![](/cdn/assets/images/search/clock.png)
We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Equipmake Holdings PLC | AQSE:EQIP | Aquis Stock Exchange | Ordinary Share | GB00BMBVXB73 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.75 | 5.50 | 6.00 | 5.75 | 5.75 | 5.75 | 0.00 | 06:55:29 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMEQIP
RNS Number : 2619O
Equipmake Holdings PLC
02 October 2023
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").
2 October 2023
Equipmake Holdings plc
("Equipmake" or the "Company")
Results for the year ended 31 May 2023
Equipmake, the UK-based engineering specialist pioneering the development and production of electrification products across the automotive, aerospace, bus, and coach industries, is pleased to announce its audited results for the 12-month period ended 31 May 2023.
Financial Highlights
-- Listed on the Aquis Stock Exchange and raised GBP16.2m of gross proceeds during the year.
-- Total Revenue of GBP5.1m (FY2022: GBP3.7m), comprising: o GBP0.8m from Powertrain sales (supply only) (FY2022: GBP0.2m); o GBP0.9m from Powertrain sales (including vehicle integration) (FY2022: GBPNil); o GBP1.6m from Electric Vehicle ("EV") component sales (FY2022: GBP0.4m); o GBP1.3m of Engineering projects revenue (FY2022: GBP2.0m); o GBP0.3m of licensing / royalty revenue (FY2022: GBPnil); and o GBP0.1m of grant income (FY2022: GBP1.0m).
-- Gross margin (inclusive of grants) of GBP1.2m or 23.9% (FY2022: Gross loss of GBP2.4m). Gross margin (exclusive of grants) of GBP1.3m or 25.5% (FY2022: no comparative available).
-- Loss after tax was GBP4.8m (FY2022: GBP5.3m). -- Loss per share was 0.60p (FY2022: 2.3p). -- Cash at 31 May 23 was GBP7.0m (31 May 22: GBP1.9m).
Operational Highlights
-- Delivering vehicles into service for First Bus York and Transport for London ("TfL"), and secured orders for further bus repowers from both new and existing clients.
-- Signed licensing agreement with Sona BLW Precision Forgings Ltd ("Sonar Comstar") in India for the application of certain products in electric cars, buses, commercial vehicles and off-road vehicles in India, Thailand and other select South Asian countries.
-- Secured, and successfully delivered, further orders for EV powertrains for fire trucks for both the UK and US markets.
-- Obtained Innovate UK / Advanced Propulsion Centre ("APC") grant funding of up to GBP1.6m for the Hydrogen Electric Integrated Drivetrain Initiative ("HEIDI").
-- Secured a flexible lease on a 50,000 sq. ft unit to facilitate the production of the growing repowering business.
Post Year End Highlights
-- Agreed a term sheet with H55 for the provision of an aerospace electric motor - 26 June.
-- Supplied cutting edge E-Drivetrain for luxury long-range electric flying boat - 10 July.
-- Awarded GBP1.47m electric bus repower contract by Newport Transport - 3 August. -- Awarded GBP1.75m electric bus repower contract by Big Bus Tours - 29 September.
Ian Foley, CEO of Equipmake said : "The Company is buoyed by the successes achieved since the IPO and is confident that it will achieve both its short-term and long-term goals. It is converting opportunities and establishing itself across multiple markets and the scaling-up of its production capability is underway, demonstrating a leading role that Equipmake has in the transition to zero-emission powertrains.
Investments in areas including supply chain management, product development and improved facilities are targeted to improve margins, in the current and subsequent financial years, and whilst there are signs that recent, well documented, inflationary pressures are abating, the Company remains alive to further potential opportunities and impacts going forward.
The Board's expectations for FY2024 are underpinned by a contracted orderbook(*) of GBP9.2m (excluding pending opportunities above), as of 29 September 2023 with a number of opportunities at advanced stages which are expected to be converted into contracted orders in the coming months."
(*) The contracted orderbook is orders that have been contracted but where revenue hasn't been recognised.
**S**
For further information, please contact:
Equipmake Via St Brides Partners Ian Foley, Founder and CEO Steven McGillivray, CFO Panmure Gordon (Corporate Adviser & Joint Tel: +44 (0) 20 7886 Broker) 2500 John Prior / James Sinclair-Ford / Freddie Twist Hugh Rich / Sam Elder VSA Capital Limited (Joint Broker) Tel: +44 (0) 20 3005 Simon Barton / Simba Khatai / Alex Cabral 5000 St Brides Partners (Financial PR Adviser) Tel: +44 (0) 20 7236 Susie Geliher / Paul Dulieu 1177 equipmake@stbridespartners.co.uk
About Equipmake
Equipmake is the UK-based engineering specialist pioneering the development and production of electrification products to meet the needs of the automotive, aerospace and other sectors in support of the transition from fossil-fuelled to zero-emission powertrains.
Equipmake is a leader in ultra-high performance electric motors and complete EV drivetrains and ultra-fast power electronic systems. As well as developing proprietary technology - such as an ultra-compact, lightweight high performance spoke motor - it also offers industry-leading EV consultancy.
Equipmake has developed a vertically integrated solution providing fully bespoke solutions. The Company has built a significant pipeline of opportunities, as demand for electric vehicles increases as part of the global decarbonisation movement.
Chairman's Statement
The route to net zero is firmly on the agenda for governments, businesses and individual consumers, and the stakes are high.
The transition to electric vehicles is important in this journey and with the cost and efficiency of the key components including batteries, motors and inverters, their mainstream adoption is increasingly economically attractive and compelling.
Electric passenger cars receive a great deal of press attention and their volume and impact is very significant. This however is just one facet of a universal EV movement, and it is thanks to the innovation and vision of the Equipmake executive team, that our company is pioneering electrification products across multiple transport sectors, helping many industries adopt their own paths to carbon reduction.
Investors who joined us early in our journey as a public company will have noted our prominence in the bus and coach industries, a core pillar of our business. We are scaling up to meet increasing demand for repowering in this sector, including adding a second site, as it continues to provide significant opportunity for growth.
Retrofitting buses and coaches, by replacing incumbent Diesel technology with battery solutions, enables operators to accelerate their net zero ambitions, whilst providing a sustainable approach to extending the life of their assets and reducing spend on new electric vehicles. There are approximately 6,000 non-electric buses currently operating across the UK alone that are between 6 and 10 years old, being strong candidates for such retrofitting.
Government support, through various Research & Development (R&D) programmes, has been important to Equipmake's development over the past 10 years. It is pleasing however that as we begin to mature our product offering, we saw in our last financial year that 97.7% of revenue was delivered from commercial contracts, up from 72.1% in the previous period. UK government affiliated agencies, most notably Innovate UK and the Advanced Propulsion Centre, continue to strongly support the transition towards net zero and we are delighted to maintain a close relationship with them and play our role in helping meet these nationwide objectives. One demonstration of this was the grant funding of up to GBP1.6m, announced in April 2023, under the Hydrogen Electric Integrated Drivetrain Initiative (HEIDI). This funding is being directed to the development of an integrated Hydrogen fuel cell battery hybrid system, featuring Equipmake's motor, inverter, and related technologies for use across multiple vehicle systems including buses, goods and passenger vehicles.
Our intellectual property (IP) in particularly electric motors and inverters is central to our long-term growth. During the year we saw the start of how we intend to generate incremental returns from these assets, with our licensing agreement with Sona Comstar. This agreement sees Equipmake license certain products from its range of drive motors, inverter, and electric powertrain technology to Sona Comstar for applications in electric cars, buses, commercial vehicles and off-road vehicles in India, Thailand and other select South Asian countries. These are important markets for Equipmake, and addressing them via an agreement with Sona Comstar, a leading locally based automotive industry supplier, is a key milestone for us. In India alone, the share of electric passenger vehicles is forecast to increase to 25% by 2032, up from less than 1% in 2022, and electric buses to increase to 21% by 2032, up from 5% in 2022.
The importance of this agreement is that, in addition to the one-time licence fee received during the period, Equipmake will receive royalties on the licensed products manufactured and sold by Sona Comstar.
This is a good example of how Equipmake's IP, which has been developed over the past 10 years, can be leveraged to access new markets at minimal cost, through contractual relations with high quality partners. We expect to use this model with other suitable original equipment manufacturers (OEMs) and tier 1 suppliers over the coming years as we look to scale revenue and address new geographies and sectors.
Our strategy to diversify our sector penetration, using a common pool of core product IP, has gained momentum during the year as we have proven our product applications in selected industries. We are now working with customers in markets directly adjacent to the bus industry, including coaches, but also in natural extensions to these, with for example Emergency One, the largest fire truck manufacturer in the UK. We have also entered a technology partnership with H55 S.A. ("H55"), a leading aerospace electric propulsion company, for the intended supply of an aerospace variant of our electric motor, have supplied an ultra-high-performance motor and inverter for a rocket fuel pump with Gilmour Space and an ultra-lightweight motor and inverter for Vertical Aerospace.
Post period end, in July 2023, we announced that we had supplied a variant of our e-drivetrain system for use in a world-first long-range electric flying boat, opening up further possibilities in the marine industry.
Our core IP and product family is directly applicable across many multi-billion-pound sectors, and our strategy is a careful and manageable route to several of those markets over time. Whilst this nascent electrification movement feels, to many, that it is only just beginning, it is important to note that Ian Foley and the Equipmake R&D team have been at its forefront for decades, which is what sets our business apart. Indeed, the majority of our business comes to us through word of mouth, with OEMs seeking us out as experts with proven production capabilities, and a track record of innovation.
