Notes to the Financial Statements for the year ended 31 December 2021

1.      Corporate information

Strip Tinning Limited is a company incorporated in the United Kingdom. The registered address of the Company is Arden Business Park, Arden Road, Frankley Birmingham, West Midlands, B45 0JA.

The principal activity of the Company is the manufacture of automotive busbar, ancillary connectors and flexible printed circuits.

2.      Accounting policies

2.1.  Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the United Kingdom in conformity with the Companies Act 2006. IFRS has been applied with a transition date from 1 January 2020.

The accounting policies have been applied consistently to all periods presented, unless otherwise stated.

These are the first period of statutory financial statements prepared under IFRS and the impact of transition is set out in note 26. IFRS 1 First-Time Adoption of International Financial Reporting Standards allows first-time adopters certain exemptions from the retrospective application of certain IFRSs and no significant exemptions have been applied.

The financial statements have been prepared under the historical cost convention with the exception of the fair values applied in accounting for share based payments. The financial statements and the accompanying notes are presented in thousands of pounds sterling ('£'000'), the functional and presentation currency of the Company, except where otherwise indicated.

Going concern

The directors have considered the principal risks and uncertainties facing the business, along with the Company's objectives, policies and processes for managing its exposure to financial risk.

In making this assessment the directors have prepared cash flows for the period ending 30 June 2023, being a period of 12 months from the expected date of approval of the financial statements. The listing on AIM in February 2022 raised a net £6.8m for the Company including the funding for planned investment where there is discretion in the timing and commitment to expenditure. Whilst there are major current inflationary and supply chain pressures in the industry these forecasts therefore show that with the funds available, the Company has sufficient resources to enable it to manage significant fluctuations in results and to continue to meet its liabilities as they fall due.

Based on the above factors, the directors have prepared the financial statements on a going concern basis.

Use of estimates and judgments

The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience, as well as expectations of future events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. 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.

Accounting policies (continued)

Share based payment

The company has used an option-pricing model where applicable, with inputs, in particular volatility in respect of a company without a quoted share price, representing a key estimate in the calculation (Notes 23 and 26).

Right-of-use assets

The application of IFRS16 involves an estimation of the appropriate incremental borrowing rate and of the relevant lease period. The  rate is reviewed in conjunction with the rates on similar borrowings and a judgement has been made where there are break options by reference to business plans and the most likely outcome (Note 26). An increase in the rate of 1% would have reduced the opening asset and liability by £67,000 with no impact on net assets, reduced the depreciation charges by £5,000 a year and increased finance charges for 2018 to 2020 by approximately £7,000 a year.

Property, plant and equipment

Property, plant and equipment as set out in note 11 is depreciated over the estimated useful lives of the assets. 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.

Intangible assets

The capitalisation of development costs set out in note 10 is also subject to a degree of judgement in respect of the timing when the commercial viability of new technology and know-how is reached, supported by the results of testing and customer trials, and by forecasts for the overall value and timing of sales which may be impacted by other future factors which could impact the assumptions made. The carrying values are shown in note 10.

Amortisation commences once management consider that the asset is available for use, i.e. when it is judged to be in the location and condition necessary for it to be capable of operating in the manner intended by management and the cost is amortised over the estimated 5 to 8 year useful life of the know-how based on experience of and future expected customer product cycles and lives.

2.2.  Revenue

Revenue principally comprises income from the sale of automotive glazing components comprising busbar, ancillary connectors and flexible printed circuits together with any related product tooling purchased by customers and represents the amount receivable for the sale of these component products or tooling, excluding VAT and trade discounts.

There are framework agreements with major customers including pricing per component and purchase orders are then received from customers for each delivery. Revenue is recognised to the extent that the performance obligations, being the agreement to transfer the product is satisfied, which is when the customer obtains control of the product or of the tooling and is able to benefit from or direct the use of the product. The transfer takes place in accordance with the terms agreed with each customer, either at the point in time the goods are despatched to or received by the customer.

