TIDMSED
RNS Number : 6528Q
Saietta Group PLC
19 October 2023
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 which forms part of UK
law by virtue of the European Union (Withdrawal) Act 2018
("MAR").
19 October 2023
Saietta Group Plc
("Saietta", the "Company" or the "Group")
Full Year Results Ending March 2023 & Operational Update
Saietta Group plc (AIM: SED), the multi-national business which
designs, engineers and manufactures complete electric drivetrain
(eDrive) solutions for electric vehicles , announces its full year
results for the 12 months ended 31 March 2023 and provides an
operational and financial update.
Since floating on the London Stock Exchange in July 2021, in 28
months Saietta has transformed from being just an axial flux
technology (AFT) R&D company into a designer of a range of
complete eDrive solutions for vehicle manufacturers, secured a
major global OEM (original equipment manufacturer) as its launch
customer for a range of their vehicle lines, established leading
manufacturing facilities in both Sunderland and Delhi (through its
JV partner Saietta VNA) and appointed high quality local supply
chains.
The Company believes that it has reached its inflection point
for its core business based on its proven AFT eDrives. The orders
in place provide a firm launch pad and the Board is confident that
it is now able to convert a significant proportion of its rapidly
growing sales pipeline into firm commercial orders, thereby
leveraging many months of development work and investment in its
design and manufacturing capabilities.
This communication also sets out a very significant step-change
business opportunity for Saietta by industrialising a proven
all-new second model line based on its new in-house radial flux
technology (RFT) motor family.
The Company has resolved the frustrating technical accountancy
issues around accounting for the post balance sheet event of the
new agreements with Consolidated Metco Inc ("ConMet") which were
signed on 1st August 2023 and has accordingly published its fully
audited accounts for the year ended 31 March 2023.
Financial highlights for FY ending March 2023
-- Revenue and Other Income from continuing operations increased
132% to GBP4.8m (2022: GBP2.1m)
-- Revenue and Other Income from continuing and discontinued
operations increased 19% to GBP5.1m (2022: GBP4.3m)
-- Revenue and Other Income reduced from previously disclosed
unaudited values by GBP1.2m, of which GBP0.3m relates to the
reclassification of certain revenue as relating to a discontinued
operation and GBP0.9m 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 GBP4.0m by virtue of the reduction in turnover and due
to capitalized development costs being reclassified as expenditure
-- Gross profit of GBP0.7m (2022: GBP0.8m profit) following above
reclassification
-- Adjusted EBITDA loss of GBP14.0m (2022: loss of GBP4.4m) which
excludes exceptional losses from the discontinued activities
of GBP7.9m
-- Statutory Loss before Tax of GBP28.3 million (2022: GBP11.1m)
accounting for all write downs and discontinued activities
-- Cash as at 31 March 2023 of GBP7.2m (2022: GBP18.4m)
-- Total Assets of GBP39.7m at 31 March 2023 (2022: GBP42.7m)
-- Net Assets of GBP29.2m at 31 March 2023 (2022: GBP32.8m)
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 GBP3.2m 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 GBP0.
-- 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 GBP1.2m to GBP0, but also resulting
in an impairment of intangible assets of GBP2.1m. 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 EUR3.3 million, potential additional future
license payments to Saietta of up to EUR20 million, and the
transfer of the relevant project team in the Netherlands to
ConMet which reduced Saietta's annual operating costs by approximately
EUR2 million to EUR0. 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 GBP2.1m.
-- 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 GBP420,000 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 GBP11.2 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 GBP1.2m 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 GBP1.5m 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 GBP0.4m
and, absent other financial resources becoming available, are
deemed to provide the Group sufficient working capital into
December 2023.
The Board believes that the increased scale of the commercial
opportunities from the current sales pipeline, described in the
Operational Update above, presents a unique opportunity to make a
step-change and thereby secure substantial recurring long-term
revenues over a range of high-volume product lifecycles.
Consequently, the Board has concluded that the Company will need
to secure additional funding in Q4 2023 for further working capital
and to generate the financial resources required to fully
capitalize on the potential from the anticipated additional sales
contracts within its pipeline.
The Company will accordingly proactively engage with
stakeholders to explore financing opportunities which may include
an equity raise.
Tony Gott, Executive Chairman of Saietta, said:
"We have finally resolved frustrating technical accountancy
issues around accounting for the post balance sheet event of the
new agreements with Consolidated Metco Inc ("ConMet") which were
signed on 1st August 2023 after our financial year end and released
our fully audited accounts for the year ended 31 March 2023, which
will recommence trading in our shares on AIM.
Saietta has made huge strides since the end of the last
financial year and we believe we have reached the inflection point
for the business. At IPO just 28 months ago we planned to build
Saietta organically based on revenues from sales of our
ground-breaking axial flux technology (AFT) motors before scaling
up into additional product lines. However, the market is
transitioning to electric propulsion much faster than even we
predicted, especially in Asia.
