REG - Strip Tinning Hldgs - Annual Results for year ended 31 December 2023
30/04/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240430:nRSd5002Ma&default-theme=true
RNS Number : 5002M Strip Tinning Holdings PLC 30 April 2024
30 April 2024
Strip Tinning Holdings plc
("Strip Tinning" or the "Company")
Annual Results for year ended 31 December 2023
Financial performance in line with market expectations, with operational
enhancements and strong sales pipeline leaving the Company well-positioned for
accelerated growth
Strip Tinning Holdings plc (AIM: STG), a leading supplier of specialist
connection systems to the automotive sector, is pleased to announce its full
year results for the year ended 31 December 2023.
FY23 Financial highlights:
· Total Revenues of £10.8m (FY 22: £10.2m).
· Renamed Battery Technologies division (formerly EV division)
product sales of £1.1m (FY 22: £1.2m).
· Glazing division product sales of £9.7m (FY 22: £8.9m).
· Adjusted EBITDA of £0.1m (FY 22: loss of £2.2m).
· £1.0m of cash generated from operating activities (2022: £4.2m
outflow) with cash of £0.3m as of 31 December 2023 (2022: £1.3m).
· £5.1m fund raise completed post-period end in January 2024,
leaving the Battery Technologies division sufficiently capitalised.
FY23 Operational highlights:
· Battery Technologies division well-positioned for growth
acceleration, with an increasing pipeline and sufficient funding to capture
the significant market opportunity.
· Growth in Glazing division driven by improved margins and
valuable new production supply nominations.
· Glazing division now cash generative and able to fund its own
growth plans.
· Further improved products, new product launch and production
processes to the benefit of both customers and the Group, with Glazing
division Gross Margins improved from 3.6% in 2022 to 28.7% in 2023.
· Maintained a strong commitment to responsible business practices
with an A grade ESG rating for the third year running.
Board Changes
· Two planned changes to the Company's Board which will be
effective from 1 June, with the promotion of Mark Perrins, the Group MD, to
Group CEO and the transition of current CEO, Richard Barton, to Deputy
Chair.
Outlook
· Strong momentum already demonstrated in 2024 with two significant
new wins announced in the emerging "smart" glass market, in which Strip
Tinning benefits from first mover advantage, with sales growth coming in 2025
once serial production commences.
· The Company anticipates securing further major programmes across
its Battery Technologies and Glazing product lines throughout 2024, with a
significant new Cell Contact System win for the Battery Technologies division
expected in H1 2024, with sales from volume ramp up anticipated in Q4 2025.
Adam Robson, Executive Chair of Strip Tinning, commented: "We are delighted
with the progress we have made in stabilising our operations during FY23,
driven by the improvements and reorganisations implemented in 2022 and into
2023.
We believe that 2024 will be a formative year for Strip Tinning, with the
strong momentum across the business already demonstrated by our recent wins
worth £18.6m. This year we are securing the nominations that will return us
to growth from 2025, and we will maintain the investment needed to maximise
our success in converting the strong Battery Technologies and Glazing sales
pipelines we have before us."
Investor Presentation
Strip Tinning will be hosting a webinar for investors on Wednesday 1(st) May
2024 at 12:00. If you would like to register for the webinar, please click the
link below:
https://www.investormeetcompany.com/strip-tinning-holdings-plc/register-investor
(https://www.investormeetcompany.com/strip-tinning-holdings-plc/register-investor)
Enquiries:
Strip Tinning Holdings plc
Via Alma
Adam Robson, Executive Chairman
Richard Barton, Chief Executive
Officer
Adam Le Van, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Sole Broker)
+44 (0) 20 7496 3000
Rick Thompson
James Fischer
Alma (Financial PR)
striptinning@almastrategic.co (mailto:striptinning@almastrategic.co)
m
Josh Royston
+44 (0) 20 3405
0205
Joe Pederzolli
Chairman's statement for the year ended 31 December 2023
2023 has been a year of strong progress for Strip Tinning. I would like to
start by thanking all employees of the Company who have worked exceptionally
hard during the year. Together, we have been implementing an operational
turnaround of the business and delivered a set of financial results which are
in line with market expectations. Having invested in new capabilities and
capacity, the business now finds itself on firm footing following the
well-documented challenges we have contended with. Our quality of service has
never been better and our customer base continues to reward us with a steady
stream of new business opportunities and production nominations.
I would also like to thank our many shareholders who have supported our recent
and successful fundraise. We are delighted to have raised gross proceeds of
£5.1m post year-end which leaves us with a well-structured balance sheet and
ensures that we are appropriately configured to capture the significant market
opportunity across the Electric Vehicle (EV) Battery Technologies market.
Despite the headwinds we have faced during the last two years, there is no
doubt that we have emerged as a leaner, higher performing organisation, with
the right team to deliver on our significant market opportunity. Our people,
capacity, and financial resources are in place to address the growing pipeline
of new business opportunities we anticipate. As such, we look forward to 2024
as a period in which we expect to secure major programmes across both our EV
Battery Technologies and Glazing product lines, which will underpin our sales
growth for the years ahead. Indeed, two record breaking Glazing wins have
already been announced, which together have increased by 91% the total
lifetime sales value of Strip Tinning's Connectors nominations, from £20.5
million at the end of 2023 to £39.1 million today. The total lifetime sales
value of all nominations held by the Company is now £52.7 million.
We remain committed as a Board to maintaining high standards of Environmental
and Social Governance (ESG) and we were pleased to receive confirmation from
Integrum that we have maintained our best-in-class A grade ESG rating for the
third year running. As an organisation we are proud of our growing
contribution to the world's drive towards electrification, and advancing our
ESG programme remains a key focus for the Group
The experience of our Board has proven to be of immense value during the year,
helping us to maintain our focus on operational excellence and targeted
markets, as well as our positioning us for the growth ahead. In order to
maintain the positive momentum across the business, the Board has met at-least
monthly throughout the year, and so I would like to thank the Board members
for the commitment they have shown.
I am also pleased to announce two Board changes scheduled to take effect on 1
June 2024, marking the next step in our succession planning as we enter an
exciting high-growth period. We are promoting Mark Perrins, who has served
as Managing Director for the past two years, to the title of Group Chief
Executive Officer (CEO). Mark has played a pivotal role in leading the
improvements of the business and positioning the Group for a return to growth,
and is now ready for greater responsibilities for the leadership of the
Group. Richard Barton will transition to the role of Deputy Chair, where he
will continue to focus on the Group's strategy and provide support to Mark and
the sales team. Additionally, Richard has also chosen to extend his "orderly
market" agreement in relation to his ordinary shares for a further year.
My role as Executive Chair is unchanged.
Looking to the future, we are focused on securing our target new business
programmes whilst continuing to enhance the core business processes,
capabilities, and production capacity which will underpin our profitable
growth.
Adam Robson
Executive Chairman
Chief Executive Officer's statement for the year ended 31 December 2023
We are pleased to deliver a financial performance in line with market
expectations, with significantly improved EBITDA performance in 2023 having
primarily been driven by the prioritisation of increased gross margins and
enhanced productivity.
We have invested in new production capabilities and in turn we are providing
our customers with a quality of service that is better than ever, which has
resulted in a growing pipeline of new nominations. We continue to hold a
diverse customer base, formed partly by longstanding customers that we have
worked with for many years, as well as new customers across both our
traditional Automotive Glazing market, and from the Electric Vehicle (EV)
Battery Technologies market.
We have officially renamed our "EV" division to "Battery Technologies"
effective immediately. This change is to provide clarity regarding the target
markets of the two divisions. The Glazing Division remains focused on
connectors used in association with automotive and occasionally non-automotive
Glazing. A significant proportion of our Glazing sales are now intended for
use in EVs, meaning the previous distinction between the EV and non-EV
divisions is no longer applicable. At the same time, our former "EV" division
has achieved success with a range of products all comprising subsystems within
battery packs. These packs are not only utilised in EVs but also across a wide
range of other applications including static storage.
Financial Results for 2023
The Group's financial performance for the year has been much improved. Sales
grew to £10.8m (FY22: £10.2m), with gross profit margins improving steadily
throughout the year to 30.6% in 2023 (2022: 4.9%), as production of lower
margin products ceased and as productivity enhancement measures and other cost
reduction activities came into effect. Adjusted EBITDA has improved to £0.1m
(FY22: loss of £2.2m) and is in line with market expectations, having
significantly improved from the prior year's losses. Our reported EBITDA for
2023 would have been higher had we not chosen to use the extra income to fund
increased investment into the enhancement of our team of managers, engineers,
quality personnel, supply chain and programme managers, in order to respond
effectively to the growing pipeline of Battery Technologies and Glazing sales
opportunities. Our Net Profit also improved materially to a loss of £0.8m in
2023 (FY22: loss of £4.9m) assisted by R&D Tax Credit claims and Grant
Income. This continued loss reflects both the lower margins achieved during
part of the year in the Glazing business as the operational improvements were
progressively enacted, as well as the significant investments we are making to
grow our Battery Technologies business.
Business Environment
Our Battery Technologies business line is focussed on the sale of Flexible
Printed Circuits (FPC) and Cell Contact Systems (CCS), key components which
operate within EV battery packs. We target the sale of these products into the
Mid-Market, which we broadly define as vehicles with production volumes under
50,000 units per annum. Typical applications are sports and luxury cars,
trucks, off-highway vehicles, new vehicle types such as autonomous shuttles,
motorcycles, and even Electric Vertical Take Off and Landing (eVTOL)
aircraft. We also include static power solutions such as mobile battery
packs which replace mobile gensets.
The scale of the Battery Technologies opportunity we are addressing in the
Mid-Market is considerable. We recently completed a market study conducted by
FEV, the German automotive consultancy, which quantified the total addressable
market in Europe and North America for CCS alone in the Mid-Market. The study
identified that our addressable market will be worth £220m in 2030 and £420m
in 2035.
The Group's Glazing products are predominantly used in the production of all
classes of automotive light vehicles, of which the majority are passenger cars
manufactured in Europe, where the European Automobile Manufacturers'
Association (ACEA) reported that car sales increased by 13.9% in 2023. This
notes a substantial improvement after the supply chain difficulties of 2022,
but one which still leaves the industry selling 19% fewer vehicles compared to
2019. Industry consensus expects vehicle production to see modest growth
continuing into 2024, but for growth in EV and Hybrid Electric vehicle sales
to be higher, having respectively achieved an annual growth in 2023 of 37% and
29.5%. We estimate that 40% of our sales in 2023 were onto EV and Hybrid
platforms, providing us with good exposure to higher growth markets and
reflecting our focus on supplying parts for innovative and higher value
vehicles.