When an amount has been invoiced or payment received in advance of the associated performance obligations being fulfilled, any amounts due are recognised as trade receivables and contract liabilities are recorded for the sales value of the performance obligations that have not been provided. 

 

Accounting policies (continued)

2.3.  Grants

Income based grants

Income based grants are recognised in other operating income based on the specific terms related to them as follows:

·      A grant is recognised in other operating income when the grant proceeds are received (or receivable) provided that the terms of the grant do not impose future performance-related conditions.

·      If the terms of a grant do impose performance-related conditions then the grant is only recognised in income when the performance-related conditions are met.

·      Any grants that are received before the revenue recognition criteria are met are recognised in the statement of financial position as an other creditor within liabilities.

Capital grants

Grants received relating to tangible and intangible fixed assets are treated as deferred income and released to the income statement over the expected useful lives of the assets concerned.

2.4.  Employee benefits

The Company operates a defined contribution pension scheme. Contributions are recognised in the statement of comprehensive income in the year in which they become payable in accordance with the rules of the scheme.

2.5.  Share based payment

The Company operates an equity-settled share-based compensation plan in which the Company receives services from employees as consideration for share options. The fair value is established at the point of grant using an appropriate pricing model and then the cost is recognised as an expense in administrative expenses in the statement of comprehensive income, together with a corresponding increase directly in equity over the period in which the services are fulfilled. This is the estimated period to vesting in respect of employees. The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest.

Deferred tax credits in respect of the potential future tax deduction from exercise of options are initially included in the tax in the statement of comprehensive income. To the extent the potential corporate tax deduction exceeds the share based payment charges, the deferred tax is taken directly to retained earnings in equity in accordance with IAS12.

2.6.  Income tax

Current income tax assets and/or liabilities comprise obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid/due at the reporting date. Current tax is payable on taxable profits, which may differ from profit or loss in the financial statements. Calculation of current tax is based on the tax rates and tax laws that have been enacted or substantively enacted at the reporting period.

Deferred taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Accounting policies (continued)

2.7.  Computer software

Computer software assets are capitalised at the cost of acquiring and bringing into use the software. Subsequent to initial recognition it is stated at cost less accumulated amortisation and accumulated impairment. Software is amortised in the Statement of Comprehensive Income on a straight line basis over its estimated useful life of two years. These costs are recognised in administrative expenses.

2.8.  Research and development costs

An internally generated intangible asset arising from development (or the development phase) of an internal project to improve the efficiency, design or capability of the Company's product range is recognised if, and only if, all of the following have been demonstrated:

 

·      It is technically feasible to complete the development such that it will be available for use, sale or licence;

·      There is an intention to complete the development;

·      There is an ability to use, sell or licence the resultant asset;

·      The method by which probable future economic benefits will be generated is known;

·      There are adequate technical, financial and other resources required to complete the development;

·      There are reliable measures that can identify the expenditure directly attributable to the project during its development.

The amount recognised is the expenditure incurred from the date when the project first meets the recognition criteria listed above.  Expenses capitalised consist of employee costs incurred on development, direct costs including material or testing and an apportionment of appropriate overheads.

Where the above criteria are not met, research and development expenditure is charged to the income statement in the period in which it is incurred.

Capitalised development costs are initially measured at cost. After initial recognition, they are recognised at cost less any accumulated amortisation and any accumulated impairment losses.

The depreciable amount of a development cost intangible asset with a finite useful life is allocated on a systematic basis over its useful life, currently expected to range from 5 to 8 years. Amortisation begins when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

The amortisation period and the amortisation method for the assets with a finite useful life is reviewed at least each financial year-end. If the expected useful of the asset is different from previous estimates, the amortisation period is changed accordingly.             

2.9.  Patent costs

Patent cost assets are initially measured at cost. After initial recognition, they are recognised at cost less any accumulated amortisation and any accumulated impairment losses. The costs are amortised over a 5 year estimated useful life.

