12. Taxation
Year ended 31 Year ended 31
March 2022 March 2021
£ £
UK tax (credit) for the current year (377,420) (304,145)
Deferred tax - -
Tax credit for the year (377,420) (304,145)
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 2022 March 2021
£ £
(Loss) before income tax (11,132,085) (7,297,163)
Tax at UK rate of 19% 2,115,096 1,386,461
Reconciling tax charges for:
Non-deductible expenses 98,898 -
Capital allowances 400,000 55,000
R&D tax credit 71,710 200,000
Gain on bargain purchase 133,905 -
Share based payments (837,203) (983,241)
Deferred tax asset not recognised (1,604,985) (354,075)
Tax credit for the year 377,420 304,145
Effective tax rate for the year (3.4%) (4.2%)
The movements in deferred tax assets and liabilities (prior to the offsetting
of balances within the same jurisdiction as permitted by IAS 12) during the
period are shown below:
Asset Liability Net
2022 2022 2022
£ £ £
Accelerated capital allowances - (714,498) (714,498)
Leases - (60,185) (60,185)
Tax losses 774,683 - 774,683
Net tax assets / liabilities 774,683 (774,683) -
Asset Liability Net
2021 2021 2021
£ £ £
Accelerated capital allowances - (480,475) 480,475
Leases 2,220 - 2,220
Tax losses 478,255 - 478,255
Net tax assets / liabilities(1) 480,475 (480,475) -
1. This table disclosure was not included in the prior year accounts and did
not present the deferred tax asset offset against the deferred tax liability
in the 2021 financial year. The deferred tax asset is not recognised, but to
the extent the Group has deferred tax liabilities. This disclosure had no
impact on the primary financial statements.
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
£31,013,764 in the year ended 31 March 2022 (2021 restated1: £4,043,664).
13. Loss per share
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 2022 March 2021
Loss per share £ £
- Basic (0.14) (0.15)
The calculation of the basic loss per share is based on the following data:
Year ended 31 Year ended 31
March 2022 March 2021
Loss for the year £ £
- Attributable to equity shareholders (£) (10,754,665) (6,993,018)
Number of shares
- Weighted average number of Ordinary Shares outstanding 74,884,548 45,738,690
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 2022, there were 9,273,161 options outstanding (2021: 10,826,072)
as detailed in note 25.
14. Intangible assets
Patents and Development Software Total
licenses 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
Disposals - - -
-
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
Amortisation eliminated on disposal - - - -
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
Net book value at 31 March 2021 55,000 3,253,554 55,602 3,364,156
15. Property, plant and equipment
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 - 250,064 - 255,691 - 505,755
combination
Disposals - - - (2,400) - (2,400)
Currency translation differences (125) 3,523 (59) 3,700 - 7,039
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
Net book value at 31 March 2021 - 43,078 146,264 9,137
- 198,479
16. Right-of-use assets
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
Net book value at 31 March 2021 425,682 8,201 - 433,883
17. Inventories
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Raw materials 2,438,533 64,463
Finished goods 31,510 52,495
2,470,043 116,958
18. Financial and non-financial assets
(a) Cash and cash equivalents Year ended 31 Year ended 31
March 2022 March 2021
£ £
Cash in hand and at bank 18,402,055 2,862,470
(b) Trade and other receivables Year ended 31 Year ended 31
March 2022 March 2021
Non-current assets: £ £
Other receivables 734,526 -
734,526 -
Current:
Trade receivables 2,422,019 273,978
Other receivables 1,742,568 -
R&D tax credit 574,368 200,000
VAT recoverable 331,184 41,476
5,270,139 515,454
5,804,665 515,454
(c) Prepayments and accrued income Year ended 31 Year ended 31
March 2022 March 2021
Non-current assets: £ £
Prepayments and accrued income 101,825 -
101,825 -
Current:
Prepayments and accrued income 1,237,197 143,569
1,237,197 143,569
1,339,022 143,569
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 2022 (2021, 2020: 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 27 for further detail.
19. Financial liabilities
Year ended 31 Year ended 31
Trade and other payables March 2022 March 2021
£ £
Current:
Trade payables 1,672,548 302,643
Social security and other taxes 1,684,705 54,589
Pension due 15,807 8,625
Accruals and deferred income 1,157,142 219,431
Other payables 2,289,319 -
Borrowings - 176,111
6,819,521 761,399
Included within 'Other payables' is an amount of £1,706,498 (2021: £nil) in
respect of deferred consideration for the acquisition of Saietta Europe B.V.
(formerly e-Traction Europe B.V.). For more details, see note 29.