It is with this in mind that I look to the future with enormous enthusiasm for how we anticipate growing our business over time, and in supporting our customers ambitions toward a lower carbon future.
I would like to extend my gratitude to the whole Equipmake team and to our shareholders for their hard work, shared vision and commitment to our company's growth.
Clive Scrivener
Non-Executive Chairman
29th September 2023
Chief Executive's Review
Introduction
The financial year ending 31 May 2023 ("FY2023") has been a pivotal year for Equipmake, during which it has continued to prove itself as a true pioneer of electrification solutions that address the global demand for zero-emission products. During the past financial year, the Company reported a 36.3% year-on-year increase in revenue (inc. grants) to GBP5.1m, and secured GBP16.2m of gross investment, enabling the execution of its growth plans.
Business Overview
FY2023 was transformational for Equipmake. The admission to the Aquis Stock Exchange in July 2022 enabled the Company to progress its plans for growth, in particular the commercialisation of its EV powertrain solution, which culminated in the delivery of repowered buses into service for First Bus York and TfL, as well as the delivery of fire truck powertrains for both the UK and US markets.
To facilitate further expansion, in March 2023, the Company secured a flexible lease on a 50,000 sq. ft unit in Norfolk, which will provide an annual capacity for vehicle repowering of 200 units per annum, and space to increase production capacity for motor and battery build. Scaling-up will be completed in phases, with the first phase to be completed by the end of FY2024. Following completion of phase one, the Company will have the capability to deliver at a monthly run rate that equates to 100 repowers per annum.
The profile of Equipmake was enhanced further by the signing of the licencing agreement with Sona Comstar, securing an established manufacturing partner that enables it to address demand for certain EV products in India, Thailand and other select South Asian countries. Product development commenced during Q4 of FY2023, with production expected to commence in 2025.
The Company reinforced its position as a market leader of electrification products for Aerospace by delivering motors and inverters to existing clients and by securing a new partnership with Swiss electric propulsion company, H55, to certify an Electric Propulsion System (EPS) for production. The EPS will initially be used on the Bristell B23 Energic aircraft, a two-seater electric training aircraft, with initial sales expected in 2025.
The Company did experience a myriad of supply chain challenges during FY2023, particularly in respect of electrical components which impacted both availability and price, and significant one-off price spikes resulting from the Russia/Ukraine war. This ultimately impacted gross margin through the absorption of higher prices and/or the redesign of products to incorporate alternative components. The in-house engineering capability to pivot to alternative components mitigated the severity of these issues on customer deliveries and enabled the Company to report its highest annual revenue number to date.
Innovation and new product development are core principles of Equipmake and in FY2023, the Company continued to invest in these areas. During the year, it capitalised GBP0.8m of development costs relating to its powertrain products and was successful in obtaining up to GBP1.6m of grant funding via Innovate UK / APC to develop a powertrain (including the battery management system and thermal management system) that integrates with a hydrogen fuel cell. The project spans 27 months and further advances the capability of Equipmake's product range.
Current Trading
The business is trading in line with market expectations, with a strong opening orderbook and significantly advanced discussions with new and existing clients, underpinning the revenue expectation for FY2024. This includes the delivery and trial of the repowered double deck diesel vehicle for First Bus, which is still to be completed. Since the balance sheet date, the business has been successful in securing the following opportunities:
-- Bus repower contracts for delivery in FY2024: o Newport Transport - eight repowers for GBP1.475m. o Big Bus Tours - nine repowers for GBP1.575m. -- Emergency One - three fire truck powertrains for GBP0.6m.
-- Contract with a new OEM for the repower of an airside operational vehicle. The prototype project is for GBP0.6m and will be delivered in FY2024, but also provides a timeframe for the commencement of discussions regarding manufacturing and a supply agreement.
Outlook
The Company is buoyed by the successes achieved since the IPO and is confident that it will achieve both its short-term and long-term goals. It is converting opportunities and establishing itself across multiple markets and the scaling-up of its production capability is underway, demonstrating the leading role that Equipmake has in the transition to zero-emission powertrains.
Investments in areas including supply chain management, product development and improved facilities are targeted to improve margins, in the current and subsequent financial years, and whilst there are signs that the recent price spikes are abating, the Company remains alive to further potential opportunities and impacts going forward.
The Board's expectations for FY2024 are underpinned by a contracted orderbook of GBP9.2m (excluding pending opportunities above), as of 29th September 2023 with a number of opportunities at advanced stages which are expected to be converted into contracted orders in the coming months. The contracted orderbook is orders that have been contracted but where revenue hasn't been recognised.
This report was approved by the board on 29th September 2023 and signed on its behalf.
Ian Foley
Chief Executive Officer
Group Strategic Report
Introduction
The directors present their strategic report and the audited financial consolidated statements for the year ended 31 May 2023. The company acts as a holding company for Equipmake Limited, collectively referred to as Equipmake.
Principal Activity
Equipmake is a UK-based engineering specialist pioneering the development and production of electrification products across the automotive, aerospace, bus, coach, and fire truck industries, supporting the transition from fossil-fuelled to zero-emission powertrains.
Business model
Through its vertically integrated business model, Equipmake designs and manufactures a significant number of the core technologies that constitute an EV powertrain (motors, inverters, battery packs, control systems) and integrates these components into a working system. The individual components or the full powertrain can be sold to an OEM, or Equipmake can integrate the powertrain into the vehicle for the end user. It also licences its products to select partners for volume manufacture.
A key differentiator for Equipmake is its ability to provide the most appropriate solution for a given application, customising its solution to match the cost and performance demands of its customers. Given the relative immaturity of the EV market, the Company looks beyond a transactional relationship and positions itself to partner its customers with their own electrification journey. This approach has helped the Company to establish a leading position in the bus and coach repowering market and secure key customers in the electric fire truck market.
The above approach, coupled with Equipmake's reputation for innovation and high-performance products has led to it securing contracts to supply EV components into the aerospace market and facilitated the partnership with H55 to design prototype motors for its propulsion system, with the intention to develop a fully certified system for production.
Innovation and new product development is integral to the strategic direction of Equipmake. Historically, a significant amount of development has been completed with support from Innovate UK / APC grant projects and this continues to be the case. In addition to receiving funding towards development, the Company also benefits from the wider collaboration that these projects provide.
Business review
Total revenue (exclusive of grant revenue) increased to GBP4.9m, which represents year-on-year increase of 84.8% (FY2022: GBP2.7m). Total revenue (inclusive of grant revenue) increased to GBP5.1m, an increase of 36.3% (FY2022: GBP3.7m). This growth is driven by the commencement of delivery of repowered vehicles to First Bus York and motors and inverters to Equipmake's aerospace customers, increases in the delivery volumes of fire truck powertrains and its ASIL-D inverter to an electric hyper car OEM. The signing of the Sona Comstar licencing agreement also contributed GBP0.3m of licencing revenue which was not present in the prior year. Grant revenue decreased by GBP0.9m due to the timing of the completion of historic projects and the commencement of new ones.
Gross margin is reported both inclusive and exclusive of grants. Whilst grants have a positive impact on the Company, the partially funded nature of these projects results in a gross loss which distorts the operational performance of the Company. Gross margin (inclusive of grants) was GBP1.2m or 23.9% (FY2022: loss GBP2.4m). Total gross margin (exclusive of grants) was 25.5% (FY2022: no comparative available).
Administrative costs were GBP5.3m (FY2022: GBP1.9m), reflecting the investments made in a number of areas. GBP2.8m of the year-on-year increase relates to staff costs, reflecting a 19% increase in the average headcount (FY2023: 82, FY2022: 69) and the reporting of development costs within overheads. Costs relating to property increased by GBP0.2m, due to the new property lease signed at the end of March 23 and increased electricity costs. There has also been a year-on-year increase in professional fees since the IPO of GBP0.2m.
During the year, the Company received GBP16.2m in gross proceeds from the IPO and the subsequent fundraise in January/February 2023, to support the expansion plans of the business.
The cash balance at the end of the year was GBP7.0m (FY2022: 1.9m), an increase of GBP5.1m. This reflects the impact of the fundraising activities during the year, less the investments made into the business, principally funding trading activities and working capital requirements.
As part of the Company's strategy for mitigating supply chain issues and its plans for expansion, there has been a significant investment in stock. The closing value as at the balance sheet date was GBP3.0m, (FY2022: GBP0.8m). Total debtors have increased to GBP4.5m (FY2022: GBP1.9m) due to the non-linear phasing of revenue recognition and the overall increase in revenue. The value of creditors due within one year has decreased by GBP3.8m to GBP2m (FY2022: GBP5.8m) due to the inclusion of a GBP3.8m convertible loan note in the prior year total. This was converted into equity at the IPO.
Loss after taxation was GBP4.8m (FY2022: GBP5.3m) leading to a loss per share of 0.60p (FY2022: 2.3p).
Other key performance indicators
The Directors monitor the business internally with several performance indicators: orderbook, cash flow, health and safety, adherence to plan and quality. The board has assessed results against these KPIs and are happy with the progress that has been made.
The contracted orderbook value as at 31 May 2023 was GBP5.5m, increasing to GBP8.6m as at 27th September 23, reflecting the successful conversion of opportunities into orders since the start of the FY2024 financial year.
Cash at 31st May 2023 was GBP7.0m (2022: GBP1.9m), reflecting the external funding received and the significant investment made in the business during the financial year.