 

Accounting policies (continued)

2.10.   Property plant and equipment

Property, plant and equipment is recognised as an asset only if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. An item of property, plant and equipment that qualifies for recognition as an asset is measured at its cost. Cost of an item of property, plant and equipment comprises the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

After recognition, all property, plant and equipment (including plant, computer equipment and fixtures) is carried at cost less any accumulated depreciation and any accumulated impairment losses. Depreciation is provided at rates calculated to write down the cost of assets, less estimated residual value, over their expected useful lives on the following basis:

Leasehold improvements                            15% reducing balance

Plant and machinery                                     15% reducing balance

Specialised Workshop Equipment              50% straight line

Office equipment                                          50% straight line

Tooling                                                             25% reducing balance

The residual value and the useful life of an asset is reviewed at least at each financial year-end and if expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying value of the asset and are recognised in profit or loss.

2.11.   Right-of-use assets and lease liabilities

 

Assets and liabilities arising from a lease with a duration of more than one year are initially measured at the present value of the lease payments and payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease or the incremental borrowing rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

Lease payments are allocated between repayments of the discounted liability, presented as a separate category within liabilities, and the lease liability finance charges. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received and any initial direct costs and are presented as a separate category within tangible fixed assets.

Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease
term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life.  

Any payments associated with short-term leases of equipment and all leases of low-value assets would be recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. There have been no significant short lease costs in the  reporting period. Associated costs of all leases, such as maintenance, service charges and insurance, are expensed as incurred.

 

Accounting policies (continued)

2.12.   Impairment of intangible assets and property, plant and equipment

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash flows. As a result, some assets are tested individually for impairment and some are tested at the overall Company cash-generating unit level.

All individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An asset or cash-generating unit is impaired when its carrying amount exceed its recoverable amount. The recoverable amount is measured as the higher of fair value less cost of disposal and value in use. The value in use is calculated as being net projected cash flows based on financial forecasts discounted back to present value.

The impairment loss is allocated to reduce the carrying amount of the asset pro-rata on the basis of the carrying amount of each asset in the unit. Non-financial assets that suffered an impairment are reviewed for a possible reversal of the impairment at the end of each reporting period. An impairment loss is reversed if the asset's or cash-generating unit's recoverable amount exceeds its carrying amount.

2.13.   Inventories

Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value.  Cost comprises all costs of purchase of raw materials or bought in manufacturing components, costs of conversion and an appropriate proportion of fixed and variable overheads incurred in bringing the finished goods inventories to their present location and condition. Net realisable value represents the estimated selling price less costs to complete and sell. Where necessary, provision is made to reduce cost to no more than net realisable value having regard to the nature and condition of inventory, as well as its anticipated utilisation and saleability.

2.14.   Financial instruments

Financial assets

Financial assets are recognised in the statement of financial position when, and only when, the Company becomes a party to the contractual provisions of the instrument and are classified based upon the purpose for which the asset was acquired. The Company's business model is to hold all assets recognised within these financial statements to collect the cash flows.

Financial assets are initially recognised at fair value, which is usually the cost, plus directly attributable transaction costs. These comprise trade and other receivables and cash and cash equivalents.

Financial assets are subsequently measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

The company applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables.  The company measures loss allowances at an amount equal to lifetime ECL, which is estimated using past experience of the historical credit losses experienced over the three year period prior to the period end. Historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the company's customers, such as inflation rates. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.

The company recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost.

A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and reward are transferred.

Accounting policies (continued)

Financial liabilities

Financial liabilities include loans, hire purchase borrowings, trade and other payables and any derivatives in respect of forward foreign exchange contracts. Financial liabilities are obligations to pay cash or other financial assets and are recognised in the statement of financial position when, and only when, the Company becomes a party to the contractual provisions of the instrument.