For our Glazing connector products, we are experiencing higher growth than
that in the underlying vehicle production market, driven by innovation,
functionality, value add and product pricing. Key to our marketing strategy is
focusing on the product areas with high levels of innovation. Our own market
model suggests that the innovation lead Automotive Glazing market is growing
at 6.3% per annum worldwide. The European automotive industry has historically
been a leader in adopting new technologies. We see this most clearly today in
the
adoption of "smart" glass, primarily based on using polymer-dispersed liquid
crystals (PDLC). Glass containing PDLC requires a new generation of electrical
connectors, and we are proud to have been one of the first suppliers in 2022
to support a volume production launch into this new segment. We have since
won two further high-volume nominations and between all our PDLC programmes we
forecast annual sales of £3.7m, ramping up from Q4 2025. Our leading pedigree
in the automotive sector has also positioned us well to serve the newly
emerging volume glazing market for architectural glass.
Sales progress during 2023
In January 2023, with the support of our customers, we raised our Glazing
product prices to reflect the pressures felt by all businesses trading
internationally. Customers engaged constructively with our price increases,
and appreciated Strip Tinning's commitment to remaining a strong, long-term
supplier in the Glazing market. That said, with a strong focus on profitable
production, it has not made sense to continue to supply all the products
previously manufactured in 2022 and our customers have phased out purchasing
of these products during 2023. As a result of price increases, our gross
margins have improved and we have returned the business to operating on a
sustainable basis. Although sales volumes declined throughout the year, total
Glazing sales in 2023 stood at £9.7m ahead of the £9.2m achieved in 2022 but
off much lower volumes. Continuing sales in the last quarter at £2.2m left us
at an annualised run rate of £8.8m as we entered 2024.
A further consequence of the price increase was that during the first half of
2023 our customers were predominantly focussed on digesting the price
increases rather than discussing new business opportunities with us. In the
second half of the year we noted a significant increase in our Glazing sales
pipeline, having won valuable new production supply nominations. The most
significant of these was the supply of glazing connectors to a range of
leading global automotive Original Equipment Manufacturers (OEMs) including
Mercedes, Volkswagen, Toyota and Skoda for a number of battery and combustion
engine-based vehicle programmes. Supply will commence in Q2 2024 and will
continue for between two and five years, depending on the end of production
dates of the individual programmes, with an estimated lifetime sales value of
c.€3.0m. Based on this and a notable pipeline of other awards we expect to
secure, we are optimistic that Glazing sales will recover towards their 2022
levels in 2024. Beyond 2024, based on our strong pipeline of sales
opportunities, which includes a number of large and exciting PDLC smart glass
programmes, we expect to return to growth in 2025.
We continued to make strong progress in the Battery Technologies Mid-Market
during 2023. Throughout 2023, we developed a larger pipeline of opportunities
which today stands at 13 new programmes coming from 9 new customers on which
we are particularly focussed. Over half of these programmes were unknown to us
12 months ago, showing the speed at which our pipeline is developing. We
were delighted to have announced, in November 2023 a production nomination for
the supply of FPCs to a leading European manufacturer of advanced battery
systems, who are a new customer to us. The FPCs are for a mobile battery
application used across a range of sectors, including the catering,
construction, and film industries. The contract started in December 2023 and
will run until the end of 2025, with a forecast lifetime sales value of $1.0m.
Strip Tinning is replacing a non-European supplier part way through the
product life cycle, hence the nomination's shorter than normal duration.
Looking ahead, we are confident there will be further opportunities within the
"smart" glass sector and we anticipate a significant new Cell Contact System
win for our Battery Technologies division in H1.
Operational Review
We continue to strengthen our capabilities across the business with the
objectives of improving quality and supply effectiveness and reducing costs
and waste. Notable advances have been:
· Strengthened Management team - our soon to be CEO, Mark Perrins,
who joined us in early 2022 as a Managing Director, has continued to develop
his Senior Leadership Team from existing and new managers. This team has
driven through the improvements already achieved and is now taking the
business forward towards growth and improving margins. We are particularly
pleased to have Rob Smith join us as Chief Technology Officer (CTO), who
returns to the UK having spent 8 years in China with Tata Engineering
Services, working on new electric programmes for Chinese and Vietnamese car
makers. We are also pleased to welcome Damian Lee as Supply Chain Director who
joins us having had a 30-year career with international automotive Tier 1s;
· Further improved products, product launch and production
processes to the benefit of both customers and the Group;
· Upgraded FPC production line installed and in production. Laser
Weld line for CCS is on order and will start production in June 2024. To date
we have invested £5m in our Battery Technologies production processes which
has benefitted from our £1.4m grant from the Advanced Propulsion Centre (APC)
Scale-up Readiness Validation (SuRV) fund. We are hopeful that we can
secure further funds for the continued expansion of this line and for further
development and innovation in our product capabilities;
· New SAP B1 ERP (SAP Business One Enterprise Resource Management
system) went live on 1 January 2024;
· Quality - we have successfully passed all customer audits during
the year and our core process certifications are all up to date:
o ISO 9001 Quality Management System
o ISO 14001 Environmental Management System
o IATF 16949 Automotive Quality Management System
o OHSAS 18001, Occupational Health and Safety Management Systems
· Productivity has risen significantly during the year with average
sales per production employee rising by 39% from £76,343 in 2022 to £106,137
in 2023.
· Working Capital - we have improved Working Capital management
throughout the year such that Debtors reduced from £3.4m to £2.7m despite
the increase in sales over the year, with a targeted effort at resolving any
invoice queries as well as being firm on payment to credit terms. Trade
Creditors also reduced from £3m to £2.2m on the back of improved material
purchasing and maintaining good supplier relationships. Stock opened at £1.8m
at the beginning of 2023 and had been managed down to £1.3m by 2023 year end.
The business is targeting a further £0.3m stock reduction over 2024, building
on the initiatives pursued in 2023 and the benefits of the SAP B1 ERP system.
ESG
As mentioned, we were pleased to receive confirmation from Integrum that we
have maintained our best-in-class A grade ESG rating for the third year
running. We are proud of our growing contribution to the world's
electrification drive and advancing our ESG programmes remains a key focus for
the Group.
Fund Raise and Cash Management
We were pleased to complete our £5.1m fund raise in January 2024 when it
received shareholder approval. We raised £4.0m in Convertible Loan Notes
from our three leading VCT fund shareholders, £1.0m from other existing
shareholders, including £0.1m from management, and £0.1m from private
investors. This raise was in line with our target and provides our Battery
Technologies business with the funds it needs to accelerate its growth over
the next two years. Our Glazing business is now cash generative and able to
fund its own growth plans and together we expect the entire Group to be cash
generative in 2026.
This addition to our cash reserves comes after a strong operating cash
performance in 2023, with £1m of cash generated from operating activities
(2022: £4.2m outflow), closing the year with £0.3m in the bank after
investments of £1.7m during the period.
Outlook
Following the improvements and reorganisations implemented in 2023, 2024 we
are preparing to return to growth, underpinned by the two new PDLC Glazing
Connector production nominations we have already announced in the current
year, as well as a pipeline of other potential nominations across both Battery
Technologies and Glazing. Given the lead time of our projects, most of these
wins will see their production start dates fall in 2025, and will therefore
have limited impact on 2024 sales, except for the supply of samples which for
Battery Technologies can be of material value. We also start the year at a
low point in expected sales, with the products discontinued in 2023 now out of
the system and the new products won only entering production from April
onwards. The net effect is that whilst on a quarterly basis we expect to see
growth from the Q1 2024 low point, net sales across the year are expected to
be in line with those of 2023.
EBITDA will benefit from improving trends in gross margins but will be
countered by further increases in our overheads, as we carry the full year
costs of our expanded business growth team and the falling away of our APC
grant which contributed £1.1m to EBITDA in 2023. The net effect is that we
expect to see a small EBITDA loss made in 2024, with the profits generated on
the Glazing side being offset by our significant investment in the Battery
Technologies opportunity.
On the cash side our net debt is expected to show a £1.6m change as we
continue our investment in Battery Technologies production assets and cover
the on-going start-up costs of the Battery Technologies business.
We believe that 2024 will be a formative year for the business with a strong
focus on preparing for profitable delivery of the nominations already received
as they ramp up in in 2025 and maintaining the investment needed to maximise
our success in converting the strong Battery Technologies and Glazing sales
pipeline we have before us to secure the nominations that will return us to
significant growth from 2025.
I would also like to welcome Mark Perrins to his new Board role as Group
CEO. Mark has made a very impressive start to his career at Strip Tinning
over the last two years, delivering great successes in operations and sales
growth. I am very confident that Mark is the right person to lead the
company into this high growth period under the continued leadership of Adam
Robson as Executive Chair. In my capacity as Deputy Chair, I look forward to
focusing on the Company's growth strategy and sales execution, and to
supporting Adam and Mark in their roles.
Richard Barton
Chief Executive Officer
Consolidated statement of comprehensive income
for the year ended 31 December 2023
Note 2023 2022
£'000 £'000
Revenue 3 10,826 10,230
Cost of sales (7,517) (9,731)
Gross profit 3,309 499
Other operating income 4 1,364 439
Administrative expenses 5 (6,075) (5,864)
Impairment loss 5 - (577)
Operating loss 5 (1,402) (5,503)
Finance expense 8 (331) (147)
Loss before taxation (1,733) (5,650)
Taxation 9 962 725
Loss and total comprehensive expense for the financial year (771) (4,925)
Basic and diluted loss per share (pence) 10 (5.0) (33.7)
All amounts relate to continuing operations.
There is no other comprehensive income in either the current or prior year.
Under the merger accounting principles applied the statement includes the
results of the company and its subsidiary as if they had been combined
throughout the prior year.