As Saietta has now secured contracts from a leading OEM, the
Board has high confidence that a significant proportion of the
material items in our sales pipeline will mature into commercial
contracts within the current financial year. This includes market
pull from the Indian 2 wheel (2W) sector for Saietta's all-new
eDrives based on our radial flux technology (RFT) motors. This is
highly significant given in the 12 months to September 2023 some
835,000 electric 2W vehicles were registered in India which equated
to approximately 5% of the total 2W registrations, indicating the
scale of opportunity in India as this sector transitions fully to
electric propulsion.
The automotive market globally stands at an unprecedented moment
of disruption, arguably the biggest since vehicles were first
introduced over 120 years ago. With major disruption comes major
commercial opportunity. We passionately believe that Saietta has
the right product breadth and depth, at the right prices, at the
right time, with the right people and the right business partners
to fully capitalize on this huge opportunity.
The Saietta Board has therefore taken the decision to seek
step-change additional funding in part to underpin our current
working capital and, importantly, to also generate the financial
resources required to fully capitalize on the potential from the
anticipated additional contracts within our sales pipeline,
including the huge 2W sector in India. We are open on how best to
achieve this and are commencing discussions with our key investors
to get their advice, but we are determined to appropriately
capitalize the business and maximise the ROI for our
investors."
The financial information set out below does not constitute the
Group's statutory accounts for the year ended 31 March 2023, but is
derived from those accounts. References within the document may
refer to information in the statutory accounts and these will be
sent to shareholders shortly and be published on the Company's
website imminently.
For any further enquiries, please contact:
Saietta Group via FTI
Tony Gott, Executive Chair
David Woolley, Chief Executive Officer
Canaccord Genuity (Nomad and Broker)
Henry Fitzgerald-O'Connor / Harry Pardoe 0207 523 8000
FTI Consulting (Financial PR advisor) Tel: +44 (0) 20 3727 1000
Ben Brewerton / Dhruv Soni saietta@fticonsulting.com
About Saietta Group plc
Listed on the London Stock Exchange's AIM, Saietta is a global
business that designs, develops and manufactures complete electric
drivetrain (eDrive) solutions for established manufacturers of a
broad range of electric vehicles.
Saietta's breakthrough proprietary technologies include AFT
(Axial Flux Technology) and RFT (Radial Flux Technology) motors,
power electronics, powertrain controls, mechanical axles,
transmissions and vehicle control units. Considerable flexibility
is built into the core design, meaning solutions can be quickly and
cost effectively tailored to a specific application.
Saietta works in a highly collaborative way with clients, driven
by the belief that partnership is key to delivering world-class
tailored solutions at pace. Saietta's engineering team takes time
to deeply understand a client's brand, target market sector,
competition and the services they require. Then Saietta develops a
bespoke suite of products and services to fast-track the client to
production with eDrive solutions which deliver a sustainable
competitive advantage.
Chairman's Statement
Saietta has transitioned from its beginnings as an R&D motor
designer to a provider of engineering design services and supplier
of light-duty vehicle e-axle products to OEM's. Such a
transformation within two years of raising funds through an IPO is
an exceptional achievement.
Facilitated primarily by the proceeds from the IPO and
subsequent fund raise, Saietta has made considerable progress in
its core focus lightweight mobility market having secured orders
for design and delivery of light-duty vehicle e-axles to customers
in India and the United States. Saietta remains dedicated to
further securing a number of long-term, high volume OEM
relationships globally.
These achievements have required a considerable amount of
transformation within the business and there have been changes at
Board level and operating level as a consequence.
In particular, whilst the E-Traction acquisition made in
November 2021 brought in new valuable intellectual property and
skills to the Group, it also contained operational activities that
were non-core such as the Retromotion, bus conversion category.
Successfully releasing this activity and deciding to seek an
industrialisation partner to take forward the Netherlands-based
marine operation, Propel, have together made it possible for the
Group to reach the milestones set out with OEM's in the light duty
sector.
The decision regarding Propel has led to an impairment of the
assets in that business unit as there is uncertainty over the
timescale to complete such a transition.
Outlook
Moving from an R&D-focused technology start-up to a
large-scale manufacturer with international sales is clearly a
dramatic transformation and the Group continues to encounter the
challenges commensurate with such. However, its market acceptance
is now firmly in place, which provides a much clearer path towards
its goals and aspirations.
Saietta employees Group-wide have been integral to delivering on
its ambitious growth plans and the Board is confident that our
short- and long-term goals remain achievable. Saietta's ramp up of
delivery of light-duty vehicle e-axle products to our customers
remains firmly in place to ensure the future prosperity of the
Group.
The Board has confidence that the commercial opportunities for
Saietta across global markets and particularly in India remain
readily apparent and the rapid scale-up of its business will allow
it to access these opportunities in the near future.
Chief Executive Officer's Review
This was a challenging transitional year for the Group with
commercial success and operational delivery becoming a dominant
feature of the business as opposed to the research and development
start up phases of the past. Our turnover in the 12 months ended 31
March 2023 increased by 50% to GBP2.1 million (2022: GBP1.4m) 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 GBP3.2m 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 GBP2.1m (2022: GBP1.4m) 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 GBP0.7m (2022: GBP0.8m) 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
GBP1.0m gain on disposal of the intangibles created in the
ConMet projects and GBP1.7m (2022: GBP0.7) 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 GBP1.0m (2022: GBP0.6m).