Trade and other payables are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. Loans and hire purchase borrowings are are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument and subsequently carried at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

Derivatives would be measured at fair value through profit and loss for any movements. None have been entered into within the period of these financial statements.

A financial liability is derecognised only when the contractual obligation is extinguished, that is, when the obligation is discharged, cancelled or expires.

The Company utilises hire purchase asset backed finance to fund tangible fixed assets, drawing down finance against individual assets or bundles of assets, which may directly finance the asset purchase or be drawn down retrospectively. The economic ownership of assets subject to hire purchase agreements are transferred to the Company if the Company bears substantially all the risks and rewards of ownership of the asset. The related asset is recognised and measured in accordance with the tangible fixed asset policy with initial cost being the fair value of the asset. A corresponding hire purchase liability.is recognised in respect of the capital repayments to be made.

These interest bearing liabilities are then measured at amortised cost with the interest, under the effective interest method, expensed over the repayment period at a constant rate.

2.15.   Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short term, highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.

2.16.   Foreign currencies

Transactions entered into by the Company in a currency other than the functional currency of sterling 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 the income statement in administrative expenses.

2.17.   Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an economic outflow will occur and a reliable estimate  can be made including any additional evidence from post period end events.  Where the timing of the estimate  represents a relatively certain amount it is provided for within accruals.

2.18.   Equity and reserves

Share capital represents the nominal value of shares that have been issued. Share premium represents the excess consideration received over the nominal value of share capital upon the sale of shares, less any incidental costs of issue.

Retained earnings include all current and prior period retained profits.

 

Accounting policies (continued)

2.19.   Presentation of non statutory measures

The Company classifies certain one-off charges or credits that have a material impact on the financial results but are not related to the core underlying trading as 'exceptional' or 'non-recurring' items. These are disclosed separately in note 4 and adjusted results to provide further understanding of the financial performance of the Company.

2.20.   Standards, amendments and interpretations in issue but not yet effective

IFRS interpretations and amendments to standards issued but not yet effective have been reviewed and assessed for any impact on the company. There are no new standards, interpretations and amendments which are not yet effective in these financial statements, expected to have a material effect on the Company's future financial statements.

3.      Segmental reporting

 

IFRS 8, Operating Segments, requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Company's chief operating decision maker. The chief operating decision maker is considered to be the executive Directors.

 

The Company comprised only one operating segment for the sale of automotive circuit components for glazing products. The operating segments are monitored by the chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results. All assets, liabilities and revenues are located in, or derived in, the United Kingdom. However, the Company has now commenced the development and initial sales of products for electric vehicles ('EV') which are expected to grow to be a material and reported segment. Separate management reporting and information has not been prepared for the year ended 31 December 2021. As an indication of the initial activity, some estimated information has been derived showing sales of £0.35m for the year ended 31 December 2021, and net costs of about £1.1m as a result of the increasing investment and development in this area of activity.

Turnover with the major customers (including customer groups) representing in excess of 10% of total revenue in a year has been as follows:

			Year ended 31     December   2021		Year ended 31 December 2020
			£'000		£'000
Customer A			2,392		2,010
Customer B			1,680		1,277
Customer C			1,230		1,124
Customer D			2,091		1,042

 

 

All revenue arises at a point in time and relates to the sale of automotive busbar, ancillary connectors and flexible printed circuit product. Turnover by geographical destination is as follows:

 

			Year ended 31 December 2021		Year ended 31 December 2020
			£'000		£'000
Europe			6,393		5,153
Rest of the World			4,757		3,402
			11,150		8,555

 

 

 

 

4.      Operating profit

			Year ended 31 December 2021		Year ended 31 December 2020
			£'000		£'000
Operating profit is stated after charging/(crediting):
Other operating income
Amortisation of deferred capital grant income			(31)		(33)
Government job retention scheme income			(1)		(71)
Amortisation of intangible assets			191		149
Depreciation of property, plant and equipment			561		505
Depreciation of right-of-use assets			160		152
Cost of inventory sold			7,598		4,727
Research and development expenditure expensed in the year			114		74
Short term lease rentals			24		15
Foreign exchange losses			164		11
IPO preparation related costs			198		-
Auditor's remuneration
-    For audit			45		14
-    For taxation compliance			-		2
-    For tax advisory services			6		28
-    For other assurance services			15		27

 

£157,000 of fees payable to the auditors in respect of IPO reporting accountants services were included in prepayments at 31 December 2021.