Principal risks and uncertainties
The directors continuously review and take steps to ensure that the risks and uncertainties faced by the Company and its subsidiary are appropriately managed and mitigated against. These risks are categorised in the table below.
Risk Description Mitigation Strategy Financial risks - The Group is exposed Contractual clauses Price risk to price variations to flex the sales in respect of its price when there are purchases and its unavoidable significant sales price. increases in component costs. Maintain strong relationships with customers and suppliers to facilitate lower cost alternatives. -------------------------------- ------------------------------------------ Financial risks - The Group is currently The listing provides Liquidity risk loss making and therefore access to investors requires access to and transparency to cash to fund development. investors of market value. -------------------------------- ------------------------------------------ Financial risks - The Group is exposed When no natural hedge foreign exchange risk to foreign exchange is possible and the risk with a small currency exposure number of overseas cannot be avoided, customers and procures the Company will utilise certain components forward contracts in foreign currency. to hedge against foreign exchange risk. -------------------------------- ------------------------------------------ Operational risks Reliance on key suppliers In-house engineering - supply chain risk / single source components. of components to design Supply chain disruptions. products around multi-sourced commodities. In-house Procurement expertise to identify component shortages and dynamically manage stock levels. -------------------------------- ------------------------------------------ Operational risks The Group is introducing In-house testing process - execution risk new products and technology that exceeds customer to the market. requirements coupled with operational trials. -------------------------------- ------------------------------------------ Operational risks The Group's success Contractual terms - Dependence on key depends to a significant and incentives to executives and personnel degree upon the vision, retain existing employees. technical and specialist Plans to invest in skills, experience formal training and and performance of development programme its Directors, senior to facilitate development management and other of in-house talent key personnel. together with a strategy to build the senior team through external hires. -------------------------------- ------------------------------------------ Intellectual Property The Group may not The Group reduces (IP) risks be able to sufficiently this risk by utilising protect its IP and the services of patent proprietary expertise. and trademark attorney and technology is patented where possible.
It also controls access to the technology through software controls and encryptions. -------------------------------- ------------------------------------------
Directors' statement of compliance with duty to promote the success of the Group (Section 172 Statement)
Section 172 of the Companies Act 2006 requires that Directors of a company must act in ways that they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
-- the likely consequences of any decision in the long term; -- the interests of the company's employees;
-- the need to foster the company's business relationships with suppliers, customers and others;
-- the impact of the company's operations on the community and the environment;
-- the desirability of the company maintaining a reputation for high standards of business conduct; and
-- the need to act fairly as between members of the company.
The board has identified the following stakeholder groups and engages with them to foster strong relations and to act fairly between them:
-- Customers: Equipmake engages with customers at all stages of the project life cycle - from concept design through to the production phase and after sales service and support. This is mutually beneficial and ensures that relationships with customers are not purely transactional and are instead focused on long-term relationships.
-- Employees: the employees are critical to the long-term success of Equipmake. The Company has introduced a strategy which rewards and retains its staff. Staff received share options in the previous financial year, it continually reviews its overall benefits package to maximise its value to employees and is addressing development needs through in-house and external training. Post balance sheet date, it has set up an apprenticeship scheme and a formal management training programme.
-- Grant bodies and other government agencies: Equipmake has benefited from a number of Innovate UK Research and Development grants in recent years and maintains a good relationship with the grant issuing bodies. The Advanced Propulsion Centre (APC) has supported multiple projects and participated in press events post-completion of the grant projects.
-- Investors and shareholders: The Company engages with investors through its annual and interim reports, AGM and analyst and investor presentations.
-- Partnerships: Equipmake has established partnerships with multiple companies to facilitate the exploitation of the opportunities in the automotive, bus and aerospace markets.
This report was approved by the board on 29th September 2023 and signed on its behalf.
Ian Foley
Chief Executive Officer
Consolidated Statement of Comprehensive Income
Year ended Year ended 31 May 31 May 2023 2022 Note GBP's GBP's Turnover 4 5,053,540 3,706,785 Cost of sales (3,845,263) (6,087,868) ----------- ----------- Gross loss 1,208,277 (2,381,083) Administrative expenses (5,346,307) (1,919,378) Other operating income 5 280,658 565,132 Share based payment charge 29 (475,321) (574,227) Exceptional items 12 (615,064) (750,000) Operating loss 6 (4,947,757) (5,059,556) Interest receivable and similar income 10 16,908 (1,182) Interest payable and similar expenses 11 (86,505) (144,994) Loss before taxation (5,017,354) (5,205,732) Tax on loss 13 185,979 (104,499) =========== =========== Loss for the financial year (4,831,375) (5,310,231) Total other comprehensive income - - ----------- ----------- Total comprehensive loss for the year (4,831,375) (5,310,231) =========== =========== Loss for the year attributable to: Non-controlling interests - (692,772) Owners of the parent Company (4,831,375) (4,617,459) ----------- ----------- (4,831,375) (5,310,231) Loss per share GBP's GBP's Basic and diluted 27 (0.0060) (0.023)
The Group's activities derive from continuing operations.
The notes below form an integral part of these Financial Statements.
Consolidated Balance Sheet
As at As at 31 May 31 May 2023 2022 Assets Note GBP 's GBP's Fixed assets Intangible assets 15 783,037 - Tangible assets 16 772,681 527,139 ------------ ----------- 1,555,718 527,139 Current assets Stocks 18 2,958,325 807,973 Debtors: amounts falling due within one year 19 4,501,978 1,920,728 Cash at bank and in hand 20 6,999,686 1,876,083 ------------ ----------- Total current assets 14,459,989 4,604,784 Liabilities Creditors: amounts falling due within one year 21 (1,957,276) (5,794,645) ------------ ----------- Net current assets /(liabilities) 12,502,713 (1,189,861) ------------ Total assets less current liabilities 14,058,431 (662,722) ------------ ----------- Creditors: amounts falling due after more than one year 22 (255,183) (307,169) Provisions for liabilities: Other provisions 25 - (44,057) ------------ ----------- Net assets /(liabilities) 13,803,248 (1,013,948) ============ =========== Capital and reserves Share capital 26 94,823 50,000 Share premium 28 19,128,427 - Other reserves 28 5,748,311 5,748,311 Profit and loss account 28 (12,217,861) (7,386,486) Share-based payment reserve 28 1,049,548 574,227 Total capital and reserves 13,803,248 (1,013,948) ============ ===========
The notes below form an integral part of these Financial Statements.
The Financial Statements were approved by the Board of Directors on 29th September 2023 and were signed on its behalf by:
Ian Foley
Chief Executive Officer
Company number: 04303233
Company Balance Sheet
Assets Note As at As at 31 May 31 May 2023 2022 GBP 's GBP's Fixed assets Investments 17 17,933,408 6,458,087 ----------- ----------- 17,933,408 6,458,087 Current assets Debtors: amounts falling due within one year 19 50,452 1,269,386 Cash at bank and in hand 20 6,601,712 1,737,118 ----------- ----------- Total current assets 6,652,164 3,006,504 Liabilities Creditors: amounts falling due within one year 21 (504,334) (3,859,315) ----------- ----------- Net current assets/ (liabilities) 6,147,830 (852,811) ----------- Total assets less current liabilities 24,081,238 5,605,276 ----------- ----------- Net assets 24,081,238 5,605,276 =========== =========== Capital and reserves Share capital 26 94,823 50,000 Share premium 28 19,128,427 - Other reserves 28 4,962,502 4,962,502
Merger relief reserve 28 849,982 849,982 Profit and loss account 28 (2,004,044) (831,435) Share-based payment reserve 28 1,049,548 574,227 Total capital and reserves 24,081,238 5,605,276 =========== ===========
As permitted by s408 Companies Act 2006, the Company has not presented its own profit and loss account and related notes. The Company's loss for the year was GBP1,172,609 (2022: GBP876,485).
The notes below form an integral part of these Financial Statements.
The Financial Statements were approved by the Board of Directors on 29th September 2023 and were signed on its behalf by:
Ian Foley
Chief Executive Officer
Company number: 04303233
Consolidated Statement In Changes Of Equity
Equity Share attributable Profit based to owners Share Share Other and loss payment of parent Non-controlling Total Note capital premium reserves account reserve company interests equity GBP's GBP's GBP's GBP's GBP's GBP's GBP's GBP's ------------ -------- ------------ ------------ -------- ------------- ---------------- ------------ Balance at 01 June 2021 2 - 5,835,579 (2,987,394) - 2,848,187 1,302,639 4,150,826 ------------ -------- ------------ ------------ -------- ------------- ---------------- ------------ Comprehensive loss for the year Loss for the year - - - (4,617,459) - (4,617,459) (692,772) (5,310,231) ------------ -------- ------------ ------------ -------- ------------- ---------------- ------------ - - - (4,617,459) - (4,617,459) (692,772) (5,310,231) ------------ -------- ------------ ------------ -------- ------------- ---------------- ------------ Transactions with owners Reclassification of non-controlling interest following share-for-share exchange - - - 609,867 - 609,867 (609,867) - Dividends: Equity capital 14 - - - (395,000) - (395,000) - (395,000) Share-based payments movement 29 - - - - 574,227 574,227 - 574,227 Share-for-share exchange 26 16,000 - (49,770) - - (33,770) - (33,770) Issue of B shares 26 5,000,000 - (5,000,000) - - - - - Cancellation of B shares 26 (5,000,000) - 5,000,000 - - - - - Purchase of own shares 26 (3,500) - - 3,500 - - - - Bonus issue of shares 26 37,498 - (37,498) - - - - - -------- Total transactions with owners 49,998 - (87,268) 218,367 574,227 755,324 (609,867) 145,457 ------------ -------- Balance at 31 May 2022 50,000 - 5,748,311 (7,386,486) 574,227 (1,013,948) - (1,013,948) ============ ======== ============ ============ ======== ============= ================ ============
The notes below form an integral part of these Financial Statements.