Administrative expenses
Administrative costs for the year of GBP21.8m (2022:GBP13.1m)
represents an increase of GBP8.7m.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 GBP4.4m in 2022 to
GBP2.3m 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 GBP7.9m (2022: GBP0.05m)
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 GBP4.4m in 2022 to
GBP14.0m 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 GBP25.5m
(2022: GBP15.5m), including intangible assets of GBP10.9m (2022:
GBP8.4m) and property, plant and equipment of GBP8.1m (2022:
GBP3.5m).
Of the increase in intangible assets, internally-generated
development costs and the purchase of intangible assets accounted
for GBP3.3m (2022: GBP3.6m) and GBP1.0m (2022: GBP0.5m)
respectively whilst disposal groups held for sale accounted for
GBP(1.7)m (2022: nil).
Current assets
As at 31 March 2023, current assets amounted to GBP14.2m (2022:
GBP27.2m), including cash balances of GBP7.2m (2022: GBP18.4m).
The principal elements of the decrease in cash were:
-- Gross proceeds through placing and subscription of GBP23.6m
(2022: GBP37.5);
-- Operating cash outflow of GBP18.2m (2022: GBP6.8m);
-- Investing activities including the acquisition of intangibles,
property, plant & equipment and the capitalization of development
costs which totaled GBP10.5m (2022: GBP8.9m); and
-- Movements in working capital of 3.4m outflow (2022: GBP1.0m
outflow).
Directors' Report
The Directors present their report and the consolidated
financial statements for the year ended 31 March 2023. The
Directors who served during the year and their beneficial interest
in the Company's issued share capital at year end were:
Ordinary shares Ordinary shares
Date of appointment Date of of of
resignation GBP0.011 each GBP0.011 each
2023 2022
------------------------- -------------------------- --------------------- ------------------- -------------------
Executive Directors:
Anthony Gott (1) 7 July 2021 N/A 21,739 -
17(th) April
Wicher Kist 23 November 2018 2023 1,313,289 1,295,174
Steven Harrison 22 April 2021 N/A - -
Non-Executive
Directors:
Emmanuel Clair 23 November 2018 N/A 12,777,622 12,603,709
David Wilkinson 7 July 2021 N/A 11,956 8,333
Seshu Bhagavathula 17 December 2021 N/A - -
Devyani Vaishampayan 5 December 2022 N/A - -
(1) On 1 August 2022, Anthony Gott was appointed Executive
Chairman and on the 18(th) April 2023 as Interim Chief Executive
Officer. On 2 October 2023 David Wooley was appointed as Chief
Executive Officer.
Principal Activities
Saietta Group plc is a company registered in England and Wales
that has developed the innovative AFT electric motor, designed to
deliver class-leading performance for its target markets whilst
being low cost and built for mass market production. Saietta's
initial target market is the high volume, fast-growing lightweight
mobility market including motorcycles in Asia.
Review of Business
A review of the business, its development and performance for
the year and its position at the year end, together with the future
prospects of the Group, is contained in the Chairman & Chief
Executive Officer's Report and the Strategic Report.
Going concern
The financial statements have been prepared on a going concern
basis. In adopting the going concern basis, the directors have
considered the financial position of the Group and the Company,
their cash flows and their liquidity position. The Group and
Company's financial risk management objectives and exposures to
liquidity and other financial risks and uncertainties are set out
on pages 15 to 18 of the Group's financial statements. The Group
had net assets of GBP29,189,193 (2022: GBP32,814,791) as at 31
March 2023 and available liquidity of GBP7,247,267 (2022:
GBP18,402,055) 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 GBP3m 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 GBP28,041,921 (2022:
10,782,252). The Directors do not recommend a final dividend this
year (2022: GBPnil).
Research and development costs
In accordance with the policy outlined in note 2, the Group
incurred research and development expenditure of GBP3.3m (2022:
GBP3.8m) in the year. Commentary on the major activities is given
in the Strategic Report.
Financial instruments
The use of financial instruments and financial risk management
policies is covered in the Strategic Report and also in note 33 of
the financial statements.
Substantial shareholdings
At 31 March 2023, the Company had been notified that (other than
Directors) the following were interested in 3% or more of the
issued capital of the Company:
Number of Ordinary % of issued
shares share capital
Amati AIM VCT plc 10,980,174 10.67%
Lawrence Marazzi 5,794,799 5.63%
John Michael Winn 6,326,934 6.15%
Premier Miton Investors 7,122,114 6.92%
Schroder Investment Management 7,167,665 6.96%
Canaccord Genuity Wealth 6,003,963 5.83%
At 18 October 2023, there were 102,917,675 Ordinary shares in
issue.
Governance and the Board
The Board's governance system provides balanced support for the
executive management team in the development of the Group's
strategy and with the need to ensure effective monitoring of its
implementation. The Board and its committees have considered the
significant events of the year and their impact on the Group's
business and reputation.