 

5.      Staff and key management personnel

Average monthly number of employees			Year ended 31 December 2021		Year ended 31 December 2020
			Number		Number
Management			4		3
Sales			5		4
Production			140		108
Administration			4		5
			153		120
Payroll costs			£'000		£'000
Gross salaries			3,860		3,073
Social security costs			369		280
Share based payment			145		76
Other pension contributions			233		200
			4,607		3,629

In view of the size and nature of the Company, the Key Management Personnel in the three year period is considered to comprise only the directors of the Company. The directors' (and key management) remuneration was as follows.

Staff and key management personnel (continued)
			Year ended 31 December 2021		Year ended 31 December 2020
			£'000		£'000
Aggregate emoluments
Remuneration for qualifying services			335		351
Fair value of share base payment			145		76
Pension contributions			13		11
			493		438
Highest paid director:
Remuneration for qualifying services			198		211
Pension contributions			8		7
			206		218

 

Retirement benefits were accruing to 2 directors in respect of defined contribution schemes (2020:2).

 

6.      Finance costs

			Year ended 31 December 2021		Year ended 31 December 2020
			£'000		£'000
Interest payable on hire purchase obligations			71		57
Bank interest			21		-
Lease liability finance charges			66		56
			158		113

 

 

7.      Income tax

			Year ended 31 December 2021		Year ended 31 December 2020
			£'000		£'000
Current tax:
UK corporation tax			(195)		(107)
Adjustment for prior periods			-		82
Total current tax (credit)			(195)		(25)
Deferred tax:
Origination and reversal of temporary differences			(161)		100
Effect of change in tax rate			135		51
Adjustment for prior periods			(16)		5
Total deferred tax (credit)/expense			(42)		156
Total tax (credit)/charge			(237)		131

The tax rate used for the reconciliation is the corporate tax rate of 19% (2020: 19%) payable by corporate entities in the UK on taxable profits under UK tax law. The Finance Act 2020 enacted in March 2020 maintained the rate of UK corporation tax rate at 19% and, as the enacted rate, is accordingly applied to deferred taxation balances at 31 December 2020. In May 2021 an increase to 25% from April 2023 was substantively enacted and, as the expected period of reversal, is accordingly applied to deferred tax balances at 31 December 2021.

The (credit)/charge for the year can be reconciled to the (loss)/profit for the year as follows:

			Year ended 31 December 2021		Year ended 31 December 2020
			£'000		£'000
(Loss)/profit before taxation			(1,062)		349
Income tax calculated at 19% (2020: 19%)			(202)		66
Expenses not deductible			35		17
Enhanced research and development allowances			(84)		(90)
Enhanced capital allowances			(41)		-
Deferred tax asset in respect of share options			(64)		-
Effect of change in deferred tax rate			135		51
Adjustment for prior periods			(16)		87
Total tax (credit)/charge			(237)		131

 

 

In addition, a deferred tax credit of £225,000 (2020: £nil) has been taken directly to retained earnings in equity in accordance with IAS12. This is in respect of the extent to which the potential corporate tax deduction exceeds the share based payment charges.