Consolidated Statement In Changes Of Equity
Equity Share attributable Profit based to owners Share Share Other and loss payment of parent Non-controlling Total Note capital premium reserves account reserve company interests equity GBP's GBP's GBP's GBP's GBP's GBP's GBP's GBP's -------- ----------- ---------- ------------- ---------- ------------- ---------------- ------------ Balance at 01 June 2022 50,000 - 5,748,311 (7,386,486) 574,227 (1,013,948) - (1,013,948) -------- ----------- ---------- ------------- ---------- ------------- ---------------- ------------ Comprehensive loss for the year Loss for the year - - - (4,831,375) - (4,831,375) - (4,831,375) -------- ----------- ---------- ------------- ---------- ------------- ---------------- ------------ - - - (4,831,375) - (4,831,375) - (4,831,375) -------- ----------- ---------- ------------- ---------- ------------- ---------------- ------------ Transactions with owners Loan conversion 26 8,824 3,741,176 - - - 3,750,000 - 3,750,000 Issue of shares 26 35,999 16,199,001 - - - 16,235,000 - 16,235,000 Share issue costs - (811,750) - - - (811,750) - (811,750) Share-based payments charge 29 - - - - 475,321 475,321 - 475,321 ----------- Total transactions with owners 44,823 19,128,427 - - 475,321 19,648,571 - 19,648,571 -------- ----------- - -------- ----------- Balance at 31 May 2023 94,823 19,128,427 5,748,311 (12,217,861) 1,049,548 13,803,248 - 13,803,248 ======== =========== ========== ============= ========== ============= ================ ============
The notes below form an integral part of these Financial Statements.
Company Statement Of Changes In Equity
Share Merger Profit based Share Share Other relief and loss payment Total Note capital premium reserves reserve account reserve equity ------------ -------- ---------- ------------ ------------ -------- ---------- GBP's GBP's GBP's GBP's GBP's GBP's GBP's ------------ -------- ---------- ------------ ------------ -------- ---------- Balance at 01 June 2021 2 - - - 436,550 - 436,552 ------------ -------- ---------- ------------ ------------ -------- ---------- Comprehensive loss for the year Loss for the year - - - - (876,485) - (876,485) ------------ -------- ---------- ------------ ------------ -------- ---------- - - - - (876,485) - (876,485) ------------ -------- ---------- ------------ ------------ -------- ---------- Transactions with owners Dividends: Equity capital 14 - - - - (395,000) - (395,000) Share-based payments charge 29 - - - - - 574,227 574,227 Share-for-share exchange 26 16,000 - - 5,849,982 - - 5,865,982 Issue of B shares 26 5,000,000 - - (5,000,000) - - - Cancellation of B shares 26 (5,000,000) - 5,000,000 - - - - Purchase of own shares 26 (3,500) - - - 3,500 - - Bonus issue of shares 26 37,498 - (37,498) - - - -
-------- Total transactions with owners 49,998 - 4,962,502 849,982 (1,267,985) 574,227 5,168,724 ------------ -------- Balance at 31 May 2022 50,000 - 4,962,502 849,982 (831,435) 574,227 5,605,276 ============ ======== ========== ============ ============ ======== ==========
The notes below form an integral part of these Financial Statements.
Company Statement Of Changes In Equity
Share Merger Profit based Share Share Other relief and loss payment Total Note capital premium reserves reserve account reserve equity -------- ----------- ---------- ---------- ------------ ---------- ------------ GBP's GBP's GBP's GBP's GBP's GBP's GBP's -------- ----------- ---------- ---------- ------------ ---------- ------------ Balance at 01 June 2022 50,000 - 4,962,502 849,982 (831,435) 574,227 5,605,276 -------- ----------- ---------- ---------- ------------ ---------- ------------ Comprehensive income for the year Loss for the year - - - - (1,172,609) - (1,172,609) -------- ----------- ---------- ---------- ------------ ---------- ------------ - - - - (1,172,609) - (1,172,609) -------- ----------- ---------- ---------- ------------ ---------- ------------ Transactions with owners Loan conversion 26 8,824 3,741,176 - - - - 3,750,000 Issue of shares 26 35,999 16,199,001 - - - - 16,235,000 Share issue costs - (811,750) - - - - (811,750) Share based payments charge 29 - - - - - 475,321 475,321 Total transactions with owners 44,823 19,128,427 - - - 475,321 19,648,571 -------- ----------- Balance at 31 May 2023 94,823 19,128,427 4,962,502 849,982 (2,004,044) 1,049,548 24,081,238 ======== =========== ========== ========== ============ ========== ============
The notes below form an integral part of these Financial Statements.
Consolidated Statement Of Cashflows
For the For the year ended year ended 31 May 31 May 2023 2022 GBP's GBP's Cash flows from operating activities Loss for the year (4,831,375) (5,310,231) Adjustments for: Amortisation of intangible assets 27,380 - Depreciation of tangible assets 187,108 220,668 Profit on disposal of tangible assets (14,951) - Interest paid 86,505 144,994 Interest received (16,908) 1,182 RDEC Taxation credit (net) (197,854) (445,496) SME R&D credit (232,389) - Increase in stocks (2,150,351) (763,526) Increase in debtors (2,137,644) (443,613) (Decrease)/increase in creditors (156,025) 598,558 (Decrease)/increase in provisions (44,057) 44,057 Corporation tax received - 353,149 Share-based payments expense 475,321 574,227 Fair value losses - convertible loan - 750,000 Stamp duty paid on share-for-share exchange - (33,770) Net cash flows used in operating activities (9,005,240) (4,309,801) ------------------ ----------- Cash flows from investing activities Purchase of tangible fixed assets (443,198) (135,248) Sale of tangible fixed assets 25,500 - Intangible assets - capitalisation of internal development cost (810,417) - ----------- Net cash used in investing activities (1,228,115) (135,248) ------------------ ----------- Cash flows from financing activities Issue of ordinary shares 16,235,000 - Share issue costs (811,750) - New secured hire purchase loans 106,779 - Repayment of obligations under finance leases and hire purchase contracts (144,177) (89,488) Dividends paid - (395,000) Interest paid (32,434) (35,679) Interest received 3,540 - New convertible loan - 3,000,000 ----------- Net cash from financing activities 15,356,958 2,479,833 ------------------ ----------- Net increase/(decrease) in cash and cash equivalents 5,123,603 (1,965,216) Cash and cash equivalents at the beginning of the year 1,876,083 3,841,299 ------------------ ----------- Cash and cash equivalents at the end of the year 6,999,686 1,876,083 ================== ===========
Consolidated Analysis Of Net Debt For The Year Ended 31 May 2023
At 1 June Cash flows Payments Increase At 31 May 2022 made in in lease 2023 year liability GBP's GBP's GBP's GBP's GBP's Cash at bank and in hand 1,876,083 5,123,603 - - 6,999,686 Finance leases (444,681) - 144,179 (106,779) (407,281) Convertible loan notes (3,750,000) 3,750,000 - - - ----------- ---------- -------- ---------- --------- (2,318,598) 8,873,603 144,179 (106,779) 6,592,405 =========== ========== ======== ========== =========
The notes below form an integral part of these Financial Statements.
Notes To The Financial Statements
1. General information
Equipmake Holdings P lc is a public company limited by shares incorporated in England and Wales. The company registration number is 04303233. The registered office is Unit 7, Snetterton Business Park, Snetterton, Norfolk, NR16 2JU.
The Group consists of the parent Equipmake Holdings Plc and subsidiary Equipmake Limited. All Group entities are included within the consolidation.
Equipmake is a UK-based engineering specialist pioneering the development and production of electrification products across the automotive, aerospace, bus, coach, and fire truck industries support of the transition from fossil-fuelled to zero-emission powertrains.
These financial statements are presented in sterling which is the functional currency of the entity and are rounded to the nearest GBP1.
2. Accounting policies
2.1 Basis of preparation of financial statements
These financial statements have been prepared in accordance with FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" ("FRS 102") and the requirements of the Companies Act 2006.
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The Company is a qualifying entity for the purposes of FRS 102, being a member of a group where parent of that group prepares publicly available consolidated financial statements, including the Company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The Company has therefore taken advantage exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
- Section 7 'Statement of Cash Flows': Presentation of a statement of cash flow and related notes and disclosures.
- Section 33 'Related Party Disclosures' - Compensation for key management personnel.
The following principal accounting policies have been applied:
2.2 Basis of consolidation
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date.
In accordance with the transitional exemption available in FRS 102, the Group has chosen not to respectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 1 June 2016.