Consolidated statement of financial position as at 31 December 2023
Note 31 December 2023 31
December
2022
£'000 £'000
Assets
Non current assets
Intangible assets 11 1,643 1,277
Right-of-use assets 12 1,090 1,151
Property, plant and equipment 13 3,233 2,950
5,966 5,378
Current assets
Inventories 15 1,287 1,848
Trade and other receivables 16 2,685 3,381
Tax recoverable 991 559
Cash at bank and in hand 343 1,290
5,306 7,078
Total assets 11,272 12,456
Liabilities
Current liabilities
Trade and other payables 17 (2,197) (3,045)
Borrowings 18 (973) (553)
Lease liabilities 19 (201) (182)
(3,371) (3,780)
Non current liabilities
Accruals and deferred income 17 (11) (37)
Borrowings 18 (798) (992)
Lease liabilities 19 (936) (995)
Provisions 23 (360) (227)
Deferred taxation 24 - -
(2,105) (2,251)
Total liabilities (5,476) (6,031)
Net assets 5,796 6,425
Equity
Called up share capital 25 154 154
Share premium account 25 6,966 6,966
Merger reserve 25 (100) (100)
Other reserve 25 (3) (3)
Accumulated loss (1,221) (592)
Total equity 5,796 6,425
Company statement of financial position as at 31 December 2023
Note 31 December 2023 31 December 2022
£'000 £'000
Assets
Non current assets
Investments 14 3,983 3,841
Current assets
Trade and other receivables 16 5,579 5,791
Cash at bank and in hand - 414
5,579 6,205
Total assets 9,562 10,046
Liabilities
Current liabilities
Trade and other payables 17 (199) (67)
Total liabilities (199) (67)
Net assets 9,363 9,979
Equity
Called up share capital 25 154 154
Share premium account 25 6,966 6,966
Merger reserve 25 3,645 3,645
Other reserve 25 (3) (3)
Accumulated loss (1,399) (783)
Total equity 9,363 9,979
As permitted by section 408 of the Companies Act 2006, the parent Company's
profit and loss account has not been included in these financial statements.
The Company recorded a loss for the year of £758,000 (from incorporation to
31 December 2022: loss of £879,000).
Consolidated statement of changes in equity for the year ended 31 December
2023
Share premium account Merger reserve Other reserve
Called up share capital £'000 Accumulated loss Total
£'000 £'000 £'000 £'000 Equity
£'000
Balance as at 1 January 2022 - - - - 4,237 4,237
Loss and total comprehensive expense for the financial year - - - - (4,925) (4,925)
Share based payment (note 25, 26) - - - (3) 96 93
Capital reorganisation (note 25) 100 - (100) - - -
Issue of share capital (note 25) 54 6,966 - - - 7,020
Total contributions by owners 54 6,966 - (3) 96 7,113
Balance as at 31 December 2022 154 6,966 (100) (3) (592) 6,425
Loss and total comprehensive expense for the financial year - - - - (771) (771)
Share based payment (note 26) - - - - 142 142
Total contributions by owners - - - - 142 142
Balance as at 31 December 2023 154 6,966 (100) (3) (1,221) 5,796
Company statement of changes in equity for the year ended 31 December 2023
Share premium account Merger reserve Other reserve Accumulated loss Total equity
Called up share capital £'000 £'000 £'000
£'000 £'000 £'000
On incorporation - - - - - -
Loss and total comprehensive expense for the financial year - - - - (879) (879)
Issue of share capital in exchange for Strip Tinning Limited shares (note 25) 100 - 3,645 - - 3,745
Issue of share capital (note 25) 54 6,966 - - - 7,020
Share based payment (note 25, 26) - - - (3) 96 93
Total contributions by owners 154 6,966 3,645 (3) - 10,858
Balance as at 31 December 2022 154 6,966 3,645 (3) (783) 9,979
Loss and total comprehensive expense for the financial year - - - - (758) (758)
Share based payment (note 26) - - - - 142 142
Balance as at 31 December 2023 154 6,966 3,645 (3) (1,399) 9,363
Consolidated cash flow statement for the year ended 31 December 2023
2023 2022
£'000 £'000
Cash flow from operating activities
Loss for the financial year (771) (4,925)
Adjustment for:
Depreciation of property, plant and equipment 13 828 592
Depreciation of right-of-use assets 12 225 203
Amortisation of intangible assets 11 173 180
Impairment of intangible fixed assets 11 - 577
Loss on disposal of tangible fixed assets - 55
Foreign exchange movements - (9)
Amortisation of government grants (88) (49)
IPO financing related costs in administrative expenses - 314
Share based payment 26 142 96
Finance costs 8 331 147
Taxation credit 9 (962) (725)
Changes in working capital:
Decrease in inventories 15 561 166
Decrease in trade and other receivables 16 696 397
Decrease in trade and other payables 17 (665) (1,309)
Cash generated from/(used in) operations 470 (4,290)
Income tax received relating to R&D tax credits 530 107
Net cash generated from/(used in) operating activities 1,000 (4,183)
Cash flows from investing activities
Purchase of property, plant and equipment 13 (1,113) (508)
Proceeds on disposal of intangible fixed assets - 15
Proceeds on disposal of tangible fixed assets 2 -
Purchase of intangible assets 11 (539) (488)
Net cash used in investing activities (1,650) (981)
Cash flows from financing activities
Issue of share capital 25 - 8,094
Share issue costs paid 25 - (1,077)
IPO financing related costs paid - (314)
Interest paid (319) (147)
Payment of lease liabilities (204) (199)
Invoice discounting finance advanced 492 -
Asset backed finance received 297 311
Loan repayments (53) (73)
Repayment of capital element of asset backed finance contracts (510) (487)
Net cash generated (used in)/from financing activities (297) 6,108
Net (decrease)/increase in cash and cash equivalents (947) 944
Cash and cash equivalents at the beginning of the year 1,290 337
Foreign exchange movements - 9
Cash and cash equivalents at the end of the year (all cash at bank and in 343 1,290
hand)
Notes to the financial statements
for the year ended 31 December 2023
1. Corporate information
Strip Tinning Holdings plc is a public company incorporated in the United
Kingdom and listed on AIM. The registered address of the Company is Arden
Business Park, Arden Road, Frankley Birmingham, West Midlands, B45 0JA.
The principal activity of the Company is as a holding company for a subsidiary
which manufactures automotive busbar, ancillary connectors and flexible
printed circuits (together the 'Group').
2. Accounting policies
Basis of preparation
The Group financial statements have been prepared in accordance with UK
adopted international accounting standards ("IFRS") and in accordance with the
requirements of the Companies Act 2006.
The parent Company financial statements have been prepared under applicable
United Kingdom Financial Reporting Standards 101: Reduced Disclosure Framework
("FRS101") and the requirements of the Companies Act 2006. The following FRS
101 disclosure exemptions have been taken in respect of the parent Company
only information:
· IAS 7 Statement of cash flows;
· IFRS 7 Financial instruments disclosures and;
· IAS 24 Key management remuneration.
The principal accounting policies applied in the preparation of these
consolidated and separate financial statements are set out below. These
policies have been consistently applied to all the years presented, unless
otherwise stated. The IASB has published the following amendments which were
implemented by the group on 1 January 2023 but which have not had any
significant impact on the group's financial statements:
· Amendments to IAS 8 Accounting policies, Changes in Accounting
Estimates and Errors: Definition of Accounting Estimates
· Amendments to IAS 1 Presentation of Financial Statements and IFRS
Practice Statements 2: Disclosure of Accounting Policies.
· IAS 12 Income Taxes: Deferred Tax related to Assets and
Liabilities arising from a Single Transaction.
The financial statements have been prepared under the historical cost
convention. The financial statements and the accompanying notes are presented
in thousands of pounds sterling ('£'000'), the functional and presentation
currency of the Company, except where otherwise indicated.
Going concern
After making appropriate enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources to continue
in operational existence for at least twelve months from the date of approval
of the financial statements. In adopting the going concern basis for preparing
the financial statements, the directors have considered a base case going
concern model and then modelled a series of severe but plausible downside
scenarios:
· All Glazing Connector Sales not already under contract or in the
pipeline have been excluded from sales forecasts despite the track record of
the Group in winning new business;
· All Sales into the Battery Technologies division other than those
covered by a Purchase Order have been pushed back into 2025 to simulate
possible delays;
· All forecast Battery Technologies division sales in 2026 have
been pushed back into 2027 to simulate a full year delay.
Despite the removal of over £4m of sales from 2024 and 2025 via these
scenarios, the adverse cash impact would still be more than covered by the
reserves provided by the January 2024 fund raise and the financing
arrangements the Group already has in place in the form of a £1.5m working
capital facility. This working capital facility is currently undrawn.
Further, the Group would take mitigation actions to alleviate the loss of
non-contracted sales, including:
· Substantially reducing planned Battery Technologies CAPEX spend
(up to £1.5m possible if Sales delayed)
· Deferring recruitment to align with Sales being pushed to the
right to achieve a very conservative total saving of £0.4m spread across 2024
and 2025.
Implementing the mitigating actions would mean the Group did not need to
utilise its working capital facility during the Going Concern assessment
period.
Under these scenarios, the financing arrangements available to the business
and / or realistic mitigating actions that can be taken to respond to results
that are not as planned mean the directors still have a reasonable expectation
that the Group have adequate resources to continue in operational existence
for the going concern model period, which is in excess of twelve months from
the date of approval of the financial statements. Beyond this period, the
directors remain confident that the product offering of the Group is
attractive to the market and augurs well for future prospects.
Standards, amendments and interpretations in issue but not yet effective
Certain new standards, amendments and interpretations to existing standards
have been published that are mandatory for accounting periods beginning on or
after 1 January 2024 and which the Group has chosen not to adopt early. These
include the following standards which may be relevant to the Group:
- Amendment to IAS 1 regarding the classification of liabilities being based
on an entity's rights at the end of a reporting period and disclosure in
respect of post period end covenants that have to be met in the 12 months post
period end;
- IAS 7/IFRS 7 amendments in respect of supplier finance arrangements and
disclosures that allow an investor to understand the nature of these;
- IFRS 16 Amendments to clarify how a seller-lessee subsequently measures sale
and leaseback transactions
As a result of initial review of the new standards, interpretations and
amendments which are not yet effective in these financial statements, none are
expected to have a material effect on the Company or Group's future financial
statements.
Use of estimates and judgments
The preparation of the financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience, as well as expectations of future events and various other factors
that are believed to be reasonable under the circumstances, the results of
which form the basis of making the judgments about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected. 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.
Intangible assets
Judgement
The capitalisation of development costs set out in note 11 is subject to a
degree of judgement in respect of the point when the commercial viability of
new technology and know-how is reached, supported by the results of testing
and customer trials. The carrying values are shown in note 11. Once the
trigger point is reached costs that can be reliably measured and directly
relate to the development of relevant projects are capitalised. These include
payroll costs, 3rd party invoices for subcontract cost and materials cost in
excess of the bill of materials. The other judgement used in intangible assets
is the Weight Average Cost of Capital (WACC) used in the impairment review's
discounted cashflow model. A CAPM formula has been used for this, with
management judgement used in the risk premium factor.