 

 

8.      Dividends paid and proposed

 

Amounts recognised as distributions to equity holders in the period:

			Year ended 31 December 2021		Year ended 31 December 2020
			£'000		£'000
Interim ordinary dividends paid for the year ended 31 December 2021 of £206 (2020 : £270 paid) per share			412		540

 

9.      Intangible assets

	Development costs	Patent costs	Computer software		Total
	£'000	£'000	£'000		£'000
Cost
At 1 January 2020	1,007	131	82		1,220
Additions	291	7	8		306
As at 31 December 2020	1,298	138	90		1,526
Additions	487	9	236		732
As at 31 December 2021	1,785	147	326		2,258
Amortisation or impairment
At 1 January 2020	170	110	77		357
Charge	126	17	6		149
As at 31 December 2020	296	127	83		506
Charge	180	5	6		191
As at 31 December 2021	476	132	89		697
Net book value
As at 1 January 2020	837	21	5		863
As at 31 December 2020	1,002	11	7		1,020
As at 31 December 2021	1,309	15	237		1,561

 

The company has a programme of research and development projects to improve the efficiency and functionality of its products. Capitalised development costs relate to the projects evaluated as viable and where the successful developments are being applied and contributing to revenue.

Included within the carrying amount of the above, are assets held under hire purchase agreements of £159,000 (2020: £nil) relating to software. Amortisation charged on these assets in the year amounted to £nil (2020: £nil).

 

 

10.   Right-of-use assets

 

	Property leasehold assets		Plant and machinery assets		Total
	£'000		£'000		£'000
Cost
At 1 January 2020	1,303		203		1,506
Additions	353		25		378
Disposals	-		(92)		(92)
As at 31 December 2020	1,656		136		1,792
Additions	-		66		66
Disposals	-		(77)		(77)
As at 31 December 2021	1,656		125		1,781
Depreciation
At 1 January 2020	369		127		496
Charge	96		56		152
Disposals	-		(92)		(92)
As at 31 December 2020	465		91		556
Charge	122		38		160
Disposals	-		(77)		(77)
As at 31 December 2021	587		52		639
Net book value
As at 1 January 2020	934		76		1,010
As at 31 December 2020	1,191		45		1,236
As at 31 December 2021	1,069		73		1.142

 

The financing charges in respect of right-of-use assets are disclosed in note 6 and the lease liabilities in 17. Right-of-use assets and lease liabilities relate principally to property leases. The Company leases its main operating premises, typically on a ten year lease, subject to periodic rent reviews and potential breaks, with the intention and assumption made in measuring assets and liabilities that the full period will be utilised. Total cash outflows in respect of leases were £202,000 for the year ended 31 December 2021 (2020: £195,000).

 

 

 

11.   Property, plant and equipment

 

	Leasehold improvements	Plant and machinery	Tooling	Office equipment		Total
	£'000	£'000	£'000	£'000	£'000
Cost
At 1 January 2020	370	4,427	815	103	5,715
Additions	32	795	203	19	1,049
As at 31 December 2020	402	5,222	1,018	122	6,764
Additions	95	515	94	33	737
Disposals	-	(633)	-	-	(633)
As at 31 December 2021	497	5,104	1,112	155	6,868
Depreciation and impairment
At 1 January 2020	208	2,690	366	82	3,346
Charge	28	310	146	21	505
As at 31 December 2020	236	3,000	512	103	3,851
Charge	27	374	139	21	561
Disposals	-	(633)	-	-	(633)
As at 31 December 2021	263	2,741	651	124	3,779
Net book value
As at 1 January 2020	162	1,737	449	21	2,369
As at 31 December 2020	166	2,222	506	19	2,913
As at 31 December 2021	234	2,363	461	31	3,089

Included within the carrying amount of the above, are assets held under hire purchase agreements of £1,482,000 (2020: £1,469,000) relating to plant and machinery and £190,000 (2020: £281,000) relating to tooling. Depreciation charged on these assets in the year amounted to £297,000 (2020: £78,000).

The Company has received capital grants towards the cost of plant and machinery from UK government research and development initiatives amounting to £nil (2020: £33,000) which are deferred and amortised in line with depreciation or impairment of the related asset.