Year ended 31 Year ended 31
Lease liabilities March 2022 March 2021
£ £
Lease liabilities 470,069 114,555
470,069 114,555
20. Non-current financial liabilities
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Lease liabilities 2,380,537 330,426
Borrowings - 2,340,000
Provisions Note 22 168,130 -
Liabilities for financial guarantees Note 23 41,833 -
2,590,500 2,670,426
Included within lease liabilities are the following amounts:
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Due within one year 470,069 114,555
Due in more than one but not more than two years 656,840 110,142
Due in more than two but not more than five years 968,423 220,284
Due after five years 755,274 -
2,850,606 444,981
Movement in net borrowings
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Borrowings at 1 April 2,516,111 231,945
Loan notes converted into equity (2,340,000) -
Convertible loan notes issued - 2,340,000
Repayments in the year (176,111) (55,834)
Borrowings at 31 March - 2,516,111
In March 2021 the Group issued 2,340 convertible loan notes to Amati Global
Investors Limited with a nominal value of £2,340,000. The loan notes had a
term until 2026 and a coupon rate of 8%. Upon admission to the AIM market on
7th July 2021, the convertible loan notes issued by the Company were
automatically converted into 3,000,0000 new Ordinary shares (the "Conversion
Shares") of £0.0011 each at a conversion price of £0.78 per share, pursuant
to the terms of the convertible loan notes. See note 25 for more detail.
In January 2019 Mr. L. Marazzi provided a non-interest bearing loan to the
company of £25,000 repayable in equal instalments over 36 months. In March
2019 Mr. L. Marazzi provided a non-interest bearing loan to the company of
£250,000 repayable in equal instalments over 36 months. The entire balance
owed to Mr. L. Marazzi was repaid during the year.
21. 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 2022 March 2021
£ £
Interest expense 18,609 21,177
Principal payments 263,263 73,533
281,872 94,710
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 2022 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.
The aggregate undiscounted commitments for short-term leases not recognised in
the balance sheet at year end is £nil (2021: £nil).
22. Provisions
Onerous
Warranty provisions contracts provisions
£ £ Total
£
Provisions at 1 April 2021 - - -
Amounts provided in the year 42,407 526,700 569,107
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.
The Group considered the impact of the COVID-19 pandemic on its product
warranty offerings and associated provisions, and determined that its existing
methodology remained applicable for the year ended 31 March 2022.
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.
23. Liabilities for financial guarantees
Year ended 31
March 2022
£
Balance at 31 March 2021 & 31 March 2022 -
Additions to financial liabilities during the year 78,058
Payments against financial liabilities (36,255)
Balance at 31 March 2022 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.
24. Share capital and share premium
Share capital and share premium
Allotted, issued and fully paid: Year ended 31 Year ended 31
March 2022 March 2021
Number: Type: Nominal £ £
value:
85,051,953 Ordinary Shares £0.0011 93,557 -
519,205,742 Ordinary Shares £0.0001 - 51,921
Share capital Share premium
Number Total
of shares £ £ £
Balance at 1 April 2020 43,579,955 4,358 10,641,597 10,645,955
Issue of shares 475,625,787 47,563 1,387,226 1,434,789
Cancellation of share premium - - (12,028,823) (12,028,823)
Balance at 31 March 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
The cancellation of share premium was approved by shareholder resolution on 25
March 2021.
In March 2021 the Group issued 2,340 convertible loan notes to Amati Global
Investors Limited with a nominal value of £2,340,000. The loan notes had a
term until 2026 and a coupon rate of 8%. Upon admission to the AIM market on 7
July 2021, the convertible loan notes issued by the Company were automatically
converted into 3,000,0000 new Ordinary shares (the "Conversion Shares") of
£0.0011 each at a conversion price of £0.78 per share, pursuant to the terms
of the convertible loan notes. The nominal value of the Conversion Shares was
credited to share capital, with the proceeds raised in excess of this being
credited to share premium. The shares will rank pari passu with the existing
Ordinary shares which were admitted to trading on AIM.
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 passu with 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.
25. Share-based payments
Share option
reserve
£
Balance at 1 April 2020 (Unaudited) 1,599,328
Share based payments 5,719,492
Balance at 31 March 2021 (Unaudited) 7,318,820
Share based payments 4,899,171
Balance at 31 March 2022 (Audited) 12,217,991
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 2022 For the year ended 31 March 2021
Number Weighted average exercise price Number Weighted average exercise price
# £ # £
Outstanding at beginning of year 10,826,072 0.010 1,592,670 0.01
Granted 8,577,394 9,233,402
Lapsed (616,370) -
Vested (12,553,823) -
Outstanding at end of year 6,233,273 0.012 10,826,072 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 2022 March 2021
£ £
Exercise price at grant date £0.01 £0.012
Expected life (in years) 3 1
Risk-free interest rate 0.58% 0.55%
Expected volatility 87.05% 86.03%
Weighted average share price 92.56 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 10 year UK
Gilts.