During the year the Audit & Risk Committee was chaired by
David Wilkinson, the Remuneration Committee was chaired by Devyani
Vaishampayan (previously David Wilkinson) and the Nomination
Committee was chaired by Devyani Vaishampayan (previously David
Wilkinson). The Board remains confident in the work of those
committees and the overall system of governance.
Events after the reporting period
The events after the year end of 31 March 2023 are detailed in
note 36 to the financial statements.
Strategy and future developments
The Group's strategy and future developments is covered in the
Chief Executive Officer's Report.
Major macroeconomic impacts
Covid-19 and its aftershocks: We are mindful that the legacy of
the COVID-19 pandemic and the friction it placed into international
trade continues to have a notable impact on global supply chains;
however, after negotiation and supplier development we currently do
not anticipate that our production and sales volumes projections
will be adversely affected in FY2023/24.
Economic and geopolitical factors: Inflationary pressures have
been increasing throughout the first half of 2023, with major
economies across the globe experiencing high energy prices linked
to the conflict in Ukraine. This has fed through into higher
interest rates and inflation on supplier costs. This has directly
impacted the business as some prices we pay our suppliers are
directly indexed to market rates which then puts pressure onto
profit margins. Cost down measures to reduce the bill of materials
and labour requirement have been pursued during the year to
mitigate the effect of the increased raw material costs. Looking
ahead, we will continue to monitor the impact of changes in
material costs on our margins and continue to review areas where
cost can be taken out of the manufacturing through process
engineering. Ultimately, we may also look to adjust sales prices if
we cannot avoid passing cost increases on to our consumers.
Auditors
Each of the persons who is a director at the date of approval of
this annual report confirms that:
-- so far as the director is aware, there is no relevant audit
information of which the company's auditors are unaware; and
-- the director has taken all the steps that he/she ought to
have taken as a director in order to make himself/herself aware of
any relevant audit information and to establish that the company's
auditors are aware of that information .
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Companies Act
2006. The auditors, BDO LLP, will be proposed for reappointment in
accordance with section 489 of the Companies Act 2006.
Saietta Group plc has not included the requirements of
Streamlined Energy and Carbon Reporting (SECR) due to the Group and
its subsidiaries not meeting the threshold for reporting.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2023
Year ended 31 Year ended 31
March 2023 March 2022*
Notes GBP GBP
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 GBP GBP
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 (106,174) -
disposal groups
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
GBP GBP GBP GBP GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 2,538,209
for sale -
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 485,473
use assets -
(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 89,936
bad debts -
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 (12,476)
equivalents -
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 GBP.
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
GBP29,189,193 (2022: GBP32,814,791) as at 31 March 2023 and
available liquidity of
GBP7,247,267 (2022: GBP18,402,055) 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 GBP3m 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 GBP8,113,009 (2022: GBP3,498,541) 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 GBP358,800.
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
GBP10,916,016 (2022: GBP8,365,506). 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 GBP99,088.
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 GBP839,673 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.
Year ended Year ended
Adjusted EBITDA 31 31
Note March 2023 March 2022*
GBP GBP
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)
Note
Share-based payment charges 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 - (600,000) -
receivable
Provision for inventory (1,292,026) -
obsolescence
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)
====================== =========================
(1)Comparative figures have been restated to exclude income and
expenditure related to discontinued operations.
(2)Share based payment charges stated excluding an amount of
GBP61,676 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 GBP 23,609,172 GBP 35,241,809
Shares issued from loan
conversion GBP - GBP 2,258,191
Gross proceeds from settled
shares GBP 23,609,172 GBP 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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 GBP GBP GBP GBP GBP GBP
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)
------------- ------------ ------------- ----------------------- -------------
1,818,536 284,421 - 2,102,957 303,108 2,406,065
============= ============ ==================== ============= ======================= =============
Groups' revenue per
consolidated
statement of
comprehensive
income
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-duty(1) segments operations(1) operations(1) Total(2)
Revenue GBP GBP GBP GBP GBP GBP
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)
=============
(1)Change in presentation to show prior year comparative figures
for continued and discontinued operations.
(2)Total 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
GBP GBP GBP GBP GBP
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
GBP GBP GBP GBP GBP
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 Year ended
31 31
March 2023 March 2022
Current year GBP GBP
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 Year ended
31 31
March 2023 March 2022
Revenue by
category GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
Grant income 1,652,982 678,411
Income from engineering design 1,021,538 -
services
2,674,520 678,411
=========== ===========
The Group received development government grants from the
Advanced Propulsion Centre against qualifying expenditure of
GBP1,008,515 (2022: GBP661,122) 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 GBP378,362 (2022: GBP330,326)
remains due, subject to submitted assessment. This has been treated
as a contingent gain at the year end. The remaining GBPnil (2022:
GBP64,423) 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 Year ended
31 31
March 2023 March 2022
Operating loss has been
stated after: GBP GBP
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 GBP1,412,053
to net realisable value.
Share-based payment expense is reduced by GBP61,676 of capitalised
development costs.
9. Significant administrative
expenses
---------------------------------------- --------------------------- ---------------------------
Year ended Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended Year ended
the 31 31
year was as follows:
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
Directors GBP GBP
- 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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
(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 GBP254,299.
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
GBP GBP GBP
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
GBP GBP GBP
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 GBP51,607,660
from continuing operations and GBP9,175,867 from discontinued
operations in the year ended 31 March 2023 (2022: GBP37,314,108
continuing operations, GBP3,845,436 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 Year ended
31 31
March 2023 March 2022
Loss per
share GBP GBP
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 Year ended
31 31
March 2023 March 2022
Loss for
the year GBP GBP
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
GBP GBP GBP GBP
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 Year ended
31 31
Intangible assets includes the following March 2023 March 2022
individually
material asset:
GBP GBP
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
GBP GBP GBP GBP
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
-------------- ------------------- ------------------------ ------------------------ ---------------------- ---------------------- -----------------
Fixtures Assets
Short Plant & & Motor under Total
leasehold machinery fittings vehicles construction
GBP GBP GBP GBP GBP GBP
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.
Fixtures Assets
Short Plant & & Motor under Total
leasehold machinery fittings vehicles construction
GBP GBP GBP GBP GBP GBP
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
- 250,064 - 255,691 - 505,755
Additions
acquired
through
business
combination
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 GBP0.2m
presented above in plant and machinery and an automated AFT
production line valued at GBP3.3m, of which GBP2.6m 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
GBP GBP GBP GBP
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
GBP GBP GBP GBP
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 GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 GBP600,000
paid was not recoverable.
19. Inventories
Year ended Year ended
31 31
March 2023 March 2022
GBP GBP
Raw materials 482,407 2,438,533
Finished
goods 16,000 31,510
498,407 2,470,043
================= ========================
Finished goods include an amount of GBP16,000 (2022: GBP31,510)
carried at fair value less costs to sell.
20. Cash and cash equivalents
------------------------------------------------- ----------------- ------------------------
Year ended Year ended
31 31
March 2023 March 2022
GBP GBP
Cash in hand and
at bank 7,247,267 18,402,055
================= ========================
21. Trade and other
receivables
--------------------------------- -------------------- ----------------------------
Year ended Year ended
31 31
March 2023 March 2022
Non-current assets: GBP GBP
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 Year ended
31 31
March 2023 March 2022
Non-current assets: GBP GBP
Prepayments and accrued
income 129,016 101,825
129,016 101,825
Current:
Prepayments and accrued
income 3,209,304 1,237,197
3,209,304 1,237,197
3,338,320 1,339,022
==================== ============================
None of the Group's cash equivalents or other financial assets, are past
due or impaired. Regarding other financial assets that are neither past
due nor impaired, there were no indications as at 31 March 2023 (2022: no
indications) that defaults in payment obligations will occur. However, as
required under IFRS 9, the Company has assessed other financial assets for
expected
credit losses.
See note 33 for further
detail.
23. Other financial
assets
Year ended Year ended
31 31
March 2023 March 2022
GBP GBP
Saietta VNA Private
Limited
Loan receivable 500,000 -
==================== ============================
The loan to associate Saietta VNA (Private) Limited is for up to GBP1,000,000
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 GBP500,000 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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 GBPnil (2022: GBP1,706,498)
in respect of deferred consideration for the acquisition of Saietta Europe
B.V. (formerly e-Traction Europe B.V.).
Year ended Year ended
31 31
Lease liabilities March 2023 March 2022
GBP GBP
Lease liabilities 1,123,085 470,069
1,123,085 470,069
======================== ===========================
25. Contract liabilities
------------------------------- --------- ------------------------ ---------------------------
Year ended Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
Lease liabilities 5,058,290 2,380,537
Note
Provisions 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 Year ended
31 31
March 2023 March 2022
GBP GBP
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
GBPnil (2022: GBPnil).
28. Liabilities for
financial guarantees
Year ended Year ended
31 31
March 2023 March 2022
GBP GBP
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
Provision
Warranty contracts for
provisions provisions dilapidations Total
GBP GBP GBP GBP
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
Provision
Warranty contracts for
provisions provisions dilapidations Total
GBP GBP GBP GBP
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 Year ended
31 31
Allotted, issued and fully March 2023 March 2022
paid:
Number: Type: Nominal GBP GBP
value:
Ordinary
102,917,675 Shares GBP0.0011 113,209 -
Ordinary
85,051,953 Shares GBP0.0011 - 93,557
Share Share
Number capital premium Total
of shares GBP GBP GBP
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 GBP0.0001 per
share. In exchange for these share, existing shareholders were
issued 47,200,522 Ordinary shares with a nominal value of
GBP0.0011.
On 7 July 2021, the Group raised gross proceeds of GBP35,177,628
through the placing of 29,314,690 new Ordinary shares (the "Placing
Shares") with new and existing investors at a price of GBP1.20 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 GBP0.012 resulting in the issue of 4,437,821 new
Ordinary shares with a nominal value of GBP0.011p. As a result,
GBP4,882 was credited to share capital and the amount received in
excess of the nominal value, GBP48,372, was credited to share
premium.
The remaining 1,092,670 options were exercised by the option
holders at a strike price of GBP0.01 resulting in the issue of
1,092,670 new Ordinary shares with a nominal value of GBP0.011p. As
a result, GBP1,202 was credited to share capital and the amount
received in excess of the nominal value, GBP9,725, 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 GBP0.012 resulting in the issue of
6,250 new Ordinary shares with a nominal value of GBP0.011p. As a
result,
GBP7 was credited to share capital and the amount received in
excess of the nominal value, GBP68, was credited to share
premium.
On 3 August 2022, the Group raised net proceeds of
GBP22,316,001, after broker fees and other expenses of
GBP1,284,000, through the placing of 17,101,450 new Ordinary Shares
of GBP0.0011 each in the capital of the Company (the "Placing
Shares") with new and existing investors at a price of GBP1.38 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 GBP0.012 resulting in the issue of
764,272 new Ordinary shares ("New Ordinary Shares") with a nominal
value of
GBP0.011p. As a result, GBP840 was credited to share capital and
the amount received in excess of the nominal value, GBP8,331, 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 For the year ended
2023 31 March 2022
Weighted Weighted
average average
exercise exercise
Number price Number price
# GBP # GBP
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
GBP GBP
Exercise price at
grant date GBP0.01 GBP0.01
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
GBP GBP
Cost of options vesting
in the year 2,397,620 4,899,171
In the year ended 31 March 2023 an amount of GBP61,676 (2022:
GBP161,951), 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 GBP1,590,469 (2022: GBP330,886) 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
GBP
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
Nominal value of share capital subscribed
Share capital for.
---
Amount subscribed for share capital in excess
Share premium 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
GBP GBP
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
GBP GBP GBP GBP
Trade and other
payables 1,997,615 3,977,674 - -
Accrued
liabilities(1) 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
====================== ====================== ====================== ======================
(1)In 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
GBP GBP GBP GBP GBP GBP
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
Recognised at cost
and adjusted thereafter
for the post- acquisition
change in the investor's
share of the investee's
Equity investments net assets. Not applicable. Not applicable.
Discounted cashflow
model using the difference
between market rates
of interest and the
rate per the loan note
instrument adjusted
Liabilities for probability of
for financial 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
GBP
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 Between 1 Over 5
2023 Total Less than 1 year and 5 years years
GBP GBP GBP GBP
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 Between 1 Over 5
2022 Total Less than 1 year and 5 years years
GBP GBP GBP GBP
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
==================== ======================
(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 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 GBP1,085,229 (2022: GBP2,422,019 (last
year disclosed as GBP2,622,019)).
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 2.3% of carrying value
due (2022: 1%)
30 days past 17% of carrying value
due (2022: 8.6%)
30-60 days past 100% of carrying value
due (2022: 9.6%)
60-90 days past 100% of carrying value
due (2022: 100%)
>90 days past 100% of carrying value
due (2022: 100%)
The resultant loss allowance is GBP34,259 (2022: GBP28,132).
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 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 GBP12,555 (2022: GBP108,096) and a decrease in financial
liabilities of GBP68,653 (2022: GBP69,054). A decrease of 5% would
result in an increase in financial assets of GBP13,876 (2022:
GBP119,474) and an increase in financial liabilities of GBP75,880
(2022: GBP76,323).
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
Building 210 Heyford
Saietta Sunderland Park, Camp Road,
Plant Limited (formerly Upper Heyford,
Saietta Motorcycles England Oxfordshire, OX25
Limited) and Wales 5HE Trading 100% 100% Direct
Building 210 Heyford
Park, Camp Road,
Saietta LDE Limited Upper Heyford,
(formerly Saietta England Oxfordshire, OX25
Racing Limited) and Wales 5HE Dormant 100% 100% Direct
Moleneind 23-A,
1241NG Kortenhoef,
Propel B.V. Netherlands Netherlands Discontinued 100% 100% Indirect
Saietta Holding Netherlands Moleneind 23-A, Trading 100% N/A Indirect
B.V. 1241NG Kortenhoef,
Netherlands
Saietta Traction Netherlands Moleneind 23-A, Trading 100% N/A Indirect
Holdings B.V. 1241NG Kortenhoef,
Netherlands
Saietta RetroMotion Netherlands Moleneind 23-A, Discontinued 100% N/A Indirect
B.V. (formerly Saietta 1241NG Kortenhoef,
Refit B.V.) Netherlands
Saietta Europe B.V. Netherlands Watermanstraat Trading 100% N/A Indirect
40, 7324AH Apeldoorn,
Netherlands
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 GBPnil
(2022: GBP176,111) 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 GBPnil.
Year ended Year ended
31 31
March 2023 March
2022
Trading transactions GBP GBP
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
GBP1,000,000 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 GBP500,000 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 GBP5 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 EUR3.3 million comprised of:
- An upfront cash fee of approximately EUR2.7 million as
consideration for the assignment of jointly developed intellectual
property ("IP")
- A further sum of EUR0.6 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 EUR20 million.
37. Capital commitments
At 31 March 2023, the Group has capital
commitments as follows:
Year ended Year ended
31 31
March 2023 March
2022
GBP GBP
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 GBP500,000 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 GBP173,000
(EUR200,000), 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 Year ended
31 31
March 2023 March
2022
GBP GBP
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 (480,729)
group -
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 GBP848,580 and severance costs of GBP107,326. During
the year, Saietta RetroMotion B.V. increased the Group's net
operating cash flows by GBP10,000. The major classes of assets and
liabilities comprising the discontinued operation are as
follows:
Year ended
31
March
2023
GBP
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 Year ended
31 31
March 2023 March
2022
GBP GBP
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 GBP2.4 million (2022: GBP1.5 million), paid GBP1.2
million (2022: GBP1.3 million) in respect of investing activities
and paid GBP0.1m (2022 received: GBP0.3 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
GBP
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 Year ended
31 31
March 2023 March
2022
Accrued costs GBP GBP
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
GBP
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 GBP GBP
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 GBP27.1
million (2022: loss of GBP10.2 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 GBP GBP GBP GBP GBP
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 GBP.
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 GBP30,877,164 (2022: GBP33,591,370)
as at 31 March 2023 and available liquidity of GBP7,084,691
(2022:
GBP17,883,118) 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 GBP3m 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 GBP830,676 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 GBP GBP GBP GBP
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 GBP GBP GBP GBP
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
Plant Fixtures Assets
Short & & Motor under Total
leasehold machinery fittings vehicles construction
GBP GBP GBP GBP GBP GBP
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
========== ========== ========== ========= ============= ==========
Plant Fixtures Assets
Short & & Motor under Total
leasehold machinery fittings vehicles construction
GBP GBP GBP GBP GBP GBP
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
GBP GBP GBP GBP GBP
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
GBP GBP GBP GBP GBP
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 Year ended
31 31
Cost March 2023 March 2022
GBP GBP
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
Building 210
Saietta Sunderland Heyford Park,
Plant Limited (formerly Camp Road, Upper
Saietta Motorcycles England and Heyford, Oxfordshire,
Limited) Wales OX25 5HE Trading 100% 100% Direct
Building 210
Heyford Park,
Saietta LDE Limited Camp Road, Upper
(formerly Saietta England and Heyford, Oxfordshire,
Racing Limited) Wales OX25 5HE Dormant 100% 100% Direct
Moleneind 23-A,
1241NG Kortenhoef,
Propel B.V. Netherlands Netherlands Discontinued 100% 100% Indirect
Saietta Holding Netherlands Moleneind 23-A, Trading 100% N/A Indirect
B.V. 1241NG Kortenhoef,
Netherlands
Saietta Traction Netherlands Moleneind 23-A, Trading 100% N/A Indirect
Holdings B.V. 1241NG Kortenhoef,
Netherlands
Saietta RetroMotion Netherlands Moleneind 23-A, Discontinued 100% N/A Indirect
B.V. (formerly Saietta 1241NG Kortenhoef,
Refit B.V.) Netherlands
Saietta Europe B.V. Netherlands Watermanstraat Trading 100% N/A Indirect
40, 7324AH Apeldoorn,
Netherlands
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 Year ended
31 31
March 2023 March 2022
GBP GBP
Raw materials and work in progress 132,298 297,585
===================== =====================
Finished goods include an amount of GBP16,000 (2022: GBP31,510)
carried at fair value less costs to sell.
47. Financial and non-financial assets
(a) Cash and cash Year ended Year ended
equivalents 31 31
March 2023 March 2022
GBP GBP
Cash in hand and
at bank 7,084,691 17,883,118
=========== ===========
Year ended Year ended
(b) Trade and other receivables 31 31
March 2023 March 2022
Non-current: GBP GBP
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 Year ended Year ended
income 31 31
March 2023 March 2022
Non-current: GBP GBP
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
=========== ===========
Year ended Year ended
(d) Amounts due from subsidiaries 31 31
March 2023 March 2022
Non-current: GBP GBP
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 GBP1,774,525 (2022: GBP1,700,491) 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 GBP6,275,604 and GBP6,536,249 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 Year ended Year ended
assets 31 31
March 2023 March 2022
Non-current: GBP GBP
Loan receivable from associate 500,000 -
The loan to associate Saietta VNA (Private) Limited is for up to
GBP1,000,000 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 GBP500,000 is drawn down in
August 2023.
48. Trade and other payables
Year ended Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
Current: GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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
GBP GBP
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
GBP GBP GBP GBP
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
GBP GBP GBP GBP GBP GBP
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.
Valuation
Financial instrument technique Significant Inter-relationship
unobservable
used inputs between key
unobservable
inputs
and fair value
Recognised at cost and adjusted
thereafter for the post- acquisition
change in the investor's share
Equity of the investee's net assets. Not applicable. Not applicable.
investments
Discounted cashflow model
using the difference between
market rates of interest and
the rate per the loan note
Liabilities instrument adjusted for probability
for 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 Year ended
ended 31
31
March March 2022
2023
GBP GBP
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 Less than Between 1 and
2023 Total 1 year 5 years Over 5 years
GBP GBP GBP GBP
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 Less than Between 1 and
2022 Total 1 year 5 years Over 5 years
GBP GBP GBP GBP
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 GBP1,072,940 (2022: GBP670,945
(last year disclosed as GBP734,526)).
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 2.3% of carrying value
due (2022: 1%)
30 days past 17% of carrying value
due (2022: 8.6%)
30-60 days past 100% of carrying value
due (2022: 9.6%)
60-90 days past 100% of carrying value
due (2022: 100%)
>90 days past 100% of carrying value
due (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 Year ended Year ended
as follows: 31 31
March 2023 March 2022
GBP GBP
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 ended Year ended
year-end date was: 31 31
March 2023 March 2022
GBP GBP
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
GBP6,275,604. The loan receivable from Saietta Europe B.V. has been
impaired by GBP6,536,249.
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 Year ended
31 31
March March
2023 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 GBP89,380.
50. Investment in associate
Year ended Year ended
31 31
March March
2023 2022
Saietta VNA (Private)
Limited GBP GBP
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 Year ended
31 31
March March
2023 2022
GBP GBP
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 GBP600,000
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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
Nominal value of share capital
Share capital subscribed for.
Amount subscribed for share capital in
Share premium excess of nominal value.
Used to record the assessed fair value of equity-settled options
Share options issued as share based payment for services received by the consolidated
reserve entity.
Accumulated All other net gains and losses and transactions with owners
losses (e.g. dividends) not recognised elsewhere.
54. Share capital
Share capital and share
premium
Year ended Year ended
31 31
Allotted, issued and fully March 2023 March 2022
paid:
Number: Type: Nominal GBP GBP
value:
Ordinary
102,917,675 Shares GBP0.0011 113,209 -
Ordinary
85,051,953 Shares GBP0.0011 - 93,557
Share Share
Number capital premium Total
of shares GBP GBP GBP
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 GBP0.0001 per
share. In exchange for these share, existing shareholders were
issued 47,200,522 Ordinary shares with a nominal value of
GBP0.0011.
On 7 July 2021, the Company raised gross proceeds of
GBP35,177,628 through the placing of 29,314,690 new Ordinary shares
(the "Placing Shares") with new and existing investors at a price
of GBP1.20 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 GBP0.012 resulting in the issue of 4,437,821 new
Ordinary shares with a nominal value of GBP0.011p. As a result,
GBP4,882 was credited to share capital and the amount received in
excess of the nominal value, GBP48,372, was credited to share
premium.
The remaining 1,092,670 options were exercised by the option
holders at a strike price of GBP0.01 resulting in the issue of
1,092,670 new Ordinary shares with a nominal value of GBP0.011p. As
a result, GBP1,202 was credited to share capital and the amount
received in excess of the nominal value, GBP9,725, 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 GBP0.012 resulting in the issue of
6,250 new Ordinary shares with a nominal value of GBP0.011p. As a
result,
GBP7 was credited to share capital and the amount received in
excess of the nominal value, GBP68, was credited to share
premium.
On 3 August 2022, the Company raised net proceeds of
GBP22,316,001, after broker fees and other expenses of
GBP1,284,000, through the placing of 17,101,450 new Ordinary Shares
of GBP0.0011 each in the capital of the Company (the "Placing
Shares") with new and existing investors at a price of GBP1.38 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 GBP0.012 resulting in the issue of
764,272 new Ordinary shares ("New Ordinary Shares") with a nominal
value of
GBP0.011p. As a result, GBP840 was credited to share capital and
the amount received in excess of the nominal value, GBP8,331, 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
GBP
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 For the year ended
31 March 2023 31 March 2022
Weighted Weighted
average average
exercise
Number price Number exercise price
# GBP # GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
Exercise price at
grant date GBP0.01 GBP0.01
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 Year ended
31 31
March 2023 March 2022
GBP GBP
Cost of options vesting
in the year 2,397,620 4,899,171
In the year ended 31 March 2023 an amount of GBP61,676 (2022:
GBP161,951), 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 GBP1,590,469 (2022: GBP330,886) 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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 Year ended
31 31
March 2023 March 2022
GBP GBP
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 GBP500,000 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 GBP5 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 EUR3.3 million comprised of:
o An upfront cash fee of approximately EUR2.7 million as
consideration for the assignment of jointly developed intellectual
property ("IP")
o A further sum of EUR0.6 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 EUR20 million.
59. Related parties
Year ended Year ended
Trading transactions 31 31
March 2023 March
2022
GBP GBP
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
GBP1,000,000 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 GBP500,000 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR GUBDGSXBDGXC
(END) Dow Jones Newswires
October 19, 2023 02:00 ET (06:00 GMT)
Saietta (LSE:SED)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Saietta (LSE:SED)
Gráfica de Acción Histórica
De May 2023 a May 2024