Estimation
Capitalisation criteria in respect of financial recoverability involves
estimated forecasts of future sales and margins with assumptions based on
experience and trends when they are prepared which may change over time. These
capitalised development costs include £0.7m of costs incurred in developing
the technologies, processes, and products for the FPC and CCS capability of
the business. As at accounting period end, the Directors were very confident
that the extensive development programmes conducted with customers over
multiple accounting period ends would translate into nominations for serial
volume production, resulting in a significant contribution to revenue. As at
Balance Sheet signing date two major FPC nominations had been received but the
outcome of two major CCS nominations was still awaited. Of the two CCS
nominations, one had a detailed contract with the Tier 1 customer agreed, but
not signed, as launch remained subject to sign-off by the ultimate OEM
customer
and the other had been delayed by the customer due to design changes. The
Directors remain confident that at least one, if not both, of the major CCS
nominations will be secured imminently based on how far advanced the
programmes are and the level of engagement with the customers. In the absence
of signed contracts in particular, there is always a risk that revenues will
not accrue in a manner expected by the directors. Should actual or expected
revenues be significantly short of those currently forecast , it will be
necessary to reassess the carrying value of this intangible asset.
Amortisation commences once management consider that the asset is available
for use, i.e. when it is judged to be in the location and condition necessary
for it to be capable of operating in the manner intended by management and the
cost is amortised over the estimated 5 to 8 year useful life of the know-how
based on experience of and future expected customer product cycles and lives.
Right-of-use assets
Judgement
The application of IFRS 16 involves an estimation of the appropriate
incremental borrowing rate and judgement of the relevant lease period. The
rate is reviewed in conjunction with the rates on similar borrowings and a
judgement has been made where there are break options by reference to business
plans and the most likely outcome.
Property, plant and equipment
Estimation
Property, plant and equipment as set out in note 13 is depreciated over the
estimated useful lives of the assets. 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. If the estimated life was increased by a year, annual
depreciation charges would be approximately £75,000 less.
Impairment of investment
Estimate
Investments are tested for impairment in accordance with IAS 36 'Impairment of
Assets'. Investments have separately identifiable cashflows. Key inputs into
the estimation uncertainty are the discount rates reflecting the asset
specific risks and the future cashflows from the investment. Carrying values
of the investment can be seen in note 14. A discounted cashflow model shows a
recoverable value with headroom of £1,775,000 above the investment amount.
Sensitivities have been applied to this amount, with a 1% increase in the
discount rate reducing the headroom by £806,000 and a £100,000 reduction in
final year cashflows from the investment reducing the headroom by £424,000.
Expected credit losses on intercompany receivables
Estimate
The intercompany receivable has been assessed for expected credit losses in
accordance with IFRS 9 'Financial Instruments'. The receivable relates to a
loan amount with no conditions attached, it is therefore assumed to be
repayable on demand with no interest charged. The loan is partially offset
every year via settlement by Strip Tinning Limited of Strip Tinning Holdings
PLC staff costs with the outstanding balance being repaid once Strip Tinning
Limited moves to Free Cash Flow. The recoverability has been assessed on the
basis of the future cashflows of Strip Tinning Limited and therefore the key
input into the estimate are the future cashflows of Strip Tinning Limited.
Discounting has not been considered as the loan is interest free and repayable
on demand. To estimate these future cashflows, management have used their base
case model, which external investors have relied on, which estimates that
Strip Tinning Limited would be able to repay the balance in full by 2028. The
same extreme sensitivity used for the impairment assessment of the investment
in Strip Tinning Limited has been used. The sensitised model estimates that
Strip Tinning Limited will be able to repay the balance in full by 2031, even
assuming no new contracts were won going forward (so that revenues were solely
from existing contracted work) versus the management base case model. Under
both scenarios Strip Tinning Holdings plc would be willing to allow the loan
to be paid over this period, and so it is concluded that no expected credit
loss need be recognised.
Deferred taxation
Judgement
The recognition of deferred tax assets involves the assessment of forecasts in
respect of future results and taxable profits and judgement as to the
likelihood that these will be achieved and realise the assets.
Inventory
Judgement
The calculation of net realisable value provisions against inventory requires,
in particular, an assessment of whether materials or components can be
utilised in future production. Management identify stock for provision based
on a combination of the past 12 month usage and the forecast next 12 month
usage of the item code,
Estimate
Stock which is identified as having more than one years usage in stock is
provided for on a sliding scale of 20%-90%. This has resulted in new
provisions of £254,000 being made in the year, this stock has not been
physically written off or scrapped, however we have decreased its net
realisable value to reflect its likely future use in the business. An
sensitivity is applied to provide 100% for all stock with more than one years
usage in stock, this would increase the provision applied by £160,000,
however management believe that this stock does have some residual value and
alternative usages, so the sliding scale is more appropriate.
Basis of consolidation
The Company was incorporated on 6 January 2022 with one £0.01 ordinary share
and on 2 February 2022, became the Group parent Company when it issued
9,999,999 £0.01 ordinary shares in exchange for all the ordinary shares in
Strip Tinning Limited. In addition, options over ordinary shares in Strip
Tinning Limited were converted, on equivalent terms, to options over 813,045
shares in the Company. This is considered not to be a business combination and
outside the scope of IFRS3 Business Combinations. This is a key judgement and,
as a transaction where there was no change in the shareholders or holdings,
is accordingly accounted for using merger accounting with no change in the
book values of assets and liabilities with no fair value accounting applied.
The consolidated financial statements present the results of the Company and
its subsidiary as if they have always formed a single group. Intercompany
transactions and balances between Group companies are therefore eliminated in
full. The share capital presented is that of Strip Tinning Holdings plc from
the date of the capital reorganisation in 2022 with the difference on
elimination of Strip Tinning Limited's capital being shown as a merger
reserve.
The consolidated statement of comprehensive income reflects the consolidated
results for the full comparative financial year ended 31 December 2022,
inclusive of the results of the newly incorporated parent entity, plc, from 6
January 2022 onwards.
A subsidiary is an entity over which the Group has control. The Group controls
an entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity.
Revenue
Revenue principally comprises income from the sale of automotive glazing
components comprising busbar, ancillary connectors and flexible printed
circuits, excluding VAT and trade discounts.
There are framework agreements with major customers including pricing per
component and purchase orders are then received from customers for each
delivery. Revenue is recognised to the extent that the performance
obligations, being the agreement to transfer the product meeting the technical
specifications is satisfied, which is when the customer obtains control of the
product. This recognition occurs at a point in time. The transfer takes place
in accordance with the terms agreed with each customer, either at the point in
time the goods are despatched to or received by the customer. Product is
tested before dispatch, but any product returned by the customer as faulty is
treated as a reduction in revenue.
When an amount has been invoiced or payment received in advance of the
associated performance obligations being fulfilled, any amounts due are
recognised as trade receivables and deferred income is recorded for the sales
value of the performance obligations that have not been provided.
Grants
Income based grants
Income based grants are recognised in other operating income based on the
specific terms related to them as follows:
· A grant is recognised in other operating income when the grant
proceeds are received (or receivable) provided that the terms of the grant do
not impose future performance-related conditions.
· If the terms of a grant impose performance-related conditions
including incurring related expenditure, then the grant is only recognised
in income as the related performance conditions are met.
· Any grants that are received before the revenue recognition
criteria are met are recognised in the statement of financial position as an
other creditor within liabilities.
Capital grants
Grants received relating to tangible and intangible fixed assets are treated
as deferred income and released to the income statement on a straight line
basis over 10 years.
Employee benefits
The Group operates a defined contribution pension scheme. Contributions are
recognised in the statement of comprehensive income in the year in which they
become payable in accordance with the rules of the scheme.
Share based payment
The Company operates an equity-settled share-based compensation plan in which
the Group receives services from employees as consideration for share options.
The fair value is established at the point of grant using an appropriate
pricing model and then the cost is recognised as an expense in administrative
expenses in the statement of comprehensive income, together with a
corresponding increase directly in equity over the period in which the
services are fulfilled. This is the estimated period to vesting in respect of
employees. The cumulative expense recognised for equity-settled transactions
at each reporting date until vesting date reflects the extent to which the
vesting period has expired and the Group's best estimate of the number of
equity instruments that will ultimately vest. As an example, if Performance
Conditions attached to the share based compensation plan can no longer be met,
no expense would be recognised.
Deferred tax credits in respect of the potential future tax deduction from
exercise of options are initially included in the tax in the statement of
comprehensive income. To the extent the potential corporate tax deduction
exceeds the share based payment charges, the deferred tax is taken directly to
retained earnings in equity in accordance with IAS12.
Income tax
Current income tax assets and/or liabilities comprise obligations to, or
claims from, fiscal authorities relating to the current or prior reporting
periods, that are unpaid/due at the reporting date. Current tax is payable on
taxable profits, which may differ from profit or loss in the financial
statements. Calculation of current tax is based on the tax rates and tax laws
that have been enacted or substantively enacted at the reporting period.
Deferred taxes are calculated using the liability method on temporary
differences between the carrying amounts of assets and liabilities and their
tax bases. A deferred tax asset is recognised for all deductible temporary
differences to the extent that it is probable that taxable profit will be
available against which the deductible temporary difference can be utilised,
unless the deferred tax asset arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and at the
time of the transaction, affects neither accounting profit nor taxable profit
(tax loss).
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realised or the liability is
settled, based on tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting period.
Computer software
Computer software assets are capitalised at the cost of acquiring and bringing
into use the software. Subsequent to initial recognition it is stated at cost
less accumulated amortisation and accumulated impairment. Software is
amortised on a straight line basis over its estimated useful life of two
years. Amortisation on all intangible assets is recognised in administrative
expenses in the Statement of Comprehensive Income.
Research and development costs
An internally generated intangible asset arising from development (or the
development phase) of an internal project to improve the efficiency, design or
capability of the Group's product range is recognised if, and only if, all of
the following have been demonstrated:
· It is technically feasible to complete the development such that
it will be available for use, sale or licence;
· There is an intention to complete the development;
· There is an ability to use, sell or licence the resultant asset;
· The method by which probable future economic benefits will be
generated is known;
· There are adequate technical, financial and other resources
required to complete the development;
· There are reliable measures that can identify the expenditure
directly attributable to the project during its development.