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Cost of options vesting in the year 4,899,171 5,719,462
In the year ended 31 March 2022 an amount of £161,951 (2021: £544,505),
representing the charge for options related to employees whose costs are
allocated to research and development and capitalized 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 £330,886 (2021: £nil) was debited in respect of
share issue costs against share premium.
The total cost of options vesting in the period has been classified as a
movement in the share option reserve.
26. 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
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
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
Accumulated losses : All other net gains and losses and transactions with
owners (e.g. dividends) not recognized elsewhere.
27. Financial instruments
Risk Management objective
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 instruments
Amortised cost
2022 2021
£ £
Cash and cash equivalents 18,402,055 2,862,470
Trade and other receivables 4,899,113 273,978
Total financial assets 23,301,168 3,136,448
Financial liabilities Fair value through profit and loss
Amortised cost
2022 2021 2022 2021
£ £ £ £
Trade and other payables 3,961,867 302,643 - -
Lease liabilities 2,850,606 444,981 - -
Loans and borrowings - 2,516,111 - -
Liabilities for financial guarantees - - 41,833 -
Total financial liabilities 6,812,473 3,263,735 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.
The details of the fair value hierarchy, valuation techniques, and significant
unobservable inputs related to determining the fair value of loans and
borrowings, 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
2022 2021 2022 2021 2022 2021
£ £ £ £ £ £
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 used Significant unobservable inputs Inter-relationship 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 guarantees 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.
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 2020 -
Purchases, disposals and reclassifications -
At 31 March 2021 -
At 1 April 2021 -
Purchases, disposals and reclassifications 41,833
At 31 March 2022 41,833
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 Group's internal auditors also review the
risk management policies and processes and report their findings to the Audit
Committee.
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 2022 Total Less than 1 year Between 1 and 5 years Over 5 years
£ 3,961,867 £ 3,961,867 £ £
Trade and other payables - -
Accrued liabilities 1,157,142 1,157,142 - -
Loans and borrowings - - - -
Liabilities for financial guarantees 41,833 - 41,833 -
5,160,842 5,119,009 41,833 -
As at 31 March 2021 Trade and other payables
Total Less than 1 year Between 1 and 5 years Over 5 years
£ 302,643 £ 302,643 £ £
- -
Accrued liabilities 219,431 395,542 - -
Loans and borrowings 2,516,111 176,111 2,340,000 -
Liabilities for financial guarantees - - - -
3,038,185 874,296 2,340,000 -
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 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 2022 the company has net trade receivables of £2,622,019 (2021:
£273,978).
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: 1% of carrying value (2021: 0.0%)
30 days past due: 8.6% of carrying value (2021: 0.5%)
30-60 days past due: 9.6% of carrying value (2021: 1.0%)
60-90 days past due: 100% of carrying value (2021: 5.0%)
>90 days past due: 100% of carrying value (2021: 10.0%)
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.
Credit risk (continued)
The maximum exposure to credit risk is as follows:
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Cash on deposit 18,402,055 2,862,470
Trade receivables 2,422,019 273,978
Other receivables 2,477,094 385,045
23,301,168 3,521,493
The ageing of trade receivables at the year-end date was:
Year ended 31 Year ended 31
March 2022 March 2021
£ £
Current 2,219,626 214,516
More than 30 days past due 145,652 -
More than 60 days past due 28,700 -
More than 120 days past due 28,041 59,462
2,422,019 273,978
Capital risk management
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.
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 2022:
Year ended 31 Year ended 31
March 2022 March 2021
Euros Euros
Financial assets 2,270,011 -
Financial liabilities (1,450,128) -
Net exposure asset 819,883 -
The following entities are included in the consolidated financial information
of Saietta Group Plc:
Country of Registered Principal Shareholding
Investment Country of incorporation Registerd office Principal activity 2022 2021
Saietta Motorcycles Limited England and Wales Building 210 Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE Dormant 100% 100%
Saietta Racing Limited England and Wales Building 210 Heyford Park, Camp Road, Upper Heyford, Dormant 100% 100%
Oxfordshire, OX25 5HE
Propel B.V. (formerly Saietta Europe B.V.) Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Trading 100% 100%
Saietta Holding B.V. Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Trading 100% N/A
Saietta Traction Holdings B.V. Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Trading 100% N/A
Saietta RetroMotion B.V. (formerly Saietta Refit B.V.) Netherlands Moleneind 23-A, 1241NG Kortenhoef, Netherlands Trading 100% N/A
Saietta Europe B.V. (formerly e-Traction Europe B.V.) Netherlands Watermanstraat 40, 7324AH Apeldoorn, Netherlands Trading 100% N/A
29. Business combinations
On 11 November 2021, Saietta Traction Holdings B.V., a company incorporated in
the Netherlands and in which Saietta Group Plc has a controlling shareholding,
acquired 100% of the Ordinary share capital of Saietta Europe B.V. (formerly
e-Traction Europe B.V) ("acquired company"), a company incorporated in the
Netherlands, for consideration of €2,000,000.
The purpose of this acquisition was to accelerate Saietta's growth strategy by
adding new commercial and technical capabilities and an established power
electronics production facility.
On the 8 December 2021, the acquired company was renamed Saietta Europe B.V.
Details of the fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill are as follows (note that fair value was
not used as the measurement basis for assets and liabilities that require a
different basis, which includes leases, contingent liabilities, income taxes
and defined benefit pension plans):
Book value Adjustment Fair value
£ £ £
Intangible fixed assets 2,184,143 (1,341,832) 842,311
Right-of-use assets 362,660 - 362,660
Property, plant and equipment 505,755 - 505,755
Inventories and work-in-progress 1,777,264 (93,871) 1,683,393
Accounts receivable 21,285 - 21,285
Taxes and social security charges 93,615 - 93,615
Other receivables 638,350 - 638,350
Cash and cash equivalents 279,252 - 279,252
Provisions (42,662) - (42,662)
Lease liabilities (362,661) - (362,661)
Long-term debt - - -
Trade creditors (366,762) - (366,762)
Taxes and social security charges (112,537) - (112,537)
Other liabilities (725,446) - (725,446)
Provision for onerous contracts (405,294) - (405,294)
3,846,962 (1,435,703) 2,411,259
A gain on bargain purchase of £704,761 (2021: £nil) was recognised in
respect of the excess of the fair value of consideration transferred over the
fair value of the acquired company's net assets.
This gain on bargain purchase was recognised immediately as a gain in the
Statement of Consolidated Income.
Fair value of consideration paid
£
Cash 1
Contingent cash consideration 1,706,498
Total consideration 1,706,498
Gain on bargain purchase recognised 704,761
Acquisition costs of £358,358 arose as a result of the transaction. These
have been recognised as part of administrative expenses in the statement of
comprehensive income.
The consideration settled in cash is contingent on:
(a) the seller not being subject to any insolvency proceedings at any
time prior to 1 May 2023 or other date as agreed in writing between both
parties; and
(b) favourable legal opinions issued by first class reputable legal
counsels, based in Hong Kong and China, in respect of legal matters pertaining
to the acquisition.
The fair value of the contingent consideration has deemed to be equivalent to
the total contingent cash consideration. The favourable legal opinions
referenced in point (b) above were both received in June 2022. At 31 March
2022, the contingent consideration was held in escrow with the Group's
solicitors.
The main factors leading to the recognition of a gain on bargain purchase are:
- The acquisition price being substantially lower than the carrying value of
the entity's net assets.
- The presence of certain intangible assets in respect of previously
unrecognised which had a fair value in excess of their carrying value.
The gain on bargain purchased recognised will not be considerable taxable for
tax purposes.
Since the acquisition date, Saietta Europe B.V. has contributed £952,018 to
the Group's revenues and £883,550 to the Group's losses, excluding the gain
on bargain purchase recognised. If the acquisition had occurred on 1 April
2022, group revenue would have been £2,643,785 and group loss for the period
would have been £4,941,128.
Fair value adjustment to intangible fixed assets
The fair value adjustment to intangibles at acquisition was determined by
assessing each individual intangible asset separately. The best estimate of
each intangibles' fair value was calculated to be equivalent to the time and
costs of resources required to recreate them.
Fair value adjustment to inventories
Management assessed the fair value of inventories was assessed to be equal to
their replacement cost. Based on management's prior experience of the markets
within which the entity operates, it was estimated that inventory, which was
held at a cost £1,952,937, could be sold to existing and new customers. The
remainder was assessed as being obsolete and having a net realisable value of
£nil.
30. Related party transactions
During the year, the company repaid an amount totalling £176,111 (2021:
£40,833) 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 (20201: £176,111).
During the year, the company paid £131,193 (2021: £nil) in respect of
commission payable to Verto AGO BV, a company in which W Kist is a director
and is considered to have significant influence over. The amount payable to
Verto AGO BV at the end of the year was £64,012 (2021: £nil).
31. Subsequent events
On 4 April 2022, Saietta Group plc was assigned the lease of a manufacturing
facility in Sunderland, UK. The lease term commences on 4 April 2022 and
terminates 27 September 2040. In addition, the Company paid consideration of
£1,100,000 for plant & equipment housed within this facility.
In June 2022 Saietta Group plc was notified of its successful application for
a £2 million grant from the UK Government's Automotive Transformation Fund
under the Scale up Readiness Validation (SuRV) to support Saietta's investment
in commercial vehicle e-axle pilot production and preparation for scale-up at
the Sunderland facility.
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