This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").
19 October 2023
Saietta Group Plc
("Saietta", the "Company" or the "Group")
Full Year Results Ending March 2023 & Operational Update
Saietta Group plc (AIM: SED), the multi-national business which designs, engineers and manufactures complete electric drivetrain (eDrive) solutions for electric vehicles, announces its full year results for the 12 months ended 31 March 2023 and provides an operational and financial update.
Since floating on the London Stock Exchange in July 2021, in 28 months Saietta has transformed from being just an axial flux technology (AFT) R&D company into a designer of a range of complete eDrive solutions for vehicle manufacturers, secured a major global OEM (original equipment manufacturer) as its launch customer for a range of their vehicle lines, established leading manufacturing facilities in both Sunderland and Delhi (through its JV partner Saietta VNA) and appointed high quality local supply chains.
The Company believes that it has reached its inflection point for its core business based on its proven AFT eDrives. The orders in place provide a firm launch pad and the Board is confident that it is now able to convert a significant proportion of its rapidly growing sales pipeline into firm commercial orders, thereby leveraging many months of development work and investment in its design and manufacturing capabilities.
This communication also sets out a very significant step-change business opportunity for Saietta by industrialising a proven all-new second model line based on its new in-house radial flux technology (RFT) motor family.
The Company has resolved the frustrating technical accountancy issues around accounting for the post balance sheet event of the new agreements with Consolidated Metco Inc ("ConMet") which were signed on 1st August 2023 and has accordingly published its fully audited accounts for the year ended 31 March 2023.
Financial highlights for FY ending March 2023
| · | Revenue and Other Income from continuing operations increased 132% to £4.8m (2022: £2.1m) |
| · | Revenue and Other Income from continuing and discontinued operations increased 19% to £5.1m (2022: £4.3m) |
| · | Revenue and Other Income reduced from previously disclosed unaudited values by £1.2m, of which £0.3m relates to the reclassification of certain revenue as relating to a discontinued operation and £0.9m relates to ConMet engineering and design services payments being treated as proceeds on a disposal of an intangible asset, rather than revenue |
| · | EBITDA reduced from previously disclosed unaudited values by £4.0m by virtue of the reduction in turnover and due to capitalized development costs being reclassified as expenditure |
| · | Gross profit of £0.7m (2022: £0.8m profit) following above reclassification |
| · | Adjusted EBITDA loss of £14.0m (2022: loss of £4.4m) which excludes exceptional losses from the discontinued activities of £7.9m |
| · | Statutory Loss before Tax of £28.3 million (2022: £11.1m) accounting for all write downs and discontinued activities |
| · | Cash as at 31 March 2023 of £7.2m (2022: £18.4m) |
| · | Total Assets of £39.7m at 31 March 2023 (2022: £42.7m) |
| · | Net Assets of £29.2m at 31 March 2023 (2022: £32.8m) |
For information on the Company's current working capital position post period end, please see the Finance Update post-period section below.
Operational highlights for FY ending March 2023
| · | Strategic adjustment to narrow near-term focus onto high volume revenue generating opportunities with established OEMs rather than a myriad of start-ups in the rapidly expanding global lightweight electric vehicle (EV) sector with a particular focus on India and the wider Asian region. The Board believes that the content of this communication clearly confirms the success of this strategy. |
| · | Expansion of the product portfolio from a stand-alone axial flux technology (AFT) motor at IPO (July 2021) to a supplier of complete proprietary eDrive solutions consisting of an AFT motor with integrated electronic controller in the same housing, modular transmission, mechanical axle and a mated vehicle control unit (VCU). The breadth of this extended product offering has been proven to generate significant market pull from OEMs. |
| · | In December 2022, Saietta announced what the Board now views as a major commercial breakthrough - the signature of a Development Agreement with a leading Indian OEM which is one of the largest manufacturers of light commercial vehicles (LCVs) in the Indian market. For clarity, this OEM is referred to as the "Lead OEM" in the rest of this document. This agreement immediately triggered an engineering design services (EDS) contract for approximately £3.2m of revenue spread over two financial years for eDrive solutions powered by Saietta's AFT motors for two product lines with indicative minimum volumes across the first five years of 80,000 units. As outlined in this announcement, this initial agreement has to date matured into Saietta potentially providing eDrive solutions to the Lead OEM for four product lines in 2, 3 and 4 wheel vehicles in the very large Indian lightweight vehicle sector. |
| · | Established a production facility in Sunderland, UK for North American and European clients. |
| · | Discontinued its loss-making bus retrofit business branded "RetroMotion" in the Netherlands which it inherited when it bought e-Traction in November 2021. RetroMotion was sold to a Saietta customer in January 2023 which included transferring the seven employees and the associated premises and thereby reduced the burn rate to £0. |
| · | Strengthened the Board with the appointment of a new Non-Executive Director, Devyani Vaishampayan. |
Operational update post-period
| · | In April 2023 the Company was awarded a contract for 3,000 bespoke eDrive units from AYRO Inc., a US manufacturer of lightweight electric urban delivery vehicles. AYRO announced on 28 September 2023 that it had commenced deliveries of vehicles to end customers. |
| · | In April 2023 Saietta opened its Global Technical Centre in Silverstone, UK which saw all of its engineering team co-located for the first time. |
| · | In July 2023 Saietta confirmed the signature of an additional Letter of Assignment (LOA) between Saietta VNA and the Lead OEM for a third product line featuring the Company's all-new Radial Flux Technology (RFT), mated to an all-new Saietta controller, gearbox and vehicle control unit. This application is for a lower powered L5 category small commercial vehicle than the two model lines to be powered by Saietta's AFT motors. Once the RFT eDrive has been fully proven to fully meet the client's requirements, a minimum of 60,000 units sales are forecast over a five year period in addition to the 80,000 units detailed above for AFT eDrive solutions across two product lines. |
| · | In July 2023 Saietta successfully completed proof of concept for complete inboard and outboard motor products in the leisure marine sector powered by Saietta's AFT motors under the 'Propel' brand. The Saietta Board believes both product variants will be highly successful but recognises the strategic imperative to focus time and resources on the lightweight EV market, where the commercial opportunities are bigger, nearer and more certain. The Propel operations in the Netherlands were therefore suspended and the operation moved to Saietta's Global Technical Centre in Silverstone, UK. This reduced annual operating expenses by approximately £1.2m to £0, but also resulting in an impairment of intangible assets of £2.1m. Saietta is now actively engaged in discussion with two potential partners for the marine business for an arrangement to take-on the industrialisation and commercialisation of the proven Propel products for which Saietta will receive ongoing revenue from product sales of the AFT motor to power the inboard and outboard systems as well as seeking technology transfer fees and ongoing royalties for the innovation delivered by Saietta. |
| · | In August 2023 in the heavy goods vehicle sector, Saietta restructured the contractual arrangements with their North American client ConMet, which resulted in an upfront payment to Saietta of ?3.3 million, potential additional future license payments to Saietta of up to ?20 million, and the transfer of the relevant project team in the Netherlands to ConMet which reduced Saietta's annual operating costs by approximately ?2 million to ?0. It also meant that Saietta had no further costs for the development or production of the ConMet products. Saietta's Heavy-Duty eDrive division was moved to Saietta's Global Technical Centre in Silverstone, UK and the Company remains free to develop any eDrive products for trucks and buses apart from the ConMet in-wheel products for truck hubs. However, this also led to an inventory write down of £2.1m. |
| · | In September 2023 the AFT eDrive went into series production at Saietta's UK manufacturing hub in Sunderland for North American and European customers with AYRO Inc. being the initial launch customer. |
| · | In September 2023 Saietta announced that its Indian joint venture, Saietta VNA, received a purchase order for supply of complete eDrives from the Lead OEM. The purchase order was for approximately £420,000 of systems for the first three months of vehicle production. Target volumes indicated by the client for the first year of production is expected to generate revenue for Saietta VNA in excess of £11.2 million. The Directors believe that the purchase order established Saietta VNA as the sole eDrive supplier for one of the Lead OEM's light commercial vehicle (LCV) product lines and is expected to build to a minimum of 40,000 complete systems over a five-year period. An order for a second LCV product line also powered by Saietta's AFT technology is expected over the coming months, and the two product lines combined are forecast to generate a minimum of 80,000 orders over a five-year period. |
| · | In October 2023 production of the AFT eDrive for the Lead OEM commenced in Delhi, India at Saietta VNA's all new 33,000 sq-ft factory. |
| · | In October 2023, building on the work for the three LCV product lines for the Lead OEM, Saietta commenced work to evaluate RFT motor solutions for a fourth product line, this time for the 2 wheel market. This is very significant for Saietta given that in the 12 months ending September 2023, some 835,000 electric 2W vehicles were registered in India. This equated to approximately 5% of the total 2 wheel registrations, indicating the scale of the opportunity as this sector in India fully transitions to electric propulsion. The Lead OEM client has indicated sales aspirations of a minimum of 50,000 units over a 5 year period with start of production targeted for 2025. |
| · | As at October 2023, Saietta is progressing towards successful agreement for an aftermarket manufacturing contract to be undertaken by its Sunderland manufacturing facility. |
| · | As at October 2023, Saietta has a live engineering project with a second, separate major Indian OEM to complete a final proof of concept for another RFT motor variant for the very large 2-wheeler sector. Forecast 5-year vehicle volumes from the client are 800,000 units. |
| · | On 6 October Steven Harrison resigned for personal reasons from his role as Chief Financial Officer. Saietta is pleased to announce that David Wilkinson is appointed as Interim CFO with immediate effect. David understands the Saietta business intimately having joined the Board at IPO in July 2021 as Non-Executive Deputy Chairman and Chair of the Audit Committee. David will lead the Finance function with the support of Mr Harrison who will remain engaged in the business for a period of time to support Mr Wilkinson and assist the Company with a smooth transition of responsibilities to a new full time CFO. The Board has initiated a search for a new CFO and the Company will announce details of such appointment and Mr Harrison's departure date in due course. |
As Saietta has now secured contracts from a leading OEM, the Board has high confidence that a significant proportion of the material items in the Company's sales pipeline will mature into commercial contracts in the current financial year.
Finance update post-period
As announced on 25 September 2023, at the end of August 2023 the Company had cash resources of £1.2m and stated that this, combined with additional sums receivable from key customers and JV partners would meet the requirements for its focused AFT eDrive production plan.
As part of its joint venture relationship, the Company has recently formalized the advanced payment of £1.5m for certain machinery that is scheduled to be transferred from its Sunderland facility to the Saietta VNA joint venture in India. The Company is due to receive these funds from the JV in the coming days providing a significant increase to the September-end cash balance of £0.4m and, absent other financial resources becoming available, are deemed to provide the Group sufficient working capital into December 2023.
The Board believes that the increased scale of the commercial opportunities from the current sales pipeline, described in the Operational Update above, presents a unique opportunity to make a step-change and thereby secure substantial recurring long-term revenues over a range of high-volume product lifecycles.
Consequently, the Board has concluded that the Company will need to secure additional funding in Q4 2023 for further working capital and to generate the financial resources required to fully capitalize on the potential from the anticipated additional sales contracts within its pipeline.
The Company will accordingly proactively engage with stakeholders to explore financing opportunities which may include an equity raise.
Tony Gott, Executive Chairman of Saietta, said:
"We have finally resolved frustrating technical accountancy issues around accounting for the post balance sheet event of the new agreements with Consolidated Metco Inc ("ConMet") which were signed on 1st August 2023 after our financial year end and released our fully audited accounts for the year ended 31 March 2023, which will recommence trading in our shares on AIM.
Saietta has made huge strides since the end of the last financial year and we believe we have reached the inflection point for the business. At IPO just 28 months ago we planned to build Saietta organically based on revenues from sales of our ground-breaking axial flux technology (AFT) motors before scaling up into additional product lines. However, the market is transitioning to electric propulsion much faster than even we predicted, especially in Asia.
As Saietta has now secured contracts from a leading OEM, the Board has high confidence that a significant proportion of the material items in our sales pipeline will mature into commercial contracts within the current financial year. This includes market pull from the Indian 2 wheel (2W) sector for Saietta's all-new eDrives based on our radial flux technology (RFT) motors. This is highly significant given in the 12 months to September 2023 some 835,000 electric 2W vehicles were registered in India which equated to approximately 5% of the total 2W registrations, indicating the scale of opportunity in India as this sector transitions fully to electric propulsion.
The automotive market globally stands at an unprecedented moment of disruption, arguably the biggest since vehicles were first introduced over 120 years ago. With major disruption comes major commercial opportunity. We passionately believe that Saietta has the right product breadth and depth, at the right prices, at the right time, with the right people and the right business partners to fully capitalize on this huge opportunity.
The Saietta Board has therefore taken the decision to seek step-change additional funding in part to underpin our current working capital and, importantly, to also generate the financial resources required to fully capitalize on the potential from the anticipated additional contracts within our sales pipeline, including the huge 2W sector in India. We are open on how best to achieve this and are commencing discussions with our key investors to get their advice, but we are determined to appropriately capitalize the business and maximise the ROI for our investors."
The financial information set out below does not constitute the Group's statutory accounts for the year ended 31 March 2023, but is derived from those accounts. References within the document may refer to information in the statutory accounts and these will be sent to shareholders shortly and be published on the Company's website imminently.
For any further enquiries, please contact:
| Saietta Group Tony Gott, Executive Chair David Woolley, Chief Executive Officer | via FTI |
| Canaccord Genuity (Nomad and Broker) Henry Fitzgerald-O'Connor / Harry Pardoe | 0207 523 8000 |
| FTI Consulting (Financial PR advisor) Ben Brewerton / Dhruv Soni | Tel: +44 (0) 20 3727 1000 saietta@fticonsulting.com
|
About Saietta Group plc
Listed on the London Stock Exchange's AIM, Saietta is a global business that designs, develops and manufactures complete electric drivetrain (eDrive) solutions for established manufacturers of a broad range of electric vehicles.
Saietta's breakthrough proprietary technologies include AFT (Axial Flux Technology) and RFT (Radial Flux Technology) motors, power electronics, powertrain controls, mechanical axles, transmissions and vehicle control units. Considerable flexibility is built into the core design, meaning solutions can be quickly and cost effectively tailored to a specific application.
Saietta works in a highly collaborative way with clients, driven by the belief that partnership is key to delivering world-class tailored solutions at pace. Saietta's engineering team takes time to deeply understand a client's brand, target market sector, competition and the services they require. Then Saietta develops a bespoke suite of products and services to fast-track the client to production with eDrive solutions which deliver a sustainable competitive advantage.
Chairman's Statement
Saietta has transitioned from its beginnings as an R&D motor designer to a provider of engineering design services and supplier of light-duty vehicle e-axle products to OEM's. Such a transformation within two years of raising funds through an IPO is an exceptional achievement.
Facilitated primarily by the proceeds from the IPO and subsequent fund raise, Saietta has made considerable progress in its core focus lightweight mobility market having secured orders for design and delivery of light-duty vehicle e-axles to customers in India and the United States. Saietta remains dedicated to further securing a number of long-term, high volume OEM relationships globally.
These achievements have required a considerable amount of transformation within the business and there have been changes at Board level and operating level as a consequence.
In particular, whilst the E-Traction acquisition made in November 2021 brought in new valuable intellectual property and skills to the Group, it also contained operational activities that were non-core such as the Retromotion, bus conversion category.
Successfully releasing this activity and deciding to seek an industrialisation partner to take forward the Netherlands-based marine operation, Propel, have together made it possible for the Group to reach the milestones set out with OEM's in the light duty sector.
The decision regarding Propel has led to an impairment of the assets in that business unit as there is uncertainty over the timescale to complete such a transition.
Outlook
Moving from an R&D-focused technology start-up to a large-scale manufacturer with international sales is clearly a dramatic transformation and the Group continues to encounter the challenges commensurate with such. However, its market acceptance is now firmly in place, which provides a much clearer path towards its goals and aspirations.
Saietta employees Group-wide have been integral to delivering on its ambitious growth plans and the Board is confident that our short- and long-term goals remain achievable. Saietta's ramp up of delivery of light-duty vehicle e-axle products to our customers remains firmly in place to ensure the future prosperity of the Group.
The Board has confidence that the commercial opportunities for Saietta across global markets and particularly in India remain readily apparent and the rapid scale-up of its business will allow it to access these opportunities in the near future.
Chief Executive Officer's Review
This was a challenging transitional year for the Group with commercial success and operational delivery becoming a dominant feature of the business as opposed to the research and development start up phases of the past. Our turnover in the 12 months ended 31 March 2023 increased by 50% to £2.1 million (2022: £1.4m) from continued operations.
The Group now consists of:
| · | An international light duty division offering an entire, integrated e-drive system (comprising gear box, axle, inverter, and controller) packaged around an AFT 140 motor. The Board believes this increases the value of the AFT product offering and accelerates the timeline for its adoption into vehicle platforms; |
| · | An international heavy-duty division which which holds an agreement post year end for future licence revenues due on two products under development by Consolidated Metco Inc., a leading US supplier of hubs to OEM's; and |
| · | A world class automotive electric motor factory in Sunderland with 4 motor production lines and an electronic circuit board production line. |
Our achievements during the year
Saietta VNA awarded contract with Tier 1 Indian OEM
In December 2022, the Group signed a Development Agreement with a Tier 1 Indian OEM for engineering design services of approximately £3.2m for a series of products with assumed minimum volumes across the next five years of 80,000 units and a start of production in the fourth quarter of 2023.
Ayro Inc. awarded contract and initial purchase order of USD6.0m
In April 2023, the Group received an order for 3,000 bespoke eDrive units from Ayro Inc., a US customer that commenced delivery of prototype units earlier in the year. The award reflected Ayro's confidence in Saietta's engineering design and support as well as its clear delivery capability, having secured a production facility in Sunderland in April 2022.
Strategy, recent developments and commercial opportunities
The Group's strategy has evolved throughout the year driven by market pull, particularly in the area of light-duty solutions and by resource constraints that have led to prioritization on the original AFT technology away from the ancillary areas of Marine and Heavy Duty.
The decision to find an industrialization partner for Propel and to renegotiate the arrangements with ConMet were necessary steps in this evolution.
Looking ahead, the outlook for the business with a refocused operating model is highly positive for Saietta. We envisage the growth experienced in 2022/23 will accelerate as the scaled up production of AFT and RFT motors in India and other markets will occur in the coming year.
Future growth strategy
The Group intends to invest for growth in the following areas:
· Saietta VNA scale up to meet client orders
· Securing a number of long-term, high volume OEM relationships globally; and
· Continue to secure crucial patents across all key international markets.
To make such growth possible, the Group has had to apply rigorous rationing of its capital and its subsequent renegotiation of arrangements with ConMet are an example of the discipline and refocus applied.
Saietta is quickly positioning itself to become a prominent participant in drive train systems and technology for applications across the electric vehicle segments.
Review of the Group's Business and Financial Performance
Overview
Having commenced the year acquiring a facility in Sunderland with 86,000 square feet of factory space designed specifically for electric motor production, the Group moved away from its research and development origins and pivoted towards a phase of industrialization of motor production in order to address the opportunities materializing in contract wins.
The Group delivered moderate results during the year, generating total revenue of £2.1m (2022: £1.4m) from continued operations whilst formalising its business structure and strategy for its principal divisions*:
a) Lightweight mobility division addressing India through Saietta VNA and the United States of America directly from its Sunderland plant.
b) Heavy-duty commercial division with licence revenue in place for future products.
* the marine division has now been discontinued whilst an industrialization partner is being sought.
Establishment of production facility
On 4 April 2022, the Group acquired fixtures and fittings, plant equipment and a lease for an 86,000 square feet production facility in Sunderland which will ultimately be able to produce in excess of 100,000 units per annum. The Sunderland plant will service non-India based customers through semi-automated lines for both AFT and RFT requirements. Saietta VNA, the Group's Indian joint venture, will service customers through a fully automated AFT line and RFT lines due to be in place in quarter four 2023.
Furthermore, in the event that additional contractual orders for eDrives are received in the near term (ahead of cashflows from the AFT eDrive vehicle programmes referenced above) then the Company may also require additional capital to fund the set up and production implementation of those additional contracts.
Business development - Lightweight mobility division
The development order from India with production to follow and the order from the USA confirmed the Group's strategy to concentrate on lightweight mobility as the most effective means to harness the potential of its AFT technology with a view to rapid profitable growth in the coming years.
Business development - Heavy-duty and Marine divisions
The Group has needed to concentrate its attention and capital on the areas of most substantial returns both in terms of internal rates of return and immediacy.
As a consequence the arrangements with ConMet, the discontinuance of the Retromotion activity and the redirection of marine retail operations in the Netherlands all became necessary steps towards the focused Group strategy.
Gross profit
Saietta delivered gross profit of £0.7m (2022: £0.8m) with a lower gross profit margin of 31% (2022: 58%) from continuing operations. The fall in gross margin is driven by revenue mix and the changing nature of the ConMet contract.
Other income
£1.0m gain on disposal of the intangibles created in the ConMet projects and £1.7m (2022: £0.7) of grant income from two projects (2022: 3 projects) were recognized in the year. Grant income included the projects with Innovate UK ("APC 6" and "APC 16") which generated income of £1.0m (2022: £0.6m).
Administrative expenses
Administrative costs for the year of £21.8m (2022:£13.1m) represents an increase of £8.7m.This increase is driven by the Group expanding its operations across geographies which in turn has served to increase its fixed cost base. In particular, the Group deployed funds to grow its existing operations with the addition of the Netherlands based heavy duty division for the entire year, a Sunderland plant and expanded Propel B.V. which has caused total, average staff numbers to increase from 100 in 2022 to 189 in 2023.
The share-based payment charge decreased from £4.4m in 2022 to £2.3m in 2023, due to performance below target for the new Long-Term Incentive Plan ('LTIP') awards.
Discontinued operations
The strategic adjustment to narrow near-term focus on immediate revenue generating opportunities in the rapidly expanding global lightweight electric vehicle (EV) sector through the discontinuance of the Retromotion activity and the redirection of marine retail operations in the Netherlands lead to significant losses in the year £7.9m (2022: £0.05m)
Adjusted EBITDA
The underlying level of loss that is measured by Earnings Before Interest, Tax, Depreciation and Amortisation, discontinued operations and non-recurring expenditure, which excludes expenses associated with the Admission to AIM in the prior year and the raising of additional funds through a placement in the financial year ended March 2023 and share-based payments (adjusted EBITDA), shows an increase in adjusted EBITDA loss from £4.4m in 2022 to £14.0m in 2023.
For full details on how the adjusted EBITDA figure is calculated, please see note 4.
Consolidated statement of financial position and cash flows
Non-current assets
As at 31 March 2023, non-current assets amounted to £25.5m (2022: £15.5m), including intangible assets of £10.9m (2022: £8.4m) and property, plant and equipment of £8.1m (2022: £3.5m).
Of the increase in intangible assets, internally-generated development costs and the purchase of intangible assets accounted for £3.3m (2022: £3.6m) and £1.0m (2022: £0.5m) respectively whilst disposal groups held for sale accounted for £(1.7)m (2022: nil).
Current assets
As at 31 March 2023, current assets amounted to £14.2m (2022: £27.2m), including cash balances of £7.2m (2022: £18.4m).
The principal elements of the decrease in cash were:
| · | Gross proceeds through placing and subscription of £23.6m (2022: £37.5); |
| · | Operating cash outflow of £18.2m (2022: £6.8m); |
| · | Investing activities including the acquisition of intangibles, property, plant & equipment and the capitalization of development costs which totaled £10.5m (2022: £8.9m); and |
| · | Movements in working capital of 3.4m outflow (2022: £1.0m outflow). |
Directors' Report
The Directors present their report and the consolidated financial statements for the year ended 31 March 2023. The Directors who served during the year and their beneficial interest in the Company's issued share capital at year end were:
| |
Date of appointment |
Date of resignation | Ordinary shares of £0.011 each 2023 | Ordinary shares of £0.011 each 2022 |
| Executive Directors: | | | | |
| Anthony Gott1 Wicher Kist | 7 July 2021 23 November 2018 | N/A 17th April 2023 | 21,739 1,313,289 | - 1,295,174 |
| Steven Harrison | 22 April 2021 | N/A | - | - |
| | | | | |
| Non-Executive Directors: | | | | |
| Emmanuel Clair | 23 November 2018 | N/A | 12,777,622 | 12,603,709 |
| David Wilkinson | 7 July 2021 | N/A | 11,956 | 8,333 |
| | | | | |
| Seshu Bhagavathula | 17 December 2021 | N/A | - | - |
| Devyani Vaishampayan | 5 December 2022 | N/A | - | - |
1On 1 August 2022, Anthony Gott was appointed Executive Chairman and on the 18th April 2023 as Interim Chief Executive Officer. On 2 October 2023 David Wooley was appointed as Chief Executive Officer.
Principal Activities
Saietta Group plc is a company registered in England and Wales that has developed the innovative AFT electric motor, designed to deliver class-leading performance for its target markets whilst being low cost and built for mass market production. Saietta's initial target market is the high volume, fast-growing lightweight mobility market including motorcycles in Asia.
Review of Business
A review of the business, its development and performance for the year and its position at the year end, together with the future prospects of the Group, is contained in the Chairman & Chief Executive Officer's Report and the Strategic Report.
Going concern
The financial statements have been prepared on a going concern basis. In adopting the going concern basis, the directors have considered the financial position of the Group and the Company, their cash flows and their liquidity position. The Group and Company's financial risk management objectives and exposures to liquidity and other financial risks and uncertainties are set out on pages 15 to 18 of the Group's financial statements. The Group had net assets of £29,189,193 (2022: £32,814,791) as at 31 March 2023 and available liquidity of £7,247,267 (2022: £18,402,055) comprised of cash and cash equivalents.
The Group and Company have modelled scenarios for a period up to October 2024 from the March 2023 year end and stress tested its financial position in such scenarios. These stress tests modelled the variability in financial performance and free cash flows when incorporating certain hypothetical events such as a reduction in forecast revenue and a delay in the receipt of payments for equipment from Saietta VNA.
The Group and Company operate in markets that are rapidly growing and has strategic plans that respond to such growth. In delivering those plans, the Group is mindful of the ultimate benefits from maintaining control over the deployment of its intellectual property in applications with major OEMs and within its joint venture arrangements. In order to do so, it recognises that at times it will potentially need to co-invest or defer investment to its partners to enhance the future value it can achieve from application of its products. In such instances the commercial merits will be weighed in determining whether funding is sought.
These forecasts align to the business strategy which was based on the assumption that the Group and Company will significantly increase its revenue and be able to generate significant gross profit in the next 12 months.
Furthermore, the forecasts also include payments from Saietta VNA, the Group's joint venture in India, for equipment for fully automated production of AFT motors. The Group has spent £3m on such equipment and this amount is to be reimbursed by Saietta VNA. In the absence of such reimbursement there may also be a need to raise additional funding
Whilst the Directors expect that additional funding can be raised this is not guaranteed and when continuing with an accelerated expansion this presents a material uncertainty which may cast significant doubt over the Group's and the Company's ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not reflect any adjustments that would be required to be made if they were prepared on a basis other than the going concern basis.