The amount recognised is the expenditure incurred from the date when the
project first meets the recognition criteria listed above. Expenses
capitalised consist of employee costs incurred on development and direct costs
including material or testing.
Where the above criteria are not met, research and development expenditure is
charged to the income statement in the period in which it is incurred.
Capitalised development costs are initially measured at cost. After initial
recognition, they are recognised at cost less any accumulated amortisation and
any accumulated impairment losses.
The depreciable amount of a development cost intangible asset with a finite
useful life is amortised on a straight line basis over its useful life,
currently expected to range from 5 to 8 years. Amortisation begins when the
asset is available for use, i.e. when it is in the location and condition
necessary for it to be capable of operating in the manner intended by
management.
The amortisation period and the amortisation method for the assets with a
finite useful life is reviewed at least each financial year-end. If the
expected useful life of the asset is different from previous estimates, the
amortisation period is changed accordingly.
Patent costs
Patent cost assets are initially measured at cost. After initial recognition,
they are recognised at cost less any accumulated amortisation and any
accumulated impairment losses. The costs are amortised over a 5 year estimated
useful life.
Property plant and equipment
Property, plant and equipment is recognised as an asset only if it is probable
that future economic benefits associated with the item will flow to the Group
and the cost of the item can be measured reliably. An item of property, plant
and equipment that qualifies for recognition as an asset is measured at its
cost. Cost of an item of property, plant and equipment comprises the purchase
price and any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of operating in the
manner intended by management.
After recognition, all property, plant and equipment (including plant,
computer equipment and fixtures) is carried at cost less any accumulated
depreciation and any accumulated impairment losses. Depreciation is provided
at rates calculated to write down the cost of assets, less estimated residual
value, over their expected useful lives on the following basis:
Leasehold
improvements
straight line over life of lease
Plant and machinery
2-15 year straight line
Office equipment
2 year straight line
Tooling
5 year straight line
The residual value and the useful life of an asset is reviewed at least at
each financial year-end and if expectations differ from previous estimates,
the changes are accounted for as a change in an accounting estimate in
accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors.
Gains or losses arising on the disposal of property, plant and equipment are
determined as the difference between the disposal proceeds and the carrying
value of the asset and are recognised in profit or loss.
Right-of-use assets and lease liabilities
Assets and liabilities arising from a lease with a duration of more than one
year are initially measured at the present value of the lease payments and
payments to be made under reasonably certain extension options are also
included in the measurement of the liability. The lease payments including any
expected dilapidation payments are discounted using the interest rate
implicit in the lease or the incremental borrowing rate that the individual
lessee would have to pay to borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar economic environment with
similar terms, security and conditions.
Lease payments are allocated between repayments of the discounted liability,
presented as a separate category within liabilities, and the lease liability
finance charges. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. Right-of-use assets are measured at
cost comprising the amount of the initial measurement of lease liability, any
lease payments made at or before the commencement date less any lease
incentives received and any initial direct costs and are presented as a
separate category within tangible fixed assets.
Right-of-use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset's useful life.
Any payments associated with short-term leases of equipment and all leases of
low-value assets would be recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of 12 months or
less. There have been no significant short lease costs in the reporting
period. Associated costs of all leases, such as maintenance, service charges
and insurance, are expensed as incurred.
Impairment of intangible assets, right-of-use assets and property, plant and
equipment
For impairment assessment purposes, assets are grouped at the lowest levels
for which there are largely independent cash flows. As a result, some assets
are tested individually for impairment and some are tested at the overall
Group level. For the purpose of impairment testing, assets that cannot be
tested individually are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of assets (the "cash-generating
unit"). Two cash-generating units have been used in our impairment testing,
being the Glazing and Battery Technologies divisions of the business, these
have largely separably identifiable cashflows, and so the Battery Technologies
cash-generating unit as a whole has been assessed for impairment.
All individual assets or cash-generating units are reviewed for indicators of
impairment at the end of each period and tested for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable.
An asset or cash-generating unit is impaired when its carrying amount exceed
its recoverable amount. The recoverable amount is measured as the higher of
fair value less cost of disposal and value in use. The value in use is
calculated as being net projected cash flows based on financial forecasts
discounted back to present value. The impairment loss is allocated to reduce
the carrying amount of the asset pro-rata on the basis of the carrying amount
of each asset in the unit. Non-financial assets that suffered an impairment
are reviewed for a possible reversal of the impairment at the end of each
reporting period. An impairment loss is reversed if the asset's or
cash-generating unit's recoverable amount exceeds its carrying amount.
Inventories
Inventories are initially recognised at cost, and subsequently at the lower of
cost and net realisable value. Cost comprises all costs of purchase of raw
materials or bought in manufacturing components on a first in first out basis,
costs of conversion and an appropriate proportion of fixed and variable
overheads incurred in bringing the finished goods inventories to their present
location and condition. Net realisable value represents the estimated selling
price less costs to complete and sell. Where necessary, provision is made to
reduce cost to no more than net realisable value having regard to the nature
and condition of inventory, as well as its anticipated utilisation and
saleability.
Financial instruments
Financial assets
Financial assets are recognised in the statement of financial position when,
and only when, the Group becomes a party to the contractual provisions of the
instrument and are classified based upon the purpose for which the asset was
acquired. The Group's business model is to hold all assets recognised within
these financial statements to collect the cash flows.
Financial assets are initially recognised at fair value, which is usually the
cost, plus directly attributable transaction costs. These comprise trade and
other receivables and cash and cash equivalents. Financial assets are
subsequently measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss ('ECL') provision for trade
receivables. The Group measures loss allowances at an amount equal to
lifetime ECL, which is estimated using past experience of the historical
credit losses experienced over the three year period prior to the period end.
Historical loss rates are then adjusted for current and forward-looking
information on macroeconomic factors affecting the Group's customers, such as
inflation rates. The gross carrying amount of a financial asset is written off
(either partially or in full) to the extent that there is no realistic
prospect of recovery.
Amounts owed by group undertakings are unsecured, interest free and have no
fixed repayment date. Management do not intend to recall these balances within
twelve months. Expected credit losses on these balances are assessed
differently to trade receivables, with an impairment assessment being carried
out on the balance as outlined in the Critical Judgements and Estimates
section above.
The Group recognises loss allowances for expected credit losses (ECLs) on
financial assets measured at amortised cost.
A financial asset is derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and all
substantial risks and reward are transferred.
Financial liabilities
Financial liabilities include loans, borrowings secured on fixed assets, lease
liabilities, trade and other payables. Financial liabilities are obligations
to pay cash or other financial assets and are recognised in the statement of
financial position when, and only when, the Group becomes a party to the
contractual provisions of the instrument.
Trade and other payables are initially recognised at fair value and
subsequently carried at amortised cost using the effective interest method.
Loans and asset backed finance borrowings are initially recognised at fair
value net of any transaction costs directly attributable to the issue of the
instrument and subsequently carried at amortised cost using the effective
interest method. Discounting is omitted where the effect of discounting is
immaterial.
A financial liability is derecognised only when the contractual obligation is
extinguished, that is, when the obligation is discharged, cancelled or
expires.
The Group utilises asset based borrowings to fund tangible fixed assets,
drawing down finance against individual assets or bundles of assets, which may
directly finance the asset purchase or be drawn down retrospectively. Control
does not pass to the finance provider and therefore the borrowings are
recognised under IFRS 9 as financing liabilities. The related asset is
recognised and measured in accordance with the tangible fixed asset policy
with initial cost being the fair value of the asset. A corresponding asset
backed finance liability.is recognised in respect of the capital repayments to
be made. These interest-bearing liabilities are then measured at amortised
cost with the interest, under the effective interest method, expensed over the
repayment period at a constant rate.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together
with other short term, highly liquid investments that are readily convertible
into known amounts of cash and are subject to an insignificant risk of changes
in value.
Staff and key management categories
Categories for the staff and key management average employee numbers have been
changed for the current year. The prior year numbers totals remain unchanged
but have been restated to reflect the categories now used by management within
the business
Foreign currencies
Transactions entered into by the Group in a currency other than the functional
currency of sterling 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 the income statement in administrative expenses.
Provisions
Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an economic outflow
will occur and a reliable estimate can be made including any additional
evidence from post period end events. Where the timing of the estimate
represents a relatively certain amount it is provided for within accruals.
Equity and reserves
Share capital represents the nominal value of shares that have been issued.
Share premium represents the excess consideration received over the nominal
value of share capital upon the sale of shares, less any incidental costs of
issue. The company's merger reserve arises from the fair value attributed to
the shares issued in exchange for the subsidiary's shares as no share premium
account is recognised under Companies Act merger relief. On consolidation a
merger reserve arises as a result of the difference between the nominal value
of the parent company shares issued in exchange for subsidiary shares and the
nominal value of those subsidiary shares, however this was capped at net
assets of Strip Tinning Limited on the merger date. Retained earnings include
all current and prior period retained profits.
Presentation of non statutory measures
The Group classifies certain one-off charges or credits that have a material
impact on the financial results but are not related to the core underlying
trading as 'exceptional' or 'non-recurring' items. These are disclosed
separately in note 4 and adjusted results to provide further understanding of
the financial performance of the Group.
3. Segmental reporting
IFRS 8, Operating Segments, requires operating segments to be identified on
the basis of internal reports that are regularly reviewed by the Group's chief
operating decision maker. The chief operating decision maker is considered to
be the executive Directors.
The operating segments are monitored by the chief operating decision maker and
strategic decisions are made on the basis of adjusted segment operating
results. All assets, liabilities and revenues are located in, or derived in,
the United Kingdom. The Group has commenced the development and sales of
specialised connectors for electric vehicle battery systems (the Battery
Technologies segment) which are expected to grow to be a material segment.
