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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Maestrano Group Plc | LSE:MNO | London | Ordinary Share | GB00BYZQM590 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 12.50 | 12.00 | 13.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMMNO
RNS Number : 9973C
Maestrano Group PLC
26 October 2020
26 October 2020
Maestrano Group PLC ("Maestrano" or the "Company")
Results for the year ended 30 June 2020
Publication of Annual Report and Accounts
The Company announces that its Annual Report and Accounts are being posted to shareholders today and will be made available on the Group's website: www.maestrano.com . Key extracts from the report and accounts are presented below.
The Company also announces that the Annual General Meeting of the Company will be held at 9.00am on 19 November, 2020 at the offices of Memery Crystal LLP, 165 Fleet Street, London, EC4A 2DY.
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Enquiries:
Maestrano Group plc
Ian Buddery, Chairman c/o Arden Partners
Grant Thornton (Nominated Adviser)
Jamie Barklem / Niall McDonald +44 (0)20 7383 5100
Arden Partners (Broker)
Ruari McGirr / Ciaran Walsh +44 (0)20 7614 5900
About Maestrano
Maestrano offers a patented cloud-based platform for master data management and business analytics , together with specialist hardware and software for capturing, analysing and reporting on large datasets within the transport sector, employing sophisticated artificial intelligence algorithms.
Further information on the Company is available at: www.maestrano.com
STRATEGIC REPORT
The directors present their strategic report on the consolidated entity (referred to hereafter as the 'Group') consisting of Maestrano Group plc (referred to hereafter as 'Maestrano', 'the Company' or ' the parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2020.
The strategic report includes the following sections:
1. Company Overview 2. Chairman's statement 3. Review of operations by the Chief Executive Officer 4. Principal risks and uncertainties 5. People
Cautionary statement regarding forward-looking statements
This document contains certain forward-looking statements. These forward-looking statements include references to matters that are not historical facts or are statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies, and the industries in which the Group operates. Forward-looking statements are based on the information available to the directors at the time of preparation of this document and will not be updated subsequent to the issue of this document. The directors can give no assurance that these expectations will prove to be correct. Due to inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements.
Principal activities
Maestrano is a United Kingdom ('UK') incorporated software company with operations in Australia (main country of operation), USA and the UK. Maestrano offers a patented cloud-based platform for master data management and business analytics, together with specialist hardware and software for capturing, analysing and reporting on large datasets within the transport sector, employing sophisticated artificial intelligence algorithms.
1. COMPANY OVERVIEW
Maestrano's cloud-based platforms, used in the transportation, infrastructure and banking sectors, connect data and turn it into actionable insights to help manage business operations in new ways.
The Maestrano Group operates subsidiaries in the UK, Australia and the USA, under the brands Corridor Technology, Nextcore and Airsight. These deliver respectively products and services for transport corridor asset management, drone based LiDAR (Light Detection And Ranging) systems and aerial surveying.
The Group is a leader in infrastructure monitoring through automation and machine learning. The flagship Corridor solution is currently focused on the rail industry, seeking to establish a strong business before expanding into road and energy transport infrastructure. The Group has a key 'anchor' customer for Corridor in Australian Rail Track Corporation (ARTC), a growing channel and customer base for Nextcore and also a small but solid customer base for Airsight.
Whilst our current priority and focus is on realising the significant opportunities for Corridor and Nextcore, we maintain a watching brief on the banking platforms market and for other opportunities to exploit the products developed earlier by Maestrano.
The Market
The markets for Corridor and Nextcore, which are large in size and global in extent, today include the UK, Australia, Japan and the USA. The aerial surveying market for Airsight is small and localised in Australia.
Corridor
Managing infrastructure assets is a major component of the overall railway management system market, which is projected to grow strongly. Global Market Insights Inc estimates that the market was over US$33 billion in 2017 and set to grow at a CAGR of over 10% between 2018 and 2024 to reach US$64 billion. Within this the growth of support and maintenance spend will be higher across the same period, at 16% CAGR. ( GMI Report, December 2018 ). Technavio is also reporting strong growth in the railway management system market, at 9% CAGR between 2019 and 2023. ( Technavio Report, February 2019 ). More broadly the global machine learning market was valued at $1.58 billion in 2017 and is expected to reach $20.83 billion in 2024, growing at a CAGR of 44.06% between 2017 and 2024. ( Roundup Of Machine Learning Forecasts And Market Estimates, 2020 ; Forbes, January 2020).
The Corridor offering is a new entrant into this growth environment and aims to take market share away from older, less effective approaches to asset infrastructure monitoring, as well as take advantage of new budgets being allocated, as innovation-oriented spend grows within the ongoing market expansion.
Nextcore
There are multiple ways to measure the large available market for Nextcore. The drone market itself is growing strongly in the current period, with a CAGR of 20.5% it is set to reach US$43.1 billion by 2024 ( The Drone Market Report , March 2019). The LiDAR drone market is projected to grow from US$133 million in 2020 to US$392 million by 2025, at a CAGR of 24.2%. ( Markets and Markets , January 2020). Key factors fuelling the growth include easing of regulations related to the use of commercial drones in different applications, and growing demand for LiDAR equipped drones for use in asset infrastructure monitoring, mapping, precision agriculture and related applications.
The market for Nextcore within these strong overall trends is based on certain discrete use cases and is harder to quantify specifically. The specific use cases do have wide global applicability and given the price points per device achievable the effective available market is assumed to be a significant multiple of US $millions already and growing.
2. CHAIRMAN'S STATEMENT
The financial year 201 9 - 20 saw dramatic change for the Group, as we transitioned to an infrastructure management focus following the successful acquisition of Airsight Holdings Pty Ltd on 1(st) November 2019 .
The overall revenue result for the year was down slightly by 4% compared to 201 8 -1 9, however more significant is the growth in the Airsight business, which grew strongly by 74% compared to their fiscal year 2019 result.
We believe that the opportunity for the Airsight business is such that similar growth is possible in future years.
Expenses were driven by the delivery of customer contracts, plus continuing investment in the Corridor Technology machine learning platform and the Nextcore LiDAR system and were in line with our business plan. T he Company is carefully managing expenditures to achieve a balance between growth and maintaining cash reserves.
I would like to express the board's appreciation for the way that the Airsight team have melded into Maestrano and their exceptional dedication and hard work throughout 2019-20.
Our purpose is to build a strong and resilient business, growing shareholder value through the consistent achievement of business plan targets and the expansion of our recurring revenue customer base. We have confidence in the long-term outlook and we thank our shareholders for their continuing support.
Ian Buddery
Chairman
23 October 2020
3. REVIEW OF OPERATIONS BY THE CHIEF EXECUTIVE OFFICER
The Maestrano Group Plc ("the Group") cloud-based platforms, used in the transportation, infrastructure and banking sectors, connect data and turn it into actionable insights to help manage business operations in new ways.
Following the acquisition of Airsight on 1 November 2019, the Company focused on successfully merging the people and products and continuing the strong growth of new customers . New contracts secured included ARTC, Meitetsu in Nagoya, Japan and our first engagement with Network Rail in the UK. The Nextcore LiDAR package continued its strong performance, with highlights including the signing of new distributors in the USA, Russia, India (who will also address Saudi Arabia and the UAE markets), Australia and Malaysia.
Overview of results
Revenue for the year was close to expectations, following the Company taking a cautious view of outlook in prior trading statements.
Hot Features
Premium
GBP 000's Twelve months Twelve months % Change % Change
to 30 June to 30 June constant
2020 2019 currency
Total revenue 872 905 (4%) (4%)
-------------- -------------- --------- ----------
Gross margin 537 529 2% 16%
-------------- -------------- --------- ----------
Total expenses 1,951 3,663 (53%) (49%)
-------------- -------------- --------- ----------
Grant income 442 777 (43%) (41%)
-------------- -------------- --------- ----------
Other income 2 29 (93%) (92%)
-------------- -------------- --------- ----------
Loss after income
tax (970) (2,328) 58% 59%
-------------- -------------- --------- ----------
Maestrano concluded its contract with a major USA bank customer in September 2019 and subsequently downsized the people and infrastructure involved to reduce our cost base, a trend which has continued owing to the lower overheads of the acquired Airsight businesses. Airsight had a strong 4 months pre-merger (1/7/19 to 31/10/19) and when this is substituted for Maestrano revenue in the same period, we see the true trend in the business, with 74% year on year growth in constant currency and only 28% increase in expenses.
Strategy
The financial year FY21 is a key stage in terms of progression as the Company plans to develop Airsight businesses outside Australia, with a particular focus on the UK, North America and Japan, in addition to continuing to grow its business in Australia, its country of origin. Corridor and Nextcore will each have a distinct go to market strategy and there will be an overarching rebranding effort to ensure that the group of companies is portrayed coherently.
The target market for Corridor in FY21 is major rail networks in the form of infrastructure owners and related operators. The approach is to continue to grow the Australian business, through developing and increasing revenue from the key 'anchor' customer ARTC , as well as acquiring further revenue generating customers and in addition establishing " beachhead " customers in new markets, specifically in the UK, North America and Japan.
The establishment of key partnerships will aid the sales strategy by providing credibility, incremental solution value to joint customers and introductions to key people in targeted new customers. The main focus will be on building an effective partnership relationship with ESRI (announced 6 July 2020), as well as seeking to add further partnerships.
The target market for Nextcore is surveyors focused on the built environment (bridges, towers and other infrastructure) and terrain (landscape, mines and other land operations), and to reach this market the Company is recruiting, training and managing a global distribution network, to enable access to local markets on a cost-efficient basis. The focus will be on expanding unit volume and associated revenue with currently active distributors and in addition recruiting and enabling effective distributors around the world.
There will be product development investments to address the targeted markets and emergent customer needs, for both Corridor and Nextcore. The focus for Corridor will be on expanding processing and insights offerings and building supporting capability, across the dimensions of data capture, data processing and insights generated , using our innovative machine learning approach. Nextcore product development efforts will focus on expanding the product range by bringing new model variations to market which address different market needs and different price points.
