Notes to the consolidated financial statements

 

1.    General information

 

 

The financial information set out above does not constitute the Company's Annual Report and Accounts for the year ended 31 March 2022. The Annual Report and Accounts for 2021 have been delivered to the Registrar of Companies and those for 2022 will be delivered shortly. The auditor's report for the Company's 2022 Annual Report and Accounts was unqualified but included a material uncertainty due to Going concern due to the uncertainties regarding future financing.  The opinion did not contain any statement under Section 498 of the Companies Act 2006.

  

Whilst the financial information included in this results announcement has been prepared in accordance with UK adopted international accounting standards, this announcement does not itself contain sufficient information to comply with UK adopted international accounting standards.

 

The Annual Report and Accounts for the year ended 31 March 2022 will be available on the Company's website: www.saietta.com

 

Saietta Group plc ("the Company") and its subsidiaries are collectively referred to as "the Group". The Company is a public limited company, registered in England and Wales. The address of its registered office is building 210, Heyford Park, Camp Road, Upper Heyford, Oxfordshire, OX25 5HE.

 

The principal activity of the company is the provision of electric drive solutions including the manufacture of prototype and production electric motors for vehicles.

 

2.    Basis of preparation and significant accounting policies

 

a)     Basis of preparation

The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

 

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into the UK law and became UK-adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted international accounting standards in its consolidated financial statements on 1 March 2021. There was no impact or changes in accounting from the transition.

 

The financial statements have been prepared under the historical cost convention. The presentation currency used is sterling and amounts have been presented rounded to the nearest £.

 

Preparation of consolidated financial statements

Where the company has control over an investee, it is classified as a subsidiary. The Company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

 

De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all relevant facts and circumstances, including:

·      The size of the company's voting rights relative to both the size and dispersion of other parties who hold voting rights

·      Substantive potential voting rights held by the company and by other parties

·      Other contractual arrangements

·      Historic patterns in voting attendance

 

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. The subsidiaries are consolidated from the date on which they were incorporated or acquired.

 

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

 

Changes in accounting policies

i.      New standards, amendments to standards or interpretations

No new standards, interpretations and amendments adopted in the year have had a material impact on the Group.

 

ii.     New standards, amendments to standards or interpretations not yet applied

There are no new standards, interpretations or amendments not yet applied which the Directors anticipate will have a material impact on the Group.

 

b)    Significant accounting policies

Revenue recognition

Performance obligations and timing of revenue recognition

A portion of the Group's revenue is derived from selling goods with revenue recognised at a point in time when control of the goods has transferred to the customer. This is generally when the goods are delivered to the customer. However, for export sales, control might also be transferred when delivered either to the port of departure or port of arrival, depending on the specific terms of the contract with a customer. There is limited judgement needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, the Company no longer has physical possession, usually will have a present right to payment (as a single payment on delivery) and retains none of the significant risks and rewards of the goods in question.

 

Some goods sold by the Group include warranties which require the Group to either replace or mend a defective product during the warranty period if the goods fail to comply with agreed-upon specifications. In accordance with IFRS 15, such warranties are not accounted for as separate performance obligations and hence no revenue is allocated to them. Instead, a provision is made for the costs of satisfying the warranties in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. On some product lines, a customer is able to take out extended warranties. These are accounted for as separate performance obligations, with the revenue earned recognised on a straight-line basis over the term of the warranty.

 

The Group's Lightweight and Heavy-duty divisions both carry out design (consultancy-type) services for clients, with revenue recognised typically on an over time basis. This is because the designs created have no alternative use for the Group and the contracts would require payment to be received for the time and effort spent by the Group on progressing the contracts in the event of the customer cancelling the contract prior to completion for any reason other than the Group's failure to perform its obligations under the contract. On partially complete design contracts, the Group recognises revenue based on stage of completion of the project which is estimated by comparing the number of hours actually spent on the project with the total number of hours expected to complete the project (i.e. an input based method). This is considered a faithful depiction of the transfer of services as the contracts are initially priced on the basis of anticipated hours to complete the projects and therefore also represents the amount to which the Group would be entitled based on its performance to date. These design contracts include commitment fees are fees which are payable by customers in order to secure exclusive access to certain goods and services of the company and thus precludes the Company from offering those goods and services to other customers. They are recognised over the period of the commitment.

 

Determining the transaction price

Most of the Group's revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices.

 

Allocating amounts to performance obligations

For most contracts for goods, there is a fixed unit price for each product sold, with reductions given for bulk orders placed at a specific time. Therefore, there is no judgement involved in allocating the contract price to each unit ordered in such contracts (it is the total contract price divided by the number of units ordered). Where a customer orders more than one product line, the Group is able to determine the split of the total contract price between each product line by reference to each product's standalone selling prices (all product lines are capable of being, and are, sold separately).

 

For most contracts for design services, revenue is recognised over time in accordance with percentage completion. Accordingly, the transaction price is allocated in accordance by reference to the actual costs incurred as a proportion of the total expected cost of the products and services to be provided for each performance obligation. Allocation of transaction price may include allocation of discounts, which are applied on a proportionate basis to all performance obligations based on the stand-alone selling price of each performance obligation (observable or estimated).

 

 

In order to win significant repeat business with key customers, the Group might enter into contracts entitling them to discounts if it places repeat orders in the future. Such discounts constitute a 'material right' and result in some of the consideration received for the initial sale being deferred and recognised as revenue when subsequent sales are fulfilled or (if later) when the rights to receive a discount expire. The Group estimates both the probability that the customer will take up its future discount offer and the value of future purchases that might be made in order to estimate the value of the rights granted. This has to be done on a contract-by-contract basis for each customer to whom material rights have been granted. The Directors do not consider past experience an appropriate basis for estimating the amount of total contract revenue to allocate to future discount rights for two reasons. Firstly, there is not a significant number of such contracts on which past experience can be extrapolated. And secondly, each customer has unique circumstances which will impact both the probability and value of additional orders being placed. Therefore, the estimates are made by reference to discussions had with the relevant customers as to the extent the discount options will be taken up when the original contracts were negotiated.

 

Costs of fulfilling contracts

The costs of fulfilling contracts do not result in the recognition of a separate asset because:

·    for RetroMotion contracts, where the Group retrofits existing diesel-engine powered buses with in-wheel electric motor technology, revenue is recognised over time by reference to the stage of completion with control of the asset remaining with the customer for the duration of the contract. Consequently, no asset for work in progress is recognised.

·    such costs are included in the carrying amount of inventory for contracts involving the sale of goods; and

·    for engineering design service contracts, revenue is recognised over time by reference to the stage of completion meaning that control of the asset (the design service) is transferred to the customer on a continuous basis as work is carried out. Consequently, no asset for work in progress is recognised.

 

Practical expedients

The company has taken advantage of the practical expedients:

·    not to account for significant financing components where the time difference between receiving consideration and transferring control of goods (or services) to its customer is one year or less; and

·    to expense the incremental costs of obtaining a contract when the amortisation period of the asset otherwise recognised would have been one year or less.

 

Grant income

The Group enters into consortiums with partners who together will apply for grant income to be paid out against a project that contains defined deliverables, clear outcomes and a set level of expenditure.

 

Expenditure comprises both capital purchases for equipment and operational expenditure for labour and supplies.

 

Each partner agrees a set level of expenditure at the start of the project and a level of grant income paid for by the grant provider is allocated for payment against the expenditure incurred, however the deliverables on the project for each partner are linked. Such projects are sought by the Group as they provide funding over one or more work streams that form part of the Group's programme(s) to deliver increased production capacity.

 

The Group recognises the costs of a project in the period in which they are incurred when related to qualifying expenditure. The grant income that is provided against this total expenditure is recognised as income when received from the issuing authority. Recognition occurs at this point as its release is subject to the issuer's review and confirmation of compliance with all conditions for release. The grant related to assets is deferred and recognised as income in the same period in which the grant-related asset is being depreciated.

 

Assets acquired for use in such projects are depreciated in accordance with the Group's depreciation policy.

 

The grant programmes that the Group participates in typically operate on a three month cycle, with recoverable income over each three month period paid in the month following that period.

 

Expenditure

Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. Provisions are made when a present obligation exists for a future liability relating to a past event and where the amount of the obligation can be reliably estimated.

 

Foreign currencies

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The financial statements are presented in 'sterling', which is also the Group's functional currency.

 

Transactions entered into by the Group in a currency other than the functional currency are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.

 

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income or expense'.

 

Intangible assets

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.

 

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see section related to critical estimates and judgements below).

 

The significant externally acquired intangibles recognised by the company and their useful economic lives are as

Intellectual property patents                               10% straight line

Software                                                       25% reducing balance

 

Internally generated intangible assets (development costs)

Expenditure on internally developed products is capitalised if it can be demonstrated that:

• it is technically feasible to develop the product for it to be sold;

• adequate resources are available to complete the development;

• there is an intention to complete and sell the product;

• the company is able to sell the product;

• sale of the product will generate future economic benefits; and

• expenditure on the project can be measured reliably.

 

Capitalised development costs are subsequently amortised on a straight line basis over the periods the company expects to benefit from selling the products developed, which ranges from 8 to 10 years. The amortisation expense is included within the administrative expenses in the statement of comprehensive income.

 

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the statement of comprehensive income as incurred.

 

The aggregate value of the capitalised development expenditure for each product is reviewed at the end of each accounting period and where the circumstances which have justified the deferral of the expenditure set out above no longer apply, or are considered doubtful, the expenditure, to the extent to which it is considered to be irrecoverable, is impaired. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

 

Property, plant, and equipment

Plant, machinery, fixtures and fittings are stated at cost less accumulated depreciation and accumulated impairment loss.

 

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

 

Short leasehold                          Remaining lease term

Plant and machinery                                25% reducing balance

Fixtures and fittings                  25% reducing balance

Motor vehicles                           Four years

 

Useful lives are based on management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness and events which may cause the estimate to be revised. At the end of the initial period, asset lives reach a residual value at which they are either suitable for replacement or extended life after maintenance and overhaul.

 

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

 

Assets under construction

Assets under construction relates to the construction of an automated production line which at 31 March 2022 was not yet ready for use.

 

Assets under construction are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items.

 

Any costs not capitalised as part of the factory cost will be expensed to the statement of profit or loss as incurred.

 

Depreciation on assets under construction does not commence until they are complete and available for use.

 

When necessary, the entire carrying amount of the assets under construction is tested for impairment in accordance with IAS 36 Impairment of assets as a single asset by comparing its recoverable amount (the higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

 

Inventories

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

 

Weighted average cost is used to determine the cost of ordinarily interchangeable items.

 

Financial instruments

Financial assets and financial liabilities are recognized in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

 

Financial assets

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

 

Fair value through profit or loss

The Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

 

Amortised Cost

These assets arise principally from the provision of goods and services to customers (eg trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

 

Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivable is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the statement of comprehensive income. On confirmation that the trade debtor will not be collectable, the gross carrying value of the asset is written off against the associated provision.

 

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

 

From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in the statement of comprehensive income (operating profit).

 

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the balance sheet. Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less.

 

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The Group does not have any liabilities held for trading nor does it voluntarily classify any financial liabilities as being at fair value through profit or loss. The Group's accounting policy for each category is as follows:

·    Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the balance sheet. Interest expense in this context includes initial transaction costs and premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

·    Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and are subsequently carried at amortised cost using the effective interest method.

 

Financial guarantee contract liabilities

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of:

·    the amount determined in accordance with the expected credit loss model under IFRS 9 Financial Instruments; and

·    the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 Revenue from Contracts with Customers.

 

The fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.

 

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

 

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

 

When the Group exchanges with the existing lender one debt instrument into another one with substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification is recognised in profit or loss as the modification gain or loss within other gains and losses.

 

Taxation

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.

 

Deferred tax is recognised on the difference between the carrying amount of an asset or liability and the amount at which that asset or liability is assessed for tax purposes (tax base). Historical accumulated tax losses would give rise to a net deferred tax asset for the Group. However, due to the uncertainty on future recovery the Directors considered it prudent not to recognize such asset at this time.

 

Leases

At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

·    The contract involves the use of an identified asset - this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

·    The Group has the right to substantially all of the economic benefits from the use of the asset throughout the period of use; and

·    The Group has the right to direct the use of the asset. The Group has this right when it has the decision making rights that are most relevant to changing how and for what purposes the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either:

·    The Group has the right to operate the asset; or

·    The Group designed the asset in a way that predetermines how and for what purposes it will be used.

 

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

 

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is allocated, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method over the shorter of the useful life of the leased asset and the expected lease term. If ownership of the leased asset is automatically transferred at the end of the lease term or the exercise of a purchase option is reflected in the lease payments,the right-of-use asset is amortised on a straight-line basis over the expected useful like of the leased asset.

 

The lease liability is initially measured at the present value of the lease payments that are not paid at commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as a discount rate. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments.

 

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

 

Lease payments include fixed payments, i.e. amounts expected to be payable by the Company under residual value guarantee, the exercise price of a purchase option and lease payments in relation to lease extension option if the Company is reasonably certain to exercise purchase or extension options and payment of penalties for terminating the lease if the lease term considered reflects that the Company shall exercise termination option.

 

The Group applies the practical expedient to not assess whether rent concessions occurring as a direct consequence of the COVID-19 pandemic that meet the following conditions are lease modifications:

·    The change in lease payments results in revised consideration that is substantially the same, or less than the consideration for the lease immediately preceding the change;

·    Any reduction in lease payments affects only payments originally due on or before 30 June 2021; and

·    There no substantive change to other terms and conditions of the lease.

 

Changes to lease payments for such leases are accounted for as if they are not lease modifications.

 

Provisions

The Group applies IAS 37 Provisions, Contingent Liabilities and Contingent Assets in accounting for non-financial liabilities. A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. When the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

 

Provisions are held for product warranty as detailed in note 22 to the consolidated financial statements

 

Warranty provisions

Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the directors' best estimate of the expenditure required to settle the Group's obligation.

 

Onerous contract provisions

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

 

Convertible loans

Convertible loans, where conversion is dependent upon an event such as Listing, are treated as borrowings and recorded in financial liabilities in accordance with the term of the loan. Whilst the loan is recognized at amortised cost, the derivative embedded in the host contract is separated and measured as an option. This element is not considered material.

 

Convertible loans which do not meet the 'fixed for fixed' criterion due to the contingency of Listing are classified as liabilities with no equity component.

 

Borrowing costs

Borrowing costs are capitalised, net of interest received on cash drawn down yet to be expended when they are directly attributable to the acquisition, contribution or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred.

 

Employee benefit costs

The Group operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the consolidated income statement in the period to which they relate.

 

Share-based payments

The Group also enters into arrangements that are equity-settled, share-based payments with certain employees (including directors) in the form of share options. During the period covered by the financial statements, the Group operated a HM Revenue and Customs approved share option scheme. This scheme is an Enterprise Management Incentive scheme where equity options are made to certain qualifying employees to reward and incentivise them. The equity share based payments are measured at the fair value of the equity at the grant date.

 

The scheme was open to all qualifying employees who are an employee within the Group working 25 hours per week for the Group, or if less, at least 75% of their working time.

 

The Listing was a necessary condition for exercise.

 

Employees who leave the Group are entitled to exercise their vested options after they leave the employment of the Group if they meet the requirements of a "good leaver", defined to be exit from the business for grounds other than dismissal.

 

The value of the share options is determined using the Black Scholes option pricing model and Monte Carlo simulation, and recorded as a share option reserve in the consolidated statements of financial position, with movements in the reserve treated as operating expenditure in the respective year.

 

The options have varying vesting periods from one month up to four years, with exercise of vested shares immediately in advance of a proposed Listing.

 

Long-Term Incentive Plan ("LTIP" )

The Group operated a share-based payment LTIP arrangement for certain employees. The scheme awards share options to the employee based on a specific number of shares at grant date and the share price of Saietta Group plc at the vesting date, subject to profitability and employment conditions. These were accounted for as equity-settled arrangements. For these awards, fair value is to be measured at the date of grant and charged to the profit and loss over the vesting period. The vesting period is the period of time before shares in an employee plan are unconditionally owned by an employee. Fair value at the date of grant is determined using the Black-Scholes model or the Monte Carlo Simulation model where appropriate.

 

Share capital

Financial instruments issued by the company are treated as equity only to the extent that they do not meet the definition of a financial liability. The company's ordinary shares are classified as equity instruments.

 

Going concern

The financial statements have been prepared on a going concern basis. In adopting the going concern basis, the directors have considered the financial position of the Group and the Company, their cash flows and their liquidity position. The Group and Company's financial risk management objectives and exposures to liquidity and other financial risks and uncertainties are set out on pages 16 to 19. The Group had net assets of £32,814,791 (2021: £3,912,478) as at 31 March 2022 and available liquidity of £18,402,055 comprised of cash and cash equivalents which is a net increase of £15,539,585 compared to the liquidity position of £2,862,470 as at 31 March 2021 which has been achieved through Admission to the AIM which raised gross proceeds of £37.5m and the Group's operational trading activities.

 

The Group and Company have modelled scenarios for periods up to four years from the March 2022 year end and stress tested its financial position in such scenarios. These stress tests modelled the variability in financial performance and free cash flows when incorporating certain hypothetical events such as a reduction in forecast revenue to include only revenue committed to date, modifications to capital expenditure and variations in gross margins achieved.

 

The Group and Company operate in markets that are rapidly growing and has strategic plans that respond to such growth. In delivering those plans, the Group is mindful of the ultimate benefits from maintaining control over the deployment of its intellectual property in applications with major OEM's. In order to do so, it recognises that at times it will potentially need to co-invest with certain major OEM's to enhance the future value it can achieve from application of its products directly into OEM customer sales. The Group has prepared forecasts for future scenarios both incorporating such funding needs and excluding such.

 

These forecasts align to the strategy set out at IPO which were based on the assumption that the Group and Company will significantly increase their revenue and be able to generate significant gross profit in the next 12 months. If the timing of the increased revenue generation is delayed there may be a need for the Group to raise additional financing.

 

Whilst the Directors expect that additional funding can be raised this is not guaranteed and when continuing with an accelerated expansion this presents a material uncertainty which may cast significant doubt over the Group's and the Company's ability to continue as a going concern and therefore its ability to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not reflect any adjustments that would be required to be made if they were prepared on a basis other than the going concern basis.

 

In particular, when looking further ahead, the Directors acknowledge that if it elects to achieve greater participation in future value, the potential then arises for a funds shortfall to arise and that in such circumstances it would need to seek further funding to pursue such a contractual route. In such instances the commercial merits will be weighed in determining whether funding is sought.

 

The Group and Company have assessed the projected cash flows of the Group and Company for the twelve-month period from the date of authorisation of the financial statements and beyond it later years and have carried out a stress test to determine the under-performance level that would ultimately result in insolvency.

 

The model takes into account the Group and Company's expectations of external factors including continued supply chain challenges related to semiconductor shortages and prevailing macroeconomic conditions including inflationary pressures. The stress test scenario models the impact of sustained reduction in forecast revenue over the twelve month period and the impact of contractually obliged outflows of cash in respect of capital expenditure.

 

Whilst acknowledging the direct relationship of commercial decisions with OEM's over needs for future funds beyond the coming twelve months, the Board have concluded, on the basis of all scenarios and of current and forecast trading and related expected cashflows and available sources of finance, that it will be able to continue as a Going Concern for at least twelve months from the date of signing these financial statements and therefore it remains appropriate to prepare the Group and Company's results on the basis of a going concern.

 

3.    Critical Accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including the expectations of future events that are believed to be reasonable under the circumstances and any further evidence that arises relevant to judgements taken. In the future, actual experience may differ from these estimates and assumptions. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

Useful lives of property, plant, and equipment

Property, plant and equipment are depreciated over the estimated useful lives of the assets:

Short leasehold                              Remaining lease term

Plant and machinery                     25% reducing balance

Fixtures and fittings                       25% reducing balance

Motor vehicles                               Four years

 

 Useful lives are based on management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness and events which may cause the estimate to be revised. At the end of the initial period, asset lives reach a residual value at which they are either suitable for replacement or extended life after maintenance and overhaul. The key areas of estimation uncertainty regarding depreciation is the determination of the life time capacity; risk of obsolescence from technological and regulatory changes; and required future capital expenditure (refurbishment or replacement of key components).

 

The carrying amount of property, plant and equipment at 31 March 2022 is £3,489,541 (2021: £198,479) and a reasonable adjustment sensitivity if assets were to have a reduced useful life of a year would be a reduction in carrying value of £366,000.

 

Accounting for business combinations and fair value - estimates and assumptions

Business combinations are accounted for at fair value. The assessment of fair value is subjective and depends on a number of assumptions. These assumptions include assessment of discount rates, and the amount and timing of expected future cash flows from assets and liabilities. In addition, the selection of specific valuation methods for individual assets and liabilities requires judgment. The specific valuation methods applied will be driven by the nature of the asset or liability being assessed. The consideration given to a seller for the purchase of a business or a company is accounted for at its fair value. When the consideration given includes elements that are not cash, such as shares or options to acquire shares, the fair value of the consideration given is calculated by reference to the specific nature of the consideration given to the seller.

 

Please refer to Note 29 for further detail.

 

Useful lives and carrying value of intangible assets

The carrying amount is sensitive to both write-off of any intangible asset that is impaired and to amortisation either before all criteria to amortise are met, or after such criteria have been met. When carrying out impairment tests these are based upon future cash flow forecasts and these forecasts include management estimates.

 

Future events or changes in the market could cause the assumptions to change, therefore this could also have an adverse effect on the future results of the group.

 

Recognition of internally generated intangible assets arising from the development phase of a project is dependent upon application of specific criteria detailed in note 2. Management judgement is required as to the extent that each of the criteria is met and to the point where development is complete.

 

The carrying amount of intangible assets at 31 March 2022 was £8,365,507 (2021: £3,364,156) and a reasonable adjustment sensitivity if intangible assets related to a motor variant were impaired or if the Group were to require amortisation for an additional year for patents and immediately at the start of the year for development costs would have an impact of £72,000.

 

Research and Development ("R&D") credits             

Research and Development credits arising in the United Kingdom under Corporation Tax Act 2009 Section 1308 claims are recognised upon success and recognised within Accrued Income. Successful Section 1308 R&D credits are considered to be UK Government grants arising as a direct result of the Company's investment in its R&D assets and for which no further obligation exists upon the Company. The R&D credits are charged to the P&L at the same time that the asset is expensed to P&L, therefore amortised over 8 years as their benefit is derived over the use of the Company's R&D assets.

 

Expected credit losses and asset impairment

Expected credit losses are assessed under IFRS9 using reasonable information about past events and current conditions and forecasts of future events. Asset impairment considers the likely returns from financial assets owned by the Group and their recoverability, based on market values and management's judgement of any other relevant factors.

 

Please refer to Note 27 for further detail.

 

Carrying value of provisions for onerous contracts

 

IAS 37 defines an onerous contract as a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. Unavoidable costs are defined as the lower of the cost of fulfilling the contract and any compensations or penalties arising failure to fulfil it.

 

The Group currently has agreed to fulfil multiple customer contracts that will see unavoidable costs of meeting their obligations exceed the revenues received. As such, these contracts are classified as onerous. The contracts need to be valued at a best estimate of fair value, including the costs directly associated with fulfilling the contract and also the costs from assets used to complete the contracts (Equipment, labour costs, etc). For the purpose of estimating their fair value, the costs are based on the anticipated material, staffing and additional operating expenses. The economic costs are taken as a percentage of the revenue to costs as forecast in 2022.

 

If the total unavoidable costs of meeting the unavoidable obligations under these contracts were to be 10% higher, this would cause the provision to increase by £9,330 with the corresponding movement recognised as an expense in the Statement of Comprehensive Income. The total provision is expected to be utilised in its entirety before the end of the financial year ended 31 March 2023.

 

Please refer to Note 22 for further detail.

 

Incremental borrowing rate used to measure lease liabilities

 

Where the interest rate implicit in the lease cannot be readily determined, lease liabilities are discounted at the lessee's incremental borrowing rate. This is the rate of interest that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. This involves assumptions and estimates, which would affect the carrying value of the lease liabilities (note 21) and the corresponding right-of-use assets (note 16).

 

To determine the incremental borrowing rate the company uses recent third-party financing as a starting point, and adjusts this for conditions specific to the lease such as its term and security. The company used incremental borrowing rates specific to each lease which ranged between 4.1% and 4.5%. A 5% increase in the rate would cause the lease liability to reduce by £413,014 with a corresponding movement in the 'cost' of the right-of-use asset which would reduce the associated amortisation.

 

Share Options - estimates and assumptions

 

The valuation of share options issued in the year has been based on a Black Scholes model for options with no market based vesting conditions and a Monte Carlo simulation for options with market based vesting conditions. The inputs to both models represent the Director's best estimates for the likely exercise behaviour of the option holders. The expected future share price volatility was estimated based on the historical volatility of the Company's share price and a representative peer group of similar companies. For the share options with market based vesting conditions an independent specialist consultant was engaged to simulate the impact on the market-based conditions on the fair value of the options issued.

 

 

4.    Alternative Performance Measures

 

In reporting financial information, the Group presents alternative performance measures ("APMs") that are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business.

 

The APMs used within this Annual Report are defined below.

                                                         

 

Alternative performance measure	Definition
Adjusted EBITDA	Adjusted EBITDA is defined as the Group's earnings before interest, tax, depreciation, amortisation, share of profit/loss from equity accounted investments and exceptional items including the share-based payment charges, the gain on bargain purchase, costs related to Saietta Group plc's admission to the AIM, costs related to the acquisition of e-Traction Europe B.V., legal fees related to Saietta Group plc's investment in its equity-accounted associate, professional fees in respect of share options issued pre-Admission, legal fees in respect of company reorganisations & the write-off of related party receivables.
Gross proceeds raised through placing	Gross proceeds are the amount that a seller receives from the sale of a shares. These proceeds include all costs and expenses.
Working capital	Changes in assets and liabilities as presented in the Consolidated Statement of Cash Flows. This comprises movements in assets and liabilities excluding movements relating to financing or investing cash flows or non-cash items that are not included in adjusted EBIT or adjusted EBITDA.

 

Adjusted EBITDA                                                                    

The Group uses adjusted EBITDA as an APM to review and measure the underlying profitability of the Group on an ongoing basis for comparability as it recognises that increased capital expenditure year on year will lead to a corresponding increase in depreciation and amortisation expense recognised within the consolidated income statement.

 

Working capital is considered by the Group to be a key measure in assessing short-term assets and liabilities that are expected to be converted into cash within the next 12-month period.

 

Reconciliations between these alternative performance measures and statutory reported measures are shown below.

 

Adjusted EBITDA		Year ended 31		Year ended 31
		March 2022		March 2021
		£		£
Adjusted EBITDA		(4,404,039)		(997,895)
Depreciation and amortization		(509,895)		(166,065)
Finance income		5,523		1
Finance expense		(104,621)		(23,101)
Share-based payment charges	Note 25	(4,406,334)		(5,174,957)
Gain on bargain purchase recognised as part of subsidiary acquisition	Note 29	704,761		-
Costs related to Saietta Group plc's admission to the AIM		(1,219,296)		-
Costs related to the acquisition of e-Traction Europe B.V.		(358,358)		-
Costs related to the co-operation with Padmini VNA		(95,510)		-
IPO-dependent staff expenses		(361,157)		-
M&A support fees		(101,569)
One-off legal fees in respect of share option advice pre-IPO		(75,000)		-
One-off legal fees in respect of company reorganisation		(44,176)		-
Net increase in financial liabilities		(78,058)		-
Contractor fees to secure grants		(73,432)
One-off enterprise resource planning consultancy fees Write-off of related party receivables		(10,925)                          -		(935,146)
Loss before taxation		(11,132,085)		(7,297,163)
Taxation		377,420		304,145
Loss for the year		(10,754,665)		(6,993,018)

 

 

A reconciliation from Gross Proceeds raised through placing to proceeds on issue of shares per Consolidated Cash Flow Statement is detailed below:

 

Proceeds on issue of shares	£35,241,809
Commission and corporate finance fees	£2,125,000
Other fees	£133,191
Gross proceeds from settled shares	£37,500,000

 

5.      Segment information

 

The Group operates through three distinct business divisions:

a.       Lightweight mobility which focuses on AFT developments particularly low voltage two and three wheelers;

b.      Heavy-duty commercial which covers the truck, bus and coach markets; and

c.       Marine division, fronted by Propel, which is the Group's marine division selling inboard and outboard motors both via distributors and direct to customers.

 

Factors that management used to identify the Group's reportable segments

The Group's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer, Executive Chairman and Chief Financial Officer.

 

Measurement of operating segment profit or loss, assets and liabilities

The Group evaluates segmental performance on the basis of profit or loss from operations calculated in accordance with IFRS but excluding non-recurring losses, such as goodwill impairment, and the effects of share-based payments.

 

Inter-segment sales are priced along the same lines as sales to external customers, with an appropriate discount being applied to encourage use of group resources at a rate acceptable to local tax authorities. This policy was applied consistently throughout the current and prior period.

 

Segment assets exclude tax assets and assets used primarily for corporate purposes. Segment liabilities exclude tax liabilities and defined benefit liabilities. Loans and borrowings are allocated to the segments based on relevant factors (e.g. funding requirements). Details are provided in the reconciliation from segment assets and liabilities to the Group position.

 

 

Year ended 31 March 2022
				All other
	Lightweight	Heavy-duty	Marine	segments	Total
Revenue	£	£	£	£	£
Revenue from Apollo Future Mobility Group Limited	635,984                 -                         -				635,984
Revenue from Consolidated Metco, Inc.	400,000                 -                         -			-	400,000
Revenue from Sloepmakerij B.V.	-                       -            1,261,008			-	1,261,008
Revenue from other customers	555,266	952,018	-	-	1,507,284
Inter-segmental revenue	(186,407)	(22,066)	-	-	(208,473)
Groups' revenue per consolidated statement of	1,404,843	929,952	1,261,008	-	3,595,803
comprehensive income
Depreciation	300,017	98,766	38,728	-	437,511
Costs associated with Listing	1,006,323	-	-	-	1,006,323
	1,306,340	98,766	38,728	-	1,443,834
Segment loss	(6,243,109)	(993,005)	(296,416)	(446,371)	(7,978,901)
Share based payments					(4,406,334)
Gain on bargain purchase					704,761
Other income					725,545
Finance income					5,523
Finance expense					(104,621)
Net increase in financial liabilities					(78,058)
Group loss before tax and discontinued operations					(11,132,085)
Year ended 31 March 2021
				All other
	Lightweight	Heavy-duty	Marine	segments	Total
Revenue	£	£	£	£	£
Revenue from Apollo Future Mobility Group Limited	624,110	-	-	-	624,110
Revenue from Consolidated Metco, Inc.	-	-	-	-	-
Revenue from Sloepmakerij B.V.	-	-	-	-	-
Revenue from other customers	246,856	-	-	-	246,856
Inter-segmental revenue	-	-	-	-	-
Groups' revenue per consolidated statement of	870,966	-                        -                    -			870,966
comprehensive income
Depreciation	(147,089)	-                        -                    -			(147,089)
Costs associated with Listing	-	-	-	-	-
	(147,089)	-                        -                    -			(147,089)
Segment loss	(2,869,826)	-                        -                    -			(2,869,826)
Share based payments					(4,406,334)
Other income					2,097
Finance income					1
Finance expense					(23,101)
Group loss before tax and discontinued operations					(7,297,163)

 

Year ended 31 March 2022
				All other
	Lightweight	Heavy-duty	Marine	segments	Total
Additions to non-current assets	£ 6,980,426	£ 3,107,667	£ 1,320,308	£ -	£ 11,408,401
Inventories	297,585	1,943,775	-	-	2,241,360
Reportable segment assets	33,962,388	5,827,677	3,055,995	48,821	42,894,881
Total group assets					42,894,881
Reportable segment liabilities	7,503,370	1,507,903	901,228	125,756	9,838,257
Loans and borrowings					-
Liabilities for financial guarantees					41,833
Deferred tax liabilities					-
Total group liabilities					9,880,090
Year ended 31 March 2021
				All other
	Lightweight	Heavy-duty	Marine	segments	Total
	£	£	£	£	£
Additions to non-current assets	906,167	-                        -                           -			906,167
Inventories	116,958	-                        -                           -			116,958
Reportable segment assets	7,634,969	-                        -                           -			7,634,969
Total group assets					7,634,969
Reportable segment liabilities	1,206,380	-                        -                           -           1,206,380
Loans and borrowings		2,516,111
Liabilities for financial guarantees		-
Deferred tax liabilities		-
Total group liabilities		3,722,491

 

 

 

Non-current assets by geography
	Year ended 31		Year ended 31
	March 2022		March 2021
	£		£
UK	13,162,815		3,993,009
European Union	2,352,632		3,509
Rest of World	-		-
Total	15,515,447		3,996,518

 

Contract assets and contract liabilities arise from the Group's Lightweight and Heavy-duty divisions, which enter into contracts that can take a few years to complete, because cumulative payments received from customers at each balance sheet date do not necessarily equal the amount of revenue recognised on the contracts.

 

6.    Revenue analysis

 

Revenue by category and by geography is as follows:
Revenue by category
Lightweight division	Year ended 31 March 2022 £ 1,404,843		Year ended 31 March 2021 £ 870,966
Heavy-duty division	929,952		-
Marine division	1,261,008		-
Total	3,595,803		870,966
Revenue by geography
UK	Year ended 31 March 2022 £ 1,221,049		Year ended 31 March 2021 £ 810,840
European Union	2,161,518		15,000
Rest of World	213,236		45,126
Total	3,595,803		870,966

 

 

 

 

 

 

Under one design contract entered into during the year, £200,000 (2021: £nil) was received in advance of performance and not recognised as revenue during the year. The balance is included within accruals and deferred income.

 

	Year ended 31		Year ended 31
	March 2022		March 2021
Grant income	£   725,545		£   2,097

 

 

The Group received development government grants from the Advanced Propulsion Centre against qualifying expenditure of £661,122 (2021: £2,097) in the years ended 31 March 2022 and 31 March 2021 respectively, which has been recorded as grant income. There are no unfulfilled conditions or other contingent liabilities attached to the grant, however, as is customary the final instalment claim amount of £330,326 (2021: £39,225) remains due, subject to submitted assessment. This has been treated as a contingent gain at the year ended 31 March 2022.

 

The remaining £64,423 (2021: £nil) balance included within 'Other income' relates to individually immaterial grants received by subsidiaries during the year.

 

8. Operating loss

 

	Year ended 31	Year ended 31
	March 2022	March 2021
Operating loss has been stated after:	£	£
Cost of inventories recognised as expense	1,971,725	68,007
Depreciation of right-of-use assets	270,477	107,381
Depreciation of property, plant and equipment	174,451	39,708
Amortisation of intangible assets	72,384	18,976
Profit on disposal of fixed assets	2,160	(562)
Auditor's remuneration:
Fees payable to the Group's auditor for the audit of the Group's accounts	108,750	90,000
Fees payable to the Group's auditor for the audit of the subsidiaries accounts	77,766	-
Fees payable to the Group's auditor for other services:
- Other fees	153,176	-
Share-based payment expense	4,406,334	5,174,957
Foreign exchange differences	(52,957)	4,562

 

The presentation of the Statement of Comprehensive Income has been amended to show the share option expense as part of administrative expenses based on the business's operations.

 

9. Significant administrative expenses

 

 

Wages and salaries excluding share-based employee expense	Year ended 31 March 2022 £ 4,800,640		Year ended 31 March 2021 £ 781,236
Share-based employee expense	4,406,334		5,040,848
Costs related to Saietta Group plc's admission to the AIM	1,219,296		-
Costs related to the acquisition of e-Traction Europe B.V.	358,358		-
Other individually immaterial expenses	3,326,172		1,199,860
Total	14,110,800		7,021,944

 

10. Employee benefit expenses (including directors)

 

	Year ended 31 March 2022 £		Year ended 31 March 2021 £
Wages and salaries	3,768,729		604,553
Social security costs	797,796		153,185
Employer's pension contributions	234,115		23,498
Share-based employee expense	4,406,334		5,040,848
Total	9,206,974		5,822,084
Average number of employees during the year was as follows:	Year ended 31 March 2022 No.		Year ended 31 March 2021 No.
Technical	70		18
Procurement	4		2
Sales and marketing	12		1
Finance and administration	14		4
Total	100		25
The remuneration of department heads who are the key management personnel is as follows:
	Year ended 31 March 2022 £		Year ended 31 March 2021 £
Short term employee benefits	1,297,568		183,584
Unexercised share options awarded in the year	2,768,709		736,377
	4,066,277		919,961
Directors	Year ended 31 March 2022 £		Year ended 31 March 2021 £
Remuneration	623,277		393,600
Unexercised share options awarded in the year	2,366,492		3,639,703
	2,989,769		4,033,303
Highest paid director The highest paid director's emoluments were as follows:
£ Directors' emoluments and amounts receivable under long-term incentive schemes	Year ended 31 March 2022 £		Year ended 31 March 2021 £
Defined contribution schemes:	2,223,689		2,171,670
Accrued pension at the end of the year	7,762		-
	2,231,451		2,171,670

 

 

 

11. Finance income and expense

 

 

		Year ended 31 March 2022 £		Year ended 31 March 2021 £
Finance income Deposit account interest		5,523		1
Finance expense
Interest on lease liabilities		18,609		21,117
Other interest		86,012		1,924
		104,621		23,101

 

12. Taxation
	Year ended 31		Year ended 31
	March 2022		March 2021
	£		£
UK tax (credit) for the current year	(377,420)		(304,145)
Deferred tax	-		-
Tax credit for the year	(377,420)		(304,145)

 

 

A reconciliation of the tax credit to the elements of loss before tax for the consolidated income statement is as follows:

 

(Loss) before income tax	Year ended 31 March 2022 £ (11,132,085)		Year ended 31 March 2021 £ (7,297,163)
Tax at UK rate of 19%	2,115,096		1,386,461
Reconciling tax charges for: Non-deductible expenses	98,898		-
Capital allowances	400,000		55,000
R&D tax credit	71,710		200,000
Gain on bargain purchase	133,905		-
Share based payments	(837,203)		(983,241)
Deferred tax asset not recognised	(1,604,985)		(354,075)
Tax credit for the year	377,420		304,145
Effective tax rate for the year	(3.4%)		(4.2%)

 

 

The movements in deferred tax assets and liabilities (prior to the offsetting of balances within the same jurisdiction as permitted by IAS 12) during the period are shown below:

 

	Asset	Liability	Net
Accelerated capital allowances	2022 £ -	2022 £ (714,498)	2022 £ (714,498)
Leases	-	(60,185)	(60,185)
Tax losses	774,683	-	774,683
Net tax assets / liabilities	774,683	(774,683)	-
	Asset	Liability	Net
Accelerated capital allowances	2021 £ -	2021 £ (480,475)	2021 £ 480,475
Leases	2,220	-	2,220
Tax losses	478,255	-	478,255
Net tax assets / liabilities1	480,475	(480,475)	-

 

1. This table disclosure was not included in the prior year accounts and did not present the deferred tax asset offset against the deferred tax liability in the 2021 financial year. The deferred tax asset is not recognised, but to the extent the Group has deferred tax liabilities.  This disclosure had no impact on the primary financial statements.

 

The Group has recognised the deferred tax assets to the extent that it can be offset against the deferred tax liability. The deferred tax asset over and above this utilisation has not been recognised as the business is developing its products.  When there is clear visibility of the profits, the Group will recognize the net deferred tax assets.  Losses carried forward were £31,013,764 in the year ended 31 March 2022 (2021 restated1: £4,043,664).

 

 

13. Loss per share

 

The calculation of the basic loss per share is based upon the net loss after tax attributable to ordinary shareholders and weighted average number of shares in issue for the year.

 

	Year ended 31	Year ended 31
	March 2022	March 2021
Loss per share	£	£
- Basic	(0.14)	(0.15)
The calculation of the basic loss per share is based on the following data:
	Year ended 31		Year ended 31
	March 2022		March 2021
Loss for the year - Attributable to equity shareholders (£)	£   (10,754,665)		£   (6,993,018)
Number of shares
- Weighted average number of Ordinary Shares outstanding	74,884,548		45,738,690

 

The loss attributable to ordinary shareholders and weighted average number of Ordinary Shares for the purpose of calculating the diluted earnings per Ordinary Share are identical to those used for basic earnings per share. This is because the exercise of share options would have the effect of reducing the loss per Ordinary Share and is therefore not dilutive.

 

At 31 March 2022, there were 9,273,161 options outstanding (2021: 10,826,072) as detailed in note 25.

 

14. Intangible assets

 

	Patents and      Development			Software	Total
	licenses	costs
	£                                           £			£	£
Cost
At 1 April 2021	79,168                3,253,554			110,231	3,442,953
Additions	377,181             3,755,989			128,842	4,262,012
Additions acquired through business combination	-                               815,231			27,080	842,311
Disposals	-                                       -			-	-
Currency translation differences	-                                (30,903)			344	(30,559)
At 31 March 2022	456,349		7,793,871	266,497	8,516,717
Accumulated amortisation
At 1 April 2021	24,168		-	54,629	78,797
Amortisation for the year	27,552		11,931	32,901	72,384
Amortisation eliminated on disposal	-		-	-	-
Currency translation differences	-		(31)	61	30
At 31 March 2022	51,720		11,900	87,591	151,211
Net book value Net book value at 31 March 2022	404,629		7,781,971	178,906	8,365,506
Net book value at 31 March 2021	55,000		3,253,554	55,602	3,364,156

 

 

15. Property, plant and equipment

 

	Short leasehold £	Plant & machinery £	Fixtures & fittings £	Motor vehicles £	Assets under construction £	Total   £
Cost
At 1 April 2021	290,932	113,156	323,838	110,044	-	837,970
Additions	248,892	315,158	388,695	74,424	1,938,441	2,965,610
Additions acquired through business	-	250,064	-	255,691	-	505,755
combination
Disposals	-	-	-	(2,400)	-	(2,400)
Currency translation differences	(125)	3,523	(59)	3,700	-	7,039
At 31 March 2022	539,699	681,901	712,474	439,880	1,938,441	4,312,395
Accumulated depreciation
At 1 April 2021	290,932	70,078	177,574	100,907	-	639,491
Depreciation for the year	8,394	58,711	87,781	19,565	-	174,451
Depreciation eliminated on disposal	-	-	-	(500)	-	(500)
Currency translation differences	-	378	(3)	37	-	412
At 31 March 2022	299,326	129,167	265,352	120,009                      -                  813,854
Net book value
Net book value at 31 March 2022	240,373	552,734	447,122	319,871          1,938,441          3,498,541
Net book value at 31 March 2021	-	43,078	146,264	9,137                                  -                 198,479

 

 

16. Right-of-use assets

 

			Motor
	Buildings	Equipment	vehicles	Total
	£	£	£	£
Cost
At 1 April 2021	530,867	27,021	-	557,888
Additions	2,125,113	-	169,120	2,294,233
Additions acquired through business combination	221,223	-	141,437	362,660
Currency translation differences	(3,292)	-	(1,616)	(4,908)
At 31 March 2022	2,873,911	27,021	308,941	3,209,873
Accumulated amortisation
At 1 April 2021	105,185	18,820	-	124,005
Depreciation for the year	237,244	2,052	31,181	270,477
Currency translation differences	174	-	168	342
At 31 March 2022	342,603	20,872	31,349	394,824
Net book value Net book value at 31 March 2022	2,531,308	6,149	277,592	2,815,049
Net book value at 31 March 2021	425,682	8,201	-	433,883
17. Inventories
		Year ended 31		Year ended 31
		March 2022		March 2021
		£		£
Raw materials		2,438,533		64,463
Finished goods		31,510		52,495
		2,470,043		116,958

 

 

18. Financial and non-financial assets

 

(a) Cash and cash equivalents	Year ended 31 March 2022 £		Year ended 31 March 2021 £
Cash in hand and at bank	18,402,055		2,862,470
(b) Trade and other receivables   Non-current assets:	Year ended 31 March 2022 £		Year ended 31 March 2021 £
Other receivables	734,526		-
Current:	734,526		-
Trade receivables	2,422,019		273,978
Other receivables	1,742,568		-
R&D tax credit	574,368		200,000
VAT recoverable	331,184		41,476
	5,270,139		515,454
	5,804,665		515,454
(c) Prepayments and accrued income   Non-current assets:	Year ended 31 March 2022 £		Year ended 31 March 2021 £
Prepayments and accrued income	101,825		-
Current:	101,825		-
Prepayments and accrued income	1,237,197		143,569
	1,237,197		143,569
	1,339,022		143,569

 

None of the Group's cash equivalents or other financial assets, are past due or impaired. Regarding other financial assets that are neither past due nor impaired, there were no indications as at 31 March 2022 (2021, 2020: no indications) that defaults in payment obligations will occur. However, as required under IFRS 9, the Company has assessed other financial assets for expected credit losses.

 

See note 27 for further detail.

 

19. Financial liabilities

 

	Year ended 31		Year ended 31
Trade and other payables	March 2022		March 2021
	£		£
Current:
Trade payables	1,672,548		302,643
Social security and other taxes	1,684,705		54,589
Pension due	15,807		8,625
Accruals and deferred income	1,157,142		219,431
Other payables	2,289,319		-
Borrowings	-		176,111
	6,819,521		761,399

 

 

Included within 'Other payables' is an amount of £1,706,498 (2021: £nil) in respect of deferred consideration for the acquisition of Saietta Europe B.V. (formerly e-Traction Europe B.V.). For more details, see note 29.

 

Lease liabilities   Lease liabilities		Year ended 31 March 2022 £ 470,069		Year ended 31 March 2021 £ 114,555
		470,069		114,555
20. Non-current financial liabilities
Lease liabilities		Year ended 31 March 2022 £ 2,380,537		Year ended 31 March 2021 £ 330,426
Borrowings		-		2,340,000
Provisions	Note 22	168,130		-
Liabilities for financial guarantees	Note 23	41,833		-
		2,590,500		2,670,426
Included within lease liabilities are the following amounts:		Year ended 31		Year ended 31
Due within one year		March 2022 £ 470,069		March 2021 £ 114,555
Due in more than one but not more than two years		656,840		110,142
Due in more than two but not more than five years		968,423		220,284
Due after five years		755,274		-
		2,850,606		444,981
Movement in net borrowings
Borrowings at 1 April		Year ended 31 March 2022 £ 2,516,111		Year ended 31 March 2021 £ 231,945
Loan notes converted into equity		(2,340,000)		-
Convertible loan notes issued		-		2,340,000
Repayments in the year		(176,111)		(55,834)
Borrowings at 31 March		-		2,516,111

 

In March 2021 the Group issued 2,340 convertible loan notes to Amati Global Investors Limited with a nominal value of £2,340,000. The loan notes had a term until 2026 and a coupon rate of 8%. Upon admission to the AIM market on 7th July 2021, the convertible loan notes issued by the Company were automatically converted into 3,000,0000 new Ordinary shares (the "Conversion Shares") of £0.0011 each at a conversion price of £0.78 per share, pursuant to the terms of the convertible loan notes. See note 25 for more detail.

 

In January 2019 Mr. L. Marazzi provided a non-interest bearing loan to the company of £25,000 repayable in equal instalments over 36 months. In March 2019 Mr. L. Marazzi provided a non-interest bearing loan to the company of £250,000 repayable in equal instalments over 36 months. The entire balance owed to Mr. L. Marazzi was repaid during the year.

 

21. Leases

In the capacity as lessee

The Group's leases are for offices and manufacturing space as well as the purchase of capital equipment used in the day to day operating activities of the business. For all property leases, the period rent is fixed over the lease term.

 

The company also leases certain items of plant and equipment. In some contracts for services with distributors, those contracts contain a lease of vehicles. Leases of plant, equipment and vehicles comprise only fixed payments over the lease terms.

 

All current lease payments are fixed in nature and not subject to any clauses which allow these payments to vary under certain conditions.

 

The total cash outflow for leases during the year was comprised of the following:
Interest expense	Year ended 31 March 2022 £ 18,609		Year ended 31 March 2021 £ 21,177
Principal payments	263,263		73,533
	281,872		94,710

 

The company sometimes negotiates break clauses in its property leases. On a case-by-case basis, the company will consider whether the absence of a break clause would exposes the company to excessive risk. Typically factors considered in deciding to negotiate a break clause include:

·      the length of the lease term;

·      the economic stability of the environment in which the property is located; and

·      whether the location represents a new area of operations for the company.

 

At 31 March 2022 the carrying amounts of lease liabilities are reduced by the amount of payments that would be avoided from exercising break clauses because on both dates it was considered reasonably certain that the company would not exercise its right to exercise any right to break the lease.

 

The aggregate undiscounted commitments for short-term leases not recognised in the balance sheet at year end is £nil (2021: £nil).

 

22. Provisions

 

Warranty provisions £		Onerous contracts provisions £	Total £
Provisions at 1 April 2021	-	-	-
Amounts provided in the year	42,407	526,700	569,107
Amounts utilised in the year	(4,241)	(396,736)	(400,977)
Provisions at 31 March 2022	38,166	129,964	168,130

 

 

Warranty provisions

The Group offers warranty cover in respect of manufacturing defects, which become apparent one to eight years after purchase, dependent on the market in which the purchase occurred and the vehicle/product purchased. The group offers warranties of up to eight years on batteries in electric vehicles. The estimated liability for product warranty is recognised when products are sold or when new warranty programmes are initiated. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future warranty claims, customer goodwill and recall complaints. The discount on the warranty provision is calculated using a risk-free discount rate as the risks specific to the liability, such as inflation, are included in the base calculation. The timing of outflows will vary as and when a warranty claim will arise, being typically up to eight years.

 

The Group considered the impact of the COVID-19 pandemic on its product warranty offerings and associated provisions, and determined that its existing methodology remained applicable for the year ended 31 March 2022.

 

Onerous contracts provisions

Onerous contract provisions comprise an estimate of unavoidable costs involved with fulfilling the terms and conditions of contracts net of any expected benefits to be received.

 

Estimates and assumptions

The group has recognised provisions for liabilities of uncertain timing or amount including those for onerous leases and warranty claims. The provision is measured at the best estimate of the expenditure required to settle the obligation at the reporting date, discounted at a pre-tax rate reflecting current market assessments of the time value of money and risks specific to the liability.

 

 

23. Liabilities for financial guarantees
		Year ended 31 March 2022 £
Balance at 31 March 2021 & 31 March 2022		-
Additions to financial liabilities during the year		78,058
Payments against financial liabilities		(36,255)
Balance at 31 March 2022		41,833

 

On 1 December 2021, the Group entered into an agreement to guarantee the obligations of its transport provider, Livingstone Aviation Limited in exchange for preferential access to their services.

 

Under IFRS9, the financial guarantee contracts was treated as a financial liability and was initially recognised at fair value. Subsequently, the financial guarantee contract was measured at the higher of the IFRS 9 expected credit loss (ECL) allowance and the amount initially recognised less any cumulative amount of income/amortisation recognised.

24. Share capital and share premium

 

Share capital and share premium

 

Allotted, issued and fully paid:

Year ended 31 March 2022

Year ended 31 March 2021

 

Number:	Type:	Nominal value:	£		£
	85,051,953 Ordinary Shares	£0.0011	93,557		-
	519,205,742 Ordinary Shares	£0.0001	-		51,921
			Number	Share capital	Share premium	Total
			of shares	£	£	£
Balance at 1 April 2020			43,579,955	4,358	10,641,597	10,645,955
Issue of shares			475,625,787	47,563	1,387,226	1,434,789
Cancellation of share premium			-	-	(12,028,823)	(12,028,823)
Balance at 31 March 2021			519,205,742	51,921	-	51,921
Consolidation of shares			(472,005,220)	-	-	-
Issue of shares			29,320,940	32,245	35,145,382	35,177,627
AIM listing costs offset against share premium			-	-	(2,868,972)	(2,868,972)
Shares issued on exercise of employee share options			5,530,491	6,091	58,165	64,256
Shares issued on conversion of convertible loan notes			3,000,000	3,300	2,336,700	2,340,000
Balance at 31 March 2022			85,051,953	93,557	34,671,275	34,764,832

 

 

The cancellation of share premium was approved by shareholder resolution on 25 March 2021.

 

In March 2021 the Group issued 2,340 convertible loan notes to Amati Global Investors Limited with a nominal value of £2,340,000. The loan notes had a term until 2026 and a coupon rate of 8%. Upon admission to the AIM market on 7 July 2021, the convertible loan notes issued by the Company were automatically converted into 3,000,0000 new Ordinary shares (the "Conversion Shares") of

£0.0011 each at a conversion price of £0.78 per share, pursuant to the terms of the convertible loan notes. The nominal value of the Conversion Shares was credited to share capital, with the proceeds raised in excess of this being credited to share premium. The shares will rank pari passu with the existing Ordinary shares which were admitted to trading on AIM.

 

On 18 June 2021, the Group passed a resolution to consolidate its Ordinary share capital. Prior to the consolidation, there were 519,205,742 Ordinary shares with a nominal value of £0.0001 per share. In exchange for these share, existing shareholders were issued 47,200,522 Ordinary shares with a nominal value of £0.0011.

 

On 7 July 2021, the Group raised gross proceeds of £35,177,628 through the placing of 29,314,690 new Ordinary shares (the "Placing Shares") with new and existing investors at a price of £1.20 per Placing Share. An amount equal to the nominal value of the Placing Shares was credited to share capital, with the proceeds raised in excess of this nominal value being credited to share premium. The Placing Shares rank pari passu with the Company's existing ordinary shares.

 

On 7 July 2021, upon admission to the AIM market, 9,919,457 share options automatically vested pursuant to the terms of their issue. Of these shares, a total of 5,530,491 shares ("New Ordinary Shares") were exercised immediately by the option holders. Of these, 4,437,821 options were exercised by the option holders at a strike price of £0.012 resulting in the issue of 4,437,821 new Ordinary shares with a nominal value of £0.011p. As a result, £4,882 was credited to share capital and the amount received in excess of the nominal value, £48,372, was credited to share premium.

 

The remaining 1,092,670 options were exercised by the option holders at a strike price of £0.01 resulting in the issue of 1,092,670 new Ordinary shares with a nominal value of £0.011p. As a result, £1,202 was credited to share capital and the amount received in excess of the nominal value, £9,725, was credited to share premium.

 

The New Ordinary Shares rank pari passu with the Company's existing ordinary shares.

 

On 30 March 2022, 6,250 share options vested pursuant to the terms of their issue. These options were exercised by the option holders at a strike price of £0.012 resulting in the issue of 6,250 new Ordinary shares with a nominal value of £0.011p. As a result, £7 was credited to share capital and the amount received in excess of the nominal value, £68, was credited to share premium.

 

25. Share-based payments

 

	Share option reserve £
Balance at 1 April 2020 (Unaudited)	1,599,328
Share based payments	5,719,492
Balance at 31 March 2021 (Unaudited)	7,318,820
Share based payments	4,899,171
Balance at 31 March 2022 (Audited)	12,217,991

 

 

 

 

 

 

 

 

 

 

 

Common share options

Options have been granted to shareholders, directors and employees to purchase common shares. These options generally vest over a period of up to four years from grant date and are exercisable in the event of a listing.

 

Details of the common option plans are as follows:

 

 

                                                

 

For the year ended 31 March 2022

For the year ended 31 March 2021

 

	Number	Weighted average exercise price	Number	Weighted average exercise price
	#	£	#	£
Outstanding at beginning of year	10,826,072	0.010	1,592,670	0.01
Granted	8,577,394		9,233,402
Lapsed	(616,370)		-
Vested	(12,553,823)		-
Outstanding at end of year	6,233,273	0.012	10,826,072	0.012

 

 

 

The fair value of each option granted was estimated on the grant date using the Black-Scholes, and where appropriate the Monte Carlo simulation option-pricing model with the following average assumptions:

 

	Year ended 31	Year ended 31
	March 2022	March 2021
	£	£
Exercise price at grant date	£0.01	£0.012
Expected life (in years)	3	1
Risk-free interest rate	0.58%	0.55%
Expected volatility	87.05%	86.03%
Weighted average share price	92.56 pence	92.56 pence

 

The expected volatility is based on the historic volatility (based on the share price) of a comparator company with publicly available share prices.

 

The risk-free interest rate is based on the average return on 10 year UK Gilts.

 

	Year ended 31	Year ended 31
	March 2022	March 2021
Cost of options vesting in the year	£ 4,899,171	£ 5,719,462

 

 

In the year ended 31 March 2022 an amount of £161,951 (2021: £544,505), representing the charge for options related to employees whose costs are allocated to research and development and capitalized as internally generated development costs was included in additions to intangible assets, whilst the remainder of the cost of options vesting was charged to the profit and loss account. A further amount of £330,886 (2021: £nil) was debited in respect of share issue costs against share premium.

 

The total cost of options vesting in the period has been classified as a movement in the share option reserve.

 

26. Reserves

 

The following describes the nature and purpose of each reserve within equity:

 

Reserve : Description and purpose

Share capital:                 Nominal value of share capital subscribed for.

 

Share premium : Amount subscribed for share capital in excess of nominal value.

 

Share options reserve                            Share options reserve : Used to record the assessed fair value of equity-settled options issued as share based payment for services received by the consolidated entity.

 

Translation reserve                                 Translation reserve : the currency translation reserve represents the cumulative gains and losses on the retranslation of the Group's net investment in foreign operations.

 

Accumulated losses                                Accumulated losses : All other net gains and losses and transactions with owners (e.g. dividends) not recognized elsewhere.

 

27. Financial instruments

 

Risk Management objective

The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of Directors.

 

The Group is exposed to the following financial risks:

a)      Credit risk

b)      Liquidity risk

c)      Interest rate risk

 

(i) Principal financial instruments

The Group is exposed to risks that arise from its use of financial instruments. The principal financial instruments used by the company, from which financial instrument risk arises, are as follows:

a.    Trade and other receivables

b.    Cash and cash equivalents

c.    Trade and other payables

d.    Fixed rate hire purchase agreement (classified within lease liabilities)

e.    Investments in unquoted equity securities

 

(ii)  Financial instruments by category

 

Financial instruments

 

Amortised cost 2022			2021
£			£
Cash and cash equivalents	18,402,055         2,862,470
Trade and other receivables	4,899,113             273,978
Total financial assets	23,301,168         3,136,448
Financial liabilities	Amortised cost			Fair value through profit and loss
Trade and other payables	2022                  2021 £                          £ 3,961,867             302,643			2022 £ -		2021 £ -
Lease liabilities	2,850,606             444,981			-		-
Loans and borrowings	-               2,516,111			-		-
Liabilities for financial guarantees	-                           -			41,833		-
Total financial liabilities	6,812,473	3,263,735			41,833	-

 

 

 

 

 

(iii) Financial instruments not measured at fair value

Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables, and loans and borrowings.

 

Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximates their fair value.

 

The details of the fair value hierarchy, valuation techniques, and significant unobservable inputs related to determining the fair value of loans and borrowings, which are classified in level 3 of the fair value hierarchy, are outlined in this note.

 

(iv) Financial instruments measured at fair value

The fair value hierarchy of financial instruments measured at fair value is provided below.

 

Financial liabilities	Level 1	Level 2		Level 3
	2022                     2021	2022	2021	2022	2021
Liabilities for financial guarantees	£                            £   -                             -	£   -	£   -	£   41,833	£   -

 

 

 

There were no transfers between levels during the year.

 

The valuation techniques and significant unobservable inputs used in determining the fair value measurement of level 2 and level 3 financial instruments, as well as the inter-relationship between key unobservable inputs and fair value, are set out in the table below.

 

Financial instrument	Valuation technique used	Significant unobservable inputs	Inter-relationship between key unobservable inputs and fair value
Equity investments	Recognised at cost and adjusted thereafter for the post- acquisition change in the investor's share of the investee's net assets.	Not applicable.	Not applicable.
Liabilities for financial guarantees	Discounted cashflow model using the difference between market rates of interest and the rate per the loan note instrument adjusted for probability of default.	Not applicable.	Not applicable.

 

There were no changes to the valuation techniques during the year.

 

The reconciliation of the opening and closing fair value balance of level 3 financial instruments is provided below:

 

Liabilities for financial guarantees

 

	£
At 1 April 2020 Purchases, disposals and reclassifications	- -
At 31 March 2021	-
At 1 April 2021	-
Purchases, disposals and reclassifications	41,833
At 31 March 2022	41,833