Separate management reporting and information is prepared at a revenue and
gross profit level only for a Glazing segment (sale of specialist automotive
busbar and electrical connectors typically housed in vehicle glazing) and
Battery Technologies as follows:
Glazing Battery Technologies Total
Year ended 31 December 2023 £'000 £'000 £'000
Revenue 9,706 1,121 10,826
Cost of sales (6,922) (596) (7,517)
Gross profit 2,784 525 3,309
Other operating income 1,364
Administrative expenses (6,075)
Finance expense (331)
Taxation 962
Loss for the year (771)
Glazing Battery Technologies Total
Year ended 31 December 2022 £'000 £'000 £'000
Revenue 8,977 1,253 10,230
Cost of sales (8,650) (1,081) (9,731)
Gross profit 327 172 499
Other operating income 439
Administrative expenses (5,864)
Impairment loss (in EV) (577)
Finance expense (147)
Taxation 725
Loss for the year (4,925)
Turnover with the largest customers (including customer groups) representing
in excess of 10% of total revenue in the year for 3 customers (2022: 3
customers) has been as follows:
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Customer A 3,090 2,062
Customer B 1,384 1,709
Customer C 1,298 867
Customer D 773 1,189
All revenue arises at a point in time and relates to the sale of automotive
busbar, ancillary connectors and flexible printed circuit product. Turnover by
geographical destination is as follows:
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
UK 1,224 967
Rest of Europe 4,792 5,571
Rest of the World 4,810 3,692
10,826 10,230
4. Other operating income
The operating loss is stated after charging/(crediting):
2023 2022
£'000 £'000
Other operating income comprising:
Amortisation of deferred government capital grant income (88) (49)
Government revenue grant income in respect of development work (1,146) (389)
Income relating to claim settlement with a customer (130) -
Government job retention scheme income - (1)
A major government grant was awarded to the group to reimburse employment,
depreciation, subcontract and other revenue costs related to the scale up of
its Battery Technologies production line and process.
5. Operating loss
The operating loss is stated after charging/(crediting): 2023 2022
£'000 £'000
Amortisation of intangible assets 173 180
Depreciation of property, plant and equipment 828 592
Depreciation of right-of-use assets 225 203
Loss on disposal of fixed assets - 55
Cost of inventory sold 4,174 5,092
Research and development expenditure expensed in the year 1,120 925
Short term lease rentals - 22
Foreign exchange losses/(gains) 18 (45)
Exceptional or non-recurring costs
IPO preparation related costs - 381
Restructuring related costs - 529
Contract termination costs - 382
Impairment of intangible fixed assets - 577
Auditor's remuneration
For audit 110 85
Additional fees for prior year audit 20 -
£232,000 of fees payable to the auditors in respect of IPO reporting
accountants related services were expensed or included in costs taken to the
share premium account in 2022.
6. Adjusted EBITDA
In reporting financial information, the Group presents an alternative
performance measure (APM), which is not defined or specified under the
requirements of IFRS. The Group believes that this APM, provides understanding
to the users of the financial statements to allow for further assessment of
the underlying performance of the Group. The Group's primary results measure,
which is considered by the directors of the Group to represent the underlying
and continuing performance of the Group, is adjusted EBITDA as set out below,
in which earnings are stated before net finance income, tax, amortisation and
depreciation and non-recurring items.
2023 2022
£'000 £'000
Operating loss (1,402) (5,503)
Depreciation 1,053 795
Loss on disposal of fixed assets - 55
Amortisation and impairment 173 757
Capital grant amortisation - (49)
EBITDA (176) (3,945)
Foreign exchange 18 (45)
Share based payments 142 96
R&D tax credit fees 92 -
IPO related non-recurring costs - 381
Non-recurring staff expenses - 247
Factory move costs - 282
Contract termination costs - 382
R&D stock obsolescence - 353
Adjusted EBITDA 76 (2,249)
7. Staff and key management
Year ended 31 December 2023 Year ended 31 December 2022
Average monthly number of employees
(2022 split restated for consistency with categories now used by the business) Number Number
Management 14 15
Engineering, administration and support 21 19
Production, quality and distribution 102 134
137 168
Payroll costs £'000 £'000
Gross salaries 4,392 4,577
Social security costs 436 511
Share based payment 142 96
Contributions to money purchase pension schemes 300 318
5,270 5,502
In view of the size and nature of the Group, the Key Management Personnel in
the period is considered to comprise only the directors of the parent and
subsidiary companies. The Company directors' remuneration was as follows:
Year ended 31 December 2023 Salary Bonus Benefits in kind Share based payment Pension Total
£'000 £'000 £'000 £'000 £'000 £'000
R W Barton - - 7 - - 7
P George 40 - - - - 40
A Le Van 144 60 5 18 7 234
A D Robson 130 49 6 16 - 201
M Taylor 40 - - - - 40
354 109 18 34 7 522
Year ended 31 December 2022 Salary Bonus Benefits in kind Share based payment Pension Total
£'000 £'000 £'000 £'000 £'000 £'000
R W Barton 15 - - - - 15
P George 37 - - - - 37
A Le Van 140 - 4 12 8 164
A D Robson 86 - - - - 86
M Taylor 37 - - - - 37
315 - 4 12 8 339
Retirement benefits were accruing to 1 director in respect of defined
contribution schemes (2022: 1).
Key management remuneration was £1,044,000 (2022: £941,000) including
£22,000 of pension contributions (2022: £23,000).
Highest paid director received remuneration of £234,000 (2022: £164,000)
including pension contributions of £7,000 (2022: 8,000).
8. Finance costs
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Interest payable on asset backed finance obligations 119 55
Bank interest 133 26
Unwinding of discount on provisions 12 -
Lease liability finance charges 67 66
331 147
9. Income tax
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Current tax:
UK corporation tax (222) (308)
Adjustment for prior periods (740) (79)
Total current tax credit (962) (387)
Deferred tax:
Origination and reversal of temporary differences - (349)
Adjustment for prior periods - 11
Total deferred tax credit - (338)
Total tax credit (962) (725)
The tax rate used for the reconciliation is the average corporate tax rate of
23.5% (2022: 19%) payable by corporate entities in the UK on taxable profits
under UK tax law. An increase to 25% from April 2023 was substantively enacted
and, as the expected period of reversal, is accordingly applied to deferred
tax balances at 31 December 2022 and 2023.
The credit for the year can be reconciled to the loss for the year as follows:
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Loss before taxation (1,733) (5,650)
Income tax calculated at 23.5% (2022: 19%) (407) (1,074)
Expenses not deductible (11) 92
Enhanced research and development allowances (256) (132)
Surrender of losses for R&D credit 265 -
Enhanced capital allowances - (29)
Deduction on exercise of share options - (34)
Differing deferred and corporate tax rates (12) (83)
Deferred tax not recognised in respect of losses 199 603
Adjustment for prior periods (740) (68)
Total tax credit (962) (725)
10. Earnings per share
Year ended 31 December 2023 Year ended 31 December 2022
Loss used in calculating earnings per share (£'000) (771) (4,925)
Weighted average number of shares ('000) 15,459 14,612
Basic and diluted loss per share (pence) (5.0) (33.7)
Earnings per share has been calculated based on the share capital of the
parent company. There are options in place over 1,214,959 (2022: 254,051)
shares that were anti-dilutive at the year end but which may dilute future
earnings per share. Post year end the group completed a fundraise in part
equity part convertible loan notes which resulted in an issue of 2,765,375
ordinary shares, if in place for the whole year this would have reduced the
loss per share to 9.5 pence. The £4,000,000 convertible loan note issued
would convert into 10,000,000 shares at 40 pence per share.
11. Intangible assets
Development costs Patents Computer Total
Group £'000 Software
£'000 £'000 £'000
Cost
At 1 January 2022 1,785 147 326 2,258
Additions 430 1 57 488
Disposals - - (15) (15)
Removal of fully impaired assets (594) - - (594)
At 31 December 2022 1,621 148 368 2,137
Additions 333 - 206 539
At 31 December 2023 1,954 148 574 2,676
Accumulated amortisation
At 1 January 2022 476 132 89 697
Charge for the year 176 4 - 180
Impairment in the year 577 - - 577
Removal of fully impaired assets (594) - - (594)
At 31 December 2022 635 136 89 860
Charge for the year 168 4 1 173
At 31 December 2023 803 140 90 1,033
Net book amount
At 31 December 2023 1,151 8 484 1,643
At 31 December 2022 986 12 279 1,277
The Group has a programme of research and development projects to improve the
efficiency and functionality of its products. Capitalised development costs
relate to the projects evaluated as viable and where the successful
developments are being applied and contributing to revenue.
Included within the carrying amount of the above, are assets held under asset
backed finance agreements of £nil (2022: £159,000) relating to software.
Amortisation charged on these assets in the year amounted to £nil (2022:
£nil).
The 2022 impairment charge results from cancellation of a contract by a
customer for which design and development work had been carried out and
capitalised in 2021.
These capitalised development costs include £0.7m of costs incurred in
developing the technologies, processes, and products for the FPC and CCS
capability of the business. As at accounting period end, the Directors were
very confident that the extensive development programmes would translate into
nominations for serial volume production, resulting in a significant
contribution to revenue. As at Balance Sheet signing date two major FPC
nominations had been received but the outcome of two major CCS nominations was
still awaited. Of the two CCS nominations, one had a detailed contract with
the Tier 1 customer agreed, but not signed, as launch remained subject to
sign-off by the ultimate OEM customer and the other had been delayed by the
customer due to design changes. The Directors remain confident that at least
one, if not both, of the major CCS nominations will be secured imminently
based on how far advanced the programmes are and the level of engagement with
the customers. In the absence of signed contracts in particular, there is
always a risk that revenues will not accrue in a manner expected by the
directors. Should actual or expected revenues be significantly short of those
currently forecast , it will be necessary to reassess the carrying value of
this intangible asset.
12. Right-of -use assets
Property leasehold Plant and machinery Total
Group assets assets
£'000 £'000
£'000
Cost
At 1 January 2022 1,656 125 1,781
Additions 212 - 212
Disposals - (13) (13)
At 31 December 2022 1,868 112 1,980
Additions - 164 164
Disposals - (55) (55)
At 31 December 2023 1,868 221 2,089
Accumulated depreciation
At 1 January 2022 587 52 639
Charge for the year 168 35 203
Disposals - (13) (13)
At 31 December 2022 755 74 829
Charge for the year 173 52 225
Disposals (55) (55)
At 31 December 2023 928 71 999
Net book amount
At 31 December 2023 940 150 1,090
At 31 December 2022 1,113 38 1,151
The financing charges in respect of right-of-use assets are disclosed in note
6 and the lease liabilities in 19. Short term rentals are disclosed in note 4
with no low value leases in either year. Right-of-use assets and lease
liabilities relate principally to property leases. The Group leases its main
operating premises, typically on a ten year lease, subject to periodic rent
reviews and potential breaks, with the intention and assumption made in
measuring assets and liabilities that the full period will be utilised. Total
cash outflows in respect of leases were £271,000 for the year ended 31
December 2023 (2022: £276,000).
13. Property, plant and equipment
Leasehold improvements Plant and machinery Tooling Office equipment Total
Group £000 £'000 £'000
£'000
£'000
Cost
At 1 January 2022 497 5,104 1,112 155 6,868
Additions 19 408 65 16 508
Disposals (69) (31) (22) - (122)
At 31 December 2022 447 5,481 1,155 171 7,254
Additions 95 898 79 41 1,113
Disposals - (2) - - (2)
At 31 December 2023 542 6,377 1,234 212 8,365
Accumulated depreciation
At 1 January 2022 263 2,741 651 124 3,779
Charge for the year 31 322 216 23 592
Disposals (62) (1) (4) - (67)
At 31 December 2022 232 3,062 863 147 4,304
Charge for the year 35 630 138 25 828
At 31 December 2023 267 3,692 1,001 172 5,132
Net book amount
At 31 December 2023 275 2,685 233 40 3,233
At 31 December 2022 215 2,419 292 24 2,950
Included within the carrying amount of the above, are assets held under asset
backed finance agreements of £1,679,000 (2022: £1,705,000) relating to plant
and machinery and £44,000 (2022: £100,000) relating to tooling. Depreciation
charged on these assets in the year amounted to £407,000 (2022: £213,000).
14. Investments
Shares in group undertakings
Company £'000
At 31 December 2022 3,841
Capital contribution to subsidiary in respect of employee share options 142
At 31 December 2023 3,983
The Company acquired all of the shares in Strip Tinning Limited by a share for
share exchange on 2 February 2022. Strip Tinning Limited is incorporated and
registered in England at Arden Business Park, Arden Road, Frankley Birmingham,
West Midlands, B45 0JA.It manufactures automotive busbar, ancillary connectors
and flexible printed circuits. A new subsidiary, Strip Tinning Technologies
Limited, with share capital of £0.01 and registered at the same address, has
been incorporated and has not yet traded.
15. Inventories
31 December 2023 31 December
2022
Group £'000 £'000
Raw materials and consumables 1,150 1,536
Finished goods and goods for resale 137 312
1,287 1,848
An inventory impairment loss of £254,000 (2022: £479,000) was recognised in
the year.
16. Trade and other receivables
Group Group Company Company
31 December 2023 31 December 2022 31 December 2023 31 December 2022
Current £'000 £'000 £'000 £'000
Trade receivables 2,173 2,691 - -
Impairment provision - - - -
Net trade receivables 2,173 2,691 - -
Amounts owed by group undertakings - - 5,563 5,776
Other receivables 242 267 - -
Prepayments 270 423 16 15
2,685 3,381 5,579 5,791
The directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
Amounts owed by group undertakings are unsecured, interest free and have no
fixed repayment date.
The impairment charge and movement in the expected credit loss provision
against trade receivables is as follows:
2023 2022
£'000 £'000
At 1 January 2023/2022 - 25
Impairment charge for the year 34 -
Debt written off (34) (25)
At 31 December 2023/2022 - -
Ageing of trade receivables past their due dates but not provided were:
Less than 30 days overdue 30 to 60 days overdue More than 60 days overdue
£'000 £'000 £'000
31 December 2022 498 289 237
31 December 2023 308 - 57
The directors consider the credit quality of trade and other receivables that
are neither past due nor impaired to be of good quality with the impairment
charges arising principally from one former customer.
17. Trade and other payables
Group Group Company Company
31 December 2023 31 December 2022 31 December 2023 31 December 2022
Current £'000 £'000 £'000 £'000
Trade payables 1,271 2,211 56 67
Other payables 99 41 - -
Taxation and social security 111 117 - -
Accruals 549 476 143 -
Deferred income 167 200 - -
2,197 3,045 199 67
Non current liabilities
Deferred income (grants) 11 37 - -
18. Borrowings
Group Company
31 December 2023 31 December 2022 31 December 2023 31 December 2022
Current liabilities £'000 £'000 £'000 £'000
Invoice discounting facility 492 - - -
Loans 74 74 - -
Asset-based borrowings 407 479 - -
973 553 - -
Non current liabilities
Loans 155 208 - -
Asset-based borrowings 643 784 - -
798 992 - -
Asset backed finance obligations are secured by fixed charges over certain
tangible fixed assets and floating charges over other assets and undertakings
of the Group. All obligations fall due within five years. The total payments
including interest in respect of asset backed finance liabilities are shown in
note 20.
The invoice discounting facilities are secured by fixed and floating charges
over all other assets of the Group.
19. Lease liabilities
Group 31 December 2023 31 December 2022
£'000 £'000
Current 201 182
Due in one to five years 683 588
Due in more than five years 253 407
936 995
The total payments including interest in respect of lease liabilities are
shown in note 20.
20. Movements in total financing liabilities
Group Borrowings Lease liabilities Total financing
£'000 £'000 £'000
At 1 January 2022 1,794 1,256 3,050
Cash movements:
Lease liability payments - (199) (199)
Asset backed finance advanced 311 - 311
Asset backed finance payments (487) - (487)
Loan repayments (73) - (73)
Interest paid (81) (66) (147)
Non-cash movements
Interest accrued 81 66 147
New lease liabilities - 120 120
At 31 December 2022 1,545 1,177 2,722
Cash movements:
Lease liability payments - (204) (204)
Asset backed finance advanced 297 - 297
Asset backed finance payments (510) - (510)
Invoice discounting finance advanced 492 - 492
Loan repayments (53) - (53)
Interest paid (252) (67) (319)
Non-cash movements
Interest accrued 252 67 319
New lease liabilities - 164 164
At 31 December 2023 1,771 1,137 2,908
21. Financial instruments and capital management
Risk management
The Board has overall responsibility for the determination of the Company and
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 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 financial risks in respect of
market including foreign exchange risk, credit and liquidity risks.
Capital management
The Group's capital comprises all components of equity which includes share
capital and retained earnings amounting to £4,834,000 at 31 December 2023
(2022: £6,245,000). The Company's objectives when maintaining capital are to
safeguard the entity's ability to continue as a going concern, so that it can
continue to provide returns for shareholders and benefits for other
stakeholders, and to provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk. The capital
structure of the Company consists of shareholders equity with all working
capital requirements financed from cash and major capital expenditure funded
by leases and asset backed finance agreements.
The Company sets the amount of capital it requires in proportion to risk. It
manages its capital structure and makes adjustments to it in the light of
changes in economic conditions, the ability to finance capital purchases and
the risk characteristics of the underlying assets and activity. 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.
Market risks
These arise from the nature and location of the customer markets and include
foreign exchange rate risks.
The Group trades within European and other overseas automotive supplier
markets, and accordingly there is a risk relating to the underlying
performance of these markets. The directors monitor this and the foreign
exchange risk closely with the intention to foresee downturns in trade or
changes in the use of automotive components.
Foreign exchange risk
The Group trades with overseas customers and, whilst it has net foreign
currency balances, also makes a degree of purchases in the respective currency
and uses currency denominated accounts to defer conversion to sterling or to
utilise the currency when needed. There has therefore been a reduced
sensitivity to fluctuations in exchange rates although a 10% increase or
decrease in Euro and US dollar exchange rates against sterling could impact
the results by up to £150,000 or £50,000 as a reduction or increase in
profit respectively.
The Group had the following in net assets comprising cash, sales ledger and
purchase ledger balances denominated in foreign currencies:
31 December 2023 31 December 2022
£'000 £'000
Euro denominated 1,119 1,154
US dollar denominated 413 496
Interest rate risk
The Group makes use of fixed rate three to five year asset backed finance
agreements to acquire property, plant and equipment with interest rates
typically ranging from 3.5% (new agreements in 2020 to 2022) to 7% (2018 and
2019); this spreads the capital cost, ensures that the Group maintains
sufficient cash resources for working capital purposes and ensures certainty
of total costs at the point of acquisition of those assets. A 5 year term bank
loan has also been drawn upon at a fixed interest rate of 9.4% and invoice
discounting facilities of up to £1.5m subject to eligible receivables at an
interest rate of 2.85% over base rates. These liabilities are set out in note
18.
Credit risk
Credit risk is the risk of financial loss if a customer or counterparty to a
financial instrument fails to meet its contractual obligations. The Group is
mainly exposed to credit risk from credit sales and attempts to mitigate
credit risk by assessing the creditworthiness of customers, including using
proforma terms for new customers and closely monitoring the payment record and
trends for each customer. The customers are principally tier 1 automotive
suppliers.
At 31 December 2023 trade receivables were £2,173,000 (31 December 2022:
£2,691,000) with 35% (31 December 2022: 35%) of the balance owed by one
customer group and 40% (2022: 25%) of the balance by 3 other customers with
operations based in a number of European and other countries.
The ageing of overdue debtors is included in note 16 with all amounts
subsequently substantially received. The impairments to trade or other
receivables in 2022 and 2023 have been immaterial and relate to a few smaller
customers.
Credit risk on cash and cash equivalents is considered to be minimal as the
counterparties are all substantial banks with high credit ratings.
Liquidity risk
The maturity of the Group's financial liabilities including trade and other
payables, asset backed finance and lease liability total payments with the
interest payable is as set out below. Current liabilities were payable on
demand or to normal trade credit terms, asset backed finance and loan
obligations were payable monthly and lease liabilities quarterly. Asset backed
finance and lease liabilities are used to manage liquidity by spreading the
cost of payment for capital purchases.
At 31 December 2023 Up to 1 year 1-2 years 2-5 years Over 5 years
£'000 £'000 £'000 £'000
Trade, other payables and accruals 1,919 - - -
Asset backed finance obligations 488 374 419 -
Loans and invoice discounting facility 584 92 77 -
Lease liabilities 260 212 602 591
3,251 678 1,098 591
At 31 December 2022 Up to 1 year 1-2 years 2-5 years Over 5 years
£'000 £'000 £'000 £'000
Trade, other payables and accruals 2,728 - - -
Asset backed finance obligations 548 391 511 -
Loans 92 92 170 -
Lease liabilities 240 217 513 762
3,608 700 1,194 762
Classification of financial instruments
All financial assets have been classified as at amortised cost, and all
financial liabilities have been classified as other financial liabilities
measured at amortised cost.
Financial assets
31 December 2023 31 December 2022
At amortised cost £'000 £'000
Trade receivables and other receivables 2,415 2,958
Cash and cash equivalents 343 1,290
2,758 4,248
Financial liabilities
31 December 2023 31 December 2022
£'000 £'000
At amortised cost
Trade payables, other payables and accruals 1,919 2,728
Asset backed finance obligations 1,050 1,263
Loans and invoice discounting facility 721 282
3,690 4,273
Financial instruments and capital management (continued)
The directors consider that the carrying amount of the financial assets and
liabilities approximates to their fair values.