2.3 Going concern
The financial statements have been prepared on a going concern basis which the Directors believe to be appropriate. The loss for the year was in line with expectations and the GBP16.2m of gross fundraising completed during the year, provides adequate funding for the Company to execute its plans for growth. The Company has prepared detailed financial forecasts and cash flow projections which reflect the anticipated revenue growth over the next few years, in line with the strategy communicated at the IPO. After considering a number of reasonable sensitivities and the availability of a number of mitigation levers, such as the deferral of capital expenditure, recruitment and discretionary overhead spend, as well as the re-phasing of working capital
2. Accounting policies (continued)
commitments to align with order conversion, the Directors confirm that sufficient cash is available to meet the Company's liabilities as they fall due for the foreseeable future and at least twelve months from the date of approval of these financial statements. The detailed cash flow calculations are based on the Company's annual budget, approved by the board and reflect a number of key assumptions including:
-- revenue growth supported by current orderbook and opportunity pipeline; -- margin rates incorporating expected input costs and sales prices; -- working capital requirements incorporating current customer and supplier payment terms; -- increased overhead spend to support the anticipated increase in revenue; and -- continued investment in product development.
Further detail regarding current trading and the outlook for the business is provided with the CEO statement on pages 4 and 5 of this report. The Directors believe that the Company is well placed to navigate the challenges that it is likely to face during a period of significant growth and have a reasonable expectation that it has sufficient resources to meet its financial obligations for the foreseeable future. On this basis, the Directors continued to adopt the going concern basis for preparation of these financial statements.
2.4 Foreign currency translation
Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each year end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
2.5 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding trade discounts, and net of VAT.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (under "ex works" incoterms, this is typically when the goods are made available for transport or collection but the transfer of rights depends on the contractual terms agreed), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
Revenue from licencing agreements is recognised when it is probable that the economic benefits associated with the transaction will flow to the entity and the amount of revenue can be measured reliably. Revenue is recognised on an accrual basis in accordance with the substance of the relevant agreement, including consideration of ongoing obligations, guaranteed minimum payments and payments contingent upon future events.
2.6 Leases
Operating leases: the Group as a lessee
Rentals paid under operating leases are charged to profit and loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Finance leases: The Group as a lessee
An asset and corresponding liability are recognised for leasing agreements that transfer to the Group substantially all of the risks and rewards incidental to ownership ("finance leases"). The amount capitalised is the fair value of the leased asset or, if lower, the present value of the minimum lease payments payable during the lease term, both determined at inception of the lease. Lease payments are treated as consisting of capital and interest elements. The interest is charged to statement of comprehensive income, so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are expensed as incurred.
2.7 Government grants
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss as other income at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated Statement of Comprehensive Income within turnover in the same period as the related expenditure, which is recognised in cost of sales. These grants relate to the primary function of the business and facilitate the delivery of the Group's primary purpose. Other grants are shown within other operating income.
2.8 Interest income
Interest income is recognised in profit or loss using the effective interest method.
2.9 Finance costs
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
2.10 Pensions
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.
2.11 Share based payments
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition. The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
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 profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
2.12 Taxation
Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.
2.13 Exceptional items
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence. This includes fair value adjustments in respect of the convertible loan notes and transaction costs associated with the IPO.
In respect of IPO transactions fees, GBP0.6m in the current financial year were expensed to the Statement of Comprehensive Income and GBP0.5m of broker fees was charged to share premium. In FY2022 these costs were prepaid. Fees prepaid in 2023 were GBPNil (2022: GBP0.1m) .
2.14 Tangible fixed assets
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.
Depreciation is provided on the following basis:
Leasehold improvements 20% Straight line Plant and machinery 20-33% Straight line Specialist assets 50% Straight line
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Assets under development are recognised at their cost. No depreciation is charged on these assets until the assets are complete and available for use.
2.15 Intangible items
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Intangible assets are reviewed for impairment each financial year.
Research and development
Internally generated intangible assets arising from development, or the development phase of internal projects, have been recognised in the year where the following can be demonstrated:
a) The technical feasibility of completing the intangible asset so that it will be available for use or sale;
b) Intention to complete the intangible asset and use or sell it; c) Ability to use or sell the intangible asset;
d) How the intangible asset will generate probable future economic benefits (e.g., the existence of a market);
e) Availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
f) Ability to measure reliably the expenditure attributable to the intangible asset during its development.
Development costs have been recognised as an intangible asset for the first time in the year, as it can be demonstrated that all of the criteria for recognition have been met.
In the research phase of an internal project, it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
All development costs capitalised in the year relate to development of an integrated electric vehicle powertrain, for which it was considered that there was insufficient evidence of probable future economic benefits in prior periods to recognise as an asset. Advancement of the development work and fulfilment of customer orders, demonstrating feasibility and existence of a market for the products, has prompted a decision to capitalise development costs in the year. Expenditure on these assets items previously recognised as an expense have not been recognised as part of the cost of the asset.
Completed assets are being amortised over 3-5 years straight line.
2.16 Investments
Investments in subsidiaries are initially measured at cost at acquisition and reviewed for impairment at each reporting date, with any movement in the fair value recognised in the profit and loss. Where an investment is acquired in stages, it may be more appropriate to recognise the fair value during initial recognition and then assess the deemed cost for impairment at each reporting date.
The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are required immediately in the profit and loss account.
2.17 Stocks and work-in-progress
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis.
Work-in-progress ("WIP") includes an allocation of direct labour costs and overhead appropriate to the stage of manufacture. At each balance sheet date, stocks and WIP are assessed for impairment. If impairment has occurred, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
2.18 Debtors
Short-term debtors are measured at transaction price, less any impairment.
2.19 Cash and cash equivalents
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
2.20 Creditors
Short-term creditors are measured at the transaction price. Other financial liabilities are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
2.21 Provisions for liabilities
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
2.22 Financial instruments
The Group has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments.
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument, and are offset only when the Group currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Financial assets
Trade, group and other debtors (including accrued income) which are receivable within one year and which do not constitute a financing transaction are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled and any impairment losses.
Where the arrangement with a debtor constitutes a financing transaction, the debtor is initially measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument and subsequently measured at amortised cost.
A provision for impairment of trade debtors is established when there is objective evidence that the amounts due will not be collected according to the original terms of the contract. Impairment losses are recognised in profit or loss for the excess of the carrying value of the trade debtor over the present value of the future cash flows discounted using the original effective interest rate. Subsequent reversals of an impairment loss that objectively relate to an event occurring after the impairment loss was recognised, are recognised immediately in profit or loss.
Financial liabilities
Financial instruments are classified as liabilities and equity instruments according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Trade, group and other creditors (including accruals) payable within one year that do not constitute a financing transaction are initially measured at the transaction price and subsequently measured at amortised cost, being the transaction price less any amounts settled.
Where the arrangement with a creditor constitutes a financing transaction, the creditor is initially measured at the present value of future payments discounted at a market rate of interest for a similar instrument and subsequently measured at amortised cost.
Derivatives
Derivatives, including forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
The Group enters into currency forward contracts. These are measured at fair value at the end of the reporting period, with any changes in fair value recognised in profit or loss.
Equity instruments
Financial instruments classified as equity instruments are recorded at the fair value of the cash or other resources received or receivable, net of direct costs of issuing the equity instruments.
2.23 Dividends
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
3. Judgements in applying accounting policies and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date, and the amounts reported for income and expenditure during the year. However, the nature of estimation means that actual outcomes could materially differ from those estimates. The key assumptions concerning the future and other key sources of estimating uncertainty at the reporting date include:
Revenue recognition
The Company has established a clear decision matrix for each order/contract to ensure a consistent approach for determining the basis for recognising revenue. In some circumstances, judgements are made in respect of the amount of revenue to be recognised at each reporting date. For example, where goods and services supplied on the same contract cannot be split for the purposes of revenue recognition and the work is performed over a period of months or years, the Company would recognise revenue based on the stage of completion. Further details regarding the calculation are included under note 2.5.
Share based payments
Some of Equipmake Limited's employees have been granted share options by the Company. The fair value of these options on the date of grant has been determined using the Black Scholes Model. The directors consider this the most suitable model for calculating the fair value of the options. For further details, see note 29.
The management believe that there will not be only one acceptable choice for estimating the fair value of share- based payment arrangements. The judgements and estimates that management apply in determination of the share- based compensation are summarised below:
-- Selection of valuation model -- Making assumptions used in determining the variables used in a valuation model: I. Expected life II. Expected volatility III. Expected dividend yield IV. Probability of performance-based vesting conditions being met.
Options with both time-based and performance-based vesting conditions were granted in the year. The vesting thresholds for the performance-linked options were revised during the year in line but remain consistent with the revenue forecasts for FY2023 and FY2024. Given that the Directors believe that the Company will achieve its revenue targets for FY2023 and FY2024, a charge has been recognised for the relevant portion of the vesting period.
Share options were also granted to two non-employees of the Company. A share-based payments charge has been recognised in respect of one of these individuals, for whom it has been judged that share options were awarded as a result of past services provided to the Company.
Development costs
Management has reviewed activity relating to both customer-related and internal product development projects during the period and capitalised costs where it is considered that the FRS102 criteria have been met. The judgements and estimates that management apply when identifying costs to be capitalised are summarised below:
-- Estimated size and value of the market for the product being developed;
-- Assessment of technical, financial and other resources required and available to complete development;
-- Technical feasibility of completing the development work; -- Completion status of the development work; and -- Expected useful life of the asset once completed.
In the research phase of an internal project, it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Impairment of investments and inter-company receivable
The directors have assessed the valuation of the investment in Equipmake Limited (subsidiary) and inter- company receivable held in Equipmake Holdings PLC, at the balance sheet date. The Directors believe that due to the ongoing development of the Company's products, its considerable pipeline of opportunities and the market capitalisation / share price of the Company (along with the raising of GBP10m of gross funding via an IPO on the Aquis Stock Exchange for Equipmake Holdings Plc and a further GBP6.2m in a subsequent funding round), that this investment is not impaired.