Ongoing operations
As of 30 June 20 20 , the Company had cash and receivables totalling GBP1,746,110. The Company operates from offices in Newcastle, Australia while staff in the UK and USA work from home offices, a model which has become widely accepted in the technology industry following the Covid-19 pandemic and could be adopted in Australia if needed . T he Company will recruit new employees as part of expanding the business and management will focus on motivating a strong and committed team whilst ensuring efficient and careful use of available resources.
We will ensure effective global communications across time zones by way of good use of communications technology, particularly video conferencing. Ensuring alignment across functional teams will be critical, and we will work hard to preserve and enhance the current culture of energy, hard work, commitment, enjoyment and fulfillment . We have deployed robust systems and processes for financial management, customer support and product development management , in preparation for scaling the company.
Outlook
The Company is confident of continuing our current growth trend in FY21, acquiring new customers for Corridor and leveraging our developing distribution network to drive increased Nextcore unit sales. We look forward to growing the value of our company for our shareholders.
Andrew Pearson
Chief Executive Officer
23 October 2020
4. PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the execution of the Group's growth strategies are subject to a number of risks which could adversely affect the Group's future development. The following is not an exhaustive list or explanation of all risks and uncertainties associated with the Group, but those considered by management to be the principal risks:
Risks relating to the Group and the industry in which it operates
Dependence on major clients
The Group's future growth relies on new sales to rail and road network owners in multiple countries. These owners typically have complex procurement arrangements which include product trials and competitive tenders. This risk is mitigated by the Group's plan to enter into reseller agreements with Engineering Consulting firms, who will in effect become the clients.
Business strategy
Although the Group has a clearly defined strategy, there can be no guarantee that its objectives will be achieved or that the Group will achieve the level of success that the Company's directors expect. Therefore, the Group may decide to change aspects of its strategy as needed. The Group's ability to implement its business strategy successfully may be adversely impacted by factors that the Group cannot currently foresee, such as unanticipated market forces, costs and expenses or technological factors. Should it be unsuccessful in implementing its strategy or should it take longer than expected to implement, the future financial results of the Group could be negatively impacted. This risk is mitigated by the continual review of the business performance to its plan and that changes are made to ensure the Group has sufficient liquidity to pursue its current plan.
Technological changes
Generally, product markets are exposed to rapid technological change, changes in use, changes to customer requirements and preferences, and services employing new technologies and the emergence of new industry standards and practices. The Group operates in a market with such changes which have the potential to render the Group's existing technology and products competitively impaired.
To successfully remain competitive, the Group will ensure continued product improvement, and the development of new markets and capabilities to maintain a pace congruent with changing technology. This added strain may stretch the Group's capital resources which may adversely impact the revenues and profitability of the Group. The Group's success is dependent on the ability to effectively respond and adapt to technological changes and changes to customer preferences. There can be no assurance that the Group will be able to effectively anticipate future technological changes or changes in customer preferences. Furthermore, there is also no assurance that the Group will have sufficient financial resources to effectively respond in a timely manner if such a change is anticipated.
Competition
There is no guarantee against new entrants or current competitors providing superior technologies, products or services to the market. There is no certainty that new entrants or current competitors will not provide equivalent products for a lower price. The Group may be forced to make changes to one or more of its products or to its pricing strategy to effectively respond to changes in customer preferences in order to remain competitive. This may impact negatively on the Group's financial performance. The Group will continue to review its competitive position and adjust its business plan to maintain relevance to its customers' requirements.
Inability to contract with customers on the most favourable terms to the Group
The Group contracts with a wide variety of companies and partners, many of which are in strong negotiating positions and have greater financial resources than the Group. The Group may in the future have limited scope for negotiation of the price or contract terms with some of its major clients.
The Group's software may not perform as expected and the Group could be at risk of defects which adversely affect its customers
There is no guarantee that the Group's platforms will perform as intended. Costs spent on developing the Platform may therefore not be recouped and this may result in reduced profitability for the Group. As the Group's platforms are complex, they may contain defects or vulnerabilities which may not be detected until after its deployment to major customers. To mitigate this risk the Group has implemented applicable internal code review and testing processes. The software is then subject to customer acceptance testing and an ongoing high level of technical support.
Data security and data privacy
The Group is subject to data and privacy regulations, particularly General Data Protection Regulation ('GDPR'). Failure to comply with legal or regulatory requirements relating to data security or data privacy in the course of the Group business activities, results in reputational damage, fines or other adverse consequences, including criminal penalties and consequential litigation, adverse impact on the Group's financial results or unfavourable effects on the Group's ability to do business. To mitigate this risk the Group has implemented policies and processes to ensure data is held securely and privacy is maintained.
Dependence on key executives and personnel
The Group is dependent on a small number of key executives. In addition, the future performance of the Group will, to some extent, be dependent on its ability to retain the services and personal connections or contacts of key executives and to attract, recruit, motivate and retain other suitably skilled, qualified and industry experienced personnel to form a high calibre management team. Such key executives are expected to play an important role in the development and growth of the Group in particular, by maintaining good business relationships with regulatory and governmental departments and essential partners, contractors and suppliers. The failure to appoint or retain such people could adversely affect the Group.
Ability to recruit and retain skilled personnel
The Group believes that it has the appropriate incentive structures to attract and retain the calibre of employees necessary to ensure the efficient management and development of the Group. However, any difficulties encountered in hiring appropriate employees and the failure to do so, or a change in market conditions that renders current incentive structures ineffective, may have a detrimental effect upon the trading performance of the Group. The ability to attract new employees with the appropriate expertise and skills cannot be guaranteed.
Financial controls and internal reporting procedures
The Group's future growth and prospects will depend on its ability to manage growth and to continue to maintain, expand and improve operational, financial and management information systems on a timely basis, whilst at the same time maintaining effective cost controls. Any damage to, failure of or inability to maintain, expand and upgrade effective operational, financial and management information systems and internal controls in line with the Group's growth could have a material adverse effect on the Group's business, financial condition and results of operations. The Group mitigates this through the implementation of internal controls as well as the review of monthly financial performance by the Board.
Economic uncertainty
Any economic downturn either globally or locally in any area in which the Group operates may have an adverse effect on demand for the Group's products. A more prolonged downturn may lead to an overall decline in sales. Economic uncertainty might have an adverse impact on the Group's operations and business results. To mitigate this risk the Group will monitor both the Group's performance and general market conditions on a monthly basis. The Group will also maintain adequate liquidity to sustain short term fluctuations in market conditions.
Brexit
Brexit is the withdrawal of the UK from the European Union ('EU'), following a referendum held in 2016. Failure to prepare for the UK's departure from the EU causes disruption to and creates uncertainty around the Group's business including: the ability to recruit; as well as impacting the Group's relationships with existing and future customers, suppliers and colleagues. These disruptions and uncertainties could have an adverse effect on the Group's business, financial results and operations. Given the vast majority of the Group's operations were outside UK and indeed the EU and similarly those of Airsight are as well, the directors do not believe Brexit will have a significant impact on the Group.
Covid -19
During the financial year, Covid-19 has had minimal impact on the operations and revenue growth of the business. Corridor Holdings Pty Ltd has received benefits from the Australian Commonwealth Government, with respect to Job Keeper and the Economic Boost, and New South Wales Government in relation to payroll tax. Staff have been able to effectively work from home during the Phase 1 of the pandemic with minimal impact on productivity and product delivery. Procedures have been put in place to ensure the safety of staff upon return to the office. Despite travel restrictions to local and overseas conferences, teleconferencing has been an effective tool in continuing to market the product range. No supply chain problems have been encountered, however alternative suppliers, where possible, are being evaluated.
5. PEOPLE
Equal opportunity
The Group is committed to an active equal opportunities policy. It is the Group's policy to promote an environment free from discrimination, harassment and victimisation, where everyone receives equal treatment regardless of gender, colour, ethnic or national origin, disability, age, marital status, sexual orientation or religion. Employment practices are applied which are fair, equitable and consistent with the skills and abilities of the employees and the needs of the Group.
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and that appropriate re-training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees.
This report is made in accordance with a resolution of directors.
On behalf of the directors
Ian Buddery
Chairman
23 October 2020
CORPORATE GOVERNANCE
The directors acknowledge the importance of high standards of corporate governance and intend, given the Group's size and the constitution of the Board, to comply with the principles set out in the QCA Corporate Governance Code published by the Quoted Companies Alliance in April 2019 (the 'QCA Code') and, where it does not comply with any of its recommendations, to explain the reasons therefor.
In the Board's opinion, the Group currently complies with the ten principles of the QCA Code which, together, are designed to deliver growth, maintain a dynamic management framework and build trust. As the Group expands, the Board will review its corporate governance framework and will consider adoption of additional principles and practices including from the UK Corporate Governance Code 2018 published by the Financial Reporting Council (the 'UK Corporate Governance Code').
Read more in our Corporate Governance Statement of Compliance with the QCA Corporate Governance Code at the following website link:
https://maestrano.com/wp-content/uploads/2020/09/Maestrano-Statement-of-QCA-compliance-2020.pdf
On behalf of the directors
Ian Buddery
Chairman
23 October 2020
DIRECTORS' REPORT
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Maestrano Group plc (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2020.
Directors
The following persons were directors of Maestrano Group plc since incorporation on 6 December 2017 and up to the date of this report, unless otherwise stated:
Ian Buddery Non-Executive Chairman
Andrew Pearson Executive Director and Chief Executive Officer
John Davis Independent Non-Executive Director Jonathan Macleod Independent Non-Executive Director Nicholas McInnes Independent Non-Executive Director
(appointed 13 March 2020)
Nicholas Smith Executive Director and Vice President Sales
(appointed 6 November 2019)
Craig Holden Executive Director and Chief Financial Officer
(resigned 23 August 2019)
Stephane Ibos Non-Executive Director
(resigned 30 December 2019)
Robert Lojszczyk Executive Director and Chief Financial Officer
(appointed 13 March 2020)
Ian Buddery, aged 63 - Non-Executive Chairman
Ian has extensive public company experience and a long background in the telecommunications and financial services industries in both international and local markets. Ian has founded multiple companies; obtained venture capital and angel funding, performed two IPOs, six acquisitions and two significant trade sales. Ian was the founder, CEO and Executive Chair of eServGlobal, founded in 1991 and listed on the Australian Securities Exchange ('ASX') in 2000 and the AIM in 2004. (LSE: ESG).
Ian was appointed a Director of Maestrano Pty Ltd in October 2013.
Andrew Pearson, aged 58 - Executive Director and Chief Executive Officer
Andrew is a seasoned CEO who successfully scaled a global cloud software company in the US, EMEA and APAC markets, achieving a ten-fold increase in recurring subscriber US$ revenue. Prior to this he achieved similar results at Intralinks, a SaaS vendor of information exchange solutions and prior to Maestrano was CEO of AIM listed Lightwave (LSE AIM: LWRF).
Andrew was appointed as Managing Director of Maestrano Group plc on 3 December 2018.
John Davis, aged 50 - Independent Non-Executive Director
John has been working with banks and SMBs for more than 20 years. Based in London, John was the Marketing and Product Director for Barclays Business from 2005-2010 before setting out on an entrepreneurial career as the co-owner and Managing Director of Business Centric Services Group Limited, an award winning, high growth business, helping banks and telecommunication companies to enhance their digital engagement with and propositions for small and medium sized businesses. He also acted as Chair and co-owner of two other London based FinTech start-ups. John completed the sales of all three of these companies during 2016 and 2018.
Jonathan Macleod, aged 63 - Independent Non-Executive Director
Jonathan is a practising Chartered Accountant and Financial Adviser with over 30 years of experience in the Financial Services and Software industries in both NZ and Australia. He has held senior executive positions within the National Bank of NZ and Rabobank Australia/NZ. Jonathan was the Chief Financial Officer of ASX listed company eServGlobal from 2008 to 2010.
Nicholas Smith , aged 3 5 - Executive Director and Vice President Sales
Results focused with an outstanding record of founding, growing and scaling technical businesses, Nick has a demonstrated ability to lead and manage geographically dispersed teams while maintaining the culture of the organisation. He has strong strategic business development attributes with the ability to build a loyal following though the practice of strong technical awareness and open communication.
Nicholas was appointed as Vice President Sales and Executive Director of Maestrano Group plc on 6 November 2019.
Nicholas McInnes, aged 66 - Independent Non-Executive Director
Nick McInnes has been a United Kingdom diplomat through much of his career, focusing on international trade and investment in such key positions as the British Consul General, Sydney and Director General Trade & Investment for Australia and New Zealand; and Director Trade & Investment USA and Deputy Consul General New York.
Nicholas was appointed to the Board of Maestrano Group plc on 13 March 2020.
Robert Lojszczyk , aged 63 - Executive Director, Chief Financial Officer and Company Secretary
Robert is a widely experienced senior finance executive with a blue chip organisational and commercial background. He has operated in finance roles of increasing seniority, scope and complexity. In many cases operating with small to medium sized profit centres making up the business across multinational boundaries.
Robert is a Fellow Certified Practicing Accountant and joined Maestrano Group plc as Chief Financial Officer and Executive Director on 13 March 20 20 .
Principal activities
Information on the Group's principal activities are disclosed in the strategic report.
Results and dividends
The loss for the Group after providing for income tax and non-controlling interest amounted to GBP854,298 (30 June 2019: GBP2,339,896).
No dividend has been paid during the financial year and the directors do not recommend a final dividend in respect of the year ended 30 June 2020 (30 June 2019: GBPnil).
Further commentary on the financial results are disclosed in the financial review by the chief financial officer within the strategic report.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and financial position are given in the strategic review and this directors' report. In addition, the notes to the financial statements include details on the Group's borrowing facilities and its objectives, policies and processes for managing its capital; its financial risk management objectives; and its exposures to credit risk and liquidity risk.
The Group has considerable financial resources together with a member base split across different geographic areas. The Group's forecasts and projections, taking into account reasonably possible changes in trading performance and the newly acquired business, show that the Group should be able to operate for the foreseeable future with the current working capital. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully.
The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.
Likely future developments
Information on likely future developments of the Group are disclosed in the strategic report.
Financial instruments
Information on the Group's financial instruments are disclosed in the strategic report and note 26 to the financial statements.
Charitable and political donations
No charitable or political donations were made during the financial year.
Disabled employees
Due to the size of the Group, no formal policy for the employment of disabled persons has been established. However, the Group gives full consideration to employment applications from disabled persons where the candidate's particular aptitudes and abilities are consistent with adequately meeting the requirements of the job.
Indemnity of directors
The Company has indemnified the directors of the Company for costs incurred, in their capacity as a director, for which they may be held personally liable, except where there is a lack of good faith.
Substantial shareholdings
The substantial shareholders in the Company as at 30 June 2020 were as follows:
Nicholas Smith 15.77% Aaron Hoye 15.77%
Disclosure of information to the auditors
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow directors and the Group's auditor, each director has taken all the steps that they are obliged to take as a director in order to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.
Auditor
Oury Clark was appointed auditor during the financial year and pursuant to section 487 of the Companies Act 2006 will be deemed to be re-appointed and therefore continue in office.
This report is made in accordance with a resolution of directors.
On behalf of the directors
Ian Buddery
Chairman
23 October 2020
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulation.
UK Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union and financial statements of the Company in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 101 'Reduced Disclosure Framework'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and the profit or loss of the Group for that year.
In preparing these financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRS as adopted by the European Union and applicable United Kingdom Accounting Standards have been followed for the Group and the Company respectively, subject to any material departures disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.
The directors confirm they have complied with all the above requirements in preparing the financial statements.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Ian Buddery
Chairman
23 October 2020
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF MAESTRANO GROUP PLC
Opinion
We have audited the group financial statements of Maestrano Group PLC (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2020 which comprise the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows and Notes to the Statement of Cash Flows, Notes to the Consolidated Financial Statements and Notes to the Company Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union, including FRS101 "Reduced Disclosure Framework" (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
- the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 30 June 2020 and of the group's loss for the year then ended;
- the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
- the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
- the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
- the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Emphasis of matter
The group is in a growth phase and believes it has identified a niche market area to exploit.
During the year they acquired the Airsight group, and made further investment in the pre-existing technology and intellectual property owned by Airsight. This has enabled the Group to begin product commercialisation.
As a result of its business model, a proportion of forecast revenues are non-contractual. As a result, we are unable to gain sufficient audit evidence that these revenues will materialise to a level sufficient to confirm that the company will be able to meet all liabilities as they fall due. A substantial amount of work has been undertaken in preparing the forecasts, there appears to be a robust forecasting process, and the forecasts appear to be conservative. There is a proportion of contractual revenue which has a non-contractual usage element. This usage element, while not being contractual in itself, is effectively certain.
However, the group's ability to continue as a going concern is dependent on them securing sufficient business and managing their cost base accordingly.
Overview of our audit approach
Key audit matters
1. Going concern 2. Contingent consideration for the purchase of the Airsight Group 3. GBP200,000 'capital' reorganisation reserve'
Audit scope
1. We performed an audit of the parent company, the 100% UK subsidiary company and the consolidated entity
2. We did not audit the components located in other countries, though our consolidated audit included a review of the procedures and work undertaken on these by other local authorised auditors together with an assessment of those auditors
Materiality
1. Overall group materiality of GBP97,000, which represents 10% of the consolidated loss for the year
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements, as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Going concern
Risk
1. The group recorded a loss of GBP969,949 in the year
2. The Covid-19 pandemic has caused significant issues for many businesses, it is not considered to be significantly impacting the group currently
3. There is a risk that given the significant losses and the uncertainty around new contracts being won that the company does not have sufficient funds to meet its debts as they fall due for the foreseeable future
Our response to the risk
1. We inspected management's going concern assessment and challenged the forecast assumptions provided, particularly in respect of future sales both directly and through distributors
2. We inspected a sample of contracts with distributors and a sample of contracts in place directly with end customers, both in place now and the progress of discussions for prospective projects
3. We reviewed minutes from board meetings after the year end to evidence continued performance and progress on discussions
4. We discussed and enquired further with management over the assumptions used to produce the forecasts
5. We assessed the appropriateness of the going concern disclosure in the financial statements in light of the above and concluded an emphasis of matter paragraph should be included
6. We discussed this basis with the firm's internal Ethical and Technical Committee who were in agreement
Key observations communicated to the audit committee
1. Based on our audit procedures we agreed with management that it is appropriate to adopt the going concern basis for the financial statements for the year to 30 June 2020
2. An emphasis of matter paragraph is included given the uncertainty of future possible revenue
Contingent consideration for the purchase of the Airsight Group
Risk
1. As part of the acquisition of the Airsight Group on 1st November 2019, the company agreed to pay additional consideration subject to certain targets being met
2. There is a risk that the contingent consideration would be both recognised incorrectly initially and recognised incorrectly at the year end
Our response to the risk
1. We obtained a copy of the Share Purchase Agreement (the 'SPA') for the acquisition of the Airsight Group and reviewed the terms included
2. We obtained the valuation report for the fair value of the contingent consideration at the date of purchase and confirmed the amount included in Goodwill calculation agreed to this
3. We assessed the competencies of the valuers in being able to conduct this valuation and noted no issues
4. We reviewed analysis against targets and board minutes after the year end to confirm the targets were met
5. Given the contingent consideration is in the form of shares at a future date, we reviewed the situation in the context of the applicable accounting standards
Key observations communicated to the audit committee
1. Based on our audit procedures we concluded that no provision should be recognised due to the future value of the transaction being unknown
2. We therefore concluded it is appropriate to include a contingent liability disclosure
GBP200,000 'capital' reorganisation reserve' Risk
1. Within Maestrano Group PLC, there existed a GBP200,000 debit balance within a 'capital reorganisation reserve', relating to the issuance of shares in Maestrano Group PLC in April 2018 for the acquisition of Maestrano Pty Limited.
2. This accounting did not reflect our understanding of the appropriate accounting treatment and so there is a risk that inappropriate accounting treatment is being used.
Our response to the risk
1. We discussed the treatment with management (current and former) and the prior year auditors to understand the rationale for the accounting treatment
2. We considered the treatment in the context of the applicable accounting standards
3. We discussed the treatment with: external technical experts; the firm's internal Ethical and Technical committee
Key observations communicated to the audit committee
1. The investment of GBP200,000 should have initially been recognised as an investment rather than a debit directly to 'capital reorganisation reserve'
2. A prior year adjustment is therefore included to account for this, with the corresponding disclosure notes updated accordingly
3. As the entire investment was impaired in the prior year and the Maestrano Pty software is currently not being utilised, together with its subsidiary being in a net liability position, it was decided that the GBP200,000 should also have been fully impaired in the prior year
An overview of the scope of our audit
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each entity within the group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account size, risk profile, the organisation of the group and effectiveness of group-wide controls, changes in the business environment and other factors such as recent internal audit results when assessing the level of work to be performed at each entity.
In assessing the risk of material misstatement to the group financial statements, and to ensure we had adequate quantitative coverage of significant accounts in the financial statements, we selected all components covering entities within Australia, United States of America and the United Kingdom, which represent the principal business units within the Group.
Of all the components selected, we performed an audit of the complete financial information of the two UK entities. We reviewed the work undertaken by component auditors of the Australian entities. We also performed audit testing on the material elements of the United States of America entity.
The reporting components where we performed audit procedures or reviewed component auditor procedures undertaken accounted for 100% of the Group's loss before tax, 100% of the Group's revenue and 100% of the Group's total assets.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be GBP97,000 (2019: GBP78,000) which is 10% of the operating loss for the year (2019: 2% of operating expenses). We believe that losses is the most appropriate basis for materiality as the group is still in the early stages of development and is still incurring significant losses. During the course of the audit, we reassessed initial materiality and materiality was therefore updated to reflect the latest loss figure for the year.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group's overall control environment, our judgement was that performance materiality was 90% (2019: 50%) of our planning materiality, being GBP87,300 (2019: GBP39,000). We have set performance materiality at this level as we consider the overall control environment to be good and the risk of the audit to be low.
Reporting threshold
The amount below which identified misstatements are considered as being clearly trivial
It was decided that we would report all audit differences in excess of GBP5,000 (2019: GBP3,900), which is set as 5% of materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.
Other information
The directors are responsible for the other information. The other information comprises the information set out in pages 4 to 17, but does not include the financial statements and our Report of the Auditors thereon.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Report of the Directors for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
- the Report of the Directors has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report and the Report of the Directors.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
- the financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit; or
- the directors were not entitled to take advantage of the small companies' exemption from the requirement to prepare a Strategic Report or in preparing the Report of the Directors.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page two, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The objectives of our audit, in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Rachel Lockwood (Senior Statutory Auditor)
for and on behalf of Oury Clark Chartered Accountants
Statutory Auditors
Herschel House
58 Herschel Street
Slough
Berkshire
SL1 1PG
Date: 23 October 2020
Notes:
1. The maintenance and integrity of the Maestrano Group PLC website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2020
Note 2020 2019
(as restated)
GBP GBP
Revenue from contracts with customer 5 872,270 905,400
Other income 6 441,617 776,843
Interest revenue calculated using the effective
interest method 1,725 29,286
Expenses
Hosting fees and other direct costs -254,430 -376,637
Employee benefits expense 9 -1,169,112 -2,510,810
Occupancy expense 8 -106,174 -235,721
Depreciation and amortisation expense 8 -36,104 -35,056
Initial public offering ('IPO') and
other non-operating costs 8 -84,990 -73,063
Other expenses 8 -625,289 -808,470
Finance costs 8 -9,462 -
---------------- ---------------
Loss before income tax expense -969,949 -2,328,228
Income tax expense 12 - -
---------------- ---------------
Loss after income tax expense for
the year -969,949 -2,328,228
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss
Foreign currency translation 115,651 -11,668
---------------- ---------------
Other comprehensive income for the
year, net of tax 115,651 -11,668
---------------- ---------------
Total comprehensive income for the
year - 854,298 - 2,339,896
================ ===============
Loss for the year is attributable
to:
Non-controlling interest - -
Owners of Maestrano Group plc -969,949 -2,328,228
---------------- ---------------
-969,949 -2,328,228
================ ===============
Total comprehensive income for the
year is attributable to:
Non-controlling interest - -
Owners of Maestrano Group plc - 854,298 - 2,339,896
- 854,298 - 2,339,896
================ ===============
Pence Pence
Basic earnings per share 33 - 0.78 -2.91
Diluted earnings per share 33 - 0.78 -2.91
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2020
Note 2020 2019
(as restated)
GBP GBP
Non-current assets
Goodwill 14 1,223,403 -
Right to Use Asset 15 138,963 -
Property, plant and
equipment 16 80,175 12,961
Total non-current assets 1,442,541 12,961
----------- ---------------
Current assets
Inventories 17 135,172 -
Trade and other receivables 18 181,843 492,785
Income tax 259,817 351,526
Other 20 52,072 61,873
Cash and cash equivalents 1,564,267 2,247,201
Total current assets 2,193,171 3,153,385
----------- ---------------
Non-current liabilities
Lease Liabilities 30 84,788 -
Total non-current liabilities 84,788 -
----------- ---------------
Current liabilities
Trade and other payables 21 253,414 259,336
Employee benefits 149,687 65,275
Unearned Income 103,091 -
Contingent consideration 29 127,834 -
Lease Liabilities 30 70,875 -
Total current liabilities 704,901 324,611
----------- ---------------
Net current assets 1,488,270 2,828,774
----------- ---------------
Total assets less current
liabilities 2,930,811 2,841,735
----------- ---------------
Net assets 2,846,023 2,841,735
=========== ===============
Equity
Share capital 22 1,460,854 800,403
Share premium account 23 7,781,192 7,583,057
Other reserves 24 2,280,174 2,164,523
Accumulated losses -8,676,197 -7,706,248
Total equity 2,846,023 2,841,735
=========== ===============
The financial statements of Maestrano Group plc (company number 11098701 (England and Wales)) were approved by the Board of Directors and authorised for issue on 23 October 2020.
They were signed on its behalf by:
Ian Buddery Andrew Pearson Chairman Director
23 October 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2020
Share Share premium Other Accumulated Total equity
capital account* reserves losses
GBP GBP GBP GBP GBP
Balance at 1 July
2018 800,403 7,583,057 2,176,191 (5,378,020) 5,181,631
Loss after income
tax expense for the
year - - - (2,679,754) (2,679,754)
Other comprehensive
income for the year,
net of tax - - (11,668) - (11,668)
Total comprehensive
income for the year - - (11,668) (2,679,754) (2,691,442)
------- ------------- --------- ----------- --------------
Balance at 30 June
2019 800,403 7,583,057 2,164,523 (8,057,774) 2,490,209
Prior year adjustment 351,526 351,526
------- ------------- --------- -----------
As restated 800,403 7,583,057 2,164,523 (7,706,248) 2,841,735
======= ============= ========= =========== ==========
v The share premium account is used to recognise the difference between the issued share capital at nominal value and the capital received, net of transaction costs.
Share Share premium Other Accumulated Total equity
capital account reserves losses
GBP GBP GBP GBP GBP
Balance at 1 July
2019 800,403 7,583,057 2,164,523 (7,706,248) 2,841,735
Loss after income
tax expense for the
year - - - (969,949) (969,949)
Other comprehensive
income for the year,
net of tax - - 115,651 - 115,651
Total comprehensive
income for the year - - 115,651 (969,949) (858,298)
Share issue 660,451 198,135 - - 858,586
Balance at 30 June
2020 1,460,854 7,781,192 2,280,174 (8,676,197) 2,846,023
========= ============= ========= =========== ============
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2020
Note 2020 2019
(as restated)
GBP GBP
Cash flows from operating activities
Loss before income tax expense for the year -969,949 -2,328,228
Adjustments for:
Depreciation and amortisation 36,104 35,056
Foreign exchange differences -150,141 -10,958
Interest received -1,725 -29,286
Interest and other finance costs 9,462 -
-1,076,249 -2,333,416
Change in operating assets and liabilities:
Increase in inventories -122,473 -
Decrease/(increase) in trade and other receivables 391,245 -693,905
Decrease in contract assets - 68,955
Decrease/(increase) in other operating assets 101,510 47,196
(Decrease)/increase in trade and other payables -148,630 9,956
Decrease in contract liabilities - -27,804
Decrease in other liabilities -33,114 -26,794
-887,711 -2,955,812
Interest received 1,725 29,286
Interest and other finance costs paid -3,280 -
Income taxes paid - -30,612
Net cash used in operating activities -889,266 -2,957,138
------------ ---------------
Cash flows from investing activities
Aggregate cash flow on acquisition 18,310 -
of subsidiary
Payments for plant and equipment 16 -71,589 -29,337
Net cash used in investing activities -53,279 -29,337
------------ ---------------
Cash flows from financing activities
Cash payments for leases -
Interest on lease payments -6,181 -
Net cash from financing activities -6,181 -
------------ ---------------
Net (decrease)/increase in cash and cash equivalents -948,726 -2,986,475
Cash and cash equivalents at the beginning of the
financial year 2,247,201 5,236,040
Effects of exchange rate changes on cash and cash
equivalents 265,792 -2,364
Cash and cash equivalents at the end of the financial
year 1,564,267 2,247,201
============ ===============
Included in the decrease of trade and other payables during the year were lease payments of GBP25,410 (2019: GBPNIL).
ACQUISITION OF BUSINESS
Refer to note 14 to these consolidated financial statements for details of the acquisition of business. The consolidated statement of cash flow has been adjusted for assets and liabilities acquired on acquisition of business detailed in note 14.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. GENERAL INFORMATION
The financial statements cover Maestrano Group plc ('Company') and the entities it controlled at the end of, or during, the financial year (referred to as the 'Group'). The financial statements are presented in Pound Sterling, which is Maestrano Group plc's functional and presentation currency. The group's functional currency in Australia is Australian Dollars.
The Company was incorporated on 6 December 2017 as a private company, Maestrano Group Limited. On 19 April 2018, as part of a Group reorganisation, the Company acquired 100% of the ordinary shares of Maestrano Pty Ltd from the existing shareholders and became the immediate and ultimate parent of the Group. On 11 May 2018, the Company converted to a public company, Maestrano Group plc and on 30 May 2018 was admitted onto the Alternative Investment Market ('AIM'). On 31 October 2019, Maestrano Group plc acquired the shares in Corridor Holdings Pty Ltd (previously Airsight Holdings Pty Ltd).
Maestrano Group plc is a listed public company limited by shares, incorporated and domiciled in England and Wales. Its registered office and principal place of business are:
Registered office Principal place of business 10 John Street 2/2 Frost Drive London WC1N 2EB Mayfield West NSW 2304 United Kingdom Australia
A description of the nature of the Group's operations and its principal activities are included in the strategic report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 23 October 2020. The directors have the power to amend and reissue the financial statements.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board ('IASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.
The following Accounting Standards and Interpretations are most relevant to the Group:
IFRS 16 Leases
The group adopted IFRS 16 on 1 July 2019 replacing IAS 17 Leases. The standard introduced a new classification of right of use assets whereby all leases other than those that are short term leases or immaterial leases are classified as assets on the balance sheet.
All existing leases at 1 July 2019 had a commitment term of less than 12 months and the Group has used the transitional election to continue to account for leases as operating leases. The leases acquired as part of the business acquisition have been recognised on the cumulative catch-up method. This effected the equity of the business acquisition and therefore there is no impact on Group equity from the initial adoption of IFRS 16.
Impact of adoption
The impact of adoption on opening accumulated losses as at the transition date of 1 July 2019 was GBPnil due to the reasons mentioned above.
The adoption has led to a recognition of a right to use asset and a lease liability with further information detailed in note 15 and 30 respectively.
Going concern
The financial statements have been prepared assuming the Group will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future.
The directors consider that the group is in a growth phase and believe it has identified a niche market area to exploit. During the year the group acquired the Airsight group, and made further investment in the pre-existing technology and intellectual property owned by Airsight. This has enabled the Group to begin product commercialisation.
As a result of this business model, there is a proportion of contractual revenue which has a non-contractual usage element. Whilst this usage element is not contractual in itself, it is effectively certain.
However, the group's ability to continue as a going concern is dependent on them securing sufficient business and managing their cost base accordingly.
The directors have considered the Group's existing working capital and are of the opinion that the Group has adequate resources to undertake its planned programme of activities for the 12 months from the date of approval of these financial statements.
Basis of preparation
The consolidated financial statements are prepared in accordance with International Financial Reporting Standards ('IFRS' or 'IFRSs') as adopted for use in the European Union (the 'EU') and IFRS Interpretations Committee interpretations (together 'EU IFRS') and the UK Companies Act 2006.
Historical cost convention
The consolidated financial statements are prepared under the historical cost convention.
Critical accounting estimates
The preparation of the consolidated financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's and Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.
Group reorganisation and comparative information
Maestrano Group plc (previously known as Maestrano Group Limited) was incorporated on 6 December 2017. Shareholders of the former parent company Maestrano Pty Ltd (the 'legal subsidiary'), approved a formal business entity reorganisation, whereby Maestrano Group plc ('the legal parent') became the parent of the Group, effective 19 April 2018, by acquiring all the outstanding shares of the Group's previous ultimate holding company Maestrano Pty Ltd in exchange for the issue of its own shares. This share for share transaction is not a business combination and does not result in any economic substance from the perspective of the Group. The substance of the Group reorganisation is a continuation of the existing Group, as a result the financial statements reflect that fact. This share for share transaction is hereafter referred to as the Group reorganisation and accounted for as follows:
-- the consolidated financial statements of Maestrano Group plc are a continuation of the existing Group;
-- the difference in share capital is reflected as an adjustment directly to the capital reorganisation reserve in equity;
-- retained earnings and other equity balances in the financial statements at acquisition date are those of Maestrano Pty Ltd;
-- no 'new' goodwill was recognised as a result of the combination;
Therefore, the consolidated financial statements are presented as if Maestrano Group plc had been the parent company of the existing Group throughout the periods presented. No reclassifications or adjustments to previously reported figures and no changes in the operations of the Group resulted from this change.
-- the results for the financial year ended 30 June 2020 comprise the consolidated results for the financial year of the Maestrano Group plc together with the results of Corridor Holdings Pty Ltd, formerly Airsight Holdings Pty Ltd, and its subsidiaries from 1 November 2019 to 30 June 2020.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Maestrano Group plc as at the balance sheet dates presented and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
The acquisition of common control subsidiaries is accounted for at book value. The acquisition of other subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The consolidated financial statements are presented in Pound Sterling, which is Maestrano Group plc's presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Pound Sterling using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Pound Sterling using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Pound Sterling
using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur.
The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability. Revenue is not recognised in line with when the revenue is received. Revenue is received prior to the delivery of a good or service.
Grants from government
Grants from government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants which represent compensation for expenses or losses already incurred are included in other income in profit or loss statement in the year in which expenses or losses were incurred.
Interest income
Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Other income
Other income is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
-- When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
-- When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets is reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the balance sheet based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Contract assets
Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes.
Plant and equipment
Equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the depreciable amount of each item of equipment over their expected useful lives as follows:
Office equipment 2 years Furniture and fixtures 2 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.
An item of equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct part costs. Net realisable value is estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Intangible assets
Intangible assets acquired as part of a business combination, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The amortisation method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.
An annual impairment review is conducted annually to assess whether the goodwill recognised in respect of acquisition accounting is in need of impairment.
Software
Significant costs associated with purchased software are deferred and amortised on a reducing balance basis over the period of their expected benefit, being their finite useful life of two years.
Research and development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the asset; the Group has sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit. Amortisation commences when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised at the amount by which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or services to the customer.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If an equity-settled award is cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Maestrano Group plc, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Value-Added Tax ('VAT')/Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated VAT/GST, unless the VAT/GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of VAT/GST receivable or payable. The net amount of VAT/GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet.
Cash flows are presented on a gross basis. The VAT/GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of VAT/GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Accounting Standards that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2020. The Group's assessment of the impact of mandatory new Accounting Standards and Interpretations, most relevant to the Group, are set out below.
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Group as a lease
The group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Group recognises right-of-use assets at the commitment date of the lease (ie. The date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and estimated useful life of the assets, as follows:
Property 10 years
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchased option, depreciation is calculated using the estimated useful life of the asset.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease terms reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the interest rate implicit in the lease. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Group's lease liabilities are presented separately in the statement of financial position.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be of low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.
Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under IFRS 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. Had the standard been adopted from 1 July 2019, and using the transitional rules available, the Group would have recognised a lease liability of the remaining lease payments as disclosed in note 30, discounted using the lessee's incremental borrowing rate of 6%, with a corresponding increase in plant and equipment.
IASB new Conceptual Framework for Financial Reporting
The new framework is applicable for annual reporting periods beginning on or after 1 January 2020 and the application of the new definition and recognition criteria may result in future amendments to several accounting standards. Furthermore, entities who rely on the conceptual framework in determining their accounting policies for transactions, events or conditions that are not otherwise dealt with under IFRS may need to revisit such policies. The Group will apply the revised conceptual framework from 1 July 2020 and is yet to assess its impact.
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results.
The accounting judgements, estimates and assumptions that have a significant risk of causing an adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.
NOTE 3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Estimates:
Revenue recognition where contracts are in progress
In accordance with the revenue recognition policy detailed in note 2, in measuring revenue relating to fixed agreements the Group measures the stage of completion with reference to costs incurred and the total costs estimated for each contract. The total estimated costs for each contract are reviewed monthly to ascertain the current stage of completion and requires reasonable judgments to be made. Judgement
includes allocating transaction prices to each of the performance obligations. Refer to note 19 for the accrued revenue asset and the balance sheet for the deferred revenue liability.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to note 34 for valuation model inputs.
NOTE 4. OPERATING SEGMENTS
Identification of reportable operating segments
The Group operates in one segment being provision of data integration and analytic services. This operating segment is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.
The operating segment information is the same information as provided throughout the consolidated financial statements and are therefore not duplicated. Given the research and development expenditure for all types of product, the board have determined that reportable operating segments would be too difficult to determine.
Major customers
There are 3 customers contributing external revenue of more than 10% amounting to GBP193,216, GBP179,572 and GBP93,614 respectively (2019: Different 3 customers amounting to GBP465,817, GBP236,467 and GBP112,891 respectively).
Revenue by geographical area
Revenue from the principal activities of the Group is attributable to the following geographical areas:
2019 (as
2020 restated)
GBP GBP
United Kingdom 8,150 -
Australia 729,338 325,174
United States of America 20,221 578,707
Middle East and Africa - 1,519
Japan 80,243 -
New Zealand 34,318 -
Total revenue 872,270 905,400
======= ==========
It was not possible to determine profit or loss by geographical
region during the period.