23. Provisions
The dilapidations provisions were reassessed during 2022 in respect of the
group's rented properties and increased to allow for potential reinstatement
costs that may be incurred at the end of the leases in 2030 under the standard
terms in the contracts. This primarily resulted in an increase in the amount
recognised in respect of the right of use assets for property and in the
discounted provisions liability which amounts to £239,000 at 31 December 2023
(2022: £227,000).
In 2023, a provision was recorded to allow for the potential supplier
settlement costs of a terminated contract (see note 26).
Group Dilapidations provision Terminated contract provision Total
£'000 £'000 £'000
Transfer from accruals 71 - 71
Additions to right of use property assets 156 - 156
Liability at 31 December 2022 227 - 227
Provision charged in year - 121 121
Unwinding of discount on provision 12 - 12
Liability at 31 December 2023 239 121 360
24. Deferred taxation
Group
Liability/(asset) in respect of: Accelerated Intangible R&D assets Share based payment Losses and other timing differences Total
capital allowances
£'000 £'000 £'000 £'000 £'000
As at 31 December 2021 738 327 (308) (419) 338
Credit to profit or loss (7) (59) 308 (580) (338)
As at 31 December 2022 731 268 - (999) -
Credit to profit or loss 142 (97) (59) 14 -
As at 31 December 2023 873 171 (59) (985) -
The Group has tax losses carried forward of approximately £5,403,000 (2022:
£6,900,000) and an unrecognised deferred tax asset of £456,000 (2022:
£790,000). The deferred tax asset has not been recognised as it is not yet
considered sufficiently probable, in the short term, that the asset will be
realised. The tax losses carried forward have no expiry date.
The Company has tax losses carried forward of £1,182,000 (2022: £564,000)
and an unrecognised deferred tax asset of £296,000 (2022: £141,000) in
respect of these. The deferred tax asset has only been recognised as far as it
offsets the deferred tax losses due to the timing of when the tax will
materialise, so it is appropriate to net them off.
The deferred tax asset on the balance of losses and other timing differences
is split further into losses £976,000 and defined contribution pension scheme
£9,000.
25. Share capital
The movements in share capital have been as follows:
Company and Group Number of £0.01 shares Nominal Share premium
£'000 £'000
Share issued on incorporation 1 - -
Shares issued in exchange for Strip Tinning Limited shares 9,999,999 100 -
EIS and VCT placing shares issued at £1.85 each 2,702,702 27 4,973
Other placing shares issued at £1.85 each 1,621,622 16 2,984
Exercise of options at £0.116 each 813,045 8 86
Shares issued to employee benefit trust at £0.01 each 322,345 3 -
Share issue costs (1,077)
At 31 December 2022 and 2023 15,459,714 154 6,966
The Company was incorporated with one £0.01 share and on 2 February 2022
issued 9,999,999 £0.01 shares in exchange for all of the issued share capital
in Strip Tinning Limited. Merger relief arises under the Companies Act from a
share premium and in accordance with IAS 27 for such a transaction with no
change in control, the consideration was recorded at the Strip Tinning Limited
net asset value of £3,745,000 (£0.375 per share) in the company, £100,000
of nominal share capital and a merger reserve of £3,645,000.
The issue of shares with a nominal value of £100,000 in exchange for the
2,000 £0.10 shares in Strip Tinning Limited with a nominal value of £200
resulted in a debit to a merger reserve of £99,800 in the consolidated
financial statements, presented as a capital reorganisation after
consolidating applying the merger accounting principles as set out in note 2.
On 10 February 2022, the Company issued a further 4,324,324 £0.01 shares at
£1.85 each and 813,045 £0.01 shares at £0.116 each on exercise of share
options. On 16 February 2022 the Company was listed on AIM. The issue of these
shares in February 2022 resulted in a share premium of £6,966,000 (net of
£1,077,000 of share issue costs).
On 2 November 2022, 322,345 £0.01 ordinary shares were issued to the Employee
Benefit Trust in respect of an employee incentive scheme with a 3 year vesting
period and the nominal value of £3,000 has been debited to an other reserve.
All £0.01 ordinary shares rank equally with the right to receive dividends
and capital distributions.
26. Share based payment
Options were granted on 24 August 2018 over 354 £0.10 A Ordinary Shares in
Strip Tinning Limited ('STL') at an exercise price of £267 per share. These
options were only exercisable on a sale of the company or on a listing and had
the right to share only prorata with the Ordinary Shares in the capital
proceeds in excess of £10m, receive dividends at the discretion of the
directors and have voting rights. They were exchanged for an equivalent
813,045 options in the Company's £0.01 shares with no change in the value of
the options, exercisable at £0.116 per share and exercised in February 2022
when the share price was £1.85. The fair value of £1,345 per STL A option
share was derived using a Black Scholes option pricing model applying a risk
free rate of 1% and an estimated volatility of 40%. The remainder of the
original fair value of £48,000 was expensed on exercise in 2022.
Options over parent company shares under a Long Term Incentive Plan were
granted in February 2022 with an exercise price of £0.01. These were subject
to a 3 year vesting period. Options over 122,702 shares required a total
shareholder return ('TSR') target to be achieved and 129,188 earnings and
gross profit targets to be achieved. 42,162 of those subject to a TSR return
and 42,162 subject to earnings targets lapsed when the director left on 31
March 2022. The respective fair values of £0.92 (TSR market condition and
probability applied) and £1.841 (earnings target conditions) have been
calculated using a Black Scholes option pricing model applying the 3 year
vesting period, share price of £1.85 at date of grant, a risk free rate of
2%, expected dividends of nil and estimated volatility of 45% with a £25,000
(2022: £26,000) charge in the year.
Further options under the LTIP plan were granted in May 2022 with an exercise
price of £0.01. These were subject to a 3 year vesting period. Options over
30,270 shares required a total shareholder return ('TSR') target to be
achieved and 56,216 earnings and gross profit targets to be achieved. The
respective fair values of £0.733 (TSR market condition and probability
applied) and £1.466 (earnings target conditions) have been calculated using a
Black Scholes option pricing model applying the 3 year vesting period, share
price of £1.475 at date of grant, a risk free rate of 2%, expected dividends
of nil and estimated volatility of 45% with a £7,000 (2022: £10,000) charge
in the year.
On 2 November 2022, employees were granted a total of 322,345 of free shares
subject to a 3 year vesting period. The fair value of £0.725 per share has
been calculated using a Black Scholes option pricing model applying the 3 year
vesting period, share price of £0.725 at date of grant, a risk free rate of
3%, expected dividends of nil and estimated volatility of 50% with a £74,000
(2022: £12,000) charge in the year.
On 3 March 2023, 960,908 options under the LTIP plan were granted with an
exercise price of £0.01. These were subject to a 3 year vesting period.
Options over 480,454 shares required a total shareholder return ('TSR') target
to be achieved and 480,454 operating profit targets to be achieved. The
respective fair values of £0.271 (TSR market condition and probability
applied) and £0.541 (earnings target conditions) have been calculated using a
Black Scholes option pricing model applying the 3 year vesting period, share
price of £0.55 at date of grant, a risk free rate of 5%, expected dividends
of nil and estimated volatility of 45% with a £36,000 charge in the year. No
charge has been recognised in respect of the performance conditions associated
with these options as these are now not expected to be met.
In view of the short period since listing, volatility has been estimated by
reference to similar shares. Unexpired options have an average vesting period
remaining at 31 December 2023 of 1.9 years (2022: 2.5 years).
The movements in share options have been as follows:
Weighted average exercise price Transfer of Strip Tinning Limited options PSP Employee free share scheme
£ scheme
Number Number Number
On incorporation - - - -
Conversion of STL options 0.116 813,045 - -
Granted in the year 0.005 - 338,375 322,345
Exercised 0.116 (813,045) - -
Lapsed 0.01 - (84,324) -
As at 31 December 2022 0.004 - 254,051 322,345
Granted in the year 0.01 - 960,908 -
As at 31 December 2023 0.008 - 1,214,959 322,345
27. Capital commitments and contingent liabilities
The Group had capital commitments contracted but not provided for of £nil at
31 December 2023 (2022: £303,000). The company had no capital commitments.
Following the notification of the termination of a Battery Technologies
contract in July 2022, effective October 2022, the business has been working
hard to reach a fair settlement and mitigate the liabilities associated with
the contract. The company and the Battery Technologies customer continue to
work closely together to reach a full and final resolution. Commercial
negotiations are now at an advanced stage and as at the financial statements
signing date, a single commercial claim remained outstanding to settle between
the company, the Battery Technologies customer, and a supplier on the
programme. Whilst the supplier has claimed additional amounts up to point of
termination, they had actually received advanced payment for work carried out
and additional costs have not been supported or justified.
28. Post balance sheet events
On 15 January 2024, shareholder approval was received for a further fund
raise. The gross fund raise of £5,100,000 was made up of £4,000,000 of
Convertible Loan Notes by the three leading VCT fund shareholders and
£1,106,000 for 2,765,375 new ordinary shares at 40 pence each resulting in
£4,643,087 after expenses of the fund raise. The Convertible Loan Notes have
a term of up to 5 years, bear interest at 10% which rolls up each year and is
payable on redemption. The company may redeem them after 2 years only if
certain targets have been met and on an exit or after 5 years, the holders may
convert the capital and accrued interest to ordinary shares at the lower of 52
pence per share or the issue price at the last fundraising round prior to
conversion.
29. Control and related party transactions
At 31 December 2023, the Company was an ultimate parent company. Mr R Barton
was considered to be the ultimate controlling party. The key management
personnel is considered to be the directors. Please refer to note 8 for
details of key management personnel remuneration.
There were no related party transactions in the year excluding intercompany
transactions and directors remuneration.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR DDGDSDGDDGSCRecent news on Strip Tinning Holdings
See all newsREG - Strip Tinning Hldgs - Receipt of R&D tax credit
AnnouncementREG - Strip Tinning Hldgs - Trading and Business Update
AnnouncementREG - Strip Tinning Hldgs - Update on Battery Technologies Nomination
AnnouncementREG - Strip Tinning Hldgs - Pre-Close Trading Update
AnnouncementREG - Strip Tinning Hldgs - Lifetime Value of Contracted Nominations Increased
Announcement