Stock
The directors have assessed whether any inventories are impaired by comparing the estimated selling price less costs to complete to the carrying amount at year end. Judgements and estimates that management apply in making this assessment include:
-- Identification of defective, slow-moving or obsolete stocks;
-- Estimates of prices obtainable for the goods at the time that they will be available for sale; and
-- Projected costs of completion and sale.
Contingent liability
A contingent liability for the provision of warranties is calculated by management. Warranties requires management's best estimate of the expenditure that will be incurred in respect of warranty claims, which are detailed in the terms and conditions of sale. Certain contracts contain an obligation for Equipmake to provide a warranty on the products that it provides. The precise terms of the warranty vary on a contract-by-contract basis but currently range between three and eight years. Given that these products are new to the market, Equipmake is unable to reference a history of warranty claims in order to provide a basis for estimating an accurate provision. The Company acknowledges the contractual obligation but is unable to provide a basis for estimation of a provision that complies with the requirements of the accounting standards.
4. Segmental reporting and turnover
Segmental information is presented in respect of the Group's operating segments based on the format that the Group reports to its chief operating decision maker, for the purpose of allocating resources and assessing performance.
The Group considers that the chief operating decision maker comprises the Executive Directors of the business.
The Directors manage the Group as a single business delivering electric power train solutions across a range of markets. Information that was made available to the chief operating decision maker in the reporting period included a split of gross margin by customer project, and therefore segmental information is presented along the same lines. Operating segments that share similar characteristics have been aggregated where the criteria for aggregation have been met.
Comparative segmental analysis has not been provided for the year ended 31 May 2022 because the information is not available.
Powertrain Powertrain EV Engineering Licencing/ Total Grants Total (inc. (supply components projects royalties (excluding vehicle only) Grants) integration) GBP's GBP's GBP's GBP's GBP's GBP's GBP's GBP's Revenue 900,000 849,700 1,575,545 1,311,951 300,000 4,937,196 116,344 5,053,540 Cost of sales (1,016,277) (875,551) (956,171) (831,472) - (3,679,471) (165,792) (3,845,263) ---------------- ------------- ----------- ----------- ------------ ----------- ------------ ---------- ------------ Gross Margin (116,277) (25,851) 619,374 480,479 300,000 1,257,725 (49,448) 1,208,277 ================ ============= =========== =========== ============ =========== ============ ========== ============ Administrative expenses - - - - - - - (6,436,692) Other operating income - - - - - - - 280,658
------------ Operating loss - - - - - - - (4,947,757) Net interest - - - - - - - (69,597) ------------ Loss before taxation - - - - - - - (5,017,354) Taxation - - - - - - - 185,979 ------------ Loss for the financial year - - - - - - - (4,831,375) ============ For the For the year year ended 31 ended 31 An analysis of turnover by class of business May May is as follows: 2023 2022 GBP's GBP's Powertrain (inc. vehicle integration) 900,000 - Powertrain (supply only) 849,700 167,156 EV components 1,575,545 416,946 Engineering projects 1,311,951 2,021,458 Grants receivable 116,344 1,035,396 Other 300,000 65,829 --------- --------- 5,053,540 3,706,785 ========= ========= Analysis of turnover by country of destination: United Kingdom 2,550,385 2,588,683 Rest of Europe 1,265,000 391,646 Asia (exc. Far East) 300,000 - Rest of world 908,955 649,816 Far East 29,200 76,640 5,053,540 3,706,785 ========= =========
All revenue reported is external to the Group.
Details of external customers where revenue is 10% or more of the Group's total revenues (inclusive of grants) are as follows:
-- GBP1,021,593 (20.2%) in the EV components segment. -- GBP900,000 (17.8%) in the Powertrain (inc. vehicle integration) segment. -- GBP849,700 (16.8%) in the Powertrain (supply only) segment. -- GBP786,703 (15.6%) in the Engineering projects and EV components segments. -- GBP668,260 (13.2%) in the Engineering projects segment. 5. Other operating income For the For the year year ended 31 ended 31 May May 2023 2022 GBP's GBP's Government grants receivable - 15,136 RDEC claim 244,265 549,996 Other income 36,393 - Total other operating income 280,658 565,132 ========= ========= 6. Operating loss For the For the year year ended 31 ended 31 May May The operating loss is stated after charging: 2023 2022 GBP's GBP's Operating lease payments - property 269,645 174,211 Operating lease payments - other 48,154 32,995 Depreciation of tangible fixed assets - owned (note 16) 169,035 209,159 Depreciation of tangible fixed assets - held under finance lease and hire purchase (note 16) 87,096 141,525 Amortisation of intangible fixed assets (note 17) 27,380 - Profit on the sale of tangible fixed assets (14,951) - Foreign exchange loss 84,801 8,081 Share-based payments (note 29) 475,321 574,227 Research and development costs * 1,752,143 4,230,735 Exceptional items (note 12) 615,064 750,000 --------- ---------
*Based on qualifying R&D expenditure (of this, a further GBP724,353 was capitalised).
7. Auditors' remuneration For the For the year year ended 31 ended 31 Fees payable to the Group's auditor and May May its associates for the audit of the: 2023 2022 GBP's GBP's Group's annual financial statements 83,500 65,000 ========= ========= Other fees payable to the Group's auditor and its associates in respect of: Reporting accountant services 85,250 60,000 All other services 2,050 1,200 87,300 61,200 ========= ========= 8. Employees Staff costs, including directors' Group Group Company Company remuneration, were as follows: 2023 2022 2023 2022 GBP's GBP's Wages and salaries 3,600,915 2,537,185 413,443 - Social security costs 405,474 278,944 49,909 - Cost of defined contribution scheme 112,266 88,286 38,840 - Share based payments 150,803 574,227 - - --------- --------- 4,269,458 3,478,642 502,192 - ========= ========= ======= =======
The average monthly number of employees, including the directors, during the year was as follows:
For the For the year year ended 31 ended 31 May May 2023 2022 Employees 82 69 --------- ---------
The Company has no employees other than the directors, who did not receive any remuneration (202 2: GBPNil). Remuneration of Directors is paid from Equipmake Limited and recharged to Equipmake Holdings Plc.
9. Directors For the For the year year ended 31 ended 31 May May 2023 2022 GBP's GBP's Directors' emoluments 438,109 102,218 Group contributions to defined contribution pension schemes 45,947 40,220 Share-based payments 76,892 442,714 560,948 585,152 ========= =========
During the year retirement benefits were accruing to 3 directors (202 2: 3 ) in respect of defined contribution pension schemes. The number of directors who received shares under long term incentive schemes was 1 (202 2: 1 ).
The highest paid director's emoluments were as follows:
Directors' emoluments and amounts receivable under long-term incentive schemes GBP147,584 (202 2 : GBP449,099, inclusive of GBP442,714 related to share-based payments).
Group contributions to defined contribution pension schemes GBP 40,000 (202 2 : GBP 110 ).
10. Interest receivable
For the For the year year ended 31 ended 31 May May 2023 2022 GBP's GBP's Other interest receivable / (payable) 16,908 (1,182) 16,908 (1,182) ========= =========
11. Interest payable and similar expenses
For the For the year year ended 31 ended 31 May May 2023 2022 GBP's GBP's Loan interest payable 86,505 32,526 Other interest payable - 112,468 86,505 144,994 ========= =========
12. Exceptional items
For the For the year year ended 31 ended 31 May May 2023 2022 GBP's GBP's Costs relating to Equipmake's admission to AQSE (615,064) - Fair value adjustment - convertible loan note - (750,000) (615,064) (750,000) ========= =========
As at 31 May 2023, exceptional costs are in respect of IPO transactions fees expensed to the Statement of Comprehensive Income. In FY2022 these costs were prepaid. Fees prepaid in 2023 were GBPNil (2022: GBP0.1m).
In the year ended 31 May 2022 exceptional cost were expensed as part of the fair value adjustment in respect of a convertible loan note. As at 31 May 2023, there was a fair value adjustment of GBPNil.
13. Taxation
For the For the year ended year 31 May Ended 31 2023 May 2022 GBP's GBP's Corporation tax Current tax on RDEC 46,410 104,499 Tax credit - R&D SME scheme (232,389) ----------- ---------- (185,979) 104,499 ----------- ---------- Total current tax Deferred tax - - ----------- ---------- Total deferred tax - - ----------- ---------- Taxation on loss on ordinary activities (185,979) 104,499 =========== ==========
Factors affecting tax charge for the year
The tax assessed for the year is lower than (2022 - lower than) the standard rate of corporation tax in the UK of 20 % (2022: 19%). The standard rate of corporation tax for the year is calculated to be 20% as a result of the UK corporation tax main rate increasing from 19% to 25% on 1(st) April 2023.
The differences are explained below:
Reconciliation of effective rate and tax For the For the charge year ended year Ended 31 May 31 May 2022 2023 GBP's GBP's Loss on ordinary activities before tax (5,017,354) (5,205,732) ----------- ------------- Loss multiplied by the rate of corporation tax in the UK of 20 % (2022: 19%) (1,003,471) (989,089) ----------- ------------- Effects of: Unrecognised deferred tax assets 1,030,305 607,688 Remeasurement of deferred tax for changes in tax rates (204,624) - Enhanced super deduction (4,613) Expenses not deductible for tax purposes 228,412 265,650 Depreciation on ineligible assets 401 SME R&D tax credit (232,389) Adjustments in respect of prior years - 11,252 ----------- ------------- Total tax charge for the year (185,979) 104,499 =========== =============
Factors that may affect future tax charges
Changes to the UK corporation tax rates were substantially enacted as part of the 2021 Budget on 24 May 2021. This included an increase to the main rate from 19% to 25% from April 2023. The Company will be taxed at a rate of 25% unless its profits are sufficiently low enough to qualify for a lower rate of tax, the lowest being 19%.