NOTE 5. REVENUE FROM CONTRACTS WITH CUSTOMER
2019 (as
2020 restated)
GBP GBP
Enterprise implementation 179,572 851,699
Enterprise subscriber 4,338 53,701
Airsight/Corridor 688,360 -
Revenue from contracts with customer 872,270 905,400
======= ==========
NOTE 6. OTHER INCOME 2019 (as
2020 restated)
GBP GBP
Government grants and rebates 441,617 776,843
Other income - -
------- ----------
Other income 441,617 776,843
======= ==========
Government grants and rebates predominately relates to research
and development rebates.
A prior year adjustment has been included in other income by
GBP351,526. This related to a government research and development
rebate which was received in FY2020 but related to the FY2019
period but was not recognised at the time.
NOTE 7. EBITDA RECONCILIATION (EARNINGS BEFORE INTEREST EXPENSE,
TAXATION, DEPRECIATION AND AMORTISATION) 2019 (as
2020 restated)
GBP GBP
EBITDA reconciliation
Loss before income tax (969,949) (2,328,228)
Add: Interest expense 9,462 -
Add: Depreciation and amortisation 36,104 35,056
EBITDA (924,383) (2,293,172)
========= ===========
Underlying EBITDA represents EBITDA adjusted for significant,
unusual and other one-off items.
2019 (as
2020 restated)
GBP GBP
Underlying EBITDA reconciliation
EBITDA (924,383) (2,293,172)
Initial public offering ('IPO') and other non-operating
costs - 73,063
Underlying EBITDA (924,383) (2,220,109)
========= ===========
The financial statements include both the statutory financial statements and additional performance measures of EBITDA and Underlying EBITDA. The directors believe these additional measures provide useful information on the underlying trend in operational performance going forward without these unusual and other one-off items.
NOTE 8. EXPENSES
2019 (as
2020 restated)
GBP GBP
Loss before income tax includes the following
specific expenses:
Depreciation
Leasehold improvements 869 4,870
Office equipment 8,540 14,919
Furniture and fixtures - 2,633
Motor Vehicles 3,034 -
Flight Equipment 2,245 -
--------- ----------
Total depreciation 14,688 22,422
Amortisation
Software - 12,634
Right to Use Asset 21,415 -
Total depreciation and amortisation 36,103 35,056
IPO and other non-operating costs
Restructuring costs and Enterprise Investment
Scheme set-up costs, acquisition costs 84,990 -
Provision for unrecoverable staff loans - 73,063
--------- ----------
Total IPO and other non-operating costs 84,990 73,063
Occupancy expense
Minimum lease payments 93,938 214,300
Other occupancy expense 12,236 21,421
--------- ----------
Total occupancy expense 106,174 235,721
Finance costs
Interest and finance charges paid/payable 9,462 -
Total finance costs expensed 9,462 -
Other expenses
Travel and entertainment 30,649 42,764
Marketing services 75,165 59,323
IT infrastructure 17,976 127,039
Professional fees 485,611 534,768
Net foreign exchange (gain)/loss (150,141) (350)
Other 166,029 44,926
Total other expenses 625,289 808,470
--------- ----------
Research and development costs recorded in the consolidated statement of profit and loss and other comprehensive income were GBP734,945 in 2020 and GBP1,195,616 in 2019.
NOTE 9. STAFF COSTS
The average number of employees during the year was as follows:
2019 (as
2020 restated)
Sales and marketing 3 3
Technical 12 19
Finance and administration 2 3
---- ----------
Average number of employees 17 25
==== ==========
The employee benefits expense during the year was as follows:
2020 2019 (as
restated)
GBP GBP
Wages and salaries 1,053,640 2,288,183
Social security costs 54,519 130,662
Other pension costs 60,952 91,965
Share-based payments - -
Total employee benefits expense 1,169,111 2,510,810
============ ============
Included in other creditors at the period end there was unpaid pension costs of GBP12,106 (2019: GBP1,791)
NOTE 10. DIRECTORS' REMUNERATION
Details of directors' remuneration is set out below: 2019 (as
2020 restated)
Number of directors accruing benefits under money
purchase schemes in respect of qualifying services 5 4
The total remuneration in respect of the year ended June 2020 and
paid to each director who held office during the year as follows:
Salary
and Benefit Post-employment
fees in kind Bonus benefits Total
2020 GBP GBP GBP GBP GBP
Non-Executive Directors:
Ian Buddery 59,828 - - - 59,828
John Davis 33,730 - - 1,012 34,742
Jonathan Macleod 31,839 - - - 31,839
Nicholas McInnes (appointed
13 March 2020)* 12,534 - - - 12,534
Executive Directors:
Stephane Ibos (resigned
30 December 2019) 21,500 - - - 21,500
Andrew Pearson 165,597 - 29,745 815 196,157
.
Craig Holden (resigned 31
August 2019) 18,718 - - - 18,718
Nicholas Smith (appointed
6 November 2019)* 55,132 - - 5,238 60,370
Robert Lojszczyk (appointed
13 March 2020)* 43,709 - - 4,024 47,733
Total directors' remuneration 442,587 - 29,745 11,089 483,421
======= ======= ====== =============== =======
*Remuneration from date of appointment as director of the Company.
Salary Benefit Post-employment
and fees in kind Bonus benefits Total
2019 GBP GBP GBP GBP GBP
Non-Executive Directors:
Ian Buddery 83,279 - - - 83,279
John Davis 45,600 - - 1,026 46,626
Jonathan Macleod 40,584 - - 3,855 44,439
Executive Directors:
Stephane Ibos 78,879 - - 3,641 82,520
Andrew Pearson (appointed
3 December 2018) * 145,315 - 8,567 3,028 156,910
Craig Holden (resigned 31
August 2019) 97,307 - - - 97,307
Total directors' remuneration 490,964 - 8,567 11,550 511,081
========= ======== ===== =============== =======
*Remuneration from date of appointment as director of the Company.
Number of directors accruing benefits under money purchase schemes in respect of qualifying services were four.
The number of directors who exercised share options was none.
NOTE 11. KEY MANAGEMENT PERSONNEL DISCLOSURES
Compensation
The aggregate compensation made to directors and other members
of key management personnel of the Group is set out below:
2019 (as
2020 restated)
GBP GBP
Short-term employee benefits 459,971 742,729
Post-employment benefits 13,851 32,267
Share-based payment - -
473,822 774,996
======= ==========
NOTE 12. INCOME TAX
2019 (as
2020 restated)
GBP GBP
Income tax expense
Adjustment recognised for prior periods - -
Aggregate income tax expense - -
Numerical reconciliation of income tax expense
and tax at the statutory rate
Loss before income tax expense (969,949) (2,328,228)
Tax at the statutory tax rate of 23% (2019: 23%) (223,088) (518,031)
Tax effect amounts which are not deductible/(taxable)
in calculating taxable income:
Unwind of interest on convertible notes - -
Research and development expenditure, net of
tax credits 15,925 128,308
Prepayments and accruals (8,923) 5,289
Amortisation of cost of raising convertible
note - -
Other non-deductible items 47,346 19,572
Prior year tax adjustment 30,862
Current year tax losses not recognised 168,740 334,000
Temporary differences not recognised - -
Income tax expense - -
========= ===========
Tax at the statutory tax rate represents the effective rate of income tax across the jurisdictions in which each of the Group entities are domiciled.
The tax rates of the main jurisdictions are Australia 27.5% (2019: 27.5%), United Kingdom 19.0% (2019: 19.0%), United States of America 21.0% (2019: 21.0%) and the United Arab Emirates 0% (2019: 0%).
2019 (as
2020 restated)
GBP GBP
Tax losses not recognised
Unused tax losses for which no deferred tax asset
has been recognised 4,533,886 4,871,535
--------- ----------
Potential deferred tax asset at domestic tax rates
applicable in the countries concerned 1,007,238 1,051,037
--------- ----------
The above potential tax benefit for tax losses has not been recognised in the balance sheet due to a lack of certainty as to when the losses will reverse.
2019 (as
2020 restated)
GBP GBP
Deferred tax assets/(liabilities) not recognised
Deferred tax assets/(liabilities) not recognised
comprises temporary differences attributable to:
Employee benefits 21,586 21,586
Accrued expenses 6,283 29,769
Prepayments and work in progress (13,382) (1,633)
14,487 49,722
======== ==========
The above potential tax benefit for deductible temporary differences have not been recognised in the balance sheet as the recovery of the benefit is uncertain.
NOTE 13. PRIOR YEAR ADJUSTMENT
The prior period has been restated to include AUD$636,773 R&D tax rebate receivable in Maestrano Pty Ltd. This has increased the prior year tax debtor and other income by GBP351,526. The tax receivable had erroneously been recognised in the year ended 30 June 2020. This has also affected the earnings per share and diluted earnings per share, which have both been restated.
NOTE 14. GOODWILL
2020 2019 (as
restated)
GBP GBP
Goodwill 1,223,403 -
1,223,403 -
=============== ===========
Acquisition
Goodwill relates to the purchase of the Corridor Holdings Pty Ltd group, formerly Airsight Holdings Pty Ltd group, on November 1, 2019. The acquisition was funded by a share issue of 66,045,038 shares as described in note 22. Further consideration is payable dependent upon the sales performance of the group acquired. Further details of this contingent consideration can be found in note 29. The purchase was accounted for under the acquisition method of accounting, whereby the identifiable assets acquired are recorded at fair value. The Group recognises goodwill for the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. As a result of the acquisition, goodwill of GBP1,223,403 was generated.
The goodwill has been recognised in the year ended 30 June 2020 and no impairments have been recognised to date.