Whilst acknowledging the uncertainties described above, the Board have concluded, on the basis of all scenarios and related expected cashflows and available sources of finance, that the Group and Company will be able to continue as a Going Concern for at least twelve months from the date of signing these financial statements and therefore it remains appropriate to prepare the Group and Company's results on the basis of a going concern.
Results and Dividends
The Group loss for the year, before taxation (including discontinued operations), amounted to £28,041,921 (2022: 10,782,252). The Directors do not recommend a final dividend this year (2022: £nil).
Research and development costs
In accordance with the policy outlined in note 2, the Group incurred research and development expenditure of £3.3m (2022: £3.8m) in the year. Commentary on the major activities is given in the Strategic Report.
Financial instruments
The use of financial instruments and financial risk management policies is covered in the Strategic Report and also in note 33 of the financial statements.
Substantial shareholdings
At 31 March 2023, the Company had been notified that (other than Directors) the following were interested in 3% or more of the issued capital of the Company:
| | Number of Ordinary shares | % of issued share capital |
| Amati AIM VCT plc | 10,980,174 | 10.67% |
| Lawrence Marazzi | 5,794,799 | 5.63% |
| John Michael Winn | 6,326,934 | 6.15% |
| Premier Miton Investors | 7,122,114 | 6.92% |
| Schroder Investment Management | 7,167,665 | 6.96% |
| Canaccord Genuity Wealth | 6,003,963 | 5.83% |
| | | |
At 18 October 2023, there were 102,917,675 Ordinary shares in issue.
Governance and the Board
The Board's governance system provides balanced support for the executive management team in the development of the Group's strategy and with the need to ensure effective monitoring of its implementation. The Board and its committees have considered the significant events of the year and their impact on the Group's business and reputation.
During the year the Audit & Risk Committee was chaired by David Wilkinson, the Remuneration Committee was chaired by Devyani Vaishampayan (previously David Wilkinson) and the Nomination Committee was chaired by Devyani Vaishampayan (previously David Wilkinson). The Board remains confident in the work of those committees and the overall system of governance.
Events after the reporting period
The events after the year end of 31 March 2023 are detailed in note 36 to the financial statements.
Strategy and future developments
The Group's strategy and future developments is covered in the Chief Executive Officer's Report.
Major macroeconomic impacts
Covid-19 and its aftershocks: We are mindful that the legacy of the COVID-19 pandemic and the friction it placed into international trade continues to have a notable impact on global supply chains; however, after negotiation and supplier development we currently do not anticipate that our production and sales volumes projections will be adversely affected in FY2023/24.
Economic and geopolitical factors: Inflationary pressures have been increasing throughout the first half of 2023, with major economies across the globe experiencing high energy prices linked to the conflict in Ukraine. This has fed through into higher interest rates and inflation on supplier costs. This has directly impacted the business as some prices we pay our suppliers are directly indexed to market rates which then puts pressure onto profit margins. Cost down measures to reduce the bill of materials and labour requirement have been pursued during the year to mitigate the effect of the increased raw material costs. Looking ahead, we will continue to monitor the impact of changes in material costs on our margins and continue to review areas where cost can be taken out of the manufacturing through process engineering. Ultimately, we may also look to adjust sales prices if we cannot avoid passing cost increases on to our consumers.
Auditors
Each of the persons who is a director at the date of approval of this annual report confirms that:
· so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware; and
· the director has taken all the steps that he/she ought to have taken as a director in order to make himself/herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006. The auditors, BDO LLP, will be proposed for reappointment in accordance with section 489 of the Companies Act 2006.
Saietta Group plc has not included the requirements of Streamlined Energy and Carbon Reporting (SECR) due to the Group and its subsidiaries not meeting the threshold for reporting.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2023
| | | | | | Year ended 31 March 2023 | Year ended 31 March 2022* | ||
|
| | | | | ||||
| | | | | Notes |
| £ |
| £ |
| Continuing operations |
| | | | | | | |
| Revenue |
| | | 6 | | 2,102,959 |
| 1,382,777 |
|
| | | | | | | | |
| Cost of sales | | | | | | (1,450,435) | | (586,966) |
| | | | | | | | | |
| Gross profit |
| | | | | 652,524 |
| 795,811 |
|
| | | | | | | | |
| Other income | | | | 7 | | 2,674,520 | | 678,411 |
| Other costs of sale | | | 7 | | (918,291) | | - | |
| | | | | | | | | |
| | | | | | | | | |
| Administrative expenses | | | | | (21,784,959) | | (13,091,952) | |
| Share option costs | | | 9 | | (2,335,944) | | (4,406,334) | |
| Other administrative expenses | | 9 | | (19,449,015) |
| (8,685,618) | ||
| | | | | | | - | | |
| Gain on bargain purchase | | | | | - | | 704,761 | |
| | | | | | | | | |
| Operating loss |
| | | 8 | | (19,376,206) |
| (10,912,969) |
|
| | | | | | | | |
| Finance income | | | | 11 | | 75,338 | | 5,523 |
| | | | | | | | | |
| Finance expense | | | | 11 | | (278,046) | | (99,604) |
| | | | | | | | | |
| Share of results of associate | | | 17 | | (243,406) | | - | |
| | | | | | | | | |
| Other gains and losses | | | 18 | | (605,377) | | (78,058) | |
| | | | | | | | | |
| Loss before taxation |
| | | | (20,427,697) |
| (11,085,108) | |
|
| | | | | | | | |
| Tax credit | | | | 12 | | 490,188 | | 377,420 |
| | | | | | | | | |
| Loss for the year from continuing operations | | | (19,937,509) |
| (10,707,688) | |||
|
| | | | | | | | |
| Discontinued operations |
| | | | | | | |
| Loss for the year from discontinued operations | 38 | | (7,868,640) | | (46,977) | |||
| | | | | | | | | |
| Loss for the year attributable to equity holders of the parent company |
| (27,806,149) |
| (10,754,665) | ||||
|
| | | | |||||
| | | | | | | | | |
| Other comprehensive loss, net of income tax, to be reclassified to profit and loss in subsequent periods |
| | | | ||||
| | | | | |||||
| Exchange differences on translation of foreign operations | | (235,772) | | (27,587) | ||||
| | | | | | | | | |
| Total comprehensive loss for the year |
| | | (28,041,921) |
| (10,782,252) | ||
|
| | | | | | | | |
| Basic and diluted loss per share in pence | 13 | | | | | |||
| - Continuing operations | | | | | (0.21) | | (0.14) | |
| The earnings per share calculation relates to continuing operations. The notes on pages 44 to 92 form part of these financial statements. |
| |
| |
| *Comparative figures have been restated to exclude income and expenditure relating to discontinued operations. A reconciliation of the balances is included in note 38. |
| |
| |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2023
| | | | | | | 2023 |
| 2022 |
| ASSETS |
| | | Notes |
| £ |
| £ |
| Non-current assets |
| | | | | | | |
| Intangible assets | | | | 14 | | 10,916,016 | | 8,365,506 |
| Property, plant and equipment | | | 15 | | 8,113,009 | | 3,498,541 | |
| Right-of-use assets | | | | 16 | | 5,715,671 | | 2,815,049 |
| Investment in associate | | | 17 | | 1,285 | | - | |
| Other financial assets | | | 23 | | 500,000 | | - | |
| Trade and other receivables | | | 21 | | 141,195 | | 734,526 | |
| Prepayments and accrued income | | 22 | | 129,016 | | 101,825 | ||
| Total non-current assets |
| | | | 25,516,192 |
| 15,515,447 | |
|
| | | | | | | | |
| Current assets |
| | | | | | | |
| Inventories | | | | 19 | | 498,407 | | 2,470,043 |
| Trade and other receivables | | | 21 | | 2,984,033 | | 5,070,139 | |
| Prepayments and accrued income | | 22 | | 3,209,304 | | 1,237,197 | ||
| Cash and cash equivalents | | | 20 | | 7,247,267 | | 18,402,055 | |
| Assets of disposal groups held for sale | | 38 | | 227,474 | | - | ||
| Total current assets |
| | | | | 14,166,485 |
| 27,179,434 |
|
| | | | | | | | |
| TOTAL ASSETS |
| | | | | 39,682,677 |
| 42,694,881 |
|
| | | | | | | | |
| EQUITY AND LIABILITIES |
| | | | | | | |
| Current liabilities |
| | | | | | | |
| Trade and other payables | | | 24 | | 3,035,454 | | 6,819,521 | |
| Lease liabilities | | | | 33 | | 1,123,085 | | 470,069 |
| Contract liabilities | | | | 25 | | 326,286 | | - |
| Liabilities of disposal groups held for sale | | 38 | | 918,828 | | - | ||
| Total current liabilities |
| | | | 5,403,653 |
| 7,289,590 | |
|
| | | | | | | | |
| Non-current liabilities |
| | | | | | | |
| Lease liabilities | | | | 33 | | 5,058,290 | | 2,380,537 |
| Provisions | | | | 29 | | 31,541 | | 168,130 |
| Liabilities for financial guarantees | | 28 | | - | | 41,833 | ||
| Total non-current liabilities |
| | | | 5,089,831 |
| 2,590,500 | |
|
| | | | | | | | |
| EQUITY |
| | | | | | | |
| Share capital | | | | 30 | | 113,209 | | 93,557 |
| Share premium | | | | 30 | | 56,670,326 | | 34,671,275 |
| Share options reserve | | | 31 | | 14,615,611 | | 12,217,991 | |
| Translation reserve | | | | | | (157,537) | | (27,939) |
| Translation reserves of disposal groups | | | | (106,174) | | - | ||
| Accumulated losses | | | | | | (41,946,242) | | (14,140,093) |
| Total equity |
| | | | | 29,189,193 |
| 32,814,791 |
|
| | | | | | | | |
| TOTAL EQUITY AND LIABILITIES |
| | | | 39,682,677 |
| 42,694,881 | |
The notes on pages 48 to 92 form part of these financial statements.
| The financial statements were approved and authorised for issue by the Board on 18th October 2023 and were signed on its behalf by: |
| |
| |
Steven Harrison
Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2023
| | | | | Share |
| | |
| | | Share | Share | options | Translation | Accumulated |
|
| | Notes | capital | premium | reserve | reserves | losses | Total |
|
| | £ | £ | £ | £ | £ | £ |
|
| | | | | | | |
| Balance at 1 April 2021 |
| 51,921 | - | 7,318,820 | (352) | (3,457,911) | 3,912,478 |
| | | | | | | | |
| Comprehensive loss for the period |
| | | | | | |
| Loss for the period | | - | - | - | - | (10,754,665) | (10,754,665) |
| Exchange differences on translation of foreign operations | | - | - | - | (27,587) | - | (27,587) |
| Total comprehensive loss | | - | - | - | (27,587) | (10,754,665) | (10,782,252) |
| | | | | | | | |
| Contributions by owners |
| | | | | | |
| Issue of shares | 30 | 32,245 | 35,145,382 | - | - | - | 35,177,627 |
| Share issue costs offset against share premium | 30 | - | (2,868,972) | - | - | - | (2,868,972) |
| Share-based payments | 31 | - | - | 4,899,171 | - | - | 4,899,171 |
| Share issues on exercise of employee share options | 30 | 6,091 | 58,165 | - | - | - | 64,256 |
| Settlement of the convertible loan notes | | - | - | - | - | 72,483 | 72,483 |
| Shares issued on conversion of convertible loan notes | 30 | 3,300 | 2,336,700 | - | - | - | 2,340,000 |
| | | | | | | | |
| Balance at 31 March 2022 |
| 93,557 | 34,671,275 | 12,217,991 | (27,939) | (14,140,093) | 32,814,791 |
|
| | | | | | | |
| | | | | | | | |
| Balance at 1 April 2022 |
| 93,557 | 34,671,275 | 12,217,991 | (27,939) | (14,140,093) | 32,814,791 |
| | | | | | | | |
| Comprehensive loss for the period |
| | | | | | |
| Loss for the period | | - | - | - | - | (27,806,149) | (27,806,149) |
| Exchange differences on translation of foreign operations | | - | - | - | (129,598) | - | (129,598) |
| Translation reserves of disposal groups | | - | - | - | (106,174) | - | (106,174) |
| Total comprehensive loss | | - | - | - | (235,772) | (27,806,149) | (28,041,921) |
| | | | | | | | |
| Contributions by owners |
| | | | | | |
| Issue of shares | 30 | 18,812 | 23,581,189 | - | - | - | 23,600,001 |
| Share issue costs offset against share premium | 30 | - | (1,590,469) | - | - | - | (1,590,469) |
| Share-based payments | 31 | - | - | 2,397,620 | - | - | 2,397,620 |
| Share issues on exercise of employee share options | 30 | 840 | 8,331 | - | - | - | 9,171 |
| | | | | | | | |
| Balance at 31 March 2023 |
| 113,209 | 56,670,326 | 14,615,611 | (263,711) | (41,946,242) | 29,189,193 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2023
| | | | | | | Year ended 31 |
| Year ended 31 |
|
| | | | | | March 2023 |
| March 2022 |
|
| | | | | | £ |
| £ |
| Operating activities |
| | | | | | | |
| Loss after taxation | | | | | | (27,806,149) | | (10,754,665) |
| | | | | | | | | |
| Adjustments for non-cash items: |
| | | | | | | |
| Taxation | | | | | 12 | (490,188) | | (377,420) |
| Depreciation of property, plant and equipment | | | 15 | 578,010 | | 174,451 | ||
| Impairment of property, plant and equipment | | | 15 | 137,668 | | - | ||
| Depreciation of right-of-use assets | | | | 16 | 989,021 | | 270,477 | |
| Amortisation of intangible assets | | | | 14 | 286,222 | | 72,384 | |
| Impairment of intangible assets | | | | 14 | 107,166 | | - | |
| Impairment of net assets held for sale | | | | 2,538,209 | | - | ||
| Charge for share options granted | | | | 31 | 2,397,620 | | 4,406,334 | |
| Loss on disposal of property, plant and equipment | | | 34,369 | | 1,900 | |||
| Loss on disposal of right of use assets | | | | 485,473 | | - | ||
| (Profit)/loss on currency exchange | | | | | (435,738) | | 3,204 | |
| Interest income | | | | | 11 | (75,338) | | (5,523) |
| Interest expense | | | | | 11 | 278,046 | | 104,621 |
| Loss provision against other receivable | | | 18 | 600,000 | | - | ||
| Share of results of associate | | | | 17 | 243,406 | | - | |
| Provision for bad debts | | | | | | 89,936 | | - |
| Provision for inventory obsolescence | | | | 1,860,993 | | - | ||
| (Decrease)/increase in financial guarantee contract | | 28 | (41,833) | | 41,833 | |||
| Gain on bargain purchase | | | | | | - | | (704,761) |
| Cash used in operating activities before changes in working capital |
| (18,223,106) |
| (6,767,165) | ||||
|
| | | | | | | | |
| Change in working capital |
| | | | | | | |
| Decrease/(increase) in debtors | | | | | (194,606) | | (4,869,032) | |
| Decrease/(increase) in inventories | | | | | 110,643 | | (669,692) | |
| (Decrease)/increase in non-interest bearing liabilities | | | (3,457,781) | | 4,802,519 | |||
| Decrease in provisions | | | | | | (136,589) | | (279,826) |
| Tax received | | | | | | 289,075 | | - |
| Net cash flow used in operating activities |
| | | (21,612,364) |
| (7,783,196) | ||
|
| | | | | | | | |
| Investing activities |
| | | | | | | |
| Interest received | | | | | 11 | 75,338 | | 5,523 |
| Intangible fixed asset additions | | | | 14 | (968,427) | | (515,939) | |
| Capitalised internally generated development costs | | 14 | (3,311,152) | | (3,594,038) | |||
| Purchase of property, plant and equipment | | | 15 | (5,535,108) | | (3,389,798) | ||
| Investment in equity accounted associate | | | 17 | (267,784) | | - | ||
| Loan advanced to associate | | | | 23 | (500,000) | | - | |
| Acquisition of subsidiary, net of cash | | | | - | | (1,427,246) | ||
| Net cash used in investing activities |
| | | | (10,507,133) |
| (8,921,498) | |
|
| | | | | | | | |
| Financing activities |
| | | | | | | |
| Proceeds on issue of shares | | | | 30 | 23,609,172 | | 35,241,809 | |
| Repayment of lease liabilities | | | | 27 | (659,993) | | (281,872) | |
| Share issue costs | | | | | 30 | (1,590,469) | | (2,507,409) |
| Interest paid on lease liabilities | | | | 11 | (274,891) | | (18,609) | |
| Repayment of borrowings | | | | | - | | (176,111) | |
| Interest paid | | | | | 11 | (3,155) | | (13,529) |
| Net cash flow from financing activities |
| | | 21,080,664 |
| 32,244,279 | ||
|
| | | | | | | | |
| Net change in cash and cash equivalents | | | | (11,038,833) | | 15,539,585 | ||
| | | | | | | | | |
| Cash and cash equivalents, beginning of year | | | | 18,402,055 | | 2,862,470 | ||
| Exchange variances on cash and cash equivalents | | | (12,476) | | - | |||
| Cash and cash equivalents for continuing and discontinued operations | 7,350,746 |
| 18,402,055 | |||||
The cash and cash equivalents balance includes cash from discontinued operations which are included in the held for sale line on the balance sheet. The cash for this is disclosed separately in note 38.
Notes to the Consolidated Financial Statements
1. General information
Saietta Group plc ("the Company") and its subsidiaries are collectively referred to as "the Group". The Company is a public limited company, registered in England and Wales. The address of its registered office is Riverbank House, 2 Swan Lane, London, EC4R 3TT.
The principal activity of the company is the provision of electric drive solutions including the manufacture of prototype and production electric motors for vehicles.
2. Basis of preparation and significant accounting policies
(a) Basis of preparation
The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.
The financial statements have been prepared under the historical cost convention. The presentation currency used is sterling and amounts have been presented rounded to the nearest £.
Preparation of consolidated financial statements
Where the company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant facts and circumstances, including:
? The size of the company's voting rights relative to both the size and dispersion of other parties who hold voting rights
? Substantive potential voting rights held by the company and by other parties
? Other contractual arrangements
? Historic patterns in voting attendance
The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. The subsidiaries are consolidated from the date on which they were incorporated or acquired.
The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
(b) Changes in accounting policies
(i) New standards, amendments to standards or interpretations
No new standards, interpretations and amendments adopted in the year have had a material impact on the Group.
(ii) New standards, amendments to standards or interpretations not yet applied
There have been amendments to some accounting standards:
IFRS 3 Business Combinations: Reference to the Conceptual Framework IAS 16 Property, Plant and Equipment-Proceeds before Intended Use IAS 37 Onerous Contracts - Cost of Fulfilling a Contract
There are no new standards, interpretations or amendments not yet applied which the Directors anticipate will have a material impact on the Group.
(c) Significant accounting policies
Revenue recognition
Performance obligations and timing of revenue recognition
A portion of the Group's revenue is derived from selling goods with revenue recognised at a point in time when control of the goods has transferred to the customer. This is generally when the goods are delivered to the customer. However, for export sales, control might also be transferred when delivered either to the port of departure or port of arrival, depending on the specific terms of the contract with a customer. There is limited judgement needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, the Company no longer has physical possession, usually will have a present right to payment (as a single payment on delivery) and retains none of the significant risks and rewards of the goods in question.
Some goods sold by the Group include warranties which require the Group to either replace or mend a defective product during the warranty period if the goods fail to comply with agreed-upon specifications. In accordance with IFRS 15, such warranties are not accounted for as separate performance obligations and hence no revenue is allocated to them. Instead, a provision is made for the costs of satisfying the warranties in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. On some product lines, a customer is able to take out extended warranties. These are accounted for as separate performance obligations, with the revenue earned recognised on a straight-line basis over the term of the warranty.
The Group's Lightweight and Heavy-duty divisions both carry out design (consultancy-type) services for clients, with revenue recognised typically on an over time basis. This is because the designs created have no alternative use for the Group and the contracts would require payment to be received for the time and effort spent by the Group on progressing the contracts in the event of the customer cancelling the contract prior to completion for any reason other than the Group's failure to perform its obligations under the contract. On partially complete design contracts, the Group recognises revenue based on stage of completion of the project which is estimated by comparing the number of hours actually spent on the project with the total number of hours expected to complete the project (i.e. an input based method). This is considered a faithful depiction of the transfer of services as the contracts are initially priced on the basis of anticipated hours to complete the projects and therefore also represents the amount to which the Group would be entitled based on its performance to date. These design contracts include commitment fees which are fees payable by customers in order to secure exclusive access to certain goods and services of the Group and thus precludes the Group from offering those goods and services to other customers. They are recognised over the period of the contract.
Determining the transaction price
Most of the Group's revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices.
Revenue recognition (continued)
Allocating amounts to performance obligations
For most contracts for goods, there is a fixed unit price for each product sold, with reductions given for bulk orders placed at a specific time. Therefore, there is no judgement involved in allocating the contract price to each unit ordered in such contracts (it is the total contract price divided by the number of units ordered). Where a customer orders more than one product line, the Group is able to determine the split of the total contract price between each product line by reference to each product's standalone selling prices (all product lines are capable of being, and are, sold separately).
For most contracts for design services, revenue is recognised over time in accordance with percentage completion. Accordingly, the transaction price is allocated in accordance by reference to the actual costs incurred as a proportion of the total expected cost of the products and services to be provided for each performance obligation. Allocation of transaction price may include allocation of discounts, which are applied on a proportionate basis to all performance obligations based on the stand-alone selling price of each performance obligation (observable or estimated).
In order to win significant repeat business with key customers, the Group might enter into contracts entitling them to discounts if it places repeat orders in the future. Such discounts constitute a 'material right' and result in some of the consideration received for the initial sale being deferred and recognised as revenue when subsequent sales are fulfilled or (if later) when the rights to receive a discount expire. The Group estimates both the probability that the customer will take up its future discount offer and the value of future purchases that might be made in order to estimate the value of the rights granted. This has to be done on a contract-by-contract basis for each customer to whom material rights have been granted. The Directors do not consider past experience an appropriate basis for estimating the amount of total contract revenue to allocate to future discount rights for two reasons. Firstly, there is not a significant number of such contracts on which past experience can be extrapolated. And secondly, each customer has unique circumstances which will impact both the probability and value of additional orders being placed. Therefore, the estimates are made by reference to discussions had with the relevant customers as to the extent the discount options will be taken up when the original contracts were negotiated.
Costs of fulfilling contracts
The costs of fulfilling contracts do not result in the recognition of a separate asset because:
· for RetroMotion contracts, where the Group retrofits existing diesel-engine powered buses with in-wheel electric motor technology, revenue is recognised over time by reference to the stage of completion with control of the asset remaining with the customer for the duration of the contract. Consequently, no asset for work in progress is recognised.
· such costs are included in the carrying amount of inventory for contracts involving the sale of goods; and
· for engineering design service contracts, revenue is recognised over time by reference to the stage of completion meaning that control of the asset (the design service) is transferred to the customer on a continuous basis as work is carried out. Consequently, no asset for work in progress is recognised.
Practical expedients
The company has taken advantage of the practical expedients:
· not to account for significant financing components where the time difference between receiving consideration and transferring control of goods (or services) to its customer is one year or less; and
· to expense the incremental costs of obtaining a contract when the amortisation period of the asset otherwise recognised would have been one year or less.
Grant income
The Group enters into consortiums with partners who together will apply for grant income to be paid out against a project that contains defined deliverables, clear outcomes and a set level of expenditure.
Expenditure comprises both capital purchases for equipment and operational expenditure for labour and supplies.
Each partner agrees a set level of expenditure at the start of the project and a level of grant income paid for by the grant provider is allocated for payment against the expenditure incurred, however the deliverables on the project for each partner are linked. Such projects are sought by the Group as they provide funding over one or more work streams that form part of the Group's programme(s) to deliver increased production capacity.
The Group recognises the costs of a project in the period in which they are incurred when related to qualifying expenditure. The grant income that is provided against this total expenditure is recognised as income when received from the issuing authority. Recognition occurs at this point as its release is subject to the issuer's review and confirmation of compliance with all conditions for release. The grant related to assets is deferred and recognised as income in the same period in which the grant-related asset is being depreciated.
Assets acquired for use in such projects are depreciated in accordance with the Group's depreciation policy.
The grant programmes that the Group participates in typically operate on a three month cycle, with recoverable income over each three month period paid in the month following that period.
Expenditure
Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provisions are made when a present obligation exists for a future liability relating to a past event and where the amount of the obligation can be reliably estimated.
Foreign currencies
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in 'sterling', which is also the Group's functional currency.
Transactions entered into by the Group in a currency other than the functional currency are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income or expense'.
Intangible assets
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section related to critical estimates and judgements below).
The significant externally acquired intangibles recognised by the company and their useful economic lives are as follows: Intellectual property patents 10% straight line
Software 25% reducing balance
Intangible assets (continued)
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if it can be demonstrated that:
? it is technically feasible to develop the product for it to be sold;
? adequate resources are available to complete the development;
? there is an intention to complete and sell the product;
? the company is able to sell the product;
? sale of the product will generate future economic benefits; and
? expenditure on the project can be measured reliably.
Capitalised development costs are subsequently amortised on a straight line basis over the periods the company expects to benefit from selling the products developed, which ranges from 8 to 10 years. The amortisation expense is included within the administrative expenses in the statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the statement of comprehensive income as incurred.
The aggregate value of the capitalised development expenditure for each product is reviewed at the end of each accounting period and where the circumstances which have justified the deferral of the expenditure set out above no longer apply, or are considered doubtful, the expenditure, to the extent to which it is considered to be irrecoverable, is impaired. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.
Intangible assets that are yet to be amortised are tested for impairment annually.
Property, plant and equipment
Plant, machinery, fixtures and fittings are stated at cost less accumulated depreciation and accumulated impairment loss. Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Short leasehold Remaining lease term Plant and machinery 25% reducing balance Fixtures and fittings 25% reducing balance
Motor vehicles Four years
Useful lives are based on management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness and events which may cause the estimate to be revised. At the end of the initial period, asset lives reach a residual value at which they are either suitable for replacement or extended life after maintenance and overhaul.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Property, plant and equipment (continued)
Assets under construction
Assets under construction relates to the construction of an automated production line which at 31 March 2023 was not yet ready for use.
Assets under construction are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items.
Any costs not capitalised as part of the factory cost will be expensed to the statement of profit or loss as incurred. Depreciation on assets under construction does not commence until they are complete and available for use.
When necessary, the entire carrying amount of the assets under construction is tested for impairment in accordance with IAS 36 Impairment of assets as a single asset by comparing its recoverable amount (the higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
Inventories Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Weighted average cost is used to determine the cost of ordinarily interchangeable items.
Financial instruments
Financial assets and financial liabilities are recognized in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
· Financial assets
The Group carries its financial assets at amortised cost.
Amortised Cost
These assets arise principally from the provision of goods and services to customers (eg trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Financial instruments (continued)
Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non- payment of the trade receivable is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised separately in the statement of comprehensive income. On confirmation that the trade debtor will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
The Group's financial assets measured at amortised cost comprise trade and other receivables and accrued income, and cash and cash equivalents in the balance sheet. Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less.
· Financial liabilities
The Group does not have any borrowings or liabilities held for trading nor does it voluntarily classify any financial liabilities as being at fair value through profit or loss.
Trade payables and other short-term monetary liabilities are initially recognised at fair value and are subsequently carried at amortised cost using the effective interest method.
· Financial guarantee contract liabilities
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of:
· the amount determined in accordance with the expected credit loss model under IFRS 9 Financial Instruments; and
· the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 Revenue from Contracts with Customers.
The fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.
Financial instruments (continued)
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
When the Group exchanges with the existing lender one debt instrument into another one with substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification is recognised in profit or loss as the modification gain or loss within other gains and losses.
Taxation Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.
Deferred tax is recognised on the difference between the carrying amount of an asset or liability and the amount at which that asset or liability is assessed for tax purposes (tax base). Historical accumulated tax losses would give rise to a net deferred tax asset for the Group. However, due to the uncertainty on future recovery the Directors considered it prudent not to recognize such asset at this time.
Investments in associates and joint ventures An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of associates or joint ventures are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5.
Under the equity method, an investment in an associate or a joint venture is recognised initially in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group's share of losses of an associate or a joint venture exceeds the Group's interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.
Investments in associates and joint ventures (continued) An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.
If there is objective evidence that the Group's net investment in an associate or joint venture is impaired, the requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture. When the Group retains an interest in the former associate or a joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IFRS 9. The difference between the carrying amount of the associate or a joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or a joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the associate or joint venture is disposed of.
When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a Group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group's consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.
The Group applies IFRS 9, including the impairment requirements, to long-term interests in an associate or joint venture to which the equity method is not applied and which form part of the net investment in the investee. Furthermore, in applying IFRS 9 to long-term interests, the Group does not take into account adjustments to their carrying amount required by IAS 28 Investments in Associates and Joint Ventures (i.e. adjustments to the carrying amount of long-term interests arising from the allocation of losses of the investee or assessment of impairment in accordance with IAS 28).
Non-current assets held for sale Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.
When the Group is committed to a sale plan involving disposal of an investment in an associate or, a portion of an investment in an associate, the investment, or the portion of the investment in the associate that will be disposed of is classified as held for sale when the criteria described above are met. The Group then ceases to apply the equity method in relation to the portion that is classified a held for sale. Any retained portion of an investment in an associate that has not been classified as held for sale continues to be accounted for using the equity method.
Prepayments
Prepayments are recognised as assets in the statement of financial position when:
- The Group has made an advance payment for goods or services to be received in the future,
- It is probable that economic benefits associated with the prepayment will flow to the Group, and
- the amount of the prepayment can be measured reliably.
Prepayments are initially measured at the amount paid, and are released over the period over which the related goods or services are consumed or utilised.
Prepayments are presented as current assets in the statement of financial position to the extent that they are expected to be realised within the following 12 months. The portion of prepayments to be realised following one year from the reporting date is presented in non-current assets.
Prepayments are derecognised when the related goods or services are received or consumed, or when the right to receive the goods or service no longer exists. Any remaining balance is removed from the statement of financial position and the relevant expense is recognised in the statement of comprehensive income.
Accrued income Accrued income represents revenue and grant income that has become due to the Group but has not been claimed or received at the reporting date.
Accrued income is recognised when:
- There is an unconditional right to receive the income
- The income can be reliably measured, and
- It is probable that the economic benefits associated with the income will flow to the company.
Accrued income is presented in current assets as it is expected to be realised within 12 months of the reporting date.
Leases At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
- The contract involves the use of an identified asset - this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
- The Group has the right to substantially all of the economic benefits from the use of the asset throughout the period of use; and
- The Group has the right to direct the use of the asset. The Group has this right when it has the decision making rights that are most relevant to changing how and for what purposes the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either:
· The Group has the right to operate the asset; or
· The Group designed the asset in a way that predetermines how and for what purposes it will be used.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is allocated, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method over the shorter of the useful life of the leased asset and the expected lease term. If ownership of the leased asset is automatically transferred at the end of the lease term or the exercise of a purchase option is reflected in the lease payments,the right-of-use asset is amortised on a straight-line basis over the expected useful life of the leased asset.
The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as a discount rate. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
Lease payments include fixed payments, i.e. amounts expected to be payable by the Company under residual value guarantee, the exercise price of a purchase option and lease payments in relation to lease extension option if the Company is reasonably certain to exercise purchase or extension options and payment of penalties for terminating the lease if the lease term considered reflects that the Company shall exercise termination option.
Provisions The Group applies IAS 37 Provisions, Contingent Liabilities and Contingent Assets in accounting for non-financial liabilities. A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. When the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Provisions are held for product warranty as detailed in note 29 to the consolidated financial statements.
Warranty provisions
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the directors' best estimate of the expenditure required to settle the Group's obligation.
Onerous contract provisions
Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
Employee benefit costs The Group operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the consolidated income statement in the period to which they relate.
Share-based payments The Group also enters into arrangements that are equity-settled, share-based payments with certain employees (including directors) in the form of share options. During the period covered by the financial statements, the Group operated a HM Revenue and Customs approved share option scheme. This scheme is an Enterprise Management Incentive scheme where equity options are made to certain qualifying employees to reward and incentivise them. The equity share based payments are measured at the fair value of the equity at the grant date.
The scheme was open to all qualifying employees who are an employee within the Group working 25 hours per week for the Group, or if less, at least 75% of their working time.
The Listing was a necessary condition for exercise.
Employees who leave the Group are entitled to exercise their vested options after they leave the employment of the Group if they meet the requirements of a "good leaver", defined to be exit from the business for grounds other than dismissal.
The value of the share options is determined using the Black Scholes option pricing model and Monte Carlo simulation, and recorded as a share option reserve in the consolidated statements of financial position, with movements in the reserve treated as operating expenditure in the respective year.
The options have varying vesting periods from one month up to four years, with exercise of vested shares immediately in advance of a proposed Listing.
Share-based payments (continued)
Long-Term Incentive Plan ("LTIP" )
The Group operated a share-based payment LTIP arrangement for certain employees. The scheme awards share options to the employee based on a specific number of shares at grant date and the share price of Saietta Group plc at the vesting date, subject to profitability and employment conditions. These were accounted for as equity-settled arrangements. For these awards, fair value is to be measured at the date of grant and charged to the profit and loss over the vesting period. The vesting period is the period of time before shares in an employee plan are unconditionally owned by an employee. Fair value at the date of grant is determined using the Black-Scholes model or the Monte Carlo Simulation model where appropriate.
Share capital Financial instruments issued by the company are treated as equity only to the extent that they do not meet the definition of a financial liability. The company's ordinary shares are classified as equity instruments.
Going concern The financial statements have been prepared on a going concern basis. In adopting the going concern basis, the directors have considered the financial position of the Group and the Company, their cash flows and their liquidity position. The Group and Company's financial risk management objectives and exposures to liquidity and other financial risks and uncertainties are set out on pages 15 to 18. The Group had net assets of £29,189,193 (2022: £32,814,791) as at 31 March 2023 and available liquidity of
£7,247,267 (2022: £18,402,055) comprised of cash and cash equivalents.
The Group and Company have modelled scenarios for a period up to October 2024 from the March 2023 year end and stress tested its financial position in such scenarios. These stress tests modelled the variability in financial performance and free cash flows when incorporating certain hypothetical events such as a reduction in forecast revenue and a delay in the receipt of payments for equipment from Saietta VNA.
The Group and Company operate in markets that are rapidly growing and has strategic plans that respond to such growth. In delivering those plans, the Group is mindful of the ultimate benefits from maintaining control over the deployment of its intellectual property in applications with major OEMs and within its joint venture arrangements. In order to do so, it recognises that at times it will potentially need to co-invest or defer investment to its partners to enhance the future value it can achieve from application of its products. In such instances the commercial merits will be weighed in determining whether funding is sought.
These forecasts align to the business strategy which was based on the assumption that the Group and Company will significantly increase its revenue and be able to generate significant gross profit in the next 12 months.
Furthermore, the forecasts also include payments from Saietta VNA, the Group's joint venture in India, for equipment for fully automated production of AFT motors. The Group has spent £3m on such equipment and this amount is to be reimbursed by Saietta VNA. In the absence of such reimbursement there may also be a need to raise additional funding.
Whilst the Directors expect that additional funding can be raised this is not guaranteed and when continuing with an accelerated expansion this presents a material uncertainty which may cast significant doubt over the Group's and the Company's ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not reflect any adjustments that would be required to be made if they were prepared on a basis other than the going concern basis.
Whilst acknowledging the uncertainties described above, the Board have concluded, on the basis of all scenarios and related expected cashflows and available sources of finance, that the Group and Company will be able to continue as a Going Concern for at least twelve months from the date of signing these financial statements and therefore it remains appropriate to prepare the Group and Company's results on the basis of a going concern.
3. Critical Accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including the expectations of future events that are believed to be reasonable under the circumstances and any further evidence that arises relevant to judgements taken. In the future, actual experience may differ from these estimates and assumptions. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Useful lives of property, plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives of the assets: Short leasehold Remaining lease term
Plant and machinery 25% reducing balance Fixtures and fittings 25% reducing balance
Motor vehicles Four years
Useful lives are based on management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness and events which may cause the estimate to be revised. At the end of the initial period, asset lives reach a residual value at which they are either suitable for replacement or extended life after maintenance and overhaul. The key areas of estimation uncertainty regarding depreciation is the determination of the life time capacity; risk of obsolescence from technological and regulatory changes; and required future capital expenditure (refurbishment or replacement of key components).
The carrying amount of property, plant and equipment at 31 March 2023 is £8,113,009 (2022: £3,498,541) and a reasonable adjustment sensitivity if assets were to have a reduced useful life of a year would be a reduction in carrying value of £358,800.
Useful lives and carrying value of intangible assets
The carrying values of these assets are tested for impairment when there is an indication that the value of the assets might not be realisable or impaired either at an individual cash generating unit level or for the company as a whole. An intangible asset with an indefinite useful life or an intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test may be performed at any time during an annual period, provided it is performed at the same time every year. Different intangible assets may be tested for impairment at different times. However, if such an intangible asset was initially recognised during the current annual period, that intangible asset shall be tested for impairment before the end of the current annual period.
Patents are recognised at cost and development costs include both purchases and capitalized employee costs directly attributable to the development.
3. Critical Accounting estimates and judgements (continued)
Useful lives and carrying value of intangible assets (continued) The nature of the estimation uncertainty is both to the eventual integration of such an intangible asset into commercial production and the successful cash generation from such production. The underlying assumption is that an impairment occurs if either the achievement of project milestones that meet client's roadmaps to commercialization are not met (and thereby indicate uncertainty over the viability to start of production ("SOP")), or if the commercial potential is reduced to such an extent that recovery of all invested amounts are uncertain.
The carrying amount is sensitive to both write-off of any intangible asset that is impaired and to amortisation either before all criteria to amortise are met, or after such criteria have been met. When carrying out impairment tests these are based upon future cash flow forecasts and these forecasts include management estimates.
Future events or changes in the market could cause the assumptions to change, therefore this could also have an adverse effect on the future results of the group.
Recognition of internally generated intangible assets arising from the development phase of a project is dependent upon application of specific criteria detailed in note 2. Management judgement is required as to the extent that each of the criteria is met and to the point where development is complete.
The carrying amount of intangible assets at 31 March 2023 was £10,916,016 (2022: £8,365,506). If the Group were to require amortisation for an additional year for patents and immediately at the start of the year for development costs this would have an impact of £99,088.
Research and Development ("R&D") credits Research and Development credits arising in the United Kingdom under Corporation Tax Act 2009 Section 1308 claims are recognised upon success and recognised within Accrued Income. Successful Section 1308 R&D credits are considered to be UK
Government grants arising as a direct result of the Company's investment in its R&D assets and for which no further obligation
exists upon the Company. The R&D credits are charged to the P&L at the same time that the asset is expensed to P&L, therefore amortised over 8 years as their benefit is derived over the use of the Company's R&D assets.
Expected credit losses and asset impairment Expected credit losses are assessed under IFRS9 using reasonable information about past events and current conditions and forecasts of future events. Asset impairment considers the likely returns from financial assets owned by the Group and their recoverability, based on market values and management's judgement of any other relevant factors.
Please refer to Note 33 for further detail.
Incremental borrowing rate used to measure lease liabilities Where the interest rate implicit in the lease cannot be readily determined, lease liabilities are discounted at the lessee's incremental borrowing rate. This is the rate of interest that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. This involves assumptions and estimates, which would affect the carrying value of the lease liabilities (note 26) and the corresponding right-of-use assets (note 16).
To determine the incremental borrowing rate the company uses recent third-party financing as a starting point, and adjusts this for conditions specific to the lease such as its term and security. The company used incremental borrowing rates specific to each lease which ranged from 4.1% to 7.25%. A 5% increase in the rate would cause the lease liability to reduce by £839,673 with a corresponding movement in the 'cost' of the right-of-use asset which would reduce the associated amortisation.
3. Critical Accounting estimates and judgements (continued)
Share Options - estimates and assumptions
The valuation of share options issued in the year has been based on a Black Scholes model for options with no market based vesting conditions and a Monte Carlo simulation for options with market based vesting conditions. The inputs to both models represent the Director's best estimates for the likely exercise behaviour of the option holders. The expected future share price volatility was estimated based on the historical volatility of the Company's share price and a representative peer group of similar companies. For the share options with market based vesting conditions an independent specialist consultant was engaged to simulate the impact on the market-based conditions on the fair value of the options issued.
Revenue recognition
The Group's revenue recognition policies, which are set out under Revenue recognition in Note 2, are central to how the Group measures the work it has performed in each financial year. Management is required to form a number of key judgements in the determination of the amount of revenue and profits to record, and related statement of financial position items such as contract assets, accrued income and deferred income to recognise. This includes an assessment of the costs the Group incurs to deliver the contractual commitments and whether such costs should be expensed as incurred or capitalised, as well as assessments of when key changes to contracts occurred, in order to appropriately recognise and measure revenue.
The key estimation judgements are in the forecasting of costs to complete deliverables under contracts as these impact the timings and amounts of revenue recognised through the percentage of completion method.
4. Alternative Performance Measures ("APMs")
In reporting financial information, the Group presents alternative performance measures ("APMs") that are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business. The APMs used within this Annual Report are defined below.
Alternative performance measures
Adjusted EBITDA Adjusted EBITDA is defined as the Group's earnings before interest, tax, depreciation, amortisation, share of profit/loss from equity accounted investments and exceptional items. These include the share-based payment charges, the gain on bargain purchase, costs related to Saietta Group plc's admission to the AIM and subsequent share issue costs, legal fees related to Saietta Group plc's investment in its equity- accounted associate, professional fees in respect of share options issued pre-Admission, legal fees in respect of company reorganisations,the write-off of related party receivables, provision for loss allowance on financial guarantee, a write-off of inventory, pension scheme set-up costs and losses from discontinued operations.
Gross proceeds raised through
Gross proceeds are the amount that a seller receives from the sale of a shares. These proceeds include all costs and expenses.
Working capital Changes in assets and liabilities as presented in the Consolidated Statement of Cash Flows. This comprises movements in assets and liabilities excluding movements relating to financing or investing cash flows or non-cash items that are not included in adjusted EBIT or adjusted EBITDA.
4. Alternative Performance Measures ("APMs") (continued)
The Group uses adjusted EBITDA as an APM to review and measure the underlying profitability of the Group on an ongoing basis for comparability as it recognises that increased capital expenditure year on year will lead to a corresponding increase in depreciation and amortisation expense recognised within the consolidated income statement. Working capital is considered by the Group to be a key measure in assessing short-term assets and liabilities that are expected to be converted into cash within the next 12-month period.
Reconciliations between these alternative performance measures and statutory reported measures are shown below.
| Adjusted EBITDA |
| | | | | | | Year ended 31 |
| Year ended 31 | |
|
| | | | | | | | Note | March 2023 |
| March 2022* |
|
| | | | | | | | | £ |
| £ |
| Adjusted EBITDA | | | | | | | | (14,050,624) | | (4,357,061) | |
| Depreciation and amortization | | | | | | (1,882,963) | | (509,895) | |||
| Finance income | | | | | | | | 75,338 | | 5,523 | |
| Finance expense | | | | | | | | (278,046) | | (104,621) | |
| Share-based payment charges | | | | | Note 31 | (2,335,944) | | (4,406,334) | |||
| Gain on bargain purchase recognised as part of subsidiary acquisition | | - | | 704,761 | |||||||
| Costs related to Saietta Group plc's admission to the AIM | | | | - | | (1,219,296) | |||||
| Costs related to the acquisition of e-Traction Europe B.V. | | | | - | | (358,358) | |||||
| Costs related to the co-operation with Padmini VNA | | | | (59,925) | | (95,510) | |||||
| IPO-dependent staff expenses | | | | | | | - | | (361,157) | ||
| M&A support fees | | | | | | | | - | | (101,569) | |
| One-off legal fees in respect of share option advice pre-IPO | | | | - | | (75,000) | |||||
| One-off legal fees in respect of company reorganisation | | | | - | | (44,176) | |||||
| Net increase in financial liabilities | | | | | | (3,507) | | (78,058) | |||
| Contractor fees to secure grants | | | | | | - | | (73,432) | |||
| One-off enterprise resource planning consultancy fees | | | | - | | (10,925) | |||||
| Impairment against other receivable | | | | | - | (600,000) | | - | |||
| Provision for inventory obsolescence | | | | | | (1,292,026) | | - | |||
| Losses from discontinued operations | | | | | | (7,868,640) | | (46,977) | |||
| | | | | | | | | | | | |
| Loss before taxation |
| | | | | | (28,296,337) |
| (11,132,085) | ||
|
| | | | | | | | | | | |
| Taxation | | | | | | | | | 490,188 | | 377,420 |
| Loss for the year |
| | | | | | | (27,806,149) |
| (10,754,665) | |
|
| | | | | | | | | | | |
¹Comparative figures have been restated to exclude income and expenditure related to discontinued operations.
²Share based payment charges stated excluding an amount of £61,676 capitalised to development costs.
Gross proceeds raising through placing
A reconciliation from Gross Proceeds raised through placing to proceeds on issue of shares per Consolidated Cash Flow Statement is detailed below:
| Proceeds on issue of shares | | | | | | | £ 23,609,172 | | £ 35,241,809 | |
| Shares issued from loan conversion | | | | | | £ - | | £ 2,258,191 | | |
| Gross proceeds from settled shares | | | | | | £ 23,609,172 | | £ 37,500,000 | | |
5. Segment information
The Group operates through three distinct business divisions:
(a) Lightweight mobility which focuses on AFT developments particularly low voltage two and three wheelers;
(b) Heavy-duty commercial which covers the truck, bus and coach markets; and
(c) Marine division, fronted by Propel, which is the Group's marine division selling inboard and outboard motors both via distributors and direct to customers. This has been discontinued and the Group is seeking an industrialization partner, with a linked sale of intellectual property and distribution rights.
Factors that management used to identify the Group's reportable segments
The Group's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision- maker. The chief operating decision makers have been identified as the management team including the Chief Executive Officer, Executive Chairman and Chief Financial Officer.
Measurement of operating segment profit or loss, assets and liabilities
The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS but excluding non-recurring losses, such as goodwill impairment, and the effects of share-based payments.
Inter-segment sales are priced along the same lines as sales to external customers, with an appropriate discount being applied to encourage use of group resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the current and prior period.
Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities and defined benefit liabilities. Loans and borrowings are allocated to the segments based on relevant factors (e.g. funding requirements). Details are provided in the reconciliation from segment assets and liabilities to the Group position.
| Non-current assets by geography |
| | | | | | | |||
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| UK | | | | | | | | 19,002,591 | | 13,162,815 |
| European Union | | | | | | | 6,513,601 | | 2,352,632 | |
| Rest of World | | | | | | | - | | - | |
| Total | | | | | | | | 25,516,192 | | 15,515,447 |
Contract assets and contract liabilities arise from the Group's Lightweight and Heavy-duty divisions, which enter into contracts that can take between 1 - 2 years to complete, because cumulative payments received from customers at each balance sheet date do not necessarily equal the amount of revenue recognised on the contracts.
| Year ended 31 March 2023 | | | | | | | | | ||||
| | | | | | | | | | Other | Continuing | Discontinued |
|
| | | | | | | | Lightweight | Heavy-duty | segments | operations | operations | Total |
| Revenue |
| | | | | | £ | £ | £ | £ | £ | £ |
| Revenue from Engineering design services | 1,039,880 | 61,717 | - | 1,101,597 | 275,789 | 1,377,386 | ||||||
| Revenue from Motor sales | | | | 238,981 | 205,655 | - | 444,636 | 27,319 | 471,955 | |||
| Other revenue | | | | | | 1,386,106 | 555,667 | - | 1,941,773 | - | 1,941,773 | |
| Inter-segmental revenue | | | | (846,431) | (538,619) | - | (1,385,050) | - | (1,385,050) | |||
| Groups' revenue per consolidated statement of comprehensive income | | 1,818,536 | 284,421 | - | 2,102,957 | 303,108 | 2,406,065 | |||||
| | | | |
|
| | ||||||
| Depreciation | | | | | | 1,528,166 | 233,799 | - | 1,761,965 | 78,386 | 1,840,351 | |
| | | | | | | | | | | | | |
| Segment loss | | | | | | (17,080,623) | (3,589,696) | - | (20,670,319) | (7,868,640) | (28,538,959) | |
| Share based payments | | | | | | | | | | (2,335,944) | |
| Other income | | | | | | | | | | | 2,777,767 |
| Finance income | | | | | | | | | | | 75,338 |
| Finance expense | | | | | | | | | | | (278,046) |
| Net increase in financial liabilities | | | | | | | 3,507 | ||||
| Group loss before tax and discontinued operations | | | | | (28,296,337) | ||||||
Revenue has been presented by category. This is a change from the prior year presentation of revenue by customer. This change was made to allow comparison between current and prior year and to better present the segmental and inter-segmental revenue.
| Year ended 31 March 2022 | | | | | | | | | |||||
| | | | | | | | | | Other | Continuing | Discontinued |
| |
| | | | | | | | Lightweight | Heavy-duty¹ | segments | operations¹ | operations¹ | Total² | |
| Revenue |
| | | | | | £ | £ | £ | £ | £ | £ | |
| Revenue from Apollo Future Mobility Group Limited | | | 635,984 | - | - | 635,984 | - | 635,984 | |||||
| Revenue from Consolidated Metco, Inc. | | | 400,000 | - | - | 400,000 | - | 400,000 | |||||
| Revenue from Sloepmakerij B.V. | | | - | - | - | - | 1,261,008 | 1,261,008 | |||||
| Revenue from other customers | | | 555,266 | - | - | 555,266 | 952,018 | 1,507,284 | |||||
| Inter-segmental revenue | | | | (186,407) | - | - | (186,407) | (22,066) | (208,473) | ||||
| Groups' revenue per consolidated statement of comprehensive income | | | | | | | 1,404,843 | - | - | 1,404,843 | 1,261,008 | 3,595,803 | |
| | | | | | | | | | | | | | |
| Depreciation | | | | | | 300,017 | 65,844 | - | 365,861 | 71,650 | 437,511 | ||
| Costs associated with Listing | | | 1,006,323 | - | - | 1,006,323 | - | 1,006,323 | |||||
| | | | | | | | 1,306,340 | 65,844 | - | 1,372,184 | 71,650 | 1,443,834 | |
| | | | | | | | | | | | | | |
| Segment loss | | | | | | (6,243,109) | (1,688,815) | (446,371) | (7,931,924) | (46,977) | (7,978,901) | ||
| Share based payments | | | | | | | | | | (4,406,334) | |
| Gain on bargain purchase | | | | | | | | | 704,761 | ||
| Other income | | | | | | | | | | | 725,545 |
| Finance income | | | | | | | | | | | 5,523 |
| Finance expense | | | | | | | | | | | (104,621) |
| Net increase in financial liabilities | | | | | | | (78,058) | ||||
| Group loss before tax and discontinued operations | | | | | (11,132,085) | ||||||
¹Change in presentation to show prior year comparative figures for continued and discontinued operations.
²Total segment losses and Group loss before tax and discontinued operations restated for discontinued operations. Refer to note 38 for a reconciliation of losses from discontinued operations.
| Year ended 31 March 2023 | | | | | | | | | ||
| | | | | | | | | Continuing | Discontinued |
|
| | | | | | | Lightweight | Heavy-duty | operations | operations | Total |
|
| | | | | | £ | £ | £ | £ | £ |
| Additions to non-current assets | | | | 12,888,263 | 632,095 | 13,520,358 | 838,529 | 14,358,887 | ||
| | | | | | | | | | | |
| Inventories | | | | | | 498,407 | - | 498,407 | - | 498,407 |
| | | | | | | | | | | |
| Reportable segment assets | | | | 35,675,582 | 3,779,621 | 39,455,203 | 227,474 | 39,682,677 | ||
| | | | | | | | | | | |
| Total group assets | | | | | | | | | 39,682,677 | |
| | | | | | | | | | |
|
| Reportable segment liabilities | | | | 8,726,735 | 847,921 | 9,574,656 | 918,828 | 10,493,484 | ||
| | | | | | | | | | | |
| | | | | | | | | | | |
| Total group liabilities | | | | | | | | | 10,493,484 | |
| Year ended 31 March 2022 | | | | | | | | | ||
| | | | | | | | | Continuing | Discontinued |
|
| | | | | | | Lightweight | Heavy-duty | operations | operations | Total |
|
| | | | | | £ | £ | £ | £ | £ |
| Additions to non-current assets | | | | 6,980,426 | 1,504,820 | 8,485,246 | 2,747,335 | 11,232,581 | ||
| | | | | | | | | | | |
| Inventories | | | | | | 405,048 | 1,417,015 | 1,822,063 | 647,980 | 2,470,043 |
| | | | | | | | | | | |
| Reportable segment assets | | | | 35,704,947 | 3,885,118 | 39,590,065 | 5,047,375 | 44,637,440 | ||
| | | | | | | | | | | |
| Total group assets | | | | | | | | | 44,637,440 | |
| | | | | | | | | | | |
| Reportable segment liabilities | | | | 7,303,308 | 1,005,269 | 8,308,577 | 1,529,680 | 9,838,257 | ||
| | | | | | | | | | | |
| Liabilities for financial guarantees | | | | | | | 41,833 | |||
| | | | | | | | | | | |
| Total group liabilities | | | | | | | | | 9,880,090 | |
Segmental information has been presented as continuing and discontinued operations in the current year, and the prior year presentation has been modified accordingly for comparability. Refer to note 38 for a reconciliation of discontinued assets and liabilities.
| 6. Revenue analysis |
|
|
|
|
|
|
|
|
| |
| A significant portion of revenue in the year was from two customers: | | | | | ||||||
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| Current year |
| | | | | | £ | | £ | |
| Customer 1 | | | | | | | 855,605 | | - | |
| Customer 2 | | | | | | | 393,096 | | - | |
| | | | | | | | | | | |
| Prior year |
| | | | | | | | | |
| Customer 1 | | | | | | | - | | 635,984 | |
| Customer 2 | | | | | | | - | | 400,000 | |
| | | | | | | | | | | |
| | | | | | | | | 1,248,701 | | 1,035,984 |
| | | | | | | | | | | |
| Revenue by category, type and and geography is as follows: | | | | | | |||||
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| Revenue by category |
| | | | | £ | | £ | ||
| | | | | | | | | | | |
| Light-duty division | | | | | | | 1,818,539 | | 1,404,843 | |
| Heavy-duty division | | | | | | 284,421 | | - | ||
| Total | | | | | | | | 2,102,959 | | 1,404,843 |
| | | | | | | | | - | | |
| Revenue by type |
| | | | | | | | | |
| | | | | | | | | | | |
| Revenue recognised over time | | | | | | 1,101,599 | | 814,095 | ||
| Revenue recognised at a point in time | | | | | 1,001,360 | | 590,748 | |||
| | | | | | | | | 2,102,959 | | 1,404,843 |
| | | | | | | | | | | |
| Revenue by geography |
| | | | | | | | ||
| | | | | | | | | | | |
| UK | | | | | | | | 372,634 | | 1,191,607 |
| European Union | | | | | | | 229,771 | | - | |
| Rest of World | | | | | | | 1,500,554 | | 213,236 | |
| Total | | | | | | | | 2,102,959 | | 1,404,843 |
| 7. Other income |
|
|
|
|
|
|
|
|
| |
|
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| Grant income | | | | | | | 1,652,982 | | 678,411 | |
| Income from engineering design services | | | | 1,021,538 | | - | ||||
| | | | | | | | | 2,674,520 | | 678,411 |
The Group received development government grants from the Advanced Propulsion Centre against qualifying expenditure of
£1,008,515 (2022: £661,122) in the years ended 31 March 2023 and 31 March 2022 respectively, which has been recorded as grant income. There are no unfulfilled conditions or other contingent liabilities attached to the grant, however, as is customary the final instalment claim amount of £378,362 (2022: £330,326) remains due, subject to submitted assessment. This has been treated as a contingent gain at the year end. The remaining £nil (2022: £64,423) balance included within 'Other income' relates to individually immaterial grants received by subsidiaries during the year.
Other income from engineering design services relates to the renegotiation of the ConMet contract which resulted in the recovery of costs incurred on products which were developed in connection with the JCDA IP but were not part of the original JCDA plan. The cost related to this are shown in other costs of sales on the face of the statement of comprehensive income.
| 8. Operating loss |
|
|
|
|
|
|
|
|
|
| |
|
| | | | | | | | | | | |
| | | | | | | | | Year ended 31 | | Year ended 31 | |
| | | | | | | | | March 2023 | | March 2022 | |
| Operating loss has been stated after: | | | | | £ | | £ | | |||
| Cost of inventories recognised as expense | | | | | 4,018,866 | | 1,971,725 | | |||
| Depreciation of right-of-use assets | | | | | 989,021 | | 270,477 | | |||
| Depreciation of property, plant and equipment | | | | 578,010 | | 174,451 | | ||||
| Amortisation of intangible assets | | | | | 286,222 | | 72,384 | | |||
| Loss on disposal of property, plant and equipment | | | | 34,369 | | 3,204 | | ||||
| Auditor's remuneration: | | | | | | | | | | ||
| Fees payable to the Group's auditor for the audit of the Group's accounts | 375,000 | | 78,750 | | |||||||
| Fees payable to the Group's auditor for the audit of the subsidiaries' accounts | 83,644 | | 77,766 | | |||||||
| Fees payable to the Group's auditor for other services: | | | | | | | |||||
| - Other fees | | | | | | | 50,000 | | 105,410 | | |
| Share-based payment expense | | | | | | 2,335,944 | | 4,406,334 | | ||
| Foreign exchange differences | | | | | | (435,738) | | (52,957) | | ||
| | | | | | | | | | | | |
| Cost of inventories recognised as an expense includes a write-down of £1,412,053 to net realisable value. | |||||||||||
| Share-based payment expense is reduced by £61,676 of capitalised development costs. | | | | ||||||||
| | | | | | | | | | | | |
| 9. Significant administrative expenses |
|
|
|
|
|
|
| |||
|
| | | | | | | | | | |
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| Wages and salaries excluding share-based employee expense | | | 8,894,749 | | 4,548,583 | |||||
| Share-based employee expense | | | | | | 2,335,944 | | 4,406,334 | ||
| Costs related to Saietta Group plc's admission to the AIM | | | - | | 1,219,296 | |||||
| Costs related to the acquisition of e-Traction Europe B.V. | | | - | | 358,358 | |||||
| Professional fees | | | | | | | 3,447,771 | | 1,114,860 | |
| Provision for inventory obsolescence | | | | | 1,012,413 | | - | |||
| Depreciation and amortisation | | | | | | 1,882,963 | | 509,895 | ||
| Facilities costs | | | | | | | 1,799,950 | | 703,068 | |
| Other individually immaterial expenses | | | | | 2,411,169 | | 231,558 | |||
| Total | | | | | | | | 21,784,959 | | 13,091,952 |
The comparative figures in this note have changed due to the exclusion of amounts pertaining to discontinued operations, and have been presented in more detail to allow for better comparison with current year figures.
| 10. Employee benefit expenses |
|
|
|
|
|
|
|
| ||
|
| | | | | | | | | | |
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| | | | | | | | | | | |
| Wages and salaries | | | | | | | 7,187,857 | | 3,768,729 | |
| Social security costs | | | | | | | 1,076,867 | | 797,796 | |
| Employer's pension contributions | | | | | 630,024 | | 234,115 | |||
| Share-based employee expense | | | | | | 2,335,944 | | 4,406,334 | ||
| Total | | | | | | | | 11,230,693 | | 9,206,974 |
| 10. Employee benefit expenses (continued) |
|
|
|
|
|
| ||||
|
| | | | | | | | | | |
| The average number of employees during the year was as follows: | | Year ended 31 | | Year ended 31 | ||||||
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | No. | | No. |
| Technical | | | | | | | | 141 | | 70 |
| Procurement | | | | | | | 8 | | 4 | |
| Sales and marketing | | | | | | | 10 | | 12 | |
| Finance and administration | | | | | | 30 | | 14 | ||
| Total | | | | | | | | 189 | | 100 |
| | | | | | | | | | | |
| The remuneration of department heads who are the key management personnel is as follows: | | | ||||||||
| | | | | | | | | | | |
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| Short term employee benefits | | | | | | 867,853 | | 1,297,568 | ||
| Share based payments | | | | | | 1,610,488 | | 2,768,709 | ||
| | | | | | | | | 2,478,341 | | 4,066,277 |
| | | | | | | | | | | |
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| Directors | | | | | | | | £ | | £ |
| - Remuneration | | | | | | | 867,853 | | 623,277 | |
| - Gains on exercise of share options | | | | | - | | 2,366,492 | |||
| | | | | | | | | 867,853 | | 2,989,769 |
| | | | | | | | | | | |
| Highest paid director |
| | | | | | | | ||
| The highest paid director's emoluments were as follows: | | | | | | |||||
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| Directors' emoluments | | | | | | 334,469 | | 290,022 | ||
| Gains on exercise of share options | | | | | - | | 1,933,667 | |||
| Pension contributions | | | | | | - | | 7,762 | ||
| | | | | | | | | 334,469 | | 2,231,451 |
| 11. Finance income and expense |
|
|
|
|
|
|
| |||
|
| | | | | | | | | | |
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| Finance income |
| | | | | | | | | |
| Deposit account interest | | | | | | 75,338 | | 5,523 | ||
| | | | | | | | |
|
| |
| Finance expense |
| | | | | | | | | |
| Interest on lease liabilities | | | | | | 274,891 | | 18,609 | ||
| Other interest | | | | | | | 3,155 | | 80,995 | |
| | | | | | | | | 278,046 | | 99,604 |
| | | | | | | |
|
| | |
| The comparative figures in this note have changed due to the exclusion of amounts pertaining to discontinued operations. | ||||||||||
| 12. Taxation |
|
|
|
|
|
|
|
|
| |
|
| | | | | | | | | | |
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| UK tax (credit) for the current year | | | | | (490,188) | | (377,420) | |||
| | | | | | | | | | | |
| A reconciliation of the tax credit to the elements of loss before tax for the consolidated income statement is as follows: | ||||||||||
| | | | | | | | | | | |
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| (Loss) before income tax | | | | | | (20,427,697) | | (11,132,085) | ||
| Tax at UK rate of 19% (2022: 19%) | | | | | 3,881,262 | | 2,115,096 | |||
| | | | | | | | | | | |
| Reconciling tax charges for: |
| | | | | | | | ||
| Non-deductible expenses | | | | | | (51,462) | | 98,898 | ||
| Capital allowances | | | | | | | 55,889 | | 400,000 | |
| R&D tax credit | | | | | | | 490,188 | | 71,710 | |
| Gain on bargain purchase | | | | | | - | | 133,905 | ||
| Share based payments disallowed | | | | | (443,829) | | (837,203) | |||
| Deferred tax asset not recognised | | | | | (3,441,860) | | (1,604,985) | |||
| | | | | | | | | | | |
| Tax credit for the year | | | | | | 490,188 | | 377,420 | ||
| | | | | | | | |
|
|
|
| Effective tax rate for the year | | | | | | 2.4% | | 3.4% | ||
| | | | | | | | | | | |
| The prior year loss before tax includes a loss on discontinued operations of £254,299. | | | | |||||||
| The breakdown in deferred tax balances prior to the offsetting of balances within the same jurisdiction (as permitted by IAS 12) during the period are shown below: |
| |||||||||||
| | ||||||||||||
| | | | | | | | Asset | Liability |
| Net | | |
|
| | | | | | | 2023 | 2023 |
| 2023 | | |
|
| | | | | | | £ | £ |
| £ | | |
| Accelerated capital allowances | | | | - | (887,905) | | (887,905) | | ||||
| Leases | | | | | | | - | (116,426) | | (116,426) | | |
| Tax losses | | | | | | 1,004,331 | - | | 1,004,331 | | ||
| Net tax assets / liabilities | | | | | 1,004,331 | (1,004,331) | | - | | |||
| 12. Taxation (continued) |
|
|
|
|
|
|
| |
|
| | | | | | | | |
| | | | | | Asset | Liability |
| Net |
|
| | | | | 2022 | 2022 |
| 2022 |
|
| | | | | £ | £ |
| £ |
| Accelerated capital allowances | | | - | (887,905) | | (714,498) | ||
| Leases | | | | | - | (116,426) | | (60,185) |
| Tax losses | | | | | 1,004,331 | - | | 774,683 |
| Net tax assets / liabilities | | | | 1,004,331 | (1,004,331) | | - | |
The Group has recognised the deferred tax assets to the extent that it can be offset against the deferred tax liability. The deferred tax asset over and above this utilisation has not been recognised as the business is developing its products. When there is clear visibility of the profits, the Group will recognize the net deferred tax assets. Losses carried forward were £51,607,660 from continuing operations and £9,175,867 from discontinued operations in the year ended 31 March 2023 (2022: £37,314,108 continuing operations, £3,845,436 discontinued operations).
| 13. Loss per share from continuing and discontinued operations |
|
|
|
|
|
| |
| The calculation of the basic loss per share is based upon the net loss after tax attributable to ordinary shareholders and weighted average number of shares in issue for the year. |
| ||||||
| | |||||||
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| Loss per share | | | | | | £ | | £ |
| Basic |
| | | | | | | |
| - Continuing operations | | | | | (0.21) | | (0.14) | |
| - Discontinued operations | | | | | (0.08) | | (0.00) | |
| | | | | | | | | |
| The calculation of the basic loss per share is based on the following data: | | | | |||||
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| Loss for the year | | | | | | £ | | £ |
| Attributable to equity shareholders |
| | | | | | ||
| - Continuing operations | | | | | (19,937,509) | | (10,707,688) | |
| - Discontinued operations | | | | | (7,868,640) | | (46,977) | |
| | | | | | | | | |
| Number of shares | | | | | | | | |
| - Weighted average number of Ordinary Shares outstanding | | 95,701,751 | | 74,884,548 | ||||
The loss attributable to ordinary shareholders and weighted average number of Ordinary Shares for the purpose of calculating the diluted earnings per Ordinary Share are identical to those used for basic earnings per share. This is because the exercise of share options would have the effect of reducing the loss per Ordinary Share and is therefore not dilutive.
At 31 March 2023, there were 5,926,243 options outstanding (2022: 6,233,273) as detailed in note 31.
| 14. Intangible assets |
|
|
|
|
|
|
|
| | | Patents and | Development | Software | Total |
| | | | licences | costs | | |
| | | | £ | £ | £ | £ |
| Cost |
| | | | | |
| At 1 April 2022 | | | 456,349 | 7,793,871 | 266,497 | 8,516,717 |
| Additions | | | 534,529 | 3,278,315 | 466,735 | 4,279,579 |
| Assets of disposal groups held for sale | | - | (1,636,566) | (27,229) | (1,663,795) | |
| Impairment losses | | | - | (107,166) | - | (107,166) |
| Currency translation differences | | | - | 134,427 | 1,481 | 135,908 |
| At 31 March 2023 | | | 990,878 | 9,462,881 | 707,484 | 11,161,243 |
| | | | | | | |
| Accumulated amortisation |
| | | | | |
| At 1 April 2022 | | | 51,720 | 11,900 | 87,591 | 151,211 |
| Amortisation for the year | | | 68,874 | 174,094 | 43,254 | 286,222 |
| Assets of disposal groups held for sale | | - | (189,488) | (6,434) | (195,922) | |
| Currency translation differences | | | - | 3,494 | 222 | 3,716 |
| At 31 March 2023 | | | 120,594 | - | 124,633 | 245,227 |
| | | | | | | |
| Net book value |
| | | | | |
| Net book value at 31 March 2023 | | | 870,284 | 9,462,881 | 582,851 | 10,916,016 |
| | | | | | | |
| Net book value |
| | | | | |
| Net book value at 31 March 2022 | | | 404,629 | 7,781,971 | 178,906 | 8,365,506 |
| | | | | | | |
| | | | | | Year ended 31 | Year ended 31 |
| Intangible assets includes the following individually material asset: | | March 2023 | March 2022 | |||
| | | | | | £ | £ |
| The AFT motor | | | | | 5,423,926 | 3,592,712 |
| This is not currently being amortised. | | | | | | |
| | | | | | | |
| The above table includes non-cash movements related to accruals and prepayments. | | | ||||
| | | | Patents and | Development | Software | Total |
| | | | licences | costs | | |
| | | | £ | £ | £ | £ |
| Cost |
| | | | | |
| At 1 April 2021 | | | 79,168 | 3,253,554 | 110,231 | 3,442,953 |
| Additions | | | 377,181 | 3,755,989 | 128,842 | 4,262,012 |
| Additions acquired through business combination | | - | 815,231 | 27,080 | 842,311 | |
| Currency translation differences | | | - | (30,903) | 344 | (30,559) |
| At 31 March 2022 | | | 456,349 | 7,793,871 | 266,497 | 8,516,717 |
| | | | | | | |
| Accumulated amortisation |
| | | | | |
| At 1 April 2021 | | | 24,168 | - | 54,629 | 78,797 |
| Amortisation for the year | | | 27,552 | 11,931 | 32,901 | 72,384 |
| Currency translation differences | | | - | (31) | 61 | 30 |
| At 31 March 2022 | | | 51,720 | 11,900 | 87,591 | 151,211 |
| | | | | | | |
| Net book value |
| | | | | |
| Net book value at 31 March 2022 | | | 404,629 | 7,781,971 | 178,906 | 8,365,506 |
| 15. Property, plant and equipment |
|
|
|
|
|
|
|
| | | | | | |
| | Short | Plant & | Fixtures & | Motor | Assets under | Total |
| | leasehold | machinery | fittings | vehicles | construction | |
| | £ | £ | £ | £ | £ | £ |
| Cost |
| | | | | |
| At 1 April 2022 | 539,699 | 681,901 | 712,474 | 439,880 | 1,938,441 | 4,312,395 |
| Additions | 1,196,841 | 1,294,367 | 1,230,264 | 69,158 | 1,744,478 | 5,535,108 |
| Assets of disposal groups held for sale | (121,530) | - | (42,817) | (74,531) | - | (238,878) |
| Disposals | - | (34,369) | - | - | - | (34,369) |
| Impairment losses | - | (137,668) | - | - | - | (137,668) |
| Currency translation differences | - | 13,855 | - | 9,597 | - | 23,452 |
| At 31 March 2023 | 1,615,010 | 1,818,086 | 1,899,921 | 444,104 | 3,682,919 | 9,460,040 |
| | | | | | | |
| Accumulated depreciation |
| | | | | |
| At 1 April 2022 | 299,326 | 129,167 | 265,352 | 120,009 | - | 813,854 |
| Depreciation for the year | 131,112 | 198,226 | 205,870 | 42,802 | - | 578,010 |
| Assets of disposal groups held for sale | (19,899) | - | (5,789) | (19,354) | - | (45,042) |
| Depreciation eliminated on disposal | - | - | - | - | - | - |
| Currency translation differences | - | (250) | - | 459 | - | 209 |
| At 31 March 2023 | 410,539 | 327,143 | 465,433 | 143,916 | - | 1,347,031 |
| | | | | | | |
| Net book value |
| | | | | |
| Net book value at 31 March 2023 | 1,204,471 | 1,490,943 | 1,434,488 | 300,188 | 3,682,919 | 8,113,009 |
| | | | | | | 0 |
| The above table includes non-cash movements related to accruals and prepayments. | | | ||||
| | Short | Plant & | Fixtures & | Motor | Assets under | Total |
| | leasehold | machinery | fittings | vehicles | construction | |
| | £ | £ | £ | £ | £ | £ |
| Cost |
| | | | | |
| At 1 April 2021 | 290,932 | 113,156 | 323,838 | 110,044 | - | 837,970 |
| Additions | 248,892 | 315,158 | 388,695 | 74,424 | 1,938,441 | 2,965,610 |
| Additions acquired through business combination | - | 250,064 | - | 255,691 | - | 505,755 |
| | | | | | | |
| Disposals | - | - | - | (2,400) | - | (2,400) |
| Currency translation differences | (125) | 3,523 | (59) | 2,121 | - | 5,460 |
| At 31 March 2022 | 539,699 | 681,901 | 712,474 | 439,880 | 1,938,441 | 4,312,395 |
| | | | | | | |
| Accumulated depreciation |
| | | | | |
| At 1 April 2021 | 290,932 | 70,078 | 177,574 | 100,907 | - | 639,491 |
| Depreciation for the year | 8,394 | 58,711 | 87,781 | 19,565 | - | 174,451 |
| Depreciation eliminated on disposal | - | - | - | (500) | - | (500) |
| Currency translation differences | - | 378 | (3) | 37 | - | 412 |
| At 31 March 2022 | 299,326 | 129,167 | 265,352 | 120,009 | - | 813,854 |
| | | | | | | |
| Net book value |
| | | | | |
| Net book value at 31 March 2022 | 240,373 | 552,734 | 447,122 | 319,871 | 1,938,441 | 3,498,541 |
In May 2023 it was agreed to transfer two production lines from Saietta's Sunderland plant to the joint venture partner, Saietta VNA. The lines to be transferred are an RFT line valued at £0.2m presented above in plant and machinery and an automated AFT production line valued at £3.3m, of which £2.6m had been completed at 31 March 2023 which is presented above in assets under construction.
| 16. Right-of-use assets |
|
|
|
|
|
|
| |
|
| | | | | | | Motor | |
| | | | | | Buildings | Equipment | vehicles | Total |
| | | | | | £ | £ | £ | £ |
| Cost |
| | | | | | | |
| At 1 April 2022 | | | | | 2,873,911 | 27,021 | 308,941 | 3,209,873 |
| Additions | | | | | 4,315,920 | 182,230 | 46,050 | 4,544,200 |
| Assets of disposal groups held for sale | | | (303,160) | - | - | (303,160) | ||
| Disposals | | | | | (806,637) | (27,021) | - | (833,658) |
| Currency translation differences | | | 9,570 | - | - | 9,570 | ||
| At 31 March 2023 | | | | | 6,089,604 | 182,230 | 354,991 | 6,626,825 |
| | | | | | | | | |
| Accumulated amortisation |
| | | | | | | |
| At 1 April 2022 | | | | | 342,603 | 20,872 | 31,349 | 394,824 |
| Depreciation for the year | | | | 917,968 | 10,333 | 60,720 | 989,021 | |
| Assets of disposal groups held for sale | | | (126,619) | - | - | (126,619) | ||
| Disposals | | | | | (326,970) | (21,215) | - | (348,185) |
| Currency translation differences | | | 2,113 | - | - | 2,113 | ||
| At 31 March 2023 | | | | | 809,095 | 9,990 | 92,069 | 911,154 |
| | | | | | | | | |
| Net book value |
| | | | | | | |
| Net book value at 31 March 2023 | | | 5,280,509 | 172,240 | 262,922 | 5,715,671 | ||
| | | | | | | | | |
| Net book value |
| | | | | | | |
| Net book value at 31 March 2022 | | | 2,531,308 | 6,149 | 277,592 | 2,815,049 | ||
| | | | | | | | | |
| The above table includes non-cash movements related to accruals and prepayments. | | | ||||||
| | | | ||||||
| | | | | | | | Motor | |
| | | | | | Buildings | Equipment | vehicles | Total |
| | | | | | £ | £ | £ | £ |
| Cost |
| | | | | | | |
| At 1 April 2021 | | | | | 530,867 | 27,021 | - | 557,888 |
| Additions | | | | | 2,125,113 | - | 169,120 | 2,294,233 |
| Additions acquired through business combination | 221,223 | - | 141,437 | 362,660 | ||||
| Currency translation differences | | | (3,292) | - | (1,616) | (4,908) | ||
| At 31 March 2022 | | | | | 2,873,911 | 27,021 | 308,941 | 3,209,873 |
| | | | | | | | | |
| Accumulated amortisation |
| | | | | | | |
| At 1 April 2021 | | | | | 105,185 | 18,820 | - | 124,005 |
| Depreciation for the year | | | | 237,244 | 2,052 | 31,181 | 270,477 | |
| Currency translation differences | | | 174 | - | 168 | 342 | ||
| At 31 March 2022 | | | | | 342,603 | 20,872 | 31,349 | 394,824 |
| | | | | | | | | |
| Net book value |
| | | | | | | |
| Net book value at 31 March 2022 | | | 2,531,308 | 6,149 | 277,592 | 2,815,049 | ||
| 17. Investment in associate |
|
|
|
|
|
|
|
|
|
| ||
|
| | | | | | | | | | |
| |
| | | | | | | | | | Year ended 31 | |
| |
| | | | | | | | | | March 2023 | |
| |
| Saietta VNA (Private) Limited |
| | | | | | £ | |
| |||
| Opening balance | | | | | | | | | - | |
| |
| Initial investment | | | | | | | | | 267,784 | |
| |
| Share of results of associate | | | | | | | | (243,406) | |
| ||
| Foreign exchange loss | | | | | | | | (23,094) | |
| ||
| | | | | | | | | | 1,285 | |
| |
| | | | | | | | | | | |
| |
| During the year the Group obtained a 49% investment in Saietta VNA (Private) Limited. The associate's registered office is 5 Padmini Enclave, Hauz Khas Delhi, New Delhi 110016. | | | | |
| |||||||
| | | | | | | | | | | |
| |
| 18. Other gains and losses |
|
|
|
|
|
|
|
|
|
| ||
|
| | | | | | | | | | |
| |
| | | | | | | | Year ended 31 | | Year ended 31 | |
| |
| | | | | | | | March 2023 | | March 2022 | |
| |
| | | | | | | | £ | | £ | |
| |
| Loss on fair value through profit and loss items | | | | 3,507 | | 78,058 | |
| ||||
| Impairment against other receivable | | | | | 601,870 | | - | |
| |||
| | | | | | | | 605,377 | | 78,058 | |
| |
| | | | | | | |
|
| | |
| |
| Saietta Group Plc entered into an agreement to guarantee the loan for the purchase of an aircraft, in return receiving preferential rates for the use thereof. The aircraft was sold in April 2023 and the deposit of £600,000 paid was not recoverable. |
| |||||||||||
| | ||||||||||||
| | ||||||||||||
| | | | | | | | | | | | | |
| 19. Inventories |
|
|
|
|
|
|
|
|
|
| | |
|
| | | | | | | | | | | | |
| | | | | | | | Year ended 31 | | Year ended 31 | | | |
| | | | | | | | March 2023 | | March 2022 | | | |
| | | | | | | | £ | | £ | | | |
| Raw materials | | | | | | | 482,407 | | 2,438,533 | | | |
| Finished goods | | | | | | | 16,000 | | 31,510 | | | |
| | | | | | | | 498,407 | | 2,470,043 | | | |
| | | | | | | | | | | | | |
| Finished goods include an amount of £16,000 (2022: £31,510) carried at fair value less costs to sell. | | | | | ||||||||
| | | | | | | | | | | | | |
| 20. Cash and cash equivalents |
|
|
|
|
|
|
|
| | |||
|
| | | | | | | Year ended 31 | | Year ended 31 | | | |
| | | | | | | | March 2023 | | March 2022 | | | |
| | | | | | | | £ | | £ | | | |
| | | | | | | | | | | | | |
| Cash in hand and at bank | | | | | | 7,247,267 | | 18,402,055 | | | ||
| | | | | | | | | | | | | |
| 21. Trade and other receivables |
|
|
|
|
|
|
|
| |||
|
| | | | | | Year ended 31 | | Year ended 31 | |
| |
| | | | | | | March 2023 | | March 2022 | |
| |
| Non-current assets: | | | | | £ | | £ | |
| ||
| Other receivables | | | | | 141,195 | | 734,526 | |
| ||
| | | | | | | | | | |
| |
| Current: | | | | | | | | | |
| |
| Trade receivables | | | | | 1,085,229 | | 2,422,019 | |
| ||
| Other receivables | | | | | 485,859 | | 1,742,568 | |
| ||
| R&D tax credit | | | | | | 775,481 | | 574,368 | |
| |
| VAT recoverable | | | | | 637,464 | | 331,184 | |
| ||
| | | | | | | 2,984,033 |
| 5,070,139 | |
| |
| | | | | | | | | | |
| |
| | | | | | | 3,125,228 | | 5,804,665 | |
| |
| | | | | | |
|
| | |
| |
| 22. Prepayments and accrued income |
|
|
|
|
|
|
| ||||
|
| | | | | | Year ended 31 | | Year ended 31 | |
| |
| | | | | | | March 2023 | | March 2022 | |
| |
| Non-current assets: | | | | | £ | | £ | |
| ||
| Prepayments and accrued income | | | | 129,016 | | 101,825 | |
| |||
| | | | | | | 129,016 | | 101,825 | |
| |
| Current: | | | | | | | | | |
| |
| Prepayments and accrued income | | | | 3,209,304 | | 1,237,197 | |
| |||
| | | | | | | 3,209,304 | | 1,237,197 | |
| |
| | | | | | | | | | |
| |
| | | | | | | 3,338,320 | | 1,339,022 | |
| |
| | | | | | | | | | |
| |
| None of the Group's cash equivalents or other financial assets, are past due or impaired. Regarding other financial assets that are neither past due nor impaired, there were no indications as at 31 March 2023 (2022: no indications) that defaults in payment obligations will occur. However, as required under IFRS 9, the Company has assessed other financial assets for expected |
| ||||||||||
| | |||||||||||
| | |||||||||||
| | |||||||||||
| | | | | | | | | | | | |
| See note 33 for further detail. | | | | | | | | | |||
| | | | | | | | | | | | |
| 23. Other financial assets |
|
|
|
|
|
|
|
| | ||
|
| | | | | | Year ended 31 | | Year ended 31 | | | |
| | | | | | | March 2023 | | March 2022 | | | |
| | | | | | | £ | | £ | | | |
| Saietta VNA Private Limited |
| | | | | | | | |||
| Loan receivable | | | | | 500,000 | | - | | | ||
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| The loan to associate Saietta VNA (Private) Limited is for up to £1,000,000 and can be repaid at any time with one month's notice. The term is until April 2028 and the interest rate is 7.5% starting to accrue in April 2024. A further £500,000 is drawn down in August 2023. The Group does not expect this loan to be repaid within the next 12 months. | | | |||||||||
| | | ||||||||||
| | | ||||||||||
| 24. Current trade and other payables |
|
|
|
|
|
|
| ||||
|
| | | | | | | | | |
| |
| | | | | | | Year ended 31 | | Year ended 31 | |
| |
| | | | | | | March 2023 | | March 2022 | |
| |
| | | | | | | £ | | £ | |
| |
| Trade payables | | | | | 1,189,425 | | 1,672,548 | |
| ||
| Accruals and deferred income | | | | 861,431 | | 1,157,142 | |
| |||
| Social security and other taxes | | | | 176,408 | | 1,684,705 | |
| |||
| Pension due | | | | | | 41,627 | | 15,807 | |
| |
| Other payables | | | | | 766,563 | | 2,289,319 | |
| ||
| | | | | | | 3,035,454 | | 6,819,521 | |
| |
| | | | | | | | | | |
| |
| Included within 'Other payables' is an amount of £nil (2022: £1,706,498) in respect of deferred consideration for the acquisition of Saietta Europe B.V. (formerly e-Traction Europe B.V.). | |
| |||||||||
| |
| ||||||||||
| | | | | | | | | | |
| |
| | | | | | | Year ended 31 | | Year ended 31 | |
| |
| Lease liabilities |
| | | | March 2023 | | March 2022 | |
| ||
| | | | | | | £ | | £ | |
| |
| Lease liabilities | | | | | 1,123,085 | | 470,069 | |
| ||
| | | | | | | 1,123,085 | | 470,069 | |
| |
| | | | | | | | | | |
| |
| 25. Contract liabilities |
|
|
|
|
|
|
|
|
| ||
|
| | | | | | | | | |
| |
| | | | | | | Year ended 31 | | Year ended 31 | |
| |
| | | | | | | March 2023 | | March 2022 | |
| |
| | | | | | | £ | | £ | |
| |
| Contract liabilities | | | | | 326,286 | | - | |
| ||
| | | | | | | 326,286 | | - | |
| |
| | | | | | | | | | |
| |
| Contract assets and contract liabilities arise from the Group's Lightweight and Heavy-duty divisions, which enter into contracts that can take a few years to complete, because cumulative payments received from customers at each balance sheet date do not necessarily equal the amount of revenue recognised on the contracts. |
| ||||||||||
| | |||||||||||
| | |||||||||||
| | | | | | | | | | | | |
| 26. Non-current financial liabilities |
|
|
|
|
|
|
| | |||
|
| | | | | | | | | | | |
| | | | | | | Year ended 31 | | Year ended 31 | | | |
| | | | | | | March 2023 | | March 2022 | | | |
| | | | | | | £ | | £ | | | |
| Lease liabilities | | | | | 5,058,290 | | 2,380,537 | | | ||
| Provisions | | | | Note 29 | | 31,541 | | 168,130 | | | |
| Liabilities for financial guarantees | | Note 28 | | - | | 41,833 | | | |||
| | | | | | | 5,089,831 | | 2,590,500 | | | |
| | | | | | | | | | | | |
| Maturity analysis of lease liabilities: |
| |
|
|
|
| | ||||
| | | | | | | | | | | | |
| Due within one year | | | | | 1,123,085 | | 470,069 | | | ||
| Due in more than one but not more than two years | | 819,774 | | 656,840 | | | |||||
| Due in more than two but not more than five years | | 2,167,759 | | 968,423 | | | |||||
| Due after five years | | | | | 2,070,756 | | 755,274 | | | ||
| | | | | | | 6,181,375 | | 2,850,606 | | | |
| | | | | | |
|
|
|
| | |
27. Leases
In the capacity as lessee
The Group's leases are for offices and manufacturing space as well as the purchase of capital equipment used in the day to day operating activities of the business. For all property leases, the period rent is fixed over the lease term.
The company also leases certain items of plant and equipment. In some contracts for services with distributors, those contracts contain a lease of vehicles. Leases of plant, equipment and vehicles comprise only fixed payments over the lease terms.
All current lease payments are fixed in nature and not subject to any clauses which allow these payments to vary under certain conditions.
The total cash outflow for leases during the year was comprised of the following:
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| | | | | | | | £ | | £ |
| Interest expense | | | | | | 274,891 | | 18,609 | |
| Principal payments | | | | | 659,993 | | 263,263 | ||
| | | | | | | | 934,884 | | 281,872 |
The company sometimes negotiates break clauses in its property leases. On a case-by-case basis, the company will consider whether the absence of a break clause would exposes the company to excessive risk. Typically factors considered in deciding to negotiate a break clause include:
· the length of the lease term;
· the economic stability of the environment in which the property is located; and
· whether the location represents a new area of operations for the company.
The aggregate undiscounted commitments for short-term leases and low-value leases not recognised in the balance sheet at year end is £nil (2022: £nil).
| 28. Liabilities for financial guarantees |
|
|
|
|
|
|
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| | | | | | | | £ | | £ |
| Balance at beginning of financial year | | | | 41,833 | | - | |||
| Additions to financial liabilities during the year | | | 3,507 | | 78,058 | ||||
| Amortisation recognised | | | | | (45,340) | | (36,225) | ||
| Balance at end of financial year | | | | - | | 41,833 | |||
On 1 December 2021, the Group entered into an agreement to guarantee the obligations of its transport provider, Livingstone Aviation Limited in exchange for preferential access to their services.
Under IFRS9, the financial guarantee contracts was treated as a financial liability and was initially recognised at fair value. Subsequently, the financial guarantee contract was measured at the higher of the IFRS 9 expected credit loss (ECL) allowance and the amount initially recognised less any cumulative amount of income/amortisation recognised.
Subsequent to year end Livingstone Aviation Limited disposed of its aircraft and at that moment the Group was released fully from the financial guarantee.
| 29. Provisions |
|
|
|
|
|
|
|
|
|
| | | | | | | Onerous | | |
| | | | | | Warranty | contracts | Provision for | |
| | | | | | provisions | provisions | dilapidations | Total |
| | | | | | £ | £ | £ | £ |
| | | | | | | | | |
| Provisions at 1 April 2022 | | | 38,166 | 129,964 | - | 168,130 | ||
| Amounts provided in the year | | | - | - | 30,000 | 30,000 | ||
| Amounts utilised in the year | | | (36,625) | (129,964) | - | (166,589) | ||
| Provisions at 31 March 2023 | | | 1,541 | - | 30,000 | 31,541 | ||
| | | | | | | Onerous | | |
| | | | | | Warranty | contracts | Provision for | |
| | | | | | provisions | provisions | dilapidations | Total |
| | | | | | £ | £ | £ | £ |
| | | | | | | | | |
| Provisions at 1 April 2021 | | | - | - | - | - | ||
| Amounts provided in the year | | | 42,407 | 121,406 | - | 163,813 | ||
| Amounts acquired through acquisition of subsidiary | - | 405,294 | - | 405,294 | ||||
| Amounts utilised in the year | | | (4,241) | (396,736) | - | (400,977) | ||
| Provisions at 31 March 2022 | | | 38,166 | 129,964 | - | 168,130 | ||
Warranty provisions
The Group offers warranty cover in respect of manufacturing defects, which become apparent one to eight years after purchase, dependent on the market in which the purchase occurred and the vehicle/product purchased. The group offers warranties of up to eight years on batteries in electric vehicles. The estimated liability for product warranty is recognised when products are sold or when new warranty programmes are initiated. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future warranty claims, customer goodwill and recall complaints. The discount on the warranty provision is calculated using a risk-free discount rate as the risks specific to the liability, such as inflation, are included in the base calculation. The timing of outflows will vary as and when a warranty claim will arise, being typically up to eight years.
Onerous contracts provisions
Onerous contract provisions comprise an estimate of unavoidable costs involved with fulfilling the terms and conditions of contracts net of any expected benefits to be received.
Estimates and assumptions
The group has recognised provisions for liabilities of uncertain timing or amount including those for onerous leases and warranty claims. The provision is measured at the best estimate of the expenditure required to settle the obligation at the reporting date, discounted at a pre-tax rate reflecting current market assessments of the time value of money and risks specific to the liability.
| 30. Share capital and share premium |
|
|
|
|
| |||
|
| | | | | | | | |
| | | | | | | | | |
| Share capital and share premium |
| | | | | | ||
| | | | | | | | Year ended 31 | Year ended 31 |
| Allotted, issued and fully paid: | | | | | March 2023 | March 2022 | ||
| Number: | | Type: | | Nominal | | | £ | £ |
| | | | | value: | | | | |
| 102,917,675 | Ordinary Shares | £0.0011 | | | 113,209 | - | ||
| | | | | | | | | |
| 85,051,953 | Ordinary Shares | £0.0011 | | | - | 93,557 | ||
| | | | | | | | | |
| | | | | | | Share | Share | |
| | | | | | Number | capital | premium | Total |
| | | | | | of shares | £ | £ | £ |
| | | | | | | | | |
| Balance at 1 April 2021 | | | | 519,205,742 | 51,921 | - | 51,921 | |
| | | | | | | | | |
| Consolidation of shares | | | | (472,005,220) | - | - | - | |
| Issue of shares | | | | | 29,320,940 | 32,245 | 35,145,382 | 35,177,627 |
| AIM listing costs offset against share premium | - | - | (2,868,972) | (2,868,972) | ||||
| Shares issued on exercise of employee share options | 5,530,491 | 6,091 | 58,165 | 64,256 | ||||
| Shares issued on conversion of convertible loan notes | 3,000,000 | 3,300 | 2,336,700 | 2,340,000 | ||||
| | | | | | | | | |
| Balance at 31 March 2022 | | | 85,051,953 | 93,557 | 34,671,275 | 34,764,832 | ||
| | | | | | | | | |
| Consolidation of shares | | | | - | - | - | - | |
| Issue of shares | | | | | 17,101,450 | 18,812 | 23,581,189 | 23,600,001 |
| Share issue costs offset | | | | - | - | (1,590,469) | (1,590,469) | |
| Shares issued on exercise of employee share options | 764,272 | 840 | 8,331 | 9,171 | ||||
| | | | | | | | | |
| Balance at 31 March 2023 | | | 102,917,675 | 113,209 | 56,670,326 | 56,783,535 | ||
| | | | | | |
|
| |
30. Share capital and share premium (continued)
On 18 June 2021, the Group passed a resolution to consolidate its Ordinary share capital. Prior to the consolidation, there were 519,205,742 Ordinary shares with a nominal value of £0.0001 per share. In exchange for these share, existing shareholders were issued 47,200,522 Ordinary shares with a nominal value of £0.0011.
On 7 July 2021, the Group raised gross proceeds of £35,177,628 through the placing of 29,314,690 new Ordinary shares (the "Placing Shares") with new and existing investors at a price of £1.20 per Placing Share. An amount equal to the nominal value of the Placing Shares was credited to share capital, with the proceeds raised in excess of this nominal value being credited to share premium. The Placing Shares rank pari passu with the Company's existing ordinary shares.
On 7 July 2021, upon admission to the AIM market, 9,919,457 share options automatically vested pursuant to the terms of their issue. Of these shares, a total of 5,530,491 shares ("New Ordinary Shares") were exercised immediately by the option holders. Of these, 4,437,821 options were exercised by the option holders at a strike price of £0.012 resulting in the issue of 4,437,821 new Ordinary shares with a nominal value of £0.011p. As a result, £4,882 was credited to share capital and the amount received in excess of the nominal value, £48,372, was credited to share premium.
The remaining 1,092,670 options were exercised by the option holders at a strike price of £0.01 resulting in the issue of 1,092,670 new Ordinary shares with a nominal value of £0.011p. As a result, £1,202 was credited to share capital and the amount received in excess of the nominal value, £9,725, was credited to share premium.
The New Ordinary Shares rank pari passuwith the Company's existing ordinary shares.
On 30 March 2022, 6,250 share options vested pursuant to the terms of their issue. These options were exercised by the option holders at a strike price of £0.012 resulting in the issue of 6,250 new Ordinary shares with a nominal value of £0.011p. As a result,
£7 was credited to share capital and the amount received in excess of the nominal value, £68, was credited to share premium.
On 3 August 2022, the Group raised net proceeds of £22,316,001, after broker fees and other expenses of £1,284,000, through the placing of 17,101,450 new Ordinary Shares of £0.0011 each in the capital of the Company (the "Placing Shares") with new and existing investors at a price of £1.38 per share. An amount equal to the nominal value of the Placing Shares was credited to share capital, with the proceeds raised in excess of this nominal value being credited to share premium.
The Placing Shares rank pari passuwith the Company's existing Ordinary shares.
During the period, 764,272 share options which had vested pursuant to the terms of their issue were exercised by option holders at a strike price of £0.012 resulting in the issue of 764,272 new Ordinary shares ("New Ordinary Shares") with a nominal value of
£0.011p. As a result, £840 was credited to share capital and the amount received in excess of the nominal value, £8,331, was credited to share premium.
The New Ordinary Shares rank pari passuwith the Company's existing ordinary shares.
31. Share-based payments
Common share options
Options have been granted to shareholders, directors and employees to purchase common shares. These options generally vest over a period of up to four years from grant date and are exercisable in the event of a listing.
Details of the common option plans are as follows:
| | | | | | For the year ended 31 March 2023 | For the year ended 31 March 2022 | ||
| | | | | | | Weighted | | Weighted |
| | | | | | | average | | average |
| | | | | | Number | exercise price | Number | exercise price |
| | | | | | # | £ | # | £ |
| | | | | | | | | |
| Outstanding at beginning of year | | 6,233,273 | 0.012 | 10,826,072 | 0.010 | |||
| Granted | | | | | 3,000,000 | 0.012 | 8,577,394 | 0.010 |
| Lapsed | | | | | (30,000) | 0.012 | (616,370) | 0.010 |
| Vested | | | | | (3,277,030) | 0.012 | (12,553,823) | 0.010 |
| Outstanding at end of year | | | 5,926,243 | 0.012 | 6,233,273 | 0.012 | ||
| | | | | | | | | |
The fair value of each option granted was estimated on the grant date using the Black-Scholes, and where appropriate the Monte Carlo simulation option-pricing model with the following average assumptions:
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Exercise price at grant date | | | | £0.01 | | £0.01 | ||
| Expected life (in years) | | | | 2 | | 3 | ||
| Risk-free interest rate | | | | 3.71% | | 0.58% | ||
| Expected volatility | | | | | 85.00% | | 87.05% | |
| Weighted average share price | | | 152.99 pence | | 92.56 pence | |||
The expected volatility is based on the historic volatility (based on the share price) of a comparator company with publicly available share prices.
The risk-free interest rate is based on the average return on 2 year UK Gilts.
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Cost of options vesting in the year | | | 2,397,620 | | 4,899,171 | |||
In the year ended 31 March 2023 an amount of £61,676 (2022: £161,951), representing the charge for options related to employees whose costs are allocated to research and development and capitalised as internally generated development costs was included in additions to intangible assets, whilst the remainder of the cost of options vesting was charged to the profit and loss account. A further amount of £1,590,469 (2022: £330,886) was debited in respect of share issue costs offset against share premium.
The total cost of options vesting in the period has been classified as a movement in the share option reserve.
31. Share-based payments (continued)
| | | | | | | | | Share option |
| | | | | | | | | reserve |
| | | | | | | | | £ |
| | | | | | | | | |
| Balance at 31 March 2021 | | | | | | | 7,318,820 | |
| Share based payments | | | | | | | | 4,899,171 |
| Balance at 31 March 2022 | | | | | | | 12,217,991 | |
| Share based payments | | | | | | | | 2,397,620 |
| | | | | | | | | |
| Balance at 31 March 2023 | | | | | | | 14,615,611 | |
32. Reserves
| The following describes the nature and purpose of each reserve within equity: | | | | | |
| |||||||
| | | | | | | | | | | |
| ||
| Reserve |
| Description and purpose |
| | | | | |
| ||||
| Share capital | | Nominal value of share capital subscribed for. | | | | |
| ||||||
| Share premium | | Amount subscribed for share capital in excess of nominal value. | | |
| ||||||||
| Share options reserve | Used to record the assessed fair value of equity-settled options issued as share based payment for services received by the consolidated entity. |
| |||||||||||
| | |||||||||||||
| Translation reserve | The currency translation reserve represents the cumulative gains and losses on the retranslation of the Group's net investment in foreign operations. | | |||||||||||
| | |||||||||||||
| Accumulated losses | All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere. | | |||||||||||
| | |||||||||||||
|
| |||||||||||||
33. Financial instruments
Risk Management objectives
The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of Directors.
The Group is exposed to the following financial risks:
a. Credit risk
b. Liquidity risk
c. Interest rate risk
(i) Principal financial instruments
The Group is exposed to risks that arise from its use of financial instruments. The principal financial instruments used by the company, from which financial instrument risk arises, are as follows:
a. Trade and other receivables
b. Cash and cash equivalents
c. Trade and other payables
d. Fixed rate hire purchase agreement (classified within lease liabilities)
e. Investments in unquoted equity securities
| (ii) Financial instruments by category |
| | | | | | | ||
| | | | | | | | | | |
| Financial assets |
| | | | Amortised cost |
| | | |
| | | | | | 2023 | 2022 |
| | |
| | | | | | £ | £ |
| | |
| Cash and cash equivalents | | | | 7,247,267 | 18,402,055 | | | | |
| Trade and other receivables | | | | 1,712,283 | 4,899,113 | | | | |
| Other financial assets | | | | | 500,000 | - | | | |
| Total financial assets |
| | | | 9,459,550 | 23,301,168 |
|
| |
| | | | | | | | | | |
| | | | | | | | | | |
| Financial liabilities |
| | | | | | | Fair value through | |
|
| | | | | Amortised cost |
| profit and loss | ||
|
| | | | | 2023 | 2022 |
| 2023 | 2022 |
|
| | | | | £ | £ |
| £ | £ |
| Trade and other payables | | | | 1,997,615 | 3,977,674 | | - | - | |
| Accrued liabilities¹ | | | | | 861,431 | 1,157,142 | | | |
| Lease liabilities | | | | | 6,181,375 | 2,850,606 | | - | - |
| Liabilities for financial guarantees | | | - | - | | - | 41,833 | ||
| Total financial liabilities |
| | | | 9,040,421 | 7,985,422 |
| - | 41,833 |
¹In the prior year accrued liabilities were not included in the financial liabilities and were not included in the table above. The comparatives have been restated to include these amounts.
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables and trade and other payables.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximates their fair value.
The details of the fair value hierarchy, valuation techniques, and significant unobservable inputs related to determining the fair value of financial guarantees, which are classified in level 3 of the fair value hierarchy, are outlined in this note.
(iv) Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below.
| Financial liabilities | Level 1 | | Level 2 | | Level 3 | |
| | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| | £ | £ | £ | £ | £ | £ |
| Liabilities for financial guarantees |
- |
- |
- |
- |
- |
41,833 |
There were no transfers between levels during the year.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of level 2 and level 3 financial instruments, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the following table.
| Financial instrument | Valuation technique | Significant |
| Inter-relationship | ||||
|
| used |
|
| unobservable inputs | between key | |||
|
|
|
|
|
|
|
| unobservable inputs | |
|
|
|
|
|
|
|
| and fair value | |
| | | | | | | | | |
| Equity investments | Recognised at cost and adjusted thereafter for the post- acquisition change in the investor's share of the investee's net assets. | Not applicable. | | Not applicable. | ||||
|
|
| | | | | |||
|
|
| | | | | |||
|
|
| | | | | |||
| | | | | | | | | |
| | | | | | | | | |
| Liabilities for financial | Discounted cashflow model using the difference between market rates of interest and the rate per the loan note instrument adjusted for probability of default. | Not applicable. | | Not applicable. | ||||
| guarantees |
| | | | | |||
|
|
| | | | | |||
|
|
| | | | | |||
|
|
| | | | | |||
| | | | | | | | | |
There were no changes to the valuation techniques during the year.
The reconciliation of the opening and closing fair value balance of level 3 financial instruments is provided below:
| | | | | | | | | Liabilities for |
|
| | | | | | | | financial guarantees |
|
| | | | | | | | £ |
| At 1 April 2021 | | | | | | | | - |
| Purchases, disposals and reclassifications | | | | | | 41,833 | ||
| At 31 March 2022 |
| | | | | | | 41,833 |
|
| | | | | | | | |
| At 1 April 2022 | | | | | | | | 41,833 |
| Purchases, disposals and reclassifications | | | | | | (41,833) | ||
| At 31 March 2023 |
| | | | | | | - |
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The Board receives monthly reports from the Group Financial Controller through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The ability to do this relies on the Group expanding its customer base, collecting its trade receivable, completing financings in a timely manner and by maintaining sufficient cash and cash equivalents on hand.
The Group monitors its payables on a periodic basis and uses the credit terms to manage the timing of payments to suppliers. The following tables show the contractual maturities of financial liabilities:
| As at 31 March 2023 | | | Total | Less than 1 year | Between 1 and 5 years | Over 5 years | ||
| | | | | | £ | £ | £ | £ |
| Trade and other payables | | 1,997,615 | 1,997,615 | - | - | |||
| Accrued liabilities | | | 861,431 | 861,431 | - | - | ||
| Lease liabilities | | | 7,085,667 | 1,360,789 | 3,527,744 | 2,197,134 | ||
| | | | | | 9,944,713 | 4,219,835 | 3,527,744 | 2,197,134 |
| | | | | | | | | |
| As at 31 March 2022 | | | Total | Less than 1 year | Between 1 and 5 years | Over 5 years | ||
| | | | | | £ | £ | £ | £ |
| Trade and other payables | | 3,977,674 | 3,977,674 | - | - | |||
| Accrued liabilities | | | 1,157,142 | 1,157,142 | - | - | ||
| Lease liabilities (restated)¹ | | 2,742,432 | 344,202 | 1,360,636 | 1,037,594 | |||
| Liabilities for financial guarantees | 41,833 | - | 41,833 | - | ||||
| | | | | | 7,919,081 | 5,479,018 | 1,402,469 | 1,037,594 |
¹The Liquidity risk table has been restated to include the undiscounted contractual cashflows for the lease liabilities for 2022 which were omitted in the prior year
Liquidity risk arises from the company's management of working capital and the continued availability of its other funding facilities. It is the risk that the company will encounter difficulty in meeting its financial obligations as they fall due. The company actively manages its cash generation and maintains sufficient cash holdings to cover its immediate obligations but is always in close contact with key shareholders who would assist the company if required.
Market risk
The Group's products are focused on meeting certain current or expected requirements of individual markets and these requirements could evolve before the Group is able to complete its licensing agreements.
The Group periodically reviews the markets, and demands expected of products to minimize the risk to its business. It also reviews new markets to identify future demand outside of the initial intended markets. As the Group releases products, it will continue to carry out an assessment of the market risk it is exposed to and will carry out sensitivity analysis on the impact that each risk will have on the product(s)' performance and the wider impact on the Group's income statement and its financial position.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument or customer contract fails to meet its obligations. The Group is mainly exposed to credit risk from credit sales. At 31 March 2023 the Group has net trade receivables of £1,085,229 (2022: £2,422,019 (last year disclosed as £2,622,019)).
The company is exposed to credit risk in respect of credit sales such that, if one or more customers encounter financial difficulties, this could materially and adversely affect the company's financial results. The company attempts to mitigate credit risk by assessing the creditworthiness of customers and closely monitoring payment history. In a limited number of customer contracts, an initial payment is secured which helps to mitigate the overall credit risk of a project.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.
The following provision matrix is used to determine the initial expected credit losses. The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers. The Group has identified the gross domestic product (GDP), unemployment rate and inflation rate as the key macroeconomic factors in the countries where the Group operates.
| None past due | | 2.3% of carrying value (2022: 1%) | |
| 30 days past due | | 17% of carrying value (2022: 8.6%) | |
| 30-60 days past due | 100% of carrying value (2022: 9.6%) | ||
| 60-90 days past due | 100% of carrying value (2022: 100%) | ||
| >90 days past due | | 100% of carrying value (2022: 100%) | |
The resultant loss allowance is £34,259 (2022: £28,132).
Although the Group has its own terms and conditions with a 30 day payment expectation, under some contracts it accepts longer terms with suitable customers. Should a trade debtor exceed the payment terms, then the Group engages to ensure swift payment.
The maximum exposure to loss arising from trade accounts receivable is equal to their total carrying value as the loss allowance not recognised is considered to be immaterial to the financial statements.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.
| The maximum exposure to credit risk is as follows: | | | | | | |||||
| | | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | | March 2023 | | March 2022 |
| | | | | | | | | £ | | £ |
| Cash on deposit | | | | | | | 7,247,267 | | 18,402,055 | |
| Trade receivables | | | | |
|
| 1,085,229 | | 2,422,019 | |
| Other receivables | | | | | | | 627,054 | | 2,477,094 | |
| Loan to associate | | | | | | | 500,000 | | - | |
| | | | | | | | | 9,459,550 | | 23,301,168 |
| Credit risk (continued) |
| | | | | | | ||
| The ageing of trade receivables at the year-end date was: | | | | | |||||
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| | | | | | | | £ | | £ |
| Current | | | | | | | 1,026,941 | | 2,219,626 |
| More than 30 days past due | | | | | 60,011 | | 145,652 | ||
| More than 60 days past due | | | | | 7,121 | | 28,700 | ||
| More than 120 days past due | | | | | 25,415 | | 28,041 | ||
| | | | | | | | 1,119,488 | | 2,422,019 |
Capital risk management
Whilst the Group has no bank debt, it's capital structure comprises cash from the issuance of equity both at the time of its initial public offering and subsequently and finance lease obligations arising from its right of use assets. This constitutes the capital under management. The Group has a low gearing ratio of 15% debt to equity.
The Group's objectives when maintaining capital are to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
All working capital requirements are financed from existing cash.
The Group sets the amount of capital it requires in proportion to risk. The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
Interest rate risk
The Group's activities expose it to the financial risks of interest rates. The Group reviews its risk management strategy on a regular basis and if appropriate it will enter into derivative financial instruments in order to manage interest rate risk. At present, the Group does not have any financial leases or borrowings that have a floating interest rate, however should it take on such facilities where this is the case, then it will review the risk exposure that it has.
The Group analyses the interest rate exposure on at regular intervals. A sensitivity analysis is performed by applying a simulation technique to the liabilities that represent major interest-bearing positions. Various scenarios are run taking into consideration refinancing, renewal of the existing positions, alternative financing and hedging. Based on the simulations performed, the impact on profit or loss and net assets of a 100 basis-point shift (being the maximum reasonable expectation of changes in interest rates) would not have any financial impact as the Group does not have any interest-bearing debt.
All borrowing is approved by the Board of Directors.
Foreign currency risk
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow group entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency. Where group entities have liabilities denominated in a currency other than their functional currency (and have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere within the Group.
33. Financial instruments (continued)
Foreign currency risk (continued)
In order to monitor the continuing effectiveness of this policy, the Board receives a monthly forecast, analysed by the major currencies held by the Group, of liabilities due for settlement and expected cash reserves.
The Group aims to fund expenses and investments in the respective currency and to manage foreign exchange risk at a local level by matching the currency in which revenue is generated and expenses are incurred.
The following table sets forth information relating to foreign currency exposure as at 31 March 2023:
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | Euros | | Euros |
| Financial assets | | | | | 299,379 | | 2,676,434 | |
| Financial liabilities | | | | | (1,637,131) | | (1,709,759) | |
| Net exposure asset | | | | | (1,337,751) | | 966,675 | |
A sensitivity analysis performed showed that an increase of 5% in the Euro to GBP rate would result in a decrease in financial assets of £12,555 (2022: £108,096) and a decrease in financial liabilities of £68,653 (2022: £69,054). A decrease of 5% would result in an increase in financial assets of £13,876 (2022: £119,474) and an increase in financial liabilities of £75,880 (2022: £76,323).
34. Subsidiaries
The following entities are included in the consolidated financial information of Saietta Group Plc:
| | | | Country of | Registered | Principal | Shareholding |
| | |
| Investment | incorporation | office | activity | 2023 | 2022 | Interest | |||
| Saietta Sunderland Plant Limited (formerly Saietta Motorcycles Limited) | England and Wales | Building 210 Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE | Trading | 100% | 100% | Direct | |||
| | | | | | |||||
| | | | | | |||||
| Saietta LDE Limited (formerly Saietta Racing Limited) | England and Wales | Building 210 Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE | Dormant | 100% | 100% | Direct | |||
| | | | | | |||||
| | | | | | | ||||
| Propel B.V. | Netherlands | Moleneind 23-A, 1241NG Kortenhoef, Netherlands | Discontinued | 100% | 100% | Indirect | |||
| | | | | | | | | | |
| Saietta Holding B.V. | Netherlands | Moleneind 23-A, 1241NG Kortenhoef, Netherlands | Trading | 100% | N/A | Indirect | |||
| | | | | | | | | | |
| Saietta Traction Holdings B.V. | Netherlands | Moleneind 23-A, 1241NG Kortenhoef, Netherlands | Trading | 100% | N/A | Indirect | |||
| | | | | | | | | | |
| Saietta RetroMotion B.V. (formerly Saietta Refit B.V.) | Netherlands | Moleneind 23-A, 1241NG Kortenhoef, Netherlands | Discontinued | 100% | N/A | Indirect | |||
| | | | | | | | | | |
| Saietta Europe B.V. | Netherlands | Watermanstraat 40, 7324AH Apeldoorn, Netherlands | Trading | 100% | N/A | Indirect | |||
| | | | | | | ||||
Saietta RetroMotion B.V. ceased operations in January 2023.
Propel B.V. discontinued operations in February 2023 and is presented as a disposal group held for sale as at 31 March 2023.
35. Related party transactions
During the year, the Group repaid an amount totalling £nil (2022: £176,111) to Mr. L Marazzi, a shareholder of the company, reducing the outstanding balance that was included within creditors due within one year at the year end to £nil.
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| Trading transactions |
| | | | £ | | £ | |
| Saietta VNA Private Limited |
| | | | | | | |
| Revenue | | | | | | 855,605 | | - |
| | | | | | | | | |
| Loans to related parties |
| | | | | | | |
| Saietta VNA Private Limited |
| | | | | | | |
| Loan receivable | | | | | 500,000 | | - | |
The loan to associate Saietta VNA (Private) Limited is for up to £1,000,000 and can be repaid at any time with one month's notice. The term is until April 2028 and the interest rate is 7.5% starting to accrue in April 2024. A further £500,000 is drawn down in August 2023.
36. Subsequent events
On 3rd April 2023, the Group received an order for 3,000 eDrives from Ayro Inc. with a value of approximately £5 million. On 17th April 2023, Mr Wicher Kist resigned as a director of Saietta Group Plc.
On 1st August 2023 the Group signed a suite of contracts to replace the Joint Commercialisation and Development Agreement ("JCDA") with Consolidated Metco Inc ("ConMet").
Under these new arrangements ConMet and its affiliates paid Saietta approximately ?3.3 million comprised of:
- An upfront cash fee of approximately ?2.7 million as consideration for the assignment of jointly developed intellectual property ("IP")
- A further sum of ?0.6 million for an agreed list of machinery and equipment being transferred by Saietta
The parties also entered into a licence agreement under which Saietta has granted exclusive and non-exclusive licences over its existing IP in consideration for the payment of 2.5% of an agreed uplift to the product cost of future IWG and IWM sales incorporating Saietta's licensed IP, capped at ?20 million.
37. Capital commitments
| At 31 March 2023, the Group has capital commitments as follows: | | | | | ||||
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Contracted for but not provided in these financial statements | | | | | ||||
| Contracted amounts for the purchase of assets | | | 1,094,320 | | 1,100,000 | |||
| Loan to associate | | | | | 500,000 | | - | |
| | | | | | | 1,594,320 | | 1,100,000 |
Capital commitments comprises contracted amounts for the purchase of assets and a loan contract with associate.
The Group is commited to advancing a further £500,000 to its associate, Saietta VNA (Private) Limited, in August 2023. This amount is due at the earlier of available cash or 5 years (April 2028).
38. Non current assets held for sale and discontinued operations
Saietta RetroMotion B.V.
In January 2023, it was agreed by the Board that Saietta RetroMotion B.V. would cease its retrofit operations in Apeldoorn, Netherlands and sell the retrofit business (consisting of premises and nine employees) to a customer of Saietta Group plc, Duracar. This activity accompanied a general restructuring of the Netherlands operations.
The transaction consisted of a sale of assets for £173,000 (?200,000), a novation of the lease premises and the redundancy of Saietta Europe's RetroMotion employees.
The results of the discontinued operations, which have been included in the statement of comprehensive income, were as follows:
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Revenue | | | | | | 275,789 | | 952,018 |
| Cost of sales | | | | | | (251,156) | | (568,477) |
| Other income | | | | | 103,247 | | - | |
| Expenses | | | | | | (855,465) | | (179,884) |
| Inventory write-down | | | | | (848,580) | | - | |
| Loss before tax | | | | | (1,576,165) | | 203,657 | |
| Impairment of disposal group | | | | (480,729) | | - | ||
| Net loss attributable to discontinued operations (attributable to owners of the Company) | (2,056,894) | | 203,657 | |||||
Expenses from discontinued operations include a write off of inventory of £848,580 and severance costs of £107,326. During the year, Saietta RetroMotion B.V. increased the Group's net operating cash flows by £10,000. The major classes of assets and liabilities comprising the discontinued operation are as follows:
| | | | | | | | | Year ended 31 |
| | | | | | | | | March 2023 |
| | | | | | | | | £ |
| Trade and other receivables | | | | | | 46,800 | ||
| Cash and cash equivalents | | | | | | | 9,031 | |
| Total assets classified as held for sale |
| | | | | 55,831 | ||
| | | | | | | | | |
| Trade and other payables | | | | | | | 251,639 | |
| Total liabilities associated with assets classified as held for sale |
| | | 251,639 | ||||
| | | | | | | | | |
| Net liabilities of disposal group | | | | | | (195,808) | ||
Propel B.V.
In February 2023, it was agreed by the Saietta Group plc Board that the marine retail operation (Propel) was representing too high a cash outflow to the Group and that further investment into marine retail activity should cease with resources focused on light duty applications going forward.
The Propel activities constituted a discontinued operation from the Board decision to cease investment at which point the Board commenced actively seeking an industrialisation partner, with a linked sale being sought for the intellectual property and distribution rights of the business.
Propel BV is considered a cash generating unit as it operates as a specific business unit dedicated to marine activities. It has been reviewed for potential impairment.
An impairment of the assets of Propel has been recognised following the decision to seek an industrialisation partner to take the marine retail business forward. This decision creates uncertainty over the recoverability of the assets of Propel BV until such point that formal arrangements with a partner are agreed.
Determination of impairment was made on the basis of nil recovery due to the uncertainties.
The results of the discontinued operations, which have been included in the statement of comprehensive income for the year, were as follows:
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Revenue | | | | | | 27,319 | | 1,261,008 |
| Cost of sales | | | | | | (2,492) | | (714,795) |
| Grant income | | | | | - | | 50,799 | |
| Expenses | | | | | | (3,779,093) | | (847,646) |
| Loss before tax | | | | | (3,754,266) | | (250,634) | |
| Loss on impairment of disposal group | | | | (2,057,480) | | - | ||
| Net loss attributable to discontinued operations (attributable to owners of the Company) | (5,811,746) | | (250,634) | |||||
During the year, Propel B.V reduced the Group's net operating cash flows by £2.4 million (2022: £1.5 million), paid £1.2 million (2022: £1.3 million) in respect of investing activities and paid £0.1m (2022 received: £0.3 million) in respect of financing activities.
Propel is expected to be sold within 12 months and has been classified as a disposal group held for sale and presented separately in the statement of financial position.The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:
| | | | | | | | | Year ended 31 |
| | | | | | | | | March 2023 |
| | | | | | | | | £ |
| Trade and other receivables | | | | | | 77,195 | ||
| Cash and bank balances | | | | | | | 94,448 | |
| Total assets classified as held for sale |
| | | | | 171,643 | ||
| | | | | | | | | |
| Trade and other payables | | | | | | | 495,354 | |
| Lease liabilities | | | | | | | 171,835 | |
| Total liabilities associated with assets classified as held for sale |
| | | 667,189 | ||||
| | | | | | | | | |
| Net liabilities of disposal group | | | | | | (495,546) | ||
Non?current assets (or disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Costs to sell have been provided for, estimated as follows:
| | | | | | | | | |
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| Accrued costs |
| | | | £ | | £ | |
| Severance pay | | | | | 161,157 | | - | |
| Lease exit fees | | | | | 44,032 | | - | |
| | | | | | | 205,189 | | - |
| Summary of profits and losses from discontinued operations: |
| | | | ||||
| Saietta RetroMotion B.V. | | | | | (2,056,894) | | 203,657 | |
| Propel B.V. | | | | | | (5,811,746) | | (250,634) |
| Total losses from discontinued operations | | | (7,868,640) | | (46,977) | |||
| | | | | | | | | |
| | | | | | | | | Year ended 31 |
| | | | | | | | | March 2023 |
| | | | | | | | | £ |
| Total assets of disposal groups held for sale | | | | | 227,474 | |||
| | | | | | | | | |
| Total liabilities of disposal groups held for sale | | | | | 918,828 | |||
COMPANY BALANCE SHEET OF SAIETTA GROUP PLC
As at 31 March 2023
Company number 06744840
| | | | | | | 2023 | 2022 |
| ASSETS |
| | | Notes |
| £ | £ |
| Non-current assets |
| | | | | | |
| Intangible fixed assets | | | | 42 | | 8,213,823 | 5,570,787 |
| Tangible fixed assets | | | | 43 | | 7,406,199 | 2,796,984 |
| Right of use assets | | | | 44 | | 5,595,634 | 2,258,202 |
| Investment in associate | | | | 50 | | 267,784 | - |
| Investments in subsidiaries | | | | 45 | | 173 | 173 |
| Trade and other receivables | | | | 47 | | 134,526 | 734,526 |
| Prepayments and accrued income | | | 47 | | 119,590 | 101,825 | |
| Other financial assets | | | | 47 | | 500,000 | - |
| Amounts due from group companies | | | 47 | | 1,774,525 | 1,700,491 | |
| Total non-current assets |
| | | | | 24,012,254 | 13,162,988 |
|
| | | | | | | |
| Current assets |
| | | | | | |
| Inventories | | | | 46 | | 132,298 | 297,585 |
| Trade and other receivables | | | | 47 | | 2,867,731 | 3,232,513 |
| Prepayments and accrued income | | | 47 | | 3,017,464 | 886,675 | |
| Amounts due from group companies | | | 47 | | 2,612,104 | 5,473,694 | |
| Cash and cash equivalents | | | | 47 | | 7,084,691 | 17,883,118 |
| Total current assets |
| | | | | 15,714,288 | 27,773,585 |
|
| | | | | | | |
| TOTAL ASSETS |
| | | | | 39,726,542 | 40,936,573 |
|
| | | | | | | |
| EQUITY AND LIABILITIES |
| | | | | | |
| Current liabilities |
| | | | | | |
| Trade and other payables | | | | 48 | | 2,461,077 | 5,014,255 |
| Contract liabilities | | | | | | 326,286 | - |
| Lease liabilities | | | | 48 | | 1,086,440 | 259,630 |
| Total current liabilities |
| | | | | 3,873,803 | 5,273,885 |
|
| | | | | | | |
| Non-current liabilities |
| | | | | | |
| Lease liabilities | | | | 48 | | 4,975,575 | 2,029,485 |
| Liabilities for financial guarantees | | | 48 | | - | 41,833 | |
| Total non-current liabilities |
| | | | | 4,975,575 | 2,071,318 |
|
| | | | | | | |
| EQUITY |
| | | | | | |
| Share capital | | | | 54 | | 113,209 | 93,557 |
| Share premium | | | | 54 | | 56,670,326 | 34,671,275 |
| Share options reserve | | | | 55 | | 14,615,611 | 12,217,991 |
| Profit and loss account | | | | | | (40,521,982) | (13,391,453) |
| Total equity |
| | | | | 30,877,164 | 33,591,370 |
|
| | | | | | | |
| TOTAL EQUITY AND LIABILITIES |
| | | | | 39,726,542 | 40,936,573 |
The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the parent company income statement. The loss for the Company for the year was £27.1 million (2022: loss of £10.2 million).
The notes on pages 97 to 129 are an integral part of these financial statements.
These parent company financial statements were approved by the Saietta Group plc Board and authorised for issue on [ October 2023 ].
They were signed on its behalf by:
Steven HarrisonChief Financial Officer
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2023
| | | | | Share | Profit |
|
| | | Share | Share | options | and loss |
|
| | | capital | premium | reserve | account | Total |
|
| Notes | £ | £ | £ | £ | £ |
|
| | | | | | |
| Balance at 1 April 2021 |
| 51,921 | - | 7,318,468 | (3,272,084) | 4,098,305 |
| | | | | | | |
| Comprehensive loss for the year |
| | | | | |
| Loss for the year | | - | - | - | (10,191,852) | (10,191,852) |
| Total comprehensive loss | | - | - | - | (10,191,852) | (10,191,852) |
| | | | | | | |
| Contributions by owners |
| | | | | |
| Issue of shares | 54 | 32,245 | 35,145,382 | - | - | 35,177,627 |
| Share issue costs offset against share premium | 54 | - | (2,868,972) | - | - | - 2,868,972 |
| Share-based payments | 55 | - | - | 4,899,523 | - | 4,899,523 |
| Share issues on exercise of employee share options | 54 | 6,091 | 58,165 | - | - | 64,256 |
| Settlement of the convertible loan notes | | - | - | - | 72,483 | 72,483 |
| Shares issued on conversion of convertible loan notes | 54 | 3,300 | 2,336,700 | - | - | 2,340,000 |
| | | | | | | |
| Balance at 31 March 2022 |
| 93,557 | 34,671,275 | 12,217,991 | (13,391,453) | 33,591,370 |
|
| |
|
|
|
|
|
| Balance at 1 April 2022 |
| 93,557 | 34,671,275 | 12,217,991 | (13,391,453) | 33,591,370 |
| | | | | | | |
| Comprehensive loss for the year |
| | | | | |
| Loss for the year | | - | - | - | (27,130,529) | (27,130,529) |
| Total comprehensive loss | | - | - | - | (27,130,529) | (27,130,529) |
| | | | | | | |
| Contributions by owners |
| | | | | |
| Issue of shares | 54 | 18,812 | 23,581,189 | - | - | 23,600,001 |
| Share issue costs offset against share premium | 54 | - | (1,590,469) | - | - | (1,590,469) |
| Share-based payments | 55 | - | - | 2,397,620 | - | 2,397,620 |
| Share issues on exercise of employee share options | 54 | 840 | 8,331 | - | - | 9,171 |
| | | | | | | |
| Balance at 31 March 2023 |
| 113,209 | 56,670,326 | 14,615,611 | (40,521,982) | 30,877,164 |
Share capital
The share capital represents the nominal value of the equity shares in issue.
Share premium account
When shares are issued, any premium paid above the nominal value is credited to the share premium reserve.
Share options reserve
When shares are issued on the exercise of vested share options, the share option reserve is debited.
Accumulated losses
The retained earnings reserve records the accumulated profits and losses of the Company since inception of the business.
The notes on pages 97 to 129 are an integral part of these financial statements.
40. Accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
Saietta Group plc is a private company incorporated in England & Wales under the Companies Act. The address of the registered office is given on the contents page and the nature of the company's operations and its principal activities are set out in the strategic report. The financial statements have been prepared in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' (FRS 101). The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements have been prepared on a historical cost basis, and in accordance with the Companies Act 2006. The presentation currency used is sterling and amounts have been presented rounded to the nearest £.
Disclosure exemptions adopted
In preparing these financial statements the company has taken advantage of certain disclosure exemptions conferred by FRS 101 and has not provided:
? Additional comparative information as per IAS 1 Presentation of Financial Statements paragraph 38 in respect of a reconciliation of the number of shares outstanding at the start and end of the prior period
? A Statement of Cash Flows and related disclosures for cash flows from discontinued activities.
? A statement of compliance with IFRS (a statement of compliance with FRS 101 is provided instead).
? Additional comparative information for narrative disclosures and information, beyond IFRS requirements.
? Disclosures in relation to the objectives, policies and process for managing capital.
? Disclosure of the effect of future accounting standards not yet adopted.
? The remuneration of key management personnel.
? Related party transactions with two or more wholly owned members of the group.
? Certain disclosures required under IFRS 15 Revenue from Contracts with Customers, including disaggregation of revenue, details of changes in contract assets and liabilities, and details of incomplete performance obligations.
? The maturity analysis of lease liabilities, as required by paragraph 58 of IFRS 16 Leases, has not been disclosed separately as details of indebtedness required by Companies Act has been presented separately for lease liabilities in note 48.
In addition, and in accordance with FRS 101, further disclosure exemptions have been applied because equivalent disclosures are included in the consolidated financial statements of Saietta Group plc. These financial statements do not include certain disclosures in respect of:
? Share based payments - details of the number and weighted average exercise prices of share options, and how the fair value of goods or services received was determined as per paragraphs 45(b) and 46 to 52 of IFRS 2 Share-Based Payment.
? Fair value measurements - details of the valuation techniques and inputs used for fair value measurement of assets and liabilities as per paragraphs 91 to 99 of IFRS 13 Fair Value Measurement.
The parent company of the following wholly-owned subsidiary companies guarantees these subsidiary companies under section 479C of the Companies Act 2006 and agrees to the exemption from audit in respect of the year ended 31 March 2023:
- Saietta Sunderland Plant Limited
- Saietta LDE Limited
40. Accounting policies (continued)
Going concern The financial statements have been prepared on a going concern basis. In adopting the going concern basis, the directors have considered the financial position of the Company, its cash flows and its liquidity position. The Company's financial risk management objectives and exposures to liquidity and other financial risks and uncertainties are set out on pages 15 to 18. The Company had net assets of £30,877,164 (2022: £33,591,370) as at 31 March 2023 and available liquidity of £7,084,691 (2022:
£17,883,118) comprised of cash and cash equivalents.
The Company has modelled scenarios for a period up to October 2024 from the March 2023 year end and stress tested its financial position in such scenarios. These stress tests modelled the variability in financial performance and free cash flows when incorporating certain hypothetical events such as a reduction in forecast revenue and a delay in the receipt of payments for equipment from Saietta VNA.
The Company operates in markets that are rapidly growing and has strategic plans that respond to such growth. In delivering those plans, the Company is mindful of the ultimate benefits from maintaining control over the deployment of its intellectual property in applications with major OEMs and within its joint venture arrangements. In order to do so, it recognises that at times it will potentially need to co-invest or defer investment to its partners to enhance the future value it can achieve from application of its products. In such instances the commercial merits will be weighed in determining whether funding is sought.
These forecasts align to the business strategy which was based on the assumption that the Company will significantly increase its revenue and be able to generate significant gross profit in the next 12 months.
Furthermore, the forecasts also include payments from Saietta VNA, the Company's joint venture in India, for equipment for fully automated production of AFT motors. The Company has spent £3m on such equipment and this amount is to be reimbursed by Saietta VNA. In the absence of such reimbursement there may also be a need to raise additional funding.
Whilst the Directors expect that additional funding can be raised this is not guaranteed and when continuing with an accelerated expansion this presents a material uncertainty which may cast significant doubt over the Company's ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not reflect any adjustments that would be required to be made if they were prepared on a basis other than the going concern basis.
Whilst acknowledging the uncertainties described above, the Board have concluded, on the basis of all scenarios and related expected cashflows and available sources of finance, that the Company will be able to continue as a Going Concern for at least twelve months from the date of signing these financial statements and therefore it remains appropriate to prepare the Company's results on the basis of a going concern.
Judgements and key areas of estimation uncertainty
The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires the company's directors to exercise judgement in applying the company's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 41.
40. Accounting policies (continued)
New standards, interpretations and amendments:
There have been amendments to some accounting standards:
IFRS 3 Business Combinations: Reference to the Conceptual Framework IAS 16 Property, Plant and Equipment-Proceeds before Intended Use IAS 37 Onerous Contracts - Cost of Fulfilling a Contract
There are no new standards, interpretations or amendments not yet applied which the Directors anticipate will have a material impact on the Company.
Revenue recognition
Performance obligations and timing of revenue recognition
A portion of the Company's revenue is derived from selling goods with revenue recognised at a point in time when control of the goods has transferred to the customer. This is generally when the goods are delivered to the customer. However, for export sales, control might also be transferred when delivered either to the port of departure or port of arrival, depending on the specific terms of the contract with a customer. There is limited judgement needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, the Company no longer has physical possession, usually will have a present right to payment (as a single payment on delivery) and retains none of the significant risks and rewards of the goods in question.
The Company's Lightweight and Heavy-duty divisions both carry out design (consultancy-type) services for clients, with revenue recognised typically on an over time basis. This is because the designs created have no alternative use for the Company and the contracts would require payment to be received for the time and effort spent by the Company on progressing the contracts in the event of the customer cancelling the contract prior to completion for any reason other than the Company's failure to perform its obligations under the contract. On partially complete design contracts, the Company recognises revenue based on stage of completion of the project which is estimated by comparing the number of hours actually spent on the project with the total number of hours expected to complete the project (i.e. an input based method). This is considered a faithful depiction of the transfer of services as the contracts are initially priced on the basis of anticipated hours to complete the projects and therefore also represents the amount to which the Company would be entitled based on its performance to date. These design contracts include commitment fees are fees which are payable by customers in order to secure exclusive access to certain goods and services of the company and thus precludes the Company from offering those goods and services to other customers. They are recognised over the period of the commitment.
Determining the transaction price
Most of the Company's revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices.
40. Accounting policies (continued)
Revenue recognition (continued)
Allocating amounts to performance obligations
For most contracts for goods, there is a fixed unit price for each product sold, with reductions given for bulk orders placed at a specific time. Therefore, there is no judgement involved in allocating the contract price to each unit ordered in such contracts (it is the total contract price divided by the number of units ordered). Where a customer orders more than one product line, the Company is able to determine the split of the total contract price between each product line by reference to each product's standalone selling prices (all product lines are capable of being, and are, sold separately).
For most contracts for design services, revenue is recognised over time in accordance with percentage completion. Accordingly, the transaction price is allocated in accordance by reference to the actual costs incurred as a proportion of the total expected cost of the products and services to be provided for each performance obligation. Allocation of transaction price may include allocation of discounts, which are applied on a proportionate basis to all performance obligations based on the stand-alone selling price of each performance obligation (observable or estimated).
In order to win significant repeat business with key customers, the Company might enter into contracts entitling them to discounts if it places repeat orders in the future. Such discounts constitute a 'material right' and result in some of the consideration received for the initial sale being deferred and recognised as revenue when subsequent sales are fulfilled or (if later) when the rights to receive a discount expire. The Company estimates both the probability that the customer will take up its future discount offer and the value of future purchases that might be made in order to estimate the value of the rights granted. This has to be done on a contract-by-contract basis for each customer to whom material rights have been granted. The Directors do not consider past experience an appropriate basis for estimating the amount of total contract revenue to allocate to future discount rights for two reasons. Firstly, there is not a significant number of such contracts on which past experience can be extrapolated. And secondly, each customer has unique circumstances which will impact both the probability and value of additional orders being placed. Therefore, the estimates are made by reference to discussions had with the relevant customers as to the extent the discount options will be taken up when the original contracts were negotiated.
Costs of fulfilling contracts
The costs of fulfilling contracts do not result in the recognition of a separate asset because:
? such costs are included in the carrying amount of inventory for contracts involving the sale of goods; and
? for engineering design service contracts, revenue is recognised over time by reference to the stage of completion meaning that control of the asset (the design service) is transferred to the customer on a continuous basis as work is carried out. Consequently, no asset for work in progress is recognised.
Practical expedients
The company has taken advantage of the practical expedients:
? not to account for significant financing components where the time difference between receiving consideration and transferring control of goods (or services) to its customer is one year or less; and
? to expense the incremental costs of obtaining a contract when the amortisation period of the asset otherwise recognised would have been one year or less.
Most of the Company's revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices.
 |
40. Accounting policies (continued)
Grant income The Company enters into consortiums with partners who together will apply for grant income to be paid out against a project that contains defined deliverables, clear outcomes and a set level of expenditure.
Expenditure comprises both capital purchases for equipment and operational expenditure for labour and supplies.
Each partner agrees a set level of expenditure at the start of the project and a level of grant income paid for by the grant provider is allocated for payment against the expenditure incurred, however the deliverables on the project for each partner are linked. Such projects are sought by the Company as they provide funding over one or more work streams that form part of the Company's programme(s) to deliver increased production capacity.
The Company recognises the costs of a project in the period in which they are incurred when related to qualifying expenditure. The grant income that is provided against this total expenditure is recognised as income when received from the issuing authority. Recognition occurs at this point as its release is subject to the issuer's review and confirmation of compliance with all conditions for release. The grant related to the asset is deferred and recognised as income in the same period in which the grant-related asset is being depreciated.
Assets acquired for use in such projects are depreciated in accordance with the Company's depreciation policy.
The grant programmes that the Company participates in typically operate on a three month cycle, with recoverable income over each three month period paid in the month following that period.
Expenditure Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provisions are made when a present obligation exists for a future liability relating to a past event and where the amount of the obligation can be reliably estimated.
Foreign currencies Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in 'sterling', which is also the Company's functional currency.
Transactions entered into by the Company in a currency other than the functional currency are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income or expense'.
Intangible assets
Externally acquired intangible assets
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.
The significant externally acquired intangibles recognised by the company and their useful economic lives are as follows:
Intellectual property patents 10% straight line Software 25% reducing balance
40. Accounting policies (continued)
Intangible assets (continued)
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if it can be demonstrated that:
? it is technically feasible to develop the product for it to be sold;
? adequate resources are available to complete the development;
? there is an intention to complete and sell the product;
? the company is able to sell the product;
? sale of the product will generate future economic benefits; and
? expenditure on the project can be measured reliably.
Capitalised development costs are subsequently amortised on a straight line basis over the periods the company expects to benefit from selling the products developed, which ranges from 8 to 10 years. The amortisation expense is included within the administrative expenses in the statement of comprehensive income.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the statement of comprehensive income as incurred.
Tangible assets
Tangible fixed assets are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions.
Depreciation on assets under construction does not commence until they are complete and available for use. Depreciation is provided on all other items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:
Short leasehold Remaining lease term Plant and machinery 25% reducing balance Fixtures and fittings 25% reducing balance
Motor vehicles Four years
Useful lives are based on management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness and events which may cause the estimate to be revised. At the end of the initial period, asset lives reach a residual value at which they are either suitable for replacement or extended life after maintenance and overhaul.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Useful lives are based on management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness and events which may cause the estimate to be revised. At the end of the initial period, asset lives reach a residual value at which they are either suitable for replacement or extended life after maintenance and overhaul. The key areas of estimation uncertainty regarding depreciation is the determination of the life time capacity; risk of obsolescence from technological and regulatory changes; and required future capital expenditure (refurbishment or replacement of key components).
40. Accounting policies (continued)
Tangible assets (continued)
Assets under construction
Assets under construction relates to the construction of an automated production line which at 31 March 2023 was not yet ready for use.
Assets under construction are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items.
Any costs not capitalised as part of the factory cost will be expensed to the statement of profit or loss as incurred. Depreciation on assets under construction does not commence until they are complete and available for use.
When necessary, the entire carrying amount of the assets under construction is tested for impairment in accordance with IAS 36 Impairment of assets as a single asset by comparing its recoverable amount (the higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
Inventories Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Inventory is valued at the weighted average cost and is held at the lower of the weighted average cost or the selling price less costs to sell.
Investments in subsidiaries
Investments in subsidiary undertakings where the Company has control are stated at cost less any provision for impairment.
Financial instruments Financial assets and financial liabilities are recognized in the Company's balance sheet when the Company becomes a party to the contractual provisions of the instrument.
· Financial assets
All financial assets are held at amortised cost.
Amortised Cost
These assets arise principally from the provision of goods and services to customers (eg trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
Financial assets (continued)
Amortised Cost (continued)
Impairment provisions for current and non-current trade debtors are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non- payment of the trade debtors is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade debtors. For trade debtors, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised separately within the statement of comprehensive income. On confirmation that the trade debtor will not be collectable, the gross carrying value of the asset is written off against the associated provision.
Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
The maximum exposure to loss arising from trade accounts receivable is equal to their total carrying value as the loss allowance not recognised is considered to be immaterial to the financial statements.
The Company's financial assets measured at amortised cost comprise trade and other debtors, accrued income and cash and cash equivalents in the statement of financial position. Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and - for the purpose of the statement of cash flows - bank overdrafts. Bank overdrafts are shown within 'Creditors: amounts falling due within one year' on the statement of financial position.
Financial liabilities
The Company does not have any borrowings or liabilities held for trading nor does it voluntarily classify any financial liabilities as being at fair value through profit or loss.
Trade payables and other short-term monetary liabilities are initially recognised at fair value and are subsequently carried at amortised cost using the effective interest method.
· Financial guarantee contract liabilities
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of:
· the amount determined in accordance with the expected credit loss model under IFRS 9 Financial Instruments; and
· the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 Revenue from Contracts with Customers.
The fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.
40. Accounting policies (continued)
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
When the Company exchanges with the existing lender one debt instrument into another one with substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Company accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between:
(1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification is recognised in profit or loss as the modification gain or loss within other gains and losses.
Taxation
Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.
Deferred tax is recognised on the difference between the carrying amount of an asset or liability and the amount at which that asset or liability is assessed for tax purposes (tax base). Historical accumulated tax losses would give rise to a net deferred tax asset for the Company. However, due to the uncertainty on future recovery the Directors considered it prudent not to recognise such asset at this time.
Investments in associates and joint ventures
An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5.
Under the equity method, an investment in an associate is recognised initially in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Company's share of the profit or loss and other comprehensive income of the associate or joint venture. When the Company's share of losses of an associate exceeds the Company's interest in that associate (which includes any long-term interests that, in substance, form part of the Company's net investment in the associate or joint venture), the Company discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.
Share capital
Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.
The Company's ordinary shares are classified as equity instruments.
Leases
Identifying Leases
The Company accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:
(a) There is an identified asset;
(b) The company obtains substantially all the economic benefits from use of the asset; and
(c) The company has the right to direct use of the asset.
The Company considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as giving rise to a lease. In determining whether the Company obtains substantially all the economic benefits from use of the asset, the Company considers only the economic benefits that arise use of the asset, not those incidental to legal ownership or other potential benefits.
In determining whether the Company has the right to direct use of the asset, the company considers whether it directs how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the nature of the asset, the Company considers whether it was involved in the design of the asset in a way that predetermines how and for what purpose the asset will be used throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Company applies other applicable IFRSs rather than IFRS 16.
On initial recognition, the carrying value of the lease liability also includes:
? amounts expected to be payable under any residual value guarantee;
? the exercise price of any purchase option granted in favour of the Company if it is reasonable certain to assess that option;
? any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
? lease payments made at or before commencement of the lease;
? initial direct costs incurred; and
? the amount of any provision recognised where the company is contractually required to dismantle, remove or restore the leased asset
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
When the Company revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.
Leases (continued)
Identifying Leases (continued)
When the Company renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the modification:
? if the renegotiation results in one or more additional assets being leased for an amount commensurate with the standalone price for the additional rights-of-use obtained, the modification is accounted for as a separate lease in accordance with the above policy.
? if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right-of- use asset are reduced by the same proportion to reflect the partial of full termination of the lease with any difference recognised in profit or loss. The lease liability is then further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date. The right-of-use asset is adjusted by the same amount.
For contracts that both convey a right to the company to use an identified asset and require services to be provided to the Company by the lessor, the Company has elected to account for the entire contract as a lease, i.e. it does allocate any amount of the contractual payments to, and account separately for, any services provided by the supplier as part of the contract.
Share-based payments
The Company operates a share based compensation plan whereby employees are awarded equity settled share options by the parent company for services provided to this Company. The Company has no obligation to settle the awards.
The fair value of the options at the date of grant is charged to profit or loss over the vesting period with a corresponding entry in retained earnings. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.
Share-based payments (continued)
Where equity instruments are granted to persons other than employees, the statement of comprehensive income is charged with the fair value of goods and services received.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of comprehensive income over the remaining vesting period.
Retirement benefits: Defined contribution schemes
Contributions to defined contribution pension schemes are charged to profit or loss in the year to which they relate.
Prepayments
Prepayments are recognised as assets in the statement of financial position when:
- The Company has made an advance payment for goods or services to be received in the future,
- It is probable that economic benefits associated with the prepayment will flow to the Company, and
- the amount of the prepayment can be measured reliably.
Prepayments are initially measured at the amount paid, and are released over the period over which the related goods or services are consumed or utilised.
Prepayments are presented as current assets in the statement of financial position to the extent that they are expected to be realised within the following 12 months. The portion of prepayments to be realised following one year from the balance sheet date is presented in non-current assets.
Prepayments are derecognised when the related goods or services are received or consumed, or when the right to receive the goods or service no longer exists. Any remaining balance is removed from the statement of financial position and the relevant expense is recognised in the statement of comprehensive income.
Accrued income
Accrued income represents grant income that has become due to the Company but has not been received at the reporting date.
Accrued income is recognised when:
- There is an unconditional right to receive the income
- The income can be reliably measured, and
- It is probable that the economic benefits associated with the income will flow to the company.
Accrued income is presented in current assets as it is expected to be realised within 12 months of the reporting date.
41. Critical accounting estimates and judgements
The Company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The company has not made any significant judgements when applying the accounting policies. The estimates that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Judgements and key areas of estimation uncertainty
Useful lives of property, plant and equipment
Property, plant and equipment are depreciated over the estimated useful lives of the assets: Short leasehold Remaining lease term
Plant and machinery Eight years to a residual value Fixtures and fittings Eight years to a residual value Motor vehicles Four years
Useful lives are based on management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness and events which may cause the estimate to be revised. At the end of the initial period, asset lives reach a residual value at which they are either suitable for replacement or extended life after maintenance and overhaul. The key areas of estimation uncertainty regarding depreciation is the determination of the life time capacity; risk of obsolescence from technological and regulatory changes; and required future capital expenditure (refurbishment or replacement of key components).
Useful lives of intangible assets
The carrying values of these assets are tested for impairment when there is an indication that the value of the assets might not be realisable or impaired either at an individual cash generating unit level or for the Company as a whole.
Patents are recognised at cost and development costs include both purchases and capitalized employee costs directly attributable to the development.
The nature of the estimation uncertainty is both to the eventual integration of such an intangible asset into commercial production and the successful cash generation from such production. The underlying assumption is that impairment occurs if either the achievement of project milestones that meet client's roadmaps to commercialization are not met (and thereby indicate uncertainty over the viability to start of production ("SOP")), or if the commercial potential is reduced to such an extent that recovery of all invested amounts are uncertain.
41. Critical accounting estimates and judgements (continued)
Useful lives of intangible assets (continued) The carrying amount is sensitive to both write-off of any intangible asset that is impaired and to amortisation either before all criteria to amortise are met, or after such criteria have been met. When carrying out impairment tests these are based upon future cash flow forecasts and these forecasts include management estimates. Future events or changes in the market could cause the assumptions to change, therefore this could also have an adverse effect on the future results of the Company.
Recognition of internally generated intangible assets arising from the development phase of a project is dependent upon application of specific criteria detailed in note 40. Management judgement is required as to the extent that each of the criteria is met and to the point where development is complete.
Research and Development credits Research and Development ("R&D") credits arising in the United Kingdom under Corporation Tax Act 2009 Section 1308 claims are recognised upon success and recognised within Accrued Income. Successful Section 1308 R&D credits are considered to be UK Government grants arising as a direct result of the Company's investment in its R&D assets and for which no further obligation exists upon the Company. The R&D credits are charged to the P&L at the same time that the asset is expensed to P&L, therefore amortised over 8 years as their benefit is derived over the use of the Company's R&D assets.
Expected credit losses and asset impairment Expected credit losses are assessed under IFRS9 using reasonable information about past events and current conditions and forecasts of future events. Asset impairment considers the likely returns from financial assets owned by the Group and their recoverability, based on market values and management's judgement of any other relevant factors.
Please refer to Note 49 for further detail.
Incremental borrowing rate used to measure lease liabilities Where the interest rate implicit in the lease cannot be readily determined, lease liabilities are discounted at the lessee's incremental borrowing rate. This is the rate of interest that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. This involves assumptions and estimates, which would affect the carrying value of the lease liabilities (note 48) and the corresponding right-of-use assets (note 44).
To determine the incremental borrowing rate the Company uses recent third-party financing as a starting point, and adjusts this for conditions specific to the lease such as its term and security.
The Company used incremental borrowing rates specific to each lease which ranged between 4.0% and 7.25%. A 5% increase in the rate would cause the lease liability to reduce by £830,676 with a corresponding movement in the 'cost' of the right-of-use asset which would reduce the associated amortisation.
Share Options - estimates and assumptions Key sources of estimation uncertainty the valuation of share options issued in the year has been based on a Black Scholes model for options with no market based vesting conditions and a Monte Carlo simulation for options with market based vesting conditions. The inputs to both models represent the Director's best estimates for the likely exercise behaviour of the option holders. The expected future share price volatility was estimated based on the historical volatility of the Company's share price and a representative peer group of similar companies. For the share options with market based vesting conditions an independent specialist consultant was engaged to simulate the impact on the market-based conditions on the fair value of the options issued.
42. Intangible assets
| | | | | | | Patents and | Development | Software | Total |
| | | | | | | licences | costs | | |
| Cost |
| | | | | £ | £ | £ | £ |
| At 1 April 2022 | | | | | 456,349 | 5,019,108 | 227,836 | 5,703,293 | |
| Additions | | | | | | 534,529 | 1,884,088 | 439,506 | 2,858,123 |
| Impairment | | | | | | - | (107,166) | - | (107,166) |
| At 31 March 2023 | | | | | 990,878 | 6,796,030 | 667,342 | 8,454,250 | |
| | | | | | | | | | |
| Accumulated amortisation |
| | | | | | | ||
| At 1 April 2022 | | | | | 51,720 | - | 80,786 | 132,506 | |
| Amortisation for the year | | | | 68,874 | - | 39,047 | 107,921 | ||
| At 31 March 2023 | | | | | 120,594 | - | 119,833 | 240,427 | |
| | | | | | | | | | |
| Net book value |
| | | | | | | | |
| Net book value at 31 March 2023 | | | 870,284 | 6,796,030 | 547,509 | 8,213,823 | |||
| | | | | | | Patents and | Development | Software | Total |
| | | | | | | licences | costs | | |
| Cost |
| | | | | £ | £ | £ | £ |
| At 1 April 2021 | | | | | 79,168 | 3,253,554 | 110,231 | 3,442,953 | |
| Additions | | | | | | 377,181 | 1,765,554 | 117,605 | 2,260,340 |
| At 31 March 2022 | | | | | 456,349 | 5,019,108 | 227,836 | 5,703,293 | |
| | | | | | | | | | |
| Accumulated amortisation |
| | | | | | | ||
| At 1 April 2021 | | | | | 24,168 | - | 54,629 | 78,797 | |
| Amortisation for the year | | | | 27,552 | - | 26,157 | 53,709 | ||
| At 31 March 2022 | | | | | 51,720 | - | 80,786 | 132,506 | |
| | | | | | | | | | |
| Net book value |
| | | | | | | | |
| Net book value at 31 March 2022 | | | 404,629 | 5,019,108 | 147,050 | 5,570,787 | |||
43. Tangible fixed assets
| | | | Short | Plant & | Fixtures & | Motor | Assets under | Total |
| | | | leasehold | machinery | fittings | vehicles | construction | |
| | | | £ | £ | £ | £ | £ | £ |
| Cost |
| | | | | | | |
| At 1 April 2022 | | 492,028 | 286,044 | 689,806 | 147,844 | 1,938,441 | 3,554,163 | |
| Additions | | | 1,122,982 | 1,294,569 | 1,204,865 | 36,144 | 1,724,230 | 5,382,790 |
| Impairment losses | | - | (137,668) | - | - | - | (137,668) | |
| Disposals | | | - | - | - | - | - | - |
| At 31 March 2023 | | 1,615,010 | 1,442,945 | 1,894,671 | 183,988 | 3,662,671 | 8,799,285 | |
| | | | | | | | | |
| Accumulated depreciation |
| | | | | | ||
| At 1 April 2022 | | 299,326 | 86,730 | 264,167 | 106,956 | - | 757,179 | |
| Depreciation for the year | 111,213 | 305,723 | 201,266 | 17,705 | - | 635,907 | ||
| At 31 March 2023 | | 410,539 | 392,453 | 465,433 | 124,661 | - | 1,393,086 | |
| | | | | | | | | |
| Net book value |
| | | | | | | |
| Net book value at 31 March 2023 | | | | | | | ||
| 1,204,471 | 1,050,492 | 1,429,238 | 59,327 | 3,662,671 | 7,406,199 | |||
| | | | Short | Plant & | Fixtures & | Motor | Assets under | Total |
| | | | leasehold | machinery | fittings | vehicles | construction | |
| | | | £ | £ | £ | £ | £ | £ |
| Cost |
| | | | | | | |
| At 1 April 2021 | | 290,932 | 113,156 | 323,838 | 110,044 | - | 837,970 | |
| Additions | | | 201,096 | 172,888 | 365,968 | 40,200 | 1,938,441 | 2,718,593 |
| Disposals | | | - | - | - | (2,400) | - | (2,400) |
| At 31 March 2022 | | 492,028 | 286,044 | 689,806 | 147,844 | 1,938,441 | 3,554,163 | |
| | | | | | | | | |
| Accumulated depreciation |
| | | | | | ||
| At 1 April 2021 | | 290,932 | 70,078 | 177,574 | 100,907 | - | 639,491 | |
| Depreciation for the year | 8,394 | 16,652 | 86,593 | 6,549 | - | 118,188 | ||
| Depreciation eliminated on disposal | - | - | - | (500) | - | (500) | ||
| At 31 March 2022 | | 299,326 | 86,730 | 264,167 | 106,956 | - | 757,179 | |
| | | | | | | | | |
| Net book value |
| | | | | | | |
| Net book value at 31 March 2022 | | | | | | | ||
| 192,702 | 199,314 | 425,639 | 40,888 | 1,938,441 | 2,796,984 | |||
44. Right-of-use assets
The net book value and depreciation charge for right-of-use assets by class of underlying asset is as follows:
| | | | | | | | | Motor | |
| | | | | | Buildings | Restorations | Equipment | vehicles | Total |
| | | | | | £ | £ | £ | £ | £ |
| Cost |
| | | | | | | | |
| At 1 April 2022 | | | | 2,363,240 | - | 27,021 | 169,120 | 2,559,381 | |
| Additions | | | | | 4,302,717 | - | 124,707 | 46,050 | 4,473,474 |
| Disposals | | | | | (566,093) | - | (27,021) | - | (593,114) |
| At 31 March 2023 | | | | 6,099,864 | - | 124,707 | 215,170 | 6,439,741 | |
| | | | | | | | | | |
| Accumulated amortisation |
| | | | | | | ||
| At 1 April 2022 | | | | 267,833 | - | 20,872 | 12,474 | 301,179 | |
| Depreciation for the year | | | 821,204 | - | 5,539 | 60,720 | 887,463 | ||
| Depreciation eliminated on disposal | | (323,320) | - | (21,215) | - | (344,535) | |||
| At 31 March 2023 | | | | 765,717 | - | 5,196 | 73,194 | 844,107 | |
| | | | | | | | | | |
| Net book value |
| | | | | | | | |
| At 31 March 2023 | | | | 5,334,147 | - | 119,511 | 141,976 | 5,595,634 | |
| | | | | | | | | Motor | |
| | | | | | Buildings | Restorations | Equipment | vehicles | Total |
| | | | | | £ | £ | £ | £ | £ |
| Cost |
| | | | | | | | |
| At 1 April 2021 | | | | 530,867 | - | 27,021 | - | 557,888 | |
| Additions | | | | | 1,832,373 | - | - | 169,120 | 2,001,493 |
| At 31 March 2022 | | | | 2,363,240 | - | 27,021 | 169,120 | 2,559,381 | |
| | | | | | | | | | |
| Accumulated amortisation |
| | | | | | | ||
| At 1 April 2021 | | | | 105,185 | - | 18,820 | - | 124,005 | |
| Amortisation for the year | | | 162,648 | - | 2,052 | 12,474 | 177,174 | ||
| At 31 March 2022 | | | | 267,833 | - | 20,872 | 12,474 | 301,179 | |
| | | | | | | | | | |
| Net book value |
| | | | | | | | |
| At 31 March 2022 | | | | 2,095,407 | - | 6,149 | 156,646 | 2,258,202 | |
45. Investment in subsidiary undertakings
| Investments in Company undertakings are stated at cost. | | | | |||||
| | | | | | | | Year ended 31 | Year ended 31 |
| Cost |
| | | | | | March 2023 | March 2022 |
| | | | | | | | £ | £ |
| At 1 April | | | | | | | 173 | 88 |
| Additions | | | | | | | - | 85 |
| At 31 March | | | | | | 173 | 173 | |
The Company's subsidiary undertakings at the year-end are as follows:
| | | | Country of | Registered |
| Principal | Shareholding |
| |
| Investment | incorporation | office |
| activity | 2023 | 2022 | Interest | ||
| Saietta Sunderland Plant Limited (formerly Saietta Motorcycles Limited) | England and Wales | Building 210 Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE | Trading | 100% | 100% | Direct | |||
| | | | | ||||||
| | | | | ||||||
| | | | | | | | |||
| Saietta LDE Limited (formerly Saietta Racing Limited) | England and Wales | Building 210 Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE | Dormant | 100% | 100% | Direct | |||
| | | | | ||||||
| | | | | ||||||
| | | | | | | | | ||
| Propel B.V. | Netherlands | Moleneind 23-A, 1241NG Kortenhoef, Netherlands | Discontinued | 100% | 100% | Indirect | |||
| | | | | | | | | ||
| Saietta Holding B.V. | Netherlands | Moleneind 23-A, 1241NG Kortenhoef, Netherlands | Trading | 100% | N/A | Indirect | |||
| | | | | | | | | ||
| Saietta Traction Holdings B.V. | Netherlands | Moleneind 23-A, 1241NG Kortenhoef, Netherlands | Trading | 100% | N/A | Indirect | |||
| | | | | | | | | ||
| Saietta RetroMotion B.V. (formerly Saietta Refit B.V.) | Netherlands | Moleneind 23-A, 1241NG Kortenhoef, Netherlands | Discontinued | 100% | N/A | Indirect | |||
| | | | | | | | | ||
| Saietta Europe B.V. | Netherlands | Watermanstraat 40, 7324AH Apeldoorn, Netherlands | Trading | 100% | N/A | Indirect | |||
| | | | | | |||||
| | | | | | |||||
Saietta RetroMotion B.V. ceased operations in January 2023.
Propel B.V. discontinued operations in February 2023 and is presented as a disposal group held for sale as at 31 March 2023.
46. Inventories
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Raw materials and work in progress | | | 132,298 | | 297,585 | |||
Finished goods include an amount of £16,000 (2022: £31,510) carried at fair value less costs to sell.
47. Financial and non-financial assets
| (a) Cash and cash equivalents |
| | | Year ended 31 | | Year ended 31 | ||
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Cash in hand and at bank | | | | 7,084,691 | | 17,883,118 | ||
| (b) Trade and other receivables |
| | Year ended 31 | | Year ended 31 | |||
| | | | | | | March 2023 | | March 2022 |
| Non-current: | | | | | £ | | £ | |
| Other debtors | | | | | 134,526 | | 734,526 | |
| | | | | | | 134,526 | | 734,526 |
| Current: | | | | | | | | |
| Trade debtors | | | | | 1,072,940 | | 670,945 | |
| Other debtors | | | | | 485,771 | | 1,742,568 | |
| R&D tax credit | | | | | 775,481 | | 574,368 | |
| VAT recoverable | | | | | 533,539 | | 244,632 | |
| | | | | | | 2,867,731 | | 3,232,513 |
| | | | | | | | | |
| | | | | | | 3,002,257 | | 3,967,039 |
The ECL model is required to be applied to the intercompany loans receivable from subsidiary companies, which are held at amortised cost. Please refer to note 1 of the parent company financial statements for the detail on the impact and the financial assets accounting policy included in this note.
| (c) Prepayments and accrued income |
| | Year ended 31 | | Year ended 31 | |||
| | | | | | | March 2023 | | March 2022 |
| Non-current: | | | | | £ | | £ | |
| Prepayments and accrued income | | | 119,590 | | 101,825 | |||
| | | | | | | 119,590 | | 101,825 |
| Current: | | | | | | | | |
| Prepayments and accrued income | | | 3,017,464 | | 886,675 | |||
| | | | | | | 3,017,464 | | 886,675 |
| | | | | | | | | |
| | | | | | | 3,137,054 | | 988,500 |
| | | | | | | | | |
| (d) Amounts due from subsidiaries |
| | Year ended 31 | | Year ended 31 | |||
| | | | | | | March 2023 | | March 2022 |
| Non-current: | | | | | £ | | £ | |
| Amounts due from subsidiaries | | | 1,774,525 | | 1,700,491 | |||
| | | | | | | 1,774,525 | | 1,700,491 |
| Current: | | | | | | | | |
| Amounts due from subsidiaries | | | 2,612,104 | | 5,473,694 | |||
| | | | | | | 2,612,104 | | 5,473,694 |
| | | | | | | | | |
| | | | | | | 4,386,629 | | 7,174,185 |
Included within non-current amounts due from subsidiaries is a balance of £1,774,525 (2022: £1,700,491) due in respect of a loan extended to subsidiary, Saietta Traction Holdings B.V. on 8 November 2021. The loan is unsecured and repayable on demand after 5 years from the date on which the loan was extended. Interest on the loan accrues at a rate of 0.5% per annum.
Remaining amounts due from subsidiaries are repayable on demand and are unsecured. The Company balance sheet includes intercompany loans with two subsidiaries of the Company that have impairments in the year: specifically, Propel BV, where an industrialisation partner is being sought and Saietta Europe BV, where activities were transferred to ConMet. The impairments in the subsidiaries themselves are indicative that sufficient funds will not be generated within those subsidiaries to extinguish the intercompany balances with the Company. The impairments have been determined after applying discount rates appropriate for the risk profile of future economic flows from the potential arrangements with industrialisation partners in the case of Propel BV and the ConMet licence payments in the case of Saietta Europe BV. Specifically discount rates of 10% and 11.8% have been applied and impairments with a value of £6,275,604 and £6,536,249 made for Propel BV and Saietta Europe BV respectively.
The impaired value for the intercompany loan from Saietta Europe BV was determined in accordance with a model of its value in use whilst the impaired value for the intercompany loan from Propel BV was determined according to recoverable amount.
| (e) Other financial assets |
| | | | Year ended 31 | | Year ended 31 | ||
| | | | | | | | March 2023 | | March 2022 |
| Non-current: | | | | | | £ | | £ | |
| Loan receivable from associate | | | | 500,000 | | - | |||
The loan to associate Saietta VNA (Private) Limited is for up to £1,000,000 and can be repaid at any time with one month's notice. The term is until April 2028 and the interest rate is 7.5% starting to accrue in April 2024. A further £500,000 is drawn down in August 2023.
48. Trade and other payables
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| | | | | | | | £ | | £ |
| Current: | | | | | | | | | |
| Trade creditors | | | | | | 1,056,512 | | 867,043 | |
| Social security and other taxes | | | | 200,532 | | 1,489,057 | |||
| Pension due | | | | | | 58,225 | | 20,224 | |
| Accruals and deferred income | | | | | 355,613 | | 348,612 | ||
| Other creditors | | | | | | 790,194 | | 2,289,319 | |
| | | | | | | | 2,461,076 | | 5,014,255 |
| | | | | | | | | | |
| Lease liabilities |
| | | | | | | | |
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| Current: | | | | | | | £ | | £ |
| Lease liabilities | | | | | | 1,086,440 | | 259,630 | |
| | | | | | | | 1,086,440 | | 259,630 |
| Non-current: | | | | | | | | | |
| Lease liabilities | | | | | | 4,975,575 | | 2,029,485 | |
| | | | | | | | 4,975,575 | | 2,029,485 |
| | | | | | | | | | |
| | | | | | | | 6,062,015 | | 2,289,115 |
Included within lease liabilities are the following amounts:
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| | | | | | | | £ | | £ |
| | | | | | | | | | |
| Due within one year | | | | | | 1,086,440 | | 259,630 | |
| Due in more than one but not more than two years | | | 773,474 | | 366,593 | ||||
| Due in more than two but not more than five years | | | 2,131,345 | | 907,618 | ||||
| Due after five years | | | | | | 2,070,756 | | 755,274 | |
| | | | | | | | 6,062,015 | | 2,289,115 |
Liabilities for financial guarantees
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| | | | | | | | £ | | £ |
| Current: | | | | | | | | | |
| Liabilities for financial guarantees | | | | - | | 41,833 | |||
49. Financial instruments
Risk Management objectives
The Board has overall responsibility for the determination of the Company's risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the company's competitiveness and flexibility. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of Directors.
The Company is exposed to the following financial risks:
a. Credit risk
b. Liquidity risk
c. Interest rate risk
(i) Principal financial instruments
The Company is exposed to risks that arise from its use of financial instruments. The principal financial instruments used by the company, from which financial instrument risk arises, are as follows:
a. Trade and other receivables
b. Cash and cash equivalents
c. Trade and other payables
d. Fixed rate hire purchase agreement (classified within lease liabilities)
e. Investments in unquoted equity securities
(ii) Financial instruments by category
Financial assets
| | | | | | Amortised cost | |
|
| | | | | | |
| | | | | | 2023 | 2022 |
|
| | | | | £ | £ |
| Cash and cash equivalents | | | 7,084,691 | 17,883,118 | ||
| Trade and other receivables | | | 1,693,237 | 3,148,039 | ||
| Amounts due from subsidiaries | | 4,386,629 | 7,174,185 | |||
| Loan to associate | | 500,000 | - | |||
| Total financial assets |
| | | 13,664,557 | 28,205,342 | |
| Financial liabilities |
| | | | | | Fair value through | ||
|
| | | | | Amortised cost |
| profit and loss | ||
|
| | | | | | | | | |
| | | | | | 2023 | 2022 |
| 2023 | 2022 |
|
| | | | | £ | £ |
| £ | £ |
| Trade and other payables | | | 2,202,319 | 3,156,362 | | - | - | ||
| Lease liabilities | | | | 6,062,015 | 2,289,115 | | - | - | |
| Liabilities for financial guarantees | | - | - | | - | 41,833 | |||
| Total financial liabilities |
| | 8,264,334 | 5,445,477 |
| - | 41,833 | ||
 |
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables, and loans and borrowings.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximates their fair value.
(iv) Financial instruments measured at fair value
The fair value hierarchy of financial instruments measured at fair value is provided below.
| Financial liabilities |
| Level 1 | Level 2 | Level 3 | |||
|
| | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
|
| | £ | £ | £ | £ | £ | £ |
| Liabilities for financial guarantees | | | | | | | |
| - | - | - | - | - | 41,833 | ||
There were no transfers between levels during the year.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement of level 2 and level 3 financial instruments, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below.
| | | | | | | | |
| Financial instrument | Valuation technique |
|
| Significant |
| Inter-relationship | |
|
| used |
|
| unobservable inputs | between key | ||
|
|
|
|
|
|
| unobservable inputs | |
|
|
|
|
|
|
| and fair value | |
| | | | | | | | |
| Equity | Recognised at cost and adjusted thereafter for the post- acquisition change in the investor's share of the investee's net assets. | Not applicable. | Not applicable. | ||||
| investments |
| | | | |||
|
|
| | | | |||
| | | | | | | | |
| | | | | | | | |
| Liabilities for | Discounted cashflow model using the difference between market rates of interest and the rate per the loan note instrument adjusted for probability of default. | Not applicable. | Not applicable. | ||||
| financial |
| | | | |||
| guarantees |
| | | | |||
|
|
| | | | |||
| | | | | | | | |
 |
(iv) Financial instruments measured at fair value (continued)
There were no changes to the valuation techniques during the year.
The reconciliation of the opening and closing fair value balance of level 3 financial instruments is provided below:
| | | | | | | Year ended 31 | Year ended 31 |
| | | | | | | March 2023 | March 2022 |
| | | | | | | £ | £ |
| Balance at beginning of financial year | | | | | 41,833 | - | |
| Additions to financial liabilities during the year | | | | - | 78,058 | ||
| Amortisation recognised | | | | | (41,833) | (36,225) | |
| Balance at end of financial year | | | | | - | 41,833 | |
On 1 December 2021, the Company entered into an agreement to guarantee the obligations of its transport provider, Livingstone Aviation Limited in exchange for preferential access to their services.
Under IFRS9, the financial guarantee contracts was treated as a financial liability and was initially recognised at fair value. Subsequently, the financial guarantee contract was measured at the higher of the IFRS 9 expected credit loss (ECL) allowance and the amount initially recognised less any cumulative amount of income/amortisation recognised.
Subsequent to year end Livingstone Aviation Limited disposed of its aircraft and at that moment the Company was released fully from the financial guarantee.
General objectives, policies and processes
The Board has overall responsibility for the determination of the Company's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company's finance function. The Board receives monthly reports from the Company Financial Controller through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets. The Company's internal auditors also review the risk management policies and processes and report their findings to the Audit & Risk Committee.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are set out below:
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The ability to do this relies on the Company expanding its customer base, collecting its trade receivable, completing financings in a timely manner and by maintaining sufficient cash and cash equivalents on hand.
The following tables show the contractual maturities of financial liabilities:
| As at 31 March 2023 |
| | | Total | Less than 1 year | Between 1 and 5 years | Over 5 years |
|
| | | | £ | £ | £ | £ |
| Trade and other payables | | | 1,846,706 | 1,845,706 | - | - | |
| Lease liabilities | | | | 7,027,635 | 1,331,773 | 3,498,728 | 2,197,134 |
| Accrued liabilities | | | | 355,613 | 355,613 | - | - |
| | | | | 9,229,954 | 3,534,092 | 3,498,728 | 2,197,134 |
| | | | | | | | |
| As at 31 March 2022 |
| | | Total | Less than 1 year | Between 1 and 5 years | Over 5 years |
|
| | | | £ | £ | £ | £ |
| Trade and other payables | | | 3,156,362 | 3,156,362 | - | - | |
| Accrued liabilities | | | | 348,612 | 348,612 | - | - |
| Lease liabilities (restated)¹ | | | 2,742,432 | 344,202 | 1,360,636 | 1,037,594 | |
| Liabilities for financial guarantees | | 41,833 | - | 41,833 | - | ||
| | | | | 6,289,239 | 3,849,176 | 1,402,469 | 1,037,594 |
1. The Liquidity risk table has been restated to include the undiscounted contractual cashflows for the lease liabilities for 2022 which were omitted in the prior year.
Liquidity risk arises from the Company's management of working capital and the continued availability of its other funding facilities. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due. The company actively manages its cash generation and maintains sufficient cash holdings to cover its immediate obligations but is always in close contact with key shareholders who would assist the Company if required.
Market risk
The Company's products are focused on meeting certain current or expected requirements of individual markets and these requirements could evolve before the Company is able to complete its licensing agreements.
The Company periodically reviews the markets, and demands expected of products to minimize the risk to its business. It also reviews new markets to identify future demand outside of the initial intended markets. As the Company releases products, it will continue to carry out an assessment of the market risk it is exposed to and will carry out sensitivity analysis on the impact that each risk will have on the product(s)' performance and the wider impact on the Company's income statement and its financial position.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument or customer contract fails to meet its obligations. The Company is mainly exposed to credit risk from credit sales. At 31 March 2023 the company has net trade receivables of £1,072,940 (2022: £670,945 (last year disclosed as £734,526)).
The Company is exposed to credit risk in respect of credit sales such that, if one or more customers encounter financial difficulties, this could materially and adversely affect the company's financial results. The Company attempts to mitigate credit risk by assessing the creditworthiness of customers and closely monitoring payment history. In a limited number of customer contracts, an initial payment is secured which helps to mitigate the overall credit risk of a project.
The Company applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.
The following provision matrix is used to determine the initial expected credit losses. The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Company's customers. The Company has identified the gross domestic product (GDP), unemployment rate and inflation rate as the key macroeconomic factors in the countries where the Company operates.
| None past due | | 2.3% of carrying value (2022: 1%) | |
| 30 days past due | | 17% of carrying value (2022: 8.6%) | |
| 30-60 days past due | 100% of carrying value (2022: 9.6%) | ||
| 60-90 days past due | 100% of carrying value (2022: 100%) | ||
| >90 days past due | | 100% of carrying value (2022: 100%) | |
Although the Company has its own terms and conditions with a 30 day payment expectation, under some contracts it accepts longer terms with suitable customers. Should a trade debtor exceed the payment terms, then the Company engages to ensure swift payment.
The maximum exposure to loss arising from trade accounts receivable is equal to their total carrying value.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.
| The maximum exposure to credit risk is as follows: | | | Year ended 31 | Year ended 31 | |||||
| | | | | | | | | March 2023 | March 2022 |
| | | | | | | | | £ | £ |
| Cash on deposit | | | | | | | 7,084,691 | 17,883,118 | |
| Trade receivables | | | | |
|
| 1,072,940 | 670,945 | |
| Other receivables | | | | | | | 620,297 | 2,477,094 | |
| Amounts owed by subsidiaries | | | | | 4,386,629 | 7,174,185 | |||
| Loan advanced to associate | | | | | 500,000 | - | |||
| | | | | | | | | 13,664,557 | 28,205,342 |
| The ageing of trade receivables at the year-end date was: | | | Year ended 31 | Year ended 31 | |||||
| | | | | | | | | March 2023 | March 2022 |
| | | | | | | | | £ | £ |
| Current | | | | | | | | 1,082,162 | 518,690 |
| More than 30 days past due | | | | | | - | 110,600 | ||
| More than 60 days past due | | | | | | 7,121 | 13,614 | ||
| More than 120 days past due | | | | | | 17,916 | 28,041 | ||
| | | | | | | | | 1,107,199 | 670,945 |
Balances with maturity requiring a credit loss provision were individually reviewed and the ultimate conclusion that there would be full recoverability thereby determined.
The Company has made unsecured loans to its subsidiary companies. Although the loans are repayable on demand, they are unlikely to be repaid until the projects become successful and the subsidiaries start to generate revenues. The method of assessment of the expected credit loss arising on intercompany loans is detailed in note 49 of the Company financial statements.
The maximum exposure to loss arising from amounts owed by subsidiaries is equal to their total carrying value. The loan receivable from Propel B.V. has been fully impaired by £6,275,604. The loan receivable from Saietta Europe B.V. has been impaired by £6,536,249.
Capital risk management
Whilst the Group has no bank debt, it's capital structure comprises cash from the issuance of equity both at the time of its initial public offering and subsequently and finance lease obligations arising from its right of use assets. This constitutes the capital under management. The company has low gearing with a debt equity ratio of 12%.
The Company's objectives when maintaining capital are to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
All working capital requirements are financed from existing cash.
The Company sets the amount of capital it requires in proportion to risk. The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
Interest rate risk
The Company's activities expose it to the financial risks of interest rates. The Company reviews its risk management strategy on a regular basis and if appropriate it will enter into derivative financial instruments in order to manage interest rate risk. At present, the Company does not have any financial leases or borrowings that have a floating interest rate, however should it take on such facilities where this is the case, then it will review the risk exposure that it has.
The Company analyses the interest rate exposure on at regular intervals. A sensitivity analysis is performed by applying a simulation technique to the liabilities that represent major interest-bearing positions. Various scenarios are run taking into consideration refinancing, renewal of the existing positions, alternative financing and hedging. Based on the simulations performed, the impact on profit or loss and net assets of a 100 basis-point shift (being the maximum reasonable expectation of changes in interest rates) would not have any financial impact as the Company does not have any interest-bearing debt.
All borrowing is approved by the Board of Directors.
Foreign currency risk
Foreign exchange risk arises when the Company enters into transactions denominated in a currency other than its functional currency. The Company's policy is, where possible, to settle liabilities denominated in its functional currency with the cash generated from its own operations in that currency. Where the Company has liabilities denominated in a currency other than its functional currency (and has insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be transferred from elsewhere in the Group.
In order to monitor the continuing effectiveness of this policy, the Board receives a monthly forecast, analysed by the major currencies held by the Company, of liabilities due for settlement and expected cash reserves.
The Company aims to fund expenses and investments in the respective currency and to manage foreign exchange risk at a local level by matching the currency in which revenue is generated and expenses are incurred.
The following table sets forth information relating to foreign currency exposure as at 31 March 2023:
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| | | | | | | | Euros | | Euros |
| | | | | | | | | | |
| Financial assets | | | | | | | 1,774,525 | | 1,700,491 |
| Financial liabilities | | | | | | (85) | | (85) | |
| Net exposure asset | | | | | | | 1,774,440 | | 1,700,406 |
An increase of 5% in the Euro - GBP exchange rate would have the effect of the GBP amount by £89,380.
50. Investment in associate
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| Saietta VNA (Private) Limited |
| | | | £ | | £ | ||
| Investment held at cost | | | | | | 267,784 | | - | |
During the year, the company obtained a 49% investment in Saietta VNA (Private) Limited.
51. Other gains and losses
| | | | | | | | Year ended 31 | | Year ended 31 | |
| |
| | | | | | | | March 2023 | | March 2022 | |
| |
| | | | | | | | £ | | £ | |
| |
| Loss on other receivable | | | | | | 600,000 | | - | |
| ||
| | | | | | | | | | | |
| |
| Saietta Group Plc entered into an agreement to guarantee the loan for the purchase of an aircraft, in return receiving preferential rates for the use thereof. The aircraft was sold in April 2023 and the deposit of £600,000 paid was not recoverable. |
| |||||||||||
| | ||||||||||||
52. Leases
In the capacity as lessee
The Company's leases are for offices and manufacturing space as well as the purchase of capital equipment used in the day to day operating activities of the business. For all property leases, the period rent is fixed over the lease term.
The Company also leases certain items of plant and equipment. In some contracts for services with distributors, those contracts contain a lease of vehicles. Leases of plant, equipment and vehicles comprise only fixed payments over the lease terms.
All current lease payments are fixed in nature and not subject to any clauses which allow these payments to vary under certain conditions.
| | | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | | March 2023 | | March 2022 |
| | | | | | | | £ | | £ |
| Interest expense | | | | | | 170,755 | | 18,609 | |
| Principal payments | | | | | | 486,227 | | 187,522 | |
| | | | | | | | 656,982 | | 206,131 |
The Company sometimes negotiates break clauses in its property leases. On a case-by-case basis, the Company will consider whether the absence of a break clause would exposes the company to excessive risk. Typically factors considered in deciding to negotiate a break clause include:
· the length of the lease term;
· the economic stability of the environment in which the property is located; and
· whether the location represents a new area of operations for the Company.
At 31 March 2023 the carrying amounts of lease liabilities are reduced by the amount of payments that would be avoided from exercising break clauses because on both dates it was considered reasonably certain that the Company would not exercise its right to exercise any right to break the lease.
53. Reserves
The following describes the nature and purpose of each reserve within equity:
| Reserve |
| Description and purpose |
| | | | |
| |||
| Share capital | Nominal value of share capital subscribed for. | | | | |
| |||||
| Share premium | Amount subscribed for share capital in excess of nominal value. | | | |
| ||||||
| Share options reserve | Used to record the assessed fair value of equity-settled options issued as share based payment for services received by the consolidated entity. |
| |||||||||
| | |||||||||||
| Accumulated losses | All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere. | | |||||||||
| | | | | | | | | | |||
|
| |||||||||||
54. Share capital
| Share capital and share premium |
| | | | | |||
| | | | | | | | Year ended 31 | Year ended 31 |
| Allotted, issued and fully paid: | | | | March 2023 | March 2022 | |||
| Number: | | Type: | | Nominal | | | £ | £ |
| | | | | value: | | | | |
| 102,917,675 | Ordinary Shares | £0.0011 | | | 113,209 | - | ||
| | | | | | | | | |
| 85,051,953 | Ordinary Shares | £0.0011 | | | - | 93,557 | ||
| | | | | | | | | |
| | | | | | | Share | Share | |
| | | | | | Number | capital | premium | Total |
| | | | | | of shares | £ | £ | £ |
| | | | | | | | | |
| Balance at 1 April 2021 | | | 519,205,742 | 51,921 | - | 51,921 | ||
| | | | | | | | | |
| Consolidation of shares | | | (472,005,220) | - | - | - | ||
| Issue of shares | | | | 29,320,940 | 32,245 | 35,145,382 | 35,177,627 | |
| AIM listing costs offset against share premium | - | - | (2,868,972) | (2,868,972) | ||||
| Shares issued on exercise of employee share options | 5,530,491 | 6,091 | 58,165 | 64,256 | ||||
| Shares issued on conversion of convertible loan notes | 3,000,000 | 3,300 | 2,336,700 | 2,340,000 | ||||
| | | | | | | | | |
| Balance at 31 March 2022 | | | 85,051,953 | 93,557 | 34,671,275 | 34,764,832 | ||
| | | | | | | | | |
| Issue of shares | | | | 17,101,450 | 18,812 | 23,581,189 | 23,600,001 | |
| Share issue costs offset against share premium | - | - | (1,590,469) | (1,590,469) | ||||
| Shares issued on exercise of employee share options | 764,272 | 840 | 8,331 | 9,171 | ||||
| | | | | | | | | |
| Balance at 31 March 2023 | | | 102,917,675 | 113,209 | 56,670,326 | 56,783,535 | ||
The cancellation of share premium was approved by shareholder resolution on 25 March 2021.
On 18 June 2021, the Company passed a resolution to consolidate its Ordinary share capital. Prior to the consolidation, there were 519,205,742 Ordinary shares with a nominal value of £0.0001 per share. In exchange for these share, existing shareholders were issued 47,200,522 Ordinary shares with a nominal value of £0.0011.
On 7 July 2021, the Company raised gross proceeds of £35,177,628 through the placing of 29,314,690 new Ordinary shares (the "Placing Shares") with new and existing investors at a price of £1.20 per Placing Share. An amount equal to the nominal value of the Placing Shares was credited to share capital, with the proceeds raised in excess of this nominal value being credited to share premium. The Placing Shares rank pari passu with the Company's existing ordinary shares.
On 7 July 2021, upon admission to the AIM market, 9,919,457 share options automatically vested pursuant to the terms of their issue. Of these shares, a total of 5,530,491 shares ("New Ordinary Shares") were exercised immediately by the option holders. Of these, 4,437,821 options were exercised by the option holders at a strike price of £0.012 resulting in the issue of 4,437,821 new Ordinary shares with a nominal value of £0.011p. As a result, £4,882 was credited to share capital and the amount received in excess of the nominal value, £48,372, was credited to share premium.
The remaining 1,092,670 options were exercised by the option holders at a strike price of £0.01 resulting in the issue of 1,092,670 new Ordinary shares with a nominal value of £0.011p. As a result, £1,202 was credited to share capital and the amount received in excess of the nominal value, £9,725, was credited to share premium.
The New Ordinary Shares rank pari passuwith the Company's existing ordinary shares.
On 30 March 2022, 6,250 share options vested pursuant to the terms of their issue. These options were exercised by the option holders at a strike price of £0.012 resulting in the issue of 6,250 new Ordinary shares with a nominal value of £0.011p. As a result,
£7 was credited to share capital and the amount received in excess of the nominal value, £68, was credited to share premium.
On 3 August 2022, the Company raised net proceeds of £22,316,001, after broker fees and other expenses of £1,284,000, through the placing of 17,101,450 new Ordinary Shares of £0.0011 each in the capital of the Company (the "Placing Shares") with new and existing investors at a price of £1.38 per share. An amount equal to the nominal value of the Placing Shares was credited to share capital, with the proceeds raised in excess of this nominal value being credited to share premium.
The Placing Shares rank pari passuwith the Company's existing Ordinary shares.
During the period, 764,272 share options which had vested pursuant to the terms of their issue were exercised by option holders at a strike price of £0.012 resulting in the issue of 764,272 new Ordinary shares ("New Ordinary Shares") with a nominal value of
£0.011p. As a result, £840 was credited to share capital and the amount received in excess of the nominal value, £8,331, was credited to share premium.
The New Ordinary Shares rank pari passuwith the Company's existing ordinary shares.
54. Share-based payments
| | | | | | | | | Share option |
| | | | | | | | | reserve |
| | | | | | | | | £ |
| Balance at 1 April 2021 | | | | | | 7,318,820 | ||
| Share based payments | | | | | | 4,899,171 | ||
| Balance at 31 March 2022 | | | | | | 12,217,991 | ||
| Share based payments | | | | | | 2,397,620 | ||
| Balance at 31 March 2023 | | | | | | 14,615,611 | ||
Common share options
Options have been granted to shareholders, directors and employees to purchase common shares. These options generally vest over a period of up to four years from grant date and are exercisable in the event of a listing.
Details of the common option plans are as follows:
| | | | | | For the year ended 31 March 2023 | For the year ended 31 March 2022 | ||
| | | | | | ||||
| | | | | | | Weighted | | Weighted |
| | | | | | | average | | average |
| | | | | | Number | exercise price | Number | exercise price |
| | | | | | # | £ | # | £ |
| | | | | | | | | |
| Outstanding at beginning of year | | 6,233,273 | 0.012 | 10,826,072 | 0.010 | |||
| Granted | | | | | 3,000,000 | 0.012 | 8,577,394 | |
| Lapsed | | | | | (30,000) | 0.012 | (616,370) | |
| Vested | | | | | (3,277,030) | 0.012 | (12,553,823) | |
| Outstanding at end of year | | | 5,926,243 | 0.012 | 6,233,273 | 0.012 | ||
The fair value of each option granted was estimated on the grant date using the Black-Scholes, and where appropriate the Monte Carlo simulation option-pricing model with the following average assumptions:
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Exercise price at grant date | | | | £0.01 | | £0.01 | ||
| Expected life (in years) | | | | 2 | | 3 | ||
| Risk-free interest rate | | | | 3.71% | | 0.58% | ||
| Expected volatility | | | | | 85% | | 87.05% | |
| Weighted average share price | | | 152.99 pence | | 92.56 pence | |||
The expected volatility is based on the historic volatility (based on the share price) of a comparator company with publicly available share prices.
The risk-free interest rate is based on the average return on 2 year UK Gilts.
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Cost of options vesting in the year | | | 2,397,620 | | 4,899,171 | |||
In the year ended 31 March 2023 an amount of £61,676 (2022: £161,951), representing the charge for options related to employees whose costs are allocated to research and development and capitalised as internally generated development costs was included in additions to intangible assets, whilst the remainder of the cost of options vesting was charged to the profit and loss account. A further amount of £1,590,469 (2022: £330,886) was debited in respect of share issue costs offset against share premium.
The total cost of options vesting in the period has been classified as a movement in the share option reserve.
56. Related party transactions
During the year the Company recharged the following costs to its subsidiaries:
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Saietta Sunderland Plant Limited | | | 1,394,430 | | - | |||
| Propel B.V. | | | | | 3,640 | | 10,765 | |
| Saietta Europe B.V. | | | | | 201,462 | | 6,082 | |
| | | | | | | 1,599,532 | | 16,847 |
Amounts owed by the Company's subsidiaries are disclosed in note 47.
The Directors consider that no one party controls the Company.
57. Capital commitments
At 31 March 2023, the Company has capital commitments as follows:
| | | | | | | Year ended 31 | | Year ended 31 |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Contracted for but not provided in these financial statements | | | | |||||
| Contracted amounts for the purchase of assets | | 1,094,320 | | 1,100,000 | ||||
| Loan to associate | | | | | 500,000 | | - | |
| | | | | | | 1,594,320 | | 1,100,000 |
Capital commitments comprises contracted amounts for the purchase of assets and a loan contract with associate.
The Company is commited to advancing a further £500,000 to its associate, Saietta VNA (Private) Limited, in August 2023. This amount is due at the earlier of available cash or 5 years (April 2028).
58. Events after the reporting date
On 3rd April 2023, the Company received an order for 3,000 eDrives from Ayro Inc. with a value of approximately £5 million. On 17th April 2023, Mr Wicher Kist resigned as a director of Saietta Group Plc.
On 1st August 2023 the Company signed a suite of contracts to replace the Joint Commercialisation and Development Agreement ("JCDA") with Consolidated Metco Inc ("ConMet").
Under these new arrangements ConMet and its affiliates paid Saietta approximately ?3.3 million comprised of:
o An upfront cash fee of approximately ?2.7 million as consideration for the assignment of jointly developed intellectual property ("IP")
o A further sum of ?0.6 million for an agreed list of machinery and equipment being transferred by Saietta
The parties also entered into a licence agreement under which Saietta has granted exclusive and non-exclusive licences over its existing IP in consideration for the payment of 2.5% of an agreed uplift to the product cost of future IWG and IWM sales incorporating Saietta's licensed IP, capped at ?20 million.
59. Related parties
| Trading transactions |
| | | | Year ended 31 | | Year ended 31 | |
| | | | | | | March 2023 | | March 2022 |
| | | | | | | £ | | £ |
| Saietta VNA Private Limited |
| | | | | | | |
| Revenue | | | | | | 823,866 | | - |
| | | | | | | | | |
| Loans to related parties |
| | | | | | | |
| | | | | | | | | |
| Saietta VNA Private Limited |
| | | | 500,000 | | - | |
The loan to associate Saietta VNA (Private) Limited is for up to £1,000,000 and can be repaid at any time with one month's notice. The term is until April 2028 and the interest rate is 7.5% starting to accrue in April 2024. A further £500,000 is drawn down in August 2023.
| Saietta Sunderland Plant Limited |
| | | 1,601,845 | | - | ||
| Saietta Traction Holdings B.V. |
| | | 1,774,525 | | 1,700,491 | ||
| Saietta Europe B.V. |
| | | | 1,011,714 | | 2,800,879 | |
| Propel B.V. |
| | | | | - | | 2,672,874 |
With the exception of the loan to Saietta Traction Holdings B.V. which earns interest at 0.5%, these loans are non-interest bearing.
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