Where applicable, deferred taxes at the balance sheet date have been measured using tax rates between 19% and 25% to reflect the rate of the timing differences are likely to unwind and are reflected in the financial statements.
Deferred tax is not recognised in respect of losses of GBP11,632,746 (2022: GBP8,281,504) due to the uncertainty that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
14. Dividends
For the For the year year ended 31 ended 31 May May 2023 2022 GBP's GBP's Ordinary dividends - 395,000 - 395,000 ========= =========
15. Intangible assets
Group Development Other Intangibles Total expenditure GBP's GBP's GBP's Cost At 1 June 2022 - 11,471 11,471 Additions - internally developed 810,417 - 810,417 ------------- ------------------- At 31 May 2023 810,417 11,471 821,888 ------------- ------------------- ------- Amortisation At 1 June 2022 - 11,471 11,471 Charge 27,380 - 27,380 ------------- ------------------- At 31 May 2023 27,380 11,471 38,851 ------------- ------------------- ------- Net book value ------------- ------------------- ------- At 31 May 2023 783,037 - 783,037 ============= =================== ======= At 31 May 2022 - - - ============= =================== =======
No intangible assets are held within the parent company.
The average remaining useful life of intangible assets being amortised is 3.6 years. The cost of assets not yet being amortised is GBP568,694, with amortisation expected to commence for these assets in the year ending 31 May 2024. Of this, GBP461,704 will be amortised over 3 years and GBP106,990 will be amortised over 5 years.
16. Tangible fixed assets
Leasehold Plant and Specialist Assets in Group property machinery equipment development Total GBP's GBP's GBP's GBP's GBP's Cost or valuation At 1 June 2021 55,452 722,037 502,119 - 1,279,608 Additions 25,144 58,820 - 51,283 135,247 --------- ---------- ---------- ------------ --------- At 31 May 2022 80,596 780,857 502,119 51,283 1,414,855 --------- ---------- ---------- ------------ --------- Depreciation At 1 June 2021 18,347 223,807 424,894 - 667,048 Charge for the year 11,509 131,934 77,225 - 220,668 --------- ---------- ---------- ------------ --------- At 31 May 2022 29,856 355,741 502,119 - 887,716 --------- ---------- ---------- ------------ --------- Cost or valuation At 1 June 2022 80,596 780,857 502,119 51,283 1,414,855 Additions 19,676 317,904 - 105,620 443,200 Disposals - (72,680) - - (72,680) --------- ---------- ---------- ------------ --------- At 31 May 2023 100,272 1,026,081 502,119 156,903 1,785,375 --------- ---------- ---------- ------------ --------- Depreciation At 1 June 2022 29,856 355,741 502,119 - 887,716 Charge for the year 18,073 169,035 - - 187,108 Eliminated on disposal - (62,130) - - (62,130) --------- ---------- ---------- ------------ --------- At 31 May 2023 47,929 462,646 502,119 - 1,012,694 --------- ---------- ---------- ------------ --------- Net book value --------- ---------- ---------- ------------ --------- At 31 May 2023 52,343 563,435 - 156,903 772,681 ========= ========== ========== ============ =========
At 31 May 2022 50,740 425,116 - 51,283 527,139 ========= ========== ========== ============ =========
Specialist/technical plant and equipment relates to project specific equipment whose value is consumed over the life of the relevant project. Cost of such assets are therefore written off over the minimum project duration.
The net book value of fixed assets includes GBP275,216 (2022: GBP225,533) in respect of assets held under finance leases and hire purchase contracts.
17. Fixed asset investments
Investments in subsidiary companies GBP's Cost or valuation At 1 June 2021 82 Additions 33,795 Fair value of addition arising on share-for-share exchange 5,849,982 Other movements - share-based payments 574,228 -------------- At 31 May 2022 6,458,087 ============== At 1 June 2022 6,458,087 Additions 11,000,000 Other movements - share-based payments 475,321 -------------- At 31 May 2023 17,933,408 ==============
On 31 May 2023, Equipmake Holdings PLC allotted 11,000 ordinary shares of GBP0.01 each in Equipmake Limited, as consideration for releasing Equipmake Limited from its obligation to repay an GBP11,000,000 intercompany loan. The share issue reflects the long-term nature of the funding relationship between Equipmake Holdings and Equipmake Limited, with Equipmake Limited being the primary trading and operating entity within the Group.
Subsidiary undertaking
The following was the only subsidiary undertaking of the Company during the year ended 31 May 2023:
Class of Name Registered office shares Holding Unit 7 Snetterton Business Park, Snetterton, Norfolk, NR16 2JU, Ordinary/ Equipmake Limited England Deferred 100%
18. Stocks
Group Group 2023 2022 GBP's GBP's Work in progress 485,452 197,418 Raw materials 2,472,873 610,555 2,958,325 807,973 ========= =======
All stock is held within the subsidiary company Equipmake Limited.
The cost of Group stocks recognised as an expense in the year ended 31 May 2023 amounted to GBP2,961,711 (2022: GBP3,106,835).
19. Debtors
Group Group Company Company 2023 2022 2023 2022 GBP's GBP's GBP's GBP's Trade debtors 2,463,277 533,740 - - Amounts owed by group undertakings - - - 1,265,867 Other debtors 231,677 230,956 16,504 3,429 Prepayments and accrued income 931,284 710,536 33,948 90 Tax recoverable 875,740 445,496 - - --------- --------- ------- --------- 4,501,978 1,920,728 50,452 1,269,386 ========= ========= ======= =========
20. Cash and cash equivalents
Group Group Company Company 2023 2022 2023 2022 GBP's GBP's GBP's GBP's Cash at bank and in hand 6,999,686 1,876,083 6,601,712 1,737,118 --------- --------- --------- --------- 6,999,686 1,876,083 6,601,712 1,737,118 ========= ========= ========= =========
21. Creditors: Amounts falling due within one year
Group Group Company Company 2023 2022 2023 2022 GBP's GBP's GBP's GBP's Trade creditors 470,449 546,807 22,855 - Amounts owed to group undertakings - - 282,776 - Other taxation and social security 138,234 85,371 3,515 - Obligations under finance lease and hire - purchase contracts 152,098 137,512 - - Other creditors 216,611 144,163 161,729 109,315 Convertible loan notes - 3,750,000 - 3,750,000 Accruals and deferred income 979,884 1,130,792 33,459 - --------- --------- ------- --------- 1,957,276 5,794,645 504,334 3,859,315 ========= ========= ======= =========
On 18 January 2022, the Company issued convertible loan notes for GBP3,000,000. These were subsequently recognised at fair value at the end of the 31 May 2022. The loan notes converted to ordinary shares immediately upon listing of the Company, and as such there is no such balance as at 31 May 2023. Until the loan notes converted, interest was accrued on the principal amount at 10% per annum.
22. Creditors: Amounts falling due after more than one year
Group Group 2023 2022 GBP's GBP's Net obligations under finance leases and hire purchase contracts 255,183 307,169 ------- ------- 255,183 307,169 ======= =======
No asset under finance lease were held within the parent company.
23. Hire purchase and finance leases
Minimum lease payments under hire purchase Group Group fall due as follows: 2023 2022 GBP's GBP's Within one year 152,098 137,512 Between 1-5 years 255,183 307,169 ------- ------- 407,281 444,681 ======= ======= Group Group 2023 2022 GBP's GBP's HP Loan 1 - GBP69,300 at 2.49%. Repayable until November 2023 7,694 22,573 HP Loan 2 - GBP278,010 at 2.70%. Repayable until December 2024 96,036 152,870 HP Loan 3 - GBP87,750 at 5.51%. Repayable until November 2025 58,611 78,539 HP Loan 4 - GBP201,600 at 4.33%. Repayable until February 2026 144,828 190,699 HP Loan 5 - GBP91,400 at 6.03%. Repayable until September 2026 87,402 - HP Loan 6 - GBP15,379 at 4.58%. Repayable until October 2025 12,710 - ------- ------- 407,281 444,681 ======= =======
24. Financial instruments
Group Group Company Company 2023 2022 2023 2022 GBP's GBP's GBP's GBP's Financial liabilities Other financial liabilities measured at fair value through profit or loss (16,231) (3,859,315) (3,922) (3,859,315) -------- ----------- ------- -----------
Financial liabilities measured at fair value through profit and loss comprise:
-- A convertible loan note which was included in full in creditors due within 1 year as at 31 May 2022; at 31 May 2023 there was no such balance. As at 31 May 2023, there was a fair value adjustment of GBPNil (2022: GBP750,000).
-- US dollar forward contracts outstanding at 31 May 2023 of GBP16,231 (2022: GBPNil).
25. Provisions and contingent liabilities
Warranty provision Group Group 2023 2022 GBP's GBP's Opening balance - 1 June 44,057 - Charged to the profit and loss (44,057) 44,057 Closing balance 31 May - 44,057 ======== ======
No warranty provisions were held within the parent company.
The warranty provision relates to management's best estimate of costs be incurred in respect of warranty claims for items sold in the year, where warranty terms have been agreed in the terms and conditions of sale. As at 31 May 2023 no such warranty provision was held. The warranty provision in the previous year was not considered material.