Consideration paid:
GBP
Share issue 858,585
Fair value of contingent
consideration 127,834
986,419
=============
Assets and liabilities acquired are as follows:
GBP
Cash and cash equivalents 18,310
Trade and other receivables 80,303
Inventory 12,699
Trade payables (142,708)
Other liabilities (237,316)
Property, Plant and Equipment 31,728
Goodwill 1,223,403
986,419
===============
Since the acquisition of Airsight Holdings Pty Ltd, the entity has generated revenue of GBP662,385 and a loss of GBP76,945. If the entity was consolidated in the results of the Group for the whole year, the loss for the year would have been GBP231,547.
NOTE 15. NON-CURRENT ASSETS - RIGHT TO USE ASSET
2020 2019 (as
restated)
GBP GBP
Right to Use Asset 160,378 -
Less: Accumulated depreciation (21,415) -
138,963 -
============= ===========
The following non-cancellable lease commitments existed at the period end:
2020 2019 (as
restated)
GBP GBP
0-1 Year 38,115 -
1-5 Years 114,343 -
152,458 -
============= ===========
The GBP160,378 right to use asset represents the full addition in the year and the GBP21,415 depreciation represents all depreciation charged in the year. There were no further additions or disposals.
NOTE 16. NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT
2019 (as
2020 restated)
GBP GBP
Leasehold improvements - at cost 20,462 4,870
Less: Accumulated depreciation (5,738) (4,870)
14,723 -
Office equipment - at cost 73,770 30,392
Less: Accumulated depreciation (41,475) (17,431)
32,296 12,961
Furniture and fixtures - at cost 3,504 3,504
Less: Accumulated depreciation (3,504) (3,504)
- -
Motor vehicles - at cost 32,155 -
Less: Accumulated depreciation (18,464) -
13,691 -
Flight equipment - at cost 133,041 -
Less: Accumulated depreciation (113,576) -
--------- ----------
19,465 -
--------- ----------
80,175 12,961
========= ==========
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial years are set out below:
Leasehold Office Furniture Motor Flight
and
improvements equipment fixtures Vehicles equipment Total
GBP GBP GBP GBP GBP GBP
Balance at 1
July 2018 - 4,301 1,246 - - 5,547
Additions 4,870 23,080 1,387 - - 29,337
Exchange
differences - 499 - - - 499
Depreciation
expense -4,870 -14,919 -2,633 - - -22,422
------------- ------------
Balance at 30
June 2019 - 12,961 - - - 12,961
--------------- ---------- --------------- ------------- ------------ ------------
Additions 11,992 25,092 - 8,265 23,421 68,770
Acquisition on
business
combination 3,600 20,135 - 23,890 109,620 157,245
Disposals - -1,848 - - - -1,848
Depreciation
disposed - 823 - - - 823
Depreciation
acquired on
business
combination - -16,327 - -15,430 -111,331 -143,088
Depreciation
expense -869 -8,540 - - 3,034 - 2,245 -14,688
Balance at 30
June 2020 14,723 32,296 - 13,691 19,465 80,175
=============== ========== =============== ============= ============ ============
Non-current assets by geographical location
All property plant and equipment is located in Australia other than office equipment with a net book value of GBP4,881 which is located in the United Kingdom.
NOTE 17. CURRENT ASSETS - Inventories
2019 (as
2020 restated)
GBP GBP
Inventories 135,172 -
135,172 -
======= ==========
The amount of inventories expensed during the period was GBP127,566 (2019: GBPNIL).
NOTE 18. CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
2019 (as
2020 restated)
GBP GBP
Trade receivables 132,946 479,355
Other receivables 48,897 13,430
181,843 492,785
======= ==========
Allowance for expected credit losses
The Group has recognised a loss of GBPnil (2019: GBPnil) in profit or loss in respect of the expected credit losses for the year ended 30 June 2020. The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Expected credit Allowance for expected
loss rate Carrying amount credit losses
2020 2019 2020 2019 2020 2019
% % GBP GBP GBP GBP
Not overdue - - 112,969 293,997 - -
0 to 3 months overdue - - 19,977 142,599 - -
3 to 6 months overdue - - - 16,669 - -
Over 6 months overdue - - - 26,090 - -
132,946 479,355 - -
======== ======= =========== ===========
The Company has virtually no experience of bad debts and credit losses and the directors do not expect any future credit losses to arise as contracts come to termination and as a result no expected credit loss provision was recorded as it was deemed immaterial.
NOTE 19. CURRENT ASSETS - CONTRACT ASSETS
2019 (as
2020 restated)
GBP GBP
Contract assets - -
Reconciliation
Reconciliation of the written down values at the
beginning and end of the current and previous financial
year are set out below:
Opening balance - 68,955
Transfer to trade receivables - (68,955)
Closing balance - -
==== ==========
NOTE 20. CURRENT ASSETS - OTHER
2019 (as
2020 restated)
GBP GBP
Prepayments 52,072 61,873
------ ----------
52,072 61,873
====== ==========
NOTE 21. CURRENT LIABILITIES -TRADE AND OTHER PAYABLES
2019 (as
2020 restated)
GBP GBP
Trade payables 85,692 65,352
Accrued expenses 121,132 190,656
Other payables 46,590 3,328
253,414 259,336
======= ==========
Refer to note 26 for further information on financial instruments.
There were no contract liabilities as at 30 June 2020 or 30 June 2019.
NOTE 22. EQUITY - SHARE CAPITAL
Capital reconstruction - Group reorganisation
Maestrano Group plc was incorporated on 6 December 2017 and was admitted to the Alternative Investment Market ('AIM') on 30 May 2018. Prior to AIM admission, the Group undertook a reorganisation such that Maestrano Group plc was established as Maestrano Pty Ltd's parent/holding entity. Maestrano Group plc determined that the acquisition of Maestrano Pty Ltd did not represent a business combination as defined by IFRS 3 'Business Combinations'. The appropriate accounting treatment for recognising the new Group structure has been determined to be a continuation of the financial statements of Maestrano Pty Ltd Group. Refer to basis of preparation in note 2 for further details. The number of shares in issue shown below therefore reflects those of Maestrano Group plc.
2019 (as 2019 (as
2020 restated) 2020 restated)
Shares Shares GBP GBP
Ordinary shares of GBP0.01 each
- issued and fully paid 146,085,369 80,040,331 1,460,854 800,403
=========== ========== ========= ==========
Movements in ordinary share capital
Details Date Shares GBP
Balance 1 July 2018 80,040,331 800,403
Balance 30 June 2019 80,040,331 800,403
Issue of shares of GBP0.01 each in
Maestrano Group plc on acquisition
of Corridor Holdings Pty Ltd, formerly
Airsight Holdings Pty Ltd 01 Nov 2019 66,045,038 660,451
Balance 30 June 2020 146,085,369 1,460,854
=========== =========
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the balance sheet, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. If net debt is negative, then the net debt adjustment is limited to zero.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company is seen as value adding relative to the current Company's share price at the time of the investment. The Group is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The Group is not subject to any financing arrangement covenants and there have been no events of default on the financing arrangements during the financial year.
The capital risk management policy remains unchanged throughout the periods presented.
NOTE 23. EQUITY - SHARE PREMIUM ACCOUNT
2019 (as
2020 restated)
GBP GBP
Share premium account 7,781,191 7,583,057
========= ==========
Movements in share premium account
Detail Date GBP
Balance 01 July 2019 7,583,057
Capital received on acquisition
of Corridor Holdings PTY, formerly
Airsight Holdings Pty Ltd 1 November 2019 198,135
---------
7,781,192
=========
The share premium account is used to recognise the difference between the issued share capital at nominal value and the capital received, net of transaction costs.
NOTE 24. EQUITY - OTHER RESERVES
2019 (as
2020 restated)
GBP GBP
Foreign currency reserve 390,334 274,683
Capital reorganisation reserve 1,889,840 1,889,840
2,280,174 2,164,523
========= ==========
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Pound sterling.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services.
Capital reorganisation reserve
As explained in note 2, the Group is a continuation of the existing Maestrano Pty Limited group. Maestrano Group plc has therefore recorded the net assets of Maestrano Pty Limited group at their historic carrying value at the date of acquisition as a capital reorganisation. The reserve is used to recognise the difference between the shares issued to effect the transaction (GBP200,000) and the share capital acquired (GBP2,089,840).
Movements in reserves
Movements in each class of reserve during the current and previous financial years are set out below:
Foreign Share based Capital
currency payments reorganisation Total
GBP GBP GBP GBP
Balance at 1 July 2018 286,351 - 1,889,840 2,176,191
Foreign currency translation (11,668) - - (11,668)
Balance at 30 June 2019 274,683 - 1,889,840 2,164,523
Foreign currency translation 115,651 - - 115,651
Balance at 30 June 2020 390,334 - 1,889,840 2,280,174
======== =========== ============== =========
NOTE 25. EQUITY - DIVIDS
There were no dividends paid, recommended or declared during the current or previous two financial years.
NOTE 26. FINANCIAL INSTRUMENTS
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risks and ageing analysis for credit risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits. Finance identifies and evaluates financial risks within the Group's operating units. Finance reports to the Board on a regular basis.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.
The Group had net assets denominated in foreign currencies of GBP288,853 as at 30 June 2020 (2019: GBP115,384). Based on this exposure, had the Pound sterling weakened by 10%/strengthened by 10% against these foreign currencies with all other variables held constant, the Group's profit before tax for the year would have been GBP28,885 lower / GBP28,885 higher (2019: GBP11,538 lower / GBP11,538 higher). The actual foreign exchange gain for the year ended 30 June 2020 was GBP350 (2019: gain of GBP9,821).
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group is not exposed to any significant interest rate risk. Most of the cash and cash equivalents are held in banks in the UK where the current interest rate is negotiable and unlikely to fluctuate in the foreseeable future.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has a strict code of credit and setting appropriate credit limits. The maximum exposure to credit risk at the reporting date to recognised financial assets is the gross carrying amount, as disclosed in the balance sheet and notes to the financial statements. The Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered representative across all customers of the Group based on recent sales experience, historical collection rates and forward-looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year.
Except for cash and cash equivalents, the Group has no other concentration of credit risk exposure as at 30 June 2020 and 2019. No expected credit loss is recorded for cash and cash equivalents as the Group and Company only deal with at least "A" rated financial institutions.
Liquidity risk
Vigilant liquidity risk management requires the company to maintain sufficient liquid assets (mainly cash and cash equivalents) to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the balance sheet.
Between Between Remaining
1 year 1 and 2 2 and 5 Over 5 contractual
or less years years years maturities
2020 GBP GBP GBP GBP GBP
Non-derivatives
Non-interest bearing
Trade payables 85,692 - - - 85,692
Other payables 46,591 - - - 46,591
Total non-derivatives 132,283 - - - 132,283
-------- -------- -------- ------ ------------
Between Between Remaining
1 year 1 and 2 2 and 5 Over 5 contractual
or less years years years maturities
2019 GBP GBP GBP GBP GBP
Non-derivatives
Non-interest bearing
Trade payables 65,352 - - - 65,352
Other payables 3,328 - - - 3,328
Total non-derivatives 68,680 - - - 68,680
-------- -------- -------- ------ ------------
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. The Group has more than adequate cash reserves to meet the remaining contractual maturities.
NOTE 27. FAIR VALUE MEASUREMENT
The carrying amounts of trade and other receivables and trade and other payables approximate their fair values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities.
NOTE 28. AUDITOR REMUNERATION
During the financial year ended June 2020, the following fees were paid or payable for services provided by Oury Clark Chartered Accountants, the auditor of the Company, and its associates. Ernst & Young LLP audited the prior year results.
2019 (as
2020 restated)
GBP GBP
Audit services
Audit or review of the financial statements 46,000 63,000
Other services
Accounting assistance 43,813 -
Other - -
- -
89,813 63,000
====== ==========
NOTE 29. CONTINGENT LIABILITIES
2019 (as
2020 restated)
GBP GBP
Contingent consideration 127,834 -
------- ----------
The contingent consideration related to the purchase of Airsight Holdings Pty Ltd now Corridor Holdings Pty Ltd. The consideration is in the form of a share issue by Maestrano Group PLC and is dependent on the total revenue achieved by the Airsight Holdings Pty Ltd group for the financial year ending 30 June 2020. The consideration is calculated dividing the total revenue achieved by the Airsight Holdings Pty Ltd group in the year ended 30 June 2020 by AU$1,500,000, multiplied by 7,338,337. To determine how many shares are to be issued by Maestrano Group PLC. The shares would be issuable on 30 September 2020.
The contingent consideration recognised in the accounts was calculated using the fair value on the date of acquisition.
NOTE 30. LEASES
Right-of-use assets
Right-of-use assets related to leased properties that do not meet the definition of investment property are presents as property, plant and equipment.
The Group leases premises with a lease term of 5 years ending 29 May 2024. There is no option to purchase and there are no variable payments.
Carrying
Additions Depreciation Impairment amount
Buildings 160,378.00 - 21,415.00 - 138,963.00
160,378.00 - 21,415.00 - 138,963.00
====================== ============= ======================= ======================
Lease liabilities
Included within current liabilities is a lease liability of GBP18,793. Included within non-current liabilities is a lease liability of GBP84,788.
As at 30 June 2020 the Group had not committed to any further lease liabilities that had not yet commenced.
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for short-term leases (leases of expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expenses on a straight-line basis.
There was GBP97,251 of rent recognised on the short-term lease basis.
The total cash outflow in respect of leases in the year was GBP122,661 and the interest expense for leasing arrangements was GBP6,181.
NOTE 31. RELATED PARTY TRANSACTIONS
Parent entity and ultimate controlling party
The parent entity and ultimate parent entity is Maestrano Group plc. There is no ultimate controlling party.
Key management personnel
Disclosures relating to key management personnel are set out in note 11.
Transactions with related parties
There were no transactions with related parties during the current and previous financial years other than those noted above with key management personnel.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting dates.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting dates.
NOTE 32. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries held by the Company in accordance with the accounting policy described in note 2:
Holding
Address and country
Name of incorporation %
2/2 Frost Drive, Mayfield
Maestrano Pty Ltd West NSW 2304, Australia 100%
Corridor Technology 10 John Street, London
Limited WC 1N 2EB United Kingdom 100%
Suite 6.018, 404 5(th)
Avenue, New York NY
Corridor Technology 10018, United States
Inc. of America 100%
Corridor Holdings Pty 2/2 Frost Drive, Mayfield
Ltd West NSW 2304, Australia 100%
2/2 Frost Drive, Mayfield
Corridor Pty Ltd West NSW 2304, Australia 100%
Airsight Australia Pty 2/2 Frost Drive, Mayfield
Ltd West NSW 2304, Australia 100%
2/2 Frost Drive, Mayfield
Airsight IP Pty Ltd West NSW 2304, Australia 100%
The Corridor Holdings Pty Ltd group which includes, Corridor Holdings Pty Ltd, Corridor Pty Ltd, Airsight IP Pty Ltd and Airsight Australia Pty Ltd have been included in the consolidation from the date of acquisition being 1 November 2019 .
Maestrano EMEA DMCC was a 100% owned subsidiary but was liquidated during the period. There was no activity during the period and therefore its results are not shown as a separate line item under 'discontinued operations' in the Statement of profit or loss for the period.
NOTE 33. EARNINGS PER SHARE
2019 (as
2020 restated)
GBP GBP
Loss after income tax (969,949) (2,328,228)
Non-controlling interest - -
Loss after income tax attributable to the owners
of Maestrano Group plc (969,949) (2,328,228)
========= ===========
Number Number
Weighted average number of ordinary shares used in
calculating basic earnings per share 124,070,377 80,040,331
Weighted average number of ordinary shares used in
calculating diluted earnings per share 124,070,377 80,040,331
=========== ==========
Pence Pence
Basic earnings per share (0.78) (2.91)
Diluted earnings per share (0.78) (2.91)
Options and convertible notes have not been included in the diluted earnings per share in the prior year as they were anti-dilutive.
NOTE 34. SHARE-BASED PAYMENTS
A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby the Group may, at the discretion of the Board of Directors, grant options over equity settled ordinary shares in the Company to certain key management personnel of the Group. The options are issued for nil consideration and are granted in accordance with performance guidelines established by the Board of Directors.
All options vest over a period no longer than three years and may have other vesting conditions. Options expire when an employee ceases to be employed or contracted by a Group unless the Board in its discretion allows the employee to retain all or some of their options. Options do not have a fixed expiry date.
All options granted during prior periods were forfeited or cancelled by the prior year end and the fair value of share-based payment charge was totally immaterial and thus the share-based payment expense during the prior financial year was recorded as GBPnil.
During the current financial year, there were 9,964,722 equity settled share options granted. The share-based payment expense during the financial year was recorded as GBP6,896 that is recognised as an accrual at the year end.
The fair value of the options granted was calculated using the Black Scholes Model. The inputs used for the shares granted on 01/07/2019 were as follows. Weighted average share price GBP0.01, exercise price GBP0.013, expected volatility of 100, a risk-free interest rate of 2.9% and an option life of 550 days. The volatility was calculated using the entity's share price over the previous 12 months.
2020
Balance Balance
at Expired/ at
the start the end
Exercise of forfeited/ of
Grant date price the year Granted Exercised other the year
01/07/2015 GBP0.012 6,221,250 - (6,041,250) (180,000) -
01/10/2015 GBP0.012 50,268 - (50,258) (10) -
26/11/2015 GBP0.012 300,000 - (300,000) - -
31/12/2015 GBP0.012 1,000,000 - (1,000,000) - -
01/01/2016 GBP0.012 100,000 - (60,000) (40,000) -
03/02/2016 GBP0.012 350,000 - (250,000) (100,000) -
02/06/2016 GBP0.012 10,000 - - (10,000) -
01/07/2016 GBP0.012 430,000 - (360,000) (70,000) -
19/09/2016 GBP0.012 30,000 - (30,000) - -
31/10/2016 GBP0.012 30,000 - (30,000) - -
14/11/2016 GBP0.012 3,050,000 - (2,000,000) (1,050,000) -
07/12/2016 GBP0.012 20,000 - (20,000) - -
01/01/2017 GBP0.012 100,000 - - (100,000) -
06/02/2017 GBP0.012 1,500,000 - (500,000) (1,000,000) -
21/04/2017 GBP0.012 150,000 - - (150,000) -
15/05/2017 GBP0.012 370,000 - (220,000) (150,000) -
19/06/2017 GBP0.012 20,000 - (20,000) - -
08/12/2017 GBP0.012 1,100,000 - (900,000) (200,000) -
27/02/2018 GBP0.012 278,492 - (278,492) - -
03/12/2018 GBP0.087 - - - - -
03/12/2018 GBP0.087 3,660,000 - - (3,660,000) -
26/02/2019 GBP0.049 880,000 - - (880,000) -
01/07/2019 GBP0.013 - 5,082,222 - - 5,082,222
13/03/2020 GBP0.02 - 800,000 - - 800,000
17/04/2020 GBP0.018 - 2,082,500 - - 2,082,500
04/05/2020 GBP0.019 - 2,000,000 - - 2,000,000
19,650,010 9,964,722 (12,060,000) (7,590,010) 9,964,722
---------- --------- ------------ ----------- ---------
Weighted average
exercise price GBP0.028 GBP0.016 GBP0.012 GBP0.012 GBP0.016
The weighted average share price during the financial year was
GBP0.018 (2019: GBP0.06).
The weighted average remaining contractual life of options outstanding
at the end of the financial year was 1.44 (2019: Nil years).
At the period end, there were 2,826,076 (2019: 0) exercisable shares.
There is no agreement in place between the Company and its employees
for the Company to pay taxes on behalf of its employees.
NOTE 35. EVENTS AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
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