Certain sales contracts contain an obligation for Equipmake to provide a warranty; however, the products sold are new to the market and intended for long-term use. This lack of historical data, combined with a lack of comparable data on similar products and known challenges in establishing the party responsible in the event of a warranty claim, has led to management making the assessment that a provision for warranty costs cannot be reliability estimated at this point in time. It is expected that a provision for warranty costs will be recognised in future periods once sufficient data becomes available.
26. Share capital
As at As at 31 May 31 May 2023 2022 Allotted, called up and fully paid GBP's GBP's 948,229,409 (2022: 500,000,000) Ordinary Shares of GBP0.0001 each 94,823 50,000 ======= ======= The following amendments to Share Capital took place in the year: Share issue on conversion of convertible loan - 88,235,294 Ordinary Shares of GBP0.0001 each 8,824 - Share issue - 235,294,115 Ordinary Shares of GBP0.0001 each 23,529 - Share issue - 124,700,000 Ordinary Shares of GBP0.0001 each 12,470 - Total 94,823 50,000 ======= =======
The following other movements in relation to Share Capital are as follows:
In January 2022, prior to its IPO, the Company secured GBP3m of investment from an existing shareholder in the form of a convertible loan note. The loan was converted into equity as part of the IPO process at a 20% discount to the market rate, resulting in a share issue of 88,235,294 Ordinary Shares.
On 28 July 2022, the Company issued 198,823,529 GBP0.0001 Ordinary Shares at an issue price of GBP0.0425 and subsequentially on 29 July 2022, the Company issued 36,470,586 GBP0.0001 Ordinary Shares at an issue price of GBP0.0425.
On 29 July 2022, the Company was admitted to the Aquis Access Stock Exchange (Ticker: EQIP).
On 31 January 2023, the Company issued 23,626,996 GBP0.0001 Ordinary Shares at an issue price of GBP0.05, raising a total of GBP1.181 million for the Company (before expenses).
On 1 February 2023, the Company issued 101,073,004 Ordinary Shares at an issue price of GBP0.05, raising a total of GBP5.054 million for the Company (before expenses).
27. Earnings per share
Basic loss per share of 0.60p (2022: 2.3p) is based on the following data:
2023 2022 GBP's GBP's Earnings used in calculation of total earnings per share: Earnings on total losses attributable to equity holders of the parent (4,831,375) (4,617,459) Shares in issue Weighted average number of ordinary GBP0.0001 shares in issue 811,174,508 208,333,375 Earnings/(loss) per share (0.0060) (0.023) =========== ===========
27. Earnings per share (continued)
Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company, being loss making in both this year and the comparative year would mean that any exercise would be anti-dilutive.
28. Reserves
Share premium- Group and Company
The share premium account represents amounts subscribed for share capital in excess of nominal value, net of directly attributable issue costs.
Other reserves - Group
Brought forward other reserves comprise the amount attributable to the owners of the Company following the issue of shares in the subsidiary at a premium to non-controlling interests in previous financial years.
Other reserves - Company
Brought forward result of a reduction in capital which resulted in the cancellation of 5,000,000 GBP1 B ordinary shares during the financial year ended 31 May 2022, GBP5,000,000 was credited against the proceeds of this issue.
Share-based payments reserve - Group and Company
Used to reflect the assessed fair value of the equity settled options issued as share-based payments.
Merger relief reserve - Company only
The merger relief reserve accounts for the uncapitalised fair value adjustment in respect of the investment in the wholly owned subsidiary Equipmake Limited which is eliminated on consolidation and therefore not presented on a Group basis.
Profit and loss account - Group and Company
Profit and loss account represents cumulative profits and losses net of dividends and other adjustments.
29. Share-based payments
The parent company (Equipmake Holdings Plc) operates an equity based share based remuneration scheme for employees of Equipmake Limited. These share options have been granted to employees of Equipmake Limited but will ultimately be settled in equity in Equipmake Holdings Plc. The share based payments charge has been recognised as an expense in the financial statements of Equipmake Limited, in accordance with the accounting standards. The fair value is measured by use of the Black Scholes option pricing method.
Under the schemes listed below, options have been granted to subscribe for shares in Equipmake Holdings Plc.
Equipmake Holdings Plc granted share options on the 26 November 2021 with 138,888 options granted in respect of A Ordinary shares of GBP0.0001 each. The vesting criteria of the options were based on the exit price (vesting of option on an exit event other than a listing) or the Company value on the exercise date (vesting of option on listing). Across all option holders, 1.5% of the fully diluted share capital vested when the Company completed the IPO in July 2022. A further 1% would vest when the Company value exceeds GBP200m. A further 1% would vest when the Company value exceeds GBP400m. 0.5% would vest when the Company value exceeds GBP800m. The share-based payments charge in respect of these options was recognised in full in the year to 31 May 2022.
Equipmake Holdings Plc granted non-EMI options over A Ordinary shares in the year to 31 May 2022, of which 2,308,744 were substantially modified on 1 June 2022. The revised non-EMI options updated the terms of the agreements to prevent dilution on a listing. Subject to the EMI options being capable of exercise in full, the recipient will be granted the option to acquire a number of A Ordinary shares which, when added to the A Ordinary shares issuable on exercise of the EMI options, equates to 4% of the fully diluted share capital. These options shall lapse on the same date as the EMI options. The initial fair value of the combined EMI and non-EMI share options were recognised 31 May 2022 and so only the revised fair value from modification has been recognised.
Equipmake Holdings Plc granted 24,950,000 share options on 19 July 2022. At the year ended 31 May 2023 700,000 options had lapsed. The vesting conditions of these options were either performance related or time based, vesting over a period of 3 to 8 years. Performance related vesting conditions are linked to revenue, though the option agreements state that the options can vest on management discretion. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions and behavioural considerations. If options remain unexercised after a period of 10 years from the date of grant, the options expire. Non-vesting conditions and market conditions are taken into account when estimating the fair value of the option on the grant date. Options shall lapse on the tenth anniversary of the Grant Date (other lapses conditions are outlined in the Options Agreement).
In addition, share options were also granted on 25 July 2022, to two non-employees of the Company. A share-based payments charge has been recognised in respect of 7,653,061 options granted to one of these individuals, for whom it has been judged that share options were awarded as a result of past services provided to the Company.
Weighted average Weighted exercise price average exercise (pence) Number price (pence) Number 2023 2023 2022 2022 B/fwd. 0.01 22,201,056 - - Granted during the year 6.54 34,911,805 0.01 22,201,056 Lapsed 10.00 (700,000) - - ----------------- ---------- ----------------- ---------- Outstanding at the end of the year 3.92 56,412,861 0.01 22,201,056 ----------------- ---------- ----------------- ---------- Exercisable at the end of the year 1.01 18,555,643 0.01 - ================= ========== ================= ==========
The presentation in the comparative period included options presented over A Ordinary shares. Following IPO this has been restated to present as options over Ordinary shares only.
19 July 1 June 2022 2022 25 July 2022 2022 Option pricing model Black Scholes Black Scholes Black Scholes Black Scholes used Weighted average share price (pence) 4.25 4.25 4.25 3,012 Exercise price (pence) 0.01 9 0.01 0.000001 Weighted average contractual life (years) 10 5.7 2 1 Expected volatility 50.79% 50.79% 50.79% 50.79% Risk-free interest rate 1.940% 1.940% 1.940% 0.612% ----------------- ------------- ------------- --------------- 2023 2022 GBP's GBP's Equity-settled schemes recognised in the profit or loss for the year 475,321 574,227 475,321 574,227 ============= ===========
30. Capital commitments
Group and Company had capital commitments as follows:
Group Group 2023 2022 GBP's GBP's Contracted for but not provided in these financial statements 676,082 66,267 ------- 676,082 66,267 ======= ======
31. Pension commitments
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to GBP112,266 (2022: GBP88,286). Contributions totalling GBP34,992 (2022: GBP20,642) were payable to the fund at the balance sheet date and are included in creditors.
32. Commitments under operating lease
The Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following years:
Group Group 2023 2022 GBP's GBP's Not later than 1 year 430,886 205,130 Later than 1 year and not later than 5 years 241,932 512,635 672,818 717,765 ======= =======
33. Related party transactions
As permitted by FRS102 paragraphs 1.12e and 33.1a, the Company has taken advantage of the exemption from disclosing the transactions entered into between two or more members of a group as all subsidiary undertakings are wholly-owned by a member of that group.
The Key Management Personnel of Equipmake Limited are the same as Equipmake Holdings Plc, being the Directors.
The following director loans existed during the year within the consolidated figures:
The balance brought forward on the director loan account was GBP70 (2022: GBP4,192). During the year there were drawings of GBP4,443 (2022: GBP1,242) and repayments of GBP4,512 (2022: GBP5,364) with a carry forward balance owed to the Company of GBP1 (2022: GBP70). No interest was charged during the year (2022: GBPNil).
34. Post balance sheet events
There are no other post balance sheet events that require adjustment or disclosure in these financial statements.
35. Controlling Party
The Directors do not consider there to be one ultimate controlling party.
The ultimate controlling party of the Group, by virtue of his majority shareholding, was Ian Foley as at 31 May 2022. As at 31st May 2023, Ian Foley controlled 39.55% (2022: 75%) of the shareholding.
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
NEXBUBDGSBGDGXB
(END) Dow Jones Newswires
October 02, 2023 02:00 ET (06:00 GMT)
1 Year Equipmake Chart |
1 Month Equipmake Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions